Exhibit 4.3
SCHOOL SPECIALTY, INC.
and
________________
BNY MIDWEST TRUST COMPANY
as Trustee
________________
$130,000,000
6% Convertible Subordinated Notes due 2008*
________________
INDENTURE
Dated as of July 30, 2001
_____________
* Plus an over-allotment option to purchase up to $19,500,000 principal amount
of 6% Convertible Subordinated Notes due 2008.
TABLE OF CONTENTS
Page
----
ARTICLE 1
DEFINITIONS
Section 1.01 Definitions................................................. 1
Section 1.02 Other Definitions........................................... 7
Section 1.03 Incorporation by Reference of Trust Indenture Act........... 8
Section 1.04 Rules of Construction....................................... 8
ARTICLE 2
THE CONVERTIBLE SUBORDINATED NOTES
Section 2.01 Form and Dating............................................. 9
Section 2.02 Execution and Authentication................................ 10
Section 2.03 Registrar, Paying Agent and Conversion Agent................ 11
Section 2.04 Paying Agent To Hold Money in Trust......................... 11
Section 2.05 Holder Lists................................................ 12
Section 2.06 Transfer and Exchange....................................... 12
Section 2.07 Replacement Convertible Subordinated Notes.................. 14
Section 2.08 Outstanding Convertible Subordinated Notes.................. 15
Section 2.09 When Treasury Convertible Subordinated Notes Disregarded.... 15
Section 2.10 Temporary Convertible Subordinated Notes.................... 15
Section 2.11 Cancellation................................................ 16
Section 2.12 Defaulted Interest.......................................... 16
Section 2.13 CUSIP Number................................................ 16
Section 2.14 Regulation S................................................ 17
ARTICLE 3
REDEMPTION
Section 3.01 Optional Redemption......................................... 17
Section 3.02 Notices to Trustee.......................................... 17
Section 3.03 Selection of Convertible Subordinated Notes To Be Redeemed.. 17
Section 3.04 Notice of Redemption........................................ 18
Section 3.05 Effect of Notice of Redemption.............................. 19
Section 3.06 Deposit of Redemption Price................................. 19
Section 3.07 Convertible Subordinated Notes Redeemed in Part............. 20
Section 3.08 Conversion Arrangement on Call for Redemption............... 20
ARTICLE 4
COVENANTS
Section 4.01 Payment of Convertible Subordinated Notes................... 21
Section 4.02 Commission Reports.......................................... 21
i
TABLE OF CONTENTS
(continued)
Page
----
Section 4.03 Compliance Certificate...................................... 21
Section 4.04 Maintenance of Office or Agency............................. 22
Section 4.05 Continued Existence......................................... 22
Section 4.06 Repurchase Upon Designated Event............................ 22
Section 4.07 Appointments to Fill Vacancies in Trustee's Office.......... 25
Section 4.08 Stay, Extension and Usury Laws.............................. 25
Section 4.09 Taxes....................................................... 25
Section 4.10 Investment Company Act...................................... 25
ARTICLE 5
SUCCESSORS
Section 5.01 When the Company May Merge, Etc............................. 25
Section 5.02 Successor Corporation Substituted........................... 26
Section 5.03 Purchase Option on Change of Control........................ 27
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01 Events of Default........................................... 27
Section 6.02 Acceleration................................................ 29
Section 6.03 Other Remedies.............................................. 30
Section 6.04 Waiver of Past Defaults..................................... 30
Section 6.05 Control by Majority......................................... 30
Section 6.06 Limitation on Suits......................................... 30
Section 6.07 Rights of Holders To Receive Payment........................ 31
Section 6.08 Collection Suit by Trustee.................................. 31
Section 6.09 Trustee May File Proofs of Claim............................ 31
Section 6.10 Priorities.................................................. 32
Section 6.11 Undertaking for Costs....................................... 32
ARTICLE 7
THE TRUSTEE
Section 7.01 Duties of the Trustee....................................... 32
Section 7.02 Rights of the Trustee....................................... 33
Section 7.03 Individual Rights of the Trustee............................ 35
Section 7.04 Trustee's Disclaimer........................................ 35
Section 7.05 Notice of Defaults.......................................... 35
Section 7.06 Reports by the Trustee to Holders........................... 35
Section 7.07 Compensation and Indemnity.................................. 36
Section 7.08 Replacement of the Trustee.................................. 37
Section 7.09 Successor Trustee by Merger, etc............................ 38
ii
TABLE OF CONTENTS
(continued)
Page
----
Section 7.10 Eligibility, Disqualification............................... 38
Section 7.11 Preferential Collection of Claims Against Company........... 38
ARTICLE 8
SATISFACTION AND DISCHARGE OF INDENTURE
Section 8.01 Discharge of Indenture...................................... 38
Section 8.02 Deposited Monies to be Held in Trust by Trustee............. 39
Section 8.03 Paying Agent to Repay Monies Held........................... 39
Section 8.04 Return of Unclaimed Monies.................................. 39
Section 8.05 Reinstatement............................................... 39
ARTICLE 9
AMENDMENTS
Section 9.01 Without the Consent of Holders.............................. 40
Section 9.02 With the Consent of Holders................................. 41
Section 9.03 Compliance with the Trust Indenture Act..................... 42
Section 9.04 Revocation and Effect of Consents........................... 42
Section 9.05 Notation on or Exchange of Convertible Subordinated Notes... 43
Section 9.06 Trustee Protected........................................... 43
ARTICLE 10
GENERAL PROVISIONS
Section 10.01 Trust Indenture Act Controls................................ 43
Section 10.02 Notices..................................................... 43
Section 10.03 Communication by Holders With Other Holders................. 44
Section 10.04 Certificate and Opinion as to Conditions Precedent.......... 44
Section 10.05 Statements Required in Certificate or Opinion............... 44
Section 10.06 Rules by Trustee and Agents................................. 45
Section 10.07 Legal Holidays.............................................. 45
Section 10.08 No Recourse Against Others.................................. 46
Section 10.09 Counterparts................................................ 46
Section 10.10 Other Provisions............................................ 46
Section 10.11 Governing Law............................................... 47
Section 10.12 No Adverse Interpretation of Other Agreements............... 47
Section 10.13 Successors.................................................. 47
Section 10.14 Severability................................................ 47
Section 10.15 Table of Contents, Headings, etc............................ 47
ARTICLE 11
SUBORDINATION
iii
TABLE OF CONTENTS
(continued)
Page
----
Section 11.01 Agreement to Subordinate.................................... 47
Section 11.02 Liquidation; Dissolution; Bankruptcy........................ 47
Section 11.03 Default on Senior Debt and/or Designated Senior Debt........ 48
Section 11.04 Acceleration of Convertible Subordinated Notes.............. 49
Section 11.05 When Distribution Must Be Paid Over......................... 49
Section 11.06 Notice by Company........................................... 49
Section 11.07 Subrogation................................................. 50
Section 11.08 Relative Rights............................................. 50
Section 11.09 Subordination May Not Be Impaired by Company................ 50
Section 11.10 Distribution or Notice to Representative.................... 51
Section 11.11 Rights of Trustee and Paying Agent.......................... 51
Section 11.12 Authorization to Effect Subordination....................... 51
Section 11.13 Article Applicable to Paying Agents......................... 51
Section 11.14 Senior Debt Entitled to Rely................................ 52
Section 11.15 Permitted Payments.......................................... 52
ARTICLE 12
CONVERSION OF CONVERTIBLE SUBORDINATED NOTES
Section 12.01 Right to Convert............................................ 52
Section 12.02 Exercise of Conversion Privilege; Issuance of Common Stock
on Conversion; No Adjustment for Interest or Dividends...... 53
Section 12.03 Cash Payments in Lieu of Fractional Shares.................. 54
Section 12.04 Conversion Price............................................ 54
Section 12.05 Adjustment of Conversion Price.............................. 54
Section 12.06 Effect of Reclassification, Consolidation, Merger or Sale... 63
Section 12.07 Taxes on Shares Issued...................................... 64
Section 12.08 Reservation of Shares; Shares to Be Fully Paid; Listing of
Common Stock................................................ 64
Section 12.09 Responsibility of Trustee................................... 64
Section 12.10 Notice to Holders Prior to Certain Actions.................. 65
Section 12.11 Restriction on Common Stock Issuable Upon Conversion........ 66
iv
CROSS-REFERENCE TABLE*
Trust Indenture Indenture
Act Section Section
----------- -------
310(a)(1).................................................. 7.10
(a)(2)................................................ 7.10, 10.10
(a)(3)................................................ n/a
(a)(4)................................................ n/a
(a)(5)................................................ n/a
(b)................................................... 7.08, 7.10, 10.02
(c)................................................... n/a
311(a)..................................................... 7.11
(b)................................................... 7.11
(c)................................................... n/a
312(a)..................................................... 2.05
(b)................................................... 10.03
(c)................................................... 10.03
313(a)..................................................... 7.06
(b)(1)................................................ n/a
(b)(2)................................................ 7.06
(c)................................................... 7.06, 10.02
(d)................................................... 7.06
314(a)..................................................... 4.02, 10.02
(b)................................................... n/a
(c)(1)................................................ 10.04
(c)(2)................................................ 10.04
(c)(3)................................................ n/a
(d)................................................... n/a
(e)................................................... 10.05
(f)................................................... n/a
315(a)..................................................... 7.01(b)
(b)................................................... 7.05, 10.02
(c)................................................... 7.01(a)
(d)................................................... 7.01(c)
(e)................................................... 6.11
316(a)(last sentence)...................................... 2.09
(a)(1)(A)............................................. 6.05
(a)(1)(B)............................................. 6.04
(a)(2)................................................ n/a
(b)................................................... 6.02
(c)................................................... 9.04
317(a)(1).................................................. 6.08
(a)(2)................................................ 6.09
(b)................................................... 2.04
318(a)..................................................... 10.01
(b)................................................... n/a
(c)................................................... 10.01
------------------
"n/a" means not applicable.
*This Cross-Reference Table shall not, for any purpose, be deemed to be a part
of the Indenture.
v
THIS INDENTURE, dated as of July 30, 2001, is between School Specialty,
Inc., a Wisconsin corporation (the "Company"), and BNY Midwest Trust Company, an
Illinois trust company (the "Trustee"). The Company has duly authorized the
creation of its 6% Convertible Subordinated Notes due 2008 (the "Convertible
Subordinated Notes"), and to provide therefor the Company and the Trustee have
duly authorized the execution and delivery of this Indenture. Each party agrees
as follows for the benefit of the other party and for the equal and ratable
benefit of the holders from time to time of the Convertible Subordinated Notes:
ARTICLE 1
DEFINITIONS
SECTION 1.01 Definitions.
-----------
"Affiliate" means, when used with reference to any person, any other person
directly or indirectly controlling, controlled by, or under direct or indirect
common control of, the referent person. For the purposes of this definition,
"control" when used with respect to any specified person means the power to
direct or cause the direction of management or policies of the referent person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise. The terms "controlling" and "controlled" have meanings
correlative of the foregoing.
"Agent" means any Registrar, Paying Agent, Conversion Agent or co-
registrar.
"Agent Member" means any member of, or participant in, the Depositary.
"Applicable Procedures" means, with respect to any transfer or transaction
involving a Global Security or beneficial interest therein, the rules and
procedures of the Depositary for such Global Security to the extent applicable
to such transaction and as in effect from time to time.
"Board of Directors" means the Board of Directors of the Company or any
authorized committee of the Board of Directors.
"Capital Stock" of any person means any and all shares, interests, rights
to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such person, but excluding any debt
securities convertible into such equity.
"Change of Control" means the occurrence of one or more of the following
events: (a) any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined
in Rules 13d-3 and 13d-5 under the Exchange Act) of shares representing more
than 50% of the combined voting power of the then outstanding Voting Stock of
the Company, (b) the Company consolidates with or merges into any other
corporation, any other corporation merges into the Company, or the Company
effects a share exchange, and, in the case of any such transaction, the
outstanding Common Stock of the Company is reclassified into or exchanged for
any other property or securities, unless the shareholders of the Company
immediately before such transaction own, directly or indirectly immediately
following such transaction, at least a majority of the combined voting power of
the then outstanding Voting Stock of the corporation resulting from such
transaction in substantially the same proportion as their ownership of the
Voting Stock of the Company immediately before
1
such transaction, (c) the Company or the Company and its subsidiaries, taken as
a whole, sells, assigns, conveys, transfers or leases all or substantially all
assets of the Company or of the Company and its subsidiaries, taken as a whole,
as applicable (other than to one or more wholly-owned subsidiaries of the
Company), or (d) any time the Continuing Directors do not constitute a majority
of the Board of Directors of the Company (or, if applicable, a successor
corporation to the Company); provided, that a Change of Control under (a), (b)
and (c) above shall not be deemed to have occurred if either (y) the Daily
Market Price per share of Common Stock for any five trading days within the
period of 10 consecutive trading days ending immediately after the later of the
Change of Control or the public announcement of the Change of Control (in the
case of a Change of Control under clause (a) above) or the period of 10
consecutive trading days ending immediately before the Change of Control (in the
case of a Change of Control under clause (b) or (c) above) shall equal or exceed
110% of the Conversion Price in effect on the date of such Change of Control or
the public announcement of such Change of Control, as applicable or (z) at least
90% of the consideration (excluding cash payments for fractional shares) in the
transaction or transactions constituting the Change of Control consists of
shares of common stock that are, or upon issuance will be, traded on the New
York Stock Exchange or quoted on the Nasdaq National Market and, as a result of
the transaction, the Convertible Subordinated Notes become convertible solely
into such common stock.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means 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. Subject to the
provisions of Section 12.06, however, shares issuable on conversion of
Convertible Subordinated Notes shall include only shares of the class designated
as Common Stock of the Company at the date of this Indenture or shares of any
class or classes resulting from any reclassification or reclassifications
thereof and which have no preference in respect of dividends or of amounts
payable in the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company and which are not subject to redemption by the
Company; provided that if at any time there shall be more than one such
resulting class, the shares of each such class then so issuable shall be
substantially in the proportion which the total number of shares of such class
resulting from all such reclassifications bears to the total number of shares of
all such classes resulting from all such reclassifications.
"Company" means the party named as such above until a successor replaces it
in accordance with Article 5 and thereafter means the successor. References to
the Company shall not include any Subsidiary.
A "consolidated subsidiary" of any person means a subsidiary which for
financial reporting purposes is or, in accordance with GAAP, should be,
accounted for by such person as a consolidated subsidiary.
"Continuing Directors" means, as of any date of determination, any member
of the Board of Directors who (i) was a member of such Board of Directors on the
date of this Indenture or (ii) was nominated for election or elected to such
Board of Directors with the approval of a
2
majority of the Continuing Directors who were members of such Board of Directors
at the time of such nomination or election.
"Convertible Subordinated Notes" means the 6% Convertible Subordinated
Notes due 2008 issued, authenticated and delivered under this Indenture.
"Conversion Price" means the initial conversion price specified in the form
of Convertible Subordinated Note in Paragraph 16 of such form, as adjusted in
accordance with the provisions of Article 12.
"Corporate Trust Office" means the corporate trust office of the Trustee at
which at any particular time the trust created by this Indenture shall
principally be administered; as of the date hereof, the Corporate Trust Office
is located at 0 X. XxXxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000.
"Daily Market Price" means the price of a share of Common Stock on the
relevant date, determined on the basis of the last reported sale price regular
way of the Common Stock as quoted on the Nasdaq National Market, or if the
Common Stock is not then quoted on the Nasdaq National Market, as reported on
the principal national securities exchange upon which the Common Stock is
listed.
"Default" means any event that is, or after notice or passage of time, or
both, would be, an Event of Default.
"Depositary" means, with respect to any Global Securities, a clearing
agency that is registered as such under the Exchange Act and is designated by
the Company to act as Depositary for such Global Securities (or any successor
securities clearing agency so registered), which shall initially be DTC.
"Designated Event" means the occurrence of a Change of Control or a
Termination of Trading.
"Designated Senior Debt" means (a) the Senior Bank Credit Facility and (ii)
any particular Senior Debt which has at the time of the giving of the Payment
Blockage Notice an aggregate outstanding principal amount in excess of $25
million, if the instrument creating or evidencing the same or the assumption or
guarantee thereof (or related agreements or documents to which the Company is a
party) expressly provides that such Indebtedness shall be "Designated Senior
Debt" for purposes of the Indenture (provided that such instrument, agreement or
other document may place limitations and conditions on the right of such Senior
Debt to exercise the rights of Designated Senior Debt.)
"DTC" means The Depository Trust Company, a New York corporation.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"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
3
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity as may be
approved by a significant segment of the accounting profession of the United
States, which are in effect from time to time.
"Global Security" means a Convertible Subordinated Note that is registered
in the Register.
"Global Securities Legend" means the legend labeled as such and that is set
forth in Exhibit A hereto.
"Indebtedness" means, with respect to any person, all obligations, whether
or not contingent, of such person (i) (a) for borrowed money (including, but not
limited to, any indebtedness secured by a security interest, mortgage or other
lien on the assets of the Company that is (1) given to secure all or part of the
purchase price of property subject thereto, whether given to the vendor of such
property or to another, or (2) existing on property at the time of acquisition
thereof), (b) evidenced by a note, debenture, bond or other written instrument,
(c) under a lease required to be capitalized on the balance sheet of the lessee
under GAAP or under any lease or related document (including a purchase
agreement) that provides that the Company is contractually obligated to purchase
or cause a third party to purchase and thereby guarantee a minimum residual
value of the lease property to the lessor and the obligations of the Company
under such lease or related document to purchase or to cause a third party to
purchase such leased property, (d) in respect of letters of credit, bank
guarantees or bankers' acceptances (including reimbursement obligations with
respect to any of the foregoing), (e) with respect to Indebtedness secured by a
mortgage, pledge, lien, encumbrance, charge or adverse claim affecting title or
resulting in an encumbrance to which the property or assets of such person are
subject, whether or not the obligation secured thereby shall have been assumed
by or shall otherwise be such person's legal liability, (f) in respect of the
balance of deferred and unpaid purchase price of any property or assets, (g)
under interest rate or currency swap agreements, cap, floor and collar
agreements, spot and forward contracts and similar agreements and arrangements;
(ii) with respect to any obligation of others of the type described in the
preceding clause (i) or under clause (iii) below assumed by or guaranteed in any
manner by such person through an agreement to purchase (including, without
limitation, "take or pay" and similar arrangements), contingent or otherwise
(and the obligations of such person under any such assumptions, guarantees or
other such arrangements); and (iii) any and all deferrals, renewals, extensions,
refinancings and refundings of, or amendments, modifications or supplements to,
any of the foregoing.
"Indenture" means this Indenture as amended or supplemented from time to
time.
"Initial Purchasers" means Xxxxxxx Xxxxx Barney Inc. and U.S. Bancorp Xxxxx
Xxxxxxx Inc.
"Interest Payment Date" means February 1 and August 1 of each year.
"Issue Date" means the date on which Convertible Subordinated Notes are
first issued and authenticated under this Indenture.
4
"Liquidated Damages" has the meaning specified in paragraph 17 of the form
of Convertible Subordinated Note which is attached as Exhibit A hereto.
"Material Subsidiary" means any subsidiary of the Company which at the date
of determination is a "significant subsidiary" as defined in Rule 1-02(w) of
Regulation S-X under the Securities Act and the Exchange Act.
"Maturity Date" means August 1, 2008.
"Note Custodian" means BNY Midwest Trust Company, as custodian with respect
to any Global Security, or any successor entity thereto.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offering Memorandum" means the offering memorandum dated July 24, 2001,
relating to the Convertible Subordinated Notes, including all amendments
thereto.
"Officer" means the Chairman of the Board, the Chief Executive Officer, the
President, the Chief Financial Officer, the Chief Accounting Officer, any
Executive Vice President, Senior Vice President or Vice President (whether or
not designated by a number or numbers or word or words before or after the title
"Vice President"), the Treasurer, the Secretary and any Assistant Treasurer or
any Assistant Secretary of the Company.
"Officers' Certificate" means a certificate signed by two Officers, one of
whom is the Chairman of the Board, the Chief Executive Officer, the President,
the Chief Financial Officer or the Treasurer of the Company.
"Opinion of Counsel" means a written opinion from legal counsel who may be
an employee of or counsel to the Company or the Trustee except to the extent
otherwise indicated in this Indenture.
A "person" means any individual, corporation, partnership, joint venture,
trust, estate, unincorporated organization, limited liability company or
government or any agency or political subdivision thereof.
"Redemption date" when used with respect to any of the Convertible
Subordinated Notes to be redeemed, means the date fixed by the Company for such
redemption pursuant to Article 3 of this Indenture and the Convertible
Subordinated Notes.
"Redemption price" when used with respect to any of the Convertible
Subordinated Notes to be redeemed, means the price fixed for such redemption
pursuant to Article 3 of this Indenture and the Convertible Subordinated Notes.
"Registration Agreement" means the Registration Agreement relating to the
Convertible Subordinated Notes and Common Stock issuable upon conversion of such
Convertible
5
Subordinated Notes dated July 30, 2001, between the Company and the Initial
Purchasers, as such agreement may be amended, modified or supplemented from time
to time.
"Regular Record Date" means the January 15 or July 15 immediately preceding
each Interest Payment Date.
"Representative" means (a) the indenture trustee or other trustee, agent or
representative for any Senior Debt or (b) with respect to any Senior Debt that
does not have any such trustee, agent or other representative, (i) in the case
of such Senior Debt issued pursuant to an agreement providing for voting
arrangements as among the holders or owners of such Senior Debt, any holder or
owner of such Senior Debt acting with the consent of the required persons
necessary to bind such holders or owners of such Senior Debt and (ii) in the
case of all other such Senior Debt, the holder or owner of such Senior Debt.
"Restricted Common Stock Legend" means the legend labeled as such and that
is set forth in Exhibit B hereto.
"Restricted Securities Legend" means the legend labeled as such and that is
set forth in Exhibit A hereto.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Senior Bank Credit Facility" means the Amended and Restated Credit
Agreement dated as of September 30, 1998 among the Company, as borrower, certain
of the Company's subsidiaries, as guarantors, the lenders identified therein,
and Bank of America, N.A., as administrative agent, including any deferrals,
renewals, extensions, replacements, refinancings or refundings thereof, or
amendments, modifications or supplements thereto and any agreement providing
therefor whether by or with the same or any other lender, creditor, group of
lenders or group of creditors and including the related notes, guarantee
agreements and other instruments and agreements executed in connection
therewith.
"Senior Debt" means the principal of, premium, if any, and interest on,
rent under, and any other amounts payable on or in respect of any Indebtedness
of the Company (including, without limitation, any Obligations in respect of
such Indebtedness and any interest accruing after the filing of a petition by or
against the Company under any bankruptcy law, whether or not allowed as a claim
after such filing in any proceeding under such bankruptcy law), whether
outstanding on the date of this Indenture or thereafter created, incurred,
assumed, guaranteed or in effect guaranteed by the Company (including all
deferrals, renewals, extensions, refinancings or refundings of, or amendments,
modifications or supplements to the foregoing); provided, however, that Senior
Debt does not include (v) Indebtedness evidenced by the Convertible Subordinated
Notes, (w) any liability for federal, state, local or other taxes owed or owing
by the Company, (x) Indebtedness of the Company to any Subsidiary of the Company
except to the extent such Indebtedness is of a type described in clause (ii) of
the definition of Indebtedness, (y) trade payables of the Company for goods,
services or materials purchased in the ordinary course of business (other than,
to the extent they may otherwise constitute trade payables, any obligations of
the type described in clause (ii) of the definition of Indebtedness), and (z)
any
6
particular Indebtedness in which the instrument creating or evidencing the same
expressly provides that such Indebtedness shall not be senior in right of
payment to, or is pari passu with, or is subordinated or junior to, the
Convertible Subordinated Notes.
"Shelf Registration Statement" shall have the meaning set forth in the
Registration Agreement.
A "subsidiary" means, with respect to any person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of capital stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
person or one or more of the other subsidiaries of that person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or managing
general partner of which is such person or a subsidiary of such person or (b)
the only general partners of which are such person or of one or more
subsidiaries of such person (or any combination thereof).
"Termination of Trading" will be deemed to have occurred if the Common
Stock (or other common stock into which the Convertible Subordinated Notes are
then convertible) is neither listed for trading on the New York Stock Exchange
nor approved for trading on the Nasdaq National Market.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code (S)(S) 77aaa-
77bbbb) as in effect on the date of execution of this Indenture, except as
provided in Sections 9.03 and 12.06.
"Trustee" means the party named as such above until a successor replaces it
in accordance with the applicable provisions of this Indenture and thereafter
means the successor.
"Trust Officer" means an officer in the Corporate Trust Office of the
Trustee and having direct responsibility for the administration of this
Indenture.
"U.S. Government Obligations" means direct obligation of the United States
of America for the payment of which the full faith and credit of the United
States of America is pledged. In order to have money available on a payment
date to pay principal or interest on the Convertible Subordinated Notes, the
U.S. Government Obligations shall be payable as to principal or interest on or
before such payment date in such amounts as will provide the necessary money.
U.S. Government Obligations shall not be callable at the issuer's option.
"Voting Stock" of a corporation means all classes of Capital Stock of such
corporation then outstanding and normally entitled to vote in the election of
directors.
SECTION 1.02 Other Definitions.
