-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CykXukaRHi8wwBK9Dlhc+xjP2Fkqsh80N9sKJUUdtG5uPegHJy0fnliuRsoNaOox Tg5TMKbCKnXIBG34uS9B0w== 0000099106-04-000013.txt : 20040322 0000099106-04-000013.hdr.sgml : 20040322 20040322165143 ACCESSION NUMBER: 0000099106-04-000013 CONFORMED SUBMISSION TYPE: SC 13E3 PUBLIC DOCUMENT COUNT: 9 FILED AS OF DATE: 20040322 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: TRANS LUX CORP CENTRAL INDEX KEY: 0000099106 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS MANUFACTURING INDUSTRIES [3990] IRS NUMBER: 131394750 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13E3 SEC ACT: 1934 Act SEC FILE NUMBER: 005-32729 FILM NUMBER: 04682887 BUSINESS ADDRESS: STREET 1: 110 RICHARDS AVE CITY: NORWALK STATE: CT ZIP: 06856-5090 BUSINESS PHONE: 2038534321 MAIL ADDRESS: STREET 1: 110 RICHARDS AVENUE CITY: NORWALK STATE: CT ZIP: 06856-5090 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: TRANS LUX CORP CENTRAL INDEX KEY: 0000099106 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS MANUFACTURING INDUSTRIES [3990] IRS NUMBER: 131394750 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13E3 BUSINESS ADDRESS: STREET 1: 110 RICHARDS AVE CITY: NORWALK STATE: CT ZIP: 06856-5090 BUSINESS PHONE: 2038534321 MAIL ADDRESS: STREET 1: 110 RICHARDS AVENUE CITY: NORWALK STATE: CT ZIP: 06856-5090 SC 13E3 1 scheduletoi.txt SCHEDULE TO SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE TO (Rule 14d-100) Tender Offer Statement under Section 14(d) (1) or 13(e) (1) of the Securities Exchange Act of 1934 TRANS-LUX CORPORATION ____________________________________________________ (Name of Subject Company (Issuer)) TRANS-LUX CORPORATION ____________________________________________________ (Name of Filing Person (Offeror)) 7 1/2% Convertible Subordinated Notes due 2006 ____________________________________________________ (Title of Class of Securities) 893247 AD 8 ____________________________________________________ (CUSIP Number of Class of Securities) Angela D. Toppi Executive Vice President and Secretary TRANS-LUX CORPORATION 110 Richards Avenue Norwalk CT 06856-5090 (203) 853-4321 ____________________________________________________ (Name, address and telephone number of person authorized to Receive Notices and communications on behalf of the filing person) Copy to: Gerald Gordon, Esq. Weisman Celler Spett & Modlin, P.C. 445 Park Avenue New York, New York 10022 (212) 371-5400 Calculation of filing fee - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- TRANSACTION VALUATION $15,000,000 AMOUNT OF FILING FEE -------------------------------$ 1,900.50---------------- Estimated for purposes of calculating the amount of the filing fee only. The amount assumes the exchange of $15,000,000 principal amount of Trans-Lux Corporation ("Trans-Lux") 8 1/4% Limited Convertible Senior Subordinated Notes due 2012 ("New Notes") for $15,000,000 principal amount of Trans-Lux 7 1/2% Convertible Subordinated Notes due 2006 ("Old Notes"). The amount is based upon the maximum principal amount of Trans-Lux New Notes to be issued in exchange. [ ] Check the box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. Amount previously paid: -------------------- Filing party: ------------------------------- Form or registration No.: ------------------- Date filed: --------------------------------- [ ] Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer. Check the appropriate boxes below to designate any transactions to which the statement relates: [ ] Third-party tender offer subject to Rule 14d-1. [X] Issuer tender offer subject to Rule 13e-4. [X] Going-private transaction subject to Rule 13e-3. [ ] Amendment to Schedule 13D under Rule 13d-2. Check the following box if the filing is a final amendment reporting the results of the tender offer: [ ] - ---------------------------------------------------------------------------- - ---------------------------------------------------------------------------- This Schedule TO relates to the offer by Trans-Lux Corporation, a Delaware corporation ("Trans- Lux"), to exchange (the "Exchange Offer") up to $15,000,000 principal amount of Trans-Lux 8 1/4% Limited Convertible Senior Subordinated Notes due 2012 (the "New Notes") for currently outstanding $15,000,000 principal amount of Trans-Lux 7 1/2% Convertible Subordinated Notes due 2006 (the "Old Notes"), at the exchange rate of $1,000 principal amount of New Notes for each $1,000 principal amount of Old Notes tendered. Subject to the terms and conditions of the Exchange Offer, Trans-Lux will issue up to $15,000,000 principal amount of New Notes in exchange for up to $15,000,000 principal amount of the Old Notes to the extent such Old Notes are properly tendered and not withdrawn prior to the expiration of the Exchange Offer. Trans-Lux reserves the right to extend or terminate the Exchange Offer, if the conditions set forth in the section of the Offering Circular (as defined below) entitled "The Exchange Offer-Conditions of the Exchange Offer" are not satisfied, and to otherwise amend the Exchange Offer in any respect. The Exchange Offer is open to all holders of Old Notes, and is subject to customary conditions. The Exchange Offer is subject to the terms and conditions set forth in the Offering Circular, dated February 23, 2004, (the "Offering Circular") and in the related Letter of Transmittal (the "Letter of Transmittal") (which, as either may be amended or supplemented from time to time, together constitute the "Disclosure Documents"). Subject to applicable securities laws and the terms set forth in the Offering Circular, Trans-Lux reserves the right to waive any and all conditions to the Exchange Offer. The Offering Circular and the Letter of Transmittal are attached to this Schedule TO as Exhibits (a)(1)(A) and (a)(1)(B), respectively. All information in the Disclosure Documents, including all schedules and annexes, is hereby expressly incorporated by reference in answer to all items in this Schedule TO, except as otherwise set forth below. This Schedule TO is combined with Schedule 13E-3 since the transaction might be deemed a 1 "going private" transaction. Where items under Schedule 13E-3 are not part of Schedule TO, they are listed at the end of this Schedule. Where the same item is covered by both schedules, the Schedule 13E-3 reference is below the Schedule TO reference. Items 1-6 are numbered the same in both schedules. ITEM 1. SUMMARY TERM SHEET The information set forth in the Offering Circular under the titles "Summary Term Sheet" and "Terms of the Exchange Offer" is incorporated herein by reference. ITEM 2. SUBJECT COMPANY INFORMATION (a) The issuer of the securities subject to the Exchange Offer is Trans-Lux Corporation, a Delaware corporation. Trans-Lux executive offices are located at 110 Richards Avenue, Norwalk, Connecticut 06856-5090. Trans-Lux telephone number is (203) 853-4321. (b) The subject security is Trans-Lux's Old Notes. As of February 20, 2004, $30,177,000 principal amount of Old Notes were issued and outstanding. (c) The Old Notes are listed on the American Stock Exchange under the symbol "TLX.C". The information set forth in the Offering Circular under the title "Price Range of Old Notes and Common Stock and Dividends on Common Stock" is incorporated herein by reference. ITEM 3. IDENTITY AND BACKGROUND OF FILING PERSON (a) Trans-Lux is the filing person and subject company. The business address and telephone number of Trans-Lux are set forth under Item 2(a) of this Schedule TO. Pursuant to General Instruction C to Schedule TO, the following persons are the directors and/or executive officers of Trans-Lux: Name Office Age ---- ------ --- Michael R. Mulcahy President, Co-Chief Executive Officer and Director 55 Thomas Brandt Executive Vice President, Co-Chief Executive Officer 40 and Director Matthew Brandt Executive Vice President and a Director 40 Al L. Miller Executive Vice President 57 Angela D. Toppi Executive Vice President, Treasurer, Secretary and 48 Chief Financial Officer Karl P. Hirschauer Senior Vice President 58 Thomas F. Mahoney Senior Vice President 56 Steven Baruch Director 65 Richard Brandt Director 76 Howard Brenner Director 70 Jean Firstenberg Director 67 Robert Greenes Director 82 Gene Jankowski Chairman of the Board (Non-executive Officer) and 69 Director Victor Liss Director 66 Howard S. Modlin Director 72
2 Messrs. Mulcahy, T. Brandt, and M. Brandt, Miller, Hirschauer, Mahoney and Ms. Toppi have been associated in an executive capacity with Trans-Lux for more than five years. Mr. Steven Baruch is Executive Vice President of Presidential Realty Corporation and a producer of plays and musicals. Mr. Howard M. Brenner is a Senior Advisor of MLGA Holding, Inc., and a Director of Interep National Radio Sales, Inc. He was formerly Chairman and Chief Executive Officer of HCFP Brenner Securities LLC, formerly President of Brenner Securities, formerly Senior Vice President of Loewenbaum & Company Incorporated, formerly Vice Chairman of Southcoast Capital Corporation which changed its name to Loewenbaum & Company Incorporated, formerly President of Drexel Burnham Lambert Incorporated; and formerly member of Board of Governors of the American Stock Exchange and District 10 Committee (NY) National Association of Securities Dealers Inc. Mr. Robert B. Greenes is Chairman of the Executive Committee of Trans-Lux, Chairman of National Oilheat Research Alliance, President of Petroconsult, Inc., and President of East Coast Energy Council. He was formerly President and Chief Executive Officer of Public Fuel Service Inc. and all of its subsidiaries. Mr. Howard S. Modlin is an Attorney and President of the firm Weisman Celler Spett & Modlin, P.C. He is a Director of Fedders Corporation and a Director and Secretary and, since November 2001, Chairman and Chief Executive Officer of General DataComm Industries, Inc. Mr. Richard Brandt is a Consultant to Trans-Lux and was formerly its Chairman of the Board. He is a Director of Presidential Realty Corporation, Chairman Emeritus and Trustee of the American Film Institute and a Trustee and Treasurer of The College of Santa Fe. Ms. Jean Firstenberg is Director and Chief Executive Officer of the American Film Institute. She was formerly a Trustee of Boston University. Mr. Gene Jankowski is Chairman of the Board of Trans-Lux, Chairman of Jankowski Communications System, Inc. and Advisor Managing Director of Veronis Suhler & Associates Inc. He is also a Director of TV Azteca, Co-Chairman of St. Vincent's College, and Trustee of St. Vincent's Medical Center. He was formerly President and Chairman of the CBS Broadcast Group, and is Chairman Emeritus of the American Film Institute. Mr. Victor Liss is Vice Chairman of the Board and a Consultant to Trans-Lux; a Director of Anthem, Inc. and Trustee of Norwalk Hospital. He was formerly President and Chief Executive Officer of Trans-Lux. The business address and telephone number for all of the above directors and executive officers is c/o Trans-Lux Corporation, 110 Richards Avenue, Norwalk, Connecticut 06856-5090 and (203) 853-4321. Pursuant to General Instruction C to Schedule TO, the following are the controlling persons of Trans-Lux. Mr. Richard Brandt, by virtue of his holdings of Class B Stock, which has 10 votes per share, may be deemed to be a controlling person of Trans-Lux. His address and telephone number is c/o Trans-Lux Corporation, 110 Richards Avenue, Norwalk, Connecticut 06856-5090 and (203) 853-4321. ITEM 4. TERMS OF THE TRANSACTION (a) The information set forth in the sections of the Offering Circular entitled "Summary Term Sheet," "Terms of the Exchange Offer," "Summary Historical and Pro Forma Financial Information- Summary Consolidated Financial Data," "The Exchange Offer," "Tax Consequences," "Description of 3 New Notes," "Description of Old Notes" and "Description of Capital Stock" is incorporated herein by reference. (b) Trans-Lux has been advised that directors and executive officers holding an aggregate of $110,000 of Old Notes intend to tender their Old Notes in the Exchange Offer. ITEM 5. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS Trans-Lux has in effect a stock option plan, which was approved by its stockholders, pursuant to which incentive and non-qualified stock options may be granted to employees and a Non-employee Director Stock Option Plan under which non-qualified stock options may be granted to non-employee directors. Approximately 20 employees currently hold options to purchase 55,539 shares of the Company's Common Stock at prices ranging from $5.40 per share to $15.1875 per share and expiration dates ranging from May 18,2004 to June 26,2012. The option plan provides that options must be granted at an exercise price equal to the average high and low price of the Common Stock on the American Stock Exchange on the date of grant and may not be exercised prior to one year from the date of grant. Trans-Lux and Continental Stock Transfer and Trust Company are parties to Indentures governing the Old Notes and Trans-Lux 9 1/2% Subordinated Debentures due 2012. ITEM 6. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS (a) The information set forth in the section of the Offering Circular entitled "Summary Term Sheet-What is the Purpose of the Exchange Offer" is incorporated herein by reference. (b) The Old Notes acquired pursuant to the Exchange Offer will be cancelled. (c)(1) None (c)(2) None (c)(3) The information set forth in the sections of the Offering Circular entitled "Summary Term Sheet-What is the Purpose of the Exchange Offer," "Terms of the Exchange Offer," "Summary Historical and Pro Forma Financial Information-Summary Consolidated Financial Data," "Description of New Notes," "Description of Old Notes," and "Description of Capital Stock" is incorporated herein by reference. (c)(4) None (c)(5) None (c)(6) and (7) The Old Notes will not be delisted from the American Stock Exchange unless Old Notes in excess of $25,177,000 are tendered and Trans-Lux accepts all tenders. (c)(8) None (c)(9) None (c)(10) None (d) These are no negotiations involving the Exchange Offer and any third party or any of the items covered by Item 6(c). ITEM 7. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION (Item 10 Schedule 13E-3) 4 (a) No cash is required in order to complete the proposed Exchange Offer. (b) Not applicable. (c) The following expenses are estimated to be incurred in connection with the transaction: (1) SEC filing fee $ 1,900 (2) Printing 5,000 (3) Legal 55,000 (4) Accounting 7,000 (5) Exchange Agent / Trustee 12,100 (6) Miscellaneous 4,000 (d) Not applicable. ITEM 8. INTEREST IN SECURITIES OF THE SUBJECT COMPANY (Item 11 Schedule 13E-3) (a) The following table sets forth information as of January 31, 2004 with respect to the beneficial ownership of Trans-Lux Class B Stock and Common Stock or shares acquirable within 60 days of such date by each person who is a director and executive officer of Trans-Lux; and all persons as a group who are executive officers and directors of Trans-Lux, and as to the percentage of outstanding shares held by them on that date. Amount Beneficially Percent Percent of Name, Status and Mailing Address Title of Class Owned of Class All Classes - -------------------------------- -------------- ------------ -------- ----------- Richard Brandt................................. Class B Stock 125,208 (1) 43.55% 9.93% Director, Consultant and beneficial owner of Common Stock 19,636 (1) 1.98% 1.53% more than 5% of Trans-Lux's Class B Stock 110 Richards Avenue Norwalk, CT 06856-5090 Matthew Brandt................................. Class B Stock 41,700 14.50% 3.31% Director, Executive Vice President and Common Stock 11,980 (2) 1.22% * beneficial owner of more than 5% of Trans- Lux's Class B Stock 110 Richards Avenue Norwalk, CT 06856-5090 Thomas Brandt.................................. Class B Stock 41,700 14.50% 3.31% Director, Executive Vice President, Common Stock 11,354 (3) 1.15% * Co-Chief Executive Officer and beneficial owner of more than 5% of Trans-Lux's Class B Stock 110 Richards Avenue Norwalk, CT 06856-5090 Steven Baruch.................................. Common Stock 1,600 (4) * * Director 110 Richards Avenue Norwalk, CT 06856-5090 5
Amount Beneficially Percent Percent of Name, Status and Mailing Address Title of Class Owned of Class All Classes - -------------------------------- -------------- ------------ -------- ----------- Howard M. Brenner.............................. Common Stock 2,500 (5) * * Director 465 Park Avenue New York, NY 10022 Jean Firstenberg............................... Common Stock 1,920 (5) * * Director 110 Richards Avenue Norwalk, CT 06856-5090 Robert B. Greenes............................. Common Stock 5,000 (6) * * Director 110 Richards Avenue Norwalk, CT 06856-5090 Gene Jankowski................................ Common Stock 3,500 (4) * * Director and Chairman of the Board (Non-executive Officer) 110 Richards Avenue Norwalk, CT 06856-5090 Victor Liss................................... Class B Stock 9,728 3.38% * Vice Chairman of the Board and Consultant Common Stock 11,620 (7) 1.19% * 110 Richards Avenue Norwalk, CT 06856-5090 Howard S. Modlin.............................. Class B Stock 8,751 (8) 3.04% * Director Common Stock 2,500 (8) * * 445 Park Avenue New York, NY 10022-2606 Michael R. Mulcahy............................ Common Stock 24,303 (9) 2.44% 1.90% Director, President and Co-Chief Executive Officer 110 Richards Avenue Norwalk, CT 06856-5090 Al L. Miller.................................. Common Stock 2,629 (10) * * Executive Vice President 110 Richards Avenue Norwalk, CT 06856-5090 Angela D. Toppi................................ Common Stock 3,000 (11) * * Executive Vice President Treasurer, Secretary and Chief Financial Officer 110 Richards Avenue Norwalk, CT 06856-5090 Karl P. Hirschauer............................. Common Stock 2,629 (11) * * Senior Vice President 110 Richards Avenue Norwalk, CT 06856-5090 Thomas F. Mahoney.............................. Common Stock 3,500 (12) * * Senior Vice President 110 Richards Avenue Norwalk, CT 06856-5090 All directors and executive officers........... Class B Stock 227,087 (13) 78.99% 18.01% as a group (15 persons) Common Stock 105,792 (13) 10.03% 7.88% _____________________ 6 (1) The amount includes 4,232 shares of Class B Stock owned by Mrs. Brandt, 12,500 shares of Common Stock acquirable upon exercise of stock options, and 7,136 shares of Common Stock acquirable upon conversion of $100,000 principal amount of the Old Notes. (2) The amount includes 11,500 shares of Common Stock acquirable upon exercise of stock options. Mr. M. Brandt is Mr. R. Brandt's son. (3) The amount includes 10,000 shares of Common Stock acquirable upon exercise of stock options. Mr. T. Brandt is Mr. R. Brandt's son. (4) The amount includes 1,000 shares of Common Stock acquirable upon exercise of stock options. (5) The amount includes 1,500 shares of Common Stock acquirable upon exercise of stock options. (6) The amount includes 2,500 shares of Common Stock acquirable upon exercise of stock options. (7) The amount includes 1,500 shares of Common Stock acquirable upon exercise of stock options, and 714 shares of Common Stock acquirable upon conversion of $10,000 principal amount of the Old Notes. (8) The amount includes 5,939 shares of Class B Stock owned by Mr. Modlin's immediate family or held in trust for Mr. Modlin's immediate family, and 2,500 shares of Common Stock acquirable upon exercise of stock options. (9) The amount includes 21,000 shares of Common Stock acquirable upon exercise of stock options. (10) The amount includes 139 shares of Common Stock acquirable upon exercise of stock options. (11) The amount includes 2,000 shares of Common Stock acquirable upon exercise of stock options. (12) The amount includes 3,400 shares of Common Stock acquirable upon exercise of stock options. (13) The amount includes 10,171 shares of Class B Stock set forth in footnotes 1 and 8 above, 7,850 shares of Common Stock acquirable upon conversion of the Old Notes set forth in footnotes 1 and 7 above, and 74,039 shares of Common Stock which members of the group have the right to acquire by exercise of stock options (including director stock options). * Less than 1%
(b) None. No persons, specified in Instruction 1 to Item 1008(b) of Regulation M-A, transacted in the Old Notes during the past 60 days. ITEM 9. PERSONS/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED (Item 14 Schedule 13E-3) (a) The information set forth in the sections of the Offering Circular entitled "The Exchange Offer," is incorporated herein by reference. ITEM 10. FINANCIAL STATEMENTS (Item 13 Schedule 13E-3) 7 (a), (b) The information set forth in the sections of the Offering Circular entitled "Summary Historical and Pro Forma Financial Information-Summary Consolidated Financial Data," "Ratio of Earnings to Fixed Charges," and the financial statements and information contained in the reports set forth in the section of the Offering Circular entitled "Incorporation of Documents by Reference" are incorporated herein by reference. ITEM 11. ADDITIONAL INFORMATION. (Item 15 Schedule 13E-3) (a) There are no agreements between, Trans-Lux and any of its executive officers, directors, controlling persons or subsidiaries relating to the Exchange Offer. The applicable legal requirements are the filing of this Schedule TO and required amendments. (b) Trans-Lux believes the Offering Circular contains all such information as may be necessary to make all required statements in the light of the circumstances under which they are made, not materially misleading. ITEM 12. EXHIBITS. (Item 16 Schedule 13E-3) (a)(1)(A) Offering Circular dated February 23, 2004 filed herewith. (a)(1)(B) Letter of Transmittal filed herewith. (a)(1)(C) Notice of Guaranteed Delivery filed herewith. (a)(1)(D) Letter to Broker-Dealers filed herewith. (a)(1)(E) Letter to Clients filed herewith. (a)(5)(A) Press Release dated March 2, 2004 filed herewith. (a)(5)(B) Letter to Old Noteholders of the Company filed herewith. (b) Not applicable. (c) None. (d)(1) Proposed Indenture governing the New Notes filed herewith. (d)(2) Form of employee stock option agreement (incorporated by reference to Proxy Statement dated April 7, 2000). (d)(3) Form of non-employee director stock option agreement (incorporated by reference to Exhibit 10.4(a) of Form 10-K for the year ended December 31, 1999). (d)(4) Indenture governing the Old Notes (form of said indenture is incorporated by reference to Exhibit 4.2 of Registration No.333-15481). (d)(5) Indenture governing Trans-Lux 9 1/2% Subordinated Debentures due 2012 (form of said indenture is incorporated by reference to Exhibit 6 of Schedule 13E-4 Amendment No. 2 dated December 23, 1994). (f) Not applicable. (g) Not applicable. (h) Not applicable. ITEM 13. INFORMATION REQUIRED BY SCHEDULE 13E-3. ITEM 7. PURPOSES, ALTERNATIVES, REASONS AND EFFECTS (Schedule 13E-3) (a) (c) For the purposes of and reasons for the Exchange Offer the information set forth in the section of the Offering Circular entitled "Summary Term Sheet-What is the Purpose of the Exchange Offer" is incorporated herein by reference. 8 (b) Trans-Lux considered alternatively a public offering of securities to redeem the Old Notes, but determined the timing for such an offer was not feasible at this time (Trans-Lux did not consider an alternative means to accomplish the stated purpose). (c) For the effects of the Exchange Offer on Trans-Lux, the information set forth in the sections of the Offering Circular entitled "Summary Term Sheet-What are the United States Federal Income Tax Consequences to me if I Participate in the Exchange Offer?" and "The Exchange Offer-Subsequent Trading in Securities Exchanged" are incorporated herein by reference. ITEM 8. FAIRNESS OF THE TRANSACTION (Schedule 13E-3) (a) Fairness (b) Factors considered in determining fairness (c) Approval of Security Holders (e) Approval of directors (f) Other offers The Section of the Offering Circular entitled "Summary Term Sheet-Does the Board of Directors Believe the Exchange Offer is Fair to Unaffiliated Security Holders?" is incorporated herein by reference. (d) Unaffiliated Representative The Board of Directors has not retained an unaffiliated representative to act solely on behalf of unaffiliated security holders. ITEM 12. THE SOLICITATION OR RECOMMENDATION Intent to Tender As set forth on the front page of the Offering Circular and elsewhere, directors and officers who own an aggregate of $110,000 of the Old Notes have indicated they will tender their Old Notes. Recommendation Reference is made to the Section of Offering Circular entitled "Summary Term Sheet- What Does the Trans-Lux Board of Directors Think of the Exchange Offer?" which states the Board of Directors is not making any recommendation regarding whether Old Noteholders should tender. SIGNATURE After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. By: /s/ ANGELA D.TOPPI ----------------------- Angela D. Toppi Executive Vice President Date: March 2, 2004 and Secretary 9 EX-99.A.1.A 3 offering021804.txt OFFERING CIRCULAR DATED 02/23/04 Exhibit (a)(1)(A) OFFERING CIRCULAR TRANS-LUX CORPORATION Offer to Exchange its 8 1/4% Limited Convertible Senior Subordinated Notes due 2012 for up to $15,000,000 Principal Amount of its 7 1/2% Convertible Subordinated Notes due 2006 THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M. NEW YORK CITY TIME ON MARCH 31, 2004 UNLESS EXTENDED. Trans-Lux Corporation (the "Company" or "Trans-Lux") hereby offers (the "Exchange Offer") upon the terms and conditions stated in this Offering Circular and in the accompanying Letter of Transmittal $1,000 principal amount of its 8 1/4% Limited Convertible Senior Subordinated Notes due March l, 2012 ("New Notes") in exchange for each $1,000 principal amount of 7 1/2% Convertible Subordinated Notes due December l, 2006 ("Old Notes"). Subject to the terms and conditions of the Exchange Offer,we will accept for exchange from the holders ("Old Noteholders") no less than an aggregate of $4,000,000 principal amount of the outstanding Old Notes and up to an aggregate of $15,000,000 principal amount (approximately 49.7%) of the outstanding Old Notes properly tendered and not withdrawn prior to the expiration of the Exchange Offer. If the minimum amount is not tendered, we may terminate the Exchange Offer without accepting tenders. If more than the maximum amount is tendered, we will accept all tendered Old Notes on a pro rata basis. We also reserve the right to amend the Exchange Offer and accept all tendered Old Notes if less than the minimum or if in excess of the maximum is tendered. (See "The Exchange Offer-Conditions of the Exchange Offer.") Subject to applicable securities laws and the terms set forth in this Offering Circular, we reserve the right to waive any and all conditions of the Exchange Offer. The New Notes will provide for a higher interest rate, a longer term, will be convertible into Common Stock at a lower conversion price of $9.00 per share, until 2007 and are senior to the Old Notes and the Company's 9 1/2% Subordinated Debentures due 2012 but do not have any restriction on issuance of additional indebtedness, issuance of preferred stock or restricted payments. (See "Summary of the Exchange Offer" for differences between the Old Notes and New Notes.) The Old Notes are convertible into Common Stock of the Company at a conversion price of $14.013 per share. On February 20, 2004, the last sale prices of the Old Notes and the Common Stock on the American Stock Exchange were $100.00 per $1,000 principal amount and $7.03 per share, respectively. For a more complete description of the New Notes we propose to issue in the Exchange Offer, see the section of this Offering Circular entitled "Description of New Notes." Executive officers and directors of the Company who own an aggregate of $110,000 of the Old Notes have indicated they will tender their Old Notes. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS OFFERING CIRCULAR. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ___________________ HOW TO EXCHANGE Tendering Old Noteholders must either (i) complete and sign the accompanying Letter of Transmittal, have their signatures guaranteed, if required, and forward the Letter of Transmittal with their certificate(s) and other required documentation to Wells Fargo Bank, N.A., the Exchange Agent, at the address set forth herein, or (ii) request their brokers, dealers, banks or trust companies to effect the transaction for them, or (iii) follow the procedures for guaranteed delivery, in each case, prior to 5:00 P.M. New York City time on March 31, 2004. (See "The Exchange Offer-How to Tender Old Notes.") ___________________ Questions regarding the Exchange Offer or requests for information may be directed to the Company at (203) 853-4321 (call Ms. Angela D. Toppi, Secretary) or e-mail to atoppi@trans-lux.com. ___________________ The date of this Offering Circular is February 23, 2004 The Exchange Offer is being made by the Company in reliance on the exemption from the registration requirements of the Securities Act of 1933, as amended, afforded by Section 3(a)(9) thereof. The Company therefore, will not pay any commission or other remuneration to any broker, dealer, salesperson or other person for soliciting tenders of Old Notes. However, regular employees of the Company (who will not be additionally compensated therefor) may solicit tenders and will answer inquiries concerning the Exchange Offer. Tendering Old Noteholders will not be obligated to pay brokerage commissions on the exchange. No person is authorized by the Company to give any information or to make any representation, in connection with the offering made hereby, other than as contained in this Exchange Offer including the documents incorporated by reference in this Offering Circular. This Exchange Offer does not constitute an offer by the Company in any jurisdiction to any person to whom such offer would be unlawful in such jurisdiction. This Exchange Offer speaks as of its date of issue. Neither delivery hereof nor any exchanges made hereunder shall under any circumstances create any implication that there has been no change in the affairs of the Company since the date hereof. Statements contained in this Exchange Offer concerning the contents of any documents are not necessarily complete; with respect to each such document, copies are available for inspection at the Company's executive office. Reference is hereby made to such documents for a more complete description of the matter involved and each such statement shall be deemed to be qualified in its entirety by such reference. Holders of Old Notes should consult their own attorney, financial advisor or tax advisor as to legal, financial or tax advice with respect to the Exchange Offer. In general, the exchange of Old Notes for New Notes should constitute a tax-free recapitalization for Federal income tax purposes (see "The Exchange Offer-Tax Consequences"). (i) TABLE OF CONTENTS Page ---- SUMMARY TERM SHEET . . . . . . . . . . . . . . . . . . . . 1 TERMS OF THE EXCHANGE OFFER . . . . . . . . . . . . . . . . . 8 SUMMARY HISTORICAL AND PRO FORMA FINANCIAL INFORMATION SUMMARY CONSOLIDATED FINANCIAL DATA . . . . . . . . . . . . . . 10 CONSOLIDATED STATEMENTS OF OPERATIONS DATA . . . . . . . . . . . 10 RATIO OF EARNINGS TO FIXED CHARGES. . . . . . . . . . . . . . . 11 CONSOLIDATED BALANCE SHEET DATA . . . . . . . . . . . . . . . . 11 CAPITALIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Leverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Risks Related to a Repurchase Event . . . . . . . . . . . . . . . . . . . 13 Reliance on Key Suppliers . . . . . . . . . . . . . . . . . . . . . . . . 14 Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Nature of Leasing and Maintenance Revenues. . . . . . . . . . . . . . . . 14 Dependence on Key Personnel . . . . . . . . . . . . . . . . . . . . . . . 14 Effect of Certain Anti-Takeover Provisions and Control by Existing Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Absence of Public Market for the New Notes . . . . . . . . . . . . . . . 15 Limited Trading Volume and Volatility of Stock Price . . . . . . . . . . 15 Share Eligible for Future Sale . . . . . . . . . . . . . . . . . . . . . 16 THE EXCHANGE OFFER . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Terms of the Exchange Offer . . . . . . . . . . . . . . . . . . . . . . . 17 Principal Differences Between the New Notes and the Old Notes . . . . . . 17 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Limited Convertibility . . . . . . . . . . . . . . . . . . . . . . . . 17 Redemption and Sinking Funds. . . . . . . . . . . . . . . . . . . . . . 17 Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Subsequent Trading in Securities Exchanged . . . . . . . . . . . . . . . 18 Purpose of the Exchange Offer . . . . . . . . . . . . . . . . . . . . . . 18 Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Expiration and Extension of the Exchange Offer . . . . . . . . . . . . . 18 Conditions of the Exchange Offer . . . . . . . . . . . . . . . . . . . . 19 How to Tender Old Notes . . . . . . . . . . . . . . . . . . . . . . . . . 19 Terms and Conditions of the Letter of Transmittal . . . . . . . . . . . . 21 Withdrawal of Tenders . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Acceptance of Tenders of Old Notes; Delivery of New Notes . . . . . . . . 21 Exchange Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Payment of Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 PRICE RANGE OF OLD NOTES AND COMMON STOCK AND DIVIDENDS ON COMMON STOCK. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 DESCRIPTION OF NEW NOTES . . . . . . . . . . . . . . . . . . . . . . . . . 24 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Conversion Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Optional Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 (ii) Page ---- Consolidation, Merger and Sale of Assets. . . . . . . . . . . . . . . . . 28 Modification and Waiver . . . . . . . . . . . . . . . . . . . . . . . . . 29 Repurchase at Option of Holders Upon a Repurchase Event . . . . . . . . . 29 Satisfaction and Discharge . . . . . . . . . . . . . . . . . . . . . . . 31 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Information Concerning the Trustee. . . . . . . . . . . . . . . . . . . . 31 DESCRIPTION OF OLD NOTES. . . . . . . . . . . . . . . . . . . . . . . . . . 33 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Conversion Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Restriction on Incurrence of Indebtedness and Issuance of Preferred Stock 35 Restricted Paymetns . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Optional Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Consolidation, Merger and Sale of Assets . . . . . . . . . . . . . . . . 40 Modification and Waiver . . . . . . . . . . . . . . . . . . . . . . . . . 41 Repurchase at Option of Holders Upon a Repurchase Event . . . . . . . . . 41 Satisfaction and Discharge. . . . . . . . . . . . . . . . . . . . . . . . 43 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Information Concerning the Trustee. . . . . . . . . . . . . . . . . . . . 43 DESCRIPTION OF CAPITAL STOCK. . . . . . . . . . . . . . . . . . . . . . . . 45 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Class B Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Class A Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Delaware Anti-Takeover Law. . . . . . . . . . . . . . . . . . . . . . . . 46 Limitation of Liability and Indemnification Matters . . . . . . . . . . . 47 Special Voting Requirements . . . . . . . . . . . . . . . . . . . . . . . 47 Transfer Agent and Registrar. . . . . . . . . . . . . . . . . . . . . . . 48 INCORPORATION OF DOCUMENTS BY REFERENCE . . . . . . . . . . . . . . . . . . 49 INFORMATION AND LETTER OF TRANSMITTAL REQUESTS. . . . . . . . . . . . Back Cover (iii) SUMMARY TERM SHEET ------------------ Through this Offering Circular and the enclosed Letter of Transmittal, we are offering to exchange $1,000 principal amount of our 8 1/4% Limited Convertible Senior Subordinated Notes due March 1, 2012 (the "New Notes") for each $1,000 principal amount of our 7 1/2% Convertible Subordinated Notes due December 1, 2006 (the "Old Notes") for tenders of no less than an aggregate of $4,000,000 and up to $15,000,000 principal amount of the outstanding Old Notes. The following are some of the questions you may have as a Holder of the Old Notes and answers to those questions. The following summary highlights selected information from this Offering Circular, but may not contain all the information you will need to make a decision regarding whether or not to tender your Old Notes and accept our New Notes in exchange. This Offering Circular includes specific terms of the Exchange Offer including a description of the New Notes, the Old Notes and some financial data. We encourage you to carefully read this Offering Circular and the related documents to which we refer you in their entirety, including the discussion of risks and uncertainties affecting our business included in the section of the Offering Circular entitled "Risk Factors" beginning on page 13. Who Is Making the Exchange Offer? Trans-Lux Corporation, a Delaware corporation, is making the Exchange Offer. We are a worldwide full-service provider of integrated multimedia systems for communication environments. The essential elements of these systems are the real-time, programmable electronic information displays we manufacture, distribute and service. Those displays are designed to meet the evolving communication needs of both the indoor and outdoor markets and are used primarily in applications for financial, banking, gaming, corporate, transportation, entertainment and sports industries and markets. In addition to our display business, we own and operate a chain of motion picture theatres in the western Mountain States. Founded 84 years ago, we are the oldest listed company on the American Stock Exchange, where our common stock has traded under the symbol "TLX" since 1925. Our headquarters are located at 110 Richards Avenue, Norwalk, Connecticut 06856-5090, our telephone number is (203) 853-4321 and our website address is www.trans-lux.com. For more information concerning Trans-Lux, see the section of this Offering Circular entitled, "Incorporation of Documents by Reference." Neither we nor any of our subsidiaries or any of our other affiliates or directors had any transactions in Old Notes in the two year period preceding the Exchange Offer. What Class and Amounts of Securities Are Sought in the Exchange Offer? We are offering to exchange our New Notes for minimum tenders of an aggregate of $4,000,000 and up to a maximum of $15,000,000 of our outstanding Old Notes, representing 49.7% of our currently outstanding $30,177,000 principal amount of our Old Notes. The Exchange Offer is subject to our right to extend the Exchange Offer in our sole and absolute discretion and amend or terminate the Exchange Offer if the conditions set forth in this Offering Circular entitled, "The Exchange Offer-Conditions of the Exchange Offer" are not satisfied. If the maximum $15,000,000 principal amount of Old Notes is tendered pursuant to the Exchange Offer, we will issue $15,000,000 principal amount of New Notes. If the minimum amount of Old Notes is not tendered, we will terminate the Exchange Offer and return any Old Notes which are tendered. If more than an aggregate of $15,000,000 of Old Notes is tendered, we will accept them on a pro rata basis. We also reserve the right to amend the Exchange Offer and accept all tendered Old Notes if less than the aggregate of $4,000,000 minimum or more than the aggregate of $15,000,000 maximum are tendered. For more information regarding the terms of the Exchange Offer, see the section of the Offering Circular entitled "The Exchange Offer." 1 What Securities Is Trans-Lux Offering to Issue in Exchange for My Old Notes? We are offering to issue $1,000 principal amount of our 8 1/4% Limited Convertible Senior Subordinated Notes due 2012 for each $1,000 principal amount of our 7 1/2% Convertible Subordinated Notes due 2006 that is properly tendered and not withdrawn subject to the maximum and minimum limitations of the Exchange Offer. On February 20, 2004, the day before commencement of the Exchange Offer, the last reported price of the Old Notes on the American Stock Exchange was $100.00 per Old Note the last reported price of our Common Stock into which the Old Notes are convertible was $7.03 share. The 8 1/4% Limited Convertible Senior Subordinated Notes have the following characteristics. -- An annual rate of 8.25% or $82.50 annually per $1,000 principal amount, payable semi-annually. -- Convertible into 111 shares of our Common Stock for each $1,000 principal amount of New Notes or a conversion rate of $9.00 per share up to and including March 1, 2007, after which the New Notes will no longer be convertible into Common Stock. -- The New Notes are senior in payment to the Old Notes and other Subordinated Indebtedness of Trans- Lux not ranking equal to the New Notes, but are subordinated in payment to all Senior Indebtedness (as defined in the section entitled "Description of New Notes-Subordination" upon its occurrence of any liquidation (voluntary or otherwise), dissolution or winding up of Trans-Lux. -- Payable upon maturity on March 1, 2012 unless earlier redeemed by Trans-Lux or converted into Common Stock prior to March 1, 2007. -- No restrictions on issuance of additional indebtedness, issuance of referred stock or restricted payments. -- Not subject to any sinking fund. -- Redeemable at the option of Trans-Lux at any time after March 1, 2006 at 102% of principal amount ($1,020 per $1,000 principal amount) declining to 101% on March 1, 2007, and 100% on or after March 1, 2008. -- Not secured. If you tender Old Notes in this Exchange Offer, and the Exchange Offer is consummated, you will receive the interest on the Old Notes at the annual rate of 7 1/2% through the Expiration Date and thereafter receive interest on the New Notes from date of issuance payable on the March 1 and September 1 semi- annual interest payment dates. For more information describing the New Notes, see the section of this Offering Circular entitled "Description of New Notes." How Do the Terms of the New Notes Compare to the Terms of the Old Notes? Following is a comparison of the New Notes and the Old Notes: -- The interest rate of the New Notes is 8.25% per annum, while the Old Notes have an interest rate of 7.50% per annum. -- The conversion rate on the New Notes is $9.00 per share per $1,000 principal amount or 111 shares of Common Stock, while the conversion rate on the Old Notes is $14.013 per $1,000 principal amount or 71 shares of Common Stock. The New Notes are convertible until March 1, 2007, while the Old Notes are convertible until December 1, 2006, their maturity date. 2 -- The New Notes are redeemable by the Company after March 1, 2006 at 102% of principal amount, declining to 101% on March 1, 2007, and 100% on March 1, 2008 and thereafter, and at maturity, respectively, while the Old Notes are currently redeemable at 101.875%, declining to 101.938% on December 1, 2004, and 100% on December 1, 2005 and thereafter, and at maturity. -- The New Notes are senior in payment to the Old Notes in the event of liquidation, dissolution or winding up of the Company. -- The New Notes do not restrict the incurrence of additional indebtedness, issuance of preferred stock or restricted payments, while the Old Notes do have restrictions on incurrence of additional indebtedness, issuance of preferred stock and restricted payments. -- Neither the New Notes nor the Old Notes have a sinking fund for the purpose of retiring any part of such indebtedness prior to maturity. What Is the Purpose of the Exchange Offer? The Board of Directors believes implementation of the Exchange Offer at this time when the trading price of the Common Stock is substantially below the $14.013 conversion price of Old Notes would enable it to provide longer term financing. It would also eliminate future potential dilution after March 1, 2007 when the New Notes are no longer convertible. What Does the Trans-Lux Board of Directors Think of the Exchange Offer? While directors who own an aggregate of $110,000 of Old Notes have indicated they will tender their Old Notes, our Board of Directors is not making any recommendations regarding whether you should tender your Old Notes in the Exchange Offer and, accordingly, you must make your own determination as to whether to tender your Old Notes and receive the New Notes we propose to issue in exchange. We urge you to make your own decision by carefully reading this Offering Circular and the other documents to which we refer, including the discussion entitled "Risk Factors." Does the Board of Directors Believe the Exchange Offer is Fair to Unaffiliated Security Holders? No director dissented or abstained in the vote. The Board of Directors believes the transaction is fair because Holders are being offered a higher rate of interest, extended maturity of their debt securities and New Notes which are senior to the Old Notes in the event of bankruptcy, liquidation or reorganization in exchange for acceptance of removal of the conversion feature after March 1, 2007. The Board of Directors used their best judgment to select the interest rate based on prevailing interest rates and likewise selected the extended maturity in light of maturities of note issues and believes approximately 8 years extension to be an appropriate time frame. We believe the Exchange Offer is fair because Old Noteholders have the right to reject the Exchange Offer and are not forced to accept the New Notes. We did not consider net book value, going concern value, liquidation value or purchase price of previous Old Notes by us or Affiliates in determining the fairness thereof, nor did we receive any firm offers by unaffiliated persons for a merger of Trans-Lux with another person or sale of all or substantially all our assets to another person or for sale of control of Trans-Lux during the past 18 months. No approval of a majority or unaffiliated security holders is required for the Exchange Offer. No unaffiliated representative has been retained to negotiate the terms of the Exchange Offer and/or prepare a report concerning the fairness of the transaction. What Risks Should I Consider In Deciding Whether or Not to Tender My Old Notes? In deciding whether to participate in the Exchange Offer, you should carefully consider the discussion of risks and uncertainties affecting our business in the section of this Offering Circular entitled "Risk Factors." 3 Are We Able to Issue the New Notes? Yes. The New Notes we propose to issue in the Exchange Offer do not require stockholder approval. The Exchange Offer also is not prohibited by terms of our principal loan and security agreement which was entered into in February, 2003, and the amount to be issued does not exceed limitations on Indebtedness in the Indenture governing the Old Notes. The Exchange Offer is being made in reliance on the exemption from registration provided by Section 3(a)(9) of the Securities Act of 1933, as amended ("Securities Act") and the New Notes have not been registered with the Securities and Exchange Commission ("SEC"). Accordingly, we are not required to have an effective registration statement on file with the SEC to register the issuance of New Notes in the Exchange Offer, and, as a result, the issuance of the New Notes need not be delayed pending SEC review of a registration statement. Therefore, provided that none of the events set forth in the section of this Offering Circular entitled "The Exchange Offer-Conditions of the Exchange Offer" has occurred and unless terminated by us, we intend to issue New Notes for properly tendered Old Notes promptly following the expiration of the Exchange Offer. For more information concerning the timing of the issuance of the New Notes in the Exchange Offer, see the section of this Offering Circular entitled "The Exchange Offer-Acceptance of Tenders of Old Notes; Delivery of New Notes." What are the Conditions of the Exchange Offer? The Exchange Offer is being made in reliance on the exemption from registration provided by Section 3(a)(9) of the Securities Act and has not been registered with the SEC. The Exchange Offer is subject to a number of customary conditions, any or all of which we may waive. If any of these conditions are not satisfied, we will not be obligated to accept and exchange any properly tendered Old Notes. For more information regarding the conditions of the Exchange Offer, see the section of this Offering Circular entitled, "The Exchange Offer-Conditions of the Exchange Offer." Will Trans-Lux Receive Any Cash Proceeds From the Exchange Offer? No. We will not receive any cash proceeds from the Exchange Offer. How long do I have to Decide Whether to Tender? You will have until 5:00 p.m., New York City time, on March 31, 2004 to tender your Old Notes. If you cannot deliver your Old Note Certificates and the other documents required to make a valid tender by that time, you may be able to use a guaranteed delivery procedure. For more information regarding the time period for tendering your Old Notes, including the use of a guaranteed delivery procedure, see the sections of this Offering Circular entitled "The Exchange Offer-Terms of the Exchange Offer; Terms and Conditions of the Letter of Transmittal" and "How to Tender Old Notes." Can the Exchange Offer be Extended or Amended and Under What Circumstances? We can extend the Exchange Offer in our sole and absolute discretion, and we reserve the right to do so. During an extension of the Exchange Offer, Old Notes that were previously tendered and not withdrawn will remain subject to the extended Exchange Offer. In addition, we expressly reserve the right to amend the Exchange Offer, and not to accept any Old Notes if any of the events described in the section of this Offering Circular entitled "The Exchange Offer-Conditions of the Exchange Offer" are not satisfied. For more information regarding our right to extend or amend the Exchange Offer, see the sections of this Offering Circular entitled "The Exchange Offer-Terms of the Exchange Offer," and "How to Tender Old Notes." 4 How Will I be Notified if the Exchange Offer is Extended or Amended? If we extend or amend the Exchange Offer, we will issue a press release or another form of public announcement. In the case of an extension, a release or announcement will be issued no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date of the Exchange Offer. For more information regarding notification of extensions or amendments of the Exchange Offer, see the section of this Offering Circular entitled "The Exchange Offer-Terms of the Exchange Offer," and "Expiration and Extension of the Exchange Offer." How do I Tender my Old Notes? If Old Notes are held in certificated form, they must be tendered by delivering the certificates representing your Old Notes, together with a completed Letter of Transmittal and any other documents required by the Letter of Transmittal, to the Exchange Agent, not later than the time the Exchange Offer expires. If the Old Notes are held in street name (that is, through a broker, dealer or other nominee), the Old Notes can be tendered by your nominee through The Depository Trust Company, or DTC. If your Old Notes are held by a broker, you should receive instructions from your broker on how to participate in the Exchange Offer. If you do not receive instructions, you should contact your broker. If you cannot provide the Exchange Agent with all of the required documents prior to the expiration of the Exchange Offer, you may obtain additional time to do so by submitting a notice of guaranteed delivery to the Exchange Agent, which must be certified by a broker, bank or other fiduciary that is a member of the Securities Transfer Agent Medallion Program or another eligible institution guarantee. You are also required to guarantee that these items will be received by the Exchange Agent within three American Stock Exchange trading days, and for your tender to be valid, the Exchange Agent must receive the missing items within that three trading-day period. For more information regarding the procedures for tendering your Old Notes, see the section of this Offering Circular entitled "The Exchange Offer-How to Tender Old Notes." Can I Tender Only a Portion of my Old Notes? Yes. This is a voluntary Exchange Offer, which means that you may tender some, all or none of your Old Notes in the Exchange Offer. If you have a certificate that represents more than the principal amount of Old Notes you wish to tender, you may specify on the Letter of Transmittal how much principal amount of Old Notes is to be tendered and how much is to be returned to you. Any amount that you are not tendering but that is represented by certificates sent in to the Exchange Agent will be returned to you. See "The Exchange Offer- How to Tender Old Notes." What Should I do if I Want to Retain my Old Notes? Nothing, if you are not tendering any of your Old Notes in the Exchange Offer. However, if you are tendering some, but not all, of your Old Notes in the Exchange Offer, and the amount you wish to tender is represented by the same certificate as the amount you wish to retain, you will need to give certain instructions to the Exchange Agent as provided for in the instructions to the Letter of Transmittal. What Happens if More Than $15,000,000 Principal Amount of Old Notes is Tendered? If more than an aggregate of $15,000,000 principal amount in Old Notes is tendered in the Exchange Offer, all Old Notes that are validly tendered will be accepted for exchange on a pro rata basis. Proration will be based on the amount of Old Notes that each Holder has tendered in the Exchange Offer, and not on that Holder's aggregate ownership of Old Notes. Any Old Notes not accepted for exchange as a result of proration will be returned to tendering Holders. 5 When Will I Receive the New Notes in Exchange for my Old Notes? Subject to the satisfaction or waiver of all conditions of the Exchange Offer, and assuming we have not previously elected to withdraw or amend the Exchange Offer, we will accept for exchange your Old Notes that are properly tendered and not withdrawn prior to the expiration of the Exchange Offer at 5:00 p.m., New York City time, on March 31, 2004. Promptly following this date, New Notes will be delivered in exchange for Old Notes, up to the maximum amount we are offering to exchange. For more information regarding our obligation to issue the New Notes in exchange for tendered Old Notes, see the section of this Offering Circular entitled "The Exchange Offer-Acceptance of Tenders of Old Notes; Delivery of New Notes." What Happens if my Old Notes are not Accepted for Exchange? If we decide for any reason not to accept any Old Notes, we will return the Old Notes to the registered Holder at our expense promptly after the expiration or termination of the Exchange Offer. For more information regarding the withdrawal of tendered Old Notes, see the sections of this Offering Circular entitled "The Exchange Offer-Terms of Exchange Offer; Withdrawal of Tenders." Until When may I Withdraw Previously Tendered Old Notes? You may withdraw previously tendered Old Notes at any time until the Exchange Offer has expired. If we have not agreed to accept your Old Notes for exchange by March 31, 2004, you may withdraw them at any time after that date until we accept your Old Notes for exchange. For more information regarding your right to withdraw tendered Old Notes, see the section of this Offering Circular entitled "The Exchange Offer-Withdrawal of Tenders." How do I Withdraw Previously Tendered Old Notes? To withdraw previously tendered Old Notes you are required to deliver, which you may do by facsimile, a written notice of withdrawal to the Exchange Agent, with all the information required by the notice of withdrawal. For more information regarding the procedures for withdrawing tendered Old Notes, see the section of this Offering Circular entitled "The Exchange Offer-Withdrawal of Tenders." What are the United States Federal Income Tax Consequences to me if I Participate in the Exchange Offer? In general, the exchange of Old Notes for New Notes should constitute a tax-free recapitalization for Federal income tax purposes. No gain or loss should be recognized by exchanging Old Notes as a result of their exchange. (See the section of this Offering Circular entitled "The Exchange Offer-Tax Consequences.") Will the New Notes be Listed for Trading? We anticipate that the New Notes will be traded in the over-the-counter market after issuance. We intend to apply for listing of the New Notes on the American Stock Exchange ("AMEX"). No assurance can be given that such New Notes will be listed on such Exchange. The Old Notes are listed on the AMEX. If, as a result of this Exchange Offer the principal amount of the Old Notes or the distribution and number of holders of such Old Notes should fall below such Exchange's minimum standards for listed securities, the Old Notes might be delisted by the AMEX, in which event it would be likely that the Old Notes would be traded in the over-the-counter market, see "The Exchange Offer- Subsequent Trading in Securities Exchanged." 6 Who can I talk to if I have Questions about the Exchange Offer? If you have questions regarding the information in this Offering Circular or the Exchange Offer, contact Ms. Angela D. Toppi, Secretary at (203) 853-4321 or atoppi@trans-lux.com. If you have questions regarding the procedures for tendering in the Exchange Offer or require assistance in tendering your Old Notes, contact the Exchange Agent. If you would like additional copies of this Offering Circular, our Quarterly Report for the period ended September 30, 2003 our 2002 Annual Report, or our Annual Meeting Proxy Statement, contact either Ms. Toppi or the Exchange Agent. Additional, this Offering Circular, the Letter of Transmittal and other documents sent to Holders are filed with the SEC and are available at no charge at the SEC's website at http://www.sec.gov. You can call the Exchange Agent at (612) 667-7390. You can also write to the Exchange Agent at the addresses listed on the back cover page of this Offering Circular. For more information regarding Trans-Lux, see the section of this Offering Circular entitled "Incorporation of Documents by Reference." You can also contact us at: Trans-Lux Corporation 110 Richards Avenue Norwalk, CT 06856-5090 Attention: Angela D. Toppi - Secretary Phone number: (203) 853-4321 Fax Number: (203) 866-9496 Email address: atoppi@trans-lux.com 7 TERMS OF THE EXCHANGE OFFER The following is a summary intended merely to supply, in non-technical terms, certain pertinent facts and highlights from material contained in the body of this Offering Circular. More detailed information may be found in the remainder of this Offering Circular, which investors should consider before making their investment decision. The Exchange Offer - ------------------ The Company offers hereunder $1,000 principal amount of its 8 1/4% Limited Convertible Senior Subordinated Notes due March 1, 2012 ("New Notes") in exchange for each $1,000 principal amount of its 7 1/2% Convertible Subordinated Notes due December l, 2006 ("Old Notes"). New Notes Old Notes --------- --------- Type $1,000 principal amount of 8 1/4% $1,000 principal amount of 7 1/2% Limited Convertible Senior Convertible Subordinated Notes Subordinated Notes Aggregate Principal Amount $15,000,000 (if maximum of Old $30,177,000 (outstanding) Notes are exchanged) Annual Interest $82.50 for each $1,000 principal $75.00 for each $1,000 principal amount amount Maturity Date March l, 2012 December l, 2006 Subordination Provisions Subordinated to all Senior Subordinated to all Senior Indebtedness and Senior to Old Indebtedness and New Notes Notes Conversion Provisions Each $1,000 New Note is Each $1,000 Old Note is convertible into 111 shares of convertible into 71 shares of Common Stock at a conversion rate Common Stock at a conversion of $9.00 per share up through price of $14.013 per share until March 1, 2007 December 1, 2006 Optional Redemption Redemable by the Company at any Redeemable by the Company at any time, including time after Mach 1, 2006 at l02% currently at 101.875% and of principal amount, declining and eventually declining to to 101% on March 1, 2007 and 100% on December 1, 2005 declining to 100% on March 1, 2008 Restriction Provisions None Restriction on incurrence of additional indebtedness, issuance of preferred stock and restricted payments Sinking Fund None None Security None None Listing Application will be made to list on American Stock Exchange the American Stock Exchange
8 The Company is offering to exchange for a minimum of $4,000,000 and maximum of $15,000,000 principal amount of its outstanding Old Notes, see the section of this Offering Circular entitled "The Exchange Offer-Conditions of the Exchange Offer." 9 SUMMARY HISTORICAL AND PRO FORMA FINANCIAL INFORMATION SUMMARY CONSOLIDATED FINANCIAL DATA The following table sets forth summary consolidated financial data of Trans-Lux as of and for each of the periods indicated. We derived the consolidated financial data as of and for the nine months ended September 30, 2003 and 2002 from our unaudited consolidated financial statements. We derived the consolidated financial data as of and for each of the annual periods presented from our audited consolidated financial statements. This information is only a summary and you should read it in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the historical consolidated financial statements, and the related schedules and notes, contained in Trans-Lux's Annual Report on Form 10-K, which is incorporated by reference herein and Quarterly Reports on Form 10-Q and other information that Trans-Lux has filed with the SEC. See "Incorporation of Documents by Reference" on page 49. Consolidated Statement of Operations Data (in thousands, except per share data) Nine Months Ended September 30 Fiscal Year Ended December 31 ------------ ----------------------------- 2003 2002 2002 2001 2000 ---- ---- ---- ---- ---- Total revenues......................... $44,211 $58,164 $74,891 $70,171 $66,763 Gross profit from operations........... 11,971 16,608 21,038 23,536 20,789 Income (loss) before income taxes...... and income from joint venture.......... 1,491 ( 128) ( 161) 665 (3,451) Net income (loss)...................... 938 291 428 509 (2,231) Earnings (loss) per share Basic................................ $ 0.74 $ 0.23 $ 0.34 $ 0.40 $ (1.77) Diluted.............................. $ 0.54 $ 0.23 $ 0.34 $ 0.40 $ (1.77) Dividends per share: Common............................... $ 0.105 $ 0.105 $ 0.140 $ 0.140 $ 0.140 Class B.............................. $0.0945 $0.0945 $ 0.126 $ 0.126 $ 0.126 Other Financial Data: Calculation of earnings before interest, taxes, depreciation and amortization (EBITDA): Net income (loss).................... 938 291 428 509 (2,231) Interest expense, net................ 2,891 3,322 4,401 5,375 5,535 Provisions for income taxes.......... 976 238 212 553 ( 867) Depreciation and amortization........ 7,533 7,594 10,247 10,067 9,532 ------- ------- ------- ------- -------- EBITDA................................. $12,338 $11,445 $15,288 $16,504 $11,969 Capital expenditures................... 2,969 4,483 6,375 8,856 18,315 Depreciation and amortization.......... 7533 7,594 10,247 10,067 9,532 Cash flow provided by (used in): Operating activities................ 2722 3,930 9,198 8,184 6,559 Investing activities................ 3,826 (3,722) (4,842) (7,699) (8,957) Financing activities................ (2,983) ( 240) (1,785) 1,294 2,667 Net book value per share-basic......... 19.08 18.85 18.26 18.69 18.79 Net book value per share-diluted....... 15.88 15.80 15.58 15.74 15.78
10 Ratio of Earnings to Fixed Charges Nine Months Ended September 30 Fiscal Year Ended December 31 ------------ ----------------------------- 2003 2002 2002 2001 ---- ---- ---- ---- Ratio of earnings to fixed charges..... 1.13 1.19 1.61 1.15
Consolidated Balance Sheet Data (in thousands) Nine Months Ended September 30 Fiscal Year Ended December 31 ------------ ----------------------------- 2003 2002 2002 2001 ---- ---- ---- ---- Cash and cash equivalents............. $ 11,835 $ 5,667 $ 8,270 $ 5,699 Total assets.......................... 102,912 114,042 110,974 113,897 Long-term debt........................ 60,988 67,002 67,209 69,250 Stockholders' equity.................. 24,055 23,765 3,025 23,568
11 CAPITALIZATION The following table summarizes the Company's debt and stockholders' equity at September 30, 2003: September 30, 2003 Actual As Adjusted (in thousands) ------ ----------- (1) Short-term debt: Current portion of long-term debt.................................... $ 2,979 $ 2,979 ======== ======== Long-term debt(2): Notes payable........................................................ $ 29,754 $ 29,754 Subordinated notes: 7 1/2% convertible subordinated notes due 2006....................... 30,177 15,177 8 1/4% limited convertible senior subordinated notes due 2012........ --- 15,000 9 1/2% subordinated debentures due 2012.............................. $ 1,057 $ 1,057 -------- -------- Total long-term debt and subordinated notes.......................... $ 63,967 $ 63,967 ======== ======== Stockholders' equity: Preferred stock, par value $l.00 (authorized 500,000 shares; issued 0 shares) Common Stock, par value $1.00 (authorized 5,500,000 shares; issued 2,452,900 shares)............... $ 2,453 $ 2,453 Class B Stock par value $1.00 (authorized 1,000,000 shares; issued 287,505 shares)................. 287 287 Additional paid-in capital.............................................. 13,901 13,901 Retained earnings....................................................... 20,417 20,417 Accumulated other comprehensive loss.................................... ( 1,166) ( 1,166) Treasury stock at cost (1,479,688 shares)(3)............................ (11,837) (11,837) Total stockholders'equity............................................... 24,055 24,055 --------- -------- Total capitalization................................................. $ 88,022 $ 88,022 ========= ======== _______ (1) Adjusted to reflect the exchange of $15,000,000 principal amount of Old Notes for $15,000,000 principal amount of New Notes. (2) For information as of December 31, 2002 regarding the Company's long-term debt, commitments and contingencies, see Notes 10 and 15 of Notes to Consolidated Financial Statements which is incorporated by reference herein.. (3) Excludes additional 287,505 shares of Common Stock held for conversion of Class B Stock.
