As filed with the Securities and Exchange Commission on September 10, 1999
Registration No. 333-
============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------
<TABLE>
<S> <C> <C>
ANNTAYLOR STORES CORPORATION DELAWARE 13-3499319
ANNTAYLOR, INC. DELAWARE 51-0297083
(Exact name of registrant as (State or other jurisdiction of (I.R.S. employer
specified in its charter) incorporation or organization) identification no.)
</TABLE>
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142 WEST 57TH STREET, NEW YORK, NEW YORK 10019,
(212) 541-3300, FAX: (212) 541-3379
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
JOCELYN BARANDIARAN, ESQ.
ANNTAYLOR STORES CORPORATION
142 WEST 57TH STREET, NEW YORK, NEW YORK 10019,
(212) 541-3300, FAX: (212) 541-3379
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
-------------------
COPIES TO:
VINCENT J. PISANO, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
919 THIRD AVENUE, NEW YORK, NY 10022, (212) 735-3000, FAX: (212) 735-2000
-------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
-------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
-------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
============================================================================================
Proposed Maximum Proposed Maximum Amount of
Title of Shares Amount to Be Offering Price Aggregate Registration
to Be Registered Registered per Share Offering Price(1) Fee
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Convertible
Subordinated
Debentures due 2019 $199,072,000(1) $556.97(2)(3) $110,876,945(2)(3) $30,824
Common Stock of
AnnTaylor Stores
Corporation, $.0068
par value 2,404,391(4) -- -- --(5)
Guarantee(6) -- -- -- --
- --------------------------------------------------------------------------------------------
Total
============================================================================================
</TABLE>
(1) Represents the aggregate principal amount at maturity of the debentures
that were originally issued by the Registrant on June 18, 1999.
(2) Estimated solely for purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933, as amended.
(3) Exclusive of accrued interest and distributions, if any.
(4) Represents the number of shares of common stock that are currently
issuable upon conversion of the debentures. The number of shares of
common stock that may be issued upon conversion of the debentures in
the future is indeterminate, and the registrant is also registering
this indeterminate amount pursuant to Rule 416 of the Securities Act.
(5) No separate consideration will be received for common stock issuable
upon conversion of the debentures and, therefore, no registration fee
is required pursuant to Rule 457(i).
(6) Includes the obligations of AnnTaylor, Inc. under the Subsidiary
Guarantee. No separate consideration will be received for the
Subsidiary Guarantee.
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
SUBJECT TO COMPLETION, DATED SEPTEMBER 10, 1999
PROSPECTUS
ANNTAYLOR STORES CORPORATION
$199,072,000 PRINCIPAL AMOUNT AT MATURITY
CONVERTIBLE SUBORDINATED DEBENTURES DUE 2019
GUARANTEED ON A SUBORDINATED BASIS BY ANNTAYLOR, INC.
2,404,391 SHARES OF ANNTAYLOR STORES CORPORATION COMMON STOCK
ISSUABLE UPON CONVERSION OF THE DEBENTURES
------------------
Our common stock currently trades on the New York Stock Exchange.
Last reported sale price on September 9, 1999: $42.50 per share. Trading
Symbol: ANN
------------------
THE OFFERING
Under this prospectus, the selling securityholders named in this
prospectus or in prospectus supplements may offer and sell the debentures
or the shares of our common stock into which the debentures may be
converted. The debentures were initially issued at a price of $552.56 per
$1,000 principal amount at maturity. Interest of 0.55% per year on the
principal amount at maturity is payable semiannually beginning December 18,
1999. The debentures mature June 18, 2019. Each $1,000 principal amount
debenture is initially convertible into 12.078 shares of our common stock.
We may redeem our debentures on or after June 18, 2004 at the redemption
prices listed in this prospectus. Holders of the debentures also have an
option to require us to purchase the debentures for cash or shares of our
common stock, at our election, on specified purchase dates or upon a change
of control of AnnTaylor Stores Corporation. The debentures are general
unsecured obligations and are subordinated in right of repayment to all of
our existing and future senior debt.
------------------
INVESTING IN OUR CONVERTIBLE SUBORDINATED DEBENTURES OR OUR COMMON
STOCK INVOLVES A HIGH DEGREE OF RISK. PLEASE CAREFULLY CONSIDER THE "RISK
FACTORS" BEGINNING ON PAGE 6 OF THIS PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR
PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is September , 1999
------------------
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. THE SELLING SECURITYHOLDERS MAY NOT SELL THEIR SECURITIES UNTIL
THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THE
SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THE SECURITIES IN ANY
STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
TABLE OF CONTENTS
PAGE
PROSPECTUS SUMMARY.........................................................3
THE OFFERING...............................................................3
RISK FACTORS...............................................................6
RATIO OF EARNINGS TO FIXED CHARGES........................................10
USE OF PROCEEDS...........................................................10
DIVIDEND POLICY...........................................................10
DESCRIPTION OF DEBENTURES.................................................11
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS...........................30
SELLING SECURITYHOLDERS...................................................32
PLAN OF DISTRIBUTION......................................................33
LEGAL MATTERS.............................................................36
EXPERTS...................................................................36
STATEMENT REGARDING FORWARD LOOKING DISCLOSURES...........................36
WHERE YOU CAN FIND MORE INFORMATION.......................................36
PROSPECTUS SUMMARY
The following summary contains basic information about us contained
elsewhere in this prospectus. This summary may not contain all the
information you should consider before buying securities in this offering.
You should read the entire prospectus carefully. Unless the context
otherwise requires, the terms "we," "our," "us" and "the company" refer to
AnnTaylor Stores Corporation, a Delaware corporation. The term "Ann Taylor"
as used in this prospectus refers to AnnTaylor, Inc., a Delaware
corporation.
ANNTAYLOR STORES CORPORATION
GENERAL
We, through our wholly owned subsidiary AnnTaylor, Inc., are a
leading national specialty retailer of better quality women's apparel,
shoes and accessories sold primarily under the Ann Taylor brand name. We
believe that "Ann Taylor" is a highly recognized brand that defines a
distinct fashion point of view. Ann Taylor merchandise represents classic
styles, updated to reflect current fashion trends. Ann Taylor stores offer
a full range of career and casual separates, weekend wear, dresses, tops,
accessories and shoes, coordinated as part of a total wardrobing strategy.
This total wardrobing strategy is reinforced by an emphasis on customer
service. Ann Taylor sales associates are trained to assist customers in
merchandise selection and wardrobe coordination. This helps our customers
achieve the "Ann Taylor look" while reflecting the customers' personal
styles.
As of July 31, 1999, we operated 387 stores in 42 states and the
District of Columbia, under the names Ann Taylor, Ann Taylor Loft and Ann
Taylor Factory Store. The 313 stores operated under the Ann Taylor name
represent our core merchandise line. We believe that the customer base for
Ann Taylor stores consists primarily of relatively affluent,
fashion-conscious women from the ages of 25 to 55. We also believe that the
majority of our customers are working women with limited time to shop, who
are attracted to Ann Taylor by our focused merchandising and total
wardrobing strategies. Ann Taylor also offers them personalized customer
service, efficient store layouts and continual flow of new merchandise.
We operated 62 Ann Taylor Loft stores as of July 31, 1999. Ann Taylor
Loft is a separate moderate-price store for women who appreciate the Ann
Taylor style but who have a more relaxed lifestyle. Merchandise is designed
uniquely for these stores and is sold under the Ann Taylor Loft label. The
first 30 Ann Taylor Loft stores were located in factory outlet centers,
including some former Ann Taylor Factory Stores that were converted to Loft
stores in 1996. In 1998, we opened the first 16 Ann Taylor Loft stores
outside the factory outlet center environment. These stores were located
primarily in regional malls and strip shopping centers focused on the
moderate-price consumer. Management believes that Ann Taylor Loft
represents a significant opportunity to extend the Ann Taylor brand to the
moderate-price women's apparel market.
THE OFFERING
Amount offered................... $199,072,000 aggregate principal amount
at maturity
Original issue price............. $552.56 per $1,000 principal amount at
maturity
Maturity date.................... June 18, 2019
Cash interest.................... 0.55% per year on the principal amount
at maturity, payable semiannually
Yield to maturity of debentures.. 3.75% per year
Subsidiary Guarantee............. Ann Taylor, our wholly owned operating
subsidiary, fully and unconditionally
guarantees the debentures offered in
this prospectus. This subsidiary
guarantee is subordinated in right of
payment to the prior payment in full of
all of the existing and future
guarantor senior indebtedness of Ann
Taylor. The debentures and the
subsidiary guarantee are also
effectively subordinated to all
existing and future liabilities of our
subsidiaries other than Ann Taylor.
Conversion rights................ Each debenture holder may convert each
$1,000 principal amount at maturity of
their debenture into 12.078 shares of
our common stock at any time prior to
maturity. The conversion rate may be
adjusted in designated circumstances
but will not be adjusted for original
issue discount. Upon conversion, you
will not receive any cash payment
representing accrued original issue
discount or accrued unpaid stated
interest. Instead, the accrued original
issue discount and accrued unpaid
stated interest will be deemed paid by
the shares of common stock received by
you on conversion.
Subordination.................... The debentures are subordinated in
right of payment to the prior payment
in full of all of our existing and
future senior indebtedness and are
effectively subordinated to all
existing and future liabilities of our
subsidiaries other than Ann Taylor. Ann
Taylor's obligations under the
subsidiary guarantee are subordinated
in right of payment to all of Ann
Taylor's existing and future senior
indebtedness. The indenture does not
limit our ability or Ann Taylor's
ability to incur senior or other debt.
Original issue discount.......... We initially sold each debenture at an
original issue discount for United
States federal income tax purposes.
This original issue discount amount
equals the excess of the stated
principal amount (redemption price) at
maturity of the debenture, $1,000, over
the issue price of $552.56. You must
include accrued original issue discount
in your gross income for United States
federal income tax purposes prior to
conversion, redemption, sale or
maturity of the debentures. This will
be true even if the debentures are
ultimately not converted, redeemed,
sold or paid at maturity.
Optional redemption.............. On and after June 18, 2004, we can
redeem the debentures for cash at any
time at our option at the redemption
prices listed in this prospectus, plus
cash interest to the redemption date.
Purchase at the option of
the holder....................... Each debenture holder has the option to
require us to purchase the debentures
held by them for a purchase price of
$635.42 on June 18, 2004, for $735.19
on June 18, 2009 and for $855.33 on
June 18, 2014. We may choose to pay
this purchase price in cash, shares of
our common stock or any combination of
cash and stock.
If a change of control of AnnTaylor
Stores Corporation occurs prior to June
18, 2004, then each debenture holder
will have an option to require us to
repurchase the debentures held by them
for an amount equal to the issue price
plus accrued original issue discount
and cash interest accrued to the date
of purchase.
Optional conversion to
semiannual coupon debenture
upon tax event................... On the occurrence of specified tax
events, we have the option to convert
the debentures from debentures that
accrue original issue discount and pay
stated interest semiannually in cash at
a rate of 0.55% per year, to debentures
that cease to accrue original issue
discount, and pay stated interest
semiannually in cash at a rate of 3.50%
per year. This interest would accrue at
3.50% per year on a restated principal
amount of the debentures equal to the
issue price plus original issue
discount accrued through the date of
the conversion.
Use of proceeds.................. We will not receive any of the proceeds
from the sale of the debentures or
common stock offered under this
prospectus.
Trading.......................... The debentures issued in the initial
private placement are eligible for
trading in the Portal Market. However,
debentures sold using this prospectus
will no longer be eligible for trading
in the Portal Market. Our common stock
is traded on the New York Stock
Exchange under the symbol "ANN".
RISK FACTORS
An investment in our debentures or our common stock involves a high
degree of risk. You should carefully consider the following risk factors
and other information in this prospectus before investing in our debentures
or our common stock. The trading price of our debentures and our common
stock could decline due to any of these risks, and you may lose all or part
of your investment.
RISKS RELATED TO THE DEBENTURES
WE MAY NOT BE ABLE TO PAY OFF THE DEBENTURES ON THE PURCHASE DATES OR UPON A
CHANGE OF CONTROL OF ANNTAYLOR STORES CORPORATION
On each purchase date of June 18, 2004, June 18, 2009 and June 18,
2014, each debenture holder will generally have an option to require us to
purchase their debentures. Also, if a change of control of AnnTaylor Stores
Corporation occurs, each debenture holder will generally have an option for
us to repurchase their debentures. We may not have sufficient cash to pay
the debentures, or restrictions in other agreements may not allow us to
make these repurchases. In either case, we may have to issue shares of our
common stock instead.
THE DEBENTURES ARE SUBORDINATED TO OUR SENIOR DEBT OBLIGATIONS
The debentures are unsecured and subordinated in right of payment to
all of our existing and future senior debt obligations. Likewise, Ann
Taylor's subsidiary guarantee is unsecured and subordinated in right of
payment to all of its existing and future guarantor senior debt
obligations. Therefore, if either we or Ann Taylor go bankrupt, liquidate
our assets, reorganize or enter into other specified transactions, our and
Ann Taylor's assets will be available to pay the obligations with respect
to the debentures only after we and Ann Taylor have paid all of our senior
debt obligations in full, and there may not be sufficient assets remaining
to pay amounts due on any or all of the debentures then outstanding. The
debentures and the subsidiary guarantee also are effectively subordinated
in right of payment to all of the liabilities, including trade payables, of
our subsidiaries other than Ann Taylor. The indenture governing the
debentures does not prohibit or limit our ability or the ability of Ann
Taylor or our other subsidiaries to incur senior debt obligations, other
debt obligations and other liabilities. If we take any of these actions,
this could harm our ability to pay off the debentures.
A TRADING MARKET FOR THE DEBENTURES MAY NOT DEVELOP
Although the initial purchasers of the debentures have advised us
that they intend to make a market in the debentures, they are not obligated
to do so and may discontinue market making at any time without notice.
Their market-making activity will be subject to the limitations imposed by
the securities laws. We cannot guarantee that the market for the debentures
will be maintained. Also, we do not intend to apply for listing of the
debentures on any securities exchange. The trading price of the debentures
will likely decline if there ceases to be an active trading market for
them.
SUBSIDIARY GUARANTEE MAY BE UNENFORCEABLE DUE TO FRAUDULENT CONVEYANCE
STATUTES
Under the federal bankruptcy law and comparable provisions of state
fraudulent transfer laws, Ann Taylor's subsidiary guarantee could be
voided, or claims in respect of the subsidiary guarantee could be
subordinated to all other debts of Ann Taylor if a court found that:
Ann Taylor, at the time it incurred the debt evidenced by the subsidiary
guarantee, received less than reasonably equivalent value or fair
consideration for the guarantee, and was any of the following:
o insolvent or rendered insolvent by reason of the guarantee,
o engaged in a business or transaction for which its remaining
assets constituted unreasonably small capital, or
o intended to incur, or believed that it would incur, debts
beyond its ability to pay such debts as they mature.
In addition, any payment by Ann Taylor pursuant to the subsidiary guarantee
could be required to be returned to Ann Taylor, or to a fund for the
benefit of the creditors of Ann Taylor.
The measures of insolvency for purposes of these fraudulent transfer
laws will vary depending upon the law applied in any proceeding to
determine whether a fraudulent transfer has occurred. Generally, however,
Ann Taylor would be considered insolvent if:
o the sum of its debts, including contingent liabilities, was
greater than the fair salable value of all of its assets;
o the present fair salable value of its assets was less than the
amount that would be required to pay its probable liability on
its existing debts, including contingent liabilities, as they
become absolute and mature; or
o it could not pay its debts as they become due.
On the basis of historical financial information, recent operating
history and other factors, we believe that Ann Taylor, after giving effect
to the subsidiary guarantee, will not be insolvent. Furthermore, we believe
that Ann Taylor will not have unreasonably small capital for the business
in which it is engaged and will not have incurred debts beyond its ability
to pay at maturity. However, we cannot assure you as to what standard a
court would apply in making such determinations or that a court would agree
with our conclusions in this regard.
RISKS RELATED TO OUR BUSINESS
BECAUSE WE ARE SIGNIFICANTLY SMALLER THAN MANY OF OUR NATIONAL COMPETITORS,
WE MAY LACK THE FINANCIAL RESOURCES NEEDED TO MAINTAIN OR INCREASE OUR
MARKET SHARE
The women's retail apparel industry is highly competitive. Our stores
compete with departments in national and local department stores, and with
other specialty store chains and independent retail stores carrying similar
lines of merchandise. We believe that our focused merchandise selection,
exclusive fashions, personalized service and convenience distinguish us
from other apparel retailers. Nevertheless, many of our competitors are
considerably larger and have substantially greater financial, marketing and
other resources than we have. Consequently, we may not be able to compete
successfully with them in the future. In addition, we have only limited
experience in the moderate-price category in which Ann Taylor Loft
competes. Many of our competitors have greater experience in managing a
moderate-price women's apparel business and may have greater brand
recognition among this customer segment than we have.
THE SUCCESS OF OUR BUSINESS DEPENDS ON OUR ABILITY TO PREDICT FASHION TRENDS
ACCURATELY
Our sales and earnings depend to a significant extent upon our
ability to predict or respond to changes in fashion trends and consumer
preferences. We have experienced seasons in which there was unsatisfactory
customer acceptance of our merchandise. As a result, we had lower than
planned sales, greater than planned markdowns and lower gross margins
earned on goods sold. Our operations may be adversely affected in the
future by a failure to predict and respond to changes in fashion
preferences.
DUE TO AN OUTSTANDING CREDIT FACILITY, ANN TAYLOR COULD POTENTIALLY BE
UNABLE TO HONOR ITS FINANCIAL OBLIGATIONS OWING TO US
Since we are a holding company whose operations are conducted
through Ann Taylor and its subsidiaries, our ability to pay interest and
principal on the debentures will be dependent on Ann Taylor's ability to
pay dividends or make other payments or distributions to us in sufficient
amounts. Ann Taylor's ability to, among other things, pay dividends to us,
repay debt, including intercompany debt owing to us, make acquisitions,
transfer assets, create liens, make capital expenditures, incur
indebtedness and make investments, is restricted by the provisions of Ann
Taylor's credit facility dated as of June 30, 1998. For example, if Ann
Taylor fails to achieve financial results that comply with the restrictive
covenants and financial tests in the credit facility, it could be in
default under the credit facility. In the event of a default, the lenders
could elect to declare all amounts borrowed, together with accrued and
unpaid interest, due and payable. If Ann Taylor is unable to pay, the
lenders could proceed against any collateral securing obligations due to
them. If this indebtedness is accelerated, there can be no assurance that
Ann Taylor's assets would be sufficient to repay in full that indebtedness.
OUR BUSINESS COULD SUFFER AS A RESULT OF PROBLEMS ASSOCIATED WITH THE "YEAR
2000 ISSUE"
The risks posed by the Year 2000 issue could adversely affect our
business in a number of significant ways. If our internal and network
information systems do not correctly recognize and process date information
beyond the year 1999, we may not be able to conduct operations at the same
level of efficiency. Although we believe our Year 2000 compliance efforts
with respect to our systems will be successful, any failure or delay in
achieving Year 2000 compliance could result in costs that differ materially
from our present cost estimates. We are developing a contingency plan to
permit our primary operations to continue if our modifications and
conversions of our systems are not successfully completed on a timely
basis. Our cost estimates for Year 2000 compliance do not take into account
any expenditures arising out of a response to any contingencies that may
materialize.
Our cost estimates also do not include costs that may be incurred as
a result of a third parties' failure to become Year 2000 compliant on a
timely basis.
We have been communicating with our business partners, including key
manufacturers, vendors, banks and other third parties with whom we do
business, to obtain information regarding their state of readiness with
respect to the Year 2000 issue. We have determined that the following
events could have a material adverse effect on our business and results of
operations:
o failure of third parties to remediate Year 2000 issues affecting
their respective businesses on a timely basis; or
o failure of third parties to implement contingency plans
sufficient to permit uninterrupted continuation of their
businesses in the event of a failure of their systems or those
of their key suppliers.
We may not be able to compensate adequately for business interruptions
caused by these third parties. Potential risks include suspension or
significant curtailment of service or significant delays by banks,
utilities or common carriers, or at U.S. ports of entry.
Our business could also be materially adversely affected by the
failure of governmental agencies to address Year 2000 issues affecting our
operations. For example, a significant amount of our merchandise is
manufactured outside the United States. We are dependent upon the issuance
by foreign governmental agencies of export visas for, and upon the U.S.
Customs Service to process and permit entry into the United States of, this
merchandise. If failures in government systems result in the suspension or
delay of these agencies' services, we could experience significant
interruption or delays in inventory flow.
OUR DEPENDENCE ON THE SUPPLY OF MERCHANDISE FROM OTHER COUNTRIES EXPOSES US
TO A SIGNIFICANT RISK OF DISRUPTION TO OUR OPERATIONS
Our merchandise is manufactured in over 20 countries. During fiscal
year 1998, approximately 35% of our merchandise was manufactured in China
and approximately 10% of our merchandise was manufactured in Hong Kong. Any
event causing a sudden disruption of manufacturing or imports from China or
Hong Kong, including the imposition of additional import restrictions,
could have a material adverse effect on our operations. In addition, we
cannot predict whether any of the foreign countries in which our products
are currently manufactured or any of the countries in which our products
may be manufactured in the future will be subject to future or increased
import restrictions by the U.S. government, including the likelihood, type
or effect of any trade restriction. Trade restrictions, including increased
tariffs or quotas, against apparel, footwear or other items sold by us
could affect the importation of such merchandise generally and, in that
event, could increase the cost or reduce the supply of merchandise
available to us and adversely affect our business, financial condition,
results of operations and liquidity. Our merchandise flow may also be
adversely affected by financial or political instability in any of the
countries in which our goods are manufactured, if it affects the production
or export of merchandise from those countries. Substantially all of our
foreign purchases are negotiated and paid for in U.S. dollars, and
merchandise flow may also be adversely affected by significant fluctuation
in the value of the U.S. dollar against foreign currencies or restrictions
on the transfer of funds.
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
PERIOD FISCAL FISCAL FISCAL FISCAL FISCAL
FROM YEAR YEAR YEAR YEAR YEAR
JANUARY 31, ENDED ENDED ENDED ENDED ENDED
1999 TO JULY JANUARY JANUARY FEBRUARY FEBRUARY JANUARY
31, 1999 30, 1999 31, 1998 1, 1997 3, 1996 28, 1995
------------ ---------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Ratio of
earnings
to fixed
charges.... 4.0 2.8 1.7 1.5 1.1 3.4
</TABLE>
The ratios of earnings to fixed charges have been computed by
dividing our earnings from continuing operations and our consolidated
subsidiaries before income taxes, extraordinary loss and fixed charges, by
the fixed charges. For purposes of these ratios, fixed charges consist of
interest expense and the portion of rent expense representative of
interest.
USE OF PROCEEDS
The selling securityholders will receive all of the proceeds from the
sale of the debentures pursuant to this prospectus. We will not receive any
of the proceeds from their sale of the debentures.
DIVIDEND POLICY
We have never paid dividends on our common stock and do not intend to
pay dividends in the foreseeable future. As a holding company, our ability
to pay dividends is dependent upon the receipt of dividends or other
payments from Ann Taylor. The payment of dividends by Ann Taylor to us is
subject to restrictions under Ann Taylor's credit facility. Our payment of
cash dividends on the common stock is also subject to restrictions
contained in our guarantee of Ann Taylor's obligations under the credit
facility. Any determination to pay cash dividends in the future will be at
the discretion of our board of directors and will be dependent upon our
results of operations, financial condition, contractual restrictions and
other factors deemed relevant at that time by our board of directors.
DESCRIPTION OF DEBENTURES
The debentures were issued under an indenture dated June 18, 1999,
between us and Ann Taylor and The Bank of New York, as trustee. This
section is only a summary of the provisions of the debentures and the
indenture and the related registration rights agreement and is not
complete. You should refer to these documents for more detailed
information. Wherever we refer to particular provisions or defined terms of
the indenture, we also incorporate these provisions or defined terms into
this prospectus by reference. Unless the context suggests otherwise,
references in this "Description of Debentures" to "we", "us" or "our" refer
to AnnTaylor Stores Corporation and not to its subsidiaries and all
references to the "Subsidiary Guarantor" refer to AnnTaylor, Inc. and not
to its subsidiaries.
GENERAL
The debentures are unsecured obligations, i.e., they are not backed
by a specific pledge of collateral. They are also subordinated obligations
limited to $199,072,000 aggregate principal amount at maturity and will
mature on June 18, 2019. The principal amount at maturity of each debenture
is $1,000 and will be payable by us at the office of the paying agent, or
an office or agency maintained by us for such purpose in the Borough of
Manhattan, City of New York. The paying agent will initially be the
trustee.
The debentures were initially offered at a substantial discount from
their principal amount at maturity. See "United States Federal Income Tax
Considerations -- Cash Interest and Original Issue Discount." The excess of
the stated principal amount at maturity of each debenture over its issue
price, is the original issue discount. The original issue discount began
accruing from the date the debentures were issued. The calculation of the
accrual of the original issue discount in the period during which a
debenture remains outstanding will be on a semiannual bond equivalent basis
using a 360-day year composed of twelve 30-day months.
The debentures will bear interest at the rate of 0.55% per year on
the principal amount due at maturity. Once the debentures are paid in full
or funds are made available for payment in full of the debentures in
accordance with the indenture, interest shall cease to accrue. Interest
accrues from the issue date, or from the most recent date to which interest
has been paid or provided for. Cash interest will be payable at maturity or
earlier purchase, redemption or conversion. Cash interest will also be
payable semiannually on June 18 and December 18 of each year, commencing on
December 18, 1999. Cash interest shall be paid to holders of record at the
close of business on June 3 or December 3, whether or not a business day,
immediately preceding each interest payment date. Each payment of cash
interest on the debentures will include interest accrued through the day
before the applicable interest payment date or the date of maturity,
earlier purchase, redemption or conversion, as the case may be. Any payment
of principal and cash interest required to be made on any day that is not a
business day will be made on the next succeeding business day. In the event
of the maturity, conversion, or redemption of a debenture, original issue
discount and cash interest will cease to accrue on the debenture, under the
terms and subject to the conditions of the indenture. Likewise, this
accrual will cease if the holder of a debenture requires us to purchase it
pursuant to the terms of the indenture.
We may not reissue a debenture that has: (a) matured; (b) been
converted; (c) been purchased by us at the option of a holder; (d) been
redeemed; or (e) been otherwise cancelled, except for purposes of
registration of a transfer, exchange or replacement.
Debentures may be presented for conversion at the office of the
conversion agent and for exchange or registration of transfer at the office
of the registrar. The agent for these purposes shall initially be the
trustee.
FORM, DENOMINATION AND REGISTRATION
Global Debenture; Book-Entry Form
The debentures were issued in registered book-entry form, without
coupons, in denominations of $1,000 principal amount at maturity and
integral multiples of $1,000. There is no service charge for any
registration of transfer or exchange of debentures, but we may require a
holder of debentures to pay for any tax, assessment or other governmental
charge payable in connection with the transfer.
The debentures that are sold under this prospectus will be
represented by one or more global debentures without coupons. The global
debentures will be deposited with a custodian for, and registered in the
name of, a nominee of DTC in New York, New York.
Purchasers of debentures under this prospectus may hold their
interests in a global debenture directly through DTC if they are
participants in DTC. Purchasers who are not DTC participants may own
interests in global debentures only through DTC participants or specified
parties that clear through or maintain a custodial relationship with a DTC
participant. So long as DTC, or its nominee, is the registered owner or
holder of a global debenture, DTC or the nominee will be considered the
sole owner or holder of the debentures represented by the global debenture.
DTC or its participants will be responsible for recording beneficial
ownership interests in global debentures.
DTC has advised that it will only take actions on the debentures that
you would be permitted to take, including presentation of the debentures
for exchange, to the extent that you direct it to do so, and then only with
regards to your ownership interests.
Transfers between participants in DTC will be made according to DTC
rules and will be settled in same-day funds. The ability of a person
holding a beneficial interest in a global debenture to transfer or pledge
its interest to persons or entities who are not DTC participants may be
restricted in states that require persons to take physical delivery of
securities in definitive form, since debentures will only be delivered in
certificated form in the limited circumstances described below.
A beneficial interest in global debentures may only be exchanged for
certificated debentures in the limited circumstances described in the
indenture.
Payments on global debentures will be made to DTC or its nominee.
Neither we, the trustee nor any paying agent will have any responsibility
or liability for payments made to beneficial ownership interests in the
global debentures or for maintaining, supervising or reviewing any records
relating to these beneficial ownership interests. We expect DTC to credit
participants' accounts on the payment date with payments in amounts
proportional to their beneficial interests in the global debenture, unless
it has reason to believe that it will not receive payment. Also, we expect
that any payment by a DTC participant to a non-participant who holds
beneficial interests in a global debenture through that participant will be
governed by standing instructions and customary practices. However, the
participants will be responsible for these payments.
SUBSIDIARY GUARANTEE
Payment of the principal, premium, if any, interest and all other
amounts owed in respect of the debentures are guaranteed on an unsecured
subordinated basis by Ann Taylor, the subsidiary guarantor. The guarantee
of the subsidiary guarantor is, to the extent set forth in the indenture,
subordinated to the guarantor senior indebtedness of the subsidiary
guarantor on the same basis that the debentures are subordinated to our
senior indebtedness. The obligations of the subsidiary guarantor under its
guarantee are limited so as not to constitute a fraudulent conveyance under
applicable Federal or state laws. See "Risk Factors--Subsidiary guarantee
may be unenforceable due to fraudulent conveyance statutes."
SUBORDINATION OF DEBENTURES
Indebtedness evidenced by the debentures is subordinated in right of
payment, as set forth in the indenture, to the prior payment in full of all
our existing and future senior indebtedness. The payment of senior
indebtedness may be in cash or other payment satisfactory to holders of
senior indebtedness. The term "senior indebtedness" shall mean in respect
of AnnTaylor Stores Corporation the following:
(1) the principal, premium, if any, interest and all other amounts
owed in respect of (A) indebtedness of AnnTaylor Stores Corporation
for money borrowed and (B) indebtedness evidenced by securities,
debentures, bonds or other similar instruments issued by AnnTaylor
Stores Corporation;
(2) all capital lease obligations of AnnTaylor Stores Corporation;
(3) all obligations of AnnTaylor Stores Corporation issued or assumed
as the deferred purchase price of property, all conditional sale
obligations of AnnTaylor Stores Corporation and all obligations of
AnnTaylor Stores Corporation under any title retention agreement,
excluding trade accounts payable arising in the ordinary course of
business;
(4) all obligations of AnnTaylor Stores Corporation for the
reimbursement of any letter of credit, banker's acceptance, security
purchase facility or similar credit transaction;
(5) all obligations of the type referred to in clauses (1) through
(4) above of other persons for the payment of which AnnTaylor Stores
Corporation is responsible or liable as obligor, guarantor or
otherwise, including without limitation the guarantee by us of Ann
Taylor's obligations under the credit facility; and
(6) all obligations of the type referred to in clauses (1) through
(5) above of other persons secured by any lien on any of our property
or assets, whether or not such obligation is assumed by us, except
for:
(a) any indebtedness that is by its terms subordinated to or on
an equal basis with the debentures; and
(b) any indebtedness between or among us or our affiliates.
This exception includes all other debt securities and guarantees in respect
of those debt securities issued to any trust, or trustee of the trust,
partnership or other entity affiliated with us that is, directly or
indirectly, a financing vehicle of AnnTaylor Stores Corporation in
connection with the issuance by the financing entity of preferred
securities or other securities that rank on an equal basis with, or junior
to, the debentures.
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 the senior
indebtedness. The holders of the debentures shall be entitled to receive
payment or distribution with respect to any debentures only after the
payment obligations on the senior indebtedness have been satisfied.
By reason of the subordination, no payment may be made on the
debentures if any debentures are declared due and payable prior to their
stated maturity because of the occurrence of an event of default until the
earlier of:
(a) 120 days after the date of the acceleration, or
(b) the payment in full of all senior indebtedness, but only if
the payment is then otherwise permitted under the terms of the indenture.
In the event of dissolution, insolvency, bankruptcy or other similar
proceedings, upon any distribution of our assets, the holders of the
debentures are required to pay over their share of the distribution to the
trustee in bankruptcy, receiver or other person distributing our assets for
application to the payment of all senior indebtedness remaining unpaid, to
the extent necessary to pay all holders of senior indebtedness in full in
cash or other payment satisfactory to the holders of senior indebtedness.
Our unsecured creditors who are not holders of debentures or holders
of senior indebtedness may recover less, ratably, than holders of our
senior indebtedness and may recover more, ratably, than the holders of
debentures. The holders of the debentures shall be entitled to receive
payment or distribution with respect to any debentures only after the
payment obligations on the senior indebtedness have been satisfied.
In addition, no payment of the principal amount at maturity, or, if
the debentures have been converted to semiannual coupon debentures
following a tax event, the "restated principal amount", and no payment of
issue price, accrued original issue discount, redemption price or change in
control purchase price or cash interest with respect to any debentures may
be made by us, nor may we pay cash with respect to the put price of any
debenture, other than for fractional shares, or acquire any debentures for
cash or property except as set forth in the indenture if:
(1) any payment default on any senior indebtedness has occurred and
is continuing beyond any applicable grace period; or
(2) any default, other than a payment default, with respect to
senior indebtedness occurs and is continuing that permits the acceleration
of the maturity of the senior indebtedness and the default is either the
subject of judicial proceedings or we receive a written notice of the
default.
Notwithstanding the foregoing, payments with respect to the
debentures may resume and we may acquire debentures for cash when:
(a) the default with respect to the senior indebtedness is cured
or waived or ceases to exist, or
(b) in the case of a default described in (2) above, 179 or
more days pass after notice of the default is received by us, provided that
the terms of the indenture otherwise permit the payment or acquisition of
the debentures at that time.
If we receive a senior indebtedness default notice, then a
similar notice received within nine months thereafter relating to the same
default on the same issue of senior indebtedness shall not be effective to
prevent the payment or acquisition of the debentures as provided above.
The debentures and the subsidiary guarantee are also effectively
subordinated to all existing and future liabilities of our subsidiaries
other than Ann Taylor, the subsidiary guarantor. Any right that we have to
receive assets of any of our subsidiaries upon their liquidation or
reorganization, and the consequent right of the holders of the debentures
to participate in those assets, will be subject to the claims of that
subsidiary's creditors, including trade creditors. To the extent that we
are recognized as a creditor of one of our subsidiaries, our claims would
still be subordinate to any security interests in the assets of that
subsidiary and any indebtedness of that subsidiary senior to that held by
us.
The subsidiary guarantee is an unsecured subordinated obligation of
the subsidiary guarantor, ranking equally with all other existing and
future subordinated indebtedness of the subsidiary guarantor. The
indebtedness evidenced by the subsidiary guarantee is subordinated on
substantially the same basis to Ann Taylor's guarantor senior indebtedness
as the debentures are subordinated to our senior indebtedness. The term
"guarantor senior indebtedness" shall mean in respect of the subsidiary
guarantor:
(1) the principal, premium, if any, interest and all other amounts
owed in respect of (A) indebtedness of Ann Taylor for money borrowed,
including without limitation the credit facility; and (B)
indebtedness evidenced by securities, debentures, bonds or other
similar instruments issued by Ann Taylor;
(2) all capital lease obligations of Ann Taylor;
(3) all obligations of Ann Taylor issued or assumed as the deferred
purchase price of property, all conditional sale obligations of Ann
Taylor and all obligations of Ann Taylor under any title retention
agreement, but excluding trade accounts payable arising in the
ordinary course of business;
(4) all obligations of Ann Taylor for the reimbursement of any letter
of credit, banker's acceptance, security purchase facility or similar
credit transaction;
(5) all obligations of the type referred to in clauses (1) through
(4) above of other persons for the payment of which Ann Taylor is
responsible or liable as obligor, guarantor or otherwise; and
(6) all obligations of the type referred to in clauses (1) through
(5) above of other persons secured by any lien on any property or
asset of Ann Taylor, whether or not the obligation is assumed by Ann
Taylor, except for any indebtedness that is by its terms subordinated
to or on an equal basis with the subsidiary guarantee.
Guarantor senior indebtedness shall continue to be guarantor senior
indebtedness and entitled to the benefits of the subordination provisions
irrespective of any amendment, modification or waiver of any term of the
guarantor senior indebtedness.
There are no restrictions in the indenture on the creation of
additional senior indebtedness, guarantor senior indebtedness or any other
indebtedness.
CONVERSION RIGHTS
A holder of a debenture may convert the debenture into shares of
common stock at any time before the close of business on June 18, 2019. If
a debenture is called for redemption, the holder may convert it at any time
before the close of business on the redemption date. A holder of a
debenture may deliver a purchase notice or a change in control purchase
notice exercising its option to require us to purchase its debenture. After
that time, a debenture may be converted only if the purchase notice or the
change in control purchase notice is withdrawn by a written notice of
withdrawal delivered by the holder to the paying agent prior to the close
of business on the purchase date or the change in control purchase date, as
the case may be, in accordance with the terms of the indenture.
The initial conversion rate for the debentures is 12.078 shares of
common stock per $1,000 principal amount at maturity, subject to adjustment
upon the occurrence of the events described below. A holder otherwise
entitled to a fractional share of common stock will receive cash in an
amount equal to the market value of that fractional share based on the
closing sale price on the trading day immediately preceding the conversion
date. A holder may convert a portion of its debentures so long as that
portion is $1,000 principal amount at maturity or an integral multiple
thereof.
To convert a debenture, a holder must (1) complete and manually sign
the conversion notice on the back of the debenture or complete and manually
sign a facsimile thereof and deliver the notice to the conversion agent,
which shall initially be the trustee, at the office maintained by the
conversion agent for this purpose, (2) surrender the debenture to the
conversion agent, (3) if required, furnish appropriate endorsements and
transfer documents, and (4) if required, pay all transfer or similar taxes.
Pursuant to the indenture, the date on which all of the foregoing
requirements have been satisfied is the conversion date.
Upon conversion of a debenture, a holder will not receive any cash
payment representing accrued original issue discount or, except as provided
below, accrued cash interest. Our delivery to the holder of the fixed
number of shares of common stock into which the debenture is convertible
together with the cash payment, if any, in lieu of any fractional shares
will satisfy our obligation to pay the principal amount at maturity of the
debenture. The delivery of the common stock into which the debenture is
convertible will also satisfy our obligation to pay the accrued original
issue discount and accrued cash interest attributable to the period from
the issue date to the conversion date. Thus, the accrued original issue
discount and accrued cash interest will be deemed to be paid in full rather
than cancelled, extinguished or forfeited. Notwithstanding the foregoing,
accrued but unpaid cash interest will be payable upon any conversion of
debentures at the option of the holder made concurrently with or after
acceleration of the debentures following an event of default described
under "-- Events of Default; Notice and Waiver".
Debentures 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 of the interest payment date must
be accompanied by payment of an amount equal to the interest thereon that
the registered holder is to receive. This foregoing payment requirement
does not apply to debentures that are redeemed during that same period.
Except where debentures surrendered for conversion must be accompanied by
payment as described above, no interest on converted debentures will be
payable by us on any interest payment date subsequent to the date of
conversion. The conversion rate will not be adjusted at any time during the
term of the debentures for accrued original issue discount or accrued cash
interest. A certificate for the number of full shares of common stock into
which any debenture is converted and cash in lieu of any fractional shares
will be delivered as soon as practicable, but in any event no later than
the seventh business day following the conversion date. For a summary of
the U.S. federal income tax treatment of a holder receiving common stock
upon conversion, see "United States Federal Income Tax Considerations
- --Disposition or Conversion of Debentures."
In the event we exercise our option to have interest in lieu of
original issue discount accrue on a debenture following a tax event, the
holder will be entitled on conversion to receive the same number of shares
of common stock that the holder would have received if we had not exercised
such option. See "Description of Debentures - We may convert the debentures
to semiannual coupon debentures upon specified tax events."
The conversion rate is subject to adjustment in specified events,
including
(a) the issuance of shares of common stock as a dividend or a
distribution with respect to common stock,
(b) subdivisions, combinations and reclassification of common
stock,
(c) the issuance to all holders of common stock of rights or
warrants entitling them for a period not exceeding 45 days, to subscribe
for shares of common stock at less than the then market price of the common
stock,
(d) the distribution to holders of common stock of evidences of
our indebtedness, securities or capital stock, cash or assets, including
securities, but excluding those rights, warrants, dividends and
distributions referred to above and dividends and distributions paid
exclusively in cash,
(e) the payment of dividends and other distributions on common
stock paid exclusively in cash, excluding cash dividends if the annualized
per share amount of the dividend does not exceed 15% of the current market
price of common stock as of the trading day immediately preceding the date
of declaration of the dividend, and
(f) payment to holders of common stock in respect of a tender
or exchange offer other than an odd-lot offer by us for common stock at a
price in excess of 110% of the then market price of common stock as of the
trading day next succeeding the last date tenders or exchanges may be made
pursuant to a tender or exchange offer.
However, no adjustment need be made if holders may participate in the
transactions otherwise giving rise to an adjustment on a basis and with
notice that our board of directors determines to be fair and appropriate,
or otherwise.
Rather than being entitled to an adjustment in the conversion rate,
the holder of a debenture upon its conversion will be entitled to receive,
in addition to the shares of common stock into which such debenture is
convertible, the kind and amounts of assets, debt securities or rights,
options or warrants comprising the distribution that the holder would have
received if that holder had converted the debenture immediately prior to
the record date for determining the shareholders entitled to receive the
distribution in the following circumstances:
o in cases where the fair market value of the portion of assets,
debt securities or rights, warrants or options to purchase our
securities applicable to one share of common stock distributed
to stockholders exceeds the average sale price per share of
common stock by less than $1.00; or
o in cases where the average sale price exceeds the fair market
value of the portion of assets, debt securities or rights,
warrants or options so distributed by less than $1.00.
The indenture permits us to increase the conversion rate from time to
time.
In the event that we shall be a party to any transaction pursuant to
which the common stock is converted into the right to receive other
securities, cash or other property, then the holders of debentures then
outstanding shall have the right to convert the debentures into the kind
and amount of securities, cash or other property receivable upon the
consummation of the transaction by a holder of the number of shares of
common stock issuable upon conversion of the debentures immediately prior
to that transaction. The transactions referred to in this paragraph,
include, without limitation,
(a) a recapitalization or reclassification of our common stock,
(b) a consolidation with, or merger into, any other person, or
any merger of another person into our company,
(c) any sale, transfer or lease of all or substantially all of our
assets, or
(d) any compulsory share exchange.
The foregoing change could substantially lessen or eliminate the
value of the conversion privilege associated with the debentures in the
future. For example, if we were acquired in a cash merger, each debenture
would become convertible solely into cash and would no longer be
convertible into securities whose value would vary depending on our future
prospects and other factors.
In the event of a taxable distribution to holders of common stock
which results in an adjustment of the conversion rate, or in which holders
otherwise participate, or in the event the conversion rate is increased at
our discretion, the holders of the debentures may, in designated
circumstances, be deemed to have received a distribution subject to United
States federal income tax as a dividend. Moreover, in other circumstances,
the absence of this kind of adjustment to the conversion rate may result in
a taxable dividend to holders of common stock. See "United States Federal
Income Tax Considerations -- Adjustment of Conversion Price."
WE MAY REDEEM THE DEBENTURES ON OR AFTER JUNE 18, 2004
No sinking fund is provided for the debentures. Prior to June 18,
2004, the debentures will not be redeemable at our option. On and after
that date, we may redeem the debentures for cash as a whole at any time, or
from time to time in part, upon not less than 30 days' nor more than 60
days' notice of redemption given by mail to holders of debentures, unless a
shorter notice period shall be satisfactory to the trustee. This redemption
shall be at the redemption prices set forth below plus accrued cash
interest to the redemption date. Any redemption must be in integral
multiples of $1,000 principal amount at maturity.
The table below shows the amount of original issue discount accrued
for each annual period until maturity and the redemption prices of a
debenture per $1,000 principal amount at maturity on June 18, 2004, at each
June 18 thereafter prior to maturity, and at maturity on June 18, 2019,
which prices reflect the accrued original issue discount calculated to each
designated date. The redemption price of a debenture redeemed between these
dates would include an additional amount reflecting the additional original
issue discount accrued since the next preceding date in the table to the
redemption date.
(1) (2) (3)
DEBENTURE ACCRUED ORIGINAL REDEMPTION
REDEMPTION DATE ISSUE PRICE ISSUE DISCOUNT PRICE (1)+(2)
- --------------- ----------- ---------------- -------------
June 18, 2000................ $552.56 $15.37 N/A
June 18, 2001................ 552.56 31.31 N/A
June 18, 2002................ 552.56 47.86 N/A
June 18, 2003................ 552.56 65.03 N/A
June 18, 2004................ 552.56 82.86 $ 635.42
June 18, 2005................ 552.56 101.36 653.92
June 18, 2006................ 552.56 120.56 673.12
June 18, 2007................ 552.56 140.49 693.05
June 18, 2008................ 552.56 161.17 713.73
June 18, 2009................ 552.56 182.63 735.19
June 18, 2010................ 552.56 204.91 757.47
June 18, 2011................ 552.56 228.03 780.59
June 18, 2012................ 552.56 252.02 804.59
June 18, 2013................ 552.56 276.93 829.49
June 18, 2014................ 552.56 302.77 855.33
June 18, 2015................ 552.56 329.60 882.16
June 18, 2016................ 552.56 357.44 910.00
June 18, 2017................ 552.56 386.33 938.89
June 18, 2018................ 552.56 416.32 968.88
At Stated Maturity........... 552.56 447.44 1,000.00
If converted to semiannual coupon debentures following the occurrence
of a tax event, the debentures will be redeemable at the restated principal
amount plus accrued and unpaid interest from the date of the conversion to
the redemption date. In no event may the debentures be redeemed prior to
June 18, 2004. See "Description of Debentures - We may convert the
debentures to semiannual coupon debentures upon specified tax events."
If fewer than all of the debentures are to be redeemed, the trustee
shall select the debentures to be redeemed in principal amounts at maturity
of $1,000 or integral multiples thereof by lot, pro rata or by another
method the trustee considers fair and appropriate. If a portion of a
holder's debentures is selected for partial redemption and that holder
converts a portion of those debentures prior to redemption, the converted
portion shall be deemed, solely for purposes of determining the aggregate
principal amount at maturity of debentures to be redeemed by us, to be of
the portion selected for redemption.
YOU MAY REQUIRE US TO REPURCHASE THE DEBENTURES AS OF A SPECIFIED PURCHASE
DATE
On June 18, 2004, June 18, 2009 and June 18, 2014, we will become
obligated to purchase, at the option of the holder, at the put prices set
forth below plus accrued cash interest to the purchase date, any
outstanding debenture for which a written purchase notice has been
delivered by the holder. The purchase notice shall be delivered to the
paying agent or an office or agency maintained by us for this purpose in
the Borough of Manhattan, The City of New York, at any time from the
opening of business on the date that is 20 business days preceding the
purchase date until the close of business on the purchase date. If the
purchase notice is withdrawn prior to the purchase date, our obligation to
pay shall cease. Our obligation to pay is further subject to the additional
conditions set forth in part in the following paragraphs.
The table below shows the put prices of a debenture as of the
specified purchase dates (equal to the issue price plus accrued original
issue discount to the respective purchase date):
PURCHASE DATE PUT PRICE
------------- ---------
June 18, 2004 $635.42
June 18, 2009 $735.19
June 18, 2014 $855.33
If prior to the purchase date the debentures have been converted to
semiannual coupon debentures following the occurrence of a tax event, the
put price will be equal to the restated principal amount plus accrued and
unpaid cash interest from the date of the conversion to, but excluding, the
purchase date. See "Description of Debentures We may convert the debentures
to semiannual coupon debentures upon specified tax events."
We, at our option, may elect to pay the put price in cash or common
stock, or any combination thereof. For a summary of the U.S. federal income
tax treatment of this type of transaction, see "United States Federal
Income Tax Considerations -- Disposition or Conversion of Debentures."
We will give notice not less than 20 business days prior to each
purchase date to all holders at their addresses shown in the register of
the registrar and to beneficial owners as required by applicable law
stating, among other things,
(a) whether the Company will pay the put price of the debentures in
cash or common stock, or any combination thereof, and
(b) the procedures that holders must follow to require us to purchase
debentures from the holders.
The purchase notice given by any holder requiring us to purchase
debentures shall state:
(1) the certificate numbers of the debentures to be delivered by the
holder for purchase by us;
(2) the portion of the principal amount at maturity of debentures to
be purchased, which portion must be $1,000 or an integral multiple
thereof;
(3) that the debentures are to be purchased by us pursuant to the
applicable provisions of the debentures; and
(4) if we elect, pursuant to our notice, to pay a specified
percentage of the put price in shares of common stock but the
specified percentage is ultimately to be paid in cash because any of
the conditions to payment of the specified percentage of the put
price in shares of common stock contained in the indenture is not
satisfied prior to the close of business on the purchase date, as
described below, that the holder elects:
(a) to withdraw the purchase notice as to some or all of the
debentures to which it relates stating the principal amount at
maturity and certificate numbers of the debentures as to which
the withdrawal shall relate; or
(b) to receive cash in respect of the put price of all
debentures subject to the purchase notice.
If the holder fails to indicate the holder's choice with respect to the
election described in clause (4) above in the purchase notice, the holder
will be deemed to have elected to receive cash for the specified percentage
of the put price that was to have been payable in shares of common stock.
See "United States Federal Income Tax Considerations -- Disposition or
Conversion of Debentures."
Any purchase notice may be withdrawn by the holder by a written
notice of withdrawal delivered to the paying agent prior to the close of
business on the purchase date. The notice of withdrawal shall state the
principal amount at maturity and the certificate numbers of the debentures
as to which the withdrawal notice relates and the principal amount at
maturity, if any, which remains subject to the purchase notice.
If we elect to pay the put price, in whole or in part, in shares of
common stock, the number of shares to be delivered in respect of the
specified percentage of the put price to be paid in common stock will be
equal to the dollar amount of the specified percentage of the put price
divided by the market price of a share of common stock. However, no
fractional shares of common stock will be delivered upon any purchase by us
of debentures in payment, in whole or in part, of the put price. Instead,
we will pay cash based on the market price for all fractional shares of
common stock. Each holder whose debentures are purchased at the option of
that holder as of the purchase date will receive the same percentage of
cash or common stock in payment of the put price for those debentures,
except as described above with regard to the payment of cash in lieu of
fractional shares of common stock. See "United States Federal Income Tax
Considerations -- Disposition or Conversion of Debentures."
The "market price" means the average of the sale prices of the common
stock for the five trading day period ending on the third trading day prior
to the applicable purchase date, or other date in question, for purposes of
adjusting the conversion rate. The market price will be appropriately
adjusted to take into account the actual occurrence, during the seven
trading days preceding the purchase date, or other date in question, for
purposes of adjusting the conversion rate, of events that would result in
an adjustment of the conversion rate with respect to the common stock.
The "sale price" on any trading day means, (a) the closing per share
sale price for the common stock or, (b) if no closing sale price is
reported, the average of the bid and ask prices or, (c) if more than one in
either case, the average of the average bid and average ask prices as
reported in the composite transactions for the principal United States
securities exchange on which the common stock is traded or, (d) if the
common stock is not listed on a United States national or regional
securities exchange, the average of the closing and average prices as
reported by the National Association of Securities Dealers Automated
Quotation System.
A "trading day" means each day on which the securities exchange or
quotation system which is used to determine the sale price is open for
trading or quotation. We may pay the put price, in whole or in part, in
common stock only if the information necessary to calculate the market
price is reported in The Wall Street Journal or another daily newspaper of
national circulation.
Because the market price of the common stock is determined prior to
the purchase date, holders of debentures bear the market risk with respect
to the value of the common stock to be received from the date such market
price is determined to the purchase date.
Upon determination of the actual number of shares of common stock
issuable in accordance with the foregoing provisions, we will publish such
determination in The Wall Street Journal or another daily newspaper of
national circulation.
Our right to purchase debentures, in whole or in part, with shares of
common stock is subject to our satisfying various conditions, including the
registration of the common stock under the Securities Act and the Exchange
Act, unless there exists an applicable exemption to registration
thereunder. If those conditions are not satisfied prior to the close of
business on the purchase date, we will pay the put price of the debentures
in cash. We will comply with the provisions of Rule 13e-4 and any other
tender offer rules under the Exchange Act which may then be applicable and
will file Schedule 13E-4 or any other schedule required thereunder in
connection with any offer by us to purchase debentures at the option of the
holders of those debentures on a purchase date. We may not change the form
of consideration or components or percentages of components thereof to be
paid once we have given our notice to holders of debentures except as
described in the second sentence of this paragraph.
Payment of the put price for a debenture for which a purchase notice
has been delivered and not withdrawn is conditioned upon delivery of that
debenture together with necessary endorsements to the paying agent or an
office or agency maintained by us for that purpose in the Borough of
Manhattan, The City of New York, at any time, whether prior to, on or after
the purchase date, after delivery of the purchase notice. Payment of the
put price for the debenture will be made promptly following the later of
the business day following the purchase date and the time of delivery of
the debenture. If the paying agent holds, in accordance with the terms of
the indenture, money or securities sufficient to pay the put price of the
debenture on the business day following the purchase date, then,
immediately after the purchase date, that debenture will cease to be
outstanding. Also, cash interest and original issue discount on the
debenture will cease to accrue and will be deemed paid, whether or not the
debenture is delivered to the paying agent. All other rights of the holder
shall terminate as well, other than the right to receive the put price upon
delivery of the debenture.
No debentures may be purchased pursuant to the provisions described
above if there has occurred and is continuing an event of default described
under "Events of Default; Notice and Waiver" other than a default in the
payment of the put price with respect to the debentures. If we become
obligated to purchase any outstanding debenture on a purchase date, there
can be no assurance that the company would have sufficient funds to pay the
put price on that purchase date for all the debentures tendered by the
holders thereof. Any future credit agreements or other agreements relating
to other indebtedness, including senior indebtedness, to which we become a
party may provide that the maturing of any obligation to purchase the
debentures would constitute an event of default thereunder and may restrict
or prohibit the repurchase of the debentures. In the event a purchase date
occurs at a time when we are prohibited from repurchasing the debentures,
we could seek the consent of our then existing lenders to repurchase the
debentures or could attempt to refinance the borrowings that contain
prohibitions. If we do not obtain consent or repay these borrowings, we
would remain prohibited from repurchasing the debentures. Our failure to
repurchase debentures required to be repurchased under the terms of the
indenture would constitute an event or default under the indenture and
would likely constitute a default under the terms of any of our other
indebtedness outstanding at the time, including senior indebtedness. In
these circumstances, the subordination provisions in the indenture would
likely prohibit or restrict payments to the holders of debentures.
YOU MAY REQUIRE US TO REPURCHASE THE DEBENTURES UPON A CHANGE OF CONTROL OF
OUR COMPANY
If any change in control of our business occurs on or prior to June
18, 2004, each holder of debentures will have the right, at the holder's
option, subject to the terms and conditions of the indenture, to require us
to purchase all or any part of the holder's debentures. The principal
amount at maturity of debentures to be purchased must be $1,000 or an
integral multiple of that amount. The change in control purchase date shall
be 30 business days after the occurrence of the change in control. The cash
price shall be equal to the issue price plus accrued original issue
discount and accrued cash interest to the change in control purchase date.
If prior to a change in control purchase date the debentures have been
converted to semiannual coupon debentures following the occurrence of a tax
event, we will be required to purchase the debentures at a cash price equal
to the restated principal amount plus accrued and unpaid interest from the
date of the conversion to, but excluding, the change in control purchase
date. Holders will not have any right to require us to purchase debentures
in the event of any change in control of our business occurring after June
18, 2004.
Within 15 business days after the change in control, we will mail to
the trustee and to each holder and to beneficial owners as required by
applicable law a notice regarding the change in control, which notice shall
state, among other things:
o the date of the change in control and, briefly, the events
causing the change in control,
o the date by which the change in control purchase notice must be
given,
o the change in control purchase date,
o the change in control purchase price,
o the name and address of the paying agent and the conversion
agent,
o the conversion rate and any adjustments thereto,
o that debentures with respect to which a change in control
purchase notice has been given may be converted into common
stock at any time prior to the close of business on the change
of control purchase date only if the change in control purchase
notice has been withdrawn by the holder in accordance with the
terms of the indenture,
o that debentures must be surrendered to the paying agent to
collect payment,
o that the change in control purchase price for any debenture as
to which a purchase notice has been given and not withdrawn will
be paid promptly following the later of the change in control
purchase date and the time of surrender of the debenture to the
paying agent,
o the procedures that holders must follow to exercise their rights
vis-a-vis a change in control of the company and a brief
description of those rights,
o briefly, the conversion rights of holders of debentures, and
o the procedures for withdrawing a change in control purchase
notice.
