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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) DECEMBER 23, 1997 (DECEMBER 16,
1997)
ACTIVISION, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
Delaware 0-12699 94-2606438
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(STATE OR OTHER JURISDICTION (COMMISSION (IRS EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
3100 Ocean Park Blvd., Santa Monica, CA 90405
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code (310) 255-2000
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(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
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ITEM 5. OTHER EVENTS.
Activision, Inc. ("Activision"), a Delaware corporation, and Credit
Suisse First Boston Corporation, Piper Jaffray, Inc. and UBS Securities LLC
(the "Initial Purchasers") entered into a Purchase Agreement on December 16,
1997, for the private placement of $60,000,000 principal amount of 6 3/4%
Convertible Subordinated Notes due 2005 (the "Notes") of Activision. The
Notes are convertible, in whole or in part, at the option of the holder at
any time after December 22, 1997 (the date of original issuance) and prior to
the close of business on the business day immediately preceding the maturity
date, unless previously redeemed or repurchased, into shares of Activision's
common stock, $.000001 par value. The Notes are redeemable, in whole or in
part, at the option of the Company at any time on or after January 10, 2001,
subject to premiums through December 31, 2003.
The Notes are being issued under an indenture, dated as of December 22,
1997, between Activision and State Street Bank and Trust Company of
California, N.A., as Trustee.
The Notes were offered to a limited number of purchasers pursuant to a
Rule 144A placement. The net proceeds to Activision of approximately
$57,900,000 are expected to be used to finance its product development and
product acquisition efforts, support its corporate acquisition program and
fund general corporate working capital needs.
The Notes were issued in a transaction exempt from registration under
the Securities Act of 1933, as amended, and may not be offered or sold in the
United States absent registration with the Securities and Exchange Commission
or the availability of an applicable exemption from such registration
requirements.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL STATEMENTS AND EXHIBITS.
(c) EXHIBITS.
10.1 Purchase Agreement dated as of December 16, 1997, between
Activision and the Initial Purchasers.
10.2 Registration Rights Agreement dated as of December 16, 1997,
between Activision and the Initial Purchasers.
10.3 Indenture dated as of December 22, 1997, between Activision
and State Street Bank and Trust Company of California, N.A.,
as Trustee.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: December 22, 1997
ACTIVISION, INC.
By:/s/ Lawrence Goldberg
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Name: Lawrence Goldberg
Title: Senior Vice President,
General Counsel and Secretary
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$60,000,000
ACTIVISION, INC.
6 3/4% CONVERTIBLE SUBORDINATED NOTES DUE 2005
PURCHASE AGREEMENT
December 16, 1997
CREDIT SUISSE FIRST BOSTON CORPORATION
PIPER JAFFRAY, INC.
UBS SECURITIES LLC
c/o Credit Suisse First Boston Corporation,
Eleven Madison Avenue,
New York, N.Y. 10010-3629
Ladies and Gentlemen:
1. INTRODUCTORY. Activision, Inc., a Delaware corporation (the
"Company"), proposes, subject to the terms and conditions stated herein, to
issue and sell to the several initial purchasers named in Schedule A hereto
(the "Purchasers") U.S.$60,000,000 principal amount of its 6 3/4% Convertible
Subordinated Notes Due 2005 (the "Offered Securities"), which are
convertible into shares of the Company's common stock, $0.000001 par value
("Common Stock"), to be issued under an indenture, dated as of December 22,
1997 (the "Indenture"), between the Company and State Street Bank and Trust
Company of California, N.A., as Trustee (the "Trustee").
The duly authorized shares of Common Stock reserved for issuance upon
conversion of the Offered Securities are herein referred to as the
"Underlying Shares." The United States Securities Act of 1933 is herein
referred to as the "Securities Act." This Agreement, the Indenture, and the
Registration Rights Agreement signed concurrently among the parties to this
Agreement (the "Registration Rights Agreement") are herein collectively
referred to as the "Transaction Documents."
The Company hereby agrees with the several Purchasers as follows:
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to, and agrees with, the several Purchasers as follows:
(a) A preliminary offering circular and an offering circular
relating to the Offered Securities to be offered by the Purchasers have
been prepared by the Company. Such preliminary offering circular and
offering circular, as supplemented as of the date of this Agreement,
together with the documents listed in Schedule B hereto and any other
document approved by the Company for use in connection with the
contemplated resale of the Offered Securities are hereinafter collectively
referred to as the "Offering Document." Any reference to the Offering
Document shall be deemed to refer to and include (i) the Company's most
recent Annual Report
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on Form 10-K and all subsequent documents filed by the Company with the
Securities and Exchange Commission (the "Commission") pursuant to
Section 13(a), 13(c) or 15(d) of the United States Securities Exchange
Act of 1934, as amended (the "Exchange Act") on or prior to the date of
the Offering Document and any reference to the Offering Document, as
amended or supplemented, as of any specified date, shall be deemed to
include any documents filed with the Commission pursuant to Section
13(a), 13(c) or 15(d) of the Exchange Act after the date of the Offering
Document and prior to such specified date and any Rule 144A Information
(as defined in Section 5(b) hereof) furnished by the Company prior to
the completion of the distribution of the Offered Securities; and all
documents filed under the Exchange Act and so deemed to be included in
the Offering Document or any amendment or supplement thereto are
hereinafter called the "Exchange Act Reports"; and (ii) any other
document listed in Schedule B hereto and any other document approved by
the Company for use in connection with the contemplated resale of the
offered securities. The Exchange Act Reports, when they were or are
filed with the Commission, conformed or will conform in all material
respects to the applicable requirements of the Exchange Act and the
applicable rules and regulations of the Commission thereunder. The
Offering Document and any amendments or supplements thereto and the
Exchange Act Reports did not and will not, as of their respective dates,
contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
PROVIDED, HOWEVER, that this representation and warranty shall not apply
to any statements or omissions made in reliance upon and in conformity
with information furnished in writing to the Company by any Purchaser
through CSFBC specifically for use therein, it being understood and
agreed that the only such information is that described as such in
Section 7(b) hereof.
(b) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Delaware,
with power and authority (corporate and other) to own its properties and
conduct its business as described in the Offering Document; and the
Company is duly qualified to do business as a foreign corporation in good
standing in all other jurisdictions in which its ownership or lease of
property or the conduct of its business requires such qualification, or is
subject to no material liability or disability by reason of the failure to
be so qualified in any such jurisdiction. The Company has an authorized
capitalization as set forth in the Offering Document, and all of the
issued shares of capital stock of the Company have been duly and validly
authorized and issued and are fully paid and non-assessable.
(c) Each subsidiary of the Company listed in Schedule D hereto and
identified therein as a material subsidiary (each a "Material Subsidiary"
and collectively the "Material Subsidiaries") has been duly incorporated
and is validly existing as a corporation in good standing under the laws
of the jurisdiction of its incorporation, with power and authority
(corporate and other) to own its properties and conduct its business as
described in the Offering Document; and each Material Subsidiary of the
Company is duly qualified to do business as a foreign corporation in good
standing in all other jurisdictions in which its ownership or lease of
property or the conduct of its business requires such qualification, or is
subject to no material liability or disability by reason of the failure to
be so qualified in any such jurisdiction. All of the issued and
outstanding capital stock of each Material Subsidiary of the Company has
been duly authorized and validly issued and is fully paid and
nonassessable; and the capital stock of each subsidiary owned by the
Company, directly or through subsidiaries, is owned free from liens,
encumbrances and defects, other than liens securing the lines of credit
described in the Offering Document.
(d) The Indenture and the Registration Rights Agreement have been
duly authorized by the Company; the Offered Securities and the Underlying
Shares have been duly authorized by the Company; and when the Offered
Securities are delivered and paid for pursuant to this Agreement on the
Closing Date (as defined below), the Indenture and the Registration Rights
Agreement will have
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been duly executed and delivered by the Company, such Offered Securities
will have been duly executed, authenticated, issued and delivered by the
Company and will conform to the description thereof contained in the
Offering Document and the Indenture and such Offered Securities will
constitute valid and legally binding obligations of the Company,
enforceable against the Company in accordance with their respective
terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
(e) When the Offered Securities are delivered and paid for pursuant
to this Agreement on the Closing Date, such Offered Securities will be
convertible into the Underlying Shares in accordance with the terms of the
Indenture; the Underlying Shares issuable upon conversion of the Offered
Securities delivered on the Closing Date have been duly authorized and
reserved for issuance upon such conversion and, when issued upon such
conversion, will be validly issued, fully paid and nonassessable; and the
shareholders of the Company have no preemptive rights with respect to the
Offered Securities or the Underlying Shares.
(f) Except as disclosed in the Offering Document, and except for
registration rights or similar rights that have been satisfied prior to
the date of this Agreement by the filing by the Company of a registration
statement under the Securities Act, there are no persons with
registration rights or other similar rights to have any securities of the
Company (other than the Offered Securities) registered under any
Securities Act registration statement; and, except as disclosed in the
Offering Document, no holder of any security of the Company (other than
Holders of the Offered Securities) has any right to request or demand
registration of any security of the Company because of the consummation of
the transactions contemplated by the Transaction Documents.
(g) No statute, rule, regulation or order that has been enacted,
adopted or issued by any governmental agency, and no injunction,
restraining order or order of any nature by a Federal or state court of
competent jurisdiction to which either the Company or any of its
subsidiaries is subject that has been issued or is pending, (i) could
interfere with or adversely affect the issuance of the Offered Securities
or the Underlying Shares, or (ii) could in any manner draw into question
the validity of this Agreement or any other Transaction Document.
(h) No consent, approval, authorization, or order of, or filing
with, any governmental agency or body or any court is required for the
consummation of the transactions contemplated by this Agreement or in
connection with the issuance or sale of the Offered Securities by the
Company or the issuance of the Underlying Shares upon conversion of the
Offered Securities, and no consents or waivers from any other person are
required for the execution, delivery or performance of this Agreement and
the other Transaction Documents by the Company and the consummation of the
transactions contemplated hereby and thereby, other than such as have been
obtained and are in full force and effect and other than such filings as
may be required under the Securities Act or the rules and regulations
thereunder, as may be required under the securities or "blue sky" laws of
the various states, or as may be required in any other jurisdiction in
connection with the offer and sale of the Offered Securities or the
Underlying Shares in such jurisdiction. No order or decree preventing the
use of the Offering Document and no order asserting that the transactions
contemplated by this Agreement are subject to the registration
requirements of the Securities Act has been issued, and no proceeding for
that purpose has commenced or is pending or, to the knowledge of the
Company, is contemplated.
(i) None of the transactions contemplated by this Agreement
(including, without limitation, the use of the proceeds from the sale of
the Offered Securities) will violate or result in a violation of Section 7
of the Exchange act, or any regulation promulgated thereunder, including,
without limitation, Regulations G, T, U, and X of the Board of Governors
of the Federal Reserve System.
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(j) Prior to the date of this Agreement, neither the Company nor any
of its affiliates has taken any action which is designed to or which has
constituted or which might reasonably be expected to cause or result in
stabilization or manipulation of the price of any security of the Company
in connection with the offering of the Offered Securities.
(k) The execution, delivery and performance of the Transaction
Documents, compliance with the terms and provisions thereof, the issuance
and sale of the Offered Securities and the issuance of the Underlying
Shares upon conversion of the Offered Securities will not result in a
breach or violation (including any event which, with notice or lapse of
time or both would constitute a breach or violation) of any of the terms
or provisions of, or constitute a default (including any event which, with
notice or lapse of time or both would constitute a default) under, any
statute, rule, regulation or order of any governmental agency or body or
any court, domestic or foreign, having jurisdiction over the Company or
any Material Subsidiary of the Company or any of their properties, or any
agreement or instrument to which the Company or any such Material
Subsidiary is a party or by which the Company or any such Material
Subsidiary is bound or to which any of the properties of the Company or
any such Material Subsidiary is subject, or the charter or by-laws of the
Company or any such Material Subsidiary, and the Company has full power
and authority to authorize, issue and sell the Offered Securities and to
issue the Underlying Shares upon conversion of the Offered Securities,
each as contemplated by this Agreement.
(l) This Agreement has been duly authorized, executed and delivered
by the Company.
(m) Except as disclosed in the Offering Document, the Company and
its Material Subsidiaries have good and marketable title to all property
owned by them, in each case free from liens, encumbrances and defects that
would materially affect the value thereof or materially interfere with the
use made or to be made thereof by them; and except as disclosed in the
Offering Document, the Company and its Material Subsidiaries hold any
leased real or personal property under valid and enforceable leases with
no exceptions that would materially interfere with the use made or to be
made thereof by them.
(n) The Company and its Material Subsidiaries possess adequate
certificates, authorities or permits issued by appropriate governmental
agencies or bodies necessary to conduct the business now operated by them
and have not received any notice of proceedings relating to the revocation
or modification of any such certificate, authority or permit that, if
determined adversely to the Company or any of its Material Subsidiaries,
would individually or in the aggregate have a material adverse effect on
the Company and its Material Subsidiaries taken as a whole.
(o) No labor dispute with the employees of the Company or any
subsidiary exists or, to the knowledge of the Company, is imminent that
might have a material adverse effect on the Company and its subsidiaries
taken as a whole, and, to the knowledge of the Company, neither the
Company nor any of its subsidiaries has violated any Federal, state or
local law relating to discrimination in hiring, promotion or pay of
employees. Neither the Company nor any of its subsidiaries will cause or
permit any goods to be manufactured, sold or distributed by any of its
employees in violation of the minimum wage or overtime laws of Sections 6
and 7 of the Federal Fair Labor Standards Act.
(p) The Company and its subsidiaries own, possess or have licenses
to use trademarks, trade names and other rights to inventions, know-how,
patents, copyrights, confidential information and other intellectual
property (collectively, "intellectual property rights") necessary to
conduct the business now operated by them, or presently employed by them,
and, except as described in the Offering Document, have not received any
notice of infringement of or conflict with asserted rights
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of others with respect to any intellectual property rights that, if
determined adversely to the Company or any of its subsidiaries, could
individually or in the aggregate have a material adverse effect on the
Company and its subsidiaries taken as a whole.
(q) Except as disclosed in the Offering Document, neither the
Company nor any of its subsidiaries is in violation of any statute, rule,
regulation, decision or order of any governmental agency or body or any
court, domestic or foreign, relating to the use, disposal or release of
hazardous or toxic substances or relating to the protection or restoration
of the environment or human exposure to hazardous or toxic substances
(collectively, "environmental laws"), owns or operates any real property
contaminated with any substance that is subject to any environmental laws,
is liable for any off-site disposal or contamination pursuant to any
environmental laws, or is subject to any claim relating to any
environmental laws, which violation, contamination, liability or claim
could individually or in the aggregate have a material adverse effect on
the Company and its subsidiaries taken as a whole; and the Company is not
aware of any pending investigation which might lead to such a claim.
(r) Except as disclosed in the Offering Document, neither the
Company nor any of its Material Subsidiaries is in violation of its
charter or by-laws or in default (including any event which, with notice
or lapse of time, or both, would constitute a default) in the performance
or observance of any material obligation, covenant or condition, contained
in any material contract, indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a party
or by which it or any of its properties may be bound.
(s) The statements set forth in the Offering Circular under the
captions "Description of Notes," insofar as they purport to constitute a
summary of the terms of the Offered Securities and of the documents and
laws therein described, and under the captions "Certain United States
Federal Tax Considerations," "Transfer Restrictions" and "Plan of
Distribution," insofar as they purport to describe the provisions of the
documents and laws therein described, are accurate and complete in all
material respects.
(t) Except as disclosed in the Offering Document, there are no
pending legal or governmental actions, suits or proceedings against or
affecting the Company, any of its subsidiaries or any of their respective
properties that, if determined adversely to the Company or any of its
subsidiaries, could individually or in the aggregate have a material
adverse effect on the condition (financial or other), business, properties
or results of operations of the Company and its subsidiaries taken as a
whole, or could materially and adversely affect the ability of the Company
to perform its obligations under the Transaction Documents, or which are
otherwise material in the context of the sale of the Offered Securities;
and no such actions, suits or proceedings are threatened or, to the
Company's knowledge, contemplated.
(u) The financial statements included in the Offering Document,
including financial statements relating to any company which the Company
has recently acquired (an "Acquired Company") present fairly the financial
position of the Company, its consolidated subsidiaries and any Acquired
Company, as the case may be, as of the dates shown and their results of
operations and cash flows for the periods shown and such financial
statements have been prepared in conformity with the generally accepted
accounting principles in the United States applied on a consistent basis;
and the assumptions used in preparing the pro forma financial statements
included in the Offering Document provide a reasonable basis for
presenting the significant effects directly attributable to the
transactions or events described therein, the related pro forma
adjustments give appropriate effect to those assumptions, and the pro
forma columns therein reflect the proper application of those adjustments
to the corresponding historical financial statement amounts.
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(v) Except as disclosed in the Offering Document, the Company and
its subsidiaries have filed all tax returns required to be filed, and such
returns are true and correct in all material respects, and the Company and
its subsidiaries are not in default in the payment of any taxes which
were payable pursuant to said returns or any assessments with respect
thereto, except insofar as the failure to file any such return or make any
such payment could not, singly or in the aggregate with all other such
failures, reasonably be expected to have a material adverse effect on the
Company and its subsidiaries, taken as a whole. The Company does not
know of any material proposed additional tax assessments against it or any
of its Material Subsidiaries.
(w) The Company is not, nor will it be, as a result of or after
giving effect to the issuance of the Offered Securities and the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated thereby, (i) insolvent, (ii) left with an
unreasonably small capital with which to engage in its existing and
anticipated businesses or (iii) incurring debts beyond its ability to pay
such debts as they mature. The Company is not issuing the Offered
Securities in anticipation of insolvency.
(x) Except as disclosed in the Offering Document, since the date of
the latest audited financial statements of the Company included in the
Offering Document there has been no material adverse change, nor any
development or event involving a prospective material adverse change, in
the condition (financial or other), business, properties or results of
operations of the Company and its subsidiaries taken as a whole and,
except as disclosed in or contemplated by the Offering Document, there has
been no dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock.
(y) KPMG Peat Marwick LLP ("KPMG") and Coopers & Lybrand LLP, who
have certified certain financial statements of the Company and its
subsidiaries, and Grant Thornton, who has certified certain financial
statements of certain subsidiaries of the Company, are independent public
accountants with respect to the Company and its subsidiaries as required
by the Securities Act and the rules and regulations of the Commission
thereunder.
(z) The Company is not an open-end investment company, unit
investment trust or face-amount certificate company that is or is required
to be registered under Section 8 of the United States Investment Company
Act of 1940, as amended (the "Investment Company Act") ; and the Company
is not and, after giving effect to the offering and sale of the Offered
Securities and the application of the proceeds thereof as described in the
Offering Document, will not be an "investment company" as defined in the
Investment Company Act.
(aa) No securities of the same class (within the meaning of
Rule 144A(d)(3) under the Securities Act) as the Offered Securities are
listed on any national securities exchange registered under Section 6 of
the Exchange Act or quoted in a U.S. automated inter-dealer quotation
system.
(bb) The offer and sale of the Offered Securities to the Purchasers,
and initial resale of the Offered Securities by the Purchasers, each in
the manner contemplated by this Agreement, will be exempt from the
registration requirements of the Securities Act by reason of Section 4(2)
thereof, Regulation D thereunder, or Regulation S thereunder ("Regulation
S"), or, in the case of resales by the Purchasers, Rule 144A under the
Securities Act, provided in each case the representations and warranties
of the Purchasers are true and correct and that the Purchasers comply with
all such applicable laws and regulations in the resale of the Offered
Securities; and it is not necessary to qualify an indenture in respect of
the Offered Securities under the United States Trust Indenture Act of
1939, as amended (the "Trust Indenture Act").
(cc) Neither the Company, nor any of its affiliates, nor any person
acting on its or their
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behalf (i) has, within the six-month period prior to the date hereof,
offered or sold in the United States or to any U.S. person (as such
terms are defined in Regulation S) the Offered Securities, or any
security of the same class or series as the Offered Securities or (ii)
has offered or will offer or sell the Offered Securities (A) in the
United States by means of any form of general solicitation or general
advertising within the meaning of Rule 502(c) under the Securities Act
or (B) with respect to any such securities sold in reliance on Rule 903
of Regulation S ("Rule 903"), by means of any directed selling efforts
within the meaning of Rule 902(b) of Regulation S. The Company, its
affiliates and any person acting on its or their behalf have complied
and will comply with the offering restrictions requirement of Regulation
S. The Company has not entered and will not enter into any contractual
arrangement with respect to the distribution of the Offered Securities
except for this Agreement.
(dd) Except as permitted by the Securities Act, neither the Company
nor any of its subsidiaries has distributed and, prior to the completion
of the initial distribution of the Offered Securities (which includes the
sale by the Purchasers), neither will distribute, any offering materials
in connection with the offering and sale of the Offered Securities other
than the Offering Document.
(ee) The Offering Document, as of the date of this Agreement,
contains all the information specified in, and meets the requirements of,
Rule 144A(d)(4) under the Securities Act.
(ff) The Company is subject to Section 13 or 15(d) the Exchange
Act.
(gg) Except as disclosed in the Offering Document, there are no
contracts, agreements or understandings between the Company and any person
that would give rise to a valid claim against the Company or any Purchaser
for a brokerage commission, finder's fee or other like payment in
connection with the sale of the Offered Securities.
3. PURCHASE, SALE AND DELIVERY OF OFFERED SECURITIES. On the basis of
the representations, warranties and agreements herein contained, but subject to
the terms and conditions herein set forth, the Company agrees to sell to the
Purchasers, and the Purchasers agree, severally and not jointly, to purchase
from the Company, at a purchase price of 97% of the principal amount thereof,
the respective principal amounts of Offered Securities set forth opposite the
names of the several Purchasers in Schedule A hereto.
The Company will deliver against payment of the purchase price the Offered
Securities in the form of one or more permanent global securities in definitive
form (the "Global Securities") deposited with the Trustee as custodian for The
Depository Trust Company ("DTC") and registered in the name of Cede & Co., as
nominee for DTC. Interests in any permanent global securities will be held
only in book-entry form through DTC, except in the limited circumstances
described in the Offering Document. The Global Securities shall include the
legend regarding restrictions on transfer set forth under "Transfer
Restrictions" in the Offering Document. Payment for the Offered Securities
shall be made by the Purchasers in Federal (same day) funds by official check
or checks or wire transfer to an account at Chase Manhattan Bank, New York, New
York drawn to the order of Activision, Inc. at the offices of Irell & Manella
LLP, 1800 Avenue of the Stars, Los Angeles, California at 10 A.M. (New York
time), on December 22, 1997, or at such other time not later than seven full
business days thereafter as CSFBC and the Company determine, such time being
herein referred to as the "Closing Date," against delivery to the Trustee as
custodian for DTC of the Global Securities representing all of the Offered
Securities. The Global Securities will be made available for checking at the
Corporate Trust Office of the Trustee, as defined in the Indenture at least one
business day prior to the Closing Date.
Notwithstanding the foregoing, any Offered Securities sold to
Institutional Accredited Investors (as hereinafter defined) pursuant to Section
4(c) hereof shall be issued in definitive, fully registered form and shall bear
the legend relating thereto set forth under "Transfer Restrictions" in the
Offering Document, but shall be
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paid for in the same manner as any Offered Securities to be purchased by the
Purchasers hereunder and to be offered and sold by them in reliance on Rule 144A
or Regulation S under the Securities Act.
4. REPRESENTATIONS BY PURCHASERS; RESALE BY PURCHASERS.
(a) Each Purchaser severally represents and warrants to the Company
that it is an "accredited investor" within the meaning of Regulation D
under the Securities Act;
(b) Each Purchaser severally acknowledges that the Offered
Securities have not been registered under the Securities Act and may not
be offered or sold within the United States or to, or for the account or
benefit of, U.S. persons except pursuant to an exemption from the
registration requirements of the Securities Act. Each Purchaser severally
represents and agrees that it has offered and sold the Offered Securities,
and will offer and sell the Offered Securities as part of its distribution
at any time, only in accordance with Rule 903 or Rule 144A under the
Securities Act ("Rule 144A") or in the case of CSFBC or any other
Purchaser authorized by CSFBC to a limited number of Institutional
Accredited Investors in accordance with subsection (c) below.
Accordingly, neither such Purchaser nor its affiliates, nor any persons
acting on its or their behalf, have engaged or will engage in any directed
selling efforts with respect to the Offered Securities, and such
Purchaser, its affiliates and all persons acting on its or their behalf
have complied and will comply with the offering restrictions requirement
of Regulation S. Each Purchaser severally agrees that, at or prior to
confirmation of sale of the Offered Securities, other than a sale pursuant
to Rule 144A or a sale to an Institutional Accredited Investor in
accordance with subsection (c) below, such Purchaser will have sent to
each distributor, dealer or person receiving a selling concession, fee or
other remuneration that purchases the Offered Securities from it a
confirmation or notice to substantially the following effect:
"The Securities covered hereby have not been registered
under the U.S. Securities Act of 1933 (The "Securities
Act") and may not be offered or sold within the United
States or to, or for the account or benefit of, U.S.
persons as part of their distribution at any time, except
in accordance with Regulation S (or Rule 144A if available)
under the Securities Act. Terms used above have the
meanings given to them by Regulation S."
Terms used in this subsection (b) have the meanings given to them by
Regulation S under the Securities Act;
(c) CSFBC and any other Purchaser authorized by CSFBC may offer and
sell Offered Securities in definitive, fully registered form to a limited
number of institutions, each of which is reasonably believed by the
applicable Purchaser to be an "accredited investor" within the meaning of
Rule 501(a)(1), (2) or (3) under the Securities Act or an entity in which
all of the equity owners are accredited investors within the meaning of
Rule 501(a)(1), (2) or (3) under the Securities Act (each, an
"Institutional Accredited Investor"); provided that each such
Institutional Accredited Investor executes and delivers to such Purchaser
and the Company, prior to the consummation of any sale of Offered
Securities to such Institutional Accredited Investor, a Purchaser's Letter
in substantially the form attached hereto as Schedule C (a "Purchaser's
Letter");
(d) Each Purchaser severally agrees that it and each of its
affiliates has not entered and will not enter into any contractual
arrangement with respect to the distribution of the Offered Securities,
except for any such arrangements with the other Purchasers or affiliates
of the other Purchasers or with the prior written consent of the Company;
(e) Each Purchaser severally agrees that it and each of its
affiliates will not offer or sell the Offered Securities in the United
States by means of any form of general solicitation or general
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advertising within the meaning of Rule 502(c) under the Securities Act,
including, but not limited to (i) any advertisement, article, notice or
other communication published in any newspaper, magazine or similar
media or broadcast over television or radio, or (ii) any seminar or
meeting whose attendees have been invited by any general solicitation or
general advertising. Each Purchaser severally agrees, with respect to
resales made in reliance on Rule 144A of any of the Offered Securities,
to deliver either with the confirmation of such resale or otherwise
prior to settlement of such resale a notice to the effect that the
resale of such Offered Securities has been made in reliance upon the
exemption from the registration requirements of the Securities Act
provided by Rule 144A;
(f) Each Purchaser severally represents and agrees that (i) it has
not offered or sold and prior to the date six months after the date of
issue of the Offered Securities will not offer or sell any Offered
Securities to persons in the United Kingdom except to persons whose
ordinary activities involve them in acquiring, holding, managing or
disposing of investments (as principal or agent) for the purposes of their
businesses or otherwise in circumstances which have not resulted and will
not result in an offer to the public in the United Kingdom within the
meaning of the Public Offers of Securities Regulations 1995; (ii) it has
complied and will comply with all applicable provisions of the Financial
Services Act 1986 with respect to anything done by it in relation to the
Offered Securities in, from or otherwise involving the United Kingdom; and
(iii) it has only issued or passed on and will only issue or pass on in
the United Kingdom any document received by it in connection with the
issue of the Offered Securities to a person who is of a kind described in
Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1996 or is a person to whom such
document may otherwise lawfully be issued or passed on.
5. CERTAIN AGREEMENTS OF THE COMPANY. The Company agrees with the
several Purchasers that:
(a) The Company will advise CSFBC promptly of any proposal to amend
or supplement the Offering Document and will not effect such amendment or
supplementation without CSFBC's consent (except that such consent shall
not be required with respect to any filing by the Company under sections
13(a), 13(c) or 15(d) of the Exchange Act that becomes a part of the
Offering Document by reason of such filing). If, at any time prior to the
completion of the resale of the Offered Securities by the Purchasers, any
event occurs as a result of which the Offering Document as then amended or
supplemented would include an untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, the Company will promptly notify CSFBC of such event and
promptly will prepare, at its own expense, an amendment or supplement
which will correct such statement or omission. Neither CSFBC's consent
to, nor the Purchasers' delivery to offerees or investors of, any such
amendment or supplement shall constitute a waiver of any of the conditions
set forth in Section 6 hereof.
(b) The Company has furnished to CSFBC copies of any preliminary
offering circular, and will furnish to CSFBC the Offering Document and all
amendments and supplements to such documents, in each case as soon as
available and in such quantities as CSFBC requests, and the Company will
furnish to CSFBC on the date hereof four copies of the Offering Document
signed by a duly authorized officer of the Company, one of which will
include the independent accountants' reports therein manually signed by
such independent accountants. At any time when the Company is not subject
to Section 13 or 15(d) of the Exchange Act, the Company will promptly
furnish or cause to be furnished to CSFBC (and, upon request, to each of
the other Purchasers) and, upon request of holders and prospective
purchasers of the Offered Securities or Underlying Shares, to such holders
and purchasers, copies of the information required to be delivered to
holders and prospective purchasers of the Offered Securities or Underlying
Shares pursuant to Rule 144A(d)(4) under the Securities Act (or any
successor provision thereto) ("Rule 144A Information") in order to permit
compliance with Rule 144A in connection with resales by such holders of
the Offered Securities or
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Underlying Shares. The Company will pay the expenses of printing all such
documents and distributing them to the Purchasers.
(c) The Company will arrange for the qualification of the Offered
Securities and the Underlying Shares, and the determination of their
eligibility, for investment under the laws of such jurisdictions in the
United States and Canada as CSFBC designates and will continue such
qualifications in effect so long as required for the resale of the Offered
Securities or the Underlying Shares by the Purchasers, provided that the
Company will not be required to qualify as a foreign corporation or to
file a general consent to service of process in any such state.
(d) The Company will reserve and keep available at all times, free
of preemptive rights, the Underlying Shares for the purpose of enabling
the Company to satisfy its obligations to issue the Underlying Shares upon
conversion of the Offered Securities.
(e) During the period of two years hereafter, the Company will
furnish to CSFBC and, upon request, to each of the other Purchasers, as
soon as practicable after the end of each fiscal year, a copy of its
annual report to shareholders for such year (including a balance sheet and
statements of income, shareholders' equity and cash flows of the Company
and its consolidated subsidiaries certified by independent public
accountants); as soon as practicable after the end of each of the first
three quarters of each fiscal year (beginning with the fiscal quarter
ending after the Closing Date), consolidated summary financial
information of the Company and its subsidiaries for such quarter in
reasonable detail; as soon as available, copies of all reports or other
communications (financial or other) furnished to shareholders of the
Company; as soon as available, a copy of each report and any definitive
proxy statement of the Company filed with the Commission under the
Exchange Act or mailed to shareholders; and, from time to time, such other
information concerning the Company as CSFBC may reasonably request.
(f) During the period of two years after the Closing Date, the
Company will, upon request, furnish to CSFBC, each of the other
Purchasers, and any holder of Offered Securities or of the Underlying
Shares a copy of the restrictions on transfer applicable to the Offered
Securities and the Underlying Shares.
(g) During the period of two years after the Closing Date, the
Company will not, and will not permit any of its affiliates (as defined in
Rule 144 under the Securities Act) to, resell any of the Offered
Securities that have been reacquired by any of them.
(h) During the period of two years after the Closing Date, the
Company will not be or become an open-end investment company, unit
investment trust, or face-amount certificate company that is or is
required to be registered under Section 8 of the Investment Company Act.
(i) The Company will pay all expenses incidental to the performance
of its obligations under this Agreement and the Indenture, including (i)
the fees and expenses of the Trustee, its agents and its professional
advisers in connection with the Indenture, the Offered Securities and the
Underlying Shares; (ii) all expenses (including fees and disbursements of
the Company's counsel and accountants) in connection with the execution,
issue, authentication, packaging and initial delivery of the Offered
Securities and the Underlying Shares, the preparation and printing of the
Transaction Documents, the Offered Securities, the Underlying Shares, the
Offering Document and amendments and supplements thereto, and any other
document relating to the issuance, offer, sale and delivery of the Offered
Securities; (iii) the cost of listing the Offered Securities and
qualifying the Offered Securities for trading in PORTAL and listing the
Underlying Shares on the Nasdaq National Market and any incidental
expenses of such qualification and listing; (iv) the cost of any
advertising approved by the Company in connection with the issue of the
Offered Securities; (v) any expenses
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(including fees and disbursements of counsel up to $15,000) incurred
in connection with qualification of the Offered Securities and
Underlying Shares for sale under the laws of such jurisdictions in the
United States and Canada as CSFBC designates and the printing of
memoranda relating thereto; (vi) expenses incurred in distributing the
preliminary offering circulars and the Offering Document (including any
amendments and supplements thereto) to the Purchasers; (vii) the fees
and expenses of DTC and any other depository used in connection with the
Offered Securities and of any transfer or conversion agent or registrar
for the Offered Securities or the Underlying Shares; (viii) for any fees
charged by investment rating agencies for rating the Offered Securities;
and (ix) all other costs and expenses incident to the performance of the
Company's obligations hereunder which are not otherwise specifically
provided for in this Section including any expenses incurred in
connection with complying with Section 5(b) hereof; and will indemnify
and hold harmless the Initial Purchasers from any documentary stamp or
similar issue tax and any related interest or penalties on the issue, sale
or delivery of the Offered Securities to the Initial Purchasers which are
or may be due. The Company will also pay or reimburse the Purchasers (to
the extent incurred by them) for all travel expenses of the Company's
officers and employees and any other expenses of the Company in connection
with attending or hosting meetings with prospective purchasers of the
Offered Securities from the Purchasers. The Company shall not be
responsible for any costs or expenses incurred by the Purchasers in
connection with the offer and sale of the Offered Securities other than as
specifically set forth herein.
(j) In connection with the offering, until CSFBC shall have notified
the Company and the other Purchasers of the completion of the resale of
the Offered Securities, neither the Company nor any of its affiliates has
or will, either alone or with one or more other persons, bid for or
purchase for any account in which it or any of its affiliates has a
beneficial interest any Offered Securities or attempt to induce any person
to purchase any Offered Securities; and neither it nor any of its
affiliates will make bids or purchases for the purpose of creating actual,
or apparent, active trading in, or of raising the price of, the Offered
Securities.
(k) For a period of 180 days after the date of the initial offering
of the Offered Securities by the Purchasers, the Company will not offer,
sell, contract to sell, announce its intention to sell, pledge or
otherwise dispose of, directly or indirectly, or file with the Commission
a registration statement under the Securities Act (other than amendments
to registration statements of the Company which are effective on the date
of the Offering Document) relating to, any debt securities issued or
guaranteed by the Company or any of its subsidiaries and having a maturity
of more than one year from the date of issue, any shares of Common Stock
of the Company or securities convertible into, or exchangeable or
exercisable for, any shares of Common Stock of the Company, without the
prior written consent of CSFBC; provided, however, that, notwithstanding
the foregoing, the Company may, without the prior written consent of
CSFBC: (i) issue and sell Common Stock pursuant to any employee stock
option plan, stock ownership plan, stock purchase plan or dividend
reinvestment plan in effect on the date of the Offering Document,
(ii) issue Common Stock upon the conversion of securities or the exercise
of warrants outstanding on the date of the Offering Document, (iii) issue
debt or equity securities or options or warrants to acquire debt or equity
securities as consideration to any seller or licensor of assets,
intellectual property or other rights, or stock that the Company or any of
its subsidiaries is acquiring and file one or more registration statements
with the Commission with respect to such securities and any securities
heretofore issued by the Company. The Company will not at any time offer,
sell, contract to sell, pledge or otherwise dispose of, directly or
indirectly, any securities under circumstances where such offer, sale,
pledge, contract or disposition would cause the exemption afforded by
Section 4(2) of the Securities Act or the safe harbor of Regulation S to
cease to be applicable to the offer and sale of the Offered Securities.
