FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934.
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934.
FOR THE TRANSITION PERIOD FROM ____________ TO ______________
COMMISSION FILE NUMBER 0-24773
PINNACLE HOLDINGS INC.
INCORPORATED IN DELAWARE I.R.S. EMPLOYER IDENTIFICATION NO. 65-0652634
301 NORTH CATTLEMEN ROAD, SARASOTA, FLORIDA 34232-6427
TELEPHONE: (941) 364-8886
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
At May 11, 2000, Registrant had outstanding 48,340,923 shares of $.001 par value
common stock.
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PART I. FINANCIAL INFORMATION PAGE
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Item 1. Financial Statements
Unaudited Condensed Consolidated Balance Sheets as of December 31, 1999 and March 31, 2000 1
Unaudited Condensed Consolidated Statements of Operations for the three months ended
March 31, 1999 and 2000 2
Unaudited Condensed Consolidated Statement of Changes in Stockholders' Equity for the three months
ended March 31, 2000 3
Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended
March 31, 1999 and 2000 4
Notes to Unaudited Condensed Consolidated Financial Statements 5-8
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 9-14
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 2 Changes in Securities and Use of Proceeds 15
Items 3 Not Applicable
Item 4 Not Applicable
Item 5 Other Information 15-16
Item 6. Exhibits and Reports on Form 8-K 16
SIGNATURES 17
EXHIBIT INDEX 18
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
--------------------
PINNACLE HOLDINGS INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1999 2000
------------------- -----------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 94,862,918 $ 228,132,860
Accounts receivable, net 12,076,689 17,239,534
Prepaid expenses and other current assets 5,235,972 9,544,960
------------------- -----------------
Total current assets 112,175,579 254,917,354
Fixed assets, net 955,689,136 1,117,335,260
Leasehold interests, net 74,037,558 69,609,223
Deferred debt issue costs, net 14,299,519 19,393,903
Other assets 3,232,248 4,273,854
------------------- -----------------
$1,159,434,040 $1,465,529,594
=================== =================
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 7,297,498 $ 8,989,569
Accrued expenses 53,853,059 43,238,389
Deferred revenue 3,910,551 6,606,401
Current portion of long-term debt 6,705,578 7,463,216
------------------- -----------------
Total current liabilities 71,766,686 66,297,575
Long-term debt 712,659,042 763,523,349
Other liabilities 510,090 579,846
------------------- -----------------
784,935,818 830,400,770
------------------- -----------------
Stockholders' equity:
Common stock, $.001 par value, 100,000,000 shares authorized; 41,094,471 and
48,340,923 shares issued and outstanding at
December 31, 1999 and March 31, 2000, respectively 41,094 48,341
Additional paid-in capital 489,090,451 771,792,664
Foreign currency translation (418,488) (338,939)
Accumulated deficit (114,214,835) (136,373,242)
------------------- -----------------
374,498,222 635,128,824
------------------- -----------------
$1,159,434,040 $1,465,529,594
=================== =================
</TABLE>
The accompanying Notes to Unaudited Condensed Consolidated Financial Statements
are an integral part of these condensed financial statements.
1
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PINNACLE HOLDINGS INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
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THREE MONTHS ENDED
MARCH 31,
-----------------------------
1999 2000
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Revenues $ 12,008,208 $ 39,923,411
Direct operating expenses, excluding depreciation and amortization 2,232,651 14,340,667
------------ ------------
Gross margin, excluding depreciation and amortization 9,775,557 25,582,744
Other expenses:
General and administrative 843,464 1,906,605
Corporate development 1,711,283 3,870,986
State franchise, excise and minimum taxes 200,975 366,240
Depreciation and amortization 8,994,211 26,395,597
------------ ------------
11,749,933 32,539,428
------------ ------------
Loss from operations (1,974,376) (6,956,684)
Interest expense 3,900,192 8,775,993
Amortization of original issue discount and debt issuance costs 5,428,504 6,425,730
------------ ------------
Net loss ($11,303,072) ($22,158,407)
Payable-in-kind preferred dividends and accretion 2,930,338 -
------------ ------------
Net loss attributable to common stockholders ($14,233,410) ($22,158,407)
============ ============
Basic and diluted loss per common share ($ 0.79) ($ 0.48)
============ ============
Weighted average number of common shares outstanding 18,067,484 46,478,027
============ ============
</TABLE>
The accompanying Notes to Unaudited Condensed Consolidated Financial Statements
are an integral part of these condensed financial statements.
2
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PINNACLE HOLDINGS INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMPREHENSIVE COMMON STOCK ADDITIONAL
INCOME ---------------------- PAID-IN ACCUMULATED
(LOSS) SHARES AMOUNT CAPITAL DEFICIT EQUITY
------------- ---------- --------- -------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1999............... 41,094,471 $ 41,094 $489,090,451 ($114,633,323) $374,498,222
Unaudited:
Issuance of common stock, net of
issuance costs........................ 7,246,452 7,247 282,702,213 282,709,460
Foreign currency translation gain (loss)... $ 79,549 79,549 79,549
Net loss................................... ( 22,158,407) ( 22,158,407) ( 22,158,407)
------------- ---------- --------- -------------- ------------- ------------
Balance at March 31, 2000.................. ($ 22,078,858) 48,340,923 $ 48,341 $ 771,792,664 ($136,712,181) $635,128,824
============= ========== ========== ============== ============== =============
</TABLE>
The accompanying Notes to Unaudited Condensed Consolidated Financial Statements
are an integral part of these condensed financial statements.
3
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PINNACLE HOLDINGS INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
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THREE MONTHS ENDED
MARCH 31,
-------------------------------
1999 2000
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Cash flows from operating activities:
Net loss ($ 11,303,072) ($ 22,158,407)
------------- -------------
Adjustments to reconcile net loss to net cash provided by operating
activities:
Depreciation 8,994,211 26,395,597
Amortization of original issue discount and debt issuance costs 5,428,504 6,425,729
Provision for doubtful accounts - 313,091
(Increase) decrease in:
Accounts receivable, gross (487,059) (5,536,771)
Prepaid expenses and other current assets 58,347 (4,308,988)
Other assets 562,528 (1,041,606)
Increase (decrease) in:
Accounts payable 929,016 1,692,071
Accrued expenses 5,682,679 (10,614,670)
Deferred revenue 1,462,667 2,695,850
Other liabilities 58,475 69,756
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Total adjustments 22,689,368 16,090,059
------------- -------------
Net cash provided by operating activities 11,386,296 (6,068,348)
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Cash flows from investing activities:
Payments made in connection with acquisitions:
Fixed assets (72,172,206) (166,395,006)
Leasehold interests - (2,670,966)
Net current liabilities acquired - 176,573
Capital expenditures:
Fixed assets (13,485,203) (7,371,552)
------------- -------------
Net cash used in investing activities (85,657,409) (176,260,951)
------------- -------------
Cash flows from financing activities:
Borrowings under long-term debt, net 50,000,000 227,433,041
Repayment of long-term debt (139,142,790) (194,923,139)
Proceeds from issuance of common stock, net 288,335,011 282,709,460
Liquidation of PIK preferred stock and warrants (93,741,617) -
Distribution of contributed capital and payment of
accretion on various classes of common stock (43,704,472) -
------------- -------------
Net cash provided by financing activities 61,746,132 315,219,362
------------- -------------
Effect of exchange rate changes on cash - 379,879
------------- -------------
Net increase (decrease) in cash and cash equivalents (12,524,981) 133,269,942
Cash and cash equivalents, beginning of period 13,801,190 94,862,918
------------- -------------
Cash and cash equivalents, end of period $ 1,276,209 $ 228,132,860
============= =============
Supplemental disclosure of cash flows:
Cash paid for interest $ 4,702,341 $ 10,882,461
============= =============
Non-Cash Transactions:
Seller debt issued in connection with acquisitions $ 4,559,650 $ 7,295,000
Payable-in-kind preferred dividends and accretion $ 2,930,338 $ -
</TABLE>
The accompanying notes to Unaudited Condensed Consolidated Financial Statements
are an integral part of these condensed financial statements.
4
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PINNACLE HOLDINGS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. FINANCIAL STATEMENTS
The accompanying consolidated financial statements reflect the
financial position and results of operations and cash flows of Pinnacle Holdings
Inc. and its wholly owned subsidiaries: Pinnacle Towers Inc., Pinnacle Towers
Canada Inc., Coverage Plus Antenna Systems, Inc. and Tower Systems, Inc. In
addition, beginning in 1999 Pinnacle Holdings Inc. contributed capital to PT III
("PT III") to establish a preferred stock interest. Pinnacle Towers Inc. and
certain members of management of Pinnacle Holdings Inc. own the common stock of
PT III. PT III utilized the capital contributed to purchase certain
communications site assets and the stock of a corporation that owns and manages
communications sites. As a result of Pinnacle Holdings Inc.'s ability to direct
the policies and management that guide the ongoing activities of PT III, the
financial position and results of operations and cash flows of PT III are
consolidated in the financial statements of Pinnacle. Unless otherwise noted,
"we," "us," "our," or "Pinnacle" refers to Pinnacle Holdings Inc. and its
consolidated subsidiaries, including PT III. All significant intercompany
balances and transactions have been eliminated.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and use
assumptions that affect the reported amounts of assets and liabilities and the
disclosure for contingent assets and liabilities at the date of the financial
statements as well as the reported amounts of revenues and expenses during the
reporting period. Actual results may vary from estimates used.
Results of operations for any interim period are not necessarily
indicative of results of any other periods or for the year. The consolidated
statements as of March 31, 2000 and for the three month periods ended March 31,
2000 and 1999 are unaudited, but in the opinion of management include all
adjustments (consisting of normal recurring adjustments) necessary for a fair
presentation of results for such periods. These consolidated financial
statements should be read in conjunction with Pinnacle's financial statements
and notes thereto for the year ended December 31, 1999.
2. ACQUISITIONS
We actively acquires communications sites and related real estate
assets.
On August 31, 1999, we acquired 1,858 communications sites and related
assets from Motorola, Inc. ("Motorola") for $254 million, comprised of $245
million in cash and $9 million of our common stock, plus fees and expenses of
approximately $17 million (the "Motorola Antenna Site Acquisition"). The
purchase price allocations related to this transaction are preliminary. However,
we do not expect that the final allocation of the purchase price will be
materially different from its preliminary allocation. This acquisition results
in Pinnacle having sites in all 50 states and nine Canadian Provinces. We
transferred certain of the rooftop communication sites we acquired from Motorola
to PT III.
Included in the total purchase price recorded on a preliminary basis
for the Motorola acquisition were accrued costs related to completion of the
transaction of approximately $31.5 million. These accrued deal costs were
comprised primarily of employee severance and relocation costs ($1.7 million),
contract and title work related to communications sites, due diligence and
closing costs ($29.8 million). As of March 31, 1999, approximately $21.0 million
of these accrued costs had been paid by us.
In addition to the Motorola Antenna Site Acquisition, during the year
ended December 31, 1999 we completed 129 acquisitions of 442 communications
sites and related assets, each of which was individually insignificant to
Pinnacle, from various sellers for an aggregate purchase price of $238 million
consisting of $228 million in cash and $10 million of notes payable to the
former communications site owners.
5
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During the three months ended March 31, 2000, we completed 65
acquisitions of 668 communications sites and related assets, each of which was
individually insignificant to Pinnacle, from various sellers for an aggregate
purchase price of $176.3 million consisting of $169.0 million in cash and $7.3
million of notes payable to the former communications site owners.
We account for our acquisitions using the purchase method of
accounting. The results of operations of the acquired assets are included with
those of Pinnacle from the dates of the respective acquisitions. The pro forma
results of operations listed below reflect purchase accounting and pro forma
adjustments as if the transactions occurred as of January 1, 1999. The unaudited
pro forma consolidated financial statements are not necessarily indicative of
the results that would have occurred if the assumed transactions had occurred on
the dates indicated and are not necessarily indicative of the expected financial
position or results of operations in the future.
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Pro Forma
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(in thousands)
March 31, March 31,
1999 2000
----------- -----------
(unaudited) (unaudited)
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Revenue $ 40,748 $ 41,718
Gross margin, excluding depreciation and amortization 25,972 26,972
Net loss (30,585) (24,447)
Net loss attributable to common stockholders (33,515) (24,447)
Basic and diluted loss per common share (1.86) (0.53)
</TABLE>
3. LONG-TERM DEBT
As of June 25, 1999, we amended our Senior Credit Facility to provide
$520 million of financing, of which $470 million was committed. Advances under
the Senior Credit Facility accrue interest at our option of either LIBOR plus a
margin of up to 3.00%, as defined in the related agreement, or at the greater of
the Federal Funds Effective Rate plus 0.50% or the prime rate, plus a margin of
up to 1.75%. Additionally, certain financial covenants were modified.
As of September 17, 1999, we again amended our Senior Credit Facility
to provide $670 million of financing, of which $520 million was committed and
$290 million was utilized at March 31, 2000.
The Senior Credit Facility is secured by a lien on substantially all of
our assets and a pledge of substantially all of the capital stock of our
subsidiaries. The Senior Credit Facility contains customary covenants such as
limitations on our ability to incur indebtedness, to incur liens or encumbrances
on assets, to make certain investments, to make distributions to stockholders,
or prepay subordinated debt. Under the Senior Credit Facility, we may not permit
the ratio of senior debt to annualized EBITDA as defined in the agreement to
exceed certain amounts.
On March 22, 2000 we completed a private placement of $200 million of
5.5% Convertible Subordinated Notes Due 2007 (the "Convertible Notes") to
certain institutional purchasers pursuant to the exemption from registration
provided by Section 4(2) of the Securities Act. We repaid outstanding
revolving debt under our Senior Credit Facility with the net proceeds of $193.5
million from this private placement. We will pay interest on the Convertible
Notes on March 15 and September 15 of each year, with the first interest payment
to be made September 15, 2000. The Convertible Notes will mature on September
15, 2007 unless previously redeemed or repurchased. The Convertible Notes are
convertible into Pinnacle's common stock at the option of the Convertible Note
holders at an initial price of $78.375 per share, which conversion price is
subject to adjustment under the terms of the Convertible Notes. We may redeem
the Convertible Notes on or after March 21, 2003. Pursuant to a Registration
Rights Agreement dated March 22, 2000, we must use reasonable best efforts to
file a registration statement on or before June 20, 2000, to cover resales of
the Convertible Notes and the shares of Common Stock issuable upon conversion
of the Convertible Notes.
6
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4. PUBLIC OFFERINGS AND STOCKHOLDERS' EQUITY
INITIAL PUBLIC OFFERING
On February 19, 1999, we completed our initial public offering of our
common stock ("the Offering") whereby we sold 20,000,000 shares of a new class
of common stock (the "Common Stock"). In addition, on March 19, 1999, the
Underwriters over-allotment options were exercised to the extent that an
additional 2,026,000 shares were sold. The initial price per share was $14,
resulting in net proceeds from the Offering of approximately $288 million.
In connection with the Offering, pursuant to a recapitalization
agreement between Pinnacle, our largest stockholder, ABRY Broadcast Partners II,
L.P. ("ABRY II"), and certain members of our management that are stockholders of
Pinnacle, we converted all outstanding shares of each class of Pinnacle's five
classes of common stock into shares of the Common Stock sold in the Offering and
paid to the holders of certain of such classes of common stock preferential
amounts and yields. Pinnacle's certificate of incorporation was amended
immediately prior to the consummation of the Offering to eliminate the multiple
classes of Pinnacle's common stock and create the now single class of Common
Stock, and all of the outstanding shares of all the classes of common stock of
Pinnacle other than Class D Common stock were converted into approximately
8,571,309 shares of Common Stock and all shares of Class D common stock were
converted into approximately 1,428,691 shares of Common Stock. All unvested
shares of Class D Common stock held by employees at the date of the Offering
become vested shares.
The holders of Pinnacle's outstanding (prior to the above described
conversion) shares of Class A Common stock, Class B Common stock and Class E
Common stock were collectively paid approximately $38.9 million by Pinnacle from
proceeds of the Offering, which amount equaled the amount of preferences such
shares were entitled to over the other classes of Pinnacle's common stock
pursuant to our certificate of incorporation before giving effect to the
amendment relative to the conversion of those shares as described above. In
addition, the holders of Pinnacle's outstanding (prior to the above described
conversion) shares of Class A Common stock were collectively paid approximately
$4.8 million by Pinnacle from proceeds of the Offering, which amount equaled the
amount of yield such shares had accrued from the date of their issuances through
June 30, 1997 pursuant to Pinnacle's certificate of incorporation before giving
effect to the amendment relative to the conversion of those shares as described
above.
Other uses of proceeds from the Offering were: (1) approximately $32.0
redeemed the outstanding shares of Pinnacle's Series A Senior Preferred Stock
(the "Senior Preferred Stock"); (2) approximately $61.7 million redeemed the
outstanding shares of Pinnacle's Series B Junior Preferred Stock (the "Junior
Preferred Stock"); (3) approximately $15.7 million repaid in full and retired
loan from ABRY II; (4) approximately $123.8 million repaid outstanding
borrowings under Pinnacle's Senior Credit Facility; and, (5) $11.4 was used to
fund the closing of pending acquisitions proximate to the date the funds were
available from the Offering.
SECONDARY OFFERINGS
On July 27, 1999, we completed a secondary offering of common stock
(the "July Offering") whereby we sold 8,650,000 shares of our common stock. The
price per share was $25, resulting in net proceeds from the July Offering of
approximately $206 million. Certain stockholders of Pinnacle also sold 2,350,000
shares of common stock, the net proceeds of which are not available to us. The
proceeds from the July Offering were invested initially in short-term liquid
securities and were used in conjunction with Pinnacle's availability of senior
debt under our amended Senior Credit Facility to fund acquisitions, the
construction of new communications sites and improvements to existing
communications sites.
On January 24, 2000, we completed another secondary offering of common
stock (the "January Offering") whereby we sold 7,200,000 shares of our common
stock. The price per share was $41, resulting in net proceeds from the January
Offering of approximately $283 million. Certain stockholders of Pinnacle also
sold 3,150,000 shares of common stock, the net proceeds of which are not
available to us. The proceeds
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from the January Offering were invested initially in short-term liquid
securities and will be used to reduce our debt or be used with borrowings made
under the Senior Credit Facility to fund acquisitions, the construction of new
communications sites and improvements to existing communications sites
(approximately $106 million used through March 31, 2000). The total shares sold
included a concurrent exercise of the underwriters' over-allotment option
whereby 1,350,000 shares were sold (including 450,000 shares sold by certain of
our stockholders).
OTHER ISSUANCES OF STOCK
In conjunction with the Motorola Antenna Site Acquisition, we issued
418,520 shares of common stock to Motorola as part of the consideration given
for the acquisition. These shares were recorded at the fair value of the
securities when the terms of the acquisition were agreed to and announced.
During the three months ended March 31, 2000, we issued 46,452 shares
of our common stock upon exercise of various stock options granted to our
employees at the time of the Offering.
4. COMMITMENTS
As of and subsequent to March 31, 2000, we entered into several letters
of intent with various third parties to purchase 676 communications sites,
reflecting an aggregate commitment to pay approximately $131.4 million, all of
which are subject to consummation of a transaction pending completion of due
diligence efforts and any further negotiation which may result therefrom. In
addition, we have completed acquisitions of 178 communications sites for an
aggregate purchase price of $39.2 million subsequent to March 31, 2000.
8
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS:
The following discussion of the consolidated financial condition and
results of operations of Pinnacle should be read in conjunction with the
consolidated financial statements and related notes thereto. This discussion
contains forward-looking statements within the meaning of the federal securities
laws. The words "believe," "estimate," "expect," "intend," "anticipate," "plan,"
and similar expressions and variations of such expressions identify certain of
such forward-looking statements that speak only as of the dates on which they
were made. Prospective investors are cautioned that any such forward-looking
statements are not guarantees of future performance and involve risks and
uncertainties. Actual events or results may differ materially from those
discussed in the forward-looking statements as a result of various factors,
including, without limitation, the forward-looking statements and associated
considerations set forth in Pinnacle's Annual Report on Form 10-K for the fiscal
year ended December 31, 1999.
OVERVIEW
We acquire communications sites and construct rental towers and lease
space on these communications sites to a broad base of wireless communications
providers, operators of private networks, government agencies and other
customers. Our objective is to acquire or construct clusters of rental
communications sites in areas where there is significant existing and expected
continued growth in the demand for rental communications sites by wireless
communications providers. We seek to obtain a significant ownership position of
communications site assets in our targeted markets in order to offer "one-stop
shopping" to wireless communications providers who are deploying or expanding
wireless communications networks.
Our growth has come primarily from the acquisition of communications
sites and construction of towers and from adding new tenants to these towers.
Our business strategy focuses on aggressively pursuing communications site
acquisitions and selectively constructing towers in areas that complement our
existing base of rental communications sites and the expansion into additional
high growth wireless communications markets. Since commencing operations in May
1995, we have completed acquisitions and builds as follows:
<TABLE>
<CAPTION>
PERIODS ENDED:
----------------------------------------------------------
DECEMBER 31, MARCH 31
---------------------------------------------- --------
1995 1996 1997 1998 1999 2000 TOTAL
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<S> <C> <C> <C> <C> <C> <C> <C>
Number of owned sites
Acquired........................... 29 119 134 517 858 273 1,930
Number of managed sites
Acquired........................... * * * * 584 395 979
Number of leased sites
Acquired........................... * * * * 858 - 858
Number of towers built................ 4 4 22 47 23 3 103
------- -------- -------- -------- -------- ------- --------
Number of sites acquired or
built during the period............ 33 123 156 564 2,323 671 3,870
======= ======== ======== ======== ======== ======= ========
Number of acquisition transac-
tions completed.................... 13 49 72 82 130 65 411
</TABLE>
- --------------
* Does not include 34 communications sites currently managed or leased that were
acquired between 1995 and 1998.
Since March 31, 2000, we have closed 19 acquisitions with 178
additional communications sites and, as of May 5, 2000, have agreements or
letters of intent to acquire 676 additional communications sites. In addition,
we have identified numerous additional acquisition candidates. We expect that
internal growth
9
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related to completed acquisitions and the business potential of pending
acquisitions will have a material impact on our future revenues and EBITDA.
We believe that significant opportunities for growth exist by
maximizing the use of our existing and future communications sites. Because the
costs of operating a communications site are primarily fixed on owned sites,
increasing tower utilization significantly improves tower level operating
margins on these sites. We believe that "same site" revenue growth on owned
communications sites (measured by comparing the annualized run rate revenue of
our owned communications sites at the end of a period to the annualized run rate
revenue for the same owned communications sites at the end of a prior period),
is a meaningful indicator of the quality of these sites and our ability to
generate incremental revenue on such sites. Taking into consideration new leases
written as of December 31, 1999, we experienced "same site" revenue growth of
approximately 19.0% for the year ended December 31, 1999 on the base of
communications sites we owned as of December 31, 1998.
We have generated net losses since inception and at March 31, 2000, had
an accumulated deficit totaling approximately $136.4 million. Due to the nature
of our business (the leasing of cash-generating assets) and our plans to
continue to grow the business, it is expected that charges relating to
depreciation of existing and future assets and interest expense associated with
related debt balances will be substantial. Accordingly, we expect to continue to
generate losses for the foreseeable future.
Our annualized run rate revenue is calculated as of a given date by
annualizing the monthly rental rates then in effect for customer lease contracts
as of such date. We believe that growth in our annualized run rate revenue is a
meaningful indicator of our performance. As of March 31, 2000, our annualized
run rate revenue was approximately $160 million.
On August 31, 1999, we completed the Motorola Antenna Site Acquisition.
In connection with that transaction, we acquired approximately 1,858
communications sites, consisting of approximately 499 owned sites, 526 managed
sites and 833 leased sites, for $254 million in cash and stock, plus fees and
expenses. For the year ended December 31, 1999 on a pro forma basis, the
Motorola sites generated $55.7 million in revenue, $25.6 million in tower level
cash flow and $17.7 million in EBITDA for the eight months ended prior to
closing on August 30, 1999. Previously, we have not had a significant number of
managed or leased sites in our portfolio. Generally, managed and leased sites
have higher operating costs than owned towers, primarily as a result of higher
rental costs related to revenue sharing with site owners. In addition, on leased
sites, we generally have a right to lease only a limited portion of a site,
which limits total revenue potential. Higher relative operating costs and
limited revenue growth results in substantially lower tower cash flow and EBITDA
margin performance on managed and leased sites. Accordingly, the acquisition of
managed and leased sites in the Motorola Antenna Site Acquisition or any
potential future acquisitions will substantially decrease our site level
operating margins.
Following the closing of the Motorola Antenna Site Acquisition we
transferred a portion of the rooftop communication sites we acquired from
Motorola to PT III, a corporation in which we own substantially all of the
equity interests, in exchange for $9.8 million of convertible preferred stock
and a $39.2 million Convertible Promissory note, in order to minimize the risk
that the ownership of or income from such assets might negatively affect our
qualification as a REIT. We also agreed to make our personnel, facilities and
general and administrative overhead available to PT III, the cost thereof to be
reimbursed to us by PT III. During the quarterly period ended March 31, 2000, we
purchased approximately $2.4 million of additional convertible preferred stock
of PT III and approximately $9.5 of additional convertible promissory notes. PT
III used such funds to acquire all of the stock of a corporation that owns and
manages communications sites, and to acquire certain assets used in
communications site management and related activities. See Item 5, Other
Information.
RESULTS OF OPERATIONS
The following table sets forth, for the quarterly periods indicated,
each statement of operations item as a percentage of revenue. The results of
operations are not necessarily indicative of results for any future
10
<PAGE>
period. The following data should be read in conjunction with our consolidated
financial statements and notes thereto included elsewhere herein.
<TABLE>
<CAPTION>
MARCH 31, MARCH 31,
1999 2000
------- ------
<S> <C> <C>
Statement of Operations Data:
Revenue 100.0% 100.0%
Direct operating expenses, excluding
depreciation and amortization..................... 18.6 35.9
Gross margin, excluding
depreciation and amortization..................... 81.4 64.1
Other expenses:
General and administrative........................... 7.0 4.8
Corporate development................................ 14.3 9.7
State franchise, excise and minimum taxes............ 1.7 0.9
Depreciation and amortization........................ 74.9 66.1
Loss from operations...................................... (16.4) (17.4)
Interest expense.......................................... 32.5 22.0
Amortization of original issue discount and debt issuance
costs................................................ 45.2 16.1
Loss before extraordinary items........................... 94.1 (55.5)
</TABLE>
THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THREE MONTHS ENDED MARCH 31, 1999
Revenues increased by $27.9 million, or 232.5%, to $39.9 million for
the three month period ended March 31, 2000 from $12.0 million for the three
month period ended March 31, 1999. This additional revenue is mainly
attributable to the acquisition and construction of 2,994 sites since January 1,
1999. They are as follows: 671 sites during the first quarter 2000; 2,198 sites
during the last three quarters of 1999 which includes the Motorola Antenna Site
Acquisition; and 125 sites during the first quarter of 1999. A portion of the
revenue increase is related to same-site organic growth. Same-site organic
growth is a result of expanded marketing efforts to increase the number of
customers per site, renegotiating leases that are subject to renewal, and,
contractual price escalations for existing customers.
Direct operating expenses, excluding depreciation and amortization,
increased by $12.1 million or 542.3% to $14.3 million for the three month period
ended March 31, 2000 from $2.2 million for the three month period ended March
31, 1999. This increase is consistent with the acquisition and construction of
the 2,994 sites discussed above. Direct operating expenses as a percentage of
revenue increased to 35.9% for the three month period ended March 31, 2000 from
18.6% for the three month period ended March 31, 1999. The percentage increase
is primarily a result of the change in mix of sites. Both managed and leased
sites produce lower margins than owned sites because of their variable rent
expense. Notwithstanding, these sites are financially and strategically
consistent with our objective of providing wireless service providers a large
selection of antenna site locations.
General and administrative expenses increased for the three month
period ended March 31, 2000 to $1.9 million from $0.8 million for the three
month period ended March 31, 1999. The increases in expenses are from additional
staffing required for the increased work volume, increased levels of advertising
and marketing expenditures, and other related costs associated with our growth.
However, as a percentage of revenue, it decreased to 4.8% of revenue for the
three month period ended March 31, 2000 from 7.0% for the three month period
ended March 31, 1999 reflecting the disproportionately higher growth in revenues
relative to expenses. The decrease in percentage is from economies of scale
realized from increases in revenues as a result of our acquisitions and
construction of communications sites.
Corporate development expenses increased by $2.2 million or 126.2% to
$3.9 million for the three month period ended March 31, 2000 from $1.7 million
for the three month period ended March 31, 1999. Corporate development expenses
decreased as a percentage of revenue to 9.7% for the three month period ended
March 31, 2000 compared to 14.3% for the three month period ended March 31,
1999. The increase in expense is related to the overall growth in the business
and related activity during this same period. The decrease in percentage is from
economies of scale realized from increases in tower revenues relative to direct
operating expenses as a result of Pinnacle's acquisitions and construction of
communications sites.
11
<PAGE>
State franchise, excise and minimum taxes, which represent taxes
assessed in connection with our operations in various state jurisdictions,
increased to $0.4 million for the three month period ended March 31, 2000 from
$0.2 for the three month period ended March 31, 1999. Such taxes are calculated
using various methods such as a portion of our property within a given state,
our capital structure or based upon a minimum tax in lieu of income taxes. The
increase in expense is related to the overall growth in the business and related
activity during this same period.
Interest expense, net of amortization of original issue discount,
increased 125.0% to $8.8 million for the three month period ended March 31, 2000
from $3.9 million for the three month period ended March 31, 1999. The increase
in interest expense was attributable to increased borrowing associated with our
acquisitions and construction activity during the period since March 31, 1999,
and that the weighted average balance of debt outstanding during the three month
period ended March 31, 1999 (approximately $160 million) was much lower than
that outstanding during the three month period ended March 31, 2000
(approximately $438 million) as a result of the use of proceeds from the
Offering in February 1999 to pay down our debt outstanding under our Senior
Credit Facility.
LIQUIDITY AND CAPITAL RESOURCES
Our liquidity needs arise from our acquisition-related activities, debt
service obligations, working capital needs and capital expenditures. We have
historically funded our liquidity needs with proceeds from equity contributions,
public equity offerings, bank borrowings, debt offerings, and cash flow from
operations. We had net working capital of $188.6 million and $40.4 million as of
March 31, 2000 and December 31, 1999, respectively. Our ratio of total debt to
stockholders' equity was 1.2 to 1.0 at March 31, 2000 and 1.9 to 1.0 at December
31, 1999.
Our Senior Credit Facility provides us with a $235 million revolving
line of credit, with an uncommitted increase option which could increase the
revolving line of credit to $435 million, a $125 million term loan and a $110
million term loan, for a total availability of up to $670 million, of which $520
million (including letters of credit) is currently committed. Under our
revolving line of credit, we may make borrowings and repayments until June 30,
2006. Under one term loan, advances must be repaid in full by June 30, 2006.
Under the other term loan, advances must be repaid in full by June 30, 2007.
Once repaid, amounts under the term loans may not be reborrowed. Advances under
the term loans may be used for refinancing certain existing indebtedness,
acquisitions, working capital, and other general corporate purposes. Advances
under our revolving line of credit are limited to acquisitions. Advances under
our Senior Credit Facility have been used primarily to fund acquisitions,
construction of new communications sites and improvements to existing
communications sites.
Beginning September 30, 2001, the availability under our revolving line
of credit and one term loan starts reducing by specified amounts on a quarterly
basis until June 30, 2006, when the availability under such credits will be
reduced to zero. Beginning June 30, 2001, the availability under the other term
loan starts reducing by specified amounts on a quarterly basis until June 30,
2007, when the term loan must be repaid in full. As of March 31, 2000 we had
$195.4 million available under our Senior Credit Facility, after giving effect
to approximately $34.0 million of outstanding letters of credit, which reduced
availability under our Senior Credit Facility.
We also use seller financing to fund certain of our communications site
acquisitions. As of March 31, 2000, we had outstanding, in the aggregate amount,
$35.8 million of seller notes bearing interest at rates ranging from 8.5% to
13.0% per annum.
On February 19, 1999, we completed the Offering where we sold
20,000,000 shares of our common stock and on March 19, 1999, the over-allotment
options were exercised and an additional 2,026,000 shares were sold. The initial
price per share was $14, resulting in net proceeds of approximately $290 million
before deducting the costs of the Offering. The proceeds were used to acquire
communications sites.
