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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
Acclaim Entertainment, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 38-2698904
(State of Incorporation or Organization) (I.R.S. Employer
Identification no.)
Glen Cove, New York 11542
(Address of Principal Executive Offices) (Zip Code)
If this form relates to the If this form relates to the
registration of a class of debt registration of a class of debt
securities and is effective upon securities and is to become
filing pursuant to General effective simultaneously with
pursuant to General Instruction A(c)(1) the effectiveness of a
please check the following box. / / concurrent registration
statement under the Securities
Act of 1933 pursuant to General
Instruction A(c)(2) please check
the following box. /X/
Securities to be registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which
to be so Registered Each Class is to be Registered
------------------- ------------------------------
- - ------------------------------------- -----------------------------------
- - ------------------------------------- -----------------------------------
Securities to be registered pursuant to Section 12(g) of the Act:
$50,000,000 aggregate principal amount of 10%
Convertible Subordinated Notes due 2002.
- - --------------------------------------------------------------------------------
(Title of Class)
- - --------------------------------------------------------------------------------
(Title of Class)
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Item 1. Description of Registrant's Securities to be Registered
Reference is made to the description of the Registrant's 10%
Convertible Subordinated Notes, due 2002 (the "Notes"), under the caption "Item
5. Other Events" in the Registrant's Current Report on Form 8-K filed with the
Securities and Exchange Commission on March 14, 1997 (File No.0-16986) (the
"Note Description 8K"), a copy of which is attached and also incorporated
herein by reference.
Item 2. Exhibits
4.1 Specimen form of the Notes (incorporated by reference to
Exhibit 4.1 to the Note Description 8K).
4.2 Indenture, dated as of February 27, 1997, between Acclaim
Entertainment, Inc. and IBJ Schroder Bank & Trust Company,
as Trustee (incorporated by reference to Exhibit 4.2 to the
Note Description 8-K).
20 Note Description 8K.
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereto duly authorized.
Acclaim Entertainment, Inc.
Registrant
Date: March 24, 1997 By /s/ J. Mark Hattendorf
------------------------------
J. Mark Hattendorf
Executive Vice President and
Chief Financial and Accounting Officer
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
February 26, 1997
ACCLAIM ENTERTAINMENT, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
0-16-986 38-2698904
(Commission File Number) (IRS Employer Identification Number)
One Acclaim Plaza, Glen Cove, New York 11542
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (516) 656-5000
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ITEM 5. OTHER EVENTS
On February 26, 1997, Acclaim Entertainment, Inc., a Delaware
corporation (the "Registrant"), completed a private placement of its 10%
Convertible Subordinated Notes due 2002 (the "Notes"), in the aggregate
principal amount of $50 million. The Notes are unsecured, and are convertible
into shares of the Registrant's common stock, $.02 par value per share (the
"Common Stock") at any time after 60 days following the date of initial issuance
and prior to maturity, unless previously redeemed, at an initial conversion
price of $5.18 per share, subject to anti-dilution adjustment under certain
conditions.
The Notes were issued under an Indenture, dated as of February 26,
1997, between the Company and IBJ Schroder Bank & Trust Company, as Trustee (the
"Trustee"). The Trustee will also serve as Conversion Agent and Paying Agent in
respect of the Notes. All terms used and not defined herein shall have the
meanings ascribed to such terms in the Indenture.
The Notes are unsecured subordinated obligations of the Company, are
limited to an aggregate principal amount of $50,000,000 and will mature on March
1, 2002. The Notes are redeemable, in whole or in part, at the option of the
Registrant at any time on or after March 1, 2000, at the redemption prices
(expressed as a percentage of the principal amount) set forth below for the
12-month period beginning March 1 of the years indicated:
2000..................................... 104.00%
2001..................................... 102.00%
and at maturity at 100% of principal, together in the case of any such
redemption with accrued interest to the redemption date.
If a Repurchase Event occurs, each Holder of the Notes will have the
right, subject to certain conditions and restrictions, to require the Registrant
to repurchase all outstanding Notes, in whole or in part, owned by such Holder
at 100% of their principal amount plus accrued interest, if any, to the date of
repurchase. The occurrence of a Repurchase Event is an event of default under
the Registrant's main credit facility with its lead senior lender, BNY Financial
Corporation.
The Notes are subordinated to all existing and future Senior
Indebtedness of the Registrant and will be effectively subordinated to all
indebtedness and other liabilities of the Registrant's subsidiaries.
2
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Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits
Exhibits:
4.1 Specimen Form of the Notes.
4.2 Indenture, dated as of February 26, 1997, between
Acclaim Entertainment, Inc. and IBJ Schroder Bank
& Trust Company, as Trustee.
99 Press release of Acclaim Entertainment, Inc. dated
February 28, 1997.
3
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ACCLAIM ENTERTAINMENT, INC.
By /s/ J. Mark Hattendorf
-----------------------------------
Name: J. Mark Hattendorf
Title: Executive Vice
President and Chief
Financial and Accounting
Officer
Dated: March 14, 1997
4
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EXHIBIT INDEX
Exhibit
4.1 Specimen Form of the Notes.
4.2 Indenture, dated as of February 26, 1997, between
Acclaim Entertainment, Inc. and IBJ Schroder Bank &
Trust Company, as Trustee.
99 Press release of Acclaim Entertainment, Inc. dated
February 28, 1997.
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Exhibit 4.1
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EXHIBIT A
ACCLAIM ENTERTAINMENT, INC.
10% Convertible Subordinated Note due 2002
ACCLAIM ENTERTAINMENT, INC., a Delaware corporation, promises to pay
to ______________________________________________________________________ or
registered assigns, the principal sum of _____________________________ Dollars,
on March 1, 2002.
Interest Payment Dates: March 1 and September 1
Regular Record Dates: February 15 and August 15
Additional provisions of this Security are set forth on other side
of this Security.
IN WITNESS WHEREOF, ACCLAIM ENTERTAINMENT, INC. has caused this
instrument to be duly signed.
ACCLAIM ENTERTAINMENT, INC.
By: _____________________________
Co-Chairman of the Board and
Chief Executive Officer
CERTIFICATE OF AUTHENTICATION By: _____________________________
Secretary
IBJ Schroder Bank & Trust Company,
as Trustee, certifies that this is
one of the Securities referred to
in the within mentioned Indenture.
IBJ Schroder Bank & Trust Company,
as Trustee
By: __________________________
Authorized Signatory
Dated:
A-1
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1. Interest. ACCLAIM ENTERTAINMENT, INC., a Delaware corporation
(the "Company"), promises to pay interest on the principal amount of this
Security at 10% per annum from and including February 26, 1997 to maturity or
earlier redemption. The Company will pay interest semi-annually on March 1 and
September 1 of each year commencing September 1, 1997. Interest on the
Securities will accrue from the most recent date to which interest has been paid
or if no interest has been paid, from February 26, 1997. If an Interest Payment
Date falls on a day that is not a Business Day, the interest payment to be made
on such Interest Payment Date will be made on the next succeeding Business Day
with the same force and effect as if made on such Interest Payment Date, and no
additional interest will accrue as a result of such delayed payment. Interest
will be computed on the basis of a 360-day year of twelve 30-day months. The
Company shall pay interest on overdue principal at the rate borne by this
Security, and it shall pay interest on overdue installments of interest at the
same rate to the extent lawful.
2. Method of Payment. The Company will pay interest on the
Securities (except defaulted interest) to the Persons who are the registered
Holders of the Securities at the close of business on the February 15 or August
15 next preceding the Interest Payment Date. Holders must surrender Securities
to a Paying Agent to collect principal payments. The Company will pay principal
and interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts. The Company, however, may pay
principal and interest by its check payable in such money. It may mail an
interest check to a Holder's registered address.
3. Registrar and Agents. Initially, IBJ Schroder Bank & Trust
Company will act as the Registrar, the Paying Agent, the Conversion Agent and
agent for service of notices and demands. The Company may change any Registrar,
co-registrar, Paying Agent, Conversion Agent and agent for service of notices
and demands without the prior consent of the Holders but upon notice to the
Holders. The Company or any of its Subsidiaries may act as Registrar,
co-registrar, Paying Agent or Conversion Agent.
4. Indenture; Limitations. The Company issued the Securities under
an Indenture dated as of February 26, 1997 (the "Indenture") between the Company
and IBJ Schroder Bank & Trust Company (the "Trustee"). Capitalized terms herein
are used as defined in the Indenture unless otherwise defined herein. The terms
of the Securities include those stated in the Indenture and those made part of
the Indenture by the Trust Indenture Act of 1939 (15 U.S. Code Sections
77aaa-77bbbb) as in effect on the date of the Indenture. The Securities are
subject to all such terms, and the Holders of the Securities are referred to the
Indenture and said Act for a statement of such terms. The Securities are general
unsecured obligations of the Company limited to $50,000,000 aggregate principal
amount.
5. Optional Redemption by the Company. The Company may, at its
option (subject to the rights of holders of Senior Indebtedness), redeem the
Securities, in whole or from time to time in part, on any date on or after March
1, 2000, at the following redemption prices, expressed as percentages of the
principal amount, if redeemed during the 12-month period beginning March 1, of
the years indicated below:
A-2
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Year Percentage
- - ---- ----------
2000..................... 104.00%
2001..................... 102.00%
and at maturity at 100% of principal, together in the case of any such
redemption with accrued interest to the Redemption Date (subject to the right of
Holders of record on the relevant Regular Record Date to receive interest due on
an Interest Payment Date that is on or prior to the Redemption Date).
6. Notice of Redemption. Notice of redemption will be mailed at
least 30 days but not more than 60 days before the Redemption Date to each
Holder to be redeemed at such Holder's address appearing in the Note Register.
Securities in denominations larger than $1,000 principal amount may be redeemed
in part, but only in an amount of $1,000 principal amount or integral multiples
thereof. In the event of redemption of this Security in part only, a new
Security or Securities for the unredeemed portion hereof will be issued in the
name of the Holder hereof upon the cancellation of this Security. On and after
the Redemption Date, interest ceases to accrue on Securities or portions of them
called for redemption.
7. Repurchase Event. In the event of a Repurchase Event (as
hereinafter defined) 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 portion thereof that is an integral multiple of $1,000, on the date (the
"Repurchase Date") that is 45 calendar days after the date of the Company Notice
(as defined below), at a price equal to 100% of the principal amount of such
Securities to be repurchased (the "Repurchase Price"), together with accrued
interest to the Repurchase Date; provided however, that a Repurchase Event shall
not be deemed to have occurred if the closing price per share of the Common
Stock for any five Trading Days within the period of ten consecutive Trading
Days ending immediately before the Repurchase Event shall equal or exceed 110%
of the Conversion Price (as defined herein) of such Securities in effect on each
such Trading Day. A "beneficial owner" shall be determined in accordance with
Rule 13d-3 promulgated by the Commission under the Exchange Act, as in effect on
the date of execution of the Indenture. A Repurchase Event shall be deemed to
have occurred at such time after February 26, 1997 if: (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, or any current or future
employee or director benefit plan of the Company or any Subsidiary 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
A-3
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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 transaction, a majority of the combined voting power of the voting capital
stock of the corporation 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 in which the individuals who constituted the
Board of Directors at the beginning of the 24-month period immediately preceding
such change (together with any other director whose election by the Board of
Directors 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
is the subject of a "Rule 13e-3 transaction" as defined under the Exchange Act.
8. Conversion. Beginning April 28, 1997, a Holder of a Security may
convert such Security into Common Stock of the Company at any time before the
close of business on March 1, 2002. If the Security is called for redemption or
delivered for repurchase, the Holder may convert it at any time before the close
of business on the last Business Day prior to the Redemption Date or the
Repurchase Date, as the case may be, unless the Company defaults in making the
payment due upon redemption or repurchase. The initial Conversion Price is $5.18
per share, subject to adjustment in certain events as set forth in the
Indenture. To determine the number of shares issuable upon conversion of a
Security, divide the principal amount to be converted by the Conversion Price in
effect on the conversion date and then round to the nearest 1/100th share. The
Company will deliver a check for any fractional share.
To convert a Security, a Holder must (1) complete and sign the
conversion notice on the back of the Security, (2) surrender the Security to the
Conversion Agent or Registrar, (3) furnish appropriate endorsements and transfer
documents if required by the Registrar or Conversion Agent and (4) pay any
transfer or similar tax if required. Securities (or portion of a Security)
surrendered for conversion during the period from the close of business on any
Regular Record Date next preceding any Interest Payment Date to the opening of
business on such Interest Payment Date (except Securities called for redemption
on a Redemption Date within such period) must be accompanied by payment of an
amount equal to the interest thereon which the registered Holder is to receive.
In the case of any Securities that have been converted after any Regular Record
Date but on or before the next Interest Payment Date, interest due on such
Interest Payment Date will be payable on such Interest Payment Date,
notwithstanding such conversion, to the Holder of record of such Note as of such
Regular Record Date. Except as described above, no interest on converted
Securities will be payable by the Company on any Interest Payment Date
subsequent to the date
A-4
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of conversion. No other payment or adjustment for interest or dividends will be
made upon conversion.
If the Company is a party to a consolidation or merger or a transfer
or lease of all or substantially all of its assets, the right to convert a
Security into Common Stock may be changed into a right to convert it into
securities, cash or other assets of the Company or another Person.
9. Subordination. This Security is subordinated to all existing and
future Senior Indebtedness of the Company as defined in the Indenture and to the
Trustee's fees and expenses as more fully described in the Indenture. To the
extent and in the manner provided in the Indenture, Senior Indebtedness must be
paid in cash before any payment may be made to any Holders of Securities. Any
Securityholder by accepting this Security agrees to the subordination and
authorizes the Trustee to give it effect.
In addition to all other rights of Senior Indebtedness described in
the Indenture, the Senior Indebtedness shall continue to be Senior Indebtedness
and entitled to the benefits of the subordination provisions irrespective of any
amendment, modification or waiver of any term of any instrument relating to the
Senior Indebtedness or extension or renewal of the Senior Indebtedness.
10. Denominations, Transfer, Exchange. The Securities are in
registered form without coupons in denominations of $1,000 principal amount and
integral multiples thereof. A Holder may register the transfer of or exchange of
the Securities in accordance with the Indenture. The Registrar may require a
Holder, among other things, to furnish appropriate endorsements and transfer
documents and to pay any taxes and fees required by law or permitted by the
Indenture. The Registrar shall not be required to exchange or register a
transfer of any Securities for a period of 15 days immediately preceding the
first mailing of notice of redemption of Securities to be redeemed or of any
Security selected, called or being called for redemption except, in the case of
any Security where public notice has been given that such Security is to be
redeemed in part, the portion thereof not to be redeemed.
11. Persons Deemed Owners. The registered Holder of a Security shall
be treated as the owner of it for all purposes.
12. Unclaimed Money. If money for the payment of principal and
premium, if any, or interest on any Securities remains unclaimed for two years,
the Trustee or any Paying Agent will pay the money back to the Company at its
request. After that, Holders may look only to the Company for payment.
13. Merger or Consolidation. The Company may not consolidate with,
or merge into, or transfer or lease all or substantially all of its assets to,
another Person unless: the Person is a corporation; such corporation assumes by
supplemental indenture all the obligations of the Company under the Securities
and the Indenture; at the time thereof and after giving effect to the
transaction no Default or Event of Default shall exist; and certain other
conditions set forth in the Indenture are satisfied.
A-5
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14. Discharge Prior to Redemption or Maturity. The Indenture will be
discharged and canceled except for certain sections thereof upon payment of
funds sufficient to pay principal and premium, if any, or interest due on such
payment or redemption of all Outstanding Securities.
15. Amendment and Waiver. Subject to certain exceptions, the
Indenture or the Securities may be amended with the consent of the Holders of at
least two-thirds in principal amount of the Securities then Outstanding (as
defined in the Indenture) and any existing Event of Default may be waived with
the consent of the Holders of a majority in principal amount of the Securities
then Outstanding. Without the consent of or notice to any Securityholder, the
Company may amend the Indenture or the Securities to, among other things,
provide for uncertificated Securities, to cure any ambiguity, defect or
inconsistency or make any other change that does not adversely affect the rights
of any Securityholder.
16. Successors. When a successor assumes all the obligations of its
predecessor under the Securities and the Indenture, the predecessor will be
released from those obligations.
