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EXHIBIT 4.2
FIRST SUPPLEMENTAL INDENTURE, dated as of December 15, 1998, among
SPECIAL DEVICES, INCORPORATED, a Delaware corporation (the "Company"), XXXX,
INC., a Delaware corporation and a wholly owned subsidiary of the Company
("Xxxx"), and UNITED STATES TRUST COMPANY OF NEW YORK, as trustee (the
"Trustee").
WHEREAS, SDI Acquisition Corp., a Delaware corporation ("SDI
Acquisition"), has heretofore executed and delivered to the Trustee an Indenture
dated as of December 15, 1998 (the "Indenture"), providing for the issuance of
its 11 3/8% Senior Subordinated Notes due 2008, Series A in the principal amount
of $100,000,000 (the "Initial Securities") and its 11 3/8% Senior Subordinated
Notes due 2008, Series B (the "Exchange Securities" and, together with the
Initial Securities, the "Securities"); and
WHEREAS, SDI Acquisition has merged with and into the Company and,
in connection herewith, the Company has assumed by operation of law all of SDI
Acquisition's debts, liabilities, duties and obligations, including SDI
Acquisition's obligations in respect of the Securities and under the Indenture;
and
WHEREAS, Xxxx is required pursuant to the Indenture to become a
party thereto and to guarantee the obligations of the Company in respect of the
Securities and under the Indenture on a senior subordinated basis (the
"Guarantee") as the Guarantor; and
WHEREAS, the Company and Xxxx desire by this First Supplemental
Indenture, pursuant to and as contemplated by Sections 5.01 and 10.01 of the
Indenture, to expressly assume the covenants, agreements and undertakings of SDI
Acquisition and a Guarantor, respectively, in the Indenture and under the
Securities; and
WHEREAS, the execution and delivery of this First Supplemental
Indenture and the notes evidencing the Initial Securities and the Exchange
Securities substantially in the form attached hereto as Exhibits A and B,
respectively, have been authorized by a resolution of the Board of Directors of
the Company; and
WHEREAS, the execution and delivery of this First Supplemental
Indenture and the guarantee evidencing the Guarantee substantially in the form
attached hereto in Exhibits A and B, have been authorized by a resolution of the
Board of Directors of Xxxx; and
WHEREAS, the Company and Xxxx authorize the Trustee to cancel the
11 3/8% Senior Subordinated Notes due 2008, Series A and the 11 3/8% Senior
Subordinated Notes due 2008, Series B of SDI Acquisition and to authenticate
$100,000,000 principal amount of 11 3/8% Senior Subordinated Notes due 2008,
Series A and 11 3/8% Senior Subordinated Notes due 2008, Series B of the
Company, each series as guaranteed by Xxxx, in replacement thereof; and
WHEREAS, all conditions and requirements necessary to make each of
this First Supplemental Indenture and the Securities a valid, binding and legal
instrument in accordance with its terms upon the Company and the Trustee, and
each of this First Supplemental Indenture and the Guarantee a valid, binding and
legal instrument in accordance with its terms upon Xxxx and the Trustee, have
been performed and fulfilled by the applicable parties hereto and the
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execution and delivery thereof have been in all respects duly authorized by the
applicable parties hereto.
NOW, THEREFORE, in consideration of the above premises, each party
agrees, for the benefit of the others and for the equal and ratable benefit of
the Holders of the Securities, as follows:
ARTICLE ONE
ASSUMPTION OF OBLIGATIONS
SECTION 1.01. Assumption of Obligations of SDI Acquisition.
(a) The Company hereby expressly and unconditionally assumes each
and every covenant, agreement and undertaking of SDI Acquisition in the
Indenture as if the Company had been the original issuer of the Securities and
also hereby expressly and unconditionally assumes each and every covenant,
agreement and undertaking in each Security outstanding on the date of this First
Supplemental Indenture.
(b) Promptly following the execution and delivery of this First
Supplemental Indenture, the Trustee shall, upon the written order of the Company
in the form of an Officers' Certificate of the Company, authenticate and deliver
Initial Securities substantially in the form of Exhibit A hereto in replacement
of the outstanding Initial Securities, and, upon delivery of certificates
representing the Initial Notes of SDI Acquisition to the Trustee for
cancellation, the Trustee shall cancel such Initial Notes of SDI Acquisition,
and the third sentence of Section 2.11 of the Indenture shall not apply to such
cancellation.
SECTION 1.02. Assumption of Obligations of the Guarantor.
Xxxx hereby expressly and unconditionally assumes each and every
covenant, agreement and undertaking of a Guarantor in the Indenture and also
hereby expressly and unconditionally assumes each and every covenant, agreement
and undertaking relating to a Guarantor in each Security outstanding on the date
of this First Supplemental Indenture.
SECTION 1.03. Exchange of Outstanding Securities; Exhibits.
Exhibits A, B, C, D and E of the Indenture are hereby deleted and
replaced in their entirety by Exhibits A, B, C, D and E, respectively, hereto.
