<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported): October 30, 1997
CONTINUCARE CORPORATION
-------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Florida
(State or Other Jurisdiction of Incorporation)
0-21910 59-2716023
(Commission File Number) (IRS Employer Identification No.)
Continucare Corporation
100 Southeast 2nd Street, 36th Floor
Miami, Florida 33131
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (305) 350-7515
<PAGE> 2
ITEM 5. OTHER EVENTS
This Form 8-K is being filed pursuant to Rule 135c(d) of the
Securities Act of 1933, as amended, relating to the press release
issued by Continucare Corporation on November 4, 1997, a copy of
which is attached hereto.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired.
Not Applicable.
(b) Pro Forma Financial Information.
Not Applicable.
(c) Exhibits
4.1 Indenture, dated as of October 30, 1997, between the
Company and American Stock Transfer & Trust Company, as
Trustee, relating to 8% Convertible Subordinated Notes Due
2002.
4.2 Registration Rights Agreement, dated as of October 30, 1997,
by and between the Company and Loewenbaum & Company
Incorporated.
10.1 Placement Agreement, dated as of October 27, 1997, between
the Company and Loewenbaum & Company Incorporated (the
"Placement Agent").
99.1 Press Release of the Company dated November 4, 1997.
<PAGE> 3
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.
CONTINUCARE CORPORATION
Date: November 13, 1997 By: /s/ Charles M. Fernandez
---------------------------------
Charles M. Fernandez
Chairman, Chief Executive Officer and President
<PAGE> 4
EXHIBIT INDEX
4.1 Indenture, dated as of October 30, 1997, between the Company and
American Stock Transfer & Trust Company, as Trustee, relating to 8%
Convertible Subordinated Notes Due 2002.
4.2 Registration Rights Agreement, dated as of October 30, 1997, by and
between the Company and Loewenbaum & Company Incorporated.
10.1 Placement Agreement, dated as of October 27, 1997, between the
Company and Loewenbaum & Company Incorporated (the "Placement
Agent").
99.1 Press release of the Company dated November 4, 1997.
<PAGE> 1
EXHIBIT 4.1
================================================================================
CONTINUCARE CORPORATION
------------------------------
------------------------------
INDENTURE
DATED AS OF OCTOBER 30, 1997
------------------------------
AMERICAN STOCK TRANSFER & TRUST COMPANY,
AS TRUSTEE
------------------------------
8% CONVERTIBLE SUBORDINATED NOTES DUE 2002
================================================================================
<PAGE> 2
TIE-SHEET
of provisions of Trust Indenture Act of 1939 with Indenture dated as
of October 30, 1997 between Continucare Corporation and American Stock Transfer
& Trust Company, as Trustee:
<TABLE>
<CAPTION>
ACT SECTION INDENTURE SECTION
<S> <C>
310(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.9
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.9
310(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
310(a)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.10, 6.11
310(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
310(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.13
311(a) and (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
311(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1, 4.2(a)
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2
312(b) and (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4
313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4
313(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4
313(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4
313(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4
313(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3
314(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
314(c)(1) and (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7
314(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
314(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
314(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7
314(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
315(a)(c) and (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1
315(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.8
315(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.9
316(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.7
316(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
316(a) last sentence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.9
316(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.2
317(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.5
317(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5
318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.8
</TABLE>
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THIS TIE-SHEET IS NOT PART OF THE INDENTURE AS EXECUTED.
<PAGE> 3
TABLE OF CONTENTS*
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
SECURITIES
SECTION 2.1 Forms Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.2 Execution and Authentication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.3 Form and Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.4 Legends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.5 Global Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.6 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.7 Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.8 Replacement Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.9 Treasury Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.10 Temporary Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 2.11 Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 2.12 Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 2.13 CUSIP Numbers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE III
PARTICULAR COVENANTS OF THE COMPANY
SECTION 3.1 Payment of Principal, Premium and Interest . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 3.2 Offices for Notices and Payments, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 3.3 Appointments to Fill Vacancies in Trustee's Office . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.4 Provision as to Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.5 Certificate to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 3.6 Compliance with Consolidation Provisions . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 3.7 Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 3.8 Payment of Taxes and Assessments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
</TABLE>
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* THIS TABLE OF CONTENTS SHALL NOT, FOR ANY PURPOSE, BE DEEMED TO BE A PART
OF THE INDENTURE.
i
<PAGE> 4
<TABLE>
<S> <C> <C>
ARTICLE IV
SECURITYHOLDERS' LISTS AND REPORTS BY THE
COMPANY AND THE TRUSTEE
SECTION 4.1 Securityholders' Lists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 4.2 Preservation and Disclosure of Lists . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 4.3 Reports by Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 4.4 Reports by the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE V
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT
SECTION 5.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 5.2 Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 5.3 Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 5.4 Waiver of Defaults and Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 5.5 Control by Majority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 5.6 Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 5.7 Rights of Holders to Receive Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 5.8 Collection Suit by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 5.9 Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 5.10 Application of Money Collected by Trustee. . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 5.11 Undertaking to Pay Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 5.12 Restoration of Rights and Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 5.13 Rights and Remedies Cumulative. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 5.14 Delay or Omission Not Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE VI
CONCERNING THE TRUSTEE
SECTION 6.1 Duties and Responsibilities of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 6.2 Reliance on Documents, Opinions, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 6.3 No Responsibility for Recitals, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 6.4 Trustee, Authenticating Agent, paying agents, Transfer Agents or Registrar May Own
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 6.5 Moneys to be Held in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 6.6 Compensation and Expenses of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 6.7 Officers' Certificate as Evidence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 6.8 Conflicting Interest of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 6.9 Eligibility of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 6.10 Resignation or Removal of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
</TABLE>
ii
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<TABLE>
<S> <C> <C>
SECTION 6.11 Acceptance by Successor Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 6.12 Succession by Merger, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 6.13 Limitation on Rights of Trustee as a Creditor . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 6.14 Authenticating Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE VII
CONCERNING THE SECURITYHOLDERS
SECTION 7.1 Action by Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 7.2 Proof of Execution by Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 7.3 Who Are Deemed Absolute Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 7.4 Securities Owned by Company Deemed Not Outstanding . . . . . . . . . . . . . . . . . . . . 41
SECTION 7.5 Revocation of Consents; Future Holders Bound . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE VIII
SECURITYHOLDERS' MEETINGS
SECTION 8.1 Purposes of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 8.2 Call of Meetings by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 8.3 Call of Meetings by Company or Securityholders . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 8.4 Qualifications for Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 8.5 Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 8.6 Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE IX
AMENDMENTS
SECTION 9.1 Without Consent of Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 9.2 With Consent of Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 9.3 Compliance with Trust Indenture Act; Effect of
Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 9.4 Notation on Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 9.5 Evidence of Compliance of Supplemental Indenture to be Furnished Trustee . . . . . . . . . 48
ARTICLE X
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
SECTION 10.1 Company May Consolidate, etc., on Certain Terms . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 10.2 Successor Corporation to be Substituted for Company . . . . . . . . . . . . . . . . . . . . 48
SECTION 10.3 Opinion of Counsel to be Given Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 49
</TABLE>
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<TABLE>
<S> <C> <C>
ARTICLE XI
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 11.1 Discharge of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 11.2 Deposited Moneys to be Held in Trust by Trustee . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 11.3 Paying Agent to Repay Moneys Held . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 11.4 Return of Unclaimed Moneys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE XII
REPURCHASE RIGHT
SECTION 12.1 Repurchase Right . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 12.2 Notice of Repurchase Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 12.3 Payment of Repurchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 12.4 Compliance With Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE XIII
REDEMPTION OF SECURITIES
SECTION 13.1 Optional Redemption by Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 13.2 Notice of Redemption; Selection of Securities . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 13.3 Payment of Securities on Redemptions; Deposit of
Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 13.4 No Sinking Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
ARTICLE XIV
SUBORDINATION OF SECURITIES
SECTION 14.1 Agreement that Securities to Be Subordinate . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 14.2 Liquidation; Dissolution; Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 14.3 Company Not to Make Payments with Respect to
Securities in Certain Circumstances . . . . . . . . . . . . . . . . . . . 56
SECTION 14.4 Payment Over of Proceeds in Certain Events . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 14.5 No Waiver of Subordination Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 14.6 Notice to Trustee of Specified Events; Reliance
on Certificate of Liquidating Agent . . . . . . . . . . . . . . . . . . . 58
SECTION 14.7 Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 14.8 Obligation to Pay Not Impaired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 14.9 Reliance by Senior Indebtedness on Subordination
Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 14.10 Subordination Not to Be Prejudiced by Certain Acts . . . . . . . . . . . . . . . . . . . . 59
SECTION 14.11 Trustee Authorized to Effectuate Subordination . . . . . . . . . . . . . . . . . . . . . . 60
</TABLE>
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<TABLE>
<S> <C> <C>
SECTION 14.12 Trustee's Relationship to Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 14.13 Trustee and Paying Agents Not Chargeable with
Knowledge Until Notice . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 14.14 Article Applicable to Paying Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 14.15 Trustee's Compensation Not Prejudiced . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
ARTICLE XV
CONVERSION
SECTION 15.1 Conversion Privilege . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 15.2 Conversion Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 15.3 Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 15.4 Taxes on Conversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 15.5 Company to Provide Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 15.6 Adjustment of Conversion Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 15.7 No Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 15.8 Other Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 15.9 Adjustments for Tax Purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 15.10 Notice of Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 15.11 Notice of Certain Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 15.12 Effect of Reclassifications, Consolidations, Mergers or Sales on Conversion Privilege . . . 67
SECTION 15.13 Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
ARTICLE XVI
MISCELLANEOUS PROVISIONS
SECTION 16.1 Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 16.2 Official Acts by Successor Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 16.3 Surrender of Company Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 16.4 Addresses for Notices, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 16.5 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 16.6 Evidence of Compliance with Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 16.7 Business Days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 16.8 Trust Indenture Act to Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 16.9 Table of Contents, Headings, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 16.10 Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 16.11 Separability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 16.12 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
EXHIBIT A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
Testimonium
Signatures
Acknowledgements
</TABLE>
v
<PAGE> 8
THIS INDENTURE, dated as of October 30, 1997, between
Continucare Corporation, a Florida corporation (hereinafter sometimes called
the "Company"), and American Stock Transfer & Trust Company, a New York
corporation, as trustee (hereinafter sometimes called the "Trustee"),
W I T N E S S E T H :
In consideration of the premises, and the purchase of the
Securities by the holders thereof, the Company covenants and agrees with the
Trustee for the equal and proportionate benefit of the respective holders from
time to time of the Securities, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions.
The terms defined in this Section 1.1 (except as herein
otherwise expressly provided or unless the context otherwise requires) for all
purposes of this Indenture shall have the respective meanings specified in this
Section 1.1. All other terms used in this Indenture which are defined in the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), or which
are by reference therein defined in the Securities Act, shall (except as herein
otherwise expressly provided or unless the context otherwise requires) have the
meanings assigned to such terms in said Trust Indenture Act and in said
Securities Act as in force at the date of this Indenture as originally
executed. All accounting terms used herein and not expressly defined shall
have the meanings assigned to such terms in accordance with generally accepted
accounting principles and the term "generally accepted accounting principles"
means such accounting principles as are generally accepted at the time of any
computation. 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. Headings are used for convenience of
reference only and do not affect interpretation. The singular includes the
plural and vice versa.
"Affiliate" shall have the meaning as set forth in Rule 501(b)
under the Securities Act.
"Authenticating Agent" shall mean any agent or agents of the
Trustee which at the time shall be appointed and acting pursuant to Section
6.14.
"Bankruptcy Law" shall mean Title 11, U.S. Code, or any
similar federal or state law for the relief of debtors.
<PAGE> 9
"Board of Directors" shall mean either the Board of Directors
of the Company or any duly authorized committee of that board.
"Board Resolution" shall mean 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" shall mean any day other than a Saturday or a
Sunday or a day on which banking institutions in The City of New York are
authorized or required by law or executive order to close.
"Capital Lease Obligation" shall mean, with respect to any
Person, at the time any determination thereof is to be made, any obligation of
such Person 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 such Person under generally accepted
accounting principles.
"Capital Stock" shall mean, with respect to any Person, any
capital stock of such Person and shares, interests, participations or other
ownership interests (however designated) in or of such Person and any rights
(other than debt securities convertible into capital stock), warrants or
options to purchase any of the foregoing, including, without limitation, each
class of common stock and preferred stock of such Person if such Person is a
corporation and each general and limited partnership interest of such Person if
such Person is a partnership.
"Commission" shall mean 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 Indenture 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" shall mean the Common Stock, par value $.0001
per share, of the Company or any other class of stock resulting from changes or
reclassifications of such Common Stock consisting solely of changes in par
value, or from par value to no par value, or from no par value to par value.
"Company" shall mean Continucare Corporation, a Florida
corporation, and, subject to the provisions of Article X, shall include its
successors and assigns.
"Company Request" or "Company Order" shall mean a written
request or order signed in the name of the Company by an Officer and delivered
to the Trustee.
"Company Notice" shall have the meaning set forth in Section
12.1.
2
<PAGE> 10
"Consolidated Net Worth" shall mean, with respect to any
Person as of any date, the sum of (i) the consolidated equity of the common
stockholders of such Person and its consolidated Subsidiaries as of such date
plus (ii) the respective amount reported on such Person's balance sheet as of
such date with respect to any series of preferred stock (other than
Disqualified Capital Stock).
"Conversion Agent" shall have the meaning set forth in Section
3.2.
"Conversion Price" shall have the meaning set forth in Section
15.1.
"Custodian" shall mean any receiver, trustee, assignee,
liquidator, or similar official under any Bankruptcy Law.
"Daily Market Price" shall mean the price of a share of Common
Stock on the relevant date, determined (a) on the basis of the closing price of
the Common Stock on the American Stock Exchange (the "Amex"), or if the Common
Stock is not then listed on the Amex, as reported on such national securities
exchange upon which the Common Stock is listed or the last reported sale price
regular way of the Common Stock as reported on the Nasdaq Stock Market's
National Market (the "NNM"), or (b) if there is no such reported sale on the
day in question, on the basis of the average of the closing bid and asked
quotations regular way as so reported, or (c) if the Common Stock is not listed
on the NNM or on any national securities exchange, on the basis of the average
of the high bid and low asked quotations regular way on the day in question in
the over-the-counter market as reported by National Association of Securities
Dealers Automated Quotation System, or if not so quoted, as reported by
National Quotation Bureau, Incorporated, or a similar organization.
"Default" means any event, act or condition that with notice
or lapse of time, or both, would constitute an Event of Default.
"Definitive Securities" shall mean those securities issued in
fully registered certificated form not otherwise in global form.
"Depositary" shall mean, with respect to Securities for which
the Company shall determine that such Securities will be issued as a Global
Security, The Depository Trust Company, New York, New York, another clearing
agency, or any successor registered as a clearing agency under the Exchange Act
or other applicable statute or regulation, which, in each case, shall be
designated by the Company pursuant to Section 2.5(b).
"Disqualified Capital Stock" shall mean, with respect to any
Person, any Capital Stock of such Person that, by its terms (or by the terms of
any security into which it is convertible or for which it is exercisable,
redeemable or exchangeable), matures, or is mandatorily redeemable, pursuant to
a sinking fund obligation or otherwise, or is redeemable at the option of the
holder thereof, in whole or in part, on or prior to the maturity of the
Securities.
3
<PAGE> 11
"Event of Default" shall mean any event specified in Section
5.1, continued for the period of time, if any, and after the giving of the
notice, if any, therein designated.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Global Security" means, with respect to the Securities, a
Security executed by the Company and delivered by the Trustee to the Depositary
or pursuant to the Depositary's instruction, all in accordance with this
Indenture, which shall be registered in the name of the Depositary or its
nominee.
"Indenture" shall mean this instrument as originally executed
or, if amended as herein provided, as so amended.
"Interest Payment Date" shall have the meaning set forth in
Section 2.6.
"Liquidated Damages" shall have the meaning set forth in the
Registration Rights Agreement.
"Market Capitalization" of the Company, as of any date, shall
mean the product of the current market price (determined in accordance with
Section 15.6(e)) of the Common Stock on such date and the number of shares of
Common Stock outstanding on such date.
"Maturity Date" shall mean October 31, 2002.
"Offering Memorandum" shall mean the Offering Memorandum dated
October 27, 1997 with respect to the Securities.
"Officer" shall mean any of the Chairman, a Vice Chairman, the
Chief Executive Officer, the President, the Chief Financial Officer, a Vice
President, the Treasurer, any Assistant Treasurer, the Controller, the
Secretary or an Assistant Secretary of the Company.
"Officers' Certificate" shall mean a certificate signed by two
Officers and delivered to the Trustee.
"Opinion of Counsel" shall mean a written opinion of counsel,
who may be an employee of or counsel to the Company or the Trustee, and who
shall be acceptable to the Trustee.
"Optional Redemption Price" shall have the meaning set forth
in Section 13.1.
4
<PAGE> 12
The term "outstanding" when used with reference to Securities,
shall, subject to the provisions of Section 7.4, mean, as of any particular
time, all Securities authenticated and delivered by the Trustee or the
Authenticating Agent under this Indenture, except
(a) Securities theretofore cancelled by the Trustee or
the Authenticating Agent or delivered to the Trustee
for cancellation;
(b) Securities, or portions thereof, for the payment or
redemption of which moneys in the necessary amount
shall have been deposited in trust with the Trustee
or with any paying agent (other than the Company) or
shall have been set aside and segregated in trust by
the Company (if the Company shall act as its own
paying agent); provided that, if such Securities, or
portions thereof, are to be redeemed prior to
maturity thereof, notice of such redemption shall
have been given as in Article Fourteen provided or
provision satisfactory to the Trustee shall have been
made for giving such notice; and
(c) Securities in lieu of or in substitution for which
other Securities shall have been authenticated and
delivered pursuant to the terms of Section 2.8 unless
proof satisfactory to the Company and the Trustee is
presented that any such Securities are held by bona
fide holders in due course.
(d) Securities converted into Common Stock or redeemed in
accordance with this Indenture.
"Permitted Junior Securities" shall mean any securities
provided for by a plan of reorganization or readjustment authorized by a court
of competent jurisdiction in a reorganization proceeding in which the rights of
holders of Senior Indebtedness are not altered without the consent of such
holders, which consent is deemed to have been given if such holders,
individually or as a class, approve such plan.
"Person" shall mean any individual, corporation, estate,
partnership, joint venture, association, joint-stock company, limited liability
company, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Placement Agent" shall mean Loewenbaum & Co. Incorporated, as
the placement agent of the Securities pursuant to the Placement Agreement.
"Placement Agreement" shall mean the Placement Agreement dated
October 27, 1997 between the Company, the Placement Agent and each Purchaser
who is a signatory thereto.
"Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same debt and as that
evidenced by such particular
5
<PAGE> 13
Security; and, for the purposes of this definition, any Security authenticated
and delivered under Section 2.8 in lieu of a lost, destroyed or stolen Security
shall be deemed to evidence the same debt as the lost, destroyed or stolen
Security.
"Principal office of the Trustee", or other similar term,
shall mean the principal office of the Trustee, at which at any particular time
its corporate trust business shall be administered.
"Redemption Date," when used with respect to any Security to
be redeemed, shall mean the date fixed for such redemption pursuant to this
Indenture.
"Regular Record Date" shall have the meaning set forth in
Section 2.6.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated October 30, 1997, between the Company and the Placement Agent
as such agreement may be amended, modified or supplemented from time to time.
A "Repurchase Event" shall occur if after initial issuance of
the Securities:
(i) any Person (including any syndicate or group
deemed to be a "Person" under Section 13(d)(3) of the Exchange
Act), other than the Company, any Subsidiary of the Company or
any current or future employee or director benefit plan of the
Company of any Subsidiary of the Company or any entity holding
capital stock of the Company for or pursuant to the terms of
such plan, or an underwriter engaged in a firm commitment
underwriting in connection with a public offering of capital
stock of the Company, is or becomes the beneficial owner,
directly or indirectly, through a purchase, merger or other
acquisition transaction or series of transactions of shares of
Capital Stock of the Company entitling such Person to exercise
50% or more of the total voting power of all shares of Capital
Stock of the Company entitled to vote generally in the
election of directors;
(ii) the Company sells or transfers all or
substantially all of the assets of the Company to another
Person;
(iii) there occurs any consolidation of the Company
with, or merger of the Company into, any other Person, any
merger of another Person into the Company (other than a merger
(a) which does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of Common
Stock, (b) which is effected solely to change the jurisdiction
of incorporation of the Company and results in a
reclassification, conversion or exchange of outstanding shares
of Common Stock solely into shares of Common Stock, or (c) a
transaction in which the stockholders of the Company
immediately prior to such transaction owned, directly or
indirectly, immediately following such
6
<PAGE> 14
transaction, at least a majority of the combined voting power
of the outstanding voting stock of the Company resulting from
the transaction, such stock to be owned by such stockholders
in substantially the same proportion as their ownership of the
voting stock of the Company immediately prior to such
transaction);
(iv) a change in the Board of Directors of the
Company in which the individuals who constituted the Board of
Directors of the Company at the beginning of the 24-month
period immediately preceding such change (together with any
other director whose election by the Board of Directors of the
Company or whose nomination for election by the stockholders
of the Company was approved by a vote of at least a majority
of the directors then in office either who were directors at
the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason
to constitute a majority of the directors then in office; or
(v) the Common Stock of the Company is the subject
of a "Rule 13e-3 transaction" as defined under the Exchange
Act.
"Repurchase Date" shall have the meaning set forth in Section
12.1.
"Responsible Officer", when used with respect to the Trustee,
shall mean the chairman or any vice chairman of the board of directors, the
chairman or any vice chairman of the executive committee of the board of
directors, the chairman of the trust committee, the president, any vice
president, the cashier, any assistant cashier, the secretary, any assistant
secretary, the treasurer, any assistant treasurer, any trust officer or
assistant trust officer, the controller or any assistant controller or any
other officer or assistant officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers
and also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his knowledge of and
familiarity with the particular subject.
"Restricted Payment" shall mean, with respect to any Person,
(i) the declaration or payment of any dividend or the incurrence of any
liability to make any other payment or distribution of cash or other property
or assets (other than a payment or distribution consisting solely of Capital
Stock of the Company, other than Disqualified Capital Stock), by such Person in
respect of such Person's Capital Stock, excluding dividends from one Subsidiary
of the Company to another Subsidiary of the Company or to the Company and
excluding cash dividends by the Company which do not exceed $2.0 million in the
aggregate in any fiscal year, (ii) except for the purchase of shares of Common
Stock of the Company in the aggregate amount of up to $2.0 million in any
fiscal year, any payment on account of the purchase, redemption, defeasance or
other requirement of such Person's Capital Stock (other than payment or
distribution consisting solely of Capital Stock of the Company, other than
Disqualified Capital Stock) or any other payment or distribution made in
respect thereof,
7
<PAGE> 15
either directly or indirectly or by merger, consolidation or otherwise or (iii)
any payment, loan, contribution, or other transfer of funds or other property
(other than payments or distributions consisting solely of Capital Stock of the
Company, other than Disqualified Capital Stock) to any stockholder of such
Person in their capacity as stockholders as opposed to employees, directors or
consultants.
"Restricted Security" shall mean Securities that bear or are
required to bear the legends set forth in Exhibit A hereto.
"Rule 144A" means Rule 144A under the Securities Act, as such
Rule may be amended from time to time, or under any similar rule or regulation
hereafter adopted by the Commission.
"Securities" means 8% Convertible Subordinated Notes due 2002
of the Company as authenticated and issued under this Indenture.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Securityholder", "holder of Securities", or other similar
terms, shall mean any person in whose name at the time a particular Security is
registered on the register kept by the Company or the Trustee for that purpose
in accordance with the terms hereof.
"Security Register" shall mean the list of holders provided to
the Trustee pursuant to Section 4.1 or any security register maintained by a
security registrar for the securities appointed by the Company.
"Senior Indebtedness" means, with respect to the Company, any
of the following (without duplication): (i)(a) any liability or obligation of
the Company for borrowed money (including, without limitation, principal of and
premium, if any, interest, fees, penalties, expenses, collection expenses, and
other obligations in respect thereof, and, to the extent permitted by
applicable law, interest accruing after the filing of a petition initiating any
proceeding under the Bankruptcy Law whether or not allowed as a claim in such
proceeding), whether or not evidenced by bonds, debentures, notes or other
written instruments, and any other liability or obligation evidenced by notes,
bonds, debentures or similar instruments whether or not contingent, (b) any
deferred payment obligation of the Company for the payment of the purchase
price of property or assets evidenced by a note or similar instrument
(excluding any obligation for trade payables or constituting the deferred
purchase price of property or assets which is not evidenced by a note or
similar instrument and which is unsecured), (c) any Capital Lease Obligations
of the Company, (d) all obligations of the Company under interest rate and
currency swaps, floors, caps, or similar arrangements intended to fix interest
rate obligations or currency fluctuation risks, (e) all obligations of the
Company evidenced by a letter of credit or any reimbursement obligation of the
Company in respect of a letter of credit, (f) all obligations of others secured
by a lien to which any of the properties or assets of the Company are subject
(including, without
8
<PAGE> 16
limitation, leasehold interests and any intangible property rights), whether or
not the obligations secured thereby have been assumed by the Company or shall
otherwise be the Company's legal obligation and, with respect to any of the
foregoing items described in clauses (a) through (f) above, whether outstanding
on the date of execution of this Indenture or hereafter created, incurred or
assumed and (g) all obligations of others of the kinds described in the
preceding clauses (a), (b), (c), (d) or (e) assumed by or guaranteed by the
Company and the obligations of the Company under guarantees of any such
obligations; and (ii) any amendments, renewals, extensions, deferrals,
modifications, refinancing and refunding of any of the foregoing. "Senior
Indebtedness" shall not include: (i) indebtedness that by the terms of the
instrument or instruments by which such indebtedness was created or incurred
expressly provides that it (a) is junior in right of payment to the Securities
or (b) ranks pari passu in right of payment with the Securities, (ii) any
repurchase, redemption or other obligation in respect of Disqualified Capital
Stock, (iii) any indebtedness of the Company to any Subsidiary of the Company
or to any Affiliate of the Company, (iv) any indebtedness incurred in
connection with the purchase of goods, assets, materials or services in the
ordinary course of business or representing amounts recorded as accounts
payable, trade payables (which are unsecured) or other current liabilities
(other than for borrowed money) or deferred revenue and deposits of the Company
on the books of the Company (other than the current portion of any long-term
indebtedness of the Company that, but for this clause (iv), would constitute
Senior Indebtedness), (v) any indebtedness of or amount owed by the Company to
employees for services rendered to the Company or in connection with the
severance of employment, (vi) any liability for Federal, state, local or other
taxes owing or owed by the Company or (vii) obligations in respect of the
Securities.
"Significant Subsidiary" shall mean any Subsidiary of the
Company that would be a "significant subsidiary" of the Company within the
meaning of Rule 1-02(w)(3) under Regulation S-X promulgated by the Commission
as in effect on the date hereof.
"Subsidiary" shall mean with respect to any Person, (i) any
corporation or other entity at least a majority of whose outstanding voting
stock of which is owned, directly or indirectly, by such Person or by one or
more of its Subsidiaries, or by such Person and one or more of its
Subsidiaries, (ii) any general partnership, joint venture or similar entity, at
least a majority of whose outstanding partnership or similar interests shall at
the time be owned by such Person, or by one or more of its Subsidiaries, or by
such Person and one or more of its Subsidiaries and (iii) any limited
partnership of which such Person or any of its Subsidiaries is a general
partner. For the purposes of this definition, "voting stock" means shares,
interests, participations or other equivalents in the equity interest (however
designated) in such Person having ordinary voting power for the election of a
majority of the directors (or the equivalent) of such Person, other than
shares, interests, participations or other equivalents having such power only
by reason of the occurrence of a contingency.
9
<PAGE> 17
"Trading Day" shall mean a day on which the principal
securities exchange upon which the Common Stock is listed or, if the Common
Stock is not listed on any securities exchange, the over-the-counter market, is
open for trading in the Common Stock.
"Transfer Restricted Security" shall have the meaning set
forth in the Registration Rights Agreement.
"Trustee" shall mean the Person identified as "Trustee" in the
first paragraph hereof, and, subject to the provisions of Article Six hereof,
shall also include its successors and assigns as Trustee hereunder. The term
"Trustee" as used with respect to a particular series of the Securities shall
mean the trustee with respect to that series.
"Trust Indenture Act of 1939" shall mean the Trust Indenture
Act of 1939 as in force at the date of execution of this Indenture, except as
provided in Section 9.3.
ARTICLE II
SECURITIES
SECTION 2.1 Forms Generally.
The Securities and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A, the terms of which are
incorporated in and made a part of this Indenture. The Securities may have
notations, legends or endorsements required by law, stock exchange rule,
agreements to which the Company is subject or usage. Each Security shall be
dated the date of its authentication. The Securities shall be issued in
denominations of $1,000 and integral multiples thereof.
SECTION 2.2 Execution and Authentication.
Two Officers shall sign the Securities for the Company by
manual or facsimile signature. If an Officer whose signature is on a Security
no longer holds that office at the time the Security is authenticated, the
Security shall nevertheless be valid.
A Security shall not be valid until authenticated by the
manual signature of the Trustee. The signature of the Trustee shall be
conclusive evidence that the Security has been authenticated under this
Indenture. The form of Trustee's certificate of authentication to be borne by
the Securities shall be substantially as set forth in Exhibit A hereto.
The Trustee shall, upon a Company Order, authenticate for
original issue up to, and the aggregate principal amount of Securities
outstanding at any time may not exceed, $46,000,000 aggregate principal amount
of the Securities; except as provided in Sections 2.7, 2.8, 2.10 and 14.3.
10
<PAGE> 18
SECTION 2.3 Form and Payment.
Except as provided in Section 2.5, the Securities shall be
issued in fully registered certificated form without interest coupons.
Principal of and premium, if any, and interest on the Securities issued in
certificated form will be payable, the transfer of such Securities will be
registrable and such Securities will be exchangeable for Securities bearing
identical terms and provisions at the office or agency of the Trustee;
provided, however, that payment of interest with respect to Securities in
global form may be made at the option of the Company (i) by check mailed to the
holder at such address as shall appear in the Security Register or (ii) by
transfer to an account maintained by the Person entitled thereto, provided that
proper transfer instructions have been received in writing by the relevant
record date.
SECTION 2.4 Legends.
Except as otherwise determined by the Company in accordance
with applicable law, each Security shall bear the applicable legends relating
to restrictions on transfer pursuant to the securities laws in substantially
the form set forth on Exhibit A hereto.
SECTION 2.5 Global Security.
