<PAGE>
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 13E-4
(AMENDMENT NO. 1)
ISSUER TENDER OFFER STATEMENT
(PURSUANT TO SECTION 13(E)(1) OF THE SECURITIES EXCHANGE ACT OF 1934)
------------------------
ALLIANCE GAMING CORPORATION
(Name of Issuer)
------------------------
ALLIANCE GAMING CORPORATION
(Name of Person Filing Statement)
------------------------
7 1/2% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2003
(Title of Class of Securities)
01859P
(CUSIP Number of Class of Securities)
JOHN W. ALDERFER
CHIEF FINANCIAL OFFICER
4380 BOULDER HIGHWAY
LAS VEGAS, NEVADA 89121
(702) 435-4200
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications on Behalf of the Person Filing Statement)
------------------------
COPIES TO:
LAWRENCE LEDERMAN, ESQ.
MILBANK, TWEED, HADLEY & MCCLOY
1 CHASE MANHATTAN PLAZA
NEW YORK, NEW YORK 10005
(212) 530-5000
------------------------
MAY 9, 1996
(Date Tender Offer First Published, Sent or Given to Security Holders)
------------------------
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<PAGE>
This Amendment No. 1 to Schedule 13E-4 amends and supplements the Tender
Offer Statement on Schedule 13E-4 filed with the Securities and Exchange
Commission (the "Commission") on May 9, 1996. The item numbers and responses
thereto below are in accordance with the requirements of Schedule 13E-4. Except
as disclosed herein, there has been no change to the information previously
reported in the Schedule 13E-4.
ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR
AFFILIATE
The information set forth in the Supplement dated May 23, 1996 to Prospectus
dated May 9, 1996 (the "Prospectus Supplement") annexed hereto as Exhibit
9(a)(7) under the headings "Changes in Terms of New Convertible Debentures and
Series E Preferred Stock", "Limitation on Right to Elect Series E Preferred
Stock; Proration" and "Private Placement" is incorporated herein by reference.
(a) The information set forth in the Prospectus Supplement under the
headings "Changes in Terms of New Convertible Debentures and Series E Preferred
Stock", "Limitation on Right to Elect Series E Preferred Stock; Proration" and
"Private Placement" is incorporated herein by reference.
(e) The information set forth in the Prospectus Supplement under the
headings "Changes in Terms of New Convertible Debentures and Series E Preferred
Stock", "Limitation on Right to Elect Series E Preferred Stock; Proration" and
"Private Placement" is incorporated herein by reference.
ITEM 7. FINANCIAL INFORMATION.
(a)(4) The information set forth in the Prospectus Supplement under the
headings "Certain Financial Information" and "Dilution" is incorporated herein
by reference.
(b)(1)-(3) The information set forth in the Prospectus Supplement under the
headings "Certain Financial Information" and "Dilution" is incorporated herein
by reference.
ITEM 8. ADDITIONAL INFORMATION.
(b) The information set forth in the Prospectus Supplement under the heading
"Recent Developments -- Gaming Regulation" is incorporated herein by reference.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------- -------------------------------------------------------------------------------------------------
<S> <C> <C>
9(a)(7) -- Supplement dated May 23, 1996 to Prospectus dated May 9, 1996.
9(a)(8) -- Press release of Alliance dated May 23, 1996.
9(c)(4) -- Form of Indenture between Alliance Gaming Corporation and The Bank of New York in respect of the
New Convertible Debentures, including form thereof.
9(c)(5) -- Certificate of Designations, Preferences and Relative, Participating, Optional and Other Special
Rights of Special Stock and Qualifications, Limitations and Restrictions thereof of 11 1/2%
Non-Voting Junior Convertible Pay-in-Kind Special Stock, Series E, par value $.10 per share, of
Alliance Gaming Corporation.
9(e)(2) -- See Exhibit 9(a)(7) above.
</TABLE>
2
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this Schedule 13E-4 is true, complete and correct.
ALLIANCE GAMING CORPORATION
By: /s/ JOHN W. ALDERFER
--------------------------------------
Name: John W. Alderfer
Title: Chief Financial Officer
Dated: May 23, 1996
<PAGE>
SUPPLEMENT DATED MAY 23, 1996 TO PROSPECTUS
DATED MAY 9, 1996
ALLIANCE GAMING CORPORATION
OFFER FOR ALL OUTSTANDING
7 1/2% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2003
IN EXCHANGE FOR
7 1/2% CONVERTIBLE SENIOR SUBORDINATED DEBENTURES DUE 2003
OF ALLIANCE GAMING CORPORATION
This Supplement dated May 23, 1996 to Prospectus dated May 9, 1996 (the
"Supplement") describes modifications to the offer (the "Exchange Offer") of
Alliance Gaming Corporation contained in the Prospectus dated May 9, 1996 (the
"Prospectus"). Capitalized terms used herein and not otherwise defined shall
have the respective meanings assigned to them in the Prospectus.
THE EXCHANGE OFFER, AS MODIFIED HEREBY, HAS NOT BEEN EXTENDED, AND ACCORDINGLY
WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON JUNE 6, 1996, UNLESS
EXTENDED (THE "EXPIRATION DATE"). TENDERS OF OLD CONVERTIBLE DEBENTURES MAY BE
WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE.
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION.
FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS SUPPLEMENT. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
NEITHER THE NEVADA GAMING COMMISSION, THE NEVADA STATE GAMING CONTROL BOARD,
THE NEW JERSEY CASINO CONTROL COMMISSION NOR THE REGULATORY AUTHORITY OF
ANY OTHER STATE HAS PASSED UPON OR CONFIRMED THE ACCURACY OR
ADEQUACY OF THIS SUPPLEMENT OR THE INVESTMENT MERITS OF THE
SECURITIES OFFERED HEREBY. ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.
------------------------
The date on which this Supplement is first being sent to holders of Old
Convertible Debentures is May 23, 1996.
<PAGE>
The following information amends and supplements the Prospectus dated May 9,
1996 of Alliance Gaming Corporation ("Alliance"). The Alliance Board has
approved certain amendments to the terms of the New Convertible Debentures, the
Series E Preferred Stock and the Exchange Offer as described herein. Except as
otherwise stated herein, the terms and conditions set forth in the Prospectus
and the Letter of Transmittal remain applicable in all respects to the Exchange
Offer. ALLIANCE HAS DETERMINED THAT, EXCEPT AS DESCRIBED IN THIS SUPPLEMENT, IT
WILL NOT MAKE FURTHER CHANGES TO THE TERMS OF THE NEW CONVERTIBLE DEBENTURES OR
SERIES E PREFERRED STOCK.
Procedures for tendering Old Convertible Debentures are set forth in the
Prospectus under the heading "The Exchange Offer -- Procedures for Tendering".
Any holder of Old Convertible Debentures desiring to tender all or any portion
of his or her Old Convertible Debentures should either (1) complete and sign the
Letter of Transmittal (or a facsimile thereof) in accordance with the
instructions in the Letter of Transmittal and mail or deliver it, together with
the certificates representing tendered Old Convertible Debentures and any other
required documents, to The Bank of New York (the "Exchange Agent") or tender
such Old Convertible Debentures pursuant to the procedures for book-entry
transfer set forth in "The Exchange Offer -- Procedures for Tendering" or (2)
request his or her broker, dealer, commercial bank, trust company or nominee to
effect the transaction for him or her. Holders whose Old Convertible Debentures
are registered in the name of a broker, dealer, commercial bank, trust company
or other nominee must contact such person if they desire to tender their Old
Convertible Debentures. Holders who wish to tender Old Convertible Debentures
and whose Old Convertible Debentures are not immediately available or who cannot
comply with the procedures for book entry transfer on a timely basis may tender
such Old Convertible Debentures by following the procedures for guaranteed
delivery set forth in "The Exchange Offer -- Procedures for Tendering".
2
<PAGE>
CHANGES IN TERMS OF NEW CONVERTIBLE DEBENTURES AND SERIES E PREFERRED STOCK
The Special Conversion Price of the New Convertible Debentures will be
reduced from $5.56 (equivalent to a conversion rate of approximately 180 shares
of Common Stock per $1,000 principal amount of New Convertible Debentures) to
$4.76 (equivalent to a conversion rate of approximately 210 shares of Common
Stock per $1,000 principal amount of New Convertible Debentures).
The initial Conversion Price of the Series E Preferred Stock will be reduced
from $6.56 (equivalent to a conversion rate of approximately 15.244 shares of
Common Stock per share of Series E Preferred Stock) to $5.88 (equivalent to a
conversion rate of approximately 17.007 shares of Common Stock per share of
Series E Preferred Stock). In addition, the dividend rate will be increased from
10% per annum to 11 1/2% per annum, but dividends will cease to accrue after the
twelfth Series E Dividend Payment Date. Assuming payment of dividends in kind
for all dividend periods and no antidilution protection adjustment to the
initial conversion price of the Series E Preferred Stock, then, at such time as
dividends cease to accrue, each holder of Old Convertible Debentures who
receives Series E Preferred Stock in the Automatic Conversion and retains such
Series E Preferred Stock and all shares of Series E Preferred Stock issued as
in-kind dividends would be entitled to receive on conversion thereof
approximately 239 shares of Common Stock for each $1,000 principal amount of Old
Convertible Debentures so exchanged by such holder in the Exchange Offer.
Finally, Alliance may not redeem the Series E Preferred Stock before the eighth
Series E Dividend Payment Date, but may redeem the Series E Preferred Stock
thereafter at the liquidation value thereof plus accrued dividends.
LIMITATION ON RIGHT TO ELECT SERIES E PREFERRED STOCK; PRORATION
Alliance has determined to limit the principal amount of Old Convertible
Debentures the holders of which may elect to receive Series E Preferred Stock in
the Automatic Conversion to $30.0 million. If the holders of more than that
principal amount of validly tendered and not withdrawn Old Convertible
Debentures so elect, Alliance will accept the election for $30.0 million
principal amount of Old Convertible Debentures as nearly as practicable on a pro
rata basis from among all such Old Convertible Debentures, rounding to the
nearest $1,000 principal amount (the smallest permitted denomination for the
Debentures). Old Convertible Debentures as to which the election is not accepted
will be converted in the Automatic Conversion into Common Stock at the Special
Conversion Price of $4.76.
In the event of proration, because of the difficulty in determining the
precise amount of Old Convertible Debentures validly tendered and not withdrawn
as to which the election to receive Series E Preferred Stock has been made,
Alliance does not expect to be able to announce the final results of such
proration until at least five NASDAQ trading days after the Expiration Date.
CERTAIN FINANCIAL INFORMATION
The changes described above in the terms of the New Convertible Debentures
and the Series E Preferred Stock will affect certain financial and related
information set forth in the Prospectus.
Under the assumptions made in preparing the pro forma financial statements
included in the Prospectus that $50.0 million of Old Convertible Debentures will
be exchanged, with no election of Series E Preferred Stock, the decrease in the
Special Conversion Price referred to above would result in the issuance of
approximately 1.5 million additional shares of Common Stock in the Automatic
Conversion, resulting in an increase in pro forma total outstanding shares from
25.4 million to 26.9 million (25.2 million and 26.1 million weighted average
shares outstanding for the year and nine months ended June 30, 1995 and March
31, 1996, respectively). In addition, the non-cash charge for inducement of
early conversion would increase by $6.0 million to $24.5 million. There is no
change to the total assets, total liabilities or total stockholders' equity as
presented in the pro forma balance sheet, although there is a $6.0 million
increase to both paid-in-capital and accumulated deficit. Pro forma net loss per
common share for the year ended June 30, 1995 and the nine months ended March
31, 1996 would decrease from $0.50 and $0.70, respectively, to $0.47 and $0.66.
Forecasted net loss applicable to Common Shares for the twelve months ending
December 31, 1996 would increase from $35.978 million ($1.42 per share) to
$41.978 million ($1.56 per share), which includes depreciation and amortization
of $23.2 million (or $0.86
3
<PAGE>
per share), direct Merger costs of $12.8 million (or $0.48 per share), loss on
assumed conversion of New Convertible Debentures of $24.5 million (or $0.91 per
share) and Preferred Stock dividends of $8.0 million (or $0.30 per share).
For each $1.0 million of New Convertible Debentures converted in the
Automatic Conversion into Series E Preferred Stock instead of Common Stock,
there would be an increase in the pay-in-kind preferred stock dividends for the
first year of $120,055, an increase in the loss per common share of $.01 for the
year ended June 30, 1995, and a decrease in the non-cash charge for inducement
of early conversion referred to in the preceding paragraph of $0.5 million.
DILUTION
The decrease in the Special Conversion Price from $5.56 to $4.76 would have
the following effects on the net tangible book value per share of Common Stock
and on the dilution to holders acquiring Common Stock pursuant to the Automatic
Conversion: excluding shares issuable pursuant to stock options and warrants,
the increase in net tangible book value per share attributable solely to the
Automatic Conversion would decline from $2.84 to $2.76, the pro forma net
tangible book value per share after the Automatic Conversion and the Transaction
would increase from $(1.20) to $(1.13), and dilution in pro forma net tangible
book value per share to converting holders of Old Convertible Debentures would
decrease from $(6.76) to $(5.89).
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion refers to that section of the Prospectus entitled
"Certain Federal Income Tax Consequences -- Common Stock and Series E Preferred
Stock" and should be read in conjunction therewith. If a distribution with
respect to the Series E Preferred Stock is a taxable dividend, the Series E
Preferred Stock is "disqualified preferred stock" within the meaning of Code
section 1059(f)(2) because dividends on the Series E Preferred Stock will cease
to accrue after the twelfth Series E Dividend Payment Date. Thus, any taxable
dividend received by a corporate holder from Alliance with respect to the Series
E Preferred Stock would be treated as an "extraordinary dividend" without regard
to the period the holder held the Series E Preferred Stock. Accordingly, a
corporate holder's basis in the Series E Preferred Stock would be reduced (but
not below zero) by the portion of the dividend payment that is not taxed because
of the dividends received deduction (i.e., the amount of the dividends received
deduction available to the holder by reason of the dividend). Any amount of the
non-taxed portion of the extraordinary dividend that otherwise would be applied
to reduce basis below zero would not further reduce basis, but would be treated
as gain from the sale or exchange of the Series E Preferred Stock when such
stock is disposed of. President Clinton's Fiscal Year 1997 Balanced Budget
Proposal, released on March 19, 1996, and The Seven-Year Balanced Budget
Reconciliation Act of 1995, vetoed by President Clinton, both contain provisions
that would require a corporate holder to recognize gain for the taxable year in
which extraordinary dividends are received to the extent the non-taxed portion
of such dividends (i.e., the portion of the dividends eligible for the dividends
received deduction) exceeds the corporate holder's basis in the stock on which
such dividends are paid, effective generally for distributions after September
13, 1995, although in certain cases for distributions after May 3, 1995.
Potential holders are urged to consult their tax advisors about these proposals.
No assurance can be given as to whether or when legislation containing the
above-mentioned or similar provisions will be enacted, and if enacted, when such
provisions will be effective.
PRIVATE PLACEMENT
The terms of the Private Placement have been revised to provide that the
$5.0 million of Common Stock issued in the Private Placement will be purchased
at a price equal to the lower of (a) $4.56 per share or (b) 91% of the lowest of
the average last sales prices of Common Stock during any consecutive period of
five trading days ended on any date in the period occurring between May 20, 1996
and the effective time of the Merger.
4
<PAGE>
RECENT DEVELOPMENTS
GAMING REGULATION. On May 23, 1996, the Nevada Gaming Commission approved
Alliance's application for approval to merge with BGII and the Transaction,
including the Exchange Offer.
BEC LITIGATION. Alliance and BEC have settled the Alliance Action and the
BEC Action by entering into an amendment to the License Agreement. Under the
terms of the settlement (which takes effect on consummation of the Merger), BEC
will consent to the continued use by BGII of the "Bally" name following the
Merger. The amendment also provides that for five years beginning with the
effective time of the Merger, Gaming will pay BEC a royalty of $35 for each
gaming machine sold or leased which is an increase from the $25 royalty
currently paid pursuant to the License Agreement. The minimum royalty under the
License Agreement for each of the first five twelve-month periods beginning with
the effective time of the Merger will increase to $1.0 million (from the current
$0.5 million), and for each such period thereafter will return to $0.5 million.
The Forecast included in the Prospectus had assumed the settlement of the
Alliance Action and BEC Action on substantially the same terms as are provided
for in this amendment to the License Agreement. In addition, the amendment
provides that sales and pledges of the stock and/or assets of Gaming or a parent
company, other than those to competitors of BEC, will generally not be treated
as assignments requiring BEC's consent under the License Agreement.
5
<PAGE>
Facsimile copies of the Letter of Transmittal will be accepted. Letters of
Transmittal, certificates for the Old Convertible Debentures and any other
required documents should be sent by each debentureholder or his broker, dealer,
commercial bank, trust company or other nominee to the Exchange Agent at the
address set forth below:
THE EXCHANGE AGENT IS:
The Bank of New York
BY MAIL OR BY HAND:
The Bank of New York
101 Barclay Street, Corporate Trust Operations, 7E
New York, New York 10286
Attention: Enrique Lopez
Telephone: (212) 815-2742
BY FACSIMILE:
(212) 571-3080
TOLL FREE NUMBER:
(800) 254-2826
Any questions or requests for assistance or additional copies of this
Supplement, the Prospectus, the Letter of Transmittal and/or the Notice of
Guaranteed Delivery may be directed to the Information Agent at its telephone
number and address set forth below. You may also contact your broker, dealer,
commercial bank or trust company or other nominee for assistance concerning the
Exchange Offer.
THE INFORMATION AGENT IS:
[LOGO]
Wall Street Plaza
New York, NY 10005
TOLL FREE NUMBER:
(800) 223-2064
Banks and Brokerage Firms
please call collect:
(212) 440-9800
THE DEALER MANAGERS FOR THE EXCHANGE OFFER ARE:
DEUTSCHE MORGAN GRENFELL JEFFERIES & COMPANY, INC. LADENBURG, THALMANN & CO.
INC.
<PAGE>
Exhibit 9(a)(8)
ALLIANCE GAMING AMENDS EXCHANGE OFFER
--Receives Nevada Gaming Commission Merger Approval;
Settles Litigation with Bally Entertainment--
LAS VEGAS, NEVADA, May 23, 1996 - Alliance Gaming Corporation (NASDAQ:ALLY)
announced today that it has amended certain terms of its pending offer to
exchange 7.5% Convertible Senior Subordinated Debentures due 2003 for all its
existing $85 million of 7.5% Convertible Subordinated Debentures due 2003.
Alliance also announced that the Nevada Gaming Commission has approved its
application to acquire through merger Bally Gaming International, Inc.
(NASDAQ:BGII) and the related financings. Finally, Alliance stated that it
had settled its pending litigation with Bally Entertainment Corporation
concerning Bally Gaming's post-merger use of the Bally name.
Under the terms of the amended exchange offer, if the Bally Gaming acquisition
occurs within 60 days after the exchange offer closes, the new debentures
will automatically convert into either common stock at a $4.76 per share
conversion price (or 210 shares for each new $1000 debenture) or, at the
tendering debenture holder's election, subject to the proration mentioned below,
into new Series E Junior Preferred Stock with an 11.5% pay-in-kind dividend
which is convertible at any time into common stock at $5.88 per share (or 170
shares of Alliance common stock). The Series E dividend would cease to accrue
after three years, at which point the Series E Preferred Stock of a tendering
debentureholder who retains all in-kind dividends will be convertible into
approximately 239 shares of Alliance common stock for each $1000 debenture.
The Series E Preferred Stock cannot be redeemed by Alliance for two years after
issuance.
The amended terms of the exchange offer represent a reduction in the special
conversion price from $5.56 to $4.76 (which is equivalent to 210 shares for
each $1000 new debenture, up from 180 shares for each $1000 new
debenture); a reduction in the conversion price of the Series E Preferred
Stock, to be issue in the automatic conversion, from $6.56 to $5.88
(which is equivalent to approximately 170 shares of Alliance common stock, up
from approximately 152 shares of Alliance common stock); and an increase in
the rate on the Series E dividend payable for three years from 10% to 11.5%.
The total amount of Series E Preferred Stock issuable in the automatic
conversion would be limited to $30 million; if the holders of the old
debentures in the aggregate elect a greater amount, the elections will be
prorated.
Alliance has determined that it will not make further changes to the terms of
the new debentures or Series E Preferred Stock. The expiration time of the
exchange offer remains midnight on June 6, 1996. The purpose of the offer is to
enhance Alliance's capital structure and facilitate obtaining financing for the
company's pending merger with Bally Gaming. Alliance remains confident it will
close the Bally Gaming transaction on or before June 18, 1996.
The exchange offer is subject to certain conditions, including approval by the
holders of a majority of Alliance's common stock and regulatory approval.
Certain members of Alliance's board of directors and management holding in
the aggregate a majority of such stock have indicated that they intend to
give their approval. The exchange offer is not subject to any minimum or
maximum amount of old debentures being exchanged.
Alliance also announced that the Nevada Gaming Commission today approved its
application for approval to merge with Bally Gaming, to complete the related
financings and to consummate the exchange offer.
Separately, Alliance announced that it has settled outstanding litigation
with Bally Entertainment. Under the terms of the settlement (which takes
effect when the merger closes), Bally Entertainment will consent to Bally
Gaming's continued use of the "Bally" name subsequent to the merger. The
royalty payable by Bally Gaming to Bally Entertainment under the two companies'
current license agreement will increase from $25 to $35 per gaming machine sold
or leased during the five years following the merger, and the minimum annual
royalty payment during that period will increase from $500,000 to $1,000,000.
# # #
<PAGE>
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ALLIANCE GAMING CORPORATION
and
THE BANK OF NEW YORK, Trustee
Indenture
Dated as of _____________, 1996
$85,000,000
7 1/2% Convertible Senior Subordinated Debentures due 2003
- -------------------------------------------------------------------------------
<PAGE>
ALLIANCE GAMING CORPORATION
Reconciliation and tie between Trust Indenture Act
of 1939 and Indenture, dated as of ___________, 1996
between Alliance Gaming Corporation and
The Bank of New York, as Trustee
<TABLE>
<CAPTION>
Trust Indenture Indenture
Act Section Section
<S> <C>
Section 310(a)(1). . . . . . . . . . . . . . . . . 5.9
(a)(2). . . . . . . . . . . . . . . . . . . . 5.9
(a)(3). . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(4). . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(5). . . . . . . . . . . . . . . . . . . . 5.9
(b) . . . . . . . . . . . . . . . . . . . . 5.8, 5.10
(c) . . . . . . . . . . . . . . . . . . . . Not Applicable
Section 311(a) . . . . . . . . . . . . . . . . . . 5.13
(b) . . . . . . . . . . . . . . . . . . . . 5.13
(c) . . . . . . . . . . . . . . . . . . . . Not Applicable
Section 312(a) . . . . . . . . . . . . . . . . . . 2.5, 3.6
(b) . . . . . . . . . . . . . . . . . . . . 6.6
(c) . . . . . . . . . . . . . . . . . . . . 6.6
Section 313(a) . . . . . . . . . . . . . . . . . . 3.8
(b)(1). . . . . . . . . . . . . . . . . . . . Not Applicable
(b)(2). . . . . . . . . . . . . . . . . . . . 3.8
(c) . . . . . . . . . . . . . . . . . . . . 3.8
(d) . . . . . . . . . . . . . . . . . . . . 3.8
Section 314(a) . . . . . . . . . . . . . . . . . . 3.7, 3.5
(b) . . . . . . . . . . . . . . . . . . . . Not Applicable
(c)(1). . . . . . . . . . . . . . . . . . . . 10.5
(c)(2). . . . . . . . . . . . . . . . . . . . 10.5
(c)(3). . . . . . . . . . . . . . . . . . . . 10.5
(d) . . . . . . . . . . . . . . . . . . . . Not Applicable
(e) . . . . . . . . . . . . . . . . . . . . 10.5
Section 315(a) . . . . . . . . . . . . . . . . . . 5.1
(b) . . . . . . . . . . . . . . . . . . . . 5.1
(c) . . . . . . . . . . . . . . . . . . . . 5.1
(d) . . . . . . . . . . . . . . . . . . . . 5.1
(e) . . . . . . . . . . . . . . . . . . . . 4.11
Section 316(a)(1)(A) . . . . . . . . . . . . . . . 4.9
(a)(1)(B) . . . . . . . . . . . . . . . . . . 4.10
(a)(2). . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . 4.7
(c) . . . . . . . . . . . . . . . . . . . . 6.2
Section 317(a)(1). . . . . . . . . . . . . . . . . 4.2
(a)(2). . . . . . . . . . . . . . . . . . . . 4.2
(b) . . . . . . . . . . . . . . . . . . . . 2.4
Section 318(a) . . . . . . . . . . . . . . . . . . 10.7
____________
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to
be a part of the Indenture.