-----------------
Defined in
Section
"Bankruptcy Law".............................................. 6.01
"business day"................................................ 10.07
"Current Market Price"........................................ 12.05
7
"closing price"............................................... 12.05
"Conversion Agent"............................................ 2.03
"Custodian"................................................... 6.01
"Designated Event Date"....................................... 4.06
"Designated Event Offer"...................................... 4.06
"Designated Event Offer Termination Date"..................... 4.06
"Designated Event Payment".................................... 4.06
"Designated Event Payment Date"............................... 4.06
"Event of Default"............................................ 6.01
"Expiration Time"............................................. 12.05
"fair market value"........................................... 12.05
"Legal Holiday"............................................... 10.07
"New Rights Plan"............................................. 12.05
"non-electing share".......................................... 12.06
"Paying Agent"................................................ 2.03
"Payment Blockage Notice"..................................... 11.03
"Purchased Shares"............................................ 12.05
"Record Date"................................................. 12.05
"Registrar"................................................... 2.03
"Securities".................................................. 12.05
"trading day"................................................. 12.05
"Trigger Event"............................................... 12.05
SECTION 1.03 Incorporation by Reference of Trust Indenture Act.
-------------------------------------------------
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"Commission" means the Commission;
"indenture securities" means the Convertible Subordinated Notes;
"indenture security holder" means a holder of a Convertible
Subordinated Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the Convertible Subordinated Notes means the Company or
any other obligor on the Convertible Subordinated Notes.
All other terms in this Indenture that are defined by the TIA, defined by
TIA reference to another statute or defined by Commission rule under the TIA
have the meanings so assigned to them.
8
SECTION 1.04 Rules of Construction.
---------------------
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular; and
(5) the male, female and neuter genders include one another.
ARTICLE 2
THE CONVERTIBLE SUBORDINATED NOTES
SECTION 2.01 Form and Dating.
---------------
(a) GLOBAL SECURITIES. The Convertible Subordinated Notes are being
offered and sold by the Company pursuant to a Purchase Agreement relating to the
Convertible Subordinated Notes, dated July 30, 2001, among the Company and the
Initial Purchasers (the "Purchase Agreement").
The Convertible Subordinated Notes are being offered and sold (i) in
reliance on Regulation S under the Securities Act ("Regulation S") or (ii) to
"qualified institutional buyers" as defined in Rule 144A ("QIBs") in reliance on
Rule 144A under the Securities Act ("Rule 144A"), each as provided in the
Purchase Agreement, and shall be issued in the form of one or more permanent
global securities in definitive, fully registered form without interest coupons
with the Global Securities Legend and Restricted Securities Legend set forth in
Exhibit A hereto (each, a "Global Security"). Any Global Security shall be
deposited on behalf of the purchasers of the Convertible Subordinated Notes
represented thereby with the Trustee, as custodian for the Depositary, and
registered in the name of the Depositary or a nominee of the Depositary for the
accounts of participants in the Depositary (and, in the case of Convertible
Subordinated Notes held in accordance with Regulation S, registered with the
Depositary for the accounts of designated agents holding on behalf of the
Euroclear System ("Euroclear") or Clearstream Banking, societe anonyme
("Clearstream")), duly executed by the Company and authenticated by the Trustee
as hereinafter provided. The aggregate principal amount of a Global Security
may from time to time be increased or decreased by adjustments made on the
records of the Trustee and the Depositary or its nominee as hereinafter
provided.
(b) BOOK-ENTRY PROVISIONS. This Section 2.01(b) shall apply only to a
Global Security deposited with or on behalf of the Depositary.
9
The Company shall execute and the Trustee shall, in accordance with this
Section 2.01(b) and the written order of the Company, authenticate and deliver
initially one or more Global Securities that (i) shall be registered in the name
of Cede & Co. or other nominee of such Depositary and (ii) shall be delivered by
the Trustee to such Depositary or pursuant to such Depositary's instructions or
held by the Trustee as custodian for the Depositary pursuant to a FAST Balance
Certificate Agreement between the Depositary and the Trustee.
Members of, or participants in, the Depositary ("Agent Members") shall have
no rights under this Indenture with respect to any Global Security held on their
behalf by the Depositary or by the Trustee as the custodian of the Depositary or
under such Global Security, and the Depositary may be treated by the Company,
the Trustee and any agent of the Company or the Trustee as the absolute owner of
such Global Security for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall prevent the Company, the Trustee or any agent of
the Company or the Trustee from giving effect to any written certification,
proxy or other authorization furnished by the Depositary or impair, as between
the Depositary and its Agent Members, the operation of customary practices of
such Depositary governing the exercise of the rights of a holder of a beneficial
interest in any Global Security.
The provisions of the "Operating Procedures of the Euroclear System" and
"Terms and Conditions Governing Use of Euroclear" and the "Management
Regulations and Instructions to Participants" of Clearstream shall be applicable
to interests in any Global Securities that are held by participants through
Euroclear or Clearstream. The Trustee shall have no obligation to notify
holders of any such procedures or to monitor or enforce compliance with the
same.
(c) DEFINITIVE SECURITIES. Except as provided in Section 2.10, owners of
beneficial interests in Global Securities will not be entitled to receive
physical delivery of certificated Convertible Subordinated Notes in definitive
form. If applicable, certificated Convertible Subordinated Notes in definitive
form will bear the Restricted Securities Legend set forth on Exhibit A unless
removed in accordance with Section 2.06(b).
SECTION 2.02 Execution and Authentication.
----------------------------
One Officer shall sign the Convertible Subordinated Notes for the Company
by manual or facsimile signature.
If an Officer whose signature is on a Convertible Subordinated Note no
longer holds that office at the time the Convertible Subordinated Note is
authenticated, the Convertible Subordinated Note shall nevertheless be valid.
A Convertible Subordinated Note shall not be valid until authenticated by
the manual signature of the Trustee. The signature shall be conclusive evidence
that the Convertible Subordinated Note has been authenticated under this
Indenture.
Upon a written order of the Company signed by an Officer of the Company,
the Trustee shall authenticate Convertible Subordinated Notes for original issue
up to an aggregate principal amount of $130,000,000 (plus up to $19,500,000
aggregate principal amount of Convertible Subordinated Notes that may be sold by
the Company pursuant to the over-allotment option granted pursuant to the
Purchase Agreement) to the Initial Purchasers. The aggregate principal
10
amount of Convertible Subordinated Notes outstanding at any time may not exceed
that amount except as provided in Section 2.07.
The Convertible Subordinated Notes shall be issuable only in registered
form without coupons and only in denominations of $1,000 or any integral
multiple thereof.
The Trustee may appoint an authenticating agent acceptable to the Company
to authenticate Convertible Subordinated Notes. An authenticating agent may
authenticate Convertible Subordinated Notes 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 right as an
Agent to deal with the Company or an Affiliate of the Company.
SECTION 2.03 Registrar, Paying Agent and Conversion Agent.
--------------------------------------------
The Company shall maintain or cause to be maintained in such locations as
it shall determine, which may be the Corporate Trust Office, an office or
agency: (i) where securities may be presented for registration of transfer or
for exchange ("Registrar"); (ii) where Convertible Subordinated Notes may be
presented for payment ("Paying Agent"); (iii) an office or agency where
Convertible Subordinated Notes may be presented for conversion (the "Conversion
Agent"); and (iv) where notices and demands to or upon the Company in respect of
Convertible Subordinated Notes and this Indenture may be served by the holders
of the Convertible Subordinated Notes. The Registrar shall keep a Register
("Register") of the Convertible Subordinated Notes and of their transfer and
exchange. The Company may appoint one or more co-registrars, one or more
additional paying agents and one or more additional conversion agents. The term
"Paying Agent" includes any additional paying agent, and the term "Conversion
Agent" includes any additional Conversion Agent. The Company may change any
Paying Agent, Registrar, Conversion Agent or co-registrar without prior notice.
The Company shall notify the Trustee of the name and address of any Agent not a
party to this Indenture and 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 or any of its subsidiaries may
act as Paying Agent, Registrar, Conversion Agent or co-registrar, except that
for purposes of Articles 3 and 8 and Section 4.06, neither the Company nor any
of its subsidiaries shall act as Paying Agent. If the Company fails to appoint
or maintain another entity as Registrar, or Paying Agent or Conversion Agent,
the Trustee shall act as such, and the Trustee shall initially act as such.
SECTION 2.04 Paying Agent To Hold Money in Trust.
-----------------------------------
The Company shall require each Paying Agent (other than the Trustee, who
hereby so agrees), to agree in writing that the Paying Agent will hold in trust
for the benefit of holders of the Convertible Subordinated Notes or the Trustee
all money held by the Paying Agent for the payment of principal or interest
(including Liquidated Damages) on the Convertible Subordinated Notes, and will
notify the Trustee of any default by the Company in respect of making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the
11
Paying Agent (if other than the Company or a subsidiary of the Company) shall
have no further liability for the money. If the Company or a subsidiary of the
Company acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the holders of the Convertible Subordinated Notes all
money held by it as Paying Agent.
SECTION 2.05 Holder Lists.
------------
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
holders of Convertible Subordinated Notes and shall otherwise comply with TIA
(S) 312(a). If the Trustee is not the Registrar, the Company shall furnish to
the Trustee at least seven business days before each Interest Payment Date, and
as the Trustee may request in writing within fifteen (15) days after receipt by
the Company of any such request (or such lesser time as the Trustee may
reasonably request in order to enable it to timely provide any notice to be
provided by it hereunder), a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of holders of
Convertible Subordinated Notes.
SECTION 2.06 Transfer and Exchange.
---------------------
(a) When Convertible Subordinated Notes are presented to the Registrar or
a co-registrar with a request to register a transfer or to exchange them for an
equal principal amount of Convertible Subordinated Notes for other
denominations, the Registrar shall register the transfer or make the exchange if
its requirements for such transactions are met. To permit registrations of
transfers and exchanges, the Company shall issue and the Trustee shall
authenticate Convertible Subordinated Notes at the Registrar's request, bearing
registration numbers not contemporaneously outstanding. No service charge shall
be made to a holder for any registration of transfer or exchange (except as
otherwise expressly permitted herein), but the Company and the Registrar may
require payment of a sum sufficient to cover any transfer tax or other
governmental charge payable upon exchanges pursuant to Sections 2.10, 3.07, 9.05
or 12.02.
The Company or the Registrar shall not be required (i) to issue, register
the transfer of or exchange Convertible Subordinated Notes during a period
beginning at the opening of business fifteen (15) days before the day of any
selection of Convertible Subordinated Notes for redemption under Section 3.03
and ending at the close of business on the day of selection, (ii) to register
the transfer or exchange of any Convertible Subordinated Note so selected for
redemption in whole or in part, except the unredeemed portion of any Convertible
Subordinated Note being redeemed in part or (iii) to register the transfer of
any Convertible Subordinated Notes surrendered for repurchase pursuant to
Section 4.06.
All Convertible Subordinated Notes issued upon any transfer or exchange of
Convertible Subordinated Notes in accordance with this Indenture shall be the
valid obligations of the Company, evidencing the same debt, and entitled to the
same benefits under this Indenture as the Convertible Subordinated Notes
surrendered upon such registration of transfer or exchange.
(b) Notwithstanding any provision to the contrary herein, so long as a
Global Security remains outstanding and is held by or on behalf of the
Depositary, transfers of a Global Security,
12
in whole or in part, or of any beneficial interest therein, shall only be made
in accordance with Sections 2.01(b) and 2.10; provided, however, that beneficial
interests in a Global Security may be transferred to persons who take delivery
thereof in the form of a beneficial interest in the Global Security in
accordance with the transfer restrictions set forth under the heading "Notice to
Investors" in the Offering Memorandum and, if applicable, in the Restricted
Securities Legend.
Except for transfers or exchanges made in accordance with Section 2.10,
transfers of a Global Security shall be limited to transfers of such Global
Security in whole, but not in part, to nominees of the Depositary or to a
successor of the Depositary or such successor's nominee.
In the event that a Global Security is exchanged for Convertible
Subordinated Notes in definitive form pursuant to Section 2.10 prior to the
effectiveness of a Shelf Registration Statement with respect to such Convertible
Subordinated Notes, such exchange may occur, and such Convertible Subordinated
Notes may be further exchanged or transferred, only upon receipt by the
Registrar of (1) such Global Security or such Convertible Subordinated Notes in
definitive form, duly endorsed as provided herein, as applicable, (2)
instructions from the holder directing the Trustee to authenticate and deliver
one or more Convertible Subordinated Notes in definitive form of the same
aggregate principal amount as the Global Security or the Convertible
Subordinated Notes in definitive form (or portion thereof), as applicable, to be
transferred, such instructions to contain the name or names of the designated
transferee or transferees, the authorized denomination or denominations of the
Convertible Subordinated Notes in definitive form to be so issued and
appropriate delivery instructions, and (3) such certifications or other
information and, in the case of transfers pursuant to Rule 144 under the
Securities Act, legal opinions as the Company may reasonably require to confirm
that such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act
(including the certification requirements intended to ensure that such transfers
comply with Rule 144A or Regulation S under the Securities Act, as the case may
be), and upon compliance with such other procedures as may from time to time be
adopted by the Company and the Registrar.
(c) Except in connection with a Shelf Registration Statement contemplated
by and in accordance with the terms of the Registration Agreement, if
Convertible Subordinated Notes are issued upon the registration of transfer,
exchange or replacement of Convertible Subordinated Notes bearing a Restricted
Securities Legend, or if a request is made to remove such a Restrictive
Securities Legend on Convertible Subordinated Notes, the Convertible
Subordinated Notes so issued shall bear the Restricted Securities Legend, or a
Restricted Securities Legend shall not be removed, as the case may be, unless
there is delivered to the Company such satisfactory evidence, which, in the case
of a transfer made pursuant to Rule 144 under the Securities Act, may include an
opinion of counsel given in accordance with the laws in the State of New York,
as may be reasonably required by the Company, that neither the legend nor the
restrictions on transfer set forth therein are required to ensure that transfers
thereof comply with the provisions of Rule 144A, Rule 144 or Regulation S under
the Securities Act or that such Convertible Subordinated Notes are not
"restricted" within the meaning of Rule 144 under the Securities Act. Upon
provision to the Company of such satisfactory evidence, the Trustee, at the
written direction of the Company, shall authenticate and deliver Convertible
Subordinated Notes that do not bear the legend. The Company shall not otherwise
be entitled to require the delivery of a legal opinion in connection with any
transfer or exchange of Securities.
13
(d) Neither the Trustee nor any Agent shall have any responsibility for
any actions taken or not taken by the Depositary.
(e) The Trustee shall have no obligation or duty to monitor, determine or
inquire as to compliance with any restrictions on transfer imposed under this
Indenture or under applicable law with respect to any transfer of any interest
in any Convertible Subordinated Notes (including any transfers between or among
the Depositary's participants or beneficial owners of interests in any Global
Security) other than to require delivery of such certificates and other
documentation as is expressly required by, and to do so if and when expressly
required by, the terms of this Indenture and to examine the same to determine
substantial compliance as to form with the express requirements hereof.
SECTION 2.07 Replacement Convertible Subordinated Notes.
------------------------------------------
If the holder of a Convertible Subordinated Note claims that its
Convertible Subordinated Note has been lost, destroyed or wrongfully taken, the
Company shall issue and the Trustee shall authenticate a replacement Convertible
Subordinated Note if the Trustee's and the Company's requirements are met. If
required by the Trustee or the Company as a condition of receiving a replacement
Convertible Subordinated Note, the holder of a Convertible Subordinated Note
must provide a certificate of loss and an indemnity and/or an indemnity bond
sufficient, in the judgment of both the Company and the Trustee, to fully
protect the Company, the Trustee, any Agent and any authenticating agent from
any loss, liability, cost or expense which any of them may suffer or incur if
the Convertible Subordinated Note is replaced. The Company and the Trustee may
charge the relevant holder for their expenses in replacing any Convertible
Subordinated Note.
The Trustee or any authenticating agent may authenticate any such
substituted Convertible Subordinated Note, and deliver the same upon the receipt
of such security or indemnity as the Trustee, the Company and, if applicable,
such authenticating agent may require. Upon the issuance of any substituted
Convertible Subordinated Note, the Company and the Trustee may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses connected therewith.
In case any Convertible Subordinated Note which has matured or is about to
mature, or has been called for redemption pursuant to Article 3, submitted for
repurchase pursuant to Section 4.06 or is about to be converted into Common
Stock pursuant to Article 12, shall become mutilated or be destroyed, lost or
stolen, the Company may, instead of issuing a substitute Convertible
Subordinated Note, pay or authorize the payment of or convert or authorize the
conversion of the same (without surrender thereof except in the case of a
mutilated Convertible Subordinated Note), as the case may be, if the applicant
for such payment or conversion shall furnish to the Company, to the Trustee and,
if applicable, to the authenticating agent such security or indemnity as may be
required by them to save each of them harmless for any loss, liability, cost or
expense caused by or connected with such substitution, and, in case of
destruction, loss or theft, evidence satisfactory to the Company, the Trustee
and, if applicable, any paying agent or conversion agent of the destruction,
loss or theft of such Convertible Subordinated Note and of the ownership
thereof.
14
Every replacement Convertible Subordinated Note is an additional obligation
of the Company and shall be entitled to all the benefits provided under this
Indenture equally and proportionately with all other Convertible Subordinated
Notes duly issued, authenticated and delivered hereunder.
SECTION 2.08 Outstanding Convertible Subordinated Notes.
------------------------------------------
The Convertible Subordinated Notes outstanding at any time are all the
Convertible Subordinated Notes properly authenticated by the Trustee except for
those canceled by the Trustee, those delivered to it for cancellation, and those
described in this Section as not outstanding.
If a Convertible Subordinated Note is replaced pursuant to Section 2.07, it
ceases to be outstanding unless the Trustee receives proof satisfactory to it
that the replaced Convertible Subordinated Note is held by a bona fide
purchaser.
If Convertible Subordinated Notes are considered paid under Section 4.01 or
converted under Article 12, they cease to be outstanding, and interest (and
Liquidated Damages, if any) on them ceases to accrue.
Subject to Section 2.09 hereof, a Convertible Subordinated Note does not
cease to be outstanding because the Company or an Affiliate of the Company holds
the Convertible Subordinated Note.
SECTION 2.09 When Treasury Convertible Subordinated Notes Disregarded.
--------------------------------------------------------
In determining whether the holders of the required principal amount of
Convertible Subordinated Notes have concurred in any direction, waiver or
consent, Convertible Subordinated Notes owned by the Company or an Affiliate of
the Company shall be considered as though they are not outstanding except that
for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, waiver or consent, only Convertible Subordinated
Notes which a Trust Officer of the Trustee actually knows are so owned shall be
so disregarded.
SECTION 2.10 Temporary Convertible Subordinated Notes.
----------------------------------------
(a) Until definitive Convertible Subordinated Notes are ready for
delivery, the Company may prepare and the Trustee shall authenticate temporary
Convertible Subordinated Notes. Temporary Convertible Subordinated Notes shall
be substantially in the form of definitive Convertible Subordinated Notes but
may have variations that the Company considers appropriate for temporary
Convertible Subordinated Notes and shall be reasonably acceptable to the
Trustee. Without unreasonable delay, the Company shall prepare and the Trustee
shall authenticate definitive Convertible Subordinated Notes in exchange for
temporary Convertible Subordinated Notes.
(b) A Global Security deposited with the Depositary or with the Trustee
as custodian for the Depositary pursuant to Section 2.01 shall be transferred to
the beneficial owners thereof in the form of certificated Convertible
Subordinated Notes in definitive form only if such transfer
15
complies with Section 2.06 and (i) the Depositary notifies the Company that it
is unwilling or unable to continue as Depositary for such Global Security or if
at any time such Depositary ceases to be a "clearing agency" registered under
the Exchange Act and a successor Depositary is not appointed by the Company
within 90 days of such notice, or (ii) an Event of Default has occurred and is
continuing.
(c) Any Global Security or interest thereon that is transferable to the
beneficial owners thereof in the form of certificated Convertible Subordinated
Notes in definitive form shall, if held by the Depository, be surrendered by the
Depositary to the Trustee, without charge, and the Trustee shall authenticate
and deliver, upon such transfer of each portion of such Global Security, an
equal aggregate principal amount of Convertible Subordinated Notes of authorized
denominations in the form of certificated Convertible Subordinated Notes in
definitive form. Any portion of a Global Security transferred pursuant to this
Section shall be executed, authenticated and delivered only in denominations of
$1,000 and any integral multiple thereof and registered in such names as the
Depositary shall direct. Any Convertible Subordinated Notes in the form of
certificated Convertible Subordinated Notes in definitive form delivered in
exchange for an interest in the Global Security shall, except as otherwise
provided by Section 2.06(c), bear the Restricted Securities Legend set forth in
Exhibit A hereto.
(d) Prior to any transfer pursuant to Section 2.10(b), the registered
holder of a Global Security may grant proxies and otherwise authorize any
person, including Agent Members and persons that may hold interests through
Agent Members, to take any action which a holder is entitled to take under this
Indenture or the Convertible Subordinated Notes.
SECTION 2.11 Cancellation.
------------
The Company at any time may deliver Convertible Subordinated Notes to the
Trustee for cancellation. The Registrar and Paying Agent shall forward to the
Trustee any Convertible Subordinated Notes surrendered to them for registration
of transfer, exchange or payment. The Trustee and no one else may cancel
Convertible Subordinated Notes surrendered for registration of transfer,
exchange, payment, replacement, conversion, redemption, repurchase or
cancellation. Upon written instructions of the Company, the Trustee shall
destroy and dispose of canceled Convertible Subordinated Notes as the Company
directs and, after such destruction, shall deliver a certificate of destruction
to the Company. The Company may not issue new Convertible Subordinated Notes to
replace Convertible Subordinated Notes that it has paid, redeemed or repurchased
or that have been delivered to the Trustee for cancellation or that any holder
has (i) converted pursuant to Article 12 hereof, (ii) submitted for redemption
pursuant to Article 3 hereof or (iii) submitted for repurchase pursuant to
Section 4.06 hereof (unless revoked).
SECTION 2.12 Defaulted Interest.
------------------
If the Company fails to make a payment of interest on the Convertible
Subordinated Notes, it shall pay such defaulted interest plus, to the extent
lawful, any interest payable on the defaulted interest. It may pay such
defaulted interest, plus any such interest payable on it, to the persons who are
holders of Convertible Subordinated Notes on a subsequent special record date.
The Company shall fix any such record date and payment date. At least 15 days
before any such
16
record date, the Company shall mail to holders of the Convertible Subordinated
Notes a notice that states the record date, payment date and amount of such
interest to be paid.
SECTION 2.13 CUSIP Number.
------------
The Company in issuing the Convertible Subordinated Notes may use a "CUSIP"
number, and if so, such CUSIP number shall be included in notices of redemption,
repurchase or exchange as a convenience to holders of Convertible Subordinated
Notes; provided, however, 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 Convertible Subordinated Notes and that reliance may be placed
only on the other identification numbers printed on the Convertible Subordinated
Notes. The Company will promptly notify the Trustee of any change in the CUSIP
number.
SECTION 2.14 Regulation S.
------------
The Company agrees that it will refuse to register any transfer of
Convertible Subordinated Notes or any shares of Common Stock issued upon
conversion of Convertible Subordinated Notes that is not made in accordance with
the provisions of Regulation S under the Securities Act, pursuant to a
registration statement which has been declared effective under the Securities
Act or pursuant to an available exemption from the registration requirements of
the Securities Act; provided that the provisions of this paragraph shall not be
applicable to any Convertible Subordinated Notes which do not bear a Restricted
Securities Legend or to any shares of Common Stock evidenced by certificates
which do not bear a Restricted Common Stock Legend.
ARTICLE 3
REDEMPTION
SECTION 3.01 Optional Redemption.
-------------------
The Company may redeem all or any portion of the Convertible Subordinated
Notes upon the terms and at the redemption prices set forth in each of the
Convertible Subordinated Notes. Any redemption shall be made pursuant to
Paragraph 5 of the Convertible Subordinated Notes and this Article 3.
SECTION 3.02 Notices to Trustee.
------------------
If the Company elects to redeem Convertible Subordinated Notes pursuant to
the optional redemption provisions of paragraph 5 of the Convertible
Subordinated Notes, it shall furnish to the Trustee, at least 15 (20 if less
than all of the then outstanding Convertible Subordinated Notes are to be
redeemed or if the Company requests the Trustee to give notice of redemption
pursuant to Section 3.04) days but not more than 60 days before a redemption
date (unless a shorter period shall be satisfactory to the Trustee), an
Officers' Certificate setting forth (i) the Section of this Indenture pursuant
to which the redemption shall occur, (ii) the redemption date, (iii) the
principal amount of Convertible Subordinated Notes (if less than all) to be
redeemed,
17
(iv) the redemption price and (v) the CUSIP number of the Convertible
Subordinated Notes being redeemed.
SECTION 3.03 Selection of Convertible Subordinated Notes To Be Redeemed.
----------------------------------------------------------
If less than all the Convertible Subordinated Notes are to be redeemed, the
Trustee shall select the Convertible Subordinated Notes to be redeemed by a
method that complies with the requirements of the principal national securities
exchange, if any, on which the Convertible Subordinated Notes are listed or
quoted or, if the Convertible Subordinated Notes are not so listed, on a pro
rata basis by lot or by any other method that the Trustee considers fair and
appropriate. The Trustee shall make the selection not more than 60 days and not
less than 15 days before the redemption date from Convertible Subordinated Notes
outstanding and not previously called for redemption. The Trustee may select
for redemption a portion of the principal of any Convertible Subordinated Notes
that has a denomination larger than $1,000. Convertible Subordinated Notes and
portions thereof will be redeemed in the amount of $1,000 or integral multiples
of $1,000.
Provisions of this Indenture that apply to Convertible Subordinated Notes
called for redemption also apply to portions of Convertible Subordinated Notes
called for redemption. The Trustee shall notify the Company promptly of the
Convertible Subordinated Notes or portions of Convertible Subordinated Notes to
be called for redemption.