We will cause a copy of the notice to be published in The Wall Street
Journal or another daily newspaper of national circulation.
To exercise the purchase right, the holder must deliver written
notice of the exercise of the right to the paying agent or an office or
agency maintained by us for that purpose in the Borough of Manhattan, The
City of New York, prior to the close of business on the change in control
purchase date. The change in control purchase notice shall state:
o the certificate numbers of the debentures to be delivered by the
holder for purchase by us,
o the portion of the principal amount at maturity of debentures to
be purchased, which portion must be $1,000 or an integral
multiple thereof, and
o that the debentures are to be purchased by us pursuant to the
applicable provisions of the debentures.
Any change in control purchase notice may be withdrawn by the holder
by a written notice of withdrawal delivered to the paying agent prior to
the close of business on the change in control purchase date. The notice of
withdrawal shall state the principal amount at maturity and the certificate
numbers of the debentures as to which the withdrawal notice relates and the
principal amount at maturity, if any, which remains subject to a change in
control purchase notice.
Payment of the change in control purchase price for a debenture for
which a change in control purchase notice has been delivered and not
withdrawn is conditioned upon delivery of the debenture together with
necessary endorsements to the paying agent or an office or agency
maintained by us for that purpose in the Borough of Manhattan, The City of
New York, at any time after the delivery of the change in control purchase
notice. The debenture may be delivered prior to, on or after the change in
control purchase date. Payment of the change in control purchase price for
a debenture will be made promptly following the later of the business day
following the change in control purchase date and the time of delivery of
the debenture. If the paying agent holds, in accordance with the terms of
the indenture, money sufficient to pay the change in control purchase price
of the debenture on the business day following the change in control
purchase date, then, immediately after the change in control purchase date,
the debenture will cease to be outstanding. In addition, cash interest and
original issue discount on the debenture will cease to accrue and will be
deemed paid, whether or not the debenture is delivered to the paying agent.
All other rights of the holder will terminate, as well other than the right
to receive the change in control purchase price upon delivery of the
debenture.
Under the indenture, a "change in control" of our business is deemed
to have occurred at such time as:
o any person (as the term "person" is used in Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act), other than us, any of our
subsidiaries, or any employee benefit plan of either us or any
of our subsidiaries, files a Schedule 13D or 14D-1 under the
Exchange Act or any successor schedule, form or report,
disclosing that the person has become the beneficial owner of
50% or more of the total voting power in the aggregate of all
classes of capital stock of our business then outstanding
normally entitled to vote in elections of directors, with
exceptions, or
o there shall be consummated any consolidation or merger of our
business pursuant to which the common stock would be converted
into cash, securities or other property, in each case, other
than a consolidation or merger in which the holders of common
stock immediately prior to the consolidation or merger have,
directly or indirectly, at least a majority of the total voting
power in the aggregate of all classes of capital stock of the
continuing or surviving corporation normally entitled to vote in
elections of directors immediately after the consolidation or
merger, or
o the occurrence of any transaction or event in connection with
which all or substantially all common stock shall be exchanged
for, converted into, acquired for or constitute solely the right
to receive consideration, whether by means of an exchange offer,
liquidation, tender offer, consolidation, merger, combination,
reclassification, recapitalization or otherwise, all or
substantially all of which consists of common stock which is
(or, upon consummation of or immediately following such
transaction or event, will be) listed on a United States
national securities exchange or approved for quotation on the
Nasdaq National Market or any similar United States system of
automated dissemination of quotations of securities prices.
The indenture does not permit the board of directors to waive our
obligation to purchase debentures at the option of a holder in the event of
a change in control of our business.
We will comply with the provisions of Rule 13e-4, Rule 14e-1 and any
other tender offer rules under the Exchange Act which may then be
applicable, and will file Schedule 13E-4 or any other schedule required
thereunder in connection with any offer by us to purchase debentures at the
option of the holders thereof upon a change in control. The change in
control purchase feature of the debentures may in certain circumstances
make more difficult or discourage a takeover of our business and, thus, the
removal of incumbent management. The change in control purchase feature,
however, is not the result of management's knowledge of any specific effort
to accumulate shares of common stock or to obtain control of our business
by means of a merger, tender offer, solicitation or otherwise, or part of a
plan by management to adopt a series of anti-takeover provisions. Instead,
the change in control purchase feature is a standard term contained in
other offerings of securities comparable to the debentures that have been
marketed by the initial purchasers, and the terms of this feature result
from negotiations between us and the initial purchasers.
If a change in control were to occur, there can be no assurance that
we would have funds sufficient to pay the change in control purchase price
for all of the debentures that might be delivered by holders seeking to
exercise the purchase right.
We might also be required to prepay senior indebtedness having
financial covenants with change of control provisions in favor of the
holders of the senior indebtedness. In addition, our senior indebtedness,
including our guarantee of Ann Taylor's credit facility, may have
cross-default provisions that could be triggered by a default under the
change of control provisions, thereby possibly accelerating the maturity of
the senior indebtedness. In this case, the holders of the debentures would
be subordinated to the prior claims of the holders of the senior
indebtedness. In addition, our ability to purchase debentures with cash may
be limited by the terms of our then-existing borrowing agreements. No
debentures may be purchased pursuant to the provisions described above if
there has occurred and is continuing an event of default described under
"--Events of Default, Notice and Waiver". Debentures may be purchased,
however, if there is a default in the payment of the change in control
purchase price with respect to those debentures.
REGISTRATION RIGHTS
We entered into a registration rights agreement with the initial
purchasers of the debentures. If you sell debentures or common stock issued
upon conversion of the debentures under this registration statement, you
generally will be required to be named as a selling securityholder in this
prospectus, deliver this prospectus to purchasers and be bound by
applicable provisions of the registration rights agreement, including some
indemnification provisions.
In this registration rights agreement, we agreed to file a
registration statement that includes this prospectus with the Securities
and Exchange Commission by September 16, 1999. We agreed to use all
reasonable efforts to cause this registration statement to become effective
as promptly as practicable, but before December 15, 1999. We agreed to keep
this registration statement effective until either all of the securities
registered under this under this registration agreement are sold, or the
period applicable to the debentures and underlying shares of our common
stock held by non-affiliates under Rule 144(k) under the Securities Act
expires. We may suspend the use of this prospectus under limited
circumstances, including pending corporate developments or public filings
with the Securities and Exchange Commission, for a period not to exceed 45
days in any 3-month period and 90 days in any 12-month period. We also
agreed to pay liquidated damages to holders of debentures and shares of
common stock issued upon conversion of the debentures if the registration
statement is not timely filed or made effective or if the prospectus is
unavailable for periods in excess of those permitted above. You should
refer to the indenture for a description of these liquidated damages.
WE MAY CONSOLIDATE, MERGE OR SELL OUR ASSETS WITHOUT YOUR CONSENT
We may consolidate with, merge into, transfer or lease all or
substantially all of our assets to any person or entity without the consent
of the holders of the debentures if specified conditions are satisfied,
including:
o the other person is an entity organized and existing under the
laws of a United States jurisdiction and expressly assumes our
obligations on the debentures and under the indenture; and
o immediately after this transaction, no default event, and no
event which, after notice or lapse of time or both, would
become a default event, is continuing.
WE MAY CONVERT THE DEBENTURES TO SEMIANNUAL COUPON DEBENTURES UPON SPECIFIED
TAX EVENTS
If a specified tax event occurs, we will have the option to elect to
have cash interest accrue and be payable at 3.50% per year on a restated
principal amount per debenture in lieu of future original issue discount
and the cash interest provided for under the indenture. This interest would
accrue from the date on which we exercise this option and would by payable
semiannually. Our exercise of this option could alter the timing of income
recognition by holders of the debentures with respect to these semiannual
interest payments. See "United States Federal Income Tax Considerations."
For the purposes of this option:
o the restated principal amount would equal the issue price of
the debenture plus original issue discount accrued to the later
of the date immediately prior to the tax event or the date on
which we exercise this option; and
o a tax event means that we shall have received an opinion from
independent tax counsel that, on or after June 18, 1999, as a
result of any amendment to, change in, or announced prospective
change in, the laws or regulations of the United States or any
political subdivision or taxing authority of the United States,
or any amendment to, or change in, an interpretation or
application of these laws or regulations by any legislative
body, court, governmental agency or regulatory authority, there
is more than an insubstantial risk that interest or original
issue discount payable on the debentures would not be
deductible on a current accrual basis or under any other method
for United States federal income tax purposes.
President Clinton's fiscal year 2000 budget proposes a tax law change
that would, if enacted and made applicable to the debentures, prevent us
from deducting interest, including original issue discount, payable on the
debentures on a current accrual basis for United States federal income tax
purposes. It could also cause some or all of the interest, including
original issue discount, payable on the debentures to fail to be deductible
by us under any other method for United States federal income tax purposes.
If this proposal or any similar future proposal is enacted and made
applicable to the debentures, the result would be a tax event and the terms
of the debentures would be subject to modification at our option as
described above.
EVENTS OF DEFAULT; NOTICE AND WAIVER
Default events.
The indenture defines a default event as:
o our failure to pay principal, accrued cash interest, if the
default continues for 31 days, or original issue discount or
other amounts due on the debentures, whether or not payment is
prohibited by the subordination provisions of the debenture and
the indenture,
o our failure to deliver shares of common stock when required
upon conversion of a debenture, and failure to remedy this
within 10 days after the required delivery date,
o our failure to comply with any other agreement in the
debentures or the indenture, after we receive notice of default
from the trustee or holders of at least 25% of the aggregate
principal amount at maturity of the debentures then
outstanding, and our failure to cure this failure within 90
days after we receive notice,
o default on any debt in excess of $15,000,000 which results in
that debt being accelerated, without that debt being discharged
or the acceleration being rescinded or annulled within 20 days
after we receive notice of default from the trustee or holders
of at least 25% of the aggregate principal amount at maturity
of debentures then outstanding,
o the Subsidiary Guarantee ceases to be, or shall be asserted in
writing by the subsidiary guarantor, or any person acting on
behalf of the subsidiary guarantor, not to be in full force and
effect, other than by reason of termination of the indenture or
the release of the Subsidiary Guarantee in accordance with the
indenture, or
o designated events of bankruptcy or insolvency.
Notice.
Within 90 days after a default event, the trustee will mail notice of
all defaults of which it is aware to the debenture holders, unless these
defaults have been cured or waived prior to the mailing. However, the
trustee may elect to withhold notice of a default, other than a payment
default, if the trustee determines in good faith that this is in the
interests of the debenture holders.
Remedies upon default events.
If a default event occurs and continues, the trustee or the holders
of at least 25% in principal amount at maturity of the debentures
outstanding may declare the debentures to be due and payable immediately.
If we experience bankruptcy or insolvency, the debentures automatically
become immediately due and payable. If our obligations under the debentures
have accelerated, we cannot make any payment until the earlier of our
payment in full of all outstanding senior debt or 120 days after the
acceleration, subject to limited exceptions.
Trustee.
Generally, the trustee will be under no obligation to exercise any
right or power under the indenture or otherwise incur financial liability
unless the debenture holders have offered reasonable indemnity against
loss, liability or expense that is satisfactory to the trustee. We are
required to furnish the trustee with an annual statement of our defaults
under the indenture, and we must give the trustee 5 business days notice of
any default.
Requirements to pursue remedies.
Before any debenture holder may pursue any remedy with respect to the
debentures or the indenture, the following conditions must be satisfied:
o the debenture holder wishing to pursue a remedy must give
the trustee written notice of a continuing default event,
o the holders of at least 25% in aggregate principal amount
at maturity of the outstanding debentures must make a
written request to the trustee to pursue the remedy,
o the debenture holder(s) wishing to pursue the remedy must
have offered the trustee reasonable security or indemnity
against any loss, liability or expense satisfactory to
the trustee,
o the trustee has not instituted the proceeding requested
by the debenture holders within 60 days after it receives
the notice, and
o the holders of a majority in aggregate principal amount
at maturity of the outstanding debentures shall not have
given the trustee instructions that are different from
the original request.
However, notwithstanding these requirements, the rights of each
debenture holder to receive their principal, premium and interest on the
debentures, to convert their debentures into common stock or to bring suit
to enforce either of these rights will not be impaired without each
debenture holder's consent.
Waiver.
The holders of a majority in aggregate principal amount at maturity
of the debentures outstanding may waive past defaults and their
consequences, except for:
o payment defaults on the debentures,
o defaults on the conversion rights of the debentures, or
o defaults on designated provisions in the indenture that
may not be modified without the consent of the individual
debenture holder affected.
AMENDMENT OF THE INDENTURE OR DEBENTURES
Limited modifications, including curing ambiguities, omissions or
defects or making other changes that do not harm the debentures holders,
may be made without the consent of the debenture holders. However,
generally, neither we nor the trustee may amend the indenture or the
debentures without the consent of holders of a majority in aggregate
principal amount at maturity of the debentures. In addition, the following
amendments require the consent of each debenture holder affected by the
modification:
o reducing the principal, original issue discount or cash
interest due on the debentures, extending the stated maturity
of the debentures or changing the form of consideration in
which the debentures are payable;
o reducing the principal amount of debentures whose holders must
consent to an amendment or waiver under the indenture or
modifying the indenture or provisions relating to amendments or
waivers;
o making any change that harms the right to convert any debenture
or any option to require us to purchase a debenture;
o modifying the subordination provisions of the indenture in a
manner adverse to the debenture holders; or
o impairing the right to sue to enforce any payment on or
conversion of the debentures.
In addition, any amendment that would harm the rights of senior debt
holders requires the consent of the senior debt holders under the terms of
the relevant senior debt.
Without the consent of any holder of debentures, we, the subsidiary
guarantor and the trustee may amend
the indenture to
o cure any ambiguity, defect or inconsistency, provided, however,
that such amendment does not materially adversely affect the
rights of any holder;
o provide for the assumption by a successor to us of our
obligations or the assumption by a successor to the subsidiary
guarantor of the subsidiary guarantor's obligations under the
indenture;
o provide for uncertificated debentures in addition to
certificated debentures, as long as such uncertificated
debentures are in registered form for United States federal
income tax purposes;
o make any change that does not adversely affect the rights of
any holder of debentures;
o make any change to comply with any requirement of the
Securities and Exchange Commission in connection with the
qualification of the indenture under the Trust Indenture Act of
1939; or
o add to our covenants or obligations or the covenants or
obligations of the subsidiary guarantor under the indenture for
the protection of holders of the debentures or surrender any
right, power or option conferred by the indenture for us or the
subsidiary guarantor.
DISCHARGE OF THE INDENTURE
Our obligations under the indenture will be discharged if:
o all outstanding debentures are delivered to the trustee for
cancellation; or
o if we deliver to the trustee, the paying agent or the
conversion agent cash or common stock sufficient to pay off all
outstanding debentures and sums due under the indenture after
the debentures have become due and payable.
NO RECOURSE AGAINST OTHERS
The indenture provides that none of our directors, officers,
employees or stockholders, as such, shall have any liability for any of our
obligations under the debentures or the indenture or for any claim based
on, in respect of or by reason of these obligations or their creation.
DESTRUCTION, LOSS OR THEFT OF DEBENTURES
In case one of your debentures becomes mutilated, defaced, destroyed,
lost or stolen, we will execute and upon our request the trustee will
authenticate and deliver a new debenture with the same maturity and date of
issuance, an equal principal amount at maturity, registered in the same
manner and dated the date of its authentication. You must provide us with
evidence that you owned the debenture and evidence of its destruction, loss
or theft. You must also provide us and the trustee with a security or
indemnity for the substituted debenture. You may have to pay for fees and
expenses for issuing the substituted debenture.
LIMITATIONS OF CLAIMS IN BANKRUPTCY
If a bankruptcy proceeding is commenced in respect of our business or
the subsidiary guarantor, under Title 11 of the United States Code, the
claim of a holder of a debenture may be limited to the issue price of the
debenture plus that portion of the original issue discount, together with
any cash interest, that is deemed to have accrued from the date of issue to
the commencement of the proceeding. In addition, the debentures will be
subordinated in right of payment to senior indebtedness and guarantor
senior indebtedness and effectively subordinated to the indebtedness and
other obligations of our subsidiaries, other than the subsidiary guarantor,
and the subsidiary guarantor's subsidiaries.
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of United States federal income tax
considerations relating to the purchase, ownership, disposition, and
conversion of debentures. Unless otherwise stated, this summary deals only
with debentures held as capital assets (generally, assets held for
investment under the Internal Revenue Code of 1986, as amended) by a holder
who purchases debentures upon original issuance and who is, for United
States federal income tax purposes:
o a citizen or resident of the United States;
o a corporation created or organized in or under the laws of the
United States or any of its political subdivisions;
o an estate, the net income of which is subject to United States
federal income taxation regardless of its source; or
o a trust, the administration of which is subject to the primary
supervision of a court within the United States and which has
one or more United States Persons with authority to control
all substantial decisions.
The tax treatment of a holder of debentures may vary depending on his
particular situation. This summary does not address all of the tax
consequences that may be relevant to holders who may be subject to special
tax rules such as, for example, rules relating to persons who are not
citizens or residents of the United States; banks and financial
institutions; insurance companies; broker-dealers; tax-exempt
organizations; and persons who hold debentures as part of a hedge,
conversion or constructive sale transaction, straddle or other risk
reduction transaction. In addition, this summary does not address any
aspects of state, local or foreign tax laws. Furthermore, this discussion
does not address the tax consequences applicable to holders that are
treated as partnerships or other passthrough entities for United States
federal income tax purposes. This summary is based on the United States
federal income tax law in effect as of the date hereof, which is subject to
change, possibly on a retroactive basis. An investor considering the
purchase of debentures should consult his tax advisor as to the particular
tax consequences of purchasing, owning, and disposing of debentures,
including the application and effect of United States federal, state,
local, and foreign tax laws.
CASH INTEREST AND ORIGINAL ISSUE DISCOUNT
The debentures were initially issued at a substantial discount from
their stated principal amount at maturity. For United States federal income
tax purposes, the excess of the stated principal amount at maturity of each
debenture over the issue price (the initial offering price to the initial
purchasers at which the debentures were sold) constitutes original issue
discount. In addition to stated cash interest on a debenture, which will be
taxable to a holder as ordinary interest income at the time it accrues or
is paid in accordance with the holder's method of accounting for United
States federal income tax purposes, holders of debentures will be required
to include original issue discount in income periodically over the term of
the debentures before receipt of the cash or other payment attributable to
such income. For United States federal income tax purposes, each holder of
a debenture must generally include in gross income a portion of the
original issue discount in each taxable year during which the debenture is
held in an amount equal to the original issue discount that accrues on the
debenture during such period, determined by using a constant yield to
maturity method. The original issue discount included in income for each
year will be calculated under a compounding formula that will result in the
allocation of less original issue discount to the earlier years of the term
of the debenture and more original issue discount to later years. For the
approximate cumulative total amount of the original issue discount accrued
annually, see the chart under "Description of Debentures." Any amount
included in income as original issue discount will increase a holder's tax
basis in the debenture.
DISPOSITION OR CONVERSION OF DEBENTURES
Except as described below, upon the sale or other disposition of a
debenture, a holder will recognize gain or loss equal to the difference
between the amount realized and the holder's income tax basis in the
debenture, which will generally equal the holder's cost of the debenture
increased by any accrued original issue discount includible in such
holder's gross income and reduced by any payments other than payments of
cash interest. Gain or loss upon a sale or other disposition of a debenture
will generally be capital gain or loss and will be long-term capital gain
or loss if the debenture is held for more than one year.
A holder that receives common stock in exchange for a debenture,
whether upon conversion of a debenture or, at the option of AnnTaylor
Stores Corporation, upon tender of a debenture, will generally not
recognize gain or loss (except with respect to shares, if any, received in
respect of accrued cash interest, which will be treated as a payment of
interest, and cash received in lieu of a fractional share). A holder's
income tax basis in the common stock received on conversion or tender of a
debenture will be the same as the holder's adjusted income tax basis in the
debenture at the time of conversion or tender (exclusive of any income tax
basis allocable to a fractional share), and the holding period for the
common stock received on conversion or tender will include the holding
period of the debenture converted. It is possible, however, the IRS may
argue that the holding period of the common stock allocable to accrued
original issue discount will commence on the date of the conversion or
tender. The receipt of cash in lieu of a fractional share of common stock
will generally result in capital gain or loss, measured by the difference
between the cash received for the fractional share and the holder's
adjusted income tax basis in the fractional share.
If a holder elects to exercise his option to cause AnnTaylor Stores
Corporation to purchase his debentures on a purchase date and AnnTaylor
Stores Corporation issues common stock in satisfaction of all of the
purchase price, such exchange will be treated the same as a conversion. If
a holder elects to exercise his option to cause AnnTaylor Stores
Corporation to purchase his debentures on a purchase date and AnnTaylor
Stores Corporation delivers a combination of cash and common stock in
satisfaction of the purchase price, gain, but not loss, realized by the
holder will generally be recognized, but only to the extent of all cash
received. The character of any gain recognized may be capital or ordinary
depending on the circumstances, including the extent to which a holder
actually or constructively has any other equity interest in AnnTaylor
Stores Corporation. The holder's gain realized will be the sum of any cash
received (other than cash attributable to accrued but unpaid stated
interest) and the fair market value of the common stock received reduced by
the holder's adjusted income tax basis in the debentures. A holder's income
tax basis in the common stock received will generally be the same as the
holder's income tax basis in the debenture, reduced by the cash received
and increased by any gain recognized (exclusive of any income tax basis
allocable to a fractional share). In the event a holder surrenders a
debenture for conversion at such a time that the debenture is required to
be accompanied by a payment in an amount equal to the interest due thereon
on the immediately next succeeding interest payment date, the holder,
particularly if an accrual method taxpayer, should consult with his tax
advisor regarding the extent to which such payment is deductible.
ADJUSTMENT OF CONVERSION PRICE
If at any time AnnTaylor Stores Corporation makes a distribution of
property to shareholders that would be taxable to such shareholders as a
dividend for United States federal income tax purposes (for example,
distributions of evidences of indebtedness or assets of AnnTaylor Stores
Corporation, but generally not stock dividends or rights to subscribe for
common stock) and, in accordance with the anti-dilution provisions of the
debentures, the conversion rate of the debentures is increased, the amount
of such increase may be deemed to be the payment of a taxable dividend to
holders of the debentures. If the conversion rate is increased at the
discretion of AnnTaylor Stores Corporation or in other circumstances as
described under the heading "Description of Debentures," such increase may
also be deemed to be the payment of a taxable dividend to holders of
debentures. Moreover, in certain other circumstances, the absence of such
an adjustment to the conversion rate may result in a taxable dividend to
holders of common stock.
TAX EVENT
The modification of the terms of the debentures by AnnTaylor Stores
Corporation upon a tax event as described in "Description of Debentures,"
could possibly alter the timing of income recognition by the holders of the
debentures with respect to the semiannual payments of interest due on the
debentures.
SELLING SECURITYHOLDERS
The following table presents information with respect to the selling
securityholders and the principal amounts of debentures and shares of our
common stock issuable upon the conversion of these debentures that they may
offer under this prospectus. The term "selling securityholders" includes
donees and pledgees selling securities received from a named selling
securityholder after the date of this prospectus. The debentures were
originally issued by us and sold by the initial purchasers, in transactions
exempt from the registration requirements of the Securities Act, to
qualified institutional buyers or to institutional "accredited investors."
To our knowledge, none of the selling securityholders has, or within the
past three years has had, any position, office or other material
relationship with us or any of our predecessors or affiliates.
The principal amounts of debentures provided in the table below is
based on information provided to us by each of the selling securityholders
as of September 9, 1999, and the percentages are based on $199,072,000
principal amount at maturity of debentures outstanding. The number of
shares of common stock that may be sold is calculated based on the current
conversion ratio of 12.078 shares of common stock per $1,000 principal
amount at maturity of a debenture. If each selling securityholder named
below converted all of its debentures, each would own less than 1% of our
outstanding common stock, based on 26,327,838 shares of common stock
outstanding as of May 28, 1999.
Since the date on which each provided this information, each selling
securityholder identified below may have sold, transferred or otherwise
disposed of all or a portion of their debentures in a transaction exempt
from the registration requirements of the Securities Act. Information
concerning the selling securityholders may change from time to time and any
changed information will be set forth in supplements to this prospectus to
the extent required. In addition, the conversion ratio, and therefore the
number of shares of our common stock issuable upon conversion of the
debentures, is subject to adjustment. Accordingly, the number of shares of
common stock issuable upon conversion of the debentures may increase or
decrease.
The selling securityholders may from time to time offer and sell any
or all of the securities under this prospectus. Because the selling
securityholders are not obligated to sell the debentures or the common
stock issuable upon the conversion of the debentures, we cannot estimate
the amount of the debentures or how many shares of our common stock that
each selling securityholder will beneficially own after this offering.
SELLING SECURITYHOLDER PRINCIPAL AMOUNT
OF DEBENTURES
(IN $)
OR COMMON STOCK
AIM BALANCED FUND.............................................. $ 4,750,000
AST AIM BALANCED PORTFOLIO..................................... $ 700,000
BANCROFT CONVERTIBLE FUND, INC................................. $ 1,190,000
BANK OF AMERICA SECURITIES, LLC................................ $ 4,600,000
CHRYSLER CORPORATION MASTER RETIREMENT TRUST................... $ 5,980,000
DELTA AIR LINES MASTER TRUST................................... $ 2,420,000
ELLSWORTH CONVERTIBLE GROWTH AND INCOME FUND, INC............. $ 1,190,000
MAJOR LEAGUE BASEBALL PLAYERS BENEFIT PLAN..................... $ 2,400,000
MOTION PICTURE INDUSTRY HEALTH PLAN - ACTIVE MEMBER FUND....... $ 710,000
MOTION PICTURE INDUSTRY HEALTH PLAN - RETIREE MEMBER FUND...... $ 355,000
OCM CONVERTIBLE LIMITED PARTNERSHIP............................ $ 145,000
OCM CONVERTIBLE TRUST.......................................... $ 3,145,000
PARTNER REINSURANCE COMPANY LTD................................ $ 705,000
RAYTHEON COMPANY MASTER PENSION TRUST.......................... $ 2,700,000
STATE EMPLOYEES' RETIREMENT FUND OF THE STATE OF DELAWARE...... $ 2,085,000
STATE OF CONNECTICUT COMBINED INVESTMENT FUNDS................. $ 6,995,000
VANGUARD CONVERTIBLE SECURITIES FUND, INC...................... $ 4,360,000
PLAN OF DISTRIBUTION
The selling securityholders will be offering and selling all
securities offered and sold under this prospectus. We will not receive any
of the proceeds on these sales of these securities. In connection with the
initial offering of the debentures, we entered into a registration rights
agreement dated June 18, 1999 with the initial purchasers of the
debentures. Securities may only be offered or sold under this prospectus
pursuant to the terms of the registration rights agreement. However,
selling securityholders may resell all or a portion of the securities in
open market transactions in reliance upon Rule 144 or Rule 144A under the
Securities Act, provided they meet the criteria and conform to the
requirements of one of these rules.
Who may sell and applicable restrictions.
The securities may be sold directly by the selling securityholders
from time to time. The selling securityholders may decide not to sell any
of the securities offered under this prospectus, and selling
securityholders could transfer, devise or gift these securities by other
means.
Alternatively, the selling securityholders may from time to time
offer the securities through brokers, dealers or agents that may receive
compensation in the form of discounts, concessions or commissions from the
selling securityholders and/or the purchasers of the securities for whom
they may act as agent. In effecting sales, broker-dealers that are engaged
by the selling securityholders may arrange for other broker-dealers to
participate. The selling securityholders and any brokers, dealers or agents
who participate in the distribution of the securities may be deemed to be
underwriters and any profits on the sale of the securities by them and any
discounts, commissions or concessions received by any broker, dealer or
agent might be deemed to be underwriting discounts and commissions under
the Securities Act. To the extent the selling securityholders may be deemed
to be underwriters, the selling securityholders may be subject to statutory
liabilities, including, but not limited to, liability under Sections 11, 12
and 17 of the Securities Act and Rule 10b-5 under the Exchange Act.
Prospectus delivery.
Because selling securityholders may be deemed to be underwriters
within the meaning of Section 2(11) of the Securities Act, they will be
subject to the prospectus delivery requirements of the Securities Act. At
any time a particular offer of the securities is made, a revised prospectus
or prospectus supplement, if required, will be distributed which will
disclose:
o the name of the selling securityholders and of any
participating underwriters, broker-dealers or agents;
o the aggregate amount and type of securities being offered;
o the price at which the securities were sold and other material
terms of the offering;
o any discounts, commissions, concessions or other items
constituting compensation from the selling securityholders and
any discounts, commissions or concessions allowed or reallowed
or paid to dealers; and
o that the participating broker-dealers did not conduct any
investigation to verify the information in this prospectus or
incorporated in this prospectus by reference.
The prospectus supplement or a post-effective amendment will be filed with
the Securities and Exchange Commission to reflect the disclosure of
additional information with respect to the distribution of the securities.
In addition, if we receive notice from a selling securityholder that a
donee or pledgee intends to sell more than 500 shares of our common stock,
a supplement to this prospectus will be filed.
Manner of sales.
The selling securityholders will act independently of us in making
decisions with respect to the timing, manner and size of each sale. Sales
may be made over the Nasdaq National Market or the over-the-counter market.
The securities may be sold at then prevailing market prices, at fixed
prices or at negotiated prices.
The securities may be sold according to one or more of the following
methods:
o a block trade in which the broker or dealer so engaged will
attempt to sell the securities as agent but may position and
resell a portion of the block as principal to facilitate the
transaction;
o purchases by a broker or dealer as principal and resale by the
broker or dealer for its account as allowed under this
prospectus;
o ordinary brokerage transactions and transactions in which the
broker solicits purchasers;
o an exchange distribution under the rules of the exchange;
o face-to-face transactions between sellers and purchasers
without a broker-dealer; and
o by writing options.
SOME PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE SECURITIES
INCLUDING THE ENTRY OF STABILIZING BIDS OR SYNDICATE COVERING TRANSACTIONS
OR THE IMPOSITION OF PENALTY BIDS.
The selling securityholders and any other person participating in a
distribution will be subject to applicable provisions of the Exchange Act
and the rules and regulations thereunder including Regulation M. This
regulation may limit the timing of purchases and sales of any of the
securities by the selling securityholders and any other person. The
anti-manipulation rules under the Exchange Act may apply to sales of
securities in the market and to the activities of the selling
securityholders and their affiliates. Furthermore, Regulation M of the
Exchange Act may restrict the ability of any person engaged in the
distribution of the securities to engage in market-making activities with
respect to the particular securities being distributed for a period of up
to five business days before the distribution. All of the foregoing may
affect the marketability of the securities and the ability of any person or
entity to engage in market-making activities with respect to the
securities.
Hedging and other transactions with broker-dealers.
In connection with distributions of the securities, the selling
securityholders may enter into hedging transactions with broker-dealers. In
connections with these transactions, broker-dealers may engage in short
sales of the registered securities in the course of hedging the positions
they assume with selling securityholders. The selling securityholders may
also sell securities short and redeliver the securities to close short
positions. The selling securityholders may also enter into options or other
transactions with broker-dealers which require the delivery to the
broker-dealer of the registered securities. The broker-dealer may then
resell or transfer these securities under this prospectus. A selling
securityholder may also loan or pledge the registered securities to a
broker-dealer and the broker-dealer may sell the securities so loaned or,
upon a default, the broker-dealer may effect sales of the pledged
securities under this prospectus.
Expenses associated with registration.
We have agreed to pay substantially all of the expenses of
registering the securities under the Securities Act and of compliance with
blue sky laws, including registration and filing fees, printing and
duplicating expenses, administrative expenses, legal and accounting fees,
fees for one legal counsel retained by the selling securityholders and fees
of the trustee under the indenture pursuant to which we originally issued
the securities. If the debentures or our underlying common stock are sold
through underwriters or broker-dealers, the selling securityholders will be
responsible for underwriting discounts, underwriting commissions and agent
commissions.
Indemnification and contribution.
In the registration rights agreement, we and the selling
securityholders have agreed to indemnify or provide contribution to each
other and specified other persons against some liabilities in connection
with the offering of the securities, including liabilities arising under
the Securities Act. The selling securityholders may also agree to indemnify
any broker-dealer or agent that participates in transactions involving
sales of the securities against some liabilities, including liabilities
that arise under the Securities Act.
Suspension of this offering.
We may suspend the use of this prospectus if we learn of any event
that causes this prospectus to include an untrue statement of a material
fact required to be stated in the prospectus or necessary to make the
statements in the prospectus not misleading in the light of the
circumstances then existing. If this type of event occurs, a prospectus
supplement or post-effective amendment, if required, will be distributed to
each selling securityholder. Each selling securityholder has agreed not to
trade securities from the time the selling securityholder receives notice
from us of this type of event until the selling securityholder receives a
prospectus supplement or amendment. This time period will not exceed
forty-five days in any three month period or ninety days in a twelve month
period.
Termination of this offering.
Under the registration rights agreement, we are obligated to use
reasonable efforts to keep the registration statement effective until ,
2001. Therefore this offering will terminate on the earlier of: (1) the
expiration date of this effectiveness period, or (2) the date on which all
securities offered under this prospectus have been sold by the selling
securityholders.
LEGAL MATTERS
Certain legal matters with respect to the debentures and the common
stock issuable upon conversion will be passed upon for us by Jocelyn F.L.
Barandiaran, Esquire, Senior Vice President, General Counsel and Corporate
Secretary of AnnTaylor Stores Corporation and AnnTaylor, Inc., and by
Skadden, Arps, Slate, Meagher & Flom LLP. Ms. Barandiaran beneficially owns
51,465 shares of common stock of AnnTaylor Stores Corporation and has been
granted options to purchase an additional 36,235 shares of common stock of
AnnTaylor Stores Corporation.
EXPERTS
The financial statements incorporated in this prospectus by reference
from AnnTaylor Stores Corporation's and AnnTaylor Inc.'s Annual Report on
Form 10-K from the year ended January 30, 1999 have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their reports,
which are incorporated herein by reference, and have been so incorporated
in reliance upon the reports of such firm given upon their authority as
experts in accounting and auditing.
STATEMENT REGARDING FORWARD LOOKING DISCLOSURES
This prospectus contains forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the
Exchange Act relating to future events or financial results. These
forward-looking statements include statements indicating that we believe,
we expect or we anticipate that events may occur or trends may continue,
and similar statements relating to future events or financial results.
These forward-looking statements are subject to material risks and
uncertainties as indicated under the caption "Risk Factors." Actual results
could vary materially as a result of a number of factors including those
disclosed in "Risk Factors" and elsewhere in this prospectus.
WHERE YOU CAN FIND MORE INFORMATION
The following documents that AnnTaylor Stores Corporation and
AnnTaylor, Inc. have previously filed with the Securities and Exchange
Commission are incorporated in this prospectus by reference and shall be
deemed a part of this prospectus:
(a) Annual Report of AnnTaylor Stores Corporation on Form 10-K for
the fiscal year ended January 30, 1999;
(b) Quarterly Report of AnnTaylor Stores Corporation on Form 10-Q for
the quarterly period ended May 1, 1999;
(c) The description of our common stock contained in our Registration
Statement on Form 8-A of AnnTaylor Stores Corporation filed on
April 11, 1991 under Section 12 of the Exchange Act, and any
amendments thereto;
(d) Current Report on Form 8-K of AnnTaylor Stores Corporation and
AnnTaylor, Inc. dated June 11, 1999;
(e) Current Report on Form 8-K of AnnTaylor Stores Corporation and
AnnTaylor, Inc. dated June 21, 1999;
(f) Annual Report of AnnTaylor, Inc. on Form 10-K for the fiscal year
ended January 30, 1999; and
(g) Quarterly Report of AnnTaylor, Inc. on Form 10-Q for the
quarterly period ended May 1, 1999.
All documents filed by AnnTaylor Stores Corporation and AnnTaylor,
Inc. pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
after the date of this prospectus and prior to the termination of this
offering shall be deemed to be incorporated in this prospectus by reference
and to be a part of this prospectus, from the date of filing of the
documents. Any statement incorporated in this prospectus will be deemed to
be modified or superseded for purposes of this prospectus to the extent
that a statement contained in this prospectus or in any other subsequently
filed document which also is or is deemed to be incorporated by reference
in this prospectus modifies or supersedes the statement. Any statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this prospectus.
We have filed with the Commission a registration statement on Form
S-3 under the Securities Act with respect to the debentures and common
stock offered under this prospectus. This prospectus does not contain all
of the information that is in the registration statement, parts of which we
have omitted, as allowed under the rules and regulations of the Commission.
You should refer to the registration statement for further information with
respect to us, our debentures and our common stock. Statements contained in
this prospectus as to the contents of any contract or other document,
including the indenture and the registration rights agreement, are not
necessarily complete and, in each instance, we refer you to the copy of
each contract or document filed as an exhibit to the registration
statement. Copies of the registration statement, including exhibits, may be
inspected without charge at the Commission's principal office in
Washington, D.C., and you may obtain copies from this office upon payment
of the fees prescribed by the Commission.
We will furnish without charge to each person to whom a copy of this
prospectus is delivered, upon written or oral request, a copy of the
information that has been incorporated by reference into this prospectus
(except exhibits, unless they are specifically incorporated by reference
into this prospectus). Requests should be directed to AnnTaylor Stores
Corporation, 142 West 57th Street, New York, NY 10019, Attention: Corporate
Secretary, telephone: (212) 541-3300.
ANNTAYLOR STORES CORPORATION
$199,072,000 PRINCIPAL AMOUNT AT MATURITY
CONVERTIBLE SUBORDINATED DEBENTURES DUE 2019
GUARANTEED ON A SUBORDINATED BASIS BY ANNTAYLOR, INC.
AND THE 2,404,391 SHARES OF COMMON STOCK OF ANNTAYLOR STORES CORPORATION
ISSUABLE UPON CONVERSION OF THE DEBENTURES
- - - - - - - - - - - - - - -
PROSPECTUS
- - - - - - - - - - - - - - -
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN OR INCORPORATED
BY REFERENCE IN THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE
YOU WITH DIFFERENT INFORMATION. WE ARE NOT MAKING AN OFFER OF THESE
SECURITIES IN ANY STATE WHERE THE OFFER IS NOT PERMITTED. YOU SHOULD NOT
ASSUME THAT THE INFORMATION CONTAINED IN OR INCORPORATED BY REFERENCE IN
THIS PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE OF THIS
PROSPECTUS.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated expenses to be borne by
us in connection with the issuance and distribution of the securities being
registered hereunder, other than commissions.
Registration fee.....................................................$ 30,824
Trustee fees and expenses............................................ 10,000
Printing and engraving............................................... 175,000
Legal fees and expenses.............................................. 225,000
Accounting fees and expenses......................................... 50,000
Rating agency fees................................................... 95,000
Miscellaneous expenses............................................... 14,176
----------
Total..........................................................$ 600,000
----------
----------
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Charter, By-law and Statutory Provisions
As permitted by the Delaware General Corporation Law, Article 6,
Section 4 of our Certificate of Incorporation includes a provision that
eliminates the personal liability of our directors to us or our
stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability:
o for any breach of the director's duty of loyalty to the
corporation or its stockholders;
o for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law;
o under Section 174 of the Delaware General Corporation Law; and
o for any transaction from which the director derived an improper
personal benefit.
Article 8, Sections 1 and 2 of our by-laws relating to
indemnification of directors and officers provides for indemnification in
accordance with our charter.
ITEM 16. EXHIBITS AND FINANCIAL SCHEDULES.
(a) Exhibits
1.01 - Purchase Agreement between AnnTaylor Stores Corporation, Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith and Banc
America Securities LLC dated as of June 18, 1999.
3.01 - Restated Certificate of Incorporation of AnnTaylor Stores
Corporation. Incorporated by reference to Exhibit 4.1 to the
Registration Statement of AnnTaylor Stores Corporation on Form S-8
filed with the Securities and Exchange Commission (the
"Commission") on August 10, 1992 (Registration No. 33-50688).
3.02 - Amendment to the Restated Certificate of Incorporation of
AnnTaylor Stores Corporation. Incorporated by reference to Exhibit
3.1 to the Form 10-Q of AnnTaylor Stores Corporation for the
Quarter ended May 1, 1999 filed on June 11, 1999 (Registration No.
1-11980).
3.03 - By-Laws of AnnTaylor Stores Corporation. Incorporated by
reference to Exhibit 3.2 to the Form 10-Q of AnnTaylor Stores
Corporation for the Quarter ended November 2, 1991 filed on
December 17, 1991.
3.04 - Certificate of Incorportation of AnnTaylor, Inc., as amended.
Incorporated by reference to Exhibit 3.3 to the Registration
Statement of AnnTaylor Stores Corporation and AnnTaylor, Inc.
Filed on May 3, 1989.
3.05 - By-laws of AnnTaylor, Inc. Incorporated by reference to Exhibit
3.4 to the Registration Statement of AnnTaylor Stores Corporation
and AnnTaylor, Inc. filed on May 3, 1989 (Registration No.
33-28522).
4.01 - Indenture between AnnTaylor Stores Corporation, AnnTaylor, Inc.
and The Bank of New York dated as of June 18, 1999.
4.02 - Registration Rights Agreement between AnnTaylor Stores
Corporation, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith and Banc America Securities LLC dated as of June 18, 1999.
5.01 - Opinion and consent of Jocelyn Barandiaran, General Counsel for
AnnTaylor Stores Corporation.**
5.02 - Opinion and consent of Skadden, Arps, Slate, Meagher & Flom LLP,
Special Counsel for AnnTaylor Stores Corporation.**
8.01 - Opinion and consent of Skadden, Arps, Slate, Meagher & Flom LLP,
Special Counsel for AnnTaylor Stores Corporation as to certain tax
matters.**
12.01 - Computation of Ratio of Earnings to Fixed Charges.
23.01 - Consent of Deloitte & Touche LLP, Independent Auditors for
AnnTaylor Stores Corporation.
23.02 - Consent of Deloitte & Touche LLP, Independent Auditors for
AnnTaylor, Inc.
24.01 - Power of Attorney of certain officers and directors of AnnTaylor
Stores Corporation (included on the signature pages).
24.02 - Power of Attorney of certain officers and directors of AnnTaylor,
Inc. (included on the signature pages).
25.01 - Form T-1: Statement of Eligibility under the Trust Indenture Act
of 1939 of The Bank of New York, trustee under the indenture.
* Previously filed.
** To be filed by amendment.
(b) FINANCIAL STATEMENT SCHEDULES
None.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes
(1) to file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration
Statement: (i) to include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933; (ii) to reflect in the prospectus any
facts or events arising after the effective date of the Registration
Statement (or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a fundamental
change in the information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered
would not exceed that which was registered) and any deviation from
the low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;
(2) that for the purpose of determining any liability under the
Securities Act of 1933 each such post-effective amendment shall be
deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof; and
(3) to remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the Registrant's annual report pursuant to Section 13(a) or Section 15(d)
of the Securities Exchange Act of 1934 that is incorporated by reference in
the Registration Statement shall be deemed to be a new Registration
Statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof. Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant, the Registrant has been advised that
in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of
expenses incurred or paid by a director, officer or controlling person of
the Registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection
with the securities being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of
prospectus filed as part of this Registration Statement in
reliance upon Rule 430A and contained in a form of prospectus
filed by the Registrant pursuant to Rule 424(b)(1) or 497(h)
under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared
effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new
Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
SIGNATURES
Pursuant to the requirements of Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the County of New York, State of New York, on
the 10th day of September, 1999.
ANNTAYLOR STORES CORPORATION
By /s/ J. Patrick Spainhour
________________________________
J. Patrick Spainhour
Chairman, Chief Executive Officer and
Director
POWER OF ATTORNEY
KNOWN BY ALL PERSONS BY THESE PRESENTS that each person whose
signature appears below, constitutes and appoints Jocelyn Barandiaran, his
true and lawful attorney-in-fact and agent, with full power of substitution
and resubstitution, for such person and in his name, place and stead, in
any and all capacities, in connection with the registrant's registration
statement, in the name and on behalf of the registrant or on behalf of the
undersigned as a director or officer of the registrant, on Form S-3 under
the Securities Act of 1933, as amended, including, without limiting the
generality of the foregoing, to sign the registration statement and any and
all amendments (including post-effective amendments) to the registration
statement, and any subsequent registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, and to file the same,
with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done in connection
therewith, as fully to all intents and purposes as he might or could do in
person, thereby ratifying and confirming all that said attorney-in-fact and
agent or her substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-3 has been signed by the following persons
in the capacities and on the dates indicated.
Signature Title Date
By /s/ J. Patrick Spainhour
______________________________ Chairman, Chief Executive September 10, 1999
J. Patrick Spainhour Officer and Director
By /s/ Patricia DeRosa
_____________________________ President, Chief Operating September 10, 1999
Patricia DeRosa Officer and Director
By /s/ Barry Erdos
_____________________________ Executive Vice President, September 10, 1999
Barry Erdos Chief Financial Officer
and Treasurer
By /s/ James M. Smith
____________________________ Vice President - September 10, 1999
James M. Smith Controller, Assistant
Treasurer and Assistant
Secretary
By /s/ Gerald S. Armstrong
_____________________________ Director September 10, 1999
Gerald S. Armstrong
By /s/ James J. Burke, Jr.
_____________________________ Director September 10, 1999
James J. Burke, Jr.
By /s/ Wesley E. Cantrell
_____________________________ Director September 10, 1999
Wesley E. Cantrell
By /s/ Robert C. Grayson
____________________________ Director September 10, 1999
Robert C. Grayson
By /s/ Ronald W. Hovsepian
____________________________ Director September 10, 1999
Ronald W. Hovsepian
By /s/ Rochelle B. Lazarus
____________________________ Director September 10, 1999
Rochelle B. Lazarus
By /s/ Hanne M. Merriman
___________________________ Director September 10, 1999
Hanne M. Merriman
SIGNATURES
Pursuant to the requirements of Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the County of New York, State of New York, on
the 10th day of September, 1999.
ANNTAYLOR, INC.
By /s/ J. Patrick Spainhour
________________________________
J. Patrick Spainhour
Chairman, Chief Executive Officer and
Director
POWER OF ATTORNEY
KNOWN BY ALL PERSONS BY THESE PRESENTS that each person whose
signature appears below, constitutes and appoints Jocelyn Barandiaran, his
true and lawful attorney-in-fact and agent, with full power of substitution
and resubstitution, for such person and in his name, place and stead, in
any and all capacities, in connection with the registrant's registration
statement, in the name and on behalf of the registrant or on behalf of the
undersigned as a director or officer of the registrant, on Form S-3 under
the Securities Act of 1933, as amended, including, without limiting the
generality of the foregoing, to sign the registration statement and any and
all amendments (including post-effective amendments) to the registration
statement, and any subsequent registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, and to file the same,
with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done in connection
therewith, as fully to all intents and purposes as he might or could do in
person, thereby ratifying and confirming all that said attorney-in-fact and
agent or her substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-3 has been signed by the following persons
in the capacities and on the dates indicated.
Signature Title Date
By /s/ J. Patrick Spainhour
____________________________ Chairman, Chief Executive September 10, 1999
J. Patrick Spainhour Officer and Director
By /s/ Patricia DeRosa
____________________________ President, Chief Operating September 10, 1999
Patricia DeRosa Officer and Director
By /s/ Barry Erdos
____________________________ Executive Vice President, September 10, 1999
Barry Erdos Chief Financial Officer
and Treasurer
By /s/ James M. Smith
____________________________ Vice President - September 10, 1999
James M. Smith Controller, Assistant
Treasurer and Assistant
Secretary
By /s/ Gerald S. Armstrong
____________________________ Director September 10, 1999
Gerald S. Armstrong
By /s/ James J. Burke, Jr.
___________________________ Director September 10, 1999
James J. Burke, Jr.
By /s/ Wesley E. Cantrell
____________________________ Director September 10, 1999
Wesley E. Cantrell
By /s/ Robert C. Grayson
_____________________________ Director September 10, 1999
Robert C. Grayson
By /s/ Ronald W. Hovsepian
____________________________ Director September 10, 1999
Ronald W. Hovsepian
By /s/ Rochelle B. Lazarus
____________________________ Director September 10, 1999
Rochelle B. Lazarus
By /s/ Hanne M. Merriman
____________________________ Director September 10, 1999
Hanne M. Merriman
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION PAGE NO.
1.01 Purchase Agreement between AnnTaylor Stores Corporation,
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith and
Banc America Securities LLC dated as of June 18, 1999.
3.01 Restated Certificate of Incorporation of AnnTaylor Stores
Corporation. Incorporated by reference to Exhibit 4.1 to the
Registration Statement of AnnTaylor Stores Corporation on Form
S-8 filed with the Securities and Exchange Commission (the
"Commission") on August 10, 1992 (Registration No. 33-50688).
3.02 Amendment to the Restated Certificate of Incorporation of
AnnTaylor Stores Corporation. Incorporated by reference to
Exhibit 3.1 to the Form 10-Q of AnnTaylor Stores Corporation
for the Quarter ended May 1, 1999 filed on June 11, 1999
(Registration No. 1-11980).
3.03 By-Laws of AnnTaylor Stores Corporation. Incorporated by
reference to Exhibit 3.2 to the Form 10-Q of AnnTaylor Stores
Corporation for the Quarter ended November 2, 1991 filed on
December 17, 1991.
3.04 Certificate of Incorportation of AnnTaylor, Inc., as amended.
Incorporated by reference to Exhibit the Registration
Statement of AnnTaylor Stores Corporation and AnnTaylor, Inc.
Filed on May 3, 1989.
3.05 By-laws of AnnTaylor, Inc. Incorporated by reference to
Exhibit 3.4 to the Registration Statement of AnnTaylor Stores
Corporation and AnnTaylor, Inc. filed on May 3, 1989
(Registration No. 33-28522).
4.01 Indenture between AnnTaylor Stores Corporation, AnnTaylor,
Inc. and The Bank of New York dated as of June 18, 1999.
4.02 Registration Rights Agreement between AnnTaylor Stores
Corporation, Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith and Banc America Securities LLC dated as of
June 18, 1999.
5.01 Opinion and consent of Jocelyn Barandiaran, General Counsel
for AnnTaylor Stores Corporation.**
5.02 Opinion and consent of Skadden, Arps, Slate, Meagher & Flom
LLP, Special Counsel for AnnTaylor Stores Corporation.**
8.01 Opinion and consent of Skadden, Arps, Slate, Meagher & Flom
LLP, Special Counsel for AnnTaylor Stores Corporation as to
certain tax matters.**
12.01 Computation of Ratio of Earnings to Fixed Charges.
23.01 Consent of Deloitte & Touche LLP, Independent Auditors for
AnnTaylor Stores Corporation.
23.02 Consent of Deloitte & Touche LLP, Independent Auditors for
AnnTaylor, Inc.
24.01 Power of Attorney of certain officers and directors of
AnnTaylor Stores Corporation (included on the signature
pages).
24.02 Power of Attorney of certain officers and directors of
AnnTaylor, Inc. (included on the signature pages).
25.01 Form T-1: Statement of Eligibility under the Trust Indenture
Act of 1939 of The Bank of New York, trustee under the
indenture.
* Previously filed.
** To be filed by amendment.
Exhibit 1.01
EXECUTION COPY
==============================================================================
ANNTAYLOR STORES CORPORATION
$180,975,000
Convertible Subordinated Debentures due 2019
PURCHASE AGREEMENT
Dated: June 14, 1999
==============================================================================
ANNTAYLOR STORES CORPORATION
$180,975,000
CONVERTIBLE SUBORDINATED DEBENTURES DUE 2019
PURCHASE AGREEMENT
June 14, 1999
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
BANC OF AMERICA SECURITIES LLC
c/o MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York 10281-1305
Ladies and Gentlemen:
AnnTaylor Stores Corporation (the "Company"), a Delaware
corporation, proposes, subject to the terms and conditions stated herein,
to issue and sell to Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("Merrill Lynch") and Banc of America Securities LLC
(together with Merrill Lynch, the "Initial Purchasers"), acting severally
and not jointly, $180,975,000 aggregate principal amount at maturity of its
Convertible Subordinated Debentures due 2019 (the "Firm Debentures"), and,
at the election of the Initial Purchasers, solely to cover overallotments,
if any, in connection with the offering of the Firm Debentures, up to
$18,097,500 aggregate principal amount at maturity of additional
Convertible Subordinated Debentures due 2019 (the "Additional Debentures").
The Firm Debentures and any Additional Debentures that the Initial
Purchasers elect to purchase are collectively referred to as the
"Debentures". The Debentures will be convertible at the option of the
holder thereof into shares of common stock of the Company (the "Conversion
Shares"). The Debentures are more fully described in the Offering
Memorandum referred to below. The Debentures will be issued pursuant to an
indenture (the "Indenture"), to be dated as of June 18, 1999, among the
Company, AnnTaylor, Inc., a Delaware corporation and a wholly owned
subsidiary of the Company (the "Guarantor"), and The Bank of New York, as
trustee (the "Trustee"). The obligations of the Company under the
Debentures and the Indenture will be guaranteed by the Guarantor pursuant
to the terms of the Indenture (the "Subsidiary Guarantee").
The Debentures and the Conversion Shares are collectively
referred to herein as the "Securities". This Agreement, the Indenture, the
Securities and the Registration Rights Agreement (as defined below) are
referred to collectively as the "Operative Documents". Capitalized terms
used herein without definition have the respective meanings specified in
the Offering Memorandum.
The Debentures will be offered and sold to the Initial
Purchasers without registration under the Securities Act of 1933, as
amended (the "1933 Act"), in reliance upon exemptions from the registration
requirements of the 1933 Act. In connection with the sale of the
Debentures, the Company has prepared a preliminary offering memorandum
dated June 14, 1999 (the "Preliminary Offering Memorandum") and a final
offering memorandum dated the date hereof (such final offering memorandum,
in the form first furnished to the Initial Purchasers for use in connection
with the offering and sale of the Debentures, or if such form is not so
used, in the form subsequently furnished for such use, the "Offering
Memorandum"), each setting forth certain information concerning the
Company, the Guarantor and the Securities. The Company and the Guarantor
hereby confirm that they have authorized the use of the Preliminary
Offering Memorandum and the Offering Memorandum in connection with the
offer and resale of the Debentures by the Initial Purchasers. Unless stated
to the contrary, all references herein to the Offering Memorandum are to
the Offering Memorandum at the date hereof (the "Execution Time") and are
not meant to include any amendment or supplement thereto subsequent to the
Execution Time. If the Company prepares a supplement dated the date hereof
to the Preliminary Offering Memorandum containing only pricing related
information, then the term "Offering Memorandum" for purposes of this
Agreement shall refer collectively to the Preliminary Offering Memorandum
and such supplement.
The Company and the Guarantor understand that the Initial
Purchasers propose to make an offering of the Debentures only on the terms,
subject to the conditions and in the manner set forth in the Offering
Memorandum and Section 3 hereof, as soon as the Initial Purchasers deem
advisable after this Agreement has been executed and delivered.
The Initial Purchasers and other holders of Securities
(including subsequent transferees) will be entitled to the benefits of the
registration rights agreement, to be dated as of the Closing Time (the
"Registration Rights Agreement"), among the Company, the Guarantor and the
Initial Purchasers, in the form attached as Exhibit A. Pursuant to the
Registration Rights Agreement, the Company will agree to file with the
Securities and Exchange Commission (the "Commission") a shelf registration
statement pursuant to Rule 415 under the 1933 Act relating to resales of
the Debentures and the Conversion Shares by holders thereof, and to use
their best efforts to cause such shelf registration statement to be
declared effective.
All references in this Agreement to financial statements and
schedules and other information that is "contained", "included" or "stated"
in the Offering Memorandum (and all other references of like import) shall
be deemed to mean and include all such financial statements and schedules
and other information that is or is deemed to be incorporated by reference
in the Offering Memorandum; and all references in this Agreement to
amendments or supplements to the Offering Memorandum shall be deemed to
mean and include the filing of any document under the Securities Exchange
Act of 1934, as amended (the "1934 Act"), that is or is deemed to be
incorporated by reference in the Offering Memorandum.
