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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 22, 1997
EINSTEIN/NOAH BAGEL CORP.
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(Exact name of registrant as specified in its charter)
Delaware 0-21097 84-1294908
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(State or other (Commission (IRS Employer
jurisdiction of File No.) Identification No.)
incorporation)
14123 Denver West Parkway, P.O. Box 4086, Golden, Colorado 80401
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(Address of principal executive offices)
(303) 215-9300
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(Registrant's telephone number, including area code)
Not applicable
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(Former name or former address, if changes since last report)
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Item 5. Other Events.
On May 22, 1997, Einstein/Noah Bagel Corp. (the "Company") entered
into a Purchase Agreement ( a copy of which is attached hereto as Exhibit 1.1)
with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Alex. Brown & Sons Incorporated and Morgan Stanley & Co. Incorporated (the
"Initial Purchasers"), pursuant to which the Company agreed to issue and sell
and the Initial Purchasers, subject to certain conditions, agreed to purchase
$125,000,000 aggregate principal amount of the Company's 7-1/4% Convertible
Subordinated Debentures due 2004 (the "Debentures") at an initial offering
price of 100% of the principal amount thereof, less an initial purchasers'
discount of 2.75% (the "Offering Price"). Pursuant to the Purchase Agreement,
the Company also granted the Initial Purchasers an option for 30 days from May
22, 1997 to purchase all or any part of an additional $18,750,000 aggregate
principal amount at maturity of Debentures at the Offering Price. The
Debentures are convertible into shares of Common Stock at any time prior to
maturity or redemption at a conversion price of $21.25 per share, subject to
adjustment under certain conditions. A copy of the Company's press releases,
dated May 13, 1997 and May 23, 1997, relating to the above offering are
attached hereto as Exhibits 99.1 and 99.2.
The issuance and sale of the Debentures were completed on May 29,
1997. A copy of the Company's press release, dated May 29, 1997, relating to
such issuance and sale is attached hereto as Exhibit 99.3. The Debentures were
issued pursuant to an Indenture dated as of May 29, 1997 between the Company
and Bankers Trust Company, as trustee (a copy of which is attached hereto as
Exhibit 4.2). The Initial Purchasers have offered the Debentures for resale to
certain qualified purchasers in transactions not requiring registration under
the Securities Act of 1933, as amended, including pursuant to Rule 144A and
Regulation S thereunder.
The Company and the Initial Purchasers have also entered into a
Registration Rights Agreement (a copy of which is attached hereto as Exhibit
4.1) dated as of May 22, 1997, pursuant to which the Company has agreed to file
with the Commission, within 60 days after May 29, 1997 and to use all
reasonable efforts to cause to become effective, a shelf registration statement
with respect to the resale of the Debentures and the common stock, par value
$0.01 per share (the "Common Stock"), of the Company issuable upon conversion
of the Debentures. If the shelf registration statement is not declared
effective by July 28, 1997, or if the prospectus is unavailable for use for an
aggregate period in excess of 60 days in any 12-month period (each, a
"Registration Event"), the Company has agreed to pay liquidated damages to the
holders of the Debentures and the holders of the Common Stock issued upon
conversion of the Debentures. The liquidated damages will accrue upon the
occurrence of any Registration Event and until such time as there are no
Registration Events which have occurred and are continuing at a rate equal to
one-half of one percent (0.5%) per annum of the principal amount of the
Debentures.
Item 7. Financial Statements and Exhibits.
See Exhibit Index appearing elsewhere herein, which is incorporated
herein by reference.
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Item 9. Sales of Equity Securities Pursuant to Regulation S.
On May 29, 1997, in connection with the issuance and sale of the
Debentures described in Item 5 hereof, the Company sold $6,250,000 aggregate
principal amount of Debentures to non-U.S. persons in a transaction pursuant to
Regulation S under the Securities Act of 1933 (the "Offshore Transaction").
The Initial Purchasers acted as distributors for the Company in the Offshore
Transaction. The Debentures were sold by the Company to the Initial Purchasers
at the offering price of 100% of the principal amount thereof, less an initial
purchasers' discount of 2.75% of the principal amount of the Debentures. The
Debentures are convertible into shares of Common Stock at any time prior to
maturity or redemption at a conversion price of $21.25 per share, subject to
adjustment under certain conditions.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: May 30, 1997
EINSTEIN/NOAH BAGEL CORP.
By: /s/ Joel M. Alam
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Joel M. Alam
Senior Vice President
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EINSTEIN/NOAH BAGEL CORP.
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
<S> <C>
1.1 Purchase Agreement dated as of May 22, 1997 among
Einstein/Noah Bagel Corp., Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Alex. Brown & Sons Incorporated and Morgan Stanley &
Co. Incorporated.
4.1 Registration Rights Agreement dated as of May 22,
1997 among Einstein/Noah Bagel Corp., Merrill Lynch &
Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Alex. Brown & Sons Incorporated and
Morgan Stanley & Co. Incorporated.
4.2 Indenture related to the Company's 7 1/4% Convertible
Subordinated Debentures due 2004 dated as of May 29,
1997 between the Company and Bankers Trust Company,
as Trustee ("Indenture").
10.1 Indenture (included in Exhibit 4.2).
99.1 Press Release of the Company dated May 13, 1997.
99.2 Press Release of the Company dated May 23, 1997.
99.3 Press Release of the Company dated May 29, 1997.
</TABLE>
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EINSTEIN/NOAH BAGEL CORP.
(a Delaware corporation)
$125,000,000
7 1/4% Convertible Subordinated Debentures Due 2004
PURCHASE AGREEMENT
May 22, 1997
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Alex. Brown & Sons Incorporated
Morgan Stanley & Co. Incorporated
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
Einstein/Noah Bagel Corp., a Delaware corporation (the "Company"),
confirms its agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner
& Smith Incorporated ("Merrill Lynch"), Alex. Brown & Sons Incorporated and
Morgan Stanley & Co. Incorporated (collectively, the "Initial Purchasers,"
which term shall also include any purchaser substituted as hereinafter provided
in Section 10 hereof), with respect to the issue and sale by the Company and
the purchase by the Initial Purchasers, acting severally and not jointly, of
the respective principal amounts set forth in Schedule A hereto of the
$125,000,000 aggregate principal amount of the Company's 7 1/4% Convertible
Subordinated Debentures due 2004 (the "Debentures"), and with respect to the
grant by the Company to the Initial Purchasers, acting severally and not
jointly, of the option described in Section 2(b) hereof to purchase all or any
part of an additional $18,750,000 principal amount of Debentures to cover over-
allotments, if any. The aforesaid $125,000,000 principal amount of Debentures
(the "Initial Securities") to be purchased by the Initial Purchasers and all or
any part of the $18,750,000 principal amount of Debentures subject to the
option described in Section 2(b) hereof (the "Option Securities") are
hereinafter called, collectively, the "Securities." The Securities are to be
issued pursuant to an Indenture dated as of May 29, 1997 (the
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"Indenture") between the Company and Bankers Trust Company, as trustee (the
"Trustee"). Securities issued in book-entry form will be issued to Cede & Co.,
as nominee of The Depository Trust Company ("DTC") pursuant to a letter
agreement, to be dated as of the Closing Time (as defined in Section 2) (the
"DTC Agreement"), among the Company, the Trustee and DTC.
The Securities are convertible into shares of common stock, $.01 par
value per share, of the Company (the "Common Stock") in accordance with the
terms of the Securities and the Indenture, at the initial conversion price
specified in Schedule B hereto.
The Company understands that the Initial Purchasers propose to make an
offering of the Securities on the terms and in the manner set forth herein and
agrees that the Initial Purchasers may resell, subject to the conditions set
forth herein, all or a portion of the Securities to purchasers (the "Subsequent
Purchasers") at any time after the date of this Agreement. The Securities are
to be offered and resold by the Initial Purchasers without being registered
under the Securities Act of 1933, as amended (the "1933 Act"), in reliance upon
exemptions therefrom. Pursuant to the terms of the Securities and the
Indenture, Securities may be resold or otherwise transferred only if such
resale or transfer is hereafter registered under the 1933 Act or if an
exemption from the registration requirements of the 1933 Act is available
(including the exemption afforded by Rule 144A ("Rule 144A") or Regulation S
("Regulation S") of the rules and regulations promulgated under the 1933 Act
(the "1933 Act Regulations") by the Securities and Exchange Commission (the
"Commission")). Prior to or concurrently with the purchase of the Securities
by the Initial Purchasers, the Company will enter into with the Initial
Purchasers an agreement (the "Registration Rights Agreement") pursuant to which
the Company is required to file and use its reasonable efforts to have declared
effective a registration statement under the 1933 Act to register resales of
the Debentures and the shares of Common Stock issuable upon conversion thereof.
The Company has prepared and delivered to the Initial Purchasers copies
of a preliminary offering memorandum dated May 13, 1997 (the "Preliminary
Offering Memorandum") and has prepared and will deliver to the Initial
Purchasers, on the date hereof or on the next succeeding business day, copies
of a final offering memorandum dated May 22, 1997 (the "Final Offering
Memorandum"), each to be used by the Initial Purchasers in connection with
their solicitation of purchases of the Securities. "Offering Memorandum"
means, with respect to any date or time referred to in this Agreement, the most
recent offering memorandum (whether the Preliminary Offering Memorandum or the
Final Offering Memorandum, or any amendment or supplement to either such
document), including exhibits thereto and any documents
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incorporated therein by reference, which has been prepared and delivered by the
Company to the Initial Purchasers in connection with its solicitation of
purchases of the Securities.
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the
Offering Memorandum (or other references of like import) shall be deemed to
mean and include all such financial statements and schedules and other
information which is incorporated by reference in the Offering Memorandum; and
all references in this Agreement to amendments or supplements to the Offering
Memorandum shall be deemed to mean and include the filing of any document under
the Securities Exchange Act of 1934 (the "1934 Act") which is incorporated by
reference in the Offering Memorandum.
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The Company
represents and warrants to each Initial Purchaser as of the date hereof and
agrees with each Initial Purchaser, as follows:
(i) Offering Memorandum. Neither the Offering Memorandum nor
any amendments or supplements thereto, at the time the Offering
Memorandum or any such amendment or supplement was issued, included an
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and the
Offering Memorandum, as amended or supplemented, at the Closing Time
(and, if any Option Securities are purchased, at the Date of Delivery)
will not include an untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
The representations and warranties in this subsection shall not apply to
statements in or omissions from the Offering Memorandum made in reliance
upon and in conformity with information furnished to the Company in
writing by any Initial Purchaser through Merrill Lynch expressly for use
in the Offering Memorandum.
(ii) Independent Accountants. The accountants who certified the
financial statements and supporting schedules included or incorporated
by reference in the Offering Memorandum are independent public
accountants within the meaning of Regulation S-X under the 1933 Act.
(iii) Financial Statements. The financial statements included
or incorporated by reference in the Offering
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Memorandum, together with the related schedules and notes, present
fairly the financial position of the Company and its consolidated
subsidiaries at the dates indicated and the statement of operations,
stockholders' equity (deficit) and cash flows of the Company and its
consolidated subsidiaries for the periods specified; said financial
statements have been prepared in conformity with generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout
the periods involved. The supporting schedules, if any, included or
incorporated by reference in the Offering Memorandum present fairly in
accordance with GAAP the information required to be stated therein. The
selected financial data included in the Offering Memorandum under
"Recent Developments" present fairly the information shown therein and
have been compiled on a basis consistent with that of the audited
financial statements incorporated by reference in the Offering
Memorandum.
(iv) No Material Adverse Change in Business. Since the
respective dates as of which information is given in the Offering
Memorandum, except as otherwise stated therein, (A) there has been no
material adverse change in the condition, financial or otherwise, or in
the earnings, business affairs or business prospects of the Company and
its subsidiaries considered as one enterprise, whether or not arising in
the ordinary course of business (a "Material Adverse Effect"), (B) there
have been no transactions entered into by the Company or any of its
subsidiaries, other than those in the ordinary course of business, which
are material with respect to the Company and its subsidiaries considered
as one enterprise, and (C) there has been no dividend or distribution of
any kind declared, paid or made by the Company on any class of its
capital stock.
(v) Good Standing of the Company. The Company has been duly
organized and is validly existing as a corporation in good standing
under the laws of the State of Delaware and has corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Offering Memorandum and to enter into and
perform its obligations under this Agreement; and the Company is duly
qualified as a foreign corporation to transact business and is in good
standing in each other jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or
the conduct of business, except where the failure so to qualify or to be
in good standing would not result in a Material Adverse Effect.
(vi) Good Standing of Subsidiaries. Each subsidiary of the
Company has been duly organized and is validly existing as a corporation
in good standing under the laws of
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the jurisdiction of its incorporation, has corporate power and authority
to own, lease and operate its properties and to conduct its business as
described in the Offering Memorandum and is duly qualified as a foreign
corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason
of the ownership or leasing of property or the conduct of business,
except where the failure so to qualify or to be in good standing would
not result in a Material Adverse Effect; all of the issued and
outstanding capital stock of each such subsidiary has been duly
authorized and validly issued, is fully paid and non-assessable and is
owned by the Company, directly or through subsidiaries, free and clear
of any security interest, mortgage, pledge, lien, encumbrance, claim or
equity, other than the pledge of such stock pursuant to the Company's
secured revolving bank credit agreement dated May 17, 1996 with Bank of
America Illinois, as agent for the lenders named therein, as amended
(the "Credit Agreement"). The only subsidiaries of the Company are the
subsidiaries listed on Schedule C attached hereto.
(vii) Capitalization. The authorized, issued and outstanding
capital stock of the Company is as set forth in the Offering Memorandum
in the column entitled "Actual" under the caption "Capitalization"
(except for subsequent issuances, if any, pursuant to this Agreement,
pursuant to reservations, agreements or employee benefit plans described
in the Offering Memorandum or pursuant to the exercise of convertible
securities, or options or warrants described in the Offering
Memorandum). The shares of issued and outstanding capital stock have
been duly authorized and validly issued and are fully paid and non-
assessable; none of the outstanding shares of capital stock of the
Company was issued in violation of the preemptive or other similar
rights of any securityholder of the Company.
(viii) Authorization of Agreement. This Agreement has been, and
at Closing Time the Registration Rights Agreement will have been, duly
executed and delivered by the Company.
(ix) Authorization of Securities and Indenture. The
Securities to be issued and sold pursuant to this Agreement have been
duly authorized, and when issued, authenticated and delivered pursuant
to this Agreement, against payment of the consideration set forth
herein, will have been duly executed, authenticated, issued and
delivered and will constitute legal, valid and binding obligations of
the Company, subject, as to enforcement, to bankruptcy, insolvency,
reorganization or other similar laws of general applicability now or
hereafter in effect relating to or
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affecting creditors' rights and to general equity principles, entitled
to the benefits provided by the Indenture under which they are to be
issued; when executed and delivered by the Company and the Trustee
(assuming due authorization, execution and delivery by the Trustee), the
Indenture will constitute a legal, valid and binding instrument
enforceable in accordance with its terms subject, as to enforcement, to
bankruptcy, insolvency, reorganization or other similar laws of general
applicability now or hereafter in effect relating to or affecting
creditors' rights and to general equity principles; and the Securities
and the Indenture conform in all material respects to the descriptions
thereof in the Offering Memorandum.
(x) Common Stock Issuable Upon Conversion. Upon issuance and
delivery of the Securities in accordance with this Agreement and the
Indenture, the Securities shall be convertible at the option of the
holder thereof for shares of Common Stock in accordance with the terms
of the Securities and the Indenture; and the shares of Common Stock
initially issuable upon conversion of Securities have been duly
authorized and reserved for issuance, and when issued and delivered,
pursuant to the terms of the Indenture, will be validly issued and fully
paid and non-assessable; the Common Stock conforms to all statements
relating thereto contained in the Offering Memorandum; and the issuance
of the Securities and the Common Stock issuable upon conversion of the
Securities is not subject to the preemptive or other similar rights of
any securityholder of the Company.
(xi) Absence of Defaults and Conflicts. Neither the Company nor
any of its subsidiaries is in violation of its charter or by-laws or in
default in the performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage,
deed of trust, loan or credit agreement, note, lease or other agreement
or instrument to which the Company or any of its subsidiaries is a party
or by which it or any of them may be bound, or to which any of the
property or assets of the Company or any subsidiary is subject
(collectively, "Agreements and Instruments") except for such defaults
that would not result in a Material Adverse Effect; and the execution,
delivery and performance of this Agreement, the Indenture and the
Registration Rights Agreement and the consummation of the transactions
contemplated herein and therein (including the issuance and sale of the
Securities and the use of the proceeds from the sale of the Securities
as described in the Offering Memorandum under the caption "Use of
Proceeds") and compliance by the Company with its obligations hereunder
and thereunder have been duly authorized by all necessary corporate
action and do not and
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will not, whether with or without the giving of notice or passage of
time or both, conflict with or constitute a breach of, or default or
Repayment Event (as defined below) under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any subsidiary pursuant to, the Agreements and
Instruments (except for such conflicts, breaches, defaults, Repayment
Events or liens, charges or encumbrances that would not result in a
Material Adverse Effect), nor will such action result in any violation
of the provisions of the charter or by-laws of the Company or any
subsidiary or any applicable law, statute, rule, regulation, judgment,
order, writ or decree of any government, government instrumentality or
court, domestic or foreign, having jurisdiction over the Company or any
subsidiary or any of their assets, properties or operations. As used
herein, a "Repayment Event" means any event or condition which gives the
holder of any note, debenture or other evidence of indebtedness (or any
person acting on such holder's behalf) the right to require the
repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company or any subsidiary.
(xii) Absence of Labor Dispute. Except as disclosed in the
Offering Memorandum, no labor dispute with the employees of the Company
or any subsidiary that could reasonably be expected to result in a
Material Adverse Effect exists or, to the knowledge of the Company, has
been threatened.
(xiii) Absence of Proceedings. Except as disclosed in the
Offering Memorandum, there is no action, suit, proceeding, inquiry or
investigation before or brought by any court or governmental agency or
body, domestic or foreign, now pending, or, to the knowledge of the
Company, threatened, against or affecting the Company or any subsidiary
which the Company reasonably believes is likely to result in a Material
Adverse Effect, or which the Company reasonably believes is likely to
materially and adversely affect the properties or assets thereof or the
consummation of the transactions contemplated in this Agreement, the
Indenture or the Registration Rights Agreement or the performance by the
Company of its obligations hereunder or thereunder; the aggregate of all
pending legal or governmental proceedings to which the Company or any
subsidiary is a party or of which any of their respective property or
assets is the subject which are not described in the Offering
Memorandum, including ordinary routine litigation incidental to the
business, could not reasonably be expected to result in a Material
Adverse Effect.
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(xiv) Possession of Intellectual Property. The Company and its
subsidiaries own or possess, or reasonably believe that they can acquire
on reasonable terms, the patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks, trade names or other
intellectual property (collectively, "Intellectual Property") currently
employed by them in connection with the business now operated by them,
and, except as disclosed in the Offering Memorandum, neither the Company
nor any of its subsidiaries has received any notice or, to the best of
their respective knowledge, is otherwise aware of any infringement of or
conflict with asserted rights of others with respect to any Intellectual
Property or of any facts or circumstances which would render any
Intellectual Property invalid or inadequate to carry on the business of
the Company or any of its subsidiaries, and which infringement or
conflict (if the subject of any unfavorable decision, ruling or finding)
or invalidity or inadequacy, singly or in the aggregate, would result in
a Material Adverse Effect.
(xv) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency is necessary or required for the performance by the Company of
its obligations under this Agreement, the Indenture or the Registration
Rights Agreement, in connection with the offering, issuance or sale of
the Securities hereunder or the consummation of the transactions
contemplated by this Agreement, except such as may be required under
state securities laws.
(xvi) Possession of Licenses and Permits. The Company and its
subsidiaries possess such certificates, permits, licenses, approvals,
consents and other authorizations (collectively, "Governmental
Licenses") issued by the appropriate federal, state, local or foreign
regulatory agencies or bodies necessary to conduct the business now
operated by them, except where the failure to so possess such Government
Licenses would not, singly or in the aggregate, have a Material Adverse
Effect; the Company and its subsidiaries are in compliance with the
terms and conditions of all such Governmental Licenses, except where the
failure so to comply would not, singly or in the aggregate, have a
Material Adverse Effect; all of the Governmental Licenses are valid and
in full force and effect, except when the invalidity of such
Governmental Licenses or the failure of such Governmental Licenses to be
in full force and effect would not have a Material Adverse
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Effect; and neither the Company nor any of its subsidiaries has received
any notice of proceedings relating to the revocation or modification of
any such Governmental Licenses which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would result in a
Material Adverse Effect.
(xvii) Compliance with Cuba Act. The Company has complied with,
and is and will be in compliance with, the provisions of that certain
Florida act relating to disclosure of doing business with Cuba, codified
as Section 517.075 of the Florida statutes, and the rules and
regulations thereunder or is exempt therefrom.
(xviii) Investment Company Act. The Company is not, and upon the
issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the Offering
Memorandum will not be, an "investment company" as such term is defined
in the Investment Company Act of 1940, as amended (the "1940 Act").
(xix) Taxes and Fees. All taxes and fees required to be paid
with respect to the execution of the Indenture and the issuance of the
Securities have been paid.
(xx) Incorporated Documents. The Offering Memorandum as
delivered from time to time shall incorporate by reference the most
recent Annual Report of the Company on Form 10-K/A filed with the
Commission and each Quarterly Report of the Company on Form 10-Q and
each Current Report of the Company on Form 8-K filed with the Commission
since the filing of the then most recent Annual Report of the Company on
Form 10-K/A. The documents incorporated or deemed to be incorporated by
reference in the Offering Memorandum at the time they were or hereafter
are filed with the Commission complied and will comply in all material
respects with the requirements of the 1934 Act and the rules and
regulations of the Commission thereunder (the "1934 Act Regulations"),
and, when read together with the other information in the Offering
Memorandum, at the date of the Offering Memorandum and at the Closing
Time (and, if any Option Securities are purchased, at the Date of
Delivery), will not include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(xxi) No Public Offering. Neither the Company, any of its
subsidiaries, nor, to the best of its knowledge, any of its other
Affiliates (as defined in Rule 501(b) of
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Regulation D under the 1933 Act ("Regulation D")), nor any person acting
on its or their behalf (other than the Initial Purchasers as to which
the Company makes no representation or warranty) has, directly or
indirectly, made offers or sales of any security, or solicited offers to
buy any security, under circumstances that would require the
registration of the Securities under the 1933 Act.
(xxii) Rule 144A and Regulation S Compliance. Neither the
Company, any of its subsidiaries, nor, to the best of its knowledge, any
of its other Affiliates, nor any person acting on its or their behalf
(other than the Initial Purchasers as to which the Company makes no
representation or warranty) has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D)
in connection with any offer or sale of the Securities in the United
States. The Securities satisfy the eligibility requirements of Rule
144A(d)(3) under the 1933 Act. Neither the Company, any of its
subsidiaries, nor, to the best of its knowledge, any of its other
Affiliates, nor any person acting on its or their behalf (other than the
Initial Purchasers as to which the Company makes no representation or
warranty) has engaged in any directed selling efforts with respect to
the Securities, and each of them has complied with the offering
restrictions requirement of Regulation S ("Regulation S") under the 1933
Act. Terms used in the preceding sentence have the meanings given to
them by Regulation S. The Company has been advised by the National
Association of Securities Dealers, Inc. that the Securities have been
designated PORTAL eligible securities in accordance with the rules and
regulations of the National Association of Securities Dealers, Inc. The
Company is subject to and in substantial compliance with the reporting
requirements of Section 13 or Section 15(d) of the 1934 Act.
(b) Officer's Certificates. Any certificates signed by any officer
of the Company or any of its subsidiaries delivered to the Initial Purchasers
or to counsel for the Initial Purchasers shall be deemed a representation and
warranty by the Company to each Initial Purchaser as to the matters covered
thereby.
SECTION 2. Sale and Delivery to Initial Purchasers; Closing.
(a) Initial Securities. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company agrees to sell to each Initial Purchaser, severally and not
jointly, and each Initial Purchaser, severally and not jointly, agrees to
purchase from the Company, at the price set forth in Schedule B, the aggregate
principal amount of Initial Securities set forth in
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Schedule A opposite the name of such Initial Purchaser, plus any additional
principal amount of Initial Securities which such Initial Purchaser may become
obligated to purchase pursuant to the provisions of Section 10 hereof.
(b) Option Securities. In addition, on the basis of the
representations and warranties herein contained and subject to the terms and
conditions herein set forth, the Company hereby grants an option to the Initial
Purchasers, severally and not jointly, to purchase up to an additional
$18,750,000 principal amount of Securities at the same price set forth in
Schedule B, plus accrued interest, if any, from the Closing Time to the Date of
Delivery. The option hereby granted will expire 30 days after the date hereof
and may be exercised in whole or in part from time to time only for the purpose
of covering over-allotments which may be made in connection with the subsequent
resale of the Initial Securities upon notice by the Initial Purchasers to the
Company setting forth the number of Option Securities as to which the several
Initial Purchasers are then exercising the option and the time and date of
payment and delivery for such Option Securities. Any such time and date of
delivery (a "Date of Delivery") shall be determined by the Initial Purchasers,
but shall not be later than five full business days after the exercise of said
option, nor in any event prior to the Closing Time, as hereinafter defined. If
the option is exercised as to all or any portion of the Option Securities, each
of the Initial Purchasers, acting severally and not jointly, will purchase that
proportion of the total principal amount of Option Securities then being
purchased which the principal amount of Initial Securities set forth in
Schedule A opposite the name of such Initial Purchaser bears to the total
principal amount of Initial Securities, subject in each case to such
adjustments as the Initial Purchasers in their discretion shall make to
eliminate any sales or purchases of Securities having a principal amount less
than $1,000.
(c) Payment. Payment of the purchase price for the Initial
Securities shall be made at the office of Bell, Boyd & Lloyd, Three First
National Plaza, Chicago, Illinois, and delivery of certificates for the Initial
Securities shall be made against payment therefor at the office of Merrill
Lynch, Merrill Lynch World Headquarters, North Tower, World Financial Center,
New York, New York 10281-1305, or (in either case) at such other place as
shall be agreed upon by the Initial Purchasers and the Company, at 10:00 A.M.
(Eastern time) on the third (fourth, if the pricing occurs after 4:30 P.M.
(Eastern time) on any given day) business day after the date hereof (unless
postponed in accordance with the provisions of Section 10), or such other time
not later than ten business days after such date as shall be agreed upon by the
Initial Purchasers and the Company (such time
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and date of payment and delivery being herein called "Closing Time").
In addition, in the event that any or all of the Option Securities are
purchased by the Initial Purchasers, payment of the purchase price for such
Option Securities shall be made at the above-mentioned office, or (in either
case) at such other place as shall be agreed upon by the Initial Purchasers and
the Company, on each Date of Delivery as specified in the notice from the
Initial Purchasers to the Company.
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery
to the Initial Purchasers of certificates for the Securities to be purchased by
them.
(d) Denominations; Registration. Certificates for the Initial
Securities and the Option Securities, if any, shall be in such denominations
and registered in such names as the Initial Purchasers may request in writing
at least one full business day before the Closing Time or the relevant Date of
Delivery, as the case may be. The certificates for the Initial Securities and
the Option Securities, if any, will be made available for examination and
packaging by the Initial Purchasers in The City of New York not later than
10:00 A.M. (Eastern time) on the business day prior to the Closing Time or the
relevant Date of Delivery, as the case may be.
(e) Information with Respect to Initial Purchasers. Each Initial
Purchaser, severally and not jointly, hereby represents and warrants to, and
agrees with, the Company that it (i) is a "qualified institutional buyer"
within the meaning of Rule 144A under the 1933 Act (a "Qualified Institutional
Buyer") and an institutional "accredited investor" within the meaning of
Regulation D under the 1933 Act (an "Accredited Investor"); (ii) has not and
will not solicit offers for, or offer or sell, Securities by means of any
general solicitation or general advertising within the meaning of Rule 502(c)
under Regulation D under the 1933 Act; and (iii) will otherwise act in
accordance with the terms and conditions set forth in this Agreement, including
Section 8 hereof, and in the Offering Memorandum in connection with the
placement of the Securities contemplated hereby.
SECTION 3. Covenants of the Company. The Company covenants with each
Initial Purchaser as follows:
(a) Delivery of Offering Memorandum. The Company agrees to furnish
to each Initial Purchaser, as promptly as possible, without charge, such number
of copies of the Preliminary Offering Memorandum, the Final Offering Memorandum
and any supplements and
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amendments thereto and documents incorporated by reference therein as such
Initial Purchaser may reasonably request.
(b) Amendments to Offering Memorandum. The Company will give the
Initial Purchasers notice of its intention to prepare any amendment or
supplement to the Offering Memorandum and will not use any such amendment or
supplement to which the Initial Purchasers or counsel for the Initial
Purchasers shall reasonably object. Neither the consent of the Initial
Purchasers, nor the Initial Purchasers' delivery of any such amendment or
supplement, shall constitute a waiver of any of the conditions set forth in
Section 5 hereof.
(c) Material Changes. The Company will immediately notify the
Initial Purchasers, and confirm such notice in writing, of (x) any filing made
by the Company of information relating to the placement of the Securities with
any securities exchange or any other regulatory body in the United States or
any other jurisdiction, and (y) prior to the completion of the placement of the
Securities by the Initial Purchasers as evidenced by a notice in writing from
the Initial Purchasers to the Company (which the Initial Purchasers agree to
provide promptly, and in any event no later than two business days after such
completion), any material changes in or affecting the condition, financial or
otherwise, or the earnings, business affairs or business prospects of the
Company and its subsidiaries that (i) make any statement in the Offering
Memorandum false or misleading or (ii) are not disclosed in the Offering
Memorandum. In such event or if during such time any event shall occur or
condition exist as a result of which it is necessary to amend or supplement the
Final Offering Memorandum in order that the Final Offering Memorandum not
include any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein not misleading in the
light of the circumstances then existing, the Company will forthwith amend or
supplement the Final Offering Memorandum by preparing and furnishing to the
Initial Purchasers an amendment or amendments of, or a supplement or
supplements to, the Final Offering Memorandum (in form and substance
satisfactory in the reasonable opinion of counsel for the Initial Purchasers)
so that, as so amended or supplemented, the Final Offering Memorandum will not
include an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances existing at the time it is delivered to a Subsequent Purchaser,
not misleading.