12
<PAGE>
On July 27, 1999, we completed a secondary offering of common stock
(the "July Offering") whereby we sold 8,650,000 shares of our common stock. The
price per share was $25, resulting in net proceeds from the July Offering of
approximately $206 million. Certain stockholders of Pinnacle also sold 2,350,000
shares of common stock, the net proceeds of which are not available to us. The
proceeds from the July Offering were invested initially in short-term liquid
securities and were used in conjunction with Pinnacle's availability of senior
debt under our amended Senior Credit Facility to fund acquisitions, the
construction of new communications sites and improvements to existing
communications sites.
On January 24, 2000, we completed another secondary offering of common
stock (the "January Offering") whereby we sold 7,200,000 shares of our common
stock. The price per share was $41, resulting in net proceeds from the January
Offering of approximately $283 million. Certain stockholders of Pinnacle also
sold 3,150,000 shares of common stock, the net proceeds of which are not
available to us. The proceeds from the January Offering were invested initially
in short-term liquid securities and will be used to reduce our debt or be used
with borrowings made under the Senior Credit Facility to fund acquisitions, the
construction of new communications sites and improvements to existing
communications sites (approximately $106 million used through March 31, 2000).
The total shares sold included a concurrent exercise of the underwriters'
over-allotment option whereby 1,350,000 shares were sold (including 450,000
shares sold by certain of our stockholders).
On March 22, 2000 we completed a private placement of $200 million of
5.5% Convertible Subordinated Notes Due 2007 (the "Convertible Notes") to
certain institutional purchasers pursuant to the exemption from registration
provided by Section 4(2) of the Securities Act. We repaid outstanding
revolving debt under our Senior Credit Facility with the net proceeds of $193.5
million from this private placement. We will pay interest on the Convertible
Notes on March 15 and September 15 of each year, with the first interest payment
to be made September 15, 2000. The Convertible Notes will mature on September
15, 2007 unless previously redeemed or repurchased. The Convertible Notes are
convertible into Pinnacle's common stock at the option of the Convertible Note
holders at an initial price of $78.375 per share, which conversion price is
subject to adjustment under the terms of the Convertible Notes. We may redeem
the Convertible Notes on or after March 21, 2003. Pursuant to a Registration
Rights Agreement dated March 22, 2000, we must use reasonable best efforts to
file a registration statement on or before June 20, 2000, to cover resales of
the Convertible Notes and the shares of Common Stock issuable upon conversion
of the Convertible Notes.
Capital investments, including acquisitions, for the three month period
ended March 31, 2000 were $176.2 million, compared to $85.7 million in the
comparable 1999 period. Depending on availability of additional capital, we
expect that we may make substantial additional capital investments for
acquisitions, construction and upgrading of additional towers in 2000. We
currently estimate that we will make additional capital investments in 2000 of
at least $400 million. To the extent we commit to complete additional
significant acquisitions beyond those we have identified and currently believe
are probable that we will complete, that amount may increase materially.
We believe that the availability under our Senior Credit Facility, cash
flow from operations and existing cash balances will be sufficient to meet
working capital requirements for existing properties and to fund our current
probable acquisitions. To the extent that we pursue additional acquisitions,
construction activity and other capital expenditures requiring funding in excess
of that then available under our Senior Credit Facility, we will be required to
obtain additional financing. To the extent that we are unable to finance future
capital expenditures, we may not be able to achieve our current business
strategy.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to certain market risks inherent in our financial
instruments. These instruments arise from transactions entered into in the
normal course of business and, in some cases, relate to our acquisitions of
related businesses. We are subject to interest rate risk on our Senior Credit
Facility and any future financing requirements. Our fixed rate debt consists
primarily of outstanding balances on the Notes, the Convertible Notes, and notes
payable to former tower owners and our variable rate debt relates to borrowings
under our Senior Credit Facility. See "--Liquidity and Capital Resources."
13
<PAGE>
The following table presents the future principal payment obligations
and weighted-average interest rates associated with our existing long-term debt
instruments assuming our actual level of long-term indebtedness of $325,000,000
under the Notes, $200,000,000 under the Convertible Notes, and $290,886,800
under our Senior Credit Facility as of March 31, 2000:
<TABLE>
<CAPTION>
EXPECTED MATURITY DATE
----------------------
2000 2001 2002 2003 2004 THEREAFTER
---- --------- --------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Liabilities
Long-term Debt
Fixed Rate (7.97%)............................. -- -- -- -- -- $525,000,000
Variable Rate (Weighted Average Interest -- $19,186,680 $28,230,020 $33,656,024 $40,890,696 $168,903,379
Rate of 9.04%)...............................
</TABLE>
Our primary market risk exposure relates to the following:
o the interest rate risk on long-term and short-term borrowings;
o our ability to refinance the Notes and the Convertible Notes at
maturity at market rates;
o the impact of interest rate movements on our ability to meet
interest expense requirements and exceed financial covenants; and
o the impact of interest rate movements on our ability to obtain
adequate financing to fund future acquisitions.
We manage interest rate risk on our outstanding long-term and
short-term debt through our use of fixed and variable rate debt. While we cannot
predict or manage our ability to refinance existing debt or the impact interest
rate movements will have on our existing debt, we continue to evaluate our
financial position on an ongoing basis.
INFLATION
Because of the relatively low levels of inflation experienced in 1999
and 2000, inflation did not have a significant effect on our results in such
years.
14
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
We are from time to time involved in ordinary litigation incidental to
the conduct of our business. We believe that none of our pending litigation will
have a material adverse effect on our business, financial condition or results
of operations.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
On March 22, 2000, we completed a private placement of $200
million principal amount of 5.5% Convertible Subordinated Notes due 2007 to
certain institutional purchasers pursuant to the exemption from registration
provided by section 4(2) of the Securities Act. The 5.5% Notes are convertible
into shares of Common stock at the option of the holder at a conversion price of
$78.375 per share. The net proceeds to Pinnacle from such sale were
approximately $193.5 million (after deduction of the initial purchaser's
discount and estimated offering expenses). We used the net proceeds to repay
outstanding debt under our Senior Credit Facility. Pursuant to a Registration
Rights Agreement dated March 22, 2000, we must use reasonable best efforts to
file a registration statement on or before June 20, 2000, to cover resales of
the Convertible Notes and the shares of Common Stock issuable upon conversion
of the Convertible Notes.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
---------------------------------------------------
Not applicable.
ITEM 5. OTHER INFORMATION.
We are taxed as a Real Estate Investment Trust ("REIT") for federal
income tax purposes. The federal tax laws and regulations relating to REITs
limit our ability to own and derive income from certain types of assets. In
order to minimize the risk that our ownership of or income from certain assets
might negatively affect our qualification as a REIT, we previously transferred
certain potentially non-REIT qualifying assets to PT III, a corporation in which
Pinnacle owns substantially all of the equity interests in the form of
nonvoting, convertible preferred stock, as well as approximately 9% of the
voting common stock. Certain officers of Pinnacle own the remaining outstanding
shares of voting common stock of PT III. During the first quarter ended March
31, 2000, Pinnacle purchased approximately $2.4 million of additional
convertible preferred stock of PT III and approximately $9.5 million of
additional convertible promissory notes. PT III used such funds to acquire all
of the stock of a corporation that owns and manages communications sites,
certain of which may not be REIT qualifying assets or generate income from
assets that are non-REIT qualifying, and to acquire certain assets used in
communication tower consulting and management activities, which assets and the
income generated thereby may not be REIT qualifying.
PT III has guaranteed the Senior Credit Facility and has pledged all of
its assets to secure such guarantee. The Board of Directors of Pinnacle,
excluding the officers of Pinnacle owning PT III common stock, who abstained,
approved the transactions with PT III and determined that such transactions were
on terms no less favorable to Pinnacle than those that would be obtained in
comparable arms-length transactions with parties that were not affiliated with
Pinnacle, and that such transactions were in the best interests of Pinnacle.
As a result of the acts referenced in the preceding paragraph and prior
transactions between PT III and a subsidiary of Pinnacle, a subsidiary of
Pinnacle currently owns $ 48.7 of convertible promissory notes issued by PT III
that accrues interest at the rate of 13%, with interest payable quarterly and
all principal and accrued interest due and payable within 30 days upon demand,
and $12.2 million of PT III convertible preferred stock that accrues dividends
at 18% per annum, payable quarterly. The terms of PT III's certificate of
incorporation limit PT III's ability to borrow money, pledge its assets, issue
additional securities, make distributions to its stockholders, purchase and sell
assets, enter into transactions with
15
<PAGE>
affiliates and take certain actions without seeking approval from its common
stockholders, and its ability to issue or redeem certain securities, make
certain distributions, enter into certain transactions with its affiliates or to
sell, lease or dispose of a majority of its assets without the approval of the
holders of the convertible preferred stock is also limited by such certificate
of incorporation. Should all of the PT III convertible preferred stock and the
convertible promissory notes be fully converted to common stock of PT III, a
subsidiary of Pinnacle would own in excess of 99.9% of the outstanding common
stock of PT III. We currently anticipate that the officers of Pinnacle who own
PT III common stock will derive only such benefits as are consistent with, and
not greater than, the very small interest in the overall equity of Pinnacle
represented by their common stock and as such that such officers will not
receive significant benefits from such stock ownership. PT III may issue limited
amounts of nonvoting common stock in the future in order for it to independently
qualify as a REIT.
The foregoing is merely a summary description of PT III and the
transactions between it and Pinnacle. The description does not purport to be a
complete description of such matters and is subject to the provisions of, and is
qualified in its entirety be reference to, the material agreements relating to
those matters, copies of which are filed as exhibits to this Quarterly Report on
Form 10-Q.
We continue to assess the risk to our status as a REIT that might
result from us reacquiring the assets transferred to PT III. Depending upon the
conclusions reached from such assessment, we may seek to reacquire such assets
by purchase, merger or other means. It is possible that we may enter into
additional transactions with PT III or other similar entities in certain
circumstances to minimize the risk that we may no longer qualifying as a REIT.
In addition, as additional acquisition opportunities become available to us in
our existing line of business or in complimentary non-real estate based
communication site or services activities, we may determine that it is in our
best interests to acquire, operate or derive income from assets, businesses or
entities that would cause us to no longer qualify as a REIT.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) The Exhibits listed in the "Exhibit Index" are filed as part of
this report.
(b) Reports on Form 8-K. Pinnacle filed a report on Form 8-K on January
4, 2000 regarding its acquisition of 201 communications sites on March 4, 1998
from Southern Communications Services, Inc. ("Southern Communications"), a
subsidiary of Southern Company. We paid $83.5 million for these communications
sites located in Georgia, Alabama, Mississippi and Florida.
16
<PAGE>
SIGNATURES
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 thereunto duly authorized.
Pinnacle Holdings Inc.
Date May 12, 2000 By: /s/ Steven R. Day
------------------
Steven R. Day
Chief Financial Officer
Vice President
Duly Authorized Officer and
Principal Financial Officer.
17
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
3.1 Amended and Restated Certificate of Incorporation of the Registrant (1)
3.2 Bylaws of the Registrant(1)
4.1 Indenture dated as of March 22, 2000 among the Registrant and The Bank of New York, as
Trustee, including the form of 5.5% Note
4.2 Form of 5.5% Note (included in Exhibit 4.1)
4.3 Registration Rights Agreement dated as of March 22, 2000 by and among the Registrant and
each of the Purchasers referred to therein
4.4 Specimen Stock Certificate(2)
10.1 Subscription Agreement between Pinnacle Towers Inc. and Pinnacle Towers III Inc., dated
as of January 13, 2000
10.2 Convertible Promissory Note of Pinnacle Towers III Inc., dated January 13, 2000
10.3 Subscription Agreement between Pinnacle Towers Inc. and Pinnacle Towers III Inc., dated
as of January 27, 2000
10.4 Convertible Promissory Note of Pinnacle Towers III Inc., dated January 27, 2000
27.1 Financial Data Schedule
</TABLE>
(1) Previously filed on April 1, 1998 with the Registrant's
Registration Statement on Form S-4 (SEC file no. 333-49147).
(2) Previously filed on August 11, 1998 with Amendment No. 2 to the
Registrant's Registration Statement on Form S-11 (SEC file no.
333-59297).
18
EXHIBIT 4.1
================================================================================
PINNACLE HOLDINGS INC.
5 1/2% Convertible Subordinated Notes
Due 2007
- --------------------------------------------------------------------------------
INDENTURE
Dated as of March 22, 2000
- --------------------------------------------------------------------------------
THE BANK OF NEW YORK,
AS TRUSTEE
================================================================================
<PAGE>
TABLE OF CONTENTS(1)
<TABLE>
<CAPTION>
Page
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
<S> <C> <C>
Section 1.1 Definitions...................................................................................1
Section 1.2 Other Definitions.............................................................................6
Section 1.3 Incorporation by Reference of Trust Indenture Act.............................................7
Section 1.4 Rules of Construction.........................................................................7
ARTICLE 2.
THE SECURITIES
Section 2.1 Designation, Form and Dating..................................................................7
Section 2.2 Execution and Authentication..................................................................8
Section 2.3 Registrar, Paying Agent and Conversion Agent..................................................8
Section 2.4 Paying Agent To Hold Money in Trust...........................................................9
Section 2.5 Securityholder Lists.........................................................................10
Section 2.6 Transfer and Exchange........................................................................10
Section 2.7 Replacement Securities.......................................................................16
Section 2.8 Outstanding Securities.......................................................................16
Section 2.9 Treasury Securities..........................................................................17
Section 2.10 Temporary Securities.........................................................................17
Section 2.11 Cancellation.................................................................................17
Section 2.12 CUSIP Numbers................................................................................18
ARTICLE 3.
OWNERSHIP LIMITATION, REDEMPTION AND REPURCHASE
Section 3.1 Ownership Limitation.........................................................................18
Section 3.2 Right of Optional Redemption.................................................................19
Section 3.3 Election To Redeem; Notice to Trustee........................................................19
Section 3.4 Selection of Securities To Be Redeemed.......................................................19
Section 3.5 Notice of Redemption.........................................................................20
Section 3.6 Deposit of Redemption Price..................................................................21
Section 3.7 Securities Payable on Redemption Date........................................................21
Section 3.8 Securities Redeemed in Part..................................................................21
Section 3.9 Conversion Arrangement on Call for Redemption................................................22
</TABLE>
- --------------
(1) This Table of Contents shall not, for any purpose, be deemed to be part of
this Indenture.
i
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Section 3.10 Repurchase of Securities at Option of the Holder upon Change in Control......................22
Section 3.11 Notice; Method of Exercising Repurchase Right................................................24
Section 3.12 Effect of Repurchase Notice..................................................................25
Section 3.13 Deposit of Repurchase Price..................................................................26
Section 3.14 Securities Repurchased in Part...............................................................26
Section 3.15 Compliance with Securities Laws upon Repurchase of Securities................................26
Section 3.16 Repayment to the Company.....................................................................27
ARTICLE 4.
CONVERSION
Section 4.1 Conversion Privilege.........................................................................27
Section 4.2 Conversion Procedure.........................................................................28
Section 4.3 Adjustments Below Par Value..................................................................29
Section 4.4 Taxes on Conversion..........................................................................29
Section 4.5 Company To Provide Stock.....................................................................29
Section 4.6 Adjustment of Conversion Price...............................................................30
Section 4.7 No Adjustment................................................................................34
Section 4.8 Equivalent Adjustments.......................................................................34
Section 4.9 Adjustment for Tax Purposes..................................................................34
Section 4.10 Notice of Adjustment.........................................................................35
Section 4.11 Notice of Certain Transactions...............................................................35
Section 4.12 Effect of Reclassification, Consolidation, Merger or Sale on Conversion Privilege............36
Section 4.13 Trustee's Disclaimer.........................................................................37
Section 4.14 Voluntary Reduction..........................................................................37
ARTICLE 5.
SUBORDINATION
Section 5.1 Securities Subordinated to Senior Indebtedness...............................................37
Section 5.2 Securities Subordinated to Prior Payment of All Senior Indebtedness on Dissolution,
Liquidation, Reorganization, Etc., of the Company.......................................38
Section 5.3 Securityholders To Be Subrogated to Right of Holders of Senior Indebtedness..................39
Section 5.4 Obligations of the Company Unconditional.....................................................39
Section 5.5 Company Not To Make Payment with Respect to Securities in Certain Circumstances..............40
Section 5.6 Notice to Trustee............................................................................41
Section 5.7 Application by Trustee of Monies Deposited with It...........................................41
Section 5.8 Subordination Rights Not Impaired by Acts or Omissions of Company or Holders of
Senior Indebtedness.....................................................................42
Section 5.9 Trustee To Effectuate Subordination..........................................................42
Section 5.10 Right of Trustee To Hold Senior Indebtedness.................................................42
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Section 5.11 Article 5 Not To Prevent Events of Default...................................................42
Section 5.12 No Fiduciary Duty Created to Holders of Senior Indebtedness..................................42
Section 5.13 Article Applicable to Paying Agents..........................................................43
Section 5.14 Certain Conversion Deemed Payment............................................................43
ARTICLE 6.
COVENANTS
Section 6.1 Payment of Securities........................................................................43
Section 6.2 SEC Reports; 144A Information................................................................44
Section 6.3 Liquidation..................................................................................44
Section 6.4 Compliance Certificates......................................................................45
Section 6.5 Notice of Defaults...........................................................................45
Section 6.6 Payment of Taxes and Other Claims............................................................46
Section 6.7 Corporate Existence..........................................................................46
Section 6.8 Maintenance of Properties....................................................................46
Section 6.9 Further Instruments and Acts.................................................................46
Section 6.10 Maintenance of Office or Agency..............................................................46
Section 6.11 Resale of Certain Securities; Reporting Issuer...............................................47
Section 6.12 Registration Rights..........................................................................47
Section 6.13 Additional Interest..........................................................................48
Section 6.14 Stay, Extension and Usury Laws...............................................................48
ARTICLE 7.
SUCCESSOR CORPORATION
Section 7.1 When Company May Merge, Etc..................................................................48
Section 7.2 Successor Corporation Substituted............................................................49
ARTICLE 8.
DEFAULT AND REMEDIES
Section 8.1 Events of Default............................................................................49
Section 8.2 Acceleration.................................................................................51
Section 8.3 Other Remedies...............................................................................52
Section 8.4 Waiver of Defaults and Events of Default.....................................................52
Section 8.5 Control by Majority..........................................................................52
Section 8.6 Limitation on Suits..........................................................................52
Section 8.7 Rights of Holders To Receive Payment.........................................................53
Section 8.8 Collection Suit by Trustee...................................................................53
Section 8.9 Trustee May File Proofs of Claim.............................................................53
Section 8.10 Priorities...................................................................................54
Section 8.11 Undertaking for Costs........................................................................54
Section 8.12 Restoration of Rights and Remedies...........................................................54
</TABLE>
iii
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<TABLE>
<CAPTION>
<S> <C> <C>
Section 8.13 Rights and Remedies Cumulative...............................................................55
Section 8.14 Delay or Omission Not Waiver.................................................................55
ARTICLE 9.
TRUSTEE
Section 9.1 Duties of Trustee............................................................................55
Section 9.2 Rights of Trustee............................................................................56
Section 9.3 Individual Rights of Trustee.................................................................57
Section 9.4 Trustee's Disclaimer.........................................................................58
Section 9.5 Notice of Default or Events of Default.......................................................58
Section 9.6 Reports by Trustee to Holders................................................................58
Section 9.7 Compensation and Indemnity...................................................................58
Section 9.8 Replacement of Trustee.......................................................................59
Section 9.9 Successor Trustee by Merger, Etc.............................................................60
Section 9.10 Eligibility; Disqualification................................................................60
Section 9.11 Preferential Collection of Claims Against Company............................................60
ARTICLE 10.
SATISFACTION AND DISCHARGE OF INDENTURE
Section 10.1 Termination of Company's Obligations.........................................................60
Section 10.2 Application of Trust Money...................................................................61
Section 10.3 Repayment to Company.........................................................................61
Section 10.4 Reinstatement................................................................................62
ARTICLE 11.
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 11.1 Without Consent of Holders...................................................................62
Section 11.2 With Consent of Holders......................................................................63
Section 11.3 Compliance with Trust Indenture Act..........................................................64
Section 11.4 Revocation and Effect of Consents............................................................64
Section 11.5 Notation on or Exchange of Securities........................................................64
Section 11.6 Trustee To Sign Amendments, Etc..............................................................64
ARTICLE 12.
MISCELLANEOUS
Section 12.1 Trust Indenture Act Controls.................................................................65
Section 12.2 Notices......................................................................................65
Section 12.3 Communications by Holders with Other Holders.................................................66
Section 12.4 Certificate and Opinion as to Conditions Precedent...........................................66
Section 12.5 Record Date for Vote or Consent of Securityholders...........................................66
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
Section 12.6 Rules by Trustee, Paying Agent, Registrar....................................................67
Section 12.7 Legal Holidays...............................................................................67
Section 12.8 Governing Law................................................................................67
Section 12.9 No Adverse Interpretation of Other Agreements................................................67
Section 12.10 No Recourse Against Others...................................................................67
Section 12.11 Successors...................................................................................67
Section 12.12 Multiple Counterparts........................................................................67
Section 12.13 Separability.................................................................................67
Section 12.14 Table of Contents, Headings, Etc.............................................................68
Signatures ...........................................................................................S-1
Exhibit A.............................................................................................A-1
</TABLE>
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INDENTURE dated as of March 22, 2000 between Pinnacle Holdings Inc., a
Delaware corporation (the "Company"), and The Bank of New York, a New York
banking corporation, as trustee (the "Trustee").
Both parties agree as follows for the benefit of the other and for the
equal and ratable benefit of the registered holders of the Company's 5 1/2%
Convertible Subordinated Notes Due 2007.
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 DEFINITIONS.
The terms defined in this Section 1.1 (except as herein otherwise
expressly provided or unless the context otherwise requires) for all purposes of
this Indenture and of any indenture supplemental hereto shall have the
respective meanings specified in this Section 1.1.
"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.
"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.
"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.
"Closing Price" with respect to any securities on any day shall mean
the closing sale price regular way on such day or, in case no such sale takes
place on such day, the average of the reported closing bid and asked prices,
regular way, in each case on the principal national security exchange or
quotation system on which such security is quoted or listed or admitted to
trading, or, if not quoted or listed or admitted to trading on any national
securities exchange or quotation system, the average of the closing bid and
asked prices of such security on the over-the-counter market on the day in
question as reported by the National Quotation Bureau Incorporated, or a similar
generally accepted reporting service, or if not so available, in such manner as
furnished by any New York Stock Exchange member firm selected from time to time
by the Board of Directors for that purpose, or a price determined in good faith
by the Board of Directors or, to the
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extent permitted by applicable law, a duly authorized committee thereof, whose
determination shall be conclusive.
"Common Stock" means any stock of any class of the Company which has no
preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the Company
and which is not subject to redemption by the Company. Subject to the provisions
of Section 4.12, however, shares issuable on conversion of Securities shall
include only shares of Common Stock, $0.001 par value per share (which is the
class designated as Common Stock of the Company at the date of this Indenture),
or shares of any class or classes resulting from any reclassification or
reclassifications thereof and which have no preference in respect of dividends
or of amounts payable in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Company and which are not subject to redemption
by the Company; PROVIDED that if at any time there shall be more than one such
resulting class, the shares of each such class then so issuable shall be
substantially in the proportion to which the total number of shares of such
class resulting from all such reclassifications bears to the total number of
shares of all such classes resulting from all such reclassifications.
"Company" means the party named as such in this Indenture until a
successor replaces it pursuant to this Indenture and thereafter means the
successor.
"Consolidated Net Worth" means, with respect to any Person, the
consolidated stockholders' equity (excluding any capital stock that by its terms
is, or upon the happening of an event or passage of time would be, required to
be redeemed prior to the maturity of the Securities or is redeemable at the
option of the holder thereof at any time prior to such maturity or is
convertible or exchangeable for debt securities at any time prior to such
maturity at the option of the holder thereof) of such Person and its
consolidated subsidiaries, as determined in accordance with generally accepted
accounting principles.
"Corporate Trust Office" of the Trustee means the office of the Trustee
at which this Indenture is administered, which office initially is located at
101 Barclay Street, Floor 21 West, New York, New York 10286, attention:
Corporate Trust Administration.
"Default" or "default" means any event which is, or after notice or
passage of time, or both, would be, an Event of Default.
"Depositary" means, with respect to the Securities issuable or issued
in whole or in part in global form, The Depository Trust Company as the
Depositary with respect to the Securities, until a successor shall have been
appointed and becomes such pursuant to the applicable provisions of this
Indenture, and thereafter, "Depositary" shall mean or include such successor.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"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.
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"Initial Purchasers" means Deutsche Bank Securities Inc., Bank of
America Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Raymond James & Associates, Inc. and Salomon Smith Barney Inc., as initial
purchasers under the Purchase Agreement.
"Instrument" means any agreement, indenture, instrument or other
document under which any obligation is evidenced, assumed, guaranteed or
secured.
"Market Capitalization" means an amount determined by multiplying the
number of shares of Common Stock outstanding on the applicable date by the
current market price of the Common Stock (determined as provided in Section
4.6(e)) as of such date.
"Non-U.S. Person" a Person that is not a U.S. Person.
"Officer" means the Chairman of the Board, the President, any Vice
President, the Chief Executive Officer, the Chief Financial Officer, the
Treasurer or the Secretary of the Company.
"Officers' Certificate" means a certificate signed by two Officers of
the Company; PROVIDED, HOWEVER, that for purposes of Section 6.4 "Officers'
Certificate" means a certificate signed by the principal executive officer,
principal financial officer or principal accounting officer of the Company.
"Opinion of Counsel" means a written opinion from legal counsel
acceptable to the Trustee. The counsel may be an employee of or counsel to the
Company.
"Payment Dates" means March 15 and September 15, the payment dates of
the Securities.
"Payment Default" means any default in the payment of principal of (or
premium, if any) or interest on Senior Indebtedness.
"Payment in full" or "paid in full" means payment in full in cash.
"Person" or "person" means any individual, corporation, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization or government or other agency or political subdivision thereof.
"PORTAL Market" means the Private Offerings, Resales and Trading
through Automated Linkages Market operated by the National Association of
Securities Dealers, Inc. or any successor thereto.
"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.
"Purchase Agreement" means the Purchase Agreement dated March 15, 2000
among the Company and the Initial Purchasers.
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"Purchase Option" means the option to purchase up to $30,000,000 in
aggregate principal amount of Securities granted by the Company to the Initial
Purchasers pursuant to Section 4 of the Purchase Agreement.
"QIB" means a "Qualified Institutional Buyer" as that term is defined
in Rule 144A.
"Record Dates" means March 1 and September 1, the record dates of the
Securities.
"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, as set forth in the form of Security annexed as Exhibit A
hereto.
"Redemption Price" or "redemption price," when used with respect to any
Security to be redeemed, means the price fixed for such redemption pursuant to
this Indenture, as set forth in the form of Security annexed as Exhibit A
hereto.
"Registration Rights Agreement" means the Registration Rights Agreement
dated as of March 22, 2000 between the Company and the Initial Purchasers and
certain permitted assigns.
"Regulation S" means Regulation S promulgated under the Securities Act.
"Reorganization Securities" means securities of the Company or any
other corporation provided for by a plan of reorganization or readjustment of
the Company (a) which are equity securities that do not provide for any
mandatory payments to holders thereof, including by way of dividends or
mandatory redemption; or (b) the payment of which is subordinated, at least to
the extent provided in Article 5 with respect to the Securities, to the payment
of all Senior Indebtedness which may at the time be outstanding.
"Representative" means the indenture trustee or other trustee, agent or
representative for any class of Senior Indebtedness.
"Rule 144" means Rule 144 as promulgated under the Securities Act.
"Rule 144A" means Rule 144A as promulgated under the Securities Act.
"SEC" or "Commission" means the Securities and Exchange Commission.
"Securities" means the 5 1/2% Convertible Subordinated Notes Due 2007
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, and the
rules and regulations promulgated thereunder.
"Senior Agent" means, on any date, the Representative of the class of
Senior Indebtedness having the highest principal amount (including all revolving
credit, letter of credit and other working capital commitments) then
outstanding.
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"Senior Indebtedness" means the following, whether outstanding upon
issuance of the Securities or thereafter incurred or created: (a) the principal
of and premium, if any, and interest on, and fees, costs, enforcement expenses,
collateral protection expenses and other reimbursement or indemnity obligations
in respect of all indebtedness or obligations of the Company to any Person for
money borrowed that is evidenced by a note, bond, debenture, loan agreement, or
similar instrument or agreement; (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 capitalized lease obligations; (e) any liabilities
of others described in the preceding clauses that the Company has guaranteed or
which are otherwise its legal liability; and (f) renewals, extensions,
refundings, refinancings, restructurings, amendments, and modifications of any
such indebtedness or guarantee; other than any indebtedness or other obligation
of the Company that by its terms is not superior in right of payment to the
Securities.
"Subsidiary" means any corporation, association or other business
entity of which at least a majority of the total capital stock entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by the Company or one or more of other Subsidiaries or a
combination thereof.
"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.
"Transfer Restricted Security" means securities that bear or are
required to bear the legend set forth in Section 2.6(c) or (d).
"Trustee" means The Bank of New York until a successor replaces it in
accordance with the provisions of this Indenture and thereafter means the
successor.
"Trust Officer" means any officer in the Corporate Trust Office of the
Trustee, including any vice president, assistant vice president, assistant
secretary, assistant treasurer, trust officer or any other officer customarily
performing functions similar to those performed by any of the above-designated
officers who shall, in any case, be responsible for the administration of this
Indenture or have familiarity with it, and also means, with respect to a
particular corporate matter, any other officer of the Trustee to whom corporate
trust matters are referred because of his knowledge of and familiarity with the
particular subject.
"U.S. Person" has the meaning specified in Regulation S.
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SECTION 1.2 OTHER DEFINITIONS.
Term Defined
- ---- in Section
----------
"Additional Interest"............................................... 6.12(a)
"Aggregate Market Premium".......................................... 4.6(d)
"Bankruptcy Law".................................................... 8.1
"beneficial owner".................................................. 3.10
"Change in Control"................................................. 3.10
"Charitable Beneficiary"............................................ 3.1
"Clearstream"....................................................... 2.6(c)
"Code".............................................................. 3.1
"Company Benefit Plan............................................... 4.6(c)
"Company Notice".................................................... 3.11(a)
"Company Order"..................................................... 2.2
"Continuing Directors".............................................. 3.10
"Conversion Agent".................................................. 2.3
"Conversion Price".................................................. 4.6
"Conversion Shares"................................................. 4.1
"Custodian"......................................................... 8.1
"Distribution Date"................................................. 4.6(c)
"Euroclear"......................................................... 2.6(c)
"Event of Default".................................................. 8.1
"Global Note"....................................................... 2.6(a)
"Group"............................................................. 3.10(1)
"Legal Holiday"..................................................... 12.7
"Optional Redemption"............................................... 3.2
"Ownership Limitation".............................................. 3.1
"Paying Agent"...................................................... 2.3
"Payment Blockage Period"........................................... 5.5
"Payment of the Securities"......................................... 5.5
"Permitted Holders"................................................. 3.10
"prohibited transferee"............................................. 3.1
"Registrar"......................................................... 2.3
"Registration Default".............................................. 6.12
"Repurchase Date"................................................... 3.10
"Repurchase Price".................................................. 3.10
"Repurchase Notice"................................................. 3.11(b)
"Restricted Securities"............................................. 2.6(c)
"Rights"............................................................ 4.6(c)
"Shelf Registration Statement"...................................... 6.12(a)
"Trading Days"...................................................... 4.6(e)
"Trigger Event"..................................................... 4.6(f)
"U.S. Government Obligations"....................................... 10.1
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SECTION 1.3 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
This Indenture is hereby made subject to, and shall be governed by, the
provisions of the TIA required to be part of and to govern indentures qualified
under the TIA. The following TIA terms used in this Indenture have the following
meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"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 a 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) "or" is not exclusive;
(4) words in the singular include the plural, and words in the plural
include the singular;
(5) provisions apply to successive events and transactions; and
(6) "herein," "hereof" and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or other
subdivision.
ARTICLE 2.
THE SECURITIES
SECTION 2.1 DESIGNATION, FORM AND DATING.