Section 1. Representations and Warranties. (a) The Company and
the Guarantor represent and warrant to and agree with the Initial
Purchasers that:
(i) As of their respective dates, none of the Offering
Memorandum or any amendment or supplement thereto, and as of the
Closing Time, the Offering Memorandum, as amended or supplemented to
such time, contained or will contain an untrue statement of a
material fact or omitted or will omit to state a material fact
necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; except
that this representation and warranty does not apply to statements or
omissions made in reliance upon and in conformity with information
furnished in writing or confirmed in writing to the Company by or on
behalf of the Initial Purchasers expressly for use in the Offering
Memorandum.
(ii) The Debentures satisfy the eligibility requirements of
Rule 144A(d)(3) under the 1933 Act.
(iii) None of the Company, the Guarantor or any of their
affiliates (as such term is defined in Rule 501(b) of Regulation D
under the 1933 Act ("Regulation D")), or any person acting on behalf
of the foregoing (other than the Initial Purchasers, as to which no
representation or warranty is made) has, directly or indirectly, made
offers or sales of any security, or solicited offers to buy any
security, under circumstances that would require the registration of
the Securities under the 1933 Act.
(iv) None of the Company, the Guarantor or any of its
affiliates (as such term is defined in Rule 501(b) of Regulation D)
or any person (other than the Initial Purchasers, as to which no
representation or warranty is made) acting on the Company's or the
Guarantor's behalf has engaged, in connection with the offering of
the Debentures, in any form of general solicitation or general
advertising within the meaning of Rule 502(c) under the 1933 Act.
(v) Assuming the accuracy of the representations and warranties
and compliance with the agreements of the Initial Purchasers in
Section 3 hereof, it is not necessary in connection with the offer,
sale and delivery of the Debentures to the Initial Purchasers, or in
connection with the initial resale of the Debentures by the Initial
Purchasers in accordance with this Agreement, to register the
Debentures under the 1933 Act or to qualify the Indenture under the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act").
(vi) Deloitte & Touche LLP, who is reporting upon the financial
statements and schedules included in the Offering Memorandum, are
independent public accountants as required by the 1933 Act and the
applicable rules and regulations thereunder.
(vii) This Agreement has been duly authorized, executed and
delivered by the Company and the Guarantor.
(viii)Each of the Company and the Guarantor has all corporate
power and authority to execute, deliver and perform its obligations
under this Agreement, the Indenture and the Registration Rights
Agreement.
(ix) As of the Closing Time, the Registration Rights Agreement
will have been duly authorized, executed and delivered by the Company
and the Guarantor and upon such execution by the Company and the
Guarantor (assuming the due authorization, execution and delivery
thereof by the other parties thereto) the Registration Rights
Agreement will constitute the valid and binding obligation of the
Company and the Guarantor enforceable against the Company and the
Guarantor in accordance with the terms thereof, except as enforcement
thereof may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or similar laws affecting enforcement of
creditors' rights generally and except as enforcement thereof is
subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law), and
except as any rights to indemnity and contribution may be limited by
federal and state securities laws and public policy considerations.
(x) The consolidated financial statements included or
incorporated by reference in the Offering Memorandum present fairly
the consolidated financial position of the Company and the Guarantor
as of the dates indicated and the consolidated results of operations
and the consolidated cash flows of the Company and the Guarantor for
the periods specified. Such financial statements have been prepared
in conformity with generally accepted accounting principles applied
on a consistent basis throughout the periods involved.
(xi) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware
with corporate power and authority under such laws to own, lease and
operate its properties and conduct its business as described in the
Offering Memorandum; and the Company is duly qualified to transact
business as a foreign corporation and is in good standing in each
other jurisdiction in which it owns or leases property of a nature,
or transacts business of a type, that would make such qualification
necessary, except to the extent that the failure to so qualify or be
in good standing would not have a material adverse effect on the
Company and the Guarantor, considered as one enterprise. The Company
is not engaged in any business other than acting as a holding company
for the capital stock of the Guarantor.
(xii) The Company's only subsidiaries are those set out in
Schedule B hereto. The Guarantor is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware with corporate power under such laws to own, lease and
operate its properties and conduct its business; the Guarantor is
duly qualified to transact business as a foreign corporation and is
in good standing in each other jurisdiction in which it owns or
leases property of a nature, or transacts business of a type, that
would make such qualification necessary, except to the extent that
the failure to so qualify or be in good standing would not have a
material adverse effect on the Company and the Guarantor, considered
as one enterprise. All of the outstanding shares of capital stock of
the Guarantor have been duly authorized and validly issued and are
fully paid and nonassessable and are owned, directly or indirectly,
by the Company free and clear of any pledge, lien, security interest,
charge, claim, equity or encumbrance of any kind, except as provided
in or pursuant to the Credit Agreement, dated as of June 30, 1998
(the "Bank Credit Agreement"), as amended, between the Guarantor and
the lenders named therein.
(xiii) The Company had at the date indicated a duly authorized,
issued and outstanding capitalization as set forth in the Offering
Memorandum in the column entitled "Actual" under the caption
"Capitalization"; and the Debentures, the Conversion Shares, the
Subsidiary Guarantee, the Registration Rights Agreement and the
Indenture conform in all material respects to the descriptions
thereof in the Offering Memorandum under the caption "Description of
the Debentures" and "Description of Capital Stock".
(xiv) All of the outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully
paid and nonassessable; no holder thereof is or will be subject to
personal liability by reason of being such a holder; and none of the
outstanding shares of capital stock of the Company was issued in
violation of the preemptive rights of any stockholder of the Company.
(xv) The Indenture has been duly authorized by the Company and
the Guarantor, will be substantially in the form heretofore delivered
to the Initial Purchasers, and when validly executed and delivered by
the Company, the Guarantor and the Trustee, will constitute a valid
and binding obligation of the Company and the Guarantor, enforceable
against the Company and the Guarantor in accordance with its terms,
except as enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws
affecting enforcement of creditors' rights generally and except as
enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in
equity or at law).
(xvi) The Debentures have been duly authorized by the Company.
When executed, authenticated, issued and delivered in the manner
provided for in the Indenture and sold and paid for as provided in
this Agreement, the Debentures will constitute valid and binding
obligations of the Company, entitled to the benefits of the Indenture
and enforceable against the Company in accordance with their terms,
except as enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws
affecting enforcement of creditors' rights generally and except as
enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in
equity or at law).
(xvii) Neither the Company nor the Guarantor is, or after
giving effect to the consummation of the transactions contemplated
herein, will be, an "investment company" within the meaning of The
Investment Company Act of 1940, as amended; neither the Company nor
the Guarantor is directly or indirectly controlled by, or acting on
behalf of any person which is, an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
(xviii) The Conversion Shares have been duly authorized and
validly reserved for issuance upon conversion of the Debentures by
all necessary corporate action of the Company and, when duly issued
by the Company upon such conversion, will be validly issued, fully
paid and nonassessable; no holder thereof will be subject to personal
liability for obligations of the Company solely by reason of being
such a holder; and the issuance of the Conversion Shares will not be
subject to preemptive or similar rights.
(xix) Since the respective dates as of which information is
given in the Offering Memorandum, except as otherwise stated therein
or contemplated thereby, there has not been (A) any material adverse
change in the condition (financial or otherwise), earnings, business
affairs or business prospects of the Company and the Guarantor,
considered as one enterprise, whether or not arising in the ordinary
course of business, or (B) any dividend or distribution of any kind
declared, paid or made by the Company on its capital stock.
(xx) Neither the Company nor the Guarantor is in default in the
performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other agreement or instrument to which it
is a party or by which it may be bound or to which any of its
properties may be subject, except for such defaults that would not
have a material adverse effect on the condition (financial or
otherwise), earnings, business affairs or business prospects of the
Company or the Guarantor considered as one enterprise. The issuance,
sale and delivery of the Debentures by the Company, the execution,
delivery and performance by the Company and the Guarantor of this
Agreement, the Indenture and the Registration Rights Agreement, the
consummation by the Company and the Guarantor of the transactions
contemplated hereby, thereby and in the Offering Memorandum and
compliance by the Company and the Guarantor with the terms of the
foregoing have been duly authorized by all necessary action on the
part of the Company and the Guarantor and do not and will not result
in any violation of the charter or by-laws of the Company or the
Guarantor and do not and will not conflict with, or result in a
breach of any of the terms or provisions of, or constitute a default
under, or give rise to any right to accelerate the maturity or
require the prepayment of any indebtedness under, or result in the
creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or the Guarantor under (A) any
contract, indenture, mortgage, loan agreement, note, lease or other
agreement or instrument to which the Company or the Guarantor is a
party or by which either of them may be bound or to which any of
their properties may be subject (except for such conflicts, breaches
or defaults or liens, charges or encumbrances that would not have a
material adverse effect on the condition (financial or otherwise),
earnings, business affairs or business prospects of the Company or
the Guarantor, considered as one enterprise) or (B) any existing
applicable law, rule, regulation, judgment, order or decree of any
government, governmental instrumentality or court, domestic or
foreign, having jurisdiction over the Company or the Guarantor or any
of their respective properties.
(xxi) No authorization, approval, consent or license of any
government, governmental instrumentality or court, domestic or
foreign is necessary in connection with the offering, issuance or
sale of the Debentures and the Conversion Shares by the Company, or
is required for the valid authorization, execution, delivery and
performance by the Company or the Guarantor of the Operative
Documents to which the Company or the Guarantor is a party or the
consummation by the Company or the Guarantor of the transactions
contemplated therein, except such as may be required by the
securities or Blue Sky laws of the various states in connection with
the offer and sale of the Debentures or by the federal and state
securities laws in connection with the registration obligations under
the Registration Rights Agreement.
(xxii) Except as disclosed in the Offering Memorandum, there is
no action, suit or proceeding before or by any government,
governmental instrumentality or court, domestic or foreign, now
pending or, to the knowledge of the Company, threatened against the
Company or the Guarantor that is required to be disclosed in the
Offering Memorandum or that is reasonably expected by the Company to
result in any material adverse change in the condition (financial or
otherwise), earnings, business affairs or business prospects of the
Company and the Guarantor, considered as one enterprise, or that is
reasonably expected by the Company to materially and adversely affect
the consummation of the transactions contemplated by this Agreement.
The aggregate of all pending legal or governmental proceedings to
which the Company or the Guarantor is a party that are not described
in the Offering Memorandum, including ordinary routine litigation
incidental to the business of the Company or the Guarantor, as the
case may be, is not reasonably expected by the Company to have a
material adverse effect on the condition (financial or otherwise),
earnings, business affairs or business prospects of the Company or
the Guarantor, considered as one enterprise.
(xxiii) The Company and the Guarantor each owns, possesses or
has obtained all material governmental licenses, permits,
certificates, consents, orders, approvals and other authorizations
necessary to own or lease, as the case may be, and to operate its
properties and to carry on its business as presently conducted,
except where the failure to possess such licenses, permits,
certificates, consents, orders, approvals or other authorizations
would not have a material adverse effect on the condition (financial
or otherwise), earnings, business affairs or business prospects of
the Company and the Guarantor, considered as one enterprise, and
neither the Company nor the Guarantor has received any notice of
proceedings relating to revocation or modification of any such
licenses, permits, certificates, consents, orders, approvals or
authorizations, which, in the reasonable judgment of the Company, if
the subject of an unfavorable decision, ruling or finding, would have
a material adverse effect on the condition (financial or otherwise),
earnings, business affairs or business prospects of the Company and
the Guarantor, considered as one enterprise.
(xxiv) The Company and the Guarantor each owns or possesses, or
can acquire on reasonable terms, adequate patents, patent licenses,
trademarks, service marks and trade names necessary to carry on its
business as presently conducted, and neither the Company nor the
Guarantor has received any notice of infringement of or conflict with
asserted rights of others with respect to any patents, patent
licenses, trademarks, service marks or trade names that in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, could materially adversely affect the condition (financial
or otherwise), earnings, business affairs or business prospects of
the Company and the Guarantor, considered as one enterprise.
(xxv) Neither the Company nor the Guarantor has taken or will
take, directly or indirectly, any action designed to, or that the
Company reasonably believes would cause or result in, stabilization
or manipulation of the price of the Debentures or the common stock.
(xxvi) The Company has obtained the written agreement of its
executive officers to the effect that, for a period of 60 days from
the date hereof, such persons will not, without the prior written
consent of the Initial Purchasers, which consent will not be
unreasonably withheld, directly or indirectly, sell, offer to sell,
grant any option for the sale of, or otherwise dispose of any shares
of common stock or securities convertible into or exchangeable or
exercisable for common stock ("convertible securities"); provided,
however, that during such 60-day period, (i) such shares of common
stock or convertible securities may be transferred by will or the
laws of descent and distribution, (ii) such persons may make gifts of
shares of common stock or convertible securities or transfer such
shares of common stock or convertible securities to family trusts, so
long as the donee agrees to be bound by the foregoing restriction in
the same manner as it applies to such persons.
(xxvii) Except as disclosed in the Offering Memorandum and
except as would not individually or in the aggregate have a material
adverse effect on the condition (financial or otherwise), earnings,
business affairs or business prospects of the Company and the
Guarantor, considered as one enterprise, (A) the Company and the
Guarantor are in compliance with all applicable Environmental Laws,
(B) the Company and the Guarantor have all permits, authorizations
and approvals required under any applicable Environmental Laws and
are each in compliance with their requirements, (C) there are no
pending or threatened Environmental Claims against the Company or the
Guarantor, and (D) there are no circumstances with respect to any
property or operations of the Company or the Guarantor that the
Company reasonably believes would form the basis of an Environmental
Claim against the Company or the Guarantor.
For purposes of this Agreement, the following terms shall
have the following meanings: "Environmental Law" means any United
States federal, state, local or municipal statute, law, rule,
regulation, ordinance, code, policy or rule of common law and any
judicial or administrative interpretation thereof including any
judicial or administrative order, consent decree or judgment,
relating to the environment, health, safety or any chemical, material
or substance, exposure to which is prohibited, limited or regulated
by any governmental authority. "Environmental Claims" means any and
all administrative, regulatory or judicial actions, suits, demands,
demand letters, claims, liens, notices of noncompliance or violation,
investigations or proceedings relating in any way to any
Environmental Law.
(xxviii) The Debentures have been designated PORTAL eligible
securities in accordance with the rules and regulations of the
National Association of Securities Dealers, Inc. ("NASD").
(xxix) Each of the Company and the Guarantor has reviewed its
operations to evaluate the extent to which the business or operations
of the Company or the Guarantor will be affected by the Year 2000
Problem (that is, any significant risk that computer hardware or
software applications used by the Company and the Guarantor will not,
in the case of dates or time periods occurring after December 31,
1999, function at least as effectively as in the case of dates or
time periods occurring prior to January 1, 2000); as a result of such
review, neither the Company nor the Guarantor has any reason to
believe, and does not believe, that there are any issues related to
the Company's or the Guarantor's preparedness to address the Year
2000 Problem that are of a character required to be described or
referred to in the Offering Memorandum which have not been accurately
described in the Offering Memorandum.
(b) Any certificate signed by any officer of the Company or the
Guarantor and delivered to the Initial Purchasers or to counsel for the
Initial Purchasers shall be deemed a representation and warranty by the
Company or the Guarantor, as the case may be, to the Initial Purchasers as
to the matters covered thereby.
Section 2. Sale and Delivery to the Initial Purchasers;
Closing. (a) On the basis of the representations and warranties herein
contained, and subject to the terms and conditions herein set forth, the
Company agrees to sell to the Initial Purchasers, and the Initial
Purchasers agree to purchase from the Company, acting severally and not
jointly, at the purchase price per $1,000 principal amount at maturity of
$535.98 (i) an aggregate principal amount at maturity of $180,975,000 of
Firm Debentures, and (ii) in the event and to the extent that the Initial
Purchasers shall elect to purchase Additional Debentures pursuant to the
paragraph immediately following, up to an aggregate principal amount at
maturity of $18,097,500 of Additional Debentures.
(b) The Company hereby grants to the Initial Purchasers the
right to purchase at its election up to aggregate principal amount at
maturity of $18,097,500 of Additional Debentures, at the purchase price per
security set forth in the immediately preceding paragraph, for the sole
purpose of covering overallotments in the sale of the Firm Debentures. Any
such election to purchase Additional Debentures shall be exercised by
written notice from the Initial Purchasers to the Company, within 30 days
after the date of this Agreement, setting forth the aggregate principal
amount at maturity of Additional Debentures to be purchased and the date on
which such Additional Debentures are to be delivered. Any such time and
date of delivery (a "Date of Delivery") shall be determined by the Initial
Purchasers but shall not be later than seven full business days after the
exercise of said option, nor in any event prior to the Closing Time (as
defined below). If the option is exercised as to all or any portion of the
Additional Debentures, each of the Initial Purchasers, acting severally and
not jointly, will purchase that proportion of the total number of
Additional Debentures then being purchased which the number of Firm
Debentures set forth in Schedule A opposite the name of such Initial
Purchaser bears to the total number of Firm Debentures, subject in each
case to such adjustments as Merrill Lynch in its discretion shall make to
eliminate any sales or purchases of fractional securities.
(c) Payment of the purchase price for, and delivery of
certificates for, the Firm Debentures shall be made at the offices of
Shearman & Sterling, 599 Lexington Avenue, New York, New York 10022, at
9:00 A.M., New York City time, on June 18, 1999 or such later date and time
not more than two full business days thereafter as the Initial Purchasers
and the Company shall determine (such date and time of payment and delivery
being herein called the "Closing Time"). In addition, in the event that any
or all of the Additional Debentures are purchased by the Initial
Purchasers, payment of the purchase price for, and delivery of certificates
for, such Additional Debentures shall be made at the offices of Shearman &
Sterling set forth above, or at such other place as the Company and the
Initial Purchasers shall determine, on the Date of Delivery as specified in
the notice from the Initial Purchasers to the Company. Payment shall be
made to the Company by wire transfer of immediately available funds to a
bank account designated by the Company against delivery to the Initial
Purchasers of the Firm Debentures and the Additional Debentures, if any, to
be purchased by it.
(d) Certificates for the Firm Debentures and the Additional
Debentures to be purchased by the Initial Purchasers shall be in such
denominations and registered in such names as the Initial Purchasers may
request in writing at least two full business days before the Closing Time
or the Date of Delivery, as the case may be. The certificates for the Firm
Debentures and the Additional Debentures will be made available in New York
City for examination and packaging by the Initial Purchasers not later than
9:00 A.M. on the business day immediately prior to the Closing Time or the
Date of Delivery, as the case may be.
(e) It is understood that Merrill Lynch is authorized, for the
account of the Initial Purchasers, to accept delivery of, receipt for, and
make payment of the purchase price for, the Debentures that each Initial
Purchaser has agreed to purchase. Merrill Lynch may (but shall not be
obligated to) make payment of the purchase price for the Firm Debentures
and the Additional Debentures, if any, to be purchased by any Initial
Purchaser whose funds shall not have been received by the Closing Time or
the Date of Delivery, as the case may be, but such payment shall not
relieve such Initial Purchaser from its obligations hereunder.
Section 3. Resale of the Securities. Each of the Initial
Purchasers, severally and not jointly, represents and warrants to, and
agrees with, the Company and the Guarantor that:
(a) it is a Qualified Institutional Buyer and an "accredited
investor" within the meaning of Rule 501(a) under the 1933 Act;
(b) it has not offered or sold, and will not offer or sell, any
Debentures except (i) to persons whom it reasonably believes to be
Qualified Institutional Buyers, or (ii) to a limited number of other
institutional accredited investors whom it believes to be "accredited
investors" (as defined in Rule 501(a) (1), (2), (3) or (7) of
Regulation D) that, prior to their purchase of the Debentures,
deliver to it a letter substantially in the form of Exhibit A to the
Offering Memorandum;
(c) neither it nor any of its U.S. affiliates or any person
acting on its or their behalf has made or will make offers or sales
of the Debentures in the United States by means of any form of
general solicitation or general advertising (within the meaning of
Regulation D) or in any manner involving a public offering (within
the meaning of Section 4(2) under the 1933 Act) in the United States;
Section 4. Certain Covenants the Company. The Company and the
Guarantor each covenants with the Initial Purchasers as follows:
(a) The Company will furnish to the Initial Purchasers and
counsel for the Initial Purchasers, without charge, as many copies of
the Preliminary Offering Memorandum and the Offering Memorandum and
any amendments or supplements thereto as the Initial Purchasers and
its counsel may reasonably request.
(b) The Company will give the Initial Purchasers notice of its
intention to prepare any amendment or supplement to the Preliminary
Offering Memorandum or the Offering Memorandum, will furnish the
Initial Purchasers and counsel to the Initial Purchasers with copies
of any such amendment or supplement and will not distribute any such
amendment or supplement to which the Initial Purchasers or counsel
for the Initial Purchasers shall reasonably object.
(c) If at any time prior to completion of the distribution of
the Securities by the Initial Purchasers to purchasers who are not
their affiliates (as determined by the Initial Purchasers) any event
shall occur or condition exist as a result of which it is necessary,
in the opinion of counsel for the Initial Purchasers or counsel for
the Company, to amend the Offering Memorandum or amend or supplement
any Offering Memorandum in order that each Offering Memorandum, as
then amended or supplemented, will not include an untrue statement of
a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances
existing at the time it is delivered to a purchaser, not misleading
or if, in the reasonable opinion of the Initial Purchasers or counsel
to the Initial Purchasers, such amendment or supplement is necessary
to comply with applicable law, the Company will, subject to paragraph
(b) of this Section 4, promptly prepare such amendment or supplement
as may be necessary to correct such untrue statement or omission or
to effect such compliance (in form and substance reasonably agreed
upon by counsel to the Initial Purchasers), so that as so amended or
supplemented, the statements in the Offering Memorandum will not
include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in
the light of the circumstances existing at the time it is delivered
to a purchaser, not misleading or so that such Offering Memorandum as
so amended or supplemented will comply with applicable law, as the
case may be, and furnish to the Initial Purchasers such number of
copies of such amendment or supplement as the Initial Purchasers may
reasonably request. The Company agrees to notify the Initial
Purchasers in writing to suspend use of the Offering Memorandum as
promptly as practicable after the occurrence of an event specified in
this paragraph (c), and the Initial Purchasers hereby agree upon
receipt of such notice from the Company to suspend use of the
Offering Memorandum until the Company has amended or supplemented the
Offering Memorandum to correct such misstatement or omission or to
effect such compliance.
(d) Notwithstanding any provision of paragraph (b) or (c) to
the contrary, however, the Company's obligations under paragraphs (b)
and (c) and the Initial Purchasers' obligations under paragraph (c)
shall terminate on the earlier to occur of (i) the effective date of
a shelf registration statement with respect to the Securities filed
pursuant to the Registration Rights Agreement and (ii) the date upon
which the Initial Purchasers and their affiliates cease to hold
Securities acquired as part of their initial distribution, but in any
event not later than nine months from the Closing Time.
(e) None of the Company, the Guarantor, any of their affiliates
(as defined in Rule 501(b) under the 1933 Act), or any person acting
on behalf of the foregoing (other than the Initial Purchasers), will
engage in any form of general solicitation or general advertising
(within the meaning of Regulation D) in connection with any offer or
sale of the Securities in the United States prior to the
effectiveness of a registration statement with respect to the
Securities.
(f) None of the Company, the Guarantor or any of their
affiliates (as defined in Rule 501(b) under the 1933 Act) will,
directly or indirectly, make offers or sales of any security, or
solicit offers to buy any security, under circumstances that would
require the registration of the Securities under the 1933 Act.
(g) So long as any of the Securities are "restricted
securities" within the meaning of Rule 144(a)(3) under the 1933 Act,
the Company will, during any period in which it is not subject to and
in compliance with, Section 13 or 15(d) of the 1934 Act, provide to
each holder of such restricted securities and to each prospective
purchaser (as designated by such holder) of such restricted
securities, upon the request of such holder or prospective purchaser,
any information required to be provided by Rule 144A(d)(4) under the
1933 Act. This covenant is intended to be for the benefit of the
holders, and the prospective purchasers designated by such holders,
from time to time of such restricted securities.
(h) Each Debenture will bear the following legend until such
legend shall no longer be necessary or advisable because the
Debentures are no longer subject to the restrictions on transfer
described herein:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES
LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN
MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS
SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS SECURITY BY
ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER
SUCH SECURITY, PRIOR TO THE DATE WHICH IS TWO YEARS AFTER THE LATER
OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH
ANNTAYLOR STORES CORPORATION (THE "COMPANY") OR ANY AFFILIATE OF THE
COMPANY WAS THE OWNER OF THIS SECURITY OR ANY PREDECESSOR OF THIS
SECURITY (THE "RESALE RESTRICTION TERMINATION DATE") ONLY (A) TO THE
COMPANY, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE
FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE
144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO
WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT
OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S
UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (a)(1), (2), (3) OR (7)
OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY
FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
"ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A VIEW
TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
SUBJECT TO THE COMPANY'S AND THE TRANSFER AGENT'S RIGHT PRIOR TO ANY
SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO CLAUSE (D), (E) OR (F)
TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION
AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND (ii) IN
EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF
TRANSFER IN THE FORM APPEARING ON THIS SECURITY IS COMPLETED AND
DELIVERED BY THE TRANSFEROR TO THE TRANSFER AGENT. THIS LEGEND WILL
BE REMOVED UPON THE REQUEST OF A HOLDER AFTER THE RESALE RESTRICTION
TERMINATION DATE.
(i) Each Conversion Share, if any, will bear the following
legend until such legend shall no longer be necessary or advisable
because the Conversion Shares are no longer subject to the
restrictions on transfer described herein:
THE COMMON STOCK EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE
HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER,
SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE WHICH IS
TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE OF THE
CONVERTIBLE SUBORDINATED DEBENTURES DUE 2019 UPON THE CONVERSION OF
WHICH THE COMMON STOCK EVIDENCED HEREBY WAS ISSUED AND THE LAST DATE
ON WHICH ANNTAYLOR STORES CORPORATION (THE "COMPANY") OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF THIS SECURITY) (THE "RESALE RESTRICTION TERMINATION
DATE") ONLY (A) TO THE COMPANY, (B) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (C) FOR SO LONG AS
THE COMPANY COMMON STOCK IS ELIGIBLE FOR RESALE PURSUANT TO RULE
144A, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT
THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES
TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE
MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF
SUBPARAGRAPH (a)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES
ACT THAT IS ACQUIRING THE SECURITIES FOR ITS OWN ACCOUNT, OR FOR THE
ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR", FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN
CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT,
OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE
TRANSFER AGENT'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (i)
PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM AND (ii) IN EACH OF THE FOREGOING CASES,
TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON
THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE
TRANSFER AGENT. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE
HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
(j) The Company will arrange for the registration and
qualification of the Debentures for offering and sale under the
applicable securities or "blue sky" laws of such states and other
jurisdictions as the Initial Purchasers may reasonably designate in
connection with the resale of the Securities as contemplated by this
Agreement and the Offering Memorandum and will continue such
qualifications in effect for as long as may be necessary to complete
the distribution of the Debentures; provided that in no event shall
the Company be obligated to (i) qualify as a foreign corporation or
as a dealer in securities in any jurisdiction where it would not
otherwise be required to so qualify but for this Section 4(k), (ii)
file any general consent to service of process in any jurisdiction
where it is not at the Closing Time then so subject, (iii) subject
itself to taxation in any such jurisdiction if it is not so subject
or (iv) register the Debentures under the 1933 Act except in
accordance with the Registration Rights Agreement. The Company shall
promptly advise the Initial Purchasers of the receipt by the Company
of any notification with respect to the suspension of the
qualification or exemption from qualification of the Debentures for
offering or sale in any jurisdiction or the institution of any
proceeding for such purpose.
(k) The Company will use the proceeds received from the issue
and sale of the Debentures in the manner specified in the Offering
Memorandum under the caption "Use of Proceeds".
(l) Neither the Company nor the Guarantor shall, directly or
indirectly, for a period of 90 days after the date hereof, except
with the prior written consent of the Initial Purchasers, offer, sell
or enter into any agreement to sell, or otherwise dispose of (a) any
convertible stock or any other security of the Company or the
Guarantor that is substantially similar to the Debentures, (b) any
shares of any class of common stock of the Company or the Guarantor
(other than (i) the Conversion Shares, or (ii) shares of common stock
issuable pursuant to the exercise of options and warrants outstanding
as of the date hereof, (iii) the grant of stock options or other
stock-based awards (and the exercise or vesting thereof) to
directors, officers and employees of the Company (including pursuant
to the Company's Associate Discount Stock Purchase Plan) or the
Guarantor, (iv) as may be required pursuant to the Certificate of
Incorporation of the Company, and (v) such shares of common stock
issuable upon the conversion of the outstanding 8 1/2% Convertible
Preferred Securities and the outstanding 8 1/2% Convertible Common
Securities of AnnTaylor Finance Trust, a Delaware business trust), or
(c) any other securities which are convertible into, or exercisable
or exchangeable for, any of (a) or (b).
Section 5. Payment of Expenses. The Company and the Guarantor
will pay all costs and expenses incident to the performance of their
obligations under this Agreement, including (a) the preparation and
printing of the Preliminary Offering Memorandum and the Offering Memorandum
(including financial statements and exhibits) and any amendments or
supplements thereto, and the cost of furnishing copies thereto to the
Initial Purchasers, (b) the preparation, issuance, printing and
distribution of the Debentures and any survey of state securities or "blue
sky" laws or legal investment memoranda ("Blue Sky Survey"), (c) the
delivery of the Debentures to the Initial Purchasers, including any stock
transfer taxes payable upon the sale of the Debentures to the Initial
Purchasers, (d) the fees and disbursements of the Company's and the
Guarantor's counsel and accountants, (e) the qualification of the
Debentures under the applicable state securities or "blue sky" laws in
accordance with Section 4(k), including filing fees and fees and
disbursements of counsel for the Initial Purchasers in connection therewith
and in connection with the Blue Sky Survey, (f) any filing fees in
connection with any filing for review of the offering with the NASD, (g)
any fees charged by rating agencies for rating the Debentures, (h) the fees
and expenses of the Trustee and the transfer agent and registrar for the
common stock, including the fees and disbursements of counsel for such
Trustee and the transfer agent and registrar, (i) all expenses and listing
fees in connection with the application for designation of the Securities
as PORTAL eligible securities and (j) the cost of qualifying the Debentures
with The Depository Trust Company.
If the sale of the Debentures provided for herein is not
consummated because any condition to the obligations of the Initial
Purchasers set forth in Section 6 is not satisfied or because this
Agreement is terminated pursuant to Section 11(a)(i) other than by reason
of a default by the Initial Purchasers in payment for the Debentures at the
Closing Time, the Company and the Guarantor shall reimburse the Initial
Purchasers promptly upon demand for all reasonable out-of-pocket expenses
(including reasonable fees and disbursements of counsel to the Initial
Purchasers) that shall have been incurred by it in connection with the
proposed purchase and sale of the Debentures.
Section 6. Conditions of Initial Purchasers' Obligations. The
obligations of the Initial Purchasers to purchase and pay for the
Debentures that it has agreed to purchase pursuant to this Agreement are
subject to the accuracy of the representations and warranties of the
Company and the Guarantor contained herein or in certificates of any
officer of the Company or the Guarantor delivered pursuant to the
provisions hereof, to the performance by the Company and the Guarantor of
their respective obligations hereunder, and to the following further
conditions:
(a) At the Closing Time, the Initial Purchasers shall have
received a signed opinion of Skadden, Arps, Slate, Meagher & Flom LLP,
counsel for the Company, dated as of the Closing Time, in form and
substance satisfactory to counsel for the Initial Purchasers, to the effect
that:
(i) The Indenture has been duly authorized, executed and
delivered by the Company and the Guarantor and, when duly authorized,
executed and delivered by the Trustee, will constitute a valid and
binding obligation of the Company and the Guarantor, enforceable
against the Company and the Guarantor in accordance with its terms,
except as enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws
affecting enforcement of creditors' rights generally and except as
enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in
equity or at law) and except that the waive of stay or extension laws
contained in Section 515 of the Indenture may be unenforceable.
(ii) The Debentures have been duly authorized by the Company
and when the Debentures have been duly authenticated by the Trustee
in the manner described in its certificate delivered to the Initial
Purchasers and paid for by the Initial Purchasers (which fact such
counsel need not determine by an inspection of the Debentures) on the
date hereof, the Debentures will be duly executed, issued and
delivered by the Company and constitute valid and binding obligations
of the Company entitled to the benefits of the Indenture and
enforceable against the Company in accordance with their terms,
except as enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws
affecting enforcement of creditors' rights generally and except as
enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in
equity or at law) and except that the waive of stay or extension laws
contained in Section 515 of the Indenture may be unenforceable.
(iii) The Conversion Shares have been duly authorized by the
Company, reserved for issuance upon conversion of the Debentures and,
if and when issued in accordance with the Indenture at conversion
prices at or in excess of the par value of such Conversion Shares,
will be validly issued, fully paid and nonassessable; and no holder
thereof will be subject to personal liability by reason of being such
a holder.
(iv) This Agreement has been duly authorized, executed and
delivered by the Company and the Guarantor.
(v) The Registration Rights Agreement has been duly authorized,
executed and delivered by the Company and the Guarantor and
constitutes a valid and binding agreement of the Company and the
Guarantor, enforceable against the Company and the Guarantor in
accordance with its terms, except to the extent that enforcement
thereof may be limited by (a) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating
to creditors' rights generally and (b) general principles of equity
(regardless of whether enforceability is considered in a proceeding
at law or in equity), and except to the extent that the right to
indemnity and contribution contained in the Registration Rights
Agreement may be limited by state or federal securities laws or the
public policy underlying such laws.
(vi) The holders of outstanding shares of capital stock of the
Company are not entitled to any preemptive rights under the
Certificate of Incorporation or By-Laws of the Company or the law of
the State of Delaware to subscribe for the Debentures or the
Conversion Shares.
(vii) No authorization, approval, consent or license of any New
York, Delaware or United States federal government, governmental
instrumentality or court that, in the opinion of such counsel, are
normally applicable to transactions of the type contemplated by this
Agreement (other than United States, state and foreign securities or
blue sky laws and the rules and regulations of the NASD) ("Applicable
Laws"), is required for the issuance and sale of the Debentures by
the Company to the Initial Purchasers pursuant to this Agreement, or
the performance by the Company or the Guarantor of its obligations in
this Agreement, the Indenture, the Debentures and the Registration
Rights Agreement, except such as may be required under state
securities law or under federal and state securities laws in
connection with the registration obligations under the Registration
Rights Agreement.
(viii) The statements made in the Offering Memorandum under the
captions "Description of Debentures" and "Description of Capital
Stock", insofar as such statements purport to summarize certain
provisions of the Debentures, the Conversion Shares, the Subsidiary
Guarantee, the Indenture, the Registration Rights Agreement and the
Certificate of Incorporation of the Company, to the extent that they
constitute matters of law or legal conclusions, have been reviewed by
such counsel and fairly summarize the information required to be
disclosed therein in all material respects;
(ix) The execution, delivery and performance by the Company and
the Guarantor of this Agreement, the Indenture and the Registration
Rights Agreement, the consummation by the Company and the Guarantor
of the transactions contemplated hereby and thereby and in the
Offering Memorandum, compliance by the Company and the Guarantor with
the terms of the foregoing and the application of the proceeds from
the sale of the Debentures as contemplated by the Offering Memorandum
do not and will not result in any violation of the charter or by-laws
of the Company or the Guarantor, and do not and will not conflict
with, or result in a breach of any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of the
Company or the Guarantor under (A) any agreement or instrument set
forth on Schedule I to such counsel's opinion, (B) any existing
Applicable Law, or (C) any judgment, order or decree under Applicable
Laws of any New York, Delaware or federal government, governmental
instrumentality or court having jurisdiction over the Company or the
Guarantor or any of their respective properties of which such counsel
is aware. Such counsel need express no opinion, however, as to
whether the execution, delivery and performance by the Company or the
Guarantor of any of the agreements identified in the preceding
sentence will constitute a violation of or a default under any
covenant, restriction or provision with respect to financial ratios
or tests or any aspect of the financial condition or results of
operations of the Company or the Guarantor.
(x) When the Debentures are issued and delivered pursuant to
this Agreement, such securities will not be of the same class (within
the meaning of Rule 144A under the 1933 Act) as securities of the
Company listed on a national securities exchange registered under
Section 6 of the 1934 Act or quoted in a U.S. automated inter-dealer
quotation system.
(xi) Assuming (a) the accuracy of the representations and
warranties of the Company and the Guarantor set forth in Section 1 of
this Agreement and of the Initial Purchasers set forth in Section 3
of this Agreement, (b) the due performance by the Company and the
Guarantor of the covenants and agreements set forth in Section 4 of
this Agreement and the due performance by the Initial Purchasers of
the covenants and agreements set forth in Section 3 of this
Agreement, (c) compliance by the Initial Purchasers with the offering
and transfer procedures and restrictions described in the Offering
Memorandum and (d) the accuracy of the representations and warranties
made in accordance with the Offering Memorandum by purchasers to whom
the Initial Purchasers initially resell Debentures, the offer, sale
and delivery of the Debentures to the Initial Purchasers in the
manner contemplated by the Purchase Agreement and the Offering
Memorandum and the initial resale of the Debentures by the Initial
Purchasers in the manner contemplated in the Offering Memorandum and
this Agreement do not require registration under the 1933 Act, it
being understood that such counsel need express no opinion as to any
subsequent resale of any Debentures, and neither the Indenture nor
the Debentures are required to be qualified under the Trust Indenture
Act of 1939, as amended.
(xii) Neither the Company nor the Guarantor is required to be
registered under the Investment Company Act of 1940, as amended.
(xiii) The Company has been duly incorporated and is validly
existing in good standing as a corporation and the Company has the
power and authority to (a) execute and deliver, and to perform its
obligations under, this Agreement, the Indenture and the Registration
Rights Agreement and (b) issue and perform its obligations under the
Debentures under Delaware law.
(xiv) The Guarantor has been duly incorporated and is validly
existing in good standing as a corporation and the Guarantor has the
power and authority to (a) execute and deliver, and to perform its
obligations under, this Agreement, the Indenture and the Registration
Rights Agreement and (b) issue and perform its obligations under the
Subsidiary Guarantee under Delaware law.
(xv) Under the Indenture, the issuance of the Debentures and
the Conversion
Shares is not subject to preemptive rights.
(xvi) The statements made in the Offering Memorandum set forth
under the captions "Offering Memorandum Summary --The Offering--
Original Issue Discount" and "United States Federal Income Taxation",
fairly present in all material respects the principal U.S. federal
income tax consequences of an investment in the Debentures.
In addition, such opinion shall state that such counsel have
participated in the preparation of the Offering Memorandum and in
conferences with officers and other representatives of the Company and the
Guarantor, representatives of the independent public accountants for the
Company and the Guarantor, and with representatives and counsel of the
Initial Purchasers at which the contents of the Offering Memorandum and
related matters were discussed and, although such counsel need not pass
upon or assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Offering Memorandum, on the
basis of the foregoing, no facts have come to the attention of such counsel
that have caused them to believe that the Offering Memorandum or any
amendment thereto (except for the financial statements and other financial
data included therein or omitted therefrom, as to which such counsel need
express no opinion) at the time any such amended or supplemented Offering
Memorandum was issued or at the Closing Time, contained or contains an
untrue statement of a material fact or omitted or omits to state a material
fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading except that such counsel need express no opinion or
belief with respect to the financial statements, schedules and other
financial data included therein or omitted therefrom.
Such opinion shall be to such further effect with respect to
other legal matters relating to this Agreement and the Securities as
counsel for the Initial Purchasers may reasonably request. In giving such
opinion, such counsel may state that, insofar as such opinion involves
factual matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Company and the Guarantor and certificates
of public officials; provided that such certificates have been delivered to
the Initial Purchasers.
(b) At the Closing Time, the Initial Purchasers shall have
received a signed opinion of Jocelyn F.L. Barandiaran, general counsel of
the Company, dated as of the Closing Time, in form and substance
satisfactory to counsel for the Initial Purchasers, to the effect that:
(i) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware
with corporate power and authority under such laws to own, lease and
operate its properties and conduct its business as described in the
Offering Memorandum.
(ii) The Company is duly qualified to transact business as a
foreign corporation and is in good standing in each other
jurisdiction in which it owns or leases property of a nature, or
transacts business of a type, that would make such qualification
necessary, except to the extent that the failure to so qualify or be
in good standing would not have a material adverse effect on the
Company and the Guarantor, considered as one enterprise.
(iii) The Guarantor is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware
with corporate power and authority under such laws to own, lease and
operate its properties and conduct its business.
(iv) The Guarantor is duly qualified to transact business as a
foreign corporation and is in good standing in each other
jurisdiction in which it owns or leases property of a nature, or
transacts business of a type, that would make such qualification
necessary, except to the extent that the failure to so qualify or be
in good standing would not have a material adverse effect on the
Company and the Guarantor, considered as one enterprise.
(v) The Company has an authorized capitalization as set forth
in the Offering Memorandum; all of the outstanding shares of capital
stock of the Company have been duly authorized and validly issued and
are fully paid and nonassessable; no holder thereof is or will be
subject to personal liability by reason of being such a holder; and
none of the outstanding shares of capital stock of the Company was
issued in violation of the preemptive rights of any stockholder of
the Company arising by operation of law or under the charter or
by-laws of the Company.
(vi) All of the outstanding shares of capital stock of the
Guarantor have been duly authorized and validly issued and are fully
paid and nonassessable; all of such shares are owned by the Company,
free and clear of any pledge, lien, security interest, charge, claim,
equity or encumbrance of any kind (other than pursuant to the Bank
Credit Agreement); no holder thereof is subject to personal liability
by reason of being such a holder; and none of such shares was issued
in violation of the preemptive rights of any stockholder of the
Guarantor arising by operation of law or under the charter or by-laws
of the Guarantor.
(vii) Other than described in the Offering Memorandum, such
counsel does not know of any statutes or regulations, or any pending
or threatened legal or governmental proceedings to which the Company
or the Guarantor is a party or to which the assets of the Company or
the Guarantor is subject which, individually or in the aggregate,
would have a material adverse effect on the Company and the
Guarantor, considered as one enterprise.
(viii) Except to the extent described in the Offering
Memorandum, to the knowledge of such counsel, no default exists in
the performance or observance of any material obligation, agreement,
covenant or condition contained in any contract, indenture, loan
agreement, note, lease or other agreement or instrument that is
described or referred to in the Offering Memorandum. Such counsel
need express no opinion, however, as to any defaults relating to a
violation of or a default under any covenant, restriction or
provision with respect to financial ratios or tests or any aspect of
the financial condition or results of operations of the Company or
the Guarantor.
In addition, such opinion shall state that such counsel has
participated in the preparation of the Offering Memorandum and in
conferences with officers and other representatives of the Company and the
Guarantor, representatives of the independent public accountants for the
Company and the Guarantor, and with representatives and counsel of the
Initial Purchasers at which the contents of the Offering Memorandum and
related matters were discussed and, although such counsel need not pass
upon or assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Offering Memorandum, on the
basis of the foregoing, no facts have come to the attention of such counsel
that have caused such counsel to believe that the Offering Memorandum or
any amendment thereto (except for the financial statements and other
financial data included therein or omitted therefrom, as to which such
counsel need express no opinion) at the time any such amended or
supplemented Offering Memorandum was issued or at the Closing Time,
contained or contains an untrue statement of a material fact or omitted or
omits to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading except that such counsel need
express no opinion or belief with respect to the financial statements,
schedules and other financial data included therein or omitted therefrom.
Such opinion shall be to such further effect with respect to
other legal matters relating to this Agreement and the Securities as
counsel for the Initial Purchasers may reasonably request. In giving such
opinion, such counsel may state that, insofar as such opinion involves
factual matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Company and the Guarantor and certificates
of public officials; provided that such certificates have been delivered to
the Initial Purchasers.
(c) At the Closing Time, the Initial Purchasers shall have
received the favorable opinion of Shearman & Sterling, counsel for the
Initial Purchasers, dated as of the Closing Time, to the effect that the
opinions delivered pursuant to Sections 6(a) and 6(b) appear on their face
to be appropriately responsive to the requirements of this Agreement
except, specifying the same, to the extent waived by you, and with respect
to the incorporation and legal existence of the Company, the Securities,
the due authorization, execution and delivery of this Agreement, the
absence of the requirement to register under the 1933 Act the initial sale
of the Debentures and such other related matters as the Initial Purchasers
may require. Such counsel may also state that, insofar as such opinion
involves factual matters, they have relied, to the extent they deem proper,
upon certificates of officers of the Company and the Guarantor and
certificates of public officials.
(d) At the Closing Time, (i) the Offering Memorandum, as it may
then be amended or supplemented, shall not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, (ii)
there shall not have been, since the respective dates as of which
information is given in the Offering Memorandum, any material adverse
change in the condition (financial or otherwise), earnings, business
affairs or business prospects of the Company or the Guarantor, considered
as one enterprise, whether or not arising in the ordinary course of
business, (iii) no action, suit or proceeding shall be pending or, to the
knowledge of the Company, threatened against the Company or the Guarantor
other than as set forth in the Offering Memorandum or in any supplement
thereto and no proceedings shall be pending or, to the knowledge of the
Company, threatened against the Company or the Guarantor before or by any
government, governmental instrumentality or court, domestic or foreign,
that could be reasonably expected to result in any material adverse change
in the condition (financial or otherwise), earnings, business affairs or
business prospects of the Company and the Guarantor considered as one
enterprise, other than as set forth in the Offering Memorandum, (iv) the
Initial Purchasers, the Company and the Guarantor shall have complied in
all material respects with all agreements and satisfied all conditions on
their respective parts to be performed or satisfied at or prior to the
Closing Time and (v) the representations and warranties of the Company and
the Guarantor set forth in Section 1(a) shall be accurate as though
expressly made at and as of the Closing Time. At the Closing Time, the
Initial Purchasers shall have received a certificate of the Chief Financial
Officer and the Chairman and Chief Executive Officer of the Company and of
the Guarantor, dated as of the Closing Time, to such effect.
(e) At the time that this Agreement is executed by the Company
and the Guarantor, the Initial Purchasers shall have received from Deloitte
& Touche LLP a letter in the form attached hereto as Exhibit B, dated such
date, and otherwise in form and substance satisfactory to the Initial
Purchasers.
(f) At the Closing Time, the Initial Purchasers shall have
received from Deloitte & Touche LLP a letter, in form and substance
satisfactory to the Initial Purchasers and dated as of the Closing Time, to
the effect that they reaffirm the statements made in the letter furnished
pursuant to Section 6(e), except that the specified date referred to shall
be a date not more than four days prior to the Closing Time.
(g) At the Closing Time, counsel for the Initial Purchasers
shall have been furnished with all such documents, certificates and
opinions as they may reasonably request for the purpose of enabling them to
pass upon the issuance and sale of the Securities as contemplated in this
Agreement and in order to evidence the accuracy and completeness of any of
the representations, warranties or statements of the Company and the
Guarantor, the performance of any of the covenants of the Company and the
Guarantor, or the fulfillment of any of the conditions herein contained;
and all proceedings taken by the Company and the Guarantor at or prior to
the Closing Time in connection with the authorization, issuance and sale of
the Securities as contemplated in this Agreement shall be satisfactory in
form and substance to the Initial Purchasers and to counsel for the Initial
Purchasers.
(h) At the Closing Time, the Company, the Guarantor and the
Initial Purchasers shall have entered into the Registration Rights
Agreement, and the Registration Rights Agreement shall be in full force and
effect.
(i) At the Closing Time, there shall not be any pending or
threatened legal or governmental proceedings with respect to any of the
transactions contemplated in this Agreement.
If any of the conditions specified in this Section 6 shall not
have been fulfilled when and as required by this Agreement, this Agreement
may be terminated by the Initial Purchasers on notice to the Company at any
time at or prior to the Closing Time, and such termination shall be without
liability of such party to the other party, except as provided in Section 5
herein. Notwithstanding any such termination, the provisions of Sections 8
and 9 shall remain in effect.
Section 7. Conditions to Purchase of Additional Debentures. In
the event that the Initial Purchasers exercise their option granted in
Section 2 to purchase all or any of the Additional Debentures and the Date
of Delivery determined by you pursuant to Section 2 is later than the
Closing Time, the obligations of the Initial Purchasers to purchase and pay
for the Additional Debentures that they shall have agreed to purchase
pursuant to this Agreement are subject to the accuracy of the
representations and warranties of the Company and the Guarantor herein
contained, to the performance by the Company and the Guarantor of their
obligations hereunder and to the following further conditions:
(a) At the Date of Delivery, the provisions of Sections 6(d)(i)
through 6(d)(iv) shall have been complied with at and as of the Date of
Delivery and, at the Date of Delivery, the Initial Purchasers shall have
received a certificate of the Chairman or an Executive Vice President, and
the Treasurer or Controller, of the Company and of the Guarantor, dated as
of the Date of Delivery, to such effect.
(b) At the Date of Delivery, the Initial Purchasers shall have
received the favorable opinion of Skadden, Arps, Slate, Meagher & Flom LLP,
counsel for the Company and the Guarantor in a form and substance
satisfactory to counsel for the Initial Purchasers, dated as of the Date of
Delivery, relating to the Additional Debentures and otherwise to the same
effect as the opinions required by Section 6(a).
(c) At each applicable Date of Delivery, the Initial Purchasers
shall have received a signed opinion of Jocelyn F.L. Barandiaran, general
counsel for the Company and the Guarantor, dated as of such Date of
Delivery, in form and substance satisfactory to counsel for the Initial
Purchasers, to the same effect as the opinion required by Section 6(b).
(d) At the Date of Delivery, the Initial Purchasers shall have
received the favorable opinion of Shearman & Sterling, counsel for the
Initial Purchasers, dated as of the Date of Delivery, relating to the
Additional Debentures and otherwise to the same effect as the opinion
required by Section 6(c).
(e) At the Date of Delivery, the Initial Purchasers shall have
received a letter from Deloitte & Touche, in form and substance
satisfactory to the Initial Purchasers and dated as of the Date of
Delivery, to the effect that they reaffirm the statements made in the
letter furnished pursuant to Section 6(f), except that the specified date
referred to shall be a date not more than three days prior to the Date of
Delivery.
(f) At the Date of Delivery, counsel for the Initial Purchasers
shall have been furnished with all such documents, certificates and
opinions as they may reasonably request for the purpose of enabling them to
pass upon the issuance and sale of the Additional Debentures as
contemplated in this Agreement in order to evidence the accuracy and
completeness of any of the representations, warranties or statements of the
Company and the Guarantor, the performance of any of the covenants of the
Company and the Guarantor, or the fulfillment of any of the conditions
herein contained; and all proceedings taken by the Company and the
Guarantor at or prior to the Date of Delivery in connection with the
authorization, issuance and sale of the Additional Debentures as
contemplated in this Agreement shall be satisfactory in form and substance
to the Initial Purchasers and their counsel.
Section 8. Indemnification. (a) The Company and the Guarantor
agree jointly and severally to indemnify and hold harmless each Initial
Purchaser and each person, if any, who controls any Initial Purchaser
within the meaning of Section 15 of the 1933 Act to the extent and in the
manner set forth in clauses (i), (ii) and (iii) below:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of an untrue statement
or alleged untrue statement of a material fact included in any
preliminary offering memorandum or the Offering Memorandum (or any
amendment or supplement thereto), including all documents
incorporated therein by reference, or the omission or alleged
omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or investigation or
proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission, if such settlement is effected with the written consent of
the Company; and
(iii) against any and all expense whatsoever, as incurred
(including, subject to Section 8(c) hereof, the reasonable fees and
disbursements of counsel chosen by the Initial Purchasers),
reasonably incurred in investigating, preparing or defending against
any litigation, or investigation or proceeding by any governmental
agency or body, commenced or threatened, or any claim whatsoever
based upon any such untrue statement or omission, or any such alleged
untrue statement or omission, to the extent that any such expense is
not paid under subparagraph (i) or (ii) above;
provided, however, that this indemnity agreement does not apply to any
loss, liability, claim, damage or expense to the extent arising out of an
untrue statement or omission or alleged untrue statement or omission made
in reliance upon and in conformity with written information furnished to
the Company by any Initial Purchasers expressly for use in the Offering
Memorandum (or any amendment or supplement thereto), or any preliminary
offering memorandum; provided further that the foregoing indemnification
with respect to any preliminary offering memorandum shall not inure to the
benefit of the Initial Purchasers (or any person controlling such Initial
Purchasers) from whom the person asserting any such losses, claims, damages
or liabilities purchased any of the Debentures if a copy of the Offering
Memorandum (as then amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) was not sent or given by
or on behalf of such Initial Purchasers on the initial resale to such
person, if such is required by law, at or prior to the written confirmation
of the sale of such Debentures to such person and if the Offering
Memorandum (as so amended or supplemented) would have cured the defect
giving rise to such loss, claim, damage or liability.
(b) Each Initial Purchaser severally agrees to indemnify and
hold harmless the Company, the Guarantor, and their respective directors
and officers and each person, if any, who controls the Company and the
Guarantor within the meaning of Section 15 of the 1933 Act against any and
all loss, liability, claim, damage and expense described in the indemnity
agreement in Section 8(a), as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in
the Offering Memorandum (or any amendment or supplement thereto) or any
preliminary offering memorandum in reliance upon and in conformity with
written information furnished to the Company by such Initial Purchasers
expressly for use in the Offering Memorandum (or any amendment or
supplement thereto), or such preliminary offering memorandum.
(c) Each indemnified party shall give prompt notice to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, but failure to so notify an indemnifying
party shall not relieve it from any liability that it may have otherwise
than on account of this indemnity agreement. An indemnifying party may
participate at its own expense in the defense of such action. In no event
shall the indemnifying party or parties be liable for the fees and expenses
of more than one counsel for all indemnified parties in connection with any
one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances.
If it so elects within a reasonable time after receipt of such notice, an
indemnifying party, jointly with any other indemnifying parties receiving
such notice, may assume the defense of such action with counsel chosen by
it and approved by the indemnified parties defendant in such action, unless
such indemnified parties reasonably object to such assumption on the ground
that there may be legal defenses available to them which are different from
or are in addition to those available to such indemnifying party. If an
indemnifying party assumes the defense of such action, the indemnifying
parties shall not be liable for any fees and expenses of counsel for the
indemnified parties incurred thereafter in connection with such action.
Section 9. Contribution. In order to provide for just and
equitable contribution in circumstances under which the indemnity provided
for in Section 8 is for any reason held to be unenforceable by the
indemnified parties although applicable in accordance with its terms, the
Company, the Guarantor and the Initial Purchasers shall contribute to the
aggregate losses, liabilities, claims, damages and expenses of the nature
contemplated by such indemnity incurred by the Company, the Guarantor and
one or more of the Initial Purchasers, as incurred, in such proportions
that the Initial Purchasers are responsible for that portion represented by
the percentage that the Initial Purchasers' discount appearing under the
heading "Plan of Distribution" of the Offering Memorandum bears to the
offering price appearing thereon; provided, however, that no person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
1933 Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section,
each person, if any, who controls an Initial Purchaser within the meaning
of Section 15 of the 1933 Act shall have the same rights to contribution as
such Initial Purchaser, and each director and officer of the Company and
the Guarantor and each person, if any, who controls the Company and the
Guarantor within the meaning of Section 15 of the 1933 Act shall have the
same rights to contribution as the Company and the Guarantor. The Initial
Purchasers' respective obligations to contribute pursuant to this Section 9
are several in proportion to the number of Debentures set forth opposite
their respective names in Schedule A hereto and not joint.
Section 10. Representations, Warranties and Agreements to
Survive Delivery. The representations, warranties, indemnities, agreements
and other statements of the Company, the Guarantor and their respective
officers and of the Initial Purchasers set forth in or made pursuant to
this Agreement will remain operative and in full force and effect
regardless of any investigation made by or on behalf of the Company, the
Guarantor, the Initial Purchasers or any controlling person thereof and
will survive delivery of and payment for the Securities.
Section 11. Termination of Agreement. (a) The Initial
Purchasers may terminate this Agreement, by notice to the Company at any
time at or prior to the Closing Time (i) if there has been, since the
respective dates as of which information is given in the Offering
Memorandum, any material adverse change in the condition (financial or
otherwise), earnings, business affairs or business prospects of the Company
and the Guarantor, considered as one enterprise, whether or not arising in
the ordinary course of business, (ii) if there has occurred any material
adverse change in the financial markets in the United States or
internationally or any outbreak of hostilities or escalation of existing
hostilities or other calamity or crisis the effect of which on the
financial markets of the United States or internationally is such as to
make it, in the judgment of the Initial Purchasers, impracticable to market
the Securities, or enforce contracts for the sale of the Debentures, (iii)
if trading in any securities of the Company has been suspended by the
Commission or the New York Stock Exchange, or if trading generally on the
New York Stock Exchange or in the over-the-counter market has been
suspended, or minimum or maximum prices for trading have been fixed, or
maximum ranges for prices for securities have been required, by such
exchange or by order of the Commission or any other governmental authority
or (iv) if a banking moratorium has been declared by either federal or New
York authorities.