17. Defaults and Remedies. If an Event of Default, as defined in the
Indenture, occurs and is continuing, the Trustee or the Holders of at least 30%
in principal amount of Securities then Outstanding may declare all the
Securities to be due and payable in the manner and with the effect provided in
the Indenture, and upon any such declaration such principal and accrued interest
shall become due and payable immediately. Holders of Securities may not enforce
the Indenture or the Securities except as provided in the Indenture. The Trustee
has the absolute right to require indemnity satisfactory to it before it
enforces the Indenture or the Securities. Subject to certain limitations,
Holders of a majority in principal amount of the Securities then outstanding may
direct the Trustee in its exercise of any trust or power. The Company is
required to file periodic reports with the Trustee as to the absence of Default.
An Event of Default is: 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, or upon redemption; 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; 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 subordination provisions of the Indenture; the
Company fails to perform or breaches any other covenant or agreement in the
Securities or in the Indenture and the default continues for 60 days after
receipt by the Company of notice in accordance with the Indenture; or certain
events of bankruptcy, insolvency or reorganization of the Company or any
Significant Subsidiary.
18. Trustee Dealings with the Company. The Trustee, in its
individual or any other capacity, may make loans to, accept deposits from, and
perform services for the Company or its affiliates, and may otherwise deal with
the Company or its affiliates, as if it were not the Trustee.
A-6
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19. No Recourse Against Others. No stockholder, director, officer or
incorporator, as such, past, present or future, of the Company or any successor
corporation shall have any liability for any obligation of the Company under the
Securities or the Indenture or for any claim based on, in respect of or by
reason of, such obligations or their creation. Each Holder of a Security by
accepting a Security waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the Securities.
20. Authentication. This Security shall not be valid until the
Trustee signs the certificate of authentication on the other side of this
Security.
21. Abbreviations. Customary abbreviations may be used in the name
of a Securityholder or an assignee, such as: TEN COM (= tenants in common), TEN
ENT (= tenants by the entireties), JT TEN (=joint tenants with rights of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (=
Uniform Gifts to Minors Act).
The Company will furnish to any Securityholder upon written request
and without charge a copy of the Indenture. It also will furnish the text of
this Security in larger type. Requests may be made to: Acclaim Entertainment,
Inc., One Acclaim Plaza, Glen Cove, New York 11542, Attention: Secretary.
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
STATE SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST
THEREIN MAY BE OFFRED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH SECURITIES ACT OR SUCH LAWS OR AN EXEMPTION FROM
REGISTRATION UNDER SUCH SECURITIES ACT AND SUCH LAWS WHICH, IN THE
OPINION OF COUNSEL FOR THE HOLDER, WHICH COUNSEL AND OPINION ARE
REASONABLY SATISFACTORY TO COUNSEL FOR THIS CORPORATION, IS
AVAILABLE.
<PAGE>
ASSIGNMENT FORM
If you the Holder want to assign this Security, fill in the form below and have
your signature guaranteed:
I or we assign and transfer this Security to
(INSERT ASSIGNEE'S SOCIAL SECURITY OR
TAX IDENTIFICATION NUMBER)
______________________________________
______________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint_________________________________________________________
______________________________________________________ agent to transfer this
Security on the books of the Company. The agent may substitute another to act
for him.
Date:___________________________________________________________________________
Your signature:_________________________________________________________________
(Sign exactly as your name appears on the
other side of this Security)
Signature guaranteed by:________________________________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE
GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND
LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN
APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT
TO S.E.C. RULE 17Ad-15.
<PAGE>
CONVERSION NOTICE
To convert this Security into Common Stock of the Company, check the box:
|_|
To convert only part of this Security, state the principal amount to be
converted (which must be a minimum of $1,000 or any integral multiple thereof):
-------------------------
$
-------------------------
If you want the stock certificate made out in another Person's name, fill in the
form below:
(INSERT OTHER Person'S SOCIAL SECURITY OR
TAX IDENTIFICATION NUMBER)
______________________________________
______________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type other Person's name, address and zip code)
Date:___________________________________________________________________________
Your signature:_________________________________________________________________
(Sign exactly as your name appears on the
other side of this Security)
Signature guaranteed by:________________________________________________________
If you want the stock certificate made out in another
Person's name, please have your signature guaranteed by an
eligible guarantor institution (banks, stockbrokers,
savings and loan associations and credit unions with
membership in an approved signature guarantee medallion
program), pursuant to S.E.C.
Rule 17Ad-15.
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 6.09 of the Indenture, check the box:
|_|
If you want to elect to have only part of this Security purchased by
the Company pursuant to Section 6.09 of the Indenture, state the amount:
_____________________________________
(in an integral multiple of $1,000)
Date:_______________ Signature(s): __________________
___________________________________________
(Sign exactly as your name(s) appear(s)
on the other side of this Security)
Signature(s) guaranteed by:______________________________________________
THE SIGNATURES SHOULD BE GUARANTEED BY AN
ELIGIBLE GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN
ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE
GUARANTEE MEDALLION PROGRAM), PURSUANT TO
S.E.C. RULE 17Ad-15.
<PAGE>
Exhibit 4.2
<PAGE>
================================================================================
ACCLAIM ENTERTAINMENT, INC.
and
IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee
------------
Indenture
Dated as of February 26, 1997
------------
$50,000,000
10% Convertible Subordinated Notes Due 2002
================================================================================
<PAGE>
CROSS-REFERENCE TABLE
Trust Indenture Act Section Section of Indenture
--------------------------- --------------------
310(a)(1) and (2).................................. 8.10
310(a)(3) and (4).................................. Not applicable
310(b)............................................. 8.08 and 8.10, 15.03
310(c)............................................. Not applicable
311(a) and (b)..................................... 8.11
311(c)............................................. Not applicable
312(a)............................................. 2.06
312(b) and (c)..................................... 15.07
313(a)............................................. 8.06
313(b)(1).......................................... Not applicable
313(b)(2).......................................... 8.06
313(c)............................................. 8.06 and 15.03
313(d)............................................. 8.06
314(a)............................................. 6.10 and 15.03
314(b)............................................. Not applicable
314(c)(1) and (2).................................. 15.04
314(c)(3).......................................... Not applicable
314(d)............................................. Not applicable
314(e)............................................. 15.04
314(f)............................................. Not applicable
315(a), (c) and (d)................................ 8.01
315(b)............................................. 8.05; 15.03
315(e)............................................. 7.11
316(a)(1).......................................... 7.04 and 7.05
316(a)(2).......................................... Not applicable
316(a) last sentence............................... 9.03
316(b)............................................. 7.07
316(c)............................................. 10.02
317(a)............................................. 7.08 and 7.09
317(b)............................................. 2.05
318(a)............................................. 15.06
- - ----------
This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of this Indenture.
<PAGE>
TABLE OF CONTENTS
Page
PARTIES......................................................................1
RECITALS.....................................................................1
ARTICLE ONE.
DEFINITIONS.
SECTION 1.01. Definitions............................................. 1
SECTION 1.02. Other Definitions....................................... 12
SECTION 1.03. Incorporation by Reference of Trust Indenture Act....... 13
SECTION 1.04. Rules of Construction................................... 13
ARTICLE TWO.
ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND
EXCHANGE OF SECURITIES.
SECTION 2.01. Dating; Incorporation of Form in Indenture.............. 14
SECTION 2.02. Execution and Authentication............................ 14
SECTION 2.03. Registrar and Agents.................................... 15
SECTION 2.04. Holders to be Treated as Owners; Payment of Interest.... 15
SECTION 2.05. Paying Agent to Hold Money in Trust..................... 16
SECTION 2.06. Securityholder Lists.................................... 16
SECTION 2.07. Transfer and Exchange................................... 16
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Securities......... 17
SECTION 2.09. Temporary Securities.................................... 18
SECTION 2.10. Cancellation of Securities.............................. 18
SECTION 2.11. Benefits of Indenture Provisions........................ 18
SECTION 2.12. Defaulted Interest...................................... 19
SECTION 2.13. CUSIP Number............................................ 19
ARTICLE THREE.
REDEMPTION OF SECURITIES.
SECTION 3.01. Redemption Prices....................................... 19
SECTION 3.02. Notice of Redemption; Selection of Securities........... 20
SECTION 3.03. Payment of Securities on Redemptions; Deposit of Redemption
Price..................................................21
ARTICLE FOUR.
SUBORDINATION OF SECURITIES.
SECTION 4.01. Agreement that Securities Be Subordinate................ 22
SECTION 4.02. Liquidation; Dissolution; Bankruptcy.................... 22
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SECTION 4.03. Company Not to Make Payments with Respect
to Securities in Certain Circumstances................ 23
SECTION 4.04. Payment Over of Proceeds in Certain Events.............. 24
SECTION 4.05. No Waiver of Subordination Provisions................... 25
SECTION 4.06. Notice to Trustee of Specified Events; Reliance on
Certificate of Liquidating Agent...................... 25
SECTION 4.07. Subrogation............................................. 25
SECTION 4.08. Obligation to Pay Not Impaired.......................... 26
SECTION 4.09. Reliance by Senior Indebtedness on Subordination
Provisions............................................ 26
SECTION 4.10. Subordination Not to Be Prejudiced by Certain Acts...... 26
SECTION 4.11. Trustee Authorized to Effectuate Subordination.......... 26
SECTION 4.12. Trustee's Relationship to Senior Indebtedness........... 27
SECTION 4.13. Trustee and Paying Agents Not Chargeable with Knowledge
Until Notice.......................................... 27
SECTION 4.14. Article Applicable to Paying Agents..................... 27
SECTION 4.15. Trustee's Compensation Not Prejudiced................... 28
ARTICLE FIVE.
CONVERSION OF SECURITIES.
SECTION 5.01. Conversion Privilege; Conversion Price.................. 28
SECTION 5.02. Manner of Exercising Conversion Privilege............... 28
SECTION 5.03. Fractional Shares....................................... 29
SECTION 5.04. Adjustment of Conversion Price.......................... 30
SECTION 5.05. Certificate Concerning Adjusted Conversion Price........ 34
SECTION 5.06. Notice of Certain Corporate Action...................... 34
SECTION 5.07. Company to Provide Stock................................ 35
SECTION 5.08. Taxes on Conversions.................................... 35
SECTION 5.09. Covenant as to Stock.................................... 35
SECTION 5.10. Provision in Case of Consolidation or Merger............ 35
SECTION 5.11. Trustee's Disclaimer of Responsibility for Certain
Matters............................................... 36
ARTICLE SIX.
PARTICULAR COVENANTS OF THE COMPANY.
SECTION 6.01. Payment of Principal, Premium and Interest.............. 37
SECTION 6.02. Offices for Notices, Payments and Conversions........... 37
SECTION 6.03. Paying Agents........................................... 38
SECTION 6.04. Annual Review Certificate............................... 38
SECTION 6.05. Appointment to Fill a Vacancy in Office of Trustee...... 39
SECTION 6.06. Further Instruments and Acts............................ 39
SECTION 6.07. Payment of Taxes and Assessments........................ 39
SECTION 6.08. Maintenance of Corporate Existence...................... 39
SECTION 6.09. Repurchase Event........................................ 39
SECTION 6.10. SEC Reports............................................. 41
SECTION 6.11. Restricted Payments..................................... 42
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SECTION 6.12. Incurrence of Indebtedness and Issuance of Preferred
Stock................................................. 42
ARTICLE SEVEN.
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT.
SECTION 7.01. Events of Default....................................... 43
SECTION 7.02. Acceleration............................................ 44
SECTION 7.03. Other Remedies. ....................................... 45
SECTION 7.04. Waiver of Defaults and Events of Default................ 45
SECTION 7.05. Control by Majority..................................... 45
SECTION 7.06. Limitation on Suits..................................... 45
SECTION 7.07. Rights of Holders to Receive Payment.................... 46
SECTION 7.08. Collection Suit by Trustee.............................. 46
SECTION 7.09. Trustee May File Proofs of Claim........................ 46
SECTION 7.10. Application of Money Collected by Trustee............... 47
SECTION 7.11. Undertaking to Pay Costs................................ 47
SECTION 7.12. Restoration of Rights and Remedies...................... 48
SECTION 7.13. Rights and Remedies Cumulative.......................... 48
SECTION 7.14. Delay or Omission Not Waiver............................ 48
ARTICLE EIGHT.
CONCERNING THE TRUSTEE.
SECTION 8.01. Duties of Trustee....................................... 48
SECTION 8.02. Rights of Trustee....................................... 49
SECTION 8.03. Individual Rights of Trustee............................ 50
SECTION 8.04. Trustee's Disclaimer.................................... 50
SECTION 8.05. Notice of Defaults...................................... 50
SECTION 8.06. Reports by Trustee to Holders........................... 50
SECTION 8.07. Compensation and Indemnity.............................. 51
SECTION 8.08. Replacement of Trustee.................................. 51
SECTION 8.09. Successor Trustee by Merger, etc........................ 52
SECTION 8.10. Eligibility; Disqualification........................... 52
SECTION 8.11. Preferential Collection of Claims Against Company....... 53
ARTICLE NINE.
CONCERNING THE SECURITYHOLDERS.
SECTION 9.01. Action by Securityholders............................... 53
SECTION 9.02. Proof of Execution by Securityholders, Evidence of
Holdings.............................................. 53
SECTION 9.03. Company-owned Securities Disregarded.................... 53
SECTION 9.04. Revocation of Consents, Future Holders Bound............ 54
ARTICLE TEN.
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SECURITYHOLDERS' MEETINGS.
SECTION 10.01. Purposes of Meetings................................... 54
SECTION 10.02. Call of Meetings by Trustee............................ 55
SECTION 10.03. Call of Meetings by Company or Securityholders......... 55
SECTION 10.04. Qualifications for Voting.............................. 55
SECTION 10.05. Regulations............................................ 55
SECTION 10.06. Voting................................................. 56
SECTION 10.07. No Delay of Rights by Meeting.......................... 56
ARTICLE ELEVEN.
SUPPLEMENTAL INDENTURES.
SECTION 11.01. Supplemental Indenture Without Consent of
Securityholders...................................... 57
SECTION 11.02. Supplemental Indentures with Consent of
Securityholders...................................... 58
SECTION 11.03. Compliance with Trust Indenture Act; Effect of
Supplemental Indentures.............................. 58
SECTION 11.04. Notation on Securities................................. 59
SECTION 11.05. Evidence of Compliance of Supplemental Indenture
to Be Furnished Trustee.............................. 59
ARTICLE TWELVE.
CONSOLIDATION, MERGER AND SALE BY THE COMPANY.
SECTION 12.01. When Company May Merge, Etc............................ 59
SECTION 12.02. Successor Corporation Substituted...................... 60
ARTICLE THIRTEEN.
SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS.
SECTION 13.01. Discharge of Indenture................................. 60
SECTION 13.02. Deposited Moneys to Be Held in Trust by Trustee........ 61
SECTION 13.03. Paying Agent to Repay Moneys Held...................... 61
SECTION 13.04. Unclaimed Moneys....................................... 61
SECTION 13.05. Reinstatement.......................................... 61
ARTICLE FOURTEEN.
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS.
SECTION 14.01. Indenture and Securities Solely Corporate Obligations.. 62
ARTICLE FIFTEEN.
MISCELLANEOUS PROVISIONS.
SECTION 15.01. Provisions Binding on Company's Successors............. 62
SECTION 15.02. Official Acts by Successor Corporation................. 62
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SECTION 15.03. Notices................................................ 62
SECTION 15.04. Evidence of Compliance with Conditions Precedent....... 63
SECTION 15.05. Legal Holidays......................................... 63
SECTION 15.06. Trust Indenture Act to Control......................... 63
SECTION 15.07. Communications by Holders with Other Holders........... 63
SECTION 15.08. Governing Law.......................................... 64
SECTION 15.09. Table of Contents and Headings......................... 64
SECTION 15.10. No Security Interest Created........................... 64
SECTION 15.11. Actions of Trustee in other Capacities................. 64
EXHIBIT A -- FORM OF SECURITY
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THIS INDENTURE, dated as of February 26, 1997 between Acclaim
Entertainment, Inc., a corporation duly organized and existing under the laws of
the State of Delaware (the "Company"), and IBJ Schroder Bank & Trust Company, as
trustee (the "Trustee").