(d) Blue Sky Qualifications. The Company will use its reasonable
best efforts, in cooperation with the Initial Purchasers, to qualify the
Securities and the shares of Common Stock issuable upon conversion of the
Securities for offering and sale under the applicable securities laws of such
states and
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other domestic jurisdictions as the Initial Purchasers may designate; provided,
however, that the Company shall not be obligated to file any general consent to
service of process or to qualify as a foreign corporation or as a dealer in
securities in any jurisdiction in which it is not so qualified or to subject
itself to taxation in respect of doing business in any jurisdiction in which it
is not otherwise so subject. In each jurisdiction in which the Securities or
such shares of Common Stock have been so qualified, the Company will file such
statements and reports as may be required by the laws of such jurisdiction to
continue such qualification in effect for so long as may be required to
complete the distribution of the Securities or as otherwise required by law.
(e) Rule 144A Information. The Company agrees that, in order to
render the Securities eligible for resale pursuant to Rule 144A under the 1933
Act, while any of the Securities remain outstanding, to make available, upon
request, to any holder of Securities or prospective purchasers of Securities
the information specified in Rule 144A(d)(4), unless the Company furnishes
information to the Commission pursuant to Section 13 or 15(d) of the 1934 Act.
(f) Integration. The Company agrees that it will not make any offer
and sale of securities of the Company of any class if, as a result of the
doctrine of "integration" referred to in Rule 502 under the 1933 Act, such
offer and sale would render invalid (as applicable to (i) the sale of the
Securities by the Company to the Initial Purchasers, (ii) the resale of the
Securities by the Initial Purchasers to Subsequent Purchasers or (iii) the
resale of the Securities by such Subsequent Purchasers to others, in each case
in accordance with the terms and conditions herein set forth) the exemption
from the registration requirements of the 1933 Act provided by Section 4(2)
thereof or by Rule 144A or by Regulation S thereunder.
(g) Reasonable Inquiry. In connection with the original distribution
of the Securities, the Company agrees that, prior to any offer or resale of the
Securities by the Initial Purchasers, the Initial Purchasers and counsel for
the Initial Purchasers shall have the right to make reasonable inquiries into
the business of the Company and its subsidiaries.
(h) Use of Proceeds. The Company will use the net proceeds received
by it from the sale of the Securities in the manner specified in the Offering
Memorandum under "Use of Proceeds."
(i) Restriction on Sale of Debt Securities. The Company will not,
without the prior written consent of Merrill Lynch, contract to sell or
announce or make any offering, sale or other disposition of any debt securities
of the Company having a
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<PAGE> 15
maturity greater than one year during the period beginning from the date of
this Agreement and continuing through the earlier of the termination of trading
restrictions with respect to the Securities, as notified to the Company by you,
or the Closing Time.
(j) Restriction on Sale of Equity Securities. During a period of 180
days from the date of the Offering Memorandum, the Company will not, without
the prior written consent of Merrill Lynch, (i) directly or indirectly, offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase or otherwise transfer or dispose of any share of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock or
file any registration statement under the 1933 Act with respect to any of the
foregoing or (ii) enter into any swap or any other agreement or any transaction
that transfers, in whole or in part, directly or indirectly, the economic
consequence of ownership of the Common Stock, whether any such swap or
transaction described in clause (i) or (ii) above is to be settled by delivery
of Common Stock or such other securities, in cash or otherwise. The foregoing
sentence shall not apply to (A) the Securities to be sold hereunder and shares
of Common Stock issuable upon conversion thereof, (B) any shares of Common
Stock issued by the Company upon the exercise of an option or warrant or the
conversion of a security outstanding on the date hereof and referred to in the
Offering Memorandum, (C) any shares of Common Stock issued or options to
purchase Common Stock granted pursuant to existing employee benefit plans of
the Company referred to in the Offering Memorandum or (D) any shares of Common
Stock issued in connection with acquisitions (provided that the number of
shares of Common Stock issued in connection with such acquisitions does not
exceed 1,000,000).
(k) Reservation of Shares. The Company will reserve and keep
available at all times, free of preemptive rights, shares of Common Stock for
the purpose of enabling the Company to satisfy any obligations to issue Common
Stock upon conversion of Securities.
SECTION 4. Payment of Expenses.
(a) Expenses. The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation, printing and delivery of the Offering Memorandum and of each
amendment or supplement thereto, (ii) the preparation, reproduction and
delivery to the Initial Purchasers of this Agreement, the Indenture and the
Registration Rights Agreement, and such other documents as may be required in
connection with the offering, purchase, sale, issuance or delivery of the
Securities, (iii) the preparation, issuance and
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delivery of the certificates for the Securities to the Initial Purchasers,
including any transfer taxes and any stamp or other duties payable upon the
sale, issuance or delivery of the Securities to the Initial Purchasers, (iv)
the fees and disbursements of the Company's counsel, accountants and other
advisors, (v) the qualification of the Securities and the shares of Common
Stock issuable upon conversion of the Securities under securities laws in
accordance with the provisions of Section 3(d) hereof, including filing fees
and the reasonable fees and disbursements of counsel in connection therewith
and in connection with the preparation of the Blue Sky Survey and any
supplement thereto, (vii) the fees and expenses of the Trustee, including the
fees and disbursements of counsel for the Trustee in connection with the
Indenture, (viii) any fees payable in connection with the rating of the
Securities and (ix) the fee of the National Association of Securities Dealers,
Inc.
(b) Termination of Agreement. If this Agreement is terminated by the
Initial Purchasers in accordance with the provisions of Section 5(i) or Section
9(a)(i) hereof, the Company shall reimburse the Initial Purchasers for all of
their reasonable out-of-pocket expenses, including the reasonable fees and
disbursements of counsel for the Initial Purchasers.
SECTION 5. Conditions of Initial Purchasers' Obligations. The
obligations of the several Initial Purchasers hereunder are subject to the
accuracy of the representations and warranties of the Company contained in
Section 1 hereof or in certificates of any officer of the Company or any
subsidiary delivered pursuant to the provisions hereof, to the performance by
the Company of its covenants and other obligations hereunder, and to the
following further conditions:
(a) Opinion of Counsel for Company. At Closing Time the Initial
Purchasers shall have received the favorable opinion, dated as of Closing Time,
of Bell, Boyd & Lloyd, counsel for the Company, in form and substance
reasonably satisfactory to counsel for the Initial Purchasers, together with
signed or reproduced copies of such letter for each of the other Initial
Purchasers to the effect set forth in Exhibit A hereto.
(b) Opinion of Counsel for Initial Purchasers. At Closing Time the
Initial Purchasers shall have received the favorable opinion, dated as of
Closing Time, of Mayer, Brown & Platt, counsel for the Initial Purchasers with
respect to the matters set forth in (i), (ii), (vi) (solely as to preemptive or
other similar rights arising by operation of law or under the charter or
by-laws of the Company), (vii) to (xi), inclusive, (xiii) (solely as to the
information in the Offering Memorandum under "Description of Debentures" and
"Description of Capital Stock"),(xix), (xx) and the penultimate paragraph of
Exhibit A
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<PAGE> 17
hereto. In giving such opinion such counsel may rely, as to all matters
governed by the laws of jurisdictions other than the law of the State of New
York, the federal law of the United States and the General Corporation Law of
the State of Delaware, upon the opinions of counsel satisfactory to the Initial
Purchasers. Such counsel may also state that, insofar as such opinion involves
factual matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Company and its subsidiaries and certificates
of public officials.
(c) Officers' Certificate. At Closing Time there shall not have
been, since the date hereof or since the respective dates as of which
information is given in the Offering Memorandum (exclusive of any amendment or
supplement thereto subsequent to the date of this Agreement), any material
adverse change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and its subsidiaries
considered as one enterprise, whether or not arising in the ordinary course of
business, and the Initial Purchasers shall have received a certificate of the
President or a Vice President of the Company and of the chief financial or
chief accounting officer of the Company, in their capacities as officers of the
Company and not individually, dated as of Closing Time, to the effect that, to
the best of their knowledge based on reasonable investigation, (i) there has
been no such material adverse change, (ii) the representations and warranties
in Section 1(a) hereof are true and correct with the same force and effect as
though expressly made at and as of Closing Time, and (iii) the Company has
complied with all agreements and satisfied all conditions on its part to be
performed or satisfied hereunder at or prior to Closing Time.
(d) Accountant's Comfort Letter. At the time of the execution of
this Agreement, the Initial Purchasers shall have received from Arthur Andersen
LLP a letter dated such date, in form and substance satisfactory to the Initial
Purchasers containing statements and information of the type ordinarily
included in accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in the
Offering Memorandum.
(e) Bring-down Comfort Letter. At Closing Time the Initial
Purchasers shall have received from Arthur Andersen LLP a letter, dated as of
Closing Time, to the effect that they reaffirm the statements made in the
letter furnished pursuant to subsection (e) of this Section, except that the
specified date referred to shall be a date not more than three business days
prior to Closing Time.
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(f) Lock-up Agreement. At the date of this Agreement, the Initial
Purchasers shall have received an agreement substantially in the form of
Exhibit B hereto signed by Boston Chicken, Inc.
(g) Conditions to Purchase of Option Securities. In the event that
the Initial Purchasers exercise their option provided in Section 2(b) hereof to
purchase all or any portion of the Option Securities, the representations and
warranties of the Company contained herein and the statements in any
certificates furnished by the Company or any subsidiary of the Company
hereunder shall be true and correct as of each Date of Delivery and, at the
relevant Date of Delivery, the Initial Purchasers shall have received:
(i) Officers' Certificate. A certificate, dated such Date of
Delivery, of the President or a Vice President of the Company and of the
chief financial or chief accounting officer of the Company, in their
capacities as officers of the Company and not individually, confirming
that the certificate delivered at the Closing Time pursuant to Section
5(c) hereof remains true and correct as of such Date of Delivery.
(ii) Opinion of Counsel for Company. The favorable opinion of
Bell, Boyd & Lloyd, counsel for the Company, in form and substance
reasonably satisfactory to counsel for the Initial Purchasers, dated
such Date of Delivery, relating to the Option Securities to be purchased
on such Date of Delivery and otherwise to the same effect as the opinion
required by Section 5(a) hereof.
(iii) Opinion of Counsel for Initial Purchasers. The favorable
opinion of Mayer, Brown & Platt, counsel for the Initial Purchasers,
dated such Date of Delivery, relating to the Option Securities to be
purchased on such Date of Delivery and otherwise to the same effect as
the opinion required by Section 5(b) hereof.
(iv) Bring-down Comfort Letter. A letter from Arthur Andersen
LLP, in form and substance satisfactory to the Initial Purchasers and
dated such Date of Delivery, substantially in the same form and
substance as the letter furnished to the Initial Purchasers pursuant to
Section 5(e) hereof, except that the "specified date" in the letter
furnished pursuant to this paragraph shall be a date not more than five
days prior to such Date of Delivery.
(h) Additional Documents. At Closing Time and at each Date of
Delivery counsel for the Initial Purchasers shall have been furnished with such
documents and opinions as they may reasonably require for the purpose of
enabling them to pass upon the
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issuance and sale of the Securities as herein contemplated, or in order to
evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company in connection with the issuance and sale of the Securities
as herein contemplated and with respect to the shares of Common Stock issuable
upon conversion of the Securities shall be reasonably satisfactory in form and
substance to the Initial Purchasers and counsel for the Initial Purchasers.
(i) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled,
this Agreement, or, in the case of any condition to the purchase of Option
Securities, on a Date of Delivery which is after the Closing Time, the
obligations of the several Initial Purchasers to purchase the relevant Option
Securities, may be terminated by the Initial Purchasers by notice to the
Company at any time at or prior to Closing Time or such Date of Delivery, as
the case may be, and such termination shall be without liability of any party
to any other party except as provided in Section 4.
SECTION 6. Indemnification.
(a) Indemnification of Initial Purchasers. The Company agrees to
indemnify and hold harmless each Initial Purchaser and each person, if any, who
controls any Initial Purchaser within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the Preliminary
Offering Memorandum or the Final Offering Memorandum (or any amendment
or supplement thereto), or the omission or alleged omission therefrom of
a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or proceeding
by any governmental agency or body, commenced or threatened, or of any
claim whatsoever based upon any such untrue statement or omission, or
any such alleged untrue statement or omission; provided that (subject to
Section 6(d) below) any such settlement is effected with the written
consent of the Company; and
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(iii) against any and all expenses whatsoever, as incurred
(including the reasonable fees and disbursements of counsel chosen by
Merrill Lynch), reasonably incurred in investigating, preparing or
defending against any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, to the extent that any such
expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Initial Purchaser through Merrill Lynch expressly for use in the Preliminary
Offering Memorandum or the Final Offering Memorandum (or any amendment or
supplement thereto); and provided further, that, insofar as this indemnity
agreement relates to any untrue statement or omission, or any alleged untrue
statement or omission, made in the Preliminary Offering Memorandum, but
eliminated or remedied in the Final Offering Memorandum, it shall not inure to
the benefit of an Initial Purchaser (or to the benefit of any person who
controls such Initial Purchaser) if a copy of the Final Offering Memorandum was
not delivered by such Initial Purchaser to the person asserting the claim
arising from such untrue statement or omission, or such alleged untrue
statement or omission at or prior to the confirmation of the sale of the
Securities to such person, if the delivery thereof would have constituted a
defense to the claim asserted by such person.
(b) Indemnification of Company, Directors and Officers. Each Initial
Purchaser severally agrees to indemnify and hold harmless the Company, its
directors, each of its officers, and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act against any and all loss, liability, claim, damage and expense
described in the indemnity contained in subsection (a) of this Section, as
incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Preliminary Offering Memorandum or
the Final Offering Memorandum (or any amendment or supplement thereto) in
reliance upon and in conformity with written information furnished to the
Company by such Initial Purchaser through Merrill Lynch expressly for use in
the Preliminary Offering Memorandum or the Final Offering Memorandum (or any
amendment or supplement thereto).
(c) Actions against Parties; Notification. Each indemnified party
shall give notice as promptly as reasonably practicable to each indemnifying
party of any action commenced
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against it in respect of which indemnity may be sought hereunder, but
failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability which it may have otherwise than
on account of this indemnity agreement. An indemnifying party may
participate at its own expense in the defense of any such action. If it
so elects within a reasonable time after receipt of such notice, an
indemnifying party, jointly with any other indemnifying parties
receiving such notice, may assume the defense of such action, with
counsel chosen by it and approved by the indemnified parties defendant
in such action, unless such indemnified parties reasonably object to
such assumption on the ground that there may be legal defenses available
to them which are different from or in addition to those available to
such indemnifying party. If an indemnifying party assumes the defense
of such action, the indemnifying parties shall not be liable for any
fees and expenses of counsel for the indemnified parties incurred
thereafter in connection with such action. In no event shall the
indemnifying parties be liable for fees and expenses of more than one
counsel (in addition to any local counsel retained for local procedural
and practice matters) separate from their own counsel for all
indemnified parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the
same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental
agency or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification could be sought under this Section 6
(whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim, (ii)
does not include a statement as to or an admission of fault, culpability
or a failure to act by or on behalf of any indemnified party, (iii) does
not impugn the reputation of any indemnified party and (iv) does not
restrict any indemnified party from engaging in any activity.
(d) Settlement without Consent if Failure to Reimburse. If at any
time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for reasonable fees and expenses of counsel,
such indemnifying party agrees that it shall be liable for any settlement of
the nature contemplated by Section 6(a)(ii) effected without its written
consent if (i) such settlement is entered into more than 45 days after receipt
by such indemnifying party of the aforesaid request, (ii) such indemnifying
party shall have received notice of the terms of such settlement at least 30
days prior to such settlement being entered into and (iii) such indemnifying
party
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shall not have reimbursed such indemnified party in accordance with such
request prior to the date of such settlement.
SECTION 7. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company submitted pursuant
hereto and identified as such, shall remain operative and in full force and
effect, regardless of any investigation made by or on behalf of any Initial
Purchaser or controlling person, or by or on behalf of the Company, and shall
survive delivery of the Securities to the Initial Purchasers.
SECTION 8. Subsequent Offers and Resales of the Securities. (a)
Each of the Initial Purchasers and the Company hereby establish
and agree to observe the following procedures in connection with the offer and
sale by the Initial Purchasers of the Securities.
(i) Offers and sales of the Securities will be made by the
Initial Purchasers only to (A) institutional investors that are
reasonably believed to qualify as Accredited Investors (each such
institutional investor being hereinafter referred to as an
"Institutional Accredited Investor"), or (B) in the case of Securities
resold or otherwise transferred pursuant to Rule 144A, to institutional
investors that are reasonably believed to qualify as Qualified
Institutional Buyers or (C) to non-U.S. persons in offshore transactions
in reliance upon Regulation S under the 1933 Act.
(ii) The Securities will be offered by the Initial Purchasers
only by approaching prospective Subsequent Purchasers on an individual
basis. No general solicitation or general advertising (within the
meaning of Rule 502(c) under the 1933 Act) will be used in connection
with the offering of the Securities.
(iii) In the case of a non-bank Subsequent Purchaser of a
Security acting as a fiduciary for one or more third parties, in
connection with an offer and sale to such purchaser pursuant to clause
(a) above, each third party shall, in the judgment of the Initial
Purchasers, be an Institutional Accredited Investor or a Qualified
Institutional Buyer or a non-U.S. person outside the United States.
(iv) The transfer restrictions and the other provisions set
forth in Section 2.6 of the Indenture, including the legend required
thereby, shall apply to the Securities except as otherwise agreed by the
Company and the
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Initial Purchasers. Following the sale of the Securities by the Initial
Purchasers to Subsequent Purchasers pursuant to the terms hereof, except
as otherwise provided in Section 6 hereof, the Initial Purchasers shall
not be liable or responsible to the Company for any losses, damages or
liabilities suffered or incurred by the Company, including any losses,
damages or liabilities under the 1933 Act, arising from or relating to
any resale or transfer of any Security.
(v) The Initial Purchasers will deliver to each Subsequent
Purchaser, in connection with its original distribution of the
Securities, a copy of the Offering Memorandum, as amended and
supplemented at the date of such delivery.
(b) Each Initial Purchaser understands that the Securities have not
been and will not be registered prior to or at Closing Time under the 1933 Act
and may not be offered or sold within the United States or to, or for the
account or benefit of, U.S. persons except in accordance with Regulation S
under the 1933 Act or pursuant to an exemption from the registration
requirements of the 1933 Act. Each Initial Purchaser represents and agrees
that, except as permitted herein, it has offered and sold Securities and will
offer and sell Securities (i) as part of its distribution at any time and (ii)
otherwise until forty days after the later of the date upon which the offering
of the Securities commences and the Closing Time, only in accordance with Rule
903 of Regulation S or Rule 144A under the 1933 Act. Accordingly, neither such
Initial Purchaser, its affiliates nor any persons acting on its behalf have
engaged or will engage in any directed selling efforts with respect to
Securities, and such Initial Purchaser, its affiliates and any person acting on
its behalf have complied and will comply with the offering restriction
requirements of Regulation S. Each Initial Purchaser agrees that, at or prior
to confirmation of a sale of Securities (other than a sale of Securities
pursuant to Rule 144A), it will have sent to each distributor, dealer or
person, if any, receiving a selling concession, fee or other remuneration that
purchases Securities from it or through it during the restricted period a
confirmation or notice to substantially the following effect.
"The Securities covered hereby have not been registered under the United
States Securities Act of 1933 (the "Securities Act") and may not be
offered or sold within the United States or to or for the account or
benefit of U.S. persons (i) as part of their distribution at any time
and (ii) otherwise until forty days after the later of the date upon
which the offering of the Securities commenced and the date of closing,
except in either case in accordance with
-23-
<PAGE> 24
Regulation S or Rule 144A under the Securities Act. Terms used above
have the meaning given to them by Regulation S."
Terms used in the above paragraph have the meanings given to them by Regulation
S.
SECTION 9. Termination of Agreement.
(a) Termination; General. The Initial Purchasers may terminate this
Agreement, by written notice to the Company, at any time at or prior to Closing
Time (i) if there has been, since the time of execution of this Agreement or
since the respective dates as of which information is given in the Offering
Memorandum, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, or (ii) if there has occurred any
material adverse change in the financial markets in the United States, any
outbreak of hostilities or escalation thereof or other calamity or crisis, in
each case the effect of which is such as to make it, in the judgment of the
Initial Purchasers, impracticable to market the Securities or to enforce
contracts for the sale of the Securities, or (iii) if trading in any securities
of the Company has been suspended or limited by the Commission or the Nasdaq
National Market, or if trading generally on the American Stock Exchange or the
New York Stock Exchange or in the Nasdaq National Market has been suspended or
limited, or minimum or maximum prices for trading have been fixed, or maximum
ranges for prices have been required, by any of said exchanges or by such
system or by order of the Commission, the National Association of Securities
Dealers, Inc. or any other governmental authority, or (iv) if a banking
moratorium has been declared by either Federal or New York authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof.
SECTION 10. Default by One or More of the Initial Purchasers. If one
or more of the Initial Purchasers shall fail at Closing Time or a Date of
Delivery to purchase the Securities which it or they are obligated to purchase
under this Agreement (the "Defaulted Securities"), the non-defaulting Initial
Purchasers shall have the right, within 24 hours thereafter, to make
arrangements for one or more of the non-defaulting Initial Purchasers, or any
other purchasers, to purchase all, but not less than all, of the Defaulted
Securities in such amounts as may be agreed upon and upon the terms herein set
forth; if, however,
-24-
<PAGE> 25
the non-defaulting Initial Purchasers shall not have completed such
arrangements within such 24-hour period, then:
(a) if the principal amount of Defaulted Securities does not exceed
10% of the aggregate principal amount of Securities to be purchased on such
date, each of the non-defaulting Initial Purchasers shall be obligated,
severally and not jointly, to purchase the full amount thereof in the
proportions that their respective underwriting obligations hereunder bear to
the underwriting obligations of all non-defaulting Initial Purchasers, or
(b) if the principal amount of Defaulted Securities exceed 10% of the
aggregate principal amount of Securities to be purchased on such date, this
Agreement or, with respect to any Date of Delivery which occurs after the
Closing Time, the obligation of the Initial Purchasers to purchase and of the
Company to sell the Option Securities to be purchased and sold on such Date of
Delivery shall terminate without liability on the part of any non-defaulting
Initial Purchasers or the Company.
No action taken pursuant to this Section shall relieve any defaulting
Initial Purchaser from liability in respect of its default.
In the event of any such default which does not result in a termination
of this Agreement or, in the case of a Date of Delivery which is after the
Closing Time, which does not result in a termination of the obligation of the
Initial Purchasers to purchase and the Company to sell the relevant Option
Securities, as the case may be, either the non-defaulting Initial Purchasers or
the Company shall have the right to postpone Closing Time or the relevant Date
of Delivery, as the case may be, for a period not exceeding seven days in order
to effect any required changes in the Offering Memorandum or in any other
documents or arrangements. As used herein, the term "Initial Purchaser"
includes any person substituted for an Initial Purchaser under this Section 10.
SECTION 11. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the Initial
Purchasers shall be directed to the Initial Purchasers c/o Merrill Lynch at
5500 Sears Tower, Chicago, Illinois 60606, Attention: Charles A. Lewis, Vice
Chairman - Investment Banking; and notices to the Company shall be directed to
it at 14123 Denver West Parkway, P.O. Box 4086, Golden, Colorado 80401,
Attention: Paul Strasen, General Counsel.
SECTION 12. Parties. This Agreement shall inure to the benefit of and
be binding upon the Initial Purchasers and the
-25-
<PAGE> 26
Company and their respective successors. Nothing expressed or mentioned in
this Agreement is intended or shall be construed to give any person, firm or
corporation, other than the Initial Purchasers and the Company and their
respective successors and the controlling persons and officers and directors
referred to in Section 6 and their heirs and legal representatives, any legal
or equitable right, remedy or claim under or in respect of this Agreement or
any provision herein contained. This Agreement and all conditions and
provisions hereof are intended to be for the sole and exclusive benefit of the
Initial Purchasers and the Company and their respective successors, and said
controlling persons and officers and directors and their heirs and legal
representatives, and for the benefit of no other person, firm or corporation.
No purchaser of Securities from any Initial Purchasers shall be deemed to be a
successor by reason merely of such purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 14. Effect of Headings. The Article and Section headings
herein and the Table of Contents are for convenience only and shall not affect
the construction hereof.
-26-
<PAGE> 27
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement between the Initial Purchasers and the Company in accordance with its
terms.
Very truly yours,
EINSTEIN/NOAH BAGEL CORP.
By /s/ JOEL M. ALAM
----------------------------------
Title: Senior Vice President
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
ALEX. BROWN & SONS INCORPORATED
MORGAN STANLEY & CO. INCORPORATED
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By /s/ MICHAEL G. O'GRADY
-------------------------------------------
Authorized Signatory
<PAGE> 28
SCHEDULE A
<TABLE>
<CAPTION>
Principal
Amount of
Initial
Name of Initial Purchaser Securities
- ------------------------- ----------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated . . . . . . . . . . . . . . . . . . . . . $41,668,000
Alex. Brown & Sons Incorporated . . . . . . . . . . . . . . . . . . 41,666,000
Morgan Stanley & Co. Incorporated . . . . . . . . . . . . . . . . . 41,666,000
-----------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $125,000,000
============
</TABLE>
Sch A - 1
<PAGE> 29
SCHEDULE B
EINSTEIN/NOAH BAGEL CORP.
$125,000,000
7 1/4% Convertible Subordinated Debentures due 2004
1. The initial price to investors of the Securities shall be 100% of
principal amount thereof, plus accrued interest, if any, from the date of
issuance.
2. The purchase price to be paid by the several Initial Purchasers
for the Initial Securities shall be 97.25% of the principal amount thereof.
3. The interest rate on the Securities shall be 7 1/4% per annum.
4. The Securities shall be convertible into shares of Common Stock,
par value $.01 per share, of the Company at an initial conversion price of
$21.25 per share.
Sch B - 2
<PAGE> 30
SCHEDULE C
List of Subsidiaries
Brackman Brothers, Inc.
Baltimore Bagel Co.
Noah's New York Bagels, Inc.
Sch C - 1
<PAGE> 31
Exhibit A
FORM OF OPINION OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(a)
(i) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware.
(ii) The Company has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the Offering
Memorandum.
(iii) To the best of our knowledge and information, the Company is duly
qualified as a foreign corporation to transact business and is in good standing
in each jurisdiction in which such qualification is required, whether by reason
of the ownership or leasing of property or the conduct of business, except
where the failure so to qualify or to be in good standing would not result in a
Material Adverse Effect.
(iv) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Offering Memorandum in the column entitled
"Actual" under the caption "Capitalization" (except for subsequent issuances,
if any, pursuant to the Purchase Agreement or pursuant to reservations,
agreements or employee benefit plans referred to in the Offering Memorandum or
pursuant to the exercise of convertible securities or options referred to in
the Offering Memorandum; the shares of issued and outstanding capital stock of
the Company have been duly authorized and validly issued and are fully paid and
non-assessable.
(v) Each subsidiary of the Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has corporate power and authority to own,
lease and operate its properties and to conduct its business as described in
the Offering Memorandum and, to the best of our knowledge and information, is
duly qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required, whether
by reason of the ownership or leasing of property or the conduct of business,
except where the failure so to qualify or to be in good standing would not
result in a Material Adverse Effect; all of the issued and outstanding capital
stock of each such subsidiary has been duly authorized and validly issued, is
fully paid and non-assessable and, to the best of our knowledge and
information, is owned by the Company, directly or through subsidiaries, free
and clear of any security interest, mortgage, pledge, lien,
A-1
<PAGE> 32
encumbrance, claim or equity (other than the pledge of stock pursuant to the
Credit Agreement).
(vi) The issuance of the Securities or the shares of Common Stock
issuable upon conversion of the Securities is not subject to preemptive or
other similar rights arising by operation of law, under the charter or by-laws
of the Company or, to the best of their knowledge and information, otherwise.
(vii) The Purchase Agreement and the Registration Rights Agreement have
been duly authorized, executed and delivered by the Company.
(viii) The Initial Securities or Option Securities, as the case may be,
to be issued and sold by the Company pursuant to the Purchase Agreement have
been duly authorized by requisite corporate action on the part of the Company,
and the Securities, when executed and authenticated in accordance with the
terms of the Indenture and delivered to and paid for by you, will be valid and
binding obligations of the Company entitled to the benefits of the Indenture
and enforceable against the Company in accordance with their terms, except to
the extent that enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally, and by general principles of equity
(regardless of whether enforceability is considered in a proceeding at law or
in equity); and the Securities and the Indenture conform as to legal matters in
all material respects to the descriptions thereof in the Offering Memorandum.
(ix) The Indenture has been duly authorized, executed and delivered by
the Company and is a valid and binding agreement, enforceable against the
Company in accordance with its terms, except to the extent that enforcement
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to creditors' rights
generally, and by general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity).
(x) Upon issuance and delivery of the Securities in accordance with
this Agreement and the Indenture, the Securities shall be convertible at the
option of the holder thereof for shares of Common Stock in accordance with the
terms of the Securities and the Indenture; and the shares of Common Stock
initially issuable upon conversion of Securities have been duly authorized and
reserved for issuance and, when issued and delivered pursuant to the terms of
the Indenture, will be validly issued, fully paid and non-assessable.