12 RISK FACTORS You should carefully consider the Risk Factors set forth below, as well as the other information appearing in this Offering Circular and the documents to which we refer you, including those incorporated by reference, before deciding whether or not to exchange your Old Notes for New Notes. Leverage As of September 30, 2003, without adjusting for the issuance of the New Notes on a dollar for dollar exchange for Old Notes, our total long-term debt (including current portion) was $64.0 million. We expect we will incur indebtedness in addition to the New Notes in connection with the implementation of our growth strategy. The Indenture governing the New Notes does not restrict the ability of us, or our subsidiaries, to incur additional indebtedness, including Senior Indebtedness. Additional indebtedness of the Company may rank senior or pari passu with the New Notes in certain circumstances, while additional indebtedness of our subsidiaries will rank effectively senior to the New Notes. See "Description of New Notes." Our ability to satisfy our obligations will be dependent upon our future performance, which is subject to prevailing economic conditions and financial, business and other factors, including factors beyond our control. There can be no assurance that our operating cash flows will be sufficient to meet our debt service requirements or to repay the New Notes at maturity or that we will be able to refinance the New Notes or other indebtedness at maturity. See "Management's Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources." Subordination The New Notes are senior to the Old Notes in the event of bankruptcy, liquidation or reorganization. The New Notes will be unsecured senior subordinated obligations of the Company and will be subordinated in right of payment to all present and future Senior Indebtedness and other liabilities of the Company and will be effectively subordinated to all indebtedness and other liabilities of our subsidiaries. In the event of our bankruptcy, liquidation or reorganization, our assets will be available to pay obligations on the New Notes only after all Senior Indebtedness has been paid in full, and there may not be sufficient assets remaining to pay amounts due on any or all of the New Notes then outstanding. The Holders of any indebtedness of our subsidiaries will be entitled to payment of the indebtedness from the assets of the subsidiaries prior to the holders of any general unsecured obligations of the Company, including the New Notes. At September 30, 2003, we had approximately $17.4 million of outstanding Senior Indebtedness and our subsidiaries had indebtedness and other liabilities of approximately $21.2 million. In the event of a payment default with respect to Senior Indebtedness, no payments may be made on account of the New Notes until such default no longer exists with respect to our Senior Indebtedness. See "Description of New Notes" and "Management's Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources." Risks Related to a Repurchase Event Upon the occurrence of a Repurchase Event, each Holder of the New Notes may require us to repurchase all or a portion of such Holder's New Notes. If a Repurchase Event were to occur, there can be no assurance that we would have sufficient financial resources, or would be able to arrange financing, to pay the repurchase price for all the New Notes tendered by Holders thereof. In addition, the occurrence of certain Repurchase Events could constitute an event of default under certain of our current debt agreements, and our repurchase of the New Notes as a result of the occurrence of a Repurchase Event may be prohibited or limited by, or create an event of default under, the terms of future agreements relating to our borrowings of, including agreements relating to Senior Indebtedness. In the event a Repurchase Event occurs at a time when we are prohibited from purchasing the New Notes, we could seek the consent of our lenders to purchase the New Notes or could attempt to refinance the borrowings that contain such prohibition. If we do not obtain such a consent or repay such borrowings, we would remain prohibited from purchasing the New Notes. In such case, our failure to purchase tendered New Notes would constitute an Event of Default under the Indenture which would, in turn, constitute a further default under certain of our existing debt agreements and may constitute a default under the terms of other indebtedness that we 13 may incur from time to time. In such circumstances, the subordination provisions in the Indenture would prohibit payments to the Holders of the New Notes. See "Description of New Notes-Repurchase at Option of Holders Upon a Repurchase Event." Reliance on Key Suppliers We design certain of our materials to match components furnished by suppliers. If such suppliers were unable or unwilling to provide us with those components, we would have to contract with other suppliers to obtain replacement sources. In particular, we purchase almost all of the LED module blocks used in our electronic information displays from a single supplier. We do not have a long-term supply contract with this supplier. A change in suppliers of either LED module blocks or certain other components may result in engineering design changes, as well as delays in obtaining such replacement components. We believe there are presently other qualified vendors of these components. Our inability to obtain sufficient quantities of certain components as required, or to develop alternative sources at acceptable prices and within a reasonable time, could result in delays or reductions in product shipments that could have a materially adverse effect on our business and results of operations. Competition Our electronic information displays compete with a number of competitors, both larger and smaller than us, and with products based on different forms of technology. In addition, there are several companies whose current products utilize similar technology and who possess the resources to develop competitive and more sophisticated products in the future. Our success is somewhat dependent upon our ability to anticipate technological changes in the industry and to successfully identify, obtain, develop and market new products that satisfy evolving industry requirements. There can be no assurance that competitors will not market new products which have perceived advantages over our products or which, because of pricing strategies, render the products currently sold by us less marketable or otherwise adversely affect our operating margins. Our motion picture theatres are subject to varying degrees of competition in the geographic areas in which they operate. In one geographical area, theatres operated by national circuits compete with our theatres. Our theatres also face competition from all other forms of entertainment competing for the public's leisure time and disposable income. Nature of Leasing and Maintenance Revenues We derive a substantial percentage of our revenues from the leasing of our electronic information displays, generally pursuant to leases which generally have an average term of three years. Consequently, our future success is at least partly dependent on our ability to obtain the renewal of existing leases or to enter into new leases as existing leases expire. We also derive a significant percentage of our revenues from maintenance agreements relating to our display products. The average term of such agreements is generally three to five years. A portion of the maintenance agreements are cancelable upon 30 days notice. There can be no assurance that we will be successful in obtaining renewal of existing leases or maintenance agreements, obtaining replacement leases or realizing the value of assets currently under leases that are not renewed. Dependence on Key Personnel We believe that our President and Co-Chief Executive Officer, Michael R. Mulcahy and our Co-Chief Executive Officer and Executive Vice President, Thomas Brandt, play a significant role in the success of the Company and the loss of the services of either could have an adverse effect on the Company. There can be no assurance that the Company would be able to find a suitable replacement for either Mr. Mulcahy or Mr. Brandt. The Company has employment agreements with Mr. Mulcahy and Mr. Brandt which expire in 2005. The Company believes that in addition to the above referenced key personnel, there is a core group of executives that also plays a significant role in the success of the Company. 14 Effect of Certain Anti-Takeover Provisions and Control by Existing Stockholders Our Restated Certificate of Incorporation contains certain provisions that could have the effect of making it more difficult for a third party to acquire, or of discouraging a third party from attempting to acquire control of us. Such provisions could limit the price that certain investors might be willing to pay in the future for shares of our Common Stock, thus making it less likely that a stockholder will receive a premium on any sale of shares. Under our Restated Certificate of Incorporation, we have two classes of common stock outstanding, Common Stock and Class B Stock, each with its own rights and preferences. Each share of Class B Stock receives ten votes per share on all matters submitted to a vote of the stockholders versus the one vote received for each share of Common Stock. The Class B Stock is entitled to vote separately as a class on any proposal for the merger, consolidation and certain other significant transactions. See "Description of Capital Stock-Common Stock" and "Class B Stock." Moreover, our Board of Directors is divided into three classes, each of which serves for a staggered three-year term, making it more difficult for a third party to gain control of our Board. Our Restated Certificate of Incorporation also has a provision that requires a four-fifths vote on any merger, consolidation or sale of assets with or to an "Interested Person" or "Acquiring Person." Additionally, we are authorized to issue 500,000 shares of Preferred Stock containing such rights, preferences, privileges and restrictions as may be fixed by our Board of Directors which may adversely affect the voting power or other rights of the holders of Common Stock or delay, defer or prevent a change in control of the Company, or discourage bids for the Common Stock at a premium over its market price or otherwise adversely affect the market price of the Common Stock. See "Description of Capital Stock-Preferred Stock." Our Board of Directors is also authorized to issue 3,000,000 shares of Class A Stock which is identical to the Common Stock but is non-voting and is entitled to a 10% higher dividend than the Common Stock. See "Description of Capital Stock-Class A Stock." As of December 31, 2003, 15 stockholders, who are executive officers and/or directors of the Company beneficially own approximately 78.99% of our outstanding Class B Stock, 18.01% of all classes and 59.01% of the voting power. As a result, these stockholders collectively will continue to have the ability to elect all of our directors and to veto major transactions for which a stockholder vote is required under Delaware law, including mergers, consolidations and certain other significant transactions. These stockholders could also block tender offers for our Common Stock that could give stockholders the opportunity to realize a premium over the then prevailing market price for their shares of Common Stock. Absence of Public Market for the New Notes The New Notes are a new issue of securities for which there is currently no public market. Although the New Notes may be approved for listing on the AMEX if we satisfy present minimum listing requirements of $5,000,000 principal amount of New Notes, there is no assurance as to the liquidity of the market for the New Notes that may develop, the ability of the Holders to sell their New Notes or the prices at which Holders of the New Notes would be able to sell their New Notes. If a market for the New Notes does develop, the New Notes may trade at a discount from their face value of $1,000, depending on prevailing interest rates, the market for similar securities, or performance, the market price of our Common Stock and other factors. There is no assurance that an active trading market will develop or be maintained for the New Notes. Limited Trading Volume and Volatility of Stock Price Our Common Stock is not widely held and the volume of trading has been low and sporadic. Accordingly, the Common Stock is subject to increased price volatility and reduced liquidity. There can be no assurance a more active trading market for the Common Stock will develop, or be sustained if it does develop. The limited public float of our Common Stock could cause the market price for the Common Stock to fluctuate substantially. In addition, stock markets have experienced wide price and volume fluctuations in recent periods and these fluctuations often have been unrelated to the operating performance of the specific companies affected. Any of these factors could adversely affect the market price of the Common Stock. 15 Shares Eligible for Future Sale Future sales of Common Stock in the public market following the Exchange Offer by current stockholders of the Company could adversely affect the market price for the Common Stock. Following the Exchange Offer, 250,990 shares of Common Stock (including Class B Stock if converted into equal amounts of Common Stock) may be sold in the public market by executive officers and directors, subject to the limitations contained in Rule 144 under the Securities Act of 1933, as amended. Sales of substantial amounts of the shares of Common Stock in the public market, or even the potential for such sales, could adversely affect the prevailing market price of our Common Stock. 16 THE EXCHANGE OFFER Terms of the Exchange Offer Subject to the conditions described below, the Company hereof offers $1,000 principal amount of its 8 1/4% Limited Convertible Senior Subordinated Notes due 2012 ("New Notes") in exchange for each $1,000 principal amount of its 7 1/2% Convertible Subordinated Notes due 2006 ("Old Notes"). The Exchange Offer will expire 5:00 P.M., New York City time, on March 31, 2004 subject to extension by written notice by the Company to the Exchange Agent. Such date, as it may be extended, is herein referred to as the "Expiration Date." The Company is offering to exchange for up to $15,000,000 principal amount of $30,177,000 of its Old Notes presently outstanding. Tenders may be withdrawn at any time prior to 5:00 P.M., New York City time, on March 31, 2004 and at any time after April 23, 2004 if they have not been accepted by such date. We do not know whether or not Old Noteholders will find the Exchange Offer attractive and tender their Old Notes. However, executive officers and directors of the Company who own an aggregate of $110,000 of Old Notes have indicated they will tender their Old Notes. Principal Differences Between the New Notes and the Old Notes - ----------------- Interest. The New Notes will bear interest at the rate of 8.25% (or $82.50 -------- per $1,000 principal amount) per annum. The interest will accrue beginning on the Effective Date of the Exchange Offer. The Old Notes bear interest at the rate of 7.50% (or $75.00 per $1,000 principal amount) per annum, and, with respect to Old Notes tendered and exchanged, such interest will accrue to the Effective Date of the Exchange Offer. Such interest, to the extent so accrued, will be paid to exchanging Holders of Old Notes together with their certificates for New Notes. Limited Convertibility. Each $1,000 principal amount of the New Notes will ---------------------- be convertible into 111 Shares of our Common Stock at $9.00 per share, subject to adjustment under certain conditions, up to March 1, 2007. Each $1,000 principal amount of the Old Notes is convertible into 71 shares of our Common Stock at $14.013 per share, subject to adjustment under certain conditions, until maturity on December 1, 2006. See "Price Range of Old Notes and Common Stock and Dividends on Common Stock" for a description of recent market prices of the Old Notes and the Common Stock and "Description of Old Notes" for a description of conversion rights. Redemption and Sinking Funds. The New Notes may, at the Company's option, ---------------------------- be redeemed, in whole or in part, at any time after March 1, 2006, at 102% of the principal amount redeemed plus accrued interest and at rates declining to 100% on and after March 1, 2008. We have no present intention to redeem the New Notes. There is no sinking fund for the New Notes or the Old Notes. The Old Notes are redeemable, at our option in whole or in part, at a current redemption price equal to 101.875% of the principal amount redeemed plus accrued interest, and declining to 100% on and after December 1, 2005. Maturity. The New Notes will mature in 2012 which is subsequent to the -------- maturity of the Old Notes which mature in 2006. Subordination. The New Notes and the Old Notes are each subordinated to ------------- Senior Indebtedness. However, the respective indentures provide that as between themselves, the New Notes are senior to the Old Notes upon any distribution of the Company's assets upon any dissolution, winding up, liquidation, readjustment or reorganization of the Company or its property. See "Description of New Notes" and "Description of Old Notes." 17 Restrictions. The New Notes do not have any restriction on incurrence of ------------ additional indebtedness, issuance of preferred stock or restricted payments. The Old Notes have restrictions on incurrence of additional indebtedness, issuance of preferred stock and restricted payments. Security. The New Notes and the Old Notes are unsecured. -------- Subsequent Trading in Securities Exchanged - ------------------------------------------ It is anticipated that the New Notes will be traded in the over-the-counter market after issuance. The Company intends to apply for listing of the New Notes on the American Stock Exchange ("AMEX"). Eligibility for listing will depend primarily upon the total amount of New Notes issued pursuant to the Exchange Offer. The current requirements of the AMEX for the listing of an additional issue of debt securities are a principal amount outstanding of at least $5,000,000. No assurance can be given that the New Notes will be listed on such Exchange. The Old Notes are listed on the AMEX. If as a result of the Exchange Offer the principal amount of Old Notes or the distribution and number of Holders of such Old Notes should fall below the AMEX's minimum standards for listed Notes, such Old Notes might be delisted by the AMEX in which event it would be likely that the Old Notes would be traded in the over-the-counter market. The New Notes are issuable in denominations of $1,000 and integral multiples of $1,000. It is anticipated that New Notes in denominations of $1,000 will be traded in the over-the-counter market. In general, securities traded in the over-the-counter market may be subject to greater uncertainty with respect to such matters as marketability, eligibility for margin, and the cost of executing trades than is the case with securities listed on the AMEX. Purpose of the Exchange Offer The purpose of the Exchange Offer is to provide the Holders of the Old Notes an opportunity to receive a higher annual interest rate, a lower conversion rate, extension of the maturity of their debt securities, and subordination rights senior to the Old Notes in the event of bankruptcy, liquidation or reorganization in exchange for their acceptance of removal of the conversion feature of such debt securities in 2007, extending the maturity of the amount exchanged and removal of certain restrictions on the Company's issuance of additional indebtedness and preferred stock, repurchase of securities and payment of dividends. Tax Consequences - ---------------- With respect to the Federal income tax consequences of the exchange, the Company believes that (i) no gain or loss would be recognized by any Noteholder on the receipt of New Notes solely in exchange for Old Notes; (ii) the basis of the New Notes received by an exchanging Noteholder would be the same as such Noteholder's basis in the Old Notes surrendered in exchange therefor; and (iii) the holding period of the New Notes received by an exchanging Noteholder would include the period during which such Noteholder held the Old Notes surrendered in exchange therefor, provided the Old Notes surrendered constituted a capital asset in the exchanging Old Noteholder's hands as of the date of the exchange. Expiration and Extension of the Exchange Offer The Exchange Offer will expire at 5:00 P.M., New York City time, on March 31, 2004 unless extended by the Company. During any extension of the Exchange Offer, all Old Notes previously tendered pursuant to the Exchange Offer will remain subject to the Exchange Offer (and to the withdrawal rights specified herein) and may be accepted for exchange by the Company. The Exchange Offer may be extended by oral or written notice from the Company to the Exchange Agent at any time or from time to time on or prior to the date then fixed for the 18 expiration of the Exchange Offer. The date fixed for the expiration of the Exchange Offer, as it may be extended, is referred to as the "Expiration Date." Public announcement of any extension of the Exchange Offer will be timely made by the Company, but, unless otherwise required by law or regulation, the Company shall not have any obligation to communicate such public announcement other than by making a release to the Dow Jones News Service, the substance of which is carried over the Dow Jones Broad Tape. Conditions of the Exchange Offer Notwithstanding any other provisions of the Exchange Offer, or any extension of the Exchange Offer, the Company will not be required to issue New Notes in respect of any properly tendered Old Notes not accepted and may amend or terminate the Exchange Offer (by oral or written notice to the Exchange Agent and by timely public announcement communicated, unless otherwise required by applicable law or regulation, by making a release to the Dow Jones News Service, the substance of which is carried over the Dow Jones Broad Tape) if any material change occurs which is likely to affect the Exchange Offer or the value or market price of the Old Notes including, but not limited to the following: (a) there shall be instituted or threatened any action or proceeding before any court or governmental agency challenging the Exchange Offer or otherwise directly or indirectly relating to the Exchange Offer or otherwise affecting the Company; (b) there shall occur any development in any pending action or proceeding, which, in the sole judgment of the Company, would or might (i) have an adverse effect on the business of the Company, (ii) prohibit, restrict or delay consummation of the Exchange Offer, or (iii) impair the contemplated benefits of the Exchange Offer; (c) there shall occur any general suspension of, or limitation on prices for, trading in securities on the AMEX; (d) any statute, rule or regulation shall have been proposed or enacted, or any action shall have been taken by any governmental authority, which, in the sole judgment of the Company, would or might (i) have an adverse effect on the business of the Company, (ii) prohibit, restrict or delay consummation of the Exchange Offer, or (iii) impair the contemplated benefits of the Exchange Offer; or (e) there shall occur any change, or development involving a prospective change, which has had or may have a material adverse effect on the business of the Company or the Exchange Offer. The foregoing conditions are for the sole benefit of the Company and may be waived by the Company, in whole or in part, in its sole discretion. Any determination made by the Company concerning an event described or referred to above will be final and binding on all parties to the Exchange Offer. The Company expressly reserves the right to terminate or amend the Exchange Offer and not accept for exchange any Old Note upon the occurrence of any of the foregoing conditions. How to Tender Old Notes In order to tender certificates of Old Notes for exchange, the Old Noteholder must submit a Letter of Transmittal which is being mailed to Holders of record. A Letter of Transmittal may be requested by sending a written request to Ms. Angela D. Toppi, Secretary, Trans-Lux-Corporation. Letters of Transmittal may also be obtained by telephone request to Ms. Toppi at (203) 853-4321 or by email at atoppi@trans-lux.com. Upon receipt of the Letter of Transmittal, an Old Noteholder may tender Old Notes by (i) properly completing and signing the Letter of Transmittal or facsimile thereof (all references in this Offering Circular to the Letter of Transmittal shall be deemed to include a facsimile thereof) and delivering the same, together with the certificate(s) representing the principal amount of Old Notes being tendered to the Exchange Agent on or prior 19 to the Expiration Date, or (ii) requesting a broker, dealer, bank, trust company or other nominee to effect the transaction. If tendered Old Notes are registered in the name of the signer of the Letter of Transmittal and the New Notes to be issued in exchange therefor are to be issued in the name of the registered Holder and delivered to the address appearing on the Company's transfer books, the signature of such signer need not be guaranteed. If New Notes are to be issued in the name of a person other than the registered Holder of the certificate(s) of Old Notes tendered, the tendered certificate(s) must be endorsed or accompanied by bond powers or written instruments of transfer in form satisfactory to the Company and duly executed by the registered owner, and the signature on the endorsement or bond power must be guaranteed by a participation in a Securities Transfer Association recognized signature program (any of the foregoing hereinafter referred to as an "Eligible Institution"). If the New Notes are to be delivered to an address other than that of the registered Holder appearing on the Company's transfer books, the signature in the Letter of Transmittal must be guaranteed by an Eligible Institution. THE METHOD OF DELIVERY OF THE OLD NOTES AND ALL OTHER DOCUMENTS IS AT THE ELECTION AND RISK OF THE OLD NOTEHOLDER. IF SENT BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, RETURN RECEIPT REQUESTED BE USED, AND PROPER INSURANCE OBTAINED. For the convenience of Old Noteholders whose certificate(s) are not immediately available, tenders may be made without the concurrent deposit of certificate(s) if made through an Eligible Institution. In such case, the Letter of Transmittal must be received by the Exchange Agent prior to the Expiration Date and must contain a guarantee from an Eligible Institution that the tendered certificate(s) will be deposited within threee business days after the date of receipt of the Letter of Transmittal by the Exchange Agent and, if possible, should list the serial numbers of the tendered certificate(s). If an Old Noteholder desires to accept the Exchange Offer and time will not permit his or her Letter of Transmittal to reach the Exchange Agent before the Expiration Date, his or her tender may be effected if the Exchange Agent has received prior to such date a letter or facsimile transmission from an Eligible Institution setting forth the name of the tendering Old Noteholder, the principal amount tendered, the name(s) in which the Old Notes are registered and, if possible, the serial numbers of the certificate(s) to be tendered, and stating that the tender is being made thereby and guaranteeing that within three business days after the date of receipt of such letter or facsimile transmission by the Exchange Agent, the Old Note certificate(s) together with the Letter of Transmittal (and any other required documents), will be deposited by such Eligible Institution with the Exchange Agent. Unless certificates being tendered by either of the above- described methods are deposited with the Exchange Agent within the time periods set forth above (accompanied or preceded by a properly completed Letter of Transmittal), the Company may, at its option, reject that tender. A tender will be deemed to have been received by the Company as of the date when the tendering Old Noteholder's duly signed Letter of Transmittal accompanied by certificate(s) or a guarantee of delivery or a letter or facsimile transmission (as provided above) from an Eligible Institution is received by the Exchange Agent. Issuances of certificates for New Notes in exchange for Old Notes tendered pursuant to a guarantee of delivery or a letter or facsimile transmission (as provided above) by an Eligible Institution will be made only against deposit of the Letter of Transmittal (and any other required documents) and the tendered certificates. Any principal amount of Old Notes in multiples of $1,000 may be tendered. Tendering Old Noteholders may tender less than all of the principal amount represented by the certificates they hold provided they appropriately indicate this fact on the Letter of Transmittal accompanying their tendered Old Note certificates. Tenders of amounts which are not multiples of $1,000 will not be accepted. With respect to tenders of the Old Notes, the Company reserves full discretion to determine whether the documentation is complete and generally to determine all questions as to tenders, including the date of receipt of a tender, the propriety of execution of any document, and other questions as to the eligibility or acceptability of any tender. The Company reserves the right to reject any tender not in proper form or to waive any irregularities or conditions, and the Company's interpretation of the terms and conditions of the Exchange Offer (including the instructions on the Letter of Transmittal) will be final. The Company shall not be obligated to give notice of any defects or irregularities in tenders and shall not incur any liability for failure to give any such notice. Old Notes shall not be deemed to have been duly tendered unless and until all defects and irregularities have been cured or waived. Certificates for all improperly tendered Old Notes, as well as certificates representing principal amounts 20 in excess of those tendered for exchange, will be returned (unless irregularities and defects are timely cured or waived), without cost to the tendering Old Noteholder as soon as practicable after the Expiration Date. Terms and Conditions of the Letter of Transmittal The Letter of Transmittal contains the following terms and conditions, which are part of the Exchange Offer: Certificates for Old Notes tendered for exchange for New Notes must be received (or a timely confirmation of a book-entry transfer of such Old Notes into the Exchange Agent's account at Depository Trust Company (Cede & Co.) must be received) by the Exchange Agent, Wells Fargo Bank, N.A., with the Letter of Transmittal and any other required documents by 5:00 P.M., New York City time, on or prior to March 31, 2004 unless extended, or within the time periods set forth above in "How to Tender Old Notes" pursuant to a guarantee or letter or facsimile transmission from an Eligible Institution. The party tendering the Old Notes for exchange (the "Transferor") assigns and transfers Old Notes to the Company and irrevocably appoints the Company as the Transferor's attorney-in-fact to cause the Old Notes to be transferred and exchanged. The Transferor warrants that it has full power to tender these Old Notes and the Company will acquire good title to these Old Notes. All authority conferred by the Transferor will survive the death or incapacity of the Transferor. Signature(s) on the Letter of Transmittal will be required to be guaranteed and endorsement(s) on the certificates being tendered will be required as set forth above in "How to Tender Old Notes." All questions as to the validity, form, and eligibility (including time of receipt and acceptance of Old Notes tendered) will be determined by the Company, in its sole discretion, and such determination will be final and binding. Unless waived by the Company, irregularities and defects must be cured by the Expiration Date. The Company will pay all transfer taxes applicable, if any, due to the transfer and exchange of Old Notes tendered. Withdrawal of Tenders All tenders may be withdrawn at any time prior to 5:00 P.M. March 31, 2004 and after April 23, 2004 if not accepted by the Company. To be effective, notice of withdrawal must be timely received by the Company, addressed in writing to Ms. Angela D. Toppi, Secretary, Trans-Lux Corporation, 110 Richards Avenue, Norwalk, Connecticut 06856-5090, or by the Exchange Agent at its address set forth below under the person named in the Letter of Transmittal as having tendered the principal amount of Old Notes to be withdrawn, the name of the registered Holder of such Old Notes and the serial number shown on the particular certificate(s) to be withdrawn. The Exchange Agent will return the withdrawn Old Notes as soon as practicable following receipt of notice of withdrawal. All questions as to the validity, including time of receipt, of notices of withdrawals, will be determined by the Company, and such determination will be final and binding on all Old Noteholders. Acceptance of Tenders of Old Notes; Delivery of New Notes Subject to the terms and conditions of the Exchange Offer, Old Notes tendered as described in "How to Tender Old Notes" with a properly executed Letter of Transmittal and all other required documentation, and not withdrawn, will be accepted for exchange on the Expiration Date. Once accepted for exchange, tendered Old Notes cannot be withdrawn. Delivery of certificates of New Notes to be issued in exchange for properly tendered Old Notes will be made by the Exchange Agent as soon as practicable after acceptance of the Old Notes. Although the Company does not presently intend to do so, if it modifies the terms of the Exchange Offer, such modified terms will be available with respect to all Old Notes (but excluding any redeemed Old Notes), whether or not such Old Notes have been tendered prior to such modification. The acceptance by the Company of tendered Old Notes pursuant to any one of the procedures set forth in "How to Tender Old Notes" will constitute an agreement between the tendering Old Noteholder and the Company upon the terms and subject to the conditions of the Exchange Offer. 21 Exchange Agent Wells Fargo Bank, N.A., has been appointed as Exchange Agent for the Exchange Offer. Letters of Transmittal must be addressed to the Exchange Agent as follows: By Mail Wells Fargo Bank Minnesota, N.A. By Hand* Wells Fargo Corporate Trust Customized Fiduciary Services c/o The Depository Trust Company 6th and Marquette, MAC N9303-120 1st Floor; TADS Department Minneapolis, MN 55479 55 Water Street Attn: David Bergstrom New York, NY 10041 - --------- *Hand delivery to other than the above address will not constitute valid delivery.