(a) The Securities shall be designated as the "5 1/2% Convertible
Subordinated Notes Due 2007." Other than as provided in Section 2.6, the
Securities and the Trustee's certificate of
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authentication to be borne by the Securities shall be substantially in the form
of Exhibit A attached hereto, which is incorporated in and made part of this
Indenture. The Company and the Trustee, by their execution and delivery of this
Indenture, expressly agree to the terms and provisions of the Securities and to
be bound thereby. In addition to such legends as may be required pursuant to
Section 2.6, any of the Securities may have imprinted thereon such legends or
endorsements as the officers executing the same may approve (execution thereof
to be conclusive evidence of such approval) and as are not inconsistent with the
provisions of this Indenture, or as may be required to comply with any law or
with any rule or regulation made pursuant thereto or with any rule or regulation
of any stock exchange on which the Securities may be listed or any trading
system in which the Securities may be admitted, or to conform to usage. Each
Security shall be dated the date of its authentication.
SECTION 2.2 EXECUTION AND AUTHENTICATION.
Two Officers of the Company shall sign the Securities for the Company
by manual or facsimile signature. If an Officer whose signature is on a Security
no longer holds that office at the time the Trustee authenticates the Security,
the Security shall 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
$200,000,000, upon a written order or orders of the Company signed by two
Officers or by an Officer and an Assistant Treasurer or Assistant Secretary 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. Upon the exercise of the Purchase Option by
the Initial Purchasers, additional Securities in the aggregate principal amount
of up to $30,000,000 shall be executed by the Company in the aforementioned
manner and delivered to the Trustee for authentication, and shall thereupon be
authenticated and delivered by the Trustee upon Company Order. The aggregate
principal amount of Securities outstanding under this Indenture at any time may
not exceed $230,000,000, except as provided 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 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
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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 for service of notices and demands to or upon the Company in
respect of the Securities and this Indenture may be served. The Registrar shall
keep a register of the Securities and of their transfer and exchange. The
Company may have one or more co-Registrars, one or more additional Paying Agents
and one or more additional Conversion Agents. The term "Registrar" includes any
co-Registrar, the term "Paying Agent" includes any additional Paying Agent and
the term "Conversion Agent" includes any additional Conversion Agent.
The Company shall enter into an appropriate agency agreement with any
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 or a Conversion Agent
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 6.3 and Article 10), Registrar or Conversion Agent.
The Company initially appoints the Trustee as Registrar, Paying Agent
and Conversion Agent in connection with the Securities.
SECTION 2.4 PAYING AGENT TO HOLD MONEY IN TRUST.
If the Company shall at any time act as its own Paying Agent, it will,
on or before each due date of the principal of and premium, if any, or interest
(together with any Additional Interest in respect thereof) on any of the
Securities, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal of, premium, if any, or interest
on any of the Securities (together with any Additional Interest in respect
thereof) so becoming due until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and will promptly notify the Trustee of
its action or failure so to act.
Whenever the Company shall have one or more Paying Agents, it will,
prior to each due date of the principal of and premium, if any, or interest
(together with any Additional Interest in respect thereof) on any Securities,
deposit with a Paying Agent a sum sufficient to pay such amount, such sum to be
held in trust for the benefit of the Persons entitled to such principal,
premium, if any, or interest, and (unless such Paying Agent is the Trustee) the
Company will promptly notify the Trustee of its action or failure so to act.
The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section 2.4,
that such Paying Agent will, subject to Section 5.7:
(1) hold all sums held by it for the payment of the principal of,
premium, if any, or interest on Securities in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;
(2) give the Trustee written notice of any default by the Company (or
any other obligor upon the Securities) in the making of any payment of
principal, premium, if any, or interest; and
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(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so held in
trust by such Paying Agent.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company in trust for the payment of the principal of, and premium, if
any, or interest (together with any Additional Interest in respect thereof) on
any Security and remaining unclaimed for two years after such principal and
premium, if any, or interest has become due and payable shall be paid to the
Company on written request of the Company, or (if then held by the Company)
shall be discharged from such trust; and the Holder of such Security shall
thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; PROVIDED, HOWEVER, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in a newspaper selected by
the Company and published in the English language, customarily published on each
Business Day and of general circulation in the Borough of Manhattan, The City of
New York, notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
publication, any unclaimed balance of such money then remaining will be repaid
to the Company.
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 at least five Business Days prior to each semi-annual 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) Upon surrender for registration of transfer of any
Security to the Registrar or any co-registrar, and satisfaction of the
requirements for such transfer set forth in this Section 2.6, the Company shall
execute, and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Securities of any
authorized denominations and of a like aggregate principal amount and bearing
such restrictive legends as may be required by this Indenture.
Securities may be exchanged for other Securities of any
authorized denominations and of a like aggregate principal amount, upon
surrender of the Securities to be exchanged at any such office or agency
maintained by the Company pursuant to Section 6.10. Whenever any Securities are
so surrendered for exchange, the Company shall execute, and the Trustee shall
authenticate and deliver, the Securities which the Securityholder making the
exchange is entitled to receive bearing registration numbers not
contemporaneously outstanding.
All Securities issued upon any registration of transfer or
exchange of Securities shall be the valid obligations of the Company, evidencing
the same debt, and entitled to the same
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benefits under this Indenture, as the Securities surrendered upon such
registration of transfer or exchange.
All Securities presented or surrendered for registration of
transfer or for exchange, redemption or conversion shall (if so required by the
Company or the Registrar) be duly endorsed, or be accompanied by a written
instrument or instruments of transfer in form satisfactory to the Company, and
the Securities shall be duly executed by the Securityholder thereof or his
attorney duly authorized in writing.
No service charge shall be made for any registration of
transfer or exchange of Securities, but the Company may require payment of a sum
sufficient to cover any tax, assessment or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of
Securities.
Neither the Company nor the Trustee nor any Registrar or any
Company registrar shall be required to exchange or register a transfer of (a)
any Securities for a period of fifteen (15) days next preceding any selection of
Securities to be redeemed or (b) any Securities or portions thereof called for
redemption pursuant to Section 3.5 or (c) any Securities or portion thereof
surrendered for conversion pursuant to Article 4.
So long as the Securities are eligible for book-entry settlement with
the Depositary, or unless otherwise required by law, all Securities that upon
initial issuance are beneficially owned by QIBs and all Securities that are
beneficially owned by Non-U.S. Persons who acquired such Securities in
accordance with Regulation S will be represented by a Security in global form
registered in the name of the Depositary or the nominee of the Depositary (the
"Global Note"). The transfer and exchange of beneficial interests in the Global
Note shall be effected through the Depositary in accordance with this Indenture
and the procedures of the Depositary therefor. The Trustee shall make
appropriate endorsements to reflect increases or decreases in the principal
amounts of the Global Note as set forth on the face of the Security to reflect
any such transfers. Except as provided below, beneficial owners of the Global
Note shall not be entitled to have certificates registered in their names, will
not receive or be entitled to receive physical delivery of certificates in
definitive form and will not be considered holders of such Securities in global
form.
(b) Any Security in global form may be endorsed with or have
incorporated in the text thereof such legends or recitals or changes not
inconsistent with the provisions of this Indenture as may be required by the
Custodian, the Depositary or by the National Association of Securities Dealers,
Inc. in order for the Securities to be tradeable on The PORTAL Market or as may
be required for the Securities to be tradeable on any other market developed for
trading of securities pursuant to Rule 144A or Regulation S or required to
comply with any applicable law or any regulation thereunder or with the rules
and regulations of any securities exchange or automated quotation system upon
which the Securities may be listed or traded or to conform with any usage with
respect thereto, or to indicate any special limitations or restrictions to which
any particular Securities are subject.
(c) Every Security that bears or is required under this
Section 2.6(c) to bear the legend set forth in this Section 2.6(c) (together
with any Common Stock issued upon conversion of
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the Securities and required to bear the legend set forth in Section 2.6(d),
collectively, the "Restricted Securities") shall be subject to the restrictions
on transfer set forth in this Section 2.6(c) (including those set forth in the
legend set forth below) unless such restrictions on transfer shall be waived by
written consent of the Company, and the Holder of each such Transfer Restricted
Security, by such Holder's acceptance thereof, agrees to be bound by all such
restrictions on transfer. As used in Sections 2.6(c) and 2.6(d), the term
"transfer" encompasses any sale, pledge, transfer or other disposition
whatsoever of any Restricted Security.
Until the expiration of the holding period applicable to sales
thereof under Rule 144(k) under the Securities Act (or any successor provision),
any certificate evidencing such Security (and all securities issued in exchange
therefor or substitution thereof, other than Common Stock, if any, issued upon
conversion thereof, which shall bear the legend set forth in Section 2.6(d), if
applicable) shall bear a legend in substantially the following form, unless such
Security has been sold pursuant to a registration statement that has been
declared effective under the Securities Act (and which continues to be effective
at the time of such transfer), or unless otherwise agreed by the Company in
writing, with written notice thereof to the Trustee:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING
THIS SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY
MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE
EXPIRATION OF THE HOLDING PERIOD UNDER RULE 144(k) (OR ANY SUCCESSOR
THERETO) UNDER THE SECURITIES ACT WHICH IS APPLICABLE TO THIS SECURITY
OR (Y) BY ANY HOLDER THAT WAS AN "AFFILIATE" (WITHIN THE MEANING OF
RULE 144 UNDER THE SECURITIES ACT) OF THE COMPANY AT ANY TIME DURING
THE THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE,
OTHER THAN (1) TO THE COMPANY, (2) SO LONG AS THIS SECURITY IS ELIGIBLE
FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE
144A"), TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A, PURCHASING FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO
WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A, (3) IN AN OFFSHORE TRANSACTION (AS
DEFINED IN REGULATION S UNDER THE SECURITIES ACT) IN ACCORDANCE WITH
REGULATION S UNDER THE SECURITIES ACT, (4) PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF
APPLICABLE) UNDER THE SECURITIES ACT OR (5) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES. THE HOLDER HEREOF, BY PURCHASING THIS SECURITY,
REPRESENTS AND AGREES FOR THE BENEFIT OF THE COMPANY THAT IT IS (1) A
QUALIFIED
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INSTITUTIONAL BUYER OR (2) NOT A U.S. PERSON AND IS OUTSIDE THE UNITED
STATES WITHIN THE MEANING OF (OR AN ACCOUNT SATISFYING THE REQUIREMENTS
OF PARAGRAPH (k)(2) OF RULE 902 UNDER) REGULATION S UNDER THE
SECURITIES ACT. IN ANY CASE THE HOLDER HEREOF WILL NOT, DIRECTLY OR
INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTION WITH REGARD TO THIS
SECURITY OR ANY COMMON STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY
EXCEPT AS PERMITTED BY THE SECURITIES ACT.
Any Security (or security issued in exchange or substitution
therefor) as to which such restrictions on transfer shall have expired in
accordance with their terms or as to which the conditions for removal of the
foregoing legend set forth therein have been satisfied may, upon surrender of
such Security for exchange to the Security registrar in accordance with the
provisions of this Section 2.6, be exchanged for a new Security or Securities,
of like tenor and aggregate principal amount, which shall not bear the
restrictive legend required by this Section 2.6(c).
Notwithstanding any other provisions of this Indenture (other
than the provisions set forth in Section 2.6(b) and in this Section 2.6(c)), the
Global Note may not be transferred as a whole or in part except by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary or by the Depositary or any
such nominee to a successor Depositary or a nominee of such successor
Depositary.
The Depositary shall be a clearing agency registered under the
Exchange Act. The Company initially appoints The Depository Trust Company to act
as Depositary with respect to the Global Note. Initially, the Global Note shall
be issued to the Depositary, registered in the name of Cede & Co., as the
nominee of the Depositary, and deposited with the Custodian for Cede & Co. The
Global Note, to the extent that it represents the interests of Non-U.S> Persons,
will be held by Cede & Co. for the accounts of designated agents on behalf of
the Euroclear System ("Euroclear") and Clearstream Banking, Societe Anonyme
("Clearstream"). Non-U.S. Persons holding beneficial interests in the Global
Note may do so only through Euroclear or Clearstream, and any resale or transfer
of any such interest to a U.S. Person shall only be permitted if such Person is
a QIB or is the Company or an Affiliate of the Company.
If at any time the Depositary for the Global Note notifies the
Company that it is unwilling or unable to continue as Depositary for such Global
Note, the Company may appoint a successor Depositary with respect to such Global
Note. If a successor Depositary is not appointed by the Company within ninety
(90) days after the Company receives such notice, the Company will execute, and
the Trustee, upon receipt of an Officers' Certificate for the authentication and
delivery of Securities, will authenticate and deliver, Securities in
certificated form, in aggregate principal amount equal to the principal amount
of the Global Note, in exchange for such Global Note.
If a Security in certificated form is issued in exchange for
any portion of the Global Note after the close of business at the office or
agency where such exchange occurs on any record date and before the opening of
business at such office or agency on the next succeeding interest payment date,
interest will not be payable on such interest payment date in respect of such
Security, but will be payable on such interest payment date, subject to the
provi-
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sions of paragraphs 1 and 2 of the Security, only to the person to whom interest
in respect of such portion of the Global Note is payable in accordance with the
provisions of this Indenture and the Securities.
Securities in certificated form issued in exchange for all or
a part of the Global Note pursuant to this Section 2.6 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. Upon execution and authentication, the Trustee shall
deliver such Securities in certificated form to the persons in whose names such
Securities in certificated form are so registered.
At such time as all interests in the Global Note have been
redeemed, converted, canceled, exchanged for Securities in certificated form, or
transferred to a transferee who receives Securities in certificated form
thereof, such Global Note shall, upon receipt thereof, be canceled by the
Trustee in accordance with standing procedures and instructions existing between
the Depositary and the Custodian. At any time prior to such cancellation, if any
interest in the Global Note is redeemed, converted, repurchased or canceled, the
principal amount of the Global Note shall, in accordance with the standing
procedures and instructions existing between the Depositary and the Custodian,
be appropriately reduced and an endorsement shall be made on such Global Note,
by the Trustee or the Custodian, at the direction of the Trustee, to reflect
such reduction.
(d) Until the expiration of the holding period applicable to
sales thereof under Rule 144(k) under the Securities Act (or any successor
provision), any stock certificate representing Common Stock issued upon
conversion of such Security shall bear a legend in substantially the following
form, unless such Common Stock has been sold pursuant to a registration
statement that has been declared effective under the Securities Act (and which
continues to be effective at the time of such transfer) or such Common Stock has
been issued upon conversion of Securities that have been transferred pursuant to
a registration statement that has been declared effective under the Securities
Act, or unless otherwise agreed by the Company in writing with written notice
thereof to the transfer agent:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING
THIS SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY
MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE
EXPIRATION OF THE HOLDING PERIOD UNDER RULE 144(k) (OR ANY SUCCESSOR
THERETO) UNDER THE SECURITIES ACT WHICH IS APPLICABLE TO THIS SECURITY
OR (Y) BY ANY HOLDER THAT WAS AN "AFFILIATE" (WITHIN THE MEANING OF
RULE 144 UNDER THE SECURITIES ACT) OF THE COMPANY AT ANY TIME DURING
THE THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE,
OTHER THAN (1) TO THE COMPANY, (2) SO LONG AS THIS SECURITY IS ELIGIBLE
FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE
144A"), TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
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INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A, PURCHASING FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO
WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A, (3) IN AN OFFSHORE TRANSACTION (AS
DEFINED IN REGULATION S UNDER THE SECURITIES ACT) IN ACCORDANCE WITH
REGULATION S UNDER THE SECURITIES ACT, (4) PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF
APPLICABLE) UNDER THE SECURITIES ACT OR (5) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES. THE HOLDER HEREOF, BY PURCHASING THIS SECURITY,
REPRESENTS AND AGREES FOR THE BENEFIT OF THE COMPANY THAT IT IS (1) A
QUALIFIED INSTITUTIONAL BUYER OR (2) NOT A U.S. PERSON AND IS OUTSIDE
THE UNITED STATES WITHIN THE MEANING OF (OR AN ACCOUNT SATISFYING THE
REQUIREMENTS OF PARAGRAPH (k)(2) OF RULE 902 UNDER) REGULATION S UNDER
THE SECURITIES ACT. IN ANY CASE THE HOLDER HEREOF WILL NOT, DIRECTLY OR
INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTION WITH REGARD TO THIS
SECURITY EXCEPT AS PERMITTED BY THE SECURITIES ACT.
Any such Common Stock as to which such restrictions on transfer shall
have expired in accordance with their terms or as to which the conditions for
removal of the foregoing legend set forth therein have been satisfied may, upon
surrender of the certificates representing such shares of Common Stock for
exchange in accordance with the procedures of the transfer agent for the Common
Stock, be exchanged for a new certificate or certificates for a like number of
shares of Common Stock, which shall not bear the restrictive legend required by
this Section 2.6(d).
(e) Any Security or Common Stock issued upon the conversion or exchange
of a Security that, prior to the expiration of the holding period applicable to
sales thereof under Rule 144(k) under the Securities Act (or any successor
provision), is purchased or owned by the Company or any Affiliate thereof may
not be resold by the Company or such Affiliate unless registered under the
Securities Act or resold pursuant to an exemption from the registration
requirements of the Securities Act in a transaction which results in such
Securities or Common Stock, as the case may be, no longer being "restricted
securities" (as defined under Rule 144).
(f) Each Holder of a Security agrees to indemnify the Company and the
Trustee against any liability that may result from the transfer, exchange or
assignment of such Holder's Security in violation of any provision of this
Indenture and/or applicable United States Federal or state securities law.
The Trustee shall have no obligation or duty to monitor, determine or
inquire as to compliance with any restrictions on transfer imposed under this
Indenture or under applicable law with respect to any transfer of any interest
in any Security (including any transfers between or among Depositary
Participants or beneficial owners of interests in the Global Note) other than to
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require delivery of such certificates and other documentation or evidence as are
expressly required by, and to do so if and when expressly required by the terms
of, this Indenture, and to examine the same to determine substantial compliance
as to form with the express requirements hereof.
SECTION 2.7 REPLACEMENT SECURITIES.
If any mutilated Security is surrendered to the Company or the Trustee,
or the Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Security, and there is delivered to the
Company 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 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 by the
Company pursuant to Article 3, the Company in its discretion may, instead of
issuing a new Security, pay or redeem 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 or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) 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.
The provisions of this Section 2.7 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 2.8 OUTSTANDING SECURITIES.
Securities outstanding at any time are all Securities authenticated by
the Trustee, except for those canceled by it, those delivered to it for
cancellation and those described in this Section 2.8 as not outstanding.
If a Security is replaced pursuant to Section 2.7, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
If the Paying Agent (other than the Company or an Affiliate of the
Company) holds on a redemption date, repurchase date or maturity date money
sufficient to pay the principal of, pre-
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mium, 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 upon 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 form of definitive Securities but may have variations that
the Company with the consent of the Trustee considers appropriate for temporary
Securities. Every such temporary Security shall be executed by the Company and
authenticated by the Trustee upon the same conditions and in substantially the
same manner, and with the same effect, as the definitive Securities. Without
unreasonable delay the Company will execute and deliver to the Trustee
definitive Securities and thereupon any or all temporary Securities may be
surrendered in exchange therefor, at each office or agency maintained by the
Company pursuant to Section 6.10 and the Trustee shall authenticate and deliver
in exchange for such temporary Securities an equal aggregate principal amount at
maturity of definitive Securities. Such exchange shall be made by the Company at
its own expense and without any charge therefor. Until so exchanged, the
temporary Securities shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities authenticated and delivered
hereunder.
SECTION 2.11 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 any Securities surrendered to them for transfer,
exchange, payment or conversion. The Trustee and no one else shall cancel all
Securities surrendered for transfer, exchange, payment (including redemption or
repurchase), conversion or cancellation and shall dispose of cancelled
Securities in accordance with its procedures for the disposition of cancelled
Securities in effect as of the date of such disposition and thereupon deliver a
certificate of cancellation to the Company. The Company may not issue new
Securities to replace Securities it has paid or delivered to the Trustee for
cancellation or which have been converted.
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SECTION 2.12 CUSIP NUMBERS.
The Company in issuing the Securities may use "CUSIP" numbers (if then
generally in use), and if so, the Trustee shall use "CUSIP" numbers in notices
of redemption as a convenience to Holders; PROVIDED that any such notice may
state that no representation is made as to the correctness of such numbers
either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be affected
by any defect in or omission of such numbers. The Company will promptly notify
the Trustee of any change in the "CUSIP" numbers.
ARTICLE 3.
OWNERSHIP LIMITATION, REDEMPTION AND REPURCHASE
SECTION 3.1 OWNERSHIP LIMITATION.
The Securities may not be transferred if the transfer would result in
ownership by five or fewer individuals of more than 50% of the aggregate value
of all classes of the Company's capital stock (the "Ownership Limitation")
determined as provided in Sections 856(a)(6) and 856(h) of the Internal Revenue
Code of 1986, as amended (the "Code"). For purposes of the Ownership Limitation,
the Common Stock into which the Securities may be converted will be deemed owned
by such an individual (the "prohibited transferee") but only to the extent the
deemed ownership of such Common Stock would violate the Ownership Limitation.
(a) If a prohibited transferee attempts to acquire Securities in
violation of the Ownership Limitation, such putative transfer to such prohibited
transferee shall be void and the intended transferee (I.E., the prohibited
transferee) will acquire no rights to the Securities. For purposes of the
Ownership Limitation, the term "transfer" includes any sale, transfer, gift,
assignment, devise or other disposition, whether voluntary or involuntary,
whether of record, constructively or beneficially, and whether by operation of
law or otherwise. Any putative transfer of Securities to the extent such
transfer if consummated would violate the Ownership Limitation will cause such
Securities to be transferred to a person (unaffiliated with the Company or the
prohibited transferee) as trustee of a trust for the exclusive benefit of one or
more organizations described in Section 501(c)(3) the Code (the "Charitable
Beneficiary"). The trustee of the trust will be deemed to own those Securities
for the benefit of the Charitable Beneficiary on the day prior to the date of
the putative violative transfer.
Any interest paid prior to when the Company discovers that Securities
were held in trust will be repaid by the prohibited transferee to the Company
and any interest after the Record Date but before the applicable Payment Date
will be rescinded as void AB INITIO with respect to the prohibited transferee.
Any interest so disgorged or rescinded will be paid over to the trustee and held
in trust for the Charitable Beneficiary. The trustee of the trust may transfer
the Securities held in trust to a person whose ownership of the Securities will
not violate the Ownership Limitation. If such a transfer is made, the interest
of the Charitable Beneficiary would terminate and proceeds of the sale would be
payable to the prohibited transferee and the Charitable Benefici-
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ary. The prohibited transferee would receive the lesser of (i) the price paid by
the prohibited transferee for the Securities or, if the prohibited transferee
did not give value for the Securities, the market price of the Securities on the
day of the event causing the Securities to be held in trust or (ii) the price
for the Securities received by the trustee for the sale or other disposition of
the Securities held in trust. Any proceeds in excess of the amount payable to
the prohibited transferee will be payable to the Charitable Beneficiary. The
Securities held in trust for the benefit of the Charitable Beneficiary will be
offered for sale to the Company at the prevailing market price before being
offered for sale to third parties.
(b) Within five days after the Company discovers that Securities were
held in trust pursuant to Section 3.1(a), the Company shall deliver to the
Trustee an Officers' Certificate and an Opinion of Counsel stating the basis for
voiding the attempted transfer.
(c) Each Holder of a Security agrees to indemnify the Company and the
Trustee against any liability that may result from any attempted transfer which
is subject to the provisions of Section 3.1(a).
The Trustee shall have no obligation or duty to monitor, determine or
inquire as to compliance with any restrictions on transfer imposed under this
Section 3.1 or under applicable law relating to the Ownership Limitation with
respect to any transfer of any interest in any Security (including any transfers
between or among Depositary Participants or beneficial owners of interests in
the Global Note).
SECTION 3.2 RIGHT OF OPTIONAL REDEMPTION.
The Company may, at its option, redeem (an "Optional Redemption") all
or from time to time any part of the Securities on any date on or after March
21, 2003 and prior to maturity, upon notice as set forth in Section 3.5, and at
the redemption prices set forth in paragraph 6 of the form of Security attached
hereto as Exhibit A, together with accrued interest to the date of redemption.
SECTION 3.3 ELECTION TO REDEEM; NOTICE TO TRUSTEE.
If the Company elects to redeem Securities pursuant to paragraph 6 of
the Securities, it shall notify the Trustee at least 60 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 such redemption shall be selected by the
Company and given to the Trustee, which record date shall not be less than 10
days after the date of notice to the Trustee.
SECTION 3.4 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, pro rata or by another method the Trustee considers fair
and appropriate; provided that such method is not prohibited by any stock
exchange or market on which the Securities are then listed. 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
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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 3.5 NOTICE OF REDEMPTION.
At least 20 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 third Business Day immediately
preceding the redemption date;
(7) that Holders who wish to convert Securities must satisfy the
requirements in paragraph 9 of the Securities;
(8) that, unless the Company defaults in making the redemption payment,
interest on Securities called for redemption ceases to accrue on and after the
redemption date and the only remaining right of the Holder is to receive payment
of the redemption price upon presentation and surrender to the Paying Agent of
the Securities;
(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 principal amount equal to the unredeemed portion thereof will be
issued; and
(10) subject to Section 2.12, the CUSIP number of the Securities called
for redemption.
At the Company's written request delivered at least 15 days prior to
the date of the mailing of the notice of redemption, the Trustee shall give the
notice of redemption in the Company's name and at the Company's expense.
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SECTION 3.6 DEPOSIT OF REDEMPTION PRICE.
On or prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust) an amount of money sufficient to pay the
Redemption Price of, and (except if the Redemption Date shall be an interest
payment date) accrued interest on, all the Securities which are to be redeemed
on that date other than any Securities called for redemption on that date which
have been converted prior to the date of such deposit; PROVIDED that if such
payment is made on the Redemption Date, it must be received by the Trustee or
Paying Agent, as the case may be, by 10:00 a.m. New York City time on such date.
If any Security called for redemption is converted, any money deposited
with the Trustee or with any Paying Agent or segregated and held in trust for
the redemption of such Security shall (subject to any right of the Holder of
such Security or any predecessor security to receive interest) be paid to the
Company as soon as practicable upon written request by the Company or, if then
held by the Company, shall be released from such trust.
SECTION 3.7 SECURITIES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest, if any) such Securities shall cease to bear or accrue any interest.
Upon surrender of any such Security for redemption in accordance with said
notice, such Security shall be paid by the Company at the Redemption Price,
together with accrued interest to (but not including) the Redemption Date;
PROVIDED, HOWEVER, that installments of interest whose stated maturity is on or
prior to the Redemption Date shall be payable to the Holders of such Securities
registered as such at the close of business on the relevant Record Dates
according to their terms.
If the Company shall fail to deposit the Redemption Price with the
Trustee and any security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal and premium, if any, shall,
until paid, bear and accrue interest from the Redemption Date at the rate borne
by the Security.
SECTION 3.8 SECURITIES REDEEMED IN PART.
Any Security which is to be redeemed only in part shall be surrendered
at an office or agency of the Company designated for that purpose (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 his attorney-in-fact duly authorized in writing), and
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
any authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal
amount of the Security so surrendered.
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SECTION 3.9 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 by an agreement with
one or more investment bankers or other purchasers to purchase such Securities
by paying to the Trustee in trust for the Holders, on or before the Redemption
Date, an amount not less than the applicable Redemption Price of such
Securities, together with interest accrued to the Redemption Date.
Notwithstanding anything to the contrary contained in this Article 3, the
obligation of the Company to pay the Redemption Price of such Securities,
together with interest accrued to, but excluding, the Redemption Date 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, a copy of which shall be
filed with the Trustee prior to the Redemption Date, 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 (and the right
to convert any such Securities shall be deemed to have been extended through
such time), subject to payment of the above amount as aforesaid. At the
direction of the Company, the Trustee shall hold and dispose of any such amount
paid to it in the same manner as it would monies deposited with it by the
Company for the redemption of Securities. Without the Trustee'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 Trustee as set forth in
this Indenture, and the Company agrees to indemnify the Trustee 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 Trustee in the defense of any claim or liability
arising out of or in connection with the exercise or performance of any of its
powers, duties, responsibilities or obligations under this Indenture. Nothing in
the preceding sentence shall be deemed to limit the rights and protections
afforded to the Trustee in Article 9, including, but not limited to, the right
to the indemnification pursuant to Section 9.7.
SECTION 3.10 REPURCHASE OF SECURITIES AT OPTION OF THE HOLDER UPON CHANGE IN
CONTROL.
If at any time that Securities remain outstanding there shall have
occurred a Change in Control (as hereinafter defined), Securities shall be
repurchased by the Company at the option of the Holder thereof, at a purchase
price (the "Repurchase Price") equal to the principal amount thereof plus
accrued interest up to and including the Repurchase Date (as hereinafter
defined), on the date (the "Repurchase Date") fixed by the Company that is not
less than 45 days nor more than 60 days after the date of the Company Notice (as
hereinafter defined), subject to satisfaction by or on behalf of the Holder of
the requirements set forth in Section 3.11(b).
Whenever in this Indenture there is a reference to the principal of any
Security as of any time, such reference shall be deemed to include reference to
the Repurchase Price payable in respect of such Security to the extent that such
Repurchase Price is, was or would be so payable at such time, and express
mention of the Repurchase Price in any provision of this Indenture shall not be
construed as excluding the Repurchase Price in those provisions of this
Indenture when such express mention is not made.
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Any rights of Holders, contractual or otherwise, arising under or
pursuant to any offer to repurchase Securities made by the Company under this
Section 3.10 shall be subordinated in right of payment to all Senior
Indebtedness to the same extent as the Securities are subordinated to Senior
Indebtedness under the provisions of Article 5 and such offer to repurchase
shall provide that, if at the time the Securities are required to be repurchased
pursuant to such offer, payment of the Securities is not permitted pursuant to
the provisions of Article 5, the Company shall use its best efforts to obtain
all necessary waivers from, or to repay in full, the holders of Senior
Indebtedness in order to permit such repurchase. Notwithstanding the foregoing,
any failure by the Company to comply with this Section 3.10 to offer to
repurchase, or to repurchase, the Securities shall be a default in the
performance by the Company hereunder.
A "Change in Control" shall be deemed to have occurred at such time
after the original issuance of the Securities as any of the following occur:
(1) any sale, lease, exchange or other transfer (in one transaction or
a series of related transactions) of all or substantially all of the assets of
the Company and its subsidiaries, taken as a whole, to any person or group of
related persons, as defined in Section 13(d) of the Exchange Act (a "Group"),
other than, as long as the 10% Senior Discount Notes due 2008 of the Company are
outstanding, to Permitted Holders;
(2) the approval by the holders of capital stock of the Company of any
plan or proposal for the liquidation or dissolution of the Company (whether or
not otherwise in compliance with the provisions of the applicable indenture);
(3) any person or Group (other than Permitted Holders) shall become the
owner, directly or indirectly, beneficially or of record, of shares representing
more than 50% of the aggregate ordinary voting power represented by the
Company's issued and outstanding voting stock of or any successor to all or
substantially all of the Company's assets; or
(4) the first day on which a majority of the members of the Company's
Board of Directors are not Continuing Directors.
"Beneficial owner" shall be determined in accordance with Rule 13d-3
promulgated by the SEC under the Exchange Act, as in effect on the date of
execution of this Indenture, except that a person shall be deemed to be the
"beneficial owner" of all securities that such person has the right to acquire,
whether such right is exercisable immediately or only after the passage of time.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Company who (i) was a member of such
Board of Directors on the date of the original issuance of the Securities or
(ii) was nominated for election or elected to such Board of Directors by any of
the Permitted Holders or with the approval of a majority of the Continuing
Directors who were members of such Board of Directors at the time of such
nomination or election.
"Permitted Holders" means as of the date of determination (i) Andrew
Banks, Royce Yudkoff or Robert Wolsey and any of their respective spouses,
estates, lineal descendants (including adoptive children), heirs, executors,
personal representatives, administrators and trusts
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for any of their benefit and (ii) any other person, the majority of whose voting
stock is directly or indirectly owned by any person described in clause (i)
above.
SECTION 3.11 NOTICE; METHOD OF EXERCISING REPURCHASE RIGHT.
