<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 23, 1998
REGISTRATION NO. 333-__________
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
-------------------------
EQUITY CORPORATION INTERNATIONAL
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 75-2521142
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
<TABLE>
<S> <C>
W. CARDON GERNER
SENIOR VICE PRESIDENT -- CHIEF FINANCIAL OFFICER
415 SOUTH FIRST STREET EQUITY CORPORATION INTERNATIONAL
SUITE 210 415 SOUTH FIRST STREET
LUFKIN, TEXAS 75901 SUITE 210
(409) 631-8700 LUFKIN, TEXAS 75901
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING (409) 631-8703
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
</TABLE>
-------------------------
COPY TO:
William N. Finnegan, IV
Andrews & Kurth L.L.P.
4200 Chase Tower
600 Travis
Houston, Texas 77002
(713) 220-4200
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As
soon as practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please 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 only in connection with
dividend or interest 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, please 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, 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. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
===============================================================================================================
Amount Proposed Maximum Proposed Maximum Amount of
Title of Each Class of Securities to be Offering Price Aggregate Registration
to be Registered Registered(1) Per Share(1) Offering Price(1) Fee
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
4 1/2 % Convertible
Subordinated $143,750,000 100% $143,750,000 $42,407
Debentures Due 2004 . . .
Common Stock, par value 5,306,386 shares (3) -- -- -- (4)
$.01 per share (2) . . . .
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</TABLE>
(1) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(i) of the Securities Act of 1933, as
amended.
(2) Includes preferred share purchase rights associated with the Common Stock.
No separate fee is payable in respect of the registration of such
preferred share purchase rights.
(3) Such number represents the number of shares of Common Stock as are
initially issuable upon conversion of the 4 1/2% Convertible Subordinated
Debentures due December 31, 2004 registered hereby and, pursuant to Rule
416 under the Securities Act of 1933, as amended, such indeterminate
number of shares of Common Stock as shall be required for issuance upon
conversion of such Debentures.
(4) No additional consideration will be received for the Common Stock and,
therefore, no registration fee is required pursuant to Rule 457(i).
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED APRIL 23, 1998
P R O S P E C T U S
EQUITY CORPORATION INTERNATIONAL
$143,750,000
4 1/2% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2004
AND
SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION THEREOF
-------------------------
This Prospectus relates to up to $143,750,000 aggregate principal amount 4
1/2% Convertible Subordinated Debentures due December 31, 2004 (the
"Debentures") of Equity Corporation International (the "Company") under the
Securities Act of 1933, as amended (the "Securities Act"), and the shares of
Common Stock, $0.01 par value of the Company ("Common Stock"), issuable upon
the conversion of the Debentures (the "Conversion Shares"). The Debentures
registered hereby were originally issued and sold by the Company (the "Original
Offering") pursuant to an Indenture dated February 25, 1998 (the "Indenture")
to qualified institutional buyers ("QIBs"), as defined in Rule 144A ("Rule
144A") under the Securities Act, in transactions exempt from the registration
requirements of the Securities Act, through Merrill Lynch, Pierce Fenner &
Smith Incorporated ("Merrill Lynch"), ABN AMRO Incorporated and Morgan Stanley
& Co. Incorporated (collectively, the "Initial Purchasers"). The Debentures
and the Common Stock issuable upon conversion thereof may be offered and sold
from time to time by the holders named herein or by their transferees,
pledgees, donees or their successors (collectively, the "Selling
Securityholders") pursuant to this Prospectus. The Registration Statement of
which this Prospectus is a part has been filed with the Securities and Exchange
Commission pursuant to a Registration Rights Agreement dated as of February 25,
1998 (the "Registration Rights Agreement") between the Company and the Initial
Purchasers, entered into in connection with the Original Offering.
The Debentures are convertible at the option of the holder into shares of
Common Stock of the Company at any time prior to redemption or maturity, at a
conversion rate of $27.09 principal amount of Debentures per share, in
denominations of $1,000 or any multiple thereof, subject to adjustment under
certain circumstances. The Common Stock is traded on the New York Stock
Exchange under the symbol "EQU". On April 22, 1998, the closing sale price of
the Common Stock as reported on the New York Stock Exchange was $25.00 per
share. Interest on the Debentures is payable semi- annually in arrears on June
30 and December 31 of each year, commencing on June 30, 1998. The Debentures
will mature on December 31, 2004.
The Debentures are not redeemable prior to February 26, 2001. Thereafter,
the Debentures are redeemable at the option of the Company, in whole or in
part, at any time and from time to time, at the redemption prices set forth
herein, plus accrued interest. Upon a Change in Control, holders of Debentures
have the right, subject to certain conditions and restrictions, to require the
Company to purchase all or any part of their Debentures at the principal amount
thereof plus accrued and unpaid interest. See "Description of Debentures."
The Debentures are general unsecured obligations of the Company, are
contractually subordinate in right of payment to all existing and future Senior
Secured Indebtedness (as hereinafter defined) of the Company, rank pari passu
in right of payment with all existing and future senior indebtedness of the
Company that is unsecured and rank senior in right of payment to all future
subordinated indebtedness of the Company. The Debentures are effectively
subordinated to all current and future obligations of subsidiaries of the
Company, including trade obligations.
The Debentures and the Conversion Shares may be offered and sold by the
Selling Securityholders from time to time in transactions (which may include
block transactions in the case of the Conversion Shares) on any exchange or
market on which such securities are listed or quoted, as applicable, in
negotiated transactions, through a combination of such methods of sale, or
otherwise, at fixed prices that may be changed, at market prices or at
negotiated prices. The Selling Securityholders may effect such transactions by
selling the Debentures or Conversion Shares directly or to or through
broker-dealers, who may receive compensation in the form of discounts,
concessions or commissions from the Selling Securityholders and/or the
purchasers of the Debentures or Conversion Shares for whom such broker-dealers
may act as agents or to whom they may sell as principals, or both (which
compensation as to a particular broker-dealer might be in excess of customary
commissions). The Company will not receive any of the proceeds from the sale
of the Debentures or Conversion Shares by the Selling Securityholders. The
Company has agreed to pay all expenses incident to the offer and sale of the
Debentures and Conversion Shares offered by the Selling Securityholders hereby,
except that the Selling Securityholders will pay all underwriting discounts and
selling commissions, if any. See "Plan of Distribution."
Prior to the registration of the Debentures under the Registration
Statement, the Debentures have been designated for trading on the Private
Offerings, Resales and Trading through Automated Linkages ("PORTAL") system of
the National Association of Securities Dealers, Inc. Debentures sold pursuant
to this Prospectus are not eligible for trading on the PORTAL system. Prior to
this offering there has been no public market for the Debentures.
THE DEBENTURES AND THE COMMON STOCK OFFERED HEREBY INVOLVE A HIGH DEGREE
OF RISK. SEE "RISK FACTORS" COMMENCING ON PAGE 6.
-------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
-------------------------
THE DATE OF THIS PROSPECTUS IS , 1998.
<PAGE> 3
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy
statements and other information filed by the Company with the Commission may
be inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington,
D.C. 20549-1004, and at the following Regional Offices of the Commission:
Chicago Regional Office, Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 6061; and New York Regional Office, 7 World Trade
Center, 13th Floor, New York, New York 10048. Copies of such material may also
be obtained at the prescribed rates from the Public Reference Section of the
Commission at its principal office at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549-1004. The Company's Common Stock is listed on the New
York Stock Exchange and, as a result, the Company also files reports, proxy
statements and other information with the New York Stock Exchange, and such
reports, proxy statements and other information are available for inspection at
the offices of the New York Stock Exchange at 20 Broad Street, New York, New
York 10005. Information filed by the Company with the Commission is also
available at the web site of the Commission at http://www.sec.gov.
A registration statement on Form S-3 with respect to the Debentures and
Conversion Shares offered hereby (together with all amendments and exhibits,
the "Registration Statement") has been filed with the Commission under the
Securities Act. This Prospectus does not contain all of the information
contained in such Registration Statement and the exhibits and schedules
thereto, certain portions of which have been omitted pursuant to the rules and
regulations of the Commission. For further information with respect to the
Company and the Debentures and Conversion Shares offered hereby, reference is
made to the Registration Statement and the exhibits and schedules thereto.
Statements contained in this Prospectus regarding the contents of any contract
or any other documents are not necessarily complete and, in each instance,
reference is hereby made to the copy of such contract or document filed as an
exhibit to the Registration Statement. The Registration Statement, including
exhibits thereto, may be inspected without charge at the Commission's principal
office in Washington, D.C., and copies of all or any part thereof may be
obtained from the Public Reference Section, Securities and Exchange Commission,
Washington, D.C., 20549, upon payment of the prescribed fees.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, or portions of documents, previously filed by the
Company with the Commission pursuant to the Exchange Act are incorporated
herein by reference:
(i) The Company's Annual Report on Form 10-K for the year ended
December 31, 1997; and
(ii) The description of the Common Stock and the associated
preferred share purchase rights contained in the Company's
Registration Statements on Form 8-A, as amended (File No.
0-24728).
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of this offering shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of the
filing of such documents.
Any statement contained herein or in a document incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
The Company will provide, without charge, to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered upon the
written or oral request of such person, a copy of any or all of the documents
incorporated by reference herein, excluding exhibits to such documents unless
such exhibits are specifically incorporated by reference into such documents.
Requests should be directed to the Company at 415 South First Street, Suite
210, Lufkin, Texas 75901, Attention: Chief Financial Officer (telephone: (409)
631-8700).
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<PAGE> 4
SUMMARY
The following summary is qualified in its entirety by the more detailed
information and consolidated financial statements and notes thereto included or
incorporated by reference in this Prospectus. Unless the context requires
otherwise, references to "ECI" or the "Company" in this Prospectus include
Equity Corporation International and its subsidiaries and their respective
predecessors.
THE COMPANY
The Company is the fourth largest publicly traded provider of deathcare
services and products in the United States, primarily serving communities
located in non-metropolitan and select suburban areas. As of December 31,
1997, the Company operated 259 funeral homes and 76 cemeteries in 33 states and
one Canadian province. For the year ended December 31, 1997, the Company
generated net revenues of $135.1 million.
The Company commenced operations in May 1990 through the acquisition of 71
funeral homes and 3 cemeteries from Service Corporation International ("SCI").
In 1994, the Company initiated an aggressive acquisition program which resulted
in the acquisition of 102 funeral homes and 61 cemeteries for purchase prices
totaling approximately $144.6 million during the three year period ended
December 31, 1996. During the year ended December 31, 1997, the Company
acquired 84 funeral homes and 12 cemeteries for approximately $156.1 million.
The Company's funeral homes perform all of the services related to
funerals, provide funeral facilities and vehicles and sell related merchandise.
The Company's funeral homes are primarily located in communities with
populations ranging from 10,000 to 250,000 residents. The company's cemeteries
perform all of the services related to interment and sell cemetery interment
rights and services, mausoleum spaces and related merchandise. The Company's
cemeteries are primarily located in communities with populations ranging from
75,000 to 500,000 residents. In order to improve the efficiency and
profitability of its operations, the Company's funeral homes and cemeteries are
generally operated in "clusters" or groups within a given geographic area. The
clustering of funeral homes and the clustering of cemeteries provide
opportunities to share personnel, vehicles and other resources, effect
operating and administrative cost reductions and implement revenue enhancing
cross-marketing programs.
ECI believes it is differentiated from the other large, national deathcare
companies by its focus on the consolidation of funeral homes and cemeteries in
non-metropolitan areas of the United States. The Company has focused on
non-metropolitan areas in order to take advantage of the unique opportunities
offered by such areas as compared to metropolitan areas, including (i) the
opportunity to establish and maintain higher market shares as a result of the
smaller number of deathcare providers typically found in a non-metropolitan
area, (ii) the relatively lower level of competition for acquisitions in such
areas and (iii) the stronger preference in such areas for traditional funeral
serves and burials. ECI has also begun to acquire funeral homes and cemeteries
in select suburban areas which possess characteristics similar to the Company's
traditional non-metropolitan markets.
The Company's principal executive office is located at 415 South First
Street, Suite 210, Lufkin, Texas 75901, and its telephone number is (409)
631-8700.
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<PAGE> 5
THE OFFERING
Securities Offered Hereby . . . . $143,750,000 principal amount of 4 1/2%
Convertible Subordinated Debentures due
2004 (the "Debentures") issued under an
Indenture dated as of February 25, 1998
(the "Indenture") between the Company
and Bankers Trust Company, as trustee
(the "Trustee") and the shares of
Common Stock issuable upon the
conversion of the Debentures.
Interest Payment Dates . . . . . June 30 and December 31, commencing
June 30, 1998.
Maturity . . . . . . . . . . . . December 31, 2004.
Conversion Rights . . . . . . . . The Debentures are convertible into
shares of Common Stock at any time
prior to maturity or redemption at a
conversion price of $27.09 per share,
subject to adjustment under certain
conditions.
Optional Redemption by the
Company . . . . . . . . . The Debentures are not redeemable prior
to February 26, 2001. Thereafter, the
Debentures will be redeemable at any
time and from time to time at the
option of the Company, in whole or in
part, at the redemption prices set
forth herein, plus accrued interest.
Change in Control . . . . . . . . Upon a Change in Control, holders of
the Debentures will have the right,
subject to certain restrictions and
conditions, to require the Company to
purchase all or any part of their
Debentures at the principal amount
thereof, plus accrued interest. If a
Change in Control were to occur, there
can be no assurance that the Company
would have sufficient funds to pay the
repurchase price for all Debentures
tendered by the holders thereof or that
the Company would be permitted under
the terms of its Senior Secured
Indebtedness or other future
indebtedness ranking pari passu in
right of payment with the Debentures to
repurchase the Debentures tendered.
Subordination . . . . . . . . . . The Debentures are general unsecured
obligations of the Company, are
contractually subordinate in right of
payment to all existing and future
Senior Secured Indebtedness of the
Company, rank pari passu in right of
payment with all existing and future
senior indebtedness of the Company that
is unsecured and rank senior in right
of payment to all future subordinated
indebtedness of the Company. The
Debentures are effectively subordinated
to all current and future obligations
of subsidiaries of the Company,
including trade obligations. As of
December 31, 1997, on a pro forma basis
after giving effect to the Original
Offering and the application of the
estimated net proceeds therefrom, the
Company would have had $17.6 million of
Senior Secured Indebtedness outstanding
(excluding accrued interest thereon)
that would have been senior in right of
payment to the Debentures and $1.0
million of indebtedness outstanding
(excluding accrued interest thereon and
excluding guarantees) that would have
been pari passu in right of payment
with the Debentures and the Company's
subsidiaries would have had
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<PAGE> 6
approximately $14.4 million of
indebtedness outstanding (excluding
accrued interest thereon) that would
have been effectively senior to the
Debentures. The Indenture governing
the Debentures does not restrict the
incurrence of Senior Secured
Indebtedness or other indebtedness by
the Company or its subsidiaries. See
"Capitalization," "Risk Factors --
Subordination; No Limitation on Senior
Secured Indebtedness" and "Risk Factors
-- Holding Company Structure."
Use of Proceeds . . . . . . . The Company will not receive any of
the proceeds from the sale of the
Debentures by the Selling
Securityholders or the shares of Common
Stock issuable upon conversion of the
Debentures.
Registration Rights . . . . . If the Company fails to comply with
certain of its obligations under the
Registration Rights Agreement, the
Company has agreed to make additional
payments of predetermined liquidated
damages to the holders of the
Debentures and the holders of the
Common Stock issued upon conversion of
the Debentures. See "Description of
Debentures -- Registration Rights."
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<PAGE> 7
RISK FACTORS
In addition to the other information set forth or incorporated by
reference in this Prospectus, the following factors should be considered
carefully by prospective investors before purchasing the securities offered
hereby.
COMPETITION FOR ACQUISITIONS
To date, the Company has expanded its operations principally through
the acquisition of established funeral homes and cemeteries. Acquisitions of
premier funeral homes and cemeteries with demographic profiles that the Company
believes are favorable will continue to be a key component of the Company's
business strategy. Competition in the acquisition market is intense, and prices
paid for funeral homes and cemeteries have increased substantially in recent
years. Accordingly, no assurance can be given that the Company will be
successful in expanding its operations through acquisitions or that funeral
homes and cemeteries will be available at reasonable prices or on reasonable
terms. The failure of the Company to continue to complete acquisitions at
reasonable prices or terms could have a material adverse effect on the
Company's results of operations.
TREND TOWARD CREMATION
There is an increasing trend in the United States toward cremation as
an alternative to traditional burial. According to industry studies, it is
estimated that cremations will represent approximately 25% of all dispositions
of human remains in the United States by the year 2000, as compared with
approximately 21% in 1996 and 10% in 1980. Cremation is increasingly marketed
as part of a complete deathcare package that includes a funeral service and
traditional memorialization. While cremations have historically generated gross
profit percentages similar to those for traditional funeral services,
cremations generally result in lower average revenue and gross profit dollars
when compared to traditional funeral services. A substantial increase in the
rate of cremations performed by the Company could have a material adverse
effect on the Company's results of operations.
DEPENDENCE UPON KEY PERSONNEL
The Company believes that its continued success will depend to a
significant extent upon the abilities and continued efforts of its existing
senior management. The loss of key members of the Company's senior management
could adversely affect the Company's results of operations. The Company has
entered into employment agreements with its principal executive officers. The
Company's future success will also depend upon its ability to attract and
retain skilled funeral home and cemetery management personnel.
REGULATION
The Company's operations are subject to regulation, supervision and
licensing under numerous federal, state and local laws, ordinances and
regulations, including extensive regulations concerning trust funds, preneed
sales of funeral and cemetery products and services and various other aspects
of the Company's business. The impact of such laws, ordinances and regulations
varies depending on the location of the Company's funeral homes and cemeteries.
Among the regulations applicable to the Company are those requiring the
establishment and maintenance of trust accounts for the deposit of certain
funds obtained from the purchasers of preneed funeral contracts and preneed
cemetery merchandise and trust accounts for the perpetual care of cemetery
properties. From time to time, federal and state regulatory agencies have
considered and may enact additional legislation or regulations that could
affect the deathcare industry. If adopted, such legislation or regulations
could have a material adverse effect on the Company's results of operations.
Approximately 33% and 41% of the Company's funeral home net revenues
(approximately 21% and 26% of the Company's total net revenues) for the years
ended December 31, 1997 and 1996, respectively, were attributable to funeral
home operations in Texas. Any material adverse change in the regulatory
requirements applicable to Texas funeral home operations could have a material
adverse effect on the Company's results of operations.
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<PAGE> 8
REQUIREMENT TO REPURCHASE DEBENTURES UPON CHANGE IN CONTROL
In the event of a Change in Control (as defined in the Indenture) each
Holder will have the option, subject to the terms of the Indenture, to require
the Company to purchase all or any part of any Debenture for a purchase price
equal to 100% of the outstanding principal amount thereof, plus accrued but
unpaid interest. If a Change in Control were to occur, there can be no
assurance that the Company would have sufficient funds to repurchase all
Debentures tendered by the Holders thereof. In addition, the Company's
revolving credit facility with banks (the "Credit Facility"), which constitutes
Senior Secured Indebtedness, provides that a change in control (as described
therein) will constitute an event of default thereunder, the occurrence of
which would cause any repurchase of the Debentures, absent a waiver, to be
blocked by the subordination provisions of the Debentures. Even if such event
of default did not occur or was waived, the exercise by any Holder of
Debentures of the right to require the Company to repurchase Debentures as a
result of the occurrence of a Change in Control could create an event of
default under other Senior Secured Indebtedness of the Company, as a result of
which any repurchase could, absent a waiver, also be blocked by the
subordination provisions of the Debentures. See "Description of Debentures --
Subordination of Debentures." Further, the terms of future Senior Secured
Indebtedness of the Company or other future indebtedness ranking pari passu in
right of payment with the Debentures could require that such indebtedness be
repaid upon the occurrence of a Change in Control. Failure by the Company to
repurchase the Debentures when required will result in an Event of Default (as
defined in the Indenture relating to the Debentures), whether or not such
repurchase is permitted by the subordination provisions thereof. See
"Description of Debentures -- Purchase of Debentures at the Option of Holders
Upon a Change in Control" for a summary of these provisions.
SUBORDINATION; NO LIMITATION ON SENIOR INDEBTEDNESS
The Debentures are general unsecured obligations of the Company, are
contractually subordinate in right of payment to all existing and future Senior
Secured Indebtedness of the Company, rank pari passu in right of payment with
all existing and future senior indebtedness of the Company that is unsecured
and rank senior in right of payment to all future subordinated indebtedness of
the Company. The Debentures are effectively subordinated to all current and
future obligations of subsidiaries of the Company, including trade obligations.
As of December 31, 1997, on a pro forma basis after giving effect to the
Original Offering and the application of the estimated net proceeds therefrom,
the Company would have had $17.6 million of Senior Secured Indebtedness
outstanding (excluding accrued interest thereon) that would have been senior in
right of payment to the Debentures and $1.0 million of indebtedness outstanding
(excluding accrued interest thereon and excluding guarantees) that would have
been pari passu in right of payment with the Debentures and the Company's
subsidiaries would have had approximately $14.4 million of indebtedness
outstanding (excluding accrued interest thereon) that would have been
effectively senior to the Debentures. See "Capitalization" and "Description of
Debentures -- Subordination."
The Indenture does not restrict the incurrence of Senior Secured
Indebtedness or the incurrence of other indebtedness by the Company or its
subsidiaries. The incurrence of Senior Secured Indebtedness or other
indebtedness by the Company or its subsidiaries could adversely affect the
Company's ability to pay its obligations on the Debentures. All indebtedness
incurred from time to time under the Credit Facility will be Senior Secured
Indebtedness of the Company. In the event of any insolvency, bankruptcy,
liquidation, reorganization, dissolution or winding up of the business of the
Company or upon acceleration of the Debentures due to an Event of Default, the
assets of the Company's subsidiaries with respect to any indebtedness of such
subsidiaries and the assets of the Company pledged as security on any
outstanding Senior Secured Indebtedness will be available to pay obligations on
the Debentures only after all such indebtedness has been paid in full, and
there may not be sufficient assets remaining to pay amounts due on any or all
of the Debentures.
HOLDING COMPANY STRUCTURE
ECI, as a holding company whose principal assets are the shares of
capital stock of its subsidiaries, does not generate any operating revenues of
its own. Consequently, it depends on dividends, advances and payments from its
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<PAGE> 9
subsidiaries to fund its activities and meet its cash needs, including its debt
service requirements. The subsidiaries are separate and distinct legal entities
and have no obligation, contingent or otherwise, to pay any amounts due
pursuant to the Debentures or to make funds available therefor. Their ability
to pay dividends or make other payments or advances to ECI will depend on their
operating results and will be subject to various business considerations and to
applicable state laws. In addition, Holders of the Debentures are effectively
subordinated to the claims of creditors of ECI's subsidiaries to the extent of
the assets of those subsidiaries. If any insolvency, bankruptcy, liquidation,
reorganization, dissolution or winding up of the business of any subsidiary of
ECI occurs, creditors of that subsidiary generally will have the right to be
paid in full before any distribution is made to ECI or the holders of the
Debentures. See "Description of Debentures."
ANTI-TAKEOVER PROVISIONS
The Company's Amended and Restated Certificate of Incorporation
("Charter") and Amended and Restated Bylaws ("Bylaws") contain certain
provisions that may have the effect of discouraging, delaying or preventing a
change in control of the Company or unsolicited acquisition proposals that a
stockholder might consider favorable, including provisions authorizing the
issuance of "blank check" preferred stock, providing for a Board of Directors
with staggered, three-year terms, requiring supermajority or class voting to
effect certain amendments to the Charter and Bylaws, limiting the persons who
may call special stockholders' meetings, limiting stockholder action by written
consent and establishing advance notice requirements for nominations for
election to the Board of Directors or for proposing matters that can be acted
upon at stockholders' meetings. In addition, the Company's Board of Directors
has adopted a preferred share rights plan. The rights plan, as well as certain
provisions of Delaware law, may also have the effect of discouraging, delaying
or preventing a change in control of the Company or an unsolicited acquisition
proposal.
The Change in Control purchase feature of the Debentures, described in
"Description of Debentures-- Purchase of Debentures at the Option of Holders
Upon a Change in Control," may in certain circumstances discourage a change in
control of the Company or acquisition proposals with respect to the Company.
LIMITED PUBLIC MARKET FOR THE DEBENTURES
The Company does not intend to list the Debentures on any national
securities exchange or to seek admission thereof to trading in the Nasdaq
system. The Initial Purchasers may make a market in the Debentures and the
underlying Common Stock. However, the Initial Purchasers are not obligated to
make such a market and may discontinue any market- making activities at any
time without notice. In addition, such market-making activities are subject to
the limits imposed by the Securities Act and the Exchange Act. Although prior
to the registration of the Debentures under the Registration Statement the
Debentures were designated for trading through The PORTAL Market, the
Debentures sold hereunder will no longer be eligible for trading through The
PORTAL Market, and no assurance can be given that an active trading market for
the Debentures will develop or, if such market develops, as to the liquidity or
sustainability of such market. If a trading market does not develop or is not
maintained, holders of the Debentures may experience difficulty in reselling,
or an inability to sell, the Debentures. If a market for the Debentures
develops, any such market may be discontinued at any time. If a public trading
market develops for the Debentures, future trading prices of the Debentures
will depend on many factors, including, among other things, prevailing interest
rates, the Company's operating results and the market for similar securities.
Depending on prevailing interest rates, the market for similar securities and
other factors, including the financial condition of the Company, the Debentures
may trade at a discount from the principal amount.
FORWARD-LOOKING INFORMATION MAY PROVE INACCURATE
This Prospectus contains or incorporates by reference forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. All statements contained
or incorporated by reference herein other than statements of historical fact
are forward-looking statements. When used in this document, the words
"anticipate," "believe," "estimate" and "expect" and similar expressions are
intended to identify forward-looking statements. Such statements reflect the
Company's current views with respect to
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<PAGE> 10
future events and are subject to certain risks, uncertainties and assumptions,
including competition for and availability of funeral home and cemetery
acquisitions, the ability of the Company to successfully implement its revenue
enhancement and cost containment programs at acquired funeral homes and
cemeteries, the Company's ability to retain key management personnel and to
continue to attract and retain skilled funeral home and cemetery management
personnel, state and federal regulations, changes in the death rate or
acceleration of the trend towards cremation, availability and cost of capital
and general industry and economic conditions. Should one or more of these risks
or uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those anticipated, believed, estimated
or expected. The Company does not intend to update these forward-looking
statements.
-9-
<PAGE> 11
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges . . . . . . . . . 4.14x 2.80x 4.73x 6.57x 4.32x
</TABLE>
For the purposes of calculating the ratio of earnings to fixed charges,
earnings consist of income before income taxes, extraordinary item and fixed
charges. Fixed charges includes interest expense and a percentage of rents
which management deems representative of an interest factor.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Debentures or the Common Stock issuable upon conversion thereof by the Selling
Securityholders.
-10-
<PAGE> 12
DESCRIPTION OF DEBENTURES
The Debentures were initially issued pursuant to an indenture dated as
of February 25, 1998 (the "Indenture") between the Company, as issuer, and
Bankers Trust Company, as trustee (the "Trustee"). The terms of the Debentures
include those stated in the Indenture and those provisions required by, or made
a part of the Indenture by reference to, the Trust Indenture Act of 1939, as in
effect on the date of the Indenture (the "Trust Indenture Act"). The Debentures
are subject to all such terms, and prospective investors are referred to the
Indenture for a statement thereof. A copy of the form of Indenture is available
from the Company upon request.
The following summary of the Debentures is qualified in its entirety
by express reference to the Debentures and the Indenture, which are
incorporated by reference as a part of such summary. Capitalized terms not
defined herein have the meanings ascribed to such terms in the Indenture.
References in this section to the "Company" are solely to Equity Corporation
International, a Delaware corporation, and not its subsidiaries.
GENERAL
The Debentures are general unsecured obligations of the Company, are
limited to an aggregate principal amount of $143,750,000 and will mature on
December 31, 2004. The Debentures are contractually subordinate in right of
payment to all existing and future Senior Secured Indebtedness of the Company,
rank pari passu in right of payment with all existing and future senior
indebtedness of the Company that is unsecured and rank senior in right of
payment to all future subordinated indebtedness of the Company. The Debentures
are effectively subordinated to all current and future obligations of
subsidiaries of the Company, including trade obligations. The Indenture does
not restrict the incurrence of Senior Secured Indebtedness or other
indebtedness by the Company or its subsidiaries. All indebtedness incurred
from time to time under the Credit Facility will be Senior Secured
Indebtedness. See "Risk Factors -- Subordination; No Limitation on Senior
Secured Indebtedness" and "Risk Factors -- Holding Company Structure."
The Debentures bear interest from February 25, 1998 at the rate per
annum shown on the cover page of this Prospectus. Interest is payable
semi-annually on June 30 and December 31 of each year, commencing June 30,
1998, to Holders of record at the close of business on the June 15 or December
15 preceding each such interest payment date. Principal of and interest on the
Debentures is payable at the office of the Paying Agent. The Trustee will
initially act as the Paying Agent. Interest may, at the Company's option, be
paid either (i) by check mailed to the address of the person entitled thereto
as it appears in the Debenture register or (ii) by transfer to an account
maintained by such person located in the United States; provided, however, that
payments to The Depository Trust Company, New York, New York ("DTC") will be
made by wire transfer of immediately available funds to the account of DTC or
its nominee. Interest will be computed on the basis of a 360-day year composed
of twelve 30-day months.
Debentures may be presented for conversion at the office of the
Conversion Agent and for exchange or registration of transfer at the office of
the Registrar. The Company has initially appointed the Trustee to act as the
Conversion Agent and Registrar.
The Company does not intend to list the Debentures on any national
securities exchange or to seek the admission thereof to trading in the Nasdaq
system. The Initial Purchasers may make a market in the Debentures and the
underlying Common Stock. However, the Initial Purchasers are not obligated to
make such a market and may discontinue any market- making activities at any
time without notice. In addition, such market-making activities are subject to
limits imposed by the Exchange Act.
Although prior to the registration of the Debentures under the
Registration Statement the Debentures were designated for trading through The
PORTAL Market, the Notes sold hereunder will no longer be eligible for trading
through The PORTAL Market, and no assurance can be given that an active trading
market for the Debentures will develop or, if such market develops, as to the
liquidity or sustainability of such market. If a trading market does not
develop or is not maintained, holders of the Debentures may experience
difficulty in reselling, or an inability to sell,
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<PAGE> 13
the Debentures. If a market for the Debentures develops, any such market may
be discontinued at any time. If a public trading market develops for the
Debentures, future trading prices of the Debentures will depend on many
factors, including, among other things, prevailing interest rates, the
Company's operating results and the market for similar securities. Depending
on prevailing interest rates, the market for similar securities and other
factors, including the financial condition of the Company, the Debentures may
trade at a discount from their principal amount.
FORM AND DENOMINATION
The Debentures have been issued in definitive registered form, without
coupons, in denominations of $1,000 and integral multiples thereof. Debentures
sold to qualified institutional buyers (as defined under Rule 144A of the
Securities Act) ("QIBs") have been registered in book-entry form and are
represented by one or more global Debentures without coupons (each, a "Global
Debenture") deposited with a custodian for and registered in the name of a
nominee of DTC in New York, New York. Beneficial interests in any such Global
Debenture is shown on, and transfers thereof is effected only through, records
maintained by DTC and its direct and indirect participants, and any such
interest may not be exchanged for Debentures in certificated form except in the
limited circumstances described herein. No Debentures were initially sold to
institutional investors that qualify as accredited investors (as defined in
Rule 501(a)(1), (2), (3) or (7) under the Securities Act) ("Institutional
Accredited Investors") or in offshore transactions in reliance on Regulation S.
No service charge will be made for any registration of transfer or
exchange of Debentures, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
Upon the issuance of the Global Debentures, DTC credited, on its
internal system, the respective principal amounts of the individual beneficial
interests represented by such Global Debentures to the accounts of persons who
have accounts with DTC. Ownership of beneficial interests in a Global Debenture
is limited to persons who have accounts with DTC ("Participants") or persons
who hold interests through Participants. Ownership of beneficial interests in
the Global Debentures is shown on, and the transfer of that ownership is
effected through, records maintained by DTC (with respect to interests of
Participants) and the records of Participants (with respect to interests of
persons other than Participants).
So long as DTC, or its nominee, is the registered owner or Holder of a
Global Debenture, DTC or such nominee, as the case may be, is considered the
sole owner or Holder of the Debentures represented by such Global Debenture for
all purposes under the Indenture and the Debentures. No beneficial owner of an
interest in a Global Debenture may transfer that interest except in accordance
with DTC's applicable procedures (in addition to those under the Indenture
referred to herein). If DTC or any successor depository notifies the Company
that it is unwilling or unable to continue as depository for a Global Debenture
or ceases to be a "clearing agency" registered or in good standing under the
Exchange Act or other applicable statute or regulation and a successor
depository is not appointed by the Company within 90 days, or an Event of
Default has occurred and is continuing, owners of beneficial interests in such
Global Debenture will receive physical delivery of Debentures in certificated
form and will be considered to be the owners or Holders of such Debentures
under the Indenture or the Debentures.
Payments of interest on and the redemption price of the Global
Debentures will be made to DTC or its nominee, as the registered owner thereof.
Neither the Company, the Trustee nor any Paying Agent will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the Global
Debentures or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
The Company expects that DTC or its nominee, upon receipt of any
payment in respect of a Global Debenture held by it or its nominee, will credit
Participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of such Global
Debenture as shown on the records of DTC or its nominee. The Company also
expects that payments by Participants to owners of beneficial interests in such
Global Debenture held through such Participants will be governed by standing
instructions and customary practices, as is now the case with
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<PAGE> 14
securities held for the accounts of customers registered in the names of
nominees for such customers. Such payments, however, will be the responsibility
of such Participants.
Transfers between Participants in DTC are effected in accordance with
DTC rules and are settled in same-day funds. The laws of some states, however,
require that certain persons take physical delivery of securities in definitive
form.
DTC will take any action permitted to be taken by a Holder of
Debentures (including the presentation of Debentures for exchange as described
below) only at the direction of one or more Participants to whose account
interests in the Global Debentures are credited and only in respect of such
portion of the aggregate principal amount of the Debentures as to which such
Participant or Participants has or have given such direction. However, if there
is an Event of Default under the Debentures, DTC will exchange the Global
Debentures for Debentures in certificated form, which it will distribute to its
Participants and which will be legended.
In case any such Debenture shall become mutilated, defaced, destroyed,
lost or stolen, the Company will execute and upon the Company's request the
Trustee will authenticate and deliver a new Debenture, of like tenor and equal
principal amount at maturity, registered in the same manner, dated the date of
its authentication in exchange and substitution for such Debenture (upon
surrender and cancellation thereof) or in lieu of and substitution for such
Debenture. In case such Debenture is destroyed, lost or stolen, the applicant
for a substituted Debenture shall furnish to the Company and the Trustee such
security or indemnity as may be required by them to hold each of them harmless,
and, in every case of destruction, loss or theft of such Debenture, the
applicant shall also furnish to the Company satisfactory evidence of the
destruction, loss or theft of such Debenture and of the ownership thereof. Upon
the issuance of any substituted Debenture, the Company may require the payment
by the registered Holder thereof of a sum sufficient to cover fees and expenses
connected therewith.
DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, member of the
Federal Reserve System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its participating organization (collectively, the
"Participants") and to facilitate the clearance and settlement of transactions
in those securities between Participants through electronic book-entry changes
in account of its Participants, thereby eliminating the need for physical
movement of securities certificates. The Participants include securities
brokers and dealers, banks (including the Trustee), trust companies clearing
corporations and certain other organizations. Access to DTC's system is also
available to other entities such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a Participant,
either directly or indirectly of indirectly.
CONVERSION RIGHTS
A Holder may, at any time prior to maturity, convert the principal
amount of a Debenture (or any portion thereof equal to $1,000 or an integral
multiple of $1,000) into shares of Common Stock at the conversion price set
forth on the cover page of this Prospectus, subject to adjustment as described
below (the "Conversion Price"). The right to convert a Debenture called for
redemption will terminate at the close of business on the Business Day
immediately preceding the Redemption Date for such Debenture or such earlier
date as the Holder presents the Debenture for redemption (unless the Company
shall default in making the redemption payment when due, in which case the
conversion right shall terminate at the close of business on the date such
default is cured and such Debenture is redeemed). A Debenture for which a
Holder has delivered a Change in Control Purchase Notice exercising the option
of such Holder to require the Company to purchase such Debenture may be
converted only if such notice is withdrawn by a written notice of withdrawal
delivered by the Holder to the Paying Agent prior to the close of business on
the Business Day prior to the Change in Control Purchase Date in accordance
with the Indenture.
No payment or adjustment will be made for dividends or distributions
with respect to shares of Common Stock issued upon conversion of a Debenture.
Except as otherwise provided in the Indenture, interest accrued shall not be
paid
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<PAGE> 15
on Debentures converted; provided, however, interest accrued through February
24, 2001 shall be paid on any Debentures called for redemption and converted
before June 16, 2001. If any Holder surrenders a Debenture for conversion
between the record date for the payment of an installment of interest and the
related interest payment date, then, notwithstanding such conversion, the
interest payable on such interest payment date will be paid to the Holder on
such record date. However, in such event, unless such Debenture has been called
for redemption, such Debenture, when surrendered for conversion, must be
accompanied by delivery by such Holder of a check or draft payable in an amount
equal to the interest payable on such interest payment date on the portion so
converted. No fractional shares will be issued upon conversion, but a cash
payment will be made for any fractional interest based upon the current market
price of the Common Stock.
The Conversion Price will be subject to adjustment upon the occurrence
of certain events, including (i) the issuance of shares of Common Stock as a
dividend or distribution on the Common Stock, (ii) the subdivision or
combination of the outstanding Common Stock, (iii) the issuance to all or
substantially all holders of Common Stock of rights or warrants to subscribe
for or purchase Common Stock (or securities convertible into Common Stock) at a
price per share less than the then current market price per share, as defined,
(iv) the distribution to all or substantially all holders of Common Stock of
shares of capital stock of the Company (other than Common Stock), evidences of
indebtedness or other non-cash assets (including securities of any company
other than the Company), (v) the distribution to all or substantially all
holders of Common Stock of rights or warrants to subscribe for its securities
(other than those referred to in (iii) above), and (vi) the distribution to all
or substantially all holders of Common Stock of cash in an aggregate amount
that (together with (A) any cash and the fair market value of other
consideration payable in respect of any tender offer by the Company or a
Subsidiary of the Company for Common Stock consummated within the preceding 12
months not triggering a Conversion Price adjustment and (B) all other cash
distributions to all or substantially all holders of Common Stock made within
the preceding 12 months not triggering a Conversion Price adjustment) exceeds
an amount equal to 10% of the Company's market capitalization on the Business
Day immediately preceding the day on which the Company declares such
distribution. In the event of a distribution pro rata to holders of Common
Stock of rights to subscribe for additional shares of the Company's capital
stock (other than those referred to in (iii) above), the Company may, instead
of making any adjustment in the Conversion Price, make proper provisions so
that each Holder who converts a Debenture (or any portion thereof) after the
record date for such distribution and prior to the expiration or redemption of
such rights shall be entitled to receive upon such conversion, in addition to
the shares of Common Stock issuable upon conversion, an appropriate number of
such rights. No adjustment of the Conversion Price will be required to be made
until the cumulative adjustments require an increase or decrease of at least 1%
in the Conversion Price as last adjusted.
Subject to any applicable right of the Holders upon a Change in
Control, if the Company reclassifies or changes its outstanding Common Stock,
or consolidates with or merges into or sells or conveys all or substantially
all of the property and assets of the Company to any person, or is a party to a
merger that reclassifies or changes its outstanding Common Stock, the
Debentures will become convertible into the kind and amount of shares of stock
and other securities and property (including cash) that the Holders would have
owned immediately after the transaction if the Holders had converted the
Debentures immediately before the effective date of the transaction.
The term "all or substantially all" as used in the previous two
paragraphs has not been interpreted under New York law (which is the governing
law of the Indenture) to represent a specific quantitative test. As a
consequence, in the event the Holders of the Debentures were to assert that an
adjustment to the conversion privilege of the Debentures was required under the
Indenture and the Company were to contest such assertion, there could be no
assurance as to how a court would interpret the phrase under New York law,
which may have the effect of preventing the Trustee or the Holders of the
Debentures from successfully asserting that the Conversion Price is subject to
adjustment or that the Debentures are convertible into other shares of stock
and other securities and property that the Holders would have owned immediately
after the transaction if the Holders had converted the Debentures immediately
before the effective date of the transaction.
Certain adjustments to the Conversion Price to reflect the Company's
issuance of certain rights, warrants, evidences of indebtedness, securities or
other property (including cash) to holders of the Common Stock may result in
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<PAGE> 16
constructive distributions taxable as dividends to Holders of the Debentures.
Similarly, if instead of adjusting the Conversion Price upon a pro rata
distribution of rights to subscribe for additional shares of the Company's
capital stock, as described above, the Company elects at such time to alter the
consideration receivable by the Holders of the Debentures upon conversion to
include the rights such Holders would have been entitled to if conversion had
occurred prior to the record date for such distribution of rights, the
alteration may result in constructive distributions taxable as dividends to
Holders of the Debentures.
OPTIONAL REDEMPTION BY THE COMPANY
The Debentures may not be redeemed at the option of the Company on or
prior to February 26, 2001. Thereafter, the Debentures may be redeemed at the
option of the Company, in whole or in part, upon not less than 30 nor more than
60 days' notice by mail.
The redemption prices (expressed as a percentage of principal amount)
are as follows for the 12-month period beginning on February 26 of the
following years:
<TABLE>
<CAPTION>
Redemption
Year Price
---- ----------
<S> <C>
2001 . . . . . . . . . . . . . . . 102.53%
2002 . . . . . . . . . . . . . . . 101.88
2003 . . . . . . . . . . . . . . . 101.22
2004 . . . . . . . . . . . . . . . 100.56
</TABLE>
in each case together with accrued interest up to but not including the
Redemption Date.
If less than all of the outstanding Debentures are to be redeemed, the
Trustee shall select the Debentures to be redeemed in principal amounts of
$1,000 or multiples thereof by lot, pro rata or by another method the Trustee
considers fair and appropriate. If a portion of a holder's Debentures is
selected for partial redemption and such holder converts a portion of such
Debentures, such converted portion shall be deemed to be of the portion
selected for redemption.
PURCHASE OF DEBENTURES AT THE OPTION OF HOLDERS UPON A CHANGE IN CONTROL
In the event of a Change in Control (as defined below), each Holder will
have the option, subject to the terms and conditions of the Indenture, to
require the Company to purchase all or any part (provided that the principal
amount must be $1,000 or an integral multiple thereof) of the Holder's
Debentures as of the date that is 50 Business Days after the occurrence of such
Change in Control (the "Change in Control Purchase Date") for a purchase price
equal to 100% of the principal amount thereof, plus accrued interest up to but
not including the Change in Control Purchase Date.
Within 20 Business Days after the occurrence of a Change in Control, the
Company shall mail to the Trustee and to each Holder and cause to be published
a written notice of the Change in Control, setting forth, among other things,
the terms and conditions of, and the procedures required for exercise of, the
Holder's right to require the purchase of such Holder's Debentures.
To exercise the purchase right upon a Change in Control, a Holder must
deliver written notice of such exercise to the Paying Agent at any time prior
to the close of business on the Business Day prior to the Change in Control
Purchase Date, specifying the Debentures with respect to which the purchase
right is being exercised. Such notice of exercise may be withdrawn by the
Holder by a written notice of withdrawal delivered to the Paying Agent at any
time prior to the close of business on the Business Day prior to the Change in
Control Purchase Date.
A Change in Control shall be deemed to have occurred if any of the
following occurs after the initial issuance of the Debentures:
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<PAGE> 17
(i) the acquisition by any Person (including any syndicate or
group deemed to be a "person" under Section 13(d)(3) or 14(d)(2) of the
Exchange Act or any successor provision of beneficial ownership, directly
or indirectly, through a purchase, merger, or other acquisition
transaction or series of transactions, of shares of capital stock of the
Company entitling such Person to exercise more than 50% of the total
voting power of all shares of capital stock of the Company entitling the
holders thereof to vote generally in elections of directors; or
(ii) 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, lease or exchange of all or substantially all of the
property and assets of the Company (other than a merger which (x) does not
result in any reclassification, conversion, exchange or cancellation of
outstanding shares of capital stock of the Company or (y) is effected
primarily to change the jurisdiction of incorporation of the Company and
results in reclassification, conversion, or exchange of outstanding shares
of Common Stock solely into shares of common stock of the surviving
entity); or
(iii) at any time during any consecutive two-year period,
individuals who at the beginning of such period constituted the Board of
Directors of the Company (together with any new directors whose election by
such Board of Directors or whose nomination for election by the
stockholders of the Company was approved by a vote of at least two-thirds
of the directors then still in office who were either 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 Board of Directors of the Company then in office.
A "beneficial owner" shall be determined in accordance with Rule 13d-3
promulgated by the Securities and Exchange Commission (the "Commission") under
the Exchange Act, as in effect on the date of execution of the Indenture,
except that the Indenture requires that the number of shares of capital stock
of the Company entitling the holders thereof to vote generally in the election
of directors shall be deemed to include, in addition to all outstanding shares
of capital stock of the Company entitling the holders thereof to vote generally
in the election of directors and Unissued Shares deemed to be held by the
Person with respect to which the Change in Control determination is being made,
all Unissued Shares deemed to be held by all other persons. As defined in the
Indenture, "Unissued Shares" means shares of capital stock of the Company not
outstanding that are subject to options, warrants, rights to purchase, or
conversion privileges exercisable within 60 days of the date of determination
of a Change in Control and that, upon issuance, will entitle the holders
thereof to vote generally in the election of directors.
The term "all or substantially all" as used in clause (ii) of the
definition of Change in Control has not been interpreted under New York law
(which is the governing law of the Indenture) to represent a specific
quantitative test. As a consequence, in the event the Holders of the
Debentures elected to exercise their rights under the Indenture and the Company
elected to contest such election, there could be no assurance as to how a court
would interpret the phrase under New York law, which may have the effect of
preventing the Trustee or the Holders of the Debentures from successfully
asserting that a Change in Control has occurred.
The Company will comply with the provisions of Rule 13e-4 and Rule 14e-1
under the Exchange Act, will file Schedule 13E-4 or any successor or similar
schedule required thereunder, and will otherwise comply with all federal and
state securities laws in connection with any offer by the Company to purchase
Debentures at the option of the Holders upon a Change in Control.
The Change in Control purchase feature of the Debentures may in certain
circumstances make more difficult or discourage a takeover of the Company and
the removal of incumbent management. The Company is not aware of any specific
effort to accumulate shares of Common Stock or to obtain control of the Company
by means of a merger, tender offer, solicitation, or otherwise, nor is the
Change of Control purchase feature part of a plan by management to adopt a
series of anti-takeover provisions. Instead, the Change in Control purchase
feature is a result of negotiations between the Company and the Initial
Purchasers.
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<PAGE> 18
Subject to the limitation on mergers and consolidations discussed below,
the Company could, in the future, enter into certain transactions, including
certain recapitalizations of the Company, that would not constitute a Change in
Control under the Indenture, but that would increase the amount of Senior
Secured Indebtedness (or other indebtedness) outstanding at such time or
otherwise adversely affect the Holders of the Debentures. There will be no
restrictions in the Indenture on the creation of additional Senior Secured
Indebtedness (or other indebtedness) by the Company or its subsidiaries, and,
under certain circumstances, the incurrence of significant amounts of
additional indebtedness could have an adverse effect on the Company's ability
to service its indebtedness, including the Debentures.
If a Change in Control were to occur, there can be no assurance that the
Company would have sufficient funds to pay the Change in Control Purchase Price
for all Debentures tendered by the Holders thereof. In addition, the Credit
Facility, which constitutes Senior Secured Indebtedness, provides that a change
in control (as described therein) will constitute an event of default
thereunder, the occurrence of which would cause the repurchase of the
Debentures, absent a waiver, to be blocked by the subordination provisions of
the Debentures. Even if such event of default did not occur or was waived, the
exercise by any Holder of Debentures of the right to require the Company to
repurchase Debentures as a result of the occurrence of a Change in Control
could create an event of default under Senior Secured Indebtedness or other
senior indebtedness of the Company ranking pari passu in right of payment with
the Debentures, as a result of which any repurchase could, absent a waiver,
also be blocked by the subordination provisions of the Debentures. See
"--Subordination of Debentures." Further, the terms of future Senior Secured
Indebtedness or other future senior indebtedness of the Company ranking pari
passu in right of payment with the Debentures could require that such
indebtedness be repaid upon the occurrence of a Change in Control. Failure by
the Company to repurchase the Debentures when required will result in an Event
of Default (as defined in the Indenture) whether or not such repurchase is
permitted by the subordination provisions thereof.
Other than granting Holders the option to require the Company to purchase
all or part of their Debentures upon the occurrence of a Change in Control as
described in "--Purchase of Debentures at the Option of Holders Upon a Change
in Control,"the Indenture will not contain any covenants or other provisions
designed to afford Holders protection in the event of takeovers,
recapitalizations, highly leveraged transactions or similar restructurings
involving the Company.
SUBORDINATION OF DEBENTURES
To the extent set forth in the Indenture, the Debentures are subordinated
and subject in right of payment to the prior payment in full of all Senior
Secured Indebtedness of the Company, whether outstanding on the date of the
Indenture or thereafter created, assumed or guaranteed. Upon any payment or
distribution of assets of the Company in any dissolution, winding-up,
liquidation or reorganization of the Company (whether in an insolvency or
bankruptcy proceeding or otherwise), all Senior Secured Indebtedness must be
paid in full (including the principal thereof, interest thereon and fees and
expenses relating thereto) before any payment is made in respect of the
Debentures. In the event of a default in payment (whether at maturity or at a
date fixed for prepayment or by acceleration or otherwise) of principal or
interest on or other discount due in respect of Senior Secured Indebtedness, no
payment may be made by the Company in respect of the Debentures until payment
in full of the Senior Secured Indebtedness then due or cure, waiver or
cessation of the default. Upon a default with respect to any Senior Secured
Indebtedness (other than a default in the payment of principal of or interest
on Senior Secured Indebtedness) permitting a holder thereof to accelerate its
maturity, and upon written notice of such default to the Trustee and the
Company by any holder of such Senior Secured Indebtedness or its
representative, then, unless and until such default has been cured, waived in
writing or has ceased to exist, no payment may be made by the Company in
respect of the Debentures; provided that nothing in the above-described
provision will prevent the making of any payment in respect of the Debentures
for a period of more than 180 days after the date such written notice of
default is given unless the maturity of the Senior Secured Indebtedness has
been accelerated, in which case no payment on the Debentures may be made until
such acceleration has been waived or such Senior Secured Indebtedness has been
paid in full. No such subordination will prevent the occurrence of any Event of
Default with respect to the Debentures,
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but, as a result of these subordination provisions, in the event of insolvency,
Holders may recover less ratably than other creditors of the Company.
In the event that, notwithstanding the foregoing, the Trustee or any holder
of the Debentures receives any payment or distribution of assets of the Company
of any kind in contravention of any of the subordination provisions of the
Indenture, whether in cash, property or securities, in respect of the
Debentures before all Senior Secured Indebtedness is paid in full, then such
payment or distribution will be held by the recipient in trust for the benefit
of holders of Senior Secured Indebtedness or their representatives to the
extent necessary to make payment in full of all Senior Secured Indebtedness
remaining unpaid, after giving effect to any concurrent payment or distribution
to or for the holders of Senior Secured Indebtedness.
"Senior Secured Indebtedness" means the following, whether outstanding upon
issuance of the Debentures or thereafter incurred or created: (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 of all indebtedness or obligations of the Company to any Person,
including but not limited to banks and other lending institutions, whether
under the Credit Facility or otherwise, for money borrowed or property acquired
(other than that evidenced by the Debentures) or in respect of credit or other
banking facilities evidenced by a note, bond, debenture, loan agreement, a
lease intended as security or similar instrument or agreement (including
purchase money obligations and noncontingent reimbursement obligations in
respect of the amounts paid under letters of credit); (b) commitment or standby
fees due and payable to lending institutions with respect to credit facilities
available to the Company; (c) all noncontingent obligations of the Company (i)
for the reimbursement of any obligor on any letter of credit, banker's
acceptance, or similar credit transaction, (ii) under interest rate swaps,
caps, collars, options and similar arrangements and (iii) under any foreign
exchange contract, currency swap agreement, futures contract, currency option
contract or other foreign currency hedge; (d) all obligations of the Company
for the payment of money relating to a Capitalized Lease Obligation; (e) any
liabilities of others described in the preceding clauses that the Company has
guaranteed or which are otherwise its legal liability; and (f) renewals,
extensions, refundings, refinancings, restructurings, amendments and
modifications of any such indebtedness or guarantee; provided that, such
indebtedness and other obligations are not treated as "unsecured indebtedness"
for purposes of Internal Revenue Code Section 279. Notwithstanding the proviso
contained in the preceding sentence, all amounts owing by the Company under the
Credit Facility and all renewals, extensions, refundings, refinancings,
restructurings, amendments and modifications of any amounts owing under, or in
connection with, the Credit Facility shall constitute "Senior Secured
Indebtedness." Notwithstanding anything to the contrary in the Indenture or the
Debentures, "Senior Secured Indebtedness" does not include (i) any indebtedness
of the Company to any subsidiary of the Company or (ii) any indebtedness or
other obligation of the Company that by its terms or the terms of the
instrument creating or evidencing it is stated to be junior in right of payment
to, or pari passu in right of payment with, the Debentures.
By reason of the subordination provisions described above, in the event of
the Company's bankruptcy, dissolution or reorganization, holders of Senior
Secured Indebtedness may receive more ratably, and holders of the Debentures may
receive less ratably, than other creditors of the Company. Such subordination
will not prevent the occurrence of any Event of Default under the Indenture.
The Indenture does not limit the amount of future or additional
indebtedness, including Senior Secured Indebtedness, that the Company can
create, incur, assume or guarantee, nor will the Indenture limit the amount of
indebtedness that any subsidiary can incur. All indebtedness of the Company
incurred from time to time under the Company's Credit Facility will constitute
Senior Secured Indebtedness. See "Capitalization."
EVENTS OF DEFAULT; NOTICE AND WAIVER
If an Event of Default (other than an Event of Default resulting from
bankruptcy, insolvency or reorganization) occurs and is continuing, the Trustee
may, by notice to the Company, declare all unpaid principal of and accrued
interest to the date of acceleration on the Debentures then outstanding to be
due and payable immediately. Also, in
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such event, the Holders of at least 25% in principal amount of the Debentures
then outstanding may notify the Company and the Trustee with respect thereto,
and upon the request of such Holders, the Trustee shall declare all unpaid
principal of and accrued interest to the date of acceleration on the Debentures
then outstanding to be due and payable immediately. If an Event of Default
resulting from certain events of bankruptcy, insolvency or reorganization shall
occur, all unpaid principal of and accrued interest on the Debentures then
outstanding shall become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Holders.
The Indenture provides that the Holders of a majority in principal amount of
the Debentures may on behalf of all Holders waive any existing default or Event
of Default and its consequences except a default in the payment of principal of
or accrued interest on the Debentures or any default in respect of any
provision of the Indenture that cannot be modified or amended without the
consent of the Holder of each Debenture affected.
The following are Events of Default under the Indenture: (i) failure of
the Company to pay interest for 30 days after the same is due or failure to pay
principal when due; (ii) failure of the Company to comply with any of its other
agreements contained in the Debentures or the Indenture for 60 days after
receipt of notice of such failure; (iii) default under any bond, debenture, note
or other evidence of indebtedness for money borrowed of the Company having an
aggregate outstanding principal amount in excess of $25 million, which default
shall have resulted in such indebtedness being accelerated, without such
indebtedness being discharged, or such acceleration having been rescinded or
annulled, within ten days from the date of such acceleration; and (iv) certain
events of bankruptcy or insolvency, including without limitation appointment of
a Custodian of the Company's property.
The Trustee shall, within 90 days after the occurrence of any default
known to it, give to the Holders notice of such default; provided that, except
in the case of a default in the payment of principal of or interest on any of
the Debentures, the Trustee may withhold such notice if it in good faith
determines that the withholding of such notice is in the interests of the
Holders.
No Holder may pursue any remedy under the Indenture or the Debentures
against the Company (except actions for payment of overdue principal or interest
or for the conversion of the Debentures), unless (i) the Holder gives to the
Trustee written notice of a continuing Event of Default, (ii) the Holders of at
least 25% in principal amount of the outstanding Debentures make a written
request to the Trustee to pursue the remedy, (iii) such Holder or Holders offer
satisfactory indemnity to the Trustee against any loss, liability or expense,
(iv) the Trustee does not comply with the request within 60 days after receipt
of the request and the offer of indemnity and (v) the Trustee shall not have
received during such 60-day period a contrary direction from the Holders of at
least a majority in principal amount of the outstanding Debentures.
The Company must deliver an Officer's Certificate to the Trustee within 90
days after the end of each fiscal year of the Company as to the signer's
knowledge of the Company's compliance with all conditions and covenants on its
part contained in the 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 Officer's Certificate shall describe the default or Event of
Default and the efforts to remedy the same.