If any Convertible Subordinated Note selected for partial redemption is
converted in part after such selection, the converted portion of such
Convertible Subordinated Note shall be deemed (so far as may be) to be the
portion to be selected for redemption. The Convertible Subordinated Notes (or
portion thereof) so selected shall be deemed duly selected for redemption for
all purposes hereof, notwithstanding that any such Convertible Subordinated Note
is converted in whole or in part before the mailing of the notice of redemption.
Upon any redemption of less than all the Convertible Subordinated Notes, the
Company and the Trustee may treat as outstanding any Convertible Subordinated
Notes surrendered for conversion during the period of 15 days next preceding the
mailing of a notice of redemption and need not treat as outstanding any
Convertible Subordinated Note authenticated and delivered during such period in
exchange for the unconverted portion of any Convertible Subordinated Note
converted in part during such period.
SECTION 3.04 Notice of Redemption.
--------------------
At least 15 days but not more than 60 days before a redemption date, the
Company shall mail by first class mail a notice of redemption to each holder
whose Convertible Subordinated Notes are to be redeemed, at such holder's
registered address.
The notice shall identify the Convertible Subordinated Notes to be redeemed
and shall state:
(1) the redemption date;
(2) the redemption price;
18
(3) if any Convertible Subordinated Note is being redeemed in part,
the portion of the principal amount of such Convertible Subordinated Note to be
redeemed and that, after the redemption date, upon surrender of such Convertible
Subordinated Note, a new Convertible Subordinated Note or Convertible
Subordinated Notes in principal amount equal to the unredeemed portion will be
issued in the name of the holder thereof;
(4) that Convertible Subordinated Notes called for redemption must
be surrendered to the Paying Agent to collect the redemption price;
(5) that interest and Liquidated Damages, if applicable, on
Convertible Subordinated Notes called for redemption and for which funds have
been set apart for payment, ceases to accrue on and after the redemption date
(unless the Company defaults in the payment of the redemption price or the
Paying Agent is prohibited from making such payment pursuant to the terms of
this Indenture);
(6) the paragraph of the Convertible Subordinated Notes pursuant to
which the Convertible Subordinated Notes called for redemption are being
redeemed;
(7) the aggregate principal amount of Convertible Subordinated Notes
(if less than all) that are being redeemed;
(8) the CUSIP number of the Convertible Subordinated Notes (provided
that the disclaimer permitted by Section 2.13 may be made);
(9) the name and address of the Paying Agent;
(10) that Convertible Subordinated Notes called for redemption may be
converted at any time prior to the close of business on the last trading day
immediately preceding the redemption date and if not converted prior to the
close of business on such date, the right of conversion will be lost; and
(11) that in the case of Convertible Subordinated Notes or portions
thereof called for redemption on a date that is also an Interest Payment Date,
the interest payment and Liquidated Damages, if any, due on such date shall be
paid to the person in whose name the Convertible Subordinated Note is registered
at the close of business on the relevant Regular Record Date.
The notice if mailed in the manner herein provided shall be conclusively
presumed to have been given, whether or not the holder receives such notice. In
any case, failure to give such notice by mail or any defect in the notice to the
holder of any Convertible Subordinated Note designated for redemption as a whole
or in part shall not affect the validity of the proceedings for the redemption
of any Convertible Subordinated Note.
At the Company's request, the Trustee shall give notice of redemption in
the Company's name and at the Company's expense.
19
SECTION 3.05 Effect of Notice of Redemption.
------------------------------
Once notice of redemption is mailed, Convertible Subordinated Notes called
for redemption become due and payable on the redemption date at the redemption
price set forth in the Convertible Subordinated Note.
SECTION 3.06 Deposit of Redemption Price.
---------------------------
On or before the redemption date, the Company shall deposit with the
Trustee or with the Paying Agent money in immediately available funds sufficient
to pay the redemption price of and accrued interest (including Liquidated
Damages) on all Convertible Subordinated Notes to be redeemed on that date. The
Trustee or the Paying Agent shall return to the Company any money not required
for that purpose.
On and after the redemption date, unless the Company shall default in the
payment of the redemption price, interest and Liquidated Damages, if applicable,
will cease to accrue on the principal amount of the Convertible Subordinated
Notes or portions thereof called for redemption and for which funds have been
set apart for payment, and such Convertible Subordinated Notes, or portions
thereof, shall cease after the close of business on the business day immediately
preceding the Redemption date to be convertible into Common Stock and, except as
provided in this Section 3.06 and Section 8.4, to be entitled to any benefit or
security under this Indenture, and the holders thereof shall have no right in
respect of such Convertible Subordinated Notes, or portions thereof, except the
right to receive the Redemption price thereof and unpaid interest and Liquidated
Damages, if any, to (but excluding) the Redemption date. In the case of
Convertible Subordinated Notes or portions thereof redeemed on a Redemption date
which is also an Interest Payment Date, the interest payment and Liquidated
Damages, if any, due on such date shall be paid to the person in whose name the
Convertible Subordinated Note is registered at the close of business on the
relevant Regular Record Date.
SECTION 3.07 Convertible Subordinated Notes Redeemed in Part.
-----------------------------------------------
Upon surrender of a Convertible Subordinated Note that is redeemed in part
only, the Company shall issue and the Trustee shall authenticate and deliver to
the holder of a Convertible Subordinated Note a new Convertible Subordinated
Note equal in principal amount to the unredeemed portion of the Convertible
Subordinated Note surrendered, at the expense of the Company, except as
specified in Section 2.06.
SECTION 3.08 Conversion Arrangement on Call for Redemption.
---------------------------------------------
In connection with any redemption of Convertible Subordinated Notes, the
Company may arrange for the purchase and conversion of any Convertible
Subordinated Notes by an arrangement with one or more investment bankers or
other purchasers to purchase such Convertible Subordinated Notes by paying to
the Trustee in trust for the holders, on or before the date fixed for
redemption, an amount not less than the applicable redemption price, together
with interest and Liquidated Damages, if any, accrued to the date fixed for
redemption, of such Convertible Subordinated Notes. Notwithstanding anything to
the contrary contained in this Article 3, the obligation of the Company to pay
the redemption price of such Convertible Subordinated Notes, together with
interest and Liquidated Damages, if any, accrued to the date
20
fixed for redemption, shall be deemed to be satisfied and discharged to the
extent such amount is so paid by the purchasers. If such an agreement is entered
into, a copy of which will be filed with the Trustee prior to the date fixed for
redemption, any Convertible Subordinated Notes not duly surrendered for
conversion by the holders thereof may, at the option of the Company, be deemed,
to the fullest extent permitted by law, acquired by such purchasers from such
holders and (notwithstanding anything to the contrary contained in Article 12)
surrendered by such purchasers for conversion, all as of immediately prior to
the close of business on the date fixed for redemption (and the right to convert
any such Convertible Subordinated Notes shall be deemed to have been extended
through such time), subject to payment of the above amount as aforesaid. At the
direction of the Company, the Trustee shall hold and dispose of any such amount
paid to it in the same manner as it would monies deposited with it by the
Company for the redemption of Convertible Subordinated Notes. Without the
Trustee's prior written consent, no arrangement between the Company and such
purchasers for the purchase and conversion of any Convertible Subordinated Notes
shall increase or otherwise affect any of the powers, duties, responsibilities
or obligations of the Trustee as set forth in this Indenture, and the Company
agrees to indemnify the Trustee from, and defend and hold it harmless against,
any loss, liability or expense arising out of or in connection with any such
arrangement for the purchase and conversion of any Convertible Subordinated
Notes between the Company and such purchasers to which the Trustee has not
consented in writing, including the costs and expenses incurred by the Trustee
in the defense of any claim or liability arising out of or in connection with
the exercise or performance of any of its powers, duties, responsibilities or
obligations under this Indenture.
ARTICLE 4
COVENANTS
SECTION 4.01 Payment of Convertible Subordinated Notes.
-----------------------------------------
The Company shall pay the principal of and interest (including Liquidated
Damages) on the Convertible Subordinated Notes on the dates and in the manner
provided in the Convertible Subordinated Notes. Principal, interest, the
redemption price and the Designated Event Payment shall be considered paid on
the date due if the Trustee or Paying Agent (other than the Company or a
subsidiary of the Company) holds as of 10:00 a.m., New York City time, on that
date immediately available funds designated for and sufficient to pay all
principal, interest (including Liquidated Damages), the redemption price or the
Designated Event Payment then due, provided, however, that money held by the
Agent for the benefit of holders of Senior Debt pursuant to the provisions of
Article 11 hereof or the payment of which to the holders of the Convertible
Subordinated Notes is prohibited by Article 11 shall not be considered to be
designated for the payment of any principal of or interest on the Convertible
Subordinated Notes within the meaning of this Section 4.01.
To the extent lawful, the Company shall pay interest (including post-
petition interest in any proceeding under any Bankruptcy Law) on (i) overdue
principal, at the rate borne by Convertible Subordinated Notes, compounded
semiannually; and (ii) overdue installments of interest (without regard to any
applicable grace period) at the same rate, compounded semiannually.
21
SECTION 4.02 Commission Reports.
------------------
The Company shall comply with Section 314(a) of the TIA.
SECTION 4.03 Compliance Certificate.
----------------------
The Company shall deliver to the Trustee within 120 days after the end of
each fiscal year of the Company, an Officers' Certificate stating that a review
of the activities of the Company and its subsidiaries during the preceding
fiscal year has been made under the supervision of the signing Officers with a
view to determining whether the Company has fully performed its obligations
under this Indenture and further stating, as to each such Officer signing such
certificate, that to the best of his or her knowledge, the Company is not in
default in the performance or observance of any of the terms and conditions
hereof (or, if any Default or Event of Default shall have occurred, describing
all such Defaults or Events of Default of which he or she may have knowledge)
and, that to the best of his or her knowledge, no event has occurred and remains
in existence by reason of which payments on account of the principal of or
interest (including Liquidated Damages) on the Convertible Subordinated Notes
are prohibited.
The Company shall, so long as any of the Convertible Subordinated Notes are
outstanding, deliver to the Trustee, forthwith upon becoming aware of any
Default or Event of Default, an Officers' Certificate specifying such Default or
Event of Default and what action the Company is taking or proposes to take with
respect thereto.
SECTION 4.04 Maintenance of Office or Agency.
-------------------------------
The Company shall maintain or cause to be maintained the office or agency
required under Section 2.03. The Company shall give prompt written notice to
the Trustee of the location, and any change in the location, of such office or
agency not maintained by the Trustee. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, presentations, surrenders, notices and demands with
respect to the Convertible Subordinated Notes 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 Convertible Subordinated Notes may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designation.
SECTION 4.05 Continued Existence.
-------------------
Subject to Article 5, the Company shall do or cause to be done all things
necessary to preserve and keep in full force and effect its corporate existence.
SECTION 4.06 Repurchase Upon Designated Event.
--------------------------------
Following a Designated Event (the date of each such occurrence being the
"Designated Event Date"), the Company shall notify the holders of Convertible
Subordinated Notes in writing of such occurrence and shall make an offer (the
"Designated Event Offer") to repurchase all Convertible Subordinated Notes then
outstanding at a repurchase price in cash (the "Designated
22
Event Payment") equal to 100% of the principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages, if any, to, but excluding, the
Designated Event Payment Date (as defined below).
Notice of a Designated Event shall be mailed by or at the direction of the
Company to the holders of Convertible Subordinated Notes as shown on the
Register of such holders maintained by the Registrar not more than 20 days after
the applicable Designated Event Date at the addresses as shown on the Register
of holders maintained by the Registrar, with a copy to the Trustee and the
Paying Agent. The Designated Event Offer shall remain open until a specified
date (the "Designated Event Offer Termination Date") which is at least 20
business days from the date such notice is mailed. During the period specified
in such notice, holders of Convertible Subordinated Notes may elect to tender
their Convertible Subordinated Notes in whole or in part in integral multiples
of $1,000 in exchange for cash. Payment shall be made by the Company in respect
of Convertible Subordinated Notes properly tendered pursuant to this Section on
a specified business day (the "Designated Event Payment Date") which shall be no
earlier than five business days after the applicable Designated Event Offer
Termination Date and no later than 60 days after the applicable Designated
Event.
The notice, which shall govern the terms of the Designated Event Offer,
shall include such disclosures as are required by law and shall state:
(a) that a Designated Event Offer is being made pursuant to this Section
4.06 and that all Convertible Subordinated Notes will be accepted for payment;
(b) the event, transaction or transactions that constitute the Designated
Event;
(c) the Designated Event Payment for each Convertible Subordinated Note,
the Designated Event Offer Termination Date and the Designated Event Payment
Date;
(d) that any Convertible Subordinated Note not accepted for payment will
continue to accrue interest and Liquidated Damages, if applicable, in accordance
with the terms thereof;
(e) that, unless the Company defaults on making the Designated Event
Payment, any Convertible Subordinated Note accepted for payment pursuant to the
Designated Event Offer shall cease to accrue interest and Liquidated Damages, if
applicable, on the Designated Event Payment Date and no further interest or
Liquidated Damages shall accrue on or after such date;
(f) that holders electing to have Convertible Subordinated Notes
repurchased pursuant to a Designated Event Offer will be required to surrender
their Convertible Subordinated Notes to the Paying Agent at the address
specified in the notice prior to 5:00 p.m., New York City time, on the
Designated Event Offer Termination Date and must complete any form letter of
transmittal proposed by the Company and acceptable to the Trustee and the Paying
Agent;
(g) that holders of Convertible Subordinated Notes will be entitled to
withdraw their election if the Paying Agent receives, not later than 5:00 p.m.,
New York City time, on the Designated Event Offer Termination Date, a facsimile
transmission or letter setting forth the name of the holder, the principal
amount of Convertible Subordinated Notes the holder delivered
23
for purchase, the Convertible Subordinated Note certificate number (if any) and
a statement that such holder is withdrawing his election to have such
Convertible Subordinated Notes purchased;
(h) that holders whose Convertible Subordinated Notes are repurchased
only in part will be issued Convertible Subordinated Notes equal in principal
amount to the unpurchased portion of the Convertible Subordinated Notes
surrendered;
(i) the instructions that holders must follow in order to tender their
Convertible Subordinated Notes; and
(j) that in the case of a Designated Event Offer Termination Date that is
also an interest payment date, the interest payment and Liquidated Damages, if
any, due on such date shall be paid to the person in whose name the Convertible
Subordinated Note is registered at the close of business on the relevant
Designated Event Offer Termination Date.
On the Designated Event Offer Termination Date, the Company shall (i)
accept for payment all Convertible Subordinated Notes or portions thereof
properly tendered pursuant to the Designated Event Offer, (ii) deposit with the
Paying Agent money sufficient to pay the Designated Event Payment with respect
to all Convertible Subordinated Notes or portions thereof so tendered and
accepted and (iii) deliver or cause to be delivered to the Trustee the
Convertible Subordinated Notes so accepted together with an Officers'
Certificate setting forth the aggregate principal amount of Convertible
Subordinated Notes or portions thereof tendered to and accepted for payment by
the Company. On the Designated Event Payment Date, the Paying Agent shall mail
or deliver the Designated Event Payment to the holders of Convertible
Subordinated Notes so accepted and the Trustee shall promptly authenticate and
mail or cause to be transferred by book entry to such holders a new Convertible
Subordinated Note equal in principal amount to any unpurchased portion of the
Convertible Subordinated Note surrendered, if any; provided that such new
Convertible Subordinate Notes will be in a principal amount of $1,000 or an
integral multiple thereof. Any Convertible Subordinated Notes not so accepted
shall be promptly mailed or delivered by the Company to the holder thereof.
In the case of any reclassification, change, consolidation, merger, share
exchange, combination or sale or conveyance to which Section 12.06 applies in
which the Common Stock of the Company is changed or exchanged as a result into
the right to receive stock, securities or other property or assets (including
cash) which includes shares of common stock of the Company or another person
that are, or upon issuance will be, traded on a United States national
securities exchange or approved for trading on an established automated over-
the-counter trading market in the United States and such shares constitute at
the time such change or exchange becomes effective in excess of 50% of the
aggregate fair market value of such stock, securities other property and assets
(including cash) (as determined by the Company, which determination shall be
conclusive and binding), then the person formed by such consolidation or
resulting from such merger or share exchange or which acquires such assets, as
the case may be, shall execute and deliver to the Trustee a supplemental
indenture (which shall comply with the TIA as in force at the date of execution
of such supplemental indenture) modifying the provisions of this Indenture
relating to the right of holders of Convertible Subordinated Notes to cause the
Company to repurchase Convertible Subordinated Notes following a Designated
Event, including the applicable provisions of this Section 4.06 and the
definitions of Designated Event, Change of
24
Control and Termination of Trading, as appropriate, as determined in good faith
by the Company (which determination shall be conclusive and binding), to make
such provision apply to such common stock and the issuer thereof if different
from the Company and Common Stock of the Company (in lieu of the Company and the
Common Stock of the Company).
The Designated Event Offer shall be made by the Company in compliance with
all applicable provisions of the Exchange Act, and all applicable tender offer
rules promulgated thereunder, to the extent such laws and regulations are then
applicable and shall include all instructions and materials that the Company
shall reasonably deem necessary to enable such holders of Convertible
Subordinated Notes to tender their Convertible Subordinated Notes.
SECTION 4.07 Appointments to Fill Vacancies in Trustee's Office.
--------------------------------------------------
The Company, whenever necessary to avoid or fill a vacancy in the office of
Trustee, will appoint, in the manner provided in Section 7.08, a Trustee, so
that there shall at all times be a Trustee hereunder.
SECTION 4.08 Stay, Extension and Usury Laws.
------------------------------
The Company covenants (to the extent that it may lawfully do so) that it
shall not at any time insist upon, plead or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter enforced, that may affect the Company's
obligation to pay the Convertible Subordinated Notes; and the Company (to the
extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law insofar as such law applies to the Convertible
Subordinated Notes, and covenants that it shall not, by resort to any such law,
hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though
no such law has been enacted.
SECTION 4.09 Taxes.
-----
The Company shall, and shall cause each of its subsidiaries to, pay prior
to delinquency all taxes, assessments and government levies; provided, however,
-------- -------
that the Company shall not be required to pay or cause to be paid any such tax,
assessment or levy (A) if the failure to do so will not, in the aggregate, have
a material adverse impact on the Company and its subsidiaries taken as a whole,
or (B) if the amount, applicability or validity is being contested in good faith
by appropriate proceedings.
SECTION 4.10 Investment Company Act.
----------------------
As long as any Convertible Subordinated Notes are outstanding, the Company
will conduct its business and operations so as not to become an "investment
company" within the meaning of the Investment Company Act of 1940, as amended
(the "Investment Company Act"), and will take all steps required in order for it
to continue not to be an "investment company" and not to be required to be
registered under the Investment Company Act, including, if necessary,
redeployment of the assets of the Company.
25
ARTICLE 5
SUCCESSORS
SECTION 5.01 When the Company May Merge, Etc.
-------------------------------
The Company may not, in a single transaction or series of related
transactions, consolidate or merge with or into or effect a share exchange with
(whether or not the Company is the surviving corporation), or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
properties or assets to, any person as an entirety or substantially as an
entirety unless:
(a) either
(i) the Company shall be the surviving or continuing corporation or
(ii) the person formed by or surviving any such consolidation or
share exchange or into which the Company is merged (if other than the Company)
or the person which acquires by sale, assignment, transfer, lease, conveyance or
other disposition the properties and assets of the Company substantially as an
entirety
(1) shall be a corporation organized and validly existing
under the laws of the United States or any State thereof or the District of
Columbia and
(2) shall expressly assume, by supplemental indenture in form
reasonably satisfactory to the Trustee, executed and delivered to the Trustee,
the due and punctual payment of the principal of, and premium, if any, and
interest and Liquidated Damages, if any, on all of the Convertible Subordinated
Notes and the performance of every covenant of the Convertible Subordinated
Notes and this Indenture and the Registration Agreement on the part of the
Company to be performed or observed, including, without limitation,
modifications to rights of holders to cause the repurchase of Convertible
Subordinated Notes upon a Designated Event in accordance with the penultimate
paragraph of Section 4.06 and conversion rights in accordance with Section 12.06
to the extent required by such Sections;
(b) immediately after giving effect to such transaction no Default and no
Event of Default shall have occurred and be continuing; and
(c) the Company or such person shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel each stating that such
consolidation, merger, share exchange, conveyance, transfer or lease and, if a
supplemental indenture is required in connection with such transaction, such
supplemental indenture, comply with this provision of this Indenture and that
all conditions precedent in this Indenture relating to such transaction have
been satisfied.
For purposes of this Section 5.01, the transfer (by lease, assignment, sale
or otherwise, in a single transaction or series of transactions) of all or
substantially all of the properties or assets of one or more subsidiaries of the
Company, the capital stock of which constitutes all or
26
substantially all of the properties and assets of the Company, shall be deemed
to be the transfer of all or substantially all of the properties and assets of
the Company.
SECTION 5.02 Successor Corporation Substituted.
---------------------------------
Upon any such consolidation, merger, share exchange, sale, assignment,
conveyance, lease, transfer or other disposition in accordance with Section
5.01, the successor person formed by such consolidation, or share exchange or
into which the Company is merged or to which such assignment, conveyance, lease,
transfer or other disposition is made will 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 had been named as the Company therein, and
thereafter (except in the case of a sale, assignment, transfer, lease,
conveyance or other disposition) the predecessor corporation will be relieved of
all further obligations and covenants under this Indenture and the Convertible
Subordinated Notes.
SECTION 5.03 Purchase Option on Change of Control.
------------------------------------
This Article 5 does not affect the obligations of the Company (including
without limitation any successor to the Company) under Section 4.06.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01 Events of Default.
-----------------
An "Event of Default" with respect to any Convertible Subordinated Notes
occurs if:
(a) the Company defaults in the payment (whether or not such payment is
prohibited by the subordination provisions set forth in Article 11 of this
Indenture) of principal of, or premium, if any, on the Convertible Subordinated
Notes when due at maturity, upon repurchase, upon acceleration or otherwise,
including, without limitation, failure of the Company to make any optional
redemption payment when required pursuant to Article 3; or
(b) the Company defaults in the payment (whether or not such payment is
prohibited by the subordination provisions set forth in Article 11 of this
Indenture) of any installment of interest or Liquidated Damages on the
Convertible Subordinated Notes when due (including any interest or Liquidated
Damages payable in connection with a repurchase pursuant to Section 4.06 or in
connection with any optional redemption payment pursuant to Article 3) and
continuance of such default for 30 days or more; or
(c) the Company defaults (other than a default set forth in clauses (a)
and (b) above and clauses (d) and (e) below) in the performance of, or breaches,
any other covenant or warranty of the Company set forth in this Indenture or the
Convertible Subordinated Notes and fails to remedy such default or breach within
a period of 60 days after the receipt of written notice from the Trustee or the
holders of at least 25% in aggregate principal amount of the then outstanding
Convertible Subordinated Notes; or
27
(d) the Company defaults in the payment of the Designated Event Payment
in respect of the Convertible Subordinated Notes on the date therefor, whether
or not such payment is prohibited by the subordination provisions set forth in
Article 11 of this Indenture; or
(e) the Company fails to provide timely notice of any Designated Event in
accordance with Section 4.06; or
(f) a default under any credit agreement, mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any Material
Subsidiary of the Company (or the payment of which is guaranteed by the Company
or any of its Material Subsidiaries), whether such Indebtedness or guarantee
exists on the date of this Indenture or is created thereafter, which default (i)
is caused by a failure to pay when due any principal of or interest on such
Indebtedness within the grace period provided for in such Indebtedness (which
failure continues beyond any applicable grace period) (a "Payment Default") or
(ii) results in the acceleration of such Indebtedness prior to its express
maturity (without such acceleration being rescinded or annulled) and, in each
case, the principal amount of such Indebtedness, together with the principal
amount of any other such Indebtedness under which there is a Payment Default or
the maturity of which has been so accelerated, aggregates $10,000,000 or more
and such Payment Default is not cured or such acceleration is not annulled
within 30 days after receipt of written notice by the Company from the Trustee
or by the Company and the Trustee from any holder of Convertible Subordinated
Notes; or
(g) a final, non-appealable judgment or final, non-appealable judgments
(other than any judgment as to which a reputable insurance company has accepted
full liability) for the payment of money are entered by a court or courts of
competent jurisdiction against the Company or any Material Subsidiaries of the
Company and remain unstayed, unbonded or undischarged for a period (during which
execution shall not be effectively stayed) of 60 days, provided that the
aggregate amount of all such judgments exceeds $10,000,000; or
(h) the Company or any Material Subsidiary, pursuant to or within the
meaning of any Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it in an
involuntary case,
(iii) consents to the appointment of a Custodian of it or for all or
substantially all of its property,
(iv) makes a general assignment for the benefit of its creditors;
(v) makes the admission in writing that it generally is unable to
pay its debts as the same become due; or
(i) a court of competent jurisdiction enters a judgment, order or decree
under any Bankruptcy Law that:
28
(i) is for relief against the Company or any Material Subsidiary in an
involuntary case,
(ii) appoints a Custodian of the Company or any Material Subsidiary, and
the order or decree remains unstayed and in effect for 90 days.
(iii) orders the liquidation of the Company or any Material Subsidiary, and
the order or decree remains unstayed and in effect for 90 days.
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar Federal
or state law for the relief of debtors. The term "Custodian" means any
receiver, trustee, assignee, liquidator or similar official under any Bankruptcy
Law.
In the case of any Event of Default, pursuant to the provisions of this
Section 6.01, occurring by reason of any willful action (or inaction) taken (or
not taken) by or on behalf of the Company with the intention of avoiding payment
of the premium which the Company would have had to pay if the Company then had
elected to redeem the Convertible Subordinated Notes pursuant to Paragraph 5 of
the Convertible Subordinated Notes, an equivalent premium shall also become and
be immediately due and payable to the extent permitted by law, upon the
acceleration of the Convertible Subordinated Notes notwithstanding anything
contained in this Indenture or in the Convertible Subordinated Notes to the
contrary.