ARTICLE TWO
MISCELLANEOUS PROVISIONS
SECTION 2.01. Terms Defined.
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For all purposes of this First Supplemental Indenture, except as
otherwise defined or unless the context otherwise requires, terms used in
capitalized form in this First Supplemental Indenture and defined in the
Indenture have the meanings specified in the Indenture.
SECTION 2.02. Indenture.
Except as amended hereby, the Indenture, the Securities and the
Guarantee are in all respects ratified and confirmed and all the terms shall
remain in full force and effect.
SECTION 2.03. Governing Law.
THIS FIRST SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS
MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICT OF LAWS.
SECTION 2.04. Successors.
All agreements of the Company and Xxxx in this First Supplemental
Indenture, the Securities and the Guarantee shall bind their respective
successors. All agreements of the Trustee in this First Supplemental Indenture
shall bind its successors.
SECTION 2.05. Duplicate Originals.
The parties may sign any number of copies of this First Supplemental
Indenture. Each signed copy shall be an original, but all of them together shall
represent the same agreement.
SECTION 2.06. Trustee Disclaimer.
The Trustee accepts the amendment of the Indenture effected by this
First Supplemental Indenture and agrees to execute the trust created by the
Indenture as hereby amended, but only upon the terms and conditions set forth in
the Indenture, including the terms and provisions defining and limiting the
liabilities and responsibilities of the Trustee, which terms and provisions
shall in like manner define and limit its liabilities and responsibilities in
the performance of the trust created by the Indenture as hereby amended and,
without limiting the generality of the foregoing, the Trustee shall not be
responsible in any manner whatsoever for or with respect to any of the recitals
or statements contained herein, all of which recitals or statements are made
solely by the Company and Xxxx, or for or with respect to (i) the validity of
the terms of this First Supplemental Indenture or any of the terms or provisions
hereof, (ii) the proper authorization hereof by the Company and Xxxx by
corporate action or otherwise, (iii) the due execution hereof by the Company and
Xxxx or (iv) the consequences (direct or indirect and whether deliberate or
inadvertent) of any amendment herein provided for, and the Trustee makes no
representation with respect to any such matters.
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SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed, all as of the date first written
above.
SPECIAL DEVICES, INCORPORATED,
as issuer
By:/s/ Xxxxx Xxxxx
---------------------------------------
Xxxxx Xxxxx, Secretary
XXXX, INC.,
as Guarantor
By: /s/Xxxx X. Xxxxx
---------------------------------------
Xxxx X. Xxxxx, Executive Vice President
and Chief Financial Officer and Assistant
Secretary
UNITED STATES TRUST COMPANY OF NEW YORK
By:/s/ Xxxxxx X. Xxxxx
---------------------------------------
Xxxxxx X. Xxxxx, Senior Vice President
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EXHIBIT A
[FORM OF SERIES A SECURITY]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER
THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF
SUCH SECURITY), ONLY (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) PURSUANT
TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A PERSON IT REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES
WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1), (2),
(3) OR (7) UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN
ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN
EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE SECURITIES OF $250,000 FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION
WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO
ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER,
SALE OR TRANSFER PURSUANT TO CLAUSE (E) OR (F) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH
OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE
RESALE RESTRICTION TERMINATION DATE.
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SPECIAL DEVICES, INCORPORATED
11 3/8% Senior Subordinated Note
due 2008, Series A
CUSIP No.:[_______]
No. [_________] $[____________]
SPECIAL DEVICES, INCORPORATED, a Delaware corporation (the
"Company", which term includes any successor), for value received promises to
pay to Cede & Co. or registered assigns, the principal sum of [__________]
Dollars, on December 15, 2008.
Interest Payment Dates: June 15 and December 15, commencing on
June 15, 1999.
Interest Record Dates: June 1 and December 1.
Reference is made to the further provisions of this Security
contained herein and the Indenture (as defined), which will for all purposes
have the same effect as if set forth at this place.
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IN WITNESS WHEREOF, the Company has caused this Security to be
signed manually or by facsimile by its duly authorized officers.
SPECIAL DEVICES, INCORPORATED
By: _____________________________________
Name:
Title
By: _____________________________________
Name:
Title
Dated: [_____________________]
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the 11 3/8% Senior Subordinated Notes due 2008,
Series A, described in the within-mentioned Indenture.
Dated: [_____________________]
UNITED STATES TRUST COMPANY OF NEW YORK, as
Trustee
By:_____________________________________________
Authorized Signatory
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(REVERSE OF SECURITY)
SPECIAL DEVICES, INCORPORATED
11 3/8% Senior Subordinated Note
due 2008, Series A
1. Interest.
The Company promises to pay interest on the principal amount of this
Security at the rate per annum shown above. Cash interest on the Securities will
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from December 15, 1998. The Company will pay interest
semi-annually in arrears on each Interest Payment Date, commencing June 15,
1999. Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
In addition, the Company shall pay interest on overdue principal and
on overdue installments of interest (without regard to any applicable grace
periods) to the extent lawful from time to time on demand, in each case at the
rate borne by this Security.
