AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 7, 1998
REGISTRATION NO. 333-56651
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
FINANCIAL FEDERAL CORPORATION
(Exact Names of Registrant as Specified in its Charter)
Nevada 88-0244792
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
400 Park Avenue, 8th Floor
New York, New York 10022
(212) 888-3344
(Address, Including Zip Code, and Telephone Number, Including Area
Code, of each Registrant's Principal Executive Offices)
MICHAEL C. PALITZ
CHIEF FINANCIAL OFFICER
FINANCIAL FEDERAL CORPORATION
400 Park Avenue, 8th Floor
New York, New York 10022
(212) 888-3344
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
Copy to:
LAWRENCE B. FISHER, ESQ.
CATERINA A. CONTI, ESQ.
ORRICK, HERRINGTON & SUTCLIFFE LLP
666 FIFTH AVENUE
NEW YORK, NEW YORK 10103
(212) 506-5300
Approximate date of commencement of proposed sale to the public: From
time to time after this registration statement becomes effective as determined
by market conditions.
If any of the securities being registered on this form are to be
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. [ ]
<PAGE>
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<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
===================================================================================================================
Title of Securities to be Amount to be Proposed Maximum Proposed Maximum Amount of
Registered Registered Aggregate Price Per Aggregate Offering Registration
Certificate(1) Price(1) Fee
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
4 1/2 % Convertible Subordinated
Notes due 2005 $100,000,000 100% $100,000,000 $29,500
Common Stock $0.50 par value
per share $ 3,316,062(2) -- -- None(3)
===================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) Plus such additional indeterminate number of shares as may become
issuable upon conversion of the Notes being registered hereunder as a
result of adjustments to the conversion price.
(3) Pursuant to Rule 457(i) there is no filing fee with respect to the
shares of Common Stock issuable upon conversion of the Notes because
no additional consideration will be received in connection with the
exercise of the conversion rights.
The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the registrant
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 this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
================================================================================
<PAGE>
Prospectus
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of any offer to buy nor shall there be any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
SUBJECT TO COMPLETION, DATED JUNE 11, 1998
[GRAPHIC OMITTED]
FINANCIAL FEDERAL CORPORATION
$100,000,000
4 1/2% Convertible Subordinated Notes due 2005
and Shares of Common Stock Issuable upon Conversion Thereof
This Prospectus relates to $100,000,000 aggregate principal amount of
4 1/2% Convertible Subordinated Notes due 2005 (the "Notes") of Financial
Federal Corporation, a Nevada corporation ("Financial Federal" or the "Company")
and the shares of Common Stock, par value $.50 per share (the "Common Stock"),
of the Company issuable upon the conversion of the Notes (the "Conversion
Shares"). The Notes and the Conversion Shares may be offered from time to time
for the accounts of the holders named herein (the "Selling Securityholders").
The Notes will mature on May 1, 2005. The Notes are convertible at any time
through the close of business on the final maturity date of the Notes, unless
previously redeemed or repurchased, into Common Stock at a conversion price of
$30.15625 per share, subject to adjustment in certain events. See "Description
of Notes -- Conversion." Interest on the Notes is payable semi-annually on May 1
and November 1 of each year, commencing November 1, 1998.
Prior to May 4, 2001, the Notes are not redeemable at the option of the
Company. Thereafter, the Notes are redeemable at the option of the Company, in
whole or in part, at the declining redemption prices set forth herein, together
with accrued and unpaid interest. See "Description of Notes -- Optional
Redemption by the Company." In the event of a Repurchase Event (as defined),
each holder may require the Company to repurchase all or a portion of such
holder's Notes for cash or, at the Company's option, Common Stock (valued at
95% of the average closing prices for the five trading days immediately
preceding and including the third trading day prior to the repurchase date) at
a repurchase price of 100% of the principal amount of the Notes to be
repurchased plus accrued and unpaid interest to the repurchase date. See
"Description of Notes -- Repurchase at Option of Holders Upon a Repurchase
Event."
The Notes are unsecured obligations of the Company and are subordinated to
all existing and future Senior Indebtedness (as defined) of the Company. The
Company is a holding company and the Notes will be effectively subordinated to
all existing and future liabilities, including trade payables, of the Company's
subsidiaries. The Indenture contains no limitations on the incurrence of
additional indebtedness or other liabilities by the Company and its
subsidiaries. At April 30, 1998, the Company had approximately $10.9 million
principal amount of indebtedness outstanding that would have constituted Senior
Indebtedness and the Company's subsidiaries had approximately $464.4 million of
indebtedness and other liabilities outstanding (excluding liabilities of a type
not required to be reflected on a balance sheet in accordance with generally
accepted accounting principles and intercompany liabilities) to which the Notes
would have been effectively subordinated. See "Description of
Notes--Subordination."
The Notes and Conversion Shares may be sold in one or more transactions at
fixed prices, at prevailing market prices at the time of sale, or at negotiated
prices. See "Plan of Distribution." The Selling Securityholders may effect such
transactions by selling the Notes or Conversion Shares directly or to or through
broker-dealers, who may receive compensation in the form of discounts,
concessions or commissions from the Selling Securityholders and/or the
purchasers of the Notes or Conversion Shares for whom such broker-dealers may
act as agents or to whom they may sell as principals, or both (which
compensation as to a particular broker-dealer might be in excess of customary
commissions). The Company will not receive any of the proceeds from the sale of
the Notes or Conversion Shares by the Selling Securityholders. The Company has
agreed to pay all expenses incident to the offer and sale of the Notes and
Conversion Shares offered by the Selling Securityholders hereby, except that the
Selling Securityholders will pay all underwriting discounts and selling
commissions, if any. See "Plan of Distribution."
<PAGE>
The Notes have been designated for trading on the Private Offerings,
Resales and Trading through Automated Linkages ("PORTAL") Market. Notes sold
pursuant to this Prospectus will not remain eligible for trading on the PORTAL
Market. The Common Stock is listed on the American Stock Exchange under the
Symbol "FIF." The last reported sale price of the Common Stock on the American
Stock Exchange on May 29, 1998 was $23.4375 per share. The Company has submitted
an application to list the Notes and the Common Stock on the New York Stock
Exchange, Inc.
-------------------
The securities offered hereby involve a high degree of risk. See "Risk Factors"
on page 7.
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION,
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is June 11, 1998
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and information statements and other
information with the Securities and Exchange Commission (the "Commission"). Such
reports, proxy statements and information statements and other information may
be inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the Commission's Regional Offices located at Seven World
Trade Center, Suite 1300, New York, New York 10048 and at the Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
material can be obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. Reports,
proxy statements and information statements and other information filed
electronically by the Company with the Commission are available at the
Commission's worldwide web site at http://www.sec.gov. The Company's Common
Stock is listed on the American Stock Exchange. Reports, proxy statements and
information statements and other information concerning the Company may also be
inspected at the offices of the American Stock Exchange, 86 Trinity Place, New
York, New York 10006. The Company has submitted an application to list the
Common Stock and the Notes on the New York Stock Exchange. In the event the
Company is approved to so list the Common Stock and the Notes, reports, proxy
statements and information statements and other information concerning the
Company may also be inspected at the offices of the New York Stock Exchange, 20
Broad Street, New York, New York 10005.
The Company has filed with the Commission a Registration Statement on Form
S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the Notes and Conversion Shares offered hereby. This Prospectus
does not contain all of the information set forth in the Registration Statement
and the exhibits and schedules thereto, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information with respect to the Company, the Notes and the Conversion Shares,
reference is made to the Registration Statement and the exhibits and schedules
thereto. Statements contained in this Prospectus as to the contents of any
contract or other document are not necessarily complete and, in each instance,
reference is made to the copy of such contract or document filed as an exhibit
to the Registration Statement, each such statement being qualified in all
respects by such reference. Copies of the Registration Statement, including all
exhibits thereto, may be obtained from the Commission's principal office in
Washington, D.C. upon payment of the fees prescribed by the Commission, or may
be examined without charge at the offices of the Commission described above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are hereby
incorporated by reference in this Prospectus and made a part hereof:
1. The Company's Annual Report on Form 10-K for the fiscal year ended July
31, 1997;
2. The Company's Quarterly Reports on Form 10-Q for the fiscal quarters
ended October 31, 1997 and January 31, 1998;
3. The Company's Proxy Statement for the Company's Annual Meeting of
Stockholders held on December 9, 1997;
4. The Company's Reports on Form 8-K dated April 16, 1998 and April 27, 1998;
and
5. The description of the Common Stock contained in the Company's
Registration Statement on Form 8-A filed under the Exchange Act on
April 30, 1992.
All reports and other documents filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of this offering shall be deemed to be
incorporated by reference herein and to be a part hereof from the date of filing
of such reports and documents. Any statement incorporated or deemed to be
incorporated herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any
other subsequently filed document which also is or is deemed to be incorporated
by reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company hereby undertakes to provide without charge to each person,
including any beneficial owner, to whom a copy of this Prospectus has been
delivered, upon written or oral request of such person, a copy of any or all of
the foregoing documents incorporated herein by reference (other than exhibits to
such documents, unless such exhibits are specifically incorporated by reference
into such documents). Requests for such documents should be made in writing to
the attention of the Company at 400 Park Avenue, 8th Floor, New York, New York
10022, Attn: Investor Relations, Telephone: (212) 888-3344.
2
<PAGE>
PROSPECTUS SUMMARY
The following information does not purport to be complete and is qualified
in its entirety by, and should be read in conjunction with, the more detailed
information in this Prospectus and in the documents, financial statements and
other information incorporated by reference herein. The securities offered
hereby involve a high degree of risk. See "Risk Factors." This Prospectus
contains certain forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including those set forth in this Prospectus under the heading "Risk Factors"
and elsewhere in this Prospectus. The Company will not undertake to update any
forward-looking statement that may be made from time to time, by or on behalf
of, the Company. Unless the context suggests otherwise, references in this
Prospectus to the "Company" or "Financial Federal" mean Financial Federal
Corporation and its subsidiaries.
The Company
The Company is a nationwide independent financial services company engaged
in financing industrial, commercial and professional equipment through
installment sales and leasing programs for manufacturers, dealers and users of
such equipment. The Company also makes capital loans to its customers,
primarily secured by the same types of equipment. The Company provides its
services primarily to middle-market businesses located throughout the nation in
diverse industries, such as general construction, road and infrastructure
construction and repair, manufacturing, trucking, and waste disposal, the
majority of which businesses have annual sales of less than $25 million. The
Company finances a wide range of revenue-producing equipment such as cranes,
earth-movers, machine tools, personnel lifts, trailers and trucks. In
substantially all cases, the Company's finance receivables are secured by a
first lien on such equipment collateral. The Company's revenues have increased
from $22.9 million in fiscal 1993 to $55.3 million in fiscal 1997 and net
earnings have increased from $5.0 million in fiscal 1993 to $12.9 million in
fiscal 1997. The Company's finance receivables have increased from $210.2
million at July 31, 1993 to $660.3 million at January 31, 1998.
The Company leases, finances and lends against (collectively, "finances")
equipment produced and sold by manufacturers that are well recognized in their
industry. Generally, the equipment financed by the Company is movable, has an
economic life which is longer than the term of the financing provided by the
Company, is not subject to rapid technological obsolescence, has applications
in a number of different industries and has a relatively broad resale market. A
majority of the equipment and machinery pledged as collateral to the Company by
its obligors is used late model equipment, which is generally, at the time
financed, less than five years old, except for cranes and certain other items
of equipment which have economic lives in excess of 15 years. Sample types of
heavy equipment that the Company finances include bulldozers, buses, cranes,
earth-movers, excavators, loaders, machine tools, personnel and material lifts,
recycling equipment, sanitation trucks, trucks and trailers. Most of the
equipment the Company finances is used in more than one industry. The Company
primarily finances its receivables through a $350 million commercial paper
program in addition to borrowings obtained through relationships with
approximately 20 banking institutions and other sources.
The Company's business strategy is to increase profitably the size of its
portfolio of finance receivables and its share of the equipment financing and
leasing market in the United States by (i) continuing its commitment to
customer service, (ii) maintaining its underwriting standards, (iii) continuing
to concentrate on specified types of equipment, (iv) expanding its existing
offices and expanding into new geographic markets, (v) attracting and retaining
dedicated and talented personnel and (vi) improving its borrowing spread and
diversifying its funding sources.
3
<PAGE>
The Company is a holding company and primarily operates through its
wholly-owned subsidiary, Financial Federal Credit Inc. ("FFCI"). FFCI conducts
its business through five full service operating centers located in Texas,
Illinois, New Jersey, North Carolina and Arizona. Each operating center is
responsible for business development as well as credit approval within
designated limits and portfolio administration within its assigned geographic
area. Marketing personnel in approximately 20 marketing locations report to the
five full service operating centers. FFCI's operating center managers have, on
average, over 20 years experience in the industry and have had extensive credit
underwriting, collections and operational experience.
The Company was founded in 1989 and is a Nevada corporation with executive
offices located at 400 Park Avenue, New York, New York 10022. The Company's
telephone number is (212) 888-3344.
4
<PAGE>
The Offering
Securities Offered....... $100,000,000 aggregate principal amount of Notes and
the Conversion Shares.
Interest Payment Dates... May 1 and November 1, beginning November 1, 1998.
Maturity................. May 1, 2005.
Conversion............... Convertible into Common Stock, $.50 par value, of
the Company at any time through the close of
business on the final maturity date of the Notes,
unless previously redeemed or repurchased, at a
conversion price of $30.15625 per share, subject to
adjustment in certain events. See "Description of
Notes--Conversion."
Optional Redemption...... The Notes are not redeemable at the option of the
Company prior to May 4, 2001. Thereafter, the Notes
will be redeemable on at least 20 days' notice at
the option of the Company, in whole or in part at
any time, initially at 102.571% of the principal
amount thereof, and thereafter at prices declining
to 100% at maturity, together with accrued and
unpaid interest. See "Description of Notes --
Optional Redemption by the Company."
Repurchase at Option of
Holders Upon a
Repurchase Event....... In the event that a Repurchase Event (as defined,
and including a Change in Control) occurs, each
holder of a Note may require the Company to
repurchase all or a portion of such holder's Notes
for cash or, at the Company's option, Common Stock
(valued at 95% of the average of the closing prices
for the five trading days immediately preceding and
including the third trading day prior to the
repurchase date) at a repurchase price of 100% of
the principal amount of the Notes to be repurchased,
plus accrued and unpaid interest to the repurchase
date. See "Description of Notes -- Repurchase at
Option of Holders Upon a Repurchase Event."
Ranking.................. The Notes are unsecured obligations of the Company
and are subordinated to all existing and future
Senior Indebtedness (as defined) of the Company. The
Company is a holding company and the Notes will also
be effectively subordinated to all existing and
future liabilities, including trade payables, of the
Company's subsidiaries. As of April 30, 1998, the
Company had approximately $10.9 million principal
amount of indebtedness outstanding that would have
constituted Senior Indebtedness and the Company's
subsidiaries had approximately $464.4 million of
indebtedness and other liabilities outstanding
(excluding liabilities of a type not required to be
reflected on a balance sheet in accordance with
generally accepted accounting principles and
intercompany liabilities) to which the Notes would
have been effectively subordinated. The Indenture
contains no limitations on the incurrence of
additional Senior Indebtedness or other indebtedness
by the Company or any subsidiary. See "Description
of Notes--Subordination."
5
<PAGE>
Use of Proceeds.......... The Company will not receive any proceeds from the
sale by the Selling Securityholders of the Notes or
the Conversion Shares. See "Use of Proceeds."
Registration Rights...... The Company has agreed to use all reasonable
efforts to file with the Commission a shelf
registration statement, of which this Prospectus
forms a part, with respect to the resale of the
Notes and the Conversion Shares and to keep such
shelf registration statement effective until two
years from the latest date of initial issuance of
the Notes. The Company will be required to pay
liquidated damages to the holders of the Notes or
the Common Stock issuable upon conversion of the
Notes, as the case may be, under certain
circumstances if the Company is not in compliance
with its registration obligations. See "Description
of Notes--Registration Rights."
Trading.................. The Notes have been designated for trading on the
Portal Market, however, Notes sold pursuant to this
Prospectus will not remain eligible for trading on
The Portal Market. As of the date of this
Prospectus, the Company's Common Stock is listed on
the American Stock Exchange under the symbol "FIF".
The Company has submitted an application to list the
Common Stock and the Notes on the New York Stock
Exchange. See "Risk Factors -- Absence of Public
Market for the Notes."
6
<PAGE>
RISK FACTORS
This Prospectus contains forward-looking statements that involve risks and
uncertainties. The statements contained in this Prospectus that are not purely
historical are forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934, including without limitation statements regarding the Company's
expectations, beliefs, intentions or strategies regarding the future. All
forward-looking statements included in this document are based on information
available to the Company on the date hereof, and the Company assumes no
obligation to update any such forward-looking statements. The Company's actual
results could differ materially from those anticipated in these forward-looking
statements as a result of certain factors, including those set forth in the
following risk factors and elsewhere in this Prospectus. Potential investors
should consider carefully the following factors, as well as the more detailed
information contained elsewhere in this Prospectus, before making a decision to
invest in the Notes and Conversion Shares offered hereby.
Reliance on Funding; Liquidity Needs
The Company is and will continue to be dependent on funding its business
through commercial paper, bank credit facilities and institutional debt. At
April 30, 1998, the Company had committed unsecured bank credit facilities
aggregating $400 million, under which $13.6 million was outstanding, and had
outstanding commercial paper aggregating $259.8 million. At April 30, 1998 the
Company had unused availability under its committed unsecured bank credit
facilities totaling $131.6 million (excluding $259.8 million which represents
100% coverage for outstanding commercial paper). As of April 30, 1998, the
Company's committed unsecured bank credit facilities expire or mature on various
dates through July 2003. In addition, the Company has established a $100 million
medium term note program, under which $55.0 million was outstanding as of April
30, 1998. There can be no assurance that these funding sources will not be
suspended or reduced at maturity or that these funding sources will be renewed
(as to which there are no obligations to do so) when they expire or mature in
accordance with their respective terms or, if necessary, replaced on terms
acceptable to the Company, if at all. Final scheduled maturities of most of the
Company's finance receivables are longer than the average terms of these funding
sources. If the Company cannot renew or replace these funding sources, its funds
from scheduled payments or dispositions of its finance receivables may not be
sufficient to pay amounts becoming due under these committed unsecured funding
sources. Moreover, there can be no assurance that the Company could obtain
increases in its existing funding sources or obtain additional funding sources
to support the growth of its portfolio of finance receivables. Any inability of
the Company to obtain adequate financing could have a material adverse effect on
the Company's business, financial condition and results of operations.
Credit Loss Risks; Adequacy of Loss Reserves
In addition to general economic and other conditions affecting the
industries and regions of the country in which the Company's obligors operate,
major factors affecting the Company's ability to maintain profitability include
risks associated with: the creditworthiness and integrity of the obligors of
the Company's finance receivables; the adequacy of the documentation relating
to such receivables and collateral; disputes and litigation with such obligors
or with their other creditors or others; the ability to enforce the Company's
lien positions in the event of the bankruptcy of such obligors or otherwise;
and various other factors. Furthermore, a decrease in pledged collateral value
could occur due to changes in equipment resale market conditions, the failure
by users of collateral to properly maintain and protect such collateral or
other events. Although the Company provides a general allowance for losses on
finance receivables, there can be no assurance that such allowance will be
adequate. Any one or more of the foregoing factors could have a material
adverse effect on the Company's business, financial condition and results of
operations.
Effects of Changes In Interest Rates
The Company's profitability depends in large part upon the extent to which
its average yield on finance receivables exceeds its average cost of borrowed
funds. This differential (the Company's net interest
7
<PAGE>
spread) is affected by the extent to which the Company's receivables mature, or
the interest rate on such receivables is reset at different intervals than its
borrowed funds. Because the Company's borrowed funds mature or reprice at a
faster rate than its finance receivables a rapid and sustained rise in market
interest rates, increasing the Company's cost of funds, could materially
adversely affect the Company's net interest spread and, therefore, its
profitability. In addition, increases in market interest rates could materially
adversely affect the volume of originations of new financings and leases
because customers and prospects may refrain from borrowings as a result of
having to pay a higher rate of interest, and so could have a material adverse
effect on the Company's business, financial condition and results of
operations.
Risks of Economic Downturn in the United States
An economic downturn in the United States could result in a decline in the
demand for some of the types of equipment which the Company finances with a
corresponding decline in originations of related finance receivables. In
addition, such a downturn could result in an increase in defaults by obligors
and guarantors of the Company's finance receivables and a decrease in the value
of collateral which the Company could realize upon disposition following such a
default. Any of these results could have a material adverse effect on the
Company's business, financial condition and results of operations. Therefore,
the Company's historical operating results may not be indicative of future
operating results during an economic downturn.
Intense Competition
The Company's business is highly competitive. The Company competes with
banks, manufacturer-owned and independent finance and leasing companies, as
well as other financial institutions. Some of these competitors have sources of
funds available at a lower cost than those available to the Company, thereby
enabling them to provide financing at rates lower than the Company may be
willing to provide. In addition, some of those competitors may be better
positioned than the Company to market their services and financing programs to
vendors and users of equipment because of their ability to offer additional
services and products, and more favorable rates and terms. Many of these
competitors have longer operating histories and possess greater financial and
other resources than the Company. There can be no assurance that the Company
will be able to successfully compete which could have a material adverse effect
on the Company's business, financial condition and results of operations.
Industry Concentrations
The Company's business activities also reflect some industry
concentrations of risk. The Company's finance receivables at April 30, 1998,
were concentrated in the following industries: trucking (18.1%), construction
(15.1%), waste disposal (13.3%) and cranes (12.1%). Historically, the
industries in which the Company's customers operate have been cyclical. Adverse
economic conditions affecting any one or more of the industries in which the
Company is active could have an adverse effect on the financial condition of
the Company's obligors operating in these industries or the value of collateral
used by the Company's obligors in such operations which, in turn, could result
in an increase in defaults by such obligors or a decrease in the value of such
collateral used by the Company's obligors in such industries. Such an increase
in defaults or decrease in collateral value could have a material adverse
effect on the Company's business, financial condition and results of
operations.
Dependence on Key Employees; Ability to Recruit and Retain Qualified Personnel
The success of the Company has been and will be largely dependent on
Clarence Y. Palitz, Jr., its Chief Executive Officer, Paul R. Sinsheimer, its
Chief Operating Officer, Michael C. Palitz, its Chief Financial Officer and
other key personnel. The Company has not entered into employment agreements
with such employees, and the loss of the services of any or all of such
individuals could have a material adverse effect on the Company's business,
financial condition and results of operations. The success of the Company is
dependent upon its ability to hire and retain additional qualified personnel.
Competition for qualified personnel in the financial services industry is
intense and there can be no assurance that the Company will be able to hire or
retain additional qualified personnel.
8
<PAGE>
Ability to Profitably Sustain Growth
In order to sustain the Company's historical rates of growth while
maintaining historical profit levels, the Company will be required to penetrate
further the markets in which it presently operates, as well as successfully
expand into other geographic markets by opening additional regional operating
centers and/or hiring experienced marketing personnel. Accomplishing the
Company's expansion goals will depend upon a number of factors, including
identification of new markets in which the Company can successfully compete,
the continued growth of the United States economy, the integration of new
offices into existing operations, the availability of capital and the hiring of
an adequate number of marketing and other qualified personnel who can be
trained in the Company's operating procedures and philosophy. There can be no
assurance that the Company will be able to expand into new geographic markets,
hire experienced marketing personnel or compete effectively in these markets
and sustain its current growth rate.
Influence by Principal Shareholders
As of the date of this Prospectus, the Company's officers, directors and
their affiliates beneficially own approximately 41% of the outstanding shares of
Common Stock (without giving effect to the purchase by certain principal
officers, directors and their affiliates of approximately 2.5% of the Notes
offered in the initial private placement in April, 1998), and will have voting
control over approximately 34% of the outstanding voting securities of the
Company. Therefore, current management may exercise significant influence in the
election of the directors of the Company and the outcome of most issues
submitted to a vote of stockholders of the Company. Such control could adversely
affect the market price of the Common Stock or delay or prevent a change in
control of the Company. See "Description of Capital Stock"
Geographic Concentrations
The Company has significant concentrations of obligors in various regions
of the country. Of the Company's finance receivables at April 30, 1998, 25.0%
were attributable to obligors located in the Southwest, 24.4% in the Southeast
and 24.1% in the Northeast. Adverse economic conditions affecting any one or
more of these or other regions could have an adverse effect on the financial
condition of the obligors located there or the value of collateral used in such
locations which, in turn, could result in an increase in defaults by such
obligors. Such an increase in defaults or decrease in collateral value could
have a material adverse effect on the Company's business, financial condition
and results of operations.
Year 2000 Issue
The Company utilizes third party vendors' network equipment,
telecommunication products, and other third party software products. The
failure of any critical components in the Company's computer systems to operate
properly in the year 2000 and beyond may require the Company to incur
unanticipated expenses and could have a material adverse effect on the
business, financial condition and results of operations of the Company. The
Company's operations could also be disrupted if the companies with which the
Company does business similarly do not identify and correct year 2000 issues,
and such failure adversely affects their ability to do business with the
Company.
Computer Systems Expansion
The Company has plans to upgrade its information systems for the
management of its receivables portfolio. Any problems in converting to the new
system and any inability of the new system to correctly manage the portfolio
could have a material adverse effect on the Company's business, financial
condition and results of operations.
Possible Liability Claims
Use of some of the equipment which the Company leases to its customers
involves inherent risks from accidents or misuse which could result in property
damage, personal injury or other losses. Although the Company typically
requires lessees to maintain insurance against such claims and no such claims
have been filed to
9
<PAGE>
date, in the event of an accident or the misuse of such equipment, the
aggrieved party could attempt to hold the Company liable for damages. If a
court were to hold the Company as well as the user liable in such a case, the
Company's damages could be substantial and could have a material adverse effect
on the Company's business, financial condition and results of operations.
Subordination
The Notes are unsecured obligations of the Company and subordinated in
right of payment in full to all existing and future Senior Indebtedness (as
defined) of the Company. As a result of such subordination, in the event of any
insolvency, liquidation or reorganization of the Company, payment default on
Senior Indebtedness and certain other events, the assets of the Company will be
available to pay obligations on the Notes only after all Senior Indebtedness has
been paid in full, and there may not be sufficient assets remaining to pay
amounts due on any or all of the Notes then outstanding. The Indenture (as
defined herein) does not prohibit or limit the incurrence of Senior Indebtedness
or the incurrence of other indebtedness and other liabilities by the Company or
any subsidiary, and the incurrence of additional indebtedness and other
liabilities by the Company or any subsidiary could adversely affect the
Company's ability to pay its obligations on the Notes. At April 30, 1998, the
Company had approximately $10.9 million principal amount of indebtedness
outstanding that would have constituted Senior Indebtedness, and the Company's
subsidiaries had approximately $464.4 million of indebtedness and other
liabilities outstanding (other than liabilities of a type not required to be
reflected in a balance sheet in accordance with generally accepted accounting
principles and intercompany indebtedness) to which the Notes would have been
effectively subordinated. The Company anticipates that from time to time it will
incur indebtedness, including Senior Indebtedness. See "Description of Notes --
Subordination."
Holding Company Structure
The issuer of the Notes is a holding company with no significant operating
assets. The Company's ability to redeem, repurchase or make interest and
principal payments on the Notes is dependent upon the earnings of its
subsidiaries and the distribution of those earnings (through dividends or
otherwise) to, or upon royalties, license fees, loans or other payment of funds
by those subsidiaries to, the Company. The subsidiaries are separate and
distinct legal entities and have no obligation, contingent or otherwise, to pay
any amounts due pursuant to the Notes or to make any funds available therefor,
whether by dividends, loans or other payments. In addition, the payment of
dividends and the making of loans and advances to the Company by its
subsidiaries may be subject to statutory, contractual or other restrictions and
are dependent upon the earnings or financial condition of those subsidiaries and
subject to various business considerations. As a result, the Company may be
unable to gain access to the cash flow or assets of its subsidiaries in amounts
sufficient to pay the principal of or interest on the Notes when due or to
redeem Notes at the option of the holders thereof after the occurrence of a
Repurchase Event.
The Notes are effectively subordinated to the liabilities, including trade
payables and lease obligations, if any, of the subsidiaries of the Company. Any
right of the Company to receive the assets of any of its subsidiaries upon the
liquidation or reorganization thereof (and the consequent right of the holders
of the Notes to participate in those assets) will be effectively subordinated to
the claims of that subsidiary's creditors (including trade creditors), except to
the extent that the Company is itself recognized as a creditor of such
subsidiary, in which case the claims of the Company would still be subordinate
to any security interests in the assets of such subsidiary and any indebtedness
of such subsidiary and any indebtedness of such subsidiary senior to that held
by the Company. The Indenture does not prohibit or limit the incurrence of
indebtedness and other liabilities by any subsidiary of the Company, and the
incurrence of additional indebtedness and other liabilities by any subsidiary of
the Company could materially adversely affect the Company's ability to pay its
obligations on the Notes. As of April 30, 1998, the Company's subsidiaries had
approximately $464.4 million of indebtedness and other liabilities outstanding
(excluding liabilities of a type not required to be reflected on a balance sheet
in accordance with generally accepted accounting principles and intercompany
liabilities) to which the Notes would have been effectively subordinated. The
Company anticipates that from time to time its subsidiaries will incur
significant amounts of additional indebtedness and other liabilities. See
"Description of Notes -- Subordination."
Limitations on Repurchase of Notes
If a Repurchase Event (as defined) were to occur, there can be no
assurance that the Company would have sufficient financial resources, or would
be able to arrange financing to pay the repurchase price in cash for all Notes
tendered by holders thereof. The Company's ability to repurchase Notes with
cash may also be limited or prohibited by the terms of its then-existing
borrowing arrangements. Moreover, although under the Indenture the
10
<PAGE>
Company may elect, subject to satisfaction of certain conditions, to pay the
repurchase price for the Notes using shares of Common Stock, any future credit
agreements or other agreements relating to other indebtedness (including other
Senior Indebtedness) to which the Company becomes a party may contain
restrictions on or prohibitions of the repurchase of the Notes by the Company
that apply even if the purchase price is paid with shares of capital stock. In
the event a Repurchase Event occurs at a time when the Company is prohibited
from repurchasing Notes, the Company could seek the consent of its lenders to
the repurchase of the Notes or could attempt to refinance the borrowings that
contain such prohibition. If the Company does not obtain such a consent or
repay such borrowings, the Company would remain prohibited from repurchasing
Notes. In such case, the Company's failure to repurchase the Notes would
constitute an Event of Default under the Indenture whether or not payment of
the repurchase price is permitted by the subordination provisions of the
Indenture. Any such default may, in turn, cause a default under Senior
Indebtedness of the Company. Moreover, the occurrence of a Repurchase Event in
and of itself may constitute an event of default under Senior Indebtedness of
the Company. As a result, in either case, payment of the repurchase price of
the Notes with cash would, absent a waiver, be prohibited under the
subordination provisions of the Indenture until the Senior Indebtedness is paid
in full. See "Description of Notes -- Subordination."
No Notes may be repurchased at the option of holders upon a Repurchase
Event if there has occurred and is continuing an Event of Default described
under "Description of Notes -- Events of Default and Remedies" below (other
than a default in the payment of the repurchase price with respect to such
Notes on the repurchase date).
Absence of Public Market for the Notes
The Notes were issued in a private placement to a limited number of
institutional investors and certain affiliates of the Company who are accredited
investors. The Notes have been designated for trading on The Portal Market;
however, Notes sold pursuant to this Prospectus will not remain eligible for
trading on The Portal Market. The Company has submitted an application to list
the Common Stock and the Notes on the New York Stock Exchange. However,
there can be no assurance that any market for the Notes will develop or, if one
does develop, that it will be maintained. The failure of an active market for
the Notes to develop or to be sustained could have a material adverse effect on
the trading price of such Notes. If a public trading market develops for the
Notes, future trading prices of the Notes will depend on many factors,
including, among other things, prevailing interest rates and the market price of
the shares of Common Stock.
Potential Price Volatility of Notes and Common Stock; Effect of Sales of Common
Stock Underlying the Notes
The securities markets have from time to time experienced significant
price and volume fluctuations that may be unrelated to the operating
performance of particular companies. The market prices of the common stock of
many publicly traded finance companies have in the past been, and can in the
future be expected to be, especially volatile. Economic and other external
factors, as well as period-to-period fluctuations in the Company's financial
results, may have a significant impact on the market price of the Notes and the
Common Stock. Factors affecting the trading prices of the Notes and Common
Stock include, without limitation, fluctuations in finance revenue and net
earnings of the Company or its competitors, shortfalls in the Company's
operating results from levels forecast by securities analysts, announcements
concerning the Company, its competitors or customers, the introduction of new
products or changes in product pricing policies by the Company, its competitors
or its customers, market conditions in the industry and the general state of
the securities market. In addition, the trading prices of the Notes and the
Common Stock could be adversely impacted by sales of the Common Stock issuable
upon conversion of the Notes.
11
<PAGE>
USE OF PROCEEDS
The Company will not receive any proceeds from the sale by the Selling
Securityholders of the Notes or the Conversion Shares.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the Company's consolidated ratio of earnings
to fixed charges for the period shown.
Nine Months
Ended
Year Ended July 31, April 30,
------------------------------------- ---------------
1993 1994 1995 1996 1997 1997 1998
---- ---- ---- ---- ---- ---- ----
Ratio of
earnings to
fixed
charges....... 1.97 1.95 1.70 1.79 1.89 1.90 1.85
For purposes of calculating the ratio of earnings to fixed charges, (i)
earnings consist of consolidated income before income taxes plus fixed charges
and (ii) fixed charges consist of interest expense and the portion of rental
expense (one third) under operating leases deemed by the Company to be
representative of the interest factor.
DIVIDEND POLICY
The Company presently has no intention of paying cash dividends on the
Common Stock in the foreseeable future. The payment of cash dividends, if any,
will depend upon the Company's earnings, financial condition, capital
requirements, cash flow and long range plans and such other factors as the
Board of Directors of the Company may deem relevant.
12
<PAGE>
SELLING SECURITYHOLDERS
The Notes were originally acquired from the Company by the Initial
Purchasers on April 29, 1998. The Initial Purchasers have advised the Company
that the Initial Purchasers resold the Notes in transactions exempt from the
registration requirements of the Securities Act to "qualified institutional
buyers" (as defined in Rule 144A of the Securities Act) and to a limited number
of affiliates of the Company who are accredited investors (as defined in Rule
501(a) of the Securities Act). These subsequent purchasers, or their
transferees, pledgees, donees or successors, may from time to time offer and
sell any or all of the Notes and/or Conversion Shares pursuant to this
Prospectus. The following table sets forth certain information as of May 30,
1998 concerning the principal amount of Notes beneficially owned by each
Selling Securityholder and the number of Conversion Shares that may be offered
from time to time pursuant to this Prospectus.
Except as indicated below, no Selling Securityholders have had any
position, office or other material relationship with the Company or its
affiliates within the past three years.
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
OF NOTES NUMBER OF
BENEFICIALLY PERCENTAGE OF CONVERSION SHARES PERCENTAGE OF
OWNED NOTES THAT COMMON STOCK
NAME THAT MAY BE SOLD OUTSTANDING MAY BE SOLD (1) OUTSTANDING (2)
---- ---------------- ------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Arkansas PERS 800,000 * 26,528 *
Associated Electric & Gas Insurance Services Limited 150,000 * 4,974 *
BancAmerica Robertson Stephens (3)(4) 6,155,000 6.2 204,104 1.4
BNP Arbitrage SNC 4,350,000 4.4 144,248 *
CALAMOS Growth and Income Fund 170,000 * 5,637 *
California Public Employees' Retirement System 2,500,000 2.5 82,901 *
Canadian Imperial Holdings, Inc. 5,000,000 5.0 165,803 1.1
Champion International Corporation Master
Retirement Trust 890,000 * 29,512 *
CIBC Oppenheimer Corp. (4) 2,000,000 2.0 66,321 *
C.M.S. Family Associates Limited Partnership (5) 1,000,000 1.0 33,160 *
CYP, Inc. (6) 500,000 * 16,580 *
Delaware PERS 550,000 * 18,238 *
Delta Airlines Master Trust 1,525,000 1.5 50,569 *
Donaldson, Lufkin & Jenrette Securities Corporation 4,000,000 4.0 132,642 *
Dorinco Reinsurance Company 1,200,000 1.2 39,792 *
The Dow Chemical Company Employee's Retirement Plan 1,555,000 1.6 51,564 *
Flemington Investments Ltd. 1,000,000 1.0 33,160 *
The Fondren Foundation 135,000 * 4,476 *
Genesee County Employee's Retirement System 500,000 * 16,580 *
HSBC Securities, Inc. 1,500,000 1.5 49,740 *
ICI American Holdings Trust 240,000 * 7,958 *
J.P. Morgan & Co. Inc. 3,000,000 3.0 99,481 *
Kettering Medical Center Funded Depreciation Account 80,000 * 2,652 *
Laterman & Co. 300,000 * 9,948 *
Laterman Strategies 90s LLC 600,000 * 19,896 *
Michael C. Palitz 1998 Grantor Retained
Annuity Trust (7) 500,000 * 16,580 *
Nalco Chemical Retirement 120,000 * 3,979 *
Offshore Strategies Ltd. 600,000 * 19,896 *
Pacific Life Insurance Company 2,000,000 2.0 66,321 *
Paloma Securities L.L.C 2,500,000 2.5 82,901 *
Port Authority of Allegheny County Retirement
and Disability Allowance Plan for
the Employees Represented by Local 85
of the Amalgamated Transit Union 1,075,000 1.1 35,647 *
PRIM Board 1,050,000 1.1 34,818 *
RJR Nabisco, Inc. Defined Benefit Master Trust 670,000 * 22,217 *
Silverton International Fund Limited 2,500,000 * 82,901 *
Southern Farm Bureau Life Insurance - FRIC 570,000 * 18,901 *
Southern Farm Bureau Life Insurance Company 1,200,000 1.2 39,792 *
Starvest Diversified Fund - Managed 200,000 * 6,632 *
State of Oregon/SAIF Corporation 3,600,000 3.6 119,378 *
Suzanne L. Palitz 1998 Grantor Retained
Annuity Trust (8) 500,000 * 16,580 *
The Travelers Indemnity Company 2,916,000 2.9 96,696 *
The Travelers Insurance Company 1,865,000 1.9 61,844 *
The Travelers Life & Annuity Company 219,000 * 7,262 *
The Travelors Series Trust Convertible
Bond Portfolio 100,000 * 3,316 *
Unifi, Inc. Profit Sharing Plan and Trust 160,000 * 5,305 *
United Food and Commercial Workers Local 1262 and 425,000 * 14,093 *
Employers Pension Fund
Univar Corporation 290,000 * 9,616 *
Van Kampen American Capital Harbor Fund 3,414,000 3.4 113,210 *
Van Kampen American Capital Convertible
Securities Fund 586,000 * 19,432 *
Zeneca Holdings Pension Trust 240,000 * 7,958 *
Other Selling Securityholders 33,000,000 33.0 1,094,301 6.9
</TABLE>
<PAGE>
* Less than 1%
(1) Assumes conversion of the full amount of Notes held by such holder at the
initial conversion price of $30.15625 per share; such conversion price is
subject to adjustment as described under "Description of the Notes -
Conversion." Accordingly, the number of shares of Common Stock issuable
upon conversion of the Notes may increase or decrease from time to time.
Under the terms of the Indenture, fractional shares will not be issued upon
conversion of the Notes; cash will be paid in lieu of fractional shares, if
any.
(2) Computed in accordance with Rule 13d-3(d)(1) promulgated under the Exchange
Act and based upon 14,825,428 shares of Common Stock outstanding as of May
27, 1998, treating as outstanding the number of Conversion Shares shown as
being issuable upon the assumed conversion by the named holder of the full
amount of such holder's Notes but not assuming the conversion of the Notes
of any other holder.
(3) An affiliate of BancAmerica Robertson Stephens has made available to FFCI
revolving credit facilities of up to an aggregate amount of $40 million
of which $10 million expires on July 29, 1998 or such earlier date as FFCI
or such affiliate shall terminate the facilities, and of which $30 million
expires on August 1, 2001 or such earlier date as FFCI or such affiliate
shall terminate the facilities. As of April 30, 1998, no amount was
outstanding under these facilities.
(4) Participated in the initial issuance of the Notes in a private placement in
April, 1998 as an Initial Purchaser (as defined herein) of the Notes.
Certain of the Initial Purchasers and their affiliates have engaged in
transactions with and performed various investment banking, commercial
banking and other services for the Company in the past, and may do so from
time to time in the future.
(5) Clarence Y. Palitz, Jr., a Director, Chairman, President and Chief
Executive Officer of the Company, is the controlling shareholder of CYP,
Inc. which is the managing general partner of C.M.S. Family Associates
Limited Partnership.
(6) Clarence Y. Palitz, Jr., a Director, Chairman, President and Chief
Executive Officer of the Company, is the controlling shareholder of CYP,
Inc.
(7) Michael C. Palitz, a Director, Treasurer, Chief Financial Officer and
Executive Vice President of the Company and Clarence Y. Palitz, Jr., a
Director, Chairman, President and Chief Executive Officer of the Company,
are both Trustees of the Trust, and can each direct the disposition of the
Notes.
(8) Clarence Y. Palitz, Jr., a Director, Chairman, President and Chief
Executive Officer of the Company, is a Trustee and can direct the
disposition of the Notes.
The preceding table has been prepared based upon the information furnished
to the Company by The First National Bank of Chicago, as trustee (the "Trustee")
for the Notes, by The Depository Trust Company ("DTC"), and by the Selling
Securityholders, listed above.
The Selling Securityholders identified above may have sold, transferred or
otherwise disposed of, in transactions exempt from the registration requirements
of the Securities Act, all or a portion of their Notes since the date on which
the information in the preceding table is presented. Information concerning the
Selling Securityholders may change from time to time and any such changed
information will be set forth in supplements to this Prospectus if and when
necessary. Because the Selling Securityholders may offer all or some of the
Notes that they hold and/or Conversion Shares pursuant to the offering
contemplated by this Prospectus, no estimate can be given as to the amount of
the Notes or Conversion Shares that will be held by the Selling Securityholders
upon the termination of this offering. See "Plan of Distribution."
13
<PAGE>
DESCRIPTION OF NOTES
The Notes have been issued under an indenture dated as of April 15, 1998
(the "Indenture"), between the Company and The First National Bank of Chicago,
as trustee (the "Trustee"). The terms of the Notes include those stated in the
Indenture and the Registration Rights Agreement (as defined herein). The
following summaries of certain provisions of the Notes, the Indenture and the
Registration Rights Agreement do not purport to be complete and are subject to,
and are qualified in their entirety by reference to, all the provisions of the
Notes, the Indenture and the Registration Rights Agreement, including the
definitions therein of certain terms which are not otherwise defined in this
Prospectus. Wherever particular provisions or defined terms of the Indenture (or
of the form of Note which is a part thereof) or the Registration Rights
Agreement are referred to, such provisions or defined terms are incorporated
herein by reference. Copies of the Indenture, form of Note and the Registration
Rights Agreement have been filed as exhibits to the Registration Statement of
which this Prospectus forms a part. As used in this Description of Notes, the
"Company" refers only to Financial Federal Corporation and does not, unless the
context otherwise indicates, include any of its subsidiaries.
General
The Notes are unsecured general obligations of the Company subordinate in
right of payment to certain other obligations of the Company as described under
"--Subordination," and convertible into Common Stock as described under
"--Conversion." The Notes are limited to $100,000,000 aggregate principal amount
and will mature on May 1, 2005 unless earlier redeemed at the option of the
Company or repurchased by the Company at the option of the holder upon a
Repurchase Event (as defined).
The Notes bear interest from April 29, 1998 at the annual rate set forth on
the cover page hereof, payable semi-annually on May 1 and November 1, commencing
on November 1, 1998, to holders of record at the close of business on the
preceding April 15 and October 15, respectively (subject to certain exceptions
in the case of conversion, redemption or repurchase of such Notes prior to the
applicable interest payment date). Interest is computed on the basis of a
360-day year comprised of twelve 30-day months.
Principal and premium, if any, is payable, and the Notes may be
presented for conversion, registration of transfer and exchange, without
service charge, at the office of the Company maintained by the Company for such
purposes in the Borough of Manhattan, The City of New York, which shall
initially be an office or agency of the Trustee. In addition, interest may, at
the Company's option, be paid by check mailed to such holders, provided that a
holder of Notes with an aggregate principal amount equal to or in excess of
$5,000,000 will be paid by wire transfer in immediately available funds at the
election of such holder.