WITNESSETH:
WHEREAS, for its lawful corporate purposes, the Company has duly
authorized the issue of its 10% Convertible Subordinated Notes Due 2002
(hereinafter sometimes referred to as the "Securities"), in the aggregate
principal amount of up to $50,000,000 and, to provide the terms and conditions
upon which the Securities are to be authenticated, issued and delivered, the
Company has duly authorized the execution of this Indenture; and
AND WHEREAS, all acts and things necessary to make the Securities, when
executed by the Company and authenticated and delivered by the Trustee or its
authorized signatory as in this Indenture provided, and issued, the valid,
binding and legal obligations of the Company, and to constitute these presents a
valid agreement according to its terms, have been done and performed, and the
execution of this Indenture and the issue hereunder of the Securities have in
all respects been duly authorized.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
That in order to declare the terms and conditions upon which the
Securities are, and are to be, authenticated, issued and delivered, and in
consideration of the premises, of the purchases and acceptance of the Securities
by the Holders thereof and for other good and valuable consideration, the
receipt whereof is hereby acknowledged, 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 ONE.
DEFINITIONS.
SECTION 1.01. Definitions. The terms in this Section 1.01 (except as
herein otherwise expressly provided or unless the context otherwise requires)
for all purposes of this Indenture and of any indenture supplemental hereto
shall have the respective meanings specified in this Section 1.01. All other
terms used in this Indenture which are defined in the TIA, as amended, or which
are by reference therein defined in the Securities Act of 1933, as amended
(except as herein otherwise expressly provided or unless the context otherwise
requires), shall have the meanings assigned to such terms in the TIA and in said
Securities Act as in force as of the date of this Indenture.
<PAGE>
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or becomes a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a lien
encumbering any asset acquired by such specified Person. Acquired Debt shall be
deemed to be Indebtedness incurred by such Person at the time of such merger, or
upon the other Person becoming a Subsidiary or upon the acquisition of such
asset.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition, the
term "control" when used with respect to any Person means the power, directly or
indirectly, alone or together with others, to direct or cause the direction of
the management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.
"Agent" means any registrar, paying agent, conversion agent, co-registrar
or agent for service of notices and demands.
"Board of Directors" means the Board of Directors of the Company, the
executive committee, if any, of such Board of Directors or any committee of such
Board of Directors authorized to act on behalf of such Board of Directors with
respect to the Indenture.
"Business Day" or "Trading Day" means any day on which the banks in New
York, New York are not authorized or required to be closed and on which the
Nasdaq National Market is open for trading and which is not a Saturday or
Sunday.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on a balance sheet in accordance with
GAAP.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations, warrants, options or other equivalents (however
designated) of corporate stock or any other equity interest of such Person.
"Common Stock" includes any stock of any class of the Company which has no
preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the Company,
and which is not subject to redemption by the Company. However, subject to the
provisions of Section 5.10, shares issuable on conversion of Securities shall
include only shares of the class designated as Common Stock, par value $0.02 per
share, of the Company at the date of this Indenture or shares of any class or
classes resulting from any reclassification or
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reclassifications thereof and which have no preference in respect of dividends
or of amounts payable in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Company and which are not subject to redemption
by the Company.
"Company" means Acclaim Entertainment, Inc., a Delaware corporation, and,
subject to the terms of the Indenture, shall include its successors and assigns.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Subsidiaries for
such period, on a consolidated basis, determined in accordance with GAAP;
provided that (i) the Net Income of any Person that is not a Subsidiary or that
is accounted for by the equity method of accounting shall be included only to
the extent of the amount of dividends or distributions paid in cash to the
referent Person or a wholly-owned Subsidiary thereof, (ii) the Net Income of any
Subsidiary shall be excluded to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that Net Income is not
at the date of determination permitted without any prior governmental approval
(that has not been obtained) or, directly or indirectly, by operation of the
terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Subsidiary or its
stockholders, (iii) the Net Income of any Person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition shall
be excluded, and (iv) the cumulative effect of a change in accounting principles
shall be excluded.
"Consolidated Net Worth" means, 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
amounts reported on such Person's balance sheet as of such date with respect to
any series of preferred stock (other than Disqualified Capital Stock).
"Corporate Trust Office" means the office of the Trustee at which at any
particular time its corporate trust business shall be principally administered,
which office at the date of execution of this Indenture is located at 1 State
Street, New York, New York.
"corporation" means any corporation, voluntary association, joint stock
association, business trust, or similar organization.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Disqualified Capital Stock" means, 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
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redeemable at the option of the holder thereof, in whole or in part, on or prior
to the maturity of the Securities.
"EBITDA" means, with respect to any Person for any period, the
Consolidated Net Income of such Person for such period plus (i) an amount equal
to any extraordinary or non-recurring loss plus any net loss realized in
connection with a Sale of Assets (to the extent such losses were deducted in
computing such Consolidated Net Income), plus (ii) provision for taxes based on
income or profits of such Person and its Subsidiaries for such period, to the
extent that such provision for taxes was included in computing such Consolidated
Net Income, plus (iii) the Fixed Charges of such Person and its Subsidiaries for
such period, to the extent that such Fixed Charges were deducted in computing
such Consolidated Net Income, plus (iv) depreciation and amortization of such
Person and its Subsidiaries for such period to the extent that such depreciation
and amortization were deducted in computing such Consolidated Net Income, plus
(v) other non-cash charges to the extent that such non-cash charges were
deducted in computing such Consolidated Net Income, in each case, on a
consolidated basis and determined in accordance with GAAP. Notwithstanding the
foregoing, the provision for taxes on the income or profits of, and the
depreciation and amortization of, a Subsidiary of the referent Person shall be
added to Consolidated Net Income to compute EBITDA only to the extent (and in
the same proportion) that the Net Income of such Subsidiary was included in
calculating the Consolidated Net Income of such Person and only if a
corresponding amount would be permitted at the date of determination to be
dividended to such Person by such Subsidiary without prior approval (that has
not been obtained), pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and governmental
regulations applicable to that Subsidiary or its stockholders.
"Event of Default" means any event specified in Section 7.01, continued
for the period of time, if any, therein designated.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries in existence on the date of the Indenture, until such amounts are
repaid, including all reimbursement obligations with respect to letters of
credit outstanding as well as the maximum availability which possibly may be
borrowed under the terms and in the amounts of the credit facilities described
in Section 6.12 subparagraph (vi).
"Fixed Charges" means, with respect to any Person for any period, the sum
of (i) the consolidated interest expense of such Person and its Subsidiaries for
such period, whether paid or accrued (including, without limitation,
amortization of original issue discount, non-cash interest payments, the
interest component of any deferred payment obligations, the interest component
of all payments associated with Capital Lease Obligations, commissions, and
discounts and other fees and charges incurred in respect of letters of credit or
bankers' acceptance financings, (ii) the consolidated interest expense of such
Person and its Subsidiaries that was capitalized during such period,
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(iii) any interest expense on Indebtedness of another Person that is guaranteed
by such Person or one of its Subsidiaries or secured by a lien on assets of such
Person or one of its Subsidiaries (whether or not such Guarantee or lien is
called upon), (iv) the product of (a) all cash dividend payments (and non-cash
dividend payments in the case of a Person that is a Subsidiary) on any series of
preferred stock of such Person, times (b) a fraction, the numerator of which is
one and the denominator of which is one minus the then current combined federal,
state and local statutory tax rate of such Person, expressed as a decimal, in
each case, on a consolidated basis and in accordance with GAAP, and (v) (without
duplication of any of the foregoing) one-third of the aggregate rental
obligations of such Person and its Subsidiaries for such period, whether paid or
accrued, in respect of leases of real and personal property, whether or not such
obligations are reflected as liabilities on the balance sheet of such Person and
its Subsidiaries.
"Fleet Loan" means up to an aggregate of $5.0 million of indebtedness
under the Company's mortgage indebtedness to Fleet Bank N.A.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession in the United States.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Indebtedness" means, with respect to any Person, any of the following
(without duplication): (i) (a) any liability or obligation of the Person for
borrowed money (including, without limitation, principal 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 Code 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 (other than the Securities) whether or not contingent and,
with respect to any of the foregoing, whether outstanding on the date of
execution of the Indenture or thereafter created, incurred or assumed, (b) any
deferred payment obligation of the Person for the payment of the purchase price
of property or assets evidenced by a note or similar instrument (excluding any
obligation for accounts payable, trade payables, royalties, advances or
guaranties of minimum royalties in respect of agreements for the acquisition,
development or distribution of intellectual properties, games or other products
in the ordinary course of business recorded as deferred expenses or current
liabilities, or obligations constituting the deferred purchase
5
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price of property or assets which is not evidenced by a note or similar
instrument and which is unsecured), (c) Capital Lease Obligations, (d) all
obligations of the Person 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 Person evidenced by a letter of
credit or any reimbursement obligation of the Person in respect of a letter of
credit whether outstanding on the date of execution of the Indenture or
thereafter created, incurred or assumed, (f) all obligations of others secured
by a lien to which any of the properties or assets of the Person are subject
(including, without limitation, leasehold interests and any intangible property
rights), whether or not the obligations secured thereby have been assumed by the
Person or shall otherwise be the Person's legal obligation whether outstanding
on the date of execution of the Indenture or thereafter 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
Person and the obligations of the Person under guarantees of any such
obligations; and (ii) any amendments, renewals, extensions, deferrals,
modifications, refinancing and refunding of any of the foregoing. "Indebtedness"
shall not include: (i) any indebtedness of the Person to any Subsidiary or to
any Affiliate of the Person or any of the Subsidiaries or of any Subsidiary or
Affiliate of any Subsidiary of the Person to the Person, (ii) 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, royalties, advances or guaranties of minimum royalties
in respect of agreements for the acquisition, development or distribution of
intellectual properties, games or other products in the ordinary course of
business recorded as deferred expenses or current liabilities, other current
liabilities (other than for borrowed money) or deferred revenue and deposits of
the Person on the books of the Person (which are unsecured), (iii) any
indebtedness of or amount owed by the Person to employees for services rendered
to the Person or in connection with the severance of such employment, and (iv)
any liability for federal, state, local or other taxes owing or owed by the
Person.
"Indenture" means this instrument as originally executed or, if amended or
supplemented as herein provided, as so amended or supplemented.
"Independent Public Accountants" means any firm of certified public
accountants of recognized national standing which is selected by the Board of
Directors and is in fact independent.
"Issuance Date" means February 26, 1997.
"Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with any Sale of Assets, and (ii) any
extraordinary or nonrecurring gain (but not loss),
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together with any related provision for taxes on such extraordinary or
nonrecurring gain (but not loss).
"Officer" means the Co-Chairmen of the Board, Chief Executive Officer,
Senior Executive Vice President, the President, any Vice President, the
Treasurer, the Secretary or the Chief Financial Officer of the Company.
"Officers' Certificate" when used with respect to the Company, shall mean
a certificate signed by any two Officers or by an Officer and by any Assistant
Treasurer or any Assistant Secretary of the Company. Each such certificate shall
include the statements provided for in Section 15.04 if and to the extent
required by the provisions of such Section.
"Opinion of Counsel" means an opinion in writing, signed by outside legal
counsel to the Company or, if agreed to by the Trustee, inside counsel, in each
case any such counsel to be satisfactory to the Trustee. Each such opinion shall
include the statements provided for in Section 15.04 if and to the extent
required by the provisions of such Section.
"Outstanding," when used with reference to Securities, shall, subject to
the provisions of Section 9.03, mean, as of any particular time, all Securities
authenticated and delivered by the Trustee under this Indenture, except
(a) Securities theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;
(b) Securities or the payment or redemption of which moneys in
the necessary amounts shall have been deposited in trust with the
Trustee or with any Paying Agent (other than the Company), provided
that if such Securities are to be redeemed prior to the maturity
thereof, notice of such redemption shall have been given as in
Article Three 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 or Securities
which have been paid pursuant to the terms of Section 2.08;
provided that Holders of Securities which cease to be outstanding by reason of
clause (b) alone shall nevertheless be entitled to convert the same or any
portion thereof until and including but not after the close of business on the
last Business Day prior to the date fixed for redemption.
"Permitted Junior Securities" means 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
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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.
"Permitted Refinancing Indebtedness" means any Indebtedness of the Company
or any of its Subsidiaries issued in exchange for, or the net proceeds of which
are used solely to extend, refinance, renew, replace, defease or refund, in
whole or in part, other Indebtedness of the Company or any of its Subsidiaries;
provided that, (i) the principal amount of such Permitted Refinancing
Indebtedness does not exceed the principal amount of the Indebtedness so
extended, refinanced, renewed, replaced, defeased or refunded (plus the amount
of any premiums paid and reasonable expenses incurred in connection therewith);
(ii) such Permitted Refinancing Indebtedness has a final maturity date equal to
or later than the final maturity date of, and has a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to maturity of, the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded, provided that the restrictions set forth in this subparagraph (ii)
shall not apply to any refinancing of the Fleet Loan which refinancing shall in
any case be deemed to be Permitted Refinancing Indebtedness; (iii) if the
Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded
is subordinated in right of payment to the Securities, such Permitted
Refinancing Indebtedness has a final maturity date equal to or later than the
final maturity date of, and is subordinated in right of payment to, the
Securities on terms at least as favorable to the Holders of Securities as those
contained in the documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; and (iv) such Indebtedness
is incurred either by the Company or by the Subsidiary who is the obligor on the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Redemption Date", when used with respect to any Security to be redeemed,
means the date fixed for such redemption pursuant to this Indenture.
"Redemption Price", when used with respect to any Securities to be
redeemed, means the price fixed for such redemption pursuant to this Indenture
as set forth in the form of Security annexed hereto as Exhibit A.
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 or any current or future employee or director benefit plan of the
Company or any Subsidiary 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
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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 transaction, a majority of
the combined voting power of the voting capital stock of the corporation
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 in which the individuals who constituted the Board of Directors at the
beginning of the 24-month period immediately preceding such change (together
with any other director whose election by the Board of Directors 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 is the subject
of a "Rule 13e-3 transaction" as defined under the Exchange Act.
"Responsible Officer," when used with respect to the Trustee, means an
officer of the Trustee within the corporate trust department, including any vice
president or trust officer of the Trustee and also means, with respect to a
particular corporate trust matter, any other officer to whom such corporate
trust 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 occurrence of any liability to
make any other payment or distribution of cash or other property or assets
(other than payment or distribution of Capital Stock, other than Disqualified
Capital Stock) by such Person in respect of such Person's Stock, excluding
dividends from one Subsidiary to another or to the Company and excluding cash
dividends by the Company which do not exceed $2,000,000 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 $2,000,000 in any fiscal year, any
payment on account of the purchase, redemption, defeasance or other retirement
of such Person's Stock (other than payment or distribution of Capital Stock,
other than Disqualified Capital Stock) or any other payment or distribution made
in respect thereof, either directly or indirectly, or (iii) any payment, loan,
contribution, or other transfer of funds or other property (other than payment
or distribution of Capital Stock, other than Disqualified Capital Stock) to any
Stockholder of such Person in their
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capacity as Stockholders as opposed to employees, directors or consultants;
provided, however, that no Event of Default exists or would be caused by the
making of a Restricted Payment.
"Sale of Assets" means (i) any sale, lease, conveyance or other
disposition by the Company or any Subsidiary of the Company of any assets
(including by way of a saleand-leaseback) other than in the ordinary course of
business (provided that the sale, lease, conveyance or other disposition of all
or substantially all of the assets of the Company shall not be a "Sale of
Assets" but instead shall be governed by the provisions of Section 12.01 of this
Indenture, or (ii) the issuance or sale of Capital Stock of any Subsidiary of
the Company, in each case, whether in a single transaction or a series of
related transactions, to any Person (other than to the Company).
"SEC" means the Securities and Exchange Commission.
"Securities" means the securities that are authenticated and delivered
under this Indenture.
"Securityholder" or "Holder" or other similar terms, means any Person in
whose name a particular Security shall be registered on the books of the Company
kept for that purpose in accordance with the terms hereof.