(a) Within 30 days after the occurrence of a Change in Control, the
Company shall mail a written notice (the "Company Notice") by first-class mail
to the Trustee and to each Holder (and to beneficial owners as required by
applicable law) and shall cause a copy of such notice to be published in a daily
newspaper of national circulation. The notice shall include the form of a
Repurchase Notice (as defined below) 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 Repurchase Notice pursuant to this Section
3.11 must be given;
(3) the Repurchase Date;
(4) the Repurchase Price;
(5) briefly, the conversion rights of the Securities including, without
limitation, the current Conversion Price and any adjustments thereto;
(6) the name and address of the Paying Agent and the Conversion Agent;
(7) whether the holders of Senior Indebtedness will permit the payment
of the Repurchase Price;
(8) that Securities as to which a Repurchase Notice has been given may
be converted into Common Stock only to the extent that the Repurchase Notice has
been withdrawn in accordance with the terms of this Indenture;
(9) the procedures that the Holder must follow to exercise rights under
Section 3.10;
(10) the procedures for withdrawing a Repurchase Notice, including a
form of notice of withdrawal;
(11) that the Holder must satisfy the requirements set forth in the
Securities in order to convert the Securities; and
(12) the CUSIP number of the Securities as to which a Repurchase Notice
has been given.
(b) A Holder may exercise its rights specified in Section 3.10 upon
delivery of a written notice of the exercise of such rights (a "Repurchase
Notice") to the Paying Agent at any time prior to the close of business on the
third Business Day prior to the Repurchase Date, stating:
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(1) the certificate number of each Security that the Holder will
deliver to be repurchased,
(2) the portion of the principal amount of each Security that the
Holder will deliver to be repurchased, which portion must be $1,000 or an
integral multiple thereof; and
(3) that such Security shall be repurchased pursuant to the terms and
conditions specified in this Indenture.
The delivery of such Security to the Paying Agent prior to, on or after
the Repurchase Date (together with all necessary endorsements) at the office of
the Paying Agent shall be a condition to the receipt by the Holder of the
Repurchase Price therefor; PROVIDED, HOWEVER, that such Repurchase Price shall
be so paid pursuant to Section 3.10 only if the Security so delivered to the
Paying Agent shall conform in all respects to the description thereof set forth
in the related Repurchase Notice.
The Company shall repurchase from the Holder thereof, pursuant to
Section 3.10, 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 repurchase of all of a Security pursuant to Sections 3.10 through
3.16 also apply to the repurchase of such portion of such Security.
Notwithstanding anything herein to the contrary, any Holder delivering
to the Paying Agent the Repurchase Notice contemplated by this Section 3.11(b)
shall have the right to withdraw such Repurchase Notice in whole or in a portion
thereof that is $1,000 or an integral multiple thereof at any time prior to the
close of business on the Business Day prior to the Repurchase Date by delivery
of a written notice of withdrawal to the Paying Agent in accordance with Section
3.12.
The Paying Agent shall promptly notify the Company of the receipt by it
of any Repurchase Notice or written withdrawal thereof.
SECTION 3.12 EFFECT OF REPURCHASE NOTICE.
Upon receipt by the Paying Agent of the Repurchase Notice specified in
Section 3.11(b), the Holder of the Security in respect of which such Repurchase
Notice was given shall (unless such Repurchase Notice is withdrawn as specified
below) thereafter be entitled to receive solely the Repurchase Price with
respect to such Security. Such Repurchase Price shall be paid to such Holder
promptly following the later of (i) the Repurchase Date with respect to such
Security (provided the conditions in Section 3.11(b) have been satisfied) and
(ii) the time of delivery of such Security to the Paying Agent by the Holder
thereof in the manner required by Section 3.11(b). Securities in respect of
which a Repurchase 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 Repurchase Notice unless such Repurchase Notice has first been validly
withdrawn.
A Repurchase Notice may be withdrawn by means of a written notice of
withdrawal delivered by the Holder, with such Holder's signature guaranteed in a
manner satisfactory to the Paying Agent, to the office of the Paying Agent at
any time prior to the close of business on the Business Day prior to the
Repurchase Date to which it relates, specifying:
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(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 Repurchase Notice and that has been or will be delivered for
repurchase by the Company.
SECTION 3.13 DEPOSIT OF REPURCHASE PRICE.
On or before the Repurchase Date, the Company shall deposit with the
Trustee or with the Paying Agent (or, if the Company is acting as the Paying
Agent, shall segregate and hold in trust as provided in Section 2.4) an amount
of money or a number of shares of Common Stock, as provided herein, sufficient
to pay the aggregate Repurchase Price of all the Securities or portions thereof
that are to be repurchased as of such Repurchase Date. The manner in which the
deposit required by this Section 3.13 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 Repurchase Date; PROVIDED FURTHER, that if such payment is made on the
Repurchase Date it must be received by the Trustee or Paying Agent, as the case
may be, by 10:00 a.m., New York City time, on such date.
If the Paying Agent holds, in accordance with the terms hereof, money
sufficient to pay the Repurchase Price of any Security tendered for repurchase
on the Business Day prior to the Repurchase Date, then, on and after the
Repurchase Date, such Security will cease to be outstanding and interest on such
Security will cease to accrue and will be deemed paid, whether or not such
Security is delivered to the Paying Agent, and all other rights of the Holder in
respect thereof shall terminate (other than the right to receive the Repurchase
Price upon delivery of such Security).
SECTION 3.14 SECURITIES REPURCHASED IN PART.
Any Security that is to be repurchased only in part shall be
surrendered at the office of the Paying Agent (with 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 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, or 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 repurchased.
SECTION 3.15 COMPLIANCE WITH SECURITIES LAWS UPON REPURCHASE OF SECURITIES.
In connection with any offer to repurchase or repurchase of Securities
under Section 3.10 hereof (PROVIDED that such offer or repurchase constitutes an
"issuer tender offer" for purposes of Rule 13e-4 (which term, as used herein,
includes any successor provision thereto) at the time of such offer or
repurchase), the Company shall (i) comply with Rule 13e-4 and Rule 14e-1 under
the Exchange Act, (ii) file the related Schedule 13E-4 (or any successor
schedule, form or report)
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under the Exchange Act, and (iii) 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 3.10 through 3.16 to be exercised in the time and in the
manner specified therein.
SECTION 3.16 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 3.13
exceeds the aggregate Repurchase Price of the Securities or portions thereof to
be repurchased, then, promptly after the Business Day following the Repurchase
Date, the Trustee or the Paying Agent, as the case may be, shall return any such
excess to the Company.
ARTICLE 4.
CONVERSION
SECTION 4.1 CONVERSION PRIVILEGE.
At any time after 90 days following the latest date of original
issuance of the Securities and prior to the close of business on September 15,
2007, a Holder of a Security may convert such Security into Common Stock (the
shares of Common Stock issuable upon such conversion, the "Conversion Shares"),
at the conversion price then in effect, together with those rights specified in
Section 4.6 hereof; PROVIDED that, if such Security is called for redemption
pursuant to Article 3, such conversion right shall terminate at the close of
business on the third Business Day before the redemption date for such Security
(unless the Company shall default in making the redemption payment then due, in
which case the conversion right shall terminate 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 9 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 Repurchase
Notice pursuant to Section 3.11(b) exercising the option of such Holder to
require the Company to repurchase such Security may be converted only if such
Repurchase Notice is withdrawn by a written notice of withdrawal delivered to
the Paying Agent prior to the close of business on the Repurchase Date in
accordance with Section 3.12.
A Holder of Securities is not entitled to any rights of a holder of
Common Stock until such Holder has converted his Securities into Common Stock
and, upon such conversion, only to the extent such Securities are deemed to have
been converted into Common Stock pursuant to this Article 4.
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SECTION 4.2 CONVERSION PROCEDURE.
To convert a Security, a Holder must (i) complete and manually sign the
conversion notice on the back of the Security and deliver such notice to the
Conversion Agent, (ii) surrender the Security to the Conversion Agent, (iii)
furnish appropriate endorsements and transfer documents to the Registrar or the
Conversion Agent, (iv) pay any transfer or other tax, if required by Section 4.4
and (v) if the Security is held in book-entry form, complete and deliver to the
Depositary appropriate instructions pursuant to the Depositary's book-entry
conversion programs. The date on which the Holder satisfies all of the foregoing
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 4.5.
The person in whose name the certificate is registered shall be deemed
to be a stockholder 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 date that such Security shall have been surrendered for
conversion, 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 accrued interest on a
converted Security or for dividends or distributions on shares of Common Stock
issued upon conversion of a Security, but if any Holder surrenders a Security
for conversion between the record date for the payment of an installment of
interest and the next interest payment date, then, notwithstanding such
conversion, the interest payable on such interest payment date shall be paid to
the Holder of such Security on such record date. In such event, such Security,
when surrendered for conversion, must be accompanied by delivery of a check or
draft payable to the Conversion Agent in an amount equal to the interest payable
on such interest payment date on the portion so converted. If such payment does
not accompany such Security, the Security shall not be converted; PROVIDED,
HOWEVER, that no such check or draft shall be required if such Security has been
called for redemption on a redemption date within the period between and
including such record date and such interest payment date, or if such Security
is surrendered for conversion on the interest payment date. If the Company
defaults in the payment of interest payable on the interest payment date, the
Conversion Agent shall repay such funds to the Holder.
If a Holder converts more than one Security at the same time, the
number of shares of Common Stock issuable upon the conversion shall be based on
the aggregate principal amount of Securities converted.
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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 ADJUSTMENTS BELOW PAR VALUE.
Before taking any action which would cause an adjustment decreasing the
Conversion Price so that the shares of Common Stock issuable upon conversion of
the Securities would be issued for less than the par value of such Common Stock,
the Company will take all corporate action which may be necessary in order that
the Company may validly and legally issue fully paid and nonassessable shares of
such Common Stock at such adjusted Conversion Price.
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 certificates
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 regulations.
SECTION 4.5 COMPANY TO PROVIDE STOCK.
The Company shall, prior to issuance of any Securities hereunder, and
from time to time as 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 for shares of Common Stock. The
shares of Common Stock or other securities issued upon conversion of the
Securities shall bear any legend required in accordance with Section 2.6(d).
No fractional shares of Common Stock or scrip representing fractional
shares shall be issued upon conversion of Securities. If more than one Security
shall be surrendered for conversion at one time by the same holder, the number
of full shares which shall be issuable upon conversion shall be computed on the
basis of the aggregate principal amount of the Securities (or specified portions
thereof to the extent permitted hereby) so surrendered. If any fractional share
of Common Stock would be issuable upon the conversion of any Security or
Securities, the Company shall make an adjustment thereof in cash at the current
market value thereof. For these purposes, the current market value of a share of
Common Stock shall be the Closing Price on the first day (which is not a Legal
Holiday) immediately preceding the day on which the Securities (or specified
portions thereof) are deemed to have been converted.
The Company covenants that 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 non-assessable and
shall be free from preemptive rights and free of any lien or adverse claim.
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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 (the "Conversion Price") shall be that price set
forth in paragraph 9 of the form of Security attached hereto as Exhibit A and
shall be adjusted from time to time by the Company as follows:
(a) In case the Company shall (i) pay a dividend or other distribution
in shares of Common Stock to holders of Common Stock, (ii) subdivide its
outstanding Common Stock into a greater number of shares, (iii) combine its
outstanding Common Stock into a smaller number of shares or (iv) reclassify its
outstanding Common Stock, 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 the number of shares of
Common Stock which it would have owned or have been entitled to receive 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 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, warrants or options to all
or substantially all holders of its Common Stock, rights, warrants or options
entitling them (for a period commencing no earlier than the record date
described below and expiring not more than 45 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) below), at the
record date for the determination of stockholders entitled to receive such
rights, warrants or options, the Conversion Price in effect immediately prior
thereto shall be adjusted so that the Conversion Price 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 subscription or purchase price for the total number
of shares of Common Stock offered by the rights, warrants or options so issued
(or the aggregate conversion price of the convertible securities offered by such
rights, warrants or options) 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
by such rights, warrants or options (or into which the convertible securities so
offered by such rights, warrants or options are convertible). Such adjustment
shall be made successively whenever any such rights, warrants or options are
issued, and shall become effective immediately after such record date. If at the
end of the period during which such rights, warrants or options are exercisable
not all rights, warrants or options shall have been exercised, the adjusted
Conversion Price shall be immediately readjusted to what it would have been upon
application of the foregoing adjustment substituting the number of additional
shares of Common Stock actually issued (or the number of shares
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of Common Stock issuable upon conversion of convertible securities actually
issued) for the total number of shares of Common Stock offered (or the
convertible securities offered).
(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) or evidences of its indebtedness, cash, other securities or
other assets, or shall distribute to all or substantially all holders of its
Common Stock rights, warrants or options to subscribe for or purchase any of its
securities (excluding (i) those rights and warrants referred to in subsection
(b) above; (ii) those dividends, distributions, subdivisions and combinations
referred to in subsection (a) above; and (iii) dividends and distributions paid
in cash in an aggregate amount that, combined together with (A) all other such
cash distributions made within the preceding 12 months in respect of which no
adjustment has been made under this Section 4.6 and (B) the fair market value of
consideration payable in respect of any repurchases (including by way of tender
offers) by the Company or any of its Subsidiaries or Affiliates, or any employee
benefit plan for the benefit of employees of the Company or any of its
Subsidiaries or Affiliates (a "Company Benefit Plan"), of Common Stock concluded
within the preceding 12 months, in each case in respect of which no adjustment
has been made under this Section 4.6, does not exceed 15% of Market
Capitalization as of the record date for such distribution), 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 or purchase by a fraction of which the
numerator shall be the current market price per share (as defined in subsection
(e) below) 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 of the
Company, whose determination shall be conclusive evidence of such fair market
value) of the portion of the capital stock or evidences of indebtedness,
securities or assets so distributed or of such rights, warrants or options, in
each case as applicable to one share of Common Stock, and of which the
denominator shall be the current market price per share (as defined in
subsection (e) below) of the Common Stock on such record date. Such adjustment
shall become effective immediately after the record date for the determination
of stockholders entitled to receive such distribution. Notwithstanding the
foregoing, in the event that the Company shall distribute rights, warrants or
options (other than those referred to in subsection (b) above) ("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 Conversion Shares, a number of Rights to be determined as follows: (x) 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 (y) 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. If the Company implements a new
stockholder rights plan, the Company agrees that such rights plan will provide
that upon conversion of the Securities, the Holders holding Common Stock issued
upon conversion shall receive the rights issued under such plan, whether or not
such rights have
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separated from the Common Stock at the time of such conversion. If the rights
under such new plan have become separated from the Common Stock prior to the
conversion of a Security, the Holders holding Common Stock issued upon
conversion shall receive the Rights that they would have received if the
Security had been converted immediately prior to the separation of the Rights.
(d) In case the Company or any of its Subsidiaries or any Company
Benefit Plan shall repurchase (including by way of tender offer) shares of
Common Stock, and the fair market value of the sum of (i) the aggregate
consideration paid for such Common Stock, (ii) the aggregate fair market value
of cash dividends and distributions of the type described in clause (iii) of the
preceding paragraph (c) paid within the twelve (12) months preceding the date of
purchase of such shares of Common Stock in respect of which no adjustment
pursuant to this Section 4.6 previously has been made, and (iii) the aggregate
fair market value of any amounts previously paid for the repurchase of Common
Stock of a type described in this paragraph (d) within the twelve (12) months
preceding the date of purchase of such shares of Common Stock in respect of
which no adjustment pursuant to this Section 4.6 previously has been made,
exceeds 15% of Market Capitalization on the date of, and after giving effect to,
such repurchase, then 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 or purchase by a fraction of
which the numerator shall be the current market price per share (as defined in
subsection (e) below) of the Common Stock on the date of such repurchase, less
the quotient obtained by dividing the Aggregate Market Premium involved in such
repurchase (as defined hereinafter) by the difference between the number of
shares of Common Stock outstanding before such repurchase and the number of
shares of Common Stock the subject of such repurchase, and of which the
denominator shall be the current market price per share (as defined in
subsection (e) below) of the Common Stock on the date of such repurchase. Such
adjustment shall become effective immediately after the date of such repurchase.
For purposes of this subsection (d), the "Aggregate Market Premium" is the
excess, if any, of the aggregate repurchase price paid for all such Common Stock
over the aggregate current market value per share (as defined in subsection (e)
below) of all such repurchased stock, determined with respect to each share
involved in each such repurchase as of the date of repurchase with respect to
such share.
(e) For the purpose of any computation under subsections (b), (c) and
(d) above, the current market price per share of Common Stock on any date shall
be deemed to be the average of the Closing Prices for 20 consecutive Trading
Days commencing 30 Trading Days before the record date with respect to any
distribution, issuance or other event requiring such computation. The Closing
Price for each day shall be (i) the last sale price, or the closing bid price if
no sale occurred, of such class of stock on the principal securities exchange on
which such class of stock is listed, if the Common Stock is listed or admitted
for trading on any national securities exchange, (ii) the last reported sale
price of Common Stock on The Nasdaq Stock Market, or any similar system of
automated dissemination of quotations of securities prices then in common use,
if so quoted, or (iii) if not quoted as described in clause (i), the mean
between the high bid and low asked quotations for Common Stock as reported by
the National Quotation Bureau Incorporated if at least two securities dealers
have inserted both bid and asked quotations for such class of stock on at least
5 of the 10 preceding days. If the Common Stock is quoted on a national
securities or central market system, in lieu of a market or quotation system
described above, the Closing Price shall be determined in the manner set forth
in clause (iii) of the preceding sentence
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if bid and asked quotations are reported but actual transactions are not, and in
the manner set forth in clause (ii) of the preceding sentence if actual
transactions are reported. If none of the conditions set forth above is met, the
Closing Price of Common Stock on any day or the average of such last reported
sale prices for any period shall be the fair market value of such class of stock
as determined by a member firm of the New York Stock Exchange, Inc. selected by
the Company. As used herein the term "Trading Days" with respect to Common Stock
means (i) if the Common Stock is listed or admitted for trading on any national
securities exchange, days on which such national securities exchange is open for
business or (ii) if the Common Stock is quoted on The Nasdaq Stock Market or any
similar system of automated dissemination of quotations of securities prices,
days on which trades may be made on such system.
(f) Rights, warrants or options distributed by the Company to all
holders of Common Stock entitling the holders thereof to subscribe for or
purchase shares of the Company's capital stock (either initially or under
certain circumstances), which rights, warrants or options, until the occurrence
of a specified event or events ("Trigger Event"):
(1) are deemed to be transferred with such shares of Common Stock,
(2) are not exercisable, and
(3) are also issued in respect of future issuances of Common Stock,
shall not be deemed distributed for purposes of this Section 4.6 until the
occurrence of the earliest Trigger Event. In addition, in the event of any
distribution of rights, warrants or options, or any Trigger Event with respect
thereto, that shall have resulted in an adjustment to the Conversion Price under
this Section 4.6, (1) in the case of any such rights, warrants or options which
shall all have been redeemed or repurchased without exercise by any holders
thereof, the Conversion Price shall be readjusted upon such final redemption or
repurchase to give effect to such distribution or Trigger Event, as the case may
be, as though it were a cash distribution, equal to the per share redemption or
repurchase price received by a holder of Common Stock with respect to such
rights, warrants or options (assuming such holder had retained such rights,
warrants or options), made to all holders of Common Stock as of the date of such
redemption or repurchase, and (2) in the case of any such rights, warrants or
options all of which shall have expired without exercise by any holder thereof,
the Conversion Price shall be readjusted as if such issuance had not occurred.
(g) In case the Company makes a cash or non-cash distribution to
substantially all holders of Common Stock prior to the earlier of March 21, 2003
or the date the Company ceases to maintain its status as a Real Estate
Investment Trust for federal income tax purposes with respect to which no
adjustment is otherwise provided for pursuant to any of the other subsections of
this Section 4.6, 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 the date of such distribution by
a fraction of which the numerator of which shall be the current market price per
share (as defined in subsection (e) above) of the Common Stock on the record
date for the determination of stockholders entitled to receive such
distribution, less the amount of the cash distribution applicable to a single
share of Common Stock or fair market value on such record date of the non-cash
distribution applicable to a single share of
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Common Stock (which fair market value shall be determined by the Board of
Directors of the Company, whose determination shall be conclusive of such fair
market value) and of which the denominator shall be the current market price per
share (as defined in subsection (e) above) of the Common Stock on such record
date. Such adjustment shall become effective immediately after the such record
date for such distribution.
(h) In any case in which this Section 4.6 shall require that an
adjustment be made immediately following a record date established for purposes
of 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 4.10) issuing to the holder of any Security converted after
such record date the shares of Common Stock and other capital stock of the
Company issuable upon such conversion over and above the shares of Common Stock
and other capital stock of the Company issuable upon such conversion only on the
basis of the Conversion Price prior to adjustment; and, in lieu of the shares
the issuance of which is so deferred, the Company shall issue or cause its
transfer agents to issue due bills or other appropriate evidence of the right to
receive such shares.
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 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 cash, no
adjustment need be made thereafter as to the cash. Interest will not accrue on
the cash.
SECTION 4.8 EQUIVALENT ADJUSTMENTS.
In the event that, as a result of an adjustment made pursuant to
Section 4.6 above, the holder of any Security thereafter surrendered for
conversion shall become entitled to receive any shares of capital stock of the
Company other than shares of its Common Stock, thereafter the Conversion Price
of such other shares so receivable upon conversion of any Securities shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to Common Stock
contained in this Article 4.
SECTION 4.9 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
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that any stock dividends, subdivision of shares, distribution of rights to
purchase stock or securities, or a distribution or securities convertible into
or exchangeable for stock hereafter made by the Company to its stockholders
shall not be taxable.
SECTION 4.10 NOTICE OF ADJUSTMENT.
Whenever the Conversion Price is adjusted, or Securityholders become
entitled to other Securities or due bills, 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 and the Trustee may conclusively assume that,
unless and until such certificate is received by it, no such adjustment is
required.
SECTION 4.11 NOTICE OF CERTAIN TRANSACTIONS.
In case:
(a) the Company shall declare a dividend (or any other distribution) on
its Common Stock (other than in cash out of retained earnings); or
(b) the Company shall authorize the granting to the holders of its
Common Stock of rights, warrants or options to subscribe for or purchase any
share of any class or any other rights, warrants or options; or
(c) of any reclassification of the Common Stock of the Company (other
than a subdivision or combination of its outstanding Common Stock, or a change
in par value, or from par value to no par value, or from no par value to par
value), or of any consolidation or merger to which the Company is a party and
for which approval of any stockholders of the Company is required, or of the
sale or transfer of all or substantially all of the assets of the Company; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding-up of the Company;
the Company shall cause to be filed with the Trustee and to be mailed to each
holder of Securities at its address appearing on the list provided for in
Section 2.5, as promptly as possible but in any event at least fifteen days
prior to the applicable date hereinafter specified, a notice stating (x) the
date on which a record is to be taken for the purpose of such dividend,
distribution or rights, warrants or options, or, if a record is not to be taken,
the date as of which the holders of Common Stock of record to be entitled to
such dividend, distribution or rights are to be determined, or (y) the date on
which such reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding-up is expected to become effective or occur, and the date
as of which it is expected that holders of Common Stock of record shall be
entitled to exchange their Common Stock for securities or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding-up. Failure to give such notice, or any
defect therein, shall not affect the legality or validity of such dividend,
distribution, reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding-up.
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SECTION 4.12 EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE ON
CONVERSION PRIVILEGE.
If any of the following shall occur, namely: (i) any reclassification
or change of outstanding shares of Common Stock (other than a change in par
value, or from par value to no par value, or from no par value to par value, or
as a result of a subdivision or combination); (ii) any consolidation,
combination 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 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 (iii) any sale or conveyance of all or substantially all of the property or
business of the Company, then the Company, or such successor or purchasing
corporation, as the case may be, shall, as a condition precedent to such
reclassification, change, consolidation, merger, sale or conveyance, execute and
deliver to the Trustee a supplemental indenture providing that the Holder of
each Security then outstanding shall have the right to convert such Security
into the kind and amount of shares of stock and other securities and property
(including cash) receivable upon such reclassification, change, consolidation,
merger, sale or conveyance by a holder of the number of shares of Common Stock
deliverable upon conversion of such Security immediately prior to such
reclassification, change, consolidation, merger, sale or conveyance. Such
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. The foregoing, however,
shall not in any way affect the right a holder of a Security may otherwise have,
pursuant to clause (ii) of the last sentence of subsection (c) of Section 4.6,
to receive Rights upon conversion of a Security. 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
includes 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 of the Company shall reasonably consider necessary by
reason of the foregoing. The provision of this Section 4.12 shall similarly
apply to successive consolidations, mergers, sales or conveyances.
Notwithstanding the foregoing, a distribution by the Company to all or
substantially all holders of its Common Stock for which an adjustment to the
Conversion Price or provision for conversion of the Securities may be made
pursuant to Section 4.6 shall not be deemed to be a sale or conveyance of all or
substantially all of the property or business of the Company for purposes of
this Section 4.12.
In the event the Company shall execute a supplemental indenture
pursuant to this Section 4.12, the Company shall promptly file with the Trustee
an Opinion of Counsel stating that such supplemental indenture is authorized or
permitted by this Indenture and 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.
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SECTION 4.13 TRUSTEE'S DISCLAIMER.
The Trustee has no duty to determine when an adjustment under this
Article 4 should be made, how it should be made or what such adjustment should
be made, but may accept as conclusive evidence of the correctness of any such
adjustment, and shall be protected in relying upon, the Officers' Certificate
with respect thereto which the Company is obligated to file with the Trustee
pursuant to Section 4.10. The Trustee shall not be accountable for and 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. Each
Conversion Agent (other than the Company or an Affiliate of the Company) shall
have the same protection under this Section 4.13 as the Trustee.
The Trustee shall not be under any responsibility to determine the
correctness of any provisions contained in any supplemental indenture executed
pursuant to Section 4.12, but may accept as conclusive evidence of the
correctness thereof, and shall be protected in relying upon, the Officers'
Certificate with respect thereto which the Company is obligated to file with the
Trustee pursuant to Section 4.12.
SECTION 4.14 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 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 by his
acceptance thereof likewise covenants and agrees, that all Securities are
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 and acknowledges that such
provisions are for the benefit of, and shall be enforceable directly by, the
holders of Senior Indebtedness.
Each holder of Securities authorizes and directs the Trustee on such
holder's behalf to take such action as may be necessary or appropriate, in the
sole discretion of the Trustee, to acknowledge or effectuate the subordination
between the holders of Securities and the holders of Senior Indebtedness as
provided in this Article and appoints the Trustee as such holder's
attorney-in-fact for any and all such purposes.
The payment of the principal of, premium, if any, and interest on and
any other payment due pursuant to this Indenture or any Securities issued
hereunder (including, without limitation,
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the payment or deposit of the Redemption Price or Repurchase Price pursuant to
Article 3 and any deposit pursuant to Section 6.3) 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, incurred,
assumed or guaranteed.
SECTION 5.2 SECURITIES SUBORDINATED TO PRIOR PAYMENT OF ALL SENIOR
INDEBTEDNESS ON DISSOLUTION, LIQUIDATION, REORGANIZATION,
ETC., OF THE COMPANY.
Upon any 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, or receivership proceedings, or upon an assignment
for the benefit of creditors, or any marshalling of the assets and liabilities
of the Company, or otherwise), then in such event:
(a) all Senior Indebtedness (including principal thereof and interest
thereon) shall first be paid in full before any Payment of the Securities (as
defined in Section 5.5) is made;
(b) any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities (including any collateral at
any time securing the Securities) (other than Reorganization Securities), 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 may have been issued, ratably according to the aggregate amounts
remaining unpaid on account of the principal of and interest on 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 Reorganization
Securities), shall be received by the Trustee or the Holders before all Senior
Indebtedness is paid in full, such payment or distribution (subject to the
provisions of Sections 5.6 and 5.7) shall be held in trust for the benefit of,
and shall be immediately paid or delivered by the Trustee or such Holders, as
the case may be, to the holders of Senior Indebtedness remaining unpaid, or
their Representative or Representatives, ratably according to the aggregate
amounts remaining unpaid on account of the principal of and interest on 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 or for the holders of such Senior
Indebtedness.
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The Company shall give prompt 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 conclusively rely 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; PROVIDED that the foregoing shall apply only if
such court, trustee, liquidating trustee or other person has been fully apprised
of the provisions of this Article.
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, the
Holders shall be subrogated (equally and ratably with the holders of all
indebtedness of the Company which by its express terms is subordinated to
indebtedness of the Company to substantially the same extent as the Securities
are subordinated and is entitled to like rights of subrogation) 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 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 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.
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SECTION 5.5 COMPANY NOT TO MAKE PAYMENT WITH RESPECT TO SECURITIES IN
CERTAIN CIRCUMSTANCES.
Upon the occurrence of a Payment Default, unless and until the amount
of such Senior Indebtedness then due shall have been paid in full, or such
default shall have been cured or waived or shall have ceased to exist, the
Company shall not pay principal of, premium, if any, or interest on the
Securities or any other amount due pursuant to this Indenture or any Securities
or make any deposit pursuant to Article 3 or Section 6.3 or 10.1 and shall not
repurchase, redeem or otherwise retire any Securities (collectively, "Payment of
the Securities").
Unless Section 5.2 shall be applicable, upon (1) the occurrence of a
default on Senior Indebtedness (other than a Payment Default) that occurs and is
continuing that permits the holders of such Senior Indebtedness (or their
Representative or Representatives) to accelerate its maturity and (2) receipt by
the Company and the Trustee from the Senior Agent of written notice of such
occurrence and the imposition of a Payment Blockage Period hereunder, then the
Company shall not make any Payment of the Securities for a period (the "Payment
Blockage Period") commencing on the earlier of the date of receipt by the
Company or the Trustee of such notice from the Senior Agent and ending on the
earlier of (subject to any blockage of payments that may then be in effect under
subsection (a) of this Section) (x) the date 179 days after such date, (y) the
date such default shall have been cured or waived in writing or shall have
ceased to exist or such Senior Indebtedness shall have been discharged, or (z)
the date such Payment Blockage Period shall have been terminated by written
notice to the Company or the Trustee from the Senior Agent, after which, in case
of clause (x), (y) or (z), as the case may be, the Company shall resume making
any and all required payments. Notwithstanding any other provision of this
Agreement, only one Payment Blockage Period may be commenced within any
consecutive 365-day period, and no event of default with respect to any Senior
Indebtedness which existed or was continuing on the date of the commencement of
any Payment Blockage Period with respect to such Senior Indebtedness shall be,
or can be made, the basis for the commencement of a second Payment Blockage
Period whether or not within a period of 365 consecutive days unless such event
of default shall have been cured or waived for a period of not less than 90
consecutive days. In no event will a Payment Blockage Period extend beyond 179
days.
In the event that, notwithstanding the foregoing provisions of this
Section 5.5, any Payment of 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), which payment was prohibited by this Section 5.5,
then, unless and until the amount of Senior Indebtedness then due, as to which a
default shall have occurred, shall have been paid in full, 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) 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, ratably according to the aggregate
amounts remaining unpaid on account of the principal of and interest on 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. The Company shall give prompt written notice to the Trustee
of
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any default under any Senior Indebtedness or under any agreement pursuant to
which Senior Indebtedness may have been issued.
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; and, prior to the receipt of any such notice, the Trustee,
subject to the provisions of Sections 9.1 and 9.2, shall be entitled to assume
conclusively that no such facts exist.
The Trustee shall be entitled to conclusively rely on the delivery to
it of a written notice by a person representing himself to be a holder of Senior
Indebtedness (or a Representative of such holder) 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.
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 at least three 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), a Trust Officer of 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 within three Business Days prior to 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.
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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 amendment of this Article 5 or any
defined terms used herein or any other Sections referred to in this Article 5
which adversely affects the rights hereunder of holders of Senior Indebtedness,
shall be effective unless the holders of such Senior Indebtedness (required
pursuant to the terms of such Senior Indebtedness to give such consent) have
consented thereto.
SECTION 5.9 TRUSTEE TO EFFECTUATE SUBORDINATION.
Each holder of a Security by his acceptance thereof authorizes and
directs the Trustee in his behalf to take such action as may be necessary or
appropriate to acknowledge and effectuate the subordination provided in this
Article 5 and appoints the Trustee his 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 5 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 of 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 or otherwise. With
respect to the holders of Senior Indebtedness, the Trustee undertakes to perform
or to observe only such of its covenants or obligations as are specifically set
forth in this Article 5 and no implied covenants or obligations with respect to
holders of Senior Indebtedness shall be read into this Indenture against the
Trustee.
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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.
SECTION 5.14 CERTAIN CONVERSION DEEMED PAYMENT.