The Indenture does not contain any financial covenants or any restrictions
on the payment of dividends, the repurchase of securities of the Company or the
incurrence of Senior Indebtedness or other indebtedness. The Indenture contains
no covenants or other provisions to afford protection to holders of Notes in
the event of a highly leveraged transaction or a change in control of the
Company except to the limited extent described under "--Repurchase at Option of
Holders Upon a Repurchase Event" below.
No service charge will be made for any registration or transfer or
exchange of Notes, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith. The
Company is not required to exchange or register the transfer of (i) any Note
for a period of 15 days next preceding any selection of Notes to be redeemed,
(ii) any Note or portion thereof selected for redemption, (iii) any Note or
portion thereof surrendered for conversion, or (iv) any Note or portion thereof
surrendered for repurchase (and not withdrawn) in connection with a Repurchase
Event.
14
<PAGE>
Conversion
The holders of Notes are entitled at any time through the close of business
on the final maturity date of the Notes, subject to prior redemption or
repurchase, to convert any Notes or portions thereof (in denominations of $1,000
or multiples thereof) into Common Stock of the Company, at the conversion price
set forth on the cover page of this Prospectus, subject to adjustment as
described below. Except as described below, no adjustment will be made on
conversion of any Notes for interest accrued thereon or for dividends on any
Common Stock issued. If Notes are converted after a record date for the payment
of interest and prior to the next succeeding interest payment date, such Notes,
other than Notes called for redemption pursuant to a redemption notice mailed to
the holders by the Company in accordance with the Indenture, must be accompanied
by funds equal to the interest payable on such succeeding interest payment date
on the principal amount so converted. The Company is not required to issue
fractional shares of Common Stock upon conversion of Notes and, in lieu thereof,
will pay a cash adjustment based upon the market price of the Common Stock on
the last business day prior to the date of conversion. In the case of Notes
called for redemption, conversion rights will expire at the close of business on
the business day preceding the date fixed for redemption, unless the Company
defaults in payment of the redemption price. A Note for which a holder has
delivered a Repurchase Event purchase notice exercising the option of such
holder to require the Company to repurchase such Note may be converted only if
such notice is withdrawn by a written notice of withdrawal delivered by the
holder to the Company prior to the close of business on the business day
immediately preceding the date fixed for repurchase.
The right of conversion attaching to any Note may be exercised by the
holder by delivering the Note at the specified office of a conversion agent,
accompanied by a duly signed and completed notice of conversion, together with
any funds that may be required as described in the preceding paragraph. The
conversion date shall be the date on which the Note, the duly signed and
completed notice of conversion, and any funds that may be required as described
in the preceding paragraph shall have been so delivered. A holder delivering a
Note for conversion will not be required to pay any taxes or duties payable in
respect of the issuance or delivery of Common Stock on conversion, but will be
required to pay any tax or duty which may be payable in respect of any transfer
involved in the issuance or delivery of the Common Stock in a name other than
that of the holder of the Note. Certificates representing shares of Common
Stock will not be issued or delivered unless all taxes and duties, if any,
payable by the holder have been paid.
15
<PAGE>
The initial conversion price of $30.15625 per share of Common Stock is
subject to adjustment (under formulae set forth in the Indenture) in certain
events, including: (i) the issuance of Common Stock as a dividend or
distribution on Common Stock; (ii) certain subdivisions and combinations of the
Common Stock; (iii) the issuance to all holders of Common Stock of certain
rights or warrants to purchase Common Stock at less than the current market
price of the Common Stock; (iv) the dividend or other distribution to all
holders of Common Stock of shares of capital stock of the Company (other than
Common Stock) or evidences of indebtedness of the Company or assets (including
securities, but excluding those rights, warrants, dividends and distributions
referred to above or paid exclusively in cash); (v) dividends or other
distributions consisting exclusively of cash (excluding any cash portion of
distributions referred to in clause (iv)) to all holders of Common Stock to the
extent that such distributions, combined together with (A) all other such
all-cash distributions made within the preceding 12 months in respect of which
no adjustment has been made plus (B) any cash and the fair market value of
other consideration payable in respect of any tender offers by the Company or
any of its subsidiaries for Common Stock concluded within the preceding 12
months in respect of which no adjustment has been made, exceed 10% of the
Company's market capitalization (being the product of the then current market
price of the Common Stock times the number of shares of Common Stock then
outstanding) on the record date for such distribution; (vi) the purchase of
Common Stock pursuant to a tender offer made by the Company or any of its
subsidiaries to the extent that the same involves an aggregate consideration
that, together with (X) any cash and the fair market value of any other
consideration payable in any other tender offer by the Company or any of its
subsidiaries for Common Stock expiring within the 12 months preceding such
tender offer in respect of which no adjustment has been made plus (Y) the
aggregate amount of any such all-cash distributions referred to in clause (v)
above to all holders of Common Stock within the 12 months preceding the
expiration of such tender offer in respect of which no adjustments have been
made, exceeds 10% of the Company's market capitalization on the expiration of
such tender offer; and (vii) payment in respect of a tender offer or exchange
offer by a person other than the Company or any subsidiary of the Company in
which, as the closing of the offer, the Board of Directors is not recommending
rejection of the offer. The adjustment referred to in clause (vii) above will
only be made if the tender offer or exchange offer is for an amount which
increases that person's ownership of Common Stock to more than 25% of the total
shares of Common Stock outstanding, and only if the cash and value of any other
consideration included in such payment per share of Common Stock exceeds the
current market price per share of Common Stock on the business day next
succeeding the last date on which tenders or exchanges may be made pursuant to
such tender or exchange. The adjustment referred to in clause (vii) above will
not be made, however, if, as of the closing of the offer, the offering
documents with respect to such offer disclose a plan or an intention to cause
the Company to engage in any transaction described below in "--Consolidation,
Merger or Assumption."
The Indenture provides that if the Company implements a stockholders'
rights plan, such rights plan must provide that upon conversion of the Notes the
holders will receive, in addition to the Common Stock issuable upon such
conversion, such rights whether or not such rights have separated from the
Common Stock at the time of such conversion.
In the case of (i) any reclassification or change of the Common Stock
(other than changes in par value or resulting from a subdivision or
combination) or (ii) a consolidation, merger, or combination involving the
Company or a sale or conveyance to another corporation of the property and
assets of the Company as an entirety or substantially as an entirety, in each
case as a result of which holders of Common Stock shall be entitled to receive
stock, other securities, other property or assets (including cash) with respect
to or in exchange for such Common Stock, the holders of the Notes then
outstanding will be entitled thereafter to convert such Notes into the kind and
amount of shares of stock, other securities or other property or assets
(including cash) which they would have owned or been entitled to receive upon
such reclassification, change, consolidation, merger, combination, sale or
conveyance had such Notes been converted into Common Stock immediately prior to
such reclassification, change, consolidation, merger, combination, sale or
conveyance (assuming, in a case in which the Company's stockholders may
exercise rights of election, that a holder of Notes would not have exercised
any rights of election as to the stock, other securities or other property or
assets (including cash) receivable in connection therewith and received per
share the kind and amount received per share by a plurality of non-electing
shares).
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In the event of a taxable distribution to holders of Common Stock (or
other transaction) which results in any adjustment of the conversion price, the
holders of Notes may, in certain circumstances, be deemed to have received a
distribution subject to United States income tax as a dividend; in certain
other circumstances, the absence of such an adjustment may result in a taxable
dividend to the holders of Common Stock. See "Certain Federal Income Tax
Considerations".
The Company from time to time may, to the extent permitted by law, reduce
the conversion price of the Notes by any amount for any period of at least 20
days, in which case the Company shall give at least 15 days' notice of such
decrease, if the Board of Directors has made a determination that such decrease
would be in the best interests of the Company, which determination shall be
conclusive. The Company may, at its option, make such reductions in the
conversion price, in addition to those set forth above, as the Board of
Directors deems advisable to avoid or diminish any income tax to holders of
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. See
"Certain Federal Income Tax Considerations".
No adjustment in the conversion price will be required unless such
adjustment would require a change of at least l% in the conversion price then
in effect; provided that any adjustment that would otherwise be required to be
made shall be carried forward and taken into account in any subsequent
adjustment. Except as stated above, the conversion price will not be adjusted
for the issuance of Common Stock or any securities convertible into or
exchangeable for Common Stock or carrying the right to purchase any of the
foregoing.
Optional Redemption by the Company
The Notes are not redeemable at the option of the Company prior to May 4,
2001. At any time on or after that date, the Notes may be redeemed at the
Company's option on at least 20 but not more than 60 days' notice, as a whole
or, from time to time in part, at the following prices (expressed in
percentages of the principal amount), together with accrued interest to, but
excluding, the date fixed for redemption; provided that if a redemption date is
an interest payment date, the semi-annual payment of interest becoming due on
such date shall be payable to the holder of record as of the relevant record
date.
If redeemed during the 12-month period beginning May 1 (May 4, 2001
through April 30, 2002 in the case of the first such period):
Year Redemption Price
---- ----------------
2001 ...................................... 102.571%
2002 ...................................... 101.929
2003 ...................................... 101.286
2004 ...................................... 100.643
and 100% at May 1, 2005.
If fewer than all the Notes are to be redeemed, the Trustee will select
the Notes to be redeemed in principal amounts of $1,000 or multiples thereof by
lot or, in its discretion, on a pro rata basis or by a method the Trustee
considers fair and appropriate (as long as such method is not prohibited by the
rules of any United States national securities exchange or of an established
automated over-the-counter trading market in the United States on which the
Notes are then listed). If any Note is to be redeemed in part only, a new Note
or Notes in principal amount equal to the unredeemed principal portion thereof
will be issued. If a portion of a holder's Notes is selected for partial
redemption and such holder converts a portion of such Notes, such converted
portion shall be deemed to be taken from the portion selected for redemption.
No sinking fund is provided for the Notes.
Repurchase at Option of Holders Upon a Repurchase Event
The Indenture provides that if a Repurchase Event (as defined) occurs,
each holder of Notes shall have the right, at the holder's option, to require
the Company to repurchase all of such holder's Notes, or any portion
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thereof that is an integral multiple of $1,000, on the date (the "repurchase
date") that is 40 calendar days after the date of the Company Notice (as
defined), for cash at a price equal to 100% of the principal amount of the
Notes, together with accrued interest, if any, to the repurchase date (the
"repurchase price"), provided, however, that if a repurchase date is an
interest payment date, the semi-annual payment of interest becoming due on such
date shall be payable to the holder of record as of the relevant record date.
The Company may, at its option, in lieu of paying the repurchase price in
cash, pay the repurchase price in Common Stock valued at 95% of the average of
the closing prices of the Common Stock for the five consecutive trading days
ending on and including the third trading day preceding the repurchase date.
Payment may not be made in Common Stock unless the Company satisfies certain
conditions with respect to such payment as provided in the Indenture.
Within 15 calendar days after the occurrence of a Repurchase Event, the
Company is obligated to mail to all holders of record of the Notes a notice
(the "Company Notice") of the occurrence of such Repurchase Event and of the
repurchase right arising as a result thereof. The Company must deliver a copy
of the Company Notice to the Trustee and cause a copy or a summary of such
notice to be published in a newspaper of general circulation in the City of New
York. To exercise the repurchase right, a holder of such Notes must deliver, on
or before the 35th calendar day after the date of the Company Notice, written
notice to the Company (or an agent designated by the Company for such purpose)
and the Trustee of the holder's exercise of such right, together with the Notes
with respect to which the right is being exercised, duly endorsed for transfer
to the Company.
"Repurchase Event" means a Change in Control (as defined) or a Termination
of Trading (as defined).
"Change in Control" will be deemed to have occurred when (i) any "person"
or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange
Act) is or becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5
under the Exchange Act) of shares representing more than 50% of the combined
voting power of the then outstanding securities entitled to vote generally in
elections of directors of the Company ("Voting Stock"); (ii) approval by
stockholders of the Company of any plan or proposal for the liquidation,
dissolution or winding up of the Company; (iii) the Company (A) consolidates
with or merges into any other corporation or any other corporation merges into
the Company, and in the case of any such transaction, the outstanding Common
Stock of the Company is changed or exchanged into or for other assets or
securities as a result, unless the stockholders of the Company immediately
before such transaction own, directly or indirectly immediately following such
transaction, at least 51% of the combined voting power of the outstanding
voting securities of the corporation resulting from such transaction in
substantially the same proportion as their ownership of the Voting Stock
immediately before such transaction or (B) conveys, transfers or leases all or
substantially all of its assets to any person; or (iv) any time Continuing
Directors (as defined) do not constitute a majority of the Board of Directors
of the Company (or, if applicable, a successor corporation to the Company);
provided that a Change in Control shall not be deemed to have occurred if
either (x) the last sale price of the Common Stock for any five trading days
during the ten trading days immediately preceding the Change in Control is at
least equal to 105% of the conversion price in effect on such day or (y) in the
case of a merger or consolidation otherwise constituting a Change in Control,
at least 90% of the consideration (excluding cash payments for fractional
shares) in such merger or consolidation constituting the Change in Control
consists of common stock traded on a United States national securities exchange
or quoted on the Nasdaq National Market (or which will be so traded or quoted
when issued or exchanged in connection with such Change in Control) and as a
result of such transaction or transactions such Notes become convertible solely
into such common stock.
"Continuing Director" means at any date a member of the Company's Board of
Directors (i) who was a member of such board on April 24, 1998, or (ii) who was
nominated or elected by at least a majority of the directors who were Continuing
Directors at the time of such nomination or election or whose election to the
Company's Board of Directors was recommended or endorsed by at least a majority
of the directors who were Continuing Directors at the time of such nomination or
election or such lesser number comprising a majority of a nominating committee
if authority for such nominations or elections has been delegated to a
nominating committee whose authority and composition has been approved by at
least a majority of the directors who were Continuing Directors at the time such
committee was formed. (Under this definition, if the current Board of Directors
of the Company were to approve a new director or directors and then resign, no
Change in Control would occur even though the current Board of Directors would
thereafter cease to be in office.)
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The phrase "all or substantially all" of the assets of the Company, as
included in the definition of Change in Control, is likely to be interpreted by
reference to applicable state law at the relevant time, and will be dependent
on the facts and circumstances existing at such time. As a result, there may be
a degree of uncertainty in ascertaining whether a sale or transfer of "all or
substantially all" of the assets of the Company has occurred.
A "Termination of Trading" shall have occurred if the Common Stock (or
other common stock into which the Notes are then convertible) is neither listed
for trading on a United States national securities exchange nor approved for
trading on any established automated over-the-counter trading market in the
United States, provided that if such occurrence is the result of the primary
exchange or market on which such Common Stock was so listed or traded generally
not being available for listing or trading of securities, such occurrence shall
not be a "Termination of Trading" unless the Common Stock continues to be
neither so listed for trading nor so approved for trading for more than 30
days.
If a Repurchase Event were to occur, there can be no assurance that the
Company would have sufficient financial resources, or would be able to arrange
financing, to pay the repurchase price in cash for all Notes tendered by
holders thereof. The Company's ability to repurchase Notes with cash may also
be limited or prohibited by the terms of its then-existing borrowing
arrangements. Moreover, although under the Indenture the Company may elect,
subject to satisfaction of certain conditions, to pay the repurchase price for
the Notes using shares of Common Stock, any future credit agreements or other
agreements relating to other indebtedness (including other Senior Indebtedness)
to which the Company becomes a party may contain restrictions on or
prohibitions of the repurchase of the Notes by the Company that apply even if
the repurchase price is paid with shares of capital stock. In the event a
Repurchase Event occurs at a time when the Company is prohibited from
repurchasing Notes, the Company could seek the consent of its lenders to the
repurchase of the Notes or could attempt to refinance the borrowings that
contain such prohibition. If the Company does not obtain such a consent or
repay such borrowings, the Company would remain prohibited from repurchasing
Notes. In such case, the Company's failure to repurchase the Notes would
constitute an Event of Default under the Indenture whether or not payment of
the repurchase price is permitted by the subordination provisions of the
Indenture. Any such default may, in turn, cause a default under Senior
Indebtedness of the Company. Moreover, the occurrence of a Repurchase Event
may, in turn, cause a default under Senior Indebtedness of the Company. As a
result, in either case, payment of the repurchase price of the Notes with cash
would, absent a waiver, be prohibited under the subordination provisions of the
Indenture until the Senior Indebtedness is paid in full. See "--Subordination"
below and "Risk Factors--Subordination."
No Notes may be repurchased at the option of holders upon a Repurchase
Event if there has occurred and is continuing an Event of Default described
under "--Events of Default and Remedies" below (other than a default in the
payment of the repurchase price with respect to such Notes on the repurchase
date).
The foregoing provisions would not necessarily afford holders of the Notes
protection in the event of a highly leveraged transaction, a change in control
of the Company or other transactions involving the Company that may adversely
affect holders. The Company could, in the future, enter into certain
transactions, including certain recapitalizations of the Company, that would
not constitute a Change in Control but that would increase the amount of Senior
Indebtedness (or other indebtedness) outstanding at such time. There are no
restrictions in the Indenture or the Notes on the creation of additional Senior
Indebtedness (or any other indebtedness of the Company or any of its
subsidiaries) and the incurrence of significant amounts of additional
indebtedness could have an adverse impact on the Company's ability to service
its debt, including the Notes. The Notes are subordinate in right of payment to
all existing and future Senior Indebtedness as described under
"--Subordination" below.
Certain leveraged transactions sponsored by the Company's management or an
affiliate of the Company could constitute a Change in Control that would give
rise to the repurchase right. The Indenture does not provide the Company's
Board of Directors with the right to limit or waive the repurchase right in the
event of any such leveraged transaction. The right to require the Company to
repurchase Notes as a result of a Repurchase Event could have the effect of
delaying, deferring or preventing a Change in Control or other attempts to
acquire control of the Company unless arrangements have been made to enable the
Company to repurchase all of the Notes at the repurchase date. Consequently,
the right may render more difficult or discourage a merger, consolidation or
tender offer (even if such transaction is supported by the Company's Board of
Directors or is favorable to the stockholders), the assumption of control by a
holder of a large block of the Company's shares and
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<PAGE>
the removal of incumbent management. The Repurchase Event repurchase right,
however, is not the result of management's knowledge of any specific effort to
accumulate shares of Common Stock or to obtain control of the Company by means
of a merger, tender offer, solicitation or otherwise. Instead, the Repurchase
Event repurchase right is a standard term contained in other similar debt
offerings.
Rule 13e-4 under the Exchange Act requires, among other things, the
dissemination of certain information to security holders in the event of an
issuer tender offer and may apply in the event that the repurchase option
becomes available to holders of the Notes. The Company will comply with this
rule to the extent applicable at that time.
Subordination
The indebtedness evidenced by the Notes is, to the extent provided in the
Indenture, subordinate to the prior payment in full in cash or other payment
satisfactory to the holders of Senior Indebtedness of all Senior Indebtedness
(as defined) whether presently outstanding or hereafter incurred or created.
Upon any distribution of assets of the Company upon any dissolution, winding
up, liquidation or reorganization of the Company, the payment of the principal
of, or premium, if any, and interest on the Notes is to be subordinated to the
extent provided in the Indenture 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. Moreover, in the event of any
acceleration of the Notes because of an Event of Default, the holders of any
Senior Indebtedness then outstanding would be entitled to payment in full in
cash or other payment satisfactory to the holders of Senior Indebtedness of all
obligations in respect of such Senior Indebtedness before the holders of the
Notes are entitled to receive any payment or distribution in respect thereof.
The Company may also not make any payment upon or in respect of the Notes
if (i) a default in the payment of principal of, premium, if any, interest, or
other payment due on Designated Senior Indebtedness (as defined) occurs and is
continuing beyond any applicable period of grace or (ii) any other default
occurs and is continuing with respect to Designated Senior Indebtedness that
permits holders of the Designated Senior Indebtedness as to which such default
related to accelerate its maturity and the Trustee and the Company receive a
notice of such default (a "Payment Blockage Notice") from a holder of Designated
Senior Indebtedness, a representative of such holder or the Company. Payments on
the Notes may and shall be resumed (a) in case of payment default, on the date
on which such default is cured or waived or ceases to exist and (b) in case of a
nonpayment default with respect to Designated Senior Indebtedness, on the
earlier of the date on which such nonpayment default is cured or waived or
ceases to exist or 179 days after the date on which the applicable Payment
Blockage Notice is received. No new period of payment blockage may be commenced
pursuant to a Payment Blockage Notice unless (i) 365 days have elapsed since the
first day of the effectiveness of the immediately prior Payment Blockage Notice,
and (ii) all scheduled payments of principal, premium, if any, and interest on
the Notes that have become due have been paid in full in cash. No default
(whether or not such event of default is on the same issue of Designated Senior
Indebtedness) that existed or was continuing on the date of delivery of any
Payment Blockage Notice shall be, or be made, the basis for a subsequent Payment
Blockage Notice.
The term "Senior Indebtedness" means the principal of, premium, if any,
interest on (including any interest accruing after the filing of a petition by
or against the Company under any bankruptcy law, whether or not allowed as a
claim after such filing in any proceeding under such bankruptcy law), and any
other payment due pursuant to, any of the following, whether outstanding on the
date of the Indenture or thereafter incurred or created: (a) all indebtedness
of the Company for money borrowed or evidenced by notes, debentures, bonds or
other securities (including, but not limited to, those which are convertible or
exchangeable for securities of the Company) and all other obligations of the
Company constituting the deferred purchase price of property or assets; (b) all
indebtedness of the Company due and owing with respect to letters of credit
(including, but not limited to, reimbursement obligations with respect thereto
and funding obligations with respect to letters of credit issued by the
Company); (c) all indebtedness or other obligations of the Company due and
owing with respect to interest rate and currency swap agreements, cap, floor
and collar agreements, currency spot and forward contracts and other similar
agreements and arrangements; (d) all indebtedness consisting of commitment or
standby fees due and payable to lending institutions with respect to credit
facilities or letters of credit available to the Company; (e) all obligations
of the Company under leases required or permitted to be capitalized under
generally
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accepted accounting principles or under any lease or related document
(including a purchase agreement) that provides that the Company is
contractually obligated to purchase or cause a third party to purchase and
thereby guarantee a minimum residual value of the lease property to the lessor
and the obligations of the Company under such lease or related document to
purchase or to cause a third party to purchase such leased property; (f) all
indebtedness or obligations of others of the kinds described in any of the
preceding clauses (a), (b), (c), (d) or (e) assumed by or guaranteed in any
manner by the Company or in effect guaranteed (directly or indirectly) by the
Company through an agreement to purchase, contingent or otherwise, and all
obligations of the Company under any such guarantee or other arrangements; and
(g) all renewals, extensions, refundings, deferrals, amendments or
modifications of indebtedness or obligations of the kinds described in any of
the preceding clauses (a), (b), (c), (d), (e) or (f); unless in the case of any
particular indebtedness, obligation, renewal, extension, refunding, amendment,
modification or supplement, the instrument or other document creating or
evidencing the same or the assumption or guarantee of the same expressly
provides that such indebtedness, obligation, renewal, extension, refunding,
amendment, modification or supplement is subordinate to, or is not superior to,
or is pari passu with, the Notes; provided that Senior Indebtedness shall not
include (i) any indebtedness of any kind of the Company to any subsidiary of
the Company, a majority of the voting stock of which is owned, directly or
indirectly, by the Company, (ii) indebtedness for trade payables or
constituting the deferred purchase price of assets or services incurred in the
ordinary course of business, or (iii) the Notes.
The term "Designated Senior Indebtedness" means the Company's obligations
under any particular Senior Indebtedness in which the instrument creating or
evidencing the same or the assumption or guarantee thereof (or related
agreements or documents to which the Company is a party) expressly provides
that such Senior Indebtedness shall be "Designated Senior Indebtedness" for
purposes of the Indenture (provided that such instrument, agreement or other
document may place limitations and conditions on the right of holders of such
Senior Indebtedness to exercise the rights of Designated Senior Indebtedness).
The Notes will also be effectively subordinated to all liabilities,
including trade payables and lease obligations, if any, of the Company's
subsidiaries. Any right of the Company to receive the assets of any of its
subsidiaries upon the liquidation or reorganization thereof (and the consequent
right of holders of the Notes to participate in those assets) will be
effectively subordinated to the claims of that subsidiary's creditors
(including trade creditors), except to the extent that the Company is itself
recognized as a creditor of such subsidiary, in which case the claims of the
Company would still be subordinated to any security interests in the assets of
such subsidiary and any indebtedness of such subsidiary senior to that held by
the Company.
The Company is a holding company with no significant operating assets. The
Company's ability to redeem, repurchase or make interest and principal payments
on the Notes is dependent upon the earnings of its subsidiaries and the
distribution of those earnings (through dividends or otherwise) to, or upon
royalties, license fees, loans or other payment of funds by those subsidiaries
to, the Company. The subsidiaries are separate and distinct legal entities and
have no obligation, contingent or otherwise, to pay any amounts due pursuant to
the Notes or to make any funds available therefor, whether by dividends, loans
or other payments. In addition, the payment of dividends and the making of
loans and advances to the Company by its subsidiaries may be subject to
statutory, contractual or other restrictions and are dependent upon the
earnings or financial condition of those subsidiaries and subject to various
business considerations. As a result, the Company may be unable to gain access
to the cash flow or assets of its subsidiaries in amounts sufficient to pay the
principal of or interest on the Notes when due or to redeem Notes at the option
of the holders thereof after the occurrence of a Repurchase Event.
As of April 30, 1998 the Company had approximately $10.9 million principal
amount of indebtedness outstanding that would have constituted Senior
Indebtedness, and the Company's subsidiaries had approximately $464.4 million of
indebtedness and other liabilities outstanding (other than liabilities of a type
not required to be reflected in a balance sheet in accordance with generally
accepted accounting principles and intercompany indebtedness) to which the Notes
would have been effectively subordinated. The Indenture does not limit the
amount of additional indebtedness, including Senior Indebtedness, which the
Company can create, incur, assume or guarantee, nor does the Indenture limit the
amount of indebtedness or other liabilities that any subsidiary can create,
incur, assume or guarantee.
Notwithstanding the foregoing, in the event that the Trustee or any holder
of Notes receives any payment or distribution of assets of the Company of any
kind in contravention of any of the terms of the Indenture,
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whether in cash, property or securities, including, without limitation, by way
of set-off or otherwise, in respect of the Notes before all Senior Indebtedness
is paid in full in cash or other payment satisfactory to the holders of Senior
Indebtedness, then such payment or distribution will be held by the recipient
in trust for the benefit of the holders of Senior Indebtedness of the Company,
and will be immediately 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 may have been issued, as their respective
interests may appear, as calculated by the Company, for application to the
payment of all Senior Indebtedness remaining unpaid to the extent necessary to
make payment in full in cash or other payment satisfactory to the holders of
Senior Indebtedness of all Senior Indebtedness of the Company remaining unpaid,
after giving effect to any concurrent payment or distribution, or provision
therefor, to or for the holders of Senior Indebtedness of the Company.
No provision contained in the Indenture or the Notes affects the
obligation of the Company, which is absolute and unconditional, to pay, when
due, principal of, premium, if any, and interest on, the Notes. The
subordination provisions of the Indenture and the Notes do not prevent the
occurrence of any default or Event of Default or limit the rights of any holder
of Notes to pursue any other rights or remedies with respect to the Notes.
As a result of these subordination provisions, in the event of the
liquidation, bankruptcy, reorganization, insolvency, receivership or similar
proceedings or an assignment for the benefit of the creditors of the Company or
a marshaling of assets or liabilities of the Company and its subsidiaries,
holders of the Notes may receive ratably less than other creditors.
Events of Default and Remedies
An Event of Default is defined in the Indenture as being: (i) a default in
payment of the principal of, or premium, if any, on the Notes (whether or not
such payment is prohibited by the subordination provisions of the Indenture);
(ii) default for 30 days in payment of any installment of interest on the Notes
(whether or not such payment is prohibited by the subordination provisions of
the Indenture); (iii) default by the Company for 60 days after notice given in
accordance with the Indenture in the observance or performance of any other
covenants in the Indenture; (iv) default in the payment of the repurchase price
in respect of the Note on the repurchase date therefor (whether or not such
payment in cash of the repurchase price is prohibited by the subordination
provisions of the Indenture); (v) failure to provide timely notice of a
Repurchase Event; (vi) failure of the Company or any Significant Subsidiary (as
defined) to make any payment at maturity, including any applicable grace
period, in respect of Indebtedness (which term as used in the Indenture means
obligations of, or guaranteed or assumed by, the Company or any Significant
Subsidiary for borrowed money), in an amount in excess of $10,000,000 and
continuance of such failure for 30 days after notice given in accordance with
the Indenture; (vii) default by the Company or any Significant Subsidiary with
respect to any Indebtedness, which default results in the acceleration of
Indebtedness in an amount in excess of $10,000,000 without such Indebtedness
having been discharged or such acceleration having been rescinded or annulled
for 30 days after notice given in accordance with the Indenture; or (viii)
certain events involving bankruptcy, insolvency or reorganization of the
Company or any Significant Subsidiary.
The Indenture provides that the Trustee shall, within 90 days after the
occurrence of a default, give to the registered holders of the Notes notice of
all uncured defaults known to it, but the Trustee shall be protected in
withholding such notice if it in good faith determines that the withholding of
such notice is in the best interest of such registered holders, except in the
case of a default in the payment of the principal of, or premium, if any, or
interest on, any of the Notes when due or in the payment of any redemption or
repurchase obligation.
The Indenture provides that if any Event of Default shall have occurred
and be continuing, the Trustee or the holders of not less than 25% in principal
amount of the Notes then outstanding (excluding for this purpose any Notes then
held by the Company or any Affiliate) may declare the principal of and premium,
if any, on the Notes to be due and payable immediately, but if the Company
shall cure all defaults (except the nonpayment of interest on, premium, if any,
and principal of any Notes which shall have become due by acceleration) and
certain other conditions are met, such declaration may be canceled and past
defaults may be waived by the holders of a majority in principal amount of
Notes then outstanding. If an Event of Default resulting from certain events of
bankruptcy, insolvency or reorganization with respect to the Company were to
occur, all unpaid principal of and accrued interest on the outstanding Notes
will become due and payable immediately without any declaration or other act on
the part of the Trustee or any holders of Notes, subject to certain
limitations.
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The Indenture provides that the holders of a majority in principal amount
of the outstanding Notes may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee, subject to certain limitations specified in the
Indenture. Before proceeding to exercise any right or power under the Indenture
at the direction of such holders, the Trustee shall be entitled to receive from
such holders reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by it in complying with any such direction.
The right of a holder to institute a proceeding with respect to the Indenture is
subject to certain conditions precedent, including the written notice by such
holder of an Event of Default and an offer to indemnify to the Trustee, along
with the written request by the holders of not less than 25% in principal amount
of the outstanding Notes that such a proceeding be instituted, but the holder
has an absolute right to institute suit for the enforcement of payment of the
principal of, and premium, if any, and interest on, such holder's Notes when due
and to convert such Notes.
The holders of not less than a majority in principal amount of the
outstanding Notes may on behalf of the holders of all Notes waive any past
defaults, except (i) a default in payment of the principal of, or premium, if
any, or interest on, any Note when due, (ii) a failure by the Company to
convert any Notes into Common Stock or (iii) in respect of certain provisions
of the Indenture which cannot be modified or amended without the consent of the
holder of each outstanding Note affected thereby.
The Company is required to furnish to the Trustee annually within 120 days
of the end of the fiscal year a statement of certain officers of the Company
stating whether or not to the best of their knowledge the Company is in default
in the performance and observation of certain terms of the Indenture and, if
they have knowledge that the Company is in default, specifying such default. The
Company is also required, upon becoming aware of any default or Event of
Default, to deliver to the Trustee a statement specifying such default or Event
of Default and the action the Company has taken, is taking or proposes to take
with respect thereto.
Consolidation, Merger or Assumption
The Indenture provides that the Company may not, directly or indirectly,
consolidate with or merge with or into another person or sell, lease, convey or
transfer all or substantially all of its assets, whether in a single
transaction or a series of related transactions, to another person or group of
affiliated persons, unless (i) either (a) in the case of a merger or
consolidation that does not involve a transfer of all or substantially all of
the Company's assets, the Company is the surviving entity or (b) the resulting,
surviving or transferee entity is a corporation organized under the laws of the
United States, any state thereof or the District of Columbia and expressly
assumes by written agreement all of the obligations of the Company in
connection with the Notes and the Indenture; (ii) no default or Event of
Default shall exist or shall occur immediately after giving effect on a pro
forma basis to such transaction; and (iii) certain other conditions are
satisfied.
Modifications of the Indenture
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the holders of not less than a majority in principal amount
of the Notes at the time outstanding, to modify the Indenture or any
supplemental indenture or the rights of the holders of the Notes, except that
no such modification shall (i) extend the fixed maturity of any Note, reduce
the rate or extend the time or payment of interest thereon, reduce the
principal amount thereof or premium, if any, thereon, reduce any amount payable
upon redemption or repurchase thereof, impair, or change in any respect adverse
to the holders of Notes, the obligation of the Company to repurchase any Note
upon the happening of a Repurchase Event, impair or adversely affect the right
of a holder to institute suit for the payment thereof, change the currency in
which the Notes are payable, or impair, or change in any respect adverse to the
holder of the Notes, the right to convert the Notes into Common Stock subject
to the terms set forth in the Indenture or modify the provisions of the
Indenture with respect to the subordination of the Notes in a manner adverse to
the holders of the Notes, without the consent of the holder of each Note so
affected, or (ii) reduce the aforesaid percentage of Notes, without the consent
of the holders of all of the Notes then outstanding.
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<PAGE>
Registration Rights
The Company and the Initial Purchasers have entered into a Registration
Rights Agreement dated as of April 24, 1998 (the "Registration Rights
Agreement") between the Company and the initial purchasers (the "Initial
Purchasers") named therein in connection with the initial issuance of the Notes.
Pursuant to the Registration Rights Agreement, the Company agreed to file,
at its expense, with the Commission as promptly as practicable after the
earliest date of initial issuance of any of the Notes, a shelf registration
statement (the "Shelf Registration Statement"), of which this Prospectus forms a
part, on such form as the Company deems appropriate covering resales of Transfer
Restricted Securities by the holders thereof and to use reasonable efforts to
cause such registration statement to become effective as promptly as is
practicable and to keep the registration statement effective until the earlier
of such date that is two years after the latest date of initial issuance of any
of the Notes or until the Shelf Registration Statement is no longer required for
transfer of any Transfer Restricted Securities. For purposes of the foregoing,
"Transfer Restricted Securities" means each Note and share of Common Stock
issued upon conversion thereof until the date on which such Note or share of
Common Stock has been effectively registered under the Securities Act and
disposed of in accordance with the Shelf Registration Statement or the date on
which such Note or share of Common Stock is distributed to the public pursuant
to Rule 144 under the Securities Act or is sellable pursuant to Rule 144(k)
under the Securities Act (or any similar provisions then in force) or the date
on which such Note or share of Common Stock ceases to be outstanding, whichever
date is earliest.
The Registration Rights Agreement provides that (i) the Company will use
all reasonable efforts to file the Shelf Registration Statement with the
Commission on or prior to 60 days after the earliest date of initial issuance of
any Notes (the "Closing Date") and (ii) the Company will use all reasonable
efforts to cause the Shelf Registration Statement to be declared effective by
the Commission as promptly as practicable but in no event later than 150 days
after the Closing Date. If (i) the Shelf Registration Statement is not filed
with the Commission on or prior to 60 days after the Closing Date, (ii) the
Shelf Registration Statement has not been declared effective by the Commission
within 150 days after the Closing Date or (iii) the Shelf Registration Statement
is filed and declared effective but shall thereafter cease to be effective or
usable (without being succeeded immediately by an additional Shelf Registration
Statement filed and declared effective which is then available for effecting
resales of Transfer Restricted Securities) for a period of time which shall
exceed 90 days in the aggregate in any period of 365 consecutive days (each such
event referred to in clauses (i) through (iii), a "Registration Default"), the
Company will pay liquidated damages to each holder of Notes or Common Stock
issuable upon conversion thereof that are Transfer Restricted Securities, during
the first 90-day period immediately following the occurrence of such
Registration Default in an amount equal to $0.05 per week per $1,000 principal
amount of Notes and, if applicable, on an equivalent basis per share (subject to
adjustment in the event of stock splits, stock recombinations, stock dividends
and the like) of Common Stock constituting Transfer Restricted Securities held
by such holder. The rate of accrual of the liquidated damages will increase by
an additional $0.05 per week per $1,000 principal amount of Notes and, if
applicable, by an equivalent amount per week per share (subject to adjustment as
set forth above) of Common Stock constituting Transfer Restricted Securities for
each subsequent 90-day period until the applicable Registration Statement is
filed, the applicable Registration Statement is declared effective and becomes
available for effecting sales of securities, or the Shelf Registration Statement
again becomes effective and becomes available for effecting sales of securities,
as the case may be, up to a maximum amount of liquidated damages of $0.25 per
week per $1,000 principal amount of Notes or if applicable, an equivalent amount
per week per share (subject to adjustment as set forth above) of Common Stock
constituting Transfer Restricted Securities. Following the cure of a
Registration Default, liquidated damages will cease to accrue with respect to
such Registration Default (without in any way limiting the effect of any
subsequent Registration Default). All accrued liquidated damages shall be paid
to the holders of Notes or shares of Common Stock (as applicable) in the same
manner as interest payments on the Notes on semiannual payment dates which
correspond to interest payment dates for the Notes. The use of the Shelf
Registration Statement for effecting resales of Transfer Restricted Securities
may be suspended in certain circumstances described in the Registration Rights
Agreement upon notice by the Company to the holders of the Transfer Restricted
Securities, subject to the rights of the holders of Transfer Restricted
Securities to receive liquidated damages if the aggregate number of days of such
suspensions in any year exceeds the periods described above.
The Company will provide to each registered holder copies of such
prospectus, notify each registered holder when the Shelf Registration Statement
has become effective and take certain other actions as are required to permit
unrestricted resales of the Transfer Restricted Securities. The Company agreed
in the Registration Rights Agreement to give notice to all holders of the filing
and effectiveness of the Shelf Registration Statement. Attached to the Offering
Circular distributed in connection with the initial issuance of the Notes as
Annex B was a form of notice and questionnaire (the "Questionnaire") to be
completed and delivered by a holder to the Company prior to any intended
distribution of Transfer
24
<PAGE>
Restricted Securities pursuant to the Shelf Registration Statement. Holders are
required to complete and deliver the Questionnaire prior to the effectiveness of
the Shelf Registration Statement so that such holders may be named as selling
stockholders in the related prospectus at the time of effectiveness. Upon
receipt of such a completed Questionnaire, together with such other information
as may be reasonably requested by the Company, from a holder following the
effectiveness of the Shelf Registration Statement, the Company will, as promptly
as practicable but in any event within five business days of such receipt, file
such amendments to the Shelf Registration Statements or supplements to the
related prospectus as are necessary to permit such holder to deliver such
prospectus to purchasers of Transfer Restricted Securities (subject to the
Company's right to suspend the use of the prospectus as described above). The
Company has agreed to pay liquidated damages to such holder if the Company fails
to make such filing in the time required or, if such filing is a post-effective
amendment of the Shelf Registration Statement required to be declared effective
under the Securities Act, if such amendment is not declared effective within 45
days of the filing thereof. Any holder that does not complete and deliver a
Questionnaire or provide such other information will not be named as a selling
stockholder in the prospectus and therefore will not be permitted to sell any
Transfer Restricted Securities pursuant to the Shelf Registration Statement. A
holder who sells the Transfer Restricted Securities pursuant to the Shelf
Registration Statement will be required to deliver a prospectus to purchasers
and will be bound by the provisions of the Registration Rights Agreement which
are applicable to such holder (including certain indemnification provisions).
The specific provisions relating to the registrations described above will be
contained in the Registration Rights Agreement to be entered into prior to the
closing of this offering.
Taxation of Notes
See "Certain Federal Income Tax Considerations" for a discussion of certain
federal tax aspects which will apply to holders of Notes.
Satisfaction and Discharge
The Company may discharge its obligations under the Indenture while Notes
remain outstanding if (i) all outstanding Notes will become due and payable at
their scheduled maturity within one year or (ii) all outstanding Notes are
scheduled for redemption within one year, and, in either case, the Company has
deposited with the Trustee an amount sufficient to pay and discharge all
outstanding Notes on the date of their scheduled maturity or the scheduled date
of redemption.
Governing Law
The Indenture, the Registration Rights Agreement and the Notes are
governed by and construed in accordance with the laws of the State of New York.
Concerning the Trustee
The First National Bank of Chicago, the Trustee under the Indenture, has
been appointed by the Company as the initial paying agent, conversion agent,
registrar and custodian with regard to the Notes. The Company may maintain
deposit accounts and conduct other banking transactions with the Trustee or its
affiliates in the ordinary course of business, and the Trustee and its
affiliates may from time to time in the future provide banking and other
services to the Company in the ordinary course of their business.
During the existence of an Event of Default, the Trustee will exercise
such rights and powers vested in it under the Indenture and use the same degree
of care and skill in its exercise as a prudent person would exercise under the
circumstances in the conduct of such person's own affairs.
The Indenture and the Trust Indenture Act of 1939, as amended (the "TIA"),
contain certain limitations on the rights of the Trustee, should it become
a creditor of the Company, to obtain payment of claims in certain cases or to
realize on certain property received in respect of any such claim as security
or otherwise. Subject to the TIA, the Trustee will be permitted to engage in
other transactions, provided, however, that if it acquires any conflicting
interest (as described in the TIA), it must eliminate such conflict or resign.
25
<PAGE>
DESCRIPTION OF CAPITAL STOCK
General
The authorized capital stock of the Company consists of 25,000,000 shares
of Common Stock, par value $0.50 per share, and 500,000 shares of Preferred
Stock, par value $1.00 per share. As of May 27, 1998, 14,825,428 shares of
Common Stock are outstanding.
Common Stock
The holders of shares of Common Stock are entitled to one vote per share
on all matters submitted to a vote at a meeting of stockholders. Each
stockholder may exercise such vote either in person or by proxy. Stockholders
are not entitled to cumulative voting with regards to the election of directors,
which means that the holders of more than 50% of the Common Stock voting for the
election of directors can elect all of the directors to be elected by holders of
Common Stock, in which event the holders of the remaining Common Stock voting
will not be able to elect any director. Subject to preferences to which holders
of Preferred Stock issued after the sale of the Common Stock offered hereby may
be entitled, the holders of Common Stock are entitled to receive ratably such
dividends, if any, as may be declared from time to time by the Board out of
funds legally available therefor. The Company does not presently anticipate
paying cash dividends in the foreseeable future. See "Dividend Policy." In the
event of a liquidation, dissolution or winding up of the Company, the holders of
Common Stock are entitled to share ratably in all assets of the Company which
are legally available for distribution to stockholders, subject to the prior
rights on liquidation of creditors' and to preferences to which holders of
Preferred Stock issued after the sale of the Common Stock offered hereby may be
entitled. The holders of Common Stock have no preemptive, subscription,
redemption or sinking fund rights. The Common Stock currently outstanding, and
the Conversion Shares are and will be validly issued, fully paid and
nonassessable.
Preferred Stock
The Board has the authority to issue the Preferred Stock in one or more
series and to fix the rights, preferences, privileges and restrictions
thereof, including dividend rights, dividend rates, conversion rights, voting
rights, terms of redemption (including sinking fund provisions), redemption
prices and liquidation preferences, and the number of shares constituting and
the designation of any such series, without further vote or action by the
stockholders. At present, the Company has no plans to issue any of the Preferred
Stock and is not aware of any pending or proposed transaction that would be
affected by such an issuance.
Certain Effects of Authorized and Unissued Stock
The authorized, unissued and unreserved shares of Common Stock and
Preferred Stock may be issued for a variety of proper corporate purposes,
including future public or private offerings to raise additional capital or
facilitate acquisitions. The Company does not presently intend to issue
additional shares of Common Stock or Preferred Stock (other than in connection
with the Company's Stock Option Plan, upon the exercise of outstanding warrants
or upon conversion of the Notes offered hereby).