"Senior Indebtedness" means, with respect to any Person, any of the
following (without duplication): (i) (a) any liability or obligation of the
Person 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 Code 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 (other than the Securities) whether or not
contingent, and with respect to any of the foregoing whether outstanding on the
date of execution of the Indenture or thereafter created, incurred or assumed,
(b) any deferred payment obligation of the Person for the payment of the
purchase price of property or assets evidenced by a note or similar instrument
(excluding any obligation for accounts payable, trade payables, royalties,
advances or guaranties of minimum royalties in respect of agreements for the
acquisition, development or distribution of intellectual properties, games or
other products in the ordinary course of business recorded as deferred expenses
or current liabilities or obligations constituting the deferred purchase price
of property or assets which is not evidenced by a note or similar instrument and
which is unsecured), (c) Capital Lease Obligations, (d) all obligations of the
Person 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 Person evidenced by a letter of credit or any
reimbursement obligation of the Person in respect of a letter of credit and with
respect to any of the foregoing whether outstanding on the date of execution of
the Indenture or thereafter
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created, incurred or assumed, (f) all obligations of others secured by a lien to
which any of the properties or assets of the Person are subject (including,
without limitation, leasehold interests and any intangible property rights),
whether or not the obligations secured thereby have been assumed by the Person
or shall otherwise be the Person's legal obligation and with respect to any of
the foregoing whether outstanding on the date of execution of the Indenture or
thereafter 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 Person and the obligations of the Person 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 Person to any Subsidiary or to any
Affiliate of the Person or any of the Subsidiaries or of any Subsidiary or
Affiliate of any subsidiary of the Person to the Person, (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, royalties, advances or guaranties of minimum royalties
in respect of agreements for the acquisition, development or distribution of
intellectual properties, games or other products in the ordinary course of
business recorded as deferred expenses or current liabilities, other current
liabilities (other than for borrowed money) or deferred revenues and deposits of
the Person on the books of the Person (which are unsecured), (v) any
indebtedness of or amount owed by the Person to employees for services rendered
to the Person or in connection with the severance of such employment and (vi)
any liability for federal, state, local or other taxes owing or owed by the
Person.
"Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" of the Company within the meaning of Rule 1-02 under Regulation S-X
promulgated by the SEC as in effect on the Issuance Date.
"Stock" shall mean all shares, options, warrants, general or limited
partnership interests, participation or other equivalents (regardless of how
designated) of or in a corporation, partnership or equivalent entity whether
voting or nonvoting, including, without limitation, common stock, preferred
stock, or any other "equity security" (as such term is defined in Rule 3a11-1 of
the General Rules and Regulations promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended).
"Subsidiary" means a corporation of which more than 50% of the issued and
outstanding stock entitled to vote for the election of directors (otherwise than
by reason of default in dividends) is at the time owned or controlled, directly
or indirectly, by the Company.
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"TIA" means the Trust Indenture Act of 1939, as amended, as it was in
force as of the date of this Indenture, and with respect to each supplemental
indenture hereto, as it was in force as of the date of such supplemental
indenture.
"Trustee" means IBJ Schroder Bank & Trust Company and, subject to the
provisions of Article Eight hereof, shall also include its successors and
assigns as Trustee hereunder.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
SECTION 1.02. Other Definitions.
Term Defined in Section
- - ---- ------------------
"Bankruptcy Law" 7.01
"Company Notice" 6.09
"Conversion Agent" 2.03
"Current Market Price" 5.04
"Custodian" 7.01
"Event of Default" 7.01
"Interest Payment Date" 2.04
"Non-payment Default" 4.03
"Paying Agent" 2.03
"Payment Blockage Period" 4.03
"Payment Default" 4.03
"Registrar" 2.03
"Regular Record Date" 2.04
"Repurchase Date" 6.09
"Repurchase Price" 6.09
"Senior Representative" 4.03
"Transaction" 12.01
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SECTION 1.03. Incorporation by Reference of Trust Indenture Act.
The following terms used in the TIA to the extent applicable to this
Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company or any other
obligor on the indenture securities.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule have the
meanings assigned to them by such definitions.
SECTION 1.04. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned to
it in accordance with generally accepted accounting principles in
effect on the date hereof;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural include
the singular;
(5) provisions apply to successive events and transactions; and
(6) "herein," "hereof" and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or
other subdivision.
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ARTICLE TWO.
ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND
EXCHANGE OF SECURITIES.
SECTION 2.01. Dating; Incorporation of Form in Indenture.
The Securities and the Trustee's certificate of authentication, with
respect thereto, shall be substantially in the form of Exhibit A, which is
annexed hereto and which is incorporated in and expressly made a part of this
Indenture. The Securities may have notations, legends or endorsements required
by law, stock exchange rules, agreements to which the Company is subject, or
usage. The Company shall approve the form of the Securities and any notation,
legend or endorsement on them. The terms and provisions contained in the
Securities shall constitute, and are expressly made, a part of this Indenture.
SECTION 2.02. 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 Trustee authenticates the Security, the Security shall
nevertheless be valid.
A Security shall not be valid until the Trustee manually signs the
certificate of authentication on the Security. Such signature shall be
conclusive evidence that the Security has been authenticated under this
Indenture. Each Security shall be dated the date of its authentication.
Upon written authorization of an Officer of the Company, the Trustee shall
authenticate Securities for original issue in the aggregate principal amount of
$50,000,000. The aggregate principal amount of Securities outstanding at any
time may not exceed that amount except as provided in Section 2.08.
The Trustee may appoint an authenticating agent to authenticate
Securities. An authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with the Company or an Affiliate.
The Securities shall be issuable only in registered form without coupons
and only in denominations of $1,000 principal amount and any integral multiple
thereof.
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SECTION 2.03. Registrar and Agents.
The Company shall maintain in the Borough of Manhattan, The City of New
York, an office or agency where Securities may be presented for registration of
transfer or for exchange ("Registrar"), an office or agency where Securities may
be presented for payment ("Paying Agent"), an office or agency where Securities
may be presented for conversion ("Conversion Agent"), and an office or agency
where notices and demands to or upon the Company in respect of the Securities
and this Indenture may be served. The Registrar shall keep a register of the
Securities and of their transfer and exchange. The Company may have one or more
co-registrars, one or more additional Paying Agents and one or more additional
Conversion Agents. The Company or any Subsidiary may act as Registrar,
co-Registrar, Paying Agent and/or Conversion Agent. The term "Paying Agent"
includes any additional Paying Agent, the term "Conversion Agent" includes any
additional Conversion Agent and the term "Registrar" includes any co-Registrar.
The Company shall enter into an appropriate agency agreement with any
Registrar, Paying Agent, Conversion Agent or co-registrar not a party to this
Indenture. The agreement shall implement the provisions of this Indenture that
relate to such Agent. The Company shall notify the Trustee of the name and
address of any such Agent 15 days prior to entering into such agency agreement.
If the Company fails to maintain a Registrar or Paying Agent, or fails to give
the foregoing notice, the Trustee shall act as such and shall be entitled to
appropriate compensation in accordance with Section 8.07.
The Company initially appoints the Trustee as a Registrar, a Paying Agent,
a Conversion Agent and agent for service of notices and demands.
SECTION 2.04. Holders to be Treated as Owners; Payment of Interest.
(a) The Company, the Paying Agent, the Registrar, the Trustee and any
agent of the Company, the Paying Agent, the Registrar or the Trustee 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 or on account of
the principal of and, subject to the provisions of this Indenture, interest on
such Security and for all other purposes; and neither the Company, the Paying
Agent, the Registrar nor the Trustee nor any agent of the Company, the Paying
Agent, the Registrar or the Trustee shall be affected by any notice to the
contrary. All such payments so made to any such Person, or upon his order, shall
be valid, satisfy and discharge the liability for moneys payable upon any
Security.
(b) The Person in whose name any Security is registered at the close of
business on any record date with respect to any interest payment date shall be
entitled to receive the interest, if any, payable on such date (an "Interest
Payment Date") notwithstanding any transfer or exchange of such Security
subsequent to the record date and prior to such Interest Payment Date, except if
and to the extent the Company
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shall default in the payment of the interest due on such Interest Payment Date,
in which case such defaulted interest shall be paid in accordance with Section
2.12. The term "Regular Record Date" as used with respect to any Interest
Payment Date for the Securities shall mean the date specified as such in the
terms of the Securities.
SECTION 2.05. Paying Agent to Hold Money in Trust.
On or prior to each Interest Payment Date or date on which payment of
principal of the Securities is required, the Company shall provide immediately
available funds to the Trustee acting as Paying Agent or with other Paying
Agents upon notice to the Trustee a sum sufficient to pay such principal and
interest so becoming due. The Company shall deliver such immediately available
funds to the Trustee by no later than 10:00 a.m. New York time on the date
payment of such principal and/or interest is required to be made. The Company
shall require each Paying Agent other than the Trustee to agree in writing that
it will hold in trust for the benefit of Securityholders or the Trustee all
money held by the Paying Agent for the payment of principal of or interest on
the Securities and to promptly notify the Trustee of any default by the Company
(or any other obligor on the Securities) in making any such payment. If the
Company or a Subsidiary acts as Paying Agent, it shall on or before each due
date of the principal of or interest on any Securities segregate the money and
hold it as a separate trust fund. The Company at any time may require a Paying
Agent to pay all money held by it to the Trustee and the Trustee may at any time
during the continuance of any payment default, upon written request to a Paying
Agent, require such Paying Agent to forthwith pay to the Trustee all sums so
held in trust by such Paying Agent. Upon doing so, the Paying Agent (other than
the Company) shall have no further liability for the money.
SECTION 2.06. Securityholder Lists.
The Trustee shall maintain the most recent list available to it of the
names and addresses of the Holders of Securities (the "Note Register"). If the
Trustee is not the Registrar, the Company or other obligor, if any, shall
furnish to the Trustee at least two Business Days prior to each Regular Record
Date and at such other times as the Trustee may request in writing a list in
such form and as of such date as the Trustee may require of the names and
addresses of the Holders of Securities.
SECTION 2.07. Transfer and Exchange.
When Securities are presented to the Registrar or a co-registrar with a
request from the Holder of such Securities to register a transfer, the Registrar
shall register the transfer as requested. Every Security presented or
surrendered for registration of transfer or exchange shall be duly endorsed or
be accompanied by a written instrument of transfer and such other documents
(including opinions of counsel) in form satisfactory to the Company and the
Registrar as the Registrar may request, duly executed by the Holder thereof or
his attorneys duly authorized in writing.
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At the option of the Holder, Securities may be exchanged for other
Securities of any authorized denomination or denominations, of a like aggregate
principal amount, upon surrender of the Securities to be exchanged at the office
or agency maintained for such purpose pursuant to Section 2.03.
To permit registrations of transfers and exchanges, upon surrender for
cancellation of the Securities being exchanged or transferred, the Company shall
issue and execute and the Trustee shall authenticate new Securities evidencing
such transfer or exchange at the Registrar's request. No service charge shall be
made to the Securityholder for any registration of transfer or exchange. The
Company may require from the Securityholder payment of a sum sufficient to cover
any transfer taxes or other governmental charge that may be imposed in relation
to a transfer or exchange, but this provision shall not apply to any exchange
pursuant to Section 2.09, 3.03, 5.02, 6.09 or 11.04 (in which events the Company
will be responsible for the payment of such taxes). The Registrar shall not be
required to exchange or register a transfer of any Security for a period of 15
days immediately preceding the first mailing of notice of redemption of
Securities to be redeemed or of any Security selected, called or being called
for redemption except, in the case of any Security where public notice has been
given that such Security is to be redeemed in part, the portion thereof not to
be redeemed.
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Securities. In case any
temporary or definitive Security shall become mutilated or be destroyed, lost or
stolen, the Company in its discretion may execute, and upon its request the
Trustee shall authenticate and deliver, a new Security, bearing a serial number
not contemporaneously outstanding, in exchange and substitution for the
mutilated Security or in lieu of and in substitution for the Security so
destroyed, lost or stolen. In every case, the applicant for a substituted
Security shall furnish to the Company and to the Trustee such security or
indemnity as may be required by them to save each of them harmless, and in every
case of destruction, loss or theft, the applicant shall also furnish to the
Company and to the Trustee evidence to their satisfaction of the destruction,
loss or theft of such Security and of the ownership thereof.
The Trustee shall authenticate any such substituted Security and deliver
the same upon the written request or authorization of any Officer of the
Company. Upon the issuance of any substituted Security, the Company may require
the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other expenses connected
therewith. In case any Security which has matured or is about to mature shall
have become mutilated or be destroyed, lost or stolen, the Company may, instead
of issuing a substitute Security, pay or authorize the payment of same (without
surrender thereof except in the case of a mutilated Security) if the applicant
for such payment shall furnish the Company, the Trustee and any Paying Agent
with such security or indemnity as they may require to save each of them
harmless and, in case of destruction, loss or theft, evidence to the
satisfaction of the Company and the Trustee of the destruction, loss or theft of
such Security and of the ownership thereof.
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Every substituted Security issued pursuant to the provisions of this
Section 2.08 by virtue of the fact that any Security is destroyed, lost or
stolen shall constitute an additional contractual obligation of the Company,
whether or not the destroyed, lost or stolen Security shall be found at any
time, and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Securities duly issued hereunder. All
Securities shall be held and owned upon the express condition that the foregoing
provisions are exclusive with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities and shall preclude any and all
other rights or remedies notwithstanding any law or statute existing or
hereafter enacted to the contrary with respect to the replacement or payment of
negotiable instruments or other securities without their surrender.
SECTION 2.09. Temporary Securities. Pending the preparation of definitive
Securities, the Company may execute and the Trustee shall authenticate and
deliver temporary Securities (printed or lithographed). Temporary Securities
shall be issuable in any authorized denomination, and substantially in the form
of the definitive Securities but with such omissions, insertions and variations
as may be appropriate for temporary Securities, all as may be determined by the
Company. Every such temporary Security shall be authenticated upon the same
conditions and in substantially the same manner, and with the same effect, as
the definitive Securities. Without unreasonable delay the Company will execute
and deliver to the Trustee definitive Securities and thereupon any or all
temporary Securities may be surrendered for cancellation in exchange therefor,
at the office or agency to be maintained by the Company pursuant to Section
2.03, and the Trustee shall authenticate and deliver in exchange for such
temporary Securities an equal aggregate principal amount of definitive
Securities. Such exchange shall be made by the Company at its own expense and
without any charge therefor. Until so exchanged, the temporary Securities shall
in all respects be entitled to the same benefits under this Indenture as
definitive Securities authenticated and delivered hereunder.
SECTION 2.10. Cancellation of Securities. All Securities surrendered for
the purpose of payment, redemption, conversion, exchange or transfer shall, if
surrendered to the Company or any Paying or Conversion Agent or Registrar, be
delivered to the Trustee for cancellation, or if surrendered to the Trustee,
shall be canceled by it, and no Securities shall be issued in lieu thereof
except as expressly permitted by any of the provisions of this Indenture. The
Trustee shall destroy canceled Securities and deliver its certificate of
destruction to the Company. If the Company shall acquire any of the Securities,
such acquisition shall not operate as a redemption or satisfaction of the
indebtedness represented by such Securities unless and until the same are
delivered to the Trustee for cancellation.
SECTION 2.11. Benefits of Indenture Provisions. Nothing in this Indenture
or in the Securities expressed or implied, shall give or be construed to give
any Person, firm or corporation, other than the parties hereto, any Paying
Agent, any Conversion Agent, Registrar and the Holders of Securities and, to the
extent provided in Article Four, the holders of Senior Indebtedness, any legal
or equitable right, remedy or claim
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under or in respect of this Indenture, or under any covenant, condition or
provision herein contained; all the covenants, conditions or provisions
contained in this Indenture or in the Securities being for the sole benefit of
the parties hereto, any Paying Agent, any Conversion Agent, Registrar and the
Holders of the Securities and, to the extent provided in Article Four, the
holders of Senior Indebtedness.
SECTION 2.12. Defaulted Interest.
If the Company defaults in a payment of interest on the Securities, it
shall pay the defaulted interest (to the extent lawful) to the Persons who are
Securityholders on a subsequent special record date. After the deposit by the
Company with the Trustee of money sufficient to pay such defaulted interest, the
Trustee shall fix a special record date and payment date. Each such special
record date shall be not less than 10 days prior to such payment date. At least
15 days before the special record date, the Company shall mail to each
Securityholder (with a copy to the Trustee) a notice that states the special
record date, the payment date and the amount of defaulted interest, and interest
payable on such defaulted interest, if any, to be paid. The Company may pay
defaulted interest in any other lawful manner, after prior notice to the
Trustee.
SECTION 2.13. CUSIP Number.
The Company may use a "CUSIP" number when issuing the Securities and, if
so, the Trustee may use the CUSIP number in notices of redemption or exchange as
a convenience to Securityholders; provided that any such notice may state that
no representation is made as to the correctness or accuracy of the CUSIP number
printed in the notice or on the Securities, and that reliance may be placed only
on the other identification numbers printed on the Securities. The Company will
promptly notify the Trustee if and when the CUSIP number has been issued.
ARTICLE THREE.
REDEMPTION OF SECURITIES.
SECTION 3.01. Redemption Prices. The Company may, at its option (subject
to the rights of holders of Senior Indebtedness), redeem all or from time to
time any part of the Securities, on any date on or after March 1, 2000 and prior
to maturity, upon notice as set forth in Section 3.02 and at the redemption
prices (expressed in percentages of the principal amount) set forth in the form
of Security herein, together with accrued interest to the date fixed for
redemption (but 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
record on the Regular Record Date). 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.