(l) The Company will use its best efforts to have the Underlying
Shares accepted for
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<PAGE>
quotation on the Nasdaq National Market prior to the time the definitive
Offered Securities become available for delivery.
(m) The Company will use its best efforts to cause the Offered
Securities to be eligible for PORTAL;
(n) The Company will use the net proceeds received by it from the
sale of the Offered Securities pursuant to this Agreement in the manner
specified in the Offering Document under the caption "Use of Proceeds."
(o) The Company will do and perform in all material respects all
things required to be done and performed under this Agreement and the
other Transaction Documents by it on, prior to, and after the Closing
Date.
6. CONDITIONS OF THE OBLIGATIONS OF THE PURCHASERS. The obligations of
the several Purchasers to purchase and pay for the Offered Securities on
the Closing Date will be subject to the accuracy of the representations
and warranties on the part of the Company herein, to the accuracy of the
statements of officers of the Company made pursuant to the provisions
hereof, to the performance by the Company of its obligations hereunder and
to the following additional conditions precedent:
(a) The Purchasers shall have received a letter, dated the date of
this Agreement, of KPMG confirming that they are independent public
accountants within the meaning of the Securities Act and the applicable
published rules and regulations thereunder ("Rules and Regulations") and
to the effect that:
(i) in their opinion the financial statements examined by
them and included in the Offering Document and in the Exchange Act
Reports comply as to form in all material respects with the
applicable accounting requirements of the Securities Act and the
related published Rules and Regulations;
(ii) they have performed the procedures specified by the
American Institute of Certified Public Accountants for a review of
interim financial information as described in Statement of Auditing
Standards No. 71, Interim Financial Information, on the unaudited
financial statements of the Company included in the Offering Document
and in the Exchange Act Reports;
(iii) on the basis of the review referred to in clause
(ii) above, a reading of the latest available interim financial
statements of the Company, inquiries of officials of the Company who
have responsibility for financial and accounting matters and other
specified procedures, nothing came to their attention that caused
them to believe that:
(A) the unaudited financial statements of the
Company included in the Offering Document or in the Exchange Act
Reports do not comply as to form in all material respects with
the applicable accounting requirements of the Securities Act and
the related published Rules and Regulations or any material
modifications should be made to such unaudited financial
statements for them to be in conformity with United States
generally accepted accounting principles;
(B) the unaudited consolidated net revenues, net
income and net income per share amounts for the six month
periods ended September 30, 1997 included in the Offering
Document do not agree with the amounts set forth in the
unaudited consolidated financial statements for those same
periods or were not determined
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<PAGE>
on a basis substantially consistent with that of the
corresponding amounts in the audited statements of income;
(C) at the date of the latest available balance
sheet read by such accountants, or at a subsequent specified
date not more than three business days prior to the date of this
Agreement, there was any change in the capital stock or any
increase in short-term indebtedness or long-term debt of the
Company and its consolidated subsidiaries or, at the date of the
latest available balance sheet read by such accountants, there
was any decrease in consolidated net current assets or net
assets, as compared with amounts shown on the latest balance
sheet included in the Offering Document; or
(D) for the period from the closing date of the
latest income statement included in the Offering Document to the
closing date of the latest available income statement read by
such accountants there were any decreases, as compared with the
corresponding period of the previous year and with the period of
corresponding length ended the date of the latest income
statement included in the Offering Document, in consolidated net
sales, net operating income or in the total or per share amounts
of consolidated net income or in the ratio of earnings to fixed
charges;
(E) In addition to the examination referred to
in their reports(s) included in the Offering Document and the
limited procedures, inspection of minute books, inquiries and
other procedures referred to in clause (ii) above, they have
carried out certain specified procedures, not constituting an
audit in accordance with generally accepted auditing standards,
with respect to certain amounts, percentages and financial
information specified by the Purchaser, which are derived from
the general accounting records of the Company and its
subsidiaries, which appear in the Offering Document, and have
computed certain of such amounts, percentages and financial
information and compared them with the accounting records of the
Company and its subsidiaries and have found them to be in
agreement.
except in all cases set forth in clauses (C) and (D) above for
changes, increases or decreases which the Offering Document discloses
have occurred or may occur or which are described in such letter;
(iv) (A) they have read the pro forma financial statements
and other pro forma financial information included in the Offering
Document (collectively, the "Pro Forma Information");
(B) they have made inquiries of certain officials of
the Company who have responsibility for financial and accounting
matters about the basis for the pro forma adjustments;
(C) they have proved the arithmetic accuracy of the
application of the pro forma adjustments to the historical amounts in
the Pro Forma Information and that the Pro Forma Information complies
as to form in all material respects with the accounting requirements
of the Securities Act and the related published Rules and
Regulations; and
(D) on the basis of such procedures, and such other
inquiries and procedures as may be specified in such letter, nothing
came to their attention that caused
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<PAGE>
them to believe that the Pro Forma Information included in the
Offering Document does not comply as to form in all material
respects with the accounting requirements of the Securities Act and
the related published Rules and Regulations or has not been
properly compiled and that the pro forma adjustments have not been
properly applied to the historical amounts in the compilation of
those statements; and
(v) they have compared specified dollar amounts (or
percentages derived from such dollar amounts) and other financial
information contained in the Offering Document and the Exchange Act
Reports (in each case to the extent that such dollar amounts,
percentages and other financial information are derived from the
general accounting records of the Company and its subsidiaries
subject to the internal controls of the Company's accounting system
or are derived directly from such records by analysis or computation)
with the results obtained from inquiries, a reading of such general
accounting records and other procedures specified in such letter and
have found such dollar amounts, percentages and other financial
information to be in agreement with such results, except as otherwise
specified in such letter.
(b) The Purchasers shall have received a letter of KPMG, dated the
date of this Agreement and satisfactory to them in form and substance,
concerning the report on Combined Distribution (Holdings) Limited and its
subsidiaries, supplied by KPMG to the Company in connection with the
Company's acquisition of such companies.
(c) The Purchasers shall have received a letter, dated the date
of this Agreement, of Coopers & Lybrand L.L.P. confirming that they are
independent public accountants within the meaning of the Securities Act
and the related published Rules and Regulations and to the effect that in
their opinion the financial statements examined by them and included in
the Offering Document and the Exchange Act Reports comply as to form in
all material respects with the applicable accounting requirements of the
Securities Act and the related published Rules and Regulations.
(d) Subsequent to the execution and delivery of this Agreement,
there shall not have occurred (i) a change in U.S. or international
financial, political or economic conditions or currency exchange rates or
exchange controls as would, in the judgment of CSFBC, be likely to
prejudice materially the success of the proposed issue, sale or
distribution of the Offered Securities, whether in the primary market or
in respect of dealings in the secondary market, or (ii) (A) any change, or
any development or event involving a prospective change, in the condition
(financial or other), business, properties or results of operations of the
Company and its subsidiaries, taken as a whole, which, in the judgment of
a majority in interest of the Purchasers including CSFBC, is material and
adverse and makes it impractical or inadvisable to proceed with completion
of the offering or the sale of and payment for the Offered Securities;
(B) any downgrading in the rating of any debt securities of the Company by
any "nationally recognized statistical rating organization" (as defined
for purposes of Rule 436(g) under the Securities Act or any public
announcement that any such organization has under surveillance or review
its rating of any debt securities of the Company (other than an
announcement with positive implications of a possible upgrading and no
implication of a possible downgrading of such rating); (C) any suspension
or limitation of trading in securities generally on the New York Stock
Exchange or the Nasdaq National Market, or any setting of minimum prices
for trading on such exchange, or any suspension of trading of any
securities of the Company on any exchange or in the over-the-counter
market; (D) any banking moratorium declared by U.S. Federal or New York
authorities; or (E) any outbreak or escalation of major hostilities in
which the United States is involved, any declaration of war by Congress or
any other substantial national or international calamity or emergency if,
in the judgment of a majority in interest of the Purchasers including
CSFBC, the effect of any such outbreak, escalation, declaration, calamity
or emergency
14
<PAGE>
makes it impractical or inadvisable to proceed with completion of the
offering or sale of and payment for the Offered Securities.
(e) The Purchasers shall have received an opinion, dated the Closing
Date, of Robinson Silverman Pearce Aronsohn & Berman LLP, counsel for the
Company, that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
State of Delaware, with corporate power and authority to own its
properties and conduct its business as described in the Offering
Document; and the Company is duly qualified to transact business as a
foreign corporation in good standing in all other jurisdictions in
which its ownership or lease of property or the conduct of its
business requires such qualification, or is subject to no material
liability or disability by reason of the failure to be so qualified
in any such jurisdiction;
(ii) Each Material Subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation,
with corporate power and authority to own its properties and conduct
its business as described in the Offering Document; and to such
counsel's knowledge each Material Subsidiary of the Company is duly
qualified to do business as a foreign corporation in good standing in
all other jurisdictions in which its ownership or lease of property
or the conduct of its business requires such qualification, or is
subject to no material liability or disability by reason of the
failure to be so qualified in any such jurisdiction; and all of the
issued shares of capital stock of such Material Subsidiary have been
duly and validly authorized and issued, to such counsel's knowledge,
are fully paid and non-assessable, and are owned directly or
indirectly by the Company, free and clear of any perfected security
interest other than security interests granted to secure the lines of
credit described in the Offering Document (such counsel being
entitled to rely in respect of the opinion in this clause upon
opinions of local counsel and in respect of matters of fact upon
certificates of officers of the Company or its subsidiaries, provided
that such counsel shall state that they believe that both the
Purchasers and they are justified in relying upon such opinions and
certificates);
(iii) The Transaction Documents have each been duly
authorized, executed and delivered by the Company; the Offered
Securities delivered on the Closing Date have been duly authorized,
executed, authenticated, issued and delivered by the Company and
conform to the description thereof contained in the Offering
Document; and the Indenture and the Offered Securities delivered on
the Closing Date constitute valid and legally binding obligations of
the Company enforceable against the Company in accordance with their
respective terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization, and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles;
(iv) The Offered Securities delivered on the Closing Date
are convertible into the Underlying Shares in accordance with the
terms of the Indenture; the Underlying Shares initially issuable upon
conversion of the Offered Securities delivered on the Closing Date
have been duly authorized and reserved for issuance upon such
conversion and, when issued upon such conversion, will be validly
issued, fully paid and nonassessable; and the shareholders of the
Company have no preemptive rights with respect to the Offered
Securities or the Underlying Shares;
(v) To such counsel's knowledge, no consent, approval,
authorization, or order of, or filing with, any governmental agency
or body or any court is required for the
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<PAGE>
consummation of the transactions contemplated by this Agreement or
in connection with the issuance or sale of the Offered Securities
by the Company or the issuance of the Underlying Shares upon
conversion of the Offered Securities, and no consents or waivers
from any other person are required for the execution, delivery or
performance of this Agreement and the other Transaction Documents
by the Company and the consummation of the transactions
contemplated hereby and thereby, other than such as have been
obtained and are in full force and effect and other than such
filings as may be required under the Securities Act or the rules
and regulations thereunder, as may be required under the securities
or "blue sky" laws of the various states, or as may be required in
any other jurisdiction in connection with the offer and sale of the
Offered Securities or the Underlying Shares in such jurisdiction;
(vi) To such counsel's knowledge, no statute, rule,
regulation or order that has been enacted, adopted or issued by any
governmental agency, and no injunction, restraining order or order of
any nature by a Federal or state court of competent jurisdiction to
which either the Company or any of its subsidiaries is subject that
has been issued or is pending, (i) could reasonably be expected to
interfere with or adversely affect the issuance of the Offered
Securities or the Underlying Shares, or (ii) could reasonably be
expected to in any manner draw into question the validity of this
Agreement or any other Transaction Document;
(vii) To such counsel's knowledge and other than as set
forth in the Offering Document, there are no pending legal or
governmental actions, suits or proceedings against or affecting the
Company, any of its subsidiaries or any of their respective
properties that, if determined adversely to the Company or any of its
subsidiaries, could individually or in the aggregate have a material
adverse effect on the condition (financial or other), business,
properties or results of operations of the Company and its
subsidiaries taken as a whole, or could materially and adversely
affect the ability of the Company to perform its obligations under
the Transaction Documents, or which are otherwise material in the
context of the sale of the Offered Securities; and, to such counsel's
knowledge, no such actions, suits or proceedings are threatened or
contemplated;
(viii) While general in nature, the statements set forth in
the Offering Document under the caption "Certain United States
Federal Tax Consequences," insofar as they purport to describe the
provisions of the laws and documents referred to therein, accurately
describe the material tax consequences to holders of the Offered
Securities and the Underlying Shares;
(ix) The execution, delivery and performance of the
Transaction Documents, compliance with the terms and provisions
thereof, the issuance and sale of the Offered Securities and the
issuance of the Underlying Shares upon conversion of the Offered
Securities will not result in a breach or violation (including any
event which, with notice or lapse of time or both, would constitute a
breach or violation) of any of the terms or provisions of, or
constitute a default (including any event which, with notice or lapse
of time or both, would constitute a default) under, any statute,
rule, regulation or order of any governmental agency or body or any
court, domestic or foreign, having jurisdiction over the Company or
any Material Subsidiary of the Company or any of their properties, or
any agreement or instrument to which the Company or any such Material
Subsidiary is a party or by which the Company or any such Material
Subsidiary is bound or to which any of the properties of the Company
or any such Material Subsidiary is subject, any of which are known to
such counsel, or the charter or by-laws of the Company or any such
Material Subsidiary, and the Company has full corporate power and
authority to authorize, issue and
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<PAGE>
sell the Offered Securities and to issue the Underlying Shares
upon conversion of the Offered Securities, each as contemplated by
this Agreement;
(x) Except as disclosed in the Offering Document, neither
the Company nor any of its Material Subsidiaries is in violation of
its charter or by-laws or to such counsel's knowledge in default
(including any event which, with notice or lapse of time or both,
would constitute a default) in the performance or observance of any
material obligation, covenant or condition, contained in any material
contract, indenture, mortgage, deed of trust, loan agreement, lease
or other agreement or instrument to which it is a party or by which
it or any of its properties may be bound;
(xi) Such counsel has no reason to believe that the
Offering Document, or any amendment or supplement thereto, or any
Exchange Act Report as of the date hereof and as of the Closing Date,
contained any untrue statement of a material fact or omitted to state
any material fact necessary to make the statements therein not
misleading; it being understood that such counsel need express no
opinion as to the financial statements or other financial data
contained in the Offering Document and in the Exchange Act Reports;
(xii) The Offering Document, as of the date of this
Agreement, contains all the information specified in, and meets the
requirements of, Rule 144A(d)(4) under the Securities Act;
(xiii) It is not necessary in connection with (i) the offer,
sale and delivery of the Offered Securities by the Company to the
several Purchasers pursuant to this Agreement, or (ii) the resales of
the Offered Securities by the several Purchasers in the manner
contemplated by this Agreement, to register the Offered Securities
under the Securities Act or to qualify an indenture in respect
thereof under the Trust Indenture Act.
(f) The Purchasers shall have received from Irell & Manella LLP,
counsel for the Purchasers, such opinion or opinions, dated the Closing
Date, with respect to the incorporation of the Company, the validity of
the Offered Securities, the Offering Document, the exemption from
registration for the offer and sale of the Offered Securities by the
Company to the several Purchasers and the resales by the several
Purchasers as contemplated hereby and other related matters as CSFBC may
require, and the Company shall have furnished to such counsel such
documents as they reasonably request for the purpose of enabling them to
pass upon such matters.
(g) The Purchasers shall have received a certificate, dated the
Closing Date, of the President or any Vice President and a principal
financial or accounting officer of the Company in which such officers, to
the best of their knowledge after reasonable investigation, shall state
that the representations and warranties of the Company in this Agreement
are true and correct in all material respects, that the Company has
complied with all agreements and satisfied all conditions on its part to
be performed or satisfied hereunder at or prior to the Closing Date, and
that, subsequent to the date of the most recent financial statements in
the Offering Document there has been no material adverse change, nor any
development or event involving a prospective material adverse change, in
the condition (financial or other), business, properties or results of
operations of the Company and its subsidiaries taken as a whole, except as
set forth in or contemplated by the Offering Document or as described in
such certificate.
(h) The Purchasers shall have received a letter, dated the Closing
Date, of KPMG which meets the requirements of subsection (a) above, except
that the specified date referred to in such subsection will be a date not
more than three business days prior to the Closing Date for the purposes
of this subsection.
17
<PAGE>
The Company will furnish the Purchasers with such conformed copies of
such opinions, certificates, letters and documents as the Purchasers reasonably
request. CSFBC may in its sole discretion waive on behalf of the Purchasers
compliance with any conditions to the obligations of the Purchasers hereunder.
7. INDEMNIFICATION AND CONTRIBUTION. (a) The Company will indemnify and
hold harmless each Purchaser against any losses, claims, damages or
liabilities, joint or several, to which such Purchaser may become subject,
under the Securities Act or the Exchange Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of
any material fact contained in the Offering Document, or any amendment or
supplement thereto, or the Exchange Act Reports, or arise out of or are based
upon the omission or alleged omission to state therein a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and will reimburse
each Purchaser for any legal or other expenses reasonably incurred by such
Purchaser in connection with investigating or defending any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
that the Company will not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement in or omission or alleged omission from
any of such documents in reliance upon and in conformity with written
information furnished to the Company by any Purchaser through CSFBC
specifically for use therein, it being understood and agreed that the only such
information consists of the information described as such in subsection (b)
below.
(b) Each Purchaser will severally and not jointly indemnify and hold
harmless the Company against any losses, claims, damages or liabilities to
which the Company may become subject, under the Securities Act or the Exchange
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in the Offering
Document, or any amendment or supplement thereto, or any related preliminary
offering circular, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Company by such Purchaser through CSFBC specifically for use
therein, and will reimburse any legal or other expenses reasonably incurred by
the Company in connection with investigating or defending any such loss, claim,
damage, liability or action as such expenses are incurred, it being understood
and agreed that the only such information furnished by any Purchaser consists
of the following information in the Offering Document furnished on behalf of
each Purchaser: the last paragraph at the bottom of the cover page concerning
the terms of the offering by the Purchasers, the legend concerning stabilizing
on page (ii), the statements as to the Purchasers' intention to make a market
in the Offered Securities in the third sentence of the ninth paragraph, and the
statements as to stabilizing in the tenth paragraph under the caption "Plan of
Distribution."
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying
party under subsection (a) or (b) above, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under subsection (a) or (b) above. In case any such action is
brought against any indemnified party and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the
indemnifying party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified
18
<PAGE>
party under this Section for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof
other than reasonable costs of investigation. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened action in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party unless such settlement includes an
unconditional release of such indemnified party from all liability on any
claims that are the subject matter of such action.
(d) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above
(i) in such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Purchasers on the other from
the offering of the Offered Securities or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and the
Purchasers on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities as well as any other
relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Purchasers on the other shall be deemed to be
in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company bear to the total discounts and
commissions received by the Purchasers from the Company under this Agreement.
The relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Purchasers and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The amount paid by an indemnified party as a
result of the losses, claims, damages or liabilities referred to in the first
sentence of this subsection (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any action or claim which is the subject of this
subsection (d). Notwithstanding the provisions of this subsection (d), no
Purchaser shall be required to contribute any amount in excess of the amount by
which the total price at which the Offered Securities purchased by it were
resold exceeds the amount of any damages which such Purchaser has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. The Purchasers' obligations in this subsection
(d) to contribute are several in proportion to their respective purchase
obligations and not joint.
(e) The obligations of the Company under this Section shall be in
addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who
controls any Purchaser within the meaning of the Securities Act or the Exchange
Act; and the obligations of the Purchasers under this Section shall be in
addition to any liability which the respective Purchasers may otherwise have
and shall extend, upon the same terms and conditions, to each person, if any,
who controls the Company within the meaning of the Securities Act or the
Exchange Act.
8. DEFAULT OF PURCHASERS. If any Purchaser or Purchasers default in
their obligations to purchase Offered Securities hereunder and the aggregate
principal amount of Offered Securities that such defaulting Purchaser or
Purchasers agreed but failed to purchase does not exceed 10% of the total
principal amount of Offered Securities that the Purchasers are obligated to
purchase, CSFBC may make arrangements satisfactory to the Company for the
purchase of such Offered Securities by other persons, including any of the
Purchasers, but if no such arrangements are made by the Closing Date, the non-
defaulting Purchasers shall be obligated severally, in proportion to their
respective commitments hereunder, to purchase the Offered Securities that such
defaulting Purchasers agreed but failed to purchase. If any Purchaser or
Purchasers so default and the aggregate principal amount of Offered Securities
with respect to which such default or defaults occur exceeds 10% of the total
principal amount of Offered Securities that the Purchasers are obligated to
purchase and arrangements satisfactory to CSFBC and the Company for the
purchase of such Offered Securities by other persons are not
19
<PAGE>
made within 36 hours after such default, this Agreement will terminate
without liability on the part of any non-defaulting Purchaser or the Company,
except as provided in Section 9 hereof. As used in this Agreement, the term
"Purchaser" includes any person substituted for a Purchaser under this
Section. Nothing herein will relieve a defaulting Purchaser from liability
for its default.
9. SURVIVAL OF CERTAIN REPRESENTATIONS AND OBLIGATIONS. The respective
indemnities, agreements, representations, warranties and other statements of
the Company or its officers and of the several Purchasers set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation, or statement as to the results thereof, made by or on behalf
of any Purchaser, the Company or any of their respective representatives,
officers or directors or any controlling person, and will survive delivery of
and payment for the Offered Securities. If this Agreement is terminated
pursuant to Section 8 hereof or if for any reason the purchase of the Offered
Securities by the Purchasers is not consummated, the Company shall remain
responsible for the expenses to be paid or reimbursed by it pursuant to
Section 5 hereof and the respective obligations of the Company and the
Purchasers pursuant to Section 7 hereof shall remain in effect, and if any
Offered Securities have been purchased hereunder the representations and
warranties in Section 2 hereof and all obligations under Section 5 hereof shall
also remain in effect. If the purchase of the Offered Securities by the
Purchasers is not consummated for any reason other than solely because of the
termination of this Agreement pursuant to Section 8 hereof or the occurrence of
any event specified in clauses (C), (D) or (E) of Section 6(d)(ii) hereof, the
Company will reimburse the Purchasers for all out-of-pocket expenses (including
fees and disbursements of counsel) reasonably incurred by them in connection
with the offering of the Offered Securities.
10. NOTICES. All communications hereunder will be in writing and, if
sent to the Purchasers will be mailed, delivered, telecopied, telegraphed, or
sent by nationally recognized overnight courier service and confirmed to the
Purchasers, c/o Credit Suisse First Boston Corporation, Eleven Madison Avenue,
New York, N.Y. 10010-3629, fax number (212) 325-8278 Attention: Investment
Banking Department - Transactions Advisory Group, or, if sent to the Company,
will be mailed, delivered, telecopied, telegraphed or sent by nationally
recognized overnight courier service and confirmed to it at 3100 Ocean Park
Blvd., Santa Monica, CA 90405, fax number (310) 255-2155, Attention: Chief
Financial Officer; with a copy to Robinson Silverman Pearce Aronsohn & Berman
LLP, 1290 Avenue of the Americas, New York, NY 10104, fax number (212) 541-
1357, Attention Kenneth L. Henderson, Esq., provided, however, that any notice
to a Purchaser pursuant to Section 7 hereof will be mailed, delivered or
telegraphed and confirmed to such Purchaser.
11. SUCCESSORS. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
controlling persons referred to in Section 7 hereof, and no other person will
have any right or obligation hereunder, except that holders of Offered
Securities and the Underlying Shares shall be entitled to enforce the
agreements for their benefit contained in the second and third sentences of
Section 5(b) hereof against the Company as if such holders were parties
thereto.
12. REPRESENTATION OF PURCHASERS. CSFBC will act for the several
Purchasers in connection with this purchase, and any action under this
Agreement taken by CSFBC will be binding upon all the Purchasers.
13. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
14. APPLICABLE LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York without regard to
principles of conflicts of laws.
The Company hereby submits to the non-exclusive jurisdiction of the
Federal and state courts in the Borough of Manhattan in The City of New York in
any suit or proceeding arising out of or relating to this
20
<PAGE>
Agreement or the transactions contemplated hereby.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
21
<PAGE>
If the foregoing is in accordance with the Purchasers' understanding of
our agreement, kindly sign and return to us one of the counterparts hereof,
whereupon it will become a binding agreement between the Company and the
several Purchasers in accordance with its terms.
Very truly yours,
ACTIVISION, INC.
By........................................
Brian G. Kelly
President and Chief Operating Officer
The foregoing Purchase Agreement
is hereby confirmed and accepted
as of the date first above written.
CREDIT SUISSE FIRST BOSTON CORPORATION
PIPER JAFFRAY, INC.
UBS SECURITIES LLC
Acting on behalf of themselves
and as the Representatives of
the several Purchasers
By CREDIT SUISSE FIRST BOSTON CORPORATION
By.............................................
Mark S. Maron
Managing Director
22
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF
PURCHASER OFFERED SECURITIES
--------- -------------------
<S> <C>
Credit Suisse First Boston Corporation.............. $30,000,000
Piper Jaffray, Inc.................................. $15,000,000
UBS Securities LLC.................................. $15,000,000
-----------
Total............................................ $60,000,000
-----------
-----------
</TABLE>
23
<PAGE>
SCHEDULE B
LIST OF DOCUMENTS DELIVERED WITH
OFFERING CIRCULAR
None
24
<PAGE>
SCHEDULE C
FORM OF LETTER TO BE DELIVERED BY
INSTITUTIONAL ACCREDITED INVESTORS
Activision, Inc.
3100 Ocean Park Boulevard
Santa Monica, CA 90405
and
Credit Suisse First Boston Corporation
Piper Jaffray, Inc.
UBS Securities LLC
As Initial Purchasers
c/o Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, New York 10010-3629
Attn: Transactions Advisory Group
Ladies and Gentlemen:
We are delivering this letter in connection with an offering (the
"Offering") of $60,000,000 principal amount of 6 3/4% Convertible
Subordinated Notes Due 2005 (the "Securities") of Activision, Inc., a
Delaware corporation (the "Company"), which are convertible into shares of
the Company's common stock, $0.000001 par value (the "Common Stock"), all as
described in the Confidential Offering Circular (the "Offering Circular")
relating to the Offering.
We hereby confirm that:
(i) we are an "accredited investor" within the meaning of Rule
501(a)(1), (2) or (3) under the Securities Act of 1933, as amended (the
"Securities Act"), or an entity in which all of the equity owners are
accredited investors within the meaning of Rule 501(a)(1), (2) or (3) under
the Securities Act (an "Institutional Accredited Investor");
(ii) (A) any purchase of the Securities by us will be for our own
account or for the account of one or more other Institutional Accredited
Investors or as fiduciary for the account of one or more trusts, each of
which is an "accredited investor" within the meaning of Rule 501(a)(7) under
the Securities Act and for each of which we exercise sole investment
discretion or (B) we are a "bank," within the meaning of section 3(a)(2) of
the Securities Act, or a "savings and loan association" or other institution
described in section 3(a)(5)(A) of the Securities Act, that is acquiring the
Securities as fiduciary for the account of one or more institutions for which
we exercise sole investment discretion;
(iii) in the event that we purchase any of the Securities, we will
acquire Securities having a minimum purchase price of not less than $100,000
for our own account or for any separate account for which we are acting;
(iv) we have such knowledge and experience in financial and business
matters that we are capable of evaluating the merits and risks of purchasing
the Securities;
(v) we are not acquiring the Securities with a view to distribution
thereof or with any present intention of offering or selling any of the
Securities or the shares of Common Stock issuable upon conversion thereof,
except inside the United States in accordance with Rule 144A under the
Securities Act or outside the United States in accordance with Regulation S
under the Securities Act, as provided below;
25
<PAGE>
provided, however, that the disposition of our property and the property of
any accounts for which we are acting as fiduciary shall remain at all times
within our control;
(vi) we have received a copy of the Offering Circular and acknowledge
that we have had access to such financial and other information, and have
been afforded the opportunity to ask such questions of representatives of the
Company and receive answers thereto as we deem necessary in connection with
our decision to purchase the Securities; and
(vii) we are not an "affiliate" (as defined in Rule 144 under the
Securities Act) of the Company or acting on behalf of an affiliate of the
Company.
We understand that the Securities are being offered in a transaction not
involving any public offering within the United States within the meaning of
the Securities Act and that the Securities and the shares of Common Stock
issuable upon conversion thereof have not been registered under the
Securities Act, and we agree, on our own behalf and on behalf of each account
for which we acquire any Securities, that if in the future we decide to
resell, pledge or otherwise transfer such Securities or the shares of Common
Stock issuable upon conversion thereof, such Securities and Common Stock may
be offered, resold, pledged or otherwise transferred only (i) inside the
United States to a person who we reasonably believe is a "qualified
institutional buyer" (as defined in Rule 144A under the Securities Act) in a
transaction meeting the requirements of Rule 144A, (ii) outside the United
States in a transaction meeting the requirements of Rule 904 under the
Securities Act, (iii) pursuant to an exemption from registration under the
Securities Act provided by Rule 144 thereunder (if available), or (iv)
pursuant to an effective registration statement under the Securities Act and,
in each of clauses (i) through (iv) above, in accordance with any applicable
securities laws of any state of the United States or any other applicable
jurisdiction. We agree to notify any purchaser, pledgee or transferee of
such Securities of the restrictions referred to in clauses (i) through (iv)
above. We understand that the registrar and transfer agent for the
Securities and the shares of Common Stock will not be required to accept for
registration or transfer any Securities acquired by us or any shares of
Common Stock issued upon conversion thereof, except upon presentation of
evidence satisfactory to the Company and the transfer agent that the
foregoing restrictions on transfer have been complied with. We further
understand that any Securities acquired by us, and any shares of Common Stock
issued upon conversion thereof, will be in the form of definitive physical
certificates and that such certificates will bear a legend reflecting the
substance of this paragraph.
We acknowledge that you, the Company and others will rely upon our
confirmations, acknowledgments and agreements set forth herein, and we agree
to notify you promptly in writing if any of our representations or warranties
herein ceases to be accurate and complete.
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAWS.
Date:
(Name of Purchaser)
By
Name:
Title:
Address:
26
<PAGE>
SCHEDULE D
Activision, Inc.
LIST OF SUBSIDIARIES
<TABLE>
<CAPTION>
JURISDICTION
MATERIAL SUBSIDIARIES OF ORGANIZATION
- --------------------- ---------------
<S> <C>
Activision Productions, Inc. Delaware
Raven Software Corporation Wisconsin
Activision UK Ltd. UK
Combined Distribution (Holdings) Ltd. UK
CentreSoft Limited UK
PDQ Distribution Limited UK
Activision GmbH Germany
Take Us! Marketing & Consulting GmbH Germany
kappaphoenicis Beteiligungs GmbH Germany
NBG EDV Handels-und Verlags GmbH Germany
jotaphoenicis Beteiligungs GmbH Germany
Activision Japan Co. Ltd Japan
Activision Australia Pty. Ltd. Australia
</TABLE>
<TABLE>
<CAPTION>
JURISDICTION
OTHER SUBSIDIARIES (NOT MATERIAL SUBSIDIARIES) OF ORGANIZATION
- ---------------------------------------------- ---------------
<S> <C>
Activision Latin America, Inc. Florida
Activisiion Texas, Inc. Texas
Activision Illinois, Inc. Illinois
Activision New York, Inc. New York
TDC Group, Inc. Delaware
International Consumer Technologies Corporation Delaware
Activision Europe Sarl France
Activision Kft. Hungary
Target Software Vertriebs GmbH Germany
</TABLE>
27
<PAGE>
1
$60,000,000
ACTIVISION, INC.
6 3/4% CONVERTIBLE SUBORDINATED NOTES DUE 2005
REGISTRATION RIGHTS AGREEMENT
December 16, 1997
Credit Suisse First Boston Corporation
Piper Jaffray, Inc.
UBS Securities LLC
c/o Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, New York 10010-3629
Ladies and Gentlemen:
Activision, Inc., a Delaware corporation (the "Company"), proposes to
issue and sell to Credit Suisse First Boston Corporation, Piper Jaffray, Inc.
and UBS Securities LLC (collectively, the "Initial Purchasers"), upon the
terms set forth in a purchase agreement of even date herewith (the "Purchase
Agreement"), $60,000,000 aggregate principal amount of its 6 3/4% Convertible
Subordinated Notes Due 2005 (the "Notes"). The Notes will be issued pursuant
to an Indenture, to be dated as of December 22, 1997 (the "Indenture") among
the Company and State Street Bank and Trust Company of California, N.A. (the
"Trustee"). Under the terms of the Indenture, the Notes are convertible, in
whole or in part, into shares of common stock of the Company, $0.000001 par
value (the "Conversion Shares" and, together with the Notes, the
"Securities") at the option of the holders thereof at any time following the
date of original issuance thereof at the conversion price set forth in the
Confidential Offering Circular dated December 16, 1997. As an inducement to
the Initial Purchasers, the Company agrees with the Initial Purchasers, for
the benefit of the holders of the Notes (including, without limitation, the
Initial Purchasers) and Conversion Shares (collectively the "Holders"), as
follows:
1. RESALE SHELF REGISTRATION. The Company shall take the following
actions:
(a) The Company shall, at its cost, as promptly as practicable (but
in no event more than 60 days after the Closing Date, as defined under the
Purchase Agreement (the "Closing Date")) file with the United States
Securities and Exchange Commission (the "Commission") and thereafter shall
use its best efforts to cause to be declared effective within 120 days
after the Closing Date a registration statement (the "Resale Shelf
Registration Statement") on an appropriate form under the Securities Act
of 1933, as amended (the "Securities Act") relating to the offer and sale
of the Transfer Restricted Securities (as defined in Section 5(d) hereof)
by the Holders thereof from time to time in accordance with the methods of
distribution set forth in the Resale Shelf Registration Statement and Rule
415 under the Securities Act (hereinafter, the "Resale Shelf
Registration"); provided, however, that no Holder shall be entitled to
have the
<PAGE>
2
Securities held by it covered by such Resale Shelf Registration
Statement unless such Holder agrees in writing to be bound by all the
provisions of this Agreement applicable to such Holder.
(b) The Company shall use its best efforts to keep the Resale Shelf
Registration Statement continuously effective in order to permit the
prospectus included therein to be lawfully delivered by the Holders of the
Securities, for a period of two years (or for such longer period if
extended pursuant to Section 2(h) below) from the date of its
effectiveness or such shorter period that will terminate when all the
Securities covered by the Resale Shelf Registration Statement (i) have
been sold pursuant thereto or (ii) are no longer restricted securities (as
defined in Rule 144 under the Securities Act, or any successor rule
thereof) or may be sold without registration in accordance with Rule
144(k) under the Securities Act (in each case, such period being called
the "Resale Shelf Registration Period"). The Company shall be deemed not
to have used its best efforts to keep the Resale Shelf Registration
Statement effective during the requisite period if it voluntarily takes
any action that would result in Holders of Securities covered thereby not
being able to offer and sell such Securities during that period, unless
such action is required by applicable law.
(c) Notwithstanding any other provisions of this Agreement to the
contrary, the Company shall cause the Resale Shelf Registration Statement
and the related prospectus and any amendment or supplement thereto, as of
the effective date of such Resale Shelf Registration Statement, amendment
or supplement, (i) to comply in all material respects with the applicable
requirements of the Securities Act, the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and the rules and regulations of the
Commission thereunder and (ii) not to contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
2. REGISTRATION PROCEDURES. In connection with any Resale Shelf
Registration contemplated by Section 1 hereof, the following provisions shall
apply:
(a) The Company shall (i) furnish to each Initial Purchaser, prior
to the filing thereof with the Commission, a copy of the Resale Shelf
Registration Statement and each amendment thereof and each supplement, if
any, to the prospectus included therein and, in the event that an Initial
Purchaser is participating in the Resale Shelf Registration Statement, the
Company shall, in each such document, when so filed with the Commission,
give due consideration to such comments as such Initial Purchaser
reasonably may propose; (ii) include the names of the Holders, who propose
to sell Securities pursuant to the Resale Shelf Registration Statement, as
selling securityholders; and (iii) after the effectiveness of the Resale
Shelf Registration Statement, upon the request of any Holder, promptly
take any action reasonably necessary to register the sale of any
Securities of such Holder and to identify such Holder as a selling
securityholder.