One of the effects of the existence of unissued and unreserved shares of
Common Stock and Preferred Stock may be to enable the Board to discourage an
attempt to change control of the Company (by means of a tender offer, proxy
contest or otherwise) and thereby to protect the continuity of the Company's
management. If, in the due exercise of its fiduciary duties, the Board
determined that an attempt to change control of the Company was not in the
Company's best interest, the Board could authorize, without having to obtain
approval of the stockholders, the issuance of such shares in one or more
transactions that might prevent or render more difficult the completion of such
attempt. In this regard, the Board has the authority to establish the rights and
preferences of the authorized and unissued shares of Preferred Stock, one or
more series of which could be issued entitling the holders thereof to vote
separately as a class or to cast a proportionately larger vote than the holders
of shares of Common Stock on any proposed action, to elect directors having
terms of office or voting rights greater than the terms of office or voting
rights of other directors, to convert shares of Preferred Stock into a
proportionately
26
<PAGE>
larger number of shares of Common Stock or other securities of the Company, to
demand redemption at a specified price under prescribed circumstances related
to such a change or to exercise other rights designed to impede such a change.
The issuance of shares of Preferred Stock, whether or not related to any attempt
to effect such a change, may adversely affect the rights of the holders of
shares of Common Stock.
Certain Charter Provisions
Under Nevada law, directors of a Nevada corporation can generally be held
liable for certain types of negligence and other acts and omissions in
connection with the performance of their duties to the corporation and its
stockholders. As permitted by Nevada law, however, the Company's Articles of
Incorporation contain a provision eliminating the liability of the Company's
directors for monetary damages for breaches of their duty of care to the Company
and the stockholders, except as described below.
Such provision is limited by Nevada law to persons who act in good faith
and in a manner which they reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe their conduct was unlawful.
Although the issue has not been determined by any court, such provision would
probably have no effect on claims arising under federal securities laws.
Transfer Agent and Registrar
The transfer agent and registrar for the Common Stock is The Bank of New
York.
27
<PAGE>
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain United States federal income tax
considerations relating to the purchase, ownership and disposition of the Notes
and Conversion Shares, but does not propose to be a complete analysis of all the
potential tax considerations relating thereto. This summary is based on laws,
regulations, rulings and decisions now in effect, all of which are subject to
change (possibly with retroactive effect). This summary deals only with holders
that will hold Notes and Conversion Shares as "capital assets" (within the
meaning of Section 1221 of the Internal Revenue Code of 1986, as amended (the
"Code")) and does not address tax considerations applicable to investors that
may be subject to special tax rules, such as foreign persons, banks, tax-exempt
organizations, insurance companies, dealers in securities or currencies, persons
subject to the alternative minimum tax, or persons that will hold Notes as a
position in a hedging transaction, "straddle" or "conversion transaction" for
tax purposes or persons deemed to sell Notes or Common Stock under the
constructive sale provisions of the Code. This summary discusses the tax
considerations applicable to the initial purchases of the Notes who purchase the
Notes at their "issue price" as defined in Section 1273 of the Code and does not
discuss the tax considerations applicable to subsequent purchasers of the Notes.
The Company has not sought any ruling from the Internal Revenue Service (the
"IRS") or an opinion of counsel with respect to the statements made and the
conclusions reached in the following summary, and there can be no assurance that
the IRS will agree with such statements and conclusions. In addition, the IRS is
not precluded from successfully adopting a contrary position. This summary does
not consider the effect of any applicable foreign, state, local or other tax
laws.
INVESTORS CONSIDERING THE PURCHASE OF NOTES SHOULD CONSULT THEIR OWN TAX
ADVISORS WITH RESPECT TO THE APPLICATION OF THE UNITED STATES FEDERAL INCOME AND
ESTATE TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES
ARISING UNDER THE LAWS OF ANY STATE, LOCAL OR FOREIGN TAXING JURISDICTION OR
UNDER ANY APPLICABLE TAX TREATY.
Interest
Interest on a Note generally will be taxable to a holder as ordinary
interest income at the time it accrues or is received, in accordance with the
holder's usual method of accounting for U.S. federal income tax purposes. The
Company intends to report the likelihood of the payment of liquidated damages to
a holder of Notes or Common Stock as remote for U.S. federal income tax
purposes. Payment of liquidated damages most likely will be taxable to a holder
as ordinary income.
Sale, Exchange or Redemption of the Notes
Upon the sale, exchange or redemption of a Note, a holder generally will
recognize capital gain or loss equal to the difference between (i) the amount of
cash proceeds and the fair market value of any property received on the sale,
exchange or redemption (except to the extent such amount is attributable to
accrued interest income not previously included in income which is taxable as
ordinary income) and (ii) such holder's adjusted tax basis in the Note. A
holder's adjusted tax basis in a Note generally will equal the cost of the Note
to such holder. Such capital gain or loss will be long-term capital gain or loss
if the holder's holding period in the Note is more than one year at the time of
sale, exchange or redemption. The maximum rate of tax on long-term capital gains
on capital assets held by an individual for more than 18 months is 20%, and gain
on capital assets held by an individual more than one year and up to 18 months
is subject to tax at a maximum rate of 28%.
Conversion of the Notes
A holder generally will not recognize any income, gain or loss upon
conversion of a Note into Common Stock except with respect to cash received in
lieu of a fractional Share of Common Stock. A holder's tax basis in the Common
Stock received on conversion of a Note will be the same as such holder's
adjusted tax basis in the Note at the time of conversion (reduced by any basis
allocable to a fractional share interest), and the holding period for the Common
Stock received on conversion will generally include the holding period of the
Note converted. Special federal income tax rules for the treatment of the
conversion of a Note into Common Stock may apply if a holder converts after a
record date for the payment of interest but prior to the next succeeding
interest payment date.
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<PAGE>
Cash received in lieu of a fractional share of Common Stock upon conversion
will be treated as a payment in exchange for a fractional share of Common Stock.
Accordingly, the receipt of cash in lieu of a fractional share of Common Stock
generally will result in capital gain or loss (measured by the difference
between the cash received for the fractional share and the holder's adjusted
tax basis in the fractional share),
Dividends; Adjustment to Conversion Price
Dividends paid on the Common Stock generally will be includable in the
income of a holder as ordinary income to the extent of the Company's current or
accumulated earnings and profits.
Holders of convertible debt instruments such as the Notes may, in certain
circumstances, be deemed to have received constructive distributions where the
conversion ratio of such instruments is adjusted. Adjustments to the conversion
price made pursuant to a bona fide reasonable adjustment formula which has the
effect of preventing the dilution of the interest of the holders of the debt
instruments, however, will generally not be considered to result in a
constructive distribution of stock. Certain of the possible adjustments provided
in the Notes (including, without limitation, adjustments in respect of taxable
dividends to stockholders of the Company) will not qualify as being pursuant to
a bona fide reasonable adjustment formula. If such adjustments are made, the
holders of Notes might be deemed to have received constructive distributions
taxable as dividends.
Sale of Common Stock
Upon the sale or exchange of Common Stock, a holder generally will
recognize capital gain or loss equal to the difference between (i) the amount of
cash proceeds and the fair market value of any property received upon the sale
or exchange and (ii) such holder's adjusted tax basis in the Common Stock. Such
capital gain or loss will be long-term capital gain or loss if the holder's
holding period in Common Stock is more than one year at the time of the sale or
exchange. Gain on capital assets held by an individual for more than one year is
subject to certain maximum rates of tax, as discussed above under "-Sale,
Exchange or Redemption of the Notes." A holder's basis and holding period in
Common Stock received upon conversion of a Note are determined as discussed
above under "-Conversion of the Notes."
Information Reporting and Backup Withholding Tax
In general, information reporting requirements will apply to payments of
principal, premium, if any, and interest on a Note, payments of dividends on
Common Stock, payments of the proceeds of the sale of a Note and payments of the
proceeds of the sale of Common Stock, and a 31% backup withholding tax may apply
to such payments if the holder either (i) fails to demonstrate that the holder
comes within certain exempt categories of holders or (ii) fails to furnish or
certify his correct taxpayer identification number to the payor in the manner
required, is notified by the IRS that he has failed to report payments of
interest and dividends properly, or under certain circumstances, fails to
certify that he has not been notified by the IRS that he is subject to backup
withholding for failure to report interest and dividend payments. Any amounts
withheld under the backup withholding rules from a payment to a holder will be
allowed as a credit against such holder's United States federal income tax and
may entitle the holder to a refund, provided that the required information is
furnished to the IRS.
29
<PAGE>
PLAN OF DISTRIBUTION
Pursuant to the Registration Rights Agreement, the Registration Statement
of which this Prospectus forms a part was filed with the Commission covering the
resale of the Notes and the Conversion Shares (the "Securities"). The Company
has agreed to use all reasonable efforts to keep the Registration Statement
effective until the earlier of such date that is two years after the latest date
of initial issuance of any of the Notes or until the Registration Statement of
which this Prospectus forms a part is no longer required for transfer of any
Notes. The specific provisions relating to the registration rights described
above are contained in the Registration Rights Agreement, and the foregoing
summary is qualified in its entirety by reference to the provisions of such
agreement.
The Notes and the Conversion Shares may be sold in one or more transactions
at fixed prices at prevailing market prices at the time of sale, at varying
prices determined at the time of sale, or at negotiated prices. Sales of Notes
and Conversion Shares may be effected in transactions (which may involve crosses
or block transactions) (i) on any national securities exchange or quotation
service on which the Notes or Conversion Shares may be listed or quoted at the
time of sale, (ii) in the over-the-counter market, (iii) in transactions
otherwise than on such exchanges or services or in the over-the-counter market
or (iv) through the writing of options. The Selling Securityholders may effect
such transactions by selling the Notes or Conversion Shares directly to
purchasers, through broker-dealers acting as agents for the Selling
Securityholders, or to broker-dealers who may purchase Notes or Conversion
Shares as principals and thereafter sell the Notes or Conversion Shares from
time to time in transactions. In effecting sales, broker-dealers engaged by
Selling Securityholders may arrange for other broker-dealers to participate.
Such broker-dealers, if any, may receive compensation in the form of discounts,
concessions or commissions from the Selling Securityholders and/or the
purchasers of the Notes or Conversion Shares for whom such broker-dealer may act
as agents or to whom they may sell as principals, or both (which compensation as
to a particular broker-dealer might be in excess of customary commissions).
The Selling Securityholdes and any broker-dealers, agents or underwriters
that participate with the Selling Securityholders in the distribution of the
Notes or Conversion Shares may be deemed to be "underwriters" within the meaning
of the Securities Act. Any commissions paid or any discounts or concessions
allowed to any such persons, and any profits received on the resale of the Notes
or Conversion Shares offered hereby and purchased by them may be deemed to be
underwriting comissions or discounts under the Securities Act.
At the time a particular offering of the Notes and/or the Conversion Shares
is made and to the extent required, the aggregate principal amount of Notes and
number of Conversion Shares being offered, the name or names of the Selling
Securityholders, and the terms of the offering, including the name or names of
any underwriters, broker-dealers or agents, any discounts, concessions or
commissions and other terms constituting compensation from the Selling
Securityholders, and any discounts, concessions or commissions allowed or
reallowed or paid to broker-dealers, will be set forth in an accompanying
Prospectus Supplement.
30
<PAGE>
Pursuant to the Registration Rights Agreement, the Company has agreed to
pay all expenses incident to the offer and sale of the Notes and Conversion
Shares offered by the Selling Securityholders hereby, except that the Selling
Securityholders will pay all underwriting discounts and selling commissions, if
any. The Company has agreed to indemnify the Selling Securityholders against
certain liabilities, including liabilities under the Securities Act, and to
contribute to payments the Selling Securityholders may be requried to make in
respect thereof.
To comply with the securities laws of certain jurisdictions, if applicable,
the Notes and Conversion Shares offered hereby will be offered or sold in such
jurisdictions only through registered or licensed brokers or dealers.
Under applicable rules and regulations under the Exchange Act, any person
engaged in a distribution of the Notes or the Conversion Shares may be limited
in its ability to engage in market activities with respect to such Notes or
Conversion Shares. In addition and without limiting the foregoing, each Selling
Securityholder will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including, without limitation, Regulation
M, which provisions may limit the timing of purchase and sales of any of the
Notes and Conversion Shares by the Selling Securityholders. Furthermore,
Regulation M of the Exchange Act may restrict the ability of any person engaged
in the distribution of the Notes and Conversion Shares to engage in
market-making activities with respect to the particular Notes and Conversion
Shares being distributed for a period of five business days prior to the
commencement of the distribution. The foregoing may affect the marketability of
the Notes and the Conversion Shares.
31
<PAGE>
LEGAL MATTERS
Certain legal matters with respect to the validity of the Notes and the
Conversion Shares will be passed upon for the Company by Erwin Thompson &
Hascheff, and certain legal matters with respect to the statements made in
"Certain Federal Income Tax Consequences" will be passed upon for the Company by
Orrick, Herrington & Sutcliffe LLP, New York, New York. Lawrence B. Fisher,
Esq., a partner of Orrick, Herrington & Sutcliffe LLP, is a director of the
Company and holds 5,000 shares of Common Stock.
EXPERTS
The consolidated financial statements of the Company at July 31, 1997 and
1996, and for each of the three years in the period ended July 31, 1997,
incorporated by reference in this Prospectus have been audited by Eisner
& Lubin LLP, Certified Public Accountants, independent auditors, as set forth
in their reports thereon and are included in reliance upon such reports given
upon the authority of such firm as experts in accounting and auditing.
32
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================================================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF ANY OFFER TO BUY THE SECURITIES DESCRIBED HEREIN BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED, OR IN WHICH THE PERSON MAKING THE OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. UNDER NO CIRCUMSTANCES SHALL THE DELIVERY OF THIS PROSPECTUS OR
ANY SALE MADE PURSUANT TO THIS PROSPECTUS CREATE ANY IMPLICATION THAT THE
INFORMATION CONTAINED IN THIS PROSPECTUS IS CURRECT AS OF ANY TIME SUBSEQUENT TO
THE DATE OF THIS PROSPECTUS.
----------------------------------
TABLE OF CONTENTS
PAGE
----
Available Information .......................................... 2
Incorporation of Certain Documents by Reference ................ 2
Prospectus Summary ............................................. 3
Risk Factors ................................................... 7
Use of Proceeds ................................................ 12
Ratio of Earnings to Fixed Charges ............................. 12
Selling Securityholders ........................................ 13
Description of the Notes ....................................... 14
Description of Capital Stock ................................... 26
Certain Federal Income Tax Considerations ...................... 28
Plan of Distribution ........................................... 30
Legal Matters .................................................. 32
Experts ........................................................ 32
================================================================================
================================================================================
FINANCIAL FEDERAL CORPORATION
$100,000,000
4 1/2% CONVERTIBLE SUBORDINATED NOTES DUE 2005
AND
SHARES OF COMMON STOCK
ISSUABLE UPON CONVERSION THEREOF
-------------------
PROSPECTUS
-------------------
JUNE 11, 1998
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following is an itemized list of the estimated expenses to be incurred
in connection with the offering of the securities being offered hereunder other
than underwriting discounts and commissions.
Registration Fee.............................................. $ 29,500.00
Printing Fees and Expenses.................................... 13,000.00
Trustee's Fees................................................ 5,000.00
Legal Fees and Expenses....................................... 15,000.00
Miscellaneous Fees............................................ 12,500.00
-----------
Total...................................................... $ 75,000.00
===========
Item 15. Indemnification of Directors and Officers.
Under Nevada law, directors of a Nevada corporation can generally be held
liable for certain types of negligence and other acts and omissions in
connection with the performance of their duties to the corporation and its
stockholders. As permitted by Nevada law, however, the Company's Articles of
Incorporation contain a provision eliminating the liability of the Company's
directors for monetary damages for breaches of their duty of care to the
Company's and the stockholders, except as described below.
Such provision is limited by Nevada law to persons who act in good faith
and in a manner which they reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe their conduct was unlawful.
Although the issue has not been determined by any court, such provision would
probably have no effect on claims arising under federal securities laws.
II-1
<PAGE>
Item 16. Exhibits.
(a) Exhibits
4.1 Indenture, dated as of April 15, 1998, between Registrant and First
National Bank of Chicago
4.2 Registration Rights Agreement, dated as of April 24, 1998, between
Registrant and BancAmerica Robertson Stephens, Donaldson, Lufkin &
Jenrette Securities Corporation, Piper Jaffray Inc., CIBC Oppenheimer
Corporation, Friedman, Billings, Ramsey & Co., Inc., Schroder & Co.
Inc., and Wheat, First Securities, Inc.
4.3 Specimen 4 1/2 % Convertible Subordinated Note Due 2005
4.4 Specimen Common Stock Certificate
5.1 Opinion of Erwin Thompson & Hasheff with respect to legality of Notes
and Conversion Shares
5.2 Opinion of Orrick, Herrington & Sutcliff LLP with respect to certain
federal income tax considerations
12.1 Statement re: computation of ratios
23.1 Consent of Erwin Thompson & Hasheff (included in its opinion filed as
Exhibit 5.1)
23.2 Consent of Orrick, Herrington & Sutcliffe LLP (included in its opinion
filed as Exhibit 5.2)
23.3 Consent of Eisner & Lubin LLP, independent public accountants to
Registrant
25.1 Statement of eligibility of trustee
- ---------------
(b) Financial Statements
All financial statements, schedules and historical information have been
omitted as they are not applicable.
Item 17. Undertakings.
The undersigned Registrant hereby undertakes as follows:
(a) 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 a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in the
effective registration statement; (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; provided, however, that (a)(i) and (a)(ii) do not apply if the
information required to be included in a post-effective amendment thereby is
contained in periodic reports filed pursuant to Section 13 or Section 15(d) of
the Securities Exchange Act of 1934 that are incorporated by reference in this
Registration Statement.
(b) 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 hereof.
(c) To remove from registration by means of a post-effective amendment any
of the securities being registered that remain unsold at the termination of the
offering.
II-2
<PAGE>
(d) 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 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to 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.
(e) That insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions described under Item 15
above, or otherwise, 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 Securities Act of 1933 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
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
(f) To deliver or cause to be delivered with the prospectus, to each person
to whom the prospectus included in this Registration Statement is sent or given,
the latest annual report, to security holders that is incorporated by reference
in the prospectus and furnished pursuant to and meeting the requirements of Rule
14a-3 or Rule 14c-3 under the Securities Exchange Act of 1934; and, where
interim financial information required to be presented by Article 3 of
Regulation S-X is not set forth in the prospectus, to deliver, or cause to be
delivered to each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the 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 amendment to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of New York, State of New York, on July 7, 1998.
FINANCIAL FEDERAL CORPORATION
By: /s/ Clarence Y. Paltiz, Jr.
-------------------------------------
Name: Clarence Y. Palitz, Jr.
Title: Chairman, Chief Executive Officer,
President and Director
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed on July 7, 1998 by
the following persons in the capacities indicated.
Signature
/s/ Clarence Y. Palitz, Jr.
- -----------------------------
Name: Clarence Y. Palitz, Jr.
Title: Chairman, Chief Executive Officer,
President, Director and Attorney-In-Fact
and Agent
II-4
<PAGE>
EXHIBIT INDEX
Exhibits Page
- -------- ------
4.1 Indenture, dated as of April 15, 1998, between Registrant
and First National Bank of Chicago ..........................
4.2 Registration Rights Agreement, dated as of April 24, 1998,
between Registrant and BancAmerica Robertson Stephens,
Donaldson, Lufkin & Jenrette Securities Corporation, Piper
Jaffray Inc., CIBC Oppenheimer Corporation, Friedman,
Billings, Ramsey & Co., Inc., Schroder & Co. Inc., and
Wheat, First Securities, Inc. ...............................
4.3 Specimen 4 1/2 % Convertible Subordinated Note Due 2005 .....
4.4 Specimen Common Stock Certificate ...........................
5.1 Opinion of Erwin Thompson & Hasheff with respect to
legality of Notes and Conversion Shares .....................
5.2 Opinion of Orrick, Herrington & Sutcliff LLP with respect
to certain federal income tax considerations ................
12.1 Statement re: computation of ratios .........................
23.1 Consent of Erwin Thompson & Hasheff (included in its
opinion filed as Exhibit 5.1) ...............................
23.2 Consent of Orrick, Herrington & Sutcliffe LLP (included
in its opinion filed as Exhibit 5.2) ........................
23.3 Consent of Eisner & Lubin LLP, independent public
accountants to Registrant ...................................
24.1 Power of Attorney (See page II-4) ...........................
25.1 Statement of eligibility of trustee .........................
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<PAGE>
================================================================================
FINANCIAL FEDERAL CORPORATION
THE FIRST NATIONAL BANK
OF CHICAGO
as Trustee
INDENTURE
Dated as of April 15, 1998
4-1/2% Convertible Subordinated Notes due 2005
================================================================================
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TABLE OF CONTENTS
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ARTICLE I - DEFINITIONS...........................................................................................1
Section 1.1 Definitions............................................................................1
ARTICLE II - ISSUE, DESCRIPTION, EXECUTION, REGISTRATION
AND EXCHANGE OF NOTES....................................................................................8
Section 2.1 Designation, Amount and Issue of Notes.................................................8
Section 2.2 Form of Notes..........................................................................8
Section 2.3 Date and Denomination of Notes; Payments of Interest...................................9
Section 2.4 Execution of Notes....................................................................11
Section 2.5 Exchange and Registration of Transfer of Notes; Restrictions on
Transfer; Depositary..................................................................11
Section 2.6 Mutilated, Destroyed, Lost or Stolen Notes............................................22
Section 2.7 Temporary Notes.......................................................................23
Section 2.8 Cancellation of Notes Paid, Etc.......................................................23
ARTICLE III - REDEMPTION OF NOTES................................................................................24
Section 3.1 Redemption Prices.....................................................................24
Section 3.2 Notice of Redemption; Selection of Notes..............................................24
Section 3.3 Payment of Notes Called for Redemption................................................25
Section 3.4 Conversion Arrangement on Call for Redemption.........................................26
ARTICLE IV - SUBORDINATION OF NOTES..............................................................................27
Section 4.1 Agreement of Subordination............................................................27
Section 4.2 Payments to Noteholders...............................................................27
Section 4.3 Bankruptcy and Dissolution, Etc.......................................................29
Section 4.4 Subrogation of Notes..................................................................30
Section 4.5 Authorization by Noteholders..........................................................31
Section 4.6 Notice to Trustee.....................................................................31
Section 4.7 Trustee's Relation to Senior Indebtedness.............................................33
Section 4.8 No Impairment of Subordination........................................................33
Section 4.9 Certain Conversions Deemed Payment....................................................33
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ARTICLE V - PARTICULAR COVENANTS OF THE COMPANY..................................................................34
Section 5.1 Payment of Principal, Premium and Interest............................................34
Section 5.2 Maintenance of Office or Agency.......................................................34
Section 5.3 Appointments to Fill Vacancies in Trustee's Office....................................35
Section 5.4 Provisions as to Paying Agent.........................................................35
Section 5.5 Existence.............................................................................36
Section 5.6 Rule 144A Information Requirement.....................................................36
Section 5.7 Stay, Extension and Usury Laws........................................................36
Section 5.8 Compliance Certificate................................................................37
Section 5.9 Further Instruments and Acts..........................................................37
ARTICLE VI - NOTEHOLDERS' LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE.......................................37
Section 6.1 Noteholders' Lists....................................................................37
Section 6.2 Preservation and Disclosure of Lists..................................................37
Section 6.3 Reports by Trustee....................................................................38
Section 6.4 Reports by Company....................................................................38
ARTICLE VII - DEFAULTS AND REMEDIES..............................................................................39
Section 7.1 Events of Default.....................................................................39
Section 7.2 Payments of Notes on Default; Suit Therefor...........................................42
Section 7.3 Application of Monies Collected by Trustee............................................43
Section 7.4 Proceedings by Noteholder.............................................................44
Section 7.5 Proceedings by Trustee................................................................45
Section 7.6 Remedies Cumulative and Continuing....................................................45
Section 7.7 Direction of Proceedings and Waiver of Defaults by Majority of Noteholders............45
Section 7.8 Notice of Defaults....................................................................46
Section 7.9 Undertaking to Pay Costs..............................................................46
Section 7.10 Delay or Omission Not Waiver..........................................................46
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ARTICLE VIII - CONCERNING THE TRUSTEE............................................................................47
Section 8.1 Duties and Responsibilities of Trustee................................................47
Section 8.2 Reliance on Documents, Opinions, Etc..................................................48
Section 8.3 No Responsibility for Recitals, Etc...................................................49
Section 8.4 Trustee, Paying Agents, Conversion Agents or Registrar May Own Notes..................49
Section 8.5 Monies to Be Held in Trust............................................................49
Section 8.6 Compensation and Expenses of Trustee..................................................50
Section 8.7 Officers' Certificate as Evidence.....................................................50
Section 8.8 Conflicting Interests of Trustee......................................................51
Section 8.9 Eligibility of Trustee................................................................51
Section 8.10 Resignation or Removal of Trustee.....................................................51
Section 8.11 Acceptance by Successor Trustee.......................................................52
Section 8.12 Succession by Merger, Etc.............................................................53
Section 8.13 Limitation on Rights of Trustee as Creditor...........................................53
ARTICLE IX - CONCERNING THE NOTEHOLDERS..........................................................................54
Section 9.1 Action by Noteholders.................................................................54
Section 9.2 Proof of Execution by Noteholders.....................................................54
Section 9.3 Who Are Deemed Absolute Owners........................................................54
Section 9.4 Company-Owned Notes Disregarded.......................................................54
Section 9.5 Revocation of Consents; Future Holders Bound..........................................55
ARTICLE X - NOTEHOLDERS' MEETINGS................................................................................55
Section 10.1 Purpose of Meetings...................................................................55
Section 10.2 Call of Meetings by Trustee...........................................................56
Section 10.3 Call of Meetings by Company or Noteholders............................................56
Section 10.4 Qualifications for Voting.............................................................56
Section 10.5 Regulations...........................................................................57
Section 10.6 Voting................................................................................57
Section 10.7 No Delay of Rights by Meeting.........................................................58
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ARTICLE XI - SUPPLEMENTAL INDENTURES.............................................................................58
Section 11.1 Supplemental Indentures Without Consent of Noteholders................................58
Section 11.2 Supplemental Indentures With Consent of Noteholders...................................59
Section 11.3 Effect of Supplemental Indentures.....................................................60
Section 11.4 Notation on Notes.....................................................................60
Section 11.5 Evidence of Compliance of Supplemental Indenture to Be
Furnished Trustee.....................................................................61
ARTICLE XII - CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE..................................................61
Section 12.1 Company May Consolidate, Etc. on Certain Terms........................................61
Section 12.2 Successor Corporation to Be Substituted...............................................62
Section 12.3 Opinion of Counsel to Be Given Trustee................................................62
ARTICLE XIII - SATISFACTION AND DISCHARGE OF INDENTURE...........................................................62
Section 13.1 Discharge of Indenture................................................................62
Section 13.2 Deposited Monies to Be Held in Trust by Trustee.......................................63
Section 13.3 Paying Agent to Repay Monies Held.....................................................63
Section 13.4 Return of Unclaimed Monies............................................................63
Section 13.5 Reinstatement.........................................................................64
ARTICLE XIV - IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS....................................64
Section 14.1 Indenture and Notes Solely Corporate Obligations......................................64
ARTICLE XV - CONVERSION OF NOTES.................................................................................64
Section 15.1 Right to Convert......................................................................64
Section 15.2 Exercise of Conversion Privilege; Issuance of Common Stock on
Conversion; No Adjustment for Interest or Dividends...................................65
Section 15.3 Cash Payments in Lieu of Fractional Shares............................................66
Section 15.4 Conversion Price......................................................................67
Section 15.5 Adjustment of Conversion Price........................................................67
Section 15.6 Effect of Reclassification, Consolidation, Merger or Sale.............................77
Section 15.7 Taxes on Shares Issued................................................................79
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Section 15.8 Reservation of Shares; Shares to Be Fully Paid; Listing of Common Stock...............79
Section 15.9 Responsibility of Trustee.............................................................79
Section 15.10 Notice to Holders Prior to Certain Actions............................................80
ARTICLE XVI - REPURCHASE UPON A REPURCHASE EVENT.................................................................81
Section 16.1 Repurchase Right......................................................................81
Section 16.2 Notices; Method of Exercising Repurchase Right, Etc...................................81
Section 16.3 Conditions to the Company's Election to Pay the Repurchase
Price in Common Stock.................................................................84
Section 16.4 Certain Definitions...................................................................85
ARTICLE XVII - MISCELLANEOUS PROVISIONS..........................................................................87
Section 17.1 Provisions Binding on Company's Successors............................................87
Section 17.2 Official Acts by Successor Corporation................................................87
Section 17.3 Addresses for Notices, Etc............................................................87
Section 17.4 Governing Law.........................................................................87
Section 17.5 Evidence of Compliance with Conditions Precedent; Certificates to Trustee.............87
Section 17.6 Legal Holidays........................................................................88
Section 17.7 No Security Interest Created..........................................................88
Section 17.8 Trust Indenture Act...................................................................88
Section 17.9 Benefits of Indenture.................................................................88
Section 17.10 Table of Contents, Headings, Etc......................................................89
Section 17.11 Authenticating Agent..................................................................89
Section 17.12 Execution in Counterparts.............................................................90
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INDENTURE dated as of April 15, 1998 between Financial Federal
Corporation, a Nevada corporation (hereinafter sometimes called the "Company",
as more fully set forth in Section 1.1), and The First National Bank of Chicago,
a national banking association, as trustee (hereinafter sometimes called the
"Trustee", as more fully set forth in Section 1.1).
W I T N E S S E T H:
WHEREAS, for its lawful corporate purposes, the Company has duly
authorized the issue of its 4-1/2% Convertible Subordinated Notes due 2005
(hereinafter sometimes called the "Notes"), in an aggregate principal amount not
to exceed $100,000,000 ($115,000,000 if the over-allotment option is exercised
in full) and to provide the terms and conditions upon which the Notes are to be
authenticated, issued and delivered, the Company has duly authorized the
execution and delivery of this Indenture; and
WHEREAS, the Notes, the certificate of authentication to be borne by
the Notes, a form of assignment, a form of option to elect repayment upon a
Repurchase Event, a form of conversion notice and a certificate of transfer to
be borne by the Notes are to be substantially in the forms hereinafter provided
for; and
WHEREAS, all acts and things necessary to make the Notes, when executed
by the Company and authenticated and delivered by the Trustee or a duly
authorized authenticating agent, as in this Indenture provided, the valid,
binding and legal obligations of the Company, and to constitute these presents a
valid agreement according to its terms, have been done and performed, and the
execution of this Indenture and the issue hereunder of the Notes have in all
respects been duly authorized.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
That in order to declare the terms and conditions upon which the Notes
are, and are to be, authenticated, issued and delivered, and in consideration of
the premises and of the purchase and acceptance of the Notes by the holders
thereof, the Company covenants and agrees with the Trustee for the equal and
proportionate benefit of the respective holders from time to time of the Notes
(except as otherwise provided below), as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. The terms defined in this Section 1.1 (except
as herein otherwise expressly provided or unless the context otherwise requires)
for all purposes of this Indenture and of any indenture supplemental hereto
shall have the respective meanings specified in this Section 1.1. All other
terms used in this Indenture, which are defined in the Trust Indenture Act or
which are by reference therein defined in the Securities Act (except as herein
<PAGE>
otherwise expressly provided or unless the context otherwise requires) shall
have the meanings assigned to such terms in said Trust Indenture Act and in said
Securities Act as in force at the date of the execution of this Indenture. The
words "herein," "hereof," "hereunder," and words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or other
Subdivision. The terms defined in this Article include the plural as well as the
singular.
Affiliate: The term "Affiliate" of any specified person shall mean 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 or cause the direction of the management and policies of such
person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Board of Directors: The term "Board of Directors" shall mean the Board
of Directors of the Company or a committee of such Board duly authorized to act
for it hereunder.
Board Resolution: The term "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 duly authorized
committee thereof (to the extent permitted by applicable law), and to be in full
force and effect on the date of such certification, and delivered to the
Trustee.
Business Day: The term "Business Day" means each Monday, Tuesday,
Wednesday, Thursday and Friday which is not a day on which the banking
institutions in The City of New York, or the city in which the Corporate Trust
Office is located are authorized or obligated by law or executive order to close
or be closed.
Change in Control: The term "Change in Control" shall have the meaning
specified in Section 16.4.
close of business: The term "close of business" means 5 p.m. (New York
City time).
Commission: The term "Commission" shall mean the Securities and
Exchange Commission.
Common Stock: The term "Common Stock" shall mean 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.
Subject to the provisions of Section 15.6, however, shares issuable on
conversion of Notes shall include only shares of the class designated as common
stock of the Company at the date of this Indenture or shares of any class or
classes resulting from any reclassification or reclassifications thereof and
which have no preference in respect of dividends or of amounts payable in the
event of any voluntary or involuntary
-2-
<PAGE>
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
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: The term "Company" shall mean Financial Federal Corporation, a
Nevada corporation, and subject to the provisions of Article XII, shall include
its successors and assigns.
Conversion Price: The term "Conversion Price" shall have the meaning
specified in Section 15.4.
Corporate Trust Office: The term "Corporate Trust Office," or other
similar term, shall mean the office of the Trustee at which at any particular
time its corporate trust business shall be principally administered, which
office is, at the date as of which this Indenture is dated, located at One First
National Plaza, Suite 0126, Chicago, Illinois 60670-0126, Attention: Corporate
Trust Department (Financial Federal Corporation 4-1/2% Convertible Subordinated
Notes due 2005).
Custodian: The term "Custodian" means The First National Bank of
Chicago, as custodian with respect to the Notes in global form, or any successor
entity thereto.
default: The term "default" shall mean any event that is, or after
notice or passage of time, or both, would be, an Event of Default.
Depositary: The term "Depositary" means, with respect to the Notes
issuable or issued in whole or in part in global form, the person specified in
Section 2.5(d) as the Depositary with respect to such Notes, until a successor
shall have been appointed and become such pursuant to the applicable provisions
of this Indenture, and thereafter, "Depositary" shall mean or include such
successor.
Designated Senior Indebtedness: The term "Designated Senior
Indebtedness" means any particular Senior Indebtedness in which the instrument
creating or evidencing the same or the assumption or guarantee thereof (or
related agreements or documents to which the Company is a party) expressly
provides that such Senior Indebtedness shall be "Designated Senior Indebtedness"
for purposes of this Indenture (provided that such instrument, agreement or
other document may place limitations and conditions on the right of such Senior
Indebtedness to exercise the rights of Designated Senior Indebtedness).
Event of Default: The term "Event of Default" shall mean any event
specified in Section 7.1, continued for the period of time, if any, and after
the giving of notice, if any, therein designated.
-3-
<PAGE>
Exchange Act: The term "Exchange Act" means the Securities Exchange Act
of 1934, as amended, and the rules and regulations promulgated thereunder.
Expiration Time: The term "Expiration Time" shall have the meaning
specified in Section 15.5(f).
Global Note: The term "Global Note" shall have the meaning specified in
Section 2.5(b).
Indebtedness: The term "Indebtedness" shall mean any obligations of, or
guaranteed or assumed by, the Company or any Significant Subsidiary for borrowed
money.
Indenture: The term "Indenture" shall mean this instrument as
originally executed or, if amended or supplemented as herein provided, as so
amended or supplemented.
Initial Purchasers: The term "Initial Purchasers" means BancAmerica
Robertson Stephens, Donaldson, Lufkin & Jenrette Securities Corporation, Piper
Jaffray, Inc., CIBC Oppenheimer Corp., Friedman, Billings, Ramsey & Co., Inc.,
Schroder & Co. Inc. and Wheat, First Securities, Inc.
Liquidated Damages: The term "Liquidated Damages" means all liquidated
damages then owing pursuant to Section 3 of the Registration Rights Agreement.
Note or Notes: The terms "Note" or "Notes" shall mean any Note or
Notes, as the case may be, authenticated and delivered under this Indenture.
Noteholder or holder: The terms "Noteholder" or "holder" as applied to
any Note, or other similar terms (but excluding the term "beneficial holder"),
shall mean any person in whose name at the time a particular Note is registered
on the Note register.
Note register: The term "Note register" shall have the meaning
specified in Section 2.5.
Officers' Certificate: The term "Officers' Certificate", when used with
respect to the Company, shall mean a certificate signed by (a) one of the
President, the Chief Executive Officer, Executive or Senior Vice President or
any Vice President (whether or not designated by a number or numbers or word
added before or after the title "Vice President") and (b) by one of the
Treasurer or any Assistant Treasurer, Secretary or any Assistant Secretary or
Controller of the Company, which is delivered to the Trustee. Each such
certificate shall include the statements provided for in Section 17.5 if and to
the extent required by the provisions of such Section.
Opinion of Counsel: The term "Opinion of Counsel" shall mean an opinion
in writing signed by legal counsel, who may be an employee of or counsel to the
Company, or other counsel acceptable to the Trustee, which is delivered to the
Trustee. Each such opinion shall include the
-4-
<PAGE>
statements provided for in Section 17.5 if and to the extent required by the
provisions of such Section.
outstanding: The term "outstanding," when used with reference to Notes,
shall, subject to the provisions of Section 9.4, mean, as of any particular
time, all Notes authenticated and delivered by the Trustee under this Indenture,
except
(a) Notes theretofore canceled by the Trustee or delivered to
the Trustee for cancellation;
(b) Notes, or portions thereof, for the payment, or redemption
of which monies in the necessary amount shall have been deposited in
trust with the Trustee or with any paying agent (other than the
Company) or shall have been set aside and segregated in trust by the
Company (if the Company shall act as its own paying agent); provided
that if such Notes are to be redeemed, as the case may be, prior to the
maturity thereof, notice of such redemption shall have been given as
provided in Section 3.2, or provision satisfactory to the Trustee shall
have been made for giving such notice;
(c) Notes in lieu of which, or in substitution for which,
other Notes shall have been authenticated and delivered pursuant to the
terms of Section 2.6 unless proof satisfactory to the Trustee is
presented that any such Notes are held by bona fide holders in due
course; and
(d) Notes converted into Common Stock pursuant to Article XV
and Notes deemed not outstanding pursuant to Section 3.2.
person: The term "person" shall mean an individual, a corporation, a
limited liability company, an association, a partnership, an individual, a joint
venture, a joint stock company, a trust, an unincorporated organization or a
government or an agency or a political subdivision thereof.
Portal Market: The term "Portal Market" shall mean The Portal Market
operated by the National Association of Securities Dealers, Inc. or any
successor thereto.
Predecessor Note: The term "Predecessor Note" of any particular Note
shall mean every previous Note evidencing all or a portion of the same debt as
that evidenced by such particular Note; and, for the purposes of this
definition, any Note authenticated and delivered under Section 2.6 in lieu of a
lost, destroyed or stolen Note shall be deemed to evidence the same debt as the
lost, destroyed or stolen Note that it replaces.
QIB: The term "QIB" shall mean a "qualified institutional buyer" as
defined in Rule 144A.
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<PAGE>
Registration Rights Agreement: The term "Registration Rights Agreement"
means that certain Registration Rights Agreement, dated as of April 24, 1998,
between the Company and the Initial Purchasers.
Repurchase Event: The term "Repurchase Event" shall have the meaning
specified in Section 16.4.
Repurchase Price: The term "Repurchase Price" has the meaning specified
in Section 16.1.
Responsible Officer: The term "Responsible Officer", when used with
respect to the Trustee, shall mean an officer of the Trustee in the Corporate
Trust Office assigned and duly authorized by the Trustee to administer its
obligations under this Indenture.
Restricted Securities: The term "Restricted Securities" has the meaning
specified in Section 2.5(d).
Rule 144A: The term "Rule 144A" shall mean Rule 144A as promulgated
under the Securities Act.
Securities Act: The term "Securities Act" means the Securities Act of
1933, as amended, and the rules and regulations promulgated thereunder.
Senior Indebtedness: The term "Senior Indebtedness" means the principal
of, premium, if any, interest on (including any interest accruing after the
filing of a petition by or against the Company under any bankruptcy law, whether
or not allowed as a claim after such filing in any proceeding under such
bankruptcy law) and any other payment due pursuant to, any of the following,
whether outstanding on the date of this Indenture or thereafter incurred or
created:
(a) All indebtedness of the Company for money borrowed that is
evidenced by notes, debentures, bonds or other securities (including,
but not limited to, those which are convertible or exchangeable for
securities of the Company), and all other obligations of the Company
constituting the deferred purchase price of property or assets;
(b) All indebtedness of the Company due and owing with respect
to letters of credit (including, but not limited to, reimbursement
obligations with respect thereto and funding obligations with respect
to letters of credit issued by the Company);
(c) All indebtedness or other obligations of the Company due
and owing with respect to interest rate and currency swap agreements,
cap, floor and collar agreements, currency spot and forward contracts
and other similar agreements and arrangements;
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(d) All indebtedness consisting of commitment or standby fees
due and payable to lending institutions with respect to credit
facilities or letters of credit available to the Company;
(e) All obligations of the Company under leases required or
permitted to be capitalized under generally accepted accounting
principles or under any lease or related document (including a purchase
agreement) that provides that the Company is contractually obligated to
purchase or cause a third party to purchase and thereby guarantee a
minimum residual value of the lease property to the lessor and the
obligations of the Company under such lease or related document to
purchase or to cause a third party to purchase such leased property;
(f) All indebtedness or obligations of others of the kinds
described in any of the preceding clauses (a), (b), (c), (d) or (e)
assumed by or guaranteed in any manner by the Company or in effect
guaranteed (directly or indirectly) by the Company through an agreement
to purchase, contingent or otherwise, and all obligations of the
Company under any such guarantee or other arrangements; and
(g) All renewals, extensions, refundings, deferrals,
amendments or modifications of indebtedness or obligations of the kinds
described in any of the preceding clauses (a), (b), (c), (d), (e) or
(f);
unless in the case of any particular indebtedness, obligation, renewal,
extension, refunding, amendment, modification or supplement, the instrument or
other document creating or evidencing the same or the assumption or guarantee of
the same expressly provides that such indebtedness, obligation, renewal,
extension, refunding, amendment, modification or supplement is subordinate to,
or is not superior to, or is pari passu with, the Notes; provided that Senior
Indebtedness shall not include (i) any indebtedness of any kind of the Company
to any subsidiary of the Company, a majority of the voting stock of which is
owned, directly or indirectly, by the Company, (ii) indebtedness for trade
payables or constituting the deferred purchase price of assets or services
incurred in the ordinary course of business, or (iii) the Notes.
Significant Subsidiary: The term "Significant Subsidiary" means, with
respect to any person, a Subsidiary of such person that would constitute a
"significant subsidiary" as such term is defined under Rule 1-02 of Regulation
S-X of the Securities and Exchange Commission.
Subsidiary: The term "Subsidiary" means a corporation more than 50% of
the outstanding voting stock of which is owned, directly or indirectly, by the
Company or by one or more other Subsidiaries, or by the Company and one or more
other Subsidiaries. For the purposes of this definition, "voting stock" means
stock which ordinarily has voting power for the election of directors, whether
at all times or only so long as no senior class of stock has such voting power
by reason of any contingency.
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Trading Day: The term "Trading Day" has the meaning specified in
Section 15.5(h)(5).
Trust Indenture Act: The term "Trust Indenture Act" shall mean the
Trust Indenture Act of 1939, as amended, as it was in force at the date of
execution of this Indenture, except as provided in Sections 11.3 and 15.6;
provided, however, that in the event the Trust Indenture Act of 1939 is amended
after the date hereof, the term "Trust Indenture Act" shall mean, to the extent
required by such amendment, the Trust Indenture Act of 1939 as so amended.
Trustee: The term "Trustee" shall mean The First National Bank of
Chicago, and its successors and any corporation resulting from or surviving any
consolidation or merger to which it or its successors may be a party and any
successor trustee at the time serving as successor trustee hereunder.
The definitions of certain other terms are as specified in Article XV
and Article XVI.
ARTICLE II
ISSUE, DESCRIPTION, EXECUTION, REGISTRATION
AND EXCHANGE OF NOTES
Section 2.1 Designation, Amount and Issue of Notes. The Notes shall be
designated as "4-1/2% Convertible Subordinated Notes due 2005." Notes not to
exceed the aggregate principal amount of $100,000,000 (or $115,000,000 if the
over-allotment option set forth in Section 7 of the Purchase Agreement dated
April 24, 1998 (as amended from time to time by the parties thereto) by and
between the Company and the Initial Purchasers is exercised in full) upon the
execution of this Indenture, or (except pursuant to Sections 2.5, 2.6, 3.3, 15.2
and 16.2) from time to time thereafter, may be executed by the Company and
delivered to the Trustee for authentication, and the Trustee shall thereupon
authenticate and deliver said Notes upon the written order of the Company,
signed by the Company's (a) President, Executive or Senior Vice President or any
Vice President (whether or not designated by a number or numbers or word or
words added before or after the title "Vice President") and (b) Treasurer or
Assistant Treasurer or its Secretary or any Assistant Secretary, without any
further action by the Company hereunder.