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SECTION 3.02. Notice of Redemption; Selection of Securities. Whenever the
Company redeems Securities pursuant to this Article Three, 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. The
Company shall give each such notice at least 30 but not more than 60 days before
the date fixed for redemption or such other period as the Company and the
Trustee may agree.
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 3.02, 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 3.02. The Trustee shall have no liability for any error
contained in any such notice.
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 30 nor more than 60 days prior to the date fixed
for redemption, to their last addresses as they shall appear upon the registry
book. 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 Redemption Price;
(3) the then current Conversion Price;
(4) the name and address of the Paying Agent and the Conversion Agent;
(5) that Securities called for redemption must be surrendered to the
Paying Agent to collect the Redemption Price;
(6) that, unless the Company defaults in paying the 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 Five
shall terminate at the close of business on the last Trading Day
prior to the
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Redemption Date (except that a Security which the Company is
required to purchase pursuant to Section 6.09 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 in paragraph 8 of 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 Trustee shall
select for redemption on a pro rata basis (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 the aggregate principal amount of Securities to be
redeemed (as specified in the Company's notice to the Trustee pursant to Section
3.02) and shall thereafter promptly notify the Company in writing of the
portions of Securities so to be redeemed.
SECTION 3.03. Payment of Securities on Redemptions; Deposit of Redemption
Price. If notice of redemption shall have been given as provided in Section
3.02, 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 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
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 3.01 shall be deposited with the Paying Agent by the Company prior to
10:00 a.m. New York time on the date fixed for redemption. On presentation and
surrender of such Securities at the place of payment specified in such notice,
such Securities or the specified portions thereof shall (subject to the
provisions of Article
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Four) be paid and redeemed at the applicable 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 or special record dates according to their terms and the
provisions of Section 2.03 of this Indenture.
Upon presentation for surrender and cancellation 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.
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 returned to the
Company by the Paying Agent upon its receipt of evidence satisfactory to it of
such conversion. In this regard but without limiting the generality of the
foregoing, the Conversion Agent is hereby instructed by the Company to provide
written notice to the Paying Agent within one Business Day following the
Conversion Agent's receipt of specified Securities for conversion.
ARTICLE FOUR.
SUBORDINATION OF SECURITIES.
SECTION 4.01. Agreement that Securities 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 or rescission, under or in respect of the Securities shall
be subordinated in accordance with the provisions of this Article Four to the
prior payment in full in cash of all amounts payable under all Senior
Indebtedness of the Company.
SECTION 4.02. 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:
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(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 Four 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 Twelve 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 4.03. Company Not to Make Payments with Respect
to Securities in Certain Circumstances.
(1) Unless Section 4.02 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 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.
The Company shall notify the Trustee of any default or event of default in
respect of any Senior Indebtedness and shall provide to the Trustee such
documents or information in respect thereof as the Trustee may request.
(2) Unless Section 4.02 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
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character shall be made by the Company on account of principal of or premium, if
any, of interest on the Securities or on account of the purchase, redemption or
other acquisition of Securities or on account of any of the 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 (subject to any blockage of
payments that may then be in effect under subsection (1) of this Section 4.03)
(w) 179 days shall have elapsed since receipt of such written notice by the
Trustee (provided such Senior Indebtedness shall theretofore not have been
accelerated), (x) 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, (y) such Senior Indebtedness shall have been
discharged or paid in full or (z) 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 (w), (x), (y) or (z), 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 by the Trustee to the Securityholders of amounts deposited with it
pursuant to Article Thirteen or (b) any payment by the Trustee or Paying Agent
as permitted by Section 4.13 or (c) any payment by the Company of any
obligations owed to the Trustee under Section 8.07.
SECTION 4.04. Payment Over of Proceeds in Certain Events. In the event
that any payment or distribution of assets of the Company of any kind or
character not permitted by Sections 4.02 or 4.03, 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, in each case as identified to the Trustee to
its satisfaction, 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
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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 4.02 or 4.03
unless a Responsible Officer of the Trustee or the Paying Agent receives notice
of a default relating to Senior Indebtedness at least three Business Days before
making a payment or distribution of such assets to the Holders.
SECTION 4.05. 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 4.06. 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.
Upon any distribution of assets of the Company or payment by or on behalf
of the Company referred to in this Article Four, the Trustee and the Holders of
the Securities shall be entitled to conclusively rely upon any order or decree
of a court of competent jurisdiction in which any proceedings of the nature
referred to in Section 4.03 are pending, and the Trustee and the holders of the
Securities shall be entitled to conclusively rely upon a certificate of the
liquidating trustee or agent or other Person making any such distribution to the
Trustee or to the holders of the Securities for the purpose of ascertaining the
Persons entitled to participate in such distribution, the holders of 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 Four.
SECTION 4.07. 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 to
holders of Senior Indebtedness which
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<PAGE>
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
Four 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 4.08. Obligation to Pay Not Impaired. Nothing contained in this
Article Four 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
Four 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 4.09. 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 Four may
be enforced directly by the holders of Senior Indebtedness.
SECTION 4.10. Subordination Not to Be Prejudiced by Certain Acts. 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 4.11. 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 Four 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
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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 4.12. 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 4.04 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 Four 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 4.13. Trustee and Paying Agents Not Chargeable with Knowledge
Until Notice. Notwithstanding any of the provisions of this Article Four 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 this Section 4.13, 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
to such three Business Day period. Nothing contained in this Section 4.13 shall
limit the right of the holders of Senior Indebtedness to recover payments as
contemplated by Section 4.04.
SECTION 4.14. 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 4.12 and 4.13 shall
not apply to the Company or its Affiliates if it acts as a Paying Agent.
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SECTION 4.15. Trustee's Compensation Not Prejudiced. Nothing contained in
this Article Four shall affect or subordinate the rights of the Trustee with
respect to any fees, expenses or indemnities owing by the Company to the Trustee
under this Indenture.
ARTICLE FIVE.
CONVERSION OF SECURITIES.
SECTION 5.01. Conversion Privilege; Conversion Price. A Holder of a
Security may convert it into Common Stock at any time during the period stated
in paragraph 8 of the Securities. The number of shares issuable upon conversion
of a Security is determined as follows: (1) divide the principal amount to be
converted by the conversion price (the "Conversion Price") in effect on the
conversion date and (2) round the result to the nearest 1/100th of a share. The
Company shall deliver to such Holder a check in lieu of any fractional share.
The initial Conversion Price is stated in paragraph 8 of the Securities.
The Conversion Price is subject to adjustment in accordance with Section 5.04.
SECTION 5.02. Manner of Exercising Conversion Privilege. To convert a
Security a Holder must satisfy the requirements in paragraph 8 of the
Securities. The date on which the Holder satisfies all those requirements is the
conversion date. As soon as practicable, the Company shall deliver to the Holder
through the Conversion Agent a certificate for the number of full shares of
Common Stock issuable upon the conversion and a check in lieu of any fractional
share. The Person in whose name the certificate is registered shall be treated
as a stockholder of record on and after the conversion date.
The Company hereby authorizes the Conversion Agent to give instructions
(i) to the transfer agent of the Company's Common Stock to deliver certificates
of Common Stock to effect such conversion and (ii) to the Trustee for
cancellation, on the conversion date, of the surrendered Security. The
Conversion Agent shall, upon receipt thereof, promptly deliver a copy of the
Conversion Notice to the transfer agent of the Company's Common Stock.
Except as provided below, no adjustment will be made on conversion of a
Security for interest accrued thereon or for dividends on shares of Common Stock
issued on conversion. If a Security is surrendered for conversion during the
period after the close of business on any Regular Record Date for the payment of
interest and before the opening of business on the corresponding Interest
Payment Date, then (a) notwithstanding such conversion, the interest payable on
such Interest Payment Date will be paid on such Interest Payment Date by check
to the Person in whose name the Security is registered at the close of business
on such Regular Record Date, and (b) (excluding Securities or portions thereof
called for redemption on a Redemption Date
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occurring after such Regular Record Date and on or prior to the Business Day
following such Interest Payment Date), when so surrendered for conversion, the
Security shall also be accompanied by payment in New York Clearing House funds
or other funds acceptable to the Company from the surrendering Holder of an
amount equal to the interest payable on such Interest Payment Date on the
principal amount of such Security then being converted; provided however, that
if the Company shall default in the payment of said interest, said funds, if any
shall be returned to the payor thereof. Except as described above, no interest
on converted Securities will be payable by the Company on any Interest Payment
Date subsequent to the date of conversion. No other payment or adjustment for
interest or dividends will be made upon conversion.
As promptly as practicable after the receipt of such notice and of such
payment, if required, and the surrender of such Security as aforesaid, the
Company shall issue and deliver, at the office or agency at which such Security
is surrendered, to such Holder or on his written order, as specified therein, a
certificate or certificates for the number of full shares of Common Stock
issuable upon the conversion of such Security (or specified portion thereof) in
accordance with the provisions of this Article Five, and cash as provided in
Section 5.03 in respect of any fractional share of Common Stock otherwise
issuable upon such conversion. Such conversion shall be deemed to have been
effected immediately prior to the close of business on the date on which notice,
payment, if required, and proper endorsement or transfer, if required, shall
have been received by the Company and such Security shall have been surrendered
as aforesaid (unless such Holder shall have so surrendered such Security and
shall have instructed the Company to effect the conversion on a particular date
following such surrender and such Holder shall be entitled to convert such
Security on such date in which case such conversion shall be deemed to be
effected immediately prior to the close of business on such date) and at such
time the rights of the Holder of such Security as such Securityholder shall
cease and the Person or Persons in whose name or names any certificate or
certificates for shares of Common Stock shall be issuable upon such conversion
shall be deemed to have become the holder or holders of record of the shares
represented thereby.
In the case of any Security which is converted in part only, upon such
conversion the Company shall execute and the Trustee, upon direction of the
Company, shall authenticate and deliver to or on the order of the Holder
thereof, at the expense of the Company, a new Security or Securities of
authorized denominations in principal amount equal to the unconverted portion of
such Security.
SECTION 5.03. Fractional Shares. The Company will not issue a fractional
share of Common Stock upon conversion of a Security. Instead the Company will
deliver its check for the current market value of the fractional share. The
current market value of a fraction of a share is determined as follows: (1)
multiply the current market price (as defined in Section 5.04) on the Business
Day next preceding the date of conversion of a full share by the fraction and
(2) round the result to the nearest cent. The Company shall deliver checks
representing the current market value of the fractional
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shares to be paid to Holders upon conversion of their Securities to the
Conversion Agent for mailing to such Holders.
If more than one Security shall be surrendered for conversion at one time
by the same Holder, the number of full shares which shall be issuable upon
conversion shall be computed on the basis of the aggregate principal amount of
Securities (or specified portions thereof to the extent permitted hereby) so
surrendered.
SECTION 5.04. Adjustment of Conversion Price. The Conversion Price shall
be adjusted from time to time as follows:
(a) In case the Company shall hereafter (i) pay a dividend or make a
distribution on its Common Stock in shares of Common Stock, (ii) subdivide
its outstanding shares of Common Stock into a greater number of shares,
(iii) combine its outstanding shares of Common Stock into a smaller number
of shares, or (iv) issue by reclassification of its Common Stock any
shares of capital stock of the Company, 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 or other capital stock of the
Company which he would have owned immediately following such action had
such Security been converted immediately prior thereto. An adjustment made
pursuant to this subsection 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, combination or reclassification. If, as a result of an
adjustment made pursuant to this subsection (a) the Holder of any Security
thereafter surrendered for conversion shall become entitled to receive
shares of two or more classes of capital stock or shares of Common Stock
and other capital stock of the Company, the Board of Directors (whose
determination shall be conclusive and shall be described in an Officers'
Certificate filed with the Trustee and with any Conversion Agent) shall
determine in good faith the allocation of the adjusted Conversion Price
between or among shares of such classes of capital stock or shares of
Common Stock and other capital stock.
(b) In case the Company shall hereafter issue rights, warrants or
options to holders of its outstanding shares of Common Stock generally
entitling them to subscribe for or purchase shares of Common Stock (or
securities convertible into or exchangeable for Common Stock) at a price
per share (or having a conversion or exchange price per share) less than
the current market price per share (as determined pursuant to subsection
(e) of this Section 5.04) of the Common Stock on the record date mentioned
below, 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 total number of shares of Common
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Stock so offered for subscription or purchase 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 for subscription or purchase.
Such adjustment shall be made successively whenever any such rights or
warrants 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 or warrants are exercisable not all rights or warrants shall have
been exercised, the adjusted Conversion Price shall be immediately
readjusted to what it would have been based upon the number of additional
shares of Common Stock actually issued (or the number of shares of Common
Stock issuable upon conversion of convertible securities or the exchange
of exchangeable securities actually issued).
(c) In case the Company shall hereafter distribute to holders of its
outstanding Common Stock generally evidences of indebtedness, cash or
other assets (including securities, but excluding those dividends, rights,
warrants, options and distributions referred to above and excluding
dividends and distributions paid exclusively in cash), then in each such
case the Conversion Price of the shares of Common Stock shall be adjusted
so that the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the date of such
distribution by a fraction the numerator of which shall be the current
market price per share (determined as provided in subsection (e) of this
Section 5.04) 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 and shall be described in an Officers'
Certificate filed with the Trustee and with any Conversion Agent) of the
portion of such evidences of indebtedness or assets (but not cash) so
distributed to the holder of one share of Common Stock or of such
subscription rights or warrants applicable to one share of Common Stock,
and of which the denominator shall be such current market price per share
of Common Stock. Such adjustment shall become effective immediately after
the record date for the determination of stockholders entitled to receive
such distribution.
In any case in which this subsection (c) is applicable, subsection
(b) shall not be applicable.
(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
distribution upon a merger or consolidation to which Section 5.10 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 their fair market
of 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
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12.5% of the Company's market capitalization (defined as being the product
of the current market price of the Common Stock times the number of shares
of Common Stock then outstanding) 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), and 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 5.04) 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) For the purpose of any computation under subsections (b), (c)
and (d) of this Section 5.04 or under Section 5.03, the "current market
price" per share of Common Stock on any record date shall be deemed to be
the average of the daily closing prices for the five consecutive trading
days immediately preceding the date in question. The closing price for
each day shall be the last sale price regular way or, in case no such sale
takes place on such day, the average of the closing bid and asked prices
regular way, in either case on the Nasdaq National Market System (the
"NMS"), or, if the shares of Common Stock are not listed or admitted to
trading on the NMS, on the principal national securities exchange on which
the shares are listed or admitted to trading, or if they are not listed or
admitted to trading on any national securities exchange, the closing bid
and asked prices as furnished by any member of the National Association of
Securities Dealers, Inc. selected from time to time by the Company for
that purpose.
(f) In any case in which this Section 5.04 shall require that an
adjustment be made immediately following a record date, the Company may
elect to defer
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(but only until five Business Days following the filing by the Company
with the Trustee and any Conversion Agent of the certificate of
Independent Public Accountants described in Section 5.05) issuing to the
Holder of any Security converted after such record date the shares of
Common Stock issuable upon such conversion over and above the shares of
Common Stock issuable upon such conversion on the basis of the Conversion
Price prior to adjustment.
(g) No adjustment in the Conversion Price shall be required unless
such adjustment would require an increase or decrease of at least 1% of
such price; provided however, that any adjustments which by reason of this
subsection (g) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under
this Section 5.04 shall be made to the nearest cent or the nearest 1/100th
of a share, as the case may be. Anything in this Section 5.04 to the
contrary notwithstanding, the Company shall be entitled to make such
reductions in the Conversion Price, in addition to those required by this
Section 5.04, as it in its discretion shall determine to be advisable in
order that any stock dividend, subdivision of shares, distribution of
rights to purchase stock or securities, or distribution of securities
convertible into or exchangeable for stock hereafter made by the Company
to its stockholders shall not be taxable; provided that in no event shall
such Conversion Price be less than the par value of the Common Stock at
the time such reduction is made. No adjustment to the Conversion Price
pursuant to this Indenture shall reduce the Conversion Price below the
then existing par value per share of Common Stock. The Company hereby
covenants not to take any action to increase the par value per share of
the Common Stock.
No adjustment in the Conversion Price need be made for rights to purchase
shares of Common Stock or issuances of Common Stock pursuant to a Company
plan for reinvestment of dividends or interest.