(b) The Company shall give written notice to the Initial Purchasers
and the Holders of the Securities:
(i) when the Resale Shelf Registration Statement or any
amendment thereto has been filed with the Commission and when the
Resale Shelf Registration Statement or any post-effective amendment
thereto has become effective;
<PAGE>
3
(ii) of any request by the Commission for amendments or
supplements to the Resale Shelf Registration Statement or the
prospectus included therein or for additional information;
(iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Resale Shelf Registration
Statement or the initiation of any proceedings for that purpose;
(iv) of the receipt by the Company or its legal counsel of any
notification with respect to the suspension of the qualification of
the Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; and
(v) of the happening of any event that requires the Company to
make changes in the Resale Shelf Registration Statement or the
prospectus in order that the Resale Shelf Registration Statement or
the prospectus do not contain an untrue statement of a material fact
nor omit to state a material fact required to be stated therein or
necessary to make the statements therein (in the case of the
prospectus, in light of the circumstances under which they were made)
not misleading.
(c) The Company shall use its best efforts to prevent the issuance,
and if issued to obtain the withdrawal at the earliest possible time, of
any order suspending the effectiveness of the Resale Shelf Registration
Statement.
(d) The Company shall furnish to each Holder of Securities included
within the coverage of the Resale Shelf Registration, without charge, at
least one copy of the Resale Shelf Registration Statement and any post-
effective amendment thereto, including financial statements and schedules,
and, if the Holder so reasonably requests in writing, all exhibits thereto
(including those, if any, incorporated by reference).
(e) The Company shall, during the Resale Shelf Registration Period,
deliver to each Holder of Securities included within the coverage of the
Resale Shelf Registration, without charge, as many copies of the
prospectus (including each preliminary prospectus) included in the Resale
Shelf Registration Statement and any amendment or supplement thereto as
such person may reasonably request. The Company consents, subject to the
provisions of this Agreement, to the use of the prospectus or any
amendment or supplement thereto by each of the selling Holders of the
Securities in connection with the offering and sale of the Securities
covered by the prospectus, or any amendment or supplement thereto,
included in the Resale Shelf Registration Statement.
(f) Prior to any public offering of the Securities, pursuant to any
Resale Shelf Registration Statement, the Company shall register or qualify
or cooperate with the Holders of the Securities included therein and their
respective counsel in connection with the registration or qualification of
the Securities for offer and sale under the securities or "blue sky" laws
of such jurisdictions as any Holder of the Securities reasonably requests
in writing and do any and all other acts or things necessary or advisable
to enable the offer and sale in such jurisdictions of the Securities
covered by such Resale Shelf Registration Statement; provided, however,
that the Company shall not be required to (i) qualify generally to do
business in any jurisdiction where it is not then so qualified or (ii)
take any action which would subject it to general service of process or to
taxation in any jurisdiction where it is not then so subject.
<PAGE>
4
(g) The Company shall cooperate with the Holders of the Securities
to facilitate the timely preparation and delivery of certificates
representing the Securities to be sold pursuant to any Resale Shelf
Registration Statement free of any restrictive legends and in such
denominations and registered in such names as the Holders may request in
connection with the sale of Securities pursuant to such Resale Shelf
Registration Statement.
(h) Upon the occurrence of any event contemplated by paragraphs
(ii) through (v) of Section 2(b) above during the period for which the
Company is required to maintain an effective Resale Shelf Registration
Statement, the Company shall promptly prepare and file a post-effective
amendment to the Resale Shelf Registration Statement or a supplement to
the related prospectus and any other required document so that, as
thereafter delivered to Holders of the Securities or purchasers of
Securities, the prospectus will not contain an untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. If the Company
notifies the Initial Purchasers and the Holders of the Securities in
accordance with paragraphs (ii) through (v) of Section 2(b) above to
suspend the use of the prospectus until the requisite changes to the
prospectus have been made, then the Initial Purchasers and the Holders of
the Securities shall suspend use of such prospectus, and the period of
effectiveness of the Resale Shelf Registration Statement provided for in
Section 1(b) above shall be extended by the number of days from and
including the date of the giving of such notice to and including the date
when the Initial Purchasers and the Holders of the Securities shall have
received such amended or supplemented prospectus pursuant to this Section
2(h).
(i) Not later than the effective date of the applicable Resale Shelf
Registration Statement, the Company will provide CUSIP numbers for the
Securities registered thereunder and provide the applicable trustee with a
printed certificate for the Securities in a form eligible for deposit with
The Depository Trust Company.
(j) The Company will comply with all rules and regulations of the
Commission to the extent and so long as they are applicable to the Resale
Shelf Registration and will make generally available to its security
holders (or otherwise provide in accordance with Section 11(a) of the
Securities Act) an earnings statement satisfying the provisions of Section
11(a) of the Securities Act, no later than 45 days after the end of a 12-
month period (or 90 days, if such period is a fiscal year) beginning with
the first month of the Company's first fiscal quarter commencing after the
effective date of the Resale Shelf Registration Statement, which statement
shall cover such 12-month period.
(k) The Company shall cause the Indenture to be qualified under the
Trust Indenture Act of 1939, as amended, in a timely manner and containing
such changes, if any, as shall be necessary for such qualification. In
the event that such qualification would require the appointment of a new
trustee under the Indenture, the Company shall appoint a new trustee
thereunder pursuant to the applicable provisions of the Indenture.
(l) The Company may require each Holder of Securities to be sold
pursuant to the Resale Shelf Registration Statement to furnish to the
Company such information regarding the Holder and the distribution of the
Securities as the Company may from time to time reasonably require for
inclusion in the Resale Shelf Registration Statement, pursuant to
applicable law and regulations, and the Company may exclude from such
registration the Securities of any Holder
<PAGE>
5
that unreasonably fails to furnish such information within a reasonable
time after receiving such request.
(m) The Company shall enter into such customary agreements
(including, if requested, an underwriting agreement in customary form) and
take all such other action, if any, as any Holder of the Securities shall
reasonably request in order to facilitate the disposition of the
Securities pursuant to any Resale Shelf Registration.
(n) The Company shall (i) make reasonably available for inspection
by the Holders of the Securities, any underwriter participating in any
disposition pursuant to the Resale Shelf Registration Statement and any
attorney, accountant or other agent retained by the Holders of the
Securities or any such underwriter all relevant financial and other
records, pertinent corporate documents and properties of the Company and
(ii) cause the Company's officers, directors, employees, accountants and
auditors to supply all relevant information reasonably requested by the
Holders of the Securities or any such underwriter, attorney, accountant or
agent in connection with the Resale Shelf Registration Statement, in each
case, as shall be reasonably necessary to enable such persons, to conduct
a reasonable investigation within the meaning of Section 11 of the
Securities Act; provided, however, that the foregoing inspection and
information gathering shall be coordinated by one counsel (the "Designated
Counsel"). Irell & Manella LLP shall be the Designated Counsel for all
purposes hereof until another Designated Counsel shall have been chosen by
the Holders of a majority in principal amount of the Securities covered by
the Resale Shelf Registration Statement (provided that Holders of
Conversion Shares shall be deemed to be Holders of the aggregate principal
amount of Notes from which such Conversion Shares were converted).
(o) The Company, if requested by any Holder of Securities covered
thereby and as reasonably necessary in connection with a proposed sale of
Securities by such Holder, shall (i) make such representations and
warranties to the Holders of Securities registered thereunder and the
underwriters, if any, in form, substance and scope as are customarily made
by the Company to underwriters in primary underwritten offerings and
covering matters including, but not limited to, those set forth in the
Purchase Agreement, (ii) cause its counsel to deliver an opinion and
updates thereof relating to the Securities in customary form addressed to
such Holders and the managing underwriters, if any, thereof and dated, in
the case of the initial opinion, the effective date of such Resale Shelf
Registration Statement (it being agreed that the matters to be covered by
such opinion shall include, without limitation, the due incorporation and
good standing of the Company and its subsidiaries; the qualification of
the Company and its subsidiaries to transact business as foreign
corporations; the due authorization, execution and delivery of the
relevant agreement of the type referred to in Section 2(m) hereof; the due
authorization, execution, authentication and issuance, and the validity
and enforceability, of the applicable Securities; the absence of material
legal or governmental proceedings involving the Company and its
subsidiaries; the absence of governmental approvals required to be
obtained in connection with the Resale Shelf Registration Statement, the
offering and sale of the applicable Securities, or any agreement of the
type referred to in Section 2(m) hereof; the absence of laws, rules, court
orders and injunctions that could adversely affect the Resale Shelf
Registration Statement and the offering and sale of the applicable
Securities, or that could draw into question the validity of any agreement
of the type referred to in Section 2(m) hereof; the compliance as to form
of such Resale Shelf Registration Statement and any documents incorporated
by reference therein and of the Indenture with the requirements of the
Securities Act, the Exchange Act and, with respect to the Indenture, the
Trust Indenture Act; the accuracy of descriptions of laws and documents,
and of the legal consequences
<PAGE>
6
to Holders; the absence of any violation by the Company of its charter
or by-laws, or of any material legal obligation; and, as of the date of
the opinion and as of the effective date of the Resale Shelf Registration
Statement or most recent post-effective amendment thereto, as the case may
be, the absence from such Resale Shelf Registration Statement and the
prospectus included therein, as then amended or supplemented, and from any
documents incorporated by reference therein of an untrue statement of a
material fact or the omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading (in the case of any such documents, in the light of the
circumstances existing at the time that such documents were filed with the
Commission under the Exchange Act)); (iii) cause its officers to execute
and deliver all customary documents and certificates and updates thereof
requested by any underwriters of the applicable Securities; (iv) cause its
independent public accountants and the independent public accountants with
respect to any other entity, if any, for which financial information is, or
is required to be, provided in the Resale Shelf Registration Statement to
provide to the selling Holders of the applicable Securities and any
underwriter therefor a comfort letter in customary form and covering
matters of the type customarily covered in comfort letters in connection
with primary underwritten offerings, subject to receipt of appropriate
documentation as contemplated, and only if permitted, by Statement of
Auditing Standards No. 72; (v) deliver such documents and certificates as
may be reasonably requested by any such Holders and managing underwriters,
if any, including those to evidence compliance with Section 2(h) and with
any customary conditions contained in the underwriting agreement or other
agreement entered into by the Company.
(p) The Company will use its best efforts to (a) if the Securities
have been rated prior to the initial sale of such Securities, confirm such
ratings will apply to the Securities covered by a Resale Shelf
Registration Statement, or (b) if the Securities were not previously
rated, cause the Securities covered by a Resale Shelf Registration
Statement to be rated with the appropriate rating agencies, if so
requested by Holders of a majority in aggregate principal amount of
Securities covered by such Resale Shelf Registration Statement, or by the
managing underwriters, if any.
(q) In the event that any broker-dealer registered under the
Exchange Act shall underwrite any Securities or participate as a member of
an underwriting syndicate or selling group or "assist in the distribution"
(within the meaning of the Conduct Rules (the "Rules") of the National
Association of Securities Dealers, Inc. ("NASD")) thereof, whether as a
Holder of such Securities or as an underwriter, a placement or sales agent
or a broker or dealer in respect thereof, or otherwise, the Company will
assist such broker-dealer in complying with the requirements of such
Rules, including, without limitation, by (i) if such Rules, including Rule
2720, shall so require, engaging a "qualified independent underwriter" (as
defined in Rule 2720) to participate in the preparation of the Resale
Shelf Registration Statement relating to such Securities, to exercise
usual standards of due diligence in respect thereto and, if any portion of
the offering contemplated by such Resale Shelf Registration Statement is
an underwritten offering or is made through a placement or sales agent, to
recommend the yield of such Securities, (ii) indemnifying any such
qualified independent underwriter to the extent of the indemnification of
underwriters provided in Section 4 hereof and (iii) providing such
information to such broker-dealer as may be required in order for such
broker-dealer to comply with the requirements of the Rules.
(r) The Company shall use its best efforts to take all other steps
necessary to effect the registration of the Securities covered by a Resale
Shelf Registration Statement contemplated hereby.
<PAGE>
7
3. REGISTRATION EXPENSES. The Company shall bear all fees and expenses
incurred in connection with the performance of its obligations under Sections
1 and 2 hereof, whether or not a Resale Shelf Registration is filed or
becomes effective, and shall bear or reimburse the Holders of the Securities
covered thereby for the reasonable fees and disbursements of the Designated
Counsel (provided that Holders of Conversion Shares shall be deemed to be
Holders of the aggregate principal amount of Notes from which such Conversion
Shares were converted) to act as counsel for the Holders in connection
therewith.
4. INDEMNIFICATION. (a) The Company agrees to indemnify and hold
harmless each Holder of the Securities, each person, if any, who controls
such Holder within the meaning of the Securities Act or the Exchange Act
(each Holder and such controlling persons are referred to collectively as the
"Indemnified Parties") from and against any losses, claims, damages,
liabilities, joint or several, or any actions in respect thereof (including,
but not limited to, any losses, claims, damages, liabilities or actions
relating to purchases and sales of the Securities) to which each Indemnified
Party may become subject under the Securities Act, the Exchange Act or
otherwise, insofar as such losses, claims, damages, liabilities or actions
arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in a Resale Shelf Registration
Statement or prospectus or in any amendment or supplement thereto or in any
preliminary prospectus relating to a Resale Shelf Registration, or arise out
of, or are based upon, the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, and shall reimburse, as incurred, the
Indemnified Parties for any legal or other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim,
damage, liability or action in respect thereof; provided, however, that the
Company shall not be liable in any such case to the extent that such loss,
claim, damage or liability arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in
a Resale Shelf Registration Statement or prospectus or in any amendment or
supplement thereto or in any preliminary prospectus relating to a Resale
Shelf Registration in reliance upon and in conformity with written
information pertaining to such Holder and furnished to the Company by or on
behalf of such Holder specifically for inclusion therein; provided further,
however, that this indemnity agreement will be in addition to any liability
which the Company may otherwise have to such Indemnified Party. The Company
shall also indemnify underwriters, their officers, directors and each person
who controls such underwriters within the meaning of the Securities Act or
the Exchange Act to the same extent as provided above with respect to the
indemnification of the Holders of the Securities if requested by such
Holders, except that such indemnification shall not include any claims solely
relating to or solely arising out of information supplied by any such
underwriter for inclusion in the Resale Shelf Registration Statement for
which claims such underwriter shall indemnify the Company.
(b) Each Holder of the Securities, severally and not jointly, will
indemnify and hold harmless the Company and each person, if any, who controls
the Company within the meaning of the Securities Act or the Exchange Act (the
Company and such controlling persons are referred to as the "Company
Indemnified Parties"), from and against any losses, claims, damages,
liabilities or any actions in respect thereof (including, but not limited to,
any losses, claims, damages, liabilities or actions relating to purchases and
sales of the Securities) to which the Company Indemnified Parties may become
subject under the Securities Act, the Exchange Act or otherwise, insofar as
such losses, claims, damages, liabilities, expenses or actions arise out of
or are based upon any untrue statement or alleged untrue statement of a
material fact contained in a Resale Shelf Registration Statement or
prospectus or in any amendment or supplement thereto or in any preliminary
prospectus relating to a Resale Shelf Registration, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
necessary to make the statements therein not misleading, but in each case
only to the extent that the untrue statement or omission or alleged untrue
statement or omission was made in reliance upon and in conformity with
written information pertaining to such Holder and furnished to the Company by
or on behalf of such Holder specifically for inclusion
<PAGE>
8
therein; and, subject to the limitation set forth immediately preceding this
clause, shall reimburse, as incurred, the Company Indemnified Parties for any
legal or other expenses reasonably incurred by the Company Indemnified
Parties or any such controlling person in connection with investigating or
defending any loss, claim, damage, liability or action in respect thereof;
provided, however, that no such Holder shall be liable for any amounts
hereunder in excess of the amount of net proceeds received by such Holder
from the sale of Securities pursuant to the Resale Shelf Registration
Statement. This indemnity agreement will be in addition to any liability
which such Holder may otherwise have to the Company Indemnified Parties.
(c) Promptly after receipt by an indemnified party under this Section 4
of notice of the commencement of any action or proceeding (including a
governmental investigation), such indemnified party will, if a claim in
respect thereof is to be made against the indemnifying party under this
Section 4, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not, in any event, relieve
the indemnifying party from any obligations to any indemnified party other
than the indemnification obligation provided in paragraph (a) or (b) above.
In case any such action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel reasonably satisfactory to such indemnified
party (who shall not, except with the consent of the indemnified party, be
counsel to the indemnifying party), and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof the indemnifying party will not be liable to such indemnified party
under this Section 4 for any legal or other expenses, other than reasonable
costs of investigation, subsequently incurred by such indemnified party in
connection with the defense thereof. No indemnifying party shall, without
the prior written consent of the indemnified party, effect any settlement of
any pending or threatened action in respect of which any indemnified party is
or could have been a party and indemnity could have been sought hereunder by
such indemnified party unless such settlement includes an unconditional
release of such indemnified party from all liability on any claims that are
the subject matter of such action.
(d) If the indemnification provided for in this Section 4 is
unavailable or insufficient to hold harmless an indemnified party under
paragraphs (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the
losses, claims, damages or liabilities (or actions in respect thereof)
referred to in paragraph (a) or (b) above (i) in such proportion as is
appropriate to reflect the relative benefits received by the indemnifying
party or parties on the one hand and the indemnified party on the other from
the registration of the Securities pursuant to the Resale Shelf Registration,
or (ii) if the allocation provided by the foregoing clause (i) is not
permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the indemnifying party or parties on the one hand and the
indemnified party on the other in connection with the statements or omissions
that resulted in such losses, claims, damages or liabilities (or actions in
respect thereof) as well as any other relevant equitable considerations. The
relative fault of the parties shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company on the one hand or such Holder or such
other indemnified party, as the case may be, on the other, and the parties'
relative intent, knowledge, access to information and opportunity to correct
or prevent such statement or omission. The amount paid by an indemnified
party as a result of the losses, claims, damages or liabilities referred to
in the first sentence of this Section 4(d) shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any action or claim which is the
subject of this Section 4(d). Notwithstanding any other provision of this
Section 4(d), the Holders of the
<PAGE>
9
Securities shall not be required to contribute any amount in excess of the
amount by which the net proceeds received by such Holders from the sale of
the Securities pursuant to a Resale Shelf Registration Statement exceeds the
amount of damages which such Holders have otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 4(d), each person, if any,
who controls such indemnified party within the meaning of the Securities Act
or the Exchange Act shall have the same rights to contribution as such
indemnified party and each person, if any, who controls the Company within
the meaning of the Securities Act or the Exchange Act shall have the same
rights to contribution as the Company. No party shall be liable for
contribution with respect to any action, suit, proceeding or claim settled
without its written consent.
(e) The agreements contained in this Section 4 shall survive the sale
of the Securities pursuant to a Resale Shelf Registration Statement and shall
remain in full force and effect, regardless of any termination or
cancellation of this Agreement or any investigation made by or on behalf of
any indemnified party.
5. ADDITIONAL INTEREST UNDER CERTAIN CIRCUMSTANCES. (a) Additional
interest (the "Additional Interest") with respect to the Notes shall be
assessed as follows if any of the following events occur (each such event in
clauses (i) through (iii) below a "Registration Default"):
(i) If on or prior to the 60th day after the Closing Date, the
Resale Shelf Registration Statement has not been filed with the
Commission;
(ii) If on or prior to the 120th day after the Closing Date, the
Resale Shelf Registration Statement is not declared effective by the
Commission; or
(iii) If after the Resale Shelf Registration Statement is declared
effective and during the period for which the Company is required to
maintain an effective Resale Shelf Registration Statement (A) the Resale
Shelf Registration Statement thereafter ceases to be effective; or (B) the
Resale Shelf Registration Statement or the related prospectus ceases to be
usable (except as permitted in paragraph (b) below) in connection with
resales of Transfer Restricted Securities because either (1) any event
occurs as a result of which the related prospectus forming part of the
Resale Shelf Registration Statement would include any untrue statement of
a material fact or omit to state any material fact necessary to make the
statements therein in the light of the circumstances under which they were
made not misleading, or (2) it shall be necessary to amend such Resale
Shelf Registration Statement or supplement the related prospectus, to
comply with the Securities Act or the Exchange Act or the respective rules
thereunder.
Additional Interest shall accrue on the Notes over and above the interest set
forth in the title of the Securities from and including the date on which any
such Registration Default shall occur to but excluding the date on which all
such Registration Defaults have been cured, at a rate of 0.50% per annum.
(b) A Registration Default referred to in Section 5(a)(iii)(B) hereof
shall be deemed not to have occurred and be continuing in relation to a
Resale Shelf Registration Statement or the related prospectus if (i) such
Registration Default has occurred solely as a result of (x) the filing of a
post-effective amendment to such Resale Shelf Registration Statement to
incorporate annual audited financial information with respect to the Company
where such post-effective amendment is not yet effective and needs to be
declared effective to permit Holders to use the related prospectus or (y)
other material events, with respect to the
<PAGE>
10
Company that would need to be described in such Resale Shelf Registration
Statement or the related prospectus and (ii) in the case of clause (y), the
Company is proceeding promptly and in good faith to amend or supplement such
Resale Shelf Registration Statement and related prospectus to describe such
events; provided, however, that in any case if such Registration Default
occurs for a continuous period in excess of 30 days, Additional Interest
shall be payable in accordance with paragraph (a) above from the day such
Registration Default occurs until such Registration Default is cured. The
Company will have no other liabilities for monetary damages with respect to
any Registration Default; provided, however, that the Holders shall be
entitled to, and the Company shall not oppose the granting of, equitable
relief, including injunction and specific performance if such relief is
otherwise available to the Holders to enforce any provision of this Agreement.
(c) Any amounts of Additional Interest due pursuant to clause (i), (ii)
or (iii) of Section 5(a) above will be payable in cash on the regular
interest payment dates with respect to the Notes. The amount of Additional
Interest will be determined by multiplying the Additional Interest rate by
the principal amount of the Notes, multiplied by a fraction, the numerator of
which is the number of days such Additional Interest rate was applicable
during such period (determined on the basis of a 360-day year comprised of
twelve 30-day months), and the denominator of which is 360.
(d) "Transfer Restricted Securities" means each Security until (i) the
date on which such Security has been effectively registered under the
Securities Act and disposed of in accordance with the Resale Shelf
Registration Statement, or (ii) the date on which such Security is
distributed to the public pursuant to Rule 144 under the Securities Act or
may be sold or transferred without restrictions pursuant to Rule 144(k) under
the Securities Act.
6. RULES 144 AND 144A. The Company shall use its best efforts to file
the reports required to be filed by it under the Securities Act and the
Exchange Act in a timely manner and, if at any time the Company is not
required to file such reports, it will, upon the request of any Holder of
Securities, make publicly available other information so long as necessary to
permit sales of the Securities pursuant to Rules 144 and 144A. The Company
covenants that it will take such further action as any Holder of Securities
may reasonably request, all to the extent required from time to time to
enable such Holder to sell Securities without registration under the
Securities Act within the limitation of the exemptions provided by Rules 144
and 144A (including the requirements of Rule 144A(d)(4)). The Company will
provide a copy of this Agreement to prospective purchasers of Securities
identified to the Company by the Initial Purchasers upon request. Upon the
request of any Holder of Securities, the Company shall deliver to such Holder
a written statement as to whether it has complied with such requirements.
Notwithstanding the foregoing, nothing in this Section 6 shall be deemed to
require the Company to register any of its securities pursuant to the
Exchange Act.
7. UNDERWRITTEN REGISTRATIONS. If any of the Transfer Restricted
Securities covered by any Resale Shelf Registration are to be sold in an
underwritten offering, the investment banker or investment bankers and
manager or managers that will administer the offering ("Managing
Underwriters") will be selected by the Holders of a majority in aggregate
principal amount of such Transfer Restricted Securities to be included in
such offering and will be subject to the approval of the Company, not to be
unreasonably withheld.
No person may participate in any underwritten registration hereunder
unless such person (i) agrees to sell such person's Transfer Restricted
Securities on the basis reasonably provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and
(ii) completes
<PAGE>
11
and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the
terms of such underwriting arrangements.
8. MISCELLANEOUS.
(a) AMENDMENTS AND WAIVERS. The provisions of this Agreement may not
be amended, modified or supplemented, and waivers or consents to departures
from the provisions hereof may not be given, except by the Company and the
written consent of the Holders of a majority in principal amount of the
Securities affected by such amendment, modification, supplement, waiver or
consents.
(b) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, first-class
mail, facsimile transmission or overnight air courier guaranteeing next day
delivery:
(1) if to a Holder of the Securities, at the most current address
given by such Holder to the Company.
(2) if to the Initial Purchasers;
Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, NY 10010-3629
Fax No.: (212) 325-8278
Attention: Transactions Advisory Group
with a copy to:
Irell & Manella LLP
1800 Avenue of the Stars, Ste. 900
Los Angeles, CA 90067-4276
Fax No.: (310) 203-7199
Attention: Alvin G. Segel, Esq.
(3) if to the Company, at its address as follows:
Activision, Inc.
3100 Ocean Park Blvd.
Santa Monica, CA 90405
Fax No.: (310) 255-2155
Attn.: Chief Financial Officer
with a copy to:
Robinson Silverman Pearce Aronsohn & Berman LLP
1290 Avenue of the Americas
New York, NY 10104
Fax. No.: (212) 541-1357
Attn.: Kenneth L. Henderson, Esq.
<PAGE>
12
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; three business
days after being deposited in the mail, postage prepaid, if mailed; when
receipt is acknowledged by recipient's facsimile machine operator, if sent by
facsimile transmission; and on the day delivered, if sent by overnight air
courier guaranteeing next day delivery.
(c) NO INCONSISTENT AGREEMENTS. The Company has not, as of the date
hereof, entered into, nor shall it, on or after the date hereof, enter into,
any agreement with respect to its securities that is inconsistent with the
rights granted to the Holders herein or otherwise conflicts with the
provisions hereof.
(d) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
Company and its successors and assigns.
(e) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(f) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) GOVERNING Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS.
(h) SEVERABILITY. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid,
illegal or unenforceable, the validity, legality and enforceability of any
such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(i) SECURITIES HELD BY THE COMPANY. Whenever the consent or approval
of Holders of a specified percentage of principal amount of Securities is
required hereunder, Securities held by the Company or its affiliates (other
than subsequent Holders of Securities if such subsequent Holders are deemed
to be affiliates solely by reason of their holdings of such Securities) shall
not be counted in determining whether such consent or approval was given by
the Holders of such required percentage.
<PAGE>
13
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement among the several Initial Purchasers and the Company in accordance
with its terms.
Very truly yours,
Activision, Inc.
By:
--------------------------------------
Brian G. Kelly
President and Chief Operating Officer
The foregoing Registration
Rights Agreement is hereby confirmed
and accepted as of the date first
above written.
CREDIT SUISSE FIRST BOSTON CORPORATION
PIPER JAFFRAY, INC.
UBS SECURITIES LLC
by: CREDIT SUISSE FIRST BOSTON CORPORATION
By:
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Mark S. Maron
Managing Director
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INDENTURE
ACTIVISION, INC.
TO
STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A., TRUSTEE
6 3/4% CONVERTIBLE SUBORDINATED NOTES DUE 2005
DATED AS OF DECEMBER 22, 1997
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TABLE OF CONTENTS
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RECITALS OF THE COMPANY................................................. 1
ARTICLE I Definitions and Other Provisions of General Application..... 1
SECTION 1.1 Definitions......................................... 1
Act...................................................... 1
Additional Interest...................................... 2
Affiliate................................................ 2
Agent Member............................................. 2
Applicable Procedures.................................... 2
Authenticating Agent..................................... 2
Board of Directors....................................... 2
Board Resolution......................................... 2
Business Day............................................. 2
Change in Control........................................ 2
Closing Price............................................ 2
Commencement Date........................................ 2
Commission............................................... 2
Common Stock............................................. 2
Company.................................................. 3
Company Request or Company Order......................... 3
Corporate Trust Office................................... 3
Corporation.............................................. 3
Defaulted Interest....................................... 3
Definitive Security...................................... 3
Depositary............................................... 3
Distribution Date........................................ 3
Dollar or U.S.$.......................................... 3
DTC...................................................... 3
Event of Default......................................... 3
Exchange Act............................................. 3
Expiration Date.......................................... 3
Expiration Time.......................................... 3
Global Security.......................................... 3
Holder................................................... 3
Indenture................................................ 3
Initial Purchasers....................................... 4
Institutional Accredited Investor........................ 4
Interest Payment Date.................................... 4
Issue Date............................................... 4
Maturity................................................. 4
Notice of Default........................................ 4
Officers' Certificate.................................... 4
Opinion of Counsel....................................... 4
Outstanding.............................................. 4
Paying Agent............................................. 5
Person................................................... 5
Predecessor Security..................................... 5
Purchased Shares......................................... 5
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Qualified Institutional Buyer............................ 5
Redemption Date.......................................... 5
Redemption Price......................................... 5
Reference Date........................................... 5
Registration Default..................................... 5
Registration Rights Agreement............................ 5
Regular Record Date...................................... 5
Regulation S............................................. 5
Repurchase Date.......................................... 5
Repurchase Price......................................... 5
Responsible Officer...................................... 5
Restricted Global Security............................... 5
Restricted Security...................................... 5
Rule 144A................................................ 5
Rule 144A Information.................................... 6
Securities............................................... 6
Securities Act........................................... 6
Security Register and Security Registrar................. 6
Senior Indebtedness...................................... 6
Shelf Registration Statement............................. 6
Special Record Date...................................... 6
Stated Maturity.......................................... 6
Subsidiary............................................... 6
Surrendered Securities................................... 6
Trading Day.............................................. 6
Transfer Restricted Securities........................... 6
Trust Indenture Act...................................... 6
Trustee.................................................. 7
United States............................................ 7
U.S. Government Obligation............................... 7
Vice President........................................... 7
SECTION 1.2 Compliance Certificates and Opinions................ 7
SECTION 1.3 Form of Documents Delivered to Trustee.............. 7
SECTION 1.4 Acts of Holders; Record Dates....................... 8
SECTION 1.5 Notices, Etc., to Trustee and Company............... 9
SECTION 1.6 Notice to Holders; Waiver........................... 9
SECTION 1.7 Conflict with Trust Indenture Act................... 10
SECTION 1.8 Effect of Headings and Table of Contents............ 10
SECTION 1.9 Successors and Assigns.............................. 10
SECTION 1.10 Separability Clause................................. 10
SECTION 1.11 Benefits of Indenture............................... 10
SECTION 1.12 Governing Law....................................... 10
SECTION 1.13 Legal Holidays...................................... 10
ARTICLE II Security Forms.............................................. 10
SECTION 2.1 Forms Generally..................................... 10
SECTION 2.2 Form of Face of Security............................ 11
SECTION 2.3 Form of Reverse of Security......................... 14
SECTION 2.4 Form of Trustee's Certificate of Authentication..... 17
SECTION 2.5 Form of Conversion Notice........................... 18
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SECTION 2.6 Form of Certification............................... 18
TRANSFER CERTIFICATE............................................... 18
ARTICLE III The Securities............................................ 20
SECTION 3.1 Title and Terms; Issuable in Series................. 20
SECTION 3.2 Denominations....................................... 20
SECTION 3.3 Execution, Authentication, Delivery and Dating...... 20
SECTION 3.4 Global and Non-Global Securities.................... 21
SECTION 3.5 Registration; Registration of Transfer and Exchange. 22
SECTION 3.6 Mutilated, Destroyed, Lost and Stolen Securities.... 25
SECTION 3.7 Payment of Interest; Interest Rights Preserved...... 26
SECTION 3.8 Persons Deemed Owners............................... 27
SECTION 3.9 Cancellation........................................ 27
SECTION 3.10 Computation of Interest............................. 27
ARTICLE IV Satisfaction and Discharge................................ 27
SECTION 4.1 Satisfaction and Discharge of Indenture............. 27
SECTION 4.2 Application of Trust Money.......................... 28
ARTICLE V Remedies.................................................. 28
SECTION 5.1 Events of Default................................... 28
SECTION 5.2 Acceleration of Maturity; Rescission and Annulment.. 30
SECTION 5.3 Collection of Indebtedness and Suits for
Enforcement by Trustee.............................. 30
SECTION 5.4 Trustee May File Proofs of Claim.................... 31
SECTION 5.5 Trustee May Enforce Claims Without Possession
of Securities....................................... 31
SECTION 5.6 Application of Money Collected...................... 31
SECTION 5.7 Limitation on Suits................................. 32
SECTION 5.8 Unconditional Right of Holders to Receive
Principal, Premium and Interest and to Convert...... 32
SECTION 5.9 Restoration of Rights and Remedies.................. 32
SECTION 5.10 Rights and Remedies Cumulative...................... 32
SECTION 5.11 Delay or Omission Not Waiver........................ 32
SECTION 5.12 Control by Holders.................................. 33
SECTION 5.13 Waiver of Past Defaults............................. 33
SECTION 5.14 Undertaking for Costs............................... 33
SECTION 5.15 Waiver of Usury, Stay or Extension Laws............. 33
ARTICLE VI The Trustee............................................... 33
SECTION 6.1 Certain Duties and Responsibilities................. 33
SECTION 6.2 Notice of Defaults.................................. 34
SECTION 6.3 Certain Rights of Trustee........................... 34
SECTION 6.4 Not Responsible for Recitals or Issuance of
Securities.......................................... 35
SECTION 6.5 May Hold Securities................................. 35
SECTION 6.6 Money Held in Trust................................. 35
SECTION 6.7 Compensation and Reimbursement...................... 35
SECTION 6.8 Disqualification; Conflicting Interests............. 36
SECTION 6.9 Corporate Trustee Required; Eligibility............. 36
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SECTION 6.10 Resignation and Removal; Appointment of Successor... 36
SECTION 6.11 Acceptance of Appointment by Successor.............. 37
SECTION 6.12 Merger, Conversion, Consolidation or Succession
to Business......................................... 37
SECTION 6.13 Preferential Collection of Claims Against Company... 38
SECTION 6.14 Appointment of Authenticating Agent................. 38
SECTION 6.15 Appointment of Co-Trustee........................... 39
ARTICLE VII Holders' Lists and Reports by Trustee and Company......... 39
SECTION 7.1 Company to Furnish Trustee Names and Addresses
of Holders.......................................... 39
SECTION 7.2 Preservation of Information; Communications
to Holders.......................................... 40
SECTION 7.3 Reports by Trustee.................................. 40
SECTION 7.4 Reports by Company.................................. 40
ARTICLE VIII Consolidation, Merger, Conveyance, Transfer or Lease..... 40
SECTION 8.1 Company May Consolidate, Etc., Only on Certain
Terms............................................... 40
SECTION 8.2 Successor Substituted............................... 41
ARTICLE IX Supplemental Indentures................................... 41
SECTION 9.1 Supplemental Indentures Without Consent of Holders.. 41
SECTION 9.2 Supplemental Indentures with Consent of Holders..... 42
SECTION 9.3 Execution of Supplemental Indentures................ 42
SECTION 9.4 Effect of Supplemental Indentures................... 43
SECTION 9.5 Conformity with Trust Indenture Act................. 43
SECTION 9.6 Reference in Securities to Supplemental Indentures.. 43
ARTICLE X Covenants................................................. 43
SECTION 10.1 Payment of Principal, Premium and Interest.......... 43
SECTION 10.2 Maintenance of Office or Agency..................... 43
SECTION 10.3 Money for Security Payments to Be Held in Trust..... 43
SECTION 10.4 Statement by Officers as to Default................. 44
SECTION 10.5 Existence........................................... 44
SECTION 10.6 Maintenance of Properties........................... 45
SECTION 10.7 Payment of Taxes and Other Claims................... 45
SECTION 10.8 Waiver of Certain Covenants......................... 45
SECTION 10.9 Delivery of Certain Information..................... 45
SECTION 10.10 Resale of Certain Securities; Reporting Issuer...... 45
SECTION 10.11 Registration Rights................................. 45
ARTICLE XI Redemption of Securities.................................. 47
SECTION 11.1 Right of Redemption................................. 47
SECTION 11.2 Applicability of Article............................ 47
SECTION 11.3 Election to Redeem; Notice to Trustee............... 47
SECTION 11.4 Selection by Trustee of Securities to Be Redeemed... 47
SECTION 11.5 Notice of Redemption................................ 47
SECTION 11.6 Deposit of Redemption Price......................... 48
SECTION 11.7 Securities Payable on Redemption Date............... 48
SECTION 11.8 Securities Redeemed in Part......................... 48
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SECTION 11.9 Conversion Arrangement on Call for Redemption....... 49
ARTICLE XII Subordination of Securities............................... 49
SECTION 12.1 Securities Subordinate to Senior Indebtedness....... 49
SECTION 12.2 Payment over of Proceeds upon Dissolution, Etc...... 49
SECTION 12.3 No Payment When Senior Indebtedness in Default...... 50
SECTION 12.4 Payment Permitted If No Default..................... 50
SECTION 12.5 Subrogation to Rights of Holders of Senior
Indebtedness........................................ 51
SECTION 12.6 Provisions Solely to Define Relative Rights......... 51
SECTION 12.7 Trustee to Effectuate Subordination................. 51
SECTION 12.8 No Waiver of Subordination Provisions............... 51
SECTION 12.9 Notice to Trustee................................... 52
SECTION 12.10 Reliance on Judicial Order or Certificate of
Liquidating Agent................................... 52
SECTION 12.11 Trustee Not Fiduciary for Holders of Senior
Indebtedness........................................ 52
SECTION 12.12 Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights.................... 52
SECTION 12.13 Article Applicable to Paying Agents................. 53
SECTION 12.14 Certain Conversions Deemed Payment.................. 53
ARTICLE XIII Conversion of Securities.................................. 53
SECTION 13.1 Conversion Privilege and Conversion Price........... 53
SECTION 13.2 Exercise of Conversion Privilege.................... 54
SECTION 13.3 Fractions of Shares................................. 55
SECTION 13.4 Adjustment of Conversion Price...................... 55
SECTION 13.5 Notice of Adjustments of Conversion Price........... 58
SECTION 13.6 Notice of Certain Corporate Action.................. 59
SECTION 13.7 Company to Reserve Common Stock..................... 59
SECTION 13.8 Taxes on Conversions................................ 59
SECTION 13.9 Covenant as to Common Stock......................... 60
SECTION 13.10 Cancellation of Converted Securities................ 60
SECTION 13.11 Provisions in Case of Reclassification,
Consolidation, Merger or Sale of Assets............. 60
ARTICLE XIV Right to Require Repurchase............................... 60
SECTION 14.1 Right to Require Repurchase......................... 60
SECTION 14.2 Notice, Method of Exercising Repurchase Right....... 61
SECTION 14.3 Deposit of Repurchase Price......................... 61
SECTION 14.4 Securities Not Repurchased on Repurchase Date....... 61
SECTION 14.5 Securities Repurchased in Part...................... 61
SECTION 14.6 Certain Definitions................................. 62
ARTICLE XV Defeasance and Covenant Defeasance........................ 62
SECTION 15.1 Company's Option to Effect Defeasance or
Covenant Defeasance................................. 62
SECTION 15.2 Defeasance and Discharge............................ 62
SECTION 15.3 Covenant Defeasance................................. 63
SECTION 15.4 Conditions to Defeasance or Covenant Defeasance..... 63
SECTION 15.5 Deposited Money and U.S. Government Obligations to
Be Held in Trust; Other Miscellaneous Provisions.... 65
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SECTION 15.6 Reinstatement....................................... 65
ARTICLE XVI Immunity.................................................. 65
SECTION 16.1 Personal Immunity of Incorporators, Shareholders,
Directors and Officers.............................. 65
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INDENTURE, dated as of December 22, 1997, between ACTIVISION, INC., a
corporation duly organized and existing under the laws of the State of
Delaware (herein called the "Company"), having its principal office at 3100
Ocean Park Blvd., Santa Monica, CA 90405, and STATE STREET BANK AND TRUST
COMPANY OF CALIFORNIA, N.A., as Trustee (herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance of its 6 3/4% Convertible Subordinated
Notes due 2005 (herein called the "Securities"), to be issued as in this
Indenture provided.