The Securities are not entitled to the benefit of any mandatory
sinking fund.
2. Method of Payment.
The Company shall pay interest on the Securities (except defaulted
interest) to the persons who are the registered Holders at the close of business
on the Interest Record Date immediately preceding the Interest Payment Date even
if the Securities are canceled on registration of transfer or registration of
exchange after such Interest Record Date. Holders must surrender Securities to a
Paying Agent to collect principal payments. The Company shall pay principal and
interest in United States Legal Tender (as defined in the Indenture referred to
below). However, the Company may pay principal and interest by wire transfer of
Federal funds (provided that the Paying Agent shall have received wire
instructions on or prior to the relevant Interest Record Date), or interest by
check payable in such United States Legal Tender. The Company may deliver any
such interest payment to the Paying Agent or to a Holder at the Holder's
registered address.
3. Paying Agent and Registrar.
Initially, United States Trust Company of New York (the "Trustee")
will act as Paying Agent and Registrar. The Company may change any Paying Agent
or Registrar without notice to the Holders. The Company may, subject to certain
exceptions, act as Registrar.
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4. Indenture.
The Company issued the Securities under an Indenture, dated as of
December 15, 1998 and the First Supplemental Indenture dated as of December 15,
1998 (collectively, the "Indenture"), by and among the Company, the Guarantors
and the Trustee. Capitalized terms herein are used as defined in the Indenture
unless otherwise defined herein. This Security is one of a duly authorized issue
of Securities of the Company designated as its 11 3/8% Senior Subordinated Notes
due 2008 issued under the Indenture. The aggregate principal amount of
Securities which may be issued under the Indenture is limited (except as
otherwise provided in the Indenture) to $150,000,000 in one or more series;
provided that the aggregate principal amount of Initial Securities on the Issue
Date shall not exceed $100,000,000. The terms of the Securities include those
stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939, as amended (the "TIA"), as in effect on the date of
the Indenture (except as otherwise indicated in the Indenture) until such time
as the Indenture is qualified under the TIA, and thereafter as in effect on the
date on which the Indenture is qualified under the TIA. Notwithstanding anything
to the contrary herein, the Securities are subject to all such terms, and
holders of Securities are referred to the Indenture and the TIA for a statement
of them.
5. Subordination.
The Securities are unsecured obligations of the Company and are
subordinated in right of payment to all Senior Indebtedness of the Company to
the extent and in the manner provided in the Indenture. Each Holder of a
Security, by accepting a Security, agrees to such subordination, authorizes the
Trustee to give effect to such subordination and appoints the Trustee as
attorney-in-fact for such purpose. The Securities will rank pari passu in right
of payment with any future senior subordinated indebtedness of the Company and
will rank senior in right of payment to any other subordinated obligations of
the Company.
6. Guarantee.
The obligations of the Company hereunder are guaranteed on a senior
subordinated basis by the Guarantors. The Guarantee by the Guarantors is
subordinated in right of payment to all Guarantor Senior Indebtedness of the
Guarantors to the same extent that the Securities are subordinated to Senior
Indebtedness of the Company.
7. Optional Redemption.
The Securities will be redeemable, at the Company's option, in whole
at any time or in part from time to time, on and after December 15, 2003, upon
not less than 30 nor more than 60 days' notice, at the following redemption
prices (expressed as percentages of the principal amount thereof) if redeemed
during the twelve-month period commencing on December 15 of the year set forth
below, plus, in each case, accrued and unpaid interest thereon, if any, to the
date of redemption:
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YEAR PERCENTAGE
---- ----------
2003......................................... 105.688%
2004......................................... 104.266%
2005......................................... 102.844%
2006......................................... 101.422%
2007 and thereafter.......................... 100.000%
8. Optional Redemption upon Public Equity Offerings.
At any time, or from time to time, on or prior to December 15, 2001,
the Company may, at its option, use the net cash proceeds of one or more Public
Equity Offerings (as defined below) to redeem up to 35% of the sum of (i) the
initial aggregate principal amount of Securities issued in the Offering and (ii)
the respective initial aggregate principal amounts of Securities issued under
the Indenture after the Issue Date, at a redemption price equal to 111.375% of
the principal amount thereof plus accrued and unpaid interest thereon and
Liquidated Damages, if any, to the date of redemption; provided that at least
65% of the sum of (i) the initial aggregate principal amount of Securities
issued in the Offering and (ii) the respective initial aggregate principal
amounts of Securities issued under the Indenture after the Issue Date remains
outstanding immediately after any such redemption. In order to effect the
foregoing redemption with the proceeds of any Public Equity Offering, the
Company shall make such redemption not more than 120 days after the consummation
of any such Public Equity Offering.