</TABLE>
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
DEFINITIONS
Section 1.1 Certain Terms Defined. . . . . . . . . . . . . . . . . . . 1
ARTICLE 2
THE SECURITIES
Section 2.1 Form and Dating. . . . . . . . . . . . . . . . . . . . . . 7
Section 2.2 Execution and Authentication . . . . . . . . . . . . . . . 7
Section 2.3 Registrar and Paying Agent . . . . . . . . . . . . . . . . 8
Section 2.4 Paying Agent to Hold Money in Trust. . . . . . . . . . . . 8
Section 2.5 Holder Lists . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.6 Transfer and Exchange. . . . . . . . . . . . . . . . . . . 9
Section 2.7 Replacement Securities . . . . . . . . . . . . . . . . . . 10
Section 2.8 Reserved . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.9 Treasury Securities. . . . . . . . . . . . . . . . . . . . 10
Section 2.10 Temporary Securities . . . . . . . . . . . . . . . . . . . 11
Section 2.11 Cancellation . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.12 Defaulted Interest . . . . . . . . . . . . . . . . . . . . 11
Section 2.13 Cusip Numbers. . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE 3
COVENANTS OF THE ISSUER AND THE TRUSTEE
Section 3.1 Payment of Principal and Interest. . . . . . . . . . . . . 11
Section 3.2 Offices for Payments, etc. . . . . . . . . . . . . . . . . 12
Section 3.3 Appointment to Fill a Vacancy
in Office of Trustee . . . . . . . . . . . . . . . . . . 12
Section 3.4 Paying Agents. . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.5 Certificate to Trustee . . . . . . . . . . . . . . . . . . 13
Section 3.6 Securityholders' Lists . . . . . . . . . . . . . . . . . . 13
Section 3.7 Reports by the Issuer. . . . . . . . . . . . . . . . . . . 13
Section 3.8 Reports by the Trustee . . . . . . . . . . . . . . . . . . 13
Section 3.9 Transactions with Affiliates . . . . . . . . . . . . . . . 14
ARTICLE 4
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT
Section 4.1 Event of Default Defined; Acceleration
of Maturity; Waiver of Default . . . . . . . . . . . . . 15
Section 4.2 Collection of Indebtedness by Trustee; Trustee
May Prove Debt . . . . . . . . . . . . . . . . . . . . . 17
Section 4.3 Application of Proceeds. . . . . . . . . . . . . . . . . . 19
Section 4.4 Suits for Enforcement. . . . . . . . . . . . . . . . . . . 20
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Section 4.5 Restoration of Rights on
Abandonment of Proceeding. . . . . . . . . . . . . . . . 21
Section 4.6 Limitation on Suits by Securityholders . . . . . . . . . . 21
Section 4.7 Rights of Holders to Receive Payment . . . . . . . . . . . 21
Section 4.8 Powers and Remedies Cumulative; Delay
or Omission Not Waiver of Default. . . . . . . . . . . . 22
Section 4.9 Control by Securityholders . . . . . . . . . . . . . . . . 22
Section 4.10 Waiver of Past Defaults . . . . . . . . . . . . . . . . . 23
Section 4.11 Undertaking for Costs . . . . . . . . . . . . . . . . . . 23
ARTICLE 5
CONCERNING THE TRUSTEE
Section 5.1 Duties and Responsibilities of the Trustee; During
Default; Prior to Default . . . . . . . . . . . . . . . 24
Section 5.2 Certain Rights of the Trustee. . . . . . . . . . . . . . . 25
Section 5.3 Trustee Not Responsible for Recital,
Disposition of Securities or
Application of Proceeds Thereof. . . . . . . . . . . . . 27
Section 5.4 Trustee and Agents May Hold
Securities; Collections, etc.. . . . . . . . . . . . . . 27
Section 5.5 Moneys Held by Trustee.. . . . . . . . . . . . . . . . . . 27
Section 5.6 Compensation and Indemnification of Trustee and Its
Prior Claim. . . . . . . . . . . . . . . . . . . . . . . 27
Section 5.7 Right of Trustee to Rely on Officers'
Certificate, etc.. . . . . . . . . . . . . . . . . . . . 28
Section 5.8 Disqualification; Conflicting Interests. . . . . . . . . . 28
Section 5.9 Persons Eligible for Appointment
as Trustee.. . . . . . . . . . . . . . . . . . . . . . . 28
Section 5.10 Resignation and Removal; Appointment
of Successor Trustee.. . . . . . . . . . . . . . . . . . 28
Section 5.11 Acceptance of Appointment by
Successor Trustee. . . . . . . . . . . . . . . . . . . . 30
Section 5.12 Merger, Conversion, Consolidation or Succession
to Business of Trustee . . . . . . . . . . . . . . . . 31
Section 5.13 Preferential Collection of
Claims Against the Issuer. . . . . . . . . . . . . . . . 31
ARTICLE 6
CONCERNING THE SECURITYHOLDERS
Section 6.1 Evidence of Action Taken by Securityholders . . . . . . . 31
Section 6.2 Proof of Execution of Instruments and of Holding of
Securities; Record Date. . . . . . . . . . . . . . . . . 32
Section 6.3 Holders to be Treated as Owners. . . . . . . . . . . . . . 32
Section 6.4 Securities Owned by Issuer Deemed Not
Outstanding. . . . . . . . . . . . . . . . . . . . . . . 32
Section 6.5 Right of Revocation of Action Taken. . . . . . . . . . . . 33
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Section 6.6 Communications by Holders With Other Holders . . . . . . . 33
ARTICLE 7
SUPPLEMENTAL INDENTURES
Section 7.1 Supplemental Indentures Without Consent of
Securityholders. . . . . . . . . . . . . . . . . . . . . 33
Section 7.2 Supplemental Indentures With Consent of
Securityholders. . . . . . . . . . . . . . . . . . . . . 35
Section 7.3 Effect of Supplemental Indenture . . . . . . . . . . . . . 36
Section 7.4 Documents to Be Given to Trustee . . . . . . . . . . . . . 36
Section 7.5 Notation on Securities in Respect of
Supplemental Indentures. . . . . . . . . . . . . . . . . 36
ARTICLE 8
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
Section 8.1 Covenant Not to Merge, Consolidate, Sell or Convey
Property Except Under Certain Conditions . . . . . . . . 37
Section 8.2 Successor Entity Substituted . . . . . . . . . . . . . . . 37
Section 8.3 Opinion of Counsel to Trustee. . . . . . . . . . . . . . . 38
ARTICLE 9
SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS
Section 9.1 Satisfaction and Discharge of Indenture. . . . . . . . . . 38
Section 9.2 Application by Trustee of Funds
Deposited for Payment of Securities. . . . . . . . . . . 39
Section 9.3 Repayment of Moneys Held by Paying Agent . . . . . . . . . 39
Section 9.4 Return of Moneys Held by Trustee and Paying Agent
Unclaimed for Two Years. . . . . . . . . . . . . . . . . 39
ARTICLE 10
MISCELLANEOUS PROVISIONS
Section 10.1 Incorporators, Stockholders,
Officers and Directors of Issuer
and Others Exempt from Individual
Liability. . . . . . . . . . . . . . . . . . . . . . . . 40
Section 10.2 Provisions of Indenture for the
Sole Benefit of Parties and
Securityholders. . . . . . . . . . . . . . . . . . . . . 40
Section 10.3 Successors and Assigns of Issuer
Bound by Indenture . . . . . . . . . . . . . . . . . . . 40
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Section 10.4 Notices and Demands on Issuer,
Trustee and Securityholders. . . . . . . . . . . . . . . 40
Section 10.5 Officers' Certificates and Opinions of
Counsel; Statements to Be
Contained Therein. . . . . . . . . . . . . . . . . . . . 41
Section 10.6 Payments Due on Saturdays, Sundays
and Holidays . . . . . . . . . . . . . . . . . . . . . . 42
Section 10.7 Conflict of Any Provision of Indenture with Trust
Indenture Act of 1939 . . . . . . . . . . . . . . . . . 42
Section 10.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . 42
Section 10.9 Counterparts. . . . . . . . . . . . . . . . . . . . . . . 43
Section 10.10 Effect of Headings . . . . . . . . . . . . . . . . . . . 43
ARTICLE 11
REDEMPTION OF SECURITIES
Section 11.1 Right of Optional Redemption; Prices. . . . . . . . . . . 43
Section 11.2 Notice of Redemption; Partial Redemptions . . . . . . . . 44
Section 11.3 Payment of Securities Called
for Redemption . . . . . . . . . . . . . . . . . . . . . 45
Section 11.4 Exclusion of Certain Securities from Eligibility for
Selection for Redemption . . . . . . . . . . . . . . . . 46
ARTICLE 12
SUBORDINATION OF SECURITIES
Section 12.1 Agreement to Subordinate. . . . . . . . . . . . . . . . . 46
Section 12.2 Payments to Securityholders . . . . . . . . . . . . . . . 47
Section 12.3 Subrogation of Securities . . . . . . . . . . . . . . . . 49
Section 12.4 Authorization by Securityholders. . . . . . . . . . . . . 50
Section 12.5 Notice to Trustee . . . . . . . . . . . . . . . . . . . . 50
Section 12.6 Trustee's Relation to Senior Indebtedness . . . . . . . . 51
Section 12.7 No Impairment of Subordination. . . . . . . . . . . . . . 52
Section 12.8 Securities Senior to Old Convertible Debentures . . . . . 52
ARTICLE 13
CONVERSION OF SECURITIES
Section 13.1 Conversion Privilege; Mandatory Conversion Upon
Consummation of Merger . . . . . . . . . . . . . . . . . 52
Section 13.2 Exercise of Conversion Privilege. . . . . . . . . . . . . 53
Section 13.3 Fractional Interests. . . . . . . . . . . . . . . . . . . 56
Section 13.4 Conversion Price. . . . . . . . . . . . . . . . . . . . . 56
Section 13.5 Adjustment of Conversion Price. . . . . . . . . . . . . . 56
Section 13.6 Continuation of Conversion Privilege
in Case of Reclassification, Change,
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Merger, Consolidation or Sale of Assets. . . . . . . . . 60
Section 13.7 Notice of Certain Events. . . . . . . . . . . . . . . . . 62
Section 13.8 Taxes on Conversion . . . . . . . . . . . . . . . . . . . 63
Section 13.9 Issuer to Provide Stock . . . . . . . . . . . . . . . . . 63
Section 13.10 Disclaimer of Responsibility
for Certain Matters. . . . . . . . . . . . . . . . . . . 64
Section 13.11 Return of Funds Deposited for
Redemption of Converted Securities . . . . . . . . . . . 64
ARTICLE 14
RIGHT TO REQUIRE REDEMPTION
Section 14.1 Right to Require Redemption . . . . . . . . . . . . . . . 64
Section 14.2 Notices; Method of Exercising
Redemption Right, etc. . . . . . . . . . . . . . . . . . 65
EXHIBIT A . . . . . . . . . . . . . . . . . . . . . . . A-1
</TABLE>
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INDENTURE, dated as of ___________, 1996 between Alliance Gaming
Corporation, a Nevada corporation, and The Bank of New York, as Trustee (the
"Trustee").
Each party hereto agrees as follows for the benefit of the other party
and for the equal and ratable benefit of the Holders of the Issuer's 7 1/2%
Convertible Senior Subordinated Debentures due 2003 (the "Securities"):
ARTICLE I
DEFINITIONS
Section 1.1 CERTAIN TERMS DEFINED. The following terms (except as
otherwise expressly provided or unless the context otherwise clearly requires),
for all purposes of this Indenture and of any indenture supplemental hereto
shall have the respective meanings specified in this Section 1.1. All other
terms used in this Indenture which are defined in the Trust Indenture Act of
1939 or the definitions of which in the Securities Act are referred to in the
Trust Indenture of 1939 (except as herein otherwise expressly provided or unless
the context otherwise clearly requires), shall have the meanings assigned to
such terms in the Trust Indenture Act of 1939 and in the Securities Act as in
force at the date of this Indenture. All accounting terms used herein and not
expressly defined shall have the meanings given to them in accordance with
generally accepted accounting principles, and the term "generally accepted
accounting principles" or "GAAP" shall mean such accounting principles which are
generally accepted at the date or time of any computation or at the date hereof.
The words "herein," "hereof" and "hereunder" and other words of similar import
refer to this Indenture as a whole and not to any particular Article, Section or
other subdivision. The terms defined in this Article I include the plural as
well as the singular.
"AFFILIATE" of any Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such Person. For the purposes of this definition, "control" when
used with respect to any Person means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of
such Person, 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 Paying Agent or Registrar.
<PAGE>
"BOARD OF DIRECTORS" means either the Board of Directors of the Issuer
or any committee of such Board duly authorized to act hereunder.
"BUSINESS DAY" means a Trading Day which in the city (or in any of the
cities, if more than one) where amounts are payable in respect of the
Securities, as specified on the face of the form of Security, is neither a legal
holiday nor a day on which banking institutions in the State of New York are
authorized or required by law or regulation to close.
"CAPITAL LEASE OBLIGATION" of any Person means the portion of any
obligation of such Person and its subsidiaries on a consolidated basis, under
any capital lease of real or personal property which, in accordance with
generally accepted accounting principles, has been recorded as a capitalized
lease obligation.
"CAPITAL STOCK" of any Person means any and all shares, interests,
participations, or other equivalents (however designated) of such Person's
capital stock whether now outstanding or issued after the date hereof.
"CHANGE OF CONTROL" means at such time as (i) any person or group
(as the term "person" or "group" is used in Section 13(d)(3) or Section
14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) other than an Exempt Person has become the beneficial owner of 50% or
more of the Issuer's Capital Stock having the power to vote in the election
of directors under ordinary circumstances ("Voting Stock"), (ii) there shall
be consummated any consolidation or merger of the Issuer that is not approved
by at least a majority of the Continuing Directors (A) in which the Issuer is
not the continuing or surviving corporation or (B) pursuant to which any
Voting Stock of the Issuer would be converted into cash, securities or other
property, in each case other than a consolidation or merger in which the
holders of such Voting Stock immediately prior thereto have at least a
majority of the Voting Stock, directly or indirectly, of the resulting or
surviving corporation immediately after the consolidation or merger or (iii)
any Person acquires all or substantially all of the assets of the Issuer;
PROVIDED, HOWEVER, that a Change in Control shall not be deemed to have
occurred if either (x) the closing price per share of the Issuer's Common
Stock for any five Trading Days within the period of ten consecutive Trading
Days ending immediately before the Change in Control shall equal or exceed
105% of the Conversion Price (as defined in Section 13.5 hereof) in effect on
such Trading Day, or (y) with respect to a Change in Control described in
clause (ii) or clause (iii) above, at least 90% of the consideration to be
paid for the Voting Stock of the Issuer in the transaction or transactions
constituting the Change in Control consists of common stock traded on a
national securities exchange or quoted on the National Association of
Securities Dealers Automated Quotation/National Market System and, as a
result of the transaction or transactions referred to in clause
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<PAGE>
(ii) or clause (iii) above, the Securities become convertible principally
into such common stock.
"COMMON STOCK" means the Common Stock, par value $.10 per share, of
the Issuer as the same exists at the date of execution and delivery of this
Indenture or as such stock may be reconstituted from time to time. For purposes
of calculating the number of shares of Common Stock at any time outstanding,
shares of Common Stock held in the treasury of the Issuer shall not be
considered outstanding.
"CONTINUING DIRECTOR" means a director of the Issuer who was either
(i) a member of the board of directors of the Issuer on the date hereof or (ii)
subsequently became a director of the Issuer and whose election or nomination
for election is approved or recommended by a vote of a majority of the board of
directors of the Issuer, which majority includes a majority of the then existing
Continuing Directors then on the board of directors of the Issuer.
"CORPORATE TRUST OFFICE" means the office of the Trustee at which the
corporate trust business of the Trustee shall, at any particular time, be
principally administered, which office is, at the date as of which this
Indenture is dated, located at 101 Barclay Street, Floor 21 West, New York,
New York 10286, Attention: Corporate Trust Trustee Administration.
"EVENT OF DEFAULT" means any event or condition specified as such in
Section 4.1 hereof which shall have continued for the period of time, if any,
therein designated.
"EXEMPT PERSON" means (i) the Issuer, any subsidiary of the Issuer or
any employee benefit plan or stock ownership plan of either the Issuer or any
subsidiary of the Issuer or (ii) any of Kirkland, KIC, GSA or Mr. Wilms, or any
of their respective Affiliates, or any successor to any of Kirkland, KIC or GSA
or any of their respective Affiliates by merger, sale or transfer of assets or
similar transaction or any successor to Mr. Wilms by a transfer from Mr. Wilms
to any estate planning vehicle controlled by Mr. Wilms or established for the
benefit of Mr. Wilms' family or his estate.
"GSA" means Gaming System Advisors, L.P., a Delaware limited
partnership, and its successors and assigns.
"GUARANTEE" by any Person, means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Indebtedness
or other obligation of any other Person and, without limiting the generality of
the foregoing, any obligation, direct or indirect, contingent or otherwise, of
such Person (i) to purchase or pay (or advance or supply funds for the purchase
of payment of) such Indebtedness or other obligation (whether arising by virtue
of partnership arrangements, by agreement to keep well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement
3
<PAGE>
conditions or otherwise), or (ii) entered into for the purpose of assuring in
any other manner the obligee of such Indebtedness or other obligation of the
payment thereof or to protect such obligee against loss in respect thereof
(in whole or in part), provided that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business.
The term "Guarantee" used as a verb has a corresponding meaning.
"HOLDER," "HOLDER OF SECURITIES," "SECURITYHOLDER" or other similar
terms means the registered holder of any Security.
"INDEBTEDNESS" of any Person means (i) all indebtedness of such
Person, including the principal of and premium, if any, and interest on such
indebtedness, whether outstanding currently or hereafter created, for borrowed
money, for indebtedness incurred in connection with acquisitions, and for money
owed or reimbursement obligations under letters of credit or under any lease of
any real or personal property, which obligations are capitalized on such
Person's books, (ii) all currency or interest rate hedging obligations of such
Person and (iii) all interest on any of the foregoing that would accrue but for
the filing of a bankruptcy or similar proceeding at the rate specified in the
instrument governing such Indebtedness, whether or not such interest is an
allowable claim in such proceeding. Such term shall also include Guarantees of
any of the foregoing and any renewals, extensions, refinancings, refundings,
deferrals, restructurings, amendments and modifications thereof, or any
securities, notes or other evidences of indebtedness issued in exchange for such
indebtedness.
"INDENTURE" means this instrument as originally executed and delivered
or, if amended or supplemented as herein provided, as so amended or
supplemented.
"ISSUER" means Alliance Gaming Corporation, a Nevada corporation, and
subject to Article 8 hereof, its successors and assigns.
"KIC" means Kirkland Investment Corporation, a Delaware corporation,
and its successors and assigns.
"KIRKLAND" means Kirkland-Ft. Worth Investment Partners, L.P., a
Delaware limited partnership, and its successors and assigns.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
For purposes of this Indenture, the Issuer shall be deemed to own subject to a
Lien any asset which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, capital lease or other
title retention agreement relating to such asset.
4
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"MERGER" means the merger of a wholly-owned subsidiary of the Issuer
with and into Bally Gaming International, Inc., pursuant to that certain
Agreement and Plan of Merger, dated as of October 1995, as amended on January
__, 1996, and as the same may be hereinafter amended from time to time.
"NASDAQ/NMS" means the National Association of Securities Dealers
Automated Quotation/National Market System.
"OFFICERS' CERTIFICATE" means a certificate signed by the Chairman of
the Board of Directors or Vice Chairman of the Board of Directors or the
President or any Vice President (whether or not designated by a number or
numbers or a word or words added before or after the title "Vice President") and
by the Chief Financial Officer or the Secretary or any Assistant Secretary of
the Issuer and delivered to the Trustee. Each such certificate shall comply
with Section 314 of the Trust Indenture Act of 1939 and include the statements
provided for in Section 10.5 hereof, if and to the extent required thereby. Any
of the foregoing persons may be referred to herein as "Officers."
"OLD CONVERTIBLE DEBENTURES" means the 7-1/2% Convertible Subordinated
Debentures due 2003 issued pursuant to the Indenture dated as of September 14,
1993 between the Issuer (then named United Gaming, Inc.) and NationsBank of
Texas, N.A., as Trustee.
"OPINION OF COUNSEL" means an opinion in writing signed by legal
counsel who may be an employee of or counsel to the Issuer or who may be other
counsel reasonably satisfactory to the Trustee. Each such opinion shall comply
with Section 314 of the Trust Indenture Act and include the statements provided
for in Section 10.5 hereof, if and to the extent required hereby.
"ORIGINAL ISSUE DATE" of any Security (or portion thereof) means the
earlier of (a) the date of such
Security and (b) the date of any Security (or portion thereof) for which such
Security was issued (directly or indirectly), on registration of transfer,
exchange or substitution.
"OUTSTANDING" when used with reference to Securities, shall, subject
to the provisions of Section 6.4 hereof, mean, as of any particular time, all
Securities authenticated and delivered by the Trustee under this Indenture,
except (i) Securities theretofore canceled by the Trustee or delivered to the
Trustee for cancellation; (ii) Securities, or portions thereof, for the payment
or redemption of which moneys or direct obligations of the United States of
America backed by its full faith and credit in the necessary amount shall have
been deposited in trust with the Trustee or with any Paying Agent (other than
the Issuer) or shall have been set aside, segregated and held in trust by the
Issuer (if the Issuer shall act as its own Paying Agent); PROVIDED that if such
Securities are to be redeemed prior to the maturity thereof, notice of such
redemption
5
<PAGE>
shall have been given as herein provided, or provision satisfactory to the
Trustee shall have been made for giving such notice; (iii) Securities in
substitution for which other Securities shall have been authenticated and
delivered, or which shall have been paid, pursuant to the terms of Section
2.6 hereof (unless proof satisfactory to the Trustee is presented that any
such Security is held by a person in whose hands such Security is a legal,
valid and binding obligation of the Issuer); (iv) Securities converted into
Common Stock or Special Stock pursuant hereto; and (v) Securities not deemed
outstanding pursuant to Section 11.2 hereof. Except as set forth in Section
2.9 hereof, a Security does not cease to be Outstanding because the Issuer or
an Affiliate holds the Security.
"PERSON" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
"PRINCIPAL" wherever used with reference to the Securities or any
Security or any portion thereof, shall be deemed to include "and premium, if
any."
"REDEMPTION EVENT" shall be deemed to have occurred at such time as
(i) there is a Change of Control of the Issuer or (ii) the Issuer's Common Stock
(or other Common Stock into which the Securities are then convertible) is not
listed for trading on a United States national securities exchange or admitted
for trading in the NASDAQ/NMS or the National Association of Securities Dealers
Automated Quotation listing of Small Capitalization Stocks.
"RESPONSIBLE OFFICER" when used with respect to the Trustee means any
officer of the Trustee to administer its corporate trust matters.
"SECURITY" or "SECURITIES" means any Convertible Subordinated
Debenture referred to in the second paragraph of this Indenture, authenticated
and delivered under this Indenture.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SENIOR INDEBTEDNESS" means (i) all Indebtedness of the Issuer unless,
by the terms of the instrument creating or evidencing such Indebtedness, it is
provided that such Indebtedness is not superior in right of payment to the
Securities or to other Indebtedness which is pari passu with, or subordinated
to, the Securities, and (ii) any modifications, refunding, deferrals, renewals
or extensions of any such Indebtedness or securities, notes or other evidences
of Indebtedness issued in exchange for such Indebtedness; PROVIDED, HOWEVER,
that Senior Indebtedness shall not include the Old
6
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Convertible Debentures or any other Indebtedness which is PARI PASSU with, or
subordinated to, the Old Convertible Debentures.
"SPECIAL STOCK" means the Non-Voting Junior Convertible Pay-in-Kind
Special Stock, Series E, par value $.10 per share, of the Issuer as the same
exists at the date of execution and delivery of this Indenture or as such stock
may be reconstituted from time to time.
"SUBSIDIARY" means any corporation a majority of the voting stock of
which is owned, directly or indirectly, by the Issuer.
"TRADING DAY" means each Monday, Tuesday, Wednesday, Thursday and
Friday, other than any day on which securities are not traded on the applicable
securities exchange or in the applicable securities market.
"TRUSTEE" means the entity identified as "Trustee" in the first
paragraph hereof and, subject to the provisions of Article 5 hereof, shall also
include any successor trustee.
"TIA" OR "TRUST INDENTURE ACT OF 1939" means the Trust Indenture Act
of 1939, as amended.
"MR. WILMS" means Alfred H. Wilms, the holder of approximately 46.9%
of the Common Stock of the Issuer as of the date of this Indenture.
ARTICLE 2
THE SECURITIES
Section 2.1 FORM AND DATING. The Securities and the Trustee's
certificate of authentication shall be substantially in the form of Exhibit A to
this Indenture. The Securities shall be in a principal amount at maturity of no
greater than $85,000,000. The Securities may have notations, legends or
endorsements required by law, stock exchange rule or usage. Each Security shall
be dated the date of its authentication. The Securities shall be in
denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Securities shall constitute,
and are hereby expressly made, a part of this Indenture and to the extent
applicable, the Issuer and the Trustee, by their execution and delivery of this
Indenture, expressly agree to such terms and provisions and to be bound thereby.
Section 2.2 EXECUTION AND AUTHENTICATION. Two Officers shall sign
the Securities for the Issuer by manual or facsimile signature. The Issuer's
seal shall be reproduced on the Securities and may be in facsimile form.
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If an Officer whose signature is on a Security no longer holds that
office at the time the Security is authenticated, the Security shall
nevertheless be valid.
A Security shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
Security has been authenticated under this Indenture.
The Trustee shall authenticate Securities for original issue up to the
aggregate Principal amount stated in paragraph 4 of the Securities, upon a
written order of the Issuer signed by an Officer to a Responsible Officer of the
Trustee. The aggregate Principal amount of Securities Outstanding at any time
may not exceed such amount except as provided in Section 2.7 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Issuer 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 Issuer or
an Affiliate of the Issuer.
Section 2.3 REGISTRAR AND PAYING AGENT. The Issuer shall maintain an
office or agency where Securities may be presented for registration of transfer
or for exchange ("REGISTRAR") and an office or agency where Securities may be
presented for payment ("PAYING AGENT"). The Registrar shall keep a register of
the Securities and of their transfer and exchange. The Issuer may appoint one
or more co-registrars and one or more additional paying agents. The term
"Registrar" includes any co-registrar and the term "Paying Agent" includes any
additional paying agent. The Issuer may change any Paying Agent or Registrar
without notice to any Holder. The Issuer shall notify the Trustee in writing of
the name and address of any Agent not a party to this Indenture. If the Issuer
fails to appoint or maintain another entity as Registrar or Paying Agent, the
Trustee shall act as such. The Issuer or any of its subsidiaries may act as
Paying Agent or Registrar.
The Issuer initially appoints the Trustee to act as Paying Agent and
Registrar.
Section 2.4 PAYING AGENT TO HOLD MONEY IN TRUST. The Issuer shall
require each Paying Agent other than the Trustee to agree in writing that the
Paying Agent will hold in trust of the benefit of Holders or the Trustee all
money held by the Paying Agent for the payment of Principal or interest on the
Securities, and will notify the Trustee of any default by the Issuer in making
any such payment. While any such default continues, the Trustee may require a
Paying Agent to pay all money held by it to the Trustee. The Issuer at any time
may require a Paying Agent
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to pay all money held by it to the Trustee. Upon payment over to the
Trustee, the Paying Agent (if other than the Issuer or a Subsidiary) shall
have no further liability for the money. If the Issuer or a Subsidiary acts
as Paying Agent, it shall segregate and hold in a separate trust fund for the
benefit of the Holders all money held by it as Paying Agent.
Section 2.5 HOLDER LISTS. The Trustee shall preserve in as current a
form as is reasonably practicable the most recent list available to it of the
names and addresses of Holders and shall otherwise comply with the Trust
Indenture Act of 1939 Section 312(a). If the Trustee is not the Registrar, the
Issuer shall furnish to the Trustee at least seven Business Days before each
Interest Payment Date (as defined in Paragraph 1 of the form of Security
attached as Exhibit A hereto), 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
require of the names and addresses of Holders, and the Issuer shall otherwise
comply with the Trust Indenture Act of 1939 Section 312(a).
Section 2.6 TRANSFER AND EXCHANGE.
(a) When Securities are presented to the Registrar with the request
(x) to register the transfer of the Securities or (y) to exchange such
Securities for an equal Principal amount of Securities of other authorized
denominations, the Registrar shall register the transfer or make the exchange as
requested if its requirements for such transactions are met; PROVIDED, HOWEVER,
that the Securities presented or surrendered for register of transfer or
exchange shall be duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by the Holder
thereof or by his attorney, duly authorized in writing.
(b) To permit registrations of transfers, exchanges and partial
conversions, the Issuer shall execute and the Trustee shall authenticate
Securities at the Registrar's request.
(c) No service charge shall be made to a Holder for any registration,
transfer, exchange or conversion, but the Issuer may require payment of a sum
sufficient to cover any transfer tax or similar governmental charge payable in
connection therewith (other than any such transfer taxes or similar governmental
charge payable upon exchange or transfer pursuant to Section 11.1 hereof).
(d) The Registrar shall not be required to register the transfer or
exchange of any Security selected for redemption in whole or in part after such
selection as provided for herein, except the unredeemed portion of any Security
being redeemed in part.
(e) All Securities issued upon any registration of transfer or
exchange of Securities shall be the valid obligations
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of the Issuer, evidencing the same debt, and entitled to the same benefits
under the Indenture, as the Securities surrendered upon such registration of
transfer or exchange.
(f) The Issuer shall not be required:
(i) to issue, register the transfer of or exchange Securities
during a period beginning at the opening of business 15 days before
the day of any selection of Securities for redemption under Section
11.2 hereof and ending at the close of business on the day of mailing
of the notice of such selection, or
(ii) to register the transfer of any Security so selected for
redemption in whole or in part, except the unredeemed portion of any
Security being redeemed in part.
(g) Prior to due presentment for registration of transfer of any
Security, the Trustee, any Agent and the Issuer may deem and treat the person in
whose name any Security is registered as the absolute owner of such Security for
the purpose of receiving payment of Principal of and interest on such Security,
whether or not such payment is overdue, and neither the Trustee, any Agent nor
the Issuer shall be affected by notice to the contrary.
Section 2.7 REPLACEMENT SECURITIES. If any mutilated Security is
surrendered to the Trustee, or the Issuer and the Trustee receive evidence to
their satisfaction of the destruction, loss or theft of any Security, the Issuer
shall issue and the Trustee, upon the written order of the Issuer signed by an
Officer, shall authenticate a replacement Security if the Trustee's requirements
are met. If required by the Trustee or the Issuer, an indemnity bond must be
supplied by the Holder that is sufficient in the judgment of the Trustee and the
Issuer to protect the Issuer, the Trustee, any Agent or any authenticating agent
from any loss which any of them may suffer if a Security is replaced. The
Issuer and the Trustee may charge for their expenses in replacing a Security.
Every replacement Security is an additional obligation of the Issuer
and shall be entitled to all benefits of this Indenture equally and
proportionately with all other Securities duly issued hereunder.
Section 2.8 Reserved.
Section 2.9 TREASURY SECURITIES. In determining whether the
Holders of the required Principal amount of Securities have concurred in any
direction, waiver or consent, Securities owned by the Issuer, or by an
Affiliate of the Issuer shall be considered as though not Outstanding, except
that for the purposes of determining whether the Trustee shall be
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protected in relying on any such direction, waiver or consent, only
Securities which a Trustee actually knows are so owned shall be so
disregarded.
Section 2.10 TEMPORARY SECURITIES. Until definitive Securities
are ready for delivery, the Issuer may prepare and the Trustee shall
authenticate temporary securities upon a written order of the Issuer signed
by an Officer and delivered or caused to be delivered to a Responsible
Officer. Temporary Securities shall be substantially in the form of
definitive Securities but may have variations that the Issuer considers
appropriate for temporary Securities. Without unreasonable delay, the Issuer
shall prepare and the Trustee shall authenticate definitive Securities in
exchange for temporary Securities.
Holders of temporary Securities shall be entitled to all benefits of
this Indenture.
Section 2.11 CANCELLATION. The Issuer at any time may deliver
Securities to the Trustee for cancellation. The Registrar and Paying Agent
shall forward to the Trustee any Securities surrendered to them for
registration of transfer, exchange or payment. The Trustee and no one else
shall cancel all Securities surrendered for registration of transfer,
exchange, payment, replacement or cancellation and shall return such
cancelled Securities to the Issuer. The Issuer may not issue new Securities
to replace Securities that it has paid or that have been delivered to the
Trustee for cancellation.