(h) In the event that at any time as a result of an adjustment made
pursuant to subsection (a) of this Section 5.04, the Holder of any
Securities thereafter surrendered for conversion shall become entitled to
receive any shares of the Company other than shares of Common Stock,
thereafter the Conversion Price of such other shares so receivable upon
conversion of any Security 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 Five.
(i) In addition to the foregoing adjustments, the Company will be
permitted to make such reduction in the Conversion Price as it considers
to be advisable in order that any event treated for federal income tax
purposes as a dividend or distribution of stock or stock rights will not
be taxable to the holders of the Common Stock. Any such reduction shall be
described in an Officers' Certificate filed with the Trustee and any
Conversion Agent.
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SECTION 5.05. Certificate Concerning Adjusted Conversion Price. Whenever
the Conversion Price is adjusted as herein provided, (i) the Company shall
promptly file with the Trustee and any Conversion Agent a certificate of a firm
of Independent Public Accountants (who may be the regular accountants employed
by the Company) setting forth the Conversion Price after such adjustment and
setting forth a brief statement of the facts requiring such adjustment and the
manner of computing the same, which certificate shall be conclusive evidence of
the correctness of such adjustment and (ii) a notice stating that the Conversion
Price has been adjusted and setting forth the adjusted Conversion Price shall
forthwith be given by the Company to the Securityholders in the same manner
provided in Section 15.03. The Trustee and any Conversion Agent shall be under
no duty or responsibility with respect to any such certificate or the
certificate provided for in Section 5.10 except to exhibit the same from time to
time to any Holder of a Security desiring an inspection of such certificate.
SECTION 5.06. Notice of Certain Corporate Action. In case:
(a) the Company shall take any action which would require an
adjustment in the Conversion Price pursuant to Sections 5.04(b), 5.04(c)
or 5.04(d); or
(b) the Company shall authorize the granting to the holders of its
Common Stock of rights or warrants to subscribe for or purchase any shares
of stock of any class or of any other rights; or
(c) there shall be any capital reorganization or reclassification of
the Common Stock (other than a subdivision or combination of the
outstanding Common Stock and other than a change in the par value of the
Common Stock), or any consolidation or merger to which the Company is a
party or any statutory exchange of securities with another corporation and
for which approval of any stockholders of the Company is required, or any
sale or transfer of all or substantially all of the assets of the Company;
or
(d) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company;
then the Company shall cause to be filed with the Trustee and any
Conversion Agent, and shall cause to be given to the Securityholders, in
the manner provided in Section 15.03, at least fifteen (15) days prior to
the applicable date hereinafter specified, a notice stating (i) the date
on which a record is to be taken for the purpose of such distribution or
rights, or, if a record is not to be taken, the date as of which the
holders of Common Stock of record to be entitled to such distribution or
rights is to be determined, or (ii) the date on which such reorganization,
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding-up is expected to become effective, and the date as
of which it is expected that holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such reorganization, reclassification,
consolidation, merger, sale,
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transfer, dissolution, liquidation or winding-up. Failure to give such
notice or any defect therein shall not affect the legality or validity of
the proceedings described in subsection (a), (b), (c) or (d) of this
Section 5.06.
SECTION 5.07. Company to Provide Stock. The Company will at all times
reserve and keep available out of its authorized but unissued Common Stock, for
the purpose of effecting conversions of Securities, the full number of shares of
Common Stock deliverable upon the conversion of all outstanding Securities. For
purposes of this Section 5.07, the number of shares of Common Stock which shall
be deliverable upon the conversion of all outstanding Securities shall be
computed as if at the time of computation all outstanding Securities were held
by a single Holder. The Company shall direct the transfer agent of its Common
Stock to issue Common Stock in conversion of any of the Securities by the
Holders thereof upon instruction of the Conversion Agent which may be in the
form of a copy of the Conversion Notice delivered to the Conversion Agent.
The Company will endeavor to list the shares of Common Stock required to
be delivered upon conversion of Securities prior to such delivery upon the NMS
or each national securities exchange, if any, upon which the outstanding Common
Stock is listed at the time of such delivery.
Prior to the delivery of any securities or other property, including cash,
which the Company shall be obligated to deliver upon conversion of the
Securities, the Company will endeavor to comply with all Federal and State laws
and regulations thereunder governing the registration or qualification of such
securities with, or any approval of or consent to the delivery thereof by, any
governmental authority.
SECTION 5.08. Taxes on Conversions. The Company will pay any and all taxes
that may be payable in respect of the issue or delivery of shares of Common
Stock on conversion of Securities pursuant hereto. The Company shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of shares of Common Stock in a name
other than that of the Holder of the Security or Securities to be converted, and
no such issue or delivery shall be made unless and until the Person requesting
such issue has paid to the Company the amount of any such tax, or has
established, to the satisfaction of the Company, that such tax has been paid.
SECTION 5.09. Covenant as to Stock. The Company covenants that all shares
of Common Stock which may be delivered upon conversion of Securities will upon
delivery be duly and validly authorized and issued and fully paid and
non-assessable, free of all liens and charges imposed by the Company and not
subject to any preemptive rights.
SECTION 5.10. Provision in Case of Consolidation or Merger.
Notwithstanding any other provision herein to the contrary, in case of any
consolidation or merger to which the Company is a party (other than a
transaction in which the Company is the
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continuing corporation and which does not result in any reclassification or
change of shares of Common Stock issuable upon conversion of the Securities
(other than a change in par value, or from par value to no par value, or from no
par value to par value, or as a result of a subdivision or combination)), or in
case of any sale or conveyance to another entity of the property of the Company
as an entirety or substantially as an entirety, or in the case of any statutory
exchange of securities with another corporation (including any exchange effected
in connection with a merger of a third corporation into the Company), there
shall be no adjustments under Section 5.04 but each Security then outstanding
would, without the consent of any Holders of Securities, become convertible only
into the kind and amount of securities, cash and other property which he would
have owned or have been entitled to receive upon such consolidation, merger,
statutory exchange, sale or conveyance had such Security been converted
immediately prior to the effective date of such consolidation, merger, statutory
exchange, sale or conveyance (assuming that as a holder of Common Stock, such
Holder failed to exercise any rights of election and received per share the kind
and amount received per share by a plurality of non-electing shares) and in any
such case, if necessary, appropriate adjustment shall be made in the application
of the provisions set forth in this Article Five with respect to the rights and
interests thereafter of the Holders of the Securities, to the end that the
provisions set forth in this Article Five shall thereafter correspondingly be
made applicable, as nearly as may reasonably be, in relation to any shares of
stock or other securities or property thereafter deliverable on the conversion
of the Securities. Any such adjustments shall be made by and set forth in a
supplemental indenture executed by the Company and the Trustee and evidenced by
a certificate of a firm of Independent Public Accountants (who may be the
regular accountants employed by the Company), to that effect furnished to the
Trustee; and any adjustment so approved shall for all purposes hereof
conclusively be deemed to be an appropriate adjustment.
The above provisions of this Section 5.10 shall similarly apply to
successive consolidations, mergers, statutory exchanges, sales or conveyances.
The Company shall give notice of the execution of such a supplemental
indenture to the Holders of Securities in the manner provided in Section 15.03
within 30 days after the execution thereof.
SECTION 5.11. Trustee's Disclaimer of Responsibility for Certain Matters.
Neither the Trustee nor any Conversion Agent shall at any time be under any duty
or responsibility to any Holder of Securities to determine whether any facts
exist which may require any adjustment of the Conversion Price, or with respect
to the nature or extent of any such adjustment when made, or with respect to the
method employed, or herein or in any supplemental indenture proved to be
employed, in making the same. Neither the Trustee nor any Conversion Agent shall
be accountable with respect to the validity or value (or the kind or amount) of
any shares of Common Stock, or of any securities or property, which may at any
time be issued or delivered upon the conversion of any Security; and neither the
Trustee nor any Conversion Agent makes any representation with respect thereto.
Neither the Trustee nor any Conversion
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Agent shall be responsible for any failure of the Company to issue, transfer or
deliver any shares of Common Stock or stock certificates or other securities or
property upon the surrender of any Security for the purpose of conversion, or to
comply with any of the covenants of the Company, or to fulfill any of the
conditions, contained in this Article Five.
ARTICLE SIX.
PARTICULAR COVENANTS OF THE COMPANY.
SECTION 6.01. Payment of Principal, Premium and Interest. The Company
covenants and agrees that it will duly and punctually pay or cause to be paid
the principal of (premium, if any) and interest on each of the Securities at the
time and place and in the manner provided in the Securities. Principal of (and
premium, if any) and interest on each of the Securities shall be considered paid
on the date due if the Paying Agent (other than the Company, a Subsidiary
thereof or any affiliate of any thereof) holds on that date, not later than
11:00 a.m. New York City time, immediately available funds designated for and
sufficient to pay the installment. The Company shall pay interest on overdue
principal at the rate borne by the Securities; it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
SECTION 6.02. Offices for Notices, Payments and Conversions. The Company
shall maintain in the Borough of Manhattan, The City of New York, an office or
agency where Securities may be surrendered for registration of transfer or
exchange or conversion and where notices and demands to or upon the Company in
respect of the Securities and this Indenture may be served. The Company shall
give prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more other offices
or agencies where the Securities may be presented or surrendered for any or all
such purposes and may from time to time rescind such designations; provided
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, The City of New York for such purposes. The Company will give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the Trustee as
an agency of the Company in accordance with Section 2.03 and directs the agent
to forward any notices or demands received by it to the Company at the address
specified by the Company to the agent for such purpose.
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SECTION 6.03. Paying Agents. (a) Any Paying Agent appointed by the Company
other than the Trustee shall be a bank or trust company of the character and
with the qualifications set forth in Section 8.10 and the Company covenants and
agrees to enter into an appropriate agency agreement with any Registrar or
Paying Agent not a party to this Indenture. The agreement shall implement the
provisions of this Indenture that relate to such Registrar or Paying Agent. In
addition, the Company covenants and agrees to cause such Paying Agent to execute
and deliver to the Trustee an instrument in which it shall agree with the
Trustee, subject to the provisions of this Section, (1) that such Paying Agent
shall hold in trust for the benefit of the Securityholders all sums held by such
Paying Agent for the payment of the principal of (or premium, if any) or
interest on any of the Securities, (2) that such Paying Agent shall give to the
Trustee prompt notice of any failure by the Company (or any other obligor on the
Securities) to make any payment of the principal of (or premium, if any) or
interest on the Securities when the same shall be due and payable, and (3) at
any time during the continuance of such default, upon the written request of the
Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying
Agent.
(b) If the Company shall at any time act as its own Paying Agent, then on
or before each due date of the principal of (and premium, if any) or interest on
any of the Securities, it will set aside and segregate and hold in trust for the
benefit of the Holders of the Securities, a sum sufficient to pay such principal
(and premium, if any) or interest so becoming due, and will notify the Trustee
of any failure to take such action.
(c) Anything in this Section 6.03 to the contrary notwithstanding, the
Company may at any time, for the purpose of obtaining the satisfaction and
discharge of this Indenture or for any other purpose, pay or cause to be paid to
the Trustee all sums held in trust by it or any Paying Agent as required by this
Section, such sums to be held by the Trustee upon the terms herein contained.
(d) Anything in this Section 6.03 to the contrary notwithstanding, the
agreement to hold sums in trust as provided in this Section is subject to the
provisions of Sections 13.03 and 13.04 hereof.
SECTION 6.04. Annual Review Certificate. 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, 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 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
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of which he may have knowledge after due inquiry and the steps being taken, if
any, to cure such defaults) and that to the best of his 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.
The Company's fiscal year ends August 31 of each year and the Company shall give
the Trustee prior notice of any change thereof.
SECTION 6.05. Appointment to Fill a Vacancy in Office of Trustee. The
Company, whenever necessary to avoid or fill a vacancy in the office of Trustee,
shall appoint, in the manner provided in Section 8.08, a Trustee, so that there
shall at all times be a Trustee hereunder.
SECTION 6.06. Further Instruments and Acts. The Company shall, upon
request of the Trustee, execute and deliver such further instruments and do such
further acts as may reasonably be necessary or proper to carry out more
effectually the purposes of this Indenture.
SECTION 6.07. Payment of Taxes and Assessments. The Company shall, and
shall cause each Significant Subsidiary 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 6.07 or
elsewhere in 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 Significant Subsidiary shall be required to pay any such taxes,
assessments or charges, if in the judgment of the Board of Directors of the
Company or such Significant Subsidiary, such payment shall no longer be
advantageous to the Company or such Significant Subsidiary in the conduct of its
business.
SECTION 6.08. Maintenance of Corporate Existence. Except as otherwise
provided or permitted pursuant to the other provisions of this Indenture, the
Company shall maintain its corporate existence and right to carry on business
and duly procure all necessary renewals and extensions thereof.
SECTION 6.09. Repurchase Event. (a) 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), at a price equal to 100% of the principal amount of
such Securities to be repurchased (the "Repurchase Price"), together with
accrued interest to the Repurchase Date in accordance with paragraph (b) of this
Section 6.09; provided however, that a Repurchase Event shall not be deemed to
have occurred if the closing price per share of the Common Stock for any five
Trading Days within the period of ten consecutive Trading Days ending
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immediately before the Repurchase Event shall equal or exceed 110% of the
conversion price of such Securities 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.
(b) 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:
(1) 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;
(2) 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;
(3) the Repurchase Date;
(4) 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;
(5) 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 Section
6.09;
(6) that any Security not tendered or not accepted for payment
will continue to accrue interest in accordance with its terms;
(7) 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
(8) 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
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Company Notice must be mailed to Securityholders (unless a shorter time shall be
acceptable to the Trustee), an Officers' Certificate setting forth all of the
information to be stated in such notice as provided in this Section 6.09. 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.
(c) 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, upon direction of the Company, 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. The Company hereby instructs the Paying
Agent to notify the Company and the Trustee of any Security received pursuant to
a Holder's exercise of the repurchase right and to deliver such Security to the
Trustee for cancellation upon payment by or on behalf of the Company of the
applicable repurchase price.
(d) In connection with any repurchase of Securities under this Section
6.09, 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 Section 6.09 to be exercised in the time and in the manner specified
in this Section 6.09.
SECTION 6.10. SEC Reports. The Company shall file all reports and other
information and documents which it is required to file with the SEC pursuant to
Section 13 or 15(d) of the Exchange Act, and within 15 days after it files all
such reports, information and other documents with the SEC, the Company shall
deliver a copy of all such reports, information and other documents with the
Trustee. The Company shall cause any quarterly and annual reports which it mails
to its stockholders to be mailed to the Holders of the Securities.
In the event the Company is at any time no longer subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, the Company shall
prepare, for the first three quarters of each fiscal year, quarterly financial
statements substantially equivalent to the financial statements required to be
included in a report on Form 10-Q under the Exchange Act. The Company shall also
prepare, on an annual
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basis, complete audited consolidated financial statements, including, but not
limited to, a balance sheet, a statement of operations, a statement of cash
flows and all appropriate notes. All such financial statements shall be prepared
in accordance with generally accepted accounting principles consistently
applied, except for changes with which the Company's Independent Public
Accountants concur, and except that quarterly statements may be subject to
year-end adjustments. The Company shall cause a copy of such financial
statements to be delivered to the Trustee and mailed to the Holders of the
Securities, at the Company's expense, within 60 days after the end of each of
the first three quarters of each fiscal year and within 120 days after the close
of each fiscal year. The Company shall also comply with the other provisions of
TIA ss. 314(a).
SECTION 6.11. Restricted Payments. The Company shall not make any
Restricted Payment to any Person and the Company shall not permit any Subsidiary
or Affiliate to make any Restricted Payment other than to the Company.
SECTION 6.12. Incurrence of Indebtedness and Issuance of Preferred Stock.
The Company will not, and will not permit any of its Subsidiaries to, directly
or indirectly, create, incur, issue, assume, Guarantee or otherwise become
directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur"), after the date of issuance of the Notes, any
Indebtedness (including Acquired Debt) and the Company will not issue any
Disqualified Capital Stock and will not permit any of its Subsidiaries to issue
any shares of preferred stock. Indebtedness consisting of reimbursement
obligations in respect of a letter of credit will be deemed to be incurred when
the letter of credit is first issued.