If an Event of Default occurs prior to any date on which the Company is
prohibited from redeeming the Convertible Subordinated Notes, pursuant to
Paragraph 5 of the Convertible Subordinated Notes, by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding the prohibition on redemption of the Convertible
Subordinated Notes prior to such date, then the premium specified in this
Indenture shall also become immediately due and payable to the extent permitted
by law upon the acceleration of the Convertible Subordinated Notes.
SECTION 6.02 Acceleration.
------------
If an Event of Default (other than an Event of Default with respect to the
Company specified in clauses (h) and (i) of Section 6.01) occurs and is
continuing, then and in every such case the Trustee, by written notice to the
Company, or the holders of at least 25% in aggregate principal amount of the
then outstanding Convertible Subordinated Notes, by written notice to the
Company and the Trustee, may declare the unpaid principal of, premium, if any,
and accrued and unpaid interest and Liquidated Damages, if any, on all the
Convertible Subordinated Notes to be due and payable. Upon such declaration
such principal amount, premium, if any, and accrued and unpaid interest and
Liquidated Damages, if any, shall become immediately due and payable,
notwithstanding anything contained in this Indenture or the Convertible
Subordinated Notes to the contrary, but subject to the provisions of Article 11
hereof. If any Event of Default with respect to the Company specified in
clauses (h) or (i) of Section 6.01 occurs, all unpaid principal of and premium,
if any, and accrued and unpaid interest and Liquidated Damages, if any, on the
Convertible Subordinated Notes then outstanding shall become automatically due
and payable subject to the provisions of Article 11 hereof, without any
declaration or other act on the part of the Trustee or any holder of Convertible
Subordinated Notes.
29
The holders of a majority in aggregate principal amount of the then
outstanding Convertible Subordinated Notes by notice to the Trustee may rescind
an acceleration of the Convertible Subordinated Notes and its consequences if
all existing Events of Default (other than nonpayment of principal of or
premium, if any, and interest and Liquidated Damages, if any, on the Convertible
Subordinated Notes which has become due solely by virtue of such acceleration)
have been cured or waived and if the rescission would not conflict with any
judgment or decree of any court of competent jurisdiction. No such rescission
shall affect any subsequent Default or Event of Default or impair any right
consequent thereto.
SECTION 6.03 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 of or interest or Liquidated Damages, if applicable, on the
Convertible Subordinated Notes or to enforce the performance of any provision of
the Convertible Subordinated Notes or this Indenture. The Trustee may maintain
a proceeding even if it does not possess any of the Convertible Subordinated
Notes or does not produce any of them in the proceeding. A delay or omission by
the Trustee or any holder of a Convertible Subordinated Note in exercising any
right or remedy occurring upon an Event of Default shall not impair the right or
remedy or constitute a waiver of or acquiescence in the Event of Default. All
remedies are cumulative to the extent permitted by law.
SECTION 6.04 Waiver of Past Defaults.
-----------------------
The holders of a majority in aggregate principal amount of the Convertible
Subordinated Notes then outstanding may, on behalf of the holders of all the
Convertible Subordinated Notes, waive an existing Default or Event of Default
and its consequences, except a Default or Event of Default in the payment of the
principal of, premium, if any, or interest or Liquidated Damages, if applicable,
on the Convertible Subordinated Notes (other than the non-payment of principal
of and premium, if any, and interest and Liquidated Damages, if any, on the
Convertible Subordinated Notes which has become due solely by virtue of an
acceleration which has been duly rescinded as provided above), or in respect of
a covenant or provision of this Indenture which cannot be modified or amended
without the consent of all holders of Convertible Subordinated Notes. When a
Default or Event of Default is waived, it is cured and stops continuing. No
waiver shall extend to any subsequent or other Default or Event of Default or
impair any right consequent thereon.
SECTION 6.05 Control by Majority.
-------------------
The holders of a majority in aggregate principal amount of the then
outstanding Convertible Subordinated Notes may direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on it. However, the Trustee may refuse
to follow any direction that conflicts with law or this Indenture that the
Trustee determines may be unduly prejudicial to the rights of other holders of
Convertible Subordinated Notes or that may involve the Trustee in personal
liability; provided that the Trustee shall have no duty or obligation (subject
to Section 7.01) to ascertain whether or not such actions of forebearances are
unduly prejudicial to such holders; provided, further, that
30
the Trustee may take any other action the Trustee deems proper that is not
inconsistent with such directions.
SECTION 6.06 Limitation on Suits.
-------------------
A holder of a Convertible Subordinated Note may not pursue any remedy with
respect to this Indenture or the Convertible Subordinated Notes unless:
(1) the holder gives to the Trustee notice of a continuing Event of
Default;
(2) the holders of at least 25% in principal amount of the then
outstanding Convertible Subordinated Notes make a request to the Trustee to
pursue the remedy;
(3) such holder or holders offer and, if requested, provide to the
Trustee indemnity satisfactory to the Trustee against any loss, liability or
expense;
(4) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer and, if requested, the provision of
indemnity; and
(5) during such 60-day period the holders of a majority in principal
amount of the then outstanding Convertible Subordinated Notes do not give the
Trustee a direction inconsistent with the request.
A holder of a Convertible Subordinated Note may not use this Indenture to
prejudice the rights of another holder or to obtain a preference or priority
over another holder.
SECTION 6.07 Rights of Holders To Receive Payment.
------------------------------------
Subject to the provisions of Article 11 hereof, notwithstanding any other
provision of this Indenture, the right of any holder of a Convertible
Subordinated Note to receive payment of principal, premium, if any, and interest
and Liquidated Damages, if any, on the Convertible Subordinated Note, on or
after the respective due dates expressed in the Convertible Subordinated Note,
or to bring suit for the enforcement of any such payment on or after such
respective dates, or to bring suit for the enforcement of the right to convert
the Convertible Subordinated Note shall not be impaired or affected without the
consent of the holder of a Convertible Subordinated Note.
SECTION 6.08 Collection Suit by Trustee.
--------------------------
If an Event of Default specified in Section 6.01(a), (b) or (d) occurs and
is continuing, the Trustee may recover judgment in its own name and as trustee
of an express trust against the Company for the whole amount of principal and
interest and Liquidated Damages, if any, remaining unpaid on the Convertible
Subordinated Notes and interest on overdue principal and interest and Liquidated
Damages, if any, and such further amount as shall be sufficient to cover the
costs and, to the extent lawful, expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
31
SECTION 6.09 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 and the
holders of Convertible Subordinated Notes allowed in any judicial proceedings
relative to the Company, its creditors or its property. Nothing contained
herein shall be deemed to authorize the Trustee to authorize or consent to or
accept or adopt on behalf of any holder of a Convertible Subordinated Note any
plan of reorganization, arrangement, adjustment or composition affecting the
Convertible Subordinated Notes or the rights of any holder thereof, or to
authorize the Trustee to vote in respect of the claim of any holder in any such
proceeding.
SECTION 6.10 Priorities.
----------
If the Trustee collects any money pursuant to this Article, it shall pay
out the money in the following order:
First: to the Trustee for amounts due under Section 7.07, including
payment of all compensation, expenses and liabilities incurred, and all
advances made, by the Trustee, and the costs and expenses of collection;
Second: to holders of Senior Debt to the extent required by Article
11;
Third: to holders of Convertible Subordinated Notes for amounts due
and unpaid on the Convertible Subordinated Notes for principal, premium, if
any, and interest and Liquidated Damages, if any, ratably, without
preference or priority of any kind, according to the amounts due and
payable on the Convertible Subordinated Notes for principal, premium, if
any, and interest and Liquidated Damages, if any, respectively; and
Fourth: to the Company.
Except as otherwise provided in Section 2.12, the Trustee may fix a record
date and payment date for any payment to holders of Convertible Subordinated
Notes.
SECTION 6.11 Undertaking for Costs.
---------------------
In any suit for the enforcement of any right or remedy under this Indenture
or in any suit against the Trustee for any action taken or omitted by it as a
Trustee, a court in its discretion may require the filing by any party litigant
in the suit, other than the Trustee, of an undertaking to pay the costs of the
suit, and the court in its discretion may assess reasonable costs, including
reasonable attorneys fees, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section does not apply to a suit by the Trustee, a suit by a
holder pursuant to Section 6.07 or a suit by holders of more than 10% in
principal amount of the then outstanding Convertible Subordinated Notes.
32
ARTICLE 7
THE TRUSTEE
The Trustee hereby accepts the trust imposed upon it by this Indenture and
covenants and agrees to perform the same, as herein expressed. Whether or not
herein expressly so provided, every provision of this Indenture relating to the
conduct or affecting the liability of or affording protection to the Trustee
shall be subject to the provisions of this Article 7.
SECTION 7.01 Duties of the Trustee.
---------------------
(a) If an Event of Default known to a Trust Officer of the Trustee has
occurred and is continuing, the Trustee shall exercise such of the rights and
powers vested in it by this Indenture and use the same degree of care and skill
in their exercise as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(b) Except during the continuance of an Event of Default known to the
Trustee:
(1) The duties of the Trustee shall be determined solely by the
express provisions of this Indenture, and the Trustee need perform only those
duties that are specifically set forth in this Indenture and no others, and no
implied covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon any statements, certificates or opinions
furnished to the Trustee and conforming to the requirements of this Indenture.
However, the Trustee shall examine the certificates and opinions to determine
whether or not they conform to the form required by 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;
(2) The Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(3) The Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction received by
it pursuant to Section 6.05.
(d) Whether or not therein expressly so provided, every provision of this
Indenture that is in any way related to the Trustee is subject to paragraphs
(a), (b) and (c) of this Section 7.01.
(e) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or incur any financial liability in the performance of any of
its duties or the exercise of any
33
of its rights and powers hereunder, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
of liability is not reasonably assured to it.
(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 7.02 Rights of the Trustee.
---------------------
(a) The Trustee may rely on and shall be protected in acting or refraining
from acting upon any resolution, Officers' Certificate, or any other
certificate, statement, instrument, opinion, report, notice, request, consent,
order, security or other 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 contained therein.
(b) Any request, direction, order or demand of the Company mentioned herein
shall be sufficiently evidenced by an Officers' Certificate (unless other
evidence in respect thereof is herein specifically prescribed). In addition,
before the Trustee acts or refrains from acting, it may require an Officers'
Certificate, an Opinion of Counsel or both. The Trustee shall not be liable for
any action it takes or omits to take in good faith in reliance on such Officers'
Certificate or Opinion of Counsel. The Trustee may consult with counsel and the
written advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection from liability in respect of any action
taken, suffered or omitted by it hereunder in good faith and in reliance
thereon.
(c) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through its attorneys and
agents and other persons not regularly in its employ and shall not be
responsible for the misconduct or negligence of any attorney or agent appointed
with due care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith without negligence or willful misconduct which it believes to
be authorized or within its discretion, rights or powers.
(e) Unless otherwise specifically provided in this Indenture, any demand,
request, direction or notice from the Company shall be sufficient if signed by
Officers of the Company.
(f) The Trustee shall not be required to give any bond or surety in respect
of the performance of its powers and duties hereunder.
(g) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request, order or discretion of
any of the holders of Convertible Subordinated Notes pursuant to the provisions
of this Indenture, unless such holders have offered to the Trustee security or
indemnity satisfactory to it against the costs, expenses and liabilities which
might be incurred therein or thereby.
34
(h) The Trustee shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, security or other document
unless requested in writing to do so by the holders of not less than a majority
in aggregate principal amount of the Convertible Subordinated Notes then
outstanding, provided that if the Trustee determines in its discretion to make
any such investigation, then it shall be entitled, upon reasonable prior notice
and during normal business hours, to examine the books and records and the
premises of the Company, personally or by agent or attorney, and the reasonable
expenses of every such examination shall be paid by the Company or, if paid by
the Trustee or any predecessor Trustee, shall be reimbursed by the Company upon
demand.
(i) The permissive rights of the Trustee to do things enumerated in this
Indenture shall not be construed as a duty, and the Trustee shall not be
answerable for other than its negligence or willful misconduct.
(j) The Trustee shall not be responsible for the computation of any
adjustment to the Conversion Price or for any determination as to whether an
adjustment is required and shall not be deemed to have knowledge of any
adjustment unless and until it shall have received the notice from the Company
contemplated by Section 12.05(j).
SECTION 7.03 Individual Rights of the Trustee.
--------------------------------
Subject to Sections 7.10 and 7.11, the Trustee in its individual or any
other capacity may become the owner or pledgee of Convertible Subordinated Notes
with the same rights it would have if it were not the Trustee and may otherwise
deal with the Company or an Affiliate of the Company and receive, collect, hold
and retain collections from the Company with the same rights it would have if it
were not Trustee. Any Agent may do the same with like rights.
SECTION 7.04 Trustee's Disclaimer.
--------------------
The Trustee shall not be responsible for and makes no representation as to
the validity or adequacy of this Indenture or the Convertible Subordinated
Notes. It shall not be accountable for the Company's use of the proceeds from
the Convertible Subordinated Notes or any money paid to the Company or upon the
Company's direction under any provision of this Indenture. It shall not be
responsible for the use or application of any money received by any Paying Agent
other than the Trustee, and it shall not be responsible for any statement or
recital herein or any statement in the Convertible Subordinated Notes or any
other document in connection with the sale of the Convertible Subordinated Notes
or pursuant to this Indenture other than its certificate of authentication.
SECTION 7.05 Notice of Defaults.
------------------
If a Default or Event of Default occurs and is continuing and if it is
known to a Trust Officer of the Trustee, the Trustee shall mail to each holder
of a Convertible Subordinated Note a notice of the Default or Event of Default
within 60 days after it occurs. A Default or an Event of Default shall not be
considered known to a Trust Officer of the Trustee unless it is a Default or
Event of Default in the payment of principal or interest when due under Section
6.01(a), (b) or (d) or a Trust Officer of the Trustee shall have received notice
thereof, in accordance with this
35
Indenture, from the Company or from the holders of a majority in principal
amount of the outstanding Convertible Subordinated Notes. Except in the case of
a Default or Event of Default in payment of principal of, premium, if any, or
interest or Liquidated Damages, if any, on any Convertible Subordinated Note,
the Trustee may withhold the notice if and so long as a committee of its Trust
Officers in good faith determines that withholding the notice is in the interest
of the holders of the Convertible Subordinated Notes.
SECTION 7.06 Reports by the Trustee to Holders.
---------------------------------
Within 60 days after the reporting date stated in Section 10.10, the
Trustee shall mail to holders of Convertible Subordinated Notes a brief report
dated as of such reporting date that complies with TIA (S) 313(a) (but if no
event described in TIA (S) 313(a) has occurred within twelve months preceding
the reporting date, no report need be transmitted). The Trustee also shall
comply with TIA (S) 313(b)(2). The Trustee shall also transmit by mail all
reports as required by TIA (S) 313(c).
A copy of each report at the time of its mailing to holders of Convertible
Subordinated Notes shall be filed, at the expense of the Company, by the Trustee
with the Commission and each stock exchange or securities market, if any, on
which the Convertible Subordinated Notes are listed. The Company shall timely
notify the Trustee when the Convertible Subordinated Notes are listed or quoted
on any stock exchange or securities market.
SECTION 7.07 Compensation and Indemnity.
--------------------------
The Company shall pay to the Trustee from time to time, and the Trustee
shall be entitled to, reasonable compensation for its acceptance of this
Indenture and its services hereunder. The Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. The
Company shall reimburse the Trustee promptly upon request for all reasonable
disbursements, advances and expenses incurred or made by or on behalf of it in
addition to the compensation for its services. Such expenses may include the
reasonable compensation, disbursements and expenses of the Trustee's agents,
counsel and other persons not regularly in its employ.
The Company shall indemnify the Trustee against, and defend and hold the
Trustee harmless from, any loss, liability or expense incurred by it arising out
of or in connection with the acceptance or administration of its duties under
this Indenture and the trusts hereunder, including the costs and expenses of
defending itself against or investigating any claim of liability in the
premises, except as set forth in the next paragraph. The Trustee shall notify
the Company promptly of any claim for which it may seek indemnity. Failure by
the Trustee to so notify the Company shall not relieve the Company of its
obligations hereunder. The Company shall defend the claim with counsel
designated by the Company, who may be outside counsel to the Company but shall
in all events be reasonably satisfactory to the Trustee, and the Trustee shall
cooperate in the defense. In addition, the Trustee may retain one separate
counsel and, if deemed advisable by such counsel, local counsel, and the Company
shall pay the reasonable fees and expenses of such separate counsel and local
counsel. The indemnification herein extends to any settlement, provided that
the Company will not be liable for any settlement made without its consent,
provided, further, that such consent will not be unreasonably withheld.
36
The Company need not reimburse any expense or indemnify against any loss or
liability incurred by the Trustee through its own negligence or willful
misconduct.
The Trustee shall have a lien prior to the Convertible Subordinated Notes
on all money or property held or collected by the Trustee to secure the
Company's payment obligations in this Section 7.07, except that held in trust to
pay principal and interest and Liquidated Damages, if any, on Convertible
Subordinated Notes. Such liens and the Company's obligations under this Section
7.07 shall survive the satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(h) or (i) occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
SECTION 7.08 Replacement of the 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 7.08.
The Trustee may resign at any time and be discharged from the trust hereby
created by so notifying the Company. The holders of a majority in principal
amount of the then outstanding Convertible Subordinated Notes may remove the
Trustee by so notifying the Trustee and the Company in writing and may appoint a
successor Trustee. The Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged a bankrupt or an insolvent or an
order for relief is entered with respect to the Trustee under any Bankruptcy
Law;
(3) a Custodian or public officer takes charge of the Trustee or
its property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the holders
of a majority in principal amount of the then outstanding Convertible
Subordinated Notes may appoint a successor Trustee to replace the 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 then outstanding Convertible
Subordinated Notes may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
37
If the Trustee after written request by any holder of a Convertible
Subordinated Note who has been a holder for at least six months fails to comply
with Section 7.10, such holder may petition any court of competent jurisdiction
for the removal of the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Thereupon the resignation or
removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. The successor Trustee shall mail a notice of its succession to
holders of Convertible Subordinated Notes. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee, provided
that all sums owing to the retiring Trustee hereunder have been paid and subject
to the lien provided for in Section 7.07. Notwithstanding the replacement of
the Trustee pursuant to this Section 7.08, the Company's obligations under
Section 7.07 shall continue for the benefit of the retiring Trustee with respect
to expenses and liabilities incurred by it prior to such replacement.
Upon request of any such successor Trustee, the Company shall execute any
and all instruments for more fully and certainly vesting in and confirming to
such successor Trustee all such rights, powers and trusts referred to in the
preceding paragraph.
SECTION 7.09 Successor Trustee by Merger, etc.
---------------------------------
If the Trustee consolidates with, merges or converts into, or transfers all
or substantially all of its corporate trust business (including the trust
created by this Indenture) to, another corporation or national banking
association, the resulting, surviving or transferee corporation or national
banking association without any further act shall be the successor Trustee with
the same effect as if the successor Trustee had been named as the Trustee
herein.
SECTION 7.10 Eligibility, Disqualification.
-----------------------------
This Indenture shall always have a Trustee who satisfies the requirements
of TIA (S) 310(a)(1). The Trustee shall always have a combined capital and
surplus as stated in Section 10.10. The Trustee is subject to TIA (S) 310(b)
regarding the disqualification of a trustee upon acquiring a conflicting
interest.
SECTION 7.11 Preferential Collection of Claims Against Company.
-------------------------------------------------
The Trustee shall comply with TIA (S) 311(a), excluding any creditor
relationship set forth in TIA (S) 311(b). A Trustee who has resigned or been
removed shall be subject to TIA (S) 311(a) to the extent indicated therein.
38
ARTICLE 8
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 8.01 Discharge of Indenture.
----------------------
When (a) the Company delivers to the Trustee for cancellation all
Convertible Subordinated Notes theretofore authenticated (other than any other
Convertible Subordinated Notes which have been destroyed, lost or stolen and in
lieu of or in substitution for which other Convertible Subordinated Notes have
been authenticated and delivered) and not theretofore canceled, or (b) all the
Convertible Subordinated Notes not theretofore canceled or delivered to the
Trustee for cancellation have become due and payable, or are by their terms will
become due and payable within one year or are to be called for redemption within
one year under arrangements satisfactory to the Trustee for the giving of notice
of redemption, and the Company deposits with the Trustee, in trust, amounts
sufficient to pay at maturity or upon redemption of all of the Convertible
Subordinated Notes (other than any Convertible Subordinated Notes which have
been mutilated, destroyed, lost or stolen and in lieu of or in substitution for
which other Convertible Subordinated Notes have been authenticated and
delivered) not theretofore canceled or delivered to the Trustee for
cancellation, including principal and premium, if any, and interest and
Liquidated Damages, if any, due or to become due to such date of maturity or
redemption date, as the case may be, and if in either case the Company also
pays, or causes to be paid, all other sums payable hereunder by the Company,
then this Indenture shall cease to be of further effect (except as to (i) rights
of registration of transfer, substitution, replacement and exchange and
conversion of Convertible Subordinated Notes, (ii) rights hereunder of holders
of Convertible Subordinated Notes to receive payments of principal of and
premium, if any, and interest, and Liquidated Damages, if any, on, the
Convertible Subordinated Notes, (iii) the obligations under Sections 2.03 and
8.05 hereof and (iv) the rights, obligations and immunities of the Trustee
hereunder), and the Trustee, on demand of the Company accompanied by an
Officers' Certificate and an Opinion of Counsel as required by Section 10.04 and
at the Company's cost and expense, shall execute proper instruments
acknowledging satisfaction of and discharging this Indenture; the Company,
however, hereby agrees to reimburse the Trustee for any costs or expenses
thereafter reasonably and properly incurred by the Trustee and to compensate the
Trustee for any services thereafter reasonably and properly rendered by the
Trustee in connection with this Indenture or the Convertible Subordinated Notes.
SECTION 8.02 Deposited Monies to be Held in Trust by Trustee.
-----------------------------------------------
Subject to Section 8.04, all monies deposited with the Trustee pursuant to
Section 8.01 shall be held in trust and applied by it to the payment,
notwithstanding the provisions of Article 11, either directly or through the
Paying Agent, to the holders of the particular Convertible Subordinated Notes
for the payment or redemption of which such monies have been deposited with the
Trustee, of all sums due and to become due thereon for principal and interest,
and Liquidated Damages, if any, and premium, if any.
39
SECTION 8.03 Paying Agent to Repay Monies Held.
---------------------------------
Upon the satisfaction and discharge of this Indenture, all monies then held
by any Paying Agent (other than the Trustee) shall, upon the Company's demand,
be repaid to it or paid to the Trustee, and thereupon such Paying Agent shall be
released from all further liability with respect to such monies.
SECTION 8.04 Return of Unclaimed Monies.
--------------------------
Subject to the requirements of applicable law, any monies deposited with or
paid to the Trustee for payment of the principal of, premium, if any, or
interest (including Liquidated Damages) on Convertible Subordinated Notes and
not applied but remaining unclaimed by the holders thereof for two years after
the date upon which the principal of, premium, if any, or interest (including
Liquidated Damages) on such Convertible Subordinated Notes, as the case may be,
have become due and payable, shall be repaid to the Company by the Trustee on
demand; provided, however, that the Company, or the Trustee at the request of
the Company, shall have first caused notice of such payment to the Company to be
mailed to each holder of a Convertible Subordinated Note entitled thereto no
less than 30 days prior to such payment and all liability of the Trustee shall
thereupon cease with respect to such monies; and the holder of any of the
Convertible Subordinated Notes shall thereafter look only to the Company for any
payment which such holder may be entitled to collect unless an applicable
abandoned property law designates another person.
SECTION 8.05 Reinstatement.
-------------
If the Trustee or the Paying Agent is unable to apply any money in
accordance with Section 8.02 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 Convertible
Subordinated Notes shall be revived and reinstated as though no deposit had
occurred pursuant to Section 8.01 until such time as the Trustee or the Paying
Agent is permitted to apply all such money in accordance with Section 8.02;
provided, however, that if the Company makes any payment of interest (including
Liquidated Damages) on or principal of any Convertible Subordinated Note
following the reinstatement of its obligations, the Company shall be subrogated
to the rights of the holders thereof to receive such payment from the money held
by the Trustee or Paying Agent.
ARTICLE 9
AMENDMENTS
SECTION 9.01 Without the Consent of Holders.
------------------------------
The Company and the Trustee may amend this Indenture or the Convertible
Subordinated Notes without notice to or the consent of any holder of a
Convertible Subordinated Note for the purposes of:
(a) curing any ambiguity or correcting or supplementing any defective or
inconsistent provision contained in this Indenture or making any other changes
in the provisions of this
40
Indenture which the Company and the Trustee may deem necessary or desirable
provided such amendment does not materially and adversely affect the legal
rights under the Indenture of the holders of Convertible Subordinated Notes.
(b) providing for uncertificated Convertible Subordinated Notes in addition
to or in place of certificated Convertible Subordinated Notes;
(c) evidencing the succession of another person to the Company and
providing for the assumption by such successor of the covenants and obligations
of the Company thereunder and in the Convertible Subordinated Notes as permitted
by Section 5.01;
(d) providing for conversion rights and/or repurchase rights of holders of
Convertible Subordinated Notes in the event of consolidation, merger, share
exchange or sale of all or substantially all of the assets of the Company as
required to comply with Sections 5.01 and/or 12.06;
(e) reducing the Conversion Price;
(f) evidence and provide for the acceptance of appointment under this
Indenture of a successor Trustee;
(g) making any changes that would provide the holders of the Convertible
Subordinated Notes with any additional rights or benefits or that does not
adversely affect the legal rights under this Indenture of any such holder; or
(h) complying with the requirements of the Commission in order to effect or
maintain the qualification of the Indenture under the TIA.
