---------------------
FAMILY GOLF CENTERS, INC.
5 3/4% Convertible Subordinated Notes
due 2004
-----------------
INDENTURE
Dated as of October 16, 1997
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United States Trust Company of New York,
Trustee
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CROSS-REFERENCE TABLE*
Indenture
TIA Section Section
----------- -------
ss.310(a)(1)......................................................... 9.10
(a)(2)......................................................... 9.10
(a)(3)......................................................... N.A.**
(a)(4)......................................................... N.A.
(a)(5)......................................................... 9.10
(b)............................................................ 9.8; 9.10
(c)............................................................ N.A.
ss.311(a)............................................................ 9.11
(b)............................................................ 9.11
(c)............................................................ N.A.
ss.312(a)............................................................ 2.5
(b)............................................................ 12.3
(c)............................................................ 12.3
ss.313(a)............................................................ 9.6
(b)(1)......................................................... N.A.
(b)(2)......................................................... 9.6
(c)............................................................ 9.6; 12.2
(d)............................................................ 9.6
ss.314(a)............................................................ 6.2; 6.4;
12.2
(b)............................................................ N.A.
(c)(1)......................................................... 12.4(a)
(c)(2)......................................................... 12.4(a)
(c)(3)......................................................... N.A.
(d)............................................................ N.A.
(e)............................................................ 12.4(b)
(f)............................................................ N.A.
ss.315(a)............................................................ 9.1(b)
(b)............................................................ 9.5; 12.2
(c)............................................................ 9.1(a)
(d)............................................................ 9.1(c)
(e)............................................................ 8.11
ss.316(a)(last sentence)............................................. 2.9
(a)(1)(A)...................................................... 8.5
(a)(1)(B)...................................................... 8.4
(a)(2)......................................................... N.A.
(b)............................................................ 8.7
(c)............................................................ 12.5
ss.317(a)(1)......................................................... 8.8
(a)(2)......................................................... 8.9
(b)............................................................ 2.4
ss.318(a)............................................................ 12.1
* This Cross-Reference Table shall not, for any purpose, be deemed a part
of this Indenture.
** N.A. means Not Applicable.
-i-
TABLE OF CONTENTS
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE................................1
SECTION 1.1 Definitions................................................1
SECTION 1.2 Other Definitions..........................................7
SECTION 1.3 Trust Indenture Act Provisions.............................7
SECTION 1.4 Rules of Construction......................................8
ARTICLE 2.
THE SECURITIES............................................................9
SECTION 2.1 Form and Dating............................................9
SECTION 2.2 Execution and Authentication...............................9
SECTION 2.3 Registrar, Paying Agent and Conversion Agent..............10
SECTION 2.4 Paying Agent to Hold Money In Trust.......................10
SECTION 2.5 Securityholder Lists......................................11
SECTION 2.6 Transfer and Exchange.....................................11
SECTION 2.7 Replacement Securities....................................12
SECTION 2.8 Outstanding Securities....................................13
SECTION 2.9 Treasury Securities.......................................13
SECTION 2.10 Temporary Securities......................................13
SECTION 2.11 Cancellation..............................................14
ARTICLE 3.
REDEMPTION AND PURCHASES.................................................14
SECTION 3.1 Right to Redeem; Notice to Trustee........................14
SECTION 3.2 Selection of Securities to Be Redeemed....................14
SECTION 3.3 Notice of Redemption......................................15
SECTION 3.4 Effect of Notice of Redemption............................16
SECTION 3.5 Deposit of Redemption Price...............................16
SECTION 3.6 Securities Redeemed in Part...............................16
SECTION 3.7 Conversion Arrangement on Call for Redemption.............16
SECTION 3.8 Purchase of Securities at Option of the Holder
Upon Change of Control....................................17
SECTION 3.9 Effect of Change of Control Purchase Notice...............21
SECTION 3.10 Deposit of Repurchase Price...............................22
SECTION 3.11 Securities Purchased In Part..............................22
SECTION 3.12 Compliance With Securities Laws Upon Purchase of
Securities................................................22
SECTION 3.13 Repayment to the Company..................................23
ARTICLE 4.
CONVERSION...............................................................23
SECTION 4.1 Conversion Privilege......................................23
SECTION 4.2 Conversion Procedure......................................24
SECTION 4.3 Fractional Shares.........................................25
SECTION 4.4 Taxes on Conversion.......................................25
SECTION 4.5 Company to Provide Stock..................................26
SECTION 4.6 Adjustment of Conversion Price............................26
1
SECTION 4.7 No Adjustment.............................................31
SECTION 4.8 Adjustment for Tax Purposes...............................31
SECTION 4.9 Notice of Adjustment......................................31
SECTION 4.10 Notice of Certain Transactions............................32
SECTION 4.11 Effect of Reclassification, Consolidation, Merger
or Sale on Conversion Privilege...........................32
SECTION 4.12 Trustee's Disclaimer......................................33
SECTION 4.13 Voluntary Reduction.......................................34
ARTICLE 5.
SUBORDINATION............................................................34
SECTION 5.1 Securities Subordinated to Senior Indebtedness............34
SECTION 5.2 Securities Subordinated to Prior Payment of All
Senior Indebtedness on Dissolution, Liquidation,
Reorganization, Etc., of the Company......................34
SECTION 5.3 Securityholders to Be Subrogated to Right of
Holders of Senior Indebtedness............................36
SECTION 5.4 Obligations of the Company Unconditional..................37
SECTION 5.5 Company Not to Make Payment With Respect to
Securities in Certain Circumstances.......................37
SECTION 5.6 Notice to Trustee.........................................39
SECTION 5.7 Application by Trustee of Monies
Deposited With It.........................................40
SECTION 5.8 Subordination Rights Not Impaired by Acts or
Omissions of Company or Holders of Senior
Indebtedness..............................................40
SECTION 5.9 Trustee to Effectuate Subordination.......................41
SECTION 5.10 Right of Trustee to Hold Senior Indebtedness..............41
SECTION 5.11 Article 5 Not to Prevent Events of Default................41
SECTION 5.12 No Fiduciary Duty Created to Holders of Senior
Indebtedness..............................................42
SECTION 5.13 Article Applicable to Paying Agents.......................42
ARTICLE 6.
COVENANTS................................................................42
SECTION 6.1 Payment of Securities.....................................42
SECTION 6.2 SEC Reports...............................................42
SECTION 6.3 Liquidation...............................................43
SECTION 6.4 Limitation on Transactions with Affiliates................44
SECTION 6.5 Compliance Certificates...................................45
SECTION 6.6 Notice of Defaults........................................45
SECTION 6.7 Further Instruments and Acts..............................46
ARTICLE 7.
SUCCESSOR CORPORATION....................................................46
SECTION 7.1 When Company May Merge, Etc...............................46
SECTION 7.2 Successor Corporation Substituted.........................47
2
ARTICLE 8.
DEFAULT AND REMEDIES.....................................................47
SECTION 8.1 Events of Default.........................................47
SECTION 8.2 Acceleration..............................................49
SECTION 8.3 Other Remedies............................................50
SECTION 8.4 Waiver of Defaults and Events of Default..................50
SECTION 8.5 Control by Majority.......................................50
SECTION 8.6 Limitations on Suits......................................50
SECTION 8.7 Rights of Holders to Receive Payment......................51
SECTION 8.8 Collection Suit by Trustee................................51
SECTION 8.9 Trustee May File Proofs of Claim..........................52
SECTION 8.10 Priorities................................................52
SECTION 8.11 Undertaking for Costs.....................................53
SECTION 8.12 Waiver of Usury, Stay or Extension Laws...................53
ARTICLE 9.
TRUSTEE..................................................................53
SECTION 9.1 Duties of Trustee.........................................53
SECTION 9.2 Rights of Trustee.........................................55
SECTION 9.3 Individual Rights of Trustee..............................55
SECTION 9.4 Trustee's Disclaimer......................................56
SECTION 9.5 Notice of Default or Events of Default....................56
SECTION 9.6 Reports by Trustee to Holders.............................56
SECTION 9.7 Compensation and Indemnity................................56
SECTION 9.8 Replacement of Trustee....................................57
SECTION 9.9 Successor Trustee by Merger, Etc..........................58
SECTION 9.10 Eligibility; Disqualification.............................59
SECTION 9.11 Preferential Collection of Claims
Against Company...........................................59
ARTICLE 10.
SATISFACTION AND DISCHARGE OF INDENTURE..................................59
SECTION 10.1 Termination of Company's Obligations......................59
SECTION 10.2 Application of Trust Money................................60
SECTION 10.3 Repayment to Company......................................60
SECTION 10.4 Reinstatement.............................................61
ARTICLE 11.
AMENDMENTS, SUPPLEMENTS AND WAIVERS......................................61
SECTION 11.1 Without Consent of Holders................................61
SECTION 11.2 With Consent of Holders...................................61
SECTION 11.3 Compliance With Trust Indenture Act.......................63
SECTION 11.4 Revocation and Effect of Consents.........................63
SECTION 11.5 Notation on or Exchange of Securities.....................63
SECTION 11.6 Trustee to Sign Amendments, etc...........................63
ARTICLE 12.
MISCELLANEOUS............................................................64
SECTION 12.1 Trust Indenture Act Controls..............................64
3
SECTION 12.2 Notices...................................................64
SECTION 12.3 Communications by Holders With Other Holders..............65
SECTION 12.4 Certificate and Opinion as to Conditions Precedent........65
SECTION 12.5 Record Date for Vote or Consent of Securityholders........66
SECTION 12.6 Rules by Trustee, Paying Agent, Registrar,
Conversion Agent..........................................66
SECTION 12.7 Legal Holidays............................................66
SECTION 12.8 Governing Law.............................................66
SECTION 12.9 No Adverse Interpretation of Other Agreements.............67
SECTION 12.10 No Recourse Against Others................................67
SECTION 12.11 Successors................................................67
SECTION 12.12 Multiple Counterparts.....................................67
SECTION 12.13 Separability..............................................67
SECTION 12.14 Table of Contents, Headings, etc..........................67
4
INDENTURE dated as of October 16, 1997 between FAMILY GOLF CENTERS,
INC, a Delaware corporation (the "Company"), and UNITED STATES TRUST COMPANY OF
NEW YORK, a banking and trust company duly organized and existing under the
laws of the state of New York, as Trustee (the "Trustee").
Both parties agree as follows for the benefit of the other and for the
equal and ratable benefit of the registered holders of the Company's 5 3/4%
Convertible Subordinated Notes due 2004.
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 Definitions
"Affiliate" of any specified person means (i) any other person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified person, (ii) any spouse, immediate family
member or other relative who has the same principal residence as the person
described in clause (i) above, (iii) any trust in which any such persons
described in clause (i) or (ii) above has a beneficial interest, and (iv) any
corporation or other organization of which any such persons described above
collectively own 50% or more of the equity of such entity. For the purposes of
this definition, "control" when used with respect to any person means the power
to direct the management and policies of such person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agent" means any Registrar, Paying Agent or Conversion
Agent.
"Board of Directors" means the Board of Directors of the Company or
any authorized committee of the Board of Directors.
"Business Day" means a day that is not a Legal Holiday.
"Capitalized Lease Obligation" means indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with generally accepted accounting principles;
the amount of such indebtedness shall be the capitalized amount of such
obligations determined in accordance with such principles.
"Cash" or "cash" means such coin or currency of the United States as
at any time of payment is legal tender for the payment of public and private
debts.
"Common Stock" means the common stock of the Company, $.01 par value,
as it exists on the date of this Indenture or as it may be constituted from
time to time.
"Company" means the party named as such in this Indenture until a
successor replaces it pursuant to this Indenture, and thereafter means the
successor.
"Consolidated Net Worth" with respect to any Person means, as of any
date, the consolidated equity of the common stockholders of such Person
(excluding the cumulated foreign currency translation adjustment), all
determined on a consolidated basis in accordance with GAAP, but without any
reduction in respect of the payment of dividends on any series of such Person's
preferred stock if such dividends are paid in additional shares of capital
stock; provided, however, that Consolidated Net Worth shall also include,
without duplication: (a) the amortization of all write-ups of inventory, (b)
the amortization of all intangible assets (including amortization of goodwill,
debt and financing costs), (c) any non-capitalized transaction costs incurred
in connection with actual or proposed financings, acquisitions or divestitures
(including, but not limited to, financing and refinancing fees), (d) any
increased amortization or depreciation resulting from the write-up of assets
pursuant to Accounting Principles Board Opinion Nos. 16 and 17, as amended and
supplemented from time to time, (e) any extraordinary or nonrecurring charges
or expenses relating to any premium or penalty paid, write-off of deferred
financing costs, or other financial recapitalization charges incurred in
connection with redeeming or retiring any Indebtedness prior to its
recapitalization charges incurred in connection with redeeming or retiring any
Indebtedness prior to its stated maturity, and (f) any extraordinary or
non-recurring charge arising out of the implementation of SFAS 106 or SFAS 109;
provided, however, that Consolidated Net Worth shall be calculated on a pro
forma basis.
"Corporate Trust Office" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be administered
which office at the date of the execution of this Indenture is located at ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust Division
or at any other time at such other address as the Trustee may designate from
time to time by notice to the Company.
"Credit Facility" means the credit agreement entered into by the
Company and the Designated Senior Lender dated as of June 30, 1997, providing
for a two-year $20 million revolving credit facility converting to a four-year
term loan on July 1, 1999, together with all loan documents and instruments
thereunder (including, without limitation, any guarantee or pledge
2
agreements and security documents), in each case as such agreements may be
amended (including any amendment and restatement thereof), supplemented or
otherwise modified from time to time, including any agreement extending the
maturity of, refinancing, replacing or otherwise restructuring (including,
without limitation, increasing the amount of available borrowings thereunder,
and all obligations with respect thereto, in adding Subsidiaries of the Company
as additional borrowers or guarantors thereunder and in receiving or releasing
collateral therefor) all or any portion of the Indebtedness under any such
agreement or any successor or replacement agreement and whether by the same or
any other lender or group of lenders.
"Default" or "default" means any event which is, or after notice or
passage of time, or both, would be an Event of Default.
"Designated Senior Indebtedness" means the Credit Facility and Term
Debt, and any particular Senior Indebtedness in which the instrument creating
or evidencing the same or the assumption or guarantee thereof (or related
agreements or documents to which the Company is a party) expressly provides
that such Senior Indebtedness shall be "Designated Senior Indebtedness" for
purposes of the Indenture (provided that such instrument, agreement or other
document may place limitations and conditions on the right of such Senior
Indebtedness to exercise the rights of Designated Senior Indebtedness). The
Company shall not, as long as any indebtedness remains outstanding under the
Credit Facility, the Term Debt or any other instrument with the Designated
Senior Lender, create any other Indebtedness which provides that it is
Designated Senior Indebtedness without the written consent of the Designated
Senior Lender.
"Designated Senior Lender" means The Chase Manhattan Bank.
"Holder" or "Securityholder" means the person in whose name a Security
is registered on the Registrar's books.
"Indebtedness" means, with respect to any Person and without
duplication, (a) all indebtedness, obligations and other liabilities
(contingent or otherwise) of such Person for borrowed money (including
obligations of the Company in respect of overdrafts, settlement of funds,
foreign exchange contracts, currency exchange agreements, interest rate
protection agreements, and any loans or advances from banks, whether or not
evidenced by notes or similar instrument) or evidenced by bonds, notes,
debentures or similar instruments (whether or not the recourse of the lender is
to the whole of the assets of such Person or to only a portion thereof) (other
than any account payable or other accrued current liability or obligation
incurred in the ordinary course of business in connection with the obtaining of
materials or services), (b) all reimbursement
3
obligations and other liabilities (contingent or otherwise) of such Person with
respect to letters of credit, bank guarantees or bankers' acceptances, (c) all
obligations and liabilities (contingent or otherwise) in respect of leases of
such Person required, in conformity with generally accepted accounting
principles, to be accounted for as capitalized lease obligations on the balance
sheet of such Person and all obligations and other liabilities (contingent or
otherwise) under any lease or related document (including a purchase agreement)
in connection with the lease of real property which provides that such Person
is contractually obligated to purchase or cause a third party to purchase the
leased property and thereby guarantee a minimum residual value of the leased
property to the lessor and the obligations of such Person under such lease or
related document to purchase or to cause a third party to purchase such leased
property, (d) all obligations of such Person (contingent or otherwise) with
respect to an interest rate or other swap, cap or collar agreement or other
similar instrument or agreement or foreign currency hedge, exchange, purchase
or similar instrument or agreement, (e) all direct or indirect guaranties or
similar agreements by such Person in respect of, and obligations or liabilities
(contingent or otherwise) of such Person to purchase or otherwise acquire or
otherwise assure a creditor against loss in respect of, indebtedness,
obligations or liabilities of another person of the kind described in clauses
(a) through (d), (f) any indebtedness or other obligations described in clauses
(a) through (d) secured by any mortgage, pledge, lien or other encumbrance
existing on property which is owned or held by such Person, regardless of
whether the indebtedness or other obligation secured thereby shall have been
assumed by such Person and (g) any and all deferrals, renewals, extensions and
refundings of, or amendments, modifications or supplements to, any
indebtedness, obligation or liability of the kind described in clauses (a)
through (f).
"Indenture" means this Indenture as amended or supplemented from time
to time pursuant to the terms of this Indenture.
"Offering" means the offer and sale of the Securities as
contemplated by the Offering Circular.
"Offering Circular" means the Offering Circular, dated October 9,
1997, relating to the Company's offering and placement of the Securities.
"Officer" means the Chairman or any Co-Chairman of the Board, any Vice
Chairman of the Board, the President, any Vice President, the Chief Financial
Officer, the Secretary or any Assistant Secretary of the Company.
4
"Officers' Certificate" means a certificate signed by two Officers;
provided, however, that for purposes of Section 6.5, "Officers' Certificate"
means a certificate signed by the principal executive officer, principal
financial officer or principal accounting officer of the Company.
"Opinion of Counsel" means a written opinion from legal counsel. The
counsel may be an employee of or counsel to the Company or the Trustee.
"Person" or "person" means any individual, corporation, limited
liability company, partnership, joint venture, association, joint-stock
company, trust, or any other entity or organization, including a government or
political subdivision or instrumentality thereof.
"Principal" or "principal" of a debt security, including the
Securities, means the principal of the security plus, when appropriate, the
premium, if any, on the security.