AMENDMENT
The Company and the Trustee may amend or supplement the Indenture or the
Debentures without notice to any Holder but with the written consent of the
Holders of at least a majority in principal amount of the outstanding
Debentures. The Holders of a majority in principal amount of the Debentures
then outstanding may waive compliance in a particular instance by the Company
with any provision of the Indenture or the Debentures without notice to any
Holder. Without the consent of the Holder of each Debenture affected thereby,
however, an amendment, supplement or waiver may not (i) reduce the principal
amount of Debentures whose Holders must consent to an amendment, supplement or
waiver, (ii) reduce the rate of or change the time for payment of interest on
any Debenture, (iii) reduce the principal of or premium on or change the fixed
maturity of any Debenture or alter
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<PAGE> 21
the redemption provisions with respect thereto in a manner adverse to the
Holder thereof, (iv) alter the conversion provisions with respect to any
Debenture in a manner adverse to the Holder thereof, (v) waive a default in the
payment of the principal of or premium or interest on any Debenture, (vi)
reduce the percentage of Debentures necessary to waive defaults or Events of
Default or to amend or supplement the Indenture or the Debentures, (vii) modify
the subordination provisions of the Indenture in a manner adverse to the
Holders or (viii) make any Debenture payable in money other than that stated in
the Debenture.
The Company and the Trustee may amend or supplement the Indenture or the
Debentures without notice to or consent of any Holder in certain events, such
as to comply with the certain conversion, adjustment, liquidation and merger
provisions described in the Indenture, to provide for uncertificated Debentures
in addition to or in place of certificated Debentures, to cure any ambiguity,
defect or inconsistency, or to make any other change that does not adversely
affect the rights of the Holders, to comply with the provisions of the Trust
Indenture Act or to appoint a successor Trustee.
REGISTRATION RIGHTS
The Company has entered into a Registration Rights Agreement with the
Initial Purchasers, pursuant to which the Company has agreed to file a
registration statement (of which this Prospectus is a part) under the
Securities Act within 60 days after the Closing Date to register resales of the
Debentures and the shares of Common Stock into which the Debentures are
convertible. The Company will use its reasonable efforts to have such
registration statement declared effective as soon as practicable after it is
filed and to keep it effective until the earliest of (i) two years after the
latest date of original issuance of the Debentures, (ii) the date when all
securities registrable thereunder (the "Registrable Securities") shall have
been disposed of and (iii) the date on which the Debentures or the underlying
Common Stock may be sold by non-affiliates of the Company pursuant to Rule
144(k) under the Securities Act (the "Effectiveness Period"). The Company will
provide to each holder of Registrable Securities copies of the prospectus which
is a part of the registration statement, notify each holder when the
registration statement has become effective and take certain other actions as
are required to permit unrestricted resales of the Registrable Securities. A
holder of Registrable Securities that sells such Registrable Securities
pursuant to the registration statement will be required to be named as a
selling security holder in the related prospectus and to deliver a prospectus
to purchasers, will be subject to certain of the civil liability provisions
under the Securities Act in connection with such sales and will be bound by the
provisions of the Registration Rights Agreement, including certain
indemnification obligations. At least five business days prior to any intended
resale of Registrable Securities, the holder thereof must notify the Company of
such intention and provide the Company with such information with respect to
such holder and the intended distribution as may be reasonably required to
amend the registration statement or supplement the prospectus. The Company will
be permitted to suspend the use of the prospectus that is a part of such shelf
registration statement for a period not to exceed an aggregate of 60 days in
any 12-month period, under certain circumstances relating to pending corporate
developments, public filings with the Commission and similar events. If the
shelf registration statement is not declared effective within 120 days after
the Closing Date, or if the prospectus is unavailable for an aggregate period
in excess of 60 days in any 12-month period (in each case, a "Registration
Event"), the Company has agreed to pay liquidated damages to each Holder of the
Debentures and each holder of the Common Stock issued upon conversion of the
Debentures. The liquidated damages will accrue upon the occurrence of any
Registration Event and until such time as there are no Registration Events
which have occurred and are continuing at a rate equal to one-half of one
percent (0.5%) per annum of the principal amount of the Debentures and will be
payable on the interest payment dates for the Debentures.
This summary of certain provisions of the Registration Rights Agreement is
subject to, and qualified in its entirety by reference to, all the provisions
of the Registration Rights Agreement, a copy of the form of which is available
from the Company upon request.
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DEFEASANCE
The Indenture provides that (A) the Company will be discharged from all
obligations in respect of the outstanding Debentures (except for certain
obligations to register the transfer or exchange of Debentures, to replace
stolen, lost or mutilated Debentures, to provide for conversion of Debentures,
to maintain paying agents and hold money for repayment in trust, and to
repurchase Debentures in the event of a Change in Control) or (B) the Company
may omit to comply with certain restrictive covenants, but not including the
obligation to provide for conversion of Debentures or repurchase Debentures in
the event of a Change in Control, and that such omission will not be deemed to
be an Event of Default, in either case (A) or (B) upon irrevocable deposit with
the Trustee, in trust, of money and/or U.S. Government Obligations that will
provide money in an amount sufficient in the written opinion of a nationally
recognized firm of independent public accountants to pay the principal of,
premium, if any, and each installment of interest on the outstanding
Debentures. With respect to clause (B), the obligations under the Indenture
other than with respect to such covenants and the Events of Default other than
the Event of Default relating to such covenants above will remain in full force
and effect. Such trust may only be established if, among other things (i) with
respect to clause (A), the Company has delivered to the Trustee an Opinion of
Counsel to the effect that the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or there has been a change
in law, which in the opinion of counsel to the Company provides that holders of
the Debentures will not recognize gain or loss for federal income tax purposes
as a result of such deposit, defeasance and discharge and will be subject to
federal income tax on the same amount, in the same manner and at the same times
as would have been the case if such deposit, defeasance and discharge had not
occurred; or, with respect to clause (B), the Company has delivered to the
Trustee an Opinion of Counsel to the effect that the holders of the Debentures
will not recognize gain or loss for federal income tax purposes as a result of
such deposit and defeasance and will be subject to federal income tax on the
same amount, in the same manner and at the same times as would have been the
case if such deposit and defeasance has not occurred; (ii) no Event of Default
(or event that with the passing of time or the giving of notice, or both, would
constitute an Event of Default) shall have occurred or be continuing; (iii) the
Company has delivered to the Trustee an Opinion of Counsel to the effect that
such deposit shall not cause the Trustee or the trust so created to be subject
to the Investment Company Act of 1940, as amended; and (iv) certain other
customary conditions precedent are satisfied.
MERGERS AND CONSOLIDATIONS
Subject to the right of the Holders to require the Company to purchase the
Debentures in the event of a Change in Control, the Company may consolidate or
merge with or into any other corporation, and the Company may transfer all or
substantially all its property and assets to any other corporation, provided
(i) either the Company is the resulting or surviving corporation, or the
successor corporation is a domestic corporation and the successor expressly
assumes, by supplemental indenture executed and delivered to the Trustee,
payment of the principal of and interest on the Debentures and performance and
observance of every covenant of the Indenture, and (ii) immediately before and
immediately after giving effect to such transaction, no default or Event of
Default shall have occurred and be continuing. Thereafter, all obligations of
the Company under the Indenture and the Debentures will terminate.
GOVERNING LAW
The Indenture, the Debentures and the Registration Rights Agreement are
governed by, and will be construed and enforced in accordance with, the laws of
the State of New York.
CONCERNING THE TRUSTEE
Bankers Trust Company is the Trustee under the Indenture.
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any
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<PAGE> 23
such claim as security or otherwise. The Trustee is permitted to engage in
other transactions; provided, however, if it acquires any conflicting interest
and there exists a default with respect to the Debentures, it must eliminate
such conflict or resign.
The Holders of a majority in principal amount of all outstanding Debentures
have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy or power available to the Trustee,
provided that such direction does not conflict with any law or the Indenture,
is not unduly prejudicial to the rights of another Holder or the Trustee and
does not involve the Trustee in personal liability.
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<PAGE> 24
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of certain United States federal
income tax considerations to holders of the Debentures. This discussion is
based upon the Internal Revenue Code of 1986, as amended (the "Code"), Treasury
Regulations, Internal Revenue Service ("IRS") rulings, and judicial decisions
in effect as of the date of this Prospectus, all of which are subject to change
(possibly with retroactive effect) or different interpretations.
This discussion does not deal with all aspects of United States federal
income taxation that may be important to holders of the Debentures or shares of
Common Stock and does not deal with tax consequences arising under the laws of
any foreign, state or local jurisdiction. This discussion is for general
information only, and does not purport to address all tax consequences that may
be important to particular purchasers in light of their personal circumstances,
or to certain types of purchasers (such as certain financial institutions,
insurance companies, tax-exempt entities, dealers in securities or persons who
hold the Debentures or Common Stock in connection with a straddle) that may be
subject to special rules. This discussion assumes that each holder holds the
Debentures and the shares of Common Stock received upon conversion thereof as
capital assets, and that the Debentures are properly characterized as debt
instruments for federal income tax purposes.
For the purpose of this discussion, a "Non-U.S. Holder" refers to any
holder who is not a United States person. The term "United States person" means
a citizen or resident of the United States, a corporation or partnership
created or organized in the United States or any state thereof, an estate the
income of which is includible in income for United States federal income tax
purposes regardless of its source, or a trust subject to primary supervision by
a court in the United States and control by one or more United States
fiduciaries.
PROSPECTIVE PURCHASERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS
REGARDING THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THEIR
OWNERSHIP AND DISPOSITION OF THE DEBENTURES, INCLUDING CONVERSION OF THE
DEBENTURES, AND THE EFFECT THAT THEIR PARTICULAR CIRCUMSTANCES MAY HAVE ON SUCH
TAX CONSEQUENCES.
OWNERSHIP OF DEBENTURES
Interest on Debentures. Interest on Debentures will be taxable to a holder
as ordinary interest income in accordance with the holder's method of tax
accounting at the time that such interest is accrued or received. The
Debentures are not being issued with original issue discount ("OID") within the
meaning of the Code.
Adjustments to Conversion Price. Adjustments to the conversion price as
provided in the Indenture in most cases will not constitute a taxable event for
a holder. However, certain corporate transactions, such as distributions of
assets to holders of Common Stock, may cause a deemed, taxable distribution to
the holders of the Debentures when the conversion price is adjusted to reflect
such a transaction.
Sale or Exchange of Debentures or Shares of Common Stock. In general, a
holder of Debentures will recognize gain or loss upon the sale, redemption,
retirement or other disposition of the Debentures measured by the difference
between the amount realized (except to the extent attributable to the payment
of accrued interest) and the holder's adjusted tax basis in the Debentures. A
holder's tax basis in Debentures generally will equal the cost of the
Debentures to the holder, increased by the amount of any market discount
previously taken into income by the holder or decreased by any bond premium
amortized by the holder with respect to the Debentures. (For the basis and
holding period of shares of Common Stock, see "Conversion of Debentures.") In
general, each holder of Common Stock into which the Debentures have been
converted will recognize gain or loss upon the sale, exchange or other
disposition of the Common Stock under rules similar to those applicable to the
Debentures. Subject to the market discount rules discussed below, the gain or
loss on the disposition of the Debentures or shares of Common Stock generally
will be capital gain or loss.
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Conversions of Debentures. A holder of Debentures will not recognize gain
or loss on the conversion of the Debentures into shares of Common Stock, except
upon the receipt of cash in lieu of a fractional share. The holder's tax basis
in the shares of Common Stock received upon conversion of the Debentures will
equal the holder's aggregate basis in the Debentures exchanged therefor (less
any portion thereof allocable to a fractional share). The holding period of the
shares of Common Stock received by the holder upon conversion of Debentures
will include the period during which the holder held the Debentures prior to
the conversion. Cash received in lieu of a fractional share of Common Stock
should be treated as a payment in exchange for such fractional share. Gain or
loss recognized on the receipt of cash paid in lieu of a fractional share
generally will equal the difference between the amount of cash received and the
amount of tax basis allocable to the fractional share.
Market Discount. The resale of Debentures may be affected by the "market
discount" provisions of the Code. Market discount on a Debenture will generally
equal the amount, if any, by which the principal amount of the Debenture
exceeds the holder's acquisition price. Subject to a de minimis exception,
these provisions generally require a holder of a Debenture acquired at a market
discount to treat as ordinary income any gain recognized on the disposition of
such Debenture to the extent of the "accrued market discount" at the time of
disposition. If a Debenture with accrued market discount is converted into
Common Stock pursuant to the conversion feature, the amount of such accrued
market discount generally will be taxable as ordinary income upon disposition
of the Common Stock. Market discount on a Debenture will be treated as accruing
on a straight-line basis over the term of such Debenture or, at the election of
the holder, under a constant-yield method. A holder of a Debenture acquired at
a market discount may be required to defer the deduction of a portion of the
interest on any indebtedness incurred or maintained to purchase or carry the
Debenture until the Debenture is disposed of in a taxable transaction, unless
the holder elects to include market discount in income as it accrues.
Amortizable Premium. A purchaser of a Debenture at a premium over its
stated principal amount, plus accrued interest, generally may elect to amortize
such premium ("Section 171 premium") from the purchase date to the Debenture's
maturity date under a constant-yield method that reflects semiannual
compounding based on the Debenture's payment period. Amortizable premium,
however, will not include any premium attributable to a Debenture's conversion
feature. The premium attributable to the conversion feature is the excess, if
any, of the Debenture's purchase price over what the Debenture's fair market
value would be if there were no conversion feature. Amortized Section 171
premium is treated as an offset to interest income on a Debenture and not as a
separate deduction.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS APPLICABLE TO NON-U.S. HOLDERS
Interest on Debentures. Generally, interest paid on the Debentures to a
Non-U.S. Holder will not be subject to United States federal income tax if:
such interest is not effectively connected with the conduct of a trade or
business within the United States by such Non-U.S. Holder; the Non-U.S. Holder
does not actually or constructively own 10% or more of the total voting power
of all classes of stock of the Company entitled to vote and is not a
"controlled foreign corporation" with respect to which the Company is a
"related person" within the meaning of the Code; and the beneficial owner,
under penalty of perjury, certifies to the payor that the owner is not a United
States person and provides the owner's name and address. If certain
requirements are satisfied, the certification described above may be provided
by a securities clearing organization, a bank, or other financial institution
that holds customers' securities in the ordinary course of its trade or
business. For this purpose, the holder of Debentures would be deemed to own
constructively the Common Stock into which it could be converted. A holder that
is not exempt from tax under these rules generally will be subject to United
States federal income tax withholding at a rate of 30% unless (i) the interest
is effectively connected with the conduct of a United States trade or business,
in which case the interest will be subject to the United States federal income
tax on net income that applies to the United States persons generally, or (ii)
an applicable income tax treaty provides for a lower rate of, or exemption
from, withholding tax.
Sale or Exchange of Debentures or Shares of Common Stock. A Non-U.S. Holder
generally will not be subject to United States federal income tax on gain
recognized upon the sale or other disposition of Debentures or shares of Common
Stock unless the gain is effectively connected with the conduct of a trade or
business within the United
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<PAGE> 26
States by the Non-U.S. Holder or, in the case of a Non-U.S. Holder who is a
nonresident alien individual and holds the Common Stock as a capital asset,
such holder is present in the United States for 183 or more days in the taxable
year. However, if the Company were to become a "United States real property
holding corporation,"a Non-U.S. Holder may be subject to federal income tax
with respect to gain realized on the disposition of Debentures or shares of
Common Stock. In that case, any withholding tax withheld pursuant to the rules
applicable to dispositions of a "United States real property interest" will be
creditable against such Non-U.S. Holder's United States federal income tax
liability and may entitle such Non-U.S. Holder to a refund upon furnishing
required information to the IRS.
Conversion of Debentures. A Non-U.S. Holder generally will not be subject
to United States federal income tax on the conversion of a Debenture into
shares of Common Stock. To the extent a Non-U.S. Holder receives cash in lieu
of a fractional share on conversion, such cash may give rise to gain that would
be subject to the rules described above with respect to the sale or exchange of
a Debenture or Common Stock.
Dividends on Shares of Common Stock. Generally, any distribution on shares
of Common Stock to a Non-U.S. Holder will be subject to United States federal
income tax withholding at a rate of 30% unless (i) the dividend is effectively
connected with the conduct of a trade or business within the United States by
the Non-U.S. Holder, in which case the dividend will be subject to the United
States federal income tax on net income that applies to United States persons
generally (and, with respect to corporate holders under certain circumstances,
the branch profits tax), or (ii) an applicable income tax treaty provides for a
lower rate of, or exemption from, withholding tax. A Non-U.S. Holder may be
required to satisfy certain certification requirements in order to claim a
reduction of or exemption from withholding under the foregoing rules.
INFORMATION REPORTING AND BACKUP WITHHOLDING
U.S. Holders. Information reporting and backup withholding may apply to
payments of principal, interest or dividends on or the proceeds of the sale or
other disposition of the Debentures or shares of Common Stock with respect to
certain noncorporate U.S. Holders. Such U.S. Holders generally will be subject
to backup withholding at a rate of 31% unless, among other conditions, the U.S.
Holder supplies a taxpayer identification number, and certain other
information, certified under penalties of perjury, to the payor or otherwise
establishes an exemption from backup withholding. Any amount withheld under
backup withholding is allowable as a credit against the U.S. Holder's federal
income tax.
Non-U.S. Holders. Generally, information reporting and backup withholding
of United States federal income tax at a rate of 31% may apply to payments of
principal, interest and dividends to Non-U.S. Holders if the payee fails to
certify that the holder is a Non-U.S. person. The 31% backup withholding tax
will not apply to interest or dividends subject to the 30% withholding tax
discussed above.
The payment of the proceeds of the disposition of Debentures or shares of
Common Stock to or through the United States office of a United States or
foreign broker will be subject to information reporting and backup withholding
unless the owner provides a required certification or otherwise establishes an
exemption. The proceeds of the disposition by a Non-U.S. Holder of Debentures
or Common Stock to or through a foreign office of a broker generally will not
be subject to backup withholding. However, if the broker is a U.S. person, a
controlled foreign corporation for United States tax purposes, or a foreign
person 50% or more of whose gross income from all sources for certain periods
is from activities that are effectively connected with a United States trade or
business, information reporting generally will apply unless the broker has
documentary evidence in its files of the Non-U.S. Holder's foreign status and
has no actual knowledge to the contrary.
NEW WITHHOLDING REGULATIONS
On October 6, 1997 the Treasury Department issued new regulations (the "New
Regulations") which make certain modifications to the withholding and
information reporting rules described above. The New Regulations attempt to
unify certification requirements and modify reliance standards. The New
Regulations will generally be
-25-
<PAGE> 27
effective for payments made after December 31, 1998, subject to certain
transition rules. Prospective investors are urged to consult their own tax
advisors regarding the New Regulations.
-26-
<PAGE> 28
DESCRIPTION OF EXISTING SECURITIES AND CREDIT FACILITY
AUTHORIZED AND OUTSTANDING CAPITAL STOCK
The authorized capital stock of the Company consists of 50,000,000 shares
of Common Stock, par value $.01 per share, and 10,000,000 shares of preferred
stock, par value $.01 per share ("Preferred Stock"), of which 500,000 shares
are designated the Series One Junior Participating Preferred Stock (the "Series
One Preferred Stock"). As of December 31, 1997, there were 21,119,362 shares of
Common Stock issued and outstanding.
The following summary is qualified in its entirety by reference to the
Company's Charter, Bylaws and the Stockholder Rights Agreement (the "Rights
Agreement"), and each of the amendments thereto, between the Company and
American Stock Transfer & Trust Company, as Rights Agent, copies of which are
available from the Company upon request.
COMMON STOCK
Holders of Common Stock are entitled to one vote per share in the election
of directors and on all other matters on which stockholders are entitled or
permitted to vote. Such holders are not entitled to vote cumulatively for the
election of directors. Holders of Common Stock have no redemption, conversion,
preemptive or other subscription rights. In the event of the liquidation,
dissolution or winding up of the Company, holders of Common Stock are entitled
to share ratably in all of the assets of the Company remaining, if any, after
satisfaction of the debts and liabilities of the Company and the preferential
rights of the holders of the Preferred Stock, if any, then outstanding.
Holders of Common Stock are entitled to receive dividends if, as and when
declared by the Board of Directors of the Company out of funds legally
available therefor only after payment of, or provision for, full dividends (on
a cumulative basis, if applicable) on all outstanding shares of any series of
Preferred Stock and after the Company has made provision for any sinking funds
for any series of Preferred Stock.
PREFERRED SHARE PURCHASE RIGHTS
On October 11, 1994, the Company's Board of Directors declared a dividend
distribution of one preferred share purchase right ("Right") for each
outstanding share of Common Stock on such date and issued thereafter. As of May
19, 1997, each Right entitles the registered holder to purchase from the
Company one one-hundred fiftieth of a share of Series One Preferred Stock, at a
price of $30.00 per one one-hundred fiftieth of a share of Series One Preferred
Stock (the "Purchase Price"), subject to further adjustment under certain
circumstances. The following summary of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement
and each of the amendments thereto.
The Rights attach to all certificates representing outstanding shares of
Common Stock and no separate rights certificates have been distributed. Until
the earlier to occur of (i) 30 days following a public announcement that a
person or group of affiliated or associated persons has acquired or obtained
the right to acquire beneficial ownership of 20% or more of the outstanding
shares of Common Stock (an "Acquiring Person") and (ii) 30 days following the
commencement or announcement of an intention to make a tender offer or exchange
offer that would result in a person or group beneficially owning 20% or more of
such outstanding shares (the earlier of such dates being called the
"Distribution Date") or earlier redemption or expiration of the Rights, (a) the
Rights will be evidenced, with respect to the shares of Common Stock
outstanding, by the certificates representing such shares and will be
transferred with and only with the Common Stock, (b) new Common Stock
certificates will contain a notation incorporating the Rights Agreement by
reference, and (c) the surrender for transfer of any certificates representing
shares of Common Stock outstanding will also constitute the transfer of the
Rights associated with such shares of Common Stock. As soon as practicable
following the Distribution Date, separate certificates representing the Rights
-27-
<PAGE> 29
("Rights Certificates") will be mailed to holders of record of Common Stock as
of the close of business on the Distribution Date and, thereafter, such
separate Rights Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on October 11, 2004, unless the expiration date is
extended or unless the Rights are earlier redeemed by the Company as described
below.
The Purchase Price payable, and the number of one one-hundred fiftieth of a
share of Series One Preferred Stock or other securities or property issuable,
upon exercise of the Rights, are subject to further adjustment from time to
time to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Series One Preferred
Stock, (ii) upon the grant to holders of Series One Preferred Stock of certain
rights or warrants to subscribe for Series One Preferred Stock or convertible
securities at less than the current share market price of the Series One
Preferred Stock, or (iii) upon the distribution to holders of Series One
Preferred Stock of evidence of indebtedness or assets of the Company (excluding
regular periodic cash dividends at a rate not in excess of 125% of the rate of
the last regular periodic cash dividend theretofore paid or dividends payable
in Series One Preferred Stock) or of subscription rights or warrants (other
than those referred to above).
The number of outstanding Rights and the number of one one-hundred fiftieth
of a share of Series One Preferred Stock issuable upon exercise of each Right
are also subject to further adjustment in the event of a stock split of the
Common Stock or a stock dividend on the Common Stock payable in Common Stock or
subdivisions, consolidations or combinations of the Common Stock occurring, in
any such case, prior to the Distribution Date.
With certain exceptions, in the event (i) the Company is acquired in a
merger or other business combination transaction or (ii) more than 50% of the
Company's assets or earning power is sold, each holder of a Right will
thereafter have the right to receive, upon the exercise thereof at the then
current Purchase Price of the Right, that number of shares of common stock of
the acquiring company that, at the time of such transaction, would have a
market price (as defined in the Rights Agreement) of two times the Purchase
Price of the Right. In the event any person acquires 20% or more of the
Company's outstanding Common Stock, each holder of a Right, other than Rights
that were or are beneficially owned by the Acquiring Person (which Rights will
thereafter be void), will thereafter have the right to receive upon exercise
that number of shares of Common Stock (or cash, other securities or property)
having a market price (as defined in the Rights Agreement) of two times the
Purchase Price of the Right.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% of
the Purchase Price. No fractional shares (other than fractions that are
integral multiples of one-hundred fiftieth of a share of Series One Preferred
Stock, which may, at the Company's election, be evidenced by depositary
receipts) will be issued, and, in lieu thereof, a payment in cash will be made.
At any time prior to 30 days after such time as any person or group has
become an Acquiring Person (or a longer period if the Board of Directors
extends such period), the Company may redeem the Rights in whole, but not in
part, at a price of $0.01 per Right (the "Redemption Price"). In certain
circumstances, the decision to redeem the Rights requires the concurrence of a
majority of the Continuing Directors (as defined in the Rights Agreement).
Immediately upon the action of the Board of Directors electing to redeem the
Rights, a holder's right to exercise the Rights will terminate and he or she
will only be entitled to receive the Redemption Price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends.
With certain exceptions, the terms of the Rights may be amended by the
Board of Directors without the consent of the holders of the Rights upon the
approval of a majority of the Continuing Directors.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to any person or group that attempts to acquire the
Company without conditioning the offer on a substantial number of Rights being
-28-
<PAGE> 30
acquired. The Rights should not interfere with any merger or other business
combination approved by the Board of Directors since the Board of Directors
may, at its option, at any time prior to the close of business on the earlier
of (i) the 30th day following the Distribution Date or (ii) ten years from the
date the Rights are first issued, redeem all, but not less than all, of the
then outstanding Rights at $0.01 per Right.
CREDIT FACILITY
As amended on February 19, 1998, the Credit Facility provides for a $225
million revolving line of credit for acquisition financing and general
corporate purposes. The Tranche A commitments provide for $150 million expiring
September 2, 2002. The Tranche B commitments provide for $75 million expiring
September 1, 1998, subject to annual renewal options.
Borrowings under the Credit Facility bear interest, at the Company's
option, at either (i) the prime rate or (ii) the London Interbank Offered Rate
plus an applicable margin, depending on the Company's Leverage Ratio, as
defined. The weighted average interest rates on amounts borrowed under the
Credit Facility were 6.83% and 6.39% at December 31, 1997 and December 31,
1996, respectively.
The Credit Facility contains customary restrictive covenants, permits the
payment of dividends by the Company to its stockholders only to the extent the
Company maintains a specified net worth and requires the Company to maintain
certain financial ratios. The Credit Facility is guaranteed by substantially
all of the Company's subsidiaries and is collateralized by a pledge of the
stock of certain of the Company's subsidiaries. Any amounts repaid under the
Credit Facility are available for future borrowings subject to the Company's
compliance with conditions precedent on such date, including the accuracy of
the Company's representations and warranties and absence of defaults.
-29-
<PAGE> 31
SELLING SECURITYHOLDERS
The following table sets forth information with respect to the Selling
Securityholders as of April 17, 1998 and the respective principal amounts of
Debentures beneficially owned by each Selling Securityholder that may be
offered pursuant to this Prospectus. Such information has been obtained from
the Selling Securityholders. None of the Selling Securityholders has, or
within the past three years has had, any position, office or other material
relationship with the Company or any of its predecessors or affiliates, except
as noted below.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
PRINCIPAL AMOUNT COMMON STOCK
OF DEBENTURES BENEFICIALLY OWNED
BENEFICIALLY OWNED AND OFFERED
SELLING SECURITYHOLDER AND OFFERED HEREBY HEREBY (1)(2)
------------------------------------------------- ------------------ -------------------
<S> <C> <C>
OCM Convertible Trust . . . . . . . . . . . . . . $1,450,000 53,525
Delta Air Lines Master Trust . . . . . . . . . . 800,000 29,531
State Employees Retirement Plan of the State
of Delaware . . . . . . . . . . . . . . . . . 350,000 12,919
State of Connecticut Combined Investment Funds . 1,250,000 46,142
Partner Reinsurance Company Ltd. . . . . . . . . 250,000 9,228
Chrysler Corporation Master Retirement Trust . . 1,000,000 36,913
Combined Insurance Company of America . . . . . . 500,000 18,456
Ratheon Company Master Pension Trust . . . . . . 500,000 18,456
Vanguard Convertible Securities Fund, Inc. . . . 900,000 33,222
Northwestern Mutual Life Insurance Company (3) . 7,000,000 258,397
High Bridge Capital Corporation . . . . . . . . . 7,000,000 258,397
Phoenix Convertible Fund . . . . . . . . . . . . 2,500,000 92,284
AIM Balanced Fund (4) . . . . . . . . . . . . . . 2,500,000 92,284
AIM VI Growth & Income (4) . . . . . . . . . . . 2,000,000 73,827
AIM Charter Fund (4) . . . . . . . . . . . . . . 10,000,000 369,139
Silverton International Fund Limited . . . . . . 1,875,000 69,213
Hatchbeam & Co. . . . . . . . . . . . . . . . . . 250,000 9,228
General Motors Employees Domestic Group
Pension Trust . . . . . . . . . . . . . . . . 5,523,000 203,875
General Motors Foundation . . . . . . . . . . . . 203,000 7,493
Motor Insurance Corporation . . . . . . . . . . . 1,274,000 47,028
CFW-C, L.P. . . . . . . . . . . . . . . . . . . . 7,500,000 276,854
Merrill Lynch Pierce Fenner & Smith
Incorporated . . . . . . . . . . . . . . . . 4,320,000 159,468
HSBC Securities Inc. . . . . . . . . . . . . . . 1,350,000 49,833
Paloma Securities L.L.C. . . . . . . . . . . . . 2,275,000 83,979
Mainstay Convertible Fund . . . . . . . . . . . . 4,500,000 166,112
Chase Manhattan N.A., Trustee for IBM
Retirement Fund . . . . . . . . . . . . . . . 3,825,000 141,196
Bankers Trust, Trustee for Chrysler Corporation
Employee #1 Pension Plan dated 4/1/89 . . . . 2,310,000 85,271
State Street Bank, Custodian for GE
Pension Trust . . . . . . . . . . . . . . . . 1,200,000 44,296
Franklin & Marshall College . . . . . . . . . . . 165,000 6,090
Deeprock & Co. . . . . . . . . . . . . . . . . . 1,500,000 55,370
</TABLE>
-30-
<PAGE> 32
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
PRINCIPAL AMOUNT COMMON STOCK
OF DEBENTURES BENEFICIALLY OWNED
BENEFICIALLY OWNED AND OFFERED
SELLING SECURITYHOLDER AND OFFERED HEREBY HEREBY (1)(2)
------------------------------------------------- ------------------ -------------------
<S> <C> <C>
Lehman Brothers International (Europe) . . . . . 20,500,000 756,736
McMahon Securities Company, L.P. . . . . . . . . 100,000 3,691
Argent Classic Convertible Arbitrage Fund L.P. . 4,500,000 166,112
J. P. Morgan & Co., Inc. . . . . . . . . . . . . 6,000,000 221,483
TQA Vantage Fund, Ltd. . . . . . . . . . . . . . 2,300,000 84,902
Laterman Strategies 90's L.L.C. . . . . . . . . . 400,000 14,765
Laterman & Co. . . . . . . . . . . . . . . . . . 250,000 9,228
Deutsche Bank A.G. . . . . . . . . . . . . . . . 1,200,000 44,296
Bankers Trust International . . . . . . . . . . . 3,000,000 110,741
California Public Retirement System . . . . . . . 4,250,000 156,884
Dean Witter Convertible Securities Trust . . . . 3,000,000 110,741
Any Other Holder of Debentures or Future
Transferee From Any Such Holder (5) (6) . . . 22,180,000 818,781
-------------- ------------
TOTAL: . . . . . . . . . . . . . . . . . . $ 143,750,000 5,306,386
============== ============
</TABLE>
- -----------------
(1) Includes shares of Common Stock issuable upon conversion of the
Debentures.
(2) Assumes a conversion price of $27.09 per share, and a cash payment in lieu
of any fractional share interest; such conversion price is subject to
adjustment as described under "Description of Debentures -- Conversion
Rights." Accordingly, the number of shares of Common Stock issuable upon
conversion of the Debentures may increase or decrease from time to time.
Under the terms of the Indenture, fractional shares will not be issued
upon conversion of the Debentures; cash will be paid in lieu of fractional
shares, if any.
(3) Includes $250,000 in principal amount held in the Northwestern Mutual Life
Insurance Company Group Annuity Separate Account.
(4) Information excludes 1,363,100 shares of Common Stock reported as
beneficially owned by AMVESCAP PLC, a parent holding company, and group
members including AIM Management Group Inc., as reported in the amended
Schedule 13G filed with the Securities and Exchange Commission on February
2, 1998.
(5) Information concerning other Selling Securityholders will be set forth in
Prospectus Supplements from time to time, if required. Only Selling
Securityholders specifically identified above who beneficially own the
Debentures set forth opposite their name may sell such Debentures or
Common Stock pursuant to this Prospectus.
(6) Assumes that any other holders of Debentures or any future transferee from
any such holder does not beneficially own any Common Stock other than the
Common Stock issuable upon conversion of the Debentures at the initial
conversion rate.
The Debentures offered hereby were originally issued by the Company and
sold by the Initial Purchasers, in a transaction exempt from the registration
requirements of the Securities Act, to persons reasonably believed by such
Initial Purchasers to be "qualified institutional buyers" (as defined in Rule
144A under the Securities Act). The Selling Securityholders (which term
includes their transferees, pledgees, donees or their successors) may from time
to time offer and sell pursuant to this Prospectus any or all of the Debentures
and Common Stock issued upon conversion of the Debentures.
The Selling Securityholders identified above may have sold, transferred or
otherwise disposed of, in transactions exempt from the registration
requirements of the Securities Act, all or a portion of their Debentures since
the date on which the information in the preceding table is presented.
Information concerning the Selling Securityholders may change from time to time
and any such changed information will be set forth in supplements to this
Prospectus if and when necessary. Because the Selling Securityholders may
offer all or some of the Debentures that they hold and/or the Common Stock
issuable upon conversion thereof pursuant to the offering contemplated by this
Prospectus, no estimate can be given as to the amount of the Debentures or the
Common Stock issuable upon conversion thereof that will be held by the Selling
Securityholders upon the termination of any such
-31-
<PAGE> 33
sales. In addition, the Selling Securityholders identified above may have
sold, transferred or otherwise disposed of all or a portion of their Debentures
since the date on which they provided the information regarding their
Debentures in transactions exempt from the registration requirements of the
Securities Act. See "Plan of Distribution."
Information concerning the Selling Securityholders may change from time to
time and any such changed information will be set forth in supplements to this
Prospectus if and when necessary. In addition, the per share conversion price,
and therefore the number of shares issuable upon conversion of the Debentures,
is subject to adjustment under certain circumstances. Accordingly, the
aggregate principal amount of Debentures and the number of shares of Common
Stock issuable upon conversion thereof offered hereby may increase or decrease.
From time to time, Merrill Lynch, Pierce, Fenner & Smith Incorporated, ABN
AMRO Incorporated and Morgan Stanley & Co. Incorporated have provided, and
continue to provide, investment banking services to the Company, for which they
have received or will receive customary fees. None of the other Selling
Securityholders has had any position, office or other material relationship
with the Company or its affiliates within the last three years.
The Company will pay the expenses of registering the Debentures and Common
Stock being sold hereunder.
-32-
<PAGE> 34
PLAN OF DISTRIBUTION
The Company will not receive any of the proceeds of the sale of the
Debentures and Common Stock offered hereby. The Debentures and Common Stock
may be sold from time to time to purchasers directly by the Selling
Securityholders. Alternatively, the Selling Securityholders may from time to
time offer the Debentures and Common Stock through brokers, dealers or agents
who may receive compensation in the form of discounts, concessions or
commissions from the Selling Securityholders and/or the purchasers of the
Debentures and Common Stock for whom they may act as agent. The Selling
Securityholders and any such brokers, dealers or agents who participate in the
distribution of the Debentures and Common Stock may be deemed to be
"underwriters,"and any profits on the sale of the Debentures and Common Stock
by them and any discounts, commissions or concessions received by any such
brokers, dealers or agents might be deemed to be underwriting discounts and
commissions under the Securities Act. To the extent the Selling
Securityholders may be deemed to be underwriters, the Selling Securityholders
may be subject to certain statutory liabilities of, including, but not limited
to, Sections 11, 12 and 178 of the Securities Act and Rule 10b-5 under the
Exchange Act.
The Debentures and Common Stock offered hereby may be sold from time to
time in one or more transactions at fixed prices, at prevailing market prices
at the time of sale, at varying prices determined at the time of sale or at
negotiated prices. The Debentures and Common Stock may be sold by one or more
of the following methods, without limitation: (a) a block trade in which the
broker or dealer so engaged will attempt to sell the Debentures and Common
Stock as agent but may position and resell a portion of the block as principal
to facilitate the transaction; (b) purchases by a broker or dealer as principal
and resale by such broker or dealer for its account pursuant to this
Prospectus; (c) ordinary brokerage transactions and transactions in which the
broker solicits purchasers; (d) an exchange distribution in accordance with the
rules of such exchange; (e) face-to-face transactions between sellers and
purchasers without a broker-dealer; and (f) through the writing of options. At
any time a particular offer of the Debentures and Common Stock is made, a
revised Prospectus or Prospectus Supplement, if required, will be distributed
which will set forth the aggregate amount and type of securities being offered
and the terms of the offering, including the name or names of any underwriters,
dealers or agents, any discounts, commissions, concessions and other items
constituting compensation from the Selling Securityholder and any discounts,
commissions or concessions allowed or reallowed or paid to dealers. Such
Prospectus Supplement and, if necessary, a post-effective amendment to the
Registration Statement of which this Prospectus is a part, will be filed with
the Commission to reflect the disclosure of additional information with respect
to the distribution of the Debentures and Common stock. In addition, the
Debentures and Common Stock covered by this Prospectus may be sold in private
transactions or under Rule 144 rather than pursuant to this Prospectus.
To the best knowledge of the Company, there are currently no plans,
arrangement or understandings between any Selling Securityholders and any
broker, dealer, agent or underwriter regarding the sale of the Debentures and
Common Stock by the Selling Securityholders. There is no assurance that any
Selling Securityholder will sell any or all of the Debentures and Common Stock
offered by it hereunder or that any such Selling Securityholder will not
transfer, devise or gift such Debentures and Common Stock by other means not
described herein.
The Selling Securityholders and any other person participating in such
distribution will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including, without limitation, Regulation
M, which may limit the timing of purchases and sales of any of the Debentures
and Common Stock by the Selling Securityholders and any other such person.
Furthermore, Regulation M of the Exchange Act may restrict the ability of any
person engaged in the distribution of the Debentures and Common Stock to engage
in market-making activities with respect to the particular Debentures and
Common Stock being distributed for a period of up to five business days prior
to the commencement of such distribution. All of the foregoing may affect the
marketability of the Debentures and Common Stock and the ability of any person
or entity to engage in market-making activities with respect to the Debentures
and Common Stock.
Pursuant to the Registration Rights Agreement entered into in connection
with the offer and sale of the Debentures by the Company, the Company has
agreed to pay substantially all of the expenses incidental to the
-33-
<PAGE> 35
registration, offering and sale of the Debentures and Common Stock to the
public other than commissions, fees and discounts of underwriters, brokers,
dealer and agents. In addition, pursuant to the Registration Rights Agreement,
each of the Company and the Selling Securityholders will be indemnified by the
other against certain liabilities, including certain liabilities under the
Securities Act, or will be entitled to contribution in connection therewith.
Merrill, Lynch, Pierce Fenner & Smith Incorporated has provided investment
banking services to the Company, including the offering and sale of the
Debentures and the Company's Common Stock, for which it received reasonable and
customary fees.
LEGAL MATTERS
The validity of the issuance of the Debentures and the underlying Common
Stock offered hereby has been passed upon for the Company by Andrews & Kurth
L.L.P.
EXPERTS
The consolidated balance sheet of the Company as of December 31, 1997 and
1996 and the consolidated statements of operations, changes in stockholders'
equity and cash flows of the Company for each of the three years in the period
ended December 31, 1997 included in this Prospectus, and the consolidated
financial statement schedule of the Company for each of the three years in the
period ended December 31, 1997 incorporated by reference in this prospectus,
have been included or incorporated herein in reliance on the reports of Coopers
& Lybrand L.L.P., independent accountants, given on the authority of that firm
as experts in accounting and auditing.
-34-
<PAGE> 36
===================================
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING
COVERED BY THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES OTHER THAN THOSE SPECIFICALLY
OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE
SUCH OFFER OR AND SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.
-------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information . . . . . . . . 2
Incorporation of Certain Documents
by Reference . . . . . . . . . . . 2
Summary . . . . . . . . . . . . . . . 3
Risk Factors . . . . . . . . . . . . 6
Ratio of Earnings to Fixed Charges . 10
Use of Proceeds . . . . . . . . . . . 10
Description of Debentures . . . . . . 11
Certain Federal Income Tax
Consequences . . . . . . . . . . . 23
Description of Existing Securities
and Credit Facility . . . . . . . 27
Selling Securityholders . . . . . . . 30
Plan of Distribution . . . . . . . . 33
Legal Matters . . . . . . . . . . . . 34
Experts . . . . . . . . . . . . . . . 34
</TABLE>
==================================
===================================
EQUITY
CORPORATION
INTERNATIONAL
$143,750,000
4 1/2% CONVERTIBLE
SUBORDINATED DEBENTURES
DUE 2004
AND
COMMON STOCK ISSUABLE
UPON CONVERSION THEREOF
----------
PROSPECTUS
----------
, 1998
===================================
<PAGE> 37
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses to be paid by the registrant in connection with this offering
other than underwriting discounts and commissions, if any, are estimated as
follows:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee . . . . . $ 42,407
New York Stock Exchange listing fee for the Common Stock . . 15,600
Accounting fees and expenses . . . . . . . . . . . . . . . . 5,000
Legal fees and expenses . . . . . . . . . . . . . . . . . . . 10,000
Miscellaneous fees and expenses . . . . . . . . . . . . . . . 6,993
----------
Total . . . . . . . . . . . . . . $ 80,000
==========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Delaware General Corporation Law
Subsection (a) of Section 145 of the General Corporation Law of the State
of Delaware empowers a corporation to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the corporation)
by reason of the fact that he is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.
Subsection (b) of Section 145 empowers a corporation to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, except that no indemnification may be
made in respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable to the corporation unless and only to the
extent that the Court of Chancery or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Court
of Chancery or such other court shall deem proper.
Section 145 further provides that to the extent a director or officer of a
corporation has been successful on the merits or otherwise in the defense of
any action, suit or proceeding referred to in subsections (a) and (b) of
Section 145 or in the defense of any claim, issue or matter therein, he shall
be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith; that indemnification
provided for by Section 145 shall not be deemed exclusive of any other rights
to which the indemnified party may be entitled; that indemnification provided
by Section 145 shall, unless otherwise provided when authorized or ratified,
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of such person's heirs, executors and
administrators; and empowers the corporation to purchase and maintain insurance
on behalf of a director or officer of the corporation against any liability
asserted against him and incurred by him in any such capacity, or arising out
of his status as such, whether or not the corporation would have the power to
indemnify him against such liabilities under Section 145.
II-1
<PAGE> 38
Section 102(b)(7) of the General Corporation Law of the State of Delaware
provides that a certificate of incorporation may contain a provision
eliminating or limiting the personal liability of a director to the corporation
or its stockholders for monetary damages for breach of fiduciary duty as a
director, provided that such provision shall not eliminate or limit the
liability of a director (i) for any breach of the director's duty of loyalty to
the corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the Delaware General Corporation Law, or (iv) for
any transaction from which the director derived an improper personal benefit.
Amended and Restated Certificate of Incorporation
Paragraph 13 of the Company's Amended and Restated Certificate of
Incorporation provides that no director of the corporation shall be liable to
the corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director provided that such provision shall not eliminate
or limit the liability of a director (i) for any breach of the director's duty
of loyalty to the corporation or its stockholders; (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing
violation of law; (iii) under Section 174 of the General Corporation Law of
Delaware; or (iv) for any transaction from which the director derived an
improper personal benefit.
Amended and Restated Bylaws
Article VIII of the Company's Amended and Restated Bylaws further provides
that the Company shall indemnify its directors, officers, employees and agents
to the fullest extent permitted by applicable law. The Company is generally
required to indemnify its directors, officers, employees, and agents against
all judgments, fines, settlements, legal fees, and other expenses incurred in
connection with pending or threatened legal proceedings because of the person's
position with the Company or another entity that the person serves at the
Company's request, subject to certain conditions, and to advance funds to
enable them to defend against such proceedings.
Indemnification Agreements
The Company has entered into indemnification agreements with each of its
directors and executive officers, which agreements contain provisions
indemnifying such parties against certain liabilities within the scope required
by the Company's Amended and Restated Certificate of Incorporation and Amended
and Restated Bylaws.
Insurance
The Company maintains directors' and officers' liability insurance covering
such persons in their official capacities with the Company and its
subsidiaries.
II-2
<PAGE> 39
ITEM 16. LIST OF EXHIBITS.
4.1 -- Purchase Agreement dated February 19, 1998 between the Company,
Merrill, Lynch & Co., ABN AMRO Incorporated and Morgan Stanley &
Co. Incorporated (the "Initial Purchasers").
4.2 -- Registration Rights Agreement dated February 25, 1997 between the
Company and the Initial Purchasers.
4.3 -- Indenture dated February 25, 1998 between the Company and Bankers
Trust Company.
4.4 -- Specimen of 4 1/2% Convertible Subordinated Debentures due 2004
issued by the Company.
4.5* -- Amended and Restated Certificate of Incorporation (Incorporated by
reference to Exhibit 4.1 to the Company's Registration Statement
on Form S-8 (Reg. No. 33-98052).
4.6* -- Amended and Restated Bylaws (Incorporated by reference to Exhibit
4.3 to the Company's Registration Statement on Form S-8 (Reg. No.
33-98052)).
4.7* -- Certificate of Designation of the Series One Junior Participating
Preferred Stock (filed as Exhibit 4.2 to Company's Registration
Statement on Form S-8 (Reg. No. 33-98052)).
4.8* -- Stockholder Rights Agreement, dated October 13, 1994, between the
Company and American Stock Transfer & Trust Company, as Rights
Agent (filed as Exhibit 4.2 to Company's Annual Report on Form
10-K for the year ended December 31, 1994)
4.9* -- Form of Rights Certificate (filed as Exhibit 4.2 to the Company's
Annual Report on 10-K for the year ended December 31, 1994)
4.10* -- First Amendment to Stockholder Rights Agreement, dated September
10, 1996, between the Company and American Stock Transfer & Trust
Company as Rights Agent (filed as Exhibit 6 to the Company's
Registration Statement on Form 8-A/A) (Amendment No. 2).
4.11* -- Second Amendment to Stockholder Rights Agreement, dated as of
April 17, 1997, between the Company and American Stock Transfer &
Trust Company as Rights Agent (filed as Exhibit 4.6 to the
Company's Registration Statement on Form 8-A/A) (Amendment No. 3)
dated May 19, 1997).
5.1 -- Opinion of Andrews & Kurth L.L.P.
12.1 -- Computation of Ratio of Earnings to Fixed Charges
23.1 -- Consent of Andrews & Kurth L.L.P. (included in Exhibit 5.1)
23.2 -- Consent of Coopers & Lybrand L.L.P.
24.1 -- Powers of attorney (included on the signature page contained in
Part II of this Registration Statement)
25.1 -- Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 of a corporation designated to act as a
Trustee on Form T-1 by Bankers Trust Company.
27.1* -- Financial Data Schedule. (Incorporated by reference to Exhibit
27 to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1997).
- -----------
*Incorporated herein by reference to the indicated filing.
ITEM 17. UNDERTAKINGS.
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, as amended (the "Exchange Act") (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act) 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.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Securities Act") 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 Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment of the registrant of
II-3
<PAGE> 40
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 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 Act and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) (i) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement; (ii) to
include any prospectus required in Section 10(a)(3) of the Securities Act;
(iii) 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 in 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 and 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 a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective Registration Statement; (iv) 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; that paragraphs (1)(ii) and (1)(iii) do not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
section 13 or section 15(d) of the Exchange Act that are incorporated by
reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, 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.
(4) That, for purposes of determining any liability under the Securities
Act, each filing of the Registrant's annual report pursuant to section 13(a) or
section 15(d) of the Exchange Act 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.
Insofar as indemnification for liabilities arising under the Securities Act
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 sand Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that 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 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 and will be governed by the final adjudication of such issue.
II-4
<PAGE> 41
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 registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Lufkin, State of Texas, on the 23rd day of April,
1998.
EQUITY CORPORATION INTERNATIONAL
By: /s/ James P. Hunter, III
-------------------------------------------
James P. Hunter, III
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints James P. Hunter, III and W. Cardon
Gerner, and each of them with full power to act without the other, his true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution for him and in his name, place and stead, in any and all
capacities, to sign, execute and file this registration statement under the
Securities Act and any and all amendments (including, without limitation,
post-effective amendments and any amendment or amendments or additional
registration statements filed pursuant to Rule 462 under the Securities Act
increasing the amount of securities for which registration is being sought) to
this registration statement, and to file the same, with all exhibits thereto,
and all other documents in connection therewith, with the Securities and
Exchange Commission, to sign any and all applications, registration statements,
notices or other documents necessary or advisable to comply with applicable
state securities laws, and to file the same, together with other documents in
connection therewith, with the appropriate state securities authorities,
granting unto said attorneys-in-fact and agents full power and authority to do
and perform each and every act and thing requisite and necessary to be done, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents and each of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ James P. Hunter, III Chairman of the Board, President April 23, 1998
-------------------------- and Chief Executive Officer
James P. Hunter, III (Principal executive officer)
/s/ W. Cardon Gerner Senior Vice President - Chief Financial April 23, 1998
-------------------------- Officer (Principal financial and
W. Cardon Gerner accounting officer)
/s/ Bob Bullock Director April 23, 1998
--------------------------
Bob Bullock
/s/ J. Patrick Doherty Director April 23, 1998
--------------------------
J. Patrick Doherty
/s/ Jack T. Hammer Director April 23, 1998
--------------------------
Jack T. Hammer
/s/ Thomas R. McDade Director April 23, 1998
--------------------------
Thomas R. McDade
/s/ Kenneth W. Smith Director April 23, 1998
--------------------------
Kenneth W. Smith
</TABLE>
II-5
<PAGE> 42
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C> <C>
4.1 -- Purchase Agreement dated February 19, 1998 between the Company, Merrill, Lynch & Co., ABN AMRO Incorporated
and Morgan Stanley & Co. Incorporated (the "Initial Purchasers").
4.2 -- Registration Rights Agreement dated February 25, 1997 between the Company and the Initial Purchasers.
4.3 -- Indenture dated February 25, 1998 between the Company and Bankers Trust Company.
4.4 -- Specimen of 4 1/2% Convertible Subordinated Debentures due 2004 issued by the Company.
4.5* -- Amended and Restated Certificate of Incorporation (Incorporated by reference to Exhibit 4.1 to the
Company's Registration Statement on Form S-8 (Reg. No. 33-98052).
4.6* -- Amended and Restated Bylaws (Incorporated by reference to Exhibit 4.3 to the Company's Registration
Statement on Form S-8 (Reg. No. 33-98052)).
4.7* -- Certificate of Designation of the Series One Junior Participating Preferred Stock (filed as Exhibit 4.2 to
Company's Registration Statement on Form S-8 (Reg. No. 33-98052)).
4.8* -- Stockholder Rights Agreement, dated October 13, 1994, between the Company and American Stock Transfer &
Trust Company, as Rights Agent (filed as Exhibit 4.2 to Company's Annual Report on Form 10-K for the year
ended December 31, 1994)
4.9* -- Form of Rights Certificate (filed as Exhibit 4.2 to the Company's Annual Report on 10-K for the year ended
December 31, 1994)
4.10* -- First Amendment to Stockholder Rights Agreement, dated September 10, 1996, between the Company and American
Stock Transfer & Trust Company as Rights Agent (filed as Exhibit 6 to the Company's Registration Statement
on Form 8-A/A) (Amendment No. 2).
4.11* -- Second Amendment to Stockholder Rights Agreement, dated as of April 17, 1997, between the Company and
American Stock Transfer & Trust Company as Rights Agent (filed as Exhibit 4.6 to the Company's
Registration Statement on Form 8-A/A) (Amendment No. 3) dated May 19, 1997).
5.1 -- Opinion of Andrews & Kurth L.L.P.
12.1 -- Computation of Ratio of Earnings to Fixed Charges
23.1 -- Consent of Andrews & Kurth L.L.P. (included in Exhibit 5.1)
23.2 -- Consent of Coopers & Lybrand L.L.P.
24.1 -- Powers of attorney (included on the signature page contained in Part II of this Registration Statement)
25.1 -- Statement of Eligibility and Qualification under the Trust Indenture Act of 1939 of a corporation
designated to act as a Trustee on Form T-1 by Bankers Trust Company.
27.1* -- Financial Data Schedule. (Incorporated by reference to Exhibit 27 to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1997).
</TABLE>
- -------------
*Incorporated herein by reference to the indicated filing.
<PAGE> 1
================================================================================
EQUITY CORPORATION INTERNATIONAL
(A DELAWARE CORPORATION)
4 1/2% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2004
PURCHASE AGREEMENT
Dated: February 19, 1998
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
SECTION 1. Representations and Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -3-
(a) Representations and Warranties by the Company . . . . . . . . . . . . . . . . . . . . . . . . -3-
(b) Officer's Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
SECTION 2. Sale and Delivery to Initial Purchasers; Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
(a) Initial Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
(b) Option Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
(c) Payment; Registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
(d) Information with Respect to Initial Purchasers . . . . . . . . . . . . . . . . . . . . . . . -13-
SECTION 3. Covenants of the Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -13-
(a) Delivery of Offering Memorandum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -13-
(b) Amendments to Offering Memorandum and Supplements . . . . . . . . . . . . . . . . . . . . . -13-
(c) Notice and Effect of Material Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . -14-
(d) Blue Sky Qualifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -14-
(e) Rule 144A Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -14-
(f) No Resale of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
(g) Rating of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
(h) DTC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
(i) Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
(j) Restriction on Sale of Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
(k) Reservation of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -16-
(l) Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -16-
(m) Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -16-
SECTION 4. Payment of Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -16-
(a) Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -16-
(b) Termination of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -17-
SECTION 5. Conditions of Initial Purchasers' Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -17-
(a) Opinions of Counsel for Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -17-
(b) Opinion of Counsel for Initial Purchasers . . . . . . . . . . . . . . . . . . . . . . . . . -17-
(c) Officers' Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -17-
(d) Accountant's Comfort Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -18-
(e) Bring-down Comfort Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -18-
(f) Maintenance of Rating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -18-
(g) Lock-up Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -18-
(h) PORTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -18-
(i) Approval of Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -18-
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
(j) Conditions to Purchase of Option Securities . . . . . . . . . . . . . . . . . . . . . . . . -18-
(k) Registration Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -19-
(l) Additional Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -19-
(m) Termination of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -20-
SECTION 6. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -20-
(a) Indemnification of Initial Purchasers . . . . . . . . . . . . . . . . . . . . . . . . . . . -20-
(b) Indemnification of Company, Directors and Officers . . . . . . . . . . . . . . . . . . . . . -21-
(c) Actions against Parties; Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . -21-
(d) Settlement without Consent if Failure to Reimburse . . . . . . . . . . . . . . . . . . . . . -22-
SECTION 7. Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -22-
SECTION 8. Representations, Warranties and Agreements to Survive Delivery . . . . . . . . . . . . . . . . . . . . . -23-
SECTION 9. Subsequent Offers and Resales of the Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . -23-
(a) Offer and Sale Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -23-
(b) Selling Restrictions for Offers and Sales Outside the United States . . . . . . . . . . . . -25-
SECTION 10. Termination of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -26-
(a) Termination; General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -26-
(b) Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -26-
SECTION 11. Default by One or More of the Initial Purchasers . . . . . . . . . . . . . . . . . . . . . . . . . . . -26-
SECTION 12. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -27-
SECTION 13. Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -27-
SECTION 14. GOVERNING LAW AND TIME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -27-
SECTION 15. Effect of Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -28-
</TABLE>
Schedule A - Initial Purchasers
Schedule B - Securities
Schedule C - List of Persons Subject to Lock-up
Exhibit A - Form of Opinions of Company's Counsel
Exhibit B - Form of Lock-up
ii
<PAGE> 4
EQUITY CORPORATION INTERNATIONAL
(a Delaware corporation)
$125,000,000
4 1/2% Convertible Subordinated Debentures due 2004
PURCHASE AGREEMENT
February 19, 1998
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
ABN AMRO Incorporated
Morgan Stanley & Co. Incorporated
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
Equity Corporation International, a Delaware corporation (the
"Company"), confirms its agreement with Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), ABN AMRO Incorporated
and Morgan Stanley & Co. Incorporated (collectively, the "Initial Purchasers,"
which term shall also include any purchaser substituted as hereinafter provided
in Section 11 hereof), with respect to the issue and sale by the Company and
the purchase by the Initial Purchasers, acting severally and not jointly, of
the respective principal amounts set forth in Schedule A hereto of the
$125,000,000 aggregate principal amount of the Company's 4 1/2% Convertible
Subordinated Debentures due 2004 (the "Debentures"), and with respect to the
grant by the Company to the Initial Purchasers, acting severally and not
jointly, of the option described in Section 2(b) hereof to purchase all or any
part of an additional $18,750,000 principal amount of Debentures to cover
over-allotments, if any. The aforesaid $125,000,000 principal amount of
Debentures (the "Initial Securities") to be purchased by the Initial Purchasers
and all or any part of the $18,750,000 principal amount of Debentures subject
to the option described in Section 2(b) hereof (the "Option Securities") are
hereinafter called, collectively, the "Securities." The Securities are to be
issued pursuant to an Indenture dated as of February 25, 1998 (the "Indenture")
between the Company and Bankers Trust Company, as trustee (the "Trustee").
Securities issued in book-entry form will be issued to Cede & Co., as nominee
of The Depository Trust Company ("DTC"),
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pursuant to a letter agreement, to be dated on or before the Closing Time (as
defined in Section 2(c)) (the "DTC Agreement"), among the Company, the Trustee
and DTC.