For the purposes of this Article only, (1) the issuance and delivery of
junior securities upon conversion of Securities in accordance with Article 4
shall not be deemed to constitute a payment or distribution on account of the
principal of or premium or interest on Securities or on account of the purchase
or other acquisition of Securities, and (2) the payment, issuance or delivery of
cash, property or securities (other than junior securities) upon conversion of a
Security shall be deemed to constitute payment on account of principal of such
Security. For the purposes of this Section, the term "junior securities" means
(a) shares of any stock of any class of the Company and (b) securities of the
Company which are subordinated in right of payment to all Senior Indebtedness
which may be outstanding at the time of issuance or delivery of such securities
to substantially the same extent as, or to a greater extent than, the Securities
are so subordinated as provided in this Article. Nothing contained in this
Article or elsewhere in this Indenture or in the Securities is intended to or
shall impair, as among the Company, its creditors other than holders of Senior
Indebtedness and the Holders of the Securities, the right, which is absolute and
unconditional, of the Holder of any Security to convert such Security in
accordance with Article 4.
ARTICLE 6.
COVENANTS
SECTION 6.1 PAYMENT OF SECURITIES.
The Company covenants and agrees that it will duly and punctually pay
or cause to be paid the principal amount at maturity, Redemption Price,
Repurchase Price and interest, in respect of each of the Securities at the
places, at the respective times and in the manner provided herein and in the
Securities. Each installment of interest on the Securities may be paid by
mailing checks for the interest payable to or upon the written order of the
holders of Securities entitled thereto as they shall appear on the registry
books of the Company; PROVIDED that with respect to any holder of Securities
with an aggregate principal amount equal to or in excess of $5 million, at the
request of such holder in writing the Company shall pay interest on such
holder's Securities by wire transfer in immediately available funds.
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SECTION 6.2 SEC REPORTS; 144A INFORMATION.
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 stockholders to be mailed to the Holders of the Securities.
In the event the Company is at any time no longer subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company
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 income and retained earnings, a statement of cash flows and all appropriate
notes. All such financial statements will be prepared in accordance with
generally accepted accounting principles consistently applied, except for
changes with which the Company's independent accountants concur, and except that
quarterly statements may be subject to year-end adjustments. 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 60 days after the close for each
of the first three quarters of each fiscal year and within 105 days after the
close of each fiscal year. The Company will also comply with the other
provisions of TIA 314(a).
Delivery of such reports, information and documents to the Trustee is
for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
At any time when the Company is not subject to Section 13 or 15(d) of
the Exchange Act, upon the request of a holder or beneficial owner of a
Security, the Company will promptly furnish or cause to be furnished Rule 144A
Information (as defined below) to such holder, to such beneficial owner or to a
prospective purchaser designated by such Securityholder or beneficial owner, as
the case may be, in order to permit compliance by such Securityholder or
beneficial owner with Rule 144A under the Securities Act in connection with the
resale of such Security by such Securityholder or beneficial owner; PROVIDED,
HOWEVER, the Company shall not be required to furnish such information in
connection with any request made on or after the date which is two years from
the later of (i) the date such Security (or any predecessor Security) was
acquired from the Company or (ii) the date such Security (or any predecessor
Security) was last acquired from an "affiliate" of the Company within the
meaning of Rule 144 under the Securities Act. "Rule 144A Information" shall be
such information as is specified pursuant to Rule 144A(d)(4) under the
Securities Act (or any successor provision thereto).
SECTION 6.3 LIQUIDATION.
Subject to the provisions of Article 5, insofar as they may be
applicable hereto, the Board of Directors or the stockholders of the Company may
not adopt a plan of liquidation which plan
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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 (Article 7
being the Article which governs any such sale, lease, conveyance or other
disposition substantially as an entirety), and (b) the distribution of all or
substantially all of the proceeds of such sale, lease, conveyance or other
disposition and of the remaining assets of the Company to the holders of the
capital stock of the Company, unless the Company shall in connection with the
adoption of such plan make provision for, or agree that prior to making any
liquidating distributions to the holders of capital stock of the Company it will
make provision for, the satisfaction of the Company's obligations hereunder and
under the Securities as to the payment of principal and interest. The Company
shall be deemed to have made 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
reasonably 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 Consolidated Net Worth (immediately after the
acquisition) equal to not less than the Consolidated Net Worth of the Company
(immediately preceding such acquisition), 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 to the holders of capital stock of the Company described in the
first sentence of this Section 6.3 until after the Company shall have 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.
SECTION 6.4 COMPLIANCE CERTIFICATES.
The Company shall deliver to the Trustee within 105 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 Certificate shall describe the default or Event of Default and
the efforts to remedy the same. For the purposes of this Section 6.4, compliance
shall be determined without regard to any grace period or requirement of notice
provided pursuant to the terms of this Indenture. The Certificate need not
comply with Section 12.4.
SECTION 6.5 NOTICE OF DEFAULTS.
The Company will give notice to the Trustee, promptly, and in any event
within five days, upon becoming aware thereof, of the existence of any Event of
Default or an event which, with notice or the lapse of time or both would
constitute an Event of Default hereunder.
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SECTION 6.6 PAYMENT OF TAXES AND OTHER CLAIMS.
The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (1) all material taxes, assessments and
governmental charges levied or imposed upon the Company, directly or by reason
of its ownership of any Subsidiary or upon the income, profits or property of
the Company; and (2) all material lawful claims for labor, materials and
supplies, which, if unpaid, might by law become a lien upon the property of the
Company; PROVIDED, HOWEVER, that the Company shall not be required to pay or
discharge or cause to be paid or discharged any such tax, assessment, charge or
claim whose amount, applicability or validity is being contested in good faith
by appropriate proceedings and for which adequate provision has been made.
SECTION 6.7 CORPORATE EXISTENCE.
Subject to Section 6.3 and Article 7, the Company will do or cause to
be done all things necessary to preserve and keep in full force and effect its
corporate existence and rights (charter and statutory); PROVIDED, HOWEVER, that
the Company shall not be required to preserve any right if the Company shall
determine that the preservation is no longer desirable in the conduct of the
Company's business and that the loss thereof is not, and will not be, adverse in
any material respect to the Holders.
SECTION 6.8 MAINTENANCE OF PROPERTIES.
Subject to Section 6.3, the Company will cause all material properties
owned, leased or licensed in the conduct of its business to be maintained and
kept in good condition, repair and working order and supplied with all necessary
equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof and thereto, all as in the
judgment of the Company may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times
while any Securities are outstanding; PROVIDED, HOWEVER, that nothing in this
Section 6.8 shall prevent the Company from doing otherwise if, in the judgment
of the Company, the same is desirable in the conduct of the Company's business
and is not, and will not be, adverse in any material respect to the Holders.
SECTION 6.9 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.
SECTION 6.10 MAINTENANCE OF OFFICE OR AGENCY.
The Company will maintain in The City of New York an office or agency
where Securities may be presented or surrendered for payment or repurchase,
where Securities may be surrendered for registration of transfer or exchange and
where notices and demands to or upon the Company in respect of the Securities
and this Indenture may be served. The office of the agent of the Trustee in The
City of New York shall be such office or agency of the Company, unless the
Company shall designate and maintain some other office or agency for one or more
of such purposes. The Company will give prompt written notice to the Trustee of
any change in the location
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of any such office or agency. If at any time the Company shall fail to maintain
any such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the Corporate Trust Office of the Trustee, and the Company hereby
appoints the Trustee as its agent to receive all such presentations, surrenders,
notices and demands.
The Company may from time to time designate one or more other offices
or agencies where the Securities may be presented or surrendered for any or all
such purposes and may from time to time rescind such designation; PROVIDED,
HOWEVER, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in The City of New
York for such purposes. The Company will give prompt written notice to the
Trustee of any such designation or rescission and any change in the location of
any such office or agency.
SECTION 6.11 RESALE OF CERTAIN SECURITIES; REPORTING ISSUER.
During the period beginning on the last date of original issuance of
the Securities and ending on the date that is two years from such date, the
Company will not, and will use all reasonable efforts not to permit any of its
"affiliates" (as defined under Rule 144 under the Securities Act or any
successor provision thereto) to, resell (x) any Securities which constitute
"restricted securities" under Rule 144 or (y) any securities into which the
Securities have been converted under this Indenture which constitute "restricted
securities" under Rule 144, that in either case have been reacquired by any of
them. The Trustee shall have no responsibility in respect of the Company's
performance of its agreement in the preceding sentence.
SECTION 6.12 REGISTRATION RIGHTS.
(a) The Company agrees that the Holders (and any Person that has a
beneficial interest in a Security) from time to time of Registrable Securities
(as such term is defined in the Registration Rights Agreement) are entitled to
the benefits of the Registration Rights Agreement. Pursuant to the Registration
Rights Agreement, the Company has agreed for the benefit of the Holders from
time to time of Registrable Securities, at the Company's expense, (i) to file
within 90 days after the first date of original issuance of the Securities, a
shelf registration statement (the "Shelf Registration Statement") with the
Commission with respect to resales of the Restricted Securities, (ii) to use all
reasonable efforts to cause such Shelf Registration Statement to be declared
effective by the Commission not later than 180 days after the first date of
original issuance of the Securities, and (iii) to use all reasonable efforts to
maintain such Shelf Registration Statement continuously effective under the
Securities Act subject to and in accordance with the terms of the Registration
Rights Agreement.
Additional interest (the "Additional Interest") with respect to the
Securities shall be assessed if a Registration Default (as defined in the
Registration Rights Agreement) occurs. Additional Interest shall accrue on the
Securities over and above the interest set forth in the title of the Securities
from and including the date on which any such Registration Default shall occur,
to but excluding the date on which such Registration Default has been cured (in
the manner described in the Registration Rights Agreement), at a rate of 0.50%
per annum.
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(b) Any amounts of Additional Interest due pursuant to clause (a) of
this Section 6.12 shall be payable in cash on the regular interest Payment
Dates. The amount of Additional Interest shall be determined by multiplying the
applicable Additional Interest rate by the principal amount of the Securities,
multiplied by a fraction, the numerator of such period (determined on the basis
of a 360-day year comprised of twelve 30-day months), and the denominator of
which is 360.
Whenever in this Indenture there is mentioned, in any context, the
payment of the principal of, premium, if any, or interest on, or in respect of,
any Security, such mention shall be deemed to include mention of the payment of
Additional Interest provided for in this Section to the extent that, in such
context, Additional Interest are, were or would be payable in respect thereof
pursuant to the provisions of this Section 6.12 and express mention of the
payment of Additional Interest (if applicable) in any provisions hereof shall
not be construed as excluding Additional Interest in those provisions hereof
where such express mention is not made.
SECTION 6.13 ADDITIONAL INTEREST.
If Additional Interest is payable pursuant to the Registration Rights
Agreement, the Company shall deliver to the Trustee a certificate to that effect
stating (i) the amount of such Additional Interest that is payable and (ii) the
date on which such interest is payable. Unless and until a Trust Officer
receives at the Corporate Trust Office such a certificate, the Trustee may
assume without inquiry that no such interest is payable. If the Company has paid
Additional Interest directly to the Persons entitled to it, the Company shall
deliver to the Trustee a certificate setting forth the particulars of such
payment.
SECTION 6.14 STAY, EXTENSION AND USURY LAWS.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not, by resort to any such law, hinder, delay or
impede the execution of any power herein granted to the Trustee, but will suffer
and permit the execution of every such power as though no such law had been
enacted.
ARTICLE 7.
SUCCESSOR CORPORATION
SECTION 7.1 WHEN COMPANY MAY MERGE, ETC.
The Company shall not consolidate with or merge into any other Person,
or convey, transfer or lease its properties and assets substantially as an
entirety to any Person, and shall not permit any Person (other than a Subsidiary
wholly-owned by the Company) to consolidate with
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or merge into the Company or convey, transfer or lease its properties and assets
substantially as an entirety to the Company, unless:
(a) in case the Company shall consolidate with or merge into another
Person or convey, transfer or lease its properties and assets substantially as
an entirety to any Person, the Person formed by such consolidation or into which
the Company is merged or the Person which acquires by conveyance or transfer, or
which leases, the properties and assets of the Company substantially as an
entirety shall be a corporation, partnership or trust, shall be organized and
validly existing under the laws of the United States of America, any State
thereof or the District of Columbia and shall expressly assume, by an indenture
supplemental thereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, the due and punctual payment of the principal of
(and premium, if any) and interest on all the Securities and the performance or
observance of every covenant of this Indenture on the part of the Company to be
performed or observed and shall have provided for conversion rights in
accordance with Section 4.12;
(b) immediately after giving effect to such transaction and treating
any indebtedness which becomes an obligation of the Company or a Subsidiary as a
result of such transaction as having been incurred by the Company or such
Subsidiary at the time of such transaction, no Event of Default, and no event
which, after notice or lapse of time or both, would become an Event of Default,
shall have happened and be continuing; and
(c) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation, merger,
conveyance, transfer or lease and, if a supplemental indenture is required in
connection with such transaction, such supplemental indenture comply with this
Article and that all conditions precedent herein provided for relating to such
transaction have been complied with.
SECTION 7.2 SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation of the Company with, or merger of the Company
into, any other Person or any conveyance, transfer or lease of the properties
and assets of the Company substantially as an entirety in accordance with
Section 7.1, the successor person formed by such consolidation or into which the
Company is merged or to which such conveyance, transfer or lease 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
Person had been named as the Company herein, and thereafter, except in the case
of a lease, the predecessor Person shall be relieved of all obligations and
covenants under this Indenture and the Securities.
ARTICLE 8.
DEFAULT AND REMEDIES
SECTION 8.1 EVENTS OF DEFAULT.
An "Event of Default" occurs if:
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(1) the Company defaults in the payment of any interest upon any of the
Securities when due and payable and the default continues for a period of 30
days whether or not such payment is prevented by Article 5;
(2) the Company defaults in the payment of the principal of and
premium, if any, on any of the Securities when due, including on a redemption
date, whether or not such payment is prevented by Article 5;
(3) the Company fails to pay when due the principal of or interest on
indebtedness for money borrowed by the Company or its subsidiaries in excess of
$20.0 million, or the acceleration of that indebtedness that is not withdrawn
within 15 days after the date of written notice to the Company by the Trustee or
to the Company and the Trustee by the holders of at least 25% in principal
amount of the outstanding Securities;
(4) a default by the Company in the performance, or breach, of any of
the Company's other covenants in this Indenture which are not remedied by the
end of a period of 60 days after written notice to the Trustee or to the Company
and the Trustee by the Holders of at least 25% in principal amount of the
outstanding Securities;
(5) the Company or any Subsidiary 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 or any Subsidiary in an
involuntary case or proceeding;
B. appoints a Custodian of the Company or any Subsidiary or
for all or substantially all of the property of any of them; or
C. orders the liquidation of the Company or any Subsidiary;
and in each case the order or decree remains unstayed and in
effect for 60 days.
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar
Federal or state law for the relief of debtors. For purposes of this Section
8.1, the term "Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
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A default under clause (4) is not an Event of Default until the Trustee
notifies the Company or the Holders of at least 25% in principal amount of the
Securities then outstanding notify the Company and the Trustee, of the default,
and the Company does not cure the default within 60 days after receipt of such
notice. The notice given pursuant to this Section 8.1 must specify the default,
demand that it be remedied and state that the notice is a "Notice of Default."
When a default is cured, it ceases.
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 Trust Officer at the Corporate Trust Office
of the Trustee by the Company, the Paying Agent, any Holder or an agent of any
Holder. Within 90 days after a default, the Trustee must give to the registered
Holders of Securities notice of all uncured defaults known to it. The Trustee
will be protected in withholding the notice if it in good faith determines that
the withholding of the notice is in the best interests of the registered
Holders, except for a default under clause (2).
SECTION 8.2 ACCELERATION.
If an Event of Default (other than an Event of Default specified in
Section 8.1(5) or (6)) 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 Section 8.1(5) or (6) 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 (i) 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; (ii) the
Company has paid or deposited with the Trustee a sum sufficient to pay (a) all
overdue interest on the Securities; (b) the principal of any Security which has
become due otherwise then by such declaration of acceleration, and (c) 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; (iii) the rescission would not conflict with any
judgment or decree of a court of competent jurisdiction; and (iv) all payments
due to the Trustee and any predecessor Trustee under Section 9.7 have been made.
No such rescission shall affect any subsequent default or impair any right
consequent thereon. 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 6 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 6 of the
Securities,
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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.
In case of an Event of Default hereunder, the Trustee may in its
discretion proceed to protect and enforce the rights vested in it by this
Indenture by such appropriate judicial proceedings as the Trustee shall deem
most effectual to protect and enforce any of such rights, either by suit in
equity or by action at law or by proceeding in bankruptcy or otherwise, whether
for the specific enforcement of any covenant or agreement contained in this
Indenture or in aid of the exercise of any power granted in this Indenture, or
to enforce any other legal or equitable right vested in the Trustee by this
Indenture or by law.
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 Section 8.7, 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 consequences, except a default in
the payment of the principal of (or premium, if any) or interest on any Security
as specified in clauses (1) and (2) of Section 8.1, or a default in respect of a
covenant or provision hereof which cannot be modified or amended pursuant to
Section 11.2 without the consent of the holder of each Security affected
thereby. 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; PROVIDED that the Trustee may take any
other action deemed proper by the Trustee which is not inconsistent with such
direction.
SECTION 8.6 LIMITATION 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 reasonably
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 any provision of this Indenture to
prejudice the rights of another Securityholder or to obtain a preference or
priority over such other Securityholder, or to enforce any rights under this
Indenture other than in the manner herein provided and for the equal and ratable
benefit of all the Securityholders.
SECTION 8.7 RIGHTS OF HOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture (but subject to
Article 5), the right of any Holder of a Security to receive payment of
principal of (and premium, if any) and interest on the Security, on or after the
respective dates on which such payments are due as expressed in the Security, or
to convert 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 Section 8.1(1) or (2) 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
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
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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 the Trustee to authorize or accept or
adopt on behalf of any Securityholder any plan of reorganization, arrangement,
adjustment or composition affecting the Securities or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the claim of any
Securityholder in any such proceeding.
SECTION 8.10 PRIORITIES.
Subject to Article 5, 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 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
THIRD, 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 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 any Holder, or group of Holders, of
more than 10% in principal amount of the Securities then outstanding.
SECTION 8.12 RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Securityholder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Securityholder, then and in every such case, subject to
any determination in such proceeding, the Company, the Trustee and the
Securityholders shall be restored severally and respectively to their former
positions hereunder and thereafter all rights and remedies of the Trustee and
the Securityholders shall continue as though no such proceeding had been
instituted.
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SECTION 8.13 RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Securities in the last paragraph of
Section 2.7, no right or remedy herein conferred upon or reserved to the Trustee
or to the Securityholders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
SECTION 8.14 DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Securityholder to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to the Securityholders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Securityholders, as
the case may be.
ARTICLE 9.
TRUSTEE
SECTION 9.1 DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture and
use the same degree of care and skill in their exercise as a prudent person
would exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee need perform only those duties as are specifically set
forth in this Indenture and no others and no implied covenants or obligations
shall be read into this Indenture against the Trustee; and
(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 the certificates and opinions to determine whether or not
they conform to the requirements of this Indenture (but need not confirm or
investigate the accuracy of mathematical calculations or other facts stated
therein).
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(c) The Trustee may not be relieved, and no provision of this Indenture
shall be construed to relieve the Trustee, from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(1) this paragraph does not limit the effect of paragraph (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;
(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; and
(4) no provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(d) The Trustee may refuse to perform any duty or exercise any right or
power unless it receives indemnity reasonably satisfactory to it against any
loss, liability, expense or fee.
(e) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (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 conclusively rely on any document believed by it to
be genuine and to have been signed or presented by the proper person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, 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.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes in good faith to be authorized or within
its rights or powers.
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(e) The Trustee may consult with counsel of its selection 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 action taken, omitted or
suffered by it hereunder in good faith and in accordance with the advice or
opinion of such counsel.
(f) Any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a written Company request or Officers' Certificate and
any resolution of the Board of Directors may be sufficiently evidenced by a
Board Resolution.
(g) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the
Trustee, in its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit, and, if the Trustee shall determine to
make such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or attorney
at the sole cost of the Company and shall incur no liability or additional
liability of any kind by reason of such inquiry or investigation.
(h) The Trustee shall not be liable for any action taken, suffered, or
omitted to be taken by it in good faith and reasonably believed by it to be
authorized or within the discretion or rights or powers conferred upon it by
this Indenture.
(i) The Trustee shall not be deemed to have notice of any Default or
Event of Default unless a Responsible Officer of the Trustee has actual
knowledge thereof or unless written notice of any event which is in fact such a
default is received by the Trustee at the Corporate Trust Office of the Trustee,
and such notice references the Securities and this Indenture.
(j) The rights, privileges, protections, immunities and benefits given
to the Trustee, including, without limitation, its right to be indemnified, are
extended to, and shall be enforceable by, the Trustee in each of its capacities
hereunder, and to each agent, custodian and other Person employed to act
hereunder.
(k) The Trustee may request that the Company deliver an Officers'
Certificate setting forth the names of individuals and/or titles of Officers of
the Company authorized at such time to take specified actions pursuant to this
Indenture, which Officers' Certificate may be signed by any person authorized to
sign an Officers' Certificate, including any person specified as so authorized
in any such certificate previously delivered and not superseded.
SECTION 9.3 INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities and may otherwise deal with the Company or an
Affiliate of the Company with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights. However, the Trustee is
subject to Sections 9.10 and 9.11.
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SECTION 9.4 TRUSTEE'S DISCLAIMER.
The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Company's
use of the proceeds from the Securities, and it shall not be responsible for the
recitals contained herein or 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 actually 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
the notice is in the interest of Securityholders.
SECTION 9.6 REPORTS BY TRUSTEE TO HOLDERS.
If such report is required by TIA 313, within 60 days after each June
30, beginning with the June 30 following the date of this Indenture, the Trustee
shall mail to each Securityholder a brief report dated as of such June 30 that
complies with TIA 313(a). The Trustee also shall comply with TIA 313(b)(2) and
(c).
A copy of each report at the time of its mailing to Securityholders
shall be mailed to the Company and filed with the SEC and each stock exchange,
if any, on which the Securities are listed. The Company shall notify the Trustee
whenever the Securities become listed on or delisted from 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 such
compensation for its services hereunder as the Company and the Trustee shall
from time to time agree in writing (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 Trustee's
agents and counsel.
The Company shall indemnify the Trustee or any predecessor Trustee and
their agents for, and hold them harmless against, any loss, liability or expense
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, including the costs and expenses of
defending itself against any claim (whether asserted by the Company, or any
Holder or any other Person) or liability in connection with the exercise or
performance of any of its powers or duties 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 at the Company's expense and may have separate counsel. The
reasonable fees and expenses of such counsel shall be paid by the Company. The
Company
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need not pay for any settlement without its written consent, which consent shall
not be unreasonably withheld or delayed.
The Company need not reimburse the Trustee for any expense or indemnify
it against any loss or liability incurred by it through its own negligent
action, negligent failure to act or willful misconduct.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 8.1(5) or (6) occurs, such expenses and the
compensation for such services are intended to constitute expenses of
administration under any Bankruptcy Law.
The provisions of this Section 9.7 shall survive the termination of
this Indenture.
SECTION 9.8 REPLACEMENT OF TRUSTEE.
The Trustee may resign by so notifying the Company; PROVIDED, HOWEVER,
no such resignation shall be effective until a successor Trustee has accepted
its appointment pursuant to this Section 9.8. The Holders of a majority in
principal amount of the Securities then outstanding may remove the Trustee by so
notifying the Trustee and may appoint a successor Trustee with the Company's
written consent. The Company may remove the Trustee if:
(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 as trustee.
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 (at the Company's
expense), 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 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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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 (including the
administration of this Indenture) 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.
There shall at all times be a Trustee hereunder which shall be a
corporation organized and doing business under the laws of the United States of
America, any State thereof or the District of Columbia, authorized under such
laws to exercise corporate trust process, having (together with any Person
directly or indirectly controlling the Trustee) a combined capital and surplus
of at least $25,000,000, subject to supervision or examination by federal or
state authority. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section, the combined capital
and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect specified above in this Article.
SECTION 9.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee shall comply with TIA 311(a), excluding any creditor
relationship listed in TIA 311(b). A trustee who has resigned or been removed
shall be subject to TIA 311(a) to the Government Obligations in accordance with
Section 10.1; PROVIDED, HOWEVER, that if the Company has made any payment of the
principal of or premium 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 10.
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 10.1 TERMINATION OF COMPANY'S OBLIGATIONS.
The Company may terminate all of its obligations under the Securities
and this Indenture (except 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
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Trustee for cancellation and the Company has paid all sums payable by it
hereunder, or if 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 premium, if any, 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 Opinion of Counsel to that effect and that all other
conditions to such deposit have been complied with.
The Company's obligations in paragraphs 9 and 13 of the Securities, in
Sections 6.1, 6.2, 9.7, 9.8 and 10.4, and in Articles 2 and 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 guarantee or obligation 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 and deposited in compliance with Section 10.1 and
Article 5 shall not be subject to the subordination provisions of Article 5.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 10.1 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is for
the account of the Holders of outstanding Securities.
SECTION 10.3 REPAYMENT TO COMPANY.
Subject to Section 10.1, the Trustee and the Paying Agent shall
promptly pay to the Company upon request any excess money or U.S. Government
Obligations held by them at any time.
The Trustee and the Paying Agent shall pay to the Company upon request
any money held by them for the payment of principal or interest that remains
unclaimed for two years after a right to such money has matured; PROVIDED,
HOWEVER, that the Trustee or such Paying Agent, before being required to make
any such payment, may at the expense of the Company cause to be
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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 that, Holders entitled
to money must look to the Company for payment unless an abandoned property law
designates another person.
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 Paying Agent is permitted to apply all such money or
U.S. Government Obligations in accordance with Section 10.1; PROVIDED, HOWEVER,
that if the Company has made any payment of the principal of or premium 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 4.12, 6.3 and 7.1;
(b) to cure any ambiguity, omission, defect or inconsistency, or to
make any other change that does not adversely affect the rights of any
Securityholder;
(c) to make provisions with respect to the conversion right of the
Holders pursuant to Section 4.6;
(d) to evidence and provide for the acceptance of appointment hereunder
by a successor Trustee with respect to the Securities; or
(e) to comply with the provisions of the TIA or with any requirement of
the SEC arising solely as a result of the qualification of this Indenture under
the TIA.
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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 but with the written consent
of the Holders of a majority in aggregate principal amount of the Securities
then outstanding. The Holders of a majority in aggregate principal amount of the
Securities then outstanding may waive compliance by the Company with restrictive
provisions of this Indenture other than as provided in the foregoing paragraph;
and waive any past default under this Indenture and its consequences, except a
default in the payment of the principal of or any premium or interest on any
Security or in respect of a provision which under this Indenture cannot be
modified or amended without the consent of the Holder of each outstanding
Security affected.
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:
(a) change the stated maturity date of the principal of, or any
installment of interest on, any Security;
(b) reduce the principal amount of, or the rate of interest on, or any
premium payable on, any Security, whether upon acceleration, redemption or
otherwise;
(c) change the currency for payment of principal of, or premium or
interest (including Additional Interest) on any Security;
(d) impair the right to institute suit for the enforcement of any
payment of principal of, or premium or interest on any Security when due;
(e) adversely affect the conversion rights provided in Article 4;
(f) modify the provisions of Article 5 with respect to the
subordination of the Securities in a manner adverse to the Holders of the
Securities;
(g) modify the provisions of this Indenture requiring the Company to
make an offer to repurchase Securities upon a Change in Control in a manner
adverse to the Holders of the Securities;
(h) reduce the percentage of principal amount of the outstanding
Securities necessary to modify or amend this Indenture or to consent to any
waiver provided for in this Indenture;
(i) waive a default in the payment of the principal of or premium or
interest (including Additional Interest) on any Security; or
(j) make any changes in Section 8.4, 8.7 or this sentence.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, supplement or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
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After an amendment, supplement or waiver under this Section 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 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 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
(a) through (h) of Section 11.2. In that case the amendment, supplement or
waiver shall bind each Holder of a Security who has consented to it and every
subsequent Holder of a Security or portion of a Security that evidences the same
debt as the consenting Holder's Security.
SECTION 11.5 NOTATION ON OR EXCHANGE OF SECURITIES.
If an amendment, supplement or waiver changes the terms of a Security,
the Trustee may require the Holder of the Security to deliver it to the Trustee.
The Trustee may place an appropriate notation on the Security about the changed
terms and return it to the Holder. Alternatively, if the Company or the Trustee
so determines, the Company in exchange for the Security shall issue and the
Trustee shall authenticate a new Security that reflects the changed terms.
SECTION 11.6 TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amendment or supplement authorized pursuant
to this Article 11 if the amendment or supplement does not adversely affect the
rights, duties, liabilities or immunities of the Trustee. If it does, the
Trustee may 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.
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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, upon qualification of this Indenture
thereunder such imposed duties shall control.
SECTION 12.2 NOTICES.
Any notice or communication shall be given in writing and delivered by
facsimile (with original to follow), in person, by overnight delivery or mailed
by first class mail, postage prepaid, addressed as follows:
If to the Company:
Pinnacle Holdings Inc.
1549 Ringling Boulevard, Third Floor
Sarasota, Florida 34236
Attention: Chief Financial Officer
If to the Trustee:
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Telecopier: (212) 815-5915
Attention: Corporate Trust Administration
Such notices or communications shall be effective when received.
The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notice or communications.
Any notice or communication mailed to a Securityholder shall be mailed
by first class mail to him at his 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.
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<PAGE>
SECTION 12.3 COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS.
Securityholders may communicate pursuant to TIA 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 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 Officers' Certificate stating that, in the opinion of the
signers, all conditions precedent (including any covenants compliance with which
constitutes a condition precedent), if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(2) an Opinion of Counsel stating that, in the opinion of such counsel,
all such conditions precedent (including any covenants compliance with which
constitutes a condition precedent) have been complied with.
(b) Each Officers' Certificate and Opinion of Counsel with respect to
compliance with a condition or covenant provided for in this Indenture (other
than annual certificates provided pursuant to Section 6.4) shall include:
(1) a statement that the person making such certificate or opinion has
read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether or not, in the opinion of such person,
such condition or covenant has been complied with; PROVIDED, HOWEVER, that with
respect to matters of fact an Opinion of Counsel may rely on Officers'
Certificates 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 10 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. 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.
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SECTION 12.6 RULES BY TRUSTEE, PAYING AGENT, REGISTRAR.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or the Paying Agent may make reasonable rules for its
functions.
SECTION 12.7 LEGAL HOLIDAYS.
A "Legal Holiday" is a Saturday, or a Sunday or a day on which state or
Federally chartered banking institutions in New York (or, if the Trustee is not
located in New York, the state where the Trust Office of the Trustee is located)
are not required to be open. If a payment date is a Legal Holiday at a place of
payment, payment may be made at that place on the next succeeding day that is
not a Legal Holiday, and no interest shall accrue for the intervening period.
SECTION 12.8 GOVERNING LAW.
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 stockholder, 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 provision 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.
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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.
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IN WITNESS WHEREOF, the parties hereto have hereunto set their hands as
of the 22nd day of March, 2000.
PINNACLE HOLDINGS INC.
By:
----------------------------
Name:
Title:
THE BANK OF NEW YORK,
as Trustee
By:
----------------------------
Name:
Title:
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<PAGE>
EXHIBIT A
FORM OF SECURITY
[GLOBAL NOTE LEGEND:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO PINNACLE HOLDINGS
INC. OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFER IN WHOLE, BUT NOT IN
PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE
AND TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
INDENTURE REFERRED TO ON THE REVERSE HEREOF.]