A-2
<PAGE> 33
(xi) The form of certificate used to evidence the Common Stock
complies in all material respects with all applicable statutory requirements
and with any applicable requirements of the charter and by-laws of the Company.
(xii) To the best of our knowledge and information, there is not
pending or threatened any action, suit, proceeding, inquiry or investigation,
to which the Company or any subsidiary is a party, or to which the property of
the Company or any subsidiary is subject, before or brought by any court or
governmental agency or body, domestic or foreign, which might reasonably be
expected to result in a Material Adverse Effect, or which might reasonably be
expected to materially and adversely affect the properties or assets thereof or
the consummation of the transactions contemplated in the Purchase Agreement or
the performance by the Company of its obligations thereunder.
(xiii) The information in the Offering Memorandum under "Description of
Debentures" and "Description of Capital Stock", to the extent that it
constitutes matters of law, summaries of legal matters, the Company's charter
and bylaws or legal proceedings, or legal conclusions, has been reviewed by us
and is correct in all material respects.
(xiv) To the best of our knowledge and information, there are no
franchises, contracts, indentures, mortgages, loan agreements, notes, leases or
other instruments required to be described or referred to in the Offering
Memorandum other than those described or referred to therein, and the
descriptions thereof or references thereto are correct in all material
respects.
(xv) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any court or governmental
authority or agency, domestic or foreign (other than as may be required under
the securities or blue sky laws of the various states, as to which we need
express no opinion) is necessary or required in connection with the due
authorization, execution and delivery of the Purchase Agreement the Indenture,
or the Registration Rights Agreement or for the offering, issuance or sale of
the Securities.
(xvi) To the best of our knowledge and information, the execution,
delivery and performance of the Purchase Agreement, the Indenture and the
Registration Rights Agreement and the consummation of the transactions
contemplated thereby (including the issuance and sale of the Securities) and
compliance by the Company with its obligations thereunder do not and will not,
whether with or without the giving of notice or lapse of time or both, conflict
with or constitute a breach of, or default or Repayment Event (as defined in
Section 1(a)(xi) of the Purchase
A-3
<PAGE> 34
Agreement) under or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any subsidiary
pursuant to any contract, indenture, mortgage, deed of trust, loan or credit
agreement, note, lease or any other agreement or instrument, known to us, to
which the Company or any subsidiary is a party or by which it or any of them
may be bound, or to which any of the property or assets of the Company or any
subsidiary is subject (except for such conflicts, breaches, defaults, Repayment
Events or liens, charges or encumbrances that would not have a Material Adverse
Effect), nor will such action result in any violation of the provisions of the
charter or by-laws of the Company, or any applicable law, statute, rule,
regulation, judgment, order, writ or decree, known to us, of any government,
government instrumentality or court, domestic or foreign, having jurisdiction
over the Company or any subsidiary or any of their respective properties,
assets or operations.
(xvii) The Company is not an "investment company" as such term is
defined in the 1940 Act.
(xviii) Each document filed pursuant to the 1934 Act (other than the
financial statements and supporting schedules included therein, as to which no
opinion need be rendered) and incorporated or deemed to be incorporated by
reference in the Offering Memorandum complied when so filed as to form in all
material respects with the 1934 Act and the 1934 Act Regulations.
(xix) Assuming the accuracy of the representations and warranties of
the Company and the Initial Purchasers contained in the Purchase Agreement and
compliance with the agreements of the Company and the Initial Purchasers
contained therein, no registration of the Securities under the 1933 Act is
required, and no qualification of the Indenture under the Trust Indenture Act
of 1939 is necessary, for the offer and sale of the Securities to the Initial
Purchasers as contemplated by the Purchase Agreement or in connection with the
initial resale of the Securities by the Initial Purchasers in accordance with
the Purchase Agreement.
(xx) The Securities are not of the same class (within the meaning of
Rule 144A) as securities of the Company that are listed on a national
securities exchange registered under Section 6 of the 1934 Act or that are
quoted in a United States automated inter-dealer quotation system.
Nothing has come to our attention that would lead us to believe that the
Offering Memorandum or any amendment or supplement thereto (except for
financial statements and schedules and other financial data included therein or
omitted therefrom, as to which we need make no statement), at the time the
Offering
A-4
<PAGE> 35
Memorandum was issued, at the time any such amendment or supplement to the
Offering Memorandum was issued or at the Closing Time, included or includes an
untrue statement of a material fact or omitted or omits to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
In rendering such opinion, such counsel may rely, as to matters of fact
(but not as to legal conclusions), to the extent they deem proper, on
certificates of responsible officers of the Company and public officials. Such
opinion shall not state that it is to be governed or qualified by, or that it
is otherwise subject to, any treatise, written policy or other document
relating to legal opinions, including, without limitation, the Legal Opinion
Accord of the ABA Section of Business Law (1991).
A-5
<PAGE> 36
[FORM OF LOCK-UP FROM BOSTON CHICKEN, INC.
PURSUANT TO SECTION 5(F)]
Exhibit B
May ___, 1997
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated,
Alex. Brown & Sons Incorporated
Morgan Stanley & Co. Incorporated
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Re: Proposed Private Offering by Einstein/Noah Bagel Corp.
Dear Sirs:
The undersigned, a stockholder of Einstein/Noah Bagel Corp., a Delaware
corporation (the "Company"), understands that Merrill Lynch & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), Alex. Brown &
Sons Incorporated and Morgan Stanley & Co. Incorporated propose to enter into a
Purchase Agreement (the "Purchase Agreement") with the Company providing for
the private offering of 7 1/4% Convertible Subordinated Debentures due 2004.
In recognition of the benefit that such an offering will confer upon the
undersigned as a stockholder of the Company, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the undersigned agrees with each purchaser to be named in the Purchase
Agreement that, during a period of 180 days from the date of the Purchase
Agreement, the undersigned will not, without the prior written consent of
Merrill Lynch, directly or indirectly, (i) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant for the sale of, or otherwise
dispose of or transfer any shares of the Company's common stock, par value
$.01 per share (the "Common Stock") or any securities convertible into or
exchangeable or exercisable for Common Stock, whether now owned or hereafter
acquired by the undersigned or with respect to which the undersigned has or
hereafter acquires the power of disposition or (ii) enter into any swap or any
other agreement or any transaction that
B-1
<PAGE> 37
transfers, in whole or in part, directly or indirectly, the economic
consequence of ownership of the Common Stock, whether any such swap or
transaction is to be settled by delivery of Common Stock or other securities,
in cash or otherwise; provided, however, that such foregoing restrictions shall
not apply to shares of Common Stock subject to options granted by the
undersigned which are outstanding on the date hereof.
Very truly yours,
Signature:
-------------------------
Print Name:
------------------------
B-2
<PAGE> 1
EINSTEIN/NOAH BAGEL CORP.
7 1/4% Convertible Subordinated Debentures Due 2004
REGISTRATION RIGHTS AGREEMENT
May 22, 1997
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Alex. Brown & Sons Incorporated
Morgan Stanley & Co. Incorporated
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
Einstein/Noah Bagel Corp., a Delaware corporation (the "Company"),
proposes to issue and sell (such issuance and sale, the "Initial Placement") to
you (the "Initial Purchasers"), upon the terms set forth in a purchase
agreement dated May 22, 1997 (the "Purchase Agreement"), $125,000,000 aggregate
principal amount (plus an additional $18,750,000 principal amount to cover
over-allotments, if any) of its 7 1/4% Convertible Subordinated Debentures Due
2004 (the "Securities"). The Securities will be convertible into shares of
common stock, par value $0.01 per share, of the Company (the "Common Stock") at
the conversion price set forth in the Final Offering Memorandum. As an
inducement to you to enter into the Purchase Agreement and in satisfaction of a
condition to your obligations thereunder, the Company agrees with you, (i) for
your benefit and (ii) for the benefit of the holders from time to time of the
Securities or the Common Stock issuable upon conversion of the Securities
(including you) (each of the foregoing, a "Holder" and together, the
"Holders"), as follows:
1. Definitions. Capitalized terms used herein without definition
shall have the respective meanings set forth in the Purchase Agreement. As
used in this Agreement, the following capitalized terms shall have the
following meanings:
"Act" means the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder.
<PAGE> 2
"Affiliate" of any specified person means any other person that,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such specified person. For purposes of this definition, control
of a person means the power, direct or indirect, to direct or cause the
direction of the management and policies of such person whether by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Business Day" means any day that is neither a Saturday or a Sunday nor
a day on which banking institutions in The City of New York are authorized or
obligated by law or executive order to close.
"Closing Time" has the meaning set forth in the Purchase Agreement.
"Commission" means the Securities and Exchange Commission.
"Damages Accrual Period" has the meaning set forth in Section 2(d)
hereof.
"Damages Payment Date" has the meaning set forth in Section 2(d) hereof.
"Deferral Period" has the meaning set forth in Section 2(c) hereof.
"DTC" has the meaning set forth in Section 3(j) hereof.
"Event" has the meaning set forth in Section 2(d) hereof.
"Event Date" has the meaning set forth in Section 2(d) hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission promulgated thereunder.
"Final Offering Memorandum" has the meaning set forth in the Purchase
Agreement.
"Holder" has the meaning set forth in the preamble hereto.
"Indenture" means the Indenture relating to the Securities dated as of
May 29, 1997, between the Company and Bankers Trust Company, as trustee, as the
same may be amended from time to time in accordance with the terms thereof.
"Initial Placement" has the meaning set forth in the preamble hereto.
"Interest Payment Date" shall mean June 1 and December 1.
"Liquidated Damages" has the meaning set forth in Section 2(d) hereof.
2
<PAGE> 3
"Losses" has the meaning set forth in Section 5(d) hereof.
"Majority Holders" means the Holders of a majority of the then
outstanding aggregate principal amount of Registrable Securities; provided,
that Holders of Common Stock issued upon conversion of Securities shall be
deemed to be Holders of the aggregate principal amount of Securities from which
such Common Stock was converted.
"Notice Holder" has the meaning set forth in Section 2(b) hereof.
"Prospectus" means the prospectus included in any Shelf Registration
Statement, and all amendments and supplements to such prospectus, including
post-effective amendments.
"Record Date" has the meaning set forth in Section 2(d) hereof.
"Record Holder" has the meaning set forth in Section 2(d) hereof.
"Registrable Securities" shall mean the Securities and shares of Common
Stock issued upon conversion thereof, excluding any such securities that, and
any such securities the predecessors of which, were previously sold pursuant to
a registration statement of the Company filed under the Act or pursuant to Rule
144 promulgated under the Act.
"Securities" has the meaning set forth in the preamble hereto.
"Selling Confirmation" means, with respect to a Notice Holder and a
Selling Notice given by such Notice Holder, a written notice given by the
Company to such Notice Holder instructing and notifying such Notice Holder that
the Shelf Registration Statement and Prospectus may be used during the
applicable Selling Period to effect the transactions described in such Selling
Notice, that the Company is then currently in compliance with Section 3(b) and
that the Company reaffirms the consent granted pursuant to Section 3(f).
"Selling Notice" has the meaning set forth in Section 2(b) hereof.
"Selling Period" means, with respect to a Notice Holder and a Selling
Notice given by such Notice Holder, a period of forty-five calendar days
commencing on the date such Notice Holder receives a Selling Confirmation in
respect of the transactions described in such Selling Notice; provided, that
the Company may defer existing Selling Periods in accordance with Section
3(c)(2).
"Shelf Registration" means a registration effected pursuant to Section 2
hereof.
"Shelf Registration Period" has the meaning set forth in Section 2(a)
hereof.
"Shelf Registration Statement" means a "shelf" registration statement of
the Company pursuant to the provisions of Section 2 hereof (including
additional registration statements filed
3
<PAGE> 4
pursuant to Section 3(d)) which covers some or all of the Securities and the
Common Stock issuable upon conversion thereof, as applicable, on an appropriate
form under Rule 415 promulgated under the Act, or any similar rule that may be
adopted by the Commission, and all amendments and supplements to such
registration statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"Special Counsel" means Mayer, Brown & Platt, special counsel to the
Initial Purchasers or such other special counsel as may be designated by the
Majority Holders.
"Trustee" means the trustee with respect to the Securities under the
Indenture.
2. Shelf Registration; Suspension of Use of Prospectus; Liquidated
Damages.
(a) The Company shall prepare and file with the Commission, as soon
as practicable but in any event on or prior to the date sixty days following
the Closing Time, a Shelf Registration Statement under the Act registering the
resale from time to time by Holders thereof of all of the Registrable
Securities. The Shelf Registration Statement shall permit resales of
Registered Securities by Holders in the manner or manners designated by them
from time to time, which shall be set forth in such Shelf Registration
Statement. The Company shall use its reasonable efforts to cause the Shelf
Registration Statement to be declared effective under the Act as soon as
practicable but in any event on or prior to the date ninety days following the
Closing Time and, subject to the provisions contained herein, to keep the Shelf
Registration Statement continuously effective under the Act until the earlier
of (i) the second anniversary of the Closing Time, (ii) the date on which the
Securities or Common Stock issuable upon conversion thereof may be sold by non-
affiliates of the Company pursuant to paragraph (k) of Rule 144 (or any
successor provision) promulgated by the Commission and (iii) such date as of
which all the Securities or the Common Stock issuable upon conversion thereof
have been sold pursuant to the Shelf Registration Statement (the period ending
at such earlier date, the "Shelf Registration Period").
(b) Each Holder of Registrable Securities agrees that if such Holder
wishes to sell its Registrable Securities pursuant to the Shelf Registration
Statement and the Prospectus, it will do so only in accordance with this
Section 2(b). Each Holder of Registrable Securities agrees to give written
notice to the Company at least three Business Days prior to any intended resale
of Registrable Securities under the Shelf Registration Statement, which notice
shall specify the date on which such Holder intends to begin such distribution
and such information with respect to such Holder and the intended distribution
as may be reasonably required to amend the Shelf Registration Statement or
supplement the Prospectus with respect to such intended distribution (each
Holder providing the notice described in this sentence and with respect to
which the related Selling Period is continuing or has been deferred, a "Notice
Holder"; each such notice, a "Selling Notice"). As soon as practicable after
the date a Selling Notice is received by the Company, and in any event within
two Business Days after such date, the Company shall either:
4
<PAGE> 5
(i) (A) provide a Selling Confirmation to such Notice Holder
or (B) file a supplement to the Prospectus or a post-effective amendment
to the Shelf Registration Statement as required by Section 3(b) (and use
all reasonable efforts to cause any such amendment to become effective
as soon as practicable thereafter and immediately thereafter provide a
Selling Confirmation to such Notice Holder); or
(ii) in the event of the happening of any event of the kind
described in Section 3(c)(2)(i), 3(c)(2)(ii), 3(c)(2)(iii) or
3(c)(2)(iv) hereof, the Company shall deliver to such Notice Holder the
notice required by Section 3(c)(2) and notify the holder that the
consent granted pursuant to Section 3(f) is suspended until further
notice.
(c) Each such Notice Holder may sell all or any Registrable
Securities pursuant to the Shelf Registration Statement and the Prospectus only
during the Selling Period commencing with the earlier of (x) the date on which
such Notice Holder receives a Selling Confirmation and (y) the third Business
Day after the related Selling Notice has been received by the Company; provided
that in the event the Company elects to take the actions permitted by Section
2(b)(ii), the commencement of the Selling Period shall be deferred until such
later date as the Company delivers a Selling Confirmation. A Notice Holder
shall not sell any Registrable Securities pursuant to the Shelf Registration
Statement or the Prospectus after the expiration of the applicable Selling
Period without giving a new Selling Notice pursuant to Section 2(b) hereof and
receiving a new Selling Confirmation. Notwithstanding the foregoing, the
aggregate number of days during which the Company shall be entitled to exercise
its right under this paragraph to defer the commencement of a Selling Period or
its right under Section 3(c)(2) to defer existing Selling Periods (any such
period of deferral herein referred to as a "Deferral Period") shall not exceed
60 days within any twelve-month period; provided, however, that each day during
any Deferral Period shall only be counted once in determining the aggregate
number of days in such Deferral Period notwithstanding the occurrence of
multiple concurrent deferrals; and, provided, further, if the Company deems it
necessary to file a post-effective amendment to the Shelf Registration
Statement in order to comply with Section 3(b) hereof as a result of any
Selling Notice or other information provided by a Holder for inclusion in the
Prospectus, then such period of time from the date of filing such post-
effective amendment until the date on which the Shelf Registration Statement is
declared effective by the Commission shall not be treated as a Deferral Period.
In the event the Company elects to take the actions described in Section
2(b)(ii), the Company will, at such time as it is in compliance with Section
3(b) and as use of the Prospectus may be resumed, immediately provide Selling
Confirmations to all Notice Holders.
(d) The parties hereto agree that the Holders of the Registrable
Securities will suffer damages, and that it would not be feasible to ascertain
the extent of such damages with precision, if (i) the Shelf Registration
Statement has not been declared effective under the Securities Act on or before
the date ninety days following the Closing Time, or the aggregate number of
days for all Deferral Periods within any one twelve-month period exceeds the
number permitted pursuant to Section 2(c) hereof (each of the events of a type
described in either of the foregoing clauses (i)
5
<PAGE> 6
or (ii) are individually referred to herein as an "Event"; and the date ninety
days following the Closing Time in the case of clause (i) and the date on which
the duration of all Deferral Periods within any one twelve-month period exceeds
the number of days permitted by Section 2(c) hereof in the case of clause (ii),
are referred to herein as an "Event Date"). Events shall be deemed to continue
until the date of the termination of such Event, which shall be the following
date with respect to the respective types of Events: the date the Registration
Statement is declared effective under the Act in the case of an Event described
in clause (i) and termination of the Deferral Period which caused the aggregate
number of days for all Deferral Periods within any one twelve-month period to
exceed the number permitted by Section 2(c) in the case of Events of the type
described in clause (ii).
Accordingly, upon the occurrence of any Event and until such time as
there are no Events which have occurred and are continuing (a "Damages Accrual
Period"), commencing on the Event Date on which such Damages Accrual Period
began, the Company agrees to pay, as liquidated damages, and not as a penalty,
an additional amount (the "Liquidated Damages"): to each Holder of Registrable
Securities (whether or not a Notice Holder), accruing during the Damages
Accrual Period at a rate equal to one-half of one percent per annum (50 basis
points) on (u) where such Registrable Securities are Securities, the aggregate
principal amount of such Securities held by such Holder and (v) where such
Registrable Securities are shares of Common Stock issued upon conversion of
Securities, the aggregate principal amount of Securities that were converted
into such shares. Notwithstanding the foregoing, no Liquidated Damages shall
accrue as to any Securities or shares of Common Stock from and after the
earlier of (x) the date such securities are no longer Registrable Securities,
or (y) the expiration of the Shelf Registration Period. The rate of accrual of
the Liquidated Damages with respect to any period shall not exceed the rate
provided for in this paragraph notwithstanding the occurrence of multiple
concurrent Events.
Liquidated Damages due on any Securities or Common Stock shall be
payable on each Interest Payment Date on the Securities occurring (or if there
are no Securities outstanding, which would have occurred) during the Damages
Accrual Period and on the Interest Payment Date immediately following (or which
would have followed) the termination of such Period (a "Damages Payment Date").
The Company shall pay the Liquidated Damages due on any Securities by
depositing with the Trustee under the Indenture, in trust, for the benefit of
the Holders of Securities or Common Stock or Notice Holders, as the case may
be, entitled thereto, at least one Business Day prior to the applicable Damages
Payment Date, sums sufficient to pay the Liquidated Damages accrued or accruing
since the last preceding Damages Payment Date to such Damages Payment Date.
The Liquidated Damages shall be paid on each Damages Payment Date to the
Holders of record of the Registrable Securities (the "Record Holders") on the
15th day of May or 15th day of November (each a "Record Date") immediately
preceding such Damages Payment Date by wire transfer of immediately available
funds to the accounts specified by them or by mailing checks to their
registered addresses as they appear in the Securities register or stock
transfer books of the Company, if no such accounts have been specified on or
before the applicable Record Date. The Trustee shall be entitled, on behalf of
the Holders of Securities, Common Stock and Notice Holders, to seek any
available remedy for the enforcement
6
<PAGE> 7
of this Agreement, including for the payment of such Liquidated Damages.
Notwithstanding the foregoing, the parties agree that the sole remedy payable
for a violation of the terms of this Agreement with respect to which Liquidated
Damages are expressly provided shall be such Liquidated Damages. Nothing shall
preclude a Notice Holder or Holder of Registrable Securities from pursuing or
obtaining specific performance or other equitable relief with respect to any
violation of this Agreement for which Liquidated Damages are not expressly
provided by this Agreement.
All of the Company's obligations set forth in this Section 2(d) which
are outstanding with respect to any Registrable Securities at the time such
security ceases to be a Registrable Security shall survive until such time as
all such obligations with respect to such security have been satisfied in full
(notwithstanding termination of this Agreement).
The parties hereto agree that the Liquidated Damages provided for in
this Section 2(d) constitute a reasonable estimate of the damages that may be
incurred by Holders of Registrable Securities (other than the Initial
Purchasers) by reason of the occurrence of an Event.
3. Registration Procedures. In connection with any Shelf
Registration Statement, the following provisions shall apply:
(a) The Company shall furnish to Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("Merrill Lynch") and the Special Counsel, prior to the
filing thereof with the Commission, a copy of any Shelf Registration Statement,
and each amendment thereof and each amendment or supplement, if any, to the
Prospectus included therein and shall use its reasonable efforts to reflect in
each such document, when so filed with the Commission, such comments as Merrill
Lynch or the Special Counsel reasonably may propose.
(b) The Company shall ensure that (i) any Shelf Registration
Statement and any amendment thereto and any Prospectus forming part thereof and
any amendment or supplement thereto comply in all material respects with the
Act and the rules and regulations thereunder, (ii) any Shelf Registration
Statement and any amendment thereto does not, when it becomes effective,
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading and (iii) any Prospectus forming part of any Shelf Registration
Statement, and any amendment or supplement to such Prospectus, does not include
an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided that no
representation or agreement is made hereby with respect to information with
respect to you or any Holder required to be included in any Shelf Registration
Statement or Prospectus pursuant to the Act or the rules and regulations
thereunder or provided by you or any Holder.
(c) (1) The Company shall advise you and the Holders and, if
requested by you or any such Holder, confirm such advice in writing:
7
<PAGE> 8
(i) when the Shelf Registration Statement or any post-
effective amendment thereto has become effective; and
(ii) of any request by the Commission for amendments or
supplements to the Shelf Registration Statement or the Prospectus
included therein or for additional information.
(2) During any Selling Period, during the deferral of any
Selling Period and within two Business Days of receipt by the Company of
any Selling Notice, the Company shall notify you and the Notice Holders
and, if requested by you or any such Notice Holder, confirm such
notification in writing:
(i) of the issuance by the Commission of any stop order
suspending the effectiveness of the Shelf Registration Statement
or the initiation of any proceedings for that purpose;
(ii) of the receipt by the Company of any notification
with respect to the suspension of the qualification of the
Securities included in any Shelf Registration Statement for sale
in any jurisdiction or the initiation or threat of any proceeding
for such purpose;
(iii) of the happening of any event that requires the
making of any changes in the Shelf Registration Statement or the
Prospectus so that, as of such date, the statements therein are
not misleading and do not omit to state a material fact required
to be stated therein or necessary to make the statements therein
(in the case of the Prospectus, in light of the circumstances
under which they were made) not misleading; and
(iv) of the determination by the Company, in its
judgment, that it is advisable to suspend use of the Prospectus
for valid business reasons (not including avoidance of the
Company's obligations hereunder) including, among other things,
the acquisition or divestiture of assets, public filings with the
Commission, pending corporate developments and similar events;
which notice shall be accompanied by an instruction to defer the use of
the Prospectus until the Company delivers a Selling Confirmation
whereupon any existing Selling Period shall be deferred and shall
recommence upon delivery of the aforementioned Selling Confirmation;
provided, that such Selling Period shall be extended by the number of
days elapsed during any such period of deferral.
(d) The Company shall use all reasonable efforts to obtain the
withdrawal of any order suspending the effectiveness of any Shelf Registration
Statement at the earliest possible time, including filing an amendment to the
Shelf Registration Statement in a manner reasonably expected by the Company to
obtain the withdrawal of such order, or filing an additional Shelf
8
<PAGE> 9
Registration Statement covering all of the Registrable Securities (whereupon
references herein to the Shelf Registration Statement shall be deemed to
include reference to such additional filing).
(e) The Company shall furnish to each Holder of Registrable
Securities upon their written request, without charge, at least one copy of
such Shelf Registration Statement and any post-effective amendment thereto,
including financial statements and schedules, and, if the Holder so requests in
such writing, all exhibits (including those incorporated by reference).
(f) The Company shall, during the Shelf Registration Period, deliver
to each Holder of Securities or the Common Stock issued upon conversion thereof
included within the coverage of any Shelf Registration Statement, without
charge, as many copies of the Prospectus included in such Shelf Registration
Statement and any amendment or supplement thereto as such Holder may reasonably
request; and, except during such periods as the Company shall have suspended
the use of the Prospectus pursuant to Section 2(b)(ii) or 3(c)(2), the Company
consents to the use of the Prospectus or any amendment or supplement thereto by
each of the selling Holders in connection with the offering and sale of the
Securities or the Common Stock issued upon conversion thereof covered by the
Prospectus or any amendment or supplement thereto.
(g) Prior to any offering of Securities or the Common Stock issued
upon conversion thereof pursuant to any Shelf Registration Statement, the
Company shall register or qualify or cooperate with the Holders of Securities
or the Common Stock issued upon conversion thereof included therein and their
respective counsel in connection with the registration or qualification of such
Securities or Common Stock for offer and sale under the securities or blue sky
laws of such jurisdictions as any such Holders reasonably request in writing
and do any and all other acts or things necessary or advisable to enable the
offer and sale in such jurisdictions of the Securities and the Common Stock
issued upon conversion thereof covered by such Shelf Registration Statement;
provided, however, that the Company will not be required to qualify generally
to do business in any jurisdiction where it is not then so qualified or to take
any action which would subject it to general service of process or to taxation
in any such jurisdiction where it is not then so subject.
(h) The Company shall cooperate with the Holders to facilitate the
timely preparation and delivery of certificates representing Securities or the
Common Stock issued upon conversion thereof sold pursuant to any Shelf
Registration Statement free of any restrictive legends and in such
denominations and registered in such names as Holders may request.
(i) Upon the occurrence of any event contemplated by paragraph
(c)(2)(iii) above, the Company shall promptly prepare a post-effective
amendment to any Shelf Registration Statement or an amendment or supplement to
the related Prospectus or file any other required document so that, as
thereafter delivered (when and as permitted pursuant to Section 2(c)) to
purchasers of the Securities or the Common Stock issued upon conversion thereof
included therein, the Prospectus will not include an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
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<PAGE> 10
(j) At such time as any of the Securities are no longer "restricted
securities", the Company shall take such actions as may be necessary to
provide, as soon as practicable, a separate CUSIP number for such Securities
and to cause such CUSIP number to be assigned to such Securities (or to the
maximum aggregate principal amount of the Securities to which such number may
be assigned). Upon compliance with the foregoing requirements of this Section
3(j), the Company shall provide the Trustee, upon request, with printed
certificates for such Securities, in a form eligible for deposit with DTC.
(k) The Company shall use all reasonable efforts to comply with all
applicable rules and regulations of the Commission and shall make generally
available to its security holders as soon as practicable after the effective
date of the applicable Shelf Registration Statement an earnings statement
satisfying the provisions of Section 11(a) of the Act and Rule 158 promulgated
by the Commission thereunder.
(l) The Company shall use all reasonable efforts to cause the
Indenture to be qualified under the Trust Indenture Act in a timely manner.
(m) The Company may require each Holder of Securities or the Common
Stock issued upon conversion thereof to be sold pursuant to any Shelf
Registration Statement to furnish to the Company such information regarding the
Holder and the distribution of such Securities or Common Stock as may, from
time to time, be required by the Act and the rules and regulations promulgated
thereunder (including the information specified in Item 507 of Regulation S-K
under the Act), and the obligations of the Company to any Holder hereunder
shall be expressly conditioned on the compliance of such Holder with such
request.
(n) The Company shall, if requested, use its reasonable efforts to
promptly incorporate in a Prospectus supplement or post-effective amendment to
a Shelf Registration Statement such information as a Holder may provide from
time to time to the Company in writing for inclusion in a Prospectus or any
Shelf Registration Statement concerning such Holder and the distribution of
such Holder's Securities and Common Stock and, in either case, shall make all
required filings of such Prospectus supplement or post-effective amendment as
soon as practicable after being notified of the matters to be incorporated in
such Prospectus supplement or post-effective amendment.
(o) The Company shall enter into such agreements and take all other
appropriate actions in order to expedite or facilitate the registration or the
disposition of the Securities or the Common Stock issuable upon conversion
thereof; provided, however, that the Company shall not be required to enter
into an underwriting agreement in connection with any such disposition.
(p) Each Holder of Registrable Securities agrees by acquisition of
such Registrable Securities that (i) such Holder will promptly (and in any case
within two business days after completion of such sale or distribution) notify
the Company following any sale of Registrable Securities under a Shelf
Registration and (ii) upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 3(c)(2)(i),
3(c)(2)(ii), 3(c)(2)(iii) or
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<PAGE> 11
3(c)(2)(iv) hereof, such Holder will forthwith discontinue disposition of such
Registrable Securities covered by such Registration Statement or Prospectus and
will not resume disposition of such Registrable Securities until such Holder's
receipt of one or more copies of a supplemented or amended Prospectus
contemplated by Section 3(f) hereof, or until it is advised in writing by the
Company that the use of the applicable Prospectus may be resumed and has
received copies of the Prospectus and any additional or supplemental filings
that are incorporated or deemed to be incorporated by reference in such
Prospectus.