As used in the preceding paragraph, "Public Equity Offering" means
an underwritten public offering of Qualified Capital Stock of the Company
pursuant to a registration statement filed with the Commission in accordance
with the Securities Act.
9. Selection and Notice of Redemption.
In the event that less than all of the Securities are to be redeemed
at any time, selection of such Securities for redemption will be made by the
Trustee in compliance with the requirements of the principal national securities
exchange, if any, on which such Securities are listed or, if such Securities are
not then listed on a national securities exchange, on a pro rata basis, by lot
or by such method as the Trustee shall deem fair and appropriate; provided,
however, that no Securities of a principal amount of $1,000 or less shall be
redeemed in part; provided, further, that if a partial redemption is made with
the proceeds of a Public Equity Offering, selection of the Securities or
portions thereof for redemption shall be made by the Trustee only on a pro rata
basis or on as nearly a pro rata basis as is practicable (subject to DTC
procedures), unless such method is otherwise prohibited. Notice of redemption
shall be mailed by first-class mail at least 30 but not more than 60 days before
the redemption date to each Holder of Securities to be redeemed at its
registered address. If any Security is to be redeemed in part only, the notice
of redemption that relates to such Security shall state the portion of the
principal amount thereof
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to be redeemed. A new Security in a principal amount equal to the unredeemed
portion thereof will be issued in the name of the Holder thereof upon
cancellation of the original Security. On and after the redemption date,
interest will cease to accrue on Securities or portions thereof called for
redemption as long as the Company has deposited with the Paying Agent funds in
satisfaction of the applicable redemption price pursuant to the Indenture.
10. Change of Control Offer.
Following the occurrence of a Change of Control, the Company shall,
within 30 days, make a Change of Control Offer for all Securities then
outstanding at a purchase price in cash equal to 101% of the aggregate principal
amount thereof, plus accrued and unpaid interest thereon, if any, to the Change
of Control Payment Date (subject to the right of Holders of record on the
relevant Interest Record Date to receive interest due on the relevant Interest
Payment Date).
11. Limitation on Disposition of Assets.
The Company is, subject to certain conditions, obligated to make a
Net Proceeds Offer for Securities at a purchase price equal to 100% of the
principal amount thereof, plus accrued and unpaid interest thereon, if any, to
the Net Proceeds Offer Payment Date (subject to the right of Holders of record
on the Interest Relevant Record Date to receive interest due on the relevant
Interest Payment Date) with the excess proceeds of certain asset dispositions.
12. Denominations; Transfer; Exchange.
The Securities are in registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000. A Holder shall
register the transfer of or exchange of Securities in accordance with the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay certain transfer
taxes or similar governmental charges payable in connection therewith as
permitted by the Indenture. The Registrar need not register the transfer of or
exchange of any Securities or portions thereof selected for redemption, except
the unredeemed portion of any security being redeemed in part.
13. Persons Deemed Owners.
The registered Holder of a Security shall be treated as the owner of
it for all purposes.
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00. Unclaimed Funds.
If funds for the payment of principal or interest remain unclaimed
for two years, the Trustee and the Paying Agent will repay the funds to the
Company at its written request. After that, all liability of the Trustee and
such Paying Agent with respect to such funds shall cease.
15. Legal Defeasance and Covenant Defeasance.
The Company may be discharged from its obligations under the
Indenture and the Securities, except for certain provisions thereof, and may be
discharged from obligations to comply with certain covenants contained in the
Indenture and the Securities, in each case upon satisfaction of certain
conditions specified in the Indenture.
16. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture and the Securities may
be amended or supplemented with the written consent of the Holders of at least a
majority in aggregate principal amount of the Securities then outstanding, and
any existing Default or Event of Default or compliance with any provision may be
waived with the consent of the Holders of a majority in aggregate principal
amount of the Securities then outstanding. Without notice to or consent of any
Holder, the parties thereto may amend or supplement the Indenture and the
Securities to, among other things, cure any ambiguity, defect or inconsistency,
provide for uncertificated Securities in addition to or in place of certificated
Securities or comply with any requirements of the SEC in connection with the
qualification of the Indenture under the TIA, or make any other change that does
not materially adversely affect the rights of any Holder of a Security.
17. Restrictive Covenants.
The Indenture contains certain covenants that, among other things,
limit the ability of the Company and the Restricted Subsidiaries to make
restricted payments, to incur indebtedness, to create liens, to sell assets, to
permit restrictions on dividends and other payments by Restricted Subsidiaries
to the Company, to consolidate, merge or sell all or substantially all of its
assets or to engage in transactions with affiliates or certain other related
persons. The limitations are subject to a number of important qualifications and
exceptions. The Company must report quarterly to the Trustee on compliance with
such limitations.