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<PAGE>
[RESTRICTED SECURITIES LEGEND:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS SECURITY,
AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE EXPIRATION OF THE HOLDING
PERIOD UNDER RULE 144(k) (OR ANY SUCCESSOR THERETO) UNDER THE SECURITIES ACT
WHICH IS APPLICABLE TO THIS SECURITY OR (Y) BY ANY HOLDER THAT WAS AN
"AFFILIATE" (WITHIN THE MEANING OF RULE 144 UNDER THE SECURITIES ACT) OF THE
COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER,
IN EITHER CASE, OTHER THAN (1) TO THE COMPANY, (2) SO LONG AS THIS SECURITY IS
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE
144A"), TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A, PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (3) IN AN OFFSHORE TRANSACTION (AS DEFINED IN REGULATION S UNDER THE
SECURITIES ACT) IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT, (4)
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY
RULE 144 (IF APPLICABLE) UNDER THE SECURITIES ACT OR (5) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES. THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, REPRESENTS AND AGREES
FOR THE BENEFIT OF THE COMPANY THAT IT IS (1) A QUALIFIED INSTITUTIONAL BUYER OR
(2) NOT A U.S. PERSON AND IS OUTSIDE THE UNITED STATES WITHIN THE MEANING OF (OR
AN ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH (k)(2) OF RULE 902 UNDER)
REGULATION S UNDER THE SECURITIES ACT. IN ANY CASE THE HOLDER HEREOF WILL NOT,
DIRECTLY OR INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTION WITH REGARD TO THIS
SECURITY OR ANY COMMON STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY EXCEPT AS
PERMITTED BY THE SECURITIES ACT.]
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[FORM OF FACE OF SECURITY]
PINNACLE HOLDINGS INC.
Number ______ CUSIP No. ___________
5 1/2% Convertible Subordinated Note Due 2007
Pinnacle Holdings Inc., a Delaware corporation, promises to pay to
__________________ or registered assigns, the principal sum of
________________________ Dollars ($__________) on September 15, 2007 and to pay
interest on the principal amount of this Note beginning the most recent date to
which interest has been paid or, if no interest has been paid, beginning March
22, 2000 at the rate of 5 1/2% per annum.
Interest Payment Dates: March 15 and September 15
Record Dates: March 1 and September 1
This Note is convertible at such times and as specified on the other
side of this Note. Additional provisions of this Note are set forth on the other
side of this Note.
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this 5 1/2% Convertible
Subordinated Note due 2007 to be signed by its duly authorized officers.
Dated: PINNACLE HOLDINGS INC.
----------------------------
By:
----------------------------
Name:
Title:
By:
----------------------------
Name:
Title:
Trustee's Certificate of
Authentication:
Dated:
-----------------------
This is one of the Securities
referred to in the within mentioned
Indenture.
THE BANK OF NEW YORK, as Trustee
By:
--------------------------------
Authorized Signatory
A-4
<PAGE>
[FORM OF REVERSE SIDE OF SECURITY]
PINNACLE HOLDINGS INC.
5 1/2% Convertible Subordinated Note Due 2007
1. Interest.
Pinnacle Holdings Inc., a Delaware corporation (the "Company"),
promises to pay interest on the principal amount of this Note at the rate per
annum shown above. The Company shall pay interest semi-annually on March 15 and
September 15 of each year, commencing September 15, 2000. Interest on the Notes
will accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from March 22, 2000. Interest will be computed on the
basis of a 360-day year of twelve 30-day months.
The Holder of this Note is entitled to the benefits of the Registration
Rights Agreement, dated March 22, 2000, among the Company, Deutsche Bank
Securities Inc., Bank of America Securities LLC, Merrill Lynch, Pierce, Fenner &
Smith Incorporated, Raymond James & Associates, Inc. and Salomon Smith Barney
Inc.
2. Method of Payment.
The Company will pay interest on this Note (except defaulted interest)
to the person who is the registered Holder of this Note at the close of business
on the March 1 and September 1 next preceding the interest payment date. The
Holder must surrender this Note to the Paying Agent to collect payment of
principal. The Company will pay principal and interest in money of the United
States that at the time of payment is legal tender for payment of public and
private debts. The Company, however, may pay principal and interest by its check
payable in such money. It may mail an interest check to the Holder's registered
address.
3. Paying Agent, Registrar and Conversion Agent.
Initially, The Bank of New York (the "Trustee") will act as Paying
Agent, Registrar and Conversion Agent. The Company may change any Paying Agent,
Registrar or Conversion Agent without notice to the holder. The Company or any
of its Subsidiaries may act as Paying Agent, Registrar or Conversion Agent.
4. Indenture; Limitations.
This Note is one of a duly authorized issue of Notes of the Company
designated as its 5 1/2% Convertible Subordinated Notes Due 2007 (the "Notes"),
issued under an Indenture dated as of March 22, 2000 (the "Indenture"), between
the Company and the Trustee. The terms of this Note include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S.C. ss.ss. 77aaa-77bbbb), as amended by the Trust
Indenture Reform Act of 1990, as in effect on the date hereof or, from and after
the date that the Indenture shall be qualified thereunder, as in effect on such
date. This Note is subject to all such terms, and the holder of this Note is
referred to the Indenture and said Act for a statement of them.
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The Notes are subordinated unsecured obligations of the Company limited
to up to $200,000,000 aggregate principal amount plus an additional principal
amount not exceeding $30,000,000 in the aggregate as may be issued upon the
exercise by the Initial Purchasers, in whole or in part, of the Purchase Option.
5. Ownership Limitation.
The Notes may not be transferred if the transfer would result in
ownership by five or fewer individuals of more than 50% of the aggregate value
of all classes of the Company's capital stock (the "Ownership Limitation")
determined as provided in Sections 856(a)(6) and 856(h) of the Internal Revenue
Code of 1986, as amended (the "Code"). For purposes of the Ownership Limitation,
the Common Stock into which the Notes may be converted will be deemed owned by
such an individual (the "prohibited transferee") but only to the extent the
deemed ownership of such Common Stock would violate the Ownership Limitation.
If a prohibited transferee attempts to acquire Notes in violation of
the Ownership Limitation, such putative transfer to such prohibited transferee
shall be void and the intended transferee (I.E., the prohibited transferee) will
acquire no rights to the Notes. For purposes of the Ownership Limitation, the
term "transfer" includes any sale, transfer, gift, assignment, devise or other
disposition, whether voluntary or involuntary, whether of record, constructively
or beneficially, and whether by operation of law or otherwise. Any putative
transfer of Notes to the extent such transfer if consummated would violate the
Ownership Limitation will cause such Notes to be transferred to a person
(unaffiliated with the Company or the prohibited transferee) as trustee of a
trust for the exclusive benefit of one or more organizations described in
Section 501(c)(3) the Code (the "Charitable Beneficiary"). The trustee of the
trust will be deemed to own those Notes for the benefit of the Charitable
Beneficiary on the day prior to the date of the putative violative transfer.
Any interest paid prior to when the Company discovers that Notes were
held in trust will be repaid by the prohibited transferee to the Company and any
interest after the Record Date but before the applicable Payment Date will be
rescinded as void AB INITIO with respect to the prohibited transferee. Any
interest so disgorged or rescinded will be paid over to the trustee and held in
trust for the Charitable Beneficiary. The trustee of the trust may transfer the
Notes held in trust to a person whose ownership of the Notes will not violate
the Ownership Limitation. If such a transfer is made, the interest of the
Charitable Beneficiary would terminate and proceeds of the sale would be payable
to the prohibited transferee and the Charitable Beneficiary. The prohibited
transferee would receive the lesser of (i) the price paid by the prohibited
transferee for the Notes or, if the prohibited transferee did not give value for
the Notes, the market price of the Notes on the day of the event causing the
Notes to be held in trust or (ii) the price for the Notes received by the
trustee for the sale or other disposition of the Notes held in trust. Any
proceeds in excess of the amount payable to the prohibited transferee will be
payable to the Charitable Beneficiary. The Notes held in trust for the benefit
of the Charitable Beneficiary will be offered for sale to the Company at the
prevailing market price before being offered for sale to third parties.
A-6
<PAGE>
6. Optional Redemption.
The Notes may be redeemed at the Company's option, in whole or in part,
at any time and from time to time on and after March 21, 2003. The redemption
price for the Notes, expressed as a percentage of the principal amount, is
103.0% if the Notes are redeemed in the period beginning March 21, 2003 and
ending March 14, 2004, and is as follows for the 12-month periods beginning
March 15 as follows:
Year Percentage
--------------------------------------
2004 ....................... 101.5%
2005 and thereafter ........ 100.0%
together in the case of any such redemption with accrued interest to the date of
redemption, but any interest payment that is due and payable on or prior to such
date of redemption will be payable to the Holders of such Notes, or one or more
predecessor Notes, of record at the close of business on the relevant record
dates referred to on the face hereof, all as provided in the Indenture.
7. Notice of Redemption.
Notice of redemption will be mailed by first class mail at least 20
days but not more than 60 days before the redemption date to each Holder of
Notes to be redeemed at his registered address. Notes in denominations larger
than $1,000 may be redeemed in part, but only in whole multiples of $1,000. On
and after the redemption date, subject to the deposit with the Paying Agent of
funds sufficient to pay the redemption price, interest ceases to accrue on Notes
or portions of them called for redemption.
8. Repurchase of Notes at Option of Holder upon a Change in Control.
If at any time that Notes remain outstanding there shall have occurred
a Change in Control (as defined in the Indenture), at the option of the Holder
and subject to the terms and conditions of the Indenture, the Company shall
become obligated to repurchase 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 Notes held by such Holder on the Repurchase Date. The Holder shall have
the right to withdraw any Repurchase Notice by delivering a written notice of
withdrawal to the Paying Agent in accordance with the terms of the Indenture.
The Repurchase Price is payable in cash.
9. Conversion.
At any time after 90 days following the latest date of original
issuance of the Notes and prior to the close of business on September 15, 2007,
a Holder of a Note may convert such Note into shares of Common Stock of the
Company; PROVIDED, HOWEVER, that if the Note is called for redemption, the
conversion right will terminate at the close of business on the third Business
Day before the redemption date of such Note (unless the Company shall default in
making the redemption payment when due, in which case the conversion right shall
terminate at the close of business on the date such default is cured and such
Note is redeemed). The initial conversion
A-7
<PAGE>
price is $78.375 per share, subject to adjustment under certain circumstances as
described in the Indenture. The number of shares issuable upon conversion of a
Note is determined by dividing the principal amount converted by the conversion
price in effect on the conversion date. Upon conversion, no adjustment for
interest or dividends will be made. No fractional shares will be issued upon
conversion; in lieu thereof, an amount will be paid in cash based upon the
current market price (as defined in the Indenture) of the Common Stock on the
last trading day prior to the date of conversion.
To convert a Note, a Holder must (a) complete and sign the conversion
notice set forth below and deliver such notice to the Conversion Agent, (b)
surrender the Note to the Conversion Agent, (c) furnish appropriate endorsements
and transfer documents if required by the Registrar or the Conversion Agent, (d)
pay any transfer or similar tax, if required and (e) if the Note is held in
book-entry form, complete and deliver to the Depositary appropriate instructions
pursuant to the Depositary's book-entry conversion programs. If a Holder
surrenders a Note for conversion between the record date for the payment of an
installment of interest and the next interest payment date, the Note must be
accompanied by payment of an amount equal to the interest payable on such
interest payment date on the principal amount of the Note or portion thereof
then converted; PROVIDED, HOWEVER, that no such payment shall be required if
such Note has been called for redemption on a redemption date within the period
between and including such record date and such interest payment date, or if
such Note is surrendered for conversion on the interest payment date. A Holder
may convert a portion of a Note equal to $1,000 or any integral multiple
thereof.
A Note in respect of which a Holder had delivered a Repurchase Notice
exercising the option of such Holder to require the Company to repurchase such
Note may be converted only if the notice of exercise is withdrawn as provided
above and in accordance with the terms of the Indenture.
10. Subordination.
The indebtedness evidenced by the Notes is, to the extent and in the
manner provided in the Indenture, subordinate and junior in right of payment to
the prior payment in full of all Senior Indebtedness of the Company, as defined
in the Indenture. Any Holder by accepting this Note agrees to and shall be bound
by such subordination provisions and authorizes the Trustee to give them effect.
In addition to all other rights of Senior Indebtedness described in the
Indenture, the Senior Indebtedness shall continue to be Senior Indebtedness and
entitled to the benefits of the subordination provisions irrespective of any
amendment, modification or waiver of any terms of any instrument relating to the
Senior Indebtedness or any extension or renewal of the Senior Indebtedness.
11. Denominations, Transfer, Exchange.
The Notes are in registered form without coupons in denominations of
$1,000 and integral multiples thereof. A Holder may register the transfer of or
exchange Notes in accordance with the Indenture. The Registrar may require a
Holder, among other things, to furnish appropriate
A-8
<PAGE>
endorsements and transfer documents and to pay any taxes or other governmental
charges that may be imposed by law or permitted by the Indenture.
[Global Note Insert:
The aggregate principal amount of the Note in global form represented
hereby may from time to time be reduced to reflect conversions or
redemptions of a part of this Note in global form or cancellations of a
part of this Note in global form, in each case, and in any such case,
by means of notations on the Global Note Transfer Schedule on the last
page hereof. Notwithstanding any provision of this Note to the
contrary, conversions or redemptions of a part of this Note in global
form and cancellations of a part of this Note in global form, may be
effected without the surrendering of this Note in global form, PROVIDED
that appropriate notations on the Schedule of Exchanges, Conversions,
Redemptions, Cancellations and Transfers are made by the Trustee, or
the Custodian at the direction of the Trustee, to reflect the
appropriate reduction or increase, as the case may be, in the aggregate
principal amount of this Note in a global form resulting therefrom or
as a consequence thereof.]
12. Persons Deemed Owners.
The registered holder of a Note 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 request. After that, Holders entitled to money must look to the Company for
payment unless an abandoned property law designates another person.
14. Amendment, Supplement, Waiver.
Subject to certain exceptions, the Indenture or the Notes may be
amended or supplemented with the consent of the Holders of a majority in
aggregate principal amount of the Notes then outstanding and any past default or
compliance with any provision may be waived in a particular instance with the
consent of the Holders of a majority in aggregate principal amount of the Notes
then outstanding. Without the consent of or notice to any Holder, the Company
and the Trustee may amend or supplement the Indenture or the Notes to, among
other things, cure any ambiguity, omission, defect or inconsistency or make any
other change that does not adversely affect the rights of any Holder.
15. Successor Corporation.
When a successor corporation assumes all the obligations of its
predecessor under the Notes and the Indenture, the predecessor corporation will
be released from those obligations.
16. Defaults and Remedies.
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An Event of Default is: default for 30 days in payment of interest on
the Notes; default in payment of principal on the Notes when due; failure by the
Company for 60 days after notice to it to comply with any of its other
agreements contained in the Indenture or the Notes; default by the Company or
any Subsidiary with respect to its obligation to pay principal of or interest on
indebtedness for borrowed money aggregating more than $20.0 million or the
acceleration of such indebtedness if not withdrawn within 15 days from the date
of such acceleration; and certain events of bankruptcy, insolvency or
reorganization of the Company or any of its subsidiaries. If an Event of Default
(other than as a result of certain events of bankruptcy, insolvency or
reorganization) occurs and is continuing, the Trustee or the Holders of at least
25% in principal amount of the Notes then outstanding may declare all unpaid
principal of and accrued interest to the date of acceleration on the Notes then
outstanding to be due and payable immediately, all as and to the extent provided
in the Indenture. If an Event of Default occurs as a result of certain events of
bankruptcy, insolvency or reorganization, all unpaid principal of and accrued
interest on the Notes then outstanding shall become due and payable immediately
without any declaration or other act on the part of the Trustee or any Holder,
all as and to the extent provided in the Indenture. Holders may not enforce the
Indenture or the Notes except as provided in the Indenture. The Trustee may
require indemnity satisfactory to it before it enforces the Indenture or the
Notes. Subject to certain limitations, Holders of a majority in principal amount
of the Notes then outstanding may direct the Trustee in its exercise of any
trust or power. The Trustee may withhold from Holders notice of any continuing
default (except a default in payment of principal or interest) if it determines
that withholding notice is in their interests. The Company is required to file
periodic reports with the Trustee as to the absence of default.
17. Trustee Dealings with the Company.
The Bank of New York, the Trustee under the Indenture, in its
individual or any other capacity, may make loans to, accept deposits from, and
perform services for the Company or an Affiliate of the Company, and may
otherwise deal with the Company or an Affiliate of the Company, as if it were
not the Trustee.
18. No Recourse Against Others.
A director, officer, employee or stockholder, as such, of the Company
shall not have any liability for any obligations of the Company under the Notes
or the Indenture or for any claim based on, in respect or by reason of, such
obligations or their creation. The Holder of this Note by accepting this Note
waives and releases all such liability. The waiver and release are part of the
consideration for the issue of this Note.
19. Discharge Prior to Maturity.
If the Company deposits with the Trustee or the Paying Agent money or
U.S. Government Obligations sufficient to pay the principal of and interest on
the Notes to maturity as provided in the Indenture, the Company will be
discharged from the Indenture except for certain Sections thereof.
20. Authentication.
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This Note shall not be valid until the Trustee or an authenticating
agent signs the certificate of authentication on the other side of this Note.
21. Abbreviations and Definitions.
Customary abbreviations may be used in the name of a Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian) and U/G/M/A (= Uniform Gifts to Minors
Act).
All capitalized terms used in this Note and not specifically defined
herein are defined in the Indenture and are used herein as so defined.
22. Indenture to Control.
In the case of any conflict between the provisions of this Note and the
Indenture, the provisions of the Indenture shall control.
The Company will furnish to any Holder, upon written request and
without charge, a copy of the Indenture. Requests may be made to: Pinnacle
Holdings Inc., 1549 Ringling Boulevard, Third Floor, Sarasota, Florida 34236,
Attention: Chief Financial Officer.
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TRANSFER NOTICE
This Transfer Notice relates to $__________ principal amount of the 5 1/2%
Convertible Subordinated Notes Due 2007 of Pinnacle Holdings Inc., a Delaware
corporation, held by ______________________________ (the "Transferor").
(I) or (we) assign and transfer this Convertible Note to
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax I.D. no.)
and irrevocably appoint _______________________________ agent to transfer this
Note on the books of the Company. The agent may substitute another to act for
him.
Your Signature:_________________________________________________________________
(Sign exactly as your name appears on the other side of this
Convertible Note)
Date:__________________________________________________________________
Signature Guarantee:(1)________________________________________________
In connection with any transfer of any of the Notes evidenced by this
certificate occurring prior to the date that is three years after the later of
the date of original issuance of such Notes and the last date, if any, on which
such Notes were owned by the Company or any Affiliate of the Company, the
undersigned confirms that such Notes are being transferred:
CHECK ONE BOX BELOW
(1) [ ] to Pinnacle Holdings Inc.; or
(2) [ ] pursuant to and in compliance with Rule 144A under the
Securities Act of 1933, as amended; or
(3) [ ] pursuant to and in compliance with Regulation S under the
Securities Act of 1933, as amended; or
(4) [ ] pursuant to another available exemption from the registration
requirements of the Securities Act of 1933; or
- ----------
(1) Signature must be guaranteed by a commercial bank, trust company or member
firm of the New York Stock Exchange.
A-12
<PAGE>
(5) [ ] pursuant to an effective registration statement under the
Securities Act of 1933.
Unless one of the boxes is checked, the Trustee will refuse to
register any of the Notes evidenced by this certificate in the
name of any person other than the registered holder thereof;
PROVIDED, HOWEVER, that if box (2), (3) or (4) is checked, the
Trustee may require, prior to registering any such transfer of
the Notes such legal opinions, certifications and other
information as the Company has reasonably requested to confirm
that such transfer is being made pursuant to an exemption
from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, such as the
exemption provided by Rule 144 under such Act.
Unless the box below is checked, the undersigned confirms that
such Note is not being transferred to an "affiliate" of the
Company as defined in Rule 144 under the Securities Act of
1933, as amended (an "Affiliate"):
(6) [ ] The transferee is an Affiliate of the Company.
------------------------------------
Signature
------------------------------------
Date
------------------------------------
Signature Guarantee(1)
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED.
- ---------
(1) Signature must be guaranteed by a commercial bank, trust company or member
firm of the New York Stock Exchange.
A-13
<PAGE>
The undersigned represents and warrants that it is purchasing this Note
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, and is aware that the sale to it is being made in reliance on Rule 144A
and acknowledges that it has received such information regarding the Company as
the undersigned has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the transferor is relying
upon the undersigned's foregoing representations in order to claim the exemption
from registration provided by Rule 144A.
Dated:___________________________ _____________________________________________
[Signature of executive officer of purchaser]
Name:________________________________________
Title:_______________________________________
A-14
<PAGE>
CONVERSION NOTICE
To Pinnacle Holdings Inc.:
The undersigned owner of this Note hereby irrevocably exercises the
option to convert this Note, or the portion below designated, into Common Stock
of Pinnacle Holdings Inc. in accordance with the terms of the Indenture referred
to in this Note, and directs that the shares issuable and deliverable upon
conversion, together with any check in payment for fractional shares, be issued
in the name of and delivered to the undersigned, unless a different name has
been indicated in the assignment below. If shares are to be issued in the name
of a person other than the undersigned, the undersigned will pay all transfer
taxes payable with respect thereto.
Any holder of Notes, upon exercise of its conversion rights in
accordance with the terms of the Indenture and the Security, agrees to be bound
by the terms of the Registration Rights Agreement relating to the Common Stock
issuable upon conversion of the Notes.
[ ] Convert whole [ ] Convert in part
Amount of Note to be converted
($1,000 or integral multiples thereof):
$________________________
_________________________________________________
Signature (sign exactly as name appears on
the other side of this Note)
_________________________________________________
Signature Guarantee:(1)
- --------------
(1) Signature must be guaranteed by a commercial bank, trust company or member
firm of the New York Stock Exchange.
A-15
<PAGE>
If you want the stock certificate made out in another person's name, complete
the following for such person:
- -----------------------------------------------------
Name
- -----------------------------------------------------
Social Security or Taxpayer Identification Number
- -----------------------------------------------------
Street Address
- -----------------------------------------------------
City, State and Zip Code
A-16
<PAGE>
OPTION OF HOLDER TO ELECT REPURCHASE
If you want to elect to have this Note repurchased by the Company
pursuant to Section 3.10 of the Indenture, check the box:
[ ]
If you want to elect to have only part of this Note repurchased by the
Company pursuant to Section 3.10 of the Indenture, state the principal amount
(which shall be $1,000 or a multiple thereof) to be repurchased:
$__________________________________
Dated:_____________________________ __________________________________________
Signature (sign exactly as name appears on
the other side of this Note)
___________________________________
Signature Guarantee:(1)
- --------------
(1) Signature must be guaranteed by a commercial bank, trust company or member
firm of the New York Stock Exchange.
A-17
<PAGE>
[Schedule A to Exhibit A
GLOBAL NOTE TRANSFER SCHEDULE
Changes to Principal Amount of Global Security
<TABLE>
<CAPTION>
=============== ==================================== ====================================== =======================
Date Principal Amount of Securities by Remaining Principal Amount of this Authorized Signature
which this Global Security Is to Be Global Security of officer of Trustee
Reduced and Reason for Reduction (following decrease) or Note Custodian
<S> <C> <C> <C>
- --------------- ------------------------------------ -------------------------------------- -----------------------
- --------------- ------------------------------------ -------------------------------------- -----------------------
- --------------- ------------------------------------ -------------------------------------- -----------------------
- --------------- ------------------------------------ -------------------------------------- -----------------------
- --------------- ------------------------------------ -------------------------------------- -----------------------
- --------------- ------------------------------------ -------------------------------------- -----------------------
=============== ==================================== ====================================== =======================
</TABLE>
Schedule to be maintained by Depositary in cooperation with Trustee.]
A-18
EXHIBIT 4.3
REGISTRATION RIGHTS AGREEMENT
Dated as of March 22, 2000
By and Among
PINNACLE HOLDINGS INC.,
as Issuer,
and
DEUTSCHE BANK SECURITIES INC.,
BANC OF AMERICA SECURITIES LLC,
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,
RAYMOND JAMES & ASSOCIATES, INC.
and
SALOMON SMITH BARNEY INC.,
as Initial Purchasers
5.5% Convertible Senior Notes Due 2007
<PAGE>
TABLE OF CONTENTS
Page
----
1. Definitions...........................................................1
2. Shelf Registration....................................................4
(a) Shelf Registration.............................................4
(b) Subsequent Shelf Registrations.................................5
(c) Supplements and Amendments.....................................5
3. Liquidated Damages....................................................5
4. Registration Procedures...............................................7
5. Registration Expenses................................................13
6. Indemnification......................................................14
7. Rules 144 and 144A...................................................17
8. Underwritten Registrations...........................................18
9. Miscellaneous........................................................18
(a) No Inconsistent Agreements....................................18
(b) Adjustments Affecting Registrable Securities..................18
(c) Amendments and Waivers........................................18
(d) Notices.......................................................19
(e) Successors and Assigns........................................20
(f) Counterparts..................................................20
(g) Headings......................................................20
(h) Governing Law.................................................20
(i) Severability..................................................20
(j) Securities Held by the Company or Its Affiliates..............21
(k) Third Party Beneficiaries.....................................21
(l) Entire Agreement..............................................21
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is dated
as of March 22, 2000, by and among PINNACLE HOLDINGS INC., a Delaware
corporation (the "Company"), DEUTSCHE BANK SECURITIES INC., BANC OF AMERICA
SECURITIES LLC, MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, RAYMOND
JAMES & ASSOCIATES, INC. and SALOMON SMITH BARNEY INC. (individually, an
"Initial Purchaser," and together, the "Initial Purchasers").
This Agreement is entered into in connection with the Purchase
Agreement, dated as of March 15, 2000 (the "Purchase Agreement"), by and among
the Company and the Initial Purchasers, which provides for the sale by the
Company to the Initial Purchasers of $200,000,000 aggregate principal amount of
the Company's 5.5% Convertible Subordinated Notes Due 2007 (the "Firm Notes"),
which are convertible into Common Stock of the Company, par value $.001 per
share (the "Underlying Shares"), plus up to an additional $30,000,000 aggregate
principal amount of the same which the Initial Purchasers may subsequently elect
to purchase pursuant to the terms of the Purchase Agreement (the "Additional
Notes" and together with the Firm Notes, the "Convertible Notes"). The Notes are
being issued pursuant to an indenture dated as of the date hereof (the
"Indenture"), between the Company and The Bank of New York, as trustee.
In order to induce the Initial Purchasers to enter into the
Purchase Agreement, the Company has agreed to provide the registration rights
set forth in this Agreement for the benefit of the Initial Purchasers and any
subsequent holder or holders of the Convertible Notes or Underlying Shares as
provided herein. The execution and delivery of this Agreement is a condition to
the Initial Purchasers' obligation to purchase the Firm Notes under the Purchase
Agreement.
The parties hereby agree as follows:
1. Definitions.
As used in this Agreement, the following terms shall have the
following meanings:
Agreement: See the first introductory paragraph hereto.
Amount of Registrable Securities: (a) With respect to
Convertible Notes constituting Registrable Securities, the aggregate principal
amount of all such Convertible Notes outstanding, (b) with respect to Underlying
Shares constituting Registrable Securities, the aggregate number of such
Underlying Shares outstanding multiplied by the Conversion Price (as defined in
the Indenture relating to the Convertible Notes upon the conversion of which
such Underlying Shares were issued) in effect at the time of computing the
Amount of Registrable Securities or, if no such Convertible Notes are then
outstanding, the last Conversion Price that was in effect under such Indenture
when any such Convertible Notes were last outstanding,
<PAGE>
and (c) with respect to combinations thereof, the sum of (a) and (b) for the
relevant Registrable Securities.
Business Day: Any day that is not a Saturday, Sunday or a day
on which banking institutions in New York are authorized or required by law to
be closed.
Closing Date: March 22, 2000.
Company: See the first introductory paragraph hereto.
Convertible Notes: See the second introductory paragraph
hereto.
Damages Payment Date: See Section 3(c) hereof.
Depositary: The Depository Trust Company until a successor is
appointed by the Company.
Effectiveness Date: The 180th day after the Closing Date.
Effectiveness Period: See Section 2(a) hereof.
Exchange Act: The Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC promulgated thereunder.
Filing Date: The 90th day after the Closing Date.
Holder: Any holder of Registrable Securities.
Indemnified Holder: See Section 6 hereof.
Indemnified Person: See Section 6 hereof.
Indemnifying Person: See Section 6 hereof.
Indenture: See the second introductory paragraph hereto.
Initial Purchasers: See the first introductory paragraph
hereto.
Initial Shelf Registration: See Section 2(a) hereof.
Inspectors: See Section 4(n) hereof.
Liquidated Damages: See Section 3(a) hereof.
NASD: See Section 4(q) hereof.
-2-
<PAGE>
Person: An individual, partnership, corporation, limited
liability company, unincorporated association, trust or joint venture, or a
governmental agency or political subdivision thereof.
Prospectus: The prospectus included in any Registration
Statement (including, without limitation, any prospectus subject to completion
and a prospectus that includes any information previously omitted from a
prospectus filed as part of an effective registration statement in reliance upon
Rule 430A promulgated under the Securities Act), as amended or supplemented by
any prospectus supplement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.
Purchase Agreement: See the second introductory paragraph
hereto.
QIU: See Section 4(q) hereof.
Records: See Section 4(n) hereof.
Registrable Securities: All Convertible Notes and all
Underlying Shares upon original issuance thereof and at all times subsequent
thereto until the earliest to occur of (i) a Registration Statement covering
such Convertible Notes and Underlying Shares having been declared effective by
the SEC and such Convertible Notes and Underlying Shares having been disposed of
in accordance with such effective Registration Statement, (ii) such Convertible
Notes and Underlying Shares having been sold in compliance with Rule 144 or
could (except with respect to affiliates of the Company within the meaning of
the Securities Act) be sold in compliance with Rule 144(k), or (iii) such
Convertible Notes and any Underlying Shares ceasing to be outstanding.
Registration Default: See Section 3(a) hereof.
Registration Statement: Any registration statement of the
Company filed with the SEC pursuant to the provisions of this Agreement,
including the Prospectus, amendments and supplements to such registration
statement, including post-effective amendments, all exhibits and all material
incorporated by reference or deemed to be incorporated by reference in such
registration statement.
Rule 144: Rule 144 promulgated under the Securities Act, as
such Rule may be amended from time to time, or any similar rule (other than Rule
144A) or regulation hereafter adopted by the SEC providing for offers and sales
of securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities being
free of the registration and prospectus delivery requirements of the Securities
Act.
-3-
<PAGE>
Rule 144A: Rule 144A promulgated under the Securities Act, as
such Rule may be amended from time to time, or any similar rule (other than Rule
144) or regulation hereafter adopted by the SEC.
Rule 415: Rule 415 promulgated under the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder.
Shelf Registration: See Section 2(b) hereof.
Shelf Registration Statement: See Section 2(b) hereof.
Subsequent Shelf Registration: See Section 2(b) hereof.
TIA: The Trust Indenture Act of 1939, as amended, and the
rules and regulations of the SEC promulgated thereunder.
Trustee: The Trustee under the Indenture.
Underlying Shares: See the second introductory paragraph
hereto.
Underwritten registration or underwritten offering: A
registration in which securities of the Company are sold to an underwriter for
reoffering to the public.
2. Shelf Registration
(a) Shelf Registration. The Company shall use its reasonable
best efforts to file with the SEC a Registration Statement for an offering to be
made on a continuous basis pursuant to Rule 415 covering all of the Registrable
Securities (the "Initial Shelf Registration") on or prior to the Filing Date.
The Initial Shelf Registration shall be on Form S-3 or another appropriate form
permitting registration of such Registrable Securities for resale by Holders in
the manner or manners designated by them (including, without limitation, one or
more underwritten offerings). The Company shall not permit any securities other
than the Registrable Securities to be included in the Initial Shelf Registration
or any Subsequent Shelf Registration (as defined below).
The Company shall use its reasonable best efforts to cause the
Initial Shelf Registration to be declared effective under the Securities Act on
or prior to the Effectiveness Date and to keep such Initial Shelf Registration
continuously effective under the Securities Act until the date that is two years
from the Closing Date (as it may be shortened pursuant to clause (i) or clause
(ii) immediately following, the "Effectiveness Period"), or such shorter
-4-
<PAGE>
period ending when (i) all the shares of Registrable Securities covered by the
Initial Shelf Registration have been sold in the manner set forth and as
contemplated in the Initial Shelf Registration, (ii) the date on which all the
Registrable Securities (x) held by Persons who are not affiliates of the Company
may be resold pursuant to Rule 144(k) under the Securities Act or (y) cease to
be outstanding, or (iii) a Subsequent Shelf Registration covering all of the
Registrable Securities has been declared effective under the Securities Act.