The Securities are convertible into shares of common stock, par value
$.01 per share, of the Company (the "Common Stock") in accordance with the
terms of the Securities and the Indenture, at the initial conversion price
specified in Schedule B hereto.
The Company understands that the Initial Purchasers propose to make an
offering of the Securities on the terms and in the manner set forth herein and
agrees that the Initial Purchasers may resell, subject to the conditions set
forth herein, all or a portion of the Securities to purchasers (the "Subsequent
Purchasers") at any time after the date of this Agreement. The Securities are
to be offered and resold by the Initial Purchasers without being registered
under the Securities Act of 1933, as amended (the "1933 Act"), in reliance upon
exemptions therefrom. Pursuant to the terms of the Securities and the
Indenture, Securities may be resold or otherwise transferred only if such
resale or transfer is hereafter registered under the 1933 Act or if an
exemption from the registration requirements of the 1933 Act is available
(including the exemption afforded by Rule 144A ("Rule 144A") or Regulation S
("Regulation S") of the rules and regulations promulgated under the 1933 Act
(the "1933 Act Regulations") by the Securities and Exchange Commission (the
"Commission")). Prior to or concurrently with the purchase of the Initial
Securities by the Initial Purchasers, the Company will enter into with the
Initial Purchasers an agreement (the "Registration Rights Agreement") pursuant
to which the Company is required to file and use its reasonable efforts to have
declared effective a registration statement under the 1933 Act to register
resales of the Registrable Securities (as defined in the Registration Rights
Agreement) and the shares of Common Stock issuable upon conversion thereof.
The Company has prepared and delivered to the Initial Purchasers
copies of a preliminary offering memorandum dated February 11, 1998 (the
"Preliminary Offering Memorandum") and has prepared and will deliver to the
Initial Purchasers, on the date hereof or on the next succeeding business day,
copies of a final offering memorandum dated February 19, 1998 (the "Final
Offering Memorandum"), each to be used by the Initial Purchasers in connection
with the offering of the Securities and the shares of Common Stock issuable
upon conversion thereof. "Offering Memorandum" means, with respect to any date
or time referred to in this Agreement, the most recent offering memorandum
(whether the Preliminary Offering Memorandum or the Final Offering Memorandum,
or any amendment or supplement to either such document), including exhibits
thereto and any documents incorporated therein by reference, which has been
prepared and delivered by the Company to the Initial Purchasers in connection
with the offering of the Securities and the shares of Common Stock issuable
upon conversion thereof.
All references in this Agreement to financial statements and schedules
and other information which are "contained," "included" or "stated" in the
Offering Memorandum (or other references of like import) shall be deemed to
mean and include all such financial statements and schedules and other
information which are incorporated by reference in the Offering Memorandum; and
all references in this Agreement to amendments or supplements to the Offering
Memorandum shall be
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deemed to mean and include the filing of any document under the Securities
Exchange Act of 1934, as amended (the "1934 Act"), which is incorporated by
reference in the Offering Memorandum.
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The Company
represents and warrants to each Initial Purchaser as of the date hereof, as of
the Closing Time referred to in Section 2(c) hereof, and as of each Date of
Delivery (if any) referred to in Section 2(b) hereof, and agrees with each
Initial Purchaser, as follows:
(i) Similar Offerings. The Company and its affiliates,
as such term is defined in Rule 501(b) under the 1993 Act
("Affiliates"), have not, directly or indirectly, solicited any offer
to buy or offered to sell, sold or otherwise negotiated in respect of
and will not, directly or indirectly, solicit any offer to buy or
offer to sell, sell or otherwise negotiate in respect of, in the
United States or to any United States citizen or resident, any
security which is or would be integrated with the sale of the
Securities in a manner that would require the Securities to be
registered under the 1933 Act.
(ii) Offering Memorandum. Neither the Offering
Memorandum nor any amendments or supplements thereto, at the time the
Offering Memorandum or any such amendment or supplement was issued,
included an untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading, and the Offering Memorandum, as amended or supplemented,
at the Closing Time (and, if any Option Securities are purchased, at
each Date of Delivery) will not include an untrue statement of a
material fact or omit to state a material fact necessary in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading; provided that this representation,
warranty and agreement shall not apply to statements in or omissions
from the Offering Memorandum made in reliance upon and in conformity
with information furnished to the Company in writing by any Initial
Purchaser through Merrill Lynch expressly for use in the Offering
Memorandum.
(iii) Incorporated Documents. The Offering Memorandum as
delivered from time to time shall incorporate by reference the most
recent Annual Report of the Company on Form 10-K filed with the
Commission, each Quarterly Report of the Company on Form 10-Q, each
Current Report of the Company on Form 8-K and the registration
statement of the Company on Form 8-A (File No. 0-24728), and each
amendment to each of the foregoing, filed with the Commission since
the filing of the end of the fiscal year to which such Annual Report
relates. The documents incorporated or deemed to be incorporated by
reference in the Offering Memorandum, when they became effective or at
the time they were or hereafter are filed with the Commission, as the
case may be, complied and will comply in all material respects with
the requirements of the 1934 Act and the rules and regulations of the
Commission thereunder (the "1934 Act Regulations"), and, when read
together with
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the other information in the Offering Memorandum, at the date of the
Offering Memorandum and at the Closing Time (and, if any Option
Securities are purchased, at each Date of Delivery), do not and will
not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading.
(iv) Independent Accountants. The accountants who
certified the financial statements and supporting schedules included
or incorporated by reference in the Offering Memorandum are
independent certified public accountants within the meaning of
Regulation S-X under the 1933 Act.
(v) Financial Statements. The financial statements
included or incorporated by reference in the Offering Memorandum,
together with the related schedules and notes, present fairly (A) the
financial position of the Company and its consolidated subsidiaries at
the dates indicated and (B) the statement of operations, stockholders'
equity and cash flows of the Company and its consolidated subsidiaries
for the periods specified; said financial statements have been
prepared in conformity with generally accepted accounting principles
("GAAP") applied on a consistent basis throughout the periods
involved. The supporting schedules, if any, included or incorporated
by reference in the Offering Memorandum present fairly in accordance
with GAAP the information required to be stated therein. The selected
financial data and the summary financial information included in the
Offering Memorandum present fairly the information shown therein and
have been compiled on a basis consistent with that of the audited
financial statements included in the Offering Memorandum.
(vi) No Material Adverse Change in Business. Since the
respective dates as of which information is given in the Offering
Memorandum, except as otherwise stated therein, (A) there has been no
material adverse change in the condition, financial or otherwise, or
in the earnings, business affairs or business prospects of the Company
and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business (a "Material Adverse
Effect"), (B) there have been no transactions entered into by the
Company or any of its subsidiaries, other than those in the ordinary
course of business, which are material with respect to the Company and
its subsidiaries considered as one enterprise, and (C) there has been
no dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock.
(vii) Good Standing of the Company. The Company has been
duly organized and is validly existing as a corporation in good
standing under the laws of the State of Delaware and has corporate
power and authority to own, lease and operate its properties and to
conduct its business as described in the Offering Memorandum and to
enter into and perform its obligations under this Agreement; and the
Company is duly qualified as a foreign corporation to transact
business and is in good standing in each other jurisdiction in which
such qualification is required, whether by reason of the ownership or
leasing of property or
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the conduct of business, except where the failure so to qualify or to
be in good standing would not result in a Material Adverse Effect.
(viii) Good Standing of Subsidiaries. Each of ECI Capital
Corporation, ECI Services, Inc., JPH Properties, Inc. and ECI Cemetery
Services, Inc. (each a "Subsidiary" and, 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, has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Offering Memorandum and is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in
which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except
where the failure so to qualify or to be in good standing would not
result in a Material Adverse Effect; except as otherwise disclosed in
the Offering Memorandum, all of the issued and outstanding capital
stock of each such Subsidiary has been duly authorized and validly
issued, is fully paid and non-assessable and is owned by the Company,
directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity; none
of the outstanding shares of capital stock of any Subsidiary was
issued in violation of any preemptive or similar rights of any
securityholder of such Subsidiary.
(ix) Capitalization. The authorized, issued and
outstanding capital stock of the Company is as set forth in the
Offering Memorandum under the caption "Capitalization" (except for
subsequent issuances, if any, pursuant to this Agreement, pursuant to
employee benefit plans referred to in the Offering Memorandum,
pursuant to the exercise of convertible securities or options
described in the Offering Memorandum or otherwise permitted under the
terms of this Agreement). The shares of issued and outstanding capital
stock of the Company have been duly authorized and validly issued and
are fully paid and non-assessable; none of the outstanding shares of
capital stock of the Company was issued in violation of the preemptive
or other similar rights of any securityholder of the Company arising
by operation of law, under the charter or by-laws of the Company or
under any agreement to which the Company or any of its subsidiaries is
a party or by which it is bound. Except as described in or
incorporated by reference in the Offering Memorandum, the Company does
not have outstanding any options to purchase, or any warrants to
subscribe for, or any securities or obligations convertible into, or
any contracts or commitments to issue or sell, any Common Stock or
other securities of the Company or any such warrants, convertible
securities or obligations.
(x) Authorization of Agreement. This Agreement has
been, and at the Closing Time, the Registration Rights Agreement will
have been, duly authorized, executed and delivered by the Company.
(xi) Authorization of the Indenture. The Indenture has
been duly authorized by the Company and when duly executed and
delivered by the Company and the Trustee,
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will constitute a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except
as the enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or other similar laws relating
to or affecting enforcement of creditors' rights generally, and except
as enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in
equity or at law).
(xii) Authorization of the Securities. The Securities
have been duly authorized and, at the Closing Time, will have been
duly executed by the Company and, when authenticated, issued and
delivered in the manner provided for in the Indenture and delivered
against payment of the purchase price therefor as provided in this
Agreement, will constitute valid and binding obligations of the
Company, enforceable against the Company in accordance with their
terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or other similar
laws affecting enforcement of creditors' rights generally, and except
as enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in
equity or at law), and will be in the form contemplated by, and
entitled to the benefits of, the Indenture.
(xiii) Description of the Securities and the Indenture.
The Securities and the Indenture will conform in all material respects
to the respective statements relating thereto contained in the
Offering Memorandum, and the Indenture will be in substantially the
form previously delivered to the Initial Purchasers.
(xiv) Authorization and Description of Common Stock. The
Common Stock conforms to all statements relating thereto contained or
incorporated by reference in the Offering Memorandum and such
description conforms to the rights set forth in the instruments
defining the same. Upon issuance and delivery of the Securities in
accordance with this Agreement and the Indenture, the Securities will
be convertible at the option of the holder thereof for shares of
Common Stock in accordance with the terms of the Securities and the
Indenture; the shares of Common Stock initially issuable upon
conversion of the Securities have been duly authorized and reserved
for issuance upon such conversion by all necessary corporate action
and such shares, when issued upon such conversion, will be validly
issued and will be fully paid and non-assessable; no holder of such
shares will be subject to personal liability by reason of being such a
holder; and the issuance of such shares upon such conversion will not
be subject to the preemptive or other similar rights of any
securityholder of the Company.
(xv) Absence of Defaults and Conflicts. Neither the
Company nor any of its subsidiaries is in violation of its charter or
by-laws or in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, deed of trust, loan or credit
agreement, note, lease or other agreement
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or instrument to which the Company or any of its subsidiaries is a
party or by which it or any of them may be bound, or to which any of
the property or assets of the Company or any subsidiary is subject
(collectively, "Agreements and Instruments") except for such defaults
that would not result in a Material Adverse Effect; and the execution,
delivery and performance of this Agreement, the Indenture, the
Securities and the Registration Rights Agreement and any other
agreement or instrument entered into or issued or to be entered into
or issued by the Company in connection with the transactions
contemplated hereby or thereby or in the Offering Memorandum and the
consummation of the transactions contemplated herein, therein and in
the Offering Memorandum (including the issuance and sale of the
Securities and the use of the proceeds from the sale of the Securities
as described in the Offering Memorandum under the caption "Use of
Proceeds" and the issuance of the shares of Common Stock issuable upon
conversion of the Securities) and compliance by the Company with its
obligations hereunder and thereunder have been duly authorized by all
necessary corporate action and do not and will not, whether with or
without the giving of notice or passage of time or both, conflict with
or constitute a breach of, or default or Repayment Event (as defined
below) under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or
any of its subsidiaries pursuant to, the Agreements and Instruments
(except for such conflicts, breaches, defaults, Repayment Events or
liens, charges or encumbrances that, singly or in the aggregate, would
not result in a Material Adverse Effect), nor will such action result
in any violation of the provisions of the charter or by-laws of the
Company or any of its subsidiaries or any applicable law, statute,
rule, regulation, judgment, order, writ or decree of any government,
government instrumentality or court, domestic or foreign, having
jurisdiction over the Company or any of its subsidiaries or any of
their assets, properties or operations. As used herein, a "Repayment
Event" means any event or condition which gives the holder of any
note, debenture or other evidence of indebtedness (or any person
acting on such holder's behalf) the right to require the repurchase,
redemption or repayment of all or a portion of such indebtedness by
the Company or any of its subsidiaries.
(xvi) Absence of Labor Dispute. No labor dispute with
the employees of the Company or any of its subsidiaries exists or, to
the knowledge of the Company, is imminent, and the Company is not
aware of any existing or imminent labor disturbance by the employees
of any of its or any of its subsidiaries' principal suppliers,
manufacturers, customers or contractors, which, in either case, may
reasonably be expected to result in a Material Adverse Effect.
(xvii) Absence of Proceedings. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of the Company, threatened, against or affecting the
Company or any subsidiary, which is required to be disclosed in the
Offering Memorandum (other than as disclosed therein), which might
reasonably be expected to result in a Material Adverse Effect, or
which might reasonably be expected to materially and adversely affect
the properties or assets of the Company or any of its subsidiaries or
the
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consummation of the transactions contemplated in this Agreement, the
Indenture or the Registration Rights Agreement or the performance by
the Company of its obligations hereunder or thereunder; the aggregate
of all pending legal or governmental proceedings to which the Company
or any subsidiary is a party or of which any of their respective
property or assets is the subject which are not described in the
Offering Memorandum, including ordinary routine litigation incidental
to the business, could not reasonably be expected to result in a
Material Adverse Effect.
(xviii) Possession of Intellectual Property. The Company
and its subsidiaries own or possess, or can acquire on reasonable
terms, adequate patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems
or procedures), trademarks, service marks, trade names or other
intellectual property (collectively, "Intellectual Property")
necessary to carry on the business now operated by them, and neither
the Company nor any of its subsidiaries has received any notice or is
otherwise aware of any infringement of or conflict with asserted
rights of others with respect to any Intellectual Property or of any
facts or circumstances which would render any Intellectual Property
invalid or inadequate to protect the interest of the Company or any of
its subsidiaries therein, and which infringement or conflict (if the
subject of any unfavorable decision, ruling or finding) or invalidity
or inadequacy, singly or in the aggregate, would result in a Material
Adverse Effect.
(xix) Absence of Further Requirements. No filing with,
or authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency is necessary or required for the performance by the Company of
its obligations under this Agreement or the Indenture, in connection
with the offering, issuance or sale of the Securities hereunder or the
consummation of the transactions contemplated by this Agreement,
except such as may be required under state securities laws.
(xx) Possession of Licenses and Permits. The Company
and its subsidiaries possess such certificates, permits, licenses,
approvals, consents and other authorizations (collectively,
"Governmental Licenses") issued by the appropriate federal, state,
local or foreign regulatory agencies or bodies necessary to conduct
the business now operated by them; the Company and its subsidiaries
are in compliance with the terms and conditions of all such
Governmental Licenses, except where the failure so to comply would
not, singly or in the aggregate, have a Material Adverse Effect; all
of the Governmental Licenses are valid and in full force and effect,
except when the invalidity of such Governmental Licenses or the
failure of such Governmental Licenses to be in full force and effect
would not have a Material Adverse Effect; and neither the Company nor
any of its subsidiaries has received any notice of proceedings
relating to the revocation or modification of any such Governmental
Licenses which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would result in a Material
Adverse Effect.
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(xxi) Title to Property. The Company and its
subsidiaries have good and indefeasible title to all real property
owned by the Company and its subsidiaries and good title to all other
properties owned by them, in each case, free and clear of all
mortgages, pledges, liens, security interests, claims, restrictions or
encumbrances of any kind, except such as (a) are described in the
Offering Memorandum or (b) do not, singly or in the aggregate,
materially affect the value of such property and do not materially
interfere with the use made and proposed to be made of such property
by the Company or any of the subsidiaries; and all of the leases and
subleases material to the business of the Company and its
subsidiaries, considered as one enterprise, and under which the
Company or any of its subsidiaries holds properties described in the
Offering Memorandum, are in full force and effect, and neither the
Company nor any of its subsidiaries has any notice of any material
claim of any sort that has been asserted by anyone adverse to the
rights of the Company or any of its subsidiaries under any of the
leases or subleases mentioned above, or affecting or questioning the
rights of the Company or such subsidiary to the continued possession
of the leased or subleased premises under any such lease or sublease
which might reasonably be expected to materially interfere with the
use of such leased or subleased property.
(xxii) Investment Company Act. The Company is not, and
upon the issuance and sale of the Securities as herein contemplated
and the application of the net proceeds therefrom as described in the
Offering Memorandum will not be, an "investment company" or an entity
"controlled" by an "investment company" as such terms are defined in
the Investment Company Act of 1940, as amended (the "Investment
Company Act").
(xxiii) Taxes. Each of the Company and the Subsidiaries
has filed all federal, state and local income, franchise and other tax
returns which have been required to be filed and has paid all taxes
shown as due thereon. All such returns, as amended if applicable, are
complete, accurate and correct in all material respects. Neither the
Company nor any of the Subsidiaries has any knowledge of any tax
deficiency which might be asserted against it which would have a
Material Adverse Effect. The provisions and reserves on the books of
the Company in respect of federal, state, local and other taxes for
any taxable period as to which the Company's liability for taxes has
not been finally determined are, in the opinion of the Company,
adequate.
(xxiv) Insurance Coverage. The Company and each
Subsidiary maintain insurance, which is in full force and effect, of
the types and in the amounts customary in the funeral home and
cemetery business. Neither the Company nor any Subsidiary has any
reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain
similar coverage from insurers at a cost that would not have a
Material Adverse Effect.
(xxv) Environmental Laws. Except as described in the
Offering Memorandum and except for such violations as would not,
singly or in the aggregate, result in a Material Adverse Effect, (A)
neither the Company nor any of its subsidiaries is in violation of any
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federal, state, local or foreign statute, law, rule, regulation,
ordinance, code, policy or rule of common law or any judicial or
administrative interpretation thereof, or any judicial or
administrative order, consent, decree or judgment which names the
Company or any of its subsidiaries as a party or as being subject
thereto, relating to pollution or protection of human health, the
environment (including, without limitation, ambient air, surface
water, groundwater, land surface or subsurface strata) or wildlife,
including, without limitation, laws and regulations relating to the
release or threatened release of chemicals, pollutants, contaminants,
wastes, toxic substances, hazardous substances, petroleum or petroleum
products (collectively, "Hazardous Materials") or to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport
or handling of Hazardous Materials (collectively, "Environmental
Laws"), (B) the Company and its subsidiaries have all permits,
authorizations and approvals required under any applicable
Environmental Laws and are each in compliance with their requirements,
except where the failure to have such permits, authorizations and
approvals or to comply with their requirements would not, singly or in
the aggregate, have a Material Adverse Effect, (C) there are no
pending or, to the Company's knowledge, threatened administrative,
regulatory or judicial actions, suits, demands, demand letters,
claims, liens, notices of noncompliance or violation, investigation or
proceedings relating to any Environmental Law against the Company or
any of its subsidiaries which, singly or in the aggregate, might
reasonably be expected to result in a Material Adverse Effect and (D)
to the Company's knowledge, there are no events or circumstances that
might reasonably be expected to form the basis of an order for
clean-up or remediation, or an action, suit or proceeding by any
private party or governmental body or agency, against or affecting the
Company or any of its subsidiaries relating to any Hazardous Materials
or the violation of any Environmental Laws which, singly or in the
aggregate, might reasonably be expected to result in a Material
Adverse Effect. Based on its prior experience with respect to
compliance with Environmental Laws as they apply to the business
conducted by the Company and its subsidiaries and the properties owned
or leased by them, the Company has reasonably concluded that the costs
and liabilities associated with compliance with Environmental Laws are
not likely to have a Material Adverse Effect.
(xxvi) Rule 144A Eligibility. The Securities are
eligible for resale pursuant to Rule 144A and will not be, at the
Closing Time, of the same class as securities listed on a national
securities exchange registered under Section 6 of the 1934 Act, or
quoted in a U.S. automated interdealer quotation system.
(xxvii) No General Solicitation. None of the Company, its
Affiliates, or any person acting on its or any of their behalf (other
than the Initial Purchasers, as to whom the Company makes no
representation) has engaged or will engage, in connection with the
offering of the Securities, in any form of general solicitation or
general advertising within the meaning of Rule 502(c) under the 1933
Act.
(xxviii) No Registration Required. Subject to compliance
by the Initial Purchasers with the representations and warranties set
forth in Section 2(d) and the procedures set forth
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in Section 9 hereof, it is not necessary in connection with the offer,
sale and delivery of the Securities to the Initial Purchasers and to
each Subsequent Purchaser in the manner contemplated by this Agreement
and the Offering Memorandum to register the Securities under the 1933
Act or to qualify the Indenture under the Trust Indenture Act of 1939,
as amended (the "1939 Act").
(xxix) No Directed Selling Efforts. With respect to
those Securities sold in reliance on Regulation S, (A) none of the
Company, its Affiliates or any person acting on its or their behalf
(other than the Initial Purchasers, as to whom the Company makes no
representation) has engaged or will engage in any directed selling
efforts within the meaning of Regulation S and (B) each of the Company
and its Affiliates and any person acting on its or their behalf (other
than the Initial Purchasers, as to whom the Company makes no
representation) has complied and will comply with the offering
restriction requirement of Regulation S.
(xxx) PORTAL. The Company has been advised by the
National Association of Securities Dealers, Inc. (the "NASD") that the
Securities have been designated PORTAL eligible securities in
accordance with the rules and regulations of the NASD.
(xxxi) Registration Rights. There are no persons with
registration rights or other similar rights to have any securities
registered by the Company under the 1933 Act pursuant to the Shelf
Registration Statement (as defined in the Registration Rights
Agreement), except as described in the Registration Rights Agreement.
(xxxii) Solvency. The Company is, and immediately after
the Closing Time will be, Solvent. As used herein, the term "Solvent"
means, with respect to the Company on a particular date, that on such
date (A) the fair market value of the assets of the Company is greater
than the total amount of liabilities (including contingent
liabilities) of the Company, (B) present fair salable value of the
assets of the Company is greater than the amount that will be required
to pay the probable liabilities of the Company on its debts as they
become absolute and matured, (C) the Company is able to realize upon
its assets and pay its debts and other liabilities, including
contingent obligations, as they mature, and (D) the Company does not
have unreasonably small capital.
(xxxiii) No Stabilization or Manipulation. Neither the
Company nor any of its officers, directors or controlling persons has
taken, directly or indirectly, any action designed to cause or to
result in, or that has constituted or which might reasonably be
expected to constitute, the stabilization or manipulation of the price
of any security of the Company to facilitate the sale or resale of the
Securities.
(xxxiv) Distribution of Offering Material. The Company
has not distributed and, prior to the later to occur of (i) the
Closing Time and (ii) completion of the distribution of the
Securities, will not distribute any offering material in connection
with the offering and
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<PAGE> 15
sale of the Securities other than the Preliminary Offering Memorandum,
the Final Offering Memorandum, any amendments or supplements to either
of the foregoing or documents incorporated by reference therein, the
Indenture, the Registration Rights Agreement or other materials, if
any, approved by the Initial Purchasers.
(b) Officer's Certificates. Any certificate signed by any officer
of the Company or any of its subsidiaries delivered to the Initial Purchasers
or to counsel for the Initial Purchasers shall be deemed a representation and
warranty by the Company to each Initial Purchaser as to the matters covered
thereby.
SECTION 2. Sale and Delivery to Initial Purchasers; Closing.
(a) Initial Securities. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company agrees to sell to each Initial Purchaser, severally and not
jointly, and each Initial Purchaser, severally and not jointly, agrees to
purchase from the Company, at the price set forth in Schedule B, the aggregate
principal amount of Initial Securities set forth in Schedule A opposite the
name of such Initial Purchaser, plus any additional principal amount of Initial
Securities which such Initial Purchaser may become obligated to purchase
pursuant to the provisions of Section 11 hereof.
(b) Option Securities. 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 Initial
Purchasers, severally and not jointly, to purchase up to an additional
$18,750,000 principal amount of Securities at the same price set forth in
Schedule B for the Initial Securities, plus accrued interest, if any, from the
Closing Time to each Date of Delivery (as defined below). The option hereby
granted will expire 30 days after the date hereof and may be exercised in whole
or in part from time to time only for the purpose of covering over-allotments
which may be made in connection with the subsequent resale of the Initial
Securities upon notice by the Initial Purchasers to the Company setting forth
the number of Option Securities as to which the several Initial Purchasers are
then exercising the option and the time and date of payment and delivery for
such Option Securities. Any such time and date of delivery (a "Date of
Delivery") shall be determined by the Initial Purchasers, but shall not be
later than seven full business days after the exercise of said option, nor in
any event prior to the Closing Time, as hereinafter defined. If the option is
exercised as to all or any portion of the Option Securities, each of the
Initial Purchasers, acting severally and not jointly, will purchase that
proportion of the total principal amount of Option Securities then being
purchased which the principal amount of Initial Securities set forth in
Schedule A opposite the name of such Initial Purchaser bears to the total
principal amount of Initial Securities, subject in each case to such
adjustments as the Initial Purchasers in their discretion shall make to
eliminate any sales or purchases of Securities having a principal amount less
than $1,000.
(c) Payment; Registration. Except as set forth in the next
paragraph, the Securities to be purchased by each Initial Purchaser hereunder
will be represented by one or more definitive global Securities in book-entry
form which will be deposited by or on behalf of the Company with
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<PAGE> 16
DTC or its designated custodian. The Company will deliver each of the global
Securities to Merrill Lynch for the account of each Initial Purchaser, against
payment by or on behalf of such Initial Purchaser of the purchase price
therefor to the order of the Company in same day funds, by causing DTC to
credit the Securities to the account of Merrill Lynch at DTC. The time and date
of such delivery and payment shall be, with respect to the Initial Securities,
9:00 a.m., New York City time, on the third (fourth, if the pricing occurs
after 4:30 p.m., New York City time, on any given day) business day after the
date hereof (unless postponed in accordance with the provisions of Section 11),
or such other time and date not later than ten business days after such date as
the Initial Purchasers and the Company may agree upon in writing (such time and
date of payment and delivery of the Initial Securities being herein called the
"Closing Time") and, with respect to the Option Securities, on each Date of
Delivery as specified in the notice from the Initial Purchasers to the Company.
Such Securities, if any, as Merrill Lynch may request upon at least
two full business days' prior notice to the Company (such request to include
the authorized denominations and the names in which they are to be registered),
shall be delivered in definitive certificated form, by or on behalf of the
Company to Merrill Lynch, for the account of the Initial Purchasers, against
payment by or on behalf of such Initial Purchaser of the purchase price
therefor to the order of the Company in same day funds. The Company will cause
the certificates representing such Securities to be made available for checking
and packaging at least 24 hours prior to the Closing Time or the relevant Date
of Delivery at the office of Merrill Lynch, Merrill Lynch World Headquarters,
North Tower, World Financial Center, New York, New York 10281-1209.
(d) Information with Respect to Initial Purchasers. Each Initial
Purchaser, severally and not jointly, hereby represents and warrants to, and
agrees with, the Company that it (i) is a "qualified institutional buyer"
within the meaning of Rule 144A under the 1933 Act (a "Qualified Institutional
Buyer") and an institutional "accredited investor" within the meaning of
Regulation D under the 1933 Act (an "Accredited Investor"); (ii) has not and
will not solicit offers for, or offer or sell, Securities by means of any
general solicitation or general advertising within the meaning of Rule 502(c)
under Regulation D under the 1933 Act; and (iii) will otherwise act in
accordance with the terms and conditions set forth in this Agreement, including
Section 9 hereof, and in the Offering Memorandum in connection with the
placement of the Securities contemplated hereby.
SECTION 3. Covenants of the Company. The Company covenants with each
Initial Purchaser as follows:
(a) Delivery of Offering Memorandum. The Company agrees to furnish
to each Initial Purchaser, as promptly as possible, without charge, such number
of copies of the Preliminary Offering Memorandum, the Final Offering Memorandum
and any supplements and amendments thereto and documents incorporated by
reference therein as such Initial Purchaser may reasonably request.
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<PAGE> 17
(b) Amendments to Offering Memorandum and Supplements. The Company
will advise each Initial Purchaser promptly of any proposal to amend or
supplement the Offering Memorandum and will not effect such amendment or
supplement without the consent of the Initial Purchasers. Neither the consent
of the Initial Purchasers, nor the Initial Purchasers' delivery of any such
amendment or supplement, shall constitute a waiver of any of the conditions set
forth in Section 5 hereof.
(c) Notice and Effect of Material Changes. The Company will
immediately notify each Initial Purchaser, and confirm such notice in writing,
of (x) any filing made by the Company of information relating to the placement
of the Securities with any securities exchange or any other regulatory body in
the United States or any other jurisdiction, and (y) prior to the completion of
the placement of the Securities by the Initial Purchasers as evidenced by a
notice in writing from the Initial Purchasers to the Company, any material
changes in or affecting the condition, financial or otherwise, or the earnings,
business affairs or business prospects of the Company and its subsidiaries that
(i) make any statement in the Offering Memorandum false or misleading or (ii)
are not disclosed in the Offering Memorandum. In such event or if during such
time any event shall occur as a result of which it is necessary, in the
reasonable opinion of any of the Company, its counsel, the Initial Purchasers
or counsel for the Initial Purchasers, to amend or supplement the Final
Offering Memorandum in order that the Final Offering Memorandum not include any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein not misleading in the light of the
circumstances then existing, the Company will forthwith amend or supplement the
Final Offering Memorandum by preparing and furnishing to each Initial Purchaser
an amendment or amendments of, or a supplement or supplements to, the Final
Offering Memorandum (in form and substance satisfactory in the reasonable
opinion of counsel for the Initial Purchasers) so that, as so amended or
supplemented, the Final Offering Memorandum will not include an untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
existing at the time it is delivered to a Subsequent Purchaser, not misleading.
(d) Blue Sky Qualifications. The Company will use its best
efforts, in cooperation with the Initial Purchasers, to qualify the Securities
and the shares of Common Stock issuable upon conversion of the Securities for
offering and sale under the applicable securities laws of such states and other
jurisdictions as the Initial Purchasers may designate and to maintain such
qualifications in effect for so long as may be required to complete the
distribution of the Securities or as otherwise required by law; provided,
however, that the Company shall not be obligated to file any general consent to
service of process or to qualify as a foreign corporation or as a dealer in
securities in any jurisdiction in which it is not so qualified or to subject
itself to taxation in respect of doing business in any jurisdiction in which it
is not otherwise so subject. In each jurisdiction in which the Securities have
been so qualified, the Company will file such statements and reports as may be
required by the laws of such jurisdiction to continue such qualification in
effect for so long as may be required to complete the distribution of the
Securities or as otherwise required by law.
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<PAGE> 18
(e) Rule 144A Information. The Company agrees that, in order to
render the Securities and the shares of Common Stock issuable upon conversion
thereof eligible for resale pursuant to Rule 144A under the 1933 Act, while any
of the Securities or such shares remain outstanding, to make available, upon
request, to any holder of Securities or such shares or prospective purchasers
of Securities or such shares the information specified in Rule 144A(d)(4),
unless the Company furnishes information to the Commission pursuant to Section
13 or 15(d) of the 1934 Act.
(f) No Resale of Securities. During the period of two years after
the latest Date of Delivery, the Company will not, and will not permit any of
its "affiliates" (as defined in Rule 144 under the Securities Act) to, resell
any of the Securities which constitute "restricted securities" under Rule 144
that have been reacquired by any of them, except pursuant to an effective
registration statement under the 1933 Act.
(g) Rating of Securities. The Company shall take all reasonable
action necessary to enable Standard & Poor's Ratings Services, a division of
the McGraw-Hill Companies, Inc. ("S&P"), and Moody's Investors Service, Inc.
("Moody's") to provide their respective credit ratings of the Securities.
(h) DTC. The Company will cooperate with the Initial Purchasers
and use its best efforts to permit the Securities to be eligible for clearance
and settlement through the facilities of DTC.
(i) Use of Proceeds. The Company will use the net proceeds
received by it from the sale of the Securities in the manner specified in the
Offering Memorandum under "Use of Proceeds."
(j) Restriction on Sale of Equity Securities. During a period of
90 days from the date of the Offering Memorandum (the "Lock-Up Period"), the
Company will not, without the prior written consent of Merrill Lynch, (i)
directly or indirectly, offer, pledge, sell, contract to sell, sell any option
or contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase or otherwise transfer or dispose of any
share of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or file any registration statement under the 1933
Act with respect to any of the foregoing or (ii) enter into any swap or any
other agreement or any transaction that transfers, in whole or in part,
directly or indirectly, the economic consequence of ownership of the Common
Stock, whether any such swap or transaction described in clause (i) or (ii)
above is to be settled by delivery of Common Stock or such other securities, in
cash or otherwise. The foregoing sentence shall not apply to (A) the Securities
to be sold hereunder, (B) any shares of Common Stock issued by the Company upon
the exercise of an option or warrant or the conversion of a security
outstanding on the date hereof and referred to in the Offering Memorandum, (C)
any shares of Common Stock issued as payment of any part of the purchase price
for funeral homes or cemeteries (or businesses or capital stock of businesses
that operate funeral homes or cemeteries) which are acquired by the Company
(provided, however, that such shares shall be subject to restrictions that will
prohibit the transfer thereof until after expiration of the Lock-Up Period),
(D) options to purchase shares of Common Stock granted pursuant to the
Company's 1994 Long-Term Incentive Plan (the "Incentive Plan") (provided,
however, that such options shall not be
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<PAGE> 19
exercisable until after the expiration of the Lock-Up Period except upon the
termination of the option holder's employment by reason of a disability, death,
or qualified retirement of the option holder as provided in the option holder's
stock option agreement relating to such options) and (E) restricted shares,
restricted stock units, stock unit awards payable in the form of Common Stock
or performance shares issued or granted pursuant to the Incentive Plan;
provided, however, that (1) in the case of restricted shares, such shares shall
be subject to restrictions on transfer or sale which do not lapse until after
the expiration of the Lock-Up Period, (2) in the case of restricted stock units
or stock unit awards payable in the form of Common Stock, the issuance of
shares of Common Stock in respect of such units shall be subject to
restrictions which do not lapse until after the expiration of the Lock-Up
Period, and (3) in the case of performance shares, such shares shall be subject
to provisions to the effect that they may not be earned by or vested in the
participant prior to the end of the Lock-Up Period. The Company shall not
waive, release or modify any of the restrictions referred to in the immediately
preceding sentence without the prior written consent of Merrill Lynch.
(k) Reservation of Shares. The Company will reserve and keep
available at all times, free of preemptive rights, shares of Common Stock for
the purpose of enabling the Company to satisfy any obligations to issue Common
Stock upon conversion of Securities.
(l) Investment Company Act. The Company agrees that it is not and
will not become, at any time prior to the expiration of two years after the
latest Date of Delivery, an open-end investment company, unit investment trust,
closed-end investment company or face-amount certificate company that is or is
required to be registered under Section 8 of the Investment Company Act.
(m) Listing. The Company will use its best efforts to effect the
listing of the shares of Common Stock initially issuable upon conversion of the
Securities on the New York Stock Exchange.
SECTION 4. Payment of Expenses.
(a) Expenses. The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation, printing and delivery of the Offering Memorandum (including
financial statements and any schedules or exhibits and any document
incorporated therein by reference) and of each amendment or supplement thereto,
(ii) the preparation, printing and delivery to the Initial Purchasers of this
Agreement, the Indenture and the Registration Rights Agreement, and such other
documents as may be required in connection with the offering, purchase, sale,
issuance or delivery of the Securities or the issuance or delivery of the
Common Stock issuable upon conversion thereof, (iii) the preparation, issuance
and delivery of the certificates for the Securities to the Initial Purchasers
and the certificates for the Common Stock issuable upon conversion thereof,
including any charges of DTC in connection therewith, (iv) the fees and
disbursements of the Company's counsel, accountants and other advisors, (v) the
qualification of the Securities and the Common Stock under securities laws in
accordance with the provisions of Section 3(d) hereof, including filing fees
and the reasonable fees and disbursements of counsel for the Initial
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<PAGE> 20
Purchasers in connection therewith and in connection with the preparation and
delivery to the Initial Purchasers of copies of the Blue Sky Survey and any
supplement thereto, (vi) the fees and expenses of the Trustee, including the
fees and disbursements of counsel for the Trustee in connection with the
Indenture and the Securities, (vii) any fees payable in connection with the
rating of the Securities, (viii) the fees and expenses of any transfer agent or
registrar for the Common Stock and (ix) any fees payable for the review by the
NASD in connection with the initial and continued designation of the Securities
as PORTAL securities under the PORTAL Market Rules pursuant to NASD Rule 5322.
(b) Termination of Agreement. If this Agreement is terminated by
the Initial Purchasers in accordance with the provisions of Section 5 or
Section 10(a)(i) hereof, the Company shall reimburse the Initial Purchasers for
all of their out-of-pocket expenses, including the reasonable fees and
disbursements of counsel for the Initial Purchasers.
SECTION 5. Conditions of Initial Purchasers' Obligations. The
obligations of the several Initial Purchasers hereunder are subject to the
accuracy of the representations and warranties of the Company contained in
Section 1 hereof or in certificates of any officer of the Company or any of its
subsidiaries delivered pursuant to the provisions hereof, to the performance by
the Company of its covenants and other obligations hereunder, and to the
following further conditions:
(a) Opinions of Counsel for Company. At the Closing Time the
Initial Purchasers shall have received the favorable opinions, dated as of the
Closing Time, of Andrews & Kurth L.L.P. and Cochran, Rooke & Craft, L.L.P.,
each counsel for the Company, in form and substance reasonably satisfactory to
the Initial Purchasers, to the combined effect set forth in Exhibit A hereto
and to such further effect as the Initial Purchasers may reasonably request.
(b) Opinion of Counsel for Initial Purchasers. At the Closing Time
the Initial Purchasers shall have received the favorable opinion, dated as of
the Closing Time, of Vinson & Elkins L.L.P., counsel for the Initial
Purchasers, with respect to the matters set forth in (i), (ii), (iv) (solely as
to preemptive or other similar rights arising by operation of law or under the
charter or by-laws of the Company), (v) to (viii), inclusive, (xii) (solely as
to the information in the Offering Memorandum under "Description of Debentures"
and "Description of Capital Stock"), (xviii) and the penultimate paragraph of
Exhibit A hereto. In giving such opinion such counsel may rely, as to all
matters governed by the laws of jurisdictions other than the law of the State
of New York, the federal law of the United States and the General Corporation
Law of the State of Delaware, upon the opinions of counsel satisfactory to the
Initial Purchasers. Such counsel may also state that, insofar as such opinion
involves factual matters, they have relied, to the extent they deem proper,
upon certificates of officers of the Company and its subsidiaries and
certificates of public officials.
(c) Officers' Certificate. At the Closing Time, there shall not
have been, since the date hereof or since the respective dates as of which
information is given in the Offering Memorandum, any material adverse change in
the condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, and the
Initial Purchasers shall have
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<PAGE> 21
received a certificate of the President or a Vice President of the Company and
of the chief financial or chief accounting officer of the Company, dated as of
the Closing Time, to the effect that, (i) there has been no such material
adverse change, (ii) the representations and warranties in Section 1(a) hereof
are true and correct (in the case of representations and warranties that are
qualified as to materiality) or are true and correct in all material respects
(in the case of representations and warranties that are not so qualified) with
the same force and effect as though expressly made at and as of the Closing
Time, and (iii) the Company has complied in all material respects with all
agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to the Closing Time.
(d) Accountant's Comfort Letter. At the time of the execution of
this Agreement, the Initial Purchasers shall have received from Coopers &
Lybrand L.L.P. a letter dated such date, in form and substance satisfactory to
the Initial Purchasers containing statements and information of the type
ordinarily included in accountants' "comfort letters" to initial purchasers
with respect to the financial statements and certain financial information
contained in the Offering Memorandum.
(e) Bring-down Comfort Letter. At the Closing Time, the Initial
Purchasers shall have received from Coopers & Lybrand L.L.P., a letter dated as
of the Closing Time, to the effect that they reaffirm the statements made in
the letter furnished pursuant to subsection (d) of this Section, except that
the specified date referred to shall be a date not more than three business
days prior to the Closing Time.
(f) Maintenance of Rating. At the Closing Time, the Securities
shall be rated at least B1 by Moody's and B by S&P, and the Company shall have
delivered to the Initial Purchasers a letter dated the Closing Time, from each
such rating agency, or other evidence satisfactory to the Initial Purchasers,
confirming that the Securities have such ratings; and since the date of this
Agreement, there shall not have occurred a downgrading in the rating assigned
to the Securities or any of the Company's other securities by any "nationally
recognized statistical rating agency," as that term is defined by the
Commission for purposes of Rule 436(g)(2) under the 1933 Act, and no such
organization shall have publicly announced that it has under surveillance or
review its rating of the Securities or any of the Company's other securities.
(g) Lock-up Agreements. At the date of this Agreement, the Initial
Purchasers shall have received an agreement substantially in the form of
Exhibit B hereto signed by the persons listed on Schedule C hereto.
(h) PORTAL. At the Closing Time, the Securities shall have been
designated for trading on PORTAL.
(i) Approval of Listing. The shares of Common Stock initially
issuable upon conversion of the Securities shall have been duly listed, subject
to notice of issuance, on the New York Stock Exchange.
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<PAGE> 22
(j) Conditions to Purchase of Option Securities. In the event that
the Initial Purchasers exercise their option provided in Section 2(b) hereof to
purchase all or any portion of the Option Securities, the representations and
warranties of the Company contained herein and the statements in any
certificates furnished by the Company or any subsidiary of the Company
hereunder shall be true and correct (in the case of representations and
warranties that are qualified as to materiality) or are true and correct in all
material respects (in the case of representations and warranties that are not
so qualified) as of each Date of Delivery and, at the relevant Date of
Delivery, the Initial Purchasers shall have received:
(i) Officers' Certificate. A certificate, dated such Date of
Delivery, of the President or a Vice President of the Company and of
the chief financial or chief accounting officer of the Company
confirming that the certificate delivered at the Closing Time pursuant
to Section 5(c) hereof remains true and correct as of such Date of
Delivery.
(ii) Opinions of Counsel for Company. The favorable opinions
of Andrews & Kurth L.L.P. and Cochran, Rooke & Craft, L.L.P., each
counsel for the Company, in form and substance satisfactory to the
Initial Purchasers, dated such Date of Delivery, relating to the
Option Securities to be purchased on such Date of Delivery and
otherwise to the same effect as the opinions required by Section 5(a)
hereof.
(iii) Opinion of Counsel for Initial Purchasers. The favorable
opinion of Vinson & Elkins L.L.P., counsel for the Initial Purchasers,
dated such Date of Delivery, relating to the Option Securities to be
purchased on such Date of Delivery and otherwise to the same effect as
the opinion required by Section 5(b) hereof.
(iv) Bring-down Comfort Letter. A letter from Coopers &
Lybrand L.L.P., in form and substance satisfactory to the Initial
Purchasers and dated such Date of Delivery, substantially in the same
form and substance as the letter furnished to the Initial Purchasers
pursuant to Section 5(d) hereof, except that the "specified date" in
the letter furnished pursuant to this paragraph shall be a date not
more than three days prior to such Date of Delivery.
(v) No Downgrading. Subsequent to the date of this Agreement,
no downgrading shall have occurred in the rating accorded the
Securities or of any of the Company's other 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
1933 Act, and no such organization shall have publicly announced that
it has under surveillance or review its ratings of any of the
Company's securities.
(k) Registration Rights Agreement. At the Closing Time, the
Company shall have executed and delivered the Registration Rights Agreement.
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<PAGE> 23
(l) Additional Documents. At the Closing Time and at each Date of
Delivery, counsel for the Initial Purchasers shall have been furnished with
such documents and opinions as they may require for the purpose of enabling
them to pass upon the issuance and sale of the Securities as herein
contemplated, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the conditions,
herein contained; and all proceedings taken by the Company in connection with
the issuance and sale of the Securities as herein contemplated and with respect
to the shares of Common Stock issuable upon conversion of the Securities shall
be satisfactory in form and substance to the Initial Purchasers.
(m) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled,
this Agreement, or, in the case of any condition to the purchase of Option
Securities, on a Date of Delivery which is after the Closing Time, the
obligations of the several Initial Purchasers to purchase the relevant Option
Securities, may be terminated by the Initial Purchasers by notice to the
Company at any time at or prior to the Closing Time or such Date of Delivery,
as the case may be, and such termination shall be without liability of any
party to any other party except as provided in Section 4 and except that
Sections 1, 6, 7 and 8 shall survive such termination and remain in full force
and effect.
SECTION 6. Indemnification.
(a) Indemnification of Initial Purchasers. The Company agrees to
indemnify and hold harmless each Initial Purchaser and each person, if any, who
controls any Initial Purchaser within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement
or alleged untrue statement of a material fact contained in any
Preliminary Offering Memorandum or the Final Offering Memorandum (or
any amendment or supplement thereto), or the omission or alleged
omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission; provided that (subject to Section 6(d) below) any such
settlement is effected with the written consent of the Company; and
(iii) against any and all expenses whatsoever, as incurred
(including the fees and disbursements of counsel chosen by Merrill
Lynch), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based
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<PAGE> 24
upon any such untrue statement or omission, or any such alleged untrue
statement or omission, to the extent that any such expense is not paid
under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Initial Purchaser through Merrill Lynch expressly for use in any Preliminary
Offering Memorandum or the Final Offering Memorandum (or any amendment or
supplement thereto); and provided further, that, insofar as this indemnity
agreement relates to any untrue statement or omission, or any alleged untrue
statement or omission, made in the Preliminary Offering Memorandum, but
eliminated or remedied in the Final Offering Memorandum, it shall not inure to
the benefit of an Initial Purchaser (or to the benefit of any person who
controls such Initial Purchaser) if a copy of the Final Offering Memorandum was
not delivered by such Initial Purchaser to the person asserting the claim
arising from such untrue statement or omission, or such alleged untrue
statement or omission at or prior to the confirmation of the sale of the
Securities to such person, if the delivery thereof would have constituted a
defense to the claim asserted by such person.
(b) Indemnification of Company, Directors and Officers. Each
Initial Purchaser severally agrees to indemnify and hold harmless the Company,
its directors, its officers, and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
against any and all loss, liability, claim, damage and expense described in the
indemnity contained in subsection (a) of this Section, as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Preliminary Offering Memorandum or the Final Offering
Memorandum (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by such Initial
Purchaser through Merrill Lynch expressly for use in the Preliminary Offering
Memorandum or the Final Offering Memorandum (or any amendment or supplement
thereto).
(c) Actions against Parties; Notification. Each indemnified party
shall give notice as promptly as reasonably practicable to each indemnifying
party of any action commenced against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party shall not
relieve such indemnifying party from any liability hereunder to the extent it
is not materially prejudiced as a result thereof and in any event shall not
relieve it from any liability which it may have otherwise than on account of
this indemnity agreement. In the case of parties indemnified pursuant to
Section 6(a) above, counsel to the indemnified parties shall be selected by
Merrill Lynch, and, in the case of parties indemnified pursuant to Section 6(b)
above, counsel to the indemnified parties shall be selected by the Company. An
indemnifying party may participate at its own expense in the defense of any
such action; provided, however, that counsel to the indemnifying party shall
not (except with the consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying parties be liable for
fees and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without
- 21 -
<PAGE> 25
the prior written consent of the indemnified parties, settle or compromise or
consent to the entry of any judgment with respect to any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever in respect of which indemnification or
contribution could be sought under this Section 6 or Section 7 hereof (whether
or not the indemnified parties are actual or potential parties thereto), unless
such settlement, compromise or consent (i) includes an unconditional release of
each indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act by or on behalf of
any indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any
time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Section 6(a)(ii) effected without its written consent if
(i) such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into and (iii) such indemnifying party shall not
have reimbursed such indemnified party in accordance with such request prior to
the date of such settlement.
SECTION 7. Contribution. If the indemnification provided for in
Section 6 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims, damages
and expenses incurred by such indemnified party, as incurred, (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Initial Purchasers on the other hand from the
offering of the Securities pursuant to this Agreement or (ii) if the allocation
provided by clause (i) is not permitted by applicable law, in such proportion
as is appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of the Company on the one hand and
of the Initial Purchasers on the other hand in connection with the statements
or omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the
Initial Purchasers on the other hand in connection with the offering of the
Securities pursuant to this Agreement shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Securities
pursuant to this Agreement (before deducting expenses) received by the Company
bear to the total discount received by the Initial Purchasers.
The relative fault of the Company on the one hand and the Underwriters
on the other hand shall be determined by reference to, among other things,
whether any such untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to
- 22 -
<PAGE> 26
information supplied by the Company or by the Initial Purchasers and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The Company and the Initial Purchasers agree that it would not be just
and equitable if contribution pursuant to this Section 7 were determined by pro
rata allocation (even if the Initial Purchasers were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above in this Section 7. The
aggregate amount of losses, liabilities, claims, damages and expenses incurred
by an indemnified party and referred to above in this Section 7 shall be deemed
to include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged
untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Initial Purchaser
shall be required to contribute any amount in excess of the amount by which the
total price at which the Securities underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which such
Initial Purchaser has otherwise been required to pay by reason of any such
untrue or alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the 1933 Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Initial Purchaser within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act shall have the same rights to contribution as such Initial
Purchaser, and each director of the Company, each officer, and each person, if
any, who controls the Company within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act shall have the same rights to contribution as the
Company. The Initial Purchasers' respective obligations to contribute pursuant
to this Section 7 are several in proportion to the principal amount of
Securities set forth opposite their respective names in Schedule A hereto and
not joint.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company submitted pursuant
hereto, shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of any Initial Purchaser or controlling
person, or by or on behalf of the Company, and shall survive delivery of the
Securities to the Initial Purchasers.
- 23 -
<PAGE> 27
SECTION 9. Subsequent Offers and Resales of the Securities.
(a) Offer and Sale Procedures. Each of the Initial Purchasers and
the Company hereby establish and agree to observe the following procedures in
connection with the offer and sale of the Securities:
(i) Offers and Sales only to Institutional Accredited
Investors or Qualified Institutional Buyers. Offers and sales of the
Securities will be made only by the Initial Purchasers or affiliates
thereof qualified to do so in the jurisdictions in which such offers
or sales are made. Each such offer or sale shall be made only (A) to
persons whom the offeror or seller reasonably believes to be Qualified
Institutional Buyers (as defined in Rule 144A under the Securities
Act), or (B) to other institutional accredited investors (as such term
is defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D) that
the offeror or seller reasonably believes to be and, with respect to
sales and deliveries, that are Accredited Investors ("Institutional
Accredited Investors"), or (C) non-U.S. persons outside the United
States to whom the offeror or seller reasonably believes offers and
sales of the Securities may be made in reliance upon Regulation S
under the 1933 Act.
(ii) No General Solicitation. The Securities will be offered
by the Initial Purchasers only by approaching prospective Subsequent
Purchasers on an individual basis. No general solicitation or general
advertising (within the meaning of Rule 502(c) under the 1933 Act)
will be used in connection with the offering of the Securities.
(iii) Purchase by Non-Bank Fiduciaries. In the case of a
non-bank Subsequent Purchaser of a Security acting as a fiduciary for
one or more third parties, in connection with an offer and sale to
such purchaser pursuant to clause (B) of paragraph (i) above, each
third party shall, in the judgment of the Initial Purchasers, be an
Institutional Accredited Investor.
(iv) Restrictions on Transfer. The transfer restrictions and
the other provisions set forth in Sections 2.6 and 2.12 of the
Indenture, including the legend required thereby, shall apply to the
Securities except as otherwise agreed by the Company and the Initial
Purchasers. Following the sale of the Securities by the Initial
Purchasers to Subsequent Purchasers pursuant to the terms hereof,
except as otherwise provided in Section 6 hereof, the Initial
Purchasers shall not be liable or responsible to the Company for any
losses, damages or liabilities suffered or incurred by the Company,
including any losses, damages or liabilities under the 1933 Act,
arising from or relating to any resale or transfer of any Security.
(v) Delivery of the Offering Memorandum. Each Initial
Purchaser will deliver to each Subsequent Purchaser, in connection
with its original distribution of the Securities, a copy of the
Offering Memorandum, as amended and supplemented at the date of such
delivery.
(vi) Subsequent Purchaser Notification. Each Initial Purchaser
will take reasonable steps to inform, and cause each of its U.S.
affiliates to take reasonable steps to inform, persons acquiring
Securities from such Initial Purchaser or U.S. affiliate, as the case
may be,
- 24 -
<PAGE> 28
in the United States that the Securities (A) have not been and will
not be registered under the 1933 Act, (B) are being sold to them
without registration under the 1933 Act in reliance on Rule 144A or in
accordance with another exemption from registration under the 1933
Act, as the case may be, and (C) may not be offered, sold or otherwise
transferred except (1) to the Company, (2) outside the United States
in accordance with Rule 904 of Regulation S, or (3) inside the United
States in accordance with (x) Rule 144A to a person whom the seller
reasonably believes is a Qualified Institutional Buyer that is
purchasing such Securities for its own account or for the account of a
Qualified Institutional Buyer to whom notice is given that the offer,
sale or transfer is being made in reliance on Rule 144A or (y) the
exemption from registration under the 1933 Act provided by Rule 144,
if available.
(b) Selling Restrictions for Offers and Sales Outside the United
States. Each Initial Purchaser understands that the Securities have not been
and will not be registered under the 1933 Act and may not be offered or sold
within the United States or to, or for the account or benefit of, U.S. persons
except in accordance with Regulation S under the 1933 Act or pursuant to an
exemption from the registration requirements of the 1933 Act. Each Initial
Purchaser represents and agrees that, except as permitted by Section 9
(a)(i)(B) above, it has offered and sold Securities and will offer and sell
Securities (i) as part of its distribution at any time and (ii) otherwise until
forty days after the later of the date upon which the offering of the
Securities commences and the latest Date of Delivery, only in accordance with
Rule 903 of Regulation S or Rule 144A under the 1933 Act. Accordingly, neither
the Initial Purchasers, their affiliates nor any persons acting on their behalf
have engaged or will engage in any directed selling efforts with respect to
Securities, and the Initial Purchasers, their affiliates and any person acting
on their behalf have complied and will comply with the offering restriction
requirements of Regulation S. Each Initial Purchaser agrees that, at or prior
to confirmation of a sale of Securities pursuant to Rule 903 of Regulation S,
it will have sent to each distributor, dealer or person receiving a selling
concession, fee or other remuneration that purchases Securities from it or
through it during the restricted period a confirmation or notice to
substantially the following effect:
"The Securities covered hereby have not been registered under the
United States Securities Act of 1933 (the "Securities Act") and may
not be offered or sold within the United States or to or for the
account or benefit of U.S. persons (i) as part of their distribution
at any time and (ii) otherwise until forty days after the later of the
date upon which the offering of the Securities commenced and the date
of closing, except in either case in accordance with Regulation S or
Rule 144A under the Securities Act. Terms used above have the meaning
given to them by Regulation S."
Terms used in the above paragraph have the meanings given to them by Regulation
S.
Each Initial Purchaser severally represents and agrees that it has not
entered and will not enter into any contractual arrangements with respect to
the distribution of the Securities, except with its affiliates or with the
prior written consent of the Company.
- 25 -
<PAGE> 29
SECTION 10. Termination of Agreement.
(a) Termination; General. The Initial Purchasers may terminate
this Agreement, by notice to the Company, at any time at or prior to the
Closing Time (i) if there has been, since the time of execution of this
Agreement or since the respective dates as of which information is given in the
Offering Memorandum, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, or (ii) if there has occurred any
material adverse change in the financial markets in the United States or the
international financial markets, any outbreak of hostilities or escalation
thereof or other calamity or crisis or any change or development involving a
prospective change in national or international political, financial or
economic conditions, in each case the effect of which is such as to make it, in
the judgment of the Initial Purchasers, impracticable to market the Securities
or to enforce contracts for the sale of the Securities, or (iii) if trading in
any securities of the Company has been suspended or limited by the Commission
or the New York Stock Exchange, or (iv) if trading generally on the American
Stock Exchange or the New York Stock Exchange or in the Nasdaq National Market
System has been suspended or limited, or minimum or maximum prices for trading
have been fixed, or maximum ranges for prices have been required, by any of
said exchanges or by such system or by order of the Commission, the NASD or any
other governmental authority, or if a banking moratorium has been declared by
either federal or New York or Texas authorities, in each case (with respect to
the items referred to in this clause (iv)) the effect of which is such as to
make it, in the judgment of the Initial Purchasers, impracticable to market the
Securities or to enforce contracts for the sale of the Securities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof and provided further that Sections
6 and 7 shall survive such termination and remain in full force and effect.