Payment of Expenses The Company will pay all the expenses of making the Exchange Offer, including the fees of the Exchange Agent. The Company will also reimburse brokerage houses and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses in forwarding copies of this Offering Circular and related documents to the beneficial owners of Old Notes held in their names or in forwarding tenders for their customers. The Company has not retained any dealer-manager or similar agent in connection with the Exchange Offer and will not make any payments to brokers, dealers or others for soliciting tenders for the Exchange Offer. The Company estimates that expenses of making the Exchange Offer will be approximately $85,000. 22 PRICE RANGE OF OLD NOTES AND COMMON STOCK AND DIVIDENDS ON COMMON STOCK Our Common Stock is traded on the American Stock Exchange ("AMEX") under the symbol "TLX." Our Old Notes are traded on the AMEX under the symbol TLX.C. The following table sets forth the cash dividends paid on Common Stock and the high and low sale prices for the Company's Old Notes and Common Stock as reported on the AMEX for each quarterly period during the last two fiscal years. Dividends Old Notes Common Stock High Low High Low ---- --- ---- --- 2001 - ---- First Quarter.............. $0.035 $ 80.00 $77.00 $5.25 $3.563 Second Quarter............. 0.035 86.00 76.25 7.05 4.20 Third Quarter.............. 0.035 82.50 80.00 6.00 4.00 Fourth Quarter............. 0.035 87.00 79.25 6.70 4.00 2002 - ---- First Quarter.............. $0.035 $ 89.00 $80.125 $6.24 $ 4.85 Second Quarter............. 0.035 88.00 80.125 7.80 5.20 Third Quarter.............. 0.035 86.00 79.50 5.85 4.90 Fourth Quarter............. 0.035 83.75 78.25 6.15 4.79 2003 - ---- First Quarter.............. $0.035 $ 82.00 $79.00 $5.35 $ 4.75 Second Quarter............. 0.035 84.00 79.25 6.55 5.10 Third Quarter.............. 0.035 92.00 84.00 7.79 6.00 Fourth Quarter............. 0.035 95.00 92.00 7.19 5.85 2004 - ---- First Quarter.............. $0.035 $100.50 $94.00 $7.49 $ 5.99 (to February 20, 2004)
On February 20, 2004 the last reported sales price, for the Old Notes and Common Stock on the American Stock Exchange were $100.00 per Old Note and $7.03 per share, respectively. The financial covenants of our existing indebtedness may limit our ability to pay dividends on our capital stock. Any future payment of dividends is at the discretion of our Board of Directors and will depend upon, among other things, our results of operations, financial condition, capital requirements and other relevant factors. We intend to pay dividends currently on our Common Stock and Class B Stock. USE OF PROCEEDS There will be no proceeds to us from the exchange of New Notes for Old Notes. Any Old Notes accepted in the Exchange Offer will be cancelled. 23 DESCRIPTION OF NEW NOTES The New Notes offered hereby are to be issued under an Indenture (the "New Indenture"), to be dated as of March 1, 2004, between the Company and Wells Fargo Bank, N.A., as Trustee (the "Trustee"), a copy of which is filed as an exhibit to Schedule TO of which this Offering Circular is a part. The following summary of certain provisions of the New Indenture does not purport to be complete and is subject to, and is qualified in its entirety by reference to, all the provisions of the New Indenture, including the definitions therein of certain terms. Wherever a particular Section, Article or defined term is referred to, such Section, Article or defined term refers to the New Indenture and is incorporated herein by reference. General The New Notes will be unsecured senior subordinated obligations of the Company, will be limited to an aggregate principal amount of $15,000,000 (subject to increase in the event the Exchange Offer is oversubscribed up to a maximum of $30,177,000 and the Company amends the Exchange Offer to accept tenders in excess of $15,000,000 of Old Notes) and will mature on March 1, 2012. The New Notes will bear interest at the rate per annum of 8.25%, payable semi-annually on March 1 and September 1 of each year, to the person in whose name the New Notes (or any predecessor New Notes) are registered at the close of business on the Regular Record Date for such interest, which shall be February 15 or August 15 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Interest on the New Notes will be paid on the basis of a 360-day year of twelve 30-day months, based on actual days elapsed. (Sections 2.04 and 6.01) Principal of, and premium, if any, and interest on the New Notes will be payable, and the transfer of New Notes will be registerable, at the office or agency of the Company maintained for such purposes in the Borough of Manhattan, the City of New York. In addition, payment of interest may, at the option of the Company, be made by check mailed to the address of the person entitled thereto as it appears in the register for the New Note. (Sections 2.03, 6.01 and 6.02) The New Notes will be issued only in fully registered form, without coupons, in denominations of $1,000 and any integral multiples thereof. (Section 2.02) No service charge will be made for any registration of transfer or exchange of the New Notes, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. The Company is not required (i) to issue, register the transfer of or exchange any New Note during a period beginning at the opening of business 15 days before the mailing of notice fixed for any redemption and ending at the close of business on such Redemption Date or (ii) to register the transfer of or exchange any New Notes for redemption in whole or in part, except the unredeemed portion of the New Notes being redeemed in part. (Section 2.07) All monies paid by the Company to the Trustee or any Paying Agent for the payment of principal of and premium, if any, and interest on any New Note which remains unclaimed for two years after such principal, premium or interest becomes due and payable may be repaid to the Company. Thereafter, the Holder of such New Note may, as an unsecured general creditor, look only to the Company for payment thereof. (Section 13.04) The New Indenture does not contain any provisions that would provide protection to Holders of the New Notes against a sudden and dramatic decline in the credit quality of the Company resulting from any takeover, recapitalization or similar restructuring, except as described below under "Repurchase at Option of Holders Upon a Repurchase Event" and "Consolidation, Merger and Sale of Assets." Conversion Rights The New Notes will be convertible into the Common Stock of the Company at any time following the date of initial issuance thereof and up to and including March 1, 2007 (subject to prior redemption by the Company on not less than 30 nor more than 60 days' notice to the Trustee) of the principal amount thereof, initially at the Conversion Price of $9.00 per share (subject to adjustment as described below). The right to convert the New Notes called for redemption or delivered for repurchase will terminate at the close of business on March 1, 2007 24 and also on the last Trading Day prior to the Redemption Date or the Repurchase Date, if sooner, unless the Company defaults in making the payment due upon redemption or repurchase. (Section 5.01) For information as to notices of redemption, see "Optional Redemption." The Conversion Price will be subject to adjustment in certain events, including (i) dividends (and other distributions) payable in Common Stock or any class of capital stock of the Company, (ii) the issuance to all holders of Common Stock of rights, warrants or options entitling them to subscribe for or purchase Common Stock at less than the current market price, (iii) subdivisions or combinations of Common Stock, (iv) distributions to all holders of Common Stock of evidences of indebtedness of the Company, cash or other assets (including securities, but excluding those dividends, rights, warrants, options and distributions referred to above and excluding dividends and distributions paid exclusively in cash), (v) distributions consisting exclusively of cash (excluding any cash portion of distributions referred to in (iv) above or cash distribution upon a merger or consolidation to which the second succeeding paragraph applies) to all holders of Common Stock in an aggregate amount that, combined together with (a) all other such all-cash distributions made within the preceding 12 months in respect to which no adjustment has been made and (b) any cash and the fair market value of other consideration paid or payable in respect of any tender offers by the Company for Common Stock concluding within the preceding 12 months in respect of which no adjustment has been made, exceeds 12.5% of the Company's market capitalization (defined as being the product of the current market price of the Common Stock times the number of shares of Common Stock then outstanding) on the record date for such distribution, and (vi) the purchase of Common Stock pursuant to a tender offer made by the Company or any of its subsidiaries which involves an aggregate consideration that together with (a) any cash and the fair market value of any other consideration paid or payable in any other tender offer by the Company or any of its subsidiaries of Common Stock expiring within the 12 months preceding the expiration of such tender offer in respect of which no adjustment has been made and (b) the aggregate amount of any such all-cash distributions referred to in (v) above to all holders of Common Stock within the 12 months preceding the expiration of such tender offer in respect of which no adjustments have been made, exceeds 12.5% of the Company's market capitalization on the expiration of such tender offer. No adjustment in the Conversion Price shall be required unless such adjustment (plus any adjustments not previously made) would require an increase or decrease of at least 1% in such price; provided, however, that any adjustments which by reason of this sentence are not required to be made shall be carried forward and then taken into account in any subsequent adjustment. (Section 5.04) In addition to the foregoing adjustments, the Company will be permitted to make such reduction in the Conversion Price as it considers to be advisable in order that any event treated for Federal income tax purposes as a dividend or distribution of stock or stock rights will not be taxable to the holders of the Common Stock. (Section 5.04) Subject to the rights of Holders of the New Notes described below under "Repurchase at Option of Holders Upon a Repurchase Event," in case of certain consolidations or mergers to which the Company is a party or the transfer of substantially all of the assets of the Company, each New Note then outstanding would, without the consent of any Holders of the New Notes, become convertible only into the kind and amount of securities, cash and other property receivable upon the consolidation, merger or transfer by a Holder of the number of shares of Common Stock into which such New Note might have been converted immediately prior to such consolidation, merger or transfer (assuming such Holder of Common Stock failed to exercise any rights of election and received per share the kind and amount received per share by a plurality of non-electing shares). (Section 5.10) Fractional shares of Common Stock will not be issued upon conversion, but, in lieu thereof, the Company will pay a cash adjustment based upon market price. (Section 5.03) New Notes surrendered for conversion during the period from the close of business on any Regular Record Date next preceding any Interest Payment Date to the opening of business on such Interest Payment Date (except the New Notes called for redemption on a Redemption Date within such period) must be accompanied by payment of an amount equal to the interest thereon which the registered Holder is to receive. In the case of any New Note that has been converted after any Regular Record Date but on or before the next Interest Payment Date, interest whose stated maturity is on such Interest Payment Date will be payable on such Interest Payment Date notwithstanding such conversion, and such interest will be paid to the Holder of such New Note on such Regular Record Date. Except as described above, no interest on converted New Notes will be payable by the Company on any Interest Payment Date subsequent to the date of conversion. No other payment or adjustment for interest or dividends will be made upon conversion. (Section 5.02) If at any time the Company makes a distribution of property to its stockholders that would be taxable to such 25 stockholders as a dividend for Federal income tax purposes (e.g., distributions of evidence of indebtedness or assets of the Company, but generally not stock dividends or rights to subscribe for Common Stock) and, pursuant to the antidilution provisions of the New Indenture, the Conversion Price of the New Notes is reduced, such reduction may be deemed to be the payment of a taxable dividend to holders of the New Notes. Holders of the New Notes could, therefore, have taxable income as a result of an event pursuant to which they receive no cash or property that could be used to pay the related income tax. Subordination The payment of the principal of and premium, if any, and interest on the New Notes will, to the extent set forth in the New Indenture, be subordinated in right of payment to the prior payment in full of all Senior Indebtedness. Upon any payment or dissolution of assets to creditors upon any liquidation, dissolution, winding- up, reorganization, assignment for the benefit of creditors, marshaling of assets or any bankruptcy, insolvency or similar proceedings of the Company, the holders of all Senior Indebtedness will be first entitled to receive payment in full of all amounts due or to become due thereon before the Holders of the New Notes will be entitled to receive any payment in respect of the principal of or premium, if any, or interest on the New Notes. No payment or distribution of any assets of the Company shall be made on account of principal of and premium, if any, or interest on the New Notes, in the event and during the continuation of (i) any default in the payment of principal of or premium, if any, or interest on any Senior Indebtedness beyond any applicable grace period with respect thereto or (ii) any other event of default with respect to any Senior Indebtedness permitting the holders of such Senior Indebtedness (or a trustee or other representative on behalf of the holders thereof) to declare such Senior Indebtedness due and payable prior to the date on which it would otherwise have become due and payable, upon written notice thereof to the Company and the Trustee by any holders of Senior Indebtedness (or a trustee or other representative on behalf of the holders thereof) (the "Default Notice"), unless and until such event of default shall have been cured or waived or ceased to exist and such acceleration shall have been rescinded or annulled; provided such payments may not be prevented under clause (ii) above for more than 179 days after an applicable Default Notice has been received by the Trustee unless the Senior 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 rescinded or annulled or such Senior Indebtedness has been paid in full. No event of default which existed or was continuing on the date of any Default Notice may be made the basis for the giving of a second Default Notice and only one such Default Notice may be given in any 365-day period. (Article Four) By reason of such subordination, in the event of insolvency, creditors of the Company who are not holders of Senior Indebtedness or of the New Notes may recover less, ratably, than holders of Senior Indebtedness and may recover more, ratably, than the Holders of the New Notes. "Senior Indebtedness" means, with respect to the Company, any of the following (without duplication): (i) (a) any liability or obligation of the Company for borrowed money (including, without limitation, principal of and premium, if any, interest, fees, penalties, expenses, collection expenses, and other obligations in respect thereof, and, to the extent permitted by applicable law, interest accruing after the filing of a petition initiating any proceeding under the Bankruptcy Code whether or not allowed as a claim in such proceeding), whether or not evidenced by bonds, debentures, notes or other written instruments, and any other liability or obligation evidenced by notes, bonds, debentures or similar instruments (other than the New Notes) whether or not contingent and whether outstanding on the date of execution of the New Indenture or thereafter created, incurred or assumed, (b) any deferred payment obligation of the Company for the payment of the purchase price of property or assets evidenced by a note or similar instrument (excluding any obligation for trade payables or constituting the deferred purchase price of property or assets which is not evidenced by a note or similar instrument and which is unsecured), (c) any obligation of the Company for the payment of rent or other amounts under a lease of property or assets which obligation is required to be classified and accounted for as a capitalized lease on the balance sheet of the Company under generally accepted accounting principles, (d) all obligations of the Company under interest rate and currency swaps, floors, caps, or similar arrangements intended to fix interest rate obligations or currency fluctuation risks, (e) all obligations of the Company evidenced by a letter of credit or any reimbursement obligation of the Company in respect of a letter of credit, (f) all obligations of others secured by a lien to which any of the properties or assets of the Company are subject (including, without limitation, leasehold interests and any intangible property rights), whether or not the obligations secured thereby have been assumed by the Company or shall otherwise be the Company's legal obligation and (g) all obligations of others of the kinds described in the preceding clauses (a), (b), (c), (d) or (e) assumed by or guaranteed by the Company and the obligations of the 26 Company under guarantees of any such obligations; and (ii) any amendments, renewals, extensions, deferrals, modifications, refinancing and refunding of any of the foregoing. "Senior Indebtedness" shall not include: (i) indebtedness that by the terms of the instrument or instruments by which such indebtedness was created or incurred expressly provides that it (a) is junior in right of payment to the New Notes or (b) ranks pari passu, in right of payment with the New Notes, (ii) any repurchase, redemption or other obligation in respect of Disqualified Capital Stock, (iii) any indebtedness of the Company to any Subsidiary or to any Affiliate of the Company or any of the Subsidiaries, (iv) any indebtedness incurred in connection with the purchase of goods, assets, materials or services in the ordinary course of business or representing amounts recorded as accounts payable, trade payables (which are unsecured) or other current liabilities (other than for borrowed money) or deferred revenue and deposits of the Company on the books of the Company (other than the current portion of any long-term indebtedness of the Company that but for this clause (iv) would constitute Senior Indebtedness), (v) any indebtedness of or amount owed by the Company to employees for services rendered to the Company, (vi) any liability for Federal, state, local or other taxes owing or owed by the Company and (vii) the Old Notes and the Company's 9 1/2% Subordinated Debentures due 2012. (Section 1.01) However, the New Notes are Senior Indebtedness with respect to the Old Notes and the Company's 9 1/2% Subordinated Debentures due 2012. The New Notes will be effectively subordinated to all indebtedness and other liabilities and commitments (including trade payables and lease obligations) of the Company's subsidiaries. Any right of the Company to receive assets of any such subsidiary upon the liquidation or reorganization of any such subsidiary (and the consequent right of the Holders of the New Notes to participate in those assets) will be effectively subordinated to the claims of that subsidiary's creditors, except to the extent that the Company is itself recognized as a creditor of such subsidiary, in which case the claims of the Company would still be subordinate to any security in the assets of such subsidiary and any indebtedness of such subsidiary senior to that held by the Company. The New Indenture does not restrict the incurrence of additional Indebtedness, including Senior Indebtedness. At September 30, 2003, the Company's Senior Indebtedness aggregated approximately $17.4 million, excluding accrued interest and the Company's subsidiaries had indebtedness and other liabilities of approximately $21.2 million. The Company expects from time to time to incur additional indebtedness, including Senior Indebtedness. See Note 10 of "Notes to Consolidated Financial Statements" for a more detailed description of the Company's outstanding indebtedness. The Company's Old Notes and 9 1/2% Subordinated Debentures due 2012 are not Senior Indebtedness. Optional Redemption The New Notes are redeemable at the Company's option, in whole or from time to time in part, upon not less than 20 nor more than 65 days' notice mailed to each Holder of the New Notes to be redeemed at such Holder's address appearing in the Note Register, on any date prior to maturity. The Redemption Prices (expressed as a percentage of the principal amount) are as follows for the periods beginning March 1 of the years indicated: Year Percentage ---- ---------- 2006 102.00% 2007 101.00 thereafter and at maturity at 100% of principal, together in the case of any such redemption with accrued interest to the Redemption Date (subject to the right of Holders of record on the relevant Regular Record Date to receive interest due on an Interest Payment Date that is on or prior to the Redemption Date). No sinking fund is provided for the New Notes. Events of Default The following will be Events of Default under the New Indenture: 27 (i) failure to pay principal of or premium, if any, on any New Note when due, whether or not such payment is prohibited by the subordination provisions of the New Indenture; (ii) failure to pay any interest on any New Note when due, continued for 30 days, whether or not such payment is prohibited by the subordination provisions of the New Indenture; (iii) default in the payment of the Repurchase Price in respect of any New Note on the Repurchase Date therefor, whether or not such payment is prohibited by the subordination provisions of the New Indenture; (iv) failure to perform or breach of any other covenant of the Company in the New Indenture, which continues for 60 days after written notice as provided in the New Indenture; and (v) certain events of bankruptcy, insolvency or reorganization of the Company or any Significant Subsidiary. (Section 7.01) Subject to the provisions of the New Indenture relating to the duties of the Trustee, in case an Event of Default shall occur and be continuing, the Trustee will be under no obligation to exercise any of its rights or powers under the New Indenture at the request or direction of any of the Holders, unless such Holders shall have offered to the Trustee reasonable indemnity. (Section 8.01) Subject to the Trustee being offered reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by the Trustee, the Holders of a majority in aggregate principal amount of the Outstanding New Notes will have the right by written instruction to the Trustee, to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee. (Section 7.05) If an Event of Default shall occur and be continuing, either the Trustee or the Holders of not less than 25% in aggregate principal amount of the Outstanding New Notes may accelerate the maturity of all New Notes; provided, however, that after such acceleration, but before a judgment or decree based on acceleration, the Holders of a majority in aggregate principal amount of the Outstanding New Notes may, under certain circumstances, rescind and annul such acceleration if all Events of Default, other than the non-payment of accelerated principal, have been cured or waived as provided in the New Indenture. (Section 7.02) For information as to waiver of defaults, see "Modification and Waiver" below. No Holder of any New Note will have any right to institute any proceeding with respect to the New Indenture or for any remedy thereunder, unless (i) such Holder shall have previously given to the Trustee written notice of a continuing Event of Default and unless also the Holders of at least 25% in aggregate principal amount of the Outstanding New Notes shall have made written request to the Trustee to institute proceedings, (ii) such Holder has offered to the Trustee reasonable indemnity, (iii) the Trustee for 60 days after receipt of such notice has failed to institute any such proceeding and (iv) no direction inconsistent with such request shall have been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the Outstanding New Notes. (Section 7.06) However, such limitations do not apply to a suit instituted by a Holder of a New Note for enforcement of (a) payment of the principal of and premium, if any, or interest on such New Note on or after the respective due dates expressed in such New Note, (b) the right to require repurchase of such New Note or (c) the right to convert such New Note in accordance with the New Indenture. (Section 7.07) The New Indenture provides that the Company will deliver to the Trustee, within 95 days after the end of each fiscal year, an officers' certificate, stating as to each signer thereof that he or she is familiar with the affairs of the Company and whether or not to his or her knowledge the Company is in default in the performance and observance of any of the Company's obligations under the New Indenture and if the Company shall be in default, specifying all such defaults of which he or she has knowledge and the nature and status thereof. (Section 6.04) Consolidation, Merger and Sale of Assets The Company, without the consent of the Holders of any of the New Notes under the New Indenture, may consolidate with or merge into any other Person or convey, transfer or lease its assets substantially as an entirety to any Person, provided that (i) the successor is a Person organized under the laws of any domestic jurisdiction; (ii) the successor Person, if other than the Company, assumes the Company's obligations on the New Notes and under the New Indenture; (iii) after giving effect to the transaction no Event of Default, and no event after notice or lapse 28 of time, would become an Event of Default, shall have occurred and be continuing; (iv) the Company or the surviving person (if other than the Company) (A) will have Consolidated Net Worth (immediately after the transaction but prior to any purchase accounting adjustments resulting from the transaction) greater than or equal to the Consolidated Net Worth of the Company immediately preceding the transaction and (B) will, at the time of such transaction after giving pro forma effect thereto as if such transaction had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to Section 6.12 of the New Indenture and (v) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture, complies with this covenant and that all conditions precedent herein provided for relating to such transaction have been complied with. (Section 12.01) "Consolidated Net Worth" means, with respect to any Person as of any date, the sum of (i) the consolidated equity of the common stockholders of such Person and its consolidated Subsidiaries as of such date plus (ii) the respective amounts reported on such Person's balance sheet as of such date with respect to any series of preferred stock (other than Disqualified Capital Stock). Modification and Waiver Modifications and amendments of the New Indenture may be made by the Company and the Trustee with the consent of the Holders of 66% in aggregate principal amount of the Outstanding New Notes; provided, however, that no such modification or amendment may, without consent of the Holder of each outstanding New Note affected thereby, (i) change the stated maturity of the principal of, or any installment of interest on any New Note; (ii) reduce the principal amount of, or the premium or interest on any New Note; (iii) change the place of payment where, or currency in which, any New Note or any premium or interest thereof is payable; (iv) impair the right to institute suit for the enforcement of any payment on or with respect to any New Note; (v) adversely affect the right to convert the New Notes; (vi) adversely affect the right to cause the Company to repurchase the New Notes; (vii) modify the subordination provisions in a manner adverse to the Holders of the New Notes; (viii) reduce the above-stated percentage of Outstanding New Notes necessary to modify or amend the New Indenture; or (ix) reduce the percentage of aggregate principal amount of Outstanding New Notes necessary for waiver of compliance with certain provisions of the New Indenture or for waiver of certain defaults. (Section 11.02) The Holders of a majority in aggregate principal amount of Outstanding New Notes may waive compliance by the Company with certain restrictive provisions of the New Indenture. (Section 7.04) The Holders of a majority in aggregate principal amount of the Outstanding New Notes may waive any past default or right under the New Indenture, except (i) a default in payment of principal, premium or interest, (ii) the right of a Holder to redeem or convert the New Note or (iii) with respect to any covenant or provision of the New Indenture that requires the consent of the Holder of each Outstanding New Note affected. (Section 7.04) Repurchase at Option of Holders Upon a Repurchase Event The New Indenture provides that if a Repurchase Event occurs after initial issuance of the New Notes, each Holder of the New Notes shall have the right (which might may not be waived by the Board of Directors or the Trustee) at the Holder's option, to require the Company to repurchase all of such Holder's New Notes, or any portion thereof that is an integral multiple of $1,000, on the date (the "Repurchase Date") that is 45 calendar days after the date of the Company Notice (as defined below), for cash at a price equal to 100% of the principal amount of such New Notes to be repurchased (the "Repurchase Price"), together with accrued interest to the Repurchase Date. (Section 6.09) Within 15 calendar days after the occurrence of a Repurchase Event, the Company is obligated to mail all Holders of record of the New Notes a notice (the "Company Notice") of the occurrence of such Repurchase Event and of the repurchase right arising thereof. The Company must deliver a copy of the Company Notice to the Trustee. To exercise the repurchase right, the Holder of such New Note must deliver on or before the fifth day preceding the Repurchase Date irrevocable written notice to the Trustee of the Holder's exercise of such right (except that the right of the Holders to convert such New Notes on or before March 1, 2007 shall continue until the close of business on the last Trading Day preceding the Repurchase Date), together with the New Notes with 29 respect to which the right is being exercised, duly endorsed for transfer to the Company. (Section 6.09) A Repurchase Event will be deemed to have occurred at such time after initial issuance of the New Notes if: (i) any Person (including any syndicate or group deemed to be a "Person" under Section 13(d) (3) of the Exchange Act), other than the Company, any subsidiary of the Company, any existing Person (including directly or indirectly, the immediate family of any such Person) who currently beneficially owns shares of capital stock with 50% or more of the voting power as described below, or any current or future employee or director benefit plan of the Company or any subsidiary of the Company or any entity holding capital stock of the Company for or pursuant to the terms of such plan, or an underwriter engaged in a firm commitment underwriting in connection with a public offering of capital stock of the Company, is or becomes the beneficial owner, 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 50% or more of the total voting power of all shares of capital stock of the Company entitled to vote generally in the election of directors; (ii) the Company sells or transfers all or substantially all of the assets of the Company to another Person; (iii) there occurs any consolidation of the Company with, or merger of the Company into, any other Person, any merger of another Person into the Company (other than a merger (a) which does not result in any reclassification, conversion, exchange or cancellation of outstanding shares of Common Stock, (b) which is effected solely to change the jurisdiction of incorporation of the Company and results in a reclassification, conversion or exchange of outstanding shares of Common Stock solely into shares of Common Stock, or (c) a transaction in which the stockholders of the Company immediately prior to such transaction owned, directly or indirectly, immediately following such transaction, at least a majority of the combined voting power of the outstanding voting stock of the Company resulting from the transaction, such stock to be owned by such stockholders in substantially the same proportion as their ownership of the voting stock of the Company immediately prior to such transaction); (iv) a change in the Board of Directors of the Company in which the individuals who constituted the Board of Directors of the Company at the beginning of the 24-month period immediately preceding such change (together with any other director whose election by the Board of Directors of the Company or whose nomination for election by the stockholders of the Company was approved by a vote of at least a majority of the directors then in office either who were directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the directors then in office; or (v) the Common Stock of the Company is the subject of a "Rule 13e-3 transaction" as defined under the Exchange Act, provided, however, that a Repurchase Event shall not be deemed to have occurred if the closing price per share of the Common Stock for any five Trading Days within the period of ten consecutive Trading Days ending immediately before a Repurchase Event shall equal or exceed 110% of the Conversion Price of such New Notes in effect on each such Trading Day. A "beneficial owner" shall be determined in accordance with Rule 13d-3 promulgated by the SEC under the Exchange Act, as in effect on the date of execution of the New Indenture. (Sections 1.01 and 6.09) The right to require the Company to repurchase the New Notes as a result of the occurrence of a Repurchase Event could create an event of default under Senior Indebtedness as a result of which any repurchase could, absent a waiver, be blocked by the subordination provisions of the New Notes. See "Subordination" above. Failure of the Company to repurchase the New Notes when required would result in an Event of Default with respect to the New Notes whether or not such repurchase is permitted by the subordination provisions. The Company's ability to pay cash to the Holders of New Notes upon a repurchase may be limited by certain financial covenants contained in the Company's principal loan and security agreement. Rule 13e-4 under the Exchange Act requires, among other things, the dissemination of certain information to security holders in the event of any issuer tender offer and may apply in the event that the repurchase option becomes available to the Holders of the New Notes. The Company will comply with this rule to the extent applicable at that time. (Section 6.09) The repurchase feature of the New Notes may in certain circumstances make more difficult or discourage a takeover of the Company and the removal of incumbent management. The foregoing provisions would not necessarily afford Holders of the New Notes protection in the event of highly leveraged or other transactions 30 involving the Company that may adversely affect Holders. Except as described above with respect to a Repurchase Event, the New Indenture does not contain provisions permitting the Holders of the New Notes to require the Company to repurchase or redeem the New Notes in the event of a takeover, recapitalization or similar transaction. Subject to the limitation on mergers and consolidations described above, the Company, its management or its subsidiaries could, in the future, enter into certain transactions, including refinancing, certain recapitalizations, acquisitions, the sale of all or substantially all of its assets, the liquidation of the Company or similar transactions, that would not constitute a Repurchase Event under the New Indenture, but that would increase the amount of Senior Indebtedness (or any other Indebtedness) outstanding at such time or substantially reduce or eliminate the Company's assets. 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 New Notes. If a Repurchase Event were to occur, there is no assurance that the Company would have sufficient funds to repurchase all New Notes tendered by the Holders thereof or to make any principal, premium, if any, or interest payments otherwise required by the New Notes. As noted above, one of the events that constitutes a Repurchase Event under the New Indenture is a sale or other transfer of all or substantially all of the assets of the Company. The New Indenture will be governed by New York law, and the definition under New York law of "substantially all" of the assets of a corporation varies according to the facts and circumstances of the transaction. Accordingly, if the Company were to engage in a transaction in which it disposed of less than all of its assets, a question of interpretation could arise as to whether such disposition was of "substantially all" of its assets and whether the transaction was a Repurchase Event. Satisfaction and Discharge The Company may, subject to certain conditions, discharge its obligations under the New Indenture while the New Notes remain outstanding if (i) all outstanding New Notes will become due and payable at their scheduled maturity within one year or (ii) all outstanding New Notes are scheduled for redemption within one year, and, in either case, the Company has deposited with the Trustee an amount sufficient to pay and discharge all outstanding New Notes on the date of their scheduled maturity or the scheduled date of redemption. (Section 13.01) Reports In addition to complying with any applicable legal requirements, the Company will deliver to the Holders of record, and to any beneficial owners so requesting, annual reports containing audited consolidated financial statements with a report thereon by the Company's independent public accountants. (Section 8.06) Governing Law The New Indenture and the New Notes will be governed by and construed in accordance with the laws of the State of New York. Information Concerning the Trustee Wells Fargo Bank, N.A., is the Trustee under the New Indenture. A successor Trustee may be appointed in accordance with the terms of the New Indenture. The Trustee's duties are set forth in the Trust Indenture Act, as amended (the "Trust Indenture Act"), and in the New Indenture. The Trust Indenture Act imposes certain limitations on the right of the Trustee, in the event it becomes a creditor of the Company, to obtain payment of claims in certain cases, or to realize on certain property received in respect to any such claim as security or otherwise. The Trustee will be permitted to engage in other transactions; provided, however, it if acquires any conflicting interest within the meaning of Section 310 of the Trust Indenture Act, it must generally either eliminate such conflict or resign. 31 Prior to an Event of Default, the Trustee is responsible to perform only such duties as are specifically set out in the New Indenture. In case an Event of Default shall occur (and shall not be cured), the Trust Indenture Act required that the Trustee use the degree of care of a prudent person in the conduct of its own affairs in the exercise of its powers. Subject to such provisions, the Trustee will be under no obligation to exercise any of its rights or powers under the New Indenture at the request of any of the Holders of New Notes, unless they shall have offered to the Trustee reasonable indemnity. (Section 8.01) The Holders of a majority in principal amount of all Outstanding New Notes will 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 rule of law or with the New Indenture, is not prejudicial to the rights of another Holder or the Trustee, and does not involve the Trustee in personal liability. (Sections 7.05 and 8.01) 32 DESCRIPTION OF OLD NOTES The Old Notes were issued under an Indenture (the "Indenture") dated as of December 1, 1996, between the Company and Continental Stock Transfer & Trust Company, as Trustee (the "Trustee"). The following summary of certain provisions of the Indenture does not purport to be complete and is subject to, and is qualified in its entirety by reference to, all the provisions of the Indenture, including the definitions therein of certain terms which is on file with the SEC. Wherever a particular Section, Article or defined term is referred to, such Section, Article or defined term refers to the Indenture and is incorporated herein by reference. General The Old Notes are unsecured subordinated obligations of the Company and will mature on December 1, 2006. The Old Notes bear interest at the rate per annum of 7.5%, payable semi-annually on June 1 and December 1 of each year, to the person in whose name the Old Notes (or any predecessor Old Notes) are registered at the close of business on the Regular Record Date for such interest, which shall be May 15 or November 15 (whether or not a business day), as the case may be, next preceding such Interest Payment Date. Interest on the Old Notes is paid on the basis of a 360-day year of twelve 30-day months, based on actual days elapsed. (Sections 2.04 and 6.01) Principal of, and premium, if any, and interest on the Old Notes is payable, and the transfer of Old Notes is registerable, at the office or agency of the Company maintained for such purposes in the Borough of Manhattan, the City of New York. In addition, payment of interest may, at the option of the Company, be made by check mailed to the address of the person entitled thereto as it appears in the register for the Old Notes. (Sections 2.03, 6.01 and 6.02) The Old Notes were issued only in fully registered form, without coupons, in denominations of $1,000 and any integral multiples thereof. (Section 2.02) No service charge will be made for any registration of transfer or exchange of the Old Notes, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. The Company is not required (i) to issue, register the transfer of or exchange any Old Note during a period beginning at the opening of business 15 days before the mailing of notice fixed for any redemption and ending at the close of business on such Redemption Date or (ii) to register the transfer of or exchange any Old Notes for redemption in whole or in part, except the unredeemed portion of the Old Notes being redeemed in part. (Section 2.07) All monies paid by the Company to the Trustee or any Paying Agent for the payment of principal of and premium, if any, and interest on any Old Note which remains unclaimed for two years after such principal, premium or interest becomes due and payable may be repaid to the Company. Thereafter, the Holder of such Old Note may, as an unsecured general creditor, look only to the Company for payment thereof. (Section 13.04) The Indenture does not contain any provisions that would provide protection to Holders of the Old Notes against a sudden and dramatic decline in the credit quality of the Company resulting from any takeover, recapitalization or similar restructuring, except as described below under "Repurchase at Option of Holders Upon a Repurchase Event" and "Consolidation, Merger and Sale of Assets." Conversion Rights The Old Notes are convertible into the Common Stock of the Company up to and including the maturity date (subject to prior redemption by the Company on not less than 30 nor more than 60 days' notice to the Trustee) of the principal amount thereof, initially at the Conversion Price of $14.013 per share (subject to adjustment as described below). The right to convert the Old Notes called for redemption or delivered for repurchase will terminate at the close of business on the last trading day prior to the Redemption Date or the Repurchase Date, unless the Company defaults in making the payment due upon redemption or repurchase. (Section 5.01) For information as to notices of redemption, see "Optional Redemption." The Conversion Price will be subject to adjustment in certain events, including (i) dividends (and other 33 distributions) payable in Common Stock or any class of capital stock of the Company, (ii) the issuance to all holders of Common Stock of rights, warrants or options entitling them to subscribe for or purchase Common Stock at less than the current market price, (iii) subdivisions or combinations of Common Stock, (iv) distributions to all holders of Common Stock of evidences of indebtedness of the Company, cash or other assets (including securities, but excluding those dividends, rights, warrants, options and distributions referred to above and excluding dividends and distributions paid exclusively in cash), (v) distributions consisting exclusively of cash (excluding any cash portion of distributions referred to in (iv) above or cash distribution upon a merger or consolidation to which the second succeeding paragraph applies) to all holders of Common Stock in an aggregate amount that, combined together with (a) all other such all-cash distributions made within the preceding 12 months in respect to which no adjustment has been made and (b) any cash and the fair market value of other consideration paid or payable in respect of any tender offers by the Company for Common Stock concluding within the preceding 12 months in respect of which no adjustment has been made, exceeds 12.5% of the Company's market capitalization (defined as being the product of the current market price of the Common Stock times the number of shares of Common Stock then outstanding) on the record date for such distribution, and (vi) the purchase of Common Stock pursuant to a tender offer made by the Company or any of its subsidiaries which involves an aggregate consideration that together with (a) any cash and the fair market value of any other consideration paid or payable in any other tender offer by the Company or any of its subsidiaries of Common Stock expiring within the 12 months preceding the expiration of such tender offer in respect of which no adjustment has been made and (b) the aggregate amount of any such all-cash distributions referred to in (v) above to all holders of Common Stock within the 12 months preceding the expiration of such tender offer in respect of which no adjustments have been made, exceeds 12.5% of the Company's market capitalization on the expiration of such tender offer. No adjustment in the Conversion Price shall be required unless such adjustment (plus any adjustments not previously made) would require an increase or decrease of at least 1% in such price; provided, however, that any adjustments which by reason of this sentence are not required to be made shall be carried forward and then taken into account in any subsequent adjustment. (Section 5.04) In addition to the foregoing adjustments, the Company will be permitted to make such reduction in the Conversion Price as it considers to be advisable in order that any event treated for Federal income tax purposes as a dividend or distribution of stock or stock rights will not be taxable to the holders of the Common Stock. (Section 5.04) Subject to the rights of holders of the Old Notes described below under "Repurchase at Option of Holders Upon a Repurchase Event" in case of certain consolidations or mergers to which the Company is a party or the transfer of substantially all of the assets of the Company, each Old Note then outstanding would, without the consent of any Holders of the Old Notes, become convertible only into the kind and amount of securities, cash and other property receivable upon the consolidation, merger or transfer by a Holder of the number of shares of Common Stock into which such Old Note might have been converted immediately prior to such consolidation, merger or transfer (assuming such Holder of Common Stock failed to exercise any rights of election and received per share the kind and amount received per share by a plurality of non-electing shares). (Section 5.10) Fractional shares of Common Stock will not be issued upon conversion, but, in lieu thereof, the Company will pay a cash adjustment based upon market price. (Section 5.03) Old Notes surrendered for conversion during the period from the close of business on any Regular Record Date next preceding any Interest Payment Date to the opening of business on such Interest Payment Date (except the Old Notes called for redemption on a Redemption Date within such period) must be accompanied by payment of an amount equal to the interest thereon which the registered Holder is to receive. In the case of any Old Note that has been converted after any Regular Record Date but on or before the next Interest Payment Date, interest whose stated maturity is on such Interest Payment Date will be payable on such Interest Payment Date notwithstanding such conversion, and such interest will be paid to the Holder of such Old Note on such Regular Record Date. Except as described above, no interest on converted Old Notes will be payable by the Company on any Interest Payment Date subsequent to the date of conversion. No other payment or adjustment for interest or dividends will be made upon conversion. (Section 5.02) If at any time the Company makes a distribution of property to its stockholders that would be taxable to such stockholders as a dividend for Federal income tax purposes (e.g., distributions of evidence of indebtedness or assets of the Company, but generally not stock dividends or rights to subscribe for Common Stock) and, pursuant to the antidilution provisions of the Indenture, the Conversion Price of the Old Notes is reduced, such reduction may be deemed to be the payment of a taxable dividend to Holders of the Old Notes. Holders of the Old Notes could, therefore, have taxable income as a result of an event pursuant to which they receive no cash or property that 34 could be used to pay the related income tax. Restriction on Incurrence of Indebtedness and Issuance of Preferred Stock The Indenture provides that the Company will not, and will not permit any of its Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, "incur"), after the date of issuance of the Old Notes, any Indebtedness (including Acquired Debt) and the Company will not issue any Disqualified Capital Stock and will not permit any of its Subsidiaries to issue any shares of preferred stock. Indebtedness consisting of reimbursement obligations in respect of a letter of credit will be deemed to be incurred when the letter of credit is first issued. The foregoing provisions will not apply to: (i) the incurrence by the Company and its Subsidiaries of Indebtedness represented by the Old Notes; (ii) the incurrence by the Company or any of its Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund, Indebtedness that was permitted by the Indenture to be incurred (including, without limitation, Existing Indebtedness); (iii) the incurrence by the Company or any of its Subsidiaries of intercompany Indebtedness between or among the Company and any of its Subsidiaries; (iv) the incurrence by the Company or any of its Subsidiaries of Indebtedness represented by performance bonds, standby letters of credit or appeal bonds, in each case to the extent incurred in the ordinary course of business of the Company or such Subsidiary; and (v) the incurrence by the Company of Indebtedness, which, together with all other Indebtedness outstanding as of the date of, such incurrence, does not exceed (a) five times EBITDA for the last four full fiscal quarters ending immediately preceding such date plus (b) $5.0 million. (Section 6.12) "Acquired Debt" means, with respect to any specified Person, (i) Indebtedness of any other Person existing at the time such other Person is merged with or into or becomes a Subsidiary of such specified Person, including, without limitation, Indebtedness incurred in connection with, or in contemplation of, such other Person merging with or into or becoming a Subsidiary of such specified Person, and (ii) Indebtedness secured by a lien encumbering any asset acquired by such specified Person. "Acquired Debt" shall be deemed to be incurred by such Person at the time of such merger, or upon the other Person becoming a Subsidiary or upon the acquisition of such asset. "Capital Lease Obligation" means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at such time be required to be capitalized on a balance sheet in accordance with GAAP. "Consolidated Net Income" means, with respect to any Person for any period, the aggregate of the Net Income of such Person and its Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; provided that (i) the Net Income of any Person that is not a Subsidiary or that is accounted for by the equity method of accounting shall be included only to the extent of the amount of dividends or distributions paid in cash to the referent Person or a wholly-owned Subsidiary thereof, (ii) the Net Income of any Subsidiary shall be excluded to the extent that the declaration or payment of dividends or similar distributions by that Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary or its stockholders, (iii) the Net Income of any Person acquired in a pooling of interests transaction for any period prior to the date of such acquisition shall be excluded and (iv) the cumulative effect of a change in accounting principles shall be excluded. "Disqualified Capital Stock" means, with respect to any person, any Capital Stock of such Person that, by its 35 terms (or by the terms of any security into which it is convertible or for which it is exercisable, redeemable or exchangeable), matures, or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the Holder thereof, in whole or in part, on or prior to the maturity of the Securities. "Existing Indebtedness" means Indebtedness of the Company and its Subsidiaries in existence on the date of the Indenture, until such amounts are repaid, including all reimbursement obligations with respect to letters of credit outstanding as of the date of issuance of the Old Notes. "EBITDA" means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period plus (i) an amount equal to any extraordinary loss plus any net loss realized in connection with a Sale of Assets (to the extent such losses were deducted in computing such Consolidated Net Income), plus (ii) provision for taxes based on income or profits of such Person and its Subsidiaries for such period, to the extent that such provision for taxes was included in computing such Consolidated Net Income, plus (iii) the Fixed Charges of such Person and its Subsidiaries for such period, to the extent that such Fixed Charges were deducted in computing such Consolidated Net Income, plus (iv) depreciation and amortization of such Person and its Subsidiaries for such period to the extent that such depreciation and amortization were deducted in computing such Consolidated Net Income, in each case, on a consolidated basis and determined in accordance with GAAP. Notwithstanding the foregoing, the provision for taxes on the income or profits of, and the depreciation and amortization of a Subsidiary of the referent Person shall be added to Consolidated Net Income to compute EBITDA only to the extent (and in the same proportion) that the Net Income of such Subsidiary was included in calculating the Consolidated Net Income of such Person and only of a corresponding amount would be permitted at the date of determination to be dividended to such Person by such Subsidiary without prior approval (that has not been obtained), pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to that Subsidiary or its stockholders. "Fixed Charges" means, with respect to any Person for any period, the sum of (i) the consolidated interest expense of such Person and its Subsidiaries for such period, whether paid or accrued (including, without limitation, amortization of original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, and discounts and other fees and charges incurred in respect of letters of credit or bankers' acceptance financings, (ii) the consolidated interest expense of such Person and its Subsidiaries that was capitalized during such period, (iii) any interest expense on Indebtedness of another Person that is Guaranteed by such Person or one of its Subsidiaries or secured by a lien on assets of such Person or one of its Subsidiaries (whether or not such Guarantee or lien is called upon), (iv) the product of (a) all cash dividend payments (and non-cash dividend payments in the case of a Person that is a Subsidiary) on any series of preferred stock of such Person, times (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined Federal, state and local statutory tax rate of such Person, expressed as a decimal, in each case, on a consolidated basis and in accordance with GAAP, and (v) (without duplication of any of the foregoing) one- third of the aggregate rental obligations of such Person and its Subsidiaries for such period, whether paid or accrued, in respect of leases of real and personal property, whether or not such obligations are reflected as liabilities on the balance sheet of such Person and its Subsidiaries. "Indebtedness" means, with respect to the Company, any of the following (without duplication): (i) (a) any liability or obligation of the Company for borrowed money (including, without limitation, principal and premium, if any, interest, fees, penalties, expenses, collection expenses, and other obligations in respect thereof, and, to the extent permitted by applicable law, interest accruing after the filing of a petition initiating any proceeding under the Bankruptcy Code whether or not allowed as a claim in such proceeding),whether or not evidenced by bonds, debentures, notes or other written instruments, and any other liability or obligation evidenced by notes, bonds, debentures or similar instruments (other than the Old Notes) whether or not contingent and whether outstanding on the date of execution of the Indenture or thereafter created, incurred or assumed, (b) any deferred payment obligation of the Company for the payment of the purchase price of property or assets evidenced by