Section 2.2 Form of Notes. The Notes and the Trustee's certificate of
authentication to be borne by such Notes shall be substantially in the form set
forth in Exhibit A, which is incorporated in and made a part of this Indenture.
Any of the Notes may have such letters, numbers or other marks of
identification and such notations, legends and endorsements as the officers
executing the same may approve (execution thereof to be conclusive evidence of
such approval) and as are not inconsistent with the provisions of this
Indenture, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any
securities exchange or
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automated quotation system on which the Notes may be listed or designated for
issuance, or to conform to usage.
The Global Note shall represent such of the outstanding Notes as shall
be specified therein and shall provide that it shall represent the aggregate
amount of outstanding Notes from time to time endorsed thereon and that the
aggregate amount of outstanding Notes represented thereby may from time to time
be increased or reduced to reflect transfers or exchanges permitted hereby. Any
endorsement of the Global Note to reflect the amount of any increase or decrease
in the amount of outstanding Notes represented thereby shall be made by the
Trustee or the Custodian, at the direction of the Trustee, in such manner and
upon instructions given by the holder of such Notes in accordance with this
Indenture. Payment of principal of and interest and premium, if any (including
any redemption price), on the Global Note shall be made to the holder of such
Note.
The terms and provisions contained in the form of Note attached as
Exhibit A hereto shall constitute, and is hereby expressly made, a part of this
Indenture and to the extent applicable, the Company and the Trustee, by their
execution and delivery of this Indenture, expressly agree to such terms and
provisions and to be bound thereby.
Section 2.3 Date and Denomination of Notes; Payments of Interest. The
Notes shall be issuable in registered form without coupons in denominations of
$1,000 principal amount and integral multiples thereof. Every Note shall be
dated the date of its authentication and shall bear interest from the applicable
date as specified on the face of the form of Note, attached as Exhibit A hereto.
Accrued interest shall be payable semiannually on each May 1 and November 1, as
set forth on such form of Note, commencing November 1, 1998 and ending on May 1,
2005, unless redeemed, repurchased or converted earlier in accordance with the
terms of this Indenture.
The person in whose name any Note (or its Predecessor Note) is
registered at the close of business on any record date with respect to any
interest payment date (including any Note that is converted after the record
date and on or before the interest payment date) shall be entitled to receive
the interest payable on such interest payment date notwithstanding the
cancellation of such Note upon any transfer, exchange or conversion subsequent
to the record date and on or prior to such interest payment date; provided that,
in the case of any Note, or portion thereof, called for redemption pursuant to
Article III on a redemption date, or repurchased by the Company pursuant to
Article XVI on a repurchase date, during the period from the close of business
on the record date to the close of business on the Business Day next preceding
the following interest payment date, interest shall not be paid to the person in
whose name the Note, or portion thereof, is registered on the close of business
on such record date, and the Company shall have no obligation to pay interest on
such Note or portion thereof except to the extent required to be paid upon such
redemption or repurchase in accordance with Article III or Article XVI. Interest
may, at the option of the Company, be paid by check mailed to the address of
such person on the Note registry; provided that, with respect to any holder of
Notes with an
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aggregate principal amount equal to or in excess of $5,000,000, at the request
of such holder in writing to the Company, interest on such holder's Notes shall
be paid by wire transfer in immediately available funds in accordance with the
wire transfer instruction supplied by such holder from time to time to the
Trustee and paying agent (if different from Trustee) at least two days prior to
the applicable record date. The term "interest payment date" shall mean May 1
and November 1 of each year commencing on November 1, 1998 and ending on May 1,
2005, unless redeemed, repurchased or converted earlier in accordance with the
terms of this Indenture. The term "record date" with respect to any interest
payment date shall mean the April 15 or October 15 preceding said May 1 or
November 1, respectively.
Interest on the Notes shall be computed on the basis of a 360-day year
comprised of twelve 30-day months compounded semi-annually.
Any interest on any Note which is payable, but is not punctually paid
or duly provided for, on any said May 1 or November 1 (herein called "Defaulted
Interest") shall forthwith cease to be payable to the Noteholder on the relevant
record date by virtue of his having been such Noteholder; and such Defaulted
Interest shall 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 Notes (or their respective
Predecessor Notes) are registered at the close of business on a special
record date for the payment of such Defaulted Interest, which shall be
fixed in the following manner. The Company shall notify the Trustee in
writing of the amount of Defaulted Interest to be paid on each Note and
the date of the payment (which shall be not less than twenty-five (25)
days after the receipt by the Trustee of such notice, unless the
Trustee shall consent to an earlier date), and at the same time the
Company shall deposit with the Trustee an amount of money equal to the
aggregate amount to be paid in respect of such Defaulted Interest or
shall make arrangements satisfactory to the Trustee for such deposit
prior to the date of the proposed payment, such money when deposited to
be held in trust for the benefit of the persons entitled to such
Defaulted Interest as in this clause provided. Thereupon the Trustee
shall fix a special record date for the payment of such Defaulted
Interest which shall be not more than fifteen (15) days and not less
than ten (10) days prior to the date of the proposed payment and not
less than ten (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 Noteholder as of such special record date at
his address as it appears in the Note register, not less than ten (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 Notes (or their respective
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Predecessor Notes) were 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 or automated quotation system on which the Notes
may be listed or designated for issuance, and upon such notice as may
be required by such exchange or automated quotation system, if, after
notice given by the Company to the Trustee of the proposed payment
pursuant to this clause, such manner of payment shall be deemed
practicable by the Trustee.
Section 2.4 Execution of Notes. The Notes shall be signed in the name
and on behalf of the Company by the facsimile signature of its President, its
Chief Executive Officer, any of its Executive or Senior Vice Presidents, or any
of its Vice Presidents (whether or not designated by a number or numbers or word
or words added before or after the title "Vice President") and attested by the
facsimile signature of its Secretary or any of its Assistant Secretaries (which
may be printed, engraved or otherwise reproduced thereon, by facsimile or
otherwise). Only such Notes as shall bear thereon a certificate of
authentication substantially in the form set forth on the form of Note attached
as Exhibit A hereto, manually executed by the Trustee (or an authenticating
agent appointed by the Trustee as provided by Section 17.11), shall be entitled
to the benefits of this Indenture or be valid or obligatory for any purpose.
Such certificate by the Trustee (or such an authenticating agent) upon any Note
executed by the Company shall be conclusive evidence that the Note so
authenticated has been duly authenticated and delivered hereunder and that the
holder is entitled to the benefits of this Indenture.
In case any officer of the Company who shall have signed any of the
Notes shall cease to be such officer before the Notes so signed shall have been
authenticated and delivered by the Trustee, or disposed of by the Company, such
Notes nevertheless may be authenticated and delivered or disposed of as though
the person who signed such Notes had not ceased to be such officer of the
Company; and any Note may be signed on behalf of the Company by such persons as,
at the actual date of the execution of such Note, shall be the proper officers
of the Company, although at the date of the execution of this Indenture any such
person was not such an officer.
Section 2.5 Exchange and Registration of Transfer of Notes;
Restrictions on Transfer; Depositary.
(a) The Company shall cause to be kept at the Corporate Trust
Office a register (the register maintained in such office and in any
other office or agency of the Company designated pursuant to Section
5.2 being herein sometimes collectively referred to as the "Note
register") in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration of Notes and
of transfers of Notes. Such register shall be in written form or in any
form capable of being converted into written form within a reasonable
period of time. The Trustee is hereby appointed
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"Note registrar" for the purpose of registering Notes and transfers of
Notes as herein provided. The Company may appoint one or more
co-registrars in accordance with Section 5.2.
Upon surrender for registration of transfer of any Note to the
Note registrar or any co-registrar, and satisfaction of the
requirements for such transfer set forth in this Section 2.5, the
Company shall execute, and the Trustee shall authenticate and deliver,
in the name of the designated transferee or transferees, one or more
new Notes of any authorized denominations and of a like aggregate
principal amount and bearing such restrictive legends as may be
required by this Indenture.
Notes may be exchanged for other Notes of any authorized
denominations and of a like aggregate principal amount, upon surrender
of the Notes to be exchanged at any such office or agency. Whenever any
Notes are so surrendered for exchange, the Company shall execute, and
the Trustee shall authenticate and deliver, the Notes which the
Noteholder making the exchange is entitled to receive, bearing
registration numbers not contemporaneously outstanding.
All Notes presented or surrendered for registration of
transfer or for exchange shall (if so required by the Company, the
Trustee, the Note registrar or any co-registrar) be duly endorsed, or
be accompanied by a written instrument or instruments of transfer in
form satisfactory to the Company and duly executed, by the Noteholder
thereof or his attorney-in-fact duly authorized in writing.
No service charge shall be charged to the Noteholder for any
exchange or registration of transfer of Notes, but the Company may
require payment of a sum sufficient to cover any tax, assessments or
other governmental charges that may be imposed in connection therewith.
None of the Company, the Trustee, the Note registrar or any
co-registrar shall be required to exchange or register a transfer of
(a) any Notes for a period of fifteen (15) days next preceding any
selection of Notes to be redeemed or (b) any Notes called for
redemption or, if a portion of any Note is selected or called for
redemption, such portion thereof selected or called for redemption or
(c) any Notes surrendered for conversion or, if a portion of any Note
is surrendered for conversion, such portion thereof surrendered for
conversion or (d) any Notes, or a portion of any Note, surrendered for
repurchase (and not withdrawn) in connection with a Repurchase Event.
All Notes issued upon any transfer or exchange of Notes in
accordance with this Indenture shall be the valid obligations of the
Company, evidencing the same debt, and entitled to the same benefits
under this Indenture as the Notes surrendered upon such registration of
transfer or exchange.
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(b) So long as the Notes are eligible for book-entry
settlement with the Depositary, unless otherwise required by law, all
Notes issued to QIBs pursuant to Rule 144A of the Securities Act to be
traded on The Portal Market shall be represented by a Note in global
form (the "Global Note") registered in the name of the Depositary or
the nominee of the Depositary. The transfer and exchange of beneficial
interests in the Global Note, which does not involve the issuance of a
definitive Note, shall be effected through the Depositary (but not the
Trustee or the Custodian) in accordance with this Indenture (including
the restrictions on transfer set forth herein) and the procedures of
the Depositary therefor.
Notes resold to persons who are not QIBs will be issued in
definitive registered form and may not be represented by the Global
Note. In addition, at any time at the request of a QIB that is a
beneficial holder of an interest in the Global Note, such beneficial
holder shall be entitled to obtain a definitive Note upon written
request to the Trustee and the Custodian in accordance with the
standing instructions and procedures existing between the Depositary
and the Custodian for the issuance thereof. Upon receipt of any such
request, the Trustee or the Custodian, at the direction of the Trustee,
will cause, in accordance with the standing instructions and procedures
existing between the Depositary and the Custodian, the aggregate
principal amount of the Global Note to be reduced by the principal
amount of the definitive Note issued upon such request to such
beneficial holder and, following such reduction, the Company will
execute and the Trustee will authenticate and deliver to such
beneficial holder (or its nominee) a definitive Note or Notes in the
appropriate aggregate principal amount in the name of such beneficial
holder (or its nominee) and bearing such restrictive legends as may be
required by this Indenture.
Any transfer of a beneficial interest in the Global Note which
cannot be effected through book-entry settlement must be effected by
the delivery to the transferee (or its nominee) of a definitive Note or
Notes registered in the name of the transferee (or its nominee) on the
books maintained by the Trustee in accordance with the transfer
restrictions set forth herein. With respect to any such transfer, the
Trustee or the Custodian, at the direction of the Trustee, will cause,
in accordance with the standing instructions and procedures existing
between the Depositary and the Custodian, the aggregate principal
amount of the Global Note to be reduced by the principal amount of the
beneficial interest in the Global Note being transferred and, following
such reduction, the Company will execute and the Trustee will
authenticate and deliver to the transferee (or such transferee's
nominee, as the case may be), a Note or Notes in the appropriate
aggregate principal amount in the name of such transferee (or its
nominee) and bearing such restrictive legends as may be required by
this Indenture.
(c) So long as the Notes are eligible for book-entry
settlement, unless otherwise required by law, upon any transfer of a
definitive Note to a QIB in accordance with Rule 144A, unless otherwise
requested by the transferor, and upon receipt of the
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definitive Note or Notes being so transferred, together with a
certification from the transferor that the transferee is a QIB (or
other evidence satisfactory to the Trustee), the Trustee shall make or
direct the Custodian to make, an endorsement on the Global Note to
reflect an increase in the aggregate principal amount of the Notes
represented by the Global Note by the principal amount of the Note
being transferred to the QIB, the Trustee shall cancel such definitive
Note or Notes and cause, or direct the Custodian to cause, in
accordance with the standing instructions and procedures existing
between the Depositary and the Custodian, the aggregate principal
amount of Notes represented by the Global Note to be increased
accordingly; provided that no definitive Note, or portion thereof, in
respect of which the Company or an Affiliate of the Company held any
beneficial interest shall be included in the Global Note until such
definitive Note is freely tradable in accordance with Rule 144(k);
provided further that the Trustee shall authenticate and deliver Notes
in definitive form upon any transfer of a beneficial interest in the
Global Note to the Company or any Affiliate of the Company.
Any Global Note may be endorsed with or have incorporated in
the text thereof such legends or recitals or changes not inconsistent
with the provisions of this Indenture as may be required by the
Custodian, the Depositary or by the National Association of Securities
Dealers, Inc. in order for the Notes to be tradeable on The Portal
Market or as may be required for the Notes to be tradeable on any other
market developed for trading of securities pursuant to Rule 144A or
required to comply with any applicable law or any regulation thereunder
or with the rules and regulations of any securities exchange or
automated quotation system upon which the Notes may be listed or traded
or designated for issuance or to conform with any usage with respect
thereto, or to indicate any special limitations or restrictions to
which any particular Notes are subject.
(d) Every Note that bears or is required under this Section
2.5(d) to bear either of the legends set forth in this Section 2.5(d)
(together with any Common Stock issued upon conversion of the Notes and
required to bear either of the legends set forth in Section 2.5(e),
collectively, the "Restricted Securities") shall be subject to the
restrictions on transfer set forth in this Section 2.5(d) (including
one of the legends set forth below), unless such restrictions on
transfer shall be waived by written consent of the Company, and the
holder of each such Restricted Security, by such holder's acceptance
thereof, agrees to be bound by all such restrictions on transfer. As
used in Sections 2.5(d) and 2.5(e), the term "transfer" encompasses any
sale, pledge, transfer or other disposition whatsoever of any
Restricted Security.
Until two (2) years after the original issuance date of any
Note, any certificate evidencing such Note (and all securities issued
in exchange therefor or substitution thereof, other than Common Stock,
if any, issued upon conversion thereof which shall bear the legend set
forth in Section 2.5(e), if applicable) shall bear a legend in
substantially the following form (unless such Notes have been
transferred pursuant to a registration statement that has been declared
effective under the Securities Act (and
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which continues to be effective at the time of such transfer), pursuant
to the exemption from registration provided by Rule 144 under the
Securities Act, or unless otherwise agreed by the Company in writing,
with notice thereof to the Trustee):
THE NOTE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT")
OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD
EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS
ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER
THE SECURITIES ACT) ("INSTITUTIONAL ACCREDITED INVESTOR"); (2)
AGREES THAT IT WILL NOT WITHIN TWO YEARS AFTER THE ORIGINAL
ISSUANCE OF THE NOTE EVIDENCED HEREBY RESELL OR OTHERWISE
TRANSFER THE NOTE EVIDENCED HEREBY OR THE COMMON STOCK
ISSUABLE UPON CONVERSION OF SUCH NOTE EXCEPT (A) TO THE
COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (C) TO AN INSTITUTIONAL ACCREDITED INVESTOR
THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE FIRST NATIONAL
BANK OF CHICAGO, AS TRUSTEE, A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THE NOTE EVIDENCED HEREBY (THE
FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH TRUSTEE), (D)
PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE
144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (E) PURSUANT TO
A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE
UNDER THE SECURITIES ACT (AND WHICH CONTINUES TO BE EFFECTIVE
AT THE TIME OF SUCH TRANSFER); AND (3) AGREES THAT IT WILL
DELIVER TO EACH PERSON TO WHOM THE NOTE EVIDENCED HEREBY IS
TRANSFERRED (OTHER THAN A TRANSFER PURSUANT TO CLAUSE 2(E)
ABOVE) A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN
CONNECTION WITH ANY TRANSFER OF THE NOTE EVIDENCED HEREBY
WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF SUCH NOTE
(OTHER THAN A TRANSFER PURSUANT TO CLAUSE 2(E) ABOVE), THE
HOLDER MUST CHECK THE APPROPRIATE BOX
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SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH
TRANSFER AND SUBMIT THIS CERTIFICATE TO THE FIRST NATIONAL
BANK OF CHICAGO, AS TRUSTEE. IF THE PROPOSED TRANSFER IS
PURSUANT TO CLAUSE 2(C) OR 2(D) ABOVE, THE HOLDER MUST, PRIOR
TO SUCH TRANSFER, FURNISH TO THE FIRST NATIONAL BANK OF
CHICAGO, AS TRUSTEE, SUCH CERTIFICATIONS, LEGAL OPINIONS OR
OTHER INFORMATION AS THE COMPANY MAY REASONABLY REQUIRE TO
CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND
WILL BE REMOVED UPON THE EARLIER OF THE TRANSFER OF THE NOTE
EVIDENCED HEREBY PURSUANT TO CLAUSE 2(D) OR 2(E) ABOVE OR THE
EXPIRATION OF TWO YEARS FROM THE ORIGINAL ISSUANCE OF THE NOTE
EVIDENCED HEREBY.
Notwithstanding the foregoing dispositions of this Section 2.5(d), any
certificate evidencing a Note that has been transferred to an Affiliate of the
Company within two years after the original issuance date of the Note, as
evidenced by a check in the appropriate box on the Assignment effecting such
transfer or the representation letter delivered in respect thereof, for so long
as such Note is held by such Affiliate, shall bear a legend in substantially the
following form (unless such Notes have been transferred pursuant to a
registration statement that has been declared effective under the Securities Act
(and which continues to be effective at the time of such transfer), pursuant to
the exemption from registration provided by Rule 144 under the Securities Act,
or unless otherwise agreed by the Company (with written notice thereof to the
Trustee):
THE NOTE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE
SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT AS
SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE
HOLDER (1) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THE
NOTE EVIDENCED HEREBY OR THE COMMON STOCK ISSUABLE UPON CONVERSION OF
SUCH NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B)
PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER
THE SECURITIES ACT (IF AVAILABLE), OR (C) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT
(AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH TRANSFER); AND
(2) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE NOTE
EVIDENCED HEREBY IS TRANSFERRED (OTHER THAN A TRANSFER PURSUANT TO
CLAUSE 1(C) ABOVE) A NOTICE
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SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY
TRANSFER OF THE NOTE EVIDENCED HEREBY (OTHER THAN A TRANSFER PURSUANT
TO CLAUSE 1(C) ABOVE), THE HOLDER MUST CHECK THE APPROPRIATE BOX SET
FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND
SUBMIT THIS CERTIFICATE TO THE FIRST NATIONAL BANK OF CHICAGO, AS
TRUSTEE. IF THE PROPOSED TRANSFER IS PURSUANT TO CLAUSE 1(B) ABOVE, THE
HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE FIRST NATIONAL BANK
OF CHICAGO, AS TRUSTEE, SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER
INFORMATION AS THE COMPANY MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT.
Any Note (or security issued in exchange or substitution
therefor) as to which such restrictions on transfer shall have expired
in accordance with their terms may, upon surrender of such Note for
exchange to the Note registrar in accordance with the provisions of
this Section 2.5, be exchanged for a new Note or Notes, of like tenor
and aggregate principal amount, which shall not bear the restrictive
legend required by this Section 2.5(d).
Notwithstanding any other provisions of this Indenture (other
than the provisions set forth in this Section 2.5(d)), the Global Note
may not be transferred as a whole or in part except by the Depositary
to a nominee of the Depositary or by a nominee of the Depositary to the
Depositary or another nominee of the Depositary or by the Depositary or
any such nominee to a successor Depositary or a nominee of such
successor Depositary.
The Depositary shall be a clearing agency registered under the
Exchange Act. The Company initially appoints The Depository Trust
Company to act as Depositary with respect to the Global Note.
Initially, the Global Note shall be issued to the Depositary,
registered in the name of Cede & Co., as the nominee of the Depositary,
and deposited with the Trustee as custodian for Cede & Co.
If at any time the Depositary for the Global Note notifies the
Company that it is unwilling or unable to continue as Depositary for
such Note, the Company may appoint a successor Depositary with respect
to such Note. If a successor Depositary for the Global Note is not
appointed by the Company within ninety (90) days after the Company
receives such notice, the Company will execute, and the Trustee, upon
receipt of an Officers' Certificate for the authentication and delivery
of Notes, will authenticate and deliver, Notes in definitive form, in
an aggregate principal amount equal to the principal amount of the
Global Note, in exchange for the Global Note, and upon delivery of the
Global Note to the Trustee the Global Note shall be canceled.
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If a Note in certificated form is issued in exchange for any
portion of a Global Note after the close of business on any record date
at the office or agency where such exchange occurs and before the
opening of business at such office or agency on the next succeeding
interest payment date, interest will not be payable on such interest
payment date in respect of such certificated Note, but will be payable
on such interest payment date only with respect to the exchanged
portion of the Global Note in accordance with the provisions of this
Indenture.
Definitive Notes issued in exchange for all or a part of the
Global Note pursuant to this Section 2.5(d) shall be registered in such
names and in such authorized denominations as the Depositary, pursuant
to instructions from its direct or indirect participants or otherwise,
shall instruct the Trustee. Upon execution and authentication, the
Trustee shall deliver such definitive Notes to the persons in whose
names such definitive Notes are so registered.
At such time as all interests in the Global Note have been
redeemed, converted, canceled, repurchased or transferred, the Global
Note shall be, upon receipt thereof, canceled by the Trustee in
accordance with standing procedures and instructions existing between
the Depositary and the Custodian. At any time prior to such
cancellation, if any interest in the Global Note is exchanged for
definitive Notes, redeemed, converted, canceled, repurchased or
transferred to a transferee who receives definitive Notes therefor or
any definitive Note is exchanged or transferred for part of the Global
Note, the principal amount of the Global Note shall, in accordance with
the standing procedures and instructions existing between the
Depositary and the Custodian, be appropriately reduced or increased, as
the case may be, and an endorsement shall be made on the Global Note,
by the Trustee or the Custodian, at the direction of the Trustee, to
reflect such reduction or increase.
(e) Until two (2) years after the original issuance date of
any Note, any stock certificate representing Common Stock issued upon
conversion of such Note shall bear a legend in substantially the
following form (unless such Common Stock has been sold pursuant to the
exemption from registration provided by Rule 144 under the Securities
Act or pursuant to a registration statement that has been declared
effective under the Securities Act, and which continues to be effective
at the time of such transfer, or such Common Stock has been issued upon
conversion of Notes that have been transferred pursuant to a
registration statement that has been declared effective under the
Securities Act, or unless otherwise agreed by the Company with written
notice thereof to the Trustee and any transfer agent for the Common
Stock):
THE COMMON STOCK EVIDENCED HEREBY HAS NOT BEEN
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") OR ANY STATE
SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD
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EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. THE HOLDER
HEREOF AGREES THAT UNTIL THE EXPIRATION OF TWO YEARS AFTER THE
ORIGINAL ISSUANCE OF THE NOTE UPON THE CONVERSION OF WHICH THE
COMMON STOCK EVIDENCED HEREBY WAS ISSUED, (1) IT WILL NOT
WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THE NOTE UPON
THE CONVERSION OF WHICH THE COMMON STOCK EVIDENCED HEREBY WAS
ISSUED RESELL OR OTHERWISE TRANSFER THE COMMON STOCK EVIDENCED
HEREBY EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF,
(B) TO A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT) IN COMPLIANCE WITH RULE 144A,
(C) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN
RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) THAT
PRIOR TO SUCH TRANSFER, FURNISHES TO THE BANK OF NEW YORK, AS
TRANSFER AGENT, A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON
TRANSFER OF THE COMMON STOCK EVIDENCED HEREBY (THE FORM OF
WHICH LETTER CAN BE OBTAINED FROM SUCH TRANSFER AGENT), (D)
PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE
144 UNDER THE SECURITIES ACT (IF AVAILABLE), OR (E) PURSUANT
TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE
UNDER THE SECURITIES ACT (AND WHICH CONTINUES TO BE EFFECTIVE
AT THE TIME OF SUCH TRANSFER); (2) PRIOR TO ANY SUCH TRANSFER
(OTHER THAN A TRANSFER PURSUANT TO CLAUSE 1(E) ABOVE), IT WILL
FURNISH TO THE BANK OF NEW YORK, AS TRANSFER AGENT, SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THE
COMPANY MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER
IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT; AND (3) IT WILL DELIVER TO EACH PERSON TO
WHOM THE COMMON STOCK EVIDENCED HEREBY IS TRANSFERRED (OTHER
THAN A TRANSFER PURSUANT TO CLAUSE 1(E) ABOVE) A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. THIS LEGEND WILL
BE REMOVED UPON THE EARLIER OF THE TRANSFER OF THE COMMON
STOCK EVIDENCED HEREBY PURSUANT TO CLAUSE 1(D) OR 1(E) ABOVE
OR THE EXPIRATION OF TWO YEARS FROM THE ORIGINAL ISSUANCE OF
THE NOTE UPON THE CONVERSION OF
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WHICH THE COMMON STOCK EVIDENCED HEREBY WAS
ISSUED.
Until two (2) years after the original issuance date
of any Note, any stock certificate representing Common Stock issued
upon conversion of such Note that shall have been transferred to an
Affiliate of the Company, as evidenced by a check in the appropriate
box on the Assignment effecting such transfer or in the representation
letter delivered in respect thereof, shall bear a legend in
substantially the following form (unless such Common Stock has been
sold pursuant to the exemption from registration provided by Rule 144
under the Securities Act or pursuant to a registration statement that
has been declared effective under the Securities Act, and which
continues to be effective at the time of such transfer, or such Common
Stock has been issued upon conversion of Notes that have been
transferred pursuant to a registration statement that has been declared
effective under the Securities Act or unless otherwise agreed by the
Company with written notice thereof to the Trustee and any transfer
agent for the Common Stock):
THE COMMON STOCK EVIDENCED HEREBY HAS NOT BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") OR ANY STATE SECURITIES LAWS, AND MAY NOT BE
OFFERED OR SOLD EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE.
THE HOLDER HEREOF AGREES THAT UNTIL THE EXPIRATION OF TWO
YEARS AFTER THE ORIGINAL ISSUANCE OF THE NOTE UPON THE
CONVERSION OF WHICH THE COMMON STOCK EVIDENCED HEREBY WAS
ISSUED, (1) IT WILL NOT WITHIN TWO YEARS AFTER THE ORIGINAL
ISSUANCE OF THE NOTE UPON THE CONVERSION OF WHICH THE COMMON
STOCK EVIDENCED HEREBY WAS ISSUED RESELL OR OTHERWISE TRANSFER
THE COMMON STOCK EVIDENCED HEREBY EXCEPT (A) TO THE COMPANY OR
ANY SUBSIDIARY THEREOF, (B) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE), OR (C) PURSUANT TO A REGISTRATION STATEMENT WHICH
HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT (AND
WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH TRANSFER);
(2) PRIOR TO ANY SUCH TRANSFER (OTHER THAN A TRANSFER PURSUANT
TO CLAUSE 1(C) ABOVE), IT WILL FURNISH TO THE BANK OF NEW
YORK, AS TRANSFER AGENT, SUCH CERTIFICATIONS, LEGAL OPINIONS
OR OTHER INFORMATION AS THE COMPANY MAY REASONABLY
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REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT
TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT; AND (3) IT
WILL DELIVER TO EACH PERSON TO WHOM THE COMMON STOCK EVIDENCED
HEREBY IS TRANSFERRED (OTHER THAN A TRANSFER PURSUANT TO
CLAUSE 1(C) ABOVE) A NOTICE SUBSTANTIALLY TO THE EFFECT OF
THIS LEGEND.
Any such Common Stock as to which such restrictions on
transfer shall have expired in accordance with their terms may, upon
surrender of the certificates representing such shares of Common Stock
for exchange in accordance with the procedures of the transfer agent
for the Common Stock, be exchanged for a new certificate or
certificates for a like aggregate number of shares of Common Stock,
which shall not bear the restrictive legend required by this Section
2.5(e).
(f) Any Note or Common Stock issued upon the conversion or
exchange of a Note that, prior to the expiration of the holding period
applicable to sales thereof under Rule 144(k) under the Securities Act
(or any successor provision), is purchased or owned by the Company or
any Affiliate thereof may not be resold by the Company or such
Affiliate unless registered under the Securities Act or resold pursuant
to an exemption from the registration requirements of the Securities
Act in a transaction that results in such Notes or Common Stock, as the
case may be, no longer being "restricted securities" (as defined under
Rule 144).
(g) Notwithstanding any provision of Section 2.5 to the
contrary, in the event Rule 144(k) as promulgated under the Securities
Act (or any successor rule) is amended to change the two-year period
under Rule 144(k) (or the corresponding period under any successor
rule), from and after receipt by the Trustee of the Officers'
Certificate and Opinion of Counsel provided for in this Section 2.5(g),
(i) each reference in Section 2.5(d) to "two (2) years" and in the
restrictive legends set forth in such paragraph to "TWO YEARS" shall be
deemed for all purposes hereof to be references to such changed period,
(ii) each reference in Section 2.5(e) to "two (2) years" and in the
restrictive legends set forth in such paragraph to "TWO YEARS" shall be
deemed for all purposes hereof to be references to such changed period
and (iii) all corresponding references in the Notes and the restrictive
legends thereon shall be deemed for all purposes hereof to be
references to such changed period, provided that such changes shall not
become effective if they are otherwise prohibited by, or would
otherwise cause a violation of, the then-applicable federal securities
laws. As soon as practicable after the Company has knowledge of the
effectiveness of any such amendment to change the two-year period under
Rule 144(k) (or the corresponding period under any successor rule),
unless such changes would otherwise be prohibited by, or would
otherwise cause a
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violation of, the then-applicable securities law, the Company shall
provide to the Trustee an Officers' Certificate and Opinion of Counsel
informing the Trustee of the effectiveness of such amendment and the
effectiveness of the foregoing changes to Sections 2.5(d) and 2.5(e)
and the Notes. The provisions of this Section 2.5(g) will not be
effective until such time as the Opinion of Counsel and Officers'
Certificate have been received by the Trustee hereunder. This Section
2.5(g) shall apply to successive amendments to Rule 144(k) (or any
successor rule) changing the holding period thereunder.
Section 2.6 Mutilated, Destroyed, Lost or Stolen Notes. In case any
Note shall become mutilated or be destroyed, lost or stolen, the Company in its
discretion may execute, and upon its request the Trustee or an authenticating
agent appointed by the Trustee shall authenticate and deliver, a new Note,
bearing a number not contemporaneously outstanding, in exchange and substitution
for the mutilated Note, or in lieu of and in substitution for the Note so
destroyed, lost or stolen. In every case the applicant for a substituted Note
shall furnish to the Company, to the Trustee and, if applicable, to such
authenticating agent such security or indemnity as may be required by them to
save each of them harmless for any loss, liability, cost or expense caused by or
connected with such substitution, and, in every case of destruction, loss or
theft, the applicant shall also furnish to the Company, to the Trustee and, if
applicable, to such authenticating agent evidence to their satisfaction of the
destruction, loss or theft of such Note and of the ownership thereof.
The Trustee or such authenticating agent may authenticate any such
substituted Note and deliver the same upon the receipt of such security or
indemnity as the Trustee, the Company and, if applicable, such authenticating
agent may require. Upon the issuance of any substituted Note, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses connected
therewith. In case any Note which has matured or is about to mature or has been
called for redemption or is about to be converted into Common Stock shall become
mutilated or be destroyed, lost or stolen, the Company may, instead of issuing a
substitute Note, pay or authorize the payment of or convert or authorize the
conversion of the same (without surrender thereof except in the case of a
mutilated Note), as the case may be, if the applicant for such payment or
conversion shall furnish to the Company, to the Trustee and, if applicable, to
such authenticating agent such security or indemnity as may be required by them
to save each of them harmless for any loss, liability, cost or expense caused by
or connected with such substitution, and, in case of destruction, loss or theft,
evidence satisfactory to the Company, the Trustee and, if applicable, any paying
agent or conversion agent of the destruction, loss or theft of such Note and of
the ownership thereof.
Every substitute Note issued pursuant to the provisions of this Section
2.6 by virtue of the fact that any Note is destroyed, lost or stolen shall
constitute an additional contractual obligation of the Company, whether or not
the destroyed, lost or stolen Note shall be found at any time, and shall be
entitled to all the benefits of (but shall be subject to all the limitations set
forth in) this Indenture equally and proportionately with any and all other
Notes duly issued hereunder. To the extent permitted by law, all Notes shall be
held and owned upon the express condition that the
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foregoing provisions are exclusive with respect to the replacement or payment or
conversion of mutilated, destroyed, lost or stolen Notes and shall preclude any
and all other rights or remedies notwithstanding any law or statute existing or
hereafter enacted to the contrary with respect to the replacement or payment or
conversion of negotiable instruments or other securities without their
surrender.
Section 2.7 Temporary Notes. Pending the preparation of definitive
Notes, the Company may execute and the Trustee or an authenticating agent
appointed by the Trustee shall, upon written request of the Company,
authenticate and deliver temporary Notes (printed or lithographed). Temporary
Notes shall be issuable in any authorized denomination, and substantially in the
form of the definitive Notes but with such omissions, insertions and variations
as may be appropriate for temporary Notes, all as may be determined by the
Company. Every such temporary Note shall be executed by the Company and
authenticated by the Trustee or such authenticating agent upon the same
conditions and in substantially the same manner, and with the same effect, as
the definitive Notes. Without unreasonable delay the Company will execute and
deliver to the Trustee or such authenticating agent definitive Notes (other than
in the case of Notes in global form) and thereupon any or all temporary Notes
(other than any the Global Note) may be surrendered in exchange therefor, at
each office or agency maintained by the Company pursuant to Section 5.2 and the
Trustee or such authenticating agent shall authenticate and deliver in exchange
for such temporary Notes an equal aggregate principal amount of definitive
Notes. Such exchange shall be made by the Company at its own expense and without
any charge therefor. Until so exchanged, the temporary Notes shall in all
respects be entitled to the same benefits and subject to the same limitations
under this Indenture as definitive Notes authenticated and delivered hereunder.
Section 2.8 Cancellation of Notes Paid, Etc. All Notes surrendered for
the purpose of payment, redemption, repurchase, conversion, exchange or
registration of transfer, shall, if surrendered to the Company or any paying
agent or any Note registrar or any conversion agent, be surrendered to the
Trustee and promptly canceled by it, or, if surrendered to the Trustee, shall be
promptly canceled by it, and no Notes shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Indenture. Upon written
instructions of the Company, the Trustee shall destroy canceled Notes and, after
such destruction, shall deliver a certificate of such destruction to the
Company. If the Company shall acquire any of the Notes, such acquisition shall
not operate as a redemption or satisfaction of the indebtedness represented by
such Notes unless and until the same are delivered to the Trustee for
cancellation.
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ARTICLE III
REDEMPTION OF NOTES
Section 3.1 Redemption Prices. The Company may, at its option, redeem
all or from time to time any part of the Notes on any date prior to maturity,
upon notice as set forth in Section 3.2, and at the optional redemption prices
set forth in the form of Note attached as Exhibit A hereto, together with
accrued interest, if any, to, but excluding, the date fixed for redemption,
provided, however, that no such redemption shall be effected before May 4, 2001.
Section 3.2 Notice of Redemption; Selection of Notes. In case the
Company shall desire to exercise the right to redeem all or, as the case may be,
any part of the Notes pursuant to Section 3.1, it shall fix a date for
redemption, and it, or at its request (which must be received by the Trustee at
least ten (10) Business Days prior to the date the Trustee is requested to give
notice as described below unless a shorter period is agreed to by the Trustee),
the Trustee in the name of and at the expense of the Company, shall mail or
cause to be mailed a notice of such redemption at least twenty (20) and not more
than sixty (60) days prior to the date fixed for redemption to the holders of
Notes so to be redeemed as a whole or in part at their last addresses as the
same appear on the Note register (provided that if the Company shall give such
notice, it shall also give such notice, and notice of the Notes to be redeemed,
to the Trustee). Such mailing shall be by first class mail. The notice if mailed
in the manner herein provided shall be conclusively presumed to have been duly
given, whether or not the holder receives such notice. In any case, failure to
give such notice by mail or any defect in the notice to the holder of any Note
designated for redemption as a whole or in part shall not affect the validity of
the proceedings for the redemption of any other Note.
Each such notice of redemption shall specify the aggregate principal
amount of Notes to be redeemed, the date fixed for redemption, the redemption
price at which Notes are to be redeemed, the place or places of payment, that
payment will be made upon presentation and surrender of such Notes, that
interest accrued to, but excluding, the date fixed for redemption will be paid
as specified in said notice, and that on and after said date interest thereon or
on the portion thereof to be redeemed will cease to accrue. Such notice shall
also state the current Conversion Price and the date on which the right to
convert such Notes or portions thereof into Common Stock will expire. If fewer
than all the Notes are to be redeemed, the notice of redemption shall identify
the Notes to be redeemed. In case any Note is to be redeemed in part only, the
notice of redemption shall state the portion of the principal amount thereof to
be redeemed and shall state that on and after the date fixed for redemption,
upon surrender of such Note, a new Note or Notes in principal amount equal to
the unredeemed portion thereof will be issued.
On or prior to the redemption date specified in the notice of
redemption given as provided in this Section, the Company will deposit with the
Trustee or with one or more paying agents (or, if the Company is acting as its
own paying agent, set aside, segregate and hold in trust as
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provided in Section 5.4) an amount of money sufficient to redeem on the
redemption date all the Notes (or portions thereof) so called for redemption
(other than those theretofore surrendered for conversion into Common Stock) at
the appropriate redemption price, together with accrued interest to, but
excluding, the date fixed for redemption; provided that if such payment is made
on the redemption date it must be received by the Trustee or paying agent, as
the case may be, by 10:00 a.m. New York City time, on such date. If any Note
called for redemption is converted pursuant hereto, any money deposited with the
Trustee or any paying agent or so segregated and held in trust for the
redemption of such Note shall be paid to the Company upon its request, or, if
then held by the Company shall be discharged from such trust.
If fewer than all the Notes are to be redeemed, the Company will give
the Trustee written notice in the form of an Officers' Certificate not fewer
than thirty-five (35) days (or such shorter period of time as may be acceptable
to the Trustee) prior to the redemption date as to the aggregate principal
amount of Notes to be redeemed. If fewer than all the Notes are to be redeemed,
the Trustee shall select the Notes or portions thereof to be redeemed (in
principal amounts of $1,000 or integral multiples thereof), by lot, or by a
method the Trustee considers fair and appropriate (as long as such method is not
prohibited by the rules of any United States national securities exchange or of
an established automated over-the-counter trading market in the United States on
which the Notes are then listed). If any Note selected for partial redemption is
converted in part after such selection, the converted portion of such Note shall
be deemed (so far as is possible) to be the portion to be selected for
redemption. The Notes (or portions thereof) so selected shall be deemed duly
selected for redemption for all purposes hereof, notwithstanding that any such
Note is converted as a whole or in part before the mailing of the notice of
redemption.
Upon any redemption of less than all Notes, the Company and the Trustee
may (but need not) treat as outstanding any Notes surrendered for conversion
during the period of fifteen (15) days next preceding the mailing of a notice of
redemption and may (but need not) treat as not outstanding any Note
authenticated and delivered during such period in exchange for the unconverted
portion of any Note converted in part during such period.
Section 3.3 Payment of Notes Called for Redemption. If notice of
redemption has been given as above provided, the Notes or portion of Notes with
respect to which such notice has been given shall, unless converted into Common
Stock pursuant to the terms hereof, become due and payable on the date and at
the place or places stated in such notice at the applicable redemption price,
together with interest accrued to, but excluding, the date fixed for redemption,
and on and after said date (unless the Company shall default in the payment of
such Notes at the redemption price, together with interest accrued to, but
excluding, said date) interest on the Notes or portion of Notes so called for
redemption shall cease to accrue and such Notes shall cease after the close of
business on the Business Day next preceding the date fixed for redemption to be
convertible into Common Stock and, except as provided in Sections 8.5 and 13.4,
to be entitled to any benefit or security under this Indenture, and the holders
thereof shall have no right in respect of such Notes except the right to receive
the redemption price thereof and unpaid interest
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to, but excluding, the date fixed for redemption. On presentation and surrender
of such Notes at a place of payment in said notice specified, the said Notes or
the specified portions thereof to be redeemed shall be paid and redeemed by the
Company at the applicable redemption price, together with interest accrued
thereon to, but excluding, the date fixed for redemption; provided that, if the
applicable redemption date is an interest payment date, the semi-annual payment
of interest becoming due on such date shall be payable to the holders of such
Notes registered as such on the relevant record date subject to the terms and
provisions of Section 2.3 hereof.
Upon presentation of any Note redeemed in part only, the Company shall
execute and the Trustee shall authenticate and deliver to the holder thereof, at
the expense of the Company, a new Note or Notes, of authorized denominations, in
principal amount equal to the unredeemed portion of the Notes so presented.
Notwithstanding the foregoing, the Trustee shall not redeem any Notes
or mail any notice of optional redemption during the continuance of a default in
payment of interest or premium on the Notes or of any Event of Default of which,
in the case of any Event of Default other than under Section 7.1(a), (b) or (d),
a Responsible Officer of the Trustee has knowledge. If any Note called for
redemption shall not be so paid upon surrender thereof for redemption, the
principal and premium, if any, shall, until paid or duly provided for, bear
interest from the date fixed for redemption at the rate borne by the Note and
such Note shall remain convertible into Common Stock until the principal and
premium, if any, shall have been paid or duly provided for.
Section 3.4 Conversion Arrangement on Call for Redemption. In
connection with any redemption of Notes, the Company may arrange for the
purchase and conversion of any Notes not converted prior to the expiration of
such conversion right by an agreement with one or more investment bankers or
other purchasers to purchase such Notes by paying to the Trustee in trust for
the Noteholders, on or before the date fixed for redemption, an amount not less
than the applicable redemption price, together with interest accrued to the date
fixed for redemption, of such Notes. Notwithstanding anything to the contrary
contained in this Article III, the obligation of the Company to pay the
redemption price of such Notes, together with interest accrued to, but
excluding, the date fixed for redemption, shall be deemed to be satisfied and
discharged to the extent such amount is so paid by such purchasers. If such an
agreement is entered into, a copy of which, certified as true and correct by the
Secretary or Assistant Secretary of the Company will be filed with the Trustee
prior to the date fixed for redemption, any Notes 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 XV)
surrendered by such purchasers for conversion, all as of immediately prior to
the close of business on the date fixed for redemption (and the right to convert
any such Notes shall be deemed to have been extended through such time), subject
to payment of the above amount as aforesaid. At the direction of the Company,
the Trustee shall hold and dispose of any such amount paid to it in the same
manner as it would monies deposited with it by the Company for the redemption of
Notes. Without the Trustee's prior written consent, no arrangement between the
Company and such purchasers for
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the purchase and conversion of any Notes 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
Notes 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.
ARTICLE IV
SUBORDINATION OF NOTES
Section 4.1 Agreement of Subordination. The Company covenants and
agrees, and each holder of Notes issued hereunder by his acceptance thereof
likewise covenants and agrees, that all Notes shall be issued subject to the
provisions of this Article IV; and each person holding any Note, whether upon
original issue or upon transfer, assignment or exchange thereof, accepts and
agrees to be bound by such provisions.
The payment of the principal of, premium, if any, and interest on all
Notes (including, but not limited to, the redemption price or repurchase price
with respect to the Notes to be redeemed or repurchased, as provided in this
Indenture) issued hereunder shall, to the extent and in the manner hereinafter
set forth, be subordinated to the prior payment in full, in cash or in such
other form of payment as may be acceptable to the holders of Senior
Indebtedness, of all Senior Indebtedness, whether outstanding at the date of
this Indenture or thereafter incurred or created.
No provision of this Article IV shall prevent the occurrence of any
default or Event of Default hereunder.