(b) Subsequent Shelf Registrations. If the Initial Shelf
Registration or any Subsequent Shelf Registration ceases to be effective for any
reason at any time during the Effectiveness Period (other than because of the
sale of all of the securities registered thereunder), the Company shall use its
reasonable best efforts to obtain the prompt withdrawal of any order suspending
the effectiveness thereof, and in any event shall within 45 days of such
cessation of effectiveness amend the Initial Shelf Registration in a manner to
obtain the withdrawal of the order suspending the effectiveness thereof, or file
an additional "shelf" Registration Statement pursuant to Rule 415 covering all
of the Registrable Securities (a "Subsequent Shelf Registration"). If a
Subsequent Shelf Registration is filed, the Company shall use its reasonable
best efforts to cause the Subsequent Shelf Registration to be declared effective
under the Securities Act as soon as practicable after such filing and to keep
such Registration Statement continuously effective for a period equal to the
number of days in the Effectiveness Period less the aggregate number of days
during which the Initial Shelf Registration or any Subsequent Shelf Registration
was previously continuously effective. As used herein the term "Shelf
Registration" means the Initial Shelf Registration and any Subsequent Shelf
Registration and the term "Shelf Registration Statement" means any Registration
Statement filed in connection with a Shelf Registration.
(c) Supplements and Amendments. The Company shall promptly
supplement and amend the Shelf Registration if required by the rules,
regulations or instructions applicable to the registration form used for such
Shelf Registration, if required by the Securities Act, or if reasonably
requested by the Holders of the majority in Amount of Registrable Securities
covered by such Registration Statement or by any underwriter of such Registrable
Securities.
3. Liquidated Damages
(a) The Company and the Initial Purchasers agree that the
Holders of Registrable Securities will suffer damages if the Company fails to
fulfill its obligations under Section 2 hereof and that it would not be feasible
to ascertain the extent of such damages with precision. Accordingly, the Company
agrees to pay liquidated damages on the Registrable Securities ("Liquidated
Damages") under the circumstances and to the extent set forth below (each of
which shall be given independent effect; each a "Registration Default"):
(i) if the Initial Shelf Registration is not filed on or prior
to the Filing Date, then commencing on the day after the Filing Date,
Liquidated Damages shall accrue on the Registrable Securities at a rate of
0.50% per annum on the Amount of Registra-
-5-
<PAGE>
ble Securities for the first 90 days immediately following the Filing
Date, such Liquidated Damages increasing by an additional 0.50% per annum
at the beginning of each subsequent 90-day period;
(ii) if the Company fails to use all reasonable efforts and
the Initial Shelf Registration is not declared effective by the SEC on or
prior to the Effectiveness Date, then commencing one day after the
Effectiveness Date, Liquidated Damages shall accrue on the Registrable
Securities at a rate of 0.50% per annum on the Amount of Registrable
Securities for the first 90 days immediately following the day after such
Effectiveness Date, such Liquidated Damages increasing by an additional
0.50% per annum at the beginning of each subsequent 90-day period; and
(iii) if a Shelf Registration has been declared effective and
such Shelf Registration ceases to be effective at any time during the
Effectiveness Period (other than as permitted under Section 3(b)), then
Liquidated Damages shall accrue on the Registrable Securities at a rate of
0.50% per annum on the Amount of Registrable Securities for the first 90
days commencing on the day such Shelf Registration ceases to be effective,
such Liquidated Damages increasing by an additional 0.50% per annum at the
beginning of each such subsequent 90-day period;
provided, however, that Liquidated Damages on the Registrable Securities may not
accrue under more than one of the foregoing clauses (i), (ii) or (iii) at any
one time and at no time shall the aggregate amount of Liquidated Damages
accruing exceed in the aggregate 1.0% per annum of the Amount of Registrable
Securities; provided, further, however, that (1) upon the filing of the Shelf
Registration as required hereunder (in the case of clause (a)(i) of this Section
3), (2) upon the effectiveness of the Shelf Registration as required hereunder
(in the case of clause (a)(ii) of this Section 3), or (3) upon the effectiveness
of a Shelf Registration which had ceased to remain effective (in the case of
(a)(iii) of this Section 3), Liquidated Damages on the Registrable Securities as
a result of such clause (or the relevant subclause thereof), as the case may be,
shall cease to accrue. It is understood and agreed that, notwithstanding any
provision to the contrary, so long as any Registrable Security is then covered
by an effective Shelf Registration Statement, no Liquidated Damages shall accrue
on such Registrable Security.
(b) Notwithstanding paragraph (a) of this Section 3, the
Company shall be permitted to suspend the effectiveness of a Shelf Registration
for any reason whatsoever for up to 30 consecutive days in any 90 day period,
for a total of not more than 60 days in any calendar year, without paying
Liquidated Damages.
(c) So long as Convertible Notes remain outstanding, the
Company shall notify the Trustee within two Business Days after each and every
date on which an event occurs in respect of which Liquidated Damages is required
to be paid. Any amounts of Liquidated Damages due pursuant to (a)(i), (a)(ii) or
(a)(iii) of this Section 3 will be payable in cash semi-annually on each March
15 and September 15 (each a "Damages Payment Date"),
-6-
<PAGE>
commencing with the first such date occurring after any such Liquidated Damages
commences to accrue, to Holders to whom regular interest is payable on such
Damages Payment Date with respect to Convertible Notes that are Registrable
Securities and to Persons that are registered Holders 15 days prior to such
Damages Payment Date with respect to Underlying Shares that are Registrable
Securities. The amount of Liquidated Damages for Registrable Securities will be
determined by multiplying the applicable rate of Liquidated Damages by the
Amount of Registrable Securities outstanding on the Damages Payment Date
following such Registration Default in the case of the first such payment of
Liquidated Damages with respect to a Registration Default (and thereafter at the
next succeeding Damages Payment Date until the cure of such Registration
Default), multiplied by a fraction, the numerator of which is the number of days
such Liquidated Damages rate was applicable during such period (determined on
the basis of a 360-day year comprised of twelve 30-day months and, in the case
of a partial month, the actual number of days elapsed), and the denominator of
which is 360.
4. Registration Procedures
In connection with the filing of any Registration Statement
pursuant to Section 2 hereof, the Company shall effect such registrations to
permit the sale of the securities covered thereby in accordance with the
intended method or methods of disposition thereof, and pursuant thereto and in
connection with any Registration Statement filed by the Company hereunder the
Company shall:
(a) Prepare and file with the SEC on or prior to the Filing
Date, a Registration Statement or Registration Statements as
prescribed by Section 2 hereof, and use its reasonable best efforts to
cause each such Registration Statement to become effective and remain
effective as provided herein; provided, however, -------- ------- that
before filing any Registration Statement or Prospectus or any
amendments or supplements thereto, the Company shall furnish to and
afford the Holders of the Registrable Securities covered by such
Registration Statement and the managing underwriters, if any, a
reasonable opportunity to review copies of all such documents proposed
to be filed (in each case, where possible, at least five Business Days
prior to such filing, or such later date as is reasonable under the
circumstances). The Company shall not file any Registration Statement
or Prospectus or any amendments or supplements thereto if the Holders
of a majority in Amount of Registrable Securities covered by such
Registration Statement or the managing underwriters, if any, shall
reasonably object.
(b) Prepare and file with the SEC such amendments and
post-effective amendments to each Shelf Registration, as may be
necessary to keep such Registration Statement continuously effective
for the Effectiveness Period; cause the related Prospectus to be
supplemented by any Prospectus supplement required by applicable law,
and as so supplemented to be filed pursuant to Rule 424 (or any
similar provisions then in force) promulgated under the Securities
Act; and comply with the provisions of the Securities Act and the
Exchange Act applicable to it with respect to the disposition of all
securities covered by such Registration Statement as so amended or in
such Pro-
-7-
<PAGE>
spectus as so supplemented. The Company shall be deemed not to
have used its reasonable best efforts to keep a Registration Statement
effective during the Effectiveness Period if it voluntarily takes any
action that would result in selling Holders of the Registrable
Securities covered thereby not being able to sell such Registrable
Securities during that period unless such action is required by
applicable law or unless the Company complies with this Agreement,
including without limitation the provisions of Section 4(k) hereof.
(c) Notify the selling Holders of Registrable Securities and
the managing underwriters, if any, promptly (but in any event within
two Business Days), (i) when a Prospectus or any prospectus supplement
or post-effective amendment has been filed, and, with respect to a
Registration Statement or any post-effective amendment, when the same
has become effective under the Securities Act (including in such
notice a written statement that any Holder may, upon request, obtain,
at the sole expense of the Company, one conformed copy of such
Registration Statement or post-effective amendment including financial
statements and schedules, documents incorporated or deemed to be
incorporated by reference and exhibits), (ii) of the issuance by the
SEC of any stop order suspending the effectiveness of a Registration
Statement or of any order preventing or suspending the use of any
preliminary prospectus or the initiation of any proceedings for that
purpose, (iii) of the happening of any event, the existence of any
condition or any information becoming known that makes any statement
made in such Registration Statement or related Prospectus or any
document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires the making
of any changes in or amendments or supplements to such Registration
Statement, Prospectus or documents so that, in the case of the
Registration Statement, it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading,
and that in the case of the Prospectus, it will not contain any untrue
statement of a material fact or omit to state any 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 and (iv) of the Company's determination that a
post-effective amendment to a Registration Statement would be
appropriate.
(d) Use its reasonable best efforts to prevent the issuance of
any order suspending the effectiveness of a Registration Statement or
of any order preventing or suspending the use of a Prospectus and, if
any such order is issued, to use its reasonable best efforts to obtain
the withdrawal of any such order at the earliest possible moment.
(e) If requested by the managing underwriter or underwriters
(if any) or the Holders of the majority in Amount of Registrable
Securities being sold in connection with an underwritten offering (i)
promptly incorporate in a prospectus supplement or post-effective
amendment such information as the managing underwriter or underwrit-
-8-
<PAGE>
ers (if any), or such Holders reasonably determine is necessary to be
included therein, (ii) make all required filings of such prospectus
supplement or such post-effective amendment as soon as reasonably
practicable after the Company has received notification of the matters
to be incorporated in such prospectus supplement or post-effective
amendment and (iii) supplement or make amendments to such Registration
Statement.
(f) Furnish to each selling Holder of Registrable Securities,
a single counsel to such Holders (chosen in accordance with Section
5(b)) and each managing underwriter, if any, at the sole expense of
the Company, one conformed copy of the Registration Statement or
Registration Statements and each post-effective amendment thereto,
including financial statements and schedules, and, if requested, all
documents incorporated or deemed to be incorporated therein by
reference and all exhibits.
(g) Deliver to each selling Holder of Registrable Securities,
a single counsel to such Holders (chosen in accordance with Section
5(b)) and the underwriters, if any, at the sole expense of the
Company, as many copies of the Prospectus (including each form of
preliminary prospectus) and each amendment or supplement thereto and
any documents incorporated by reference therein as such Persons may
reasonably request; and, subject to the second paragraph of Section
4(s) hereof, the Company hereby consents to the use of such Prospectus
and each amendment or supplement thereto by each of the selling
Holders of Registrable Securities and the underwriters or agents, if
any, and dealers (if any), in connection with the offering and sale of
the Registrable Securities covered by such Prospectus and any
amendment or supplement thereto.
(h) Prior to any public offering of Registrable Securities, to
use its reasonable best efforts to register or qualify, to the extent
required by applicable law, and to cooperate with the selling Holders
of Registrable Securities and the managing underwriter or
underwriters, if any, in connection with the registration or
qualification (or exemption from such registration or qualification)
of such Registrable Securities or offer and sale under the securities
or Blue Sky laws of such jurisdictions within the United States as any
selling Holder, or the managing underwriter or underwriters, if any,
reasonably request; provided, however, that where Registrable
Securities are offered other than through an underwritten offering,
the Company agrees to cause the Company's counsel to perform Blue Sky
investigations and file registrations and qualifications required to
be filed pursuant to this Section 4(h); keep each such registration or
qualification (or exemption therefrom) effective during the period
such Registration Statement is required to be kept effective and do
any and all other acts or things reasonably necessary or advisable to
enable the disposition in such jurisdictions of the Registrable
Securities covered by the applicable Registration Statement; provided,
however, that the Company shall not be required to (A) qualify
generally to do business in any jurisdiction where it is not then so
qualified, (B) take any action that would subject it to general
service of process in any such jurisdiction where it is not then so
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<PAGE>
subject or (C) subject itself to taxation in excess of a nominal
dollar amount in any such jurisdiction where it is not then so
subject.
(i) Cooperate with the selling Holders of Registrable
Securities and the managing underwriter or underwriters, if any, to
facilitate the timely preparation and delivery of certificates
representing shares of Registrable Securities to be sold, which
certificates shall not bear any restrictive legends and shall be in a
form eligible for deposit with The Depository Trust Company; and
enable such shares of Registrable Securities to be in such
denominations and registered in such names as the managing underwriter
or underwriters, if any, or Holders may reasonably request.
(j) Use its reasonable best efforts to cause the Registrable
Securities covered by any Shelf Registration Statement to be
registered with or approved by such other governmental agencies or
authorities as may be reasonably necessary to enable the seller or
sellers thereof or the underwriter or underwriters, if any, to
consummate the disposition of such Registrable Securities, except as
may be required solely as a consequence of the nature of such selling
Holder's business, in which case the Company will cooperate in all
reasonable respects with the filing of such Registration Statement and
the granting of such approvals.
(k) Upon the occurrence of any event contemplated by paragraph
4(c)(ii), 4(c)(iii) or 4(c)(iv) hereof, as promptly as practicable
prepare and (subject to Section 4(a) hereof) file with the SEC, at the
sole expense of the Company, a supplement or post-effective amendment
to the Registration Statement or a supplement to the related
Prospectus or any document incorporated or deemed to be incorporated
therein by reference, or file any other required document so that, as
thereafter delivered to the purchasers of the Registrable Securities
being sold thereunder, any such Prospectus will not 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, in
the light of the circumstances under which they were made, not
misleading.
(l) Prior to the effective date of the first Registration
Statement relating to the Registrable Securities, (i) provide the
Trustee with certificates for the Registrable Securities in a form
eligible for deposit with The Depository Trust Company and (ii)
provide a CUSIP number for the Registrable Securities.
(m) In connection with any underwritten offering of
Registrable Securities pursuant to a Shelf Registration, enter into an
underwriting agreement as is customary in underwritten offerings of
securities similar to the Registrable Securities and take all such
other actions as are reasonably requested by the managing underwriter
or underwriters in order to expedite or facilitate the registration or
the disposition of such Registrable Securities and, in such
connection, (i) make such representations and warranties to, and
covenants with, the underwriters with respect to the business of the
Company and its subsidiaries (including any acquired business,
properties or entity, if
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applicable) and the Registration Statement, Prospectus and documents,
if any, incorporated or deemed to be incorporated by reference
therein, in each case, as are customarily made by issuers to
underwriters in underwritten offerings of securities similar to the
Registrable Securities and confirm the same in writing if and when
requested; (ii) obtain the written opinion of counsel to the Company
and written updates thereof in form, scope and substance reasonably
satisfactory to the managing underwriter or underwriters, addressed to
the underwriters covering the matters customarily covered in opinions
requested in underwritten offerings of securities similar to the
Registrable Securities and such other matters as may be reasonably
requested by the managing underwriter or underwriters; and (iii)
obtain "cold comfort" letters and updates thereof in form, scope and
substance reasonably satisfactory to the managing underwriter or
underwriters from the independent certified public accountants of the
Company (and, if necessary, any other independent certified public
accountants of any subsidiary of the Company or of any business
acquired by the Company for which financial statements and financial
data are, or are required to be, included or incorporated by reference
in the Registration Statement), addressed to each of the underwriters,
such letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with
underwritten offerings of securities similar to the Registrable
Securities and such other matters as reasonably requested by the
managing underwriter or underwriters as permitted by the Statement on
Auditing Standards No. 72. The above shall be done as and to the
extent required by such underwriting agreement.
(n) Make available for inspection by any selling Holder of
such Registrable Securities being sold, any underwriter participating
in any such disposition of Registrable Securities, if any, and any
attorney, accountant or other agent retained by any such selling
Holder, or underwriter (collectively, the "Inspectors"), at the
offices where normally kept, during reasonable business hours at such
time or times as shall be mutually convenient for the Company and the
Inspectors as a group, all financial and other records, pertinent
corporate documents and instruments of the Company and its
subsidiaries (collectively, the "Records") as shall be reasonably
necessary to enable them to exercise any applicable due diligence
responsibilities, and cause the officers, directors and employees of
the Company and its subsidiaries to supply all information reasonably
requested by any such Inspector in connection with such Registration
Statement. Records that the Company determines, in good faith, to be
confidential and any Records that it notifies the Inspectors are
confidential shall not be disclosed by any Inspector unless (i) the
disclosure of such Records is necessary to avoid or correct a material
misstatement or material omission in such Registration Statement, (ii)
the release of such Records is ordered pursuant to a subpoena or other
order from a court of competent jurisdiction, (iii) disclosure of such
information is, in the opinion of counsel for any Inspector, necessary
or advisable in connection with any action, claim, suit or proceeding,
directly involving or potentially involving such Inspector and arising
out of, based upon, relating to, or involving this Agreement or any
transactions contemplated hereby or arising hereunder or (iv) the
information in such Rec-
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<PAGE>
ords has been made generally available to the public other than
through the acts of such Inspector; provided, however, that prior
notice shall be provided as soon as practicable to the Company of the
potential disclosure of any information by such Inspector pursuant to
clauses (ii) or (iii) of this sentence to permit the Company to obtain
a protective order (or waive the provisions of this paragraph (n)).
Each Inspector shall take such actions as are reasonably necessary to
protect the confidentiality of such information (if practicable) to
the extent such actions are otherwise not inconsistent with, an
impairment of or in derogation of the rights and interests of the
Holder or any Inspector, unless and until such information in such
Records has been made generally available to the public other than as
a result of a breach of this Agreement.
(o) Provide (i) the Holders of the Registrable Securities to
be included in such Registration Statement and not more than one
counsel for all the Holders of such Registrable Securities chosen in
accordance with Section 5(b), (ii) the underwriters (which term, for
purposes of this Registration Rights Agreement, shall include a Person
deemed to be an underwriter within the meaning of Section 2(11) of the
Securities Act), if any, thereof, (iii) the sales or placement agent,
if any, thereof, and (D) one counsel for such underwriters or agents,
reasonable opportunity to participate in the preparation of such
Registration Statement, each prospectus included therein or filed with
the SEC, and each amendment or supplement thereto.
(p) Comply with all applicable rules and regulations of the
SEC and make generally available to its securityholders earning
statements satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder (or any similar rule
promulgated under the Securities Act) no later than 45 days after the
end of any 12-month period (or 90 days after the end of any 12-month
period if such period is a fiscal year) (i) commencing at the end of
any fiscal quarter in which Registrable Securities are sold to
underwriters in a firm commitment or best efforts underwritten
offering and (ii) if not sold to underwriters in such an offering,
commencing on the first day of the first fiscal quarter of the Company
after the effective date of a Registration Statement, which statements
shall cover said 12-month periods.
(q) Cooperate with each seller of Registrable Securities
covered by any Registration Statement and each underwriter, if any,
participating in the disposition of such Registrable Securities and
their respective counsel in connection with any filings required to be
made with the National Association of Securities Dealers, Inc. (the
"NASD"), including, if the Conduct Rules of the NASD or any successor
thereto as amended from time to time so require, engaging a "qualified
independent underwriter" ("QIU") as contemplated therein and making
Records available to such QIU as though it were a participating
underwriter for the purposes of Section 4(n) and otherwise applying
the provisions of this Agreement to such QIU (including
indemnification) as though it were a participating underwriter.
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<PAGE>
(r) Cause the Indenture to be qualified under the TIA not
later than the effective date of the first Registration Statement
relating to the Registrable Securities; and in connection therewith,
cooperate with the Trustee and the Holders of the Registrable
Securities to effect such changes to the Indenture as may be required
for the Indenture to be so qualified in accordance with the terms of
the TIA; and execute, and use its reasonable best efforts to cause the
Trustee to execute, all documents as may be required to effect such
changes and all other forms and documents required to be filed with
the SEC to enable the Indenture to be so qualified in a timely manner.
(s) Use its reasonable best efforts to take all other steps
necessary or advisable to effect the registration of the Registrable
Securities covered by a Registration Statement contemplated hereby.
The Company may require each seller of Registrable Securities
as to which any registration is being effected to furnish to the Company such
information regarding such seller and the distribution of such Registrable
Securities as the Company may, from time to time, reasonably request to the
extent necessary or advisable to comply with the Securities Act. The Company may
exclude from such registration the Registrable Securities of any seller if such
seller fails to furnish such information within 20 Business Days after receiving
such request. Each seller as to which any Shelf Registration is being effected
agrees to furnish promptly to the Company all information required to be
disclosed so that the information previously furnished to the Company by such
seller is not materially misleading and does not omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances under which they were made.
Each Holder of Registrable Securities agrees by acquisition of
such Registrable Securities that, upon actual receipt of any notice from the
Company of the happening of any event of the kind described in Section 4(c)(ii),
4(c)(iii) or 4(c)(iv) hereof, such Holder will forthwith discontinue disposition
of such Registrable Securities covered by such Registration Statement or
Prospectus until such Holder's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 4(k) 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 any amendments or supplements thereto.
5. Registration Expenses
(a) All fees and expenses incident to the performance of or
compliance with this Agreement by the Company shall be borne by the Company,
including, without limitation, (i) all registration and filing fees (including,
without limitation, (A) fees with respect to filings required to be made with
the NASD in connection with an underwritten offering and (B) fees and expenses
of compliance with state securities or Blue Sky laws (including, without
limitation, reasonable fees and disbursements of counsel in connection with Blue
Sky qualifications of the Registrable Securities and determination of the
eligibility of the Registrable Securities for investment under the laws of such
jurisdictions as provided in Sec-
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<PAGE>
tion 4(h) hereof), (ii) printing expenses, including, without limitation,
expenses of printing certificates for Registrable Securities in a form eligible
for deposit with The Depository Trust Company and of printing prospectuses if
the printing of prospectuses is requested by the managing underwriter or
underwriters, if any, or by the Holders of the majority in Amount of Registrable
Securities included in any Registration Statement, (iii) messenger, telephone
and delivery expenses, (iv) fees and disbursements of counsel for the Company
and reasonable fees and disbursements of one special counsel for the sellers of
Registrable Securities (subject to the provisions of Section 5(b) hereof), (v)
fees and disbursements of all independent certified public accountants referred
to in Section 4(m)(iii) hereof (including, without limitation, the expenses of
any special audit and "cold comfort" letters required by or incident to such
performance), (vi) Securities Act liability insurance, if the Company desires
such insurance, (vii) fees and expenses of all other Persons retained by the
Company, (viii) internal expenses of the Company (including, without limitation,
all salaries and expenses of officers and employees of the Company performing
legal or accounting duties), (ix) the expense of any annual audit, (x) the fees
and expenses incurred in connection with the listing of the securities to be
registered on any securities exchange, if applicable, and (xi) the expenses
relating to printing, word processing and distributing all Registration
Statements, underwriting agreements, securities sales agreements and any other
documents necessary in order to comply with this Agreement. Nothwithstanding
anything in this Agreement to the contrary, each Holder shall pay all
underwriting discounts and brokerage commissions with respect to any Registrable
Securities sold by it.
(b) The Company shall reimburse the Holders of the Registrable
Securities being registered in a Shelf Registration for the reasonable fees and
disbursements of not more than one counsel chosen by the Holders of a majority
in Amount of Registrable Securities to be included in such Registration
Statement.
6. Indemnification
The Company agrees to indemnify and hold harmless (i) each
Initial Purchaser, (ii) each Holder, (iii) each Person, if any, who controls
(within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act) any of the foregoing (any of the Persons referred to in this
clause (iii) being hereinafter referred to as a "controlling person"), (iv) the
respective officers, directors, partners, employees, representatives and agents
of the Initial Purchasers, the Holders (including predecessor Holders) or any
controlling person (any person referred to in clause (i), (ii), (iii) or (iv)
may hereinafter be referred to as an "Indemnified Holder"), from and against any
and all losses, claims, damages, liabilities and judgments (including, without
limitation, reasonable legal fees and other expenses incurred in connection with
any suit, action or proceeding or any claim asserted) caused by any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement or Prospectus, or any amendment or supplement thereto or
any related preliminary prospectus, or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any untrue statement or
omission or
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<PAGE>
alleged untrue statement or omission made in reliance upon and in conformity
with information relating to any Holder furnished to the Company in writing by
such Holder expressly for use in therein; provided, however, that the Company
shall not be liable to any Indemnified Holder under the indemnity agreement of
this paragraph with respect to any preliminary prospectus to the extent that any
such loss, claim, damage, liability, judgment or expense of such Indemnified
Holder results from the fact that such Indemnified Holder sold Registrable
Securities under a Registration Statement to a Person as to whom it shall be
established that there was not sent or given, at or prior to the written
confirmation of such sale, a copy of the Prospectus (or of the preliminary
prospectus as then amended or supplemented if the Company shall have furnished
such Indemnified Holder with such amendment or supplement thereto on a timely
basis), in any case where such delivery is required by applicable law and the
loss, claim, damage, liability or expense of such Indemnified Holder results
from an untrue statement or omission of a material fact contained in the
preliminary prospectus which was corrected in the Prospectus (or in the
preliminary prospectus as then amended or supplemented if the Company shall have
furnished such Indemnified Holder with such amendment or supplement thereto, as
the case may be, on a timely basis). The Company shall notify Indemnified Holder
promptly of the institution, threat or assertion of any claim, proceeding
(including any governmental investigation) or litigation in connection with the
matters addressed by this Agreement which involves the Company or such
Indemnified Holder.
Each Holder agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, officers and each Person who
controls the Company within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act to the same extent as the foregoing
indemnity from the Company to each Holder, but only with reference to such
losses, claims, damages or liabilities which are caused by any untrue statement
or omission or alleged untrue statement or omission made in reliance upon and in
conformity with information relating to a Holder furnished to the Company in
writing by such Holder expressly for use in any Registration Statement or
Prospectus, or any amendment or supplement thereto or any related preliminary
prospectus.
If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any Person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such Person (the "Indemnified Person") shall promptly
notify the Person or Persons against whom such indemnity may be sought (each an
"Indemnifying Person") in writing, and such Indemnifying Person, upon request of
the Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others entitled
to indemnification pursuant to this Section 6 that the Indemnifying Person may
designate in such proceeding and shall pay the fees and expenses of such counsel
related to such proceeding. In any such proceeding, any Indemnified Person shall
have the right to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Person unless (i) such
Indemnifying Person and the Indemnified Person shall have mutually agreed to the
contrary, (ii) such Indemnifying Person has failed within a reasonable time to
retain counsel reasonably satisfactory to such Indemnified Person or (iii) the
named parties in
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<PAGE>
any such proceeding (including any impleaded parties) include an Indemnifying
Person and an Indemnified Person and representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interests
between them. It is understood that an Indemnifying Person shall not, in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all Indemnified Persons, and that all such fees and
expenses shall be reimbursed as they are incurred. Any such separate firm for
the Indemnified Holders shall be designated in writing by the Holders of the
majority in Amount of Registrable Securities, and any such separate firm for the
Company, its directors, respective officers and such control Persons of the
Company shall be designated in writing by the Company. The Indemnifying Person
shall not be liable for any settlement of any proceeding effected without its
written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, such Indemnifying Person agrees to indemnify any
Indemnified Person from and against any loss or liability by reason of such
settlement or judgment. No Indemnifying Person shall, without the prior written
consent of the Indemnified Person, effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Person is or could
have been a party and indemnity could have been sought hereunder by such
Indemnified Person, unless such settlement includes an unconditional release of
such Indemnified Person from all liability on claims that are the subject matter
of such proceeding.
If the indemnification provided for in the first and second
paragraphs of this Section 6 is unavailable to an Indemnified Person or
insufficient in respect of any losses, claims, damages or liabilities referred
to therein, then each Indemnifying Person under such paragraph, in lieu of
indemnifying such Indemnified Person thereunder, shall contribute to the amount
paid or payable by such Indemnified Person as a result of such losses, claims,
damages or liabilities (i) in such proportion as is appropriate to reflect the
relative benefits received by the Indemnifying Person on the one hand and the
Indemnified Person on the other hand pursuant to the Purchase Agreement or from
the offering of the Registrable Securities pursuant to any Shelf Registration or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Indemnifying Person on the one hand and the Indemnified Person on the other
in connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and any Indemnified Holder on the other shall be deemed to be in the same
proportion as the total net proceeds from the initial offering and sale of
Convertible Notes (before deducting expenses) received by the Company bear to
the total net proceeds received by such Indemnified Holder from sales of
Registrable Securities giving rise to such obligations. The relative fault of
the parties shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
or such Indemnified Holder and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
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<PAGE>
Each of the Company and the Initial Purchasers agrees that it
would not be just and equitable if contribution pursuant to this Section 6 were
determined by pro rata allocation or by any other method of allocation that does
not take account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an Indemnified Person as a
result of the losses, claims, damages and liabilities referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses incurred by such
Indemnified Person in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 6, in no event shall
any Holder be required to contribute any amount in excess of the amount by which
the net proceeds received by such Holder from the sale of the Registrable
Securities pursuant to a Shelf Registration Statement exceeds the amount of
damages which such Holder would have otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
Person guilty of fraudulent misrepresentation (within the meaning of Section
11(F) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.
The remedies provided for in this Section 6 are not exclusive
and shall not limit any rights or remedies that may otherwise be available to
any indemnified party at law or in equity.
The indemnity and contribution agreements contained in this
Section 6 shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by or on behalf
of any Holder or any Person controlling any Holder or by or on behalf of the
Company, its officers or directors or any other Person controlling any of the
Company and (iii) acceptance of and payment for any of the Registrable
Securities.
7. Rules 144 and 144A.
The Company covenants that it will file the reports required
to be filed by it under the Securities Act and the Exchange Act and the rules
and regulations adopted by the SEC thereunder in a timely manner in accordance
with the requirements of the Securities Act and the Exchange Act and, for so
long as any Registrable Securities remain outstanding, if at any time the
Company is not required to file such reports, it will, upon the request of any
Holder or beneficial owner of Registrable Securities, make available such
information necessary to permit sales pursuant to Rule 144A under the Securities
Act. The Company further covenants that, for so long as any Registrable
Securities remain outstanding, it will use its reasonable best efforts to take
such further action as any Holder of Registrable Securities may reasonably
request, all to the extent required from time to time to enable such holder to
sell Registrable Securities without registration under the Securities Act within
the limitation of the exemptions provided by (a) Rule 144(k) and Rule 144A under
the Securities Act, as such rules may be amended from time to time, or (b) any
similar rule or regulation hereafter adopted by the SEC. Notwithstanding the
foregoing, nothing in this Section 7 shall be deemed to require the Company to
register any of its securities pursuant to the Exchange Act.
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<PAGE>
8. Underwritten Registrations.
If any of the Registrable Securities covered by any Shelf
Registration are to be sold in an underwritten offering, the investment banker
or investment bankers and manager or managers that will manage the offering will
be selected by the Holders of the majority in Amount of Registrable Securities
to be included in such offering and be reasonably acceptable to the Company.
No Holder of Registrable Securities may participate in any
underwritten registration hereunder unless such Holder (a) agrees to sell such
Holder's Registrable Securities on the basis provided in any underwriting
arrangements approved by the Persons entitled hereunder to approve such
arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
9. Miscellaneous
(a) No Inconsistent Agreements. The Company has not, as of the
date hereof, and the Company shall not, after the date of this Agreement, enter
into any agreement with respect to any of its securities that is inconsistent
with the rights granted to the Holders of Registrable Securities in this
Agreement or otherwise conflicts with the provisions hereof. The Company has not
entered and will not enter into any agreement with respect to any of its
securities that will grant to any Person piggyback registration rights with
respect to a Registration Statement, except to the extent any existing right has
heretofore been waived.
(b) Adjustments Affecting Registrable Securities. The Company
shall not, directly or indirectly, take any action with respect to the
Registrable Securities as a class that would adversely affect the ability of the
Holders of Registrable Securities to include such Registrable Securities in a
registration undertaken pursuant to this Agreement.