"Principal Stockholder" means (i) ▇▇▇▇▇▇▇ ▇▇▇▇▇, and/or his heirs,
executors and administrators, (ii) any trusts established by ▇▇▇▇▇▇▇ ▇▇▇▇▇
whose beneficiaries are ▇▇▇▇▇▇▇ ▇▇▇▇▇ and/or his lineal descendants or other
relatives and (iii) any family members or other affiliated Persons of ▇▇▇▇▇▇▇
▇▇▇▇▇.
"Redemption Date" or "redemption date," when used with respect to any
Security to be redeemed, means the date fixed for such redemption pursuant to
this Indenture.
"Redemption Price" or "redemption price," when used with respect to
any Security to be redeemed, means the price fixed for such redemption pursuant
to this Indenture, as set forth in the form of Security annexed as Exhibit A
hereto.
"SEC" or "Commission" means the Securities and Exchange
Commission.
"Securities" means the 5 3/4% Convertible Subordinated Notes due 2004
or any of them (each, a "Security"), as amended or supplemented from time to
time, that are issued under this Indenture.
"Senior Indebtedness" means the principal of, premium, if any,
interest (including all interest accruing subsequent to the commencement of any
bankruptcy or similar proceeding, whether or not a claim for post-petition
interest is allowable as a claim in any such proceeding) and rent payable on or
in connection with, and all fees, costs, expenses and other amounts accrued or
due on or in connection with, Indebtedness of the Company, whether outstanding
on the date of this Indenture or thereafter created,
5
incurred, assumed, guaranteed or in effect guaranteed by the Company (including
all deferrals, renewals, extensions or refundings of, or amendments,
modifications or supplements to, the foregoing), unless in the case of any
particular Indebtedness the instrument creating or evidencing the same or the
assumption or guarantee thereof expressly provides that such Indebtedness shall
not be senior in right of payment to the Securities or expressly provides that
such Indebtedness is "pari passu" or "junior" to the Notes. Notwithstanding the
foregoing, the term Senior Indebtedness shall not include any Indebtedness of
the Company to any Subsidiary of the Company, a majority of the voting stock of
which is owned, directly or indirectly, by the Company.
"Subsidiary" means any corporation of which at least a majority of the
outstanding capital stock having voting power under ordinary circumstances to
elect directors of such corporation shall at the time be held, directly or
indirectly, by the Company, by the Company and one or more Subsidiaries, or by
one or more Subsidiaries.
"Term Debt" means the indebtedness evidenced by certain promissory
notes described in and modified by the First Note Modification Agreement dated
July 25, 1997 entered into by the Company and the Designated Senior Lender in
an aggregate principal amount of $26.9 million due August 2002, together with
all loan documents and instruments thereunder (including, without limitation,
any guarantee or pledge agreements and security documents), in each case as
such agreements have been or may be amended (including any amendment and
restatement thereof), supplemented or otherwise modified from time to time,
including any agreement extending the maturity of, refinancing, replacing or
otherwise restructuring (including, without limitation, increasing the amount
of available borrowings thereunder, and all obligations with respect thereto,
in adding Subsidiaries of the Company as additional borrowers or guarantors
thereunder and in receiving or releasing collateral therefor) all or any
portion of the Indebtedness under any such agreement or any successor or
replacement agreement and whether by the same or any other lender or group of
lenders.
"TIA" means the Trust Indenture Act of 1939, as amended by the Trust
Indenture Reform Act of 1990 and as in effect on the date of this Indenture,
except as provided in Section 11.3, and except to the extent any amendment to
the Trust Indenture Act expressly provides for application of the Trust
Indenture Act as in effect on another date.
"Trading Day" means, with respect to any security, each Monday,
Tuesday, Wednesday, Thursday and Friday, other than any
6
day on which securities are not generally traded on the exchange or market in
which such security is traded.
"Trustee" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture, and
thereafter means the successor.
"Trust Officer" means, with respect to the Trustee, any officer within
the Corporate Trust Division of the Trustee, including any managing director,
vice president, assistant vice president, assistant treasurer, assistant
secretary or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above-designated officers, and also,
with respect to a particular matter, any other officer, to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject.
SECTION 1.2 Other Definitions
TERM DEFINED IN SECTION
"Affiliate Transaction" 6.4
"Bankruptcy Law" 8.1
"Change of Control" 3.8
"Company Notice" 3.8
"Company Order" 2.2
"Conversion Agent" 2.3
"Conversion Date" 4.2
"Conversion Price" 4.6
"Conversion Shares" 4.6
"Custodian" 8.1
"Determination Date" 4.6
"Disposition" 7.1
"Distribution Date" 4.6
"Event of Default" 8.1
"Exchange Act" 3.8
"Legal Holiday" 12.7
"Payment Blockage Notice" 5.5
"Paying Agent" 2.3
"Registrar" 2.3
"Repurchase Date" 3.8
"Repurchase Price" 3.8
"Rights" 4.6
"Subordinated Indebtedness" 5.1
"Triggering Distribution" 4.6
"Unissued Shares" 3.8
"U.S. Government Obligations" 10.1
SECTION 1.3 Trust Indenture Act Provisions
7
Whenever this Indenture refers to a provision of the TIA, that
provision is incorporated by reference in and made a part of this Indenture.
The Indenture shall also include those provisions of the TIA required to be
included herein by the provisions of the Trust Indenture Reform Act of 1990.
The following TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC;
"indenture securities" means the Securities;
"indenture security holder" means a Securityholder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the
Trustee; and
"obligor" on the indenture securities means the Company or
any other obligor on the Securities.
All other terms used in this Indenture that are defined in the TIA,
defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings assigned to them therein.
SECTION 1.4 Rules of Construction
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting
principles in effect on the date hereof, and any other reference in
this Indenture to "generally accepted accounting principles" refers to
generally accepted accounting principles in effect on the date hereof;
(3) words in the singular include the plural, and words in
the plural include the singular;
(4) provisions apply to successive events and transactions;
and
(5) "herein," "hereof" and other words of similar import
refer to this Indenture as a whole and not to any particular Article,
Section or other subdivision.
8
ARTICLE 2.
THE SECURITIES
SECTION 2.1 Form and Dating
The Securities and the Trustee's certificate of authentication shall
be substantially in the form of Exhibit A, which is incorporated in and made
part of this Indenture. The Securities may have notations, legends or
endorsements required by law, stock exchange rule or usage. The Company shall
approve, with the consent of the Trustee, any notation, legend or endorsement
on the Securities. Each Security shall be dated the date of its authentication.
SECTION 2.2 Execution and Authentication
An Officer shall sign the Securities for the Company by manual or
facsimile signature. Typographic and other minor errors or defects in any
signature shall not affect the validity or enforceability of any Security which
has been authenticated and delivered by the Trustee.
If an Officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security, the Security shall
be valid nevertheless.
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security. The
signature shall be conclusive evidence that the Security has been authenticated
under this Indenture.
The Trustee shall authenticate and make available for delivery
Securities for original issue in the aggregate principal amount of up to
$100,000,000 (plus up to an additional $15,000,000 issued pursuant to the
exercise of the over-allotment option described in Section 2(b) of that certain
Purchase Agreement dated October 9, 1997 among the Company and ▇▇▇▇▇▇▇▇▇ &
Company, Inc., ▇▇▇▇▇▇▇▇▇▇▇ & Co., Inc., Prudential Securities Incorporated and
BancAmerica ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ upon a written order or orders of the Company
signed by two Officers of the Company (a "Company Order"). The Company Order
shall specify the amount of Securities to be authenticated and the date on
which the original issue of Securities is to be authenticated. The aggregate
principal amount of Securities outstanding at any time may not exceed
$100,000,000, except as provided above and in Section 2.7.
The Trustee shall act as the initial authenticating agent.
Thereafter, the Trustee may appoint an authenticating agent
acceptable to the Company to authenticate Securities. An
9
authenticating agent may authenticate Securities whenever the Trustee may do
so. Each reference in this Indenture to authentication by the Trustee includes
authentication by such agent. An authenticating agent has the same rights as an
Agent to deal with the Company or an Affiliate of the Company.
The Securities shall be issuable only in registered form without
coupons and only in denominations of $1,000 and any integral multiple thereof.
SECTION 2.3 Registrar, Paying Agent and Conversion Agent
The Company shall maintain an office or agency where Securities may be
presented for registration of transfer or for exchange (the "Registrar"), an
office or agency where Securities may be presented for payment (the "Paying
Agent"), an office or agency where Securities may be presented for conversion
(the "Conversion Agent") and an office or agency where notices and demands to
or upon the Company in respect of the Securities and this Indenture may be
served. The Registrar shall keep a register of the Securities and of their
transfer and exchange.
The Company shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture. The agreement shall implement the
provisions of this Indenture that relate to such Agent. The Company shall
notify the Trustee of the name and address of any Agent not a party to this
Indenture. If the Company fails to maintain a Registrar, Paying Agent,
Conversion Agent or agent for service of notices and demands, or fails to give
the foregoing notice, the Trustee shall act as such. The Company or any
Affiliate of the Company may act as Paying Agent (except for the purposes of
Section 6.1 and Article 10), Registrar or Conversion Agent.
The Company initially appoints the Trustee as Registrar, Paying Agent,
Conversion Agent and agent for service of notices and demands in connection
with the Securities.
SECTION 2.4 Paying Agent to Hold Money In Trust
On or prior to 12:00 noon New York time on each due date of the
principal of or interest on any Securities, the Company shall deposit with the
Paying Agent a sum sufficient to pay such principal or interest so becoming
due. Subject to Section 5.7, the Paying Agent shall hold in trust for the
benefit of Securityholders or the Trustee all money held by the Paying Agent
for the payment of principal of or interest on the Securities, and shall notify
the Trustee of any default by the Company (or any other obligor on the
Securities) in making any such payment. If the Company or an Affiliate of the
Company acts as Paying Agent, it shall, on or before each due date of the
principal of
10
or interest on any Securities, segregate the money and hold it as a separate
trust fund. The Company at any time may require a Paying Agent to pay all money
held by it to the Trustee and the Trustee may at any time during the
continuance of any default, upon written request to a Paying Agent, require
such Paying Agent to forthwith pay to the Trustee all sums so held in trust by
such Paying Agent. Upon doing so, the Paying Agent (other than the Company)
shall have no further liability for the money.
SECTION 2.5 Securityholder Lists
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Securityholders. If the Trustee is not the Registrar, the Company shall furnish
to the Trustee on or before the fifth Business Day preceding each semiannual
interest payment date and at such other times as the Trustee may request in
writing a list in such form and as of such date as the Trustee may reasonably
require of the names and addresses of Securityholders.
SECTION 2.6 Transfer and Exchange
When a Security is presented to the Registrar with a request to
register a transfer thereof or to exchange such Security for an equal principal
amount of Securities of other authorized denominations, the Registrar shall
register the transfer or make the exchange as requested; provided, however,
that every Security presented or surrendered for registration of transfer or
exchange shall be duly endorsed or accompanied by a written instrument of
transfer in form satisfactory to the Registrar duly executed by the Holder
thereof or his or her attorney duly authorized in writing. To permit
registration of transfers and exchanges, upon surrender of any Security for
registration of transfer or exchange at the office or agency maintained
pursuant to Section 2.3, the Company shall execute and the Trustee shall
authenticate Securities of a like aggregate principal amount at the Registrar's
request. Any exchange or transfer shall be without charge, except that the
Company or the Registrar may require payment of a sum sufficient to cover any
tax, assessment or other governmental charge that may be imposed in relation
thereto, and provided further that this sentence shall not apply to any
exchange pursuant to Section 2.10, 3.6, 3.11, 4.2 (last paragraph) or 11.5.
Neither the Company, the Registrar nor the Trustee shall be required
to exchange or register a transfer of (a) any Securities for a period of 15
days next preceding the date of any selection of Securities to be redeemed, (b)
any Securities or portions thereof selected or called for redemption (except,
in the case of redemption of a Security in part, the portion not to be
redeemed)
11
or (c) any Securities or portions thereof in respect of which a Change of
Control Purchase Notice has been delivered and not withdrawn by the Holder
thereof (except, in the case of the purchase of a Security in part, the portion
not to be purchased).
All Securities issued upon any transfer or exchange of Securities
shall be valid obligations of the Company, evidencing the same debt and
entitled to the same benefits under this Indenture as the Securities
surrendered upon such transfer or exchange.
SECTION 2.7 Replacement Securities
If any mutilated Security is surrendered to the Company, the Registrar
or the Trustee, or the Company, the Registrar and the Trustee receive evidence
to their satisfaction of the destruc tion, loss or theft of any Security, and
there is delivered to the Company, the Registrar and the Trustee such Security
or indemnity as may be required by them to save each of them harmless, then, in
the absence of notice to the Company, the Registrar or the Trustee that such
Security has been acquired by a bona fide purchaser, the Company shall execute,
and upon its written request the Trustee shall authenticate and deliver, in
exchange for any such mutilated Security or in lieu of any such destroyed, lost
or stolen Security, a new Security of like tenor and principal amount, bearing
a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, or is about to be redeemed or
purchased by the Company pursuant to Article 3, the Company in its discretion
may, instead of issuing a new Security, pay, redeem or purchase such Security,
as the case may be.
Upon the issuance of any new Securities under this Section 2.7, the
Company may require the payment of a sum sufficient to cover any tax,
assessment or other governmental charge that may be imposed in relation thereto
and any other expenses (including the fees and expenses of the Trustee or the
Registrar) in connection therewith.
Every new Security issued pursuant to this Section 2.7 in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all benefits of this Indenture equally and proportionately with any
and all other Securities duly issued hereunder.
12
The provisions of this Section 2.7 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 2.8 Outstanding Securities
Securities outstanding at any time are all Securities authenticated by
the Trustee, except for those canceled by it, those delivered to it for
cancellation and those described in this Section 2.8 as not outstanding.
If a Security is replaced pursuant to Section 2.7, it ceases to be
outstanding unless the Company receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
If the Paying Agent (other than the Company) holds on a redemption
date or maturity date money sufficient to pay the principal of, and premium, if
any, and accrued interest on, Securities payable on that date, then on and
after that date such Securities cease to be outstanding and interest on them
ceases to accrue.
Subject to the restrictions contained in Section 2.9, a Security does
not cease to be outstanding because the Company or an Affiliate of the Company
holds the Security.
SECTION 2.9 Treasury Securities
In determining whether the Holders of the required principal amount of
Securities have concurred in any notice, direction, waiver or consent,
Securities owned by the Company or any other obligor on the Securities or by
any Affiliate of the Company or of such other obligor shall be disregarded,
except that, for purposes of determining whether the Trustee shall be protected
in relying on any such notice, direction, waiver or consent, only Securities
which the Trustee knows are so owned shall be so disregarded. Securities so
owned which have been pledged in good faith shall not be disregarded if the
pledgee establishes to the satisfaction of the Trustee the pledgee's right so
to act with respect to the Securities and that the pledgee is not the Company
or any other obligor on the Securities or any Affiliate of the Company or of
such other obligor.
SECTION 2.10 Temporary Securities
Until definitive Securities are ready for delivery, the Company may
prepare and execute, and, upon the order of the Company, the Trustee shall
authenticate and deliver, temporary Securities. Temporary Securities shall be
substantially in the
13
form of definitive Securities but may have variations that the Company with the
consent of the Trustee considers appropriate for temporary Securities. Without
unreasonable delay, the Company shall prepare and the Trustee shall
authenticate and deliver definitive Securities in exchange for temporary
Securities.
SECTION 2.11 Cancellation
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar, the Paying Agent and the Conversion Agent shall
forward to the Trustee or its agent any Securities surrendered to them for
transfer, exchange, payment or conversion. The Trustee and no one else shall
cancel, in accordance with its standard procedures, all Securities surrendered
for transfer, exchange, redemption, payment, conversion or cancellation and
shall deliver the canceled Securities to the Company. The Company may not issue
new Securities to replace Securities it has paid or delivered to the Trustee
for cancellation or that any Holder has converted pursuant to Article 4.
ARTICLE 3.
REDEMPTION AND PURCHASES
SECTION 3.1 Right to Redeem; Notice to Trustee
The Securities may be redeemed at the election of the Company, as a
whole or from time to time in part, at any time on or after October 15, 2000,
at the redemption prices specified in paragraph 5 of the form of Security
attached hereto as Exhibit A, together with accrued interest up to but not
including the Redemption Date.
If the Company elects to redeem Securities pursuant to this Section
3.1 and paragraph 5 of the Securities, it shall deliver to the Trustee an
Officers' Certificate at least 45 days prior to the redemption date as fixed by
the Company (unless a shorter period shall be satisfactory to the Trustee)
specifying the redemption date and the principal amount of Securities to be
redeemed. If fewer than all of the Securities are to be redeemed, the record
date relating to such redemption shall be selected by the Company and given to
the Trustee, which record date shall not be less than ten days after the date
of delivery of such Officers' Certificate to the Trustee.
SECTION 3.2 Selection of Securities to Be Redeemed
If less than all of the Securities are to be redeemed, the Trustee
shall, not more than 60 days prior to the redemption date, select the
Securities to be redeemed by lot, on a pro rata
14
basis or by such other method as the Trustee shall determine to be fair and
appropriate. The Trustee shall make the selection from the Securities
outstanding and not previously called for redemption. Securities in
denominations of $1,000 may only be redeemed in whole. The Trustee may select
for redemption portions (equal to $1,000 or any integral multiple thereof) of
the principal of Securities that have denominations larger than $1,000.
Provisions of this Indenture that apply to Securities called for redemption
also apply to portions of Securities called for redemption.
SECTION 3.3 Notice of Redemption
At least 30 days but not more than 60 days before a Redemption Date,
the Company shall mail or cause to be mailed a notice of redemption by
first-class mail to each Holder of Securities to be redeemed at such Holder's
address as it appears on the Registrar's books.
The notice shall identify the Securities to be redeemed and shall
state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) the then current Conversion Price;
(4) the name and address of the Paying Agent and the Conversion
Agent;
(5) that Securities called for redemption must be presented and
surrendered to the Paying Agent to collect the Redemption Price;
(6) that the Securities called for redemption may be converted at
any time before the close of business on the Redemption Date;
(7) that Holders who wish to convert Securities must satisfy the
requirements in paragraph 8 of the Securities;
(8) that, unless the Company defaults in making the redemption
payment, interest on Securities called for redemption shall cease
accruing on and after the redemption date and the only remaining right
of the Holder shall be to receive payment of the redemption price upon
presentation and surrender to the Paying Agent of the Securities; and
(9) if any Security is being redeemed in part, the portion of the
principal amount of such Security to be
15
redeemed and that, after the redemption date, upon presentation and
surrender of such Security, a new Security or Securities in aggregate
principal amount equal to the unredeemed portion thereof will be
issued.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense.