SECTION 11. Default by One or More of the Initial Purchasers. If one
or more of the Initial Purchasers shall fail at the Closing Time or a Date of
Delivery to purchase the Securities which it or they are obligated to purchase
under this Agreement (the "Defaulted Securities"), the non-defaulting Initial
Purchasers shall have the right, within 24 hours thereafter, to make
arrangements for one or more of the non-defaulting Initial Purchasers, or any
other purchasers, to purchase all, but not less than all, of the Defaulted
Securities in such amounts as may be agreed upon and upon the terms herein set
forth; if, however, the non-defaulting Initial Purchasers shall not have
completed such arrangements within such 24-hour period, then:
(a) if the principal amount of Defaulted Securities does not
exceed 10% of the aggregate principal amount of Securities to be purchased on
such date, each of the non-defaulting Initial Purchasers shall be obligated,
severally and not jointly, to purchase the full amount thereof in the
proportions that their respective underwriting obligations hereunder bear to
the underwriting obligations of all non-defaulting Initial Purchasers, or
- 26 -
<PAGE> 30
(b) if the principal amount of Defaulted Securities exceeds 10% of
the aggregate principal amount of Securities to be purchased on such date, this
Agreement or, with respect to any Date of Delivery which occurs after the
Closing Time, the obligation of the Initial Purchasers to purchase and of the
Company to sell the Option Securities to be purchased and sold on such Date of
Delivery, shall terminate without liability on the part of any non-defaulting
Initial Purchaser.
No action taken pursuant to this Section shall relieve any defaulting
Initial Purchaser from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement or, in the case of a Date of Delivery, which is
after the Closing Time, which does not result in a termination of the
obligation of the Initial Purchasers to purchase and the Company to sell the
relevant Option Securities, as the case may be, either the non-defaulting
Initial Purchasers or the Company shall have the right to postpone the Closing
Time or the relevant Date of Delivery, as the case may be, for a period not
exceeding seven days in order to effect any required changes in the Offering
Memorandum or in any other documents or arrangements. As used herein, the term
"Initial Purchaser" includes any person substituted for an Initial Purchaser
under this Section 11.
SECTION 12. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the Initial
Purchasers shall be directed to the Initial Purchasers c/o Merrill Lynch at
1221 McKinney, Suite 2700, Houston, Texas 77010, Attention: Christopher D.
Mize; and notices to the Company shall be directed to it at 415 South First
Street, Suite 210, Lufkin, Texas 75901, Attention: W. Cardon Gerner.
SECTION 13. Parties. This Agreement shall inure to the benefit of and
be binding upon the Initial Purchasers and the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Initial Purchasers and the Company and their respective successors and the
controlling persons and officers and directors referred to in Sections 6 and 7
and their heirs and legal representatives, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the Initial Purchasers and the
Company and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Securities
from any Initial Purchaser shall be deemed to be a successor by reason merely
of such purchase.
SECTION 14. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
- 27 -
<PAGE> 31
SECTION 15. Effect of Headings. The Article and Section headings
herein are for convenience only and shall not affect the construction hereof.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement between the Initial Purchasers and the Company in accordance with its
terms.
Very truly yours,
EQUITY CORPORATION INTERNATIONAL
By:
----------------------------------
W. Cardon Gerner
Senior Vice President - Chief
Financial Officer
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
ABN AMRO INCORPORATED
MORGAN STANLEY & CO. INCORPORATED
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By
------------------------------------------
Authorized Signatory
- 28 -
<PAGE> 32
SCHEDULE A
<TABLE>
<CAPTION>
Principal Amount of
Name of Initial Purchaser Initial Securities
------------------------- ------------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 72,500,000
ABN AMRO Incorporated . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,250,000
Morgan Stanley & Co. Incorporated . . . . . . . . . . . . . . . . . . . . . . 26,250,000
------------
TOTAL $125,000,000
============
</TABLE>
Sch A - 1
<PAGE> 33
SCHEDULE B
EQUITY CORPORATION INTERNATIONAL
$125,000,000
4 1/2% Convertible Subordinated Debentures due 2004
1. The initial price to investors of the Securities shall be 100%
of principal amount thereof, plus accrued interest, if any, from the date of
initial issuance.
2. The purchase price to be paid by the several Initial
Purchasers for the Initial Securities shall be 97.25% of the principal amount
thereof.
3. The interest rate on the Securities shall be 4 1/2% per annum.
4. The Securities shall be convertible into shares of Common
Stock, par value $.01 per share, of the Company at an initial conversion price
of $27.09 per share.
Sch B - 1
<PAGE> 34
SCHEDULE C
List of Persons
Subject to Lock-up
1. William C. McNamara
2. Jack D. Rottman
3. W. Cardon Gerner
4. Billy C. Wells
5. Jack T. Hammer
6. Thomas R. McDade
7. Kenneth W. Smith
8. James P. Hunter, III
9. Bob Bullock
10. J. Patrick Doherty
Sch C - 1
<PAGE> 35
Exhibit A
FORM OF OPINIONS OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(a)
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware.
(ii) The Company has the requisite corporate power and
authority to own, lease and operate its properties and to conduct its business
as described in the Offering Memorandum and to enter into and perform its
obligations under the Purchase Agreement, the Registration Rights Agreement and
the Indenture.
(iii) The authorized, issued and outstanding capital stock of
the Company is as set forth in the Offering Memorandum in the column entitled
"Actual" under the caption "Capitalization" (except for subsequent issuances,
if any, pursuant to the Purchase Agreement or pursuant to reservations,
agreements, employee benefit plans or the exercise of convertible securities or
options referred to in the Offering Memorandum); the shares of issued and
outstanding capital stock of the Company have been duly authorized and validly
issued and are fully paid and non- assessable, and none of the outstanding
shares of capital stock of the Company were issued in violation of the
preemptive or other similar rights of any securityholder of the Company.
(iv) The issuance and sale of the Securities or the shares of
Common Stock issuable upon conversion of the Securities is not subject to
preemptive or other similar rights of any securityholder of the Company arising
by operation of law, under the charter or by-laws of the Company or, to our
knowledge, under any agreement to which the Company or any of its subsidiaries
is a party or by which it is bound.
(v) The Purchase Agreement and the Registration Rights
Agreement have been duly authorized, executed and delivered by the Company.
(vi) The Initial Securities or Option Securities, as the case
may be, to be issued and sold by the Company pursuant to the Purchase Agreement
have been duly authorized by the requisite corporate action on the part of the
Company, and the Securities, when executed and authenticated in accordance with
the terms of the Indenture and delivered to and paid for by you, will be valid
and binding obligations of the Company entitled to the benefits of the
Indenture and enforceable against the Company in accordance with their terms,
except as the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium (including, without limitation, all laws relating to
fraudulent transfers), or other similar laws now or hereafter in effect
relating to or affecting creditors' rights generally, or by general principles
of equity (regardless of whether enforcement is considered in a proceeding at
law or in equity); and the Securities and the Indenture conform as to legal
matters in all material respects to the descriptions thereof in the Offering
Memorandum.
A-1
<PAGE> 36
(vii) 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 binding agreement of
the Company, enforceable against the Company in accordance with its terms,
except as the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium (including, without limitation, all laws relating to
fraudulent transfers), or other similar laws now or hereafter in effect
relating to or affecting the enforcement of creditors' rights generally, or by
general principles of equity (regardless of whether enforcement is considered
in a proceeding at law or in equity).
(viii) The Securities have been duly authorized by the Company,
and the global certificate representing the Securities has been duly executed
by the Company and, when it has been authenticated by the Trustee in the manner
provided in the Indenture (assuming the due authorization, execution and
delivery of the Indenture by the Trustee) and delivered against payment of the
purchase price therefor, the Securities will constitute valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium (including, without limitation, all laws
relating to fraudulent transfers), or other similar laws relating to or
affecting enforcement of creditors' rights generally, and except as enforcement
thereof is subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law), and will be
entitled to the benefits of the Indenture.
(ix) The Securities and the Indenture conform in all material
respects to the descriptions thereof contained in the Offering Memorandum.
(x) Upon issuance and delivery of the Securities in
accordance with the Purchase Agreement and the Indenture, the Securities shall
be convertible at the option of the holder thereof for shares of Common Stock
in accordance with the terms of the Securities and the Indenture; the shares of
Common Stock initially issuable upon conversion of Securities have been duly
authorized for issuance upon such conversion by all necessary action; and such
shares, when issued upon such conversion, will be validly issued and will be
fully paid and non-assessable, and no holder of such Common Stock is or will be
subject to personal liability by reason of being such a holder.
(xi) The shares of Common Stock (including the shares issuable
upon conversion of the Securities) conform as to legal matters in all material
respects to the description thereof in the Company's registration statement on
Form 8-A (File No. 0-24728), as amended, which is incorporated by reference in
the Offering Memorandum.
(xii) The form of certificate used to evidence the Common Stock
complies in all material respects with Section 158 of the Delaware General
Corporation Law and with any applicable requirements of the charter and by-laws
of the Company.
(xiii) To our knowledge, there is not any action, suit,
proceeding, inquiry or investigation to which the Company or any subsidiary is
or is threatened to be made a party, or to
A-2
<PAGE> 37
which the property of the Company or any subsidiary is subject, before or
brought by any court or governmental agency or body, domestic or foreign, which
(a) is required to be disclosed in the Offering Memorandum (other than as
disclosed therein) or (b) seeks to enjoin or prevent the issuance and sale of
the Securities.
(xiv) The information in the Offering Memorandum under
"Description of Debentures" and "Description of Existing Securities and Credit
Facility," to the extent that it constitutes matters of law, summaries of legal
matters, the Company's charter and by-laws or legal proceedings, or legal
conclusions, has been reviewed by us and is correct in all material respects.
(xv) All descriptions in the Offering Memorandum of contracts
and other documents to which the Company or any of its subsidiaries are a party
are accurate in all material respects; to our knowledge, there are no
franchises, contracts, indentures, mortgages, loan agreements, notes, leases or
other instruments required to be described in the Offering Memorandum that are
not described or referred to therein or incorporated by reference thereto, and
the descriptions thereof or references thereto are correct in all material
respects.
(xvi) No filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any court or
governmental authority or agency (other than as may be required under the
securities or blue sky laws of the various states, as to which we need express
no opinion) is necessary or required in connection with the due authorization,
execution and delivery of the Purchase Agreement, the Indenture or the
Registration Rights Agreement or for the offering, issuance or sale of the
Securities to the Initial Purchasers or the initial resale by the Initial
Purchasers in accordance with the Purchase Agreement.
(xvii) The execution, delivery and performance of the Purchase
Agreement, the Indenture and the Registration Rights Agreement and the
consummation of the transactions contemplated thereby (including the issuance
and sale of the Securities and the use of the proceeds from the sale of the
Securities as described under the caption "Use of Proceeds" and the issuance of
the shares of Common Stock issuable upon conversion of the Securities) and
compliance by the Company with its obligations thereunder do not and will not,
whether with or without the giving of notice or lapse of time or both,
constitute a breach of, or default or Repayment Event (as defined in Section
1(a)(xv) of the Purchase Agreement) under or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of
the Company or any subsidiary pursuant to any contract, indenture, mortgage,
deed of trust, loan or credit agreement, note, lease or any other agreement or
instrument incorporated by reference in the Offering Memorandum or filed as an
exhibit to the Company's Annual Report on Form 10-K for the year ended December
31, 1996 (other than with respect to covenants or agreements of a financial or
numerical nature or requiring computation, to which we express no opinion) nor
will such action result in any violation of (i) the provisions of the charter
or by-laws of the Company or any subsidiary, (ii) any applicable law, statute,
rule or regulation or (iii) any judgment, order, writ or decree, known to us,
of any government, government instrumentality or court which names the Company
or any subsidiary or any of their respective properties or assets as a party or
being subject thereto.
A-3
<PAGE> 38
(xiii) The Company is not an "investment company" or an entity
"controlled" by an "investment company" as such terms are defined in the
Investment Company Act.
(xix) The documents filed pursuant to the 1934 Act and
incorporated by reference in the Offering Memorandum (other than the financial
statements and notes thereto and related schedules and other financial data
included therein, as to which no opinion need be rendered) when they became
effective or were filed with the Commission, as the case may be, complied as to
form in all material respects with the requirements of the 1934 Act, as
applicable, and the 1934 Act Regulations, as applicable.
(xx) Assuming the accuracy of the representations and
warranties of the Company and the Initial Purchasers contained in the Purchase
Agreement and compliance with the agreements of the Company and the Initial
Purchasers contained therein, no registration of the Securities under the 1933
Act is required, and no qualification of the Indenture under the Trust
Indenture Act of 1939 is necessary, for the offer and sale of the Securities to
the Initial Purchasers as contemplated by the Purchase Agreement or in
connection with the initial resale of the Securities by the Initial Purchasers
in accordance with the Purchase Agreement.
(xxi) The Securities are not of the same class (within the
meaning of Rule 144A) as securities of the Company that are listed on a
national securities exchange registered under Section 6 of the 1934 Act or that
are quoted in a United States automated inter-dealer quotation system.
(xxii) To our knowledge, there are no persons with registration
rights or other similar rights to have any securities registered by the Company
under the 1933 Act pursuant to the Shelf Registration Statement (as defined in
the Registration Rights Agreement), except as described in the Registration
Rights Agreement.
Nothing has come to our attention that would lead us to believe that
the Offering Memorandum or any amendment or supplement thereto (except for
financial statements and notes thereto and related schedules and other
financial data included therein or omitted therefrom, as to which we need make
no statement), at the time the Offering Memorandum was issued, at the time any
such amendment or supplement to the Offering Memorandum was issued or at the
Closing Time, included or includes an untrue statement of a material fact or
omitted or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
Such opinion may state that it is limited to federal law and the laws
of the State of Delaware and the State of Texas and the General Corporation Law
of the State of Delaware. In rendering such opinion, such counsel may rely, as
to matters of fact (but not as to legal conclusions), to the extent they deem
proper, on certificates of responsible officers of the Company and public
officials. Such opinion shall not state that it is to be governed or qualified
by, or that it is otherwise subject to, any treatise, written policy or other
document relating to legal opinions, including, without limitation, the Legal
Opinion Accord of the ABA Section of Business Law (1991).
A-4
<PAGE> 39
[FORM OF LOCK-UP
PURSUANT TO SECTION 5(G)]
Exhibit B
______________, 1998
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated,
ABN AMRO Incorporated
Morgan Stanley & Co. Incorporated
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Re: Proposed Private Offering by Equity Corporation International
Dear Sirs:
The undersigned, [a stockholder] [an officer] [a director] of Equity
Corporation International, a Delaware corporation (the "Company"), understands
that Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch"), ABN AMRO Incorporated and Morgan Stanley & Co. Incorporated
propose to enter into a Purchase Agreement (the "Purchase Agreement") with the
Company providing for the private offering of ______% Convertible Subordinated
Debentures due 2004. In recognition of the benefit that such an offering will
confer upon the undersigned as [a stockholder] [an officer] [a director] of the
Company, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned agrees with each
purchaser to be named in the Purchase Agreement that, during a period of 90
days from the date of the Purchase Agreement, the undersigned will not, without
the prior written consent of Merrill Lynch, directly or indirectly, (i) offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant for
the sale of, or otherwise dispose of or transfer any shares of the Company's
common stock, par value $.01 per share (the "Common Stock"), or any securities
convertible into or exchangeable or exercisable for Common Stock, whether now
owned or hereafter acquired by the undersigned or with respect to which the
undersigned has or hereafter acquires the power of disposition or (ii) enter
into any swap or any other agreement or any transaction that transfers, in
B-1
<PAGE> 40
whole or in part, directly or indirectly, the economic consequence of ownership
of the Common Stock, whether any such swap or transaction described in clause
(i) or (ii) above is to be settled by delivery of Common Stock or other
securities, in cash or otherwise.
Very truly yours,
Signature:
-------------------------
Print Name:
------------------------
B-2
<PAGE> 1
EQUITY CORPORATION INTERNATIONAL
4 1/2% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2004
REGISTRATION RIGHTS AGREEMENT
February 25, 1998
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
ABN AMRO Incorporated
Morgan Stanley & Co. Incorporated
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
Equity Corporation International, a Delaware corporation (the
"Company"), proposes to issue and sell (such issuance and sale, the "Initial
Placement") to you (the "Initial Purchasers"), upon the terms set forth in a
purchase agreement dated February 19, 1998 (the "Purchase Agreement"),
$125,000,000 aggregate principal amount (plus up to an additional $18,750,000
aggregate principal amount to cover over-allotments, if any) of its 4 1/2%
Convertible Subordinated Debentures due 2004 (the "Securities"). The
Securities will be convertible into shares of common stock, par value $0.01 per
share, of the Company (the "Common Stock") at the conversion price set forth in
the Final Offering Memorandum. As an inducement to you to enter into the
Purchase Agreement and in satisfaction of a condition to your obligations
thereunder, the Company agrees with you, (i) for your benefit and (ii) for the
benefit of the holders from time to time of the Securities or the Common Stock
issuable upon conversion of the Securities (including you) (each of the
foregoing, a "Holder" and together, the "Holders"), as follows:
1. DEFINITIONS. Capitalized terms used herein without definition
shall have the respective meanings set forth in the Purchase Agreement. As
used in this Agreement, the following capitalized terms shall have the
following meanings:
"Act" means the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder.
<PAGE> 2
"Affiliate" of any specified person means any other person that,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such specified person. For purposes of this definition, control
of a person means the power, direct or indirect, to direct or cause the
direction of the management and policies of such person whether by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Agreement" means this Registration Rights Agreement as it may be
amended, qualified, modified or supplemented from time to time.
"Business Day" means any day that is neither a Saturday or a Sunday
nor a day on which banking institutions in The City of New York are authorized
or obligated by law or executive order to close.
"Closing Time" has the meaning set forth in the Purchase Agreement.
"Commission" means the Securities and Exchange Commission.
"Damages Accrual Period" has the meaning set forth in Section 2(d)
hereof.
"Damages Payment Date" has the meaning set forth in Section 2(d)
hereof.
"Date of Delivery" has the meaning set forth in the Purchase
Agreement.
"Deferral Period" has the meaning set forth in Section 2(c) hereof.
"DTC" means The Depository Trust Company.
"Event" has the meaning set forth in Section 2(d) hereof.
"Event Date" has the meaning set forth in Section 2(d) hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission promulgated thereunder.
"Final Offering Memorandum" has the meaning set forth in the Purchase
Agreement.
"Holder" has the meaning set forth in the preamble hereto.
"Indenture" means the Indenture relating to the Securities dated as of
February 25, 1998, between the Company and Bankers Trust Company, as trustee,
as the same may be amended from time to time in accordance with the terms
thereof.
"Initial Placement" has the meaning set forth in the preamble hereto.
"Interest Payment Date" shall mean June 30 and December 31.
<PAGE> 3
"Liquidated Damages" has the meaning set forth in Section 2(d) hereof.
"Majority Holders" means the Holders of a majority of the then
outstanding aggregate principal amount of Registrable Securities; provided,
however, that Holders of Common Stock issued upon conversion of Securities
shall be deemed to be Holders of the aggregate principal amount of Securities
from which such Common Stock was converted.
"Notice Holder" has the meaning set forth in Section 2(b) hereof.
"Prospectus" means the prospectus included in any Shelf Registration
Statement, and all amendments and supplements to such prospectus, including
post-effective amendments.
"Record Date" has the meaning set forth in Section 2(d) hereof.
"Record Holder" has the meaning set forth in Section 2(d) hereof.
"Registrable Securities" means the Securities and shares of Common
Stock issued upon conversion thereof, excluding any such securities that, and
any such securities the predecessors of which, were previously sold pursuant to
a registration statement of the Company filed under the Act or pursuant to Rule
144 promulgated under the Act.
"Rule 144" means Rule 144 under the Act, as such Rule may be amended
from time to time, or any successor to such Rule.
"Securities" has the meaning set forth in the preamble hereto.
"Selling Confirmation" means, with respect to a Notice Holder and a
Selling Notice given by such Notice Holder, a written notice given by the
Company to such Notice Holder instructing and notifying such Notice Holder that
the Shelf Registration Statement and Prospectus may be used during the
applicable Selling Period to effect the transactions described in such Selling
Notice, that the Company is then currently in compliance with Section 3(b) and
that the Company reaffirms the consent granted pursuant to Section 3(f).
"Selling Notice" has the meaning set forth in Section 2(b) hereof.
"Selling Period" means, with respect to a Notice Holder and a Selling
Notice given by such Notice Holder, a period of forty-five calendar days
commencing on the date such Notice Holder receives a Selling Confirmation in
respect of the transactions described in such Selling Notice; provided,
however, that the Company may defer existing Selling Periods in accordance with
Section 3(c)(2).
"Shelf Registration" means a registration effected pursuant to Section
2 hereof.
"Shelf Registration Period" has the meaning set forth in Section 2(a)
hereof.
<PAGE> 4
"Shelf Registration Statement" means a "shelf" registration statement
of the Company pursuant to the provisions of Section 2 hereof (including any
additional registration statements filed pursuant to Section 3(d)) which covers
some or all of the Securities and the Common Stock issuable upon conversion
thereof, as applicable, on an appropriate form under Rule 415 promulgated under
the Act, or any similar rule that may be adopted by the Commission, and all
amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
"Special Counsel" means Vinson & Elkins L.L.P., special counsel to the
Initial Purchasers or such other special counsel as may be designated by the
Majority Holders.
"Trustee" means the trustee with respect to the Securities under the
Indenture.
2. SHELF REGISTRATION; SUSPENSION OF USE OF PROSPECTUS;
LIQUIDATED DAMAGES.
(a) The Company shall prepare and file with the Commission, as
soon as practicable but in any event on or prior to the date 60 days following
the Closing Time, a Shelf Registration Statement under the Act registering the
resale from time to time by Holders thereof of all of the Registrable
Securities. The Shelf Registration Statement shall permit resales of
Registered Securities by Holders in the manner or manners designated by them
from time to time, which shall be set forth in such Shelf Registration
Statement. The Company shall use its reasonable efforts to cause the Shelf
Registration Statement to be declared effective under the Act as soon as
practicable but in any event on or prior to the date 120 days following such
Closing Time and, subject to the provisions contained herein, to keep the Shelf
Registration Statement continuously effective under the Act until the earliest
of (i) the second anniversary of the latest Date of Delivery, (ii) the date on
which the Securities or Common Stock issuable upon conversion thereof may be
sold by non-affiliates of the Company pursuant to paragraph (k) of Rule 144 (or
any successor provision) and (iii) such date as of which all the Securities or
the Common Stock issuable upon conversion thereof have been sold pursuant to
the Shelf Registration Statement or pursuant to Rule 144 (the period ending at
such earliest date, the "Shelf Registration Period").
(b) Each Holder of Registrable Securities agrees that if such
Holder wishes to sell its Registrable Securities pursuant to the Shelf
Registration Statement and the Prospectus, it will do so only in accordance
with this Section 2(b). Each Holder of Registrable Securities agrees to give
written notice to the Company at least five Business Days prior to any intended
resale of Registrable Securities under the Shelf Registration Statement, which
notice shall specify the date on which such Holder intends to begin such
distribution and such information with respect to such Holder and the intended
distribution as may be reasonably required to amend the Shelf Registration
Statement or supplement the Prospectus with respect to such intended
distribution (each Holder providing the notice described in this sentence and
with respect to which the related Selling Period is continuing or has been
deferred, a "Notice Holder;" each such notice, a "Selling Notice"). As soon as
practicable after the date a Selling Notice is received by the Company, and in
any event within four Business Days after such date, the Company shall either:
<PAGE> 5
(i) (A) provide a Selling Confirmation to such Notice
Holder or (B) file a supplement to the Prospectus or a post-effective
amendment to the Shelf Registration Statement as required by Section
3(b) (and use all reasonable efforts to cause any such post-effective
amendment to become effective as soon as practicable thereafter and
immediately after such post-effective amendment shall become
effective, or it shall file such supplement, to provide a Selling
Confirmation to such Notice Holder); or
(ii) in the event of the happening of any event of the
kind described in Section 3(c)(2)(i), 3(c)(2)(ii), 3(c)(2)(iii) or
3(c)(2)(iv) hereof, the Company shall deliver to such Notice Holder
the notice required by Section 3(c)(2) and notify the Holder that the
consent granted pursuant to Section 3(f) is suspended until further
notice.
(c) Each such Notice Holder may sell all or any Registrable
Securities pursuant to the Shelf Registration Statement and the Prospectus only
during the Selling Period commencing with the earlier of (x) the date on which
such Notice Holder receives a Selling Confirmation and (y) the fifth Business
Day after the related Selling Notice has been received by the Company;
provided, however, that in the event the Company elects to take the actions
permitted by Section 2(b)(ii), the commencement of the Selling Period shall be
deferred until such later date as the Company delivers a Selling Confirmation.
A Notice Holder shall not sell any Registrable Securities pursuant to the Shelf
Registration Statement or the Prospectus after the expiration of the applicable
Selling Period without giving a new Selling Notice pursuant to Section 2(b)
hereof and receiving a new Selling Confirmation. Notwithstanding the
foregoing, the aggregate number of days during which the Company shall be
entitled to exercise its right under this paragraph to defer the commencement
of a Selling Period or its rights under Section 3(c)(2) to defer existing
Selling Periods (any such period of deferral herein referred to as a "Deferral
Period") shall not exceed 60 days within any twelve-month period; provided,
however, that each day during any Deferral Period shall only be counted once in
determining the aggregate number of days in such Deferral Period
notwithstanding the occurrence of multiple concurrent deferrals; and, provided,
further, if the Company deems it necessary to file a post-effective amendment
to the Shelf Registration Statement in order to comply with Section 3(b) hereof
as a result of any Selling Notice or other information provided by a Holder for
inclusion in the Prospectus, then such period of time from the date of filing
such post-effective amendment until the date on which the Shelf Registration
Statement is declared effective by the Commission shall not be treated as a
Deferral Period.
In the event the Company elects to take the actions described in
Section 2(b)(ii), the Company will, at such time as it is in compliance with
Section 3(b) and as use of the Prospectus may be resumed, immediately provide
Selling Confirmations to all Notice Holders.
(d) The parties hereto agree that the Holders of the Registrable
Securities will suffer damages, and that it would not be feasible to ascertain
the extent of such damages with precision, if (i) the Shelf Registration
Statement has not been declared effective under the Securities Act on or before
the date 120 days following the Closing Time, or (ii) the aggregate number of
days for all Deferral Periods within any one twelve-month period exceeds the
number permitted pursuant to Section 2(c) hereof (each of the events of a type
described in either of the foregoing clause (i) or (ii) is individually
referred to herein as an "Event;" and the date 120 days following the Closing
Time
<PAGE> 6
in the case of clause (i) and the date on which the duration of all Deferral
Periods within any one twelve-month period exceeds the number of days permitted
by Section 2(c) hereof in the case of clause (ii), are referred to herein as an
"Event Date"). Events shall be deemed to continue until the date of the
termination of such Event, which shall be the following date with respect to
the respective types of Events: the date the Registration Statement is
declared effective under the Act in the case of an Event described in clause
(i) and termination of the Deferral Period which caused the aggregate number of
days for all Deferral Periods within any one twelve-month period to exceed the
number permitted by Section 2(c) in the case of Events of the type described in
clause (ii).
Accordingly, upon the occurrence of any Event and until such time as
there are no Events which have occurred and are continuing (a "Damages Accrual
Period"), commencing on the Event Date on which such Damages Accrual Period
began, the Company agrees to pay, as liquidated damages, and not as a penalty,
an additional amount (the "Liquidated Damages"): to each Holder of Registrable
Securities (whether or not a Notice Holder), accruing during the Damages
Accrual Period at a rate equal to one-half of one percent per annum (50 basis
points) on (u) where such Registrable Securities are Securities, the aggregate
principal amount of such Securities held by such Holder and (v) where such
Registrable Securities are shares of Common Stock issued upon conversion of
Securities, the aggregate principal amount of Securities that were converted
into such shares. Notwithstanding the foregoing, no Liquidated Damages shall
accrue as to any Securities or shares of Common Stock from and after the
earlier of (x) the date such securities are no longer Registrable Securities,
or (y) the expiration of the Shelf Registration Period. The rate of accrual of
the Liquidated Damages with respect to any period shall not exceed the rate
provided for in this paragraph notwithstanding the occurrence of multiple
concurrent Events.
Liquidated Damages due on any Securities or Common Stock shall be
payable on each Interest Payment Date on the Securities occurring (of if there
are no Securities outstanding, which would have occurred) during the Damages
Accrual Period and on the Interest Payment Date immediately following (or which
would have followed) the termination of such Period (a "Damages Payment Date").
The Company shall pay the Liquidated Damages due on any Securities by
depositing with the Trustee under the Indenture, in trust, for the benefit of
the Holders of Securities or Common Stock, as the case may be, entitled
thereto, at least one Business Day prior to the applicable Damages Payment
Date, sums sufficient to pay the Liquidated Damages accrued or accruing since
the Event Date or, if later, the last preceding Damages Payment Date to such
Damages Payment Date. The Liquidated Damages shall be paid on each Damages
Payment Date to the Holders of record of the Registrable Securities (the
"Record Holders") on the 15th day of June or the 15th day of December (each a
"Record Date") immediately preceding such Damages Payment Date by wire transfer
of immediately available funds to the accounts specified by them or by mailing
checks to the registered addresses as they appear in the Securities register or
stock transfer books of the Company, if no such accounts have been specified on
or before the applicable Record Date. The Trustee shall be entitled, on behalf
of the Holders of Securities and Common Stock, to seek any available remedy for
the enforcement of this Agreement, including for the payment of such Liquidated
Damages. Notwithstanding the foregoing, the parties agree that the sole remedy
payable for a violation of the terms of this Agreement with respect to which
Liquidated Damages are expressly provided shall be such Liquidated Damages.
Nothing shall preclude a Holder of Registrable Securities from pursuing or
obtaining specific performance or other equitable relief with
<PAGE> 7
respect to any violation of this Agreement for which Liquidated Damages are not
expressly provided by this Agreement.
All of the Company's obligations set forth in this Section 2(d) which
are outstanding with respect to any Registrable Security at the time such
security ceases to be a Registrable Security shall survive until such time as
all such obligations with respect to such security have been satisfied in full
(notwithstanding termination of this Agreement).
The parties hereto agree that the Liquidated Damages provided for in
this Section 2(d) constitute a reasonable estimate of the damages that may be
incurred by Holders of Registrable Securities by reason of the occurrence of an
Event.
3. REGISTRATION PROCEDURES. In connection with any Shelf
Registration Statement, the following provisions shall apply:
(a) The Company shall furnish to Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("Merrill Lynch") and the Special Counsel, prior to the
filing thereof with the Commission, a copy of any Shelf Registration Statement,
and each amendment thereof and each amendment or supplement, if any, to the
Prospectus included therein and shall use its reasonable efforts to reflect in
each such document, when so filed with the Commission, such comments as Merrill
Lynch reasonably may propose.
(b) The Company shall ensure that (i) any Shelf Registration
Statement and any amendment thereto and any Prospectus forming part thereof and
any amendment or supplement thereto comply in all material respects with the
Act, (ii) any Shelf Registration Statement or any amendment thereto does not,
when it becomes effective, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading and (iii) any Prospectus forming
part of any Shelf Registration Statement, or any amendment or supplement to
such Prospectus, does not include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided, however, that no representation or agreement is made
hereby with respect to information with respect to you or any Holder required
to be included in any Shelf Registration Statement or Prospectus pursuant to
the Act or provided by you or any Holder.
(c) (1) The Company shall advise you and the Holders and, if
requested by you or any such Holder, confirm such advice in writing:
(i) when the Shelf Registration Statement or any
post-effective amendment thereto has become effective; and
(ii) of any request by the Commission for amendments or
supplements to the Shelf Registration Statement or the Prospectus
included therein or for additional information.
<PAGE> 8
(2) During any Selling Period, during the deferral of any Selling
Period and within four Business Days of receipt by the Company of any Selling
Notice, the Company shall notify you and the Notice Holders and, if requested
by you or any such Notice Holder, confirm such notification in writing:
(i) of the issuance by the Commission of any stop order
suspending the effectiveness of the Shelf Registration Statement or
the initiation or threat of any proceedings for that purpose;
(ii) of the receipt by the Company of any notification
with respect to the suspension of the qualification or exemption from
qualification of the Securities or the Common Stock included in any
Shelf Registration Statement for sale in any jurisdiction or the
initiation or threat of any proceeding for such purpose;
(iii) of the existence of any fact or the happening of any
event that requires the making of any changes in the Shelf
Registration Statement or the Prospectus so that, as of such date, the
statements therein are not misleading and do not omit to state a
material fact required to be stated therein or necessary to make the
statements therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading; and
(iv) of the determination by the Company, in its judgment,
that it is advisable to suspend use of the Prospectus for valid
business reasons (not including avoidance of the Company's obligations
hereunder) including, among other things, the acquisition or
divestiture of assets, public filings with the Commission, pending
corporate developments and similar events;
which notice shall be accompanied by an instruction to defer the use
of the Prospectus until the Company delivers a Selling Confirmation
whereupon any existing Selling Period shall be deferred and shall
recommence upon delivery of the aforementioned Selling Confirmation;
provided, that such Selling Period shall be extended by the number of
days elapsed during any such period of deferral.
(d) The Company shall use all reasonable efforts to obtain the
withdrawal of any order suspending the effectiveness of any Shelf Registration
Statement at the earliest possible time.
(e) The Company shall furnish to each Holder of Registrable
Securities upon its written request, without charge, at least one copy of such
Shelf Registration Statement and any post-effective amendment thereto,
including financial statements and schedules, and, if the Holder so requests in
such writing, all exhibits (including those incorporated by reference).
(f) The Company shall, during the Shelf Registration Period,
deliver to each Holder of Securities or the Common Stock issued upon conversion
thereof included within the coverage of any Shelf Registration Statement,
without charge, as many copies of the Prospectus included in such Shelf
Registration Statement and any amendment or supplement thereto as such Holder
may reasonably request; and, except during such periods as the Company shall
have suspended the use
<PAGE> 9
of the Prospectus pursuant to Section 2(b)(ii) or 3(c)(2), the Company consents
to the use of the Prospectus or any amendment or supplement thereto by each of
the selling Holders in connection with the offering and sale of the Securities
or the Common Stock issued upon conversion thereof covered by the Prospectus or
any amendment or supplement thereto.
(g) Prior to any offering of Securities or the Common Stock issued
upon conversion thereof pursuant to any Shelf Registration Statement, the
Company shall register or qualify or cooperate with the Holders of Securities
or the Common Stock issued upon conversion thereof included therein and their
respective counsel in connection with the registration or qualification (or
exemption from such registration or qualification) of such Securities or Common
Stock for offer and sale under the securities or Blue Sky laws of such
jurisdictions as any such Holders reasonably request in writing and do any and
all other acts or things necessary or advisable to enable the offer and sale in
such jurisdictions of the Securities and the Common Stock issued upon
conversion thereof covered by such Shelf Registration Statement; provided,
however, that the Company will not be required to qualify generally to do
business in any jurisdiction where it is not then so qualified or to take any
action which would subject it to general service of process or to taxation in
any such jurisdiction where it is not then so subject.
(h) The Company shall cooperate with the Holders to facilitate the
timely preparation and delivery of certificates representing Securities (other
than Securities which are in book-entry only form) or the Common Stock issued
upon conversion thereof sold pursuant to any Shelf Registration Statement free
of any restrictive legends and in such denominations and registered in such
names as Holders may request.
(i) Upon the occurrence of any event contemplated by Section
3(c)(2)(iii) that is not also an event contemplated by Section 3(c)(2)(iv), the
Company shall promptly prepare a post-effective amendment to any Shelf
Registration Statement or an amendment or supplement to the related Prospectus
or file any other required document so that, as thereafter delivered (when and
as permitted pursuant to Section 2(c)) to purchasers of the Securities or the
Common stock issued upon conversion thereof included therein, the Prospectus
will not include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(j) At such time as any of the Securities are no longer
"restricted securities" within the meaning of Rule 144, the Company shall take
such actions as may be necessary to provide, as soon as practicable, a separate
CUSIP number for such Securities and to cause such CUSIP number to be assigned
to such Securities (or to the maximum aggregate principal amount of the
Securities to which such number may be assigned). Upon compliance with the
foregoing requirements of this Section 3((j), the Company shall provide the
Trustee, upon request, with certificates for such Securities, in a form
eligible for deposit with DTC.
(k) The Company shall use all reasonable efforts to comply with
all applicable rules and regulations of the Commission and shall make generally
available to its security holders as soon as practicable after the effective
date of the applicable Shelf Registration Statement an earnings
<PAGE> 10
statement satisfying the provisions of Section 11(a) of the Act and Rule 158
promulgated by the Commission thereunder.
(l) The Company shall use all reasonable efforts to cause the
Indenture to be qualified under the Trust Indenture Act in a timely manner.
(m) The Company may require each Holder of Securities or the
Common Stock issued upon conversion thereof to be sold pursuant to any Shelf
Registration Statement to furnish to the Company such information regarding the
Holder and the distribution of such Securities or Common Stock as may, from
time to time, be required by the Act (including the information specified in
Item 507 of Regulation S-K under the Act), and the obligations of the Company
to any Holder hereunder shall be expressly conditioned on the compliance of
such Holder with such request.
(n) The Company shall, if requested, use its reasonable efforts to
promptly incorporate in a Prospectus supplement or post-effective amendment to
a Shelf Registration Statement (i) such information as the Majority Holders
reasonably agree should be included therein as required by applicable law and
provide to the Company in writing for inclusion in the Shelf Registration
Statement or Prospectus, and (ii) such information as a Holder may provide from
time to time to the Company in writing for inclusion in a Prospectus or any
Shelf Registration Statement concerning such Holder and the distribution of
such Holder's Securities and Common Stock and, in either case, shall make all
required filings of such Prospectus supplement or post-effective amendment as
soon as practicable after being notified of the matters to be incorporated in
such Prospectus supplement or post-effective amendment.
(o) The Company shall enter into such agreements and take all
other appropriate actions in order to expedite or facilitate the registration
or the disposition of the Securities or the Common Stock issuable upon
conversion thereof; provided, however, that the Company shall not be required
to enter into an underwriting agreement or participate in a "roadshow" in
connection with any such disposition.
(p) Each Holder of Registrable Securities agrees by acquisition of
such Registrable Securities that (i) such Holder will promptly (and in any case
within two Business Days after completion of such sale or distribution) notify
the Company following any sale of Registrable Securities under a Shelf
Registration and (ii) upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 3(c)(2)(i),
3(c)(2)(ii), 3(c)(2)(iii) or 3(c)(2)(iv) hereof, such Holder will forthwith
discontinue disposition of such Registrable Securities covered by such
Registration Statement or Prospectus and will not resume disposition of such
Registrable Securities until such Holder's receipt of one or more copies of a
supplemented or amended Prospectus contemplated by Section 3(f) hereof, or
until it is advised in writing by the Company that the use of the applicable
Prospectus may be resumed and has received copies of the Prospectus and any
additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus.
4. REGISTRATION EXPENSES. The Company shall pay all fees and
expenses incurred by it or the Initial Purchasers incident to the performance
of or compliance with this Agreement by the
<PAGE> 11
Company including, without limitation, (i) all Commission, stock exchange or
National Association of Securities Dealers, Inc. registration and filing fees,
(ii) all fees and expenses incurred in connection with compliance with state
securities or Blue Sky laws (including reasonable fees and disbursements of the
Special Counsel in connection with Blue Sky qualification of any of the
Registrable Securities), (iii) all expenses in preparing or assisting in
preparing, printing and distributing any Registration Statement, any
Prospectus, any amendments or supplements thereto, other documents relating to
the Company's performance of and compliance with this Agreement, and (iv) all
rating agency fees but excluding fees of any special accountants retained by
the Holders, counsel to the Holders other than the Special Counsel and
underwriting discounts and commissions and transfer taxes, if any, relating to
the sale or disposition of Registrable Securities by a Holder thereof.
5. INDEMNIFICATION.
(a) (i) In connection with any Shelf Registration Statement, the
Company agrees to indemnify and hold harmless each Holder of Securities or
Common Stock issued upon conversion thereof covered thereby (including the
Initial Purchasers), the directors, officers, employees and agents of each such
Holder and each person who controls any such Holder within the meaning of
either the Act or the Exchange Act against any and all losses, claims, damages
or liabilities, joint or several, to which they or any of them may become
subject under the Act, the Exchange Act or other Federal or state statutory law
or regulation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of a material fact
contained in the Shelf Registration Statement as originally filed or in any
amendment thereof, or in any preliminary Prospectus or Prospectus, or in any
amendment thereof or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
agrees to reimburse each such indemnified party, as incurred, for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company will not be liable in any case to the extent that any such
loss, claim, damage or liability arises out of or is based upon (A) any such
untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written information
furnished to the Company by or on behalf of any such Holder or any Initial
Purchaser, (B) use of a Shelf Registration Statement or the related Prospectus
during a period when a stop order has been issued in respect of such Shelf
Registration or any proceedings for that purpose have been initiated or use of
a Prospectus when use of such Prospectus has been deferred pursuant to Section
2(c) or 3(c)(2); provided, further, in each case, that the Company delivered
prior notice in accordance with Section 6(c) hereof of such stop order,
initiation of proceedings or deferral or (C) if the Holder fails to deliver the
then current Prospectus. This indemnity agreement will be in addition to any
liability which the Company may otherwise have.
(b) Each Holder of Securities or Common Stock issued upon
conversion thereof covered by a Shelf Registration Statement (including the
Initial Purchasers) severally agrees to indemnify and hold harmless the
Company, its directors, officers, employees and agents and each person who
controls the Company within the meaning of either the Act or the Exchange Act
to the same extent
<PAGE> 12
as the foregoing indemnity from the Company to each such Holder, but only with
reference to written information relating to such Holder furnished to the
Company by or on behalf of such Holder. This indemnity agreement will be in
addition to any liability which any such Holder may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 5 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying
party under this Section 5, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve it from liability under paragraph (a) or (b) above unless and
to the extent it did not otherwise learn of such action and such failure
results in the forfeiture by the indemnifying party of substantial rights and
defenses and (ii) will not, in any event, relieve the indemnifying party from
any obligations to any indemnified party other than the indemnification
obligation provided in paragraph (a) or (b) above. The indemnifying party
shall be entitled to appoint counsel of the indemnifying party's choice at the
indemnifying party's expense to represent the indemnified party in any action
for which indemnification is sought (in which case the indemnifying party shall
not thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be reasonably satisfactory to the
indemnified party. Notwithstanding the indemnifying party's election to
appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel (including
local counsel), and the indemnifying party shall bear the reasonable fees,
costs and expenses of such separate counsel (and local counsel) if (i) the use
of counsel chosen by the indemnifying party to represent the indemnified party
would present such counsel with a conflict of interest, (ii) the actual or
potential defendants in, or targets of, any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional to
those available to the indemnifying party, (iii) the indemnifying party shall
not have employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of the
institution of such action or (iv) the indemnifying party shall authorize the
indemnified party to employ separate counsel at the expense of the indemnifying
party; provided, further, that the indemnifying party shall not be responsible
for the fees and expenses of more than one separate counsel (together with
appropriate local counsel) representing all the indemnified parties under
paragraph (a)(i), paragraph (a)(ii) and paragraph (b) above. An indemnifying
party will not, without the prior written consent of the indemnified parties,
settle or compromise or consent to the entry of any judgment with respect to
any pending or threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not the indemnified parties
are actual or potential parties to such claim or action) unless such
settlement, compromise or consent includes an unconditional release of each
indemnified party from all liability arising out of such claim, action, suit or
proceeding.
(d) The provisions of this Section 5 will remain in full force and
effect, regardless of any investigation made by or on behalf of any Holder or
the Company or any of the officers, directors or controlling persons referred
to in Section 5 hereof, and will survive the sale by a Holder of Securities
covered by a Shelf Registration Statement.
<PAGE> 13
6. MISCELLANEOUS.
(a) NO INCONSISTENT AGREEMENTS. The Company has not, as of the
date hereof, entered into nor shall it, on or after the date hereof, enter into,
any agreement with respect to the Securities that is inconsistent with the
rights granted to the Holders herein or otherwise conflicts with the provisions
hereof.
(b) AMENDMENTS AND WAIVERS. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, qualified,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the Company has obtained the written
consent of the Majority Holders; provided that, with respect to any matter that
directly or indirectly affects the rights of the Initial Purchasers hereunder,
the Company shall obtain the written consent of each Initial Purchaser
originally purchasing more than a majority of the Securities against which such
amendment, qualification, supplement, waiver or consent is to be effective.
Notwithstanding the foregoing (except the foregoing proviso), a waiver or
consent to departure from the provisions hereof with respect to a matter that
relates exclusively to the rights of Holders whose securities are being sold
pursuant to a Shelf Registration Statement and that does not directly or
indirectly affect the rights of other Holders may be given by the Majority
Holders, determined on the basis of securities being sold rather than registered
under such Shelf Registration Statement.
(c) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class
mail, telecopier or air courier guaranteeing overnight delivery:
1. if to you, initially at the address set forth in the
Purchase Agreement;
2. if to any other Holder, at the most current address
given by such Holder to the Company in accordance
with the provisions of this Section 6(c), which
address initially is, with respect to each Holder,
the address of such Holder maintained by the
Registrar under the Indenture, with a copy in like
manner to Merrill Lynch; and
3. if to the Company, initially at its address set forth
in the Purchase Agreement.
All such notices and communications shall be deemed to have been duly
given when received, if delivered by hand or air courier, and when sent, if
sent by first-class mail or telecopier.
The Initial Purchasers or the Company by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
(d) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including, without the need for an express assignment or any consent
by the Company thereto, subsequent Holders. The Company hereby
<PAGE> 14
agrees to extend the benefits of this Agreement to any Holder and any such
Holder may specifically enforce the provisions of this Agreement as if an
original party hereto.
(e) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) HEADINGS. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
(g) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed in said State, without regard to the
conflicts of law rules thereof.
(h) SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances,
is held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way impaired
or affected thereby, it being intended that all of the rights and privileges of
the parties shall be enforceable to the fullest extent permitted by law.
(i) SECURITIES HELD BY THE COMPANY, ETC. Whenever the consent or
approval of Holders of a specified percentage of principal amount of Securities
or the Common Stock issuable upon conversion thereof is required hereunder,
Securities or the Common Stock issued upon conversion thereof held by the
Company or its Affiliates (other than subsequent Holders of Securities or the
Common Stock issued upon conversion thereof if such subsequent Holders are
deemed to be Affiliates solely by reason of their holdings of such Securities)
shall not be counted in determining whether such consent or approval was given
by the Holders of such required percentage.
<PAGE> 15
Please confirm that the foregoing correctly sets forth the agreement
between the Company and you.
Very truly yours,
EQUITY CORPORATION INTERNATIONAL
By:
-----------------------------------------
W. Cardon Gerner
Senior Vice President -
Chief Financial Officer
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
ABN AMRO INCORPORATED
MORGAN STANLEY & CO. INCORPORATED
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:
-------------------------------------------------
Authorized Signatory
<PAGE> 1
--------------------------
EQUITY CORPORATION INTERNATIONAL
4 1/2% Convertible Subordinated Debentures
due 2004
-------------------
INDENTURE
Dated as of February 25, 1998
-------------------
Bankers Trust Company
Trustee
--------------------------
<PAGE> 2
CROSS-REFERENCE TABLE*
Indenture
TIA Section Section
<TABLE>
<S> <C> <C>
Section 310(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.10
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.10
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.**
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.10
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.8; 9.10
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
Section 311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.11
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.11
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
Section 312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.3
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.3
Section 313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.6
(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.6
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.6; 12.2
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.6
Section 314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2; 6.4;12.2
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.4(a)
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.4(a)
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.4(b)
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
Section 315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.1(b)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.5; 12.2
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.1(a)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.1(c)
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.11
Section 316(a)(last sentence) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.9
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.5
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.4
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.7
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.5
Section 317(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.8
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.9
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4
Section 318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.1
</TABLE>
* This Cross-Reference Table shall not, for any purpose, be deemed a
part of this Indenture.
** N.A. means Not Applicable.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2 Other Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 1.3 Trust Indenture Act Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 1.4 Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 2.
THE SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.1 Form and Dating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.2 Execution and Authentication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.3 Registrar, Paying Agent and Conversion Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.4 Paying Agent to Hold Money In Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.5 Securityholder Lists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.6 Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.7 Replacement Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.8 Outstanding Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.9 Treasury Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.10 Temporary Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.11 Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.12 Additional Transfer and Exchange Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE 3.
REDEMPTION AND PURCHASES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.1 Right to Redeem; Notice to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.2 Selection of Securities to Be Redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 3.3 Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 3.4 Effect of Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 3.5 Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 3.6 Securities Redeemed in Part . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.7 Conversion Arrangement on Call for Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.8 Purchase of Securities at Option of the Holder Upon Change in Control . . . . . . . . . . . . . . 24
SECTION 3.9 Effect of Change in Control Purchase Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 3.10 Deposit of Change in Control Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 3.11 Securities Purchased In Part . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 3.12 Compliance With Securities Laws Upon Purchase of Securities . . . . . . . . . . . . . . . . . . . 29
SECTION 3.13 Repayment to the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
ARTICLE 4.
CONVERSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 4.1 Conversion Privilege . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 4.2 Conversion Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 4.3 Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 4.4 Taxes on Conversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 4.5 Company to Provide Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 4.6 Adjustment of Conversion Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 4.7 No Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 4.8 Adjustment for Tax Purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 4.9 Notice of Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 4.10 Notice of Certain Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 4.11 Effect of Reclassification, Consolidation, Merger or Sale on Conversion Privilege . . . . . . . . 37
SECTION 4.12 Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 4.13 Voluntary Reduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE 5.
SUBORDINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 5.1 Securities Subordinated to Senior Secured Indebtedness . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 5.2 Securities Subordinated to Prior Payment of All Senior Secured Indebtedness on Dissolution,
Liquidation, Reorganization, Etc., of the Company. . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 5.3 Securityholders to Be Subrogated to Right of Holders of Senior Secured Indebtedness . . . . . . . 40
SECTION 5.4 Obligations of the Company Unconditional . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 5.5 Company Not to Make Payment With Respect to Securities in Certain Circumstances. . . . . . . . . . 41
SECTION 5.6 Notice to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 5.7 Application by Trustee of Money Deposited With It . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 5.8 Subordination Rights Not Impaired by Acts or Omissions of Company or Holders of Senior Secured
Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 5.9 Trustee to Effectuate Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 5.10 Right of Trustee to Hold Senior Secured Indebtedness . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 5.11 Article 5 Not to Prevent Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 5.12 No Fiduciary Duty Created to Holders of Senior Secured Indebtedness . . . . . . . . . . . . . . . 44
SECTION 5.13 Article Applicable to Paying Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE 6.
COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 6.1 Payment of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 6.2 SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
</TABLE>
<PAGE> 5
<TABLE>
<S> <C>
SECTION 6.3 Compliance Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 6.4 Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 6.5 Further Instruments and Acts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE 7.
SUCCESSOR CORPORATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 7.1 When Company May Merge, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 7.2 Successor Corporation Substituted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE 8.
DEFAULT AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 8.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 8.2 Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 8.3 Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 8.4 Waiver of Defaults and Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 8.5 Control by Majority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 8.6 Limitations on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 8.7 Rights of Holders to Receive Payment and to Convert . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 8.8 Collection Suit by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 8.9 Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 8.10 Priorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 8.11 Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 8.12 Waiver of Usury, Stay or Extension Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE 9.
TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 9.1 Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 9.2 Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 9.3 Individual Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 9.4 Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 9.5 Notice of Default or Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 9.6 Reports by Trustee to Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 9.7 Compensation and Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 9.8 Replacement of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 9.9 Successor Trustee by Merger, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 9.10 Eligibility; Disqualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 9.11 Preferential Collection of Claims Against Company . . . . . . . . . . . . . . . . . . . . . . . . 57
ARTICLE 10.
SATISFACTION AND DISCHARGE OF INDENTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 10.1 Satisfaction and Discharge of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
</TABLE>
<PAGE> 6
<TABLE>
<S> <C>
SECTION 10.2 Application of Trust Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 10.3 Repayment to Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 10.4 Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
ARTICLE 11.
AMENDMENTS, SUPPLEMENTS AND WAIVERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 11.1 Without Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 11.2 With Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 11.3 Compliance With Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 11.4 Revocation and Effect of Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 11.5 Notation on or Exchange of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 11.6 Trustee to Sign Amendments, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
ARTICLE 12.
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 12.1 Trust Indenture Act Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 12.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 12.3 Communications by Holders With Other Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 12.4 Certificate and Opinion as to Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 12.5 Record Date for Vote or Consent of Securityholders . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 12.6 Rules by Trustee, Paying Agent, Registrar and Conversion Agent . . . . . . . . . . . . . . . . . . 63
SECTION 12.7 Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 12.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 12.9 No Adverse Interpretation of Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 12.10 No Recourse Against Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 12.11 Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 12.12 Multiple Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 12.13 Separability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 12.14 Table of Contents, Headings, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
ARTICLE 13.
DEFEASANCE AND COVENANT DEFEASANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 13.1 Company's Option to Effect Defeasance or Covenant Defeasance . . . . . . . . . . . . . . . . . . . 65
SECTION 13.2 Defeasance and Discharge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 13.3 Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 13.4 Conditions to Defeasance or Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 13.6 Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
</TABLE>
<PAGE> 7
THIS INDENTURE dated as of February 25, 1998, is between Equity
Corporation International, a Delaware corporation (the "Company"), and Bankers
Trust Company, a banking corporation duly organized and existing under the laws
of the State of New York, as Trustee (the "Trustee").
Both parties agree as follows for the benefit of the other and for the
equal and ratable benefit of the registered holders of the Company's 4 1/2%
Convertible Subordinated Debentures due 2004.
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 Definitions
"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 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.
"Applicable Procedures" means, with respect to any transfer or
exchange of beneficial ownership interests in a global Security, the rules and
procedures of the DTC, Euroclear and Cedel that are applicable to such transfer
or exchange.
"Board of Directors" means the Board of Directors of the Company or
any authorized committee of the Board of Directors.
"Business Day" means a day that is not a Legal Holiday.
"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.
"Cedel" means Centrale de Livraison de Valeurs Mobilieres, S.A., or
its successor.
<PAGE> 8
"Certificated Securities" means Securities that are in the
form of the Securities attached hereto as Exhibit A-1, that do not include the
information called for by footnotes 1 and 2 thereof.
"Common Stock" means the common stock of the Company, $.01 par value,
as it exists on the date of this Indenture and any shares of any class or
classes of capital stock of the Company resulting from any reclassification or
reclassifications thereof and which have no preference in respect of dividends
or of amounts payable in the event of any voluntary or involuntary liquidation,
dissolution or winding-up of the Company and which are not subject to
redemption by the Company; provided, however, that if at any time there shall
be more than one such resulting class, the shares of each such class then so
issuable on conversion of Securities shall be substantially in the proportion
which the total number of shares of such class resulting from all such
reclassifications bears to the total number of shares of all such classes
resulting from all such reclassifications.
"Company" means the party named as such in this Indenture until a
successor replaces it pursuant to this Indenture, and thereafter means the
successor.
"Corporate Trust Office" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be administered
which office at the date of the execution of this Indenture is located at Four
Albany Street, New York, New York 10006, Attention: Corporate Trust and Agency
Group - Corporate Market Services or at any other time at such other address as
the Trustee may designate from time to time by notice to the Company.
"Credit Agreement" means the Amended and Restated Credit Agreement
dated as of September 2, 1997 among the Company, the banks named therein and
NationsBank of Texas, N.A., as Agent.
"Default" or "default" means any event which is, or after notice or
passage of time, or both, would be an Event of Default.
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
office, or its successor as operator of the Euroclear System.
The term "global Securities" means, individually and collectively, the
Regulation S Temporary Global Security, the Regulation S Permanent Global
Security and the Restricted Global Security.
"Holder" or "Securityholder" means the person in whose name a Security
is registered on the Registrar's books.
"Indenture" means this Indenture as amended or supplemented from time
to time pursuant to the terms of this Indenture.
2
<PAGE> 9
"Officer" means the Chairman or any Co-Chairman of the Board, any Vice
Chairman of the Board, the President, any Vice President, the Chief Financial
Officer, the Secretary or any Assistant Secretary of the Company.
"Officers' Certificate" means a certificate signed by two Officers;
provided, however, that for purposes of Section 6.4, "Officers' Certificate"
means a certificate signed by the principal executive officer, principal
financial officer or principal accounting officer of the Company.
"Opinion of Counsel" means a written opinion from legal counsel. The
counsel may be an employee of or counsel to the Company or the Trustee.
"Person" or "person" means any individual, corporation, limited
liability company, partnership, joint venture, association, joint-stock
company, trust, or any other entity or organization, including a government or
political subdivision or instrumentality thereof.
"Principal" or "principal" of a debt security, including the
Securities, means the principal of the security plus, when appropriate, the
premium, if any, on the security.
"Redemption Date" or "redemption date," when used with respect to any
Security to be redeemed, means the date fixed for such redemption pursuant to
this Indenture.
"Redemption Price" or "redemption price," when used with respect to
any Security to be redeemed, means the price fixed for such redemption pursuant
to this Indenture, as set forth in the form of Security annexed as Exhibit A-1
hereto.
"Regulation S" means Regulation S promulgated under the Securities
Act.
"Regulation S Global Security" means a Regulation S Temporary Global
Security or Regulation S Permanent Global Security, as appropriate.
"Regulation S Permanent Global Security" means a permanent global
Security that contains the paragraphs referred to in footnote 1, the phrase
referred to in footnote 2 and the additional schedule referred to in footnote 3
to the form of the Security attached hereto as Exhibit A-1, and that is
deposited with the Depositary or its custodian, and registered in the name of
the Depositary or its nominee, representing Securities initially sold in
reliance on Regulation S.
"Regulation S Temporary Global Security" means a single temporary
global Security in the form of the Security attached hereto as Exhibit A-2 that
is deposited with the Depositary or its custodian, and registered in the name
of the Depositary or its nominee, representing Securities sold in reliance on
Regulation S.
"Restricted Global Security" means a permanent global Security that
contains the paragraphs referred to in footnote 1, the phrase referred to in
footnote 2 and the additional schedule referred to
3
<PAGE> 10
in footnote 3 to the form of the Security attached hereto as Exhibit A-1, and
that is deposited with the Depositary or its custodian, and registered in the
name of the Depositary or its nominee, representing Securities initially sold
in reliance on Rule 144A.