All things necessary to make the Securities, when executed by the
Company and authenticated and delivered hereunder and duly issued by the
Company, the valid obligations of the Company, and to make this Indenture a
valid agreement of the Company, in accordance with their and its terms, have
been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually agreed, for the equal and
proportionate benefit of all Holders of the Securities or of any series
thereof, as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.1 DEFINITIONS. For all purposes of this Indenture, except as
otherwise expressly provided or unless the context otherwise requires:
1. the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
2. all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
3. all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles,
and, except as otherwise herein expressly provided, the term "generally
accepted accounting principles" with respect to any computation required or
permitted hereunder shall mean such accounting principles as are generally
accepted at the date of such computation;
4. unless the context otherwise requires, any reference to an
"Article" or a "Section" refers to an Article or Section, as the case may be,
of this Indenture; and
5. 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.
Certain terms used in Article XIV have the meanings specified therein.
"Act", when used with respect to any Holder, has the meaning specified
in Section 1.4.
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"Additional Interest" has the meaning specified in Section 10.11.
"Affiliate" of any specified Person means any other Person who directly,
or indirectly through one or more intermediaries, controls, is controlled by,
or is under common control with, such specified Person. For the purposes of
this definition, "control" when used with respect to any specified Person
means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities,
by contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Agent Member" means any member of, or participant in, the Depositary.
"Applicable Procedures" means, with respect to any transfer or
transaction involving a Global Security or beneficial interest therein, the
rules and procedures of the Depositary for such Security, in each case to the
extent applicable to such transaction and as in effect from time to time.
"Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 6.14 to act on behalf of the Trustee to authenticate
Securities.
"Board of Directors" means either the board of directors of the Company
or any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted
by the Board of Directors and to be in full force and effect on the date of
such certification, and delivered to the Trustee.
"Business Day" means a day on which banking institutions are open for
business and carrying out transactions in Dollars at the relevant place of
payment.
"Change in Control" has the meaning specified in Section 14.6.
"Closing Price" on any Trading Day with respect to the per share price
of Common Stock means the last reported sales price regular way or, in case
no such reported sale takes place on such Trading Day, the average of the
reported closing bid and asked prices regular way, in either case on the New
York Stock Exchange or, if the Common Stock is not listed or admitted to
trading on the New York Stock 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, on The
Nasdaq Stock Market, Inc. ("Nasdaq") or, if the Common Stock is not listed or
admitted to trading on any national securities exchange or Nasdaq, the
average of the closing bid and asked prices in the over-the-counter market as
furnished by any New York Stock Exchange member firm that is selected from
time to time by the Company for that purpose and is reasonably acceptable to
the Trustee.
"Commencement Date" has the meaning specified in Section 13.4.
"Commission" means the Securities and Exchange Commission, as from time
to time constituted, created under the Exchange Act, or, if at any time after
the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then
the body performing such duties at such time.
"Common Stock" includes any stock of any class of the Company which has
no preference in respect of dividends or of amounts payable in the event of
any voluntary or involuntary liquidation, dissolution or winding-up of the
Company and which is not subject to redemption by the Company. However,
subject to the provisions of Section 13.11, shares issuable on conversion of
Securities shall include only shares of the class designated as Common Stock
of the Company at the date of this instrument or shares of any class or
classes resulting from any reclassification or reclassifications thereof and
which have no preference in respect of dividends or of amounts payable in the
event of any voluntary or involuntary liquidation, dissolution or winding-up
of the Company and which are not subject to redemption by the Company;
PROVIDED that if at any time there shall be more than one
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such resulting class, the shares of each such class then so issuable shall be
substantially in the proportion which the total number of shares of such
class resulting from all such reclassifications bears to the total number of
shares of all such classes resulting from all such reclassifications.
"Company" means the Person named as the "Company" in the first paragraph
of this instrument until a successor Person shall have become such pursuant
to the applicable provisions of this Indenture, and thereafter "Company"
shall mean such successor Person.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman of the Board, its Vice
Chairman of the Board, its President or a Vice President, and by its
Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary,
and delivered to the Trustee.
"Corporate Trust Office" means the principal office of the Trustee in
the city at which at any particular time its corporate trust business shall
be administered. As of the date hereof, the Corporate Trust Office of the
Trustee is located at 725 South Figueroa St., Suite 3100, Los Angeles, CA
90017.
"Corporation" means a corporation, association, company, joint-stock
company or business trust.
"Defaulted Interest" has the meaning specified in Section 3.7.
"Definitive Security" means a certificated Security in the form set
forth in Section 2.2 and 2.3, bearing the restricted securities legend set
forth in Section 2.2, and held by an Institutional Accredited Investor in
accordance with Section 2.1.
"Depositary" means, with respect to the Securities issued in whole or in
part in the form of one or more Global Securities, a clearing agency
registered under the Exchange Act that is designated to act as Depositary for
such Securities as contemplated by Section 2.1 (or any successor securities
clearing agency so registered).
"Distribution Date" has the meaning specified in Section 13.4.
"Dollar" or "U.S.$" means a Dollar or other equivalent unit in such coin
or currency of the United States as at the time shall be legal tender for the
payment of public and private debts.
"DTC" means The Depository Trust Company, a New York corporation.
"Event of Default" has the meaning specified in Section 5.1.
"Exchange Act" means the Securities Exchange Act of 1934 as it may be
amended from time to time, and any successor act thereto, and the rules and
regulations of the Commission promulgated thereunder.
"Expiration Date" has the meaning specified in Section 1.4.
"Expiration Time" has the meaning specified in Section 13.4.
"Global Security" means a Security that is registered in the Security
Register in the name of a Depositary or a nominee thereof.
"Holder" means a Person in whose name a Security is registered in the
Security Register.
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions
hereof, including, for all purposes of this instrument and any such
supplemental indenture, the provisions of the Trust Indenture Act that are
deemed to be a part of and govern this instrument and any such supplemental
indenture, respectively.
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"Initial Purchasers" means Credit Suisse First Boston Corporation, UBS
Securities LLC, and Piper Jaffray, Inc.
"Institutional Accredited Investor" means an institutional "accredited
investor" as described in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Securities.
"Issue Date" means the date of first issuance of the Securities under this
Indenture.
"Maturity", when used with respect to any Security, means the date on
which the principal of such Security or an installment of principal becomes due
and payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption, exercise of the repurchase
right or otherwise.
"Notice of Default" means a written notice of the kind specified in
Section 5.1(4) or 5.1(5).
"Officers' Certificate" means a certificate signed by any of the Chairman
of the Board, a Vice Chairman of the Board, the President or a Vice President,
and by any of the Treasurer, an Assistant Treasurer, the Secretary or an
Assistant Secretary, of the Company, and delivered to the Trustee. One of the
officers signing an Officers' Certificate given pursuant to Section 10.4 shall
be the principal executive, financial or accounting officer of the Company.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company.
"Outstanding", when used with respect to Securities, means, as of the date
of determination, all Securities theretofore authenticated and delivered under
this Indenture, EXCEPT:
(i) Securities theretofore cancelled by the Trustee or delivered to
the Trustee for cancellation;
(ii) Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Trustee or any
Paying Agent (other than the Company) in trust or set aside and segregated
in trust by the Company (if the Company shall act as its own Paying Agent)
for the Holders of such Securities; PROVIDED that, if such Securities are
to be redeemed, notice of such redemption shall have been duly given
pursuant to this Indenture or provision therefor satisfactory to the
Trustee shall have been made;
(iii) Securities which have been paid pursuant to Section 3.6 or
in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other than any
such Securities in respect of which there shall have been presented to the
Trustee proof satisfactory to it that such Securities are held by a bona
fide purchaser in whose hands such Securities are valid obligations of the
Company; and
(iv) Securities which have been defeased pursuant to Section 15.2;
PROVIDED, HOWEVER, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given, made or taken any
request, demand, authorization, direction, notice, consent, waiver or other
action hereunder as of any date, Securities owned by the Company or any other
obligor upon the Securities or any Affiliate of the Company or of such other
obligor shall be disregarded and deemed not to be outstanding, except that, in
determining whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent, waiver or other
action, only Securities which the Trustee knows to be so owned shall be so
disregarded. Securities so owned which have been pledged in good faith 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
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Securities and that the pledgee is not the Company or any other
obligor upon the Securities or any Affiliate of the Company or of
such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any) or interest on any Securities on behalf of
the Company.
"Person" means any individual, corporation, partnership, joint venture,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 3.6 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"Purchased Shares" has the meaning specified in Section 13.4.
"Qualified Institutional Buyer" means a "qualified institutional buyer" as
defined in Rule 144A.
"Redemption Date", when used with respect to any Security to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price", when used with respect to any Security to be redeemed,
means the price at which it is to be redeemed as set forth in the Securities.
"Reference Date" has the meaning specified in Section 13.4.
"Registration Default" has the meaning specified in Section 10.11.
"Registration Rights Agreement" has the meaning specified in Section 10.11.
"Regular Record Date" for the interest payable on any Interest Payment
Date means the December 15 or June 15 (whether or not a Business Day), as the
case may be, next preceding such Interest Payment Date.
"Regulation S" means Regulation S under the Securities Act (or any
successor provision), as it may be amended from time to time.
"Repurchase Date" has the meaning specified in Section 14.1.
"Repurchase Price" has the meaning specified in Section 14.1.
"Responsible Officer", when used with respect to the Trustee, means any
officer of the Trustee assigned to the Corporate Trust Office of the Trustee.
"Restricted Global Security" has the meaning specified in Section 2.1.
"Restricted Security" means a Security required to bear the restricted
securities legend set forth in Section 2.2.
"Rule 144A" means Rule 144A under the Securities Act (or any successor
provision), as it may be amended from time to time.
"Rule 144A Information" has the meaning specified in Section 10.9.
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"Securities" has the meaning stated in the first recital of this Indenture
and more particularly means any Securities authenticated and delivered under
this Indenture and "Security" means one of such Securities.
"Securities Act" means the Securities Act of 1933 as it may be amended
from time to time, and any successor act thereto, and the rules and regulations
of the Commission promulgated thereunder.
"Security Register" and "Security Registrar" have the respective meanings
specified in Section 3.5.
"Senior Indebtedness" means the principal of and premium, if any, and
interest on all indebtedness of the Company for borrowed money, other than the
Securities, whether outstanding on the date of execution of the Indenture or
thereafter created, incurred, guaranteed or assumed, except such indebtedness
that by the terms of the instrument or instruments by which such indebtedness
was created or incurred expressly provides that it (i) is junior in right of
payment to the Securities or any other indebtedness of the Company for borrowed
money or (ii) ranks PARI PASSU in right of payment to the Securities. The term
"indebtedness for borrowed money" when used with respect to the Company is
defined to mean (i) any obligation of, or any obligation guaranteed by, the
Company for the repayment of borrowed money, whether or not evidenced by bonds,
debentures, notes or other written instruments, (ii) all obligations of the
Company with respect to interest rate hedging agreements to hedge interest
rates relating to Senior Indebtedness of the Company, (iii) any deferred
payment obligation of, or any such obligation guaranteed by, the Company for
the payment of the purchase price of property or assets evidenced by a note or
similar instrument, and (iv) any obligation of, or any such obligation
guaranteed by, the Company for the payment of rent or other amounts under a
lease of property or assets which obligation is required to be classified and
accounted for as a capitalized lease on the balance sheet of the Company under
generally accepted accounting principles.
"Shelf Registration Statement" has the meaning specified in Section 10.11.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 3.7.
"Stated Maturity", when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
in such Security as the fixed date on which the principal of such Security or
such installment of principal or interest is due and payable.
"Subsidiary" means a corporation more than 50% of the outstanding voting
stock of which is owned, directly or indirectly, by the Company or by one or
more other Subsidiaries, or by the Company and one or more other Subsidiaries.
For the purposes of this definition, "voting stock" means stock which
ordinarily has voting power for the election of directors, whether at all times
or only so long as no senior class of stock has such voting power by reason of
any contingency.
"Surrendered Securities" has the meaning specified in Section 2.6.
"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.
"Transfer Restricted Securities" has the meaning specified in the
Registration Rights Agreement.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at
the date as of which this instrument was executed and the rules and regulations
thereunder; PROVIDED, HOWEVER, that in the event the Trust Indenture Act of
1939 or such rules and regulations are amended after such date, "Trust
Indenture Act" means, to the extent required by any such amendment, the Trust
Indenture Act of 1939 and such rules and regulations as so amended.
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<PAGE>
"Trustee" means the Person named as the "Trustee" in the first paragraph
of this instrument until a successor Trustee shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Trustee" shall
mean such successor Trustee.
"Trustee's New York Affiliate Office" means the office of State Street
Bank and Trust Company, N.A., 61 Broadway, 15th Floor, New York, NY 10006.
"United States" means the United States of America (including the States
thereof and the District of Columbia), its territories, its possessions and
other areas subject to its jurisdiction.
"U.S. Government Obligation" has the meaning specified in Section 15.4.
"Vice President", when used with respect to the Company, means any vice
president, whether or not designated by a number or a word or words added
before or after the title "vice president".
SECTION 1.2 COMPLIANCE CERTIFICATES AND OPINIONS. Upon any application
or request by the Company to the Trustee to take any action under any provision
of this Indenture, the Company shall furnish to the Trustee an Officers'
Certificate, if to be given by an officer of the Company, or an Opinion of
Counsel, if to be given by counsel, stating that all conditions precedent, if
any, provided for in this Indenture relating to the proposed action have been
complied with.
Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include:
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 1.3 FORM OF DOCUMENTS DELIVERED TO TRUSTEE. In any case where
several matters are required to be certified by, or covered by an opinion of,
any specified Person, it is not necessary that all such matters be certified
by, or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other such Persons
as to other matters, and any such Person may certify or give an opinion as to
such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
such matters are erroneous.
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Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 1.4 ACTS OF HOLDERS; RECORD DATES. Any request, demand,
authorization, direction, notice, consent, waiver or other action provided or
permitted by this Indenture to be given or taken by Holders may be embodied in
and evidenced by one or more instruments of substantially similar tenor signed
by such Holders 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 and, where it is
hereby expressly required, to the Company. Such instrument or instruments (and
the action embodied therein and evidenced thereby) are herein sometimes
referred to as the "Act" of the Holders signing such instrument or instruments.
Proof of execution of any such instrument or of a writing appointing any such
agent shall be sufficient for any purpose of this Indenture and (subject to
Section 6.1) conclusive in favor of the Trustee and the Company, if made in the
manner provided in this Section.
The fact and date of the execution by any Person of any such instrument or
writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such
instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
The ownership of Securities shall be proved by the Security Register.
Any request, demand, authorization, direction, notice, consent, waiver or
other Act of the Holder of any Security shall bind every future Holder of the
same Security and the Holder of every Security issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made upon such
Security.
The Company may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to give or take any
request, demand, authorization, direction, notice, consent, waiver or other
action provided or permitted by this Indenture to be given or taken by Holders
of Securities; PROVIDED that the Company may not set a record date for, and the
provisions of this paragraph shall not apply with respect to, the giving or
making of any notice, declaration, request or direction referred to in the next
paragraph. If any record date is set pursuant to this paragraph, the Holders
of Outstanding Securities on such record date, and no other Holders, shall be
entitled to take the relevant action, whether or not such Holders remain
Holders after such record date; PROVIDED that no such action shall be effective
hereunder unless taken on or prior to the applicable Expiration Date by Holders
of the requisite principal amount of Outstanding Securities on such record
date; and PROVIDED, FURTHER, that for the purpose of determining whether
Holders of the requisite principal amount of such Securities have taken such
action, no Security shall be deemed to have been Outstanding on such record
date unless it is also Outstanding on the date such action is to become
effective. Nothing in this paragraph shall prevent the Company from setting a
new record date for any action for which a record date has previously been set
pursuant to this paragraph (whereupon the record date previously set shall
automatically and with no action by any Person be cancelled and of no effect),
nor shall anything in this paragraph be construed to render ineffective any
action taken by Holders of the requisite principal amount of Outstanding
Securities on the date such action is taken. Promptly after any record date is
set pursuant to this paragraph, the Company, at its own expense, shall cause
notice of such record date, the proposed action by Holders and the applicable
Expiration Date to be given to the Trustee in writing and to each Holder of
Securities in the manner set forth in Section 1.6.
The Trustee may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to join in the
giving or making of (i) any Notice of Default, (ii) any declaration of
acceleration referred to in Section 5.2, (iii) any request to institute
proceedings referred to in Section 5.7(2) or (iv) any direction
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<PAGE>
referred to in Section 5.12. If any record date is set pursuant to this
paragraph, the Holders of Outstanding Securities on such record date, and no
other Holders, shall be entitled to join in such notice, declaration, request
or direction, whether or not such Holders remain Holders after such record
date; PROVIDED that no such action shall be effective hereunder unless taken
on or prior to the applicable Expiration Date by Holders of the requisite
principal amount of Outstanding Securities on such record date; and PROVIDED,
FURTHER, that for the purpose of determining whether Holders of the requisite
principal amount of such Securities have taken such action, no Security shall
be deemed to have been Outstanding on such record date unless it is also
Outstanding on the date such action is to become effective. Nothing in this
paragraph shall be construed to prevent the Trustee from setting a new record
date for any action (whereupon the record date previously set shall
automatically and without any action by any Person be cancelled and of no
effect), nor shall anything in this paragraph be construed to render
ineffective any action taken by Holders of the requisite principal amount of
Outstanding Securities on the date such action is taken. Promptly after any
record date is set pursuant to this paragraph, the Trustee, at the Company's
expense, shall cause notice of such record date, the proposed action by
Holders and the applicable Expiration Date to be given to the Company in
writing and to each Holder of Securities in the manner set forth in Section
1.6.
With respect to any record date set pursuant to this Section, the party
hereto that sets such record date may designate any day as the "Expiration
Date" and from time to time may change the Expiration Date to any earlier or
later day, PROVIDED that no such change shall be effective unless notice of the
proposed new Expiration Date is given to the other party hereto in writing, and
to each Holder of Securities in the manner set forth in Section 1.6, at least
five Business Days before the proposed new Expiration Date. Notwithstanding
the foregoing, no Expiration Date shall be later than the 180th day after the
applicable record date and, if an Expiration Date is not designated with
respect to any record date set pursuant to this Section, the party hereto that
set such record date shall be deemed to have designated the 180th day after
such record date as the Expiration Date with respect thereto.
Without limiting the foregoing, a Holder entitled hereunder to take any
action hereunder with regard to any particular Security may do so with regard
to all or any part of the principal amount of such Security or by one or more
duly appointed agents, each of which may do so pursuant to such appointment
with regard to all or any part of such principal amount.
SECTION 1.5 NOTICES, ETC., TO TRUSTEE AND COMPANY. Any request, demand,
authorization, direction, notice, consent, waiver or Act of Holders or other
document provided or permitted by this Indenture to be made upon, given or
furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be
sufficiently given if made, given, furnished or filed in writing to or
with the Trustee at its Corporate Trust Office, Attention: Corporate
Trust Department, or at any other address previously furnished in writing
to the Company by the Trustee, or
(2) the Company by the Trustee or by any Holder shall be
sufficiently given (unless otherwise herein expressly provided) if in
writing and mailed, first-class postage prepaid, to the Company, addressed
to it at the address of its principal office specified in the first
paragraph of this instrument or at any other address previously furnished
in writing to the Trustee by the Company.
SECTION 1.6 NOTICE TO HOLDERS; WAIVER. Where this Indenture provides for
notice to Holders of any event, such notice shall be sufficiently given
(unless otherwise herein expressly provided) if in writing and mailed, first-
class postage prepaid, to each Holder affected by such event, at his address as
it appears in the Security Register, not later than the latest date (if any),
and not earlier than the earliest date (if any), prescribed for the giving of
such notice. 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.
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<PAGE>
In case by reason of the suspension of regular mail service or by reason
of any other cause it shall be impracticable to give such notice by mail, then
such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
SECTION 1.7 CONFLICT WITH TRUST INDENTURE ACT. If any provision hereof
limits, qualifies or conflicts with a provision of the Trust Indenture Act
which is required under such Act to be a part of and govern this Indenture, the
latter provision shall control. If any provision of this Indenture modifies or
excludes any provision of the Trust Indenture Act which may be so modified or
excluded, the latter provision shall be deemed to apply to this Indenture as so
modified or to be excluded, as the case may be. To the extent a Security
conflicts with a provision in the Indenture, the Indenture governs.
SECTION 1.8 EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
SECTION 1.9 SUCCESSORS AND ASSIGNS. All covenants and agreements in this
Indenture by the Company shall bind its successors and assigns, whether so
expressed or not.
SECTION 1.10 SEPARABILITY CLAUSE. In case any provision in this
Indenture or in the Securities shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
SECTION 1.11 BENEFITS OF INDENTURE. Nothing in this Indenture or in the
Securities, express or implied, shall give to any Person, other than the
parties hereto and their successors hereunder, the holders of Senior
Indebtedness and the Holders of Securities, any benefit or any legal or
equitable right, remedy or claim under this Indenture.
SECTION 1.12 GOVERNING LAW. THIS INDENTURE AND THE SECURITIES SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
SECTION 1.13 LEGAL HOLIDAYS. In any case where any Interest Payment
Date, Redemption Date, Repurchase Date or Stated Maturity of any Security or
the last date on which a Holder has the right to convert his Securities shall
not be a Business Day then (notwithstanding any other provision of this
Indenture or of the Securities) payment of interest or principal (and premium,
if any) or conversion of the Securities 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 Interest Payment Date, Redemption Date, Repurchase Date or at
the Stated Maturity, or on such last day for conversion, PROVIDED that no
interest shall accrue for the period from and after such Interest Payment Date,
Redemption Date, Repurchase Date or Stated Maturity, as the case may be.
ARTICLE II
SECURITY FORMS
SECTION 2.1 FORMS GENERALLY. The Securities, the conversion notice and
the Trustee's certificates of authentication shall be in substantially the
forms set forth in this Article, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture, and may have such letters, numbers or other marks of identification
and such legends or endorsements placed thereon as may be required to comply
with the rules of any securities exchange or Depositary therefor or as may,
consistently herewith, be determined by the officers executing such Securities,
as evidenced by their execution of the Securities.
The Definitive Securities shall be printed, lithographed or engraved on
steel engraved borders or may be produced in any other manner, all as
determined by the officers executing such Securities, as evidenced by their
execution of such Securities.
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In certain cases described elsewhere herein, the legends set forth in the
first four paragraphs of Section 2.2 may be omitted from Securities issued
hereunder.
Upon their original issuance, Securities offered and sold in reliance on
Rule 144A or in reliance on Regulation S, in each case as provided in the
Purchase Agreement, shall be issued in the form of a single Global Security in
definitive, fully registered form without interest coupons, substantially in
the form of Security set forth in Sections 2.2 and 2.3, with such applicable
legends as are provided for in Section 2.2, except as otherwise permitted
herein. Such Global Security shall be registered in the name of DTC, as
Depositary, or its nominee, duly executed by the Company and authenticated by
the Trustee as hereinafter provided, and deposited with the Trustee, as
custodian for DTC, for credit by DTC to the respective accounts of beneficial
owners of the Securities represented thereby (or such other accounts as they
may direct). Such Global Security, together with its successor Securities
which are Global Securities, are collectively herein called the "Restricted
Global Security."
Except as provided in this Section 2.1 or Section 3.5, owners of
beneficial interests in the Restricted Global Security will not be entitled to
receive physical delivery of certificated Securities. Purchasers of Securities
who are Institutional Accredited Investors and are not Qualified Institutional
Buyers and did not purchase Securities sold in reliance on Regulation S will
receive Definitive Securities. Upon transfer of such Definitive Securities to
a Qualified Institutional Buyer or in reliance on Regulation S, such Definitive
Securities will, unless the Restricted Global Security has previously been
exchanged, be exchanged for an interest in the Restricted Global Security
pursuant to the provisions of Section 3.5.
Neither the Company nor the Trustee shall have any responsibility for any
defect in the CUSIP or ISIN number that appears on any Security, check, advice
of payment or redemption or repurchase notice, and any such document may
contain a statement to the effect that CUSIP or ISIN numbers have been assigned
by an independent service for convenience of reference and that neither the
Company nor the Trustee shall be liable for any inaccuracy in such numbers.
SECTION 2.2 FORM OF FACE OF SECURITY.
[INCLUDE IF SECURITY IS A RESTRICTED SECURITY OR A DEFINITIVE SECURITY
OTHER THAN A RESTRICTED GLOBAL SECURITY:
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND THIS SECURITY AND THE COMMON STOCK ISSUABLE
UPON THE CONVERSION THEREOF MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED
IN THE ABSENCE OF SUCH REGISTRATION OTHER THAN IN A TRANSACTION EXEMPT FROM, OR
NOT SUBJECT TO, THE SECURITIES ACT. EACH PURCHASER OF THIS SECURITY IS HEREBY
NOTIFIED THAT THE SELLER OF THIS SECURITY, AND THE COMMON STOCK ISSUABLE UPON
THE CONVERSION THEREOF, MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF
SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT
(A) THIS SECURITY AND THE COMMON STOCK ISSUABLE UPON THE CONVERSION THEREOF MAY
BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I) INSIDE THE
UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) OUTSIDE THE
UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (III) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (IV) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF
CASES (I) THROUGH (IV) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER
IS REQUIRED TO, NOTIFY ANY PURCHASER OF
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THIS SECURITY AND ANY SHARES OF COMMON STOCK ISSUABLE UPON THE CONVERSION
THEREOF OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.]
[INCLUDE IF SECURITY IS A RESTRICTED GLOBAL SECURITY:
THE SECURITIES EVIDENCED BY THIS GLOBAL SECURITY (OR ITS PREDECESSOR) WERE
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
SUCH SECURITIES AND THE COMMON STOCK ISSUABLE UPON THE CONVERSION THEREOF MAY
NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR IN A TRANSACTION EXEMPT FROM, OR NOT SUBJECT TO, THE SECURITIES
ACT. EACH PURCHASER OF ANY BENEFICIAL INTEREST IN THE SECURITIES IS HEREBY
NOTIFIED THAT THE SELLER OF SUCH BENEFICIAL INTEREST MAY BE RELYING ON THE
EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY
RULE 144A THEREUNDER.
EACH BENEFICIAL OWNER OF AN INTEREST IN ANY OF THE SECURITIES EVIDENCED BY
THIS GLOBAL SECURITY (INCLUDING ANY PARTICIPANT IN THE DEPOSITARY HOLDING THE
GLOBAL SECURITY THAT IS SHOWN AS HOLDING SUCH AN INTEREST ON THE RECORDS OF
SUCH DEPOSITARY AND EACH BENEFICIAL OWNER THAT HOLDS THROUGH SUCH PARTICIPANT)
AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) ANY BENEFICIAL INTEREST IN THE
SECURITIES AND THE COMMON STOCK ISSUABLE UPON THE CONVERSION THEREOF MAY BE
OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I) INSIDE THE UNITED
STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) OUTSIDE THE UNITED
STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (III) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (IV) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF
CASES (I) THROUGH (IV) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES, AND (B) THE BENEFICIAL OWNER WILL, AND EACH
SUBSEQUENT BENEFICIAL OWNER OF THIS SECURITY OR ANY SHARES OF COMMON STOCK
ISSUABLE UPON CONVERSION THEREOF IS REQUIRED TO, NOTIFY ANY PURCHASER OF ANY
BENEFICIAL INTEREST IN THE SECURITIES AND ANY SHARES OF COMMON STOCK ISSUABLE
UPON CONVERSION THEREOF FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A)
ABOVE.]
[INCLUDE IF SECURITY IS A GLOBAL SECURITY:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A
SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY
BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A
NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW
YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC, AND
ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL BECAUSE THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
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[INCLUDE IF SECURITY IS A DEFINITIVE SECURITY TO BE HELD BY AN
INSTITUTIONAL ACCREDITED INVESTOR:
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR
AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER
AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE
FOREGOING RESTRICTIONS.]
Activision, Inc.
6 3/4% Convertible Subordinated Notes due January 1, 2005
No. _____ U.S.$ _____
[IF RESTRICTED GLOBAL SECURITY - CUSIP No. 004930 AA 1]
[IF RESTRICTED GLOBAL SECURITY - ISIN No. US 004930 AA 13]
[IF DEFINITIVE SECURITY - CUSIP No. 004930 AB 9]
Activision, Inc., a corporation duly organized and existing under the laws
of the state of Delaware (herein called the "Company", which term includes any
successor Person under the Indenture hereinafter referred to), for value
received, hereby promises to pay to _____, or registered assigns, the principal
sum of _____ United States Dollars (U.S.$ _____) [IF THIS SECURITY IS A GLOBAL
SECURITY, THEN INSERT -- (which principal amount may from time to time be
increased or decreased to such other principal amounts (which, taken together
with the principal amounts of all other Outstanding Securities, shall not
exceed U.S.$60,000,000 in the aggregate at any time) by adjustments made on the
records of the Trustee hereinafter referred to in accordance with the
Indenture)] on January 1, 2005, and to pay interest thereon from December 22,
1997, or from the most recent Interest Payment Date to which interest has been
paid or duly provided for, semi-annually on January 1 and July 1 in each year,
commencing July 1, 1998, at the rate of 6 3/4% per annum, until the principal
hereof is paid or made available for payment. The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, as
provided in such Indenture, be paid to the Person in whose name this Security
(or one or more Predecessor Securities) is registered at the close of business
on the Regular Record Date for such interest, which shall be the December 15 or
June 15 (whether or not a Business Day), as the case may be, next preceding
such Interest Payment Date. Any such interest not so punctually paid or duly
provided for will forthwith cease to be payable to the Holder on such Regular
Record Date and may either be paid to the Person in whose name this Security
(or one or more Predecessor Securities) is registered at the close of business
on a Special Record Date for the payment of such Defaulted Interest to be fixed
by the Trustee, notice whereof shall be given to Holders of Securities not less
than 10 days prior to such Special Record Date, or be paid at any time in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in said Indenture.
Payment of the principal of, premium, if any, and interest (including
payment of any Additional Interest) on this Security will be made at the
Corporate Trust Office or the Trustee's New York Affiliate Office, in such coin
or currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts by a U.S. Dollar check drawn on
an account maintained with a bank in the Borough of Manhattan, The City of New
York or Los Angeles, California; PROVIDED, HOWEVER, that upon written
application by the Holder to the Security Registrar setting forth wire
instructions not later than 15 days prior to the relevant payment date (in the
case of payment of principal) or not later than the relevant Record Date (in
the case of payment of interest), such Holder may receive payment by wire
transfer of Dollars to a U.S. Dollar account (such transfers to be made only to
Holders of an aggregate principal amount in excess of U.S.$2,000,000)
maintained by the payee with a bank in the United States or in Europe and
designated by the payee to the Security Registrar.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
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<PAGE>
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated:
ACTIVISION, INC.,
By:
--------------------------------------------
Name:
Title:
Attest:
- ----------------------------
Name:
Title:
SECTION 2.3 FORM OF REVERSE OF SECURITY. This Security is one of a
duly authorized issue of Securities of the Company designated as its 6 3/4%
Convertible Subordinated Notes due 2005 (herein called the "Securities"),
limited in aggregate principal amount to U.S.$60,000,000, issued under an
Indenture, dated as of December 22, 1997 (herein called the "Indenture"),
between the Company and State Street Bank and Trust Company of California,
N.A., as Trustee for the Holders of Securities issued under said Indenture
(herein called the "Trustee", which term includes any successor trustee under
the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Company, the
Trustee, the holders of Senior Indebtedness and the Holders of the Securities
and of the terms upon which the Securities are, and are to be, authenticated
and delivered.