SECTION 3.4 Effect of Notice of Redemption
Once notice of redemption is mailed, Securities called for redemption
become due and payable on the redemption date and at the redemption price
stated in the notice, except for Securities that are converted in accordance
with the provisions of Section 4.1. Upon presentation and surrender to the
Paying Agent, Securities called for redemption shall be paid at the Redemption
Price, plus accrued interest up to but not including the Redemption Date.
SECTION 3.5 Deposit of Redemption Price
On or prior to 12:00 noon New York time on the Redemption Date, the
Company shall deposit with the Paying Agent (or, if the Company acts as Paying
Agent, shall segregate and hold in trust) money sufficient to pay the
redemption price of and accrued interest on all Securities to be redeemed on
that date, other than Securities or portions thereof called for redemption on
that date which have been delivered by the Company to the Trustee for
cancellation or have been converted. The Paying Agent shall return to the
Company any money not required for that purpose because of the conversion of
Securities pursuant to Article 4 or otherwise. If such money is then held by
the Company in trust and is not required for such purpose, it shall be
discharged from the trust.
SECTION 3.6 Securities Redeemed in Part
Upon presentation and surrender of a Security that is redeemed in
part, the Company shall execute and the Trustee shall authenticate and deliver
to the Holder a new Security equal in principal amount to the unredeemed
portion of the Security surrendered.
SECTION 3.7 Conversion Arrangement on Call for Redemption
In connection with any redemption of Securities, the Company may
arrange for the purchase and conversion of any Securities called for redemption
by an agreement with one or more investment bankers or other purchasers to
purchase such Securities by paying to the Paying Agent in trust for the
Securityholders, on or before the close of business on the Redemption Date, an
amount
16
that, together with any amounts deposited with the Paying Agent by the Company
for the redemption of such Securities, is not less than the Redemption Price,
together with interest, if any, accrued to, but not including, the Redemption
Date, of such Securities. Notwithstanding anything to the contrary contained in
this Article 3, the obligation of the Company to pay the Redemption Price of
such Securities, including all accrued interest, if any, shall be deemed to be
satisfied and discharged to the extent such amount is so paid by such
purchasers. If such an agreement is entered into, any Securities not duly
surrendered for conversion by the Holders thereof may, at the option of the
Company, be deemed, to the fullest extent permitted by law, acquired by such
purchasers from such Holders and (notwithstanding anything to the contrary
contained in Article 4) surrendered by such purchasers for conversion, all as
of immediately prior to the close of business on the Redemption Date, subject
to payment of the above amount as aforesaid. The Paying Agent shall hold and
pay to the Holders whose Securities are selected for redemption any such amount
paid to it for purchase and conversion in the same manner as it would moneys
deposited with it by the Company for the redemption of Securities. Without the
Paying Agent's prior written consent, no arrangement between the Company and
such purchasers for the purchase and conversion of any Securities shall
increase or otherwise affect any of the powers, duties, responsibilities or
obligations of the Paying Agent and the Trustee as set forth in this Indenture,
and the Company agrees to indemnify the Paying Agent and the Trustee from, and
hold them harmless against, any loss, liability or expense arising out of or in
connection with any such arrangement for the purchase and conversion of any
Securities between the Company and such purchasers, including the costs and
expenses incurred by the Paying Agent and 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.
SECTION 3.8 Purchase of Securities at Option of the Holder Upon Change
of Control
(a) If at any time that Securities remain outstanding there shall have
occurred a Change of Control, Securities shall be purchased by the Company at
the option of the Holder thereof, on the date that is 30 days after the Company
Notice of the occurrence of the Change of Control (the "Repurchase Date") at a
purchase price (the "Repurchase Price") equal to 101% of the principal amount
thereof plus accrued interest up to but not including the Repurchase Date,
subject to satisfaction by or on behalf of any Holder of the requirements set
forth in subsection (c) of this Section 3.8.
17
A "Change of Control" shall be deemed to have occurred at such time
after the original issuance of the Securities as there shall occur:
(1) any "person" or "group" (as such items are used under
Section 13(d) and 14(d) of the Exchange Act), other than the Company,
any subsidiary of the Company, any Principal Stockholders or any
employee benefit plan of the Company or any such subsidiary, is or
becomes the beneficial owner, directly or indirectly, through a
purchase or other acquisition transaction or series of transactions
(other than a merger or consolidation involving the Company), of
shares of capital stock of the Company entitling such person to
exercise in excess of 50% of the total voting power of all shares of
capital stock of the Company entitled to vote generally in the
election of directors;
(2) there occurs any consolidation of the Company with, or
merger of the Company into, any other person, any merger of another
person into the Company, or any sale or transfer of all or
substantially all of the assets of the Company to another person
(other than (a) any such transaction pursuant to which the holders of
the Common Stock immediately prior to such transaction have, directly
or indirectly, shares of capital stock of the continuing or surviving
corporation immediately after such transaction which entitle such
holders to exercise in excess of 50% of the total voting power of all
shares of capital stock of the continuing or surviving corporation
entitled to vote generally in the election of directors and (b) any
merger (1) which does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of Common Stock or (2)
which is effected solely to change the jurisdiction of incorporation
of the Company and results in a reclassification, conversion or
exchange of outstanding shares of Common Stock solely into shares of
common stock); or
(3) at any time Continuing Directors do not constitute a
majority of the Board of Directors of the Company. "Continuing
Director" means at any date a member of the Company's Board of
Directors (i) who is a member of such Board on the date of the
Indenture or (ii) who was nominated or elected by at least two-thirds
of the directors who were Continuing Directors at the time of such
nomination or election or whose election to the Company's Board of
Directors was recommended or endorsed by at least two-thirds of the
directors who were Continuing Directors at the time of such election.
Under this definition, if the present Board of Directors of the
Company were to approve a new director or directors and then resign,
no Change of Control
18
would occur even though the present Board of Directors would
thereafter cease to be in office.
A "beneficial owner" shall be determined in accordance with Rule 13d-3
promulgated by the Commission under the Exchange Act, as in effect on the date
of execution of this Indenture, except that, for purposes of this subsection
(a), the number of shares of capital stock of the Company entitling the holders
thereof to vote generally in elections of directors shall be deemed to include,
in addition to all outstanding shares of capital stock of the Company entitling
the holders thereof to vote generally in the election of directors and Unissued
Shares deemed to be held by the Person with respect to which the Change of
Control determination is being made, all Unissued Shares deemed to be held by
all other Persons. As used herein, "Unissued Shares" shall mean shares of
capital stock of the Company not outstanding that are subject to options,
warrants, rights to purchase or conversion privileges exercisable within 60
days following the date of determination of a Change of Control and that, upon
issuance, shall entitle the holders thereof to vote generally in the election
of directors.
(b) Within 30 days after the occurrence of a Change of Control, the
Company shall mail a written notice of Change of Control (the "Company Notice")
by first-class mail to the Trustee and to each Holder (and to beneficial owners
as required by applicable law) and shall cause a copy of such notice to be
published in a daily newspaper of national circulation. The notice shall
include the form of a Change of Control Purchase Notice to be completed by the
Holder and shall state:
(1) the date of such Change of Control and, briefly, the
events causing such Change of Control;
(2) the date by which the Change of Control Purchase Notice
pursuant to this Section 3.8 must be given;
(3) the Repurchase Date;
(4) the Repurchase Price;
(5) the maximum principal amount of Securities that will be
accepted for repurchase;
(6) briefly, the conversion rights of the Securities;
(7) the name and address of the Paying Agent and the
Conversion Agent;
(8) the then current Conversion Price;
19
(9) that Securities as to which a Change of Control Purchase
Notice has been given may be converted into Common Stock only to the
extent that the Change of Control Purchase Notice has been withdrawn
in accordance with the terms of this Indenture;
(10) the procedures that the Holder must follow to exercise
rights under this Section 3.8;
(11) the procedures for withdrawing a Change of Control
Purchase Notice, including a form of notice of withdrawal; and
(12) that the Holder must satisfy the requirements set forth
in the Securities in order to convert the Securities.
(c) A Holder may exercise his or her rights specified in subsection
(a) of this Section 3.8 upon delivery of a written notice of the exercise of
such rights (a "Change of Control Purchase Notice") to the Paying Agent at any
time prior to the close of business on the Repurchase Date, stating:
(1) the certificate number of each Security that the Holder
will deliver to be purchased;
(2) the portion of the principal amount of each Security
that the Holder will deliver to be purchased, which portion must be
$1,000 or an integral multiple thereof; and
(3) that such Security shall be purchased pursuant to the
terms and conditions specified in this Indenture.
The delivery of such Security to the Paying Agent (together with all
necessary endorsements) at the office of the Paying Agent shall be a condition
to the receipt by the Holder of the Repurchase Price therefor; provided,
however, that such Repurchase Price shall be so paid pursuant to this Section
3.8 only if the Security so delivered to the Paying Agent shall conform in all
respects to the description thereof set forth in the related Change of Control
Purchase Notice.
The Company shall purchase from the Holder thereof, pursuant to this
Section 3.8, a portion of a Security if the principal amount of such portion is
$1,000 or an integral multiple of $1,000. Provisions of this Indenture that
apply to the purchase of all of a Security pursuant to Sections 3.8 through
3.13 also apply to the purchase of such portion of such Security.
Notwithstanding anything herein to the contrary, any Holder delivering
to the Paying Agent the Change of Control Purchase Notice contemplated by this
subsection (c) shall have the right
20
to withdraw such Change of Control Purchase Notice in whole or in a portion
thereof that is $1,000 or in an integral multiple thereof at any time prior to
the close of business on the Repurchase Date by delivery of a written notice of
withdrawal to the Paying Agent in accordance with Section 3.9.
The Paying Agent shall promptly notify the Company of the receipt by
it of any Change of Control Purchase Notice or written withdrawal thereof.
SECTION 3.9 Effect of Change of Control Purchase Notice
Upon receipt by the Paying Agent of the Change of Control Purchase
Notice specified in Section 3.8(c), the Holder of the Security in respect of
which such Change of Control Purchase Notice was given shall (unless such
Change of Control Purchase Notice is withdrawn as specified below) thereafter
be entitled to receive solely the Repurchase Price with respect to such
Security. Such Repurchase Price shall be paid to such Holder promptly following
the later of (a) the Repurchase Date with respect to such Security (provided
the conditions in Section 3.8(c) have been satisfied) and (b) the time of
delivery of such Security to the Paying Agent by the Holder thereof in the
manner required by Section 3.8(c). Securities in respect of which a Change of
Control Purchase Notice has been given by the Holder thereof may not be
converted into shares of Common Stock on or after the date of the delivery of
such Change of Control Purchase Notice unless such Change of Control Purchase
Notice has first been validly withdrawn.
A Change of Control Purchase Notice may be withdrawn by means of a
written notice of withdrawal delivered by the Holder to the office of the
Paying Agent at any time prior to the close of business on the Repurchase Date,
specifying:
(1) the certificate number of each Security in respect of
which such notice of withdrawal is being submitted;
(2) the principal amount of the Security or portion thereof
with respect to which such notice of withdrawal is being submitted;
and
(3) the principal amount, if any, of such Security that
remains subject to the original Change of Control Purchase Notice and
that has been or will be delivered for purchase by the Company.
There shall be no purchase of any Securities pursuant to Section 3.8
if there has occurred (prior to, on or after, as the case may be, the giving,
by the Holders of such Securities, of the required Change of Control Purchase
Notice) and is continuing
21
an Event of Default (other than a default in the payment of the Repurchase
Price with respect to such Securities).
SECTION 3.10 Deposit of Repurchase Price
On or before the second Business Day immediately following a
Repurchase Date, the Company shall deposit with the Trustee or with the Paying
Agent (or, if the Company is acting as the Paying Agent, shall segregate and
hold in trust as provided in Section 2.4) an amount of money sufficient to pay
the aggregate Repurchase Price of all the Securities or portions thereof that
are to be purchased as of such Repurchase Date. The manner in which the deposit
required by this Section 3.10 is made by the Company shall be at the option of
the Company, provided that such deposit shall be made in a manner such that the
Trustee or the Paying Agent shall have immediately available funds on the
second Business Day immediately following the Repurchase Date.
If the Paying Agent holds, in accordance with the terms hereof, money
sufficient to pay the Repurchase Price of any Security tendered for purchase,
then, on the second Business Day immediately following to the Repurchase Date,
such Security will cease to be outstanding and will be deemed paid, whether or
not such Security is delivered to the Paying Agent, and all other rights of the
Holder in respect thereof shall terminate (other than the right to receive the
Repurchase Price upon delivery of such Security).
SECTION 3.11 Securities Purchased In Part
Any Security that is to be purchased only in part shall be surrendered
at the office of the Paying Agent (with, if the Company or the Trustee so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder
thereof or such Holder's attorney duly authorized in writing), and promptly
after the Repurchase Date the Company shall execute and the Trustee shall
authenticate and deliver to the Holder of such Security, without service
charge, a new Security or Securities, of such authorized denomination or
denominations as may be requested by such Holder, in aggregate principal amount
equal to, and in exchange for, the portion of the principal amount of the
Security so surrendered that is not purchased.
SECTION 3.12 Compliance With Securities Laws Upon Purchase of Securities
In connection with any offer to purchase or purchase of Securities
under Section 3.8 (provided that such offer or purchase constitutes an "issuer
tender offer" for purposes of Rule 13e-4 under the Exchange Act (which term, as
used herein,
22
includes any successor provision thereto) at the time of such offer or
purchase), the Company shall (a) comply with Rule 13e-4 and Rule 14e-1 under
the Exchange Act, (b) file the related Schedule 13E-4 (or any successor
schedule, form or report) under the Exchange Act, and (c) otherwise comply with
all federal and state securities laws so as to permit the rights of the Holders
and obligations of the Company under Sections 3.8 through 3.11 to be exercised
in the time and in the manner specified therein. If necessary the time periods
referred to in Sections 3.8 through 3.11 will be extended to permit compliance
with such laws.
SECTION 3.13 Repayment to the Company
Subject to the provisions of Section 5.7, to the extent that the
aggregate amount of cash deposited by the Company pursuant to Section 3.10
exceeds the aggregate Repurchase Price of the Securities or portions thereof
that the Company is obligated to purchase, then promptly after the second
Business Day immediately following the Repurchase Date the Trustee or the
Paying Agent, as the case may be, shall return any such excess to the Company.
ARTICLE 4.
CONVERSION
SECTION 4.1 Conversion Privilege
Subject to the further provisions of this Section 4.1, a Holder of a
Security may convert such Security into Common Stock at any time after 60 days
following the date of this Indenture and prior to maturity, at the Conversion
Price then in effect; provided, however, that, if such Security is called for
redemption pursuant to Article 3, such conversion right shall terminate at the
close of business on the business day preceding the Redemption Date for such
Security (unless the Company shall default in making the redemption payment
when due, in which case the conversion right shall terminate at the close of
business on the date such default is cured and such Security is redeemed);
provided, further, that, if the Holder of a Security presents such Security for
redemption prior to the close of business on the Redemption Date for such
Security, the right of conversion shall terminate upon presentation of the
Security to the Trustee (unless the Company shall default in making the
redemption payment when due, in which case the conversion right shall terminate
at the close of business on the date such default is cured and such Security is
redeemed). The number of shares of Common Stock issuable upon conversion of a
Security shall be determined by dividing the principal amount of the Security
or portion thereof surrendered for conversion by the Conversion Price in effect
on the Conversion Date. The initial Conversion
23
Price is set forth in paragraph 8 of the Securities and is subject to
adjustment as provided in this Article 4.
A Holder may convert a portion of a Security equal to $1,000 or any
integral multiple thereof. Provisions of this Indenture that apply to
conversion of all of a Security also apply to conversion of a portion of a
Security.
A Security in respect of which a Holder has delivered a Change of
Control Purchase Notice pursuant to Section 3.8(c) exercising the option of
such Holder to require the Company to purchase such Security may be converted
only if such Change of Control Purchase Notice is withdrawn by a written notice
of withdrawal delivered to the Paying Agent prior to the close of business on
the Repurchase Date in accordance with Section 3.9.
A Holder of Securities is not entitled to any rights of a holder of
Common Stock until such Holder has converted his or her Securities to Common
Stock, and only to the extent such Securities are deemed to have been converted
into Common Stock pursuant to this Article 4.
SECTION 4.2 Conversion Procedure
To convert a Security, a Holder must (a) complete and manually sign
the conversion notice on the back of the Security and deliver such notice to
the Conversion Agent, (b) surrender the Security to the Conversion Agent, (c)
furnish appropriate endorsements and transfer documents if required by the
Registrar or the Conversion Agent, and (d) pay any transfer or similar tax, if
required. The date on which the Holder satisfies all of those requirements is
the "Conversion Date." As soon as practicable after the Conversion Date, the
Company shall deliver to the Holder through the Conversion Agent a certificate
for the number of whole shares of Common Stock issuable upon the conversion and
cash in lieu of any fractional shares pursuant to Section 4.3.
The person in whose name the certificate is registered shall be deemed
to be a shareholder of record on the Conversion Date; provided, however, that
no surrender of a Security on any date when the stock transfer books of the
Company shall be closed shall be effective to constitute the person or persons
entitled to receive the shares of Common Stock upon such conversion as the
record holder or holders of such shares of Common Stock on such date, but such
surrender shall be effective to constitute the person or persons entitled to
receive such shares of Common Stock as the record holder or holders thereof for
all purposes at the close of business on the next succeeding day on which such
stock transfer books are open; provided, further, that such conversion shall be
at the Conversion Price in effect on the Conversion Date as if the stock
transfer books of the Company had not been
24
closed. Upon conversion of a Security, such person shall no longer be a Holder
of such Security. No payment or adjustment will be made for dividends or
distributions on shares of Common Stock issued upon conversion of a Security.
No payment or adjustment will be made for accrued interest on a
converted Security. If any Holder surrenders a Security for conversion after
the close of business on the record date for the payment of an installment of
interest and before the close of business on the related interest payment date,
then, notwithstanding such conversion, the interest payable on such interest
payment date shall be paid to the Holder of such Security on such record date.