SECTION 9.02 With the Consent of Holders.
---------------------------
Subject to Section 6.07, the Company and the Trustee may amend this
Indenture or the Convertible Subordinated Notes with the written consent of the
holders of at least a majority in principal amount of the then outstanding
Convertible Subordinated Notes (including consents obtained in connection with a
tender offer or exchange offer for Convertible Subordinated Notes).
Subject to Sections 6.04 and 6.07, the holders of a majority in principal
amount of the Convertible Subordinated Notes then outstanding may also waive
compliance in a particular instance by the Company with any provision of this
Indenture or the Convertible Subordinated Notes.
However, without the consent of each holder of a Convertible Subordinated
Note affected, an amendment or waiver under this Section may not (with respect
to any Convertible Subordinated Notes held by a non-consenting holder):
(a) reduce the principal amount of Convertible Subordinated Notes whose
holders must consent to an amendment, supplement or waiver;
41
(b) reduce the principal of or premium on or change the fixed maturity of
any Convertible Subordinated Note or, except as permitted pursuant to Section
9.01(a), (d), (g) or (h), alter the redemption provisions with respect thereto;
(c) reduce the rate of, or change the time for payment of, interest,
including defaulted interest, or Liquidated Damages on any Convertible
Subordinated Note;
(d) waive a Default or Event of Default in the payment of principal of or
premium, if any, or interest or Liquidated Damages on the Convertible
Subordinated Notes (except a rescission of acceleration of the Convertible
Subordinated Notes by the holders of at least a majority in aggregate principal
amount of the Convertible Subordinated Notes then outstanding and a waiver of
the payment default that resulted from such acceleration);
(e) make the principal of, or premium, if any, or interest or Liquidated
Damages on, any Convertible Subordinated Note payable in money other than as
provided for herein and in the Convertible Subordinated Notes;
(f) make any change in the provisions of this Indenture relating to waivers
of past Defaults or Events of Default or the rights of holders of Convertible
Subordinated Notes to receive payments of principal of, premium, if any, or
interest or Liquidated Damages on the Convertible Subordinated Notes;
(g) waive a redemption payment with respect to any Convertible Subordinated
Notes;
(h) except as permitted herein (including Section 9.01(a)), increase the
Conversion Price or modify the provisions contained herein relating to
conversion of the Convertible Subordinated Notes in a manner adverse to the
holders thereof; or
(i) make any change to the abilities of holders of Convertible Subordinated
Notes to enforce their rights hereunder or the provisions of clauses (a) through
(i) of this Section 9.02.
To secure a consent of the holders of Convertible Subordinated Notes under
this Section, it shall not be necessary for such holders to approve the
particular form of any proposed amendment or waiver, but it shall be sufficient
if such consent approves the substance thereof.
After an amendment or waiver under this Section becomes effective, the
Company shall mail to holders of Convertible Subordinated Notes a notice briefly
describing the amendment or waiver.
In order to amend any provisions of Article 11, holders of at least 75% in
aggregate principal amount of Convertible Subordinated Notes then outstanding
must consent to such amendment if such amendment would adversely affect the
rights of holders of Convertible Subordinated Notes.
SECTION 9.03 Compliance with the Trust Indenture Act.
---------------------------------------
Every amendment to this Indenture or the Convertible Subordinated Notes
shall be set forth in a supplemental indenture that complies with the TIA as
then in effect.
42
SECTION 9.04 Revocation and Effect of Consents.
---------------------------------
Until an amendment or waiver becomes effective, a consent to it by a holder
of a Convertible Subordinated Note is a continuing consent by the holder and
every subsequent holder of a Convertible Subordinated Note or portion of a
Convertible Subordinated Note that evidences the same debt as the consenting
holder's Convertible Subordinated Note, even if notation of the consent is not
made on any Convertible Subordinated Note. However, any such holder or
subsequent holder may revoke the consent as to his or her Convertible
Subordinated Note or portion of a Convertible Subordinated Note if the Trustee
receives the notice of revocation before the date on which the Trustee receives
an Officers' Certificate certifying that the holders of the requisite principal
amount of Convertible Subordinated Notes have consented to the amendment or
waiver.
The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the holders of Convertible Subordinated Notes entitled to
consent to any amendment or waiver. If a record date is fixed, then
notwithstanding the provisions of the immediately preceding paragraph, those
persons who were holders of Convertible Subordinated Notes at such record date
(or their duly designated proxies), and only those persons, shall be entitled to
consent to such amendment or waiver or to revoke any consent previously given,
whether or not such persons continue to be holders after such record date. No
consent shall be valid or effective for more than 90 days after such record date
unless consents from holders of the principal amount of Convertible Subordinated
Notes required hereunder for such amendment or waiver to be effective shall have
also been given and not revoked within such 90-day period.
After an amendment or waiver becomes effective it shall bind every holder
of a Convertible Subordinated Note, unless it is of the type described in
clauses (a) - (i) of Section 9.02. In such case, the amendment or waiver shall
bind each holder of a Convertible Subordinated Note who has consented to it and
every subsequent holder of a Convertible Subordinated Note or portion of a
Convertible Subordinated Note that evidences the same debt as the consenting
holder's Convertible Subordinated Note.
SECTION 9.05 Notation on or Exchange of Convertible Subordinated Notes.
---------------------------------------------------------
Convertible Subordinated Notes authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article 9 may, and
shall if required by the Trustee, bear a notation in the form approved by the
Trustee as to any matter provided for in such supplemental indenture. If the
Company shall so determine, new Convertible Subordinated Notes so modified as to
conform, in the opinion of the Company and the Trustee, to any such supplemental
indenture may be prepared and executed by the Company and authenticated and
delivered by the Trustee in exchange for outstanding Convertible Subordinated
Notes without charge to the holders of the Convertible Subordinated Notes,
except as specified in Section 2.06.
SECTION 9.06 Trustee Protected.
-----------------
The Trustee shall sign any amendment or supplemental indenture authorized
pursuant to this Article 9 if such amendment or supplemental indenture does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If such amendment or supplemental indenture
43
does adversely affect the rights, duties, liabilities or immunities of the
Trustee, the Trustee may, but need not, sign it. In signing such amendment or
supplemental indenture, the Trustee shall be entitled to receive, and shall be
fully protected in relying upon, an Officers' Certificate and an Opinion of
Counsel as conclusive evidence that such amendment or supplemental indenture is
authorized or permitted by this Indenture, that it is not inconsistent herewith,
and that it will be valid and binding upon the Company in accordance with its
terms.
ARTICLE 10
GENERAL PROVISIONS
SECTION 10.01 Trust Indenture Act Controls.
----------------------------
If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by TIA (S) 318(c), such duties imposed by such section of the TIA
shall control. If any provision of this Indenture expressly modifies or
excludes any provision of the TIA that may be so modified or excluded, the
Indenture provision so modifying or excluding such provision of the TIA shall be
deemed to apply.
SECTION 10.02 Notices.
-------
Any notice or communication by the Company or the Trustee to the other is
duly given if in writing and delivered in person or mailed by first-class mail,
with postage prepaid (registered or certified, return receipt requested), or
sent by facsimile or overnight air couriers guaranteeing next day delivery, to
the other's address as stated in Section 10.10. The Company or the Trustee by
notice to the other may designate additional or different addresses for
subsequent notices or communications.
All notices and communications (other than those sent to holders of
Convertible Subordinated Notes) shall be deemed to have been duly given at the
time delivered by hand, if personally delivered; five business days after being
deposited in the mail, postage prepaid, if mailed; when transmission is
confirmed, if transmitted by facsimile; and the next business day after timely
delivery to the courier, if sent by overnight air courier guaranteeing next day
delivery. Notwithstanding the foregoing, all notices to the Trustee shall be
effective only upon receipt by a Trust Officer.
Any notice or communication to a holder of a Convertible Subordinated Note
shall be mailed by first-class mail, with postage prepaid, to his or her address
shown on the Register kept by the Registrar. Failure to mail a notice or
communication to a holder or any defect in it shall not affect its sufficiency
with respect to other holders.
If a notice or communication to a holder of a Convertible Subordinated Note
is sent in the manner provided above within the time prescribed, it is duly
given, whether or not the addressee receives it.
If the Company sends a notice or communication to holders of Convertible
Subordinated Notes, it shall send a copy to the Trustee and each Agent at the
same time.
44
All notices or communications shall be in writing.
SECTION 10.03 Communication by Holders With Other Holders.
-------------------------------------------
Holders may communicate pursuant to TIA (S) 312(b) with other holders with
respect to their rights under this Indenture or the Convertible Subordinated
Notes. The Company, the Trustee, the Registrar and the paying agent shall have
the protection of TIA (S) 312(c).
SECTION 10.04 Certificate and Opinion as to Conditions Precedent.
--------------------------------------------------
Upon any request or application by the Company to the Trustee to take any
action under this Indenture, the Company shall furnish to the Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 10.05) stating that, in the opinion of such person, all conditions
precedent and covenants, if any, provided for in this Indenture relating to the
proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 10.05) stating that, in the opinion of such counsel, all such conditions
precedent and covenants have been complied with.
SECTION 10.05 Statements Required in Certificate or Opinion.
---------------------------------------------
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA (S) 314(a)(4)) shall include:
(1) a statement that the person making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based;
(3) a statement that, in the opinion of such person, he or she
has made such examination or investigation as is necessary to enable him or her
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(4) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.
Any Officers' Certificate may be based, insofar as it relates to legal
matters, upon an Opinion of Counsel, unless such Officer knows that the opinion
with respect to the matters upon which his or her certificate may be based as
aforesaid is erroneous. Any Opinion of Counsel may be based, insofar as it
relates to factual matters, upon certificates, statements or opinions of, or
representations by an officer or officers of the Company, or other persons or
firms deemed
45
appropriate by such counsel, unless such counsel knows that the certificates,
statements or opinions or representations with respect to the matters upon which
his or her opinion may be based as aforesaid are erroneous.
Any Officers' Certificate, statement or Opinion of Counsel may be based,
insofar as it relates to accounting matters, upon a certificate or opinion of or
representation by an accountant (who may be an employee of the Company), or firm
of accountants, unless such Officer or counsel, as the case may be, knows that
the certificate or opinion or representation with respect to the accounting
matters upon which his or her certificate, statement or opinion may be based as
aforesaid is erroneous.
SECTION 10.06 Rules by Trustee and Agents.
---------------------------
The Trustee may make reasonable rules for action by, or a meeting of,
holders of Convertible Subordinated Notes. The Registrar or Paying Agent may
make reasonable rules and set reasonable requirements for its functions.
SECTION 10.07 Legal Holidays.
--------------
A "Legal Holiday" is a Saturday, a Sunday or a day on which banking
institutions in the City of New York or the city in which the Corporate Trust
Office of the Trustee is located are not required to be open, and a "business
day" is any day that is not a Legal Holiday. If a payment date is a Legal
Holiday at a place of payment, payment may be made at that place on the next
succeeding day that is not a Legal Holiday, and no interest shall accrue for the
intervening period. If any date specified in this Indenture, including, without
limitation, a redemption date under Paragraph 5 of Convertible Subordinated
Notes, is a Legal Holiday, then such date shall be the next succeeding business
day.
SECTION 10.08 No Recourse Against Others.
--------------------------
No director, officer, employee, shareholder or Affiliate, as such, of the
Company from time to time shall have any liability for any obligations of the
Company under the Convertible Subordinated Notes or this Indenture or for any
claim based on, in respect of, or by reason of such obligations or their
creation. Each holder by accepting a Convertible Subordinated Note waives and
releases all such liability. This waiver and release are part of the
consideration for the Convertible Subordinated Notes. Each of such directors,
officers, employees, shareholders and Affiliates is a third party beneficiary of
this Section 10.08.
SECTION 10.09 Counterparts.
------------
This Indenture may be executed in any number of counterparts and by the
parties hereto in separate counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement.
SECTION 10.10 Other Provisions.
----------------
The Company initially appoints the Trustee as Paying Agent, Registrar and
authenticating agent.
46
The reporting date for Section 7.06 is April 30 of each year. The first
reporting date is the April 30 following the issuance of Convertible
Subordinated Notes hereunder.
The Trustee shall always have, or shall be a subsidiary of a bank or bank
holding company which has, a combined capital and surplus of at least
$50,000,000 as set forth in its most recent published annual report of
condition.
The Company's address is:
School Specialty, Inc.
X0000 Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxxx 00000
Attention: Chief Financial Officer
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
The Trustee's address is:
BNY Midwest Trust Company
0 Xxxxx XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
SECTION 10.11 Governing Law.
-------------
The internal laws of the State of New York shall govern this Indenture and
the Convertible Subordinated Notes, without regard to the conflict of laws
provisions thereof.
SECTION 10.12 No Adverse Interpretation of Other Agreements.
---------------------------------------------
This Indenture may not be used to interpret another indenture, loan or debt
agreement of the Company or a subsidiary. Any such other indenture, loan or
debt agreement may not be used to interpret this Indenture.
SECTION 10.13 Successors.
----------
All agreements of the Company in this Indenture and the Convertible
Subordinated Notes shall bind its successor. All agreements of the Trustee in
this Indenture shall bind its successor.
SECTION 10.14 Severability.
------------
In case any provision in this Indenture or in the Convertible Subordinated
Notes shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
47
SECTION 10.15 Table of Contents, Headings, etc.
---------------------------------
The Table of Contents, Cross-Reference Table and headings of the Articles
and Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part hereof and shall in no way modify or
restrict any of the terms or provisions hereof.
ARTICLE 11
SUBORDINATION
SECTION 11.01 Agreement to Subordinate.
------------------------
The Company agrees, and each holder of Convertible Subordinated Notes by
accepting a Convertible Subordinated Note agrees, that the indebtedness
evidenced by the Convertible Subordinated Note is subordinated in right of
payment, to the extent and in the manner provided in this Article 11, to the
prior payment in full in cash or payment satisfactory to holders of Senior Debt
of all Senior Debt (whether outstanding on the date hereof or hereafter created,
incurred, assumed or guaranteed), and that the subordination is for the benefit
of the holders of Senior Debt.
SECTION 11.02 Liquidation; Dissolution; Bankruptcy.
------------------------------------
Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, in
an assignment for the benefit of creditors or any marshaling of the Company's
assets and liabilities:
(1) holders of Senior Debt shall be entitled to receive payment
in full of all Obligations due in respect of such Senior Debt (including
interest and Liquidated Damages, if any, after the commencement of any such
proceeding at the rate specified in the applicable Senior Debt) in cash or other
payment satisfactory to the holders of the Senior Debt before holders of
Convertible Subordinated Notes shall be entitled to receive any payment with
respect to the Convertible Subordinated Notes; and
(2) until all Senior Debt is paid in full in cash or other
payment satisfactory to the holders of the Senior Debt, any distribution to
which holders of Convertible Subordinated Notes would be entitled but for this
Article 11 shall be made to holders of Senior Debt, as their interests may
appear.
SECTION 11.03 Default on Senior Debt and/or Designated Senior Debt.
----------------------------------------------------
Anything in this Indenture to the contrary notwithstanding, no payment on
account of principal of or premium, if any, interest or Liquidated Damages, if
any, on or other amounts due on the Convertible Subordinated Notes (including
without limitation the making of a deposit pursuant to Section 3.06 or 4.06),
and no redemption, repurchase, or other acquisition of the Convertible
Subordinated Notes, shall be made by or on behalf of the Company unless:
48
(a) full payment of all amounts then due for principal of and interest on,
and of all other amounts then due on, all Senior Debt has been made or duly
provided for pursuant to the terms of the instruments governing such Senior
Debt; and
(b) at the time for, and immediately after giving effect to, such payment,
redemption, repurchase or other acquisition, there shall not exist under any
Senior Debt, or any agreement pursuant to which any Senior Debt is issued, any
default which shall not have been cured or waived and which default shall have
resulted in the full amount of such Senior Debt being declared due and payable.
In addition, if the Trustee shall receive written notice from the holders
of Designated Senior Debt or their Representative (a "Payment Blockage Notice")
that there has occurred and is continuing under such Designated Senior Debt, or
any agreement pursuant to which such Designated Senior Debt is issued, any
default, which default shall not have been cured or waived, giving the holders
of such Designated Senior Debt the right to declare such Designated Senior Debt
immediately due and payable, then, anything in this Indenture to the contrary
notwithstanding, no payment on account of the principal of or premium, if any,
interest or Liquidated Damages, if any, on or any other amounts due on the
Convertible Subordinated Notes (including without limitation the making of a
deposit pursuant to Section 3.06 or 4.06), and no redemption, repurchase or
other acquisition of the Convertible Subordinated Notes, shall be made by or on
behalf of the Company during the period (the "Payment Blockage Period")
commencing on the date of receipt of the Payment Blockage Notice and ending
(unless earlier terminated by notice given to the Trustee by the holders or the
Representative of the holders of such Designated Senior Debt) on the earlier of
(i) the date on which such default shall have been cured or waived and (ii) 180
days from the receipt of the Payment Blockage Notice. Notwithstanding the
provisions described in the immediately preceding sentence (but subject to the
provisions contained in Section 11.01 and the first sentence of this Section
11.03), unless the holders of such Designated Senior Debt or the Representative
of such holders shall have accelerated the maturity of such Designated Senior
Debt, the Company may resume payments on the Convertible Subordinated Notes
after the end of such Payment Blockage Period. Not more than one Payment
Blockage Notice may be given in any consecutive 365-day period, irrespective of
the number of defaults with respect to Senior Debt during such period.
SECTION 11.04 Acceleration of Convertible Subordinated Notes.
----------------------------------------------
In the event of the acceleration of the Convertible Subordinated Notes
because of an Event of Default, the Company may not make any payment or
distribution to the Trustee or any holder of Convertible Subordinated Notes in
respect of Obligations with respect to Convertible Subordinated Notes and may
not acquire or purchase from the Trustee or any holder of Convertible
Subordinated Notes any Convertible Subordinated Notes until all Senior Debt has
been paid in full in cash or other payment satisfactory to the holders of Senior
Debt or such acceleration is rescinded in accordance with the terms of this
Indenture.
If payment of the Convertible Subordinated Notes is accelerated because of
an Event of Default, the Company shall promptly notify holders of Senior Debt or
trustee(s) of such Senior Debt of the acceleration.
49
SECTION 11.05 When Distribution Must Be Paid Over.
-----------------------------------
In the event that the Trustee, any holder of Convertible Subordinated Notes
or any other person receives any payment or distributions of assets of the
Company of any kind with respect to the Convertible Subordinated Notes in
contravention of any terms contained in this Indenture, whether in cash,
property or securities, including, without limitation by way of set-off or
otherwise, then such payment shall be held by the recipient in trust for the
benefit of holders of Senior Debt, and shall be immediately paid over and
delivered to the holders of Senior Debt or the representative(s), to the extent
necessary to make payment in full of all Senior Debt remaining unpaid, after
giving effect to any concurrent payment or distribution or provision therefor,
to or for the holders of Senior Debt; provided that the foregoing shall apply
to the Trustee only if a Trust Officer of the Trustee has actual knowledge (as
determined in accordance with Section 11.11) that such payment or distribution
is prohibited by this Indenture.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform only such obligations on the part of the Trustee as are specifically set
forth in this Article 11, and no implied covenants or obligations with respect
to the holders of Senior Debt shall be read into this Indenture against the
Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt, and shall not be liable to any such holders if the
Trustee shall pay over or distribute to or on behalf of holders of Convertible
Subordinated Notes or the Company or any other person money or assets to which
any holders of Senior Debt shall be entitled by virtue of this Article 11,
except if such payment is made as a result of the willful misconduct or gross
negligence of the Trustee.
SECTION 11.06 Notice by Company.
-----------------
The Company shall promptly notify the Trustee of any facts known to the
Company that would cause a payment of any Obligations with respect to the
Convertible Subordinated Notes or the purchase of any Convertible Subordinated
Notes by the Company to violate this Article, but failure to give such notice
shall not affect the subordination of the Convertible Subordinated Notes to the
Senior Debt as provided in this Article.
SECTION 11.07 Subrogation.
-----------
After all Senior Debt is paid in full and until the Convertible
Subordinated Notes are paid in full, holders of Convertible Subordinated Notes
shall be subrogated (equally and ratably with all other indebtedness pari passu
with the Convertible Subordinated Notes) to the rights of holders of Senior Debt
to receive distributions applicable to Senior Debt to the extent that
distributions otherwise payable to the holders of Convertible Subordinated Notes
have been applied to the payment of Senior Debt. A distribution made under this
Article to holders of Senior Debt that otherwise would have been made to holders
of Convertible Subordinated Notes is not, as between the Company and holders of
Convertible Subordinated Notes, a payment by the Company on the Convertible
Subordinated Notes.
SECTION 11.08 Relative Rights.
---------------
This Article defines the relative rights of holders of Convertible
Subordinated Notes and holders of Senior Debt. Nothing in this Indenture shall:
50
(1) impair, as between the Company and holders of Convertible
Subordinated Notes, the obligation of the Company, which is absolute and
unconditional, to pay principal of, premium, if any, and interest (including
Liquidated Damages) on the Convertible Subordinated Notes in accordance with
their terms;
(2) affect the relative rights of holders of Convertible
Subordinated Notes and creditors (other than with respect to Senior Debt) of the
Company, other than their rights in relation to holders of Senior Debt; or
(3) prevent the Trustee or any holder of Convertible Subordinated
Notes from exercising its available remedies upon a Default or Event of Default,
subject to the rights of holders and owners of Senior Debt to receive
distributions and payments otherwise payable to holders of Convertible
Subordinated Notes.
If the Company fails because of this Article to pay principal of or
interest (including Liquidated Damages) on a Convertible Subordinated Note on
the due date, the failure is still a Default or Event of Default.
SECTION 11.09 Subordination May Not Be Impaired by Company.
--------------------------------------------
No right of any holder of Senior Debt to enforce the subordination of the
indebtedness evidenced by the Convertible Subordinated Notes shall be impaired
by any act or failure to act by the Company or any holder of Convertible
Subordinated Notes or by the failure of the Company or any such holder to comply
with this Indenture.
SECTION 11.10 Distribution or Notice to Representative.
----------------------------------------
Whenever a distribution is to be made or a notice given to holders of
Senior Debt, the distribution may be made and the notice given to their
Representative(s).
Upon any payment or distribution of assets of the Company referred to in
this Article 11, the Trustee and the holders of Convertible Subordinated Notes
shall be entitled to rely upon any order or decree made by any court of
competent jurisdiction or upon any certificate of such Representative or of the
liquidating trustee or agent or other person making any distribution to the
Trustee or to the holders of Convertible Subordinated Notes for the purpose of
ascertaining the persons entitled to participate in such distribution, the
holders of the Senior Debt 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 11.
SECTION 11.11 Rights of Trustee and Paying Agent.
----------------------------------
Notwithstanding the provisions of this Article 11 or any other provision of
this Indenture, the Trustee shall not be charged with knowledge of the existence
of any facts that would prohibit the making of any payment or distribution by
the Trustee (other than pursuant to Section 11.04), and the Trustee may continue
to make payments on the Convertible Subordinated Notes, unless a Trust Officer
shall have received at least two business days prior to the date of such payment
or distribution written notice of facts that would cause such payment or
distribution with respect to
51
the Convertible Subordinated Notes to violate this Article. Only the Company or
a Representative may give the notice.
Nothing in this Article 11 shall impair the claims of, or payments to, the
Trustee under or pursuant to Section 7.07 hereof.
The Trustee in its individual or any other capacity may hold Senior Debt
with the same rights it would have if it were not Trustee. Any Agent may do the
same with like rights.
SECTION 11.12 Authorization to Effect Subordination.
-------------------------------------
Each holder of a Convertible Subordinated Note by the holder's acceptance
thereof authorizes and directs the Trustee on the holder's behalf to take such
action as may be necessary or appropriate to effectuate the subordination as
provided in this Article 11, and appoints the Trustee to act as the holder's
attorney-in-fact for any and all such purposes. If the Trustee does not file a
proper proof of claim or proof of debt in the form required in any proceeding
referred to in Section 6.09 hereof at least 30 days before the expiration of the
time to file such claim, the holders of any Senior Debt or their Representatives
are hereby authorized to file an appropriate claim for and on behalf of the
holders of the Convertible Subordinated Notes.
SECTION 11.13 Article Applicable to Paying Agents.
-----------------------------------
In case at any time any Paying Agent other than the Trustee shall have been
appointed by the Company and be then acting hereunder, the term "Trustee" as
used in this Article shall in such case (unless the context otherwise requires)
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 the
second and third paragraphs of Section 11.11 shall not apply to the Company or
any subsidiary of the Company if it or such subsidiary acts as Paying Agent.
SECTION 11.14 Senior Debt Entitled to Rely.
----------------------------
The holders of Senior Debt shall have the right to rely upon this Article
11, and no amendment or modification of the provisions contained herein shall
diminish the rights of such holders unless such holders shall have agreed in
writing thereto.
SECTION 11.15 Permitted Payments.
------------------
Notwithstanding anything to the contrary in this Article 11, the holders of
Convertible Subordinated Notes may receive and retain at any time on or prior to
the Maturity Date (i) securities that are subordinated to at least the same
extent as the Convertible Subordinated Notes to (a) Senior Debt and (b) any
securities issued in exchange for Senior Debt and (ii) payments and other
distributions made from any trust created pursuant to Section 8.01 hereof.
52
ARTICLE 12
CONVERSION OF CONVERTIBLE SUBORDINATED NOTES
SECTION 12.01 Right to Convert.