Subject to and upon compliance with the provisions of the Indenture, the
Holder of this Security is entitled, at his option, at any time on or before
the close of business on the Business Day immediately preceding January 1,
2005, or in case this Security or a portion hereof is called for redemption
or the Holder thereof exercises his right to require the Company to
repurchase the Security, then in respect of this Security or such portion
hereof until and including, but (unless the Company defaults in making the
payment due upon redemption or repurchase) not after, the close of business
on the Business Day immediately preceding the Redemption Date or Repurchase
Date, as the case may be, to convert this Security (or any portion of the
principal amount hereof which is U.S.$1,000 or an integral multiple thereof),
at the principal amount hereof, or of such portion, into fully paid and
non-assessable shares of Common Stock of the Company at a conversion price
equal to U.S.$18.8750 aggregate principal amount of Securities for each share
of Common Stock (or at the current adjusted conversion price if an adjustment
has been made as provided in Article XIII of the Indenture) by surrender of
this Security, duly endorsed or assigned to the Company or in blank, to the
Company at its office or agency in the Borough of Manhattan, The City of New
York or Los Angeles, California accompanied by the conversion notice hereon
executed by the Holder hereof evidencing such Holder's election to convert
this Security, or if less than the entire principal amount hereof is to be
converted, the portion hereof to be converted, and, in case such surrender
shall be made during the period from the close of business on any Regular
Record Date to the opening of business on the corresponding Interest Payment
Date (unless this Security or the portion hereof being converted has been
called for redemption on a Redemption Date within such period between and
including such Regular Record Date and such Interest Payment Date), also
accompanied by payment in funds acceptable to the Company of an amount equal
to the interest payable on such Interest Payment Date on the principal amount
of this Security then being converted. Subject to the aforesaid requirement
for payment of interest and, in the case of a conversion after the close of
business on any Regular Record Date and on or before the corresponding
Interest Payment Date, to the right of the Holder of this Security (or any
Predecessor Security) of record at such Regular Record Date to receive an
installment of interest (even if the Security has been called for redemption
on a
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Redemption Date within such period between and including such Regular Record
Date and such Interest Payment Date), also accompanied by payment in funds
acceptable to the Company of an amount equal to the interest payable on such
Interest Payment Date on the principal amount of this Security then being
converted. Subject to the aforesaid requirement for payment of interest and,
in the case of a conversion after the close of business on any Regular Record
Date and on or before the corresponding Interest Payment Date, to the right
of the Holder of this Security (or any Predecessor Security) of record at
such Regular Record Date to receive an installment of interest (even if the
Security has been called for redemption on a Redemption Date within such
period), no payment or adjustment is to be made on conversion for interest
accrued hereon or for dividends on the Common Stock issued on conversion. No
fractions of shares or scrip representing fractions of shares will be issued
on conversion, but instead of any fractional interest the Company shall pay a
cash adjustment or round up to the next higher whole share as provided in
Article XIII of the Indenture. The conversion price is subject to adjustment
as provided in Article XIII of the Indenture. In addition, the Indenture
provides that in case of certain reclassifications, consolidations, mergers,
sales or transfers of assets or other transactions pursuant to which the
Common Stock is converted into the right to receive other securities, cash or
other property, the Indenture shall be amended, without the consent of any
Holders of Securities, so that this Security, if then outstanding, will be
convertible thereafter, during the period this Security shall be convertible
as specified above, only into the kind and amount of securities, cash and
other property receivable upon the transaction by a holder of the number of
shares of Common Stock into which this Security might have been converted
immediately prior to such transaction (assuming such holder of Common Stock
failed to exercise any rights of election and received per share the kind and
amount received per share by a plurality of non-electing shares).
The Company will furnish to any Holder, upon request and without charge,
copies of the Certificate of Incorporation and By-laws of the Company then in
effect. Any such request may be addressed to the Company or to the Security
Registrar.
The Securities are subject to redemption, as a whole or from time to
time in part, at the option of the Company upon not less than 20 days' or
more than 60 days' notice by mail, at any time on or after January 10, 2001,
through December 31, 2001, at 103.3750% of the principal amount, and
thereafter, as a whole or from time to time in part, at the following
Redemption Prices (expressed as percentages of the principal amount), if
redeemed during the 12-month period beginning on January 1 of the years
indicated:
<TABLE>
<CAPTION>
Redemption
Year Price
---- ----------
<S> <C>
2002 102.2500%
2003 101.1250%
</TABLE>
and thereafter at a Redemption Price equal to 100% of the principal amount,
together in the case of any such redemption with accrued interest to (but not
including) the Redemption Date, but interest installments whose Stated
Maturity is on or prior to such Redemption Date will be payable to the
Holders of such Securities, or one or more Predecessor Securities, of record
at the close of business on the relevant Record Dates referred to on the face
hereof, all as provided in the Indenture.
In certain circumstances involving a Change in Control, each Holder
shall have the right to require the Company to redeem all or part of its
Securities at a repurchase price equal to 100% of the principal amount
thereof, together with accrued and unpaid interest through the Repurchase
Date.
The Securities do not have the benefit of any sinking fund.
In the event of redemption, conversion or repurchase of this Security in
part only, a new Security or Securities for the unredeemed, unconverted or
unrepurchased portion hereof will be issued in the name of the Holder hereof
upon the cancellation hereof.
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Subject to certain limitations in the Indenture, at any time when the
Company is not subject to Section 13 or 15(d) of the United States Securities
Exchange Act of 1934, as amended, upon the request of a Holder or the holder
of shares of Common Stock issued upon conversion thereof, the Company will
promptly furnish or cause to be furnished Rule 144A Information (as defined
below) to such Holder or such holder of shares of Common Stock issued upon
conversion, or to a prospective purchaser of any such security designated by
any such Holder or holder of shares of Common Stock, as the case may be, to
the extent required to permit compliance by such Holder or holder of shares
of Common Stock with Rule 144A under the United States Securities Act of
1933, as amended (the "Securities Act"), in connection with the resale of any
such security. "Rule 144A Information" shall be such information as is
specified pursuant to Rule 144A(d)(4) under the Securities Act (or any
successor provision thereto).
If this Security is a Transfer Restricted Security, then the Holder of
this Security [IF THIS SECURITY IS A GLOBAL SECURITY, THEN INSERT -- including
any Person that has a beneficial interest in this Security)] and the Common
Stock issuable upon conversion thereof is entitled to the benefits of a
Registration Rights Agreement, dated as of December 16, 1997 (the "Registration
Rights Agreement") executed by the Company. If a Registration Default occurs
(as defined in the Registration Rights Agreement and in the Indenture),
Additional Interest will accrue on this Security from and including the day
following such Registration Default to but excluding the day on which such
Registration Default has been cured. Additional Interest will be paid
semi-annually in arrears, with the first semi-annual payment due on the first
Interest Payment Date in respect of the Securities following the date on which
such Additional Interest begin to accrue, and will accrue at a rate per annum
equal to an additional one-half of one percent (0.50%) of the principal amount
of the Securities.
Whenever in this Security there is a reference, in any context, to the
payment of the principal of, premium, if any, or interest on, or in respect
of, any Security such mention shall be deemed to include mention of the
payment of Additional Interest payable as described in the preceding
paragraph to the extent that, in such context, Additional Interest is, was or
would be payable in respect of such Security and express mention of the
payment of Additional Interest (if applicable) in any provisions of this
Security shall not be construed as excluding Additional Interest in those
provisions of this Security where such express mention is not made.
The indebtedness evidenced by this Security is, to the extent provided
in the Indenture, subordinate and subject in right of payment to the prior
payment in full of all Senior Indebtedness, and this Security is issued
subject to the provisions of the Indenture with respect thereto. Each Holder
of this Security, by accepting the same, (a) agrees to and shall be bound by
such provisions, (b) authorizes and directs the Trustee on his behalf to take
such action as may be necessary or appropriate to effectuate the
subordination so provided and (c) appoints the Trustee his attorney-in-fact
for any and all such purposes.
If an Event of Default shall occur and be continuing, the principal of
all the Securities may be declared due and payable in the manner and with the
effect provided in Article V of the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities under the Indenture
at any time by the Company and the Trustee with the consent of the Holders of
a majority in aggregate principal amount of the Securities at the time
Outstanding. The Indenture also contains provisions permitting the Holders
of a majority in aggregate principal amount of the Securities at the time
Outstanding, on behalf of the Holders of all the Securities, to waive
compliance by the Company with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Security shall be conclusive and
binding upon such Holder and upon all future Holders of this Security and of
any Security issued upon the registration of transfer hereof or in exchange
herefor or in lieu hereof, whether or not notation of such consent or waiver
is made upon this Security.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of, premium, if
any, and interest (including Additional Interest) on this Security at the
times, place and rate, and in the coin or currency, herein prescribed or to
convert this Security as provided in the Indenture.
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<PAGE>
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
Corporate Trust Office duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Security
Registrar duly executed by, the Holder hereof or his attorney duly authorized
in writing, and thereupon one or more new Securities, of authorized
denominations and for the same aggregate principal amount, will be issued to
the designated transferee or transferees.
The Securities are issuable only in registered form without coupons in
denominations of U.S.$1,000 (or, in the case of Definitive Securities sold to
Institutional Accredited Investors, minimum denominations of U.S.$100,000)
and any integral multiple thereof. As provided in the Indenture and subject
to certain limitations therein set forth, Securities are exchangeable for a
like aggregate principal amount of Securities of a different authorized
denomination, as requested by the Holder surrendering the same.
No service charge shall be made to a Holder for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not payment of or on this Security is
overdue, and neither the Company, the Trustee nor any such agent shall be
affected by notice to the contrary.
Interest on this Security shall be computed on the basis of a 360-day
year of twelve 30-day months.
All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 2.4 FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
This is one of the Securities referred to in the within-mentioned
Indenture.
Dated: State Street Bank and Trust Company of California,
N.A., AS TRUSTEE
By
--------------------------------------------------
AUTHORIZED SIGNATORY
SECTION 2.5 FORM OF CONVERSION NOTICE.
CONVERSION NOTICE
To: Activision, Inc.
The undersigned Holder of this Security hereby irrevocably exercises the
option to convert this Security, or the portion hereof (which is U.S.$1,000
or an integral multiple thereof) below designated, at any time following the
date of original issuance thereof, into shares of Common Stock in accordance
with the terms of the Indenture referred to in this Security, and directs
that the shares issuable and deliverable upon conversion, together with any
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<PAGE>
check in payment for a fractional share and any Security representing any
unconverted principal amount hereof, be issued and delivered to the
registered owner hereof unless a different name has been provided below. If
shares or any portion of this Security not converted are to be issued in the
name of a person other than the undersigned, the undersigned will pay all
transfer taxes payable with respect thereto and is delivering herewith a
certificate in proper form certifying that the applicable restrictions on
transfer have been complied with. Any amount required to be paid by the
undersigned on account of interest accompanies this Security.
The Applicant hereby agrees that, promptly after request of the Company,
he or it will furnish such proof in support of this certification as the
Company or the Security Registrar for the Common Stock may, from time to
time, request.
Dated: -------------------------------------
Signature*
If shares or Securities are to be Principal amount to be converted
registered in the name of a Person (if less than all):
other than the Holder, please print $____,000
such Person's name and address:*
- ----------------------------------- -------------------------------------
Name Social Security or
Taxpayer Identification Number
- ----------------------------------- -------------------------------------
Street Address
- ----------------------------------- -------------------------------------
City, State and Zip Code
* Signature(s) must be guaranteed by an eligible guarantor institution
(banks, stock brokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program) pursuant to
Securities and Exchange Commission Rule 17Ad-15 if shares of Common Stock are
to be delivered, or unconverted Securities are to be issued, other than to
and in the name of the registered owner.
SECTION 2.6 FORM OF CERTIFICATION. Whenever any certification is
required to be given to evidence compliance with certain restrictions
relating to transfers of Restricted Securities contemplated by Section
3.5(b)(iv), Section 3.5(c) or Section 13.2, such certification shall be
provided substantially in the form of the following certificate, with only
such changes as shall be approved by the Company and the Initial Purchasers.
TRANSFER CERTIFICATE
The undersigned Holder hereby certifies with respect to U.S.$_____
principal amount of the above-captioned securities presented or surrendered
on the date hereof (the "Surrendered Securities") for registration of
transfer, or for exchange or conversion where the securities issuable upon
such exchange or conversion are to be registered in a name other than that of
the undersigned Holder (each such transaction being a "transfer"), that such
transfer complies with the restrictive legend set forth on the face of the
Surrendered Securities for the reason checked below:
___________ The transfer of the Surrendered Securities complies with
Rule 144 under the U.S. Securities Act of 1933, as amended (the
"Securities Act"); or
___________ The transfer of the Surrendered Securities complies with
Rule 144A under the Securities Act; or
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<PAGE>
___________ The transfer of the Surrendered Securities complies with
Rule 904 of Regulation S under the Securities Act; or
___________ The transfer of the Surrendered Securities is pursuant to an
effective registration statement under the Securities Act, the
prospectus delivery requirements under the Securities Act have
been satisfied with respect to such transfer, the undersigned
Holder is named as a "Selling Securityholder" in the prospectus
relating to such registration statement, or in amendments or
supplements thereto, and the aggregate principal amount of
Surrendered Securities transferred are all or a portion of
the securities listed in such prospectus opposite the
undersigned's name.
Dated: ___________________*
* To be dated the date of surrender.
----------------------------------
Signature
(If the registered owner is a
corporation, partnership or
fiduciary, the title of the Person
signing on behalf of such
registered owner must be stated.)
19
<PAGE>
ARTICLE III
THE SECURITIES
SECTION 3.1 TITLE AND TERMS; ISSUABLE IN SERIES. The aggregate
principal amount of Securities which may be authenticated and delivered under
this Indenture is limited to U.S.$60,000,000, except for Securities
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Securities of the series pursuant to Sections 3.4,
3.5, 3.6, 9.6, 11.8, 13.2 or 14.5 and except for Securities which, pursuant
to Section 3.3, are deemed never to have been authenticated and delivered
hereunder.
The Stated Maturity of the Securities shall be January 1, 2005, and they
shall bear interest at the rate of 6 3/4% per annum, payable semi-annually on
January 1 and July 1, commencing July 1, 1998, until the principal thereof is
paid or made available for payment.
Payment of the principal of, premium, if any, and interest (including
payment of any Additional Interest) on this Security will be made at the
Corporate Trust Office or the Trustee's New York Affiliate Office, in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts by a U.S. Dollar check
drawn on an account maintained with a bank in the Borough of Manhattan, The
City of New York or Los Angeles, California; PROVIDED, HOWEVER, that upon
written application by the Holder to the Security Registrar setting forth
wire instructions not later than 15 days prior to the relevant payment date
(in the case of payment of principal) or not later than the relevant Record
Date (in the case of payment of interest), such Holder may receive payment by
wire transfer of Dollars to a U.S. Dollar account (such transfers to be made
only to Holders of an aggregate principal amount in excess of U.S.$2,000,000)
maintained by the payee with a bank in the United States or in Europe and
designated by the payee to the Security Registrar.
The Securities shall be redeemable by the Company as provided in Article
XI.
The Securities shall be subordinated in right of payment to the prior
payment in full of Senior Indebtedness as provided in Article XII.
The Securities shall be convertible as provided in Article XIII.
The Securities shall be subject to purchase by the Company at the option
of the Holder as provided in Article XIV.
SECTION 3.2 DENOMINATIONS. The Securities shall be issuable only in
registered form without coupons and only in denominations of U.S.$1,000 and
any integral multiple thereof.
SECTION 3.3 EXECUTION, AUTHENTICATION, DELIVERY AND DATING. The
Securities shall be executed on behalf of the Company by any of its Chairman
of the Board, its Vice Chairman of the Board, its President or one of its
Vice Presidents, under its corporate seal reproduced thereon and attested by
its Secretary or one of its Assistant Secretaries. The signature of any of
these officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did
not hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities of any series executed by
the Company to the Trustee for authentication, together with a Company Order
for the authentication and delivery of such Securities; and the Trustee in
accordance with such Company Order shall authenticate and deliver such
Securities as in this Indenture provided and not otherwise.
Each Security shall be dated the date of its authentication.
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No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such
Security has been duly authenticated and delivered hereunder.
SECTION 3.4 GLOBAL AND NON-GLOBAL SECURITIES.
(a) GLOBAL SECURITIES.
(i) Each Global Security authenticated under this Indenture shall be
registered in the name of the Depositary designated by the Company for
such Global Security or a nominee thereof and delivered to such Depositary
or a nominee thereof or custodian therefor, and each such Global Security
shall constitute a single Security for all purposes of this Indenture.
(ii) Notwithstanding any other provision in this Indenture, no Global
Security may be exchanged in whole or in part for Securities registered,
and no transfer of a Global Security in whole or in part may be
registered, in the name of any Person other than the Depositary for such
Global Security or a nominee thereof unless (A) such Depositary (1) has
notified the Company that it is unwilling or unable to continue as
Depositary for such Global Security or (2) has ceased to be a clearing
agency registered as such under the Exchange Act or announces an intention
permanently to cease business or does in fact do so, (B) there shall have
occurred and be continuing an Event of Default with respect to such Global
Security, or (C) the Company in its discretion at any time determines not
to have all the Securities represented by a Global Security. Any Global
Security exchanged pursuant to clause (A) above shall be so exchanged in
whole and not in part and any Global Security exchanged pursuant to
clause (B) or (C) above may be exchanged in whole or from time to time in
part as directed by the Depositary. Any Security issued in exchange for a
Global Security or any portion thereof shall be a Global Security;
PROVIDED that any such Security so issued that is registered in the name
of a Person other than the Depositary or a nominee thereof shall not be a
Global Security.
(iii) If any Global Security is to be exchanged for other
Securities or canceled in whole, it shall be surrendered by or on behalf
of the Depositary or its nominee to the Trustee, as Security Registrar,
for exchange or cancellation as provided in this Article III. If any
Global Security is to be exchanged for other Securities or cancelled in
part, or if another Security is to be exchanged in whole or in part for a
beneficial interest in any Global Security, in each case, as provided in
Section 3.5, then either (i) such Global Security shall be so surrendered
for exchange or cancellation as provided in this Article III or (ii) the
principal amount thereof shall be reduced or increased by an amount equal
to the portion thereof to be so exchanged or cancelled, or equal to the
principal amount of such other Security to be so exchanged for a
beneficial interest therein, as the case may be, by means of an
appropriate adjustment made on the records of the Trustee, as Security
Registrar, whereupon the Trustee, in accordance with the Applicable
Procedures, shall instruct the Depositary or its authorized representative
to make a corresponding adjustment to its records. Upon any such surrender
or adjustment of a Global Security, the Trustee shall, subject to Section
3.5(c) and as otherwise provided in this Article III, authenticate and
deliver any Securities issuable in exchange for such Global Security (or
any portion thereof) to or upon the order of, and registered in such names
as may be directed by the Depositary or its authorized representative.
Upon the request of the Trustee in connection with the occurrence of any
of the events specified in the preceding paragraph, the Company shall
promptly make available to the Trustee a reasonable supply of Securities
that are not in the form of Global Securities. The Trustee shall be
entitled to rely upon any order, direction or request of the Depositary or
its authorized representative which is given or made pursuant to this
Article III if such order, direction or request is given or made in
accordance with the Applicable Procedures.
(iv) Every Security authenticated and delivered upon registration of
transfer of, or in exchange for or in lieu of, a Global Security or any
portion thereof, whether pursuant to this Article III or otherwise, shall
be authenticated and delivered in the form of, and shall be, a Global
Security, unless
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such Security is registered in the name of a Person other than the
Depositary for such Global Security or a nominee thereof, in which case
such Security shall be authenticated and delivered in definitive, fully
registered form, without interest coupons.
(v) The Depositary or its nominee, as registered owner of a Global
Security, shall be the Holder of such Global Security for all purposes
under the Indenture and the Securities, and owners of beneficial interests
in the Global Security shall hold such interests pursuant to the
Applicable Procedures. Accordingly, any such owner's beneficial interest
in a Global Security will be shown only on, and the transfer of such
interest shall be effected only through, records maintained by the
Depositary or its nominee or its Agent Members and such owners of
beneficial interests in a Global Security will not be considered the
owners or holders thereof. Notwithstanding the foregoing, nothing herein
shall prevent the Company, the Trustee or any agent of the Company or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depositary or such nominee, as the case may
be, or impair, as between the Depositary, its Agent Members and any other
person on whose behalf an Agent Member may act, the operation of customary
practices of such Persons governing the exercise of the rights of a holder
of any Security.
(b) NON-GLOBAL SECURITIES.
(i) Securities issued pursuant to Regulation D under the Securities
Act shall be initially issued as Securities in definitive, fully
registered form, without interest coupons, shall initially be registered
in such names and be in such authorized denominations as the Initial
Purchasers shall designate and shall bear the legends required hereunder.
The Company will make available to the Trustee a reasonable supply of
Securities in definitive form.
(ii) Pending the preparation of definitive Securities, the Company
may execute, and upon Company Order the Trustee shall authenticate and
deliver, temporary Securities which are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any authorized
denomination, substantially of the tenor of the definitive Securities in
lieu of which they are issued and with such appropriate insertions,
omissions, substitutions and other variations as the officers executing
such Securities may determine, as evidenced by their execution of such
Securities.
If temporary Securities are issued, the Company will cause definitive
Securities to be prepared without unreasonable delay. After the
preparation of definitive Securities, the temporary Securities shall be
exchangeable for definitive Securities upon surrender of the temporary
Securities at any office or agency of the Company designated pursuant to
Section 10.2, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Securities the Company shall
execute and the Trustee shall authenticate and deliver in exchange
therefor a like principal amount of definitive Securities of authorized
denominations. Until so exchanged, the temporary Securities shall in all
respects be entitled to the same benefits under this Indenture as
definitive Securities.
SECTION 3.5 REGISTRATION; REGISTRATION OF TRANSFER AND EXCHANGE.
(a) The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register (the register maintained in such office, in the
Trustee's New York Affiliate Office and in any other office or agency
designated pursuant to Section 10.2 being herein sometimes collectively
referred to as the "Security Register") in which, subject to such reasonable
regulations as it may prescribe, the Company shall provide for the registration
of Securities and of transfers and exchanges thereof. The Trustee is hereby
appointed "Security Registrar" for the purpose of registering Securities and
transfers and exchanges thereof as herein provided. Upon surrender for
registration of transfer or exchange of any Security at an office or agency of
the Company designated pursuant to Section 10.2 for such purpose, accompanied
by a written instrument of transfer or exchange in the form provided by the
Company, the Company shall execute, and the Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Securities of the same series, of any authorized denominations and of a
like aggregate principal amount.
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<PAGE>
(b) Notwithstanding any other provisions of this Indenture or the
Securities, transfers and exchanges of Securities and beneficial interests in
a Global Security of the kinds specified in this Section 3.5(b) shall be made
only in accordance with this Section 3.5(b).
(i) TRANSFER OF GLOBAL SECURITY. Other than as set forth in Section
3.4(a), a Global Security may not be transferred, in whole or in part, to
any Person other than the Depositary or a nominee thereof, and no such
transfer to any such other Person may be registered; PROVIDED that this
Section 3.5(b)(i) shall not prohibit any transfer of a Security that is
issued in exchange for a Global Security but is not itself a Global
Security. No transfer of a Security to any Person shall be effective
under this Indenture or the Securities unless and until such Security has
been registered in the name of such Person. Nothing in this Section
3.5(b)(i) shall prohibit or render ineffective any transfer of a
beneficial interest in a Global Security effected in accordance with the
other provisions of this Section 3.5(b).
(ii) TRANSFER OF BENEFICIAL INTERESTS IN THE GLOBAL SECURITY.
Transfer of beneficial interests in a Global Security shall be effected
through the Depositary, in accordance with this Indenture (including
applicable restrictions on transfer set forth herein, if any) and the
procedures of the Depositary therefor, if applicable.
(iii) OTHER EXCHANGES. In the event that a Global Security or
any portion thereof is exchanged for Securities other than Global
Securities, such other Securities may in turn be exchanged (on transfer or
otherwise) for Securities that are not Global Securities or for beneficial
interests in a Global Security (if any is then outstanding) only in
accordance with such procedures, which shall be substantially consistent
with the provisions of Section 3.5(b)(i) (including the certification
requirements set forth on the reverse of the Security intended to insure
that transfers of beneficial interests in a Global Security comply with
Rule 144A, Regulation S or Rule 144 under the Securities Act, as the case
may be) and any Applicable Procedures, as may be from time to time adopted
by the Company and the Trustee.
(iv) TRANSFER AND EXCHANGE OF DEFINITIVE SECURITIES. When Definitive
Securities are presented to the Security Registrar with a request:
(A) to register the transfer of such Definitive Securities; or
(B) to exchange such Definitive Securities for an equal principal
amount of Definitive Securities of other authorized denominations, the
Security Registrar shall register the transfer or make the exchange as
requested if its reasonable requirements for such transaction are met;
PROVIDED, HOWEVER, that the Definitive Securities surrendered for transfer
or exchange:
(x) shall be duly endorsed or accompanied by a written
instrument of transfer in form reasonably satisfactory to the Company and
the Security Registrar, duly executed by the Holder thereof or his
attorney duly authorized in writing; and
(y) are being transferred or exchanged pursuant to an effective
registration statement under the Securities Act, pursuant to
Section 3.5(b)(v), or pursuant to clause (1), (2) or (3) below, and are
accompanied by the following additional information and documents, as
applicable:
(1) if such Definitive Securities are being delivered
to the Security Registrar by a Holder for registration in the name of
such Holder, without transfer, a certification from such Holder to
that effect (in the form set forth in Section 2.6); or
(2) if such Definitive Securities are being
transferred to the Company, a certification to that effect (in the
form set forth in Section 2.6); or
(3) if such Definitive Securities are being
transferred pursuant to an exemption from registration in accordance
with Rule 144, (i) a certification to that effect (in the
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form set forth in Section 2.6) and (ii) if the Company or
Security Registrar so requests, an opinion of counsel or other
evidence reasonably satisfactory to them as to the compliance with
the restrictions set forth in the legend set forth in Section 2.2.
(v) RESTRICTIONS ON TRANSFER OF A DEFINITIVE SECURITY FOR A
BENEFICIAL INTEREST IN A GLOBAL SECURITY. A Definitive Security may not
be exchanged for a beneficial interest in a Global Security except upon
satisfaction of the requirements set forth below. Upon receipt by the
Trustee of a Definitive Security, duly endorsed or accompanied by
appropriate instruments of transfer, in form satisfactory to the Trustee,
together with:
(A) certification in the form set forth on the reverse of the
Security (1) that such Definitive Security is being transferred to a
Qualified Institutional Buyer in accordance with Rule 144A or (2) outside
the United States in an offshore transaction within the meaning of
Regulation S and in compliance with Rule 904 under the Securities Act; and
(B) written instructions directing the Trustee to make, or to direct
the Securities Registrar to make, an adjustment on its books and records
with respect to such Global Security to reflect an increase in the
aggregate principal amount of the Securities represented by the Global
Security, such instructions to contain information regarding the
Depositary account to be credited with such increase,
then the Trustee shall cancel such Definitive Security and cause, or
direct the Securities Registrar to cause, in accordance with the standing
instructions and procedures existing between the Depository and the
Securities Registrar, the aggregate principal amount of Securities
represented by the Global Security to be increased by the aggregate
principal amount of the Definitive Security to be exchanged and shall
credit or cause to be credited to the account of the Person specified in
such instructions a beneficial interest in the Global Security equal to
the principal amount of the Definitive Security so cancelled. If no
Global Securities are then outstanding, the Company shall issue and the
Trustee shall authenticate, upon written order of the Company in the form
of an Officers' Certificate, a new Global Security in the appropriate
principal amount.
(c) Subject to the succeeding paragraph, every Security shall be subject
to the restrictions on transfer provided in the legends required by Section 2.2
to be applied to such Security. Whenever any Security is presented or
surrendered for registration of transfer or for exchange for a Security
registered in a name other than that of the Holder, such Security must be
accompanied by a certificate in substantially the form set forth in
Section 2.6, dated the date of such surrender and signed by the Holder of such
Security, as to compliance with such restrictions on transfer. The Security
Registrar shall not be required to accept for such registration of transfer or
exchange any Security not so accompanied by a properly completed certificate.
(d) The restrictions imposed by the legend set forth in the first or
fourth paragraph, as the case may be, of Section 2.2 upon the transferability
of any Security shall cease and terminate when such Security has been sold
pursuant to an effective registration statement under the Securities Act,
transferred in compliance with Rule 144 under the Securities Act (or any
successor provision thereto), or after the second anniversary of the original
issuance date of the Security (or such earlier date after which the Security
may be freely transferred without registration under the Securities Act or
without being subject to transfer restrictions pursuant to the Securities Act,
as may be provided in Rule 144(k) under the Securities Act (or any successor
provision thereto) or otherwise). Any Security as to which such restrictions
on transfer shall have expired in accordance with their terms or shall have
terminated may, upon surrender of such Security for exchange to the Security
Registrar in accordance with the provisions of this Section 3.5 (accompanied,
in the event that such restrictions on transfer have terminated by reason of a
transfer in compliance with Rule 144 or any successor provision, by an opinion
of counsel having substantial experience in practice under the Securities Act
and otherwise reasonably acceptable to the Company, addressed to the Company
and in form acceptable to the Company, to the effect that the transfer of such
Security has been made in compliance with Rule 144 or such successor
provision), be exchanged for a new Security, of like tenor and aggregate
principal amount, which shall not bear the restrictive legend set forth in the
first paragraph of Section 2.2. The Company shall inform the Trustee of the
effective date of any registration
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statement registering the Securities under the Securities Act. The Trustee
shall not be liable for any action taken or omitted to be taken by it in good
faith in accordance with the aforementioned opinion of counsel or notice of
an effective registration statement.
(e) As used in the preceding two paragraphs of this Section 3.5, the term
"transfer" encompasses any sale, pledge, transfer, hypothecation or other
disposition of any Security.
(f) No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 3.4, 9.6, 11.8, 13.2 or 14.5 not involving any
transfer.
(g) The Company shall not be required (i) to issue, register the transfer
of or exchange any Security during a period beginning at the opening of
business 15 days before the day of the mailing of a notice of redemption of
Securities selected for redemption under Section 11.4 and ending at the close
of business on the day of such mailing, or (ii) to register the transfer of or
exchange any Security so selected for redemption in whole or in part, except
the unredeemed portion of any Security being redeemed in part.
SECTION 3.6 MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES. If any
mutilated Security is surrendered to the Trustee, the Company shall execute and
the Trustee shall authenticate and deliver in exchange therefor a new Security
of like tenor and principal amount and bearing a number not contemporaneously
outstanding.
If there shall be delivered to the Company and the Trustee (i) evidence to
their satisfaction of the destruction, loss or theft of any Security and
(ii) such security or indemnity as may be required by them to save each of them
and any agent of either of them harmless, then, in the absence of notice to the
Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and the Trustee shall authenticate and
deliver, in lieu of any such destroyed, lost or stolen Security, a new Security
of like tenor and principal amount and bearing a number not contemporaneously
outstanding.
In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, the Company in its discretion, but
subject to any conversion rights, may, instead of issuing a new Security, pay
such Security.
Upon the issuance, authentication and delivery by the Trustee of any new
Security under this Section, the Company may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other expenses (including the fees and expenses of the
Trustee) connected therewith.
Every new Security issued, authenticated and delivered by the Trustee
pursuant to this Section in lieu of any destroyed, lost or stolen Security
shall constitute an original additional contractual obligation of the Company,
whether or not the destroyed, lost or stolen Security shall be at any time
enforceable by anyone, and shall be entitled to all the benefits of this
Indenture equally and proportionately with any and all other Securities duly
issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
SECTION 3.7 PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED. Interest
on any Security which is payable, and is punctually paid or duly provided for,
on any Interest Payment Date shall be paid to the Person in whose name that
Security (or one or more Predecessor Securities) is registered at the close of
business on the Regular Record Date for payment of such interest.
If the Company shall be required by law to deduct any taxes from any sum
of interest payable hereunder to a Holder, (i) the Company shall make such
deductions and shall pay the full amount deducted to the relevant
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taxing authority in accordance with applicable law and (ii) the amount of
such deduction shall be treated for purposes hereof as a payment of interest.
Any interest on any Security which is payable, but is not punctually paid
or duly provided for, on any Interest Payment Date (herein called "Defaulted
Interest") shall forthwith cease to be payable to the Holder on the relevant
Regular Record Date by virtue of having been such Holder, and such Defaulted
Interest may be paid by the Company, at its election in each case, as provided
in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Securities (or their respective
Predecessor Securities) are registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest, which
shall be fixed in the following manner. The Company shall notify the
Trustee in writing of the amount of Defaulted Interest proposed to be paid
on each Security and the date of the proposed payment, and at the same
time the Company shall deposit with the Trustee an amount of money equal
to the aggregate amount proposed to be paid in respect of such Defaulted
Interest or shall make arrangements satisfactory to the Trustee for such
deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons entitled to
such Defaulted Interest as in this Clause (1) provided. Thereupon, the
Trustee shall fix a Special Record Date for the payment of such Defaulted
Interest which shall be not more than 15 days and not less than 10 days
after the receipt by the Trustee of the notice of the proposed payment.
The Trustee shall promptly notify the Company of such Special Record Date
and, in the name and at the expense of the Company, shall cause notice of
the proposed payment of such Defaulted Interest and the Special Record
Date therefor to be mailed, first-class postage prepaid, to each Holder at
his address as it appears in the Security Register, not less than 10 days
prior to such Special Record Date. Notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor having been so
mailed, such Defaulted Interest shall be paid to the Persons in whose
names the Securities (or their respective Predecessor Securities) are
registered at the close of business on such Special Record Date and shall
no longer be payable pursuant to the following Clause (2).
(2) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this Clause
(2), such manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
In the case of any Security which is converted after any Regular Record
Date and on or prior to the corresponding Interest Payment Date, interest on
such Security whose Stated Maturity is on such Interest Payment Date shall be
deemed to continue to accrue and shall be payable on such Interest Payment Date
notwithstanding such conversion and notwithstanding that such Security may have
been called for redemption on a Redemption Date within such period, and such
interest (whether or not punctually paid or duly provided for) shall be paid to
the Person in whose name that Security (or one or more Predecessor Securities)
is registered at the close of business on such Regular Record Date. Except as
otherwise expressly provided in the immediately preceding sentence, in the case
of any Security which is converted, interest whose Stated Maturity is after the
date of conversion of such Security shall not be payable (although such accrued
and unpaid interest will be deemed paid by the appropriate portion of the
Common Stock received by the holders upon such conversion).
SECTION 3.8 PERSONS DEEMED OWNERS. Prior to due presentment of a
Security for registration of transfer, the Company, the Trustee and any agent
of the Company or the Trustee may treat the Person in whose name such Security
is registered as the owner of such Security for the purpose of receiving
payment of principal of, premium, if any, and (subject to Section 3.7) interest
on such Security and for all other purposes whatsoever,
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whether or not such Security be overdue, and neither the Company, the Trustee
nor any agent of the Company or the Trustee shall be affected by notice to
the contrary.
SECTION 3.9 CANCELLATION. All Securities surrendered for payment,
redemption, repurchase, registration of transfer or exchange or conversion
shall, if surrendered to any Person other than the Trustee, be delivered to the
Trustee and shall be promptly cancelled by it. The Company may at any time
deliver to the Trustee for cancellation any Securities previously authenticated
and delivered hereunder which the Company may have acquired in any manner
whatsoever, and all Securities so delivered shall be promptly cancelled by the
Trustee. No Securities shall be authenticated in lieu of or in exchange for
any Securities cancelled as provided in this Section, except as expressly
permitted by this Indenture. All cancelled Securities held by the Trustee
shall be disposed of as directed by a Company Order.
SECTION 3.10 COMPUTATION OF INTEREST. Interest on the Securities of
each series shall be computed on the basis of a 360-day year of twelve 30-day
months.
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.1 SATISFACTION AND DISCHARGE OF INDENTURE. This Indenture
shall upon Company request cease to be of further effect (except as to any
surviving rights of conversion, registration of transfer or exchange of
Securities herein expressly provided for), and the Trustee, at the expense of
the Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered (other
than (i) Securities which have been destroyed, lost or stolen and which
have been replaced or paid as provided in Section 3.6 and (ii) Securities
for whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Company and thereafter repaid to the
Company or discharged from such trust, as provided in Section 10.3) have
been delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated
Maturity within one year, or
(iii) are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the giving of
notice of redemption by the Trustee in the name, and at the expense,
of the Company,
and the Company, in the case of (i), (ii) or (iii) above, has
deposited or caused to be deposited irrevocably with the Trustee as
trust funds in trust for the benefit of Holders of Outstanding
Securities an amount sufficient to pay and discharge the entire
indebtedness on such Securities not theretofore delivered to the
Trustee for cancellation, for principal (and premium, if any) and
interest to the date of such deposit (in the case of Securities which
have become due and payable) or to the Stated Maturity or Redemption
Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company;
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(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge
of this Indenture have been complied with; and
(4) no Event of Default which, with notice or lapse of time, or
both, would become an Event of Default with respect to the Securities
shall have occurred and be continuing on the date of such deposit.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 6.7, the obligations of
the Trustee to any Authenticating Agent under Section 6.14 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of Clause (1) of
this Section, the obligations of the Trustee under Section 4.2 and the last
paragraph of Section 10.3 shall survive.
SECTION 4.2 APPLICATION OF TRUST MONEY. Subject to the provisions of
the last paragraph of Section 10.3, all money deposited with the Trustee
pursuant to Section 4.1 shall be held in trust and applied by it, in accordance
with the provisions of the Securities and this Indenture, to the payment,
either directly or through any Paying Agent (including the Company acting as
its own Paying Agent) as the Trustee may determine, to the Persons entitled
thereto, of the principal (and premium, if any) and interest for whose payment
such money has been deposited with the Trustee. All moneys deposited with the
Trustee pursuant to Section 4.1 (and held by it or any Paying Agent) for the
payment of Securities subsequently converted shall be returned to the Company
upon Company Request.