In such event, such Security, when surrendered for conversion, must be
accompanied by delivery of a check or draft payable to the Conversion Agent in
an amount equal to the interest payable on such interest payment date on the
portion so converted. If such payment does not accompany such Security, the
Security shall not be converted. If the Company defaults in the payment of
interest payable on the interest payment date, the Conversion Agent shall repay
such funds to the Holder.
If a Holder converts more than one Security at the same time, the
number of shares of Common Stock issuable upon the conversion shall be based on
the aggregate principal amount of Securities converted.
Upon surrender of a Security that is converted in part, the Company
shall execute, and the Trustee shall authenticate and deliver to the Holder, a
new Security equal in principal amount to the unconverted portion of the
Security surrendered.
SECTION 4.3 Fractional Shares
The Company will not issue fractional shares of Common Stock upon
conversion of Securities. In lieu thereof, the Company will pay an amount in
cash based upon the closing sale price of the Common Stock on the Trading Day
immediately prior to the date of conversion.
SECTION 4.4 Taxes on Conversion
If a Holder converts a Security, the Company shall pay any
documentary, stamp or similar issue or transfer tax due on the issue of shares
of Common Stock upon such conversion. However, the Holder shall pay any such
tax which is due because the Holder requests the shares to be issued in a name
other than the Holder's name. The Conversion Agent may refuse to deliver the
certificate representing the Common Stock being issued in a name other than the
Holder's name until the Conversion Agent receives a sum sufficient to pay any
tax which will be due because the
25
shares are to be issued in a name other than the Holder's name. Nothing herein
shall preclude any tax withholding required by law or regulation.
SECTION 4.5 Company to Provide Stock
The Company shall, prior to issuance of any Securities hereunder, and
from time to time as it may be necessary, reserve, out of its authorized but
unissued Common Stock, a sufficient number of shares of Common Stock to permit
the conversion of all outstanding Securities into shares of Common Stock.
All shares of Common Stock delivered upon conversion of the Securities
shall be newly issued shares or treasury shares, shall be duly authorized,
validly issued, fully paid and nonassessable and shall be free from preemptive
rights and free of any lien or adverse claim.
The Company will endeavor promptly to comply with all federal and
state securities laws regulating the offer and delivery of shares of Common
Stock upon conversion of Securities, if any, and will list or cause to have
quoted such shares of Common Stock on each national securities exchange or in
the over-the-counter market or such other market on which the Common Stock is
then listed or quoted.
SECTION 4.6 Adjustment of Conversion Price
The conversion price as stated in paragraph 8 of the Securities (the
"Conversion Price") shall be adjusted from time to time by the Company as
follows:
(a) In case the Company shall (i) pay a dividend in shares of Common
Stock to all holders of Common Stock, (ii) make a distribution in shares of
Common Stock to all holders of Common Stock, (iii) subdivide its outstanding
Common Stock into a greater number of shares, or (iv) combine its outstanding
Common Stock into a smaller number of shares, the Conversion Price in effect
immediately prior thereto shall be adjusted so that the Holder of any Security
thereafter surrendered for conversion shall be entitled to receive that number
of shares of Common Stock which he or she would have owned had such Security
been converted immediately prior to the happening of such event. An adjustment
made pursuant to this subsection (a) shall become effective immediately after
the record date in the case of a dividend in shares or distribution and shall
become effective immediately after the effective date in the case of
subdivision or combination.
(b) In case the Company shall issue rights or warrants to all or
substantially all holders of its Common Stock entitling
26
them (for a period commencing no earlier than the record date described below
and expiring not more than 60 days after such record date) to subscribe for or
purchase shares of Common Stock (or securities convertible into Common Stock)
at a price per share less than the current market price per share of Common
Stock (as determined in accordance with subsection (f) of this Section 4.6) at
the record date for the determination of shareholders entitled to receive such
rights or warrants, the Conversion Price in effect immediately prior thereto
shall be adjusted so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to such record
date by a fraction of which the numerator shall be the number of shares of
Common Stock outstanding on such record date, plus the number of shares which
the aggregate offering price of the total number of shares of Common Stock so
offered (or the aggregate Conversion Price of the convertible securities so
offered) would purchase at such current market price, and of which the
denominator shall be the number of shares of Common Stock outstanding on such
record date plus the number of additional shares of Common Stock offered (or
into which the convertible securities so offered are convertible). Such
adjustment shall be made successively whenever any such rights or warrants are
issued, and shall become effective immediately after such record date. If at
the end of the period during which such rights or warrants are exercisable not
all rights or warrants shall have been exercised, the adjusted Conversion Price
shall be immediately readjusted to what it would have been based upon the
number of additional shares of Common Stock actually issued (or the number of
shares of Common Stock issuable upon conversion of convertible securities
actually issued).
(c) In case the Company shall distribute to all or substantially all
holders of its Common Stock any shares of capital stock of the Company (other
than Common Stock), evidences of indebtedness or other non-cash assets
(including securities of any company other than the Company), or shall
distribute to all or substantially all holders of its Common Stock rights or
warrants to subscribe for or purchase any of its securities (excluding those
referred to in subsection (b) of this Section 4.6), then in each such case the
Conversion Price shall be adjusted so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
the date of such distribution by a fraction of which the numerator shall be the
current market price per share (as defined in subsection (f) of this Section
4.6) of the Common Stock on the record date mentioned below less the fair
market value on such record date (as determined by the Board of Directors,
whose determination shall be conclusive evidence of such fair market value) of
the portion of the capital stock or assets or evidences of indebtedness so
distributed or of such rights or warrants applicable to one share of Common
Stock (determined on the basis
27
of the number of shares of Common Stock outstanding on the record date), and of
which the denominator shall be the current market price per share (as defined
in subsection (f) of this Section 4.6) of the Common Stock on such record date.
Such adjustment shall become effective immediately after the record date for
the determination of shareholders entitled to receive such distribution.
Notwithstanding the foregoing, in the event that the Company shall distribute
rights or warrants (other than those referred to in subsection (b) of this
Section 4.6) ("Rights") pro rata to holders of Common Stock, the Company may,
in lieu of making any adjustment pursuant to this Section 4.6, make proper
provision so that each holder of a Security who converts such Security (or any
portion thereof) after the record date for such distribution and prior to the
expiration or redemption of the Rights shall be entitled to receive upon such
conversion, in addition to the shares of Common Stock issuable upon such
conversion (the "Conversion Shares"), a number of Rights to be determined as
follows: (i) if such conversion occurs on or prior to the date for the
distribution to the holders of Rights of separate certificates evidencing such
Rights (the "Distribution Date"), the same number of Rights to which a holder
of a number of shares of Common Stock equal to the number of Conversion Shares
is entitled at the time of such conversion in accordance with the terms and
provisions of and applicable to the Rights and (ii) if such conversion occurs
after the Distribution Date, the same number of Rights to which a holder of the
number of shares of Common Stock into which the principal amount of the
Security so converted was convertible immediately prior to the Distribution
Date would have been entitled on the Distribution Date in accordance with the
terms and provisions of and applicable to the Rights.
(d) In case the Company shall, by dividend or otherwise, at any time
distribute (a "Triggering Distribution") to all or substantially all holders of
its Common Stock cash (other than in connection with the liquidation or
dissolution of the Company) in an aggregate amount that, together with the
aggregate amount of any other cash distributions to all or substantially all
holders of its Common Stock made within the 12 months preceding the date of
payment of the Triggering Distribution and in respect of which no Conversion
Price adjustment pursuant to this Section 4.6 has been made, exceeds 10% of the
product of the current market price per share of Common Stock (as determined in
accordance with subsection (f) of this Section 4.6) on the Business Day (the
"Determination Date") immediately preceding the day on which such Triggering
Distribution is declared by the Company multiplied by the number of shares of
Common Stock outstanding on such date (excluding shares held in the Treasury of
the Company), the Conversion Price shall be reduced so that the same shall
equal the price determined by multiplying such Conversion Price in effect
immediately prior to the Determination Date by a fraction
28
of which the numerator shall be the current market price per share of the
Common Stock (as determined in accordance with subsection (f) of this Section
4.6) on the Determination Date less the amount of cash so distributed within
such 12 months (including, without limitation, the Triggering Distribution)
applicable to one share of Common Stock (determined on the basis of the number
of shares of Common Stock outstanding on the Determination Date) and the
denominator shall be such current market price per share of the Common Stock
(as determined in accordance with subsection (f) of this Section 4.6) on the
Determination Date, such reduction to become effective immediately prior to the
opening of business on the day following the date on which the Triggering
Distribution is paid.
(e) In case the Company shall make a Triggering Distribution of cash
or other consideration to all or substantially all holders of its Common Stock
in respect of a tender or exchange offer by the Company or any subsidiary for
the Common Stock ("Tender Offer") in an aggregate amount that, together with
the aggregate amount of any other cash distributions to all or substantially
all holders of its Common Stock made within the 12 months preceding the date of
payment of the Triggering Distribution and in respect of which no Conversion
Price adjustment pursuant to this Section 4.6 has been made, exceeds 10% of the
product of the current market price per share of Common Stock (as determined in
accordance with subsection (f) of this Section 4.6) on the Determination Date
multiplied by the number of shares of Common Stock outstanding on such date
(excluding shares held in the Treasury of the Company), the Conversion Price
shall be reduced so that the same shall equal the price determined by
multiplying such Conversion Price in effect immediately prior to the
Determination Date by a fraction of which the numerator shall be the current
market price per share of the Common Stock (as determined in accordance with
subsection (f) of this Section 4.6) on the Determination Date less the amount
of cash or other consideration so distributed within such 12 months (including,
without limitation, the Triggering Distribution) applicable to one share of
Common Stock (determined on the basis of the number of shares of Common Stock
outstanding on the Determination Date) and the denominator shall be such
current market price per share of the Common Stock (as determined in accordance
with subsection (f) of this Section 4.6) on the Determination Date, such
reduction to become effective immediately prior to the opening of business on
the day following the date on which the Triggering Distribution is paid.
(f) For the purpose of any computation under subsections (b), (c), (d)
and (e) of this Section 4.6, the current market price per share of Common Stock
on any date shall be deemed to be the average of the daily closing prices for
the 30 consecutive Trading Days commencing 45 Trading Days before (i) the
29
Determination Date with respect to distributions under subsections (d) and (e)
of this Section 4.6 or (ii) the record date with respect to distributions,
issuances or other events requiring such computation under subsection (b) or
(c) of this Section 4.6. The closing price for each day shall be the last
reported sales price or, in case no such reported sale takes place on such
date, the average of the reported closing bid and asked prices in either case
on the NASDAQ National Market System or, if the Common Stock is not listed or
admitted to trading on the NASDAQ National Market System, on the principal
national securities exchange on which the Common Stock is listed or admitted to
trading or, if not listed or admitted to trading on any national securities
exchange, the closing sales price of the Common Stock as quoted by NASDAQ or,
in case no reported sales takes place, the average of the closing bid and asked
prices as quoted by NASDAQ or any comparable system or, if the Common Stock is
not quoted on NASDAQ or any comparable system, the closing sales price or, in
case no reported sale takes place, the average of the closing bid and asked
prices, as furnished by any two members of the National Association of
Securities Dealers, Inc. selected from time to time by the Company for that
purpose. If no such prices are available, the current market price per share
shall be the fair value of a share of Common Stock as determined by the Board
of Directors of the Company.
(g) In any case in which this Section 4.6 shall require that an
adjustment be made following a record date or a Determination Date, as the case
may be, established for purposes of this Section 4.6, the Company may elect to
defer (but only until five Business Days following the filing by the Company
with the Trustee of the certificate described in Section 4.9) issuing to the
holder of any Security converted after such record date or Determination Date
the shares of Common Stock and other capital stock of the Company issuable upon
such conversion over and above the shares of Common Stock and other capital
stock of the Company issuable upon such conversion only on the basis of the
Conversion Price prior to adjustment; and, in lieu of the shares the issuance
of which is so deferred, the Company shall issue or cause its transfer agents
to issue due bills or other appropriate evidence prepared by the Company of the
right to receive such shares. If any distribution in respect of which an
adjustment to the Conversion Price is required to be made as of the record
date, effective date or Determination Date therefor is not thereafter made or
paid by the Company for any reason, the Conversion Price shall be readjusted to
the Conversion Price which would then be in effect if such record date had not
been fixed or such effective date or Determination Date had not occurred.
30
SECTION 4.7 No Adjustment
No adjustment in the Conversion Price shall be required unless the
adjustment would require an increase or decrease of at least 1% in the
Conversion Price as last adjusted; provided, however, that any adjustments
which by reason of this Section 4.7 are not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under this Article 4 shall be made to the nearest cent or to the
nearest one-hundredth of a share, as the case may be.
No adjustment need be made for a transaction referred to in Section
4.6 if all Securityholders are entitled to participate in the transaction on a
basis and with notice that the Board of Directors determines to be fair and
appropriate in light of the basis and notice on which holders of Common Stock
participate in the transaction. The Company shall give notice to the Trustee of
any such determination.
No adjustment need be made for rights to purchase Common Stock or
issuances of Common Stock pursuant to a Company plan for reinvestment of
dividends or interest.
No adjustment need be made for a change in the par value or a change
to no par value of the Common Stock.
To the extent that the Securities become convertible into the right to
receive cash, no adjustment need be made thereafter as to the cash. Interest
will not accrue on the cash.
SECTION 4.8 Adjustment for Tax Purposes
The Company shall be entitled to make such reductions in the
Conversion Price, in addition to those required by Section 4.6, as it in its
discretion shall determine to be advisable in order that any stock dividends,
subdivisions of shares, distributions of rights to purchase stock or securities
or distributions of securities convertible into or exchangeable for stock
hereafter made by the Company to its shareholders shall not be taxable.
SECTION 4.9 Notice of Adjustment
Whenever the Conversion Price is adjusted, the Company shall promptly
mail to Securityholders a notice of the adjustment and file with the Trustee an
Officers' Certificate briefly stating the facts requiring the adjustment and
the manner of computing it. The certificate shall be conclusive evidence of the
correctness of such adjustment.
31
SECTION 4.10 Notice of Certain Transactions
In the event that:
(1) the Company takes any action which would require an
adjustment in the Conversion Price;
(2) the Company consolidates or merges with, or transfers
all or substantially all of its assets to, another corporation and
shareholders of the Company must approve the transaction; or
(3) there is a dissolution or liquidation of the Company,
the Company shall mail to Securityholders and file with the Trustee a notice
stating the proposed record or effective date, as the case may be. The Company
shall mail the notice at least ten days before such date. Failure to mail such
notice or any defect therein shall not affect the validity of any transaction
referred to in clause (1), (2) or (3) of this Section 4.10.
SECTION 4.11 Effect of Reclassification, Consolidation, Merger or Sale on
Conversion Privilege
If any of the following shall occur, namely: (a) any reclassification
or change of shares of Common Stock issuable upon conversion of the Securities
(other than a change in par value, or from par value to no par value, or from
no par value to par value, or as a result of a subdivision or combination, or
any other change for which an adjustment is provided in Section 4.6); (b) any
consolidation or merger to which the Company is a party other than a merger in
which the Company is the continuing corporation and which does not result in
any reclassification of, or change (other than a change in name, or in par
value, or from par value to no par value, or from no par value to par value, or
as a result of a subdivision or combination) in, outstanding shares of Common
Stock; or (c) any sale or conveyance of all or substantially all of the assets
of the Company as an entirety, then the Company, or such successor or
purchasing corporation, as the case may be, shall, as a condition precedent to
such reclassification, change, consolidation, merger, sale or conveyance,
execute and deliver to the Trustee a supplemental indenture providing that the
Holder of each Security then outstanding shall have the right to convert such
Security into the kind and amount of shares of stock and other securities and
property (including cash) receivable upon such reclassification, change,
consolidation, merger, sale or conveyance by a holder of the number of shares
of Common Stock deliverable upon conversion of such Security immediately prior
to such reclassification, change, consolidation, merger, sale or conveyance.
Such
32
supplemental indenture shall provide for adjustments of the Conversion Price
which shall be as nearly equivalent as may be practicable to the adjustments of
the Conversion Price provided for in this Article 4. If, in the case of any
such consolidation, merger, sale or conveyance, the stock or other securities
and property(including cash) receivable thereupon by a holder of Common Stock
include shares of stock or other securities and property of a corporation other
than the successor or purchasing corporation, as the case may be, in such
consolidation, merger, sale or conveyance, then such supplemental indenture
shall also be executed by such other corporation and shall contain such
additional provisions to protect the interests of the Holders of the Securities
as the Board of Directors shall reasonably consider necessary by reason of the
foregoing. The provisions of this Section 4.11 shall similarly apply to
successive consolidations, mergers, sales or conveyances.
In the event the Company shall execute a supplemental indenture
pursuant to this Section 4.11, the Company shall promptly file with the Trustee
(x) an Officers' Certificate briefly stating the reasons therefor, the kind or
amount of shares of stock or securities or property (including cash) receivable
by Holders of the Securities upon the conversion of their Securities after any
such reclassification, change, consolidation, merger, sale or conveyance, any
adjustment to be made with respect thereto and that all conditions precedent
have been complied with and (y) an Opinion of Counsel that all conditions
precedent have been complied with.
SECTION 4.12 Trustee's Disclaimer
The Trustee has no duty to determine if the conditions precedent to
the Company's redemption rights under Section 3 have been satisfied or to
determine when an adjustment under this Article 4 should be made, how it should
be made or what such adjustment should be, but may accept as conclusive
evidence of that fact or the correctness of any such adjustment, and shall be
protected in relying upon, an Officers' Certificate including the Officers'
Certificate with respect thereto which the Company is obligated to file with
the Trustee pursuant to Section 4.9. The Trustee makes no representation as to
the validity or value of any securities or assets issued upon conversion of
Securities, and the Trustee shall not be responsible for the Company's failure
to comply with any provisions of this Article 4.
The Trustee shall not be under any responsibility to determine the
correctness of any provisions contained in any supplemental indenture executed
pursuant to Section 4.11, but may accept as conclusive evidence of the
correctness thereof, and shall be fully protected in relying upon, the
Officers'
33
Certificate with respect thereto which the Company is obligated to file with
the Trustee pursuant to Section 4.11.