----------------
Subject to and upon compliance with the provisions of this Indenture, each
holder of Convertible Subordinated Notes shall have the right, at his or her
option, at any time on or before the close of business on the last trading day
prior to the Maturity Date (except that, (a) with respect to any Convertible
Subordinated Note or portion thereof which is called for redemption prior to
such date, such right shall terminate, except as provided in the fourth
paragraph of Section 12.02, before the close of business on the last trading day
preceding the date fixed for redemption (unless the Company defaults in payment
of the redemption price in which case the conversion right will terminate at the
close of business on the date such default is cured) and (b) with respect to any
Convertible Subordinated Note or portion thereof subject to a duly completed
election for repurchase, such right shall terminate on or before the close of
business on the Designated Event Offer Termination Date (unless the Company
defaults in the payment due upon repurchase or such holder elects to withdraw
the submission of such election to repurchase in accordance with section 4.06)
to convert the principal amount of any Convertible Subordinated Note held by
such holder, or any portion of such principal amount which is $1,000 or an
integral multiple thereof, into that number of fully paid and non-assessable
(except as provided in Wis. Stat. (S)180.0622(2)(b) and successor provisions or
court interpretations thereof) shares of Common Stock (as such shares shall then
be constituted) obtained by dividing the principal amount of the Convertible
Subordinated Note or portion thereof to be converted by the Conversion Price in
effect at such time, by surrender of the Convertible Subordinated Note so to be
converted in whole or in part in the manner provided in Section 12.02. A holder
of Convertible Subordinated Notes is not entitled to any rights of a holder of
Common Stock until such holder of Convertible Subordinated Notes has converted
his or her Convertible Subordinated Notes to Common Stock, and only to the
extent such Convertible Subordinated Notes are deemed to have been converted to
Common Stock under this Article 12.
SECTION 12.02 Exercise of Conversion Privilege; Issuance of Common Stock on
-------------------------------------------------------------
Conversion; No Adjustment for Interest or Dividends.
---------------------------------------------------
To exercise, in whole or in part, the conversion privilege with respect to
any Convertible Subordinated Note, the holder of such Convertible Subordinated
Note shall surrender such Convertible Subordinated Note, duly endorsed, at an
office or agency maintained by the Company pursuant to Section 4.04, accompanied
by the funds, if any, required by the penultimate paragraph of this Section
12.02, and shall give written notice of conversion in the form provided on the
Convertible Subordinated Notes (or such other notice which is acceptable to the
Company) to the office or agency that the holder of Convertible Subordinated
Notes elects to convert such Convertible Subordinated Note or such portion
thereof specified in said notice. Such notice shall also state the name or
names (with address or addresses) in which the certificate or certificates for
shares of Common Stock which are issuable on such conversion shall be issued,
and shall be accompanied by transfer taxes, if required pursuant to Section
12.07. Each such Convertible Subordinated Note surrendered for conversion
shall, unless the shares issuable on conversion are to be issued in the same
name as the registration of such Convertible
53
Subordinated Note, be duly endorsed by, or be accompanied by instruments of
transfer in form satisfactory to the Company duly executed by, the holder of
Convertible Subordinated Notes or his or her duly authorized attorney. The
holder of such Convertible Subordinated Notes will not be required to pay any
tax or duty which may be payable in respect of the issue or delivery of Common
Stock on conversion, but will be required to pay any tax or duty which may be
payable in respect of any transfer involved in the issue or delivery of Common
Stock in a name other than the same name as the registration of such Convertible
Subordinated Note.
As promptly as practicable after satisfaction of the requirements for
conversion set forth above, the Company shall issue and shall deliver to such
holder at the office or agency maintained by the Company for such purpose
pursuant to Section 4.04, a certificate or certificates for the number of full
shares of Common Stock issuable upon the conversion of such Convertible
Subordinated Note or portion thereof in accordance with the provisions of this
Article 12 and a check or cash in respect of any fractional interest in respect
of a share of Common Stock arising upon such conversion, as provided in Section
12.03 (which payment, if any, shall be paid no later than five business days
after satisfaction of the requirements for conversion set forth above).
Certificates representing shares of Common Stock will not be issued or delivered
unless all taxes and duties, if any, payable by the holder have been paid. In
case any Convertible Subordinated Note of a denomination of an integral multiple
greater than $1,000 is surrendered for partial conversion, and subject to
Section 2.02, the Company shall execute, and the Trustee shall authenticate and
deliver to the holder of the Convertible Subordinated Note so surrendered,
without charge to him or her, a new Convertible Subordinated Note or Convertible
Subordinated Notes in authorized denominations in an aggregate principal amount
equal to the unconverted portion of the surrendered Convertible Subordinated
Note.
Each conversion shall be deemed to have been effected as to any such
Convertible Subordinated Note (or portion thereof) on the date on which the
requirements set forth above in this Section 12.02 have been satisfied as to
such Convertible Subordinated Note (or portion thereof), and the person in whose
name any certificate or certificates for shares of Common Stock are issuable
upon such conversion shall be deemed to have become on said date the holder of
record of the shares represented thereby; provided, however, that any such
surrender on any date when the Company's stock transfer books are closed shall
constitute the person in whose name the certificates are to be issued as the
record holder thereof for all purposes on the next succeeding day on which such
stock transfer books are open, but such conversion shall be at the Conversion
Price in effect on the date upon which such Convertible Subordinated Note is
surrendered.
Any Convertible Subordinated Note or portion thereof surrendered for
conversion during the period from the close of business on the record date for
any interest payment through the close of business on the last trading day
immediately preceding such interest payment date shall (unless such Convertible
Subordinated Note or portion thereof being converted has been called for
redemption pursuant to a notice of redemption mailed by the Company to the
holders in accordance with the provisions of Section 3.04) be accompanied by
payment, in funds acceptable to the Company, of an amount equal to the interest
and Liquidated Damages, if any, otherwise payable on such interest payment date
on the principal amount being converted; provided however, that no such payment
need be made if there exists at the time of conversion a default in the payment
of interest or Liquidated Damages, if applicable, on the Convertible
Subordinated
54
Notes. An amount equal to such payment shall be paid by the Company on such
interest payment date to the holder of such Convertible Subordinated Note at the
close of business on such record date; provided, however, that if the Company
defaults in the payment of interest or Liquidated Damages, if applicable, on
such interest payment date, such amount shall be paid to the person who made
such required payment. Except as provided above in this Section 12.02, no
adjustment shall be made for interest and Liquidated Damages, if any, accrued on
any Convertible Subordinated Note converted or for dividends on any shares
issued upon the conversion of such Convertible Subordinated Note as provided in
this Article 12.
SECTION 12.03 Cash Payments in Lieu of Fractional Shares.
------------------------------------------
No fractional shares of Common Stock or scrip representing fractional
shares shall be issued upon conversion of Convertible Subordinated Notes. If
more than one Convertible Subordinated Note shall be surrendered for conversion
at one time by the same holder, the number of full shares which shall be
issuable upon conversion shall be computed on the basis of the aggregate
principal amount of the Convertible Subordinated Notes (or specified portions
thereof to the extent permitted hereby) so surrendered for conversion. If any
fractional share of stock otherwise would be issuable upon the conversion of any
Convertible Subordinated Note or Convertible Subordinated Notes, the Company
shall make an adjustment therefor in cash based upon the Current Market Price of
the Common Stock on the last trading day prior to the date of conversion.
SECTION 12.04 Conversion Price.
----------------
The conversion price shall be as specified in the form of Convertible
Subordinated Note attached as Exhibit A hereto, subject to adjustment as
provided in this Article 12.
SECTION 12.05 Adjustment of Conversion Price.
------------------------------
The Conversion Price shall be adjusted from time to time by the Company as
follows:
(a) If the Company shall hereafter pay a dividend or make a distribution to
all holders of the outstanding Common Stock in shares of Common Stock, the
Conversion Price in effect at the opening of business on the date following the
date fixed for the determination of shareholders entitled to receive such
dividend or other distribution shall be reduced by multiplying such Conversion
Price by a fraction of which the numerator shall be the number of shares of
Common Stock outstanding at the close of business on the Record Date (as defined
in Section 12.05(g)) fixed for such determination and the denominator shall be
the sum of such number of shares and the total number of shares constituting
such dividend or other distribution, such reduction to become effective
immediately after the opening of business on the day following the Record Date.
If any dividend or distribution of the type described in this Section 12.05(a)
is declared but not so paid or made, the Conversion Price shall again be
adjusted to the Conversion Price which would then be in effect if such dividend
or distribution had not been declared.
(b) If the outstanding shares of Common Stock shall be subdivided into a
greater number of shares of Common Stock, the Conversion Price in effect at the
opening of business on the day following the day upon which such subdivision
becomes effective shall be proportionately reduced, and, conversely, if the
outstanding shares of Common Stock shall be
55
combined into a smaller number of shares of Common Stock, the Conversion Price
in effect at the opening of business on the day following the day upon which
such combination becomes effective shall be proportionately increased, such
reduction or increase, as the case may be, to become effective immediately after
the opening of business on the day following the day upon which such subdivision
or combination becomes effective.
(c) If the Company shall issue rights or warrants to all or substantially
all holders of its outstanding shares of Common Stock entitling them to
subscribe for or purchase shares of Common Stock at a price per share less than
the Current Market Price (as defined in Section 12.05(g)) on the Record Date
fixed for the determination of shareholders entitled to receive such rights or
warrants, the Conversion Price shall be adjusted so that the same shall equal
the price determined by multiplying the Conversion Price in effect at the
opening of business on the date after such Record Date by a fraction of which
the numerator shall be the number of shares of Common Stock outstanding at the
close of business on the Record Date plus the number of shares which the
aggregate offering price of the total number of shares so offered would purchase
at such Current Market Price, and of which the denominator shall be the number
of shares of Common Stock outstanding on the close of business on the Record
Date plus the total number of additional shares of Common Stock so offered for
subscription or purchase. Such adjustment shall become effective immediately
after the opening of business on the day following the Record Date fixed for
determination of shareholders entitled to receive such rights or warrants. To
the extent that shares of Common Stock are not delivered pursuant to such rights
or warrants, upon the expiration or termination of such rights or warrants the
Conversion Price shall be readjusted to be the Conversion Price which would then
be in effect had the adjustments made upon the issuance of such rights or
warrants been made on the basis of delivery of only the number of shares of
Common Stock actually delivered. If such rights or warrants are not so issued,
the Conversion Price shall again be adjusted to be the Conversion Price which
would then be in effect if such date fixed for the determination of shareholders
entitled to receive such rights or warrants had not been fixed. In determining
whether any rights or warrants entitle the holders to subscribe for or purchase
shares of Common Stock at less than such Current Market Price, and in
determining the aggregate offering price of such shares of Common Stock, there
shall be taken into account any consideration received for such rights or
warrants, with the value of such consideration, if other than cash, to be
determined by the Board of Directors.
(d) If the Company shall, by dividend or otherwise, distribute to all
holders of its Common Stock shares of any class of capital stock of the Company
(other than any dividends or distributions to which Section 12.05(a) applies) or
evidences of its indebtedness, cash or other assets (including securities, but
excluding (i) any rights or warrants of a type referred to in Section 12.05(c)
and (ii) dividends and distributions paid exclusively in cash) (the foregoing
hereinafter in this Section 12.05(d) called the "Securities"), then, in each
such case, the Conversion Price shall be reduced so that the same shall be equal
to the price determined by multiplying the Conversion Price in effect
immediately prior to the close of business on the Record Date (as defined in
Section 12.05(g)) with respect to such distribution by a fraction of which the
numerator shall be the Current Market Price (determined as provided in Section
12.05(g)) on such date less the fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a resolution
of the Board of Directors) on such date of the portion of the Securities so
distributed applicable to one share of Common Stock and the denominator shall be
such Current Market Price, such reduction to
56
become effective immediately prior to the opening of business on the day
following the Record Date; provided, however, that in the event the then fair
market value (as so determined) of the portion of the Securities so distributed
applicable to one share of Common Stock is equal to or greater than the Current
Market Price on the Record Date, in lieu of the foregoing adjustment, adequate
provision shall be made so that each holder of Convertible Subordinated Notes
shall have the right to receive upon conversion of a Convertible Subordinated
Note (or any portion thereof) the amount of Securities such holder would have
received had such holder converted such Convertible Subordinated Note (or
portion thereof) immediately prior to such Record Date. If such dividend or
distribution is not so paid or made, the Conversion Price shall again be
adjusted to be the Conversion Price which would then be in effect if such
dividend or distribution had not been declared. If the Board of Directors
determines the fair market value of any distribution for purposes of this
Section 12.05(d) by reference to the actual or when issued trading market for
any securities comprising all or part of such distribution, it must in doing so
consider the prices in such market over the same period used in computing the
Current Market Price pursuant to Section 12.05(g) to the extent possible.
Notwithstanding any other provision of this Section 12.05(d) to the
contrary, rights, warrants, evidences of indebtedness, other securities, cash or
other assets (including, without limitation, any rights distributed pursuant to
any shareholder rights plan) shall be deemed not to have been distributed for
purposes of this Section 12.05(d) if the Company makes proper provision so that
each holder of Convertible Subordinated Notes who converts a Convertible
Subordinated Note (or any portion thereof) after the date fixed for
determination of shareholders entitled to receive such distribution shall be
entitled to receive upon such conversion, in addition to the shares of Common
Stock issuable upon such conversion, the amount and kind of such distributions
that such holder would have been entitled to receive if such holder had,
immediately prior to such determination date, converted such Convertible
Subordinated Note into Common Stock.
Rights or warrants distributed by the Company to all holders of Common
Stock entitling the holders thereof to subscribe for or purchase shares of the
Company's capital stock (either initially or under certain circumstances), which
rights or warrants, until the occurrence of a specified event or events
("Trigger Event"): (i) are deemed to be transferred with such shares of Common
Stock; (ii) are not exercisable; and (iii) are also issued in respect of future
issuances of Common Stock, shall be deemed not to have been distributed for
purposes of this Section 12.05(d) (and no adjustment to the Conversion Price
under this Section 12.05(d) shall be required) until the occurrence of the
earliest Trigger Event, whereupon such rights and warrants shall be deemed to
have been distributed and an appropriate adjustment to the Conversion Price
under this Section 12.05(d) shall be made. If any such rights or warrants,
including any such existing rights or warrants distributed prior to the date of
this Indenture, are subject to subsequent events, upon the occurrence of each of
which such rights or warrants shall become exercisable to purchase different
securities, evidences of indebtedness or other assets, then the occurrence of
each such event shall be deemed to be such date of issuance and record date with
respect to new rights or warrants (and a termination or expiration of the
existing rights or warrants without exercise by the holder thereof). In
addition, in the event of any distribution (or deemed distribution) of rights or
warrants, or any Trigger Event with respect thereto, that was counted for
purposes of calculating a distribution amount for which an adjustment to the
Conversion Price under this Section 12.05 was made, (1) in the case of any such
rights or warrants which shall all
57
have been redeemed or repurchased without exercise by any holders thereof, the
Conversion Price shall be readjusted upon such final redemption or repurchase to
give effect to such distribution or Trigger Event, as the case may be, as though
it were a cash distribution, equal to the per share redemption or repurchase
price received by a holder or holders of Common Stock with respect to such
rights or warrants (assuming such holder had retained such rights or warrants),
made to all holders of Common Stock as of the date of such redemption or
repurchase, and (2) in the case of such rights or warrants which shall have
expired or been terminated without exercise by any holders thereof, the
Conversion Price shall be readjusted as if such rights and warrants had not been
issued.
For purposes of this Section 12.05(d) and Sections 12.05(a) and (c), any
dividend or distribution to which this Section 12.05(d) is applicable that also
includes shares of Common Stock, or rights or warrants to subscribe for or
purchase shares of Common Stock to which Section 12.05(c) applies (or both),
shall be deemed instead to be (1) a dividend or distribution of the evidences of
indebtedness, assets, shares of capital stock, rights or warrants other than
such shares of Common Stock or rights or warrants to which Section 12.05(c)
applies (and any Conversion Price reduction required by this Section 12.05(d)
with respect to such dividend or distribution shall then be made) immediately
followed by (2) a dividend or distribution of such shares of Common Stock or
such rights or warrants (and any further Conversion Price reduction required by
Sections 12.05(a) and (c) with respect to such dividend or distribution shall
then be made, except that (A) the Record Date of such dividend or distribution
shall be substituted as "the date fixed for the determination of shareholders
entitled to receive such dividend or other distribution", "Record Date fixed for
such determination" and "Record Date" within the meaning of Section 12.05(a) and
as "the date fixed for the determination of shareholders entitled to receive
such rights or warrants", "the Record Date fixed for the determination of the
shareholders entitled to receive such rights or warrants" and "such Record Date"
within the meaning of Section 12.05(c) and (B) any shares of Common Stock
included in such dividend or distribution shall not be deemed "outstanding at
the close of business on the date fixed for such determination" within the
meaning of Section 12.05(a)).
(e) If the Company shall, by dividend or otherwise, distribute cash to all
holders of its Common Stock (excluding any cash that is distributed upon a
merger, share exchange or consolidation to which Section 12.06 applies or as
part of a distribution referred to in Section 12.05(d)) in an aggregate amount
that, combined together with (1) the aggregate amount of any other such all-cash
distributions to all holders of its Common Stock within the 12 months preceding
the date of payment of such distribution, and in respect of which no adjustment
pursuant to this Section 12.05(e) has been made, and (2) the aggregate of any
cash plus the fair market value (as determined by the Board of Directors, whose
determination shall be conclusive and described in a resolution of the Board of
Directors) of consideration payable in respect of any tender offer by the
Company or any of its subsidiaries for all or any portion of the Common Stock
concluded within the 12 months preceding the date of payment of such
distribution, and in respect of which no adjustment pursuant to Section 12.05(f)
has been made, exceeds 15% of the product of the Current Market Price
(determined as provided in Section 12.05(g)) on the Record Date with respect to
such distribution times the number of shares of Common Stock outstanding on such
date, then, and in each such case, immediately after the close of business on
such date, the Conversion Price shall be reduced so that the same shall equal
the price determined by multiplying the Conversion Price in effect immediately
prior to the close of business on such
58
Record Date by a fraction (i) the numerator of which shall be equal to the
Current Market Price on the Record Date less an amount equal to the quotient of
(x) the excess of such combined amount over such 15% and (y) the number of
shares of Common Stock outstanding on the Record Date and (ii) the denominator
of which shall be equal to the Current Market Price on such Record Date;
provided, however, that if the portion of the cash so distributed applicable to
one share of Common Stock is equal to or greater than the Current Market Price
of the Common Stock on the Record Date, in lieu of the foregoing adjustment,
adequate provision shall be made so that each holder of Convertible Subordinated
Notes shall have the right to receive upon conversion of a Convertible
Subordinated Note (or any portion thereof) the amount of cash such holder would
have received had such holder converted such Convertible Subordinated Note (or
portion thereof) immediately prior to such Record Date. If such dividend or
distribution is not so paid or made, the Conversion Price shall again be
adjusted to be the Conversion Price which would then be in effect if such
dividend or distribution had not been declared. Any cash distribution to all
holders of Common Stock as to which the Company makes the election permitted by
Section 12.05(m) and as to which the Company has complied with the requirements
of such Section shall be treated as not having been made for all purposes of
this Section 12.05(e).
(f) If a tender offer made by the Company or any of its subsidiaries for
all or any portion of the Common Stock expires and such tender offer (as amended
upon the expiration thereof) requires the payment to shareholders (based on the
acceptance (up to any maximum specified in the terms of the tender offer) of
Purchased Shares (as defined below)) of an aggregate consideration having a fair
market value (as determined by the Board of Directors, whose determination shall
be conclusive and described in a resolution of the Board of Directors) that,
combined together with (1) the aggregate of the cash plus the fair market value
(as determined by the Board of Directors, whose determination shall be
conclusive and described in a resolution of the Board of Directors), as of the
expiration of such tender offer, of consideration payable in respect of any
other tender offers, by the Company or any of its subsidiaries for all or any
portion of the Common Stock, expiring within the 12 months preceding the
expiration of such tender offer and in respect of which no adjustment pursuant
to this Section 12.05(f) has been made and (2) the aggregate amount of any such
all-cash distributions to all holders of the Common Stock within 12 months
preceding the expiration of such tender offer and in respect of which no
adjustment pursuant to Section 12.05(e) has been made, exceeds 15% of the
product of the Current Market Price (determined as provided in Section 12.05(g))
as of the last time (the "Expiration Time") tenders could have been made
pursuant to such tender offer (as it may be amended) times the number of shares
of Common Stock outstanding (including any tendered shares) on the Expiration
Time, then, and in each such case, immediately prior to the opening of business
on the day after the date of the Expiration Time, the Conversion Price shall be
adjusted so that the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to close of business on the date of
the Expiration Time by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding (including any tendered shares) on the
Expiration Time multiplied by the Current Market Price of the Common Stock on
the trading day next succeeding the Expiration Time and the denominator shall be
the sum of (x) the fair market value (determined as aforesaid) of the aggregate
consideration payable to shareholders based on the acceptance (up to any maximum
specified in the terms of the tender offer) of all shares validly tendered and
not withdrawn as of the Expiration Time (the shares deemed so accepted, up to
any such maximum, being referred to as the "Purchased Shares") and (y) the
product of the number of shares of Common Stock outstanding (less any Purchased
59
Shares) on the Expiration Time and the Current Market Price of the Common Stock
on the Trading Day next succeeding the Expiration Time, such reduction (if any)
to become effective immediately prior to the opening of business on the day
following the Expiration Time. If the Company is obligated to purchase shares
pursuant to any such tender offer, but the Company is permanently prevented by
applicable law from effecting any such purchases or all such purchases are
rescinded, the Conversion Price shall again be adjusted to be the Conversion
Price which would then be in effect if such tender offer had not been made. If
the application of this Section 12.05(f) to any tender offer would result in an
increase in the Conversion Price, no adjustment shall be made for such tender
offer under this Section 12.05(f).
(g) For purposes of this Section 12.05, the following terms shall have the
meaning indicated:
(1) "closing price" with respect to any securities on any day means
the closing price on such day or, if no such sale takes place on such day, the
average of the reported high and low prices on such day, in each case on the
Nasdaq National Market or New York Stock Exchange, as applicable, or, if such
security is not listed or admitted to trading on such national market or
exchange, on the principal national securities exchange or quotation system on
which such security is quoted or listed or admitted to trading, or, if not
quoted or listed or admitted to trading on any national securities exchange or
quotation system, the average of the high and low prices of such security on the
over-the-counter market on the day in question as reported by the National
Quotation Bureau Incorporated, or a similar generally accepted reporting
service, or, if not so available, in such manner as furnished by any New York
Stock Exchange member firm selected from time to time by the Board of Directors
for that purpose, or a price determined in good faith by the Board of Directors,
whose determination shall be conclusive and described in a resolution of the
Board of Directors.
(2) "Current Market Price" means the average of the daily closing
prices per share of Common Stock for the 10 consecutive trading days immediately
prior to the date in question; provided, however, that (1) if the "ex" date (as
hereinafter defined) for any event (other than the issuance or distribution
requiring such computation) that requires an adjustment to the Conversion Price
pursuant to Sections 12.05(a), (b), (c), (d), (e) or (f) occurs during such 10
consecutive trading days, the closing price for each trading day prior to the
"ex" date for such other event shall be adjusted by multiplying such closing
price by the same fraction by which the Conversion Price is so required to be
adjusted as a result of such other event, (2) if the "ex" date for any event
(other than the issuance or distribution requiring such computation) that
requires an adjustment to the Conversion Price pursuant to Section 12.05(a),
(b), (c), (d), (e) or (f) occurs on or after the "ex" date for the issuance or
distribution requiring such computation and prior to the day in question, the
closing price for each trading day on and after the "ex" date for such other
event shall be adjusted by multiplying such closing price by the reciprocal of
the fraction by which the Conversion Price is so required to be adjusted as a
result of such other event, and (3) if the "ex" date for the issuance or
distribution requiring such computation is prior to the day in question, after
taking into account any adjustment required pursuant to clause (1) or (2) of
this proviso, the closing price for each trading day on or after such "ex" date
shall be adjusted by adding thereto the amount of any cash and the fair market
value (as determined by the Board of Directors in a manner consistent with any
determination of such value for purposes of Sections 12.05(d) or (f), whose
determination shall be conclusive and described in a resolution
60
of the Board of Directors) of the evidences of indebtedness, shares of capital
stock or assets being distributed applicable to one share of Common Stock as of
the close of business on the day before such "ex" date. For purposes of any
computation under Section 12.05(f), the Current Market Price on any date shall
be deemed to be the average of the daily closing prices per share of Common
Stock for such day and the next two succeeding trading days; provided, however,
that if the "ex" date for any event (other than the tender offer requiring such
computation) that requires an adjustment to the Conversion Price pursuant to
Section 12.05(a), (b), (c), (d), (e) or (f) occurs on or after the Expiration
Time for the tender or exchange offer requiring such computation and prior to
the day in question, the closing price for each trading day on and after the
"ex" date for such other event shall be adjusted by multiplying such Closing
Price by the reciprocal of the fraction by which the Conversion Price is so
required to be adjusted as a result of such other event. For purposes of this
paragraph, the term "ex" date, (1) when used with respect to any issuance or
distribution, means the first date on which the Common Stock trades regular way
on the relevant exchange or in the relevant market from which the closing price
was obtained without the right to receive such issuance or distribution, (2)
when used with respect to any subdivision or combination of shares of Common
Stock, means the first date on which the Common Stock trades regular way on such
exchange or in such market after the time at which such subdivision or
combination becomes effective, and (3) when used with respect to any tender or
exchange offer means the first date on which the Common Stock trades regular way
on such exchange or in such market after the Expiration Time of such offer.
Notwithstanding the foregoing, whenever successive adjustments to the Conversion
Price are called for pursuant to this Section 12.05, such adjustments shall be
made to the Current Market Price as may be necessary or appropriate to
effectuate the intent of this Section 12.05 and to avoid unjust or inequitable
results as determined in good faith by the Board of Directors.