ARTICLE V
REMEDIES
SECTION 5.1 EVENTS OF DEFAULT. "Event of Default", wherever used herein,
means any one of the following events (whatever the reason for such Event of
Default and whether it shall be occasioned by the provisions of Article XII or
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):
(1) default in the payment of any interest (including Additional
Interest) upon any Security when it becomes due and payable, and
continuance of such default for a period of 30 days (whether or not such
payment is prohibited by the provisions of Article XII); or
(2) default in the payment of the principal of (or premium, if any,
on) any Security at its Maturity (whether or not such payment is
prohibited by the provisions of Article XII); or
(3) failure by the Company to provide the notice of a Change of
Control in accordance with Section 14.2 or notice of a Change of Control
or default in the payment of the Repurchase Price in respect of any Note
on the Repurchase Date therefor (whether or not such payment is prohibited
by the provisions of Article XII); or
(4) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture (other than a covenant or
warranty a default in whose performance or whose breach is elsewhere in
this Section specifically dealt with), and continuance of such default or
breach for a period of 60 days after there has been given, by registered
or certified mail, to the Company by the Trustee or to the Company and the
Trustee by the Holders of at least 25% in principal amount of the
Outstanding Securities a written notice specifying such default or breach
and requiring it to be remedied and stating that such notice is a "Notice
of Default" hereunder; or
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(5) a default under any bonds, debentures, notes or other evidences
of indebtedness for money borrowed by the Company or a Subsidiary or under
any mortgages, indentures or instruments under which there may be issued
or by which there may be secured or evidenced any indebtedness for money
borrowed by the Company or a Subsidiary, whether such indebtedness now
exists or shall hereafter be created, which indebtedness, individually or
in the aggregate, has a principal amount outstanding in excess of
U.S.$5,000,000, which default shall constitute a failure to pay any
portion of the principal of such indebtedness when due and payable after
the expiration of any applicable grace or cure period with respect thereto
or shall have resulted in such indebtedness becoming or being declared due
and payable prior to the date on which it would otherwise have become due
and payable, without such indebtedness having been discharged, or such
acceleration having been rescinded or annulled, within a period of 10 days
after there shall have been given, by registered or certified mail, to the
Company by the Trustee or to the Company and the Trustee by the Holders of
at least 25% in principal amount of the Outstanding Securities a written
notice specifying such default and requiring the Company to cause such
indebtedness to be discharged or cause such acceleration to be rescinded
or annulled and stating that such notice is a "Notice of Default"
hereunder; or
(6) the entry by a court having jurisdiction in the premises of
(A) a decree or order for relief in respect of the Company or a Subsidiary
in an involuntary case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or (B) a
decree or order adjudging the Company or a Subsidiary a bankrupt or
insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or in respect of
the Company or a Subsidiary under any applicable Federal or State law, or
appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or a Subsidiary or
of any substantial part of their respective properties, or ordering the
winding up or liquidation of the affairs of the Company or a Subsidiary,
and the continuance of any such decree or order for relief or any such
other decree or order unstayed and in effect for a period of
60 consecutive days; or
(7) the commencement by the Company or a Subsidiary of a voluntary
case or proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or of any other case or
proceeding to be adjudicated a bankrupt or insolvent, or the consent by
either the Company or a Subsidiary to the entry of a decree or order for
relief in respect of the Company or a Subsidiary in an involuntary case or
proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any
bankruptcy or insolvency case or proceeding against either the Company or
a Subsidiary, or the filing by either the Company or a Subsidiary of a
petition or answer or consent seeking reorganization or relief under any
applicable Federal or State law, or the consent by either the Company or a
Subsidiary to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or a Subsidiary or
of any substantial part of their respective properties, or the making by
either the Company or a Subsidiary of an assignment for the benefit of
creditors, or the admission by either the Company or a Subsidiary in
writing of an inability to pay the debts of either the Company or a
Subsidiary generally as they become due, or the taking of corporate action
by the Company or a Subsidiary in furtherance of any such action.
SECTION 5.2 ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT. If an
Event of Default (other than an Event of Default specified in Section 5.1(6) or
5.1(7)) occurs and is continuing, then in every such case the Trustee or the
Holders of not less than 25% in principal amount of the Outstanding Securities
may declare the principal of all the Securities to be due and payable
immediately, by a notice in writing to the Company (and to the Trustee if given
by Holders), and upon any such declaration such principal and any accrued
interest (including Additional Interest) thereon shall become immediately due
and payable. If an Event of Default specified in Section 5.1(6) or 5.1(7)
occurs, the principal of, and accrued interest (including Additional Interest)
on, all the Securities shall automatically, and without any declaration or
other action on the part of the Trustee or any Holder, become immediately due
and payable.
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At any time after such a declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter in this Article V provided, the Holders of a
majority in principal amount of the Outstanding Securities, by written notice
to the Company and the Trustee, may rescind and annul such declaration and its
consequences if
(1) the Company has paid or deposited with the Trustee a sum sufficient
to pay
(A) all overdue interest (including Additional Interest) on all
Securities,
(B) the principal of (and premium, if any, on) any Securities which
have become due otherwise than by such declaration of acceleration and
interest thereon at the rate borne by the Securities,
(C) to the extent that payment of such interest is lawful, interest
upon overdue interest at the rate borne by the Securities, and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel;
and
(2) all Events of Default, other than the non-payment of the principal of
Securities which have become due solely by such declaration of acceleration,
have been cured or waived as provided in Section 5.13.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 5.3 COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE. If
(1) default is made in the payment of any interest on any Security when
such interest becomes due and payable and such default continues for a period
of 30 days, or
(2) default is made in the payment of the principal of (or premium, if
any, on) any Security at the Maturity thereof,
the Trustee is authorized to recover judgment in its own name and as trustee of
an express trust against the Company for the whole amount then due and payable
on such Securities for principal (and premium, if any) and interest, and, to
the extent that payment of such interest shall be legally enforceable, interest
on any overdue principal (and premium, if any) and on any overdue interest, at
the rate borne by the Securities, and, in addition thereto, such further amount
as shall be sufficient to cover the costs and expenses of collection, including
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel.
If an Event of Default occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 5.4 TRUSTEE MAY FILE PROOFS OF CLAIM. In case of any judicial
proceeding relative to the Company (or any other obligor upon the Securities),
its property or its creditors, the Trustee shall be entitled and empowered, by
intervention in such proceeding or otherwise,
(1) to file and prove a claim 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 the reasonable
compensation,
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expenses, disbursements and advances of the Trustee, its agents and
counsel) and of the Holders allowed in such judicial proceeding, and
(2) to collect and receive any moneys or other property payable or
deliverable on any such claim and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders,
to pay to the Trustee any amount due it for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel,
and any other amounts due the Trustee under Section 6.7.
No provision of this Indenture shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder 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 Holder in any such proceeding; PROVIDED, HOWEVER,
that the Trustee may, on behalf of the Holders, vote for the election of a
trustee in bankruptcy or similar official and be a member of a creditors' or
other similar committee.
SECTION 5.5 TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES.
All rights of action and claims under this Indenture or the Securities may be
prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own name
as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
SECTION 5.6 APPLICATION OF MONEY COLLECTED. Any money collected by the
Trustee pursuant to this Article V shall be applied in the following order, at
the date or dates fixed by the Trustee and, in case of the distribution of such
money on account of principal (or premium, if any) or interest, upon
presentation of the Securities and the notation thereon of the payment if only
partially paid and upon surrender thereof if fully paid:
FIRST: to the payment of all amounts due the Trustee under
Section 6.7;
SECOND: subject to Article XII to the payment of the amounts then
due and unpaid for first, interest (including Additional Interest) on,
and, second, for principal of (and premium, if any, on) the Securities in
respect of which or for the benefit of which such money has been
collected, ratably, without preference or priority of any kind, according
to the amounts due and payable on such Securities for interest and
principal (and premium, if any) respectively; and
THIRD: the balance, if any, to the Person or Persons entitled
thereto, as their interest may appear or as a court of competent
jurisdiction shall direct.
SECTION 5.7 LIMITATION ON SUITS. No Holder of any Security shall have
any right to institute any proceeding, judicial or otherwise, with respect to
this Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless
(1) such Holder has previously given written notice to the Trustee
of a continuing Event of Default;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name
as Trustee hereunder;
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(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a
majority in principal amount of the Outstanding Securities;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all of such
Holders.
SECTION 5.8 UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM
AND INTEREST AND TO CONVERT. Notwithstanding any other provision in this
Indenture, the Holder of any Security shall have the right, which is absolute
and unconditional, to receive payment of the principal of (and premium, if any)
and (subject to Section 3.7) interest on such Security on the respective Stated
Maturities expressed in such Security (or, in the case of redemption or
repurchase, on the Redemption Date or Repurchase Date, as the case may be) and
to convert such Security in accordance with Article XIII and to institute suit
for the enforcement of any such payment and right to convert, and such rights
shall not be impaired without the consent of such Holder.
SECTION 5.9 RESTORATION OF RIGHTS AND REMEDIES. If the Trustee or any
Holder has instituted any proceeding to enforce any right or remedy under this
Indenture and such proceeding has been discontinued or abandoned for any
reason, or has been determined adversely to the Trustee or to such Holder, then
and in every such case, subject to any determination in such proceeding, the
Company, the Trustee and the Holders shall be restored severally and
respectively to their former positions hereunder and thereafter all rights and
remedies of the Trustee and the Holders shall continue as though no such
proceeding had been instituted.
SECTION 5.10 RIGHTS AND REMEDIES CUMULATIVE. Except as otherwise
provided with respect to the replacement or payment of mutilated, destroyed,
lost or stolen Securities in the last paragraph of Section 3.6, no right or
remedy herein conferred upon or reserved to the Trustee or to the Holders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at
law or in equity or otherwise. The assertion or employment of any right or
remedy hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 5.11 DELAY OR OMISSION NOT WAIVER. No delay or omission of the
Trustee or of any Holder of any Securities to exercise any right or remedy
accruing upon any Event of Default shall impair any such right or remedy or
constitute a waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article V or by law to the Trustee or to
the Holders may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders, as the case may be.
SECTION 5.12 CONTROL BY HOLDERS. The Holders of a majority in principal
amount of the Outstanding Securities 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; PROVIDED
that
(1) such direction shall not be in conflict with any rule of law or with
this Indenture, and
(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
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SECTION 5.13 WAIVER OF PAST DEFAULTS. The Holders of not less than a
majority in principal amount of the Outstanding Securities may on behalf of the
Holders of all the Securities waive any past default hereunder and its
consequences, except a default
(1) in the payment of the principal of (or premium, if any) or interest
on any Security, or
(2) in respect of a covenant or provision hereof which under Article IX
cannot be modified or amended without the consent of the Holder of each
Outstanding Security affected.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
SECTION 5.14 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, suffered or omitted by it as Trustee, a court may require
any party litigant in such suit to file an undertaking to pay the costs of such
suit, and may assess costs against any such party litigant, having due regard
to the merits and good faith of the claims or defenses made by such party
litigant; PROVIDED, that this Section 5.14 shall not be deemed to authorize any
court to require such an undertaking or to make such an assessment in any suit
instituted by the Company or in any suit for the enforcement of the right to
convert any Security in accordance with Article XIII.
SECTION 5.15 WAIVER OF USURY, STAY OR EXTENSION LAWS. The Company
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any usury, stay or extension law wherever enacted, now
or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution
of every such power as though no such law had been enacted.
ARTICLE VI
THE TRUSTEE
SECTION VI.1 CERTAIN DUTIES AND RESPONSIBILITIES.
(a) Except during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions furnished
to the Trustee and conforming to the requirements of this Indenture; but
in the case of any such 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 same to determine whether or
not they conform to the requirements of this Indenture.
(b) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.
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(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, EXCEPT that
(1) this paragraph (c) shall not be construed to limit the effect of
paragraph (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts;
(3) 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 a majority in principal amount of the
Outstanding Securities 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; and
(4) no provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder, or in the exercise of any
of its rights or powers.
(d) Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee (as Trustee, Paying Agent, Authenticating Agent or
Security Registrar) shall be subject to the provisions of this Section.
SECTION 6.2 NOTICE OF DEFAULTS. Within 90 days after the occurrence
of any default hereunder, the Trustee shall give the Holders, in the manner
provided in Section 1.6, notice of any default hereunder actually known to a
Responsible Officer of the Trustee; PROVIDED, HOWEVER, that in the case of
any default of the character specified in Section 5.1(3), no such notice to
Holders shall be given until at least 30 days after the occurrence thereof.
The Trustee shall not be deemed to have notice of a default unless (i) the
Trustee has received written notice thereof from the Company or any Holder or
(ii) a Responsible Officer of the Trustee shall have actual knowledge
thereof. For the purpose of this Section, the term "default" means any event
which is, or after notice or lapse of time or both would become, an Event of
Default.
SECTION 6.3 CERTAIN RIGHTS OF TRUSTEE. Subject to the provisions of
Section 6.1:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness 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 or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order and
any resolution of the Board of Directors shall be sufficiently evidenced by
a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may require and, in the
absence of bad faith on its part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel and the written advice
of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
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(e) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders pursuant to this Indenture, unless such
Holders shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which might be incurred by it
in compliance with such request or direction;
(f) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and
premises of the Company, personally or by agent or attorney; and
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys and the Trustee shall not be responsible for any
misconduct or negligence on the part of any agent or attorney appointed
with due care by it hereunder.
SECTION 6.4 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.
The recitals contained herein and in the Securities, except the Trustee's
certificates of authentication, shall be taken as the statements of the
Company, and neither the Trustee nor any Authenticating Agent assumes any
responsibility for their correctness. The Trustee makes no representations
as to the validity or sufficiency of this Indenture or of the Securities.
Neither the Trustee nor any Authenticating Agent shall be accountable for the
use or application by the Company of Securities or the proceeds thereof.
SECTION 6.5 MAY HOLD SECURITIES. The Trustee, any Authenticating
Agent, any Paying Agent, any Security Registrar or any other agent of the
Company, in its individual or any other capacity, may become the owner or
pledgee of Securities and, subject to Section 6.8 and Section 6.13, may
otherwise deal with the Company with the same rights it would have if it were
not Trustee, Authenticating Agent, Paying Agent, Security Registrar or such
other agent.
SECTION 6.6 MONEY HELD IN TRUST. Money held by the Trustee in trust
hereunder need not be segregated from other funds except to the extent
required by law. The Trustee shall be under no liability for interest on any
money received by it hereunder except as otherwise agreed with the Company.
SECTION 6.7 COMPENSATION AND REIMBURSEMENT. The Company agrees:
(1) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder (which compensation
shall not be limited by any provision of law in regard to the compensation
of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to reimburse
the Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision
of this Indenture (including the reasonable compensation and the expenses
and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad
faith; and
(3) to indemnify the Trustee for, and to hold it harmless
against, any loss, liability or expense incurred without negligence,
willful misconduct or bad faith on its part, arising out of or in
connection with the acceptance or administration of this trust, including
the costs and expenses of defending itself against any claim or liability
in connection with the exercise or performance of any of its powers or
duties hereunder. The Trustee shall notify the Company of any claim
asserted against it for which it may seek indemnity.
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All indemnifications and releases from liability granted hereunder to
the Trustee shall extend to its officers, directors, employees, agents,
successors and assigns.
When the Trustee incurs expenses or renders services after the
occurrence of any Event of Default specified in Section 5.1, the expenses
and the compensation for the services are intended to constitute expenses
of administration under any bankruptcy, insolvency or similar laws.
The obligations of the Company under this Section shall survive the
satisfaction and discharge of this Indenture.
SECTION 6.8 DISQUALIFICATION; CONFLICTING INTERESTS. If the Trustee
has or shall acquire a conflicting interest within the meaning of the Trust
Indenture Act, 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 and this Indenture.
SECTION 6.9 CORPORATE TRUSTEE REQUIRED; ELIGIBILITY. There shall at
all times be a Trustee hereunder which shall be a corporation organized and
doing business under the laws of the United States, authorized under such
laws to exercise corporate trust powers, which shall have (or, in the case of
a corporation included in a bank holding company system, the related bank
holding company shall have) a combined capital and surplus of at least
U.S.$100,000,000, subject to supervision or examination by federal or state
authority, in good standing and having an established place of business or
agency in the Borough of Manhattan, The City of New York. If such
corporation or related bank holding company publishes reports of condition at
least annually, pursuant to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section, the combined
capital and surplus of such corporation or related bank holding company shall
be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. If at any time the Trustee shall
cease to be eligible in accordance with the provisions of this Section, it
shall resign immediately in the manner and with the effect hereinafter
specified in this Article.
SECTION 6.10 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 6.11.
(b) The Trustee may resign at any time by giving written notice thereof
to the Company. If the instrument of acceptance by a successor Trustee
required by Section 6.11 shall not have been delivered to the Trustee within
30 days after the giving of such notice of resignation, the resigning Trustee
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
(c) The Trustee may be removed at any time by Act of the Holders of a
majority in principal amount of the Outstanding Securities, delivered to the
Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 6.8 after
written request therefor by the Company or by any Holder who has been a
bona fide Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 6.9 and
shall fail to resign after written request therefor by the Company or by
any such Holder, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver 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,
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then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee, or (ii) subject to Section 5.14, any Holder who has been a bona fide
Holder of a Security for at least 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.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause,
the Company, by a Board Resolution, shall promptly appoint a successor
Trustee. If, within one year after such resignation, removal or incapability,
or the occurrence of such vacancy, a successor Trustee shall be appointed by
Act of the Holders of a majority in principal amount of the Outstanding
Securities delivered to the Company and the retiring Trustee, the successor
Trustee so appointed shall, forthwith upon its acceptance of such appointment
in accordance with the applicable requirements of Section 6.11, become the
successor Trustee and to that extent supersede the successor Trustee
appointed by the Company. If no successor Trustee shall have been so
appointed by the Company or the Holders and accepted appointment in the
manner required by Section 6.11, any Holder who has been a bona fide Holder
of a Security for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for
the appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each removal
of the Trustee and each appointment of a successor Trustee to all Holders in
the manner provided in Section 1.6. Each notice shall include the name of
the successor Trustee and the address of its Corporate Trust Office.
SECTION 6.11 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR. Every successor
Trustee appointed hereunder shall execute, acknowledge and deliver to the
Company and to the retiring Trustee an instrument accepting such appointment,
and thereupon the resignation or removal of the retiring Trustee shall become
effective and such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee; but, on the request of the Company or the
successor Trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Trustee all
the rights, powers and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder. Upon request of any such successor Trustee,
the Company shall execute any and all instruments for more fully and
certainly vesting in and confirming to such successor Trustee all such
rights, powers and trusts.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article.
SECTION 6.12 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS. 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 (including the trust created by this Indenture) shall
be the successor of the Trustee hereunder, PROVIDED such corporation shall be
otherwise qualified and eligible under this Article, without the execution or
filing of any paper or any further act on the part of any of the parties
hereto. In case any Securities shall have been authenticated, but not
delivered, by the Trustee then in office, any successor by merger, conversion
or consolidation to such authenticating Trustee may adopt such authentication
and deliver the Securities so authenticated with the same effect as if such
successor Trustee had itself authenticated such Securities.
SECTION 6.13 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. If
and when the Trustee shall be or become a creditor of the Company (or any
other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims
against the Company (or any such other obligor).
SECTION 6.14 APPOINTMENT OF AUTHENTICATING AGENT. The Trustee may
appoint an Authenticating Agent or Agents which shall be authorized to act on
behalf of the Trustee to authenticate Securities issued upon original issue
and upon exchange, registration of transfer, partial conversion, partial
redemption, or partial repurchase or
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pursuant to Section 3.6, and Securities so authenticated shall be entitled to
the benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by the Trustee hereunder. Wherever reference is
made in this Indenture to the authentication and delivery of Securities by
the Trustee or the Trustee's certificate of authentication, such reference
shall be deemed to include authentication and delivery on behalf of the
Trustee by an Authenticating Agent and a certificate of authentication
executed on behalf of the Trustee by an Authenticating Agent. Each
Authenticating Agent shall be acceptable to the Company and shall at all
times be a corporation organized and doing business under the laws of the
United States, authorized under such laws to act as Authenticating Agent,
which shall have (or, in the case of a corporation included in a bank holding
company system, the related bank holding company shall have) a combined
capital and surplus of not less than U.S.$100,000,000 and shall be subject to
supervision or examination by Federal or State authority. If such
Authenticating Agent publishes reports of condition at least annually,
pursuant to law or to the requirements of said supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such Authenticating Agent or related bank holding company shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. If at any time an Authenticating Agent
shall cease to be eligible in accordance with the provisions of this Section,
such Authenticating Agent shall resign immediately in the manner and with the
effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating
Agent shall be a party, or any corporation succeeding to the corporate agency
or corporate trust business of an Authenticating Agent (including the
authenticating agency contemplated by this Indenture), shall continue to be
an Authenticating Agent, PROVIDED such corporation shall be otherwise
eligible under this Section, without the execution or filing of any paper or
any further act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice
thereof to such Authenticating Agent and to the Company. Upon receiving such
a notice of resignation or upon such a termination, or in case at any time
such Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor
Authenticating Agent which shall be acceptable to the Company and shall mail
written notice of such appointment by first-class mail, postage prepaid, to
all Holders as their names and addresses appear in the Security Register.
Any successor Authenticating Agent upon acceptance of its appointment
hereunder shall become vested with all the rights, powers and duties of its
predecessor hereunder, with like effect as if originally named as an
Authenticating Agent. No successor Authenticating Agent shall be appointed
unless eligible under the provisions of this Section.
The Trustee agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section, and the Trustee
shall be entitled to be reimbursed for such payments, subject to the
provisions of Section 6.7.
If an appointment is made pursuant to this Section, the Securities may
have endorsed thereon, in addition to the Trustee's certificate of
authentication, an alternative certificate of authentication in the following
form:
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This is one of the Securities described in the within-mentioned Indenture.
State Street Bank and Trust Company of California, N.A.
-------------------------------------------------------
As Trustee
By: ,
----------------------------------------------------
As Authenticating Agent
By:
----------------------------------------------------
Authorized Signatory
SECTION 6.15 APPOINTMENT OF CO-TRUSTEE. Subject to the qualifications
set forth in Section 6.9, the Trustee may appoint an additional institution
as a separate trustee or co-trustee. If the Trustee appoints an additional
institution as a separate trustee or co-trustee, each and every remedy,
power, right, claim, demand, cause of action, immunity, estate, duty,
obligation, title, interest and lien expressed or intended by this Indenture
to be exercised by, vested in and conveyed by the Trustee with respect
thereto shall be exercisable by, vested in and conveyed to such separate
trustee or co-trustee, but only to the extent necessary to enable such
separate trustee or co-trustee to exercise such powers, rights and remedies,
and every covenant and obligation necessary for the exercise thereby by such
separate trustee or co-trustee shall run to and be enforceable by either of
them. Should any instrument in writing from the Company be required by the
separate trustee or co-trustee so appointed by the Trustee for more fully
vesting in and confirming to them such properties, rights, powers, trusts,
duties and obligations, any and all such instruments in writing shall, on
request, be executed, acknowledged and delivered by the Company. If any
separate trustee or co-trustee, or a successor to either, shall become
incapable of acting or not qualified to act, resign or be removed, all the
estate, properties, rights, powers, trusts, duties and obligations of such
separate trustee or co-trustee, so far as permitted by law, shall vest in and
be exercised by the Trustee until the appointment of a successor to such
separate trustee or co-trustee. The appointment of any separate trustee or
co-trustee shall be subject to written approval of the Company so long as no
Event of Default has occurred and is continuing under this Indenture.
ARTICLE VII
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 7.1 COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF
HOLDERS. The Company will furnish or cause to be furnished to the Trustee
(a) semi-annually, not more than 15 days after each Regular Record
Date, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders as of such Regular Record Date, and
(b) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company of any such request, a list of
similar form and content as of a date not more than 15 days prior to the time
such list is furnished;
EXCLUDING from any such list names and addresses received by the Trustee in
its capacity as Security Registrar.
SECTION 7.2 PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 7.1 and the
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names and addresses of Holders received by the Trustee in its capacity as
Security Registrar. The Trustee may destroy any list furnished to it as
provided in Section 7.1 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Securities, and the
corresponding rights and duties of the Trustee, shall be as provided by the
Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the
Trustee nor any agent of either of them shall be held accountable by reason
of any disclosure of information as to names and addresses of Holders made
pursuant to the Trust Indenture Act.
SECTION 7.3 REPORTS BY TRUSTEE.
(a) The Trustee shall transmit to Holders such reports concerning the
Trustee and its actions under this Indenture as may be required pursuant to
the Trust Indenture Act at the times and in the manner provided pursuant
thereto.
(b) A copy of each such report shall, at the time of such transmission
to Holders, be filed by the Trustee with each stock exchange upon which the
Securities are listed, with the Commission, if applicable, and with the
Company. The Company will notify the Trustee when the Securities are listed
on any stock exchange.
SECTION 7.4 REPORTS BY COMPANY.
(a) The Company shall file with the Trustee and the Commission, if
applicable, and transmit to Holders, such information, documents and other
reports, and such summaries thereof, as may be required pursuant to the Trust
Indenture Act at the times and in the manner provided pursuant to such Act;
PROVIDED that any such information, documents or reports required to be filed
with the Commission pursuant to Section 13 or 15(d) of the Exchange Act shall
be filed with the Trustee within 15 days after the same is so required to be
filed with the Commission. Notwithstanding anything to the contrary
contained herein, the Trustee shall have no duty to review such documents for
the purpose of determining compliance with this Indenture.
(b) The Company shall provide the Trustee with at least 30 days' prior
notice of any change in location of its principal executive offices or other
principal place of business.
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 8.1 COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.
The Company shall not consolidate with or merge into any other Person or,
directly or indirectly, convey, transfer, sell, lease or otherwise dispose of
all or substantially all of its properties and assets to any Person, and the
Company shall not permit any Person to consolidate with or merge into the
Company or convey, transfer, sell, lease or otherwise dispose of all or
substantially all of its properties and assets to the Company, unless:
(1) in case the Company shall consolidate with or merge into
another Person or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, the Person formed by such
consolidation or into which the Company is merged or the Person which
acquires by conveyance or transfer, or which leases, the properties and
assets of the Company substantially as an entirety shall be a corporation,
partnership or trust, shall be organized and validly existing under the
laws of the United States of America, any State thereof or the District of
Columbia and shall expressly assume, by an indenture supplemental hereto,
executed and delivered to the Trustee, in form satisfactory to the
Trustee, the due and punctual payment of the principal of (and premium, if
any) and interest (including Additional
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Interest) on all the Securities and the performance or observance of every
covenant of this Indenture on the part of the Company to be performed or
observed and shall have provided for conversion rights in accordance with
Article XIII;
(2) immediately after giving effect to such transaction, no
Event of Default, and no event which, after notice or lapse of time or
both, would become an Event of Default, shall have happened and be
continuing; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and, if a
supplemental indenture is required in connection with such transaction,
such supplemental indenture comply with this Article and that all
conditions precedent herein provided for relating to such transaction have
been complied with.
SECTION 8.2 SUCCESSOR SUBSTITUTED. Upon any consolidation of the
Company with, or merger of the Company into, any other Person or any
conveyance, transfer or lease of the properties and assets of the Company
substantially as an entirety in accordance with Section 8.1, the successor
Person formed by such consolidation or into which the Company is merged or to
which such conveyance, transfer or lease is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture with the same effect as if such successor Person had been
named as the Company herein, and thereafter, except in the case of a lease,
the predecessor Person shall be released from its obligations and covenants
under this Indenture and the Securities.
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holders, the Company, when authorized by a Board
Resolution, and the Trustee, at any time and from time to time, may enter
into one or more indentures supplemental hereto, in form satisfactory to the
Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the Company
and the assumption by any such successor of the covenants of the Company
herein and in the Securities; or
(2) to add to the covenants of the Company for the equal and
ratable benefit of the Holders, or to surrender any right or power herein
conferred upon the Company; or
(3) to secure the Company's obligations in respect of the
Securities; or
(4) to make provision with respect to the conversion rights of
Holders pursuant to the requirements of Article XIII; or
(5) to make any changes or modifications to this Indenture
necessary in connection with the registration of any Transfer Restricted
Securities under the Securities Act as contemplated by Section 10.11,
PROVIDED that such action pursuant to this clause (5) shall not adversely
affect the interests of the Holders of Securities; or
(6) to cure any ambiguity, to correct or supplement any
provision herein which may be inconsistent with any other provision herein,
to correct or supplement any provision herein which limits, qualifies or
conflicts with a provision of the Trust Indenture Act which is required
under such Act to be a part of and govern this Indenture, in any case to
the extent necessary to qualify this Indenture under the Trust Indenture
Act, or to make any other provisions with respect to matters or questions
arising under
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this Indenture which shall not be inconsistent with the provisions of this
Indenture; PROVIDED that such action pursuant to this clause (6) shall not
adversely affect the interests or legal rights of the Holders in any
material respect.
SECTION 9.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS. With
the consent of the Holders of not less than a majority in principal amount of
the Outstanding Securities, by the Act of said Holders delivered to the
Company and the Trustee, the Company, when authorized by a Board Resolution,
and the Trustee may 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 modifying in any
manner the rights of the Holders under this Indenture; PROVIDED, HOWEVER,
that no such supplemental indenture shall, without the consent of the Holder
of each Outstanding Security affected thereby,
(1) change the Stated Maturity of the principal of, or any
installment of interest on, any Security, or reduce the principal amount
thereof or the rate of interest thereon or any premium payable upon the
redemption thereof, or change the place of payment where, or the coin or
currency in which, any Security or any premium or interest thereon is
payable, or impair the right to institute suit for the enforcement of any
such payment on or after the Stated Maturity thereof (or, in the case of
redemption or repurchase, on or after the Redemption Date or Repurchase
Date, as the case may be), or adversely affect the right to convert any
Security as provided in Article XIII (except as permitted by
Section 9.1(4)), or modify the provisions of this Indenture with respect
to the subordination of the Securities in a manner adverse to the Holders,
or modify the redemption provisions in a manner adverse to the Holders, or
modify the provisions relating to the Company's requirement to offer to
repurchase Notes upon a Change in Control in a manner adverse to the
Holders, or
(2) modify any of the provisions of this Section 9.2,
Section 5.13 or Section 10.8, except to increase any such percentage or to
provide that certain other provisions of this Indenture cannot be modified
or waived without the consent of the Holder of each Outstanding Security
affected thereby, or
(3) modify the obligation of the Company to maintain an office
or agency in the Borough of Manhattan, The City of New York or Los Angeles,
California pursuant to Section 10.2, or
(4) modify any of the provisions of Section 10.9 or
Section 10.10, or
(5) reduce the percentage in principal amount of the Outstanding
Securities, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for
any waiver (of compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences) provided for in this
Indenture.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
SECTION 9.3 EXECUTION OF SUPPLEMENTAL INDENTURES. In executing, or
accepting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modifications thereby of the trusts
created by this Indenture, the Trustee shall be entitled to receive, and
(subject to Section 6.1 and Section 6.3) shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such supplemental
indenture is authorized or permitted by this Indenture, complies with its
terms and will, upon the execution and delivery thereof, be valid and binding
upon the Company in accordance with its terms. The Trustee may, but shall
not be obligated to, enter into any such supplemental indenture which affects
the Trustee's own rights, duties or immunities under this Indenture or
otherwise.
SECTION 9.4 EFFECT OF SUPPLEMENTAL INDENTURES. Upon the execution of
any supplemental indenture under this Article, this Indenture shall be
modified in accordance therewith, and such supplemental indenture shall form
a part of this Indenture for all purposes; and every Holder of Securities
theretofore or thereafter authenticated and delivered hereunder shall be
bound thereby.
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SECTION 9.5 CONFORMITY WITH TRUST INDENTURE ACT. Every supplemental
indenture executed pursuant to this Article shall conform to the requirements
of the Trust Indenture Act.
SECTION 9.6 REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so
determine, new Securities so modified as to conform, in the judgment of the
Trustee and the Company, to any such supplemental indenture may be prepared
and executed by the Company and authenticated and delivered by the Trustee in
exchange for Outstanding Securities.
ARTICLE X
COVENANTS
SECTION 10.1 PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST. The Company
will duly and punctually pay the principal of (and premium, if any) and
interest on the Securities in accordance with the terms of the Securities and
this Indenture.
SECTION 10.2 MAINTENANCE OF OFFICE OR AGENCY. The Company will
maintain in the Borough of Manhattan, The City of New York or Los Angeles,
California an office or agency where Securities may be presented or
surrendered for payment, where Securities may be surrendered for registration
of transfer or exchange, where Securities may be surrendered for conversion
and where notices and demands to or upon the Company in respect of the
Securities and this Indenture may be served. The Company will give prompt
written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the Corporate Trust Office of the Trustee or
the Trustee's New York Affiliate Office, and the Company hereby appoints the
Trustee as its agent to receive all such presentations, surrenders, notices
and demands.
The Company may also from time to time designate one or more other
offices or agencies (in or outside the Borough of Manhattan, The City of New
York or Los Angeles, California) where the Securities may be presented or
surrendered for any or all such purposes and may from time to time rescind
such designations; PROVIDED, HOWEVER, that no such designation or rescission
shall in any manner relieve the Company of its obligation to maintain an
office or agency in the Borough of Manhattan, The City of New York or Los
Angeles, California for such purposes. The Company will give prompt written
notice to the Trustee of any such designation or rescission and of any change
in the location of any such other office or agency.
SECTION 10.3 MONEY FOR SECURITY PAYMENTS TO BE HELD IN TRUST. If the
Company shall at any time act as its own Paying Agent, it will, on or before
each due date of the principal of (and premium, if any) or interest (together
with any Additional Interest in respect thereof) on any of the Securities,
segregate and hold in trust for the benefit of the Persons entitled thereto a
sum sufficient to pay the principal (and premium, if any) or interest
(together with any Additional Interest in respect thereof) so becoming due
until such sums shall be paid to such Persons or otherwise disposed of as
herein provided and will promptly notify the Trustee of its action or failure
so to act.
Whenever the Company shall have one or more Paying Agents, it will,
prior to each due date of the principal of (and premium, if any) or interest
(together with any Additional Interest in respect thereof) on any Securities,
deposit with a Paying Agent a sum sufficient to pay such amount, such sum to
be held in trust for the benefit of the Persons entitled to such principal,
premium, if any, or interest, and (unless such Paying Agent is the Trustee)
the Company will promptly notify the Trustee of its action or failure so to
act.
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The Company will cause each Paying Agent other than the Trustee to execute
and deliver to the Trustee an instrument in which such Paying Agent shall agree
with the Trustee, subject to the provisions of this Section 10.3, that such
Paying Agent will
(1) hold all sums held by it for the payment of the principal of,
premium, if any, or interest on Securities in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or any
other obligor upon the Securities) in the making of any payment of
principal, premium, if any, or interest; and
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company or such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of (and premium, if any)
or interest (together with any Additional Interest in respect thereof) on any
Security and remaining unclaimed for two years after such principal (and
premium, if any) or interest has become due and payable shall be paid to the
Company on Company Request, or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Security shall thereafter,
as an unsecured general creditor, look only to the Company for payment thereof,
and all liability of the Trustee or such Paying Agent with respect to such
trust money, and all liability of the Company as trustee thereof, shall
thereupon cease; PROVIDED, HOWEVER, that the Trustee or such Paying Agent,
before being required to make any such repayment, may at the expense of the
Company cause to be published once, in a newspaper published in the English
language, customarily published on each Business Day and of general circulation
in the Borough of Manhattan, The City of New York, notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such publication, any unclaimed balance of
such money then remaining will be repaid to the Company.
SECTION 10.4 STATEMENT BY OFFICERS AS TO DEFAULT. The Company will
deliver to the Trustee, within 120 days after the end of each fiscal year of
the Company ending after the date hereof, an Officers' Certificate, stating
whether or not to the best knowledge of the signers thereof the Company is in
default in the performance and observance of any of the terms, provisions and
conditions of this Indenture (without regard to any period of grace or
requirement of notice provided hereunder) and, if the Company shall be in
default, specifying all such defaults and the nature and status thereof of
which they may have knowledge.