"SEC" or "Commission" means the Securities and Exchange Commission.
"Securities" means the 4 1/2% Convertible Subordinated Debentures due
2004 or any of them (each, a "Security"), as amended or supplemented from time
to time, that are issued under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Custodian" means the Trustee, as custodian with respect to
the Securities in global form, or any successor thereto.
"Senior Secured Indebtedness" means the following, whether currently
outstanding or hereafter incurred or created: (a) the principal of and
premium, if any, and interest (including, without limitation, any interest
accruing subsequent to the filing of a petition or other action concerning
bankruptcy or other similar proceedings, whether or not constituting an allowed
claim in any such proceedings) on, and fees, costs, enforcement expenses
(including legal fees and disbursements), collateral protection expenses and
other reimbursement or indemnity obligations in respect of, the following: all
indebtedness or obligations of the Company to any Person, including, but not
limited to, banks and other lending institutions, whether under the Credit
Agreement or otherwise, for money borrowed or property acquired (other than
that evidenced by the Securities) or in respect of credit or other banking
facilities and which is evidenced by a note, bond, debenture, loan agreement, a
lease intended as security or similar instrument or agreement (including
purchase money obligations with original maturities in excess of one year and
noncontingent obligations to reimburse any bank or other Person in respect of
amounts paid under letters of credit); (b) commitment or standby fees due and
payable to lending institutions with respect to credit facilities available to
the Company; (c) all noncontingent obligations of the Company (i) for the
reimbursement of any obligor on any letter of credit, banker's acceptance or
similar credit transaction, (ii) under interest rate swaps, caps, collars,
options and similar arrangements and (iii) under any foreign exchange contract,
currency swap agreement, futures contract, currency option contract or other
foreign currency hedge; (d) all obligations of the Company for the payment of
money relating to a Capitalized Lease Obligation; (e) any liabilities of others
described in the preceding clauses (a), (b), (c) and (d) which the Company has
guaranteed or which are otherwise its legal liability; and (f) renewals,
extensions, refundings, refinancings, restructurings, amendments and
modifications of any such indebtedness or guarantee; provided that such
indebtedness and other obligations are not treated as "unsecured indebtedness"
for purposes of Internal Revenue Code Section 279. Notwithstanding the proviso
contained in the preceding sentence, all amounts owing by the Company under the
Credit Agreement and all renewals, extensions, refundings, refinancings,
restructurings, increases, amendments and modifications of any amounts owing
under, or in connection with, the Credit Agreement shall constitute "Senior
Secured Indebtedness."
4
<PAGE> 11
Notwithstanding anything to the contrary in this Indenture or the Securities,
"Senior Secured Indebtedness" shall not include (x) any particular
indebtedness, lease, fee, obligation, renewal, extension, refunding,
refinancing, restructuring, amendment or modification if, under the express
provisions of the instrument creating or evidencing the same, or pursuant to
which the same is outstanding, such indebtedness, lease, fee, obligation,
renewal, extension, refunding, refinancing, restructuring, amendment or
modification thereof is stated to be junior in right of payment to, or pari
passu in right of payment with, the Securities, (y) indebtedness of the Company
(i) owing, directly or indirectly, to any person under or in respect of any
employee benefit plan of the Company or (ii) owing, directly or indirectly, to
any employee of the Company or any Affiliate of the Company, and (z) the
Securities.
"Subsidiary" means (i) any corporation of which at least a majority of
the outstanding capital stock having voting power under ordinary circumstances
to elect directors of such corporation shall at the time be held, directly or
indirectly, by the Company, by the Company and one or more other Subsidiaries,
or by one or more other Subsidiaries and (ii) any other Person (other than a
corporation), including, without limitation, a joint venture, in which the
Company, the Company and one or more other Subsidiaries or one or more other
Subsidiaries have at least a majority ownership interest entitled under
ordinary circumstances to elect directors, managers or trustees thereof (or
other persons performing similar functions).
"TIA" means the Trust Indenture Act of 1939, as amended by the Trust
Indenture Reform Act of 1990 and as in effect on the date of this Indenture,
except as provided in Section 11.3, 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" means, with respect to any security, each Monday,
Tuesday, Wednesday, Thursday and Friday, other than any day on which securities
are not generally 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, with respect to the Trustee, any officer
assigned to the Corporate Trust Office, including any managing director, vice
president, assistant vice president, assistant treasurer, assistant secretary
or any other officer of the Trustee customarily performing functions similar to
those performed by any of the above-designated officers and having direct
responsibility for the administration of this Indenture, and also, with respect
to a particular matter, any other officer, to whom such matter is referred
because of such officer's knowledge of and familiarity with the particular
subject.
5
<PAGE> 12
SECTION 1.2 Other Definitions
TERM DEFINED IN SECTION
<TABLE>
<S> <C>
"Agent Members" 2.1
"Bankruptcy Law" 8.1
"Change in Control" 3.8
"Change in Control Purchase Date" 3.8
"Change in Control Purchase Notice" 3.8
"Change in Control Purchase Price" 3.8
"Company Order" 2.2
"Conversion Agent" 2.3
"Conversion Date" 4.2
"Conversion Price" 4.6
"Conversion Shares" 4.6
"covenant defeasance" 13.3
"Custodian" 8.1
"defeasance" 13.2
"DTC" 2.1
"Default Notice" 5.5
"Depositary" 2.1
"Determination Date" 4.6
"Distribution Date" 4.6
"Event of Default" 8.1
"Exchange Act" 3.8
"Legal Holiday" 12.7
"NYSE" 4.6
"Paying Agent" 2.3
"Purchase Agreement" 2.1
"QIB" 2.1
"Registrar" 2.3
"Rights" 4.6
"Transfer Restricted Security" 2.12
"Triggering Distribution" 4.6
"Unissued Shares" 3.8
"U.S. Government Obligations" 13.4
</TABLE>
SECTION 1.3 Trust Indenture Act Provisions
Whenever this Indenture refers to a provision of the TIA, that
provision is incorporated by reference in and made a part of this Indenture.
The Indenture shall also include those provisions of
6
<PAGE> 13
the TIA required to be included herein by the provisions of the Trust Indenture
Reform Act of 1990. The following TIA terms used in this Indenture have the
following meanings:
"indenture securities" means the Securities;
"indenture security holder" means a Securityholder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the indenture securities means the Company or any other
obligor on the Securities.
All other terms used in this Indenture that are defined in the TIA,
defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings assigned to them therein.
SECTION 1.4 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 the United States of America and 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 the United States of America and in
effect on the date hereof;
(3) words in the singular include the plural, and words
in the plural include the singular;
(4) provisions apply to successive events and
transactions;
(5) the term "merger" includes a statutory share exchange
and the term "merged" has a correlating meaning;
(6) the masculine gender includes the feminine and the
neuter;
(7) references to agreements and other instruments
include subsequent amendments thereto; and
7
<PAGE> 14
(8) "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 2.
THE SECURITIES
SECTION 2.1 Form and Dating
The Securities and the Trustee's certificate of authentication shall
be substantially in the respective forms set forth in Exhibit A-1 or, in the
case of the Regulation S Temporary Global Security, in Exhibit A-2, which
Exhibits are incorporated in and made part of this Indenture. The Securities
may have notations, legends or endorsements required by law, stock exchange
rule or usage. Each Security shall be dated the date of its authentication.
The Securities are being offered and sold by the Company pursuant to a Purchase
Agreement, dated February 19, 1998 (the "Purchase Agreement"), between the
Company and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Morgan Stanley & Co. Incorporated and ABN AMRO Incorporated, in
transactions exempt from, or not subject to, the requirements of the Securities
Act.
(a) Restricted Global Securities. Securities offered and sold
within the United States to qualified institutional buyers as defined in Rule
144A (collectively, "QIBs" or individually a "QIB") in reliance on Rule 144A
under the Securities Act shall be issued initially in the form of a Restricted
Global Security, which shall be deposited on behalf of the purchasers of the
Securities represented thereby with the Trustee, at its Corporate Trust Office,
as custodian for the depositary, The Depository Trust Company ("DTC") (such
depositary, or any successor thereto, being hereinafter referred to as the
"Depositary"), and registered in the name of its nominee, Cede & Co., duly
executed by the Company and authenticated by the Trustee as hereinafter
provided. The aggregate principal amount of the Restricted Global Security may
from time to time be increased or decreased by adjustments made on the records
of the Securities Custodian as hereinafter provided, subject in each case to
compliance with the Applicable Procedures.
(b) Regulation S Global Securities. Securities offered and sold
in reliance on Regulation S shall be issued initially in the form of the
Regulation S Temporary Global Security, which shall be deposited on behalf of
the purchasers of the Securities represented thereby with the Trustee, at its
Corporate Trust Office, as custodian for the Depositary, and registered in the
name of Cede & Co., duly executed by the Company and authenticated by the
Trustee as hereinafter provided. The "40-day restricted period" (as defined in
Regulation S) shall be terminated upon the receipt by the Trustee of (i) a
written certificate from the Depositary certifying that it has received
certification of non- United States beneficial ownership of 100% of the
aggregate principal amount of the Regulation S Temporary Global Security
(except to the extent of any beneficial owners thereof who acquired an interest
therein pursuant to another exemption from registration under the Securities
Act and who will take delivery of a beneficial ownership interest in a
Restricted Global Security, all as contemplated by Section 2.12(a)(ii) hereof),
and (ii) an Officers' Certificate from the Company.
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Following the termination of the 40-day restricted period, beneficial interests
in the Regulation S Temporary Global Security shall be exchanged for beneficial
interests in Regulation S Permanent Global Securities pursuant to the
Applicable Procedures. Simultaneously with the authentication of Regulation S
Permanent Global Securities, the Trustee shall cancel the Regulation S
Temporary Global Security. The aggregate principal amount of the Regulation S
Temporary Global Security and the Regulation S Permanent Global Securities may
from time to time be increased or decreased by adjustments made on the records
of the Securities Custodian as hereinafter provided, subject in each case to
compliance with the Applicable Procedures.
(c) Global Securities in General. Each global Security shall
represent such of the outstanding Securities as shall be specified therein and
each shall provide that it shall represent the aggregate amount of outstanding
Securities from time to time endorsed thereon and that the aggregate amount of
outstanding Securities represented thereby may from time to time be reduced or
increased, as appropriate, to reflect exchanges, redemptions, purchases or
conversions of such Securities. Any endorsement of a global Security to
reflect the amount of any increase or decrease in the amount of outstanding
Securities represented thereby shall be made by the Securities Custodian in
accordance with the standing instructions and procedures existing between the
Depositary and the Securities Custodian.
Members of, or participants in, the Depositary ("Agent Members") shall
have no rights under this Indenture with respect to any global Security held on
their behalf by the Depositary or under the global Security, and the Depositary
(including, for this purpose, its nominee) may be treated by the Company, the
Trustee and any agent of the Company or the Trustee as the absolute owner of
such global Security for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall (A) prevent the Company, the Trustee or any
agent of the Company or the Trustee from giving effect to any written
certification, proxy or other authorization furnished by the Depositary or (B)
impair, as between the Depositary and its Agent Members, the operation of
customary practices governing the exercise of the rights of a holder of any
Security.
(d) Certificated Securities. Securities issued to accredited
investors as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act ("Accredited Investors") who are not QIBs and any other Securities not
issued as interests in the global Securities shall be issued initially in
definitive, fully registered form substantially in the form of Exhibit A-1
attached hereto (but without including the text referred to in the footnotes 1
and 2 thereto).
SECTION 2.2 Execution and Authentication
An Officer shall sign the Securities for the Company by manual or
facsimile signature. The Company's seal shall be affixed to or reproduced on
the Securities and attested by the Secretary or an Assistant Secretary of the
Company. Typographic and other minor errors or defects in any such
reproduction of the seal or any such facsimile signature shall not affect the
validity or enforceability of any Security which has been authenticated and
delivered by the Trustee.
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If an Officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security, the Security shall
be valid nevertheless.
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security. The
signature shall be conclusive evidence that the Security has been authenticated
under this Indenture.
The Trustee shall authenticate and make available for delivery
Securities for original issue in the aggregate principal amount of up to
$125,000,000 (plus up to an additional $18,750,000 issued pursuant to the
exercise of the over-allotment option described in the Purchase Agreement upon
receipt of a written order or orders of the Company signed by two Officers of
the Company (a "Company Order"). The Company Order shall specify the amount of
Securities to be authenticated, to what extent, if any, such Securities will be
represented by a Regulation S Temporary Global Security, a Restricted Global
Security and one or more Certificated Securities, and the date on which each
original issue of Securities is to be authenticated. The aggregate principal
amount of Securities outstanding at any time may not exceed $125,000,000,
except as provided above and in Section 2.7.
The Trustee shall act as the initial authenticating agent.
Thereafter, the Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities. An authenticating agent may authenticate
Securities whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent shall have the same rights as an Agent to deal with the
Company or an Affiliate of the Company.
The Securities shall be issuable only in registered form without
coupons and only in denominations of $1,000 and any integral multiple thereof.
SECTION 2.3 Registrar, Paying Agent and Conversion Agent
The Company shall maintain an office or agency where Securities may be
presented for registration of transfer or for exchange (the "Registrar"), an
office or agency where Securities may be presented for payment (the "Paying
Agent"), an office or agency where Securities 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 Securities and this Indenture may be
served. The Registrar shall keep a register of the Securities and of their
transfer and exchange.
The Company shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture. The agreement shall implement the
provisions of this Indenture that relate to such Agent. The Company shall
notify the Trustee of the name and address of any Agent not a party to this
Indenture. If the Company fails to 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 or any
Affiliate of the Company may act as Paying Agent (except for the purposes of
Section 6.1 and Article 10), Registrar or Conversion Agent.
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The Company initially appoints the Trustee as Registrar, Paying Agent,
Conversion Agent and agent for service of notices and demands in connection
with the Securities.
SECTION 2.4 Paying Agent to Hold Money In Trust
Prior to 11:00 a.m., New York City time, on each due date of the
principal of or interest on any Securities, the Company shall deposit with the
Paying Agent a sum sufficient to pay such principal or interest so becoming
due. Subject to Section 5.7, the Paying Agent shall hold in trust for the
benefit of Securityholders or the Trustee all money held by the Paying Agent
for the payment of principal of or interest on the Securities, and shall notify
the Trustee of any default by the Company (or any other obligor on the
Securities) in making any such payment. If the Company or an Affiliate of the
Company acts as Paying Agent, it shall, before 11:00 a.m., New York City time,
on each due date of the principal of or interest on any Securities, 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 so, the
Paying Agent (other than the Company) shall have no further liability for the
money.
SECTION 2.5 Securityholder 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
Securityholders. If the Trustee is not the Registrar, the Company shall
furnish to the Trustee on or before each semiannual 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 Securityholders.
SECTION 2.6 Transfer and Exchange
(a) Subject to compliance with any applicable additional
requirements contained in Section 2.12, when a Security is presented to the
Registrar with a request to register a transfer thereof or to exchange such
Security for an equal principal amount of Securities of other authorized
denominations, the Registrar shall register the transfer or make the exchange
as requested; provided, however, that every Security presented or surrendered
for registration of transfer or exchange shall be duly endorsed or accompanied
by a written instrument of transfer in form satisfactory to the Registrar duly
executed by the Holder thereof or its attorney duly authorized in writing. To
permit registration of transfers and exchanges, upon surrender of any Security
for registration of transfer or exchange at the office or agency maintained
pursuant to Section 2.3, the Company shall execute and the Trustee shall
authenticate Securities of a like aggregate principal amount at the Registrar's
request. Any exchange or transfer shall be without charge, except that the
Company or the Registrar may require payment of a sum sufficient to cover any
tax, assessment or other governmental charge that may be imposed in relation
thereto, and provided further that this sentence shall not apply to any
exchange pursuant to Section 2.10, 3.6, 3.11, 4.2 (last paragraph) or 11.5.
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Neither the Company, the Registrar nor the Trustee shall be required
to exchange or register a transfer of (a) any Securities for a period of 15
days next preceding any selection of Securities to be redeemed, (b) any
Securities or portions thereof selected or called for redemption (except, in
the case of redemption of a Security in part, the portion not to be redeemed)
or (c) any Securities or portions thereof in respect of which a Change in
Control Purchase Notice has been delivered and not withdrawn by the Holder
thereof (except, in the case of the purchase of a Security in part, the portion
not to be purchased).
All Securities issued upon any transfer or exchange of Securities
shall be valid obligations of the Company, evidencing the same debt and
entitled to the same benefits under this Indenture as the Securities
surrendered upon such transfer or exchange.
(b) Notwithstanding any provision to the contrary herein, so long
as a global Security remains outstanding and is held by or on behalf of the
Depositary, transfers of a global Security, in whole or in part, shall be made
only in accordance with Section 2.12 and this Section 2.6(b). Except as
provided in Section 2.12, transfers of a global Security shall be limited to
transfers of such global Security in whole, or in part, to nominees of the
Depositary or to a successor of the Depositary or such successor's nominee.
(c) Successive registrations and registrations of transfers and
exchanges as aforesaid may be made from time to time as desired, and each such
registration shall be noted on the register for the Securities.
(d) Any Registrar appointed pursuant to Section 2.3 hereof shall
provide to the Trustee such information as the Trustee may reasonably require
in connection with the delivery by such Registrar of Securities upon transfer
or exchange of Securities.
(e) No Registrar shall be required to make registrations of
transfer or exchange of Securities during any periods designated in the text of
the Securities or in this Indenture as periods during which such registration
of transfers and exchanges need not be made.
SECTION 2.7 Replacement Securities
If any mutilated Security is surrendered to the Company, the Registrar
or the Trustee, or the Company, the Registrar and the Trustee receive evidence
to their satisfaction of the destruction, loss or theft of any Security, and
there is delivered to the Company, the Registrar and the Trustee such Security
or indemnity as may be required by them to save each of them harmless, then, in
the absence of notice to the Company, the Registrar or the Trustee that such
Security has been acquired by a bona fide purchaser, the Company shall execute,
and upon its written request the Trustee shall authenticate and deliver, in
exchange for any such mutilated Security or in lieu of any such destroyed, lost
or stolen Security, a new Security of like tenor and principal amount, bearing
a number not contemporaneously outstanding.
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In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, or is about to be redeemed or
purchased by the Company pursuant to Article 3, the Company in its discretion
may, instead of issuing a new Security, pay, redeem or purchase such Security,
as the case may be.
Upon the issuance of any new Securities under this Section 2.7, the
Company may require the payment of a sum sufficient to cover any tax,
assessment or other governmental charge that may be imposed in relation thereto
and any other expenses (including the fees and expenses of the Trustee or the
Registrar) in connection therewith.
Every new Security issued pursuant to this Section 2.7 in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all benefits of this Indenture equally and proportionately with any
and all other Securities duly issued hereunder.
The provisions of this Section 2.7 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 2.8 Outstanding Securities
Securities outstanding at any time are all Securities authenticated by
the Trustee, except for those canceled by it, those delivered to it for
cancellation and those described in this Section 2.8 as not outstanding.
If a Security is replaced pursuant to Section 2.7, it ceases to be
outstanding unless the Company receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
If the Paying Agent (other than the Company) holds on a redemption
date or maturity date money sufficient to pay the principal of (including
premium, if any) and accrued interest on Securities payable on that date, then
on and after that date such Securities cease to be outstanding and interest on
them ceases to accrue.
Subject to the restrictions contained in Section 2.9, a Security does
not cease to be outstanding because the Company or an Affiliate of the Company
holds the Security.
SECTION 2.9 Treasury Securities
In determining whether the Holders of the required principal amount of
Securities have concurred in any notice, direction, waiver or consent,
Securities owned by the Company or any other obligor on the Securities or by
any Affiliate of the Company or of such other obligor shall be disregarded,
except that, for purposes of determining whether the Trustee shall be protected
in
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relying on any such notice, direction, waiver or consent, only Securities which
the Trustee knows are so owned shall be so disregarded. Securities 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 Securities and that the pledgee is not the Company or any
other obligor on the Securities or any Affiliate of the Company or of such
other obligor.
SECTION 2.10 Temporary Securities
Until definitive Securities are ready for delivery, the Company may
prepare and execute, and, upon receipt of a Company Order, the Trustee shall
authenticate and deliver, temporary Securities. Temporary Securities shall be
substantially in the form of definitive Securities but may have variations that
the Company with the consent of the Trustee considers appropriate for temporary
Securities. Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate and deliver definitive Securities in exchange for
temporary Securities.
SECTION 2.11 Cancellation
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar, the Paying Agent and the Conversion Agent shall
forward to the Trustee or its agent any Securities surrendered to them for
transfer, exchange, payment or conversion. The Trustee and no one else shall
cancel, in accordance with its standard procedures, all Securities surrendered
for transfer, exchange, redemption, payment, conversion or cancellation and
shall deliver the canceled Securities to the Company. The Company may not
issue new Securities to replace Securities it has paid or delivered to the
Trustee for cancellation or that any Holder has converted pursuant to Article
4.
SECTION 2.12 Additional Transfer and Exchange Requirements
(a) Transfer and Exchange of Global Securities. A global
Security shall be transferred to the beneficial owners thereof only if (1) the
Depositary notifies the Company that it is unwilling or unable to continue as
depositary for such global Security or if it at any time ceases to be a
"clearing agency" registered or in good standing under the Exchange Act or
other applicable statute or regulation and a successor depositary is not
appointed by the Company within 90 days of such notice, or (2) an Event of
Default has occurred and is continuing. In either case, the Company shall
execute, and the Trustee shall, upon receipt of a Company Order, authenticate
and deliver, Certificated Securities in an aggregate principal amount equal to
the principal amount of such global Security in exchange therefor. Such
exchange shall be effected in accordance with the Applicable Procedures.
The following requirements shall apply to transfers of beneficial
interests between a Restricted Global Security and a Regulation S Global
Security:
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(i) Restricted Global Security to Regulation S Global
Security. If, at any time, an owner of a beneficial interest in a
Restricted Global Security wishes to transfer its interest in such
Restricted Global Security to a person who is required or permitted to
take delivery thereof in the form of a beneficial interest in a
Regulation S Global Security, such owner shall, subject to the
Applicable Procedures, exchange or cause the exchange of such interest
for an equivalent beneficial interest in a Regulation S Global
Security as provided in this Section 2.12(a)(i). Upon receipt by the
Trustee, as Registrar, at the Corporate Trust Office of (1)
instructions given in accordance with the Applicable Procedures from
an Agent Member directing the Trustee to credit or cause to be
credited a beneficial interest in the Regulation S Global Security in
an amount equal to the beneficial interest in the Restricted Global
Security to be exchanged, (2) a written order given in accordance with
the Applicable Procedures containing information regarding the
participant account of the Depositary to be credited with such
increase and the participant account of the Depositary to be debited
for such beneficial interest, and, in the case of a Restricted Global
Security that is a Transfer Restricted Security, (3) a certificate in
the form of Exhibit B-1 hereto, upon which the Trustee may
conclusively rely, given by the holder of such beneficial interest
stating that the transfer of such interest has been made in compliance
with the transfer restrictions applicable to the global Securities and
pursuant to and in accordance with Rule 904 of Regulation S, then the
Trustee, as Registrar and Securities Custodian, shall reduce or cause
to be reduced the aggregate principal amount of the applicable
Restricted Global Security and increase or cause to be increased the
aggregate principal amount of the applicable Regulation S Global
Security by the principal amount of the beneficial interest in the
Restricted Global Security to be exchanged, and the Trustee, as
Registrar, shall instruct the Depositary, concurrently with the
reduction, to credit or cause to be credited to the account of the
person specified in such instructions (which shall be the Agent Member
for Euroclear or Cedel or both, as the case may be) a beneficial
interest in the Regulation S Global Security equal to the reduction in
the aggregate principal amount of the Restricted Global Security, and
to debit or cause to be debited from the account of the person making
such exchange or transfer the beneficial interest in the Restricted
Global Security that is being exchanged or transferred.
(ii) Regulation S Global Security to Restricted Global
Security. If, at any time, an owner of a beneficial interest in a
Regulation S Global Security wishes to transfer its interest in such
Regulation S Global Security to a person who is required or permitted
to take delivery thereof in the form of an interest in a Restricted
Global Security, such owner shall, subject to the Applicable
Procedures and only in accordance with this Section 2.12(a)(ii),
exchange or cause the exchange of such interest for an equivalent
beneficial interest in a Restricted Global Security. Upon receipt by
the Trustee, as Registrar, at the Corporate Trust Office of (1)
written instructions from the Depositary, directing the Trustee, as
Registrar, to credit or cause to be credited a beneficial interest in
the Restricted Global Security equal to the beneficial interest in the
Regulation S Global Security to be exchanged, such instructions to
contain information regarding the participant account with the
Depositary to be credited with such increase, (2) a written order
given in accordance with the Applicable Procedures containing
information regarding the participant account of the Depositary to be
credited
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with, and the account of the Depositary (or, if such account is held
for Euroclear or Cedel, the Euroclear or Cedel account, as the case
may be) to be debited with, such beneficial interest and, in the case
of a Regulation S Global Security that is a Transfer Restricted
Security, (3) a certificate in the form of Exhibit B-2 attached
hereto, upon which the Trustee may conclusively rely, given by the
owner of such beneficial interest stating (A) if the transfer is
pursuant to Rule 144A, that the person transferring such interest in a
Regulation S Global Security reasonably believes that the person
acquiring such interest in a Restricted Global Security is a QIB and
is obtaining such beneficial interest in a transaction meeting the
requirements of Rule 144A and any applicable Blue Sky or securities
laws of any state of the United States, (B) that the transfer complies
with the requirements of Rule 144 under the Securities Act and any
applicable Blue Sky or securities laws of any state of the United
States, (C) that the transfer is being effected pursuant to an
effective registration statement under the Securities Act or (D) if
the transfer is pursuant to any other exemption from the registration
requirements of the Securities Act, that the transfer of such interest
has been made in compliance with the transfer restrictions applicable
to the global Securities and pursuant to and in accordance with the
requirements of the exemption claimed, such statement to be supported
by an Opinion of Counsel from the transferee or the transferor in form
reasonably acceptable to the Company and the Trustee, then the
Trustee, as Registrar and Securities Custodian, shall reduce or cause
to be reduced the aggregate principal amount of such Regulation S
Global Security and increase or cause to be increased the aggregate
principal amount of the applicable Restricted Global Security by the
principal amount of the beneficial interest in the Regulation S Global
Security to be exchanged, and the Trustee, as Registrar, shall
instruct the Depositary, concurrently with such reduction, to credit
or cause to be credited to the account of the person specified in such
instructions a beneficial interest in the applicable Restricted Global
Security equal to the reduction in the aggregate principal amount of
such Regulation S Global Security and to debit or cause to be debited
from the account of the person making such transfer the beneficial
interest in the Regulation S Global Security that is being
transferred.
(b) Transfer and Exchange of Certificated Securities. When
Certificated Securities are presented by a Holder to the Registrar with a
request:
(x) to register the transfer of the Certificated
Securities to a person who will take delivery thereof in the form of
Certificated Securities only; or
(y) to exchange such Certificated Securities for an equal
principal amount of Certificated Securities of other authorized
denominations,
the Registrar shall register the transfer or make the exchange as requested;
provided, however, that the Certificated Securities presented or surrendered
for register of transfer or exchange:
(i) shall be duly endorsed or accompanied by a written
instrument of transfer in accordance with the proviso to Section 2.6;
and
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(ii) in the case of a Certificated Security that is a
Transfer Restricted Security, such request shall be accompanied by the
following additional information and documents, as applicable:
(A) if such Transfer Restricted Security is being
delivered to the Registrar by a Holder for registration in the
name of such Holder, without transfer, or such Transfer
Restricted Security is being transferred to the Company, a
certification to that effect from such Holder (in
substantially the form of Exhibit B-3 hereto);
(B) if such Transfer Restricted Security is being
transferred to a QIB in accordance with Rule 144A under the
Securities Act or pursuant to an exemption from registration
in accordance with Rule 144 under the Securities Act or
pursuant to an effective registration statement under the
Securities Act, a certification to that effect from such
Holder and to the further effect that the transfer complies
with any applicable Blue Sky or securities laws of any state
of the United States (in substantially the form of Exhibit B-3
hereto, upon which the Trustee may conclusively rely); or
(C) if such Transfer Restricted Security is being
transferred in reliance on any other exemption from the
registration requirements of the Securities Act (including
Rule 904 of Regulation S thereunder), a certification to that
effect from such Holder and to the further effect that the
transfer complies with any applicable Blue Sky or securities
laws of any state of the United States (in substantially the
form of Exhibit B-3 hereto, upon which the Trustee may
conclusively rely) and an Opinion of Counsel from such Holder
or the transferee reasonably acceptable to the Company and the
Trustee to the effect that such transfer is in compliance with
the Securities Act.
(c) Transfer of a Beneficial Interest in a Restricted Global
Security or Regulation S Permanent Global Security for a Certificated Security.
(i) Any person having a beneficial interest in a
Restricted Global Security or Regulation S Permanent Global Security
may upon request, subject to the Applicable Procedures, transfer such
beneficial interest to a person who is required or permitted to take
delivery thereof in the form of a Certificated Security. Upon receipt
by the Trustee of written instructions or such other form of
instructions as is customary for the Depositary, from the Depositary
on behalf of any person having a beneficial interest in a Restricted
Global Security or Regulation S Permanent Global Security, and, in the
case of a global security that is a Transfer Restricted Security, the
following additional information and documents (all of which may be
submitted by facsimile):
(A) if such beneficial interest is being
transferred to the person designated by the Depositary as
being the beneficial owner, a certification to that effect
from
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such person (in substantially the form of Exhibit B-4 hereto,
upon which the Trustee may conclusively rely);
(B) if such beneficial interest is being
transferred to a QIB in accordance with Rule 144A under the
Securities Act or pursuant to an exemption from registration
in accordance with Rule 144 under the Securities Act or
pursuant to an effective registration statement under the
Securities Act, a certification to that effect from the
transferor and to the further effect that the transfer
complies with any applicable Blue Sky or securities laws of
any state of the United States (in substantially the form of
Exhibit B-4 hereto, upon which the Trustee may conclusively
rely); or
(C) if such beneficial interest is being
transferred in reliance on any other exemption from the
registration requirements of the Securities Act (including
Rule 904 of Regulation S thereunder), a certification, upon
which the Trustee may conclusively rely, to that effect from
the transferor and to the further effect that the transfer
complies with any applicable Blue Sky or securities laws of
any state of the United States (in substantially the form of
Exhibit B-4 hereto, upon which the Trustee may conclusively
rely) and an Opinion of Counsel from the transferee or the
transferor reasonably acceptable to the Company and to the
Trustee to the effect that such transfer is in compliance with
the Securities Act,
the Trustee, as Registrar and Securities Custodian, shall reduce or cause to be
reduced accordingly, the aggregate principal amount of Restricted Global
Securities or Regulation S Permanent Global Securities, as applicable, and,
following such reduction, the Company shall execute and the Trustee shall
authenticate and deliver to the transferee a Certificated Security in the
appropriate principal amount.
(ii) Certificated Securities issued in exchange for a
beneficial interest in a Restricted Global Security or Regulation S
Permanent Global Security, as applicable, pursuant to this Section
2.12(c) shall be registered in such names and in such authorized
denominations as the Depositary, pursuant to instructions from its
direct or indirect participants or otherwise, shall instruct the
Trustee.
(d) Exchange of a Certificated Security for a Beneficial Interest
in a Global Security. When Certificated Securities are presented by a Holder
to the Registrar with a written request to exchange the Certificated Securities
for a beneficial interest in a Restricted Global Security or Regulation S
Permanent Global Security, then, subject to the Applicable Procedures, the
Trustee, as Registrar, shall make the exchange as requested and, as Securities
Custodian, it shall increase or cause to be increased accordingly the aggregate
principal amount of such global Security and the Trustee shall cancel such
Certificated Securities in accordance with Section 2.11, but in each case only
if the following requirements for such transactions are met:
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(i) such Certificated Securities shall be duly endorsed
or accompanied by a written instrument of transfer in accordance with
the proviso to Section 2.6; and
(ii) in the case of each Certificated Security that is a
Transfer Restricted Security, such request shall be accompanied by the
following additional information and documents, as applicable: if
such Certificated Security is being transferred (A) to a QIB in
accordance with Rule 144A, (B) pursuant to Rule 144 under the
Securities Act or (C) pursuant to an exemption from registration in
accordance with Rule 904 of Regulation S under the Securities Act or
(D) pursuant to an effective registration statement under the
Securities Act, a certification to that effect from such Holder and to
the further effect that the transfer complies with any applicable Blue
Sky or securities laws of any state of the United States (in
substantially the form of Exhibit B-5 hereto, upon which the Trustee
may conclusively rely) and, in the case of a transfer described in
clause (C), an Opinion of Counsel from the transferee or the
transferor reasonably acceptable to the Company and the Trustee to the
effect that such transfer is in compliance with the Securities Act.
(e) [Intentionally omitted.]
(f) Legends.
(i) Except as permitted by the following paragraphs (ii)
and (iii), each global Security and Certificated Security (and all
Securities issued in exchange therefor or upon registration of
transfer or replacement thereof) shall bear a legend in substantially
the following form (each a "Transfer Restricted Security" for so long
as it is required by this Indenture to bear such legend):
THIS SECURITY AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION
OF THIS SECURITY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS.
NEITHER THIS SECURITY, THE SHARES OF COMMON STOCK ISSUABLE UPON
CONVERSION OF THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN
OR THEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT
TO, REGISTRATION. UNLESS THE SHARES OF COMMON STOCK HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT, A HOLDER OF THIS SECURITY WILL BE
ABLE TO EXERCISE THE CONVERSION RIGHT ONLY IF THE HOLDER CERTIFIES
THAT IT IS A "QUALIFIED INSTITUTIONAL BUYER" OR AN INSTITUTIONAL
"ACCREDITED INVESTOR" AS DEFINED BELOW.
THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE
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(THE "RESALE RESTRICTION TERMINATION DATE"), WHICH IS TWO YEARS AFTER
THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH
THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS
SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY) ONLY (A) TO THE COMPANY
OR ANY SUBSIDIARY THEREOF, (B) FOR SO LONG AS THE SECURITY IS ELIGIBLE
FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES
IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
OF A QUALIFIED INSTITUTIONAL BUYER TO WHICH NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH
(A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS
ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH
AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND
NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, (D) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (E) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE
904 OF REGULATION S UNDER THE SECURITIES ACT, OR (F) PURSUANT TO
ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENT OF THE
SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR
TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (C), (E) OR (F)
TO REQUIRE THE DELIVERY TO EACH OF THEM OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM,
AND IN EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE
FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND
DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE
REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION
TERMINATION DATE.
(ii) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security represented by a
global Security) pursuant to Rule 144A or 144 under the Securities Act
or pursuant to an effective registration statement under the
Securities Act:
(A) in the case of any Transfer Restricted
Security that is a Certificated Security, the Registrar shall
permit the Holder thereof to exchange such Transfer Restricted
Security for a Certificated Security that does not bear the
legend set forth in (i) above and rescind any restriction on
the transfer of such Transfer Restricted Security upon receipt
of a certification from the transferring Holder substantially
in the form of Exhibit B-3 hereto; and
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(B) in the case of any Transfer Restricted
Security represented by a global Security, such Transfer
Restricted Security shall not be required to bear the legend
set forth in (i) above, but shall continue to be subject to
the provisions of Section 2.12(a); provided, however, that
with respect to any request for an exchange of a Transfer
Restricted Security that is represented by a global Security
for a Certificated Security that does not bear the legend set
forth in (i) above, which request is made in reliance upon
Rule 144A or 144, the Holder thereof shall certify in writing
to the Registrar that such request is being made pursuant to
Rule 144 (such certification to be substantially in the form
of Exhibit B-4 hereto).
(iii) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security represented by a
global Security) in reliance on any exemption from the registration
requirements of the Securities Act (other than exemptions pursuant to
Rule 144A or Rule 144 under the Securities Act) in which the Holder or
the transferee provides an Opinion of Counsel to the Company and the
Trustee in form reasonably acceptable to the Company and the Trustee
(which Opinion of Counsel shall also state that the transfer
restrictions contained in the legend are no longer applicable):
(A) in the case of any Transfer Restricted
Security that is a Certificated Security, the Registrar shall
permit the Holder thereof to exchange such Transfer Restricted
Security for a Certificated Security that does not bear the
legend set forth in (i) above and rescind any restriction on
the transfer of such Transfer Restricted Security; and
(B) in the case of any Transfer Restricted
Security represented by a global Security, such Transfer
Restricted Security shall not be required to bear the legend
set forth in (i) above, but shall continue to be subject to
the provisions of Section 2.12(a).
(iv) Upon the exchange, registration of transfer or
replacement of Securities not bearing the legend set forth in
paragraph (i) above, the Registrar shall deliver Securities that do
not bear such legend.
ARTICLE 3.
REDEMPTION AND PURCHASES
SECTION 3.1 Right to Redeem; Notice to Trustee
The Securities may be redeemed at the election of the Company, as a
whole or from time to time in part, at any time on or after February 26, 2001,
at the redemption prices specified in paragraph 5 of the form of Security
attached hereto as Exhibit A-1, together with accrued interest up to but not
including the Redemption Date.
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If the Company elects to redeem Securities pursuant to this Section
3.1 and paragraph 5 of the Securities, it shall notify the Trustee at least 35
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 Securities to be redeemed. If fewer than all of the
Securities 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 Securities to Be Redeemed
If less than all of the Securities are to be redeemed, the Trustee
shall, not more than 60 days prior to the redemption date, select the
Securities to be redeemed by lot. The Trustee shall make the selection from
the Securities outstanding and not previously called for redemption, pro rata
or by another method the Trustee considers fair and appropriate. Securities in
denominations of $1,000 may only be redeemed in whole. The Trustee may select
for redemption portions (equal to $1,000 or any multiple thereof) of the
principal of Securities that have denominations larger than $1,000. Provisions
of this Indenture that apply to Securities called for redemption also apply to
portions of Securities called for redemption.
If any Security selected for partial redemption is converted in part
before termination of the conversion right with respect to the portion of the
Security so selected, the converted portion of such Security shall be deemed
(so far as may be) to be the portion selected for redemption. Securities which
have been converted during a selection of Securities to be redeemed shall be
treated by the Trustee as outstanding for the purpose of such selection.
SECTION 3.3 Notice of Redemption
At least 30 days but not more than 60 days before a redemption date,
the Company shall mail or cause to be mailed a notice of redemption to each
Holder of Securities to be redeemed at such Holder's address as it appears on
the Registrar's books.
The notice shall identify the Securities 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;
(5) that Securities called for redemption must be
presented and surrendered to the Paying Agent to collect the
redemption price;
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(6) that the Securities called for redemption may be
converted at any time before the close of business on the redemption
date;
(7) that Holders who wish to convert Securities must
satisfy the requirements in paragraph 8 of the Securities;
(8) that, unless the Company defaults in making the
redemption payment, interest on Securities called for redemption shall
cease accruing on and after the redemption date and 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
Securities; and
(9) if any Security is being redeemed in part, the
portion of the principal amount of such Security to be redeemed and
that, after the redemption date, upon presentation and surrender of
such Security, a new Security or Securities in aggregate principal
amount equal to the unredeemed portion thereof will be issued.
If any of the Securities to be redeemed is in the form of a global
Security, then the Company shall modify such notice to the extent necessary to
accord with the procedures of the Depositary applicable to redemptions.
At the Company's 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, Securities called for redemption
become due and payable on the redemption date and at the redemption price
stated in the notice, except for Securities that are converted in accordance
with the provisions of Section 4.1. Upon presentation and surrender to the
Paying Agent, Securities 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
Prior to 11:00 a.m. New York City time, on the redemption date, the
Company shall deposit with the Paying Agent (or, if the Company acts as Paying
Agent, shall segregate and hold in trust) money sufficient to pay the
redemption price of and accrued interest on all Securities to be redeemed on
that date, other than Securities 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 return to the
Company any money not required for that purpose because of the conversion of
Securities pursuant to Article 4 or otherwise. If such money is then held by
the Company in trust and is not required for such purpose, it shall be
discharged from the trust.
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SECTION 3.6 Securities Redeemed in Part
Upon presentation and surrender of a Security that is redeemed in
part, the Company shall execute and the Trustee shall authenticate for and
deliver to the Holder a new Security equal in principal amount to the
unredeemed portion of the Security surrendered.
SECTION 3.7 Conversion Arrangement on Call for Redemption
In connection with any redemption of Securities, the Company may
arrange for the purchase and conversion of any Securities called for redemption
by an agreement with one or more investment bankers or other purchasers to
purchase such Securities by paying to the Paying Agent in trust for the
Securityholders, on or before the close of business on the Redemption Date, an
amount that, together with any amounts deposited with the Paying Agent by the
Company for the redemption of such Securities, is not less than the Redemption
Price, together with interest, if any, accrued to, but not including, the
Redemption Date, of such Securities. Notwithstanding anything to the contrary
contained in this Article 3, the obligation of the Company to pay the
Redemption Price of such Securities, including all accrued interest, if any,
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, any Securities
not duly surrendered for conversion by the Holders thereof may, at the option
of the Company, be deemed, to the fullest extent permitted by law, acquired by
such purchasers from such Holders and (notwithstanding anything to the contrary
contained in Article 4) surrendered by such purchasers for conversion, all as
of immediately prior to the close of business on the Redemption Date, subject
to payment of the above amount as aforesaid. The Paying Agent shall hold and
pay to the Holders whose Securities are selected for redemption any such amount
paid to it for purchase and conversion in the same manner as it would money
deposited with it by the Company for the redemption of Securities. Without the
Paying Agent's prior written consent, no arrangement between the Company and
such purchasers for the purchase and conversion of any Securities shall
increase or otherwise affect any of the powers, duties, responsibilities or
obligations of the Paying Agent as set forth in this Indenture, and the Company
agrees to indemnify the Paying Agent 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 Securities between the
Company and such purchasers, including the costs and expenses incurred by the
Paying Agent 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.
SECTION 3.8 Purchase of Securities at Option of the Holder Upon Change in
Control
(a) If at any time that Securities remain outstanding there shall
have occurred a Change in Control, Securities shall be purchased by the Company
at the option of the Holder thereof, as of the date that is 50 Business Days
after the occurrence of the Change in Control (the "Change in Control Purchase
Date") at a purchase price equal to 100% of the principal amount thereof (the
"Change in Control Purchase Price") plus accrued interest up to but not
including the Change in
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Control Purchase Date, subject to satisfaction by or on behalf of any Holder of
the requirements set forth in subsection (c) of this Section 3.8.
A "Change in Control" shall be deemed to have occurred at such time
after the initial issuance of the Securities as there shall occur:
(1) the acquisition by any person (including any
syndicate or group deemed to be a "person" under Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or any successor provision) of beneficial ownership,
directly or indirectly, through a purchase, merger or other
acquisition transaction or series of transactions, of shares of
capital stock of the Company entitling such person to exercise more
than 50% of the total voting power of all shares of capital stock of
the Company entitling the holders thereof to vote generally in
elections of directors; or
(2) 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, lease or exchange of all or substantially
all of the property and assets of the Company (other than a merger
which (x) does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of capital stock of the
Company or (y) is effected primarily 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 of the surviving entity); or
(3) at any time during any consecutive two-year period,
individuals who at the beginning of such period constituted the Board
of Directors (together with any new directors whose election by the
Board of Directors or whose nomination for election by the
stockholders of the Company was approved by a vote of at least
two-thirds of the directors then still in office who were either
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 Board of Directors then in
office.
A "beneficial owner" shall be determined in accordance with Rule 13d-3
promulgated by the Commission under the Exchange Act, as in effect on the date
of execution of this Indenture, except that, for purposes of this subsection
(a), the number of shares of capital stock of the Company entitling the holders
thereof to vote generally in elections of directors shall be deemed to include,
in addition to all outstanding shares of capital stock of the Company entitling
the holders thereof to vote generally in the election of directors and Unissued
Shares deemed to be held by the Person with respect to which the Change in
Control determination is being made, all Unissued Shares deemed to be held by
all other Persons. As used herein, "Unissued Shares" shall mean shares of
capital stock of the Company not outstanding that are subject to options,
warrants, rights to purchase or conversion privileges exercisable within 60
days following the date of determination of a Change in Control and that, upon
issuance, shall entitle the holders thereof to vote generally in the election
of directors.
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(b) Within 20 Business Days after the occurrence of a Change in
Control, the Company shall mail a written notice of Change in Control to the
Trustee and to each Holder (and to beneficial owners as required by applicable
law) and shall cause a copy of such notice to be published in a daily newspaper
of national circulation. The notice shall include the form of a Change in
Control Purchase Notice to be completed by the Holder and shall state:
(1) the date of such Change in Control and, briefly, the
events causing such Change in Control;
(2) the date by which the Change in Control Purchase
Notice pursuant to this Section 3.8 must be given;
(3) the Change in Control Purchase Date;
(4) the Change in Control Purchase Price;
(5) briefly, the conversion rights of the Securities;
(6) the name and address of the Paying Agent and the
Conversion Agent;
(7) the then current Conversion Price;
(8) that Securities as to which a Change in Control
Purchase Notice has been given may be converted into Common Stock only
to the extent that the Change in Control Purchase Notice has been
withdrawn in accordance with the terms of this Indenture;
(9) the procedures that the Holder must follow to
exercise rights under this Section 3.8;
(10) the procedures for withdrawing a Change in Control
Purchase Notice, including a form of notice of withdrawal; and
(11) that the Holder must satisfy the requirements set
forth in the Securities in order to convert the Securities.
(c) A Holder may exercise its rights specified in subsection (a)
of this Section 3.8 upon delivery of a written notice of the exercise of such
rights (a "Change in Control Purchase Notice") to the Paying Agent at any time
prior to the close of business on the Business Day next preceding the Change in
Control Purchase Date, stating:
(1) the certificate number of each Certificate Security
that the Holder will deliver to be purchased;
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(2) the portion of the principal amount of each Security
that the Holder will deliver to be purchased, which portion must be
$1,000 or an integral multiple thereof; and
(3) that such Security shall be purchased pursuant to the
terms and conditions specified in this Indenture.
The delivery of such Security to the Paying Agent (together with all
necessary endorsements) at the office of the Paying Agent shall be a condition
to the receipt by the Holder of the Change in Control Purchase Price therefor;
provided, however, that such Change in Control Purchase Price shall be so paid
pursuant to this Section 3.8 only if the Security so delivered to the Paying
Agent shall conform in all respects to the description thereof set forth in the
related Change in Control Purchase Notice.
The Company shall purchase from the Holder thereof, pursuant to this
Section 3.8, a portion of a Security if the principal amount of such portion is
$1,000 or an integral multiple of $1,000. Provisions of this Indenture that
apply to the purchase of all of a Security pursuant to Sections 3.8 through
3.13 also apply to the purchase of such portion of such Security.
Notwithstanding anything herein to the contrary, any Holder delivering
to the Paying Agent the Change in Control Purchase Notice contemplated by this
subsection (c) shall have the right to withdraw such Change in Control Purchase
Notice in whole or in a portion thereof that is $1,000 or in an integral
multiple thereof at any time prior to the close of business on the Business Day
next preceding the Change in Control Purchase Date by delivery of a written
notice of withdrawal to the Paying Agent in accordance with Section 3.9.
The Paying Agent shall promptly notify the Company of the receipt by
it of any Change in Control Purchase Notice or written withdrawal thereof.
SECTION 3.9 Effect of Change in Control Purchase Notice
Upon receipt by the Paying Agent of the Change in Control Purchase
Notice specified in Section 3.8(c), the Holder of the Security in respect of
which such Change in Control Purchase Notice was given shall (unless such
Change in Control Purchase Notice is withdrawn as specified below) thereafter
be entitled to receive solely the Change in Control Purchase Price with respect
to such Security plus accrued interest thereon up to but not including the
Change in Control Purchase Date. Such Change in Control Purchase Price and
accrued interest shall be paid to such Holder promptly following the later of
(a) the Change in Control Purchase Date with respect to such Security (provided
the conditions in Section 3.8(c) have been satisfied) and (b) the time of
delivery of such Security to the Paying Agent by the Holder thereof in the
manner required by Section 3.8(c). Securities in respect of which a Change in
Control Purchase Notice has been given by the Holder thereof may not be
converted into shares of Common Stock on or after the date of the delivery of
such Change in Control Purchase Notice unless such Change in Control Purchase
Notice has first been validly withdrawn.
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A Change in Control Purchase Notice may be withdrawn by means of a
written notice of withdrawal delivered by the Holder to the office of the
Paying Agent at any time prior to the close of business on the Business Day
immediately preceding the Change in Control Purchase Date, specifying:
(1) the certificate number of each Certificated Security
in respect of which such notice of withdrawal is being submitted;
(2) the principal amount of the Security or portion
thereof with respect to which such notice of withdrawal is being
submitted; and
(3) the principal amount, if any, of such Security that
remains subject to the original Change in Control Purchase Notice and
that has been or will be delivered for purchase by the Company.
There shall be no purchase of any Securities pursuant to Section 3.8
if there has occurred (prior to, on or after, as the case may be, the giving,
by the Holders of such Securities, of the required Change in Control Purchase
Notice) and is continuing an Event of Default (other than a default in the
payment of the Change in Control Purchase Price with respect to such
Securities).
SECTION 3.10 Deposit of Change in Control Purchase Price
At or before 11:00 a.m., New York City time, on the second Business
Day immediately following a Change in Control Purchase Date, the Company shall
deposit with the Trustee or with the Paying Agent (or, if the Company is acting
as the Paying Agent, shall segregate and hold in trust as provided in Section
2.4) an amount of money sufficient to pay the aggregate Change in Control
Purchase Price of all the Securities or portions thereof that are to be
purchased as of such Change in Control Purchase Date plus accrued interest
thereon up to but not including the Change in Control Purchase Date. The
manner in which the deposit required by this Section 3.10 is made by the
Company shall be at the option of the Company, provided that such deposit shall
be made in a manner such that the Trustee or the Paying Agent shall have
immediately available funds on the second Business Day immediately following
the Change in Control Purchase Date.
If the Paying Agent holds, in accordance with the terms hereof, money
sufficient to pay the Change in Control Purchase Price of any Security tendered
for purchase, then, on the second Business Day immediately following to the
Change in Control Purchase Date, such Security will cease to be outstanding and
will be deemed paid, whether or not such Security is delivered to the Paying
Agent, and all other rights of the Holder in respect thereof shall terminate
(other than the right to receive the Change in Control Purchase Price upon
delivery of such Security).
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SECTION 3.11 Securities Purchased In Part
Any Security that is to be purchased only in part shall be surrendered
at the office of the Paying Agent (with, if the Company or the Trustee so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder
thereof or such Holder's attorney duly authorized in writing), and promptly
after the Change in Control Purchase Date the Company shall execute and the
Trustee shall authenticate and deliver to the Holder of such Security, without
service charge, a new Security or Securities, of such authorized denomination
or denominations as may be requested by such Holder, in aggregate principal
amount equal to, and in exchange for, the portion of the principal amount of
the Security so surrendered that is not purchased.
SECTION 3.12 Compliance With Securities Laws Upon Purchase of Securities
In connection with any offer to purchase or purchase of Securities
under Section 3.8 (provided that such offer or purchase constitutes an "issuer
tender offer" for purposes of Rule 13e-4 under the Exchange Act (which term, as
used herein, includes any successor provision thereto) at the time of such
offer or purchase), the Company shall (a) comply with Rule 13e-4 and Rule 14e-1
under the Exchange Act, (b) file the related Schedule 13E-4 (or any successor
or similar schedule, form or report) under the Exchange Act, and (c) otherwise
comply with all federal and state securities laws so as to permit the rights of
the Holders and obligations of the Company under Sections 3.8 through 3.11 to
be exercised in the time and in the manner specified therein.
SECTION 3.13 Repayment to the Company
Subject to the provisions of Section 5.7, to the extent that the
aggregate amount of cash deposited by the Company pursuant to Section 3.10
exceeds the aggregate Change in Control Purchase Price of the Securities or
portions thereof that the Company is obligated to purchase, plus accrued
interest thereon up to but not including the Change in Control Purchase Date,
then promptly after the second Business Day immediately following the Change in
Control Purchase Date the Trustee or the Paying Agent, as the case may be,
shall return any such excess to the Company.
ARTICLE 4.
CONVERSION
SECTION 4.1 Conversion Privilege
Subject to the further provisions of this Section 4.1, a Holder of a
Security may convert such Security into Common Stock at any time prior to
maturity, at the Conversion Price then in effect; provided, however, that, if
such Security is called for redemption pursuant to Article 3, such conversion
right shall terminate at the close of business on the Business Day immediately
preceding the redemption date for such Security (unless the Company shall
default in making the redemption
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payment when due, in which case the conversion right shall terminate at the
close of business on the date such default is cured and such Security is
redeemed); provided, further, that, if the Holder of a Security presents such
Security for redemption prior to the close of business on the Business Day
immediately preceding the redemption date for such Security, the right of
conversion shall terminate upon presentation of the Security to the Trustee
(unless the Company shall default in making the redemption payment when due, in
which case the conversion right shall terminate at the close of business on the
date such default is cured and such Security is redeemed). The number of
shares of Common Stock issuable upon conversion of a Security shall be
determined by dividing the principal amount of the Security or portion thereof
surrendered for conversion by the Conversion Price in effect on the Conversion
Date. The initial Conversion Price is set forth in paragraph 8 of the
Securities and is subject to adjustment as provided in this Article 4.
A Holder may convert a portion of a Security equal to $1,000 or any
integral multiple thereof. Provisions of this Indenture that apply to
conversion of all of a Security also apply to conversion of a portion of a
Security.
A Security in respect of which a Holder has delivered a Change in
Control Purchase Notice pursuant to Section 3.8(c) exercising the option of
such Holder to require the Company to purchase such Security may be converted
only if such Change in Control Purchase Notice is withdrawn by a written notice
of withdrawal delivered to the Paying Agent prior to the close of business on
the Business Day immediately preceding the Change in Control Purchase Date in
accordance with Section 3.9.
A Holder of Securities is not entitled to any rights of a holder of
Common Stock until such Holder has converted its Securities to Common Stock,
and only to the extent such Securities are deemed to have been converted into
Common Stock pursuant to this Article 4.
SECTION 4.2 Conversion Procedure
To convert a Security, a Holder must (a) complete and manually sign
the conversion notice on the back of the Security and deliver such notice to
the Conversion Agent, (b) surrender the Security to the Conversion Agent, (c)
furnish appropriate endorsements and transfer documents if required by the
Registrar or the Conversion Agent, and (d) pay any transfer or similar tax, if
required. The date on which the Holder satisfies all of those requirements is
the "Conversion Date." As soon as practicable after the Conversion Date, the
Company shall deliver to the Holder through the Conversion Agent a certificate
for the number of whole shares of Common Stock issuable upon the conversion,
payment for accrued interest on such Security to the extent required by this
Section 4.2 and cash in lieu of any fractional shares pursuant to Section 4.3.
The person in whose name the certificate is registered shall be deemed
to be a shareholder of record on the Conversion Date; provided, however, that
no surrender of a Security on any date when the stock transfer books of the
Company shall be closed shall be effective to constitute the person or persons
entitled to receive the shares of Common Stock upon such conversion as the
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record holder or holders of such shares of Common Stock on such date, but such
surrender shall be effective to constitute the person or persons entitled to
receive such shares of Common Stock as the record holder or holders thereof for
all purposes at the close of business on the next succeeding day on which such
stock transfer books are open; provided, further, that such conversion shall be
at the Conversion Price in effect on the Conversion Date as if the stock
transfer books of the Company had not been closed. Upon conversion of a
Security, such person shall no longer be a Holder of such Security. No payment
or adjustment will be made for dividends or distributions on shares of Common
Stock issued upon conversion of a Security.
Except as otherwise provided in this Section 4.2, no payment or
adjustment will be made for accrued interest on a converted Security. Interest
accrued through and including February 24, 2001 shall be paid on any Security
called for redemption pursuant to Article 3 and surrendered for conversion
pursuant to this Article 4 before the close of business on June 15, 2001. If
any Holder surrenders a Security for conversion after the close of business on
the record date for the payment of an installment of interest and before the
close of business on the related interest payment date, then, notwithstanding
such conversion, the interest payable on such interest payment date shall be
paid to the Holder of such Security on such record date. In such event, unless
such Security has been called for redemption, such Security, when surrendered
for conversion, must be accompanied by delivery of a check or draft payable to
the Conversion Agent in an amount equal to the interest payable on such
interest payment date on the portion so converted. If such payment does not
accompany such Security, the Security shall not be converted. If the Company
defaults in the payment of interest payable on the interest payment date, the
Conversion Agent shall repay such funds to the Holder.
If a Holder converts more than one Security at the same time, the
number of shares of Common Stock issuable upon the conversion shall be based on
the aggregate principal amount of Securities converted.
Upon surrender of a Security that is converted in part, the Company
shall execute, and the Trustee shall authenticate and deliver to the Holder, a
new Security equal in principal amount to the unconverted portion of the
Security surrendered.
SECTION 4.3 Fractional Shares
The Company will not issue fractional shares of Common Stock upon
conversion of Securities. In lieu thereof, the Company will pay an amount in
cash based upon the closing sale price of the Common Stock on the Trading Day
immediately prior to the date of conversion.
SECTION 4.4 Taxes on Conversion
If a Holder converts a Security, the Company shall pay any
documentary, stamp or similar issue or transfer tax due on the issue of shares
of Common Stock upon such conversion. However, the Holder shall pay any such
tax which is due because the Holder requests the shares to be issued
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in a name other than the Holder's name. The Conversion Agent may refuse to
deliver the certificate representing the Common Stock being issued in a name
other than the Holder's name until the Conversion Agent receives a sum
sufficient to pay any tax which will be due because the shares are to be issued
in a name other than the Holder's name. Nothing herein shall preclude any tax
withholding required by law or regulation.