(b) If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other
party, except to the extent provided in Section 5. Notwithstanding any such
termination, the provisions of Sections 8 and 9 shall remain in effect.
(c) This Agreement may also terminate pursuant to the
provisions of Section 6, with the effect stated in such Section.
Section 12. Default by One or More of the Initial Purchasers.
If one or more of the Initial Purchasers shall fail at the Closing Time to
purchase the Debentures that it or they are obligated to purchase pursuant
to this Agreement (the "Defaulted Securities"), Merrill Lynch shall have
the right, within 24 hours thereafter, to make arrangements for one or more
of the non-defaulting Initial Purchasers, or any other initial purchasers,
to purchase all, but not less than all, of the Defaulted Securities in such
amounts as may be agreed upon and upon the terms set forth in this
Agreement; if, however, you have not completed such arrangements within
such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10%
of the total number of Firm Debentures, the non-defaulting Initial
Purchasers shall be obligated to purchase the full amount thereof in the
proportions that their respective Initial Share underwriting obligation
proportions bear to the underwriting obligation proportions of all
non-defaulting Initial Purchasers, or
(b) if the number of Defaulted Securities exceeds 10% of the
total number of Firm Debentures, this Agreement shall terminate without
liability on the part of any non-defaulting Initial Purchaser.
No action taken pursuant to this Section shall relieve any
defaulting Initial Purchaser from liability in respect of its default.
In the event of any such default that does not result in a
termination of this Agreement, either Merrill Lynch or the Company shall
have the right to postpone the Closing Time for a period not exceeding
seven days in order to effect any required changes in the Offering
Memorandum or in any other documents or arrangements. As used herein, the
term "Initial Purchaser" includes any person substituted for any Initial
Purchaser under this Section 12.
Section 13. Notices. All notices and other communications under
this Agreement shall be in writing and shall be deemed to have been duly
given if delivered, mailed or transmitted by any standard form of
telecommunication. Notices to the Initial Purchasers shall be directed to
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, at
Merrill Lynch World Headquarters, North Tower, World Financial Center, New
York, New York 10281-1201 (telecopier no.: (212) 449-3150), attention of
Mary Beth Henson; and notices to the Company and the Guarantor shall be
directed to the Company at AnnTaylor Stores Corporation, 142 West 57th
Street, New York, New York 10019 (telecopier no.: (212) 541-3299),
attention of Jocelyn F.L. Barandiaran, Esq.
Section 14. Parties. This Agreement is made solely for the
benefit of the several Initial Purchasers, the Company and the Guarantor
and, to the extent expressed, any person who controls the Company, the
Guarantor or any of the Initial Purchasers within the meaning of Section 15
of the 1933 Act, and the directors of the Company and the Guarantor and
their respective officers, employees and trustees, and its executors,
administrators, successors and assigns and, subject to the provisions of
Section 12, no other person shall acquire or have any right under or by
virtue of this Agreement. The term "successors and assigns" shall not
include any purchaser, as such purchaser, from any of the Initial
Purchasers of the Securities.
Section 15. Governing Law and Time. This Agreement shall be
governed by the laws of the State of New York. Specified times of the day
refer to New York City time.
Section 16. Counterparts. This Agreement may be executed in one
or more counterparts and when a counterpart has been executed by each
party, all such counterparts taken together shall constitute one and the
same agreement.
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If the foregoing is in accordance with the Initial Purchasers'
understanding of our agreement, please sign and return to us a counterpart
hereof, whereupon this instrument will become a binding agreement among the
Company, the Guarantor and the Initial Purchasers in accordance with its
terms.
Very truly yours,
ANNTAYLOR STORES CORPORATION
By: /s/ Barry Erdos
______________________________
Name: Barry Erdos
Title: Executive Vice President - CFO
ANNTAYLOR, INC.
By: /s/ Barry Erdos
______________________________
Name: Barry Erdos
Title: Executive Vice President - CFO
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Confirmed and accepted as of the date first above written:
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
BANC OF AMERICA SECURITIES LLC
By: MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
By: /s/ Cynthia Bates
_________________________________
Name: Cynthia Bates
Title: Vice President
SCHEDULE A
Aggregate Principal Amount at
Maturity of Firm Debentures
Initial Purchaser to be Purchased
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.................. 90,487,500
Banc of America Securities LLC............... 90,487,500
----------
Total.................................. 180,975,000
===========
SCHEDULE B
SUBSIDIARIES OF ANNTAYLOR STORES CORPORATION ("ATSC")
AnnTaylor Finance Trust Common securities 100% owned by ATSC;
Preferred securities (TOPrS) publicly
held
AnnTaylor, Inc. ("ATI") Common Stock 100% owned by ATSC
AnnTaylor Travel, Inc. Common Stock 100% owned by ATI
AnnTaylor Distribution Services, Inc. Common Stock 100% owned by ATI
AnnTaylor Loft, Inc. Common Stock 100% owned by ATI
AnnTaylor Sourcing Far East Limited 149,999 ordinary shares owned by
ATI; ("ATS-Far East") 1 ordinary share held by ATSC
AnnTaylor Italy S.r.l. Common Stock 100% owned by ATS-Far
East
AnnTaylor Sourcing Italy S.r.l. Common Stock 100% owned by ATS-Far
(assets formerly part of Cygne Italy) East
AnnTaylor of Puerto Rico, Inc. Incorporated; shares to be issued.
Anticipate Common Stock will be 100%
owned by either ATS-Far East or ATI
Annco, Inc. Incorporated; shares to be issued.
Common Stock to be 100% owned by ATI
ANNTAYLOR STORES CORPORATION,
AS ISSUER
AND
ANNTAYLOR, INC.,
AS SUBSIDIARY GUARANTOR
TO
THE BANK OF NEW YORK,
AS TRUSTEE
INDENTURE
DATED AS OF JUNE 18, 1999
CONVERTIBLE SUBORDINATED DEBENTURES DUE 2019
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION . . . . . . . . . 2
Section 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . 2
Section 1.2 Compliance Certificates and Opinions . . . . . . . 14
Section 1.3 Form of Documents Delivered to Trustee . . . . . . 15
Section 1.4 Acts of Holders; Record Dates . . . . . . . . . . . 15
Section 1.5 Notices, Etc. to Trustee, the Company and the
Subsidiary Guarantor . . . . . . . . . . . . . . . 17
Section 1.6 Notice to Holders; Waiver . . . . . . . . . . . . . 17
Section 1.7 Conflict with Trust Indenture Act . . . . . . . . . 18
Section 1.8 Effect of Headings and Table of Contents . . . . . 18
Section 1.9 Successors and Assigns . . . . . . . . . . . . . . 18
Section 1.10 Separability Clause . . . . . . . . . . . . . . . . 19
Section 1.11 Benefits of Indenture . . . . . . . . . . . . . . . 19
Section 1.12 Governing Law . . . . . . . . . . . . . . . . . . . 19
Section 1.13 Legal Holidays . . . . . . . . . . . . . . . . . . 19
ARTICLE II
SECURITY FORMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 2.1 Forms Generally . . . . . . . . . . . . . . . . . . 20
Section 2.2 Form of Face of Security . . . . . . . . . . . . . 21
Section 2.3 Form of Reverse of Security . . . . . . . . . . . . 26
Section 2.4 Form of Trustee's Certificate of Authentication . . 38
Section 2.5 Form of Conversion Notice . . . . . . . . . . . . . 38
Section 2.6 Form of Certification . . . . . . . . . . . . . . . 40
Section 2.7 Form of Option of Holder to Elect Purchase . . . . 41
Section 2.8 Form of Assignment . . . . . . . . . . . . . . . . 42
ARTICLE III
THE SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 3.1 Title and Terms . . . . . . . . . . . . . . . . . . 43
Section 3.2 Denominations . . . . . . . . . . . . . . . . . . . 44
Section 3.3 Execution, Authentication, Delivery and Dating . . 44
Section 3.4 Temporary Securities . . . . . . . . . . . . . . . 44
Section 3.5 Registration; Registration of Transfer and
Exchange . . . . . . . . . . . . . . . . . . . . . 45
Section 3.6 Mutilated, Destroyed, Lost and Stolen Securities . 52
Section 3.7 Payment of Cash Interest; Interest Rights Preserved 53
Section 3.8 Persons Deemed Owners . . . . . . . . . . . . . . . 55
Section 3.9 Cancellation . . . . . . . . . . . . . . . . . . . 55
Section 3.10 Computation of Interest . . . . . . . . . . . . . . 55
Section 3.11 CUSIP Numbers . . . . . . . . . . . . . . . . . . . 55
ARTICLE IV
SATISFACTION AND DISCHARGE . . . . . . . . . . . . . . . . . . . . . . 56
Section 4.1 Satisfaction and Discharge of Indenture . . . . . . 56
Section 4.2 Application of Trust Money . . . . . . . . . . . . 57
ARTICLE V
REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 5.1 Events of Default . . . . . . . . . . . . . . . . . 58
Section 5.2 Acceleration of Stated Maturity; Rescission and
Annulment . . . . . . . . . . . . . . . . . . . . . 60
Section 5.3 Collection of Indebtedness and Suits for
Enforcement by Trustee . . . . . . . . . . . . . . 62
Section 5.4 Trustee May File Proofs of Claim . . . . . . . . . 62
Section 5.5 Trustee May Enforce Claims Without Possession of
Securities . . . . . . . . . . . . . . . . . . . . 63
Section 5.6 Application of Money Collected . . . . . . . . . . 63
Section 5.7 Limitation on Suits . . . . . . . . . . . . . . . . 64
Section 5.8 Unconditional Right of Holders to Receive
Principal, Premium and Interest and to Convert. . . 65
Section 5.9 Restoration of Rights and Remedies . . . . . . . . 65
Section 5.10 Rights and Remedies Cumulative . . . . . . . . . . 65
Section 5.11 Delay or Omission Not Waiver . . . . . . . . . . . 65
Section 5.12 Control by Holders . . . . . . . . . . . . . . . . 66
Section 5.13 Waiver of Past Defaults . . . . . . . . . . . . . . 66
Section 5.14 Undertaking for Costs . . . . . . . . . . . . . . . 66
Section 5.15 Waiver of Usury, Stay or Extension Laws . . . . . . 67
ARTICLE VI
THE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 6.1 Certain Duties and Responsibilities . . . . . . . . 67
Section 6.2 Notice of Defaults . . . . . . . . . . . . . . . . 67
Section 6.3 Certain Rights of Trustee . . . . . . . . . . . . . 68
Section 6.4 Not Responsible for Recitals or Issuance of
Securities . . . . . . . . . . . . . . . . . . . . 69
Section 6.5 May Hold Securities . . . . . . . . . . . . . . . . 70
Section 6.6 Money Held in Trust . . . . . . . . . . . . . . . . 70
Section 6.7 Compensation and Reimbursement . . . . . . . . . . 70
Section 6.8 Disqualification: Conflicting Interests . . . . . . 71
Section 6.9 Corporate Trustee Required; Eligibility . . . . . . 71
Section 6.10 Resignation and Removal; Appointment of Successor . 71
Section 6.11 Acceptance of Appointment by Successor . . . . . . 73
Section 6.12 Merger, Conversion, Consolidation or Succession to
Business. . . . . . . . . . . . . . . . . . . . . . 73
Section 6.13 Preferential Collection of Claims Against Company . 74
ARTICLE VII
Holders' Lists and Reports by Trustee and Company . . . . . . . . . . . 74
Section 7.1 Company to Furnish Trustee Names and Addresses of
Holders . . . . . . . . . . . . . . . . . . . . . . 74
Section 7.2 Preservation of Information; Communications to
Holder. . . . . . . . . . . . . . . . . . . . . . . 75
Section 7.3 Reports by Trustee . . . . . . . . . . . . . . . . 75
Section 7.4 Reports by Company . . . . . . . . . . . . . . . . 76
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE . . . . . . . . . 76
Section 8.1 Company and Subsidiary Guarantor May Consolidate,
Etc., Only on Certain Terms . . . . . . . . . . . .. 76
Section 8.2 Successor Substituted . . . . . . . . . . . . . . . 77
ARTICLE IX
AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 9.1 Without Consent of Holders . . . . . . . . . . . . 78
Section 9.2 With Consent of Holders . . . . . . . . . . . . . . 78
Section 9.3 Compliance with Trust Indenture Act . . . . . . . . 80
Section 9.4 Revocation and Effect of Consents, Waivers and
Action . . . . . . . . . . . . . . . . . . . . . . 80
Section 9.5 Notation on or Exchange of Securities . . . . . . . 80
Section 9.6 Trustee to Sign Supplemental Indentures . . . . . . 81
Section 9.7 Effect of Supplemental Indentures . . . . . . . . . 81
ARTICLE X
COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 10.1 Payment of Securities . . . . . . . . . . . . . . . 81
Section 10.2 Maintenance of Office or Agency . . . . . . . . . . 82
Section 10.3 Money for Security Payments To Be Held in Trust . . 82
Section 10.4 Statement by Officers as to Default . . . . . . . . 84
Section 10.5 Existence . . . . . . . . . . . . . . . . . . . . . 85
Section 10.6 Calculation of Original Issue Discount . . . . . . 85
Section 10.7 Delivery of Certain Information . . . . . . . . . . 85
ARTICLE XI
REDEMPTION OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . 85
Section 11.1 Right to Redeem; Notices to Trustee . . . . . . . . 85
Section 11.2 Selection of Securities to Be Redeemed . . . . . . 86
Section 11.3 Notice of Redemption . . . . . . . . . . . . . . . 86
Section 11.4 Effect of Notice of Redemption . . . . . . . . . . 87
Section 11.5 Deposit of Redemption Price . . . . . . . . . . . . 88
Section 11.6 Securities Redeemed in Part . . . . . . . . . . . . 88
Section 11.7 Conversion Arrangement on Call for Redemption . . . 88
ARTICLE XII
SUBORDINATION OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . 89
Section 12.1 Securities Subordinate to Senior Indebtedness . . . 89
Section 12.2 Payment Over of Proceeds upon Dissolution, Etc. . . 89
Section 12.3 No Payment When Senior Indebtedness in Default . . 91
Section 12.4 Payment Permitted If No Default . . . . . . . . . . 92
Section 12.5 Subrogation to Rights of Holders of Senior
Indebtedness. . . . . . . . . . . . . . . . . . . . 93
Section 12.6 Provisions Solely To Define Relative Rights . . . . 93
Section 12.7 Trustee To Effectuate Subordination . . . . . . . . 94
Section 12.8 No Waiver of Subordination Provisions . . . . . . . 94
Section 12.9 Notice to Trustee . . . . . . . . . . . . . . . . . 95
Section 12.10 Reliance on Judicial Order or Certificate of
Liquidating Agent . . . . . . . . . . . . . . . . . 96
Section 12.11 Trustee Not Fiduciary for Holders of Senior
Indebtedness . . . . . . . . . . . . . . . . . . . 96
Section 12.12 Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights . . . . . . . . . 96
Section 12.13 Article Applicable to Paying Agents . . . . . . . . 97
Section 12.14 Certain Conversions Deemed Payment . . . . . . . . 97
ARTICLE XIII
CONVERSION OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . 97
Section 13.1 Conversion Privilege . . . . . . . . . . . . . . . 97
Section 13.2 Conversion Procedure . . . . . . . . . . . . . . . 98
Section 13.3 Fractional Shares . . . . . . . . . . . . . . . . . 99
Section 13.4 Taxes on Conversion . . . . . . . . . . . . . . . . 100
Section 13.5 Company To Provide Stock . . . . . . . . . . . . . 100
Section 13.6 Adjustment for Change in Common Stock . . . . . . . 100
Section 13.7 Reclassification, Consolidation, Merger or Sale of
Assets . . . . . . . . . . . . . . . . . . . . . . 105
Section 13.8 Notice of Adjustments of Conversion Rate . . . . . 106
Section 13.9 Prior Notice of Certain Events . . . . . . . . . . 106
Section 13.10 No Adjustment in Certain Events . . . . . . . . . . 107
Section 13.11 Certain Additional Rights . . . . . . . . . . . . . 108
Section 13.12 Restrictions on Common Stock Issuable
Upon Conversion . . . . . . . . . . . . . . . . . . 109
Section 13.13 Trustee Not Responsible for Determining Conversion
Price or Adjustments . . . . . . . . . . . . . . . 109
ARTICLE XIV
RIGHT TO REQUIRE REPURCHASE . . . . . . . . . . . . . . . . . . . . . . 110
Section 14.1 Purchase of Securities at Option of the Holder
upon Change in Control . . . . . . . . . . . . . . 110
Section 14.2 Purchase of Securities at the Option of the Holder 114
Section 14.3 Effect of Purchase Notice or Change in Control
Purchase Notice . . . . . . . . . . . . . . . . . 121
Section 14.4 Deposit of Put Price or Change in Control Purchase
Price . . . . . . . . . . . . . . . . . . . . . . . 123
Section 14.5 Securities Purchased in Part . . . . . . . . . . . 123
Section 14.6 Covenant to Comply with Securities Laws upon
Purchase of Securities . . . . . . . . . . . . . . 124
Section 14.7 Repayment to the Company . . . . . . . . . . . . . 124
ARTICLE XV
SPECIAL TAX EVENT CONVERSION . . . . . . . . . . . . . . . . . . . . . 124
Section 15.1 Optional Conversion to Semiannual Coupon
Debenture Upon Tax Event . . . . . . . . . . . . . 124
ARTICLE XVI
SECURITY GUARANTEE . . . . . . . . . . . . . . . . . . . . . . . . . . 125
Section 16.1 Security Guaranty . . . . . . . . . . . . . . . . . 125
Section 16.2 Severability. . . . . . . . . . . . . . . . . . . . 127
Section 16.3 Subordination of Security Guarantee . . . . . . . . 127
Section 16.4 Limitation of Subsidiary Guarantors' Liability . . 128
Section 16.5 Subrogation . . . . . . . . . . . . . . . . . . . . 128
Section 16.6 Reinstatement . . . . . . . . . . . . . . . . . . . 128
Section 16.7 Release of the Subsidiary Guarantor . . . . . . . . 128
Section 16.8 Benefits Acknowledged . . . . . . . . . . . . . . . 129
INDENTURE, dated as of June 18, 1999, among AnnTaylor Stores
Corporation, a corporation duly organized and existing under the laws of
the State of Delaware (herein called the "Company"), AnnTaylor, Inc., a
wholly owned corporation of the Company duly organized and existing under
the laws of the State of Delaware (herein called the "Subsidiary
Guarantor") and The Bank of New York, a New York banking corporation
(herein called the "Trustee").
RECITALS OF THE COMPANY
WHEREAS, the Company has duly authorized the creation of an
issue of its Securities of substantially the tenor and amount hereinafter
set forth and to provide therefor the Company has duly authorized the
execution and delivery of this Indenture to provide for the issuance from
time to time of its Convertible Subordinated Debentures due 2019 (herein
called the "Securities") by the Company and the Subsidiary Guarantor has
duly authorized the execution and delivery of this Indenture to provide
the Security Guarantee;
WHEREAS, the Company, pursuant to the Purchase Agreement (the
"Purchase Agreement") dated June 14, 1999, among the Company, the
Subsidiary Guarantor and the Initial Purchasers named therein, will issue
and sell up to $180,975,000 aggregate principal amount (or $199,072,500 if
the overallotment option is exercised) of its Securities;
WHEREAS, the Subsidiary Guarantor is guaranteeing the payment of
distributions on the Securities and payment of the Redemption Price with
respect to the Securities to the extent provided herein (the "Security
Guarantee");
WHEREAS, all things necessary to make the Securities, when
executed by the Company and authenticated and delivered hereunder and duly
issued by the Company, the valid obligations of the Company, and to make
this Indenture a valid agreement of the Company and the Subsidiary
Guarantor, in accordance with their and its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually agreed, for the equal
and proportionate benefit of all Holders of the Securities, as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.1 Definitions. For all purposes of this Indenture,
except as otherwise expressly provided or unless the context otherwise
requires:
(1) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the
singular;
(2) all other terms used herein which are defined in the
Trust Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;
(3) all accounting terms not otherwise defined herein have
the meanings assigned to them in accordance with generally accepted
accounting principles, and, except as otherwise herein expressly provided,
the term "generally accepted accounting principles" with respect to any
computation required or permitted hereunder shall mean such accounting
principles as are generally accepted at the date of such computation;
(4) unless the context otherwise requires, any reference to
an "Article" or a "Section" refers to an Article or Section, as the case
may be, of this Indenture; and
(5) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision.
Certain terms used in Article XIV have the meanings specified
therein.
"Act", when used with respect to any Holder, has the meaning
specified in Section 1.4.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of
this definition, "control" when used with respect to any specified Person
means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agent Members" has the meaning specified in Section 3.5.
"Applicable Procedures" means, with respect to any transfer or
transaction involving a Global Security or beneficial interest therein,
the rules and procedures of the Depositary for such Security, in each case
to the extent applicable to such transaction and as in effect from time to
time.
"Bankruptcy Law" means Title 11, United States Bankruptcy Code
of 1978, as amended, or any similar United States federal or state law
relating to bankruptcy, insolvency, receivership, winding-up, liquidation,
reorganization or relief of debtors or any amendment to, succession to or
change in any such law.
"Board of Directors" means either the board of directors of the
Company or any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly
adopted by the Board of Directors, or a Committee thereof, and to be in
full force and effect on the date of such certification, and delivered to
the Trustee.
"Business Day" means a day on which banking institutions are
open for business and carrying out transactions in Dollars at the relevant
place of payment.
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Exchange Act, or, if at
any time after the execution of this instrument such Commission is not
existing and performing the duties now assigned to it under the Trust
Indenture Act, then the body performing such duties at such time.
"Common Stock" includes any stock of any class of the Company
which has no preference in respect of dividends or of amounts payable in
the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company and which is not subject to redemption by the
Company. However, subject to the provisions of Article Thirteen, shares
issuable on conversion of Securities shall include only shares of the
class designated as Common Stock of the Company at the date of this
instrument or shares of any class or classes resulting from any
reclassifications thereof and which have no preference in respect of
dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Company and
which are not subject to redemption by the Company; provided, that if at
any time there shall be more than one such resulting class, the shares of
each such class then so issuable on conversion shall be substantially in
the proportion which the total number of shares of such class resulting
from all such reclassifications bears to the total number of shares of all
such classes resulting from all such reclassifications.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become
such pursuant to the applicable provisions of this Indenture, and
thereafter "Company" shall mean such successor Person.
"Company Request" or "Company Order" means a written request or
order signed in the name of the Company by its Chairman of the Board
and/or its Chief Executive Officer, its President or a Vice President, and
by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant
Secretary, and delivered to the Trustee.
"Conversion Agent" shall have the meaning set forth in Section
2.3(4).
"Corporate Trust Office" means the principal office of the
Trustee in New York, New York, at which at any particular time its
corporate trust business shall be administered and which at the date of
this Indenture is 101 Barclay Street, Floor 21W, New York, New York 10286,
Attention: Corporate Trust Trustee Administration.
"Corporation" means a corporation, association, company
(including, without limitation, a limited liability company), joint-stock
company or business trust.
"Credit Facility" means the credit agreement dated as of June
30, 1998 among Ann Taylor, the lenders party thereto (the "Lenders"),
BancAmerica Robertson Stephens, as arranger, Bank of America National
Trust and Savings Association ("Bank of America"), as administrative
agent, Citicorp USA and First Union Capital Markets, as syndication
agents, and Bank of America, Citibank, N.A. and First Union National Bank,
as Issuing Banks, as such agreement may be amended, supplemented or
modified from time to time.
"Default" means any event that is, or after notice or passage of
time or both would be, an Event of Default.
"Defaulted Interest" has the meaning specified in Section 3.7.
"Definitive Security" means a certificated Security bearing the
restricted securities legend set forth in Section 2.2 and which is held by
an Institutional Accredited Investor in accordance with Section 2.1(b).
"Depositary" means, with respect to the Securities issued in
whole or in part in the form of one or more Global Securities, a clearing
agency registered under the Exchange Act that is designated to act as
Depositary for such Securities as contemplated by Section 3.5.
"Dollar" means a dollar or other equivalent unit in such coin or
currency of the United States as at the time shall be legal tender for the
payment of public and private debts.
"DTC" has the meaning specified in Section 2.2.
"Event of Default" has the meaning specified in Section 5.1.
"Exchange Act" means the Securities Exchange Act of 1934 as it
may be amended from time to time, and any successor act thereto, and the
rules and regulations of the Commission promulgated thereunder.
"Financing Entity" has the meaning specified in the definition of
the term "Senior Indebtedness".
"Global Security" has the meaning specified in Section 2.1.
"Guarantor Senior Indebtedness" means in respect of the
Subsidiary Guarantor, whether now or hereafter incurred: (i) the
principal, premium, if any, interest and all other amounts owed in respect
of (A) indebtedness of such obligor for money borrowed (including without
limitation the Credit Facility) and (B) indebtedness evidenced by
securities, debentures, bonds or other similar instruments issued by such
obligor, (ii) all capital lease obligations of such obligor, (iii) all
obligations of such obligor issued or assumed as the deferred purchase
price of property, all conditional sale obligations of such obligor and
all obligations of such obligor under any title retention agreement (but
excluding trade accounts payable arising in the ordinary course of
business), (iv) all obligations of such obligor for the reimbursement of
any letter of credit, banker's acceptance, security purchase facility or
similar credit transaction, (v) all obligations of the type referred to in
clauses (i) through (iv) above of other persons for the payment of which
such obligor is responsible or liable as obligor, guarantor or otherwise,
and (vi) all obligations of the type referred to in clauses (i) through
(v) above of other persons secured by any lien on any property or asset of
such obligor (whether or not such obligation is assumed by such obligor),
except for (1) the Security Guarantee and any such indebtedness that is by
its terms subordinated to or pari passu with the Security Guarantee and
(2) any indebtedness between or among such obligor or its affiliates,
including all other debt securities and guarantees in respect of those
debt securities issued to any trust, or trustee of such trust, partnership
or other entity affiliated with the Subsidiary Guarantor that is, directly
or indirectly, a financing vehicle of the Subsidiary Guarantor (a
"Financing Entity") in connection with the issuance by such Financing
Entity of preferred securities or other securities that rank pari passu
with, or junior to, the Security Guarantee.
"Holder" means a Person in whose name a Security is registered in
the Security Register.
"Indenture" means this instrument as originally executed or as
it may from time to time be supplemented or amended by one or more
indentures supplemental hereto entered into pursuant to the applicable
provisions hereof, including, for all purposes of this instrument and any
such supplemental indenture, the provisions of the Trust Indenture Act
that are deemed to be a part of and govern this instrument and any such
supplemental indenture, respectively.
"Initial Purchasers" means Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated and Banc of America Securities, LLC.
"Institutional Accredited Investor" means an institutional
"accredited investor" as described in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act.
"Interest Payment Date" means the Stated Maturity of an
installment of interest on the Securities.
"Issue Date" means the date of first issuance of the Securities
under this Indenture.
"Issue Price" of any Security means, in connection with the
original issuance of such Security, the initial issue price at which the
Security is sold as set forth on the face of the Security.
"Liquidated Damages" shall mean liquidated damages paid to all
holders of Registrable Securities (as defined in that certain Registration
Rights Agreement, dated June 18, 1999, between the Company, the Subsidiary
Guarantor and the Initial Purchasers (the "Registration Rights
Agreement")) in accordance with and pursuant to the provisions of Section
2(e) of the Registration Rights Agreement.
"Market Price" means the average of the Sale Price of the Common
Stock for the five Trading Day period ending on and including the third
Trading Day immediately prior to but not including, the applicable
Purchase Date, appropriately adjusted to take into account the actual
occurrence, during the seven Trading Days preceding but not including such
Purchase Date (or other date in question for purposes of adjusting the
Conversion Rate pursuant to Section 13.6), of any event described in
Section 13.6; subject, however, to the conditions set forth in Sections
13.10 and 13.11.
"Maturity", when used with respect to any Security, means the
date on which the principal of such Security or an installment of
principal becomes due and payable as therein or herein provided, whether
at the Stated Maturity or by declaration of acceleration, call for
redemption, exercise of the conversion or repurchase right or otherwise.
"Nasdaq National Market" means the Nasdaq National Market
operated by Nasdaq Stock Market, Inc., a subsidiary of the National
Association of Securities Dealers, Inc.
"Notice of Default" means a written notice of the kind specified
in Section 5.1(3) or 5.1(7).
"Officers' Certificate" means a certificate signed by any of the
Chairman of the Board and/or its Chief Executive Officer, the President or
a Vice President, and by any of the Treasurer, an Assistant Treasurer, the
Secretary or an Assistant Secretary, of the Company, and delivered to the
Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may
be an employee of the Company.
"Original Issue Discount" of any Security means the difference,
if any, between the Issue Price and the Principal Amount of such Security
as set forth on the face of such Security.
"Outstanding", when used with respect to Securities, means, as
of the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:
(i) Securities theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Securities for whose payment or redemption money in
the necessary amount has been theretofore deposited with the Trustee
or any Paying Agent (other than the Company) in trust or set aside
and segregated in trust by the Company (if the Company shall act as
its own Paying Agent) for the Holders of such Securities; provided
that, if such Securities are to be redeemed, notice of such
redemption shall have been duly given pursuant to this Indenture or
provision therefor satisfactory to the Trustee shall have been made;
(iii) Securities which have been paid pursuant to Section
3.6 or in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other than
any such Securities in respect of which there shall have been
presented to the Trustee proof satisfactory to it that such
Securities are held by a bona fide purchaser in whose hands such
Securities are valid obligations of the Company; and
(iv) Securities which have been converted pursuant to
Article XIII;
provided, however, that in determining whether the Holders of the
requisite Principal Amount of the Outstanding Securities have given, made
or taken any request, demand, authorization, direction, notice, consent,
waiver or other action hereunder as of any date, Securities owned by the
Company or any other obligor upon the Securities or any Affiliate of the
Company or of such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be
protected in relying upon any such request, demand, authorization,
direction, notice, consent, waiver or other action, only Securities which
a Responsible Officer of the Trustee actually knows to be so owned shall
be so disregarded. Securities so owned which have been pledged in good
faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to
such Securities and that the pledgee is not the Company or any other
obligor upon the Securities or any Affiliate of the Company or of such
other obligor.
"Paying Agent" means any Person authorized by the Company to pay
the principal of (and premium, if any) or interest on any Securities on
behalf of the Company.
"Person" means any individual, Corporation, partnership, joint
venture, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same debt as that
evidenced by such particular Security; and, for the purposes of this
definition, any Security authenticated and delivered under Section 3.6 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Security
shall be deemed to evidence the same debt as the mutilated, destroyed,
lost or stolen Security.
"Principal Amount" of a Security means the Principal Amount at
Stated Maturity as set forth on the face of the Security; provided,
however, that if the Securities have been converted to a semiannual coupon
debenture following a Tax Event, references to "Principal Amount" shall be
to "Restated Principal Amount," as the context requires.
"Purchase Notice" has the meaning specified in Section 14.2.
"Qualified Institutional Buyer" means a "qualified
institutional buyer" as defined in Rule 144A.
"Redemption Date"; when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price", when used with respect to any Security to be
redeemed in whole or in part, means the price at which it is to be
redeemed as set forth in the Securities.
"Registration Rights Agreement" has the meaning specified in the
definition of "Liquidated Damages".
"Regular Record Date" for the interest payable on any Interest
Payment Date means the close of business on June 3 or December 3 (whether
or not a Business Day), as the case may be, next preceding such Interest
Payment Date.
"Responsible Officer", when used with respect to the Trustee,
means any officer within the corporate trust department of the Trustee,
including any vice president, assistant vice president, assistant
secretary, assistant treasurer, trust officer or any other officer of the
Trustee who customarily performs functions similar to those performed by
the Persons who at the time shall be such officers, respectively, or to
whom any corporate trust matter is referred because of such person's
knowledge of and familiarity with the particular subject and who shall
have direct responsibility for the administration of this Indenture.
"Restated Principal Amount" shall have the meaning set forth in
Section 15.1 hereof.
"Restricted Security" means a Security required to bear the
restrictive legend set forth in the form of Security set forth in Section
2.2 of this Indenture.
"Rule 144A" has the meaning specified in Section 2.1.
"Rule 144A Information" has the meaning specified in Section 10.7.
"Sale Price" on any Trading Day means the closing per share sale
price for the Common Stock (or if no closing sale price is reported, the
average of the bid and ask prices or, if more than one in either case the
average of the average bid and the average ask prices) on such Trading Day
as reported by the New York Stock Exchange or, if the Common Stock is not
then listed thereon, such other national or regional securities exchange
upon which the Common Stock is listed on such Trading Day, as reported in
composite transactions for such exchange. If the Common Stock is not
listed on the New York Stock Exchange or a United States national or
regional stock exchange or quoted on the Nasdaq National Market, the
Company shall be entitled to determine the "Sale Price" on the basis of
such quotation as it deems, in good faith, to be appropriate.
"Securities" has the meaning stated in the first recital of this
Indenture and more particularly means any Securities authenticated and
delivered under this Indenture and "Security" means one of such Securities.
"Securities Act" means the Securities Act of 1933 as it may be
amended from time to time, and any successor act thereto, and the rules
and regulations of the Commission promulgated thereunder.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 3.5.
"Senior Indebtedness" means in respect of the Company, whether
now or hereafter incurred: (i) the principal, premium, if any, interest
and all other amounts owed in respect of (A) indebtedness of such obligor
for money borrowed and (B) indebtedness evidenced by securities,
debentures, bonds or other similar instruments issued by such obligor,
(ii) all capital lease obligations of such obligor, (iii) all obligations
of such obligor issued or assumed as the deferred purchase price of
property, all conditional sale obligations of such obligor and all
obligations of such obligor under any title retention agreement (but
excluding trade accounts payable arising in the ordinary course of
business), (iv) all obligations of such obligor for the reimbursement of
any letter of credit, banker's acceptance, security purchase facility or
similar credit transaction, (v) all obligations of the type referred to in
clauses (i) through (iv) above of other persons for the payment of which
such obligor is responsible or liable as obligor, guarantor or otherwise
(including without limitation the guarantee by the Company of the
Subsidiary Guarantor's obligations under the Credit Facility), and (vi)
all obligations of the type referred to in clauses (i) through (v) above
of other persons secured by any lien on any property or asset of such
obligor (whether or not such obligation is assumed by such obligor),
except for (1) any such indebtedness that is by its terms subordinated to
or pari passu with the Securities and (2) any indebtedness between or
among such obligor or its affiliates, including all other debt securities
and guarantees in respect of those debt securities issued to any trust, or
trustee of such trust, partnership or other entity affiliated with the
Company that is, directly or indirectly, a financing vehicle of the
Company (a "Financing Entity") in connection with the issuance by such
Financing Entity of preferred securities or other securities that rank
pari passu with, or junior to, the Securities.
"Share Certificate" means a certificate evidencing ownership of
shares of Common Stock.
"Special Record Date" for the payment of any Defaulted Interest
means a date fixed by the Trustee pursuant to Section 3.7.
"Stated Maturity", when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date
specified in such Security as the fixed date on which the principal of
such Security or such installment of principal or interest is due and
payable.
"Subsidiary" of any Person means (i) a corporation more than 50%
of the outstanding Voting Stock of which is owned, directly or indirectly,
by such Person or by one or more other Subsidiaries of such Person, or by
such Person and one or more Subsidiaries thereof or (ii) any other Person
(other than a corporation) in which such Person, or one or more other
Subsidiaries of such Person or such Person and one or more other
Subsidiaries thereof, directly or indirectly, has at least a majority
ownership and power to direct the policies, management and affairs thereof.
"Security Guarantee" has the meaning set forth in the recitals
hereto.
"Surrendered Securities" has the meaning specified in Section 2.6.
"Tax Event" means that the Company shall have received an
opinion from independent tax counsel experienced in such matters to the
effect that, on or after June 18, 1999, as a result of (a) any amendment to,
or change (including any announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any political subdivision
or taxing authority thereof or therein or (b) any amendment to, or change
in, an interpretation or application of such laws or regulations by any
legislative body, court, governmental agency or regulatory authority, in
each case which amendment or change is enacted, promulgated, issued or
announced or which interpretation is issued or announced or which action
is taken, on or after June 18, 1999, there is more than an insubstantial
risk that interest (including Original Issue Discount) payable on the
Securities either (i) would not be deductible on a current accrual basis
or (ii) would not be deductible under any other method, in either case in
whole or in part, by the Company (by reason of deferral, disallowance, or
otherwise) for United States federal income tax purposes.
"Trading Day" means each day on which the securities exchange or
quotation system which is used to determine the Sale Price is open for
trading or quotation.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as
in force at the date as of which this instrument was executed and the
rules and regulations thereunder; provided, however, that in the event the
Trust Indenture Act of 1939 or such rules and regulations are amended
after such date, "Trust Indenture Act" means, to the extent required by
any such amendment, the Trust Indenture Act of 1939 and such rules and
regulations as so amended.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become
such pursuant to the applicable provisions of this Indenture, and
thereafter "Trustee" shall mean such successor Trustee.
"United States" means the United States of America (including
the States thereof and the District of Columbia), its territories, its
possessions and other areas subject to its jurisdiction.
"U.S. Government Obligations" means securities that are (x)
direct obligations of the United States of America for the payment of
which its full faith and credit is pledged or (y) obligations of a Person
controlled or supervised by and acting as an agency or instrumentality of
the United States of America the timely payment of which is
unconditionally guaranteed as a full faith and credit obligation by the
United States of America, which, in either case, are not callable or
redeemable at the option of the issuer thereof, and shall also include a
depository receipt issued by a bank (as defined in Section 3(a)(2) of the
Securities Act of 1933, as amended), as custodian with respect to any such
U.S. Government Obligation or a specific payment of principal of or
interest on any such U.S. Government Obligation held by such custodian for
the account of the holder of such depository receipt, provided that
(except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depository receipt
from any amount received by the custodian in respect of the U.S.
Government Obligation or the specific payment of principal of or interest
on the U.S. Government Obligation evidenced by such depository receipt.
"Vice President", when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number
or a word or words added before or after the title "vice president".
"Voting Stock" of any Person means capital stock of such Person
which ordinarily has voting power for the election of directors (or
Persons performing similar functions of such Person), whether at all times
or only so long as no senior class of securities has such voting power by
reason of any contingency.
Section 1.2 Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to
take any action under any provision of this Indenture, the Company shall
furnish to the Trustee such certificates and opinions as may be required
under the Trust Indenture Act or reasonably requested by the Trustee in
connection with such application or request. Each such certificate or
opinion shall be given in the form of an Officers' Certificate, if to be
given by an officer of the Company, or an opinion of Counsel, if to be
given by counsel, and shall comply with the applicable requirements of the
Trust Indenture Act and any other applicable requirement set forth in this
Indenture.
Every certificate or Opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include
(a) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(c) a statement that, in the opinion of each such individual, he
has made such examination or investigation as is necessary to enable him
to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1.3 Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary
that all such matters be certified by, or covered by the opinion of, only
one such Person, or that they be so certified or covered by only one
document, but one such Person may certify or give an opinion with respect
to some matters and one or more other such Persons as to other matters,
and any such Person may certify or give an opinion as to such matters in
one or several documents.
Any certificate or opinion of an officer of the Company or the
Subsidiary Guarantor may be based, insofar as it relates to legal matters,
upon a certificate or opinion of, or representations by, counsel, unless
such officer knows, or in the exercise of reasonable care should know,
that the certificate or opinion or representations with respect to the
matters upon which his certificate or opinion is based are erroneous. Any
such certificate or opinion of counsel may be based, insofar as it relates
to factual matters, upon a certificate or opinion of, or representations
by, an officer or officers of the Company or the Subsidiary Guarantor
stating that the information with respect to such factual matters is in
the possession of the Company or the Subsidiary Guarantor, unless such
counsel knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to such matters are
erroneous.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions
or other instruments under this Indenture, they may, but need not, be
consolidated and form one instrument.
Section 1.4 Acts of Holders; Record Dates.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or
taken by Holders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in
person or by an agent duly appointed in writing; and, except as herein
otherwise expressly provided, such action shall become effective when such
instrument or instruments are delivered to the Trustee and, where it is
hereby expressly required, to the Company. Such instrument or instruments
(and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Holders signing such instrument
or instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 6.3) conclusive in favor of the Trustee
and the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer
authorized by law to take acknowledgments of deeds, certifying that the
individual signing such instrument or writing acknowledged to him the
execution thereof. Where such execution is by a signer acting in a
capacity other than his individual capacity, such certificate or affidavit
shall also constitute sufficient proof of his authority. The fact and date
of the execution of any such instrument or writing, or the authority of
the Person executing the same, may also be proved in any other manner
which the Trustee or the Company, as the case may be, deems sufficient.
(c) The Company may, in the circumstances permitted by the Trust
Indenture Act, fix any day as the record date for the purpose of
determining the Holders of Outstanding Securities entitled to give, make
or take any request, demand, authorization, direction, notice, consent,
waiver or other action, or to vote on any action, authorized or permitted
to be given or taken by Holders. If not set by the Company prior to the
first solicitation of a Holder made by any Person in respect of any such
action, or, in the case of any such vote, prior to such vote, the record
date for any such action or vote shall be the 30th day (or, if later, the
date of the most recent list of Holders required to be provided pursuant
to Section 7.1) prior to such first solicitation or vote, as the case may
be. With regard to any record date, only the Holders on such date (or
their duly designated proxies) shall be entitled to give or take, or vote
on, the relevant action.
(d) The ownership of Securities shall be proved by the Security
Register.
(e) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Security shall bind
every future Holder of the same Security and the Holder of every Security
issued upon the registration of transfer thereof or in exchange therefor
or in lieu thereof in respect of anything done, omitted or suffered to be
done by the Trustee or the Company in reliance thereon, whether or not
notation of such action is made upon such Security.
(f) Without limiting the foregoing, a Holder entitled hereunder
to give or take any such action with regard to any particular Security may
do so with regard to all or any part of the principal amount of such
Security or by one or more duly appointed agents each of which may do so
pursuant to such appointment with regard to all or any different part of
such principal amount.
Section 1.5 Notices, Etc. to Trustee, the Company and the
Subsidiary Guarantor.
Any request, demand, authorization, direction, notice, consent,
waiver or Act of Holders or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company or the
Subsidiary Guarantor shall be sufficient for every purpose hereunder if
made, given, furnished or filed in writing to or with the Trustee at its
Corporate Trust Office, Attention: Corporate Trust Trustee Administration, or
(2) the Company or the Subsidiary Guarantor by the Trustee
or by any Holder shall be sufficient for every purpose hereunder (unless
otherwise herein expressly provided) if in writing and mailed, first-class
postage prepaid, to the Company or the Subsidiary Guarantor addressed to
it at the address of its principal office at AnnTaylor Stores Corporation,
142 West 57th Street, New York, NY 10019, Attention: Corporate Secretary,
or at any other address previously furnished in writing to the Trustee by
the Company or the Subsidiary Guarantor.
Section 1.6 Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any
event, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage prepaid,
to each Holder affected by such event, at such Holder's address as it
appears in the Security Register, not later than the latest date (if any),
and not earlier than the earliest date (if any), prescribed for the giving
of such notice. In any case where notice to Holders is given by mail,
neither the failure to mail such notice, nor any defect in any notice so
mailed, to any particular Holder shall affect the sufficiency of such
notice with respect to other Holders. Any notice when mailed to a Holder
in the aforesaid manner shall be conclusively deemed to have been received
by such Holder whether or not actually received by such Holder. Where this
Indenture provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or
after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Holders shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or
by reason of any other cause it shall be impracticable to give such notice
by mail, then such notification as shall be made with the approval of the
Trustee shall constitute a sufficient notification for every purpose
hereunder.
Section 1.7 Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act that is required under such act to be
a part of and govern this Indenture, the latter provision shall control.
If any provision of this Indenture modifies or excludes any provision of
the Trust Indenture Act that may be so modified or excluded, the latter
provision shall be deemed to apply to this Indenture as so modified or to
be excluded, as the case may be.
Section 1.8 Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of
Contents are for convenience only and shall not affect the construction
hereof.
Section 1.9 Successors and Assigns.
All covenants and agreements in this Indenture by the Company
and the Subsidiary Guarantor shall bind their respective successors and
assigns, whether so expressed or not.
Section 1.10 Separability Clause.
In case any provision in this Indenture or in the Securities
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
Section 1.11 Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder, the holders of Senior Indebtedness, the holders of
the Guarantor Senior Indebtedness and the Holders of Securities, any
benefit or any legal or equitable right, remedy or claim under this
Indenture.
Section 1.12 Governing Law.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO ITS PRINCIPLES OF CONFLICTS OF LAWS.
Section 1.13 Legal Holidays.
In any case where any Interest Payment Date, Redemption Date or
Stated Maturity of any Security or the last date on which a Holder has the
right to convert his Securities shall not be a Business Day, then
(notwithstanding any other provision of this Indenture or of the
Securities) payment of interest or principal or conversion of the
Securities need not be made on such date, but may be made on the next
succeeding Business Day (except that, if such Business Day is in the next
succeeding calendar year, such Interest Payment Date, Redemption Date or
Stated Maturity, as the case may be, shall be the immediately preceding
Business Day) with the same force and effect as if made on the Interest
Payment Date or Redemption Date, or at the Stated Maturity or on such last
day for conversion, provided, that no interest shall accrue for the period
from and after such Interest Payment Date, Redemption Date or Stated
Maturity, as the case may be.
ARTICLE II
SECURITY FORMS
Section 2.1 Forms Generally. The Securities and the Trustee's
certificate of authentication shall be in substantially the form set forth
in this Article, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture, and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or Depositary
therefor or as may, consistently herewith, be determined by the officers
executing such Securities, as evidenced by their execution of the Securities.
The definitive Securities shall be printed, lithographed or
engraved on steel engraved borders or may be produced in any other manner,
all as determined by the officers executing such Securities, as evidenced
by their execution of such Securities.
In certain cases described elsewhere herein, the legends set
forth in the second through sixth paragraphs of Section 2.2 may be omitted
from Securities issued hereunder.
(a) Rule 144A Securities. Securities offered and sold in
reliance on Rule 144A ("Rule 144A") under the Securities Act and to
subsequent transferees, directly or indirectly, of such Securities shall
be issued in fully registered book-entry form in one or more Global
Securities (each a "Global Security"), without interest coupons,
substantially in the form of Security set forth in Sections 2.2 and 2.3,
with such applicable legends as are provided for in Section 2.2, except as
otherwise permitted herein. Such Global Securities shall be registered in
the name of a nominee of the Depositary and deposited with the Trustee, as
custodian for the Depositary, duly executed by the Company and
authenticated by the Trustee as hereinafter provided. The aggregate
Principal Amount of the Global Securities may from time to time be
increased or decreased, as appropriate, by adjustments made on the records
of the Trustee, as custodian for the Depositary, in consequence of the
issue of Definitive Securities, as hereinafter provided, or to reflect
redemptions, repurchases and conversions.
(b) Definitive Securities. Except as provided in this Section
2.1 or Section 3.5, owners of beneficial interests in Global Securities
will not be entitled to receive physical delivery of certificated
Securities. Purchasers of Securities who are Institutional Accredited
Investors and are not Qualified Institutional Buyers will receive
Definitive Securities; provided, however, that upon transfer of such
Definitive Securities to a Qualified Institutional Buyer, such Definitive
Securities will, unless the Global Security has previously been exchanged,
be exchanged for an interest in a Global Security pursuant to the
provisions of Section 3.5.
Section 2.2 Form of Face of Security. FOR PURPOSES OF SECTIONS
1273 AND 1275 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, THE AMOUNT
OF ORIGINAL ISSUE DISCOUNT WITH RESPECT TO EACH $1,000 OF PRINCIPAL AMOUNT
OF THIS SECURITY IS $447.44, THE ISSUE DATE IS JUNE 18, 1999, AND THE
YIELD TO STATED MATURITY IS 3.75% PER ANNUM (COMPUTED ON A SEMIANNUAL BOND
EQUIVALENT BASIS).
[INCLUDE UNLESS PURSUANT TO SECTION 3.5(d) OF THE INDENTURE, THE
COMPANY DETERMINES THAT THE FOLLOWING LEGEND MAY BE REMOVED -- THIS
SECURITY AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS
SECURITY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY, THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE
REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION
IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY AND THE COMMON STOCK
ISSUABLE UPON THE CONVERSION THEREOF, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE"), WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OR SUCCESSOR OF SUCH SECURITY) ONLY (A) TO THE COMPANY OR ANY
SUBSIDIARY THEREOF, (B) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR
RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHICH NOTICE IS GIVEN THAT THE TRANSFER
IS BEING MADE IN RELIANCE ON RULE 144A, (C) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (2), (3)
OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY
FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
"ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR
FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, (D) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, OR (E) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT, SUBJECT TO THE COMPANY'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR
TRANSFER PURSUANT TO CLAUSE (C) OR (E) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO
THE COMPANY, AND IN EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER
IN THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND
DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE REMOVED
UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.]
[INCLUDE IF SECURITY IS A GLOBAL SECURITY DEPOSITED WITH DTC --
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY TO THE COMPANY OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY
(AND ANY PAYMENT HEREON IS MADE TO CEDE & CO.), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS
IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO., OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS
GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN ARTICLE THREE OF THE INDENTURE REFERRED TO ON
THE REVERSE HEREOF.]
[INCLUDE IF SECURITY IS A DEFINITIVE SECURITY TO BE HELD BY AN
INSTITUTIONAL ACCREDITED INVESTOR--IN CONNECTION WITH ANY TRANSFER, THE
HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES
AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO
CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.]
AnnTaylor Stores Corporation
Convertible Subordinated Debentures Due 2019
No. ____ Principal Amount:
$____________
Cusip No. _______
Issue Date: June 18, 1999
Issue Price: $______
(for each $1,000 Principal Amount
at Stated Maturity)
Original Issue Discount: $______
(for each $1,000 Principal Amount
at Stated Maturity)
AnnTaylor Stores Corporation, a corporation duly organized and
existing under the laws of Delaware (herein called the "Company", which
term includes any successor Person under the Indenture hereinafter
referred to), for value received, hereby promises to pay to __________, or
registered assigns, the principal sum of ___________ Dollars [if this
Security is a Global Security, then insert --(which Principal Amount may
from time to time be increased or decreased to such other Principal
Amounts (which, taken together with the Principal Amounts of all other
Outstanding Securities, shall not exceed $________ in the aggregate at any
time) by adjustments made on the records of the Trustee hereinafter
referred to in accordance with the Indenture)] on June 18, 2019, and to
pay cash interest thereon as specified on the other side of this Security.
Original Issue Discount will accrue as specified on the other
side of this Security. This Security is convertible as specified on the
other side of this Security. All capitalized terms used herein without
definition shall have the respective meanings assigned thereto in the
Indenture referred to on the other side of this Security.
Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further provisions shall
for all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been
executed by the Trustee referred to on the reverse hereof by manual
signature, this Security shall not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated: _____________________
ANNTAYLOR STORES CORPORATION
By: ___________________________
Name:
Title:
[Seal]
Attest:
---------------------------------------
Name:
Title:
Section 2.3 Form of Reverse of Security.
(1) Cash Interest; Original Issue Discount. The Company
promises to pay interest in cash on the Principal Amount of this Security
at the rate per annum of 0.55%. The Company will pay cash interest
semiannually on June 18, and December 18 of each year (each an "Interest
Payment Date") to holders of record at the close of business on each June
3 or December 3 (whether or not a business day) (each a "Regular Record
Date") immediately preceding such Interest Payment Date. Cash interest on
the Securities will accrue from the most recent date to which interest has
been paid or duly provided or, if no interest has been paid, from the
Issue Date. Cash interest will be computed on the basis of a 360-day year
of twelve 30-day months. The Company shall pay cash interest on overdue
principal, or if shares of Common Stock (or cash in lieu of fractional
shares) in respect of a conversion of this Security in accordance with the
terms of Article XIII of the Indenture are not delivered when due, at the
rate borne by the Securities plus 1% per annum, and it shall pay interest
in cash on overdue installments of cash interest at the same rate to the
extent lawful. All such overdue cash interest shall be payable on demand.
Original Issue Discount shall accrue on this Security as set
forth below so long as this Security remains outstanding, calculated on a
semiannual bond equivalent basis using a 360-day year composed of twelve
30-day months, from the Issue Date of this Security. As of any date (the
"Specified Date"), the amount of Original Issue Discount accrued on this
Security per $1,000 Principal Amount shall be:
(i) If the Specified Date occurs on one of the Interest
Payment Dates set forth below, the amount of accumulated Original
Issue Discount will equal the amount set forth below for such
Interest Payment Date:
Accretion of Original Issue
Discount (per $1,000 Accreted Amount (per $1,000
Date Principal Amount) Principal Amount)
- ----------------- --------------------------- ---------------------------
December 18, 1999 7.61 560.17
June 18, 2000 15.37 567.93
December 18, 2000 23.26 575.82
June 18, 2001 31.31 583.87
December 18, 2001 39.51 592.07
June 18, 2002 47.86 600.42
December 18, 2002 56.37 608.93
June 18, 2003 65.03 617.59
December 18, 2003 73.86 626.42
June 18, 2004 82.86 635.42
December 18, 2004 92.02 644.58
June 18, 2005 101.36 653.92
December 18, 2005 110.87 663.43
June 18, 2006 120.56 673.12
December 18, 2006 130.43 682.99
June 18, 2007 140.49 693.05
December 18, 2007 150.73 703.29
June 18, 2008 161.17 713.73
December 18, 2008 171.80 724.36
June 18, 2009 182.63 735.19
December 18, 2009 193.67 746.23
June 18, 2010 204.91 757.47
December 18, 2010 216.36 768.92
June 18, 2011 228.03 780.59
December 18, 2011 239.92 792.48
June 18, 2012 252.02 804.59
December 18, 2012 264.36 816.92
June 18, 2013 276.93 829.49
December 18, 2013 289.73 842.29
June 18, 2014 302.77 855.33
December 18, 2014 316.06 868.62
June 18, 2015 329.60 882.16
December 18, 2015 343.39 895.95
June 18, 2016 357.44 910.00
December 18, 2016 371.75 924.31
June 18, 2017 386.33 938.89
December 18, 2017 401.19 953.75
June 18, 2018 416.32 968.88
December 18, 2018 431.73 984.29
At Stated Maturity 447.44 $1,000.00
(ii) if the Specified Date occurs before the first Interest
Payment Date, the amount of accrued Original Issue Discount will
equal an amount equal to the amount of accrued Original Issue
Discount for the first Interest Payment Date multiplied by a
fraction, the numerator of which is the number of days elapsed from
the Issue Date to the Specified Date, using a 360-day year of twelve
30-day months, and the denominator of which is the number of days
from the Issue Date to the first Interest Payment Date, using a
360-day year of twelve 30- day months;
(iii) if the Specified Date occurs between two Interest
Payment Dates, the amount of accrued Original Issue Discount will
equal the sum of (A) the amount of accrued Original Issue Discount
set forth in paragraph (i) for the Interest Payment Date immediately
preceding such Specified Date and (B) an amount equal to the product
of (1) the amount of accrued Original Issue Discount for the
immediately following Interest Payment Date less the amount of
accrued Original Issue Discount for the immediately preceding
Interest Payment Date multiplied by (2) a fraction, the numerator of
which is the number of days elapsed from the immediately preceding
Interest Payment Date to the Specified Date, using a 360-day year of
twelve 30-day months, and the denominator of which is 180; or
(iv) if the Specified Date occurs after the Stated Maturity
of this Security, the amount of accrued Original Issue Discount will
equal the amount of accrued Original Issue Discount as of such Stated
Maturity.
(2) Special Tax Event Conversion. From and after the date
(the "Tax Event Date") of the occurrence of a Tax Event, at the option of
the Company, interest in lieu of future Original Issue Discount and
regular cash interest shall accrue at 3.5% per annum on a principal amount
per Security (the "Restated Principal Amount") equal to the Issue Price
plus Original Issue Discount accrued to the date immediately prior to the
Tax Event Date or the date on which the Company exercises the option
described in this paragraph, whichever is later (such date hereunder
referred to as the "Option Exercise Date"), and shall be payable
semiannually on each Interest Payment Date to holders of record at the
close of business on the Regular Record Date immediately preceding such
Interest Payment Date. In the event the Company exercises such option upon
a Tax Event, interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months and will accrue from the most recent
date to which interest has been paid or, if no interest has been paid,
from the Option Exercise Date.