SECTION 10.5 EXISTENCE. Subject to Article VIII, the Company will do or
cause to be done all things necessary to preserve and keep in full force and
effect its existence, rights (charter and statutory) and franchises; PROVIDED,
HOWEVER, that the Company shall not be required to preserve any such right or
franchise if the Board of Directors shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company
and that the loss thereof is not disadvantageous in any material respect to the
Holders.
SECTION 10.6 MAINTENANCE OF PROPERTIES. The Company will cause all
properties used or useful in the conduct of its business or the business of any
Subsidiary to be maintained and kept in good condition, repair and working
order and supplied with all necessary equipment and will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgment of the Company may be necessary so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times; PROVIDED, HOWEVER, that nothing in this Section shall
prevent the Company from discontinuing the operation or
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maintenance of any of such properties, or disposing of any of them, if such
discontinuance or disposition is, in the judgment of the Company, desirable
in the conduct of its business or the business of any Subsidiary and not
disadvantageous in any material respect to the Holders.
SECTION 10.7 PAYMENT OF TAXES AND OTHER CLAIMS. The Company will pay or
discharge or cause to be paid or discharged, before the same shall become
delinquent, (1) all taxes, assessments and governmental charges levied or
imposed upon the Company or any Subsidiary or upon the income, profits or
property of the Company or any Subsidiary, and (2) all lawful claims for labor,
materials and supplies which, if unpaid, might by law become a lien upon the
property of the Company or any Subsidiary; PROVIDED, HOWEVER, that the Company
shall not be required to pay or discharge or cause to be paid or discharged any
such tax, assessment, charge or claim whose amount, applicability or validity
is being contested in good faith by appropriate proceedings.
SECTION 10.8 WAIVER OF CERTAIN COVENANTS. The Company may omit in any
particular instance to comply with any covenant or condition set forth in
Sections 10.5 to 10.7, inclusive, if before the time for such compliance the
Holders of at least a majority in principal amount of the Outstanding
Securities shall, by Act of such Holders, either waive such compliance in such
instance or generally waive compliance with such covenant or condition, but no
such waiver shall extend to or affect such covenant or condition except to the
extent so expressly waived, and, until such waiver shall become effective, the
obligations of the Company and the duties of the Trustee in respect of any such
covenant or condition shall remain in full force and effect.
SECTION 10.9 DELIVERY OF CERTAIN INFORMATION. At any time when the
Company is not subject to Section 13 or 15(d) of the Exchange Act, upon the
request of a Holder or the holder of shares of Common Stock issued upon
conversion thereof, the Company will promptly furnish or cause to be furnished
Rule 144A Information (as defined below) to such Holder or such holder of
shares of Common Stock issued upon conversion of Securities, or to a
prospective purchaser of any such security designated by any such Holder or
holder, as the case may be, to the extent required to permit compliance by such
Holder or holder with Rule 144A under the Securities Act in connection with the
resale of any such security. "Rule 144A Information" shall be such information
as is specified pursuant to Rule 144A(d)(4) under the Securities Act.
SECTION 10.10 RESALE OF CERTAIN SECURITIES; REPORTING ISSUER. During the
period beginning on the last date of original issuance of the Securities and
ending on the date that is two years from such date, the Company will not, and
will use its best efforts not to permit any of its "affiliates" (as defined
under Rule 144 under the Securities Act or any successor provision thereto) to,
resell (x) any Securities which constitute "restricted securities" under Rule
144 or (y) any securities into which the Securities have been converted under
this Indenture which constitute "restricted securities" under Rule 144, that in
either case have been reacquired by any of them. The Trustee shall have no
responsibility in respect of the Company's performance of its agreement in the
preceding sentence.
SECTION 10.11 REGISTRATION RIGHTS.
(a) The Company agrees that the Holders (and any Person that has a
beneficial interest in a Security) from time to time of Transfer Restricted
Securities are entitled to the benefits of a Registration Rights Agreement,
dated as of December 16, 1997 (the "Registration Rights Agreement"), executed
by the Company. Pursuant to the Registration Rights Agreement, the Company has
agreed for the benefit of the Holders from time to time of Transfer Restricted
Securities, at the Company's expense, (i) to file within 60 days after the
first date of original issuance of the Securities, a shelf registration
statement on Form S-3 (the "Shelf Registration Statement") with the Commission
with respect to resales of the Transfer Restricted Securities, (ii) to use its
best efforts to cause such Shelf Registration Statement to be declared
effective by the Commission as soon as practicable and no later than 120 days
after the first sale of initial issuance of the Securities, and (iii) to use
its best efforts to maintain such Shelf Registration Statement continuously
effective under the Securities Act for a period of two years from the last date
of original issuance of the Securities or, if earlier, (A) until there are no
outstanding Transfer Restricted Securities or (B) until all outstanding
Transfer Restricted Securities held by persons that are not affiliates of the
Company may be resold without registration under the Securities Act pursuant to
Rule 144(k) under the Securities Act or any successor provision thereof.
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Additional interest (the "Additional Interest") with respect to the
Securities shall be assessed as follows if any of the following events occur
(each such event in clauses (i) through (iii) below being herein called a
"Registration Default"):
(i) if on or prior to the 60th day after the first date of original
issuance of the Securities the Shelf Registration Statement has not been
filed with the Commission;
(ii) if on or prior to the 120th day after the first date of original
issuance of the Securities the Shelf Registration Statement has not been
declared effective by the Commission; or
(iii) if after the Shelf Registration Statement is declared
effective and during the period for which the Company is required to
maintain an effective Resale Shelf Registration Statement (A) the Shelf
Registration Statement thereafter ceases to be effective; or (B) the Shelf
Registration Statement or the related prospectus ceases to be usable (in
each case except as permitted in paragraph (b) below) in connection with
resales of Transfer Restricted Securities because either (1) any event
occurs as a result of which the related prospectus forming part of such
Shelf Registration Statement would include any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein in the light of the circumstances under which they were
made not misleading, or (2) it shall be necessary to amend such Shelf
Registration Statement or supplement the related prospectus, to comply
with the Securities Act or the Exchange Act or the respective rules
thereunder.
Additional Interest shall accrue on the Securities over and above the
interest set forth in the title of the Securities from and including the date
on which any such Registration Default shall occur, to but excluding the date
on which all such Registration Defaults have been cured, at a rate of 0.50% per
annum.
(b) A Registration Default shall be deemed not to have occurred and be
continuing in relation to the Shelf Registration Statement or the related
prospectus if (i) such Registration Default has occurred solely as a result of
(x) the filing of a post-effective amendment to the Shelf Registration
Statement to incorporate annual audited financial information with respect to
the Company where such post-effective amendment is not yet effective and needs
to be declared effective to permit Holders to use the related prospectus or (y)
other material events with respect to the Company that would need to be
described in the Shelf Registration Statement or the related prospectus and
(ii) in the case of clause (y), the Company proceeds promptly and in good faith
to amend or supplement the Shelf Registration Statement and related prospectus
to describe such events; PROVIDED, HOWEVER, that in any case if such
Registration Default occurs for a continuous period in excess of 30 days,
Additional Interest shall be payable in accordance with the above paragraph
from the day such Registration Default occurs until such Registration Default
is cured.
(c) Any amounts of Additional Interest due pursuant to clause (a)(i),
(a)(ii) or (a)(iii) of this Section 10.11 will be payable in cash on the
regular Interest Payment Dates. The amount of Additional Interest will be
determined by multiplying the applicable Additional Interest rate by the
principal amount of the Securities, multiplied by a fraction, the numerator of
which is the number of days such Additional Interest rate was applicable during
such period (determined on the basis of a 360-day year comprised of twelve
30-day months), and the denominator of which is 360.
Whenever in this Indenture there is mentioned, in any context, the payment
of the principal of, premium, if any, or interest on, or in respect of, any
Security, such mention shall be deemed to include mention of the payment of
Additional Interest provided for in this Section to the extent that, in such
context, Additional Interest is, was or would be payable in respect thereof
pursuant to the provisions of this Section and express mention of the payment
of Additional Interest (if applicable) in any provisions hereof shall not be
construed as excluding Additional Interest in those provisions hereof where
such express mention is not made.
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ARTICLE XI
REDEMPTION OF SECURITIES
SECTION 11.1 RIGHT OF REDEMPTION. The Securities may be redeemed at the
election of the Company, as a whole or from time to time in part, at any time
on or after January 10, 2001, at the Redemption Prices specified in the form of
Security hereinbefore set forth, together with accrued interest to (but not
including) the Redemption Date.
SECTION 11.2 APPLICABILITY OF ARTICLE. Redemption of Securities at the
election of the Company or otherwise, as permitted or required by any provision
of this Indenture, shall be made in accordance with such provision and this
Article XI.
SECTION 11.3 ELECTION TO REDEEM; NOTICE TO TRUSTEE. The election of the
Company to redeem any Securities pursuant to Section 11.1 shall be evidenced by
a Board Resolution. In case of any redemption at the election of the Company,
the Company shall, at least 60 days prior to the Redemption Date fixed by the
Company (unless a shorter notice shall be satisfactory to the Trustee), notify
the Trustee of such Redemption Date and of the principal amount of Securities
to be redeemed.
SECTION 11.4 SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED. If less
than all the Securities are to be redeemed, the particular Securities to be
redeemed shall be selected not less than 20 days or more than 60 days prior to
the Redemption Date by the Trustee, from the Outstanding Securities not
previously called for redemption, by such method as the Trustee shall deem fair
and appropriate in the circumstances and which may provide for the selection
for redemption of portions (equal to U.S.$1,000 or any integral multiple
thereof) of the principal amount of Securities of a denomination larger than
U.S.$1,000.
If any Security selected for partial redemption is converted in part
before termination of the conversion right with respect to the portion of the
Security so selected, the converted portion of such Security shall be deemed
(so far as may be) to be the portion selected for redemption. Securities which
have been converted during a selection of Securities to be redeemed shall be
treated by the Trustee as Outstanding for the purpose of such selection.
The Trustee shall promptly notify the Company and each Security Registrar
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 Securities redeemed or to be redeemed only in part, to the portion
of the principal amount of such Securities which has been or is to be redeemed.
SECTION 11.5 NOTICE OF REDEMPTION. Notice of redemption shall be given
by first-class mail, postage prepaid, mailed not less than 20 nor more than
60 days prior to the Redemption Date, to each Holder of Securities to be
redeemed, at his address appearing in the Security Register.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all the Outstanding Securities are to be redeemed,
the identification (and, in the case of partial redemption of any
Securities, the principal amounts) of the particular Securities to be
redeemed,
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(4) that on the Redemption Date the Redemption Price will become due
and payable upon each such Security to be redeemed and that interest
thereon will cease to accrue on and after said date,
(5) the conversion price, the date on which the right to convert the
Securities to be redeemed will terminate and the place or places where
such Securities may be surrendered for conversion, and
(6) the place or places where such Securities are to be surrendered
for payment of the Redemption Price.
Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company, and shall be
irrevocable.
SECTION 11.6 DEPOSIT OF REDEMPTION PRICE. On or prior to any Redemption
Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if
the Company is acting as its own Paying Agent, segregate and hold in trust as
provided in Section 10.3) an amount of money sufficient to pay the Redemption
Price of, and (except if the Redemption Date shall be an Interest Payment Date)
accrued interest on, all the Securities which are to be redeemed on that date
other than any Securities called for redemption on that date which have been
converted prior to the date of such deposit.
If any Security called for redemption is converted, any money deposited
with the Trustee or with any Paying Agent or so segregated and held in trust
for the redemption of such Security shall (subject to any right of the Holder
of such Security or any Predecessor Security to receive interest as provided in
the last paragraph of Section 3.7) be paid to the Company upon Company Request
or, if then held by the Company, shall be released from such trust.
SECTION 11.7 SECURITIES PAYABLE ON REDEMPTION DATE. Notice of redemption
having been given as aforesaid, the Securities so to be redeemed shall, on the
Redemption Date, become due and payable at the Redemption Price therein
specified, and from and after such date (unless the Company shall default in
the payment of the Redemption Price and accrued interest) such Securities shall
cease to bear or accrue any interest. Upon surrender of any such Security for
redemption in accordance with said notice, such Security shall be paid by the
Company at the Redemption Price, together with accrued interest to (but not
including) the Redemption Date; PROVIDED, HOWEVER, that installments of
interest whose Stated Maturity is on or prior to the Redemption Date shall be
payable to the Holders of such Securities, or one or more Predecessor
Securities, registered as such at the close of business on the relevant Record
Dates according to their terms and the provisions of Section 3.7.
If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal (and premium, if any) shall, until paid,
bear and accrue interest from the Redemption Date at the rate borne by the
Security.
SECTION 11.8 SECURITIES REDEEMED IN PART. Any Security which is to be
redeemed only in part shall be surrendered at an office or agency of the
Company designated for that purpose pursuant to Section 10.2 (with, if the
Company or the Trustee so requires, due endorsement by, or a written instrument
of transfer in form satisfactory to the Company and the Trustee duly executed
by, the Holder thereof or his attorney-in-fact duly authorized in writing), and
the Company shall execute, and the Trustee shall authenticate and deliver to
the Holder of such Security without service charge, a new Security or
Securities, of any authorized denomination as requested by such Holder, in
aggregate principal amount equal to and in exchange for the unredeemed portion
of the principal amount of the Security so surrendered.
SECTION 11.9 CONVERSION ARRANGEMENT ON CALL FOR REDEMPTION. In
connection with any redemption of Securities, the Company may arrange for the
purchase and conversion of any Securities by an agreement with one or more
investment bankers or other purchasers to purchase such Securities by paying to
the Trustee in trust for the Holders, on or before the Redemption Date, an
amount not less than the applicable Redemption Price, together with interest
accrued to the Redemption Date, of such Securities. Notwithstanding anything
to the contrary
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contained in this Article XI, the obligation of the Company to pay the
Redemption Price of such Securities, together with interest accrued to, but
excluding, the date fixed for redemption, shall be deemed to be satisfied and
discharged to the extent such amount is so paid by such purchasers. If such
an agreement is entered into, a copy of which will be filed with the Trustee
prior to the Redemption Date, any Securities not duly surrendered for
conversion by the Holders thereof may, at the option of the Company, be
deemed, to the fullest extent permitted by law, acquired by such purchasers
from such Holders and (notwithstanding anything to the contrary contained in
Article XIII) surrendered by such purchasers for conversion, all as of
immediately prior to the close of business on the Redemption Date (and the
right to convert any such Securities shall be deemed to have been extended
through such time), subject to payment of the above amount as aforesaid. At
the direction of the Company, the Trustee shall hold and dispose of any such
amount paid to it in the same manner as it would monies deposited with it by
the Company for the redemption of Securities. Without the Trustee's prior
written consent, no arrangement between the Company and such purchasers for
the purchase and conversion of any Securities shall increase or otherwise
affect any of the powers, duties, responsibilities or obligations of the
Trustee as set forth in this Indenture, and the Company agrees to indemnify
the Trustee from, and hold it harmless against, any loss, liability or
expense arising out of or in connection with any such arrangement for the
purchase and conversion of any Securities between the Company and such
purchasers to which the Trustee has not consented in writing, including the
costs and expenses incurred by the Trustee in the defense of any claim or
liability arising out of or in connection with the exercise or performance of
any of its powers, duties, responsibilities or obligations under this
Indenture. Nothing in the preceding sentence shall be deemed to limit the
rights and protections afforded to the Trustee in Article VI hereof,
including, but not limited to, the right to indemnification pursuant to
Section 6.7.
ARTICLE XII
SUBORDINATION OF SECURITIES
SECTION 12.1 SECURITIES SUBORDINATE TO SENIOR INDEBTEDNESS. The Company
covenants and agrees, and each Holder of a Security, by his acceptance thereof,
likewise covenants and agrees, that, to the extent and in the manner herein
after set forth in this Article XII, the indebtedness represented by the
Securities and the payment of the principal of (and premium, if any) and
interest on each and all of the Securities and all obligations of the Company
under this Indenture are hereby expressly made subordinate and subject in right
of payment to the prior payment in full of all Senior Indebtedness.
SECTION 12.2 PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC. In the
event of (a) any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or other similar case or proceeding
in connection therewith, relative to the Company or to its creditors, as such,
or to its assets, or (b) any liquidation, dissolution or other winding up of
the Company, whether voluntary or involuntary and whether or not involving
insolvency or bankruptcy, or (c) any assignment for the benefit of creditors or
any other marshalling of assets and liabilities of the Company, then and in any
such event the holders of Senior Indebtedness shall be entitled to receive
payment in full of all amounts due or to become due on or in respect of all
Senior Indebtedness, or provision shall be made for such payment in cash or
cash equivalents or otherwise in a manner satisfactory to the holders of Senior
Indebtedness, before the Holders of the Securities are entitled to receive any
payment on account of principal of (or premium, if any) or interest on the
Securities, and to that end the holders of Senior Indebtedness shall be
entitled to receive, for application to the payment thereof, any payment or
distribution of any kind or character, whether in cash, property or securities,
which may be payable or deliverable in respect of the Securities in any such
case, proceeding, dissolution, liquidation or other winding up or event.
In the event that, notwithstanding the foregoing provisions of this
Section, the Trustee or the Holder of any Security shall have received any
payment or distribution of assets of the Company prohibited by the foregoing
paragraph of any kind or character, whether in cash, property or securities,
before all Senior Indebtedness is paid in full or payment thereof provided for,
and if such fact shall, at or prior to the time of such payment or
distribution, have been made actually known to a Responsible Officer of the
Trustee or, as the case may be, such Holder, then and in such event such
payment or distribution shall be paid over or delivered forthwith to the
trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee,
agent or other Person making payment or
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distribution of assets of the Company for application to the payment of all
Senior Indebtedness remaining unpaid, to the extent necessary to pay all
Senior Indebtedness in full, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Indebtedness.
For purposes of this Article XII only, the words "cash, property or
securities" shall not be deemed to include shares of capital stock of the
Company as reorganized or readjusted, or securities of the Company or any other
corporation provided for by a plan of reorganization or readjustment which in
either case are subordinated in right of payment to all Senior Indebtedness
which may at the time be outstanding to substantially the same extent as, or to
a greater extent than, the Securities are so subordinated as provided in this
Article XII. The consolidation of the Company with, or the merger of the
Company into, another Person or the liquidation or dissolution of the Company
following the conveyance or transfer of its properties and assets substantially
as an entirety to another Person upon the terms and conditions set forth in
Article VIII shall not be deemed a dissolution, winding up, liquidation,
reorganization, assignment for the benefit of creditors or marshalling of
assets and liabilities of the Company for the purposes of this Section 12.2 if
the Person formed by such consolidation or into which the Company is merged or
which acquires by conveyance or transfer such properties and assets sub
stantially as an entirety, as the case may be, shall, as a part of such
consolidation, merger, conveyance or transfer, comply with the conditions set
forth in Article VIII.
SECTION 12.3 NO PAYMENT WHEN SENIOR INDEBTEDNESS IN DEFAULT.
(a) In the event and during the continuation of any default in the
payment of principal of (or premium, if any) or interest on any Senior
Indebtedness beyond any applicable grace period with respect thereto (unless
and until such payment default shall have been cured or waived in writing by
the holders of such Senior Indebtedness), or (b) in the event any judicial
proceeding shall be pending with respect to any such default, then no payment
shall be made by the Company on account of principal of (or premium, if any) or
interest on the Securities or on account of the purchase or other acquisition
of Securities (including pursuant to Articles XI and XIII).
In the event that, notwithstanding the foregoing, the Company shall make
any payment to the Trustee or the Holder of any Security prohibited by the
foregoing provisions of this Section 12.3, and if such fact shall, at or prior
to the time of such payment, have been made actually known to a Responsible
Officer of the Trustee or, as the case may be, such Holder, then and in such
event such payment shall be paid over and delivered forthwith to the Company.
The provisions of this Section 12.3 shall not apply to any payment with
respect to which Section 12.2 would be applicable.
SECTION 12.4 PAYMENT PERMITTED IF NO DEFAULT. Nothing contained in this
Article XII or elsewhere in this Indenture or in any of the Securities shall
prevent (a) the Company, at any time except during the pendency of any case,
proceeding, dissolution, liquidation or other winding up, assignment for the
benefit of creditors or other marshalling of assets and liabilities of the
Company referred to in Section 12.2 or under the conditions described in
Section 12.3, from making payments at any time of principal of (and premium, if
any) or interest on the Securities, or (b) the application by the Trustee of
any money deposited with it hereunder to the payment of or on account of the
principal of (and premium, if any) or interest on the Securities or the
retention of such payment by the Holders, if, at the time of such application
by the Trustee, a Responsible Officer of the Trustee did not have actual
knowledge that such payment would have been prohibited by the provisions of
this Article XII.
SECTION 12.5 SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS.
Subject to the payment in full of all Senior Indebtedness, and until the
Securities are paid in full, the Holders of the Securities shall be
subrogated (equally and ratably with the holders of all indebtedness of the
Company which by its express terms is subordinated to indebtedness of the
Company to substantially the same extent as the Securities are subordinated
and is entitled to like rights of subrogation) to the rights of the holders
of such Senior Indebtedness to receive payments and distributions of cash,
property and securities applicable to the Senior Indebtedness to the extent
that payments and distributions otherwise payable to Holders of Securities
have been applied to the payment of Senior Indebtedness
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as provided by this Article XII. For 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 would be entitled, except for the provisions of this Article XII, and
no payments over pursuant to the provisions of this Article XII to the
holders of Senior Indebtedness by Holders of the Securities or the Trustee,
shall, as among the Company, its creditors other than holders of Senior
Indebtedness and the Holders of the Securities, be deemed to be a payment or
distribution by the Company to or on account of the Senior Indebtedness.
SECTION 12.6 PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS. The
provisions of this Article XII 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 Senior Indebtedness on the other hand. Nothing contained in
this Article XII or elsewhere in this Indenture or in the Securities is
intended to or shall (a) impair, as among the Company, its creditors other than
holders of Senior Indebtedness and the Holders of the Securities, the
obligation of the Company, which is absolute and unconditional (and which,
subject to the rights under this Article XII of the holders of Senior
Indebtedness, is intended to rank equally with all other general obligations of
the Company), to pay to the Holders of the Securities the principal of (and
premium, if any) and interest on the Securities as and when the same shall
become due and payable in accordance with their terms; or (b) affect the
relative rights against the Company of the Holders of the Securities and
creditors of the Company other than the holders of Senior Indebtedness; or
(c) prevent the Trustee or the Holder of any Security from exercising all
remedies otherwise permitted by applicable law upon default under this
Indenture, subject to the rights, if any, under this Article XII of the holders
of Senior Indebtedness to receive cash, property and securities otherwise
payable or deliverable to the Trustee or such Holder.
SECTION 12.7 TRUSTEE TO EFFECTUATE SUBORDINATION. Each holder of a
Security by his acceptance thereof authorizes and directs the Trustee on his
behalf to take such action as may be necessary or appropriate to effectuate the
subordination provided in this Article XII and appoints the Trustee his
attorney-in-fact for any and all such purposes.
SECTION 12.8 NO WAIVER OF SUBORDINATION PROVISIONS. 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 Company or by any act or failure to
act, in good faith, by any such holder, or by any non-compliance by the Company
with the terms, provisions and covenants of this Indenture, regardless of any
knowledge thereof any such holder may have or be otherwise charged with.
Without in any way limiting the generality of the foregoing paragraph, the
holders of Senior Indebtedness may, at any time and from time to time, without
the consent of or notice to the Trustee or the Holders of the Securities,
without incurring responsibility to the Holders of the Securities and without
impairing or releasing the subordination provided in this Article XII or the
obligations hereunder of the Holders of the Securities to the holders of Senior
Indebtedness, do any one or more of the following: (i) change the manner,
place or terms of payment or extend the time of payment of, or renew or alter,
Senior Indebtedness, or otherwise amend or supplement in any manner Senior
Indebtedness or any instrument evidencing the same or any agreement under which
Senior Indebtedness is outstanding; (ii) sell, exchange, release or otherwise
deal with any property pledged, mortgaged or otherwise securing Senior
Indebtedness; (iii) release any Person liable in any manner for the collection
of Senior Indebtedness; (iv) exercise or refrain from exercising any rights
against the Company and any other Person; (v) apply any and all sums received
from time to time to the Senior Indebtedness.
SECTION 12.9 NOTICE TO TRUSTEE. The Company shall give prompt written
notice to the Trustee of any fact known to the Company which would prohibit the
making of any payment to or by the Trustee in respect of the Securities.
Notwithstanding the provisions of this Article XII or any other provision of
this Indenture, the Trustee shall not be charged with knowledge of the
existence of any facts which would prohibit the making of any payment to or by
the Trustee in respect of the Securities, unless and until the Trustee shall
have received written notice thereof from the Company or a holder of Senior
Indebtedness or from any trustee therefor; and, prior to the receipt of any
such written notice, the Trustee, subject to the provisions of Section 6.1,
shall be entitled in all respects to assume that no such facts exist; PROVIDED,
HOWEVER, that if the Trustee shall not have received the notice provided for in
this Section 12.9 at least two Business Days prior to the date upon which by
the terms hereof any money may become payable for any purpose (including,
without limitation, the payment of the principal of (and
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premium, if any) or interest on any Security), then, anything herein
contained to the contrary notwithstanding, the Trustee shall have full power
and authority to receive such money and to apply the same to the purpose for
which such money was received and shall not be affected by any notice to the
contrary which may be received by it within two Business Days prior to such
date.
Subject to the provisions of Section 6.1, 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 therefor) to establish that
such notice has been given by a holder of Senior Indebtedness (or a trustee
therefor). 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 XII, 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 XII, and if such evidence is not
furnished, the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment.
SECTION 12.10 RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING
AGENT. Upon any payment or distribution of assets of the Company referred to
in this Article XII, the Trustee, subject to the provisions of Section 6.1, and
the Holders of the Securities shall be entitled to rely upon any order or
decree entered by any court of competent jurisdiction in which such insolvency,
bankruptcy, receivership, liquidation, reorganization, dissolution, winding up
or similar case or proceeding is pending, or a certificate of the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit
of creditors, agent or other Person making such payment or distribution,
delivered to the Trustee or to the Holders of Securities, for the purpose of
ascertaining the Persons entitled to participate in such payment or distribu
tion, the holders of the Senior Indebtedness and other indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this
Article XII.
SECTION 12.11 TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR INDEBTEDNESS.
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 it shall in
good faith mistakenly pay over or distribute to Holders of Securities or to the
Company or to any other Person cash, property or securities to which any
holders of Senior Indebtedness shall be entitled by virtue of this Article XII
or otherwise.
SECTION 12.12 RIGHTS OF TRUSTEE AS HOLDER OF SENIOR INDEBTEDNESS;
PRESERVATION OF TRUSTEE'S RIGHTS. The Trustee in its individual capacity shall
be entitled to all the rights set forth in this Article XII with respect to any
Senior Indebtedness which may at any time be held by it, to the same extent as
any other holder of Senior Indebtedness, and nothing in this Indenture shall
deprive the Trustee of any of its rights as such holder.
Nothing in this Article XII shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 6.7.
SECTION 12.13 ARTICLE APPLICABLE TO PAYING AGENTS. In case at any time
any Paying Agent other than the Trustee shall have been appointed by the
Company and be then acting hereunder, the term "Trustee" as used in this
Article XII shall in such case (unless the context otherwise requires) be
construed as extending to and including such Paying Agent within its meaning as
fully for all intents and purposes as if such Paying Agent were named in this
Article XII in addition to or in place of the Trustee; PROVIDED, HOWEVER, that
Section 12.12 shall not apply to the Company or any Affiliate of the Company if
it or such Affiliate acts as Paying Agent.
SECTION 12.14 CERTAIN CONVERSIONS DEEMED PAYMENT. For the purposes of
this Article XII only, (1) the issuance and delivery of junior securities upon
conversion of Securities in accordance with Article XIII shall not be deemed to
constitute a payment or distribution on account of the principal of or premium
or interest on Securities or on account of the purchase or other acquisition of
Securities, and (2) the payment, issuance or delivery of cash, property or
securities (other than junior securities) upon conversion of a Security shall
be deemed to constitute payment on account of the principal of such Security.
For the purposes of this Section 12.14, the term
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"junior securities" means (a) shares of any stock of any class of the Company
and (b) securities of the Company which are subordinated in right of payment
to the prior payment in full of all Senior Indebtedness which may be
outstanding at the time of issuance or delivery of such securities to
substantially the same extent as, or to a greater extent than, the Securities
are so subordinated as provided in this Article XII. Nothing contained in
this Article XII or elsewhere in this Indenture or in the Securities is
intended to or shall impair, as among the Company, its creditors other than
holders of Senior Indebtedness and the Holders of the Securities, the right,
which is absolute and unconditional, of the Holder of any Security to convert
such Security in accordance with Article XIII.
ARTICLE XIII
CONVERSION OF SECURITIES
SECTION 13.1 CONVERSION PRIVILEGE AND CONVERSION PRICE. Subject to and
upon compliance with the provisions of this Article XIII, at the option of the
Holder thereof, any Security or any portion of the principal amount thereof
which is U.S.$1,000 or an integral multiple of U.S.$1,000 may be converted at
the principal amount thereof, or of such portion thereof, into fully paid and
nonassessable shares of Common Stock of the Company at any time following the
latest date of original issuance of Securities at the conversion price,
determined as hereinafter provided, in effect at the time of conversion. Such
conversion right shall expire at the close of business on the Business Day
immediately preceding January 1, 2005, subject, in the case of conversion of
any Global Security, to any Applicable Procedures. In case a Security or
portion thereof is called for redemption at the election of the Company or the
Holder thereof exercises his right to require the Company to repurchase the
Security, such conversion right in respect of the Security or portion so called
shall expire at the close of business, New York time, on the Business Day
immediately preceding the corresponding Redemption Date or Repurchase Date, as
the case may be, unless the Company defaults in making the payment due upon
redemption or repurchase, as the case may be (in each case subject as aforesaid
to any Applicable Procedures with respect to any Global Security).
The price at which shares of Common Stock shall be delivered upon
conversion (herein called the "conversion price") shall be initially
U.S.$18.8750 per share of Common Stock. The conversion price shall be adjusted
in certain instances as provided in Section 13.4.
In case the Company shall, by dividend or otherwise, declare or make a
distribution on its Common Stock referred to in paragraph (4) or (5) of
Section 13.4 (including, without limitation, dividends or distributions
referred to in the last sentence of paragraph (4) of Section 13.4), the Holder
of each Security, upon the conversion thereof pursuant to this Article XIII
subsequent to the close of business on the date fixed for the determination of
shareholders entitled to receive such distribution and prior to the
effectiveness of the conversion price adjustment in respect of such
distribution pursuant to paragraph (4) or (5) of Section 13.4, shall also be
entitled to receive for each share of Common Stock into which such Security is
converted, the portion of the evidences of indebtedness, shares of capital
stock, securities, cash and other property so distributed applicable to one
share of Common Stock, PROVIDED, HOWEVER, that, at the election of the Company
(whose election shall be evidenced by a Board Resolution) with respect to all
Holders so converting, the Company may, in lieu of distributing to such Holder
any portion of such distribution not consisting of cash or securities of the
Company, pay such Holder an amount in cash equal to the fair market value
thereof (as determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a Board Resolution). If any
conversion of a Security described in the immediately preceding sentence occurs
prior to the payment date for a distribution to holders of Common Stock which
the Holder of the Security so converted is entitled to receive in accordance
with the immediately preceding sentence, the Company may elect (such election
to be evidenced by a Board Resolution) to distribute to such Holder a due bill
for the evidences of indebtedness, shares of capital stock, securities, cash or
assets to which such Holder is so entitled, PROVIDED that such due bill
(i) meets any applicable requirements of the principal national securities
exchange or other market on which the Common Stock is then traded and
(ii) requires payment or delivery of such evidences of indebtedness, shares of
capital stock, securities, cash or assets no later than the date of payment or
delivery thereof to holders of Common Stock receiving such distribution.
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SECTION 13.2 EXERCISE OF CONVERSION PRIVILEGE. In order to exercise
the conversion privilege, the Holder of any Security to be converted shall
surrender such Security, duly endorsed or assigned to the Company or in blank,
at any office or agency maintained by the Company pursuant to Section 10.2,
accompanied by (a) written notice (as set forth in Section 2.5 herein) to the
Company at such office or agency that the Holder elects to convert such
Security or, if less than the entire principal amount thereof is to be
converted, the portion thereof to be converted and (b) if shares or any portion
of such Security not to be converted are to be issued in the name of a Person
other than the Holder thereof, and the restrictions on transfer of such
Security set forth in the first paragraph of Section 2.2 remain in effect, a
certification of the Holder as to compliance with such restrictions (as set
forth in Section 2.6).
If the restrictions on transfer of a Security set forth in the first
paragraph of Section 2.2 remain in effect, all shares of Common Stock delivered
upon conversion thereof shall bear a restrictive legend substantially in the
form of such paragraph.
Except as described in the last paragraph of Section 3.7, no Holder of
Securities will be entitled upon conversion thereof to any payment or
adjustment on account of accrued and unpaid interest thereon (although such
accrued and unpaid interest will be deemed paid by the appropriate portion of
the Common Stock received by the holders upon such conversion) or on account of
dividends on the shares of Common Stock issued in connection therewith.
Securities surrendered for conversion during the period from the close of
business on any Regular Record Date to the opening of business on the
corresponding Interest Payment Date (except Securities called for redemption on
a Redemption Date within such period between and including such Regular Record
Date and such Interest Payment Date) must be accompanied by payment to the
Company in New York Clearing House Funds or other funds acceptable to the
Company of an amount equal to the interest payable on such Interest Payment
Date on the principal amount converted.
Securities shall be deemed to have been converted immediately prior to the
close of business on the day of surrender of such Securities for conversion in
accordance with the foregoing provisions, and at such time the rights of the
Holders of such Securities as Holders shall cease, and the Person or Persons
entitled to receive the Common Stock issuable upon conversion shall be treated
for all purposes as the record holder or holders of such Common Stock at such
time. As promptly as practicable on or after the conversion date, the Company
shall issue and shall deliver at such office or agency a certificate or
certificates for the number of full shares of Common Stock issuable upon
conversion, together with payment in lieu of any fraction of a share as
provided in Section 13.3.
In the case of any Security which is converted in part only, upon such
conversion the Company shall execute and the Trustee shall authenticate and
deliver to the Holder thereof, at the expense of the Company, a new Security or
Securities of authorized denominations in aggregate principal amount equal to
the unconverted portion of the principal amount of such Security. Any
requirements for notice, surrender or delivery of Securities pursuant to this
Article XIII shall, with respect to any Global Security, be subject to any
Applicable Procedures.
SECTION 13.3 FRACTIONS OF SHARES. No fractional 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 which shall be issuable upon conversion thereof shall be computed
on the basis of the aggregate principal amount of the Securities (or specified
portions thereof) so surrendered. Instead of any fractional share of Common
Stock which would otherwise be issuable upon conversion of any Security or
Securities (or specified portions thereof), the Company shall pay a cash
adjustment in respect of such fraction in an amount equal to the same fraction
of the Closing Price per share of the Common Stock at the close of business on
the day of conversion (or, if such day is not a Trading Day, on the Trading Day
immediately preceding such day) or, alternatively, the Company shall round up
to the next higher whole share.
SECTION 13.4 ADJUSTMENT OF CONVERSION PRICE.
(1) In case the Company shall pay or make a dividend or other
distribution on its Common Stock exclusively in Common Stock or shall pay or
make a dividend or other distribution on any other class of capital
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stock of the Company which dividend or distribution includes Common Stock, the
conversion price in effect at the opening of business on the day next following
the date fixed for the determination of shareholders entitled to receive such
dividend or other distribution shall be reduced by multiplying such conversion
price by a fraction of which the numerator shall be the number of shares of
Common Stock outstanding at the close of business on the date fixed for such
determination and the denominator shall be the sum of such number of shares and
the total number of shares constituting such dividend or other distribution,
such reduction to become effective immediately after the opening of business on
the day next following the date fixed for such determination. For the purposes
of this paragraph (1), the number of shares of Common Stock at any time
outstanding shall not include shares held in the treasury of the Company but
shall include shares issuable in respect of scrip certificates issued in lieu
of fractions of shares of Common Stock. The Company shall not pay any dividend
or make any distribution on shares of Common Stock held in the treasury of the
Company.