Section 4.2 Payments to Noteholders. No payment (including pursuant to
any redemption or repurchase of Notes) shall be made with respect to the
principal of, or premium, if any, or interest (including Liquidated Damages, if
any) on the Notes, except payments and distributions made by the Trustee as
permitted by Section 4.6, if:
(1) a default in the payment of principal, premium, if any, or
interest or other payment due on Designated Senior Indebtedness occurs
and is continuing beyond any applicable period of grace; or
(2) any other default occurs and is continuing with respect to
Designated Senior Indebtedness that then permits holders of the
Designated Senior Indebtedness as to which such default related to
accelerate its maturity and the Trustee and the Company receive a
notice of such default (a "Payment Blockage Notice") from a
representative of
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Designated Senior Indebtedness or a holder of Designated Senior
Indebtedness or the Company.
The Company may and shall resume payments on the Notes (1) in the case
of a payment default, on the date upon which such default is cured or waived or
ceases to exist, and (2) in the case of a nonpayment default with respect to
Designated Senior Indebtedness, on the earlier of the date on which the
nonpayment default is cured or waived or ceases to exist or 179 days pass after
the date on which the applicable Payment Blockage Notice is received.
No new period of payment blockage may be commenced pursuant to a
Payment Blockage Notice unless (A) at least 365 days shall have elapsed since
the first day of effectiveness of the immediately prior Payment Blockage Notice
and (B) all scheduled payments of principal, premium, if any, and interest on
the Notes that have come due have been paid in full in cash, or in such other
form of payment as may be acceptable to the holders of the Notes. No default
(whether or not such event of default is on the same issue of Designated Senior
Indebtedness) that existed or was continuing on the date of delivery of any
Payment Blockage Notice to the Trustee shall be, or be made, the basis for a
subsequent Payment Blockage Notice.
In addition, in the event of any acceleration of the Notes because of
an Event of Default, no payment or distribution (including with respect to any
redemption or repurchase of the Notes) shall be made to the Trustee or any
holder of Notes with respect to the principal of, premium, if any, or interest
(including Liquidated Damages, if any) on the Notes, except payments and
distributions made by the Trustee as permitted by Section 4.6, until all Senior
Indebtedness has been paid in full in cash or other payment satisfactory to the
holders of Senior Indebtedness or such acceleration is rescinded in accordance
with the terms of this Indenture. If payment of the Notes is accelerated because
of an Event of Default, the Company shall promptly notify holders of Senior
Indebtedness of the acceleration.
Notwithstanding the foregoing, in the event that the Trustee or any
holder of Notes receives any payment or distribution of assets of the Company of
any kind in contravention of any term of this Indenture, whether in cash,
property or securities, including, without limitation, by way of setoff or
otherwise, before all Senior Indebtedness is paid in full, in cash or such other
form of payment as may be acceptable to the holders of Senior Indebtedness, then
such payment or distribution shall be held by the recipient or recipients in
trust for the benefit of, and shall immediately be paid over or delivered to,
the holders of Senior Indebtedness or their respective representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing any Senior Indebtedness may have been issued,
as their respective interests may appear, as calculated by the Company, for
application to the payment of all Senior Indebtedness remaining unpaid to the
extent necessary to make payment in full, in cash or such other form of payment
as may be acceptable to the holders of Senior Indebtedness, of all Senior
Indebtedness remaining unpaid, after giving effect to any concurrent payment or
distribution, or provision therefor, to or for the holders of such Senior
Indebtedness.
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Nothing in this Section 4.2 shall apply to claims of, or payments to,
the Trustee pursuant to Section 8.6. This Section 4.2 shall be subject to the
further provisions of Section 4.6.
Section 4.3 Bankruptcy and Dissolution, Etc. Upon any payment by the
Company, or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, to creditors upon any dissolution,
winding-up, liquidation or reorganization of the Company, whether voluntary or
involuntary or in bankruptcy, insolvency, receivership or other proceedings, all
amounts due or to become due upon all Senior Indebtedness shall first be paid in
full, in cash or in such other form of payment as may be acceptable to the
holders of Senior Indebtedness, before any payment is made on account of the
principal or premium, if any, and interest on the Notes (except payments made
pursuant to Article XIII from monies deposited with the Trustee pursuant thereto
prior to the happening of such dissolution, winding-up, liquidation or
reorganization or bankruptcy, insolvency, receivership or other such
proceedings); and upon any such dissolution, winding-up, liquidation or
reorganization or bankruptcy, insolvency, receivership or other such
proceedings, any payment by the Company, or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to
which the holders of the Notes or the Trustee under this Indenture would be
entitled, except for the provision of this Article IV, shall (except as
aforesaid) be paid by the Company or by any receiver, trustee in bankruptcy,
liquidating trustee, agent or other person making such payment or distribution,
or by the holders of the Notes or by the Trustee under this Indenture if
received by them or it, directly to the holders of Senior Indebtedness (pro rata
to such holders on the basis of the respective amounts of Senior Indebtedness
held by such holders, or as otherwise required by law or a court order) or their
respective representative or representatives, or to the trustee or trustees
under any indenture pursuant to which any instruments evidencing any Senior
Indebtedness may have been issued, as their respective interests may appear, to
the extent necessary to pay all Senior Indebtedness in full in cash or in such
other form of payment as may be acceptable to the holders of Senior Indebtedness
after giving effect to any concurrent payment or distribution to or for the
holders of Senior Indebtedness, before any payment or distribution is made to
the holders of the Notes or to the Trustee under this Indenture.
Notwithstanding the foregoing, in the event that the Trustee or any
holder of Notes receives any payment or distribution of assets of the Company of
any kind in contravention of any term of this Indenture, whether in cash,
property or securities, including, without limitation, by way of setoff or
otherwise, before all Senior Indebtedness is paid in full, in cash or such other
form of payment as may be acceptable to the holders of Senior Indebtedness, then
such payment or distribution shall be held by the recipient or recipients in
trust for the benefit of, and shall immediately be paid over or delivered to,
the holders of Senior Indebtedness or their respective representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing any Senior Indebtedness may have been issued,
as their respective interests may appear, as calculated by the Company, for
application to the payment of all Senior Indebtedness remaining unpaid to the
extent necessary to make payment in full, in cash or such other form of payment
as may be acceptable to the holders of Senior Indebtedness, of all
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Senior Indebtedness remaining unpaid, after giving effect to any concurrent
payment or distribution, or provision therefor, to or for the holders of such
Senior Indebtedness.
For purposes of Section 4.2 hereof and this Section 4.3, the words
"cash, property or securities" shall not be deemed to include shares of 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, the
payment of which is subordinated (at least to the extent provided in this
Article IV with respect to the Notes) to the payment of all Senior Indebtedness
which may at the time be outstanding; provided that (i) the Senior Indebtedness
is assumed by the new corporation, if any, resulting from such reorganization or
adjustment, and (ii) the rights of the holders of Senior Indebtedness (other
than leases which are not assumed by the Company or by the new corporation, as
the case may be) are not, without the consent of such holders, altered by such
reorganization or readjustment. The consolidation of the Company with, or the
merger of the Company into, another corporation or the liquidation or
dissolution of the Company following the conveyance or transfer of its property
as an entirety, or substantially as an entirety, to another corporation upon the
terms and conditions provided for in Article XII shall not be deemed a
dissolution, winding-up, liquidation or reorganization for the purposes of this
Section 4.3 if such other corporation shall, as a part of such consolidation,
merger, conveyance or transfer, comply with the conditions stated in Article
XII.
Nothing in this Section 4.3 shall apply to claims of, or payments to,
the Trustee under or pursuant to Section 8.6. This Section 4.3 shall be subject
to the further provisions of Section 4.6.
Section 4.4 Subrogation of Notes. Subject to the payment in full in
cash or in such other form of payment as may be acceptable to the holders of
Senior Indebtedness of all Senior Indebtedness, the rights of the holders of the
Notes shall be subrogated to the extent of the payments or distributions made to
the holders of such Senior Indebtedness pursuant to the provisions of this
Article IV (equally and ratably with the holders of all indebtedness of the
Company which by its express terms is subordinated to other indebtedness of the
Company to substantially the same extent as the Notes are subordinated and is
entitled to like rights of subrogation) to the rights of the holders of Senior
Indebtedness to receive payments or distributions of cash, property or
securities of the Company applicable to the Senior Indebtedness until the
principal of, and premium, if any, and interest on the Notes shall be paid in
full; and, for the purposes of such subrogation, no payments or distributions to
the holders of the Senior Indebtedness of any cash, property or securities to
which the holders of the Notes or the Trustee would be entitled except for the
provisions of this Article IV, and no payment over pursuant to the provisions of
this Article IV, to or for the benefit of the holders of Senior Indebtedness by
holders of the Notes or the Trustee, shall, as between the Company, its
creditors other than holders of Senior Indebtedness, and the holders of the
Notes, be deemed to be a payment by the Company to or on account of the Senior
Indebtedness; and no payments or distributions of cash, property or securities
to or for the benefit of the holders of the Notes pursuant to the subrogation
provisions of this Article IV, which would otherwise have been paid to the
holders of Senior Indebtedness shall be deemed to be a payment by the Company to
or for the account of the
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Notes. It is understood that the provisions of this Article IV are and are
intended solely for the purposes of defining the relative rights of the holders
of the Notes, on the one hand, and the holders of the Senior Indebtedness, on
the other hand.
Nothing contained in this Article IV or elsewhere in this Indenture or
in the Notes is intended to or shall impair, as among the Company, its creditors
other than the holders of Senior Indebtedness, and the holders of the Notes, the
obligation of the Company, which is absolute and unconditional, to pay to the
holders of the Notes the principal of, and premium, if any, and interest on the
Notes as and when the same shall become due and payable in accordance with their
terms, or is intended to or shall affect the relative rights of the holders of
the Notes and creditors of the Company other than the holders of the Senior
Indebtedness, nor shall anything herein or therein prevent the Trustee or the
holder of any Note from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, subject to the rights, if any,
under this Article IV of the holders of Senior Indebtedness in respect of cash,
property or securities of the Company received upon the exercise of any such
remedy.
Upon any payment or distribution of assets of the Company referred to
in this Article IV, the Trustee, subject to the provisions of Section 8.1, and
the holders of the Notes shall be entitled to rely upon any order or decree made
by any court of competent jurisdiction in which such bankruptcy, dissolution,
winding-up, liquidation or reorganization proceedings are pending, or a
certificate of the receiver, trustee in bankruptcy, liquidating trustee, agent
or other person making such payment or distribution, delivered to the Trustee or
to the holders of the Notes, for the purpose of ascertaining the persons
entitled to participate in such 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 IV.
Section 4.5 Authorization by Noteholders. Each holder of a Note 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 IV and appoints the Trustee his attorney-in-fact for
any and all such purposes. If the Trustee does not file a proper proof of claim
or proof of debt in the form required in any proceeding referred to in the third
paragraph of Section 7.2 hereof at least thirty (30) days before the expiration
of the time to file such claim, the holders of any Senior Indebtedness or their
representatives are hereby authorized to file an appropriate claim for and on
behalf of the holders of the Notes.
Section 4.6 Notice to Trustee. The Company shall give written notice to
the Trustee of the issuance of any Designated Senior Indebtedness. In addition,
the Company shall give prompt written notice in the form of an Officers'
Certificate to a Responsible Officer of the Trustee and to any paying agent of
any fact known to the Company which would prohibit the making of any payment of
monies to or by the Trustee or any paying agent in respect of the Notes pursuant
to the provisions of this Article IV. Notwithstanding the provisions of this
Article IV or any other provision of this Indenture, the Trustee shall not be
charged with
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knowledge of the existence of any Senior Indebtedness or of any default or event
of default with respect to any Senior Indebtedness or of any other facts which
would prohibit the making of any payment of monies to or by the Trustee in
respect of the Notes pursuant to the provisions of this Article IV, unless and
until a Responsible Officer of the Trustee shall have received written notice
thereof at the Corporate Trust Office from the Company (in the form of an
Officers' Certificate) or a holder or holders of Senior Indebtedness or from any
trustee thereof who shall have been certified by the Company or otherwise
established to the reasonable satisfaction of the Trustee to be such holder or
trustee; and before the receipt of any such written notice, the Trustee, subject
to the provisions of Section 8.1, shall be entitled in all respects to assume
that no such facts exist; provided that if on a date at least two (2) Business
Days prior to the date upon which by the terms hereof any such monies may become
payable for any purpose (including, without limitation, the payment of the
principal of, or premium, if any, or interest on any Note), the Trustee shall
not have received with respect to such monies the notice provided for in this
Section 4.6, then, anything herein contained to the contrary notwithstanding,
the Trustee shall have full power and authority to receive such monies and to
apply the same to the purpose for which they were received, and shall not be
affected by any notice to the contrary which may be received by it on or after
such prior date.
Notwithstanding anything to the contrary hereinbefore set forth,
nothing shall prevent (a) any payment by the Company or the Trustee to the
Noteholders of amounts in connection with a redemption of Notes if (i) notice of
such redemption has been given to the Noteholders pursuant to Article III prior
to the receipt by the Trustee of written notice as aforesaid, and (ii) such
notice of redemption is given not earlier than sixty (60) days before the
redemption date, (b) any payment by the Company or the Trustee to the
Noteholders of amounts in connection with a repurchase of Notes if (i) notice of
such repurchase has been given pursuant to Article XVI prior to the receipt by
the Trustee of written notice as aforesaid, and (ii) such notice of repurchase
is given not earlier than forty (40) days before the repurchase date, or (c) any
payment by the Trustee to the Noteholders of monies deposited with it pursuant
to Section 13.1.
The Trustee, subject to the provisions of Section 8.1, shall be
entitled to rely on the delivery to it of a written notice by a person
representing himself to be a holder of Senior Indebtedness (or a trustee on
behalf of such holder) to establish that such notice has been given by a holder
of Senior Indebtedness or a trustee on behalf of any such holder or holders. 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 IV, 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 IV, 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.
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Section 4.7 Trustee's Relation to Senior Indebtedness. The Trustee and
any agent of the Company or the Trustee in its individual capacity shall be
entitled to all the rights set forth in this Article IV in respect of any Senior
Indebtedness at any time held by it, to the same extent as any other holder of
Senior Indebtedness, and nothing in Section 8.13 or elsewhere in this Indenture
shall deprive the Trustee or any such agent of any of its rights as such holder.
Nothing in this Article IV shall apply to claims of, or payments to, the Trustee
under or pursuant to Section 8.6.
With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article IV, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness and, subject to the
provisions of Section 4.2 and Section 8.1, the Trustee shall not be liable to
any holder of Senior Indebtedness if it shall pay over or deliver to holders of
Notes, the Company or any other person money or assets to which any holder of
Senior Indebtedness shall be entitled by virtue of this Article IV or otherwise.
Section 4.8 No Impairment of Subordination. No right of any present or
future holder of any Senior Indebtedness to enforce subordination as herein
provided shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Company or by any act or failure to act, in
good faith, by any such holder, or by any noncompliance by the Company with the
terms, provisions and covenants of this Indenture, regardless of any knowledge
thereof which any such holder may have or otherwise be charged with.
Section 4.9 Certain Conversions Deemed Payment. For the purposes of
this Article IV only, (1) the issuance and delivery of junior securities upon
conversion of Notes in accordance with Article XV shall not be deemed to
constitute a payment or distribution on account of the principal of (or premium,
if any) or interest on Notes or on account of the purchase or other acquisition
of Notes, and (2) the payment, issuance or delivery of cash, property or
securities (other than junior securities) upon conversion of a Note shall be
deemed to constitute payment on account of the principal of such Note. For the
purposes of this Section, 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 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 Notes are so
subordinated as provided in this Article. Nothing contained in this Article or
elsewhere in this Indenture or in the Notes is intended to or shall impair, as
among the Company, its creditors other than holders of Senior Indebtedness and
the holders of the Notes, the right, which is absolute and unconditional, of the
holder of any Note to convert such Note in accordance with Article XV.
Section 4.10 Article Applicable to Paying Agents. If at any time any
paying agent other than the Trustee shall have been appointed by the Company and
be then acting hereunder, the
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term Trustee as used in this Article IV shall (unless the context shall
otherwise require) be construed as extending to and including such paying agent
within its meaning as fully for all intents and purposes as if such paying agent
were named in this Article in addition to or in place of the Trustee; provided,
however, that the first sentence of Section 4.5 shall not apply to the Company
or any Affiliate of the Company if it or such Affiliate acts as paying agent.
ARTICLE V
PARTICULAR COVENANTS OF THE COMPANY
Section 5.1 Payment of Principal, Premium and Interest. The Company
covenants and agrees that it will duly and punctually pay or cause to be paid
the principal of and premium, if any, and interest on each of the Notes at the
places, at the respective times and in the manner provided herein and in the
Notes. Each installment of interest on the Notes due on any semi-annual interest
payment date may be paid by mailing checks for the interest payable to or upon
the written order of the holders of Notes entitled thereto as they shall appear
on the registry books of the Company, provided that, with respect to any holder
of Notes with an aggregate principal amount equal to or in excess of $5,000,000,
at the request of such holder in writing to the Company, interest on such
holder's Notes shall be paid by wire transfer in immediately available funds in
accordance with the wire transfer instructions supplied by such holder from time
to time to the Trustee and paying agent (if different from Trustee) at least two
days prior to the applicable record date.
Section 5.2 Maintenance of Office or Agency. The Company will maintain
in the Borough of Manhattan, The City of New York, an office or agency where the
Notes may be surrendered for registration of transfer or exchange or for
presentation for payment or for conversion, redemption or repurchase and where
notices and demands to or upon the Company in respect of the Notes and this
Indenture may be served. The Company will give prompt written notice to the
Trustee of the location, and any change in the location, of such office or
agency not designated or appointed by the Trustee. 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 or the
office or agency of the Trustee in the Borough of Manhattan, The City of New
York.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided
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.
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The Company hereby initially designates the Trustee as paying agent,
Note registrar, Custodian and conversion agent and the Corporate Trust Office
and the office or agency of the Trustee in the Borough of Manhattan, The City of
New York (which initially shall be First National Bank of Chicago, an agency of
the Trustee located at 14 Wall Street, 8th Floor, New York, New York 10005) as
one such office or agency of the Company for each of the aforesaid purposes.
So long as the Trustee is the Note registrar, the Trustee agrees to
mail, or cause to be mailed, the notices set forth in Section 8.10(a) and the
third paragraph of Section 8.11.
Section 5.3 Appointments to Fill Vacancies in Trustee's Office. The
Company, whenever necessary to avoid or fill a vacancy in the office of Trustee,
will appoint, in the manner provided in Section 8.10, a Trustee, so that there
shall at all times be a Trustee hereunder.
Section 5.4 Provisions as to Paying Agent.
(a) If the Company shall appoint a paying agent other than the
Trustee or if the Trustee shall appoint such a paying agent, it will
cause such paying agent to execute and deliver to the Trustee an
instrument in which such agent shall agree with the Trustee, subject to
the provisions of this Section 5.4:
(1) that it will hold all sums held by it as such
agent for the payment of the principal of and premium, if any,
or interest on the Notes (whether such sums have been paid to
it by the Company or by any other obligor on the Notes) in
trust for the benefit of the holders of the Notes;
(2) that it will give the Trustee notice of any
failure by the Company (or by any other obligor on the Notes)
to make any payment of the principal of and premium, if any,
or interest on the Notes when the same shall be due and
payable; and
(3) that at any time during the continuance of an
Event of Default, upon request of the Trustee, it will
forthwith pay to the Trustee all sums so held in trust.
The Company shall, on or before each due date of the principal
of, premium, if any, or interest on the Notes, deposit with the paying
agent a sum sufficient to pay such principal, premium, if any, or
interest, and (unless such paying agent is the Trustee) the Company
will promptly notify the Trustee of any failure to take such action,
provided that if such deposit is made on the due date, such deposit
must be received by the paying agent by 10:00 a.m., New York City time,
on such date.
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(b) If the Company shall act as its own paying agent, it will,
on or before each due date of the principal of, premium, if any, or
interest on the Notes, set aside, segregate and hold in trust for the
benefit of the holders of the Notes a sum sufficient to pay such
principal, premium, if any, or interest so becoming due and will notify
the Trustee of any failure to take such action and of any failure by
the Company (or any other obligor under the Notes) to make any payment
of the principal of, premium, if any, or interest on the Notes when the
same shall become due and payable.
(c) Anything in this Section 5.4 to the contrary
notwithstanding, the Company may, at any time, for the purpose of
obtaining a satisfaction and discharge of this Indenture, or for any
other reason, pay or cause to be paid to the Trustee all sums held in
trust by the Company or any paying agent hereunder as required by this
Section 5.4, such sums to be held by the Trustee upon the trusts herein
contained and upon such payment by the Company or any paying agent to
the Trustee, the Company or such paying agent shall be released from
all further liability with respect to such sums.
(d) Anything in this Section 5.4 to the contrary
notwithstanding, the agreement to hold sums in trust as provided in
this Section 5.4 is subject to Sections 13.3 and 13.4.
Section 5.5 Existence. Subject to Article XII, the Company will do or
cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence.
Section 5.6 Rule 144A Information Requirement. Within the period prior
to the expiration of the holding period applicable to sales thereof under Rule
144(k) under the Securities Act (or any successor provision), the Company
covenants and agrees that it shall, during any period in which it is not subject
to Section 13 or 15(d) under the Exchange Act, make available to any holder or
beneficial holder of Notes or any Common Stock issued upon conversion thereof,
in each case which continue to be Restricted Securities, in connection with any
sale thereof and any prospective purchaser of Notes or such Common Stock from
such holder or beneficial holder, the information required pursuant to Rule
144A(d)(4) under the Securities Act upon the request of any holder or beneficial
holder of the Notes or such Common Stock and it will take such further action as
any holder or beneficial holder of such Notes or such Common Stock may
reasonably request, all to the extent required from time to time to enable such
holder or beneficial holder to sell its Notes or Common Stock without
registration under the Securities Act within the limitation of the exemption
provided by Rule 144A, as such rule may be amended from time to time. Upon the
request of any holder or any beneficial holder of the Notes or such Common
Stock, the Company will deliver to such holder a written statement as to whether
it has complied with such requirements.
Section 5.7 Stay, Extension and Usury Laws. The Company covenants (to
the extent that it may lawfully do so) that it shall not at any time insist
upon, plead, or in any manner whatsoever claim or take the benefit or advantage
of, any stay, extension or usury law or other
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law which would prohibit or forgive the Company from paying all or any portion
of the principal of or interest on the Notes as contemplated herein, wherever
enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Indenture; and the Company (to the extent
it may lawfully do so) hereby expressly waives all benefit or advantage of any
such law, and covenants that it will not, by resort to any such law, 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
has been enacted.
Section 5.8 Compliance Certificate. The Company shall deliver to the
Trustee within 120 days after the end of each fiscal year of the Company
(beginning with the fiscal year ending on July 31, 1998) an Officers'
Certificate stating whether or not to the best of their knowledge the signers
know of any default or Event of Default that occurred during such period. If
they do, such Officers' Certificate shall describe the default or Event of
Default and its status.
Section 5.9 Further Instruments and Acts. Upon request of the Trustee,
the Company will execute and deliver such further instruments and do such
further acts as may be reasonably necessary or proper to carry out more
effectively the purposes of this Indenture.
ARTICLE VI
NOTEHOLDERS' LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE
Section 6.1 Noteholders' Lists. The Company covenants and agrees that
it will furnish or cause to be furnished to the Trustee, semi-annually, not more
than fifteen (15) days after each April 15 and October 15 in each year beginning
with October 15, 1998, and at such other times as the Trustee may request in
writing, within thirty (30) days after receipt by the Company of any such
request (or such lesser time as the Trustee may reasonably request in order to
enable it to timely provide any notice to be provided by it hereunder), a list
in such form as the Trustee may reasonably require of the names and addresses of
the holders of Notes as of a date not more than fifteen (15) days (or such other
date as the Trustee may reasonably request in order to so provide any such
notices) prior to the time such information is furnished, except that no such
list need be furnished so long as the Trustee is acting as Note registrar.
Section 6.2 Preservation and Disclosure of Lists.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, all information as to the names and addresses of the
holders of Notes contained in the most recent list furnished to it as provided
in Section 6.1 or maintained by the Trustee in its capacity as Note registrar,
if so acting. The Trustee may destroy any list furnished to it as provided in
Section 6.1 upon receipt of a new list so furnished.
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(b) The rights of Noteholders to communicate with other
holders of Notes with respect to their rights under this Indenture or under the
Notes and the corresponding rights and duties of the Trustee, shall be as
provided by the Trust Indenture Act.
(c) Every Noteholder, 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 of Notes made
pursuant to the Trust Indenture Act.
Section 6.3 Reports by Trustee.
(a) After this Indenture has been qualified under the Trust
Indenture Act, the Trustee shall transmit to holders of Notes such reports
concerning the Trustee and its actions under this Indenture as may be required
pursuant to the Trust Indenture Act at the times and in the manner provided
pursuant thereto.
(b) A copy of such report shall, at the time of such
transmission to holders of Notes, be filed by the Trustee with each stock
exchange and automated quotation system upon which the Notes are listed and with
the Company. The Company will notify the Trustee when the Notes are listed on
any stock exchange or automated quotation system and when any such listing is
discontinued.
Section 6.4 Reports by Company.
(a) After this Indenture has been qualified under the Trust
Indenture Act, the Company shall file with the Trustee and the Commission, and
transmit to holders of Notes, such information, documents and other reports and
such summaries thereof, as may be required pursuant to the Trust Indenture Act
at the times and in the manner provided pursuant to such Act; provided that any
such information, documents or reports required to be filed with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act shall be filed with the
Trustee within 15 days after the same is so required to be filed with the
Commission.
(b) The Company will deliver to the Trustee (a) as soon as
available and in any event within one hundred and five (105) days after the end
of each fiscal year of the Company (i) a consolidated balance sheet of the
Company and its subsidiaries as of the end of such fiscal year and the related
consolidated statements of operations, stockholders' equity and cash flows for
such fiscal year, all reported on by an independent public accountant of
nationally recognized standing and (ii) a report containing a management's
discussion and analysis of the financial condition and results of operations and
a description of the business and properties of the Company and (b) as soon as
available and in any event within sixty (60) days after the end of each of the
first three quarters of each fiscal year of the Company (i) an unaudited
consolidated management's discussion and analysis of the financial condition and
results of operations of the Company for such quarter; provided that the
foregoing statements and reports shall not be
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required for any fiscal year or quarter, as the case may be, with respect to
which the Company files or expects to file with the Trustee an annual report or
quarterly report, as the case may be, pursuant to the preceding paragraph of
this Section 6.4. The Trustee shall have no liability as regards the substance
of the information provided by the Company or its agents pursuant to this
Section 6.4.
ARTICLE VII
DEFAULTS AND REMEDIES
Section 7.1 Events of Default. In case one or more of the following
Events of Default (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body) shall have occurred and be
continuing:
(a) default in the payment of the principal of and premium, if
any, on any of the Notes as and when the same shall become due and
payable either at maturity or in connection with any redemption, by
declaration or otherwise, whether or not such payment is prohibited by
the provisions of Article IV; or
(b) default for thirty (30) days in the payment of any
installment of interest or Liquidated Damages, if any, upon any of the
Notes as and when the same shall become due and payable, whether or not
such payment is prohibited by the provisions of Article IV; or
(c) failure on the part of the Company duly to observe or
perform any other of the covenants on the part of the Company in the
Notes or in this Indenture (other than a covenant a default in whose
performance or whose breach is elsewhere in this Section specifically
dealt with) and the continuance of such failure for a period of sixty
(60) days after the date on which written notice of such failure,
requiring the Company to remedy the same, shall have been given to the
Company by the Trustee, or to the Company and a Responsible Officer of
the Trustee by the holders of at least 25% in aggregate principal
amount of the outstanding Notes at the time outstanding determined in
accordance with Section 9.4; or
(d) a default in the payment of the Repurchase Price in
respect of any Note on the repurchase date therefor in accordance with
the provisions of Article XVI, whether or not such payment in cash of
the Repurchase Price is prohibited by the provisions of Article IV; or
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(e) failure on the part of the Company to provide a written
notice of a Repurchase Event in accordance with Section 16.2; or
(f) failure on the part of the Company or any Significant
Subsidiary to make any payment at maturity, including any applicable
grace period, in respect of Indebtedness of, or guaranteed or assumed
by, the Company or any Significant Subsidiary, in a principal amount
then outstanding in excess of U.S. $10,000,000, and the continuance of
such failure for a period of thirty (30) days after there shall have
been given, by registered or certified mail, to the Company by the
Trustee or to the Company and the Trustee by the holders of not less
than 25% in aggregate principal amount of the Notes then outstanding, a
written notice specifying such default and requiring the Company to
cause such default to be cured or waived and stating that such notice
is a "Notice of Default" hereunder; or
(g) default on the part of the Company or any Significant
Subsidiary with respect to any Indebtedness of, or guaranteed or
assumed by, the Company or any Significant Subsidiary, which default
results in the acceleration of Indebtedness in a principal amount then
outstanding in excess of U.S. $10,000,000, and such Indebtedness shall
not have been discharged or such acceleration shall not have been
rescinded or annulled for a period of thirty (30) days after there
shall have been given, by registered or certified mail, to the Company
by the Trustee or to the Company and the Trustee by the holders of not
less than 25% in aggregate principal amount of the Notes then
outstanding, a written notice specifying such default and requiring the
Company to cause such Indebtedness to be discharged or cause such
default to be cured or waived or such acceleration to be rescinded or
annulled and stating that such notice is a "Notice of Default"
hereunder; or
(h) the Company or any Significant Subsidiary shall commence a
voluntary case or other proceeding seeking liquidation, reorganization
or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect
or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of
its property, or shall consent to any such relief or to the appointment
of or taking possession by any such official in an involuntary case or
other proceeding commenced against it, or shall make a general
assignment for the benefit of creditors, or shall fail generally to pay
its debts as they become due; or
(i) (x) an involuntary case or other proceeding shall be
commenced against the any Significant Subsidiary seeking liquidation,
reorganization or other relief with respect to it or its debts under
any bankruptcy, insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of
its property, and such involuntary case or other proceeding shall
remain undismissed and unstayed for a period of ninety (90) consecutive
days, unless being contested in good faith by the Company, or (y) an
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involuntary case or other proceeding shall be commenced against the
Company seeking liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of
it or any substantial part of its property, and such involuntary case
or other proceeding shall remain undismissed and unstayed for a period
of ninety (90) consecutive days;
then, and in each and every such case (other than an Event of Default specified
in Section 7.1(h) or (i) with respect to the Company), unless the principal of
all of the Notes shall have already become due and payable, either the Trustee
or the holders of not less than 25% in aggregate principal amount of the Notes
then outstanding hereunder determined in accordance with Section 9.4, by notice
in writing to the Company (and to the Trustee if given by Noteholders), may
declare the principal of and premium, if any, on all the Notes and the interest
accrued thereon to be due and payable immediately, and upon any such declaration
the same shall become and shall be immediately due and payable, anything in this
Indenture or in the Notes contained to the contrary notwithstanding. If an Event
of Default specified in Section 7.1(h) or (i) occurs and is continuing with
respect to the Company, the principal of all the Notes and the interest accrued
thereon shall be immediately due and payable. This provision, however, is
subject to the conditions that if, at any time after the principal of the Notes
shall have been so declared due and payable, and before any judgment or decree
for the payment of the monies due shall have been obtained or entered as
hereinafter provided, the Company shall pay or shall deposit with the Trustee a
sum sufficient to pay all matured installments of interest upon all Notes and
the principal of and premium, if any, on any and all Notes which shall have
become due otherwise than by acceleration (with interest on overdue installments
of interest (to the extent that payment of such interest is enforceable under
applicable law) and on such principal and premium, if any, at the rate borne by
the Notes, to the date of such payment or deposit) and amounts due to the
Trustee pursuant to Section 8.6, and if any and all defaults under this
Indenture, other than the nonpayment of principal of and premium, if any, and
accrued interest on Notes which shall have become due by acceleration, shall
have been cured or waived pursuant to Section 7.7, then and in every such case
the holders of a majority in aggregate principal amount of the Notes then
outstanding, by written notice to the Company and to the Trustee, may waive all
defaults or Events of Default and rescind and annul such declaration and its
consequences; but no such waiver or rescission and annulment shall extend to or
shall affect any subsequent default or Event of Default, or shall impair any
right consequent thereon. The Company shall notify the Responsible Officer of
the Trustee, promptly upon becoming aware thereof, of any default or Event of
Default and shall deliver to the Trustee a statement specifying such default or
Event of Default and the action the Company has taken, is taking or proposes to
take with respect thereto.
In case the Trustee shall have proceeded to enforce any right under
this Indenture and such proceedings shall have been discontinued or abandoned
because of such waiver or rescission and annulment or for any other reason or
shall have been determined adversely to the Trustee, then and in every such case
the Company, the holders of Notes, and the Trustee shall be
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restored respectively to their several positions and rights hereunder, and all
rights, remedies and powers of the Company, the holders of Notes, and the
Trustee shall continue as though no such proceeding had been instituted.
Section 7.2 Payments of Notes on Default; Suit Therefor. The Company
covenants that (a) in case default shall be made in the payment by the Company
of any installment of interest upon any of the Notes as and when the same shall
become due and payable, and such default shall have continued for a period of
thirty (30) days, or (b) in case default shall be made in the payment of the
principal of or premium, if any, on any of the Notes as and when the same shall
have become due and payable, whether at maturity of the Notes or in connection
with any redemption or repurchase, by declaration under this Indenture or
otherwise, then, upon demand of the Trustee, the Company will pay to the
Trustee, for the benefit of the holders of the Notes, the whole amount that then
shall have become due and payable on all such Notes for principal and premium,
if any, or interest, or both, as the case may be, with interest upon the overdue
principal and premium, if any, and (to the extent that payment of such interest
is enforceable under applicable law) upon the overdue installments of interest
at the rate borne by the Notes; and, in addition thereto, such further amount as
shall be sufficient to cover the costs and expenses of collection, including
reasonable compensation to the Trustee, its agents, attorneys and counsel, and
any expenses or liabilities incurred by the Trustee hereunder other than through
its negligence or bad faith. Until such demand by the Trustee, the Company may
pay the principal of and premium, if any, and interest on the Notes to the
registered holders, whether or not the Notes are overdue.
In case the Company shall fail forthwith to pay such amounts upon such
demand, the Trustee, in its own name and as trustee of an express trust, shall
be entitled and empowered to institute any actions or proceedings at law or in
equity for the collection of the sums so due and unpaid, and may prosecute any
such action or proceeding to judgment or final decree, and may enforce any such
judgment or final decree against the Company or any other obligor on the Notes
and collect in the manner provided by law out of the property of the Company or
any other obligor on the Notes wherever situated the monies adjudged or decreed
to be payable.
In the case there shall be pending proceedings for the bankruptcy or
for the reorganization of the Company or any other obligor on the Notes under
Title 11 of the United States Code, or any other applicable law, or in case a
receiver, assignee or trustee in bankruptcy or reorganization, liquidator,
sequestrator or similar official shall have been appointed for or taken
possession of the Company or such other obligor, the property of the Company or
such other obligor, or in the case of any other judicial proceedings relative to
the Company or such other obligor upon the Notes, or to the creditors or
property of the Company or such other obligor, the Trustee, irrespective of
whether the principal of the Notes shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the Trustee
shall have made any demand pursuant to the provisions of this Section 7.2, shall
be entitled and empowered, by intervention in such proceedings or otherwise, to
file and prove a claim or claims for the whole amount of principal, premium, if
any, and interest owing and unpaid in respect of
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the Notes, and, in case of any judicial proceedings, to file such proofs of
claim and other papers or documents and to take such other actions as it may
deem necessary or advisable in order to have the claims of the Trustee and of
the Noteholders allowed in such judicial proceedings relative to the Company or
any other obligor on the Notes, its or their creditors, or its or their
property, and to collect and receive any monies or other property payable or
deliverable on any such claims, and to distribute the same after the deduction
of any amounts due the Trustee under Section 8.6; and any receiver, assignee or
trustee in bankruptcy or reorganization, liquidator, custodian or similar
official is hereby authorized by each of the Noteholders 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 Noteholders, to pay to the Trustee any amount
due it for reasonable compensation, expenses, advances and disbursements,
including agents and counsel fees incurred by it up to the date of such
distribution. To the extent that such payment of reasonable compensation,
expenses, advances and disbursements out of the estate in any such proceedings
shall be denied for any reason, payment of the same shall be secured by a lien
on, and shall be paid out of, any and all distributions, dividends, monies,
securities and other property which the holders of the Notes may be entitled to
receive in such proceedings, whether in liquidation or under any plan of
reorganization or arrangement or otherwise.
All rights of action and of asserting claims under this Indenture, or
under any of the Notes, may be enforced by the Trustee without the possession of
any of the Notes, or the production thereof on any trial or other proceeding
relative thereto, and any such suit or 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 Notes.
In any proceedings brought by the Trustee (and in any proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party) the Trustee shall be held to represent all the holders
of the Notes, and it shall not be necessary to make any holders of the Notes
parties to any such proceedings.
Section 7.3 Application of Monies Collected by Trustee. Any monies
collected by the Trustee pursuant to this Article VII shall be applied in the
order following, at the date or dates fixed by the Trustee for the distribution
of such monies, upon presentation of the several Notes, and stamping thereon the
payment, if only partially paid, and upon surrender thereof, if fully paid:
First: To the payment of all amounts due the Trustee under
Section 8.6;
Second: Subject to the provisions of Article IV, in case the
principal of the outstanding Notes shall not have become due and be
unpaid, to the payment of interest on the Notes in default in the order
of the maturity of the installments of such interest, with interest (to
the extent that such interest has been collected by the Trustee) upon
the
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overdue installments of interest at the rate borne by the Notes, such
payments to be made ratably to the persons entitled thereto;
Third: Subject to the provisions of Article IV, in case the
principal of the outstanding Notes shall have become due, by
declaration or otherwise, and be unpaid, to the payment of the whole
amount then owing and unpaid upon the Notes for principal and premium,
if any, and interest, with interest on the overdue principal and
premium, if any, and (to the extent that such interest has been
collected by the Trustee) upon overdue installments of interest at the
rate borne by the Notes; and in case such monies shall be insufficient
to pay in full the whole amounts so due and unpaid upon the Notes, then
to the payment of such principal and premium, if any, and interest
without preference or priority of principal and premium, if any, over
interest, or of interest over principal and premium, if any, or of any
installment of interest over any other installment of interest, or of
any Note over any other Note, ratably to the aggregate of such
principal and premium, if any, and accrued and unpaid interest; and
Fourth: Subject to the provisions of Article IV, to the
payment of the remainder, if any, to the Company or any other person
lawfully entitled thereto.
Section 7.4 Proceedings by Noteholder. No holder of any Note shall have
any right by virtue of or by availing of any provision of this Indenture to
institute any suit, action or proceeding in equity or at law upon or under or
with respect to this Indenture, or for the appointment of a receiver, trustee,
liquidator, custodian or other similar official, or for any other remedy
hereunder, unless such holder previously shall have given to the Trustee written
notice of an Event of Default and of the continuance thereof, as hereinbefore
provided, and unless also the holders of not less than 25% in aggregate
principal amount of the Notes then outstanding shall have made written request
upon the Trustee to institute such action, suit or proceeding in its own name as
Trustee hereunder and shall have offered to the Trustee such indemnity as may be
reasonably satisfactory to the Trustee against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee for sixty (60)
days after its receipt of such notice, request and offer of indemnity, shall
have neglected or refused to institute any such action, suit or proceeding and
no direction inconsistent with such written request shall have been given to the
Trustee pursuant to Section 7.7; it being understood and intended, and being
expressly covenanted by the taker and holder of every Note with every other
taker and holder and the Trustee, that no one or more holders of Notes 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 holder of Notes, or to obtain or seek to obtain priority over or
preference to any other such holder, or to enforce any right under this
Indenture, except in the manner herein provided and for the equal, ratable and
common benefit of all holders of Notes (except as otherwise provided herein).
For the protection and enforcement of this Section 7.4, each and every
Noteholder and the Trustee shall be entitled to such relief as can be given
either at law or in equity.
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Notwithstanding any other provision of this Indenture and any provision
of any Note, the right of any holder of any Note to receive payment of the
principal of and premium, if any, and interest on such Note, on or after the
respective due dates expressed in such Note, or to institute suit for the
enforcement of any such payment on or after such respective dates against the
Company shall not be impaired or affected without the consent of such holder.
Anything in this Indenture or the Notes to the contrary
notwithstanding, the holder of any Note, without the consent of either the
Trustee or the holder of any other Note, in his own behalf and for his own
benefit, may enforce, and may institute and maintain any proceeding suitable to
enforce, his rights of conversion as provided herein.
Section 7.5 Proceedings by Trustee. In case of an Event of Default the
Trustee may in its discretion proceed to protect and enforce the rights vested
in it by this Indenture by such appropriate judicial proceedings as the Trustee
shall deem most effectual to protect and enforce any of such rights, either by
suit in equity or by action at law or by proceeding in bankruptcy or otherwise,
whether for the specific enforcement of any covenant or agreement contained in
this Indenture or in aid of the exercise of any power granted in this Indenture,
or to enforce any other legal or equitable right vested in the Trustee by this
Indenture or by law.
Section 7.6 Remedies Cumulative and Continuing. Except as provided in
the last paragraph of Section 2.6, all powers and remedies given by this Article
VII to the Trustee or to the Noteholders shall, to the extent permitted by law,
be deemed cumulative and not exclusive of any thereof or of any other powers and
remedies available to the Trustee or the holders of the Notes, by judicial
proceedings or otherwise, to enforce the performance or observance of the
covenants and agreements contained in this Indenture, and no delay or omission
of the Trustee or of any holder of any of the Notes to exercise any right or
power accruing upon any default or Event of Default occurring and continuing as
aforesaid shall impair any such right or power, or shall be construed to be a
waiver of any such default or any acquiescence therein; and, subject to the
provisions of Section 7.4, every power and remedy given by this Article VII or
by law to the Trustee or to the Noteholders may be exercised from time to time,
and as often as shall be deemed expedient, by the Trustee or by the Noteholders.
Section 7.7 Direction of Proceedings and Waiver of Defaults by Majority
of Noteholders. The holders of a majority in aggregate principal amount of the
Notes at the time outstanding determined in accordance with Section 9.4 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, however, that (a) such direction shall
not be in conflict with any rule of law or with this Indenture, and (b) the
Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction. The holders of a majority in aggregate
principal amount of the Notes at the time outstanding determined in accordance
with Section 9.4 may on behalf of the holders of all of the Notes waive any past
default or Event of Default hereunder and its consequences except (i) a default
in the payment of interest or premium, if any, on, or the principal of, the
Notes when due, (ii) a failure
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by the Company to convert any Notes into Common Stock or (iii) a default in
respect of a covenant or provisions hereof which under Article XI cannot be
modified or amended without the consent of the holders of all Notes then
outstanding. Upon any such waiver the Company, the Trustee and the holders of
the Notes shall be restored to their former positions and rights hereunder; but
no such waiver shall extend to any subsequent or other default or Event of
Default or impair any right consequent thereon. Whenever any default or Event of
Default hereunder shall have been waived as permitted by this Section 7.7, said
default or Event of Default shall for all purposes of the Notes and this
Indenture be deemed to have been cured and to be not continuing; but no such
waiver shall extend to any subsequent or other default or Event of Default or
impair any right consequent thereon.
Section 7.8 Notice of Defaults. The Trustee shall, within ninety (90)
days after the occurrence of a default, mail to all Noteholders, as the names
and addresses of such holders appear upon the Note register, notice of all
defaults known to a Responsible Officer, unless such defaults shall have been
cured or waived before the giving of such notice; and provided that, except in
the case of default in the payment of the principal of, or premium, if any, or
interest on any of the Notes, including without limiting the generality of the
foregoing any default in the payment of any Repurchase Price or in the payment
of any amount due in connection with any redemption of Notes, then in any such
event the Trustee shall be protected in withholding such notice if and so long
as a trust committee of directors and/or Responsible Officers of the Trustee in
good faith determine that the withholding of such notice is in the interests of
the Noteholders.