(a) The Global Securities shall represent the aggregate
amount of outstanding Securities from time to time endorsed thereon; provided,
that the aggregate amount of outstanding Securities represented thereby may
from time to time be reduced or increased, as appropriate, to reflect exchanges
and redemptions. Any endorsement of a Global Security to reflect the amount of
any increase or decrease in the amount of outstanding Securities represented
thereby shall be made by the Trustee, in accordance with instructions given by
the Company as required by this Section 2.5.
(b) The Global Securities may be transferred, in whole
but not in part, only to another nominee of the Depositary, or to a successor
Depositary selected or approved by the Company or to a nominee of such
successor Depositary.
(c) If at any time the Depositary notifies the Company
that it is unwilling or unable to continue as Depositary or the Depositary has
ceased to be a clearing agency registered under the Exchange Act, and a
successor Depositary is not appointed by the Company within 90 days after the
Company receives such notice or becomes aware of such condition, as the case
may be, the Company will execute, and the Trustee, upon written notice from the
Company, will authenticate and make available for delivery the Definitive
Securities, in authorized denominations, and in an aggregate principal amount
equal to the principal amount of the Global Security in exchange for such
Global Security. If there is an Event of Default, the Depositary shall have
the right to exchange the Global Securities for Definitive Securities. In
addition, the Company may at any time determine that the Securities shall no
longer be represented by a Global Security. In the event of such an Event of
Default or such a determination, the Company shall execute, and subject to
Section 2.7, the
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Trustee, upon receipt of an Officers' Certificate evidencing such determination
by the Company, will authenticate and make available for delivery the
Definitive Securities, in authorized denominations, and in an aggregate
principal amount equal to the principal amount of the Global Security in
exchange for such Global Security. Upon the exchange of the Global Security
for such Definitive Securities, in authorized denominations, the Global
Security shall be cancelled by the Trustee. Such Definitive Securities issued
in exchange for the Global Security shall be registered in such names and in
such authorized denominations as the Depositary, pursuant to instructions from
its direct or indirect participants or otherwise, shall instruct the Trustee.
The Trustee shall deliver such Definitive Securities to the Depositary for
delivery to the Persons in whose names such Definitive Securities are so
registered.
SECTION 2.6 Interest.
(a) Each Security will bear interest at the rate of 8% per
annum (the "Coupon Rate") from the most recent date to which interest has been
paid or, if no interest has been paid, from October 30, 1997, until the
principal thereof becomes due and payable, and on any overdue principal and (to
the extent that payment of such interest is enforceable under applicable law) on
any overdue installment of interest at the Coupon Rate, compounded semi-
annually, payable semi-annually in arrears on April 30 and October 31 of each
year (each, an "Interest Payment Date") commencing on April 30, 1998, to the
Person in whose name such Security or any Predecessor Security is registered, at
the close of business on the regular record date for such interest installment,
which shall be April 15 or October 15 (whether or not a Business Day), as the
case may be, next preceding such Interest Payement Date (each a "Regular Record
Date").
(b) Interest will be computed on the basis of a 360-day
year consisting of twelve 30-day months, based on actual days elapsed. In the
event that any Interest Payment Date falls on a day that is not a Business Day,
then payment of interest payable on such date will be made on the next
succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay), with the same force and effect as if
made on such date.
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SECTION 2.7 Transfer and Exchange.
(a) The Securities may not be transferred except in
compliance with the legend contained in Exhibit A unless otherwise determined
by the Company in accordance with applicable law.
(b) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Definitive Securities
and Global Securities at the Trustee's request. All Definitive Securities and
Global Securities issued upon any registration of transfer or exchange of
Definitive Securities or Global Securities shall be the valid obligations of
the Company, evidencing the same debt, and entitled to the same benefits under
this Indenture, as the Definitive Securities or Global Securities surrendered
upon such registration of transfer or exchange.
No service charge shall be made to a holder for any
registration of transfer or exchange, but the Company may require payment of a
sum sufficient to cover any transfer tax or similar governmental charge payable
in connection therewith.
The Company shall not be required to (i) issue, register the
transfer of or exchange Securities during a period beginning at the opening of
business 15 days before the day of mailing of a notice of redemption or any
notice of selection of Securities for redemption under Article Thirteen hereof
and ending at the close of business on the day of such mailing; or (ii)
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.
Prior to due presentment for the registration of a transfer of
any Security, the Trustee, any agent thereof and the Company may deem and treat
the Person in whose name any Security is registered as the absolute owner of
such Security for the purpose of receiving payment of principal of and premium,
if any, and interest on such Securities, and neither the Trustee, any agent
thereof nor the Company shall be affected by notice to the contrary.
(c) When Definitive Securities are presented to the
Security registrar with a request:
(x) to register the transfer of such Definitive
Securities; or
(y) 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 registration
of transfer or exchange:
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(1) 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 Securityholder or his attorney
duly authorized in writing; and
(2) in the case of Definitive Securities that are
Restricted Securities, such request shall be accompanied by the following
additional information and documents, as applicable:
(A) if such Restricted Securities are
being delivered to the Security registrar by a Securityholder
for registration in the name of such Securityholder, without
transfer, a certification from such Securityholder to that
effect (in substantially the form set forth on the reverse of
the Security); or
(B) if such Restricted Security is being
transferred to a "qualified institutional buyer" (as defined
in Rule 144A) in accordance with Rule 144A a certification to
that effect (in substantially the form set forth on the
reverse of the Security); or
(C) if such Restricted Security is being
transferred (i) pursuant to an exemption from registration in
accordance with Rule 144 or Regulation S under the Securities
Act or (ii) pursuant to an effective registration statement
under the Securities Act, or (iii) in a minimum principal
amount of $100,000 to an "institutional accredited investor"
within the meaning of Rule 501(A)(1), (2), (3) or (7) under
the Securities Act that is acquiring the security for its own
account, or for the account of such an institutional
accredited investor, not with a view to or for offer or sale
in connection with any distribution in violation of the
Securities Act, or (iv) in reliance on another exemption from
the registration requirements of the Securities Act, a
certification to that effect (in substantially the form set
forth on the reverse of the Security) and in the case of (i),
(iii) and (iv) above, if the Company or the Security registrar
so request, an Opinion of Counsel reasonably acceptable to the
Company and to the Security registrar to the effect that such
transfer is in compliance with the Securities Act, and, in the
case of (iii) above, a letter from the transferee
substantially in the form of Annex A to the Offering
Memorandum.
(d) 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 Security registrar of a
Definitive Security, duly endorsed or accompanied by appropriate instruments of
transfer, in form satisfactory to the Security registrar, together with:
(1) if such Definitive Security is a Restricted
Security, certification, substantially in the form set forth on the reverse of
the Security, that such Definitive Security
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<PAGE> 22
is being transferred to a "qualified institutional buyer" (as defined in Rule
144A) in accordance with Rule 144A; and
(2) whether or not such Definitive Security is a
Restricted Security, written instructions of the Securityholder directing the
Security registrar to make, or to direct the Trustee to make, an endorsement on
the Global Security to reflect an increase in the aggregate principal amount of
the Securities represented by the Global Security,
then the Security registrar shall cancel such Definitive Security and cause, or
direct the Trustee to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Trustee, the aggregate
principal amount of Securities represented by the Global Security to be
increased accordingly. If no Global Securities are then outstanding, the
Company shall issue and the Trustee shall authenticate a new Global Security in
the appropriate principal amount.
(e) The transfer and exchange of Global Securities or
beneficial interests therein 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 which
shall include restrictions on transfer comparable to those set forth herein to
the extent required by the Securities Act.
(f) Any Person having a beneficial interest in a Global
Security may upon request exchange such beneficial interest for a Definitive
Security. Upon receipt by the Security registrar of written instructions or
such other form of instructions as is customary for the Depositary from the
Depositary or its nominee on behalf of any Person having a beneficial interest
in a Global Security and upon receipt by the Security registrar of a written
order or such other form of instructions as is customary for the Depositary or
the Person designated by the Depositary as having such a beneficial interest in
a Restricted Security only, the following additional information and documents
(all of which may be submitted by facsimile):
(A) if such beneficial interest is being
transferred to the Person designated by the
Depositary as being the beneficial owner, a
certification from such person to that effect (in
substantially the form set forth on the reverse of
the Security); or
(B) if such beneficial interest is being
transferred to a "qualified institutional buyer" (as
defined in Rule 144A) in accordance with Rule 144A a
certification to that effect from the transferor (in
substantially the form set forth on the reverse of
the Security); or
(C) if such beneficial interest is being
transferred (i) pursuant to an exemption from
registration in accordance with Rule 144 or
Regulation S under the Securities Act or (ii)
pursuant to an effective
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registration statement under the Securities Act, or
(iii) in a minimum principal amount of $100,000 to an
"institutional accredited investor" within the meaning
of Rule 501(A)(1), (2), (3) or (7) under the
Securities Act that is acquiring the security for its
own account, or for the account of such an
institutional accredited investor, not with any
distribution in violation of the Securities Act, or
(iv) in reliance on another exemption from the
registration requirements of the Securities Act, a
certification to that effect from the transferee or
transferor (in substantially the form set forth on the
reverse of the Security) and in the case of (i), (iii)
and (iv) above, if the Company or the Security
registrar so requests, an Opinion of Counsel from the
transferee or transferor reasonably acceptable to the
Company and to the Security registrar to the effect
that such transfer is in compliance with the
Securities Act, and, in the case of (iii) above, a
letter from the transferee substantially in the form
of Annex A to the Offering Memorandum;
then the Security registrar, or the Trustee, will cause, in accordance with the
standing instructions and procedures existing between the Depositary and the
Trustee, the aggregate principal amount of the Global Security to be reduced
and, following such reduction, the Company will execute and, upon receipt of an
authentication order in the form of an Officers' Certificate, the Trustee or
the Trustee's authenticating agent will authenticate and deliver to the
transferee a Definitive Security.
(2) Definitive Securities issued in exchange for
a beneficial interest in a Global Security pursuant to this Section 2.7(f)
shall be registered in such names and in such authorized denominations as the
Depositary, pursuant to instructions from its direct or indirect participants
or otherwise, shall instruct the Security registrar. The Security registrar
shall deliver such Definitive Securities to the persons in whose names such
Securities are so registered.
(g) (1) Except as permitted by the following
paragraph (2), each Security certificate evidencing the Global
Securities and the Definitive Securities (and all securities
issued in exchange therefor or substitution thereof) shall
bear legends in substantially the form set forth on Exhibit A
hereto.
(2) Upon any sale or transfer of a Restricted
Security (including any Restricted Security represented by a
Global Security) pursuant to Rule 144 under the Securities Act
or an effective registration statement under the Securities
Act:
(A) in the case of any Restricted
Security that is a Definitive Security, the Security
registrar shall permit the Securityholder to exchange
such Restricted Security for a Definitive Security
that does not bear the legend required by the
preceding paragraph (1) and rescind
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any restriction on the transfer of such Restricted
Security in the case of a sale or transfer pursuant
to Rule 144 under the Securities Act, after the date
which is two years after the later of the date hereof
and the last date on which the Company or any
Affiliate of the Company was the owner of such
Security or delivery of an Opinion of Counsel; and
(B) any such Restricted Security
represented by a Global Security shall not be subject
to the provisions set forth in the legend required by
paragraph (1) above (such sales or transfers being
subject only to the provisions of Section 2.7(e)
hereof); provided, however, that with respect to any
request for an exchange of a Restricted Security that
is represented by a Global Security for a Definitive
Security that does not bear a legend, which request
is made in reliance upon Rule 144 under the
Securities Act, the Securityholder shall certify in
writing (to be accompanied by an Opinion of Counsel)
to the Security registrar that such request is being
made pursuant to Rule 144 under the Securities Act
(such certification to be substantially in the form
set forth on the reverse of the Security).
SECTION 2.8 Replacement Securities.
If any mutilated Security is surrendered to the Trustee, or
the Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Security, the Company shall issue and the
Trustee shall authenticate a replacement Security if the Trustee's requirements
for replacements of Securities are met. An indemnity bond must be supplied by
the holder that is sufficient in the judgment of the Trustee and the Company to
protect the Company, the Trustee, any agent thereof or any Authenticating Agent
from any loss that any of them may suffer if a Security is replaced. The
Company or the Trustee may charge for its expenses in replacing a Security.
Every replacement Security is an obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Securities duly issued hereunder.
SECTION 2.9 Treasury Securities.
In determining whether the holders of the required principal
amount of Securities have concurred in any direction, waiver or consent,
Securities owned by the Company or any Affiliate of the Company shall be
considered as though not outstanding, except that for purposes of determining
whether the Trustee shall be protected in relying on any such direction, waiver
or consent, only Securities that a Trustee actually knows to be so owned shall
be so considered.
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SECTION 2.10 Temporary Securities.
Pending the preparation of Definitive Securities, the Company
may execute, and upon Company Order the Trustee shall authenticate and make
available for delivery, temporary Securities that are printed, lithographed,
typewritten, mimeographed or otherwise reproduced, 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 conclusively evidenced by their execution of such Securities.
If temporary Securities are issued, the Company shall cause
Definitive Securities to be prepared without unreasonable delay. The
Definitive Securities shall be printed, lithographed or engraved, or provided
by any combination thereof, or in any other manner permitted by the rules and
regulations of any applicable securities exchange, all as determined by the
officers executing such Definitive Securities. After the preparation of
Definitive Securities, the temporary Securities shall be exchangeable for
Definitive Securities upon surrender of the temporary Securities at the office
or agency maintained by the Company for such purpose pursuant to Section 3.2
hereof, 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 make available for delivery, in exchange therefor the
same aggregate 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 2.11 Cancellation.
The Company at any time may deliver Securities to the Trustee
for cancellation. The Trustee and no one else shall cancel all Securities
surrendered for registration of transfer, exchange, payment, replacement or
cancellation and shall retain or destroy cancelled Securities in accordance
with its normal practices (subject to the record retention requirement of the
Exchange Act) unless the Company directs them to be returned to it. The
Company may not issue new Securities to replace Securities that have been
redeemed or paid or that have been delivered to the Trustee for cancellation.
All cancelled Securities held by the Trustee shall be delivered to the Company.
SECTION 2.12 Defaulted Interest.
Any interest on any Security that 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 shall be paid by the Company, at its election, as
provided in clause (a) or clause (b) below:
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(a) The Company may make payment of any Defaulted Interest on
Securities to the Persons in whose names such 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 such 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 provided. Thereupon the Trustee shall fix
a special record date for the payment of such Defaulted Interest which
shall not be more than 15 nor less than 10 days prior to the date of
the proposed payment 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
Securityholder at his or her 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 mailed as afore- said, such
Defaulted Interest shall be paid to the Persons in whose names such
Securities (or their respective Predecessor Securities) are registered
on such special record date and shall be no longer payable pursuant to
the following clause (b).
(b) The Company may make payment of any Defaulted Interest on
any Securities in any other lawful manner not inconsistent with the
requirements of any securities exchange on which such 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, such manner of payment shall be
deemed practicable by the Trustee.
SECTION 2.13 CUSIP Numbers.
The Company in issuing the Securities may use "CUSIP" numbers
(if then generally in use), and, if so, the Trustee shall use "CUSIP" numbers
in notices of redemption as a convenience to Securityholders; provided that any
such notice may state that no representation is made as to the correctness of
such numbers either as printed on the Securities or as contained in any notice
of a redemption and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such redemption shall
not be affected by any defect in or omission of such numbers. The Company will
promptly notify the Trustee of any change in the CUSIP numbers.
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ARTICLE III
PARTICULAR COVENANTS OF THE COMPANY
SECTION 3.1 Payment of Principal, Premium and
Interest.
The Company covenants and agrees for the benefit of the
holders of the Securities that it will duly and punctually pay or cause to be
paid the principal of and premium, if any, and interest on the Securities at
the place, at the respective times and in the manner provided herein. Each
installment of interest on the Securities may be paid by mailing checks for
such interest payable to the order of the holder of Security entitled thereto
as they appear in the Security Register. The Company further covenants to pay
any and all amounts including, without limitation, Liquidated Damages, if any,
on the dates and in the manner required under the Registration Rights
Agreement.
SECTION 3.2 Offices for Notices and Payments, etc.
So long as any of the Securities remains outstanding, the
Company will maintain in the Borough of Manhattan, The City of New York, an
office or agency where the Securities may be presented for payment, an office
or agency where Securities may be presented for conversion ("Conversion
Agent"), an office or agency where the Securities may be presented for
registration of transfer and for exchange as in this Indenture provided and an
office or agency where notices and demands to or upon the Company in respect of
the Securities or of this Indenture may be served. The Company will give to
the Trustee written notice of the location of any such office or agency and of
any change of location thereof. Until otherwise designated from time to time
by the Company in a notice to the Trustee, any such office or agency for all of
the above purposes shall be the office or agency of the Trustee. In case the
Company shall fail to maintain any such office or agency in the Borough of
Manhattan, The City of New York, or shall fail to give such notice of the
location or of any change in the location thereof, presentations and demands
may be made and notices may be served at the principal corporate trust office
of the Trustee.
In addition to any such office or agency, the Company may from
time to time designate one or more offices or agencies outside the Borough of
Manhattan, The City of New York, where the Securities may be presented for
registration of transfer and for exchange in the manner provided in this
Indenture, and the Company may from time to time rescind such designation, as
the Company may deem desirable or expedient; provided, however, that no such
designation or rescission shall in any manner relieve the Company of its
obligation to maintain any such office or agency in the Borough of Manhattan,
The City of New York, for the purposes above mentioned. The Company will give
to the Trustee prompt written notice of any such designation or rescission
thereof.
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SECTION 3.3 Appointments to Fill Vacancies in Trustee's
Office.
The Company, whenever necessary to avoid or fill a vacancy in
the office of Trustee, will appoint, in the manner provided in Section 6.10, a
Trustee, so that there shall at all times be a Trustee hereunder.
SECTION 3.4 Provision as to Paying Agent.
(a) If the Company shall appoint a paying agent other
than the Trustee with respect to the Securities, it
will cause such paying agent to execute and deliver
to the Trustee an instrument in which such agent
shall agree with the Trustee, subject to the
provision of this Section 3.4,
(1) that it will hold all sums held by it as such
agent for the payment of the principal of and
premium, if any, or interest on the
Securities (whether such sums have been paid
to it by the Company or by any other obligor
on the Securities of such series) in trust
for the benefit of the holders of the
Securities; and
(2) that it will give the Trustee notice of any
failure by the Company (or by any other
obligor on the Securities) to make any
payment of the principal of and premium or
interest on the Securities when the same
shall be due and payable.
(b) If the Company shall act as its own paying agent, it
will, on or before each due date of the principal of
and premium, if any, or interest on the Securities,
set aside, segregate and hold in trust for the
benefit of the holders of the Securities a sum
sufficient to pay such principal, premium or interest
so becoming due and will notify the Trustee of any
failure to take such action and of any failure by the
Company (or by any other obligor under the
Securities) to make any payment of the principal of
and premium, if any, or interest on the Securities
when the same shall become due and payable.
(c) Anything in this Section 3.4 to the contrary
notwithstanding, the Company may, at any time, for
the purpose of obtaining a satisfaction and discharge
with respect to the Securities hereunder, or for any
other reason, pay or cause to be paid to the Trustee
all sums held in trust for such Securities by the
Trustee or any paying agent hereunder, as required by
this Section 3.4, such sums to be held by the Trustee
upon the trusts herein contained.
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(d) Anything in this Section 3.4 to the contrary
notwithstanding, the agreement to hold sums in trust
as provided in this Section 3.4 is subject to
Sections 11.3 and 11.4.
SECTION 3.5 Certificate to Trustee.
The Company covenants and agrees to deliver to the Trustee, on
or before a date not more than 90 days after the end of each fiscal year of the
Company ending after the date hereof and on or before a date not more than 90
days after the end of each six-month period after the end of each fiscal year,
a certificate from its principal executive officer, principal financial officer
or principal accounting officer stating that he or she is familiar with the
affairs of the Company, stating that a review of the activities of the Company
and of its Subsidiaries during the preceding fiscal year has been made under
the supervision of the signing officers with a view to determining whether the
Company has kept, observed, performed and fulfilled its obligations under this
Indenture and further stating, as to each such officer signing such
certificate, that to the best of his or her knowledge the Company has kept,
observed, performed and fulfilled each and every covenant in this Indenture
contained and is not in default in the performance and observance of any of the
terms, provisions and conditions hereof (or, if the Company shall be in
default, specifying all such defaults and the nature thereof of which he or she
may have knowledge) and that to the best of his or her knowledge no event has
occurred and remains in existence by reason of which payments on account of the
principal of (or premium, if any) or interest on the Securities is prohibited.
SECTION 3.6 Compliance with Consolidation Provisions.
The Company will not, while any of the Securities remain
outstanding, consolidate with, or merge into, or merge into itself, or sell or
convey all or substantially all of its property to any other Person unless the
provisions of Article Ten hereof are complied with.
SECTION 3.7 Restricted Payments.
The Company shall not make any Restricted Payment to any
Person and the Company shall not permit any Subsidiary of the Company to make
any Restricted Payment other than to the Company.
SECTION 3.8 Payment of Taxes and Assessments.
The Company shall, and shall cause each Subsidiary of the
Company to, pay all taxes, assessments and governmental charges lawfully levied
or assessed upon it, its property, or upon any part thereof or upon its income
or profits, or any part thereof, before the same shall become delinquent;
provided that nothing in this Section 3.8 or elsewhere in
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this Indenture contained shall require the Company to pay any such tax
assessment or governmental charge so long as the applicability or validity
thereof shall be contested in good faith; and provided further, that neither
the Company nor any Subsidiary of the Company shall be required to pay any such
taxes, assessment or charges, if in the judgment of the Board of Directors of
the Company or such Subsidiary, such payment shall no longer be advantageous to
the Company or such Subsidiary in the conduct of its business.
ARTICLE IV
SECURITYHOLDERS' LISTS AND REPORTS BY THE
COMPANY AND THE TRUSTEE
SECTION 4.1 Securityholders' Lists.
The Company covenants and agrees that it will furnish or cause
to be furnished to the Trustee:
(a) on a semi-annual basis on each regular record date
for the Securities, a list, in such form as the
Trustee may reasonably require, of the names and
addresses of the Securityholders as of such 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,
except that, no such lists need be furnished so long as the Trustee is in
possession thereof by reason of its acting as Security registrar.
SECTION 4.2 Preservation and Disclosure of Lists.
(a) The Trustee shall preserve, in as current a form as
is reasonably practicable, all information as to the names and addresses of the
holders of the Securities (1) contained in the most recent list furnished to it
as provided in Section 4.1 or (2) received by it in the capacity of Securities
registrar (if so acting) hereunder. The Trustee may destroy any list furnished
to it as provided in Section 4.1 upon receipt of a new list so furnished.
(b) In case three or more holders of Securities
(hereinafter referred to as "applicants") apply in writing to the Trustee and
furnish to the Trustee reasonable proof that each such applicant has owned a
Security for a period of at least six months preceding the date of such
application, and such application states that the applicants desire to
communicate with other holders of Securities or with holders of all Securities
with respect to their rights
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under this Indenture and is accompanied by a copy of the form of proxy or other
communication which such applicants propose to transmit, then the Trustee shall
within 5 Business Days after the receipt of such application, at its election,
either:
(1) afford such applicants access to the information
preserved at the time by the Trustee in accordance
with the provisions of subsection (a) of this Section
4.2, or
(2) inform such applicants as to the approximate number
of holders of all Securities, whose names and
addresses appear in the information preserved at the
time by the Trustee in accordance with the provisions
of subsection (a) of this Section 4.2, and as to the
approximate cost of mailing to such Securityholders
the form of proxy or other communication, if any,
specified in such application.
If the Trustee shall elect not to afford such applicants
access to such information, the Trustee shall, upon the written request of such
applicants, mail to each Securityholder whose name and address appear in the
information preserved at the time by the Trustee in accordance with the
provisions of subsection (a) of this Section 4.2 a copy of the form of proxy or
other communication which is specified in such request with reasonable
promptness after a tender to the Trustee of the material to be mailed and of
payment, or provision for the payment, of the reasonable expenses of mailing,
unless within five days after such tender, the Trustee shall mail to such
applicants and file with the Commission, together with a copy of the material
to be mailed, a written statement to the effect that, in the opinion of the
Trustee, such mailing would be contrary to the best interests of the holders of
Securities or would be in violation of applicable law. Such written statement
shall specify the basis of such opinion. If the Commission, after opportunity
for a hearing upon the objections specified in the written statement so filed,
shall enter an order refusing to sustain any of such objections or if, after
the entry of an order sustaining one or more of such objections, the Commission
shall find, after notice and opportunity for hearing, that all the objections
so sustained have been met and shall enter an order so declaring, the Trustee
shall mail copies of such material to all such Securityholders with reasonable
promptness after the entry of such order and the renewal of such tender;
otherwise the Trustee shall be relieved of any obligation or duty to such
applicants respecting their application.
(c) Each and every holder of Securities, by receiving and
holding the same, agrees with Company and the Trustee that neither the Company
nor the Trustee nor any paying agent shall be held accountable by reason of the
disclosure of any such information as to the names and addresses of the holders
of Securities in accordance with the provisions of subsection (b) of this
Section 4.2, regardless of the source from which such information was derived,
and that the Trustee shall not be held accountable by reason of mailing any
material pursuant to a request made under said subsection (b).
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SECTION 4.3 Reports by Company.
(a) The Company covenants and agrees to file with the
Trustee, within 15 days after the date on which Company is required to file the
same with the Commission, copies of the annual reports and of the information,
documents and other reports (or copies of such portions of any of the foregoing
as said Commission may from time to time by rules and regulations prescribe)
which the Company may be required to file with the Commission pursuant to
Section 13 or Section 15(d) of the Exchange Act; or, if the Company is not
required to file information, documents or reports pursuant to either of such
sections, then to file with the Trustee and the Commission; such of the
supplementary and periodic information, documents and reports which would have
been required had the Company been subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act in respect of a security listed and
registered on a national securities exchange.
(b) The Company covenants and agrees to file with the
Trustee and the Commission, in accordance with the rules and regulations
prescribed from time to time by said Commission, such additional information,
documents and reports with respect to compliance by the Company with the
conditions and covenants provided for in this Indenture as may be required from
time to time by such rules and regulations.
(c) The Company covenants and agrees to transmit by mail,
or to cause the Trustee to so transmit, to all holders of Securities, as the
names and addresses of such holders appear upon the Security Register, within
30 days after the filing thereof with the Trustee, such summaries of any
information, documents and reports required to be filed by the Company pursuant
to subsections (a) and (b) of this Section 4.3 as may be required by rules and
regulations prescribed from time to time by the Commission.
(d) Delivery of such reports, information and documents
to the Trustee is for informational purposes only and the Trustee's receipt of
such shall not constitute constructive notice of any information contained
therein or determinable from information contained therein, including the
Company's compliance with any of its covenants hereunder (as to which the
Trustee is entitled to rely exclusively on Officers' Certificates).
(e) So long as is required for an offer or sale of the
Securities to qualify for an exemption under Rule 144A under the Securities
Act, the Company shall, upon request, provide the information required by
clause (d)(4) thereunder to each Holder and to each beneficial owner and
prospective purchaser of Securities identified by any holder of Restricted
Securities, unless such information is furnished to the Commission pursuant to
Section 13 or 15(d) of the Exchange Act.
SECTION 4.4 Reports by the Trustee.
(a) The Trustee shall transmit to Securityholders 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. If required by Section 313(a) of the Trust
Indenture Act, the Trustee shall, within sixty days after each December 15
following the date of this Indenture, commencing December 15, 1997 deliver
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to Securityholders a brief report, dated as of such December 15, which complies
with the provisions of such Section 313(a).
(b) A copy of each such report shall, at the time of such
transmission to Securityholders, be filed by the Trustee with each stock
exchange, if any, upon which the Securities are listed, with the Commission and
with the Company. The Company will promptly notify the Trustee when the
Securities are listed on any stock exchange.
ARTICLE V
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT
SECTION 5.1 Events of Default. An "Event of Default" occurs
if:
(a) the Company defaults in the payment of the principal
of or premium, if any, of any of the Securities as
and when the same shall become due and payable either
at maturity, upon redemption (including redemption
and purchase pursuant to Article Twelve), by
declaration or otherwise, and in each case whether or
not such payment is prohibited by the provisions of
Article Fourteen; or
(b) the Company defaults in the payment of any
installment of interest upon any of the Securities as
and when the same shall become due and payable and
the default continues for a period of 30 days,
whether or not such payment is prohibited by the
provisions of Article Fourteen; or
(c) the Company defaults in the payment of the Repurchase
Price in respect of any Security on the Repurchase
Date therefor, whether or not such payment is
prohibited by the provisions of Article Fourteen; or
(d) the Company fails to perform or breaches any other
covenant or agreement in the Securities or in this
Indenture and the default continues for the period
and after the notice specified in the last paragraph
of this Section 5.1; or
(e) there shall have been entered a decree or order under
any Bankruptcy Law by a court of competent
jurisdiction that (A) is for relief in respect of the
Company or any Significant Subsidiary under any
Bankruptcy Law, or (B) appoints a Custodian of the
Company or such Significant Subsidiary or of any
substantial part of the property of the Company or
such Significant Subsidiary, as the case may be, or
(C) orders the winding-up or liquidation of the
affairs of the Company or such Significant
Subsidiary, as the case may be, and the continuance
of any such decree or order unstayed and in effect
for a period of 60 consecutive days; or
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(f) the Company or any Significant Subsidiary pursuant to
or within the meaning of any Bankruptcy Law (A)
commences a voluntary case or proceeding with respect
to itself, (B) consents to the entry of a judgment,
decree or order for relief against it in an
involuntary case or proceeding, (C) applies for,
consents to or acquiesces in the appointment of or
taking possession by a Custodian of the Company or
such Significant Subsidiary or of a substantial part
of its properties or (D) makes a general assignment
for the benefit of its creditors.
A Default under clause (d) is not an Event of Default until
the Trustee notifies the Company in writing, or the holders of at least 25% in
principal amount of the Securities then outstanding notify the Company and the
Trustee in writing, of the Default and the Company does not cure the Default
within 60 days after receipt of such notice. The notice must specify the
Default, demand that it be remedied and state the notice is a "Notice of
Default." When a Default is cured, it ceases.
SECTION 5.2 Acceleration. If any Event of Default (other
than an Event of Default specified in Section 5.1(e) or (f) above) occurs and
is continuing, the Trustee by notice in writing to the Company, or the holders
of at least 25% in principal amount of the Securities then outstanding by
notice to the Company and the Trustee, may declare to be due and payable
immediately the principal amount of the Securities plus accrued interest to the
date of acceleration. Upon any such declaration, such amount shall be due and
payable immediately. If an Event of Default specified in Section 5.1(e) or (f)
above occurs, all unpaid principal and accrued interest on the Securities then
outstanding shall ipso facto become and be immediately due and payable without
any declaration or other act on the part of the Trustee or any Securityholder.