(2) In case the Company shall pay or make a dividend or other
distribution on its Common Stock consisting exclusively of, or shall otherwise
issue to all holders of its Common Stock, rights, warrants or options entitling
the holders thereof to subscribe for or purchase shares of Common Stock at a
price per share less than the current market price per share (determined as
provided in paragraph (7) of this Section 13.4) of the Common Stock on the date
fixed for the determination of shareholders entitled to receive such rights,
warrants or options, the conversion price in effect at the opening of business
on the day following the date fixed for such determination shall be reduced by
multiplying such conversion price by a fraction of which the numerator shall be
the number of shares of Common Stock outstanding at the close of business on
the date fixed for such determination plus the number of shares of Common Stock
which the aggregate of the offering price of the total number of shares of
Common Stock so offered for subscription or purchase would purchase at such
current market price and the denominator shall be the number of shares of
Common Stock outstanding at the close of business on the date fixed for such
determination plus the number of shares of Common Stock so offered for
subscription or purchase, such reduction to become effective immediately after
the opening of business on the day following the date fixed for such
determination. For the purposes of this paragraph (2), the number of shares of
Common Stock at any time outstanding shall not include shares held in the
treasury of the Company but shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of shares of Common Stock. The
Company shall not issue any rights, warrants or options in respect of shares of
Common Stock held in the treasury of the Company.
(3) In case outstanding shares of Common Stock shall be subdivided into a
greater number of shares of Common Stock, the conversion price in effect at the
opening of business on the day following the day upon which such subdivision
becomes effective shall be proportionately reduced, and, conversely, in case
outstanding shares of Common Stock shall each be combined into a smaller number
of shares of Common Stock, the conversion price in effect at the opening of
business on the day following the day upon which such combination becomes
effective shall be proportionately increased, such reduction or increase, as
the case may be, to become effective immediately after the opening of business
on the day following the day upon which such subdivision or combination becomes
effective.
(4) Subject to the last sentence of this paragraph (4), in case the
Company shall, by dividend or otherwise, distribute to all holders of its
Common Stock evidences of its indebtedness, shares of any class of capital
stock, securities, cash or property (excluding any rights, warrants or options
referred to in paragraph (2) of this Section 13.4, any dividend or distribution
paid exclusively in cash and any dividend or distribution referred to in
paragraph (1) of this Section 13.4), the conversion price shall be reduced so
that the same shall equal the price determined by multiplying the conversion
price in effect immediately prior to the effectiveness of the conversion price
reduction contemplated by this paragraph (4) by a fraction of which the
numerator shall be the current market price per share (determined as provided
in paragraph (7) of this Section) of the Common Stock on the date of such
effectiveness less the fair market value (as determined in good faith by the
Board of Directors, whose determination shall be conclusive and described in a
Board Resolution and shall, in the case of securities being distributed for
which prior thereto there is an actual or when issued trading market, be no
less than the value determined by reference to the average of the closing
prices in such market over the period specified in the succeeding sentence), on
the date of such effectiveness, of the portion of the evidences of
indebtedness, shares of capital stock, securities, cash and property so
distributed applicable to one share of Common Stock and the denominator shall
be such current market price per share of the Common Stock, such reduction to
become effective immediately prior to the
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opening of business on the day next following the later of (a) the date fixed
for the payment of such distribution and (b) the date 20 days after the
notice relating to such distribution is given pursuant to Section 13.6(a)
(such later date of (a) and (b) being referred to as the "Reference Date").
If the Board of Directors determines the fair market value of any
distribution for purposes of this paragraph (4) by reference to the actual or
when issued trading market for any securities comprising such distribution,
it must in doing so consider the prices in such market over the same period
used in computing the current market price per share pursuant to paragraph
(7) of this Section. For purposes of this paragraph (4), any dividend or
distribution that includes shares of Common Stock or rights, warrants or
options to subscribe for or purchase shares of Common Stock shall be deemed
instead to be (a) a dividend or distribution of the evidences of
indebtedness, cash, property, shares of capital stock or securities other
than such shares of Common Stock or such rights, warrants or options (making
any conversion price reduction required by this paragraph (4)) immediately
followed by (b) a dividend or distribution of such shares of Common Stock or
such rights, warrants or options (making any further conversion price
reduction required by paragraph (1) or (2) of this Section 13.4, except (i)
the Reference Date of such dividend or distribution as defined in this
paragraph (4) shall be substituted as "the date fixed for the determination
of shareholders entitled to receive such dividend or other distribution",
"the date fixed for the determination of shareholders entitled to receive
such rights, warrants or options" and "the date fixed for such determination"
within the meaning of paragraphs (1) and (2) of this Section 13.4 and (ii)
any shares of Common Stock included in such dividend or distribution shall
not be deemed "outstanding at the close of business on the date fixed for
such determination" within the meaning of paragraph (1) of this Section 13.4).
(5) In case the Company shall, by dividend or otherwise, make a
distribution to all holders of its Common Stock exclusively in cash in an
aggregate amount that, together with (i) the aggregate amount of any other
distributions to all holders of its Common Stock made exclusively in cash
within the 12 months preceding the date of payment of such distribution and in
respect of which no conversion price adjustment pursuant to this paragraph (5)
has been made and (ii) the aggregate of any cash plus the fair market value (as
determined in good faith by the Board of Directors, whose determination shall
be conclusive and described in a Board Resolution), as of the expiration of the
tender or exchange offer referred to below, of consideration payable in respect
of any tender or exchange offer by the Company or a Subsidiary for all or any
portion of the Common Stock concluded within the 12 months preceding the date
of payment of such distribution and in respect of which no conversion price
adjustment pursuant to paragraph (6) of this Section 13.4 has been made,
exceeds 12.5% of the product of the current market price per share (determined
as provided in paragraph (7) of this Section 13.4) of the Common Stock on the
date fixed for shareholders entitled to receive such distribution times the
number of shares of Common Stock outstanding on such date, the conversion price
shall be reduced so that the same shall equal the price determined by
multiplying the conversion price in effect immediately prior to the
effectiveness of the conversion price reduction contemplated by this
paragraph (5) by a fraction of which the numerator shall be the current market
price per share (determined as provided in paragraph (7) of this Section 13.4)
of the Common Stock on the date of such effectiveness less the amount of cash
so distributed applicable to one share of Common Stock and the denominator
shall be such current market price per share of the Common Stock, such
reduction to become effective immediately prior to the opening of business on
the later of (a) the day following the date fixed for the payment of
such distribution and (b) the date 20 days after the notice relating to such
distribution is given pursuant to Section 13.6(a).
(6) In case a successful tender or exchange offer made by the Company or
any Subsidiary for all or any portion of the Common Stock shall involve an
aggregate consideration having a fair market value (as determined in good faith
by the Board of Directors, whose determination shall be conclusive and
described in a Board Resolution) at the last time (the "Expiration Time")
tenders or exchanges may be made pursuant to such tender or exchange offer (as
it may be amended) that, together with (i) the aggregate of the cash plus the
fair market value (as determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a Board Resolution), as of
the expiration of the other tender or exchange offer referred to below, of
consideration payable in respect of any other tender or exchange offer by the
Company or a Subsidiary for all or any portion of the Common Stock concluded
within the preceding 12 months and in respect of which no conversion price
adjustment pursuant to this paragraph (6) has been made and (ii) the aggregate
amount of any distributions to all holders of the Common Stock made exclusively
in cash within the preceding 12 months and in respect of which no conversion
price adjustment pursuant to paragraph (5) of this Section 13.4 has been made,
exceeds 12.5%
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of the product of the current market price per share (determined as provided
in paragraph (7) of this Section 13.4) 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, the conversion price shall be
reduced (but not increased) so that the same shall equal the price determined
by multiplying the conversion price in effect immediately prior to the
Expiration Time by a fraction of which the numerator shall be (i) the product
of the current market price per share (determined as provided in paragraph
(7) of this Section 13.4) of the Common Stock at the Expiration Time times
the number of shares of Common Stock outstanding (including any tendered or
exchanged shares) at the Expiration Time minus (ii) the fair market value
(determined as aforesaid) of the aggregate consideration payable to
shareholders based on the acceptance (up to any maximum specified in the
terms of the tender or exchange offer) of all shares validly tendered or
exchanged and not withdrawn as of the Expiration Time (the shares deemed so
accepted, up to any such maximum, being referred to as the "Purchased
Shares") and the denominator shall be the product of (i) such current market
price per share at the Expiration Time times (ii) such number of outstanding
shares at the Expiration Time less the number of Purchased Shares, such
reduction to become effective immediately prior to the opening of business on
the day following the Expiration Time.
(7) For the purpose of any computation under this paragraph and
paragraphs (2), (4) and (5) of this Section 13.4, the current market price per
share of Common Stock on any date in question shall be deemed to be the average
of the daily Closing Prices for the 5 consecutive Trading Days selected by the
Company commencing not more than 20 Trading Days before, and ending not later
than, the date in question; PROVIDED, HOWEVER, that (i) if the "ex" date (as
hereinafter defined) for any event (other than the issuance or distribution
requiring such computation) that requires an adjustment to the conversion price
pursuant to paragraph (1), (2), (3), (4), (5) or (6) above ("Other Event")
occurs on or after the 20th Trading Day prior to the date in question and prior
to the "ex" date for the issuance or distribution requiring such computation
(the "Current Event"), the Closing Price for each Trading Day prior to the "ex"
date for such Other Event shall be adjusted by multiplying such Closing Price
by the same fraction by which the conversion price is so required to be
adjusted as a result of such Other Event, (ii) if the "ex" date for any Other
Event occurs after the "ex" date for the Current Event and on or prior to the
date in question, the Closing Price for each Trading Day on and after the "ex"
date for such Other Event shall be adjusted by multiplying such Closing Price
by the reciprocal of the fraction by which the conversion price is so required
to be adjusted as a result of such Other Event, (iii) if the "ex" date for any
Other Event occurs on the "ex" date for the Current Event, one of those events
shall be deemed for purposes of clauses (i) and (ii) of this proviso to have an
"ex" date occurring prior to the "ex" date for the other event, and (iv) if the
"ex" date for the Current Event is on or prior to the date in question, after
taking into account any adjustment required pursuant to clause (ii) of this
proviso, the Closing Price for each Trading Day on or after such "ex" date
shall be adjusted by adding thereto the amount of any cash and the fair market
value on the date in question (as determined in good faith by the Board of
Directors in a manner consistent with any determination of such value for
purposes of paragraph (4) or (5) of this Section 13.4, whose determination
shall be conclusive and described in a Board Resolution) of the portion of the
rights, warrants, options, evidences of indebtedness, shares of capital stock,
securities, cash or property being distributed applicable to one share of
Common Stock. For the purpose of any computation under paragraph (6) of this
Section 13.4, the current market price per share of Common Stock on any date in
question shall be deemed to be the average of the daily Closing Prices for the
5 consecutive Trading Days selected by the Company commencing on or after the
latest (the "Commencement Date") of (i) the date 20 Trading Days before the
date in question, (ii) the date of commencement of the tender or exchange offer
requiring such computation and (iii) the date of the last amendment, if any, of
such tender or exchange offer involving a change in the maximum number of
shares for which tenders are sought or a change in the consideration offered,
and ending not later than the date of the Expiration Time of such tender or
exchange offer (or, if such Expiration Time occurs before the close of trading
on a Trading Day, not later than the Trading Day immediately preceding the date
of such Expiration Time); PROVIDED, HOWEVER, that if the "ex" date for any
Other Event (other than the tender or exchange offer requiring such
computation) occurs on or after the Commencement Date and on or prior to the
date of the Expiration Time for the tender or exchange offer requiring such
computation, the Closing Price for each Trading Day prior to the "ex" date for
such Other Event shall be adjusted by multiplying such Closing Price by the
same fraction by which the conversion price is so required to be adjusted as a
result of such other event. For purposes of this paragraph, the term "ex"
date, (i) when used with respect to any issuance or distribution, means the
first date on which the Common Stock trades regular way on the relevant
exchange or in the relevant market from which the Closing Price was obtained
without the right to receive such issuance or distribution, (ii) when used
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with respect to any subdivision or combination of shares of Common Stock,
means the first date on which the Common Stock trades regular way on such
exchange or in such market after the time at which such subdivision or
combination becomes effective, and (iii) when used with respect to any tender
or exchange offer means the first date on which the Common Stock trades
regular way on such exchange or in such market after the Expiration Time of
such tender or exchange offer.
(8) The Company may make such reductions in the conversion price, in
addition to those required by paragraphs (1), (2), (3), (4), (5) and (6) of
this Section, as it considers to be advisable in order that any event treated
for Federal income tax purposes as a dividend of stock or stock rights shall
not be taxable to the recipients.
(9) No adjustment in the conversion price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the
conversion price; PROVIDED, HOWEVER, that any adjustments which by reason of
this paragraph (9) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment.
(10) In the event that the Company distributes rights or warrants (other
than those referred to in paragraph (2) above) pro rata to holders of Common
Stock, so long as any such rights or warrants have not expired or been redeemed
by the Company, the Company shall make proper provision so that the Holder of
any Security surrendered for conversion will be entitled to receive upon such
conversion, in addition to the Conversion Shares, a number of rights and
warrants to be determined as follows: (i) if such conversion occurs on or prior
to the date for the distribution to the holders of rights or warrants of
separate certificates evidencing such rights or warrants (the "Distribution
Date"), the same number of rights or warrants to which a holder of a number of
shares of Common Stock equal to the number of Conversion Shares is entitled at
the time of such conversion in accordance with the terms and provisions of and
applicable to the rights or warrants, and (ii) if such conversion occurs after
such Distribution Date, the same number of rights or warrants to which a holder
of the number of shares of Common Stock into which the principal amount of such
Security so converted was convertible immediately prior to such Distribution
Date would have been entitled on such Distribution Date in accordance with the
terms and provisions of and applicable to the rights or warrants.
SECTION 13.5 NOTICE OF ADJUSTMENTS OF CONVERSION PRICE. Whenever the
conversion price is adjusted as herein provided:
(a) the Company shall compute the adjusted conversion price in
accordance with Section 13.4 and deliver to the Trustee an Officers'
Certificate setting forth the adjusted conversion price and showing in
reasonable detail the facts upon which such adjustment is based, and such
Officers' Certificate shall forthwith be filed at each office or agency
maintained for the purpose of conversion of Securities pursuant to Section
10.2; and
(b) a notice stating that the conversion price has been adjusted and
setting forth the adjusted conversion price shall be mailed by the Company
to all Holders at their last addresses as they shall appear in the
Security Register promptly after the conversion price has been adjusted.
Unless and until a Responsible Officer of the Trustee shall have received
an Officers' Certificate setting forth an adjustment of the conversion
price or stating that an action described in Section 13.6 has occurred,
the Trustee shall not be deemed to have knowledge of such adjustment or
action and may assume without inquiry (x) that the conversion price has
not been adjusted, (y) that the last conversion price of which the Trustee
had knowledge remains in effect, and (z) that no action described in
Section 13.6 has occurred.
SECTION 13.6 NOTICE OF CERTAIN CORPORATE ACTION. In case:
(a) the Company shall declare a dividend (or any other distribution)
on its Common Stock payable (i) otherwise than exclusively in cash or
(ii) exclusively in cash in an amount that would require a conversion
price adjustment pursuant to paragraph (5) of Section 13.4; or
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(b) the Company shall authorize the granting to the holders of its
Common Stock of rights, warrants or options to subscribe for or purchase
any shares of capital stock of any class or of any other rights (excluding
employee stock options); or
(c) of any reclassification of the Common Stock of the Company
(other than a subdivision or combination of its outstanding shares of
Common Stock), or of any consolidation or merger to which the Company is a
party and for which approval of any shareholders of the Company is
required, or of the sale or transfer of all or substantially all of the
assets of the Company; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company; or
(e) the Company or any Subsidiary of the Company shall commence a
tender or exchange offer for all or a portion of the Company's outstanding
shares of Common Stock (or shall amend any such tender or exchange offer);
then the Company shall cause to be filed at each office or agency maintained
for the purpose of conversion of Securities pursuant to Section 10.2, and shall
cause to be mailed to all Holders at their last addresses as they shall appear
in the Security Register, at least 20 days (or 10 days in any case specified in
clause (a) or (b) above) prior to the applicable record, effective or
expiration date hereinafter specified, a notice (which shall be in the form of
an Officers' Certificate in the case of the notice delivered to the Trustee)
stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution or granting of rights, warrants or options, or, if a
record is not to be taken, the date as of which the holders of Common Stock of
record to be entitled to such dividend, distribution, rights, warrants or
options are to be determined, or (y) the date on which such reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding up
is expected to become effective, and the date 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, cash or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up, or (z) the date on which such tender offer
commenced, the date on which such tender offer is scheduled to expire unless
extended, the consideration offered and the other material terms thereof (or
the material terms of any amendment thereto).
SECTION 13.7 COMPANY TO RESERVE COMMON STOCK. The Company shall at all
times reserve and keep available, free from preemptive rights, out of its
authorized but unissued Common Stock, solely for the purpose of effecting the
conversion of Securities, the whole number of shares of Common Stock then
issuable upon the conversion in full of all outstanding Securities.
SECTION 13.8 TAXES ON CONVERSIONS. The Company will pay any and all
taxes that may be payable in respect of the issue or delivery of shares of
Common Stock on conversion of Securities pursuant hereto. The Company shall
not, however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of shares of Common Stock in a name
other than that of the Holder of the Security or Securities to be converted,
and no such issue or delivery shall be made unless and until the Person
requesting such issue has paid to the Company the amount of any such tax, or
has established to the satisfaction of the Company that such tax has been paid.
SECTION 13.9 COVENANT AS TO COMMON STOCK. The Company covenants that
all shares of Common Stock which may be issued upon conversion of Securities
will upon issue be newly issued (and not treasury shares) and be duly
authorized, validly issued, fully paid and nonassessable and, except as
provided in Section 13.8, the Company will pay all taxes, liens and charges
with respect to the issue thereof.
SECTION 13.10 CANCELLATION OF CONVERTED SECURITIES. All Securities
delivered for conversion shall be delivered to the Trustee to be cancelled by
or at the direction of the Trustee, which shall dispose of the same as provided
in Section 3.9.
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SECTION 13.11 PROVISIONS IN CASE OF RECLASSIFICATION, CONSOLIDATION,
MERGER OR SALE OF ASSETS. In the event that the Company shall be a party to
any transaction (including without limitation any (i) recapitalization or
reclassification of the Common Stock (other than a change in par value, or from
par value to no par value, or from no par value to par value, or as a result of
a subdivision or combination of the Common Stock), (ii) any consolidation of
the Company with, or merger of the Company into, any other person, any merger
of another person into the Company (other than a merger which does not result
in a reclassification, conversion, exchange or cancellation of outstanding
shares of Common Stock of the Company), (iii) any sale or transfer of all or
substantially all of the assets of the Company, or (iv) any compulsory share
exchange) pursuant to which the Common Stock is converted into the right to
receive other securities, cash or other property, then lawful provision shall
be made as part of the terms of such transaction whereby the Holder of each
Security then outstanding shall have the right thereafter to convert such
Security only into (subject to funds being legally available for such purpose
under applicable law at the time of such conversion) the kind and amount of
securities, cash and other property receivable upon such transaction by a
holder of the number of shares of Common Stock into which such Security might
have been converted immediately prior to such transaction. The Company or the
person formed by such consolidation or resulting from such merger or which
acquired such assets or which acquired the Company's shares, as the case may
be, shall execute and deliver to the Trustee a supplemental indenture
establishing such rights. Such supplemental indenture shall provide for
adjustments which, for events subsequent to the effective date of such supple
mental indenture, shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Article. The above provisions of this
Section 13.11 shall similarly apply to successive transactions of the foregoing
type.
ARTICLE XIV
RIGHT TO REQUIRE REPURCHASE
SECTION 14.1 RIGHT TO REQUIRE REPURCHASE. In the event that there shall
occur a Change in Control (as defined in Section 14.6), then each Holder shall
have the right, at such Holder's option, to require the Company, subject to the
provisions of Section 12.3, to purchase all or any designated part of such
Holder's Securities on the date (the "Repurchase Date") fixed by the Company
that is not less than 30 days nor more than 45 days after the date the Company
gives notice of the Change in Control as contemplated in Section 14.2(a) at a
price (the "Repurchase Price") equal to 100% of the principal amount thereof,
together with accrued and unpaid interest through the Repurchase Date. Such
right to require the repurchase of Securities shall not continue after a
discharge of the Company from its obligations with respect to the Securities in
accordance with Article IV. Any requirements for notice, surrender or delivery
of Securities pursuant to this Article XIV shall, with respect to any Global
Security, be subject to any Applicable Procedures.
SECTION 14.2 NOTICE, METHOD OF EXERCISING REPURCHASE RIGHT.
(a) On or before the 15th day after the Company knows or reasonably
should know a Change in Control has occurred, the Company, or at the written
request of the Company, the Trustee (in the name and at the expense of the
Company), shall give notice of the occurrence of the Change in Control and of
the repurchase right set forth herein arising as a result thereof by first-
class mail, postage prepaid, or by telefacsimile with written acknowledgement
of transmittal to each Holder of the Securities at such Holder's address
appearing in the Security Register. The Company shall also deliver a copy of
such notice of a repurchase right to the Trustee. Unless and until a
Responsible Officer of the Trustee shall have received such notice, the Trustee
shall not be deemed to have knowledge of such Change in Control.
Each notice of a repurchase right shall state:
(1) the Repurchase Date,
(2) the date by which the repurchase right must be exercised,
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(3) the Repurchase Price, and
(4) the instructions a Holder must follow to exercise its repurchase
right.
No failure of the Company to give the foregoing notice shall limit any
Holder's right to exercise a repurchase right. The Trustee shall have no
affirmative obligation to determine if there shall have occurred a Change in
Control.
(b) To exercise a repurchase right, a Holder shall deliver to the Company
(or an agent designated by the Company for such purpose in the notice referred
to in (a) above) and to the Trustee on or before the Repurchase Date
(i) written notice of the Holder's exercise of such right, which notice shall
set forth the name of the Holder, the principal amount of the Security or
Securities (or portion of a Security) to be repurchased, and a statement that
an election to exercise the repurchase right is being made thereby, and
(ii) the Security or Securities with respect to which the repurchase right is
being exercised, duly endorsed for transfer to the Company. Such written
notice shall be irrevocable. If the Repurchase Date falls between any Regular
Record Date and the corresponding succeeding Interest Payment Date, Securities
to be repurchased must be accompanied by payment from the Holder of an amount
equal to the interest thereon which the registered Holder thereof is to receive
on such Interest Payment Date.
(c) In the event a repurchase right shall be exercised in accordance with
the terms hereof, the Company shall on the Repurchase Date pay or cause to be
paid in cash to the Holder thereof the Repurchase Price of the Security or
Securities as to which the repurchase right had been exercised.
SECTION 14.3 DEPOSIT OF REPURCHASE PRICE. On or prior to the Repurchase
Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if
the Company is acting as its own Paying Agent, segregate and hold in trust as
provided in Section 10.3) an amount of money sufficient to pay the Repurchase
Price of the Securities which are to be repaid on the Repurchase Date.
SECTION 14.4 SECURITIES NOT REPURCHASED ON REPURCHASE DATE. If any
Security surrendered for repurchase shall not be so paid on the Repurchase
Date, the principal of such Security shall, until paid, bear interest from the
Repurchase Date at a rate borne by such Security.
SECTION 14.5 SECURITIES REPURCHASED IN PART. Any Security which is to
be repurchased only in part shall be surrendered at any office or agency of the
Company designated for that purpose pursuant to Section 10.2 (with, if the
Company or the Trustee so requires, due endorsement by, or written instrument
of transfer in form satisfactory to the Company and the Trustee duly executed
by, the Holder thereof or his attorney duly authorized in writing), and the
Company shall execute, and the Trustee shall authenticate and deliver to the
Holder of such Security without service charge, a new Security or Securities of
any authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unrepurchased portion of the principal
of the Security so surrendered.
SECTION 14.6 CERTAIN DEFINITIONS. For purposes of this Article: The
term "Beneficial Owner" shall be determined in accordance with Rules 13d-3 and
13d-5 promulgated by the Commission under the Exchange Act, or any successor
provision thereto, except that a Person shall be deemed to have "beneficial
ownership" of all shares that such Person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time.
A "Change in Control" shall be deemed to have occurred at such time as
(a) any Person, or any Persons acting together in a manner which would
constitute a "group" (a "Group") for purposes of Section 13(d) of the Exchange
Act, or any successor provision thereto, together with any Affiliates thereof,
(i) become the Beneficial Owners, directly or indirectly, of capital stock of
the Company, entitling such Person or Persons and its or their Affiliates to
exercise more than 50% of the total voting power of all classes of the
Company's capital stock entitled to vote generally in the election of directors
or (ii) shall succeed in having sufficient of its or their nominees (who are
not supported by a majority of the then current Board of Directors of the
Company) elected to the Board of
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Directors of the Company such that such nominees, when added to any existing
directors remaining on the Board of Directors of the Company after such
election who are Affiliates of or acting in concert with any such Persons,
shall constitute a majority of the Board of Directors of the Company, (b) the
Company shall be a party to any transaction pursuant to which the Common
Stock is converted into the right to receive other securities (other than
common stock), cash and/or property (or the Company, by dividend, tender or
exchange offer or otherwise, distributes other securities, cash and/or
property to holders of Common Stock) and the value of all such securities,
cash and/or property distributed in such transaction and any other
transaction effected within the 12 months preceding consummation of such
transaction (as determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a Board Resolution) is
more than 50% of the average of the daily Closing Prices for the five
consecutive Trading Days ending on the Trading Day immediately preceding the
date of such transaction (or, if earlier, the Trading Day immediately
preceding the "ex" date (as defined in paragraph (7) of Section 13.4) for
such transaction) or (c) the Company shall consolidate with or merge into any
other Person or sell, convey, transfer or lease its properties and assets
substantially as an entirety to any Person other than a Subsidiary, or any
other Person shall consolidate with or merge into the Company (other than, in
the case of this clause (c), pursuant to any consolidation or merger where
Persons who are shareholders of the Company immediately prior thereto become
the Beneficial Owners of shares of capital stock of the surviving company
entitling such Persons to exercise more than 50% of the total voting power of
all classes of such surviving company's capital stock entitled to vote
generally in the election of directors); PROVIDED that a Change in Control
shall not be deemed to have occurred if either (i) at least 90% of the
consideration (excluding cash payments for fractional shares) in the
transaction or transactions constituting the Change in Control consists of
common stock or securities convertible into common stock that are, or upon
issuance will be, traded on a United States national securities exchange or
approved for trading on an established automated over-the-counter trading
market in the United States; or (b) the last sale price of the Common Stock
for any five trading days during the ten trading days immediately preceding
the Change of Control is at least equal to 110% of the conversion price in
effect on such day.
ARTICLE XV
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 15.1 COMPANY'S OPTION TO EFFECT DEFEASANCE OR
COVENANT DEFEASANCE. The Company may at its option by Board Resolution, at
any time, elect to have either Section 15.2 or Section 15.3 applied to the
Outstanding Securities upon compliance with the conditions set forth below in
this Article XV.
SECTION 15.2 DEFEASANCE AND DISCHARGE. Upon the Company's exercise of
the option provided in Section 15.1 applicable to this Section, the Company and
the Trustee shall be deemed to have been discharged from their obligations with
respect to the Outstanding Securities (other than those specified below), and
the provisions of Article XII hereof shall cease to be effective, on the date
the conditions set forth below are satisfied (hereinafter, "defeasance"). For
this purpose, such defeasance means that the Company shall be deemed to have
paid and discharged the entire indebtedness represented by the Outstanding
Securities, the Company and the Trustee shall be deemed to have satisfied all
their other obligations under such Securities and this Indenture insofar as
such Securities are concerned (and the Trustee, at the expense of the Company,
shall execute proper instruments acknowledging the same), except for the
following which shall survive until otherwise terminated or discharged
hereunder: (A) the rights of Holders of such Securities to receive, solely
from the trust fund described in Section 15.4 and as more fully set forth in
such Section, payments in respect of the principal of, premium, if any and
interest on such Securities when such payments are due, (B) the Company's
obligations with respect to such Securities under Sections 3.4, 3.5, 3.6, 10.2,
10.3, 10.11, Article XIII and Article XIV, (C) the rights, powers, trusts,
duties and immunities of the Trustee hereunder and (D) this Article XV.
Subject to compliance with this Article XV, the Company may exercise its option
under this Section 15.2 notwithstanding the prior exercise of its option under
Section 15.3.
SECTION 15.3 COVENANT DEFEASANCE. Upon the Company's exercise of the
option provided in Section 15.1 applicable to this Section, (i) the Company
shall be released from its obligations under Section 10.6
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and Section 10.7, (ii) the occurrence of an event specified in Section 5.1(4)
(with respect to either of Section 10.6 or Section 10.7) shall not be deemed
to be an Event of Default and (iii) the provisions of Article XII hereof
shall cease to be effective on and after the date the conditions set forth
below are satisfied (hereinafter, "covenant defeasance"). For this purpose,
such covenant defeasance means that the Company may omit to comply with and
shall have no liability in respect of any term, condition or limitation set
forth in any such Section or Article, whether directly or indirectly by
reason of any reference elsewhere herein to any such Section or Article or by
reason of any reference in any such Section or Article to any other provision
herein or in any other document, but the remainder of this Indenture and such
Securities shall be unaffected thereby.
SECTION 15.4 CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE. The
following shall be the conditions to application of either Section 15.2 or
Section 15.3 to the then Outstanding Securities:
(1) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the
requirements of Section 6.9 who shall agree to comply with the provisions
of this Article XV applicable to it) as trust funds in trust for the
purpose of making the following payments, specifically pledged as security
for, and dedicated solely to, the benefit of the Holders of such
Securities, (A) money in an amount, or (B) U.S. Government Obligations
which through the scheduled payment of principal and interest in respect
thereof in accordance with their terms will provide, not later than one
day before the due date of any payment, money in an amount, or (C) a combi
nation thereof, sufficient, in the written opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, to pay and discharge, and
which shall be applied by the Trustee (or other qualifying trustee) to pay
and discharge, the principal of, premium, if any, and each installment of
interest on the Securities on the Stated Maturity of such principal or
installment of interest in accordance with the terms of this Indenture and
of such Securities. For this purpose, "U.S. Government Obligations" means
securities that are (x) direct obligations of the United States of America
for the payment of which its full faith and credit is pledged or
(y) obligations of a Person controlled or supervised by and acting as an
agency or instrumentality of the United States of America the payment of
which is unconditionally guaranteed as a full faith and credit obligation
by the United States of America, which, in either case, are not callable
or redeemable at the option of the issuer thereof, and shall also include
a depository receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act of 1933, as amended) as custodian with respect to any
such U.S. Government Obligation or a specific payment of principal of or
interest on any such U.S. Government Obligation held by such custodian for
the account of the holder of such depository receipt, PROVIDED that
(except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depository receipt
from any amount received by the custodian in respect of the U.S.
Government Obligation or the specific payment of principal of or interest
on the U.S. Government Obligation evidenced by such depository receipt.
(2) In the case of an election under Section 15.2, the Company shall
have delivered to the Trustee an Opinion of Counsel stating that (x) the
Company has received from, or there has been published by, the Internal
Revenue Service a ruling, or (y) since the date of this Indenture there
has been a change in the applicable Federal income tax law, in either case
to the effect that, and based thereon such opinion shall confirm that, the
Holders of the Outstanding Securities will not recognize gain or loss for
Federal income tax purposes as a result of such deposit, defeasance and
discharge and will be subject to Federal income tax on the same amount, in
the same manner and at the same times as would have been the case if such
deposit, defeasance and discharge had not occurred.
(3) In the case of an election under Section 15.3, the Company shall
have delivered to the Trustee an Opinion of Counsel to the effect that the
Holders of the Outstanding Securities will not recognize gain or loss for
Federal income tax purposes as a result of such deposit and covenant
defeasance and will be subject to Federal income tax on the same amount,
in the same manner and at the same times as would have been the case if
such deposit and covenant defeasance had not occurred.
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(4) The Company shall have delivered to the Trustee an Officers'
Certificate to the effect that the Securities, if then listed on any
securities exchange, will not be delisted as a result of such deposit.
(5) Such defeasance or covenant defeasance shall not cause the
Trustee to have a conflicting interest as defined in Section 6.8 and for
purposes of the Trust Indenture Act with respect to any securities of the
Company.
(6) At the time of such deposit: (A) no default in the payment of
all or a portion of principal of (or premium, if any) or interest on or
other obligations in respect of any Senior Indebtedness shall have
occurred and be continuing, and no event of default with respect to any
Senior Indebtedness shall have occurred and be continuing and shall have
resulted in such Senior Indebtedness becoming or being declared due and
payable prior to the date on which it would otherwise have become due and
payable and (B) no other event with respect to any Senior Indebtedness
shall have occurred and be continuing permitting (after notice or the
lapse of time, or both) the holders of such Senior Indebtedness (or a
trustee on behalf of the holders thereof) to declare such Senior
Indebtedness due and payable prior to the date on which it would otherwise
have become due and payable, or, in the case of either Clause (A) or
Clause (B) above, each such default or event of default shall have been
cured or waived or shall have ceased to exist.
(7) No Event of Default or event which with notice or lapse of time
or both would become an Event of Default shall have occurred and be
continuing on the date of such deposit or, insofar as subsections 5.1(6)
and (7) are concerned, at any time during the period ending on the 121st
day after the date of such deposit (it being understood that this
condition shall not be deemed satisfied until the expiration of such
period).
(8) Such defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a default under, any other agreement
or instrument to which the Company is a party or by which it is bound.
(9) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to either the defeasance under Section
15.2 or the covenant defeasance under Section 15.3 (as the case may be)
have been complied with.
(10) Such defeasance or covenant defeasance shall not result in the
trust arising from such deposit constituting an investment company as
defined in the Investment Company Act of 1940, as amended, or such trust
shall be qualified under such act or exempt from regulation thereunder.
SECTION 15.5 DEPOSITED MONEY AND U.S. GOVERNMENT OBLIGATIONS TO BE HELD
IN TRUST; OTHER MISCELLANEOUS PROVISIONS. Subject to the provisions of the
last paragraph of Section 10.3, all money and U.S. Government Obligations
(including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee-- collectively, for purposes of this Section 15.5, the
"Trustee") pursuant to Section 15.4 in respect of the Securities shall be
held in trust and applied by the Trustee, in accordance with the provisions
of such Securities and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as its own Paying
Agent) as the Trustee may determine, to the Holders of such Securities, of
all sums due and to become due thereon in respect of principal, premium, if
any, and interest. Money so held in trust shall not be subject to the
provisions of Article XII.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 15.4 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is
for the account of the Holders of the Outstanding Securities.
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Anything in this Article XV to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon Company Request
any money or U.S. Government Obligations held by it as provided in Section
15.4 which, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered to
the Trustee, are in excess of the amount thereof which would then be required
to be deposited to effect an equivalent defeasance or covenant defeasance.
SECTION 15.6 REINSTATEMENT. If the Trustee or the Paying Agent is
unable to apply any money in accordance with Section 15.2 or 15.3 by reason
of any order or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, then the Company's
obligations under this Indenture and the Securities shall be revived and
reinstated as though no deposit had occurred pursuant to this Article XV
until such time as the Trustee or Paying Agent is permitted to apply all such
money in accordance with Section 15.2 or 15.3; PROVIDED, HOWEVER, that if the
Company makes any payment of principal of, premium, if any, or interest on
any Security following the reinstatement of its obligations, the Company
shall be subrogated to the rights of the Holders of such Securities to
receive such payment from the money held by the Trustee or the Paying Agent.
ARTICLE XVI
IMMUNITY
SECTION 16.1 PERSONAL IMMUNITY OF INCORPORATORS, SHAREHOLDERS,
DIRECTORS AND OFFICERS. No recourse for the payment of the principal of or
interest on the Securities, and no recourse under or upon any obligation,
covenant or agreement contained in this Indenture or in any indenture
supplemental hereto, or in the Securities, or because of any indebtedness
evidenced thereby, shall be had against any incorporator, or against any
past, present or future shareholder, officer or director, as such, of the
Company or any successor corporation, either directly or through the Company
or any successor corporation, 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. Each and every Holder of the Securities, by receiving and
holding the same, agrees to the provisions of this Section 16.1 and waives
and releases any and all such recourse, claim and liability.
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This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed,
all as of the day and year first above written.
ACTIVISION, INC., a Delaware corporation
By:
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Name:
Title:
STATE STREET BANK AND TRUST COMPANY OF
CALIFORNIA, N.A.
By:
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Name:
Title:
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