Section 7.9 Undertaking to Pay Costs. All parties to this Indenture
agree, and each holder of any Note by his acceptance thereof shall be deemed to
have agreed, that any court may, in its discretion, require, in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against
the Trustee for any action taken or omitted by it as Trustee, the filing by any
party litigant in such suit of an undertaking to pay the costs of such suit and
that such court may in its discretion assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in such suit, having due
regard to the merits and good faith of the claims or defenses made by such party
litigant; provided that the provisions of this Section 7.9 shall not apply to
any suit instituted by the Trustee, to any suit instituted by any Noteholder, or
group of Noteholders, holding in the aggregate more than 10% in principal amount
of the Notes at the time outstanding determined in accordance with Section 9.4,
or to any suit instituted by any Noteholder for the enforcement of the payment
of the principal of or premium, if any, or interest on any Note (including, but
not limited to, the redemption price or repurchase price with respect to the
Notes being redeemed or repurchased as provided in this Indenture) on or after
the due date expressed in such Note or to any suit for the enforcement of the
right to convert any Note in accordance with the provisions of Article XV.
Section 7.10 Delay or Omission Not Waiver. No delay or omission of the
Trustee or of any holder of any Note 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 any acquiescence therein. Every right and
remedy given by this Article or by law to the Trustee or to
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the holders of Notes may be exercised from time to time, and as often as may be
deemed expedient, by the Trustee or by the holders of Notes, as the case may be.
ARTICLE VIII
CONCERNING THE TRUSTEE
Section 8.1 Duties and Responsibilities of Trustee. The Trustee, prior
to the occurrence of an Event of Default and after the curing or waiver of all
Events of Default which may have occurred, undertakes to perform such duties and
only such duties as are specifically set forth in this Indenture. In case an
Event of Default has occurred (which has not been cured or waived) the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in their exercise, as a prudent person
would exercise or use under the circumstances in the conduct of such person's
own affairs.
No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that
(a) prior to the occurrence of an Event of Default and after
the curing or waiving of all Events of Default which may have occurred:
(1) the duties and obligations of the Trustee shall
be determined solely by the express provisions of this
Indenture and, after it has been qualified thereunder, the
Trust Indenture Act, and the Trustee shall not be liable
except for the performance of such duties and obligations as
are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture and
the Trust Indenture Act against the Trustee; and
(2) in the absence of bad faith and willful
misconduct on the part of the Trustee, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture; but, in the
case of any such certificates or opinions which by any
provisions hereof are specifically required to be furnished to
the Trustee, the Trustee shall be under a duty to examine the
same to determine whether or not they conform to the
requirements of this Indenture;
(b) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer or Officers of the Trustee,
unless it shall be provided that the Trustee was negligent in
ascertaining the pertinent facts;
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(c) the Trustee shall not be liable to any Noteholder with
respect to any action taken or omitted to be taken by it in good faith
in accordance with the direction of the holders of not less than a
majority in principal amount of the Notes at the time outstanding
determined as provided in Section 9.4 relating to the time, method and
place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee,
under this Indenture; and
(d) whether or not therein 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.
None of the provisions contained in this Indenture shall
require the Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers, if there is reasonable ground for believing that
the repayment of such funds or adequate indemnity against such risk or liability
is not reasonably assured to it.
Section 8.2 Reliance on Documents, Opinions, Etc. Except as otherwise
provided in Section 8.1:
(a) the Trustee may rely and shall be protected in acting upon
any resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, bond, note, coupon or other paper or
document believed by it in good faith to be genuine and to have been
signed or presented by the proper party or parties;
(b) any request, direction, order or demand of the Company
mentioned herein shall be sufficiently evidenced by an Officers'
Certificate (unless other evidence in respect thereof be herein
specifically prescribed); and any resolution of the Board of Directors
may be evidenced to the Trustee by a copy thereof certified by the
Secretary or an Assistant Secretary of the Company;
(c) the Trustee may consult with counsel and any advice of
such counsel or Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken or omitted
by it hereunder in good faith and in accordance with such advice or
Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request,
order or direction of any of the Noteholders pursuant to the provisions
of this Indenture, unless such Noteholders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses
and liabilities which may be incurred therein or thereby;
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(e) 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 or other paper or document, but the
Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit, and, if the
Trustee shall determine to make such further inquiry or investigation,
it shall be entitled to examine the books, records and premises of the
Company, personally or by agent or attorney; provided, however, that if
the payment within a reasonable time to the Trustee of the costs,
expenses or liabilities likely to be incurred by it in the making of
such investigation is, in the opinion of the Trustee, not reasonably
assured to the Trustee by the security afforded to it by the terms of
this Indenture, the Trustee may require indemnity reasonably
satisfactory to the Trustee from the Noteholders against such expenses
or liability as a condition to so proceeding; the reasonable expenses
of every such examination shall be paid by the Company or, if paid by
the Trustee or any predecessor Trustee, shall be repaid by the Company
upon demand; and
(f) 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 by it with due care hereunder.
In no event shall the Trustee be liable for any consequential loss or damage of
any kind whatsoever (including but not limited to lost profits), even if the
Trustee has been advised of the likelihood of such loss or damage and regardless
of the form of action other than through the Trustee's willful misconduct or
gross negligence.
Section 8.3 No Responsibility for Recitals, Etc. The recitals contained
herein and in the Notes (except in the Trustee's certificate of authentication)
shall be taken as the statements of the Company, and the Trustee assumes no
responsibility for the correctness of the same. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Notes. The Trustee shall not be accountable for the use or application by the
Company of any Notes or the proceeds of any Notes authenticated and delivered by
the Trustee in conformity with the provisions of this Indenture.
Section 8.4 Trustee, Paying Agents, Conversion Agents or Registrar May
Own Notes. The Trustee, any paying agent, any conversion agent or Note
registrar, in its individual or any other capacity, may become the owner or
pledgee of Notes with the same rights it would have if it were not Trustee,
paying agent, conversion agent or Note registrar.
Section 8.5 Monies to Be Held in Trust. Subject to the provisions of
Section 13.4, all monies received by the Trustee shall, until used or applied as
herein provided, be held in trust for the purposes for which they were received.
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
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under no liability for interest on any money received by it hereunder except as
may be agreed from time to time by the Company and the Trustee.
Section 8.6 Compensation and Expenses of Trustee. The Company covenants
and agrees to pay to the Trustee from time to time, and the Trustee shall be
entitled to, reasonable compensation for all services rendered by it hereunder
in any capacity (which shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust), and the Company will pay or
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances reasonably incurred or made by the Trustee in
accordance with any of the provisions of this Indenture (including the
reasonable compensation and the expenses and disbursements of its agents and
counsel and of all persons not regularly in its employ) except any such expense,
disbursement or advance as may arise from its negligence, willful misconduct or
bad faith. The Company also covenants to indemnify the Trustee in any capacity
under this Indenture and its agents and any authenticating agent for, and to
hold them harmless against, any loss, liability or expense incurred without
negligence, willful misconduct or bad faith on the part of the Trustee or such
agent or authenticating agent, as the case may be, and arising out of or in
connection with the acceptance or administration of this trust or in any other
capacity hereunder, including the costs and expenses of defending themselves
against any claim of liability in the premises. The obligations of the Company
under this Section 8.6 to compensate or indemnify the Trustee and to pay or
reimburse the Trustee for expenses, disbursements and advances shall be secured
by a lien prior to that of the Notes upon all property and funds held or
collected by the Trustee as such, except, subject to the effect of Sections 4.3
and 7.6, funds held in trust herewith for the benefit of the holders of
particular Notes prior to the date of the accrual of such unpaid compensation or
indemnifiable claim. The obligation of the Company under this Section shall
survive the satisfaction and discharge of this Indenture. The indemnification
provided in this Section 8.6 shall extend to the officers, directors, agents and
employees of the Trustee.
When the Trustee and its agents and any authenticating agent incur
expenses or render services after an Event of Default specified in Section
7.1(h) or (i) occurs, the expenses and the compensation for the services are
intended to constitute expenses of administration under any bankruptcy,
insolvency or similar laws.
Section 8.7 Officers' Certificate as Evidence. Except as otherwise
provided in Section 8.1, whenever in the administration of the provisions of
this Indenture the Trustee shall deem it necessary or desirable that a matter be
proved or established prior to taking or omitting any action hereunder, such
matter (unless other evidence in respect thereof be herein specifically
prescribed) may, in the absence of negligence, willful misconduct, recklessness
and bad faith on the part of the Trustee, be deemed to be conclusively proved
and established by an Officers' Certificate delivered to the Trustee, and such
Officers' Certificate, in the absence of negligence, willful misconduct,
recklessness and bad faith on the part of the Trustee, shall be full warrant to
the Trustee for any action taken or omitted by it under the provisions of this
Indenture upon the faith thereof.
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Section 8.8 Conflicting Interests of Trustee. After qualification under
the Trust Indenture Act, 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 8.9 Eligibility of Trustee. 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 (together
with its corporate parent) of at least $50,000,000. If such person publishes
reports of condition at least annually, pursuant to law or to the requirements
of any 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 8.10 Resignation or Removal of Trustee.
(a) The Trustee may at any time resign by giving written
notice of such resignation to the Company and by mailing notice thereof
to the holders of Notes at their addresses as they shall appear on the
Note register. Upon receiving such notice of resignation, the Company
shall promptly appoint a successor trustee by written instrument, in
duplicate, executed by order of the Board of Directors, one copy of
which instrument shall be delivered to the resigning Trustee and one
copy to the successor trustee. If no successor trustee shall have been
so appointed and have accepted appointment sixty (60) days after the
mailing of such notice of resignation to the Noteholders, the resigning
Trustee may petition any court of competent jurisdiction for the
appointment of a successor trustee, or any Noteholder who has been a
bona fide holder of a Note or Notes for at least six months may,
subject to the provisions of Section 7.9, on behalf of himself and all
others similarly situated, petition any such court for the appointment
of a successor trustee. Such court may thereupon, after such notice, if
any, as it may deem proper and prescribe, appoint a successor trustee.
(b) In case at any time any of the following shall occur:
(1) the Trustee shall fail to comply with Section 8.8
within a reasonable time after written request therefor by the
Company or by any Noteholder who has been a bona fide holder
of a Note or Notes for at least six months, or
(2) the Trustee shall cease to be eligible in
accordance with the provisions of Section 8.9 and shall fail
to resign after written request therefor by the Company or by
any such Noteholder, or
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(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, or
(4) there shall be an unreasonable increase in the
fees of the Trustee, or
(5) a successor in interest to the entity serving as
Trustee, by reason of merger or consolidation, shall be
reasonably unacceptable to the Company or to the holders of at
least 51% in principal amount of the outstanding Notes,
then, in any such case, the Company may by a Board resolution remove
the Trustee and appoint a successor trustee by written instrument, in
duplicate, executed by order of the Board of Directors, one copy of
which instrument shall be delivered to the Trustee so removed and one
copy to the successor trustee, or, subject to the provisions of Section
7.9, any Noteholder who has been a bona fide holder of a Note or Notes
for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor trustee.
Such court may thereupon, after such notice, if any, as it may deem
proper and prescribe, remove the Trustee and appoint a successor
trustee.
(c) The holders of a majority in aggregate principal amount of
the Notes at the time outstanding may at any time remove the Trustee
and nominate a successor trustee which shall be deemed appointed as
successor trustee unless within ten (10) days after notice to the
Company of such nomination the Company objects thereto, in which case
the Trustee so removed or any Noteholder, upon the terms and conditions
and otherwise as in Section 8.10(a) provided, may petition any court of
competent jurisdiction for an appointment of a successor trustee.
(d) Any resignation or removal of the Trustee and appointment
of a successor trustee pursuant to any of the provisions of this
Section 8.10 shall become effective upon acceptance of appointment by
the successor trustee as provided in Section 8.11.
Section 8.11 Acceptance by Successor Trustee. Any successor trustee
appointed as provided in Section 8.10 shall execute, acknowledge and deliver to
the Company and to its predecessor trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become vested with all the rights,
powers, duties and obligations of its predecessor hereunder, with like effect as
if originally named as trustee herein; but, nevertheless, on the written request
of the Company or of the successor trustee, the trustee ceasing to act shall,
upon payment of any amounts then due it pursuant to the provisions of Section
8.6, execute and deliver an instrument transferring to such successor trustee
all the rights and powers of the trustee so ceasing to act. Upon request of any
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such successor trustee, the Company shall execute any and all instruments in
writing for more fully and certainly vesting in and confirming to such successor
trustee all such rights and powers. Any trustee ceasing to act shall,
nevertheless, retain a lien upon all property and funds held or collected by
such trustee as such, except for funds held in trust for the benefit of holders
of particular Notes, to secure any amounts then due it pursuant to the
provisions of Section 8.6.
No successor trustee shall accept appointment as provided in this
Section 8.11 unless at the time of such acceptance such successor trustee shall
be qualified under the provisions of Section 8.8 and be eligible under the
provisions of Section 8.9.
Upon acceptance of appointment by a successor trustee as provided in
this Section 8.11, each of the Company and the former trustee shall mail or
cause to be mailed notice of the succession of such trustee hereunder to the
holders of Notes at their addresses as they shall appear on the Note register.
If the Company fails to mail such notice within ten (10) days after acceptance
of appointment by the successor trustee, the successor trustee shall cause such
notice to be mailed at the expense of the Company.
Section 8.12 Succession by Merger, Etc. Any corporation or other entity
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 or other
entity succeeding to all or substantially all of the corporate trust business of
the Trustee, shall be the successor to the Trustee hereunder without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, provided that in the case of any corporation succeeding to all
or substantially all of the corporate trust business of the Trustee such
corporation shall be qualified under the provisions of Section 8.8 and eligible
under the provisions of Section 8.9.
In case at the time such successor to the Trustee shall succeed to the
trusts created by this Indenture, any of the Notes shall have been authenticated
but not delivered, any such successor to the Trustee may adopt the certificate
of authentication of any predecessor trustee or authenticating agent appointed
by such predecessor trustee, and deliver such Notes so authenticated; and in
case at that time any of the Notes shall not have been authenticated, any
successor to the Trustee or an authenticating agent appointed by such successor
trustee may authenticate such Notes either in the name of any predecessor
trustee hereunder or in the name of the successor trustee; and in all such cases
such certificates shall have the full force which it is anywhere in the Notes or
in this Indenture provided that the certificate of the Trustee shall have;
provided, however, that the right to adopt the certificate of authentication of
any predecessor Trustee or to authenticate Notes in the name of any predecessor
Trustee shall apply only to its successor or successors by merger, conversion or
consolidation.
Section 8.13 Limitation on Rights of Trustee as Creditor. If and when
the Trustee shall be or become a creditor of the Company (or any other obligor
upon the Notes), after qualification under the Trust Indenture Act, the Trustee
shall be subject to the provisions of the Trust
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Indenture Act regarding the collection of the claims against the Company (or any
such other obligor).
ARTICLE IX
CONCERNING THE NOTEHOLDERS
Section 9.1 Action by Noteholders. Whenever in this Indenture it is
provided that the holders of a specified percentage in aggregate principal
amount of the Notes may take any action (including the making of any demand or
request, the giving of any notice, consent or waiver or the taking of any other
action), the fact that at the time of taking any such action, the holders of
such specified percentage have joined therein may be evidenced (a) by any
instrument or any number of instruments of similar tenor executed by Noteholders
in person or by agent or proxy appointed in writing, or (b) by the record of the
holders of Notes voting in favor thereof at any meeting of Noteholders duly
called and held in accordance with the provisions of Article X, or (c) by a
combination of such instrument or instruments and any such record of such a
meeting of Noteholders. Whenever the Company or the Trustee solicits the taking
of any action by the holders of the Notes, the Company or the Trustee may fix in
advance of such solicitation, a date as the record date for determining holders
entitled to take such action. The record date shall be not more than fifteen
(15) days prior to the date of commencement of solicitation of such action.
Section 9.2 Proof of Execution by Noteholders. Subject to the
provisions of Sections 8.1, 8.2 and 10.5, proof of the execution of any
instrument by a Noteholder or his agent or proxy shall be sufficient if made in
accordance with such reasonable rules and regulations as may be prescribed by
the Trustee or in such manner as shall be satisfactory to the Trustee. The
holding of Notes shall be proved by the Note register or by a certificate of the
Note registrar. The record of any Noteholders' meeting shall be proved in the
manner provided in Section 10.6.
Section 9.3 Who Are Deemed Absolute Owners. The Company, the Trustee,
any authenticating agent, any paying agent, any conversion agent and any Note
registrar may deem the person in whose name such Note shall be registered upon
the Note register to be, and may treat him as, the absolute owner of such Note
(whether or not such Note shall be overdue and notwithstanding any notation of
ownership or other writing thereon) for the purpose of receiving payment of or
on account of the principal of, premium, if any, and interest on such Note, for
conversion of such Note and for all other purposes; and neither the Company nor
the Trustee nor any paying agent nor any conversion agent nor any Note registrar
shall be affected by any notice to the contrary. All such payments so made to
any holder for the time being, or upon his order, shall be valid, and, to the
extent of the sum or sums so paid, effectual to satisfy and discharge the
liability for monies payable upon any such Note.
Section 9.4 Company-Owned Notes Disregarded. In determining whether the
holders of the requisite aggregate principal amount of Notes have concurred in
any direction, consent,
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waiver or other action under this Indenture, Notes which are owned by the
Company or any other obligor on the Notes or by any person directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Company or any other obligor on the Notes shall be disregarded
and deemed not to be outstanding for the purpose of any such determination;
provided that for the purposes of determining whether the Trustee shall be
protected in relying on any such direction, consent, waiver or other action only
Notes which a Responsible Officer knows are so owned shall be so disregarded.
Notes so owned which have been pledged in good faith may be regarded as
outstanding for the purposes of this Section 9.4 if the pledgee shall establish
to the satisfaction of the Trustee the pledgee's right to vote such Notes and
that the pledgee is not the Company, any other obligor on the Notes or a person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Company or any such other obligor. In the case of a
dispute as to such right, any decision by the Trustee taken upon the advice of
counsel shall be full protection to the Trustee. Upon request of the Trustee,
the Company shall furnish to the Trustee promptly an Officers' Certificate
listing and identifying all Notes, if any, known by the Company to be owned or
held by or for the account of any of the above described persons; and, subject
to Section 8.1, the Trustee shall be entitled to accept such Officers'
Certificate as conclusive evidence of the facts therein set forth and of the
fact that all Notes not listed therein are outstanding for the purpose of any
such determination.
Section 9.5 Revocation of Consents; Future Holders Bound. At any time
prior to (but not after) the evidencing to the Trustee, as provided in Section
9.1, of the taking of any action by the holders of the percentage in aggregate
principal amount of the Notes specified in this Indenture in connection with
such action, any holder of a Note which is shown by the evidence to be included
in the Notes the holders of which have consented to such action may, by filing
written notice with the Trustee at its Corporate Trust Office and upon proof of
holding as provided in Section 9.2, revoke such action so far as concerns such
Note. Except as aforesaid, any such action taken by the holder of any Note shall
be conclusive and binding upon such holder and upon all future holders and
owners of such Note and of any Notes issued in exchange or substitution
therefor, irrespective of whether any notation in regard thereto is made upon
such Note or any Note issued in exchange or substitution therefor.
ARTICLE X
NOTEHOLDERS' MEETINGS
Section 10.1 Purpose of Meetings. A meeting of Noteholders may be
called at any time and from time to time pursuant to the provisions of this
Article X for any of the following purposes:
(1) to give any notice to the Company or to the Trustee or to
give any directions to the Trustee permitted under this Indenture, or
to consent to the waiving of any default or Event of Default hereunder
and its consequences, or to take any other
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action authorized to be taken by Noteholders pursuant to any of the
provisions of Article VII;
(2) to remove the Trustee and nominate a successor trustee
pursuant to the provisions of Article VIII;
(3) to consent to the execution of an indenture or indentures
supplemental hereto pursuant to the provisions of Section 11.2;
(4) to take any other action authorized to be taken by or on
behalf of the holders of any specified aggregate principal amount of
the Notes under any other provision of this Indenture or under
applicable law; or
(5) to take any other action authorized by this Indenture or
under applicable law.
Section 10.2 Call of Meetings by Trustee. The Trustee may at any time
call a meeting of Noteholders to take any action specified in Section 10.1, to
be held at such time and at such place in the Borough of Manhattan, The City of
New York, as the Trustee shall determine. Notice of every meeting of the
Noteholders, setting forth the time and the place of such meeting and in general
terms the action proposed to be taken at such meeting and the establishment of
any record date pursuant to Section 9.1, shall be mailed to holders of Notes at
their addresses as they shall appear on the Note register. Such notice shall
also be mailed to the Company. Such notices shall be mailed not less than twenty
(20) nor more than ninety (90) days prior to the date fixed for the meeting.
Any meeting of Noteholders shall be valid without notice if the holders
of all Notes then outstanding are present in person or by proxy or if notice is
waived before or after the meeting by the holders of all Notes outstanding, and
if the Company and the Trustee are either present by duly authorized
representatives or have, before or after the meeting, waived notice.
Section 10.3 Call of Meetings by Company or Noteholders. In case at any
time the Company, pursuant to a resolution of its Board of Directors, or the
holders of at least 10% in aggregate principal amount of the Notes then
outstanding, shall have requested the Trustee to call a meeting of Noteholders,
by written request setting forth in reasonable detail the action proposed to be
taken at the meeting, and the Trustee shall not have mailed the notice of such
meeting within twenty (20) days after receipt of such request, then the Company
or such Noteholders may determine the time and the place for such meeting and
may call such meeting to take any action authorized in Section 10.1, by mailing
notice thereof as provided in Section 10.2.
Section 10.4 Qualifications for Voting. To be entitled to vote at any
meeting of Noteholders a person shall (a) be a holder of one or more Notes on
the record date pertaining to such meeting or (b) be a person appointed by an
instrument in writing as proxy by a holder of
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one or more Notes. The only persons who shall be entitled to be present or to
speak at any meeting of Noteholders shall be the persons entitled to vote at
such meeting and their counsel and any representatives of the Trustee and its
counsel and any representatives of the Company and its counsel.
Section 10.5 Regulations. Notwithstanding any other provisions of this
Indenture, the Trustee may make such reasonable regulations as it may deem
advisable for any meeting of Noteholders, in regard to proof of the holding of
Notes and of the appointment of proxies, and in regard to the appointment and
duties of inspectors of votes, the submission and examination of proxies,
certificates and other evidence of the right to vote, and such other matters
concerning the conduct of the meeting as it shall think fit.
The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Noteholders as provided in Section 10.3, in which case the Company
or the Noteholders calling the meeting, as the case may be, shall in like manner
appoint a temporary chairman. A permanent chairman and a permanent secretary of
the meeting shall be elected by vote of the holders of a majority in principal
amount of the Notes represented at the meeting and entitled to vote at the
meeting.
Subject to the provisions of Section 9.4, at any meeting each
Noteholder or proxyholder shall be entitled to one vote for each $1,000
principal amount of Notes held or represented by him; provided, however, that no
vote shall be cast or counted at any meeting in respect of any Note challenged
as not outstanding and ruled by the chairman of the meeting to be not
outstanding. The chairman of the meeting shall have no right to vote other than
by virtue of Notes held by him or instruments in writing as aforesaid duly
designating him as the proxy to vote on behalf of other Noteholders. Any meeting
of Noteholders duly called pursuant to the provisions of Section 10.2 or 10.3
may be adjourned from time to time by the holders of a majority of the aggregate
principal amount of Notes represented at the meeting, whether or not
constituting a quorum, and the meeting may be held as so adjourned without
further notice.
Section 10.6 Voting. The vote upon any resolution submitted to any
meeting of Noteholders shall be by written ballot on which shall be subscribed
the signatures of the holders of Notes or of their representatives by proxy and
the principal amount of the Notes held or represented by them. The permanent
chairman of the meeting shall appoint two inspectors of votes who shall count
all votes cast at the meeting for or against any resolution and who shall make
and file with the secretary of the meeting their verified written reports in
duplicate of all votes cast at the meeting. A record in duplicate of the
proceedings of each meeting of Noteholders shall be prepared by the secretary of
the meeting and there shall be attached to said record the original reports of
the inspectors of votes on any vote by ballot taken thereat and affidavits by
one or more persons having knowledge of the facts setting forth a copy of the
notice of the meeting and showing that said notice was mailed as provided in
Section 10.2. The record shall show the principal amount of the Notes voting in
favor of or against any resolution. The
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record shall be signed and verified by the affidavits of the permanent chairman
and secretary of the meeting and one of the duplicates shall be delivered to the
Company and the other to the Trustee to be preserved by the Trustee, the latter
to have attached thereto the ballots voted at the meeting.
Any record so signed and verified shall be conclusive evidence of the
matters therein stated.
Section 10.7 No Delay of Rights by Meeting. Nothing in this Article X
contained shall be deemed or construed to authorize or permit, by reason of any
call of a meeting of Noteholders or any rights expressly or impliedly conferred
hereunder to make such call, any hindrance or delay in the exercise of any right
or rights conferred upon or reserved to the Trustee or to the Noteholders under
any of the provisions of this Indenture or of the Notes.
ARTICLE XI
SUPPLEMENTAL INDENTURES
Section 11.1 Supplemental Indentures Without Consent of Noteholders.
The Company, when authorized by the resolutions of the Board of Directors, and
the Trustee may from time to time and at any time enter into an indenture or
indentures supplemental hereto for one or more of the following purposes:
(a) to make provision with respect to the conversion rights of
the holders of Notes pursuant to the requirements of Section 15.6;
(b) subject to Article IV, to convey, transfer, assign,
mortgage or pledge to the Trustee as security for the Notes, any
property or assets;
(c) to evidence the succession of another corporation to the
Company, or successive successions, and the assumption by the successor
corporation of the covenants, agreements and obligations of the Company
pursuant to Article XII;
(d) to add to the covenants of the Company such further
covenants, restrictions or conditions for the benefit of the holders of
Notes, and to make the occurrence, or the occurrence and continuance,
of a default in any such additional covenants, restrictions or
conditions a default or an Event of Default permitting the enforcement
of all or any of the several remedies provided in this Indenture as
herein set forth; provided, however, that in respect of any such
additional covenant, restriction or condition such supplemental
indenture may provide for a particular period of grace after default
(which period may be shorter or longer than that allowed in the case of
other
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defaults) or may provide for an immediate enforcement upon such default
or may limit the remedies available to the Trustee upon such default;
(e) to provide for the issuance under this Indenture of Notes
in coupon form (including Notes registerable as to principal only) and
to provide for exchangeability of such Notes with the Notes issued
hereunder in fully registered form and to make all appropriate changes
for such purpose;
(f) to cure any ambiguity or to correct or supplement any
provision contained herein or in any supplemental indenture which may
be defective or inconsistent with any other provision contained herein
or in any supplemental indenture, or to make such other provisions in
regard to matters or questions arising under this Indenture which shall
not materially adversely affect the interests of the holders of the
Notes;
(g) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Notes; or
(h) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the
qualifications of this Indenture under the Trust Indenture Act, or
under any similar federal statute hereafter enacted.
The Trustee is hereby authorized to join with the Company in the
execution of any such supplemental indenture, to make any further appropriate
agreements and stipulations which may be therein contained and to accept the
conveyance, transfer and assignment of any property thereunder, but the Trustee
shall not be obligated to, but may in its discretion, enter into any
supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this Section
11.1 may be executed by the Company and the Trustee without the consent of the
holders of any of the Notes at the time outstanding, notwithstanding any of the
provisions of Section 11.2.
Section 11.2 Supplemental Indentures With Consent of Noteholders. With
the consent (evidenced as provided in Article IX) of the holders of not less
than a majority in aggregate principal amount of the Notes at the time
outstanding (determined in accordance with Section 9.4), the Company, when
authorized by the resolutions of the Board of Directors, and the Trustee may
from time to time and at any time enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or any
supplemental indenture or of modifying in any manner the rights of the holders
of the Notes; provided, however, that no such supplemental indenture shall (i)
extend the fixed maturity of any Note, or reduce the rate or extend the time of
payment of interest thereon, or reduce the principal amount thereof or premium,
if any, thereon, or reduce any amount payable on redemption or repurchase
thereof, impair, or change in any respect
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adverse to the holder of Notes, the obligation of the Company to repurchase any
Note at the option of the holder upon the happening of a Repurchase Event, or
impair or adversely affect the right of any Noteholder to institute suit for the
payment thereof, or change the currency in which the Notes are payable, or
impair or change in any respect adverse to the Noteholders the right to convert
the Notes into Common Stock subject to the terms set forth herein, including
Section 15.6, or modify the provisions of this Indenture with respect to the
subordination of the Notes in a manner adverse to the Noteholders, without the
consent of the holder of each Note so affected, or (ii) reduce the aforesaid
percentage of Notes, the holders of which are required to consent to any such
supplemental indenture, without the consent of the holders of all Notes then
outstanding.
Upon the request of the Company, accompanied by a copy of the
resolutions of the Board of Directors certified by its Secretary or Assistant
Secretary authorizing the execution of any such supplemental indenture, and upon
the filing with the Trustee of evidence of the consent of Noteholders as
aforesaid, the Trustee shall join with the Company in the execution of such
supplemental indenture unless such supplemental indenture affects the Trustee's
own rights, duties or immunities under this Indenture or otherwise, in which
case the Trustee may in is discretion, but shall not be obligated to, enter into
such supplemental indenture.
It shall not be necessary for the consent of the Noteholders under this
Section 11.2 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.
Section 11.3 Effect of Supplemental Indentures. Any supplemental
indenture executed pursuant to the provisions of this Article XI shall comply
with the Trust Indenture Act, as then in effect. Upon the execution of any
supplemental indenture pursuant to the provisions of this Article XI, this
Indenture shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitation of rights, obligations, duties
and immunities under this Indenture of the Trustee, the Company and the holders
of Notes shall thereafter be determined, exercised and enforced hereunder
subject in all respects to such modifications and amendments and all the terms
and conditions of any such supplemental indenture shall be and be deemed to be
part of the terms and conditions of this Indenture for any and all purposes.
Section 11.4 Notation on Notes. Notes authenticated and delivered after
the execution of any supplemental indenture pursuant to the provisions of this
Article XI may bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company or the Trustee shall
so determine, new Notes so modified as to conform, in the opinion of the Trustee
and the Board of Directors, to any modification of this Indenture contained in
any such supplemental indenture may, at the Company's expense, be prepared and
executed by the Company, authenticated by the Trustee (or an authenticating
agent duly appointed by the Trustee pursuant to Section 17.11) and delivered in
exchange for the Notes then outstanding, upon surrender of such Notes then
outstanding.
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Section 11.5 Evidence of Compliance of Supplemental Indenture to Be
Furnished Trustee. The Trustee, subject to the provisions of Sections 8.1 and
8.2, may receive an Officers' Certificate and an Opinion of Counsel as
conclusive evidence that any supplemental indenture executed pursuant hereto
complies with the requirements of this Article XI.
ARTICLE XII
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
Section 12.1 Company May Consolidate, Etc. on Certain Terms. The
Company shall not, directly or indirectly, consolidate with or merge with or
into any other Person or sell, lease, convey or transfer all its properties and
assets substantially as an entirety, whether in a single transaction or a series
of related transactions, to any Person or group of affiliated Persons unless:
(a) either (i) in the case of a merger or consolidation that
does not involve a transfer of all or substantially all of the Company's
properties and assets, the Company is the surviving entity or (ii) in case the
Company shall consolidate with or merge into another Person or sell, lease,
convey or transfer all its properties and assets substantially as an entirety,
whether in a single transaction or a series of related transactions, to any
Person, the Person formed by such consolidation or into which the Company is
merged, or the Person which acquires by sale, conveyance or transfer, or which
leases the properties and assets of the Company substantially as an entirety,
shall be a corporation, limited liability company, partnership or trust, shall
be organized and validly existing under the laws of the United States of
America, any state thereof or the District of Columbia and shall expressly
assume, by an indenture supplemental hereto, executed and delivered to the
Trustee, in form satisfactory to the Trustee, the due and punctual payment of
the principal of, premium, if any, and interest (including Liquidated Damages,
if any) on all of the Notes as applicable, and the performance or observance of
every covenant of this Indenture on the part of the Company to be performed or
observed and shall have provided for the applicable conversion rights set forth
in Section 15.6 and the repurchase rights set forth in Article XVI;
(b) immediately after giving effect to such transaction, no
Event of Default, 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
(c) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger, conveyance, transfer or lease and, if a supplemental indenture is
required in connection with such transaction, such supplemental indenture comply
with this Article and that all conditions precedent herein provided for relating
to such transaction have been complied with, together with any documents
required under Article IX.
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Section 12.2 Successor Corporation to Be Substituted. In case of any
such consolidation, merger, sale, conveyance or lease in accordance with Section
12.1, and, where required in accordance with Section 12.1(a) upon the assumption
by the successor corporation, by supplemental indenture, executed and delivered
to the Trustee and satisfactory in form to the Trustee, of the due and punctual
payment of the principal of and premium, if any, and interest on all of the
Notes and the due and punctual performance of all of the covenants and
conditions of this Indenture to be performed by the Company, such successor
corporation shall succeed to and be substituted for the Company, with the same
effect as if it had been named herein as the party of the first part. Such
successor corporation thereupon may cause to be signed, and may issue either in
its own name or in the name of Financial Federal Corporation any or all of the
Notes issuable hereunder which theretofore shall not have been signed by the
Company and delivered to the Trustee; and, upon the order of such successor
corporation instead of the Company and subject to all the terms, conditions and
limitations in this Indenture prescribed, the Trustee shall authenticate and
shall deliver, or cause to be authenticated and delivered, any Notes which
previously shall have been signed and delivered by the officers of the Company
to the Trustee for authentication, and any Notes which such successor
corporation thereafter shall cause to be signed and delivered to the Trustee for
that purpose. All the Notes so issued shall in all respects have the same legal
rank and benefit under this Indenture as the Notes theretofore or thereafter
issued in accordance with the terms of this Indenture as though all of such
Notes had been issued at the date of the execution hereof. In the event of any
such consolidation, merger, sale, conveyance or lease, the person named as the
"Company" in the first paragraph of this Indenture or any successor which shall
thereafter have become such in the manner prescribed in this Article XII may be
dissolved, wound up and liquidated at any time thereafter and such person shall
be released from its liabilities as obligor and maker of the Notes and from its
obligations under this Indenture.
In case of any such consolidation, merger, sale, conveyance or lease,
such changes in phraseology and form (but not in substance) may be made in the
Notes thereafter to be issued as may be appropriate.
Section 12.3 Opinion of Counsel to Be Given Trustee. The Trustee,
subject to Sections 8.1 and 8.2, shall receive an Officers' Certificate and an
Opinion of Counsel as conclusive evidence that any such consolidation, merger,
sale, conveyance or lease and any such assumption complies with the provisions
of this Article XII.
ARTICLE XIII
SATISFACTION AND DISCHARGE OF INDENTURE
Section 13.1 Discharge of Indenture. When (a) the Company shall deliver
to the Trustee for cancellation all Notes theretofore authenticated (other than
any Notes which have been destroyed, lost or stolen and in lieu of or in
substitution for which other Notes shall have
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been authenticated and delivered) and not theretofore canceled, or (b) all the
Notes not theretofore canceled or delivered to the Trustee for cancellation
shall have become due and payable, or are by their terms to become due and
payable within one year or are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of redemption,
and the Company shall deposit with the Trustee, in trust, funds sufficient to
pay at maturity or upon redemption of all of the Notes (other than any Notes
which shall have been mutilated, destroyed, lost or stolen and in lieu of or in
substitution for which other Notes shall have been authenticated and delivered)
not theretofore canceled or delivered to the Trustee for cancellation, including
principal and premium, if any, and interest due or to become due to such date of
maturity or redemption date, as the case may be, and if in either case the
Company shall also pay or cause to be paid all other sums payable hereunder by
the Company, then this Indenture shall cease to be of further effect (except as
to (i) remaining rights of registration of transfer, substitution and exchange
and conversion of Notes, (ii) rights hereunder of Noteholders to receive
payments of principal of and premium, if any, and interest on, the Notes and the
other rights, duties and obligations of Noteholders, as beneficiaries hereof
with respect to the amounts, if any, so deposited with the Trustee and (iii) the
rights, obligations and immunities of the Trustee hereunder), and the Trustee,
on demand of the Company accompanied by an Officers' Certificate and an Opinion
of Counsel as required by Section 17.5 and at the cost and expense of the
Company, shall execute proper instruments acknowledging satisfaction of and
discharging this Indenture; the Company, however, hereby agreeing to reimburse
the Trustee for any costs or expenses thereafter reasonably and properly
incurred by the Trustee and to compensate the Trustee for any services
thereafter reasonably and properly rendered by the Trustee in connection with
this Indenture or the Notes.
Section 13.2 Deposited Monies to Be Held in Trust by Trustee. Subject
to Section 13.4, all monies deposited with the Trustee pursuant to Section 13.1
shall be held in trust and applied by it to the payment, notwithstanding the
provisions of Article IV, either directly or through any paying agent (including
the Company if acting as its own paying agent), to the holders of the particular
Notes for the payment or redemption of which such monies have been deposited
with the Trustee, of all sums due and to become due thereon for principal and
interest and premium, if any.
Section 13.3 Paying Agent to Repay Monies Held. Upon the satisfaction
and discharge of this Indenture, all monies then held by any paying agent of the
Notes (other than the Trustee) shall, upon demand of the Company, be repaid to
it or paid to the Trustee, and thereupon such paying agent shall be released
from all further liability with respect to such monies.
Section 13.4 Return of Unclaimed Monies. Subject to the requirements of
applicable law, any monies deposited with or paid to the Trustee for payment of
the principal of, premium, if any, or interest on Notes and not applied but
remaining unclaimed by the holders of Notes for two years after the date upon
which the principal of, premium, if any, or interest on such Notes, as the case
may be, shall have become due and payable, shall be repaid to the Company by the
Trustee on demand and all liability of the Trustee shall thereupon cease with
respect to such
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monies; and the holder of any of the Notes shall thereafter look only to the
Company for any payment which such holder may be entitled to collect unless an
applicable abandoned property law designates another person.
Section 13.5 Reinstatement. If (i) the Trustee or the paying agent is
unable to apply any money in accordance with Section 13.2 by reason of any order
or judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application and (ii) the holders of at least a
majority in principal amount of the then outstanding Notes so request by written
notice to the Trustee, the Company's obligations under this Indenture and the
Notes shall be revived and reinstated as though no deposit had occurred pursuant
to Section 13.1 until such time as the Trustee or the paying agent is permitted
to apply all such money in accordance with Section 13.2; provided, however, that
if the Company makes any payment of interest on or principal of any Note
following the reinstatement of its obligations, the Company shall be subrogated
to the rights of the holders of such Notes to receive such payment from the
money held by the Trustee or paying agent.
ARTICLE XIV
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
Section 14.1 Indenture and Notes Solely Corporate Obligations. No
recourse for the payment of the principal of or premium, if any, or interest on
any Note, or for any claim based thereon or otherwise in respect thereof, and no
recourse under or upon any obligation, covenant or agreement of the Company in
this Indenture or in any supplemental indenture or in any Note, or because of
the creation of any indebtedness represented thereby, shall be had against any
incorporator, stockholder, employee, agent, officer or director or subsidiary,
as such, past, present or future, of the Company or of any successor
corporation, either directly or through the Company or any successor
corporation, whether by virtue of any constitution, statute or rule of law, or
by the enforcement of any assessment or penalty or otherwise; it being expressly
understood that all such liability is hereby expressly waived and released as a
condition of, and as a consideration for, the execution of this Indenture and
the issue of the Notes.
ARTICLE XV
CONVERSION OF NOTES
Section 15.1 Right to Convert. Subject to and upon compliance with the
provisions of this Indenture, the holder of any Note shall have the right, at
his option, at any time following the date of original issuance of the Notes and
prior to the close of business on May 1, 2005 (except that, with respect to any
Note or portion of a Note which shall be called for redemption, such right shall
terminate, except as provided in the fifth paragraph of Section 15.2 and Section
3.4, at
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the close of business on the Business Day next preceding the date fixed for
redemption of such Note or portion of a Note unless the Company shall default in
payment due upon redemption thereof) to convert the principal amount of any such
Note, or any portion of such principal amount which is $1,000 or an integral
multiple thereof, into that number of fully paid and non-assessable shares of
Common Stock (as such shares shall then be constituted) obtained by dividing the
principal amount of the Note or portion thereof surrendered for conversion by
the Conversion Price in effect at such time, by surrender of the Note so to be
converted in whole or in part in the manner provided in Section 15.2. A holder
of Notes is not entitled to any rights of a holder of Common Stock until such
holder has converted his Notes to Common Stock, and only to the extent such
Notes are deemed to have been converted to Common Stock under this Article XV. A
Note with respect to which a holder has delivered a notice in accordance with
Section 16.2 regarding such holder's election to require the Company to
repurchase such holder's Notes following the occurrence of a Repurchase Event
may be converted in accordance with this Article XV only if such holder
withdraws such notice by delivering a written notice of withdrawal to the
Company prior to the close of business on last Business Day prior to the day
fixed for repurchase.
Section 15.2 Exercise of Conversion Privilege; Issuance of Common Stock
on Conversion; No Adjustment for Interest or Dividends. In order to exercise the
conversion privilege with respect to any Note in definitive form, the holder of
any such Note to be converted in whole or in part shall surrender such Note,
duly endorsed, at an office or agency maintained by the Company pursuant to
Section 5.2, accompanied by the funds, if any, required by the penultimate
paragraph of this Section 15.2, and shall give written notice of conversion in
the form provided on the Notes (or such other notice which is acceptable to the
Company) to the office or agency that the holder elects to convert such Note or
such portion thereof specified in said notice. Such notice shall also state the
name or names (with address) in which the certificate or certificates for shares
of Common Stock which shall be issuable on such conversion shall be issued, and
shall be accompanied by transfer taxes, if required pursuant to Section 15.7.
Each such Note surrendered for conversion shall, unless the shares issuable on
conversion are to be issued in the same name as the registration of such Note,
be duly endorsed by, or be accompanied by instruments of transfer in form
satisfactory to the Company duly executed by, the holder or his duly authorized
attorney.
In order to exercise the conversion privilege with respect to any
interest in the Global Note, the beneficial holder must complete the appropriate
instruction form for conversion pursuant to the Depositary's book-entry
conversion program, deliver by book-entry delivery an interest in the Global
Note, furnish appropriate endorsements and transfer documents if required by the
Company or the Trustee or conversion agent, and pay the funds, if any, required
by the penultimate paragraph of this Section 15.2 and any transfer taxes, if
required pursuant to Section 15.7.
As promptly as practicable after satisfaction of the requirements for
conversion set forth above, subject to compliance with any restrictions on
transfer if shares issuable on conversion are
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to be issued in a name other than that of the Noteholder (as if such transfer
were a transfer of the Note or Notes (or portion thereof) so converted), the
Company shall issue and shall deliver to such holder at the office or agency
maintained by the Company for such purpose pursuant to Section 5.2, a
certificate or certificates for the number of full shares of Common Stock
issuable upon the conversion of such Note or portion thereof in accordance with
the provisions of this Article and a check or cash in respect of any fractional
interest in respect of a share of Common Stock arising upon such conversion, as
provided in Section 15.3 (which payment, if any, shall be paid no later than
five Business Days after satisfaction of the requirements for conversion set
forth above). In case any Note of a denomination greater than $1,000 shall be
surrendered for partial conversion, and subject to Section 2.3, the Company
shall execute and the Trustee shall authenticate and deliver to the holder of
the Note so surrendered, without charge to him, a new Note or Notes in
authorized denominations in an aggregate principal amount equal to the
unconverted portion of the surrendered Note.
Each conversion shall be deemed to have been effected as to any such
Note (or portion thereof) on the date on which the requirements set forth above
in this Section 15.2 have been satisfied as to such Note (or portion thereof),
and the person in whose name any certificate or certificates for shares of
Common Stock shall be issuable upon such conversion shall be deemed to have
become on said date the holder of record of the shares represented thereby;
provided, however, that any such surrender on any date when the stock transfer
books of the Company shall be closed shall constitute the person in whose name
the certificates are to be issued as the record holder thereof for all purposes
on the next succeeding day on which such stock transfer books are open, but such
conversion shall be at the Conversion Price in effect on the date upon which
such Note shall be surrendered.
Any Note or portion thereof surrendered for conversion during the
period from the close of business on the record date for any interest payment
date through the close of business on the Business Day next preceding such
interest payment date shall (unless such Note or portion thereof being converted
shall have been called for redemption pursuant to a redemption notice mailed to
the Noteholders in accordance with Section 3.2) be accompanied by payment, in
New York Clearing House funds or other funds acceptable to the Company, of an
amount equal to the interest otherwise payable on such interest payment date on
the principal amount being converted; provided, however, that no such payment
need be made if there shall exist at the time of conversion a default in the
payment of interest on the Notes. Except as provided above in this Section 15.2,
no adjustment shall be made for interest accrued on any Note converted or for
dividends on any shares issued upon the conversion of such Note as provided in
this Article.