SECTION 4.5 Company to Provide Stock
The Company shall, prior to issuance of any Securities hereunder, and
from time to time as it may be necessary, reserve, out of its authorized but
unissued Common Stock, a sufficient number of shares of Common Stock to permit
the conversion of all outstanding Securities into shares of Common Stock.
All shares of Common Stock delivered upon conversion of the Securities
shall be newly issued shares or treasury shares, shall be duly authorized,
validly issued, fully paid and nonassessable and shall be free from preemptive
rights and free of any lien or adverse claim.
The Company will endeavor promptly to comply with all federal and
state securities laws regulating the offer and delivery of shares of Common
Stock upon conversion of Securities, if any, and will list or cause to have
quoted such shares of Common Stock on each national securities exchange or in
the over-the-counter market or such other market on which the Common Stock is
then listed or quoted.
SECTION 4.6 Adjustment of Conversion Price
The conversion price as stated in paragraph 8 of the Securities (the
"Conversion Price") shall be adjusted from time to time by the Company as
follows:
(a) In case the Company shall (i) pay a dividend in shares of
Common Stock to all holders of Common Stock, (ii) make a distribution in shares
of Common Stock to all holders of Common Stock, (iii) subdivide its outstanding
Common Stock into a greater number of shares, or (iv) combine its outstanding
Common Stock into a smaller number of shares, the Conversion Price in effect
immediately prior thereto shall be adjusted so that the Holder of any Security
thereafter surrendered for conversion shall be entitled to receive that number
of shares of Common Stock which it would have owned had such Security been
converted immediately prior to the happening of such event. An adjustment made
pursuant to this subsection (a) shall become effective immediately after the
record date in the case of a dividend in shares or distribution and shall
become effective immediately after the effective date in the case of
subdivision or combination.
(b) In case the Company shall issue rights or warrants to all or
substantially all holders of its Common Stock entitling them (for a period
commencing no earlier than the record date described below and expiring not
more than 60 days after such record date) to subscribe for or purchase shares
of Common Stock (or securities convertible into Common Stock) at a price per
share
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less than the current market price per share of Common Stock (as determined in
accordance with subsection (e) of this Section 4.6) at the record date for the
determination of shareholders entitled to receive such rights or warrants, the
Conversion Price in effect immediately prior thereto shall be adjusted so that
the same shall equal the price determined by multiplying the Conversion Price
in effect immediately prior to such record date by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding on such
record date, plus the number of shares which the aggregate offering price of
the total number of shares of Common Stock so offered (or the aggregate
Conversion Price of the convertible securities 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 such record date plus the number of
additional shares of Common Stock offered (or into which the convertible
securities so offered are convertible). Such adjustment shall be made
successively whenever any such rights or warrants are issued, and shall become
effective immediately after such record date. If at the end of the period
during which such rights or warrants are exercisable not all rights or warrants
shall have been exercised, the adjusted Conversion Price shall be immediately
readjusted to what it would have been based upon the number of additional
shares of Common Stock actually issued (or the number of shares of Common Stock
issuable upon conversion of convertible securities actually issued).
(c) In case the Company shall distribute to all or substantially
all holders of its Common Stock any shares of capital stock of the Company
(other than Common Stock), evidences of indebtedness or other non-cash assets
(including securities of any company other than the Company), or shall
distribute to all or substantially all holders of its Common Stock rights or
warrants to subscribe for or purchase any of its securities (excluding those
referred to in subsection (b) of this Section 4.6), then in each such case 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 date of such distribution by a fraction of which the numerator shall be the
current market price per share (as defined in subsection (e) of this Section
4.6) of the Common Stock on the record date mentioned below less the fair
market value on such record date (as determined by the Board of Directors,
whose determination shall be conclusive evidence of such fair market value) of
the portion of the capital stock, evidences of indebtedness or other non-cash
assets so distributed or of such rights or warrants applicable to one share of
Common Stock (determined on the basis of the number of shares of Common Stock
outstanding on the record date), and of which the denominator shall be the
current market price per share (as defined in subsection (e) of this Section
4.6) of the Common Stock on such record date. Such adjustment shall become
effective immediately after the record date for the determination of
shareholders entitled to receive such distribution. Notwithstanding the
foregoing, in the event that the Company shall distribute rights or warrants
(other than those referred to in subsection (b) of this Section 4.6) ("Rights")
pro rata to holders of Common Stock, the Company may, in lieu of making any
adjustment pursuant to this Section 4.6, make proper provision so that each
holder of a Security who converts such Security (or any portion thereof) after
the record date for such distribution and prior to the expiration or redemption
of the Rights shall be entitled to receive upon such conversion, in addition to
the shares of Common Stock issuable upon such conversion (the "Conversion
Shares"), a number of Rights to be determined as follows: (i) if such
conversion occurs on or prior to the date for the distribution to the holders
of Rights of separate
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certificates evidencing such Rights (the "Distribution Date"), the same number
of Rights to which a holder of a number of shares of Common Stock equal to the
number of Conversion Shares is entitled at the time of such conversion in
accordance with the terms and provisions of and applicable to the Rights and
(ii) if such conversion occurs after the Distribution Date, the same number of
Rights to which a holder of the number of shares of Common Stock into which the
principal amount of the Security so converted was convertible immediately prior
to the Distribution Date would have been entitled on the Distribution Date in
accordance with the terms and provisions of and applicable to the Rights.
(d) In case the Company shall, by dividend or otherwise, at any
time distribute (a "Triggering Distribution") to all or substantially all
holders of its Common Stock cash in an aggregate amount that, together with the
aggregate amount of (A) any cash and the fair market value (as determined by
the Board of Directors, whose determination shall be conclusive evidence
thereof) of other consideration payable in respect of any tender offer by the
Company or a Subsidiary for Common Stock consummated within the 12 months
preceding the date of payment of the Triggering Distribution and in respect of
which no Conversion Price adjustment pursuant to this Section 4.6 has been made
and (B) any other cash distributions to all or substantially all holders of its
Common Stock made within the 12 months preceding the date of payment of the
Triggering Distribution and in respect of which no Conversion Price adjustment
pursuant to this Section 4.6 has been made, exceeds 10% of the product of the
current market price per share of Common Stock (as determined in accordance
with subsection (e) of this Section 4.6) on the Business Day (the
"Determination Date") immediately preceding the day on which such Triggering
Distribution is declared by the Company multiplied by the number of shares of
Common Stock outstanding on such date (excluding shares held in the Treasury of
the Company), the Conversion Price shall be reduced so that the same shall
equal the price determined by multiplying such Conversion Price in effect
immediately prior to the Determination Date by a fraction of which the
numerator shall be the current market price per share of the Common Stock (as
determined in accordance with subsection (e) of this Section 4.6) on the
Determination Date less the amount of cash (plus the fair market value of such
other consideration) so distributed within such 12 months (including, without
limitation, the Triggering Distribution) applicable to one share of Common
Stock (determined on the basis of the number of shares of Common Stock
outstanding on the Determination Date) and the denominator shall be such
current market price per share of the Common Stock (as determined in accordance
with subsection (e) of this Section 4.6) on the Determination Date, such
reduction to become effective immediately prior to the opening of business on
the day following the date on which the Triggering Distribution is paid.
(e) For the purpose of any computation under subsections (b), (c)
and (d) of this Section 4.6, the current market price per share of Common Stock
on any date shall be deemed to be the average of the daily closing prices for
the 30 consecutive Trading Days commencing 45 Trading Days before (i) the
Determination Date with respect to distributions under subsection (d) of this
Section 4.6 or (ii) the record date with respect to distributions, issuances or
other events requiring such computation under subsection (b) or (c) of this
Section 4.6. The closing price for each day shall be the last reported sales
price or, in case no such reported sale takes place on such date, the average
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of the reported closing bid and asked prices in either case on the New York
Stock Exchange (the "NYSE") or, if the Common Stock is not listed or admitted
to trading on the NYSE, on the principal national securities exchange on which
the Common Stock is listed or admitted to trading or, if not listed or admitted
to trading on any national securities exchange, the closing sales price of the
Common Stock as quoted by NASDAQ or, in case no reported sales takes place, the
average of the closing bid and asked prices as quoted by NASDAQ or any
comparable system or, if the Common Stock is not quoted on NASDAQ or any
comparable system, the closing sales price or, in case no reported sale takes
place, the average of the closing bid and asked prices, as furnished by any two
members of the National Association of Securities Dealers, Inc. selected from
time to time by the Company for that purpose. If no such prices are available,
the current market price per share shall be the fair value of a share of Common
Stock as determined by the Board of Directors.
(f) In any case in which this Section 4.6 shall require that an
adjustment be made following a record date or a Determination Date, as the case
may be, established for purposes of this Section 4.6, the Company may elect to
defer (but only until five Business Days following the filing by the Company
with the Trustee of the certificate described in Section 4.9) issuing to the
Holder of any Security converted after such record date or Determination Date
the shares of Common Stock and other capital stock of the Company issuable upon
such conversion over and above the shares of Common Stock and other capital
stock of the Company issuable upon such conversion only on the basis of the
Conversion Price prior to adjustment; and, in lieu of the shares the issuance
of which is so deferred, the Company shall issue or cause its transfer agents
to issue due bills or other appropriate evidence prepared by the Company of the
right to receive such shares. If any distribution in respect of which an
adjustment to the Conversion Price is required to be made as of the record
date, effective date or Determination Date therefor is not thereafter made or
paid by the Company for any reason, the Conversion Price shall be readjusted to
the Conversion Price which would then be in effect if such record date had not
been fixed or such effective date or Determination Date had not occurred.
SECTION 4.7 No Adjustment
No adjustment in the Conversion Price shall be required unless the
adjustment would require an increase or decrease of at least 1% in the
Conversion Price as last adjusted; provided, however, that any adjustments
which by reason of this Section 4.7 are not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under this Article 4 shall be made to the nearest cent or to the
nearest one-hundredth of a share, as the case may be.
No adjustment need be made for a transaction referred to in Section
4.6 if all Securityholders are entitled to participate in the transaction on a
basis and with notice that the Board of Directors determines to be fair and
appropriate in light of the basis and notice on which holders of Common Stock
participate in the transaction. The Company shall give notice to the Trustee
of any such determination.
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No adjustment need be made for rights to purchase Common Stock or
issuances of Common Stock pursuant to a Company plan for reinvestment of
dividends or interest.
No adjustment need be made for a change in the par value or a change
to no par value of the Common Stock.
To the extent that the Securities become convertible into the right to
receive cash, no adjustment need be made thereafter as to the cash. Interest
will not accrue on the cash.
SECTION 4.8 Adjustment for Tax Purposes
The Company shall be entitled to make such reductions in the
Conversion Price, in addition to those required by Section 4.6, as it in its
discretion shall determine to be advisable in order that any stock dividends,
subdivisions of shares, distributions of rights to purchase stock or securities
or distributions of securities convertible into or exchangeable for stock
hereafter made by the Company to its shareholders shall not be taxable.
SECTION 4.9 Notice of Adjustment
Whenever the Conversion Price is adjusted, the Company shall promptly
mail to Securityholders a notice of the adjustment and file with the Trustee an
Officers' Certificate briefly stating the facts requiring the adjustment and
the manner of computing it.
SECTION 4.10 Notice of Certain Transactions
In the event that:
(1) the Company takes any action which would require an
adjustment in the Conversion Price;
(2) the Company consolidates or merges with, or transfers
all or substantially all of its property and assets to, another
corporation and shareholders of the Company must approve the
transaction; or
(3) there is a dissolution or liquidation of the Company,
the Company shall mail to Securityholders and file with the Trustee a notice
stating the proposed record or effective date, as the case may be. The Company
shall mail the notice at least ten days before such date. Failure to mail such
notice or any defect therein shall not affect the validity of any transaction
referred to in clause (1), (2) or (3) of this Section 4.10.
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SECTION 4.11 Effect of Reclassification, Consolidation, Merger or Sale on
Conversion Privilege
If any of the following shall occur, namely: (a) any reclassification
or change of shares of Common Stock issuable upon conversion of the Securities
(other than a change in par value, or from par value to no par value, or from
no par value to par value, or as a result of a subdivision or combination, or
any other change for which an adjustment is provided in Section 4.6); (b) any
consolidation or merger to which the Company is a party other than a merger in
which the Company is the continuing corporation and which does not result in
any reclassification of, or change (other than a change in name, or in par
value, or from par value to no par value, or from no par value to par value, or
as a result of a subdivision or combination) in, outstanding shares of Common
Stock; or (c) any sale or conveyance of all or substantially all of the
property and assets of the Company to any person, then the Company, or such
successor or purchasing corporation, as the case may be, shall, as a condition
precedent to such reclassification, change, consolidation, merger, sale or
conveyance, execute and deliver to the Trustee a supplemental indenture
providing that the Holder of each Security then outstanding shall have the
right to convert such Security into the kind and amount of shares of stock and
other securities and property (including cash) receivable upon such
reclassification, change, consolidation, merger, sale or conveyance by a holder
of the number of shares of Common Stock deliverable upon conversion of such
Security immediately prior to such reclassification, change, consolidation,
merger, sale or conveyance. Such supplemental indenture shall provide for
adjustments of the Conversion Price which shall be as nearly equivalent as may
be practicable to the adjustments of the Conversion Price provided for in this
Article 4. If, in the case of any such consolidation, merger, sale or
conveyance, the stock or other securities and property(including cash)
receivable thereupon by a holder of Common Stock include shares of stock or
other securities and property of a corporation other than the successor or
purchasing corporation, as the case may be, in such consolidation, merger, sale
or conveyance, then such supplemental indenture shall also be executed by such
other corporation and shall contain such additional provisions to protect the
interests of the Holders of the Securities as the Board of Directors shall
reasonably consider necessary by reason of the foregoing. The provisions of
this Section 4.11 shall similarly apply to successive consolidations, mergers,
sales or conveyances.
In the event the Company shall execute a supplemental indenture
pursuant to this Section 4.11, the Company shall promptly file with the Trustee
(x) an Officers' Certificate briefly stating the reasons therefor, the kind or
amount of shares of stock or other securities or property (including cash)
receivable by Holders of the Securities upon the conversion of their Securities
after any such reclassification, change, consolidation, merger, sale or
conveyance, any adjustment to be made with respect thereto and that all
conditions precedent have been complied with and (y) an Opinion of Counsel that
all conditions precedent have been complied with.
SECTION 4.12 Trustee's Disclaimer
The Trustee shall have no duty to determine when an adjustment under
this Article 4 should be made, how it should be made or what such adjustment
should be, but may accept as conclusive evidence of that fact or the
correctness of any such adjustment, and shall be protected in relying
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upon, an Officers' Certificate including the Officers' Certificate with respect
thereto which the Company is obligated to file with the Trustee pursuant to
Section 4.9. The Trustee makes no representation as to the validity or value
of any securities or assets issued upon conversion of Securities, and the
Trustee shall not be responsible for the Company's failure to comply with any
provisions of this Article 4.
The Trustee shall not be under any responsibility to determine the
correctness of any provisions contained in any supplemental indenture executed
pursuant to Section 4.11, but may accept as conclusive evidence of the
correctness thereof, and shall be fully protected in relying upon, the
Officers' Certificate with respect thereto which the Company is obligated to
file with the Trustee pursuant to Section 4.11.
SECTION 4.13 Voluntary Reduction
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 or such longer
period as may be required by law and if the reduction is irrevocable during the
period; provided, however, that in no event may the Conversion Price be less
than the par value of a share of Common Stock.
ARTICLE 5.
SUBORDINATION
SECTION 5.1 Securities Subordinated to Senior Secured Indebtedness
The Company covenants and agrees, and each Holder of Securities issued
hereunder by its acceptance thereof likewise covenants and agrees, that all
Securities shall be issued subject to the provisions of this Article 5; and
each person holding any Security, whether upon original issue or upon transfer
or assignment thereof, accepts and agrees to be bound by such provisions.
The payment of all amounts on account of all Securities issued
hereunder 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 Secured Indebtedness, whether outstanding at the date of this
Indenture or thereafter created, assumed or guaranteed.
SECTION 5.2 Securities Subordinated to Prior Payment of All Senior Secured
Indebtedness on Dissolution, Liquidation, Reorganization, Etc., of the Company
Upon the payment or distribution of the assets of the Company of any
kind or character, whether in cash, property or securities (including any
collateral at any time securing the Securities), to creditors upon any
dissolution, winding-up, liquidation or reorganization of the Company (whether
voluntary or involuntary, or in bankruptcy, insolvency, reorganization,
liquidation,
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receivership proceedings, or upon an assignment for the benefit of creditors,
or any other marshaling of the assets and liabilities of the Company, or
otherwise), then in such event:
(a) all Senior Secured Indebtedness and the reasonable fees and
expenses of the Trustee shall first be paid in full, in cash, before any
payment is made on account of the Securities, whether by way of the payment of
principal of or interest on the indebtedness evidenced by the Securities, a
deposit pursuant to Section 10.1 or 13.4, a repurchase, redemption or other
acquisition of the Securities or otherwise (collectively, "pay the
Securities");
(b) any payment or distribution of assets of the Company of any
kind or character, whether in cash, property or securities (other than
securities of the Company as reorganized or readjusted, or securities of the
Company or any other Person provided for by a plan of reorganization or
readjustment, junior, or the payment of which is otherwise subordinate, at
least to the extent provided in this Article 5, with respect to the Securities,
to the payment of all Senior Secured Indebtedness), to which the Holders or the
Trustee on behalf of the Holders would be entitled except for the provisions of
this Article 5, including any such payment or distribution which may be payable
or deliverable by reason of the payment of another debt of the Company being
subordinated to the payment of the Securities, shall be paid or delivered by
any debtor, Custodian or other person making such payment or distribution,
directly to the holders of the Senior Secured Indebtedness or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any of such Senior
Secured Indebtedness have been issued, ratably according to the aggregate
amounts remaining unpaid on account of the Senior Secured Indebtedness held or
represented by each, for application to payment of all Senior Secured
Indebtedness remaining unpaid, to the extent necessary to pay all Senior
Secured Indebtedness in full after giving effect to any concurrent payment or
distribution to or for the benefit of the holders of such Senior Secured
Indebtedness; and
(c) in the event that, notwithstanding the foregoing provisions of
this Section 5.2, any payment or distribution of assets of the Company of any
kind or character, whether in cash, property or securities (other than
securities of the Company as reorganized or readjusted, or securities of the
Company or any other Person provided for by a plan of reorganization or
readjustment, junior, or the payment of which is otherwise subordinate, at
least to the extent provided for in this Article 5, with respect to the
Securities, to the payment of all Senior Secured Indebtedness), shall be
received by the Trustee or the Holders before all Senior Secured Indebtedness
is paid in full, such payment or distribution (subject to the provisions of
Sections 5.6 and 5.7) shall be held in trust for the benefit of, and shall be
immediately paid or delivered by the Trustee or such Holders, as the case may
be, to, the holders of Senior Secured Indebtedness remaining unpaid or
unprovided for, or their representative or representatives, or to the trustee
or trustees under any indenture pursuant to which any instruments evidencing
any of such Senior Secured Indebtedness have been issued, ratably according to
the aggregate amounts remaining unpaid on account of the Senior Secured
Indebtedness held or represented by each, for application to the payment of all
Senior Secured Indebtedness remaining unpaid, to the extent necessary to pay
all Senior Secured Indebtedness in full after giving
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effect to any concurrent payment or distribution to or for the benefit of the
holders of such Senior Secured Indebtedness.
The Company shall give prompt written notice to the Trustee of any
dissolution, winding-up, liquidation or reorganization of the Company.
Upon any distribution of assets of the Company referred to in this
Article 5, the Trustee, subject to the provisions of Sections 9.1 and 9.2, and
the Holders shall be entitled to rely conclusively upon any order or decree by
any court of competent jurisdiction in which such dissolution, winding-up,
liquidation or reorganization proceeding is pending, or a certificate of the
liquidating trustee or agent or other person making any distribution to the
Trustee or to the Holders, for the purpose of ascertaining the persons entitled
to participate in such distribution, the holders of the Senior Secured
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all
other facts pertinent thereto or to this Article 5.
SECTION 5.3 Securityholders to Be Subrogated to Right of Holders of Senior
Secured Indebtedness
Subject to the prior payment in full of all Senior Secured
Indebtedness then due, the Holders shall be subrogated to the rights of the
holders of Senior Secured Indebtedness to receive payments or distributions of
assets of the Company applicable to the Senior Secured Indebtedness until the
principal of and interest on the Securities shall be paid in full, and, for
purposes of such subrogation, no payments or distributions to the holders of
Senior Secured Indebtedness of assets, whether in cash, property or securities,
distributable to the holders of Senior Secured Indebtedness under the
provisions hereof to which the Holders would be entitled except for the
provisions of this Article 5, and no payment pursuant to the provisions of this
Article 5 to the holders of Senior Secured Indebtedness by the Holders shall,
as among the Company, its creditors other than the holders of Senior Secured
Indebtedness, and the Holders, be deemed to be a payment by the Company to or
on account of Senior Secured Indebtedness, it being understood that the
provisions of this Article 5 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 Secured Indebtedness, on the other hand.
SECTION 5.4 Obligations of the Company Unconditional
Nothing contained in this Article 5 or elsewhere in this Indenture or
in any Security is intended to or shall impair, as among the Company, its
creditors other than the holders of Senior Secured 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 Securities, as and when
the same shall become due and payable in accordance with the terms of the
Securities, or to affect the relative rights of the Holders and other creditors
of the Company other than the holders of Senior Secured 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 8,
and the rights, if any, under this
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Article 5 of the holders of Senior Secured Indebtedness to receive assets,
whether in cash, property or securities, of the Company otherwise payable or
deliverable to the Trustee or such Holder upon the exercise of any such remedy.
SECTION 5.5 Company Not to Make Payment With Respect to Securities in
Certain Circumstances
(a) Upon the happening of a default in payment (whether at
maturity or at a date fixed for prepayment or by acceleration or otherwise) of
the principal of, interest on or other amount due in respect of any Senior
Secured Indebtedness, as such default is defined under or in respect of such
Senior Secured Indebtedness or in any agreement pursuant to which such Senior
Secured Indebtedness has been incurred, then, unless and until the amount of
such Senior Secured Indebtedness then due shall have been paid in full or
provision made therefor in a manner satisfactory to the holders of such Senior
Secured Indebtedness, or such default shall have been cured or waived or shall
have ceased to exist, the Company shall not pay the Securities.
(b) Upon the happening of an event of default with respect to any
Senior Secured Indebtedness (other than under circumstances when the terms of
subsection (a) of this Section 5.5 are applicable), as such event of default is
defined under or in respect of such Senior Secured Indebtedness or in any
agreement pursuant to which such Senior Secured Indebtedness has been incurred,
permitting the holders thereof to immediately accelerate the maturity thereof,
and upon written notice thereof given to the Company and the Trustee by any one
or more holders of such Senior Secured Indebtedness or their representative or
representatives or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing any of such Senior Secured Indebtedness have
been issued (a "Default Notice"), then, unless and until such event of default
shall have been cured or waived in writing by the holders of such Senior
Secured Indebtedness or shall have ceased to exist, the Company shall not pay
the Securities; provided, however, that this subsection (b) shall not prevent
the making of any such payment (which is not otherwise prohibited by subsection
(a) of this Section 5.5) for more than 180 days after the Default Notice shall
have been given unless the Senior Secured Indebtedness in respect of which such
event of default exists has been declared due and payable in its entirety, in
which case no such payment may be made until such acceleration has been waived,
rescinded or annulled, or such Senior Secured Indebtedness shall have been paid
in full, or payment thereof shall be duly provided for in cash or in any other
manner satisfactory to the holders of such Senior Secured Indebtedness.
Notwithstanding the foregoing, not more than one Default Notice shall be given
with respect to the same issue of Senior Secured Indebtedness within a period
of 360 consecutive days, and no event of default which existed or was
continuing on the date of any Default Notice and was known to the holders of
such issue of Senior Secured Indebtedness shall be made the basis for the
giving of a subsequent Default Notice by the holders of such issue of Senior
Secured Indebtedness.
(c) In the event that, notwithstanding the foregoing provisions of
this Section 5.5, the Company shall pay the Securities and such payment shall
be received by the Trustee, any Holder or any Paying Agent (or, if the Company
is acting as its own Paying Agent, money for any such payment shall be
segregated and held in trust), after the happening of a default under any
Senior
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Secured Indebtedness of the type specified in subsections (a) and (b) of this
Section 5.5, then, unless and until the amount of such Senior Secured
Indebtedness then due shall have been paid in full, or provision made therefor
or such default shall have been cured or waived or shall have ceased to exist,
such payment (subject, in each case, to the provisions of Sections 5.6 and 5.7
and the proviso contained in subsection (b) of this Section 5.5) shall be held
in trust for the benefit of, and shall be immediately paid over to, the holders
of Senior Secured Indebtedness or their representative or representatives or
the trustee or trustees under any indenture under which any instruments
evidencing any of the Senior Secured Indebtedness may have been issued ratably
according to the aggregate amounts remaining unpaid on account of the Senior
Secured Indebtedness held or represented by each, for application to the
payment of all Senior Secured Indebtedness remaining unpaid to the extent
necessary to pay all Senior Secured Indebtedness in accordance with its terms,
after giving effect to any concurrent payment or distribution to or for the
benefit of the holders of Senior Secured Indebtedness.
SECTION 5.6 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 Securities. Notwithstanding the provisions of
this Article 5 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 the
Trustee shall have received written notice thereof from the Company or from the
holder or holders of Senior Secured Indebtedness or from their representative
or representatives or from the trustee or trustees under any indenture pursuant
to which any instruments evidencing any of such Senior Secured Indebtedness
have been issued; and, prior to the receipt of any such written notice, the
Trustee, subject to the provisions of Sections 9.1 and 9.2, shall be entitled
to assume conclusively that such facts do not exist.
The Trustee shall be entitled to rely conclusively on the delivery to
it of a written notice by a person representing himself or herself to be a
holder of Senior Secured Indebtedness (or a representative of such holder or
the trustee under any indenture pursuant to which any instruments evidencing
any of such Senior Secured Indebtedness have been issued) to establish that
such notice has been given by a holder of Senior Secured 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 Secured Indebtedness to participate in any payment
or distribution pursuant to this Article 5, the Trustee may request such person
to furnish evidence to the reasonable satisfaction of the Trustee as to the
amount of Senior Secured Indebtedness held by such person, the extent to which
such person is entitled to participate in such payment or distribution and any
other facts pertinent to the rights of each person under this Article 5, and,
if such evidence is not furnished, the Trustee may defer any payment to such
person pending judicial determination as to the right of such person to receive
such payment.
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SECTION 5.7 Application by Trustee of Money Deposited With It
Money deposited in trust with the Trustee pursuant to Section 10.1 or
13.4 and not in violation of this Article 5 shall be for the sole benefit of
Securityholders and shall thereafter not be subject to the subordination
provisions of this Article 5. Otherwise, any deposit of money by the Company
with the Trustee or any Paying Agent (whether or not in trust) for the payment
of the principal of or interest on any Securities shall be subject to the
provisions of Sections 5.1, 5.2, 5.3 and 5.5; except that, if two Business Days
prior to the date on which by the terms of this Indenture any such money may
become payable for any purpose (including, without limitation, the payment of
either the principal of or interest on any Security) the Trustee shall not have
received with respect to such money the notice provided for in Section 5.6,
then the Trustee or any Paying Agent shall have full power and authority to
receive such money and to apply such money to the purpose for which it was
received, and shall not be affected by any notice to the contrary which may be
received by it on or after such date. This Section 5.7 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 Secured Indebtedness may
have to recover any such payments from the Holders in accordance with the
provisions of this Article 5.
SECTION 5.8 Subordination Rights Not Impaired by Acts or Omissions of
Company or Holders of Senior Secured Indebtedness
No right of any present or future holders of any Senior Secured
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 Secured
Indebtedness may extend, renew, modify or amend the terms of such Senior
Secured 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 supplemental indenture which affects the superior
position of the holders of the Senior Secured Indebtedness shall be effective
against the holders of the Senior Secured Indebtedness unless the holders of
such Senior Secured Indebtedness (required pursuant to the terms of such Senior
Secured Indebtedness to give such consent) have consented thereto.
SECTION 5.9 Trustee to Effectuate Subordination
Each Holder of a Security by its acceptance thereof authorizes and
directs the Trustee on its behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article 5 and
appoints the Trustee its attorney-in-fact for any and all such purposes.
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SECTION 5.10 Right of Trustee to Hold Senior Secured Indebtedness
The Trustee, in its individual capacity, shall be entitled to all of
the rights set forth in this Article 5 in respect of any Senior Secured
Indebtedness at any time held by it to the same extent as any other holder of
Senior Secured 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 shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 9.7.
SECTION 5.11 Article 5 Not to Prevent Events of Default
The failure to make a payment on account of the principal of or
interest on the Securities by reason of any provision in this Article 5 shall
not be construed as preventing the occurrence of an Event of Default under
Section 8.1.
SECTION 5.12 No Fiduciary Duty Created to Holders of Senior Secured
Indebtedness
Notwithstanding any other provision in this Article 5, the Trustee
shall not be deemed to owe any fiduciary duty to the holders of Senior Secured
Indebtedness by virtue of the provisions of this Article 5.
SECTION 5.13 Article Applicable to Paying Agents
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 5 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 5 in addition to or in place of the Trustee;
provided, however, that Sections 5.6, 5.10 and 5.12 shall not apply to the
Company if it acts as Paying Agent.
ARTICLE 6.
COVENANTS
SECTION 6.1 Payment of Securities
The Company shall promptly make all payments in respect of the
Securities on the dates and in the manner provided in the Securities and this
Indenture. An installment of principal or interest shall be considered paid on
the date it is due if the Paying Agent (other than the Company) holds by 11:00
a.m., New York City time, on that date money, deposited by the Company or an
Affiliate thereof, sufficient to pay the installment. The Company shall pay
interest on overdue principal at
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the rate borne by the Securities per annum; it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
SECTION 6.2 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.
In the event the Company is at any time no longer subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company
will prepare, for the first three quarters of each fiscal year, quarterly
financial statements substantially equivalent to the financial statements
required to be included in a report on Form 10-Q under the Exchange Act. The
Company will also prepare, on an annual basis, complete audited consolidated
financial statements, including, but not limited to, a balance sheet, a
statement of operations, a statement of cash flows and all appropriate notes.
All such financial statements will be prepared in accordance with generally
accepted accounting principles. The Company will cause a copy of such
financial statements to be filed with the Trustee and mailed to the Holders of
the Securities within 50 days after the end of each of the first three quarters
of each fiscal year and within 95 days after the close of each fiscal year.
The Company will also comply with the other provisions of TIA Section 314(a).
SECTION 6.3 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. For the purposes of this
Section 6.4, compliance shall be determined without regard to any grace period
or requirement of notice provided pursuant to the terms of this Indenture.
SECTION 6.4 Notice of Defaults
In the event (a) that indebtedness of the Company in an aggregate
principal amount in excess of $25,000,000 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 entitles the holder or holders of
such indebtedness to declare such indebtedness due and payable before its
maturity and with respect to which any applicable grace period has lapsed or
expired, the Company will promptly give written notice to the Trustee of such
declaration or event.
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SECTION 6.5 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 7.
SUCCESSOR CORPORATION
SECTION 7.1 When Company May Merge, Etc.
The Company shall not consolidate with or merge with or into, or
transfer all or substantially all of its property and assets to, any person
unless:
(a) either the Company shall be the resulting or surviving
corporation or such person is a corporation organized and existing under the
laws of the United States, a State thereof or the District of Columbia, and
such person expressly assumes by supplemental indenture executed and delivered
to the Trustee, in form satisfactory to the Trustee, all the obligations of the
Company under the Securities and this Indenture (in which case all such
obligations of the Company shall terminate); and
(b) immediately after giving effect to such transaction and
treating any indebtedness which becomes an obligation of the Company as a
result of such transaction as having been incurred by the Company at the time
of such transaction, no default or Event of Default shall have occurred and be
continuing.
The Company shall deliver to the Trustee prior to the proposed
transaction an Officers' Certificate and an Opinion of Counsel, each of which
shall comply with Section 12.4 and shall state that such consolidation, merger
or transfer and any such supplemental indenture comply with this Article 7 and
that all conditions precedent herein provided for relating to such transaction
have been complied with; provided, however, that such Opinion of Counsel shall
address only the matters referred to in clause (a) of this Section 7.1.
SECTION 7.2 Successor Corporation Substituted
Upon any consolidation or merger, or any transfer of all or
substantially all of the property and assets of the Company in accordance with
Section 7.1, the successor corporation formed by such consolidation or into
which the Company is merged or to which such transfer is made shall succeed to,
and be substituted for, and may exercise every right and power of, the Company
under this Indenture with the same effect as if such successor corporation had
been named as the Company herein.
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ARTICLE 8.
DEFAULT AND REMEDIES
SECTION 8.1 Events of Default
An "Event of Default" shall occur if:
(1) the Company defaults in the payment of interest on
any Security when the same becomes due and payable and the default
continues for a period of 30 days;
(2) the Company defaults in the payment of the principal
of any Security when the same becomes due and payable at maturity,
upon redemption or otherwise;
(3) the Company fails to comply with any of its other
agreements contained in the Securities or this Indenture and the
default continues for the period and after the notice specified below;
(4) a default shall occur under any bond, debenture, note
or other evidence of indebtedness for money borrowed by the Company
having an aggregate outstanding principal amount in excess of
$25,000,000, which default shall have resulted in such indebtedness
becoming or being declared due and payable prior to the date on which
it would otherwise have been due and payable, without such
indebtedness having been discharged, such acceleration having been
rescinded or annulled or there having been deposited in trust a sum of
money sufficient to discharge in full such indebtedness, in each case
within a period of 10 days following the occurrence of such
acceleration;
(5) the Company pursuant to or within the meaning of any
Bankruptcy Law:
(A) commences a voluntary case or proceeding;
(B) consents to the entry of an order for relief
against it in an involuntary case or proceeding;
(C) consents to the appointment of a Custodian of
it or for all or substantially all of its property; or
(D) makes a general assignment for the benefit of
its creditors; or
(6) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company in an
involuntary case or proceeding;
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(B) appoints a Custodian of the Company or for
all or substantially all of its property; or
(C) orders the liquidation of the Company;
and in each case the order or decree remains unstayed and in effect
for 60 days.
The term "Bankruptcy Law" means Title 11 of the United States Code or
any similar federal or state law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator, sequestrator or
similar official under any Bankruptcy Law.
A default under clause (3) above is not an Event of Default until the
Trustee notifies the Company, or the Holders of at least 25% in principal
amount of the Securities then outstanding notify the Company and the Trustee,
of the default, and the Company does not cure the default within 60 days after
receipt of such notice. The notice given pursuant to this Section 8.1 must
specify the default, demand that it be remedied and state that the notice is a
"Notice of Default." When any default under this Section 8.1 is cured, it
ceases.
Subject to the provisions of Sections 9.1 and 9.2, the Trustee shall
not be charged with knowledge of any Event of Default unless written notice
thereof shall have been given to a Trust Officer at the Corporate Trust Office
of the Trustee by the Company, the Paying Agent, any Holder or any agent of any
Holder.
SECTION 8.2 Acceleration
If an Event of Default (other than an Event of Default specified in
clause (5) or (6) of Section 8.1) occurs and is continuing, the Trustee may, by
notice to the Company, or the Holders of at least 25% in principal amount of
the Securities then outstanding may, by notice to the Company and the Trustee,
and the Trustee shall, upon the request of such Holders, declare all unpaid
principal of and accrued interest to the date of acceleration on the Securities
then outstanding (if not then due and payable) to be due and payable upon any
such declaration, and the same shall become and be immediately due and payable.
If an Event of Default specified in clause (5) or (6) of Section 8.1 occurs,
all unpaid principal of and accrued interest on the Securities then outstanding
shall ipso facto become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Securityholder. The
Holders of a majority in principal amount of the Securities then outstanding by
notice to the Trustee may rescind an acceleration and its consequences if (a)
all existing Events of Default, other than the nonpayment of the principal of
and accrued interest on the Securities which has become due solely by such
declaration of acceleration, have been cured or waived; (b) to the extent the
payment of such interest is lawful, interest on overdue installments of
interest and overdue principal, which has become due otherwise than by such
declaration of acceleration, has been paid; (c) the rescission would not
conflict with any judgment or decree of a court of competent jurisdiction; and
(d) all payments due to the Trustee and any predecessor Trustee under Section
9.7 have been made. Anything herein contained to the contrary notwithstanding,
in
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the event of any acceleration pursuant to this Section 8.2, the Company shall
not be obligated to pay any premium which it would have had to pay if it had
then elected to redeem the Securities pursuant to paragraph 5 of the
Securities, except in the case of any Event of Default occurring by reason of
any willful action (or inaction) taken (or not taken) by or on behalf of the
Company with the intention of avoiding payment of the premium which it would
have had to pay if it had then elected to redeem the Securities pursuant to
paragraph 5 of the Securities, in which case an equivalent premium shall also
become and be immediately due and payable to the extent permitted by law.
SECTION 8.3 Other Remedies
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy by proceeding at law or in equity to collect the
payment of the principal of or interest on the Securities or to enforce the
performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding. A delay
or omission by the Trustee or any Securityholder in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. No remedy
is exclusive of any other remedy. All available remedies are cumulative to the
extent permitted by law.
SECTION 8.4 Waiver of Defaults and Events of Default
Subject to Sections 8.7 and 11.2, the Holders of a majority in
principal amount of the Securities then outstanding by notice to the Trustee
may waive an existing default or Event of Default and its consequence, except a
default in the payment of the principal of or interest on any Security as
specified in clauses (1) and (2) of Section 8.1. When a default or Event of
Default is waived, it is cured and ceases.
SECTION 8.5 Control by Majority
The Holders of a majority in principal amount of the Securities then
outstanding may direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture, that the Trustee determines may be unduly
prejudicial to the rights of another Securityholder or the Trustee, or that may
involve the Trustee in personal liability; provided, however, that the Trustee
may take any other action deemed proper by the Trustee which is not
inconsistent with such direction.
SECTION 8.6 Limitations on Suits
A Securityholder may not pursue any remedy with respect to this
Indenture or the Securities (except actions for payment of overdue principal or
interest or for the conversion of the Securities pursuant to Article 4) unless:
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(1) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(2) the Holders of at least 25% in principal amount of
the then outstanding Securities make a written request to the Trustee
to pursue the remedy;
(3) such Holder or Holders offer to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or expense;
(4) the Trustee does not comply with the request within
60 days after receipt of the request and the offer of indemnity; and
(5) no direction inconsistent with such written request
has been given to the Trustee during such 60-day period by the Holders
of a majority in principal amount of the Securities then outstanding.
A Securityholder may not use this Indenture to prejudice the rights of
another Securityholder or to obtain a preference or priority over such other
Securityholder.
SECTION 8.7 Rights of Holders to Receive Payment and to Convert
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Security to receive payment of the principal of and interest on
the Security, on or after the respective due dates expressed in the Security,
to convert such Security in accordance with Article 4 and to bring suit for the
enforcement of any such payment on or after such respective dates or the right
to convert, is absolute and unconditional and shall not be impaired or affected
without the consent of the Holder.
SECTION 8.8 Collection Suit by Trustee
If an Event of Default in the payment of principal or interest
specified in clause (1) or (2) of Section 8.1 occurs and is continuing, the
Trustee may recover judgment in its own name and as trustee of an express trust
against the Company or another obligor on the Securities for the whole amount
of principal and accrued interest remaining unpaid, together with, to the
extent that payment of such interest is lawful, interest on overdue principal
and on overdue installments of interest, in each case at the rate per annum
borne by the Securities and such further amount as shall be sufficient to cover
the costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.
SECTION 8.9 Trustee May File Proofs of Claim
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
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counsel) and the Securityholders allowed in any judicial proceedings relative
to the Company (or any other obligor on the Securities), its creditors or its
property and shall be entitled and empowered to collect and receive any money
or other property payable or deliverable on any such claims and to distribute
the same, and any Custodian in any such judicial proceeding is hereby
authorized by each Securityholder 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 Securityholders, to pay to the Trustee any amount due to it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 9.7, and to the extent that such payment of the reasonable
compensation, expenses, disbursements and advances 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, money,
securities and other property which the Securityholders may be entitled to
receive in such proceedings, whether in liquidation or under any plan of
reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to, or, on behalf of
any Securityholder, to authorize, accept or adopt any plan of reorganization,
arrangement, adjustment or composition affecting the Securities or the rights
of any Holder thereof, or to authorize the Trustee to vote in respect of the
claim of any Securityholder in any such proceeding.
SECTION 8.10 Priorities
If the Trustee collects any money pursuant to this Article 8, it shall
pay out the money in the following order:
First, to the Trustee for amounts due under Section 9.7;
Second, to the holders of Senior Secured Indebtedness to the extent
required by Article 5;
Third, to Securityholders for amounts due and unpaid on the Securities
for principal and interest, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Securities for principal
and interest, respectively; and
Fourth, to the Company.
The Trustee may fix a record date and payment date for any payment to
Securityholders pursuant to this Section 8.10.
SECTION 8.11 Undertaking for Costs
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses
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made by the party litigant. This Section 8.11 does not apply to a suit made by
the Trustee, a suit by a Holder pursuant to Section 8.7, or a suit by Holders
of more than 10% in principal amount of the Securities then outstanding.
SECTION 8.12 Waiver of Usury, Stay or Extension Laws
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any usury, stay or extension law
wherever enacted, now or at any time hereafter in force, which may affect the
covenants or the performance of this Indenture; and the Company (to the extent
that it may lawfully do so) hereby expressly waives all benefit or advantage of
any such law and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and
permit the execution of every such power as though no such law had been
enacted.
ARTICLE 9.
TRUSTEE
SECTION 9.1 Duties of Trustee
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture and use the same degree of care and skill in its exercise as a
prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee need perform only those duties as are
specifically set forth in this Indenture and no others; and
(2) in the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture. The Trustee, however, shall examine any
certificates and opinions which by any provision hereof are
specifically required to be delivered to the Trustee to determine
whether or not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) this paragraph does not limit the effect of
subsection (b) of this Section 9.1;
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(2) the Trustee shall not be liable for any error of
judgment made in good faith by a Trust Officer, unless it is proved
that the Trustee was negligent in ascertaining the pertinent facts;
and
(3) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 8.5.
(d) The Trustee may refuse to perform any duty or exercise any
right or power unless it receives indemnity satisfactory to it against any
loss, liability, expense or fee.
(e) Every provision of this Indenture that in any way relates to
the Trustee is subject to subsections (a), (b), (c) and (d) of this Section
9.1.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
SECTION 9.2 Rights of Trustee
Subject to Section 9.1:
(a) The Trustee may rely conclusively on any document believed by
it to be genuine and to have been signed or presented by the proper person.
The Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel, which shall conform
to Section 12.4(b). The Trustee shall not be liable for any action it takes or
omits to take in good faith in reliance on such Certificate or Opinion.
(c) The Trustee may act through its agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers.
(e) The Trustee may consult with counsel, and the advice or
opinion of such counsel as to matters of law shall be full and complete
authorization and protection in respect of any such action taken, omitted or
suffered by it hereunder in good faith and in accordance with the advice or
opinion of such counsel.
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SECTION 9.3 Individual Rights of Trustee
The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities and may otherwise deal with the Company or an
affiliate of the Company with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights. However, the Trustee is
subject to Sections 9.10 and 9.11.
SECTION 9.4 Trustee's Disclaimer
The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Company's
use of the proceeds from the Securities, and it shall not be responsible for
any statement in the Securities other than its certificate of authentication.
SECTION 9.5 Notice of Default or Events of Default
If a default or an Event of Default occurs and is continuing and if it
is known to the Trustee, the Trustee shall mail to each Securityholder notice
of the default or Event of Default within 90 days after it occurs. Except in
the case of a default or an Event of Default in payment of the principal of or
interest on any Security, the Trustee may withhold the notice if and so long as
a committee of its Trust Officers in good faith determines that withholding
notice is in the interests of Securityholders.
SECTION 9.6 Reports by Trustee to Holders
If such report is required by TIA Section 313, within 60 days after
each January 15, beginning with the January 15 following the date of this
Indenture, the Trustee shall mail to each Securityholder a brief report dated
as of such January 15 that complies with TIA Section 313(a). The Trustee also
shall comply with TIA Section 313(b)(2) and (c).
A copy of each report at the time of its mailing to Securityholders
shall be mailed to the Company and filed with the SEC and each stock exchange,
if any, on which the Securities are listed. The Company shall notify the
Trustee whenever the Securities become listed on any stock exchange and any
changes in the stock exchanges on which the Securities are listed.
SECTION 9.7 Compensation and Indemnity
The Company shall pay to the Trustee from time to time reasonable
compensation for its services (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust). The Company shall reimburse the Trustee upon request for all
reasonable disbursements, expenses and advances incurred or made by it. Such
expenses may include the reasonable compensation, disbursements and expenses of
the Trustee's agents and counsel.
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The Company shall indemnify the Trustee (which for purposes of this
Section 9.7 shall include its officers, directors, employees and agents) for,
and hold it harmless against, any loss, liability or expense (including
reasonable legal fees and expenses) incurred by it in connection with its
duties under this Indenture or any action or failure to act as authorized or
within the discretion or rights or powers conferred upon the Trustee hereunder
including the reasonable costs and expenses of the Trustee and its counsel in
defending itself against any claim or liability in connection with the exercise
or performance of any of its powers or duties hereunder. The Trustee shall
notify the Company promptly of any claim asserted against the Trustee for which
it may seek indemnity. The Company need not pay for any settlement without its
written consent, which shall not be unreasonably withheld.
The Company need not reimburse the Trustee for any expense or
indemnify it against any loss or liability incurred by it resulting from its
negligence or bad faith.
To secure the Company's payment obligations in this Section 9.7, the
Trustee shall have a senior claim to which the Securities are hereby made
subordinate on all money or property held or collected by the Trustee, except
such money or property held in trust to pay the principal of and interest on
particular Securities. The obligations of the Company under this Section 9.7
to compensate or indemnify the Trustee and to pay or reimburse the Trustee for
expenses, disbursements and advances shall be secured by a lien prior to that
of the Securities 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 Securities. The obligations of the Company under this Section 9.7
shall survive the satisfaction and discharge of this Indenture or the
resignation or removal of the Trustee.
When the Trustee incurs expenses or renders services after an Event of
Default specified in clause (5) or (6) of Section 8.1 occurs, the expenses and
the compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
SECTION 9.8 Replacement of Trustee
The Trustee may resign by so notifying the Company. The Holders of a
majority in principal amount of the Securities then outstanding may remove the
Trustee by so notifying the Trustee and may, with the Company's written
consent, appoint a successor Trustee. The Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 9.10;
(2) the Trustee is adjudged a bankrupt or an insolvent;
(3) a receiver or other public officer takes charge of
the Trustee or its property; or
(4) the Trustee becomes incapable of acting.
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If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee.
If a successor Trustee does not take office within 45 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or
the Holders of 10% in principal amount of the Securities then outstanding may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee fails to comply with Section 9.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after
that, the retiring Trustee shall transfer all property held by it as Trustee to
the successor Trustee and be released from its obligations (exclusive of any
liabilities that the retiring Trustee may have incurred while acting as
Trustee) hereunder, the resignation or removal of the retiring Trustee shall
become effective, and the successor Trustee shall have all the rights, powers
and duties of the Trustee under this Indenture. A successor Trustee shall mail
notice of its succession to each Securityholder.
A retiring Trustee shall not be liable for the acts or omissions of
any successor Trustee after its succession.
Notwithstanding replacement of the Trustee pursuant to this Section
9.8, the Company's obligations under Section 9.7 shall continue for the benefit
of the retiring Trustee.
SECTION 9.9 Successor Trustee by Merger, Etc.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust assets to, another
corporation, the resulting, surviving or transferee corporation, without any
further act, shall be the successor Trustee, provided such transferee
corporation shall qualify and be eligible under Section 9.10. Such successor
Trustee shall promptly mail notice of its succession to the Company and each
Securityholder.
SECTION 9.10 Eligibility; Disqualification
The Trustee shall always satisfy the requirements of paragraphs (1),
(2) and (5) of TIA Section 310(a). If at any time the Trustee shall cease to
satisfy any such requirements, it shall resign immediately in the manner and
with the effect specified in this Article 9. The Trustee shall be subject to
the provisions of TIA Section 310(b). Nothing herein shall prevent the
Trustee from filing with the SEC the application referred to in the penultimate
paragraph of TIA Section 310(b).
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SECTION 9.11 Preferential Collection of Claims Against Company
The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated
therein.
ARTICLE 10.
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 10.1 Satisfaction and Discharge of Indenture
This Indenture shall cease to be of further effect (except as to any
surviving rights of conversion, registration of transfer or exchange of
Securities herein expressly provided for), and the Trustee, on demand of and at
the expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and
delivered (other than (i) Securities which have been destroyed, lost
or stolen and which have been replaced or paid as provided in Section
2.7 and (ii) Securities for whose payment money has theretofore been
deposited in trust and thereafter repaid to the Company as provided in
Section 10.3) have been delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the
Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their stated
maturity within one year, or
(iii) are to be called for redemption within one
year under arrangements satisfactory to the Trustee for the
giving of notice of redemption by the Trustee in the name, and
at the expense, of the Company,
and the Company, in the case of clause (i), (ii) or (iii) above, has
irrevocably deposited or caused to be irrevocably deposited with the
Trustee as trust funds in trust for the purpose an amount sufficient
to pay and discharge the entire indebtedness on such Securities not
theretofore delivered to the Trustee for cancellation, for principal
(and premium, if any) and interest to the date of such deposit (in the
case of Securities which have become due and payable) or to the stated
maturity or Redemption Date, as the case may be;
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(2) the Company has paid or caused to be paid all other sums
payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of
this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 9.7 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of clause (1) of
this Section, the obligations of the Trustee under Section 10.2 and the last
paragraph of Section 10.3 shall survive.
SECTION 10.2 Application of Trust Money
Subject to the provisions of Section 10.3, the Trustee or the Paying
Agent shall hold in trust, for the benefit of the Holders, all money deposited
with it pursuant to Section 10.1, and shall apply the deposited money in
accordance with this Indenture to the payment of the principal of and interest
on the Securities. Money so held in trust shall not be subject to the
subordination provisions of Article 5.
SECTION 10.3 Repayment to Company
The Trustee and the Paying Agent shall promptly pay to the Company
upon request any excess money (i) deposited with them pursuant to Section 10.1
and (ii) held by them at any time.
The Trustee and the Paying Agent shall pay to the Company upon request
any money held by them for the payment of principal or interest that remains
unclaimed for two years after a right to such money has matured; provided,
however, that the Trustee or such Paying Agent, before being required to make
any such payment, may at the expense of the Company cause to be published once
in a newspaper of general circulation in The City of New York or mail to each
Holder entitled to such money notice that such money remains unclaimed and that
after a date specified therein, which shall be at least 30 days from the date
of such publication or mailing, any unclaimed balance of such money then
remaining will be repaid to the Company. After payment to the Company,
Securityholders entitled to money must look to the Company for payment as
general creditors unless otherwise prohibited by law.
SECTION 10.4 Reinstatement
If the Trustee or the Paying Agent is unable to apply any money in
accordance with Section 10.2 by reason of any legal proceeding or by reason of
any order or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, then the Company's
obligations under this Indenture and the Securities shall be revived and
reinstated as
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though no deposit had occurred pursuant to Section 10.1 until such time as the
Trustee or the Paying Agent is permitted to apply all such money in accordance
with Section 10.2; provided, however, that if the Company has made any payment
of the principal of or interest on any Securities because of the reinstatement
of its obligations, the Company shall be subrogated to the rights of the
Holders of such Securities to receive any such payment from the money held by
the Trustee or the Paying Agent.
ARTICLE 11.
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 11.1 Without Consent of Holders
The Company and the Trustee may amend or supplement this Indenture or
the Securities without notice to or consent of any Securityholder:
(a) to comply with Sections 4.11 and 7.1;
(b) to provide for uncertificated Securities in addition to or in
place of certificated Securities;
(c) to cure any ambiguity, defect or inconsistency, or to make any
other change that does not adversely affect the rights of any
Securityholder;
(d) to comply with the provisions of the TIA; or
(e) to appoint a successor Trustee.
SECTION 11.2 With Consent of Holders
The Company and the Trustee may amend or supplement this Indenture or
the Securities without notice to any Securityholder with the written consent of
the Holders of at least a majority in principal amount of the Securities then
outstanding. The Holders of at least a majority in principal amount of the
Securities then outstanding may waive compliance in a particular instance by
the Company with any provision of this Indenture or the Securities without
notice to any Securityholder. Subject to Section 11.4, without the written
consent of each Securityholder affected, however, an amendment, supplement or
waiver, including a waiver pursuant to Section 8.4, may not:
(1) reduce the principal amount of Securities whose
Holders must consent to an amendment, supplement or waiver;
(2) reduce the rate of or change the time for payment of
interest on any Security;
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(3) reduce the principal of or premium on or change the
fixed maturity of any Security or alter the redemption provisions with
respect thereto in a manner adverse to the Holder thereof;
(4) alter the conversion provisions with respect to any
Security in a manner adverse to the Holder thereof;
(5) waive a default in the payment of the principal of
(including any premium) or interest on any Security;
(6) make any changes in Section 8.4 or in this Section
11.2, except to increase any percentage in principal amount of
outstanding Securities required for any amendment, supplement or
waiver;
(7) modify the provisions of Article 5 in a manner
adverse to the Holders; or
(8) make any Security payable in money other than that
in the Security.
It shall not be necessary for the consent of the Holders under this
Section 11.2 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section 11.2
becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amendment, supplement or
waiver.
An amendment under this Section 11.2 may not make any change that
adversely affects the rights under Article 5 of any holder of an issue of
Senior Secured Indebtedness unless the holders of that issue, pursuant to its
terms, consent to the change.
SECTION 11.3 Compliance With Trust Indenture Act
Every amendment to or supplement of this Indenture or the Securities
shall comply with the TIA as in effect at the date of such amendment or
supplement.
SECTION 11.4 Revocation and Effect of Consents
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder is a continuing consent by the Holder and every subsequent
Holder of a Security or portion of a Security that evidences the same debt as
the consenting Holder's Security, even if notation of the consent is not made
on any Security. However, any such Holder or subsequent Holder may revoke
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the consent as to its Security or portion of a Security if the Trustee receives
the notice of revocation before the date the amendment, supplement or waiver
becomes effective.
After an amendment, supplement or waiver becomes effective, it shall
bind every Securityholder, unless it makes a change described in any of clauses
(1) through (8) of Section 11.2. In that case the amendment, supplement or
waiver shall bind each Holder of a Security who has consented to it and every
subsequent Holder of a Security or portion of a Security that evidences the
same debt as the consenting Holder's Security.
SECTION 11.5 Notation on or Exchange of Securities
If an amendment, supplement or waiver changes the terms of a Security,
the Trustee may require the Holder of the Security to deliver it to the
Trustee. The Trustee may place an appropriate notation on the Security about
the changed terms and return it to the Holder. Alternatively, if the Company
or the Trustee so determines, the Company in exchange for the Security shall
issue and the Trustee shall authenticate a new Security that reflects the
changed terms.
SECTION 11.6 Trustee to Sign Amendments, etc.
The Trustee shall sign any amendment or supplement authorized pursuant
to this Article 11 if the amendment or supplement does not adversely affect the
rights, duties, liabilities or immunities of the Trustee. If it does, the
Trustee may, in its sole discretion, but need not sign it. In signing or
refusing to sign such amendment or supplement, the Trustee shall be entitled to
receive and, subject to Section 9.1, shall be fully protected in relying upon,
an Opinion of Counsel stating that such amendment or supplement is authorized
or permitted by this Indenture. The Company may not sign an amendment or
supplement until the Board of Directors approves it.
ARTICLE 12.
MISCELLANEOUS
SECTION 12.1 Trust Indenture Act Controls
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by any of Sections 310 to 317, inclusive, of the TIA through
operation of Section 318(c) thereof, such imposed duties shall control.
SECTION 12.2 Notices
Any notice, request or communication shall be given in writing and
delivered in person or mailed by first-class mail, postage prepaid, addressed
as follows:
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If to the Company:
Equity Corporation International
415 South First Street, Suite 210
Lufkin, Texas 75901
Attention: Chief Financial Officer
If to the Trustee:
Bankers Trust Company
Four Albany Street, 4th Floor
New York, New York 10006
Attention: Corporate Trust and Agency Group - Corporate
Market Services
Such notices or communications shall be effective when received.
The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Securityholder shall be mailed
by first-class mail to it at its address shown on the register kept by the
Registrar.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication to a Securityholder is mailed in
the manner provided above, it is duly given, whether or not the addressee
receives it.
SECTION 12.3 Communications by Holders With Other Holders
Securityholders may communicate pursuant to TIA Section 312(b) with
other Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and any other person shall
have the protection of TIA Section 312(c).
SECTION 12.4 Certificate and Opinion as to Conditions Precedent
(a) Upon any request or application by the Company to the Trustee
to take any action under this Indenture, the Company shall furnish to the
Trustee at the request of the Trustee:
(1) an Officers' Certificate stating that, in the opinion
of the signers, all conditions precedent (including any covenants,
compliance with which constitutes a condition precedent), if any,
provided for in this Indenture relating to the proposed action have
been complied with; and
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(2) an Opinion of Counsel stating that, in the opinion of
such counsel, all such conditions precedent (including any covenants,
compliance with which constitutes a condition precedent) have been
complied with.