The foregoing provisions will not apply to:
(i) the incurrence by the Company and its Subsidiaries of Indebtedness
represented by the Notes;
(ii) the incurrence by the Company or any of its Subsidiaries of Permitted
Refinancing Indebtedness in exchange for, or the net proceeds of which are used
to extend, refinance, renew, replace, defease or refund, in whole or in part,
Indebtedness that was permitted by the Indenture to be incurred (including,
without limitation, Existing Indebtedness);
(iii) the incurrence by the Company or any of its Subsidiaries or any
Affiliate of the Company or any Subsidiary of intercompany Indebtedness between
or among the Company and any of its Subsidiaries or any such Affiliate;
(iv) the incurrence by the Company or any of its Subsidiaries of
Indebtedness represented by performance bonds, standby letters of credit or
appeal bonds, in each case to the extent incurred in the ordinary course of
business of the Company or such Subsidiary;
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(v) the incurrence by the Company or any of its Subsidiaries of
Indebtedness, which, together with all other Indebtedness outstanding as of the
date of such incurrence, does not exceed (x) five and one-half times EBITDA for
the last four full fiscal quarters ending immediately preceding such date plus
(y) $6.5 million of any Capital Lease Obligations; and
(vi) the incurrence of (a) up to an aggregate of $70.0 million under the
Company's credit facility with BNY Financial Corporation; (b) up to an aggregate
of $5.0 million under the Company's mortgage indebtedness to Fleet Bank N.A.
(the "Fleet Loan"); (c) up to an aggregate of $7.5 million under a short term
loan from BNY Financial Corporation; (d) up to an aggregate of $17.5 million
under international working capital lines of credit; and (e) up to an aggregate
of $15.0 million of borrowings from hardware vendors.
Notwithstanding the foregoing, the Company may not use the proceeds from any of
the above-referenced items in paragraph (vi) above to make an acquisition of a
business having a purchase price in excess of $5.0 million unless and only to
the extent that after the use of such proceeds the Company is able to incur at
least $1.00 of additional Indebtedness on a pro forma basis under the test
described in paragraph (v) above.
ARTICLE SEVEN.
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT.
SECTION 7.01. 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 Section 6.09), by declaration or otherwise, and in each case whether or not
such payment is prohibited by the provisions of Article Four; 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 Four; 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 subordination provisions of Article Four; 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
7.01; or
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(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 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
(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 for a substantial
part of its properties or (D) makes a general assignment for the benefit of its
creditors.
The term "Bankruptcy Law" means Title 11 of the United States Code, as now
constituted or hereafter amended, or any other applicable Federal, state or
foreign bankruptcy, insolvency or other similar law. The term "Custodian" means
any receiver, liquidator, assignee, trustee, custodian, sequestrator or similar
official under any Bankruptcy Law.
A Default under clause (d) is not an Event of Default until the Trustee
notifies the Company, or the Holders of at least 30% in principal amount of the
Securities then outstanding notify the Company and the Trustee, of the Default
and the Company does not cure the Default within 60 days after receipt of such
notice. The notice 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 7.02. Acceleration. If any Event of Default (other than an Event
of Default with respect to the Company specified in Sections 7.01(e) or (f)
above) occurs and is continuing, the Trustee by notice to the Company, or the
Holders of at least 30% 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 with respect to the Company
specified in Sections 7.01(e) or (f) above occurs, all unpaid principal and
accrued interest on the Securities then outstanding shall automatically 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 and the
Company 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
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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 7.03. 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 for the
payment of the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, be for the ratable benefit of the Holders
of the Securities in respect of which such judgment has been recovered.
SECTION 7.04. Waiver of Defaults and Events of Default. Subject only to
the provisions of Sections 7.07 and 11.02 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 7.01, (b) the right of Securityholders to
redeem or convert their Securities or (c) in respect of a covenant or provision
hereof which under Article Eleven 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 7.05. 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 7.03. 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 to it; provided that the Trustee may take any other action
deemed proper by the Trustee which is not inconsistent with such direction.
SECTION 7.06. Limitation on Suits. Except as provided in Section 7.07, 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;
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(b) the Holders of at least 30% 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 to it;
(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 outstanding.
A Securityholder may not use this Indenture to prejudice the rights of
another Securityholder or to obtain a preference or priority over another
Securityholder.
SECTION 7.07. 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, the Redemption 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 7.08. Collection Suit by Trustee. If an Event of Default in
payment of interest or principal specified in Section 7.01(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 7.09. 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 securities
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or property payable or deliverable upon the conversion or exchange of the
Securities or upon 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.
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 of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof, or to authorize the Trustee to
vote in respect of the claim of any Securityholder in any such proceedings.
SECTION 7.10. Application of Money Collected by Trustee. Any moneys
collected by the Trustee or any Paying Agent pursuant to this Article Seven
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
Securities, 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
8.07 hereof;
Second: To holders of Senior Indebtedness of the Company to the
extent required by Article Four 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 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 7.11. 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 reasonably 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 7.11 shall not apply to
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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 the
principal of (or premium, if any) or interest on any Security against the
Company on or after the due date expressed in such Security (or in the case of
redemption or repurchase, on or after the Redemption Date or Repurchase Date, as
applicable).
SECTION 7.12. 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 7.13. 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 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 7.14. 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 Seven 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.
ARTICLE EIGHT.
CONCERNING THE TRUSTEE.
SECTION 8.01. Duties of Trustee.
(1) If an Event of Default has occurred and is continuing, the Trustee
shall exercise its rights and powers vested in it by this Indenture and use the
same degree of care and skill in their exercise as a prudent person would
exercise or use under the circumstances in the conduct of his own affairs.
(2) Except during the continuance of an Event of Default:
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(a) The Trustee need perform only those duties that are specifically
set forth in this Indenture and no others.
(b) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions furnished
to the Trustee and conforming to the requirements of this Indenture. The
Trustee, however, shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
grossly negligent action, its own grossly negligent failure to act, or its
own willful misconduct, except that:
(1) This paragraph does not limit the effect of paragraph (b)
of this Section 8.01.
(2) The Trustee shall not be liable for any error in judgment
made in good faith by a Responsible Officer of the Trustee, unless
it is proved that the Trustee was grossly negligent in ascertaining
the pertinent facts.
(3) The Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 7.05.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section 8.01(2).
(e) The Trustee may refuse to perform any duty or exercise any right
or power unless it receives indemnity satisfactory to it against any loss,
liability or expense which might be incurred by it in connection with any
such performance or exercise.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree with the Company. Money
held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
SECTION 8.02. Rights of Trustee. Subject to Section 8.01:
(1) The Trustee may conclusively rely on any document believed by it to be
genuine and to have been signed or presented by the proper person. The Trustee
need not investigate any fact or matter stated in the document.
(2) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or an opinion of counsel to the
Trustee, which
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shall conform to Section 15.04. The Trustee shall not be liable for any action
it takes or omits to take in good faith in reliance on such Certificate or
Opinion.
(3) The Trustee may act through Agents and shall not be responsible for
the misconduct or negligence of any Agent appointed with due care.
(4) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers.
(5) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder, or in the exercise of any of its rights or
powers, if it shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it.
SECTION 8.03. Individual Rights of Trustee. The Trustee in its individual
or any other capacity may become the owner or pledgee of Securities and may
otherwise deal with the Company or its Affiliates with the same rights it would
have if it were not Trustee. Any Agent may do the same with like rights. The
Trustee, however, is subject to Sections 8.10 and 8.11.
SECTION 8.04. Trustee's Disclaimer. The Trustee makes no representation as
to the validity or adequacy of this Indenture or the Securities, it shall not be
accountable for the Company's use or application of the proceeds from the
Securities, and it shall not be responsible for any statement in the Securities
other than its certificate of authentication or in any document used in the sale
of the Securities other than any statement in writing provided by the Trustee
for use in such document.
SECTION 8.05. Notice of Defaults. If a Default occurs and is continuing
and if it is known to the employees of the Trustee with responsibility for the
Securities, the Trustee shall mail to each Securityholder notice of the Default
within 90 days after it occurs. Except in the case of a Default in payment of
principal of or interest on any Security, the Trustee may withhold the notice if
and so long as it in good faith determines that withholding the notice is in the
interests of Securityholders.
SECTION 8.06. Reports by Trustee to Holders. Based on an opinion of
counsel to the Trustee if such report is required by TIA ss. 313, within 60 days
after each August 15 beginning with August 15, 1997, the Trustee shall mail to
each Securityholder a brief report dated as of such August 15 that complies with
TIA ss. 313(a). The Trustee also shall provide reports in form and substance
which comply with TIA ss. 313(b) and ss. 313(c).
A copy of each report at the time of its mailing to Securityholders shall
be filed with the SEC and each national securities exchange on which the
Securities are listed. The Company agrees to notify the Trustee in writing as
soon as the Securities become listed on any national securities exchange, or
upon the delisting of any such Securities.
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SECTION 8.07. Compensation and Indemnity. The Company shall pay to the
Trustee from time to time reasonable compensation for its services (which
compensation shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust). The Company shall reimburse the
Trustee upon request for all reasonable disbursements, expenses and advances
incurred or made by it. Such expenses may include the reasonable compensation,
disbursements and expenses of the Trustee's agents and counsel.
Subject to the provisions of the following paragraph, the Company shall
indemnify the Trustee for, and hold it harmless against, any loss or liability
incurred by it arising from or relating to this Indenture or in connection with
the placement or administration of the Securities, including the costs and
expenses of enforcing this Indenture against the Company and of defending itself
against any claim (whether asserted by any Holder or the Company). The Trustee
shall notify the Company promptly of any claim asserted against the Trustee for
which it may seek indemnity and the Company may elect by written notice to the
Trustee, and with the consent of the Trustee, to assume the defense of any such
claim at the Company's expense with counsel satisfactory to the Trustee. If the
Trustee shall not consent to the Company's assumption of the defense, the
Company agrees promptly upon request of the Trustee to pay all of the reasonable
costs, expenses and fees of counsel retained to represent the Trustee.
All payments and reimbursements due the Trustee from the Company shall be
made with interest (computed daily on the unpaid or overdue amount) at the per
annum interest rate borne by the Securities.
The Company need not reimburse the Trustee for any expense or indemnify it
against any loss or liability incurred by it through its gross negligence or bad
faith. The Company shall not be liable for any settlement of any claim or action
effected without the Company's consent, which consent shall not be unreasonably
withheld or delayed.
To secure the Company's payment obligations in this Section 8.07, the
Trustee, in its capacity as Trustee or in any other capacity shall have a lien
prior to the Securities on all money or property held or collected by the
Trustee, except that held in trust to pay principal and interest on particular
Securities. The Securities shall be subordinate to the Trustee's right to
receive such payment.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Sections 7.01(e) or (f) hereof occurs, the expenses and the
compensation for the services (including the reasonable fees and expenses of its
agents and counsel) are intended to constitute expenses of administration under
any Bankruptcy Law.
SECTION 8.08. Replacement of Trustee. A resignation or removal of the
Trustee and appointment of a successor Trustee shall become effective only upon
the successor Trustee's acceptance of appointment as provided in this Section
8.08.
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The Trustee may resign by so notifying the Company. The Holders of a
majority in principal amount of the Securities then outstanding may remove the
Trustee by so notifying the Trustee and may appoint a successor Trustee with the
Company's written consent. The Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 8.10;
(b) the Trustee is adjudged a bankrupt or an insolvent;
(c) a receiver or other public officer takes charge of the Trustee
or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the Securities may appoint a successor
Trustee to replace the successor Trustee appointed by the Company, and if a
successor Trustee is not appointed within such period, the Holders shall no
longer be permitted to appoint a successor Trustee to replace such successor
Trustee appointed by the Company.
If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least 10% in principal amount of the Securities then outstanding
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee fails to comply with Section 8.10, any Securityholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee which must satisfy the eligibility
requirements of Section 8.10.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Immediately after that, the retiring
Trustee shall, upon payment of its charges, transfer all property held by it as
Trustee to the successor Trustee, subject to the lien provided for in Section
8.07, the resignation or removal of the retiring Trustee shall become effective,
and the successor Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. A successor Trustee shall mail notice of its
succession to each Securityholder.
SECTION 8.09. Successor Trustee by Merger, etc. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all of its corporate trust assets to, another corporation, the successor
corporation without any further act shall be the successor Trustee.
SECTION 8.10. Eligibility; Disqualification. This Indenture shall always
have a Trustee who satisfies the requirements of TIA ss. 310(a)(1). The Trustee
shall have
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a combined capital and surplus of at least $1,000,000 as set forth in its most
recent published annual report of condition. The Trustee shall comply with TIA
ss. 310(b).
SECTION 8.11. Preferential Collection of Claims Against Company. The
Trustee is subject to and shall comply with TIA ss. 311(a), excluding any
creditor relationship listed in TIA ss. 311(b). A Trustee who has resigned or
been removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
ARTICLE NINE.
CONCERNING THE SECURITYHOLDERS.
SECTION 9.01. 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
Securityholders in person or by agent or proxy appointed in writing, or (b) by
the record of the Holders of Securities voting in favor thereof at any meeting
of Securityholders duly called and held in accordance with the provisions of
Article Ten, or (c) by a combination of such instrument or instruments and any
such record of such a meeting of Securityholders.
SECTION 9.02. Proof of Execution by Securityholders, Evidence of Holdings.
Subject to the provisions of Sections 8.01 and 10.05, proof of the execution of
any instrument by a Securityholder or his agent or proxy and proof of the
holding by any Person of any of the Securities shall be sufficient for any
purpose of this Indenture if made in the following manner:
(a) The fact and date of the execution by any such Person of any
instrument may be proved in any reasonable manner acceptable to the
Trustee.
(b) The ownership of Securities shall be proved by the register of
such Securities or by a certificate of the Security Registrar.
The record of any Securityholders' meeting shall be proved in the manner
provided in Section 10.06.
The Trustee may require such additional proof of any matter referred to in
this Section 9.02 as it shall deem necessary.
SECTION 9.03. Company-owned Securities Disregarded. In determining whether
the Holders of the requisite aggregate principal amount of Securities have
concurred in any direction or consent under this Indenture, Securities which are
owned by the
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Company or any other obligor on the Securities or by any Affiliate of the
Company or such obligor 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 or consent only Securities which the employees of the Trustee with
responsibility for the Securities know are so owned shall be so disregarded.
SECTION 9.04. Revocation of Consents, Future Holders Bound. At any time
prior to but not after the evidencing to the Trustee, as provided in Section
9.01, 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 which is included in the Securities
the Holders of which have consented to such action may, by filing written notice
with the Trustee at its office and upon proof of holding as provided in Section
9.02, revoke such action as far as concerns such 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, irrespective of whether or not any notation in regard thereto is made
upon such Security or any Security issued in exchange or substitution therefor.
Any action taken by the Holders of the percentage in aggregate principal amount
of the Securities specified in this Indenture in connection with such action
shall be conclusively binding upon the Company, the Trustee and the Holders of
all the Securities.
ARTICLE TEN.
SECURITYHOLDERS' MEETINGS.
SECTION 10.01. 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 Ten for any of the following purposes:
(1) 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
Seven;
(2) to remove the Trustee and nominate a successor trustee pursuant
to the provisions of Article Eight;
(3) to consent to the execution of an indenture or indentures
supplemental hereto pursuant to the provisions of Section 11.02; or
(4) to take any other action authorized to be taken by or on behalf
of the Holders of any specified aggregate principal amount of the
Securities under any other provision of this Indenture or under applicable
law.
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SECTION 10.02. Call of Meetings by Trustee. The Trustee may at any time
call a meeting of Securityholders to take any action specified in Section 10.01,
to be held at such time and at such place in the Borough of Manhattan, The City
of New York, 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 given
to the Holders of Securities in the manner provided in Section 15.03. Such
notice shall be mailed not less than 20 nor more than 90 days prior to the date
fixed for the meeting.
SECTION 10.03. Call of Meetings by Company or Securityholders. In case at
any time the Company, pursuant to a resolution of its 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 place in The
Borough of Manhattan, The City of New York, New York for such meeting and may
call such meeting to take any action authorized in Section 10.01, by mailing
notice thereof as provided in Section 10.02.
SECTION 10.04. Qualifications for Voting. To be entitled to vote at any
meeting of Securityholders a Person shall (a) be a Holder of one or more
Securities; or (b) be 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.
SECTION 10.05. Regulations. Notwithstanding any provisions of this
Indenture, the Trustee may make such reasonable regulations, and may rely on its
counsel, 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 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 10.03, 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 a majority vote of the meeting.
Subject to the provisions of Section 9.03, at any meeting of
Securityholders, each Securityholder or proxy 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
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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 10.02 or 10.03
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. At any meeting of Securityholders duly called pursuant to the
provisions of Section 10.02 or 10.03, the presence of Persons holding or
representing Securities in an aggregate principal amount sufficient to take
action on any business for the transaction of which such meeting was called
shall constitute a quorum.