Section 2.12 DEFAULTED INTEREST. If the Issuer defaults in a payment
of interest on the Securities, it shall pay the defaulted interest in any lawful
manner plus, to the extent lawful, interest payable on the defaulted interest,
to the Persons who are holders on a subsequent special record date, in each case
at the rate provided in the Securities and in Section 4.3 hereof. The Issuer
shall, with the consent of the Trustee, fix each such special record date and
payment date. At least 15 days before the record date, the Issuer (or the
Trustee, in the name of and at the expense of the Issuer) shall mail to Holders
a notice that states the special record date, the related payment date and the
amount of such interest to be paid.
Section 2.13. CUSIP NUMBERS. The Issuer 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 Issuer will
promptly notify the Trustee of any change in the CUSIP numbers.
ARTICLE 3
COVENANTS OF THE ISSUER AND THE TRUSTEE
Section 3.1 PAYMENT OF PRINCIPAL AND INTEREST. The Issuer covenants
and agrees that it will duly and punctually pay or cause to be paid the
Principal of, and interest on, each of the Securities at the place or places, at
the respective times and in the manner provided in the Securities. All payments
in respect of the Securities shall be made by mailing checks for such interest
payable to or upon the written order of the holders
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of Securities entitled thereto as they shall appear on the registry books of
the Issuer.
Section 3.2 OFFICES FOR PAYMENTS, ETC. So long as any of the
Securities remain Outstanding, the Issuer will maintain in New York City, New
York, the following: (a) an office or agency where the Securities may be
presented for payment, (b) an office or agency where the Securities may be
presented for registration of transfer and for exchange and conversion as in
this Indenture provided and (c) an office or agency where notices and demands
to or upon the Issuer in respect of the Securities or of this Indenture may
be served. The Issuer will give to the Trustee written notice of the
location of any such office or agency and of any change of location thereof.
The Issuer hereby initially designates The Bank of New York, 101 Barclay
Street, New York, New York 10286 as the office or agency for each such
purpose. In case the Issuer shall fail to maintain any such office or agency
or shall fail to give such notice of the location or of any change in the
location thereof presentations and demands may be made and notices may be
served at such address.
Section 3.3 APPOINTMENT TO FILL A VACANCY IN OFFICE OF TRUSTEE. The
Issuer, whenever necessary to avoid or fill a vacancy in the office of Trustee,
will appoint, in the manner provided in Section 5.10 hereof, a Trustee, so that
there shall at all times be a Trustee hereunder; it being understood that the
occurrence of any of the events affecting the Trustee under Section 5.10(b)
hereunder shall not be a default hereunder.
Section 3.4 PAYING AGENTS. Whenever the Issuer shall appoint a
paying agent other than the Trustee, it will cause such paying agent to execute
and deliver to the Trustee an instrument in which such agent shall agree with
the Trustee, subject to the provisions of this Section 3.4, (a) that it will
hold all sums received by it as such agent for the payment of the Principal of
or interest on the Securities (whether such sums have been paid to it by the
Issuer or by any other obligor on the Securities) in trust for the benefit of
the holders of the Securities or of the Trustee, (b) that it will give the
Trustee notice of any failure by the Issuer (or by any other obligor on the
Securities) to make any payment of the Principal of or interest on the
Securities when the same shall be due and payable, and (c) that it will pay any
such sums so held in trust by it to the Trustee upon the Trustee's written
request at any time during the continuance of the failure referred to in clause
(b) above.
The Issuer will, prior to each due date of the Principal of or
interest on the Securities, deposit with the Paying Agent a sum sufficient to
pay such Principal or interest, and (unless such paying agent is the Trustee)
the Issuer will promptly notify the Trustee of any failure to take such action.
If the Issuer shall act as its own Paying Agent, it will, on or before
each due date of the Principal of or interest
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on the Securities, set aside, segregate and hold in trust for the benefit of
the holders of the Securities a sum sufficient to pay such Principal or
interest so becoming due. The Issuer will promptly notify the Trustee of any
failure to take such action.
Anything in this Section to the contrary notwithstanding, the Issuer
may at any time, for the purpose of obtaining a satisfaction and discharge of
this Indenture or for any other reason, pay or cause to be paid to the Trustee
all sums held in trust by the Issuer or any Paying Agent hereunder, as required
by this Section, such sums to be held by the Trustee upon the trusts herein
contained. Anything in this Section to the contrary notwithstanding, the
agreement to hold sums in trust as provided in this Section is subject to the
provisions of Sections 9.3 and 9.4 hereof.
Section 3.5 CERTIFICATE TO TRUSTEE. The Issuer will furnish to the
Trustee on or before September 1 in each year (beginning with 1996) a brief
certificate (which need not comply with Section 10.5 hereof) from the principal
executive, financial or accounting officer of the Issuer as to his or her
knowledge of the Issuer's compliance with all conditions and covenants under
this Indenture (such compliance to be determined without regard to any period of
grace or requirement of notice provided under this Indenture) and as to any
default in such performance.
Section 3.6 SECURITYHOLDERS' LISTS. If and so long as the Trustee
shall not be the Registrar, the Issuer will furnish or cause to be furnished to
the Trustee a list in such form as the Trustee may require of the names and
addresses of the holders of the Securities pursuant to Section 312 of the Trust
Indenture Act (a) semi-annually not more than 15 days after each record date for
the payment of semi-annual interest on the Securities, as hereinabove specified,
as of such record date, and (b) at such other times as the Trustee may request
in writing, within 30 days after receipt by the Issuer of any such request as of
a date not more than 15 days prior to the time such information is furnished.
Section 3.7 REPORTS BY THE ISSUER. The Issuer covenants to file with
the Trustee, within 15 days after the Issuer is required to file the same with
the Securities and Exchange Commission ("SEC"), copies of the annual reports and
of the information, documents, and other reports which the Issuer may be
required to file with the SEC pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934. The Issuer shall also comply with the other
provisions of Section 314(a) of the Trustee Indenture Act of 1939.
Section 3.8 REPORTS BY THE TRUSTEE. Any Trustee's report required
under Section 313(a) of the Trustee Indenture Act of 1939 shall be transmitted
by mail to each Securityholder and certain other holders in accordance with
Section 313(c) of the Trust Indenture Act of 1939 within 60 days after
March 15 of each year
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beginning March 15, 1997. The Trustee shall also comply with Section 313(b)
of the Trust Indenture Act of 1939. A copy of each report at the time of its
mailing to Securityholders shall be mailed to the Issuer and filed with the
SEC and each stock exchange, if any, on which the Securities are listed.
Section 3.9 TRANSACTIONS WITH AFFILIATES. The Issuer will not, and
will not permit any of its Subsidiaries to, sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into any contract, agreement, understanding, loan, advance
or guarantee with, or for the benefit of, any Affiliate (each of the foregoing,
an "Affiliate Transaction"), unless (a) such Affiliate Transaction is on terms
that are no less favorable to the Issuer or the relevant Subsidiary than those
that would have been obtained in a comparable transaction by the Issuer or such
Subsidiary with an unrelated person and (b) the Issuer delivers to the Trustee
with respect to any Affiliate Transaction involving aggregate payments in excess
of $500,000, a resolution of the Board of Directors set forth in an Officers'
Certificate certifying that such Affiliate Transaction complies with clause (a)
above and such Affiliate Transaction is approved by a majority of the
independent members of the Board of Directors; PROVIDED, HOWEVER, that none of
the following shall be deemed Affiliate Transactions: (i) any employment
agreement entered into by the Issuer or any of its subsidiaries in the ordinary
course of business, (ii) the continuation, extension or renewal of any
transaction entered into between the Issuer or any of its subsidiaries and any
Affiliate on or prior to October 31, 1993, (iii) transactions among the Issuer
and any of Kirkland, KIC, GSA, Mr. Wilms, or their respective Affiliates
pursuant to or contemplated by agreements existing on October 31, 1993 as in
effect on such date, (iv) any agreement between the Issuer, KIC, Kirkland, GSA
or their respective Affiliates providing for the payment by the Issuer of
management or related fees in connection with providing services to the Issuer
in an aggregate amount not exceeding $1.4 million per annum, plus reimbursement
of reasonable related expenses, (v) any agreement between the Issuer and Mr.
Wilms or any of his Affiliates providing for the payment by the Issuer of
consulting fees or similar fees in an aggregate amount not to exceed $500,000
per annum, (vi) any agreement with Mr. Wilms pursuant to which the Issuer loaned
funds to Mr. Wilms to be used to exercise stock purchase warrants if such
exercise occurred so that Mr. Wilms could comply with his commitment to the
Issuer to obtain sufficient shares to approve (A) the investment by Kirkland and
certain other parties concurrently with the original issuance of the Old
Convertible Debentures of $5,000,000 in the Issuer's Capital Stock and various
related transactions and (B) the increase in the authorized number of shares of
the Issuer's Common Stock to 100,000,000 or (vii) transactions between or among
the Issuer and/or its Subsidiaries or among the Subsidiaries.
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ARTICLE 4
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT
Section 4.1 EVENT OF DEFAULT DEFINED; ACCELERATION OF MATURITY;
WAIVER OF DEFAULT. In case one or more of the following Events of Default
(whatever the reason for such Event of Default and whether it shall be voluntary
or involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body) shall have occurred and be continuing:
(a) failure to pay Principal with respect to any Securities when due,
whether or not such payment is prohibited by the subordination provisions
of this Indenture;
(b) failure to pay any interest on any Securities when due, continued
for 30 days, whether or not such payment is prohibited by the subordination
provisions of this Indenture;
(c) failure on the part of the Issuer duly to observe or perform any
other of the covenants or agreements on the part of the Issuer in the
Securities or in this Indenture and continuance of such failure for a
period of 60 days after the date on which written notice specifying such
failure, stating that such notice is a "Notice of Default" hereunder and
demanding that the Issuer remedy the same, shall have been given by
registered or certified mail, return receipt requested, to the Issuer by
the Trustee, or to the Issuer and the Trustee by the holders of at least
25% in aggregate Principal amount of the Securities at the time
Outstanding;
(d) a court having jurisdiction in the premises shall enter a decree
or order for relief in respect of the Issuer in an involuntary case under
any applicable bankruptcy, insolvency or other similar law now or hereafter
in effect, or appointing a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of the Issuer or for any
substantial part of its property or ordering the winding up or liquidation
of its affairs, and such decree or order shall remain unstayed and in
effect for a period of 60 consecutive days;
(e) the Issuer shall commence a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or
consent to the entry of an order for relief in an involuntary case under
any such law, or consent to the appointment or taking possession by a
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receiver, liquidator, assignee, custodian, trustee, sequestrator (or
similar official) of the Issuer or for any substantial part of its
property, or make any general assignment for the benefit of creditors;
(f) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Issuer or any of its Subsidiaries,
and as a result of such default the maturity of such Indebtedness has been
accelerated prior to its express maturity and the principal amount of such
Indebtedness, together with the principal amount of any other such
Indebtedness the maturity of which has been accelerated, aggregates $5
million or more, PROVIDED that if such default under such indenture or
instrument shall be remedied or cured by the Issuer or waived by the
holders of such Indebtedness within 90 days of the date of acceleration of
such Indebtedness, then the Event of Default under this Indenture by reason
thereof shall be deemed likewise to have been thereupon remedied, cured or
waived without further action upon the part of either the Trustee or any of
the holders; or
(g) a final judgment or judgments or order or orders for the payment
of money which aggregates $5 million or more is entered against the Issuer
or one or more of its subsidiaries, which judgment or judgments or order or
orders shall not have been discharged or stayed pending appeal within 75
days after the entry thereof or discharged within 75 days after the
expiration of any such stay;
then, and in each such case (other than in the case of an Event of Default
specified in Sections 4.1(d) or (e) hereof), unless the Principal of all of the
Securities shall have already become due and payable, either the Trustee or the
holders of not less than 25% in aggregate Principal amount of the Securities
then Outstanding hereunder, by notice in writing to the Issuer (and to the
Trustee if given by Securityholders), may declare the entire Principal of all
the Securities and the interest accrued thereon, to be due and payable
immediately, and upon any such declaration the same shall become immediately due
and payable. If an Event of Default specified in Section 4.1(d) or (e) hereof
occurs, the entire Principal of all of the Securities and the interest accrued
thereon shall automatically become due and payable without any declaration or
other act on the part of the Trustee or any Securityholder. This provision,
however, is subject to the condition that if, at any time after the Principal of
the Securities shall have become due and payable, and before any judgment or
decree for the payment of the moneys due shall have been obtained or entered as
hereinafter provided, the Issuer shall pay or shall deposit with the Trustee a
sum sufficient to pay all matured installments of interest upon all the
Securities and the Principal of any and all Securities which shall have become
due otherwise than by acceleration (with interest upon
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such Principal and, to the extent that payment of such interest is
enforceable under applicable law, on overdue installments of interest, at the
same rate as the rate of interest specified in the Securities, to the date of
such payment or deposit) and such amount as shall be sufficient to cover
reasonable compensation to the Trustee and each predecessor Trustee, their
respective agents, attorneys and counsel, and all other reasonable agents,
attorneys and counsel, and all other expenses and liabilities incurred, and
all advances made, by the Trustee and each predecessor Trustee except as a
result of negligence or bad faith, and if any and all Events of Default under
this Indenture, other than the non-payment of the Principal of Securities
which have become due by acceleration, shall have been cured, waived or
otherwise remedied as provided herein, then and in every such case the
holders of a majority in aggregate Principal amount of the Securities then
outstanding, by written notice to the Issuer and to the Trustee, may waive
all defaults and rescind and annul an acceleration and its consequences, but
no such waiver or rescission and annulment shall extend to or shall affect
any subsequent default or shall impair any right consequent thereon.
Section 4.2 COLLECTION OF INDEBTEDNESS BY TRUSTEE; TRUSTEE MAY PROVE
DEBT. The Issuer covenants that (a) in case default shall occur in the payment
of any installment of interest on any of the Securities when such interest shall
have become due and payable, and such default shall have continued for a period
of 30 days or (b) in case default shall occur in the payment of all or any part
of the Principal of any of the Securities when the same shall have become due
and payable, whether upon maturity or upon any redemption or by declaration or
otherwise, then upon demand of the Trustee, the Issuer will pay to the Trustee
for the benefit of the holders of the Securities the whole amount that then
shall have become due and payable on all such Securities for Principal or
interest, as the case may be (with interest to the date of such payment upon the
overdue Principal and, to the extent that payment of such interest is
enforceable under applicable law, on overdue installments of interest at the
same rate as the rate of interest specified in the Securities); and in addition
thereto, such further amount as shall be sufficient to cover the costs and
expenses of collection, including reasonable compensation to the Trustee and
each predecessor Trustee, their respective agents, attorneys and counsel, and
any expenses and liabilities incurred, and all advances made, by the Trustee and
each predecessor Trustee except as a result of its negligence or bad faith.
Until such demand is made by the Trustee, the Issuer may pay the
Principal of and interest on the Securities to the Holders, whether or not the
Securities are overdue.
In case the Issuer shall fail forthwith to pay such amounts upon such
demand, the Trustee, in its own name and as trustee of an express trust, shall
be entitled and empowered to institute any action or proceedings at law or in
equity for the
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collection of the sums so due and unpaid, and may prosecute any such action
or proceedings to judgment or final decree, and may enforce any such judgment
or final decree against the Issuer or other obligor upon the Securities and
collect in the manner provided by law out of the property of the Issuer or
other obligor upon the Securities, wherever situated the moneys adjudged or
decreed to be payable.
In case there shall be pending proceedings relative to the Issuer or
any other obligor upon the Securities under the United States Bankruptcy Code or
any other applicable Federal or state bankruptcy, insolvency or other similar
law, or in case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Issuer or its property or such other obligor, or in case
of any other comparable judicial proceedings relative to the Issuer or other
obligor upon the Securities, or to the creditors or property of the Issuer or
such other obligor, the Trustee, irrespective of whether the Principal of the
Securities shall then be due and payable as therein expressed or by declaration
or otherwise and irrespective of whether the Trustee shall have made any demand
pursuant to the provisions of this Section, shall be entitled and empowered, by
intervention in such proceedings or otherwise:
(a) to file and prove a claim or claims for the whole amount of
Principal and interest owing and unpaid in respect of the Securities, and
to file such other papers or documents as may be necessary or advisable in
order to have the claims of the Trustee (including any claim for reasonable
compensation to the Trustee and each predecessor Trustee, and their
respective agents, attorneys and counsel, and for reimbursement of all
reasonable expenses and liabilities incurred, and all reasonable advances
made, by the Trustee and each predecessor Trustee, except as a result of
negligence or bad faith) and of the Securityholders allowed in any judicial
proceedings relative to the Issuer or other obligor upon the Securities, or
to the creditors or property of the Issuer or such other obligor;
(b) unless prohibited by applicable law and regulations, to vote on
behalf of the holders of the Securities in any election of a trustee or a
standby trustee in arrangement, reorganization, liquidation or other
bankruptcy or insolvency proceedings or person performing similar functions
in comparable proceedings; and
(c) to collect and receive any moneys or other property payable or
deliverable on any such claims, and to distribute all amounts received with
respect to the claims of the Securityholders and of the Trustee on their
behalf, and any trustee, receiver, or liquidator, custodian or other
similar official is hereby authorized by each of the Securityholders to
make payments to the Trustee, and in the
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event that the Trustee shall consent to the making of payments directly
to the Securityholders, to pay to the Trustee such amounts as shall be
sufficient to cover reasonable compensation to the Trustee, each
predecessor Trustee and their respective agents, attorneys and counsel,
and all other expenses and liabilities incurred, and all advances made,
by the Trustee and each predecessor Trustee except as a result of
negligence or bad faith.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or vote for 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 except, as aforesaid, to vote for the election of a trustee
in bankruptcy or similar person.
All rights of action and of asserting claims under this Indenture, or
under any of the Securities, may be enforced by the Trustee without the
possession of any of the Securities or the production thereof on any trial or
other proceedings relative thereto, and any such action or proceedings
instituted by the Trustee shall be brought in its own name as trustee of an
express trust, and any recovery of judgment, subject to the payment of the
expenses, disbursements and compensation of the Trustee, each predecessor
Trustee and their respective agents and attorneys, shall be for the ratable
benefit of the holders of the Securities.
In any proceedings brought by the Trustee (and also any proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party) the Trustee shall be held to represent all the holders
of the Securities, and it shall not be necessary to make any holders of the
Securities parties to any such proceedings.
Section 4.3 APPLICATION OF PROCEEDS. Any moneys collected by the
Trustee pursuant to this Article 4 shall be applied in the following order at
the date or dates fixed by the Trustee and, in case of the distribution of such
moneys on account of Principal or interest, upon presentation of the several
Securities and stamping (or otherwise noting) thereon the payment, or issuing
Securities in reduced Principal amounts in exchange for the presented Securities
if only partially paid, or upon surrender thereof if fully paid:
FIRST: To the payment of costs and expenses, including reasonable
compensation to the Trustee and each predecessor Trustee and
their respective agents and attorneys and of all expenses
and liabilities incurred, and all advances made, by the
Trustee and each
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predecessor Trustee except as a result of negligence or bad
faith;
SECOND: In case the Principal of the Securities shall not have
become and be then due and payable, to the payment of
interest in default in the order of the maturity of the
installments of such interest, with interest (to the extent
that such interest has been collected by the Trustee) upon
the overdue installments of interest, to the extent
permitted by applicable law, at the same rate as the rate
of interest specified in the Securities, such payments to
be made ratably to the persons entitled thereto, without
discrimination or preference;
THIRD In case the Principal of the Securities shall have become
and shall be then due and payable, to the payment of the
whole amount then owing and unpaid upon all the Securities
for Principal and interest (unless already applied pursuant
to section "SECOND" above), with interest upon the overdue
Principal, and (to the extent that such interest has been
collected by the Trustee) upon overdue installments of
interest, to the extent permitted by applicable law, at the
same rate as the rate of interest specified in the
Securities; and in case such moneys shall be insufficient to
pay in full the whole amount so due and unpaid upon the
Securities, then to the payment of such Principal and interest
(unless already applied pursuant to section "SECOND" above),
without preference or priority of Principal over interest, or of
interest over Principal, or of any installment of interest
over any other installment of interest, or of any Security
over any other Security, ratably to the aggregate of such
Principal payments accrued and unpaid interest; and
FOURTH: To the payment of the remainder, if any, to the Issuer or
any other person lawfully entitled thereto.
Section 4.4 SUITS FOR ENFORCEMENT. In case an Event of Default has
occurred, has not been waived and is continuing, the Trustee may in its
discretion proceed to protect and enforce
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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 at law or in equity or 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.
Section 4.5 RESTORATION OF RIGHTS ON ABANDONMENT OF PROCEEDINGS. In
case the Trustee shall have proceeded to enforce any right under this Indenture
and such proceedings shall have been discontinued or abandoned for any reason,
or shall have been determined adversely to the Trustee, then and in every such
case the Issuer and the Trustee shall be restored respectively to their former
positions and rights hereunder, and all rights, remedies and powers of the
Issuer, the Trustee and the Securityholders shall continue as though no such
proceedings had been taken.
Section 4.6 LIMITATION ON SUITS BY SECURITYHOLDERS. No holder of any
Security shall have any right by virtue or by availing of any provision of this
Indenture to institute any action or proceeding at law or in equity or in
bankruptcy or otherwise upon or under or with respect to this Indenture, or for
the appointment of a trustee, receiver, liquidator, custodian or other similar
official or for any other remedy hereunder, unless such holder previously shall
have given to the Trustee written notice of default and of the continuance
thereof, as hereinbefore provided, and unless also the holders of not less than
25% in aggregate Principal amount of the Securities then Outstanding shall have
made written request upon the Trustee to institute such action or proceedings in
its own name as trustee hereunder and shall have offered to the Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby and the Trustee for 60 days after
its receipt of such notice, request and offer of indemnity shall have failed to
institute any such action or proceedings and no direction inconsistent with such
written request shall have been given to the Trustee pursuant to Section 4.9
hereof; it being understood and intended, and being expressly covenanted by the
taker and holder of every Security with every other taker and holder and the
Trustee, that no one or more holders of Securities shall have any right in any
manner whatever by virtue or by availing of any provision of this Indenture to
affect, disturb or prejudice the rights of any other holder of Securities, or to
obtain or seek to obtain priority over or preference to any other such holder or
to enforce any right under this Indenture, except in the manner herein provided
and for the equal, ratable and common benefit of all holders of Securities. For
the protection and enforcement of the provisions of this Section, each and every
Securityholder and the Trustee shall be entitled to such relief as can be given
either at law or in equity.
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Section 4.7 RIGHTS OF HOLDERS TO RECEIVE PAYMENT. Notwithstanding
any other provision of this Indenture, the right of any Holder of a Security
to receive payment of Principal of and interest on the Securities as set
forth herein, on or after the respective due dates expressed in the
Securities, or to bring suit for the enforcement of any such payment on or
after such respective dates, shall not be impaired or affected without the
consent of the Holder.
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Security to bring suit for the enforcement of the right to
convert the Security shall not be impaired or affected without the consent of
the Holder.
Section 4.8 POWERS AND REMEDIES CUMULATIVE; DELAY OR OMISSION NOT
WAIVER OF DEFAULT. 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.
No delay or omission of the Trustee or of any holder of any of the
Securities to exercise any right or power accruing upon any Event of Default
occurring and continuing as aforesaid shall impair any such right or power or
shall be construed to be a waiver of any such Event of Default or an
acquiescence therein; and, subject to Section 4.6 hereof, every power and remedy
given by this Indenture or by law to the Trustee or to the Securityholders may
be exercised from time to time, and as often as shall be deemed expedient, by
the Trustee or by the Securityholders.
Section 4.9 CONTROL BY SECURITYHOLDERS. The holders of a majority in
aggregate Principal amount of the Securities at the time Outstanding shall have
the right to 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 the Trustee by this Indenture, provided that such direction shall not be
otherwise than in accordance with law and the provisions of this Indenture and
provided further that (subject to the provisions of Section 5.1 hereof) the
Trustee shall have the right to decline to follow any such direction if the
Trustee, being advised by counsel, shall determine that the action or proceeding
so directed may not lawfully be taken or if the Trustee in good faith by its
board of directors, the executive committee, or a trust committee of directors
or Responsible Officers of the Trustee shall determine that the action or
proceedings so directed would involve the Trustee in personal liability or if
the Trustee in good faith shall so determine that the actions or forbearances
specified in or
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pursuant to such direction shall be unduly prejudicial to the interests of
holders of the Securities not joining in the giving of said direction, it
being understood that (subject to Section 5.1) the Trustee shall have no duty
to ascertain whether or not such actions or forbearances are unduly
prejudicial to such holders.
Nothing in this Indenture shall impair the right of the Trustee in its
discretion to take any action deemed proper by the Trustee and which is not
inconsistent with such direction by Securityholders.
Section 4.10 WAIVER OF PAST DEFAULTS. Prior to the declaration of
acceleration of the maturity of the Securities as provided in Section 4.1
hereof, the holders of a majority in aggregate Principal amount of the
Securities at the time Outstanding may on behalf of the holders of all the
Securities waive any past default or Event of Default hereunder and its
consequences, except a default (a) in the payment of Principal of or interest
on any of the Securities or (b) in respect of a covenant or provision hereof
which cannot be modified or amended without the consent of the holder of each
Security affected. In the case of any such waiver, the Issuer, the Trustee
and the holders of the Securities shall be restored to their former positions
and rights hereunder, respectively, but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
Upon any such waiver, such default shall cease to exist and be deemed
to have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured, and not to have occurred for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or Event of Default or impair any right consequent thereon.
Section 4.11 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 and
expenses 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 4.11 does not apply to any suit instituted by the Issuer, to any
suit instituted by the Trustee, to any suit instituted by any Holder pursuant
to Section 4.7, or group of Holders, holding in the aggregate more than 10%
in principal amount of the Outstanding Securities.
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ARTICLE 5
CONCERNING THE TRUSTEE
Section 5.1 DUTIES AND RESPONSIBILITIES OF THE TRUSTEE; DURING
DEFAULT; PRIOR TO DEFAULT. The Trustee, prior to the occurrence of an Event of
Default and after the curing or waiving of all Events of Default which may have
occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture. In case an Event of Default has
occurred (which has not been cured or waived) the Trustee shall exercise such of
the rights and powers vested in it by this Indenture, and use the same degree of
care and skill in their exercise, as a prudent person would exercise or use
under the circumstances in the conduct of his or her own affairs. The Trustee
shall give the Securityholders notice of all defaults or Events of Default known
to the Trustee within 90 days of the occurrence thereof. Except in the case of
a default or an Event of Default in payment of any Security, the Trustee may
withhold the notice if and so long as a committee of its Responsible Officers in
good faith determines that withholding the notice is in the interest of
Securityholders.
No provisions 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:
(a) prior to the occurrence of an Event of Default and after the
curing or waiving of all such Events of Default which may have occurred:
(i) the duties and obligations of the Trustee shall be
determined solely by the express provisions of this
Indenture, and the Trustee shall not be liable except for
the performance of such duties and obligations as are
specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture
against the Trustee; and
(ii) in the absence of bad faith on the part of the Trustee, the
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon any statements, certificates or opinions
furnished to the Trustee and conforming the requirements of
this Indenture; but in the case of any such statements,
certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the
Trustee shall be under a duty to examine the
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same to determine whether or not they conform to the
requirements of this Indenture;
(b) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer or Responsible Officers of the Trustee,
unless it shall be proved that the Trustee was negligent in ascertaining
the pertinent facts; and
(c) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction
of the holders of not less than a majority in Principal amount of the
Securities at the time Outstanding relating to the time, method and place
of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Indenture.
None of the provisions contained in this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in the exercise of any of
its rights or powers, if there shall be reasonable ground for believing that the
repayment of such funds or adequate indemnity against such liability is not
reasonably assured to it.
The Trustee shall have no responsibility for making any
calculations hereunder, including without limitation the amount of any
additional interest owing on the Securities hereunder. The Issuer shall
deliver to the Trustee an Officers' Certificate specifying the amount of any
additional interest due hereunder on or before the 15th day prior to the date
such amount is required to be paid.
This Section 5.1 is in furtherance of and subject to Sections 315 and
316 of the Trust Indenture Act of 1939.