Upon the conversion of an interest in the Global Note, the Trustee, or
the Custodian at the direction of the Trustee, shall make a notation on the
Global Note as to the reduction in the principal amount represented thereby.
Section 15.3 Cash Payments in Lieu of Fractional Shares. No fractional
shares of Common Stock or scrip representing fractional shares shall be issued
upon conversion of Notes.
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If more than one Note shall be surrendered for conversion at one time by the
same holder, the number of full shares which shall be issuable upon conversion
shall be computed on the basis of the aggregate principal amount of the Notes
(or specified portions thereof to the extent permitted hereby) so surrendered
for conversion. If any fractional share of stock otherwise would be issuable
upon the conversion of any Note or Notes, the Company shall make an adjustment
therefor in cash at the current market value thereof to the holder of Notes. The
current market value of a share of Common Stock shall be the Closing Price on
the first Trading Day immediately preceding the day on which the Notes (or
specified portions thereof) are deemed to have been converted and such Closing
Price shall be determined as provided in Section 15.5(h).
Section 15.4 Conversion Price. The conversion price shall be as
specified in the form of Note (herein called the "Conversion Price") attached as
Exhibit A hereto, subject to adjustment as provided in this Article XV.
Section 15.5 Adjustment of Conversion Price. The Conversion Price shall
be adjusted from time to time by the Company as follows:
(a) In case the Company shall hereafter pay a dividend or make
a distribution to all holders of the outstanding Common Stock in shares
of Common Stock, the Conversion Price in effect at the opening of
business on the date following the date fixed for the determination of
stockholders entitled to receive such dividend or other distribution
shall be reduced by multiplying such Conversion Price by a fraction of
which the numerator shall be the number of shares of Common Stock
outstanding at the close of business on the Record Date (as defined in
Section 15.5(h)) fixed for such determination and the denominator shall
be the sum of such number of shares and the total number of shares
constituting such dividend or other distribution, such reduction to
become effective immediately after the opening of business on the day
following the Record Date. If any dividend or distribution of the type
described in this Section 15.5(a) is declared but not so paid or made,
the Conversion Price shall again be adjusted to the Conversion Price
which would then be in effect if such dividend or distribution had not
been declared.
(b) In case the Company shall issue rights or warrants to all
holders of its outstanding shares of Common Stock entitling them (for a
period expiring within forty-five (45) days after the date fixed for
the determination of stockholders entitled to receive such rights or
warrants) to subscribe for or purchase shares of Common Stock at a
price per share less than the Current Market Price (as defined in
Section 15.5(h)) on the Record Date fixed for the determination of
stockholders entitled to receive such rights or warrants, the
Conversion Price shall be adjusted so that the same shall equal the
price determined by multiplying the Conversion Price in effect at the
opening of business on the date after such Record Date by a fraction of
which the numerator shall be the number of shares of Common Stock
outstanding at the close of business on the Record Date 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
Current Market Price, and of
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which the denominator shall be the number of shares of Common Stock
outstanding on the close of business on the Record Date plus the total
number of additional shares of Common Stock so offered for subscription
or purchase. Such adjustment shall become effective immediately after
the opening of business on the day following the Record Date fixed for
determination of stockholders entitled to receive such rights or
warrants. To the extent that shares of Common Stock are not delivered
pursuant to such rights or warrants, upon the expiration or termination
of such rights or warrants the Conversion Price shall be readjusted to
the Conversion Price which would then be in effect had the adjustments
made upon the issuance of such rights or warrants been made on the
basis of delivery of only the number of shares of Common Stock actually
delivered. In the event that such rights or warrants are not so issued,
the Conversion Price shall again be adjusted to be the Conversion Price
which would then be in effect if such date fixed for the determination
of stockholders entitled to receive such rights or warrants had not
been fixed. In determining whether any rights or warrants entitle the
holders to subscribe for or purchase shares of Common Stock at less
than such Current Market Price, and in determining the aggregate
offering price of such shares of Common Stock, there shall be taken
into account any consideration received for such rights or warrants,
the value of such consideration, if other than cash, to be determined
by the Board of Directors.
(c) In case the outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock, the
Conversion Price in effect at the opening of business on the day
following the day upon which such subdivision becomes effective shall
be proportionately reduced, and conversely, in case outstanding shares
of Common Stock shall be combined into a smaller number of shares of
Common Stock, the Conversion Price in effect at the opening of business
on the day following the day upon which such combination becomes
effective shall be proportionately increased, such reduction or
increase, as the case may be, to become effective immediately after the
opening of business on the day following the day upon which such
subdivision or combination becomes effective.
(d) In case the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock shares of any class of
capital stock of the Company (other than any dividends or distributions
to which Section 15.5(a) applies) or evidences of its indebtedness,
cash or other assets (including securities, but excluding (1) any
rights or warrants referred to in Section 15.5(b) and, (2) dividends
and distributions (A) in connection with the liquidation, dissolution
or winding up of the Company or paid (B) exclusively in cash and (3)
any capital stock, evidences of indebtedness, cash or assets
distributed upon a merger or consolidation to which Section 15.6
applies) (the foregoing hereinafter in this Section 15.5(d) called the
"Securities")), unless the Company elects to reserve such Securities
for distribution to the Noteholders upon conversion of the Notes so
that any such holder converting Notes will receive upon such
conversion, in addition to the shares of Common Stock to which such
holder is entitled, the amount and kind of such Securities which such
holder would have received if such holder had converted its
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Notes into Common Stock immediately prior to the Record Date (as
defined in Section 15.5(h) for such distribution of the Securities)
then, in each such case, the Conversion Price shall be reduced so that
the same shall be equal to the price determined by multiplying the
Conversion Price in effect immediately prior to the close of business
on the Record Date (as defined in Section 15.5(h)) with respect to such
distribution by a fraction of which the numerator shall be the Current
Market Price (determined as provided in Section 15.5(h)) on such date
less the fair market value (as determined by the Board of Directors,
whose determination shall be conclusive and described in a Board
Resolution) on such date of the portion of the Securities so
distributed applicable to one share of Common Stock and the denominator
shall be such Current Market Price, such reduction to become effective
immediately prior to the opening of business on the day following the
Record Date; provided, however, that in the event the then fair market
value (as so determined) of the portion of the Securities so
distributed applicable to one share of Common Stock is equal to or
greater than the Current Market Price on the Record Date, in lieu of
the foregoing adjustment, adequate provision shall be made so that each
Noteholder shall have the right to receive upon conversion of a Note
(or any portion thereof) the amount of Securities such holder would
have received had such holder converted such Note (or portion thereof)
immediately prior to such Record Date. In the event that such dividend
or distribution is not so paid or made, the Conversion Price shall
again be adjusted to be the Conversion Price which would then be in
effect if such dividend or distribution had not been declared. If the
Board of Directors determines the fair market value of any distribution
for purposes of this Section 15.5(d) by reference to the actual or when
issued trading market for any securities comprising all or part of such
distribution, it must in doing so consider the prices in such market
over the same period (the "Reference Period") used in computing the
Current Market Price pursuant to Section 15.5(h) to the extent
possible, unless the Board of Directors in a board resolution
determines in good faith that determining the fair market value during
the Reference Period would not be in the best interest of the
Noteholder.
In the event that the Company implements a stockholder rights
plan, such rights plan shall provide that upon conversion of the Notes
the holders will receive, in addition to the Common Stock issuable upon
such conversion, the rights issued under such rights plan
(notwithstanding the occurrence of an event causing such rights to
separate from the Common Stock at or prior to the time of conversion).
Any distribution of rights or warrants pursuant to a stockholder rights
plan complying with the requirements set forth in the immediately
preceding sentence of this paragraph shall not constitute a
distribution of rights or warrants for the purposes of this Section
15.5(d).
Rights or warrants distributed by the Company to all holders
of Common Stock entitling the holders thereof to subscribe for or
purchase shares of the Company's capital stock (either initially or
under certain circumstances), which rights or warrants, until the
occurrence of a specified event or events ("Trigger Event"): (i) are
deemed to be transferred with such shares of Common Stock; (ii) are not
exercisable; and (iii) are also
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issued in respect of future issuances of Common Stock, shall be deemed
not to have been distributed for purposes of this Section 15.5(d) (and
no adjustment to the Conversion Price under this Section 15.5(d) will
be required) until the occurrence of the earliest Trigger Event. If
such right or warrant is subject to subsequent events, upon the
occurrence of which such right or warrant shall become exercisable to
purchase different securities, evidences of indebtedness or other
assets or entitle the holder to purchase a different number or amount
of the foregoing or to purchase any of the foregoing at a different
purchase price, then the occurrence of each such event shall be deemed
to be the date of issuance and record date with respect to a new right
or warrant (and a termination or expiration of the existing right or
warrant without exercise by the holder thereof). In addition, in the
event of any distribution (or deemed distribution) of rights or
warrants, or any Trigger Event or other event (of the type described in
the preceding sentence) with respect thereto, that resulted in an
adjustment to the Conversion Price under this Section 15.5(d), (1) in
the case of any such rights or warrants which shall all have been
redeemed or repurchased without exercise by any holders thereof, the
Conversion Price shall be readjusted upon such final redemption or
repurchase to give effect to such distribution or Trigger Event, as the
case may be, as though it were a cash distribution, equal to the per
share redemption or repurchase price received by a holder of Common
Stock with respect to such rights or warrants (assuming such holder had
retained such rights or warrants), made to all holders of Common Stock
as of the date of such redemption or repurchase, and (2) in the case of
such rights or warrants all of which shall have expired or been
terminated without exercise, the Conversion Price shall be readjusted
as if such rights and warrants had never been issued.
For purposes of this Section 15.5(d) and Sections 15.5(a) and
(b), any dividend or distribution to which this Section 15.5(d) is
applicable that also includes shares of Common Stock, or rights or
warrants to subscribe for or purchase shares of Common Stock to which
Section 15.5(b) applies (or both), shall be deemed instead to be (1) a
dividend or distribution of the evidences of indebtedness, assets,
shares of capital stock, rights or warrants other than such shares of
Common Stock or rights or warrants to which Section 15.5(b) applies
(and any Conversion Price reduction required by this Section 15.5(d)
with respect to such dividend or distribution shall then be made)
immediately followed by (2) a dividend or distribution of such shares
of Common Stock or such rights or warrants (and any further Conversion
Price reduction required by Sections 15.5(a) and (b) with respect to
such dividend or distribution shall then be made, except (A) the Record
Date of such dividend or distribution shall be substituted as "the date
fixed for the determination of stockholders entitled to receive such
dividend or other distribution", "Record Date fixed for such
determination" and "Record Date" within the meaning of Section 15.5(a)
and as "the date fixed for the determination of stockholders entitled
to receive such rights or warrants", "the Record Date fixed for the
determination of the stockholders entitled to receive such rights or
warrants" and "such Record Date" within the meaning of Section 15.5(b)
and (B) any shares of Common Stock included in
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such dividend or distribution shall not be deemed "outstanding at the
close of business on the Record Date . . . fixed for such
determination" within the meaning of Section 15.5(a).
(e) In case the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock cash (excluding any cash
that is distributed upon a merger or consolidation to which Section
15.6 applies or as part of a distribution referred to in Section
15.5(d)), in an aggregate amount that, combined together with (1) the
aggregate amount of any other such distributions to all holders of its
Common Stock made exclusively in cash within the twelve (12) months
preceding the date of payment of such distribution, and in respect of
which no adjustment pursuant to this Section 15.5(e) has been made, and
(2) the aggregate of any cash plus the fair market value (as determined
by the Board of Directors, whose determination shall be conclusive and
described in a Board Resolution) of consideration payable in respect of
any tender offer by the Company or any of its subsidiaries for all or
any portion of the Common Stock concluded within the twelve (12) months
preceding the date of payment of such distribution, and in respect of
which no adjustment pursuant to Section 15.5(f) has been made, exceeds
10% of the product of the Current Market Price (determined as provided
in Section 15.5(h)) on the Record Date with respect to such
distribution times the number of shares of Common Stock outstanding on
such date, then, and in each such case, immediately after the close of
business on such date, the Conversion Price shall be reduced so that
the same shall equal the price determined by multiplying the Conversion
Price in effect immediately prior to the close of business on such
Record Date by a fraction (i) the numerator of which shall be equal to
the Current Market Price on the Record Date less an amount equal to the
quotient of (x) the excess of such combined amount over such 10% and
(y) the number of shares of Common Stock outstanding on the Record Date
and (ii) the denominator of which shall be equal to the Current Market
Price on such date; 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 Current Market Price of the Common Stock
on the Record Date, in lieu of the foregoing adjustment, adequate
provision shall be made so that each Noteholder shall have the right to
receive upon conversion of a Note (or any portion thereof) the amount
of cash such holder would have received had such holder converted such
Note (or portion thereof) immediately prior to such Record Date. In the
event that such dividend or distribution is not so paid or made, the
Conversion Price shall again be adjusted to be the Conversion Price
which would then be in effect if such dividend or distribution had not
been declared. Any cash distribution to all holders of Common Stock as
to which the Company makes the election permitted by Section 15.5(n)
and as to which the Company has complied with the requirements of such
Section shall be treated as not having been made for all purposes of
this Section 15.5(e)).
(f) In case a tender offer made by the Company or any
Subsidiary for all or any portion of the Common Stock shall expire and
such tender offer (as amended upon the expiration thereof) shall
require the payment to stockholders (based on the acceptance (up to any
maximum specified in the terms of the tender offer) of Purchased Shares
(as
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defined below)) of an aggregate consideration having a fair market
value (as determined by the Board of Directors, whose determination
shall be conclusive and described in a Board Resolution) that combined
together with (1) the aggregate of the cash plus the fair market value
(as determined by the Board of Directors, whose determination shall be
conclusive and described in a Board Resolution), as of the expiration
of such tender offer, of consideration payable in respect of any other
tender offers, by the Company or any of its subsidiaries for all or any
portion of the Common Stock expiring within the twelve (12) months
preceding the expiration of such tender offer and in respect of which
no adjustment pursuant to this Section 15.5(f) has been made and (2)
the aggregate amount of any distributions to all holders of the
Company's Common Stock made exclusively in cash within twelve (12)
months preceding the expiration of such tender offer and in respect of
which no adjustment pursuant to Section 15.5(e) has been made, exceeds
10% of the product of the Current Market Price (determined as provided
in Section 15.5(h)) as of the last time (the "Expiration Time") tenders
could have been made pursuant to such tender offer (as it may be
amended) times the number of shares of Common Stock outstanding
(including any tendered shares) on the Expiration Time, then, and in
each such case, immediately prior to the opening of business on the day
after the date of the Expiration Time, the Conversion Price shall be
adjusted so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to close
of business on the date of the Expiration Time by a fraction of which
the numerator shall be the number of shares of Common Stock outstanding
(including any tendered shares) on the Expiration Time multiplied by
the Current Market Price of the Common Stock on the Trading Day next
succeeding the Expiration Time and the denominator 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 offer) of all shares
validly tendered 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) on the Expiration
Time and the Current Market Price of the Common Stock on the Trading
Day next succeeding the Expiration Time, such reduction (if any) to
become effective immediately prior to the opening of business on the
day following the Expiration Time. In the event that the Company is
obligated to purchase shares pursuant to any such tender offer, but the
Company is permanently prevented by applicable law from effecting any
such purchases or all such purchases are rescinded, the Conversion
Price shall again be adjusted to be the Conversion Price which would
then be in effect if such tender offer had not been made. If the
application of this Section 15.5(f) to any tender offer would result in
an increase in the Conversion Price, no adjustment shall be made for
such tender offer under this Section 15.5(f). Any cash distribution to
all holders of Common Stock as to which the Company has made the
election permitted by Section 15.5(n) and as to which the Company has
complied with the requirements of such Section shall be treated as not
having been made for all purposes of this Section 15.5(f).
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(g) In case of a tender or exchange offer made by a person
other than the Company or any Subsidiary for an amount which increases
the offeror's ownership of Common Stock to more than 25% of the Common
Stock outstanding and shall involve the payment by such person of
consideration per share of Common Stock having a fair market value (as
determined 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 the Current Market Price of the Common Stock on
the Trading Day next succeeding the Expiration Time, and in which, as
of the Expiration Time the Board of Directors is not recommending
rejection of the offer, the Conversion Price shall be reduced so that
the same shall equal the price determined by multiplying the Conversion
Price in effect immediately prior to the Expiration Time by a fraction
of which the numerator shall be the number of shares of Common Stock
outstanding (including any tendered or exchanged shares) on the
Expiration Time multiplied by the current Market Price of the Common
Stock on the Trading Day next succeeding the Expiration Time and the
denominator 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) on the Expiration
Time and the Current Market Price of the Common Stock on the Trading
Day next succeeding the Expiration Time, such reduction to become
effective immediately prior to the opening of business on the day
following the Expiration Time. In the event that such person is
obligated to purchase shares pursuant to any such tender or exchange
offer, but such person is permanently prevented by applicable law from
effecting any such purchases or all such purchases are rescinded, the
Conversion Price shall again be adjusted to be the Conversion Price
which would then be in effect if such tender or exchange offer had not
been made. Notwithstanding the foregoing, the adjustment described in
this Section 15.5(g) shall not be made if, as of the Expiration Time,
the offering documents with respect to such offer disclose a plan or
intention to cause the Company to engage in any transaction described
in Article XII.
(h) For purposes of this Section 15.5, the following terms
shall have the meaning indicated:
(1) "Closing Price" with respect to any securities on
any day shall mean the closing sale price regular way on such
day or, in case no such sale takes place on such day, the
average of the reported closing bid and asked prices, regular
way, in each case on the American Stock Exchange or Nasdaq
National Market, as applicable, or, if such security is not
listed or admitted to trading on such National Market or
Exchange, on the principal national security exchange or
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quotation system on which such security is quoted or listed or
admitted to trading, or, if not quoted or listed or admitted
to trading on any national securities exchange or quotation
system, the average of the closing bid and asked prices of
such security on the over-the-counter market on the day in
question as reported by the National Quotation Bureau
Incorporated, or a similar generally accepted reporting
service, or if not so available, in such manner as furnished
by any New York Stock Exchange member firm selected from time
to time by the Board of Directors for that purpose, or a price
determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a Board
Resolution.
(2) "Current Market Price" shall mean the average of
the daily Closing Prices per share of Common Stock for the ten
(10) consecutive Trading Days immediately prior to the date in
question; provided, however, that (1) if the "ex" date (as
hereinafter defined) for any event (other than the issuance or
distribution requiring such computation) that requires an
adjustment to the Conversion Price pursuant to Section
15.5(a), (b), (c), (d), (e), (f) or (g) occurs during such ten
(10) consecutive Trading Days, the Closing Price for each
Trading Day prior to the "ex" date for such other event shall
be adjusted by multiplying such Closing Price by the same
fraction by which the Conversion Price is so required to be
adjusted as a result of such other event, (2) if the "ex" date
for any event (other than the issuance or distribution
requiring such computation) that requires an adjustment to the
Conversion Price pursuant to Section 15.5(a), (b), (c), (d),
(e), (f) or (g) occurs on or after the "ex" date for the
issuance or distribution requiring such computation and prior
to the day in question, the Closing Price for each Trading Day
on and after the "ex" date for such other event shall be
adjusted by multiplying such Closing Price by the reciprocal
of the fraction by which the Conversion Price is so required
to be adjusted as a result of such other event, and (3) if the
"ex" date for the issuance or distribution requiring such
computation is prior to the day in question, after taking into
account any adjustment required pursuant to clause (1) or (2)
of this proviso, the Closing Price for each Trading Day on or
after such "ex" date shall be adjusted by adding thereto the
amount of any cash and the fair market value (as determined by
the Board of Directors in a manner consistent with any
determination of such value for purposes of Section 15.5(d),
(f) or (g), whose determination shall be conclusive and
described in a Board Resolution) of the evidences of
indebtedness, shares of capital stock or assets being
distributed applicable to one share of Common Stock as of the
close of business on the day before such "ex" date. For
purposes of any computation under Sections 15.5(f) or (g), the
Current Market Price of the Common Stock on any date shall be
deemed to be the average of the daily Closing Prices per share
of Common Stock for such day and the next two succeeding
Trading Days; provided, however, that if the "ex" date for any
event (other than the tender offer requiring such computation)
that requires an adjustment to the Conversion Price
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pursuant to Section 15.5(a), (b), (c), (d), (e), (f) and (g)
occurs on or after the Expiration Time for the tender or
exchange offer requiring such computation and prior to the day
in question, the Closing Price for each Trading Day on and
after the "ex" date for such other event shall be adjusted by
multiplying such Closing Price by the reciprocal of the
fraction by which the Conversion Price is so required to be
adjusted as a result of such other event. For purposes of this
paragraph, the term "ex" date, (1) when used with respect to
any issuance or distribution, means the first date on which
the Common Stock trades regular way on the relevant exchange
or in the relevant market from which the Closing Price was
obtained without the right to receive such issuance or
distribution, (2) when used with respect to any subdivision or
combination of shares of Common Stock, means the first date on
which the Common Stock trades regular way on such exchange or
in such market after the time at which such subdivision or
combination becomes effective, and (3) when used with respect
to any tender or exchange offer means the first date on which
the Common Stock trades regular way on such exchange or in
such market after the Expiration Time of such offer.
Notwithstanding the foregoing, whenever successive adjustments
to the Conversion Price are called for pursuant to this
Section 15.5, such adjustments shall be made to the Current
Market Price as may be necessary or appropriate to effectuate
the intent of this Section 15.5 and to avoid unjust or
inequitable results as determined in good faith by the Board
of Directors.
(3) "fair market value" shall mean the amount which a
willing buyer would pay a willing seller in an arm's length
transaction.
(4) "Record Date" shall mean, with respect to any
dividend, distribution or other transaction or event in which
the holders of Common Stock have the right to receive any
cash, securities or other property or in which the Common
Stock (or other applicable security) is exchanged for or
converted into any combination of cash, securities or other
property, the date fixed for determination of stockholders
entitled to receive such cash, securities or other property
(whether such date is fixed by the Board of Directors or by
statute, contract or otherwise).
(5) "Trading Day" shall mean (x) if the applicable
security is listed or admitted for trading on the New York
Stock Exchange or another national security exchange, a day on
which the New York Stock Exchange or another national security
exchange is open for business or (y) if the applicable
security is quoted on the Nasdaq National Market, a day on
which trades may be made thereon or (z) if the applicable
security is not so listed, admitted for trading or quoted, any
day other than a Saturday or Sunday or a day on which banking
institutions in the State of New York are authorized or
obligated by law or executive order to close.
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(i) The Company may make such reductions in the Conversion
Price, in addition to those required by Sections 15.5(a), (b), (c),
(d), (e), (f) and (g), as the Board of Directors 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.
To the extent permitted by applicable law, the Company from
time to time may reduce the Conversion Price by any amount for any
period of time if the period is at least twenty (20) days, the
reduction is irrevocable during the period and the Board of Directors
shall have made a determination that such reduction would be in the
best interests of the Company, which determination shall be conclusive
and described in a Board Resolution. Whenever the Conversion Price is
reduced pursuant to the preceding sentence, the Company shall mail to
the holder of each Note at his last address appearing on the Note
register provided for in Section 2.5 a notice of the reduction at least
fifteen (15) days prior to the date the reduced Conversion Price takes
effect, and such notice shall state the reduced Conversion Price and
the period during which it will be in effect.
(j) No adjustment in the Conversion Price shall be required
unless such adjustment would require an increase or decrease of at
least 1% in such price; provided, however, that any adjustments which
by reason of this Section 15.5(j) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment.
All calculations under this Article XV shall be made by the Company and
shall be made to the nearest cent or to the nearest one hundredth of a
share, as the case may be. No adjustment need be made for a change in
the par value or no par value of the Common Stock.
(k) Whenever the Conversion Price is adjusted as herein
provided, the Company shall promptly file with the Trustee and any
conversion agent other than the Trustee an Officers' Certificate
setting forth the Conversion Price after such adjustment and setting
forth a brief statement of the facts requiring such adjustment.
Promptly after delivery of such certificate, the Company shall prepare
a notice of such adjustment of the Conversion Price setting forth the
adjusted Conversion Price and the date on which each adjustment becomes
effective and shall mail such notice of such adjustment of the
Conversion Price to the holder of each Note at his last address
appearing on the Note register provided for in Section 2.5, within
twenty (20) days of the effective date of such adjustment. Failure to
deliver such notice shall not effect the legality or validity of any
such adjustment.
(l) In any case in which this Section 15.5 provides that an
adjustment shall become effective immediately after a Record Date for
an event, the Company may defer until the occurrence of such event (i)
issuing to the holder of any Note converted after such Record Date and
before the occurrence of such event the additional shares of
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Common Stock issuable upon such conversion by reason of the adjustment
required by such event over and above the Common Stock issuable upon
such conversion before giving effect to such adjustment and (ii) paying
to such holder any amount in cash in lieu of any fraction pursuant to
Section 15.3.
(m) For purposes of this Section 15.5, the number of shares of
Common Stock at any time outstanding shall not include shares held in
the treasury of the Company but shall include shares issuable in
respect of scrip certificates issued in lieu of fractions of shares of
Common Stock. The Company will not pay any dividend or make any
distribution on shares of Common Stock held in the treasury of the
Company.
(n) In lieu of making any adjustment to the Conversion Price
pursuant to Section 15.5(e), the Company may elect to reserve an amount
of cash for distribution to the holders of the Notes upon the
conversion of the Notes so that any such holder converting Notes will
receive upon such conversion, in addition to the shares of Common Stock
and other items to which such holder is entitled, the full amount of
cash which such holder would have received if such holder had,
immediately prior to the Record Date for such distribution of cash,
converted its Notes into Common Stock, together with any interest
accrued with respect to such amount, in accordance with this Section
15.5(n). The Company may make such election by providing an Officers'
Certificate to the Trustee to such effect on or prior to the payment
date for any such distribution and depositing with the Trustee on or
prior to such date an amount of cash equal to the aggregate amount the
holders of the Notes would have received if such holders had,
immediately prior to the Record Date for such distribution, converted
all of the Notes into Common Stock. Any such funds so deposited by the
Company with the Trustee shall be invested by the Trustee in marketable
obligations issued or fully guaranteed by the United States government
with a maturity not more than three (3) months from the date of
issuance. Upon conversion of Notes by a holder, the holder will be
entitled to receive, in addition to the Common Stock issuable upon
conversion, an amount of cash equal to the amount such holder would
have received if such holder had, immediately prior to the Record Date
for such distribution, converted its Note into Common Stock, along with
such holder's pro rata share of any accrued interest earned as a
consequence of the investment of such funds. Promptly after making an
election pursuant to this Section 15.5(n), the Company shall give or
shall cause to be given notice to all Noteholders of such election,
which notice shall state the amount of cash per $1,000 principal amount
of Notes such holders shall be entitled to receive (excluding interest)
upon conversion of the Notes as a consequence of the Company having
made such election.
Section 15.6 Effect of Reclassification, Consolidation, Merger or Sale.
If any of the following events occur, namely (i) any reclassification or change
of the outstanding shares of 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), (ii) any consolidation,
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merger or combination of the Company with another corporation as a result of
which holders of Common Stock shall be entitled to receive stock, securities or
other property or assets (including cash) with respect to or in exchange for
such Common Stock, or (iii) any sale or conveyance of the properties and assets
of the Company as, or substantially as, an entirety to any other corporation as
a result of which holders of Common Stock shall be entitled to receive stock,
securities or other property or assets (including cash) with respect to or in
exchange for such Common Stock, then the Company or the successor or purchasing
corporation, as the case may be, shall execute with the Trustee a supplemental
indenture (which shall comply with the Trust Indenture Act as in force at the
date of execution of such supplemental indenture if such supplemental indenture
is then required to so comply) providing that such Note shall be convertible
into the kind and amount of shares of stock and other securities or property or
assets (including cash) receivable upon such reclassification, change,
consolidation, merger, combination, sale or conveyance by a holder of a number
of shares of Common Stock issuable upon conversion of such Notes (assuming, for
such purposes, a sufficient number of authorized shares of Common Stock
available to convert all such Notes) immediately prior to such reclassification,
change, consolidation, merger, combination, sale or conveyance assuming such
holder of Common Stock did not exercise his rights of election, if any, as to
the kind or amount of securities, cash or other property receivable upon such
consolidation, merger, statutory exchange, sale or conveyance (provided that, if
the kind or amount of securities, cash or other property receivable upon such
consolidation, merger, statutory exchange, sale or conveyance is not the same
for each share of Common Stock in respect of which such rights of election shall
not have been exercised ("non-electing share"), then for the purposes of this
Section 15.6 the kind and amount of securities, cash or other property
receivable upon such consolidation, merger, statutory exchange, sale or
conveyance for each non-electing share shall be deemed to be the kind and amount
so receivable per share by a plurality of the non-electing shares). Such
supplemental indenture shall provide for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this
Article. If, in the case of any such reclassification, change, consolidation,
merger, combination, sale or conveyance, the stock or other securities and
assets receivable thereupon by a holder of shares of Common Stock include shares
of stock or other securities and assets of a corporation other than the
successor or purchasing corporation, as the case may be, in such
reclassification, change, consolidation, merger, combination, sale or
conveyance, then such supplemental indenture shall also be executed by such
other corporation and shall contain such additional provisions to protect the
interests of the holders of the Notes as the Board of Directors shall reasonably
consider necessary by reason of the foregoing, including to the extent
practicable the provisions providing for the repurchase rights set forth in
Article XVI herein.
The Company shall cause notice of the execution of such supplemental
indenture to be mailed to each holder of Notes, at his address appearing on the
Note register provided for in Section 2.5 of this Indenture, within twenty (20)
days after execution thereof. Failure to deliver such notice shall not affect
the legality or validity of such supplemental indenture.
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The above provisions of this Section shall similarly apply to
successive reclassifications, changes, consolidations, mergers, combinations,
sales and conveyances.
If this Section 15.6 applies to any event or occurrence, Section 15.5
shall not apply.
Section 15.7 Taxes on Shares Issued. The issue of stock certificates on
conversions of Notes shall be made without charge to the converting Noteholder
for any tax in respect of the issue thereof. The Company shall not, however, be
required to pay any tax which may be payable in respect of any transfer involved
in the issue and delivery of stock in any name other than that of the holder of
any Note converted, and the Company shall not be required to issue or deliver
any such stock certificate unless and until the person or persons requesting the
issue thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.
Section 15.8 Reservation of Shares; Shares to Be Fully Paid; Listing of
Common Stock. The Company shall provide, free from preemptive rights, out of its
authorized but unissued shares or shares held in treasury, sufficient shares to
provide for the conversion of the Notes from time to time as such Notes are
presented for conversion.
Before taking any action which would cause an adjustment reducing the
Conversion Price below the then par value, if any, of the shares of Common Stock
issuable upon conversion of the Notes, the Company will take all corporate
action which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue shares of such Common Stock at such
adjusted Conversion Price.
The Company covenants that all shares of Common Stock issued upon
conversion of Notes will be fully paid and non-assessable by the Company and
free from all taxes, liens and charges with respect to the issue thereof.
The Company further covenants that if at any time the Common Stock
shall be listed on the American Stock Exchange or any other national securities
exchange or automated quotation system the Company will, if permitted by the
rules of such exchange or automated quotation system, list and keep listed, so
long as the Common Stock shall be so listed on such exchange or automated
quotation system, all Common Stock issuable upon conversion of the Notes.
Section 15.9 Responsibility of Trustee. The Trustee and any other
conversion agent shall not at any time be under any duty or responsibility to
any holder of Notes to determine whether any facts exist which may require any
adjustment of the Conversion Price, or with respect to the nature or extent or
calculation 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. The Trustee and any other conversion agent shall not be
accountable with respect to the validity or value (or the kind or amount) of any
shares of Common Stock, or of any securities or property, which may at any time
be issued or delivered upon the conversion of any
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Note; and the Trustee and any other conversion agent make no representations
with respect thereto. Subject to the provisions of Section 8.1, neither the
Trustee nor any conversion agent shall be responsible for any failure of the
Company to issue, transfer or deliver any shares of Common Stock or stock
certificates or other securities or property or cash upon the surrender of any
note for the purpose of conversion or to comply with any of the duties,
responsibilities or covenants of the Company contained in this Article. Without
limiting the generality of the foregoing, neither the Trustee nor any conversion
agent shall be under any responsibility to determine the correctness of any
provisions contained in any supplemental indenture entered into pursuant to
Section 15.6 relating either to the kind or amount of shares of stock or
securities or property (including cash) receivable by Noteholders upon the
conversion of their Notes after any event referred to in such Section 15.6 or to
any adjustment to be made with respect thereto, but, subject to the provisions
of Section 8.1, may accept as conclusive evidence of the correctness of any such
provisions, and shall be protected in relying upon, the Officers' Certificate
(which the Company shall be obligated to file with the Trustee prior to the
execution of any such supplemental indenture) with respect thereto.
Section 15.10 Notice to Holders Prior to Certain Actions. In case:
(a) the Company shall declare a dividend (or any other
distribution) on its Common Stock (that would require an adjustment in
the Conversion Price pursuant to Section 15.5); or
(b) the Company shall authorize the granting to the holders of
its Common Stock of rights or warrants to subscribe for or purchase any
share of any class or any other rights or warrants; or
(c) of any reclassification of the Common Stock of the
Company (other than a subdivision or combination of its 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
shareholders of the Company is required, or of the sale or transfer of
all or substantially all of the assets of the Company; or
(d) of the voluntary or involuntary dissolution, liquidation
or winding-up of the Company;
the Company shall cause to be filed with the Trustee and to be mailed to each
holder of Notes at his address appearing on the Note register, provided for in
Section 2.5 of this Indenture, as promptly as possible but in any event at least
fifteen days prior to the applicable date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution or 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 or rights are to be determined, or (y) the date
on which such reclassification, consolidation, merger, sale,
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transfer, dissolution, liquidation or winding-up is expected to become effective
or occur, and the date as of which it is expected that holders of Common Stock
of record shall be entitled to exchange their Common Stock for securities or
other property deliverable upon such reclassification, consolidation, merger,
sale, transfer, dissolution, liquidation or winding-up. Failure to give such
notice, or any defect therein, shall not affect the legality or validity of such
dividend, distribution, reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding-up.
ARTICLE XVI
REPURCHASE UPON A REPURCHASE EVENT
Section 16.1 Repurchase Right.
(a) If, at any time prior to May 1, 2005 there shall occur a
Repurchase Event, then each Noteholder shall have the right, at such
holder's option, to require the Company to repurchase all of such
holder's Notes, or any portion thereof (in principal amounts of $1,000
or integral multiples thereof), on the date (the "repurchase date")
that is forty (40) calendar days after the date of the Company Notice
(as defined in Section 16.2 below) of such Repurchase Event (or, if
such 40th day is not a Business Day, the next succeeding Business Day).
Such repurchase shall be made in cash at a price equal to 100% of the
principal amount of Notes such holder elects to require the Company to
repurchase, together with accrued interest, if any, to the repurchase
date (the "Repurchase Price") (or, at the option of the Company, by
delivery of Common Stock in accordance with the provisions of Section
16.3); provided, however, that if such repurchase date is May 1 or
November 1, then the interest payable on such date shall be paid to the
holder of record of the Note on the next preceding April 15 or October
15, respectively. No Notes may be redeemed at the option of holders
upon a Repurchase Event if there has occurred and is continuing an
Event of Default, other than a default in the payment of the Repurchase
Price with respect to such Notes on the repurchase date.
Section 16.2 Notices; Method of Exercising Repurchase Right, Etc.
(a) Unless the Company shall have theretofore called for
redemption all of the outstanding Notes, on or before the fifteenth
(15th) calendar day after the occurrence of a Repurchase Event, the
Company or, at the written request of the Company, the Trustee, shall
mail to all holders of record of the Notes a notice (the "Company
Notice") in the form as prepared by the Company of the occurrence of
the Repurchase Event and of the repurchase right set forth herein
arising as a result thereof. The Company shall also deliver a copy of
such notice of a repurchase right to the Trustee and cause a copy of
such notice of a repurchase right, or a summary of the information
contained therein, to be
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published once in a newspaper of general circulation in The City of New
York. The Company Notice shall contain the following information:
(1) the repurchase date,
(2) the date by which the repurchase right must
be exercised,
(3) the last date by which the election to
require repurchase, if submitted, must be revoked;
(4) the Repurchase Price and whether the Repurchase
Price shall be payable in cash or Common Stock and, if payable
in Common Stock, the method of calculating the amount of the
Common Stock to be delivered upon the repurchase as provided
in Section 16.3(a);
(5) a description of the procedure which a holder
must follow to exercise a repurchase right, and
(6) the Conversion Price then in effect, the date on
which the right to convert the principal amount of the Notes
to be repurchased will terminate and the place or places where
Notes may be surrendered for conversion.
No failure of the Company to give the foregoing notices or
defect therein shall limit any holder's right to exercise a repurchase
right or affect the validity of the proceedings for the repurchase of
Notes.
If any of the foregoing provisions are inconsistent with
applicable law, such law shall govern.
(b) To exercise a repurchase right, a holder shall deliver to
the Trustee on or before the thirty-fifth (35th) day after the Company
Notice was delivered (i) written notice to the Company (or agent
designated by the Company for such purpose) of the holder's exercise of
such right, which notice shall set forth the name of the holder, the
principal amount of the Notes to be repurchased, a statement that an
election to exercise the repurchase right is being made thereby, and,
in the event that the Repurchase Price shall be paid in shares of
Common Stock, the name or names (with addresses) in which the
certificate or certificates for shares of Common Stock shall be issued,
and (ii) the Notes with respect to which the repurchase right is being
exercised, duly endorsed for transfer to the Company. Election of
repurchase by a holder shall be revocable at any time prior to, but
excluding, the repurchase date, by delivering written notice to that
effect to the Trustee prior to the close of business on the Business
Day prior to the repurchase date.
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(c) If the Company fails to repurchase on the repurchase date
any Notes (or portions thereof) as to which the repurchase right has
been properly exercised, then the principal of such Notes shall, until
paid, bear interest to the extent permitted by applicable law from the
repurchase date at the rate borne by the Note and each such Note shall
be convertible into Common Stock in accordance with this Indenture
(without giving effect to Section 16.2(b)) until the principal of such
Note shall have been paid or duly provided for.
(d) Any Note which is to be repurchased only in part shall be
surrendered to the Trustee duly endorsed for transfer to the Company
and accompanied by appropriate evidence of genuineness and authority
satisfactory to the Company and the Trustee duly executed by, the
holder thereof (or his attorney duly authorized in writing), and the
Company shall execute, and the Trustee shall authenticate and deliver
to the holder of such Note without service charge, a new Note or Notes,
containing identical terms and conditions, of any authorized
denomination as requested by such holder in aggregate principal amount
equal to and in exchange for the unrepurchased portion of the principal
of the Note so surrendered.
(e) On or prior to the repurchase date, the Company shall
deposit with the Trustee or with a paying agent (or, if the Company is
acting as its own paying agent, segregate and hold in trust as provided
in Section 5.4) the Repurchase Price in cash for payment to the holder
on the repurchase date; provided that if payment is to be made in cash,
such cash payment is made on the repurchase date it must be received by
the Trustee or paying agent, as the case may be, by 10:00 a.m., New
York City time, on such date; provided further that if the Repurchase
Price is to be paid in shares of Common Stock, such shares of Common
Stock are to be paid as promptly after the repurchase date as
practicable.
(f) Any issuance of shares of Common Stock in respect of the
Repurchase Price shall be deemed to have been effected immediately
prior to the close of business on the repurchase date and the person or
persons in whose name or names any certificate or certificates for
shares of Common Stock shall be issuable upon such repurchase shall be
deemed to have become on the repurchase date the holder or holders of
record of the shares represented thereby; provided, however, that any
surrender for repurchase on a date when the stock transfer books of the
Company shall be closed shall constitute the person or persons in whose
name or names the certificate or certificates for such shares are to be
issued as the record holder or holders thereof for all purposes at the
opening of business on the next succeeding day on which such stock
transfer books are open. No payment or adjustment shall be made for
dividends or distributions on any Common Stock issued upon repurchase
of any Security declared prior to the repurchase date.
(g) No fractions of shares shall be issued upon repurchase of
Notes. If more than one Note shall be repurchased from the same holder
and the Repurchase Price shall
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be payable in shares of Common Stock, the number of full shares which
shall be issuable upon such repurchase shall be computed on the basis
of the aggregate principal amount of the Notes so repurchased. Instead
of any fractional share of Common Stock which would otherwise be
issuable on the repurchase of any Note or Notes, the Company will
deliver to the applicable holder its check for the current market value
of such fractional share. The current market value of a fraction of a
share is determined by multiplying the current market price of a full
share by the fraction, and rounding the result to the nearest cent. For
purposes of this Section, the current market price of a share of Common
Stock is the Closing Price of the Common Stock on the Trading Day
immediately preceding the repurchase date.
(h) Any issuance and delivery of certificates for shares of
Common Stock on repurchase of Notes shall be made without charge to the
holder of Notes being repurchased for such certificates or for any tax
or duty in respect of the issuance or delivery of such certificates or
the securities represented thereby; provided, however, that the Company
shall not be required to pay any tax or duty which may be payable in
respect of (i) income of the holder or (ii) any transfer involved in
the issuance or delivery of certificates for shares of Common Stock in
a name other than that of the holder of the Notes being repurchased,
and no such issuance or delivery shall be made unless and until the
person requesting such issuance or delivery has paid to the Company the
amount of any such tax or duty or has established, to the satisfaction
of the Company, that such tax or duty has been paid.
(i) All Notes delivered for repurchase shall be delivered to
the Trustee to be canceled in accordance with the provisions of Section
2.8.
Section 16.3 Conditions to the Company's Election to Pay the Repurchase
Price in Common Stock.
The Company may elect to pay the Repurchase Price by delivery of shares
of Common Stock pursuant to Section 16.1 if and only if the following conditions
shall have been satisfied:
(a) The shares of Common Stock deliverable in payment of the Repurchase
Price shall have a fair market value as of the repurchase date of not less than
the Repurchase Price. For purposes of Section 16.1 and this Section 16.3, the
fair market value of shares of Common Stock shall be determined by the Company
and shall be equal to 95% of the average of the Closing Prices of the Common
Stock for the five consecutive Trading Days immediately preceding and including
the third Trading Day prior to the repurchase date;
(b) The Repurchase Price shall be paid only in cash in the event any
shares of Common Stock to be issued upon repurchase of Notes hereunder (i)
require registration under any federal securities law before such shares may be
freely transferable without being subject to any transfer restrictions under
the Securities Act upon repurchase and if such registration is not
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completed or does not become effective prior to the repurchase date, and/or (ii)
require registration with or approval of any governmental authority under any
state law or any other federal law before such shares may be validly issued or
delivered upon repurchase and if such registration is not completed or does not
become effective or such approval is not obtained prior to the repurchase date;
(c) Payment of the Repurchase Price may not be made in Common Stock
unless such stock is, or shall have been, listed on a national securities
exchange or approved for quotation on the Nasdaq National Market, in either
case, prior to the repurchase date; and
(d) All shares of Common Stock which may be issued upon repurchase of
the Notes will be issued out of the Company's authorized but unissued Common
Stock and, will upon issue, be duly and validly issued and fully paid and
non-assessable and free of any preemptive rights.
If all of the conditions set forth in this Section 16.3 are not
satisfied in accordance with the terms thereof, the Repurchase Price shall be
paid by the Company only in cash.
Section 16.4 Certain Definitions. For purposes of this Article XVI:
(a) the term "beneficial owner" shall be determined in
accordance with Rule 13d-3 and 13d-5, as in effect on the date of the
original execution of this Indenture, promulgated by the Securities and
Exchange Commission pursuant to the Exchange Act;
(b) the term "person" or "group" shall include any syndicate
or group which would be deemed to be a "person" under Section 13(d) and
14(d) of the Exchange Act as in effect on the date of the original
execution of this Indenture; and
(c) the term "Continuing Director" means at any date a member
of the Company's Board of Directors (i) who was a member of such board
on April 24, 1998 or (ii) who was nominated or elected by at least a
majority of the directors who were Continuing Directors at the time of
such nomination or election or whose election to the Company's Board of
Directors was recommended or endorsed by at least a majority of the
directors who were Continuing Directors at the time of such nomination
or election or such lesser number comprising a majority of a nominating
committee if authority for such nominations or elections has been
delegated to a nominating committee whose authority and composition
have been approved by at least a majority of the directors who were
continuing directors at the time such committee was formed. (Under this
definition, if the Board of Directors of the Company as of the date of
this Indenture were to approve a new director or directors and then
resign, no Change in Control would occur even though the current Board
of Directors would thereafter cease to be in office).