(3) Method of Payment. Subject to the terms and conditions
of the Indenture, the Company will make payments in respect of the
principal of, premium, if any, and interest payable in cash on this
Security, and in respect of Redemption Prices to Holders who surrender
Securities to a Paying Agent to collect such payments in respect of the
Securities. The Company will pay cash amounts in money of the United
States of America that at the time of payment is legal tender for payment
of public and private debts. However, the Company may make such cash
payments by check payable in such money.
(4) Paying Agent; Registrar; Conversion Agent. Initially,
The Bank of New York (the "Trustee"), will act as Paying Agent, Registrar
and Conversion Agent (the "Conversion Agent"). The Company may appoint and
change any Paying Agent, Registrar or co-registrar or Conversion Agent
without notice, other than notice to the Trustee, except that the Company
will maintain at least one Paying Agent in the State of New York, City of
New York, Borough of Manhattan. The Company or any of its Subsidiaries or
Affiliates incorporated in the United States may act as Paying Agent,
Registrar or co-registrar or Conversion Agent.
(5) Indenture. The Company issued the Securities under an
Indenture dated as of June 18, 1999 (the "Indenture"), among the Company,
the Subsidiary Guarantor and the Trustee. The terms of the Securities
include those stated in the Indenture and those made part of the Indenture
by reference to the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939, as in effect from time to
time (the "TIA"). Capitalized terms used herein and not defined herein
have the meanings ascribed thereto in the Indenture. The Securities are
subject to all such terms, and Holders are referred to the Indenture and
the TIA for a statement of those terms.
The Securities are unsecured subordinated obligations of the
Company limited to the aggregate Principal Amount specified in Section 3.1
of the Indenture.
(6) Redemption at the Option of the Company. No sinking
fund is provided for this Security. On and after June 18, 2004, this
Security is redeemable for cash as a whole, or from time to time in part,
at any time at the option of the Company at the prices set forth below
(each a "Redemption Price") (equal to its Issue Price plus accrued
Original Issue Discount, together with accrued and unpaid cash interest,
to the Redemption Date).
The table below shows Redemption Prices of a Security per $1,000
Principal Amount at maturity on June 18, 2004, at each June 18 thereafter
prior to maturity, and at maturity on June 18, 2019, which prices reflect
the accrued Original Issue Discount calculated to each such date. The
Redemption Price of a Security redeemed between such dates would include
an additional amount reflecting the additional Original Issue Discount
accrued since the next preceding date in the table to, but excluding, the
Redemption Date, calculated as set forth under paragraph 1(iii) (except
that the reference therein to "180" shall instead be deemed to refer to
"360" for purposes of this paragraph).
(2) (3) Redemption
(1) Accrued Original Price
Redemption Date Issue Price Issue Discount (1) + (2)
--------------- ----------- ---------------- --------------
June 18, 2004 $552.56 $82.86 $635.42
June 18, 2005 552.56 101.36 653.92
June 18, 2006 552.56 120.56 673.12
June 18, 2007 552.56 140.49 693.05
June 18, 2008 552.56 161.17 713.73
June 18, 2009 552.56 182.63 735.19
June 18, 2010 552.56 204.91 757.47
June 18, 2011 552.56 228.03 780.59
June 18, 2012 552.56 252.02 804.59
June 18, 2013 552.56 276.93 829.49
June 18, 2014 552.56 302.77 855.33
June 18, 2015 552.56 329.60 882.16
June 18, 2016 552.56 357.44 910.00
June 18, 2017 552.56 386.33 938.89
June 18, 2018 552.56 416.32 968.88
At Stated Maturity 552.56 447.44 1,000.00
Notwithstanding the foregoing, if converted to a semiannual coupon
debenture following the occurrence of a Tax Event, this Security will be
redeemable at the Restated Principal Amount plus accrued and unpaid
interest from the date of such conversion to, but excluding, the
Redemption Date; provided, however, that in no event may this Security be
redeemed prior to June 18, 2004.
(7) 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 of Securities to be redeemed at the Holder's
registered address. If money sufficient to pay the Redemption Price of all
Securities (or portions thereof which are in an integral multiple of
$1,000 in Principal Amount) to be redeemed on the Redemption Date is
deposited with the Paying Agent prior to or on the Redemption Date,
immediately after such Redemption Date cash interest and Original Issue
Discount shall cease to accrue on such Securities or portions thereof.
(8) Purchase by the Company at the Option of the Holder.
Subject to the terms and conditions of the Indenture, the Company shall
become obligated to purchase, at the option of the Holder, this Security
on the following Purchase Dates at the following Put Prices per $1,000 in
Principal Amount (equal to the Issue Price plus accrued Original Issue
Discount to such Purchase Date), plus accrued and unpaid cash interest to
the Purchase Date, upon delivery by the Holder of a Purchase Notice
containing the information set forth in the Indenture, at any time from
the opening of business on the date that is 20 Business Days prior to such
Purchase Date until the close of business on such Purchase Date and upon
delivery of this Security to the Paying Agent by the Holders as set forth
in the Indenture. Such Put Prices may be paid, at the option of the
Company, in cash or by the delivery of Common Stock, or in any combination
thereof.
Purchase Date Put Price
- -------------------------------- --------------------------
June 18, 2004 . . . . . . . . $635.42
June 18, 2009 . . . . . . . . $735.19
June 18, 2014 . . . . . . . . $855.33
Notwithstanding anything herein to the contrary, if prior to the
Purchase Date this Security has been converted to a semiannual coupon
debenture following the occurrence of a Tax Event, the Put Price will be
equal to the Restated Principal Amount plus accrued and unpaid cash
interest from the date of conversion to, but excluding, the Purchase Date.
At the option of the Holder and subject to the terms and
conditions of the Indenture, the Company shall become obligated to
purchase this Security held by such Holder 30 Business Days after the
occurrence of a Change in Control for a Change in Control Purchase Price
equal to the Issue Price plus accrued Original Issue Discount and accrued
and unpaid cash interest to the Change in Control Purchase Date, which
shall be paid in cash.
The Holder has the right to withdraw any Purchase Notice or
Change in Control Purchase Notice, as the case may be, by delivering to
the Paying Agent prior to the close of business on the Purchase Date a
written notice of withdrawal in accordance with the provisions of the
Indenture.
If cash (or, if applicable, shares of Common Stock) sufficient
to pay the Put Price or Change in Control Purchase Price, as the case may
be, of all Securities (or any portion thereof which is in an integral
multiple of $1,000 in Principal Amount) to be purchased prior to or on the
Purchase Date or the Change in Control Purchase Date, as the case may be,
is deposited with the Paying Agent on the Purchase Date or the Change in
Control Purchase Date, as the case may be, this Security shall cease to be
outstanding and cash interest and Original Issue Discount shall cease to
accrue on this Security (or such portions thereof) and will be deemed
paid, whether or not this Security is delivered to the Paying Agent,
immediately after such Purchase Date or Change in Control Purchase Date,
as the case may be, and the Holder shall have no other rights as such
(other than the right to receive the Put Price or Change in Control
Purchase Price, as the case may be, upon surrender of this Security or
portion hereof).
(9) Conversion Rights. At the option of the Holder and
subject to the terms and conditions of the Indenture, this Security (or
any portion hereof which is an integral multiple of $1,000 in Principal
Amount) may be surrendered for conversion into shares of Common Stock at
an initial conversion rate (the "Conversion Rate") of 12.078 shares of
Common Stock per $1,000 Principal Amount of this Security. The Conversion
Rate is subject to adjustment as provided in Article XIII of the
Indenture. The right to surrender this Security for conversion pursuant to
Article XIII of the Indenture shall terminate on the close of business on
June 18, 2019, or, if this Security or any portion hereof shall be called
for redemption pursuant to the terms hereof, then in respect of any
portion so called for redemption, at the close of business on the
Redemption Date (unless in the case of any such redemption the Company
shall default in the payment due upon the redemption hereof).
Except as otherwise expressly provided in the Indenture, no
payment or adjustment shall be made on account of any dividends or
distributions on Common Stock delivered upon such conversion. The
Conversion Rate will not be adjusted at any time during the term of this
Security for accrued Original Issue Discount or cash interest. Upon
conversion of this Security, that portion of accrued Original Issue
Discount or (except as provided below) accrued and unpaid cash interest
thereon attributable to the period from the Issue Date through the
Conversion Date with respect to this Security shall not be canceled,
extinguished or forfeited, but rather shall be deemed to be paid in full
to the Holder thereof through the delivery of the Common Stock (together
with the cash payment in lieu of fractional interests therein) in exchange
for this Security; and the fair market value of such Common Stock
(together with any cash payment for fractional shares), if any, shall be
treated as delivered or paid, to the extent thereof, first in exchange for
accrued Original Issue Discount and accrued and unpaid cash interest
through the Conversion Date, and the balance, if any, of such fair market
value of such Common Stock (and any cash payment for fractional shares)
shall be treated as delivered or paid in exchange for the Issue Price of
this Security, to the extent of such Issue Price. Notwithstanding the
foregoing, accrued but unpaid cash interest will be payable upon
conversion of this Security if such conversion is made concurrently with
or after acceleration of the indebtedness represented by this Security
following an Event of Default.
No fractional shares of Common Stock shall be delivered upon
exchanges but the Conversion Agent on behalf of the Company shall make a
cash payment in lieu thereof equal to the product of such fractional share
and the Sale Price on the Trading Day immediately preceding the Conversion
Date.
To convert this Security the Holder must (1) complete and
manually sign the conversion notice hereon (or complete and manually sign
a facsimile of such notice) and deliver such notice to the Conversion Agent
(initially the Trustee) or, if applicable, complete and deliver to The
Depository Trust Company ("DTC") the appropriate instruction form for
conversion pursuant to DTC's book entry conversion program, (2) surrender
(or arrange for book-entry delivery of) this Security to the Conversion
Agent (which is not necessary in the case of conversion pursuant to DTC's
book entry conversion program), (3) furnish appropriate endorsements and
transfer documents if required by the Conversion Agent, the Company or the
Trustee and (4) pay any transfer or similar tax if required.
Book entry delivery of a Security to the Conversion Agent may be
made by any financial institution that is a participant in DTC; conversion
through DTC's book entry conversion program is available for any security
that is held in an account maintained at DTC by any such Participant. A
conversion shall be deemed to have been effected at the close of business
on the date all such requirements have been satisfied (the "Conversion
Date"). A Holder may convert a portion of this Security only if the
portion is $1,000 Principal Amount or an integral multiple of $1,000.
In the event the Company exercises its option pursuant to
Section 15.1 of the Indenture to have interest in lieu of Original Issue
Discount accrue on this Security following a Tax Event, the Holder will be
entitled on conversion to receive the same number of shares of Common
Stock such Holder would have received if the Company had not exercised
such option.
Securities 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 to be redeemed on a date within such period) must be
accompanied by payment of an amount equal to the interest thereon that the
registered Holder is to receive. Except where Securities surrendered for
conversion must be accompanied by payment 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.
(10) Arrangement on Call for Redemption. Any Securities
called for redemption, unless surrendered for conversion before the close
of business on the Redemption Date, may be deemed to be purchased from the
Holders of such Securities at an amount not less than the Redemption Price
plus accrued and unpaid cash interest to the Redemption Date, by one or
more third parties who may agree with the Company to purchase such
Securities from the Holders, to exchange them for Common Stock and to make
payment for such Securities to the Trustee in trust for such Holders.
(11) Subordination. The Securities are subordinated to
Senior Indebtedness of the Company and the Security Guarantee is
subordinated to Guarantor Senior Indebtedness of the Subsidiary Guarantor.
To the extent provided in the Indenture, Senior Indebtedness of the
Company and Guarantor Senior Indebtedness of the Subsidiary Guarantor must
be paid before the Securities may be paid. The Company and each Holder of
Securities, by accepting a Security, agrees to the subordination
provisions contained in the Indenture and authorizes the Trustee to give
it effect and appoints the Trustee as attorney-in-fact for such purpose.
(12) Denominations; Transfer; Exchange. The Securities are in
fully registered form, without coupons, in denominations of $1,000 of
Principal Amount and integral multiples of $1,000 in excess thereof. The
Holder may transfer or exchange this Security in accordance with the
Indenture. The Registrar may require the Holder, among other things, to
furnish appropriate endorsements and transfer documents. The Registrar
need not transfer or exchange any Securities selected for redemption
(except, in the case of a Security to be redeemed in part, the portion of
the Security not to be redeemed) or any Securities in respect of which a
Purchase Notice or Change in Control Purchase Notice has been given and
not withdrawn (except, in the case of a Security to be purchased in part,
the portion of the Security not to be purchased) or any Securities for a
period of 15 days before a selection of Securities to be redeemed.
(13) Persons Deemed Owners. The registered Holder of this
Security may be treated as the owner of this Security for all purposes.
(14) Unclaimed Money for Securities. The Trustee and the
Paying Agent shall return to the Company upon written request any money or
securities held by them for the payment of any amount with respect to this
Security that remain unclaimed for two years. After return to the Company,
the Holder must look solely to the Company for payment.
(15) Amendment; Waiver. Subject to certain exceptions set
forth in the Indenture, (i) the Indenture or the Securities may be amended
with the written consent of the Holders of at least a majority in
aggregate Principal Amount of the Securities at the time Outstanding and
(ii) certain Defaults may be waived with the written consent of the
Holders of a majority in the aggregate Principal Amount of the Securities
at the time Outstanding. Subject to certain exceptions set forth in the
Indenture, without the consent of any Holder, the Company, the Subsidiary
Guarantor and the Trustee may amend the Indenture or the Securities to
cure any ambiguity, omission, defect, or inconsistency, or to comply with
Article VIII or Section 13.7 of the Indenture, to provide for
uncertificated Securities in addition to or in place of certificated
Securities, to make any change that does not adversely affect the rights
of any Holder, to comply with any requirement of the Commission in
connection with the qualification of the Indenture under the TIA or to add
to the covenants or obligations of the Company or the Subsidiary Guarantor
under the Indenture or surrender any right, power or option conferred by
the Indenture on the Company or the Subsidiary Guarantor.
(16) Defaults and Remedies. Under the Indenture, Events of
Default include, among other things (i) default by the Company or the
Subsidiary Guarantor in (A) payment of the Principal Amount (or, if the
Securities have been converted to semiannual coupon debentures following a
Tax Event, the Restated Principal Amount), Issue Price, accrued Original
Issue Discount, the Redemption Price, the Put Price or the Change in
Control Purchase Price, as the case may be, in respect of the Securities
when the same becomes due and payable, (B) cash interest when due (if such
default in payment of any such interest shall continue for 31 days) or (C)
the delivery of shares of Common Stock (including cash in lieu of
fractional shares of Common Stock) in accordance with the terms of the
Indenture when such are required to be delivered upon conversion of a
Security (if such default shall continue for 10 days); (ii) failure by the
Company or the Subsidiary Guarantor to comply with any other agreements in
the Indenture or the Securities upon the receipt by the Company or the
Subsidiary Guarantor of notice of such default from the Trustee or Holders
of not less than 25% in aggregate Principal Amount of the Securities then
Outstanding and the Company's or the Subsidiary Guarantor's failure to
cure such default within 90 days after receipt by the Company or the
Subsidiary Guarantor of such notice; (iii) default under any bond,
debenture, note or other evidence of indebtedness for money borrowed of
the Company or the Subsidiary Guarantor having an aggregate outstanding
principal amount of in excess of $15,000,000, which default shall have
resulted in such indebtedness being accelerated, without such indebtedness
being discharged or such acceleration having been rescinded or annulled
within 20 days after receipt of notice thereof by the Company or the
Subsidiary Guarantor from the Trustee or the Company, the Subsidiary
Guarantor and the Trustee from the Holders of not less than 25% in
aggregate Principal Amount of the Securities then Outstanding (unless such
default has been cured or waived); (iv) the Security Guarantee ceases to
be, or shall be asserted in writing by the Subsidiary Guarantor, or any
person acting on behalf of the Subsidiary Guarantor, not to be in full
force and effect (other than by reason of termination of the Indenture or
the release of the Subsidiary Guarantor in accordance with the Indenture);
and (v) certain events of bankruptcy or insolvency. If an Event of Default
occurs and is continuing, the Trustee, or the Holders of at least 25% in
aggregate Principal Amount of the Securities at the time Outstanding, may
by notice to the Company declare the Issue Price of, plus accrued Original
Issue Discount and accrued and unpaid cash interest through the date of
such declaration on, all the Securities to be immediately due and payable.
Certain events of bankruptcy or insolvency are Events of Default which
will result in the Issue Price plus accrued Original Issue Discount and
accrued and unpaid cash interest through the occurrence of such Event of
Default on the Securities becoming due and payable immediately upon the
occurrence of such Event of Default.
Holders may not enforce the Indenture or the Securities except
as provided in the Indenture. The Trustee may refuse to enforce the
Indenture or the Securities unless it receives reasonable indemnity or
security. Subject to certain limitations, Holders of a majority in
aggregate Principal Amount of the Securities at the time Outstanding may
direct the Trustee in its exercise of any trust or power. The Trustee may
withheld from Holders notice of any continuing Default (except a Default
in payment of amounts specified in clause (i) above) if it in good faith
determines that withholding notice is in their interests.
(17) Registration Rights Agreement. The Holder of this
Security and the Common Stock issuable upon conversion thereof is entitled
to the benefits of a Registration Rights Agreement (subject to the
provisions thereof), dated as of June 18, 1999, among the Company, the
Subsidiary Guarantor and the Initial Purchasers.
(18) Trustee Dealings with the Company. Subject to certain
limitations imposed by the TIA, the Trustee under the Indenture, in its
individual or any other capacity, may become the owner or pledgee of
Securities and may otherwise deal with and collect obligations owed to it
by the Company or its Affiliates with the same rights it would have if it
were not Trustee.
(19) Security Guarantee. The Company's obligations under
the Securities are fully and unconditionally guaranteed by the Subsidiary
Guarantor as and to the extent set forth in Article XVI of the Indenture.
(20) No Recourse Against Others. A director, officer,
employee, agent or stockholder, as such, of the Company or the Subsidiary
Guarantor shall not have any liability for any obligations of the Company
or the Subsidiary Guarantor under this Security or the Indenture or for
any claim based on, in respect of or by reason of such obligations or
their creation. By accepting a Security, each Holder waives and releases
all such liability. The waiver and release are part of the consideration
for the issue of the Securities.
(21) Authentication. This Security shall not be valid until
an authorized signatory of the Trustee manually signs the Trustee's
Certificate of Authentication on the other side of this Security.
(22) Abbreviations. Customary abbreviations may be used in
the name of a Holder or an assignee, such as TEN COM (-tenants in common),
TEN ENT (-tenants by the entireties), JT TEN (-joint tenants with right of
survivorship and not as tenants in common), CUST (-custodian), and U/G/M/A
(-Uniform Gift to Minors Act).
(23) Governing Law. THE INDENTURE AND THIS SECURITY SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS.
Section 2.4 Form of Trustee's Certificate of Authentication.
This is one of the Securities referred to in the within-mentioned
Indenture.
Dated: _______________ The Bank of New York, as Trustee
By: __________________________________
Authorized Signatory
Section 2.5 Form of Conversion Notice.
CONVERSION NOTICE
To: AnnTaylor Stores Corporation
The undersigned registered owner of this Security hereby
irrevocably exercises the option to convert this Security, or the portion
hereof (which is $1,000 Principal Amount or an integral multiple thereof),
below designated into shares of Common Stock (in the form of a Share
Certificate) in accordance with the terms of the Indenture referred to in
this Security, and directs that the shares issuable and deliverable upon
conversion, together with any check in payment for a fractional share and
any Security representing any unconverted Principal Amount hereof, be
issued and delivered to the registered owner hereof unless a different
name has been provided below. If shares or any portion of this Security
not converted are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable with
respect thereto and is delivering herewith a certificate in proper form
certifying that the applicable restrictions on transfer have been complied
with. Any amount required to be paid by the undersigned on account of
interest accompanies this Security.
DATE: _______________
----------------------------------
Signature(s)
(If a corporation, partnership or fiduciary, the
title of the Person signing must be stated.)
Signature(s) must be guaranteed by an eligible Guarantor Institution
(banks, stock brokers, savings and loan associations and credit unions)
with membership in an approved signature guarantee medallion program
pursuant to Securities and Exchange Commission Rule 17Ad-15 if shares of
Common Stock are to be issued, or Securities to be delivered, other than
to and in the name of the registered holder.
------------------------------------
Signature Guarantee
Fill in for registration of shares if they are to be delivered, or
unconverted Securities if they are to be issued, other than to and in the
name of the registered holder:
------------------------------------
(Name)
------------------------------------
(Street Address)
------------------------------------
(City, State and zip code)
(Please print name and address)
Register: __ Common Stock
__ Securities
(Check appropriate line(s))
Principal Amount to be converted
(if less than all):
$_____,000
----------------------------------
Social Security or other Taxpayer
Identification Number of owner
Section 2.6Form of Certification.
TRANSFER CERTIFICATE
In connection with any transfer of any of the Securities within the
period prior to the expiration of the holding period applicable to the
sales thereof under Rule 144(k) under the Securities Act of 1933, as
amended (the "Securities Act") (or any successor provision), the
undersigned registered owner of this Security hereby certifies with
respect to $________ Principal Amount of the above-captioned securities
presented or surrendered on the date hereof (the "Surrendered Securities")
for registration of transfer, or for exchange or conversion where the
securities issuable upon such exchange or conversion are to be registered
in a name other than that of the undersigned registered owner (each such
transaction being a "transfer"), that such transfer complies with the
restrictive legend set forth on the face of the Surrendered Securities for
the reason checked below:
[_]The transfer of the Surrendered Securities complies with Rule 144
under the U.S. Securities Act of 1933, as amended (the
"Securities Act"); or
[_]The transfer of the Surrendered Securities complies with Rule
144A under the Securities Act; or
[_]The transfer of the Surrendered Securities is to an institutional
accredited investor, as described in Rule 501(a)(1), (2), (3) or
(7) of Regulation D under the Securities Act; or
[_]The transfer of the Surrendered Securities is pursuant to an
effective registration statement under the Securities Act.
and unless the box below is checked, the undersigned confirms that, to the
undersigned's knowledge, such Securities are not being transferred to an
"affiliate" of the Company as defined in Rule 144 under the Securities Act
(an "Affiliate").
[_]The transferee is an Affiliate of the Company.
DATE: ___________________
-------------------------------
Signature(s)
(If the registered owner is a corporation,
partnership or fiduciary, the title of the Person
signing on behalf of such registered owner must be
stated.)
Section 2.7 Form of Option of Holder to Elect Purchase.
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 14.1 or Section 14.2 of the Indenture, check the
appropriate box:
Section 14.1 [_]
Section 14.2 [_]
If you want to elect to have only part of this Security purchased by
the Company pursuant to Section 14.1 or Section 14.2 of the Indenture,
state the amount you elect to have purchased:
$------------------------
Dated: _________________________
Signature: _______________________________
NOTICE: The signature on this assignment must correspond with the name as
it appears upon the face of the within Security in every particular
without alteration or enlargement or any change whatsoever and be
guaranteed.
Signature Guarantee: ______________________
Signature(s) must be guaranteed by an eligible Guarantor Institution
(banks, stock brokers, savings and loan associations and credit unions)
with membership in an approved signature guarantee medallion program
pursuant to Securities and Exchange Commission Rule 17Ad-15 if shares of
Common Stock are to be issued, or Securities to be delivered, other than
to and in the name of the registered holder.
Section 2.8Form of Assignment.
For value received ______________ hereby sell(s), assign(s) and
transfer(s) unto _______ (Please insert social security or Taxpayer
Identification number of assignee) the within Security, and hereby
irrevocably constitutes and appoints ___________ attorney to transfer the
said Security on the books of the Company, with full power of substitution
in the premises.
Dated: _____________
Signature(s)
Signature(s) must be guaranteed by an eligible Guarantor Institution
(banks, stock brokers, savings and loan associations and credit unions)
with membership in an approved signature guarantee medallion program
pursuant to Securities and Exchange Commission Rule 17Ad-15 if shares of
Common Stock are to be issued, or Securities to be delivered, other than
to and in the name of the registered holder.
Signature Guarantee: __________________
ARTICLE III
THE SECURITIES
Section 3.1 Title and Terms. The aggregate Principal Amount of
Securities which may be authenticated and delivered for original issue
under this Indenture is $180,975,000 upon a Company Order without any
further action by the Company (except for Securities authenticated and
delivered for exchange for, or in lieu of, other Securities pursuant to
Sections 3.4, 3.5, 3.6, 9.5, 11.6, 13.2 or 14.5); provided, however, that
if the Company sells any Securities pursuant to the over-allotment option
granted pursuant to the Purchase Agreement among the Company, the
Subsidiary Guarantor and the Initial Purchasers dated June 14, 1999, then
the Trustee shall authenticate and deliver Securities for original issue
in an aggregate Principal Amount of $180,975,000 plus up to $18,097,500
aggregate Principal Amount upon receipt by the Trustee of a Company Order,
except as aforesaid.
The Principal Amount, Restated Principal Amount, Issue Price,
accrued Original Issue Discount, Redemption Price, cash in respect of Put
Price, Liquidated Damages, change in Control Purchase Price and cash
interest on the Securities shall be payable at the Corporate Trust Office
and at any other office or agency maintained by the Company for such
purpose; provided, however, that upon application by the Holder to the
Security Registrar not later than the June 3 or December 3 immediately
preceding the relevant Interest Payment Date, such Holder may receive
payment by wire transfer to a U.S. Dollar account (such transfers to be
made only to Holders of an aggregate Principal Amount in excess of U.S.
$5,000,000 in Principal Amount) maintained by the payee with a bank in the
United States upon compliance with the reasonable regulations of the
Trustee.
The Securities shall be redeemable by the Company as provided in
Article XI.
The Securities shall be subordinated in right of payment to the
prior payment in full of Senior Indebtedness as provided in Article XII.
The Securities shall be convertible as provided in Article XIII.
The Securities shall be subject to purchase by the Company at the
option of the Holder as provided in Article XIV.
Section 3.2 Denominations. The Securities shall be issuable only in
registered form without coupons and only in denominations of $1,000 in
Principal Amount and any integral multiple thereof.
Section 3.3 Execution, Authentication, Delivery and Dating. The
Securities shall be executed on behalf of the Company by any of its
Chairman of the Board, its President or one of its Vice Presidents, under
its corporate seal reproduced thereon and attested by its Treasurer or one
of its Assistant Treasurers or Secretary or one of its Assistant
Secretaries. The signature of any of these officers on the Securities may
be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the
Company, notwithstanding that such individuals or any of them have ceased
to hold such offices prior to the authentication and delivery of such
Securities or did not hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery
of this Indenture, the Company may deliver Securities executed by the
Company to the Trustee or to its order for authentication, together with a
Company Order for the authentication and delivery of such Securities, and
the Trustee in accordance with such Company Order shall authenticate and
make available for delivery such Securities as in this Indenture provided
and not otherwise. In connection with any Company Order for
authentication, an Officers' Certificate and Opinion of Counsel pursuant
to Section 1.2 shall be required.
No Security shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such
Security a certificate of authentication substantially in the form
provided for herein executed by the Trustee by manual signature, and such
certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered
hereunder.
Each security shall be dated the date of its authentication.
Section 3.4 Temporary Securities. Pending the preparation of
definitive Securities, the Company may execute, and upon Company Order the
Trustee shall authenticate and deliver, temporary Securities which are
printed, lithographed, typewritten, mimeographed or otherwise produced, in
any authorized denomination, substantially of the tenor of the definitive
Securities in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the officers
executing such Securities may determine, as evidenced by their execution
of such Securities.
If temporary Securities are issued, the Company will cause
definitive Securities to be prepared without unreasonable delay. After the
preparation of definitive Securities, the temporary Securities shall be
exchangeable for definitive Securities upon surrender of the temporary
Securities at any office or agency of the Company designated pursuant to
Section 10.2, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Securities the Company shall
execute and the Trustee shall authenticate and deliver in exchange
therefor a like Principal Amount of definitive Securities of authorized
denominations. Until so exchanged, the temporary Securities shall in all
respects be entitled to the same benefits under this Indenture as
definitive Securities.
Section 3.5 Registration; Registration of Transfer and Exchange. (a)
The Company shall cause to be kept at the Corporate Trust Office of the
Trustee a register (the register maintained in such office and in any
other office or agency designated pursuant to Section 10.2 being herein
sometimes collectively referred to as the "Security Register") in which,
subject to such reasonable regulations as it may prescribe, the Company
shall provide for the registration of Securities and of transfers and
exchanges thereof. The Trustee is hereby appointed "Security Registrar"
for the purpose of registering Securities and transfers and exchanges
thereof as herein provided. Upon surrender for registration of transfer or
exchange of any Security at an office or agency of the Company designated
pursuant to Section 10.2 for such purpose, accompanied by a written
instrument of transfer or exchange in the form provided by the Company,
the Company shall execute, and the Trustee shall authenticate and deliver,
in the name of the designated transferee or transferees (in the case of a
transfer) or to the Holder (in the case of an exchange), one or more new
Securities, of any authorized denominations and of a like aggregate
Principal Amount and tenor bearing such restrictive legends as may be
required by this Indenture.
(b) Notwithstanding any other provisions of this Indenture or the
Securities, (A) transfers of a Global Security, in whole or in part, shall
be made only in accordance with Section 3.5(b)(i), (B) transfer of a
beneficial interest in a Global Security for a Definitive Security shall
comply with Section 3.5(b)(ii) below, and (C) transfers of a Definitive
Security shall comply with Section 3.5(b)(iii) and (iv) below.
(i) Transfer of Global Security. A Global Security may not be
transferred, in whole or in part, to any Person other than the
Depositary or a nominee or any successor thereof, and no such
transfer to any such other Person may be registered; provided that
this clause (i) shall not prohibit any transfer of a Security that is
issued in exchange for a Global Security but is not itself a Global
Security. No transfer of a Security to any Person shall be effective
under this Indenture or the Securities unless and until such Security
has been registered in the name of such Person. Nothing in this
Section 3.5(b)(i) shall prohibit or render ineffective any transfer
of a beneficial interest in a Global Security effected in accordance
with the other provisions of this Section 3.5(b).
(ii) Restrictions on Transfer of a Beneficial Interest in a
Global Security for a Definitive Security. A beneficial interest in a
Global Security may not be exchanged for a Definitive Security except
upon satisfaction of the requirements set forth below. Upon receipt
by the Trustee of a notice of a transfer of a beneficial interest in
a Global Security in accordance with Applicable Procedures for a
Definitive Security in the form satisfactory to the Trustee, together
with:
(A) so long as the Securities are Restricted Securities,
certification, in the form set forth in Section 2.6, that such
beneficial interest in the Global Security is being transferred to an
Institutional Accredited Investor in accordance with Sections
501(a)(1), (2), (3) or (7) of the Securities Act; and
(B) written instructions to the Trustee to make, or direct
the Security Registrar to make, an adjustment on its books and
records with respect to such Global Security to reflect a decrease in
the aggregate Principal Amount of the Securities represented by the
Global Security, such instructions to contain information regarding
the Depositary account to be credited with such decrease, then the
Trustee shall cause, or direct the Securities Registrar to cause, in
accordance with the standing instructions and procedures existing
between the Depository and the Securities Registrar, the aggregate
Principal Amount of Securities represented by the Global Security to
be decreased by the aggregate Principal Amount of the Definitive
Security to be issued, shall issue such Definitive Security and shall
debit or cause to be debited to the account of the Person specified
in such instructions a beneficial interest in the Global Security
equal to the Principal Amount of the Definitive Security so issued.
(iii) Transfer and Exchange of Definitive Securities. When
Definitive Securities are presented to the Security Registrar with a
request:
(x) to register the transfer of such Definitive Securities; or
(y) to exchange such Definitive Securities for an equal Principal
Amount of Definitive Securities of other authorized
denominations, the Security Registrar shall register the
transfer or make the exchange as requested if its reasonable
requirements for such transaction are met;
provided, however, that the Definitive Securities surrendered for
transfer or exchange:
(i) shall be duly endorsed or accompanied by a written
instrument of transfer in form reasonably satisfactory to the
Company and the Security Registrar, duly executed by the Holder
thereof or his attorney duly authorized in writing; and
(ii) so long as such Securities are Restricted Securities,
such Securities are being transferred or exchanged pursuant to
an effective registration statement under the Securities Act or
pursuant to clause (A), (B) or (C) below, and are accompanied by
the following additional information and documents, as
applicable:
(A) if such Definitive Securities are being delivered to
the Security Registrar by a Holder for registration in the
name of such Holder, without transfer, a certification from
such Holder to that effect (in the form set forth in
Section 2.6); or
(B) if such Definitive Securities are being transferred
to the Company, a certification to that effect; or
(C) if such Definitive Securities are being transferred
pursuant to an exemption from registration in accordance
with Rule 144, (i) a certification to that effect (in the
form set forth in Section 2.6) and (ii) if the Company or
Security Registrar so requests, an opinion of counsel or
other evidence reasonably satisfactory to them as to the
compliance with the restrictions set forth in the legend
set forth in Section 2.2.
(iv) Restrictions on Transfer of a Definitive Security for a
Beneficial Interest in a Global Security. A Definitive Security may
not be exchanged for a beneficial interest in a Global Security
except upon satisfaction of the requirements set forth below. Upon
receipt by the Trustee of a Definitive Security, duly endorsed or
accompanied by appropriate instruments of transfer, in form
satisfactory to the Trustee, together with:
(i) certification, in the form set forth on the reverse of
the Security, that such Definitive Security is being transferred to
a Qualified Institutional Buyer in accordance with Rule 144A; and
(ii) written instructions directing the Trustee to make, or
to direct the Securities Registrar to make, an adjustment on its
books and records with respect to such Global Security to reflect
an increase in the aggregate Principal Amount of the Securities
represented by the Global Security, such instructions to contain
information regarding the Depositary account to be credited with
such increase,
then the Trustee shall cancel such Definitive Security and cause, or
direct the Securities Registrar to cause, in accordance with the
standing instructions and procedures existing between the Depository
and the Securities Registrar, the aggregate Principal Amount of
Securities represented by the Global Security to be increased by the
aggregate Principal Amount of the Definitive Security to be exchanged
and shall credit or cause to be credited to the account of the Person
specified in such instructions a beneficial interest in the Global
Security equal to the Principal Amount of the Definitive Security so
cancelled. If no Global Securities are then Outstanding, the Company
shall issue and the Trustee shall authenticate, upon written order of
the Company in the form of an Officers' Certificate, a new Global
Security in the appropriate Principal Amount.
(c) Subject to the succeeding paragraph, every Security shall be
subject to the restrictions on transfer provided in the legend set forth
in the first paragraph of Section 2.2. Whenever any Restricted Security is
presented or surrendered for registration of transfer or for exchange for
a Security registered in a name other than that of the Holder, such
Security must be accompanied by a certificate in substantially the form
set forth in Section 2.6, dated the date of such surrender and signed by
the Holder of such Security, as to compliance with such restrictions on
transfer. The Security Registrar shall not be required to accept for such
registration of transfer or exchange any Security not so accompanied by a
properly completed certificate.
(d) The restrictions imposed by the legend set forth in the first
paragraph of Section 2.2 upon the transferability of any Security shall
cease and terminate when such Security has been sold pursuant to an
effective registration statement under the Securities Act or transferred
in compliance with Rule 144 under the Securities Act (or any successor
provision thereto) or, if earlier, upon the expiration of the holding
period applicable to sales thereof under Rule 144(k) under the Securities
Act (or any successor provision). Any Security as to which such
restrictions on transfer shall have expired in accordance with their terms
or shall have terminated may, upon surrender of such Security for exchange
to the Security Registrar in accordance with the provisions of this
Section 3.5 (accompanied, in the event that such restrictions on transfer
have terminated by reason of a transfer in compliance with Rule 144 or any
successor provision, by an opinion of counsel having substantial
experience in practice under the Securities Act and otherwise reasonably
acceptable to the Company, addressed to the Company and in form acceptable
to the Company, to the effect that the transfer of such Security has been
made in compliance with Rule 144 or such successor provision), be
exchanged for a new Security, of like tenor and aggregate Principal
Amount, which shall not bear the restrictive legend set forth in the first
paragraph of Section 2.2. The Company shall inform the Trustee of the
effective date of any registration statement registering the Securities
under the Securities Act. The Trustee shall not be liable for any action
taken or omitted to be taken by it in good faith in accordance with the
aforementioned opinion of counsel or registration statement.
(e) As used in the preceding two paragraphs of this Section 3.5,
the term "transfer" encompasses any sale, pledge, transfer, hypothecation
or other disposition of any Security.
(f) No service charge shall be made for any registration of
transfer or exchange of Securities, but the Company may require payment of
a sum sufficient to cover any tax, assessment or other governmental charge
that may be imposed in connection with any registration of transfer or
exchange of Securities, other than exchanges pursuant to Section 3.4, 9.6,
11.6, 13.2 or 14.1 not involving any transfer.
(g) The Company shall not be required (i) to issue, register the
transfer of or exchange any Security during a period beginning at the
opening of business 15 days before the day of the mailing of a notice of
redemption of Securities selected for redemption under Section 11.2 and
ending at the close of business on the day of such mailing, (ii) to
register the transfer of or exchange any Security so selected for
redemption in whole or in part, except the unredeemed portion of any
Security being redeemed in part or (iii) to register the transfer of or
exchange any Securities in respect of which a Purchase Notice or a Change
of Control Purchase Notice has been given and not withdrawn by the Holder
thereof in accordance with the terms of this Indenture and such Securities
(except, in the case of Securities to be purchased in part, the portion
thereof not be purchased).
(h) The provisions of clauses (1), (2), (3) and (4) below shall
apply only to Global Securities:
(1) Notwithstanding any other provisions of this Indenture or
the Securities, except as provided in Section 3.5(b)(ii) a Global Security
shall not be exchanged in whole or in part for a Security registered in
the name of any Person other than the Depositary or one or more nominees
thereof, provided that a Global Security may be exchanged for Securities
registered in the names of any person designated by the Depositary in the
event that (i) the Depositary has notified the Company that it is
unwilling or unable to continue as Depositary for such Global Security or
such Depositary has ceased to be a "clearing agency" registered under
Exchange Act, and a successor Depositary is not appointed by the Company
within 90 days or (ii) an Event of Default has occurred and is continuing
with respect to the Securities. Any Global Security exchanged pursuant to
clause (i) above shall be so exchanged in whole and not in part and any
Global Security exchanged pursuant to clause (ii) above may be exchanged
in whole or from time to time in part as directed by the Depositary. Any
Security issued in exchange for a Global Security or any portion thereof
shall be a Global Security; provided that any such Security so issued that
is registered in the name of a Person other than the Depositary or a
nominee thereof shall not be a Global Security.
(2) Securities issued in exchange for a Global Security or any
portion thereof shall be issued in definitive, fully registered form,
without interest coupons, shall have an aggregate Principal Amount equal
to that of such Global Security or portion thereof to be so exchanged,
shall be registered in such names and be in such authorized denominations
as the Depositary shall designate and shall bear the applicable legends
provided for herein. Any Global Security to be exchanged in whole shall be
surrendered by the Depositary to the Trustee, as Security Registrar. With
regard to any Global Security to be exchanged in part, either such Global
Security shall be so surrendered for exchange or, if the Trustee is acting
as custodian for the Depositary or its nominee with respect to such Global
Security, the Principal Amount thereof shall be reduced, by an amount
equal to the portion thereof to be so exchanged, by means of an
appropriate adjustment made on the records of the Trustee. Upon any such
surrender or adjustment, the Trustee shall authenticate and deliver the
Security issuable on such exchange to or upon the order of the Depositary
or an authorized representative thereof.
(3) Subject to the provisions of clause (5) below, the
registered Holder may grant proxies and otherwise authorize any Person,
including Agent Members and persons that may hold interests through Agent
Members, to take any action which a holder is entitled to take under this
Indenture or the Securities.
(4) In the event of the occurrence of any of the events
specified in clause (1) above, the Company will promptly make available to
the Trustee a reasonable supply of certificated Securities in definitive,
fully registered form, without interest coupons.
(5) Neither any members of, or participants in, the Depositary
("Agent Members") nor any other Persons on whose behalf Agent Members may
act shall have any rights under this Indenture with respect to any Global
Security registered in the name of the Depositary or any nominee thereof,
or under any such Global Security, and the Depositary or such nominee, as
the case may be, may be treated by the Company, the Trustee and any agent
of the Company or the Trustee as the absolute owner and holder of such
Global Security for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall prevent the Company, the Trustee or any
agent of the Company or the Trustee from giving effect to any written
certification, proxy or other authorization furnished by the Depositary or
such nominee, as the case may be, or impair, as between the Depositary,
its Agent Members and any other person on whose behalf an Agent Member may
act, the operation of customary practices of such Persons governing the
exercise of the rights of a holder of any Security.
(i) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer
imposed under this Indenture or under applicable law with respect to any
transfer of any interest in any Security (including any transfers between
or among Agent Members or beneficial owners of interests in any Global
Security) other than to require delivery of such certificates and other
documentation or evidence as are expressly required by, and to do so if
and when expressly required by the terms of, this Indenture, and to
examine the same to determine substantial compliance as to form with the
express requirements hereof.
Section 3.6 Mutilated, Destroyed, Lost and Stolen Securities. If (i)
any mutilated Security is surrendered to the Trustee, or if there shall be
delivered to the Company and the Trustee evidence to their satisfaction of
the destruction, loss or theft of any Security and (ii) such security or
indemnity as may be required by them to save each of them and any agent of
either of them harmless, then, in the absence of notice to the Company or
the Trustee that such Security has been acquired by a bona fide purchaser,
the Company shall execute and the Trustee shall authenticate and deliver,
in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Security, a new Security of like tenor and Principal Amount and
bearing a number not contemporaneously Outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its
discretion, but subject to any conversion rights, may, instead of issuing
a new Security, pay such Security.
Upon the issuance, authentication and delivery by the Trustee of
any new Security under this Section, the Company may require the payment
of a sum sufficient to cover any tax, assessment or other governmental
charge that may be imposed in relation thereto and any other expenses
(including the fees and expenses of the Trustee) connected therewith.
Every new Security issued, authenticated and delivered by the
Trustee pursuant to this Section in lieu of any destroyed, lost or stolen
Security shall constitute an original additional contractual obligation of
the Company and the Subsidiary Guarantor, whether or not the destroyed,
lost or stolen Security shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Securities.
Section 3.7 Payment of Cash Interest; Interest Rights Preserved.
Cash interest on any Security which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the
Person in whose name that Security (or one or more Predecessor Securities)
is registered at the close of business on the Regular Record Date for
payment of such cash interest.
If the Company shall be required by law to deduct any taxes from
any sum of cash interest payable hereunder to a Holder, (i) the Company
shall make such deductions and shall pay the full amount deducted to the
relevant taxing authority in accordance with applicable law and (ii) the
amount of such deduction shall be treated for purposes hereof as a payment
of cash interest.
Any cash interest on any Security which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the
Holder on the relevant Regular Record Date by virtue of having been such
Holder, and such Defaulted Interest may be paid by the Company, at its
election in each case, as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Securities (or their respective
Predecessor Securities) are registered at the close of business on a
special record date (a "Special Record Date") for the payment of such
Defaulted Interest, which shall be fixed in the following manner. The
Company shall notify the Trustee in writing of the amount of Defaulted
Interest proposed to be paid on each Security and the date of the proposed
payment, and at the same time the Company shall deposit with the Trustee
an amount of money equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall make arrangements satisfactory
to the Trustee for such deposit prior to the date of the proposed payment,
such money when deposited to be held in trust for the benefit of the
Persons entitled to such Defaulted Interest as in this clause (1)
provided. Thereupon, the Trustee shall fix a Special Record Date for the
payment of such Defaulted Interest which shall be not more than 15 days
and not less than 10 days prior to the date of the proposed payment and
not less than 10 days after the receipt by the Trustee of the notice of
the proposed payment. The Trustee shall promptly notify the Company of
such Special Record Date and, in the name and at the expense of the
Company, shall cause notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor to be mailed, first-class
postage prepaid, to each Holder at his address as it appears in the
Security Register, not less than 10 days prior to such Special Record
Date. Notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been so mailed, such Defaulted
Interest shall be paid to the Persons in whose names the Securities (or
their respective Predecessor Securities) are registered at the close of
business on such Special Record Date and shall no longer be payable
pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted Interest in
any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this clause
(2), such manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Security shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such
other Security.
In the case of any Security which is converted after any Regular
Record Date and on or prior to the corresponding Interest Payment Date,
cash interest on such Security whose Stated Maturity is on such Interest
Payment Date shall be deemed to continue to accrue and shall be payable on
such Interest Payment Date notwithstanding such conversion and
notwithstanding that such Security may have been called for redemption on
a Redemption Date within such period, and such interest (whether or not
punctually paid or duly provided for) shall be paid to the Person in whose
name that Security (or one or more Predecessor Securities) is registered
at the close of business on such Regular Record Date. Except as otherwise
expressly provided in the immediately preceding sentence, in the case of
any Security which is converted, cash interest whose Stated Maturity is
after the date of conversion of such Security shall not be payable
(although such accrued and unpaid interest will be deemed paid by the
appropriate portion of the Common Stock received by the holders upon such
conversion).
Section 3.8 Persons Deemed Owners. Prior to due presentment of a
Security for registration of transfer, the Company, the Trustee and any
agent of the Company or the Trustee may treat the Person in whose name
such Security is registered as the owner of such Security for the purpose
of receiving payment of principal of, premium, if any, and (subject to
Section 3.7) interest on such Security and for all other purposes
whatsoever, whether or not such Security be overdue, and none of the
Company, the Subsidiary Guarantor or the Trustee nor any agent of the
Company, the Subsidiary Guarantor or the Trustee shall be affected by notice
to the contrary.
None of the Company, the Trustee, any Paying Agent or the Security
Registrar will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests of a Global Security or from maintaining, supervising or
reviewing any records relating to such beneficial ownership interests and
they shall be protected in acting on any such information provided by the
Depositary.
Section 3.9 Cancellation. All Securities surrendered for payment,
redemption, registration of transfer or exchange or conversion shall, if
surrendered to any Person other than the Trustee, be delivered to the
Trustee and shall be promptly cancelled by it. The Company may at any time
deliver to the Trustee for cancellation any Securities previously
authenticated and delivered hereunder which the Company may have acquired
in any manner whatsoever, and all Securities so delivered shall be
promptly cancelled by the Trustee. No Securities shall be authenticated in
lieu of or in exchange for any Securities cancelled as provided in this
Section, except as expressly permitted by this Indenture. All cancelled
Securities held by the Trustee shall be disposed of as directed by a
Company Order; provided, however, that the Trustee shall not be required
to destroy the certificates representing such cancelled securities.
Section 3.10 Computation of Interest. Interest on the Securities
shall be computed on the basis of a 360-day year of twelve 30-day months.
Section 3.11 CUSIP Numbers. The Company in issuing the Securities
may use "CUSIP" numbers (if then generally in use), and, if so, the
Trustee shall use "CUSIP" numbers in notices of redemption as a
convenience to Holders; provided that any such notice may state that no
representation is made as to the correctness of such numbers either as
printed on the Securities or as contained in any notice of a redemption
and that reliance may be placed only on the other identification numbers
printed on the Securities, and any such redemption shall not be affected
by any defect in or omission of such numbers. The Company will promptly
notify the trustee of any change in the "CUSIP" numbers.
ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.1 Satisfaction and Discharge of Indenture. This Indenture
shall upon Company request cease to be of further effect (except as to any
surviving rights of conversion, registration of transfer or exchange of
Securities herein expressly provided for), and the Trustee, on demand of
and at the expense of the Company, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered
(other than (i) Securities which have been destroyed, lost or stolen
and which have been replaced or paid as provided in Section 3.6 and
(ii) Securities for whose payment money has theretofore been
deposited in trust or segregated and held in trust by the Company and
thereafter repaid to the Company or discharged from such trust, as
provided in Section 10.3) have been delivered to the Trustee for
cancellation; or
(B all such Securities not theretofore delivered to the
Trustee for cancellation (i) have become due and payable, (ii) will
become due and payable at their Stated Maturity within one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the
Company,
and the Company, in the case of (i), (ii) or (iii) above, has deposited or
caused to be deposited irrevocably with the Trustee as trust cash or, if
expressly permitted by the terms hereof, Common Stock or U.S. Government
Obligations in trust for the benefit of Holders of Outstanding Securities
in an amount sufficient to pay and discharge the entire indebtedness on
such Securities not theretofore delivered to the Trustee for cancellation,
for the aggregate Issue Price thereof plus Original Issue Discount thereon
(or, if the securities have been converted to a semi-annual coupon
debenture following a Tax Event, the aggregate Restated Principal Amount),
any interest due on overdue installments and interest to the date of such
deposit (in the case of securities which have become due and payable) or
to the Stated Maturity or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums
payable hereunder by the Company;
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge
of this Indenture have been complied with; and
(4) no Event of Default or event which, with notice or lapse of
time, or both, would become an Event of Default with respect to the
Securities shall have occurred and be continuing on the date of such
deposit.
Notwithstanding the satisfaction and discharge of this Indenture,
the obligations of the Company to the Trustee under Section 6.7, the
obligations of the Trustee and, if money shall have been deposited with
the Trustee pursuant to subclause (B) of clause (1) of this Section, the
obligations of the Trustee under Section 4.2 and the last paragraph of
Section 10.3 shall survive.
Section 4.2 Application of Trust Money. Subject to the provisions of
the last paragraph of Section 10.3, all money deposited with the Trustee
pursuant to Section 4.1 shall be held in trust and applied by it, in
accordance with the provisions of the Securities and this Indenture, to
the payment, either directly or through any Paying Agent (including the
Company acting as its own Paying Agent) as the Trustee may determine, to
the Persons entitled thereto, of the aggregate Issue Price thereof plus
Original Issue Discount thereon (or, if the securities have been converted
to a semi-annual coupon debenture following a Tax Event, the aggregate
Restated Principal Amount), any interest due on overdue installments and
interest for whose payment such money has been deposited with the Trustee.
All moneys deposited with the Trustee pursuant to Section 4.1 (and held by
it or any Paying Agent) for the payment of Securities subsequently
converted shall be returned to the Company upon Company Request.
ARTICLE V
REMEDIES
Section 5.1 Events of Default. "Event of Default", wherever used
herein, means any one of the following events (whatever the reason for
such Event of Default and whether it shall be occasioned by the provisions
of Article XII or be voluntary or involuntary or be effected by operation
of law or pursuant to any judgment, decree or order of any court or any
order, rule or regulation of any administrative or governmental body):
(1) default in the payment of any cash interest or Liquidated
Damages, if any, upon any Security when it becomes due and payable, and
continuance of such default for a period of 31 days; or
(2) the Company or the Subsidiary Guarantor defaults in the
payment of the Principal Amount (or, if the Securities have been converted
to semiannual coupon debentures following a Tax Event, the Restated
Principal Amount), Issue Price, accrued Original Issue Discount,
Redemption Price, Put Price or Change in Control Purchase Price on any
Security, when the same becomes due and payable at its Stated Maturity,
upon redemption, upon declaration, when due for purchase by the Company or
otherwise, whether or not such payment shall be prohibited by this
Indenture;
(3) the Company or the Subsidiary Guarantor fails to comply with
any of its agreements in the Securities or this Indenture and such failure
continues for 90 days after receipt by the Company or the Guarantor of a
Notice of Default;
(4) the Company or the Subsidiary Guarantor pursuant to or
within the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief
against it in an involuntary case or the commencement of any case
against it;
(C) consents to the appointment of a Custodian of it or
for any substantial part of its property;
(D) makes a general assignment for the benefit of its
creditors;
(E) files a petition in bankruptcy or answer or consent
seeking reorganization or relief; or
(F) consents to the filing of such petition or the
appointment of or taking possession by a Custodian;
(5) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company or the Subsidiary
Guarantor in an involuntary case, or adjudicates the Company
insolvent or bankrupt;
(B) appoints a Custodian of the Company or the
Subsidiary Guarantor or for any substantial part of their
respective properties; or
(C) orders the winding up or liquidation of the Company or
the Subsidiary Guarantor; and the order or decree remains unstayed
and in effect for 60 days;
(6) the Company or the Subsidiary Guarantor fails to deliver
shares of Common Stock (including cash in lieu of fractional shares) when
such Common Stock (and cash in lieu of fractional shares) is required to
be delivered, upon conversion of a Security and such failure is not
remedied for a period of 10 days; or
(7) default under any bond, debenture, note or other evidence of
indebtedness for money borrowed of the Company or the Subsidiary Guarantor
having an aggregate outstanding principal amount of in excess of
$15,000,000, which default shall have resulted in such indebtedness being
accelerated, without such indebtedness being discharged or such
acceleration having been rescinded or annulled within 20 days after
receipt of notice thereof by the Company or the Subsidiary Guarantor from
the Trustee or the Company, the Subsidiary Guarantor and the Trustee from
the Holders of not less than 25% in aggregate Principal Amount of the
Securities then Outstanding (unless such default has been cured or waived)
specifying such default and requiring the Company to cause such
indebtedness to be discharged or such acceleration to be rescinded or
annulled and stating that such notice is a "Notice of Default" hereunder.
(8) the Security Guarantee ceases to be, or shall be asserted in
writing by the Subsidiary Guarantor, or any person acting on behalf of the
Subsidiary Guarantor, not to be in full force and effect (other than by
reason of termination of the Indenture or the release of the Subsidiary
Guarantor in accordance with the Indenture).
A Default under clause (3) above is not an Event of Default until
the Trustee notifies the Company or the Subsidiary Guarantor, or the
Holders of at least 25% in aggregate Principal Amount of the Securities at
the time Outstanding notify the Company, the Subsidiary Guarantor and the
Trustee, of the Default and the Company or the Subsidiary Guarantor does
not cure such Default within the time specified in clause (3) above after
receipt of such notice. Any such notice must specify the Default, demand
that it be remedied and state that such notice is a "Notice of Default".
The Company shall deliver to the Trustee, within 90 days after it
becomes aware of the occurrence thereof, written notice of any event which
with the giving of notice or the lapse of time or both would become an
Event of Default under clause (3) or clause (7), its status and what
action the Company or the Subsidiary Guarantor is taking or proposes to
take with respect thereto.
Section 5.2 Acceleration of Stated Maturity; Rescission and
Annulment. If an Event of Default (other than an Event of Default
specified in Section 5.1(4) or 5.1(5)) occurs and is continuing, then in
every such case the Trustee or the Holders of not less than 25% in
Principal Amount of the Outstanding Securities may declare the Issue
Price, accrued Original Issue Discount and accrued and unpaid cash
interest (or if the Securities have been converted to a semiannual coupon
debenture following a Tax Event, the Restated Principal Amount, plus
accrued interest) through the date of declaration on all the Securities to
be due and payable immediately, by a notice in writing to the Company or
the Subsidiary Guarantor (and to the Trustee if given by Holders), and
upon any such declaration such Issue Price, accrued Original Issue
Discount and accrued and unpaid cash interest (or if the Securities have
been converted to a semiannual coupon debenture following a Tax Event, the
Restated Principal Amount, plus accrued interest) shall become immediately
due and payable. If an Event of Default specified in Section 5.1(4) or
5.1(5) occurs, the Issue Price, accrued Original Issue Discount and
accrued and unpaid cash interest (or if the Securities have been converted
to a semiannual coupon debenture following a Tax Event, the Restated
Principal Amount, plus accrued interest) through the date of declaration
on all the Securities shall automatically, and without any declaration or
other action on the part of the Trustee or any Holder, become immediately
due and payable.