Section 5.2 CERTAIN RIGHTS OF THE TRUSTEE. In furtherance of and
subject to the Trust Indenture Act of 1939, and subject to Section 5.1 hereof:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officers' Certificate or any
other certificate, statement, instrument, opinion, report, notice, request,
consent, order, bond, debenture, note, coupon, security or other paper or
document believed by it to be genuine and to have been signed or presented
by the proper party or parties;
(b) any request, direction, order or demand of the Issuer mentioned
herein shall be sufficiently evidenced by an Officers' Certificate (unless
other evidence in respect thereof be herein specifically prescribed); and
any resolution of the Board of Directors may be evidenced to the
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Trustee by a copy thereof certified by the secretary or an assistant
secretary of the Issuer;
(c) the Trustee may consult with counsel of its selection and any
advice or Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted to be
taken by it hereunder in good faith and in accordance with such advice or
Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any of the
trusts or powers vested in it by this Indenture at the request, order or
direction of any of the Securityholders pursuant to the provisions of this
Indenture, unless such Securityholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred therein or thereby;
(e) the Trustee shall not be liable for any action taken or omitted
by it in good faith and believed by it to be authorized or within the
discretion, rights or powers conferred upon it by this Indenture;
(f) prior to the occurrence of an Event of Default hereunder and
after the curing or waiving of all Events of Default, the Trustee shall not
be bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, appraisal, bond, debenture, note,
coupon, security, or other paper or document unless requested in writing so
to do by the holders of not less than a majority in aggregate Principal
amount of the Securities then Outstanding; PROVIDED that, if the payment
within a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such investigation
is, in the opinion of the Trustee, not reasonably assured to the Trustee by
the security afforded to it by the terms of this Indenture, the Trustee may
require reasonable indemnify against such expenses or liabilities as a
condition to proceeding; the expenses of every such investigation shall be
paid by the Issuer or, if paid by the Trustee or any predecessor trustee,
shall be repaid by the Issuer upon demand; and
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder whether directly or by or through agents or
attorneys not regularly in its employ and the Trustee shall not be
responsible for any misconduct or negligence on the part of any such agent
or attorney appointed with due care by it hereunder.
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Section 5.3 TRUSTEE NOT RESPONSIBLE FOR RECITAL, DISPOSITION OF
SECURITIES OR APPLICATION OF PROCEEDS THEREOF. The recitals contained herein
and in the Securities, except the Trustee's certificates of authentication,
shall be taken as the statements of the Issuer, and the Trustee assumes no
responsibility for the correctness of the same. The Trustee makes no
representation as to the validity or sufficiency of this Indenture or of the
Securities. The Trustee shall not be accountable for the use or application by
the Issuer of any of the Securities or of the proceeds thereof.
Section 5.4 TRUSTEE AND AGENTS MAY HOLD SECURITIES COLLECTIONS, ETC.
The Trustee or any agent of the Issuer or the Trustee, in its individual or any
other capacity, may become the owner or pledgee of Securities with the same
rights it would have if it were not the Trustee or such agent and may otherwise
deal with the Issuer and receive, collect, hold and retain collections from the
Issuer with the same rights it would have if it were not the Trustee or such
agent.
Section 5.5 MONEYS HELD BY TRUSTEE. Subject to the provisions of
Section 9.4 hereof, all moneys received by the Trustee shall, until used or
applied as herein provided, be held in trust for the purposes for which they
were received, but need not be segregated from other funds except to the extent
required by mandatory provisions of law. Neither the Trustee nor any agent of
the Issuer or the Trustee in the absence of negligence of such persons, shall be
under any liability for interest on any moneys received by it hereunder.
Section 5.6 COMPENSATION AND INDEMNIFICATION OF TRUSTEE AND ITS
PRIOR CLAIM. The Issuer covenants and agrees to pay to the Trustee from time
to time, and the Trustee shall be entitled to, such compensation as the
Issuer and the Trustee shall from time to time agree in writing (which shall
not be limited by any provision of law in regard to the compensation of a
trustee of an express trust) and the Issuer covenants and agrees to pay or
reimburse the Trustee and each predecessor Trustee upon its request for all
expenses, disbursements and advances incurred or made by or on behalf of it
in accordance with any of the provisions of this Indenture (including the
compensation and the expenses and disbursements of its counsel and of all
agents and other persons not regularly in its employ), except to the extent
any such expense, disbursement or advance may arise from its negligence or
bad faith. The Issuer also covenants to indemnify the Trustee and each
predecessor Trustee for, and to hold it harmless against, any loss, liability
or expense arising out of or in connection with the acceptance or
administration of this Indenture or the trusts hereunder and its duties
hereunder and the performance of its duties hereunder, including the costs
and expenses of defending itself against or investigating any claim of
liability in the premises, except to the extent any such loss, liability or
expense is due to its own negligence or bad faith. The obligations of the
Issuer under this Section to compensate and indemnify the Trustee and each
predecessor Trustee and to pay
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or reimburse the Trustee and each predecessor Trustee for expenses,
disbursements and advances shall constitute additional indebtedness hereunder
and shall survive the satisfaction and discharge of this Indenture. Such
additional indebtedness shall be a senior claim to that of the Securities
upon all property and funds held or collected by the Trustee as such, except
funds held in trust for the benefit of the holders of some but not all of the
Securities, and the Securities are hereby subordinated to such senior claim.
When the Trustee incurs expenses or renders services in connection
with an Event of Default specified in Section 4.1(d) or Section 4.1(e) the
expenses (including the reasonable charges and expenses of its counsel) and the
compensation for the services are intended to constitute expenses of
administration under any applicable Federal or state bankruptcy, insolvency or
other similar law.
Section 5.7 RIGHT OF TRUSTEE TO RELY ON OFFICERS' CERTIFICATE, ETC.
Subject to Section 5.1 and 5.2 hereof, whenever in the administration of the
trusts of this Indenture the Trustee shall deem it necessary or desirable that a
matter be proved or established prior to taking or suffering or omitting any
action hereunder, such matter (unless other evidence in respect thereof be
herein specifically prescribed) may, in the absence of negligence or bad faith
on the part of the Trustee, be deemed to be conclusively proved and established
by an Officers' Certificate delivered to the Trustee, and such certificate, in
the absence of negligence or bad faith on the part of the Trustee, shall be full
warrant to the Trustee for any action taken, suffered or omitted by it under the
provisions of this Indenture upon the faith thereof.
Section 5.8 DISQUALIFICATION; CONFLICTING INTERESTS. If the Trustee
has or shall acquire a conflicting interest within the meaning of Section 310(b)
of the Trust Indenture Act of 1939, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of the Trust Indenture Act of 1939 and this Indenture. Nothing
herein shall prohibit the Trustee from filing the application provided for by
the penultimate paragraph of Section 310(b) of the Trust Indenture Act of 1939.
Section 5.9 PERSONS ELIGIBLE FOR APPOINTMENT AS TRUSTEE. The Trustee
hereunder shall at all times be a corporation having a combined capital and
surplus of at least $50,000,000, and which is eligible in accordance with the
provisions of Section 310(a) of the Trust Indenture Act of 1939. If such
corporation publishes reports of condition at least annually, pursuant to law or
to the requirements of a Federal, State or District of Columbia 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.
Section 5.10 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR
TRUSTEE.
(a) The Trustee may at any time resign by giving written notice
of resignation to the Issuer and by mailing notice thereof by first-class
mail to holders of Securities
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at their last addresses as they shall appear on the Security register.
Upon receiving such notice of resignation, the Issuer shall promptly
appoint a successor trustee by written instrument in duplicate,
executed by authority of the Board of Directors, one copy of which
instrument shall be delivered to the resigning Trustee and one copy
to the successor trustee. If no successor trustee shall have been so
appointed and have accepted appointment within 30 days after the mailing of
such notice of resignation, the resigning trustee may petition any court of
competent jurisdiction for the appointment of a successor trustee, or any
Securityholder who has been a bona fide holder of a Security or Securities
for at least six months may, on behalf of himself and all others similarly
situated, petition any such court for the appointment of a successor
trustee. Such court may thereupon, after such notice, if any, as it may
deem proper and prescribe, appoint a successor trustee.
(b) In case at any time any of the following shall occur:
(i) the Trustee shall fail to comply with the provisions of
Section 5.8 hereof after written request therefor by the Issuer or by
any Securityholder who has been a bona fide holder of a Security or
Securities for at least six months; or
(ii) the Trustee shall cease to be eligible in accordance
with the provisions of Section 5.9 hereof and this Section 5.10 and
shall fail to resign after written request therefor by the Issuer or
by any such Securityholder; or
(iii) the Trustee shall become incapable of acting, or
shall be adjudged a bankrupt or insolvent, or a receiver or liquidator
of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property
or affairs for the purpose of rehabilitation, conservation or
liquidation; or
(iv) the Trustee shall be found unsuitable by the Nevada
Gaming Commission or the Nevada Gaming Control Board,
then, in any such case, the Issuer may remove the Trustee and promptly
appoint a successor trustee by written instrument, in duplicate, executed
by order of the Board of Directors of the Issuer, one copy of which
instrument shall be delivered to the Trustee so removed and one copy of the
successor trustee, or, subject to Section 315(e) of the Trust Indenture Act
of 1939, any Securityholder who has been a bona fide holder of a Security
or Securities for at least
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six months may on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor trustee. Such court may
thereupon, after such notice, if any, as it may deem proper and
prescribe, remove the Trustee and appoint a successor trustee.
(c) The holders of a majority in aggregate Principal amount of the
Securities at the time Outstanding may at any time remove the Trustee and
appoint a successor trustee by delivering to the Trustee so removed, to the
successor trustee so appointed and to the Issuer the evidence provided for
in Section 6.1 hereof of the action in that regard taken by the
Securityholders.
(d) Any resignation or removal of the Trustee and any appointment of
a successor trustee pursuant to any of the provisions of this Section 5.10
shall become effective upon acceptance of appointment by the successor
trustee as provided in Section 5.11 hereof.
Section 5.11 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR TRUSTEE. Any
successor trustee appointed as provided in this Section 5.11 shall execute and
deliver to the Issuer and to its predecessor trustee an instrument accepting
such appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become vested with all rights,
powers, duties and obligations of its predecessor hereunder, with like effect as
if originally named as trustee herein; but, nevertheless, on the written request
of the Issuer or of the successor trustee, upon payment of its charges then
unpaid, the trustee ceasing to act shall, subject to Section 9.4 hereof, pay
over to the successor trustee all moneys at the time held by it hereunder and
shall execute and deliver an instrument transferring to such successor trustee
all such rights, powers, duties and obligations. Upon request of any such
successor trustee, the Issuer shall execute any and all instruments in writing
for more fully and certainly vesting in and confirming to such successor trustee
all such rights and powers. Any trustee ceasing to act shall, nevertheless,
retain a prior claim upon all property or funds held or collected by such
trustee to secure any amounts then due it pursuant to the provisions of Section
5.6 hereof.
Upon acceptance of appointment by a successor trustee as provided in
this Section 5.11 hereof, the Issuer shall mail notice thereof by first-class
mail to the holders of Securities at their last addresses as they shall appear
in the Security register. If the acceptance of appointment is substantially
contemporaneous with the resignation, then the notice called for by the
preceding sentence may be combined with the notice called for by Section 5.10
hereof. If the Issuer fails to mail such notice within 10 days after acceptance
of appointment by the
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successor trustee, the successor trustee shall cause such notice to be mailed
at the expense of the Issuer.
Section 5.12 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS OF TRUSTEE. Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to all or substantially all the
corporate trust business of the Trustee, shall be the successor of the
Trustee hereunder, provided that such corporation shall be eligible under the
provisions of Section 5.10 hereof, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.
In case at the time such successor to the Trustee shall succeed to the
trusts created by this Indenture any of the Securities shall have been
authenticated but not delivered, any such successor to the Trustee may adopt the
certificate of authentication of any predecessor Trustee and deliver such
Securities so authenticated; and, in case at that time any of the Securities
shall not have been authenticated, any successor to the Trustee may authenticate
such Securities either in the name of any predecessor hereunder or in the name
of the successor Trustee; and in all such cases such certificate shall have the
full force which it is anywhere in the Securities or in this Indenture provided
that the certificate of the Trustee shall have; provided, that the right to
adopt the certificate of authentication of any predecessor Trustee or to
authenticate Securities in the name of any predecessor Trustee shall apply only
to its successor or successors by merger, conversion or consolidation.
Section 5.13 PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE ISSUER.
If and when the Trustee shall be, or shall become a creditor, directly or
indirectly, secured or unsecured of the Issuer (or any other obligor upon the
Securities), the Trustee shall be subject to the provisions of Section 311 of
the Trust Indenture Act of 1939.
ARTICLE 6
CONCERNING THE SECURITYHOLDERS
Section 6.1 EVIDENCE OF ACTION TAKEN BY SECURITYHOLDERS. Any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given or taken by Securityholders may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Securityholders in person or by an agent duly appointed in
writing; and, except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are delivered to the
Trustee. Proof of execution of any instrument or of a writing appointing any
such
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agent shall be sufficient for any purpose of this Indenture and (subject to
Sections 5.1 and 5.2 hereof) conclusive in favor of the Trustee and the Issuer,
if made in the manner provided in this Article 6.
Section 6.2 PROOF OF EXECUTION OF INSTRUMENTS AND OF HOLDING OF
SECURITIES; RECORD DATE. Subject to Section 5.1 and 5.2 hereof, the execution
of any instrument by a Securityholder or his agent or proxy may be proved in
accordance with such reasonable rules and regulations as may be prescribed by
the Trustee or in such manner as shall be satisfactory to the Trustee. The
holding of Securities shall be proved by the Security register or by a
certificate of the Registrar thereof. The Issuer may set a record date for
purposes of determining the identity of holders of Securities entitled to vote
or consent to any action referred to in Section 6.1 hereof, which record date
may be set at any time or from time to time by notice to the Trustee, for any
date or dates (in the case of any adjournment or resolicitation) not more than
60 days nor less than 15 days prior to the proposed date of such vote or
consent, and thereafter, notwithstanding any other provisions hereof, only
holders of Securities of record on such record date shall be entitled to so vote
or give such consent or to draw such vote or consent.
Section 6.3 HOLDERS TO BE TREATED AS OWNERS. The Issuer, the
Trustee and any agent of the Issuer or the Trustee may deem and treat the
person in whose name any Security shall be registered upon the Security
register as the absolute owner of such Security (whether or not such Security
shall be overdue and notwithstanding any notation of ownership or other
writing thereon) for the purpose of receiving payment of or on account of the
Principal of and, subject to the provisions of this Indenture, interest on
such Security and for all other purposes; and neither the Issuer nor the
Trustee nor any agent of the Issuer or the Trustee shall be affected by any
notice to the contrary. All such payments so made to any such person, or
upon his order, shall be valid, and, to the extent of the sum or sums so
paid, effectual to satisfy and discharge the liability for moneys payable
upon any such Security.
Section 6.4 SECURITIES OWNED BY ISSUER DEEMED NOT OUTSTANDING. In
determining whether the holders of the requisite aggregate Principal amount of
Securities have concurred in any direction, consent or waiver under this
Indenture, Securities which are owned by the Issuer or any other obligor on the
Securities or any Affiliate of the Issuer or any other obligor on the Securities
shall be disregarded and deemed not to be Outstanding for the purpose of any
such determination, except that for the purpose of determining whether the
Trustee shall be protected in relying on any such direction, consent or waiver
only Securities which the Trustee actually knows are so owned shall be so
disregarded. Securities so owned which have been pledged in good faith and in
respect of which the pledgee
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possesses voting rights may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Securities and that the pledgee is not the Issuer or any
other obligor upon the Securities or any Affiliate of the Issuer or any other
obligor on the Securities. In case of a dispute as to such right, the advise
of counsel shall be full protection in respect of any decision made by the
Trustee in accordance with such advice. Upon request of the Trustee, the
Issuer shall furnish to the Trustee promptly an Officers' Certificate listing
and identifying all Securities, if any, known by the Issuer to be owned or
held by or for the account of any of the above-described persons; and,
subject to Sections 5.1 and 5.2 hereof, the Trustee shall be entitled to
accept such Officers' Certificate as conclusive evidence of the facts therein
set forth and of the fact that all Securities not listed therein are
Outstanding for the purpose of any such determination.
Section 6.5 RIGHT OF REVOCATION OF ACTION TAKEN. At any time prior
to (but not after) the evidencing to the Trustee, as provided in Section 6.1
hereof, of the taking of any action by the holders of the percentage in
aggregate Principal amount of the Securities specified in this Indenture, in
connection with such action, any holder of a Security the serial number of which
is shown by the evidence to be included among the serial numbers of the
Securities the holders of which have consented to such action may, by filing
written notice at the Corporate Trust Office and upon proof of holding as
provided in this Article, revoke such action so far as concerns such Security.
Except as aforesaid any such actions taken by the holder of any Security shall
be conclusive and binding upon such holder and upon all future holders and
owners of such Security and of any Securities issued in exchange or substitution
therefor or upon registration or transfer thereof, irrespective of whether or
not any notation in regard thereto is made upon any such Security. Any action
taken by the holders of the percentage in aggregate Principal amount of the
Securities specified in this Indenture in connection with such action shall be
conclusively binding upon the Issuer, the Trustee and the holders of all the
Securities.
Section 6.6 COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS.
Securityholders may communicate pursuant to Section 312(b) of the Trust
Indenture Act of 1939 with respect to their rights under this Indenture or the
Securities. The Issuer, the Trustee, the Registrar and any other person shall
have the protection of Section 312(c) of the Trust Indenture Act of 1939.
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ARTICLE 7
SUPPLEMENTAL INDENTURES
Section 7.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF
SECURITYHOLDERS. The Issuer, when authorized by a resolution of its Board of
Directors, and the Trustee may from time to time and at any time enter into an
indenture or indentures supplemental hereto for one or more of the following
purposes:
(a) to convey, transfer, assign, mortgage or pledge to the Trustee as
security for the Securities any property or assets;
(b) to evidence the succession of another corporation to the Issuer,
or successive successions, and the assumption by the successor corporation
of the covenants, agreements and obligations of the Issuer pursuant to
Article 8 hereof;
(c) to add to the covenants of the Issuer such further covenants,
restrictions, conditions or provisions as its Board of Directors and the
Trustee shall consider to be for the protection of the holders of
Securities, and to make the occurrence, or the occurrence and continuance,
of a default in any such additional covenants, restrictions, conditions or
provisions an Event of Default permitting the enforcement of all or any of
the several remedies provided in this Indenture as herein set forth;
provided, that in respect of any such additional covenant, restriction,
condition or provision such supplemental indenture may provide for a
particular period of grace after default (which period may be shorter or
longer than that allowed in the case of other defaults) or may provide for
an immediate enforcement upon such an Event of Default or may limit the
remedies available to the Trustee upon such an Event of Default or may
limit the right of the holders of a majority in aggregate Principal amount
of the Securities to waive such an Event of Default;
(d) to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture which may be defective or
inconsistent with any other provision contained herein or in any
supplemental indenture;
(e) to make such other provisions in regard to matters or questions
arising under this Indenture or under any supplemental indenture as the
Board of Directors may deem necessary or desirable and which shall not
adversely affect the interests of the holders of the Securities;
(f) to make any changes required by amendments to the TIA;
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(g) to unilaterally reduce the Conversion Price (as defined in
Section 13.5 hereof) or the Special Conversion Price (as defined in Section
13.5 hereof); and
(h) subject to Section 5.10(c) of this Indenture, appoint a successor
Trustee.
The Trustee is hereby authorized to join in the execution of any such
supplemental indenture, to make any further appropriate agreements and
stipulations which may be therein contained and to accept the conveyance,
transfer, assignment, mortgage or pledge of any property thereunder, but the
Trustee shall not be obligated to enter into any such supplemental indenture
which adversely affects the Trustee's own rights, duties or immunities under
this Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this
Section may be executed without the consent of the holders of any of the
Securities at the time Outstanding, notwithstanding any of the provisions of
Section 7.2 hereof.
Section 7.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF SECURITYHOLDERS.
With the consent (evidenced as provided in Article 6 hereof) of the Holders of
not less than a majority in aggregate principal amount of the Securities at the
time Outstanding, the Issuer, when authorized by a resolution of its Board of
Directors, and the Trustee may, from time to time and at any time, enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of any supplemental Indenture or modifying in any manner the
rights of the holders of the Securities; PROVIDED, that no such supplemental
indenture shall (a) extend the final maturity of any Security, or reduce the
Principal amount thereof, or reduce the rate or extend the time of payment of
interest thereon, or alter the redemption provisions thereof, or impair or
affect the right of any Securityholder to institute suit for the payment or
conversion thereof, or amend Section 4.10 hereof, or adversely affect the right
to convert the Securities into Common Stock or Special Stock or the right to
require the Issuer to redeem the Securities upon a Redemption Event (as defined
in Section 14.3 hereof) in accordance herewith without the consent of the holder
of each Security so affected, PROVIDED, no consent of any Holder of any Security
shall be necessary under this Section 7.2 to permit the Trustee and the Issuer
to execute supplemental indentures pursuant to Section 7.1 hereof and Section
13.6 hereof of this Indenture or (b) reduce the aforesaid percentage in
aggregate principal amount of Securities, the consent of the holders of which is
required for any such supplemental indenture, without the consent of the holders
of all Securities then Outstanding. Notwithstanding any other provision
thereof, no such supplemental indenture shall modify any provision of this
Indenture so as to affect adversely the rights under Article 12
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hereof of any holder of Senior Indebtedness at the time outstanding without
the consent of such holder.
Upon the request of the Issuer, accompanied by a copy of a resolution
of the Board of Directors certified by the Secretary or an Assistant Secretary
of the Issuer authorizing the execution of any such supplemental indenture, and
upon the filing with the Trustee of evidence of the consent of Securityholders
and other documents, if any, required by Section 6.1 hereof, the Trustee shall
join with the Issuer in the execution of such supplemental indenture unless such
supplemental indenture affects the Trustee's own rights, duties or immunities
under this Indenture or otherwise, in which case the Trustee may in its
discretion, but shall not be obligated to, enter into such supplemental
indenture.
It shall not be necessary for the consent of the Securityholders under
this Section to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.
Promptly after the execution by the Issuer and the Trustee of any
supplemental indenture pursuant to the provisions of this Section, the Issuer
shall mail a notice thereof by first-class mail to the holders of Securities at
their addresses as they shall appear on the registry books of the Issuer,
setting forth in general terms the substance of such supplemental indenture.
Any failure of the Issuer to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such supplemental
indenture.
Section 7.3 EFFECT OF SUPPLEMENTAL INDENTURE. Upon the execution of
any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and be deemed to be modified and amended in accordance therewith and
the respective rights, limitations of rights, obligations, duties and immunities
under this Indenture of the Trustee, the Issuer and the holders of Securities
shall thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments, and all the terms and conditions
of any such supplemental indenture shall be and be deemed to be part of the
terms and conditions of this Indenture for any and all purposes.
Section 7.4 DOCUMENTS TO BE GIVEN TO TRUSTEE. The Trustee, subject
to the provisions of Sections 5.1 and 5.2 hereof, may receive an Officers'
Certificate and an Opinion of Counsel as conclusive evidence that any such
supplemental indenture complies with the applicable provisions of this
Indenture.
Section 7.5 NOTATION ON SECURITIES IN RESPECT OF SUPPLEMENTAL
INDENTURES. Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to the provisions of this Article may bear a
notation in form approved
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by the Trustee as to any matter provided for by such supplemental indenture
or as to any action taken at any such meeting. If the Issuer or the Trustee
shall so determine, new Securities so modified as to conform, in the opinion
of the Trustee and the Board of Directors, to any modification of this
Indenture contained in any such supplemental indenture may be prepared by the
Issuer, authenticated by the Trustee and delivered in exchange for the
Securities then Outstanding.
ARTICLE 8
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
Section 8.1 COVENANT NOT TO MERGE, CONSOLIDATE, SELL OR CONVEY
PROPERTY EXCEPT UNDER CERTAIN CONDITIONS. The Issuer covenants that it will not
merge or consolidate with any corporation, partnership or other entity and will
not sell, lease or convey all or substantially all its assets to any entity,
unless the Issuer shall be the surviving entity, or the successor entity that
acquires all or substantially all of the assets of the Issuer shall be a
corporation, partnership or limited liability company or trust organized under
the laws of the United States or a State therein or the District of Columbia and
shall expressly assume by supplemental indenture all obligations of the Issuer
under this Indenture and the Securities, and immediately after giving effect to
such merger, consolidation, sale, lease or conveyance, 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.
Section 8.2 SUCCESSOR ENTITY SUBSTITUTED. In case of any such
consolidation, merger, sale, lease or conveyance, and following such an
assumption by the successor entity, such successor entity shall succeed to and
be substituted for the Issuer, with the same effect as if it had bene named
herein.
Such successor entity may cause to be signed, and may issue either in
its own name or in the name of the Issuer prior to such succession any or all of
the Securities issuable hereunder which theretofore shall not have been signed
by the Issuer and delivered to the Trustee; and, upon the order of such
successor entity, instead of the Issuer, and subject to all the terms,
conditions and limitations in this Indenture prescribed, the Trustee shall
authenticate and shall deliver any Securities which previously shall have been
signed and delivered by the officers of the Issuer to the Trustee for
authentication, and any Securities which such successor entity thereafter shall
cause to be signed and delivered to the Trustee for that purpose. All of the
Securities so issued shall in all respects have the same legal rank and benefit
under this Indenture as the Securities theretofore or thereafter issued in
accordance with the terms of this Indenture as though all such Securities had
been issued at the date of the execution hereof.
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In case of any such consolidation, merger, sale, lease or conveyance
such changes in phraseology and form (but not in substance) may be made in the
Securities thereafter to be issued as may be appropriate.
In the event any such sale or conveyance (other than a conveyance by
way of lease) the Issuer or any successor entity which shall theretofore have
become such in the manner described in this Article shall be discharged from all
obligations and covenants under this Indenture and the Securities and may be
liquidated and dissolved.
Section 8.3 OPINION OF COUNSEL TO TRUSTEE. The Trustee, subject to
the provisions of Sections 5.1 and 5.2 hereof, may receive an Opinion of Counsel
as conclusive evidence that any such consolidation, merger, sale, lease or
conveyance, and any such assumption, and any such liquidation or dissolution,
complies with the applicable provisions of this Indenture.
Section 8.4 SUBSIDIARY AS SUCCESSOR. In the event that a
subsidiary of the Issuer is or becomes the holder of all or substantially all
of the assets of the Issuer, then such subsidiary shall expressly assume by
supplemental indenture all obligations of the Issuer under this Indenture and
the Securities. Notwithstanding the assumption of the Issuer's obligations by
a subsidiary of the Issuer, the Issuer will remain fully obligated under this
Indenture and the Securities.
ARTICLE 9
SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS
Section 9.1 SATISFACTION AND DISCHARGE OF INDENTURE. If at any time
(a) the Issuer shall have delivered to the Trustee for cancellation all
Securities theretofore authenticated (other than any Securities which shall have
been destroyed, lost or stolen and which shall have been replaced or paid as
provided in Section 2.7 hereof) and Securities for whose payment money has
theretofore been deposited in trust with the Trustee or a paying agent and
repaid pursuant to Section 9.4 hereof or (b)(i) all such Securities not
theretofore delivered to the Trustee for cancellation shall have become due and
payable, or are by their terms to become due and payable within one year or are
to be called for redemption within one year under arrangements reasonably
satisfactory to the Trustee for the giving of notice of redemption, and (ii) the
Issuer shall have irrevocably deposited or caused to be deposited with the
Trustee as trust funds the entire amount in cash (other than moneys repaid by
the Trustee or any Paying Agent to the Issuer in accordance with Section 9.4
hereof) or direct obligations of the United States of America backed by its full
faith and credit, maturing as to Principal and interest in such amounts and at
such times as in the written opinion of a firm of nationally recognized
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independent public accountants delivered to the Trustee will insure the
availability of cash sufficient to pay at maturity or upon redemption all
such Securities not theretofore delivered to the Trustee for cancellation,
including Principal and interest due or to become due to such date of
maturity or redemption as the case may be, and if, in any such case, the
Issuer shall also pay or cause to be paid all other sums payable hereunder by
the Issuer, then this Indenture shall cease to be of further effect (except
as to (i) rights of registration of transfer, conversion and exchange, and
the Issuer's right to optional redemption, (ii) substitution of apparently
mutilated, defaced, destroyed, lost or stolen Securities, (iii) rights of
holders to receive payments of Principal thereof and interest thereon upon
the original stated due dates therefor (but not upon acceleration), (iv) the
rights, obligations and immunities of the Trustee hereunder and (v) the
rights of the Securityholders as beneficiaries hereof with respect to the
property so deposited with the Trustee payable to all or any of them), and
the Trustee, on demand of the Issuer accompanied by an Officers' Certificate
and an Opinion of Counsel and at the cost and expense of the Issuer, shall
execute proper instruments acknowledging such satisfaction of and discharging
this Indenture, provided that the rights of holders of the Securities to
receive amounts in respect of Principal of and interest on the Securities
held by them shall not be delayed longer than required by then-applicable
mandatory rules or policies of any securities exchange upon which the
Securities are listed.
The Issuer agrees to reimburse the Trustee for any costs or expenses
thereafter reasonably and properly incurred and to compensate the Trustee for
any services thereafter reasonably and properly rendered by the Trustee in
connection with this Indenture or the Securities.