(3) "fair market value" shall mean the amount which a willing
buyer would pay a willing seller in an arm's length transaction.
(4) "Record Date" shall mean, with respect to any dividend,
distribution or other transaction or event in which the holders of Common Stock
have the right to receive any cash, securities or other property or in which the
Common Stock (or other applicable security) is exchanged for or converted into
any combination of cash, securities or other property, the date fixed for
determination of shareholders entitled to receive such cash, securities or other
property (whether such date is fixed by the Board of Directors or by statute,
contract or otherwise).
(5) "trading day" shall mean (x) if the applicable security is
listed or admitted for trading on the New York Stock Exchange or another
national securities exchange, a day on which the New York Stock Exchange or
another national securities exchange is open for business or (y) if the
applicable security is quoted on the Nasdaq National Market, a day on which
trades may be made thereon or (z) if the applicable security is not so listed,
admitted for trading or quoted, any day other than a Saturday or Sunday or a day
on which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
(h) The Company may make such reductions in the Conversion Price, in
addition to those required by Sections 12.05(a), (b), (c), (d), (e) and (f), as
the Board of Directors considers
61
to be advisable to avoid or diminish any income tax to holders of Common Stock
or rights to purchase Common Stock resulting from any dividend or distribution
of stock (or rights to acquire stock) or from any event treated as such for
income tax purposes.
The Company from time to time may, to the extent permitted by law, reduce
the Conversion Price by any amount for any period of at least 20 days, if the
Board of Directors has made a determination that such reduction would be in the
Company's best interests, which determination shall be conclusive and described
in a resolution of the Board of Directors. The reduction in Conversion Price
shall be irrevocable during this period. Whenever the Conversion Price is
reduced pursuant to the preceding sentence, the Company shall mail to the
holders of Convertible Subordinated Notes at his or her last address appearing
on the Register of holders maintained for that purpose a notice of the reduction
at least 15 days prior to the date the reduced Conversion Price takes effect,
and such notice shall state the reduced Conversion Price and the period during
which it will be in effect.
(i) No adjustment in the Conversion Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in such price;
provided, however, that any adjustments which by reason of this Section 12.05(i)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Article 12 shall be made
by the Company and shall be made to the nearest cent or to the nearest one
hundredth of a share, as the case may be.
No adjustment need be made for a change in the par value or no par value of
the Common Stock.
(j) Whenever the Conversion Price is adjusted as herein provided, the
Company shall promptly file with the Trustee and any Conversion Agent other than
the Trustee an Officers' Certificate setting forth the Conversion Price after
such adjustment and setting forth a brief statement of the facts requiring such
adjustment. Promptly after delivery of such certificate, the Company shall
prepare a notice of such adjustment of the Conversion Price setting forth the
adjusted Conversion Price and the date on which each adjustment becomes
effective and shall mail such notice of such adjustment of the Conversion Price
to each holder of Convertible Subordinated Notes at his or her last address
appearing on the Register of holders maintained for that purpose within 20 days
of the effective date of such adjustment. Failure to deliver such notice shall
not affect the legality or validity of any such adjustment.
(k) In any case in which this Section 12.05 provides that an adjustment
shall become effective immediately after a Record Date for an event, the Company
may defer until the occurrence of such event issuing to the holder of any
Convertible Subordinated Note converted after such Record Date and before the
occurrence of such event the additional shares of Common Stock issuable upon
such conversion by reason of the adjustment required by such event over and
above the Common Stock issuable upon such conversion before giving effect to
such adjustment.
(l) For purposes of this Section 12.05, the number of shares of Common
Stock at any time outstanding shall not include shares held in the treasury of
the Company but shall include shares issuable in respect of scrip certificates
issued in lieu of fractions of shares of Common
62
Stock. The Company shall not pay any dividend or make any distribution on shares
of Common Stock held in the treasury of the Company.
(m) In lieu of making any adjustment to the Conversion Price pursuant to
Section 12.05(e), the Company may elect to reserve an amount of cash for
distribution to the holders of Convertible Subordinated Notes upon the
conversion of the Convertible Subordinated Notes so that any such holder
converting Convertible Subordinated Notes will receive upon such conversion, in
addition to the shares of Common Stock and other items to which such holder is
entitled, the full amount of cash which such holder would have received if such
holder had, immediately prior to the Record Date for such distribution of cash,
converted its Convertible Subordinated Notes into Common Stock, together with
any interest accrued with respect to such amount, in accordance with this
Section 12.05(m). The Company may make such election by providing an Officers'
Certificate to the Trustee to such effect on or prior to the payment date for
any such distribution and depositing with the Trustee on or prior to such date
an amount of cash equal to the aggregate amount that the holders of Convertible
Subordinated Notes would have received if such holders had, immediately prior to
the Record Date for such distribution, converted all of the Convertible
Subordinated Notes into Common Stock. Any such funds so deposited by the
Company with the Trustee shall be invested by the Trustee in U.S. Government
Obligations with a maturity not more than three (3) months from the date of
issuance. Upon conversion of Convertible Subordinated Notes by a holder
thereof, such holder shall be entitled to receive, in addition to the Common
Stock issuable upon conversion, an amount of cash equal to the amount such
holder would have received if such holder had, immediately prior to the Record
Date for such distribution, converted its Convertible Subordinated Note into
Common Stock, along with such holder's pro-rata share of any accrued interest
earned as a consequence of the investment of such funds. Promptly after making
an election pursuant to this Section 12.05(m), the Company shall give or shall
cause to be given notice to all holders of Convertible Subordinated Notes of
such election, which notice shall state the amount of cash per $1,000 principal
amount of Convertible Subordinated Notes such holders shall be entitled to
receive (excluding interest) upon conversion of the Convertible Subordinated
Notes as a consequence of the Company having made such election.
SECTION 12.06 Effect of Reclassification, Consolidation, Merger or Sale.
---------------------------------------------------------
If any of the following events occur: (i) any reclassification or change of
the outstanding shares of Common Stock (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), (ii) any consolidation, merger, share
exchange or combination of the Company with another corporation as a result of
which holders of Common Stock shall be entitled to receive stock, securities or
other property or assets (including cash) with respect to or in exchange for
such Common Stock, or (iii) any sale or conveyance of the properties and assets
of the Company as an entirety or substantially as an entirety to any other
corporation as a result of which holders of Common Stock shall be entitled to
receive stock, securities or other property or assets (including cash) with
respect to or in exchange for such Common Stock, then the Company or the
successor or purchasing corporation, as the case may be, shall execute with the
Trustee a supplemental indenture (which shall comply with the TIA as in force at
the date of execution of such supplemental indenture if such supplemental
indenture is then required to so comply) providing that the Convertible
Subordinated Notes shall be convertible into the kind and amount of shares
63
of stock and other securities or property or assets (including cash) receivable
upon such reclassification, change, consolidation, merger, share exchange,
combination, sale or conveyance by a holder of a number of shares of Common
Stock issuable upon conversion of the Convertible Subordinated Notes (assuming,
for such purposes, a sufficient number of authorized shares of Common Stock
available to convert all such Convertible Subordinated Notes) immediately prior
to such reclassification, change, consolidation, merger, share exchange,
combination, sale or conveyance assuming such holder of Common Stock did not
exercise his or her rights of election, if any, as to the kind or amount of
securities, cash or other property receivable upon such consolidation, merger,
share exchange, sale or conveyance (provided that, if the kind or amount of
securities, cash or other property receivable upon such consolidation, merger,
share exchange, sale or conveyance is not the same for each share of Common
Stock in respect of which such rights of election have not been exercised ("non-
electing share"), then, for the purposes of this Section 12.06, the kind and
amount of securities, cash or other property receivable upon such consolidation,
merger, share exchange, sale or conveyance for each non-electing share shall be
deemed to be the kind and amount so receivable per share by a plurality of the
non-electing shares). Such supplemental indenture shall provide for adjustments
which shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Article 12. If, in the case of any such reclassification,
change, consolidation, merger, share exchange, combination, sale or conveyance,
the stock or other securities and assets receivable thereupon by a holder of
shares of Common Stock includes shares of stock or other securities and assets
of a corporation other than the successor or purchasing corporation, as the case
may be, in such reclassification, change, consolidation, merger, share exchange,
combination, sale or conveyance, then such supplemental indenture shall also be
executed by such other corporation and shall contain such additional provisions
to protect the interests of the holders of the Convertible Subordinated Notes as
the Board of Directors shall reasonably consider necessary by reason of the
foregoing.
The Company shall cause notice of the execution of such supplemental
indenture to be mailed to each holder of Convertible Subordinated Notes at his
or her address appearing on the Register of holders for that purpose within 20
days after execution thereof. Failure to deliver such notice shall not affect
the legality or validity of such supplemental indenture.
The above provisions of this Section 12.06 shall similarly apply to
successive reclassifications, changes, consolidations, mergers, share exchanges,
combinations, sales and conveyances.
If this Section 12.06 applies to any event or occurrence, Section 12.05
shall not apply.
SECTION 12.07 Taxes on Shares Issued.
----------------------
The issue of stock certificates on conversions of Convertible Subordinated
Notes shall be made without charge to the converting holder for any tax in
respect of the issue thereof. The Company shall not, however, be required to
pay any tax which may be payable in respect of any transfer involved in the
issue and delivery of stock in any name other than that of the holder of any
Convertible Subordinated Note converted, and the Company shall not be required
to issue or deliver any such stock certificate unless and until the person or
persons requesting the issue
64
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid.
SECTION 12.08 Reservation of Shares; Shares to Be Fully Paid; Listing of Common
-----------------------------------------------------------------
Stock.
-----
The Company shall provide, free from preemptive rights, out of its
authorized but unissued shares or shares held in treasury, sufficient shares to
provide for the conversion of the Convertible Subordinated Notes from time to
time as such Convertible Subordinated Notes are presented for conversion.
Before taking any action which would cause an adjustment reducing the
Conversion Price below the then par value, if any, of the shares of Common Stock
issuable upon conversion of the Convertible Subordinated Notes, the Company
shall take all corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue shares of such
Common Stock at such adjusted Conversion Price.
The Company covenants that all shares of Common Stock issued upon
conversion of Convertible Subordinated Notes will be fully paid and non-
assessable by the Company and free from all taxes, liens and charges with
respect to the issue thereof.
The Company further covenants that as long as the Common Stock is quoted on
the Nasdaq National Market, or its successor, the Company shall cause all Common
Stock issuable upon conversion of the Convertible Subordinated Notes to be
eligible for such quotation in accordance with, and at the times required under,
the requirements of such market, and if at any time the Common Stock becomes
listed on the New York Stock Exchange or any other national securities exchange,
the Company shall cause all Common Stock issuable upon conversion of the
Convertible Subordinated Notes to be so listed and kept listed.
SECTION 12.09 Responsibility of Trustee.
-------------------------
The Trustee shall not at any time be under any duty of responsibility to
any holders of Convertible Subordinated Notes to determine whether any facts
exist which may require any adjustment of the Conversion Price, or with respect
to the nature or extent or calculation of any such adjustment when made, or with
respect to the method employed, or herein or in any supplemental indenture
provided to be employed, in making the same. The Trustee shall not be
accountable with respect to the validity or value (or the kind or amount) of any
shares of Common Stock, or of any securities or property, which may at any time
be issued or delivered upon the conversion of any Convertible Subordinated Note;
and the Trustee makes no representations with respect thereto. Subject to the
provisions of Section 7.01, the Trustee shall not be responsible for any failure
of the Company to issue, transfer or deliver any shares of Common Stock or stock
certificates or other securities or property or cash upon the surrender of any
Convertible Subordinated Note for the purpose of conversion or to comply with
any of the duties, responsibilities or covenants of the Company contained in
this Article 12. Without limiting the generality of the foregoing, the Trustee
shall not have any responsibility to determine the correctness of any provisions
contained in any supplemental indenture entered into pursuant to Section 12.06
relating either to the kind or amount of shares of stock or securities or
property (including cash) receivable by holders of Convertible Subordinated
Notes upon the
65
conversion of their Convertible Subordinated Notes after any event referred to
in such Section 12.06 or to any adjustment to be made with respect thereto, but,
subject to the provisions of Section 7.01, may accept as conclusive evidence of
the correctness of any such provisions, and shall be protected in relying upon,
the Officers' Certificate and Opinion of Counsel (which the Company shall be
obligated to file with the Trustee prior to the execution of any such
supplemental indenture) with respect thereto.
SECTION 12.10 Notice to Holders Prior to Certain Actions.
------------------------------------------
If
(a) the Company declares a dividend (or any other distribution) on its
Common Stock (other than in cash out of retained earnings or other than a
dividend that results in an adjustment in the Conversion Price pursuant to
Section 12.05 as to which the Company has made an election in accordance with
Section 12.05(m)); or
(b) the Company authorizes the granting to the holders of its Common Stock
of rights or warrants to subscribe for or purchase any share of any class of
Common Stock or any other rights or warrants (other than rights or warrants
referred to in the second paragraph of Section 12.05(d)); or
(c) there is any reclassification of the Common Stock (other than a
subdivision or combination of outstanding Common Stock, or a change in par
value, or from par value to no par value, or from no par value to par value), or
of any consolidation, merger or share exchange to which the Company is a party
and for which approval of any shareholders of the Company is required, or of the
sale or transfer of all or substantially all of the assets of the Company; or
(d) there is any voluntary or involuntary dissolution, liquidation or
winding-up of the Company;
then the Company shall cause to be filed with the Trustee and to be mailed to
each holder of Convertible Subordinated Notes at his or her address appearing on
the Register maintained for that purpose as promptly as possible but in any
event at least 15 days prior to the applicable date hereinafter specified, a
notice stating (x) the date on which a record is to be taken for the purpose of
such dividend, distribution or rights or warrants, or, if a record is not to be
taken, the date as of which the holders of Common Stock of record to be entitled
to such dividend, distribution or rights are to be determined, or (y) the date
on which such reclassification, consolidation, merger, share exchange, sale,
transfer, dissolution, liquidation or winding-up is expected to become effective
or occur, and the date as of which it is expected that holders of Common Stock
of record shall be entitled to exchange their Common Stock for securities or
other property deliverable upon such reclassification, consolidation, merger,
share exchange, sale, transfer, dissolution, liquidation or winding-up. Failure
to give such notice, or any defect therein, shall not affect the legality or
validity of such dividend, distribution, reclassification, consolidation,
merger, share exchange, sale, transfer, dissolution, liquidation or winding-up.
66
SECTION 12.11 Restriction on Common Stock Issuable Upon Conversion.
----------------------------------------------------
(a) Shares of Common Stock to be issued upon conversion of Convertible
Subordinated Notes prior to the effectiveness of a Shelf Registration Statement
shall be physically delivered in certificated form to the holders converting
such Securities, and the certificate representing such shares of Common Stock
shall bear the Restricted Common Stock Legend unless removed in accordance with
Section 12.11(c).
(b) If (i) shares of Common Stock to be issued upon conversion of a
Convertible Subordinated Note prior to the effectiveness of a Shelf Registration
Statement are to be registered in a name other than that of the holder of such
Convertible Subordinated Note or (ii) shares of Common Stock represented by a
certificate bearing the Restricted Common Stock Legend are transferred
subsequently by such holder, then, unless the Shelf Registration Statement has
become effective and such shares are being transferred pursuant to the Shelf
Registration Statement, the holder must deliver to the transfer agent for the
Common Stock a certificate in substantially the form of Exhibit C as to
compliance with the restrictions on transfer applicable to such shares of Common
Stock, and neither the transfer agent nor the registrar for the Common Stock
shall be required to register any transfer of such Common Stock not so
accompanied by a properly completed certificate.
(c) Except in connection with a Shelf Registration Statement, if
certificates representing shares of Common Stock are issued upon the
registration of transfer, exchange or replacement of any other certificate
representing shares of Common Stock bearing the Restricted Common Stock Legend,
or if a request is made to remove such Restricted Common Stock Legend from
certificates representing shares of Common Stock, the certificates so issued
shall bear the Restricted Common Stock Legend, or the Restricted Common Stock
Legend shall not be removed, as the case may be, unless there is delivered to
the Company such satisfactory evidence, which, in the case of a transfer made
pursuant to Rule 144 under the Securities Act, may include an opinion of counsel
as may be reasonably required by the Company, that neither the legend nor the
restrictions on transfer set forth therein are required to ensure that transfers
thereof comply with the provisions of Rule 144A, Rule 144 or Regulation S under
the Securities Act or that such shares of Common Stock are securities that are
not "restricted" within the meaning of Rule 144 under the Securities Act. Upon
provision to the Company of such reasonably satisfactory evidence, the Company
shall cause the transfer agent for the Common Stock to countersign and deliver
certificates representing shares of Common Stock that do not bear the legend.
67
IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed and attested, all as of the date first above written, signifying their
agreements contained in this Indenture.
SCHOOL SPECIALTY, INC.
By /s/ Xxxxxx X. Xxxxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxxxx
------------------------
Title: Chief Executive Officer
------------------------
BNY MIDWEST TRUST COMPANY
By /s/ X. Xxxxxxxxx
-------------------------------
Name: X. Xxxxxxxxx
------------------------
Title: Vice President
------------------------
68
EXHIBIT A
(Face of Security)
[Global Securities Legend]
[The following legend shall appear on the face of each Global Security:
THIS CONVERTIBLE SUBORDINATED NOTE IS A GLOBAL SECURITY WITHIN THE MEANING
OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITARY OR A NOMINEE OF THE DEPOSITARY, WHICH MAY BE TREATED BY THE COMPANY,
THE TRUSTEE AND ANY AGENT THEREOF AS OWNER AND HOLDER OF THIS CONVERTIBLE
SUBORDINATED NOTE FOR ALL PURPOSES.]
[The following legend shall appear on the face of each Global Security for
which The Depository Trust Company is to be the Depositary:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITARY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY THE AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OR DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR REGISTERED
CONVERTIBLE SUBORDINATED NOTES IN DEFINITIVE REGISTERED FORM IN THE LIMITED
CIRCUMSTANCES REFERRED TO IN THE INDENTURE, THIS GLOBAL SECURITY MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY
OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR
A NOMINEE OR SUCH SUCCESSOR DEPOSITARY.]
[Restricted Securities Legend]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS
SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY OF
THE ISSUE HEREOF (OR ANY PREDECESSOR SECURITY HEREOF) OR (Y) BY ANY HOLDER THAT
WAS AN "AFFILIATE" (WITHIN THE MEANING OF RULE 144 UNDER THE SECURITIES
A-1
ACT) OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF
SUCH TRANSFER, IN EITHER CASE OTHER THAN (1) TO THE COMPANY, (2) SO LONG AS THIS
SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT
("RULE 144A"), TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A, PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (3) IN AN OFFSHORE TRANSACTION (AS DEFINED IN REGULATION S UNDER THE
SECURITIES ACT) IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT, (4)
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY
RULE 144 (IF APPLICABLE) UNDER THE SECURITIES ACT OR (5) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES. THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, REPRESENTS AND AGREES
FOR THE BENEFIT OF THE COMPANY THAT IT IS (1) A QUALIFIED INSTITUTIONAL BUYER OR
(2) NOT A U.S. PERSON AND IS OUTSIDE THE UNITED STATES WITHIN THE MEANING OF (OR
AN ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH (k)(2) OF RULE 902 UNDER)
REGULATION S UNDER THE SECURITIES ACT. IN ANY CASE THE HOLDER HEREOF WILL NOT,
DIRECTLY OR INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTION WITH REGARD TO THIS
SECURITY OR ANY COMMON STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY EXCEPT AS
PERMITTED BY THE SECURITIES ACT.
A-2
No. _______ $ 130,000,000
CUSIP 807863 AB 1
SCHOOL SPECIALTY, INC.
6% CONVERTIBLE SUBORDINATED NOTE DUE 2008
promises to pay to
or registered assigns,
the principal sum of One Hundred and Thirty Million Dollars on July 31, 2008
Interest Payment Dates: February 1 and August 1, commencing February 1, 2002
Regular Record Dates: January 15 and July 15
SCHOOL SPECIALTY, INC.
By _______________________
Title:
Certificate of Authentication
This is one of the Convertible Subordinated Notes described in the within-
mentioned Indenture.
BNY MIDWEST TRUST COMPANY,
as Trustee
By ____________________________
Authorized Signatory
Dated:
A-3
(Back of Security)
A-4
SCHOOL SPECIALTY, INC.
6% CONVERTIBLE SUBORDINATED NOTE DUE 2008
1. INTEREST. School Specialty, Inc., a Wisconsin corporation (the "Company"),
promises to pay interest on the principal amount of this Convertible
Subordinated Note at the rate per annum shown above. The Company will pay
interest semi-annually in arrears on February 1 and August 1 of each year,
beginning February 1, 2002. Interest on the Convertible Subordinated Notes
will accrue from the most recent interest payment date to which interest
has been paid or, if no interest has been paid, from July 30, 2001.
Interest (including any Liquidated Damages) will be computed on the basis
of a 360-day year composed of twelve 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest (and Liquidated Damages,
if any) on the Convertible Subordinated Notes (except defaulted interest)
to the person in whose name each Convertible Subordinated Note is
registered at the close of business on the January 15 or July 15
immediately preceding the relevant interest payment date (each a "Regular
Record Date") (other than with respect to a Convertible Subordinated Note
or portion thereof called for redemption on a redemption date, or
repurchased in connection with a Designated Event on a repurchase date,
during the period from the close of business on a Regular Record Date to
(but excluding) the next succeeding interest payment date, in which case
accrued interest (and Liquidated Damages, if any) shall be payable (unless
such Convertible Subordinated Note or portion thereof is converted) to the
holder of the Convertible Subordinated Note or portion thereof redeemed or
repurchased in accordance with the applicable redemption or repurchase
provisions of the Indenture). The holder must surrender Convertible
Subordinated Notes to a Paying Agent to collect principal payments. The
Company will pay the principal of, premium, if any, and interest (including
Liquidated Damages, if any) on the Convertible Subordinated Notes at the
office or agency of the Company maintained for such purpose, in money of
the United States that at the time of payment is legal tender for payment
of public and private debts. Until otherwise designated by the Company, the
Company's office or agency maintained for such purpose will be the
principal Corporate Trust Office of the Trustee (as defined below).
However, the Company may pay principal, premium, if any, and interest
(including Liquidated Damages, if any) by check payable in such money, and
may mail such check to the holders of the Convertible Subordinated Notes at
their respective addresses as set forth in the Register of holders of
Convertible Subordinated Notes.
3. PAYING AGENT AND REGISTRAR. BNY Midwest Trust Company (together with any
successor Trustee under the Indenture referred to below, the "Trustee"),
will act as Paying Agent and Registrar. The Company may change the Paying
Agent, Registrar or co-registrar without prior notice. Subject to certain
limitations in the Indenture, the Company or any of its subsidiaries may
act in any such capacity.
4. INDENTURE. The Company issued the Convertible Subordinated Notes under an
Indenture dated as of July 30, 2001 (the "Indenture") between the Company
and the Trustee. The terms of the Convertible Subordinated Notes include
those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939 (15 U.S. Code (S)(S)77aaa-
A-5
77bbbb) (the "TIA") as in effect on the date of the Indenture. The
Convertible Subordinated Notes are subject to, and qualified by, all such
terms, certain of which are summarized hereon, and holders are referred to
the Indenture and the TIA for a statement of such terms. The Convertible
Subordinated Notes are unsecured general obligations of the Company limited
to (except as otherwise provided in the Indenture) up to $130,000,000 in
aggregate principal amount, unless an election has been made as set forth
in Article 2 of the Indenture to increase such aggregate principal amount
to an amount not to exceed $149,500,000. Capitalized terms not defined
below have the same meaning as is given to them in the Indenture.
5. OPTIONAL REDEMPTION. On or after August 5, 2004, the Company shall have the
option to redeem the Convertible Subordinated Notes, in whole or from time
to time in part, at the following redemption prices (expressed as
percentages of principal amount), if redeemed during the twelve month
period beginning August 1 of each year indicated (August 5, 2004 through
July 31, 2005, in the case of the first such year) plus accrued and unpaid
interest (and Liquidated Damages, if any) to, but excluding, the date fixed
for redemption:
Redemption
Year Price
---- -----
2004........................... 103.43%
2005........................... 102.57%
2006........................... 101.71%
2007........................... 100.00%
and 100% at July 31, 2008.
Notice of redemption will be mailed by first class mail at least 15 days
but not more than 60 days before the date fixed for redemption to each holder of
Convertible Subordinated Notes to be redeemed at his or her registered address.
Convertible Subordinated Notes in denominations larger than $1,000 may be
redeemed in part but only in integral multiples of $1,000. If less than all the
Convertible Subordinated Notes are to be redeemed, the Trustee shall select the
Convertible Subordinated Notes to be redeemed by a method that complies with the
requirements of the principal national securities exchange, if any, on which the
Convertible Subordinated Notes are listed or quoted, or, if the Convertible
Subordinated Notes are not so listed, on a pro rata basis by lot or by any other
method that the Trustee considers fair and appropriate. On and after the
redemption date, interest (and Liquidated Damages, if any) ceases to accrue on
Convertible Subordinated Notes or portions thereof called for redemption (unless
the Company defaults in the payment of the redemption price). If this
Convertible Subordinated Note is redeemed on a date which is also an Interest
Payment Date, the interest payment (and Liquidated Damages, if any) due on such
date will be paid to the person in whose name this Convertible Subordinated Note
is registered at the close of business on such record date.