(b) Each Officers' Certificate and Opinion of Counsel 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 statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such person, he
or she has made such examination or investigation as is necessary to
enable him or her 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;
provided, however, that with respect to matters of fact an Opinion of
Counsel may rely on an Officers' Certificate or certificates of public
officials.
SECTION 12.5 Record Date for Vote or Consent of Securityholders
The Company (or, in the event deposits have been made pursuant to
Section 6.3 or 10.1, the Trustee) may set a record date for purposes of
determining the identity of Securityholders entitled to vote or consent to any
action by vote or consent authorized or permitted under this Indenture, which
record date shall be the later of ten days prior to the first solicitation of
such vote or consent or the date of the most recent list of Securityholders
furnished to the Trustee pursuant to Section 2.5 prior to such solicitation.
Notwithstanding the provisions of Section 11.4, if a record date is fixed,
those persons who were Holders of Securities at such record date (or their duly
designated proxies), and only those persons, shall be entitled to take such
action by vote or consent or to revoke any vote or consent previously given,
whether or not such persons continue to be Holders after such record date.
SECTION 12.6 Rules by Trustee, Paying Agent, Registrar and Conversion Agent
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar, Paying Agent or Conversion Agent may make reasonable
rules for its functions.
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SECTION 12.7 Legal Holidays
A "Legal Holiday" is a Saturday, Sunday or a day on which state or
federally chartered banking institutions in New York, New York (or such other
city and state where the Trustee's corporate trust operations are then located)
are not required to be open. If a payment date is a Legal Holiday at a place
of payment, payment may be made at that place on the next succeeding day that
is not a Legal Holiday, and no interest shall accrue for the intervening
period.
SECTION 12.8 Governing Law
This Indenture and the Securities shall be governed by, and construed
and enforced in accordance with, the laws of the State of New York.
SECTION 12.9 No Adverse Interpretation of Other Agreements
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or a Subsidiary. Any such indenture, loan or
debt agreement may not be used to interpret this Indenture.
SECTION 12.10 No Recourse Against Others
All liability described in paragraph 18 of the Securities of any
director, officer, employee or shareholder, as such, of the Company is waived
and released.
SECTION 12.11 Successors
All agreements of the Company in this Indenture and the Securities
shall bind its successor. All agreements of the Trustee in this Indenture
shall bind its successor.
SECTION 12.12 Multiple Counterparts
The parties may sign multiple counterparts of this Indenture. Each
signed counterpart shall be deemed an original, but all of them together
represent the same agreement.
SECTION 12.13 Separability
In case any provisions in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
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SECTION 12.14 Table of Contents, Headings, etc.
The table of contents, cross-reference sheet 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.
ARTICLE 13.
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 13.1 Company's Option to Effect Defeasance or Covenant Defeasance
The Company may at its option, at any time, elect to have either
Section 13.2 or Section 13.3 applied to the outstanding Securities upon
compliance with the conditions set forth below in this Article 13.
SECTION 13.2 Defeasance and Discharge
Upon the Company's exercise of the option provided in Section 13.1
applicable to this Section, the Company shall be deemed to have been discharged
from its obligations with respect to the outstanding Securities (other than
those specified below) and the subordination provisions of Article 5 hereof
shall cease to be effective, on and after the date the conditions set forth
below are satisfied (hereinafter, "defeasance"). For this purpose, such
defeasance means that the Company shall be deemed to have paid and discharged
the entire indebtedness represented by the outstanding Securities and to have
satisfied all its other obligations under such Securities and this Indenture
insofar as such Securities are concerned (and the Trustee, at the expense of
the Company, shall execute proper instruments acknowledging the same), except
for the following which shall survive until otherwise terminated or discharged
hereunder: (A) the rights of Holders of such Securities to receive, solely
from the trust fund described in Section 13.4 and as more fully set forth in
such Section, payments in respect of the principal of and interest on such
Securities when such payments are due, (B) the Company's obligations with
respect to such Securities under Sections 2.3, 2.4, 2.5, 2.6, 2.7, 2.11 and
2.12, Article 3 and Article 4, (C) the rights, powers, trusts, duties and
immunities of the Trustee hereunder and (D) this Article 13. Subject to
compliance with this Article 13, the Company may exercise its option under this
Section 13.2 notwithstanding the prior exercise of its option under Section
13.3
SECTION 13.3 Covenant Defeasance
Upon the Company's exercise of the option provided in Section 13.1
applicable to this Section, (i) the Company shall be released from its
obligations under Section 6.4, (ii) the occurrence of an event specified in
Section 8.1(3) (with respect to Section 6.4) and 8.1(4) shall not be deemed to
be an Event of Default and (iii) the provisions of Article 5 hereof shall cease
to be effective on and after the date the conditions set forth below are
satisfied (hereinafter, "covenant defeasance").
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For this purpose, such covenant defeasance means that the Company may omit to
comply with and shall have no liability in respect of any term, condition or
limitation set forth in any such Section or Article, whether directly or
indirectly by reason of any reference elsewhere herein to any such Section or
by reason of any reference in any such Section or Article to any other
provision herein or in any other document, but the remainder of this Indenture
and such Securities shall be unaffected thereby.
SECTION 13.4 Conditions to Defeasance or Covenant Defeasance
The following shall be the conditions to application of either Section
13.2 or Section 13.3 to the then outstanding Securities:
(1) The Company shall irrevocably have deposited or
caused to be deposited with the Trustee (or another trustee satisfying
the requirements of Section 9.10 who shall agree to comply with the
provisions of this Article 13 applicable to it) as trust funds in
trust for the purpose of making the following payments, specifically
pledged as security for, and dedicated solely to, the benefit of the
Holders of such Securities, (A) money in an amount, or (B) U.S.
Government Obligations which through the scheduled payment of
principal and interest in respect thereof in accordance with their
terms will provide, not later than one day before the due date of any
payment, money in an amount, or (C) a combination thereof, sufficient,
in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to
the Trustee, to pay and discharge, and which shall be applied by the
Trustee (or other qualifying trustee) to pay and discharge, the
principal of and each installment of interest on the Securities on the
stated maturity of such principal or installment of interest in
accordance with the terms of this Indenture and of such Securities.
For this purpose, "U.S. Government Obligations" means securities that
are (x) direct obligations of the United States of America for the
payment of which its full faith and credit is pledged or (y)
obligations of a Person controlled or supervised by and acting as an
agency or instrumentality of the United States of America the payment
of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the issuer thereof.
(2) In the case of an election under Section 13.2, the
Company shall have delivered to the Trustee an Opinion of Counsel
stating that (x) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling, or (y) since the
date of this Indenture there has been a change in the applicable
federal income tax law, in either case to the effect that, and based
thereon such opinion shall confirm that, the Holders of the
outstanding Securities will not recognize gain or loss for federal
income tax purposes as a result of such deposit, defeasance and
discharge and will be subject to federal income tax on the same
amount, in the same manner and at the same times as would have been
the case if such deposit, defeasance and discharge had not occurred.
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(3) In the case of an election under Section 13.3, the
Company shall have delivered to the Trustee an Opinion of Counsel to
the effect that the Holders of the outstanding Securities will not
recognize gain or loss for federal income tax purposes as a result of
such deposit and covenant defeasance and will be subject to federal
income tax on the same amount, in the same manner and at the same
times as would have been the case if such deposit and covenant
defeasance had not occurred.
(4) The Company shall have delivered to the Trustee an
Officers' Certificate to the effect that the Securities, if then
listed on any securities exchange, will not be delisted as a result of
such deposit.
(5) Such defeasance or covenant defeasance shall not
cause the Trustee to have a conflicting interest as defined in TIA
Section 310(b) with respect to any securities of the Company.
(6) At the time of such deposit: (A) no default in the
payment of all or a portion of principal of (or premium, if any) or
interest on or other obligations in respect of any Senior Secured
Indebtedness shall have occurred and be continuing, and no event of
default with respect to any Senior Secured Indebtedness shall have
occurred and be continuing and shall have resulted in such Senior
Secured Indebtedness becoming or being declared due and payable prior
to the date on which it would otherwise have become due and payable
and (B) no other event with respect to any Senior Secured Indebtedness
shall have occurred and be continuing permitting (after notice or the
lapse of time, or both) the holders of such Senior Secured
Indebtedness (or a trustee on behalf of the holders thereof) to
declare such Senior Secured Indebtedness due and payable prior to the
date on which it would otherwise have become due and payable, or, in
the case of either clause (A) or clause (B) above, each such default
or event of default shall have been cured or waived or shall have
ceased to exist.
(7) No Event of Default or Default shall have occurred
and be continuing on the date of such deposit or, insofar as
subsections 8.1(5) and (6) are concerned, at any time during the
period ending on the 91st day after the date of such deposit (it being
understood that this condition shall not be deemed satisfied until the
expiration of such period).
(8) Such defeasance or covenant defeasance shall not
result in a breach or violation of, or constitute a default under, any
other agreement or instrument to which the Company is a party or by
which it is bound.
(9) The Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for relating to either the defeasance
under Section 13.2 or the covenant defeasance under Section 13.3 (as
the case may be) have been complied with.
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(1)) The Company shall have delivered to the Trustee an
Opinion of Counsel stating that such defeasance or covenant defeasance
shall not result in the trust arising from such deposit constituting
an investment company as defined in the Investment Company Act of
1940, as amended, or such trust shall be qualified under such act or
exempt from regulation thereunder.
SECTION 13.5 Deposited Money and U.S. Government Obligations to be Held in
Trust; Other Miscellaneous Provisions.
Subject to the provisions of the last paragraph of Section 10.3, all
money and U.S. Government Obligations (including the proceeds thereof)
deposited with the Trustee (or other qualifying trustee - - collectively, for
the purposes of this Section 13.5, the "Trustee") pursuant to Section 13.4 in
respect of the Securities shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Securities and this Indenture, to the
payment, either directly or through any Paying Agent (but not including the
Company acting as its own Paying Agent) as the Trustee may determine, to the
Holders of such Securities, of all sums due and to become due thereon in
request of principal and interest. Money so held in trust shall not be subject
to the provisions of Article 5.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 13.4 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is
for the account of the Holders of the outstanding Securities.
Anything in this Article 13 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon its request
any money or U.S. Government Obligations held by it as provided in Section 13.4
which, in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee, are in excess of the amount thereof which would then be required to be
deposited to effect an equivalent defeasance or covenant defeasance.
SECTION 13.6 Reinstatement
If the Trustee or the Paying Agent is unable to apply any money in
accordance with Section 13.5 by reason of any legal proceeding or by reason of
any order or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, then the Company's
obligations under this Indenture and the Securities shall be revived and
reinstated as though no deposit had occurred pursuant to this Article 13 until
such time as the Trustee or Paying Agent is permitted to apply all such money
in accordance with Section 13.5; provided, however, that if the Company makes
any payment of principal of or interest on any Securities because of the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Securities to receive such payment from the money held
by the Trustee or the Paying Agent.
68
<PAGE> 75
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands
as of the 25th day of February, 1998.
EQUITY CORPORATION INTERNATIONAL
By:
-------------------------------
Name:
Title:
BANKERS TRUST COMPANY, AS TRUSTEE
By:
-------------------------------
Name:
Title:
69
<PAGE> 76
EXHIBIT A-1
[FORM OF FACE OF SECURITY]
4 1/2% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2004
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY 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 TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF THE DEPOSITORY TRUST COMPANY, OR TO A
SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS
GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN ARTICLE 2 OF THE INDENTURE REFERRED TO ON THE REVERSE
HEREOF.]1/
THIS SECURITY AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION
OF THIS SECURITY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY, THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY
NOR ANY INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION. UNLESS THE SHARES OF COMMON STOCK HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT, A HOLDER OF THIS SECURITY WILL BE ABLE TO
EXERCISE THE CONVERSION RIGHT ONLY IF THE HOLDER CERTIFIES THAT IT IS A
"QUALIFIED INSTITUTIONAL BUYER" OR AN INSTITUTIONAL "ACCREDITED INVESTOR" AS
DEFINED BELOW.
- -------------------------
1/ These paragraphs should be included only if the Security is a global
Security.
<PAGE> 77
THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE"), WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF
SUCH SECURITY) ONLY (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) FOR SO
LONG AS THE SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON
IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHICH NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR
(7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS
OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR,"
FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN
CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, (D)
PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER
THE SECURITIES ACT, (E) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904
OF REGULATION S UNDER THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO
THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
PURSUANT TO CLAUSE (C), (E) OR (F) TO REQUIRE THE DELIVERY TO EACH OF THEM OF
AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO
EACH OF THEM AND IN EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN
THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND
DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. THE LEGEND IN THIS AND THE
PRECEDING PARAGRAPH WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE
RESALE RESTRICTION TERMINATION DATE.
A-1-2
<PAGE> 78
EQUITY CORPORATION INTERNATIONAL
INCORPORATED UNDER THE
LAWS OF THE STATE OF DELAWARE
CUSIP: _____ R-_____
4 1/2% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2004
Equity Corporation International promises to pay to ___________, or
registered assigns, the principal sum of ______________ Dollars on December 31,
2004 or such greater or lesser amount as is indicated on the Schedule of
Exchanges of Securities on the other side of this Debenture]2/.
Interest Payment Dates: June 30 and December 31
Record Dates: June 15 and December 15
This Debenture is convertible as specified on the other side of this
Debenture. Additional provisions of this Debenture are set forth on the other
side of this Debenture.
In Witness Whereof, Equity Corporation International has caused this
instrument to be duly executed under its corporate seal.
EQUITY CORPORATION INTERNATIONAL
By:
-------------------------------
Title:
[SEAL]
Attest:
- -------------------------------
Secretary
Dated:
Trustee's Certificate of Authentication:
This is one of the Securities referred to in
the within-mentioned Indenture.
BANKERS TRUST COMPANY,
as Trustee
By:
------------------------------
Authorized Signatory
- ------------------------
2/ This phrase should be included only if the Security is a global Security.
A-1-3
<PAGE> 79
[FORM OF REVERSE SIDE OF SECURITY]
EQUITY CORPORATION INTERNATIONAL
4 1/2% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2004
1. Interest
Equity Corporation International, a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Debenture
at the rate per annum shown above. The Company shall pay interest semiannually
on June 30 and December 31 of each year, commencing June 30, 1998. Interest on
the Debentures shall accrue from the most recent date to which interest has
been paid or, if no interest has been paid, from the date of first issuance of
the Debentures under the Indenture (as defined below); provided, however, that
if there is not an existing default in the payment of interest, and if this
Debenture is authenticated between a record date referred to on the face hereof
and the next succeeding interest payment date, interest shall accrue from such
interest payment date. Interest will be computed on the basis of a 360-day
year of twelve 30-day months.
2. Method of Payment
The Company shall pay interest on this Debenture (except defaulted
interest) to the person who is the Holder of this Debenture at the close of
business on the June 15th or December 15th next preceding the related interest
payment date. The Holder must surrender this Debenture to the Paying Agent to
collect payment of principal. The Company will pay principal and interest in
money of the United States that at the time of payment is legal tender for
payment of public and private debts. The Company may, however, pay principal
and interest in respect of any Certificated Security by its check or wire
payable in such money. It may mail an interest check to the Holder's
registered address.
3. Paying Agent, Registrar and Conversion Agent
Initially, Bankers Trust Company (the "Trustee") will act as Paying
Agent, Registrar and Conversion Agent. The Company may change any Paying
Agent, Registrar or Conversion Agent without notice to the Holder. The Company
or any of its Subsidiaries may act as Paying Agent, Registrar or Conversion
Agent.
4. Indenture, Limitations
This Debenture is one of a duly authorized issue of Debentures of the
Company designated as its 4 1/2% Convertible Subordinated Debentures due 2004
(the "Debentures"), issued under an Indenture dated as of February 25, 1998
(the "Indenture"), between the Company and the Trustee. The terms of this
Debenture include those stated in the Indenture and those required by or made
part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended, and as in effect on the
A-1-4
<PAGE> 80
date of the Indenture. This Debenture is subject to all such terms, and the
Holder of this Debenture is referred to the Indenture and said Act for a
statement of them.
The Debentures are subordinated unsecured obligations of the Company
limited to up to $125,000,000 aggregate principal amount, subject to Section
2.2 of the Indenture. The Indenture does not limit other debt of the Company,
secured or unsecured, including Senior Secured Indebtedness.
5. Optional Redemption
The Debentures are subject to redemption, at any time on or after
February 26, 2001, as a whole or in part, at the election of the Company. The
Redemption Prices (expressed as percentages of the principal amount) beginning
February 26 of the years indicated are as follows:
<TABLE>
Redemption
Year Price
---- ----------
<S> <C>
2001 102.53%
2002 101.88%
2003 101.22%
2004 100.56%
</TABLE>
in each case together with accrued interest up to but not including the
Redemption Date.
6. Notice of Redemption
Notice of redemption will be mailed by first-class mail at least 30
days but not more than 60 days before the Redemption Date to each Holder of
Debentures to be redeemed at its registered address. Debentures in
denominations larger than $1,000 may be redeemed in part, but only in whole
multiples of $1,000. On and after the Redemption Date, subject to the deposit
with the Paying Agent of funds sufficient to pay the Redemption Price, interest
ceases to accrue on Debentures or portions of them called for redemption.
7. Purchase of Debentures at Option of Holder Upon a Change in Control
At the option of the Holder and subject to the terms and conditions of
the Indenture, the Company shall become obligated to purchase all or any part
specified by the Holder (so long as the principal amount of such part is $1,000
or an integral multiple thereof) of the Debentures held by such Holder on the
date that is 50 Business Days after a Change in Control, at a purchase price
equal to 100% of the principal amount thereof together with accrued interest up
to but not including the Change in Control Purchase Date. The Holder shall
have the right to withdraw any Change in Control Purchase Notice by delivering
a written notice of withdrawal to the Paying Agent in accordance with the terms
of the Indenture.
A-1-5
<PAGE> 81
8. Conversion
A Holder of a Debenture may convert such Debenture into shares of
Common Stock of the Company at any time prior to maturity; provided, however,
that if the Debenture is called for redemption, the conversion right will
terminate at the close of business on the Business Day immediately preceding
the redemption date for such Debenture (unless the Company shall default in
making the redemption payment when due, in which case the conversion right
shall terminate at the close of business on the date such default is cured and
such Debenture is redeemed); provided, further, that if the Holder of a
Debenture presents such Debenture for redemption prior to the close of business
on the Business Day immediately preceding the redemption date for such
Debenture, the right of conversion shall terminate upon presentation of the
Debenture to the Trustee (unless the Company shall default in making the
redemption payment when due, in which case the conversion right shall terminate
on the close of business on the date such default is cured and such Debenture
is redeemed). The initial Conversion Price is $27.09 per share, subject to
adjustment under certain circumstances. The number of shares issuable upon
conversion of a Debenture is determined by dividing the principal amount
converted by the Conversion Price in effect on the Conversion Date. No payment
or adjustment will be made for accrued interest on a converted Debenture,
except as described in the next succeeding paragraph, or for dividends or
distributions on shares of Common Stock issued upon conversion of a Debenture.
No fractional shares will be issued upon conversion; in lieu thereof, an amount
will be paid in cash based upon the closing sale price of the Common Stock on
the last Trading Day prior to the Conversion Date.
To convert a Debenture, a Holder must (a) complete and manually sign
the conversion notice set forth below and deliver such notice to the Conversion
Agent, (b) surrender the Debenture to the Conversion Agent, (c) furnish
appropriate endorsements or transfer documents if required by the Registrar or
the Conversion Agent, and (d) pay any transfer or similar tax, if required.
Interest accrued through and including February 24, 2001 shall be paid on any
Debenture called for redemption and surrendered for conversion before the close
of business on June 15, 2001. If a Holder surrenders a Debenture for
conversion after the close of business on the record date for the payment of an
installment of interest and before the close of business on the related
interest payment date then, notwithstanding such conversion, the interest
payable on such interest payment date shall be paid to the Holder of such
Debenture on such record date. In such event, unless the Debenture has been
called for redemption the Debenture must be accompanied by payment of an amount
equal to the interest payable on such interest payment date on the principal
amount of the Debenture or portion thereof then converted. A Holder may
convert a portion of a Debenture equal to $1,000 or any integral multiple
thereof.
A Debenture in respect of which a Holder had delivered a Change in
Control Purchase Notice exercising the option of such Holder to require the
Company to purchase such Debenture may be converted only if the Change in
Control Purchase Notice is withdrawn as provided above and in accordance with
the terms of the Indenture.
A-1-6
<PAGE> 82
9. Conversion Arrangement on Call for Redemption
Any Securities called for redemption, unless surrendered for
conversion before the close of business on the Business Day immediately
preceding the Redemption Date, may be deemed to be purchased from the Holders
of such Securities at an amount not less than the Redemption Price, together
with accrued interest, if any, to, but not including, the Redemption Date, by
one or more investment bankers or other purchasers who may agree with the
Company to purchase such Securities from the Holders, to convert them into
Common Stock of the Company and to make payment for such Securities to the
Paying Agent in Trust for such Holders.
10. Subordination
The indebtedness evidenced by the Debentures is, to the extent and in
the manner provided in the Indenture, subordinate and junior in right of
payment to the prior payment in full of all Senior Secured Indebtedness of the
Company. Any Holder by accepting this Debenture agrees to and shall be bound
by such subordination provisions and authorizes the Trustee to give them
effect.
In addition to all other rights of Senior Secured Indebtedness
described in the Indenture, the Senior Secured Indebtedness shall continue to
be Senior Secured Indebtedness and entitled to the benefits of the
subordination provisions irrespective of any amendment, modification or waiver
of any terms of any instrument relating to the Senior Secured Indebtedness or
any extension or renewal of the Senior Secured Indebtedness.
11. Denominations, Transfer, Exchange
The Debentures are in registered form without coupons in denominations
of $1,000 and integral multiples of $1,000. A Holder may register the transfer
of or exchange Debentures in accordance with the Indenture. The Registrar may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and to pay any taxes or other governmental charges that may
be imposed by law or permitted by the Indenture.
12. Persons Deemed Owners
The Holder of a Debenture may be treated as the owner of it for
all purposes.
13. Unclaimed Money
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent will pay the money back to the
Company at its written request. After that, Holders entitled to money must
look to the Company for payment.
A-1-7
<PAGE> 83
14. Amendment, Supplement and Waiver
Subject to certain exceptions, the Indenture or the Debentures may be
amended or supplemented with the consent of the Holders of at least a majority
in principal amount of the Debentures then outstanding and any past default or
compliance with any provision may be waived in a particular instance with the
consent of the Holders of a majority in principal amount of the Debentures then
outstanding. Without the consent of or notice to any Holder, the Company and
the Trustee may amend or supplement the Indenture or the Debentures to, among
other things, provide for uncertificated Debentures in addition to or in place
of certificated Debentures, or to cure any ambiguity, defect or inconsistency
or make any other change that does not adversely affect the rights of any
Holder.
15. Successor Corporation
When a successor corporation assumes all the obligations of its
predecessor under the Debentures and the Indenture in accordance with the terms
and conditions of the Indenture, the predecessor corporation will be released
from those obligations.
16. Defaults and Remedies
An Event of Default is: default for 30 days in payment of interest on
the Debentures; default in payment of principal on the Debentures when due;
failure by the Company for 60 days after notice to it to comply with any of its
other agreements contained in the Indenture or the Debentures; certain events
of bankruptcy, insolvency or reorganization of the Company; and the
acceleration of certain other indebtedness. If an Event of Default (other than
as a result of certain events of bankruptcy, insolvency or reorganization)
occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the Debentures then outstanding may declare all unpaid
principal of and accrued interest to the date of acceleration on the Debentures
then outstanding to be due and payable immediately, all as and to the extent
provided in the Indenture. If an Event of Default occurs as a result of
certain events of bankruptcy, insolvency or reorganization, unpaid principal of
and accrued interest on the Debentures then outstanding shall become due and
payable immediately without any declaration or other act on the part of the
Trustee or any Holder, all as and to the extent provided in the Indenture.
Holders may not enforce the Indenture or the Debentures except as provided in
the Indenture. The Trustee may require indemnity satisfactory to it before it
enforces the Indenture or the Debentures. Subject to certain limitations,
Holders of a majority in principal amount of the Debentures then outstanding
may direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders notice of any continuing default (except a default in
payment of principal or interest) if it determines that withholding notice is
in their interests. The Company is required to file periodic reports with the
Trustee as to the absence of default.
A-1-8
<PAGE> 84
17. Trustee Dealings With the Company
Bankers Trust Company, the Trustee under the Indenture, in its
individual or any other capacity, may make loans to, accept deposits from and
perform services for the Company or an Affiliate of the Company, and may
otherwise deal with the Company or an Affiliate of the Company, as if it were
not the Trustee.
18. No Recourse Against Others
A director, officer, employee or shareholder, as such, of the Company
shall not have any liability for any obligations of the Company under the
Debentures or the Indenture nor for any claim based on, in respect of or by
reason of such obligations or their creation. The Holder of this Debenture by
accepting this Debenture waives and releases all such liability. The waiver
and release are part of the consideration for the issuance of this Debenture.
19. Discharge Prior to Maturity
If the Company deposits with the Trustee or the Paying Agent money or
U.S. Government Obligations sufficient to pay the principal of and interest on
the Debentures to maturity, the Company will be discharged from the Indenture
except for certain sections thereof.
20. Authentication
This Debenture shall not be valid until the Trustee or an
authenticating agent signs the certificate of authentication on the other side
of this Debenture.
21. Abbreviations and Definitions
Customary abbreviations may be used in the name of the Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian) and U/G/M/A (= Uniform Gifts to Minors
Act).
All capitalized terms used in this Debenture and not specifically
defined herein are defined in the Indenture and are used herein as so defined.
22. Indenture to Control
In the case of any conflict between the provisions of this Debenture
and the Indenture, the provisions of the Indenture shall control.
A-1-9
<PAGE> 85
The Company will furnish to any Holder, upon written request and
without charge, a copy of the Indenture. Requests may be made to: Equity
Corporation International, 415 South First Street, Suite 210, Lufkin, Texas
75901, Attention: Chief Financial Officer.
A-1-10
<PAGE> 86
ASSIGNMENT FORM
To assign this Debenture, fill in the form below:
I or we assign and transfer this Debenture to
- ----------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- ------------------------------------------------
- ------------------------------------------------
- ------------------------------------------------
- ------------------------------------------------
(Print or type assignee's name, address and
zip code)
and irrevocably appoint
- ------------------------------------------------
agent to transfer this Debenture on the books
of the Company. The Agent may substitute
another to act for him or her.
Date:
-------------------------------------------
Your signature:
--------------------------------
(Sign exactly as your name
appears on the other side of
this Debenture)
- ------------------------------------------------
(Sign exactly as your name appears on the
other side of this Debenture)
***/Signature guaranteed by:
--------------------
By:
---------------------------------------------
- ------------------------
*** The signature must be guaranteed by a bank, a trust company or a
member firm of the New York Stock Exchange.
A-1-11
<PAGE> 87
CONVERSION NOTICE
To convert this Debenture into Common Stock of the Company, check the box:
[ ]
To convert only part of this Debenture, state the amount to be converted:
$_____________________
If you want the stock certificate made out in another person's name, fill in
the form below:
- --------------------------------------------------
(Insert other person's soc. sec. or tax I.D. no.)
- --------------------------------------------------
- --------------------------------------------------
- --------------------------------------------------
- --------------------------------------------------
(Print or type assignee's name, address and
zip code)
Date:
---------------------------------------------
Your signature:
-----------------------------------
(Sign exactly as your name appears on the
other side of this Debenture)
- --------------------------------------------------
(Sign exactly as your name appears on the
other side of this Debenture)
*/Signature guaranteed by:
------------------------
By:
-----------------------------------------------
- -------------------------------
* The signature must be guaranteed by a bank, a trust company or a
member firm of the New York Stock Exchange.
A-1-12
<PAGE> 88
SCHEDULE OF EXCHANGES OF SECURITIES
<TABLE>
<CAPTION>
Amount of decrease Amount of increase Principal Amount of Signature of
in Principal in Principal this global Security Authorized
Amount of this Amount of this following such Signatory of
Date of ransaction global Security global Security decrease (or increase) Securities Custodian
-------- ---------- --------------- --------------- ---------------------- --------------------
<S> <C> <C> <C> <C>
</TABLE>
- -----------------------------
3/ This schedule should be included only if the Security is a global Security.
A-1-13
<PAGE> 89
EXHIBIT A-2
[FORM OF FACE OF REGULATION S
TEMPORARY GLOBAL SECURITY]
4 1/2% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2004
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY 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 TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF THE DEPOSITORY TRUST COMPANY, OR TO A
SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS
GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN ARTICLE TWO OF THE INDENTURE REFERRED TO ON THE
REVERSE HEREOF.
THIS SECURITY AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION
OF THIS SECURITY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY, THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY
NOR ANY INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION. UNLESS THE SHARES OF COMMON STOCK HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT, A HOLDER OF THIS SECURITY WILL BE ABLE TO
EXERCISE THE CONVERSION RIGHT ONLY IF THE HOLDER CERTIFIES THAT IT IS A
"QUALIFIED INSTITUTIONAL BUYER" OR AN INSTITUTIONAL "ACCREDITED INVESTOR" AS
DEFINED BELOW.
THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE
<PAGE> 90
"RESALE RESTRICTION TERMINATION DATE"), WHICH IS TWO YEARS AFTER THE LATER OF
THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF
SUCH SECURITY ) ONLY (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) FOR SO
LONG AS THE SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON
IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHICH NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR
(7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS
OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR,"
FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN
CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, (D)
PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER
THE SECURITIES ACT, (E) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904
OF REGULATION S UNDER THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO
THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
PURSUANT TO CLAUSE (C), (E) OR (F) TO REQUIRE THE DELIVERY TO EACH OF THEM OF
AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO
EACH OF THEM, AND IN EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN
THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND
DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. THE LEGEND IN THIS AND THE
PRECEDING PARAGRAPH WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE
RESALE RESTRICTION TERMINATION DATE.
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL SECURITY,
AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR REGULATION S
PERMANENT GLOBAL SECURITIES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED
HEREIN).
NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S
TEMPORARY GLOBAL SECURITY SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST
HEREON.
A-2-2
<PAGE> 91
EQUITY CORPORATION INTERNATIONAL
INCORPORATED UNDER THE
LAWS OF THE STATE OF DELAWARE
CUSIP:_____ R-_____
4 1/2% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2004
Equity Corporation International promises to pay to ___________, or
registered assigns, the principal sum of ______________ Dollars on December 31,
2004 or such greater or lesser amount as indicated on the Schedule of Exchanges
of Securities on the other side of this Debenture
Interest Payment Dates: June 30 and December 31
Record Dates: June 15 and December 15
This Debenture is convertible as specified on the other side of this
Debenture. Additional provisions of this Debenture are set forth on the other
side of this Debenture.
A-2-3
<PAGE> 92
IN WITNESS WHEREOF, Equity Corporation International has caused this
instrument to be duly executed under its corporate seal.
EQUITY CORPORATION INTERNATIONAL
By:
--------------------------------
Title:
[SEAL]
Attest:
By:
------------------------------
Secretary
Dated:
Trustee's Certificate of Authentication:
This is one of the Securities referred to in
the within-mentioned Indenture.
BANKERS TRUST COMPANY,
as Trustee
By:
-----------------------------------
Authorized Signatory
A-2-4
<PAGE> 93
[FORM OF REVERSE SIDE OF SECURITY]
EQUITY CORPORATION INTERNATIONAL
4 1/2% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2004
This Regulation S Temporary Global Security is issued in respect of an
offering of $___________ 4 1/2% Convertible Subordinated Debentures due 2004
(the "Debentures") of Equity Corporation International, a Delaware corporation
(the "Company"), pursuant to an Indenture (the "Indenture") dated as of
February 25, 1998, between the Company and Bankers Trust Company, as trustee
(the "Trustee"), and is governed by the terms and conditions of the Indenture,
which terms and conditions are incorporated herein by reference and, except as
otherwise provided herein, shall be binding on the Company and the Holder
hereof as if fully set forth herein. Unless the context otherwise requires,
the terms used herein shall have the meanings specified in the Indenture.
This Regulation S Temporary Global Security is exchangeable in whole
or in part for one or more Regulation S Permanent Global Securities only (i) on
or after the termination of the 40-day restricted period (as defined in
Regulation S) and (ii) upon presentation of certificates (accompanied by an
Opinion of Counsel, if applicable) required by Article 2 of the Indenture.
Upon exchange of all interests in this Regulation S Temporary Global Security
for one or more Regulation S Permanent Global Securities, the Trustee shall
cancel this Regulation S Temporary Global Security.
This Regulation S Temporary Global Security shall not become valid or
obligatory until the certificate of authentication hereon shall have been duly
manually signed on behalf of the Trustee in accordance with the Indenture.
This Regulation S Temporary Global Security shall be governed by and construed
and enforced in accordance with the laws of the State of New York. All
references to "$," "Dollars," "dollars" or "U.S.$" are to such coin or currency
of the United States of America as at the time shall be legal tender for the
payment of public and private debts therein.
1. Interest
The Company promises to pay interest on the principal amount of this
Debenture at the rate per annum shown above. The Company shall pay interest
semiannually on June 30 and December 31 of each year, commencing June 30, 1998.
Interest on the Debentures shall accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the date of first
issuance of the Debentures under the Indenture (as defined below); provided,
however, that if there is not an existing default in the payment of interest,
and if this Debenture is authenticated between a record date referred to on the
face hereof and the next succeeding interest payment date, interest shall
accrue from such interest payment date. Interest will be computed on the basis
of a 360-day year of twelve 30-day months.
A-2-5
<PAGE> 94
2. Method of Payment
The Company shall pay interest on this Debenture (except defaulted
interest) to the person who is the Holder of this Debenture at the close of
business on the June 15th or December 15th next preceding the related interest
payment date. The Holder must surrender this Debenture to the Paying Agent to
collect payment of principal. The Company will pay principal and interest by
wire in money of the United States that at the time of payment is legal tender
for payment of public and private debts.
3. Paying Agent, Registrar and Conversion Agent
Initially, Bankers Trust Company (the "Trustee") will act as Paying
Agent, Registrar and Conversion Agent. The Company may change any Paying
Agent, Registrar or Conversion Agent without notice to the Holder. The Company
or any of its Subsidiaries may act as Paying Agent, Registrar or Conversion
Agent.
4. Indenture, Limitations
The terms of this Debenture include those stated in the Indenture and
those required by or made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended, and as in effect on the date of the
Indenture. This Debenture is subject to all such terms, and the Holder of this
Debenture is referred to the Indenture and said Act for a statement of them.
The Debentures are subordinated unsecured obligations of the Company
limited to up to $125,000,000 aggregate principal amount, subject to Section
2.2 of the Indenture. The Indenture does not limit other debt of the Company,
secured or unsecured, including Senior Secured Indebtedness.
5. Optional Redemption
The Debentures are subject to redemption, at any time on or after
February 26, 2001, as a whole or in part, at the election of the Company. The
Redemption Prices (expressed as percentages of the principal amount) beginning
February 26 of the years indicated are as follows:
<TABLE>
<CAPTION>
Redemption
Year Price
---- -----------
<S> <C>
2001 102.53%
2002 101.88%
2003 101.22%
2004 100.56%
</TABLE>
in each case together with accrued interest up to but not including the
Redemption Date.
A-2-6
<PAGE> 95
6. Notice of Redemption
Notice of redemption will be mailed by first-class mail at least 30
days but not more than 60 days before the Redemption Date to each Holder of
Debentures to be redeemed at its registered address. Debentures in
denominations larger than $1,000 may be redeemed in part, but only in whole
multiples of $1,000. On and after the Redemption Date, subject to the deposit
with the Paying Agent of funds sufficient to pay the Redemption Price, interest
ceases to accrue on Debentures or portions of them called for redemption.
7. Purchase of Debentures at Option of Holder Upon a Change in Control
At the option of the Holder and subject to the terms and conditions of
the Indenture, the Company shall become obligated to purchase all or any part
specified by the Holder (so long as the principal amount of such part is $1,000
or an integral multiple thereof) of the Debentures held by such Holder on the
date that is 50 Business Days after a Change in Control, at a purchase price
equal to 100% of the principal amount thereof together with accrued interest up
to but not including the Change in Control Purchase Date. The Holder shall
have the right to withdraw any Change in Control Purchase Notice by delivering
a written notice of withdrawal to the Paying Agent in accordance with the terms
of the Indenture.
8. Conversion
A Holder of a Debenture may convert such Debenture into shares of
Common Stock of the Company at any time prior to maturity; provided, however,
that if the Debenture is called for redemption, the conversion right will
terminate at the close of business on the Business Day immediately preceding
the redemption date for such Debenture (unless the Company shall default in
making the redemption payment when due, in which case the conversion right
shall terminate at the close of business on the date such default is cured and
such Debenture is redeemed); provided, further, that if the Holder of a
Debenture presents such Debenture for redemption prior to the close of business
on the Business Day immediately preceding the redemption date for such
Debenture, the right of conversion shall terminate upon presentation of the
Debenture to the Trustee (unless the Company shall default in making the
redemption payment when due, in which case the conversion right shall terminate
on the close of business on the date such default is cured and such Debenture
is redeemed). The initial Conversion Price is $27.09 per share, subject to
adjustment under certain circumstances. The number of shares issuable upon
conversion of a Debenture is determined by dividing the principal amount
converted by the Conversion Price in effect on the Conversion Date. No payment
or adjustment will be made for accrued interest on a converted Debenture,
except as described in the next succeeding paragraph, or for dividends or
distributions on shares of Common Stock issued upon conversion of a Debenture.
No fractional shares will be issued upon conversion; in lieu thereof, an amount
will be paid in cash based upon the closing sale price of the Common Stock on
the last Trading Day prior to the Conversion Date.
A-2-7
<PAGE> 96
To convert a Debenture, a Holder must (a) complete and manually sign
the conversion notice set forth below and deliver such notice to the Conversion
Agent, (b) surrender the Debenture to the Conversion Agent, (c) furnish
appropriate endorsements or transfer documents if required by the Registrar or
the Conversion Agent, and (d) pay any transfer or similar tax, if required.
Interest accrued through and including February 24, 2001 shall be paid on any
Debenture called for redemption and surrendered for conversion before the close
of business on June 15, 2001. If a Holder surrenders a Debenture for
conversion after the close of business on the record date for the payment of an
installment of interest and before the close of business on the related
interest payment date then, notwithstanding such conversion, the interest
payable on such interest payment date shall be paid to the Holder of such
Debenture on such record date. In such event, unless the Debenture has been
called for redemption the Debenture must be accompanied by payment of an amount
equal to the interest payable on such interest payment date on the principal
amount of the Debenture or portion thereof then converted. A Holder may
convert a portion of a Debenture equal to $1,000 or any integral multiple
thereof.
A Debenture in respect of which a Holder had delivered a Change in
Control Purchase Notice exercising the option of such Holder to require the
Company to purchase such Debenture may be converted only if the Change in
Control Purchase Notice is withdrawn as provided above and in accordance with
the terms of the Indenture.
9. Conversion Arrangement on Call for Redemption
Any Securities called for redemption, unless surrendered for
conversion before the close of business on the Business Day immediately
preceding the Redemption Date, may be deemed to be purchased from the Holders
of such Securities at an amount not less than the Redemption Price, together
with accrued interest, if any, to, but not including, the Redemption Date, by
one or more investment bankers or other purchasers who may agree with the
Company to purchase such Securities from the Holders, to convert them into
Common Stock of the Company and to make payment for such Securities to the
Paying Agent in Trust for such Holders.
10. Subordination
The indebtedness evidenced by the Debentures is, to the extent and in
the manner provided in the Indenture, subordinate and junior in right of
payment to the prior payment in full of all Senior Secured Indebtedness of the
Company. Any Holder by accepting this Debenture agrees to and shall be bound
by such subordination provisions and authorizes the Trustee to give them
effect.
In addition to all other rights of Senior Secured Indebtedness
described in the Indenture, the Senior Secured Indebtedness shall continue to
be Senior Secured Indebtedness and entitled to the benefits of the
subordination provisions irrespective of any amendment, modification or waiver
of any terms of any instrument relating to the Senior Secured Indebtedness or
any extension or renewal of the Senior Secured Indebtedness.
A-2-8
<PAGE> 97
11. Denominations, Transfer, Exchange
The Debentures are in registered form without coupons in denominations
of $1,000 and integral multiples of $1,000. A Holder may register the transfer
of or exchange Debentures in accordance with the Indenture. The Registrar may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and to pay any taxes or other governmental charges that may
be imposed by law or permitted by the Indenture.
12. Persons Deemed Owners
The Holder of a Debenture may be treated as the owner of it for all purposes.
13. Unclaimed Money
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent will pay the money back to the
Company at its written request. After that, Holders entitled to money must
look to the Company for payment.
14. Amendment, Supplement and Waiver
Subject to certain exceptions, the Indenture or the Debentures may be
amended or supplemented with the consent of the Holders of at least a majority
in principal amount of the Debentures then outstanding and any past default or
compliance with any provision may be waived in a particular instance with the
consent of the Holders of a majority in principal amount of the Debentures then
outstanding. Without the consent of or notice to any Holder, the Company and
the Trustee may amend or supplement the Indenture or the Debentures to, among
other things, provide for uncertificated Debentures in addition to or in place
of certificated Debentures, or to cure any ambiguity, defect or inconsistency
or make any other change that does not adversely affect the rights of any
Holder.
15. Successor Corporation
When a successor corporation assumes all the obligations of its
predecessor under the Debentures and the Indenture in accordance with the terms
and conditions of the Indenture, the predecessor corporation will be released
from those obligations.
16. Defaults and Remedies
An Event of Default is: default for 30 days in payment of interest on
the Debentures; default in payment of principal on the Debentures when due;
failure by the Company for 60 days after notice to it to comply with any of its
other agreements contained in the Indenture or the Debentures; certain events
of bankruptcy, insolvency or reorganization of the Company; and the
acceleration of certain other indebtedness. If an Event of Default (other than
as a result of certain events of bankruptcy,
A-2-9
<PAGE> 98
insolvency or reorganization) occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the Debentures then outstanding
may declare all unpaid principal of and accrued interest to the date of
acceleration on the Debentures then outstanding to be due and payable
immediately, all as and to the extent provided in the Indenture. If an Event
of Default occurs as a result of certain events of bankruptcy, insolvency or
reorganization, unpaid principal of and accrued interest on the Debentures then
outstanding shall become due and payable immediately without any declaration or
other act on the part of the Trustee or any Holder, all as and to the extent
provided in the Indenture. Holders may not enforce the Indenture or the
Debentures except as provided in the Indenture. The Trustee may require
indemnity satisfactory to it before it enforces the Indenture or the
Debentures. Subject to certain limitations, Holders of a majority in principal
amount of the Debentures then outstanding may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Holders notice
of any continuing default (except a default in payment of principal or
interest) if it determines that withholding notice is in their interests. The
Company is required to file periodic reports with the Trustee as to the absence
of default.
17. Trustee Dealings With the Company
Bankers Trust Company, the Trustee under the Indenture, in its
individual or any other capacity, may make loans to, accept deposits from and
perform services for the Company or an Affiliate of the Company, and may
otherwise deal with the Company or an Affiliate of the Company, as if it were
not the Trustee.
18. No Recourse Against Others
A director, officer, employee or shareholder, as such, of the Company
shall not have any liability for any obligations of the Company under the
Debentures or the Indenture nor for any claim based on, in respect of or by
reason of such obligations or their creation. The Holder of this Debenture by
accepting this Debenture waives and releases all such liability. The waiver
and release are part of the consideration for the issuance of this Debenture.
19. Discharge Prior to Maturity
If the Company deposits with the Trustee or the Paying Agent money or
U.S. Government Obligations sufficient to pay the principal of and interest on
the Debentures to maturity, the Company will be discharged from the Indenture
except for certain sections thereof.
20. Authentication
This Debenture shall not be valid until the Trustee or an
authenticating agent signs the certificate of authentication on the other side
of this Debenture.
A-2-10
<PAGE> 99
21. Abbreviations and Definitions
Customary abbreviations may be used in the name of the Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian) and U/G/M/A (= Uniform Gifts to Minors
Act).
All capitalized terms used in this Debenture and not specifically
defined herein are defined in the Indenture and are used herein as so defined.
22. Indenture to Control
In the case of any conflict between the provisions of this Debenture
and the Indenture, the provisions of the Indenture shall control.
The Company will furnish to any Holder, upon written request and
without charge, a copy of the Indenture. Requests may be made to: Equity
Corporation International, 415 South First Street, Suite 210, Lufkin, Texas
75901, Attention: Chief Financial Officer.
A-2-11
<PAGE> 100
ASSIGNMENT FORM
To assign this Debenture, fill in the form below:
I or we assign and transfer this Debenture to
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------
- --------------------------------------------------
- --------------------------------------------------
- --------------------------------------------------
(Print or type assignee's name, address and
zip code)
and irrevocably appoint
- --------------------------------------------------
agent to transfer this Debenture on the books
of the Company. The Agent may substitute
another to act for him or her.
Date:
---------------------------------------------
Your signature:
-----------------------------------
(Sign exactly as your name
appears on the other side of
this Debenture)
- --------------------------------------------------
(Sign exactly as your name appears on the
other side of this Debenture)
*/Signature guaranteed by:
------------------------
By:
-----------------------------------------------
- -------------------------
*/ The signature must be guaranteed by a bank, a trust company or a member
firm of the New York Stock Exchange.
A-2-12
<PAGE> 101
CONVERSION NOTICE
TO CONVERT THIS DEBENTURE INTO COMMON STOCK OF THE COMPANY, CHECK THE BOX:
[ ]
To convert only part of this Debenture, state the amount to be converted:
$_______________________________
IF YOU WANT THE STOCK CERTIFICATE MADE OUT IN ANOTHER PERSON'S NAME, FILL IN
THE FORM BELOW:
- -----------------------------------------------------
(Insert other person's soc. sec. or tax I.D. no.)
- -----------------------------------------------------
- -----------------------------------------------------
- -----------------------------------------------------
- -----------------------------------------------------
(Print or type assignee's name, address and zip code)
Date:
------------------------------------------------
Your signature:
-------------------------------------
(Sign exactly as your name appears
on the other side of this Debenture)
- -----------------------------------------------------
other side of this Debenture)
*/Signature guaranteed by:
---------------------------
By:
--------------------------------------------------
- -----------------------
* The signature must be guaranteed by a bank, a trust company or a
member firm of the New York Stock Exchange.
A-2-13
<PAGE> 102
SCHEDULE OF EXCHANGES OF SECURITIES
The following exchanges, redemptions, repurchases or conversions of a
part of this Regulation S Temporary Global Security for other global Securities
have been made:
<TABLE>
<CAPTION>
Amount of decrease Amount of increase Principal Amount of Signature of
in Principal in Principal this global Security Authorized
Amount of this Amount of this following such Signatory of
Date of Transaction global Security global Security decrease (or increase) Securities Custodian
------------------- --------------- --------------- ---------------------- --------------------
<S> <C> <C> <C> <C>
</TABLE>
A-2-14
<PAGE> 103
EXHIBIT B-1
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
FROM RESTRICTED GLOBAL SECURITY TO REGULATION S GLOBAL SECURITY
(PURSUANT TO SECTION 2.12(A)(I) OF THE INDENTURE)
Bankers Trust Company
Four Albany Street, 4th Floor
New York, New York 10006
Attention: Corporate Trust and Agency Group - Corporate Market Services
Re: $___________ 4 1/2% Convertible Subordinated Debentures due 2004
of Equity Corporation International
Reference is hereby made to the Indenture, dated as of February 25, 1998
(the "Indenture"), between Equity Corporation International (the "Company") and
Bankers Trust Company, as trustee. Capitalized terms used but not defined
herein shall have the meanings given to them in the Indenture.
This letter relates to $ ____________ principal amount of Securities which
are evidenced by one or more Restricted Global Securities (CUSIP No.
_____________) and held with the Depositary in the name of the undersigned (the
"Transferor") or its nominee. The Transferor has requested a transfer of such
beneficial interest in the Securities to a person who will take delivery
thereof in the form of an equal principal amount of Securities evidenced by one
or more Regulation S Global Securities (CUSIP No. ___).
In connection with such request and in respect of such Securities, the
Transferor hereby certifies that such transfer has been effected in compliance
with the transfer restrictions applicable to the global Securities and pursuant
to and in accordance with Rule 903 or Rule 904 of Regulation S under the United
States Securities Act of 1933, as amended (the "Securities Act"), and
accordingly the Transferor hereby further certifies that:
(1) The offer of the Securities was not made to a person in the United
States;
(2) either:
B-1-1
<PAGE> 104
(a) at the time the buy order was originated, the transferee
was outside the United States or the Transferor and any
person acting on its behalf reasonably believed and
believes that the transferee was outside the United
States; or
(b) the transaction was executed in, on or through the
facilities of a designated offshore securities market and
neither the Transferor nor any person acting on its
behalf knows that the transaction was prearranged with a
buyer in the United States;
(3) no directed selling efforts have been made in contravention of the
requirements of Rule 904(b) of Regulation S under the Securities
Act;
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
(5) upon completion of the transaction, the beneficial interest being
transferred as described above is to be held with the Depositary.
Upon giving effect to this request to exchange a beneficial interest in a
Restricted Global Security for a beneficial interest in a Regulation S Global
Security, the resulting beneficial interest shall be subject to the
restrictions on transfer applicable to Regulation S Global Securities pursuant
to the Indenture and the Securities Act and, if such transfer occurs prior to
the end of the 40-day restricted period associated with the initial offering of
Securities, the additional restrictions applicable to transfers of interest in
the Regulation S Temporary Global Security.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company and Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. Incorporated and ABN
AMRO Incorporated, the initial purchasers of such Securities being transferred.
Terms used in this certificate and not otherwise defined in the Indenture have
the meanings set forth in Regulation S under the Securities Act.
--------------------------------
[Insert Name of Transferor]
By:
-----------------------------
Name:
Title:
Dated:
--------------------
cc: Equity Corporation International
B-1-2
<PAGE> 105
EXHIBIT B-2
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
FROM REGULATION S GLOBAL SECURITY TO RESTRICTED GLOBAL SECURITY
(PURSUANT TO SECTION 2.12(A)(II) OF THE INDENTURE)
Bankers Trust Company
Four Albany Street, 4th Floor
New York, New York 10006
Attention: Corporate Trust and Agency Group - Corporate Market Services
Re: $___________ 4 1/2% Convertible Subordinated Debentures due 2004
of Equity Corporation International
Reference is hereby made to the Indenture, dated as of February 25, 1998
(the Indenture), between Equity Corporation International (the "Company") and
Bankers Trust Company, as trustee. Capitalized terms used but not defined
herein shall have the meanings given to them in the Indenture.
This letter relates to $ _____________ principal amount of Securities
which are evidenced by one or more Regulation S Global Securities (CUSIP No.
___________) and held with the Depositary in the name of the undersigned (the
"Transferor") or its nominee. The Transferor has requested a transfer of such
beneficial interest in the Securities to a person who will take delivery
thereof in the form of an equal principal amount of Securities evidenced by one
or more Restricted Global Securities (CUSIP No. __________).
In connection with such request and in respect of such Securities, the
Transferor hereby certifies that:
[CHECK ONE]
[ ] such transfer is being effected pursuant to and in accordance with Rule
144A under the United States Securities Act of 1933, as amended (the
"Securities Act"), and, accordingly, the Transferor hereby further
certifies that the Securities are being transferred to a person that the
Transferor reasonably believes is purchasing the Securities for its own
account, or for one or more accounts with respect to which such person
exercises sole investment discretion, and such person and each such
account is a "qualified institutional buyer" within the meaning of Rule
144A in a transaction meeting the requirements of Rule 144A; or
[ ] such transfer is being effected pursuant to and in accordance with Rule
144 under the Securities Act; or
<PAGE> 106
[ ] such transfer is being effected pursuant to an effective registration
statement under the Securities Act; or
[ ] such transfer is being effected pursuant to an exemption from the
registration requirements of the Securities Act other than Rule 144A or
Rule 144, and the Transferor hereby further certifies that the Securities
are being transferred in compliance with the transfer restrictions
applicable to the global Securities and in accordance with the
requirements of the exemption claimed, which certification is supported by
an Opinion of Counsel provided by the transferor or the transferee (a copy
of which the Transferor has attached to this certification) in form
reasonably acceptable to the Company and to the Trustee to the effect that
such transfer is in compliance with the Securities Act;
and such Securities are being transferred in compliance with any applicable
Blue Sky or securities laws of any state of the United States.
Upon giving effect to this request to exchange a beneficial interest in
Regulation S Global Securities for a beneficial interest in Restricted Global
Securities, the resulting beneficial interest shall be subject to the
restrictions on transfer applicable to Restricted Global Securities pursuant to
the Indenture and the Securities Act.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company and Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. Incorporated and ABN
AMRO Incorporated, the initial purchasers of such Securities being transferred.
--------------------------------
[Insert Name of Transferor]
By:
-----------------------------
Name:
Title:
Dated:
-------------------------------
cc: Equity Corporation International
B-2-2
<PAGE> 107
EXHIBIT B-3
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
OF CERTIFICATED SECURITIES
(PURSUANT TO SECTION 2.12(B) OF THE INDENTURE)
Bankers Trust Company
Four Albany Street, 4th Floor
New York, New York 10006
Attention: Corporate Trust Agency Group - Corporate Market Services
Re: $___________ 4 1/2% Convertible Subordinated Debentures due 2004
of Equity Corporation International
Reference is hereby made to the Indenture, dated as of February 25, 1998
(the "Indenture"), between Equity Corporation International (the "Company") and
Bankers Trust Company, as trustee. Capitalized terms used but not defined
herein shall have the meanings given to them in the Indenture.
This letter relates to $___________ principal amount of Securities which
are evidenced by one or more Certificated Securities (CUSIP No. _____)
registered in the name of the undersigned (the "Transferor") or its nominee.
The Transferor has requested a transfer of such Certificated Securities to a
person who will take delivery thereof in the form of an equal principal amount
of Securities evidenced by one or more Certificated Securities registered in
the name of such person or its nominee.
In connection with such request and in respect of the Securities
surrendered to the Trustee herewith for exchange or registration of transfer
(the "Surrendered Securities"), the Holder of such Surrendered Securities
hereby certifies that:
[CHECK ONE]
[ ] the Surrendered Securities are being acquired for the Transferor's own
account, without transfer; or
[ ] the Surrendered Securities are being transferred to the Company; or
[ ] the Surrendered Securities are being transferred pursuant to and in
accordance with Rule 144A under the United States Securities Act of 1933,
as amended (the "Securities Act"), and, accordingly, the Transferor hereby
further certifies that the Surrendered Securities are being transferred to
a person that the Transferor reasonably believes is purchasing the
Surrendered Securities for its own account, or for one or more accounts
with respect to which such person
<PAGE> 108
exercises sole investment discretion, and such person and each such
account is a "qualified institutional buyer" within the meaning of Rule
144A, in each case in a transaction meeting the requirements of Rule 144A;
[ ] the Surrendered Securities are being transferred in a transaction
permitted by Rule 144 under the Securities Act; or
[ ] the Surrendered Securities are being transferred pursuant to an effective
registration statement under the Securities Act; or
[ ] such transfer is being effected pursuant to an exemption from the
registration requirements of the Securities Act other than Rule 144A or
Rule 144, and the Transferor hereby further certifies that the Securities
are being transferred in compliance with the transfer restrictions
applicable to the Certificated Securities and in accordance with the
requirements of the exemption claimed, which certification is supported by
an Opinion of Counsel provided by the transferor or the transferee (a copy
of which the Transferor has attached to this certification) in form
reasonably acceptable to the Company and to the Trustee, to the effect
that such transfer is in compliance with the Securities Act;
and the Surrendered Securities are being transferred in compliance with any
applicable Blue Sky or securities laws of any state of the United States.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company and Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. Incorporated and ABN
AMRO Incorporated, the initial purchasers of such Securities being transferred.
------------------------------------
[Insert Name of Transferor]
By:
---------------------------------
Name:
Title:
Dated:
---------------------------------
cc: Equity Corporation International
B-3-2
<PAGE> 109
EXHIBIT B-4
FORM OF CERTIFICATE FOR EXCHANGE OR
REGISTRATION OF TRANSFER FROM RESTRICTED
GLOBAL SECURITY OR REGULATION S PERMANENT
GLOBAL SECURITY TO CERTIFICATED SECURITY
(PURSUANT TO SECTION 2.12(C) OF THE INDENTURE)
Bankers Trust Company
Four Albany Street, 4th Floor
New York, New York 10006
Attention: Corporate Trust and Agency Group - Corporate Market Service
Re: $___________ 4 1/2% Convertible Subordinated Debentures due 2004
of Equity Corporation International
Reference is hereby made to the Indenture, dated as of February 25, 1998
(the "Indenture"), between Equity Corporation International (the "Company") and
Bankers Trust Company, as trustee. Capitalized terms used but not defined
herein shall have the meanings given to them in the Indenture.
This letter relates to $______________ principal amount of Securities
which are evidenced by one or more Restricted Global Securities (CUSIP No.
______) or Regulation S Permanent Global Securities (CUSIP No._____) and held
with the Depositary in the name of the undersigned (the "Transferor") or its
nominee. The Transferor has requested a transfer of such beneficial interest
in the Securities to a person who will take delivery thereof in the form of an
equal principal amount of Securities evidenced by one or more Certificated
Securities (CUSIP No._____ ).