The holders of a majority in principal amount of the outstanding Securities by
notice to the Trustee may rescind an acceleration and its consequences if (x)
all existing Events of Default, other than the non-payment of the principal of
the Securities which shall have become due solely by such declaration of
acceleration, shall have been cured or waived, (y) to the extent the payment of
such interest is lawful, interest on overdue installments of interest and
overdue principal which has become due otherwise than by such declaration of
acceleration has been paid, and (z) the rescission would not conflict with any
judgment or decree of a court of competent jurisdiction.
SECTION 5.3 Other Remedies. If an Event of Default occurs
and is continuing, the Trustee may pursue any available remedy by proceeding at
law or in equity to collect the payment of principal or interest on the
Securities or to enforce the performance of any provision of the Securities or
this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the
proceeding, 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 of 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.
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SECTION 5.4 Waiver of Defaults and Events of Default.
Subject only to the provisions of Section 5.7 and 9.2 hereof, the holders of a
majority in principal amount of the outstanding Securities by written notice to
the Trustee may waive an existing Default or Event of Default and its
consequences except (a) a Default in payment of principal or interest on any
Security as specified in clauses (a) and (b) of Section 5.1, (b) the right of
Securityholders to have their Securities repurchased pursuant to Article Twelve
or to convert their Securities pursuant to Article Fifteen or (c) in respect of
a covenant or provision hereof which under Article Nine cannot be modified or
amended without the consent of the holder of each outstanding Security
affected. When a Default or Event of Default is waived, it is cured and
ceases; but no such waiver shall extend to any subsequent or other Default or
Event of Default or impair any right consequent thereto.
SECTION 5.5 Control by Majority. The holders of a majority
in principal amount of the outstanding Securities may direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or exercising any trust or power conferred on it, including, without
limitation, any remedies provided for in Section 5.3. The Trustee may refuse,
however, to follow any direction that conflicts with law, the Securities or
this Indenture, or that the Trustee determines may be unduly prejudicial to the
rights of another Securityholder, that may involve the Trustee in personal
liability or if the Trustee determines that it does not have adequate
indemnification against any loss or expense; provided that the Trustee may take
any other action deemed proper by the Trustee which is not inconsistent with
such direction.
SECTION 5.6 Limitation on Suits. Except as provided in
Section 5.7, a Securityholder may not pursue any remedy with respect to this
Indenture or the Securities unless:
(a) the holder gives to the Trustee written notice of a
continuing Event of Default;
(b) the holders of at least 25% in principal amount of
the Securities then outstanding make a written
request to the Trustee to pursue the remedy;
(c) such holder or holders offer to the Trustee
reasonable indemnity satisfactory to the Trustee
against any loss, liability or expenses;
(d) the Trustee does not comply with the request within
60 days after receipt of the notice, request and
offer of indemnity; and
(e) no direction inconsistent with such written request
has been given to the Trustee during such 60-day
period by the holders of a majority in principal
amount of the Securities then outstand- ing.
A Securityholder may not use this Indenture to prejudice the
rights of another Securityholder or to obtain a preference or priority over
another Securityholder.
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SECTION 5.7 Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any holder
of a Security to receive payment of the principal of, premium, if any, and
interest on the Security, on or after the respective due dates expressed in the
Security (including the Maturity Date and the Repurchase Date), or to bring
suit for the enforcement of any such payment on or after such respective dates,
is absolute and unconditional and shall not be impaired or affected without the
consent of the holder.
Notwithstanding any other provision of this Indenture, the
right of any holder of a Security to convert the Security or to bring suit for
the enforcement of such right shall not be impaired or affected without the
consent of the holder.
SECTION 5.8 Collection Suit by Trustee. If an Event of
Default in payment of interest or principal specified in Section 5.1(a) or (b)
occurs and is continuing, the Trustee may recover judgment in its own name and
as trustee of an express trust against the Company or any other obligor on the
Securities for the whole amount of unpaid principal and accrued interest
remaining unpaid, together with interest on overdue principal and, to the
extent that payment of such interest is lawful, interest on overdue
installments of interest, in each case at the rate borne by the Securities, and
such further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
SECTION 5.9 Trustee May File Proofs of Claim. The Trustee
may file such proofs of claim and other papers or documents as may be necessary
or advisable in order to have the claims of the Trustee (including any claim
for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel) and the Securityholders allowed in any
judicial proceedings relative to the Company (or any other obligor upon the
Securities), its creditors or its property and shall be entitled and empowered
to collect and receive any monies or other property payable or deliverable on
any such claims and to distribute the same. Any Custodian in any such judicial
proceeding is hereby authorized by each Securityholder to make such payments to
the Trustee and, in the event that the Trustee shall consent to the making of
such payments directly to the Securityholders, to pay to the Trustee any amount
due to it for the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel, and any other amounts due the Trustee
under Section 6.6.
Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any
Securityholder any plan or reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Securityholder in
any such proceedings.
SECTION 5.10 Application of Money Collected by Trustee.
Subject to the provisions of Article Fourteen, any moneys collected by the
Trustee or any paying agent pursuant to this Article Five shall be applied in
the order following, at the date or dates fixed by the Trustee for the
distribution of such moneys, upon presentation of the several Securi-
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ties, and stamping thereon 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 6.6 hereof;
Second: To holders of Senior Indebtedness of the
Company to the extent required by Article Fourteen hereof;
Third: To the Securityholders for amounts owing and
unpaid upon the Securities for principal (and premium, if any)
and interest, with interest on the overdue principal and
premium, if any, and (to the extent that such interest has
been collected by the Trustee or any Paying agent) on overdue
installments of interest at the rate borne by the Securities,
ratably, without preference or priority of any kind, according
to the amounts due and payable on the Securities for principal
(and premium, if any) and interest, respectively; and
Fourth: To the Company or as a court of competent
jurisdiction may direct.
SECTION 5.11 Undertaking to Pay Costs. All parties to this
Indenture agree, and each holder of any Security by his acceptance thereof
shall be deemed to have agreed, that any court may in its discretion require,
in any suit for the enforcement of any right or remedy under this Indenture, or
in any suit against the Trustee for any action taken or omitted by it as
Trustee, the filing by any party litigant in such suit of an undertaking to pay
the costs of such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys' fees, against any party
litigant in such suit, having due regard to the merits and good faith of the
claims or defenses made by such party litigant; but the provisions of this
Section 5.11 shall not apply to any suit instituted by the Trustee, to any suit
instituted by any Securityholder, or group of Securityholders, holding in the
aggregate more than 10% in aggregate principal amount of the Securities
outstanding, or to any suit instituted by any Securityholder for the
enforcement of the payment of (or premium, if any) or interest on any Security
against the Company on or after the due date expressed in such Security.
SECTION 5.12 Restoration of Rights and Remedies. If the
Trustee or any holder has instituted any proceeding to enforce any right or
remedy under this Indenture or any Security 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 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 5.13 Rights and Remedies Cumulative. 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 remedy shall,
to the extent permitted by law, be cumulative
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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 5.14 Delay or Omission Not Waiver. No delay or
omission of the Trustee or of any holder of any Security 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 Five 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 5.15 Indenture and Notes Solely Corporate
Obligations. No recourse for the payment of the principal of or premium, if
any, or interest on any Note, or for any claim based thereon or otherwise in
respect thereof, and no recourse under or upon any obligation, covenant or
agreement of the Company in this Indenture or in any supplemental indenture or
in any Note, or because of this Indenture or any supplemental indenture or any
Note, or because of the creation of any indebtedness represented thereby, shall
be had against any incorporator, stockholder, employee, agent, officer or
director or subsidiary, as such, past, present or future, of the Company or of
any successor corporation, either directly or through the Company or any
succssor corporation, whether by virtue of any constitution, statute or rule of
law, or by the enforcement of any assessment or penalty or otherwise; it being
expressly understood that all such liability is hereby expressly waived and
released as a condition of, and as a consideration for, the execution of this
Indenture and the issue of the Notes.
ARTICLE VI
CONCERNING THE TRUSTEE
SECTION 6.1 Duties and Responsibilities of Trustee.
With respect to the holders of the Securities issued
hereunder, the Trustee, prior to the occurrence of an Event of Default and
after the curing or waiving of all Events of Default which may have occurred,
undertakes to perform such duties and only such duties as are specifically set
forth in this Indenture. In case an Event of Default has occurred (which has
not been cured or waived) the Trustee shall exercise such of the rights and
powers vested in it by this Indenture, and use the same degree of care and
skill in their exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.
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
(a) prior to the occurrence of an Event of Default and
after the curing or waiving of all Events of Default
which may have occurred
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(1) the duties and obligations of the Trustee
shall be determined solely by the express
provisions of this Indenture, and the Trustee
shall not be liable except for the
performance of such duties and obligations as
are specifically set forth in this Indenture,
and no implied covenants or obligations shall
be read into this Indenture against the
Trustee; and
(2) in the absence of bad faith on the part of
the Trustee, the Trustee may conclusively
rely, as to the truth of the statements and
the correctness of the opinions expressed
therein, upon any 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) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer
or Officers of the Trustee, unless it shall be proved
that the Trustee was negligent in ascertaining the
pertinent facts; and
(c) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good
faith, in accordance with the direction of the
Securityholders pursuant to Sections 5.4 and 5.5
relating to the time, method and place of conducting
any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred
upon the Trustee, under this Indenture.
None of the provisions contained in this Indenture shall
require the Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers, if there is reasonable ground for believing
that the repayment of such funds or liability is not reasonably assured to it
under the terms of this Indenture or adequate indemnity against such risk is
not reasonably assured to it.
SECTION 6.2. Reliance on Documents, Opinions, etc.
Except as otherwise provided in 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, consent, order, bond, note,
debenture or other paper or document believed by it
to be genuine and to have been signed or presented by
the proper party or parties;
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(b) any request, direction, order or demand of the
Company mentioned herein may be sufficiently
evidenced by an Officers' Certificate (unless other
evidence in respect thereof be herein specifically
prescribed); and any Board Resolution may be
evidenced to the Trustee by a copy thereof certified
by the Secretary or an Assistant Secretary of the
Company;
(c) the Trustee may consult with counsel of its selection
and any advice or Opinion of Counsel shall be full
and complete authorization and protection in respect
of any action taken or suffered omitted by it
hereunder in good faith and in accordance with such
advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this
Indenture at the request, order or direction of any
of the Securityholders, pursuant to the provisions of
this Indenture, unless such Securityholders shall
have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby;
(e) the Trustee shall not be liable for any action taken
or omitted by it in good faith and believed by it to
be authorized or within the discretion or rights or
powers conferred upon it by this Indenture; nothing
contained herein shall, however, relieve the Trustee
of the obligation, upon the occurrence of an Event of
Default (that has not been cured or waived), to
exercise such of the rights and powers vested in it
by this Indenture, and to use the same degree of care
and skill in their exercise, as a prudent man would
exercise or use under the circumstances in the
conduct of his own affairs;
(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, consent, order,
approval, bond, debenture, coupon or other paper or
document, unless requested in writing to do so by the
holders of a majority in aggregate principal amount
of the outstanding Securities; provided, however,
that if the payment within a reasonable time to the
Trustee of the costs, expenses or liabilities likely
to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not
reasonably assured to the Trustee by the security
afforded to it by the terms of this Indenture, the
Trustee may require reasonable indemnity against such
expense or liability as a condition to so proceeding;
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 (including any
Authenticating Agent) or attorneys, and the Trustee
shall
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not be responsible for any misconduct or negligence
on the part of any such agent or attorney appointed
by it with due care.
SECTION 6.3 No Responsibility for Recitals, etc.
The recitals contained herein and in the Securities (except in
the certificate of authentication of the Trustee or the Authenticating Agent)
shall be taken as the statements of the Company and the Trustee and the
Authenticating Agent assume no responsibility for the correctness of the same.
The Trustee and the Authenticating Agent make no representations as to the
validity or sufficiency of this Indenture or of the Securities. The Trustee
and the Authenticating Agent shall not be accountable for the use or
application by the Company of any Securities or the proceeds of any Securities
authenticated and delivered by the Trustee or the Authenticating Agent in
conformity with the provisions of this Indenture.
SECTION 6.4 Trustee, Authenticating Agent, paying agents,
Transfer Agents or Registrar May Own Securities.
The Trustee or any Authenticating Agent or any paying agent or
any transfer agent or any Security registrar, in its individual or any other
capacity, may become the owner or pledgee of Securities with the same rights it
would have if it were not Trustee, Authenticating Agent, paying agent, transfer
agent or Security registrar.
SECTION 6.5 Moneys to be Held in Trust.
Subject to the provisions of Section 11.4, all moneys received
by the Trustee or any paying agent shall, until used or applied as herein
provided, be held in trust for the purpose for which they were received, but
need not be segregated from other funds except to the extent required by law.
The Trustee and any paying agent shall be under no liability for interest on
any money received by it hereunder except as otherwise agreed in writing with
the Company. So long as no Event of Default shall have occurred and be
continuing, all interest allowed on any such moneys shall be paid from time to
time upon the written order of the Company, signed by the Chairman of the Board
of Directors, the President or a Vice President or the Treasurer or an
Assistant Treasurer of the Company.
SECTION 6.6 Compensation and Expenses of Trustee.
The Company, as borrower, covenants and agrees to pay to the
Trustee from time to time, and the Trustee shall be entitled to, such
compensation as shall be agreed to in writing between the Company and the
Trustee (which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust), and the Company will pay or
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any of the provisions of this Indenture (including the reasonable compensation
and the expenses and disbursements of its counsel and of all persons not
regularly in its employ) except any such expense, disbursement or advance as
may arise from its negligence or bad faith. The Company also covenants to
indemnify each of the Trustee or any predecessor Trustee (and its officers,
agents, directors and employees) for, and to hold it harmless against, any and
all loss, damage, claim,
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liability or expense including taxes (other than taxes based on the income of
the Trustee) incurred without negligence or bad faith on the part of the
Trustee and 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 of liability in the premises. The obligations of the
Company under this Section 6.6 to compensate and indemnify the Trustee and to
pay or reimburse the Trustee for expenses, disbursements and advances shall
constitute additional indebtedness hereunder. Such additional indebtedness
shall be secured by a lien prior to that of the Securities upon all property
and funds held or collected by the Trustee as such, except funds held in trust
for the benefit of the holders of particular Securities.
When the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 5.1(e) or Section
5.1(f), the expenses (including the reasonable charges and expenses of its
counsel) and the compensation for the services are intended to constitute
expenses of administration under any applicable federal or state bankruptcy,
insolvency or other similar law.
The provisions of this Section shall survive the termination
of this Indenture.
SECTION 6.7 Officers' Certificate as Evidence.
Except as otherwise provided in Sections 6.1 and 6.2, whenever
in the administration of the provisions of this Indenture the Trustee shall
deem it necessary or desirable that a matter be proved or established prior to
taking or omitting any action hereunder, such matter (unless other evidence in
respect thereof is herein specifically prescribed) may, in the absence of
negligence or bad faith on the part of the Trustee, be deemed to be
conclusively proved and established by an Officers' Certificate delivered to
the Trustee, and such certificate, in the absence of negligence or bad faith on
the part of the Trustee, shall be full warrant to the Trustee for any action
taken or omitted by it under the provisions of this Indenture upon the faith
thereof.
SECTION 6.8 Conflicting Interest of Trustee.
If the Trustee has or shall acquire any "conflicting interest"
within the meaning of Section 310(b) of the Trust Indenture Act, the Trustee
and the Company shall in all respects comply with the provisions of Section
310(b) of the Trust Indenture Act.
SECTION 6.9 Eligibility of Trustee.
The Trustee hereunder shall at all times be a corporation
organized and doing business under the laws of the United States of America or
any state or territory thereof or of the District of Columbia or a corporation
or other Person permitted to act as trustee by the Commission authorized under
such laws to exercise corporate trust powers, having a combined capital and
surplus of at least 10 million U.S. dollars ($10,000,000) and subject to
supervision or examination by federal, state, territorial, or District of
Columbia authority. If such corporation publishes reports of condition at
least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this Section 6.9
the combined capital and surplus of such corporation shall be deemed to be
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its combined capital and surplus as set forth in its most recent report of
condition so published.
The Company may not, nor may any Person directly or indirectly
controlling, controlled by, or under common control with the Company, serve as
Trustee.
In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 6.9, the Trustee shall resign
immediately in the manner and with the effect specified in Section 6.10.
SECTION 6.10 Resignation or Removal of Trustee.
(a) The Trustee, or any trustee or trustees hereafter
appointed, may at any time resign by giving written
notice of such resignation to the Company and by
mailing notice thereof to the holders of the
Securities at their addresses as they shall appear on
the Security register. Upon receiving such notice of
resignation, the Company shall promptly appoint a
successor trustee or trustees by written instrument,
in duplicate, one copy of which instrument shall be
delivered to the resigning Trustee and one copy to
the successor trustee. If no successor trustee shall
have been so appointed and have accepted appointment
within 60 days after the mailing of such notice of
resignation to the affected Securityholders, the
resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor
trustee, or any Securityholder who has been a bona
fide holder of a Security for at least six months
may, subject to the provisions of Section 5.11, on
behalf of himself and all others similarly situated,
petition any such court for the appointment of a
successor trustee. Such court may thereupon, after
such notice, if any, as it may deem proper and
prescribe, appoint a successor trustee.
(b) In case at any time any of the following shall occur:
(1) the Trustee shall fail to comply with the
provisions of Section 6.8 after written re-
quest therefor by the Company or by any
Securityholder who has been a bona fide
holder of a Security or Securities for at
least six months; or
(2) the Trustee shall cease to be eligible in
accordance with the provisions of Section 6.9
and shall fail to resign after written
request therefor by the Company or by any
such Securityholder; 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
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take charge or control of the Trustee or of
its property or affairs for the purpose of
rehabilitation, conservation or liquidation;
then, in any such case, the Company may remove the
Trustee and appoint a successor trustee by written
instrument, in duplicate, one copy of which
instrument shall be delivered to the Trustee so
removed and one copy to the successor trustee, or,
subject to the provisions of Section 5.11, any
Securityholder 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. Such court may thereupon, after such
notice, if any, as it may deem proper and prescribe,
remove the Trustee and appoint a successor trustee.
(c) The holders of a majority in aggregate principal
amount of the Securities at the time outstanding may
at any time remove the Trustee and nominate a
successor trustee, which shall be deemed appointed as
successor trustee unless within 10 days after such
nomination the Company objects thereto or if no
successor trustee shall have been so appointed and
shall have accepted appointment within 30 days after
such removal, in which case the Trustee so removed or
any Securityholder, upon the terms and conditions and
otherwise as in subsection (a) of this Section 6.10
provided, may petition any court of competent
jurisdiction for an appointment of a successor
trustee.
(d) Any resignation or removal of the Trustee and
appointment of a successor trustee pursuant to any of
the provisions of this Section 6.10 shall become
effective upon acceptance of appointment by the
successor trustee as provided in Section 6.11.
SECTION 6.11 Acceptance by Successor Trustee.
Any successor trustee appointed as provided in Section 6.10
shall execute, acknowledge and deliver to the Company and to its predecessor
trustee an instrument accepting such appointment hereunder, 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, duties and obligations of its predecessor
hereunder, with like effect as if originally named as trustee herein; but,
nevertheless, on the written request of the Company or of the successor
trustee, the trustee ceasing to act shall, upon payment of any amounts then due
it pursuant to the provisions of Section 6.6, execute and deliver an instrument
transferring to such successor trustee all the rights and powers of the trustee
so ceasing to act and shall duly assign, transfer and deliver to such successor
trustee all property and money held by such retiring trustee thereunder. Upon
request of any such successor trustee, the Company shall execute any and all
instruments in writing for more fully and certainly vesting in and confirming
to such successor trustee all such rights and powers. Any trustee ceasing to
act shall, nevertheless, retain a
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lien upon all property or funds held or collected by such trustee to secure any
amounts then due it pursuant to the provisions of Section 6.6.
No successor trustee shall accept appointment as provided in
this Section 6.11 unless at the time of such acceptance such successor trustee
shall be qualified under the provisions of Section 6.8 and eligible under the
provisions of Section 6.9.
Upon acceptance of appointment by a successor trustee as
provided in this Section 6.11, the Company shall mail notice of the succession
of such trustee hereunder to the holders of Securities at their addresses as
they shall appear on the Security register. If the Company fails to mail such
notice within 10 days after the acceptance of appointment by the successor
trustee, the successor trustee shall cause such notice to be mailed at the
expense of the Company.
SECTION 6.12 Succession by Merger, etc.
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 of the
corporate trust business of the Trustee, shall be the successor of the Trustee
hereunder without the execution or filing of any paper or any further act on
the part of any of the parties hereto.
In case at the time such successor to the Trustee shall
succeed to the trusts created by this Indenture any Securities shall have been
authenticated but not delivered, any such successor to the Trustee may adopt
the certificate of authentication of any predecessor trustee, and deliver such
Securities so authenticated; and in case at that time any of the Securities
shall not have been authenticated, any successor to the Trustee may
authenticate such Securities either in the name of any predecessor hereunder or
in the name of the successor trustee; and in all such cases such certificates
shall have the full force which the Securities or this Indenture elsewhere
provides that the certificate of the Trustee shall have; provided, however,
that the right to adopt the certificate of authentication of any predecessor
trustee or authenticate Securities in the name of any predecessor trustee shall
apply only to such predecessor trustee's successor or successors by merger,
conversion or consolidation.
SECTION 6.13 Limitation on Rights of Trustee as a Creditor.
The Trustee shall comply with Section 311(a) of the Trust
Indenture Act, excluding any creditor relationship described in Section 311(b)
of the Trust Indenture Act. A Trustee who has resigned or been removed shall
be subject to Section 311(a) of the Trust Indenture Act to the extent included
therein.
SECTION 6.14 Authenticating Agents.
There may be one or more Authenticating Agents appointed by
the Trustee upon the request of the Company with power to act on its behalf and
subject to its direction in the authentication and delivery of Securities
issued upon exchange or transfer thereof as
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fully to all intents and purposes as though any such Authenticating Agent had
been expressly authorized to authenticate and deliver Securities; provided,
that the Trustee shall have no liability to the Company for any acts or
omissions of the Authenticating Agent with respect to the authentication and
delivery of Securities. Any such Authenticating Agent shall at all times be a
corporation organized and doing business under the laws of the United States or
of any state or territory thereof or of the District of Columbia authorized
under such laws to act as Authenticating Agent, having a combined capital and
surplus of at least five million U.S. dollars ($5,000,000) and being subject to
supervision or examination by federal, state, territorial or District of
Columbia authority. If such corporation publishes reports of condition at
least annually pursuant to law or the requirements of such authority, then for
the purposes of this Section 6.14 the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect herein specified in this Section.
Any corporation into which any Authenticating Agent may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, consolidation or conversion to which any
Authenticating Agent shall be a party, or any corporation succeeding to the
corporate trust business of any Authenticating Agent, shall be the successor of
such Authenticating Agent hereunder, if such successor corporation is otherwise
eligible under this Section 6.14 without the execution or filing of any paper
or any further act on the part of the parties hereto or such Authenticating
Agent.
Any Authenticating Agent may at any time resign by giving
written notice of resignation to the Trustee and to the Company. The Trustee
may at any time terminate the agency of any Authenticating Agent by giving
written notice of termination 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 any Authenticating Agent shall cease to be eligible under this
Section 6.14, the Trustee may, and upon the request of the Company shall,
promptly appoint a successor Authenticating Agent eligible under this Section
6.14, shall give written notice of such appointment to the Company and shall
mail notice of such appointment to all Securityholders as the names and
addresses of such holders appear on the Security Register. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all rights, powers, duties and responsibilities of its predecessor
hereunder, with like effect as if originally named as Authenticating Agent
herein.
The Company, as borrower, agrees to pay to any Authenticating
Agent from time to time reasonable compensation for its services. Any
Authenticating Agent shall have no responsibility or liability for any action
taken by it as such in accordance with the directions of the Trustee.
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ARTICLE VII
CONCERNING THE SECURITYHOLDERS
SECTION 7.1 Action by Securityholders.
Whenever in this Indenture it is provided that the holders of
a specified percentage in aggregate principal amount of the Securities may take
any action (including the making of any demand or request, the giving of any
notice, consent or waiver or the taking of any other action) the fact that at
the time of taking any such action the holders of such specified percentage
have joined therein may be evidenced (a) by any instrument or any number of
instruments of similar tenor executed by such Securityholders in person or by
agent or proxy appointed in writing, or (b) by the record of such holders of
Securities voting in favor thereof at any meeting of such Securityholders duly
called and held in accordance with the provisions of Article Eight, or (c) by a
combination of such instrument or instruments and any such record of such a
meeting of such Securityholders.
If the Company shall solicit from the Securityholders any
request, demand, authorization, direction, notice, consent, waiver or other
action, the Company may, at its option, as evidenced by an Officers'
Certificate, fix in advance a record date for the determination of
Securityholders entitled to give such request, demand, authorization,
direction, notice, consent, waiver or other action, but the Company shall have
no obligation to do so. If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other action may be given
before or after the record date, but only the Securityholders of record at the
close of business on the record date shall be deemed to be Securityholders for
the purposes of determining whether Securityholders of the requisite proportion
of outstanding Securities have authorized or agreed or consented to such
request, demand, authorization, direction, notice, consent, waiver or other
action, and for that purpose the outstanding Securities shall be computed as of
the record date; provided, however, that no such authorization, agreement or
consent by such Securityholders on the record date shall be deemed effective
unless it shall become effective pursuant to the provisions of this Indenture
not later than six months after the record date.
SECTION 7.2 Proof of Execution by Securityholders.
Subject to the provisions of Section 6.1, 6.2 and 8.5, proof
of the execution of any instrument by a Securityholder or his agent or proxy
shall be sufficient if made in accordance with such reasonable rules and
regulations as may be prescribed by the Trustee or in such manner as shall be
satisfactory to the Trustee. The ownership of Securities shall be proved by
the Security Register or by a certificate of the Security registrar. The
Trustee may require such additional proof of any matter referred to in this
Section as it shall deem necessary.
The record of any Securityholders' meeting shall be proved in
the manner provided in Section 8.6.
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SECTION 7.3 Who Are Deemed Absolute Owners.
Prior to due presentment for registration of transfer of any
Security, the Company, the Trustee, any Authenticating Agent, any paying agent,
any transfer agent and any Security registrar may deem the person in whose name
such Security shall be registered upon the Security Register to be, and may
treat him as, the absolute owner of such Security (whether or not such Security
shall be overdue) for the purpose of receiving payment of or on account of the
principal of and premium, if any, and interest on such Security and for all
other purposes; and neither the Company nor the Trustee nor any Authenticating
Agent nor any paying agent nor any transfer agent nor any Security registrar
shall be affected by any notice to the contrary. All such payments so made to
any holder for the time being or upon his order shall be valid, and, to the
extent of the sum or sums so paid, effectual to satisfy and discharge the
liability for moneys payable upon any such Security.
SECTION 7.4 Securities Owned by Company Deemed Not
Outstanding.
In determining whether the holders of the requisite aggregate
principal amount of Securities have concurred in any direction, consent or
waiver under this Indenture, Securities which are owned by the Company or any
other obligor on the Securities or by any person directly or indirectly
controlling or controlled by or under direct or indirect common control with
the Company or any other obligor on the Securities shall be disregarded and
deemed not to be outstanding for the purpose of any such determination;
provided that for the purposes of determining whether the Trustee shall be
protected in relying on any such direction, consent or waiver, only Securities
which the Trustee actually knows are so owned shall be so disregarded.
Securities so owned which have been pledged in good faith may be regarded as
outstanding for the purposes of this Section 7.4 if the pledgee shall establish
to the satisfaction of the Trustee the pledgee's right to vote such Securities
and that the pledgee is not the Company or any such other obligor or person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Company or any such other obligor. In the case of a
dispute as to such right, any decision by the Trustee taken upon the advice of
counsel shall be full protection to the Trustee.
SECTION 7.5 Revocation of Consents; Future Holders Bound.
At any time prior to (but not after) the evidencing to the
Trustee, as provided in Section 7.1, of the taking of any action by the holders
of the percentage in aggregate principal amount of the Securities specified in
this Indenture in connection with such action, any holder of a Security (or any
Security issued in whole or in part in exchange or substitution therefor) the
serial number of which is shown by the evidence to be included in the
Securities the holders of which have consented to such action may, by filing
written notice with the Trustee at its principal office and upon proof of
holding as provided in Section 7.2, revoke such action so far as concerns such
Security (or so far as concerns the principal amount represented by any
exchanged or substituted Security). Except as aforesaid any such action taken
by the holder of any Security shall be conclusive and binding upon such holder
and upon all future holders and owners of such Security, and of any Security
issued in exchange or substitution therefor, irrespective of whether or not any
notation in regard
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thereto is made upon such Security or any Security issued in exchange or
substitution therefor.
ARTICLE VIII
SECURITYHOLDERS' MEETINGS
SECTION 8.1 Purposes of Meetings.
A meeting of Securityholders may be called at any time and
from time to time pursuant to the provisions of this Article Eight for any of
the following purposes:
(a) To give any notice to the Company or to the Trustee,
or to give any directions to the Trustee, or to
consent to the waiving of any default hereunder and
its consequences, or to take any other action
authorized to be taken by Securityholders pursuant to
any of the provisions of Article Five;
(b) to remove the Trustee and nominate a successor
trustee pursuant to the provisions of Article Six;
(c) to consent to the execution of an indenture or
indentures supplemental hereto pursuant to the
provisions of Section 9.2; or
(d) to take any other action authorized to be taken by or
on behalf of the holders of any specified aggregate
principal amount of such Securities under any other
provision of this Indenture or under applicable law.
SECTION 8.2 Call of Meetings by Trustee.
The Trustee may at any time call a meeting of Securityholders
to take any action specified in Section 8.1, to be held at such time and at
such place in the Borough of Manhattan, The City of New York, as the Trustee
shall determine. Notice of every meeting of the Securityholders, setting forth
the time and the place of such meeting and in general terms the action proposed
to be taken at such meeting, shall be mailed to holders of Securities at their
addresses as they shall appear on the Securities Register. Such notice shall
be mailed not less than 20 nor more than 180 days prior to the date fixed for
the meeting.
SECTION 8.3 Call of Meetings by Company or Securityholders.
In case at any time the Company pursuant to a resolution of
the Board of Directors, or the holders of at least 10% in aggregate principal
amount of the Securities then outstanding, shall have requested the Trustee to
call a meeting of Securityholders, by written request setting forth in
reasonable detail the action proposed to be taken at the meeting, and the
Trustee shall not have mailed the notice of such meeting within 20 days after
receipt of such request, then the Company or such Securityholders may determine
the time and the
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place in said Borough of Manhattan for such meeting and may call such meeting
to take any action authorized in Section 8.1, by mailing notice thereof as
provided in Section 8.2.