4. Registration Expenses. The Company shall pay all fees and
expenses incurred by it or the Initial Purchasers incident to the performance
of or compliance with this Agreement by the Company including, without
limitation, (i) all Commission, stock exchange or National Association of
Securities Dealers, Inc. registration and filing fees, (ii) all fees and
expenses incurred in connection with compliance with state securities or Blue
Sky laws (including reasonable fees and disbursements of counsel for any
holders in connection with Blue Sky qualification of any of the Registrable
Securities), (iii) all expenses in preparing or assisting in preparing,
printing and distributing any Registration Statement, any Prospectus, any
amendments or supplements thereto, other documents relating to the Company's
performance of and compliance with this Agreement, and (iv) all rating agency
fees but excluding fees of any special accountants retained by the Holders,
counsel to the Holders other than the Special Counsel and underwriting
discounts and commissions and transfer taxes, if any, relating to the sale or
disposition of Registrable Securities by a Holder thereof.
5. Indemnification.
(a)(i) In connection with any Shelf Registration Statement, the Company
agrees to indemnify and hold harmless each Holder of Securities or Common Stock
issued upon conversion thereof covered thereby (including the Initial
Purchasers), the directors, officers, employees and agents of each such Holder
and each person who controls any such Holder within the meaning of either the
Act or the Exchange Act against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become subject
under the Act, the Exchange Act or other Federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact contained
in the Shelf Registration Statement as originally filed or in any amendment
thereof, or in any preliminary Prospectus or Prospectus, or in any amendment
thereof or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and agrees
to reimburse each such indemnified party, as incurred, for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company will not be liable in any case to the extent that any such
loss, claim, damage or liability arises out of or is based upon (A) any such
untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written information
furnished to the Company by or on behalf of any such Holder or any Initial
Purchaser, (B) use of a Shelf Registration Statement or
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<PAGE> 12
the related Prospectus during a period when a stop order has been issued in
respect of such Shelf Registration or any proceedings for that purpose have
been initiated or use of a Prospectus when use of such Prospectus has been
deferred pursuant to Section 2(c) or 3(c)(2); provided, further, in each case,
that the Company delivered prior notice in accordance with Section 6(c) hereof
of such stop order, initiation of proceedings or deferral or (C) if the Holder
fails to deliver a Prospectus or the then current Prospectus. This indemnity
agreement will be in addition to any liability which the Company may otherwise
have.
(b) Each Holder of Securities or Common Stock issued upon conversion
thereof covered by a Shelf Registration Statement (including the Initial
Purchasers) severally agrees to indemnify and hold harmless the Company, its
directors, officers, employees and agents and each person who controls the
Company within the meaning of either the Act or the Exchange Act to the same
extent as the foregoing indemnity from the Company to each such Holder, but
only with reference to written information relating to such Holder furnished to
the Company by or on behalf of such Holder. This indemnity agreement will be
in addition to any liability which any such Holder may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
5 of notice of the commencement of any action, such indemnified party will, if
a claim in respect thereof is to be made against the indemnifying party under
this Section 5, notify the indemnifying party in writing of the commencement
thereof; but the failure so to notify the indemnifying party (i) will not
relieve it from liability under paragraph (a) or (b) above unless and to the
extent it did not otherwise learn of such action and such failure results in
the forfeiture by the indemnifying party of substantial rights and defenses and
(ii) will not, in any event, relieve the indemnifying party from any
obligations to any indemnified party other than the indemnification obligation
provided in paragraph (a) or (b) above. The indemnifying party shall be
entitled to appoint counsel of the indemnifying party's choice at the
indemnifying party's expense to represent the indemnified party in any action
for which indemnification is sought (in which case the indemnifying party shall
not thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be satisfactory to the indemnified
party. Notwithstanding the indemnifying party's election to appoint counsel to
represent the indemnified party in an action, the indemnified party shall have
the right to employ separate counsel (including local counsel), and the
indemnifying party shall bear the reasonable fees, costs, and expenses of such
separate counsel (and local counsel) if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such
counsel with a conflict of interest, (ii) the actual or potential defendants
in, or targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, (iii) the indemnifying party shall not have employed
counsel satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of the institution of such action
or (iv) the indemnifying party shall authorize the indemnified party to employ
separate counsel at the expense of the indemnifying party; provided further,
that the indemnifying party shall not be responsible for the fees and expenses
of more than one separate
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<PAGE> 13
counsel (together with appropriate local counsel) representing all the
indemnified parties under paragraph (a)(i), paragraph (a)(ii) or paragraph (b)
above. An indemnifying party will not, without the prior written consent of
the indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification may be sought hereunder (whether
or not the indemnified parties are actual or potential parties to such claim or
action) unless such settlement, compromise or consent includes an unconditional
release of each indemnified party from all liability arising out of such claim,
action, suit or proceeding.
(d) The provisions of this Section 5 will remain in full force and
effect, regardless of any investigation made by or on behalf of any Holder or
the Company or any of the officers, directors or controlling persons referred
to in Section 5 hereof, and will survive the sale by a Holder of Securities
covered by a Shelf Registration Statement.
6. Miscellaneous.
(a) No Inconsistent Agreements. The Company has not, as of the date
hereof, entered into nor shall it, on or after the date hereof, enter into, any
agreement with respect to its Securities that is inconsistent with the rights
granted to the Holders herein or otherwise conflicts with the provisions
hereof.
(b) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, qualified,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the Company has obtained the written
consent of the Majority Holders; provided that, with respect to any matter that
directly or indirectly affects the rights of the Initial Purchasers hereunder,
the Company shall obtain the written consent of the Initial Purchasers
originally purchasing more than a majority of the Securities against which such
amendment, qualification, supplement, waiver or consent is to be effective.
Notwithstanding the foregoing (except the foregoing proviso), a waiver or
consent to departure from the provisions hereof with respect to a matter that
relates exclusively to the rights of Holders whose Securities are being sold
pursuant to a Shelf Registration Statement and that does not directly or
indirectly affect the rights of other Holders may be given by the Majority
Holders, determined on the basis of Securities being sold rather than
registered under such Shelf Registration Statement.
(c) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class
mail, telex, telecopier, or air courier guaranteeing overnight delivery:
1. if to you, initially at the address set forth in the
Purchase Agreement;
2. if to any other Holder, at the most current address given
by such Holder to the Company in accordance with the
provisions of this Section 6(c), which address initially
is, with respect to each Holder, the address of such
Holder
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<PAGE> 14
maintained by the Registrar under the Indenture, with a
copy in like manner to Merrill Lynch; and
3. if to the Company, initially at its address set forth in
the Purchase Agreement.
All such notices and communications shall be deemed to have been duly
given when received, if delivered by hand or air courier, and when sent, if
sent by first-class mail, telex or telecopier.
The Initial Purchasers or the Company by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
(d) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including, without the need for an express assignment or any consent
by the Company thereto, subsequent Holders. The Company hereby agrees to
extend the benefits of this Agreement to any Holder and any such Holder may
specifically enforce the provisions of this Agreement as if an original party
hereto.
(e) Counterparts. This agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York applicable to agreements
made and to be performed in said State, without regard to the conflicts of law
rules thereof.
(h) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances,
is held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way impaired
or affected thereby, it being intended that all of the rights and privileges of
the parties shall be enforceable to the fullest extent permitted by law.
(i) Securities Held by the Company, etc. Whenever the consent or
approval of Holders of a specified percentage of principal amount of Securities
or the Common Stock issuable upon conversion thereof is required hereunder,
Securities or the Common Stock issued upon conversion thereof held by the
Company or its Affiliates (other than subsequent Holders of Securities or the
Common Stock issued upon conversion thereof if such subsequent Holders are
deemed to be Affiliates solely by reason of their holdings of such Securities)
shall not be counted in determining whether such consent or approval was given
by the Holders of such required percentage.
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<PAGE> 15
Please confirm that the foregoing correctly sets forth the agreement
between the Company and you.
Very truly yours,
EINSTEIN/NOAH BAGEL CORP.
/s/ PAUL A. STRASEN
-----------------------------
Name: Paul A. Strasen
Title: Senior Vice President
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
MERRILL LYNCH, & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
ALEX. BROWN & SONS INCORPORATED
MORGAN STANLEY & CO. INCORPORATED
BY: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
/s/ BRADLEY JONES
- -----------------------------------------------
Authorized Signatory
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<PAGE> 1
_________________________
Einstein/Noah Bagel Corp.
7 1/4% Convertible Subordinated Debentures
due 2004
___________________
INDENTURE
Dated as of May 29, 1997
__________________
Bankers Trust Company
Trustee
_________________________
<PAGE> 2
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Indenture
TIA Section Section
- ----------- -----------
<S> <C> <C>
Section 310(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.10
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.10
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.**
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.10
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.8; 9.10
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
Section 311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.11
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.11
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
Section 312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.3
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.3
Section 313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.6
(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.6
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.6; 12.2
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.6
Section 314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2; 6.4;
12.2
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.4(a)
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.4(a)
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.4(b)
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
Section 315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.1(b)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.5; 12.2
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.1(a)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.1(c)
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.11
Section 316(a)(last sentence) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.9
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.5
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.4
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.7
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.5
Section 317(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.8
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.9
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4
Section 318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.1
</TABLE>
* This Cross-Reference Table shall not, for any purpose, be deemed a part of
this Indenture.
** N.A. means Not Applicable.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2 Other Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 1.3 Trust Indenture Act Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 1.4 Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 2. THE SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.1 Form and Dating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.2 Execution and Authentication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.3 Registrar, Paying Agent and Conversion Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.4 Paying Agent to Hold Money In Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.5 Securityholder Lists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.6 Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.7 Replacement Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.8 Outstanding Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.9 Treasury Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 2.10 Temporary Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 2.11 Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.12 Global Securities; Temporary Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 3. REDEMPTION AND PURCHASES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 3.1 Right to Redeem; Notice to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 3.2 Selection of Securities to Be Redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 3.3 Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 3.4 Effect of Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 3.5 Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 3.6 Securities Redeemed in Part . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 3.7 Conversion Arrangement on Call for Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 3.8 Purchase of Securities at Option of the Holder Upon Change in Control . . . . . . . . . . . . . . 28
SECTION 3.9 Effect of Change in Control Purchase Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 3.10 Deposit of Change in Control Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 3.11 Securities Purchased In Part . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 3.12 Compliance With Securities Laws Upon Purchase of Securities . . . . . . . . . . . . . . . . . . . 33
SECTION 3.13 Repayment to the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE 4. CONVERSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 4.1 Conversion Privilege . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 4.2 Conversion Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 4.3 Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 4.4 Taxes on Conversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 4.5 Company to Provide Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 4.6 Adjustment of Conversion Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 4.7 No Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 4.8 Adjustment for Tax Purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 4.9 Notice of Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 4.10 Notice of Certain Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 4.11 Effect of Reclassification, Consolidation, Merger or Sale on Conversion Privilege . . . . . . . . 42
</TABLE>
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<TABLE>
<S> <C>
SECTION 4.12 Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 4.13 Voluntary Reduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE 5. SUBORDINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 5.1 Securities Subordinated to Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 5.2 Securities Subordinated to Prior Payment of All Senior Indebtedness on Dissolution, Liquidation,
Reorganization, Etc., of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 5.3 Securityholders to Be Subrogated to Right of Holders of Senior Indebtedness . . . . . . . . . . . 46
SECTION 5.4 Obligations of the Company Unconditional . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 5.5 Company Not to Make Payment With Respect to Securities in Certain Circumstances . . . . . . . . . 47
SECTION 5.6 Notice to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 5.7 Application by Trustee of Monies Deposited With It . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 5.8 Subordination Rights Not Impaired by Acts or Omissions of Company or Holders of Senior
Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 5.9 Trustee to Effectuate Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 5.10 Right of Trustee to Hold Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 5.11 Article 5 Not to Prevent Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 5.12 No Fiduciary Duty Created to Holders of Senior Indebtedness . . . . . . . . . . . . . . . . . . . 51
SECTION 5.13 Article Applicable to Paying Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE 6. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 6.1 Payment of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 6.2 SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 6.3 Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 6.4 Compliance Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 6.5 Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 6.6 Further Instruments and Acts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
ARTICLE 7. SUCCESSOR CORPORATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 7.1 When Company May Merge, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 7.2 Successor Corporation Substituted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
ARTICLE 8. DEFAULT AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 8.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 8.2 Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 8.3 Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 8.4 Waiver of Defaults and Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 8.5 Control by Majority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 8.6 Limitations on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 8.7 Rights of Holders to Receive Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 8.8 Collection Suit by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 8.9 Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 8.10 Priorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 8.11 Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 8.12 Waiver of Usury, Stay or Extension Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
ARTICLE 9. TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 9.1 Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
</TABLE>
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<TABLE>
<S> <C>
SECTION 9.2 Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 9.3 Individual Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 9.4 Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 9.5 Notice of Default or Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 9.6 Reports by Trustee to Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 9.7 Compensation and Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 9.8 Replacement of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 9.9 Successor Trustee by Merger, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 9.10 Eligibility; Disqualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 9.11 Preferential Collection of Claims Against Company . . . . . . . . . . . . . . . . . . . . . . . . 66
ARTICLE 10. SATISFACTION AND DISCHARGE OF INDENTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 10.1 Termination of Company's Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 10.2 Application of Trust Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 10.3 Repayment to Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 10.4 Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
ARTICLE 11. AMENDMENTS, SUPPLEMENTS AND WAIVERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 11.1 Without Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 11.2 With Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 11.3 Compliance With Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 11.4 Revocation and Effect of Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 11.5 Notation on or Exchange of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 11.6 Trustee to Sign Amendments, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
ARTICLE 12. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 12.1 Trust Indenture Act Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 12.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 12.3 Communications by Holders With Other Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 12.4 Certificate and Opinion as to Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 12.5 Record Date for Vote or Consent of Securityholders . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 12.6 Rules by Trustee, Paying Agent, Registrar, Conversion Agent . . . . . . . . . . . . . . . . . . . 73
SECTION 12.7 Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 12.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 12.9 No Adverse Interpretation of Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 12.10 No Recourse Against Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 12.11 Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 12.12 Multiple Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 12.13 Separability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 12.14 Table of Contents, Headings, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
</TABLE>
<PAGE> 6
INDENTURE dated as of May 29, 1997 between Einstein/Noah Bagel Corp.,
a Delaware corporation (the "Company"), and Bankers Trust Company, a banking
corporation duly organized and existing under the laws of the state of New
York, as Trustee (the "Trustee").
Both parties agree as follows for the benefit of the other and for the
equal and ratable benefit of the registered holders of the Company's 7 1/4%
Convertible Subordinated Debentures due 2004.
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 Definitions
"Affiliate" of any specified person means any other person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified person. For the purposes of this definition,
"control" when used with respect to any person means the power to direct the
management and policies of such person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agent" means any Registrar, Paying Agent or Conversion Agent.
"Applicable Procedures" means, with respect to any transfer or
exchange of beneficial ownership interests in a global Security, the rules and
procedures of the DTC, Euroclear and Cedel that are applicable to such transfer
or exchange.
"Board of Directors" means the Board of Directors of the Company or
any authorized committee of the Board of Directors.
"Business Day" means a day that is not a Legal Holiday.
"Capitalized Lease Obligation" means indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with generally accepted accounting principles;
the amount of such indebtedness shall be the capitalized amount of such
obligations determined in accordance with such principles.
"Cash" or "cash" means such coin or currency of the United States as
at any time of payment is legal tender for the payment of public and private
debts.
<PAGE> 7
"Cedel" means Centrale de Livraison de Valeurs Mobilieres, S.A., or
its successor.
"Certificated Securities" means Securities that are in the form of the
Securities attached hereto as Exhibit A- 1, that do not include the information
called for by footnotes 1 and 2 thereof.
"Common Stock" means the common stock of the Company, $.01 par value,
as it exists on the date of this Indenture 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.
"Corporate Trust Office" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be administered
which office at the date of the execution of this Indenture is located at Four
Albany Street, New York, New York 10006, Attention: Corporate Trust and Agency
Group - Corporate Market Services or at any other time at such other address as
the Trustee may designate from time to time by notice to the Company.
"Default" or "default" means any event which is, or after notice or
passage of time, or both, would be an Event of Default.
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
Office, or its successor as operator of the Euroclear System.
"global Securities" means, individually and collectively, the
Regulation S Temporary Global Security, the Regulation S Permanent Global
Security and the Restricted Global Security.
"Holder" or "Securityholder" means the person in whose name a Security
is registered on the Registrar's books.
"Indenture" means this Indenture as amended or supplemented from time
to time pursuant to the terms of this Indenture.
"Officer" means the Chairman or any Co-Chairman of the Board, any Vice
Chairman of the Board, the President, any Vice President, the Chief Financial
Officer, the Secretary or any Assistant Secretary of the Company.
"Officers' Certificate" means a certificate signed by two Officers;
provided, however, that for purposes of Section 6.4, "Officers' Certificate"
means a certificate signed by the
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<PAGE> 8
principal executive officer, principal financial officer or principal
accounting officer of the Company.
"Opinion of Counsel" means a written opinion from legal counsel. The
counsel may be an employee of or counsel to the Company or the Trustee.
"Person" or "person" means any individual, corporation, limited
liability company, partnership, joint venture, association, joint-stock
company, trust, or any other entity or organization, including a government or
political subdivision or instrumentality thereof.
"Principal" or "principal" of a debt security, including the
Securities, means the principal of the security plus, when appropriate, the
premium, if any, on the security.
"Redemption Date" or "redemption date," when used with respect to any
Security to be redeemed, means the date fixed for such redemption pursuant to
this Indenture.
"Redemption Price" or "redemption price," when used with respect to
any Security to be redeemed, means the price fixed for such redemption pursuant
to this Indenture, as set forth in the form of Security annexed as Exhibit A-1
hereto.
"Regulation S" means Regulation S promulgated under the Securities
Act.
"Regulation S Global Security" means a Regulation S Temporary Global
Security or Regulation S Permanent Global Security, as appropriate.
"Regulation S Permanent Global Security" means a permanent global
Security that contains the paragraph referred to in footnote 1 and the
additional schedule referred to in footnote 2 to the form of the Security
attached hereto as Exhibit A-1, and that is deposited with and registered in
the name of the Depositary, representing the Securities sold in reliance on
Regulation S.
"Regulation S Temporary Global Security" means a single temporary
global Security in the form of the Security attached hereto as Exhibit A-2 that
is deposited with and registered in the name of the Depositary, representing
Securities sold in reliance on Regulation S.
"Restricted Global Security" means a permanent global Security that
contains the paragraph referred to in footnote 1 and the additional schedule
referred to in footnote 2 to the form
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<PAGE> 9
of the Security attached hereto as Exhibit A-1, and that is deposited with and
registered in the name of the Depositary.
"SEC" or "Commission" means the Securities and Exchange Commission.
"Securities" means the 7 1/4% Convertible Subordinated Debentures due
2004 or any of them (each, a "Security"), as amended or supplemented from time
to time, that are issued under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Indebtedness" means the following: (a) the principal of and
premium, if any, and interest (including, without limitation, any interest
accruing subsequent to the filing of a petition or other action concerning
bankruptcy or other similar proceedings, whether or not constituting an allowed
claim in any such proceedings) on, and fees, costs, enforcement expenses
(including legal fees and disbursements), collateral protection expenses and
other reimbursement or indemnity obligations in respect of, the following,
whether presently outstanding or hereafter incurred or created: all
indebtedness or obligations of the Company to any person, including, but not
limited to, banks and other lending institutions, for money borrowed (other
than that evidenced by the Securities) or in respect of credit or other banking
facilities and which is evidenced by a note, bond, debenture, loan agreement, a
lease intended as security or similar instrument or agreement (including
purchase money obligations with an original maturity in excess of one year and
noncontingent obligations to reimburse any bank or other person in respect of
amounts paid under letters of credit); (b) commitment or standby fees due and
payable to lending institutions with respect to credit facilities available to
the Company; (c) all noncontingent obligations of the Company (i) for the
reimbursement of any obligor on any letter of credit, banker's acceptance or
similar credit transaction, (ii) under interest rate swaps, caps, collars,
options and similar arrangements, and (iii) under any foreign exchange
contract, currency swap agreement, futures contract, currency option contract,
or other foreign currency hedge; (d) all obligations of the Company for the
payment of money relating to a Capitalized Lease Obligation; (e) any
liabilities of others described in the preceding clauses (a), (b), (c) and (d)
which the Company has guaranteed or which are otherwise its legal liability;
and (f) renewals, extensions, refundings, restructurings, amendments and
modifications of any such indebtedness or guarantee. Notwithstanding anything
to the contrary in this Indenture or the Securities, "Senior Indebtedness"
shall not include (x) any particular indebtedness, lease, fee, obligation,
renewal,
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<PAGE> 10
extension, refunding, restructuring, amendment or modification if, under the
express provisions of the instrument creating or evidencing the same, or
pursuant to which the same is outstanding, such indebtedness, lease, fee,
obligation, renewal, extension, refunding, restructuring, amendment or
modification thereof is stated to be not superior in right of payment to the
Securities, (y) indebtedness of the Company (i) owing, directly or indirectly,
to any person under or in respect of any employee benefit plan of the Company,
(ii) owing, directly or indirectly, to any employee of the Company or any
Affiliate of the Company, or (iii) owing, directly or indirectly, to Boston
Chicken, Inc. and (z) the Securities.
"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.
"TIA" means the Trust Indenture Act of 1939, as amended by the Trust
Indenture Reform Act of 1990 and as in effect on the date of this Indenture,
except as provided in Section 11.3, and except to the extent any amendment to
the Trust Indenture Act expressly provides for application of the Trust
Indenture Act as in effect on another date.
"Trading Day" means, with respect to any security, each Monday,
Tuesday, Wednesday, Thursday and Friday, other than any day on which securities
are not generally traded on the exchange or market in which such security is
traded.
"Trustee" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture, and
thereafter means the successor.
"Trust Officer" means, with respect to the Trustee, any officer
assigned to the Corporate Trust Office, including any managing director, vice
president, assistant vice president, assistant treasurer, assistant secretary
or any other officer of the Trustee customarily performing functions similar to
those performed by any of the above- designated officers and having direct
responsibility for the administration of this Indenture, and also, with respect
to a particular matter, any other officer, to whom such matter is referred
because of such officer's knowledge of and familiarity with the particular
subject.
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<PAGE> 11
SECTION 1.2 Other Definitions
<TABLE>
<CAPTION>
TERM DEFINED IN SECTION
<S> <C>
"Agent Members" 2.1
"Bankruptcy Law" 8.1
"Change in Control" 3.8
"Change in Control Purchase Date" 3.8
"Change in Control Purchase Notice" 3.8
"Change in Control Purchase Price" 3.8
"Company Order" 2.2
"Conversion Agent" 2.3
"Conversion Date" 4.2
"Conversion Price" 4.6
"Conversion Shares" 4.6
"Custodian" 8.1
"DTC" 2.1
"Default Notice" 5.5
"Depositary" 2.1
"Determination Date" 4.6
"Distribution Date" 4.6
"Event of Default" 8.1
"Exchange Act" 3.8
"Legal Holiday" 12.7
"Paying Agent" 2.3
"Registrar" 2.3
"Rights" 4.6
"Transfer Restricted Security" 2.12
"Triggering Distribution" 4.6
"Unissued Shares" 3.8
"U.S. Government Obligations" 10.1
</TABLE>
SECTION 1.3 Trust Indenture Act Provisions
Whenever this Indenture refers to a provision of the TIA, that
provision is incorporated by reference in and made a part of this Indenture.
The Indenture shall also include those provisions of 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;
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<PAGE> 12
"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.
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- 1, 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, the form of the Securities and any
notation, legend or endorsement thereon. Each Security shall be dated the date
of its authentication. The Securities are being offered and sold by the
Company pursuant to a Purchase Agreement, dated May 22, 1997, between the
Company and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated,
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<PAGE> 13
Alex. Brown & Sons Incorporated and Morgan Stanley & Co. Incorporated.
(a) Restricted Global Securities. Securities offered and sold
within the United States to qualified institutional buyers as defined in Rule
144A (collectively, "QIBS" or individually a "QIB") in reliance on Rule 144A
under the Securities Act shall be issued, initially in the form of a Restricted
Global Security, which shall be deposited on behalf of the purchasers of the
Securities represented thereby with and registered in the name of The
Depository Trust Company ("DTC") or the nominee thereof (such depositary, or
any successor thereto, and any such nominee being hereinafter referred to as
the "Depositary"), duly executed by the Company and authenticated by the
Trustee as hereinafter provided. The aggregate principal amount of the
Restricted Global Security may from time to time be increased or decreased by
adjustments made on the records of the Trustee and the Depositary as
hereinafter provided.
(b) Regulation S Global Securities. Securities offered and sold
in reliance on Regulation S shall be issued initially in the form of the
Regulation S Temporary Global Security, which shall be deposited on behalf of
the purchasers of the Securities represented thereby with the Trustee, at its
Corporate Trust Office, as custodian for the Depositary, and registered in the
name of Cede & Co., duly executed by the Company and authenticated by the
Trustee as hereinafter provided. The "40-day restricted period" (as defined in
Regulation S) shall be terminated upon the receipt by the Trustee of (i) a
written certificate from the Depositary certifying that it has received
certification of non- United States beneficial ownership of 100% of the
aggregate principal amount of the Regulation S Temporary Global Security
(except to the extent of any beneficial owners thereof who acquired an interest
therein pursuant to another exemption from registration under the Securities
Act and who will take delivery of a beneficial ownership interest in a
Restricted Global Security, all as contemplated by Section 2.12(a)(ii) hereof),
and (ii) an Officers' Certificate from the Company. Following the termination
of the 40-day restricted period, beneficial interests in the Regulation S
Temporary Global Security shall be exchanged for beneficial interests in
Regulation S Permanent Global Securities pursuant to the Applicable Procedures.
Simultaneously with the authentication of Regulation S Permanent Global
Securities, the Trustee shall cancel the Regulation S Temporary Global
Security. The aggregate principal amount of the Regulation S Temporary Global
Security and the Regulation S Permanent Global Securities may from time to time
be increased or decreased by adjustments made on the records of the Trustee and
the Depositary, as the case may be, in connection with transfers of interest as
hereinafter provided.
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<PAGE> 14
(c) Global Securities in General. Each global Security shall
represent such of the outstanding Securities as shall be specified therein and
each shall provide that it shall represent the aggregate amount of outstanding
Securities from time to time endorsed thereon and that the aggregate amount of
outstanding Securities represented thereby may from time to time be reduced or
increased, as appropriate, to reflect exchanges and redemptions. Any
endorsement of a global Security to reflect the amount of any increase or
decrease in the amount of outstanding Securities represented thereby shall be
made by the Trustee in accordance with instructions given by the Holder thereof
as required by Section 2.12 hereof.
(d) Book-Entry Provisions. This Section 2.1(d), shall apply only
to Restricted Global Securities and the Registration S Permanent Global
Securities deposited with or on behalf of the Depositary.
The Company shall execute and the Trustee shall, in accordance with
this Section 2.1(d), authenticate and deliver initially one or more global
Securities that (a) shall be registered in the name of the Depositary, (b)
shall be delivered by the Trustee to the Depositary or pursuant to the
Depositary's instructions and (c) shall bear legends substantially to the
following effect:
"UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE COMPANY
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME
OF CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND
ANY PAYMENT HEREON IS MADE TO CEDE & CO.), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE &
CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS, IN WHOLE BUT NOT IN PART, TO NOMINEES OF THE
DEPOSITORY TRUST COMPANY OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH
THE RESTRICTIONS SET FORTH IN ARTICLE TWO OF THE INDENTURE
REFERRED TO ON THE REVERSE HEREOF."
Members of, or participants in, the Depositary ("Agent Members") shall
have no rights under this Indenture with respect to any global Security held on
their behalf by the Depositary or under the global Security, and the Depositary
may be treated by
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<PAGE> 15
the Company, the Trustee and any agent of the Company or the Trustee as the
absolute owner of such global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall (A) prevent the Company,
the Trustee or any agent of the Company or the Trustee from giving effect to
any written certification, proxy or other authorization furnished by the
Depositary or (B) impair, as between the Depositary and its Agent Members, the
operation of customary practices governing the exercise of the rights of a
holder of any Security.
(e) Certificated Securities. Securities issued to accredited
investors as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act ("Accredited Investors") who are not QIBS and other Securities not issued
as interests in the global Securities will be issued in certificated form
substantially in the form of Exhibit A-1 attached hereto (but without including
the text referred to in the footnotes 1 and 2 thereto).
SECTION 2.2 Execution and Authentication
Two Officers shall sign the Securities for the Company by manual or
facsimile signature. The Company's seal shall be reproduced on the Securities.
Typographic and other minor errors or defects in any such reproduction of the
seal or any such 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
$125,000,000 (plus up to an additional $18,750,000 issued pursuant to the
exercise of the over-allotment option described in Section 2(b) of that certain
Purchase Agreement dated May 22, 1997 between the Company and Merrill Lynch &
Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Alex. Brown & Sons
Incorporated and Morgan Stanley & Co. Incorporated 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
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<PAGE> 16
outstanding at any time may not exceed $125,000,000, except as provided above
and in Section 2.7.
The Trustee shall act as the initial authenticating agent.
Thereafter, the Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities. An authenticating agent may authenticate
Securities whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent 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 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
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<PAGE> 17
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 or interest on any Securities,
segregate the money and hold it as a separate trust fund. The Company at any
time may require a Paying Agent to pay all money held by it to the Trustee and
the Trustee may at any time during the continuance of any default, upon written
request to a Paying Agent, require such Paying Agent to forthwith pay to the
Trustee all sums so held in trust by such Paying Agent. Upon doing so, the
Paying Agent (other than the Company) shall have no further liability for the
money.
SECTION 2.5 Securityholder Lists
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Securityholders. If the Trustee is not the Registrar, the Company shall
furnish to the Trustee on or before each semiannual interest payment date and
at such other times as the Trustee may request in writing a list in such form
and as of such date as the Trustee may reasonably require of the names and
addresses of Securityholders.
SECTION 2.6 Transfer and Exchange
(a) 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.