Section 9.2 APPLICATION BY TRUSTEE OF FUNDS DEPOSITED FOR PAYMENT OF
SECURITIES. Subject to Section 9.4 hereof, all moneys deposited with the
Trustee pursuant to Section 9.1 hereof shall be held in trust and applied by it
to the payment, either directly or through any paying agent (including the
Issuer acting as its own paying agent), to the holders of the particular
Securities for the payment or redemption for which such moneys have been
deposited with the Trustee, of all sums due and to become due thereon for
Principal and interest, but such money need not be segregated from other funds
except to the extent required by law. Moneys held in trust pursuant to Section
9.1 hereof shall not be subject to the claims of holders of Senior Indebtedness
under Article Twelve.
Section 9.3 REPAYMENT OF MONEYS HELD BY PAYING AGENT. In connection
with the satisfaction and discharge of this Indenture all moneys then held by
any Paying Agent under the provisions of this Indenture shall, upon demand of
the Issuer, be repaid to it or paid to the Trustee and thereupon such Paying
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Agent shall be released from all further liability with respect to such moneys.
Section 9.4 RETURN OF MONEYS HELD BY TRUSTEE AND PAYING AGENT
UNCLAIMED FOR TWO YEARS. Any moneys deposited with or paid to the Trustee or
any Paying Agent for the payment of the Principal of, interest on, or
payments in respect of redemptions of any Security and not applied but
remaining unclaimed for two years after the date upon which such Principal,
interest or redemption payment shall have become due and payable, shall,
upon the written request of the Issuer and unless otherwise required by
mandatory provisions of applicable escheat or abandoned or unclaimed property
law, be repaid to the Issuer by the Trustee or such Paying Agent, and the
holder of such Security shall, unless otherwise required by mandatory
provisions of applicable escheat or abandoned or unclaimed property laws,
thereafter look only to the Issuer for any payment which such holder may be
entitled to collect, and all liability of the Trustee or any paying agent
with respect to such moneys shall thereupon cease.
ARTICLE 10
MISCELLANEOUS PROVISIONS
Section 10.1 INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS OF
ISSUER AND OTHERS EXEMPT FROM INDIVIDUAL LIABILITY. No recourse under or upon
any obligations, covenant or agreement contained in this Indenture, or in any
Security, or because of any indebtedness evidenced thereby, shall be had against
any incorporator, as such, or against any past, present or future stockholder,
officer, director, employee, manager, agent or Affiliate, as such, of the Issuer
or of any successor, either directly or through the Issuer or any successor,
under any rule of law, statute or constitutional provision or by the enforcement
of any assessment or by any legal or equitable proceeding or otherwise, all such
liability being expressly waived and released by the acceptance of the
Securities by the holders thereof and as part of the consideration for the issue
of the Securities.
Section 10.2 PROVISIONS OF INDENTURE FOR THE SOLE BENEFIT OF PARTIES
AND SECURITYHOLDERS. Nothing in this Indenture or in the Securities, expressed
or implied, shall give or be construed to give to any person, firm or
corporation, other than the parties hereto and their successors and the holders
of Senior Indebtedness and the holders of the Securities, any legal or equitable
right, remedy or claim under this Indenture or under any covenant or provision
herein contained, all such covenants and provisions being for the sole benefit
of the parties hereto and their successors and the holders of Senior
Indebtedness and of the holders of the Securities.
Section 10.3 SUCCESSORS AND ASSIGNS OF ISSUER BOUND BY INDENTURE.
All the covenants, stipulations, promises and
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agreements in this Indenture contained by or in behalf of the Issuer shall
bind its successors and assigns, whether so expressed or not.
Section 10.4 NOTICES AND DEMANDS ON ISSUER, TRUSTEE AND
SECURITYHOLDERS. Any notice or demand which by any provision of this Indenture
is required or permitted to be given or served by the Trustee or by the holders
of Securities to or on the Issuer may be given or served by being deposited
postage prepaid, first-class mail or a national next-day delivery service
(except as otherwise specifically provided herein) addressed (until another
address of the Issuer is filed by the Issuer with the Trustee) to Alliance
Gaming Corporation, 4380 Boulder Highway, Las Vegas, Nevada 89121. Any notice,
direction, request or demand by the Issuer or any Securityholder to or upon the
Trustee shall be deemed to have been sufficiently given or made, for all
purposes, if in writing and given or made at the Corporate Trust Office.
Where this Indenture provides for notice to holders, such notice shall
be sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class postage prepaid, to each holder entitled thereto, at his
last address as it appears in the Security register. In any case where notice
to holders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular holder shall affect the
sufficiency of such notice with respect to other holders. Where this Indenture
provides for notice in any manner, such notice may be waived in writing by the
person entitled to receive such notice, either before or after the event, and
such waiver shall be the equivalent of such notice. Waivers of notice by
holders shall be filed with the Trustee, but such filing shall not be a
condition precedent to the validity of any action taken in reliance upon such
waiver.
In case, by reason of the suspension of or irregularities in regular
mail service, it shall be impracticable to mail notice to the Issuer and
Securityholders when such notice is required to be given pursuant to any
provision of this Indenture, then any manner of giving such notice as shall be
satisfactory to the Trustee shall be deemed to be a sufficient giving of such
notice.
Section 10.5 OFFICERS' CERTIFICATES AND OPINIONS OF COUNSEL;
STATEMENTS TO BE CONTAINED THEREIN. Upon any application or demand by the
Issuer to the Trustee to take any action under any of the provisions of this
Indenture, the Issuer shall furnish to the Trustee an Officers' Certificate
stating that all conditions precedent provided for in this Indenture relating to
the proposed action have been complied with and an Opinion of Counsel stating
that in the opinion of such counsel all such conditions precedent have been
complied with, except that in the case of any such application or demand as to
which the furnishing of such documents is specifically required by any
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provision of this Indenture relating to such particular application or
demand, no additional certificate or opinion need be furnished.
Each certificate or opinion provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or covenant
provided for in this Indenture shall include (a) a statement that the person
making such certificate or opinion has read such covenant or condition, (b) 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, (c) 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 (d) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.
Any certificate, statement or opinion of an officer of the Issuer may
be based, insofar as it relates to legal matters, upon a certificate or opinion
of or representations by counsel, unless such officer knows that the certificate
or opinion or representations with respect to the matters upon which his
certificate, statement or opinion may be based as aforesaid are erroneous, or in
the exercise of reasonable care should know that the same are erroneous. Any
certificate, statement or opinion of counsel may be based, insofar as it relates
to factual matters information with respect to which is in the possession of the
Issuer, upon the certificate, statement or opinion of or representations by an
officer or officers of the Issuer, unless such counsel knows that the
certificate, statement or opinion or representations with respect to the matters
upon which his certificate, statement or opinion may be based as aforesaid are
erroneous, or in the exercise of reasonable care should know that the same are
erroneous.
Any certificate, statement or opinion of an officer of the Issuer or
of counsel may be based, insofar as it relates to accounting matters, upon a
certificate or opinion of or representations by an accountant or firm of
accountants in the employ of the Issuer, unless such officer or counsel, as the
case may be, knows that the certificate or opinion or representations with
respect to the accounting matters upon which his certificate, statement or
opinion may be based as aforesaid are erroneous, or in the exercise of
reasonable care should know that the same are erroneous.
Any certificate or opinion of any independent firm of public
accountants filed with the Trustee shall contain a statement that such firm is
independent.
Section 10.6 PAYMENTS DUE ON SATURDAYS, SUNDAYS AND HOLIDAYS. If the
date of maturity of interest on or Principal of
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the Securities or the date fixed for redemption of any Security shall not
be a Business Day, then payment of interest or Principal need not be made on
such date, but may be made on the next succeeding Business Day with the same
force and effect as if made on the date of maturity or the date fixed for
redemption, and no interest shall accrue for the period after such date.
Section 10.7 CONFLICT OF ANY PROVISION OF INDENTURE WITH TRUST
INDENTURE ACT OF 1939. If and to the extent that any provision of this
Indenture limits, qualifies or conflicts with another provision included in this
Indenture by operation of Sections 310 to 317, inclusive, of the Trust Indenture
Act of 1939, which Sections are incorporated herein by reference and made a part
hereof (an "incorporated provision"), such incorporated provision shall control.
Section 10.8 GOVERNING LAW. This Indenture and each Security shall
be deemed to be a contract under, and shall be governed by and construed under
the laws of the State of New York, except as otherwise required by mandatory
provisions of Nevada law, including without limitation, the Nevada Gaming
Control Act and the regulations promulgated thereunder.
Section 10.9 COUNTERPARTS. This Indenture may be executed in any
number of counterparts, each of which shall be an original; but such
counterparts shall together constitute but one and the same instrument.
Section 10.10 EFFECT OF HEADINGS. The Article and Section headings
herein and the Table of Contents are for convenience only and shall not affect
the construction hereof.
ARTICLE 11
REDEMPTION OF SECURITIES
Section 11.1 RIGHT OF OPTIONAL REDEMPTION; PRICES.
(a) The Issuer at its option may, at any time, redeem all, or from
time to time any part of, the Securities upon payment of the optional
redemption prices set forth in the form of Security attached as Exhibit A
hereto, together with accrued but unpaid interest to the date fixed for
redemption to the extent not theretofore paid, if any; provided, that until
September 15, 1996 the Securities cannot be so redeemed at the option of the
Issuer unless the last sale price of the Common Stock as reported on the
Composite Tape for New York Stock Exchange Listed Stocks (or if not listed or
admitted to trading on such Exchange, then on the principal national
securities exchange on which the Common Stock is listed or admitted to
trading, or, if not listed or admitted to trading on any national securities
exchange, on the NASDAQ/NMS or a similar organization if NASDAQ/NMS is no
longer reporting
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information) has equaled or exceed 250% of the then existing Conversion Price
(as defined in Section 13.5 hereof) per share for at least 20 out of any 30
consecutive Trading Days ending within 60 days before the notice of
redemption is first mailed.
(b) Notwithstanding any other provision hereof, if a Holder or
beneficial owner of a Security or any underlying Common Stock or Special Stock
is required by the Nevada Gaming Commission to be found suitable, the Holder or
beneficial owner shall apply for a finding of suitability within 30 days after
the Nevada Gaming Commission's request. The applicant for a finding of
suitability shall pay all costs of the investigation for such finding of
suitability. If a Holder or beneficial owner is required to be found suitable
and is not found suitable by the Nevada Gaming Commission, at the Issuer's
option (i) the Holder or beneficial owner shall, upon request of the Issuer,
dispose of his Securities and underlying Common Stock or Special Stock within 30
days or within that time prescribed by the Nevada Gaming Commission, whichever
is earlier, or (ii) the Issuer may, at its option, redeem the Holder's or
beneficial owner's Securities at the lesser of (x) the principal amount thereof
and (y) the price at which the Securities were acquired by the Holder or
beneficial owner, together with, in either case, accrued interest to the date of
the finding of unsuitability by the Nevada Gaming Commission.
Section 11.2 NOTICE OF REDEMPTION; PARTIAL REDEMPTIONS. Notice of
redemption to the Holders of Securities to be redeemed as a whole or in part
shall be given by mailing notice of such redemption by first class mail, postage
prepaid, at least 20 days and not more than 60 days prior to the date fixed for
redemption to such Holders of Securities at their last addresses as they shall
appear upon the registry books. Any notice which is mailed in the manner herein
provided shall be conclusively presumed to have been duly given, whether or not
the Holder receives the notice. Failure to give notice by mail, or any defect
in the notice to the Holder of any Security designated for redemption as a whole
or in part, shall not affect the validity of the proceedings for the redemption
of any other Security.
The notice of redemption to each such Holder shall identify the
Securities to be redeemed (including CUSIP numbers) and shall specify the
Principal amount of each Security held by such Holder to be redeemed, the
date fixed for redemption, the redemption price, the place or places of
payment, that payment will be made upon presentation and surrender of such
Securities, that interest accrued but unpaid to the date fixed for redemption
will be paid as specified in said notice and that on and after said date
interest thereon or on the portions thereof to be redeemed will cease to
accrue and shall also specify the Conversion Price (as defined in Section
13.5 hereof) then in effect and the date on which the right to convert such
Securities or the portions thereof to be redeemed will expire. In case any
Security is to be redeemed in part only the notice of redemption shall state
the portion of the Principal amount
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thereof to be redeemed and shall state that on and after the date fixed for
redemption, upon surrender of such Security, a new Security or Securities in
Principal amount equal to the unredeemed portion thereof will be issued.
The notice of redemption of Securities to be redeemed at the option of
the Issuer shall be given by the Issuer or, at the Issuer's request, by the
Trustee in the name and at the expense of the Issuer.
At least one Business Day prior to the redemption date specified in
the notice of redemption given as provided in this Section, the Issuer will
deposit with the Trustee or with one or more Paying Agents (or, if the Issuer
is acting as its own Paying Agent, set aside, segregate and hold in trust as
provided in Section 3.4 hereof) an amount of money sufficient to redeem on
the redemption date all the Securities so called for redemption (other than
those theretofore surrendered for conversion into Common Stock or Special
Stock), at the appropriate redemption price, together with accrued but unpaid
interest to the date fixed for redemption. If any Security called for
redemption is converted pursuant hereto, any money deposited with the Trustee
or any Paying Agent or so segregated and held in trust for the redemption of
such Security shall be paid to the Issuer upon the Issuer's request, or, if
then held by the Issuer, shall be discharged from such trust. The Issuer will
deliver to the Trustee no less than 10 Business Days prior to the mailing of
notices of redemption as required by this Section 11.2 an Officers'
Certificate stating the aggregate Principal amount of Securities to be
redeemed, as well as all other information required to be in such notices.
If less than all the Securities are to be redeemed, the Trustee shall
select, by lot, pro rata or in such manner as the Trustee shall deem fair and
equitable, Securities to be redeemed in whole or in part. Securities may be
redeemed in part in integral multiples of $1,000 only. The Trustee shall
promptly notify the Issuer in writing of the Securities selected for redemption
and, in the case of any Securities selected for partial redemption, the
Principal amount thereof to be redeemed. For all purposes of this Indenture,
unless the context otherwise requires, all provisions relating to the redemption
of Securities shall relate, in the case of any Security redeemed or to be
redeemed only in part, to the portion of the Principal amount of such Security
which has been or is to be redeemed. If any Security selected for partial
redemption is surrendered for conversion after such selection, the converted
portion of such Security shall be deemed (so far as may be) to be the portion
selected for redemption. Upon any redemption of less than all the Securities,
the Issuer and the Trustee may treat as Outstanding Securities surrendered for
conversion during the period of 15 days next preceding the mailing of a notice
of redemption, and need not treat as Outstanding any Security authenticated and
delivered during such period in exchange for
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the unconverted portion of any Security converted in part during such period.
Section 11.3 PAYMENT OF SECURITIES CALLED FOR REDEMPTION. If notice
of redemption has been given as above provided, the Securities or portions of
Securities specified in such notice shall become due and payable on the date and
at the place stated in such notice at the applicable redemption price, together
with interest accrued but unpaid to the date fixed for redemption, and on and
after said date (unless the Issuer shall default in the payment of such
Securities at the redemption price, together with interest accrued but unpaid to
said date) interest on the Securities or portions of Securities so called for
redemption shall cease to accrue and, except as provided in Sections 5.5 and 9.4
hereof, such Securities shall cease from and after the date fixed for redemption
to be convertible into Common Stock or Special Stock and to be entitled to any
benefit or security under this Indenture, and the holders thereof shall have no
right in respect of such Securities except the right to receive the redemption
price thereof and unpaid interest to the date fixed for redemption. On
presentation and surrender of such Securities at a place of payment specified in
said notice, said Securities or the specified portions thereof shall be paid and
redeemed by the Issuer at the applicable redemption price, together with
interest accrued thereon to the date fixed for redemption; PROVIDED that any
semi-annual payment of interest becoming due on the date fixed for redemption
shall be payable to the holders of such Securities registered as such on the
relevant record date subject to the terms and provisions of Section 2.4 hereof.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the Principal shall, until paid or duly
provided for, bear interest from the date fixed for redemption at the rate borne
by the Security and such Security shall remain convertible into Common Stock or
Special Stock until the Principal of such Security shall have been paid or duly
provided for.
Upon presentation of any Security redeemed in part only, the Issuer
shall execute and the Trustee shall authenticate and deliver to or on the order
of the holder thereof, at the expense of the Issuer, a new Security or
Securities, of authorized denominations, in Principal amount equal to the
unredeemed portion of the Security so presented.
Section 11.4 EXCLUSION OF CERTAIN SECURITIES FROM ELIGIBILITY FOR
SELECTION FOR REDEMPTION. Securities shall be excluded from eligibility for
selection for redemption if they are identified by registration and certificate
number in a written statement signed by an authorized officer of the Issuer and
delivered to the Trustee at least 40 days prior to the last date on which notice
of redemption may be given as being owned of record and beneficially by, and not
pledged or hypothecated by
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either (a) the Issuer or (b) an entity specifically identified in such
written statement as an Affiliate of the Issuer.
ARTICLE 12
SUBORDINATION OF SECURITIES
Section 12.1 AGREEMENT TO SUBORDINATE. The Issuer covenants and
agrees, and each holder of Securities issued hereunder by his acceptance
thereof likewise covenants and agrees, that all Securities shall be issued
subject to the provisions of this Article 12; and each person holding any
Security, whether upon original issue or upon transfer, assignment or
exchange thereof accepts and agrees that the Principal of, interest on and
payments in respect of redemption at the option of Holders of all Securities
issued hereunder shall, to the extent and in the manner herein set forth, be
subordinated and subject in right of payment to the prior payment in full of
all Senior Indebtedness.
Section 12.2 PAYMENTS TO SECURITYHOLDERS. No payment on account
of Principal of, interest on and redemptions at the option of Holders of the
Securities shall be made if at the time of such payment or immediately after
giving effect thereto there shall have occurred and be continuing a default
in any payment with respect to any Senior Indebtedness permitting the holders
thereof to accelerate the maturity thereof or a default in any payment due
thereon at maturity or any judicial proceeding shall be pending with respect
to any such default and such event of default shall not have been cured or
waived or shall not have ceased to exist. In addition, upon the occurrence
of any other default with respect to any Senior Indebtedness permitting any
holder of or agent for a syndicate of lenders which syndicate in the
aggregate holds in excess of $5 million of Senior Indebtedness to accelerate
the maturity thereof, and upon receipt by the Issuer and the Trustee of
written notice of such occurrence (a "Blockage Notice") by any of the
foregoing Persons, no payment on account of Principal of, interest on and
redemptions at the option of Holders of the Securities in cash, property or
securities shall be made by the Issuer to the Trustee or any holder of the
Securities during a period (the "Payment Blockage Period") commencing on the
date of receipt of a Blockage Notice by the Issuer and ending 179 days
thereafter (unless such Payment Blockage Period shall be earlier terminated
by written notice to the Trustee), or such earlier date, if any, on which the
Senior Indebtedness to which such event of default relates is paid in full or
such event of default is waived in writing by the holders or owners of such
Senior Indebtedness or otherwise cured. Not more than one Payment Blockage
Period may be commenced with respect to the Securities during any period of
360 consecutive days.
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Upon (i) any acceleration of the Principal amount due on the
Securities or (ii) any payment or distribution of assets of the Issuer of any
kind or character, whether in cash, property or securities, to creditors upon
any dissolution, winding-up, assignment for the benefit of creditors,
marshalling of assets and liabilities or total or partial liquidation or
arrangement or reorganization of the Issuer, whether voluntary or involuntary
or in bankruptcy, insolvency, receivership or other proceedings, all amounts
due or to become due upon all Senior Indebtedness shall first be paid in full
in cash, or payment thereof provided for in accordance with its terms, before
any payment is made on account of the Principal of, interest on or
redemptions at the option of the Holders of the Securities, and upon any such
dissolution, winding-up, assignment for the benefit of creditors, marshalling
of assets and liabilities or liquidation, arrangement or reorganization, any
payment or distribution of assets of the Issuer of any kind or character,
whether in cash, property or securities, to which the holders of the
Securities or the Trustee under this Indenture would be entitled, except for
the provisions hereof, shall be paid by the Issuer or by any receiver,
trustee in bankruptcy, liquidating trustee, agent or other person making such
payment or distribution, or by the Holders of the Securities or by the
Trustee under this Indenture if received by them or it, directly to the
holders of Senior Indebtedness (pro rata to such holders on the basis of the
respective amounts of Senior Indebtedness held by such holders) or their
respective 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, as their respective interests may appear, to the extent
necessary to pay all Senior Indebtedness in full in cash (including, without
limitation, except to the extent, if any, prohibited by mandatory provisions
of law, post-petition interest, in any such proceedings), after giving effect
to any concurrent payment or distribution to or for the holders of Senior
Indebtedness, before any payment or distribution is made to the holders of
the indebtedness evidenced by the Securities or to the Trustee under this
Indenture.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Issuer of any kind or character, whether in cash,
property or securities, prohibited by the foregoing, shall be received by the
Trustee under this Indenture or by any Holder of the Securities before all
Senior Indebtedness is paid in full or provision is made for such payment in
accordance with its terms, such payment or distribution shall be held in trust
for the benefit of and shall be paid over or delivered to the holders of such
Senior Indebtedness or their respective 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, as their respective interests may
appear, for application to the payment of all Senior Indebtedness remaining
unpaid until all such Senior Indebtedness shall have been paid in
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full in accordance with its terms, after giving effect to any concurrent
payment or distribution to or for the holders of such Senior Indebtedness.
For purposes of this Article 12, the words, "cash, property or
securities" shall not be deemed to include shares of stock of the Issuer as
reorganized or readjusted, or securities of the Issuer or any other corporation
provided for by a plan of arrangement, reorganization or readjustment, the
payment of which is subordinated (to a greater extent than provided in this
Article with respect to the Securities) to the payment of all Senior
Indebtedness which may at the time be outstanding; provided, that (i) the Senior
Indebtedness is assumed by the new corporation, if any, resulting from any such
arrangement, reorganization or readjustment, and (ii) the rights of the holders
of the Senior Indebtedness are not, without the consent of such holders, altered
by such arrangement, reorganization or readjustment. The consolidation of the
Issuer with, or the merger of the Issuer into, another corporation or the
liquidation or dissolution of the Issuer following the conveyance or transfer of
all or substantially all of its assets, to another corporation upon the terms
and conditions provided in Article 8 hereof shall not be deemed a dissolution,
winding-up, liquidation or reorganization for the purposes of this Section 12.2
if such other corporation shall, as a part of such consolidation, merger,
conveyance or transfer, comply with the conditions stated in Article 8 hereof.
Nothing in this Section shall apply to claims of, or payments to, the Trustee
under or pursuant to Section 5.6 hereof, except as provided therein. This
Section 12.2 shall be subject to the further provisions of Section 12.5 hereof.
Section 12.3 SUBROGATION OF SECURITIES. Subject to the payment in
full of all Senior Indebtedness, the Holders of the Securities shall be
subrogated to the rights of the holders of Senior Indebtedness to receive
payments or distributions of cash, property, securities of the Issuer
applicable to the Senior Indebtedness until the Principal of and interest on
and redemption prices payable at the option of the Holders of the Securities
shall be paid in full; and, for the purposes of such subrogation, no payments
or distributions to the holders of the Senior Indebtedness of any cash,
property or securities to which the Holders of the Securities or the Trustee
on their behalf would be entitled except for the provisions of this Article
12, and no payment pursuant to the provisions of this Article 12 to the
holders of Senior Indebtedness by Holders of the Securities or the Trustee on
their behalf shall, as between the Issuer, its creditors other than holders
of Senior Indebtedness and the Holders of the Securities, be deemed to be a
payment by the Issuer to or on account of the Senior Indebtedness, and no
payments or distributions of cash, property or securities to or for the
benefit of the Securityholders pursuant to the subrogation provision of this
Article 12, which would otherwise have been paid to the holders of Senior
Indebtedness shall be deemed to be
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a payment by the Issuer to or for the account of the Securities. It is
understood that the provisions of this Article 12 are and are intended solely
for the purpose of defining the relative rights of the Holders of the
Securities, on the one hand, and the holders of the Senior Indebtedness, on
the other hand.
Nothing contained in this Article 12 or elsewhere in this Indenture
or in the Securities is intended to or shall impair, as between the Issuer,
its creditors other than the holders of Senior Indebtedness, and the Holders
of the Securities, the obligation of the Issuer, which is absolute and
unconditional, to pay to the Holders of the Securities the Principal of,
interest on and redemption prices payable at the option of the Holders of
the Securities as and when the same shall become due and payable in
accordance with their terms, or is intended to or shall affect the relative
rights of the holders of the Securities and creditors of the Issuer other
than the holders of the Senior Indebtedness, nor shall anything herein or
therein prevent the Holder of any Security or the Trustee on his behalf from
exercising all remedies otherwise permitted by applicable law upon default
under this Indenture, subject to the rights, if any, under this Article 12 of
the holders of Senior Indebtedness in respect of cash, property or securities
of the Issuer received upon the exercise of any such remedy.
Upon any payment or distribution of assets of the Issuer referred to
in this Article 12, the Trustee, subject to the provisions of Sections 5.1 and
5.2 hereof, and the Holders of the Securities shall be entitled to rely upon any
order or decree made by any court of competent jurisdiction in which such
bankruptcy, dissolution, winding-up, liquidation, arrangement or reorganization
proceedings are pending, or a certificate of the receiver, trustee in
bankruptcy, liquidating trustee, agent or other person making such payment or
distribution, delivered to the Trustee or to the Holders of the Securities, for
the purpose of ascertaining the persons entitled to participate in such
distribution, the holders of the Senior Indebtedness and other indebtedness of
the Issuer, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article 12.
Section 12.4 AUTHORIZATION BY SECURITYHOLDERS. Each Holder of a
Security by his acceptance thereof authorizes the Trustee in his behalf to take
such action as may be necessary or appropriate to effectuate the subordination
provided in this Article 12 and appoints the Trustee his, her or its attorney-
in-fact for any and all such purposes.
Section 12.5 NOTICE TO TRUSTEE. The Issuer shall give prompt written
notice to the Trustee and to any Paying Agent of any fact known to the Issuer
which would prohibit the making of any payment of moneys to or by the Trustee or
any Paying Agent in respect of the Securities pursuant to the provisions of this
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Article 12. Regardless of anything to the contrary contained in this Article 12
or elsewhere in this Indenture, the Trustee shall not be charged with knowledge
of the existence of any Senior Indebtedness or of any default or event of
default with respect to any Senior Indebtedness or of any other facts which
would prohibit the making of any payment of moneys to or by the Trustee, unless
and until the Trustee shall have received notice in writing at its Corporate
Trust Office to that effect signed by an officer of the Issuer, or by a holder
or agent of a holder of Senior Indebtedness who shall have been certified by the
Issuer or otherwise established to the reasonable satisfaction of the Trustee to
be such holder or agent, or by the trustee under any indenture pursuant to which
Senior Indebtedness shall be outstanding, and, prior to the receipt of any such
written notice, the Trustee shall, subject to Sections 5.1 and 5.2 hereof, be
entitled to assume that no such facts exist; provided that if on a date at least
one Business Day prior to the date upon which by the terms hereof any such
moneys shall become payable for any purpose (including, without limitation, the
payment of the Principal of, or interest on, any Security) the Trustee shall not
have received with respect to such moneys the notice provided for in this
Section, then, regardless of anything herein to the contrary, the Trustee shall
have full power and authority to receive such moneys and to apply the same to
the purpose for which they were received, and shall not be affected by any
notice to the contrary which may be received by it on or after such prior date.
Regardless of anything to the contrary herein, nothing shall prevent
(a) any payment by the Issuer or the Trustee to the Securityholders of amounts
in connection with a redemption of Securities if (i) notice of such redemption
has been given pursuant to Article 11 prior to the receipt by the Trustee of
written notice as aforesaid, and (ii) such notice of redemption is given not
earlier than 60 days before the redemption date, or (b) any payment by the
Trustee to the Securityholders of amounts deposited with it pursuant to Section
9.1 hereof.
The Trustee shall be entitled to rely on the delivery to it of a
written notice by a Person representing himself to be a holder of Senior
Indebtedness (or a trustee on behalf of such holder) to establish that such
notice has been given by a holder of Senior Indebtedness or a trustee on behalf
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 12, 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
such Person under this Article 12, and if such evidence is not furnished the
Trustee may
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defer any payment to such Person pending judicial determination as to the right
of such Person to receive such payment.
Section 12.6 TRUSTEE'S RELATION TO SENIOR INDEBTEDNESS. The Trustee
and any agent of the Issuer or the Trustee shall be entitled to all the rights
set forth in this Article 12 with respect to any Senior Indebtedness which may
at any time be held by it in its individual or any other capacity to the same
extent as any other holder of Senior Indebtedness and nothing in this Indenture
shall deprive the Trustee, or any such agent, of any of its rights as such
holder. Nothing in this Article 12 shall apply to claims of, or payments to,
the Trustee under or pursuant to Section 5.6 hereof.