SECTION 8.4 Qualifications for Voting.
To be entitled to vote at any meeting of Securityholders a
person shall be (a) a holder of one or more Securities or (b) a person
appointed by an instrument in writing as proxy by a holder of one or more
Securities. The only persons who shall be entitled to be present or to speak
at any meeting of Securityholders shall be the persons entitled to vote at such
meeting and their counsel and any representatives of the Trustee and its
counsel and any representatives of the Company and its counsel.
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SECTION 8.5 Regulations.
Notwithstanding any other provisions of this Indenture, the
Trustee may make such reasonable regulations as it may deem advisable for any
meeting of Securityholders, in regard to proof of the holding of Securities and
of the appointment of proxies, and in regard to the appointment and duties of
inspectors of votes, the submission and examination of proxies, certificates
and other evidence of the right to vote, and such other matters concerning the
conduct of the meeting as it shall think fit.
The Trustee shall, by an instrument in writing, appoint a
temporary chairman of the meeting, unless the meeting shall have been called by
the Company or by Securityholders as provided in Section 8.3, in which case the
Company or the Securityholders calling the meeting, as the case may be, shall
in like manner appoint a temporary chairman. A permanent chairman and a
permanent secretary of the meeting shall be elected by majority vote of the
meeting.
Subject to the provisions of Section 8.4, at any meeting of
Securityholders each holder of Securities or proxy therefor shall be entitled
to one vote for each $1,000 principal amount of Securities held or represented
by him; provided, however, that no vote shall be cast or counted at any meeting
in respect of any Security challenged as not outstanding and ruled by the
chairman of the meeting to be not outstanding. The chairman of the meeting
shall have no right to vote other than by virtue of Securities held by him or
instruments in writing as aforesaid duly designating him as the person to vote
on behalf of other Securityholders. Any meeting of Securityholders duly called
pursuant to the provisions of Section 8.2 or 8.3 may be adjourned from time to
time by a majority of those present, whether or not constituting a quorum, and
the meeting may be held as so adjourned without further notice.
SECTION 8.6 Voting.
The vote upon any resolution submitted to any meeting of
holders of Securities shall be by written ballots on which shall be subscribed
the signatures of such holders or of their representatives by proxy and the
serial number or numbers of the Securities held or represented by them. The
permanent chairman of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any resolution and who
shall make and file with the secretary of the meeting their verified written
reports in triplicate of all votes cast at the meeting. A record in duplicate
of the proceedings of each meeting of Securityholders shall be prepared by the
secretary of the meeting and there shall be attached to said record the
original reports of the inspectors of votes on any vote by ballot taken thereat
and affidavits by one or more persons having knowledge of the facts setting
forth a copy of the notice of the meeting and showing that said notice was
mailed as provided in Section 8.2. The record shall show the serial numbers of
the Securities voting in favor of or against any resolution. The record shall
be signed and verified by the affidavits of the permanent chairman and
secretary of the meeting and one of the duplicates shall be delivered to the
Company and the other to the Trustee to be preserved by the Trustee, the latter
to have attached thereto the ballots voted at the meeting.
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Any record so signed and verified shall be conclusive evidence
of the matters therein stated.
ARTICLE IX
AMENDMENTS
SECTION 9.1 Without Consent of Securityholders.
The Company and the Trustee may from time to time and at any
time amend the Indenture, without the consent of the Securityholders, for one
or more of the following purposes:
(a) to make provision with respect to the conversion
rights of holders of Securities pursuant to the
requirements of Section 15.12;
(b) to evidence the succession of another corporation to
the Company, or successive successions, and the
assumption by the successor corporation of the
covenants, agreements and obligations of the Company
pursuant to Article Ten hereof;
(c) to add to the covenants of the Company such further
covenants, restrictions or conditions for the
protection of the Securityholders as the Board of
Directors and the Trustee shall consider to be for
the protection of the Securityholders, and to make
the occurrence, or the occurrence and continuance, of
a default in any of such additional covenants,
restrictions or conditions a Default or an Event of
Default permitting the enforcement of all or any of
the remedies provided in this Indenture as herein set
forth; provided, however, that in respect of any such
additional covenant, restriction or condition such
amendment may provide for a particular period of
grace after default (which period may be shorter or
longer than that allowed in the case of other
defaults) or may provide for an immediate enforcement
upon such default or may limit the remedies available
to the Trustee upon such default;
(d) to provide for the issuance under this Indenture of
Securities in coupon form (including Securities
registrable as to principal only) and to provide for
exchangeability of such Securities with the
Securities issued hereunder in fully registered form
and to make all appropriate changes for such purpose;
(e) to cure any ambiguity or to correct or supplement any
provision contained herein or in any supplemental
indenture which may be defective or inconsistent with
any other provision contained herein or in any
supplemental indenture, or to make such other
provisions in regard to matters or questions arising
under this Indenture; provided that any
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such action shall not adversely affect the interests
of the holders of the Securities;
(f) to evidence and provide for the acceptance of
appointment hereunder by a successor trustee with
respect to the Securities;
(g) to qualify or maintain qualification of this
Indenture under the Trust Indenture Act; or
(h) to secure the Securities.
The Trustee is hereby authorized to join with the Company in
the execution of any supplemental indenture to effect such amendment, to make
any further appropriate agreements and stipulations which may be therein
contained and to accept the conveyance, transfer and assignment of any property
thereunder, but the Trustee shall not be obligated to, but may in its
discretion, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
SECTION 9.2 With Consent of Securityholders.
With the consent (evidenced as provided in Section 7.1) of the
holders of not less than two-thirds in aggregate principal amount of the
Securities at the time outstanding, the Company, when authorized by a Board
Resolution, and the Trustee may from time to time and at any time amend the
Indenture 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 of the Securities; provided, however, that no
such amendment shall without the consent of the holders of each Security then
outstanding and affected thereby (i) change the Maturity Date or, once a
Company Notice has been sent following a Repurchase Event, the Repurchase Date;
(ii) reduce the principal amount of, or the premium or interest on, any
Security or the price payable upon a repurchase pursuant to Article Twelve;
(iii) change the place of payment where, or currency in which, any Security or
any premium or interest thereon is payable; (iv) impair the right to institute
suit for the enforcement of any payment on or with respect to any Security; (v)
adversely affect the right to convert the Securities; (vi) adversely affect the
right to cause the Company to repurchase the Securities; (vii) modify the
subordination provisions in a manner adverse to the holders of the Securities;
(viii) reduce the above- stated percentage of outstanding Securities necessary
to modify or amend the Indenture; or (ix) modify any of the provisions of
section 5.4 except to increase the percentage of aggregate principal amount of
outstanding Securities referred to therein.
Upon the request of the Company accompanied by a copy of a
Board Resolution authorizing the execution of any supplemental indenture
effecting such amendment, and upon the filing with the Trustee of evidence of
the consent of Securityholders as aforesaid, the Trustee shall join with the
Company in the execution of such supplemental indenture unless such
supplemental indenture affects the Trustee's own rights, duties or immunities
under this Indenture or otherwise, in which case the Trustee may in its
discretion, but shall not be obligated to, enter into such supplemental
indenture. The Trustee may receive an
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Opinion of Counsel as conclusive evidence that any supplemental indenture
executed pursuant to this Article is authorized or permitted by, and conforms
to, the terms of this Article and that it is proper for the Trustee under the
provisions of this Article to join in the execution thereof.
Promptly after the execution by the Company and the Trustee of
any supplemental indenture pursuant to the provisions of this Section, the
Trustee shall transmit by mail, first class postage prepaid, a notice, prepared
by the Company, setting forth in general terms the substance of such
supplemental indenture, to the Securityholders as their names and addresses
appear upon the Security Register. Any failure of the Trustee to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture.
It shall not be necessary for the consent of the
Securityholders under this Section 9.2 to approve the particular form of any
proposed supplemental indenture, but it shall be sufficient if such consent
shall approve the substance thereof.
SECTION 9.3 Compliance with Trust Indenture Act; Effect of
Supplemental Indentures.
Any supplemental indenture executed pursuant to the provisions
of this Article Nine shall comply with the Trust Indenture Act. Upon the
execution of any supplemental indenture pursuant to the provisions of this
Article Nine, this Indenture shall be and be deemed to be modified and amended
in accordance therewith and the respective rights, limitations of rights,
obligations, duties and immunities under this Indenture of the Trustee, the
Company and the holders of Securities shall thereafter be determined, exercised
and enforced hereunder subject in all respects to such modifications and
amendments and all the terms and conditions of any such supplemental indenture
shall be and be deemed to be part of the terms and conditions of this Indenture
for any and all purposes.
SECTION 9.4 Notation on Securities.
Securities authenticated and delivered after the execution of
any supplemental indenture affecting such series pursuant to the provisions of
this Article Nine may bear a notation in form approved by the Trustee as to any
matter provided for in such supplemental indenture. If the Company or the
Trustee shall so determine, new Securities so modified as to conform, in the
opinion of the Trustee and the Board of Directors, to any modification of this
Indenture contained in any such supplemental indenture may be prepared and
executed by the Company, authenticated by the Trustee or the Authenticating
Agent and delivered in exchange for the Securities then outstanding.
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SECTION 9.5 Evidence of Compliance of Supplemental
Indenture to be Furnished Trustee.
The Trustee, subject to the provisions of Sections 6.1 and
6.2, may receive an Officers' Certificate and an Opinion of Counsel as
conclusive evidence that any supplemental indenture executed pursuant hereto
complies with the requirements of this Article Nine.
ARTICLE X
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
SECTION 10.1 Company May Consolidate, etc., on Certain Terms.
Notwithstanding anything contained herein to the contrary, the
Company may consolidate with or merge with, or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its assets to (each
a "transaction"), another Person; provided (i)(a) the Company is the surviving
entity, or (b) the successor Person (if other than the Company) formed by such
consolidation or into which the Company is merged or to which such assets are
sold, assigned, transferred, leased, conveyed or otherwise disposed is a Person
organized and existing under the laws of the United States or a state thereof
or the District of Columbia and such Person (if other than the Company)
expressly assumes by supplemental indenture all the obligations of the Company
under the Securities and the Indenture; (ii) at the time of and immediately
after giving effect to such transaction, no Default or Event of Default has
occurred and is continuing; (iii) the Company or the surviving Person (if other
than the Company) will have Consolidated Net Worth (immediately after the
transaction but prior to any purchase accounting adjustments resulting from the
transaction) greater than or equal to the Consolidated Net Worth of the Company
immediately preceding the transaction and (iv) the Company has delivered to the
Trustee an Officers' Certificate and Opinion of Counsel that all conditions
precedent herein relating to such transaction have been complied with.
SECTION 10.2 Successor Corporation to be Substituted for
Company.
In case of any such transaction in compliance with Section
10.1 and upon the assumption by the successor corporation, by supplemental
indenture, executed and delivered to the Trustee and satisfactory in form to
the Trustee, of the due and punctual payment of the principal of and premium,
if any, and interest on all of the Securities and the due and punctual
performance and observance of all of the covenants and conditions of this
Indenture to be performed or observed by the Company, such successor Person
shall succeed to and be substituted for the Company, with the same effect as if
it had been named herein as the party of the first part, and the Company
thereupon, except in the case of a lease, shall be relieved of any further
liability or obligation hereunder or upon the Securities. Such successor
Person thereupon may cause to be signed, and may issue either in its own name
or in the name of the Company, any and all of the Securities issuable hereunder
which theretofore shall not have been signed by the Company and delivered to
the Trustee or the Authenticating Agent; and, upon the order of such successor
Person instead of the Company and subject to all the
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terms, conditions and limitations in this Indenture prescribed, the Trustee or
the Authenticating Agent shall authenticate and deliver any Securities which
previously shall have been signed and delivered by the officers of the Company
to the Trustee or the Authenticating Agent for authentication, and any
Securities which such successor Person thereafter shall cause to be signed and
delivered to the Trustee or the Authenticating Agent for that purpose. All the
Securities so issued shall in all respects have the same legal rank and benefit
under this Indenture as the Securities theretofore or thereafter issued in
accordance with the terms of this Indenture as though all of such Securities
had been issued at the date of the execution hereof.
SECTION 10.3 Opinion of Counsel to be Given Trustee.
The Trustee, subject to the provisions of Sections 6.1 and
6.2, may receive an Opinion of Counsel as conclusive evidence that any
transaction, and any assumption, permitted or required by the terms of this
Article Ten complies with the provisions of this Article Ten.
ARTICLE XI
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 11.1 Discharge of Indenture.
When (a) the Company shall deliver to the Trustee for
cancellation all Securities theretofore authenticated (other than any
Securities which shall have been destroyed, lost or stolen and which shall have
been replaced or paid as provided in Section 2.8) and not theretofore
cancelled, or (b) (1) all the Securities not theretofore cancelled or delivered
to the Trustee for cancellation shall have become due and payable and the
Company shall deposit with the Trustee, in trust, funds sufficient to pay on
the Maturity Date or upon redemption all of the Securities (other than any
Securities which shall have been destroyed, lost or stolen and which shall have
been replaced or paid as provided in Section 2.8) not theretofore cancelled or
delivered to the Trustee for cancellation, including principal and premium, if
any, and interest due or to become due to the Maturity Date or redemption date,
as the case may be, but excluding, however, the amount of any moneys for the
payment of principal of or premium, if any, or interest on the Securities (x)
theretofore repaid to the Company in accordance with the provisions of Section
11.4, or (y) paid to any State or to the District of Columbia pursuant to its
unclaimed property or similar laws, (2) the Company shall have delivered to the
Trustee an Opinion of Counsel to the effect that such trust funds will not be
subject to any rights of holders of Senior Indebtedness, including without
limitation, those arising under Article Fourteen hereof, and (3) the Company
shall have delivered to the Trustee an Officers' Certificate and an Opinion of
Counsel, each stating that all conditions precedent provided for herein
relating to the satisfaction and discharge of this Indenture have been complied
with, and if in either case the Company shall also pay or cause to be paid all
other sums payable hereunder by the Company, then this Indenture shall cease to
be of further effect except that the provisions of Sections 2.2, 2.7, 2.8, 3.1,
3.2, 3.4, 6.6, 6.10, 11.4 and Article Fifteen hereof shall survive until such
Securities shall
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mature and be paid. Thereafter, Sections 6.10 and 11.4 shall survive, and the
Trustee, on demand of the Company accompanied by any Officers' Certificate and
an Opinion of Counsel and at the cost and expense of the Company, shall execute
proper instruments acknowledging satisfaction of and discharging this
Indenture, the Company, however, hereby agreeing to reimburse the Trustee for
any costs or expenses thereafter reasonably and properly incurred by the
Trustee in connection with this Indenture or the Securities.
SECTION 11.2 Deposited Moneys to be Held in Trust by
Trustee.
Subject to the provisions of Section 11.4, all moneys
deposited with the Trustee pursuant to Section 11.1 shall be held in trust and
applied by it to the payment, either directly or through any paying agent
(including the Company if acting as its own paying agent), to the holders of
the particular Securities for the payment of which such moneys have been
deposited with the Trustee, of all sums due and to become due thereon for
principal, premium, if any, and interest.
SECTION 11.3 Paying Agent to Repay Moneys Held.
Upon the satisfaction and discharge of this Indenture all
moneys then held by any paying agent of the Securities (other than the Trustee)
shall, upon written demand of the Company, be repaid to it or paid to the
Trustee, and thereupon such paying agent shall be released from all further
liability with respect to such moneys.
SECTION 11.4 Return of Unclaimed Moneys.
Any moneys deposited with or paid to the Trustee or any paying
agent for payment of the principal of or premium, if any, or interest on
Securities and not applied but remaining unclaimed by the holders of Securities
for two years after the date upon which the principal of or premium, if any, or
interest on such Securities, as the case may be, shall have become due and
payable, shall be repaid to the Company by the Trustee or such paying agent on
written demand; and the holder of any of the Securities shall thereafter look
only to the Company for any payment which such holder may be entitled to
collect and all liability of the Trustee or such paying agent with respect to
such moneys shall thereupon cease.
ARTICLE XII
REPURCHASE RIGHT
SECTION 12.1 Repurchase Right.
In the event that a Repurchase Event occurs after initial
issuance of the Securities, each holder of Securities shall have the right
(which right may not be waived by the Board of Directors or the Trustee) at
the holder's option, to require the Company to repurchase all of such holder's
Securities or any authorized denomination thereof, on the date (the "Repurchase
Date") that is 45 calendar days after the date of the Company Notice
(as defined below), for cash at a price equal to 101% of the principal amount
of such Securities to be
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repurchased (the "Repurchase Price"), together with accrued interest to the
Repurchase Date in accordance with paragraph (b) of this Section 12.1;
provided, however, that a Repurchase Event shall not be deemed to have occurred
if the Daily Market Price per share of the Common Stock for any 10 Trading Days
within the period of 20 consecutive Trading Days ending immediately before the
Repurchase Event shall equal or exceed 120% of the Conversion Price in effect
on each such Trading Day. A "beneficial owner" shall be determined in
accordance with Rule 13d-3 promulgated by the SEC under the Exchange Act, as in
effect on the date of execution of the Indenture.
SECTION 12.2 Notice of Repurchase Event.
Within 15 calendar days after a Repurchase Event, the Company
shall mail a notice (the "Company Notice") to the Trustee and each
Securityholder of record as of the date of the Repurchase Event stating:
(a) that a Repurchase Event has occurred
and that such Securityholder has the right to require the
Company to repurchase all or any authorized denomination of
such Securityholder's Securities at the Repurchase Price;
(b) the current Conversion Price, the
date on which the right to convert such Holder's Securities
into Common Stock will expire and the place or places where
such Securities may be surrendered for conversion;
(c) the Repurchase Date;
(d) that holders electing to have
Securities or any authorized denomination thereof purchased
will be required (a) to surrender their Securities to the
paying agent at the address specified in the Company Notice on
or before the fifth Business Day preceding the Repurchase Date
with the "Option of Holder to Elect Purchase" on the reverse
thereof completed and (b) to complete any form of letter of
transmittal proposed by the Company and acceptable to the
Trustee and the paying agent;
(e) that Securities which have been
surrendered to the paying agent may be converted into Common
Stock only to the extent that the holder of such Securities
withdraws his election to have such Securities purchased in
accordance with the terms of this Article Twelve;
(f) that any Security not tendered or
not accepted for payment will continue to accrue interest;
(g) that, unless the Company defaults in
paying the Repurchase Price, any Security accepted for payment
shall cease to accrue interest after the Repurchase Date; and
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(h) a description of any other procedure
which a Holder must follow to exercise his right to have
Securities repurchased.
At the Company's request, the Trustee shall give the Company
Notice in the Company's name and at the Company's expense, provided however,
that the Company shall deliver to the Trustee, at least five days prior to the
date upon which the Company Notice must be mailed to Securityholders (unless a
shorter time shall be acceptable to the Trustee), an Officers' Certificate
setting forth the information to be stated in such notice as provided in this
Article Twelve. No failure of the Company to give the Company Notice shall
limit any Securityholder's right to exercise the repurchase right herein
described.
The Trustee shall be under no obligation to ascertain or
verify the occurrence of a Repurchase Event or to give notice with respect
thereto other than as provided above upon receipt of the written notice of a
Repurchase Event from the Company. The Trustee may conclusively presume, in
the absence of written notice from the Company to the contrary, that no
Repurchase Event has occurred.
SECTION 12.3 Payment of Repurchase Price.
In the event a repurchase right shall be exercised in
accordance with the terms hereof, the Company shall pay or cause to be paid the
price payable with respect to the Securities as to which the repurchase right
had been exercised in cash to the Securityholder. In the event that a
repurchase right is exercised with respect to less than the entire principal
amount of a surrendered Security, the Company shall execute and the Trustee
shall authenticate for issuance in the name of the Securityholder a Security or
Securities in the aggregate principal amount of the unpurchased portion of such
surrendered Security.
SECTION 12.4 Compliance With Laws.
In connection with any repurchase of Securities under this
Article Twelve, the Company shall (i) comply with Rule 13e-4 (which term, as
used herein, includes any successor provision thereto) under the Exchange Act,
if applicable (ii) file the related Schedule 13e-4 (or any successor schedule,
form or report) under the Exchange Act, if applicable, and (iii) otherwise
comply with all federal and state securities laws so as to permit the rights
and obligations under this Article Twelve to be exercised in the time and in
the manner specified in this Article Twelve.
ARTICLE XIII
REDEMPTION OF SECURITIES
SECTION 13.1 Optional Redemption by Company.
The Company may, at its option, redeem all or from time to
time any part of the Securities, on any date on or after October 31, 2000, upon
notice as set forth in Section
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14.2 and at the optional redemption prices set forth below (expressed in
percentages of the principal amount), together with accrued interest to the
date fixed for redemption (the "Optional Redemption Price") (but installments
of interest whose stated maturity is on or prior to the date fixed for
redemption shall continue to be payable to the Securityholders of record on the
Regular Record Date) if redeemed during the 12-month period beginning October
31 of the years indicated below.
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2000 104.00%
2001 102.00%
2002 and thereafter 100%
</TABLE>
Portions of such redemption prices in excess of 100% of the
principal amount are sometimes herein referred to as the "premium" payable upon
such redemption.
SECTION 13.2 Notice of Redemption; Selection of Securities.
Whenever the Company redeems Securities pursuant to this
Article Fourteen, it shall notify the Trustee of the date fixed for redemption
and the principal amount of Securities to be redeemed. The notice shall be
accompanied by an Officers' Certificate stating that the redemption complies
with the provisions of this Indenture.
In case the Company shall desire to exercise its right to
redeem all or, as the case may be, any part of the Securities in accordance
with the right reserved so to do, notice of such redemption shall be given to
the holders of the Securities to be redeemed as hereinafter provided in this
Section 13.2, such notice to be given by the Company or, at the Company's
direction, by the Trustee in the name and at the expense of the Company. If
the notice is to be given by the Trustee, the Company shall provide the Trustee
with the information required in this Section 13.2.
Notice of redemption shall be given by mailing to holders of
Securities to be redeemed in whole or in part a notice of such redemption by
first class mail, postage prepaid, not less than 20 nor more than 65 days prior
to the date fixed for redemption, to their last addresses as they shall appear
upon the Securities Register. Any notice which is mailed in the manner herein
provided shall be conclusively presumed to have been duly given, whether or not
the holder receives the notice. In any case, failure to duly give notice by
mail, or any defect in the notice, to the holder of any Security designated for
redemption as a whole or in part shall not affect the validity of the
proceedings for the redemption of such Security or any other Security.
The notice shall identify the Securities to be redeemed and
shall state:
(1) the Redemption Date;
(2) the Optional Redemption Price;
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(3) the then current Conversion Price;
(4) the name and address of the paying agent and the
Conversion Agent;
(5) that Securities called for redemption must be
surrendered to the paying agent to collect the
Optional Redemption Price.
(6) that, unless the Company defaults in paying the
Optional Redemption Price, interest on Securities
called for redemption ceases to accrue on and after
the Redemption Date;
(7) that the right to convert the Securities as provided
in Article Fifteen shall terminate at the close of
business on the last Trading Day prior to the
Redemption Date (except that a Security which the
Company is required to purchase pursuant to Article
Twelve hereof shall be convertible until the close of
business on the last Trading Day prior to the
Repurchase Date);
(8) if any Security is being redeemed in part, the
portion of the principal amount of such Security to
be redeemed and the bond number of such Security and
that, after the Redemption Date, upon surrender of
such Security, a new Security or Securities in
principal amount equal to the unredeemed portion
thereof will be issued;
(9) that Holders who want to convert Securities must
satisfy the requirements set forth in the Securities;
(10) the CUSIP number, if any, of the Securities; and
(11) the consequences to a holder, if any, of converting a
Security (or portion of a Security) prior to the next
Interest Payment Date if the Redemption Date with
respect to such Security occurs on or after such
Interest Payment Date.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. If a CUSIP
number is listed in such notice or printed on the Security, the notice may
state that no representation is made as to the correctness or accuracy of such
CUSIP number.
If less than all of the Securities are to be redeemed, the
Company shall give the Trustee written notice, at least 45 days (or such
shorter period as may be acceptable to the Trustee) prior to the date fixed for
redemption, as to the aggregate principal amount of the Securities to be
redeemed, and thereupon the Trustee shall select, in such manner as it shall
deem appropriate and fair (so long as such method is not prohibited by the
rules of any securities exchange or market in which the Securities are then
listed or quoted) from outstanding Securities, a principal amount of Securities
equal to such aggregate principal amount of Securities to be redeemed and shall
thereafter promptly notify the Company in writing of the
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Securities so to be redeemed and, if any such Securities are to be redeemed in
part, the portions thereof to be redeemed.
SECTION 13.3 Payment of Securities on Redemptions; Deposit of
Redemption Price.
If notice of redemption shall have been given as provided in
Section 13.2, such Securities or portions of Securities shall, unless
theretofore converted into Common Stock pursuant to the terms hereof, become
due and payable on the date fixed for redemption and at the place stated in
such notice at the applicable Optional Redemption Price and premium, if any,
together with accrued and unpaid interest to the date fixed for redemption, and
on and after such date fixed for redemption, unless the Company shall default
in the payment of the Optional Redemption Price, interest on the Securities so
called for redemption shall cease to accrue. Moneys in the amount necessary
for each redemption referred to in Section 13.1 shall be deposited with a
paying agent by the Company on or prior to the date fixed for redemption. On
presentation and surrender of such payment specified in such notice, such
Securities or the specified portions thereof shall (subject to the provisions
of Article Fourteen) be paid and redeemed at the applicable Optional Redemption
Price, together with accrued and unpaid interest thereon to the date fixed for
redemption. Installments of interest whose stated maturity is on or prior to
the date fixed for redemption shall continue to be payable to the holders of
such Securities on the relevant Regular Record Date or special record date, as
the case may be, according to their terms and the provisions of Sections 2.6 or
2.12, as the case may be, of this Indenture.
Upon presentation of any Security redeemed in part only, the
Company shall execute and the Trustee shall authenticate and deliver, at the
expense of the Company, a new Security or Securities of authorized
denominations in aggregate principal amount equal to the unredeemed portion of
the Security so presented.
The Company's obligation to deposit with the paying agent
moneys in the amount necessary for the redemption of particular Securities or
portions thereof called for redemption shall be reduced automatically by the
amount of such moneys attributable to any of such called Securities or portions
thereof which shall have been converted prior to the date such moneys are
required to be deposited with the paying agent. Any moneys which shall have
been deposited with the paying agent for redemption of Securities and which are
not required for that purpose by reason of conversion of such Securities shall
be repaid to the Company. The paying agent may in each case require evidence
reasonably satisfactory to it of such conversion.
SECTION 13.4 No Sinking Fund.
The Securities are not entitled to the benefit of any sinking
fund.
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ARTICLE XIV
SUBORDINATION OF SECURITIES
SECTION 14.1 Agreement that Securities to Be Subordinate.
The Trustee acknowledges, the Company covenants and agrees,
and each holder of Securities issued hereunder by his acceptance thereof
likewise covenants and agrees, that all payments of principal of, premium, if
any, and interest on the Securities and all other monetary claims, including
such monetary claims as may result from rights of repurchase, under or in
respect of the Securities shall be subordinated in accordance with the
provisions of this Article Fourteen to the prior payment in full in cash of all
amounts payable under all Senior Indebtedness, whether outstanding as of the
date of this Indenture or thereafter incurred.
SECTION 14.2 Liquidation; Dissolution; Bankruptcy.
Upon any payment or distribution of assets to creditors upon
any liquidation, dissolution, winding up, reorganization, assignment for the
benefit of creditors, marshaling of assets or any bankruptcy, insolvency or
similar proceedings of the Company:
(a) holders of all Senior Indebtedness then
outstanding shall be entitled to receive
payment in full in cash of all amounts owing
with respect to all Senior Indebtedness
before Securityholders shall be entitled to
receive any payment on or with respect to the
Securities; and
(b) until all Senior Indebtedness is paid in full
in cash, any distribution to which
Securityholders would be entitled but for
this Article Fourteen shall be made to
holders of Senior Indebtedness as their
interests may appear, except that the
Securityholders may receive Permitted Junior
Securities.
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 the properties and assets of the
Company substantially as an entirety to another Person upon the terms and
conditions set forth in Article Ten shall not be deemed a liquidation,
dissolution, winding up, reorganization, insolvency, receivership or similar
proceeding of the Company for the purposes of this Section.
SECTION 14.3 Company Not to Make Payments with Respect to
Securities in Certain Circumstances.
(a) Unless Section 14.2 shall be applicable, upon the
occurrence of any default in the payment of any obligation on or with respect
to any Senior Indebtedness, whether with respect to scheduled payments or
amounts due upon acceleration (a "Payment Default"), then no payment or
distribution of any assets of the Company of any kind or
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character 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, redemption
or other acquisition of Securities or any of the obligations of the Company
under the Securities unless and until such Payment Default shall have been
cured or waived or shall have ceased to exist or such Senior Indebtedness shall
have been discharged or paid in full, immediately after which the Company shall
resume making any and all required payments, including missed payments, in
respect of its obligations under the Securities.
(b) Unless Section 14.2 shall be applicable, upon (1) the
occurrence of any default (other than a Payment Default) relating to Senior
Indebtedness which default, pursuant to the instrument governing such Senior
Indebtedness, entitles the holders (or a specified portion of holders) of such
Senior Indebtedness to accelerate the maturity of such Senior Indebtedness (a
"Non-payment Default") and (2) receipt by the Trustee and the Company from a
holder of such Senior Indebtedness or from the trustee, agent or other
representative designated in writing to the Trustee of any class or issue of
Senior Indebtedness (the "Senior Representative") of written notice of such
occurrence, no payment or distribution of any assets of the Company of any kind
or character 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,
redemption or other acquisition of Securities or on account of any other
obligations of the Company under the Securities for a period (a "Payment
Blockage Period") commencing on the date of receipt by the Trustee of such
notice unless and until the earlier to occur of the following events (i) 179
days shall have elapsed since receipt of such written notice by the Trustee
(provided such Senior Indebtedness shall theretofore not have been
accelerated), (ii) such Non-payment Default shall have been cured or waived in
the manner required by the instrument relating to such Senior Indebtedness or
shall have ceased to exist, (iii) such Senior Indebtedness shall have been
discharged or paid in full or (iv) such Payment Blockage Period shall have been
terminated by written notice to the Company or the Trustee from either the
Senior Representative initiating such Payment Blockage Period or the holders of
the requisite amount of such issue of such Senior Indebtedness, immediately
after which, in the case of clause (i), (ii), (iii) or (iv), the Company shall
resume making any and all required payments, including missed payments, in
respect of its obligations under the Securities. Only one Payment Blockage
Period pursuant to such notice may be commenced with respect to the Securities
during any period of 365 consecutive days. Successive Payment Blockage Periods
based on successive Non-payment Defaults may be commenced; provided that no
Non-payment Default with respect to Senior Indebtedness which existed or was
continuing on the date of the commencement of any Payment Blockage Period shall
be, or be made, the basis for the commencement of any other Payment Blockage
Period with respect to such Senior Indebtedness unless such event of default
shall have been cured or waived for a period of not less than 180 consecutive
days.