At any time after such a declaration of acceleration has been made
and before a judgment or decree for payment of the money due has been
obtained by the Trustee as hereinafter in this Article V provided, the
Holders of a majority in Principal Amount of the Outstanding Securities,
by written notice to the Company, the Subsidiary Guarantor and the
Trustee, may rescind and annul such declaration and its consequences if
(1) the Company or the Subsidiary Guarantor has paid or
deposited with the Trustee a sum sufficient to pay
(A) the Issue Price, accrued Original Issue Discount and
accrued and unpaid cash interest (or if the Securities have been
converted to a semiannual coupon debenture following a Tax Event, the
Restated Principal Amount, plus accrued interest) through the date of
declaration on the Securities,
(B) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate borne by the Securities,
and
(C) all sums paid or advanced by the Trustee hereunder and
the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel; and
(2) all Events of Default, other than the non-payment of the
principal of Securities which have become due solely by such declaration
of acceleration, have been cured or waived as provided in Section 5.13.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
Section 5.3 Collection of Indebtedness and Suits for Enforcement by
Trustee. If
(1) default is made in the payment of any cash interest on any
Security when such interest becomes due and payable and such default
continues for a period of 31 days, or
(2) default is made in the payment of the Issue Price or accrued
Original Issue Discount (or if the Securities have been converted to a
semiannual coupon debenture following a Tax Event, the Restated Principal
Amount, plus accrued interest),
the Trustee is authorized to recover judgment in its own name and as
trustee of an express trust against the Company and the Subsidiary
Guarantor for the whole amount then due and payable on such Securities,
and, in addition thereto, such further amount as shall be sufficient to
cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of
the Holders by such appropriate judicial proceedings as the Trustee shall
deem most effectual to protect and enforce any such rights, whether for
the specific enforcement of any covenant or agreement in this Indenture or
in aid of the exercise of any power granted herein, or to enforce any
other proper remedy.
Section 5.4 Trustee May File Proofs of Claim. In case of any
judicial proceeding relative to the Company or the Subsidiary Guarantor
(or any other obligor upon the Securities), its property or its creditors,
the Trustee shall be entitled and empowered, by intervention in such
proceeding or otherwise,
(1) to file and prove a claim for the whole amount owing and
unpaid in respect of the Securities and to file such other papers or
documents as may be necessary or advisable in order to have the claims of
the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and
counsel) and of the Holders allowed in such judicial proceeding, and
(2) to collect and receive any moneys or other property payable
or deliverable on any such claim and to distribute the same; and any
custodian, receiver, assignee, trustee, liquidator, sequestrator or other
similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that
the Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel, and any other amounts due the Trustee under Section
6.7.
No provision of this Indenture shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Securities or the rights of any Holder thereof or to
authorize the Trustee to vote in respect of the claim of any Holder in any
such proceeding; provided, however, that the Trustee may, on behalf of the
Holders, vote for the election of a trustee in bankruptcy or similar
official and be a member of a creditors' or other similar committee.
Section 5.5 Trustee May Enforce Claims Without Possession of
Securities. All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the
possession of any of the Securities or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the
Trustee shall be brought in its own name as trustee of an express trust,
and any recovery of judgment shall, after provision for the payment of the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, be for the ratable benefit of the Holders
of the Securities in respect of which such judgment has been recovered.
Section 5.6 Application of Money Collected. Any money collected by
the Trustee pursuant to this Article V shall be applied in the following
order, at the date or dates fixed by the Trustee and, in case of the
distribution of such money on account of principal (or premium, if any) or
interest, upon presentation of the Securities and the notation thereon of
the payment if only partially paid and upon surrender thereof if fully
paid:
FIRST: Subject to Article XII to the payment of all amounts due
the Trustee under Section 6.7;
SECOND: Subject to Article XII to the payment of the amounts then
due and unpaid for first, interest on, and, second, for principal
of the Securities in respect of which or for the benefit of which
such money has been collected, ratably, without preference or
priority of any kind, according to the amounts due and payable on
such Securities for interest and principal respectively; and
THIRD: The balance, if any, to the Company.
Section 5.7 Limitation on Suits. No Holder of any Security shall
have any right to institute any proceeding, judicial or otherwise, with
respect to this Indenture or Securities, or for the appointment of a
receiver or trustee, or for any other remedy hereunder, unless
(1) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(2) the Holders of not less than 25% in Principal Amount of the
Outstanding Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name
as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee
reasonable security or indemnity satisfactory to the Trustee against the
costs, expenses, losses and liabilities to be incurred in compliance with
such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a
majority in Principal Amount of the Outstanding Securities;
it being understood and intended that no one or more of such Holders shall
have any right in any manner whatever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of
any other of such Holders, or to obtain or to seek to obtain priority or
preference over any other of such Holders or to enforce any right under
this Indenture, except in the manner herein provided and for the equal and
ratable benefit of all of such Holders.
Section 5.8 Unconditional Right of Holders to Receive Principal,
Premium and Interest and to Convert. Notwithstanding any other provision
in this Indenture, the Holder of any Security shall have the right, which
is absolute and unconditional, to receive payment of the Issue Price,
accrued Original Issue Discount and accrued and unpaid cash interest (or
if the Securities have been converted to a semiannual coupon debenture
following a Tax Event, the Restated Principal Amount, plus accrued
interest) (subject to Section 3.7) on such Security on the respective
Stated Maturities expressed in such Security (or, in the case of
redemption or repurchase, on the Redemption Date, Change in Control
Repurchase Date or Repurchase Date, as the case may be) and to convert
such Security in accordance with Article XIII and to institute suit for
the enforcement of any such payment on or after such respective dates or
the right to convert, and such rights shall not be impaired without the
consent of such Holder.
Section 5.9 Restoration of Rights and Remedies. If the Trustee or
any Holder has instituted any proceeding to enforce any right or remedy
under this Indenture and such proceeding has been discontinued or
abandoned for any reason, or has been determined adversely to the Trustee
or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Subsidiary Guarantor,
the Trustee and the Holders shall be restored severally and respectively
to their former positions hereunder and thereafter all rights and remedies
of the Trustee and the Holders shall continue as though no such proceeding
had been instituted.
Section 5.10 Rights and Remedies Cumulative. Except as otherwise
provided with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Securities in the last paragraph of Section 3.6,
no right or remedy herein conferred upon or reserved to the Trustee or to
the Holders is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder
or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise,
shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
Section 5.11 Delay or Omission Not Waiver. No delay or omission of
the Trustee or of any Holder of any Securities to exercise any right or
remedy accruing upon any Event of Default shall impair any such right or
remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article V or by
law to the Trustee or to the Holders may be exercised from time to time,
and as often as may be deemed expedient, by the Trustee or by the Holders,
as the case may be.
Section 5.12 Control by Holders. The Holders of a majority in
Principal Amount of the Outstanding Securities shall have the right to
direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or exercising any trust or power conferred
on the Trustee; provided that
(1) such direction shall not be in conflict with any rule of law
or with this Indenture, and
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
Section 5.13 Waiver of Past Defaults. The Holders of not less than
a majority in Principal Amount of the Outstanding Securities may on behalf
of the Holders of all the Securities waive any past default hereunder and
its consequences, except
(1) an Event of Default described in Section 5.1(1) or 5.1(2),
or
(2) a Default in respect of a covenant or provision hereof which
under Article IX cannot be modified or amended without the consent of the
Holder of each Outstanding Security affected, or
(3) a Default under Article XIII.
Upon any such waiver, such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
Section 5.14 Undertaking for Costs. In any suit for the enforcement
of any right or remedy under this Indenture, or in any suit against the
Trustee for any action taken, suffered or omitted by it as Trustee, a
court may require any party litigant in such suit to file an undertaking
to pay the costs of such suit, including reasonable attorneys' fees and
expenses, and may assess costs against any such party litigant, having due
regard to the merits and good faith of the claims or defenses made by such
party litigant; provided, that this Section 5.14 shall not be deemed to
authorize any court to require such an undertaking or to make such an
assessment in any suit instituted by the Trustee and the Company or the
Subsidiary Guarantor or in any suit for the enforcement of the right to
convert any Security in accordance with Article XIII.
Section 5.15 Waiver of Usury, Stay or Extension Laws. Each of the
Company and the Subsidiary Guarantor covenants (to the extent that it may
lawfully do so) that it will not at any time insist upon, or plead, or in
any manner whatsoever claim or take the benefit or advantage of, any
usury, stay or extension law wherever enacted, now or at any time
hereafter in force, which may affect the covenants or the performance of
this Indenture; and the Company and the Subsidiary Guarantor (to the
extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Trustee, but will
suffer and permit the execution of every such power as though no such law
had been enacted.
ARTICLE VI
THE TRUSTEE
Section 6.1 Certain Duties and Responsibilities.
The duties and responsibilities of the Trustee shall be as provided
by the Trust Indenture Act. Notwithstanding the foregoing, 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. Whether or not therein expressly so provided,
every provision of this Indenture relating to the conduct or affecting the
liability of or affording protection to the Trustee shall be subject to
the provisions of this Section.
Section 6.2 Notice of Defaults. Within 90 days after the occurrence
of any default hereunder, the Trustee shall give the Holders, in the
manner provided in Section 1.6, notice of any default hereunder of which
the Trustee shall be aware, unless such default shall have been cured or
waived before the giving of such notice; provided, however, that, except
in the case of a default in any payment on any Security, the Trustee shall
be protected in withholding such notice if and so long as the board of
directors, the executive committee or a trust committee of directors or
any Responsible Officer of the Trustee in good faith determines that the
withholding of such notice is in the interest of the Holders; and
provided, further, that in the case of any default of the character
specified in Section 5.1(3), no such notice to Holders shall be given
until at least 30 days after the occurrence thereof. For the purpose of
this Section, the term "default" means any event which is, or after notice
or lapse of time or both would become, an Event of Default.
Section 6.3 Certain Rights of Trustee. Subject to the provisions of
Section 6.1:
(a) the Trustee may conclusively rely and shall be protected in
acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness or
other paper or document believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall
be sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors may be sufficiently evidenced by a
Board Resolution;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel of its choice and the
advice of such counsel or any opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or
direction of any of the Holders pursuant to this Indenture, unless such
Holders shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which might be incurred by it
in compliance with such request or direction;
(f) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to reasonable examination of the
books, records and premises of the Company, personally or by agent or
attorney;
(g) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder; and
(h) the Trustee shall not be liable for any action taken, suffered,
or omitted to be taken by it in good faith, without negligence or willful
misconduct, and reasonably believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this indenture.
(i) the Trustee shall not be deemed to have notice of any Default
or Event of Default unless a Responsible Officer of the Trustee has actual
knowledge thereof or unless written notice of any event which is in fact
such a default is received by the Trustee at the Corporate Trust Office of
the Trustee, and such notice references the Securities and this Indenture;
and
(j) the rights, privileges, protections, immunities and benefits
given to the Trustee, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Trustee in
each of its capacities hereunder, and to each agent, custodian and other
Person employed to act hereunder.
Section 6.4 Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements
of the Company, and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representations as to the validity or
sufficiency of this Indenture or of the Securities. The Trustee shall not
be accountable for the use or application by the Company of the Securities
or the proceeds thereof.
Section 6.5 May Hold Securities.
The Trustee, any Paying Agent, any Security Registrar or any other
agent of the Company, in its individual or any other capacity, may become
the owner or pledgee of Securities and, subject to Sections 6.8 and 6.13,
may otherwise deal with the Company with the same rights it would have if
it were not Trustee, Paying Agent, Security Registrar, or such other
agent.
Section 6.6 Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall
be under no liability for interest on any money received by it hereunder
except as otherwise agreed in writing with the Company.
Section 6.7 Compensation and Reimbursement.
The Company agrees
(1) to pay to the Trustee from time to time such reasonable
compensation as the Company and the Trustee shall from time to time agree
in writing for all services rendered by it hereunder (which compensation
shall not be limited by any provision of law in regard to the compensation
of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to reimburse
the Trustee upon its request for all reasonable expenses, fees,
disbursements and advances incurred or made by the Trustee in accordance
with any provision of this Indenture (including the reasonable
compensation and the expenses and disbursements of its agents and
counsel), except any such expense, disbursement or advance as may be
attributable to its negligence or bad faith; and
(3) to indemnify, the Trustee and any predecessor Trustee for,
and to hold it harmless against, any loss, damage, claims, liability or
expense, including taxes other than taxes based upon, measured by or
determined by the income of the Trustee, incurred without negligence or
bad faith on its part, arising out of or in connection with the acceptance
or administration of this trust, including the costs and expenses of
defending itself against any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder.
When the Trustee incurs expenses or renders services in connection
with an Event of Default specified in Section 5.1(4) or Section 5.1(5),
the expenses (including the reasonable charges and expenses of its
counsel) and the compensation for the services are intended to constitute
expenses of administration under any applicable Bankruptcy Law.
The provisions of this Section shall survive the termination of
this Indenture.
Section 6.8 Disqualification: Conflicting Interests.
If the Trustee has or shall acquire a conflicting interest within
the meaning of the Trust Indenture Act, the Trustee shall either eliminate
such interest or resign, to the extent and in the manner provided by, and
subject to the provisions of, the Trust Indenture Act and this Indenture.
Section 6.9 Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a
Person that is eligible pursuant to the Trust Indenture Act to act as such
and has a combined capital and surplus of at least $50,000,000 and has its
Corporate Trust Office in New York, New York. If such Person publishes
reports of condition at least annually, pursuant to law or to the
requirements of said supervising or examining authority, then for the
purposes of this Section, the combined capital and surplus of such Person
shall be deemed to be its combined capital and surplus as set forth in its
most recent report of condition so published. If at any time the Trustee
shall cease to be eligible in accordance with the provisions of this
Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
Section 6.10 Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of
a successor Trustee pursuant to this Article shall become effective until
the acceptance of appointment by the successor Trustee under Section 6.11.
(b) The Trustee may resign at any time by giving written notice
thereof to the Company. If an instrument of acceptance by a successor
Trustee shall not have been delivered to the Trustee within 30 days after
the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a
successor Trustee.
(c) The Trustee may be removed at any time by Act of the Holders of
a majority in Principal Amount of the Outstanding Securities, delivered to
the Trustee and to the Company. If an instrument of acceptance by a
successor Trustee shall not have been delivered to the Trustee within 30
days after the giving of such notice of resignation, the resigning Trustee
may petition any court of competent jurisdiction for the appointment of a
successor Trustee at the expense of the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 6.8 after
written request therefor by the Company or by any Holder who has been a
bona fide Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 6.9 and
shall fail to resign after written request therefor by the Company or by
any such Holder, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, the Company by Board Resolution may remove the
Trustee, or (ii) subject to Section 5.14, any Holder who has been a bona
fide Holder of a Security for at least six months may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any
cause, the Company, by a Board Resolution, shall promptly appoint a
successor Trustee. If, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor Trustee shall
be appointed by Act of the Holders of a Principal Amount of the
Outstanding Securities delivered to the Company and the retiring Trustee,
the successor Trustee so appointed shall, forthwith upon its acceptance of
such appointment, become the successor Trustee and supersede the successor
Trustee appointed by the Company. If no successor Trustee shall have been
so appointed by the Company or the Holders and accepted appointment in the
manner hereinafter provided, any Holder who has been a bona fide Holder of
a Security for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction
for the appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee to all
Holders in the manner provided in Section 1.6. Each notice shall include
the name of the successor Trustee and the address of its Corporate Trust
Office.
Section 6.11 Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or
removal of the retiring Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall become vested
with all the rights, powers, trusts and duties of the retiring Trustee;
provided, that on request of the Company or the successor Trustee, such
retiring Trustee shall, upon payment of its charges, execute and deliver
an instrument transferring to such successor Trustee all the rights,
powers and trusts of the retiring Trustee and shall duly assign, transfer
and deliver to such successor Trustee all property and money held by such
retiring Trustee hereunder. Upon request of any such successor Trustee,
the Company shall execute any and all instruments required to more fully
and certainly vest in and confirm to such successor Trustee all such
rights, powers and trusts.
No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and
eligible under this Article.
Section 6.12 Merger, Conversion, Consolidation or Succession to
Business.
Any corporation into which the Trustee may be merged or converted
or with which it may be consolidated, or any corporation resulting from
any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to all or substantially all the
corporate trust business of the Trustee, shall be the successor of the
Trustee hereunder, provided such corporation shall be otherwise qualified
and eligible under this Article, without the execution or filing of any
paper or any further act on the part of any of the parties hereto. In case
any Securities shall have been authenticated, but not delivered, by the
Trustee then in office, any successor by merger, conversion or
consolidation to such authenticating Trustee may adopt such authentication
and deliver the Securities so authenticated with the same effect as if
such successor Trustee had itself authenticated such Securities.
Section 6.13 Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the
Company (or any other obligor upon the Securities), the Trustee shall be
subject to the provisions of the Trust Indenture Act regarding the
collection of claims against the Company (or any such other obligor).
ARTICLE VII
Holders' Lists and Reports by Trustee and Company
Section 7.1 Company to Furnish Trustee Names and Addresses of
Holders.
The Company will furnish or cause to be furnished to the Trustee
(a) semiannually, not later than five Business Days immediately
preceding each Interest Payment Date in each year, a list, in such form as
the Trustee may reasonably require, of the names and addresses of the
Holders as of the immediately preceding Regular Record Date, and
(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such request, a
list of similar form and content as of a date not more than 15 days prior
to the time such list is furnished;
excluding from any such list names and addresses received by the Trustee
in its capacity as Security Registrar.
Section 7.2 Preservation of Information; Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders contained in
the most recent list furnished to the Trustee as provided in Section 7.1
and the names and addresses of Holders received by the Trustee in its
capacity as Security Registrar. The Trustee may destroy any list furnished
to it as provided in Section 7.1 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Securities, and
the corresponding rights and duties of the Trustee, shall be as provided
by the Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the
Trustee nor any agent of either of them shall be held accountable by
reason of any disclosure of information as to names and addresses of
Holders made pursuant to the Trust Indenture Act.
Section 7.3 Reports by Trustee.
(a) Within 60 days after May 15 of each year, commencing May 15,
2000, the Trustee shall transmit by mail to Holders such reports
concerning the Trustee and its actions under this Indenture as may be
required pursuant to the Trust Indenture Act in the manner provided
pursuant thereto.
(b) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange
upon which the Securities are listed, with the Commission and with the
Company. The Company will notify the Trustee when the Securities are listed
on any stock exchange and of any delisting thereof.
(c) The Trustee shall cause to be duly prepared and delivered to
each of the Holders of Securities, any annual United States federal income
tax information required by the Internal Revenue Code of 1986, as amended
(the "Code"), containing such information with regard to the Securities
held by each Holder as is required the Code and the Treasury Regulations
thereunder, including, without limitation, Form 1099-OID or any successor
form.
Section 7.4 Reports by Company.
The Company shall file with the Trustee and the Commission, and
transmit to Holders, such information, documents and other reports, and
such summaries thereof, as may be required pursuant to the Trust Indenture
Act at the times and in the manner provided pursuant to such Act;
provided, that any such information, documents or reports required to be
filed with the Commission pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 shall be filed with the Trustee within 15
days after the same is so required to be filed with the Commission.
Delivery of such reports, information and documents to the Trustee is for
informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers, Certificates). The Company shall
also provide to the Trustee on a timely basis such information as the
Trustee requires to enable the Trustee to prepare and file any form
required to be submitted by the Company with the Internal Revenue Service
and the Holders of the Securities relating to original issue discount,
including, without limitation, Form 1099-OID or any successor form.
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 8.1 Company and Subsidiary Guarantor May Consolidate, Etc.,
Only on Certain Terms. Neither the Company nor the Subsidiary Guarantor
shall consolidate with or merge into any other Person or convey, transfer
or lease its properties and assets substantially as an entirety to any
Person, and neither the Company or the Subsidiary Guarantor shall permit
any Person to consolidate with or merge into the Company or the Subsidiary
Guarantor or convey, transfer or lease its properties and assets
substantially as an entirety to the Company or the Subsidiary Guarantor,
unless:
(1) in case the Company or the Subsidiary Guarantor shall
consolidate with or merge into another Person or convey, transfer or lease
its properties and assets substantially as an entirety to any Person, the
Person formed by such consolidation or into which the Company or the
Subsidiary Guarantor is merged or the Person that acquires by conveyance
or transfer, or that leases, the properties and assets of the Company or
the Subsidiary Guarantor substantially as an entirety shall be a Person
(other than an individual) organized and validly existing under the laws
of the United States of America, any state thereof or the District of
Columbia and shall expressly assume, by an indenture supplemental hereto,
executed and delivered to the Trustee, in form reasonably satisfactory to
the Trustee, the due and punctual payment of the principal of and any
premium and interest on all the Securities and the performance or
observance of every covenant of this Indenture on the part of the Company
or the Subsidiary Guarantor to be performed or observed and shall have
provided for conversion rights in accordance with Section 13.7;
(2) immediately after giving effect to such transaction, no
Event of Default (as defined in Article V), and no event that, after
notice or lapse of time, or both, would become an Event of Default, shall
have happened and be continuing; and
(3) the Company or the Subsidiary Guarantor, as the case may be,
has delivered to the Trustee an Officer's Certificate and an Opinion of
Counsel, each stating that such consolidation, merger, conveyance,
transfer or lease and, if a supplemental indenture is required in
connection with such transaction, such supplemental indenture comply with
this Article and that all conditions precedent herein provided for
relating to such transaction have been complied with and if a supplemental
indenture is required that such supplemental indenture constitutes the
legal, valid and binding obligation of the Company or the Subsidiary
Guarantor, as the case may be, in accordance with its terms.
Section 8.2 Successor Substituted. Upon any consolidation of the
Company with, or merger of the Company or the Subsidiary Guarantor into,
any other Person or any conveyance, transfer or lease of the properties
and assets of the Company substantially as an entirety in accordance with
Section 8.1, the successor Person formed by such consolidation or into
which the Company or the Subsidiary Guarantor is merged or to which such
conveyance, transfer or lease is made shall succeed to, and be substituted
for, and may exercise every right and power of, the Company or the
Subsidiary Guarantor under this Indenture with the same effect as if such
successor Person had been named as the Company or the Subsidiary Guarantor
herein, and thereafter, except in the case of a lease, the predecessor
Person shall be relieved of all obligations and covenants under this
Indenture and the Securities.
ARTICLE IX
AMENDMENTS
Section 9.1 Without Consent of Holders. The Company, the Subsidiary
Guarantor and the Trustee may amend this Indenture or the Securities
without the consent of any Holder of Securities:
(1) to cure any ambiguity, omission, defect or inconsistency or
to make any other provision with respect to matters or questions arising
under the Indenture or the Securities; provided, however, that such
amendment does not materially adversely affect the rights of any Holder;
(2) to comply with Article VIII or Section 13.7;
(3) to provide for uncertificated Securities in addition to or
in place of certificated Securities so long as such uncertificated
Securities are in registered form for purposes of the Internal Revenue
Code of 1986, as amended;
(4) to make any change that does not adversely affect the rights
of any Holder;
(5) to make any change to comply with the TIA or any amendment
of the TIA, or any requirement by the Commission in connection with the
qualification of this Indenture under the TIA or any amendment thereof; or
(6) to add to the covenants or obligations of the Company or the
Subsidiary Guarantor hereunder, for the benefit of the Holders, or to
surrender any right, power or option herein conferred upon the Company or
the Subsidiary Guarantor.
Section 9.2 With Consent of Holders. With the written consent of the
Holders of at least a majority in aggregate Principal Amount of the
Securities at the time Outstanding, the Company, the Subsidiary Guarantor
and the Trustee may amend this Indenture or the Securities. However,
without the consent of each Holder affected, an amendment or supplement to
this Indenture or the Securities may not:
(1) reduce the Principal Amount or Restated Principal Amount of
Securities whose Holders must consent to an amendment;
(2) make any change to the rate of accrual in connection with
Original Issue Discount, reduce the rate of cash interest referred to in
paragraph 1 of the Securities, reduce the rate of interest referred to in
Section 15.1 upon the occurrence of a Tax Event or extend the time for
payment of accrued Original Issue Discount or cash interest on any
Security;
(3) reduce the Principal Amount or Restated Principal Amount or
the Issue Price of or extend the Stated Maturity of any Security;
(4) reduce the Redemption Price, Purchase Price or Change in
Control Purchase Price of any Security or extend the date on which the
Purchase Price or Change in Control Purchase Price of any Security is
payable;
(5) make any Security payable in money or securities other than
that stated in the Security;
(6) make any change in Article XII that adversely affects the
rights of any Holder;
(7) make any change in Section 5.13 or this Section 9.2, except
to increase any percentage referred to therein, or make any change in
Section 5.8;
(8) make any change that adversely affects the right to convert
any Security;
(9) make any change that adversely affects the right to require
the Company to purchase the Securities in accordance with the terms
thereof and this Indenture (including the right to receive cash if the
Company has elected to pay cash upon such purchase);
(10) make any change to the provisions of this Indenture
relating to the purchase of Securities at the option of the Holder
pursuant to Section 14.1 or 14.2 which change would result in a violation
of applicable federal or state securities laws (including positions of the
Commission under applicable no-action letters), whether as a result of the
exercise or performance of any rights or obligations under such provisions
or otherwise;
(11) impair the right to institute suit for the enforcement of
any payment with respect to, or conversion of, the Securities.
(12) release the Security Guarantee except in compliance with
the terms of this Indenture.
It shall not be necessary for the consent of the Holders under this
Section 9.2 to approve the particular form of any proposed amendment, but
it shall be sufficient if such consent approves the substance thereof.
An amendment under this Section 9.2 or Section 9.1 may not make any
change that adversely affects the rights under Article XII of any holder
of Senior Indebtedness or Guarantor Senior Indebtedness then outstanding
unless the requisite holders of such Senior Indebtedness or Guarantor
Senior Indebtedness consent to such change pursuant to the terms of such
Senior Indebtedness or Guarantor Senior Indebtedness.
After an amendment under this Section 9.2 becomes effective, the
Company shall mail to each Holder a notice briefly describing the
amendment.
Section 9.3 Compliance with Trust Indenture Act. Every supplemental
indenture executed pursuant to this Article IX shall comply with the TIA
as then in effect.
Section 9.4 Revocation and Effect of Consents, Waivers and Actions.
Until an amendment or waiver becomes effective, a consent to it or any
other action by a Holder of a Security hereunder is a continuing consent
by the Holder and every subsequent Holder of that Security or portion of
the Security that evidences the same obligation as the consenting Holder's
Security, even if notation of the consent, waiver or action is not made on
the Security. However, any such Holder or subsequent Holder may revoke the
consent, waiver or action as to such Holder's Security or portion of the
Security if the Trustee receives the notice of revocation before the date
the amendment, waiver or action becomes effective. After an amendment,
waiver or action becomes effective, it shall bind every Holder, except as
provided in Section 9.2.
Section 9.5 Notation on or Exchange of Securities. Securities
authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article IX may, and shall if required by the
Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so
determine, new Securities so modified as to conform, in the opinion of the
Trustee and the Company, to any such supplemental indenture may be
prepared and executed by the Company and authenticated and delivered by
the Trustee in exchange for Outstanding Securities.
Section 9.6 Trustee to Sign Supplemental Indentures. The Trustee
shall sign any supplemental indenture authorized pursuant to this Article
IX if the amendment does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. If it does, the Trustee may, but
need not, sign it. In signing such amendment the Trustee shall be entitled
to receive, and (subject to the provisions of Section 6.3) shall be fully
protected in relying upon, an Officers' Certificate and an Opinion of
Counsel stating that such amendment is authorized or permitted by this
Indenture.
Section 9.7 Effect of Supplemental Indentures. Upon the execution of
any supplemental indenture under this Article IX, this Indenture shall be
modified in accordance therewith, and such supplemental indenture shall
form a part of this Indenture for all purposes; and every Holder of
Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
ARTICLE X
COVENANTS
Section 10.1 Payment of Securities. The Company and the Subsidiary
Guarantor shall promptly make all payments in respect of the Securities on
the dates and in the manner provided in the Securities or pursuant to this
Indenture, including, without limitation, Article XII herein. Principal
Amount, Restated Principal Amount, Issue Price, accrued Original Issue
Discount, Redemption Price, Put Price, Change in Control Purchase Price
and cash interest and Liquidated Damages, if any, shall be considered paid
on the applicable date due if on such date the Trustee or the Paying Agent
holds, in accordance with this Indenture, cash or securities, if expressly
permitted hereunder, sufficient to pay all such amounts then due.
The Company and the Subsidiary Guarantor shall, to the extent
permitted by law, pay cash interest on overdue amounts at the per annum
rate of interest set forth in paragraph 1 of the Reverse of Security,
compounded semiannually, which interest on overdue amounts (to the extent
payment of such interest shall be legally enforceable) shall accrue from
the date such overdue amounts were originally due and payable.
Section 10.2 Maintenance of Office or Agency. The Company will
maintain in the Borough of Manhattan, The City of New York an office or
agency where Securities may be presented or surrendered for payment, where
Securities may be surrendered for registration of transfer or exchange,
where Securities may be surrendered for conversion and where notices and
demands to or upon the Company in respect of the Securities and this
Indenture may be served. The office or agency in the Borough of Manhattan,
the City of New York, shall initially be at the Corporate Trust Office of
the Trustee, and shall be the office or agency for all of the aforesaid
purposes unless the Company shall appoint some other office or agency for
such purposes and shall give prompt written notice to the Trustee of the
location, and any change in the location, of such other office or agency.
If at any time the Company shall fail to maintain any such required office
or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served
at the Corporate Trust Office of the Trustee, and the Company hereby
appoints the Trustee as its agent to receive all such presentations,
surrenders, notices and demands.
The Company may also from time to time designate one or more other
offices or agencies (in or outside the Borough of Manhattan, The City of
New York) 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.
Section 10.3 Money for Security Payments To Be Held in Trust. If
the Company or the Subsidiary Guarantor shall at any time act as its own
Paying Agent, it will, on or before each due date of the Principal Amount,
Restated Principal Amount, Issue Price, accrued Original Issue Discount,
Redemption Price, Put Price, Change in Control Purchase Price and cash
interest and Liquidated Damages, if any, on any of the Securities,
segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the Principal Amount, Restated Principal
Amount, Issue Price, accrued Original Issue Discount, Redemption Price,
Put Price, Change in Control Purchase Price and cash interest and
Liquidated Damages, if any, so becoming due until such sums shall be paid
to such Persons or otherwise disposed of as herein provided and will
promptly notify the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents, it will,
prior to each due date of the Principal Amount, Restated Principal Amount,
Issue Price, accrued Original Issue Discount, Redemption Price, Put Price,
Change in Control Purchase Price and cash interest and Liquidated Damages,
if any, on any Securities, deposit with a Paying Agent a sum sufficient to
pay such amount, such sum to be held in trust for the benefit of the
Persons entitled to such Principal Amount, Restated Principal Amount,
Issue Price, accrued Original Issue Discount, Redemption Price, Put Price,
Change in Control Purchase Price and cash interest and Liquidated Damages,
if any, and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of its action or failure so to act.
The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying
Agent shall agree with the Trustee, subject to the provisions of this
Section 10.3, that such Paying Agent will
(1) hold all sums held by it for the payment of the principal
of, premium, if any, or interest on Securities in trust for the benefit of
the Persons entitled thereto until such sums shall be paid to such Persons
or otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company or the
Subsidiary Guarantor (or any other obligor upon the Securities) in the
making of any payment of principal, premium, if any, or interest; and
(3) at any time during the continuance of any such default, upon
the written request of the Trustee, forthwith pay to the Trustee all sums
so held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose,
pay, or by Company Order direct any Paying Agent to pay, to the Trustee
all sums held in trust by the Company or such Paying Agent, such sums to
be held by the Trustee upon the same trusts as those upon which such sums
were held by the Company or such Paying Agent; and, upon such payment by
any Paying Agent to the Trustee, such Paying Agent shall be released from
all further liability with respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of Principal Amount, Issue
Price, accrued Original Issue Discount Redemption Price, Put Price, Change
in Control Purchase Price or cash interest on the Securities and remaining
unclaimed for two years after such Principal Amount, Issue Price, accrued
Original Issue Discount Redemption Price, Purchase Price, Change in
Control Purchase Price or cash interest has become due and payable shall
be paid to the Company on Company Request, or (if then held by the
Company) shall be discharged from such trust; and the Holder of such
Security shall thereafter, as an unsecured general creditor, look only to
the Company for payment thereof, and all liability of the Trustee or such
Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease; provided, however, that
the Trustee or such Paying Agent, before being required to make any such
repayment, may at the expense of the Company cause to be published once,
in a newspaper published in the English language, customarily published on
each Business Day and of general circulation in the Borough of Manhattan,
The City of New York, notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days from
the date of such publication, any unclaimed balance of such money then
remaining will be repaid to the Company.
Section 10.4 Statement by Officers as to Default. The Company will
deliver to the Trustee, within 120 days after the end of each fiscal year
of the Company ending after the date hereof, an Officers' Certificate,
stating whether or not to the best knowledge of the signers thereof the
Company is in default in the performance and observance of any of the
terms, provisions and conditions of this Indenture (without regard to any
period of grace or requirement of notice provided hereunder) and, if the
Company shall be in default, specifying all such defaults and the nature
and status thereof of which they may have knowledge. The Company shall
file with the Trustee written notice of the occurrence of any Default or
Event of Default within five Business Days of its becoming aware of such
Default or Event of Default.
Section 10.5 Existence. Subject to Article VIII, each of the
Company and the Subsidiary Guarantor will do or cause to be done all
things necessary to preserve and keep in full force and effect its
existence, rights (charter and statutory) and franchises; provided,
however, that the Company or the Subsidiary Guarantor shall not be
required to preserve any such right or franchise if the Board of Directors
of the Company or the Subsidiary Guarantor, as applicable, shall determine
that the preservation thereof is no longer desirable in the conduct of the
business of the Company or the Subsidiary Guarantor and that the loss
thereof is not disadvantageous in any material respect to the Holders.
Section 10.6 Calculation of Original Issue Discount. The Company
shall file with the Trustee promptly following the end of each calendar
year a written notice specifying the amount of Original Issue Discount
(including daily rates and accrual periods) accrued on Outstanding
Securities as of the end of such year.
Section 10.7 Delivery of Certain Information. At any time when the
Company is not subject to Section 13 or 15(d) of the Exchange Act, upon
the request of a Holder or the holder of shares of Common Stock issued
upon conversion thereof, the Company will promptly furnish or cause to be
furnished Rule 144A Information (as defined below) to such Holder or such
holder of shares of Common Stock issued upon conversion of Securities, or
to a prospective purchaser of any such security designated by any such
Holder or holder, as the case may be, to the extent required to permit
compliance by such Holder or holder with Rule 144A under the Securities
Act in connection with the resale of any such security. "Rule 144A
Information" shall be such information as is specified pursuant to Rule
144A(d)(4) under the Securities Act.
ARTICLE XI
REDEMPTION OF SECURITIES
Section 11.1 Right to Redeem; Notices to Trustee. On or after June
18, 2004, the Company, at its option, may redeem the Securities as a whole
at any time, or from time to time in part, for cash in accordance with the
provisions set forth in paragraphs 6 and 7 of the Securities. If the
Company elects to redeem Securities pursuant to paragraph 6 of the
Securities, it shall notify the Trustee in writing of the Redemption Date,
the Principal Amount of Securities to be redeemed and the Redemption
Price.
The Company shall give the notice to the Trustee provided for in
this Section 11.1 at least 45 days but not more than 60 days before the
Redemption Date (unless a shorter notice shall be satisfactory to the
Trustee). If fewer than all the Securities are to be redeemed, the record
date relating to such redemption shall be selected by the Company and
given to the Trustee.
Section 11.2 Selection of Securities to Be Redeemed. If less than
all the Securities are to be redeemed, the Trustee shall select the
Securities to be redeemed by lot, pro rata or by any other method the
Trustee considers fair and appropriate. The Trustee shall make the
selection at least 30 but not more than 60 days before the Redemption Date
from Outstanding Securities not previously called for redemption.
Securities and portions of them the Trustee selects shall be in Principal
Amounts of $1,000 or an integral multiple of $1,000. Provisions of this
Indenture that apply to Securities called for redemption also apply to
portions of Securities called for redemption. The Trustee shall notify the
Company promptly of the Securities or portions of Securities to be
redeemed.
If any Security selected for partial redemption is thereafter
surrendered for conversion in part before termination of the conversion
right with respect to the portion of the Security so selected, the
converted portion of such Security shall be deemed (so far as may be),
solely for purposes of determining the aggregate Principal Amount of
Securities to be redeemed by the Company, to be the portion selected for
redemption. Securities that have been converted during a selection of
Securities to be redeemed may be treated by the Trustee as Outstanding for
the purpose of such selection. Nothing in this Section 11.2 shall affect
the right of any Holder to convert any Security pursuant to Article XIII
before the termination of the conversion right with respect thereto.
Section 11.3 Notice of Redemption. At least 30 days but not more
than 60 days before a Redemption Date, the Trustee, in the name and at the
expense of the Company, shall cause notice of redemption to be mailed,
first-class postage prepaid, to each Holder of Securities to be redeemed
at such Holder's address as it appears on the list of Holders maintained
pursuant to Section 7.1. At the Company's written request, the Trustee
shall, in the name and at the expense of the Company, cause a similar
notice to be published at least once in a newspaper of national
circulation designated by the Company.
The notice shall identify the Securities to be redeemed and shall
state:
(a) the Redemption Date (upon which the Redemption Price shall
be paid);
(b) the Redemption Price;
(c) the Conversion Rate;
(d) the name and address of the Paying Agent and Conversion Agent
and of the office or agency referred to in Section 10.2;
(e) that Securities called for redemption may be converted at any
time before the close of business on the Redemption Date;
(f) that Holders who want to convert Securities must satisfy the
requirements set forth in paragraph 9 of the Securities;
(g) that Securities called for redemption must be surrendered to
the Paying Agent or at the office or agency referred to in Section 10.2 to
collect the Redemption Price;
(h) the CUSIP number of the Securities called for redemption;
(i) if fewer than all the Outstanding Securities are to be
redeemed, the certificate numbers and Principal Amounts of the particular
Securities to be redeemed; and
(j) that, unless the Company defaults in payment of the Redemption
Price, Original Issue Discount and cash interest on Securities called for
redemption will cease to accrue on and after the Redemption Date.
Section 11.4 Effect of Notice of Redemption. Once notice of
redemption is given, Securities called for redemption become due and
payable on the Redemption Date stated in the notice and at the Redemption
Price therefor except for Securities that are converted in accordance with
the terms of this Indenture and after such date (unless the Company shall
default in the payment of the Redemption Price), such Securities shall
cease to bear interest or accrue Original Issue Discount. Upon the later
of the Redemption Date and the date such Securities are surrendered to the
Paying Agent or at the office or agency referred to in Section 10.2, such
Securities called for redemption shall be paid at the Redemption Price
therefor.
Section 11.5 Deposit of Redemption Price. Prior to 11:00 a.m., New
York City time on the Redemption Date, the Company shall deposit with the
Paying Agent (or if the Company or a Subsidiary or an Affiliate of either
of them is the Paying Agent, shall segregate and hold in trust) money
sufficient to pay the Redemption Price of, and accrued and unpaid cash
interest on, all Securities to be redeemed on that date other than
Securities or portions of Securities called for redemption which prior
thereto have been delivered by the Company to the Trustee for
cancellation. The Paying Agent shall as promptly as practicable return to
the Company any money, with interest, if any, thereon not required for
that purpose because of conversion of Securities pursuant to Article XIII.
If such money is then held by the Company or a Subsidiary or an Affiliate
of the Company in trust and is not required for such purpose it shall be
discharged from such trust.
Section 11.6 Securities Redeemed in Part. Upon surrender of a
Security that is redeemed in part, the Company shall execute, and the
Trustee shall authenticate and deliver to the Holder, a new Security of
the same tenor in an authorized denomination equal in Principal Amount to
the unredeemed portion of the Security surrendered.
Section 11.7 Conversion Arrangement on Call for Redemption. In
connection with any redemption of Securities, the Company may arrange, in
lieu of redemption, for the purchase and conversion of any Securities
called for redemption by an agreement with one or more investment bankers
or other purchasers to purchase all or a portion of such Securities by
paying to the Trustee in trust for the Holders whose Securities are to be
so purchased, on or before the close of business on the Redemption Date,
an amount that, together with any amounts deposited with the Trustee by
the Company for redemption of such Securities, is not less than the
Redemption Price, together with interest, if any, accrued to the
Redemption Date, of such Securities. Notwithstanding anything to the
contrary contained in this Article XI, the obligation of the Company to
pay the Redemption Price of such Securities, including all accrued
interest, if any, shall be deemed to be satisfied and discharged to the
extent such amount is so paid by such purchasers, but no such agreement
shall relieve the Company of its obligation to pay such Redemption Price
and such accrued interest, if any. If such an agreement is entered into,
any Securities not duly surrendered for conversion by the Holders thereof
may, at the option of the Company, be deemed, to the fullest extent
permitted by law, acquired by such purchasers from such Holders and
(notwithstanding anything to the contrary contained in Article XIII)
surrendered by such purchasers for conversion, all as of immediately prior
to the close of business on the Redemption Date, subject to payment of the
above amount as aforesaid. The Trustee shall hold and pay to the Holders
whose Securities are selected for redemption any such amount paid to it
for purchase and conversion in the same manner as it would moneys
deposited with it by the Company for the redemption of Securities. Without
the Trustee's prior written consent, no arrangement between the Company
and such purchasers for the purchase and conversion of any Securities
shall increase or otherwise affect any of the powers, duties,
responsibilities or obligations of the Trustee as set forth in this
Indenture, and the Company agrees to indemnify the Trustee from, and hold
it harmless against, any loss, liability or expense arising out of or in
connection with any such arrangement for the purchase and conversion of
any Securities between the Company and such purchasers, including the
costs and expenses incurred by the Trustee in the defense of any claim or
liability arising out of or in connection with the exercise or performance
of any of its powers, duties, responsibilities or obligations under this
Indenture except to the extent arising from its willful misconduct or
negligence.
ARTICLE XII
SUBORDINATION OF SECURITIES
Section 12.1 Securities Subordinate to Senior Indebtedness. The
Company covenants and agrees, and each Holder of a Security, by his
acceptance thereof, likewise covenants and agrees, that, to the extent and
in the manner hereinafter set forth in this Article XII, the indebtedness
represented by the Securities and the payment of the Principal Amount,
Restated Principal Amount, Issue Price, accrued Original Issue Discount,
Redemption Price, cash in respect of Put Price, Liquidated Damages, Change
in Control Purchase Price, cash interest and all other amounts and claims
owing on each and all of the Securities and all obligations of the Company
under this Indenture are hereby expressly made subordinate and junior in
right of payment to the prior payment in full in cash or other payment
satisfactory to the holders of Senior Indebtedness of all Senior
Indebtedness and that said subordination is for the benefit of the holders
of Senior Indebtedness and they and or each of them severally may enforce
such subordination.
Section 12.2 Payment Over of Proceeds upon Dissolution, Etc. In the
event of (a) any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, relative to the Company or to its
creditors, as such, or to its assets, or (b) any liquidation, dissolution
or other winding up of the Company, whether voluntary or involuntary and
whether or not involving insolvency or bankruptcy, or (c) any assignment
for the benefit of creditors or any other marshaling of assets and
liabilities of the Company, then and in any such event the holders of
Senior Indebtedness shall be entitled to receive payment in full in cash
or other payment satisfactory to the holders of Senior Indebtedness of all
amounts due or to become due on or in respect of all Senior Indebtedness,
or provision shall be made for such payment in cash or other payment
satisfactory to the holders of Senior Indebtedness, before the Holders of
the Securities are entitled to receive any payment on account of Principal
Amount, Restated Principal Amount, Issue Price, accrued Original Issue
Discount, Redemption Price, cash in respect of Put Price, Liquidated
Damages, Change in Control Purchase Price and cash interest on the
Securities, and to that end the holders of Senior Indebtedness or their
representative or representatives or the trustee or trustees under any
indenture under which any instruments evidencing any of such Senior
Indebtedness may have been issued, shall be entitled to receive from the
liquidating trustee or agent or other person making such payment or
distribution, whether a trustee in bankruptcy, a receiver or liquidating
trustee or otherwise, ratably according to the aggregate amounts remaining
unpaid on account of the Senior Indebtedness held or represented by each,
to the extent necessary to make payment in full of all Senior Indebtedness
remaining unpaid, for application to the payment thereof, any payment or
distribution of any kind or character, whether in cash, property or
securities, which may be payable or deliverable in respect of the
Securities in any such case, proceeding, dissolution, liquidation or other
winding up or event.
For purposes of this Article XII only, the words "cash, property or
securities" shall not be deemed to include shares of capital stock of the
Company as reorganized or readjusted, or securities of the Company or any
other corporation provided for by a plan of reorganization or readjustment
which in either case are subordinated in right of payment to all Senior
Indebtedness which may at the time be outstanding to substantially the
same extent as, or to a greater extent than, the Securities are so
subordinated as provided in this Article XII. The consolidation of the
Company with, or the merger of the Company into, another Person or the
liquidation or dissolution of the Company following the conveyance or
transfer of its properties and assets substantially as an entirety to
another Person upon the terms and conditions set forth in Article VIII
shall not be deemed a dissolution, winding up, liquidation,
reorganization, assignment for the benefit of creditors or marshaling of
assets and liabilities of the Company for the purposes of this Section
12.2 if the Person formed by such consolidation or into which the Company
is merged or which acquires by conveyance or transfer such properties and
assets substantially as an entirety, as the case may be, shall, as a part
of such consolidation, merger, conveyance or transfer, comply with the
conditions set forth in Article VIII.
Section 12.3 No Payment When Senior Indebtedness in Default.
(a) The Company may not make any payment of the Principal Amount,
Restated Principal Amount, Issue Price, accrued Original Issue Discount,
Redemption Price, Change in Control Purchase Price, Liquidated Damages or
cash interest in respect of the Securities nor may the Company pay cash
with respect to the Put Price or acquire any Securities for cash or
property (except as otherwise provided in Article XI and other than for
Common Stock of the Company) if (a) a payment default on any Senior
Indebtedness has occurred and is continuing beyond any applicable grace
period with respect thereto; or (b) a default (other than a default
referred to in the preceding clause (a)) on any Senior Indebtedness occurs
and is continuing that permits holders of such Senior Indebtedness to
accelerate the Stated Maturity thereof and the default is the subject of
judicial proceedings or the Company receives a notice of default thereof
from any person who may give such notice pursuant to the instrument
evidencing or document governing such Senior Indebtedness. If the Company
receives any such notice (except for a notice received relating solely to
a default referred to in clause (a) above), then a similar notice received
within nine months thereafter relating to the same default on the same
issue of Senior Indebtedness shall not be effective for purposes of this
Section 12.3.
The Company may resume payment on the Securities and may acquire
Securities if and when (i) the default referred to in clauses (a) or (b)
of the preceding paragraph above is cured or waived in writing or ceases
to exist; or (ii) in the case of a default referred to in clause (b) of
the preceding paragraph, 179 or more days pass after the receipt by the
Company of the notice described in clause (b) of the preceding paragraph;
and this Article XII otherwise permits the payment or acquisition at that
time.
Nothing contained in this Article XII or elsewhere in this
Indenture or in any of the Securities shall prevent the conversion by a
Holder of any Securities into Common Stock in accordance with the
provisions for conversion of such Securities set forth in this Indenture,
including the payment of cash in lieu of fractional shares of Common Stock
in accordance with Article XIII, or in any of such Securities in the event
of an occurrence of the events described in this Section 12.3.
(b) In the event that any Securities are declared due and payable
before their Stated Maturity pursuant to Section 5.2, then and in such
event the Company shall promptly notify holders of Senior Indebtedness of
such acceleration. The Company may not pay the Securities until the
earlier of (i) the passage of 120 or more days have passed after such
acceleration occurs or (ii) the payment in full in cash or other payment
satisfactory to the holders of Senior Indebtedness of all Senior
Indebtedness, and may thereafter pay the Securities if this Article XII
permits the payment at that time.
In the event that, notwithstanding the foregoing provisions, any
payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities (including, without limitation, by
way of setoff or otherwise), prohibited by the foregoing, shall be
received by the Trustee or the Holders of the Securities before all Senior
Indebtedness of the Company is paid in full in cash or other payment
satisfactory to the holders of such Senior Indebtedness of the Company, or
provision is made for such payment thereof in accordance with its terms in
cash or other payment satisfactory to the holders of such Senior
Indebtedness of the Company, such payment or distribution shall be held in
trust for the benefit of and shall be paid over or delivered to the
holders of Senior Indebtedness of the Company or their representative or
representatives, or to the trustee or trustees under any indenture
pursuant to which any instruments evidencing any Senior Indebtedness of
the Company may have been issued, as their respective interests may appear
for application to the payment of all Senior Indebtedness of the Company
remaining unpaid to the extent necessary to pay all Senior Indebtedness of
the Company in full in cash or other payment satisfactory to the holders
of such Senior Indebtedness of the Company, after giving effect to any
concurrent payment or distribution, or provision therefor, to or for the
holders of such Senior Indebtedness of the Company.
The provisions of this Section 12.3 shall not apply to any payment
with respect to which Section 12.2 would be applicable.
Section 12.4 Payment Permitted If No Default. Nothing contained in
this Article XII or elsewhere in this Indenture or in any of the
Securities shall prevent (a) the Company, at any time except during the
pendency of any case, proceeding, dissolution, liquidation or other
winding up, assignment for the benefit of creditors or other marshalling
of assets and liabilities of the Company referred to in Section 12.2 or
under the conditions described in Section 12.3, from making payments at
any time of Principal Amount, Restated Principal Amount, Issue Price,
accrued Original Issue Discount, Put Price, Redemption Price, Liquidated
Damages, Change in Control Purchase Price or cash interest, as the case
may be, on the Securities, or (b) the application by the Trustee of any
money deposited with it hereunder to the payment of or on account of the
Principal Amount, Restated Principal Amount, Issue Price, accrued Original
Issue Discount, Redemption Price, Put Price, Liquidated Damages, Change in
Control Purchase Price or cash interest, as the case may be, on the
Securities or the retention of such payment by the Holders, if, at the
time of such application by the Trustee, it did not have knowledge that
such payment would have been prohibited by the provisions of this Article
XII.
Section 12.5 Subrogation to Rights of Holders of Senior
Indebtedness. Subject to the payment in full of all Senior Indebtedness,
and until the Securities are paid in full, the Holders of the Securities
shall be subrogated (equally and ratably with the holders of all
indebtedness of the Company which by its express terms is subordinated to
indebtedness of the Company to substantially the same extent as the
Securities are subordinated and is entitled to like rights of subrogation)
to the rights of the holders of such Senior Indebtedness to receive
payments and distributions of cash, property and securities applicable to
the Senior Indebtedness to the extent that payments and distributions
otherwise payable to Holders of Securities have been applied to the
payment of Senior Indebtedness as provided by this Article XII. For
purposes of such subrogation, no payments or distributions to the holders
of the Senior Indebtedness of any cash, property or securities to which
the Holders of the Securities or the Trustee would be entitled, except for
the provisions of this Article XII, and no payments over pursuant to the
provisions of this Article XII to the holders of Senior Indebtedness by
Holders of the Securities or the Trustee, shall, as among the Company, its
creditors other than holders of Senior Indebtedness and the Holders of the
Securities, be deemed to be a payment or distribution by the Company to or
on account of the Senior Indebtedness.
Section 12.6 Provisions Solely To Define Relative Rights. The
provisions of this Article XII are and are intended solely for the purpose
of defining the relative rights of the Holders of the Securities on the
one hand and the holders of Senior Indebtedness and the holders of the
Guarantor Senior Indebtedness on the other hand. Nothing contained in this
Article XII or elsewhere in this Indenture or in the Securities is
intended to or shall (a) impair, as among the Company, its creditors other
than holders of Senior Indebtedness, the holders of the Guarantor Senior
Indebtedness and the Holders of the Securities, the obligation of the
Company, which is absolute and unconditional (and which, subject to the
rights under this Article XII of the holders of Senior Indebtedness and
the holders of the Guarantor Senior Indebtedness, is intended to rank
equally with all other general obligations of the Company), to pay to the
Holders of the Securities the Principal Amount, Restated Principal Amount,
Issue Price, accrued Original Issue Discount, Redemption Price, Put Price,
Liquidated Damages, Change in Control Purchase Price or cash interest, as
the case may be, on the Securities as and when the same shall become due
and payable in accordance with their terms; or (b) affect the relative
rights against the Company of the Holders of the Securities and creditors
of the Company other than the holders of Senior Indebtedness and the
holders of the Guarantor Senior Indebtedness; or (c) prevent the Trustee
or the Holder of any Security from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture, subject to
the rights, if any, under this Article XII of the holders of Senior
Indebtedness to receive cash, property and securities otherwise payable or
deliverable to the Trustee or such Holder.
Section 12.7 Trustee To Effectuate Subordination. Each Holder of a
Security by his acceptance thereof authorizes and directs the Trustee on
his behalf to take such action as may be necessary or appropriate to
effectuate the subordination provided in this Article XII and appoints the
Trustee his attorney-in-fact for any and all such purposes.
Section 12.8 No Waiver of Subordination Provisions. No right of any
present or future holder of any Senior Indebtedness to enforce
subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the
Company or by any act or failure to act, in good faith, by any such
holder, or by any non-compliance by the Company with the terms, provisions
and covenants of this Indenture, regardless of any knowledge thereof any
such holder may have or be otherwise charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness may, at any time and from
time to time, without the consent of or notice to the Trustee or the
Holders of the Securities, without incurring responsibility to the Holders
of the Securities and without impairing or releasing the subordination
provided in this Article XII or the obligations hereunder of the Holders
of the Securities to the holders of Senior Indebtedness, do any one or
more of the following: (i) change the manner, place or terms of payment or
extend the time of payment of, or renew, exchange, increase or alter,
Senior Indebtedness, or otherwise amend, modify or supplement in any
manner Senior Indebtedness or any instrument evidencing the same or any
agreement under which Senior Indebtedness or any security thereof or
guarantee thereof is outstanding; (ii) sell, exchange, release, surrender,
realize upon, enforce or otherwise deal with any property pledged,
mortgaged or otherwise securing Senior Indebtedness; (iii) release any
Person liable in any manner for the collection of Senior Indebtedness;
(iv) exercise or refrain from exercising any rights against the Company
and any other Person; (v) apply any and all sums received from time to
time to the Senior Indebtedness.
The provisions of this Article XII shall continue to be effective or
be reinstated as the case may be if at any time any payment of the Senior
Indebtedness is rescinded or must otherwise be returned by the holder
thereof upon the insolvency, bankruptcy or reorganization of the Company
or otherwise, all as though such payment had not been made.
Section 12.9 Notice to Trustee. The Company shall give prompt
written notice to the Trustee of any fact known to the Company which would
prohibit the making of any payment to or by the Trustee in respect of the
Securities. Notwithstanding the provisions of this Article XII or any
other provision of this Indenture, the Trustee shall not be charged with
knowledge of the existence of any facts which would prohibit the making of
any payment to or by the Trustee in respect of the Securities, unless and
until the Trustee shall have received written notice thereof from the
Company or a holder of Senior Indebtedness or from any trustee therefor;
and, prior to the receipt of any such written notice, the Trustee, subject
to the provisions of Section 6.1, shall be entitled in all respects to
assume that no such facts exist; provided, however, that if the Trustee
shall not have received the notice provided for in this Section 12.9 at
least two Business Days prior to the date upon which by the terms hereof
any money may become payable for any purpose, then, anything herein
contained to the contrary notwithstanding, the Trustee shall have full
power and authority to receive such money and to apply the same to the
purpose for which such money was received and shall not be affected by any
notice to the contrary which may be received by it within two Business
Days prior to such date.
Subject to the provisions of Section 6.1, the Trustee shall be
entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Indebtedness (or a trustee
therefor) to establish that such notice has been given by a holder of
Senior Indebtedness (or a trustee therefor). In the event that the Trustee
determines in good faith that further evidence is required with respect to
the right of any Person as a holder of Senior Indebtedness to participate
in any payment or distribution pursuant to this Article XII, the Trustee
may request such Person to furnish evidence to the reasonable satisfaction
of the Trustee as to the amount of Senior Indebtedness held by such
Person, the extent to which such Person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of
such Person under this Article XII, and if such evidence is not furnished,
the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment.
Section 12.10 Reliance on Judicial Order or Certificate of
Liquidating Agent. Upon any payment or distribution of assets of the
Company referred to in this Article XII, the Trustee, subject to the
provisions of Section 6.1, and the Holders of the Securities shall be
entitled to rely upon any order or decree entered by any court of
competent jurisdiction in which such insolvency, bankruptcy, receivership,
liquidation, reorganization, dissolution, winding up or similar case or
proceeding is pending, or a certificate of the trustee in bankruptcy,
receiver, liquidating trustee, custodian, assignee for the benefit of
creditors, agent or other Person making such payment or distribution,
delivered to the Trustee or to the Holders of Securities, for the purpose
of ascertaining the Persons entitled to participate in such payment or
distribution, the holders of the Senior Indebtedness and other
indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Article XII.