SECTION 4.13 Voluntary Reduction
The Company, upon the determination by the Board of Directors, and the
giving of at least 15 days notice to the Trustee and Holders of Securities,
from time to time may reduce the Conversion Price by any amount for any period
of time if the period is at least 20 days or such longer period as may be
required by law and if the reduction is irrevocable during the period;
provided, however, that in no event may the Conversion Price be less than the
par value of a share of Common Stock.
ARTICLE 5.
SUBORDINATION
SECTION 5.1 Securities Subordinated to Senior Indebtedness
The Company covenants and agrees, and each holder of Securities issued
hereunder by his or her acceptance thereof likewise covenants and agrees, that
all Securities shall be issued subject to the provisions of this Article 5; and
each person holding any Security, whether upon original issue or upon transfer
or assignment thereof, accepts and agrees to be bound by such provisions.
The payment of the principal of and interest, and premiums, if any, on
all Securities issued hereunder (including, without limitation, in connection
with any redemption of Securities) and all other amounts payable in respect
thereof now or hereafter existing under the Securities and this Indenture
(collectively, the "Subordinated Indebtedness") shall, to the extent and in the
manner hereinafter set forth, be subordinated and subject in right of payment
to the prior payment in full of all Senior Indebtedness, whether outstanding at
the date of this Indenture or thereafter created, assumed or guaranteed.
SECTION 5.2 Securities Subordinated to Prior Payment of All Senior
Indebtedness on Dissolution, Liquidation, Reorganization, Etc.,
of the Company
Upon the payment or distribution of the assets of the Company of any
kind or character, whether in cash, property or securities (including any
collateral at any time securing the Securities), to creditors upon any
dissolution, winding-up, total or partial liquidation or reorganization of the
Company or its debts (whether voluntary or involuntary, or in bankruptcy,
insolvency, reorganization, liquidation, receivership proceedings, or upon an
assignment for the benefit of creditors,
34
or any other marshaling of the assets and liabilities of the Company, or
otherwise), then in such event:
(a) all Senior Indebtedness (including principal thereof, interest
thereon and fees and expenses relating thereto) shall first be paid in full in
cash before any payment is made on account of the Subordinated Indebtedness,
upon any of the circumstances referred to in the preceding paragraph or any
deposit is made pursuant to Section 6.3;
(b) any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities (other than securities of
the Company as reorganized or readjusted, or securities of the Company or any
other company, trust or corporation provided for by a plan of reorganization or
readjustment, junior, or the payment of which is otherwise subordinate, at
least to the extent provided in this Article 5, with respect to the
Subordinated Indebtedness, to the payment of all Senior Indebtedness at that
time outstanding and to the payment of all securities issued in exchange
therefor to the holders of the Senior Indebtedness at the time outstanding), to
which the Holders or the Trustee on behalf of the Holders would be entitled
except for the provisions of this Article 5, including any such payment or
distribution which may be payable or deliverable by reason of the payment of
another debt of the Company being subordinated to the payment of the
Subordinated Indebtedness, shall be paid or delivered by any debtor, Custodian
or other person making such payment or distribution, directly to the holders of
the Senior Indebtedness or their representative or representatives, or to the
trustee or trustees under any indenture pursuant to which any instruments
evidencing any of such Senior Indebtedness have been issued, ratably according
to the aggregate amounts remaining unpaid on account of the principal of,
interest on and fees and expenses relating to the Senior Indebtedness held or
represented by each, for application to payment of all Senior Indebtedness
remaining unpaid, to the extent necessary to pay all Senior Indebtedness in
full after giving effect to any concurrent payment or distribution to the
holders of such Senior Indebtedness; and
(c) in the event that, notwithstanding the foregoing provisions of
this Section 5.2, any payment or distribution of assets of the Company of any
kind or character, whether in cash, property or securities (other than
securities of the Company as reorganized or readjusted, or securities of the
Company or any other Company, trust or corporation provided for by a plan of
reorganization or readjustment, junior, or the payment of which is otherwise
subordinate, at least to the extent provided for in this Article 5, with
respect to the Subordinated Indebtedness, to the payment of all Senior
Indebtedness at the time outstanding and to the payment of all securities
issued in exchange thereof
35
to the holders of Senior Indebtedness at the time outstanding), shall be
received by the Trustee or the Holders before all Senior Indebtedness is paid
in full in cash, such payment or distribution (subject to the provisions of
Sections 5.6 and 5.7) shall be held in trust for the benefit of, and shall be
immediately paid or delivered by the Trustee or such Holders, as the case may
be, to, the holders of Senior Indebtedness remaining unpaid, or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any of such Senior
Indebtedness have been issued, ratably according to the aggregate amounts
remaining unpaid on account of the principal of, interest on and fees and
expenses relating to the Senior Indebtedness held or represented by each, for
application to the payment of all Senior Indebtedness remaining unpaid, to the
extent necessary to pay all Senior Indebtedness in full after giving effect to
any concurrent payment or distribution to the holders of such Senior
Indebtedness.
The Company shall give prompt written notice to the Trustee of any
dissolution, winding-up, liquidation or reorganization of the Company.
Upon any distribution of assets of the Company referred to in this
Article 5, the Trustee, subject to the provisions of Sections 9.1 and 9.2, and
the Holders shall be entitled to rely conclusively upon any order or decree by
any court of competent jurisdiction in which such dissolution, winding-up,
liquidation or reorganization proceeding is pending, or a certificate of the
liquidating trustee or agent or other person making any distribution to the
Trustee or to the Holders, for the purpose of ascertaining the persons entitled
to participate in such distribution, the holders of the Senior Indebtedness and
other indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article 5.
SECTION 5.3 Securityholders to Be Subrogated to Right of Holders of Senior
Indebtedness
Subject to the prior payment in full of all Senior Indebtedness then
due, the Holders shall be subrogated to the rights of the holders of Senior
Indebtedness to receive payments or distributions of assets of the Company
applicable to the Senior Indebtedness until the Subordinated Indebtedness shall
be paid in full in cash, and, for purposes of such subrogation, no payments or
distributions to the holders of Senior Indebtedness of assets, whether in cash,
property or securities, distributable to the holders of Senior Indebtedness
under the provisions hereof to which the Holders would be entitled except for
the provisions of this Article 5, and no payment pursuant to the provisions of
36
this Article 5 to the holders of Senior Indebtedness by the Holders shall, as
among the Company, its creditors other than the holders of Senior Indebtedness,
and the Holders, be deemed to be a payment by the Company to or on account of
Senior Indebtedness, it being understood that the provisions of this Article 5
are, and are intended, solely for the purpose of defining the relative rights
of the Holders, on the one hand, and the holders of Senior Indebtedness, on the
other hand.
SECTION 5.4 Obligations of the Company Unconditional
Nothing contained in this Article 5 or elsewhere in this Indenture or
in any Security is intended to or shall impair, as among the Company, its
creditors other than the holders of Senior Indebtedness, and the Holders, the
obligation of the Company, which is absolute and unconditional, to pay to the
Holders the principal of and interest on the Securities, as and when the same
shall become due and payable in accordance with the terms of the Securities, or
to affect the relative rights of the Holders and other creditors of the Company
other than the holders of Senior Indebtedness, nor shall anything herein or
therein prevent the Trustee or any Holder from exercising all remedies
otherwise permitted by applicable law upon the happening of an Event of Default
under this Indenture, subject to the provisions of Article 8, and the rights,
if any, under this Article 5 of the holders of Senior Indebtedness in respect
of assets, whether in cash, property or securities of the Company received upon
the exercise of any such remedy.
SECTION 5.5 Company Not to Make Payment With Respect to Securities in
Certain Circumstances
(a) Upon the happening of a default in payment (whether at maturity or
at a date fixed for payment or prepayment or by acceleration or otherwise) of
the principal of or interest on any Senior Indebtedness, as such default is
defined under or in respect of such Senior Indebtedness or in any agreement
pursuant to which such Senior Indebtedness has been incurred, then, unless and
until the amount of such Senior Indebtedness then due shall have been paid in
full or provision made therefor in a manner satisfactory to the holders of such
Senior Indebtedness, or such default shall have been cured or waived or shall
have ceased to exist, the Company shall not pay principal of or interest or
make any payment with respect to the Subordinated Indebtedness or make any
deposit pursuant to Section 6.3 or 10.1 and shall not repurchase, redeem or
otherwise retire any Subordinated Indebtedness (collectively, "pay the
Subordinated Indebtedness").
(b) Upon the happening of an event of default with respect to any
Designated Senior Indebtedness (other than under circumstances when the terms
of subsection (a) of this Section
37
5.5 are applicable), as such event of default is defined under or in respect of
such Designated Senior Indebtedness or in any agreement pursuant to which such
Designated Senior Indebtedness has been incurred, permitting the holders
thereof to accelerate the maturity thereof, and upon written notice thereof
given to the Trustee by any holders of such Designated Senior Indebtedness or
their representative or representatives or by the trustee or trustees under any
indenture pursuant to which any instruments evidencing any of such Designated
Senior Indebtedness have been issued (a "Payment Blockage Notice"), then,
unless and until such event of default shall have been cured or waived in
writing by the holders of such Designated Senior Indebtedness or shall have
ceased to exist, from and after the date of such Payment Blockage Notice
subject to Section 5.7, no direct or indirect payment shall be made with
respect to the Subordinated Indebtedness or to acquire any of the Securities or
on account of the redemption or mandatory repurchase provisions of the
Securities. Payments on the Subordinated Indebtedness may and shall be resumed
(a) in case of a payment default, upon the date on which such default is cured
or waived and (b) in case of a nonpayment default, the earlier of the date on
which such nonpayment default is cured or waived or 179 days after the date on
which the applicable Payment Blockage Notice is received if the maturity of
such Designated Senior Indebtedness has not been accelerated. No new period of
payment blockage may be commenced pursuant to a Payment Blockage Notice unless
and until (i) 365 days have elapsed since the initial effectiveness of the
immediately prior Payment Blockage Notice and (ii) all scheduled payments of
principal, premium, if any, and interest on the Notes that have come due have
been paid in full in cash. No nonpayment default that existed or was continuing
on the date of delivery of any Payment Blockage Notice to the Trustee shall be,
or be made, the basis for a subsequent Payment Blockage Notice, unless such
nonpayment default shall have been cured or waived for a period of not less
than 90 consecutive days and subsequently recurs.
(c) In the event that, notwithstanding the foregoing provisions of
this Section 5.5, any payment or distribution on account of the Subordinated
Indebtedness shall be made by or on behalf of the Company and received by the
Trustee, any Holder or any Paying Agent (or, if the Company is acting as its
own Paying Agent, money for any such payment shall be segregated and held in
trust), after the happening of a default under any Senior Indebtedness of the
type specified in subsections (a) and (b) of this Section 5.5, then, unless and
until the amount of such Senior Indebtedness then due shall have been paid in
full, or provision made therefor or such default shall have been cured or
waived, such payment (subject, in each case, to the provisions of Sections 5.6
and 5.7 and the proviso contained in subsection (b) of this Section 5.5) shall
be held in trust for the benefit of, and shall be immediately paid over to, the
holders of Senior Indebtedness or their representative or representatives or
the trustee or trustees under any indenture under which any instruments
evidencing any of the Senior Indebtedness may have
38
been issued ratably according to the aggregate amounts remaining unpaid on
account of the principal of and interest on, and fees and other charges in
respect of, the Senior Indebtedness held or represented by each, for
application to the payment of all Senior Indebtedness remaining unpaid to the
extent necessary to pay all Senior Indebtedness in accordance with its terms,
after giving effect to any concurrent payment or distribution to or for the
benefit of the holders of Senior Indebtedness.
SECTION 5.6 Notice to Trustee
The Company shall give prompt written notice to the Trustee of any
fact known to the Company which would prohibit the making of any payment to or
by the Trustee in respect of the Securities. Notwithstanding the provisions of
this Article 5 or any other provision of this Indenture, the Trustee shall not
at any time be charged with knowledge of the existence of any facts which would
prohibit the making of any payment to or by the Trustee, unless and until the
Trustee shall have received written notice thereof from the Company or from the
holder or holders of Senior Indebtedness or from their representative or
representatives or from the trustee or trustees under any indenture pursuant to
which any instruments evidencing any of such Senior Indebtedness have been
issued; and, prior to the receipt of any such written notice, the Trustee,
subject to the provisions of Sections 9.1 and 9.2, shall be entitled to assume
conclusively that such facts do not exist.
The Trustee shall be entitled to rely conclusively on the delivery to
it of a written notice by a person representing himself or herself to be a
holder of Senior Indebtedness (or a representative of such holder or the
trustee under any indenture pursuant to which any instruments evidencing any of
such Senior Indebtedness have been issued) to establish that such notice has
been given by a holder of Senior Indebtedness or a representative of any such
holder. In the event that the Trustee determines in good faith that further
evidence is required with respect to the right of any person as a holder of
Senior Indebtedness to participate in any payment or distribution pursuant to
this Article 5, the Trustee may request such person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness
held by such person, the extent to which such person is entitled to participate
in such payment or distribution and any other facts pertinent to the rights of
each person under this Article 5, and, if such evidence is not furnished, the
Trustee may defer any payment to such person pending judicial determination as
to the right of such person to receive such payment.
39
SECTION 5.7 Application by Trustee of Monies Deposited With It
Money or U.S. Government Obligations deposited in trust with the
Trustee pursuant to Sections 6.3 and 10.1 and not in violation of this Article
5 shall be for the sole benefit of Securityholders and shall thereafter not be
subject to the subordination provisions of this Article 5. However, money or
U.S. Government Obligations may only be deposited in trust with the Trustee
pursuant to Sections 6.3 and 10.1 if all Designated Senior Indebtedness has
been paid in full in cash or if the Designated Senior Lender has given prior
written approval of such deposit. Otherwise, any deposit of monies by the
Company with the Trustee or any Paying Agent (whether or not in trust) for the
payment of the Subordinated Indebtedness shall be subject to the provisions of
Sections 5.1, 5.2, 5.3 and 5.5; except that, if two Business Days prior to the
date on which by the terms of this Indenture any such monies may become payable
for any purpose (including, without limitation, the payment of either the
principal of or interest on any Security) the Trustee shall not have received
with respect to such monies the notice provided for in Section 5.6, then the
Trustee or any Paying Agent shall have full power and authority to receive such
monies and to apply such monies to the purpose for which they were received,
and shall not be affected by any notice to the contrary which may be received
by it on or after such date. This Section 5.7 shall be construed solely for the
benefit of the Trustee and the Paying Agent and shall not otherwise affect the
rights that holders of Senior Indebtedness may have to recover any such
payments from the Holders in accordance with the provisions of this Article 5.
SECTION 5.8 Subordination Rights Not Impaired by Acts or Omissions of Company
or Holders of Senior Indebtedness
(a) No right of any present or future holders of any Senior
Indebtedness to enforce subordination, as herein provided, shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
the Company or by any act or failure to act, in good faith, by any such holder,
or by any noncompliance by the Company with the terms, provisions and covenants
of this Indenture, regardless of any knowledge thereof which any such holder
may have or be otherwise charged with. In the event any Designated Senior
Indebtedness is outstanding, the provisions of Article 5 shall not be amended
in any manner adverse to the interests of the holders of the Designated Senior
Indebtedness without the consent of the Designated Senior Lender. No provision
in any supplemental indenture which affects Senior Indebtedness shall be
effective against the holders of the Senior Indebtedness unless the holders of
such Senior Indebtedness (required pursuant to the terms of such Senior
Indebtedness to give such consent) have consented thereto.
40
(b) Without in any way limiting the generality of Section 5.8(a), the
holders, from time to time, of the Senior Indebtedness may, at any time, and
from time to time, without the consent or notice to the holders of the
Securities and without impairing or releasing the subordination provided in
this Article 5 or the obligations hereunder of the holders of the Securities to
the holders, from time to time, of Senior Indebtedness, do any one or more of
the following: (i) change the manner, place or terms of payment or extend the
time of payment of, or renew or alter, Senior Indebtedness or any instrument
evidencing the same or any agreement under which Senior Indebtedness is
outstanding; (ii) sell, exchange, release or otherwise deal with any property,
pledge, mortgage or other instrument securing Senior Indebtedness; (iii)
release any Person liable in any manner for the collection of Senior
Indebtedness; and (iv) exercise or refrain from exercising any rights against
the Company and any other Person, provided, however, that this clause (iv)
shall not impair the obligations of the Trustee pursuant to the second sentence
of Section 5.5(b).
SECTION 5.9 Trustee to Effectuate Subordination
Each holder of a Security by his or her acceptance thereof authorizes
and directs the Trustee on his or her behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this
Article 5 and appoints the Trustee his or her attorney-in-fact for any and all
such purposes.
SECTION 5.10 Right of Trustee to Hold Senior Indebtedness
The Trustee, in its individual capacity, shall be entitled to all of
the rights set forth in this Article 5 in respect of any Senior Indebtedness at
any time held by it to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall be construed to deprive the
Trustee of any of its rights as such holder.
Nothing in this Article shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 9.7.
SECTION 5.11 Article 5 Not to Prevent Events of Default
The failure to make a payment on account of the Subordinated
Indebtedness by reason of any provision in this Article 5 shall not be
construed as preventing the occurrence of an Event of Default under Section
8.1.
41
SECTION 5.12 No Fiduciary Duty Created to Holders of Senior Indebtedness
Notwithstanding any other provision in this Article 5, the Trustee
shall not be deemed to owe any fiduciary duty to the holders of Senior
Indebtedness by virtue of the provisions of this Article 5.
SECTION 5.13 Article Applicable to Paying Agents
In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting hereunder, the term "Trustee"
as used in this Article 5 shall in such case (unless the context shall
otherwise require) be construed as extending to and including such Paying Agent
within its meaning as fully for all intents and purposes as if such Paying
Agent were named in this Article 5 in addition to or in place of the Trustee;
provided, however, that Sections 5.6, 5.10 and 5.12 shall not apply to the
Company if it acts as Paying Agent.
ARTICLE 6.