a note or similar instrument (excluding any obligation for trade payables or constituting the deferred purchase price of property or assets which is not evidenced by a note or similar instrument and which is unsecured),(c) any obligation of the Company for the payment of rent or other amounts under a lease of property or assets which obligation is required to be classified and accounted for as a capitalized lease on the balance sheet of the Company under generally accepted accounting principles, (d) all obligations of the Company under interest rate and currency swaps, floors, caps, or similar arrangements intended to fix interest rate obligations or currency fluctuation risks, (e) all obligations of the Company evidenced by a letter of credit or any reimbursement obligation of the Company 36 in respect of a letter of credit, (f) all obligations of others secured by a lien to which any of the properties or assets of the Company are subject (including, without limitation, leasehold interests and any intangible property rights), whether or not the obligations secured thereby have been assumed by the Company or shall otherwise be the Company's legal obligation and (g) all obligations of others of the kinds described in the preceding clauses (a),(b),(c),(d) or (e) assumed by or guaranteed by the Company and the obligations of the Company under guarantees of any such obligations; and (ii) any amendments, renewals, extensions, deferrals, modifications, refinancing and refunding of any of the foregoing. "Indebtedness" shall not include; (i) any indebtedness of the Company to any Subsidiary or to any Affiliate of the Company or any of the Subsidiaries, (ii) any indebtedness incurred in connection with the purchase of goods, assets, materials or services in the ordinary course of business or representing amounts recorded as accounts payable, trade payables (which are unsecured), other current liabilities (other than for borrowed money) or deferred revenue and deposits of the Company on the books of the Company, (iii) any indebtedness of or amount owed by the Company to employees for services rendered to the Company, and (iv) any liability for Federal, state, local or other taxes owing or owed by the Company. "Net Income" means, with respect to any Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends, excluding, however, (i) any gain (but not loss), together with any related provision for taxes on such gain (but not loss), realized in connection with any Sale of Assets and (ii) any extraordinary or nonrecurring gain (but not loss), together with any related provision for taxes on such extraordinary or nonrecurring gain (but not loss). "Permitted Refinancing Indebtedness" means any Indebtedness of the Company or any of its Subsidiaries issued in exchange for, or the net proceeds of which are used solely to extend, refinance, renew, replace, defease or refund, other Indebtedness of the Company or any of its Subsidiaries; provided that, except in the case of Indebtedness of the Company issued in exchange for, or the net proceeds of which are used solely to extend, refinance, renew, replace, defease or refund, Indebtedness of a Subsidiary of the Company: (i) the principal amount of such Permitted Refinancing Indebtedness does not exceed the principal amount of the Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded (plus the amount of any premiums paid and reasonable expenses incurred in connection therewith); (ii) such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; (iii) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the Old Notes, such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and is subordinated in right of payment to, the Old Notes on terms at least as favorable to the Holders of Old Notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and (iv) such Indebtedness is incurred either by the Company or by the Subsidiary who is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded. Restricted Payments The Indenture provides that the Company shall not make any Restricted Payment to any Person and the Company shall not permit any Subsidiary or Affiliate to make any Restricted Payment other than to the Company. (Section 6.11) "Restricted Payment" means, with respect to any Person, (i) the declaration or payment of any dividend or the occurrence of any liability to make any other payment or distribution of cash or other property or assets in respect of such Person's Stock, excluding dividends from one Subsidiary to another or to the Company and excluding cash dividends by the Company which do not exceed $750,000 in the aggregate in any fiscal year, (ii) except for (A) the Odd Lot Purchase Program, (B) the purchase of shares of Common Stock of the Company in the aggregate amount of up to $750,000 in any fiscal year, and (C) in respect of the Stock Option Plans, any payment on account of the purchase, redemption, defeasance or other retirement of such Person's Stock or any other payment or distribution made in respect thereof, either directly or indirectly, or (iii) any payment, loan, contribution, or other transfer of funds or other property to any stockholder of such Person in their capacity as Stockholders as opposed to employees, directors or consultants; provided, however, that no Event of Default exists or would be caused by the making of a Restricted Payment. (Section 1.01) 37 Subordination The payment of the principal of and premium, if any, and interest on the Old Notes will, to the extent set forth in the Indenture, be subordinated in right of payment to the prior payment in full of all Senior Indebtedness. Upon any payment or dissolution of assets to creditors upon any liquidation, dissolution, winding-up, reorganization, assignment for the benefit of creditors, marshaling of assets or any bankruptcy, insolvency or similar proceedings of the Company, the holders of all Senior Indebtedness will be first entitled to receive payment in full of all amounts due or to become due thereon before the Holders of the Old Notes will be entitled to receive any payment in respect of the principal of or premium, if any, or interest on the Old Notes. No payment or distribution of any assets of the Company shall be made on account of principal of and premium, if any, or interest on the Old Notes, in the event and during the continuation of (i) any default in the payment of principal of or premium, if any, or interest on any Senior Indebtedness beyond any applicable grace period with respect thereto or (ii) any other event of default with respect to any Senior Indebtedness permitting the holders of such Senior Indebtedness (or a trustee or other representative on behalf of the holders thereof) to declare such Senior Indebtedness due and payable prior to the date on which it would otherwise have become due and payable, upon written notice thereof to the Company and the Trustee by any holders of Senior Indebtedness (or a trustee or other representative on behalf of the holders thereof) (the "Default Notice"), unless and until such event of default shall have been cured or waived or ceased to exist and such acceleration shall have been rescinded or annulled; provided such payments may not be prevented under clause (ii) above for more than 179 days after an applicable Default Notice has been received by the Trustee unless the Senior 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 rescinded or annulled or such Senior Indebtedness has been paid in full. No event of default which existed or was continuing on the date of any Default Notice may be made the basis for the giving of a second Default Notice and only one such Default Notice may be given in any 365-day period. (Article Four) By reason of such subordination, in the event of insolvency, creditors of the Company who are not holders of Senior Indebtedness or of the Old Notes may recover less, ratably, than holders of Senior Indebtedness and may recover more, ratably, than the Holders of the Old Notes. "Senior Indebtedness" means, with respect to the Company, any of the following (without duplication): (i) (a) any liability or obligation of the Company for borrowed money (including, without limitation, principal of and premium, if any, interest, fees, penalties, expenses, collection expenses, and other obligations in respect thereof, and, to the extent permitted by applicable law, interest accruing after the filing of a petition initiating any proceeding under the Bankruptcy Code whether or not allowed as a claim in such proceeding), whether or not evidenced by bonds, debentures, notes or other written instruments, and any other liability or obligation evidenced by notes, bonds, debentures or similar instruments (other than the Old Notes, but including the New Notes) whether or not contingent and whether outstanding on the date of execution of the Indenture or thereafter created, incurred or assumed, (b) any deferred payment obligation of the Company for the payment of the purchase price of property or assets evidenced by a note or similar instrument (excluding any obligation for trade payables or constituting the deferred purchase price of property or assets which is not evidenced by a note or similar instrument and which is unsecured), (c) any obligation of the Company for the payment of rent or other amounts under a lease of property or assets which obligation is required to be classified and accounted for as a capitalized lease on the balance sheet of the Company under generally accepted accounting principles, (d) all obligations of the Company under interest rate and currency swaps, floors, caps, or similar arrangements intended to fix interest rate obligations or currency fluctuation risks, (e) all obligations of the Company evidenced by a letter of credit or any reimbursement obligation of the Company in respect of a letter of credit, (f) all obligations of others secured by a lien to which any of the properties or assets of the Company are subject (including, without limitation, leasehold interests and any intangible property rights), whether or not the obligations secured thereby have been assumed by the Company or shall otherwise be the Company's legal obligation and (g) all obligations of others of the kinds described in the preceding clauses (a), (b), (c), (d) or (e) assumed by or guaranteed by the Company and the obligations of the Company under guarantees of any such obligations; and (ii) any amendments, renewals, extensions, deferrals, modifications, refinancing and refunding of any of the foregoing. "Senior Indebtedness" shall not include: (i) indebtedness that by the terms of the instrument or instruments by which such indebtedness was created or incurred expressly provides that it (a) is junior in right of payment to the Old Notes or (b) ranks pari passu, in right of payment with the Old Notes, (ii) any repurchase, redemption or other obligation in respect of Disqualified Capital Stock, (iii) any indebtedness of the Company to any Subsidiary or to any Affiliate of the Company or any of the Subsidiaries, (iv) any indebtedness incurred in connection with the purchase of goods, assets, materials or services in the ordinary course of business or representing amounts recorded as accounts 38 payable, trade payables (which are unsecured) or other current liabilities (other than for borrowed money) or deferred revenue and deposits of the Company on the books of the Company (other than the current portion of any long-term indebtedness of the Company that but for this clause (iv) would constitute Senior Indebtedness), (v) any indebtedness of or amount owed by the Company to employees for services rendered to the Company, (vi) any liability for Federal, state, local or other taxes owing or owed by the Company and (vii) the Company's 9 1/2% Subordinated Debentures due 2012. (Section 1.01) However, the New Notes are Senior Indebtedness with respect to the Old Notes and the Company's 9 1/2% Subordinated Debentures due 2012. The Old Notes will be effectively subordinated to all indebtedness and other liabilities and commitments (including trade payables and lease obligations) of the Company's subsidiaries. Any right of the Company to receive assets of any such subsidiary upon the liquidation or reorganization of any such subsidiary (and the consequent right of the Holders of the Old Notes to participate in those assets) will be effectively subordinated to the claims of that subsidiary's creditors, except to the extent that the Company is itself recognized as a creditor of such subsidiary, in which case the claims of the Company would still be subordinate to any security in the assets of such subsidiary and any indebtedness of such subsidiary senior to that held by the Company. The Indenture permits the incurrence of certain additional Indebtedness, including Senior Indebtedness. At September 30, 2003, the Company's Senior Indebtedness aggregated approximately $17.4 million, excluding accrued interest and the Company's subsidiaries had indebtedness and other liabilities of approximately $21.2 million. The Company expects from time to time to incur additional indebtedness, including Senior Indebtedness to the extent permitted by the Indenture. See Note 10 of "Notes to Consolidated Financial Statements" for a more detailed description of the Company's outstanding indebtedness. The Company's 9 1/2% Subordinated Debentures due 2012 are not Senior Indebtedness. However, the New Notes will be Senior Indebteness with respect to the Old Notes. Optional Redemption The Old Notes are presently redeemable at the Company's option, in whole or from time to time in part, upon not less than 20 nor more than 65 days' notice mailed to each Holder of the Old Notes to be redeemed at such Holder's address appearing in the Note Register, prior to maturity. The Redemption Prices (expressed as a percentage of the principal amount) are as follows for the 12-month period beginning December 1 of the years indicated: Year Percentage ---- ---------- 2003 101.875% 2004 100.938 thereafter and at maturity at 100% of principal, together in the case of any such redemption with accrued interest to the Redemption Date (subject to the right of Holders of record on the relevant Regular Record Date to receive interest due on an Interest Payment Date that is on or prior to the Redemption Date). No sinking fund is provided for the Old Notes. Events of Default The following are Events of Default under the Indenture: (i) failure to pay principal of or premium, if any, on any Old Note when due, whether or not such payment is prohibited by the subordination provisions of the Indenture; (ii) failure to pay any interest on any Old Note when due, continued for 30 days, whether or not such payment is prohibited by the subordination provisions of the Indenture; (iii) default in the payment of the Repurchase Price in respect of any Old Note on the Repurchase Date therefor, whether or not such payment is prohibited by the subordination provisions of the Indenture; 39 (iv) failure to perform or breach of any other covenant of the Company in the Indenture, which continues for 60 days after written notice as provided in the Indenture; and (v) certain events of bankruptcy, insolvency or reorganization of the Company or any Significant Subsidiary. (Section 7.01) Subject to the provisions of the Indenture relating to the duties of the Trustee, in case an Event of Default shall occur and be continuing, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request or direction of any of the Holders, unless such Holders shall have offered to the Trustee reasonable indemnity. (Section 8.01) Subject to the Trustee being offered reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by the Trustee, the Holders of a majority in aggregate principal amount of the Outstanding Old Notes will have the right by written instruction to the Trustee, to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee. (Section 7.05) If an Event of Default shall occur and be continuing, either the Trustee or the Holders of not less than 25% in aggregate principal amount of the Outstanding Old Notes may accelerate the maturity of all Old Notes; provided, however, that after such acceleration, but before a judgment or decree based on acceleration, the Holders of a majority in aggregate principal amount of the Outstanding Old Notes may, under certain circumstances, rescind and annul such acceleration if all Events of Default, other than the non-payment of accelerated principal, have been cured or waived as provided in the Indenture. (Section 7.02) For information as to waiver of defaults, see "Modification and Waiver" below. No Holder of any Old Note will have any right to institute any proceeding with respect to the Indenture or for any remedy thereunder, unless (i) such Holder shall have previously given to the Trustee written notice of a continuing Event of Default and unless also the Holders of at least 25% in aggregate principal amount of the Outstanding Old Notes shall have made written request to the Trustee to institute proceedings, (ii) such Holder has offered to the Trustee reasonable indemnity, (iii) the Trustee for 60 days after receipt of such notice has failed to institute any such proceeding and (iv) no direction inconsistent with such request shall have been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the Outstanding Old Notes. (Section 7.06) However, such limitations do not apply to a suit instituted by a Holder of an Old Note for enforcement of (a) payment of the principal of and premium, if any, or interest on such Old Note on or after the respective due dates expressed in such Old Note, (b) the right to require repurchase of such Old Note or (c) the right to convert such Old Note in accordance with the Indenture. (Section 7.07) The Indenture provides that the Company will deliver to the Trustee, within 95 days after the end of each fiscal year, an officers' certificate, stating as to each signer thereof that he or she is familiar with the affairs of the Company and whether or not to his or her knowledge the Company is in default in the performance and observance of any of the Company's obligations under the Indenture and if the Company shall be in default, specifying all such defaults of which he or she has knowledge and the nature and status thereof. (Section 6.04) Consolidation, Merger and Sale of Assets The Company, without the consent of the Holders of any of the Old Notes under the Indenture, may consolidate with or merge into any other Person or convey, transfer or lease its assets substantially as an entirety to any Person, provided that (i) the successor is a Person organized under the laws of any domestic jurisdiction; (ii) the successor Person, if other than the Company, assumes the Company's obligations on the Old Notes and under the Indenture; (iii) after giving effect to the transaction no Event of Default, and no event after notice or lapse of time, would become an Event of Default, shall have occurred and be continuing; (iv) the Company or the surviving person (if other than the Company) (A) will have Consolidated Net Worth (immediately after the transaction but prior to any purchase accounting adjustments resulting from the transaction) greater than or equal to the Consolidated Net Worth of the Company immediately preceding the transaction and (B) will, at the time of such transaction after giving pro forma effect thereto as if such transaction had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to Section 6.12 of the Indenture and (v) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture, complies with this covenant 40 and that all conditions precedent herein provided for relating to such transaction have been complied with. (Section 12.01) "Consolidated Net Worth" means, with respect to any Person as of any date, the sum of (i) the consolidated equity of the common stockholders of such Person and its consolidated Subsidiaries as of such date plus (ii) the respective amounts reported on such Person's balance sheet as of such date with respect to any series of preferred stock (other than Disqualified Capital Stock). Modification and Waiver Modifications and amendments of the Indenture may be made by the Company and the Trustee with the consent of the Holders of 66% in aggregate principal amount of the Outstanding Old Notes; provided, however, that no such modification or amendment may, without consent of the Holder of each Outstanding Old Note affected thereby, (i) change the stated maturity of the principal of, or any installment of interest on any Old Note; (ii) reduce the principal amount of, or the premium or interest on any Old Note; (iii) change the place of payment where, or currency in which, any Old Note or any premium or interest thereof is payable; (iv) impair the right to institute suit for the enforcement of any payment on or with respect to any Old Note; (v) adversely affect the right to convert the Old Notes; (vi) adversely affect the right to cause the Company to repurchase the Old Notes; (vii) modify the subordination provisions in a manner adverse to the Holders of the Old Notes; (viii) reduce the above- stated percentage of Outstanding Old Notes necessary to modify or amend the Indenture; or (ix) reduce the percentage of aggregate principal amount of Outstanding Old Notes necessary for waiver of compliance with certain provisions of the Indenture or for waiver of certain defaults. (Section 11.02) The Holders of a majority in aggregate principal amount of Outstanding Old Notes may waive compliance by the Company with certain restrictive provisions of the Indenture. (Section 7.04) The Holders of a majority in aggregate principal amount of the Outstanding Old Notes may waive any past default or right under the Indenture, except (i) a default in payment of principal, premium or interest, (ii) the right of a Holder to redeem or convert the Old Note or (iii) with respect to any covenant or provision of the Indenture that requires the consent of the Holder of each Outstanding Old Note affected. (Section 7.04) Repurchase at Option of Holders Upon a Repurchase Event The Indenture provides that if a Repurchase Event occurs after initial issuance of the Old Notes, each Holder of the Old Notes shall have the right (which right may not be waived by the Board of Directors or the Trustee) at the Holder's option, to require the Company to repurchase all of such Holder's Old Notes, or any portion thereof that is an integral multiple of $1,000, on the date (the "Repurchase Date") that is 45 calendar days after the date of the Company Notice (as defined below), for cash at a price equal to 100% of the principal amount of such Old Notes to be repurchased (the "Repurchase Price"), together with accrued interest to the Repurchase Date. (Section 6.09) Within 15 calendar days after the occurrence of a Repurchase Event, the Company is obligated to mail all Holders of record of the Old Notes a notice (the "Company Notice") of the occurrence of such Repurchase Event and of the repurchase right arising thereof. The Company must deliver a copy of the Company Notice to the Trustee. To exercise the repurchase right, the Holder of such Note must deliver on or before the fifth day preceding the Repurchase Date irrevocable written notice to the Trustee of the Holder's exercise of such right (except that the right of the Holders to convert such Old Notes shall continue until the close of business on the last Trading Day preceding the Repurchase Date), together with the Old Notes with respect to which the right is being exercised, duly endorsed for transfer to the Company. (Section 6.09) A Repurchase Event will be deemed to have occurred at such time after initial issuance of the Old Notes if: (i) any Person (including any syndicate or group deemed to be a "Person" under Section 13(d) (3) of the Exchange Act), other than the Company, any subsidiary of the Company, any existing Person (including directly or indirectly, the immediate family of any such Person) who currently beneficially owns shares of capital stock with 50% or more of the voting power as described below, or any current or future employee or director benefit plan of the Company or any subsidiary of the Company or any entity holding capital stock of the Company for or pursuant to the terms of such plan, or an underwriter engaged in a firm commitment underwriting in connection with a 41 public offering of capital stock of the Company, is or becomes the beneficial owner, 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 50% or more of the total voting power of all shares of capital stock of the Company entitled to vote generally in the election of directors; (ii) the Company sells or transfers all or substantially all of the assets of the Company to another Person; (iii) there occurs any consolidation of the Company with, or merger of the Company into, any other Person, any merger of another Person into the Company (other than a merger (a) which does not result in any reclassification, conversion, exchange or cancellation of outstanding shares of Common Stock, (b) which is effected solely to change the jurisdiction of incorporation of the Company and results in a reclassification, conversion or exchange of outstanding shares of Common Stock solely into shares of Common Stock, or (c) a transaction in which the stockholders of the Company immediately prior to such transaction owned, directly or indirectly, immediately following such transaction, at least a majority of the combined voting power of the outstanding voting stock of the Company resulting from the transaction, such stock to be owned by such stockholders in substantially the same proportion as their ownership of the voting stock of the Company immediately prior to such transaction); (iv) a change in the Board of Directors of the Company in which the individuals who constituted the Board of Directors of the Company at the beginning of the 24-month period immediately preceding such change (together with any other director whose election by the Board of Directors of the Company or whose nomination for election by the stockholders of the Company was approved by a vote of at least a majority of the directors then in office either who were directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the directors then in office; or (v) the Common Stock of the Company is the subject of a "Rule 13e-3 transaction" as defined under the Exchange Act, provided, however, that a Repurchase Event shall not be deemed to have occurred if the closing price per share of the Common Stock for any five Trading Days within the period of ten consecutive Trading Days ending immediately before a Repurchase Event shall equal or exceed 110% of the Conversion Price of such Old Notes in effect on each such Trading Day. A "beneficial owner" shall be determined in accordance with Rule 13d-3 promulgated by the SEC under the Exchange Act, as in effect on the date of execution of the Indenture. (Sections 1.01 and 6.09) The right to require the Company to repurchase the Old Notes as a result of the occurrence of a Repurchase Event could create an event of default under Senior Indebtedness as a result of which any repurchase could, absent a waiver, be blocked by the subordination provisions of the Old Notes. See "Subordination" above. Failure of the Company to repurchase the Old Notes when required would result in an Event of Default with respect to the Old Notes whether or not such repurchase is permitted by the subordination provisions. The Company's ability to pay cash to the Holders of Old Notes upon a repurchase may be limited by certain financial covenants contained in the Company's credit agreement. Rule 13e-4 under the Exchange Act requires, among other things, the dissemination of certain information to security holders in the event of any issuer tender offer and may apply in the event that the repurchase option becomes available to the Holders of the Old Notes. The Company will comply with this rule to the extent applicable at that time. (Section 6.09) The repurchase feature of the Old Notes may in certain circumstances make more difficult or discourage a takeover of the Company and the removal of incumbent management. The foregoing provisions would not necessarily afford Holders of the Old Notes protection in the event of highly leveraged or other transactions involving the Company that may adversely affect Holders. Except as described above with respect to a Repurchase Event, the Indenture does not contain provisions permitting the Holders of the Old Notes to require the Company to repurchase or redeem the Old Notes in the event of a takeover, recapitalization or similar transaction. Subject to the limitation on mergers and consolidations described above, the Company, its management or its subsidiaries could, in the future, enter into certain transactions, including refinancing, certain recapitalizations, acquisitions, the sale of all or substantially all of its assets, the liquidation of the Company or similar transactions, that would not constitute a Repurchase Event under the Indenture, but that would increase the amount of Senior Indebtedness (or any other Indebtedness) outstanding 42 at such time or substantially reduce or eliminate the Company's assets. There are certain restrictions in the Indenture on the creation of Senior Indebtedness (and other Indebtedness), however, 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 Old Notes. If a Repurchase Event were to occur, there is no assurance that the Company would have sufficient funds to repurchase all Old Notes tendered by the Holders thereof or to make any principal, premium, if any, or interest payments otherwise required by the Old Notes. As noted above, one of the events that constitutes a Repurchase Event under the Indenture is a sale or other transfer of all or substantially all of the assets of the Company. The Indenture is governed by New York law, and the definition under New York law of "substantially all" of the assets of a corporation varies according to the facts and circumstances of the transaction. Accordingly, if the Company were to engage in a transaction in which it disposed of less than all of its assets, a question of interpretation could arise as to whether such disposition was of "substantially all" of its assets and whether the transaction was a Repurchase Event. Satisfaction and Discharge The Company may, subject to certain conditions, discharge its obligations under the Indenture while the Old Notes remain outstanding if (i) all outstanding Old Notes will become due and payable at their scheduled maturity within one year or (ii) all outstanding Old Notes are scheduled for redemption within one year, and, in either case, the Company has deposited with the Trustee an amount sufficient to pay and discharge all outstanding Old Notes on the date of their scheduled maturity or the scheduled date of redemption. (Section 13.01) Reports In addition to complying with any applicable legal requirements, the Company delivers to the Holders of record, and to any beneficial owners so requesting, annual reports containing audited consolidated financial statements with a report thereon by the Company's independent public accountants. (Section 8.06) Governing Law The Indenture and the Old Notes are governed by and construed in accordance with the laws of the State of New York. Information Concerning the Trustee Continental Stock Transfer & Trust Company is the Trustee under the Indenture. A successor Trustee may be appointed in accordance with the terms of the Indenture. The Trustee's duties are set forth in the Trust Indenture Act, as amended (the "Trust Indenture Act"), and in the Indenture. The Trust Indenture Act imposes certain limitations on the right of the Trustee, in the event it becomes a creditor of the Company, to obtain payment of claims in certain cases, or to realize on certain property received in respect to any such claim as security or otherwise. The Trustee will be permitted to engage in other transactions; provided, however, it if acquires any conflicting interest within the meaning of Section 310 of the Trust Indenture Act, it must generally either eliminate such conflict or resign. Prior to an Event of Default, the Trustee is responsible to perform only such duties as are specifically set out in the Indenture. In case an Event of Default shall occur (and shall not be cured), the Trust Indenture Act required that the Trustee use the degree of care of a prudent person in the conduct of its own affairs in the exercise of its powers. Subject to such provisions, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request of any of the Holders of Old Notes, unless they shall have offered to the Trustee reasonable indemnity. (Section 8.01) 43 The Holders of a majority in principal amount of all outstanding Old Notes will 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 rule of law or with the Indenture, is not prejudicial to the rights of another Holder or the Trustee, and does not involve the Trustee in personal liability. (Sections 7.05 and 8.01) The Trustee is also the trustee for the Company's 9 1/2% Subordinated Debentures due 2012. 44 DESCRIPTION OF CAPITAL STOCK Common Stock The shares of Common Stock are entitled to one (1) vote per share on all matters submitted to stockholders. The holders of Common Stock are entitled to vote separately as a class (as are the shares of Class B Stock) on all matters requiring an amendment to the Company's Certificate of Incorporation, as well as on mergers, consolidations and certain other significant transactions for which stockholder approval is required under Delaware law. Holders of the Common Stock do not have preemptive rights or cumulative voting rights. Dividends on the Common Stock will be paid if, and when declared. The Common Stock is entitled to cash dividends which are 11.11% higher per share than the cash dividends which may be paid on the Class B Stock, but otherwise the Common Stock and the Class B Stock rank equally. Stock dividends on and stock splits of Common Stock will only be payable or made in shares of Common Stock. In the event of liquidation or insolvency, the Common Stock is entitled to receive the entire net assets of the Company remaining after payment of all debts and other claims of creditors and after the holders of each series of Preferred Stock, if any, have been paid the preferred liquidating distribution on their shares, if any, as fixed by the Board of Directors of the Company. The Common Stock is not convertible into shares of any other equity security of the Company. The Common Stock is freely transferable. As of December 31, 2003, there were 709 holders of record of Common Stock. Class B Stock The shares of Class B Stock are entitled to ten (10) votes per share on all matters submitted to stockholders. The holders of Class B Stock are entitled to vote separately as a class (as are the shares of Common Stock) on all matters requiring an amendment to the Company's Certificate of Incorporation, as well as on mergers, consolidations and certain other significant transactions for which stockholder approval is required under Delaware law. Holders of the Class B Stock do not have preemptive rights or cumulative voting rights. In the event the combined listing for trading of the Common Stock on the American Stock Exchange no longer requires twenty-five percent (25%) of the directors to be elected separately by the holders of Common Stock, or if the number of shares of Class B Stock is less than twelve and one-half percent (12 1/2%) of the total number of shares of Common Stock and Class B Stock outstanding, then the Common Stock and Class B Stock will vote as one class in the election of directors, with each share of Common Stock entitled to one (1) vote per share and each share of Class B Stock entitled to ten (10) votes per share. Dividends on the Class B Stock will be paid only as and when dividends on the Common Stock are declared and paid. The Common Stock is entitled to cash dividends which are 11.11% higher per share than the cash dividends which may be paid on the Class B Stock, but otherwise the Common Stock and the Class B Stock rank equally. Stock dividends on and stock splits of Class B Stock will only be payable or made in shares of Class B Stock. In the event of liquidation or insolvency, each share of Class B Stock will be entitled, through conversion into Common Stock, to share ratably with the Common Stock in the assets remaining after payment of all debts and other claims of creditors, subject to the rights of any Preferred Stock which may be issued in the future. Holders of Class B Stock may elect at any time to convert any or all of such shares back into shares of the Common Stock on a share-for-share basis. In the event that the number of outstanding shares of Class B Stock falls below 5% of the aggregate number of issued and outstanding shares of Common Stock and Class B Stock, or the Board of Directors and a majority of the outstanding shares of Class B Stock approve the conversion of all of the Class B Stock into Common Stock, then immediately upon the occurrence of the Class B Stock will automatically be converted into shares of Common Stock. In the event of such conversion, certificates formerly representing outstanding shares of Class B Stock will thereafter be deemed to represent a like number of shares of Common Stock. The Class B Stock is not transferable except to certain family members and related entities. As of December 31, 2003, there were 63 holders of Class B Stock. 45 Class A Stock Each share of Class A Stock has no voting rights except as otherwise required by law. Under the Delaware General Corporation Law, holders of Class A Stock are entitled to vote on proposals to increase or decrease the number of authorized shares of Class A Stock, change the par value of the Class A Stock or to alter or change the powers, preferences or special rights of the shares of Class A Stock which may affect them adversely. Each outstanding share of Class A stock is entitled to receive such dividends and other distributions in cash, stock or property as may be declared by the Board of Directors of the Company, provided that, if at any time a cash dividend is paid on the Common Stock, a cash dividend will also be paid on the Class A Stock in an amount 10% higher than the amount per share paid on the Common Stock and 22.2% higher than that paid on the Class B Stock. In no event shall dividends and other distributions be paid on any of the Common Stock, Class A Stock or Class B Stock unless the other such classes of stock also receive dividends subject to the above provisions for the requirement of the respective higher cash dividends for Class A Stock and Common Stock. Dividends or other distributions payable in shares of stock shall be made to holders of Class A Stock in shares of Class A Stock. The Board can authorize a distribution of Class A Stock proportionately to holders of Common Stock, Class A Stock and Class B Stock. In no event will either Common Stock, Class A Stock or Class B Stock be split, divided or combined unless the others are also proportionately split, divided or combined. The Class A Stock will convert into Common Stock only at such time as all of the Class B Stock is converted to Common Stock in accordance with the terms of the Certificate of Incorporation. The Certificate of Incorporation provides that if the number of shares of Class B Stock falls below 5% of the aggregate number of outstanding shares of Common Stock and Class B Stock, or if the Board of Directors and a majority of the outstanding shares of Class B Stock approve, the outstanding shares of Class B Stock will be converted into Common Stock. Consistent with the terms of the Common Stock and Class B Stock, the Class A Stock does not carry any preemptive rights enabling a holder to subscribe for or receive shares of any class of stock of the Company or any other securities convertible into shares of any class of stock of the Company. The Class A Stock is entitled to receive the same consideration per share as the Common Stock and Class B Stock in the event of any liquidation, dissolution or winding-up of the Company. Each holder of Class A Stock is entitled to receive the same per share consideration as the per share consideration, if any, received by any holder of the Common Stock and Class B Stock in a merger or consolidation of the Company. There are no shares of Class A Stock outstanding. Preferred Stock Preferred stock may be issued in one or more series from time to time by action of the Board of Directors. The shares of any series of Preferred Stock may be convertible into Common Stock, may have priority over the Common Stock, Class B Stock and Class A Stock in the payment of dividends and as to the distribution of assets in the event of liquidation, dissolution or winding-up of the Company and may have preferential or other voting rights, in each case, to the extent, if any, determined by the Board of Directors of the Company at the time it creates the series of Preferred Stock. There currently are no shares of Preferred Stock outstanding. Delaware Anti-Takeover Law Under Section 203 of the Delaware General Corporation Law (the "Delaware anti-takeover law"), certain "business combinations" between a Delaware corporation whose stock is listed on a national securities exchange or held of record by more than 2,000 stockholders, and an "interested stockholder" are prohibited for a three-year period following the date that such stockholder became an interested stockholder, unless (i) the corporation has elected in its certificate of incorporation or bylaws not to be governed by the Delaware anti- takeover law (the 46 Company has not made such an election), (ii) the business combination was approved by the board of directors of the corporation before the other party to the business combination became an interested stockholder, (iii) upon consummation of the transaction that made it an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the commencement of the transaction (excluding voting stock owned by directors who are also officers or held in employee stock plans in which the employees do not have a right to determine confidentially whether to tender or vote stock held by the plan), or (iv) the business combination was approved by the board of directors of the corporation and ratified by 66% of the voting stock which the interested stockholder did not own. The three year prohibition does not apply to certain business combinations proposed by an interested stockholder following the announcement or notification of certain extraordinary transactions involving the corporation and a person who had not been an interested stockholder during the previous three years or who became an interested stockholder with the approval of a majority of the corporation's directors. The term "business combination" is defined generally to include mergers or consolidations between a Delaware corporation and an interested stockholder, transactions with an interested stockholder involving the assets or stock of the corporation or its majority-owned subsidiaries and transactions which increase an interested stockholder's percentage ownership of stock. The term "interested stockholder" is defined generally as a stockholder who becomes the beneficial owner of 15% or more of a Delaware corporation's voting stock. The Delaware anti-takeover law could have the effect of delaying, deferring or preventing a change in control of the Company. Limitation of Liability and Indemnification Matters The Company's Certificate of Incorporation provides that directors of the Company shall not be personally liable to the Company or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the Company 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, relating to prohibited dividends or distributions or the repurchase or redemption of stock, or (iv) for any transaction from which the director derives an improper personal benefit. The provision does not apply to claims against a director for violations of certain laws, including Federal securities law. If the Delaware General Corporation Law is amended to authorize the further elimination or limitation of directors' liability, then the liability of directors of the Company shall automatically be limited to the fullest extent provided by law. The Company's By-laws also contain provisions to indemnify the directors, officers, employees or other agents to the fullest extent permitted by the Delaware General Corporation Law. In addition, the Company has entered into indemnification agreements with its current directors and executive officers. These provisions and agreements may have the practical effect in certain cases of eliminating the ability of stockholders to collect monetary damages from directors. The Company believes that these contractual agreements and the provisions in its Certificate of Incorporation and By-laws are necessary to attract and retain qualified persons as directors and officers. Special Voting Requirements The Company's Certificate of Incorporation, as presently in effect, contains a required four-fifths vote on mergers, consolidations or a sale of substantially all of the Company's assets with an "Interested Person," i.e. a Holder of 10% or more of its Common Stock unless such transaction is first approved by the Company's Board of Directors. It also contains a "fair price" provision requiring all stockholders to receive equal treatment in the event of a takeover which may be coercive; such provision may not be amended except by a four-fifths vote of the stockholders and may be considered to have the effect of discouraging tender offers, takeover attempts, acquisitions or business combinations involving the Company; and such provision also requires that business combinations involving the Company and certain "Acquiring Persons" (i.e., a person or entity which directly or indirectly owns or controls at least 5% of the voting stock of the Company) be approved by the holders of four- fifths of the Company's outstanding shares entitled to vote (excluding shares held by an Acquiring Person) unless such business combination either: (1) has been authorized by the Board of Directors prior to the time that the Acquiring Person involved in such business combination became an Acquiring Person, or 47 (2) will result in the receipt by the other stockholders of a specified minimum amount and form of payment for their shares. Transfer Agent and Registrar The transfer agent and registrar of the Common Stock of the Company is Continental Stock Transfer & Trust Company, 17 Battery Place, New York, New York 10004. 48 INCORPORATION OF DOCUMENTS BY REFERENCE The SEC allows us to "incorporate by reference" information into this document, which means that we can disclose important information to you by referring you to another document filed separately with the SEC. This document incorporates by reference the documents set forth below that we have previously filed with the SEC. These documents contain important information about Trans-Lux and its finances. The following documents that we previously filed with the SEC are incorporated in this Offering Circular by reference: * Quarterly Report on Form 10-Q for the period ended September 30, 2003; * Annual Report on Form 10-K for the fiscal year ended December 31, 2002; and * Proxy Statement on Schedule 14A relating to our 2003 Annual Meeting of Stockholders. In addition to the foregoing, all reports and other documents that we file pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Offering Circular and prior to the expiration date of the Exchange Offer shall be deemed to be incorporated by reference into this Offering Circular and to be a part hereof from the dates of filing of such reports and documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Offering Circular to the extent that a statement contained herein, or in any other subsequently filed document which also is incorporated or deemed to be incorporated by reference herein, modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Offering Circular. 49 INFORMATION AND LETTER OF TRANSMITTAL REQUESTS Requests for information, Letters of Transmittal or additional copies of this Offering Circular should be made to: Ms. Angela D. Toppi - Secretary Trans-Lux Corporation 110 Richards Avenue Norwalk, CT 06856-5090 Phone Number: (203) 853-4321 Fax Number: (203) 866-9496 E-mail address: atoppi@trans-lux.com Exchange Agent If Old Noteholders wish to tender in the Exchange Offer, delivery of the Letter of Transmittal, and Old Note certificates and any other required documents should be made to the Exchange Agent, Wells Fargo Bank, N.A., as follows: By Mail - ------- Wells Fargo Bank Minnesota, N.A. Customized Fiduciary Services 6th and Marquette, MAC N9303-120 Minneapolis, MN 55479 Attn: David Bergstrom By Hand* - ------- Wells Fargo Corporate Trust c/o The Depository Trust Company 1st Floor; TADS Department 55 Water Street New York, NY 10041 - ----------- *Hand delivery to other than the above addresses will not constitute valid delivery. EX-99.A.1.B 4 letteroftransmittal3.txt LETTER OF TRANSMITTAL Exhibit (a)(1)(B) LETTER OF TRANSMITTAL TO ACCOMPANY CERTIFICATE FOR 7 1/2% CONVERTIBLE SUBORDINATED NOTES DUE 2006 TRANS-LUX CORPORATION OFFER TO EXCHANGE UP TO $15,000,000 PRINICPAL AMOUNT OF 8 1/4% LIMITED CONVERTIBLE SENIOR SUBORDINATED NOTES DUE 2012 ("NEW NOTES") PURSUANT TO THE OFFERING CIRCULAR DATED FEBRUARY 23, 2004 FOR UP TO $15,000,000 PRINICPAL AMOUNT OF 7 1/2% CONVERTIBLE SUBORDINATED NOTES DUE 2006 ("OLD NOTES") THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON MARCH 31, 2004, UNLESS EXTENDED OR EARLIER TERMINATED. TENDERS MAY BE WITHDRAWN PRIOR TO 5:00P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE. The Exchange Agent is: Wells Fargo Bank, N.A. By Regular or Certified Mail: By Overnight Courier: By Hand: ----------------------------- --------------------- -------- Wells Fargo Bank Minnesota, N.A. Wells Fargo Bank Minnesota, N.A. Wells Fargo Corporate Trust Customized Fiduciary Services Customized Fiduciary Services c/o The Depository Trust Company 6th and Marquette, MAC N9303-120 6th and Marquette, MAC N9303-120 1st Floor; TADS Department Minneapolis, MN 55479 Minneapolis, MN 55479 55 Water Street Attn: David Bergstrom Attn: David Bergstrom New York, NY 10041 By Facsimile: (Eligible Guarantor Institutions Only) (612) 667-9825 To Confirm by Telephone or for Information Call: (612) 667-7390
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN THOSE SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS BY FACSIMILE OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY OF YOUR OLD NOTES. NOTE: SIGNATURES MUST BE PROVIDED BELOW PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY BOX BELOW TO BE COMPLETED BY ALL TENDERING HOLDERS OF OLD NOTES DESCRIPTION OF OLD NOTES TENDERED Name and Address of Registered Holder 1 2 3 Certificate Aggregate Amount of Old Number(s) Amount Notes Tendered _________________________________________ _________________________________________ _________________________________________ Total: __________________________________________________________________________________
BOXES BELOW TO BE CHECKED AS APPLICABLE [ ] CHECK HERE IF THE CERTIFICATE(S) REPRESENTING YOUR OLD NOTES IS BEING TENDERED WITH THIS LETTER OF TRANSMITTAL. [ ] CHECK HERE IF THE CERTIFICATE(S) REPRESENTING YOUR OLD NOTES HAS BEEN LOST, DESTROYED OR STOLEN AND YOU REQUIRE ASSISTANCE IN OBTAINING A NEW CERTIFICATE(S). Certificate number(s) ---------------------------------------------------- Amount represented ---------------------------------------------------- You must contact the Exchange Agent to obtain instructions for replacing lost, destroyed or stolen certificate(s) representing amount of Old Notes. See Instruction 12. By signing this Letter of Transmittal, you hereby acknowledge that you have received and reviewed the Offering Circular dated February 23, 2004 (the "Offering Circular"), of Trans-Lux Corporation ("Trans-Lux") and this Letter of Transmittal (the "Letter of Transmittal"). The Offering Circular, together with this Letter of Transmittal, constitutes Trans- Lux' offer to exchange (the "Exchange Offer") $1,000 principal amount of its 8 1/4% Limited Convertible Senior Subordinated Notes due 2012 ("New Notes") for each $1,000 principal amount of Trans-Lux' currently outstanding 7 1/2% Convertible Subordinated Notes due 2006 (CUSIP No. 893247 AD 8) ("Old Notes"). Subject to the terms and conditions of the Exchange Offer, Trans-Lux will issue up to $15,000,000 principal amount of its New Notes in exchange for up to $15,000,000 principal amount of its Old Notes, representing approximately 49.7% of the $30,177,000 outstanding principal amount of Old Notes, to the extent such New Notes are properly tendered and not withdrawn prior to the expiration of the Exchange Offer. If more than $15,000,000 principal amount of Old Notes are tendered, Trans-Lux will accept tenders from each tendering Holder of Old Notes on a pro rata basis unless Trans-Lux elects to accept all tendered Old Notes. Trans-Lux will announce any final proration factor within seven business days after the Expiration Date. Trans-Lux reserves the right to extend or terminate the Exchange Offer if any of the conditions set forth in the section of the Offering Circular entitled "The Exchange Offer-Conditions of the Exchange Offer" are not satisfied and to otherwise amend the Exchange Offer in any respect. The Exchange Offer is open to all Holders of Old Notes and is subject to customary conditions. Subject to applicable securities laws and the terms set forth in the Offering Circular, Trans-Lux reserves the right to waive any and all conditions of the Exchange Offer. If you decide to tender your Old Notes and Trans-Lux accepts the Old Notes, this will constitute a binding agreement between you and Trans-Lux, subject to the terms and conditions set forth in the Offering Circular and this Letter of Transmittal. Unless you comply with the procedures described in the section of the Offering Circular entitled "The Exchange Offer-Guaranteed Delivery Procedures," you must do one of the following prior to the expiration of the Exchange Offer to participate in the Exchange Offer: -- tender your Old Notes by sending the certificates representing your Old Notes, in proper form for transfer, a properly completed and duly executed Letter of Transmittal, with any required signature guarantees, and all other documents required by this Letter of Transmittal to the Exchange Agent at one of the addresses set forth above; or -- if you hold Old Notes in "street name" through your broker, you should follow the instructions provided by your broker. If you are a Holder of Old Notes and wish to tender your Old Notes in the Exchange Offer, but (1) the certificates representing your Old Notes are not immediately available, or (2) time will not permit your certificates or other required documents to reach Wells Fargo Bank, N.A., (the "Exchange Agent") before the expiration of the Exchange Offer, you may tender the Old Notes by following the procedures described in the section of the Offering Circular entitled "The Exchange Offer-Guaranteed Delivery Procedures." Only registered Holders of the Old Notes - which term, for purposes of this Letter of Transmittal, includes any participant in The Depository Trust Company's system whose name appears on a security position listing as the owner of the Old Notes - are entitled to tender their Old Notes for exchange in the Exchange Offer. If you are a beneficial owner whose Old Notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and you wish to tender your Old Notes in the Exchange Offer, you should promptly contact the person in whose name the Old Notes are registered and instruct that person to tender on your behalf. If you wish to tender in the Exchange Offer on your own behalf, prior to completing and executing this Letter of Transmittal and delivering the certificates representing your Old Notes, you must either make appropriate arrangements to register ownership of the Old Notes in your name or obtain a properly completed bond power from the person in whose name the Old Notes are registered. You must complete this Letter of Transmittal if you are a registered Holder of Old Notes - which term, for purposes of this Letter of Transmittal, includes any participant in the Depository Trust Company's system whose name appears on a security position listing as the owner of the Old Notes - and you wish to tender the certificates representing your Old Notes to the Exchange Agent together with this Letter Of Transmittal. In order to properly complete this Letter of Transmittal, you must: (1) complete the box titled "Description of Old Notes Tendered," (2) if appropriate, check and complete the boxes relating to guaranteed delivery and the boxes titled "Special Issuance Instructions" and "Special Delivery Instructions," (3) sign this Letter of Transmittal by completing the box titled "Sign Here," and (4) complete the box titled "Substitute Form W-9." By completing the box titled "Description of Old Notes Tendered" and signing below, you will have tendered your New Notes for exchange on the terms and conditions described in the Offering Circular and this Letter of Transmittal. You should read the detailed instructions below before completing this Letter of Transmittal. BOXES BELOW TO BE CHECKED AS APPLICABLE SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS (See Instructions 1, 5 and 6) (See Instructions 1, 5 and 6) TO BE COMPLETED ONLY IF CERTIFICATES FOR TO BE COMPLETED ONLY IF CERTIFICATES FOR OLD NOTES NOT TENDERED OR EXCHANGED OR OLD NOTES NOT TENDERED OR EXCHANGED OR NEW NOTES ARE TO BE DELIVERED TO NEW NOTES ARE TO BE ISSUED IN THE NAME OF SOMEONE OTHER THAN THE REGISTERED SOMEONE OTHER THAN THE REGISTERED HOLDER OF THE OLD NOTES WHOSE NAME(S) HOLDER OF THE OLD NOTES WHOSE NAME(S) APPEAR(S) BELOW OR TO THE REGISTERED APPEAR(S) BELOW. HOLDER AT AN ADDRESS OTHER THAN THAT SHOWN BELOW. [ ] 8 1/4% Limited Convertible Senior Subordinated Notes to: [ ] 8 1/4% Limited Convertible Senior Subordinated Notes to: [ ] 7 1/2% Convertible Subordinated Notes to: [ ] 7 1/2% Convertible Subordinated Notes to: Name____________________________________________ Name_________________________________________ (Please Print) (Please Print) Address__________________________________________ Address______________________________________ _________________________________________________ _____________________________________________ (Zip Code) (Zip Code) Telephone Number (____)__________________________ Telephone Number (____)_______________________ _________________________________________________ _____________________________________________ (Tax Identification or Social Security No.) (Tax Identification or Social Security No.) (See Instruction 9) (See Instruction 9)
CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED DELIVERY IF TENDERED OLD NOTES ARE BEING DELIVERED UNDER A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING: Name(s) of Registered Holder(s) ------------------------------------------ Window Ticket Number (if any) ------------------------------------------ Date of Execution of Notice of Guaranteed Delivery ----------------------- Name of Institution which Guaranteed Delivery --------------------------- Ladies and Gentlemen: Upon the terms and subject to the conditions of the Exchange Offer, as described in the Offering Circular and this Letter of Transmittal, I hereby tender to Trans-Lux the amount of Old Notes, described above in the box titled "Description of Old Notes Tendered," in exchange for a like amount of New Notes tendered for exchange. I understand that, subject to the terms and conditions of the Exchange Offer, Trans-Lux will issue New Notes in exchange for up to $15,000,000 principal amount of New Notes, representing approximately 49.7% of the number of outstanding Old Notes, to the extent such Old Notes are properly tendered and not withdrawn prior to the expiration of the Exchange Offer. I also understand that, if more than $15,000,000 principal amount of Old Notes are tendered, Trans-Lux will accept tenders from each tendering Holder of Old Notes on a pro rata basis and that Trans-Lux will announce any proration factor within seven business days after the expiration date. I understand that Trans-Lux reserves the right to extend or terminate the Exchange Offer if the conditions set forth in the section of the Offering Circular entitled "The Exchange Offer-Conditions of the Exchange Offer" are not satisfied and to otherwise amend the Exchange Offer in any respect. I understand that the Exchange Offer is open to all Holders of Old Notes and is subject to customary conditions. I agree that, subject to applicable securities laws and the terms set forth in the Offering Circular, Trans-Lux reserves the right to waive any and all conditions of the Exchange Offer. Subject to and effective upon the acceptance for exchange of all or any portion of the Old Notes tendered by this Letter of Transmittal in accordance with the terms and conditions of the Exchange Offer - including, if the Exchange Offer is extended or amended, the terms and conditions of any extension or amendment - I hereby sell, assign and transfer to, or upon the order of, Trans-Lux all right, title and interest in and to the Old Notes tendered by this Letter of Transmittal. I hereby irrevocably constitute and appoint the Exchange Agent as my agent and attorney-in-fact - with full knowledge that the Exchange Agent is also acting as the agent of Trans-Lux in connection with the Exchange Offer with respect to the tendered Old Notes, with full power of substitution, such power of attorney being deemed to be an irrevocable power coupled with an interest, subject only to the right of withdrawal described in the Offering Circular, to (1) deliver certificates representing the tendered Old Notes to Trans-Lux together with all accompanying evidences of transfer and authenticity to, or upon the order of, Trans-Lux, upon receipt by the Exchange Agent, as my agent, of the certificates for New Notes to be issued in exchange for the tendered Old Notes, (2) present certificates representing the tendered Old Notes for transfer, and to transfer the tendered Old Notes on the books of Trans-Lux, and (3) receive for the account of Trans-Lux all benefits and otherwise exercise all rights of ownership of the tendered Old Notes, all in accordance with the terms and conditions of the Exchange Offer. I hereby represent and warrant that I have full power and authority to tender, sell, assign and transfer the Old Notes tendered by this Letter of Transmittal and that, when the tendered Old Notes are accepted for exchange, Trans-Lux will acquire good, marketable and unencumbered title to the tendered Old Notes, free and clear of all liens, restrictions, charges and encumbrances, and that the tendered Old Notes are not subject to any adverse claims or proxies. I will, upon request, execute and deliver any additional documents deemed by Trans-Lux or the Exchange Agent to be necessary or desirable to complete the exchange, sale, assignment and transfer of the Old Notes tendered by this Letter of Transmittal. I have read and I agree to all of the terms of the Exchange Offer. The name(s) and address(es) of the registered Holder(s) - which term, for purposes of this Letter of Transmittal, includes any participant in The Depository Trust Company's system whose name appears on a security position listing as the Holder of the Old Notes - of the Old Notes tendered by this Letter of Transmittal are printed above as they appear on the certificate(s) representing the Old Notes. The certificate number(s) and the Old Notes that I wish to tender are indicated in the appropriate boxes set forth above. Unless I have otherwise indicated by completing the box titled "Special Issuance Instructions" above, I hereby direct that the New Notes be issued in the name(s) of the undersigned. Similarly, unless I have otherwise indicated by completing the box titled "Special Delivery Instructions," I hereby direct that the certificates for the New Notes be delivered to the address shown below my signature. If I have (1) tendered any Old Notes that are not exchanged in the Exchange Offer for any reason or (2) submitted certificates for more Old Notes than I wish to tender, unless I have otherwise indicated by completing the boxes titled "Special Issuance Instructions" or "Special Delivery Instructions," I hereby direct that certificates for any Old Notes that are not tendered or not exchanged should be issued in the name of the undersigned, and delivered to the address shown below my signature, at Trans-Lux' expense, promptly following the expiration or termination of the Exchange Offer. I understand that if I decide to tender Old Notes and Trans-Lux accepts the Old Notes for exchange, this will constitute a binding agreement between Trans-Lux and me, subject to the terms and conditions set forth in the Offering Circular and this Letter of Transmittal. I also recognize that under certain circumstances described in the section of the Offering Circular titled "The Exchange Offer-Conditions of the Exchange Offer," Trans-Lux may not be required to accept for exchange any Old Notes tendered by this Letter of Transmittal. All authority conferred in or agreed to be conferred in this Letter of Transmittal will survive my death or incapacity, and any obligation of mine under this Letter of Transmittal will be binding upon my heirs, executors, administrators, personal representatives, trustees in bankruptcy, legal representatives, successors and assigns. Except as stated in the Offering Circular, this tender is irrevocable. SIGN HERE (SEE INSTRUCTIONS 2, 5 AND 6) (Please complete substitute Form W-9 below) (NOTE: SIGNATURE(S) MUST BE GUARANTEED IF REQUIRED BY INSTRUCTION 2) This Letter of Transmittal must be signed by (1) the registered Holder(s) - which term, for purposes of this Letter of Transmittal, includes any participant in The Depository Trust Company's system whose name appears on a security position listing as the Holder of the Old Notes - exactly as the name(s) of the registered Holder(s) appear(s) on the certificate(s) for the Old Notes tendered or on the register of Holders maintained by Trans-Lux, or (2) any person(s) authorized to become the registered Holder(s) by endorsements and documents transmitted with this Letter of Transmittal - including any opinions of counsel, certifications and other information as may be required by Trans-Lux for the Old Notes to comply with the restrictions on transfer, if any, applicable to the Old Notes. If the signature below is by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or another acting in a similar fiduciary or representative capacity, please set forth the signer's full title. See Instruction 5. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Signature(s) of Existing Old Note Holder(s) Dated: ___________________, 2004 Name(s) ------------------------------------------------------------------------ - ------------------------------------------------------------------------------- (Please Print) Capacity ---------------------------------------------------------------------- Address - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- (Zip Code) Tax Identification or Social Security No. -------------------------------------- (See Instruction 9) Area Code and Telephone No. --------------------------------------------------- - ------------------------------------------------------------------------------- Signature(s) Guaranteed (See Instruction 2, if required) Eligible Guarantor Institution ------------------------------------------------- Official Signature ------------------------------------------------------------ Dated: ___________________, 2004 PAYOR'S NAME: WELLS FARGO BANK, N.A. SUBSTITUTE FORM W-9 Department of the Treasury Internal Revenue Service Name_________________________________________________________ Address______________________________________________________ ______________________________________________________ (Number and Street) ____________________________________________________________ (Zip Code) (City) (State) Payor's Request for Taxpayer Identification Number ("TIN") Part 1(a) - PLEASE PROVIDE YOUR TIN TIN______________________ IN THE BOX AT RIGHT AND CERTIFY BY __________________________ SIGNING AND DATING BELOW (Social Security Number of Employer Identification Number) _______________________________________________________________________ Part 1 (b) - PLEASE CHECK THE BOX AT RIGHT IF YOU HAVE APPLIED FOR, AND ARE AWAITING RECEIPT OF YOUR TIN [ ] _______________________________________________________________________ Part 2 - FOR PAYEES EXEMPT FROM BACKUP WITHHOLDING PLEASE WRITE "EXEMPT" HERE (SEE INSTRUCTIONS) _______________________________________________________________________ Part 3 - CERTIFICATION UNDER PENALTIES OF PERJURY, I CERTIFY THAT (X) The number shown on this form is my correct TIN (or I am waiting for a number to be issued to me), (Y) I am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service (the "IRS") that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup with holding, and (2) I am a U.S. person (including a U.S. resident alien). Sign Here SIGNATURE: --------------------------------------------------------------- DATE: ---------------------------------------------------------------
Certification of Instructions - You must cross out Item (Y) of Part 3 above if you have been notified by the IRS that you are currently subject to backup withholding because of underreporting interest or dividends on your tax return. However, if after being notified by the IRS that you were subject to backup withholding you received another notification from the IRS that you are no longer subject to backup withholding, do not cross out such Item (Y). YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 1(B) OF THE SUBSTITUTE FORM W-9 INDICATING YOU HAVE APPLIED FOR, AND ARE AWAITING RECEIPT OF, YOUR TIN. CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (1) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office or (2) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number to the Payor by the time of payment, 30% of all reportable payments made to me pursuant to the Exchange Offer will be withheld. ----------------------------------------- -------------------------------- Signature Date NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 30% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE EXCHANGE OFFER. INSTRUCTIONS (Forming Part of the Terms and Conditions of the Exchange Offer) 1. Delivery of Letter of Transmittal and Certificates; Guaranteed Delivery Procedures You must complete this Letter of Transmittal if you are a Holder of Old Notes - which term, for purposes of this Letter of Transmittal, includes any participant in The Depository Trust Company's system whose name appears on a security position listing as the Holder of the Old Notes - and you wish to tender certificates representing your Old Notes to the Exchange Agent together with this Letter of Transmittal. In order to constitute a valid tender of your Old Notes, unless you comply with the procedures for Guaranteed Delivery described below, the Exchange Agent must receive the following documents at one of the addresses set forth above prior to the expiration of the Exchange Offer: (1) certificates representing the Old Notes, in proper form for transfer, (2) a properly completed and duly executed Letter of Transmittal, with any required signature guarantees, and (3) all other documents required by this Letter of Transmittal. If you are a Holder of Old Notes and wish to tender your Old Notes, but (1) the certificates representing your Old Notes are not immediately available, or (2) time will not permit the certificates or other required documents to reach the Exchange Agent before the expiration of the Exchange Offer, you may effect a tender if: (1) the tender is made through an Eligible Guarantor Institution (as defined below); (2) prior to the expiration of the Exchange Offer, the Exchange Agent receives from an Eligible Guarantor Institution a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form we have provided, setting forth your name and address and the amount of Old Notes you are tendering and stating that the tender is being made by Notice of Guaranteed Delivery; and (3) the Exchange Agent receives within three American Stock Exchange, Inc. ("AMEX") trading days after the date of execution of the Notice of Guaranteed Delivery: (a) the certificates for all physically tendered Old Notes, in proper form for transfer, (b) a properly completed and duly executed Letter of Transmittal, with any required signature guarantees, and (c) all other documents required by the Letter of Transmittal. The Notice of Guaranteed Delivery may be sent by overnight courier, hand delivery, registered or certified mail or facsimile transmission and must include a guarantee by an Eligible Guarantor Institution in the form set forth in the Notice. The method of delivery of certificates for Old Notes, Letters of Transmittal, and all other required documents is at your election. If you deliver your Old Notes by mail, we recommend registered mail, properly insured, with return receipt requested. In all cases, you should allow sufficient time to assure timely delivery. Please send certificates for Old Notes, Letters of Transmittal, or other required documents to the Exchange Agent at one of the addresses set forth above. Please do not send these documents to Trans-Lux. Trans-Lux will not accept any alternative, conditional or contingent tenders. Each tendering Holder, by execution of this Letter of Transmittal, waives any right to receive any notice of the acceptance of such tender. 2. Guarantee of Signatures No signature guarantee on this Letter of Transmittal is required if: (a) this Letter of Transmittal is signed by the registered Holder which term - - for purposes of this Letter of Transmittal, includes any participant in The Depository Trust Company's system whose name appears on a security position listing as the owner of the Old Notes - tendered with this Letter of Transmittal, unless such Holder(s) has completed either the box titled "Special Issuance Instructions" or the box titled "Special Delivery Instructions" set forth above, or (b) the Old Notes are tendered for the account of a firm that is an Eligible Guarantor Institution. In all other cases, an Eligible Guarantor Institution must guarantee the signature(s) on this Letter of Transmittal. See Instruction 5. An "Eligible Guarantor Institution" (as defined in Rule 17Ad-15 promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act") means: -- Banks (as defined in Section 3(a) of the Federal Deposit Insurance Act); -- Brokers, dealers, municipal securities dealers, municipal securities brokers, government securities dealers and government securities brokers (as defined in the Exchange Act); -- Credit unions (as defined in Section 19B(1)(A) of the Federal Reserve Act); -- National securities exchanges, registered securities associations and clearing agencies (as these terms are defined in the Exchange Act); and -- Savings associations (as defined in Section 3(b) of the Federal Deposit Insurance Act). 3. Inadequate Space If the space provided in the box titled "Description of Old Notes Tendered" is inadequate, the certificate number(s) and/or the amount of Old Notes and any other required information may be listed on a separate signed schedule and attached to this Letter of Transmittal. 4. Partial Tenders and Withdrawal Rights If you are tendering less than all of the Old Notes evidenced by any certificate you are submitting, please fill in the amount of Old Notes which are to be tendered in column 3 ("Amount of Old Notes Tendered" of the box titled "Description of Old Notes Tendered." In that case, unless you have otherwise indicated by completing the boxes titled "Special Issuance Instructions" or "Special Delivery Instructions," new certificate(s) for the remainder of the Old Notes that were evidenced by your old certificate(s) will be sent to the registered Holder of the Old Notes, promptly after the expiration of the Exchange Offer. The entire principal amount of Old Notes delivered to the Exchange Agent will be deemed to have been tendered unless otherwise indicated. Except as otherwise provided in this Letter of Transmittal, tenders of Old Notes may be withdrawn at any time prior to the Expiration Date of the Exchange Offer. For a withdrawal to be effective, a written notice of withdrawal must be received by the Exchange Agent prior to the expiration of the Exchange Offer at one of the addresses set forth above. Any notice of withdrawal must specify the name of the Holder who tendered the Old Notes to be withdrawn, identify the New Notes to be withdrawn, including the amount of Old Notes, and, where certificates representing Old Notes have been delivered, specify the name in which the Old Notes are registered, if different from that of the withdrawing Holder. If certificates representing Old Notes have been delivered or otherwise identified to the Exchange Agent, then, prior to the release of the certificates, the withdrawing Holder must also submit the serial numbers of the particular certificates to be withdrawn and a signed notice of withdrawal with signatures guaranteed by an Eligible Guarantor Institution unless the Holder is an Eligible Guarantor Institution. All questions as to the validity, form and eligibility - including time of receipt - of such notices will be determined by Trans-Lux. Any such determination will be final and binding. Any Old Notes so withdrawn will be deemed not to have been validly tendered for exchange for purposes of the Exchange Offer. Any Old Notes which have been tendered for exchange but which are not exchanged for any reason will be returned to the registered Holder without cost to that Holder as soon as practicable after withdrawal, non-acceptance of tender or termination of the Exchange Offer. Properly withdrawn Old Notes may be retendered at any time prior to the expiration of the Exchange Offer by following one of the procedures described in the section of the Offering Circular entitled "The Exchange Offer-How To Tender Old Notes." 5. Signatures on Letter of Transmittal, Assignments and Endorsements If this Letter of Transmittal is signed by the registered Holder(s) of the Old Notes tendered hereby, the signature(s) must correspond exactly with the name(s) as written on the face of the certificate(s) without alteration, enlargement or any change whatsoever. If any of the Old Notes tendered hereby are registered in the name of two or more joint owners, all such owners must sign this Letter of Transmittal. If any tendered Old Notes are registered in different name(s) on several certificates, it will be necessary to complete, sign and submit as many separate Letters of Transmittal as there are different registered Holders. When this Letter of Transmittal is signed by the registered Holder(s) of Old Notes listed and transmitted by this Letter of Transmittal, no endorsement(s) of certificate(s) or separate bond power(s) are required unless the New Notes are to be issued in the name of a person other than the registered Holder(s). If the New Notes are to be issued in the name of the person other than a registered Holder(s), signature(s) on the certificate(s) or bond power(s) must be guaranteed by an Eligible Guarantor Institution. If a person or persons other than the registered Holder(s) of the Old Notes signs the Letter of Transmittal, certificates representing the Old Notes must be endorsed or accompanied by appropriate bond powers, signed exactly as the name or names of the registered Holder(s) that appears on the certificates representing the Old Notes and also must be accompanied by any opinions of counsel, certifications and other information as Trans-Lux may require in accordance with the restrictions on transfer, if any, applicable to the Old Notes. Signatures on certificates or bond powers must be guaranteed by an Eligible Guarantor Institution. If you are a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation, or act in a similar fiduciary or representative capacity, and wish to sign this Letter of Transmittal or any certificates representing the Old Notes or bond powers, you must indicate your status when signing. If you are acting in any of these capacities, you must submit proper evidence satisfactory to us of your authority to so act unless we waive this requirement. 6. Special Issuance and Delivery Instructions If New Notes are to be issued in the name of a person other than the signer of this Letter of Transmittal, or if the New Notes are to be delivered to someone other than the signer of this Letter of Transmittal, or to an address other than that shown above, the appropriate boxes on this Letter of Transmittal should be completed. Certificates representing New Notes not exchanged will be returned by mail. See Instruction 4. 7. Irregularities All questions as to the validity, form, eligibility - including time of receipt - and acceptance of Old Notes tendered for exchange will be determined by Trans-Lux in its sole discretion. Our determination will be final and binding. We reserve the absolute right to reject any and all tenders of Old Notes improperly tendered or to not accept any Old Notes, the acceptance of which might be unlawful as determined by us or our counsel. We also reserve the absolute right to waive any defects or irregularities or conditions of the Exchange Offer as to any Old Notes either before or after the expiration of the Exchange Offer - including the right to waive the ineligibility of any Holder who seeks to tender Old Notes in the Exchange Offer. Our interpretation of the terms and conditions of the Exchange Offer as to any particular Old Notes either before or after the expiration of the Exchange Offer - including the terms and conditions of this Letter of Transmittal and the accompanying instructions - will be final and binding. Unless waived, any defects or irregularities in connection with tenders of Old Notes for exchange must be cured within a reasonable period of time, as determined by us. Neither we, the Exchange Agent, nor any other person has any duty to give notification of any defect or irregularity with respect to any tender of Old Notes for exchange, nor will we have any liability for failure to give such notification. 8. Questions, Requests for Assistance and Additional Copies Questions and requests for assistance may be directed to the Exchange Agent at the addresses and telephone number set forth on the front of this Letter of Transmittal at the address and telephone numbers set forth in the Offering Circular. Additional copies of the Offering Circular, this Letter of Transmittal or the Notice of Guaranteed Delivery may be obtained from the Exchange Agent or from your broker, dealer, commercial bank, trust company or other nominee. 9. Backup Withholding; Substitute Form W-9 Under U.S. federal income tax law, a Holder whose tendered Old Notes are accepted for exchange is required to provide the Exchange Agent with the Holder's correct taxpayer identification number ("TIN") on Substitute Form W-9 above. If the Exchange Agent is not provided with the correct TIN, the IRS may subject the Holder or other payee to a $50 penalty. In addition, cash payments, if any, to such Holders or other payees with respect to the Old Notes exchanged in the Exchange Offer may be subject to 30% backup withholding. The box in Part 1(b) of the Substitute Form W-9 may be checked if the tendering Holder has not been issued a TIN and has applied for a TIN or intends to apply for a TIN in the near future. If the box in Part 1(b) is checked, the Holder or other payee must also complete the Certificate of Awaiting Taxpayer Identification Number above in order to avoid backup withholding. Notwithstanding that the box in Part 1(b) is checked and the Certificate of Awaiting Taxpayer Identification Number is completed, the Exchange Agent will withhold 30% of all payments made prior to the time a properly certified TIN is provided to the Exchange Agent. The Exchange Agent will retain all amounts withheld during the 60-day period following the date of the Substitute Form W-9. If the Holder furnishes the Exchange Agent with its TIN within 60 days after the date of the Substitute Form W-9, the amounts retained during the 60-day period will be remitted to the Holder and no further amounts will be retained or withheld from payments made to the Holder thereafter. If, however, the Holder has not provided the Exchange Agent with its TIN within the 60-day period, amounts withheld will be remitted to the IRS as backup withholding. In addition, 30% of all payments made thereafter will be withheld and remitted to the IRS until a correct TIN is provided. The Holder is required to give the Exchange Agent the TIN (e.g., social security number or employer identification number) of the registered Holder of the Old Notes or of the last transferee appearing on the transfers attached to, or endorsed on, the certificates of the Old Notes. Certain Holders - including, among others, corporations, financial institutions and certain foreign individuals, - may not be subject to these backup withholding and reporting requirements. These Holders should nevertheless complete the Substitute Form W-9 above, and write "Exempt" in Part 2 of the Substitute Form W-9, to avoid possible erroneous backup withholding. In order for a foreign person to qualify as an exempt recipient, such individual must submit a properly completed IRS Form W-8BEN signed under penalties of perjury, attesting to that Holder's exempt status. Backup withholding is not an additional U.S. federal income tax. Rather, the U.S. federal income tax liability of a person subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained. 10. Waiver of Conditions Trans-Lux' obligation to complete the Exchange Offer is subject to the conditions described in the section of the Offering Circular entitled "The Exchange Offer-Conditions of the Exchange Offer." These conditions are for our benefit only and we may assert them regardless of the circumstances giving rise to any condition. We may also waive any condition in whole or in part at any time in our sole discretion. Our failure at any time to exercise any of the foregoing rights will not constitute a waiver of that right and each right is an ongoing right that we may assert at any time. 11. No Conditional Tenders No alternative, conditional or contingent tenders will be accepted. All tendering Holders of Old Notes, by execution of this Letter of Transmittal, waive any right to receive notice of the acceptance of Old Notes for exchange. 12. Lost, Destroyed or Stolen Certificates If any certificate(s) representing Old Notes have been lost, destroyed or stolen, the Holder should check the box above regarding lost, destroyed or stolen certificates and promptly notify the Exchange Agent. The Holder will then be instructed as to the steps that must be taken in order to replace the certificate(s). This Letter of Transmittal and related documents cannot be processed until the procedures for replacing lost, destroyed or stolen certificate(s) have been followed. 13. Transfer Taxes You will not be obligated to pay any transfer taxes in connection with the tender of Old Notes in the Exchange Offer unless you instruct us to register Old Notes in the name of, or request that Old Notes not tendered or not accepted in the Exchange Offer be returned to, a person other than the registered tendering Holder. In those cases, you will be responsible for the payment of any applicable transfer tax. If satisfactory evidence of payment of these taxes or an exemption from payment is not submitted with this Letter of Transmittal, no New Notes will be issued until such evidence is received by the Exchange Agent. IMPORTANT: Unless you comply with the Guaranteed Delivery Procedures described above, this Letter of Transmittal (or a facsimile of this Letter of Transmittal), and all other required documents must be received by the Exchange Agent prior to the expiration of the Exchange Offer. Delivery To: Wells Fargo Bank, N.A., Exchange Agent By Regular or Certified Mail: By Overnight Courier: By Hand: ----------------------------- --------------------- -------- Wells Fargo Bank Minnesota, N.A. Wells Fargo Bank Minnesota, N.A. Wells Fargo Corporate Trust Customized Fiduciary Services Customized Fiduciary Services c/o The Depository Trust Company 6th and Marquette, MAC N9303-120 6th and Marquette, MAC N9303-120 1st Floor; TADS Department Minneapolis, MN 55479 Minneapolis, MN 55479 55 Water Street Attn: David Bergstrom Attn: David Bergstrom New York, NY 10041 By Facsimile: (Eligible Guarantor Institutions Only) (612) 667-9825 To Confirm by Telephone or for Information Call: (612) 667-7390
Delivery of a Letter of Transmittal to an address other than the address listed above or transmission of instructions by facsimile other than as set forth above is not valid delivery of the Letter of Transmittal. EX-99.A.1.C 5 noticeofguaranteeddelivery.txt NOTICE OF GUARANTEED DELIVERY Exhibit (a)(1)(C) TRANS-LUX CORPORATION NOTICE OF GUARANTEED DELIVERY PURSUANT TO THE OFFERING CIRCULAR DATED FEBRUARY 23, 2004 This Notice of Guaranteed Delivery relates to the offer of Trans-Lux Corporation ("Trans-Lux") to exchange (the "Exchange Offer") $1,000 principal amount of its 8 1/4% Limited Convertible Senior Subordinated Notes due 2012 ("New Notes") for each $1,000 principal amount of Trans-Lux' currently outstanding 7 1/2% Convertible Subordinated Notes due 2006 ("Old Notes"). Subject to the terms and conditions of the Exchange Offer, Trans-Lux will issue up to $15,000,000 principal amount of its New Notes in exchange for up to $15,000,000 principal amount of Old Notes, representing approximately 49.7% of the $30,177,000 outstanding principal amount of Old Notes, to the extent such Old Notes are properly tendered and not withdrawn prior to the expiration of the Exchange Offer. If more than $15,000,000 principal amount of Old Notes are tendered, Trans-Lux will accept tenders from each tendering Holder of Old Notes on a pro rata basis. For a more detailed description of the New Notes Trans-Lux is proposing to issue in the Exchange Offer, please see the section of the Offering Circular dated February 23, 2004) the "Offering Circular") entitled "Description of New Notes." The Exchange Offer is open to all Holders of Old Notes and is subject to customary conditions. You must use this Notice of Guaranteed Delivery, or one substantially equivalent to this form, to accept the Exchange Offer if you are a registered Holder of Old Notes and wish to tender any Old Notes, but (i) the certificates representing your Old Notes are not immediately available, and (ii) time will not permit your certificates for the Old Notes or other required documents to reach Wells Fargo Bank, N.A., as exchange agent (the "Exchange Agent"), before 5:00 p.m., New York City time, on March 31, 2004 (or any such later date and time to which the Exchange Offer may be extended (the "Expiration Date")). You may effect a tender of your Old Notes if (a) the tender is made through an Eligible Guarantor Institution (as defined in the section of the Offering Circular entitled "The Exchange Offer-How to Tender Old Notes"); (b) prior to the Expiration Date, the Exchange Agent receives from an Eligible Guarantor Institution a properly completed and duly executed Notice of Guaranteed Delivery, substantially in this form, setting forth your name and address, and the amount of Old Notes you are tendering and stating that the tender is being made by Notice of Guaranteed Delivery (these documents may be sent by overnight courier, registered or certified mail or facsimile transmission); (c) you guarantee that within three American Stock Exchange, Inc. ("AMEX") trading days after the date of execution of the Notice of Guaranteed Delivery, the certificates for all physically tendered Old Notes, in proper form for transfer, a properly completed and duly executed Letter of Transmittal, with any required signature guarantees, and all other documents required by the Letter of Transmittal, will be deposited by the Eligible Guarantor Institution with the Exchange Agent; and (d) the Exchange Agent receives the certificates for all physically tendered Old Notes, in proper form for transfer, a properly completed and duly executed Letter of Transmittal, with any required signature guarantees, and all other required documents within three AMEX trading days after the date of execution of this Notice of Guaranteed Delivery. Capitalized terms used but not defined herein have the meanings assigned to them in the Offering Circular. Delivery To: Wells Fargo Bank, N.A., Exchange Agent By Regular or Certified Mail: By Overnight Courier: By Hand: ----------------------------- -------------------- -------- Wells Fargo Bank Minnesota, N.A. Wells Fargo Bank Minnesota, N.A. Wells Fargo Corporate Trust Customized Fiduciary Services Customized Fiduciary Services c/o The Depository Trust Company 6th and Marquette, MAC N9303-120 6th and Marquette, MAC N9303-120 1st Floor; TADS Department Minneapolis, MN 55479 Minneapolis, MN 55479 55 Water Street Attn: David Bergstrom Attn: David Bergstrom New York, NY 10041 (registered or certified mail By Facsimile: recommended) (Eligible Guarantor Institutions Only) (612) 667-9825 To Confirm by Telephone or for Information Call: (612) 667-7390
DELIVERY OF A LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN THE ADDRESS LISTED ABOVE OR TRANSMISSION OF INSTRUCTIONS BY FACSIMILE OTHER THAN AS SET FORTH ABOVE IS NOT VALID DELIVERY OF THE LETTER OF TRANSMITTAL. Ladies and Gentlemen: Subject to the terms and conditions set forth in the Offering Circular and the accompanying Letter of Transmittal, the undersigned hereby tenders to Trans-Lux Corporation the principal amount of 7 1/2% Convertible Subordinated Notes due 2006 set forth below pursuant to the guaranteed delivery procedure described in the section of the Offering Circular entitled "The Exchange Offer-Guaranteed Delivery Procedures." Amount of 7 1/2% Convertible Subordinated Notes due 2006 tendered: - ------------------------------------------------------------------ Certificate Nos. (if available): - ------------------------------------------------------------------ Total principal amount represented by Old Note Certificate(s): - ------------------------------------------------------------------ ALL AUTHORITY HEREIN CONFERRED OR AGREED TO BE CONFERRED SHALL SURVIVE THE DEATH OR INCAPACITY OF THE UNDERSIGNED AND EVERY OBLIGATION OF THE UNDERSIGNED HEREUNDER SHALL BE BINDING UPON THE HEIRS, PERSONAL REPRESENTATIVES, SUCCESSORS AND ASSIGNS OF THE UNDERSIGNED. PLEASE SIGN HERE - --------------------------------------------------------- ------------ Signature(s) of Owner(s) Date or Authorized Signatory Area Code and Telephone Number: ( ) ----------------------- Must be signed by the Holder(s) of 7 1/2% Convertible Subordinated Notes due 2006 as their name(s) appear(s) on certificates for the Old Notes or on a security position listing, or by person(s) authorized to become registered Holder(s) by endorsement and documents transmitted with this Notice of Guaranteed Delivery. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer or other person acting in a fiduciary or representative capacity, such person must set forth his or her full title below. Please Print Name(s) and Address(es) Name(s): -------------------------------------------------- Capacity: -------------------------------------------------- Address(es): ------------------------------------------------ ------------------------------------------------ 2 GUARANTEE OF DELIVERY (Not To Be Used For Signature Guarantee) The undersigned, an Eligible Guarantor Institution, hereby guarantees that the certificates representing the principal amount of Trans-Lux Corporation 7 1/2% Convertible Subordinated Notes due 2006 tendered hereby in proper form for transfer pursuant to the procedures set forth in the section of the Offering Circular entitled "The Exchange Offer-Guaranteed Delivery Procedures," together with any required signature guarantee and any other documents required by the Letter of Transmittal, will be received by the Exchange Agent at the address set forth above, no later than three AMEX trading days after the Expiration Date. Dated: ------------------------------------------- - ------------------------------------------------- --------------------------- (Address) (Name of Firm) - ------------------------------------------------- --------------------------- (Area Code and Telephone Number) (Authorized Signature) NOTE: DO NOT SEND CERTIFICATES FOR OLD NOTES WITH THIS FORM. CERTIFICATES FOR OLD NOTES SHOULD BE SENT ONLY WITH A COPY OF YOUR PREVIOUSLY EXECUTED LETTER OF TRANSMITTAL. 3 EX-99.A.1.D 6 lettertobrokers.txt LETTER TO BROKERS-DEALERS LETTER TO BROKER-DEALERS Exhibit (a)(1)(D) TRANS-LUX CORPORATION OFFER TO EXCHANGE UP TO $15,000,000 PRINCIPAL AMOUNT OF 8 1/4% LIMITED CONVERTIBLE SENIOR SUBORDINATED NOTES DUE 2012 FOR UP TO $15,000,000 PRINCIPAL AMOUNT OF ITS 7 1/2% CONVERTIBLE SUBORDINATED NOTES DUE 2006 To: Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees: Trans-Lux Corporation ("Trans-Lux") is offering, subject to the terms and conditions set forth in the Offering Circular dated February 23, 2004 (the "Offering Circular"), and the related Letter of Transmittal (the "Letter of Transmittal"), relating to the offer to exchange (the "Exchange Offer") $1,000 principal amount of new 8 1/4% Limited Convertible Senior Subordinated Notes due 2012 ("New Notes") for each $1,000 principal amount of its currently outstanding 7 1/2% Convertible Subordinated Notes due 2006 (CUSIP No. 893247 AD 8) ("Old Notes"). Subject to the terms and conditions of the Exchange Offer, Trans-Lux will issue up to $15,000,000 principal amount of its New Notes in exchange for up to $15,000,000 principal amount of its outstanding Old Notes, representing approximately 49.7% of the $30,177,000 outstanding principal amount of the Old Notes, to the extent such Old Notes are properly tendered and not withdrawn prior to the expiration of the Exchange Offer. If more than $15,000,000 of Old Notes are tendered, Trans-Lux will accept tenders from each tendering Holder of Old Notes on a pro rata basis. Trans-Lux is expecting to announce any final proration factor within seven business days after the expiration date. For a more detailed description of the New Notes Trans-Lux is proposing to issue in the Exchange Offer, please see the section of the Offering Circular entitled "Description of New Notes." Trans-Lux reserves the right to extend or terminate the Exchange Offer if the conditions set forth in the section of the Offering Circular entitled "The Exchange Offer-Conditions of the Exchange Offer" are not satisfied and to otherwise amend the Exchange Offer in any respect. The Exchange Offer is open to all Holders of Old Notes and is subject to customary conditions. Subject to applicable securities laws and the terms set forth in the Offering Circular, Trans-Lux reserves the right to waive any and all conditions of the Exchange Offer. We are requesting that you contact your clients for whom you hold Old Notes regarding the Exchange Offer. For your information and for forwarding to your clients for whom you hold Old Notes registered in your name or in the name of your nominee, or who hold Old Notes registered in their own names, we are enclosing the following documents: 1. The Offering Circular; 2. The Letter of Transmittal for your use and for the information of your clients; 3. A Notice of Guaranteed Delivery to be used to accept the Exchange Offer if (a) certificates for the Old Notes are not immediately available, or (b) time will not permit the certificates for the Old Notes or other required documents to reach the Exchange Agent before the expiration of the Exchange Offer; 4. A form of letter which may be sent to your clients for whose account you hold Old Notes registered in your name or the name of your nominee, with space provided for obtaining the clients' instructions with respect to the Exchange Offer; 5. A letter to Noteholders to be sent to your clients for whose account you hold Old Notes registered in your name or the name of your nominee; 6. Return envelopes addressed to Wells Fargo Bank, N.A., the Exchange Agent for the Exchange Offer. YOUR PROMPT ACTION IS REQUESTED. THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON MARCH 31, 2004. TRANS-LUX, IN ITS SOLE AND ABSOLUTE DISCRETION, MAY EXTEND THE EXCHANGE OFFER (AS IT MAY BE EXTENDED, THE "EXPIRATION DATE"). OLD NOTES TENDERED PURSUANT TO THE EXCHANGE OFFER MAY BE WITHDRAWN AT ANY TIME BEFORE THE EXPIRATION DATE. Unless a Holder of shares of Old Notes complies with the procedures described in the Offering Circular under the title "The Exchange Offer-Guaranteed Delivery Procedures," the Holder must do one of the following on or prior to the Expiration Date to participate in the Exchange Offer: - tender the Old Notes by sending the certificates for the Old Notes, in proper form for transfer, a properly completed and duly executed Letter of Transmittal, with any required signature guarantees, and all other documents required by the Letter of Transmittal, to Wells Fargo Bank, N.A., as Exchange Agent, at one of the addresses set forth in the Offering Circular under the section entitled "The Exchange Offer-Exchange Agent," or - if the Holder of Old Notes holds such Old Notes in "street name", he or she should tender such amounts following the instructions provided by you. If a registered Holder of Old Notes wishes to tender the Old Notes in the Exchange Offer, but (a) the certificates for the Old Notes are not immediately available, or (b) time will not permit the certificates for the Old Notes or other required documents to reach the Exchange Agent before the Expiration Date, a tender of Old Notes may be effected by following the Guaranteed Delivery Procedures described in the section of the Offering Circular entitled "The Exchange Offer-Guaranteed Delivery Procedures." Trans-Lux will not make any payments to brokers, dealers, or other persons for soliciting acceptances of the Exchange Offer. Trans-Lux will, however, upon request, reimburse brokers, dealers, commercial banks, trust companies and other nominees for reasonable and necessary costs and expenses incurred by them in forwarding the Offering Circular and the related documents to the beneficial owners of Old Notes held by them as nominee or in a fiduciary capacity. Trans-Lux will pay or cause to be paid all transfer taxes applicable to the exchange of Old Notes in the Exchange Offer, except as set forth in the Letter of Transmittal. Any inquiries you may have with respect to the Exchange Offer, or requests for additional copies of the enclosed materials, should be directed to Wells Fargo Bank, N.A., the Exchange Agent for the Exchange Offer, at one of the addresses and telephone numbers set forth on the front of the Letter of Transmittal or at the addresses and telephone numbers set forth in the Offering Circular. Very truly yours, TRANS-LUX CORPORATION NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY PERSON AS AN AGENT OF TRANS-LUX OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF EITHER OF THEM WITH RESPECT TO THE EXCHANGE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN THE OFFERING CIRCULAR OR THE LETTER OF TRANSMITTAL. Enclosures EX-99.A.1.E 7 lettertoclients.txt LETTER TO CLIENTS Exhibit (a)(1)(E) TRANS-LUX CORPORATION OFFER TO EXCHANGE 8 1/4% LIMITED CONVERTIBLE SENIOR SUBORDINATED NOTES DUE 2012 FOR UP TO $15,000,000 PRINCIPAL AMOUNT OF ITS 7 1/2% CONVERTIBLE SUBORDINATED NOTES DUE 2006 To Our Clients: Enclosed for your consideration is an Offering Circular, dated February 23, 2004 (the "Offering Circular"), the related Letter of Transmittal (the "Letter of Transmittal"), and a letter to Noteholder relating to the offer to exchange (the "Exchange Offer") $1,000 principal amount of new 8 1/4% Limited Convertible Senior Subordinated Notes due 2012 ("New Notes") of Trans-Lux Corporation ("Trans-Lux") for each $1,000 principal amount of Trans-Lux' currently outstanding 7 1/2% Convertible Subordinated Notes due 2006 ("Old Notes"). Subject to the terms and conditions of the Exchange Offer, Trans-Lux will issue up to $15,000,000 principal amount of the New Notes in exchange for up to $15,000,000 principal amount of its outstanding principal amount of the Old Notes, representing approximately 49.7% of the $30,177,000 outstanding Old Notes, to the extent such Old Notes are properly tendered and not withdrawn prior to the expiration of the Exchange Offer. If more than $15,000,000 principal amount of the Old Notes are tendered, Trans-Lux will accept tenders from each tendering Holder of Old Notes on a pro rata basis unless Trans-Lux elects to accept all tendered Old Notes. If less than $4,000,000 principal amount of the Old Notes are tendered, Trans-Lux reserves the right to either accept or reject such lesser tendered amount. For a more detailed description of the New Notes Trans-Lux is proposing to issue in the Exchange Offer, please see the section of the Offering Circular entitled "Description of New Notes." Trans-Lux reserves the right to extend or terminate the Exchange Offer if the conditions set forth in the section of the Offering Circular entitled "The Exchange Offer-Conditions of the Exchange Offer" are not satisfied and to otherwise amend the Exchange Offer in any respect. The Exchange Offer is open to all Holders of Old Notes and is subject to customary conditions. Subject to applicable securities laws and the terms set forth in the Offering Circular, Trans-Lux reserves the right to waive any and all conditions of the Exchange Offer. These materials are being forwarded to you as the beneficial owner of the Old Notes held by us for your account but not registered in your name. A TENDER OF THE OLD NOTES MAY ONLY BE MADE BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. Accordingly, we request instructions as to whether you wish us to tender on your behalf any Old Notes held by us for your account, pursuant to the terms and conditions set forth in the enclosed Offering Circular and Letter of Transmittal. Your instructions should be forwarded to us as promptly as possible in order to permit us to tender any Old Notes on your behalf in accordance with the provisions of the Exchange Offer. The Exchange Offer will expire at 5:00 p.m., New York City time, on March 31, 2004, unless extended. Trans-Lux may, in its sole and absolute discretion, extend the Exchange Offer. Any Old Notes tendered pursuant to the Exchange Offer may be withdrawn at any time before the expiration of the Exchange Offer or at any time after April 23, 2004 if Trans-Lux has not accepted the tendered Old Notes for exchange by that date. Your attention is directed to the following: 1. The Exchange Offer is for up to $15,000,000 principal amount of the Old Notes. 2. The Exchange Offer is subject to certain conditions set forth in the section of the Offering Circular entitled "The Exchange Offer-Conditions of the Exchange Offer." 3. Any transfer taxes incidental to the transfer of Old Notes from the Holder to Trans-Lux will be paid by Trans-Lux, except as otherwise provided in the Letter of Transmittal. 4. The Exchange Offer expires at 5:00 p.m., New York City time, on March 31, 2004, unless extended. Trans-Lux may, in its sole and absolute discretion, extend the Exchange Offer. If you wish to have us tender any Old Notes, please so instruct us by completing, executing and returning to us the instruction form on the back of this letter. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR INFORMATION ONLY AND MAY NOT BE USED DIRECTLY BY YOU TO TENDER YOUR OLD NOTES. 2 INSTRUCTIONS WITH RESPECT TO THE EXCHANGE OFFER The undersigned acknowledge(s) receipt of your letter and the enclosed materials referred to therein relating to the Exchange Offer made by Trans-Lux Corporation with respect to the Old Notes. This will instruct you to tender the Old Notes held by you for the account of the undersigned, subject to the terms and conditions set forth in the Offering Circular and the related Letter of Transmittal. Please tender the Old Notes held by you for my account as indicated below: [ ] 7 1/2% Convertible Subordinated Notes Due 2006: $ ------------------------- (principal amount of Old Notes in $1,000 increments) [ ] Please do not tender any Old Notes held by you for my account. Dated:___________________________________, 2004 Signature(s): _____________________________________________ Print Name(s) here: _____________________________________________ (Print Address(es)): _____________________________________________ (Area Code and Telephone Number(s)): ______________________________________________ (Tax Identification or Social Security Number(s)): ______________________________________________ NONE OF THE 7 1/2% CONVERTIBLE SUBORDINATED NOTES DUE 2006 OF TRANS-LUX CORPORATION HELD BY US FOR YOUR ACCOUNT WILL BE TENDERED UNLESS WE RECEIVE WRITTEN INSTRUCTIONS FROM YOU TO DO SO. UNLESS A SPECIFIC CONTRARY INSTRUCTION IS GIVEN IN THE SPACE PROVIDED, YOUR SIGNATURE(S) HEREON SHALL CONSTITUTE AN INSTRUCTION TO US TO TENDER ALL THE OLD NOTES HELD BY US FOR YOUR ACCOUNT. 3 EX-99.A.5.A 8 pressrelease030204.txt PRESS RELEASE DATED 03/20/04 Exhibit (a)(5)(A) FOR IMMEDIATE RELEASE For Further Information Contact: Angela D. Toppi Executive Vice President & CFO 203/853-4321 Trans-Lux Announces Commencement of Exchange Offer for 7 1/2% Convertible Subordinated Notes due 2006 NORWALK, CT, March 2, 2004 - Trans-Lux Corporation (AMEX:TLX), a leading supplier of programmable electronic information displays and owner/operator of cinemas, announced it commenced its Exchange Offer today, pursuant to which Trans-Lux Corporation (the "Company") is offering to exchange (the "Exchange Offer") $1,000 principal amount of its new 8 1/4% Limited Convertible Senior Subordinated Notes due 2012 ("New Notes") for each $1,000 principal amount of its 7 1/2% Convertible Subordinated Notes due 2006 ("Old Notes"). The offer will be for up to $15,000,000 principal amount, or 49.7% of the $30,177,000 principal amount outstanding of the Old Notes. If more than $15,000,000 principal amount of the Old Notes are tendered, all tenders will be accepted pro rata unless the Company elects to accept all such tendered Old Notes. If less than $4,000,000 principal amount of the Old Notes are tendered, the Company reserves the right to either accept or reject such lesser tendered amount. The New Notes will also be senior to the Old Notes and the Company's 9 1/2% Subordinated Notes due 2012. In general terms, the New Notes will pay a higher interest rate than the Old Notes, a longer maturity, a later call date, a lower conversion price of $9.00 per share compared to the conversion price of $14.013 per share of the Old Notes, and be convertible into Common Stock through March 1, 2007 (which is after the maturity date of the Old Notes, but prior to the maturity date of the New Notes). Application will be made to list the New Notes on the American Stock Exchange. It should be noted that directors of the Company who hold an aggregate of $110,000 Old Notes have indicated that they will accept the Exchange Offer. The Exchange Offer is voluntary on a Noteholder's part. The Company believes no taxable gain or loss will be recognized by any Noteholder who accepts the Exchange Offer. Full details of the terms and conditions of the Exchange Offer will be contained in the Offering Circular being sent to Noteholders today. Consummation of the Exchange Offer, which expires March 31, 2004, and issuance of the New Notes are subject to various conditions as described in the Offering Circular. Holders may withdraw their tenders at any time prior to 5:00 P.M., New York City time, on March 31, 2004 and at any time after April 23, 2004 if they have not been accepted by such date. This announcement is not an offer to purchase nor a solicitation of an offer to purchase with respect to any securities. The offer is made solely by, and subject to the terms and conditions set forth in the Offering Circular and the related Letter of Transmittal which should be read carefully by Noteholders before making any decision with respect to the Exchange Offer because they contain important information. The Offering Circular, the related Letter of Transmittal and certain other documents will be sent to all Holders of Old Notes, at no expense to them. The Tender Offer statement (including the Offering Circular, the related Letter of Transmittal and all other Offer documents filed with the Securities and Exchange Commission) is also available at no charge at the Securities and Exchange Commission's website at http://www.sec.gov. Holders of the Notes can also obtain copies of the Offering Circular, the related Letter of Transmittal and other documents sent to Holders from the Company from Ms. Angela D. Toppi, Executive Vice President and Secretary by calling the Company at (203) 853-4321 or email at atoppi@trans.lux.com. Trans-Lux Corporation is not making any recommendations as to whether or not Holders should exchange their Old Notes pursuant to the Exchange Offer, and no one has been authorized by it to make any such recommendations. Holders must make their own decisions as to whether to consent to the proposed exchange for the Old Notes, and, if so, the principal amount of Old Notes to exchange. The New Notes offered will not be and have not been registered under the Securities Act of 1933 and are issued pursuant to an exemption under Section 3(a)(9) of the Securities Act of 1933, as amended. Trans-Lux is a worldwide, full-service provider of integrated multimedia systems for today's communications environments. The essential elements of these systems are the real-time, programmable electronic information displays the Company manufactures, distributes and services. Designed to meet the evolving communications needs of both the indoor and outdoor markets, these displays are used primarily in applications for the financial, banking, gaming, corporate, transportation, entertainment and sports industries. In addition to its display business, the Company owns and operates a chain of motion picture theatres in the western Mountain States. ### EX-99.A.5.B 9 noticetoholders.txt NOTICE TO OLD NOTE HOLDERS Exhibit (a)(5)(B) TRANS-LUX CORPORATION 110 Richards Avenue Norwalk, CT 06856-5090 (203) 853-4321 February 23, 2004 Dear Noteholder: Enclosed for your consideration is an Offering Circular dated February 23, 2004 (the "Offering Circular") and the related Letter of Transmittal (the "Letter of Transmittal") relating to an offer to exchange (the "Exchange Offer") $1,000 principal amount of our new 8 1/4% Limited Convertible Senior Subordinated Notes due 2012 ("New Notes") for each $1,000 principal amount of Trans-Lux Corporation (the "Company") currently outstanding 7 1/2% Convertible Subordinated Notes due 2006 ("Old Notes"). The offer is for up to $15,000,000 principal amount, or 49.7%, of the $30,177,000 outstanding principal amount of the Old Notes, to the extent such Old Notes are properly tendered and not withdrawn prior to the expiration of the Exchange Offer. If more than $15,000,000 principal amount of the Old Notes are tendered, all tenders will be accepted on a pro rata basis unless the Company elects to accept all such tendered Old Notes. If less than $4,000,000 principal amount of the Old Notes are tendered, the Company reserves the right to either accept or reject such lesser tendered amount. In general terms, the New Notes will pay a higher interest rate than the Old Notes, have a longer maturity, later call date, and be convertible into Common Stock at a lower conversion price until March 1, 2007, (which is after the maturity date of the Old Notes, but prior to the maturity date of the New Notes). The New Notes will also be senior to the Old Notes and our 9 1/2% Subordinated Notes due 2012, but do not have any restriction on issuance of additional indebtedness, issuance of preferred stock or restricted payments. The Exchange Offer is voluntary on your part. We believe no taxable gain or loss will be recognized by any Noteholder who accepts the Exchange Offer. Full details of the terms and conditions of the Exchange Offer, which expires March 31, 2004, are contained in the Offering Circular which we encourage you to read. It should be noted that directors of the Company who hold an aggregate of $110,000 Old Notes have indicated they will accept the Exchange Offer. The following is a comparison of certain features of the Old Notes and New Notes, which are more fully described in the Offering Circular: New Notes Old Notes --------- --------- Interest 8.25% 7.50% ($82.50 per $1,000 Note) ($75.00 per $1,000 Note) Maturity March 1, 2012 December 1, 2006 Subordination Senior to Old Notes, but Subordinated to all Senior subordinated to all Senior Indebtedness. Indebtedness. Conversion Provisions 111 shares of Common Stock at a 71 shares of Common Stock at a conversion price of $9.00 per conversion price of $14.013 per share for each $1,000 New Note share for each $1,000 Old Note through March 1, 2007 and not (the conversion price is well convertible thereafter. above the trading level of $3.563 - $7.79 of the Common Stock since January 1, 2001). Optional Redemption Not callable before 2006 at which Callable at 101.875%. O. and time the call price is 102%, after December 1, 2004 the call dropping each year by 1% until it price drops to 100.938% and on reaches 100% on and after March and after December 1, 2005 the 1, 2008. call price drops to 100%. Restriction Provisions None Restriction on incurrence of additional indebtedness, issuance of preferred stock and restricted payments. Taxability Exchange is expected to be tax Exchange is expected to be free (consult your tax advisor). free (consult your tax advisor).