In connection with such request and in respect of the Securities
surrendered to the Trustee herewith for exchange (the "Surrendered
Securities"), the Holder of such Surrendered Securities hereby certifies that:
[CHECK ONE]
[ ] the Surrendered Securities are being transferred to the beneficial owner
of such Securities; or
[ ] the Surrendered Securities are being transferred pursuant to and in
accordance with Rule 144A under the United States Securities Act of 1933,
as amended (the "Securities Act"), and, accordingly, the Transferor hereby
further certifies that the Surrendered Securities are being transferred to
a person that the Transferor reasonably believes is purchasing the
Surrendered Securities for its own account, or for one or more accounts
with respect to which such person exercises sole investment discretion,
and such person and each such account is a "qualified
<PAGE> 110
institutional buyer" within the meaning of Rule 144A, in each case in a
transaction meeting the requirements of Rule 144A; or
[ ] the Surrendered Securities are being transferred in a transaction
permitted by Rule 144 under the Securities Act; or
[ ] the Surrendered Securities are being transferred pursuant to an effective
registration statement under the Securities Act; or
[ ] such transfer is being effected pursuant to an exemption from the
registration requirements of the Securities Act other than Rule 144A or
Rule 144, and the Transferor hereby further certifies that the Securities
are being transferred in compliance with the transfer restrictions
applicable to the global Securities and in accordance with the
requirements of the exemption claimed, which certification is supported by
an Opinion of Counsel provided by the Transferor or the transferee (a copy
of which the Transferor has attached to this certification) in form
reasonably acceptable to the Company and to the Trustee to the effect that
such transfer is in compliance with the Securities Act;
and the Surrendered Securities are being transferred in compliance with any
applicable Blue Sky or securities laws of any state of the United States.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company and Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. Incorporated and ABN
AMRO Incorporated, the initial purchasers of such Securities being transferred.
--------------------------------------
[Insert Name of Transferor]
By:
-----------------------------------
Name:
Title:
Dated:
--------------------------------
cc: Equity Corporation International
B-4-2
<PAGE> 111
EXHIBIT B-5
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
FROM CERTIFICATED SECURITY TO RESTRICTED GLOBAL SECURITY OR
REGULATION S PERMANENT GLOBAL SECURITY
(PURSUANT TO SECTION 2.12(D) OF THE INDENTURE)
Bankers Trust Company
Four Albany Street, 4th Floor
New York, New York 10006
Attention: Corporate Trust and Agency Group - Corporate Market Services
Re: $___________ 4 1/2% Convertible Subordinated Debentures due 2004
of Equity Corporation International
Reference is hereby made to the Indenture, dated as of February 25, 1998
(the "Indenture"), between Equity Corporation International (the "Company") and
Bankers Trust Company, as trustee. Capitalized terms used but not defined
herein shall have the meanings given to them in the Indenture.
This letter relates to $___________ principal amount of Securities which
are evidenced by one or more Certificated Securities (CUSIP No. _____)
registered in the name of the undersigned (the "Transferor") or its nominee.
The Transferor has requested a transfer of such Certificated Securities to a
person who will take delivery thereof in the form of an equal principal amount
of Securities evidenced by a Restricted Global Security (CUSIP No. ______) or a
Regulation S Permanent Global Security (CUSIP No. _____).
In connection with such request and in respect of the Securities
surrendered to the Trustee herewith for exchange (the "Surrendered
Securities"), the Holder of such Surrendered Securities hereby certifies that:
[CHECK ONE]
[ ] the Surrendered Securities are being transferred pursuant to and in
accordance with Rule 144A under the United States Securities Act of 1933,
as amended (the "Securities Act"), and, accordingly, the Transferor hereby
further certifies that the Surrendered Securities are being transferred to
a person that the Transferor reasonably believes is purchasing the
Surrendered Securities for its own account, or for one or more accounts
with respect to which such person exercises sole investment discretion,
and such person and each such account is a "qualified institutional buyer"
within the meaning of Rule 144A, in each case in a transaction meeting the
requirements of Rule 144A; or
<PAGE> 112
[ ] the Surrendered Securities are being transferred in a transaction
permitted by Rule 144 under the Securities Act; or
[ ] the Surrendered Securities are being transferred in a transaction
permitted by Rule 904 of Regulation S under the Securities Act, which
certification is supported by an Opinion of Counsel provided by the
Transferor or the transferee (a copy of which the Transferor has attached
to this certification) in form reasonably acceptable to the Company and to
the Trustee to the effect that such transfer is in compliance with the
Securities Act; or
[ ] the Surrendered Securities are being transferred pursuant to an effective
registration statement under the Securities Act;
and the Surrendered Securities are being transferred in compliance with any
applicable Blue Sky or securities laws of any state of the United States.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company and Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. Incorporated and ABN
AMRO Incorporated, the initial purchasers of such Securities being transferred.
-------------------------------------
[Insert Name of Transferor]
By:
----------------------------------
Name:
Title:
Dated:
-------------------
cc: Equity Corporation International
B-5-2
<PAGE> 1
GLOBAL SECURITY
4 1/2% CONVERTIBLE SUBORDINATED DEBENTURE DUE 2004
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY 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 TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF THE DEPOSITORY TRUST COMPANY, OR TO A
SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS
GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN ARTICLE 2 OF THE INDENTURE REFERRED TO ON THE REVERSE
HEREOF.
THIS SECURITY AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION
OF THIS SECURITY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY, THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY
NOR ANY INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION. UNLESS THE SHARES OF COMMON STOCK HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT, A HOLDER OF THIS SECURITY WILL BE ABLE TO EXERCISE THE
CONVERSION RIGHT ONLY IF THE HOLDER CERTIFIES THAT IT IS A "QUALIFIED
INSTITUTIONAL BUYER" OR AN INSTITUTIONAL "ACCREDITED INVESTOR" AS DEFINED BELOW.
THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES TO OFFER,
SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE"), WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS
<PAGE> 2
SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY) ONLY (A) TO THE COMPANY OR ANY
SUBSIDIARY THEREOF, (B) FOR SO LONG AS THE SECURITY IS ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHICH NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (C) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF
SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT
IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A VIEW
TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF
THE SECURITIES ACT, (D) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (E) IN AN OFFSHORE TRANSACTION IN
ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, OR (F)
PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO
ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (C), (E) OR (F) TO REQUIRE
THE DELIVERY TO EACH OF THEM OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR
OTHER INFORMATION SATISFACTORY TO EACH OF THEM AND IN EACH OF THE FOREGOING
CASES, A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS
SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. THE LEGEND
IN THIS AND THE PRECEDING PARAGRAPH WILL BE REMOVED UPON THE REQUEST OF THE
HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
-2-
<PAGE> 3
EQUITY CORPORATION INTERNATIONAL
INCORPORATED UNDER THE
LAWS OF THE STATE OF DELAWARE
CUSIP:294644 AA 7 R-2
4 1/2% CONVERTIBLE SUBORDINATED DEBENTURE DUE 2004
Equity Corporation International promises to pay to CEDE & Co., or
registered assigns, the principal sum of Eighteen Million, Seven Hundred and
Fifty Thousand Dollars on December 31, 2004 or such greater or lesser amount as
is indicated on the Schedule of Exchanges of Securities on the other side of
this Debenture.
Interest Payment Dates: June 30 and December 31
Record Dates: June 15 and December 15
This Debenture is convertible as specified on the other side of this
Debenture. Additional provisions of this Debenture are set forth on the other
side of this Debenture.
-3-
<PAGE> 4
In Witness Whereof, Equity Corporation International has caused this
instrument to be duly executed under its corporate seal.
EQUITY CORPORATION INTERNATIONAL
By:
----------------------------------
Title:
Attest:
- --------------------------------
Secretary
Dated: , 1998
------------------
Trustee's Certificate of Authentication:
This is one of the Securities referred to in
the within-mentioned Indenture.
BANKERS TRUST COMPANY,
as Trustee
By:
----------------------------
Authorized Signatory
-4-
<PAGE> 5
[REVERSE SIDE OF SECURITY]
EQUITY CORPORATION INTERNATIONAL
4 1/2% CONVERTIBLE SUBORDINATED DEBENTURE DUE 2004
1. Interest
Equity Corporation International, a Delaware corporation (the "Company"),
promises to pay interest on the principal amount of this Debenture at the rate
per annum shown above. The Company shall pay interest semiannually on June 30
and December 31 of each year, commencing June 30, 1998. Interest on the
Debentures shall accrue from the most recent date to which interest has been
paid or, if no interest has been paid, from the date of first issuance of the
Debentures under the Indenture (as defined below); provided, however, that if
there is not an existing default in the payment of interest, and if this
Debenture is authenticated between a record date referred to on the face hereof
and the next succeeding interest payment date, interest shall accrue from such
interest payment date. Interest will be computed on the basis of a 360-day year
of twelve 30-day months.
2. Method of Payment
The Company shall pay interest on this Debenture (except defaulted
interest) to the person who is the Holder of this Debenture at the close of
business on the June 15th or December 15th next preceding the related interest
payment date. The Holder must surrender this Debenture to the Paying Agent to
collect payment of principal. The Company will pay principal and interest in
money of the United States that at the time of payment is legal tender for
payment of public and private debts. The Company may, however, pay principal and
interest in respect of any Certificated Security by its check or wire payable in
such money. It may mail an interest check to the Holder's registered address.
3. Paying Agent, Registrar and Conversion Agent
Initially, Bankers Trust Company (the "Trustee") will act as Paying Agent,
Registrar and Conversion Agent. The Company may change any Paying Agent,
Registrar or Conversion Agent without notice to the Holder. The Company or any
of its Subsidiaries may act as Paying Agent, Registrar or Conversion Agent.
4. Indenture, Limitations
This Debenture is one of a duly authorized issue of Debentures of the
Company designated as its 4 1/2% Convertible Subordinated Debentures due 2004
(the "Debentures"), issued under an Indenture dated as of February 25, 1998 (the
"Indenture"), between the Company and the Trustee. The terms of this Debenture
include those stated in the Indenture and those required by or made part of the
Indenture by reference to the Trust Indenture Act of 1939, as amended, and as in
effect on the date of the
-5-
<PAGE> 6
Indenture. This Debenture is subject to all such terms, and the Holder of this
Debenture is referred to the Indenture and said Act for a statement of them.
The Debentures are subordinated unsecured obligations of the Company
limited to up to $143,750,000 aggregate principal amount, subject to Section 2.2
of the Indenture. The Indenture does not limit other debt of the Company,
secured or unsecured, including Senior Secured Indebtedness.
5. Optional Redemption
The Debentures are subject to redemption, at any time on or after February
26, 2001, as a whole or in part, at the election of the Company. The Redemption
Prices (expressed as percentages of the principal amount) beginning February 26
of the years indicated are as follows:
<TABLE>
<CAPTION>
Redemption
Year Price
---- ----------
<S> <C>
2001 102.53%
2002 101.88%
2003 101.22%
2004 100.56%
</TABLE>
in each case together with accrued interest up to but not including the
Redemption Date.
6. Notice of Redemption
Notice of redemption will be mailed by first-class mail at least 30 days
but not more than 60 days before the Redemption Date to each Holder of
Debentures to be redeemed at its registered address. Debentures in denominations
larger than $1,000 may be redeemed in part, but only in whole multiples of
$1,000. On and after the Redemption Date, subject to the deposit with the Paying
Agent of funds sufficient to pay the Redemption Price, interest ceases to accrue
on Debentures or portions of them called for redemption.
7. Purchase of Debentures at Option of Holder Upon a Change in Control
At the option of the Holder and subject to the terms and conditions of the
Indenture, the Company shall become obligated to purchase all or any part
specified by the Holder (so long as the principal amount of such part is $1,000
or an integral multiple thereof) of the Debentures held by such Holder on the
date that is 50 Business Days after a Change in Control, at a purchase price
equal to 100% of the principal amount thereof together with accrued interest up
to but not including the Change in Control Purchase Date. The Holder shall have
the right to withdraw any Change in Control Purchase Notice by delivering a
written notice of withdrawal to the Paying Agent in accordance with the terms of
the Indenture.
-6-
<PAGE> 7
8. Conversion
A Holder of a Debenture may convert such Debenture into shares of Common
Stock of the Company at any time prior to maturity; provided, however, that if
the Debenture is called for redemption, the conversion right will terminate at
the close of business on the Business Day immediately preceding the redemption
date for such Debenture (unless the Company shall default in making the
redemption payment when due, in which case the conversion right shall terminate
at the close of business on the date such default is cured and such Debenture is
redeemed); provided, further, that if the Holder of a Debenture presents such
Debenture for redemption prior to the close of business on the Business Day
immediately preceding the redemption date for such Debenture, the right of
conversion shall terminate upon presentation of the Debenture to the Trustee
(unless the Company shall default in making the redemption payment when due, in
which case the conversion right shall terminate on the close of business on the
date such default is cured and such Debenture is redeemed). The initial
Conversion Price is $27.09 per share, subject to adjustment under certain
circumstances. The number of shares issuable upon conversion of a Debenture is
determined by dividing the principal amount converted by the Conversion Price in
effect on the Conversion Date. No payment or adjustment will be made for accrued
interest on a converted Debenture, except as described in the next succeeding
paragraph, or for dividends or distributions on shares of Common Stock issued
upon conversion of a Debenture. No fractional shares will be issued upon
conversion; in lieu thereof, an amount will be paid in cash based upon the
closing sale price of the Common Stock on the last Trading Day prior to the
Conversion Date.
To convert a Debenture, a Holder must (a) complete and manually sign the
conversion notice set forth below and deliver such notice to the Conversion
Agent, (b) surrender the Debenture to the Conversion Agent, (c) furnish
appropriate endorsements or transfer documents if required by the Registrar or
the Conversion Agent, and (d) pay any transfer or similar tax, if required.
Interest accrued through and including February 24, 2001 shall be paid on any
Debenture called for redemption and surrendered for conversion before the close
of business on June 15, 2001. If a Holder surrenders a Debenture for conversion
after the close of business on the record date for the payment of an installment
of interest and before the close of business on the related interest payment
date then, notwithstanding such conversion, the interest payable on such
interest payment date shall be paid to the Holder of such Debenture on such
record date. In such event, unless the Debenture has been called for redemption
the Debenture must be accompanied by payment of an amount equal to the interest
payable on such interest payment date on the principal amount of the Debenture
or portion thereof then converted. A Holder may convert a portion of a Debenture
equal to $1,000 or any integral multiple thereof.
A Debenture in respect of which a Holder had delivered a Change in Control
Purchase Notice exercising the option of such Holder to require the Company to
purchase such Debenture may be converted only if the Change in Control Purchase
Notice is withdrawn as provided above and in accordance with the terms of the
Indenture.
-7-
<PAGE> 8
9. Conversion Arrangement on Call for Redemption
Any Securities called for redemption, unless surrendered for conversion
before the close of business on the Business Day immediately preceding the
Redemption Date, may be deemed to be purchased from the Holders of such
Securities at an amount not less than the Redemption Price, together with
accrued interest, if any, to, but not including, the Redemption Date, by one or
more investment bankers or other purchasers who may agree with the Company to
purchase such Securities from the Holders, to convert them into Common Stock of
the Company and to make payment for such Securities to the Paying Agent in Trust
for such Holders.
10. Subordination
The indebtedness evidenced by the Debentures is, to the extent and in the
manner provided in the Indenture, subordinate and junior in right of payment to
the prior payment in full of all Senior Secured Indebtedness of the Company. Any
Holder by accepting this Debenture agrees to and shall be bound by such
subordination provisions and authorizes the Trustee to give them effect.
In addition to all other rights of Senior Secured Indebtedness described in
the Indenture, the Senior Secured Indebtedness shall continue to be Senior
Secured Indebtedness and entitled to the benefits of the subordination
provisions irrespective of any amendment, modification or waiver of any terms of
any instrument relating to the Senior Secured Indebtedness or any extension or
renewal of the Senior Secured Indebtedness.
11. Denominations, Transfer, Exchange
The Debentures are in registered form without coupons in denominations of
$1,000 and integral multiples of $1,000. A Holder may register the transfer of
or exchange Debentures in accordance with the Indenture. The Registrar may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and to pay any taxes or other governmental charges that may
be imposed by law or permitted by the Indenture.
12. Persons Deemed Owners
The Holder of a Debenture may be treated as the owner of it for all
purposes.
13. Unclaimed Money
If money for the payment of principal or interest remains unclaimed for two
years, the Trustee or Paying Agent will pay the money back to the Company at its
written request. After that, Holders entitled to money must look to the Company
for payment.
-8-
<PAGE> 9
14. Amendment, Supplement and Waiver
Subject to certain exceptions, the Indenture or the Debentures may be
amended or supplemented with the consent of the Holders of at least a majority
in principal amount of the Debentures then outstanding and any past default or
compliance with any provision may be waived in a particular instance with the
consent of the Holders of a majority in principal amount of the Debentures then
outstanding. Without the consent of or notice to any Holder, the Company and the
Trustee may amend or supplement the Indenture or the Debentures to, among other
things, provide for uncertificated Debentures in addition to or in place of
certificated Debentures, or to cure any ambiguity, defect or inconsistency or
make any other change that does not adversely affect the rights of any Holder.
15. Successor Corporation
When a successor corporation assumes all the obligations of its predecessor
under the Debentures and the Indenture in accordance with the terms and
conditions of the Indenture, the predecessor corporation will be released from
those obligations.
16. Defaults and Remedies
An Event of Default is: default for 30 days in payment of interest on the
Debentures; default in payment of principal on the Debentures when due; failure
by the Company for 60 days after notice to it to comply with any of its other
agreements contained in the Indenture or the Debentures; certain events of
bankruptcy, insolvency or reorganization of the Company; and the acceleration of
certain other indebtedness. If an Event of Default (other than as a result of
certain events of bankruptcy, insolvency or reorganization) occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount of
the Debentures then outstanding may declare all unpaid principal of and accrued
interest to the date of acceleration on the Debentures then outstanding to be
due and payable immediately, all as and to the extent provided in the Indenture.
If an Event of Default occurs as a result of certain events of bankruptcy,
insolvency or reorganization, unpaid principal of and accrued interest on the
Debentures then outstanding shall become due and payable immediately without any
declaration or other act on the part of the Trustee or any Holder, all as and to
the extent provided in the Indenture. Holders may not enforce the Indenture or
the Debentures except as provided in the Indenture. The Trustee may require
indemnity satisfactory to it before it enforces the Indenture or the Debentures.
Subject to certain limitations, Holders of a majority in principal amount of the
Debentures then outstanding may direct the Trustee in its exercise of any trust
or power. The Trustee may withhold from Holders notice of any continuing default
(except a default in payment of principal or interest) if it determines that
withholding notice is in their interests. The Company is required to file
periodic reports with the Trustee as to the absence of default.
-9-
<PAGE> 10
17. Trustee Dealings With the Company
Bankers Trust Company, the Trustee under the Indenture, in its individual
or any other capacity, may make loans to, accept deposits from and perform
services for the Company or an Affiliate of the Company, and may otherwise deal
with the Company or an Affiliate of the Company, as if it were not the Trustee.
18. No Recourse Against Others
A director, officer, employee or shareholder, as such, of the Company shall
not have any liability for any obligations of the Company under the Debentures
or the Indenture nor for any claim based on, in respect of or by reason of such
obligations or their creation. The Holder of this Debenture by accepting this
Debenture waives and releases all such liability. The waiver and release are
part of the consideration for the issuance of this Debenture.
19. Discharge Prior to Maturity
If the Company deposits with the Trustee or the Paying Agent money or U.S.
Government Obligations sufficient to pay the principal of and interest on the
Debentures to maturity, the Company will be discharged from the Indenture except
for certain sections thereof.
20. Authentication
This Debenture shall not be valid until the Trustee or an authenticating
agent signs the certificate of authentication on the other side of this
Debenture.
21. Abbreviations and Definitions
Customary abbreviations may be used in the name of the Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian) and U/G/M/A (= Uniform Gifts to Minors
Act).
All capitalized terms used in this Debenture and not specifically defined
herein are defined in the Indenture and are used herein as so defined.
22. Indenture to Control
In the case of any conflict between the provisions of this Debenture and
the Indenture, the provisions of the Indenture shall control.
-10-
<PAGE> 11
The Company will furnish to any Holder, upon written request and without
charge, a copy of the Indenture. Requests may be made to: Equity Corporation
International, 415 South First Street, Suite 210, Lufkin, Texas 75901,
Attention: Chief Financial Officer.
-11-
<PAGE> 12
ASSIGNMENT FORM
To assign this Debenture, fill in the form below:
I or we assign and transfer this Debenture to
- -----------------------------------------------------
- -----------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------
- --------------------------------------------------
- --------------------------------------------------
- --------------------------------------------------
(Print or type assignee's name, address and
zip code)
and irrevocably appoint
- --------------------------------------------------
agent to transfer this Debenture on the books
of the Company. The Agent may substitute
another to act for him or her.
Date:
--------------------------------------------
Your signature:
----------------------------------
(Sign exactly as your name
appears on the other side of
this Debenture)
- --------------------------------------------------
(Sign exactly as your name appears on the
other side of this Debenture)
*Signature guaranteed by:
------------------------
By:
----------------------------------------------
* The signature must be guaranteed by a bank, a trust company or a member
firm of the New York Stock Exchange.
-12-
<PAGE> 13
CONVERSION NOTICE
To convert this Debenture into Common Stock of the Company, check the box:
[ ]
To convert only part of this Debenture, state the amount to be converted:
$
-------------
If you want the stock certificate made out in another person's name, fill in the
form below:
- --------------------------------------------------------
- --------------------------------------------------------
(Insert other person's soc. sec. or tax I.D. no.)
- --------------------------------------------------
- --------------------------------------------------
- --------------------------------------------------
- --------------------------------------------------
(Print or type assignee's name, address and
zip code)
Date:
-------------------------------------------
Your signature:
----------------------------------
(Sign exactly as your name appears on the
other side of this Debenture)
- --------------------------------------------------
(Sign exactly as your name appears on the
other side of this Debenture)
*Signature guaranteed by:
------------------------
By:
-----------------------------------------------
* The signature must be guaranteed by a bank, a trust company or a member
firm of the New York Stock Exchange.
-13-
<PAGE> 14
SCHEDULE OF EXCHANGES OF SECURITIES
The following exchanges, redemptions, repurchases or conversions of a
part of this global Security have been made:
<TABLE>
<S> <C> <C> <C> <C>
Amount of decrease Amount of increase Principal Amount of Signature of
in Principal in Principal this global Security Authorized
Amount of this Amount of this following such Signatory of
Date of Transaction global Security global Security decrease (or increase) Securities Custodian
------------------- --------------- --------------- --------------------- --------------------
</TABLE>
- ------------
* The signature must be guaranteed by a bank, a trust company or a member firm
of the New York Stock Exchange.
* The signature must be guaranteed by a bank, a trust company or a member firm
of the New York Stock Exchange.
-14-
<PAGE> 1
EXHIBIT 5.1
[Letterhead]
Andrews & Kurth L.L.P.
600 Travis, Suite 4200
Houston, Texas 77002
April 23, 1998
Equity Corporation International
415 South First Street, Suite 210
Lufkin, Texas 75901
Dear Sirs:
We have acted as counsel for Equity Corporation International, a Delaware
corporation (the "Company"), in connection with the issuance by it of
$143,750,000 principal amount of its 4 1/2% Convertible Subordinated Debentures
due 2004 (the "Debentures"), pursuant to an Indenture dated as of February 25,
1998, between the Company and Bankers Trust Company, as Trustee (the
"Indenture"). The Debentures and the Common Stock, $.01 par value (the "Common
Stock"), issuable upon conversion of the Debentures are being registered for
resale by the holders thereof under the Securities Act of 1933 pursuant to a
Registration Statement on Form S-3 (the "Registration Statement").
As the basis for the opinions hereinafter expressed, we have examined such
statutes, regulations, corporate records and documents, certificates of public
officials and such other instruments as we have deemed necessary for the
purposes of the opinions contained herein. As to all matters of fact material
to such opinions, we have relied upon the representations of officers of the
Company and the Trustee. We have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, and the conformity
with the original documents of all documents submitted to us as copies.
Based upon the foregoing and having due regard for such legal
considerations as we deem relevant, we are of the opinion that:
1. The Debentures have been duly authorized, executed,
authenticated, issued and delivered and constitute valid and legally binding
obligations of the Company, enforceable against the Company in accordance with
their terms and entitled to the benefits of the Indenture, except as the
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium (including, without limitation, all laws relating to fraudulent
transfers), or other similar laws now or hereafter in effect relating to or
affecting creditors' rights generally, or by
<PAGE> 2
general principles of equity (regardless of whether enforcement is considered
in a proceeding at law or in equity).
2. The shares of Common Stock issuable upon conversion of the
Debentures have been duly and validly authorized and reserved for issuance,
and when issued and delivered in accordance with the provisions of the
Debentures and the Indenture, will be duly and validly issued and fully paid
and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and the statements made with respect to us under the
caption "Legal Matters" in the Prospectus included as part of the Registration
Statement. By giving such consent, we do not 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 thereunder.
This opinion speaks only as of its date and we assume no obligations to
update this opinion should circumstances change after the date hereof. This
opinion is intended solely for your use as an exhibit to the Registration
Statement for the purpose of the above sale of Debentures or Common Stock and
is not to be relied upon for any other purpose.
Very truly yours,
/s/ ANDREWS & KURTH L.L.P.
ANDREWS & KURTH L.L.P.
<PAGE> 1
EXHIBIT 12.1
RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
1993 1994 1995 1996 1997
-------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C>
Income before taxes . . . . . . . . . . . . . . . . . . . $ 3,943 $ 6,674 $ 10,307 $ 17,915 $ 23,769
Fixed charges:
Interest expense . . . . . . . . . . . . . . . . . . 701 3,178 2,207 2,374 6,331
Capitalized interest . . . . . . . . . . . . . . . . -- -- -- -- 31
Interest income netted against expense . . . . . . . -- -- -- 276 41
Interest factor portion of rentals . . . . . . . . . 553 528 553 514 733
-------- -------- --------- -------- ---------
1,254 3,706 2,760 3,164 7,136
-------- -------- --------- -------- ---------
Pretax income before fixed charges . . . . . . . . . . . 5,197 10,380 13,067 21,079 30,905
Less:
Capitalized interest . . . . . . . . . . . . . . . . -- -- -- -- (31)
Interest income . . . . . . . . . . . . . . . . . . . -- -- -- (276) (41)
-------- -------- --------- -------- --------
Earnings before income taxes and fixed charges . . . . . $ 5,197 $ 10,380 $ 13,067 $ 20,803 $ 30,833
======== ======== ========= ======== =========
Ratio of earnings to fixed charges . . . . . . . . . . . 4.14x 2.80x 4.73x 6.57x 4.32x
======== ======== ========= ======== =========
</TABLE>
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement
of Equity Corporation International on Form S-3 relating to $143,750,000 of 4
1/2% Convertible Subordinated Debentures due 2004 of our reports dated March 5,
1998 on our audits of the consolidated financial statements and financial
statement schedule of Equity Corporation International (the "Company") as of
December 31, 1997 and 1996 and for each of the three years in the period ended
December 31, 1997 from the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1997. We also consent to the reference to our firm
under the caption "Experts."
/s/ COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
Houston, Texas
April 23, 1998
<PAGE> 1
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT
TO SECTION 305(b)(2) ___________
------------------------------
BANKERS TRUST COMPANY
(Exact name of trustee as specified in its charter)
NEW YORK 13-4941247
(Jurisdiction of Incorporation or (I.R.S. Employer
organization if not a U.S. national bank) Identification no.)
FOUR ALBANY STREET
NEW YORK, NEW YORK 10006
(Address of principal (Zip Code)
executive offices)
BANKERS TRUST COMPANY
LEGAL DEPARTMENT
130 LIBERTY STREET, 31ST FLOOR
NEW YORK, NEW YORK 10006
(212) 250-2201
(Name, address and telephone
number of agent for service)
------------------------------
EQUITY CORPORATION INTERNATIONAL
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 75-2521142
(State or other jurisdiction of Incorporation or organization) (I.R.S. employer Identification no.)
</TABLE>
415 SOUTH FIRST STREET
SUITE 210
LUFKIN, TEXAS 75901
(Address, including zip code
of principal executive offices)
4 1/2% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2004
(Title of the indenture securities)
<PAGE> 2
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee.
(a) Name and address of each examining or supervising authority to
which it is subject.
NAME ADDRESS
Federal Reserve Bank (2nd District) New York, NY
Federal Deposit Insurance Corporation Washington, D.C.
New York State Banking Department Albany, NY
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
ITEM 2. AFFILIATIONS WITH OBLIGOR.
If the obligor is an affiliate of the Trustee, describe each such
affiliation.
None.
ITEM 3.-15. NOT APPLICABLE
ITEM 16. LIST OF EXHIBITS.
EXHIBIT 1 - Restated Organization Certificate of Bankers Trust
Company dated August 7, 1990, Certificate of
Amendment of the Organization Certificate of Bankers
Trust Company dated June 21, 1995 - Incorporated
herein by reference to Exhibit 1 filed with Form T-1
Statement, Registration No. 33-65171, Certificate of
Amendment of the Organization Certificate of Bankers
Trust Company dated March 20, 1996, incorporate by
referenced to Exhibit 1 filed with Form T-1
Statement, Registration No. 333-25843 and Certificate
of Amendment of the Organization Certificate of
Bankers Trust Company dated June 19, 1997, copy
attached.
EXHIBIT 2 - Certificate of Authority to commence business -
Incorporated herein by reference to Exhibit 2 filed
with Form T-1 Statement, Registration No. 33-21047.
EXHIBIT 3 - Authorization of the Trustee to exercise corporate
trust powers Incorporated herein by reference to
Exhibit 2 filed with Form T-1 Statement, Registration
No. 33-21047.
EXHIBIT 4 - Existing By-Laws of Bankers Trust Company, as amended
on November 18, 1997. Copy attached.
-2-
<PAGE> 3
EXHIBIT 5 - Not applicable.
EXHIBIT 6 - Consent of Bankers Trust Company required by Section
321(b) of the Act. - Incorporated herein by reference
to Exhibit 4 filed with Form T-1 Statement,
Registration No. 22-18864.
EXHIBIT 7 - The latest report of condition of Bankers Trust
Company dated as of December 31, 1997. Copy attached.
EXHIBIT 8 - Not Applicable.
EXHIBIT 9 - Not Applicable.
-3-
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Bankers Trust Company, a corporation organized and
existing under the laws of the State of New York, has duly caused this statement
of eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in The City of New York, and State of New York, on the 22nd day
of April, 1998.
BANKERS TRUST COMPANY
By: /s/ SANDRA J. SHAFFER
-------------------------------------
Sandra J. Shaffer
Assistant Vice President
-4-
<PAGE> 5
State of New York,
Banking Department
I, MANUEL KURSKY, Deputy Superintendent of Banks of the State of New
York, DO HEREBY APPROVE the annexed Certificate entitled "CERTIFICATE OF
AMENDMENT OF THE ORGANIZATION CERTIFICATE OF BANKERS TRUST COMPANY UNDER SECTION
8005 OF THE BANKING LAW," dated June 19, 1997, providing for an increase in
authorized capital stock from $1,601,666,670 consisting of 100,166,667 shares
with a par value of $10 each designated as Common Stock and 600 shares with a
par value of $1,000,000 each designated as Series Preferred Stock to
$2,001,666,670 consisting of 100,166,667 shares with a par value of $10 each
designated as Common Stock and 1,000 shares with a par value of $1,000,000 each
designated as Series Preferred Stock.
WITNESS, my hand and official seal of the Banking Department at the City of New
York,
this 27TH day of June in the Year of our
Lord one thousand nine hundred and
ninety-seven.
Manuel Kursky
------------------------------
Deputy Superintendent of Banks
<PAGE> 6
CERTIFICATE OF AMENDMENT
OF THE
ORGANIZATION CERTIFICATE
OF BANKERS TRUST
Under Section 8005 of the Banking Law
-----------------------------
We, James T. Byrne, Jr. and Lea Lahtinen, being respectively a Managing
Director and an Assistant Secretary of Bankers Trust Company, do hereby certify:
1. The name of the corporation is Bankers Trust Company.
2. The organization certificate of said corporation was filed by the
Superintendent of Banks on the 5th of march, 1903.
3. The organization certificate as heretofore amended is hereby amended
to increase the aggregate number of shares which the corporation shall have
authority to issue and to increase the amount of its authorized capital stock in
conformity therewith.
4. Article III of the organization certificate with reference to the
authorized capital stock, the number of shares into which the capital stock
shall be divided, the par value of the shares and the capital stock outstanding,
which reads as follows:
"III. The amount of capital stock which the corporation is hereafter to
have is One Billion, Six Hundred and One Million, Six Hundred Sixty-Six
Thousand, Six Hundred Seventy Dollars ($1,601,666,670), divided into
One Hundred Million, One Hundred Sixty-Six Thousand, Six Hundred
Sixty-Seven (100,166,667) shares with a par value of $10 each
designated as Common Stock and 600 shares with a par value of One
Million Dollars ($1,000,000) each designated as Series Preferred
Stock."
is hereby amended to read as follows:
"III. The amount of capital stock which the corporation is hereafter to
have is Two Billion One Million, Six Hundred Sixty-Six Thousand, Six
Hundred Seventy Dollars ($2,001,666,670), divided into One Hundred
Million, One Hundred Sixty-Six Thousand, Six Hundred Sixty-Seven
(100,166,667) shares with a par value of $10 each designated as Common
Stock and 1000 shares with a par value of One Million Dollars
($1,000,000) each designated as Series Preferred Stock."
<PAGE> 7
5. The foregoing amendment of the organization certificate was
authorized by unanimous written consent signed by the holder of all outstanding
shares entitled to vote thereon.
IN WITNESS WHEREOF, we have made and subscribed this certificate this
19th day of June, 1997.
/s/ JAMES T. BYRNE, JR.
-------------------------------
James T. Byrne, Jr.
Managing Director
/s/ LEA LAHTINEN
-------------------------------
Lea Lahtinen
Assistant Secretary
State of New York )
) ss:
County of New York )
Lea Lahtinen, being fully sworn, deposes and says that she is an
Assistant Secretary of Bankers Trust Company, the corporation described in the
foregoing certificate; that she has read the foregoing certificate and knows the
contents thereof, and that the statements herein contained are true.
/s/ LEA LAHTINEN
-------------------------------
Lea Lahtinen
Sworn to before me this 19th day of June, 1997.
Sandra L. West
-------------------------------
Notary Public
SANDRA L. WEST
Notary Public State of New York
No. 31-4942101
Qualified in New York County
Commission Expires September 19,
1998
<PAGE> 8
BY-LAWS
NOVEMBER 18, 1997
BANKERS TRUST COMPANY
NEW YORK
<PAGE> 9
BY-LAWS
OF
BANKERS TRUST COMPANY
ARTICLE I
MEETINGS OF STOCKHOLDERS
SECTION 1. The annual meeting of the stockholders of this Company shall be held
at the office of the Company in the Borough of Manhattan, City of New York, on
the third Tuesday in January of each year, for the election of directors and
such other business as may properly come before said meeting.
SECTION 2. Special meetings of stockholders other than those regulated by
statute may be called at any time by a majority of the directors. It shall be
the duty of the Chairman of the Board, the Chief Executive Officer or the
President to call such meetings whenever requested in writing to do so by
stockholders owning a majority of the capital stock.
SECTION 3. At all meetings of stockholders, there shall be present, either in
person or by proxy, stockholders owning a majority of the capital stock of the
Company, in order to constitute a quorum, except at special elections of
directors, as provided by law, but less than a quorum shall have power to
adjourn any meeting.
SECTION 4. The Chairman of the Board or, in his absence, the Chief Executive
Officer or, in his absence, the President or, in their absence, the senior
officer present, shall preside at meetings of the stockholders and shall direct
the proceedings and the order of business. The Secretary shall act as secretary
of such meetings and record the proceedings.
ARTICLE II
DIRECTORS
SECTION 1. The affairs of the Company shall be managed and its corporate powers
exercised by a Board of Directors consisting of such number of directors, but
not less than ten nor more than twenty-five, as may from time to time be fixed
by resolution adopted by a majority of the directors then in office, or by the
stockholders. In the event of any increase in the number of directors,
additional directors may be elected within the limitations so fixed, either by
the stockholders or within the limitations imposed by law, by a majority of
directors then in office. One-third of the number of directors, as fixed from
time to time, shall constitute a quorum. Any one or more members of the Board of
Directors or any Committee thereof may participate in a meeting of the Board of
Directors or Committee thereof by means of a conference telephone or similar
communications equipment which allows all persons participating in the meeting
to hear each other at the same time. Participation by such means shall
constitute presence in person at such a meeting.
All directors hereafter elected shall hold office until the next annual meeting
of the stockholders and until their successors are elected and have qualified.
No person who shall have attained age 72 shall be eligible to be elected or
re-elected a director. Such director may, however, remain a director of the
<PAGE> 10
Company until the next annual meeting of the stockholders of Bankers Trust New
York Corporation (the Company's parent) so that such director's retirement will
coincide with the retirement date from Bankers Trust New York Corporation.
No Officer-Director who shall have attained age 65, or earlier relinquishes his
responsibilities and title, shall be eligible to serve as a director.
SECTION 2. Vacancies not exceeding one-third of the whole number of the Board of
Directors may be filled by the affirmative vote of a majority of the directors
then in office, and the directors so elected shall hold office for the balance
of the unexpired term.
SECTION 3. The Chairman of the Board shall preside at meetings of the Board of
Directors. In his absence, the Chief Executive Officer or, in his absence, such
other director as the Board of Directors from time to time may designate shall
preside at such meetings.
SECTION 4. The Board of Directors may adopt such Rules and Regulations for the
conduct of its meetings and the management of the affairs of the Company as it
may deem proper, not inconsistent with the laws of the State of New York, or
these By-Laws, and all officers and employees shall strictly adhere to, and be
bound by, such Rules and Regulations.
SECTION 5. Regular meetings of the Board of Directors shall be held from time to
time on the third Tuesday of the month. If the day appointed for holding such
regular meetings shall be a legal holiday, the regular meeting to be held on
such day shall be held on the next business day thereafter. Special meetings of
the Board of Directors may be called upon at least two day's notice whenever it
may be deemed proper by the Chairman of the Board or, the Chief Executive
Officer or, in their absence, by such other director as the Board of Directors
may have designated pursuant to Section 3 of this Article, and shall be called
upon like notice whenever any three of the directors so request in writing.
SECTION 6. The compensation of directors as such or as members of committees
shall be fixed from time to time by resolution of the Board of Directors.
<PAGE> 11
ARTICLE III
COMMITTEES
SECTION 1. There shall be an Executive Committee of the Board consisting of not
less than five directors who shall be appointed annually by the Board of
Directors. The Chairman of the Board shall preside at meetings of the Executive
Committee. In his absence, the Chief Executive Officer or, in his absence, such
other member of the Committee as the Committee from time to time may designate
shall preside at such meetings.
The Executive Committee shall possess and exercise to the extent permitted by
law all of the powers of the Board of Directors, except when the latter is in
session, and shall keep minutes of its proceedings, which shall be presented to
the Board of Directors at its next subsequent meeting. All acts done and powers
and authority conferred by the Executive Committee from time to time shall be
and be deemed to be, and may be certified as being, the act and under the
authority of the Board of Directors.
A majority of the Committee shall constitute a quorum, but the Committee may act
only by the concurrent vote of not less than one-third of its members, at least
one of whom must be a director other than an officer. Any one or more directors,
even though not members of the Executive Committee, may attend any meeting of
the Committee, and the member or members of the Committee present, even though
less than a quorum, may designate any one or more of such directors as a
substitute or substitutes for any absent member or members of the Committee, and
each such substitute or substitutes shall be counted for quorum, voting, and all
other purposes as a member or members of the Committee.
SECTION 2. There shall be an Audit Committee appointed annually by resolution
adopted by a majority of the entire Board of Directors which shall consist of
such number of directors, who are not also officers of the Company, as may from
time to time be fixed by resolution adopted by the Board of Directors. The
Chairman shall be designated by the Board of Directors, who shall also from time
to time fix a quorum for meetings of the Committee. Such Committee shall conduct
the annual directors' examinations of the Company as required by the New York
State Banking Law; shall review the reports of all examinations made of the
Company by public authorities and report thereon to the Board of Directors; and
shall report to the Board of Directors such other matters as it deems advisable
with respect to the Company, its various departments and the conduct of its
operations.
In the performance of its duties, the Audit Committee may employ or retain, from
time to time, expert assistants, independent of the officers or personnel of the
Company, to make studies of the Company's assets and liabilities as the
Committee may request and to make an examination of the accounting and auditing
methods of the Company and its system of internal protective controls to the
extent considered necessary or advisable in order to determine that the
operations of the Company, including its fiduciary departments, are being
audited by the General Auditor in such a manner as to provide prudent and
adequate protection. The Committee also may direct the General Auditor to make
such investigation as it deems necessary or advisable with respect to the
Company, its various departments and the conduct of its operations. The
Committee shall hold regular quarterly meetings and during the intervals thereof
shall meet at other times on call of the Chairman.
SECTION 3. The Board of Directors shall have the power to appoint any other
Committees as may seem necessary, and from time to time to suspend or continue
the powers and duties of such
<PAGE> 12
Committees. Each Committee appointed pursuant to this Article shall serve at the
pleasure of the Board of Directors.
ARTICLE IV
OFFICERS
SECTION 1. The Board of Directors shall elect from among their number a Chairman
of the Board and a Chief Executive Officer; and shall also elect a President,
and may also elect a Senior Vice Chairman, one or more Vice Chairmen, one or
more Executive Vice Presidents, one or more Senior Managing Directors, one or
more Managing Directors, one or more Senior Vice Presidents, one or more
Principals, one or more Vice Presidents, one or more General Managers, a
Secretary, a Controller, a Treasurer, a General Counsel, one or more Associate
General Counsels, a General Auditor, a General Credit Auditor, and one or more
Deputy Auditors, who need not be directors. The officers of the corporation may
also include such other officers or assistant officers as shall from time to
time be elected or appointed by the Board. The Chairman of the Board or the
Chief Executive Officer or, in their absence, the President, the Senior Vice
Chairman or any Vice Chairman, may from time to time appoint assistant officers.
All officers elected or appointed by the Board of Directors shall hold their
respective offices during the pleasure of the Board of Directors, and all
assistant officers shall hold office at the pleasure of the Board or the
Chairman of the Board or the Chief Executive Officer or, in their absence, the
President, the Senior Vice Chairman or any Vice Chairman. The Board of Directors
may require any and all officers and employees to give security for the faithful
performance of their duties.
SECTION 2. The Board of Directors shall designate the Chief Executive Officer of
the Company who may also hold the additional title of Chairman of the Board,
President, Senior Vice Chairman or Vice Chairman and such person shall have,
subject to the supervision and direction of the Board of Directors or the
Executive Committee, all of the powers vested in such Chief Executive Officer by
law or by these By-Laws, or which usually attach or pertain to such office. The
other officers shall have, subject to the supervision and direction of the Board
of Directors or the Executive Committee or the Chairman of the Board or, the
Chief Executive Officer, the powers vested by law or by these By-Laws in them as
holders of their respective offices and, in addition, shall perform such other
duties as shall be assigned to them by the Board of Directors or the Executive
Committee or the Chairman of the Board or the Chief Executive Officer.
The General Auditor shall be responsible, through the Audit Committee, to the
Board of Directors for the determination of the program of the internal audit
function and the evaluation of the adequacy of the system of internal controls.
Subject to the Board of Directors, the General Auditor shall have and may
exercise all the powers and shall perform all the duties usual to such office
and shall have such other powers as may be prescribed or assigned to him from
time to time by the Board of Directors or vested in him by law or by these
By-Laws. He shall perform such other duties and shall make such investigations,
examinations and reports as may be prescribed or required by the Audit
Committee. The General Auditor shall have unrestricted access to all records and
premises of the Company and shall delegate such authority to his subordinates.
He shall have the duty to report to the Audit Committee on all matters
concerning the internal audit program and the adequacy of the system of internal
controls of the Company which he deems advisable or which the Audit Committee
may request. Additionally, the General Auditor shall have the duty of reporting
independently of all officers of the Company to the Audit Committee at least
quarterly on any matters concerning the internal audit program and the adequacy
of the system of internal controls of the Company that should be brought
<PAGE> 13
to the attention of the directors except those matters responsibility for which
has been vested in the General Credit Auditor. Should the General Auditor deem
any matter to be of special immediate importance, he shall report thereon
forthwith to the Audit Committee. The General Auditor shall report to the Chief
Financial Officer only for administrative purposes.
The General Credit Auditor shall be responsible to the Chief Executive Officer
and, through the Audit Committee, to the Board of Directors for the systems of
internal credit audit, shall perform such other duties as the Chief Executive
Officer may prescribe, and shall make such examinations and reports as may be
required by the Audit Committee. The General Credit Auditor shall have
unrestricted access to all records and may delegate such authority to
subordinates.
SECTION 3. The compensation of all officers shall be fixed under such plan or
plans of position evaluation and salary administration as shall be approved from
time to time by resolution of the Board of Directors.
SECTION 4. The Board of Directors, the Executive Committee, the Chairman of the
Board, the Chief Executive Officer or any person authorized for this purpose by
the Chief Executive Officer, shall appoint or engage all other employees and
agents and fix their compensation. The employment of all such employees and
agents shall continue during the pleasure of the Board of Directors or the
Executive Committee or the Chairman of the Board or the Chief Executive Officer
or any such authorized person; and the Board of Directors, the Executive
Committee, the Chairman of the Board, the Chief Executive Officer or any such
authorized person may discharge any such employees and agents at will.
<PAGE> 14
ARTICLE V
INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHERS
SECTION 1. The Company shall, to the fullest extent permitted by Section 7018 of
the New York Banking Law, indemnify any person who is or was made, or threatened
to be made, a party to an action or proceeding, whether civil or criminal,
whether involving any actual or alleged breach of duty, neglect or error, any
accountability, or any actual or alleged misstatement, misleading statement or
other act or omission and whether brought or threatened in any court or
administrative or legislative body or agency, including an action by or in the
right of the Company to procure a judgment in its favor and an action by or in
the right of any other corporation of any type or kind, domestic or foreign, or
any partnership, joint venture, trust, employee benefit plan or other
enterprise, which any director or officer of the Company is servicing or served
in any capacity at the request of the Company by reason of the fact that he, his
testator or intestate, is or was a director or officer of the Company, or is
serving or served such other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise in any capacity, against judgments,
fines, amounts paid in settlement, and costs, charges and expenses, including
attorneys' fees, or any appeal therein; provided, however, that no
indemnification shall be provided to any such person if a judgment or other
final adjudication adverse to the director or officer establishes that (i) his
acts were committed in bad faith or were the result of active and deliberate
dishonesty and, in either case, were material to the cause of action so
adjudicated, or (ii) he personally gained in fact a financial profit or other
advantage to which he was not legally entitled.
SECTION 2. The Company may indemnify any other person to whom the Company is
permitted to provide indemnification or the advancement of expenses by
applicable law, whether pursuant to rights granted pursuant to, or provided by,
the New York Banking Law or other rights created by (i) a resolution of
stockholders, (ii) a resolution of directors, or (iii) an agreement providing
for such indemnification, it being expressly intended that these By-Laws
authorize the creation of other rights in any such manner.
SECTION 3. The Company shall, from time to time, reimburse or advance to any
person referred to in Section 1 the funds necessary for payment of expenses,
including attorneys' fees, incurred in connection with any action or proceeding
referred to in Section 1, upon receipt of a written undertaking by or on behalf
of such person to repay such amount(s) if a judgment or other final adjudication
adverse to the director or officer establishes that (i) his acts were committed
in bad faith or were the result of active and deliberate dishonesty and, in
either case, were material to the cause of action so adjudicated, or (ii) he
personally gained in fact a financial profit or other advantage to which he was
not legally entitled.
SECTION 4. Any director or officer of the Company serving (i) another
corporation, of which a majority of the shares entitled to vote in the election
of its directors is held by the Company, or (ii) any employee benefit plan of
the Company or any corporation referred to in clause (i) in any capacity shall
be deemed to be doing so at the request of the Company. In all other cases, the
provisions of this Article V will apply (i) only if the person serving another
corporation or any partnership, joint venture, trust, employee benefit plan or
other enterprise so served at the specific request of the Company, evidenced by
a written communication signed by the Chairman of the Board, the Chief Executive
Officer or the President, and (ii) only if and to the extent that, after making
such efforts as the Chairman
<PAGE> 15
of the Board, the Chief Executive Officer or the President shall deem adequate
in the circumstances, such person shall be unable to obtain indemnification from
such other enterprise or its insurer.
SECTION 5. Any person entitled to be indemnified or to the reimbursement or
advancement of expenses as a matter of right pursuant to this Article V may
elect to have the right to indemnification (or advancement of expenses)
interpreted on the basis of the applicable law in effect at the time of
occurrence of the event or events giving rise to the action or proceeding, to
the extent permitted by law, or on the basis of the applicable law in effect at
the time indemnification is sought.
SECTION 6. The right to be indemnified or to the reimbursement or advancement of
expense pursuant to this Article V (i) is a contract right pursuant to which the
person entitled thereto may bring suit as if the provisions hereof were set
forth in a separate written contract between the Company and the director or
officer, (ii) is intended to be retroactive and shall be available with respect
to events occurring prior to the adoption hereof, and (iii) shall continue to
exist after the rescission or restrictive modification hereof with respect to
events occurring prior thereto.
SECTION 7. If a request to be indemnified or for the reimbursement or
advancement of expenses pursuant hereto is not paid in full by the Company
within thirty days after a written claim has been received by the Company, the
claimant may at any time thereafter bring suit against the Company to recover
the unpaid amount of the claim and, if successful in whole or in part, the
claimant shall be entitled also to be paid the expenses of prosecuting such
claim. Neither the failure of the Company (including its Board of Directors,
independent legal counsel, or its stockholders) to have made a determination
prior to the commencement of such action that indemnification of or
reimbursement or advancement of expenses to the claimant is proper in the
circumstance, nor an actual determination by the Company (including its Board of
Directors, independent legal counsel, or its stockholders) that the claimant is
not entitled to indemnification or to the reimbursement or advancement of
expenses, shall be a defense to the action or create a presumption that the
claimant is not so entitled.
SECTION 8. A person who has been successful, on the merits or otherwise, in the
defense of a civil or criminal action or proceeding of the character described
in Section 1 shall be entitled to indemnification only as provided in Sections 1
and 3, notwithstanding any provision of the New York Banking Law to the
contrary.
ARTICLE VI
SEAL
SECTION 1. The Board of Directors shall provide a seal for the Company, the
counterpart dies of which shall be in the charge of the Secretary of the Company
and such officers as the Chairman of the Board, the Chief Executive Officer or
the Secretary may from time to time direct in writing, to be affixed to
certificates of stock and other documents in accordance with the directions of
the Board of Directors or the Executive Committee.
SECTION 2. The Board of Directors may provide, in proper cases on a specified
occasion and for a specified transaction or transactions, for the use of a
printed or engraved facsimile seal of the Company.
<PAGE> 16
ARTICLE VII
CAPITAL STOCK
SECTION 1. Registration of transfer of shares shall only be made upon the books
of the Company by the registered holder in person, or by power of attorney, duly
executed, witnessed and filed with the Secretary or other proper officer of the
Company, on the surrender of the certificate or certificates of such shares
properly assigned for transfer.
ARTICLE VIII
CONSTRUCTION
SECTION 1. The masculine gender, when appearing in these By-Laws, shall be
deemed to include the feminine gender.
ARTICLE IX
AMENDMENTS
SECTION 1. These By-Laws may be altered, amended or added to by the Board of
Directors at any meeting, or by the stockholders at any annual or special
meeting, provided notice thereof has been given.
<PAGE> 17
I, Sandra J. Shaffer, Assistant Vice President of Bankers Trust Company, New
York, New York, hereby certify that the foregoing is a complete, true and
correct copy of the By-Laws of Bankers Trust Company, and that the same are in
full force and effect at this date.
Sandra J. Shaffer
-----------------------------------------
ASSISTANT VICE PRESIDENT
DATED: 4/16/98
-------------------------------
<PAGE> 18
<TABLE>
<S> <C> <C> <C> <C>
Legal Title of Bank: Bankers Trust Company Call Date: 12/31/97 ST-BK: 36-4840 FFIEC 031
Address: 130 Liberty Street Vendor ID: D CERT: 00623 Page RC-1
City, State ZIP: New York, NY 10006 11
FDIC Certificatee No.: 00623
</TABLE>
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR DECEMBER 31, 1997
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
SCHEDULE RC - BALANCE SHEET
<TABLE>
<CAPTION>
C400
Dollar Amounts in Thousands
---------------------------
<S> <C> <C>
RCFD Bil Mil Thou
-------------------
ASSETS
1. Cash and balances due from depository institutions (from Schedule RC-A):
a. Noninterest-bearing balances and currency and coin(1)................................. 0081 2,121,000
b. Interest bearing balances(2).......................................................... 0071 4,770,000
2. Securities:
a. Held-to-maturity securities (from Schedule RC-B, column A)............................ 1754 0
b. Available-for-sale securities (from Schedule RC-B, column D).......................... 1773 4,015,000
3. Federal funds sold and securities purchased under agreements to resell..................... 1350 28,927,000
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income (from Schedule RC-C)......................... 2122 17,692,000
b. LESS: Allowance for loan and lease losses............................................. 3123 659,000
c. LESS: Allocated transfer risk reserve................................................. 3128 0
d. Loans and leases, net of unearned income, allowance, and reserve (item 4.a minus 4.b
and 4.c).............................................................................. 2125 17,033,000
5. Trading assets (from Schedule RC-D)........................................................ 3545 45,488,000
6. Premises and fixed assets (including capitalized leases)................................... 2145 766,000
7. Other real estate owned (from Schedule RC-M)............................................... 2150 188,000
8. Investments in unconsolidated subsidiaries and associated companies (from Schedule
RC-M)...................................................................................... 2130 58,000
9. Customers' liability to this bank on acceptances outstanding............................... 2155 633,000
10. Intangible assets (from Schedule RC-M)..................................................... 2143 83,000
11. Other assets (from Schedule RC-F).......................................................... 2160 5,957,000
12. Total assets (sum of items 1 through 11)................................................... 2170 110,039,000
</TABLE>
- ---------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
<PAGE> 19
<TABLE>
<S> <C> <C> <C>
Legal Title of Bank: Bankers Trust Company Call Date: 12/31/97 ST-BK: 36-4840 FFIEC 031
Address: 130 Liberty Street Vendor ID: D CERT: 00623 Page RC-2
City, State Zip: New York, NY 10006 12
FDIC Certificate Number: 00623
</TABLE>
SCHEDULE RC -- CONTINUED
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
---------------------------
Bil Mil Thou
---------------------------
<S> <C> <C> <C>
LIABILITIES
13. Deposits:
a. In domestic offices (sum of totals of columns A and C from Schedule RC-E, Part I)........... RCON 2200 24,608,000
(1) Noninterest-bearing(1)................................................................... RCON 6631 2,856,000
(2) Interest-bearing......................................................................... RCON 6636 21,752,000
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E, Part II). RCFN 2200 20,529,000
(1) Noninterest-bearing...................................................................... RCFN 6631 2,122,000
(2) Interest-bearing......................................................................... RCFN 6636 18,407,000
14. Federal funds purchased and securities sold under agreements to repurchase..................... RCFD 2800 13,777,000
15. a. Demand notes issued to the U.S. Treasury.................................................... RCON 2840 0
b. Trading liabilities (from Schedule RC-D).................................................... RCFD 3548 24,968,000
16. Other borrowed money (includes mortgage indebtedness and obligations under
capitalized leases):
a. With a remaining maturity of one year or less............................................... RCFD 2332 5,810,000
b. With a remaining maturity of more than one year through three years......................... A547 4,702,000
c. With a remaining maturity of more than three years.......................................... A548 1,750,000
17. Not Applicable................................................................................. /
18. Bank's liability on acceptances executed and outstanding....................................... RCFD 2920 633,000
19. Subordinated notes and debentures (2).......................................................... RCFD 3200 1,307,000
20. Other liabilities (from Schedule RC-G)......................................................... RCFD 2930 5,961,000
21. Total liabilities (sum of items 13 through 20)................................................. RCFD 2948 104,045,000
22. Not Applicable................................................................................. /
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus.................................. RCFD 3838 1,000,000
24. Common stock................................................................... RCFD 3230 1,352,000
25. Surplus (exclude all surplus related to preferred stock)....................... RCFD 3839 540,000
26. a. Undivided profits and capital reserves...................................... RCFD 3632 3,526,000
b. Net unrealized holding gains (losses) on available-for-sale securities...... RCFD 8434 (45,000)
</TABLE>
<PAGE> 20
<TABLE>
<S> <C> <C> <C>
27. Cumulative foreign currency translation adjustments............................ RCFD3284 (379,000)
28. Total equity capital (sum of items 23 through 27).............................. RCFD3210 5,994,000
29. Total liabilities and equity capital (sum of items 21 and 28).................. RCFD3300 110,039,000
MEMORANDUM
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best
describes the most comprehensive level of auditing work performed for the bank Number
by independent external auditors as of any date during 1996.................... RCFD6724 N/A M.1
1 = Independent audit of the bank conducted in accordance with generally accepted auditing standards by a certified
public accounting firm which submits a report on the bank
2 = Independent audit of the bank's parent holding company conducted in accordance with generally accepted auditing
standards by a certified public accounting firm which submits a report on the consolidated holding company (but
not on the bank separately)
3 = Directors' examination of the bank conducted in accordance with generally accepted auditing standards by a
certified public accounting firm (may be required by state chartering authority)
4 = Directors' examination of the bank performed by other external auditors (may be required by state chartering
authority)
5 = Review of the bank's financial statements by external auditors
6 = Compilation of the bank's financial statements by external auditors
7 = Other audit procedures (excluding tax preparation work)
8 = No external audit work
</TABLE>
- ---------------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
(2) Includes limited-life preferred stock and related surplus.