Regardless of anything to the contrary herein, nothing shall
prevent (A) any payment of the Trustee to the Securityholders of amounts
deposited with it pursuant to Article Eleven or (B) any payment by the Trustee
or paying agent as permitted by Section 14.13.
SECTION 14.4 Payment Over of Proceeds in Certain Events.
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In the event that any payment or distribution of assets of the
Company of any kind or character not permitted by Sections 14.2 or 14.3,
whether in cash, property or securities, shall be received by the Trustee or
paying agent, if any, or the holders of the Securities before all Senior
Indebtedness is paid in full in cash, such payment or distribution shall be
received and held in trust for the benefit of the holders of Senior
Indebtedness and shall forthwith be paid over or delivered by the Trustee, such
paying agent or such holders of the Securities, as the case may be, directly to
the holders of Senior Indebtedness (pro rata to each such holder on the basis
of the respective amounts of Senior Indebtedness held by such holder) or the
Senior Representative or the trustee under the indenture or other agreement (if
any) pursuant to which Senior Indebtedness may have been issued, for
application to the payment of, all Senior Indebtedness remaining unpaid to the
extent necessary to pay all obligations in respect of such Senior Indebtedness
in full in cash in accordance with its terms, after giving effect to any other
concurrent payment or distribution to the holders of such Senior Indebtedness.
Both the Trustee and the paying agent shall be entitled to presume that any
payment or distribution of assets of the Company is not prohibited by Section
14.2 or 14.3 unless a Responsible Officer of the Trustee or the paying agent
receives notice of a default relating to Senior Indebtedness at least two
Business Days before making a payment or distribution of such assets to the
holders of Securities.
SECTION 14.5 No Waiver of Subordination Provisions.
Without notice to or the consent of the Securityholders or the
Trustee, the holders of Senior Indebtedness may at any time and from time to
time, without impairing or releasing the subordination herein made, change the
manner, place or terms of payments, or change or extend the time of payment of
or renew or alter the Senior Indebtedness, or amend or supplement in any manner
any instrument evidencing the Senior Indebtedness, any agreement pursuant to
which the Senior Indebtedness was issued or incurred or any instrument securing
or relating to the Senior Indebtedness; release any person liable in any manner
for the payment or collection of the Senior Indebtedness; exercise or refrain
from exercising any rights in respect of the Senior Indebtedness against the
Company or any other person; apply any moneys or other property paid by any
person or released in any manner to the Senior Indebtedness; or accept or
release any security for the Senior Indebtedness.
SECTION 14.6 Notice to Trustee of Specified Events; Reliance
on Certificate of Liquidating Agent.
The Company shall give prompt written notice to the Trustee
and any paying agent of any fact known to the Company that would prohibit the
making of any payment to or by the Trustee or any paying agent in respect of
the Securities pursuant to the provisions of this Article Fourteen.
Upon any distribution of assets of the Company or payment by
or on behalf of the Company referred to in this Article Fourteen, the Trustee
and the holders of the Securities shall be entitled to rely upon any order or
decree of a court of competent jurisdiction in which any proceedings of the
nature referred to in Section 14.3 are pending, and the Trustee and the holders
of the Securities shall be entitled to rely upon a certificate of the
liquidating trustee or agent or other person making any such distribution to
the Trustee or to
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the holders of the Securities for the purpose of ascertaining the persons
entitled to participate in such distribution, the holders of 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 Fourteen.
SECTION 14.7 Subrogation.
After all Senior Indebtedness is paid in full and until the
Securities are paid in full, Securityholders shall be subrogated to the rights
of holders of Senior Indebtedness to receive distributions applicable to Senior
Indebtedness to the extent that distributions otherwise payable to the
Securityholders have been applied to the payment of Senior Indebtedness. A
distribution made or payment over made under this Article Fourteen to holders
of Senior Indebtedness which otherwise would have been made to Securityholders
is not, as between the Company, its creditors other than the holders of Senior
Indebtedness and Securityholders, a payment or distribution by the Company on
or on account of Senior Indebtedness, it being understood that the provisions
of this Article Fourteen are, and are intended, solely for the purpose of
defining the relative rights of the Securityholders, on the one hand, and the
holders of Senior Indebtedness, on the other hand.
SECTION 14.8 Obligation to Pay Not Impaired.
Nothing contained in this Article Fourteen or elsewhere in
this Indenture, or in the Securities, is intended to or shall alter or impair,
as between the Company, its creditors other than the holders of Senior
Indebtedness, and the holders of the Securities, the obligation of the Company,
which is absolute and unconditional, to pay to the holders of the Securities
the principal of (and premium, if any) and interest on the Securities at the
time and place and at the rate and in the currency therein prescribed, or to
affect the relative rights of the holders of the Securities and creditors of
the Company other than the holders of Senior Indebtedness, nor shall anything
herein or therein 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 right, if any, under this Article Fourteen
of the holders of the Senior Indebtedness in respect of cash, property or
securities of the Company received upon the exercise of any such remedy.
SECTION 14.9 Reliance by Senior Indebtedness on Subordination
Provisions.
Each holder of a Security by his acceptance thereof
acknowledges and agrees that the foregoing subordination provisions are, and
are intended to be, an inducement and a consideration to each holder of any
Senior Indebtedness (by its original terms or amendment thereof), whether such
Senior Indebtedness was created or acquired before or after the issuance of the
Securities, to acquire and hold, or to continue to hold, such Senior
Indebtedness, and such holder of Senior Indebtedness shall be deemed
conclusively to have relied on such subordination provisions in acquiring and
continuing to hold, or in holding, such Senior Indebtedness. The subordination
provisions in this Article Fourteen may be enforced directly by the holders of
Senior Indebtedness.
SECTION 14.10 Subordination Not to Be Prejudiced by Certain
Acts.
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No present or future holder of Senior Indebtedness shall be
prejudiced in his right to enforce subordination of the indebtedness evidenced
by the Securities by any act or failure to act in good faith by any such holder
or by noncompliance by the Company with the terms and provisions and covenants
herein regardless of any knowledge thereof any such holder may have or
otherwise be charged with.
SECTION 14.11 Trustee Authorized to Effectuate Subordination.
Each holder of Securities by his acceptance thereof authorizes
and directs the Trustee on his behalf to take such action as may be necessary
or appropriate to acknowledge or effectuate the subordination as provided in
this Article Fourteen and appoints the Trustee his attorney-in-fact for any and
all such purposes including, in the event of any dissolution, winding up,
liquidation or reorganization of the Company (whether in bankruptcy, insolvency
or receivership or similar proceedings or upon an assignment for the benefit of
creditors or otherwise) tending towards liquidation of the business and assets
of the Company, to file a claim for the unpaid balance of its Securities in the
form required in said proceedings and to cause said claim to be approved. If
the Trustee does not file a proper claim or proof of debt in the form required
in such proceeding prior to 30 days before the expiration of the time to file
such claim or proof, then the holders of the Senior Indebtedness shall have the
right to file and are hereby authorized to file an appropriate claim or proof
for and on behalf of the holders of said Securities.
SECTION 14.12 Trustee's Relationship to Senior Indebtedness.
Except for the Trustee's duty to hold cash, properties or
securities in trust for the benefit of holders of Senior Indebtedness pursuant
to Section 14.4 hereof, subject, however, to the final sentence thereof, the
Trustee shall owe no fiduciary duty to the holders of Senior Indebtedness. The
Trustee shall be entitled to all rights set forth in this Article Fourteen in
respect of any Senior Indebtedness at any time held by it, to the same extent
as any other holder of Senior Indebtedness, and nothing in this Indenture shall
deprive the Trustee of any of its rights as such holder.
SECTION 14.13 Trustee and Paying Agents Not Chargeable with
Knowledge Until Notice.
Notwithstanding any of the provisions of this Article Fourteen
or any other provisions of this Indenture, the Trustee and any paying agent
shall not at any time be charged with knowledge of the existence of any facts
which would prohibit the making of any payment of moneys to or by the Trustee
or any paying agent, unless and until a Responsible Officer of the Trustee or
such paying agent, as the case may be, shall have received written notice
thereof from the Company or a holder of a Senior Indebtedness, or any trustee
thereof, and, prior to the receipt of any such written notice, the Trustee and
any other paying agent shall be entitled to assume that no such facts exist.
If at least two Business Days prior to the date upon which the terms of any
such moneys may become payable for any purpose (including, without limitation,
the payment of either the principal of or the interest on any Security) a
Responsible Officer of the Trustee or paying agent, as the case may be, shall
not have received with respect to such moneys the notice provided for in
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this Section 14.13, then, anything contained herein to the contrary
notwithstanding, the Trustee shall have full power and authority to receive
such moneys and to apply the same to the purpose for which they were received,
and shall not be affected by any notice to the contrary which may be received
by it on or after the commencement of such two Business Day period. Nothing
contained in this Section 14.13 shall limit the right of the holders of Senior
Indebtedness to recover payments as contemplated by Section 14.4.
SECTION 14.14 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 shall in such case (unless the context shall
otherwise require) be construed as extending to and including such paying agent
within its meaning as fully for all intents and purposes as if such paying
agent were named in this Article in addition to or in place of the Trustee,
provided however, that Sections 14.12 and 14.13 shall not apply to the Company
if it acts as a paying agent.
SECTION 14.15 Trustee's Compensation Not Prejudiced.
Nothing contained in this Article Fourteen shall affect or
subordinate the rights of the Trustee with respect to any fees, expenses or
indemnitees owing by the Company to the Trustee under this Indenture.
ARTICLE XV
CONVERSION
SECTION 15.1 Conversion Privilege.
A holder of a Security may convert it into fully paid and
nonassessable shares of Common Stock of the Company at any time after 60 days
following the date of original issuance thereof and prior to and including
maturity at the Conversion Price then in effect, except that, with respect to
any Security called for redemption or delivered for repurchase, such conversion
right shall terminate at the close of business on the Trading Day immediately
preceding the Redemption Date or Repurchase Date (unless the Company shall
default in making the payment due upon such redemption or repurchase, in which
case the conversion right shall terminate on the date such default is cured).
The number of shares of Common Stock issuable upon conversion of a Security is
determined by dividing the principal amount of the Security to be converted by
the conversion price in effect on the Conversion Date (the "Conversion Price").
The initial Conversion Price is stated in the Securities and
is subject to adjustment as provided in this Article Fifteen.
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A holder may convert a portion of a Security equal to any
integral multiple of $1,000. Provisions of this Indenture that apply to
conversion of all of a Security also apply to conversion of a portion of it.
SECTION 15.2 Conversion Procedure.
To convert a Security, a holder must satisfy the requirements
in the Securities. The date on which the holder satisfies all of those
requirements is the conversion date (the "Conversion Date"). As soon as
practicable after the Conversion Date, the Company shall deliver to the holder
through the Conversion Agent a certificate for the number of whole shares of
Common Stock issuable upon the conversion and a check for any fractional share
determined pursuant to Section 15.3. The person in whose name the certificate
is registered shall become the stockholder of record on the Conversion Date
and, as of such date, such person's rights as a Securityholder shall cease;
provided, however, that no surrender of a Security on any date when the stock
transfer books of the Company shall be closed shall be effective to constitute
the person entitled to receive the shares of Common Stock upon such conversion
as the stockholder of record of such shares of Common Stock on such date, but
such surrender shall be effective to constitute the person entitled to receive
such shares of Common Stock as the stockholder of record thereof for all
purposes at the close of business on the next succeeding day on which such
stock transfer books are open; provided further, however, that such conversion
shall be at the Conversion Price in effect on the date that such Security shall
have been surrendered for conversion, as if the stock transfer books of the
Company had not been closed.
No payment or adjustment will be made for dividends or
distributions on shares of Common Stock issued upon conversion of a Security.
However, upon conversion of a Security, the holder thereof shall be entitled to
receive interest, if any, accrued and unpaid through the date of such
conversion, which interest shall be payable by the Company (without any
additional interest) on the next succeeding Interest Payment Date.
If a holder converts more than one Security at the same time,
the number of whole shares of Common Stock issuable upon the conversion shall
be based on the total principal amount of Securities converted.
Upon surrender of a Security that is converted in part, the
Trustee shall authenticate for the holder a new Security equal in principal
amount to the unconverted portion of the Security surrendered.
SECTION 15.3 Fractional Shares.
The Company will not issue fractional shares of Common Stock
upon conversion of a Security. In lieu thereof, the Company will pay an amount
in cash based upon the Daily Market Price of the Common Stock on the Trading
Day prior to the date of conversion.
SECTION 15.4 Taxes on Conversion.
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The issuance of certificates for shares of Common Stock upon
the conversion of any Security shall be made without charge to the converting
Securityholder for such certificates or for any tax in respect of the issuance
of such certificates, and such certificates shall be issued in the respective
names of, or in such names as may be directed by, the holder or holders of the
converted Security; provided, however, that in the event that certificates for
shares of Common Stock are to be issued in a name other than the name of the
holder of the Security converted, such Security, when surrendered for
conversion, shall be accompanied by an instrument of transfer, in form
satisfactory to the Company, duly executed by the registered holder thereof or
his duly authorized attorney; and provided further, however, that the Company
shall not be required to pay any tax which may be payable in respect of any
transfer involved in the issuance and delivery of any such certificates in a
name other than that of the holder of the converted Security, and the Company
shall not be required to issue or deliver such certificates unless or until the
person or persons requesting the issuance thereof shall have paid to the
Company the amount of such tax or shall have established to the satisfaction of
the Company that such tax has been paid or is not applicable.
SECTION 15.5 Company to Provide 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 issuance upon conversion of Securities as herein
provided, a sufficient number of shares of Common Stock to permit the
conversion of all outstanding Securities for shares of Common Stock. All
shares of Common Stock which may be issued upon conversion of the Securities
shall be duly authorized, validly issued, fully paid and nonassessable when so
issued. Shares of Common Stock issuable upon conversion of a Transfer
Restricted Security shall bear such restrictive legends as the Company shall
provide in accordance with applicable law. If shares of Common Stock are to be
issued upon conversion of a Transfer Restricted Security and they are to be
registered in a name other than that of the holder of such Transfer Restricted
Security, then the person in whose name such shares of Common Stock are to be
registered must deliver to the Trustee a certificate satisfactory to the
Company and signed by such person as to compliance with the restrictions on
transfer contained in such restrictive legends.
SECTION 15.6 Adjustment of Conversion Price.
The Conversion Price shall be subject to adjustment from time
to time as follows:
(a) In case the Company shall (1) pay a dividend in shares of
Common Stock to holders of Common Stock, (2) make a distribution in shares of
Common Stock to holders of Common Stock, (3) subdivide its outstanding shares
of Common Stock into a greater number of shares of Common Stock or (4) combine
its outstanding shares of Common Stock into a smaller number of shares of
Common Stock, the Conversion Price in effect immediately prior to such action
shall be adjusted so that the holder of any Security thereafter surrendered for
conversion shall be entitled to receive the number of shares of Common Stock
which he would have owned immediately following such action had such Securities
been converted immediately prior thereto. Any adjustment made pursuant to this
subsection (a)
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shall become effective immediately after the record date in the case of a
dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision or combination.
(b) In case the Company shall issue rights, warrants or
options to all holders of Common Stock entitling them to subscribe for or
purchase shares of Common Stock (or securities convertible into Common Stock)
at a price per share less than the current market price (as determined pursuant
to subsection (e) below) of the Common Stock on such record date, the
Conversion Price shall be adjusted so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
such record date by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding on such record date, plus the number of
shares of Common Stock which the aggregate offering price of the offered shares
of Common Stock (or the aggregate conversion price of the convertible
securities so offered) would purchase at such current market price, and of
which the denominator shall be the number of shares of Common Stock outstanding
on such record date plus the number of additional shares of Common Stock
offered (or into which the convertible securities so offered are convertible).
Such adjustment shall be made successively whenever any such rights, warrants
or options are distributed, and shall become effective immediately after the
record date for the determination of stockholders entitled to receive such
rights, warrants or options. If at the end of the period during which such
rights, warrants or options are exercisable not all such rights, warrants or
options shall have been exercised, the adjusted Conversion Price shall be
immediately readjusted to what it would have been based upon the number of
additional shares of Common Stock actually issued (or the number of shares of
Common Stock issuable upon conversion of convertible securities or the exchange
of exchangeable securities actually issued).
(c) In case the Company shall distribute to all holders of
Common Stock shares of any class of stock other than Common Stock, evidences of
indebtedness, cash or other assets (including securities, but excluding those
rights, options, warrants and securities referred to in subsection (b) above
and excluding dividends and distributions paid exclusively in cash), then in
each such case the Conversion Price shall be adjusted so that the same shall
equal the price determined by multiplying the Conversion Price in effect
immediately prior the date of such distribution by a fraction of which the
numerator shall be the current market price (determined as provided in
subsection (e) below) of the Common Stock on the record date mentioned below
less the then fair market value (as determined by the Board of Directors, whose
determination shall be conclusive evidence of such fair market value and
described in a Board Resolution) of the portion of the evidences of
indebtedness and/or assets and/or securities so distributed applicable to one
share of Common Stock, and of which the denominator shall be such current
market price of the Common Stock. Such adjustment shall become effective
immediately prior to the opening of business on the day following the record
date for the determination of the holders of Common Stock entitled to receive
such distribution; provided, however that in the event the fair market value
(as so determined) of the portion of the evidences of indebtedness, shares of
capital stock, cash, securities and assets so distributed applicable to one
share of Common Stock is equal to greater than such current market price per
share of Common Stock, or if the excess of such current market price per share
over such fair market value is less than $1.00, then the Company shall also
distribute to the holders of the Securities the amount of evidences of
indebtedness, shares of
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capital stock, cash, securities and assets such Holder would have received had
the Holder converted the Securities immediately prior to the record date for
such distribution. If the Board of Directors determines the fair market value
of any distribution for purposes of this subsection (c) by reference to the
actual or when issued trading market for any securities included in such
distribution, it shall in doing so consider the prices in such market over the
same period used in computing the current market price per share pursuant to
subsection (c) of this Section..
(d) In case the Company shall, (i) by dividend or otherwise,
at any time distribute to all holders of its Common Stock cash (excluding any
cash portions of distributions referred to in (c) above or cash distributions
upon a merger or consolidation to which Section 15.12 applies) in an aggregate
amount that, combined together with (a) all other such all-cash distributions
made within the preceding 12 months in respect to which no adjustment has been
made and (b) any cash and the fair market value of any other consideration paid
or payable in respect of any tender offers by the Company for Common Stock
concluding within the preceding 12 months in respect of which no adjustment has
been made, exceeds 12.5% of the Company's Market Capitalization on the record
date for such distribution (as determined by the Board of Directors, whose
determination shall be described in an Officers' Certificate filed with the
Trustee and any Conversion Agent), or (ii) purchase Common Stock pursuant to a
tender offer made by the Company or any of its Subsidiaries which involves an
aggregate consideration that together with (a) any cash and the fair market
value of any other consideration paid or payable in any other tender offer by
the Company or any of its Subsidiaries of Common Stock expiring within the 12
months preceding the expiration of such tender offer in respect of which no
adjustment has been made (as determined by the Board of Directors, whose
determination shall be described in an officers' Certificate filed with the
Trustee and any Conversion Agent) and (b) the aggregate amount of any such
all-cash distributions referred to in (i) above to all holders of Common Stock
within the 12 months preceding the expiration of such tender offer in respect
of which no adjustments have been made, exceeds 12.5% of the Company's Market
Capitalization on the expiration of such tender offer, 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 subsection
(d) by a fraction of which the numerator shall be the current market price per
share (determined as provided in subsection (e) of this Section 15.6) 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 (determined as
aforesaid), such reduction to become effective immediately prior to the opening
of business on the day following the date fixed for the payment of such
distribution.
(e) The current market price per share of Common Stock on any
date shall be deemed to be the average of the Daily Market Prices for the
shorter of (i) thirty consecutive Business Days ending on the last full Trading
Day on the exchange or market referred to in determining such Daily Market
Prices prior to the time of determination or (ii) the period commencing on the
date next succeeding the first public announcement of the issuance of such
rights, such warrants, such options or such other distribution or such
negotiated transaction through such last full Trading Day on the exchange or
market referred to in determining such Daily Market Prices prior to the time of
determination.
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(f) In any case in which this Section 15.6 shall require that
an adjustment be made immediately following a record date, the Company may
elect to defer (but only until five Business Days following the filing by the
Company with the Trustee of the certificate described in Section 15.10 below)
issuing to the holder of any Security converted after such record date the
shares of Common Stock and other capital stock of the Company issuable upon
such conversion over and above the shares of Common Stock and other capital
stock of the Company issuable upon such conversion only on the basis of the
Conversion Price prior to adjustment; and, in lieu of the shares the issuance
of which is so deferred, the Company shall issue or cause its transfer agents
to issue due bills or other appropriate evidence of the right to receive such
shares.
SECTION 15.7 No Adjustment.
No adjustment in the Conversion Price shall be required until
cumulative adjustments amount to 1% or more of the Conversion Price as last
adjusted; provided, however, that any adjustments which by reason of this
Section 15.7 are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Article
Fifteen shall be made to the nearest cent or to the nearest one-hundredth of a
share, as the case may be. No adjustment need be made for rights to purchase
Common Stock pursuant to a Company plan for reinvestment of dividends or
interest. No adjustment need be made for a change in the par value of the
Common Stock, or from par value to no par value, or from no par value to par
value.
SECTION 15.8 Other Adjustments.
In the event that, as a result of an adjustment made pursuant
to Section 15.6 above, the holder of any Security thereafter surrendered for
conversion shall become entitled to receive any Capital Stock of the Company
other than shares of its Common Stock, thereafter the Conversion Price of such
other shares so receivable upon conversion of any Securities shall be subject
to adjustment from time to time in a manner and on terms as nearly equivalent
as practicable to the provisions with respect to Common Stock contained in this
Article Fifteen.
SECTION 15.9 Adjustments for Tax Purposes.
The Company may make such reductions in the Conversion Price,
in addition to those required by Section 15.6 above, as it determines to be
advisable in order that any stock dividend, subdivision of shares, distribution
or rights to purchase stock or securities or distribution of securities
convertible into or exchangeable for stock made by the Company to its
stockholders will not be taxable to the recipients thereof.
SECTION 15.10 Notice of Adjustment.
Whenever the Conversion Price is adjusted, the Company shall
promptly mail to Securityholders at the addresses appearing on the Registrar's
books a notice of the adjustment and file with the Trustee an Officer's
Certificate briefly stating the facts requiring
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the adjustment and the manner of computing it. The certificate shall be
conclusive evidence of the correctness of such adjustment.
SECTION 15.11 Notice of Certain Transactions.
In the event that:
(1) the Company takes any action which would require an
adjustment in the Conversion Price;
(2) the Company takes any action that would require a
supplemental indenture pursuant to Section 15.12; or
(3) there is a dissolution or liquidation of the Company;
a holder of a Security may wish to convert such Security into shares of Common
Stock prior to the record date for or the effective date of the transaction so
that he may receive the rights, warrants, options, securities or assets which a
holder of shares of Common Stock on that date may receive. Therefore, the
Company shall mail to Securityholders at the addresses appearing on the
Security registrar's books and the Trustee a notice stating the proposed record
or effective date, as the case may be. The Company shall mail the notice at
least 15 days before such date; however, failure to mail such notice or any
defect therein shall not affect the validity of any transaction referred to in
clause (1), (2) or (3) of this Section 15.11.
SECTION 15.12 Effect of Reclassifications, Consolidations,
Mergers or Sales on Conversion Privilege.
If any of the following shall occur, namely: (i) any
reclassification or change of outstanding shares of Common Stock issuable upon
conversion of Securities (other than a change in par value, or from par value
to no par value, or from no par value to par value, or as a result of a
subdivision or combination), (ii) any consolidation or merger to which the
Company is a party other than a merger in which the Company is the continuing
corporation and which does not result in any reclassification of, or change
(other than a change in name, or par value, or from par value to no par value,
or from no par value to par value or as a result of a subdivision or
combination) in, outstanding shares of Common Stock or (iii) any sale or
conveyance of all or substantially all of the property or business of the
Company as an entirety, then the Company, or such successor or purchasing
Person, as the case may be, shall, as a condition precedent to such
reclassification, change, consolidation, merger, sale or conveyance, execute
and deliver to the Trustee a supplemental indenture in form satisfactory to the
Trustee providing that the holder of each Security then outstanding shall have
the right to convert such Security into the kind and amount of shares of stock
and other securities and property (including cash) receivable upon such
reclassification, change, consolidation, merger, sale or conveyance by a holder
of the number of shares of Common Stock deliverable upon conversion of such
Security immediately prior to such reclassification, change, consolidation,
merger, sale or conveyance. Such supplemental indenture shall provide for
adjustments of the Conversion Price which shall be as nearly equivalent as may
be practicable to the adjustments of the Conversion Price provided for in this
Article Fifteen. If, in the
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case of any such consolidation, merger, sale or conveyance, the stock or other
securities and property (including cash) receivable thereupon by a holder of
Common Stock includes shares of stock or other securities and property of a
Person other than the successor or purchasing Person, as the case may be, in
such consolidation, merger, sale or conveyance, then such supplemental
indenture shall also be executed by such other Person and shall contain such
additional provisions to protect the interests of the holders of the Securities
as the Board of Directors of the Company shall reasonably consider necessary by
reason of the foregoing. The provision of this Section 15.12 shall similarly
apply to successive consolidations, mergers, sales or conveyances.
In the event the Company shall execute a supplemental
indenture pursuant to this Section 15.12, the Company shall promptly file with
the Trustee an Officers' Certificate briefly stating the reasons therefor, the
kind or amount of shares of stock or securities or property (including cash)
receivable by holders of the Securities upon the conversion of their Securities
after any such reclassification, change, consolidation, merger, sale or
conveyance and any adjustment to be made with respect thereto.
SECTION 15.13 Trustee's Disclaimer.
The Trustee has no duty to determine when an adjustment under
this Article Fifteen should be made, how it should be made or what such
adjustment should be, but may accept as conclusive evidence of the correctness
of any such adjustment, and shall be protected in relying upon the Officers'
Certificate with respect thereto which the Company is obligated to file with
the Trustee pursuant to Section 15.10. The Trustee makes no representation as
to the validity or value of any securities or assets upon conversion of
Securities, and the Trustee shall not be responsible for the Company's failure
to comply with any provisions of this Article Fifteen.
The Trustee shall not be under any responsibility to determine
the correctness of any provisions contained in any supplemental indenture
executed pursuant to Section 15.12, but may accept as conclusive evidence of
the correctness thereof, and shall be protected in relying upon, the Officers'
Certificate with respect thereto which the Company is obligated to file with
the Trustee pursuant to Section 15.12.
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ARTICLE XVI
MISCELLANEOUS PROVISIONS
SECTION 16.1 Successors.
All the covenants, stipulations, promises and agreements in
this Indenture contained by the Company shall bind its successors and assigns
whether so expressed or not.
SECTION 16.2 Official Acts by Successor Corporation.
Any act or proceeding by any provision of this Indenture
authorized or required to be done or performed by any board, committee or
officer of the Company shall and may be done and performed with like force and
effect by the like board, committee or officer of any corporation that shall at
the time be the lawful sole successor of the Company.
SECTION 16.3 Surrender of Company Powers.
The Company by instrument in writing executed by authority of
two-thirds of its Board of Directors and delivered to the Trustee may surrender
any of the powers reserved to the Company, and thereupon such power so
surrendered shall terminate both as to the Company, as the case may be, and as
to any successor Person.
SECTION 16.4 Addresses for Notices, etc.
Any notice or demand which by any provision of this Indenture
is required or permitted to be given or served by the Trustee or by the holders
of Securities on the Company may be given or served by being deposited postage
prepaid by registered or certified mail in a post office letter box addressed
(until another address is filed by the Company with the Trustee for the
purpose) to the Company, 100 Southeast 2nd Street, 36th Floor, Miami, Florida
33131, Attention: General Counsel. Any notice, direction, request or demand
by any Securityholder to or upon the Trustee shall be deemed to have been
sufficiently given or made, for all purposes, if given or made in writing at
the office of the Trustee, addressed to the Trustee, 40 Wall Street, New York,
New York 10005, Attention: Corporate Trust Department.
SECTION 16.5 Governing Law.
This Indenture and each Security shall be deemed to be a
contract made under the laws of the State of New York, and for all purposes
shall be governed by and construed in accordance with the laws of said State,
without regard to conflicts of laws principles thereof.
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SECTION 16.6 Evidence of Compliance with Conditions
Precedent.
Upon any application or demand by the Company to the Trustee
to take any action under any of the provisions of this Indenture, the Company
shall furnish to the Trustee an Officers' Certificate stating that in the
opinion of the signers all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with and an
Opinion of Counsel stating that, in the opinion of such counsel, all such
conditions precedent have been complied with.
Each certificate or opinion provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or
covenant provided for in this Indenture shall include (1) a statement that the
person making such certificate or opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based; (3) a statement that, in the opinion of such
person, he has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant or
condition has been complied with; and (4) a statement as to whether or not, in
the opinion of such person, such condition or covenant has been complied with.
SECTION 16.7 Business Days.
In any case where the date of payment of principal of or
premium, if any, or interest on the Securities will not be a Business Day, the
payment of such principal of or premium, if any, or interest on 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 date of payment and no
interest shall accrue for the period from and after such date.
SECTION 16.8 Trust Indenture Act to Control.
If and to the extent that any provision of this Indenture
limits, qualifies or conflicts with another provision included in this
Indenture which is required to be included in this Indenture by any of Sections
310 to 317, inclusive, of the Trust Indenture Act of 1939, such required
provision shall control.
SECTION 16.9 Table of Contents, Headings, etc.
The table of contents and the titles and headings of the
articles and sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof, and shall in no way
modify or restrict any of the terms or provisions hereof.
SECTION 16.10 Execution in Counterparts.
This Indenture may be executed in any number of counterparts,
each of which shall be an original, but such counterparts shall together
constitute but one and the same instrument.
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SECTION 16.11 Separability.
In case any one or more of the provisions contained in this
Indenture or in the Securities shall for any reason be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Indenture or of
the Securities, but this Indenture and the Securities shall be construed as if
such invalid or illegal or unenforceable provision had never been contained
herein or therein.
SECTION 16.12 Assignment.