COVENANTS
SECTION 6.1 Payment of Securities
The Company shall promptly make all payments in respect of the
Securities on the dates and in the manner provided in the Securities and this
Indenture. An installment of principal or interest shall be considered paid on
the date it is due if the Paying Agent (other than the Company) holds on that
date money, deposited by the Company or an Affiliate thereof, sufficient to pay
the installment. The Company shall pay interest on overdue principal at the
rate borne by the Securities per annum; it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
SECTION 6.2 SEC Reports
The Company shall file all reports and other information and documents
which it is required to file with the SEC pursuant to Section 13 or 15(d) of
the Exchange Act, and within 15 days after it files them with the SEC, the
Company shall file copies of all such reports, information and other documents
with the Trustee. The Company will cause any quarterly and annual reports which
it mails to its shareholders to be mailed to the Holders of the Securities.
In the event the Company is at any time no longer subject to the
reporting requirements of Section 13 or 15(d) of the Exchange
42
Act, the Company will prepare, for the first three quarters of each fiscal
year, quarterly financial statements substantially equivalent to the financial
statements required to be included in a report on Form 10-Q under the Exchange
Act. The Company will also prepare, on an annual basis, complete audited
consolidated financial statements, including, but not limited to, a balance
sheet, a statement of operations, a statement of cash flows and all appropriate
notes. All such financial statements will be prepared in accordance with
generally accepted accounting principles. The Company will cause a copy of such
financial statements to be filed with the Trustee and mailed to the Holders of
the Securities within 50 days after the end of each of the first three quarters
of each fiscal year and within 95 days after the close of each fiscal year. The
Company will also comply with the other provisions of TIA ss. 314(a).
SECTION 6.3 Liquidation
Subject to the provisions of Article 5, so far as they may be
applicable hereto, the Board of Directors or the shareholders of the Company
may not adopt a plan of liquidation, which plan provides for, contemplates or
the effectuation of which is preceded by (a) the sale, lease, conveyance or
other disposition of all or substantially all of the assets of the Company
otherwise than substantially as an entirety (any such sale, lease, conveyance
or other disposition substantially as an entirety being governed by Article 7)
and (b) the distribution of all or substantially all of the proceeds of such
sale, lease, conveyance or other disposition and of the remaining assets of the
Company to the holders of the capital stock of the Company, unless the Company
shall in connection with the adoption of such plan make provision for, or agree
that prior to making any liquidating distributions it will make provision for,
the satisfaction of the Company's obligations hereunder and under the
Securities as to the payment of the principal and interest thereof. The Company
shall be deemed to make provision for such payments only if (1) the Company
irrevocably deposits in trust with the Trustee money or U.S. Government
Obligations maturing as to principal and interest in such amounts and at such
times as are sufficient, without consideration of any reinvestment of such
interest, to pay the principal of and interest on the Securities then
outstanding to maturity and to pay all other sums payable by it hereunder or
(2) there is an express assumption of the due and punctual payment of the
Company's obligations hereunder and under the Securities and the performance
and observance of all cove nants and conditions to be performed by the Company
hereunder, by the execution and delivery of a supplemental indenture in form
satisfactory to the Trustee by a person who acquires, or will acquire
(otherwise than pursuant to a lease), a portion of the assets of the Company,
and which person will have assets (im mediately after the acquisition) and
aggregate earnings (for such
43
person's four full fiscal quarters immediately preceding the acquisition) equal
to not less than the assets of the Company (immediately preceding such
acquisition) and the aggregate earnings of the Company (for its four full
fiscal quarters immediately preceding the acquisition), respectively, and which
is a corporation organized under the laws of the United States, any State
thereof or the District of Columbia; provided, however, that the Company shall
not make any such deposit with the Trustee until (i) it has paid in full in
cash all Designated Senior Indebtedness or obtained prior written consent of
the Designated Senior Lender to make such deposit and (ii) it is not prohibited
from doing so under the provisions of Article 5; and provided, further, the
Company shall not make any liquidating distribution until after the Company (x)
has certified to the Trustee with an Officers' Certificate at least five days
prior to the making of any liquidating distribution that it has complied with
the provisions of this Section 6.3 and (y) delivered to the Trustee an Opinion
of Counsel that all conditions precedent to such liquidation have been complied
with.
SECTION 6.4 Limitation on Transactions with Affiliates
Except as otherwise set forth herein, neither the Company nor any of
its Subsidiaries shall make any loan, advance, guarantee or capital
contribution to, or for the benefit of, or sell, lease, transfer or dispose of
any properties or assets to, or for the benefit of, or purchase or lease any
property or assets from, or enter into or amend any contract, agreement or
understanding with, or for the benefit of, an Affiliate (each such transaction
or series of related transactions that are part of a common plan, an "Affiliate
Transaction"), except in good faith and on terms that are no less favorable to
the Company or the relevant Subsidiary than those that would have been obtained
in a comparable transaction on an arm's length basis from an unrelated Person.
The Company shall not, and shall not permit any Subsidiary to, engage
in any Affiliate Transactions involving aggregate payments or other transfers
by the Company and its Subsidiaries in excess of $2,000,000 (including cash and
non-cash payments and benefits valued at their fair market value by the Board
of Directors in good faith), unless the Company delivers to the Trustee: (i) a
resolution of the Board of Directors stating that the Board of Directors
(including a majority of the disinterested directors, if any) has, in good
faith, determined that such Affiliate Transaction complies with the provisions
of this Inden ture (which resolution shall also be required for all Affiliate
Transactions involving aggregate payments or other transfers by the Company and
its Subsidiaries which are less than $2,000,000 as long as they are in excess
of $500,000); and (ii)(A) with respect to any Affiliate Transaction involving
the incurrence of
44
Indebtedness, a written opinion of a nationally recognized in vestment banking
or accounting firm experienced in the review of similar types of transactions,
(B) with respect to any Affiliate Transaction involving the transfer of real
property, fixed assets or equipment, either directly or by a transfer of 50% or
more of the capital stock of a Subsidiary which holds any such real property,
fixed assets or equipment, a written appraisal from a nationally recognized
appraiser experienced in the review of similar types of transactions or (C)
with respect to any Affili ate Transaction not otherwise described in (A) or
(B) above, or in lieu of the opinions and appraisals referred to in (A) and (B)
above, a written certification from a nationally recognized pro fessional or
firm experienced in evaluating similar types of transactions, in each case,
stating that the terms of such transaction are fair to the Company or such
Subsidiary, as the case may be, and the Holders of the Securities from a
financial point of view.
Notwithstanding Sections 4.8(a) and (b), this Section 4.8 shall not
apply to: (i) transactions between the Company and any Subsidiary or between
Subsidiaries; (ii) reasonable compensation paid to officers, employees or
consultants of the Company or any Subsidiary as determined in good faith by the
Company's Board of Directors or executives; or (iii) payments and transactions
in connection with the Offering.
SECTION 6.5 Compliance Certificates
The Company shall deliver to the Trustee, within 90 days after the end
of each fiscal year of the Company, an Officers' Certificate complying with TIA
ss. 314(a)(4) as to the signer's knowledge of the Company's compliance with all
conditions and covenants on its part contained in this Indenture and stating
whether or not the signer knows of any default or Event of Default. If such
signer knows of such a default or Event of Default, the Officers' Certificate
shall describe the default or Event of Default and the efforts to remedy the
same. For the purposes of this Section 6.4, compliance shall be determined
without regard to any grace period or requirement of notice provided pursuant
to the terms of this Indenture. The Officers' Certificate need not comply with
Section 12.4 hereof.
SECTION 6.6 Notice of Defaults
In the event (a) that Indebtedness of the Company in an aggregate
amount in excess of $1,000,000 is declared due and payable before its maturity
because of the occurrence of any default under such Indebtedness, or (b) of the
occurrence of any event which entitles the holder or holders of such
Indebtedness to declare such Indebtedness due and payable before its maturity
and with respect to which any applicable grace period has lapsed
45
or expired, the Company will promptly give written notice to the Trustee of
such declaration or event.
SECTION 6.7 Further Instruments and Acts
Upon request of the Trustee, the Company will execute and deliver such
further instruments and do such further acts as may be reasonably necessary or
proper to carry out more effectively the purposes of this Indenture.
ARTICLE 7.
SUCCESSOR CORPORATION
SECTION 7.1 When Company May Merge, Etc.
The Company shall not consolidate with or merge with or into, or
transfer all or substantially all of its assets to, any person, (any such
consolidation, merger or sale being a "Disposition") unless:
(a) either the Company shall be the resulting or surviving entity of
such Disposition or such person is a corporation organized and existing under
the laws of the United States, a State thereof or the District of Columbia, and
such person expressly assumes by supplemental indenture executed and delivered
to the Trustee, in form satisfactory to the Trustee, all the obligations of the
Company under the Securities and this Indenture (in which case all such
obligations of the Company shall terminate); and
(b) immediately before and immediately after giving effect to such
Disposition and treating any indebtedness which becomes an obligation of the
Company as a result of such Disposition as having been incurred by the Company
at the time of such transaction, no default or Event of Default shall have
occurred and be continuing; and
(c) the entity formed by or surviving such Disposition, or the person
to which such Disposition shall have been made shall have Consolidated Net
Worth (immediately after the Disposition but prior to giving effect on a pro
forma basis to any purchase accounting adjustments or restructuring changes
resulting from the Disposition) equal to or greater than the Consolidated Net
Worth of the Company immediately preceding the Disposition.
The Company shall deliver to the Trustee prior to the proposed
transaction an Officers' Certificate and an Opinion of Counsel, each of which
shall comply with Section 12.4 and shall state that such consolidation, merger
or transfer and such supplemental indenture comply with this Article 7 and that
all
46
conditions precedent herein provided for relating to such transaction have been
complied with; provided, however, that such Opinion of Counsel shall not
address Events of Default, except where such counsel has actual knowledge of
any such Event of Default.
SECTION 7.2 Successor Corporation Substituted
Upon any Disposition in accordance with Section 7.1, the successor
corporation formed by such consolidation or into which the Company is merged or
to which such transfer is made shall succeed to, and be substituted for, and
may exercise every right and power of, the Company under this Indenture with
the same effect as if such successor corporation had been named as the Company
herein.
ARTICLE 8.
DEFAULT AND REMEDIES
SECTION 8.1 Events of Default
An "Event of Default" shall occur if:
(1) the Company defaults in the payment of interest on any
Security when the same becomes due and payable and the default
continues for a period of 30 days;
(2) the Company defaults in the payment of the principal of
any Security when the same becomes due and payable at maturity, upon
redemption or otherwise;
(3) failure by the Company to perform any conversion of
Securities required under this Indenture and the continuance of such
failure for 30 days;
(4) the Company fails to comply with any of its other
agreements contained in the Securities or this Indenture and the
default continues for the period and after the notice specified below;
(5) failure of the Company to make any payment at maturity
in respect of Indebtedness, which payment is in an amount in excess of
$1,000,000 and continuance of such failure for 30 days after notice of
such failure;
(6) a default shall occur under any bond, debenture, note or
other indebtedness for money borrowed by the Company having an
aggregate outstanding principal amount of in excess of $1,000,000,
which default shall have resulted in such indebtedness becoming or
being declared due and payable
47
prior to the date on which it would otherwise have been due and
payable, without such indebtedness having been discharged, such
acceleration having been rescinded or annulled or there having been
deposited in trust a sum of money sufficient to discharge in full such
indebtedness, in each case within a period of 30 days following the
occurrence of such acceleration;
(7) the Company pursuant to or within the meaning of any
Bankruptcy Law:
(A) commences a voluntary case or proceeding;
(B) consents to the entry of an order for relief
against it in an involuntary case or proceeding;
(C) consents to the appointment of a Custodian of
it or for all or substantially all of its property; or
(D) makes a general assignment for the benefit of
its creditors; or
(8) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company in an
involuntary case or proceeding;
(B) appoints a Custodian of the Company or for all
or substantially all of its property; or
(C) orders the liquidation of the Company;
and in each case the order or decree remains unstayed and in
effect for 60 days.
The term "Bankruptcy Law" means Title 11 of the United States Code or
any similar federal or state law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator, sequestrator or
similar official under any Bankruptcy Law.
A default under clause (4) above is not an Event of Default until the
Trustee notifies the Company, or the Holders of at least 25% in principal
amount of the Securities then outstanding notify the Company and the Trustee,
of the default, and the Company does not cure the default within 60 days after
receipt of such notice. The notice given pursuant to this Section 8.1 must
specify the default, demand that it be remedied and state that the notice is a
"Notice of Default." When a default is cured, it ceases.
48
SECTION 8.2 Acceleration
If an Event of Default (other than an Event of Default specified in
clause (7) or (8) of Section 8.1) occurs and is continuing, the Trustee may, by
notice to the Company, or the Holders of at least 25% in principal amount of
the Securities then outstanding may, by written notice to the Company, the
Trustee, and the Designated Senior Lender, and the Trustee shall, upon the
request of such Holders, declare all unpaid principal of and accrued interest
to the date of acceleration on the Securities then outstanding (if not then due
and payable) to be due and payable (A) if no Designated Senior Indebtedness is
outstanding upon any such declaration or (B) if Designated Senior Indebtedness
is outstanding, upon the first to occur of (i) an acceleration of all
Designated Senior Indebtedness or (ii) the 15th day after receipt by the
Company and the Designated Senior Lender of such written notice given
hereunder, and the same shall become and be immediately due and payable. If an
Event of Default specified in clause (7) or (8) of Section 8.1 occurs, all
unpaid principal of and accrued interest on the Securities then outstanding
shall ipso facto become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Securityholder. The
Holders of a majority in principal amount of the Securities then outstanding by
notice to the Trustee may rescind an acceleration and its consequences if (a)
all existing Events of Default, other than the nonpayment of the principal of
and accrued interest on the Securities which has become due solely by such
declaration of acceleration, have been cured or waived; (b) to the extent the
payment of such interest is lawful, interest on overdue installments of
interest and overdue principal, which has become due otherwise than by such
declaration of acceleration, has been paid; (c) the rescission would not
conflict with any judgment or decree of a court of competent jurisdiction; and
(d) all payments due to the Trustee and any predecessor Trustee under Section
9.7 have been made. Anything herein contained to the contrary notwithstanding,
in the event of any acceleration pursuant to this Section 8.2, the Company
shall not be obligated to pay any premium which it would have had to pay if it
had then elected to redeem the Securities pursuant to paragraph 5 of the
Securities, except in the case of any Event of Default occurring by reason of
any willful action (or inaction) taken (or not taken) by or on behalf of the
Company with the intention of avoiding payment of the premium which it would
have had to pay if it had then elected to redeem the Securities pursuant to
paragraph 5 of the Securities, in which case an equivalent premium shall also
become and be immediately due and payable to the extent permitted by law.
49
SECTION 8.3 Other Remedies
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy by proceeding at law or in equity to collect the
payment of the principal of or interest on the Securities or to enforce the
performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative to the
extent permitted by law.
SECTION 8.4 Waiver of Defaults and Events of Default
Subject to Sections 8.7 and 11.2, the Holders of a majority in
principal amount of the Securities then outstanding by notice to the Trustee
may waive an existing default or Event of Default and its consequence, except a
default in the payment of the principal of or interest on any Security as
specified in clauses (1) and (2) of Section 8.1. When a default or Event of
Default is waived, it is cured and ceases.
SECTION 8.5 Control by Majority
The Holders of a majority in principal amount of the Securities then
outstanding may direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture, that the Trustee determines may be unduly
prejudicial to the rights of another Securityholder or the Trustee, or that may
involve the Trustee in personal liability; provided, however, that the Trustee
may take any other action deemed proper by the Trustee which is not
inconsistent with such direction.
SECTION 8.6 Limitations on Suits
A Securityholder may not pursue any remedy with respect to this
Indenture or the Securities (except actions for payment of overdue principal or
interest or for the conversion of the Securities pursuant to Article 4) unless:
(1) the Holder gives to the Trustee written notice of a
continuing Event of Default;
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(2) the Holders of at least 25% in principal amount of the
then outstanding Securities make a written request to the Trustee to
pursue the remedy;
(3) such Holder or Holders offer to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60
days after receipt of the request and the offer of indemnity; and
(5) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of
a majority in principal amount of the Securities then outstanding.
A Securityholder may not use this Indenture to prejudice the rights of
another Securityholder or to obtain a preference or priority over such other
Securityholder.
SECTION 8.7 Rights of Holders to Receive Payment
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Security to receive payment of the principal of and interest on
the Security, on or after the respective due dates expressed in the Security,
or to bring suit for the enforcement of any such payment on or after such
respective dates, is absolute and unconditional and shall not be impaired or
affected without the consent of the Holder.
SECTION 8.8 Collection Suit by Trustee
If an Event of Default in the payment of principal or interest
specified in clause (1) or (2) of Section 8.1 occurs and is continuing, the
Trustee may recover judgment in its own name and as trustee of an express trust
against the Company or another obligor on the Securities for the whole amount
of principal and accrued interest remaining unpaid, together with interest on
overdue principal and, to the extent that payment of such interest is lawful,
interest on overdue installments of interest, in each case at the rate per
annum borne by the Securities and such further amount as shall be sufficient to
cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel.
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SECTION 8.9 Trustee May File Proofs of Claim
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Securityholders allowed in any judicial proceedings relative to the Company (or
any other obligor on the Securities), its creditors or its property and shall
be entitled and empowered to collect and receive any monies or other property
payable or deliverable on any such claims and to distribute the same, and any
Custodian in any such judicial proceeding is hereby authorized by each
Securityholder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the
Securityholders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 9.7, and to
the extent that such payment of the reasonable compensation, expenses,
disbursements and advances in any such proceedings shall be denied for any
reason, payment of the same shall be secured by a lien on, and shall be paid
out of, any and all distributions, dividends, monies, securities and other
property which the Securityholders may be entitled to receive in such
proceedings, whether in liquidation or under any plan of reorganization or
arrangement or otherwise. Nothing herein contained shall be deemed to authorize
the Trustee to authorize or consent to, or, on behalf of any Securityholder, to
authorize, accept or adopt any plan of reorganization, arrangement, adjustment
or composition affecting the Securities or the rights of any Holder thereof, or
to authorize the Trustee to vote in respect of the claim of any Securityholder
in any such proceeding.
SECTION 8.10 Priorities
If the Trustee collects any money pursuant to this Article 8, it shall
pay out the money in the following order:
First, to the Trustee for amounts due under Section 9.7;
Second, to the holders of Senior Indebtedness to the extent
required by Article 5;
Third, to Securityholders for amounts due and unpaid on the Securities
for principal and interest, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Securities for principal
and interest, respectively; and
Fourth, to the Company.
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The Trustee may fix a record date and payment date for any payment to
Securityholders pursuant to this Section 8.10.