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<PAGE> 18
Neither the Company, the Registrar nor the Trustee shall be required
to exchange or register a transfer of (a) any Securities for a period of 15
days next preceding any selection of Securities to be redeemed, (b) any
Securities or portions thereof selected or called for redemption (except, in
the case of redemption of a Security in part, the portion not to be redeemed)
or (c) any Securities or portions thereof in respect of which a Change in
Control Purchase Notice has been delivered and not withdrawn by the Holder
thereof (except, in the case of the purchase of a Security in part, the portion
not to be purchased).
All Securities issued upon any transfer or exchange of Securities
shall be valid obligations of the Company, evidencing the same debt and
entitled to the same benefits under this Indenture as the Securities
surrendered upon such transfer or exchange.
(b) Notwithstanding any provision to the contrary herein, so long
as a global Security remains outstanding and is held by or on behalf of the
Depositary, transfers of a global Security, in whole or in part, shall be made
only in accordance with Section 2.12 and this Section 2.6(b). Transfers of a
global Security shall be limited to transfers of such global Security in whole,
or in part, to nominees of the Depositary or to a successor of the Depositary
or such successor's nominee.
(c) Successive registrations and registrations of transfers and
exchanges as aforesaid may be made from time to time as desired, and each such
registration shall be noted on the register for the Securities.
(d) Any Registrar appointed pursuant to Section 2.3 hereof shall
provide to the Trustee such information as the Trustee may reasonably require
in connection with the delivery by such Registrar of Securities upon transfer
or exchange of Securities.
(e) No Registrar shall be required to make registrations of
transfer or exchange of Securities during any periods designated in the text of
the Securities or in this Indenture as periods during which such registration
of transfers and exchanges need not be made.
(f) If Securities are issued upon the transfer, exchange or
replacement of Securities subject to restrictions on transfer and bearing the
legends set forth on the form of Security attached hereto as Exhibit A-1
setting forth such restrictions (collectively, the "Legend"), or if a request
is made to remove the Legend on a Security, the Securities so issued shall bear
the Legend, or the Legend shall not be removed, as the case may be, unless (i)
there is delivered to the Company and the Registrar such reasonably
satisfactory evidence, which shall include an
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<PAGE> 19
Opinion of Counsel, as may be reasonably required by the Company and the
Registrar, that neither the Legend nor the restrictions on transfer set forth
therein are required to ensure that transfers thereof comply with the
provisions of Rule 144A, Rule 144 or Regulation S under the Securities Act or
that such Securities are not "restricted" within the meaning of Rule 144 under
the Securities Act. Upon provision of such reasonably satisfactory evidence,
the Trustee, at the written direction of the Company, shall authenticate and
deliver a Security that does not bear the Legend. If a Legend is removed from
the face of a Security and the Security is subsequently held by an Affiliate of
the Company, the Legend shall be reinstated.
SECTION 2.7 Replacement Securities
If any mutilated Security is surrendered to the Company, the Registrar
or the Trustee, or the Company, the Registrar and the Trustee receive evidence
to their satisfaction of the destruction, loss or theft of any Security, and
there is delivered to the Company, the Registrar and the Trustee such Security
or indemnity as may be required by them to save each of them harmless, then, in
the absence of notice to the Company, the Registrar or the Trustee that such
Security has been acquired by a bona fide purchaser, the Company shall execute,
and upon its written request the Trustee shall authenticate and deliver, in
exchange for any such mutilated Security or in lieu of any such destroyed, lost
or stolen Security, a new Security of like tenor and principal amount, bearing
a number not contemporaneously outstanding.
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.
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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 cancelled 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
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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 cancelled Securities to the Company. The Company may not
issue new Securities to replace Securities it has paid or delivered to the
Trustee for cancellation or that any Holder has converted pursuant to Article 4.
SECTION 2.12 Global Securities; Temporary Securities.
(a) Transfer and Exchange of Global Securities. A global
Security deposited with the Depositary pursuant to Section 2.1 shall be
transferred to the beneficial owners thereof only if such transfer complies
with Section 2.6(b) or 2.6(f) of this Indenture and (i) the Depositary notifies
the Company that it is unwilling or unable to continue as depositary for such
global Security or if it at any time ceases to be a "clearing agency"
registered or in good standing under the Exchange Act or other applicable
statute or regulation and a successor depositary is not appointed by the
Company within 90 days of such notice, or (ii) an Event of Default has occurred
and is continuing with respect to the Securities. In either case, the Company
will promptly make available to the Trustee a reasonable supply of Certificated
Securities in definitive, fully registered form without interest coupons in
accordance with the provisions of Section 2.10.
Any global Security that is transferable to the beneficial owners
thereof pursuant to this Section 2.12 shall be surrendered by the Depositary to
the Trustee located in the Borough of Manhattan, The City of New York, to be so
transferred, in whole or from time to time in part, without charge, and the
Trustee shall authenticate and deliver, upon such transfer of each portion of
such global Security, an equal aggregate principal amount of Securities of
authorized denominations. Any portion of a global Security transferred
pursuant to this Section 2.12 shall be executed, authenticated and delivered
only in the denominations specified in the form of Security attached as
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Exhibit A-1 hereto and registered in such names as the Depositary shall direct.
Any Security delivered in exchange for an interest in the Restricted Global
Security shall bear the legend regarding transfer restrictions applicable to
the Restricted Global Security set forth on the form of Security attached as
Exhibit A-1 hereto.
Subject to the provisions of this Section 2.12(a), the Holder may
grant proxies and otherwise authorize any Person, including Agent Members and
Persons that may hold interests through Agent Members, to take any action which
a Holder is entitled to take under this Indenture or the Securities.
(i) Restricted Global Security to Regulation S Global
Security. If, at any time, an owner of a beneficial interest in a
Restricted Global Security deposited with the Depositary wishes to
transfer its interest in such Restricted Global Security to a person
who is required or permitted to take delivery thereof in the form of a
beneficial interest in a Regulation S Global Security, such owner
shall, subject to the Applicable Procedures, exchange or cause the
exchange of such interest for an equivalent beneficial interest in a
Regulation S Global Security as provided in this Section 2.12(a)(i).
Upon receipt by the Trustee, as Registrar, at the Corporate Trust
Office of (1) instructions given in accordance with the Applicable
Procedures from an Agent Member directing the Trustee to credit or
cause to be credited a beneficial interest in the Regulation S Global
Security in an amount equal to the beneficial interest in the
Restricted Global Security to be exchanged, (2) a written order given
in accordance with the Applicable Procedures containing information
regarding the participant account of the Depositary to be credited
with such increase and the participant account of the Depositary to be
debited for, such beneficial interest, (3) a certificate in the form
of Exhibit B-1 hereto, upon which the Trustee may conclusively rely,
given by the Holder of such beneficial interest stating that the
transfer of such interest has been made in compliance with the
transfer restrictions applicable to the global Securities and pursuant
to and in accordance with Rule 903 or Rule 904 of Regulation S, then
the Trustee, as Registrar, shall instruct the Depositary to reduce or
cause to be reduced the aggregate principal amount of the applicable
Restricted Global Security and to increase or cause to be increased
the aggregate principal amount of the applicable Regulation S Global
Security by the principal amount of the beneficial interest in the
Restricted Global Security to be exchanged, to credit or cause to be
credited to the account of the person specified in such instructions
(which shall be the Agent Member for Euroclear or Cedel or both, as
the case may
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be) a beneficial interest in the Regulation S Global Security equal to
the reduction in the aggregate principal amount of the Restricted
Global Security, and to debit, or cause to be debited, from the
account of the person making such exchange or transfer the beneficial
interest in the Restricted Global Security that is being exchanged or
transferred.
(ii) Regulation S Global Security to Restricted Global
Security. If, at any time, an owner of a beneficial interest in a
Regulation S Global Security deposited with the Depositary wishes to
transfer its interest in such Regulation S Global Security to a person
who is required or permitted to take delivery thereof in the form of
an interest in a Restricted Global Security, such owner shall, subject
to the Applicable Procedures and only in accordance with this Section
2.12(a)(ii), exchange or cause the exchange of such interest for an
equivalent beneficial interest in a Restricted Global Security. Upon
receipt by the Trustee, as Registrar, at the Corporate Trust Office of
(1) written instructions from the Depositary, directing the Trustee,
as Registrar, to credit or cause to be credited a beneficial interest
in the Restricted Global Security equal to the beneficial interest in
the Regulation S Global Security to be exchanged, such instructions to
contain information regarding the participant account with the
Depositary to be credited with such increase, (2) a written order
given in accordance with the Applicable Procedures containing
information regarding the participant account of the Depositary to be
credited with, and the account of the Depositary (or, if such account
is held for Euroclear or Cedel, the Euroclear or Cedel account, as the
case may be) to be debited with, such beneficial interest and (3) a
certificate in the form of Exhibit B-2 attached hereto, upon which the
Trustee may conclusively rely, given by the owner of such beneficial
interest stating (A) if the transfer is pursuant to Rule 144A, that
the person transferring such interest in a Regulation S Global
Security reasonably believes that the person acquiring such interest
in a Restricted Global Security is a QIB and is obtaining such
beneficial interest in a transaction meeting the requirements of Rule
144A and any applicable blue sky or securities laws of any state of
the United States, (B) that the transfer complies with the
requirements of Rule 144 under the Securities Act and any applicable
blue sky or securities laws of any state of the United States or (C)
if the transfer is pursuant to any other exemption from the
registration requirements of the Securities Act, that the transfer of
such interest has been made in compliance with the transfer
restrictions applicable to the global Securities and pursuant to and
in accordance with the
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requirements of the exemption claimed, such statement to be supported
by an Opinion of Counsel from the transferee or the transferor in form
reasonably acceptable to the Company, then the Trustee, as Registrar,
shall instruct the Depositary to reduce or cause to be reduced the
aggregate principal amount of such Regulation S Global Security and to
increase or cause to be increased the aggregate principal amount of
the applicable Restricted Global Security by the principal amount of
the beneficial interest in the Regulation S Global Security to be
exchanged, and the Trustee, as Registrar, shall instruct the
Depositary, concurrently with such reduction, to credit or cause to be
credited to the account of the person specified in such instructions a
beneficial interest in the applicable Restricted Global Security equal
to the reduction in the aggregate principal amount of such Regulation
S Global Security and to debit or cause to be debited from the account
of the person making such transfer the beneficial interest in the
Regulation S Global Security that is being transferred.
(b) Transfer and Exchange of Certificated Securities. When
Certificated Securities are presented by a Holder to the Registrar with a
request:
(x) to register the transfer of the Certificated
Securities; or
(y) to exchange such Certificated Securities for an equal
principal amount of Certificated Securities of other authorized
denominations,
the Registrar shall register the transfer or make the exchange as requested;
provided, however, that the Certificated Securities presented or surrendered
for register of transfer or exchange:
(i) shall be duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the Registrar duly
executed by such Holder or by such Holder's attorney, duly authorized
in writing; and
(ii) in the case of a Certificated Security that is a
Transfer Restricted Security, such request shall be accompanied by the
following additional information and documents, as applicable:
(A) if such Transfer Restricted Security is being
delivered to the Registrar by a Holder for registration in the
name of such Holder, without transfer, or such Transfer
Restricted Security is being transferred to the Company, a
certification to that effect from such
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Holder (in substantially the form of Exhibit B-3 hereto);
(B) if such Transfer Restricted Security is being
transferred to a QIB in accordance with Rule 144A under the
Securities Act or pursuant to an exemption from registration
in accordance with Rule 144 under the Securities Act or
pursuant to an effective registration statement under the
Securities Act, a certification to that effect from such
Holder (in substantially the form of Exhibit B-3 hereto, upon
which the Trustee may conclusively rely); or
(C) if such Transfer Restricted Security is being
transferred in reliance on any other exemption from the
registration requirements of the Securities Act (including
Rule 904 of Regulation S thereunder), a certification to that
effect from such Holder (in substantially the form of Exhibit
B-3 hereto, upon which the Trustee may conclusively rely) and
an Opinion of Counsel from such Holder or the transferee
reasonably acceptable to the Company and to the Registrar to
the effect that such transfer is in compliance with the
Securities Act.
(c) Transfer of a Beneficial Interest in a Restricted Global
Security or Regulation S Permanent Global Security for a Certificated Security.
(i) Any person having a beneficial interest in a
Restricted Global Security or Regulation S Permanent Global Security
may upon request, subject to the Applicable Procedures, exchange such
beneficial interest for a Certificated Security. Upon receipt by the
Trustee of written instructions or such other form of instructions as
is customary for the Depositary, from the Depositary on behalf of any
person having a beneficial interest in a Restricted Global Security or
Regulation S Permanent Global Security, the following additional
information and documents (all of which may be submitted by
facsimile):
(A) if such beneficial interest is being
transferred to the person designated by the Depositary as
being the beneficial owner, a certification to that effect
from such person (in substantially the form of Exhibit B-4
hereto, upon which the Trustee may conclusively rely);
(B) if such beneficial interest is being
transferred to a QIB in accordance with Rule 144A under
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the Securities Act or pursuant to an exemption from
registration in accordance with Rule 144 under the Securities
Act or pursuant to an effective registration statement under
the Securities Act, a certification to that effect from the
transferor (in substantially the form of Exhibit B-4 hereto,
upon which the Trustee may conclusively rely); or
(C) if such beneficial interest is being
transferred in reliance on any other exemption from the
registration requirements of the Securities Act (including
Rule 904 of Regulation S thereunder), a certification, upon
which the Trustee may conclusively rely, to that effect from
the transferor (in substantially the form of Exhibit B-4
hereto) and an Opinion of Counsel from the transferee or the
transferor reasonably acceptable to the Company and to the
Trustee, as Registrar, to the effect that such transfer is in
compliance with the Securities Act,
in which case the Trustee shall cause the aggregate principal amount of
Restricted Global Securities or Regulation S Permanent Global Securities, as
applicable, to be reduced accordingly and, following such reduction, the
Company shall execute and the Trustee shall authenticate and deliver to the
transferee a Certificated Security in the appropriate principal amount.
(ii) Certificated Securities issued in exchange for a
beneficial interest in a Restricted Global Security or Regulation S
Permanent Global Security, as applicable, pursuant to this Section
2.12(c) shall be registered in such names and in such authorized
denominations as the Depositary, pursuant to instructions from its
direct or indirect participants or otherwise, shall instruct the
Trustee. The Trustee shall deliver such Certificated Securities to
the persons in whose names such Securities are so registered.
Following any such issuance of Certificated Securities, the Trustee,
as Registrar, shall instruct the Depositary to reduce or cause to be
reduced the aggregate principal amount of the applicable global
Security to reflect the transfer.
(d) Transfer and Exchange of a Certificated Security for a
Beneficial Interest in a Global Security. Holders of Certificated Securities
may offer, resell, pledge or otherwise transfer such Securities only pursuant
to an effective registration statement under the Securities Act, inside the
United States to a QIB in a transaction meeting the requirements of Rule 144A,
in a transaction meeting the requirements of Rule 144 under the Securities Act,
outside the United States in a transaction meeting the requirements of Rule 904
or Regulation S
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under the Securities Act or to the Company, in each case incompliance with any
applicable securities laws of any state of the United States or any other
applicable jurisdiction.
When Certificated Securities are presented by a Holder to the
Registrar with a request (x) to register the transfer of the Certificated
Securities or (y) to exchange such Certificated Securities for an equal
principal amount of Certificated Securities of other authorized denominations,
the Registrar shall register the transfer or make the exchange as requested if
its requirements for such transactions are met; provided, however, that the
Certificated Securities presented or surrendered for register of transfer or
exchange:
(i) shall be duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the Registrar duly
executed by such Holder or by his or her attorney, duly authorized in
writing, which instructions, if applicable, shall direct the Trustee
(A) to cancel any Certificated Security being exchanged for another
Certificated Security or a beneficial interest in a global Security in
accordance with Section 2.11 hereof, and (B) to make, or to direct the
Registrar to make, an endorsement on the appropriate global Security
to reflect an increase in the aggregate principal amount of the
Securities represented by such global Security; and
(ii) such request shall be accompanied by the following
additional information and documents, as applicable:
(A) if such Certificated Security is being
delivered to the Registrar by a Holder for registration in the
name of such Holder, without transfer, a certification to that
effect from such Holder (in substantially the form of Exhibit
B-5 hereto, upon which the Trustee may conclusively rely); or
(B) if such Certificated Security is being
transferred to a QIB in accordance with Rule 144A, pursuant to
Rule 144 under the Securities Act or pursuant to an exemption
from registration in accordance with Rule 904 of Regulation S
under the Securities Act or pursuant to an effective
registration statement under the Securities Act, a
certification to that effect from such Holder (in
substantially the form of Exhibit B-5 hereto, upon which the
Trustee may conclusively rely).
(e) Authentication of Certificated Securities in Absence of
Depositary. If at any time:
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(i) the Depositary notifies the Company that the
Depositary is unwilling or unable to continue as the
depositary for the global Securities and a successor
Depositary for the Global Securities is not appointed by the
Company within 90 days after delivery of such notice; or
(ii) the Company delivers to the Trustee an
Officers' Certificate or an order signed by two Officers of
the Company notifying the Trustee that it elects to cause the
issuance of Certificated Securities under this Indenture,
then the Company shall execute, and the Trustee shall, upon receipt of a
Company Order in accordance with Section 2.2 hereof, authenticate and deliver,
Certificated Securities in an aggregate principal amount equal to the principal
amount of the global Securities in exchange for such global Securities.
(f) Legends.
(i) Except as permitted by the following
paragraphs (ii) and (iii), each global Security and
Certificated Security (and all Securities issued in exchange
therefor or substitution thereof) shall bear a legend in
substantially the following form (each a "Transfer Restricted
Security"):
THIS SECURITY AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS
SECURITY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY,
THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY NOR ANY
INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
REGISTRATION. UNLESS THE SHARES OF COMMON STOCK HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT, A HOLDER OF THIS SECURITY WILL BE ABLE TO EXERCISE THE
CONVERSION RIGHT ONLY IF THE HOLDER CERTIFIES THAT IT IS A "QUALIFIED
INSTITUTIONAL BUYER" OR AN INSTITUTIONAL "ACCREDITED INVESTOR" AS DEFINED
BELOW.
THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION
TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE
DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE
COMPANY WAS THE OWNER OF ANY SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY)
ONLY (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) FOR SO LONG AS THE
SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A
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QUALIFIED INSTITUTIONAL BUYER TO WHICH NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (C) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A) (1), (2), (3) OR (7) OF
RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN
ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION
WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, (D) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (E) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 OF REGULATION S
UNDER THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENT OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S
AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO
CLAUSE (C), (E) OR (F) TO REQUIRE THE DELIVERY TO EACH OF THEM OF AN OPINION OF
COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM,
AND IN EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM
APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE
TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE
HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
(ii) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security represented by a
global Security) pursuant to Rule 144 under the Securities Act or
pursuant to an effective registration statement under the Securities
Act:
(A) in the case of any Transfer Restricted
Security that is a Certificated Security, the Registrar shall
permit the Holder thereof to exchange such Transfer Restricted
Security for a Certificated Security that does not bear the
legend set forth in (i) above and rescind any restriction on
the transfer of such Transfer Restricted Security upon receipt
of a certification from the transferring Holder substantially
in the form of Exhibit B-4 hereto; and
(B) in the case of any Transfer Restricted
Security represented by a global Security, such Transfer
Restricted Security shall not be required to bear the legend
set forth in (i) above, but shall continue to be subject to
the provisions of Section 2.12(a) and (b) hereof; provided,
however, that with respect to any request for an exchange of a
Transfer Restricted Security that is represented by a global
Security for a Certificated Security that does not bear the
legend set forth in (i) above, which request is made in
reliance upon Rule 144, the Holder thereof shall certify in
writing to the Registrar that such
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request is being made pursuant to Rule 144 (such certification
to be substantially in the form of Exhibit B-4 hereto).
(iii) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security represented by a
global Security) in reliance on any exemption from the registration
requirements of the Securities Act (other than exemptions pursuant to
Rule 144A or Rule 144 under the Securities Act) in which the Holder or
the transferee provides an Opinion of Counsel to the Company and the
Registrar in form and substance reasonably acceptable to the Company
and the Registrar (which Opinion of Counsel shall also state that the
transfer restrictions contained in the legend are no longer
applicable):
(A) in the case of any Transfer Restricted
Security that is a Certificated Security, the Registrar shall
permit the Holder thereof to exchange such Transfer Restricted
Security for a Certificated Security that does not bear the
legend set forth in (i) above and rescind any restriction on
the transfer of such Transfer Restricted Security; and
(B) in the case of any Transfer Restricted
Security represented by a global Security, such Transfer
Restricted Security shall not be required to bear the legend
set forth in (i) above, but shall continue to be subject to
the provisions of Section 2.12(a) and (b) hereof.
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 June 1, 2000, at
the redemption prices specified in paragraph 5 of the form of Security attached
hereto as Exhibit A-1, together with accrued interest up to but not including
the Redemption Date.
If the Company elects to redeem Securities pursuant to this Section
3.1 and paragraph 5 of the Securities, it shall notify the Trustee at least 35
days prior to the redemption date as fixed by the Company (unless a shorter
notice shall be satisfactory to the Trustee) of the redemption date and the
principal amount of Securities to be redeemed. If fewer than all of the
Securities are to be redeemed, the record date relating to
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such redemption shall be selected by the Company and given to the Trustee,
which record date shall not be less than ten days after the date of notice to
the Trustee.
SECTION 3.2 Selection of Securities to Be Redeemed
If less than all of the Securities are to be redeemed, the Trustee
shall, not more than 60 days prior to the redemption date, select the
Securities to be redeemed by lot. The Trustee shall make the selection from
the Securities outstanding and not previously called for redemption.
Securities in denominations of $1,000 may only be redeemed in whole. The
Trustee may select for redemption portions (equal to $1,000 or any multiple
thereof) of the principal of Securities that have denominations larger than
$1,000. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption.
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
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redemption shall cease accruing on and after the redemption date and
the only remaining right of the Holder shall be to receive payment of
the redemption price upon presentation and surrender to the Paying
Agent of the Securities; and
(9) if any Security is being redeemed in part, the
portion of the principal amount of such Security to be redeemed and
that, after the redemption date, upon presentation and surrender of
such Security, a new Security or Securities in aggregate principal
amount equal to the unredeemed portion thereof will be issued.
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 for and
deliver to the Holder a new Security equal in principal amount to the
unredeemed portion of the Security surrendered.
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SECTION 3.7 Conversion Arrangement on Call for Redemption
In connection with any redemption of Securities, the Company may
arrange for the purchase and conversion of any Securities called for redemption
by an agreement with one or more investment bankers or other purchasers to
purchase such Securities by paying to the Paying Agent in trust for the
Securityholders, on or before the close of business on the Redemption Date, an
amount that, together with any amounts deposited with the Paying Agent by the
Company for the redemption of such Securities, is not less than the Redemption
Price, together with interest, if any, accrued to, but not including, the
Redemption Date, of such Securities. Notwithstanding anything to the contrary
contained in this Article 3, the obligation of the Company to pay the
Redemption Price of such Securities, including all accrued interest, if any,
shall be deemed to be satisfied and discharged to the extent such amount is so
paid by such purchasers. If such an agreement is entered into, any Securities
not duly surrendered for conversion by the Holders thereof may, at the option
of the Company, be deemed, to the fullest extent permitted by law, acquired by
such purchasers from such Holders and (notwithstanding anything to the contrary
contained in Article 4) surrendered by such purchasers for conversion, all as
of immediately prior to the close of business on the Redemption Date, subject
to payment of the above amount as aforesaid. The Paying Agent shall hold and
pay to the Holders whose Securities are selected for redemption any such amount
paid to it for purchase and conversion in the same manner as it would 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 as set forth in this Indenture, and the Company
agrees to indemnify the Paying Agent from, and hold it harmless against, any
loss, liability or expense arising out of or in connection with any such
arrangement for the purchase and conversion of any Securities between the
Company and such purchasers, including the costs and expenses incurred by the
Paying Agent in the defense of any claim or liability arising out of or in
connection with the exercise or performance of any of its powers, duties,
responsibilities or obligations under this Indenture.
SECTION 3.8 Purchase of Securities at Option of the Holder Upon Change in
Control
(a) If at any time that Securities remain outstanding there shall
have occurred a Change in Control, Securities shall be purchased by the Company
at the option of the Holder thereof, as
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of the date that is 40 Business Days after the occurrence of the Change in
Control (the "Change in Control Purchase Date") at a purchase price (the
"Change in Control Purchase Price") equal to 100% of the principal amount
thereof plus accrued interest up to but not including the Change in Control
Purchase Date, subject to satisfaction by or on behalf of any Holder of the
requirements set forth in subsection (c) of this Section 3.8.
A "Change in Control" shall be deemed to have occurred at such time
after the original issuance of the Securities as there shall occur:
(1) the acquisition by any person (including any
syndicate or group deemed to be a "person" under Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or any successor provision, but excluding Boston
Chicken, Inc. and its successors, or any person or group controlled by
such persons) of beneficial ownership, directly or indirectly, through
a purchase, merger or other acquisition transaction or series of
transactions, of shares of capital stock of the Company entitling such
person to exercise more than 50% of the total voting power of all
shares of capital stock of the Company entitling the holders thereof
to vote generally in elections of directors; or
(2) any consolidation of the Company with, or merger of
the Company into, any other person, any merger of another person into
the Company, or any sale, lease or exchange of all or substantially
all of the property and assets of the Company to another person (other
than (i) sales or leases of property to franchisees of the Company in
the ordinary course of business or (ii) a merger which (x) does not
result in any reclassification, conversion, exchange or cancellation
of outstanding shares of capital stock of the Company or (y) is
effected primarily to change the jurisdiction of incorporation of the
Company and results in a reclassification, conversion or exchange of
outstanding shares of Common Stock solely into shares of common stock
of the surviving entity).
A "beneficial owner" shall be determined in accordance with Rule 13d-3
promulgated by the Commission under the Exchange Act, as in effect on the date
of execution of this Indenture, except that, for purposes of this subsection
(a), the number of shares of capital stock of the Company entitling the holders
thereof to vote generally in elections of directors shall be deemed to include,
in addition to all outstanding shares of capital stock of the Company entitling
the holders thereof to vote generally in the election of directors and Unissued
Shares deemed to be held by the Person with respect to which the Change in
Control
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determination is being made, all Unissued Shares deemed to be held by all other
Persons. As used herein, "Unissued Shares" shall mean shares of capital stock
of the Company not outstanding that are subject to options, warrants, rights to
purchase or conversion privileges exercisable within 60 days following the date
of determination of a Change in Control and that, upon issuance, shall entitle
the holders thereof to vote generally in the election of directors.
(b) Within ten Business Days after the occurrence of a Change in
Control, the Company shall mail a written notice of Change in Control 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 in Control Purchase Notice to be completed by the
Holder and shall state:
(1) the date of such Change in Control and, briefly, the
events causing such Change in Control;
(2) the date by which the Change in Control Purchase
Notice pursuant to this Section 3.8 must be given;
(3) the Change in Control Purchase Date;
(4) the Change in Control Purchase Price;
(5) briefly, the conversion rights of the Securities;
(6) the name and address of the Paying Agent and the
Conversion Agent;
(7) the then current Conversion Price;
(8) that Securities as to which a Change in Control
Purchase Notice has been given may be converted into Common Stock only
to the extent that the Change in Control Purchase Notice has been
withdrawn in accordance with the terms of this Indenture;
(9) the procedures that the Holder must follow to
exercise rights under this Section 3.8;
(10) the procedures for withdrawing a Change in Control
Purchase Notice, including a form of notice of withdrawal; and
(11) that the Holder must satisfy the requirements set
forth in the Securities in order to convert the Securities.
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(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 in Control Purchase Notice") to the Paying
Agent at any time prior to the close of business on the Change in Control
Purchase 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 Change in Control Purchase Price therefor;
provided, however, that such Change in Control Purchase Price shall be so paid
pursuant to this Section 3.8 only if the Security so delivered to the Paying
Agent shall conform in all respects to the description thereof set forth in the
related Change in Control Purchase Notice.
The Company shall purchase from the Holder thereof, pursuant to this
Section 3.8, a portion of a Security if the principal amount of such portion is
$1,000 or an integral multiple of $1,000. Provisions of this Indenture that
apply to the purchase of all of a Security pursuant to Sections 3.8 through
3.13 also apply to the purchase of such portion of such Security.
Notwithstanding anything herein to the contrary, any Holder delivering
to the Paying Agent the Change in Control Purchase Notice contemplated by this
subsection (c) shall have the right to withdraw such Change in Control Purchase
Notice in whole or in a portion thereof that is $1,000 or in an integral
multiple thereof at any time prior to the close of business on the Change in
Control Purchase Date by delivery of a written notice of withdrawal to the
Paying Agent in accordance with Section 3.9.
The Paying Agent shall promptly notify the Company of the receipt by
it of any Change in Control Purchase Notice or written withdrawal thereof.
SECTION 3.9 Effect of Change in Control Purchase Notice
Upon receipt by the Paying Agent of the Change in Control Purchase
Notice specified in Section 3.8(c), the Holder of the
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Security in respect of which such Change in Control Purchase Notice was given
shall (unless such Change in Control Purchase Notice is withdrawn as specified
below) thereafter be entitled to receive solely the Change in Control Purchase
Price with respect to such Security. Such Change in Control Purchase Price
shall be paid to such Holder promptly following the later of (a) the Change in
Control Purchase Date with respect to such Security (provided the conditions in
Section 3.8(c) have been satisfied) and (b) the time of delivery of such
Security to the Paying Agent by the Holder thereof in the manner required by
Section 3.8(c). Securities in respect of which a Change in Control Purchase
Notice has been given by the Holder thereof may not be converted into shares of
Common Stock on or after the date of the delivery of such Change in Control
Purchase Notice unless such Change in Control Purchase Notice has first been
validly withdrawn.
A Change in Control Purchase Notice may be withdrawn by means of a
written notice of withdrawal delivered by the Holder to the office of the
Paying Agent at any time prior to the close of business on the Change in
Control Purchase 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 in Control Purchase Notice and
that has been or will be delivered for purchase by the Company.