18. Defaults and Remedies.
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in aggregate principal amount of Securities then
outstanding may declare all the Securities to be due and payable immediately in
the manner and with the effect provided in the Indenture. Holders of Securities
may not enforce the Indenture or the Securities except as provided in the
Indenture. The Trustee is not obligated to enforce the Indenture or the
Securities unless it has received indemnity satisfactory to it. The Indenture
permits, subject to certain limitations therein provided, Holders of a majority
in aggregate principal amount of the Securities then outstanding to direct the
Trustee in its exercise of any trust or power. The Trustee may
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withhold from Holders of Securities notice of certain continuing Defaults or
Events of Default if it determines that withholding notice is in their interest.
19. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other
capacity, may become the owner or pledgee of Securities and may otherwise deal
with the Company or its respective Affiliates as if it were not the Trustee.
20. No Recourse Against Others.
No director, officer, employee, stockholder or incorporator of the
Company, as such, shall have any liability for any obligation of the Company
under the Securities or the Indenture or for any claim based on, in respect of
or by reason of, such obligations or their creation. Each Holder of a Security
by accepting a Security waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the Securities.
21. Authentication.
This Security shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on this Security.
22. Abbreviations and Defined Terms.
Customary abbreviations may be used in the name of a Holder of a
Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
23. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Securities as a convenience to the Holders of the Securities. No
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
24. Registration Rights.
Pursuant to the Registration Rights Agreement, the Company will be
obligated upon the occurrence of certain events to consummate an exchange offer
pursuant to which the Holder of this Security shall have the right to exchange
this Security for a 11 3/8% Senior Subordinated Note due 2008, Series B, of the
Company which has been registered under the Securities Act, in like principal
amount and having terms identical in all material respects to the Initial
Securities. The Holders shall be entitled to receive certain additional interest
payments in
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the event such exchange offer is not consummated and upon certain other
conditions, all pursuant to and in accordance with the terms of the Registration
Rights Agreement.
25. Governing Law.
The Indenture and the Securities will be governed by, and construed
in accordance with, the laws of the State of New York but without giving effect
to applicable principles of conflicts of law to the extent that the application
of the law of another jurisdiction would be required thereby.
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[FORM OF GUARANTEE]
SENIOR SUBORDINATED GUARANTEE
The Guarantor (capitalized terms used herein have the meanings given
such terms in the Indenture referred to in the Security upon which this notation
is endorsed) hereby unconditionally guarantees on a senior subordinated basis
(such guaranty being referred to herein as the "Guarantee") the due and punctual
payment of the principal of, premium, if any, and interest on the Securities,
whether at maturity, by acceleration or otherwise, the due and punctual payment
of interest on the overdue principal, premium and interest on the Securities,
and the due and punctual performance of all other obligations of the Company to
the Holders or the Trustee, all in accordance with the terms set forth in
Article Eleven of the Indenture.
The obligations of the Guarantor to the Holders of Securities and to
the Trustee pursuant to the Guarantee and the Indenture are expressly set forth,
and are expressly subordinated and subject in right of payment to the prior
payment in full of all Guarantor Senior Indebtedness of the Guarantor, to the
extent and in the manner provided in Article Eleven and Article Twelve of the
Indenture.
This Guarantee shall not be valid or obligatory for any purpose
until the certificate of authentication on the Securities upon which this
Guarantee is noted shall have been executed by the Trustee under the Indenture
by the manual signature of one of its authorized officers.
This Guarantee shall be governed by and construed in accordance with
the laws of the State of New York without regard to principles of conflicts of
law.
This Guarantee is subject to release upon the terms set forth in the
Indenture.
[_______________________________]
By:______________________________
Name:
Title:
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ASSIGNMENT FORM
I or we assign and transfer this Security to
_______________________________________________________________________________
_______________________________________________________________________________
(Print or type name, address and zip code of assignee or transferee)
(Insert Social Security or other identifying number of assignee or transferee)
and irrevocably appoint________________________________________________________
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
Dated: ___________________ Signed:____________________________
Signed exactly as name appears on the other
side of this Security)
Signature Guarantee:___________________________
Participant in a recognized Signature Guarantee
Medallion Program (or other signature guarantor
program reasonably acceptable to the Trustee)
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OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.05 or Section 4.14 of the Indenture, check the appropriate
box:
Section 4.05 [______]Section 4.14 [______]
If you want to elect to have only part of this Security purchased by
the Company pursuant to Section 4.05 or Section 4.14 of the Indenture, state the
amount: $_____________
Dated:___________________ Your Signature:_______________________________
(Signed exactly as name appears on the other
side of this Security)
Signature Guarantee:
_________________________
SIGNATURE GUARANTEE
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
18
EXHIBIT B
[FORM OF SERIES B SECURITY]
SPECIAL DEVICES, INCORPORATED
11 3/8% Senior Subordinated Note
due 2008, Series B
CUSIP No.:[_______]
No. [_________] $[____________]
SPECIAL DEVICES, INCORPORATED, a Delaware corporation (the
"Company", which term includes any successor), for value received promises to
pay to Cede & Co. or registered assigns, the principal sum of [__________]
Dollars, on December 15, 2008.
Interest Payment Dates: June 15 and December 15, commencing on
June 15, 1999.