SECTION 10.06. Voting. The vote upon any resolution submitted to any
meeting of Securityholders shall be by written ballots on which shall be
subscribed the signatures of the Holders of Securities or of their
representatives by proxy and the principal amount 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 duplicate 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 10.02. 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.
Any record so signed and verified shall be conclusive evidence of the
matters therein stated.
SECTION 10.07. No Delay of Rights by Meeting. Nothing in this Article Ten
contained shall be deemed or construed to authorize or permit, by reason of any
call of a meeting of Securityholders or any rights expressly or impliedly
conferred hereunder to make such call, any hindrance or delay in the exercise of
any right or rights conferred upon or reserved to the Trustee or to the
Securityholders under any of the provisions of this Indenture or of the
Securities.
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ARTICLE ELEVEN.
SUPPLEMENTAL INDENTURES.
SECTION 11.01. Supplemental Indenture Without Consent of Securityholders.
The Company, when authorized by the resolutions of its Board of Directors, and
the Trustee may from time to time and at any time enter into an indenture or
indentures supplemental hereto for one or more of the following purposes:
(a) to make provision with respect to the conversion rights of
Holders of Securities pursuant to the requirements of Section 5.10;
(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 Twelve hereof;
(c) to add to the covenants of the Company such further covenants,
restrictions or conditions for the protection of the Holders of the
Securities as the Board of Directors of the Company and the Trustee shall
consider to be for the protection of the Holders of Securities;
(d) to provide for uncertificated Securities in addition to or in
place of certificated Securities;
(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 which shall not
adversely affect the interests of the Holders of the Securities; and
(f) to modify, eliminate or add to the provisions of this Indenture
to such extent as shall be necessary to effect the qualification of this
Indenture under the TIA, or under any similar federal statute hereafter
enacted.
The Trustee is hereby authorized to join with the Company in the execution
of any such supplemental indenture, to make any further appropriate agreements
and stipulations which may be therein contained and to accept the conveyance,
transfer and assignment of any property thereunder, but the Trustee shall not be
obligated to enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this Section
11.01 may be executed by the Company and the Trustee without the consent of the
Holders
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of any of the Securities at the time outstanding, notwithstanding any of the
provisions of Section 11.02.
SECTION 11.02. Supplemental Indentures with Consent of Securityholders.
With the consent (evidenced as provided in Section 9.01) 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 the resolutions of its Board of
Directors, and the Trustee may from time to time and at any time enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of any supplemental indenture or of modifying in any manner
the rights of the Holders of the Securities; provided however, that no such
supplemental indenture shall (i) change the stated maturity of the principal of,
or any installment of interest on, any Security; (ii) reduce the principal
amount of, or the premium or interest on, any Security; (iii) change the place
of payment where, or currency in which, any Security or any premium or interest
thereof 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) reduce the percentage of aggregate principal amount of
Outstanding Securities necessary for waiver of compliance with certain provision
of this Indenture or for waiver of certain Defaults.
Upon the request of the Company, accompanied by a copy of the resolutions
of its Board of Directors certified by its Secretary or Assistant Secretary
authorizing the execution of any such supplemental indenture and upon the filing
with the Trustee of evidence satisfactory to the Trustee 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.
It shall not be necessary for the consent of the Securityholders under
this Section 11.02 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.
SECTION 11.03. Compliance with Trust Indenture Act; Effect of Supplemental
Indentures. Any supplemental indenture executed pursuant to the provisions of
this Article Eleven shall comply with the TIA as in effect on the date of
execution thereof. Upon the execution of any supplemental indenture pursuant to
the provisions of this Article Eleven this Indenture shall be and be deemed to
be modified and amended in accordance therewith and the respective rights,
limitation of rights, obligations, duties and immunities under this Indenture of
the Trustee, Paying Agent, Conversion Agent, Registrar, the Company and the
Holders of Securities shall thereafter be determined, exercised and enforced
hereunder subject in all respects to such modifications and
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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 11.04. Notation on Securities. Securities authenticated and
delivered after the execution of any supplemental indenture pursuant to the
provisions of this Article Eleven may bear a notation in form acceptable to the
Trustee as to any matter provided for in such supplemental indenture. If the
Company shall so determine, new Securities so modified as to conform, in the
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 and delivered in exchange
for the Securities then outstanding.
SECTION 11.05. Evidence of Compliance of Supplemental Indenture to Be
Furnished Trustee. The Trustee, subject to the provisions of Section 8.01, may
receive an Officers' Certificate and an Opinion of Counsel both conforming to
Section 15.04 as conclusive evidence that any supplemental indenture executed
pursuant hereto complies with the requirements of this Indenture.
ARTICLE TWELVE.
CONSOLIDATION, MERGER AND SALE BY THE COMPANY.
SECTION 12.01. When Company May Merge, Etc. 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 corporation organized and existing
under the laws of the United States or a state thereof or the District of
Columbia and such corporation 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) (A) will have Consolidated Net
Worth (immediately after the transaction but prior to any purchase according to
adjustments resulting from the transaction) greater than or equal to the
Consolidated Net Worth of the Company immediately preceding the transaction and
(B) will, at the time of such transaction after giving pro forma effect thereto
as if such transaction had occurred at the beginning of the applicable
four-quarter period, be permitted to incur at least $1.00 of additional
Indebtedness pursuant to Section 6.12 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, and
thereafter all
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obligations of the Company (if the Company is not the resulting, surviving or
transferee Person) shall terminate.
SECTION 12.02. Successor Corporation Substituted. Upon any consolidation
or merger, or any transfer of all or substantially all of the assets of the
Company in accordance with Section 12.01, the successor corporation formed by
such consolidation or into which the Company is merged or to which such transfer
is made shall succeed to, and be substituted for, and may exercise every right
and power of, the Company under this Indenture with the same effect as if such
successor corporation had been named as the Company herein.
ARTICLE THIRTEEN.
SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS.
SECTION 13.01. Discharge of Indenture. If (a) there shall have been
delivered to the Trustee for cancellation all Securities theretofore
authenticated (other than any Securities which shall have been destroyed, lost
or stolen and in lieu of or in substitution for which other Securities shall
have been authenticated and delivered), or (b)(1) all such Securities not
theretofore delivered to the Trustee for cancellation shall have become due and
payable, or will become due and payable at their stated maturity within one
year, or have been called for redemption, and the Company shall have irrevocably
deposited with the Paying Agent, in trust, funds (except funds paid to the
Company pursuant to Section 13.04) sufficient to pay at maturity or upon
redemption all of such Securities (other than any Securities which shall have
been destroyed, lost or stolen and in lieu of or in substitution for which other
Securities shall have been authenticated and delivered) not theretofore
delivered to the Trustee for cancellation, including principal (and premium, if
any) and interest, and such deposit shall be upon terms making such funds
payable forthwith upon due presentation, whether before or after such date of
maturity or redemption of such Securities, (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 Four 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 any such case the Company shall also pay or cause to be paid all other
sums payable hereunder by the Company, then (except as provided below) this
Indenture shall cease to be of further effect, and the Trustee, on demand of the
Company accompanied by an Officers' Certificate and an Opinion of Counsel as
required by Section 15.04 and at the cost and expense of the Company, shall
execute proper instruments acknowledging satisfaction of and discharging this
Indenture; provided however, that the Company's obligations under Sections 2.03,
2.04, 2.05, 2.06, 2.07, 2.08, 6.01, 6.02, 6.03, 8.07, 8.08, 13.04, 13.05 and
Article Five shall survive until the Securities are no longer outstanding.
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SECTION 13.02. Deposited Moneys to Be Held in Trust by Trustee. All moneys
deposited with the Paying Agent pursuant to Section 13.01 shall be held in trust
and, subject to the provisions of Section 13.04, applied by it to the payment,
either directly or through any Paying Agent, to the Holders of the particular
Securities for the payment or redemption of which such moneys have been
deposited with the Trustee, of all sums due thereon for principal and interest
(and premium, if any).
SECTION 13.03. 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 demand of the Company, be repaid
to it and thereupon the Paying Agent shall be released from all further
liability with respect to such moneys.
SECTION 13.04. Unclaimed Moneys. Any moneys deposited with the Trustee or
any Paying Agent (including moneys held in trust by the Company if it shall act
as its own Paying Agent) not applied but remaining unclaimed by the Holders of
Securities for two years after the date upon which the principal of (and
premium, if any) or interest on such Securities shall have become due and
payable shall be repaid to the Company by the Trustee or such Paying Agent on
demand, or if held in trust by the Company may at the Company's option be
released from such trust; and the Holder of any of the Securities entitled to
receive such payment shall thereafter look only to the Company, as the holder of
a general claim, for the payment thereof, provided however, that the Trustee or
such Paying Agent before being required to make any such repayment, may at the
expense of the Company cause to be mailed to each such holder a notice that said
moneys have not been so applied and that after a date named therein any
unclaimed balance of said moneys then remaining will be returned to the Company.
SECTION 13.05. Reinstatement. If the Trustee or a Paying Agent is unable
to apply any moneys in accordance with Section 13.01 by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company's obligations under this Indenture and the Securities shall be revived
and reinstated as though no deposit had occurred pursuant to Section 13.01 until
such time as the Trustee or such Paying Agent is permitted to apply all such
moneys in accordance with Section 13.01; provided however, that if the Company
has made any payment of principal or interest on any of the Securities because
of the reinstatement of its obligations, the Company shall be subrogated to the
rights of the Holders of the Securities to receive such payment from moneys held
by the Trustee or such Paying Agent.
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ARTICLE FOURTEEN.
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS.
SECTION 14.01. Indenture and Securities Solely Corporate Obligations. No
recourse for the payment of the principal or premium or interest on any
Security, 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 Security, or because of the creation of any
indebtedness represented thereby, shall be had against any incorporator,
stockholder, officer or director, as such, past, present or future, of the
Company or of any successor corporation, either directly or through the Company
or a successor 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 Securities.
ARTICLE FIFTEEN.
MISCELLANEOUS PROVISIONS.
SECTION 15.01. Provisions Binding on Company's Successors. All the
covenants, stipulations, promises and agreements in this Indenture contained by
or on behalf of the Company shall bind its successors and assigns, whether so
expressed or not.
SECTION 15.02. 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 15.03. Notices. 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, first class postage prepaid, in a United States post office letter
box addressed (until another address is filed by the Company with the Trustee)
to Acclaim Entertainment, Inc., One Acclaim Plaza, Glen Cove, New York, 11452,
Attn: Chief Executive Officer. 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 principal
office of the Trustee, addressed to the attention of its Corporate Trust
Department.
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Any notice or demand which by any provision of this Indenture is required
or permitted to be given or served by the Trustee or the Company to or on the
Holders of Securities shall be given or served by first-class mail, postage
prepaid, addressed to the Holders of such Securities at their last addressed as
the same appear on the registry books referred to in Section 2.03, and any such
notice shall be deemed to be given or served by being deposited in a post office
letter box in the form and manner provided in this Section 15.03.
SECTION 15.04. Evidence of Compliance with Conditions Precedent. Upon any
application, demand or request 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 opinion contained in such certificate or opinion are
based; (3) a statement that, in the opinion of such Person, he had 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 15.05. Legal Holidays. In any case where the date of maturity of
interest on or principal of the Securities or the date fixed for redemption of
any Security or the last day on which a Securityholder has the right to convert
his Security at a particular Conversion Price shall not be a Business Day, then
payment of interest or principal (and premium, if any) or conversion of the
Securities need not be made on such date but may be made on the next succeeding
Business Day, with the same force and effect as if made on the date of such
maturity or the date fixed for redemption or such last day for conversion, and,
in the case of payment, no interest shall accrue for the period from and after
such date.
SECTION 15.06. Trust Indenture Act to Control. The provisions of ss. 310
to and including ss. 317 of the TIA that imposes duties on any Person (including
any such provisions automatically deemed included in an indenture by the TIA)
are a part of and govern this Indenture. If any provision hereof limits,
qualifies or conflicts with any of such duties imposed by operation of such
provisions of the TIA, the applicable provisions of the TIA and duties imposed
thereby shall control.
SECTION 15.07. Communications by Holders with Other Holders. A
Securityholder may communicate pursuant to TIA ss. 312(b) with other
Securityholders
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with respect to their rights under this Indenture or the Securities. The
Company, the Trustee, the Registrar and anyone else shall have the protection of
TIA ss. 312(c).
SECTION 15.08. 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 construed in accordance with the laws of said State,
without giving effect to such State's conflicts of law principles.
SECTION 15.09. Table of Contents and Headings. The table of contents,
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 15.10. No Security Interest Created. Subject to Section 8.07,
nothing in this Indenture or in the Securities, express or implied, shall be
construed to constitute a security interest under the Uniform Commercial Code or
similar legislation, as now or hereafter enacted and in effect in any
jurisdiction where property of the Company or its Subsidiaries is or may be
located.
SECTION 15.11. Actions of Trustee in other Capacities. Anything to the
contrary notwithstanding, when the Trustee is also acting as Registrar, Paying
Agent or Conversion Agent or in any other capacity hereunder, the provisions of
Article 8 including, without limitation, those which relate to the performance
of duties and indemnification rights and the like, shall also apply to the
Registrar, Paying Agent, Conversion Agent or other capacity, as the case may be,
and references to Trustee therein shall be construed to include Registrar,
Paying Agent, Conversion Agent or other capacity hereunder mutatis mutandis.
SECTION 15.12. 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.
The Trustee hereby accepts the trusts in this Indenture declared and
provided, upon terms and conditions hereinabove set forth.
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IN WITNESS WHEREOF, Acclaim Entertainment, Inc. has caused this Indenture
to be signed and acknowledged by its Co-Chairman of the Board and Chief
Executive Officer, and its corporate seal to be affixed hereunto, and the same
to be attested by its secretary or one of its assistant secretaries, and IBJ
Schroder Bank & Trust Company has caused this Indenture to be signed and
acknowledged by its President or one of its vice presidents, has caused its
corporate seal to be affixed hereunto, and the same to be attested by one of its
Responsible Officers, as of the day and year first written above.
ACCLAIM ENTERTAINMENT, INC.
By /s/ Gregory E. Fischbach
------------------------------------
Name: Gregory E. Fischbach
Title: President and Chief
Executive Officer
Attest:
/s/ James Scoroposki
- - ---------------------------------
Secretary
IBJ SCHRODER BANK & TRUST COMPANY,
As Trustee
By /s/ James P. Freeman
------------------------------------
Name: James P. Freeman
Title: Assistant Vice President
Attest:
/s/ Anthony Liegy
- - --------------------------------
Trust Officer/Assistant Secretary
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Exhibit 99
<PAGE>
[LOGO OF ACCLAIM ENTERTAINMENT, INC.]
ACCLAIM NEWS
Contact: Nancy Tully
Acclaim Entertainment
516.656.5000
[email protected]
ACCLAIM ENTERTAINMENT CLOSES PRIVATE PLACEMENT
OF CONVERTIBLE SUBORDINATED NOTES DUE 2002
Glen Cove, N.Y., February 28, 1997 -- Acclaim Entertainment, Inc. (NASDAQ:AKLM)
today announced the successful completion of a private placement offering of $50
million, 10 percent Convertible Subordinated Notes, due 2002. The Notes are
convertible into common stock at an initial conversion price of $5.18 per share.
As part of this offering, the Company has used approximately $18 million to
retire previously outstanding indebtedness. The remaining proceeds will be used
for working capital and general corporate purposes.
Neither the Notes nor the Common Stock issuable on conversion of the Notes has
been registered under the Securities Act of 1933 and may not be offered or sold
in the United States absent registration or an applicable exemption.
ACCLAIM ENTERTAINMENT BACKGROUND INFORMATION
Acclaim Entertainment, Inc., a leading worldwide publisher of software for
Nintendo, Sega, Sony and personal computer hardware systems, also publishes
comic books under a variety of imprints. In addition, Acclaim develops
coin-operated arcade and ticket-redemption games; operates motion capture
studios; and, through A.D.I., globally sells and distributes products from a
variety of entertainment software publishers including Interplay and others.
Visit Acclaim's Web site, www.acclaimnation.com.
LONDON MADRID MUNICH NEW YORK PARIS TOKYO TORONTO
- - --------------------------------------------------------------------------------
Acclaim Entertainment, Inc., One Acclaim Plaza, Glen Cove, NY 11542-2708
Tel 516.656.5000 Fax 516.656.2040