There shall be no purchase of any Securities pursuant to Section 3.8
if there has occurred (prior to, on or after, as the case may be, the giving,
by the Holders of such Securities, of the required Change in Control Purchase
Notice) and is continuing an Event of Default (other than a default in the
payment of the Change in Control Purchase Price with respect to such
Securities).
SECTION 3.10 Deposit of Change in Control Purchase Price
On or before the second Business Day immediately following a Change in
Control Purchase Date, the Company shall deposit with the Trustee or with the
Paying Agent (or, if the Company is acting as the Paying Agent, shall segregate
and hold in trust as provided in Section 2.4) an amount of money sufficient to
pay the aggregate Change in Control Purchase Price of all the Securities or
portions thereof that are to be purchased as of such Change in Control Purchase
Date. The manner in which the deposit required
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by this Section 3.10 is made by the Company shall be at the option of the
Company, provided that such deposit shall be made in a manner such that the
Trustee or the Paying Agent shall have immediately available funds on the
second Business Day immediately following the Change in Control Purchase Date.
If the Paying Agent holds, in accordance with the terms hereof, money
sufficient to pay the Change in Control Purchase Price of any Security tendered
for purchase, then, on the second Business Day immediately following to the
Change in Control Purchase Date, such Security will cease to be outstanding and
will be deemed paid, whether or not such Security is delivered to the Paying
Agent, and all other rights of the Holder in respect thereof shall terminate
(other than the right to receive the Change in Control Purchase Price upon
delivery of such Security).
SECTION 3.11 Securities Purchased In Part
Any Security that is to be purchased only in part shall be surrendered
at the office of the Paying Agent (with, if the Company or the Trustee so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder
thereof or such Holder's attorney duly authorized in writing), and promptly
after the Change in Control Purchase Date the Company shall execute and the
Trustee shall authenticate and deliver to the Holder of such Security, without
service charge, a new Security or Securities, of such authorized denomination
or denominations as may be requested by such Holder, in aggregate principal
amount equal to, and in exchange for, the portion of the principal amount of
the Security so surrendered that is not purchased.
SECTION 3.12 Compliance With Securities Laws Upon Purchase of Securities
In connection with any offer to purchase or purchase of Securities
under Section 3.8 (provided that such offer or purchase constitutes an "issuer
tender offer" for purposes of Rule 13e-4 under the Exchange Act (which term, as
used herein, includes any successor provision thereto) at the time of such
offer or purchase), the Company shall (a) comply with Rule 13e-4 and Rule 14e-1
under the Exchange Act, (b) file the related Schedule 13E-4 (or any successor
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.
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SECTION 3.13 Repayment to the Company
Subject to the provisions of Section 5.7, to the extent that the
aggregate amount of cash deposited by the Company pursuant to Section 3.10
exceeds the aggregate Change in Control Purchase Price of the Securities or
portions thereof that the Company is obligated to purchase, then promptly after
the second Business Day immediately following the Change in Control Purchase
Date the Trustee or the Paying Agent, as the case may be, shall return any such
excess to the Company.
ARTICLE 4.
CONVERSION
SECTION 4.1 Conversion Privilege
Subject to the further provisions of this Section 4.1, a Holder of a
Security may convert such Security into Common Stock at any time prior to
maturity, at the Conversion Price then in effect; provided, however, that, if
such Security is called for redemption pursuant to Article 3, such conversion
right shall terminate at the close of business on the 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 Price is set forth in paragraph
8 of the Securities and is subject to adjustment as provided in this Article 4.
A Holder may convert a portion of a Security equal to $1,000 or any
integral multiple thereof. Provisions of this Indenture that apply to
conversion of all of a Security also apply to conversion of a portion of a
Security.
A Security in respect of which a Holder has delivered a Change in
Control Purchase Notice pursuant to Section 3.8(c) exercising the option of
such Holder to require the Company to purchase such Security may be converted
only if such Change in Control Purchase Notice is withdrawn by a written notice
of withdrawal delivered to the Paying Agent prior to the close of
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business on the Change in Control Purchase Date in accordance with Section 3.9.
A Holder of Securities is not entitled to any rights of a holder of
Common Stock until such Holder has converted 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 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
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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.
Notwithstanding the foregoing, if any Security is called for redemption on June
1, 2000 and such Security is surrendered for conversion during the ten Business
Days immediately preceding such redemption date, interest shall accrue on such
Security through, but not including, such redemption date, and shall be payable
on such redemption date to the person who surrenders such Security for
conversion and the Conversion Date of such Security will, notwithstanding
anything contained in this Article 4 to the contrary, be deemed to be such
redemption date.
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 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.
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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 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 (e) of this
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Section 4.6) at the record date for the determination of shareholders entitled
to receive such rights or warrants, the Conversion Price in effect immediately
prior thereto shall be adjusted so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
such record date by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding on such record date, plus the number of
shares which the aggregate offering price of the total number of shares of
Common Stock so offered (or the aggregate Conversion Price of the convertible
securities so offered) would purchase at such current market price, and of
which the denominator shall be the number of shares of Common Stock outstanding
on such record date plus the number of additional shares of Common Stock
offered (or into which the convertible securities so offered are convertible).
Such adjustment shall be made successively whenever any such rights or warrants
are issued, and shall become effective immediately after such record date. If
at the end of the period during which such rights or warrants are exercisable
not all rights or warrants shall have been exercised, the adjusted Conversion
Price shall be immediately readjusted to what it would have been based upon the
number of additional shares of Common Stock actually issued (or the number of
shares of Common Stock issuable upon conversion of convertible securities
actually issued).
(c) In case the Company shall distribute to all or substantially
all holders of its Common Stock any shares of capital stock of the Company
(other than Common Stock), evidences of indebtedness or other non-cash assets
(including securities of any company other than the Company), or shall
distribute to all or substantially all holders of its Common Stock rights or
warrants to subscribe for or purchase any of its securities (excluding those
referred to in subsection (b) of this Section 4.6), then in each such case the
Conversion Price shall be adjusted so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
the date of such distribution by a fraction of which the numerator shall be the
current market price per share (as defined in subsection (e) of this Section
4.6) of the Common Stock on the record date mentioned below less the fair
market value on such record date (as determined by the Board of Directors,
whose determination shall be conclusive evidence of such fair market value) of
the portion of the capital stock 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 of the number of shares of Common Stock
outstanding on the record date), and of which the denominator shall be the
current market price per share (as defined in subsection (e) of this Section
4.6) of the Common Stock on such record date. Such adjustment shall become
effective immediately after the record date for the determination of
shareholders entitled to receive such
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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 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 20% of the
product of the current market price per share of Common Stock (as determined in
accordance with subsection (e) of this Section 4.6) on the Business Day (the
"Determination Date") immediately preceding the day on which such Triggering
Distribution is declared by the Company multiplied by the number of shares of
Common Stock outstanding on such date (excluding shares held in the Treasury of
the Company), the Conversion Price shall be reduced so that the same shall
equal the price determined by multiplying such Conversion Price in effect
immediately prior to the Determination Date by a fraction of which the
numerator shall be the current market price per share of the Common Stock (as
determined in accordance with subsection (e) of this Section 4.6) on the
Determination Date less the amount of cash 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
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Determination Date) and the denominator shall be such current market price per
share of the Common Stock (as determined in accordance with subsection (e) of
this Section 4.6) on the Determination Date, such reduction to become effective
immediately prior to the opening of business on the day following the date on
which the Triggering Distribution is paid.
(e) For the purpose of any computation under subsections (b), (c)
and (d) of this Section 4.6, the current market price per share of Common Stock
on any date shall be deemed to be the average of the daily closing prices for
the 30 consecutive Trading Days commencing 45 Trading Days before (i) the
Determination Date with respect to distributions under subsection (d) of this
Section 4.6 or (ii) the record date with respect to distributions, issuances or
other events requiring such computation under subsection (b) or (c) of this
Section 4.6. The closing price for each day shall be the last reported sales
price or, in case no such reported sale takes place on such date, the average
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.
(f) In any case in which this Section 4.6 shall require that an
adjustment be made following a record date or a Determination Date, as the case
may be, established for purposes of this Section 4.6, the Company may elect to
defer (but only until five Business Days following the filing by the Company
with the Trustee of the certificate described in Section 4.9) issuing to the
holder of any Security converted after such record date or Determination Date
the shares of Common Stock and other capital stock of the Company issuable upon
such conversion over and above the shares of Common Stock and other capital
stock of the Company issuable upon such conversion only on the basis of the
Conversion Price prior to adjustment; and, in lieu of the shares the issuance
of which is so deferred, the Company shall issue or cause its transfer agents
to issue due bills or other appropriate
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evidence prepared by the Company of the right to receive such shares. If any
distribution in respect of which an adjustment to the Conversion Price is
required to be made as of the record date, effective date or Determination Date
therefor is not thereafter made or paid by the Company for any reason, the
Conversion Price shall be readjusted to the Conversion Price which would then
be in effect if such record date had not been fixed or such effective date or
Determination Date had not occurred.
SECTION 4.7 No Adjustment
No adjustment in the Conversion Price shall be required unless the
adjustment would require an increase or decrease of at least 1% in the
Conversion Price as last adjusted; provided, however, that any adjustments
which by reason of this Section 4.7 are not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under this Article 4 shall be made to the nearest cent or to the
nearest one-hundredth of a share, as the case may be.
No adjustment need be made for a transaction referred to in Section
4.6 if all Securityholders are entitled to participate in the transaction on a
basis and with notice that the Board of Directors determines to be fair and
appropriate in light of the basis and notice on which holders of Common Stock
participate in the transaction. The Company shall give notice to the Trustee
of any such determination.
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.
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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.
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
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outstanding shall have the right to convert such Security into the kind and
amount of shares of stock and other securities and property (including cash)
receivable upon such reclassification, change, consolidation, merger, sale or
conveyance by a holder of the number of shares of Common Stock deliverable upon
conversion of such Security immediately prior to such reclassification, change,
consolidation, merger, sale or conveyance. Such supplemental indenture shall
provide for adjustments of the Conversion Price which shall be as nearly
equivalent as may be practicable to the adjustments of the Conversion Price
provided for in this Article 4. If, in the case of any such consolidation,
merger, sale or conveyance, the stock or other securities and
property(including cash) receivable thereupon by a holder of Common Stock
include shares of stock or other securities and property of a corporation other
than the successor or purchasing corporation, as the case may be, in such
consolidation, merger, sale or conveyance, then such supplemental indenture
shall also be executed by such other corporation and shall contain such
additional provisions to protect the interests of the Holders of the Securities
as the Board of Directors shall reasonably consider necessary by reason of the
foregoing. The provisions of this Section 4.11 shall similarly apply to
successive consolidations, mergers, sales or conveyances.
In the event the Company shall execute a supplemental indenture
pursuant to this Section 4.11, the Company shall promptly file with the Trustee
(x) an Officers' Certificate briefly stating the reasons therefor, the kind or
amount of shares of stock or 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 and 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.
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The Trustee shall not be under any responsibility to determine the
correctness of any provisions contained in any supplemental indenture executed
pursuant to Section 4.11, but may accept as conclusive evidence of the
correctness thereof, and shall be fully protected in relying upon, the
Officers' Certificate with respect thereto which the Company is obligated to
file with the Trustee pursuant to Section 4.11.
SECTION 4.13 Voluntary Reduction
The Company from time to time may reduce the Conversion Price by any
amount for any period of time if the period is at least 20 days or such longer
period as may be required by law and if the reduction is irrevocable during the
period; provided, however, that in no event may the Conversion Price be less
than the par value of a share of Common Stock.
ARTICLE 5.
SUBORDINATION
SECTION 5.1 Securities Subordinated to Senior 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 on all Securities issued
hereunder (including, without limitation, in connection with any redemption of
Securities) 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 (whether voluntary or involuntary, or in bankruptcy, insolvency,
reorganization, liquidation, receivership proceedings, or upon an assignment
for the benefit of creditors, or any other marshalling
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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) and the reasonable fees and
expenses of the Trustee shall first be paid in full, in cash, or have provision
made for such payment, before any payment is made on account of the principal
of or interest on the indebtedness evidenced by the Securities 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 Securities, 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 Securities, shall be paid
or delivered by any debtor, Custodian or other person making such payment or
distribution, directly to the holders of the Senior 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, or provision therefor, 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 Securities, to the payment of all Senior Indebtedness at the
time outstanding and to the
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payment of all securities issued in exchange thereof 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, or provision made for
its payment, 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 unprovided for,
or their representative or representatives, or to the trustee or trustees under
any indenture pursuant to which any instruments evidencing any of such Senior
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, or provision therefor, 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 principal of and interest on
the Securities shall be paid in full, and, for purposes of such subrogation, no
payments or distributions to the holders of Senior Indebtedness of assets,
whether in cash, property or securities, distributable to the holders of Senior
Indebtedness
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under the provisions hereof to which the Holders would be entitled except for
the provisions of this Article 5, and no payment pursuant to the provisions of
this Article 5 to the holders of Senior 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 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 on the
Securities or make any deposit pursuant to Section 6.3 or 10.1 and shall not
repurchase, redeem or otherwise retire any Securities (collectively, "pay the
Securities").
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(b) Upon the happening of an event of default with respect to any
Senior Indebtedness (other than under circumstances when the terms of
subsection (a) of this Section 5.5 are applicable), as such event of default is
defined under or in respect of such Senior Indebtedness or in any agreement
pursuant to which such Senior Indebtedness has been incurred, permitting the
holders thereof to immediately accelerate the maturity thereof, and upon
written notice thereof given to the Company and the Trustee by any holders of
such 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 (a "Default
Notice"), then, unless and until such event of default shall have been cured or
waived in writing by the holders of such Senior Indebtedness or shall have
ceased to exist, no direct or indirect payment shall be made with respect to
the principal of or interest on the Securities or to acquire any of the
Securities or on account of the redemption or mandatory repurchase provisions
of the Securities; provided, however, that this subsection (b) shall not
prevent the making of any such payment (which is not otherwise prohibited by
subsection (a) of this Section 5.5) for more than 90 days after the Default
Notice shall have been given unless the Senior Indebtedness in respect of which
such event of default exists has been declared due and payable in its entirety,
in which case no such payment may be made until such acceleration has been
waived, rescinded or annulled, or such Senior Indebtedness shall have been paid
in full, or payment thereof shall be duly provided for in cash or in any other
manner satisfactory to the holders of such Senior Indebtedness.
Notwithstanding the foregoing, not more than one Default Notice shall be given
with respect to the same issue of Senior Indebtedness within a period of 360
consecutive days, and no event of default which existed or was continuing on
the date of any Default Notice and was known to the holders of such issue of
Senior Indebtedness shall be made the basis for the giving of a subsequent
Default Notice by the holders of such issue of Senior Indebtedness.
(c) In the event that, notwithstanding the foregoing provisions of
this Section 5.5, any payment on account of the principal of or interest on the
Securities 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
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trustee or trustees under any indenture under which any instruments evidencing
any of the Senior Indebtedness may have 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.
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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. 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 principal of or interest on any
Securities shall be subject to the provisions of Sections 5.1, 5.2, 5.3 and
5.5; except that, if two Business Days prior to the date on which by the terms
of this Indenture any such 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
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. The holders of any Senior Indebtedness may
extend, renew, modify or amend the terms of such Senior Indebtedness or any
security therefor and release, sell or exchange such security and otherwise
deal freely with the Company, all without affecting the liabilities and
obligations of the parties to this Indenture or the Holders. No provision in
any supplemental indenture which affects the superior position of the holders
of the Senior 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.
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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 principal of or
interest on the Securities by reason of any provision in this Article 5 shall
not be construed as preventing the occurrence of an Event of Default under
Section 8.1.
SECTION 5.12 No Fiduciary Duty Created to Holders of Senior 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.
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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 Act, the Company
will prepare, for the first three quarters of each fiscal year, quarterly
financial statements substantially equivalent to the financial statements
required to be included in a report on Form 10-Q under the Exchange Act. The
Company will also prepare, on an annual basis, complete audited consolidated
financial statements, including, but not limited to, a balance sheet, a
statement of operations, a statement of cash flows and all appropriate notes.
All such financial statements will be prepared in accordance with generally
accepted accounting principles. The Company will cause a copy of such
financial statements to be filed with the Trustee and mailed to the Holders of
the Securities within 50 days after the end of each of the first three quarters
of each fiscal year and within 95 days after the close of each fiscal year.
The Company will also comply with the other provisions of TIA Section 314(a).
SECTION 6.3 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
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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
covenants 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 (immediately after the acquisition) and aggregate earnings (for such
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 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 Compliance Certificates
The Company shall deliver to the Trustee, within 90 days after the end
of each fiscal year of the Company, an Officers' Certificate as to the signer's
knowledge of the Company's compliance with all conditions and covenants on its
part contained in this Indenture and stating whether or not the signer knows of
any default or Event of Default. If such signer knows of such a default or
Event of Default, the Officers' Certificate shall describe the default or Event
of Default and the efforts to remedy the same. For the purposes of this
Section 6.4, compliance shall be determined without regard to any grace period
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or requirement of notice provided pursuant to the terms of this Indenture. The
Officers' Certificate need not comply with Section 12.4 hereof.
SECTION 6.5 Notice of Defaults
In the event (a) that indebtedness of the Company in an aggregate
amount in excess of $10,000,000 is declared due and payable before its maturity
because of the occurrence of any default under such indebtedness, or (b) of the
occurrence of any event which entitles the holder or holders of such
indebtedness to declare such indebtedness due and payable before its maturity
and with respect to which any applicable grace period has lapsed or expired,
the Company will promptly give written notice to the Trustee of such
declaration or event.
SECTION 6.6 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 unless:
(a) either the Company shall be the resulting or surviving entity
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
transaction and treating any indebtedness which becomes an obligation of the
Company as a result of such transaction as having been incurred by the Company
at the time of such transaction, no default or Event of Default shall have
occurred and be continuing.
The Company shall deliver to the Trustee prior to the proposed
transaction an Officers' Certificate and an Opinion of
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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 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 consolidation or merger, or any transfer of all or
substantially all of the assets of the Company in accordance with Section 7.1,
the successor corporation formed by such consolidation or into which the
Company is merged or to which such transfer is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture with the same effect as if such successor corporation had been
named as the Company herein.
ARTICLE 8.
DEFAULT AND REMEDIES
SECTION 8.1 Events of Default
An "Event of Default" shall occur if:
(1) the Company defaults in the payment of interest on
any Security when the same becomes due and payable and the default
continues for a period of 30 days;
(2) the Company defaults in the payment of the principal
of any Security when the same becomes due and payable at maturity,
upon redemption or otherwise;
(3) the Company fails to comply with any of its other
agreements contained in the Securities or this Indenture and the
default continues for the period and after the notice specified below;
(4) a default shall occur under any bond, debenture, note
or other evidence of indebtedness for money borrowed by the Company
having an aggregate outstanding principal amount of in excess of
$10,000,000, which default shall have resulted in such indebtedness
becoming or being declared due and payable prior to the date on which
it would otherwise have been due and payable, without such
indebtedness having been discharged, such acceleration having been
rescinded or annulled or there having been deposited in trust a sum of
money sufficient to discharge in full such indebtedness, in
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each case within a period of 10 days following the occurrence of such
acceleration;
(5) the Company pursuant to or within the meaning of any
Bankruptcy Law:
(A) commences a voluntary case or proceeding;
(B) consents to the entry of an order for relief
against it in an involuntary case or proceeding;
(C) consents to the appointment of a Custodian of
it or for all or substantially all of its property; or
(D) makes a general assignment for the benefit of
its creditors; or
(6) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company in an
involuntary case or proceeding;
(B) appoints a Custodian of the Company or for
all or substantially all of its property; or
(C) orders the liquidation of the Company;
and in each case the order or decree remains unstayed and in effect
for 60 days.
The term "Bankruptcy Law" means Title 11 of the United States Code or
any similar federal or state law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator, sequestrator or
similar official under any Bankruptcy Law.
A default under clause (3) above is not an Event of Default until the
Trustee notifies the Company, or the Holders of at least 25% in principal
amount of the Securities then outstanding notify the Company and the Trustee,
of the default, and the Company does not cure the default within 30 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.
Subject to the provisions of Sections 9.1 and 9.2, the Trustee shall
not be charged with knowledge of any Event of Default unless written notice
thereof shall have been given to a
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Trust Officer at the Corporate Trust Office of the Trustee by the Company, the
Paying Agent, any Holder or any agent of any Holder.
SECTION 8.2 Acceleration
If an Event of Default (other than an Event of Default specified in
clause (5) or (6) of Section 8.1) occurs and is continuing, the Trustee may, by
notice to the Company, or the Holders of at least 25% in principal amount of
the Securities then outstanding may, by notice to the Company and the Trustee,
and the Trustee shall, upon the request of such Holders, declare all unpaid
principal of and accrued interest to the date of acceleration on the Securities
then outstanding (if not then due and payable) to be due and payable upon any
such declaration, and the same shall become and be immediately due and payable.
If an Event of Default specified in clause (5) or (6) of Section 8.1 occurs,
all unpaid principal of and accrued interest on the Securities then outstanding
shall ipso facto become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Securityholder. The
Holders of a majority in principal amount of the Securities then outstanding by
notice to the Trustee may rescind an acceleration and its consequences if (a)
all existing Events of Default, other than the nonpayment of the principal of
and accrued interest on the Securities which has become due solely by such
declaration of acceleration, have been cured or waived; (b) to the extent the
payment of such interest is lawful, interest on overdue installments of
interest and overdue principal, which has become due otherwise than by such
declaration of acceleration, has been paid; (c) the rescission would not
conflict with any judgment or decree of a court of competent jurisdiction; and
(d) all payments due to the Trustee and any predecessor Trustee under Section
9.7 have been made. Anything herein contained to the contrary notwithstanding,
in the event of any acceleration pursuant to this Section 8.2, the Company
shall not be obligated to pay any premium which it would have had to pay if it
had then elected to redeem the Securities pursuant to paragraph 5 of the
Securities, except in the case of any Event of Default occurring by reason of
any willful action (or inaction) taken (or not taken) by or on behalf of the
Company with the intention of avoiding payment of the premium which it would
have had to pay if it had then elected to redeem the Securities pursuant to
paragraph 5 of the Securities, in which case an equivalent premium shall also
become and be immediately due and payable to the extent permitted by law.
SECTION 8.3 Other Remedies
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy by proceeding at law or in equity to collect the
payment of the principal of or interest on the
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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;
(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;
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(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.
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
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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.
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
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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 its exercise as a
prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee need perform only those duties as are
specifically set forth in this Indenture and no others; and
(2) in the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture. The Trustee, however, shall examine any
certificates and opinions which by any provision hereof are
specifically required to be delivered to the Trustee to
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determine whether or not they conform to the requirements of this
Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) this paragraph does not limit the effect of
subsection (b) of this Section 9.1;
(2) the Trustee shall not be liable for any error of
judgment made in good faith by a Trust Officer, unless it is proved
that the Trustee was negligent in ascertaining the pertinent facts;
and
(3) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 8.5.
(d) The Trustee may refuse to perform any duty or exercise any
right or power unless it receives indemnity satisfactory to it against any
loss, liability, expense or fee.
(e) Every provision of this Indenture that in any way relates to
the Trustee is subject to subsections (a), (b), (c) and (d) of this Section
9.1.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
SECTION 9.2 Rights of Trustee
Subject to Section 9.1:
(a) The Trustee may rely conclusively on any document believed by
it to be genuine and to have been signed or presented by the proper person.
The Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel, which shall conform
to Section 12.4(b). The Trustee shall not be liable for any action it takes or
omits to take in good faith in reliance on such Certificate or Opinion.
(c) The Trustee may act through its agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
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(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.
SECTION 9.3 Individual Rights of Trustee
The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities and may otherwise deal with the Company or an
affiliate of the Company with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights. However, the Trustee is
subject to Sections 9.10 and 9.11.
SECTION 9.4 Trustee's Disclaimer
The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Company's
use of the proceeds from the Securities, and it shall not be responsible for
any statement in the Securities other than its certificate of authentication.
SECTION 9.5 Notice of Default or Events of Default
If a default or an Event of Default occurs and is continuing and if it
is known to the Trustee, the Trustee shall mail to each Securityholder notice
of the default or Event of Default within 90 days after it occurs. Except in
the case of a default or an Event of Default in payment of the principal of or
interest on any Security, the Trustee may withhold the notice if and so long as
a committee of its Trust Officers in good faith determines that withholding
notice is in the interest of Securityholders.
SECTION 9.6 Reports by Trustee to Holders
If such report is required by TIA Section 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 Section 313(a). The Trustee also
shall comply with TIA Section 313(b)(2) and (c).
A copy of each report at the time of its mailing to Securityholders
shall be mailed to the Company and filed with the SEC and each stock exchange,
if any, on which the Securities are
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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 shall indemnify the Trustee for, and hold it harmless
against, any loss, liability or expense (including reasonable legal fees and
expenses) incurred by it in connection with its duties under this Indenture or
any action or failure to act as authorized or within the discretion or rights
or powers conferred upon the Trustee hereunder. The Trustee shall notify the
Company promptly of any claim asserted against the Trustee for which it may
seek indemnity. The Trustee shall have the option of undertaking the defense
of such claims; provided, however, that if the Trustee opts not to defend
itself, the Trustee may have separate counsel and the Company shall pay the
reasonable fees and expenses of such counsel. The Company need not pay for any
settlement without its written consent, which shall not be unreasonably
withheld.
The Company need not reimburse the Trustee for any expense or
indemnify it against any loss or liability incurred by it resulting from its
negligence or bad faith.
To secure the Company's payment obligations in this Section 9.7, the
Trustee shall have a senior claim to which the Securities are hereby made
subordinate on all money or property held or collected by the Trustee, except
such money or property held in trust to pay the principal of and interest on
particular Securities. The obligations of the Company under this Section 9.7
to compensate or indemnify the Trustee and to pay or reimburse the Trustee for
expenses, disbursements and advances shall be secured by a lien prior to that
of the Securities upon all property and funds held or collected by the Trustee
as such, except funds held in trust for the benefit of the Holders of
particular Securities. The obligations of the Company under this Section 9.7
shall survive the satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in clause (5) or (6) of Section 8.1
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occurs, the expenses and the compensation for the services are intended to
constitute expenses of administration under any Bankruptcy Law.
SECTION 9.8 Replacement of Trustee
The Trustee may resign by so notifying the Company. The Holders of a
majority in principal amount of the Securities then outstanding may remove the
Trustee by so notifying the Trustee and may, with the Company's written
consent, appoint a successor Trustee. The Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 9.10;
(2) the Trustee is adjudged a bankrupt or an insolvent;
(3) a receiver or other public officer takes charge of
the Trustee or its property; or
(4) the Trustee becomes incapable of acting.
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.
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A retiring Trustee shall not be liable for the acts or omissions of
any successor Trustee after its succession.
Notwithstanding replacement of the Trustee pursuant to this Section
9.8, the Company's obligations under Section 9.7 shall continue for the benefit
of the retiring Trustee.
SECTION 9.9 Successor Trustee by Merger, Etc.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust assets to, another
corporation, the resulting, surviving or transferee corporation, without any
further act, shall be the successor Trustee, provided such transferee
corporation shall qualify and be eligible under Section 9.10.
SECTION 9.10 Eligibility; Disqualification
The Trustee shall always satisfy the requirements of paragraphs (1),
(2) and (5) of TIA Section 310(a). If at any time the Trustee shall cease to
satisfy any such requirements, it shall resign immediately in the manner and
with the effect specified in this Article 9. The Trustee shall be subject to
the provisions of TIA Section 310(b). Nothing herein shall prevent the
Trustee from filing with the SEC the application referred to in the penultimate
paragraph of TIA Section 310(b).
SECTION 9.11 Preferential Collection of Claims Against Company
The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated therein.
ARTICLE 10.
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 10.1 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
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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 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 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, 2.12, 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, 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 non-callable 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 so held in trust 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.
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The Trustee and the Paying Agent shall pay to the Company upon request
any money held by them for the payment of principal or interest that remains
unclaimed for two years after a right to such money has matured; provided,
however, that the Trustee or such Paying Agent, before being required to make
any such payment, may at the expense of the Company cause to be published once
in a newspaper of general circulation in The City of New York or mail to each
Holder entitled to such money notice that such money remains unclaimed and that
after a date specified therein, which shall be at least 30 days from the date
of such publication or mailing, any unclaimed balance of such money then
remaining will be repaid to the Company. After payment to the Company,
Securityholders entitled to money must look to the Company for payment as
general creditors unless otherwise prohibited by law.
SECTION 10.4 Reinstatement
If the Trustee or the Paying Agent is unable to apply any money 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;
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(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 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
69
<PAGE> 75
proposed amendment, supplement or waiver, but it shall be sufficient if such
consent approves the substance thereof.
After an amendment, supplement or waiver under this Section 11.2
becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amendment, supplement or
waiver.
An amendment under this Section 11.2 may not make any change that
adversely affects the rights under Article 5 of any holder of an issue of
Senior 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
70
<PAGE> 76
and the Trustee shall authenticate a new Security that reflects the changed
terms.
SECTION 11.6 Trustee to Sign Amendments, etc.
The Trustee shall sign any amendment or supplement authorized pursuant
to this Article 11 if the amendment or supplement does not adversely affect the
rights, duties, liabilities or immunities of the Trustee. If it does, the
Trustee may, in its sole discretion, but need not sign it. In signing or
refusing to sign such amendment or supplement, the Trustee shall be entitled to
receive and, subject to Section 9.1, shall be fully protected in relying upon,
an Opinion of Counsel stating that such amendment or supplement is authorized
or permitted by this Indenture. The Company may not sign an amendment or
supplement until the Board of Directors approves it.
ARTICLE 12.
MISCELLANEOUS
SECTION 12.1 Trust Indenture Act Controls
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by any of Sections 310 to 317, inclusive, of the TIA through
operation of Section 318(c) thereof, such imposed duties shall control.