(c) Amendments and Waivers. The provisions of this Agreement
may not be amended, modified or supplemented, and waivers or consents to
departures from the provisions hereof may not be given, otherwise than with the
prior written consent of the Company and the Holders of not less than the
majority in Amount of Registrable Securities; provided, however, that Section 6
and this Section 9(c) may not be amended, modified or supplemented without the
prior written consent of the Company and each Holder (including, in the case of
an amendment, modification or supplement of Section 6, any Person who was a
Holder of Registrable Securities disposed of pursuant to any Registration
Statement). Notwithstanding the foregoing, a waiver or consent to depart from
the provisions hereof with respect to a matter that relates exclusively to the
rights of Holders of Registrable Securities whose securities are being sold
pursuant to a Registration Statement and that does not directly or indirectly
affect, impair, limit or compromise the rights of other Holders of Registrable
Securities may be given by Holders of at least a majority in Amount of the
Registrable Securities being sold by such Holders pursuant to such Registration
Statement.
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<PAGE>
(d) Notices. All notices and other communications (including
without limitation any notices or other communications to the Trustee) provided
for or permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, next-day air courier or facsimile:
(1) if to a Holder of the Registrable Securities, at the most
current address of such Holder set forth on the records of the
registrar under the Indenture, in the case of Holders of Convertible
Notes, and the stock ledger of the Company, in the case of Holders of
common stock of the Company.
(2) if to the Initial Purchasers:
DEUTSCHE BANK SECURITIES INC.
BANC OF AMERICA SECURITIES LLC
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
RAYMOND JAMES & ASSOCIATES, INC.
SALOMON SMITH BARNEY INC.
c/o Deutsche Bank Securities Inc.
1 South Street
Baltimore, Maryland 21202
Attention: Equity Syndicate
with copies to:
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Facsimile No.: (212) 269-5420
Attention: William M. Hartnett, Esq.
(3) if to the Company, at the addresses as follows:
Pinnacle Holdings Inc.
1549 Ringling Boulevard, Third Floor
Sarasota, Florida 34236
Facsimile No.: (941) 354-8761
Attention: Chief Financial Officer
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with copies to:
Holland & Knight LLP
400 North Ashley Drive, Suite 2300
Tampa, Florida 33602
Facsimile No.: (813) 229-0134
Attention: Chester E. Bacheller, Esq.
All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; one Business
Day after being timely delivered to a next-day air courier; and when the
addressor receives facsimile confirmation, if sent by facsimile.
(e) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the parties
hereto, including the Holders; provided, however, that this Agreement shall not
inure to the benefit of or be binding upon a successor or assign of a Holder
unless and except to the extent such successor or assign holds Registrable
Securities.
(f) 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.
(g) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK, WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT
TO THE JURISDICTION OF THE FEDERAL AND NEW YORK STATE COURTS SITTING IN
MANHATTAN, NEW YORK CITY, THE STATE OF NEW YORK, IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(i) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restric-
-20-
<PAGE>
tions without including any of such that may be hereafter declared invalid,
illegal, void or unenforceable.
(j) Securities Held by the Company or Its Affiliates. Whenever
the consent or approval of Holders of a specified percentage in Amount of
Registrable Securities is required hereunder, Registrable Securities held by the
Company or its affiliates (as such term is defined in Rule 405 under the
Securities Act) shall not be counted in determining whether such consent or
approval was given by the Holders of such required percentage.
(k) Third Party Beneficiaries. Holders of Registrable
Securities are intended third party beneficiaries of this Agreement and this
Agreement may be enforced by such Persons.
(l) Entire Agreement. This Agreement, together with the
Purchase Agreement and the Indenture, is intended by the parties as a final and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein and therein and any and all prior
oral or written agreements, representations, or warranties, contracts,
understandings, correspondence, conversations and memoranda between the Initial
Purchasers on the one hand and the Company on the other, or between or among any
agents, representatives, parents, subsidiaries, affiliates, predecessors in
interest or successors in interest with respect to the subject matter hereof and
thereof are merged herein and replaced hereby.
-21-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first written above.
PINNACLE HOLDINGS INC.
By:____________________________________
Name:
Title:
DEUTSCHE BANK SECURITIES INC.
BANC OF AMERICA SECURITIES LLC
MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
RAYMOND JAMES & ASSOCIATES, INC.
SALOMON SMITH BARNEY INC.
By: DEUTSCHE BANK SECURITIES INC.
By:____________________________________
Name:
Title:
convertible subordinated notes with additional notes feature
S-1
EXHIBIT 10.1
SUBSCRIPTION AGREEMENT
This Subscription Agreement is entered into effective as of
January 13, 2000, between Pinnacle Towers Inc., a Delaware corporation (the
"Purchaser") and Pinnacle Towers III Inc., a Florida corporation (the
"Company").
The Company has created and authorized the issuance of shares
of its Series A Convertible Preferred Stock, par value $0.001 per share ("Series
A Preferred Stock").
The Company has agreed to issue and sell to the Purchaser, and
the Purchaser has agreed to subscribe for and purchase, certain of the shares of
Series A Preferred Stock.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Purchaser agree as follows:
1. Subscription, Purchase and Sale. The Purchaser hereby
subscribes for and purchases, and the Company hereby issues and sells to the
Purchaser, 2.176 shares of Series A Preferred Stock, for an aggregate purchase
price of $2,176,000.
2. Payment of Subscription Price. The Purchaser is paying the
aggregate purchase price for the 2.176 shares of Series A Preferred Stock on the
date of this Subscription Agreement by wire transfer of immediately available
funds as directed by the Company.
3. Purchaser's Representations. The Purchaser represents and
warrants that it is acquiring the shares of series A Preferred Stock being
purchased by it hereunder solely for its own account, for investment purposes,
and that the Purchaser is an accredited investor, as that term is defined in the
rules and regulations promulgated under the Securities Act of 1933, as amended.
4. Company's Representations. The Company represents and
warrants to the Purchaser that (a) the Company is a corporation existing and in
good standing under the laws of the State of Florida, (b) the Company has the
legal power and capacity to enter into this Agreement and issue the 2.176 shares
of Series A Preferred Stock to be issued pursuant to this Agreement, and (c)
when issued in accordance with this Agreement, such 2.176 shares of Series A
Preferred Stock will be duly authorized, validly issued, fully paid and
nonassessable.
5. Miscellaneous. This Subscription Agreement may be executed
in two or more counterparts, no one of which need contain the signatures of both
parties hereto.
* * * *
<PAGE>
This Subscription Agreement is hereby executed and delivered
by the parties to be effective as of the date first written above.
PINNACLE TOWERS INC.
By:________________________
________________________
PINNACLE TOWERS III INC.
By:________________________
________________________
EXHIBIT 10.2
NEITHER THIS CONVERTIBLE PROMISSORY NOTE NOR THE VOTING COMMON STOCK INTO WHICH
IT IS CONVERTIBLE HAS BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN
EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT AND APPLICABLE LAWS OR SOME
OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE
LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED.
PINNACLE TOWERS III INC.
CONVERTIBLE PROMISSORY NOTE
$8,701,000 January 13, 2000
New York, New York
PINNACLE TOWERS III INC., a Florida corporation (the "Company"), the
principal office of which is located at 1549 Ringling Boulevard, Third Floor,
Sarasota, Florida 34236, for value received hereby promises to pay to Pinnacle
Towers Inc., or its registered assigns, the sum of Eight Million Seven Hundred
One Thousand Dollars ($8,701,000), or such lesser amount as shall then equal the
outstanding principal amount hereof and any unpaid accrued interest hereon, as
set forth below. The outstanding principal under this Note shall be due and
payable in full within 30 days of the date demand is made therefor by the
Holder. Demand under this Note shall be given by the Holder to the Company by
written notice thereof in accordance with Section 11 below. Payment for all
amounts due hereunder shall be made at the Company's option by either wire
transfer or by mail to the registered address of the Holder.
The following is a statement of the rights of the Holder of this Note
and the conditions to which this Note is subject, and to which the Holder
hereof, by the acceptance of this Note, agrees:
1. Definitions. As used in this Note, the following terms, unless the
context otherwise requires, have the following meanings:
(a) "Company" includes any corporation which shall succeed to or
assume the obligations of the Company under this Note.
(b) "Holder," when the context refers to a holder of this Note,
shall mean any Person who shall at the time be the registered holder of this
Note.
<PAGE>
(c) "Person" means any individual, Company, partnership, joint
venture, trust, unincorporated organization or government or any agency or
political subdivision thereof.
2. Interest. Commencing on March 31, 2000, and on each June 30,
September 30, December 31 and March 31 thereafter until all outstanding
principal and interest on this Note shall have been paid in full, the Company
shall pay interest at the rate of thirteen percent (13%) per annum (the "Initial
Interest Rate") on the principal of this Note outstanding during the period
beginning on the date of issuance of this Note and ending on the date that the
principal amount of this Note becomes due and payable. In the event that the
principal amount of this Note is not paid in full when such amount becomes due
and payable, interest at the same rate as the Initial Interest Rate plus two
percent (2%) shall continue to accrue on the balance of any unpaid principal
until such balance is paid.
3. Conversion.
3.1 Conversion. Any Holder of this Note has the right, at the
Holder's option (the "Option"), at any time prior to payment in full of the
principal balance of this Note, to convert this Note, in accordance with the
provisions of Section 3.2 hereof, in whole or in part, into fully paid and
nonassessable shares of the Company's Voting Common Stock, par value $0.001 per
share or Nonvoting Common Stock, par value $0.001 per share (the "Common
Stock"), at the option of the Holder from time to time. The number of shares of
Common Stock into which this Note may be converted ("Conversion Shares") shall
be determined by dividing the aggregate principal amount of this Note together
with all accrued interest to the date of conversion elected to be converted by
the Holder by the Conversion Price (as defined below) in effect at the time of
such conversion. The initial Conversion Price shall be equal to $25 (the
"Conversion Price").
3.2 Notice of Conversion Pursuant to Section 3.1. Before the Holder
shall be entitled to convert this Note into shares of Common Stock, it shall
surrender this Note at the office of the Company and shall give written notice
to the Company at its principal corporate office of the election to convert all
or a portion of the same pursuant to this Section 3 ("Notice of Conversion"),
and shall state therein the amount of the Note to be converted and the name or
names in which the certificate or certificates for shares of Common Stock are to
be issued. Such conversion shall be deemed to have been made immediately prior
to the close of business on the date of such surrender of the Note, and the
Person or Persons entitled to receive the shares of Common Stock issuable upon
such conversion shall be treated for all purposes as the record holder or
holders of such shares of Common Stock as of such date.
2
<PAGE>
3.3 Mechanics and Effect of Conversion. No fractional shares of
Common Stock shall be issued upon conversion of this Note. In lieu of the
Company issuing any fractional shares to the Holder upon the conversion of this
Note, the Company shall pay to the Holder the amount of outstanding principal
that is not so converted, such payment to be in the form as provided below. Upon
the conversion of this Note pursuant to Section 3.1 above, the Holder shall
surrender this Note, duly endorsed, at the principal office of the Company. At
its expense, the Company shall, as soon as practicable thereafter, issue and
deliver to such Holder at such principal office a certificate or certificates
for the number of shares of such Common Stock to which the Holder shall be
entitled upon such conversion (bearing such legends as are required by
applicable state and federal securities laws in the opinion of counsel to the
Company), together with any other securities and property to which the Holder is
entitled upon such conversion under the terms of this Note, including a check
payable to the Holder for any cash amounts payable as described above and a
replacement Note representing any amount of the Note not converted. Upon the
complete conversion of all of this Note, the Company shall be forever released
from all its obligations and liabilities under this Note, except that the
Company shall be obligated to pay the Holder, within ten (10) days after the
date of such conversion, any interest accrued and unpaid or unconverted to and
including the date of such conversion, and no more.
4. Prepayment. Prepayment of the principal of this Note is
permitted, in whole or in part, without premium or penalty of any kind; provided
the Company provides the Holder with thirty (30) days' prior written notice
(unless notice is waived in writing by the Holder) of its intention to prepay
the principal of this Note, in whole or in part, during which time the Holder
may exercise the Option by delivering to the Company the Notice of Conversion.
5. Conversion Price Adjustments.
5.1 Adjustments for Stock Splits and Subdivisions. In the event
the Company should at any time or from time to time after the date of issuance
hereof fix a record date for the effectuation of a split or subdivision of the
outstanding shares of Common Stock or the determination of holders of Common
Stock entitled to receive a dividend or other distribution payable in additional
shares of Common Stock or other securities or rights convertible into, or
entitling the holder thereof to receive directly or indirectly, additional
shares of Common Stock (hereinafter referred to as "Common Stock Equivalents")
without payment of any consideration by such holder for the additional shares of
Common Stock or the Common Stock Equivalents (including the additional shares of
Common Stock issuable upon conversion or exercise thereof), then, as of such
record date (or the date of such dividend distribution, split or subdivision if
no record date is fixed), the Conversion Price of this Note shall be
appropriately decreased so that the number of shares of
3
<PAGE>
Common Stock issuable upon conversion of this Note shall be increased in
proportion to such increase of outstanding shares.
5.2 Adjustments for Reverse Stock Splits. If the number of shares
of Common Stock outstanding at any time after the date hereof is decreased by a
combination of the outstanding shares of Common Stock, then, following the
record date of such combination, the Conversion Price for this Note shall be
appropriately increased so that the number of shares of Common Stock issuable on
conversion hereof shall be decreased in proportion to such decrease in
outstanding shares.
5.3 Notices of Record Date, etc. In the event of:
(a) Any taking by the Company of a record of the holders of
any class of securities of the Company for the purpose of determining the
holders thereof who are entitled to receive any dividend (other than a cash
dividend payable out of earned surplus at the same rate as that of the last such
cash dividend theretofore paid) or other distribution, or any right to subscribe
for, purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right; or
(b) Any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company or any
transfer of all or substantially all of the assets of the Company to any other
Person or any consolidation or merger involving the Company; or
(c) Any voluntary or involuntary dissolution, liquidation or
windingup of the Company, the Company will mail to the holder of this Note at
least seven (7) days prior to the earliest date specified therein, a notice
specifying:
(i) The date on which any such record is to be taken for
the purpose of such dividend, distribution or right, and the amount and
character of such dividend, distribution or right; and
(ii) The date on which any such reorganization,
reclassification, transfer, consolidation, merger, dissolution, liquidation or
windingup is expected to become effective and the record date for determining
shareholders entitled to vote thereon.
5.4 Reservation of Stock Issuable Upon Conversion. The Company
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock solely for the purpose of effecting the conversion of
this Note such number of its shares of Common Stock as shall from time to time
be sufficient to effect the conversion of the Note; and if at any time the
number of authorized but unissued shares of Common Stock shall not be sufficient
to effect the
4
<PAGE>
conversion of the entire outstanding principal amount of this Note, in addition
to such other remedies as shall be available to the holder of this Note, the
Company will use its best efforts to take such corporation action as may, in
the opinion of its counsel, be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purposes.
6. Representations and Warranties of the Holder.
(a) The Holder by its acceptance of this Note acknowledges that
it is aware that this Note and the shares of Common Stock issuable to it by the
Company upon conversion of this Note have not been registered under the
Securities Act of 1933, as amended ("Act"), or the securities laws of any state
or other jurisdiction.
(b) The Holder warrants and represents to the Company that it has
acquired this Note, and, upon conversion of the Note, it will be acquiring the
Common Stock, for investment and not with a view to or for sale in connection
with any distribution of this Note or such Common Stock or with any intention of
distributing or selling this Note or such Common Stock.
(c) The Holder has no right to demand that the Company register
this Note or the shares of Common Stock issued or issuable under this Note.
7. Assignment. Subject to the restrictions on transfer described in
Section 11 below, the rights and obligations of the Company and the Holder of
this Note shall be binding upon and benefit the successors, assigns, heirs,
administrators and transferees of the parties.
8. Waiver and Amendment. Any provision of this Note may be amended,
waived or modified upon the written consent of the Company and the Holder.
9. Transfer of This Note or Securities Issuable on Conversion
Hereof. With respect to any offer, sale or other disposition of this Note or
securities into which such Note may be converted, the Holder will give written
notice to the Company prior thereto, describing briefly the manner thereof,
together with a written opinion of such Holder's counsel, to the effect that
such offer, sale or other distribution may be effected without registration or
qualification (under any federal or state law then in effect). Promptly upon
receiving such written notice and reasonably satisfactory opinion, if so
requested, the Company, as promptly as practicable, shall notify such Holder
that such Holder may sell or otherwise dispose of this Note or such securities,
all in accordance with the terms of the notice delivered to the Company. If a
determination has been made pursuant to this Section 9 that the opinion of
counsel for the Holder is not reasonably satisfactory to the Company, the
Company shall so notify the Holder promptly after such determination has been
made. Each Note thus transferred and each certificate
5
<PAGE>
representing the securities thus transferred shall bear a legend as to the
applicable restrictions on transferability in order to ensure compliance with
the Act, unless in the opinion of counsel for the Company such legend is not
required. The Company may issue stop transfer instructions to its transfer
agent in connection with such restrictions.
10. Treatment of Note. To the extent permitted by generally accepted
accounting principles, the Company will treat, account and report the Note as
debt and not equity for accounting purposes and with respect to any returns
filed with federal, state or local tax authorities.
11. Notices. Any notice, request or other communication required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if personally delivered or if (and then two business days after) mailed by
registered or certified mail, postage prepaid, at the respective addresses of
the parties as set forth herein. Any party hereto may by notice so given change
its address for future notice hereunder.
12. No Shareholder Rights. Nothing contained in this Note shall be
construed as conferring upon the Holder or any other Person the right to vote or
to consent or to receive notice as a shareholder in respect of meetings of
shareholders for the election of directors of the Company or any other matters
or any rights whatsoever as a shareholder of the Company; and no dividends or
interest shall be payable or accrued in respect of this Note or the interest
represented hereby or the Conversion Shares obtained hereunder until, and only
to the extent that, this Note shall have been converted.
13. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Florida, excluding that body of law
relating to conflict of laws.
14. Heading; References. All headings used herein are used for
convenience only and shall not be used to construe or interpret this Note.
Except where otherwise indicated, all references herein to Sections refer to
Sections hereof.
6
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note to be issued
this 13th day of January, 2000.
PINNACLE TOWERS III INC.
By______________________________
Steven R. Day, Vice President
Name of Holder:________________
Address:_______________________
_______________________
7
EXHIBIT 10.3
SUBSCRIPTION AGREEMENT
This Subscription Agreement is entered into effective as of
January 27, 2000, between Pinnacle Towers Inc., a Delaware corporation (the
"Purchaser") and Pinnacle Towers III Inc., a Florida corporation (the
"Company").
The Company has created and authorized the issuance of shares
of its Series A Convertible Preferred Stock, par value $0.001 per share ("Series
A Preferred Stock").
The Company has agreed to issue and sell to the Purchaser, and
the Purchaser has agreed to subscribe for and purchase, certain of the shares of
Series A Preferred Stock.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Purchaser agree as follows:
1. Subscription, Purchase and Sale. The Purchaser hereby
subscribes for and purchases, and the Company hereby issues and sells to the
Purchaser, 0.206501 shares of Series A Preferred Stock, for an aggregate
purchase price of $206,501.
2. Payment of Subscription Price. The Purchaser is paying the
aggregate purchase price for the 0.206501 shares of Series A Preferred Stock on
the date of this Subscription Agreement by wire transfer of immediately
available funds as directed by the Company.
3. Purchaser's Representations. The Purchaser represents and
warrants that it is acquiring the shares of series A Preferred Stock being
purchased by it hereunder solely for its own account, for investment purposes,
and that the Purchaser is an accredited investor, as that term is defined in the
rules and regulations promulgated under the Securities Act of 1933, as amended.
4. Company's Representations. The Company represents and
warrants to the Purchaser that (a) the Company is a corporation existing and in
good standing under the laws of the State of Florida, (b) the Company has the
legal power and capacity to enter into this Agreement and issue the 0.206501
shares of Series A
<PAGE>
Preferred Stock to be issued pursuant to this Agreement, and (c) when issued in
accordance with this Agreement, such 0.206501 shares of Series A Preferred Stock
will be duly authorized, validly issued, fully paid and nonassessable.
5. Miscellaneous. This Subscription Agreement may be executed
in two or more counterparts, no one of which need contain the signatures of both
parties hereto.
* * * *
<PAGE>
This Subscription Agreement is hereby executed and delivered
by the parties to be effective as of the date first written above.
PINNACLE TOWERS INC.
By:_______________________________
_______________________________
PINNACLE TOWERS III INC.
By:_______________________________
_______________________________
EXHIBIT 10.4
NEITHER THIS CONVERTIBLE PROMISSORY NOTE NOR THE VOTING COMMON STOCK INTO WHICH
IT IS CONVERTIBLE HAS BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN
EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT AND APPLICABLE LAWS OR SOME
OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE
LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED.
PINNACLE TOWERS III INC.
CONVERTIBLE PROMISSORY NOTE
$826,005 January 27, 2000
New York, New York
PINNACLE TOWERS III INC., a Florida corporation (the "Company"), the
principal office of which is located at 1549 Ringling Boulevard, Third Floor,
Sarasota, Florida 34236, for value received hereby promises to pay to Pinnacle
Towers Inc., or its registered assigns, the sum of Eight Hundred Twenty-six
Thousand Five Dollars ($826,005), or such lesser amount as shall then equal the
outstanding principal amount hereof and any unpaid accrued interest hereon, as
set forth below. The outstanding principal under this Note shall be due and
payable in full within 30 days of the date demand is made therefor by the
Holder. Demand under this Note shall be given by the Holder to the Company by
written notice thereof in accordance with Section 11 below. Payment for all
amounts due hereunder shall be made at the Company's option by either wire
transfer or by mail to the registered address of the Holder.
The following is a statement of the rights of the Holder of this Note
and the conditions to which this Note is subject, and to which the Holder
hereof, by the acceptance of this Note, agrees:
1. Definitions. As used in this Note, the following terms, unless the
context otherwise requires, have the following meanings:
(a) "Company" includes any corporation which shall succeed to or
assume the obligations of the Company under this Note.
(b) "Holder," when the context refers to a holder of this Note,
shall mean any Person who shall at the time be the registered holder of this
Note.
<PAGE>
(c) "Person" means any individual, Company, partnership, joint
venture, trust, unincorporated organization or government or any agency or
political subdivision thereof.
2. Interest. Commencing on March 31, 2000, and on each June 30,
September 30, December 31 and March 31 thereafter until all outstanding
principal and interest on this Note shall have been paid in full, the Company
shall pay interest at the rate of thirteen percent (13%) per annum (the "Initial
Interest Rate") on the principal of this Note outstanding during the period
beginning on the date of issuance of this Note and ending on the date that the
principal amount of this Note becomes due and payable. In the event that the
principal amount of this Note is not paid in full when such amount becomes due
and payable, interest at the same rate as the Initial Interest Rate plus two
percent (2%) shall continue to accrue on the balance of any unpaid principal
until such balance is paid.
3. Conversion.
3.1 Conversion. Any Holder of this Note has the right, at the
Holder's option (the "Option"), at any time prior to payment in full of the
principal balance of this Note, to convert this Note, in accordance with the
provisions of Section 3.2 hereof, in whole or in part, into fully paid and
nonassessable shares of the Company's Voting Common Stock, par value $0.001 per
share or Nonvoting Common Stock, par value $0.001 per share (the "Common
Stock"), at the option of the Holder from time to time. The number of shares of
Common Stock into which this Note may be converted ("Conversion Shares") shall
be determined by dividing the aggregate principal amount of this Note together
with all accrued interest to the date of conversion elected to be converted by
the Holder by the Conversion Price (as defined below) in effect at the time of
such conversion. The initial Conversion Price shall be equal to $25 (the
"Conversion Price").
3.2 Notice of Conversion Pursuant to Section 3.1. Before the Holder
shall be entitled to convert this Note into shares of Common Stock, it shall
surrender this Note at the office of the Company and shall give written notice
to the Company at its principal corporate office of the election to convert all
or a portion of the same pursuant to this Section 3 ("Notice of Conversion"),
and shall state therein the amount of the Note to be converted and the name or
names in which the certificate or certificates for shares of Common Stock are to
be issued. Such conversion shall be deemed to have been made immediately prior
to the close of business on the date of such surrender of the Note, and the
Person or Persons entitled to receive the shares of Common Stock issuable upon
such conversion shall be treated for all purposes as the record holder or
holders of such shares of Common Stock as of such date.
<PAGE>
3.3 Mechanics and Effect of Conversion. No fractional shares of
Common Stock shall be issued upon conversion of this Note. In lieu of the
Company issuing any fractional shares to the Holder upon the conversion of this
Note, the Company shall pay to the Holder the amount of outstanding principal
that is not so converted, such payment to be in the form as provided below. Upon
the conversion of this Note pursuant to Section 3.1 above, the Holder shall
surrender this Note, duly endorsed, at the principal office of the Company. At
its expense, the Company shall, as soon as practicable thereafter, issue and
deliver to such Holder at such principal office a certificate or certificates
for the number of shares of such Common Stock to which the Holder shall be
entitled upon such conversion (bearing such legends as are required by
applicable state and federal securities laws in the opinion of counsel to the
Company), together with any other securities and property to which the Holder is
entitled upon such conversion under the terms of this Note, including a check
payable to the Holder for any cash amounts payable as described above and a
replacement Note representing any amount of the Note not converted. Upon the
complete conversion of all of this Note, the Company shall be forever released
from all its obligations and liabilities under this Note, except that the
Company shall be obligated to pay the Holder, within ten (10) days after the
date of such conversion, any interest accrued and unpaid or unconverted to and
including the date of such conversion, and no more.
4. Prepayment. Prepayment of the principal of this Note is permitted,
in whole or in part, without premium or penalty of any kind; provided the
Company provides the Holder with thirty (30) days' prior written notice (unless
notice is waived in writing by the Holder) of its intention to prepay the
principal of this Note, in whole or in part, during which time the Holder may
exercise the Option by delivering to the Company the Notice of Conversion.
5. Conversion Price Adjustments.
5.1 Adjustments for Stock Splits and Subdivisions. In the event the
Company should at any time or from time to time after the date of issuance
hereof fix a record date for the effectuation of a split or subdivision of the
outstanding shares of Common Stock or the determination of holders of Common
Stock entitled to receive a dividend or other distribution payable in additional
shares of Common Stock or other securities or rights convertible into, or
entitling the holder thereof to receive directly or indirectly, additional
shares of Common Stock (hereinafter referred to as "Common Stock Equivalents")
without payment of any consideration by such holder for the additional shares of
Common Stock or the Common Stock Equivalents (including the additional shares of
Common Stock issuable upon conversion or exercise thereof), then, as of such
record date (or the date of such dividend distribution, split or subdivision if
no record date is fixed), the Conversion
<PAGE>
Price of this Note shall be appropriately decreased so that the number of shares
of Common Stock issuable upon conversion of this Note shall be increased in
proportion to such increase of outstanding shares.
5.2 Adjustments for Reverse Stock Splits. If the number of shares of
Common Stock outstanding at any time after the date hereof is decreased by a
combination of the outstanding shares of Common Stock, then, following the
record date of such combination, the Conversion Price for this Note shall be
appropriately increased so that the number of shares of Common Stock issuable on
conversion hereof shall be decreased in proportion to such decrease in
outstanding shares.
5.3 Notices of Record Date, etc. In the event of:
(a) Any taking by the Company of a record of the holders of any
class of securities of the Company for the purpose of determining the holders
thereof who are entitled to receive any dividend (other than a cash dividend
payable out of earned surplus at the same rate as that of the last such cash
dividend theretofore paid) or other distribution, or any right to subscribe for,
purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right; or
(b) Any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company or any
transfer of all or substantially all of the assets of the Company to any other
Person or any consolidation or merger involving the Company; or
(c) Any voluntary or involuntary dissolution, liquidation or
windingup of the Company, the Company will mail to the holder of this Note at
least seven (7) days prior to the earliest date specified therein, a notice
specifying:
(i) The date on which any such record is to be taken for the
purpose of such dividend, distribution or right, and the amount and character of
such dividend, distribution or right; and
(ii) The date on which any such reorganization,
reclassification, transfer, consolidation, merger, dissolution, liquidation or
windingup is expected to become effective and the record date for determining
shareholders entitled to vote thereon.
5.4 Reservation of Stock Issuable Upon Conversion. The Company shall
at all times reserve and keep available out of its authorized but unissued
shares of Common Stock solely for the purpose of effecting the conversion of
this Note such number of its shares of Common Stock as shall from time to time
be
<PAGE>
sufficient to effect the conversion of the Note; and if at any time the number
of authorized but unissued shares of Common Stock shall not be sufficient to
effect the conversion of the entire outstanding principal amount of this
Note, in addition to such other remedies as shall be available to the holder of
this Note, the Company will use its best efforts to take such corporation action
as may, in the opinion of its counsel, be necessary to increase its authorized
but unissued shares of Common Stock to such number of shares as shall be
sufficient for such purposes.
6. Representations and Warranties of the Holder.
(a) The Holder by its acceptance of this Note acknowledges that it
is aware that this Note and the shares of Common Stock issuable to it by the
Company upon conversion of this Note have not been registered under the
Securities Act of 1933, as amended ("Act"), or the securities laws of any state
or other jurisdiction.
(b) The Holder warrants and represents to the Company that it has
acquired this Note, and, upon conversion of the Note, it will be acquiring the
Common Stock, for investment and not with a view to or for sale in connection
with any distribution of this Note or such Common Stock or with any intention of
distributing or selling this Note or such Common Stock.
(c) The Holder has no right to demand that the Company register this
Note or the shares of Common Stock issued or issuable under this Note.
7. Assignment. Subject to the restrictions on transfer described in
Section 11 below, the rights and obligations of the Company and the Holder of
this Note shall be binding upon and benefit the successors, assigns, heirs,
administrators and transferees of the parties.
8. Waiver and Amendment. Any provision of this Note may be amended,
waived or modified upon the written consent of the Company and the Holder.
9. Transfer of This Note or Securities Issuable on Conversion Hereof.
With respect to any offer, sale or other disposition of this Note or securities
into which such Note may be converted, the Holder will give written notice to
the Company prior thereto, describing briefly the manner thereof, together with
a written opinion of such Holder's counsel, to the effect that such offer, sale
or other distribution may be effected without registration or qualification
(under any federal or state law then in effect). Promptly upon receiving such
written notice and reasonably satisfactory opinion, if so requested, the
Company, as promptly as practicable, shall notify such Holder that such Holder
may sell or otherwise dispose of this Note or such securities, all in accordance
with the terms of the notice delivered to the Company. If a determination has
been made pursuant to this
<PAGE>
Section 9 that the opinion of counsel for the Holder is not reasonably
satisfactory to the Company, the Company shall so notify the Holder promptly
after such determination has been made. Each Note thus transferred and each
certificate representing the securities thus transferred shall bear a legend as
to the applicable restrictions on transferability in order to ensure compliance
with the Act, unless in the opinion of counsel for the Company such legend is
not required. The Company may issue stop transfer instructions to its transfer
agent in connection with such restrictions.
10. Treatment of Note. To the extent permitted by generally accepted
accounting principles, the Company will treat, account and report the Note as
debt and not equity for accounting purposes and with respect to any returns
filed with federal, state or local tax authorities.
11. Notices. Any notice, request or other communication required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if personally delivered or if (and then two business days after) mailed by
registered or certified mail, postage prepaid, at the respective addresses of
the parties as set forth herein. Any party hereto may by notice so given change
its address for future notice hereunder.
12. No Shareholder Rights. Nothing contained in this Note shall be
construed as conferring upon the Holder or any other Person the right to vote or
to consent or to receive notice as a shareholder in respect of meetings of
shareholders for the election of directors of the Company or any other matters
or any rights whatsoever as a shareholder of the Company; and no dividends or
interest shall be payable or accrued in respect of this Note or the interest
represented hereby or the Conversion Shares obtained hereunder until, and only
to the extent that, this Note shall have been converted.
13. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida, excluding that body of law
relating to conflict of laws.
14. Heading; References. All headings used herein are used for
convenience only and shall not be used to construe or interpret this Note.
Except where otherwise indicated, all references herein to Sections refer to
Sections hereof.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note to be issued this
27th day of January, 2000.
PINNACLE TOWERS III INC.
By_______________________________
Steven R. Day, Vice President
Name of Holder:__________________
Address:_________________________
_________________________
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<FISCAL-YEAR-END> DEC-31-1999 DEC-31-2000
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<PERIOD-END> MAR-31-1999 MAR-31-2000
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<INTEREST-EXPENSE> 3,900,192 8,775,993
<INCOME-PRETAX> (11,303,072) (22,158,407)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (11,303,072) (22,158,407)
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