The Company will have the right at all times to assign any of
its respective rights or obligations under this Indenture to a direct or
indirect wholly owned Subsidiary of the Company, provided that, in the event of
any such assignment, the Company, as the case may be, will remain liable for
all such obligations. Subject to the foregoing, the Indenture is binding upon
and inures to the benefit of the parties thereto and their respective
successors and assigns. This Indenture may not otherwise be assigned by the
parties thereto.
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The Trustee hereby accepts the trusts in this Indenture
declared and provided, upon the terms and conditions hereinabove set forth.
IN WITNESS WHEREOF, the parties hereto have caused
this Indenture to be duly executed by their respective officers thereunto duly
authorized, as of the day and year first above written.
CONTINUCARE CORPORATION
By:/s/ Charles M. Fernandez
---------------------------------
Name: Charles M. Fernandez
Title:Chief Executive Officer
and President
AMERICAN STOCK TRANSFER & TRUST COMPANY,
as Trustee
By:/s/ Harry Shulman
------------------------
Name: Harry Shulman
Title:Vice President
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Exhibit 4.2
================================================================================
REGISTRATION RIGHTS AGREEMENT
Dated October 30, 1997
among
CONTINUCARE CORPORATION
and
LOEWENBAUM & CO. INCORPORATED,
as Placement Agent
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REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made
and entered into as of October 30, 1997 among CONTINUCARE CORPORATION, a
Florida corporation (the "Company"), and LOEWENBAUM & CO. INCORPORATED, as
placement agent (the "Placement Agent").
This Agreement is made pursuant to the Placement Agreement
dated October 27, 1997 (the "Placement Agreement"), among the Company, as
issuer of the 8% Convertible Subordinated Notes due 2002 (the "Notes") and the
common stock, par value $.0001 per share, of the Company issuable upon
conversion thereof (the "Common Stock"), the Placement Agent and each purchaser
who is a signatory thereto (the "Purchasers"), which provides for among other
things, the sale by the Company to the Purchasers of the Notes (together with
the Common Stock, the "Securities"). In order to induce the Purchasers to enter
into the Placement Agreement, the Company has agreed to provide to the
Purchasers and their direct and indirect transferees the registration rights
set forth in this Agreement. The execution and delivery of this Agreement is a
condition to the closing under the Placement Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
1. Definitions. As used in this Agreement, the
following initially capitalized terms shall have the following meanings:
"Advice" shall have the meaning set forth in the last paragraph of
Section 3 hereof.
"Business Day" shall mean a day that is not a Saturday, a Sunday, or a
day on which banking institutions in New York, New York are authorized or
required to be closed.
"Closing Time" shall mean the Closing Time as defined in the Placement
Agreement.
"Common Stock" shall have the meaning set forth in the preamble to
this Agreement.
"Company" shall have the meaning set forth in the preamble to this
Agreement and also includes the Company's successors and permitted assigns.
"Depositary" shall mean The Depository Trust Company, or any other
depositary appointed by the Company; provided, however, that such depositary
must have an address in the Borough of Manhattan, in the City of New York.
"Effectiveness Period" shall have the meaning set forth in Section
2(a) hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
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"Holder" shall mean any Purchaser, for so long as it owns any
Registrable Securities, and each of its respective successors, assigns and
direct and indirect transferees who become registered owners of Registrable
Securities under the Indenture.
"Indenture" shall mean the Indenture relating to the Notes dated as of
October 30, 1997 among the Company, as issuer, and American Stock Transfer &
Trust Company, a New York corporation, as trustee, as the same may be amended
from time to time in accordance with the terms thereof.
"Inspectors" shall have the meaning set forth in Section 3(m) hereof.
"Issue Date" shall mean the date of the last Closing Time.
"Liquidated Damages" shall have the meaning set forth in Section 2(d)
hereof.
"Majority Holders" shall mean the Holders of a majority in aggregate
principal amount of the outstanding Registrable Securities (considering, for
purposes of this definition, each share of Common Stock which is a Registrable
Security as equivalent to the aggregate principal amount of Notes in respect of
the conversion of which each such share was issued).
"Person" shall mean an individual, partnership, corporation, trust or
unincorporated organization, limited liability company, or a government or
agency or political subdivision thereof.
"Placement Agent" shall have the meaning set forth in the preamble of
this Agreement.
"Placement Agreement" shall have the meaning set forth in the preamble
to this Agreement.
"Prospectus" shall mean the prospectus included in the Registration
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including any prospectus
supplement with respect to the terms of the offering of any portion of the
Registrable Securities covered by the Registration Statement, and by all other
amendments and supplements to a prospectus, including post-effective
amendments, and in each case including all material incorporated by reference
therein.
"Records" shall have the meaning set forth in Section 3(m) hereof.
"Registrable Securities" shall mean the Securities; provided, however,
that a Security shall cease to be a Registrable Security when (i) a
Registration Statement with respect to such Security shall have been declared
effective under the Securities Act and such Security shall have been disposed
of pursuant to such Registration Statement, (ii) such Security shall have been
sold to the public pursuant to Rule 144(k) (or any similar provision then in
force, but not Rule 144A) under the Securities Act, or (iii) such Security
shall have ceased to be outstanding.
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"Registration" shall mean a registration effected pursuant to Section
2(a) hereof.
"Registration Expenses" shall mean any and all expenses incident to
performance of or compliance by the Company with this Agreement, including
without limitation: (i) all SEC or National Association of Securities Dealers,
Inc. (the "NASD") registration and filing fees, (ii) all fees and expenses
incurred in connection with compliance with state securities or blue sky laws
(including reasonable fees and disbursements of counsel referred to in Section
2(b) hereof for any underwriters or Holders in connection with blue sky
qualification of any of the Registrable Securities) and compliance with the
rules of the NASD, (iii) all expenses of any Persons in preparing or assisting
in preparing, word processing, printing and distributing any Registration
Statement, any Prospectus and any amendments or supplements thereto, and in
preparing or assisting in preparing, printing and distributing any underwriting
agreements, securities sales agreements and other documents relating to the
performance of and compliance with this Agreement, (iv) the fees and
disbursements of counsel for the Company and of the independent certified
public accountants of the Company, including the expenses of any "cold comfort"
letters required by or incident to such performance and compliance, (v) all
fees and expenses incurred in connection with the listing, if any, of any of
the Registrable Securities on any securities exchange or exchanges and (vi) the
reasonable fees and expenses of any special experts retained by the Company in
connection with any Registration Statement. Notwithstanding anything in this
Agreement to the contrary, each Holder shall pay all underwriting discounts and
brokerage commissions with respect to any Registrable Securities sold by it.
"Registration Statement" shall mean a "shelf" registration statement
of the Company, on an appropriate form, pursuant to the provisions of Section
2(a) hereof which covers the resale of all of the Registrable Securities under
Rule 415 under the Securities Act, or any similar rule that may be adopted by
the SEC, and all amendments and supplements to such registration statement,
including post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all material incorporated by
reference therein.
"Rule 144(k) Period" shall mean the period of two years (or such
shorter or longer period as may hereafter be referred to in Rule 144(k) under
the Securities Act (or similar successor rule)) commencing on the Closing Time
(as defined in the Placement Agreement).
"SEC" shall mean the Securities and Exchange Commission.
"Securities" shall have the meaning set forth in the preamble to this
Agreement.
"Securities Act" shall mean the Securities Act of 1933, as amended
from time to time.
"TIA" shall have the meaning set forth in Section 3(k) hereof.
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2. Registration Under the Securities Act.
(a) Shelf Registration. The Company shall, at its sole
expense, (i) within 60 days after the Issue Date, file the Registration
Statement providing for the resale by the Holders of all of the Registrable
Securities, (ii) shall use its best efforts to cause the Registration Statement
to be declared effective by the SEC under the Securities Act within 120 days
after the Issue Date and (iii) use its reasonable best efforts to keep
effective the Registration Statement until the earlier of the expiration of the
Rule 144(k) Period or such time as all of the Registrable Securities have been
sold thereunder or otherwise cease to be Registrable Securities (the
"Effectiveness Period"). No Holder of Registrable Securities shall be entitled
to include any of its Registrable Securities in the Registration pursuant to
this Agreement unless and until such Holder furnishes to the Company in
writing, within 15 days after receipt of a written request therefor, such
information as the Company may (after conferring with counsel and counsel to
the Placement Agent with regard to information relating to Holders that would
be required by the SEC to be included in such Registration Statement or the
Prospectus included therein) reasonably request for inclusion in the
Registration Statement or the Prospectus included therein. Each Holder as to
which the Registration is being effected agrees to furnish to the Company all
information with respect to such Holder necessary to make the information
previously furnished to the Company by such Holder not materially misleading.
The Company shall not permit any securities other than
Registrable Securities to be included in the Registration Statement. The
Company will provide to each Holder a reasonable number of copies of the
Prospectus that is a part of the Registration Statement, notify each such
Holder when the Registration has become effective and take all other actions as
are reasonably requested to permit unrestricted resales of the Registrable
Securities. The Company further agrees, if necessary, to supplement or amend
the Registration Statement, if required by the rules, regulations or
instructions applicable to the registration form used by the Company for such
Registration Statement or by the Securities Act or by any other rules and
regulations thereunder for shelf registrations, and to furnish to the Holders
of Registrable Securities copies of any such supplement or amendment promptly.
Any Holder that sells Registrable Securities pursuant to the
Registration Statement shall, if required by the staff of the SEC, be named as
a selling security holder in the Prospectus, shall deliver a Prospectus to
purchasers, shall be subject to certain of the civil liability provisions under
the Securities Act in connection with such sales and shall be bound by the
provisions of this Registration Rights Agreement that are applicable to such
holder (including certain indemnification rights and obligations).
The Holders of Registrable Securities covered by the
Registration Statement who desire to do so may sell the securities covered by
such Registration in an underwritten offering. In any such underwritten
offering, the underwriter or underwriters and manager or managers that will
administer the offering will be investment bankers of recognized national
standing, including, but not limited to, Loewenbaum & Co. Incorporated,
selected by the Majority
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Holders; provided, however, that such underwriters and managers must be
reasonably satisfactory to the Company.
(b) Expenses. The Company shall pay all Registration
Expenses in connection with the registration pursuant to Section 2(a) hereof
and will reimburse the Holders for the reasonable fees and disbursements of not
more than one firm of attorneys representing the selling Holders, which firm
shall be Skadden, Arps, Slate, Meagher & Flom LLP or any such other counsel
designated in writing by the Majority Holders to act as counsel for the Holders
of the Registrable Securities in connection with the Registration Statement,
which other counsel shall be reasonably satisfactory to the Company. Except as
provided herein, each Holder shall pay all expenses of its counsel,
underwriting discounts and commissions and transfer taxes, if any, relating to
the sale or disposition of such Holder's Registrable Securities pursuant to the
Registration Statement.
(c) Effective Registration Statement. The Registration
Statement referred to in Section 2(a) hereof will not be deemed to have become
effective unless it has been declared effective by the SEC; provided, however,
that, (i) if, after it has been declared effective, the offering of Registrable
Securities pursuant to the Registration Statement is interfered with by any
stop order, injunction or other order or requirement of the SEC or any other
governmental agency or court or (ii) upon the occurrence of any event which
makes any statement in the Prospectus which is part of the Registration
Statement untrue in any material respect or which requires the making of any
changes in the Prospectus in order to make the statements therein not
misleading, such Registration Statement will be deemed not to have been
effective during the period of such interference or occurrence, until (x) the
offering of Registrable Securities pursuant to such Registration Statement may
legally resume or (y) the Company has amended or supplemented such prospectus
to correct such misstatement or omission and has furnished copies of the
amended or supplemented Prospectus to the Holders, as the case may be. If the
Registration Statement is deemed not to have been effective for any period of
time pursuant to this Section 2(c), the Effectiveness Period shall be extended
by the number of days during the period from and including the date of the
occurrence of an event described in the foregoing clause (i) or (ii), as the
case may be, to and including the date of the occurrence of the event described
in the foregoing clause (x) or (y), as the case may be.
The Company shall be deemed not to have used its reasonable
best efforts to cause the Registration Statement to become, or to remain,
effective during the requisite period if it voluntarily takes any action that
would result in the Registration Statement not being declared effective or in
the Holders of Registrable Securities covered thereby not being able to offer
and sell such Registrable Securities during that period unless (i) such action
is required by applicable law, including, but not limited to, reasonable
periods necessary to prepare appropriate disclosure, or (ii) such action is
taken by the Company in good faith and for business reasons, including, without
limitation, the acquisition or divestiture of assets or the offering or sale of
securities, so long as the Company promptly thereafter prepares a
post-effective amendment to the Registration Statement or a supplement to the
related prospectus so that, as thereafter
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delivered to purchasers of the Notes, the prospectus will not contain an untrue
statement of a material fact necessary to make the statements therein not
misleading.
(d) Liquidated Damages. In the event that (A) the Company
fails to file the Registration Statement with the SEC on or prior to the 60th
day after the Issue Date, (B) the Registration Statement is not declared
effective by the SEC on or prior to the 120th day after the Issue Date or (C) a
filed and effective Registration Statement ceases to be effective at any time
during the Effectiveness Period, the Company shall pay liquidated damages (the
"Liquidated Damages") to each holder of Registrable Securities as follows:
(i) if the Registration Statement is not filed with the SEC on
or prior to the 60th day after the Issue Date, then commencing on the
day after such required filing date, Liquidated Damages shall be
payable in an amount equal to $.05 per week per $1,000 principal
amount of Notes then outstanding and $.01 per week per share (subject
to adjustment as described below) of Common Stock theretofore issued
upon the conversion of the Notes; or
(ii) if the Registration Statement is not declared effective
by the SEC on or prior to the 120th day after the Issue Date,
commencing on the 121st day after the Issue Date, additional
Liquidated Damages shall be payable in an amount equal to $.05 per
week per $1,000 principal amount of Notes then outstanding and $.01
per week per share (subject to adjustment as described below) of
Common Stock theretofore issued upon the conversion of the Notes; or
(iii) if the Registration Statement has been declared
effective and such Registration Statement ceases to be effective at
any time during the Effectiveness Period (other than after such time
as all Notes then outstanding or Common Stock theretofore issued
pursuant to the conversion thereof have been disposed of thereunder or
otherwise cease to be Registrable Securities), then additional
Liquidated Damages shall be payable in an amount equal to $.05 per
week per $1,000 principal amount of Notes then outstanding and $.01
per week per share (subject to adjustment as described below) of
Common Stock theretofore issued upon conversion of the Notes,
commencing on the date such Registration Statement ceases to be
effective;
provided, however, that the Liquidated Damages rate on the Notes then
outstanding or Common Stock theretofore issued upon the conversion thereof may
not exceed in the aggregate $.10 per week per $1,000 principal amount of Notes
then outstanding and $.02 per week per share (subject to adjustment as
described below) of Common Stock theretofore issued upon the conversion of the
Notes; provided, further, however, that (1) upon the filing of the Registration
Statement (in the case of clause (i) above), (2) upon the effectiveness of the
Registration Statement (in the case of clause (ii) above), or (3) upon the
effectiveness of the Registration Statement which had ceased to remain
effective (in the case of clause (iii) above), the obligation to pay Liquidated
Damages as a result of such clause, as the case may be, shall cease to accrue.
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Any amounts of Liquidated Damages due pursuant to clause (i),
(ii) or (iii) above shall be payable in cash on April 30 and October 31 of each
year to the Holders of record on the first day of the month in which the
relevant payment date falls.
In the event of any stock split, stock dividend, reverse stock
split, reclassification, share exchange or similar transaction with respect to
the Common Stock such that an adjustment to the amount of Liquidated Damages
payable in respect of each share of Common Stock theretofore issued upon
conversion of the Notes is appropriate as an equitable matter, then the
Company, in consultation with each Purchaser, shall in good faith make such
equitable adjustment to the amount of Liquidated Damages per share as it deems
necessary or appropriate to achieve such equitable result.
(e) Specific Enforcement. Without limiting the remedies
available to the Holders, the Company acknowledges that any failure by the
Company to comply with its obligations under Section 2(a) hereof may result in
material irreparable injury to the Holders for which there is no adequate
remedy at law, that it would not be possible to measure damages for such
injuries precisely and that, in the event of any such failure, any Holder may
obtain such relief as may be required to specifically enforce the Company's
obligations under Section 2(a) hereof.
3. Registration Procedures. The Company shall use its
reasonable best efforts to:
(a) prepare and file with the SEC a Registration Statement or
Registration Statements as prescribed by Section 2(a) hereof within
the relevant time period specified in Section 2 hereof on the
appropriate form under the Securities Act, which (i) shall be
available for the sale of the Registrable Securities by the selling
Holders thereof, (ii) shall comply as to form in all material respects
with the requirements of the applicable form and include all financial
statements required by the SEC to be filed therewith and (iii) include
a generic and broad plan of distribution which is reasonably
satisfactory to the Majority Holders and their counsel; and use its
best efforts to cause such Registration Statement to become effective
and remain effective in accordance with Section 2 hereof; before
filing any Registration Statement or Prospectus or any amendments or
supplements thereto, the Company shall furnish to and afford the
Holders of the Registrable Securities covered by such Registration
Statement, their counsel and the managing underwriters, if any, a
reasonable opportunity to review copies of all such documents
(including copies of any documents to be incorporated by reference
therein and all exhibits thereto) proposed to be filed.
(b) subject to the provisions of Section 2(c) hereof, prepare
and file with the SEC such amendments and post-effective amendments to
each Registration Statement as may be necessary to keep such
Registration Statement effective for the Effectiveness Period; and
cause each Prospectus to be supplemented, if so determined by the
Company or requested by the SEC, by any required prospectus supplement
and as so supplemented to be filed pursuant to Rule 424 (or any
similar provision then in force) under the Securities
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Act, and comply with the provisions of the Securities Act, the
Exchange Act and the rules and regulations promulgated thereunder
applicable to it with respect to the disposition of all securities
covered by the Registration Statement during the Effectiveness Period
in accordance with the intended method or methods of distribution by
the selling Holders.
(c) (i) notify each Holder of Registrable Securities included
in the Registration Statement, within a reasonable time prior to
filing, that a Registration Statement with respect to the Registrable
Securities is being filed and advise such Holder that the distribution
of Registrable Securities will be made in accordance with the method
selected by such Holders; and (ii) furnish to each Holder of
Registrable Securities included in the Registration Statement and to
each underwriter of an underwritten offering of Registrable
Securities, if any, without charge, as many copies of each Prospectus,
including each preliminary Prospectus, and any amendment or supplement
thereto and such other documents as such Holder or underwriter may
reasonably request, in order to facilitate the public sale or other
disposition of the Registrable Securities; and (iii) subject to the
provisions of this Agreement, consent to the use of the Prospectus or
any amendment or supplement thereto by each of the selling Holders of
Registrable Securities included in the Registration Statement in
connection with the offering and sale of the Registrable Securities
covered by the Prospectus or any amendment or supplement thereto.
(d) use its reasonable best efforts to register or qualify
the Registrable Securities under all applicable state securities or
"blue sky" laws of such jurisdictions as any Holder of Registrable
Securities covered by the Registration Statement and each underwriter
of an underwritten offering of Registrable Securities shall reasonably
request, and do any and all other acts and things which may be
reasonably necessary or advisable to enable such Holder and
underwriter to consummate the disposition in each such jurisdiction of
such Registrable Securities owned by such Holder; provided,
however, that the Company shall not be required to (i) qualify as a
foreign corporation in any jurisdiction where it would not otherwise
be required to qualify but for this Section 3(d), (ii) file any
general consent to service of process in any jurisdiction where it
would not otherwise be subject to such service of process or (iii)
subject itself to taxation in any such jurisdiction if it is not then
so subject;
(e) if requested, notify each Holder of Registrable
Securities promptly (i) when a Registration Statement has become
effective and when any post-effective amendments and supplements
thereto become effective, (ii) of any request by the SEC or any state
securities authority for amendments and supplements to the
Registration Statement or Prospectus or for additional information,
(iii) of the issuance by the SEC or any state securities authority of
any stop order suspending the effectiveness of a Registration
Statement or the qualification of the Registrable Securities or the
initiation of any proceedings for that purpose, (iv) if any of the
representations and warranties of the Company contained in any
purchase or underwriting agreement cease to be true and correct in any
material respects, and (v) of the happening of any event or the
failure of
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any event to occur or the discovery of any facts or otherwise, during
the Effectiveness Period which makes any statement made in the
Registration Statement or the related Prospectus untrue in any
material respect or which causes the Registration Statement or
Prospectus to omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, and (vi) when a post-effective amendment to
the Registration Statement would be required;
(f) make every commercially reasonable effort to obtain the
withdrawal of any order suspending the effectiveness of a Registration
Statement at the earliest possible moment;
(g) furnish to each Holder of Registrable Securities
included within the coverage of the Registration Statement, without
charge, at least one conformed copy of each Registration Statement
relating to such Registration and any post-effective amendment thereto
(without documents incorporated therein by reference or exhibits
thereto, unless requested);
(h) cooperate with the selling Holders of Registrable
Securities to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold and not
bearing any restrictive legends and in such denominations (consistent
with the provisions of the Indenture) and registered in such names as
the selling Holders or the underwriters may reasonably request within
a reasonable period prior to the closing of any sale of Registrable
Securities pursuant to the Registration Statement;
(i) upon the occurrence of any circumstance contemplated by
Section 3(e)(ii), 3(e)(iii), 3(e)(v) or 3(e)(vi) hereof, use its
reasonable best efforts to prepare a supplement or post-effective
amendment to the Registration Statement and the related Prospectus or
any document incorporated therein by reference and/or file any other
required document so that, as thereafter delivered to the purchasers
of the Registrable Securities, such Prospectus will not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(j) cause the Indenture to be qualified under the Trust
Indenture Act of 1939 (the "TIA") in connection with the registration
of the Registrable Securities and effect such changes to the Indenture
as may be required for it to be so qualified in accordance with the
terms of the TIA and execute, and use its best efforts to cause the
trustee under the Indenture to execute, all documents as may be
required to effect such changes, and all other forms and documents
required to be filed with the SEC to enable the Indenture to be so
qualified in a timely manner;
(k) if requested by the Majority Holders, enter into such
agreements (including underwriting agreements) as are customary in
underwritten offerings and take all such other appropriate actions as
are reasonably requested in order to expedite or facilitate the
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registration or the disposition of such Registrable Securities, and in
such connection, whether or not an underwriting agreement is entered
into and whether or not the registration is an underwritten
registration, if requested by Holders of Securities covered thereby:
(i) make such representations and warranties to Holders of such
Registrable Securities and the underwriters (if any), with respect to
the business of the Company and its subsidiaries as then conducted and
the Registration Statement, Prospectus and documents, if any,
incorporated or deemed to be incorporated by reference therein, in
each case, as are customarily made by issuers to underwriters in
underwritten offerings, and confirm the same if and when requested;
(ii) use its reasonable best efforts to obtain opinions of counsel to
the Company and updates thereof (which may be in the form of a
reliance letter) in form and substance reasonably satisfactory to the
managing underwriters (if any) and the Holders of a majority in
principal amount or majority of shares, as the case may be, of the
Registrable Securities being sold, addressed to each selling Holder
and the underwriters (if any) covering the matters customarily covered
in opinions requested in underwritten offerings and such other matters
as may be reasonably requested by such underwriters (it being agreed
that the matters to be covered by such opinion may be subject to
customary qualifications and exceptions); (iii) use its reasonable
best efforts to obtain customary "cold comfort" letters and updates
thereof in form and substance reasonably satisfactory to the managing
underwriters from the independent certified public accountants of the
Company (and, if necessary, any other independent certified public
accountants of any subsidiary of the Company or of any business
acquired or to be acquired by the Company for which financial
statements and financial data are, or are required to be, included in
the Registration Statement), addressed to each of the underwriters,
such letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with
underwritten offerings and such other matters as reasonably requested
by such underwriters in accordance with Statement on Auditing
Standards No. 72; and (iv) if an underwriting agreement is entered
into, the same shall contain indemnification provisions and procedures
no less favorable than those set forth in Section 4 hereof (or such
other provisions and procedures acceptable to Holders of a majority in
aggregate principal amount or majority of shares, as the case may be,
of Registrable Securities covered by such Registration Statement and
the managing underwriters or agents) with respect to all parties to be
indemnified pursuant to said Section (including, without limitation,
such underwriters and selling Holders); provided, however, that the
Company is not required to facilitate an underwritten public offering
unless a request therefor shall have been made by the holders of a
majority in the aggregate principal amount of the Registrable
Securities being sold and, in any event, the Company is not required
to effect more than two underwritten offerings. The above shall be
done at each closing under such underwriting agreement, or as and to
the extent required thereunder;
(l) make reasonably available for inspection by any selling
Holder of such Registrable Securities being sold, any underwriter
participating in any such disposition of Registrable Securities, if
any, and any attorney, accountant or other agent retained by any such
selling Holder or underwriter (collectively, the "Inspectors"), at the
offices
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where normally kept, during reasonable business hours, all financial
and other records, pertinent corporate documents and properties the
Company and its subsidiaries (collectively, the "Records") as shall be
reasonably necessary to enable them to exercise any applicable due
diligence responsibilities, and cause the officers, directors and
employees of the Company and its subsidiaries to supply all relevant
information in each case reasonably requested by any such Inspector in
connection with such Registration Statement provided, however, that
the foregoing inspection and information gathering shall be
coordinated on behalf of such parties, by one counsel designated by
the Majority Holders on behalf of such parties as described in Section
2(a) hereof. Records which the Company determines, in good faith, to
be confidential and any records which it notifies the Inspectors are
confidential shall be disclosed subject to the execution of
confidentiality agreements that are reasonably satisfactory to the
Company and shall not be disclosed by the Inspectors unless (i) the
disclosure of such Records is necessary to avoid or correct a material
misstatement or omission in such Registration Statement, (ii) the
release of such Records is ordered pursuant to a subpoena or other
order from a court of competent jurisdiction or is necessary in
connection with any action, suit or proceeding or (iii) the
information in such Records has been made generally available to the
public;
(m) comply with all applicable rules and regulations of the
SEC so long as any provision of this Agreement shall be applicable and
make generally available to its securityholders earning statements
satisfying the provisions of Section 11(a) of the Securities Act and
Rule 158 thereunder (or any similar rule promulgated under the
Securities Act) no later than 45 days after the end of any 12-month
period (or 90 days after the end of any 12-month period if such period
is a fiscal year) (i) commencing at the end of any fiscal quarter in
which Registrable Securities are sold to underwriters in a firm
commitment or best efforts underwritten offering and (ii) if not sold
to underwriters in such an offering, commencing on the first day of
the first fiscal quarter of the Company after the effective date of
the Registration Statement, which statements shall cover said 12-month
periods;
(n) cooperate with each seller of Registrable Securities
covered by the Registration Statement and each underwriter, if any,
participating in the disposition of such Registrable Securities and
their respective counsel in connection with any filings required to be
made with the NASD;
(o) use its reasonable best efforts to take all other steps
necessary to effect the registration of the Registrable Securities
covered by the Registration Statement contemplated hereby;
(p) The Company may require each seller of Registrable
Securities as to which a registration is being effected to furnish to
the Company, as applicable, such information regarding such seller as
may be required by the staff of the SEC to be included in a
Registration Statement. The Company may exclude from such
registration the Regis-
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trable Securities of any seller who unreasonably fails to furnish such
information within a reasonable time after receiving such request.
Each Holder agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section
3(e)(ii), 3(e)(iii), 3(e)(v) or 3(e)(vi) hereof, such Holder will
forthwith discontinue disposition of Registrable Securities pursuant
to a Registration Statement until such Holder's receipt of the copies
of the supplemented or amended Prospectus contemplated by Section 3(i)
hereof or until it is advised in writing (the "Advice") by the Company
that the use of the applicable Prospectus may be resumed, and, if so
directed by the Company, such Holder will deliver to the Company (at
the Company's expense, as the case requires) all copies in such
Holder's possession, other than permanent file copies then in such
Holder's possession, of the Prospectus covering such Registrable
Securities current at the time of receipt of such notice. If the
Company shall give any such notice to suspend the disposition of
Registrable Securities pursuant to the Registration Statement, the
Company shall use its best efforts to file and have declared effective
(if an amendment) as soon as practicable an amendment or supplement to
the Registration Statement and shall extend the period during which
such Registration Statement shall be maintained effective pursuant to
this Agreement by the number of days in the period from and including
the date of the giving of such notice to and including the date when
the Company shall have made available to the Holders (x) copies of the
supplemented or amended Prospectus necessary to resume such
dispositions or (y) the Advice.
4. Indemnification and Contribution.
(a) In connection with the Registration Statement, the Company
shall indemnify and hold harmless each Holder, each underwriter who
participates in an offering of the Registrable Securities, each Person, if any,
who controls any of such parties within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act and each of their respective
directors, officers, employees and agents, as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement
or alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment or supplement thereto) or in
any Prospectus (or any amendment or supplement thereto), including all
documents incorporated therein by reference, or the omission or
alleged omission therefrom of a material fact necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue
statement or
13
<PAGE> 14
omission, or any such alleged untrue statement or omission, provided
that any such settlement is effected with the prior written consent of
the Company; and
(iii) against any and all expenses whatsoever, as incurred
(including reasonable fees and disbursements of counsel chosen by such
Holder or any underwriter (except to the extent otherwise expressly
provided in Section 4(c) hereof)), reasonably incurred in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any court or governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any
such untrue statement or omission, or any such alleged untrue
statement or omission, to the extent that any such expense is not paid
under subparagraph (i) or (ii) of this Section 4(a);
provided, however, that this indemnity does not apply to any loss, liability,
claim, damage or expense to the extent arising out of an untrue statement or
omission or alleged untrue statement or omission made (i) in reliance upon and
in conformity with written information furnished in writing to the Company by
such Purchasers, any Holder or any underwriter with respect to such Purchasers,
any Holder or any underwriter, as the case may be, expressly for use in the
Registration Statement (or any amendment thereto) or any Prospectus (or any
amendment or supplement thereto) or (ii) in a preliminary prospectus if a copy
of the Prospectus (as then amended or supplemented) was not sent or given by or
on behalf of such Holder or any underwriter, as the case may be, to the person
asserting any such loss, liability, claim, damage or expense, if required by
law so to have been delivered, at or prior to the written confirmation of the
sale of the Notes, and the Prospectus (as then amended or supplemented) would
have completely corrected such untrue statement or omission.
(b) Each Holder agrees, severally and not jointly, to
indemnify and hold harmless the Company, any underwriter and the other selling
Holders and each of their respective directors, officers (including each
officer of the Company who signed the Registration Statement), employees and
agents and each Person, if any, who controls the Company, any underwriter or
any other selling Holder within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act, from and against any and all loss,
liability, claim, damage and expense whatsoever described in the indemnity
contained in Section 4(a) hereof, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in the
Registration Statement (or any amendment thereto) or any Prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Company by such selling Holder with
respect to such Holder expressly for use in the Registration Statement (or any
amendment thereto), or any such Prospectus (or any amendment or supplement
thereto); provided, however, that no such Holder shall be liable for any claims
hereunder in excess of the amount of net proceeds received by such Holder from
the sale of Registrable Securities pursuant to the Registration Statement.