SECTION 12.2 Notices
Any notice, request or communication shall be given in writing and
delivered in person or mailed by first-class mail, postage prepaid, addressed
as follows:
If to the Company:
Einstein/Noah Bagel Corp.
14123 Denver West Parkway
Golden, Colorado 80401-4086
Attention: Chief Financial Officer
If to the Trustee:
Bankers Trust Company
Four Albany Street, 4th Floor
New York, New York 10006
Attention: Corporate Trust and Agency Group - Corporate
Market Services
Such notices or communications shall be effective when received.
71
<PAGE> 77
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.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication to a Securityholder is mailed in
the manner provided above, it is duly given, whether or not the addressee
receives it.
SECTION 12.3 Communications by Holders With Other Holders
Securityholders may communicate pursuant to TIA Section 312(b) with
other Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and any other person shall
have the protection of TIA Section 312(c).
SECTION 12.4 Certificate and Opinion as to Conditions Precedent
(a) Upon any request or application by the Company to the Trustee
to take any action under this Indenture, the Company shall furnish to the
Trustee at the request of the Trustee:
(1) an Officer's 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 6.4) shall
include:
(1) a statement that the person making such certificate
or opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements
72
<PAGE> 78
or opinions contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such person, he
or she has made such examination or investigation as is necessary to
enable him or her to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of
such person, such condition or covenant has been complied with;
provided, however, that with respect to matters of fact an Opinion of
Counsel may rely on an Officers' Certificate or certificates of public
officials.
SECTION 12.5 Record Date for Vote or Consent of Securityholders
The Company (or, in the event deposits have been made pursuant to
Section 6.3 or 10.1, the Trustee) may set a record date for purposes of
determining the identity of Securityholders entitled to vote or consent to any
action by vote or consent authorized or permitted under this Indenture, which
record date shall be the later of ten days prior to the first solicitation of
such vote or consent or the date of the most recent list of Securityholders
furnished to the Trustee pursuant to Section 2.5 prior to such solicitation.
Notwithstanding the provisions of Section 11.4, if a record date is fixed,
those persons who were Holders of Securities at such record date (or their duly
designated proxies), and only those persons, shall be entitled to take such
action by vote or consent or to revoke any vote or consent previously given,
whether or not such persons continue to be Holders after such record date.
SECTION 12.6 Rules by Trustee, Paying Agent, Registrar, 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.
73
<PAGE> 79
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.
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.
74
<PAGE> 80
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands
as of the 29th day of May, 1997.
EINSTEIN/NOAH BAGEL CORP.
By: /s/ PAUL A. STRASEN
------------------------------------
Name: Paul A. Strasen
Title: Senior Vice President
[SEAL]
Attest:
/s/ AMY S. POWERS
- ------------------------------------
Name: Amy S. Powers
Title: Assistant Secretary
BANKERS TRUST COMPANY
By: /s/ SUSAN JOHNSON
------------------------------------
Name: Susan Johnson
Title: Assistant Vice President
[SEAL]
Attest:
/s/ KEVIN WEEKS
- ------------------------------------
Name: Kevin Weeks
Title: Assistant Treasurer
75
<PAGE> 81
EXHIBIT A-1
[FORM OF FACE OF SECURITY]
7 1/4% Convertible Subordinated Debentures due 2004
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF THE DEPOSITORY TRUST COMPANY, OR TO A
SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS
GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN ARTICLE TWO OF THE INDENTURE REFERRED TO ON THE
REVERSE HEREOF.](1)
THIS SECURITY AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION
OF THIS SECURITY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY, THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY
NOR ANY INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION. UNLESS THE SHARES OF COMMON STOCK HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT, A HOLDER OF THIS SECURITY WILL BE ABLE TO
EXERCISE THE CONVERSION RIGHT ONLY IF THE HOLDER CERTIFIES THAT IT IS A
"QUALIFIED INSTITUTIONAL BUYER" OR AN INSTITUTIONAL "ACCREDITED INVESTOR" AS
DEFINED BELOW.
THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE
- ---------------
(1) These paragraphs should be included only if the Security is a global
Security deposited with the DTC.
<PAGE> 82
COMPANY WAS THE OWNER OF ANY SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY)
ONLY (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) FOR SO LONG AS THE
SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHICH NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR
(7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS
OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR,"
FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN
CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, (D)
PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER
THE SECURITIES ACT, (E) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904
OF REGULATION S UNDER THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO
THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
PURSUANT TO CLAUSE (C), (E) OR (F) TO REQUIRE THE DELIVERY TO EACH OF THEM OF
AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO
EACH OF THEM AND IN EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN
THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND
DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON
THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
[THE FOREGOING LEGEND MAY BE REMOVED FROM THIS SECURITY ON
SATISFACTION OF THE CONDITIONS SPECIFIED IN THE INDENTURE.]
EINSTEIN/NOAH BAGEL CORP.
INCORPORATED UNDER THE
LAWS OF THE STATE OF DELAWARE
CUSIP: _____ R-_____
7 1/4% Convertible Subordinated Debentures due 2004
Einstein/Noah Bagel Corp. promises to pay to ___________, or
registered assigns, the principal sum of ______________ Dollars on June 1, 2004.
Interest Payment Dates: June 1 and December 1
Record Dates: May 15 and November 15
This Debenture is convertible as specified on the other side of this
Debenture. Additional provisions of this Debenture are set forth on the other
side of this Debenture.
A-1-2
<PAGE> 83
In Witness Whereof, Einstein/Noah Bagel Corp. has caused this
instrument to be duly executed in its corporate name and the facsimile of its
corporate seal to be affixed hereunto or imprinted hereon.
EINSTEIN/NOAH BAGEL CORP.
By:
------------------------------------
President and Chief Executive
Officer
[SEAL]
Attest:
By:
------------------------------------
Secretary
Dated:
Trustee's Certificate of Authentication:
This is one of the Securities referred to in
the within-mentioned Indenture
BANKERS TRUST COMPANY,
as Trustee
By:
-------------------------------------
Authorized Signatory
A-1-3
<PAGE> 84
[FORM OF REVERSE SIDE OF SECURITY]
EINSTEIN/NOAH BAGEL CORP.
7 1/4% Convertible Subordinated Debentures due 2004
1. Interest
Einstein/Noah Bagel Corp., a Delaware corporation (the "Company"),
promises to pay interest on the principal amount of this Debenture at the rate
per annum shown above. The Company shall pay interest semiannually on June 1
and December 1 of each year, commencing December 1, 1997. Interest on the
Debentures shall accrue from the most recent date to which interest has been
paid or, if no interest has been paid, from the date of first issuance of the
Debentures under the Indenture (as defined below); provided, however, that if
there is not an existing default in the payment of interest, and if this
Debenture is authenticated between a record date referred to on the face hereof
and the next succeeding interest payment date, interest shall accrue from such
interest payment date. Interest will be computed on the basis of a 360-day
year of twelve 30-day months.
2. Method of Payment
The Company shall pay interest on this Debenture (except defaulted
interest) to the person who is the Holder of this Debenture at the close of
business on the May 15 or November 15 next preceding the related interest
payment date. The Holder must surrender this Debenture to the Paying Agent to
collect payment of principal. The Company will pay principal and interest in
money of the United States that at the time of payment is legal tender for
payment of public and private debts. The Company may, however, pay principal
and interest by its check or wire payable in such money. It may mail an
interest check to the Holder's registered address.
3. Paying Agent, Registrar and Conversion Agent
Initially, Bankers Trust Company (the "Trustee") will act as Paying
Agent, Registrar and Conversion Agent. The Company may change any Paying
Agent, Registrar or Conversion Agent without notice to the Holder. The Company
or any of its Subsidiaries may act as Paying Agent, Registrar or Conversion
Agent.
4. Indenture, Limitations
This Debenture is one of a duly authorized issue of Debentures of the
Company designated as its 7 1/4% Convertible Subordinated Debentures due 2004
(the "Debentures"), issued under an Indenture dated as of May 29, 1997 (the
"Indenture"), between
A-1-4
<PAGE> 85
the Company and the Trustee. The terms of this Debenture include those stated
in the Indenture and those required by or made part of the Indenture by
reference to the Trust Indenture Act of 1939, as amended, and as in effect on
the date of the Indenture. This Debenture is subject to all such terms, and
the Holder of this Debenture is referred to the Indenture and said Act for a
statement of them.
The Debentures are subordinated unsecured obligations of the Company
limited to up to $125,000,000 aggregate principal amount, subject to Section
2.2 of the Indenture. The Indenture does not limit other debt of the Company,
secured or unsecured, including Senior Indebtedness.
5. Optional Redemption
The Debentures are subject to redemption, at any time on or after June
1, 2000, as a whole or in part, at the election of the Company. The Redemption
Prices (expressed as percentages of the principal amount) beginning June 1 of
the years indicated are as follows:
<TABLE>
<CAPTION>
Redemption
Year Price
---- ----------
<S> <C>
2000 104.14%
2001 103.11%
2002 102.07%
2003 101.04%
</TABLE>
in each case together with accrued interest up to but not including the
Redemption Date.
6. Notice of Redemption
Notice of redemption will be mailed by first-class mail at least 30
days but not more than 60 days before the Redemption Date to each Holder of
Debentures to be redeemed at his or her registered address. Debentures in
denominations larger than $1,000 may be redeemed in part, but only in whole
multiples of $1,000. On and after the Redemption Date, subject to the deposit
with the Paying Agent of funds sufficient to pay the Redemption Price, interest
ceases to accrue on Debentures or portions of them called for redemption.
7. Purchase of Debentures at Option of Holder Upon a Change in Control
At the option of the Holder and subject to the terms and conditions of
the Indenture, the Company shall become obligated to purchase all or any part
specified by the Holder (so long as the principal amount of such part is $1,000
or an integral
A-1-5
<PAGE> 86
multiple thereof) of the Debentures held by such Holder on the date that is 40
Business Days after a Change in Control. The Holder shall have the right to
withdraw any Change in Control Purchase Notice by delivering a written notice
of withdrawal to the Paying Agent in accordance with the terms of the
Indenture. The obligation of the Company to pay the Change in Control Purchase
Price will be subject to the terms of agreements relating to borrowings which
constitute Senior Indebtedness.
8. Conversion
A Holder of a Debenture may convert such Debenture into shares of
Common Stock of the Company at any time prior to maturity; provided, however,
that if the Debenture is called for redemption, the conversion right will
terminate at the close of business on the redemption date for such Debenture
(unless the Company shall default in making the redemption payment when due, in
which case the conversion right shall terminate at the close of business on the
date such default is cured and such Debenture is redeemed); provided, further,
that if the Holder of a Debenture presents such Debenture for redemption prior
to the close of business on the redemption date for such Debenture, the right
of conversion shall terminate upon presentation of the Debenture to the Trustee
(unless the Company shall default in making the redemption payment when due, in
which case the conversion right shall terminate on the close of business on the
date such default is cured and such Debenture is redeemed). The initial
conversion price is $21.25 per share, subject to adjustment under certain
circumstances. The number of shares issuable upon conversion of a Debenture is
determined by dividing the principal amount converted by the conversion price
in effect on the Conversion Date. No payment or adjustment will be made for
accrued interest on a converted Debenture or for dividends or distributions on
shares of Common Stock issued upon conversion of a Debenture. No fractional
shares will be issued upon conversion; in lieu thereof, an amount will be paid
in cash based upon the closing sale price of the Common Stock on the last
Trading Day prior to the Conversion Date.
To convert a Debenture, a Holder must (a) complete and manually sign
the conversion notice set forth below and deliver such notice to the Conversion
Agent, (b) surrender the Debenture to the Conversion Agent, (c) furnish
appropriate endorsements or transfer documents if required by the Registrar or
the Conversion Agent, and (d) pay any transfer or similar tax, if required. If
a Holder surrenders a Debenture for conversion after the close of business on
the record date for the payment of an installment of interest and before the
close of business on the related interest payment date then, notwithstanding
such conversion, the interest payable on such interest payment date shall be
paid to the Holder of such Debenture on such record date. In such event, the
A-1-6
<PAGE> 87
Debenture must be accompanied by payment of an amount equal to the interest
payable on such interest payment date on the principal amount of the Debenture
or portion thereof then converted. A Holder may convert a portion of a
Debenture equal to $1,000 or any integral multiple thereof.
A Debenture in respect of which a Holder had delivered a Change in
Control Purchase Notice exercising the option of such Holder to require the
Company to purchase such Debenture may be converted only if the Change in
Control Purchase Notice is withdrawn as provided above and in accordance with
the terms of the Indenture.
9. Conversion Arrangement on Call for Redemption
Any Securities called for redemption, unless surrendered for
conversion before the close of business on the Redemption Date, may be deemed
to be purchased from the Holders of such Securities at an amount not less than
the Redemption Price, together with accrued interest, if any, to, but not
including, the Redemption Date, by one or more investment bankers or other
purchasers who may agree with the Company to purchase such Securities from the
Holders, to convert them into Common Stock of the Company and to make payment
for such Securities to the Paying Agent in Trust for such Holders.
10. Subordination
The indebtedness evidenced by the Debentures is, to the extent and in
the manner provided in the Indenture, subordinate and junior in right of
payment to the prior payment in full of all Senior Indebtedness of the Company.
Any Holder by accepting this Debenture agrees to and shall be bound by such
subordination provisions and authorizes the Trustee to give them effect.
In addition to all other rights of Senior 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 Debentures are in registered form without coupons in denominations
of $1,000 and integral multiples of $1,000. A Holder may register the transfer
of or exchange Debentures in accordance with the Indenture. The Registrar may
require a Holder, among other things, to furnish appropriate endorsements
A-1-7
<PAGE> 88
and transfer documents and to pay any taxes or other governmental charges that
may be imposed by law or permitted by the Indenture.
12. Persons Deemed Owners
The Holder of a Debenture may be treated as the owner of it for all
purposes.
13. Unclaimed Money
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent will pay the money back to the
Company at its written request. After that, Holders entitled to money must
look to the Company for payment.
14. Amendment, Supplement and Waiver
Subject to certain exceptions, the Indenture or the Debentures may be
amended or supplemented with the consent of the Holders of a majority in
principal amount of the Debentures then outstanding and any past default or
compliance with any provision may be waived in a particular instance with the
consent of the Holders of a majority in principal amount of the Debentures then
outstanding. Without the consent of or notice to any Holder, the Company and
the Trustee may amend or supplement the Indenture or the Debentures to, among
other things, provide for uncertificated Debentures in addition to or in place
of certificated Debentures, or to cure any ambiguity, defect or inconsistency
or make any other change that does not adversely affect the rights of any
Holder.
15. Successor Corporation
When a successor corporation assumes all the obligations of its
predecessor under the Debentures and the Indenture in accordance with the terms
and conditions of the Indenture, the predecessor corporation will be released
from those obligations.
16. Defaults and Remedies
An Event of Default is: default for 30 days in payment of interest on
the Debentures; default in payment of principal on the Debentures when due;
failure by the Company for 30 days after notice to it to comply with any of its
other agreements contained in the Indenture or the Debentures; certain events
of bankruptcy, insolvency or reorganization of the Company; and the
acceleration of certain other indebtedness. If an Event of Default (other than
as a result of certain events of bankruptcy, insolvency or reorganization)
occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the Debentures then outstanding may declare all unpaid
principal of and accrued
A-1-8
<PAGE> 89
interest to the date of acceleration on the Debentures then outstanding to be
due and payable immediately, all as and to the extent provided in the
Indenture. If an Event of Default occurs as a result of certain events of
bankruptcy, insolvency or reorganization, unpaid principal of and accrued
interest on the Debentures then outstanding shall become due and payable
immediately without any declaration or other act on the part of the Trustee or
any Holder, all as and to the extent provided in the Indenture. Holders may
not enforce the Indenture or the Debentures except as provided in the
Indenture. The Trustee may require indemnity satisfactory to it before it
enforces the Indenture or the Debentures. Subject to certain limitations,
Holders of a majority in principal amount of the Debentures then outstanding
may direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders notice of any continuing default (except a default in
payment of principal or interest) if it determines that withholding notice is
in their interests. The Company is required to file periodic reports with the
Trustee as to the absence of default.
17. Trustee Dealings With the Company
Bankers Trust Company, the Trustee under the Indenture, in its
individual or any other capacity, may make loans to, accept deposits from and
perform services for the Company or an Affiliate of the Company, and may
otherwise deal with the Company or an Affiliate of the Company, as if it were
not the Trustee.
18. No Recourse Against Others
A director, officer, employee or shareholder, as such, of the Company
shall not have any liability for any obligations of the Company under the
Debentures or the Indenture nor for any claim based on, in respect of or by
reason of such obligations or their creation. The Holder of this Debenture by
accepting this Debenture waives and releases all such liability. The waiver
and release are part of the consideration for the issuance of this Debenture.
19. Discharge Prior to Maturity
If the Company deposits with the Trustee or the Paying Agent money or
U.S. Government Obligations sufficient to pay the principal of and interest on
the Debentures to maturity, the Company will be discharged from the Indenture
except for certain sections thereof.
A-1-9
<PAGE> 90
20. Authentication
This Debenture shall not be valid until the Trustee or an
authenticating agent signs the certificate of authentication on the other side
of this Debenture.
21. Abbreviations and Definitions
Customary abbreviations may be used in the name of the Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian) and U/G/M/A (= Uniform Gifts to Minors
Act).
All capitalized terms used in this Debenture and not specifically
defined herein are defined in the Indenture and are used herein as so defined.
22. Indenture to Control
In the case of any conflict between the provisions of this Debenture
and the Indenture, the provisions of the Indenture shall control.
The Company will furnish to any Holder, upon written request and
without charge, a copy of the Indenture. Requests may be made to:
Einstein/Noah Bagel Corp., 14123 Denver West Parkway, Golden, Colorado
80401-4086, Attention: Chief Financial Officer.
A-1-10
<PAGE> 91
ASSIGNMENT FORM
To assign this Debenture, fill in the form below:
I or we assign and transfer this Debenture to
- --------------------------------------------------
- --------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------
- --------------------------------------------------
- --------------------------------------------------
- --------------------------------------------------
(Print or type assignee's name, address and
zip code)
and irrevocably appoint
- --------------------------------------------------
agent to transfer this Debenture on the books
of the Company. The Agent may substitute
another to act for him or her.
Date:
---------------------------------------------
Your signature:
-----------------------------------
(Sign exactly as your name
appears on the other side of
this Debenture)
- --------------------------------------------------
(Sign exactly as your name appears on the
other side of this Debenture)
**/Signature guaranteed by:
-----------------------
By:
-----------------------------------------------
- -----------------
** The signature must be guaranteed by a bank, a trust company or a
member firm of the New York Stock Exchange.
A-1-11
<PAGE> 92
CONVERSION NOTICE
To convert this Debenture into Common Stock of the Company, check the box:
[ ]
To convert only part of this Debenture, state the amount to be converted:
$
-----------------
If you want the stock certificate made out in another person's name, fill in
the form below:
- --------------------------------------------------
- --------------------------------------------------
(Insert other person's soc. sec. or tax I.D. no.)
- --------------------------------------------------
- --------------------------------------------------
- --------------------------------------------------
- --------------------------------------------------
(Print or type assignee's name, address and
zip code)
Date:
---------------------------------------------
Your signature:
-----------------------------------
(Sign exactly as your name appears on the
other side of this Debenture)
- --------------------------------------------------
(Sign exactly as your name appears on the
other side of this Debenture)
*/Signature guaranteed by:
------------------------
By:
-----------------------------------------------
- ---------------
* The signature must be guaranteed by a bank, a trust company or a
member firm of the New York Stock Exchange.
A-1-12
<PAGE> 93
NOTICE OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Debenture 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 Debenture 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 Debenture)
--------------------------------------
(Sign exactly as your name appears on
the other side of this Debenture)
*/Signature guaranteed by:
------------------------------
By:
-----------------------------------------------------
- ----------------
* The signature must be guaranteed by a bank, a trust company or a
member firm of the New York Stock Exchange.
A-1-13
<PAGE> 94
SCHEDULE OF EXCHANGES FOR CERTIFICATED SECURITY(2)
The following exchanges of a part of this global Security for
Certificated Securities have been made:
<TABLE>
<CAPTION>
Amount of decrease Amount of increase Principal Amount of Signature of
in Principal in Principal this global Security Authorized
Amount of this Amount of this following such Signatory of
Date of Exchange global Security global Security decrease (or increase) Trustee
---------------- ------------------ ------------------ ---------------------- -----------
<S> <C> <C> <C> <C>
</TABLE>
- -----------------
(2) This schedule should be included only if the Security is a global
Security deposited with the Depository.
A-1-14
<PAGE> 95
EXHIBIT A-2
[FORM OF FACE OF REGULATION S
TEMPORARY GLOBAL SECURITY]
7 1/4% Convertible Subordinated Debentures due 2004
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF THE DEPOSITORY TRUST COMPANY, OR TO A
SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS
GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN ARTICLE TWO OF THE INDENTURE REFERRED TO ON THE
REVERSE HEREOF.]*
THIS SECURITY AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION
OF THIS SECURITY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY, THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY
NOR ANY INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION. UNLESS THE SHARES OF COMMON STOCK HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT, A HOLDER OF THIS SECURITY WILL BE ABLE TO
EXERCISE THE CONVERSION RIGHT ONLY IF THE HOLDER CERTIFIES THAT IT IS A
"QUALIFIED INSTITUTIONAL BUYER" OR AN INSTITUTIONAL "ACCREDITED INVESTOR" AS
DEFINED BELOW.
THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND
- ---------------------
* These paragraphs should be included only if the Security is a global
Security deposited with the DTC.
<PAGE> 96
THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE
OWNER OF ANY SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY ) ONLY (A) TO THE
COMPANY OR ANY SUBSIDIARY THEREOF, (B) FOR SO LONG AS THE SECURITY IS ELIGIBLE
FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHICH NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (C) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE
MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE
SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE
ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES
AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, (D) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (E) IN AN
OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE
SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND
THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO
CLAUSE (C), (E) OR (F) TO REQUIRE THE DELIVERY TO EACH OF THEM OF AN OPINION OF
COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM,
AND IN EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM
APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE
TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE
HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL SECURITY,
AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED
SECURITIES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN).
NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S
TEMPORARY GLOBAL SECURITY SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST
THEREON.
[THE FOREGOING LEGEND MAY BE REMOVED FROM THIS SECURITY ON
SATISFACTION OF THE CONDITIONS SPECIFIED IN THE INDENTURE.]
A-2-2
<PAGE> 97
EINSTEIN/NOAH BAGEL CORP.
INCORPORATED UNDER THE
LAWS OF THE STATE OF DELAWARE
CUSIP:_____ R-_____
7 1/4% Convertible Subordinated Debentures due 2004
Einstein/Noah Bagel Corp. promises to pay to ___________, or
registered assigns, the principal sum of ______________ Dollars on June 1, 2004.
Interest Payment Dates: June 1 and December 1
Record Dates: May 15 and November 15
This Debenture is convertible as specified on the other side of this
Debenture. Additional provisions of this Debenture are set forth on the other
side of this Debenture.
A-2-3
<PAGE> 98
In Witness Whereof, Einstein/Noah Bagel Corp. has caused this
instrument to be duly executed in its corporate name and the facsimile of its
corporate seal to be affixed hereunto or imprinted hereon.
EINSTEIN/NOAH BAGEL CORP.
By:
------------------------------------
President and Chief Executive
Officer
[SEAL]
Attest:
By:
------------------------------------
Secretary
Dated:
Trustee's Certificate of Authentication:
This is one of the Securities referred to in
the within-mentioned Indenture
BANKERS TRUST COMPANY,
as Trustee
By:
-----------------------------------
Authorized Signatory
A-2-4
<PAGE> 99
[FORM OF REVERSE SIDE OF SECURITY]
EINSTEIN/NOAH BAGEL CORP.
7 1/4% Convertible Subordinated Debentures due 2004
This Regulation S Temporary Global Security is issued in respect of an
offering of $125,000,000 7 1/4% Convertible Subordinated Debentures due 2004
(the "Securities") of the Company, pursuant to an Indenture (the "Indenture")
dated as of May 29, 1997, between the Company and Bankers Trust Company, as
trustee (the "Trustee"), and is governed by the terms and conditions of the
Indenture, which terms and conditions are incorporated herein by reference and,
except as otherwise provided herein, shall be binding on the Company and the
Holder hereof as if fully set forth herein. Unless the context otherwise
requires, the terms used herein shall have the meanings specified in the
Indenture.
This Regulation S Temporary Global Security is exchangeable in whole
or in part for one or more Regulation S Permanent Global Securities or
Restricted Global Securities only (i) on or after the termination of the 40-day
restricted period (as defined in Regulation S) and (ii) upon presentation of
certificates (accompanied by an Opinion of Counsel, if applicable) required by
Article 2 of the Indenture. Upon exchange of all interest in this Regulation S
Temporary Global Security for one or more Regulation S Permanent Global
Securities or Restricted Global Securities, the Trustee shall cancel this
Regulation S Temporary Global Security.
This Regulation S Temporary Global Security shall not become valid or
obligatory until the certificate of authentication hereon shall have been duly
manually signed by the Trustee in accordance with the Indenture. This
Regulation S Temporary Global Security shall be governed by and construed in
accordance with the laws of the State of New York. All references to "$,"
"Dollars," "dollars" or "U.S.$" are to such coin or currency of the United
States of America as at the time shall be legal tender for the payment of
public and private debts therein.
1. Interest
Einstein/Noah Bagel Corp., a Delaware corporation (the "Company"),
promises to pay interest on the principal amount of this Debenture at the rate
per annum shown above. The Company shall pay interest semiannually on June 1
and December 1 of each year, commencing December 1, 1997. Interest on the
Debentures shall accrue from the most recent date to which interest has been
paid or, if no interest has been paid, from the date of first issuance of the
Debentures under the Indenture (as defined
A-2-5
<PAGE> 100
below); provided, however, that if there is not an existing default in the
payment of interest, and if this Debenture is authenticated between a record
date referred to on the face hereof and the next succeeding interest payment
date, interest shall accrue from such interest payment date. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
2. Method of Payment
The Company shall pay interest on this Debenture (except defaulted
interest) to the person who is the Holder of this Debenture at the close of
business on the May 15 or November 15 next preceding the related interest
payment date. The Holder must surrender this Debenture to the Paying Agent to
collect payment of principal. The Company will pay principal and interest in
money of the United States that at the time of payment is legal tender for
payment of public and private debts. The Company may, however, pay principal
and interest by its check or wire payable in such money. It may mail an
interest check to the Holder's registered address.
3. Paying Agent, Registrar and Conversion Agent
Initially, Bankers Trust Company (the "Trustee") will act as Paying
Agent, Registrar and Conversion Agent. The Company may change any Paying
Agent, Registrar or Conversion Agent without notice to the Holder. The Company
or any of its Subsidiaries may act as Paying Agent, Registrar or Conversion
Agent.
4. Indenture, Limitations
This Debenture is one of a duly authorized issue of Debentures of the
Company designated as its 7 1/4% Convertible Subordinated Debentures due 2004
(the "Debentures"), issued under an Indenture dated as of May 29, 1997 (the
"Indenture"), between the Company and the Trustee. The terms of this Debenture
include those stated in the Indenture and those required by or made part of the
Indenture by reference to the Trust Indenture Act of 1939, as amended, and as
in effect on the date of the Indenture. This Debenture is subject to all such
terms, and the Holder of this Debenture is referred to the Indenture and said
Act for a statement of them.
The Debentures are subordinated unsecured obligations of the Company
limited to up to $125,000,000 aggregate principal amount, subject to Section
2.2 of the Indenture. The Indenture does not limit other debt of the Company,
secured or unsecured, including Senior Indebtedness.
A-2-6
<PAGE> 101
5. Optional Redemption
The Debentures are subject to redemption, at any time on or after June
1, 2000, as a whole or in part, at the election of the Company. The Redemption
Prices (expressed as percentages of the principal amount) beginning June 1 of
the years indicated are as follows:
<TABLE>
<CAPTION>
Redemption
Year Price
---- ----------
<S> <C>
2000 104.14%
2001 103.11%
2002 102.07%
2003 101.04%
</TABLE>
in each case together with accrued interest up to but not including the
Redemption Date.
6. Notice of Redemption
Notice of redemption will be mailed by first-class mail at least 30
days but not more than 60 days before the Redemption Date to each Holder of
Debentures to be redeemed at his or her registered address. Debentures in
denominations larger than $1,000 may be redeemed in part, but only in whole
multiples of $1,000. On and after the Redemption Date, subject to the deposit
with the Paying Agent of funds sufficient to pay the Redemption Price, interest
ceases to accrue on Debentures or portions of them called for redemption.
7. Purchase of Debentures at Option of Holder Upon a Change in Control
At the option of the Holder and subject to the terms and conditions of
the Indenture, the Company shall become obligated to purchase all or any part
specified by the Holder (so long as the principal amount of such part is $1,000
or an integral multiple thereof) of the Debentures held by such Holder on the
date that is 40 Business Days after a Change in Control. The Holder shall have
the right to withdraw any Change in Control Purchase Notice by delivering a
written notice of withdrawal to the Paying Agent in accordance with the terms
of the Indenture. The obligation of the Company to pay the Change in Control
Purchase Price will be subject to the terms of agreements relating to
borrowings which constitute Senior Indebtedness.