The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness and shall not be liable to any such holders if
the Trustee shall in good faith without gross negligence pay over or distribute
to Holders of Securities or to the Issuer or to any other person cash, property
or securities to which any holders of Senior Indebtedness shall be entitled by
virtue of this Article 12 or otherwise. With respect to the holders of Senior
Indebtedness, the Trustee undertakes to perform or to observe only such of
its covenants and obligations as are specifically set forth in this Article
12, and no implied covenants or obligations with respect to the holders of
Senior Indebtedness shall be read into this Indenture against the Trustee.
Section 12.7 NO IMPAIRMENT OF SUBORDINATION. No right of any present
or future holder 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 Issuer or by any act or failure to act, in
good faith, by any such holder, or by any noncompliance by the Issuer with the
terms, provisions and covenants of this Indenture, regardless of any knowledge
thereof which any such holder may have or otherwise be charged with. No
modification, amendment, extension or renewal of any Senior Indebtedness shall
impair the rights of the holders of such Senior Indebtedness under the
subordination provisions of this Article 12.
Section 12.8. SECURITIES SENIOR TO OLD CONVERTIBLE DEBENTURES. The
Securities shall be superior in right of payment to the Old Convertible
Debentures and to any other Indebtedness which is pari passu with, or
subordinated to, the Old Convertible Debentures.
ARTICLE 13
CONVERSION OF SECURITIES
Section 13.1 CONVERSION PRIVILEGE; MANDATORY CONVERSION UPON
CONSUMMATION OF MERGER.
(a) Subject to and upon compliance with the provisions of this
Article 13 and subject to Sections 14.2(b) and (d) hereof, at the option of the
Holder thereof, any Security may, at any time until and including, but not after
the close of business on the second Business Day prior to September 15, 2003 or
in case such Security or some portion thereof shall be called for redemption
prior to such date, then, with respect to such
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Security or portion thereof as is so called, until and including, but (if no
default is made in making due provision for the payment of the redemption
price) not after, the close of business on, the fifth Business Day prior to
the date fixed for redemption, be converted, in whole, or in part in integral
multiples of $1,000 principal amount, into fully paid and non-assessable
shares of Common Stock issuable upon conversion of the Securities, at the
Conversion Price (as defined in Section 13.5 hereof) in effect at the Date of
Conversion (as hereinafter defined).
(b) In the event that prior to ____________, 1996 the Merger
becomes effective under Section 251 of the Delaware General Corporation Law,
then at the time and date of such effectiveness (the "Effective Time of the
Merger"), each Security then outstanding shall be automatically, and without
any further action on the part of the Issuer, the Trustee or any Securityholder,
converted into fully paid and non-assessable shares of Common Stock, at the
Special Conversion Price (as defined in Section 13.5 hereof) in effect at the
Effective Time of the Merger; provided, however, that, if so specified on the
face of any Security, then, in lieu of such shares of Common Stock, such
Security shall be automatically converted into fully paid and non-assessable
shares of Special Stock, at the conversion rate of ten shares of Special Stock
for each $1,000 principal amount of Securities held by such Securityholders
immediately prior to the Effective Time of the Merger. From and after the
Effective Time of the Merger, all of the Securities shall cease to be
convertible into Common Stock pursuant to Section 13.1(a) hereof, and the
holders thereof shall have no right in respect of the Securities (including
without limitation the right to receive interest and Principal) except the
right to receive shares of Common Stock or Special Stock in accordance with
this Section 13.1(b) and the procedures set forth in Section 13.2(b) hereof.
Section 13.2 EXERCISE OF CONVERSION PRIVILEGE.
(a) In order to exercise the conversion privilege, the holder of any
Security to be converted pursuant to Section 13.1(a) hereof shall surrender such
Security to the Issuer at any time during usual business hours at its office or
agency maintained for the purpose as provided in this Indenture, accompanied by
a fully executed written optional conversion notice, in substantially the form
set forth on the reverse of the Security, that the holder elects to convert such
Security or a stated portion thereof constituting an integral multiple of $1,000
principal amount, and, if such Security is surrendered for conversion during the
period between the close of business on March 1 or September 1 in any year and
the opening of business on the following March 15 or September 15 and has not
been called for redemption on a redemption date within such period accompanied
also by payment of an amount equal to the interest
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payable on such March 15 or September 15 on the principal amount of the
Security being surrendered for conversion. Such notice shall also state the
name or names (with address) in which the certificate or certificates for
shares of Common Stock shall be issued. Securities surrendered for
conversion pursuant to Section 13.1(a) hereof shall (if so required by the
Issuer or the Trustee) be duly endorsed by, or be accompanied by a written
instrument or instruments of transfer in form satisfactory to the Trustee
duly executed by, the holder or his attorney duly authorized in writing. As
promptly as practicable after the receipt of such notice and the surrender of
such Security as aforesaid, the Issuer shall, subject to the provisions of
Section 13.8 hereof, issue and deliver at such office or agency to such
holder, or on his written order, a certificate or certificates for the number
of full shares of Common Stock issuable on such conversion of Securities
pursuant to Section 13.1(a) hereof in accordance with the provisions of this
Article and cash, as provided in Section 13.3 hereof, in respect of any
fraction of a share of Common Stock otherwise issuable upon such conversion.
Such conversion shall be deemed to have been effected immediately prior to
the close of business on the date (herein called the "Date of Conversion") on
which such notice shall have been received by the Issuer and such Security
shall have been surrendered as aforesaid, and the person or persons in whose
name or names any certificate or certificates for shares of Common Stock
shall be issuable upon such conversion shall be deemed to have become on the
Date of Conversion the holder or holders of record of the shares represented
thereby; PROVIDED, HOWEVER, that any such surrender on any date when the
stock transfer books of the Issuer shall be closed shall constitute the
person or persons in whose name or names the certificate or certificates for
such shares are to be issued as the record holder or holders thereof for all
purposes at the opening of business on the next succeeding day on which such
stock transfer books are open but such conversion shall nevertheless be at
the Conversion Price in effect at the close of business on the date when such
Security shall have been so surrendered with the conversion notice. In the
case of conversion of a portion, but less than all, of a Security pursuant to
Section 13.1(a) hereof, the Issuer shall execute, and the Trustee shall
authenticate and deliver to the holder thereof, at the expense of the Issuer,
a Security or Securities in the aggregate principal amount of the unconverted
portion of the Security surrendered. Except as otherwise expressly provided
in this Indenture, no payment or adjustment shall be made for interest
accrued on any Security (or portion thereof) converted pursuant to Section
13.1(a) hereof or for dividends or distributions on any Common Stock issued
upon any such conversion.
(b) As soon as practicable (but in any case within five Business
Days) after the Effective Time of the Merger, the Issuer shall give written
notice thereof (the "Issuer's Notice") to the Trustee and each holder of
Securities in accordance with Section 10.4 hereof. The Issuer's Notice shall
specify (i) that
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the Merger has become effective, (ii) the time and date of the Effective Time
of the Merger, (iii) that all of the Securities outstanding as of the
Effective Time of the Merger were automatically, and without any further
action on the part of the Issuer, the Trustee or any Securityholder,
converted into (A) fully paid and non-assessable shares of Common Stock at
the Special Conversion Price and/or (B) Special Stock at a conversion rate
of ten shares of Special Stock for each $1,000 princpal amount of Securities in
accordance with Section 13.1(b) hereof and (iv) that from and after the
Effective Time of the Merger, all of the Securities ceased to be convertible
into Common Stock pursuant to Section 13.1(a) hereof, and the holders thereof
no longer have any right in respect of the Securities (including without
limitation the right to receive interest and Principal in respect thereof)
except the right to receive shares of Common Stock or Special Stock in
accordance with Section 13.1(b) hereof and the procedures set forth in this
Section 13.2(b). Any Issuer's Notice which is sent in the manner provided in
Section 10.4 hereof shall be conclusively presumed to have been duly given,
whether or not the Trustee or any Holder receives such notice. Failure to
give the Issuer's Notice, or any defect in the Issuer's Notice to the Trustee
or any Holder, shall not in any way affect the validity of the conversion
pursuant to Section 13.1(b).
Following the Effective Time of the Merger, the holder of any
Security may surrender such Security to the Issuer at any time during usual
business hours at its office or agency maintained for the purpose as provided
in this Indenture, accompanied by a fully executed written notice, in
substantially the form set forth on the reverse of the Security, that the
Security is being surrendered for conversion in accordance with Section
13.1(b) hereof. Such notice shall also state the name or names (with
address) in which the certificate or certificates for shares of Common Stock
and/or Special Stock shall be issued. Securities surrendered for conversion
shall (if so required by the Issuer or the Trustee) be duly endorsed by, or
be accompanied by a written instrument or instruments of transfer in form
satisfactory to the Issuer or the Trustee duly executed by, the holder or his
attorney duly authorized in writing. As promptly as practicable after the
receipt of such notice and the surrender of such Security as aforesaid, the
Issuer shall, subject to the provisions of Section 13.8 hereof, issue and
deliver at such office or agency to such holder, or on his written order, a
certificate or certificates for the number of full shares of Common Stock
and/or
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Special Stock issuable on such conversion of Securities in accordance with
the provisions of this Article and cash, as provided in Section 13.3 hereof,
in respect of any fraction of a share of Common Stock or Special Stock
otherwise issuable upon such conversion. Such conversion shall be deemed to
have been effected at the Effective Time of the Merger, and the person or
persons in whose name or names any certificate or certificates for shares of
Common Stock or Special Stock shall be issuable upon such conversion shall be
deemed to have become at the Effective Time of the Merger the holder or
holders of record of the shares represented thereby; provided, however, that
no holder or holders of Securities shall be entitled to vote, or to receive
any dividends or distributions on, any shares of Common Stock or Special
Stock issuable upon conversion thereof until such time as such Securities are
surrendered for conversion pursuant to this Section 13.2(b). No payment or
adjustment shall be made for interest accrued on any Security converted
pursuant to Section 13.1(b) or for dividends or distributions on any Common
Stock or Special Stock issued upon any such conversion.
Section 13.3 FRACTIONAL INTERESTS. No fractions of shares of
Common Stock or scrip representing fractions of shares of Common Stock 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 of Common Stock which shall be issuable upon conversion thereof shall be
computed on the basis of the aggregate Principal amount of the Securities so
surrendered. If any fraction of a share of Common Stock would, except for the
provisions of this Section, be issuable on the conversion of any Security or
Securities, the Issuer shall make payment in lieu thereof in an amount of United
States dollars equal to the value of such fraction computed on the basis of the
last sale price of the Common Stock as reported on the Composite Tape for New
York Exchange Listed Stocks (or if not listed or admitted to trading on such
Exchange, then on the principal national securities exchange on which the Common
Stock is listed or admitted to trading, or, if not listed or admitted to trading
on any national securities exchange, on the NASDAQ/NMS or a similar organization
if NASDAQ/NMS is no longer reporting information) on the last Trading Day
priorto the Date of Conversion or if no such sale takes place on such day, the
last sale price for such day shall be the average of the closing bid and asked
prices regular way on the New York Stock Exchange (or if not listed or admitted
to trading on such Exchange, on the principal national securities exchange on
which the Common Stock is listed or admitted to trading, or if not listed or
admitted to trading on any national securities exchange, the average of the
highest bid and lowest asked prices on NASDAQ/NMS or a similar organization if
NASDAQ/NMS is no longer reporting information) for such day (any such last sale
price being hereinafter referred to as the "Last Sale Price"). If on such
Trading Day the Common Stock is not quoted by any such organization, the fair
value of such Common Stock on suchday, as determined by the Board of Directors,
shall
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be used. Fractional shares of Special Stock (in integral multiples of one
ten-thousandth of a share of Special Stock) shall be issued, if and to the
extent necessary to effectuate any conversion into Special Stock pursuant to
Section 13.1(b) hereof, and no adjustment in cash shall be made for any
fractional shares of Special Stock.
Section 13.4 CONVERSION PRICE. The conversion price per share of
Common Stock issuable upon conversion of the Securities pursuant to Section
13.1(a) hereof shall initially be $8.33. The conversion price per share of
Common Stock issuable upon conversion of the Securities pursuant to Section
13.1(b) hereof shall initially be $4.76.
Section 13.5 ADJUSTMENT OF CONVERSION PRICE AND SPECIAL CONVERSION
PRICE. The conversion price per share of Common Stock issuable upon conversion
of the Securities pursuant to Section 13.1(a) hereof (herein called the
"Conversion Price") and the conversion price per share of Common Stock issuable
upon conversion of the Securities pursuant to Section 13.1(b) hereof (herein
called the "Special Conversion Price") shall be subject to adjustment from time
to time as follows:
(a) In case the Issuer shall (1) pay a dividend or make a
distribution in shares of Common Stock on any class of Capital Stock of the
Issuer, (2) subdivide its outstanding shares of Common Stock into a greater
number of shares or (3) combine its outstanding shares of Common Stock into
a smaller number of shares, the Conversion Price and Special Conversion
Price in effect immediately prior to such action 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 he would
have owned immediately following such action had such Security been
converted immediately prior thereto. An adjustment made pursuant to this
subsection (a) shall become effective immediately, except as provided in
subsection (g) below, 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 a subdivision or combination.
(b) In case the Issuer shall issue rights or warrants to all holders
of Common Stock entitling them to subscribe for or purchase shares of
Common Stock at a price per share less than the current market price per
share (as determined pursuant to subsection (e) below) of the Common Stock
on the record date mentioned below, the Conversion Price and the Special
Conversion Price shall be adjusted to a price, computed to the nearest
cent, so that the same shall equal the price determined by multiplying:
(i) the Conversion Price or the Special Conversion Price,
as the case may be, in effect immediately prior to the date of
issuance of such rights or warrants by a fraction, of which
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(ii) the numerator shall be (A) the number of shares of
Common Stock outstanding on the date of issuance of such rights or
warrants, immediately prior to such issuance, plus (B) the number of
shares which the aggregate offering price of the total number of
shares so offered for subscription or purchase would purchase at such
current market price (determined by multiplying such total number of
shares by the exercise price of such rights or warrants and dividing
the product so obtained by such current market price), and of which
(iii) the denominator shall be (A) the number of shares of
Common Stock outstanding on the date of issuance of such rights or
warrants, immediately prior to such issuance, plus (B) the number of
additional shares of Common Stock which are so offered for
subscription or purchase.
Such adjustment shall become effective immediately, except as provided
in subsection (g) below, after the record date for the determination of holders
entitled to receive such rights or warrants. No adjustment will be made under
this Section 13.5(b) in the event of the issuance or exercise of any warrants
issued by the Issuer to Kirkland, KIC or GSA pursuant to any agreement among
such parties and the Issuer which was entered into prior to the date of this
Indenture.
(c) In case the Issuer or any subsidiary of the Issuer shall
distribute to all holders of Common Stock, any of its assets, evidences of
indebtedness or securities other than Common Stock (other than (x) ordinary
dividends in cash or other property whether or not paid out of retained
earnings of the Issuer or (y) any dividend or distribution referred to in
subsection (a) or (b) above) then in each such case the Conversion Price
and the Special Conversion Price shall be adjusted so that the same shall
equal the price determined by multiplying the Conversion Price or the
Special Conversion Price, as the case may be, in effect immediately prior
to the date of such distribution by a fraction of which the numerator shall
be the current market price per share (determined as provided in subsection
(e) below) of the Common Stock immediately prior to the record date
mentioned below less the then fair market value (as determined by the Board
of Directors, whose determination shall, if made in good faith, be
conclusive evidence of such fair market value) of the portion of the assets
so distributed or of such subscription rights or warrants applicable to one
share of Common Stock, and of which the denominator shall be such current
market price per share of the Common Stock. Such adjustment shall become
effective immediately, except as provided in subsection (g) below, after
the record date for the determination of stockholders entitled to receive
such distribution. Notwithstanding the
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foregoing, in the event that the fair market value of the assets, evidences
of indebtedness or other securities so distributed applicable to one share
of Common Stock equals or exceeds such current market price per share of
Common Stock or such current market price exceeds such fair market value
by less than $0.10 per share, the Conversion Price and the Special
Conversion Price shall not be adjusted pursuant to this subsection (c)
until such time as the cumulative amount of all such distributions
exceeds $0.10 per share.
(d) Unless provision is made, to the Trustee's reasonable
satisfaction, for the Contingent Conversion (as defined below) by the
Holders of the Securities in connection with an Offer (as defined below),
then, the Issuer or any Subsidiary of the Issuer shall be prohibited from
making a tender or exchange offer for all or any portion of the Issuer's
Common Stock (any such tender or exchange offer being referred to as an
"Offer") which involves (i) per share consideration the fair market value
of which is in excess of 120% of the current market price per share
(determined as provided in subsection (e) of this Section) prevailing three
Business Days prior to the commencement of such Offer and (ii) an aggregate
consideration having a fair market value as of the expiration of such Offer
(the "Expiration Time") that, exceeds 110% of the product of the current
market price per share (determined as provided in subsection (e) of this
Section) of the Common Stock on the Expiration Time times the number of
shares of Common Stock outstanding (including any tendered shares) on the
Expiration Time.
For purposes of this subsection (d), (i) the fair market value of any
consideration with respect to an Offer shall be determined by the Board of
Directors, whose determination shall be conclusive and described in a board
resolution and (ii) a Contingent Conversion shall mean a conversion of
Securities pursuant to Section 13.1(a) hereof pursuant to which the Holder of
Securities can tender such Securities for conversion subject to the Common Stock
issuable upon such conversion being acquired by the Issuer or any Subsidiary of
the Issuer pursuant to an Offer and, to the extent such Common Stock is not so
acquired, the portion of the Securities which would have been converted upon
such acquisition but which were not acquired pursuant to the Offer shall be
considered for all purposes under this Indenture as if such Securities were
never tendered for conversion hereunder.
(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 Last Sale Prices of a share of
Common Stock for the five consecutive Trading Days selected by the Issuer
commencing not more than 20 Trading Days before, and ending not later than,
the earlier of the date in question
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and the date before the "`ex' date," with respect to the issuance,
distribution or Offer requiring such computation. If on any such Trading
Day the Common Stock is not quoted by any organization referred to in the
definition of Last Sale Price in Section 13.3 hereof, the fair value of
the Common Stock on such day, as determined by the Board of Directors,
shall be used. For purposes of this paragraph, the term "`ex' date,"
when used with respect to any issuance, distribution or payments with
respect to an Offer, means the first date on which the Common Stock trades
regular way on the principal national securities exchange on which the
Common Stock trades or on which the Common Stock is listed or admitted to
trading without the right to receive such issuance, distribution or Offer.
(f) In addition to the foregoing adjustments in subsections (a), (b),
(c) and (d) above, the Issuer will be permitted to make such reductions in
the Conversion Price or the Special Conversion Price, as the case may be,
as its considers to be advisable in order that any event treated for
Federal income tax purposes as a dividend of stock or stock rights will be
not be taxable to the holders of the shares of Common Stock.
(g) In any case in which this Section 13.5 shall require that an
adjustment (including by reason of the last sentence of subsection (a) or
(c) above) be made immediately following a record date, the Issuer may
elect to defer the effectiveness of such adjustment (but in no event until
a date later than the effective time of the event giving rise to such
adjustment), in which case the Issuer shall, with respect to any Security
converted after such record date and on and before such adjustment shall
have become effective (i) defer paying any cash payment pursuant to Section
13.3 hereof or issuing to the Holder of such Security the number of shares
of Common Stock and other capital stock of the Issuer (or other assets or
securities) issuable upon such conversion in excess of the number of shares
of Common Stock and other capital stock of the Issuer issuable thereupon
only on the basis of the Conversion Price or the Special Conversion Price,
as the case may be, prior to adjustment, and (ii) not later than five
Business Days after such adjustment shall have become effective, pay to
such Holder the appropriate cash payment pursuant to Section 13.3 hereof
and issue to such Holder the additional shares of Common Stock and other
capital stock of the Issuer issuable on such conversion.
(h) No adjustment in the Conversion Price or the Special Conversion
Price shall be required unless such adjustment would require an increase or
decrease of at least 1% of the Conversion Price or the Special Conversion
Price, as the case may be; PROVIDED, that any adjustments which by reason
of this subsection (h) are not required to be made
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shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Article 13 shall be made to the
nearest cent or to the nearest one-hundredth of a share, as the case may
be.
(i) Whenever the Conversion Price or the Special Conversion Price is
adjusted as herein provided, the Issuer shall promptly (i) file with the
Trustee and each conversion agent an Officers' Certificate setting forth
the Conversion Price and the Special Conversion Price after such adjustment
and setting forth a brief statement of the facts requiring such adjustment,
which certificate shall be conclusive evidence of the correctness of such
adjustment, and (ii) mail or cause to be mailed a notice of such adjustment
to each holder of Securities at his address as the same appears on the
registry books of the Issuer.
Section 13.6 CONTINUATION OF CONVERSION PRIVILEGE IN CASE OF
RECLASSIFICATION, CHANGE, MERGER, CONSOLIDATION OR SALE OF ASSETS. If any of
the following shall occur, namely: (a) any reclassification or change of
outstanding shares of Common Stock issuable upon conversion of the Securities
pursuant to Section 13.1 hereof (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), (b) any consolidation or merger of the Issuer with
or into any other Person, or any other Person with or into the Issuer (other
than a merger which does not result in any reclassification, change, conversion,
exchange or cancellation of outstanding shares of Common Stock) or (c) sale or
conveyance of all or substantially all of the assets of the Issuer, then the
Issuer, or such successor or purchasing entity, 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, upon conversion of the Securities pursuant to Section 13.1
hereof, 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 issuable upon conversion of such Security pursuant to
Section 13.1(a) hereof or Section 13.1(b) hereof, as the case may be,
immediately prior to such reclassification, change, consolidation, merger, sale
or conveyance assuming such holder of Common Stock of the Issuer (i) is not a
Person with which the Issuer consolidated or into which the Issuer merged or
which merged into the Issuer or to which such sale, transfer or conveyance was
made, as the case may be ("Constituent Person") or an Affiliate of a Constituent
Person and (ii) failed to exercise his rights of an election, if any, as to the
kind or amount of securities, cash and other property receivable upon such
reclassification, change, consolidation, merger, sale, transfer or conveyance
(PROVIDED that if the kind or amount of securities, cash, and other property
receivable upon
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such reclassification, change, consolidation, merger, sale, transfer or
conveyance is not the same for each share of Common Stock of the Issuer held
immediately prior to such reclassification, change, consolidation, merger,
sale, transfer or conveyance by others than a Constituent Person or an
Affiliate thereof and in respect of which such rights of election shall not
have been exercised ("non-electing share"), then for the purpose of this
Section the kind and amount of securities, cash and other property receivable
upon such reclassification, change, consolidation, merger, sale, transfer or
conveyance by each non-electing share shall be deemed to be the kind and
amount so receivable per share by a plurality of the non-electing shares).
Such supplemental indenture shall provide for adjustments which shall be as
nearly equivalent as may be practicable to the adjustments provided for in
this Article 13. 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 shares of Common Stock includes shares of
stock or other securities and property (including cash) of a corporation
other than the successor or purchasing corporation, as the case may be, in
such consolidation, merger, sale or conveyance, then such supplemental
indenture shall also be executed by such other corporation and shall contain
such additional provisions to protect the interests of the holders of the
Securities as the Board of Directors shall reasonably consider necessary by
reason of the foregoing. The provisions of this Section shall similarly
apply to successive consolidations, mergers, sales or conveyances.
Notice of the execution of each such supplemental indenture shall be
mailed by the Trustee to each Holder of Securities at his address as the same
appears on the registry books of the Issuer.
Neither the Trustee nor any conversion agent shall be under any
responsibility to determine the correctness of any provisions contained in any
such supplemental indenture relating either to the kind or amount of shares of
stock or securities or property (including cash) receivable by holders of
Securities upon the conversion of their Securities after any such
reclassification, change, consolidation, merger, sale or conveyance or to any
adjustment to be made with respect thereto, but, subject to the provisions of
Sections 5.1 and 5.2 hereof, may accept as conclusive evidence of the
correctness of any such provisions, and shall be protected in relying upon, the
Officers' Certificate (which the Issuer shall be obligated to file with the
Trustee prior to the execution of any such supplemental indenture) with respect
thereto.
Section 13.7 NOTICE OF CERTAIN EVENTS. In case:
(a) the Issuer shall declare a dividend (or any other
distribution) payable to the holders of Common Stock
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otherwise than in cash dividends paid out of retained earnings; or
(b) the Issuer shall authorize the granting to all the holders
of Common Stock of rights to subscribe for or purchase any shares of stock
of any class or of any other rights; or
(c) the Issuer shall authorize any reclassification or change of
the Common Stock (other than a subdivision or combination of its
outstanding shares of Common Stock), or any consolidation or merger to
which the Issuer is a party and for which approval of any stockholders of
the Issuer is required, or the sale or conveyance of all or substantially
all the property or business of the Issuer; or
(d) there shall be proposed any voluntary or involuntary
dissolution, liquidation or winding-up of the Issuer;
then, the Issuer shall cause to be filed at the office or agency maintained for
the purpose of conversion of the Securities as provided in Section 3.2 hereof,
and shall cause to be mailed to each Holder of Securities, at his address as it
shall appear on the registry books of the Issuer, at least 20 days before the
date hereinafter specified (or the earlier of the dates hereinafter specified,
in the event that more than one date is specified), a notice stating the date on
which (i) a record is expected to be taken for the purpose of such dividend,
distribution or rights, 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 (ii) such reclassification,
change, consolidation, merger, sale, conveyance, dissolution, liquidation or
winding-up is expected to become effective and the date, if any is to be fixed,
as of which it is expected that holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such reclassification, change, consolidation, merger,
sale, conveyance, dissolution, liquidation or winding-up.
Section 13.8 TAXES ON CONVERSION. The Issuer will pay any and all
documentary, stamp or similar taxes payable to the United States of America or
any political subdivision or taxing authority thereof or therein in respect of
the issue or delivery of shares of Common Stock or Special Stock on conversion
of Securities pursuant to Section 13.1 hereof; PROVIDED, HOWEVER, that the
Issuer shall not be required to pay any tax which may be payable in respect of
any transfer involved in the issue or delivery of shares of Common Stock or
Special Stock in a name other than that of the Holder of the Securities to be
converted and no such issue or delivery shall be made unless and until the
person requesting such issue or delivery has paid to the Issuer
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the amount of any such tax or has established, to the satisfaction of the
Issuer, that such tax has been paid. The Issuer extends no protection with
respect to any other taxes imposed in connection with conversion of Securities.
Section 13.9 ISSUER TO PROVIDE STOCK. The Issuer shall reserve from
time to time, free from preemptive rights, out of its authorized but unissued
shares, or, with respect to no more than 5% of the number of shares issuable
upon conversion of the Outstanding Securities, shall otherwise cause to be made
available, sufficient shares to provide for the conversion of the Securities as
such Securities are presented for conversion, PROVIDED, that nothing contained
herein shall be construed to preclude the Issuer from satisfying its obligations
in respect of the conversion of Securities by delivery of repurchased shares of
Common Stock or Special Stock which are held in the treasury of the Issuer.
If any shares of Common Stock or Special Stock to be reserved for the
purpose of conversion of Securities hereunder require registration with or
approval of any governmental authority under any Federal or State law before
such shares may be validly issued or delivered upon conversion, then the Issuer
covenants that it will in good faith and as expeditiously as possible endeavor
to secure such registration or approval, as the case may be, PROVIDED, HOWEVER,
that nothing in this Section shall be deemed to affect in any way the
obligations of the Issuer to convert Securities into Common Stock or Special
Stock as provided in this Article 13.
Before taking any action which would cause an adjustment reducing the
Conversion Price or the Special Conversion Price below the then par value, if
any, of the Common Stock, the Issuer will take all corporate action which may,
in the Opinion of Counsel, be necessary in order that the Issuer may validly and
legally issue fully paid and non-assessable shares of Common Stock at such
adjusted Conversion Price or Special Conversion Price.
The Issuer covenants that all shares of Common Stock or Special Stock
which may be issued upon conversion of Securities will upon issue be fully paid
and non-assessable by the Issuer and free of preemptive rights.
Section 13.10 DISCLAIMER OF RESPONSIBILITY FOR CERTAIN MATTERS.
Neither the Trustee nor any agent of the Trustee shall at any time be under any
duty or responsibility to any Holder of Securities to determine whether any
facts exist which may require any adjustment of the Conversion Price or the
Special Conversion Price, or with respect to the Officers' Certificate referred
to in Section 13.5 hereof, or with respect to the nature or extent of any such
adjustment when made, or with respect to the method employed, or herein or in
any supplemental indenture (or whether such supplemental indenture is required)
provided to be employed, in making the same, or whether the Effective Time of
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the Merger has occurred. Neither the Trustee nor any agent of the Trustee
shall be accountable with respect to the validity or value (or the kind or
amount) of any shares of Common Stock or Special Stock, or of any securities
or property (including cash), which may at any time be issued or delivered
upon the conversion of any Security; and neither the Trustee nor any
conversion agent makes any representation with respect thereto. Neither the
Trustee nor any agent of the Trustee shall be responsible for any failure of
the Issuer to issue, register the transfer of or deliver any shares of Common
Stock or Special Stock or stock certificates or other securities or property
(including cash) upon the surrender of any Security for the purpose of
conversion or, subject to Sections 5.1 and 5.2 hereof, to comply with any of
the covenants of the Issuer contained in this Article.