(c) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, but failure
to so notify an indemnifying party shall not relieve such
14
<PAGE> 15
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this
indemnity agreement. In the case of indemnification pursuant to Section 4(a)
above, the indemnifying parties shall select counsel which shall be reasonably
acceptable to the Placement Agent, and, in the case of indemnification pursuant
to Section 4(b) above, the indemnifying parties shall select counsel which
shall be reasonably acceptable to the Company. An indemnifying party may
participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemni- fied party.
In no event shall the indemnifying parties be liable for fees and expenses of
more than one counsel (in addition to any local counsel) separate from their
own counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 4 (whether
or not the indemnified parties are actual or potential parties thereto), unless
such settlement, compromise or consent includes an unconditional release of
each indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim.
(d) Notwithstanding the last sentence of Section 4(c), if at
any time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for reasonable fees and expenses of counsel
pursuant to Section 4(a)(iii) above, such indemnifying party agrees that it
shall be liable for any settlement effected without its written consent if (i)
such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into and (iii) such indemnifying party shall not
have reimbursed such indemnified party in accordance with such request prior to
the date of such settlement; provided, however, that an indemnifying party
shall not be liable for any such settlement effected without its consent if
such indemnifying party (x) reimburses such indemnified party in accordance
with such request to the extent it considers such request to be reasonable and
(y) provides written notice to the indemnified party substantiating the unpaid
balance as unreasonable, in each case prior to the date of such settlement.
(e) In order to provide for just and equitable contribution
in circumstances under which any of the indemnity provisions set forth in this
Section 4 is for any reason held to be unavailable to the indemnified parties
although applicable in accordance with its terms, the Company, any underwriter
and the Holders shall contribute to the aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by such indemnity agreement
incurred by the Company, any underwriter and the Holders, as incurred; provided
that 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 that was not guilty of such fraudulent misrepresentation. As between
the Company and the Holders, such parties shall contribute to such
15
<PAGE> 16
aggregate losses, liabilities, claims, damages and expenses of the nature
contemplated by such indemnity agreement in such proportion as shall be
appropriate to reflect the relative fault of the Company, on the one hand, and
the Holders, on the other hand, with respect to the statements or omissions
which resulted in such loss, liability, claim, damage or expense, or action in
respect thereof, as well as any other relevant equitable considerations. The
relative fault of the Company, on the one hand, and of the Holders, on the
other hand, 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 by or on behalf of the Holders, on the other,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
the Holders of the Registrable Securities agree that it would not be just and
equitable if contribution pursuant to this Section 4 were to be determined by
pro rata allocation or by any other method of allocation that does not take
into account the relevant equitable considerations referred to above. For
purposes of this Section 4, each affiliate of a Holder, and each director,
officer, employee, agent and Person, if any, who controls a Holder or such
affiliate within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act shall have the same rights to contribution as such Holder,
and each director of the Company, each officer of the Company who signed the
Registration Statement, and each Person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act shall have the same rights to contribution as the Company.
5. Participation in Underwritten Registrations. No
Holder may participate in any underwritten registration hereunder unless such
Holder (a) agrees to sell such Holder's Registrable Securities on the basis
provided in any underwriting arrangements approved by the Persons entitled
hereunder to approve such arrangements and (b) completes and executes all
reasonable questionnaires, powers of attorney, indemnities, underwriting
agreements, lock-up letters and other documents reasonably required under the
terms of such underwriting arrangements.
6. Miscellaneous.
(a) Rule 144 and Rule 144A. For so long as the Company is
subject to the reporting requirements of Section 13 or 15 of the Exchange Act
and any Registrable Securities remain outstanding, the Company will file the
reports required to be filed by it under the Securities Act and Section 13(a)
or 15(d) of the Exchange Act and the rules and regulations adopted by the SEC
thereunder. If it ceases to be so required to file such reports, the Company
will, upon the request of any Holder of Registrable Securities (a) make
publicly available such information as is necessary to permit sales of their
securities pursuant to Rule 144 under the Securities Act, (b) deliver such
information to a prospective purchaser as is necessary to permit sales of their
securities pursuant to Rule 144A under the Securities Act and it will take such
further action as any Holder of Registrable Securities may reasonably request,
and (c) take such further action that is reasonable in the circumstances, in
each case, to the extent required from time to time to enable such Holder to
sell its Registrable Securities without registration under
16
<PAGE> 17
the Securities Act within the limitation of the exemptions provided by (i) Rule
144 under the Securities Act, as such rule may be amended from time to time,
(ii) Rule 144A under the Securities Act, as such rule may be amended from time
to time, or (iii) any similar rules or regulations hereafter adopted by the
SEC. Upon the request of any Holder of Registrable Securities, the Company
will deliver to such Holder a written statement as to whether it has complied
with such requirements.
(b) No Inconsistent Agreements. The Company has not entered
into nor will the Company on or after the date of this Agreement enter into any
agreement which is inconsistent with the rights granted to the Holders of
Registrable Securities in this Agreement or otherwise conflicts with the
provisions hereof. The Company represents and warrants that the rights granted
to the Holders hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of the Company's other
issued and outstanding securities under any such agreements.
(c) Amendments and Waivers. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given unless the Company has obtained the written
consent of the Majority Holders; provided no amendment, modification or
supplement or waiver or consent to the departure with respect to the provisions
of Section 4 hereof shall be effective as against any Holder of Registrable
Securities unless consented to in writing by such Holder of Registrable
Securities. Notwithstanding the foregoing sentence, (i) this Agreement may be
amended, without the consent of any Holder of Registrable Securities, by
written agreement signed by the Company and the Placement Agent, to cure any
ambiguity, correct or supplement any provision of this Agreement that may be
inconsistent with any other provision of this Agreement or to make any other
provisions with respect to matters or questions arising under this Agreement
which shall not be inconsistent with other provisions of this Agreement, (ii)
this Agreement may be amended, modified or supplemented, and waivers and
consents to departures from the provisions hereof may be given, by written
agreement signed by the Company and the Placement Agent to the extent that any
such amendment, modification, supplement, waiver or consent is, in their
reasonable judgment, necessary or appropriate to comply with applicable law
(including any interpretation of the Staff of the SEC) or any change therein
and (iii) to the extent any provision of this Agreement relates to the
Placement Agent, such provision may be amended, modified or supplemented, and
waivers or consents to departures from such provisions may be given, by written
agreement signed by the Placement Agent and the Company.
(d) Notices. All notices and other communications provided
for or permitted hereunder shall be made in writing by hand-delivery,
registered first-class mail, telex, telecopier, or any courier guaranteeing
overnight delivery (i) if to a Holder, at the most current address given by
such Holder to the Company by means of a notice given in accordance with the
provisions of this Section 6(d), which address initially is, with respect to
each Purchaser, the address set forth in the Placement Agreement; and (ii) if
to the Company, initially at the Company's
17
<PAGE> 18
address set forth in the Placement Agreement and thereafter at such other
address, notice of which is given in accordance with the provisions of this
Section 6(d).
All such notices and communications shall be deemed to have
been duly given: at the time delivered by hand, if personally delivered; five
Business Days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt is acknowledged, if telecopied;
and on the next Business Day, if timely delivered to an air courier
guaranteeing overnight delivery.
Copies of all such notices, demands, or other communications
shall be concurrently delivered by the Person giving the same to the Trustee,
at the address specified in the Indenture.
(e) Successors and Assigns. This Agreement shall inure to
the benefit of and be binding upon the successors, assigns and transferees of
each Purchaser, including, without limitation and without the need for an
express assignment, subsequent Holders; provided, however, that nothing herein
shall be deemed to permit any assignment, transfer or other disposition of
Registrable Securities in violation of the terms of the Placement Agreement or
the Indenture. If any transferee of any Holder shall acquire Registrable
Securities, in any manner, whether by operation of law or otherwise, such
Registrable Securities shall be held subject to all of the terms of this
Agreement, and by taking and holding such Registrable Securities, such Person
shall be conclusively deemed to have agreed to be bound by and to perform all
of the terms and provisions of this Agreement and such Person shall be entitled
to receive the benefits hereof.
(f) Third Party Beneficiary. The Placement Agent and each of
the Purchasers shall be a third party beneficiary of the agreements made
hereunder between the Company, on the one hand, and the Holders, on the other
hand, and shall have the right to enforce such agreements directly to the
extent it deems such enforcement necessary or advisable to protect its rights
or the rights of Holders hereunder.
(g) 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.
(h) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO HAVE
BEEN MADE IN THE STATE OF NEW YORK. THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN, SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
GIVING EFFECT TO ANY PROVI-
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<PAGE> 19
SIONS RELATING TO CONFLICTS OF LAWS. EACH OF THE PARTIES HERETO AGREES TO
SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(j) Severability. In the event that 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.
(k) Securities Held by the Company or its Affiliates.
Whenever the consent or approval of Holders of a specified percentage of
Registrable Securities is required hereunder, Registrable Securities held by
the Company or its affiliates (as such term is defined in Rule 405 under the
Securities Act) shall not be counted in determining whether such consent or
approval was given by the Holders of such required percentage.
19
<PAGE> 20
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
CONTINUCARE CORPORATION
By: /s/ CHARLES M. FERNANDEZ
-----------------------------------
Name: CHARLES M. FERNANDEZ
Title: Chief Executive Officer
and President
By: /s/ SUSAN TARBE
-----------------------------------
Name: SUSAN TARBE
Title: Executive Vice President
and General Counsel
Confirmed and accepted as of
the date first above
written:
ON BEHALF OF THE PURCHASERS
By: LOEWENBAUM & CO. INCORPORATED
By: /s/ Calvin L. Chrisman
------------------------------
Name: Calvin L. Chrisman
Title: Managing Director
<PAGE> 1
EXHIBIT 10.1
$46,000,000
CONTINUCARE CORPORATION
(a Florida corporation)
8% Convertible Subordinated Notes Due 2002
PLACEMENT AGREEMENT
October 27, 1997
Loewenbaum & Co. Incorporated
277 Park Avenue
37th Floor
New York, New York 10172
Ladies and Gentlemen:
Continucare Corporation, a Florida corporation (the "Company"),
confirms its agreement with Loewenbaum & Co. Incorporated (the "Placement
Agent") with respect to the issuance and sale by the Company of up to
$46,000,000 aggregate principal amount of the Company's 8% Convertible
Subordinated Notes due 2002 (the "Notes"). The Placement Agent will be
responsible for soliciting purchasers of the Notes, as agent for the Company
and not as principal, in connection with the offering contemplated by this
Agreement. The Notes will be convertible at the option of the holder thereof
at any time after 60 days following the date of original issuance of the Notes
(the "Issue Date") and prior to maturity, unless previously redeemed, into
shares of the Company's common stock, par value $.0001 (the "Common Stock"), at
a conversion price of $7.25 per share, subject to adjustment in certain events.
The Notes and the Common Stock issuable upon conversion thereof are hereinafter
referred to as the "Securities." The Notes are to be issued pursuant to an
indenture to be dated as of October 30, 1997 (the "Indenture") between the
Company and American Stock Transfer & Trust Company, a New York corporation, as
trustee (the "Trustee"). Notes issued in book-entry form will be issued to
Cede & Co. as nominee of The Depository Trust Company ("DTC") pursuant to a
letter agreement, to be dated as of the Closing Time (as defined in Section
2(c)) (the "DTC Agreement"), among the Company, the Trustee and DTC.
Capitalized terms used herein and not otherwise defined shall have the meaning
assigned to them in the Indenture.
<PAGE> 2
The Notes are to be offered and sold by the Company without being
registered under the Securities Act of 1933, as amended (the "1933 Act"), in
reliance upon exemptions therefrom. Pursuant to the terms of the Securities
and the Indenture, investors that acquire Securities may only resell or
otherwise transfer such Securities pursuant to an effective registration
statement under the 1933 Act or pursuant to an exemption from (or in a
transaction not subject to) the registration requirements of the 1933 Act,
including the exemption afforded by Rule 144A ("Rule 144A") of the rules and
regulations promulgated under the 1933 Act by the Securities and Exchange
Commission (the "Commission").
The Company has prepared and delivered to the Placement Agent copies
of a preliminary offering memorandum dated October 6, 1997 (the "Preliminary
Offering Memorandum") and has prepared and will deliver to the Placement Agent,
on the date hereof or the next succeeding day, copies of a final offering
memorandum dated October 27, 1997 (the "Final Offering Memorandum"), each for
use by the Placement Agent in connection with its solicitation of purchases of
the Securities. "Offering Memorandum" means, with respect to any date or time
referred to in this Agreement, the most recent offering memorandum (whether the
Preliminary Offering Memorandum or the Final Offering Memorandum, or any
amendment or supplement to either such document), including exhibits thereto
and any documents incorporated therein by reference, which has been prepared
and delivered by the Company to the Placement Agent in connection with its
solicitation of purchases of the Securities.
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the
Offering Memorandum (or other references of like import) shall be deemed to
mean and include all such financial statements and schedules and other
information which are incorporated by reference in the Offering Memorandum; and
all references in this Agreement to amendments or supplements to the Offering
Memorandum shall be deemed to mean and include the filing of any document under
the Securities Exchange Act of 1934 (the "1934 Act") which is incorporated by
reference in the Offering Memorandum.
The Purchasers (as defined herein) of the Securities will be entitled
to the benefits of a registration rights agreement, to be dated October 30,
1997, between the Company and the Placement Agent (the "Registration Rights
Agreement") the form of which is attached hereto as Exhibit A.
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The Company
represents and warrants to the Placement Agent as of the date hereof and as of
each Closing Time referred to in Section 2(c) hereof, and agrees with the
Placement Agent as follows:
(i) Similar Offerings. The Company has not,
directly or indirectly, solicited any offer to buy or offered to sell,
and will not, directly or indirectly, solicit any offer to buy or
offer to sell, in the United States or to any United States citizen or
resident, any security which is or would be integrated with the sale
of the Securities in a manner that would require the Securities to be
registered under the 1933 Act; provided,
2
<PAGE> 3
however, that no such representation is made on behalf of the
Placement Agent or any person acting on its behalf.
(ii) Offering Memorandum. The Offering Memorandum
does not, and at such Closing Time will not, include an untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided
that this representation, warranty and agreement shall not apply to
statements in or omissions from the Offering Memorandum made in
reliance upon and in conformity with information relating to the
Placement Agent furnished to the Company in writing by the Placement
Agent expressly for use in the Offering Memorandum.
(iii) Incorporated Documents. The Offering
Memorandum as delivered from time to time shall incorporate by
reference the most recent Annual Report of the Company on Form 10-KSB
filed with the Commission and each Quarterly Report of the Company on
Form 10-QSB and each Current Report of the Company on Form 8-K filed
with the Commission since the end of the fiscal year to which such
Annual Report relates. The documents incorporated or deemed to be
incorporated by reference in the Offering Memorandum at the time they
were or hereafter are filed with the Commission complied and will
comply in all material respects with the requirements of the 1934 Act
and the rules and regulations of the Commission thereunder (the "1934
Act Regulations"), and, when read together with the other information
in the Offering Memorandum, at the date of the Offering Memorandum and
at such Closing Time, do not and will not include an untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(iv) Independent Accountants. To the Company's
knowledge, the accountants who certified the financial statements and
supporting schedules included in the Offering Memorandum are
independent certified public accountants with respect to the Company
and its subsidiaries within the meaning of Regulation S-X under the
1933 Act.
(v) Financial Statements. The historical
financial statements, together with the related schedules and notes,
included in the Offering Memorandum present fairly in all material
respects the financial position of the Company and its consolidated
subsidiaries at the dates indicated and the statement of operations,
stockholders' equity and cash flows of the Company and its
consolidated subsidiaries for the periods specified; said financial
statements have been prepared in conformity with generally accepted
accounting principles ("GAAP") applied on a consistent basis
throughout the periods involved except as disclosed therein. The
supporting schedules, if any, included in the Offering Memorandum
present fairly in accordance with GAAP the information required to be
stated therein. The selected financial data and the summary financial
information included in the Offering Memorandum present fairly in all
material respects the information shown therein and have been compiled
on a basis consistent with that of the audited financial statements
included in the Offering Memorandum. The pro forma
3
<PAGE> 4
financial statements of the Company and its subsidiaries and the
related notes thereto included in the Offering Memorandum present
fairly in all material respects the information shown therein, have
been prepared in accordance with the Commission's rules and guidelines
with respect to pro forma financial statements and have been properly
compiled on the bases described therein, and the assumptions used in
the preparation thereof are reasonable and the adjustments used
therein are appropriate to give effect to the transactions and
circumstances referred to therein.
(vi) No Material Adverse Change in Business.
Since the respective dates as of which information is given in the
Offering Memorandum, except as otherwise stated therein, (A) there has
been no material adverse change or development involving, or which
would reasonably be expected to involve, a prospective material
adverse change, in the business prospects of the Company as described
in the Offering Memorandum or in the condition, financial or
otherwise, earnings or business affairs of the Company and its
subsidiaries considered as one enterprise, whether or not arising in
the ordinary course of business, (B) there have been no transactions
entered into by the Company or any of its subsidiaries which are
material with respect to the Company and its subsidiaries considered
as one enterprise and (C) there has been no dividend or distribution
of any kind declared, paid or made by the Company on any class of its
capital stock nor has there been any material increase in the
short-term debt or long-term debt of the Company.
(vii) Good Standing of the Company. The Company
has been duly organized and is validly existing as a corporation in
good standing under the laws of the State of Florida and has corporate
power and authority to own, lease and operate its properties and to
conduct its business as presently conducted and as described in the
Offering Memorandum and to enter into and perform its obligations
under this Agreement; and the Company is duly qualified as a foreign
corporation to transact business and is in good standing in each other
jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of
business, except where the failure so to qualify or to be in good
standing would not (1) have a material adverse effect on the business
prospects of the Company as described in the Offering Memorandum or on
the condition, financial or otherwise, earnings, business affairs,
properties, shareholders' equity or results of operations of the
Company and its consolidated subsidiaries, considered as a whole, (2)
adversely affect in any significant way the issuance, validity or
enforceability of the Securities or the enforceability of the
Indenture or (3) adversely affect in any significant way the
consummation of any of the transactions contemplated by this
Agreement, the Indenture or the Registration Rights Agreement (each of
(1), (2) and (3) above, a "Material Adverse Effect").
(viii) Good Standing of Designated Subsidiaries.
Each subsidiary of the Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has corporate power and authority
to own, lease and operate its properties and to conduct its business
as described in the Offering Memorandum and is duly qualified as a
foreign corporation to transact business and is in good standing in
each jurisdiction in which such qualification is
4
<PAGE> 5
required, whether by reason of the ownership or leasing of property or
the conduct of business, except where the failure so to qualify or to
be in good standing would not result in or have a Material Adverse
Effect; except as otherwise disclosed in the Offering Memorandum, all
of the issued and outstanding capital stock of each subsidiary of the
Company has been duly authorized and validly issued, is fully paid and
non-assessable and is owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity; none of the outstanding
shares of capital stock of any of the Company's subsidiaries were
issued in violation of any preemptive or similar rights arising by
operation of law, or under the charter or by-laws of any such
subsidiary or under any agreement to which the Company or any such
subsidiary is a party.
(ix) Capitalization. The authorized, issued and
outstanding capital stock of the Company is as set forth in the
Offering Memorandum in the section entitled "Capitalization."
(x) Authorization of Agreement. This Agreement
has been duly authorized, executed and delivered by the Company.
(xi) Authorization of the Indenture. The
Indenture has been duly authorized by the Company and, at the First
Closing Time (as defined in Section 2(b) hereof), will have been duly
executed and delivered by the Company and will constitute a valid and
binding agreement of the Company, enforceable against the Company in
accordance with its terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting enforcement of creditors' rights
generally, or by general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law).
(xii) Authorization of the Registration Rights
Agreement. The Registration Rights Agreement has been duly authorized
by the Company and, at the First Closing Time, will have been duly
executed and delivered by the Company and will constitute a valid and
binding agreement of the Company, enforceable against the Company in
accordance with its terms except to the extent enforcement thereof may
be limited by (a) applicable bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting creditors' rights
generally or (b) general principles of equity (regardless of whether
considered in a proceeding in equity or at law) and except to the
extent that rights to indemnity and contribution contained therein may
be limited by state and federal securities laws or the public policy
underlying such laws.
(xiii) Authorization of the Notes. The Notes have
been duly authorized and, at each Closing Time, will have been duly
executed by the Company and, when authenticated in the manner provided
for in the Indenture and delivered against payment of the purchase
price therefor will constitute valid and binding obligations of the
Company, enforceable against the Company in accordance with their
terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating
to or affecting enforcement of creditors' rights
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<PAGE> 6
generally, or by general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law), and
will be in the form contemplated by, and entitled to the benefits of,
the Indenture.
(xiv) Convertibility of Notes. The Notes will be
convertible into Common Stock in accordance with the terms of the
Indenture; the shares of Common Stock issuable upon conversion of the
Notes 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 will conform to the
description thereof contained in the Offering Memorandum.
(xv) Description of the Securities and the
Indenture. The Securities and the Indenture conform in all material
respects to the respective statements relating thereto contained in
the Offering Memorandum and will be in substantially the respective
forms previously delivered to the Placement Agent.
(xvi) Absence of Defaults and Conflicts. Neither
the Company nor any of its subsidiaries is in violation of its charter
or by-laws or in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, deed of trust, loan or credit
agreement, note, lease or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which or any of
them may be bound, or to which any of the property or assets of the
Company or any of its subsidiaries is subject (collectively,
"Agreements and Instruments") except for such defaults that would not
result in or have a Material Adverse Effect; and the execution,
delivery and performance of this Agreement, the Registration Rights
Agreement, the Indenture and the Securities and any other agreement or
instrument entered into or issued or to be entered into or issued by
the Company in connection with the transactions contemplated hereby or
thereby or in the Offering Memorandum and the consummation of the
transactions contemplated herein and in the Offering Memorandum
(including the issuance and sale of the Securities and the use of the
proceeds from the sale of the Securities as described in the Offering
Memorandum under the caption "Use of Proceeds") and compliance by the
Company with its obligations hereunder have been duly authorized by
all necessary corporate action and do not and will not, whether with
or without the giving of notice or passage of time or both, conflict
with or constitute a breach of, or default or a Repayment Event (as
defined below) under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company
or any of its subsidiaries pursuant to, any of the Agreements and
Instruments except for such conflicts, breaches or defaults or liens,
charges or encumbrances that, singly or in the aggregate, would not
result in or have a Material Adverse Effect, nor will such action
result in any violation of the provisions of the charter or by-laws of
the Company or any of its subsidiaries or any applicable law, statute,
rule, regulation, judgment, order, writ or decree of any government,
government instrumentality or court, domestic or foreign, having
jurisdiction over the Company or any of its subsidiaries or any of
their assets or properties, except for such violations that would not
result in or have a Material Adverse Effect. As used herein, a
"Repayment Event" means any event or condition which gives
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<PAGE> 7
the holder of any note, debenture or other evidence of indebtedness
(or any person acting on such holder's behalf) the right to require
the repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company or any of its subsidiaries.
(xvii) Absence of Labor Dispute. No labor dispute
with the employees of the Company or any of its subsidiaries exists
or, to the knowledge of the Company, is imminent, which would
reasonably be expected to result in or have a Material Adverse Effect.
(xviii) Compliance with Applicable Laws. The Company
and its subsidiaries are in compliance with, and conduct their
businesses in conformity with, all applicable federal, state, local
and foreign laws, rules and regulations of any court, governmental
agency or legislative body, except where noncompliance or
nonconformity would not result in or have a Material Adverse Effect.
(xix) Absence of Proceedings. Except as disclosed
in the Offering Memorandum, there is no action, suit, proceeding,
inquiry or investigation before or by any court or governmental agency
or body, domestic or foreign, now pending, or, to the knowledge of the
Company, threatened against or affecting the Company or any subsidiary
thereof which, if adversely determined, would reasonably be expected
to result in or have a Material Adverse Effect. The aggregate of all
pending legal or governmental proceedings to which the Company or any
subsidiary thereof is a party or of which any of their respective
property or assets is the subject which are not described in the
Offering Memorandum, including ordinary routine litigation incidental
to the business, would not reasonably be expected to result in or have
a Material Adverse Effect.
(xx) Possession of Intellectual Property. The
Company and its subsidiaries own or possess, or can acquire on
reasonable terms, adequate patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), trademarks, service marks, trade
names or other intellectual property (collectively, "Intellectual
Property") necessary to carry on the business now operated by them,
and neither the Company nor any of its subsidiaries has received any
notice or is otherwise aware of any infringement of or conflict with
asserted rights of others with respect to any Intellectual Property or
of any facts or circumstances which would render any Intellectual
Property invalid or inadequate to protect the interest of the Company
or any of its subsidiaries therein, and which infringement or conflict
(if the subject of any unfavorable decision, ruling or finding) or
invalidity or inadequacy, singly or in the aggregate, would result in
or have a Material Adverse Effect.
(xxi) Accounting Controls. The Company maintains a
system of internal accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in accordance
with management's general or specific authorization; (ii) transactions
are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles
and to maintain accountability
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<PAGE> 8
for assets; (iii) access to assets is permitted only in accordance
with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to
any differences.
(xxii) No Impermissible Payments. Neither the
Company, any subsidiary of the Company nor, to the Company's
knowledge, any employee or agent of the Company or any subsidiary of
the Company has made any payment of funds of the Company or any
subsidiary of the Company or received or retained any funds in
violation of any law, rule or regulation, which payment, receipt or
retention of funds would reasonably be expected to result in or have a
Material Adverse Effect.
(xxiii) Absence of Further Requirements. No filing
with, or authorization, approval, consent, license, order,
registration, qualification or decree of, any court or governmental
authority or agency is necessary or required for the performance by
the Company of its obligations hereunder, in connection with the
offering, issuance or sale of the Securities hereunder or the
consummation of the transactions contemplated by this Agreement
(except as may be required in connection with the registration of the
Notes and the qualification of the Indenture pursuant to, and in
connection with the registration contemplated by, the Registration
Rights Agreement and except as may be required under state securities
laws).
(xxiv) Possession of Licenses and Permits. The
Company and its subsidiaries possess such permits, licenses,
approvals, consents and other authorizations (collectively,
"Governmental Licenses") issued by the appropriate federal, state,
local or foreign regulatory agencies or bodies necessary under
applicable law to conduct the business now operated by them; the
Company and its subsidiaries are in compliance with the terms and
conditions of all such Governmental Licenses, except where the failure
so to comply would not, singly or in the aggregate, result in or have
a Material Adverse Effect; all of the Governmental Licenses are valid
and in full force and effect, except when the invalidity of such
Governmental Licenses or the failure of such Governmental Licenses to
be in full force and effect would not result in or have a Material
Adverse Effect; and neither the Company nor any of its subsidiaries
has received any notice of proceedings relating to the revocation or
modification of any such Governmental Licenses which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, would result in or have a Material Adverse Effect.
(xxv) Title to Property. The Company and its
subsidiaries have good and marketable title to all real property owned
by the Company and its subsidiaries and good title to all other
properties owned by them, in each case, free and clear of all
mortgages, pledges, liens, security interests, claims, restrictions or
encumbrances of any kind except such as (a) are described in the
Offering Memorandum or (b) do not, singly or in the aggregate,
materially affect the value of such property and do not interfere with
the use made and proposed to be made of such property by the Company
or any of its subsidiaries; and all of the leases and subleases
material to the business of the Company and its subsidiaries,
considered as one enterprise, and under which the Company or any
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<PAGE> 9
of its subsidiaries holds properties described in the Offering
Memorandum, are in full force and effect, and neither the Company nor
any of its subsidiaries has any notice of any material claim of any
sort that has been asserted by anyone adverse to the rights of the
Company or any of its subsidiaries under any of the leases or
subleases mentioned above, or affecting or questioning the rights of
the Company or any subsidiary thereof to the continued possession of
the leased or subleased premises under any such lease or sublease.
(xxvi) Tax Returns. The Company and its
subsidiaries have filed all federal, state, local and foreign tax
returns that are required to be filed or have duly requested
extensions thereof and have paid all taxes indicated to be due in such
returns; and adequate charges, accruals and reserves in accordance
with GAAP have been provided for in the financial statements referred
to in Section 1(a)(v) above in respect of all federal, state, local
and foreign taxes for all periods as to which the tax liability of the
Company or any of its subsidiaries has not been finally determined or
remains open to examination by applicable taxing authorities
(xxvii) Environmental Laws. Except as described in
the Offering Memorandum and except for such matters as would not,
singly or in the aggregate, result in or have a Material Adverse
Effect, (A) neither the Company nor any of its subsidiaries is in
violation of any federal, state, local or foreign statute, law, rule,
regulation, ordinance, code, policy or rule of common law or any
judicial or administrative interpretation thereof, including any
judicial or administrative order, consent, decree or judgment, in each
case as currently in effect, relating to pollution or protection of
human health, the environment (including, without limitation, ambient
air, surface water, groundwater, land surface or subsurface strata) or
wildlife, including, without limitation, laws and regulations relating
to the release or threatened release of medical wastes, chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous
substances, petroleum or petroleum products (collectively, "Hazardous
Materials") or to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous
Materials (collectively, "Environmental Laws"), (B) the Company and
its subsidiaries have all permits, authorizations and approvals
required under any applicable Environmental Laws and are each in
compliance with their requirements, (C) there are no pending or, to
the Company's knowledge, threatened administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens,
notices of noncompliance or violation, investigation or proceedings
relating to any Environmental Law against the Company or any of its
subsidiaries and (D) there are no events or circumstances that would
reasonably be expected to form the basis of an order for clean-up or
remediation, or an action, suit or proceeding by any private party or
governmental body or agency, against or affecting the Company or any
of its subsidiaries relating to Hazardous Materials or Environmental
Laws.
(xxviii) Investment Company Act. The Company is not,
and upon the issuance and sale of the Securities as herein
contemplated and the application of the net proceeds therefrom as
described in the Offering Memorandum will not be, an
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<PAGE> 10
"investment company" or an entity "controlled" by an "investment
company" as such terms are defined in the Investment Company Act of
1940, as amended (the "1940 Act").
(xxix) Rule 144A Eligibility. The Securities are
eligible for resale pursuant to Rule 144A and will not be, at any
Closing Time, of the same class as securities listed on a national
securities exchange registered under Section 6 of the 1934 Act, or
quoted in a U.S. automated interdealer quotation system.