Important: If you require further information concerning the Exchange Offer, please contact Trans-Lux Corporation directly by writing to Ms. Angela D. Toppi, Secretary, Trans-Lux Corporation, 110 Richards Avenue, Norwalk, Connecticut 06856-5090 or email to atoppi@trans-lux.com or by calling (203) 853-4321. Very truly yours, TRANS-LUX CORPORATION EX-99.D.1 10 indenturev3.txt PROPOSED INDENTURE GOVERNING THE NEW NOTES Exhibit (d)(1) TRANS-LUX CORPORATION and WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee ______________ INDENTURE DATED AS OF MARCH 1, 2004 $15,000,000* 8.25% Limited Convertible Senior Subordinated Notes due 2012 ________________________________________________________________________________ ________________________________________________________________________________ * Subject to increase up to $30,177,000. CROSS-REFERENCE TABLE TRUST INDENTURE ACT SECTION SECTION OF INDENTURE 310(a)(1) and (2)................................... 8.10 310(a)(3) and (4)................................... Not applicable 310(b).............................................. 8.08 and 8.10, 15.03 310(c).............................................. Not applicable 311(a) and (b)...................................... 8.11 311(c).............................................. Not applicable 312(a).............................................. 2.06 312(b) and (c)...................................... 15.07 313(a).............................................. 8.06 313(b)(1)........................................... Not applicable 313(b)(2)........................................... 8.06 313(c).............................................. 8.06 and 15.03 313(d).............................................. 8.06 314(a).............................................. 6.10 and 15.03 314(b).............................................. Not applicable 314(c)(1) and (2)................................... 15.04 314(c)(3)........................................... Not applicable 314(d).............................................. Not applicable 314(e).............................................. 15.04 314(f).............................................. Not applicable 315(a), (c) and (d)................................. 8.01 315(b).............................................. 8.05; 15.03 315(e).............................................. 7.11 316(a)(1)........................................... 7.04 and 7.05 316(a)(2)........................................... Not applicable 316(a) last sentence................................ 9.03 316(b).............................................. 7.07 316(c).............................................. 10.02 317(a).............................................. 7.08 and 7.09 317(b).............................................. 2.05 318(a).............................................. 15.06 ________________ This Cross-Reference Table shall not, for any purpose, be deemed to be a part of this Indenture. TABLE OF CONTENTS Page ---- PARTIES.................................................................... 1 RECITALS................................................................... 1 ARTICLE ONE. DEFINITIONS. SECTION 1.01. Definitions ................................................ 1 SECTION 1.02. Other Definitions........................................... 8 SECTION 1.03. Incorporation by Reference of Trust Indenture Act........... 8 SECTION 1.04. Rules of Construction....................................... 9 ARTICLE TWO. ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF SECURITIES. SECTION 2.01. Dating; Incorporation of Form in Indenture.................. 9 SECTION 2.02. Execution and Authentication ............................... 9 SECTION 2.03. Registrar and Agents........................................ 10 SECTION 2.04. Holders to be Treated as Owners; Payment of Interest........ 11 SECTION 2.05. Paying Agent to Hold Money in Trust......................... 11 SECTION 2.06. Securityholder Lists........................................ 11 SECTION 2.07. Transfer and Exchange....................................... 12 SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Securities............. 12 SECTION 2.09. Temporary Securities........................................ 13 SECTION 2.10. Cancellation of Securities.................................. 13 SECTION 2.11. Benefits of Indenture Provisions............................ 13 SECTION 2.12. Defaulted Interest.......................................... 14 SECTION 2.13. CUSIP Number................................................ 14 SECTION 2.14. Deposit of Moneys........................................... 14 ARTICLE THREE. REDEMPTION OF SECURITIES SECTION 3.01. Redemption Prices .......................................... 14 SECTION 3.02. Notice of Redemption; Selection of Securities............... 15 SECTION 3.03. Payment of Securities on Redemptions; Deposit of Redemption Price............................................ 16 ARTICLE FOUR. SUBORDINATION OF SECURITIES. SECTION 4.01. Agreement that Securities to Be Subordinate................. 17 SECTION 4.02. Liquidation; Dissolution; Bankruptcy........................ 17 SECTION 4.03. Company Not to Make Payments with Respect to Securities in Certain Circumstances.................................... 18 SECTION 4.04. Payment Over of Proceeds in Certain Events.................. 19 SECTION 4.05. No Waiver of Subordination Provisions....................... 19 SECTION 4.06. Notice to Trustee of Specified Events; Reliance on Certificate of Liquidating Agent............................ 19 SECTION 4.07. Subrogation................................................. 20 SECTION 4.08. Obligation to Pay Not Impaired.............................. 20 SECTION 4.09. Reliance by Senior Indebtedness on Subordination Provisions. 20 SECTION 4.10. Subordination Not to Be Prejudiced by Certain Acts.......... 21 ii SECTION 4.11. Trustee Authorized to Effectuate Subordination.............. 21 SECTION 4.12. Trustee's Relationship to Senior Indebtedness............... 21 SECTION 4.13. Trustee and Paying Agents Not Chargeable with Knowledge Until Notice................................................ 21 SECTION 4.14. Article Applicable to Paying Agents......................... 22 SECTION 4.15. Trustee's Compensation Not Prejudiced....................... 22 ARTICLE FIVE. LIMITED CONVERSION OF SECURITIES. SECTION 5.01. Conversion Privilege; Conversion Price...................... 22 SECTION 5.02. Manner of Exercising Conversion Privilege................... 22 SECTION 5.03. Fractional Shares........................................... 24 SECTION 5.04. Adjustment of Conversion Price.............................. 24 SECTION 5.05. Certificate Concerning Adjusted Conversion Price............ 27 SECTION 5.06. Notice of Certain Corporate Action.......................... 27 SECTION 5.07. Company to Provide Stock.................................... 28 SECTION 5.08. Taxes on Conversions........................................ 28 SECTION 5.09. Covenant as to Stock........................................ 29 SECTION 5.10. Provision in Case of Consolidation or Merger................ 29 SECTION 5.11. Trustee's Disclaimer of Responsibility for Certain Matters.. 29 ARTICLE SIX. PARTICULAR COVENANTS OF THE COMPANY. SECTION 6.01. Payment of Principal, Premium and Interest.................. 30 SECTION 6.02. Offices for Notices, Payments and Conversions............... 30 SECTION 6.03. Paying Agents............................................... 31 SECTION 6.04. Annual Review Certificate................................... 31 SECTION 6.05. Appointment to Fill a Vacancy in Office of Trustee.......... 32 SECTION 6.06. Further Instruments and Acts................................ 32 SECTION 6.07. Payment of Taxes and Assessments............................ 32 SECTION 6.08. Maintenance of Corporate Existence.......................... 32 SECTION 6.09. Repurchase Event............................................ 32 SECTION 6.10. SEC Reports................................................. 34 ARTICLE SEVEN. REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT. SECTION 7.01. Events of Default........................................... 34 SECTION 7.02. Acceleration................................................ 35 SECTION 7.03. Other Remedies. ............................................ 36 SECTION 7.04. Waiver of Defaults and Events of Default.................... 36 SECTION 7.05. Control by Majority......................................... 36 SECTION 7.06. Limitation on Suits......................................... 37 SECTION 7.07. Rights of Holders to Receive Payment........................ 37 SECTION 7.08. Collection Suit by Trustee.................................. 37 SECTION 7.09. Trustee May File Proofs of Claim............................ 37 SECTION 7.10. Application of Money Collected by Trustee................... 38 SECTION 7.11. Undertaking to Pay Costs.................................... 38 SECTION 7.12. Restoration of Rights and Remedies.......................... 39 SECTION 7.13. Rights and Remedies Cumulative.............................. 39 SECTION 7.14. Delay or Omission Not Waiver................................ 39 iii ARTICLE EIGHT. CONCERNING THE TRUSTEE. SECTION 8.01. Duties of Trustee........................................... 39 SECTION 8.02. Rights of Trustee........................................... 40 SECTION 8.03. Individual Rights of Trustee................................ 41 SECTION 8.04. Trustee's Disclaimer........................................ 41 SECTION 8.05. Notice of Defaults.......................................... 41 SECTION 8.06. Reports by Trustee to Holders............................... 41 SECTION 8.07. Compensation and Indemnity.................................. 41 SECTION 8.08. Replacement of Trustee...................................... 42 SECTION 8.09. Successor Trustee by Merger, Etc............................ 43 SECTION 8.10. Eligibility; Disqualification............................... 43 SECTION 8.11. Preferential Collection of Claims Against Company........... 43 ARTICLE NINE. CONCERNING THE SECURITYHOLDERS. SECTION 9.01. Action by Securityholders................................... 43 SECTION 9.02. Proof of Execution by Securityholders, Evidence of Holdings. 44 SECTION 9.03. Company-owned Securities Disregarded........................ 44 SECTION 9.04. Revocation of Consents, Future Holders Bound................ 44 ARTICLE TEN. SECURITYHOLDERS' MEETINGS. SECTION 10.01. Purposes of Meetings....................................... 45 SECTION 10.02. Call of Meetings by Trustee................................ 45 SECTION 10.03. Call of Meetings by Company or Securityholders............. 45 SECTION 10.04. Qualifications for Voting.................................. 45 SECTION 10.05. Regulations................................................ 46 SECTION 10.06. Voting..................................................... 46 SECTION 10.07. No Delay of Rights by Meeting.............................. 47 ARTICLE ELEVEN. SUPPLEMENTAL INDENTURES. SECTION 11.01. Supplemental Indenture Without Consent of Securityholders.. 47 SECTION 11.02. Supplemental Indentures with Consent of Securityholders.... 48 SECTION 11.03. Compliance with Trust Indenture Act; Effect of Supplemental Indentures................................... 49 SECTION 11.04. Notation on Securities.................................... 49 SECTION 11.05. Evidence of Compliance of Supplemental Indenture to be Furnished Trustee.......................................... 49 ARTICLE TWELVE. CONSOLIDATION, MERGER AND SALE BY THE COMPANY. SECTION 12.01. When Company May Merge, Etc................................ 49 SECTION 12.02. Successor Corporation Substituted.......................... 50 iv ARTICLE THIRTEEN. SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS. SECTION 13.01. Discharge of Indenture..................................... 50 SECTION 13.02. Deposited Moneys to Be Held in Trust by Trustee............ 51 SECTION 13.03. Paying Agent to Repay Moneys Held.......................... 51 SECTION 13.04. Unclaimed Moneys........................................... 51 SECTION 13.05. Reinstatement.............................................. 51 ARTICLE FOURTEEN. IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS. SECTION 14.01. Indenture and Securities Solely Corporate Obligations...... 51 ARTICLE FIFTEEN. MISCELLANEOUS PROVISIONS. SECTION 15.01. Provisions Binding on Company's Successors................. 52 SECTION 15.02. Official Acts by Successor Corporation..................... 52 SECTION 15.03. Notices.................................................... 52 SECTION 15.04. Evidence of Compliance with Conditions Precedent........... 52 SECTION 15.05. Legal Holidays............................................. 53 SECTION 15.06. Trust Indenture Act to Control............................. 53 SECTION 15.07. Communications by Holders with Other Holders............... 53 SECTION 15.08. Governing Law.............................................. 53 SECTION 15.09. Table of Contents and Headings............................. 53 SECTION 15.10. No Security Interest Created............................... 54 SECTION 15.11. Execution in Counterparts.................................. 54 EXHIBIT A -- FORM OF SECURITY v THIS INDENTURE, dated as of March 1, 2004 between TRANS-LUX CORPORATION, a corporation duly organized and existing under the laws of the State of Delaware (the "Company"), and WELLS FARGO BANK, NATIONAL ASSOCIATION, as trustee (the "Trustee"). WITNESSETH: WHEREAS, for its lawful corporate purposes, the Company has duly authorized the issue of its 8.25% Limited Convertible Senior Subordinated Notes due 2012 (hereinafter sometimes referred to as the "Securities"), in the aggregate principal amount of up to $15,000,000 and, to provide the terms and conditions upon which the Securities are to be authenticated, issued and delivered, the Company has duly authorized the execution of this Indenture; and WHEREAS, all acts and things necessary to make the Securities, when executed by the Company and authenticated and delivered by the Trustee or its authorized signatory as in this Indenture provided, and issued, the valid, binding and legal obligations of the Company, and to constitute these presents a valid agreement according to its terms, have been done and performed, and the execution of this Indenture and the issue hereunder of the Securities have in all respects been duly authorized. NOW, THEREFORE, THIS INDENTURE WITNESSETH: That in order to declare the terms and conditions upon which the Securities are, and are to be, authenticated, issued and delivered, and in consideration of the premises, of the purchases and acceptance of the Securities by the Holders thereof and for other good and valuable consideration, the receipt whereof is hereby acknowledged, the Company covenants and agrees with the Trustee for the equal and proportionate benefit of the respective Holders from time to time of the Securities, as follows: ARTICLE ONE. DEFINITIONS. SECTION 1.01. Definitions. The terms in this Section 1.01 (except as herein otherwise expressly provided or unless the context otherwise requires)for all purposes of this Indenture and of any indenture supplemental hereto shall have the respective meanings specified in this Section 1.01. All other terms used in this Indenture which are defined in the TIA, as amended, or which are by reference therein defined in the Securities Act of 1933, as amended (except as herein otherwise expressly provided or unless the context otherwise requires), shall have the meanings assigned to such terms in the TIA and in said Securities Act as in force as of the date of this Indenture. "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, the term "control" when used with respect to any Person means the power, directly or indirectly, alone or together with others, to direct or cause the direction of the management and policies of such Person, directly or indirectly, whether 1 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, conversion agent, co-registrar or agent for service of notices and demands. "Board of Directors" means the Board of Directors of the Company, the executive committee, if any, of such Board of Directors or any committee of such Board of Directors authorized to act on behalf of such Board of Directors with respect to the Indenture. "Business Day" or "Trading Day" means any day on which the banks in New York, New York are not authorized or required to be closed and on which the American Stock Exchange is open for trading and which is not a Saturday or Sunday. "Capital Lease Obligation" means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at such time be required to be capitalized on a balance sheet in accordance with GAAP. "Capital Stock" means, with respect to any person, any and all shares, interests, participations, warrants, options or other equivalents (however designated) of corporate stock or any other equity interest of such person. "Common Stock" includes any stock of any class of the Company which has 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 is not subject to redemption by the Company. However, subject to the provisions of Section 5.10, shares issuable on conversion of Securities shall include only shares of the class designated as Common Stock, par value $1.00 per share, of the Company at the date of this Indenture or shares of any class or classes 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. "Company" means Trans-Lux Corporation, a Delaware corporation, and, subject to the terms of the Indenture, shall include its successors and assigns. "Consolidated Net Worth" means, with respect to any Person as of any date, the sum of (i) the consolidated equity of the common stockholders of such Person and its consolidated Subsidiaries as of such date plus (ii) the respective amounts reported on such Person's balance sheet as of such date with respect to any series of preferred stock (other than Disqualified Capital Stock). "Corporate Trust Office" means the office of the Trustee at which at any particular time its corporate trust business shall be principally administered, which office at the date of execution of this Indenture is located at Sixth and Marquette, N9303-120, Minneapolis, Minnesota 55479. "Corporation" means any corporation, voluntary association, joint stock association, business trust, or similar organization. "Default" means any event which is, or after notice or passage of time or both would be, an Event of Default. 2 "Disqualified Capital Stock" means, with respect to any person, any Capital Stock of such Person that, by its terms (or by the terms of any security into which it is convertible or for which it is exercisable, redeemable or exchangeable), matures, or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof, in whole or in part, on or prior to the maturity of the securities. "Event of Default" means any event specified in Section 7.01, continued for the period of time, if any, therein designated. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession in the United States. "Guarantee" means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner (including, without limitation, letters of credit and reimbursement agreements in respect thereof), of all or any part of any Indebtedness. "Indebtedness" means, with respect to the Company, any of the following (without duplication): (i) (a) any liability or obligation of the Company for borrowed money (including, without limitation, principal of and premium, if any, interest, fees, penalties, expenses, collection expenses, and other obligations in respect thereof, and, to the extent permitted by applicable law, interest accruing after the filing of a petition initiating any proceeding under the Bankruptcy Code whether or not allowed as a claim in such proceeding), whether or not evidenced by bonds, debentures, notes or other written instruments, and any other liability or obligation evidenced by notes, bonds, debentures or similar instruments (other than the Securities) whether or not contingent and whether outstanding on the date of execution of the Indenture or thereafter created, incurred or assumed, (b) any deferred payment obligation of the Company for the payment of the purchase price of property or assets evidenced by a note or similar instrument (excluding any obligation for trade payables or constituting the deferred purchase price of property or assets which is not evidenced by a note or similar instrument and which is unsecured), (c) any obligation of the Company for the payment of rent or other amounts under a lease of property or assets which obligation is required to be classified and accounted for as a capitalized lease on the balance sheet of the Company under GAAP, (d) all obligations of the Company under interest rate and currency swaps, floors, caps, or similar arrangements intended to fix interest rate obligations or currency fluctuation risks, (e) all obligations of the Company evidenced by a letter of credit or any reimbursement obligation of the Company in respect of a letter of credit, (f) all obligations of others secured by a lien to which any of the properties or assets of the Company are subject (including, without limitation, leasehold interests and any intangible property rights), whether or not the obligations secured thereby have been assumed by the Company or shall otherwise be the Company's legal obligation and (g) all obligations of others of the kinds described in the preceding clauses (a), (b), (c), (d) or (e) assumed by or guaranteed by the Company and the obligations of the Company under guarantees of any such obligations; and (ii) any amendments, renewals, 3 extensions, deferrals, modifications, refinancing and refunding of any of the foregoing. "Indebtedness" shall not include: (i) any indebtedness of the Company to any Subsidiary or to any Affiliate of the Company or any of the Subsidiaries, (ii) any indebtedness incurred in connection with the purchase of goods, assets, materials or services in the ordinary course of business or representing amounts recorded as accounts payable, trade payables (which are unsecured), other current liabilities (other than for borrowed money) or deferred revenue and deposits of the Company on the books of the Company, (iii) any indebtedness of or amount owed by the Company to employees for services rendered to the Company, and (iv) any liability for federal, state, local or other taxes owing or owed by the Company. "Indenture" means this instrument as originally executed or, if amended or supplemented as herein provided, as so amended or supplemented. "Independent Public Accountants" means any firm of certified public accountants of recognized national standing which is selected by the Board of Directors and is in fact independent. "Issuance Date" means the date of original issuance of the Securities. "Officer" means the President, any Vice President, the Treasurer, the Secretary or the Chief Financial Officer of the Company. "Officers' Certificate" when used with respect to the Company, shall mean a certificate signed by any two Officers or by an Officer and by any Assistant Treasurer or any Assistant Secretary of the Company. Each such certificate shall include the statements provided for in Section 15.04 if and to the extent required by the provisions of such Section. "Opinion of Counsel" means an opinion in writing, signed by legal counsel who may be an employee of, or of counsel to, the Company or may be other counsel, any such counsel to be reasonably satisfactory to the Trustee. Each such opinion shall include the statements provided for in Section 15.04 if and to the extent required by the provisions of such Section . "Outstanding," when used with reference to Securities, shall, subject to the provisions of Section 9.03, mean, as of any particular time, all Securities authenticated and delivered by the Trustee under this Indenture, except (a) Securities theretofore canceled by the Trustee or delivered to the Trustee for cancellation; (b) Securities or the payment or redemption of which moneys in the necessary amounts shall have been deposited in trust with the Trustee or with any Paying Agent (other than the Company), provided that if such Securities are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as in Article Three provided or provision reasonably satisfactory to the Trustee shall have been made for giving such notice; and (c) Securities in lieu of or in substitution for which other Securities shall have been authenticated and delivered or Securities which have been paid pursuant to the terms of Section 2.08; 4 provided that Holders of Securities which cease to be outstanding by reason of clause (b) alone shall nevertheless be entitled to convert the same or any portion thereof until and including but not after the close of business on the last Business Day prior to the date fixed for redemption. "Permitted Junior Securities" means any securities provided for by a plan of reorganization or readjustment authorized by a court of competent jurisdiction in a reorganization proceeding in which the rights of holders of Senior Indebtedness are not altered without the consent of such holders, which consent is deemed to have been given if such holders, individually or as a class, approve such plan. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "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", when used with respect to any Securities to be redeemed, means the price fixed for such redemption pursuant to this Indenture as set forth in the form of Security annexed hereto as Exhibit A. A "Repurchase Event" shall occur if, after initial issuance of the Securities (i) any Person (including any syndicate or group deemed to be a "Person" under Section 13(d)(3) of the Exchange Act), other than the Company, any Subsidiary, any existing Person (including, directly or indirectly, the immediate family (parents, spouse, children, brothers or sisters) of any such Person) who currently beneficially owns shares of the Company's capital stock with 50% or more of the voting power as described below, or any current or future employee or director benefit plan of the Company or any Subsidiary or any entity holding capital stock of the Company for or pursuant to the terms of such plan, or an underwriter engaged in a firm commitment underwriting in connection with a public offering of capital stock of the Company, is or becomes the beneficial owner, 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 50% or more of the total voting power of all shares of capital stock of the Company entitled to vote generally in the election of directors; (ii) the Company sells or transfers all or substantially all of the assets of the Company to another Person; (iii) there occurs any consolidation of the Company with, or merger of the Company into, any other Person, any merger of another Person into the Company (other than a merger (a) which does not result in any reclassification, conversion, exchange or cancellation of outstanding shares of Common Stock, (b) which is effected solely to change the jurisdiction of incorporation of the Company and results in a reclassification, conversion or exchange of outstanding shares of Common Stock solely into shares of Common Stock) or (c) a transaction in which the stockholders of the Company immediately prior to such transaction owned, directly or indirectly, immediately following such transaction, a majority of the combined voting power of the voting capital stock of the corporation resulting from the transaction, such stock to be owned by such stockholders in substantially the same proportion as their ownership of the voting stock of the Company immediately prior to such transaction); (iv) a change in the Board of Directors in which the individuals who constituted the Board of Directors at the beginning of the 24-month period immediately preceding such change (together with any other director whose election by the Board of Directors or whose 5 nomination for election by the stockholders of the Company was approved by a vote of at least a majority of the directors then in office either who were directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the directors then in office; or (v) the Common Stock is the subject of a "Rule 13e-3 transaction" as defined under the Exchange Act. "Responsible Officer," when used with respect to the Trustee, means an officer of the Trustee within the corporate trust department, including any vice president or trust officer of the Trustee and also means, with respect to a particular corporate trust matter, any other officer to whom such corporate trust matter is referred because of his knowledge of and familiarity with the particular subject. "SEC" means the Securities and Exchange Commission. "Securities" means the securities that are authenticated and delivered under this Indenture. "Securityholder" or "Holder" or other similar terms, means any person in whose name a particular Security shall be registered on the books of the Company kept for that purpose in accordance with the terms hereof. "Senior Indebtedness" means, with respect to the Company, any of the following (without duplication): (i) (a) any liability or obligation of the Company for borrowed money (including, without limitation, principal of and premium, if any, interest, fees, penalties, expenses, collection expenses, and other obligations in respect thereof, and, to the extent permitted by applicable law, interest accruing after the filing of a petition initiating any proceeding under the Bankruptcy Code whether or not allowed as a claim in such proceeding), whether or not evidenced by bonds, debentures, notes or other written instruments, and any other liability or obligation evidenced by notes, bonds, debentures or similar instruments (other than the Securities) whether or not contingent and whether outstanding on the date of execution of the Indenture or thereafter created, incurred or assumed, (b) any deferred payment obligation of the Company for the payment of the purchase price of property or assets evidenced by a note or similar instrument (excluding any obligation for trade payables or constituting the deferred purchase price of property or assets which is not evidenced by a note or similar instrument and which is unsecured), (c) any obligation of the Company for the payment of rent or other amounts under a lease of property or assets which obligation is required to be classified and accounted for as a capitalized lease on the balance sheet of the Company under generally accepted accounting principles, (d) all obligations of the Company under interest rate and currency swaps, floors, caps, or similar arrangements intended to fix interest rate obligations or currency fluctuation risks, (e) all obligations of the Company evidenced by a letter of credit or any reimbursement obligation of the Company in respect of a letter of credit, (f) all obligations of others secured by a lien to which any of the properties or assets of the Company are subject (including, without limitation, leasehold interests and any intangible property rights), whether or not the obligations secured thereby have been assumed by the Company or shall otherwise be the Company's legal obligation and (g) all obligations of others of the kinds described in the preceding clauses (a), (b), (c), (d) or (e) assumed by or guaranteed by the Company and the obligations of the Company under guarantees of any such obligations; and (ii) any amendments, renewals, extensions, deferrals, modifications, refinancing and refunding of any of the foregoing. "Senior Indebtedness" shall not include: (i) indebtedness that by the terms of the instrument or instruments by which 6 such indebtedness was created or incurred expressly provides that it (a) is junior in right of payment to the Securities or (b) ranks pari passu, in right of payment with the Securities, (ii) any repurchase, redemption or other obligation in respect of Disqualified Capital Stock, (iii) any indebtedness of the Company to any Subsidiary or to any Affiliate of the Company or any of the Subsidiaries, (iv) any indebtedness incurred in connection with the purchase of goods, assets, materials or services in the ordinary course of business or representing amounts recorded as accounts payable, trade payables (which are unsecured) other current liabilities (other than for borrowed money) or deferred revenues and deposits of the Company on the books of the Company (other than the current portion of any long-term indebtedness of the Company that but for this clause (iv) would constitute Senior Indebtedness), (v) any indebtedness of or amount owed by the Company to employees for services rendered to the Company, (vi) any liability for federal, state, local or other taxes owing or owed by the Company and (vii) the Company's 9.5% subordinated debentures due 2012 and 7.5% convertible subordinated Notes due 2006 it being understood that since the Securities are notes, the Securities shall be deemed "Senior Indebtedness" insofar as such outstanding Subordinated Securities are concerned, and which are deemed junior in right of payment to the Securities. "Significant Subsidiary" means any Subsidiary that would be a "significant subsidiary" of the Company within the meaning of Rule 1-02(w)(3) under Regulation S-X promulgated by the SEC as in effect on the Issuance Date. "Stock" shall mean all shares, options, warrants, general or limited partnership interests, participation or other equivalents (regardless of how designated) of or in a corporation, partnership or equivalent entity whether voting or nonvoting, including, without limitation, common stock, preferred stock, or any other "equity security" (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended). "Stock Option Plans" shall mean the 1989 Non-Employee Director Stock Option Plan, the 1992 Stock Option Plan and the 1995 Stock Option Plan. "Subordinated Securities" means the Company's 9.5% Subordinated Debentures due 2012 and the Company's 7.5% Convertible Subordinated Notes due 2006. "Subsidiary" means a corporation of which more than 50% of the issued and outstanding stock entitled to vote for the election of directors (otherwise than by reason of default in dividends) is at the time owned or controlled, directly or indirectly, by the Company. "TIA" means the Trust Indenture Act of 1939, as amended, as it was in force as of the date of this Indenture, and with respect to each supplemental indenture hereto, as it was in force as of the date of such supplemental indenture. "Trustee" means Wells Fargo Bank, National Association and, subject to the provisions of Article Eight hereof, shall also include its successors and assigns as Trustee hereunder. 7 SECTION 1.02. Other Definitions. Term Defined in Section "Bankruptcy Law" 7.01 "Conversion Agent" 2.03 "Company Notice" 6.09 "Current Market Price" 5.04 "Custodian" 7.01 "Event of Default" 7.01 "Interest Payment Date" 2.04 "Non-payment Default" 4.03 "Paying Agent" 2.03 "Payment Blockage Period" 4.03 "Payment Default" 4.03 "Registrar" 2.03 "Regular Record Date" 2.04 "Repurchase Date" 6.09 "Repurchase Price" 6.09 "Senior Representative" 4.03 "Transaction" 12.01 SECTION 1.03. Incorporation by Reference of Trust Indenture Act. The following terms used in the TIA to the extent applicable to this Indenture have the following meanings: "Commission" means the SEC. "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. "obligor" on the indenture securities means the Company or any other obligor on the indenture securities. 8 All other terms used in this Indenture that are defined by the TIA,defined by TIA reference to another statute or defined by SEC rule have the meanings assigned to them by such definitions. SECTION 1.04. Rules of Construction. Unless the context otherwise requires: (1) a term has the meaning assigned to it; (2) an accounting term not otherwise defined has the meaning assigned to it in accordance with generally accepted accounting principles in effect on the date hereof; (3) "or" is not exclusive; (4) words in the singular include the plural, and in the plural include the singular; (5) provisions apply to successive events and transactions; and (6) "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 TWO. ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF SECURITIES. SECTION 2.01. Dating; Incorporation of Form in Indenture. The Securities and the Trustee's certificate of authentication, with respect thereto, shall be substantially in the form of Exhibit A, which is annexed hereto and which is incorporated in and expressly made a part of this Indenture. The Securities may have notations, legends or endorsements required by law, stock exchange rules, agreements to which the Company is subject, or usage. The Company shall approve the form of the Securities and any notation, legend or endorsement on them. Each Security shall be dated the date of its authentication. The terms and provisions contained in the Securities shall constitute, and are expressly made, a part of this Indenture. SECTION 2.02. Execution and Authentication. Two Officers shall sign the Securities for the Company by manual or facsimile signature. If an Officer whose signature is on a Security no longer holds that office at the time the Trustee authenticates the Security, the Security shall nevertheless be valid. A Security shall not be valid until the Trustee manually signs the certificate of authentication on the Security. Such signature shall be conclusive evidence that the Security has been authenticated under this Indenture. 9 The Trustee shall authenticate Securities for original issue up to the aggregate principal amount of $15,000,000, and such additional principal amount, if any, as shall be determined pursuant to the next sentence of this Section 2.02, upon the execution of the Indenture and receipt of a written order or orders of the Company signed by two Officers or by an Officer and an Assistant Treasurer of the Company. Upon receipt by the Trustee of an Officers' Certificate stating that the Company has elected to accept for exchange existing securities in excess of $15,000,000 and issue securities in exchange therefor, a specified aggregate principal amount of additional Securities, not to exceed $15,177,000 the Trustee shall authenticate and deliver such specified aggregate principal amount of additional Securities to or upon the written order of the Company signed as provided in the immediately preceding sentence. Such Officers' Certificate may be received by the Trustee at least two full Business Days prior to the proposed date for delivery of such additional Securities. The aggregate principal amount of Securities outstanding at any time may not exceed $30,177,000 except as provided in Section 2.08. The Trustee may appoint an authenticating agent 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 has the same rights as an Agent to deal with the Company or an Affiliate. The Securities shall be issuable only in registered form without coupons and only in denominations of $1,000 principal amount and any integral multiple thereof. SECTION 2.03. Registrar and Agents. The Company shall maintain in the Borough of Manhattan, The City of New York, an office or agency where Securities may be presented for registration of transfer or for exchange ("Registrar"), an office or agency where Securities may be presented for payment ("Paying Agent"), an office or agency where Securities may be presented for conversion ("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 may have one or more co-registrars, one or more additional Paying Agents and one or more additional Conversion Agents. The Company or any Subsidiary may act as Registrar, co- Registrar, Paying Agent and/or Conversion Agent. The term "Paying Agent" includes any additional Paying Agent and the term "Conversion Agent" includes any additional Conversion Agent. The Company shall enter into an appropriate agency agreement with any Registrar, Paying Agent, Conversion Agent or co-registrar 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 such Agent. If the Company fails to maintain a Registrar or Paying Agent, or fails to give the foregoing notice, the Trustee shall act as such and shall be entitled to appropriate compensation in accordance with Section 8.07. The Company initially appoints the Trustee as a Registrar, a Paying Agent, a Conversion Agent and agent for service of notices and demands. 10 SECTION 2.04. Holders to be Treated as Owners; Payment of Interest. (a) The Company, the Paying Agent, the Registrar, the Trustee and any agent of the Company, the Paying Agent, the Registrar or the Trustee may deem and treat the person in whose name any Security is registered as the absolute owner of such Security for the purpose of receiving payment of or on account of the principal of and, subject to the provisions of this Indenture, interest on such Security and for all other purposes; and neither the Company, the Paying Agent, the Registrar nor the Trustee nor any agent of the Company, the Paying Agent, the Registrar or the Trustee shall be affected by any notice to the contrary. All such payments so made to any such Person, or upon his order, shall be valid, satisfy and discharge the liability for moneys payable upon any Security. (b) The Person in whose name any Security is registered at the close of business on any record date with respect to any interest payment date shall be entitled to receive the interest, if any, payable on such date (an "Interest Payment Date") notwithstanding any transfer or exchange of such Security subsequent to the record date and prior to such Interest Payment Date, except if and to the extent the Company shall default in the payment of the interest due on such Interest Payment Date, in which case such defaulted interest shall be paid in accordance with Section 2.12. The term "Regular Record Date" as used with respect to any Interest Payment Date for the Securities shall mean the date specified as such in the terms of the Securities. SECTION 2.05. Paying Agent to Hold Money in Trust. On or prior to each Interest Payment Date or date on which payment of principal of the Securities is required, the Company shall provide immediately available funds to the Trustee acting as Paying Agent or with other Paying Agents upon notice to the Trustee a sum sufficient to pay such principal and interest so becoming due. The Company shall require each Paying Agent other than the Trustee to agree in writing that it will 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 to 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 a Subsidiary acts as Paying Agent, it shall on or before 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 payment 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 2.06. 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 the Holders of Securities (the "Note Register"). If the Trustee is not the Registrar, the Company or other obligor, if any, shall furnish to the Trustee at least two Business Days prior to each Regular Record 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 the Holders of Securities. 11 SECTION 2.07. Transfer and Exchange. When Securities are presented to the Registrar or a co-registrar with a request from the Holder of such Securities to register a transfer, the Registrar shall register the transfer as requested. Every Security presented or surrendered for registration of transfer or exchange shall be duly endorsed or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Registrar, duly executed by the Holder thereof or his attorneys duly authorized in writing. At the option of the Holder, Securities may be exchanged for other Securities of any authorized denomination or denominations, of a like aggregate principal amount, upon surrender of the Securities to be exchanged at the office or agency maintained for such purpose pursuant to Section 2.03. To permit registrations of transfers and exchanges, the Company shall issue and execute and the Trustee shall authenticate new Securities evidencing such transfer or exchange at the Registrar's request. No service charge shall be made to the Securityholder for any registration of transfer or exchange. The Company may require from the Securityholder payment of a sum sufficient to cover any transfer taxes or other governmental charge that may be imposed in relation to a transfer or exchange, but this provision shall not apply to any exchange pursuant to Section 2.09, 3.03, 5.02, 6.09 or 11.04 (in which events the Company will be responsible for the payment of such taxes). The Registrar shall not be required to exchange or register a transfer of any Security for a period of 15 days immediately preceding the first mailing of notice of redemption of Securities to be redeemed or of any Security selected, called or being called for redemption except, in the case of any Security where public notice has been given that such Security is to be redeemed in part, the portion thereof not to be redeemed. SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Securities. In case any temporary or definitive Security shall become mutilated or be destroyed, lost or stolen, the Company in its discretion may execute, and upon receipt of an Officers' Certificate (in accordance with Section 2.02) the Trustee shall authenticate and deliver, a new Security, bearing a serial number not contemporaneously outstanding, in exchange and substitution for the mutilated Security or in lieu of and in substitution for the Security so destroyed, lost or stolen. In every case, the applicant for a substituted Security shall furnish to the Company and to the Trustee such security or indemnity as may be required by them to save each of them harmless, and in every case of destruction, loss or theft, the applicant shall also furnish to the Company and to the Trustee evidence to their satisfaction of the destruction, loss or theft of such Security and of the ownership thereof. The Trustee shall authenticate any such substituted Security and deliver the same upon receipt of an Officers' Certificate. Upon the issuance of any substituted Security, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses connected therewith. In case any Security which has matured or is about to mature shall have become mutilated or be destroyed, lost or stolen, the Company may, instead of issuing a substitute Security, pay or authorize the payment of same (without surrender thereof except in the case of a mutilated Security) if the applicant for such payment shall furnish the Company, the Trustee and any Paying Agent with such security or indemnity as they may require to save each of them harmless and, in case of destruction, loss 12 or theft, evidence to the satisfaction of the Company and the Trustee of the destruction, loss or theft of such Security and of the ownership thereof. Every substituted Security issued pursuant to the provisions of this Section 2.08 by virtue of the fact that any Security is destroyed, lost or stolen shall constitute an additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security shall be found at any time, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities duly issued hereunder. All Securities shall be held and owned upon the express condition that the foregoing provisions are exclusive with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities and shall preclude any and all other rights or remedies notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement or payment of negotiable instruments or other securities without their surrender. SECTION 2.09. Temporary Securities. Pending the preparation of definitive Securities, the Company may execute and the Trustee shall authenticate and deliver temporary Securities (printed or lithographed). Temporary Securities shall be issuable in any authorized denomination, and substantially in the form of the definitive Securities but with such omissions, insertions and variations as may be appropriate for temporary Securities, all as may be determined by the Company. Every such temporary Security shall be authenticated upon the same conditions and in substantially the same manner, and with the same effect, as the definitive Securities. Without unreasonable delay the Company will execute and deliver to the Trustee definitive Securities and thereupon any or all temporary Securities may be surrendered in exchange therefor, at the office or agency to be maintained by the Company pursuant to Section 2.03, and the Trustee shall authenticate and deliver in exchange for such temporary Securities an equal aggregate principal amount of definitive Securities. Such exchange shall be made by the Company at its own expense and without any charge therefor. Until so exchanged, the temporary Securities shall in all respects be entitled to the same benefits under this Indenture as definitive Securities authenticated and delivered hereunder. SECTION 2.10. Cancellation of Securities. All Securities surrendered for the purpose of payment, redemption, conversion, exchange or transfer shall, if surrendered to the Company or any Paying or Conversion Agent, be delivered to the Trustee for cancellation, or if surrendered to the Trustee, shall be canceled by it, and no Securities shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Indenture. The Trustee shall destroy canceled Securities and deliver its certificate of destruction to the Company. If the Company shall acquire any of the Securities, such acquisition shall not operate as a redemption or satisfaction of the indebtedness represented by such Securities unless and until the same are delivered to the Trustee for cancellation. SECTION 2.11. Benefits of Indenture Provisions. Nothing in this Indenture or in the Securities expressed or implied, shall give or be construed to give any person, firm or corporation, other than the parties hereto, any Paying Agent, any Conversion Agent and the Holders of Securities and, to the extent provided in Article Four, the holders of Senior 13 Indebtedness, any legal or equitable right, remedy or claim under or in respect of this Indenture, or under any covenant, condition or provision herein contained; all the covenants, conditions or provisions contained in this Indenture or in the Securities being for the sole benefit of the parties hereto, any Paying Agent, any Conversion Agent and the Holders of the Securities and, to the extent provided in Article Four, the holders of Senior Indebtedness. SECTION 2.12. Defaulted Interest. If the Company defaults in a payment of interest on the Securities, it shall pay the defaulted interest (to the extent lawful) to the Persons who are Securityholders on a subsequent special record date. After the deposit by the Company with the Trustee of money sufficient to pay such defaulted interest, the Trustee shall fix a special record date and payment date. Each such special record date shall be not less than 10 days prior to such payment date. At least 15 days before the special record date, the Company shall mail to each Securityholder a notice that states the special record date, the payment date and the amount of defaulted interest, and interest payable on such defaulted interest, if any, to be paid. The Company may pay defaulted interest in any other lawful manner if, after prior notice to the Trustee, such payment shall be deemed practicable by the Trustee. SECTION 2.13. CUSIP Number. The Company may use a "CUSIP" number when issuing the Securities and, if so, the Trustee may use the CUSIP number in notices of redemption or exchange as a convenience to Securityholders; provided that any such notice may state that no representation is made as to the correctness or accuracy of the CUSIP number printed in the notice or on the Securities, and that reliance may be placed only on the other identification numbers printed on the Securities. SECTION 2.14. Deposit of Moneys. Prior to 11:00 a.m.(New York, New York time) on each date on which the principal of, and interest on the Notes are due, the Company shall deposit with the Trustee or Paying Agent in immediately available funds money sufficient to make cash payments, if any, due on such date in a timely manner which permits the Trustee or such Paying Agent to remit payment to the Holders on such date. ARTICLE THREE. REDEMPTION OF SECURITIES. SECTION 3.01. Redemption Prices. The Company may, at its option, redeem all or from time to time any part of the Securities, on any date on or after March 1, 2006 and prior to maturity, upon notice as set forth in Section 3.02 and at the redemption prices (expressed in percentages of the principal amount) set forth in the form of Security herein, together with accrued interest to the date fixed for redemption (but installments of interest whose stated maturity is on or prior to the date fixed for redemption shall continue to be payable to the Holders of record on the Regular Record Date). Portions of such redemption prices in excess of 100% of the principal amount are sometimes herein referred to as the "premium" payable upon such redemption. 14 SECTION 3.02. Notice of Redemption; Selection of Securities. Whenever the Company redeems Securities pursuant to this Article Three, it shall notify the Trustee of the date fixed for redemption and the principal amount of Securities to be redeemed. The notice shall be accompanied by an Officers' Certificate stating that the redemption complies with the provisions of this Indenture. The Company shall give each such notice at least 30 but not more than 60 days before the date fixed for redemption or such other period as the Company and the Trustee may agree. In case the Company shall desire to exercise its right to redeem all or, as the case may be, any part of the Securities in accordance with the right reserved so to do, notice of such redemption shall be given to the Holders of the Securities to be redeemed as hereinafter provided in this Section 3.02, such notice to be given by the Company or, at the Company's direction, by the Trustee in the name and at the expense of the Company. If the notice is to be given by the Trustee, the Company shall provide the Trustee with the information required in this Section 3.02. Notice of redemption shall be given by mailing to Holders of Securities to be redeemed in whole or in part a notice of such redemption by first class mail, postage prepaid, not less than 20 nor more than 65 days prior to the date fixed for redemption, to their last addresses as they shall appear upon the registry book. Any notice which is mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the Holder receives the notice. In any case, failure to duly give notice by mail, or any defect in the notice, to the Holder of any Security designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of such Security or any other Security. 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 surrendered to the Paying Agent to collect the Redemption Price; (6) that, unless the Company defaults in paying the Redemption Price, interest on Securities called for redemption ceases to accrue on and after the Redemption Date; (7) that the right to convert the Securities as provided in Article Five shall terminate at the close of business on the last Trading Day prior to the Redemption Date which is on or before March 1, 2007 (except that a Security which the Company is required to purchase pursuant to Section 6.09 hereof shall be convertible until the close of business on the last Trading Day prior to the Repurchase Date which is on or before March 1, 2007); (8) if any Security is being redeemed in part, the portion of the principal amount of such Security to be redeemed and the bond number of such 15 Security and that, after the Redemption Date, upon surrender of such Security, a new Security or Securities in principal amount equal to the unredeemed portion thereof will be issued; (9) that Holders who want to convert Securities must satisfy the requirements in paragraph 8 of the Securities; (10) the CUSIP number, if any, of the Securities; and (11) the consequences to a Holder, if any, of converting a Security (or portion of a Security) prior to the next Interest Payment Date if the Redemption Date with respect to such Security occurs on or after such Interest Payment Date. At the Company's request, the Trustee shall give the notice of redemption in the Company's name and at the Company's expense. If a CUSIP number is listed in such notice or printed on the Security, the notice may state that no representation is made as to the correctness or accuracy of such CUSIP number. If less than all of the Securities are to be redeemed, the Company shall give the Trustee written notice, at least 45 days (or such shorter period as may be acceptable to the Trustee) prior to the date fixed for redemption, as to the aggregate principal amount of the Securities to be redeemed, and thereupon the Trustee shall select, in such manner as it shall deem appropriate and fair (so long as such method is not prohibited by the rules of any securities exchange or market in which the Securities are then listed or quoted) from outstanding Securities, a principal amount of Securities equal to such aggregate principal amount of Securities to be redeemed and shall thereafter promptly notify the Company in writing of the Securities so to be redeemed and, if any such Securities are to be redeemed in part, the portions thereof to be redeemed. SECTION 3.03. Payment of Securities on Redemptions; Deposit of Redemption Price. If notice of redemption shall have been given as provided in Section 3.02, such Securities or portions of Securities shall, unless theretofore converted into Common Stock pursuant to the terms hereof, become due and payable on the date fixed for redemption and at the place stated in such notice at the applicable Redemption Price and premium, if any, together with accrued and unpaid interest to the date fixed for redemption, and on and after such date fixed for redemption, unless the Company shall default in the payment of the Redemption Price, interest on the Securities so called for redemption shall cease to accrue. Moneys in the amount necessary for each redemption referred to in Section 3.01 shall be deposited with the Paying Agent by the Company on or prior to the date fixed for redemption. On presentation and surrender of such Securities at the place of payment specified in such notice, such Securities or the specified portions thereof shall (subject to the provisions of Article Four) be paid and redeemed at the applicable Redemption Price, together with accrued and unpaid interest thereon to the date fixed for redemption. Installments of interest whose stated maturity is on or prior to the date fixed for redemption shall continue to be payable to the Holders of such Securities on the relevant regular or special record dates according to their terms and the provisions of Section 2.03 of this Indenture. Upon presentation of any Security redeemed in part only, the Company shall execute and the Trustee upon receipt of an Officers' Certificate (Section 2.02) shall authenticate and deliver, at the expense of the Company, a new Security or 16 Securities of authorized denominations in aggregate principal amount equal to the unredeemed portion of the Security so presented. The Company's obligation to deposit with the Paying Agent moneys in the amount necessary for the redemption of particular Securities or portions thereof called for redemption shall be reduced automatically by the amount of such moneys attributable to any of such called Securities or portions thereof which shall have been converted prior to the date such moneys are required to be deposited with the Paying Agent. Any moneys which shall have been deposited with the Paying Agent for redemption of Securities and which are not required for that purpose by reason of conversion of such Securities shall be repaid to the Company. The Paying Agent may in each case require evidence reasonably satisfactory to it of such conversion. ARTICLE FOUR. SUBORDINATION OF SECURITIES. SECTION 4.01. Agreement that Securities to Be Subordinate. The Trustee acknowledges, the Company covenants and agrees, and each Holder of Securities issued hereunder by his acceptance thereof likewise covenants and agrees, that all payments of principal of, premium, if any, and interest on the Securities and all other monetary claims, including such monetary claims as may result from rights of repurchase or rescission, under or in respect of the Securities shall be subordinated in accordance with the provisions of this Article Four to the prior payment in full in cash of all amounts payable under all Senior Indebtedness of the Company. SECTION 4.02. Liquidation; Dissolution; Bankruptcy. Upon any payment or distribution of assets to creditors upon any liquidation, dissolution, winding up, reorganization, assignment for the benefit of creditors, marshaling of assets or any bankruptcy, insolvency or similar proceedings of the Company: (a) holders of all Senior Indebtedness then outstanding shall be entitled to receive payment in full in cash of all amounts owing with respect to all Senior Indebtedness before Securityholders shall be entitled to receive any payment on or with respect to the Securities; and (b) until all Senior Indebtedness is paid in full in cash, any distribution to which Securityholders would be entitled but for this Article Four shall be made to holders of Senior Indebtedness as their interests may appear, except that the Securityholders may receive Permitted Junior Securities. The consolidation of the Company with, or the merger of the Company into, another Person or the liquidation or dissolution of the Company following the conveyance or transfer of the properties and assets of the Company substantially as an entirety to another Person upon the terms and conditions set forth in Article Twelve shall not be deemed a liquidation, dissolution, winding up, reorganization, insolvency, receivership or similar proceeding of the Company for the purposes of this Section. 