Section 12.11 Trustee Not Fiduciary for Holders of Senior
Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to
the holders of Senior Indebtedness and shall not be liable to any such
holders if it shall in good faith mistakenly pay over or distribute to
Holders of Securities or to the Company or to any other Person cash,
property or securities to which any holders of Senior Indebtedness shall
be entitled by virtue of this Article XII or otherwise.
Section 12.12 Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights. The Trustee in its individual capacity
shall be entitled to all the rights set forth in this Article XII with
respect to any Senior Indebtedness which may at any time be held by it, to
the same extent as any other holder of Senior Indebtedness, and nothing in
this Indenture shall deprive the Trustee of any of its rights as such
holder.
Nothing in this Article XII shall apply to claims of, or payments
to, the Trustee under or pursuant to Section 6.7.
Section 12.13 Article Applicable to Paying Agents. In case at any
time any Paying Agent other than the Trustee shall have been appointed by
the Company and be then acting hereunder, the term "Trustee" as used in
this Article XII shall in such case (unless the context otherwise
requires) be construed as extending to and including such Paying Agent
within its meaning as fully for all intents and purposes as if such Paying
Agent were named in this Article XII in addition to or in place of the
Trustee; provided, however, that Section 12.12 shall not apply to the
Company or any Affiliate of the Company if it or such Affiliate acts as
Paying Agent.
Section 12.14 Certain Conversions Deemed Payment. For the purposes
of this Article XII only, (1) the issuance and delivery of junior
securities upon conversion of Securities in accordance with Article XIII
shall not be deemed to constitute a payment or distribution on account of
the principal of or premium (if any) or cash interest on Securities or on
account of the purchase or other acquisition of Securities, and (2) the
payment, issuance or delivery of cash, property or securities (other than
junior securities) upon conversion of a Security shall be deemed to
constitute payment on account of the principal of such Security. For the
purposes of this Section 12.14, the term "junior securities" means (a)
shares of any stock of any class of the Company and (b) securities of the
Company which are subordinated in right of payment to the prior payment in
full of all Senior Indebtedness which may be outstanding at the time of
issuance or delivery of such securities to substantially the same extent
as, or to a greater extent than, the Securities are so subordinated as
provided in this Article XII. Nothing contained in this Article XII or
elsewhere in this Indenture or in the Securities is intended to or shall
impair, as among the Company, its creditors other than holders of Senior
Indebtedness and the Holders of the Securities, the right, which is
absolute and unconditional, of the Holder of any Security to convert such
Security in accordance with Article XIII.
ARTICLE XIII
CONVERSION OF SECURITIES
Section 13.1 Conversion Privilege. A Holder of a Security may
convert such Security into shares of Common Stock at any time (subject to
the limitation described in Section 11.3(f)) during the period stated in
paragraph 9 of the Securities. The number of shares of Common Stock
issuable upon conversion of a Security per $1,000 of Principal Amount
thereof (the "Conversion Rate") shall be that set forth in paragraph 9 in
the Securities, subject to adjustment as herein set forth.
In the event the Company exercises its option pursuant to Section
15.1 to have interest in lieu of Original Issue Discount accrue on the
Security following a Tax Event, the Holder will be entitled on conversion
to receive the same number of shares of Common Stock such Holder would
have received if the Company had not exercised such option.
Securities 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 of such Interest Payment Date
(except Securities to be redeemed on a date within such period) must be
accompanied by payment of an amount equal to the interest thereon that the
registered Holder is to receive. Except where Securities surrendered for
conversion must be accompanied by payment 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.
Section 13.2 Conversion Procedure. To convert a Security a Holder
must satisfy the requirements in paragraph 9 of the Securities. The date
on which the Holder satisfies all those requirements is the conversion
date (the "Conversion Date"). The Company shall deliver to the Holder no
later than the seventh Business Day following the Conversion Date a
certificate for the number of full shares of Common Stock issuable upon
the conversion and cash in lieu of any fractional share determined
pursuant to Section 13.3.
The person in whose name the certificate is registered shall be
treated as a stockholder of record on and after the Conversion Date;
provided, however, that no surrender of a Security on any date when the
stock transfer books of the Company shall be closed shall be effective to
constitute the person or persons entitled to receive the shares of Common
Stock upon such conversion as the record holder or holders of such shares
of Common Stock on such date, but such surrender shall be effective to
constitute the person or persons entitled to receive such shares of Common
Stock as the record holder or holders thereof for all purposes at the
close of business on the next succeeding day on which such stock transfer
books are open; provided further that such conversion shall be at the
Conversion Rate in effect on the date that such Security shall have been
surrendered for conversion, as if the stock transfer books of the Company
had not been closed. Upon conversion of a Security, such person shall no
longer be a Holder of such Security.
Holders may surrender a Security for conversion by means of book
entry delivery in accordance with paragraph 9 of the Securities and the
regulations of the applicable book entry facility.
No payment or adjustment will be made for dividends on any Common
Stock except as provided in this Article XIII. On conversion of a
Security, that portion of accrued Original Issue Discount or (except as
provided below) accrued and unpaid cash interest attributable to the
period from the Issue Date (or, the date on which interest was last paid)
to the Conversion Date with respect to the converted Security shall not be
canceled, extinguished or forfeited, but rather shall be deemed to be paid
in full to the Holder thereof through delivery of the Common Stock in
exchange for the Security being converted pursuant to the terms hereof,
and the fair market value of such Common Stock (together with any cash
payment in lieu of fractional shares of Common Stock) shall be treated as
issued, to the extent thereof, first in exchange for the Original Issue
Discount and cash interest accrued through the Conversion Date, and the
balance, if any, of such fair market value of such shares of Common Stock
(and any such cash payment) shall be treated as issued in exchange for the
Issue Price of the Security being converted pursuant to the provisions
hereof. Notwithstanding the foregoing, accrued but unpaid interest will be
payable upon conversion of Securities made concurrently with or after
acceleration of the Securities following an Event of Default.
If the Holder converts more than one Security at the same time, the
number of shares of Common Stock issuable upon the conversion shall be
computed based on the total Principal Amount of the Securities converted.
Upon surrender of a Security that is converted in part, the Company
shall execute, and the Trustee shall authenticate and deliver to the
Holder, a new Security in an authorized denomination equal in Principal
Amount to the unconverted portion of the Security surrendered.
If the last day on which a Security may be converted is not a
Business Day in a place where the Conversion Agent is located, the
Security may be surrendered to such Conversion Agent on the next
succeeding day that is a Business Day.
Section 13.3 Fractional Shares. The Company will not issue a
fractional share of Common Stock upon conversion of a Security. Instead,
the Company will deliver cash for the current market value of the
fractional share. The current market value of a fractional share shall be
determined to the nearest 1/1,000th of a share by multiplying the Sale
Price, on the last Trading Day prior to the Conversion Date, of a full
share by the fractional amount and rounding the product to the nearest
whole cent.
Section 13.4 Taxes on Conversion. If a Holder converts a Security,
the Company shall pay any documentary, stamp or similar issue or transfer
tax due on the issue of shares of Common Stock upon such conversion. The
Holder, however, shall pay any such tax that is due because the Holder
requests the shares to be issued in a name other than the Holder's name.
The Conversion Agent may refuse to deliver the certificates representing
the Common Stock being issued in a name other than the Holder's name until
the Conversion Agent receives a sum sufficient to pay any tax which will
be due because the shares are to be issued in a name other than the
Holder's name. Nothing herein shall preclude any tax withholding required
by law or regulations.
Section 13.5 Company To Provide Stock. The Company shall, prior to
issuance of any Securities hereunder, and from time to time as may be
necessary, reserve out of its authorized but unissued Common Stock a
sufficient number of shares of Common Stock to permit the conversion of
the Securities for shares of Common Stock.
All shares of Common Stock delivered upon conversion of the
Securities shall be newly issued shares or treasury shares, shall be duly
and validly issued and fully paid and nonassessable and shall be free from
preemptive rights and free of any lien or adverse claim.
The Company will endeavor promptly to comply with all Federal and
state securities laws regulating the offer and delivery of shares of
Common Stock upon conversion of Securities, if any, and will cause to have
quoted or listed such shares of Common Stock in the over-the-counter
market or on each national securities exchange or such other market on
which the Common Stock is then quoted or listed.
Section 13.6 Adjustment for Change in Common Stock.
The Conversion Rate shall be subject to adjustment (without
duplication) from time to time as follows:
(a) In case the Company shall, while any of the Securities are
outstanding, pay a dividend or make a distribution with respect to its
Common Stock in shares of Common Stock, (ii) subdivide its outstanding
shares of Common Stock, (iii) combine its outstanding shares of Common
Stock into a smaller number of shares or (iv) issue by reclassification of
its shares of Common Stock any shares of capital stock of the Company, the
conversion privilege and the Conversion Rate in effect immediately prior
to such action shall be adjusted so that the Holder of any Securities
thereafter surrendered for conversion shall be entitled to receive the
number of shares of capital stock of the Company which he would have owned
immediately following such action had such Securities been converted
immediately prior thereto. An adjustment made pursuant to this subsection
(a) shall become effective immediately after the record date in the case
of a dividend or other distribution and shall become effective immediately
after the effective date in case of a subdivision, combination or
reclassification (or immediately after the record date if a record date
shall have been established for such event). 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 or series of capital stock of the
Company, the Board of Directors (whose determination shall be conclusive
and shall be described in a Board Resolution filed with the Trustee) shall
determine the allocation of the adjusted Conversion Rate between or among
shares of such classes or series of capital stock.
(b) In case the Company shall, while any of the Securities are
outstanding, issue rights or warrants to all holders of its Common Stock
entitling them (for a period expiring within 45 days after the record date
mentioned below) to subscribe for or purchase shares of Common Stock at a
price per share less than the Market Price on the record date mentioned
below, the Conversion Rate for the Securities shall be adjusted so that
the same shall equal the number of shares of Common Stock determined by
dividing the Conversion Rate in effect immediately prior to the date of
issuance of such rights or warrants by a fraction of which the numerator
shall be the number of shares of Common Stock outstanding on the date of
issuance of such rights or warrants plus the number of shares which the
aggregate offering price of the total number of shares so offered for
subscription or purchase would purchase at such Market Price, and of which
the denominator shall be the number of shares of Common Stock outstanding
on the date of issuance of such rights or warrants plus the number of
additional shares of Common Stock offered for subscription or purchase.
Such adjustment shall become effective immediately after the record date
for the determination of stockholders entitled to receive such rights or
warrants. For the purposes of this subsection, the number of shares of
Common Stock at any time outstanding shall not include shares held in the
treasury of the Company. The Company shall not issue any rights or
warrants in respect of shares of Common Stock held in the treasury of the
Company. In case any rights or warrants referred to in this subsection in
respect of which an adjustment shall have been made shall expire
unexercised within 45 days after the same shall have been distributed or
issued by the Company, the Conversion Rate shall be readjusted at the time
of such expiration to the Conversion Rate that would have been in effect
if no adjustment had been made on account of the distribution or issuance
of such expired rights or warrants.
(c) Subject to the last sentence of this subparagraph, in case the
Company shall, by dividend or otherwise, distribute to all holders of its
Common Stock evidences of its indebtedness, shares of any class or series
of capital stock, cash or assets (including securities, but excluding any
rights or warrants referred to in subparagraph (b), any dividend or
distribution paid exclusively in cash and any dividend or distribution
referred to in subparagraph (a) of this Section 13.6), the Conversion Rate
shall be increased so that the same shall equal the number of shares of
Common Stock determined by multiplying the Conversion Rate in effect
immediately prior to the effectiveness of the Conversion Rate increase
contemplated by this subparagraph (c) by a fraction of which the numerator
shall be the Market Price of the Common Stock on the date fixed for the
payment of such distribution (the "Reference Date") and the denominator
shall be the Market Price on the Reference Date less the fair market value
(as determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a resolution of the
Board of Directors), on the Reference Date, of the portion of the
evidences of indebtedness, shares of capital stock, cash and assets so
distributed applicable to one share of Common Stock, such increase to
become effective immediately prior to the opening of business on the day
following the Reference Date. In the event that such dividend or
distribution is not so paid or made, the Conversion Rate shall again be
adjusted to be the Conversion Rate which would then be in effect if such
dividend or distribution had not occurred. If the Board of Directors
determines the fair market value of any distribution for purposes of this
subparagraph (c) by reference to the actual or when issued trading market
for any securities comprising such distribution, it must in doing so
consider the prices in such market over the same period used in computing
the Market Price. For purposes of this subparagraph (c), any dividend or
distribution that includes shares of Common Stock or rights or warrants to
subscribe for or purchase shares of Common Stock shall be deemed instead
to be (1) a dividend or distribution of the evidences of indebtedness,
shares of capital stock, cash or assets other than such shares of Common
Stock or such rights or warrants (making any Conversion Rate increase
required by this subparagraph (c)) immediately followed by (2) a dividend
or distribution of such shares of Common Stock or such rights or warrants
(making any further Conversion Rate increase required by subparagraph (a)
or (b)), except (A) the Reference Date of such dividend or distribution as
defined in this subparagraph shall be substituted as (a) "the record date
in the case of a dividend or other distribution," and (b) "the record date
for the determination of stockholders entitled to receive such rights or
warrants" and (c) "the date fixed for such determination" within the
meaning of subparagraphs (a) and (b) and (B) any shares of Common Stock
included in such dividend or distribution shall not be deemed outstanding
for purposes of computing any adjustment of the Conversion Rate in
subparagraph (a). In the event that, with respect to any distribution to
which this subparagraph (c) would otherwise apply, the fair market value
on the Reference Date of the portion of the evidences of indebtedness,
shares of capital stock, cash and assets so distributed exceeds the Market
Price by less than $1.00, then the adjustment provided hereby shall not be
made and in lieu thereof, the Holder of Securities, upon conversion
thereof, will be entitled to receive, in addition to the shares of Common
Stock into which such Securities are convertible, the kind of evidences of
indebtedness, shares of capital stock, cash and assets comprising the
distribution that the Holder would have received if the Holder had
converted such Securities immediately prior to the record date for the
determination of stockholders entitled to receive the distribution.
(d) In case the Company shall pay or make a dividend or other
distribution on its Common Stock exclusively in cash (excluding all
regular cash dividend, if the annualized amount thereof per share of
Common Stock does not exceed 15% of the Market Price on the Trading Day
immediately preceding the date of declaration of such dividend), the
Conversion Rate shall be increased so that the same shall equal the number
of shares of Common Stock determined by multiplying the Conversion Rate
immediately prior to the effectiveness of the Conversion Rate increase
contemplated by this subparagraph by a fraction of which the numerator
shall be the Market Price of the Common Stock on the date fixed for the
payment of such distribution and the denominator shall be the Market Price
of the Common Stock on the date fixed for the payment of such distribution
less the amount of cash so distributed and not excluded as provided
applicable to one share of Common Stock, such increase to become effective
immediately prior to the opening of business on the day following the date
fixed for the payment of such distribution; provided, however, that in the
event the portion of the cash so distributed applicable to one share of
Common Stock is equal to or greater than the Market Price on the record
date mentioned above, in lieu of the foregoing adjustment, adequate
provision shall be made so that each Holder of Securities shall have the
right to receive upon conversion the amount of cash such Holder would have
received had such Holder converted the Securities immediately prior to the
record date for the distribution of the cash. In the event that such
dividend or distribution is not so paid or made, the Conversion Rate shall
again be adjusted to be the Conversion Rate which would then be in effect
if such record date had not been fixed.
(e) In case a tender or exchange offer (other than an odd-lot
offer) made by the Company or any Subsidiary of the Company for all or any
portion of the Company's Common Stock shall expire and such tender or
exchange offer shall involve the payment by the Company or such Subsidiary
of consideration per share of Common Stock having a fair market value (as
determined in good faith by the Board of Directors, whose determination
shall be conclusive and described in a resolution of the Board of
Directors) at the last time (the "Expiration Time") tenders or exchanges
may be made pursuant to such tender or exchange offer (as it shall have
been amended) that exceeds 110% of the Market Price on the Trading Day
next succeeding the Expiration Time, the Conversion Rate shall be
increased so that the same shall equal the rate determined by multiplying
the Conversion Rate in effect immediately prior to the effectiveness of
the Conversion Rate increase contemplated by this subparagraph (e) by a
fraction of which the numerator shall be the sum of (x) the fair market
value (determined as aforesaid) of the aggregate consideration payable to
stockholders based on the acceptance (up to any maximum specified in the
terms of the tender or exchange offer) of all shares validly tendered or
exchanged and not withdrawn as of the Expiration Time (the shares deemed
so accepted, up to any such maximum, being referred to as the "Purchased
Shares") and (y) the product of the number of shares of Common Stock
outstanding (less any Purchased Shares) at the Expiration Time and the
Market Price on the Trading Day next succeeding the Expiration Time, and
the denominator shall be the number of shares of Common Stock outstanding
(including any tendered or exchanged shares) at the Expiration Time
multiplied by the Market Price on the Trading Day next succeeding the
Expiration Time, such increase to become effective immediately prior to
the opening of business on the day following the Expiration Time.
(f) The Company may make such increases in the Conversion Rate, in
addition to those required by subparagraphs (a) through (e), as it
considers to be advisable to avoid or diminish any income tax to holders
of Common Stock or rights to purchase Common Stock resulting from any
dividend or distribution of stock (or rights to acquire stock) or from any
event treated as such for income tax purposes. The Company from time to
time may increase the Conversion Rate by any amount for any period of time
if the period is at least twenty (20) days, the increase is irrevocable
during the period, and the Board of Directors of the Company shall have
made a determination that such increase would be in the best interest of
the Company, which determination shall be conclusive. Whenever the
Conversion Rate is increased pursuant to the preceding sentence, the
Company shall mail to holders of record of the Securities a notice of the
increase at least fifteen (15) days prior to the date the increased
Conversion Rate takes effect, and such notice shall state the Increased
Conversion Rate and the period it will be in effect.
(g) No adjustment in the Conversion Rate shall be required unless
such adjustment would require an increase or decrease of at least 1% in
the Conversion Rate; provided, however, that any adjustments which by
reason of this subparagraph are not required to be made shall be carried
forward and taken into account in determining whether any subsequent
adjustment shall be required.
If any action would require adjustment of the Conversion Rate
pursuant to more than one of the provisions described above, only one
adjustment shall be made and such adjustment shall be the amount of
adjustment that has the highest absolute value to the Holder of the
Securities.
Section 13.7 Reclassification, Consolidation, Merger or Sale of
Assets.
In the event that the Company shall be a party to any transaction
(including without limitation (a) any recapitalization or reclassification
of the Common Stock (other than a change in par value, or from par value
to no par value, or from no par value to par value, or as a result of a
subdivision or combination of the Common Stock), (b) any consolidation of
the Company with, or merger of the Company into, any other Person, any
merger of another Person into the Company (other than a merger which does
not result in a reclassification, conversion, exchange or cancellation of
outstanding shares of Common Stock of the Company), (c) any sale, transfer
or lease of all or substantially all of the assets of the Company or (d)
any compulsory share exchange) pursuant to which the Common Stock is
converted into the right to receive other securities, cash or other
property, then lawful provision shall be made as part of the terms of such
transaction whereby the Holder of each Security then outstanding shall
have the right thereafter to convert such Security only into the kind and
amount of securities, cash or other property receivable upon consummation
of such transaction by a holder of the number of shares of Common Stock of
the Company into which such Security could have been converted immediately
prior to such transaction.
The Company or the Person formed by such consolidation or resulting
from such merger or which acquired such assets or which acquires the
Company's shares, as the case may be, shall make provision in its
certificate or articles of incorporation or other constituent document to
establish such right. Such certificate or articles of incorporation or
other constituent document shall provide for adjustments which, for events
subsequent to the effective date of such certificate or articles of
incorporation or other constituent document, shall be as nearly equivalent
as may be practicable to the adjustments provided for in this Article
XIII. The above provisions shall similarly apply to successive
transactions of the foregoing type.
Section 13.8 Notice of Adjustments of Conversion Rate.
Whenever the Conversion Rate is adjusted as herein provided:
(a) the Company shall compute the adjusted Conversion Rate and
shall prepare a certificate signed by the Chief Financial Officer or the
Treasurer or such other officer as is acceptable to the Trustee of the
Company setting forth the adjusted Conversion Rate and showing in
reasonable detail the facts upon which such adjustment is based, and such
certificate shall forthwith be filed with the Trustee, the Conversion
Agent and the transfer agent for the Common Stock; and
(b) a notice stating the Conversion Rate has been adjusted and
setting forth the adjusted Conversion Rate shall as soon as practicable be
mailed by the Company to all record holders of the Securities at their
last addresses as they appear upon the stock transfer books of the
Company.
Section 13.9 Prior Notice of Certain Events.
In case:
(i) the Company shall (1) declare any dividend (or any other
distribution) on its Common Stock, other than (A) a dividend payable
in shares of Common Stock or (B) a dividend payable in cash that
would not require an adjustment pursuant to Section 13.6 (c) or (d)
or (2) authorize a tender or exchange offer that would require an
adjustment pursuant to Section 13.6(e);
(ii) the Company shall authorize the granting to all holders of
Common Stock of rights or warrants to subscribe for or purchase any
shares of stock of any class or series or of any other rights or
warrants;
(iii) of any reclassification of Common Stock (other than a
subdivision or combination of the outstanding Common Stock, or a
change in par value, or from par value to no par value, or from no
par value to par value), or of any consolidation or merger to which
the Company is a party and for which approval of any stockholders of
the Company shall be required, or of the sale or transfer of all or
substantially all of the assets of the Company or of any compulsory
share exchange whereby the Common Stock is converted into other
securities, cash or other property; or
(iv) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company;
then the Company shall cause to be mailed to all Holders at their last
addresses as they shall appear in the Security Register, at least 15 days
prior to the applicable record or effective date hereinafter specified, a
notice stating the date on which a record (if any) is to be taken for the
purpose of such dividend, distribution, rights or warrants or, if a record
is not to be taken, the date as of which the holders of Common Stock of
record to be entitled to such dividend, distribution, rights or warrants
are to be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution,
liquidation or winding up is expected to become effective, and the date as
of which it is expected that holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities, cash or
other property deliverable upon such reclassification, consolidation,
merger, sale, transfer, share exchange, dissolution, liquidation or
winding up (but no failure to mail such notice or any defect therein or in
the mailing thereof shall affect the validity of the corporate action
required to be specified in such notice).
Section 13.10 No Adjustment in Certain Events
Notwithstanding the foregoing provisions, (i) no adjustment need be
made for a transaction to which any of the adjustment provisions described
above applies if Holders may participate in the transaction on a basis and
with notice that the Board of Directors determines to be the fair and
appropriate in light of the basis and notice on which holders of Common
Stock participate in the transaction, and (ii) the issuance of any shares
of Common Stock pursuant to any plan providing for the reinvestment of
dividends or interest payable on securities of the Company and the
investment of additional optional amounts in shares of Common Stock under
any such plan, and the issuance of any shares of Common Stock or options
or rights to purchase such shares pursuant to any employee benefit plan or
program of the Company or pursuant to any option, warrant, right or
exercisable, exchangeable or convertible security outstanding as of the
date the Securities were first issued, shall not be deemed to constitute
an issuance of Common Stock or exercisable, exchangeable or convertible
securities by the Company to which any of the adjustment provisions
described above applies. There shall also be no adjustment of the
Conversion Rate in case of the issuance of any stock (or securities
convertible into or exchangeable for stock) of the Company except as
specifically described in this Article XIII.
Section 13.11 Certain Additional Rights.
In case the Company shall, by dividend or otherwise, declare or
make a distribution on its Common Stock referred to in Section 13.6(c) or
13.6(d) (including, without limitation, dividends or distributions
referred to in the last sentence of Section 13.6(c)), the Holder of the
Securities, upon the conversion thereof subsequent to the close of
business on the date fixed for the determination of stockholders entitled
to receive such distribution and prior to the effectiveness of the
Conversion Rate adjustment in respect of such distribution, shall also be
entitled to receive for each share of Common Stock into which the
Securities are converted, the portion of the shares of Common Stock,
rights, warrants, evidences of indebtedness, shares of capital stock, cash
and assets so distributed applicable to one share of Common Stock;
provided, however, that, at the election of the Company (whose election
shall be evidenced by a resolution of the Board of Directors) with respect
to all Holders so converting, the Company may, in lieu of distributing to
such Holder any portion of such distribution not consisting of cash or
securities of the Company, pay such Holder an amount in cash equal to the
fair market value thereof (as determined in good faith by the Board of
Directors, whose determination shall be conclusive and described in a
resolution of the 74 Board of Directors). If any conversion of Securities
described in the immediately preceding sentence occurs prior to the
payment date for a distribution to holders of Common Stock which the
Holder of Securities so converted is entitled to receive in accordance
with the immediately preceding sentence, the Company may elect (such
election to be evidenced by a resolution of the Board of Directors) to
distribute to such Holder a due bill for the shares of Common Stock,
rights, warrants, evidences of indebtedness, shares of capital stock, cash
or assets to which such Holder is so entitled, provided, that such due
bill meets any applicable requirements of the principal national
securities exchange or other market on which the Common Stock is then
traded and (ii) requires payment or delivery of such shares of Common
Stock, rights, warrants, evidences of indebtedness, shares of capital
stock, cash or assets no later than the date of payment or delivery
thereof to holders of shares of Common Stock receiving such distribution.
Section 13.12 Restrictions on Common Stock Issuable Upon Conversion.
(1) Shares of Common Stock to be issued upon conversion of a
Security in respect of restricted Securities shall bear such restrictive
legends as the Company may provide in accordance with applicable law.
(2) If shares of Common Stock to be issued upon conversion of a
Security in respect of restricted Securities are to be registered in a
name other than that of the Holder of such Security, then the Person in
whose name such shares of Common Stock are to be registered must deliver
to the Conversion Agent a certificate satisfactory to the Company and
signed by such Person, as to compliance with the restrictions on transfer
applicable to such Security. Neither the Trustee nor any Conversion Agent
or Registrar shall be required to register in a name other than that of
the Holder shares of Common Stock or such Securities issued upon
conversion of any such Security in respect of such Securities not so
accompanied by a properly completed certificate.
Section 13.13 Trustee Not Responsible for Determining Conversion
Price or Adjustments.
Neither the Trustee nor any Conversion Agent shall at any time be
under any duty or responsibility to any Holder of any Security to
determine whether any facts exist which may require any adjustment of the
Conversion Rate, 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 provided to be employed, in making the same.
Neither the Trustee nor any Conversion Agent shall be accountable with
respect to the validity or value for the kind of account) 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 Agent shall be responsible
for any failure of the Company to make any cash payment or 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, except as expressly herein provided, to comply
with any of the covenants of the Company contained in Article X or this
Article XIII.
ARTICLE XIV
RIGHT TO REQUIRE REPURCHASE
Section 14.1 Purchase of Securities at Option of the Holder upon
Change in Control.
(a) If on or prior to June 18, 2004, there shall have occurred a
Change in Control, Securities in aggregate Principal Amount of $1,000 or
an integral multiple thereof shall be purchased, at the option of the
Holder thereof, by the Company at the purchase price specified in
paragraph 8 of the Securities (or, if prior to a Change in Control
Purchase Date, the Debentures have been converted to semiannual coupon
debentures following a Tax Event pursuant to Article XV, at a price equal
to the Restated Principal Amount plus accrued and unpaid interest from the
date of such conversion to, but excluding, the Change in Control Purchase
Date) (the "Change in Control Purchase Price"), on the date that is 30
Business Days after the occurrence of the Change in Control (the "Change
in Control Purchase Date"), subject to satisfaction by or on behalf of the
Holder of the requirements set forth in Section 14.1(c).
A "Change in Control" shall be deemed to have occurred at such time
as either of the following events shall occur:
(i) There shall be consummated any consolidation or merger of
the Company or the Subsidiary Guarantor to which the Common Stock
would be converted into cash, or other property, in each case, other
than a consolidation or merger of the Company or the Subsidiary
Guarantor in which the holders of Common Stock immediately prior to
the consolidation or merger have, directly or indirectly, at least a
majority of the total voting power in the aggregate of all classes of
common stock of the continuing or surviving corporation normally
entitled to vote in elections of directors immediately after such
consolidation or merger; or
(ii) There is a report filed by any person, including its
Affiliates and Associates, on Schedule 13D or 14D-1 (or any successor
schedule, form or report) pursuant to the Exchange Act, disclosing
that such person (for the purposes of this Section 14.1 only, the
term "person" shall include a "person" within the meaning of Section
13(d)(3) or Section 14(d)(2) of the Exchange Act or any successor
provision to either of the foregoing) has become the beneficial owner
(as the term "beneficial owner" is defined under Rule 13d-3 or any
successor rule or regulation promulgated under the Exchange Act) of
50% or more of the total voting power in the aggregate of all classes
of Capital Stock then outstanding of the Company or the Subsidiary
Guarantor normally entitled to vote in elections of directors;
provided, however, that a person shall not be deemed beneficial owner
of, or to own beneficially, (A) any securities tendered pursuant to a
tender or exchange offer made by or on behalf of such person or any
of such person's Affiliates or Associates until such tendered
securities are accepted for purchase or exchange thereunder, or (B)
any securities if such beneficial ownership (1) arises solely as a
result of a revocable proxy delivered in response to a proxy or
consent solicitation made pursuant to, and in accordance with, the
applicable rules and regulations under the Exchange Act, and (2) is
not also then reportable on Schedule 13D (or any successor schedule,
form or report) under the Exchange Act; or
(iii) The occurrence of any transaction or event in connection
with which all or substantially all Common Stock shall be exchanged
for, converted into, acquired for or constitute solely the right to
receive consideration (whether by means of an exchange offer,
liquidation, tender offer, consolidation, merger, combination,
reclassification, recapitalization or otherwise) all or substantially
all of which consists of common stock which is (or, upon consummation
of or immediately following such transaction or event, which will be)
listed on a United States national securities exchange or approved
for quotation on the Nasdaq National Market or any similar United
States system of automated dissemination of quotations of securities
prices.
Notwithstanding the foregoing provisions of this Section 14.1(a), a
Change in Control shall not be deemed to have occurred if at any time the
Company, any Subsidiary of the Company, any employee stock ownership plan
or any other employee benefit plan of either the Company or any Subsidiary
of the Company, or any person holding shares of Common Stock for or
pursuant to the terms of any such employee benefit plan, files or becomes
obligated to file a report under or in response to Schedule 13D or
Schedule 14D-1 (or any successor schedule, form or report) under the
Exchange Act disclosing beneficial ownership by it of 50% or more of the
total voting power in the aggregate of all classes of Common Stock then
outstanding of the Company normally entitled to vote in elections of
directors.
"Associate" shall have the meaning ascribed to such term in Rule
12b-2 of the General Rules and Regulations under the Exchange Act, as in
effect on the date hereof.
(b) Within 15 Business Days after the Change in Control, the
Company shall mail a written notice of such Change in Control by
first-class mail to the Trustee and to each Holder (and to beneficial
owners if required by applicable law). The Company will cause a copy of
the notice to be published in The Wall Street Journal or another daily
newspaper of national circulation. The notice shall include a form of
Change in Control Purchase Notice to be completed by the Holder and shall
state:
(1) briefly the events causing a Change in Control and the date
such Change in Control is deemed to have occurred for purposes of this
Section 14.1;
(2) the date by which the Change in Control Purchase Notice
pursuant to this Section 14.1 must be given;
(3) the Change in Control Purchase Date;
(4) the Change in Control Purchase Price;
(5) the name and address of the Paying Agent and the Conversion
Agent and the office or agency referred to Section 10.2;
(6) the Conversion Rate and any adjustments thereto;
(7) that Securities as to which a Change in Control Purchase
Notice has been given may be converted into Common Stock (or, in lieu
thereof, cash, if the Company shall so elect) at any time prior to the
close of business on the Change in Control Purchase Date only if the
Change in Control Purchase Notice has been withdrawn by the Holder in
accordance with the terms of this Indenture;
(8) that Securities must be surrendered to the Paying Agent or
the office or agency referred to in Section 10.2 to collect payment;
(9) that the Change in Control Purchase Price for any Security
as to which a Purchase Notice has been duly given and not withdrawn will
be paid promptly following the later of the Change in Control Purchase Date
and the time of surrender of such Security as described in clause (8)
above;
(10) the procedures the Holder must follow to exercise rights
under this Section 14.1 and a brief description of those rights;
(11) briefly, the conversion rights of the Securities; and
(12) the procedures for withdrawing a Change in Control Purchase
Notice.
(c) A Holder may exercise its rights specified in Section 14.1(a)
upon delivery of a written notice of purchase (a "Change in Control
Purchase Notice") to the Paying Agent or to the office or agency referred
to in Section 10.2 at any time prior to the close of business on the
Change in Control Purchase Date, stating:
(1) the certificate number of the Security which the Holder will
deliver to be purchased;
(2) the portion of the Principal Amount of the Security which
the Holder will deliver to be purchased, which portion must be $1,000 or
an integral multiple thereof; and
(3) that such Security shall be purchased on the Change in
Control Purchase Date, pursuant to the terms and conditions specified in
paragraph 8 of the Securities.
Receipt of the Security by the Paying Agent prior to, on or after
the Change in Control Purchase Date (together with all necessary
endorsements), at the offices of the Paying Agent or to the office or
agency referred to in Section 10.2 shall be a condition to the receipt by
the Holder of the Change in Control Purchase Price therefor; provided,
however, that such Change in Control Purchase Price shall be so paid
pursuant to this Section 14.1 only if the Security so delivered to the
Paying Agent or such office or agency shall conform in all respects to the
description thereof set forth in the related Change in Control Purchase
Notice.
The Company shall purchase from the Holder thereof, pursuant to
this Section 14.1, a portion of a Security if the Principal Amount of such
portion is $1,000 or an integral multiple of $1,000. Provisions of this
Indenture that apply to the purchase of all of a Security also apply to
the purchase of such portion of such Security.
Any purchase by the Company contemplated pursuant to the provisions
of this Section 14.1 shall be consummated by the delivery of the
consideration to be received by the Holder promptly following the later of
the Change in Control Purchase Date and the date such Securities are
surrendered to the Paying Agent or at the office or agency referred to in
Section 10.2.
Notwithstanding anything herein to the contrary, any Holder
delivering to the Paying Agent or to the office or agency referred to in
Section 10.2 the Change in Control Purchase Notice contemplated by this
Section 14.1(c) shall have the right to withdraw such Change in Control
Purchase Notice at any time prior to the close of business on the Change
in Control Purchase Date by delivery of a written notice of withdrawal to
the Paying Agent or to such office or agency in accordance with Section
14.3.
The Paying Agent shall promptly notify the Company of the receipt
by it of any Change in Control Purchase Notice or written withdrawal
thereof.
Section 14.2 Purchase of Securities at the Option of the Holder.
(a) General. Securities shall be purchased by the Company pursuant
to paragraph 8 of the Securities as of June 18, 2004, June 18, 2009 and
June 18, 2014 (each, a "Purchase Date"), at the purchase prices specified
therein (the "Put Price"), at the option of the Holder thereof, upon:
(1) delivery to the Paying Agent or to the office or agency
referred to in Section 10.2 by the Holder of a written notice of purchase
(a "Purchase Notice") at any time from the opening of business on the date
that is 20 Business Days prior to the Purchase Date until the close of
business on such Purchase Date stating:
(A) the certificate number of the Security that the
Holder will deliver to be purchased;
(B) the portion of the Principal Amount of the Security
which the Holder will deliver to be purchased, which portion must be
$1,000 or an integral multiple thereof;
(C) that such Security shall be purchased on the Purchase
Date pursuant to the terms and conditions specified in this Indenture
and in paragraph 6 of the Securities; and
(D) if the Company elects pursuant to Section 14.2(b) to pay
the Put Price on such Purchase Date, in whole or in part, in shares
of Common Stock, but such portion of the Put Price to be paid in
Common Stock is ultimately to be paid in cash because any condition
in Section 14.2(d) is not satisfied, such Holder elects (i) to
withdraw such Purchase Notice as to some or all of the Securities to
which it relates (stating the Principal Amount and certificate
numbers of the Securities as to which such withdrawal shall relate),
or (ii) to receive cash in respect of the Put Price for all
Securities subject to such Purchase Notice; and
(2) delivery of such Security prior to, on or after the Purchase
Date (together with all necessary endorsements) to the Paying Agent at the
offices of the Paying Agent or to the office or agency referred to in
Section 10.2, such delivery being a condition to receipt by the Holder of
the Put Price therefor; provided, however, that such Purchase Price shall
be so paid pursuant to this Section 14.2 only if the Security so delivered
conforms in all respects to the description thereof in the related
Purchase Notice.
If a Holder, in such Holder's Purchase Notice and in any written
notice of withdrawal delivered by such Holder pursuant to the terms of
Section 14.3, fails to indicate such Holder's choice with respect to the
election set forth in clause (D) of Section 14.2(a)(1) above, such Holder
shall be deemed to have elected to receive cash in respect of the Put
Price otherwise payable in Common Stock.
The Company shall purchase from the Holder thereof, pursuant to
this Section 14.2, a portion of a Security if the Principal Amount of such
portion is $1,000 or an integral multiple of $1,000. Provisions of this
Indenture that apply to the purchase of all or a Security also apply to
the purchase of such portion of such Security.
Any purchase by the Company contemplated pursuant to the provisions
hereof shall be consummated by the delivery of the consideration to be
received by the Holder promptly following the later of the Purchase Date
and the time of delivery of the Security.
Notwithstanding anything herein to the contrary, any Holder
delivering to the Paying Agent or the office or agency referred to in
Section 10.2 the Purchase Notice contemplated by this Section 14.2(a)
shall have the right to withdraw at any time prior to the close of
business on the Purchase Date such Purchase Notice by delivery of a
written notice of withdrawal to the Paying Agent or such office or agency
in accordance with Section 14.3.
The Paying Agent shall promptly notify the Company of the receipt
by it of any Purchase Notice or written notice of withdrawal thereof.
(b) Company's Right to Elect Manner of Payment of Purchase Price.
The Securities to be purchased pursuant to Section 14.2(a) may be paid
for, at the election of the Company, in cash or Common Stock, or in any
combination of cash and Common Stock, subject to the conditions set forth
in this Section 14.2. The Company shall designate, in the notice from the
Company delivered pursuant to Section 14.2(e), whether the Company will
purchase the Securities for cash or Common Stock, and, if a combination
thereof, the percentages of the Put Price of Securities in respect of
which it will pay in cash or Common Stock; provided that the Company will
pay cash for fractional interests in Common Stock. For purposes of
determining the existence of potential fractional interests, all
Securities subject to purchase by the Company held by a Holder shall be
considered together (no matter how many separate certificates are to be
presented). Each Holder whose Securities are purchased pursuant to this
Section 14.2 shall receive the same percentage of cash or Common Stock in
payment of the Put Price for such Securities, except (i) as provided in
Section 14.2(d) with regard to the payment of cash in lieu of fractional
shares of Common Stock and (ii) in the event that the Company is unable to
purchase the Securities of a Holder or Holders for Common Stock because
any necessary qualifications or registrations of the Common Stock under
applicable state securities laws cannot be obtained, the Company may
purchase the Securities of such Holder or Holders for cash. The Company
may not change its election with respect to the consideration (or
components or percentages of components thereof) to be paid once the
Company has given notice thereof to Holders except pursuant to this
Section 14.2(b) or Section 14.2(d).
At least five Business Days before the Company Notice Date (as
defined below), the Company shall deliver an Officers' Certificate to the
Trustee specifying:
(i) the manner of payment selected by the Company;
(ii) the information required by Section 14.2(e);
(iii) that the conditions to such manner of payment set forth in
Section 14.2(d) have or will be complied with; and
(iv) whether the Company desires the Trustee to give the notice
required by Section 14.2(e).
(c) Purchase with Cash. On each Purchase Date, at the option of the
Company, the Principal Amount of the Securities in respect of which a
Purchase Notice pursuant to Section 14.2(a) has been given, or a specified
percentage thereof, may be purchased by the Company with cash equal to the
aggregate Purchase Price of such Securities.
(d) Payment by Common Stock. On each Purchase Date, at the option
of the Company, the Principal Amount of the Securities in respect of which
a Purchase Notice pursuant to Section 14.2(a) has been given, or a
specified percentage thereof, may be purchased by the Company by the
issuance of a number of shares of Common Stock equal to the quotient
obtained by dividing (i) the amount of cash to which the Holders would
have been entitled had the Company elected to pay all or such specified
percentage, as the case may be, of the Purchase Price of such Securities
in cash by (ii) the Market Price of a share of Common Stock, subject to
the next succeeding paragraph.
The Company will not issue a fractional share of Common Stock in
payment of the Put Price. Instead the Company will pay cash for the
current market value of the fractional share. The current market value of
a fraction of a share shall be determined by multiplying the Market Price
by such fraction and rounding the product to the nearest whole cent, with
one-half cent being rounded upward. It is understood that if a Holder
elects to have more than one Security purchased, the number of shares of
Common Stock shall be based on the aggregate amount of Securities to be
purchased.
The Company's right to exercise its election to purchase the
Securities pursuant to this Section through the issuance of shares of
Common Stock shall be conditioned upon:
(i) the Company's not having given notice of an election to pay
entirely in cash and its giving of timely notice of election to
purchase all or a specified percentage of the Securities with Common
Stock as provided herein;
(ii) the registration of the shares of Common Stock to be issued
in respect of the payment of the Put Price under the Securities Act
and the Exchange Act, in each case if required unless there exists an
applicable exemption to registration thereunder;
(iii) the listing of the Common Stock on the relevant Purchase
Date on the Nasdaq National Market or the New York Stock Exchange or
other national securities exchange; and
(iv) the receipt by the Trustee of an Officers' Certificate and
an Opinion of Counsel each stating that (A) the terms of the issuance
of the Common Stock are in conformity with this Indenture and (B) the
shares of Common Stock to be issued by the Company in payment of the
Put Price in respect of Securities have been duly authorized and,
when issued and delivered pursuant to the terms of this Indenture in
payment of the Put Price in respect of the Securities, will be
validly issued, fully paid and nonassessable and shall be free of any
preemptive rights and any lien or adverse claim (provided that such
Opinion of Counsel may state that, insofar as it relates to the
absence of such preemptive rights, liens and adverse claims, it is
given upon the best knowledge of such counsel), and, in the case of
such Officers' Certificate, that conditions (i), (ii) and (iii) above
have been satisfied and, in the case of such Opinion of Counsel, that
conditions (ii) and (iii) above have been satisfied.
Such Officers' Certificate shall also set forth the number of shares of
Common Stock to be issued for each $1,000 Principal Amount of Securities
and the Sale Price of a share of Common Stock on each of the seven
Business Days prior to the Purchase Date. The Company may elect to pay in
Common Stock only if the information necessary to calculate the Market
Price is reported in The Wall Street Journal or another daily newspaper of
national circulation. If such conditions are not satisfied prior to or on
the Purchase Date and the Company elected to purchase the Securities
pursuant to this Section 14.2 through the issuance of shares of Common
Stock, the Company shall pay the Purchase Price in cash.
(e) Notice of Election. The Company shall send notices of its
election (the "Company Notice") to purchase with cash or Common Stock or
any combination thereof to the Holders (and to beneficial owners as
required by applicable law) in the manner provided in Section 15.2. The
Company Notice shall be sent to Holders (and to beneficial owners as
required by applicable law) on a date not less than 20 Business Days prior
to the Purchase Date (such date not less than 20 Business Days prior to
the Purchase Date being herein referred to as the "Company Notice Date").
Such notices shall state the manner of payment elected and shall contain
the following information:
In the event the Company has elected to pay the Put Price (or any
specified percentage thereof) with Common Stock, the notice shall:
(1) state that each Holder will receive Common Stock with a
Market Price determined as of a specified date prior to the
Purchase Date equal to such specified percentage of the Put Price
of the Securities held by such Holder (except for any cash amount
to be paid in lieu of fractional shares); and
(2) state that because the Market Price of Common Stock will be
determined prior to the Purchase Date, Holders will bear the market
risk with respect to the value of the Common Stock to be received
from the date such Market Price is determined to the Purchase Date.
In any case, each notice shall include a form of Purchase Notice to
be completed by the Holder and shall state:
(i) the Put Price and Conversion Rate;
(ii) the name and address of the Paying Agent and the Conversion
Agent and of the office or agency referred to in Section 10.2;
(iii) that Securities as to which a Purchase Notice has been
given may be converted into Common Stock at any time prior to the
close of business on the applicable Purchase Date only if the
applicable Purchase Notice has been withdrawn in accordance with the
terms of this Indenture;
(iv) that Securities must be surrendered to the Paying Agent or
to the office or agency referred to in Section 10.2 to collect
payment;
(v) that the Put Price for any security as to which a Purchase
Notice has been given and not withdrawn will be paid promptly
following the later of the Purchase Date and the time of surrender of
such Security as described in (iv);
(vi) the procedures the Holder must follow to exercise rights
under Section 14.2 and a brief description of those rights;
(vii) briefly, the conversion rights of the Securities and that
Holders who want to convert Securities must satisfy the requirements
set forth in paragraph 9 of the Securities; and
(viii) the procedures for withdrawing a Purchase Notice
(including, without limitation, for a conditional withdrawal pursuant
to the terms of Section 14.2(a)(1)(D) or Section 14.3).
At the Company's written request, the Trustee shall give such notice
in the Company's name and at the Company's expense; provided, however,
that, in all cases, the text of such notice shall be prepared by the
Company.
Upon determination of the actual number of shares of Common Stock to
be issued for each $1,000 Principal Amount of Securities, the Company will
publish such determination in The Wall Street Journal or another daily
newspaper of national circulation and furnish the Trustee with an
affidavit of publication.
(f) Covenants of the Company. All shares of Common Stock delivered
upon purchase of the Securities shall be newly issued shares or treasury
shares, shall be duly authorized, validly issued, fully paid and
nonassessable and shall be free from preemptive rights and free of any
lien or adverse claim.
The Company shall use its best efforts to list or cause to have
quoted any shares of Common Stock to be issued to purchase Securities on
the principal national securities exchange or over-the-counter or other
domestic market on which any other shares of the Common Stock are then
listed or quoted. The Company will promptly inform the Trustee in writing
of any such listing.
(g) Procedure Upon Purchase. The Company shall deposit cash (in
respect of a cash purchase under Section 14.2(c) or for fractional
interests, as applicable) or shares of Common Stock, or any combination
thereof, as applicable, at the time and in the manner as provided in
Section 14.4, sufficient to pay the aggregate Put Price of all Securities
to be purchased pursuant to this Section 14.2. As soon as practicable
after the later of the Purchase Date and the date such Securities are
surrendered to the Paying Agent or at the office or agency referred to in
Section 10.2, the Company shall deliver to each Holder entitled to receive
Common Stock through the Paying Agent a certificate for the number of full
shares of Common Stock issuable in payment of the Put Price and cash in
lieu of any fractional interests. The person in whose name the certificate
for Common Stock is registered shall be treated as a holder of record of
such Common Stock on the Business Day following the related Purchase Date.
Subject to Section 14.2(d), no payment or adjustment will be made for
dividends on the Common Stock the record date for which occurred prior to
the Purchase Date.
(h) Taxes. If a Holder of a Security is paid in Common Stock, the
Company shall pay any documentary, stamp or similar issue or transfer tax
due on such issue of shares of Common Stock. However, the Holder shall pay
any such tax which is due because the Holder requests the shares of Common
Stock to be issued in a name other than the Holder's name. The Paying
Agent may refuse to deliver the certificates representing the Common Stock
being issued in a name other than the Holder's name until the Paying Agent
receives a sum sufficient to pay any tax which will be due because the
shares of Common Stock are to be issued in a name other than the Holder's
name. Nothing herein shall preclude any income tax withholding required by
law or regulations.
Section 14.3 Effect of Purchase Notice or Change in Control
Purchase Notice. Upon receipt by the Paying Agent of the Change in Control
Purchase Notice or Purchase Notice specified in Section 14.1(c) or Section
14.2(a), as applicable, the Holder of the Security in respect of which
such Purchase Notice or Change in Control Purchase Notice, as the case may
be, was given shall (unless such Purchase Notice or Change in Control
Purchase Notice is withdrawn as specified in the following two paragraphs)
thereafter be entitled to receive solely the Put Price or Change in
Control Purchase Price, as the case may be, with respect to such Security.
Such Put Price or Change in Control Purchase Price shall be paid to such
Holder promptly following the later of (x) the Business Day following the
Purchase Date or the Change in Control Purchase Date, as the case may be,
with respect to such Security (provided the conditions in Section 14.1(c)
or Section 14.2(a), as applicable, have been satisfied) and (y) the time
of delivery of such Security to the Paying Agent or to the office or
agency referred to in Section 10.2 by the Holder thereof in the manner
required by Section 14.2(a) and (g) or Section 14.1(c), as applicable.
Securities in respect of which a Purchase Notice or Change in Control
Purchase Notice, as the case may be, has been given by the Holder thereof
may not be converted into shares of Common Stock on or after the date of
the delivery of such Purchase Notice or Change in Control Purchase Notice,
unless such Purchase Notice or Change in Control Purchase Notice, as the
case may be, has first been validly withdrawn as specified in the
following two paragraphs.
A Purchase Notice or Change in Control Purchase Notice, as the case
may be, may be withdrawn by means of a written notice of withdrawal
delivered to the office of the Paying Agent or to the office or agency
referred to in Section 10.2 at any time on or prior to the close of
business on the Purchase Date or the Change in Control Purchase Date, as
the case may be, specifying:
(1) the certificate number of the Security in respect of which
such notice of withdrawal is being submitted;
(2) the Principal Amount of the Security with respect to which
such notice of withdrawal is being submitted; and
(3) the Principal Amount, if any, of such Security which remains
subject to the original Purchase Notice or Change in Control Purchase
Notice, as the case may be, and which has been or will be delivered for
purchase by the Company.
A written notice of withdrawal of a Purchase Notice may be in the
form set forth in the preceding paragraph or may be in the form of (i) a
conditional withdrawal contained in a Purchase Notice pursuant to the
terms of Section 14.2(a)(1)(D) or (ii) a conditional withdrawal containing
the information set forth in Section 14.2(a)(1)(D) and the preceding
paragraph and contained in a written notice of withdrawal delivered to the
Paying Agent as set forth in the preceding paragraph.
There shall be no purchase of any Securities pursuant to Section 14.2
(other than through the issuance of Common Stock in payment of the Put
Price, including cash in lieu of fractional shares of Common Stock) or
Section 14.1 if there has occurred (prior to, or on or after, as the case
may be, the giving, by the Holders of such Securities, of the required
Purchase Notice or Change in Control Purchase Notice, as the case may be)
and is continuing an Event of Default (other than a default in the payment
of the Put Price or Change in Control Purchase Price, as the case may be,
with respect to such Securities). The Paying Agent will promptly return to
the respective Holders thereof any Securities (x) with respect to which a
Purchase Notice or Change in Control Purchase Notice, as the case may be,
has been withdrawn in compliance with this Indenture, or (y) held by it
during the continuance of an Event of Default (other than a default in the
payment of the Put Price or Change in Control Purchase Price, as the case
may be, with respect to such Securities) in which case, upon such return,
the Purchase Notice or Change in Control Purchase Notice with respect
thereto shall be deemed to have been withdrawn.
Section 14.4 Deposit of Put Price or Change in Control Purchase
Price. Prior to 12:00 p.m. (noon), New York City time, on the Business Day
following the Purchase Date or the Change in Control Purchase Date, as the
case may be, the Company shall deposit with the Trustee or with the Paying
Agent (or, if the Company or a Subsidiary or an Affiliate of either of
them is acting as Paying Agent, shall segregate and hold in trust) an
amount of cash in immediately available funds or securities, if expressly
permitted hereunder, sufficient to pay the aggregate Put Price or Change
in Control Purchase Price, as the case may be, of all the Securities or
portions thereof which are to be purchased as of the Purchase Date or
Change in Control Purchase Date, as the case may be and after the Purchase
Date or Change in Control Purchase Date, as the case may be, such
Securities shall cease to bear interest or accrue Original Issue Discount
(unless the Company shall default in the payment of the Put Price or
Change of Control Purchase Price).
Section 14.5 Securities Purchased in Part. Any Security which is to
be purchased only in part shall be surrendered at the office of the Paying
Agent or the office or agency referred to in Section 10.2 (with, if the
Company or the Trustee so requires, due endorsement, or a written
instrument of transfer in form satisfactory to the Company and the Trustee
executed by the Holder or such Holder's attorney duly authorized in
writing) and the Company shall execute and the Trustee shall authenticate
and deliver to the Holder of such Security, without service charge, a new
Security or Securities, of any authorized denomination as requested by
such Holder in aggregate Principal Amount equal to, and in exchange for,
the portion of the Principal Amount of the Security so surrendered which
is not purchased.
Section 14.6 Covenant to Comply with Securities Laws upon Purchase
of Securities. In connection with any offer to purchase or purchase of
Securities under Section 14.1 or 14.2, the Company shall (i) comply with
Rule 13e-4 and Rule 14e-1 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 regulating the offer and delivery of
shares of Common Stock upon purchase of the Securities (including
positions of the Commission under applicable no- action letters) so as to
permit the rights and obligations under Sections 14.1 and 14.2 to be
exercised in the time and in the manner specified in Sections 14.1 and
14.2 .
Section 14.7 Repayment to the Company. The Trustee and the Paying
Agent shall return to the Company, upon written request, any cash or
shares of Common Stock, together with interest on such cash as hereinafter
provided and dividends on such shares of Common Stock, if any, held by
them for the payment of a Put Price or Change in Control Purchase Price,
as the case may be, of the Securities that remain unclaimed as provided in
paragraph 14 of the Securities; provided, however, that to the extent that
the aggregate amount of cash or shares of Common Stock deposited by the
Company pursuant to Section 14.4 exceeds the aggregate Put Price or Change
in Control Purchase Price, as the case may be, of the Securities or
portions thereof to be purchased, then promptly after the Business Day
following the Purchase Date or Change in Control Purchase Date, as the
case may be, the Trustee shall return any such excess to the Company
together with interest as hereinafter provided or dividends, if any,
thereon.
ARTICLE XV
SPECIAL TAX EVENT CONVERSION
Section 15.1 Optional Conversion to Semiannual Coupon Debenture
Upon Tax Event. From and after the date (the "Tax Event Date") of the
occurrence of a Tax Event, at the option of the Company, interest in lieu
of future Original Issue Discount and regular cash interest shall accrue
at 3.50% per annum on a principal amount per Security (the "Restated
Principal Amount") equal to the Issue Price plus Original Issue Discount
and cash interest accrued to the date immediately prior to the Tax Event
Date or the date on which the Company exercises the option described
herein, whichever is later (such date, the "Option Exercise Date"). Such
interest shall accrue from the Option Exercise Date and shall be payable
semiannually on each Interest Payment Date to holders of record at the
close of business on the Regular Record Date immediately preceding such
Interest Payment Date. Interest will be computed on the basis of a 360-day
year comprised of twelve 30-day months and will accrue from the most
recent date on which interest has been paid or, if no interest has been
paid, from the Option Exercise Date. Within 15 days of the occurrence of a
Tax Event, the Company shall mail a written notice of such Tax Event by
first-class mail to the Trustee.
ARTICLE XVI
SECURITY GUARANTEE
Section 16.1 Security Guaranty.
The Subsidiary Guarantor hereby absolutely, unconditionally and
irrevocably guarantees the Securities and obligations of the Company
hereunder and thereunder, and guarantees to each Holder of a Security
authenticated and delivered by the Trustee and to the Trustee on behalf of
such Holder, that: (a) Principal Amount, Restated Principal Amount, Issue
Price, accrued Original Discount, Redemption Price, Purchase Price, Change
in Control Purchase Price and Cash Interest and Liquidated Damages, if
any, on the Securities will be paid in full when due, otherwise
(including, without limitation, the amount that would become due but for
the operation of the automatic stay under Section 362(a) of Title 11,
United States Bankruptcy Code of 1978, as amended), together with interest
on the overdue principal, if any, and interest on any overdue interest, to
the extent lawful, and all other obligations of the Company to the Holders
or the Trustee hereunder or thereunder will be paid in full or performed,
all in accordance with the terms hereof and thereof; and (b) in case of
any extension of time of payment or renewal of any Securities or of any
such other obligations, the same will be paid in full when due or
performed in accordance with the terms of the extension or renewal,
whether at Stated Maturity, by acceleration or otherwise, subject,
however, in the case of clauses (a) and (b) above, to the limitations set
forth in Section 16.4 hereof.