Interest Record Dates: June 1 and December 1.
Reference is made to the further provisions of this Security
contained herein and the Indenture (as defined), which will for all purposes
have the same effect as if set forth at this place.
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IN WITNESS WHEREOF, the Company has caused this Security to be
signed manually or by facsimile by its duly authorized officers.
SPECIAL DEVICES, INCORPORATED
By:________________________________________
Name:
Title
By:________________________________________
Name:
Title
Dated: [_____________________]
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the 11 3/8% Senior Subordinated Notes due 2008,
Series B, described in the within-mentioned Indenture.
Dated: [_____________________]
UNITED STATES TRUST COMPANY OF NEW YORK, as
Trustee
By:_______________________________________________
Authorized Signatory
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(REVERSE OF SECURITY)
SPECIAL DEVICES, INCORPORATED
11 3/8% Senior Subordinated Note
due 2008, Series B
1. Interest.
The Company promises to pay interest on the principal amount of this
Security at the rate per annum shown above. Cash interest on the Securities will
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from December 15, 1998. The Company will pay interest
semi-annually in arrears on each Interest Payment Date, commencing June 15,
1999. Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
In addition, the Company shall pay interest on overdue principal and
on overdue installments of interest (without regard to any applicable grace
periods) to the extent lawful from time to time on demand, in each case at the
rate borne by this Security.
The Securities are not entitled to the benefit of any mandatory
sinking fund.
2. Method of Payment.
The Company shall pay interest on the Securities (except defaulted
interest) to the persons who are the registered Holders at the close of business
on the Interest Record Date immediately preceding the Interest Payment Date even
if the Securities are canceled on registration of transfer or registration of
exchange after such Interest Record Date. Holders must surrender Securities to a
Paying Agent to collect principal payments. The Company shall pay principal and
interest in United States Legal Tender (as defined in the Indenture referred to
below). However, the Company may pay principal and interest by wire transfer of
Federal funds (provided that the Paying Agent shall have received wire
instructions on or prior to the relevant Interest Record Date), or interest by
check payable in such United States Legal Tender. The Company may deliver any
such interest payment to the Paying Agent or to a Holder at the Holder's
registered address.
3. Paying Agent and Registrar.
Initially, United States Trust Company of New York (the "Trustee")
will act as Paying Agent and Registrar. The Company may change any Paying Agent
or Registrar without notice to the Holders. The Company may, subject to certain
exceptions, act as Registrar.
B-3
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4. Indenture.
The Company issued the Securities under an Indenture, dated as of
December 15, 1998 and the First Supplemental Indenture dated as of December 15,
1998 (collectively, the "Indenture"), by and among the Company, the Guarantors
and the Trustee. Capitalized terms herein are used as defined in the Indenture
unless otherwise defined herein. This Security is one of a duly authorized issue
of Securities of the Company designated as its 11 3/8% Senior Subordinated Notes
due 2008 issued under the Indenture. The aggregate principal amount of
Securities which may be issued under the Indenture is limited (except as
otherwise provided in the Indenture) to $150,000,000 in one or more series;
provided that the aggregate principal amount of Initial Securities on the Issue
Date shall not exceed $100,000,000. The terms of the Securities include those
stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939, as amended (the "TIA"), as in effect on the date of
the Indenture (except as otherwise indicated in the Indenture) until such time
as the Indenture is qualified under the TIA, and thereafter as in effect on the
date on which the Indenture is qualified under the TIA. Notwithstanding anything
to the contrary herein, the Securities are subject to all such terms, and
holders of Securities are referred to the Indenture and the TIA for a statement
of them.
5. Subordination.
The Securities are unsecured obligations of the Company and are
subordinated in right of payment to all Senior Indebtedness of the Company to
the extent and in the manner provided in the Indenture. Each Holder of a
Security, by accepting a Security, agrees to such subordination, authorizes the
Trustee to give effect to such subordination and appoints the Trustee as
attorney-in-fact for such purpose. The Securities will rank pari passu in right
of payment with any future senior subordinated indebtedness of the Company and
will rank senior in right of payment to any other subordinated obligations of
the Company.
6. Guarantee.
The obligations of the Company hereunder are guaranteed on a senior
subordinated basis by the Guarantors. The Guarantee by the Guarantors is
subordinated in right of payment to all Guarantor Senior Indebtedness of the
Guarantors to the same extent that the Securities are subordinated to Senior
Indebtedness of the Company.