(xxx) No Registration Required. Subject to
compliance by the Placement Agent with the procedures set forth in
Section 6(a) hereof, it is not necessary in connection with the offer,
sale and delivery of the Securities to the Purchasers in the manner
contemplated by this Agreement and the Offering Memorandum to register
the Securities under the 1933 Act or to qualify the Indenture under
the Trust Indenture Act of 1939, as amended (the "1939 Act").
(xxxi) No General Solicitation. None of the
Company, its affiliates, as such term is defined in Rule 501(b) under
the 1933 Act ("Affiliates"), or any person acting on its or any of
their behalf (other than the Placement Agent or any person acting on
its behalf, as to whom the Company makes no representation) has
engaged or will engage, in connection with the offering of the
Securities, in any form of general solicitation or general advertising
within the meaning of Rule 502(c) under the 1933 Act.
(xxxii) No Manipulation of the Securities. The
Company has not taken and will not take, directly or indirectly, any
action designed to, or that might be reasonably expected to, cause or
result in stabilization or manipulation of the price of any of the
Securities; provided, however, that no such representation is made
on behalf of the Placement Agent or any person acting on its behalf.
(xxxiii) No Medicare or Medicaid Recoupments. There
are no material Medicare or Medicaid recoupment or recoupments of any
third-party payor being sought, requested or claimed, or to the
Company's knowledge threatened, against the Company.
(xxxiv) PORTAL Eligibility. The Company has agreed
to permit the Securities to be designated PORTAL eligible securities,
will pay the requisite fees related thereto and has been advised by
the National Association of Securities Dealers, Inc. PORTAL Market
("PORTAL") that the Securities have been designated PORTAL eligible
securities in accordance with the rules and regulations of the
National Association of Securities Dealers, Inc.
(xxxv) Insurance. The Company and each of its
subsidiaries is insured against such losses and risks and in such
amounts as are prudent and customary in the businesses in which it is
engaged.
(b) Officer's Certificates. Any certificate signed by any officer
of the Company or any of its subsidiaries delivered to the Placement Agent or
to counsel for the Placement Agent
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<PAGE> 11
shall be deemed a representation and warranty by the Company to the Placement
Agent as to the matters covered thereby.
SECTION 2. Sale and Delivery to Purchasers; Closing.
(a) Placement. On the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Placement Agent agrees to use its best efforts, as agent of the Company and not
as principal, to solicit purchases by investors (which may include the
Placement Agent) (collectively, the "Purchasers") of up to $46,000,000
aggregate principal amount of the Notes. As compensation to the Placement Agent
for its acting as placement agent hereunder, the Company at each Closing Time
(as defined below) will pay to the Placement Agent a placement fee in an amount
equal to 4.5% of the aggregate gross proceeds of the Notes offered and sold
hereunder at such Closing Time.
(b) Securities. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company agrees to sell to such Purchasers as the Placement Agent
shall designate up to $46,000,000 aggregate principal amount of the Notes at a
purchase price set forth in Schedule A hereto. The Notes shall have the
financial terms indicated on Schedule A.
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Notes shall be made at the office of Skadden, Arps,
Slate, Meagher & Flom LLP, 919 Third Avenue, New York, NY 10022, or at such
other place as shall be agreed upon by the Placement Agent and the Company, at
10:00 A.M. on the third business day after the date hereof and/or such other
time or times not later than ten business days after such date as shall be
agreed upon by the Placement Agent and the Company. It is understood and
agreed that there may be more than one date and time hereunder at which payment
for and delivery of Notes may take place (the first such time and date of
payment and delivery being herein called the "First Closing Time" and each such
time and date of payment and delivery being herein called a "Closing Time").
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery
as directed by the Placement Agent of certificates, registered in such names as
the Placement Agent may designate in writing at least one business day before
such Closing Time. The certificates representing the Notes which are sold to
Qualified Institutional Buyers (as defined below) shall be registered in the
name of Cede & Co. pursuant to the DTC Agreement and shall be made available
for examination and packaging by the Placement Agent in the City of New York
not later than 10:00 A.M. on the last business day prior to the Closing Time.
(d) Denominations; Registration. Certificates for the Notes shall
be in such denominations ($1,000 or integral multiples thereof) and registered
in such names as the Placement Agent may request in writing at least one full
business day before such Closing Time.
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SECTION 3. Covenants of the Company. The Company covenants with
the Placement Agent as follows:
(a) Offering Memorandum. The Company, as promptly as possible,
will furnish to the Placement Agent, without charge, such number of copies of
the Preliminary Offering Memorandum, the Final Offering Memorandum and any
amendments and supplements thereto and documents incorporated by reference
therein as the Placement Agent may reasonably request.
(b) Notice and Effect of Material Events. The Company will
immediately notify the Placement Agent and, if requested by the Placement
Agent, will confirm such notice in writing, of (x) any filing made by the
Company of information relating to the offering of the Securities with any
securities exchange or any other regulatory body in the United States or any
other jurisdiction, and (y) prior to the completion of the placement of the
Securities by the Placement Agent as evidenced by a notice in writing from the
Placement Agent to the Company, any material changes in or affecting the
business prospects of the Company as described in the Offering Memorandum or
the earnings or business affairs of the Company and its subsidiaries taken as a
whole which (i) make any statement in the Offering Memorandum false or
misleading or (ii) are not disclosed in the Offering Memorandum. In such event
or if during such time any event shall occur as a result of which it is
necessary, in the reasonable opinion of the Company, its counsel, the Placement
Agent or counsel for the Placement Agent, to amend or supplement the Final
Offering Memorandum in order that the Final Offering Memorandum not include any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein not misleading in the light of the
circumstances then existing, the Company will forthwith amend or supplement the
Final Offering Memorandum by preparing and furnishing to the Placement Agent an
amendment or amendments of, or a supplement or supplements to, the Final
Offering Memorandum (in form and substance satisfactory in the reasonable
opinion of counsel for the Placement Agent) so that, as so amended or
supplemented, the Final Offering Memorandum will not include any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
existing at the time it is delivered to the Placement Agent, not misleading.
(c) Amendment to Offering Memorandum and Supplements. The Company
will advise the Placement Agent promptly of any proposal to amend or supplement
the Offering Memorandum and will not effect such amendment or supplement
without the consent of the Placement Agent. Neither the consent of the
Placement Agent, nor the Placement Agent's delivery of any such amendment or
supplement, shall constitute a waiver of any of the conditions set forth in
Section 5 hereof.
(d) Qualification of Securities for Offer and Sale. The Company
will use its best efforts, in cooperation with the Placement Agent, to qualify
the Securities for offering and sale under the applicable securities laws of
such jurisdictions as the Placement Agent may designate and will maintain such
qualifications in effect as long as required for the sale of the Securities;
provided, however, that the Company shall not be obligated to file any general
consent to service of process or to qualify as a foreign corporation in any
jurisdiction in which it is not so
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<PAGE> 13
qualified or to subject itself to taxation in respect of doing business in any
jurisdiction in which it is not otherwise so subject.
(e) DTC. The Company will cooperate with the Placement Agent and
use its best efforts to permit the Securities to be eligible for clearance and
settlement through the facilities of DTC.
(f) Use of Proceeds. The Company will use the net proceeds
received by it from the sale of the Notes substantially in the manner specified
in the Offering Memorandum under "Use of Proceeds."
(g) Restriction on Sale of Securities. During a period of 180
days from the date of the Offering Memorandum, the Company will not, directly
or indirectly, (i) issue, sell, offer or agree to sell, grant any option for
the sale of, or otherwise dispose of, any securities that are substantially
similar to the Notes or Common Stock issuable upon the conversion thereof or
that are convertible into or exchangeable for, or otherwise represent a right
to acquire, any such securities, except pursuant to this Agreement or with
prior written consent of the Placement Agent, or (ii) enter into any swap or
any other agreement or any transaction that transfers, in whole or in part,
directly or indirectly, the economic consequences of ownership of Securities,
whether any such swap transaction is to be settled by delivery of Securities or
such other securities, in cash or otherwise; provided, however, that the
Company may, without such consent, (i) issue Common Stock in connection with
acquisitions so long as the recipients thereof agree to be bound in writing to
a "lock-up" agreement for the remainder of such 180 day period, which agreement
shall be substantively identical to the letter agreement referred to in Section
5(f) hereof, (ii) issue shares of Common Stock pursuant to presently
outstanding employee stock options described in the Offering Memorandum and
(iii) grant options to purchase up to 700,000 shares of Common Stock pursuant
to the Company's Stock Option Plan so long as the recipients thereof who are
officers and directors of the Company agree to be bound in writing to a
"lock-up" agreement for the remainder of such 180 day period, which agreement
shall be substantively identical to the letter agreement referred to in Section
5(f) hereof. In addition, the Company will not waive, amend, supplement or
otherwise modify the agreements of Douglas Miller and Barry Goldstein referred
to in Note (7) to the table under the caption "Principal Shareholders" in the
Offering Memorandum, without the prior written consent of the Placement Agent.
SECTION 4. Payment of Expenses.
(a) Expenses. The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation, printing and any filing of the Offering Memorandum (including
financial statements and any schedules or exhibits and any document
incorporated therein by reference) and of each amendment or supplement thereto,
(ii) the preparation, printing and delivery to the Placement Agent of this
Agreement, the Registration Rights Agreement, the Indenture and such other
documents as may be required in connection with the offering, purchase, sale
and delivery of the Securities, (iii) the preparation, issuance and delivery of
the certificates for the Securities, including any charges of DTC in connection
therewith; (iv) the fees and disbursements of the Company's counsel,
accountants and other advisors, (v) the qualification of the Securities under
securities laws in accordance with
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the provisions of Section 3(d) hereof, including filing fees and the reasonable
fees and disbursements of counsel for the Placement Agent in connection
therewith and in connection with the preparation of any blue sky survey, any
supplement thereto and any legal investment survey, (vi) the fees and expenses
of the Trustee, including the fees and disbursements of counsel for the Trustee
in connection with the Indenture and the Securities and (vii) any fees payable
to the review by the National Association of Securities Dealers, Inc. (the
"NASD") in connection with the initial and continued designation of the
Securities as PORTAL securities under the PORTAL Market rules. In addition,
except as otherwise provided in Section 4(b), the Company will reimburse the
Placement Agent for $62,000 (approximately $27,000 of which has been paid) in
out-of-pocket expenses incurred by the Placement Agent in connection with the
transactions contemplated hereby.
(b) Termination of Agreement. If this Agreement is terminated by the
Placement Agent in accordance with the provisions of Section 5 (other than
solely by reason of the failure to satisfy the condition set forth in Section
5(b)) or Section 10(a)(i) hereof, the Company shall reimburse the Placement
Agent for all of its out-of-pocket expenses, including the reasonable fees and
disbursements of counsel for the Placement Agent.
SECTION 5. Conditions to Closing. The closing of the offer and
sale of the Securities hereunder is subject to the accuracy of the
representations and warranties of the Company contained in Section 1 hereof or
in certificates of any officer of the Company or any of its subsidiaries
delivered pursuant to the provisions hereof, to the performance by the Company
of its covenants and other obligations hereunder, and to the following further
conditions:
(a) Opinion of Counsel for Company. At each Closing
Time, the Placement Agent shall have received the favorable opinion,
dated as of such Closing Time, of Greenberg Traurig Hoffman Lipoff
Rosen & Quentel P.A., and/or other counsel for the Company reasonably
acceptable to the Placement Agent, in form and substance satisfactory
to counsel for the Placement Agent, together with signed or reproduced
copies thereof as counsel to the Placement Agent may reasonably
request, to the effect set forth in Exhibit B hereto and to such
further effect as counsel to the Placement Agent may reasonably
request.
(b) Opinion of Counsel for Placement Agent. At each
Closing Time, the Placement Agent shall have received the favorable
opinion, dated as of such Closing Time, of Skadden, Arps, Slate,
Meagher & Flom LLP, counsel for the Placement Agent, with respect to
the matters set forth in (vi) through (x), inclusive, (xiii) (solely
as to the information in the Offering Memorandum under "Description of
Notes") and the penultimate paragraph of Exhibit B hereto. In giving
such opinion such counsel may rely, as to all matters governed by the
laws of jurisdictions other than the law of the State of New York and
the federal law of the United States, upon the opinions of counsel
satisfactory to the Placement Agent. Such counsel may also state
that, insofar as such opinion involves factual matters, they have
relied, to the extent they deem proper, upon certificates of officers
of the Company and its subsidiaries and certificates of public
officials.
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(c) Officers' Certificate. At each Closing Time, there
shall not have been, since the date hereof or since the respective
dates as of which information is given in the Offering Memorandum, any
material adverse change in the business prospects of the Company as
described in the Offering Memorandum or in the condition, financial or
otherwise, earnings or business affairs of the Company and its
subsidiaries considered as one enterprise, whether or not arising in
the ordinary course of business, and the Placement Agent shall have
received a certificate of the President or a Vice President of the
Company and of the chief financial or chief accounting officer of the
Company, dated as of the Closing Time, certifying in such capacity
that (i) there has been no such material adverse change, (ii) the
representations and warranties in Section 1 hereof are true and
correct with the same force and effect as though expressly made at and
as of the Closing Time, and (iii) the Company has complied with all
agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to the Closing Time.
(d) Accountant's Comfort Letter. At the time of the
execution of this Agreement, the Placement Agent shall have received
from each of Deloitte & Touche LLP and Oliver J. Collins Jr., CPA, a
letter dated such date, in form and substance satisfactory to the
Placement Agent, containing statements and information of the type
ordinarily included in accountants' "comfort letters" to Placement
Agent with respect to the financial statements and certain financial
information contained in the Offering Memorandum.
(e) Bring-down Comfort Letter. At each Closing Time, the
Placement Agent shall have received from Deloitte & Touche LLP and
Oliver J. Collins Jr., CPA, a letter, dated as of such Closing Time,
to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (d) of this Section, except that the
specified date referred to shall be a date not more than three
business days prior to such Closing Time.
(f) Restriction on Sale of Securities. At the time of
the execution of this Agreement, the Placement Agent shall have
received from each director of the Company referred to under the
caption "Management" in the Offering Memorandum and each record and
beneficial owner of Common Stock referred to under the caption
"Principal Shareholders" in the Offering Memorandum a letter agreement
addressed to the Placement Agent to the effect that, during a period
of 180 days from the date of the Offering Memorandum, such person will
not, directly or indirectly, (i) sell, offer or agree to sell, grant
any option for the sale of, or otherwise dispose of, any securities
that are substantially similar to the Notes or Common Stock or that
are convertible into or exchangeable for, or otherwise represent a
right to acquire, any such securities, except with prior written
consent of the Placement Agent, or (ii) enter into any swap or any
other agreement or any transaction that transfers, in whole or in
part, directly or indirectly, the economic consequences of ownership
of any Notes or Common Stock, whether any such swap transaction is to
be settled by delivery of securities, in cash or otherwise;
provided, however, that this Section 5(f) shall be subject to the
following exceptions: (x) the exercise of outstanding options granted
by the Company or pursuant to any options granted or to be granted
pursuant to any employee or non-employee
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director stock option plans (but not the sale, distribution, pledge,
hypothecation or other disposition of shares of Common Stock received
upon exercise of any such option), (y) if such person is a
partnership, transfers of shares of Common Stock by such person or any
affiliated partner or to any partner of such person, provided that
such transferee shall agree in writing to continue to be bound by the
terms of such letter agreement and (z) transfers of shares of Common
Stock disposed of as bona fide gifts, provided that the donee shall
agree in writing to continue to be bound by the terms of such letter
agreement.
(g) PORTAL. At the First Closing Time, the Securities
shall have been designated for trading on PORTAL.
(h) Additional Documents. At the First Closing Time, the
Placement Agent shall have been furnished with the Registration Rights
Agreement executed by the Company, and at each Closing Time, counsel
for the Placement Agent shall have been furnished with such documents
and opinions as they may reasonably require for the purpose of
enabling them to pass upon the issuance and sale of the Securities as
herein contemplated, or in order to evidence the accuracy of any of
the representations or warranties, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the Company
in connection with the issuance and sale of the Securities as herein
contemplated shall be reasonably satisfactory in form and substance to
the Placement Agent and counsel for the Placement Agent.
(i) Termination of Agreement. If any condition specified
in this Section 5 shall not have been fulfilled when and as required to
be fulfilled, this Agreement may be terminated by the Placement Agent
by notice to the Company at any time at or prior to any Closing Time,
and such termination shall be without liability of any party to any
other party except as provided in Section 4 and except that Sections
1, 7 and 8 shall survive any such termination and remain in full force
and effect.
SECTION 6.
Subsequent Offers and Resales of the Securities.
(a) Offer and Sale Procedures. The Placement Agent and the
Company hereby establish and agree to observe the following procedures in
connection with the offer and sale of the Securities:
(i) Offers and Sales only to Institutional Accredited
Investors or Qualified Institutional Buyers. Unless the Placement
Agent otherwise consents thereto, offers and sales of the Securities
will be made only through the Placement Agent (or Affiliates thereof),
as agent for the Company and not as principal. Each such offer or
sale shall only be made (A) to persons whom the offeror or seller
reasonably believes to be "qualified institutional buyers" within the
meaning Rule 144A under the 1933 Act (each such person, a "Qualified
Institutional Buyer") or (B) to a limited number of other
institutional "accredited investors" (as such term is defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D) that the offeror or seller
reasonably believes to be and, with respect to sales and deliveries,
that are accredited investors ("Institutional Accredited Investors").
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(ii) No General Solicitation. The Securities will be
offered by approaching prospective Purchasers on an individual basis.
No general solicitation or general advertising (within the meaning of
Rule 502(c) under the 1933 Act) will be used in the United States in
connection with the offering of the Securities.
(iii) Purchases by Non-Bank Fiduciaries. In the case of a
non-bank Purchaser of a Security acting as a fiduciary for one or more
third parties, in connection with an offer and sale to such Purchaser
pursuant to clause (i) above, each third party shall, in the judgment
of the Placement Agent, be an Institutional Accredited Investor or a
Qualified Institutional Buyer.
(iv) Purchaser Notification. The Placement Agent will
take reasonable steps to inform, and cause each of its Affiliates to
take reasonable steps to inform, persons acquiring the Securities in
the United States that the Securities (A) have not been registered
under the 1933 Act, (B) are being sold to them without registration
under the 1933 Act in accordance with an exemption from registration
under the 1933 Act and (C) except in the case that the Securities are
registered under the 1933 Act pursuant to the Registration Rights
Agreement, may not be offered, sold or otherwise transferred except
(1) to the Company, (2) inside the United States in accordance with
Rule 144A to a person whom the seller reasonably believes is a
Qualified Institutional Buyer that is purchasing such Securities for
its own account or for the account of a Qualified Institutional Buyer
to whom notice is given that the offer, sale or transfer is being made
in reliance on Rule 144A or (3) an exemption from registration under
the 1933 Act (including the exemption provided by Rule 144), if
available.
(v) Minimum Principal Amount. No sale of the Securities
to any one Purchaser who is an Institutional Accredited Investor, but
not a Qualified Institutional Buyer, will involve less than $100,000
principal amount of Notes.
(vi) Restrictions on Transfer. The transfer restrictions
and the other provisions set forth in Section 2.7 of the Indenture,
including the legend required thereby, shall apply to the Securities
except as otherwise agreed by the Company and the Placement Agent.
Following the solicitation of purchases of the Securities pursuant to
the terms hereof, the Placement Agent shall not be liable or
responsible to the Company for any losses, damages or liabilities
suffered or incurred by the Company, including any losses, damages or
liabilities under the 1933 Act, arising from or relating to any resale
or transfer of any Security.
(vii) Delivery of Offering Memorandum. The Placement Agent
will deliver to each Purchaser of the Notes solicited by it hereunder
a copy of the Offering Memorandum, as amended and supplemented at the
date of such delivery.
(viii) Reliance. The Placement Agent understands that the
Company and, for purposes of the opinions to be delivered pursuant to
Sections 5(a) and 5(b) hereof, counsel, will rely upon the accuracy
and truth of the representations and covenants contained in this
Section 6(a), and the Placement Agent consents to such reliance.
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(b) Covenants of the Company. The Company covenants with the
Placement Agent as follows:
(i) Due Diligence. The Company agrees that, prior to any
solicitation of any purchase of the Notes by the Placement Agent, the
Placement Agent and counsel for the Placement Agent shall have the
right to make reasonable inquiries into the business of the Company
and its subsidiaries. The Company also agrees to provide answers to
each prospective Purchaser of Securities who so requests concerning
the Company and its subsidiaries (to the extent that such information
is available or can be acquired and made available to prospective
Purchasers without unreasonable effort or expense and to the extent
the provision thereof is not prohibited by applicable law) and the
terms and conditions of the offering of the Securities, as provided in
the Offering Memorandum.
(ii) Integration. The Company agrees that it will not and
will cause its Affiliates not to make any offer or sale of securities
of the Company of any class if, as a result of the doctrine of
"integration" referred to in Rule 502 under the 1933 Act, such offer
or sale would render invalid (for the purpose of (i) the sale of the
Securities by the Company to the Purchasers or (ii) the resale of the
Securities by such Purchasers to others) the exemption from the
registration requirements of the 1933 Act provided by Section 4(1) or
4(2) thereof or by Rule 144A.
(iii) Rule 144A Information. The Company agrees that, in
order to render the Securities eligible for resale pursuant to Rule
144A under the 1933 Act, while any of the Securities remain
outstanding, it will make available, upon request, to any holder of
Securities or prospective purchasers of Securities the information
specified in Rule 144A(d)(4), unless the Company furnishes information
to the Commission pursuant to Section 13 or 15(d) of the 1934 Act
(such information, whether made available to holders or prospective
purchasers or furnished to the Commission, is herein referred to as
"Additional Information"). All Additional Information will not
include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading.
(iv) Restriction on Repurchases. Until the expiration of
two years after the latest Closing Time, the Company will not, and
will cause its Affiliates not to, purchase or agree to purchase or
otherwise acquire any Securities which are "restricted securities" (as
such term is defined under Rule 144(a)(3) under the 1933 Act), whether
as beneficial owner or otherwise (except as agent acting as a
securities broker on behalf of and for the account of customers in the
ordinary course of business in unsolicited broker's transactions)
unless, immediately upon any such purchase, the Company or such
Affiliate shall submit such Securities to the Trustee for
cancellation.
SECTION 7. Indemnification.
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(a) Indemnification of Placement Agent. The Company agrees to
indemnify and hold harmless the Placement Agent and each person, if any, who
controls the Placement Agent within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, arising out of any untrue
statement or alleged untrue statement of a material fact contained in
any Preliminary Offering Memorandum or the Final Offering Memorandum
(or any amendment or supplement thereto), or the omission or alleged
omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading;
(ii) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission; provided that (subject to Section 7(d) below) any such
settlement is effected with the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by the
Placement Agent), reasonably incurred in investigating, preparing or
defending against any litigation, or any investigation or proceeding
by any governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue statement or omission, or
any such alleged untrue statement or omission, to the extent that any
such expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made (i) in
reliance upon and in conformity with written information relating to the
Placement Agent furnished to the Company by the Placement Agent expressly for
use in the Offering Memorandum (or any amendment thereto) or (ii) in the
Preliminary Offering Memorandum if a copy of the Offering Memorandum (as then
amended or supplemented) was not sent or given by or on behalf of such
Placement Agent to the person asserting any such loss, liability, claim, damage
or expense, if required by law so to have been delivered, at or prior to the
written confirmation of the sale of the Securities, and the Offering Memorandum
(as then amended or supplemented) would have corrected such untrue statement or
omission.
(b) Indemnification of Company, Directors and Officers. The
Placement Agent agrees to indemnify and hold harmless the Company, its
directors, and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act against any and all
loss, liability, claim, damage and expense described in the indemnity contained
in subsection (a) of this Section, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in the
Offering Memorandum in reliance upon and in conformity with written information
relating to the
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Placement Agent furnished to the Company by the Placement Agent expressly for
use in the Offering Memorandum.
(c) Actions against Parties; Notification. Each indemnified party
shall give notice as promptly as reasonably practicable to each indemnifying
party of any action commenced against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party shall not
relieve such indemnifying party from any liability hereunder to the extent it
is not materially prejudiced as a result thereof and in any event shall not
relieve it from any liability which it may have otherwise than on account of
this indemnity agreement. In the case of indemnification pursuant to Section
7(a) above, the indemnifying parties shall select counsel which shall be
reasonably acceptable to the Placement Agent, and, in the case of
indemnification pursuant to Section 7(b) above, the indemnifying parties shall
select counsel which shall be reasonably acceptable to the Company. An
indemnifying party may participate at its own expense in the defense of any
such action; provided, however, that counsel to the indemnifying party shall
not (except with the consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying parties be liable for
fees and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever
in respect of which indemnification or contribution could be sought under this
Section 7 or Section 8 hereof (whether or not the indemnified parties are
actual or potential parties thereto), unless such settlement, compromise or
consent includes an unconditional release of each indemnified party from all
liability arising out of such litigation, investigation, proceeding or claim.
(d) Settlement without Consent if Failure to Reimburse. If at any
time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Section 7(a)(ii) effected without its written consent if
(i) such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into and (iii) such indemnifying party shall not
have reimbursed such indemnified party in accordance with such request prior to
the date of such settlement; provided, however, that an indemnifying party
shall not be liable for any such settlement effected without its consent if
such indemnifying party (x) reimburses such indemnified party in accordance
with such request to the extent it considers such request to be reasonable and
(y) provides written notice to the indemnified party substantiating the unpaid
balance as unreasonable, in each case prior to the date of such settlement.
SECTION 8. Contribution. If the indemnification provided for in
Section 7 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims, damages
and
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expenses incurred by such indemnified party, as incurred, (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Placement Agent on the other hand from the
offering of the Securities pursuant to this Agreement or (ii) if the allocation
provided by 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 Company on the one hand and
of the Placement Agent on the other hand in connection with the statements or
omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the
Placement Agent on the other hand in connection with the offering of the
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses and after
deducting the placement fee received by the Placement Agent) to the Company
bears to the total placement fee received by the Placement Agent pursuant to
Section 2(a) hereof.
The relative fault of the Company on the one hand and the Placement
Agent on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Placement Agent and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and the Placement Agent agree that it would not be just
and equitable if contribution pursuant to this Section 8 were determined by pro
rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to above in this Section 8.
The aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above in this Section 8 shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 8, the Placement Agent
shall not be required to contribute any amount in excess of the amount by which
the total price at which the Securities placed by it exceeds the amount of any
damages which the Placement Agent has 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 1933 Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 8, each person, if any, who controls the
Placement Agent within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 Act shall have the same rights to contribution as the Placement
Agent, and each director of the Company and each
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person, if any, who controls the Company within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as the Company.
SECTION 9. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company submitted pursuant
hereto, shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of the Placement Agent or controlling
person, or by or on behalf of the Company, and shall survive delivery of the
Securities to the Placement Agent.
SECTION 10. Termination of Agreement.
(a) Termination; General. The Placement Agent may terminate this
Agreement, by notice to the Company, at any time at or prior to the Closing
Time (i) if there has been, since the time of execution of this Agreement or
since the respective dates as of which information is given in the Offering
Memorandum, any material adverse change in the business prospects of the
Company as described in the Offering Memorandum or in the condition, financial
or otherwise, earnings or business affairs of the Company and its subsidiaries
considered as one enterprise, whether or not arising in the ordinary course of
business, or (ii) if there has occurred any material adverse change in the
financial markets in the United States or the international financial markets,
any outbreak of hostilities or escalation thereof or other calamity or crisis
or any change or development involving a prospective change in national or
international political, financial or economic conditions, in each case the
effect of which is such as to make it, in the judgment of the Placement Agent,
impracticable to market the Securities or to enforce contracts for the sale of
the Securities, or (iii) if trading in any securities of the Company has been
suspended or limited by the Commission or the American Stock Exchange, or if
trading generally on the New York Stock Exchange or the American Stock Exchange
or in the Nasdaq National Market System has been suspended or limited, or
minimum or maximum prices for trading have been fixed, or maximum ranges for
prices have been required, by any of said exchanges or by such system or by
order of the Commission, the National Association of Securities Dealers, Inc.
or any other governmental authority, or (iv) if a banking moratorium has been
declared by either Federal or New York authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section 10, such termination shall be without liability of any party to any
other party except as provided in Section 4 hereof, and provided further that
Sections 1, 7 and 8 shall survive such termination and remain in full force and
effect.
SECTION 11. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Placement Agent shall be directed to the Placement Agent at 277 Park Avenue,
37th Floor, New York, NY 10172, attention of Calvin L. Chrisman; notices to the
Company shall be directed to it at 100 SE Second Street, 36th Floor, Miami, FL
33131, attention of the President.
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SECTION 12. Parties. This Agreement shall each inure to the benefit
of and be binding upon the Placement Agent and the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Placement Agent and the Company and their respective successors and the
controlling persons and officers and directors referred to in Sections 7 and 8
and their heirs and legal representatives, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are
intended to be for the sole and exclusive benefit of the Placement Agent and
the Company and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No Purchaser shall be deemed
to be a successor by reason merely of such purchase.
SECTION 13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 14. Effect of Headings. The Article and Section headings
herein are for convenience only and shall not affect the construction hereof.
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If the foregoing is in accordance with your understanding of
our agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement between the Placement Agent and the Company in accordance with its
terms.
Very truly yours,
CONTINUCARE CORPORATION
By /s/ Charles M. Ferandez
-----------------------------
Name: Charles M. Ferandez
Title: C.E.O.
CONFIRMED AND ACCEPTED,
as of the date first above written:
LOEWENBAUM & CO. INCORPORATED
By /s/ Calvin L. Chrisman
---------------------------------
Authorized Signatory
Managing Director
<PAGE> 1
EXHIBIT 99.1
Miami, Florida-November 4, 1997 -- Continucare Corporation (AMEX:CNU), an
operator of outpatient rehabilitation services including related practices and
facilities, today announced that it issued $46 million of 8% convertible
subordinated notes due 2002 in a private offering not required to be registered
under the Securities Act of 1933, as amended.
The notes, which are not redeemable until October 31, 2000, will be convertible
into shares of common stock of the Company at a conversion price of $7.25 per
share at any time after 60 days.
Continucare intends to use the net proceeds of the offering for acquisitions,
working capital and other general corporate purposes.
The notes (and the shares of common stock issuable upon conversion thereof) have
not been registered under the Securities Act of 1933, as amended (the
"Securities Act"), or any state securities laws and, unless so registered, may
not be offered or sold in the United States except pursuant to an exemption
from, or in a transaction not subject to, the registration requirements of the
Securities Act and applicable state securities laws.
This press release contains "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. Such forward-looking
statements involve known and unknown risks, uncertainties or other factors which
may cause actual results, performance or achievements expressed or implied by
such forward-looking statements. For more complete information concerning
factors which could affect Continucare's results, reference is made to
Continucare's registration statements, reports and other documents filed with
the Securities and Exchange Commission.