17 SECTION 4.03. Company Not to Make Payments with Respect to Securities in Certain Circumstances. (1) Unless Section 4.02 shall be applicable, upon the occurrence of any default in the payment of any obligation on or with respect to any Senior Indebtedness, whether with respect to scheduled payments or amounts due upon acceleration (a "Payment Default"), then no payment or distribution of any assets of the Company of any kind or character shall be made by the Company on account of principal of or premium, if any, or interest on the Securities or on account of the purchase, redemption or other acquisition of Securities or any of the obligations of the Company under the Securities unless and until such Payment Default shall have been cured or waived or shall have ceased to exist or such Senior Indebtedness shall have been discharged or paid in full, immediately after which the Company shall resume making any and all required payments, including missed payments, in respect of its obligations under the Securities. (2) Unless Section 4.02 shall be applicable, upon (1) the occurrence of any default (other than a Payment Default) relating to Senior Indebtedness which default, pursuant to the instrument governing such Senior Indebtedness, entitles the holders (or a specified portion of holders) of such Senior Indebtedness to accelerate the maturity of such Senior Indebtedness (a "Non-payment Default") and (2) receipt by the Trustee and the Company from a holder of such Senior Indebtedness or from the trustee, agent or other representative designated in writing to the Trustee of any class or issue of Senior Indebtedness (the "Senior Representative") of written notice of such occurrence, no payment or distribution of any assets of the Company of any kind or character shall be made by the Company on account of principal of or premium if any, of interest on the Securities or on account of the purchase, redemption or other acquisition of Securities or on account of any of the other obligations of the Company under the Securities for a period (a "Payment Blockage Period") commencing on the date of receipt by the Trustee of such notice unless and until the earlier to occur of the following events (subject to any blockage of payments that may then be in effect under subsection (1) of this Section 4.03) (w) 179 days shall have elapsed since receipt of such written notice by the Trustee (provided such Senior Indebtedness shall theretofore not have been accelerated), (x) such Non- payment Default shall have been cured or waived in the manner required by the instrument relating to such Senior Indebtedness or shall have ceased to exist, (y) such Senior Indebtedness shall have been discharged or paid in full or (z) such Payment Blockage Period shall have been terminated by written notice to the Company or the Trustee from either the Senior Representative initiating such Payment Blockage Period or the holders of the requisite amount of such issue of such Senior Indebtedness, immediately after which, in the case of clause (w), (x), (y) or (z), the Company shall resume making any and all required payments, including missed payments, in respect of its obligations under the Securities. Only one Payment Blockage Period pursuant to such notice may be commenced with respect to the Securities during any period of 365 consecutive days. Successive Payment Blockage Periods based on successive Non-payment Defaults may be commenced; provided that no Nonpayment Default with respect to Senior Indebtedness which existed or was continuing on the date of the commencement of any Payment Blockage Period shall be, or be made, the basis for the commencement of any other Payment Blockage Period with respect to such Senior Indebtedness unless such event of default shall have been cured or waived for a period of not less than 180 consecutive days. Regardless of anything to the contrary herein, nothing shall prevent (a) any payment by the Trustee to the Securityholders of amounts deposited with it 18 pursuant to Article Thirteen or (b) any payment by the Trustee or Paying Agent as permitted by Section 4.13. SECTION 4.04. Payment Over of Proceeds in Certain Events. In the event that any payment or distribution of assets of the Company of any kind or character not permitted by Sections 4.02 or 4.03, whether in cash, property or securities, shall be received by the Trustee or Paying Agent, if any, or the Holders of the Securities before all Senior Indebtedness is paid in full in cash, such payment or distribution shall be received and held in trust for the benefit of the holders of Senior Indebtedness and shall forthwith be paid over or delivered by the Trustee, such Paying Agent or such Holders of the Securities, as the case may be, directly to the holders of Senior Indebtedness (pro rata to each such holder on the basis of the respective amounts of Senior Indebtedness held by such holder) or the Senior Representative or the trustee under the indenture or other agreement (if any) pursuant to which Senior Indebtedness may have been issued, for application to the payment of, all Senior Indebtedness remaining unpaid to the extent necessary to pay all obligations in respect of such Senior Indebtedness in full in cash in accordance with its terms, after giving effect to any other concurrent payment or distribution to the holders of such Senior Indebtedness. Both the Trustee and the Paying Agent shall be entitled to presume that any payment or distribution of assets of the Company is not prohibited by Section 4.02 or 4.03 unless a Responsible Officer of the Trustee or the Paying Agent receives notice of a default relating to Senior Indebtedness at least two Business Days before making a payment or distribution of such assets to the Holders. SECTION 4.05. No Waiver of Subordination Provisions. Without notice to or the consent of the Securityholders or the Trustee, the holders of Senior Indebtedness may at any time and from time to time, without impairing or releasing the subordination herein made, change the manner, place or terms of payments, or change or extend the time of payment of or renew or alter the Senior Indebtedness, or amend or supplement in any manner any instrument evidencing the Senior Indebtedness, any agreement pursuant to which the Senior Indebtedness was issued or incurred or any instrument securing or relating to the Senior Indebtedness; release any person liable in any manner for the payment or collection of the Senior Indebtedness; exercise or refrain from exercising any rights in respect of the Senior Indebtedness against the Company or any other person; apply any moneys or other property paid by any person or released in any manner to the Senior Indebtedness; or accept or release any security for the Senior Indebtedness. SECTION 4.06. Notice to Trustee of Specified Events; Reliance on Certificate of Liquidating Agent. The Company shall give prompt written notice to the Trustee and any Paying Agent of any fact known to the Company that would prohibit the making of any payment to or by the Trustee or any Paying Agent in respect of the Securities pursuant to the provisions of this Article. Upon any distribution of assets of the Company or payment by or on behalf of the Company referred to in this Article Four, the Trustee and the Holders of the Securities shall be entitled to rely upon any order or decree of a court of competent jurisdiction in which any proceedings of the nature referred to in Section 4.02 are pending, and the Trustee and the holders of the Securities shall be entitled to rely upon a certificate of the liquidating trustee or agent 19 or other person making any such distribution to the Trustee or to the holders of the Securities for the purpose of ascertaining the persons entitled to participate in such distribution, the holders of Senior Indebtedness and other indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article Four. SECTION 4.07. Subrogation. After all Senior Indebtedness is paid in full and until the Securities are paid in full, Securityholders shall be subrogated to the rights of holders of Senior Indebtedness to receive distributions applicable to Senior Indebtedness to the extent that distributions otherwise payable to the Securityholders have been applied to the payment of Senior Indebtedness. A distribution made or payment over made under this Article to holders of Senior Indebtedness which otherwise would have been made to Securityholders is not, as between the Company, its creditors other than the holders of Senior Indebtedness and Securityholders, a payment or distribution by the Company on or on account of Senior Indebtedness, it being understood that the provisions of this Article Four are, and are intended, solely for the purpose of defining the relative rights of the Securityholders, on the one hand, and the holders of Senior Indebtedness, on the other hand. SECTION 4.08. Obligation to Pay Not Impaired. Nothing contained in this Article Four or elsewhere in this Indenture, or in the Securities, is intended to or shall alter or impair, as between the Company, its creditors other than the holders of Senior Indebtedness, and the Holders of the Securities, the obligation of the Company, which is absolute and unconditional, to pay to the Holders of the Securities the principal of (and premium, if any) and interest on the Securities at the time and place and at the rate and in the currency therein prescribed, or to affect the relative rights of the Holders of the Securities and creditors of the Company other than the Holders of Senior Indebtedness, nor shall anything herein or therein prevent the Trustee or the Holder of any Security from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the right, if any, under this Article Four of the holders of the Senior Indebtedness in respect of cash, property or securities of the Company received upon the exercise of any such remedy. SECTION 4.09. Reliance by Senior Indebtedness on Subordination Provisions. Each Holder of a Security by his acceptance thereof acknowledges and agrees that the foregoing subordination provisions are, and are intended to be, an inducement and a consideration to each holder of any Senior Indebtedness (by its original terms or amendment thereof), whether such Senior Indebtedness was created or acquired before or after the issuance of the Securities, to acquire and hold, or to continue to hold, such Senior Indebtedness, and such holder of Senior Indebtedness shall be deemed conclusively to have relied on such subordination provisions in acquiring and continuing to hold, or in holding, such Senior Indebtedness. The subordination provisions in this Article Four may be enforced directly by the holders of Senior Indebtedness. 20 SECTION 4.10. Subordination Not to Be Prejudiced by Certain Acts. No present or future holder of Senior Indebtedness shall be prejudiced in his right to enforce subordination of the indebtedness evidenced by the Securities by any act or failure to act in good faith by any such holder or by noncompliance by the Company with the terms and provisions and covenants herein regardless of any knowledge thereof any such holder may have or otherwise be charged with. SECTION 4.11. Trustee Authorized to Effectuate Subordination. Each Holder of Securities by his acceptance thereof authorizes and directs the Trustee on his behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination as provided in this Article Four and appoints the Trustee his attorney-in-fact for any and all such purposes including, in the event of any dissolution, winding up, liquidation or reorganization of the Company (whether in bankruptcy, insolvency or receivership or similar proceedings or upon an assignment for the benefit of creditors or otherwise) tending towards liquidation of the business and assets of the Company, to file a claim for the unpaid balance of its Securities in the form required in said proceedings and to cause said claim to be approved. If the Trustee does not file a proper claim or proof of debt in the form required in such proceeding prior to 30 days before the expiration of the time to file such claim or proof, then the Holders of the Senior Indebtedness shall have the right to file and are hereby authorized to file an appropriate claim or proof for and on behalf of the Holders of said Securities. SECTION 4.12. Trustee's Relationship to Senior Indebtedness. Except for the Trustee's duty to hold cash, properties or securities in trust for the benefit of holders of Senior Indebtedness pursuant to Section 4.04 hereof, subject, however, to the final sentence thereof, the Trustee shall owe no fiduciary duty to the holders of Senior Indebtedness. The Trustee shall be entitled to all rights set forth in this Article Four in respect of any Senior Indebtedness at any time held by it, to the same extent as any other holder of Senior Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder. SECTION 4.13. Trustee and Paying Agents Not Chargeable with Knowledge Until Notice. Notwithstanding any of the provisions of this Article Four or any other provisions of this Indenture, the Trustee and any Paying Agent shall not at any time be charged with knowledge of the existence of any facts which would prohibit the making of any payment of moneys to or by the Trustee or any Paying Agent, unless and until a Responsible Officer of the Trustee or such Paying Agent, as the case may be, shall have received written notice thereof from the Company or a holder of a Senior Indebtedness, or any trustee thereof, and, prior to the receipt of any such written notice, the Trustee and any other Paying Agent shall be entitled to assume that no such facts exist. If at least two Business Days prior to the date upon which the terms of any such moneys may become payable for any purpose (including, without limitation, the payment of either the principal of or the interest on any Security) a Responsible Officer of the Trustee or Paying Agent, as the case may be, shall not have received with respect to such moneys the notice provided for in this Section 4.13, then, anything contained herein to the contrary notwithstanding, the Trustee shall have full power and authority to receive such moneys and to apply the same to 21 the purpose for which they were received, and shall not be affected by any notice to the contrary which may be received by it on or after the commencement to such two Business Day period. Nothing contained in this Section 4.13 shall limit the right of the holders of Senior Indebtedness to recover payments as contemplated by Section 4.04. SECTION 4.14. 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 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 in addition to or in place of the Trustee, provided however, that Sections 4.12 and 4.13 shall not apply to the Company if it acts as a Paying Agent. SECTION 4.15. Trustee's Compensation Not Prejudiced. Nothing contained in this Article Four shall affect or subordinate the rights of the Trustee with respect to any fees, expenses or indemnities owing by the Company to the Trustee under this Indenture. ARTICLE FIVE. LIMITED CONVERSION OF SECURITIES. SECTION 5.01. Conversion Privilege; Conversion Price. A Holder of a Security may convert it into Common Stock at any time during the period stated in paragraph 8 of the Securities. The number of shares issuable upon conversion of a Security is determined as follows: (1) divide the principal amount to be converted by the conversion price (the "Conversion Price") in effect on the conversion date and (2) round the result to the nearest 1/100th of a share. The Company shall deliver to such Holder a check in lieu of any fractional share. The initial Conversion Price is stated in paragraph 8 of the Securities. The Conversion Price is subject to adjustment in accordance with Section 5.04. SECTION 5.02. Manner of Exercising Conversion Privilege. To convert a Security a Holder must satisfy the requirements in paragraph 8 of the Securities. The date on which the Holder satisfies all those requirements is the conversion date. As soon as practicable, the Company shall deliver to the Holder through the Conversion Agent a certificate for the number of full shares of Common Stock issuable upon the conversion and a check in lieu of any fractional share. The person in whose name the certificate is registered shall be treated as a stockholder of record on and after the conversion date. Except as provided below, no adjustment will be made on conversion of a Security for interest accrued thereon or for dividends on shares of Common Stock issued on conversion. If a Security is surrendered for conversion during the period after the close of business on any Regular Record Date for the payment of interest and before the opening of business on the corresponding Interest Payment Date, then (a) notwithstanding such conversion, the interest payable on 22 such Interest Payment Date will be paid by check to the Person in whose name the Security is registered at the close of business on such Regular Record Date, and (b) (excluding Securities or portions thereof called for redemption on a Redemption Date occurring after such Regular Record Date and on or prior to the fifth Business Day following such Interest Payment Date), when so surrendered for conversion, the Security shall also be accompanied by payment in New York Clearing House funds or other funds acceptable to the Company of an amount equal to the interest payable on such Interest Payment Date on the principal amount of such Security then being converted; provided however, that if the Company shall default in the payment of said interest, said funds, if any shall be returned to the payor thereof. Securities (or portion of a Security) surrendered for conversion during the period from the close of business on any Regular Record Date next preceding any Interest Payment Date to the opening of business on such Interest Payment Date (except Securities called for redemption on a Redemption Date within such period) must be accompanied by payment of an amount equal to the interest thereon which the registered Holder is to receive. In the case of any Securities that have been converted after any Regular Record Date but on or before the next Interest Payment Date, interest whose stated maturity is on such Interest Payment Date will be payable on such Interest Payment Date notwithstanding such conversion, and such interest will be paid to the Holder of such Securities on such Regular Record Date. Except as described above, no interest on converted Securities will be payable by the Company on any Interest Payment Date subsequent to the date of conversion. No other payment or adjustment for interest or dividends will be made upon conversion. As promptly as practicable after the receipt of such notice and of such payment, if required, and the surrender of such Security as aforesaid, the Company shall issue and deliver, at the office or agency at which such Security is surrendered, to such Holder or on his written order, as specified therein, a certificate or certificates for the number of full shares of Common Stock issuable upon the conversion of such Security (or specified portion thereof) in accordance with the provisions of this Article Five, and cash as provided in Section 5.03 in respect of any fractional share of Common Stock otherwise issuable upon such conversion. Such conversion shall be deemed to have been effected immediately prior to the close of business on the date on which notice, payment, if required, and proper endorsement or transfer, if required, shall have been received by the Company and such Security shall have been surrendered as aforesaid (unless such Holder shall have so surrendered such Security and shall have instructed the Company to effect the conversion on a particular date following such surrender and such Holder shall be entitled to convert such Security on such date in which case such conversion shall be deemed to be effected immediately prior to the close of business on such date) and at such time the rights of the Holder of such Security as such Securityholder shall cease and the person or persons in whose name or names any certificate or certificates for shares of Common Stock shall be issuable upon such conversion shall be deemed to have become the holder or holders of record of the shares represented thereby. In the case of any Security which is converted in part only, upon such conversion the Company shall execute and the Trustee upon receipt of an Officers' Certificate (Section 2.02) shall authenticate and deliver to or on the order of the Holder thereof, at the expense of the Company, a new Security or Securities of authorized denominations in principal amount equal to the unconverted portion of such Security. 23 SECTION 5.03. Fractional Shares. The Company will not issue a fractional share of Common Stock upon conversion of a Security. Instead the Company will deliver its check for the current market value of the fractional share. The current market value of a fraction of a share is determined as follows: (1) multiply the current market price (as defined in Section 5.04) on the Business Day next preceding the date of conversion of a full share by the fraction and (2) round the result to the nearest cent. If more than one Security shall be surrendered for conversion at one time by the same Holder, the number of full shares which shall be issuable upon conversion shall be computed on the basis of the aggregate principal amount of Securities (or specified portions thereof to the extent permitted hereby) so surrendered. SECTION 5.04. Adjustment of Conversion Price. The Conversion Price shall be adjusted from time to time during the period stated in paragraph 8 of the Securities as follows: (a) In case the Company shall hereafter (i) pay a dividend or make a distribution on its Common Stock in shares of Common Stock, (ii) subdivide its outstanding shares of Common Stock into a greater number of shares, (iii) combine its outstanding shares of Common Stock into a smaller number of shares, or (iv) issue by reclassification of its Common Stock any shares of capital stock of the Company, the Conversion Price in effect immediately prior to such action shall be adjusted so that the Holder of any Security thereafter surrendered for conversion shall be entitled to receive the number of shares of Common Stock or other capital stock of the Company which he would have owned immediately following such action had such Security been converted immediately prior thereto. An adjustment made pursuant to this subsection shall become effective immediately after the record date in the case of a dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or reclassification. If, as a result of an adjustment made pursuant to this subsection (a) the Holder of any Security thereafter surrendered for conversion shall become entitled to receive shares of two or more classes of capital stock or shares of Common Stock and other capital stock of the Company, the Board of Directors (whose determination shall be conclusive and shall be described in an Officers' Certificate filed with the Trustee and with any Conversion Agent) shall determine in good faith the allocation of the adjusted Conversion Price between or among shares of such classes of capital stock or shares of Common Stock and other capital stock. (b) In case the Company shall hereafter issue rights, warrants or options to holders of its outstanding shares of Common Stock generally entitling them to subscribe for or purchase shares of Common Stock (or securities convertible into or exchangeable for Common Stock) at a price per share (or having a conversion or exchange price per share) less than the current market price per share (as determined pursuant to subsection (e) of this Section 5.04) of the Common Stock on the record date mentioned below, 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 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 of Common Stock which the aggregate offering price of the total number of shares of Common Stock so offered for subscription or purchase would purchase at such current market price, and of 24 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 for subscription or purchase. Such adjustment shall be made successively whenever any such rights or warrants are distributed, and shall become effective immediately after the record date for the determination of stockholders entitled to receive such rights, warrants or options. 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 or the exchange of exchangeable securities actually issued). (c) In case the Company shall hereafter distribute to holders of its outstanding Common Stock generally evidences of indebtedness, cash or other assets (including securities, but excluding those dividends, rights, warrants, options and distributions referred to above and excluding dividends and distributions paid exclusively in cash), then in each such case the Conversion Price of the shares of Common Stock 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 the numerator of which shall be the current market price per share (determined as provided in subsection (e) of this Section 5.04) of the Common Stock on the record date mentioned below less the then fair market value (as determined by the Board of Directors, whose determination shall be conclusive and shall be described in an Officers' Certificate filed with the Trustee and with any Conversion Agent) of the portion of such evidences of indebtedness or assets (but not cash) so distributed to the holder of one share of Common Stock or of such subscription rights or warrants applicable to one share of Common Stock, and of which the denominator shall be such current market price per share of Common Stock. Such adjustment shall become effective immediately after the record date for the determination of stockholders entitled to receive such distribution. In any case in which this subsection (c) is applicable, subsection (b) shall not be applicable. (d) In case the Company shall, (i) by dividend or otherwise, at any time distribute to all holders of its Common Stock cash (excluding any cash portions of distributions referred to in (c) above or cash distribution upon a merger or consolidation to which Section 5.10 applies) in an aggregate amount that, combined together with (a) all other such all-cash distributions made within the preceding 12 months in respect to which no adjustment has been made and (b) any cash and their fair market of other consideration paid or payable in respect of any tender offers by the Company for Common Stock concluding within the preceding 12 months in respect of which no adjustment has been made, exceeds 12.5% of the Company's market capitalization (defined as being the product of the current market price of the Common Stock times the number of shares of Common Stock then outstanding) on the record date for such distribution (as determined by the Board of Directors, whose determination shall be described in an Officers' Certificate filed with the Trustee and any Conversion Agent), and or (ii) purchase Common Stock pursuant to a tender offer made by the Company or any of its subsidiaries which involves an aggregate consideration that together with (a) any cash and the fair market value of any other consideration paid or payable in any other tender offer by the Company or any of its subsidiaries of Common Stock expiring within the 12 months preceding the expiration of such tender offer in respect of which no adjustment has been made (as determined by the Board of Directors, whose determination shall be described in an Officers' 25 Certificate filed with the Trustee and any Conversion Agent) and (b) the aggregate amount of any such all-cash distributions referred to in (i) above to all holders of Common Stock within the 12 months preceding the expiration of such tender offer in respect of which no adjustments have been made, exceeds 12.5% of the Company's market capitalization on the expiration of such tender offer, the Conversion Price shall be reduced so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the effectiveness of the Conversion Price reduction contemplated by this subsection (d) by a fraction of which the numerator shall be the current market price per share (determined as provided in subsection (e) of this Section 5.04) of the Common Stock on the date of such effectiveness less the amount of cash so distributed applicable to one share of Common Stock and the denominator shall be such current market price per share of the Common Stock (determined as aforesaid), such reduction to become effective immediately prior to the opening of business on the day following the date fixed for the payment of such distribution. (e) For the purpose of any computation under subsections (b), (c) and (d) of this Section 5.04 or under Section 5.03, the "current market price" per share of Common Stock on any record date shall be deemed to be the average of the daily closing prices for the five consecutive trading days immediately preceding the date in question. The closing price for each day shall be the last sale price regular way or, in case no such sale takes place on such day, the average of the closing bid and asked prices regular way, in either case on the American Stock Exchange, or, if the shares of Common Stock are not listed or admitted to trading on such Exchange, on the principal national securities exchange on which the shares are listed or admitted to trading, or if they are not listed or admitted to trading on any national securities exchange, on the Nasdaq National Market System (the NMS") or any comparable system, or if the Common Stock is not quoted on the NMS or a comparable system, the closing bid and asked prices as furnished by any member of the National Association of Securities Dealers, Inc. selected from time to time by the Company for that purpose. (f) In any case in which this Section 5.04 shall require that an adjustment be made immediately following a record date, the Company may elect to defer (but only until five Business Days following the filing by the Company with the Trustee and any Conversion Agent of the certificate of Independent Public Accountants described in Section 5.05) issuing to the Holder of any Security converted after such record date the shares of Common Stock issuable upon such conversion over and above the shares of Common Stock issuable upon such conversion on the basis of the Conversion Price prior to adjustment. (g) No adjustment in the Conversion Price shall be required unless such adjustment would require an increase or decrease of at least 1% of such price; provided however, that any adjustments which by reason of this subsection (g) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 5.04 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. Anything in this Section 5.04 to the contrary notwithstanding, the Company shall be entitled to make such reductions in the Conversion Price, in addition to those required by this Section 5.04, as it in its discretion shall determine to be advisable in order that any stock dividend, subdivision of shares, distribution of rights to purchase stock or securities, or distribution of securities convertible into or exchangeable for stock hereafter made by the Company to its stockholders shall not be taxable; provided that in no event shall such Conversion Price be less than the par value of the Common Stock at the time such reduction is made. No adjustment to the Conversion Price pursuant 26 to this Indenture shall reduce the Conversion Price below the then existing par value per share of Common Stock. The Company hereby covenants not to take any action to increase the par value per share of the Common Stock. No adjustment in the Conversion Price need be made for rights to purchase shares of Common Stock or issuances of Common Stock pursuant to a Company plan for reinvestment of dividends or interest. (h) In the event that at any time as a result of an adjustment made pursuant to subsection (a) of this Section 5.04, the Holder of any Securities thereafter surrendered for conversion shall become entitled to receive any shares of the Company other than shares of Common Stock, thereafter the Conversion Price of such other shares so receivable upon conversion of any Security shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to Common Stock contained in this Article Five. (i) In addition to the foregoing adjustments, the Company will be permitted to make such reduction in the Conversion Price as it considers to be advisable in order that any event treated for federal income tax purposes as a dividend or distribution of stock or stock rights will not be taxable to the holders of the Common Stock. Any such reduction shall be described in an Officers' Certificate filed with the Trustee and any Conversion Agent. SECTION 5.05. Certificate Concerning Adjusted Conversion Price. Whenever the Conversion Price is adjusted as herein provided, (i) the Company shall promptly file with the Trustee and any Conversion Agent a certificate of a firm of Independent Public Accountants (who may be the regular accountants employed by the Company) setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment and the manner of computing the same, which certificate shall be conclusive evidence of the correctness of such adjustment and (ii) a notice stating that the Conversion Price has been adjusted and setting forth the adjusted Conversion Price shall forthwith be given by the Company to the Securityholders in the same manner provided in Section 15.03. The Trustee and any Conversion Agent shall be under no duty or responsibility with respect to any such certificate or the certificate provided for in Section 5.10 except to exhibit the same from time to time to any Holder of a Security desiring an inspection of such certificate. SECTION 5.06. Notice of Certain Corporate Action. In case: (a) the Company shall take any action which would require an adjustment in the Conversion Price pursuant to Sections 5.04(b), 5.04(c) or 5.04(d); or (b) the Company shall authorize the granting to the holders of its Common Stock of rights or warrants to subscribe for or purchase any shares of stock of any class or of any other rights; or (c) there shall be any capital reorganization or reclassification of the Common Stock (other than a subdivision or combination of the outstanding Common Stock and other than a change in the par value of the Common Stock), or any consolidation or merger to which the Company is a party or any statutory exchange of securities with another corporation and for which approval of any 27 stockholders of the Company is required, or any sale or transfer of all or substantially all of the assets of the Company; or (d) there shall be a voluntary or involuntary dissolution, liquidation or winding-up of the Company; then the Company shall cause to be filed with the Trustee and any conversion Agent, and shall cause to be given to the Securityholders, in the manner provided in Section 15.03, at least fifteen (15) days prior to the applicable date hereinafter specified, a notice stating (i) the date on which a record is to be taken for the purpose of such distribution or rights, or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such distribution or rights is to be determined, or (ii) the date on which such reorganization, reclassification, consolidation, merger, sale, transfer, dissolution, liquidation or winding-up is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale, transfer, dissolution, liquidation or winding-up. Failure to give such notice or any defect therein shall not affect the legality or validity of the proceedings described in subsection (a), (b), (c) or (d) of this Section 5.06. SECTION 5.07. Company to Provide Stock. The Company will at all times during the period stated in paragraph 8 of the Securities reserve and keep available out of its authorized but unissued Common Stock, for the purpose of effecting conversions of Securities, the full number of shares of Common Stock deliverable upon the conversion of all outstanding Securities. For purposes of this Section 5.07, the number of shares of Common Stock which shall be deliverable upon the conversion of all outstanding Securities shall be computed as if at the time of computation all outstanding Securities were held by a single Holder. The Company will endeavor to list the shares of Common Stock required to be delivered upon conversion of Securities prior to such delivery upon each national securities exchange, if any, upon which the outstanding Common Stock is listed at the time of such delivery. Prior to the delivery of any securities or other property, including cash, which the Company shall be obligated to deliver upon conversion of the Securities, the Company will endeavor to comply with all Federal and State laws and regulations thereunder governing the registration or qualification of such securities with, or any approval of or consent to the delivery thereof by, any governmental authority. SECTION 5.08. Taxes on Conversions. The Company will pay any and all taxes that may be payable in respect of the issue or delivery of shares of Common Stock on conversion of Securities pursuant hereto. The Company shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the issue and delivery of shares of Common Stock in a name other than that of the Holder of the Security or Securities to be converted, and no such issue or delivery shall be made unless and until the person requesting such issue has paid to the Company the amount of any such tax, or has established, to the satisfaction of the Company, that such tax has been paid. 28 SECTION 5.09. Covenant as to Stock. The Company covenants that all shares of Common Stock which may be delivered upon conversion of Securities will upon delivery be duly and validly authorized and issued and fully paid and non-assessable, free of all liens and charges imposed by the Company and not subject to any preemptive rights. SECTION 5.10. Provision in Case of Consolidation or Merger. Notwithstanding any other provision herein to the contrary, in case of any consolidation or merger to which the Company is a party (other than a transaction in which the Company is the continuing corporation and which does not result in 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 in case of any sale or conveyance to another entity of the property of the Company as an entirety or substantially as an entirety, or in the case of any statutory exchange of securities with another corporation (including any exchange effected in connection with a merger of a third corporation into the Company), there shall be no adjustments under Section 5.04 but each Security then outstanding would, without the consent of any Holders of Securities, become convertible only into the kind and amount of securities, cash and other property which he would have owned or have been entitled to receive upon such consolidation, merger, statutory exchange, sale or conveyance had such Security been converted immediately prior to the effective date of such consolidation, merger, statutory exchange, sale or conveyance (assuming that as a holder of Common Stock, such Holder failed to exercise any rights of election and received per share the kind and amount received per share by a plurality of non-electing shares) and in any such case, if necessary, appropriate adjustment shall be made in the application of the provisions set forth in this Article Five with respect to the rights and interests thereafter of the Holders of the Securities, to the end that the provisions set forth in this Article Five shall thereafter correspondingly be made applicable, as nearly as may reasonably be, in relation to any shares of stock or other securities or property thereafter deliverable on the conversion of the Securities. Any such adjustments shall be made by and set forth in a supplemental indenture executed by the Company and the Trustee and evidenced by a certificate of a firm of Independent Public Accountants (who may be the regular accountants employed by the Company), to that effect furnished to the Trustee; and any adjustment so approved shall for all purposes hereof conclusively be deemed to be an appropriate adjustment. The above provisions of this Section 5.10 shall similarly apply to successive consolidations, mergers, statutory exchanges, sales or conveyances. The Company shall give notice of the execution of such a supplemental indenture to the Holders of Securities in the manner provided in Section 15.03 within 30 days after the execution thereof. SECTION 5.11. Trustee's Disclaimer of Responsibility for Certain Matters. Neither the Trustee nor any Conversion Agent shall at any time be under any duty or responsibility to any Holder of Securities to determine whether any facts exist which may require any adjustment of the Conversion Price, or with respect to the nature or extent of any such adjustment when made, or with respect to the method employed, or herein or in any supplemental indenture proved to be employed, in making the same. Neither the Trustee nor any 29 Conversion Agent shall be accountable with respect to the validity or value (or the kind or amount) of any shares of Common Stock, or of any securities or property, which may at any time be issued or delivered upon the conversion of any Security; and neither the Trustee nor any Conversion Agent makes any representation with respect thereto. Neither the Trustee nor any Conversion Agent shall be responsible for any failure of the Company to issue, transfer or deliver any shares of Common Stock or stock certificates or other securities or property upon the surrender of any Security for the purpose of conversion, or to comply with any of the covenants of the Company, or to fulfill any of the conditions, contained in this Article Five. ARTICLE SIX. PARTICULAR COVENANTS OF THE COMPANY. SECTION 6.01. Payment of Principal, Premium and Interest. The Company covenants and agrees that it will duly and punctually pay or cause to be paid the principal of (premium, if any) and interest on each of the Securities at the time and place and in the manner provided in the Securities. Principal of (and premium, if any) and interest on each of the Securities shall be considered paid on the date due if the Paying Agent (other than the Company, a Subsidiary thereof or any affiliate of any thereof) holds on that date, not later than 11:00 a.m. New York City time, immediately available funds designated for and sufficient to pay the installment. The Company shall pay interest on overdue principal at the rate borne by the Securities; it shall pay interest on overdue installments of interest at the same rate to the extent lawful. SECTION 6.02. Offices for Notices, Payments and Conversions. The Company shall maintain in the Borough of Manhattan, The City of New York, an office or agency where Securities may be surrendered for registration of transfer or exchange or conversion and where notices and demands to or upon the Company in respect of the Securities and this Indenture may be served. The Company shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee. The Company may also from time to time designate one or more other offices or agencies where the Securities may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, The City of New York for such purposes. The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. The Company hereby designates the Corporate Trust Office of the Trustee as an agency of the Company in accordance with Section 2.03. 30 SECTION 6.03. Paying Agents. (a) Any Paying Agent appointed by the Company other than the Trustee shall be a bank or trust company of the character and with the qualifications set forth in Section 8.10 and the Company covenants and agrees to enter into an appropriate agency agreement with any Registrar or Paying Agent not a party to this Indenture. The agreement shall implement the provisions of this Indenture that relate to such Registrar or Paying Agent. In addition, the Company covenants and agrees to cause such Paying Agent to execute and deliver to the Trustee an instrument in which it shall agree with the Trustee, subject to the provisions of this Section, (1) that such Paying Agent shall hold in trust for the benefit of the Securityholders all sums held by such Paying Agent for the payment of the principal of (or premium, if any) or interest on any of the Securities, (2) that such Paying Agent shall give to the Trustee notice of any failure by the Company (or any other obligor on the Securities) to make any payment of the principal of (or premium, if any) or interest on the Securities when the same shall be due and payable, and (3) at any time during the continuance of such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent. (b) If the Company shall at any time act as its own Paying Agent, then on or before each due date of the principal of (and premium, if any) or interest on any of the Securities, it will set aside and segregate and hold in trust for the benefit of the Holders of the Securities, a sum sufficient to pay such principal (and premium, if any) or interest so becoming due, and will notify the Trustee of any failure to take such action. (c) Anything in this Section 6.03 to the contrary notwithstanding, the Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay or cause to be paid to the Trustee all sums held in trust by it or any Paying Agent as required by this Section, such sums to be held by the Trustee upon the terms herein contained. (d) Anything in this Section 6.03 to the contrary notwithstanding, the agreement to hold sums in trust as provided in this Section is subject to the provisions of Sections 13.03 and 13.04 hereof. SECTION 6.04. Annual Review Certificate. The Company covenants and agrees to deliver to the Trustee, on or before a date not more than 95 days after the end of each fiscal year of the Company ending after the date hereof, a certificate from its principal executive officer, principal financial officer or principal accounting officer stating that he or she is familiar with the affairs of the Company stating that a review of the activities of the Company and of its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing officers with a view to determining whether the Company has kept, observed, performed and fulfilled its obligations under this Indenture and further stating, as to each such officer signing such certificate, that to the best of his knowledge the Company has kept, observed, performed and fulfilled each and every covenant in this Indenture contained and is not in default in the performance and observance of any of the terms, provisions and conditions hereof (or, if the Company shall be in default, specifying all such defaults and the nature thereof of which he may have knowledge) and that to the best of his knowledge no event has occurred and remains in existence by reason of which payments on account of the principal of (or premium, if any) or interest on the Securities is prohibited. 31 SECTION 6.05. Appointment to Fill a Vacancy in Office of Trustee. The Company, whenever necessary to avoid or fill a vacancy in the office of Trustee, shall appoint, in the manner provided in Section 8.08, a Trustee, so that there shall at all times be a Trustee hereunder. SECTION 6.06. Further Instruments and Acts. The Company shall, upon request of the Trustee, execute and deliver such further instruments and do such further acts as may reasonably be necessary or proper to carry out more effectually the purposes of this Indenture. SECTION 6.07. Payment of Taxes and Assessments. The Company shall, and shall cause each Significant Subsidiary to, pay all taxes, assessments and governmental charges lawfully levied or assessed upon it, its property, or upon any part thereof or upon its income or profits, or any part thereof, before the same shall become delinquent; provided that nothing in this Section 6.07 or elsewhere in this Indenture contained shall require the Company to pay any such tax assessment or governmental charge so long as the applicability or validity thereof shall be contested in good faith; and provided further, that neither the Company nor any Significant Subsidiary shall be required to pay any such taxes, assessments or charges, if in the judgment of the Board of Directors of the Company or such Significant Subsidiary, such payment shall no longer be advantageous to the Company or such Significant Subsidiary in the conduct of its business. SECTION 6.08. Maintenance of Corporate Existence. Except as otherwise provided or permitted pursuant to the other provisions of this Indenture, the Company shall maintain its corporate existence and right to carry on business and duly procure all necessary renewals and extensions thereof. SECTION 6.09. Repurchase Event. (a) In the event that a Repurchase Event occurs after initial issuance of the Securities, each Holder of Securities shall have the right (which right may not be waived by the Board of Directors or the Trustee) at the Holder's option, to require the Company to repurchase all of such Holder's Securities or any authorized denomination thereof, on the date (the "Repurchase Date") that is 45 calendar days after the date of the Company Notice (as defined below), at a price equal to 100% of the principal amount of such Securities to be repurchased (the "Repurchase Price"), together with accrued interest to the Repurchase Date in accordance with paragraph (b) of this Section 6.09; provided however, that a Repurchase Event shall not be deemed to have occurred so long as the Securities are convertible into Common Stock if the closing price per share of the Common Stock for any five Trading Days within the period of ten consecutive Trading Days ending immediately before the Repurchase Event shall equal or exceed 110% of the conversion price of such Securities in effect on each such Trading Day. A "beneficial owner" shall be determined in accordance with Rule 13d-3 promulgated by the SEC under the Exchange Act, as in effect on the date of execution of the Indenture. (b) Within 15 calendar days after a Repurchase Event, the Company shall mail a notice (the "Company Notice") to the Trustee and each Securityholder of record as of the date of the Repurchase Event stating: 32 (1) that a Repurchase Event has occurred and that such Securityholder has the right to require the Company to repurchase all or any authorized denomination of such Securityholder's Securities at the Repurchase Price; (2) if the date of the Repurchase Event is on or prior to March 1, 2007, the current Conversion Price, the date on which the right to convert such Holder's Securities into Common Stock will expire and the place or places where such Securities may be surrendered for conversion; (3) the Repurchase Date; (4) that Holders electing to have Securities or any authorized denomination thereof purchased will be required (a) to surrender their Securities to the Paying Agent at the address specified in the Company Notice on or before the fifth Business Day preceding the Repurchase Date with the "Option of Holder to Elect Purchase" on the reverse thereof completed and (b) to complete any form of letter of transmittal proposed by the Company and acceptable to the Trustee and the Paying Agent; (5) that Securities which have been surrendered to the Paying Agent may be converted into Common Stock only to the extent that the Holder of such Securities withdraws his election to have such Securities purchased in accordance with the terms of this Section 6.09; (6) that any Security not tendered or not accepted for payment will continue to accrue interest; (7) that, unless the Company defaults in paying the Repurchase Price, any Security accepted for payment shall cease to accrue interest after the Repurchase Date; and (8) a description of any other procedure which a Holder must follow to exercise his right to have Securities repurchased. At the Company's request, the Trustee shall give the Company Notice in the Company's name and at the Company's expense, provided however, that the Company shall deliver to the Trustee, at least five days prior to the date upon which the Company Notice must be mailed to Securityholders (unless a shorter time shall be acceptable to the Trustee), an Officers' Certificate setting forth the information to be stated in such notice as provided in this Section 6.09. No failure of the Company to give the Company Notice shall limit any Securityholder's right to exercise the repurchase right herein described. The Trustee shall be under no obligation to ascertain or verify the occurrence of a Repurchase Event or to give notice with respect thereto other than as provided above upon receipt of the written notice of a Repurchase Event from the Company. The Trustee may conclusively presume, in the absence of written notice from the Company to the contrary, that no Repurchase Event has occurred. (c) In the event a repurchase right shall be exercised in accordance with the terms hereof, the Company shall pay or cause to be paid the price payable with respect to the Securities as to which the repurchase right had been exercised in cash to the Securityholder. In the event that a repurchase right is exercised with respect to less than the entire principal amount of a surrendered 33 Security, the Company shall execute and the Trustee shall authenticate for issuance in the name of the Securityholder a Security or Securities in the aggregate principal amount of the unpurchased portion of such surrendered Security. (d) In connection with any repurchase of Securities under this Section 6.09, the Company shall (i) comply with Rule 13e-4 (which term, as used herein, includes any successor provision thereto) under the Exchange Act, if applicable, (ii) file the related Schedule TO (or any successor schedule, form or report) under the Exchange Act, if applicable, and (iii) otherwise comply with all federal and state securities laws so as to permit the rights and obligations under this Section 6.09 to be exercised in the time and in the manner specified in this Section 6.09. SECTION 6.10. 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 all such reports, information and other documents with the SEC, the Company shall file copies of all such reports, information and other documents with the Trustee. The Company shall cause any quarterly and annual reports which it mails to its stockholders to be mailed to the Holders of the Securities. 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 shall 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 shall 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 shall be prepared in accordance with generally accepted accounting principles consistently applied, except for changes with which the Company's Independent Public Accountants concur, and except that quarterly statements may be subject to year-end adjustments. The Company shall cause a copy of such financial statements to be filed with the Trustee and mailed to the Holders of the Securities within 60 days after the end of each of the first three quarters of each fiscal year and within 120 days after the close of each fiscal year. The Company shall also comply with the other provisions of TIA Section 314(a). ARTICLE SEVEN. REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT. SECTION 7.01. Events of Default. An "Event of Default" occurs if: (a) the Company defaults in the payment of the principal of or premium, if any, of any of the Securities as and when the same shall become due and payable either at maturity, upon redemption (including redemption and purchase pursuant to Section 6.09), by declaration or otherwise, and in each case whether or not such payment is prohibited by the provisions of Article Four; or 34 (b) the Company defaults in the payment of any installment of interest upon any of the Securities as and when the same shall become due and payable and the default continues for a period of 30 days, whether or not such payment is prohibited by the provisions of Article Four; or (c) the Company defaults in the payment of the Repurchase Price in respect of any Security on the Repurchase Date therefor, whether or not such payment is prohibited by the subordination provisions of Article Four; or (d) the Company fails to perform or breaches any other covenant or agreement in the Securities or in this Indenture and the default continues for the period and after the notice specified in the last paragraph of this Section 7.01; or (e) there shall have been entered a decree or order under any Bankruptcy Law by a court of competent jurisdiction that (A) is for relief in respect of the Company or any Significant Subsidiary under any Bankruptcy Law, or (B) appoints a Custodian of the Company or such Significant Subsidiary or of any substantial part of the property of the Company or such Significant Subsidiary, as the case may be, or (C) orders the winding-up or liquidation of the affairs of the Company or such Subsidiary, as the case may be, and the continuance of any such decree or order unstayed and in effect for a period of 60 consecutive days; or (f) the Company or any Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law (A) commences a voluntary case or proceeding with respect to itself, (B) consents to the entry of a judgment, decree or order for relief against it in an involuntary case or proceeding, (C) applies for, consents to or acquiesces in the appointment of or taking possession by a Custodian of the Company or such Significant Subsidiary or for a substantial part of its properties or (D) makes a general assignment for the benefit of its creditors. The term "Bankruptcy Law" means Title 11 of the United States Code, as now constituted or hereafter amended, or any other applicable Federal, state or foreign bankruptcy, insolvency or other similar law. The term "Custodian" means any receiver, liquidator, assignee, trustee, custodian, sequestrator or similar official under any Bankruptcy Law. A Default under clause (c) 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 must specify the Default, demand that it be remedied and state the notice is a "Notice of Default." When a Default is cured, it ceases. SECTION 7.02. Acceleration. If any Event of Default (other than an Event of Default with respect to the Company specified in Sections 7.01(e) or (f) above) occurs and is continuing, the Trustee by notice to the Company, or the Holders of at least 25% in principal amount of the Securities then outstanding by notice to the Company and the Trustee, may declare to be due and payable immediately the principal amount of the Securities plus accrued interest to the date of acceleration. Upon any such declaration, such amount shall be due and payable immediately. If an Event of Default with respect to the Company specified in Sections 7.01(e) or (f) above occurs, all unpaid principal and accrued interest on the Securities 35 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 outstanding Securities by notice to the Trustee may rescind an acceleration and its consequences if (x) all existing Events of Default, other than the non-payment of the principal of the Securities which shall have become due solely by such declaration of acceleration, shall have been cured or waived, (y) 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, and (z) the rescission would not conflict with any judgment or decree of a court of competent jurisdiction. SECTION 7.03. 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 principal 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, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered. SECTION 7.04. Waiver of Defaults and Events of Default. Subject only to the provisions of Sections 7.07 and 11.02 hereof, the Holders of a majority in principal amount of the outstanding Securities by written notice to the Trustee may waive an existing Default or Event of Default and its consequences except (a) a Default in payment of principal or interest on any Security as specified in clauses (a) and (b) of Section 7.01, (b) the right of Securityholders to redeem or convert their Securities or (c) in respect of a covenant or provision hereof which under Article Eleven cannot be modified or amended without the consent of the Holder of each outstanding Security affected. When a Default or Event of Default is waived, it is cured and ceases; but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereto. SECTION 7.05. Control by Majority. The Holders of a majority in principal amount of the outstanding Securities may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on it, including, without limitation, any remedies provided for in Section 7.03. The Trustee may refuse, however, to follow any direction that conflicts with law, the Securities or this Indenture, or that the Trustee determines may be unduly prejudicial to the rights of another Securityholder, that may involve the Trustee in personal liability or if the Trustee determines that it does not have adequate indemnification against any loss or expense; provided that the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction. 36 SECTION 7.06. Limitation on Suits. Except as provided in Section 7.07, a Securityholder may not pursue any remedy with respect to this Indenture or the Securities unless: (a) the Holder gives to the Trustee written notice of a continuing Event of Default; (b) the Holders of at least 25% in principal amount of the Securities then outstanding make a written request to the Trustee to pursue the remedy; (c) such Holder or Holders offer to the Trustee reasonable indemnity satisfactory to the Trustee against any loss, liability or expenses; (d) the Trustee does not comply with the request within 60 days after receipt of the notice, request and offer of indemnity; and (e) 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 another Securityholder. SECTION 7.07. Rights of Holders to Receive Payment. Notwithstanding any other provision of this Indenture, the right of any Holder of a Security to receive payment of the principal of, premium, if any, and interest on the Security, on or after the respective due dates expressed in the Security (including the maturity date, the Redemption Date and the Repurchase Date), or to bring suit for the enforcement of any such payment on or after such respective dates, is absolute and unconditional and shall not be impaired or affected without the consent of the Holder. Notwithstanding any other provision of this Indenture, the right of any Holder of a Security to convert the Security or to bring suit for the enforcement of such right shall not be impaired or affected without the consent of the Holder. SECTION 7.08. Collection Suit by Trustee. If an Event of Default in payment of interest or principal specified in Section 7.01(a) or (b) occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company or any other obligor on the Securities for the whole amount of unpaid principal and accrued interest remaining unpaid, together with interest on overdue principal and, to the extent that payment of such interest is lawful, interest on overdue installments of interest, in each case at the rate 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 7.09. 