The Subsidiary Guarantor hereby agrees that its obligations
hereunder shall be unconditional, irrespective of the validity, regularity
or enforceability of the Securities or this Indenture, the absence of any
action to enforce the same, any waiver or consent by any Holder of the
Securities with respect to any provisions hereof or thereof, any release
of any other Subsidiary Guarantor, the recovery of any judgment against
the Company, any action to enforce the same or any other circumstance
which might otherwise constitute a legal or equitable discharge or defense
of a guarantor.
The Subsidiary Guarantor hereby waives (to the extent permitted by
law) the benefits of diligence, presentment, demand for payment, filing of
claims with a court in the event of insolvency or bankruptcy of the
Company, any right to require a proceeding first against the Company or
any other Person, protest, notice an all demands whatsoever and covenants
that the Security Guarantee of the Subsidiary Guarantor shall not be
discharged as to any Security except by complete performance of the
obligations contained in such Security, this Indenture and the Security
Guarantee. The Subsidiary Guarantor acknowledges that the Security
Guarantee is a guarantee of payment and not of collection and the
Subsidiary Guarantor hereby agrees that, in the event of a default in
Principal Amount, Restated Principal Amount, Issue Price, accrued Original
Discount, Redemption Price, Put Price, Change in Control Purchase Price
and Cash Interest and Liquidated Damages, if any, on such Security,
whether at its Stated Maturity, by acceleration, purchase or otherwise,
legal proceedings may be instituted by the Trustee on behalf of, or by,
the Holder of such Security, subject to the terms and conditions set forth
in this Indenture, directly against the Subsidiary Guarantor to enforce
the Security Guarantee without proceeding against the Company. The
Subsidiary Guarantor agrees that if, after the occurrence and during the
continuance of an Event of Default, the Trustee or any of the Holders are
prevented by applicable law from exercising their respective rights to
accelerate the maturity of the Securities, to collect interest on the
Securities, or to enforce or exercise any other right or remedy with
respect to the Securities, the Subsidiary Guarantor will pay to the
Trustee for the account of the Holders, upon demand therefor, the amount
that would otherwise have been due and payable had such rights and
remedies been permitted to be exercised by the Trustee or any of the
Holders.
If any Holder or the Trustee is required by any court or otherwise
to return to the Company or the Subsidiary Guarantor, or any custodian,
trustee, liquidator or other similar official acting in relation to either
the Company or the Subsidiary Guarantor, any amount paid by any of them to
the Trustee or such Holder, the Security Guarantee, to the extent
theretofore discharged, shall be reinstated in full force and effect. The
Subsidiary Guarantor further agrees that, as between the Subsidiary
Guarantor, on the one hand, and the Holders and the Trustee, on the other
hand, (x) subject to this Article XVI, the maturity of the obligations
guaranteed hereby may be accelerated as provided in Article V hereof for
the purposes of the Security Guarantee, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of
the obligations guaranteed hereby, and (y) in the event of any
acceleration of such obligations as provided in Article V hereof, such
obligations (whether or not due and payable) shall forthwith become due
and payable by the Subsidiary Guarantor for the purpose of the Security
Guarantee.
The Security Guarantee shall remain in full force and effect and
continue to be effective should any petition be filed by or against the
Company for liquidation or reorganization, should the Company become
insolvent or make an assignment for the benefit of creditors or should a
receiver or trustee be appointed for all or any significant part of the
Company's assets, and shall, to the fullest extent permitted by law,
continue to be effective or be reinstated, as the case may be, if at any
time payment and performance of the Securities are, pursuant to applicable
law, rescinded or reduced in amount, or must otherwise be restored or
returned by any obligee on the Securities, whether as a "voidable
preference," "fraudulent transfer" or otherwise, all as though such
payment or performance had not been made. In the event that any payment,
or any part thereof, is rescinded, reduced, restored or returned, the
Securities shall, to the fullest extent permitted by law, be reinstated and
deemed reduced only by such amount paid and not so rescinded, reduced,
restored or returned.
Section 16.2 Severability.
In case any provision of the Security Guarantee shall be invalid,
illegal or unenforceable, the validity, legality, and enforceability of
the remaining provisions shall not in any way be affected or impaired
thereby.
Section 16.3 Subordination of Security Guarantee.
The Security Guarantee will be unsecured subordinated obligations
of the Subsidiary Guarantor, ranking pari passu with all other existing
and future subordinate indebtedness of the Subsidiary Guarantor, if any.
The indebtedness evidenced by the Security Guarantee is being accepted by
the holders of the Securities on a subordinated basis to the Guarantor
Senior Indebtedness and such Security Guarantee is subordinated on the
same basis to the Guarantor Senior Indebtedness of the Subsidiary
Guarantor as the Securities are subordinated to Senior Indebtedness under
Article XII.
Section 16.4 Limitation of Subsidiary Guarantors' Liability.
The Subsidiary Guarantor and by its acceptance hereof each Holder
confirms that it is the intention of all such parties that the guarantee
by the Subsidiary Guarantor pursuant to the Security Guarantee not
constitute a fraudulent transfer or conveyance for purposes of any
Bankruptcy Law, the Uniform Fraudulent Conveyance Act the Uniform
Fraudulent Conveyance Act or any similar federal or state law or the
provisions of its local law relating to fraudulent transfer or conveyance.
To effectuate the foregoing intention, the Holders and the Subsidiary
Guarantor hereby irrevocably agree that the obligations of the Subsidiary
Guarantor under the Security Guarantee shall be limited to the maximum
amount that will not, after giving effect to all other contingent and
fixed liabilities of the Subsidiary Guarantor result in the obligations of
the Subsidiary Guarantor under the Security Guarantee constituting such
fraudulent transfer or conveyance.
Section 16.5 Subrogation.
The Subsidiary Guarantor shall be subrogated to all rights of
Holders against the Company in respect of any amounts paid by the
Subsidiary Guarantor pursuant to the provisions of Section 16.1; provided,
however, that, if an Event of Default has occurred and is continuing, the
Subsidiary Guarantor shall not be entitled to enforce or receive any
payments arising out of, or based upon, such right of subrogation until
all amounts then due and payable by the Company under this Indenture or
the Securities shall have been paid in full.
Section 16.6 Reinstatement.
The Subsidiary Guarantor hereby agrees that the Security Guarantee
provided for in Section 16.1 shall continue to be effective or be
reinstated, as the case may be, if at any time, payment, or any part
thereof, of any obligations or interest thereon is rescinded or must
otherwise be restored by a Holder to the Company upon the bankruptcy or
insolvency of the Company or the Subsidiary Guarantor.
Section 16.7 Release of the Subsidiary Guarantor.
Concurrently with the discharge of the Securities under Section
4.1, the Subsidiary Guarantor shall be released from all of its
obligations under the Security Guarantee under this Article XVI.
Section 16.8 Benefits Acknowledged.
The Subsidiary Guarantor acknowledges that it will receive direct
and indirect benefits from the financing arrangements contemplated by this
Indenture and that its guarantee and waivers pursuant to the Security
Guarantee are knowingly made in contemplation of such benefits.
This instrument may be executed in any number of counterparts, each
of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this Indenture
to be duly executed, and their respective corporate seals to be hereunto
affixed and attested, all as of the day and year first above written.
ANNTAYLOR STORES CORPORATION
By: /s/ Barry Erdos
_____________________________
Name: Barry Erdos
Title: Executive Vice President
- CFO
ANNTAYLOR, INC.
By: /s/ Barry Erdos
_____________________________
Name: Barry Erdos
Title: Executive Vice President
- CFO
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed as of the day and year first above written.
THE BANK OF NEW YORK, as Trustee
By: /s/ Annette L. Kos
_____________________________
Name: Annette L. Kos
Title:
Exhibit 4.02
ANNTAYLOR STORES CORPORATION
$180,975,000
CONVERTIBLE SUBORDINATED DEBENTURES DUE 2019
REGISTRATION RIGHTS AGREEMENT
June 18, 1999
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
BANC OF AMERICA SECURITIES LLC
c/o MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York 10281-1305
Ladies and Gentlemen:
AnnTaylor Stores Corporation, a Delaware corporation (the "Company"),
proposes to issue and sell to Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated ("Merrill Lynch"), and the Banc of America
Securities LLC (together with Merrill Lynch, the "Initial Purchasers"),
upon the terms set forth in the Purchase Agreement dated June 14, 1999 (the
"Purchase Agreement") among the Company, AnnTaylor, Inc., a Delaware
corporation and a wholly owned subsidiary of the Company (the "AnnTaylor"),
and the Initial Purchasers, Convertible Subordinated Debentures due 2019
(the "Debentures"). As an inducement to the Initial Purchasers to enter
into the Purchase Agreement and in satisfaction of a condition to the
obligations of the Initial Purchasers thereunder, the Company and AnnTaylor
agree with you, (i) for the benefit of the Initial Purchasers and (ii) for
the benefit of the holders from time to time of the Debentures and the
holders from time to time of the Common Stock, par value $0.0068 per share
(the "Common Stock"), of the Company initially issuable upon conversion of
the Debentures (each of the foregoing, a "Holder" and, together, the
"Holders"), as follows:
Section 1. Definitions. Capitalized terms used in this
Agreement without definition shall have their respective meanings set forth
in the Purchase Agreement. All references to Sections herein are to
Sections of this Agreement unless otherwise indicated. As used in this
Agreement, the following capitalized defined terms shall have the following
meanings:
"Act" or "Securities Act" means the Securities Act of 1933, as
amended.
"Affiliate" of any specified person means any other person
which, directly or indirectly, is in control of, is controlled by, or
is under common control with such specified person. For purposes of
this definition, control of a person means the power, direct or
indirect, to direct or cause the direction of the management and
policies of such person whether by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Applicable Conversion Price" as of any date of determination
means the Applicable Principal Amount per $1,000 principal amount at
maturity of Debentures as of such date of determination divided by
the Conversion Rate in effect as of such date of determination or, if
no Debentures are then outstanding, the Conversion Rate that would be
in effect were Debentures then outstanding.
"Applicable Principal Amount" as of any date of determination,
with respect to each $1,000 principal amount at maturity of
Debentures means the sum of the initial issue price of such Debenture
($552.56) plus accrued original issue discount with respect to such
Debenture through such date of determination or, if no Debentures are
then outstanding, such sum calculated as if such Debentures were then
outstanding.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday that is not a day on which banking institutions in The
City of New York are authorized or obligated by law or executive
order to close.
"Commission" means the Securities and Exchange Commission.
"Company Offering" means the sale of Common Stock pursuant to a
registration statement filed by the Company under the Act (other than
(i) a registration statement filed on Form S-4 or any successor form
or (ii) a registration statement filed on Form S-8 or any successor
form) respecting an underwritten offering, whether primary or
secondary, that is declared effective by the Commission.
"Conversion Rate" means the term "Conversion Rate" as defined in
the Indenture.
"Damages Payment Date" means each June 18 and December 18 in
the case of Debentures and the Common Stock.
"DTC" means The Depository Trust Company.
"Effectiveness Period" has the meaning set forth in Section 2(b).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Indenture" means the Indenture dated as of the date hereof
among the Company, AnnTaylor and The Bank of New York, as trustee,
pursuant to which the Debentures are being issued.
"Managing Underwriters" means the investment banker or
investment bankers and manager or managers that shall administer an
underwritten offering, if any, as set forth in Section 6.
"Notice and Questionnaire" means a written notice delivered to
the Company containing substantially the information called for by
the Form of Selling Securityholder Notice and Questionnaire attached
as Appendix B to the Offering Memorandum of the Company dated June
14, 1999 relating to the Debentures.
"Notice Holder" means, on any date, any Holder that has
delivered a Notice and Questionnaire to the Company on or prior to
such date.
"Person" shall mean an individual, partnership, corporation,
trust or unincorporated organization, or a government or agency or
political subdivision thereof.
"Prospectus" means the prospectus included in any Shelf
Registration Statement (including, without limitation, a prospectus
that discloses information previously omitted from a prospectus filed
as part of an effective registration statement in reliance upon Rule
430A under the Act), as amended or supplemented by any prospectus
supplement, with respect to the terms of the offering of any portion
of the Registrable Securities.
"Record Holder" means, with respect to any Damages Payment Date
relating to any Debenture or Common Stock as to which any Liquidated
Damages Amount has accrued, the registered holder of such Debenture
or Common Stock, as the case may be, 15 days prior to the next
succeeding Damages Payment Date.
"Registrable Securities" means the Debentures and the shares of
Common Stock issuable upon conversion of the Debentures, until such
securities have been converted or exchanged, and, at all times
subsequent to any such conversion or exchange, any securities into or
for which such securities have been converted or exchanged, and any
security issued with respect thereto upon any stock dividend, split
or similar event until, in the case of any such security, the
earliest of (i) its effective registration under the Securities Act
and resale in accordance with the Registration Statement covering it,
(ii) expiration of the holding period that would be applicable
thereto under Rule 144(k) were it not held by an Affiliate of the
Company or (iii) its sale to the public pursuant to Rule 144.
"Shelf Registration" means a registration effected pursuant to
Section 2.
"Shelf Registration Statement" means a "shelf" registration
statement of the Company and AnnTaylor pursuant to the provisions of
Section 2 filed with the Commission which covers some or all of the
Registrable Securities, as applicable, on an appropriate form under
Rule 415 under the Act, or any similar rule that may be adopted by
the Commission, amendments and supplements to such registration
statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and
all material incorporated by reference therein.
"Trustee" means The Bank of New York (or any successor entity),
the trustee under the Indenture.
"Underwriter" means any underwriter of Registrable Securities
in connection with an offering thereof under a Shelf Registration
Statement.
Section 2. Shelf Registration. (a) The Company and AnnTaylor
shall prepare and file or cause to be prepared and filed with the
Commission, as soon as practicable, but in any event, no later than the
date (the "Filing Deadline Date") that is 90 days after the date of
original issuance (the "Issue Date") of the Debentures, a Shelf
Registration Statement relating to the offer and sale of the Registrable
Securities by the Holders from time to time in accordance with the methods
of distribution elected by such Holders and set forth in such Shelf
Registration Statement and, thereafter, shall each use their best efforts
to cause such Shelf Registration Statement to be declared effective under
the Act no later than the date (the "Effectiveness Deadline Date") that is
180 days following the Issue Date; provided, however, that no Holder shall
be entitled to have the Registrable Securities held by it covered by such
Shelf Registration unless such Holder shall have provided a Notice and
Questionnaire in accordance with Section 2(c) and is in compliance with
Section 3(m). None of the Company's securityholders (other than the Holders
of Registrable Securities) shall have the right to include any of the
Company's securities in the Shelf Registration Statement.
(b) The Company and AnnTaylor shall each use its best
efforts to keep the Shelf Registration Statement continuously effective in
order to permit the Prospectus forming part thereof to be usable by Holders
for a period of two years from the date the Shelf Registration Statement is
declared effective or such shorter period that will terminate upon the
earliest of the following: (A) when all the Debentures covered by the Shelf
Registration Statement have been sold pursuant to the Shelf Registration
Statement, (B) when all shares of Common Stock issued upon conversion of
any such Debentures that had not been sold pursuant to the Shelf
Registration Statement have been sold pursuant to the Shelf Registration
Statement and (C) when, in the written opinion of counsel to the Company
and AnnTaylor, all outstanding Registrable Securities held by persons which
are not affiliates of the Company or AnnTaylor may be resold without
registration under the Act pursuant to Rule 144(k) under the Act or any
successor provision thereto (in any such case, such period being called the
"Effectiveness Period").
(c) Each Holder of Registrable Securities wishing to sell
Registrable Securities pursuant to a Shelf Registration Statement and
related Prospectus agrees to deliver a Notice and Questionnaire to the
Company at least three (3) Business Days prior to any intended distribution
of Registrable Securities under the Shelf Registration Statement. From and
after the date the Shelf Registration Statement is declared effective, the
Company and AnnTaylor shall, as promptly as is practicable after the date a
Notice and Questionnaire and such other information as the Company and Ann
Taylor may reasonably require pursuant to Section 3(m) is delivered, and in
any event within five (5) Business Days after such date, (i) if required by
applicable law, file with the Commission a post-effective amendment to the
Shelf Registration Statement or prepare and, if required by applicable law,
file a supplement to the related Prospectus or a supplement or amendment to
any document incorporated therein by reference or file any other required
document so that the Holder delivering such Notice and Questionnaire is
named as a selling securityholder in the Shelf Registration Statement and
the related Prospectus in such a manner as to permit such Holder to deliver
such Prospectus to purchasers of the Registrable Securities in accordance
with applicable law and, if the Company and AnnTaylor shall file a
post-effective amendment to the Shelf Registration Statement, use their
best efforts to cause such post-effective amendment to be declared
effective under the Securities Act as promptly as is practicable, but in
any event by the date (the "Amendment Effectiveness Deadline Date") that is
forty-five (45) days after the date such post-effective amendment is
required by this clause to be filed; (ii) provide such Holder copies of any
documents filed pursuant to Section 2(c)(i); and (iii) notify such Holder
as promptly as practicable after the effectiveness under the Securities Act
of any post-effective amendment filed pursuant to Section 2(c)(i);
provided, that if such Notice and Questionnaire is delivered during a
Deferral Period, the Company shall so inform the Holder delivering such
Notice and Questionnaire and shall take the actions set forth in clauses
(i), (ii) and (iii) above upon expiration of the Deferral Period in
accordance with Section 2(d), provided, further, that if under applicable
law the Company or AnnTaylor has more than one option as to the type or
manner of making any such filing, it will make the required filing or
filings in the manner or of a type that is reasonably expected to result in
the earliest availability of the Prospectus for effecting resales of
Registrable Securities. Notwithstanding anything contained herein to the
contrary, neither the Company nor AnnTaylor shall be under any obligation
to name any Holder that is not a Notice Holder as a selling securityholder
in the Shelf Registration Statement or related Prospectus; provided,
however, that any Holder that becomes a Notice Holder pursuant to the
provisions of Section 2(c) of this Agreement (whether or not such Holder
was a Notice Holder at the time the Shelf Registration Statement was
declared effective) shall be named as a selling securityholder in the Shelf
Registration Statement or related Prospectus in accordance with the
requirements of this Section 2(c).
(d) The Company and AnnTaylor shall be deemed not to have
used their best efforts to keep the Shelf Registration Statement effective
during the requisite period if either the Company or AnnTaylor voluntarily
takes any action that would result in Holders of Registrable Securities
covered thereby not being able to offer and sell any such Registrable
Securities during that period, unless (i) such action is required by
applicable law, (ii) upon the occurrence of any event contemplated by
paragraph 3(c)(2)(iii) below, and such action is taken by the Company or
AnnTaylor in good faith and for valid business reasons or (iii) the
continued effectiveness of the Shelf Registration Statement would require
the Company or AnnTaylor to disclose a material financing, acquisition or
other corporate development, and the proper officers of the Company shall
have determined in good faith that such disclosure is not in the best
interests of the Company and its stockholders, and, in the case of clause
(ii) above, the Company and AnnTaylor thereafter promptly comply with the
requirements of Section 3(i) below. The duration of all periods during
which the availability of the Shelf Registration Statement and the
Prospectus is suspended in accordance with clauses (i) through (iii) of the
preceding sentence (each such period of suspension being referred to herein
as a "Deferral Period") shall, without the Company or AnnTaylor incurring
any obligation to pay liquidated damages pursuant to Section 2(e), not, in
the aggregate, exceed 45 days in any three-month period or 90 days in any
12-month period.
(e) The parties hereto agree that the Holders of
Registrable Securities will suffer damages, and that it would not be
feasible to ascertain the extent of such damages with precision, if (i) the
Shelf Registration Statement has not been filed on or prior to the Filing
Deadline Date, (ii) the Shelf Registration Statement has not been declared
effective under the Securities Act on or prior to the Effectiveness
Deadline Date, (iii) either the Company or AnnTaylor has failed to perform
its obligations set forth in Section 2(c) within the time period require
therein or (iv) the aggregate duration of Deferral Periods in any period
exceeds the number of days permitted in respect of such period pursuant to
Section 2(d) hereof (each of the events of a type described in any of the
foregoing clauses (i) through (iv) are individually referred to herein as
an "Event," and the Filing Deadline Date in the case of clause (i), the
Effectiveness Deadline Date in the case of clause (ii), the date by which
each of the Company and AnnTaylor is required to perform its obligations
set forth in Section 2(c) in the case of clause (iii) (including the filing
of any post-effective amendment prior to the Amendment Effectiveness
Deadline Date) and the date on which the aggregate duration of Deferral
Periods in any period exceeds the number of days permitted by Section 2(d)
hereof in the case of clause (iv), being referred to herein as an "Event
Date"). Events shall be deemed to continue until the "Event Termination
Date," which shall be the following dates with respect to the respective
types of Events: the date the Shelf Registration Statement is filed in the
case of an Event of the type described in clause (i), the date the Shelf
Registration Statement is declared effective under the Securities Act in
the case of an Event of the type described in clause (ii), the latest date
on which the Company and AnnTaylor perform their obligations set forth in
Section 2(c) in the case of an Event of the type described in clause (iii)
(including, without limitation, the date the relevant post-effective
amendment to the Shelf Registration Statement is declared effective under
the Securities Act), and termination of the Deferral Period that caused the
limit on the aggregate duration of Deferral Periods in a period set forth
in Section 2(d) to be exceeded in the case of the commencement of an Event
of the type described in clause (iv).
Accordingly, commencing on (and including) any Event Date and
ending on (but excluding) the next date on which there are no Events that
have occurred and are continuing (a "Damages Accrual Period"), the Company
and AnnTaylor agree to pay, as liquidated damages and not as a penalty, an
amount (the "Liquidated Damages Amount"), payable on the Damages Payment
Dates to Record Holders of then outstanding Debentures that are Registrable
Securities and of then outstanding shares of Common Stock issued upon
conversion of Debentures that are Registrable Securities, as the case may
be, accruing, for each portion of such Damages Accrual Period beginning on
and including a Damages Payment Date (or, in respect of the first time that
the Liquidation Damages Amount is to be paid to Holders on a Damages
Payment Date as a result of the occurrence of any particular Event, from
the Event Date) and ending on but excluding the first to occur of (A) the
date of the end of the Damages Accrual Period or (B) the next Damages
Payment Date, at a rate per annum equal to one-quarter of one percent
(.25%) for the first 90-day period from the Event Date and thereafter at a
rate per annum equal to one-half of one percent (.5%) of the aggregate
Applicable Principal Amount of such Debentures and the Applicable
Conversion Price of such shares of Common Stock, as the case may be, in
each case determined as of the Business Day immediately preceding the next
Damages Payment Date; provided, that in the case of a Damages Accrual
Period that is in effect solely as a result of an Event of the type
described in clause (iii) of the immediately preceding Paragraph, such
Liquidated Damages Amount shall be paid only to the Holders that have
delivered Notice and Questionnaires that caused the Company and AnnTaylor
to incur the obligations set forth in Section 2(c) the non-performance of
which is the basis of such Event; provided further, that any Liquidated
Damages Amount accrued with respect to any Debenture or portion thereof
called for redemption on a redemption date or converted into Common Stock
on a conversion date prior to the Damages Payment Date, shall, in any such
event, be paid instead to the Holder who submitted such Debenture or
portion thereof for redemption or conversion on the applicable redemption
date or conversion date, as the case may be, on such date (or promptly
following the conversion date, in the case of conversion). Notwithstanding
the foregoing, no Liquidated Damages Amounts shall accrue as to any
Registrable Security from and after the earlier of (x) the date such
security is no longer a Registrable Security and (y) termination of the
Effectiveness Period pursuant to Section 2(b). The rate of accrual of the
Liquidated Damages Amount with respect to any period shall not exceed the
rate provided for in this paragraph notwithstanding the occurrence of
multiple concurrent Events. Following the cure of all Events requiring the
payment by the Company and AnnTaylor of Liquidated Damages Amounts to the
Holders of Registrable Securities pursuant to this Section, the accrual of
Liquidated Damages Amounts will cease (without in any way limiting the
effect of any subsequent Event requiring the payment of Liquidated Damages
Amount by the Company and AnnTaylor).
The Trustee shall be entitled, on behalf of Holders of
Debentures or Common Stock issued upon conversion of Debentures, to seek
any available remedy for the enforcement of this Agreement, including for
the payment of any Liquidated Damages Amount. Notwithstanding the
foregoing, the parties agree that the sole damages payable for a violation
of the terms of this Agreement with respect to which liquidated damages are
expressly provided shall be such liquidated damages. Nothing shall preclude
a Notice Holder or Holder of Registrable Securities from pursuing or
obtaining specific performance or other equitable relief with respect to
this Agreement.
All of the Company's and AnnTaylor's obligations set forth in
this Section 2(e) that are outstanding with respect to any Registrable
Security at the time such security ceases to be a Registrable Security
shall survive until such time as all such obligations with respect to such
security have been satisfied in full.
The parties hereto agree that the liquidated damages provided
for in this Section 2(e) constitute a reasonable estimate of the damages
that may be incurred by Holders of Registrable Securities by reason of the
failure of the Shelf Registration Statement to be filed or declared
effective or available for effecting resales of Registrable Securities in
accordance with the provisions hereof.
Section 3. Registration Procedures. In connection with any
Shelf Registration Statement, the following provisions shall apply:
(a) The Company and AnnTaylor shall furnish to the
Initial Purchasers, prior to the filing thereof with the Commission,
a copy of any Shelf Registration Statement, and each amendment
thereof and each amendment or supplement, if any, to the Prospectus
included therein and shall each use its best efforts to reflect in
each such document, when so filed with the Commission, such comments
as the Initial Purchasers reasonably may propose.
(b) The Company and AnnTaylor shall take such action as
may be necessary so that (i) any Shelf Registration Statement, and
any amendment thereto, and any Prospectus forming part thereof, and
any amendment or supplement thereto (and each report or other
document incorporated therein by reference in each case) complies in
all material respects with the Securities Act and the Exchange Act
and the respective rules and regulations thereunder, (ii) any Shelf
Registration Statement, and any amendment thereto, does not, when it
becomes effective, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and (iii) any
Prospectus forming part of any Shelf Registration Statement, and any
amendment or supplement to such Prospectus, does not include an
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements, in the light of the
circumstances under which they were made, not misleading.
(c) (1) AnnTaylor shall advise the Initial Purchasers
and, in the case of clause (i), the Holders and, if requested by the
Initial Purchasers or any such Holder, confirm such advice in
writing:
(i) when a Shelf Registration Statement, and any
amendment thereto, has been filed with the Commission and
when the Shelf Registration Statement or any
post-effective amendment thereto has become effective;
and
(ii) of any request by the Commission for
amendments or supplements to the Shelf Registration
Statement or the Prospectus included therein or for
additional information.
(2) AnnTaylor shall advise the Initial Purchasers and the
Holders and, if requested by the Initial Purchasers or any such
Holder, confirm such advice in writing of:
(i) the issuance by the Commission of any stop
order suspending effectiveness of the Shelf Registration
Statement or the initiation of any proceedings for that
purpose;
(ii) the receipt by the Company or AnnTaylor of any
notification with respect to the suspension of the
qualification of the securities included therein for sale
in any jurisdiction or the initiation of any proceeding
for such purpose; and
(iii) the happening of any event that requires the
making of any changes in the Shelf Registration Statement
or the Prospectus so that, as of such date, the Shelf
Registration Statement and the Prospectus do not contain
an untrue statement of a material fact and do not omit to
state a material fact required to be stated therein or
necessary to make the statements therein (in the case of
the Prospectus, in light of the circumstances under which
they were made) not misleading (which advice shall be
accompanied by an instruction to suspend the use of the
Prospectus until the requisite changes have been made).
(d) AnnTaylor shall use its best efforts to prevent the
issuance, and, if issued, to obtain the withdrawal, of any order
suspending the effectiveness of any Shelf Registration Statement at
the earliest possible time.
(e) The Company and AnnTaylor shall furnish to each
Holder of Registrable Securities included within the coverage of any
Shelf Registration Statement, without charge, at least one copy of
such Shelf Registration Statement and any post-effective amendments
thereto, including financial statements and schedules, and, if the
Holder so requests in writing, all reports and other documents
incorporated by reference in the Shelf Registration Statement and
exhibits (including those incorporated by reference).
(f) The Company and AnnTaylor shall, during the
Effectiveness Period, deliver to each Holder of Registrable
Securities included within the coverage of any Shelf Registration
Statement, without charge, as many copies of the Prospectus
(including each preliminary prospectus) included in such Shelf
Registration Statement and any amendment or supplement thereto as
such Holder may reasonably request; and each of the Company and
AnnTaylor consents (except upon and during the continuance of any
event described in paragraphs 2(d) or 3(c)(2)(iii) above or Section
6(e)) to the use of the Prospectus or any amendment or supplement
thereto by each of the selling Holders of Registrable Securities in
connection with the offering and sale of the Registrable Securities
covered by the Prospectus or any amendment or supplement thereto
during the Shelf Registration Period.
(g) Prior to any offering of Registrable Securities
pursuant to any Shelf Registration Statement, the Company and
AnnTaylor shall register or qualify or cooperate with the Holders of
Registrable Securities included therein and their respective counsel
in connection with the registration or qualification of such
Registrable Securities for offer and sale under the securities or
blue sky laws of such jurisdictions in the United States as any such
Holders reasonably request in writing and do any and all other acts
or things necessary or advisable to enable the offer and sale in such
jurisdictions of the Registrable Securities covered by such Shelf
Registration Statement; provided, however, that in no event shall the
Company or AnnTaylor be obligated to (i) qualify generally to do
business or as a foreign corporation or as a dealer in securities in
any jurisdiction where it would not otherwise be required to so
qualify but for this Section 3(g), (ii) file any general consent to
service of process in any jurisdiction where it is not as of the date
hereof then so subject or (iii) subject itself to taxation in any
such jurisdiction if it is not so subject.
(h) Unless any Registrable Securities shall be in
book-entry only form, the Company and AnnTaylor shall cooperate with
the Holders of Registrable Securities to facilitate the timely
preparation and delivery of certificates representing Registrable
Securities to be sold pursuant to any Shelf Registration Statement
free of any restrictive legends and in such permitted denominations
and registered in such names as Holders may request in connection
with the sale of Registrable Securities pursuant to such Shelf
Registration Statement.
(i) Upon the occurrence of any event contemplated by
paragraph 3(c)(2)(iii) above, the Company and AnnTaylor shall
promptly prepare a post-effective amendment to any Shelf Registration
Statement or an amendment or supplement to the related Prospectus or
file any other required document so that, as thereafter delivered to
purchasers of the Registrable Securities included therein, the
Prospectus will not include an untrue statement of a material fact or
omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were
made, not misleading (except, in each case, for an untrue statement
of a material fact or omission of a material fact made in reliance on
and in conformity with written information furnished to AnnTaylor or
the Company by or on behalf of Holders specifically for use therein).
The Company and AnnTaylor agree to notify the Holders to suspend use
of the Prospectus, and the Holders shall suspend use of the
Prospectus, and not communicate such material non-public information
to any third party, and not sell or purchase, or offer to sell or
purchase, any securities of the Company or AnnTaylor, until the
Company or AnnTaylor has amended or supplemented the Prospectus so it
does not contain any such misstatement or omission. Subject to
Section 2(d), at such time as such public disclosure is otherwise
made or the Company and AnnTaylor determine in good faith that such
disclosure is not necessary, the Company and AnnTaylor agree to
notify the Holders of such determination and to amend or supplement
the Prospectus if necessary, so it does not contain any such untrue
statement or omission therein and to furnish the Holders such numbers
of copies of the Prospectus as so amended or supplemented as the
Holders may reasonably request.
(j) Not later than the effective date of any Shelf
Registration Statement hereunder, the Company and AnnTaylor shall
provide a CUSIP number for all Registrable Securities covered by any
Shelf Registration Statement and provide the Trustee with
certificates for the Debentures that are in a form eligible for
deposit with DTC.
(k) The Company and AnnTaylor shall use their best
efforts to comply with all applicable rules and regulations of the
Commission and shall make generally available to their
securityholders or otherwise provide in accordance with Section 11(a)
of the Securities Act as soon as practicable after the effective date
of the applicable Shelf Registration Statement an earnings statement
satisfying the provisions of Section 11(a) of the Securities Act.
(l) The Company and AnnTaylor shall use their reasonable
best efforts to cause the Indenture to be qualified under the Trust
Indenture Act in a timely manner.
(m) The Company and AnnTaylor may require each Holder of
Registrable Securities to be sold pursuant to any Shelf Registration
Statement to furnish to the Company and AnnTaylor such information
regarding the Holder and the distribution of such Registrable
Securities as the Company and AnnTaylor may from time to time
reasonably require for inclusion in such Shelf Registration Statement
and AnnTaylor and the Company may exclude from such registration the
Registrable Securities of any Holder that fails to furnish such
information within a reasonable time after receiving such request.
(n) The Company and AnnTaylor will each use their
reasonable best efforts to cause the Common Stock issuable upon
conversion of the Debentures to be listed on the New York Stock
Exchange on or prior to the effective date of any Shelf Registration
Statement hereunder.
(o) Upon (i) the filing of any Shelf Registration
Statement and (ii) the effectiveness of any Shelf Registration
Statement, the Company shall announce the same, in each case by
release to Reuters Economic Services and Bloomberg Business News (or
any successor thereto).
(p) The Company and AnnTaylor shall use their reasonable
best efforts to take all other steps necessary to effect the
registration, offering and sale of the Registrable Securities covered
by the Shelf Registration Statement contemplated hereby.
Section 4. Registration Expenses. Except as otherwise provided
in Section 6, the Company and AnnTaylor shall bear all fees and expenses
incurred in connection with the performance of their obligations under
Sections 2 and 3 and shall bear or reimburse the Holders for the reasonable
fees and disbursements of one firm of counsel designated by the Company and
reasonably acceptable to the Holders of a majority of the Registrable
Securities covered by the Shelf Registration Statement to act as counsel
therefor in connection therewith.
Section 5. Indemnification and Contribution. (a) In connection
with any Shelf Registration Statement, the Company and AnnTaylor, jointly
and severally, shall indemnify and hold harmless the Initial Purchasers,
each Holder, each underwriter who participates in an offering of
Registrable Securities, each person, if any, who controls any of such
parties within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act and each of their respective directors, officers,
employees, trustees and agents, as follows:
(i) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, arising out of any untrue
statement or alleged untrue statement of a material fact contained in
any Shelf Registration Statement (or any amendment thereto) covering
Registrable Securities, including all documents incorporated therein
by reference, or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the
statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact contained in
any Prospectus (or any amendment or supplement thereto) or the
omission or alleged omission therefrom of a material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or investigation or
proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission, if such settlement is effected with the written consent of
the Company and AnnTaylor; and
(iii) against any and all expenses whatsoever, as incurred
(including reasonable fees and disbursements of counsel chosen by the
Holders, such Holder or any underwriter (except to the extent
otherwise expressly provided in Section 5(c))), reasonably incurred
in investigating, preparing or defending against any litigation, or
any investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under
subparagraph (i) or (ii) of this Section 5(a);
provided that this indemnity shall not apply to any loss, liability, claim,
damage or expense to the extent arising out of an untrue statement or
omission or alleged untrue statement or omission (i) made in reliance upon
and in conformity with written information furnished to the Company or
AnnTaylor by the Initial Purchasers, such Holder or any underwriter in
writing expressly for use in the Shelf Registration Statement (or any
amendment thereto) or any Prospectus (or any amendment or supplement
thereto) or (ii) contained in any preliminary prospectus if the Initial
Purchasers, such Holder or such underwriter failed to send or deliver a
copy of the Prospectus (or any amendment or supplement thereto) to the
Person asserting such losses, claims, damages or liabilities on or prior to
the delivery of written confirmation of any sale of securities covered
thereby to such Person in any case where such Prospectus (or any amendment
or supplement thereto) corrected such untrue statement or omission. Any
amounts advanced by the Company or AnnTaylor to an indemnified party
pursuant to this Section 5 as a result of such losses shall be returned to
AnnTaylor if it shall be finally determined by such a court in a judgment
not subject to appeal or final review that such indemnified party was not
entitled to indemnification by the Company or AnnTaylor.
(b) Each Holder agrees, severally and not jointly, to
indemnify and hold harmless the Company, AnnTaylor, the Initial Purchasers,
each underwriter who participates in an offering of Registrable Securities
and the other selling Holders and each of their respective directors,
officers (including each officer of the Company who signed the Shelf
Registration Statement), employees, trustees and agents and each Person, if
any, who controls the Company, AnnTaylor, the Initial Purchasers, any
underwriter or any other selling Holder within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act, from and against any
and all loss, liability, claim, damage and expense whatsoever described in
the indemnity contained in Section 5(a), as incurred, but only with respect
to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Shelf Registration Statement (or any amendment
thereto) or any Prospectus (or any amendment or supplement thereto) in
reliance upon and in conformity with written information furnished to the
Company or AnnTaylor by such selling Holder expressly for use in the Shelf
Registration Statement (or any amendment thereto) or any Prospectus (or any
amendment or supplement thereto); provided, however, that no such Holder
shall be liable for any claims hereunder in excess of the amount of net
proceeds received by such Holder from the sale of Registrable Securities
pursuant to the Shelf Registration Statement.
(c) Each indemnified party shall give prompt notice to
each indemnifying party of any action commenced against it in respect of
which indemnity may be sought hereunder, enclosing a copy of all papers
served on such indemnified party, but failure to so notify an indemnifying
party shall not relieve such indemnifying party from any liability which it
may have other than on account of this indemnity agreement. An indemnifying
party may participate at its own expense in the defense of any such action.
If an indemnifying party so elects within a reasonable time after receipt
of such notice, such indemnifying party, jointly with any other
indemnifying party, may assume the defense of such action with counsel
chosen by it and approved by the indemnified party or parties defendant in
such action; provided that if any such indemnified party reasonably
determines that there may be legal defenses available to such indemnified
party which are different from or in addition to those available to such
indemnifying party or that representation of such indemnifying party and
any indemnified party by the same counsel would present a conflict of
interest, then such indemnifying party or parties shall not be entitled to
assume such defense. If an indemnifying party is not entitled to assume the
defense of such action as a result of the proviso to the preceding
sentence, counsel for such indemnifying party shall be entitled to conduct
the defense of such indemnifying party and counsel for each indemnified
party or parties shall be entitled to conduct the defense of such
indemnified party or parties. If an indemnifying party assumes the defense
of an action in accordance with and as permitted by the provisions of this
paragraph, such indemnifying party shall not be liable for any fees and
expenses of counsel for the indemnified parties incurred thereafter in
connection with such action. In no event shall the indemnifying party or
parties be liable for the fees and expenses of more than one counsel (in
addition to any local counsel) separate from its own counsel for all
indemnified parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances.
(d) In order to provide for just and equitable
contribution in circumstances in which the indemnity provision agreement
provided for in this Section 5 is for any reason held to be unavailable to
the indemnified parties although applicable in accordance with its terms,
the Company, AnnTaylor, the Initial Purchasers and the Holders shall
contribute to the aggregate losses, liabilities, claims, damages and
expenses of the nature contemplated by said indemnity agreement incurred by
the Company, AnnTaylor, the Initial Purchasers and the Holders, as
incurred; provided that no Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any Person that was not guilty of such
fraudulent misrepresentation. As between the Company, AnnTaylor, the
Initial Purchasers and the Holders, such parties shall contribute to such
aggregate losses, liabilities, claims, damages and expenses of the nature
contemplated by such indemnity agreement in such proportion as shall be
appropriate to reflect the relative fault of the Company and AnnTaylor, on
the one hand, and the Initial Purchasers and the Holders, on the other
hand, with respect to the statements or omissions which resulted in such
loss, liability, claim, damage or expense, or action in respect thereof, as
well as any other relevant equitable considerations. The relative fault of
the Company and AnnTaylor, on the one hand, and of the Initial Purchasers
and the Holders, on the other hand, shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company and AnnTaylor, on the one
hand, or by or on behalf of the Initial Purchasers or the Holders, on the
other, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The
Company, AnnTaylor, the Initial Purchasers and the Holders of the
Registrable Securities agree that it would not be just and equitable if
contributions pursuant to this Section 5 were to be determined by pro rata
allocation or by any other method of allocation that does not take into
account the relevant equitable considerations. For purposes of this Section
5(d), each director, officer, employee, trustee, agent and Person, if any,
who controls an Initial Purchaser or Holder within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act shall have the
same rights to contribution as such Initial Purchaser or Holder, and each
director, officer, employee, trustee and agent of the Company and
AnnTaylor, and each Person, if any, who controls the Company or AnnTaylor
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act shall have the same rights to contribution as the Company and
AnnTaylor. No party shall be liable for contribution with respect to any
action, suit, proceeding or claim settled without its written consent.
Section 6. Underwritten Offering.
(a) The Holders of Registrable Securities covered by the
Shelf Registration Statement who desire to do so may sell such Registrable
Securities in an underwritten offering in accordance with the conditions
set forth below. In any such underwritten offering, the investment banker
or bankers and manager or managers that will administer the offering will
be selected by, and the underwriting arrangements with respect thereto will
be approved by, the Holders of a majority of the Registrable Securities to
be included in such offering; provided, however, that (i) such investment
bankers and managers and underwriting arrangements must be reasonably
satisfactory to the Company and AnnTaylor and (ii) neither the Company nor
AnnTaylor shall be obligated to arrange for more than one underwritten
offering during the Effectiveness Period. No Holder may participate in any
underwritten offering contemplated hereby unless such Holder (i) agrees to
sell such Holder's Registrable Securities in accordance with any approved
underwriting arrangements, (ii) completes and executes all reasonable
questionnaires, powers of attorney, indemnities, underwriting agreements,
lock-up letters and other documents required under the terms of such
approved underwriting arrangements and (iii) at least 30% of the
outstanding Registrable Securities are included in such underwritten
offering. The Holders participating in any underwritten offering shall be
responsible for any expenses customarily borne by selling securityholders,
including underwriting discounts and commissions and fees and expenses of
counsel to the selling securityholders and shall reimburse the Company and
AnnTaylor for the fees and disbursements of their counsel, their
independent public accountants and any printing expenses incurred in
connection with such underwritten offering. Notwithstanding the foregoing,
upon receipt of a request from the Managing Underwriter or a representative
of Holders of a majority of the Registrable Securities outstanding to
prepare and file an amendment or supplement to the Shelf Registration
Statement and Prospectus in connection with an underwritten offering, the
Company and AnnTaylor may delay the filing of any such amendment or
supplement for up to 90 days if the Company and AnnTaylor in good faith
have a valid business reason for such delay.
(b) The Company and AnnTaylor shall enter into such
customary agreements (including underwriting agreements in customary form)
which are reasonably acceptable to the Company and AnnTaylor, and take all
other reasonably requested actions in order to expedite or facilitate the
registration or the disposition of the Registrable Securities, and in
connection therewith, if an underwriting agreement is entered into, cause
the same to contain indemnification provisions and procedures substantially
identical to those set forth in Section 5 (or such other provisions and
procedures acceptable to the Managing Underwriters, if any) with respect to
all parties to be indemnified pursuant to Section 5.
(c) The Company and AnnTaylor shall (i) make reasonably
available for inspection by the Holders of Registrable Securities to be
registered thereunder, any underwriter participating in any disposition
pursuant to such Shelf Registration Statement, and any attorney, accountant
or other agent retained by such Holders or any such underwriter all
relevant financial and other records, pertinent corporate documents and
properties of the Company and AnnTaylor and its subsidiaries; (ii) cause
the Company's and AnnTaylor's officers, directors and employees to make
reasonably available for inspection all relevant information reasonably
requested by such Holders or any such underwriter, attorney, accountant or
agent in connection with any such Shelf Registration Statement, in each
case as is customary for similar due diligence examinations; provided,
however, that any information that is designated in writing by the Company
and AnnTaylor, in good faith, as confidential at the time of delivery of
such information shall be kept confidential by such Holders or any such
underwriter, attorney, accountant or agent, unless such disclosure is made
in connection with a court proceeding or required by law, or such
information becomes available to the public generally or through a third
party without an accompanying obligation of confidentiality; and provided
further that the foregoing inspection and information gathering shall, to
the greatest extent possible, be coordinated on behalf of the Holders and
the other parties entitled thereto by one counsel designated by and on
behalf of such Holders and other parties reasonably acceptable to the
Company and AnnTaylor; (iii) make such representations and warranties to
the Holders of Registrable Securities registered thereunder and the
underwriters, if any, in form, substance and scope as are customarily made
by the Company and AnnTaylor to underwriters in primary underwritten
offerings and covering matters including, but not limited to, those set
forth in the Purchase Agreement; (iv) obtain opinions of counsel to the
Company and AnnTaylor (who may be the general counsel of the Company and/or
AnnTaylor) and updates thereof (which counsel and opinions (in form, scope
and substance) shall be reasonably satisfactory to the Managing
Underwriters, if any) in customary form addressed to each selling Holder
and the underwriters, if any, covering such matters as are customarily
covered in opinions requested in underwritten offerings and such other
matters as may be reasonably requested by such Holders and underwriters (it
being agreed that the matters to be covered by such opinion or a written
statement by such counsel delivered in connection with such opinions shall
include, without limitation, as of the date of the opinion and as of the
effective date of the Shelf Registration Statement or most recent
post-effective amendment thereto, as the case may be, the absence from such
Shelf Registration Statement and the prospectus included therein, as then
amended or supplemented, including the documents incorporated by reference
therein, of an untrue statement of a material fact or the omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading); (v) obtain "comfort letters" and
updates thereof from the independent public accountants of the Company and
AnnTaylor (and, if necessary, any other independent public accountants of
any subsidiary of the Company or AnnTaylor or of any business acquired by
the Company or AnnTaylor for which financial statements and financial data
are, or are required to be, included in the Shelf Registration Statement),
addressed to each such Holder of Registrable Securities registered
thereunder and the underwriters, if any, in customary form and covering
matters of the type customarily covered in "comfort letters" in connection
with primary underwritten offerings; and (vi) deliver such other customary
documents and certificates as may be reasonably requested by any such
Holders and the Managing Underwriters, if any, including those to evidence
compliance with Section 3(i) and with any customary conditions contained in
the underwriting agreement or other agreement entered into by the Company
and AnnTaylor. The foregoing actions set forth in clauses (iii), (iv), (v)
and (vi) of this Section 6(c) shall be performed at each closing under any
underwritten offering to the extent required thereunder.
(d) Upon the request of the Company, the Holders agree
not to effect any public sale or distribution (including sales pursuant to
Rule 144) of Registrable Securities during the 10-day period prior to the
date that the Company has notified the Holders that it intends to commence
a Company Offering through the 120-day period immediately following the
closing date of such Company Offering; provided, however, that (i) the
Holders shall not be obligated to comply with this Section 6(d) until the
first anniversary of the date of this Agreement and (ii) the Holders shall
not be obligated to comply with this Section 6(d) on more than one occasion
in any 12-month period.
Section 7. Miscellaneous.
(a) No Conflicting Agreements. Neither the Company nor
AnnTaylor is, as of the date hereof, a party to, nor shall it, on or after
the date of this Agreement, enter into, any agreement with respect to its
securities that conflicts with the rights granted to the Holders of
Registrable Securities in this Agreement. Each of the Company and AnnTaylor
represents and warrants that the rights granted to the Holders of
Registrable Securities hereunder do not in any way conflict with the rights
granted to the holders of the Company's or AnnTaylor's securities under any
other agreements.
(b) Amendments and Waivers. The provision of this
Agreement, including the provisions of this sentence, may not be amended,
qualified, modified or supplemented, and waivers or consents to departures
from the provisions hereof may not be given, unless the Company and
AnnTaylor have obtained the written consent of the Initial Purchasers.
(c) Notices. All notices and other communications
provided for or permitted hereunder shall be made in writing by
hand-delivery, first-class mail, telex, telecopier, or air courier
guaranteeing overnight delivery:
1. if to a Holder, at the most current address
given by such Holder to the Company or AnnTaylor in
accordance with the provisions of this Section 6(c);
2. if to the Initial Purchasers, initially at the
address set forth in the Purchase Agreement; and
3. if to the Company or AnnTaylor, initially at
its address set forth in the Purchase Agreement.
All such notices and communications shall be deemed to have duly given when
received.
The Initial Purchasers or the Company and AnnTaylor by notice to the
other may designate additional or different addresses for subsequent
notices or communications.
(d) Successors and Assigns. This Agreement shall inure to
the benefit of and be binding upon the successors and assigns of each of
the parties and the Holders, including, without the need for an express
assignment or any consent by the Company or AnnTaylor thereto, subsequent
Holders of Registrable Securities. The Company and AnnTaylor hereby agree
to extend the benefits of this Agreement to any Holder of Registrable
Securities and any such Holder may specifically enforce the provisions of
this Agreement as if an original party hereto.
(e) Counterparts. This agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
(f) Headings. The headings in this agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(g) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
THE LAWS OF THE STATE OF NEW YORK.
(h) Severability. In the event that any one of more of
the provisions contained herein, or the application thereof in any
circumstances, is held invalid, illegal or unenforceable in any respect for
any reason, the validity, legality and enforceability of any such provision
in every other respect and of the remaining provisions hereof shall not be
in any way impaired or affected thereby, it being intended that all of the
rights and privileges of the parties shall be enforceable to the fullest
extent permitted by law.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
Please confirm that the foregoing correctly sets forth the
agreement among AnnTaylor, the Company and you.
Very truly yours,
ANNTAYLOR STORES CORPORATION
By: /s/ Barry Erdos
__________________________
Name: Barry Erdos
Title: Executive Vice President - CFO
ANNTAYLOR, INC.
By: /s/ Barry Erdos
__________________________
Name: Barry Erdos
Title: Executive Vice President - CFO
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
The foregoing Registration Rights Agreement is hereby confirmed and
accepted as of the date first above written.
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
BANC OF AMERICA SECURITIES LLC
By: MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By: /s/ Cynthia Bates
______________________________________
Name: Cynthia Bates
Title: Vice President
<TABLE>
<CAPTION>
EXHIBIT 12.01
ANNTAYLOR STORES CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
Six Months
Fiscal Years Ended Ended
------------------------------------------------------------------- -----------
January 30, January 31, February 1, February 3, January 28, July 31,
1999 1998 1997 1996 1995 1999
---------- ----------- ---------- --------- --------- -----------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Income before income taxes and $72,903 $29,463 $21,642 $4,281 $62,894 $ 50,560
extraordinary loss
Add total fixed charges 39,913 39,607 42,939 37,992 26,513 16,900
deducted from earnings
Less interest capitalized 0 0 0 (1,325) (490) 0
---------- ----------- ---------- --------- --------- ---------
Earnings available for payment
of fixed charges $112,816 $69,070 $64,581 $40,948 $88,917 $ 67,460
========== =========== ========== ========= ========= =========
Fixed charges:
Portion of minimum lease rental $21,796 $19,618 $18,523 $15,711 $11,794 $ 11,316
deemed to be interest
Interest expense 18,117 19,989 24,416 20,956 14,229 5,584
Capitalized interest 0 0 0 1,325 490 0
---------- ----------- ---------- --------- --------- ---------
Total fixed charges $39,913 $39,607 $42,939 $37,992 $26,513 $ 16,900
========== =========== ========== ========= ========= =========
Ratio of earnings to fixed
charges 2.83 1.74 1.50 1.08 3.35 3.99
========== =========== ========== ========= ========= =========
</TABLE>
EXHIBIT 23.01
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of AnnTaylor Stores Corporation on Form S-3 of our report dated March 8,
1999, appearing in the Annual Report on Form 10-K of AnnTaylor Stores
Corporation for the year ended January 30, 1999 and to the reference to us
under the heading "Experts" in the Prospectus, which is part of this
Registration Statement.
Deloitte & Touche LLP
New York, New York
September 8, 1999
EXHIBIT 23.02
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of AnnTaylor Inc. on Form S-3 of our report dated March 8, 1999, appearing
in the Annual Report on Form 10-K of AnnTaylor, Inc. for the year ended
January 30, 1999 and to the reference to us under the heading "Experts" in
the Prospectus, which is part of this Registration Statement.
Deloitte & Touche LLP
New York, New York
September 8, 1999
EXHIBIT 25.01
========================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
One Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
ANNTAYLOR STORES CORPORATION
(Exact name of obligor as specified in its charter)
Delaware 13-3499319
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
ANNTAYLOR, INC.
(Exact name of obligor as specified in its charter)
New Jersey 51-0297083
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
142 West 57th Street
New York, New York 10019
(Address of principal executive offices) (Zip code)
-------------
Convertible Subordinated Debentures due 2019
(Title of the indenture securities)
========================================================================
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE
TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO
WHICH IT IS SUBJECT.
- --------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany,
N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE
COMMISSION, ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT
HERETO, PURSUANT TO RULE 7A-29 UNDER THE TRUST INDENTURE ACT OF
1939 (THE "ACT") AND 17 C.F.R. 229.10(D).
1. A copy of the Organization Certificate of The Bank of New
York (formerly Irving Trust Company) as now in effect, which
contains the authority to commence business and a grant of
powers to exercise corporate trust powers. (Exhibit 1 to
Amendment No. 1 to Form T-1 filed with Registration
Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed
with Registration Statement No. 33-21672 and Exhibit 1 to
Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to
Form T-1 filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the
Act. (Exhibit 6 to Form T-1 filed with Registration
Statement No. 33-44051.)
7. A copy of the latest report of condition of the Trustee
published pursuant to law or to the requirements of its
supervising or examining authority.
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of
New York, a corporation organized and existing under the laws of the State
of New York, has duly caused this statement of eligibility to be signed on
its behalf by the undersigned, thereunto duly authorized, all in The City
of New York, and State of New York, on the 2nd day of August, 1999.
THE BANK OF NEW YORK
By: /s/ WALTER N. GITLIN
----------------------------
Name: WALTER N. GITLIN
Title: VICE PRESIDENT
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EXHIBIT 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of One Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business March 31,
1999, published in accordance with a call made by the Federal Reserve Bank
of this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts
ASSETS In Thousands
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin.. $4,508,742
Interest-bearing balances........................... 4,425,071
Securities:
Held-to-maturity securities......................... 836,304
Available-for-sale securities....................... 4,047,851
Federal funds sold and Securities purchased under
agreements to resell................................ 1,743,269
Loans and lease financing receivables:
Loans and leases, net of unearned
income............................................ 39,349,679
LESS: Allowance for loan and
lease losses...................................... 603,025
LESS: Allocated transfer risk
reserve........................................... 15,906
Loans and leases, net of unearned income,
allowance, and reserve............................ 38,730,748
Trading Assets......................................... 1,571,372
Premises and fixed assets (including capitalized
leases)............................................. 685,674
Other real estate owned................................ 10,331
Investments in unconsolidated subsidiaries and
associated companies................................ 182,449
Customers' liability to this bank on acceptances
outstanding......................................... 1,184,822
Intangible assets...................................... 1,129,636
Other assets........................................... 2,632,309
-----------
Total assets........................................... $61,688,578
===========
LIABILITIES
Deposits:
In domestic offices................................. $25,731,036
Noninterest-bearing................................. 10,252,589
Interest-bearing.................................... 15,478,447
In foreign offices, Edge and Agreement
subsidiaries, and IBFs............................ 18,756,302
Noninterest-bearing................................. 111,386
Interest-bearing.................................... 18,644,916
Federal funds purchased and Securities sold under
agreements to repurchase............................ 3,276,362
Demand notes issued to the U.S.Treasury................ 230,671
Trading liabilities.................................... 1,554,493
Other borrowed money:
With remaining maturity of one year or less......... 1,154,502
With remaining maturity of more than one year
through three years............................... 465
With remaining maturity of more than three years.... 31,080
Bank's liability on acceptances executed and
outstanding......................................... 1,185,364
Subordinated notes and debentures...................... 1,308,000
Other liabilities...................................... 2,743,590
-----------
Total liabilities...................................... 55,971,865
===========
EQUITY CAPITAL
Common stock........................................... 1,135,284
Surplus................................................ 764,443
Undivided profits and capital reserves................. 3,807,697
Net unrealized holding gains (losses) on
available-for-sale securities....................... 44,106
Cumulative foreign currency translation adjustments.... ( 34,817)
-----------
Total equity capital................................... 5,716,713
-----------
Total liabilities and equity capital................... $61,688,578
===========
I, Thomas J. Mastro, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of
Governors of the Federal Reserve System and is true to the best of my
knowledge and belief.
/s/ Thomas J. Mastro
We, the undersigned directors, attest to the correctness of this
Report of Condition and declare that it has been examined by us and to the
best of our knowledge and belief has been prepared in conformance with the
instructions issued by the Board of Governors of the Federal Reserve System
and is true and correct.
/s/ Thomas A. Reyni
/s/ Alan R. Griffith Directors
/s/ Gerald L. Hassell
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