Section 13.11 RETURN OF FUNDS DEPOSITED FOR REDEMPTION OF CONVERTED
SECURITIES. Any funds which at any time shall have been deposited by the Issuer
or on its behalf with the Trustee or any other Paying Agent for the purpose of
paying the Principal of and interest on any of the Securities and which shall
not be required for such purposes because of the conversion of such Securities,
as provided in this Article 13, shall after such conversion be repaid to the
Issuer by the Trustee or such other Paying Agent.
ARTICLE 14
RIGHT TO REQUIRE REDEMPTION
Section 14.1 RIGHT TO REQUIRE REDEMPTION. If at any time there shall
occur any Redemption Event of the Issuer, then each Holder shall have the right,
at such Holder's option, to require the Issuer to redeem, and upon the exercise
of such right the Issuer shall redeem, all or any part of such Holder's
Securities that is $1,000 or any integral multiple thereof, on the date (the
"Repurchase Date") that is 45 days after the date of the Issuer Notice (as
defined below) at a redemption price in cash equal to 101% of the Principal
amount of such Securities to be redeemed, plus accrued and unpaid interest
thereon to the Repurchase Date (the "Repurchase Price").
Section 14.2 NOTICES; METHOD OF EXERCISING REDEMPTION RIGHT, ETC.
(a) Unless the Issuer shall have theretofore called for redemption of
all the Securities then Outstanding pursuant to Article 11 hereof, within
15 days after the occurrence of a Redemption Event, the Issuer or, at the
request of the Issuer, the Trustee, shall mail to all Holders of record of
the Securities a notice (the "Issuer Notice") of the occurrence of the
Redemption Event and of the redemption right set forth herein arising as a
result thereof in the manner provided in Section 10.4 hereof. The Issuer
shall also deliver a copy of the Issuer Notice to the
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Trustee prior to or promptly after the mailing of such Issuer Notice.
Each Issuer Notice of a redemption right shall state:
(1) the Repurchase Date;
(2) the date by which the redemption right must be
exercised;
(3) the Repurchase Price;
(4) a description of the procedure which a Holder must
follow to exercise a redemption right including a form of the
irrevocable written notice referred to in Section 14.2 hereof; and
(5) the Conversion Price (as defined in Section 13.5
hereof) and Special Conversion Price (as defined in Section 13.5
hereof) then in effect, the date on which the right to convert the
Principal amount of the Securities to be redeemed will terminate and
the place or places where such Securities may be surrendered for
conversion.
No failure of the Issuer to give the foregoing notices or any defect
therein shall limit any Holder's right to exercise a redemption right or affect
the validity of the proceedings for the redemption of Securities.
(b) To exercise a redemption right, a Holder shall deliver to the
Trustee on or before the 15th Business Day after the date of the Issuer
Notice (i) irrevocable written notice of the Holder's exercise of such
rights, which notice shall set forth the name of the Holder, the amount of
the Securities to be redeemed, a statement that an election to exercise the
redemption right is being made thereby, and (ii) the Securities with
respect to which the redemption right is being exercised, duly endorsed for
transfer to the Issuer. Securities held by a securities depository may be
delivered in such other manner as may be agreed to by such securities
depository, the Issuer and the Trustee. Such written notice shall be
irrevocable. Subject to the provisions of paragraph (d) below, Securities
surrendered for redemption together with such irrevocable written notice
shall cease to be convertible from the date of delivery of such notice. If
the Repurchase Date falls after the record date and before the following
Interest Payment Date, any Securities to be redeemed must be accompanied by
payment of an amount equal to the interest thereon which the registered
Holder thereof is to receive on such Interest Payment Date, and,
notwithstanding such redemption, such interest payment will be made by the
Issuer to the registered Holder thereof on the applicable record date;
provided that any semi-annual
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payment of interest becoming due on the Repurchase Date shall be payable
to the holders of such Securities registered as such on the relevant record
date subject to the terms Section 2.4 hereof.
(c) In the event a redemption right shall be exercised in accordance
with the terms hereof, the Issuer shall pay or cause to be paid the
Repurchase Price in cash, to the Holder on the Repurchase Date.
(d) If any Security surrendered for redemption shall not be so
redeemed on the Repurchase Date, such Security shall be convertible at any
time from the Repurchase Date until redeemed and, until redeemed, continue
to bear interest to the extent permitted by applicable law from the
Repurchase Date at the same rate borne by such Security. The Issuer shall
pay to the Holder of such Security the additional amounts arising from this
Section 14.2 at the time that it pays the Repurchase Price, and if
applicable such Security shall remain convertible into Common Stock
pursuant to Section 13.1(a) hereof, or Common Stock or Special Stock
pursuant to Section 13.1(b) hereof, until the Repurchase Price plus any
additional amounts owing on such Security shall have been paid or duly
provided for.
(e) Any Security which is to be redeemed only in part shall be
surrendered at any office or agency of the Issuer designated for that
purpose pursuant to Section 3.2 hereof (with, if the Issuer or the Trustee
so requires, due endorsement by, or a written instrument of transfer in
form satisfactory to the Issuer and the Trustee duly executed by, the
Holder thereof or his attorney duly authorized in writing), and the Issuer
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
Security so surrendered.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of May __, 1996.
ALLIANCE GAMING CORPORATION
By:_________________________
Name:
Title:
Attest:
By:________________________
Name:
Title:
THE BANK OF NEW YORK,
as Trustee
By:_________________________
Name:
Title:
Attest:
By:_______________________
Name:
Title:
68
<PAGE>
EXHIBIT A
[FORM OF FACE OF SECURITY]
7 1/2% Convertible Senior Subordinated Debenture due 2003
This Security will be automatically converted into [Common Stock]
[Non-Voting Junior Convertible Pay-in-Kind Special Stock, Series E] of the
Issuer if the Merger is consummated prior to _____________, 1996. See the
reverse of this Security.
CUSIP #
$_______
No.
Alliance Gaming Corporation
promises to pay to __________________________________________ or registered
assigns, the principal sum of ______________________ Dollars on September 15,
2003.
Interest Payment Dates: March 15 and September 15.
Record Dates: March 1 and September 1.
ALLIANCE GAMING CORPORATION
By:____________________________
_________________, President
By:____________________________
_________________, Secretary
Authenticated: Dated: __________________
THE BANK OF NEW YORK,
as Trustee
By:_________________________
Authorized Signatory
A-1
<PAGE>
[FORM OF REVERSE OF SECURITY]
7 1/2% Convertible Senior Subordinated Debenture due 2003
In addition, the Securities shall bear any additional legends which
are required pursuant to applicable law. Capitalized terms used herein shall
have the meanings ascribed to them in the Indenture unless otherwise indicated.
1. INTEREST. Alliance Gaming Corporation (the "Issuer") promises
to pay interest on the Principal amount of this Security at 7 1/2% per annum
from the date of issuance until maturity. The Issuer will pay interest
semi-annually on March 15 and September 15 of each year or, if any such day
is not a Business Date, on the next succeeding Business Date (each an
"Interest Payment Date"). Interest on the Securities will accrue from the
most recent date on which interest has been paid, or, if no interest has been
paid, from the date of issuance; PROVIDED that if there is no existing
Default in the payment of interest, and if this Security is authenticated
between a record date referred to on the face hereof and the next succeeding
Interest Payment Date, interest shall accrue from such next succeeding
Interest Payment Date; PROVIDED, FURTHER, that the first Interest Payment
Date shall be September 15, 1996. The issuer shall pay interest (including
post-petition interest in any proceeding under Bankruptcy Law) on overdue
Principal and premium, if any, from time to time on demand at the same rate
per annum on the Securities then in effect; it shall pay interest (including
post-petition interest in any proceeding under Bankruptcy Law) on overdue
installments of interest (without regard to any applicable grace periods),
from time to time on demand at the same rate to the extent lawful. Interest
will be computed on the basis of a 360-day year of twelve 30-day months.
2. METHOD OF PAYMENT. The Issuer will pay interest on the Securities
(except defaulted interest) to the Persons who are registered Holders of
Securities at the close of business on the March 1 or September 1 next preceding
the Interest Payment Date, even if such Securities are canceled or converted
after such record date and on or before such Interest Payment Date. All
payments in respect of the Securities will be made by check mailed to the
Holders of the Securities at their addresses set forth in the register of
Holders of Securities.
3. PAYING AGENT AND REGISTRAR. Initially, The Bank of New York, the
Trustee under the Indenture, will act as Paying Agent and Registrar. The Issuer
may change any Paying Agent or Registrar without notice to any Holder. The
Issuer or any of its subsidiaries may act in any such capacity.
A-2
<PAGE>
4. INDENTURE. The Issuer issued the Securities under an Indenture
dated as of ___________, 1996 ("Indenture") between the Issuer and the Trustee.
The terms of the Securities include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended (15 U.S. Code Sections 77aaa-77bbbb). The Securities are subject to all
such terms, and Holders are referred to the Indenture and such Act for a
statement of such terms. The Securities are general unsecured obligations of
the Issuer limited to $85,000,000 in aggregate Principal amount.
5. SUBORDINATION. The Issuer's payment of the Principal of,
interest on and redemptions at the option of the Holders of the Securities
is subordinated to the prior payment in full of the Issuer's Senior
Indebtedness. Each Holder of Securities by his or her acceptance hereof
covenants and agrees that all payments of the Principal of, interest on and
redemptions at the option of the Holders of the Securities by the Issuer
shall be subordinated in accordance with the provisions of Article 12 of the
Indenture, and each Holder accepts and agrees to be bound by such provisions.
6. CONVERSION RIGHTS; AUTOMATIC CONVERSION IN CERTAIN EVENTS.
(a) Subject to the provisions of the Indenture, the Holder of this Security
has the right, at his option, at any time until and including, but not after the
close of business on, the second Business Day prior to September 15, 2003
(except that, (i) in case this Security or a portion hereof shall be called
for redemption and the Issuer shall not thereafter default in making due
provision for the payment of the redemption price, such right shall terminate
with respect to this Security or such portion hereof at the close of business on
the second Business Day prior to the date fixed for redemption and (ii) in the
case the holder of this Security exercises his right to require the Issuer to
redeem this Security or a portion hereof, such conversion right shall terminate
with respect to this Security or portion hereof on the date this Security is
presented for redemption together with written notice to the Issuer of the
holder's exercise of such right or, if the Issuer fails to redeem this Security
or portion hereof on the date set for such redemption, upon redemption), to
convert the principal of this Security, or any portion thereof which is $1,000
or a multiple of $1,000, into fully paid and non-assessable shares of Common
Stock of the Issuer, as said shares shall be constituted at the date of
conversion, at the conversion price of $8.33 in principal amount of
Securities for each share of such Common Stock, or at the adjusted
conversion price in effect at the date of conversion if an adjustment has
been made, determined as provided in the Indenture, upon surrender of this
Security to the Issuer at the office or agency of the Issuer maintained for the
purpose in the Borough of Manhattan, The City of New York, together with a fully
executed notice of optional conversion substantially in the form set forth at
the foot hereof that the holder elects so to convert this Security
(or any portion hereof which is a multiple of
A-3
<PAGE>
$1,000) and, if this Security is surrendered for conversion during the period
between the close of business on March 1 or September 1 in any year and the
opening of business on the following March 15 or September 15 and has not
been called for redemption on a redemption date within such period, shall be
accompanied by payment of an amount equal to the interest payable on such
March 15 or September 15 on the principal amount of the Security being
surrendered for conversion. Except as provided in the preceding sentence or
as otherwise expressly provided in the Indenture, no payment or adjustment
shall be made on account of interest accrued on this Security (or portion
thereof) so converted or on account of any dividend or distribution on any
such Common Stock issued upon conversion. If so required by the Issuer or
the Trustee, this Security, upon surrender for conversion as aforesaid, shall
be duly endorsed by, or be accompanied by instruments of transfer, in form
satisfactory to the Issuer, duly executed by, the holder or by his duly
authorized attorney. The conversion price from time to time in effect is
subject to adjustment as provided in the Indenture. No fractions of shares
will be issued on conversion pursuant to this paragraph 6(a), but an
adjustment in cash will be made for any fractional interest as provided
in the Indenture.
(b) Subject to the provisions of the Indenture, in the event that
prior to _________, 1996 the Merger (as defined in the Indenture) becomes
effective under Section 251 of the Delaware General Corporation Law, then at
the effective time of the Merger (except that, (i) in case this Security or a
portion hereof shall be called for redemption and the Issuer shall not
thereafter default in making due provision for the payment of the redemption
price, such provision for automatic conversion shall terminate with respect
to this Security or such portion hereof at the close of business on the
second Business Day prior to the date fixed for redemption and (ii) in the
case the holder of this Security exercises his right to require the Issuer to
redeem this Security or a portion hereof, such provision for automatic
conversion shall terminate with respect to this Security or portion hereof on
the date this Security is presented for redemption together with written
notice to the Issuer of the holder's exercise of such right or, if the Issuer
fails to redeem this Security or portion hereof on the date set for such
redemption, upon redemption), this Security shall be automatically, and
without any further action on the part of the Issuer, the Trustee or the
holder of this Security, converted into fully paid and non-assessable shares
of Common Stock, at the special conversion price of $4.76 in principal amount
of Securities for each share of Common Stock, or at the special conversion
price in effect at the Effective Time of the Merger if an adjustment has been
made, determined as provided in the Indenture (provided, however, that if so
specified on the face of this Security, then, in lieu of such shares of
Common Stock, this Security shall be automatically converted into fully paid
and non-assessable shares of Non-Voting Junior Convertible Pay-in-Kind
Special Stock, Series E (the "Special Stock"), of the Issuer, at the
conversion rate of ten shares of Special Stock for each $1,000 principal
amount of Securities), upon surrender of this Security to the Issuer at the
office or agency of the Issuer maintained for the purpose in the Borough of
Manhattan, together with a fully executed form of surrender for mandatory
conversion substantially in the form set forth at the foot hereof. Except as
otherwise expressly provided in the Indenture, no payment or adjustment shall
be made on account of interest accrued on this Security (or portion thereof)
so converted or on account of any dividend or distribution on any such Common
Stock issued upon conversion. If so required by the Issuer or the Trustee,
this Security, upon surrender for conversion as aforesaid, shall be duly
endorsed by, or be accompanied by instruments of transfer, in form
satisfactory to the Issuer, duly executed by, the holder or by his duly
authorized attorney. The special conversion price from time to time in effect
is subject to adjustment as provided in the Indenture. No fractions of shares
of Common Stock will be issued on conversion pursuant to this paragraph 6(b),
but an adjustment in cash will be made for any fractional shares of
Common Stock as provided in the Indenture. Fractional shares of Special Stock
will be issued, if and to the extent necessary, upon conversion pursuant
to this paragraph 6(b), and no adjustment in cash will be made for any
fractional shares of Special Stock.
(c) No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the Issuer,
which is absolute and unconditional, to pay the Principal of and interest on
this Security at the place, times, and rate, and in the currency, herein
prescribed.
7. OPTIONAL REDEMPTION. The Issuer may redeem all or any of the
Securities, in whole or in part, at any time, at a redemption price equal to the
percentages of the Principal amount thereof set forth below, plus accrued and
unpaid interest to the redemption date; provided, however, that until September
15, 1996 the Securities cannot be redeemed at the option of the Issuer unless
the closing price of the Issuer's Common Stock has equaled or exceeded 250% of
the then existing per share Conversion Price set forth in Paragraph 6, as
adjusted, for at least 20 out of any 30 consecutive Trading Days ending within
60 days before the notice of redemption is first mailed.
If redeemed during the twelve-month period beginning September 15 of
each year indicated:
<TABLE>
<CAPTION>
Year Percentage
<S> <C>
1995 105.63%
1996 104.69%
1997 103.75%
1998 102.81%
1999 101.88%
2000 100.94%
2001 and thereafter 100.00%;
</TABLE>
A-4
<PAGE>
provided that if the date fixed for redemption is a March 15 or September 15,
then the interest payable on such date shall be paid to the holder of record on
the next proceeding March 1 or September 1.
8. NOTICE OF REDEMPTION. Notice of redemption will be mailed at
least 20 days but not more than 60 days before the Redemption Date to each
Holder whose Securities are to be redeemed at its registered address.
Securities in denominations larger than $1,000 may be redeemed in part but only
in whole multiples of $1,000, unless all of the Securities held by a Holder are
to be redeemed. On and after the redemption date interest ceases to accrue on
Securities or portions thereof called for redemption.
9. RIGHT TO REQUIRE REDEMPTION UPON CERTAIN EVENTS. If a Redemption
Event (as defined below) occurs, each Holder of the Securities shall have the
right, subject to certain conditions, at the Holder's option, to require the
Issuer to redeem all of such Holder's Securities, or any portion thereof that is
an integral multiple of $1,000, on the date (the "Redemption Date") that is 45
days after the date of the Issuer Notice (as defined below), for cash at a price
equal to 101% of the Principal amount of such Securities to be redeemed (the
"Redemption Price").
Within 15 Business Days after the occurrence of a Redemption Event,
the Issuer is obligated to mail to all holders of record of the Securities a
notice (the "Issuer Notice") of the occurrence of such Redemption Event and of
the redemption right arising as a result thereof. The Issuer must deliver a
copy of the Issuer Notice to the Trustee. To exercise the redemption right a
holder of such Securities must deliver on or before the 15th Business Day after
the date of the Issuer Notice irrevocable written notice to the Trustee of the
holder's exercise of such right, together with the Securities with respect to
which the right is being exercised, duly endorsed for transfer to the Issuer.
A Redemption Event will be deemed to have occurred at such time as:
(i) there is a Change of Control (as defined in the Indenture)
of the Issuer, or
(ii) the Issuer's Common Stock (or other common stock into which
the Securities are then convertible) is not listed for trading on a United
States national securities exchange or admitted for trading in the
NASDAQ/NMS or the National Association of Securities Dealers Automated
Quotation listing of Small Capitalization Stocks.
10. DISPOSITION IN EVENT OF UNSUITABILITY. If a Holder or beneficial
owner of a Security or any underlying Common
A-5
<PAGE>
Stock or Special Stock is required by the Nevada Gaming Commission to be found
suitable, the Holder or beneficial owner must apply for a finding of
suitability within 30 days after the Nevada Gaming Commission's request. If a
Holder or beneficial owner is required to be found suitable and is not found
suitable by the Nevada Gaming Commission, at the option of the Issuer, (i) the
Holder or beneficial owner shall, upon request of the Issuer, dispose of his
or her Securities and underlying Common Stock and Special Stock within 30 days
or within that time prescribed by the Nevada Gaming Commission, whichever is
earlier, or (ii) the Issuer may, at its option, redeem the Holder's or
beneficial owner's Securities at the lesser of (x) the principal amount
thereof or (y) the price at which the Securities were acquired by the Holder
or beneficial owner, together with, in each case, accrued interest to the date
of the finding of unsuitability by the Nevada Gaming Commission.
11. DENOMINATIONS, TRANSFER, EXCHANGE. The Securities are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Securities may be registered and
Securities may be exchanged as provided in the Indenture. The Registrar and the
Trustee may required a Holder, among other things, to furnish appropriate
endorsements and transfer documents and the Issuer may require a Holder to pay
any taxes and fees required by law or permitted by the Indenture. The Issuer
need not exchange or register the transfer of any Security or portion of a
Security selected for redemption, except for the unredeemed portion of any
Security being redeemed in part. Also, it need not exchange or register the
transfer of any Securities for a period of 15 days before a selection of
Securities to be redeemed or during the period between a record date and the
corresponding Interest Payment Date.
12. PERSONS DEEMED OWNERS. The registered Holder of a Security may
be treated as its owner for all purposes.
13. AMENDMENTS AND WAIVERS. Subject to certain exceptions, the
Indenture or the Securities may be amended or supplemented and any existing
Default under, or compliance with any provision of, the Indenture may be waived
with the written consent of the Holders of at least a majority in Principal
amount of the Securities then outstanding (including consents obtained in
connection with a tender offer or exchange offer for Securities). Without the
consent of any Holder, the Issuer and the Trustee may amend or supplement the
Indenture or the Securities to cure any ambiguity, defect or inconsistency; to
provide for uncertificated Securities in addition to or in place of certificated
Securities; to comply with Section 8.1 of the Indenture; to make any change that
would provide any additional rights or benefits to the Holders or that does not
adversely affect the rights under the Indenture of any Holder to make changes
required by the TIA; or to appoint a successor Trustee.
A-6
<PAGE>
Without the consent of each Holder affected, an amendment or waiver
may not (with respect to any Securities held by a nonconsenting Holder): (i)
reduce the Principal amount of Securities whose Holders must consent to an
amendment, supplement or waiver; (ii) reduce the Principal of or change the
fixed maturity of any Security or alter the provisions with respect to the
redemption or purchase price in connection with repurchases under Section
11.1 of the Indenture; (iii) reduce the rate of or change the time for
payment of interest on any Security; (iv) waive a Default or Event of Default
in the payment of the Principal of, or interest on Securities or that
resulted from a failure to comply with Article 14 of the Indenture (except a
rescission of acceleration of the Securities by Holders of at least a
majority in Principal amount of the Securities); (v) make any change in
Section 4.10 of the Indenture; or (vi) waive a redemption payment with
respect to any Security. In addition, no amendment may adversely affect the
rights under Section 12 of the Indenture of any holder of outstanding Senior
Indebtedness without such holder's consent.
The right of any Holder to participate in any consent required or
sought pursuant to any provision of the Indenture (and the obligation of the
Issuer to obtain any such consent otherwise required from such Holder) may be
subject to the requirement that such Holder shall have been the Holder of record
of any Securities with respect to which such consent is required or sought as of
a date identified by the Trustee in a notice furnished to Holders in accordance
with the terms of this Indenture.
14. DEFAULTS AND REMEDIES. An Event of Default is: default for 30
days in payment of interest on the Securities; default in payment of
Principal of the Securities; failure by the Issuer for 60 days after notice
to it to comply with any of its other agreements in the Indenture or the
Securities; certain defaults under and acceleration prior to maturity of
other indebtedness; certain final judgments which remain undischarged; and
certain events of bankruptcy or insolvency. If an Event of Default occurs
and is continuing, the Trustee or the holders of at least 25% in Principal
amount of the then outstanding Securities may declare all the Securities to
be due and payable immediately, except that in the case of an Event of
Default arising from certain events of bankruptcy or insolvency, all
outstanding Securities become due and payable immediately without further
action or notice. Securityholders may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may require
indemnity satisfactory to it before it enforces the Indenture or the
Securities. Subject to certain limitations, holders of a majority in
Principal amount in the then outstanding Securities may direct the Trustee in
its exercise of any trust or power. The Trustee may withhold from
Securityholders notice of any continuing default (except a default in payment
of Principal or interest) if it determines that withholding notice is in their
A-7
<PAGE>
interests. The Issuer must furnish an annual compliance certificate to the
Trustee.
15. TRUSTEE DEALINGS WITH ISSUER. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Issuer or its Affiliates, and may otherwise deal with the
Issuer or its Affiliates, as if it were not Trustee.
16. NO RECOURSE AGAINST OTHERS. A director, officer, employee,
incorporator, manager, agent or stockholder of the Issuer, as such, shall not
have any liability for any obligations of the Issuer under the Securities or the
Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder by accepting a Security waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Securities.
17. AUTHENTICATION. This Security shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
18. ABBREVIATIONS. 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][T]/M/A (= Uniform
[Gifts] [Transfers] to Minors Act).
19. GOVERNING LAW. This Security shall be deemed to be a contract
under, and shall be governed by and conserved under the laws of the State of
New York, except as otherwise required by mandatory provisions of Nevada law,
including with limitation, the Nevada Gaming Control Act and the regulations
promulgated thereunder.
The Issuer will furnish to any Holder upon written request and without
charge a copy of the Indenture. Requests may be made to:
Alliance Gaming Corporation
4830 Boulder Highway
Las Vegas, NV 89121
Attention: Corporate Secretary
A-8
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
______________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint ___________________________ agent to transfer this
Security on the books of the Issuer. The agent may substitute another to act
for him.
______________________________________________________________________________
Date: _____________________
Signature(s):
______________________________
(Sign exactly as your name(s)
appear(s) on the face of this
Security)
Signature Guaranteed by:
____________________________
IMPORTANT NOTICE: The signature guarantee provided on this Notice must comply
with the regulations of one of the nationally recognized medallion signature
guarantee programs.
A-9
<PAGE>
[FORM OF OPTIONAL CONVERSION NOTICE]
To: Alliance Gaming Corporation
The undersigned owner of this Security hereby: (1) irrevocably
exercises the option to convert this Security, or the portion hereof below
designated, pursuant to Section 13.1(a) of the Indenture referred to in this
Security for shares of Common Stock of Alliance Gaming Corporation in accordance
with the terms of such Indenture and (ii) directs that such shares of Common
Stock deliverable upon the conversion, together with any payment for fractional
shares and any Security(ies) representing any unconverted Principal amount
hereof, be issued and delivered to the registered holder hereof unless a
different name has been indicated below. If shares are to be delivered
registered in the name of a person other than the undersigned, the undersigned
will pay all transfer taxes payable with respect thereto. Any amount required
to be paid by the undersigned on account of interest accompanies this Security.
Dated:__________________
______________________________
Signature(s)
(Sign exactly as your name(s)
appear(s) on the Security)
Signature Guaranteed by:
__________________________
IMPORTANT NOTICE: The signature guarantee provided on this Notice must comply
with the regulations of one of the nationally recognized medallion signature
guarantee programs.
If the stock certificate is to be issued in a name other than the registered
holder on the reverse hereof, the assignment below must be completed.
______________________________
Social Security or other
Taxpayer Identifying Number
_____________________________
(Name)
_____________________________
(Street Address)
_____________________________
(City, State and Zip Code)
(Please print name and address)
Principal amount to be Converted (if
less than all):
$___________________________
A-10
<PAGE>
[FORM OF SURRENDER FOR MANDATORY CONVERSION]
To: Alliance Gaming Corporation
The undersigned owner of this Security hereby: (i) surrenders this
Securities for conversion, in accordance with Section 13.1(b) of the Indenture
referred to in this Security, into shares of Common Stock (or, if and to the
extent indicated below, into shares of Special Stock) of Alliance Gaming
Corporation in accordance with the terms of such Indenture and (ii) directs that
the shares of Common Stock or Special Stock deliverable upon the conversion,
together with any payment for fractional shares, be issued and delivered to the
registered holder hereof unless a different name has been indicated below. If
shares are to be delivered are registered in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto.
Dated:______________
___________________________________________________
Signature(s)
(Sign exactly as your name(s) appear(s) on the
Security)
Signature Guaranteed by:
______________________________
IMPORTANT NOTICE: The signature guarantee provided on this Notice must comply
with the regulations of one of the nationally recognized medallion signature
guarantee programs.
If the stock certificate(s) is (are) to be issued in a name other than the
registered holder on the reverse hereof, the assignment below must be completed.
______________________________________________________
Social Security or other Taxpayer Identifying Number
_________________________
(Name)
_________________________
(Street Address)
_________________________
(City, State and Zip Code)
(Please print name and address)
A-11
<PAGE>
CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL AND
OTHER SPECIAL RIGHTS OF SPECIAL
STOCK AND QUALIFICATIONS, LIMITATIONS
AND RESTRICTIONS THEREOF
OF
11 1/2% NON-VOTING JUNIOR CONVERTIBLE PAY-IN-KIND
SPECIAL STOCK SERIES E
OF
ALLIANCE GAMING CORPORATION,
A NEVADA CORPORATION,
PURSUANT TO SECTION 78.195 OF THE
NEVADA REVISED STATUTES
ALLIANCE GAMING CORPORATION, a Nevada corporation (the "CORPORATION")
certifies that, pursuant to the authority contained in Article IV of its Amended
Articles of Incorporation (the "ARTICLES OF INCORPORATION") and in accordance
with the provisions of Section 78.195 of the Nevada Revised Statutes, the Board
of Directors of the Corporation at a meeting duly called and held on
, 1996, adopted the following resolution which resolution remains in
full force and effect on the date hereof:
RESOLVED, that the Articles of Incorporation have authorized 10,000,000
shares of special stock, par value $.10 per share, of which 10,000,000 remain
unissued; and
FURTHER RESOLVED, that it is necessary to set forth the designation,
preferences and relative, participating, optional and other special rights and
qualifications, limitations and restrictions of shares of such non-voting
special stock; and
FURTHER RESOLVED, that there is hereby established a series of authorized
special stock having a par value of $.10 per share, which series shall be
designated as "11 1/2% Non-Voting Junior Convertible Pay-in-Kind Special Stock,
Series E" (herein the "SERIES E SPECIAL STOCK"), shall consist of 850,000 shares
and shall have the following voting powers, preferences and relative,
participating, optional and other special rights, and qualifications,
limitations and restrictions thereof as follows.