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 37 (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Securityholders allowed in any judicial proceedings relative to the Company (or any other obligor upon the Securities), its creditors or its property and shall be entitled and empowered to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same. 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 8.07. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Securityholder 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 proceedings. SECTION 7.10. Application of Money Collected by Trustee. Subject to the provisions of Article Four, any moneys collected by the Trustee or any Paying Agent pursuant to this Article Seven shall be applied in the order following, at the date or dates fixed by the Trustee for the distribution of such moneys, upon presentation of the several Securities, and stamping thereon the payment, if only partially paid, and upon surrender thereof if fully paid: First: To the payment of all amounts due the Trustee under Section 8.07 hereof; Second: To holders of Senior Indebtedness of the Company to the extent required by Article Four hereof; Third: To the Securityholders for amounts owing and unpaid upon the Securities for principal (and premium, if any) and interest, with interest on the overdue principal and premium, if any, and (to the extent that such interest has been collected by the Trustee or Paying Agent) on overdue installments of interest at the rate borne by the Securities, ratably, without preference or priority of any kind, according to the amounts due and payable on the Securities for principal (and premium, if any) and interest, respectively; and Fourth: To the Company or as a court of competent jurisdiction may direct. SECTION 7.11. Undertaking to Pay Costs. All parties to this Indenture agree, and each Holder of any Security by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonably attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the 38 provisions of this Section 7.11 shall not apply to any suit instituted by the Trustee, to any suit instituted by any Securityholder, or group of Securityholders, holding in the aggregate more than 10% in aggregate principal amount of the Securities outstanding, or to any suit instituted by any Securityholder for the enforcement of the payment of the principal of (or premium, if any) or interest on any Security against the Company on or after the due date expressed in such Security. SECTION 7.12. Restoration of Rights and Remedies. If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture or any Security and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every case, subject to any determination in such proceeding, the Company, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted. SECTION 7.13. Rights and Remedies Cumulative. No right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. SECTION 7.14. Delay or Omission Not Waiver. No delay or omission of the Trustee or of any Holder of any Security to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article Seven or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be. ARTICLE EIGHT. CONCERNING THE TRUSTEE. SECTION 8.01. Duties of Trustee. (1) If an Event of Default has occurred and is continuing, the Trustee shall exercise its rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise as a prudent person would exercise or use under the circumstances in the conduct of his own affairs. (2) Except during the continuance of an Event of Default: (a) The Trustee need perform only those duties that are specifically set forth in this Indenture and no others. 39 (b) In the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. The Trustee, however, shall examine the certificates and opinions 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 paragraph (b) of this Section 8.01. (2) The Trustee shall not be liable for any error in judgment made in good faith by a Responsible Officer of the Trustee, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts. (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 7.05. (d) Every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b) and (c) of this Section 8.01. (e) The Trustee may refuse to perform any duty or exercise any right or power unless it receives indemnity reasonably satisfactory to it against any loss, liability or expense. (f) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree 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 8.02. Rights of Trustee. Subject to Section 8.01: (1) The Trustee may rely on any document believed by it to be genuine and to have been signed or presented by the proper person. The Trustee need not investigate any fact or matter stated in the document. (2) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel, which shall conform to Section 15.04. 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. (3) The Trustee may act through Agents and shall not be responsible for the misconduct or negligence of any Agent appointed with due care. (4) The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers. 40 SECTION 8.03. Individual Rights of Trustee. The Trustee in its individual or any other capacity may become the owner or pledgee of Securities and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights. The Trustee, however, is subject to Sections 8.10 and 8.11. SECTION 8.04. Trustee's Disclaimer. The Trustee makes no representation as to the validity or adequacy of this Indenture or the Securities, and it shall not be responsible for any statement in the Securities, other than its certificate of authentication, or in any document used in connection with the original issuance of the Securities other than any statement in writing provided by the Trustee for use in such document. SECTION 8.05. Notice of Defaults. If a Default occurs and is continuing and if it is known to the Trustee, the Trustee shall mail to each Securityholder notice of the Default within 90 days after it occurs. Except in the case of a Default in payment of principal of or interest on any Security, the Trustee may withhold the notice if and so long as it in good faith determines that withholding the notice is in the interests of Securityholders. SECTION 8.06. Reports by Trustee to Holders. If such report is required by TIA Section 313, within 60 days after each May 15 beginning with May 15, 1997, the Trustee shall mail to each Securityholder a brief report dated as of such May 15 that complies with TIA Section 313(a). The Trustee also shall comply with TIA Section 313(b) and Section 313(c). A copy of each report at the time of its mailing to Securityholders shall be filed with the SEC and each national securities exchange on which the Securities are listed. The Company agrees to notify the Trustee whenever the Securities become listed on any national securities exchange. SECTION 8.07. 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 in administering its duties hereunder. Such expenses may include the reasonable compensation, disbursements and expenses of the Trustee's agents and counsel. Subject to the provisions of the following paragraph, the Company shall indemnify the Trustee and any predecessor Trustee and their agents for, and hold them harmless against, any loss or liability incurred by them in connection with their duties under this Indenture. The Trustee shall notify the Company promptly of any claim asserted against the Trustee for which it may seek indemnity and the Company may elect by written notice to the Trustee, and with the consent of the Trustee, to assume the defense of any such claim at the Company's expense with counsel reasonably satisfactory to the Trustee. If the Trustee shall not consent to the Company's assumption of the defense, the 41 Company agrees to pay the reasonable costs and expenses of counsel retained to represent the Trustee. The Company need not reimburse the Trustee for any expense or indemnify it against any loss or liability incurred by it through its negligence or bad faith. The Company shall not be liable for any settlement of any claim or action effected without the Company's consent, which consent shall not be unreasonably withheld or delayed. To secure the Company's payment obligations in this Section 8.07, the Trustee shall have a lien prior to the Securities on all money or property held or collected by the Trustee, except that held in trust to pay principal and interest on particular Securities. When the Trustee incurs expenses or renders services after an Event of Default specified in Sections 7.01(e) or (f) hereof occurs, the expenses and the compensation for the services (including the reasonable fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Law. This Section shall survive any termination, satisfaction or discharge of this Indenture or resignation or removal of the Trustee. SECTION 8.08. Replacement of Trustee. A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee's acceptance of appointment as provided in this Section 8.08. 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 appoint a successor Trustee with the Company's written consent. The Company may remove the Trustee if: (a) the Trustee fails to comply with Section 8.10; (b) the Trustee is adjudged a bankrupt or an insolvent; (c) a receiver or other public officer takes charge of the Trustee or its property; or (d) the Trustee becomes incapable of acting. If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the Securities may appoint a successor Trustee to replace the successor Trustee appointed by the Company, and if a successor Trustee is not appointed within such period, the Holders shall no longer be permitted to appoint a successor Trustee to replace such successor Trustee appointed by the Company. If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company or the Holders of at least 10% in principal amount of the Securities then outstanding may petition any court of competent jurisdiction for the appointment of a successor Trustee. 42 If the Trustee fails to comply with Section 8.10, 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, upon payment of its charges, transfer all property held by it as Trustee to the successor Trustee, subject to the lien provided for in Section 8.07, 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. SECTION 8.09. 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 successor corporation without any further act shall be the successor Trustee. SECTION 8.10. Eligibility; Disqualification. This Indenture shall always have a Trustee who satisfies the requirements of TIA Section 310(a)(1). The Trustee shall have a combined capital and surplus of at least $1,000,000 as set forth in its most recent published annual report of condition. The Trustee shall comply with TIA Section 310(b). SECTION 8.11. Preferential Collection of Claims Against Company. The Trustee is subject to and 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 NINE. CONCERNING THE SECURITYHOLDERS. SECTION 9.01. Action by Securityholders. Whenever in this Indenture it is provided that the Holders of a specified percentage in aggregate principal amount of the Securities may take any action (including the making of any demand or request, the giving of any notice, consent or waiver or the taking of any other action), the fact that at the time of taking any such action the Holders of such specified percentage have joined therein may be evidenced (a) by any instrument or any number of instruments of similar tenor executed by Securityholders in person or by agent or proxy appointed in writing, or (b) by the record of the Holders of Securities voting in favor thereof at any meeting of Securityholders duly called and held in accordance with the provisions of Article Ten, or (c) by a combination of such instrument or instruments and any such record of such a meeting of Securityholders. 43 SECTION 9.02. Proof of Execution by Securityholders, Evidence of Holdings. Subject to the provisions of Sections 8.01 and 10.05, proof of the execution of any instrument by a Securityholder or his agent or proxy and proof of the holding by any person of any of the Securities shall be sufficient for any purpose of this Indenture if made in the following manner: (a) The fact and date of the execution by any such person of any instrument may be proved in any reasonable manner acceptable to the Trustee. (b) The ownership of Securities shall be proved by the register of such Securities or by a certificate of the Security Registrar. The record of any Securityholders' meeting shall be proved in the manner provided in Section 10.06. The Trustee may require such additional proof of any matter referred to in this Section 9.02 as it shall deem necessary. SECTION 9.03. Company-owned Securities Disregarded. In determining whether the Holders of the requisite aggregate principal amount of Securities have concurred in any direction or consent under this Indenture, Securities which are owned by the Company or any other obligor on the Securities or by any Affiliate of the Company or such obligor shall be disregarded and deemed not to be outstanding for the purpose of any such determination, provided that for the purposes of determining whether the Trustee shall be protected in relying on any such direction or consent only Securities which the Trustee knows are so owned shall be so disregarded. SECTION 9.04. Revocation of Consents, Future Holders Bound. At any time prior to but not after the evidencing to the Trustee, as provided in Section 9.01, of the taking of any action by the Holders of the percentage in aggregate principal amount of the Securities specified in this Indenture in connection with such action, any Holder of a Security which is included in the Securities the Holders of which have consented to such action may, by filing written notice with the Trustee at its office and upon proof of holding as provided in Section 9.02, revoke such action as far as concerns such Security. Except as aforesaid any such action taken by the Holder of any Security shall be conclusive and binding upon such Holder and upon all future Holders and owners of such Security, irrespective of whether or not any notation in regard thereto is made upon such Security or any Security issued in exchange or substitution therefor. Any action taken by the Holders of the percentage in aggregate principal amount of the Securities specified in this Indenture in connection with such action shall be conclusively binding upon the Company, the Trustee and the Holders of all the Securities. 44 ARTICLE TEN. SECURITYHOLDERS' MEETINGS. SECTION 10.01. Purposes of Meetings. A meeting of Securityholders may be called at any time and from time to time pursuant to the provisions of this Article Ten for any of the following purposes: (1) to give any notice to the Company or to the Trustee, or to give any directions to the Trustee, or to consent to the waiving of any default hereunder and its consequences, or to take any other action authorized to be taken by Securityholders pursuant to any of the provisions of Article Seven; (2) to remove the Trustee and nominate a successor trustee pursuant to the provisions of Article Eight; (3) to consent to the execution of an indenture or indentures supplemental hereto pursuant to the provisions of Section 11.02; or (4) to take any other action authorized to be taken by or on behalf of the Holders of any specified aggregate principal amount of the Securities under any other provision of this Indenture or under applicable law. SECTION 10.02. Call of Meetings by Trustee. The Trustee may at any time call a meeting of Securityholders to take any action specified in Section 10.01, to be held at such time and at such place in the Borough of Manhattan, The City of New York, New York, as the Trustee shall determine. Notice of every meeting of the Securityholders, setting forth the time and the place of such meeting and in general terms the action proposed to be taken at such meeting, shall be given to the Holders of Securities in the manner provided in Section 15.03. Such notice shall be mailed not less than 20 nor more than 90 days prior to the date fixed for the meeting. SECTION 10.03. Call of Meetings by Company or Securityholders. In case at any time the Company, pursuant to a resolution of its Board of Directors, or the Holders of at least 10% in aggregate principal amount of the Securities then outstanding, shall have requested the Trustee to call a meeting of Securityholders, by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the Trustee shall not have mailed the notice of such meeting within 20 days after receipt of such request, then the Company or such Securityholders may determine the time and the place in The Borough of Manhattan, The City of New York, New York for such meeting and may call such meeting to take any action authorized in Section 10.01, by mailing notice thereof as provided in Section 10.02. SECTION 10.04. Qualifications for Voting. To be entitled to vote at any meeting of Securityholders a person shall (a) be a Holder of one or more Securities; or (b) be a person appointed by an instrument in writing as proxy by a Holder of one or more Securities. The only persons who shall be entitled to be present or to speak at any meeting of Securityholders shall be the persons entitled to vote at such meeting and their 45 counsel and any representatives of the Trustee and its counsel and any representatives of the Company and its counsel. SECTION 10.05. Regulations. Notwithstanding any provisions of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any meeting of Securityholders in regard to proof of the holding of Securities and of the appointment of proxies, and in regard to the appointment and duties of inspectors of votes, the submission and examination of proxies and other evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall think fit. The Trustee shall, by an instrument in writing, appoint a temporary chairman of the meeting, unless the meeting shall have been called by the Company or by Securityholders as provided in Section 10.03, in which case the Company or the Securityholders calling the meeting, as the case may be, shall in like manner appoint a temporary chairman. A permanent chairman and a permanent secretary of the meeting shall be elected by a majority vote of the meeting. Subject to the provisions of Section 9.03, at any meeting of Securityholders, each Securityholder or proxy shall be entitled to one vote for each $1,000 principal amount of Securities held or represented by him, provided however, that no vote shall be cast or counted at any meeting in respect of any Security challenged as not outstanding and ruled by the chairman of the meeting to be not outstanding. The chairman of the meeting shall have no right to vote other than by virtue of Securities held by him or instruments in writing as aforesaid duly designating him as the person to vote on behalf of other Securityholders. Any meeting of Securityholders duly called pursuant to the provisions of Section 10.02 or 10.03 may be adjourned from time to time by a majority of those present, whether or not constituting a quorum, and the meeting may be held as so adjourned without further notice. At any meeting of Securityholders duly called pursuant to the provisions of Section 10.02 or 10.03, the presence of persons holding or representing Securities in an aggregate principal amount sufficient to take action on any business for the transaction of which such meeting was called shall constitute a quorum. SECTION 10.06. Voting. The vote upon any resolution submitted to any meeting of Securityholders shall be by written ballots on which shall be subscribed the signatures of the Holders of Securities or of their representatives by proxy and the principal amount of the Securities held or represented by them. The permanent chairman of the meeting shall appoint two inspectors of votes who shall count all votes cast at the meeting for or against any resolution and who shall make and file with the secretary of the meeting their verified written reports in duplicate of all votes cast at the meeting. A record in duplicate of the proceedings of each meeting of Securityholders shall be prepared by the secretary of the meeting and there shall be attached to said record the original reports of the inspectors of votes on any vote by ballot taken thereat and affidavits by one or more persons having knowledge of the facts setting forth a copy of the notice of the meeting and showing that said notice was mailed as provided in Section 10.02. The record shall be signed and verified by the affidavits of the permanent chairman and secretary of the meeting and one of the duplicates shall be delivered to the Company and the other to the Trustee to be preserved by the Trustee. 46 Any record so signed and verified shall be conclusive evidence of the matters therein stated. SECTION 10.07. No Delay of Rights by Meeting. Nothing in this Article Ten contained shall be deemed or construed to authorize or permit, by reason of any call of a meeting of Securityholders or any rights expressly or impliedly conferred hereunder to make such call, any hindrance or delay in the exercise of any right or rights conferred upon or reserved to the Trustee or to the Securityholders under any of the provisions of this Indenture or of the Securities. ARTICLE ELEVEN. SUPPLEMENTAL INDENTURES. SECTION 11.01. Supplemental Indenture Without Consent of Securityholders. The Company, when authorized by the resolutions of its Board of Directors, and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto for one or more of the following purposes: (a) to make provision with respect to the conversion rights of Holders of Securities pursuant to the requirements of Section 5.10; (b) to evidence the succession of another corporation to the Company, or successive successions, and the assumption by the successor corporation of the covenants, agreements and obligations of the Company pursuant to Article Twelve hereof; (c) to add to the covenants of the Company such further covenants, restrictions or conditions for the protection of the Holders of the Securities as the Board of Directors of the Company and the Trustee shall consider to be for the protection of the Holders of Securities, and to make the occurrence, or the occurrence and continuance, of a default in any of such additional covenants, restrictions or conditions a default or an Event of Default permitting the enforcement of all or any of the several remedies provided in this Indenture as herein set forth; provided however, that in respect of any such additional covenant, restriction or condition such supplemental indenture may provide for a particular period of grace after default (which period may be shorter or longer than that allowed in the case of other defaults) or may provide for an immediate enforcement upon such default or may limit the remedies available to the Trustee upon such default; (d) to provide for uncertificated Securities in addition to or in place of certificated Securities; (e) to cure any ambiguity or to correct or supplement any provision contained herein or in any supplemental indenture which may be defective or inconsistent with any other provision contained herein or in any supplemental indenture, or to make such other provisions in regard to matters or questions arising under this Indenture which shall not adversely affect the interests of the Holders of the Securities; and 47 (f) to modify, eliminate or add to the provisions of this Indenture to such extent as shall be necessary to effect the qualification of this Indenture under the TIA, or under any similar federal statute hereafter enacted. The Trustee is hereby authorized to join with the Company in the execution of any such supplemental indenture, to make any further appropriate agreements and stipulations which may be therein contained and to accept the conveyance, transfer and assignment of any property thereunder, but the Trustee shall not be obligated to enter into any such supplemental indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. Any supplemental indenture authorized by the provisions of this Section 11.01 may be executed by the Company and the Trustee without the consent of the Holders of any of the Securities at the time outstanding, notwithstanding any of the provisions of Section 11.02. SECTION 11.02. Supplemental Indentures with Consent of Securityholders. With the consent (evidenced as provided in Section 9.01) of the Holders of not less than two-thirds in aggregate principal amount of the Securities at the time outstanding, the Company, when authorized by the resolutions of its Board of Directors, and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of any supplemental indenture or of modifying in any manner the rights of the Holders of the Securities; provided however, that no such supplemental indenture shall (i) change the stated maturity of the principal of, or any installment of interest on, any Security; (ii) reduce the principal amount of, or the premium or interest on, any Security; (iii) change the place of payment where, or currency in which, any Security or any premium or interest thereof is payable; (iv) impair the right to institute suit for the enforcement of any payment on or with respect to any Security; (v) adversely affect the right to convert the Securities; (vi) adversely affect the right to cause the Company to repurchase the Securities; (vii) modify the subordination provisions in a manner adverse to the Holders of the Securities; (viii) reduce the above- stated percentage of Outstanding Securities necessary to modify or amend the Indenture; or (ix) reduce the percentage of aggregate principal amount of Outstanding Securities necessary for waiver of compliance with certain provisions of this Indenture or for waiver of certain Defaults. Upon the request of the Company, accompanied by a copy of the resolutions of its Board of Directors certified by its Secretary or Assistant Secretary authorizing the execution of any such supplemental indenture and upon the filing with the Trustee of evidence of the consent of Securityholders as aforesaid, the Trustee shall join with the Company in the execution of such supplemental indenture unless such supplemental indenture affects the Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such supplemental indenture. It shall not be necessary for the consent of the Securityholders under this Section 11.02 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such consent shall approve the substance thereof. 48 SECTION 11.03. Compliance with Trust Indenture Act; Effect of Supplemental Indentures. Any supplemental indenture executed pursuant to the provisions of this Article Eleven shall comply with the TIA as in effect on the date of execution thereof. Upon the execution of any supplemental indenture pursuant to the provisions of this Article Eleven this Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective rights, limitation of rights, obligations, duties and immunities under this Indenture of the Trustee, the Company and the Holders of Securities shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes. SECTION 11.04. Notation on Securities. Securities authenticated and delivered after the execution of any supplemental indenture pursuant to the provisions of this Article Eleven may bear a notation in form approved by the Trustees as to any matter provided for in such supplemental indenture. If the Company or the Trustee shall so determine, new Securities so modified as to conform, in the opinion of the Trustee and the Board of Directors, to any modification of this Indenture contained in any such supplemental indenture may be prepared and execution by the Company, authenticated by the Trustee and delivered in exchange for the Securities then outstanding. SECTION 11.05. Evidence of Compliance of Supplemental Indenture to Be Furnished Trustee. The Trustee, subject to the provisions of Section 8.01, may receive an Officers' Certificate and an Opinion of Counsel both conforming to Section 15.04 as conclusive evidence that any supplemental indenture executed pursuant hereto complies with the requirements of this Indenture. ARTICLE TWELVE. CONSOLIDATION, MERGER AND SALE BY THE COMPANY. SECTION 12.01. When Company May Merge, Etc. Notwithstanding anything contained herein to the contrary, the Company may consolidate with or merge with, or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its assets to (each a "transaction"), another person; provided (i)(a) the Company is the surviving entity, or (b) the successor person (if other than the Company) formed by such consolidation or into which the Company is merged or to which such assets are sold, assigned, transferred, leased, conveyed or otherwise disposed is a corporation organized and existing under the laws of the United States or a state thereof or the District of Columbia and such corporation expressly assumes by supplemental indenture all the obligations of the Company under the Securities and the Indenture; (ii) at the time of and immediately after giving effect to such transaction, no Default or Event of Default has occurred and is continuing; (iii) the Company or the surviving person (if other than the Company) will have Consolidated Net Worth (immediately after the transaction but prior to any purchase according to adjustments resulting from the transaction) 49 greater than or equal to the Consolidated Net Worth of the Company immediately preceding the transaction and (iv) the Company has delivered to the Trustee an Officers' Certificate and Opinion of Counsel that all conditions precedent herein relating to such transaction have been complied with, and thereafter all obligations of the Company (if the Company is not the resulting, surviving or transferee person) shall terminate. SECTION 12.02. Successor Corporation Substituted. Upon any consolidation or merger, or any transfer of all or substantially all of the assets of the Company in accordance with Section 12.01, 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. ARTICLE THIRTEEN. SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS. SECTION 13.01. Discharge of Indenture. If (a) there shall have been delivered to the Trustee for cancellation all Securities theretofore authenticated (other than any Securities which shall have been destroyed, lost or stolen and in lieu of or in substitution for which other Securities shall have been authenticated and delivered), or (b)(1) all such Securities not theretofore delivered to the Trustee for cancellation shall have become due and payable, or will become due and payable at their stated maturity within one year, or have been called for redemption, and the Company shall have irrevocably deposited with the Paying Agent, in trust, funds (except funds paid to the Company pursuant to Section 13.04) sufficient to pay at maturity or upon redemption all of such Securities (other than any Securities which shall have been destroyed, lost or stolen and in lieu of or in substitution for which other Securities shall have been authenticated and delivered) not theretofore delivered to the Trustee for cancellation, including principal (and premium, if any) and interest, and such deposit shall be upon terms making such funds payable forthwith upon due presentation, whether before or after such date of maturity or redemption of such Securities, (2) the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that such trust funds will not be subject to any rights of holders of Senior Indebtedness, including without limitation, those arising under Article Four hereof, and (3) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for herein relating to the satisfaction and discharge of this Indenture have been complied with, and if in any such case the Company shall also pay or cause to be paid all other sums payable hereunder by the Company, then (except as provided below) this Indenture shall cease to be of further effect, and the Trustee, on demand of the Company accompanied by an Officers' Certificate and an Opinion of Counsel as required by Section 15.04 and at the cost and expense of the Company, shall execute proper instruments acknowledging satisfaction of and discharging this Indenture; provided however, that the Company's obligations under Sections 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 6.01, 6.02, 6.03, 8.07, 8.08, 13.04, 13.05 and Article Five shall survive until the Securities are no longer outstanding. 50 SECTION 13.02. Deposited Moneys to Be Held in Trust by Trustee. All moneys deposited with the Paying Agent pursuant to Section 13.01 shall be held in trust and, subject to the provisions of Section 13.04, applied by it to the payment, either directly or through any Paying Agent, to the Holders of the particular Securities for the payment or redemption of which such moneys have been deposited with the Trustee, of all sums due thereon for principal and interest (and premium, if any). SECTION 13.03. Paying Agent to Repay Moneys Held. Upon the satisfaction and discharge of this Indenture all moneys then held by any Paying Agent of the Securities (other than the Trustee) shall, upon demand of the Company, be repaid to it and thereupon the Paying Agent shall be released from all further liability with respect to such moneys. SECTION 13.04. Unclaimed Moneys. Any moneys deposited with the Trustee or any Paying Agent (including moneys held in trust by the Company if it shall act as its own Paying Agent) not applied but remaining unclaimed by the Holders of Securities for two years after the date upon which the principal of (and premium, if any) or interest on such Securities shall have become due and payable shall be repaid to the Company by the Trustee or such Paying Agent on demand, or if held in trust by the Company may at the Company's option be released from such trust; and the Holder of any of the Securities entitled to receive such payment shall thereafter look only to the Company, as the holder of a general claim, for the payment thereof, provided however, that the Trustee or such Paying Agent before being required to make any such repayment, may at the expense of the Company cause to be mailed to each such holder a notice that said moneys have not been so applied and that after a date named therein any unclaimed balance of said moneys then remaining will be returned to the Company. SECTION 13.05. Reinstatement. If the Trustee or a Paying Agent is unable to apply any moneys in accordance with Section 13.01 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company's obligations under this Indenture and the Securities shall be revived and reinstated as though no deposit had occurred pursuant to Section 13.01 until such time as the Trustee or such Paying Agent is permitted to apply all such moneys in accordance with Section 13.01; provided however, that if the Company has made any payment of principal or interest on any of the Securities because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of the Securities to receive such payment from moneys held by the Trustee or such Paying Agent. ARTICLE FOURTEEN. IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS. SECTION 14.01. Indenture and Securities Solely Corporate Obligations. No recourse for the payment of the principal or premium or interest on any Security, or for any claim based thereon or otherwise in respect thereof, and no 51 recourse under or upon any obligation, covenant or agreement of the Company in this Indenture, or in any Security, or because of the creation of any indebtedness represented thereby, shall be had against any incorporator, stockholder, officer or director, as such, past, present or future, of the Company or of any successor corporation, either directly or through the Company or an successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that all such liability is hereby expressly waived and released as a condition of, and as a consideration for, the execution of this Indenture and the issue of the Securities. ARTICLE FIFTEEN. MISCELLANEOUS PROVISIONS. SECTION 15.01. Provisions Binding on Company's Successors. All the covenants, stipulations, promises and agreements in this Indenture contained by or on behalf of the Company shall bind its successors and assigns, whether so expressed or not. SECTION 15.02. Official Acts by Successor Corporation. Any act or proceeding by any provision of this Indenture authorized or required to be done or performed by any board, committee or officer of the Company shall and may be done and performed with like force and effect by the like board, committee or officer of any corporation that shall at the time be the lawful sole successor of the Company. SECTION 15.03. Notices. Any notice or demand which by any provision of this Indenture is required or permitted to be given or served by the Trustee or by the Holders of Securities on the Company may be given or served by being deposited, first class postage prepaid, in a United States post office letter box addressed (until another address is filed by the Company with the Trustee) to Trans-Lux Corporation, 110 Richards Avenue, Norwalk, Connecticut 06856, Attn: Chief Executive Officer. Any notice, direction, request, or demand by any Securityholder to or upon the Trustee shall be deemed to have been sufficiently given or made, for all purposes, if given or made in writing at the principal office of the Trustee, addressed to the attention of its Corporate Trust Department. Any notice or demand which by any provision of this Indenture is required or permitted to be given or served by the Trustee or the Company to or on the Holders of Securities shall be given or served by first-class mail, postage prepaid, addressed to the Holders of such Securities at their last address as the same appears on the registry books referred to in Section 2.03, and any such notice shall be deemed to be given or served by being deposited in a post office letter box in the form and manner provided in this Section 15.03. SECTION 15.04. Evidence of Compliance with Conditions Precedent. Upon any application or demand by the Company to the Trustee to take any action under any of the provisions of this Indenture, the Company shall furnish to the Trustee an Officers' Certificate stating that in the opinion of the 52 signers all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent have been complied with. Each certificate or opinion provided for in this Indenture and delivered to the Trustee with respect to compliance with a condition or covenant provided for in this Indenture shall include: (1) a statement that the person making such certificate or opinion has read such covenant or condition; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinion contained in such certificate or opinion are based; (3) a statement that, in the opinion of such person, he had made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with. SECTION 15.05. Legal Holidays. In any case where the date of maturity of interest on or principal of the Securities or the date fixed for redemption of any Security or the last day on which a Securityholder has the right to convert his Security at a particular Conversion Price shall not be a Business Day, then payment of interest or principal (and premium, if any) or conversion of the Securities need not be made on such date but may be made on the next succeeding Business Day, with the same force and effect as if made on the date of such maturity or the date fixed for redemption or such last day for conversion, and, in the case of payment, no interest shall accrue for the period from and after such date. SECTION 15.06. Trust Indenture Act to Control. The provisions of Section 310 to and including Section 317 of the TIA that imposes duties on any person (including any such provisions automatically deemed included in an indenture by the TIA) are a part of and govern this Indenture. If any provision hereof limits, qualifies or conflicts with any of such duties imposed by operation of such provisions of the TIA, the applicable provisions of the TIA and duties imposed thereby shall control. SECTION 15.07. Communications by Holders with Other Holders. A Securityholder 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 anyone else shall have the protection of TIA Section 312(c). SECTION 15.08. Governing Law. This Indenture and each Security shall be deemed to be a contract made under the laws of the State of New York, and for all purposes shall be construed in accordance with the laws of said State, without giving effect to such State's conflicts of law principles. SECTION 15.09. Table of Contents and Headings. The table of contents, titles and headings of the articles and sections of this Indenture have been inserted for convenience of reference only, are not to 53 be considered a part hereof, and shall in no way modify or restrict any of the terms or provisions hereof. SECTION 15.10. No Security Interest Created. Nothing in this Indenture or in the Securities, express or implied, shall be construed to constitute a security interest under the Uniform Commercial Code or similar legislation, as now or hereafter enacted and in effect in any jurisdiction where property of the Company or its Subsidiaries is or may be located. SECTION 15.11. Execution in Counterparts. This Indenture may be executed in any number of counterparts, each of which shall be an original; but such counterparts shall together constitute but one and the same instrument. The Trustee hereby accepts the trusts in this Indenture declared and provided, upon terms and conditions hereinabove set forth. IN WITNESS WHEREOF, Trans-Lux Corporation has caused this Indenture to be signed and acknowledged by its President, or one of its Vice Presidents, and Wells Fargo National Association has caused this Indenture to be signed and acknowledged by an authorized Officer. TRANS-LUX CORPORATION By ------------------------------------- Name: Title: WELLS FARGO BANK, NATIONAL ASSOCIATION As Trustee By -------------------------------------- Name: Title: 54 EXHIBIT A TRANS-LUX CORPORATION 8.25% Limited Convertible Senior Subordinated Note due 2012 TRANS-LUX CORPORATION, a Delaware corporation, promises to pay to or registered assigns, the principal sum of _____________________________ Dollars, on March 1, 2012. Interest Payment Dates: March 1 and September 1 Regular Record Dates: February 15 and August 15 Additional provisions of this Security are set forth on other side of this Security. IN WITNESS WHEREOF, TRANS-LUX CORPORATION has caused this instrument to be duly signed. TRANS-LUX CORPORATION By:____________________ President CERTIFICATE OF AUTHENTICATION By:____________________ Secretary WELLS FARGO BANK, NATIONAL ASSOCIATION as Trustee, certifies that this is one of the Securities referred to in the within mentioned Indenture. Wells Fargo Bank, National Association, as Trustee By: __________________________ Authorized Signatory Dated: A-1 1. Interest. TRANS-LUX CORPORATION, a Delaware corporation (the "Company"), promises to pay interest on the principal amount of this Security at 8.25% per annum from and including the date of issuance of this Security to maturity or earlier redemption. The Company will pay interest semi-annually on March 1 and September 1 of each year commencing September 1, 2003. Interest on the Securities will accrue from the most recent date to which interest has been paid. If an Interest Payment Date falls on a day that is not a Business Day, the interest payment to be made on such Interest Payment Date will be made on the next succeeding Business Day with the same force and effect as if made on such Interest Payment Date, and no additional interest will accrue as a result of such delayed payment. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Company shall pay interest on overdue principal at the rate borne by this Security, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful. 2. Method of Payment. The Company will pay interest on the Securities (except defaulted interest) to the persons who are the registered Holders of the Securities at the close of business on the February 15 or August 15 next preceding the Interest Payment Date. Holders must surrender Securities to a Paying Agent to collect principal payments. The Company will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. The Company, however, may pay principal and interest by its check payable in such money. It may mail an interest check to a Holder's registered address. 3. Registrar and Agents. Initially, Wells Fargo Bank, National Association will act as the Registrar, the Paying Agent, the Conversion Agent and agent for service of notices and demands. The Company may change any Registrar, co- registrar, Paying Agent, Conversion Agent and agent for service of notices and demands without the prior consent of the Holders but upon notice to the Holders. The Company or any of its Subsidiaries may act as Registrar, co-registrar, Paying Agent or Conversion Agent. 4. Indenture; Limitations. The Company issued the Securities under an Indenture dated as of March 1, 2004 (the "Indenture") between the Company and Wells Fargo Bank, National Association (the "Trustee"). Capitalized terms herein are used as defined in the Indenture unless otherwise defined herein. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by the Trust Indenture Act of 1939 (15 U.S. Code Section 77aaa-77bbbb) as in effect on the date of the Indenture. The Securities are subject to all such terms, and the Holders of the Securities are referred to the Indenture and said Act for a statement of such terms. The Securities are general unsecured obligations of the Company limited to $30,177,000 principal amount. 5. Optional Redemption. by the Company. The Company may, at its option, redeem the Securities, in whole or from time to time in part, on any date after March 1, 2006, at the following redemption prices, expressed as percentages of the principal amount, if redeemed during the periods beginning March 1, of the years indicated below: A-2 Year Percentage - ---- ---------- 2006.......................... 102.000% 2007.......................... 101.000 2008.......................... 100.000 and thereafter and at maturity at 100% of principal, together in the case of any such redemption with accrued interest to the Redemption Date (subject to the right of Holders of record on the relevant Regular Record Date to receive interest due on an Interest Payment Date that is on or prior to the Redemption Date). 6. Notice of Redemption. Notice of redemption will be mailed at least 20 days but not more than 65 days before the Redemption Date to each Holder to be redeemed at such Holder's address appearing in the Note Register. Securities in denominations larger than $1,000 principal amount may be redeemed in part, but only in an amount of $1,000 principal amount or integral multiples thereof. In the event of redemption of this Security in part only, a new Security or Securities for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof. On and after the Redemption Date, interest ceases to accrue on Securities or portions of them called for redemption. 7. Repurchase Event. In the event of a Repurchase Event (as hereinafter defined) on or before March 1, 2007 each Holder of Securities shall have the right (which right may not be waived by the Board of Directors or the Trustee) at the Holder's option, to require the Company to repurchase all of such Holder's Securities, or any portion thereof that is an integral multiple of $1,000, on the date (the "Repurchase Date") that is 45 calendar days after the date of the Company Notice (as defined below), at a price equal to 100% of the principal amount of such Securities to be repurchased (the "Repurchase Price"), together with accrued interest to the Repurchase Date; provided however, that a Repurchase Event shall not be deemed to have occurred if on or before March 1, 2007 the closing price per share of the Common Stock for any five Trading Days within the period of ten consecutive Trading Days ending immediately before the Repurchase Event shall equal or exceed 110% of the Conversion Price of such Securities in effect on each such Trading Day. 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 the Indenture. A Repurchase Event shall be deemed to have occurred at such time after initial issuance of the Securities if: (i) any Person (including any syndicate or group deemed to be a "Person" under Section 13(d)(3) of the Exchange Act), other than the Company, any Subsidiary, any existing Person (including, directly or indirectly, the immediate family (parents, spouse, children, brothers or sisters) of any such Person) who currently beneficially owns shares of the Company's capital stock with 50% or more of the voting power as described below, or any current or future employee or director benefit plan of the Company or any A-3 Subsidiary or any entity holding capital stock of the Company for or pursuant to the terms of such plan, or an underwriter engaged in a firm commitment underwriting in connection with a public offering of capital stock of the Company, is or becomes the beneficial owner, 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 50% or more of the total voting power of all shares of capital stock of the Company entitled to vote generally in the election of directors; (ii) the Company sells or transfers all or substantially all of the assets of the Company to another Person; (iii) there occurs any consolidation of the Company with, or merger of the Company into, any other Person, any merger of another Person into the Company (other than a merger (a) which does not result in any reclassification, conversion, exchange or cancellation of outstanding shares of Common Stock, (b) which is effected solely to change the jurisdiction of incorporation of the Company and results in a reclassification, conversion or exchange of outstanding shares of Common Stock solely into shares of Common Stock) or (c) a transaction in which the stockholders of the Company immediately prior to such transaction owned, directly or indirectly, immediately following such transaction, a majority of the combined voting power of the voting capital stock of the corporation resulting from the transaction, such stock to be owned by such stockholders in substantially the same proportion as their ownership of the voting stock of the Company immediately prior to such transaction); (iv) a change in the Board of Directors in which the individuals who constituted the Board of Directors at the beginning of the 24-month period immediately preceding such change (together with any other director 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 a majority of the directors then in office either who were directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the directors then in office; or (v) the Common Stock is the subject of a "Rule 13e-3 transaction" as defined under the Exchange Act. 8. Limited Conversion. At any time following the date of initial issuance of the Securities, a Holder of a Security may convert such Security into Common Stock of the Company at any time before the close of business on March 1, 2007. If the Security is called for redemption or delivered for repurchase on or before March 1, 2007, the Holder may convert it at any time before the close of business on the last Business Day prior to the Redemption Date or the Repurchase Date, as the case may be, unless the Company defaults in making the payment due upon redemption or repurchase. The initial Conversion Price is $9.00 per share, subject to adjustment in certain events as set forth in the Indenture. To determine the number of shares issuable upon conversion of a Security, divide the principal amount to be converted by the Conversion Price in effect on the conversion date and then round to the nearest 1/100th share. The Company will deliver a check for any fractional share. To convert a Security, a Holder must before the close of business on March 1, 2007 (1) complete and sign the conversion notice on the back of the Security, (2) surrender the Security to the Conversion Agent or Registrar, (3) furnish appropriate endorsements and transfer documents if required by the Registrar or Conversion Agent and (4) pay any transfer or similar tax if required. Securities (or portion of a Security) surrendered for conversion during the period from the A-4 close of business on any Regular Record Date next preceding any Interest Payment Date to the opening of business on such Interest Payment Date (except Securities called for redemption on a Redemption Date within such period) must be accompanied by payment of an amount equal to the interest thereon which the registered Holder is to receive. In the case of any Securities that have been converted after any Regular Record Date but on or before the next Interest Payment Date, interest whose stated maturity is on such Interest Payment Date will be payable on such Interest Payment Date notwithstanding such conversion, and such interest will be paid to the Holder of such Note on such Regular Record Date. Except as described above, no interest on converted Securities will be payable by the Company on any Interest Payment Date subsequent to the date of conversion. No other payment or adjustment for interest or dividends will be made upon conversion. If the Company is a party to a consolidation or merger or a transfer or lease of all or substantially all of its assets, the right to convert a Security into Common Stock may be changed into a right to convert it into securities, cash or other assets of the Company or another Person. 9. Subordination; Subordinated Securities. This Security is subordinated to all existing and future Senior Indebtedness of the Company as defined in the Indenture. To the extent and in the manner provided in the Indenture, Senior Indebtedness must be paid in cash before any payment may be made to any Holders of Securities. Any Securityholder by accepting this Security agrees to the subordination and authorizes the Trustee to give it effect. In addition to all other rights of Senior Indebtedness described in the Indenture, the Senior Indebtedness shall continue to be Senior Indebtedness and entitled to the benefits of the subordination provisions irrespective of any amendment, modification or waiver of any term of any instrument relating to the Senior Indebtedness or extension or renewal of the Senior Indebtedness. This Security is not subordinate to the outstanding Subordinated Securities as defined in the Indenture which are deemed junior in right of payment to the Securities. 10. Denominations, Transfer, Exchange. The Securities are in registered form without coupons in denominations of $1,000 principal amount and integral multiples thereof. A Holder may register the transfer of or exchange Securities 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 and fees required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange any Securities selected for redemption in whole or in part or register the transfer of or exchange any Securities for a period of 15 days before the first mailing of a Redemption Notice of Securities to be redeemed. 11. Persons Deemed Owners. The registered Holder of a Security shall be treated as the owner of it for all purposes. 12. Unclaimed Money. If money for the payment of principal or interest on any Securities remains unclaimed for two years, the Trustee and the Paying Agent will pay the money back to the Company at its request. After that, Holders may look only to the Company for payment. A-5 13. Merger or Consolidation. The Company may not consolidate with, or merge into, or transfer or lease all or substantially all of its assets to, another person unless: the person is a corporation; such corporation assumes by supplemental indenture all the obligations of the Company under the Securities and the Indenture; at the time thereof and after giving effect to the transaction no Default or Event of Default shall exist; and certain other conditions set forth in the Indenture are satisfied. 14. Discharge Prior to Redemption or Maturity. The Indenture will be discharged and canceled except for certain sections thereof upon payment of funds sufficient to pay principal and interest due on such payment or redemption of all Outstanding Securities. 15. Amendment and Waiver. Subject to certain exceptions, the Indenture or the Securities may be amended with the consent of the Holders of at least two- thirds in principal amount of the Securities then outstanding and any existing Event of Default may be waived with the consent of the Holders of a majority in principal amount of the Securities then outstanding. Without the consent of or notice to any Securityholder, the Company may amend the Indenture or the Securities to, among other things, provide for uncertificated Securities, to cure any ambiguity, defect or inconsistency or make any other change that does not adversely affect the rights of any Securityholder. 16. Successors. When a successor assumes all the obligations of its predecessor under the Securities and the Indenture, the predecessor will be released from those obligations. 17. Defaults and Remedies. If an Event of Default, as defined in the Indenture, occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of Securities may declare all the Securities to be due and payable in the manner and with the effect provided in the Indenture, and upon any such declaration such principal and accrued interest shall become due and payable immediately. Holders of Securities may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may require indemnity satisfactory to it before it enforces the Indenture or the Securities. Subject to certain limitations, Holders of a majority in principal amount of the Securities then outstanding may direct the Trustee in its exercise of any trust or power. The Company is required to file periodic reports with the Trustee as to the absence of Default. An Event of Default is: the Company defaults in the payment of the principal of or premium, if any, of any of the Securities as and when the same shall become due and payable either at maturity, upon redemption; the Company defaults in the payment of any installment of interest upon any of the Securities as and when the same shall become due and payable and the default continues for a period of 30 days; the Company defaults in the payment of the Repurchase Price in respect of any Security on the Repurchase Date therefor, whether or not such payment is prohibited by the subordination provisions of the Indenture; or the Company fails to perform or breaches any other covenant or agreement in the Securities or in the Indenture and the default continues for 60 days after receipt by the Company of notice in accordance with the Indenture. 18. Trustee Dealings with the Company. The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its affiliates, and may otherwise deal with the Company or its affiliates, as if it were not Trustee. A-6 19. No Recourse Against Others. No stockholder, director, officer or incorporator, as such, past, present or future, of the Company or any successor corporation shall have any liability for any obligation of the Company under the Securities or the Indenture or for any claim based on, in respect of or by reason of, such obligations or their creation. Each Holder of a Security by accepting a Security waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Securities. 20. Authentication. This Security shall not be valid until the Trustee signs the certificate of authentication on the other side of this Security. 21. Abbreviations. Customary abbreviations may be used in the name of a Securityholder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). The Company will furnish to any Securityholder upon written request and without charge a copy of the Indenture. It also will furnish the text of this Security in larger type. Requests may be made to: Trans-Lux Corporation, 110 Richards Avenue, Norwalk, Connecticut 06856. A-7 ASSIGNMENT FORM If you the Holder want to assign this Security, fill in the form below and have your signature guaranteed: I or we assign and transfer this Security to (INSERT ASSIGNEE'S SOCIAL SECURITY OR TAX IDENTIFICATION NUMBER) ___________________________________ ___________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ (Print or type assignee's name, address and zip code) and irrevocably appoint_________________________________________________________________ ______________________________________________________ agent to transfer this Security on the books of the Company. The agent may substitute another to act for him. Date:___________________________________________________________________________ Your signature:______________________________________________________________________ (Sign exactly as your name appears on the other side of this Security) Signature guaranteed by:________________________________________________________________ THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15. A-8 CONVERSION NOTICE To convert this Security into Common Stock of the Company on or before March 1, 2007, check the box: ---- / / ---- To convert only part of this Security, state the principal amount to be converted (which must be a minimum of $1,000 or any multiple thereof): _________________________ $ _________________________ If you want the stock certificate made out in another person's name, fill in the form below: (INSERT ASSIGNEE'S SOCIAL SECURITY OR TAX IDENTIFICATION NUMBER) ___________________________________ ___________________________________ ____________________________________________________________________________ ____________________________________________________________________________ (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 Security) Signature guaranteed by:____________________________________________________________________ If you want the stock certificate made out in another person's name, please have your signature guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program), pursuant to S.E.C. Rule 17Ad-15. A-9 OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Security purchased by the Company pursuant to Section 6.09 of the Indenture, check the box: ---- / / ---- If you want to elect to have only part of this Security purchased by the Company pursuant to Section 6.09 of the Indenture, state the amount: ___________________________________ (in an integral multiple of $1,000) Date: Signature(s): _______________ _______________________________________ Sign exactly as your name(s) appear(s) on the other side of this Security) Signature(s) guaranteed by: --------------------------------------------------- THE SIGNATURES SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad- 15. A-10 -----END PRIVACY-ENHANCED MESSAGE-----