SECTION 8.11 Undertaking for Costs
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 8.11 does not apply to a suit made by the Trustee, a suit by a
Holder pursuant to Section 8.7, or a suit by Holders of more than 10% in
principal amount of the Securities then outstanding.
SECTION 8.12 Waiver of Usury, Stay or Extension Laws
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any usury, stay or extension law
wherever enacted, now or at any time hereafter in force, which may affect the
covenants or the performance of this Indenture; and the Company (to the extent
that it may lawfully do so) hereby expressly waives all benefit or advantage of
any such law and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and
permit the execution of every such power as though no such law had been
enacted.
ARTICLE 9.
TRUSTEE
SECTION 9.1 Duties of Trustee
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture and
use the same degree of care and skill in 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:
(1) the Trustee need perform only those duties as 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
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(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture. The Trustee, however, shall examine any
certificates and opinions which by any provision hereof are
specifically required to be delivered to the Trustee to determine
whether or not they conform to the requirements of this Indenture.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that:
(1) this paragraph does not limit the effect of subsection
(b) of this Section 9.1;
(2) the Trustee shall not be liable for any error of
judgment made in good faith by a Trust Officer, unless it is proved
that the Trustee was negligent in ascertaining the pertinent facts;
and
(3) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 8.5.
(d) The Trustee may refuse to perform any duty or exercise any right
or power unless it receives indemnity satisfactory to it against any loss,
liability, expense or fee.
(e) Every provision of this Indenture that in any way relates to the
Trustee is subject to subsections (a), (b), (c) and (d) of this Section 9.1.
(f) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Company. Money or
other assets held in trust by the Trustee need not be segregated from other
funds except to the extent required by law.
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SECTION 9.2 Rights of Trustee
Subject to Section 9.1:
(a) The Trustee may rely conclusively on any document believed by it
to be genuine and to have been signed or presented by the proper person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel, or both, which shall conform to
Section 12.4(b). The Trustee shall not be liable for any action it takes or
omits to take in good faith in reliance on such Certificate or Opinion.
(c) The Trustee may act through its agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights
or powers.
(e) The Trustee may consult with counsel, and the advice or opinion of
such counsel as to matters of law shall be full and complete authorization and
protection in respect of any such action taken, omitted or suffered by it
hereunder in good faith and in accordance with the advice or opinion of such
counsel.
(f) The Trustee shall have no duty to inquire as to the performance of
the Company's covenants herein. In addition, the Trustee shall not be deemed to
have knowledge of any default or Event of Default except (i) any Event of
Default occurring pursuant to Section 8.1(1) or 8.1(2) or (ii) any default or
Event of Default of which the Trustee shall have received written notification
or of which a Trust Officer shall have obtained actual knowledge.
SECTION 9.3 Individual Rights of Trustee
The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities and may otherwise deal with the Company or an
affiliate of the Company with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights. However, the Trustee is
subject to Sections 9.10 and 9.11.
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SECTION 9.4 Trustee's Disclaimer
The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Company's
use of the proceeds from the Securities, and it shall not be responsible for
any statement in the Securities other than its certificate of authentication.
SECTION 9.5 Notice of Default or Events of Default
If a default or an Event of Default occurs and is continuing and if it
is known to the Trustee, the Trustee shall mail to each Securityholder notice
of the default or Event of Default within 90 days after it occurs. Except in
the case of a default or an Event of Default in payment of the principal of or
interest on any Security, the Trustee may withhold the notice if and so long as
a committee of its Trust Officers in good faith determines that withholding
notice is in the interest of Securityholders.
SECTION 9.6 Reports by Trustee to Holders
If such report is required by TIA ss. 313, within 60 days after each
April 15, beginning with the April 15 following the date of this Indenture, the
Trustee shall mail to each Securityholder a brief report dated as of such April
15 that complies with TIA ss. 313(a). The Trustee also shall comply with TIA
ss. 313(b)(2) and (c).
A copy of each report at the time of its mailing to Securityholders
shall be mailed to the Company and filed with the SEC and each stock exchange,
if any, on which the Securities are listed. The Company shall notify the
Trustee whenever the Securities become listed on any stock exchange and any
changes in the stock exchanges on which the Securities are listed.
SECTION 9.7 Compensation and Indemnity
The Company shall pay to the Trustee from time to time reasonable
compensation for its services (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust). The Company shall reimburse the Trustee upon request for all reasonable
disbursements, expenses and advances incurred or made by it. Such expenses may
include the reasonable compensation, disbursements and expenses of the
Trustee's agents and counsel.
The Company agrees to indemnify the Trustee and each of its officers,
directors, attorneys-in-fact and agents for, and hold it and each of them
harmless against, any claim, demand, expense (including but not limited to
reasonable compensation, disbursements and expenses of the Trustee's agents and
counsel),
56
loss or liability incurred by it without negligence, bad faith or willful
misconduct on its part, arising out of or in connection with the administration
of this trust and its rights or duties hereunder, including the reasonable
costs and expenses of defending itself against any claim or liability in
connection therewith. The Trustee shall notify the Company promptly of any
claim asserted against the Trustee for which it may seek indemnity, but failure
by the Trustee promptly to notify the Company shall not relieve the Company of
its obligations hereunder unless such failure prejudices the Company. The
Company need not pay for any settlement made without its written consent, which
consent shall not be unreasonably withheld. The Company need not reimburse any
expense or indemnify against any loss or liability to the extent incurred by
the Trustee through its negligence, bad faith or willful misconduct.
To secure the Company's payment obligations in this Section 9.7, the
Trustee shall have a senior claim to which the Securities are hereby made
subordinate on all money or property held or collected by the Trustee, except
such money or property held in trust to pay the principal of and interest on
particular Securities. The obligations of the Company under this Section 9.7 to
compensate or indemnify the Trustee and to pay or reimburse the Trustee for
expenses, disbursements and advances shall be secured by a lien prior to any
lien of the Securities upon all property and funds held or collected by the
Trustee as such, except funds held in trust for the benefit of the Holders of
particular Securities. The obligations of the Company under this Section 9.7
shall survive the satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in clause (7) or (8) of Section 8.1 occurs, the expenses and
the compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
SECTION 9.8 Replacement of Trustee
The Trustee may resign by so notifying the Company. The Holders of a
majority in principal amount of the Securities then outstanding may remove the
Trustee by so notifying the Trustee and may, with the Company's written
consent, appoint a successor Trustee. The Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 9.10;
(2) the Trustee is adjudged a bankrupt or an insolvent;
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(3) a receiver or other 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.
If a successor Trustee does not take office within 45 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or
the Holders of 10% in principal amount of the Securities then outstanding may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee fails to comply with Section 9.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that,
the retiring Trustee shall transfer all property held by it as Trustee to the
successor Trustee and be released from its obligations (exclusive of any
liabilities that the retiring Trustee may have incurred while acting as
Trustee) hereunder, the resignation or removal of the retiring Trustee shall
become effective, and the successor Trustee shall have all the rights, powers
and duties of the Trustee under this Indenture. A successor Trustee shall mail
notice of its succession to each Securityholder.
A retiring Trustee shall not be liable for the acts or omissions of
any successor Trustee after its succession.
Notwithstanding replacement of the Trustee pursuant to this Section
9.8, the Company's obligations under Section 9.7 shall continue for the benefit
of the retiring Trustee.
SECTION 9.9 Successor Trustee by Merger, Etc.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the resulting, surviving or transferee corporation, without any
further act, shall be the successor Trustee, provided such transferee
corporation shall qualify and be eligible under Section 9.10.
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SECTION 9.10 Eligibility; Disqualification
The Trustee shall always satisfy the requirements of paragraphs (1),
(2) and (5) of TIA ss. 310(a). If at any time the Trustee shall cease to
satisfy any such requirements, it shall resign immediately in the manner and
with the effect specified in this Article 9. The Trustee shall be subject to
the provisions of TIA ss. 310(b). Nothing herein shall prevent the Trustee from
filing with the SEC the application referred to in the penultimate paragraph of
TIA ss. 310(b).
SECTION 9.11 Preferential Collection of Claims Against Company
The Trustee shall comply with TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein. The
provisions of TIA ss. 311 shall apply to the Company, as obligor on the
Securities.
ARTICLE 10.
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 10.1 Termination of Company's Obligations
Subject to applicable rules of any stock exchange or system on which
the Securities are listed or quoted, the Company may terminate all of its
obligations under the Securities and this Indenture (excepting those
obligations referred to in the immediately succeeding paragraph) if all
Securities previously authenticated and delivered (other than destroyed, lost
or stolen Securities which have been replaced or paid or Securities for whose
payment money has theretofore been held in trust and thereafter repaid to the
Company, as provided in Section 10.3) have been delivered to the Trustee or the
Paying Agent for cancellation and the Company has paid all sums payable by it
hereunder, or if the Company irrevocably deposits in trust with the Trustee or
the Paying Agent, pursuant to a written trust agreement satisfactory to the
Trustee, money or U.S. Government Obligations maturing as to principal and
interest in such amounts and at such times as are sufficient, without
consideration of any reinvestment of such interest, to pay the principal of and
interest on the Securities then outstanding to maturity or to the date fixed
for redemption and to pay all other sums payable by it hereunder. The Company
may make an irrevocable deposit pursuant to this Section 10.1 only if (i) it
has paid in full in cash all Designated Senior Indebtedness or obtained prior
written consent of the Designated Senior Lender to make such deposit and (ii)
at such time it is not prohibited from doing so under the provisions of Article
5 and the Company shall have delivered to the Trustee and any such Paying Agent
an Officers' Certificate and an Opinion
59
of Counsel to that effect and that all other conditions to such deposit have
been complied with.
The Company's obligations in paragraph 13 of the Securities and in
Sections 2.3, 2.4, 2.5, 2.6, 2.7, 2.11, 6.1, 9.7, 9.8, 10.4 and Article 4 shall
survive until the Securities are no longer outstanding. Thereafter, the
Company's obligations in such paragraph 13 and in Section 9.7 shall survive.
After such irrevocable deposit, if in compliance with Section 5.7, the
Trustee upon request shall acknowledge in writing the discharge of the
Company's obligations under the Securities and this Indenture, except for those
surviving obligations specified above.
"U.S. Government Obligations" means direct noncallable obligations of,
or non-callable obligations guaranteed by, the United States of America for the
payment of which obligation or guarantee the full faith and credit of the
United States is pledged.
SECTION 10.2 Application of Trust Money
The Trustee or the Paying Agent shall hold in trust, for the benefit
of the Holders, money or U.S. Government Obligations deposited with it pursuant
to Section 10.1, and shall apply the deposited money and the money from U.S.
Government Obligations in accordance with this Indenture, to the payment of the
principal of and interest on the Securities. Money and U.S. Government
Obligations deposited in trust in accordance with Section 10.1 shall not be
subject to the subordination provisions of Article 5.
SECTION 10.3 Repayment to Company
Subject to Section 10.1, the Trustee and the Paying Agent shall
promptly pay to the Company upon request any excess money or U.S. Government
Obligations held by them at any time.
The Trustee and the Paying Agent shall pay to the Company upon request
any money held by them for the payment of principal or interest that remains
unclaimed for two years after a right to such money has matured; provided,
however, that the Trustee or such Paying Agent, before being required to make
any such payment, may at the expense of the Company cause to be published once
in a newspaper of general circulation in The City of New York or mail to each
Holder entitled to such money notice that such money remains unclaimed and that
after a date specified therein, which shall be at least 30 days from the date
of such publication or mailing, any unclaimed balance of such money then
remaining will be repaid to the Company. After payment to the
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Company, Securityholders entitled to money must look to the Company for payment
as general creditors unless otherwise prohibited by law.
SECTION 10.4 Reinstatement
If the Trustee or the Paying Agent is unable to apply any money or
U.S. Government Obligations in accordance with Section 10.1 by reason of any
legal proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Company's obligations under this Indenture and the Securities
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 10.1 until such time as the Trustee or the Paying Agent is permitted to
apply all such money or U.S. Government Obligation in accordance with Section
10.1; provided, however, that if the Company has made any payment of the
principal of or interest on any Securities because of the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders of
such Securities to receive any such payment from the money or U.S. Government
Obligations held by the Trustee or the Paying Agent.
ARTICLE 11.
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 11.1 Without Consent of Holders
The Company and the Trustee may amend or supplement this Indenture or
the Securities without notice to or consent of any Securityholder:
(a) to comply with Sections 4.11, 6.3 and 7.1;
(b) to provide for uncertificated Securities in addition to or in
place of certificated Securities;
(c) to cure any ambiguity, defect or inconsistency, or to make any
other change that does not adversely affect the rights of any
Securityholder;
(d) to comply with the provisions of the TIA; or
(e) to appoint a successor Trustee.
SECTION 11.2 With Consent of Holders
The Company and the Trustee may amend or supplement this Indenture or
the Securities without notice to any Securityholder with the written consent of
the Holders of a majority in
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principal amount of the Securities then outstanding. The Holders of a majority
in principal amount of the Securities then outstanding may waive compliance in
a particular instance by the Company with any provision of this Indenture or
the Securities without notice to any Securityholder. Subject to Section 11.4,
without the written consent of each Securityholder affected, however, an
amendment, supplement or waiver, including a waiver pursuant to Section 8.4,
may not:
(1) reduce the principal amount of Securities whose Holders
must consent to an amendment, supplement or waiver;
(2) reduce the rate of or change the time for payment of
interest on any Security;
(3) reduce the principal of or premium on or change the
fixed maturity of any Security or alter the redemption provisions with
respect thereto in a manner adverse to the Holder thereof;
(4) alter the conversion provisions with respect to any
Security in a manner adverse to the Holder thereof;
(5) waive a default in the payment of the principal of or
premium or interest on any Security;
(6) make any changes in Section 8.4 or 8.7 or in this
sentence;
(7) modify the provisions of Article 5 in a manner adverse
to the Holders; or
(8) make any Security payable in money other than that
stated in the Security.
It shall not be necessary for the consent of the Holders under this
Section 11.2 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section 11.2
becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amendment, supplement or
waiver.
An amendment under this Section 11.2 may not make any change that
adversely affects the rights under Article 5 of any holder
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of an issue of Senior Indebtedness unless the holders of that issue, pursuant
to its terms, consent to the change.
SECTION 11.3 Compliance With Trust Indenture Act
Every amendment to or supplement of this Indenture or the Securities
shall comply with the TIA as in effect at the date of such amendment or
supplement.
SECTION 11.4 Revocation and Effect of Consents
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder is a continuing consent by the Holder and every subsequent
Holder of a Security or portion of a Security that evidences the same debt as
the consenting Holder's Security, even if notation of the consent is not made
on any Security. However, any such Holder or subsequent Holder may revoke the
consent as to his or her Security or portion of a Security if the Trustee
receives the notice of revocation before the date the amendment, supplement or
waiver becomes effective.
After an amendment, supplement or waiver becomes effective, it shall
bind every Securityholder, unless it makes a change described in any of clauses
(1) through (8) of Section 11.2. In that case the amendment, supplement or
waiver shall bind each Holder of a Security who has consented to it and every
subsequent Holder of a Security or portion of a Security that evidences the
same debt as the consenting Holder's Security.
SECTION 11.5 Notation on or Exchange of Securities
If an amendment, supplement or waiver changes the terms of a Security,
the Trustee may require the Holder of the Security to deliver it to the
Trustee. The Trustee may place an appropriate notation on the Security about
the changed terms and return it to the Holder. Alternatively, if the Company or
the Trustee so determines, the Company in exchange for the Security shall issue
and the Trustee shall authenticate a new Security that reflects the changed
terms.
SECTION 11.6 Trustee to Sign Amendments, etc.
The Trustee shall sign any amendment or supplement authorized pursuant
to this Article 11 if the amendment or supplement does not adversely affect the
rights, duties, liabilities or immunities of the Trustee. If it does, the
Trustee may, in its sole discretion, but need not sign it. In signing or
refusing to sign any amendment or supplement hereunder, the Trustee shall be
entitled to receive and, subject to Section 9.1, shall be fully protected in
relying upon, an Opinion of Counsel stating that such amendment or supplement
is
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authorized or permitted by this Indenture. The Company may not sign an
amendment or supplement until the Board of Directors approves it.
ARTICLE 12.
MISCELLANEOUS
SECTION 12.1 Trust Indenture Act Controls
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by any of Sections 310 to 317, inclusive, of the TIA through
operation of Section 318(c) thereof, such imposed duties shall control.
SECTION 12.2 Notices
Any notice, request or communication shall be given in writing and
delivered in person or mailed by first-class mail, postage prepaid, addressed
as follows:
If to the Company:
Family Golf Centers, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
If to the Trustee:
United States Trust Company of New York
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Division
If to the Designated Senior Lender:
The Chase Manhattan Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Account Officer-Family Golf Centers
Such notices or communications shall be effective when received.
The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Securityholder shall be mailed
by first-class mail to him or her at his or her address shown on the register
kept by the Registrar.
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Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication to a Securityholder is mailed in
the manner provided above, it is duly given, whether or not the addressee
receives it.
SECTION 12.3 Communications by Holders With Other Holders
Securityholders may communicate pursuant to TIA ss. 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and any other person shall
have the protection of TIA ss. 312(c).
SECTION 12.4 Certificate and Opinion as to Conditions Precedent
(a) Upon any request or application by the Company to the Trustee to
take any action under this Indenture, the Company shall furnish to the Trustee:
(1) an Officers' Certificate stating that, in the opinion of
the signers, all conditions precedent (including any covenants,
compliance with which constitutes a condition precedent), if any,
provided for in this Indenture relating to the proposed action have
been complied with; and
(2) an Opinion of Counsel stating that, in the opinion of
such counsel, all such conditions precedent (including any covenants,
compliance with which constitutes a condition precedent) have been
complied with.
(b) Each Officers' Certificate and Opinion of Counsel with respect to
compliance with a condition or covenant provided for in this Indenture (other
than annual certificates provided pursuant to Section 6.5) 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
65
(4) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with; provided,
however, that with respect to matters of fact an Opinion of Counsel
may rely on an Officers' Certificate or certificates of public
officials.
SECTION 12.5 Record Date for Vote or Consent of Securityholders
The Company (or, in the event deposits have been made pursuant to
Section 6.3 or 10.1, the Trustee) may set a record date for purposes of
determining the identity of Securityholders entitled to vote or consent to any
action by vote or consent authorized or permitted under this Indenture, which
record date shall be the later of ten days prior to the first solicitation of
such vote or consent or the date of the most recent list of Securityholders
furnished to the Trustee pursuant to Section 2.5 prior to such solicitation.