ARTICLE I
CERTAIN DEFINITIONS
Unless the context otherwise requires, the terms defined in this Article I
shall have, for all purposes of this resolution, the meanings herein specified:
COMMON STOCK. The term "COMMON STOCK" shall mean the common stock, par
value $.10 per share, of the Corporation as the same exists on the date of this
resolution or as such stock may be reconstituted from time to time. For purposes
of calculating the number of shares of Common Stock outstanding, shares of
Common Stock held in the treasury of the Corporation shall not be considered
outstanding.
EFFECTIVE TIME. The term "EFFECTIVE TIME" shall mean the effective time of
the consummation of the merger contemplated by the Agreement and Plan of Merger
dated October 18, 1995, as amended, among the Corporation, BGI Acquisition
Corporation and Bally Gaming International, Inc.
<PAGE>
INITIAL ISSUE DATE. The term "INITIAL ISSUE DATE" shall mean the date that
shares of Series E Special Stock are first issued by the Corporation.
JUNIOR STOCK. The term "JUNIOR STOCK" shall mean the Common Stock and any
class or series of stock of the Corporation authorized after the Initial Issue
Date ranking junior to the Series E Special Stock in respect of the right to
receive dividends or in respect of the right to participate in any distribution
upon liquidation, dissolution or winding up of the affairs of the Corporation.
LIQUIDATION VALUE. The term "LIQUIDATION VALUE" shall mean $100.00 per
share of Series E Special Stock.
PERSON. The term "PERSON" shall mean an individual, partnership, joint
venture, corporation, trust or unincorporated organization, a government or any
department, agency or political subdivision thereof or other entity.
SENIOR STOCK. The term "Senior Stock" shall mean the 15% Non-Voting
Pay-in-Kind Special Stock, Series B, of the Corporation and any other class or
series of stock of the Corporation authorized after the Initial Issue Date
ranking senior to the Series E Special Stock in respect of the right to receive
dividends or in respect of the right to participate in any distribution upon
liquidation, dissolution or winding up of the affairs of the Corporation.
ARTICLE II
DIVIDENDS OR OTHER DISTRIBUTIONS OF PROPERTY
2.1 GENERAL. The holders of the outstanding Series E Special Stock shall
be entitled to receive quarterly dividends, as and when declared by the Board of
Directors out of funds legally available thereof, through the twelfth Dividend
Payment Date (as defined below). Each quarterly dividend shall be an amount per
share equal to $2.875 and shall be payable in cash, except that the Corporation
may at its sole option pay any such dividend accruing through and including the
Dividend Payment Date (as defined below) occurring next after the third
anniversary of the Effective Time in whole or in part in additional shares of
Series E Special Stock (or fractions thereof) in an amount equal to such
dividend, valued at the Liquidation Value. Each such dividend shall be payable
on or about the first day of the first, fourth, seventh and tenth months
following the Initial Issuance Date in each year as fixed by the Board of
Directors beginning on the first day of the fourth month following the Initial
Issue Date or such other dates as are fixed by the Board of Directors (each a
"DIVIDEND PAYMENT DATE"), to the holders of record of Series E Special Stock at
the close of business on the 15th day of the month next preceding such Dividend
Payment Date, as the case may be, as fixed by the Board of Directors (each a
"RECORD DATE"). Such dividends shall be cumulative and shall accrue on each
share whether or not earned, from and after the Dividend Payment Date coincident
with or next preceding the issuance of such share, PROVIDED, HOWEVER, that
dividends payable on the first Dividend Payment Date shall so accrue from and
after the date immediately succeeding the Initial Issue Date and
PROVIDED FURTHER, that dividends shall cease to accrue on shares of Series E
Special Stock following the twelfth Dividend Payment Date. Dividends payable
for any partial dividend period (including the period from the Initial Issue
Date to the first day of the month next following the month in which the Initial
Issue Date occurs) shall be computed on the basis of the actual days elapsed in
such period over a year of 365 or 366 days. All calculations provided for in
this Section 2.1 shall be rounded to the nearest 1/1000 share and the nearest
cent.
2.2 LIMITATIONS. Except as hereinafter provided in this Section 2.2,
unless all dividends on the outstanding shares of Series E Special Stock that
have accrued and be payable as of any date shall have been paid, or declared and
additional shares or funds, as appropriate, set apart for payment thereof, no
dividend or other distribution shall be paid to the holders of Junior Stock and
no shares of Junior Stock shall be purchased or redeemed by the Corporation.
Holders of shares of Series E Special Stock shall not be entitled to any
dividends, whether payable in cash, property or stock, in excess of
<PAGE>
full cumulative dividends, as herein provided, on the Series E Special Stock.
Any dividend that is not declared and paid (or set apart for payment) on the
requisite Dividend Payment Date shall accrue additional dividends at the per
annum rate of 11 1/2%, compounded on a quarterly basis and payable on
succeeding Dividend Payment Dates.
ARTICLE III
DISTRIBUTIONS UPON LIQUIDATION, DISSOLUTION OR WINDING UP
3.1 PREFERENCE ON LIQUIDATION, ETC. In the event of any voluntary or
involuntary liquidation, dissolution or other winding up of the affairs of the
Corporation, subject to the prior preferences and other rights of any Senior
Stock as to liquidation preferences, the holders of Series E Special Stock shall
be entitled to be paid out of the assets of the Corporation in cash or property
at its fair market value as determined, in good faith, by the Board of Directors
of the Corporation the Liquidation Value per share plus an amount equal to all
accrued and unpaid dividends and distributions thereon to the date of such
payment prior to any payment to the holders of Junior Stock. After payment in
full of the Liquidation Value per share of the Series E Special Stock and other
preferential amounts provided for in this Section 3.1, the holders of the Series
E Special Stock as such shall have no right or claim to any of the remaining
assets of the Corporation. Except as provided in this Section 3.1, the holders
of Series E Special Stock as such shall have no right or claim to any of the
remaining assets of the Corporation. Except as provided in this Section 3.1,
holders of Series E Special Stock shall not be entitled to any distribution in
the event of liquidation, dissolution or winding up of the affairs of the
Corporation.
3.2 LIQUIDATION PRO RATA IF ASSETS INADEQUATE. If, upon any such
liquidation, dissolution or other winding up of the affairs of the Corporation,
the assets of the Corporation shall be insufficient to permit the payment in
full of the Liquidation Value per share of Series E Special Stock, then the
assets of the Corporation remaining after the distributions to holder of any
Senior Stock of the full amounts in which they may be entitled shall be ratably
distributed among the holders of Series E Special Stock and any other stock
ranking on a parity with the Series E Special Stock with respect to
distributions upon liquidation, dissolution or winding up of the affairs of the
Corporation in proportion to the full amounts to which they would otherwise be
respectively entitled if all amounts thereon were paid in full. Neither the
consolidation or merger of the Corporation into or with another corporation or
corporations nor the sale, lease, transfer or conveyance of all or substantially
all of the assets of the Corporation to another corporation or any other entity
shall be deemed a liquidation, dissolution or winding up of the affairs of the
Corporation within the meaning of this resolution.
ARTICLE IV
VOTING RIGHTS
4.1 VOTING RIGHTS OF HOLDERS OF SERIES E SPECIAL STOCK. The shares of
Series E Special Stock shall have no voting rights except as required by law or
as set forth below:
(a) If and whenever at any time or times dividends payable on
shares of Series E Special Stock shall have been in arrears and unpaid for
six consecutive Dividend Payment Dates, then the number of
directors constituting the Board of Directors of the Corporation shall be
increased by two and the holders of shares of Series E Special Stock
shall have the exclusive right, voting as a class with all other equity
securities of equal rank which have the right to elect directors along
with the Series E Special Stock, to elect two directors of the Corporation.
(b) Such voting right may be exercised initially at a special
meeting of the holders of Series E Special Stock having such voting
right, called as hereinafter provided, or at any annual meeting of
stockholders held for the purpose of electing directors, and thereafter
at each such annual
<PAGE>
meeting until such time as all dividends accumulated on the shares of Series
E Special Stock shall have been paid or set apart for payment in full, at
which time such voting right and the term of the directors elected pursuant
to Section 4.1(a) shall terminate.
(c) At any time when such voting right shall have vested in
holders of shares of Series E Special Stock described in Section
4.1(a), a proper officer of the Corporation may call and, upon the
written request, addressed to the Secretary of the Corporation, of the
record holders of shares representing 25% of the voting power of the shares
then outstanding of Series E Special Stock, shall call, a special meeting of
the holders of Series E Special Stock. Such meeting shall be held
at the earliest practicable date upon the notice required for
annual meetings of stockholders at the place for holding annual meetings of
stockholders of the Corporation, or, if none, at a place designated by the
Board of Director. Notwithstanding the provisions of this Section 4.1(c), no
such special meeting shall be called during a period within 60 days
immediately preceding the date fixed for the next annual meeting of
stockholders.
(d) At any meeting held for the purpose of electing directors at
which the holders of Series E Special Stock shall have the right to elect
directors as provided herein, the presence in person or by proxy of the
holders of shares representing a majority of the then outstanding shares of
Series E Special Stock shall be required and shall be sufficient to
constitute a quorum of such class for the election of directors by the
holders of Series E Special Stock.
(e) Whatever directors are to be elected pursuant to paragraph (a) of
this Section 4.1, they shall be elected by a plurality of the votes cast
by the holders of Series E Special Stock entitled to vote.
(f) Any directors elected pursuant to paragraph (a) of this Section
4.1 may be removed at any time, with or without cause, only by the
affective vote of the holders of a majority of the shares of Series E
Special Stock then outstanding.
(g) Any director elected by holders of Series E Special Stock
pursuant to the voting right exercised under this Section 4.1 shall hold
office until the next annual meeting of stockholders (unless such
term has previously terminated pursuant to Section 4.1(b)) and any vacancy
in respect of any such director shall be filled only by vote of the
remaining director so elected, or if there be no such remaining director,
by the holders of Series E Special Stock entitled to elect such director
or directors at a special meeting called in accordance with the
procedures set forth in Section 4.1(c), or, if no such special meeting is
called, at the next annual meeting of stockholders. Upon any termination of
such voting right, subject to applicable law, the term of office of all
directors elected by holders of Series E Special Stock voting separately as
a class pursuant to this Section 4.1 shall terminate.
(h) In exercising the voting rights set forth in this Section 4.1,
each holder of Series E Special Stock shall be entitled to one vote for
each share of such stock held by such holder. The holders of Series E
Special Stock shall in no event be entitled to elect more than two directors
in total under the provisions of this Certificate. The voting rights granted
in this Certificate are subject to applicable regulatory approvals and
limitations.
ARTICLE V
CONVERSION
5.1 CONVERSION PRIVILEGE. (a) Subject to and upon compliance with the
provisions of this Article V, at the option of the holder thereof, shares of
Series E Special Stock may at any time be converted into fully paid and
non-assessable shares of Common Stock at a conversion price of $5.88, subject to
adjustment as provided below. For this purpose, the value of any share of Series
E Special Stock shall be deemed to be the Liquidation Value. Immediately
following such conversion, the rights
<PAGE>
of the holders of any converted Series E Special Stock shall cease and the
persons entitled to receive Common Stock upon the conversion of such Series E
Special Stock shall upon compliance with the requirements of Section 5.2 hereof
be treated for all purposes as having become the owners of such Common Stock.
5.2 PROCEDURES. To receive certificates evidencing Common stock issuable
on conversion of Series E Special Stock, a holder must (i) surrender the
certificate or certificates evidencing the shares of Series E Special Stock to
be converted, duly endorsed in a form reasonably satisfactory to the
Corporation, at the office of the Corporation or transfer agent for the Series E
Special Stock, (ii) state in writing the name or names in which he wishes the
certificate or certificates for shares of Common Stock to be issued, and (iii)
pay any transfer or similar tax if required by Section 5.6 hereof. The date on
which the holder satisfies all those requirements is the "EXCHANGE DATE". The
Person in whose name the Common Stock certificate is registered shall be treated
as the stockholder of record on and after the Exchange Date. As soon as
practicable, but in any event within 10 business days, the Corporation shall
deliver, through the transfer agent, a certificate for the number of full shares
of Common Stock issuable upon the conversion and a check for any fractional
share. The number of full shares of Common Stock issuable to any holder of
Series E Special Stock upon conversion shall be based on the total number of
shares of Series E Special Stock surrendered for conversion by such holder.
5.3 FRACTIONAL INTERESTS. No fractions of shares or scrip representing
fractions of shares of Common Stock shall be issued upon conversion of the
Series E Special Stock. If any fraction of a share of Common Stock would, except
for the provisions of this Section, be issuable on the conversion of any shares
of Series E Special Stock, the Corporation shall make payment in lieu thereof in
an amount of United States dollars equal to the value of such fraction computed
on the basis of the last sale price of the Common Stock as reported on the
Composite Tape for New York Exchange Listed Stocks (or if not listed or admitted
to trading on such Exchange, then on the principal national securities exchange
on which the Common Stock is listed or admitted to trading, or, if not listed or
admitted to trading on any national securities exchange, on the National
Association of Securities Dealers Automated Quotation/National Market System
(the "NASDAQ/NMS") or a similar organization if NASDAQ/NMS is no longer
reporting information) on the last trading day prior to the Exchange Date or if
no such sale takes place on such day, the last sale price for such day shall be
the average of the closing bid and asked prices regular way on the New York
Stock Exchange (or if not listed or admitted to trading on such Exchange, on the
principal national securities exchange on which the Common Stock is listed or
admitted to trading, or, if not listed or admitted to trading on any national
securities exchange, the average of the highest bid and lowest asked prices on
NASDAQ/NMS or a similar organization if NASDAQ/NMS is no longer reporting
information) for such day (any such last sale price being hereinafter referred
to as the "LAST SALE PRICE"). If on such trading day the Common Stock is not
quoted by any such organization, the fair value of such Common Stock on such
day, as determined by the Board of Directors, shall be used.
5.4 ADJUSTMENT OF CONVERSION PRICE. The conversion price per share of
Common Stock issuable upon conversion of the Securities pursuant to Section 5.1
(herein called the "Conversion Price") shall be subject to adjustment from time
to time from and after the date of this resolution as follows:
(a) In case the Corporation shall (1) pay a dividend or
make a distribution in shares of Common Stock on any class of capital stock
of the Corporation, (2) subdivide its outstanding shares of Common Stock
into a greater number of shares or (3) combine its outstanding shares of
Common Stock into a smaller number of shares, the Conversion Price in effect
immediately prior to such action shall be adjusted so that the holder of any
shares of Series E Special Stock thereafter surrendered for conversion shall
be entitled to receive the number of shares of Common Stock which he would
have owned immediately following such action had such shares of Series E
Special Stock been converted immediately prior thereto. An adjustment made
pursuant
<PAGE>
to this subsection (a) shall become effective immediately, except as
provided in subsections (g) or (h) below, 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 a subdivision or combination.
(b) In case the Corporation shall issue rights or warrants to all
holders of Common Stock entitling them to subscribe for or purchase shares
of Common Stock at a price per share less than the current market price per
share (as determined pursuant to subsection (e) below) of the Common Stock
on the record date mentioned below, the Conversion Price shall be adjusted
to a price, computed to the nearest cent, so that the same shall equal the
price determined by multiplying:
(i) the Conversion Price in effect immediately prior to the
date of issuance of such rights or warrants by a fraction, of
which
(ii) the numerator shall be (A) the number of shares of Common
Stock outstanding on the date of issuance of such rights or
warrants, immediately prior to such issuance, plus (B) the
number of shares which the aggregate offering price of the
total number of shares so offered for subscription or
purchase would purchase at such current market price
(determined by multiplying such total number of shares by
the exercise price of such rights or warrants and dividing
the product so obtained by such current market price), and of
which
(iii) the denominator shall be (A) the number of shares of Common
Stock outstanding on the date of issuance of such rights or
warrants, immediately prior to such issuance, plus (B) the
number of additional shares of Common Stock which are so
offered for subscription or purchase.
Such adjustment shall become effective immediately, except as provided in
subsections (g) or (h) below, after the record date for the determination of
holders entitled to receive such rights or warrants.
(c) In case the Corporation or any subsidiary of the Corporation
shall distribute to all holders of Common Stock any of its assets,
evidences of indebtedness or securities other than Common Stock (other than
(x) ordinary dividends in cash or other property whether or not paid out of
retained earnings of the Corporation or (y) any dividend or distribution
referred to in subsection (a) or (b) above), then in each such case the
Conversion Price shall be adjusted so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior
to the date of such distribution by a fraction of which the numerator shall
be the current market price per share (determined as provided in subsection
(e) below) of the Common Stock immediately prior to the record date
mentioned below less the then fair market value (as determined by the Board
of Directors, whose determination shall, if made in good faith, be
conclusive evidence of such fair market value) of the portion of the assets
so distributed or of such evidences of debt or other securities applicable
to one share of Common Stock, and of which the denominator shall be such
current market price per share of the Common Stock. Such adjustment shall
become effective immediately, except as provided in subsections (g) or (h)
below, after the record date for the determination of stockholders entitled
to receive such distribution. Notwithstanding the foregoing, in the event
that the fair market value of the assets, evidences of indebtedness or other
securities so distributed applicable to one share of Common Stock equals or
exceeds such current market price per share of Common Stock or such current
market price exceeds such fair market value by less than $0.10 per share,
the Conversion Price shall not be adjusted pursuant to this subsection (c)
until such time as the cumulative amount of all such distributions exceeds
$0.10 per share.
(d) Unless provision is made for the Contingent Conversion (as
defined below) by the holders of the Series E Special Stock in
connection with an Offer (as defined below), the Corporation and any
subsidiary of the Corporation shall be prohibited from making a tender or
exchange offer for all or any portion of the Common Stock (any such
tender or exchange offer being referred
<PAGE>
to as an "OFFER") which involves (i) per share consideration the fair market
value of which is in excess of 120% of the current market price per share
(determined as provided in subsection (e) of this Section) prevailing three
business days prior to the commencement of such Offer and (ii) an aggregate
consideration having a fair market value as of the expiration of such Offer
(the "EXPIRATION TIME") that exceeds 110% of the product of the current
market price per share (determined as provided in subsection (e) of this
Section) of the Common Stock at the Expiration Time times the number of
shares of Common Stock outstanding (including any tendered shares) at the
Expiration Time.
For purposes of this subsection (d), (i) the fair market value of any
consideration with respect to an Offer shall be determined by the Board of
Directors, whose determination shall be conclusive and described in a board
resolution, and (ii) a "CONTINGENT CONVERSION" shall mean a conversion of Series
E Special Stock pursuant to Section 5.1 pursuant to which the holder of shares
of Series E Special Stock can tender such shares for conversion subject to the
Common Stock issuable upon such conversion being acquired by the Corporation or
any subsidiary of the Corporation pursuant to an Offer and, to the extent such
Common Stock is not so acquired, the portion of the shares of Series E Special
Stock which would have been converted upon such acquisition but which were not
acquired pursuant to the Offer shall be considered for all purposes as if such
shares were never tendered for conversion hereunder.
(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 Last Sale Prices of a share of
Common Stock for the five consecutive trading days selected by the
Corporation commencing not more than 20 trading days before, and ending not
later than, the earlier of the date in question and the date before the
" 'ex' date" with respect to the issuance, distribution or Offer
requiring such computation. If on any such trading day the Common Stock
is not quoted by any organization referred to in the definition of Last
Sale Price in Section 5.3 hereof, the fair value of the Common Stock on
such day, as determined by the Board of Directors, shall be used. For
purposes of this paragraph, the term " 'EX' DATE", when used with
respect to any issuance, distribution or payments with respect to an
Offer, means the first date on which the Common Stock trades regular way
on the principal national securities exchange on which the Common Stock
trades or on which the Common Stock is listed or admitted to trading
without the right to receive such issuance, distribution or Offer.
(f) In addition the foregoing adjustments in subsections (a), (b),
(c) and (d) above, the Corporation will be permitted to make such
reductions in the Conversion Price as its considers to be advisable in order
that any event treated for Federal income tax purposes as a dividend of
stock or stock rights will be not be taxable to the holders of the shares of
Common Stock.
(g) In any case in which this Section shall require that an
adjustment (including by reason of the last sentence of subsection (a) or
(c) above) be made immediately following a record date, the Corporation
may elect to defer the effectiveness of such adjustment (but in no event
until a date later than the effective time of the event giving rise to such
adjustment), in which case the Corporation shall, with respect to any shares
of Series E Special Stock converted after such record date pursuant to
Section 5.1 and on and before such adjustment shall have become effective,
(i) defer paying any cash payment pursuant to Section 5.3 hereof or issuing
to the holder of such shares the number of shares of Common Stock and other
capital stock of the Corporation (or other assets or securities) issuable
upon such conversion in excess of the number of shares of Common Stock and
other capital stock of the Corporation issuable thereupon only on the basis
of the Conversion Price prior to adjustment, and (ii) not later than five
business days after such adjustment shall have become effective, pay to such
holder the appropriate cash payment pursuant to Section 5.3 hereof and issue
to such holder the additional shares of Common Stock and other capital stock
of the Corporation issuable on such conversion.
<PAGE>
(h) No adjustment in the Conversion Price shall be required unless
such adjustment would require an increase or decrease of at least 1% of
the Conversion Price; PROVIDED, that any adjustments which by reason of this
subsection (h) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 5.3 shall be made to the nearest cent or to the nearest
one-hundredth of a share, as the case may be.
(i) Whenever the Conversion Price is adjusted as herein provided,
the Corporation shall promptly (i) cause to be filed with the Corporation
a certificate of a firm of independent public accountants of recognized
standing selected by the Board of Directors (who may be the regular auditors
of the Corporation) setting forth the Conversion Price after such adjustment
and setting forth in reasonable detail the method of calculation and the
facts upon which such calculations are based and setting forth the number of
shares of Common Stock (or portion thereof) issuable after such adjustment
to the Conversion Price upon conversion of a share of Series E Special
Stock, which certificate shall be conclusive evidence of the correctness of
the matters set forth therein, and (ii) cause to be given to each of the
registered holders of the Series E Special Stock at its address appearing on
the transfer agent's register written notice of such adjustments by first-
class mail, postage prepaid.
5.5 REORGANIZATION OF CORPORATION. If the Corporation shall at any time
consolidate or merge with one or more persons (other than a merger or
consolidation in which the Corporation is the continuing person and which does
not result in any reclassification, change or exchange of the outstanding shares
of Common Stock), or sell, lease, transfer, or convey all or substantially all
of its assets, the record holders of the Series E Special Stock shall have the
right thereafter to receive, upon the surrender of a certificate or certificates
representing Series E Special Stock, the cash, securities or other property to
which the record holder would have been entitled upon such consolidation,
merger, sale, lease, transfer or conveyance (to the extent permitted by
applicable law) if the record holder had held the shares of Common Stock
issuable upon any conversion thereof immediately prior to any such transaction,
whether or not the Series E Special Stock was at such time convertible. The
Corporation shall take such steps in connection with such consolidation or
merger or sale, lease, transfer or conveyance as may be necessary to assure that
the provisions hereof shall thereafter be applicable, as nearly as reasonably
may be, in relation to any cash, securities or other property thereafter
deliverable upon any conversion or redemption hereof. The provisions of this
Section shall similarly apply to successive consolidations, mergers, sales,
leases, transfers or conveyances.
5.6 TAXES ON CONVERSION. The Corporation will pay any and all documentary,
stamp or similar taxes payable to the United States of America or any political
subdivision or taxing authority thereof or therein in respect of the issue or
delivery of shares of Common Stock on conversion of Series E Special Stock;
PROVIDED, HOWEVER, that the Corporation shall not be required to pay any tax
which may be payable in respect of any transfer involved in the issue or
delivery of shares of Common Stock in a name other than that of the holder of
the Series E Special Stock to be converted and no such issue or delivery shall
be made unless and until the person requesting such issue or delivery has paid
to the Corporation the amount of any such tax or has established, to the
satisfaction of the Corporation, that such tax has been paid. The Corporation
extends no protection with respect to any other taxes imposed in connection with
conversion of Series E Special Stock.
5.7 CORPORATION TO PROVIDE STOCK. The Corporation shall reserve from time to
time, free from preemptive rights, out of its authorized but unissued shares,
or, with respect to no more than 5% of the number of shares issuable upon
conversion of the outstanding Series E Special Stock, shall otherwise cause to
be made available, sufficient shares to provide for the conversion of the Series
E Special Stock as such shares of Series E Special Stock are presented for
conversion, PROVIDED, that nothing contained herein shall be construed to
preclude the Corporation from satisfying its obligations in respect of the
conversion of Series E Special Stock by delivery of repurchased shares of Common
Stock which are held in the treasury of the Corporation.
<PAGE>
If any shares of Common Stock to be reserved for the purpose of conversion
of shares of Shares E Special Stock hereunder require registration with or
approval of any governmental authority under any Federal or State law before
such shares may be validly issued or delivered upon conversion, then the
Corporation covenants that it will in good faith and as expeditiously as
possible endeavor to secure such registration or approval, as the case may be,
PROVIDED, HOWEVER, that nothing in this Section shall be deemed to affect in any
way the obligations of the Corporation to convert Series E Special Stock into
Common Stock as provided in this Article V.
Before taking any action which would cause an adjustment reducing the
Conversion Price below the then par value, if any, of the Common Stock, the
Corporation will take all corporate action which may, in the opinion of counsel,
be necessary in order that the Corporation may validly and legally issue fully
paid and non-assessable shares of Common Stock at such adjusted Conversion
Price.
<PAGE>
ARTICLE VI
OPTIONAL REDEMPTION
6.1 OPTIONAL REDEMPTION. (a) Following the eighth Dividend Payment Date, the
Corporation at any time and from time to time may at its option redeem all or
any number less than all of the outstanding shares of Series E Special Stock.
Any redemption of shares of Series E Special Stock shall be elected at a price
per share in cash equal to the Liquidation Value per share plus an amount equal
to all accrued and unpaid dividends and distributions thereon to the date of
redemption. Except as provided in this subparagraph (a) or elsewhere in the
Articles of Incorporation, the Corporation shall have no right or obligation to
redeem any shares of Series E Special Stock.
(b)(i) Notice of any redemption of shares of Series E Special Stock pursuant
to this Section 6.1 shall be mailed not less than 30, but not more than 60 days
prior to the date fixed for redemption to each holder of shares of Series E
Special Stock to be redeemed, at such holder's address as it appears on the
transfer books of the Corporation in order to facilitate the redemption of
shares of Series E Special Stock, the Board of Directors may fix a record date
for the determination of shares of Series E Special Stock to be redeemed not
more than 60 days or less than 30 days prior to the date fixed for such
redemption.
(ii) Notice having been given pursuant to paragraph (b)(i) of this Section
6.1, from and after the date specified therein as of the date of redemption,
unless default shall be made by the Corporation in providing for the payment of
the applicable redemption price, all dividends on the Series E Special Stock
thereby called for redemption shall cease to accrue and all rights of the
holders thereof as stockholders of the Corporation, except the right to receive
the applicable redemption price (but without interest) plus an amount equal to
all accrued and unpaid dividends and distributions thereon to the date of
redemption shall cease and terminate.
ARTICLE VII
MISCELLANEOUS
7.1 EXCLUSION OF OTHER RIGHTS. Except as may otherwise be required by law,
the shares of Series E Special Stock shall not have any powers, preferences or
relative, participating, optional or special rights, other than those
specifically set forth in this Certificate and in the Articles of Incorporation.
7.2 HEADINGS OF SUBDIVISIONS. The headings of the various subdivisions
hereof are for convenience of reference only and shall not affect the
interpretation of any of the provisions hereof.
7.3 SEVERABILITY OF PROVISION. If any voting powers, preferences, and
relative, participating, optional or other special rights of the Series E
Special Stock and qualifications, limitations, and restrictions thereof set
forth in this resolution are invalid, unlawful or incapable of being enforced by
reason of any rule of law or public policy, all other voting powers, preferences
and relative, participating, option and other special rights of the Series E
Special Stock and qualifications, limitations and restrictions thereof set forth
in this resolution (as so amended) which can be given effect without the
invalid, unlawful or unenforceable voting powers, preferences and relative,
participating, option and other special rights of the Series E Special Stock and
qualifications, limitations and restrictions thereof shall, nevertheless, remain
in full force and effect, and no voting powers, preferences and relative,
participating, option or other special rights of the Series E Special Stock and
qualifications, limitations and restrictions thereof herein set forth shall be
deemed dependent upon any other such voting powers, preferences and relative,
participating, optional or other special rights of the Series E Special Stock
and qualifications, limitations and restrictions thereof unless so expressed
herein.
7.4 FRACTIONAL SHARES. Fractional shares of Series E Special Stock shall
entitle the holder to receive dividends and distributions and to exercise voting
rights in proportion to the fractional holding.