6. DESIGNATED EVENT. Upon the occurrence of a Designated Event, the Company
shall make a Designated Event Offer to repurchase all outstanding
Convertible Subordinated
A-6
Notes at a price equal to 100% of the aggregate principal amount of the
Convertible Subordinated Notes, plus accrued and unpaid interest (and
Liquidated Damages, if any) to, but excluding, the date of repurchase, such
offer to be made as provided in the Indenture. To accept the Designated
Event Offer, the holder hereof must comply with the terms thereof,
including surrendering this Convertible Subordinated Note, with the "Option
of Holder to Elect Repurchase" portion hereof completed, to the Company, a
depositary, if appointed by the Company, or a Paying Agent, at the address
specified in the notice of the Designated Event Offer mailed to holders as
provided in the Indenture, prior to termination of the Designated Event
Offer.
7. SUBORDINATION. The Company's payment of the principal of, premium, if any,
and interest (including Liquidated Damages, if any) on the Convertible
Subordinated Notes is subordinated to the prior payment in full of the
Company's Senior Debt as set forth in the Indenture. Each holder of
Convertible Subordinated Notes by his or her acceptance hereof covenants
and agrees that all payments of the principal of, premium, if any, and
interest (including Liquidated Damages, if any) on the Convertible
Subordinated Notes by the Company shall be subordinated in accordance with
the provisions of Article 11 of the Indenture, and each holder of
Convertible Subordinated Notes accepts and agrees to be bound by such
provisions.
8. DENOMINATIONS, TRANSFER, EXCHANGE. The Convertible Subordinated Notes are
in registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Convertible Subordinated Notes may be
registered and Convertible Subordinated Notes may be exchanged as provided
in the Indenture. As a condition of transfer, the Registrar and the Trustee
may require a holder, among other things, to furnish appropriate
endorsements and transfer documents, and the Company and the Registrar may
require a holder to pay any taxes and fees required by law or permitted by
the Indenture. The Company or the Registrar need not exchange or register
the transfer of any Convertible Subordinated Note or portion of a
Convertible Subordinated Note selected for redemption or submitted for
repurchase. Also, the Company or the Registrar need not exchange or
register the transfer of any Convertible Subordinated Note for a period of
15 days before a selection of Convertible Subordinated Notes to be
redeemed.
9. PERSONS DEEMED OWNERS. The registered holder of a Convertible Subordinated
Note may be treated as its owner for all purposes.
10. AMENDMENTS AND WAIVERS. Subject to certain exceptions, the Indenture or the
Convertible Subordinated Notes may be amended or supplemented with the
consent of the holders of at least a majority in principal amount of the
then outstanding Convertible Subordinated Notes, and any existing default
may be waived with the consent of the holders of a majority in principal
amount of the then outstanding Convertible Subordinated Notes.
Without the consent of any holder, the Indenture or the Convertible
Subordinated Notes may be amended to: (a) cure any ambiguity or correct or
supplement any defective or inconsistent provision contained in the Indenture,
or make any other changes in the provisions of the Indenture which the Company
and the Trustee may deem necessary or desirable provided such amendment does not
materially and adversely affect the legal rights under the Indenture of
A-7
the holders of Convertible Subordinated Notes; (b) provide for uncertificated
Convertible Subordinated Notes in addition to or in place of certificated
Convertible Subordinated Notes; (c) evidence the succession of another person to
the Company and providing for the assumption by such successor of the covenants
and obligations of the Company thereunder and in the Convertible Subordinated
Notes as permitted by Section 5.01 of the Indenture; (d) provide for conversion
rights and/or repurchase rights of holders of Convertible Subordinated Notes in
the event of consolidation, merger, share exchange or sale of all or
substantially all of the assets of the Company as required to comply with
Sections 5.01 and/or 12.06 of the Indenture; (e) reduce the Conversion Price;
(f) evidence and provide for the acceptance of the appointment under the
Indenture of a successor Trustee; (g) make any change that would provide any
additional rights or benefits to the holders of Convertible Subordinated Notes
or that does not adversely affect the legal rights under the Indenture of any
such holder; or (h) comply with the requirements of the Commission in order to
effect or maintain the qualification of the Indenture under the TIA.
Without the consent of each holder affected, an amendment or waiver may not
(with respect to any Convertible Subordinated Notes held by a non-consenting
holder): (a) reduce the principal amount of Convertible Subordinated Notes whose
holders must consent to an amendment, supplement or waiver; (b) reduce the
principal of, or premium on, or change the fixed maturity of any Convertible
Subordinated Note or, except as permitted pursuant to clause (a), (d), (g) or
(h) of the immediately preceding paragraph, alter the provisions with respect to
the redemption of the Convertible Subordinated Notes; (c) reduce the rate of or
change the time for payment of interest, including defaulted interest, or
Liquidated Damages on any Convertible Subordinated Notes; (d) waive a Default or
Event of Default in the payment of principal of or premium, if any, or interest
or Liquidated Damages on the Convertible Subordinated Notes (except a rescission
of acceleration of the Convertible Subordinated Notes by the holders of at least
a majority in aggregate principal amount of the Convertible Subordinated Notes
and a waiver of the payment default that resulted from such acceleration); (e)
make the principal of, or premium, if any, or interest or Liquidated Damages on,
any Convertible Subordinated Note payable in money other than as provided for in
the Indenture and in the Convertible Subordinated Notes; (f) make any change in
the provisions of the Indenture relating to waivers of past Defaults or the
rights of holders of Convertible Subordinated Notes to receive payments of
principal of, premium, if any, or interest or Liquidated Damages on the
Convertible Subordinated Notes; (g) waive a redemption payment with respect to
any Convertible Subordinated Note; (h) except as permitted by the Indenture
(including Section 9.01(a)), increase the Conversion Price or modify the
provisions of the Indenture relating to conversion of the Convertible
Subordinated Notes in a manner adverse to the holders thereof or (i) make any
change to the ability of holder of Convertible Subordinated Notes to enforce
their rights under the Indenture or the provisions of clauses (a) through (i) of
Section 9.02 of the Indenture. In addition, any amendment to the provisions of
Article 11 of the Indenture (which relate to subordination) will require the
consent of the holders of at least 75% in aggregate principal amount of the
Convertible Subordinated Notes then outstanding if such amendment would
adversely affect the rights of holders of Convertible Subordinated Notes.
11. DEFAULTS AND REMEDIES. An Event of Default is: (a) default in payment of
the principal of, or premium, if any, on the Convertible Subordinated
Notes, when due at maturity, upon repurchase, upon acceleration or
otherwise, whether or not such payment is prohibited by the subordination
provisions of the Indenture; (b) default for 30 days or more
A-8
in payment of any installment of interest or Liquidated Damages on the
Convertible Subordinated Notes, whether or not such payment is prohibited
by the subordination provisions of the Indenture; (c) default by the
Company for 60 days or more after notice in the observance or performance
of any other covenants in the Indenture; (d) default in the payment of the
Designated Event Payment in respect of the Convertible Subordinated Notes
on the date therefor, whether or not such payment is prohibited by the
subordination provisions of the Indenture; (e) failure to provide timely
notice of a Designated Event; (f) default under any credit agreement,
mortgage, indenture or instrument under which there may be issued or by
which there may be secured or evidenced any Indebtedness for money borrowed
by the Company or any of its Material Subsidiaries (or the payment of which
is guaranteed by the Company or any of its Material Subsidiaries), whether
such Indebtedness or guarantee exists on the date of the Indenture or is
created thereafter, which default (i) is caused by a failure to pay when
due any principal of or interest on such Indebtedness within the grace
period provided for in such Indebtedness (which failure continues beyond
any applicable grace period) (a "Payment Default") or (ii) results in the
acceleration of such Indebtedness prior to its express maturity (without
such acceleration being rescinded or annulled) and, in each case, the
principal amount of such Indebtedness, together with the principal amount
of any other such Indebtedness under which there is a Payment Default or
the maturity of which has been so accelerated, aggregates $10,000,000 or
more and such Payment Default is not cured or such acceleration is not
annulled within 30 days after notice; or (g) failure by the Company or any
Material Subsidiary of the Company to pay final, non-appealable judgments
(other than any judgment as to which a reputable insurance company has
accepted full liability) aggregating in excess of $10,000,000, which
judgments are not stayed, bonded or discharged within 60 days after their
entry; or (h) certain events involving bankruptcy, insolvency or
reorganization of the Company or any Material Subsidiary. If an Event of
Default occurs and is continuing, the Trustee or the holders of at least
25% in principal amount of the then outstanding Convertible Subordinated
Notes may declare the unpaid principal of, premium, if any, and accrued and
unpaid interest and Liquidated Damages, if any, on all Convertible
Subordinated Notes then outstanding to be due and payable immediately,
except that in the case of an Event of Default arising from certain events
of bankruptcy, insolvency, or reorganization with respect to the Company or
any of its Material Subsidiaries, all outstanding Convertible Subordinated
Notes become due and payable without further action or notice. Holders of
Convertible Subordinated Notes may not enforce the Indenture or the
Convertible Subordinated Notes except as provided in the Indenture. The
Trustee may require an indemnity satisfactory to it before it enforces the
Indenture or the Convertible Subordinated Notes. Subject to certain
limitations, holders of a majority in principal amount of the then
outstanding Convertible Subordinated Notes may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from holders
notice of any continuing default (except a default in payment of principal,
premium, if any, or interest or Liquidated Damages, if applicable) if it
determines that withholding notice is in their interests. The Company must
furnish annual compliance certificates to the Trustee.
12. TRUSTEE DEALINGS WITH THE COMPANY. The Trustee or any of its Affiliates,
in their individual or any other capacities, may make or continue loans to
or guaranteed by, 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-9
13. NO RECOURSE AGAINST OTHERS. No director, officer, employee, shareholder or
Affiliate, as such, of the Company shall have any liability for any
obligations of the Company under the Convertible Subordinated Notes or the
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. Each holder by accepting a Convertible
Subordinated Note waives and releases all such liability. The waiver and
release are part of the consideration for the Convertible Subordinated
Notes.
14. AUTHENTICATION. This Convertible Subordinated Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating
agent.
15. ABBREVIATIONS. Customary abbreviations may be used in the name of a holder
or an assignee, such as: TEN CO = tenants in common, TEN ENT = tenants by
the entireties, JT TEN = joint tenants with right of survivorship and not
as tenants in common, CUST = Custodian and U/G/M/A = Uniform Gifts to
Minors Act.
16. CONVERSION. Subject to and upon compliance with the provisions of the
Indenture, the registered holder of this Convertible Subordinated Note has
the right at any time on or before the close of business on the last
trading day prior to the Maturity Date (or in case this Convertible
Subordinated Note or any portion hereof is (a) called for redemption prior
to such date, before the close of business on the last trading day
preceding the date fixed for redemption (unless the Company defaults in
payment of the redemption price in which case the conversion right will
terminate at the close of business on the date such default is cured) or
(b) subject to a duly completed election for repurchase, on or before the
close of business on the Designated Event Offer Termination Date (unless
the Company defaults in payment due upon repurchase or such holder elects
to withdraw the submission of such election to repurchase ) to convert the
principal amount hereof, or any portion of such principal amount which is
$1,000 or an integral multiple thereof, into that number of fully paid and
non-assessable (except as provided in Wis. Stat. (S)180.0622(2)(b) and
successor provisions or court interpretations thereof) shares of common
stock of the Company ("Common Stock") obtained by dividing the principal
amount of the Convertible Subordinated Note or portion thereof to be
converted by the conversion price of $32.29 per share, as adjusted from
time to time as provided in the Indenture (the "Conversion Price"), upon
surrender of this Convertible Subordinated Note to the Company at the
office or agency maintained for such purpose (and at such other offices or
agencies designated for such purpose by the Company), accompanied by
written notice of conversion duly executed (and if the shares of Common
Stock to be issued on conversion are to be issued in any name other than
that of the registered holder of this Convertible Subordinated Note by
instruments of transfer, in form satisfactory to the Company, duly executed
by the registered holder or its duly authorized attorney) and, in case such
surrender shall be made during the period from the close of business on the
Regular Record Date immediately preceding any Interest Payment Date through
the close of business on the last trading day immediately preceding such
Interest Payment Date (unless this Convertible Subordinated Note or the
portion thereof being converted has been called for redemption on a date in
such period), also accompanied by payment, in funds acceptable to the
Company, of an amount equal to the interest and Liquidated Damages, if any,
otherwise payable on such Interest Payment Date on the principal amount of
this Convertible Subordinated Note then being converted. Subject to the
aforesaid requirement for a payment in the event of conversion after the
close of business on a Regular Record Date immediately
A-10
preceding an Interest Payment Date, no adjustment shall be made on
conversion for interest or Liquidated Damages accrued hereon or for
dividends on Common Stock delivered on conversion. The right to convert
this Convertible Subordinated Note is subject to the provisions of the
Indenture relating to conversion rights in the case of certain
consolidations, mergers, share exchanges or sales or transfers of
substantially all the Company's assets.
The Company shall not issue fractional shares or scrip representing
fractions of shares of Common Stock upon any such conversion, but shall make an
adjustment therefor in cash based upon the current market price of the Common
Stock on the last trading day prior to the date of conversion.
17. REGISTRATION AGREEMENT. The holder of this Convertible Subordinated Note is
entitled to the benefits of a Registration Agreement, dated July 30, 2001,
between the Company and the Initial Purchasers (the "Registration
Agreement"). Pursuant to the Registration Agreement the Company has agreed
for the benefit of the holders of the Convertible Subordinated Notes and
the Common Stock issued and issuable upon conversion of the Convertible
Subordinated Notes, that (i) it will, at its cost, within 90 days after the
Issue Date, file a shelf registration statement (the "Shelf Registration
Statement") with the Securities and Exchange Commission (the "Commission")
with respect to resales of the Convertible Subordinated Notes and the
Common Stock issuable upon conversion thereof, (ii) the Company will use
its reasonable best efforts to cause such Shelf Registration Statement to
be declared effective by the Commission under the Securities Act within 150
days after the Issue Date and (iii) the Company will use its reasonable
best efforts to keep such Shelf Registration Statement continuously
effective under the Securities Act until the earliest of (a) the second
anniversary of the Issue Date or, if later, the second anniversary of the
last date on which any Convertible Subordinated Notes are issued upon
exercise of the Initial Purchasers' over-allotment option, (b) the date on
which the Convertible Subordinated Notes or the Common Stock issuable upon
conversion thereof may be sold to persons who are not "affiliates" (as
defined in Rule 144) of the Company pursuant to paragraph (k) of Rule 144
(or any successor provision) promulgated by the Commission under the
Securities Act, (c) the date as of which the Convertible Subordinated Notes
or the Common Stock issuable upon conversion thereof have been transferred
pursuant to Rule 144 under the Securities Act (or any similar provision
then in force) and (d) the date as of which all the Convertible
Subordinated Notes or the Common Stock issuable upon conversion thereof
have been sold pursuant to such Shelf Registration Statement.
If the Shelf Registration Statement (i) is not filed with the
Commission on or prior to 90 days, or has not been declared effective by the
Commission within 150 days, after the Issue Date or (ii) is filed and declared
effective but shall thereafter cease to be effective (without being succeeded
immediately by a replacement shelf registration statement filed and declared
effective) or cease to be usable (including, without limitation, as a result of
a Suspension Period as defined below) for the offer and sale of Transfer
Restricted Securities (as defined below) for a period of time (including any
Suspension Period) which shall exceed 60 days in the aggregate in any 12-month
period during the period beginning on the Issue Date and ending on the second
anniversary of the Issue Date or, if later, the second anniversary of the last
date on which any Convertible Subordinated Notes are issued upon exercise of the
Initial Purchasers' over-allotment option (each such event referred to in
clauses (i) and (ii) being referred to herein as a
A-11
"Registration Default"), the Company will pay liquidated damages ("Liquidated
Damages") to each holder of Transfer Restricted Securities which has complied
with its obligations under the Registration Agreement. The amount of Liquidated
Damages payable during any period in which a Registration Default shall have
occurred and be continuing is that amount which is equal to one-quarter of one
percent (25 basis points) per annum per $1,000 principal amount of Securities
and $2.50 per annum per 30.969 shares of Common Stock (subject to adjustment
from time to time in the event of a stock split, stock recombination, stock
dividend and the like) constituting Transfer Restricted Securities for the first
90 days during which a Registration Default has occurred and is continuing and
one-half of one percent (50 basis points) per annum per $1,000 principal amount
of Securities and $5.00 per annum per 30.969 shares of Common Stock (subject to
adjustment as set forth above) constituting Transfer Restricted Securities for
any additional days during which such Registration Default has occurred and is
continuing. The Company will pay all accrued Liquidated Damages by wire transfer
of immediately available funds or by federal funds check on each Damages Payment
Date (as defined in the Registration Agreement), and Liquidated Damages will be
calculated on the basis of a 360-day year consisting of twelve 30-day months.
Following the cure of a Registration Default, Liquidated Damages will cease to
accrue with respect to such Registration Default.
"Transfer Restricted Securities" means each Convertible Subordinated Note
and each share of Common Stock issued on conversion thereof until the date on
which such Convertible Subordinated Note or share, as the case may be, (i) has
been transferred pursuant to the Shelf Registration Statement or another
registration statement covering such Convertible Subordinated Note or share
which has been filed with the Commission pursuant to the Securities Act, in
either case after such registration statement has become and while such
registration statement is effective under the Securities Act, (ii) has been
transferred pursuant to Rule 144 under the Securities Act (or any similar
provision then in force), or (iii) may be sold or transferred pursuant to Rule
144(k) under the Securities Act (or any similar provision then in force).
Pursuant to the Registration Agreement, the Company may suspend the use of
the prospectus which is a part of the Shelf Registration Statement for a period
not to exceed 30 days in any three-month period or for three periods not to
exceed an aggregate of 90 days in any twelve-month period under certain
circumstances (each, a "Suspension Period"); provided that the existence of a
Suspension Period will not prevent the occurrence of a Registration Default or
otherwise limit the obligation of the Company to pay Liquidated Damages.
The above description of certain provisions of the Registration Agreement
is qualified by reference to, and is subject in its entirety to, the more
complete description thereof contained in the Registration Agreement.
The Company will furnish to any holder upon written request and without
charge a copy of the Indenture and the Registration Agreement. Requests may be
made to: School Specialty, Inc., X0000 Xxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxxxx
00000, Attention: Chief Financial Officer.
A-12
FORM OF CONVERSION NOTICE
To: SCHOOL SPECIALTY, INC.
The undersigned beneficial owner of the Convertible Subordinated Note
hereby irrevocably exercises the option to convert this Convertible Subordinated
Note, or portion hereof (which is $1,000 or an integral multiple thereof) below
designated, into shares of Common Stock of School Specialty, Inc. in accordance
with the terms of the Indenture referred to in this Convertible Subordinated
Note, and directs that the shares issuable and deliverable upon the conversion,
together with any check in payment for fractional shares and Convertible
Subordinated Notes representing any unconverted principal amount hereof, be
issued and delivered to the beneficial owner hereof unless a different name has
been indicated below. If shares or any portion of this Convertible Subordinated
Note not converted are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto. Any amount required to be paid by the undersigned on account of
interest, Liquidated Damages and taxes accompanies this Convertible Subordinated
Note.
Dated:
Fill in for registration of shares if to be _________________________________________________
delivered, and Convertible Subordinated Notes
if to be issued, other than to and in the name _________________________________________________
of the beneficial owner
(Please Print): _________________________________________________
Signature(s)
Principal amount to be converted (if less than
all):
____________________________________________ _________________________________________________
(Name) $___,000
____________________________________________ _________________________________________________
(Xxxxxx Xxxxxxx) Social Security or other Taxpayer Identification
Number
____________________________________________
(City, State and Zip Code)
Signature Guarantee:
________________________________________
Signatures must be guaranteed by an eligible Guarantor Institution (banks,
brokers, dealers, savings and loan associations and credit unions) with
membership in an approved signature guarantee medallion program pursuant to
Securities and Exchange Commission Rule 17Ad-15 if shares are to be issued, or
Convertible Subordinated Notes are to be delivered, other than to and in the
name of the registered holder(s).
A-13
ASSIGNMENT FORM
To assign this Convertible Subordinated Note, fill in the form below:
(I) or (we) assign and transfer this Convertible Subordinated Note to
________________________________________________________________________________
(Insert assignee's social security or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint ____________________________________ agent to transfer
this Convertible Subordinated Note on the books of the Company. The agent may
substitute another to act for him.
Your Signature: _______________________________________________________
(Sign exactly as your name appears on the other side of
this Convertible Subordinated Note)
Date: ________________________________
Medallion Signature Guarantee: _____________________________________
[FOR INCLUSION ONLY IF THIS CONVERTIBLE SUBORDINATED NOTE BEARS A RESTRICTED
SECURITIES LEGEND] In connection with any transfer of any of the Convertible
Subordinated Notes evidenced by this certificate which are "restricted
securities" (as defined in Rule 144 (or any successor thereto) under the
Securities Act), the undersigned confirms that such Convertible Subordinated
Notes are being transferred:
CHECK ONE BOX BELOW
(1) [_] to the Company; or
(2) [_] pursuant to and in compliance with Rule 144A under the Securities
Act of 1933; or
(3) [_] pursuant to and in compliance with Regulation S under the
Securities Act of 1933; or
(4) [_] pursuant to an exemption from registration under the Securities
Act of 1933 provided by Rule 144 thereunder.
A-14
Unless one of the boxes is checked, the Registrar will refuse to register
any of the Convertible Subordinated Notes evidenced by this certificate in
the name of any person other than the registered holder thereof; provided,
however, that if box (3) or (4) is checked, the Trustee may require, prior
to registering any such transfer of the Convertible Subordinated Notes,
such certifications and other information, and if box (4) is checked such
legal opinions, as the Company has reasonably requested in writing, by
delivery to the Trustee of a standing letter of instruction, to confirm
that such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the
Securities Act of 1933; provided that this paragraph shall not be
applicable to any Convertible Subordinated Notes which are not "restricted
securities" (as defined in Rule 144 (or any successor thereto) under the
Securities Act).
Your Signature: _______________________________________________________
(Sign exactly as your name appears on the
other side of this Convertible Subordinated Note)
Date: __________________________
Medallion Signature Guarantee: _________________________________
A-15
OPTION OF HOLDER TO ELECT REPURCHASE
If you wish to have this Convertible Subordinated Note repurchased by the
Company pursuant to Section 4.06 of the Indenture, check the Box: [_]
If you wish to have a portion of this Convertible Subordinated Note
purchased by the Company pursuant to Section 4.06 of the Indenture, state the
amount (in multiples of $1,000): $_____.
Date: ________ Your Signature:______________________________________________
(Sign exactly as your name appears on the other side of this
Convertible Subordinated Note)
Medallion Signature Guarantee:________________________________________________
A-16
EXHIBIT B
FORM OF RESTRICTED COMMON STOCK LEGEND
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS SECURITY,
AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY OF THE
ISSUANCE HEREOF (OR ANY PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER THAT
WAS AN "AFFILIATE" (WITHIN THE MEANING OF RULE 144 UNDER THE SECURITIES ACT) OF
THE COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH
TRANSFER, IN EITHER CASE OTHER THAN (1) TO THE COMPANY, (2) SO LONG AS THIS
SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT
("RULE 144A"), TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A, PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (3) IN AN OFFSHORE TRANSACTION (AS DEFINED IN REGULATION S UNDER THE
SECURITIES ACT) IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT, (4)
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY
RULE 144 (IF APPLICABLE) UNDER THE SECURITIES ACT OR (5) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES. THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, REPRESENTS AND AGREES
FOR THE BENEFIT OF THE COMPANY THAT IT IS (1) A QUALIFIED INSTITUTIONAL BUYER OR
(2) NOT A U.S. PERSON AND IS OUTSIDE THE UNITED STATES WITHIN THE MEANING OF (OR
AN ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH (k)(2) OF RULE 902 UNDER)
REGULATION S UNDER THE SECURITIES ACT. IN ANY CASE THE HOLDER HEREOF WILL NOT,
DIRECTLY OR INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTION WITH REGARD TO THIS
SECURITY EXCEPT AS PERMITTED BY THE SECURITIES ACT."
B-1
EXHIBIT C
FORM OF TRANSFER CERTIFICATE FOR TRANSFER
OF RESTRICTED COMMON STOCK
(Transfers pursuant to Section 12.11(c) of the Indenture)
[NAME AND ADDRESS OF COMMON STOCK TRANSFER AGENT]
Re: School Specialty, Inc. 6% Convertible Subordinated Notes
due 2008 (the "Convertible Subordinated Notes")
Reference is hereby made to the Indenture dated as of July 30, 2001 (the
"Indenture") between School Specialty, Inc. and BNY Midwest Trust Company, as
Trustee. Capitalized terms used but not defined herein shall have the meanings
given them in the Indenture.
This letter relates to _________ shares of Common Stock represented by the
accompanying certificate(s) that were issued upon conversion of Convertible
Subordinated Notes and which are held in the name of [name of transferor] (the
"Transferor") to effect the transfer of such Common Stock.
In connection with the transfer of such shares of Common Stock, the
undersigned confirms that such shares of Common Stock are being transferred:
CHECK ONE BOX BELOW
(1) [_] to the Company; or
(2) [_] pursuant to and in compliance with Rule 144A under the Securities
Act of 1933; or
(3) [_] pursuant to and in compliance with Regulation S under the
Securities Act of 1933; or
(4) [_] pursuant to an exemption from registration under the Securities
Act of 1933 provided by Rule 144 thereunder.
C-1
Unless one of the boxes is checked, the transfer agent will refuse to
register any of the Common Stock evidenced by this certificate in the name of
any person other than the registered holder thereof; provided, however, that if
box (3) or (4) is checked, the transfer agent may require, prior to registering
any such transfer of the Common Stock such certifications and other information,
and if box (4) is checked such legal opinions, as the Company has reasonably
requested in writing, by delivery to the transfer agent of a standing letter of
instruction, to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933.
[Name of Transferor],
By _______________________________
Name: ____________________________
Title: ___________________________
Dated:
C-2