Notwithstanding the provisions of Section 11.4, if a record date is fixed,
those persons who were Holders of Securities at such record date (or their duly
designated proxies), and only those persons, shall be entitled to take such
action by vote or consent or to revoke any vote or consent previously given,
whether or not such persons continue to be Holders after such record date.
SECTION 12.6 Rules by Trustee, Paying Agent, Registrar, Conversion Agent
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar, Paying Agent or Conversion Agent may make reasonable
rules for its functions.
SECTION 12.7 Legal Holidays
A "Legal Holiday" is a Saturday, Sunday or a day on which state or
federally chartered banking institutions in New York, New York (or such other
city and state where the Trustee's corporate trust operations are then located)
are not required to be open. If a payment date is a Legal Holiday at a place of
payment, payment may be made at that place on the next succeeding day that is
not a Legal Holiday, and no interest shall accrue for the intervening period.
SECTION 12.8 Governing Law
Except as specifically provided in Section 3.8(a), the laws of the
State of New York shall govern this Indenture and the Securities without regard
to principles of conflicts of law.
66
SECTION 12.9 No Adverse Interpretation of Other Agreements
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or a Subsidiary. Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.
SECTION 12.10 No Recourse Against Others
All liability described in paragraph 18 of the Securities of any
director, officer, employee or shareholder, as such, of the Company is waived
and released.
SECTION 12.11 Successors
All agreements of the Company in this Indenture and the Securities
shall bind its successor. All agreements of the Trustee in this Indenture shall
bind its successor.
SECTION 12.12 Multiple Counterparts
The parties may sign multiple counterparts of this Indenture. Each
signed counterpart shall be deemed an original, but all of them together
represent the same agreement.
SECTION 12.13 Separability
In case any provisions in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 12.14 Table of Contents, Headings, etc.
The table of contents, cross-reference sheet and headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof, and shall in no way
modify or restrict any of the terms or provisions hereof.
67
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands
as of the 16th day of October, 1997.
FAMILY GOLF CENTERS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President
[SEAL]
Attest:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Secretary
UNITED STATES TRUST COMPANY
OF NEW YORK, as Trustee
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President
[SEAL]
Attest:
-----------------------------
Name:
Title:
EXHIBIT A
[FORM OF FACE OF SECURITY]
5 3/4% Convertible Subordinated Note due 2004
No. G-1 $___________
CUSIP No. 30701A AA 4
FAMILY GOLF CENTERS, INC.
promises to pay to -- Cede & Co. --
or registered assigns,
the principal sum of ____________________ Dollars
Dollars on October 15, 2004.
Interest Payment Dates: April 15 and October 15.
Record Dates: April 1 and October 1.
Dated: October 16, 1997
FAMILY GOLF CENTERS, INC.
By:
---------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: President and Chief
Executive Officer
Trustee's Certificate of Authentication
Dated: October 16, 1997
This is one of the Global Notes referred to in the within-mentioned Indenture:
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee
By:
--------------------------
(Authorized Signatory)
71
Unless and until it is exchanged in whole or in part for Notes in
definitive form, this Note 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 of such successor
Depositary. The Depository Trust Company shall act as the Depositary until a
successor shall be appointed by the Company and the Registrar. Unless this
certificate is presented by an authorized representa tive of The Depository
Trust Company (55 ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇) ("▇▇▇"), to the issuer or
its agent for registration of transfer, exchange or payment, and any
certificate issued is registered in the name of Cede & Co. or such other name
as may be requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or such other entity as may be requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER ▇▇▇▇▇▇▇ ▇ ▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND
THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY
IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION
FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY
RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY
AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a) INSIDE THE
UNITED STATES TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) IN A TRANSACTION MEETING THE RE QUIREMENTS OF RULE
144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER
THE SECURITIES ACT, OR (c) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM
THE REGISTRATION RE QUIREMENTS OF THE SECURITIES ACT (AND BASED UPON
AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE COMPANY
OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH
CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE
OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE
HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PURCHASER PROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE
RESTRICTIONS SET FORTH IN (A) ABOVE.
Additional provisions of this Note are set forth on the other side of
this Note.
1
[FORM OF REVERSE SIDE OF SECURITY]
FAMILY GOLF CENTERS, INC.
5 3/4% Convertible Subordinated Notes due 2004
1. Interest
Family Golf Centers, Inc., a Delaware corporation (the "Company"),
promises to pay interest on the principal amount of this Note at the rate per
annum shown above. The Company shall pay interest semiannually on October 15
and April 15 of each year, commencing April 15, 1998. Interest on the Notes
shall accrue from the most recent date to which interest has been paid or, if
no interest has been paid, from the date of first issuance of the Notes under
the Indenture (as defined below); provided, however, that if there is not an
existing default in the payment of interest, and if this Note is authenticated
between a record date referred to on the face hereof and the next succeeding
interest payment date, interest shall accrue from such interest payment date.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
2. Method of Payment
The Company shall pay interest on this Note (except defaulted
interest) to the person who is the Holder of this Note at the close of business
on the October 1 or April 1 next preceding the related interest payment date.
The Holder must surrender this Note to the Paying Agent to collect payment of
principal. The Company will pay principal and interest in money of the United
States that at the time of payment is legal tender for payment of public and
private debts. The Company may, however, pay principal and interest by its
check payable in such money. It may mail an interest check to the Holder's
registered address.
3. Paying Agent, Registrar and Conversion Agent
Initially, United States Trust Company of New York (the "Trustee")
will act as Paying Agent, Registrar and Conversion Agent. The Company may
change any Paying Agent, Registrar or Conversion Agent without notice to the
Holder. The Company or any of its Subsidiaries may act as Paying Agent,
Registrar or Conversion Agent.
4. Indenture, Limitations
This Note is one of a duly authorized issue of Notes of the Company
designated as its 5 3/4% Convertible Subordinated Notes due 2004 (the "Notes"),
issued under an Indenture dated as of October
2
16, 1997 (the "Indenture"), between the Company and the Trustee. The terms of
this Note include those stated in the Indenture and those required by or made
part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended, and as in effect on the date of the Indenture. This Note is subject to
all such terms, and the Holder of this Note is referred to the Indenture and
said Act for a statement of them.
The Notes are subordinated unsecured obligations of the Company
limited to up to $100,000,000 aggregate principal amount, subject to Section
2.2 of the Indenture. The Indenture does not limit other debt of the Company,
secured or unsecured, including Senior Indebtedness.
5. Optional Redemption
The Notes are subject to redemption, at any time on or after October
15, 2000, as a whole or in part, at the election of the Company. The Redemption
Prices (expressed as percentages of the principal amount) beginning October 15
of the years indicated are as follows:
Redemption
Year Price
---- -----
2000 102.875%
2001 101.917%
2002 100.958%
and 100% at October 15, 2003 and thereafter in each case together with accrued
interest up to but not including the Redemption Date.
6. Notice of Redemption
Notice of redemption will be mailed by first-class mail at least 30
days but not more than 60 days before the Redemption Date to each Holder of
Notes to be redeemed at his or her registered address. Notes in denominations
larger than $1,000 may be redeemed in part, but only in whole multiples of
$1,000. On and after the Redemption Date, subject to the deposit with the
Paying Agent of funds sufficient to pay the Redemption Price, interest ceases
to accrue on Notes or portions of them called for redemption.
7. Purchase of Notes at Option of Holder Upon a Change of Control
At the option of the Holder and subject to the terms and conditions of
the Indenture, the Company shall become obligated to purchase all or any part
specified by the Holder (so long as the principal amount of such part is $1,000
or an integral
3
multiple thereof) of the Notes held by such Holder on the date that is 30 days
after notice of a Change of Control. The Holder shall have the right to
withdraw any Change of Control Purchase Notice by delivering a written notice
of withdrawal to the Paying Agent in accordance with the terms of the
Indenture. The obligation of the Company to pay the Repurchase Price will be
subject to the terms of agreements relating to borrowings which constitute
Senior Indebtedness.
8. Conversion
A Holder of a Note may convert such Note into shares of Common Stock
of the Company at any time prior to maturity; provided, however, that if the
Note is called for redemption, the conversion right will terminate at the close
of business on the business day preceding the redemption date for such Note
(unless the Company shall default in making the redemption payment when due, in
which case the conversion right shall terminate at the close of business on the
date such default is cured and such Note is redeemed); provided, further, that
if the Holder of a Note presents such Note for redemption prior to the close of
business on the redemption date for such Note, the right of conversion shall
terminate upon presentation of the Note to the Trustee (unless the Company
shall default in making the redemption payment when due, in which case the
conversion right shall terminate on the close of business on the date such
default is cured and such Note is redeemed). The initial conversion price is
$37.25 per share, subject to adjustment under certain circumstances. The number
of shares issuable upon conversion of a Note is determined by dividing the
principal amount converted by the conversion price in effect on the Conversion
Date. No payment or adjustment will be made for accrued interest on a converted
Note or for dividends or distributions on shares of Common Stock issued upon
conversion of a Note. No fractional shares will be issued upon conversion; in
lieu thereof, an amount will be paid in cash based upon the closing sale price
of the Common Stock on the last Trading Day prior to the Conversion Date.
To convert a Note, a Holder must (a) complete and manually sign the
conversion notice set forth below and deliver such notice to the Conversion
Agent, (b) surrender the Note to the Conversion Agent, (c) furnish appropriate
endorsements or transfer documents if required by the Registrar or the
Conversion Agent, and (d) pay any transfer or similar tax, if required. If a
Holder surrenders a Note for conversion after the close of business on the
record date for the payment of an installment of interest and before the close
of business on the related interest payment date then, notwithstanding such
conversion, the interest payable on such interest payment date shall be paid to
the Holder of such Note on such record date. In such event, the Note must
4
be accompanied by payment of an amount equal to the interest payable on such
interest payment date on the principal amount of the Note or portion thereof
then converted. A Holder may convert a portion of a Note equal to $1,000 or any
integral multiple thereof.
A Note in respect of which a Holder had delivered a Change of Control
Purchase Notice exercising the option of such Holder to require the Company to
purchase such Note may be converted only if the Change of Control Purchase
Notice is withdrawn as provided above and in accordance with the terms of the
Indenture.
9. Conversion Arrangement on Call for Redemption
Any Securities called for redemption, unless surrendered for
conversion before the close of business on the Redemption Date, may be deemed
to be purchased from the Holders of such Securities at an amount not less than
the Redemption Price, together with accrued interest, if any, to, but not
including, the Redemption Date, by one or more investment bankers or other
purchasers who may agree with the Company to purchase such Securities from the
Holders, to convert them into Common Stock of the Company and to make payment
for such Securities to the Paying Agent in Trust for such Holders.
10. Subordination
The indebtedness evidenced by the Notes is, to the extent and in the
manner provided in the Indenture, subordinate and junior in right of payment to
the prior payment in full of all Senior Indebtedness of the Company. Any Holder
by accepting this Note agrees to and shall be bound by such subordination
provisions and authorizes the Trustee to give them effect.
In addition to all other rights of Senior Indebtedness described in
the Indenture, the Senior Indebtedness shall continue to be Senior Indebtedness
and entitled to the benefits of the subordination provisions irrespective of
any amendment, modification or waiver of any terms of any instrument relating
to the Senior Indebtedness or any extension or renewal of the Senior
Indebtedness.
11. Denominations, Transfer, Exchange
The Notes are in registered form without coupons in denominations of
$1,000 and integral multiples of $1,000. A Holder may register the transfer of
or exchange Notes in accordance with the Indenture. The Registrar may require a
Holder, among other things, to furnish appropriate endorsements and transfer
documents and to pay any taxes or other governmental charges that may be
imposed by law or permitted by the Indenture.
5
12. Persons Deemed Owners
The Holder of a Note may be treated as the owner of it for all
purposes, subject to the provisions of the Indenture with respect to record
dates for the payment of interest.
13. Unclaimed Money
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent will pay the money back to the
Company at its request, subject to applicable law. After that, Holders entitled
to money must look to the Company for payment.
14. Amendment, Supplement and Waiver
Subject to certain exceptions, the Indenture or the Notes may be
amended or supplemented with the consent of the Holders of a majority in
principal amount of the Notes then outstanding and any past default or
compliance with any provision may be waived in a particular instance with the
consent of the Holders of a majority in principal amount of the Notes then
outstanding. Without the consent of or notice to any Holder, the Company and
the Trustee may amend or supplement the Indenture or the Notes to, among other
things, provide for uncertificated Notes in addition to or in place of
certificated Notes, or to cure any ambiguity, defect or inconsistency or make
any other change that does not adversely affect the rights of any Holder.
15. Successor Corporation
When a successor corporation assumes all the obligations of its
predecessor under the Notes and the Indenture in accordance with the terms and
conditions of the Indenture, the predecessor corporation will be released from
those obligations.
16. Defaults and Remedies
An Event of Default is: default in payment of the principal of or
premium, if any, on the Notes when due; default for 30 days in payment of
interest on the Notes; failure by the Company for 30 days after notice to it to
perform any conversion of the Notes; failure by the Company for 60 days after
notice to it to comply with any of its other agreements contained in the
Indenture or the Notes; failure of the Company for 30 days after notice to it
to make any payment at maturity in respect of indebtedness for borrowed money,
which payment is in excess of $1,000,000; default by the Company for 30 days
after notice to it with respect to indebtedness for borrowed money, which
default results in acceleration of such indebtedness which is in excess of
$1,000,000 without such indebtedness having been paid on
6
discharged; certain events of bankruptcy, insolvency or reorganization of the
Company; and the acceleration of certain other indebtedness. If an Event of
Default (other than as a result of certain events of bankruptcy, insolvency or
reorganization) occurs and is continuing, the Trustee or the Holders of at
least 25% in principal amount of the Notes then outstanding may declare all
unpaid principal of and accrued interest to the date of acceleration on the
Notes then outstanding to be due and payable immediately, all as and to the
extent provided in the Indenture. If an Event of Default occurs as a result of
certain events of bankruptcy, insolvency or reorganization, unpaid principal of
and accrued interest on the Notes then outstanding shall become due and payable
immediately without any declaration or other act on the part of the Trustee or
any Holder, all as and to the extent provided in the Indenture. Holders may not
enforce the Indenture or the Notes except as provided in the Indenture. The
Trustee may require indemnity satisfactory to it before it enforces the
Indenture or the Notes. Subject to certain limitations, Holders of a majority
in principal amount of the Notes then outstanding may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Holders notice of
any continuing default (except a default in payment of principal or interest)
if it determines that withholding notice is in their interests. The Company is
required to file periodic reports with the Trustee as to the absence of
default.
17. Trustee Dealings With the Company
United States Trust Company of New York, the Trustee under the
Indenture, in its individual or any other capacity, may make loans to, accept
deposits from and perform services for the Company or an Affiliate of the
Company, and may otherwise deal with the Company or an Affiliate of the
Company, as if it were not the Trustee.
18. No Recourse Against Others
A director, officer, employee or shareholder, as such, of the Company
shall not have any liability for any obligations of the Company under the Notes
or the Indenture nor for any claim based on, in respect of or by reason of such
obligations or their creation. The Holder of this Note by accepting this Note
waives and releases all such liability. The waiver and release are part of the
consideration for the issuance of this Note.
19. Discharge Prior to Maturity
If the Company deposits with the Trustee or the Paying Agent money or
U.S. Government Obligations sufficient to pay the principal of and interest on
the Notes to maturity, the Company
7
will be discharged from the Indenture except for certain sections thereof.
20. Authentication
This Note shall not be valid until the Trustee or an authenticating
agent signs the certificate of authentication on the other side of this Note.
21. Abbreviations and Definitions
Customary abbreviations may be used in the name of the Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian) and U/G/M/A (= Uniform Gifts to Minors
Act).
All capitalized terms used in this Note and not specifically defined
herein are defined in the Indenture and are used herein as so defined.
22. Indenture to Control
In the case of any conflict between the provisions of this Note and
the Indenture, the provisions of the Indenture shall control.
The Company will furnish to any Holder, upon written request
and without charge, a copy of the Indenture. Requests may be
made to: Family Golf Centers, Inc., ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Chief Financial Officer.
8
ASSIGNMENT FORM
To assign this Note, fill in the form below:
I or we assign and transfer this Note to
--------------------------------------------------
--------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
(Print or type assignee's name, address and
zip code)
and irrevocably appoint
--------------------------------------------------
agent to transfer this Note on the books
of the Company. The Agent may substitute
another to act for him or her.
Date:
---------------------------------------------
Your signature:
-----------------------------------
(Sign exactly as your name appears
on the other side of this Note)
--------------------------------------------------
(Sign exactly as your name appears on the
other side of this Note)
*Signature guaranteed by:
-------------------------
By:
-----------------------------------------------
--------------
* The signature must be guaranteed by a bank, a trust company or a
member firm of the New York Stock Exchange.
CONVERSION NOTICE
To convert this Note into Common Stock of the Company, check the box:
-----
-----
To convert only part of this Note, state the amount to be converted:
$
-----------------------
If you want the stock certificate made out in another person's name, fill in
the form below:
--------------------------------------------------
--------------------------------------------------
(Insert other person's soc. sec. or tax I.D. no.)
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
(Print or type assignee's name, address and
zip code)
Date:
---------------------------------------------
Your signature:
-----------------------------------
(Sign exactly as your name appears
on the side of this Note)
--------------------------------------------------
(Sign exactly as your name appears on the
other side of this Note)
*Signature guaranteed by:
-------------------------
By:
-----------------------------------------------
--------------
* The signature must be guaranteed by a bank, a trust company or a
member firm of the New York Stock Exchange.
NOTICE OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 3.8 of the Indenture, check the box:
-----
-----
If you want to elect to have only part of this Note purchased by the
Company pursuant to Section 3.8 of the Indenture, state the amount to be
purchased: $__________
Date: Your signature
------------------- -------------------------------
(Sign exactly as your name
appears on the other side of
this Notes)
-------------------------------
(Sign exactly as your name
appears on the other side of
this Notes)
*Signature guaranteed by:
-------------------
By:
-----------------------------------------
--------------
* The signature must be guaranteed by a bank, a trust company or a
member firm of the New York Stock Exchange.