8. Conversion
A Holder of a Debenture may convert such Debenture into shares of
Common Stock of the Company at any time prior to
A-2-7
<PAGE> 102
maturity; provided, however, that if the Debenture is called for redemption,
the conversion right will terminate at the close of business on the redemption
date for such Debenture (unless the Company shall default in making the
redemption payment when due, in which case the conversion right shall terminate
at the close of business on the date such default is cured and such Debenture
is redeemed); provided, further, that if the Holder of a Debenture presents
such Debenture for redemption prior to the close of business on the redemption
date for such Debenture, the right of conversion shall terminate upon
presentation of the Debenture to the Trustee (unless the Company shall default
in making the redemption payment when due, in which case the conversion right
shall terminate on the close of business on the date such default is cured and
such Debenture is redeemed). The initial conversion price is $21.25 per share,
subject to adjustment under certain circumstances. The number of shares
issuable upon conversion of a Debenture is determined by dividing the principal
amount converted by the conversion price in effect on the Conversion Date. No
payment or adjustment will be made for accrued interest on a converted
Debenture or for dividends or distributions on shares of Common Stock issued
upon conversion of a Debenture. No fractional shares will be issued upon
conversion; in lieu thereof, an amount will be paid in cash based upon the
closing sale price of the Common Stock on the last Trading Day prior to the
Conversion Date.
To convert a Debenture, a Holder must (a) complete and manually sign
the conversion notice set forth below and deliver such notice to the Conversion
Agent, (b) surrender the Debenture to the Conversion Agent, (c) furnish
appropriate endorsements or transfer documents if required by the Registrar or
the Conversion Agent, and (d) pay any transfer or similar tax, if required. If
a Holder surrenders a Debenture for conversion after the close of business on
the record date for the payment of an installment of interest and before the
close of business on the related interest payment date then, notwithstanding
such conversion, the interest payable on such interest payment date shall be
paid to the Holder of such Debenture on such record date. In such event, the
Debenture must be accompanied by payment of an amount equal to the interest
payable on such interest payment date on the principal amount of the Debenture
or portion thereof then converted. A Holder may convert a portion of a
Debenture equal to $1,000 or any integral multiple thereof.
A Debenture in respect of which a Holder had delivered a Change in
Control Purchase Notice exercising the option of such Holder to require the
Company to purchase such Debenture may be converted only if the Change in
Control Purchase Notice is withdrawn as provided above and in accordance with
the terms of the Indenture.
A-2-8
<PAGE> 103
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 Debentures is, to the extent and in
the manner provided in the Indenture, subordinate and junior in right of
payment to the prior payment in full of all Senior Indebtedness of the Company.
Any Holder by accepting this Debenture agrees to and shall be bound by such
subordination provisions and authorizes the Trustee to give them effect.
In addition to all other rights of Senior 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 Debentures are in registered form without coupons in denominations
of $1,000 and integral multiples of $1,000. A Holder may register the transfer
of or exchange Debentures in accordance with the Indenture. The Registrar may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and to pay any taxes or other governmental charges that may
be imposed by law or permitted by the Indenture.
12. Persons Deemed Owners
The Holder of a Debenture may be treated as the owner of it for all
purposes.
13. Unclaimed Money
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent will pay the money back to the
Company at its written request. After that, Holders entitled to money must
look to the Company for payment.
A-2-9
<PAGE> 104
14. Amendment, Supplement and Waiver
Subject to certain exceptions, the Indenture or the Debentures may be
amended or supplemented with the consent of the Holders of a majority in
principal amount of the Debentures then outstanding and any past default or
compliance with any provision may be waived in a particular instance with the
consent of the Holders of a majority in principal amount of the Debentures then
outstanding. Without the consent of or notice to any Holder, the Company and
the Trustee may amend or supplement the Indenture or the Debentures to, among
other things, provide for uncertificated Debentures in addition to or in place
of certificated Debentures, or to cure any ambiguity, defect or inconsistency
or make any other change that does not adversely affect the rights of any
Holder.
15. Successor Corporation
When a successor corporation assumes all the obligations of its
predecessor under the Debentures and the Indenture in accordance with the terms
and conditions of the Indenture, the predecessor corporation will be released
from those obligations.
16. Defaults and Remedies
An Event of Default is: default for 30 days in payment of interest on
the Debentures; default in payment of principal on the Debentures when due;
failure by the Company for 30 days after notice to it to comply with any of its
other agreements contained in the Indenture or the Debentures; certain events
of bankruptcy, insolvency or reorganization of the Company; and the
acceleration of certain other indebtedness. If an Event of Default (other than
as a result of certain events of bankruptcy, insolvency or reorganization)
occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the Debentures then outstanding may declare all unpaid
principal of and accrued interest to the date of acceleration on the Debentures
then outstanding to be due and payable immediately, all as and to the extent
provided in the Indenture. If an Event of Default occurs as a result of
certain events of bankruptcy, insolvency or reorganization, unpaid principal of
and accrued interest on the Debentures then outstanding shall become due and
payable immediately without any declaration or other act on the part of the
Trustee or any Holder, all as and to the extent provided in the Indenture.
Holders may not enforce the Indenture or the Debentures except as provided in
the Indenture. The Trustee may require indemnity satisfactory to it before it
enforces the Indenture or the Debentures. Subject to certain limitations,
Holders of a majority in principal amount of the Debentures then outstanding
may direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders notice of any
A-2-10
<PAGE> 105
continuing default (except a default in payment of principal or interest) if it
determines that withholding notice is in their interests. The Company is
required to file periodic reports with the Trustee as to the absence of
default.
17. Trustee Dealings With the Company
Bankers Trust Company, the Trustee under the Indenture, in its
individual or any other capacity, may make loans to, accept deposits from and
perform services for the Company or an Affiliate of the Company, and may
otherwise deal with the Company or an Affiliate of the Company, as if it were
not the Trustee.
18. No Recourse Against Others
A director, officer, employee or shareholder, as such, of the Company
shall not have any liability for any obligations of the Company under the
Debentures or the Indenture nor for any claim based on, in respect of or by
reason of such obligations or their creation. The Holder of this Debenture by
accepting this Debenture waives and releases all such liability. The waiver
and release are part of the consideration for the issuance of this Debenture.
19. Discharge Prior to Maturity
If the Company deposits with the Trustee or the Paying Agent money or
U.S. Government Obligations sufficient to pay the principal of and interest on
the Debentures to maturity, the Company will be discharged from the Indenture
except for certain sections thereof.
20. Authentication
This Debenture shall not be valid until the Trustee or an
authenticating agent signs the certificate of authentication on the other side
of this Debenture.
21. Abbreviations and Definitions
Customary abbreviations may be used in the name of the Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian) and U/G/M/A (= Uniform Gifts to Minors
Act).
All capitalized terms used in this Debenture and not specifically
defined herein are defined in the Indenture and are used herein as so defined.
A-2-11
<PAGE> 106
22. Indenture to Control
In the case of any conflict between the provisions of this Debenture
and the Indenture, the provisions of the Indenture shall control.
The Company will furnish to any Holder, upon written request and
without charge, a copy of the Indenture. Requests may be made to:
Einstein/Noah Bagel Corp., 14123 Denver West Parkway, Golden, Colorado
80401-4086, Attention: Chief Financial Officer.
A-2-12
<PAGE> 107
ASSIGNMENT FORM
To assign this Debenture, fill in the form below:
I or we assign and transfer this Debenture to
- --------------------------------------------------
- --------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------
- --------------------------------------------------
- --------------------------------------------------
- --------------------------------------------------
(Print or type assignee's name, address and
zip code)
and irrevocably appoint
- --------------------------------------------------
agent to transfer this Debenture on the books
of the Company. The Agent may substitute
another to act for him or her.
Date:
---------------------------------------------
Your signature:
-----------------------------------
(Sign exactly as your name
appears on the other side of
this Debenture)
- --------------------------------------------------
(Sign exactly as your name appears on the
other side of this Debenture)
*/Signature guaranteed by:
------------------------
By:
-----------------------------------------------
- ---------------
* The signature must be guaranteed by a bank, a trust company or a
member firm of the New York Stock Exchange.
A-2-13
<PAGE> 108
CONVERSION NOTICE
To convert this Debenture into Common Stock of the Company, check the box:
[ ]
To convert only part of this Debenture, state the amount to be converted:
$
-------------------
If you want the stock certificate made out in another person's name, fill in
the form below:
- -----------------------------------------------------
(Insert other person's soc. sec. or tax I.D. no.)
- -----------------------------------------------------
- -----------------------------------------------------
- -----------------------------------------------------
- -----------------------------------------------------
(Print or type assignee's name, address and zip code)
Date:
------------------------------------------------
Your signature:
--------------------------------------
(Sign exactly as your name appears
on the other side of this Debenture)
- -----------------------------------------------------
(Sign exactly as your name appears on the
other side of this Debenture)
*/Signature guaranteed by:
---------------------------
By:
--------------------------------------------------
- ----------------
* The signature must be guaranteed by a bank, a trust company or a
member firm of the New York Stock Exchange.
A-2-14
<PAGE> 109
NOTICE OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Debenture 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 Debenture 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 Debenture)
-------------------------------------
(Sign exactly as your name appears on
the other side of this Debenture)
*/Signature guaranteed by:
--------------------------------
By:
-------------------------------------------------------
- -----------------
* The signature must be guaranteed by a bank, a trust company or a
member firm of the New York Stock Exchange.
A-2-15
<PAGE> 110
SCHEDULE OF EXCHANGES FOR CERTIFICATED SECURITY
The following exchanges of a part of this Regulation S Temporary
Global Security for other global Securities have been made:
<TABLE>
<CAPTION>
Amount of decrease Amount of increase Principal Amount of Signature of
in Principal in Principal this global Security Authorized
Amount of this Amount of this following such Signatory of
Date of Exchange global Security global Security decrease (or increase) Trustee
---------------- ----------------- ------------------ ---------------------- -----------
<S> <C> <C> <C> <C>
</TABLE>
A-2-16
<PAGE> 111
EXHIBIT B-1
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
FROM RESTRICTED GLOBAL SECURITY TO REGULATION S GLOBAL SECURITY
(Pursuant to Section 2.12(a)(i) of the Indenture)
Bankers Trust Company
Four Albany Street, 4th Floor
New York, New York 10006
Attention: Corporate Trust and Agency Group - Corporate Market Services
Re: $125,000,000 7 1/4% Convertible Subordinated Debentures due 2004
of Einstein/Noah Bagel Corp.
Reference is hereby made to the Indenture, dated as of May 29, 1997 (the
"Indenture"), between Einstein/Noah Bagel Corp. (the "Company") and Bankers
Trust Company, as trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.
This letter relates to $ ____________ principal amount of Securities which
are evidenced by one or more Restricted Global Securities (CUSIP No. __________)
and held with the Depositary in the name of _______________________________ (the
"Transferor"). The Transferor has requested a transfer of such beneficial
interest in the Securities to a person who will take delivery thereof in the
form of an equal principal amount of Securities evidenced by one or more
Regulation S Global Securities (CUSIP No. ___), which amount, immediately after
such transfer, is to be held with the Depositary.
In connection with such request and in respect of such Securities, the
Transferor hereby certifies that such transfer has been effected in compliance
with the transfer restrictions applicable to the global Securities and pursuant
to and in accordance with Rule 903 or Rule 904 of Regulation S under the United
States Securities Act of 1933, as amended (the "Securities Act"), and
accordingly the Transferor hereby further certifies that:
(1) The offer of the Securities was not made to a person in the United
States;
(2) either:
B-1-1
<PAGE> 112
(a) at the time the buy order was originated, the transferee
was outside the United States or the Transferor and any
person acting on its behalf reasonably believed and
believes that the transferee was outside the United
States; or
(b) the transaction was executed in, on or through the
facilities of a designated offshore securities market and
neither the Transferor nor any person acting on its
behalf knows that the transaction was prearranged with a
buyer in the United States;
(3) no directed selling efforts have been made in contravention of the
requirements of Rule 904(b) of Regulation S under the Securities
Act;
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
(5) upon completion of the transaction, the beneficial interest being
transferred as described above is to be held with the Depositary.
Upon giving effect to this request to exchange a beneficial interest in a
Restricted Global Security for a beneficial interest in a Regulation S Global
Security, the resulting beneficial interest shall be subject to the
restrictions on transfer applicable to Regulation S Global Securities pursuant
to the Indenture and the Securities Act and, if such transfer occurs prior to
the end of the 40-day restricted period associated with the initial offering of
Securities, the additional restrictions applicable to transfers of interest in
the Regulation S Temporary Global Security.
B-1-2
<PAGE> 113
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company and Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Alex. Brown & Sons Incorporated and Morgan
Stanley & Co. Incorporated, the initial purchasers of such Securities being
transferred. Terms used in this certificate and not otherwise defined in the
Indenture have the meanings set forth in Regulation S under the Securities Act.
--------------------------------------
[Insert Name of Transferor]
By:
-----------------------------------
Name:
Title:
Dated:
--------------------------
cc: Einstein/Noah Bagel Corp.
B-1-3
<PAGE> 114
EXHIBIT B-2
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
FROM REGULATION S GLOBAL SECURITY TO RESTRICTED GLOBAL SECURITY
(Pursuant to Section 2.12(a) (ii) of the Indenture)
Bankers Trust Company
Four Albany Street, 4th Floor
New York, New York 10006
Attention: Corporate Trust and Agency Group - Corporate Market Services
Re: $125,000,000 7 1/4% Convertible Subordinated Debentures due 2004
of Einstein/Noah Bagel Corp.
Reference is hereby made to the Indenture, dated as of May 29, 1997 (the
Indenture), between Einstein/Noah Bagel Corp. (the "Company") and Bankers Trust
Company, as trustee. Capitalized terms used but not defined herein shall have
the meanings given to them in the Indenture.
This letter relates to $ _____________ principal amount of Securities
which are evidenced by one or more Regulation S Global Securities (CUSIP No.
___________) and held with the Depositary in the name of ________________ (the
"Transferor"). The Transferor has requested a transfer of such beneficial
interest in the Securities to a person who will take delivery thereof in the
form of an equal principal amount of Securities evidenced by one or more
Restricted Global Securities (CUSIP No. __________), to be held with the
Depositary.
In connection with such request and in respect of such Securities, the
Transferor hereby certifies that:
[CHECK ONE]
[ ] such transfer is being effected pursuant to and in accordance with Rule
144A under the United States Securities Act of 1933, as amended (the
"Securities Act"), and, accordingly, the Transferor hereby further
certifies that the Securities are being transferred to a person that
the Transferor reasonably believes is purchasing the Securities for
its own account, or for one or more accounts with respect to which
such person exercises sole investment discretion, and such person and
each such account is a "qualified institutional buyer" within the
meaning of Rule 144A in a transaction meeting the requirements of
Rule 144A;
or
B-2-1
<PAGE> 115
[ ] such transfer is being effected pursuant to and in accordance with
Rule 144 under the Securities Act;
or
[ ] such transfer is being effected pursuant to an effective registration
statement under the Securities Act;
or
[ ] such transfer is being effected pursuant to an exemption from the
registration requirements of the Securities Act other than Rule 144A
or Rule 144, and the Transferor hereby further certifies that the
Securities are being transferred in compliance with the transfer
restrictions applicable to the global Securities and in accordance
with the requirements of the exemption claimed, which certification is
supported by an Opinion of Counsel, provided by the transferor or the
transferee (a copy of which the Transferor has attached to this
certification) in form reasonably acceptable to the Company and to the
Registrar, to the effect that such transfer is in compliance with the
Securities Act;
and such Securities are being transferred in compliance with any applicable
blue sky securities laws of any state of the United States.
Upon giving effect to this request to exchange a beneficial interest in
Regulation S Global Securities for a beneficial interest in Restricted Global
Securities, the resulting beneficial interest shall be subject to the
restrictions on transfer applicable to Restricted Global Securities pursuant to
the Indenture and the Securities Act.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company and Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. Incorporated and
Alex. Brown & Sons Incorporated, the initial purchasers of such Securities
being transferred. Terms used in this certificate and not otherwise defined in
the Indenture have the meanings set forth in Regulation S under the Securities
Act.
---------------------------------------
[Insert Name of Transferor]
By:
------------------------------------
Name:
Title:
Dated:
----------------------------
cc: Einstein/Noah Bagel Corp.
B-2-2
<PAGE> 116
EXHIBIT B-3
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
OF CERTIFICATED SECURITIES
(Pursuant to Section 2.12(b) of the Indenture)
Bankers Trust Company
Four Albany Street, 4th Floor
New York, New York 10006
Attention: Corporate Trust Agency Group - Corporate Market Services
Re: $125,000,000 7 1/4% Convertible Subordinated Debentures due 2004
of Einstein/Noah Bagel Corp.
Reference is hereby made to the Indenture, dated as of May 29, 1997 (the
"Indenture"), between Einstein/Noah Bagel Corp. (the "Company") and Bankers
Trust Company, as trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.
In connection with such request and in respect of the Securities
surrendered to the Trustee herewith for exchange (the "Surrendered
Securities"), the Holder of such Surrendered Securities hereby certifies that:
[CHECK ONE]
[ ] the Surrendered Securities are being acquired for the Transferor's own
account, without transfer;
or
[ ] the Surrendered Securities are being transferred to the Company;
or
[ ] the Surrendered Securities are being transferred pursuant to and in
accordance with Rule 144A under the United States Securities Act of
1933, as amended (the "Securities Act"), and, accordingly, the
Transferor hereby further certifies that the Surrendered Securities
are being transferred to a person that the Transferor reasonably
believes is purchasing the Surrendered Securities for its own account,
or for one or more accounts with respect to which such person
exercises sole investment discretion, and such person and each such
account is a "qualified institutional buyer" within the meaning of
Rule 144A, in each case in a transaction meeting the requirements of
Rule 144A;
B-3-1
<PAGE> 117
[ ] the Surrendered Securities are being transferred in a transaction
permitted by Rule 144 under the Securities Act;
or
[ ] the Surrendered Securities are being transferred pursuant to an
effective registration statement under the Securities Act;
or
[ ] such transfer is being effected pursuant to an exemption from the
registration requirements of the Securities Act other than Rule 144A
or Rule 144, and the Transferor hereby further certifies that the
Securities are being transferred in compliance with the transfer
restrictions applicable to the global Securities and in accordance
with the requirements of the exemption claimed, which certification is
supported by an Opinion of Counsel, provided by the transferor or the
transferee (a copy of which the Transferor has attached to this
certification) in form reasonably acceptable to the Company and to the
Registrar, to the effect that such transfer is in compliance with the
Securities Act;
and the Surrendered Securities are being transferred in compliance with any
applicable blue sky securities laws of any state of the United States.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company and Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. Incorporated and
Alex. Brown & Sons Incorporated, the initial purchasers of such Securities
being transferred. Terms used in this certificate and not otherwise defined in
the Indenture have the meanings set forth in Regulation S under the Securities
Act.
---------------------------------------
[Insert Name of Transferor]
By:
------------------------------------
Name:
Title:
Dated:
---------------------------
cc: Einstein/Noah Bagel Corp.
B-3-2
<PAGE> 118
EXHIBIT B-4
FORM OF CERTIFICATE FOR EXCHANGE OR
REGISTRATION OF TRANSFER FROM RESTRICTED
GLOBAL SECURITY OR REGULATION S PERMANENT
GLOBAL SECURITY TO CERTIFICATED SECURITY
(Pursuant to Section 2.12(c) of the Indenture)
Bankers Trust Company
Four Albany Street, 4th Floor
New York, New York 10006
Attention: Corporate Trust and Agency Group - Corporate Market Service
Re: $125,000,000 7 1/4% Convertible Subordinated Debentures due 2004
of Einstein/Noah Bagel Corp.
Reference is hereby made to the Indenture, dated as of May 29, 1997 (the
"Indenture"), between Einstein/Noah Bagel Corp. (the "Company") and Bankers
Trust Company, as trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.
This letter relates to $______________ principal amount of Securities
which are evidenced by one or more Restricted Global Securities (CUSIP No.
______) or Regulation S Permanent Global Securities (CUSIP No._____) and held
with the Depositary in the name of (the "Transferor"). The Transferor has
requested a transfer of such beneficial interest in the Securities to a person
who will take delivery thereof in the form of an equal principal amount of
Securities evidenced by one or more Certificated Securities (CUSIP No._____ ),
which amount, immediately after such transfer, is to be held with the
Depositary.
In connection with such request and in respect of the Securities
surrendered to the Trustee herewith for exchange (the "Surrendered
Securities"), the Holder of such Surrendered Securities hereby certifies that:
[CHECK ONE]
[ ] the Surrendered Securities are being transferred to the beneficial
owner of such Securities;
or
B-4-1
<PAGE> 119
[ ] the Surrendered Securities are being transferred pursuant to and
in accordance with Rule 144A under the United States Securities
Act of 1933, as amended (the "Securities Act"), and, accordingly,
the Transferor hereby further certifies that the Surrendered
Securities are being transferred to a person that the Transferor
reasonably believes is purchasing the Surrendered.
[ ] Securities for its own account, or for one or more accounts with
respect to which such person exercises sole investment discretion,
and such person and each such account is a "qualified
institutional buyer" within the meaning of Rule 144A, in each case
in a transaction meeting the requirements of Rule 144A;
or
[ ] the Surrendered Securities are being transferred in a transaction
permitted by Rule 144 under the Securities Act;
or
[ ] the Surrendered Securities are being transferred pursuant to an
effective registration statement under the Securities Act;
or
[ ] such transfer is being effected pursuant to an exemption from the
registration requirements of the Securities Act other than Rule
144A or Rule 144, and the Transferor hereby further certifies that
the Securities are being transferred in compliance with the
transfer restrictions applicable to the global Securities and in
accordance with the requirements of the exemption claimed, which
certification is supported by an Opinion of Counsel, provided by
the transferor or the transferee (a copy of which the Transferor
has attached to this certification) in form reasonably acceptable
to the Company and to the Registrar, to the effect that such
transfer is in compliance with the Securities Act;
and the Surrendered Securities are being transferred in compliance with any
applicable blue sky securities laws of any state of the United States.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company and Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. Incorporated and
Alex. Brown & Sons Incorporated,
B-4-2
<PAGE> 120
the initial purchasers of such Securities being transferred. Terms used in
this certificate and not otherwise defined in the Indenture have the meanings
set forth in Regulation S under the Securities Act.
---------------------------------------
[Insert Name of Transferor]
By:
------------------------------------
Name:
Title:
Dated:
--------------------------------
cc: Einstein/Noah Bagel Corp.
B-4-3
<PAGE> 121
EXHIBIT B-5
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
FROM CERTIFICATED SECURITY TO RESTRICTED GLOBAL SECURITY OR
REGULATION S PERMANENT GLOBAL SECURITY
(Pursuant to Section 2.12(d) of the Indenture)
Bankers Trust Company
Four Albany Street, 4th Floor
New York, New York 10006
Attention: Corporate Trust and Agency Group - Corporate Market Services
Re: $125,000,000 7 1/4% Convertible Subordinated Debentures due 2004
of Einstein/Noah Bagel Corp.
Reference is hereby made to the Indenture, dated as of May 29, 1997 (the
"Indenture"), between Einstein/Noah Bagel Corp. (the "Company") and Bankers
Trust Company, as trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.
In connection with such request and in respect of the Securities
surrendered to the Trustee herewith for exchange (the "Surrendered
Securities"), the Holder of such Surrendered Securities hereby certifies that:
[CHECK ONE]
[ ] the Surrendered Securities are being transferred to the beneficial
owner of such Securities;
or
[ ] the Surrendered Securities are being transferred pursuant to and
in accordance with Rule 144A under the United States Securities
Act of 1933, as amended (the "Securities Act"), and, accordingly,
the Transferor hereby further certifies that the Surrendered
Securities are being transferred to a person that the Transferor
reasonably believes is purchasing the Surrendered Securities for
its own account, or for one or more accounts with respect to which
such person exercises sole investment discretion, and such person
and each such account is a "qualified institutional buyer" within
the meaning of Rule 144A, in each case in a transaction meeting
the requirements of Rule 144A;
or
B-5-1
<PAGE> 122
[ ] the Surrendered Securities are being transferred in a transaction
permitted by Rule 144 under the Securities Act;
or
[ ] the Surrendered Securities are being transferred in a transaction
permitted by Rule 904 of Regulation S under the Securities Act;
or
[ ] the Surrendered Securities are being transferred pursuant to an
effective registration statement under the Securities Act;
or
[ ] such transfer is being effected pursuant to an exemption from the
registration requirements of the Securities Act other than Rule
144A or Rule 144, and the Transferor hereby further certifies that
the Securities are being transferred in compliance with the
transfer restrictions applicable to the global Securities and in
accordance with the requirements of the exemption claimed, which
certification is supported by an Opinion of Counsel, provided by
the transferor or the transferee (a copy of which the Transferor
has attached to this certification) in form reasonably acceptable
to the Company and to the Registrar, to the effect that such
transfer is in compliance with the Securities Act;
and the Surrendered Securities are being transferred in compliance with any
applicable blue sky securities laws of any state of the United States.
B-5-2
<PAGE> 123
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company and Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. Incorporated and
Alex. Brown & Sons Incorporated, the initial purchasers of such Securities
being transferred. Terms used in this certificate and not otherwise defined in
the Indenture have the meanings set forth in Regulation S under the Securities
Act.
---------------------------------------
[Insert Name of Transferor]
By:
------------------------------------
Name:
Title:
Dated:
------------------------------
cc: Einstein/Noah Bagel Corp.
B-5-3
<PAGE> 1
Exhibit 99.1
Analyst Contact: Nancy Shipp
303-216-3738
Media Contact: Gary Gerdemann
303-216-3724
EINSTEIN/NOAH BAGEL CORP. ANNOUNCES PROPOSED PRIVATE DEBT OFFERING
GOLDEN, CO., May 13, 1997 -- Einstein/Noah Bagel Corp. (NASDAQ-NMS: ENBX) today
announced a proposed private offering of $75 million of convertible
subordinated debentures due 2004. The proceeds of the offering will be used
primarily to fund new store development.
The proposed debentures will be offered to qualified institutional buyers and
certain institutional accredited investors and may also be offered to foreign
persons. The debentures have not been registered under the Securities Act of
1933 and may not be offered or sold in the United States without registration
or without an exemption from the registration requirements of the Securities
Act of 1933 and applicable state securities laws. The company expects the
debentures will be resold by the initial purchasers pursuant to Rule 144A or
Regulation S under the Securities Act of 1933.
As of April 20, 1997, Einstein/Noah Bagel Corp. franchised 420 retail bagel
stores in 28 states, primarily under the Einstein Bros.(TM) Bagels and Noah's
New York Bagels(R) brands. The stores are unique bagel cafes and bakeries
featuring fresh-baked bagels, a variety of cream cheese spreads, specialty
coffee drinks, soups, sandwiches and salads. Boston Chicken, Inc., (NASDAQ-
NMS: BOST) is the majority stockholder of ENBC.
# # #
<PAGE> 1
Exhibit 99.2
Analyst Contact: Nancy Shipp
303-216-3738
Media Contact: Gary Gerdemann
303-216-3724
EINSTEIN/NOAH BAGEL CORP. ANNOUNCES INCREASE IN DEBT OFFERING
GOLDEN, CO., May 23, 1997 -- Einstein/Noah Bagel Corp. (NASDAQ-NMS: ENBX)
today announced that its private offering of $75 million of convertible
subordinated debentures due 2004 was increased to $125 million due to heavy
demand for the offering. The proceeds of the offering will be used primarily
to fund new store development.
The Debentures are convertible into common stock of Einstein/Noah Bagel Corp.
and have semi-annual interest payments on June 1 and December 1 of each year,
with the first payment due December 1, 1997. Each bond is convertible into the
Company's common stock at a conversion price of $21.25 and carries a 7.25
percent coupon rate.
As of April 20, 1997, Einstein/Noah Bagel Corp. franchised 420 retail bagel
stores in 28 states, primarily under the Einstein Bros.(TM) Bagels and Noah's
New York Bagels(R) brands. The stores are unique bagel cafes and bakeries
featuring fresh-baked bagels, a variety of cream cheese spreads, specialty
coffee drinks, soups, sandwiches and salads. Boston Chicken, Inc., (NASDAQ-
NMS: BOST) is the majority stockholder of ENBC.
# # #
<PAGE> 1
Exhibit 99.3
Analyst Contact: Nancy Shipp
303-216-3738
Media Contact: Gary Gerdemann
303-216-3724
EINSTEIN/NOAH BAGEL CORP. COMPLETES PRIVATE DEBT OFFERING
GOLDEN, CO., May 29, 1997 -- Einstein/Noah Bagel Corp. (NASDAQ-NMS:ENBX) today
announced it has completed a private offering of $125 million of convertible
subordinated debentures due 2004. Proceeds will be used primarily to fund new
store development.
"At the end of the first quarter, we had 420 stores and we are on track to end
the year at 615-665 stores. Our store performance is strong and we have built
a great management team and Area Developer network to build our brands," said
Mark Goldston, president and CEO. "With the closing of our recent financing,
we are in position to become the leading bagel retailer before the year is
over."
The Debentures are convertible into common stock of Einstein/Noah Bagel Corp.
and have semi-annual interest payments on June 1 and December 1 of each year,
with the first payment due December 1, 1997. Each bond is convertible into the
Company's common stock at a conversion price of $21.25 and carries a 7.25
percent coupon rate.
As of April 20, 1997, Einstein/Noah Bagel Corp. franchised 420 retail bagel
stores in 28 states, primarily under the Einstein Bros.(TM) Bagels and Noah's
New York Bagels(R) brands. The stores are unique bagel cafes and bakeries
featuring fresh-baked bagels, a variety of cream cheese spreads, specialty
coffee drinks, soups, sandwiches and salads. Boston Chicken, Inc. (NASDAQ-NMS:
BOST) is the majority stockholder of ENBC.
Certain statements in this release constitute forward-looking statements and
involve known and unknown risks, uncertainties, and other factors which may
cause the actual results, performance or achievements of the Company, its area
developers and
<PAGE> 2
franchisees, and Einstein Bros. Bagels stores and Noah's New York Bagels stores
to be materially different from any performance or achievements expressed or
implied by such forward looking statements. Such factors include, among
others, area developers adherence to development schedules; availability,
locations and terms of sites for store development; changes in business
strategy or development plans; and other factors referenced in the Company's
filings with the Securities and Exchange Commission.
# # #