7. Optional Redemption.
The Securities will be redeemable, at the Company's option, in whole
at any time or in part from time to time, on and after December 15, 2003, upon
not less than 30 nor more than 60 days' notice, at the following redemption
prices (expressed as percentages of the principal amount thereof) if redeemed
during the twelve-month period commencing on December 15 of the year set forth
below, plus, in each case, accrued and unpaid interest thereon, if any, to the
date of redemption:
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YEAR PERCENTAGE
---- ----------
2003......................................... 105.688%
2004......................................... 104.266%
2005......................................... 102.844%
2006......................................... 101.422%
2007 and thereafter.......................... 100.000%
8. Optional Redemption upon Public Equity Offerings.
At any time, or from time to time, on or prior to December 15, 2001,
the Company may, at its option, use the net cash proceeds of one or more Public
Equity Offerings (as defined below) to redeem up to 35% of the sum of (i) the
initial aggregate principal amount of Securities issued in the Offering and (ii)
the respective initial aggregate principal amounts of Securities issued under
the Indenture after the Issue Date, at a redemption price equal to 111.375% of
the principal amount thereof plus accrued and unpaid interest thereon and
Liquidated Damages, if any, to the date of redemption; provided that at least
65% of the sum of (i) the initial aggregate principal amount of Securities
issued in the Offering and (ii) the respective initial aggregate principal
amounts of Securities issued under the Indenture after the Issue Date remains
outstanding immediately after any such redemption. In order to effect the
foregoing redemption with the proceeds of any Public Equity Offering, the
Company shall make such redemption not more than 120 days after the consummation
of any such Public Equity Offering.
As used in the preceding paragraph, "Public Equity Offering" means
an underwritten public offering of Qualified Capital Stock of the Company
pursuant to a registration statement filed with the Commission in accordance
with the Securities Act.
9. Selection and Notice of Redemption.
In the event that less than all of the Securities are to be redeemed
at any time, selection of such Securities for redemption will be made by the
Trustee in compliance with the requirements of the principal national securities
exchange, if any, on which such Securities are listed or, if such Securities are
not then listed on a national securities exchange, on a pro rata basis, by lot
or by such method as the Trustee shall deem fair and appropriate; provided,
however, that no Securities of a principal amount of $1,000 or less shall be
redeemed in part; provided, further, that if a partial redemption is made with
the proceeds of a Public Equity Offering, selection of the Securities or
portions thereof for redemption shall be made by the Trustee only on a pro rata
basis or on as nearly a pro rata basis as is practicable (subject to DTC
procedures), unless such method is otherwise prohibited. Notice of redemption
shall be mailed by first-class mail at least 30 but not more than 60 days before
the redemption date to each Holder of Securities to be redeemed at its
registered address. If any Security is to be redeemed in part only, the notice
of redemption that relates to such Security shall state the portion of the
principal amount thereof to be redeemed. A new Security in a principal amount
equal to the unredeemed portion thereof
B-5
23
will be issued in the name of the Holder thereof upon cancellation of the
original Security. On and after the redemption date, interest will cease to
accrue on Securities or portions thereof called for redemption as long as the
Company has deposited with the Paying Agent funds in satisfaction of the
applicable redemption price pursuant to the Indenture.
10. Change of Control Offer.
Following the occurrence of a Change of Control, the Company shall,
within 30 days, make a Change of Control Offer for all Securities then
outstanding at a purchase price in cash equal to 101% of the aggregate principal
amount thereof, plus accrued and unpaid interest thereon, if any, to the Change
of Control Payment Date (subject to the right of Holders of record on the
relevant Interest Record Date to receive interest due on the relevant Interest
Payment Date).
11. Limitation on Disposition of Assets.
The Company is, subject to certain conditions, obligated to make a
Net Proceeds Offer for Securities at a purchase price equal to 100% of the
principal amount thereof, plus accrued and unpaid interest thereon, if any, to
the Net Proceeds Offer Payment Date (subject to the right of Holders of record
on the Interest Relevant Record Date to receive interest due on the relevant
Interest Payment Date) with the excess proceeds of certain asset dispositions.
12. Denominations; Transfer; Exchange.
The Securities are in registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000. A Holder shall
register the transfer of or exchange of Securities in accordance with the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay certain transfer
taxes or similar governmental charges payable in connection therewith as
permitted by the Indenture. The Registrar need not register the transfer of or
exchange of any Securities or portions thereof selected for redemption, except
the unredeemed portion of any security being redeemed in part.
13. Persons Deemed Owners.
The registered Holder of a Security shall be treated as the owner of
it for all purposes.
14. Unclaimed Funds.
If funds for the payment of principal or interest remain unclaimed
for two years, the Trustee and the Paying Agent will repay the funds to the
Company at its written request. After that, all liability of the Trustee and
such Paying Agent with respect to such funds shall cease.
15. Legal Defeasance and Covenant Defeasance.
B-6
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The Company may be discharged from its obligations under the
Indenture and the Securities, except for certain provisions thereof, and may be
discharged from obligations to comply with certain covenants contained in the
Indenture and the Securities, in each case upon satisfaction of certain
conditions specified in the Indenture.
16. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture and the Securities may
be amended or supplemented with the written consent of the Holders of at least a
majority in aggregate principal amount of the Securities then outstanding, and
any existing Default or Event of Default or compliance with any provision may be
waived with the consent of the Holders of a majority in aggregate principal
amount of the Securities then outstanding. Without notice to or consent of any
Holder, the parties thereto may amend or supplement the Indenture and the
Securities to, among other things, cure any ambiguity, defect or inconsistency,
provide for uncertificated Securities in addition to or in place of certificated
Securities or comply with any requirements of the SEC in connection with the
qualification of the Indenture under the TIA, or make any other change that does
not materially adversely affect the rights of any Holder of a Security.
17. Restrictive Covenants.
The Indenture contains certain covenants that, among other things,
limit the ability of the Company and the Restricted Subsidiaries to make
restricted payments, to incur indebtedness, to create liens, to sell assets, to
permit restrictions on dividends and other payments by Restricted Subsidiaries
to the Company, to consolidate, merge or sell all or substantially all of its
assets or to engage in transactions with affiliates or certain other related
persons. The limitations are subject to a number of important qualifications and
exceptions. The Company must report quarterly to the Trustee on compliance with
such limitations.
18. Defaults and Remedies.
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in aggregate principal amount of Securities then
outstanding may declare all the Securities to be due and payable immediately in
the manner and with the effect provided in the Indenture. Holders of Securities
may not enforce the Indenture or the Securities except as provided in the
Indenture. The Trustee is not obligated to enforce the Indenture or the
Securities unless it has received indemnity satisfactory to it. The Indenture
permits, subject to certain limitations therein provided, Holders of a majority
in aggregate principal amount of the Securities then outstanding to direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of Securities notice of certain continuing Defaults or Events of Default
if it determines that withholding notice is in their interest.
19. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other
capacity, may become the owner or pledgee of Securities and may otherwise deal
with the Company or its respective Affiliates as if it were not the Trustee.
B-7
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20. No Recourse Against Others.
No director, officer, employee, stockholder or incorporator of the
Company, as such, shall have any liability for any obligation of the Company
under the Securities or the Indenture or for any claim based on, in respect of
or by reason of, such obligations or their creation. Each Holder of a Security
by accepting a Security waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the Securities.
21. Authentication.
This Security shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on this Security.
22. Abbreviations and Defined Terms.
Customary abbreviations may be used in the name of a Holder of a
Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
23. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Securities as a convenience to the Holders of the Securities. No
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
24. Governing Law.
The Indenture and the Securities will be governed by, and construed
in accordance with, the laws of the State of New York but without giving effect
of applicable principles of conflicts of law to the extent that the application
of the law of another jurisdiction would be required thereby.
B-8
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[FORM OF GUARANTEE]
SENIOR SUBORDINATED GUARANTEE
The Guarantor (capitalized terms used herein have the meanings given
such terms in the Indenture referred to in the Security upon which this notation
is endorsed) hereby unconditionally guarantees on a senior subordinated basis
(such guaranty being referred to herein as the "Guarantee") the due and punctual
payment of the principal of, premium, if any, and interest on the Securities,
whether at maturity, by acceleration or otherwise, the due and punctual payment
of interest on the overdue principal, premium and interest on the Securities,
and the due and punctual performance of all other obligations of the Company to
the Holders or the Trustee, all in accordance with the terms set forth in
Article Eleven of the Indenture.
The obligations of the Guarantor to the Holders of Securities and to
the Trustee pursuant to the Guarantee and the Indenture are expressly set forth,
and are expressly subordinated and subject in right of payment to the prior
payment in full of all Guarantor Senior Indebtedness of the Guarantor, to the
extent and in the manner provided in Article Eleven and Article Twelve of the
Indenture.
This Guarantee shall not be valid or obligatory for any purpose
until the certificate of authentication on the Securities upon which this
Guarantee is noted shall have been executed by the Trustee under the Indenture
by the manual signature of one of its authorized officers.
This Guarantee shall be governed by and construed in accordance with
the laws of the State of New York without regard to principles of conflicts of
law.
This Guarantee is subject to release upon the terms set forth in the
Indenture.
[_______________________________]
By:______________________________
Name:
Title:
27
ASSIGNMENT FORM
I or we assign and transfer this Security to
_______________________________________________________________________________
_______________________________________________________________________________
(Print or type name, address and zip code of assignee or transferee)
(Insert Social Security or other identifying number of assignee or transferee)
and irrevocably appoint _______________________________________________________
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
Dated:___________________ Signed:____________________________________
Signed exactly as name appears on the other
side of this Security)
Signature Guarantee: _____________________________
Participant in a recognized Signature Guarantee
Medallion Program (or other signature guarantor
program reasonably acceptable to the Trustee)
28
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.05 or Section 4.14 of the Indenture, check the appropriate
box:
Section 4.05 [______]Section 4.14 [______]
If you want to elect to have only part of this Security purchased by
the Company pursuant to Section 4.05 or Section 4.14 of the Indenture, state the
amount: $_____________
Dated:___________________ Your Signature:_______________________________
(Signed exactly as name appears on the other
side of this Security)
Signature Guarantee:
_________________________
SIGNATURE GUARANTEE
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