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(d) the term "Repurchase Event" means a Change in Control or a
Termination of Trading.
(e) a "Change in Control" shall be deemed to have occurred
when (i) any "person" or "group" (as such terms are used in Sections
13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial
owner" (as defined in Rules 13-d3 and 13-d5 under the Exchange Act) of
shares representing more than 50% of the combined voting power of the
then outstanding securities entitled to vote generally in elections of
directors of the Company (the "Voting Stock"); (ii) approval by
stockholders of the Company of any plan or proposal for the
liquidation, dissolution or winding up of the Company; (iii) the
Company (A) consolidates with or merges into any other corporation or
any other corporation merges into the Company, and in the case of any
such transaction, the outstanding Common Stock of the Company is
changed or exchanged into other assets or securities as a result,
unless the stockholders of the Company immediately before such
transaction own, directly or indirectly immediately following such
transaction, at least 51% of the combined voting power of the
outstanding voting securities of the corporation resulting from such
transaction in substantially the same proportion as their ownership of
the Voting Stock immediately before such transaction, or (B) conveys,
transfers or leases all or substantially all of its assets to any
person; or (iv) any time Continuing Directors do not constitute a
majority of the Board of Directors of the Company (or, if applicable, a
successor corporation to the Company); provided that a Change in
Control shall not be deemed to have occurred if either (x) the Closing
Price (as defined in Section 15.5(h)(1) hereof) of the Common Stock for
any five (5) Trading Days during the ten (10) Trading Days immediately
preceding the Change in Control is at least equal to 105% of the
Conversion Price in effect on the date on which the Change in Control
occurs or (y) in the case of a merger or consolidation otherwise
constituting a Change in Control, at least 90% of the consideration
(excluding cash payments for fractional shares) in such merger or
consolidation constituting the Change in Control consists of common
stock traded on a United States national securities exchange or quoted
on the Nasdaq National Market (or which will be so traded or quoted
when issued or exchanged in connection with such Change in Control) and
as a result of such transaction or transactions such Notes become
convertible solely into such common stock.
(f) a "Termination of Trading" shall have occurred if the
Common Stock (or other common stock into which the Notes are then
convertible) is neither listed for trading on a United States national
securities exchange nor approved for trading on an established
automated over-the-counter trading market in the United States;
provided that if such occurrence is the result of the primary exchange
or market on which such Common Stock was so listed or traded generally
not being available for listing or trading securities, a "Termination
of Trading" shall not have occurred until the Common Stock shall have
continued not to be so listed or not to be so approved for trading for
more than thirty (30) days.
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ARTICLE XVII
MISCELLANEOUS PROVISIONS
Section 17.1 Provisions Binding on Company's Successors. All the
covenants, stipulations, promises and agreements of the Company in this
Indenture contained shall bind its successors and assigns whether so expressed
or not.
Section 17.2 Official Acts by Successor Corporation. Any act or
proceeding by any provision of this Indenture authorized or required to be done
or performed by any board, committee or officer of the Company shall and may be
done and performed with like force and effect by the like board, committee or
officer of any corporation that shall at the time be the lawful sole successor
of the Company.
Section 17.3 Addresses for Notices, Etc. Any notice or demand which by
any provision of this Indenture is required or permitted to be given or served
by the Trustee or by the holders of Notes on the Company shall be deemed to have
been sufficiently given or made, for all purposes if given or served by being
deposited postage prepaid by registered or certified mail in a post office
letter box addressed (until another address is filed by the Company with the
Trustee) to Financial Federal Corporation, 400 Park Avenue, New York, NY 10022,
Attention: Chief Financial Officer. Any notice, direction, request or demand
hereunder to or upon the Trustee shall be deemed to have been sufficiently given
or made, for all purposes, if given or served by being deposited postage prepaid
by registered or certified mail in a post office letter box addressed to the
Corporate Trust Office.
The Trustee, by notice to the Company, may designate additional or
different addresses for subsequent notices or communications.
Any notice or communication mailed to a Noteholder shall be mailed to
him by first class mail, postage prepaid, at his address as it appears on the
Note register and shall be sufficiently given to him if so mailed within the
time prescribed.
Failure to mail a notice or communication to a Noteholder or any defect
in it shall not affect its sufficiency with respect to other Noteholders. If a
notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
Section 17.4 Governing Law. This Indenture and each Note shall be
deemed to be a contract made under the laws of New York, and for all purposes
shall be construed in accordance with the laws of New York (without regard to
the conflict of laws provisions thereof).
Section 17.5 Evidence of Compliance with Conditions Precedent;
Certificates to Trustee. Upon any application or demand by the Company to the
Trustee to take any action under any of the provisions of this Indenture, the
Company shall furnish to the Trustee an
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Officers' Certificate stating that all conditions precedent, if any, provided
for in this Indenture relating to the proposed action have been complied with,
and an Opinion of Counsel stating that, in the opinion of such counsel, all such
conditions precedent have been complied with.
Each certificate or opinion provided for by or on behalf of the Company
in this Indenture and delivered to the Trustee with respect to compliance with a
condition or covenant provided for in this Indenture shall include (1) a
statement that the person making such certificate or opinion has read such
covenant or condition; (2) a brief statement as to the nature and scope of the
examination or investigation upon which the statement or opinion contained in
such certificate or opinion is based; (3) a statement that, in the opinion of
such person, he has made such examination or investigation as is necessary to
enable him to express an informed opinion as to whether or not such covenant or
condition has been complied with; and (4) a statement as to whether or not, in
the opinion of such person, such condition or covenant has been complied with.
Section 17.6 Legal Holidays. In any case where the date of maturity of
interest on or principal of the Notes or the date fixed for redemption of any
Note will not be a Business Day, then payment of such interest on or principal
of the Notes need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made on the date of
maturity or the date fixed for redemption, and no interest shall accrue for the
period from and after such date.
Section 17.7 No Security Interest Created. Nothing in this Indenture or
in the Notes, expressed or implied, shall be construed to constitute a security
interest under the Uniform Commercial Code or similar legislation, as now or
hereafter enacted and in effect, in any jurisdiction.
Section 17.8 Trust Indenture Act. This Indenture is hereby made subject
to, and shall be governed by, the provisions of the Trust Indenture Act required
to be part of and to govern indentures qualified under the Trust Indenture Act;
provided, however, that, unless otherwise required by law, notwithstanding the
foregoing, this Indenture and the Notes issued hereunder shall not be subject to
the provisions of subsections (a)(1), (a)(2), and (a)(3) of Section 314 of the
Trust Indenture Act as now in effect as hereafter amended or modified; provided
further that this Section 17.8 shall not require that this Indenture or the
Trustee be qualified under the Trust Indenture Act prior to the time such
qualification is in fact required under the terms of the Trust Indenture Act,
nor shall it constitute any admission or acknowledgment by any party hereto that
any such qualification is required prior to the time such qualification is in
fact required under the terms of the Trust Indenture Act. If any provision
hereof limits, qualifies or conflicts with another provision hereof which is
required to be included in an indenture qualified under the Trust Indenture Act,
such required provision shall control.
Section 17.9 Benefits of Indenture. Nothing in this Indenture or in the
Notes, expressed or implied, shall give to any person, other than the parties
hereto, any paying agent, any
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authenticating agent, any Note registrar and their successors hereunder, the
holders of Notes and the holders of Senior Indebtedness, any benefit or any
legal or equitable right, remedy or claim under this Indenture.
Section 17.10 Table of Contents, Headings, Etc. The table of contents
and the titles and headings of the articles and sections of this Indenture have
been inserted for convenience of reference only, are not to be considered a part
hereof, and shall in no way modify or restrict any of the terms or provisions
hereof.
Section 17.11 Authenticating Agent. The Trustee may appoint an
authenticating agent which shall be authorized to act on its behalf and subject
to its direction in the authentication and delivery of Notes in connection with
the original issuance thereof and transfers and exchanges of Notes hereunder,
including under Sections 2.4, 2.5, 2.6, 2.7 and 3.3, as fully to all intents and
purposes as though the authenticating agent had been expressly authorized by
this Indenture and those Sections to authenticate and deliver Notes. For all
purposes of this Indenture, the authentication and delivery of Notes by the
authenticating agent shall be deemed to be authentication and delivery of such
Notes "by the Trustee" and a certificate of authentication executed on behalf of
the Trustee by an authenticating agent shall be deemed to satisfy any
requirement hereunder or in the Notes for the Trustee's certificate of
authentication. Such authenticating agent shall at all times be a person
eligible to serve as trustee hereunder pursuant to Section 8.9.
Any corporation into which any authenticating agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any authenticating agent
shall be a party, or any corporation succeeding to the corporate trust business
of any authenticating agent, shall be the successor of the authenticating agent
hereunder, if such successor corporation is otherwise eligible under this
Section, without the execution or filing of any paper or any further act on the
part of the parties hereto or the authenticating agent or such successor
corporation.
Any authenticating agent may at any time resign by giving written
notice of resignation to the Trustee and to the Company. The Trustee may at any
time terminate the agency of any authenticating agent by giving written notice
of termination to such authenticating agent and to the Company. Upon receiving
such a notice of resignation or upon such a termination, or in case at any time
any authenticating agent shall cease to be eligible under this Section, the
Trustee shall promptly appoint a successor authenticating agent (which may be
the Trustee), shall give written notice of such appointment to the Company and
shall mail notice of such appointment to all holders of Notes as the names and
addresses of such holders appear on the Note register.
The Trustee agrees to pay to the authenticating agent from time to time
reasonable compensation for its services (to the extent pre-approved by the
Company in writing), and the Trustee shall be entitled to be reimbursed for such
pre-approved payments, subject to Section 8.6.
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The provisions of Sections 8.2, 8.3, 8.4, 9.3 and this Section 17.11
shall be applicable to any authenticating agent.
Section 17.12 Execution in Counterparts. This Indenture may be executed
in any number of counterparts, each of which shall be an original, but such
counterparts shall together constitute but one and the same instrument.
The First National Bank of Chicago hereby accepts the trusts in this
Indenture declared and provided, upon the terms and conditions hereinabove set
forth.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly signed, and their respective corporate seals to be hereunto affixed and
attested, all as of the date first written above.
FINANCIAL FEDERAL CORPORATION
By:____________________________
Name:
Title:
Attest:
____________________________
Name:
Title:
[seal]
THE FIRST NATIONAL BANK OF
CHICAGO, as Trustee
By:____________________________
Name:
Title:
<PAGE>
This Cross-Receipt may be signed in two (2) counterparts, each of which
shall be deemed to be an original and both of which taken together shall
constitute one and the same agreement.
Dated: April 29, 1998
BANCAMERICA ROBERTSON STEPHENS
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
PIPER JAFFRAY INC.
AND THE ADDITIONAL INITIAL PURCHASERS LISTED ON SCHEDULE A OF
THE PURCHASE AGREEMENT
By: BancAmerica Robertson Stephens
By:
----------------------------
Name:
Title:
Dated: April 29, 1998
FINANCIAL FEDERAL CORPORATION
By:
----------------------------
Name:
Title:
<PAGE>
Exhibit 4.2
4-1/2% CONVERTIBLE SUBORDINATED NOTES DUE 2005
REGISTRATION RIGHTS AGREEMENT
Dated as of April 24, 1998
by and among
FINANCIAL FEDERAL CORPORATION
as the Company,
and
BANCAMERICA ROBERTSON STEPHENS,
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION,
PIPER JAFFRAY INC.,
CIBC OPPENHEIMER CORPORATION,
FRIEDMAN, BILLINGS, RAMSEY & CO., INC.,
SCHRODER & CO. INC.
and
WHEAT, FIRST SECURITIES, INC.
as Purchasers
<PAGE>
This Registration Rights Agreement is made and entered into as of April
24, 1998, by and among Financial Federal Corporation, a Nevada corporation (the
"Company"), and BancAmerica Robertson Stephens, Donaldson, Lufkin & Jenrette
Securities Corporation, Piper Jaffray Inc., CIBC Oppenheimer Corp., Friedman,
Billings, Ramsey & Co., Inc., Schroder & Co. Inc. and Wheat, First Securities,
Inc. (the "Purchasers") who have purchased or have the right to purchase up to
$100,000,000 plus up to an additional $15,000,000 in principal amount to cover
overallotments, if any, in aggregate principal amount of 4-1/2% Convertible
Subordinated Notes due 2005 (the "Notes") of the Company pursuant to the
Purchase Agreement (as such term is defined below).
This Agreement is made pursuant to the Purchase Agreement, dated April
24, 1998, among the Company and the Purchasers (the "Purchase Agreement"). In
order to induce the Purchasers to enter into the Purchase Agreement, the Company
has agreed to provide the registration rights provided for in this Agreement to
the Purchasers and their respective direct and indirect transferees (i) for the
benefit of the Purchasers, (ii) for the benefit of the holders from time to time
of the Notes (including the Purchasers) and the holders from time to time of the
Common Stock issuable or issued upon conversion of the Notes and (iii) for the
benefit of the securities constituting the Transfer Restricted Securities (as
such term is defined in Section 1 hereof). The execution of this Agreement is a
condition to the closing of the transactions contemplated by the Purchase
Agreement.
The parties hereby agree as follows:
1. Definitions. As used in this Agreement, the following terms shall
have the following meanings:
Act: As defined in this Section 1.
Advice: As defined in the last paragraph of Section 2(d) hereof.
Affiliate: An affiliate of any specified person shall mean 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 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 "affiliated," "controlling" and "controlled" have meanings correlative
to the foregoing.
Affiliate Accredited Investor Notes: Notes initially resold by the
Purchasers pursuant to the Purchase Agreement to "accredited investors" (within
the meaning of the Securities Act) who are Affiliates of the Company, and all
Notes issued upon registration or transfer of or in exchange for such Notes.
Agreement: This Registration Rights Agreement, as the same may be
amended, supplemented or modified from time to time in accordance with the terms
hereof.
<PAGE>
Business Day: Each Monday, Tuesday, Wednesday, Thursday and Friday
that is not a day on which banking institutions in New York, New York are
authorized or obligated by law or executive order to close.
Closing Date: April 29, 1998.
Common Stock: Common Stock, $0.50 par value per share, of the
Company and any other shares of common stock as may constitute "Common Stock"
for purposes of the Indenture, in each case, as issuable or issued upon
conversion of the Notes.
Company: Financial Federal Corporation, a Nevada corporation, and
any successor corporation thereto.
controlling person: As defined in Section 6(a) hereof.
Damages Payment Date: Each of the semi-annual interest payment dates
provided in the Indenture.
Effectiveness Period: As defined in Section 2(a) hereof.
Effectiveness Target Date: The 150th day following the Closing Date.
Exchange Act: The Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated by the SEC thereunder.
Filing Date: The 60th day after the Closing Date.
Holder: Each owner of any Transfer Restricted Securities.
Indemnified Person: As defined in Section 6(a) hereof.
Indenture: The Indenture, dated as of April 15, 1998, between the
Company and the Trustee, pursuant to which the Notes are being issued, as the
same may be amended, modified or supplemented from time to time in accordance
with the terms thereof.
Institutional Accredited Investor Notes: Notes initially resold by
the Purchasers pursuant to the Purchase Agreement to institutional "accredited
investors" (within the meaning of Rule 501(a)(1), (2), (3) or (7) promulgated by
the SEC under the Securities Act) and all Notes issued upon registration of
transfer of or in exchange for such Notes.
Liquidated Damages: As defined in Section 3(a) hereof.
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Notes: The $100,000,000 aggregate principal amount of 4-1/2%
Convertible Subordinated Notes due 2005 of the Company being issued pursuant to
the Indenture (together with up to $15,000,000 aggregate principal amount of
such Notes, if, and to the extent, the Purchasers' over-allotment option is
exercised).
Notice and Questionnaire: A written notice delivered to the Company
containing substantially the information called for by the Selling
Securityholder Notice and Questionnaire attached as Annex A to the Offering
Memorandum of the Company dated April 24, 1998 relating to the Notes.
Proceeding: An action, claim, suit or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.
Prospectus: The prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed in reliance upon Rule 430A), as
amended or supplemented by any prospectus supplement, with respect to the resale
of any of the Transfer Restricted Securities covered by such Registration
Statement, and all other amendments and supplements to any such prospectus,
including post-effective amendments, and all materials incorporated by reference
or deemed to be incorporated by reference, if any, in such prospectus.
Purchase Agreement: As defined in the second paragraph hereof.
Purchasers: As defined in the first paragraph hereof.
Record Holder: (i) with respect to any Damages Payment Date relating
to any Note as to which any such Liquidated Damages have accrued, the registered
Holder of such Note on the record date with respect to the interest payment date
under the Indenture on which such Damages Payment Date shall occur and (ii) with
respect to any Damages Payment Date relating to any shares of Common Stock as to
which any such Liquidated Damages have accrued, the registered Holder of such
shares 15 days prior to the next succeeding Damages Payment Date.
Registration Default: As defined in Section 3(a) hereof.
Registration Statement: Any registration statement of the Company
filed with the SEC pursuant to the Securities Act that covers the resale of any
of the Transfer Restricted Securities pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
registration statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto, and all material incorporated by reference or
deemed to be incorporated by reference, if any, in such registration statement.
Requisite Information: As defined in Section 2(c) hereof.
Rule 144: Rule 144 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any successor rule or
regulation.
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Rule 144A: Rule 144A promulgated by the SEC pursuant to the
Securities Act, as such Rule may be amended from time to time, or any successor
rule or regulation.
Rule 144A Notes: Notes initially resold by the Purchasers pursuant
to the Purchase Agreement to "qualified institutional buyers" (as such time is
defined in Rule 144A) and all Notes issued upon registration of transfer of or
in exchange for such Notes.
Rule 158: Rule 158 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any successor rule or
regulation.
Rule 415: Rule 415 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any successor rule or
regulation.
Rule 424: Rule 424 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any successor rule or
regulation.
Rule 430A: Rule 430A promulgated by the SEC pursuant to the
Securities Act, as such Rule may be amended from time to time, or any successor
rule or regulation.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended, and the
rules and regulations promulgated by the SEC thereunder.
Shelf Registration Statement: As defined in Section 2 hereof.
Special Counsel: The special counsel to the Holders.
TIA: The Trust Indenture Act of 1939, as amended, and the rules and
regulations promulgated by the SEC thereunder.
Transfer Restricted Securities: The Institutional Accredited
Investor Notes, the Affiliate Accredited Investor Notes and the Rule 144A Notes,
and the shares of Common Stock into which such Notes are converted or
convertible (including any shares of Common Stock issued or issuable thereon
upon any stock split, stock combination, stock dividend or the like), upon
original issuance thereof, and at all times subsequent thereto, and associated
related rights, if any, until, in the case of any such Note or share (and
associated rights) (i) the date on which the resale thereof has been effectively
registered under the Securities Act and disposed of in accordance with the
Registration Statement relating thereto, (ii) the date on which such security
has been distributed to the public pursuant to Rule 144 or is saleable pursuant
to paragraph (k) of Rule 144 or (iii) the date on which it ceases to be
outstanding, whichever date is earliest.
Trustee: The trustee under the Indenture.
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underwritten registration or underwritten offering: A registration
in connection with which securities of the Company are sold to one or more
underwriters for reoffering to the public pursuant to an effective Registration
Statement.
References herein to the term "Holders of a majority in aggregate
principal amount of Transfer Restricted Securities" or words to a similar effect
shall mean, with respect to any request, notice, demand, objection or other
action by the Holders hereunder or pursuant hereto (each, an "Act"), registered
Holders of a number of shares of then-outstanding Common Stock constituting
Transfer Restricted Securities and an aggregate principal amount of then
outstanding Notes constituting Transfer Restricted Securities, such that the sum
of such shares of Common Stock and the shares of Common Stock issuable upon
conversion of such Notes constitutes in excess of 50% of the sum of all of the
then-outstanding shares of Common Stock constituting Transfer Restricted
Securities and the number of shares of Common Stock issuable upon conversion of
then- outstanding Notes constituting Transfer Restricted Securities. For
purposes of the preceding sentence, Transfer Restricted Securities owned,
directly or indirectly, by the Company or its Affiliates shall be deemed not to
be outstanding.
2. Shelf Registration Statement.
(a) The Company agrees to file with the SEC as soon as reasonably
practicable after the Closing Date, but in no event later than the Filing Date,
a Registration Statement for an offering to be made on a continuous basis
pursuant to Rule 415 covering all of the Transfer Restricted Securities or
separate Registration Statements for an offering to be made on a continuous
basis pursuant to Rule 415 covering all of the Notes constituting Transfer
Restricted Securities and all of the Common Stock constituting Transfer
Restricted Securities, respectively (such Registration Statement or Statements,
collectively, the "Shelf Registration Statement"). Each Shelf Registration
Statement shall be on Form S-3 under the Securities Act or another appropriate
form selected by the Company permitting registration of such Transfer Restricted
Securities for resale by the Holders in the manner or manners reasonably
designated by Holders of a majority in aggregate principal amount of Transfer
Restricted Securities being sold (including, without limitation, up to two
underwritten offerings). The Company shall not permit any securities other than
the Transfer Restricted Securities to be included in any Shelf Registration
Statement. The Company shall use its best efforts to cause each Shelf
Registration Statement to be declared effective pursuant to the Securities Act
as soon as reasonably practicable following the filing thereof and to keep each
Shelf Registration Statement continuously effective under the Securities Act for
two years after the date on which all the Notes are sold (including those sold
pursuant to the over-allotment option granted to the Purchasers in the Purchase
Agreement) to the Purchasers (subject to extension pursuant to Sections 2(d)
hereof) (the "Effectiveness Period"), or such shorter period ending when there
cease to be any Transfer Restricted Securities outstanding.
(b) Supplements and Amendments. The Company shall use its best
efforts to keep each Shelf Registration Statement continuously effective by
supplementing and amending the Shelf Registration Statement if required by the
rules, regulations or instructions applicable to the registration form used for
such Shelf Registration Statement, if required by the Securities Act or if
reasonably requested by the Holders of a majority in aggregate principal amount
of the Transfer
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Restricted Securities or by any underwriter of such Transfer Restricted
Securities; provided, however, that the Effectiveness Period shall be extended
as provided in Section 2(d) hereof.
(c) Selling Securityholder Information. Each Holder of Transfer
Restricted Securities agrees that if such Holder wishes to sell Transfer
Restricted Securities pursuant to a Shelf Registration Statement and related
Prospectus, it will do so only in accordance with this Section 2. Each Holder of
Transfer Restricted Securities wishing to sell Transfer Restricted Securities
pursuant to a Shelf Registration Statement and related Prospectus agrees to
deliver a Notice and Questionnaire that includes such information regarding the
distribution of its Transfer Restricted Securities as is required by law to be
disclosed by the Holder in the applicable Registration Statement ("Requisite
Information") to the Company at least three (3) Business Days prior to any
intended distribution of Transfer Restricted Securities under the Shelf
Registration Statement. From and after the date the Shelf Registration Statement
becomes effective, the Company shall, as promptly as is practicable after the
date a Notice and Questionnaire is delivered, and in any event within five (5)
Business Days after such date, (i) if required by applicable law, file with the
SEC 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 Transfer Restricted Securities
in accordance with applicable law and, if the Company shall file a
post-effective amendment to the Shelf Registration Statement, use its reasonable
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 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 the time a Holder receives a
notice from the Company pursuant to Section 2(d) that the use of the Prospectus
shall be discontinued, 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 such time the use of the Prospectus may be resumed,
provided, further, that if under applicable law the Company 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 reasonably expected to
result in the earliest availability of the Prospectus for effecting resales of
Transfer Restricted Securities.
If any such Registration Statement refers to any Holder by name or
otherwise as the holder of any securities of the Company, then such Holder shall
have the right to require, in the event that such reference to such Holder by
name or otherwise is not required by the Securities Act or any similar Federal
statute then in force, the deletion of the reference to such Holder in such
Registration Statement at any time subsequent to the time that such reference
ceases to be required.
(d) Certain Notices; Suspension of Sales. Each Holder agrees by
acquisition of such Transfer Restricted Securities that, upon receipt of any
notice from the Company of the happening of any event of the kind described in
Section 4(c)(ii), 4(c)(iii), 4(c)(v) or 4(c)(vi) hereof,
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such Holder will forthwith discontinue disposition of such Transfer Restricted
Securities covered by such Registration Statement and Prospectus (other than in
transactions exempt from the registration requirements under the Securities Act)
until such Holder's receipt of the copies of the supplemented or amended
Prospectus contemplated by Sections 4(c)(i) and 4(k) hereof, or until it is
advised in writing (the "Advice") by the Company that the use of the applicable
Prospectus may be resumed, and, in either case, has received copies of any
additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus. If the Company shall give any such
notice, the Effectiveness Period shall be extended by the number of days during
such period from and including the date of the giving of such notice to and
including the date when each Holder shall have been sent (x) the copies of the
supplemented or amended Prospectus contemplated by Sections 4(c)(i) and 4(k)
hereof or (y) the Advice, and, in either case, has been sent copies of any
additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus.
3. Liquidated Damages
(a) The Company and the Purchasers agree that the Holders will
suffer damages if the Company fails to fulfill its obligations pursuant to
Section 2 hereof and that it would not be possible to ascertain the extent of
such damages. Accordingly, the Company hereby agrees to pay liquidated damages
("Liquidated Damages") to each Holder under the circumstances and to the extent
set forth below:
(i) if the Shelf Registration Statement has not been filed
with the SEC on or prior to the Filing Date; or
(ii) if each Shelf Registration Statement is not declared
effective by the SEC on or prior to the applicable Effectiveness
Target Date; or
(iii) any Shelf Registration Statement ceases to be effective or
usable at any time during the Effectiveness Period (without being
succeeded on the same day immediately by a post-effective amendment
or supplement to such Registration Statement that cures such failure
and that is itself, in the case of post-effective amendment,
immediately declared effective) for a period of time which shall
exceed 90 days in the aggregate in any period of 365 consecutive
days;
(any of the foregoing, a "Registration Default"); provided that the fact that a
Shelf Registration Statement is not usable by a particular Holder at any given
time solely as a result of the failure of such Holder to provide Requisite
Information with respect to it shall not be relevant for purposes of clause
(iii) above unless such Holder shall have provided such information to the
Company and the Company shall have failed to file an appropriate Prospectus
supplement or post-effective amendment to the Registration Statement pursuant to
Section 2(c) hereof. In the event of any such Registration Default, the Company
shall accrue Liquidated Damages to each Holder during the first 90-day period
immediately in an amount equal to $.05 per week per $1,000 principal amount of
Notes held by such Holder and, if applicable, on an equivalent basis per share
(subject to adjustment in the event of any stock split, stock combination, stock
dividends and the like) of Common Stock constituting Transfer
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Restricted Securities held by such Holder for each week or portion thereof that
the Registration Default continues. The weekly rate at which such Liquidated
Damages accrue shall increase by an additional $.05 per $1,000 principal amount
of Notes and, if applicable, an equivalent amount per week per share (subject to
adjustment as set forth above) of Common Stock constituting Transfer Restricted
Securities for each subsequent continuing 90-day period following the occurrence
of such Registration Default until all Registration Defaults have been cured;
provided, however, that Liquidated Damages shall not at any time exceed $.25 per
week per $1,000 principal amount of Notes or, as applicable, an equivalent
amount per week per share (subject to adjustment as set forth above) of Common
Stock constituting Transfer Restricted Securities. Following the cure of all
Registration Defaults, the accrual of Liquidated Damages shall cease (without in
any way limiting the effect of any subsequent Registration Default). A
Registration Default under clause (i) above shall be cured on the date that the
applicable Shelf Registration Statement is filed with the SEC; a Registration
Default under clause (ii) above shall be cured on the date that the applicable
Shelf Registration Statement is declared effective by the SEC; and a
Registration Default under clause (iii) above shall be cured on the date the
applicable Shelf Registration Statement is declared effective or otherwise
usable.
(b) The Company shall notify the Trustee within one Business Day
after each and every date on which a Registration Default occurs. Liquidated
Damages shall be paid by the Company to the Record Holders on each Damages
Payment Date in the same manner as interest is paid under the Indenture, in the
case of the Notes, and by mailing checks to their registered addresses in the
register of the Company for the Common Stock, in the case of shares of Common
Stock; provided, however, that any Liquidated Damages accrued with respect to
any Note or portion thereof called for redemption on a redemption date,
repurchased in connection with a Repurchase Event (as defined in the Indenture)
on a repurchase date, or converted into shares of 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 Note or portion thereof for redemption,
repurchase or conversion on the applicable redemption date, repurchase date or
conversion date, as the case may be, on such date (promptly following the
conversion date, in the case of conversion of a Note). In no event shall the
Company be required to pay Liquidated Damages in excess of the applicable
maximum weekly amount set forth above, regardless of whether one or multiple
Registration Defaults shall exist.
(c) All of the Company's obligations set forth in this Section 3
which are unsatisfied to any extent with respect to any Transfer Restricted
Securities at the time such security ceases to be a Transfer Restricted Security
shall survive until such time as all such obligations with respect to such
security have been satisfied in full (notwithstanding the earlier termination of
this Agreement).
(d) Any payments due and payable pursuant to this Section 3 with
respect to any Notes shall be subject to the provisions of Article IV of the
Indenture as if such payments were additional interest on the Notes.
4. Registration Procedures. In connection with the Company's
registration obligations hereunder, the Company shall effect such registrations
on the appropriate form selected by the Company to permit the resale of Transfer
Restricted Securities in accordance with the intended
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method or methods of disposition thereof, and pursuant thereto the Company shall
as expeditiously as reasonably possible:
(a) No fewer than five Business Days prior to the initial filing of
a Registration Statement or Prospectus and no fewer than two Business Days prior
to the filing of any amendment or supplement thereto (excluding any document
that would be incorporated or deemed to be incorporated therein by reference),
furnish to the registered (as of the most recent reasonably practicable date
which shall not be more than two Business Days prior to the date such document
is personally delivered, delivered to a next-day courier, deposited in the mail
or telecopied, as the case may be) Holders, Special Counsel and the managing
underwriters, if any, copies of all such documents proposed to be filed
(excluding those incorporated or deemed to be incorporated by reference) and
cause the officers and directors of the Company, counsel to the Company and
independent certified public accountants to the Company to respond to such
inquiries as shall be necessary in connection with such Registration Statement,
in the opinion of Special Counsel and counsel to such underwriters, to conduct a
reasonable investigation within the meaning of the Securities Act; provided,
that the Company shall be under no obligation to furnish copies of any
supplement to the Registration Statement or Prospectus containing the
information specified in Item 507 of Regulation S-K relating solely to the sale
by a single Holder other than the Holder named therein. The Company shall not
file any such Registration Statement or related Prospectus or any amendments or
supplements thereto to which the Holders of a majority in aggregate principal
amount of the Transfer Restricted Securities, Special Counsel, or the managing
underwriters, if any, shall reasonably object in writing on a timely basis;
provided, that the Company may assume, for the purposes of this subparagraph
(a), that objections to the inclusion of information specifically requested to
be included in the Registration Statement by the staff of the SEC, or in a
written opinion of counsel to the Company required to be in the Registration
Statement, or specifically required by the Securities Act or other applicable
law, shall not be deemed to be reasonable;
(b) Prepare and file with the SEC such amendments, including
post-effective amendments, to each Registration Statement as may be necessary to
keep such Registration Statement continuously effective for the applicable time
period set forth in Section 2(a) hereof; cause the related Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented to be
filed pursuant to Rule 424 under the Securities Act and the Exchange Act with
respect to the disposition of all securities covered by such Registration
Statement during such period in accordance with the intended method or methods
of disposition by the Holder set forth in such Registration Statement as so
amended or in such Prospectus as so supplemented (including, without limitation,
the filing of any Prospectus supplement pursuant to Rule 424 in order to add or
change any selling security holder information (including any such supplements
or amendments pursuant to Section 2(c) hereof, provided such Holder to which
such change applies complies with the Requisite Information requirements of
Section 2(c) hereof));
(c) Notify the registered (as of the most recent reasonably
practicable date which shall not be more than two Business Days prior to the
date such notice is personally delivered, delivered to a next-day courier,
deposited in the mail or telecopied, as the case may be) Holders, Special
Counsel and the managing underwriters, if any, promptly (and in the case of an
event specified by clause (i)(A) of this paragraph in no event fewer than two
Business Days prior to such
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filing), and (if requested by any such person), confirm such notice in writing,
(i)(A) when a Prospectus or any Prospectus supplement or post-effective
amendment is proposed to be filed, and, (B) with respect to a Registration
Statement or any post-effective amendment, when the same has become effective,
(ii) of any request of the SEC or any other Federal or state governmental
authority for amendments or supplements to such Registration Statement or
related Prospectus or for additional information related thereto, (iii) of the
issuance by the SEC, any state securities commission, any other governmental
agency or any court of any stop order, order or injunction suspending or
enjoining the use or the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose, (iv) if at any time any of the
representations and warranties of the Company contained in any agreement
(including any underwriting agreement) contemplated by Section 4(m) hereof are
not true and correct in all material respects, (v) of the receipt by the Company
of any notification with respect to the suspension of the qualification or
exemption from qualification of any of the Transfer Restricted Securities for
sale in any jurisdiction, or the initiation or threatening of any proceeding for
such purpose, and (vi) of the existence of any fact and the happening of any
event that makes any statement made in such Registration Statement or related
Prospectus untrue in any material respect, or that requires the making of any
changes in such Registration Statement or Prospectus so that in the case of the
Registration Statement, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading and that, in the case of
the Prospectus, such Prospectus will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading;
(d) Use all reasonable efforts to avoid the issuance of, or, if
issued, obtain the withdrawal of any stop order or order enjoining or suspending
the use or effectiveness of a Registration Statement or the lifting of any
suspension of the qualification (or exemption from qualification) of any of the
Transfer Restricted Securities for sale in any jurisdiction, at the earliest
practicable moment;
(e) If requested by the Special Counsel, the managing underwriters,
if any, or the Holders of a majority in aggregate principal amount of the
Transfer Restricted Securities being sold in connection with such offering, (i)
promptly include in a Prospectus supplement or post-effective amendment such
information as the Special Counsel, the managing underwriters, if any, and such
Holders agree should be included therein, and (ii) make all required filings of
such Prospectus supplement or such post-effective amendment as soon as
reasonably practicable after the Company has received notification of the
matters to be included in such Prospectus supplement or post-effective
amendment; provided, however, that the Company shall not be required to take any
action pursuant to this Section 4(e) that would, in the opinion of counsel for
the Company, violate applicable law or which is not reasonably required to
comply with applicable securities laws;
(f) Furnish to each Holder who so requests, Special Counsel and each
managing underwriter, if any, without charge, at least one conformed copy of
each Registration Statement and each amendment thereto, including financial
statements (but excluding schedules, all documents incorporated or deemed to be
incorporated therein by reference and all exhibits, unless requested in writing
by such Holder, Special Counsel or managing underwriter);
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(g) Deliver to each Holder, the Special Counsel, and the
underwriters, if any, without charge, as many copies of the Prospectus or
Prospectuses (including each form of Prospectus) and each amendment or
supplement thereto to as such persons may reasonably request; and, unless the
Company shall have given notice to such Holder pursuant to Section 4(c)(vi), the
Company hereby consents to the use of such Prospectus and each amendment or
supplement thereto by each of the selling Holders of Transfer Restricted
Securities and the underwriters, if any, in connection with the offering and
sale of the Transfer Restricted Securities covered by such Prospectus and any
amendment or supplement thereto, provided, however, that no Holder shall be
entitled to use the Prospectus unless and until such Holder shall have furnished
to the Company any and all Requisite Information pursuant to Section 2(c)
hereof;
(h) Use all reasonable efforts to register or qualify, or cooperate
with the Holders of Transfer Restricted Securities to be sold or tendered for,
the underwriters, if any, and their respective counsel in connection with the
registration or qualification (or exemption from such registration or
qualification) of, such Transfer Restricted Securities for offer and sale under
the securities or Blue Sky laws of such jurisdictions within the United States
as any Holder or underwriter reasonably requests in writing, keep each such
registration or qualification (or exemption therefrom) effective during the
period such Registration Statement is required to be kept effective and do any
and all other acts or things necessary legally to enable the disposition in such
jurisdictions of the Transfer Restricted Securities covered by the applicable
Registration Statement; provided, however, that the Company shall not be
required to qualify generally to do business in any jurisdiction where it is not
then so qualified, take any action that would subject it to general service of
process in any such jurisdiction where it is not then so subject or subject the
Company to any tax in any such jurisdiction where it is not then so subject;
(i) In connection with any sale or transfer of Transfer Restricted
Securities that will result in such securities no longer being Transfer
Restricted Securities, cooperate with the Holders and the managing underwriters,
if any, to (A) facilitate the timely preparation and delivery of certificates
representing Transfer Restricted Securities to be sold, which certificates shall
not bear any restrictive legends, shall bear a CUSIP number different from the
CUSIP number for the Transfer Restricted Securities and shall be in a form
eligible for deposit with The Depository Trust Company and (B) enable such
Transfer Restricted Securities to be in such denominations and registered in
such names as the managing underwriters, if any, or Holders may reasonably
request at least two Business Days prior to any sale of Transfer Restricted
Securities;
(j) Use all reasonable efforts to cause the offering of the Transfer
Restricted Securities covered by the Registration Statement to be registered
with or approved by such other governmental agencies or authorities within the
United States, except as may be reasonably required as a consequence of the
nature of a Holder's business, in which case the Company will cooperate in all
reasonable respects with the filing of such Registration Statement and the
granting of such approvals as may be reasonably necessary to enable the seller
or sellers thereof or the underwriters, if any, to consummate the disposition of
such Transfer Restricted Securities; provided, however, that the Company shall
not be required to register the Transfer Restricted Securities in any
jurisdiction that would require the Company to qualify to do business in any
jurisdiction where it is not then so qualified, subject it to general service of
process in any such jurisdiction where it is not then so
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subject or subject the Company to any tax in any such jurisdiction where it is
not then so subject or to;
(k) Upon the occurrence of any event contemplated by Section
4(c)(vi) hereof, as promptly as reasonably practicable, prepare a supplement or
amendment, including, if appropriate, a post-effective amendment, to each
Registration Statement or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, and file any
other required document so that, as thereafter delivered, such Prospectus will
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,
in light of the circumstances under which they were made, not misleading;
(l) Prior to the effective date of the first Registration Statement
relating to the Transfer Restricted Securities, to provide a CUSIP number for
the Transfer Restricted Securities to be sold pursuant to the Registration
Statement;
(m) Enter into such agreements (including an underwriting agreements
in form, scope and substance as are customary in underwritten offerings)
reasonably satisfactory to the Company and take all such other reasonable
actions in connection therewith (including those reasonably requested by the
managing underwriters, if any, or the Holders of a majority in aggregate
principal amount of the Transfer Restricted Securities being sold) in order to
expedite or facilitate the sale of such Transfer Restricted Securities;
provided, however, that the Company is not required to facilitate an
underwritten public offering unless a request therefor shall have been made by
the Holders of a majority in aggregate principal amount of the Transfer
Restricted Securities being sold, and in any event, that the Company is required
to facilitate no more than two underwritten offerings. In such connection,
whether or not an underwriting agreement is entered into and whether or not the
registration is an underwritten registration, (i) make such representations and
warranties to the Holders of such Transfer Restricted Securities and the
underwriters, if any, with respect to the business of the Company and its
subsidiaries (including with respect to businesses or assets acquired or to be
acquired by any of them), and the Registration Statement, Prospectus and
documents, if any, incorporated or deemed to be incorporated by reference
therein, in each case, in form, substance and scope as are customarily made by
issuers to underwriters in underwritten offerings and reasonably acceptable to
the Company, and confirm the same if and when requested; (ii) seek to obtain
opinions of counsel to the Company and updates thereof (which counsel and
opinions (in form, scope and substance) shall be reasonably satisfactory to the
managing underwriters, if any, and Special Counsel to the Holders of the
Transfer Restricted Securities being sold, addressed to each selling Holder of
Transfer Restricted Securities and each of the underwriters, if any, covering
the matters customarily covered in opinions requested in underwritten offerings
(including any such matters as may be reasonably requested by such Special
Counsel and underwriters); (iii) use all reasonable efforts to obtain customary
"cold comfort" letters and updates thereof from the independent certified public
accountants of the Company (and, if necessary, any other independent certified
public accountants of any subsidiary of the Company or of any business acquired
by the Company for which financial statements and financial data is, or is
required to be, included in the Registration Statement), addressed (where
reasonably possible) to each selling Holder of Transfer Restricted Securities
and each of the underwriters, if any, such letters to be in customary form and
covering matters of the type
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customarily covered in "cold comfort" letters in connection with underwritten
offerings; (iv) if an underwriting agreement is entered into, the same shall
contain indemnification provisions and procedures no less favorable to the
selling Holders of Transfer Restricted Securities and the underwriters, if any,
than those set forth in Section 6 hereof (or such other provisions and
procedures acceptable to Holders of a majority in aggregate principal amount of
the Transfer Restricted Securities covered by such Registration Statement and
the managing underwriters); and (v) deliver such documents and certificates as
may be reasonably requested by the Holders of majority in aggregate principal
amount of the Transfer Restricted Securities being sold, their Special Counsel
or the managing underwriters, if any, to evidence the continued validity of the
representations and warranties made pursuant to clause (i) of this Section 4(m)
and to evidence compliance with any customary conditions contained in the
underwriting agreement or other agreement entered into by the Company;
(n) Make available for inspection by a representative of the Holders
of Transfer Restricted Securities being sold, any underwriter participating in
any such disposition of Transfer Restricted Securities, if any, and any
attorney, consultant or accountant retained by such selling Holders or
underwriter, at the offices where normally kept, during reasonable business
hours, all financial and other records, pertinent corporate documents and
properties of the Company and its subsidiaries as they may reasonably request,
and cause the officers, directors, agents and employees of the Company and its
subsidiaries to supply all information in each case reasonably requested by any
such representative, underwriter, attorney, consultant or accountant in
connection with such Registration Statement, provided, however, that such
persons shall first agree in writing with the Company that any information that
is reasonably and in good faith designated by the Company in writing as
confidential at the time of delivery or inspection (as the case may be) of such
information shall be kept confidential by such persons, unless (i) disclosure of
such information is required by court or administrative order or is necessary to
respond to inquiries of regulatory authorities, (ii) disclosure of such
information is required by law (including any disclosure requirements pursuant
to Federal securities laws in connection with the filing of any Registration
Statement or the use of any Prospectus), (iii) such information becomes
generally available to the public other than as a result of a disclosure or
failure to safeguard by any such person or (iv) such information becomes
available to any such person from a source other than the Company and such
source is not bound by a confidentiality agreement.
(o) Cause the Indenture to be qualified under the TIA not later than
the effective date of the first Registration Statement relating to the Transfer
Restricted Securities; and in connection therewith, cooperate with the Trustee
and the Holders of Notes constituting Transfer Restricted Securities to effect
such changes to the Indenture, if any, as may be required for such Indenture to
be so qualified in accordance with the terms of the TIA; and execute, and use
its best efforts to cause the Trustee to execute, all customary documents as may
be required to effect such changes, and all other forms and documents (including
Form T-1) required to be filed with the SEC to enable the Indenture to be so
qualified under the TIA in a timely manner.
(p) Comply with applicable rules and regulations of the SEC and make
generally available to its security holders earning statements satisfying the
provisions of Section 11(a) of the Securities Act or Rule 158 (or any similar
rule promulgated under the Securities Act), no later than
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45 days after the end of any 12-month period (or 90 days after the end of any
12-month period if such period is a fiscal year) (i) commencing at the end of
any fiscal quarter in which Transfer Restricted Securities are sold to
underwriters in a firm commitment or best efforts underwritten offering and (ii)
if not sold to underwriters in such an offering, commencing on the first day of
the first fiscal quarter after the effective date of a Registration Statement,
which statement shall cover said period, consistent with the requirements of
Rule 158; and
(q) (i) list all shares of Common Stock covered by such Registration
Statement on any securities exchange on which the Common Stock is then listed or
(ii) authorize for quotation on the National Association of Securities Dealers
Automated Quotation System ("Nasdaq") or the National Market of Nasdaq all
Common Stock covered by such Registration Statement if the Common Stock is then
so authorized for quotation.
5. Registration Expenses.
(a) All fees and expenses incident to the performance of or
compliance with this Agreement by the Company shall be borne by it whether or
not any Registration Statement is filed or becomes effective and whether or not
any securities are offered or sold pursuant to any Registration Statement. The
fees and expenses referred to in the foregoing sentence shall include, without
limitation, (i) all registration and filings fees (including, without
limitation, fees and expenses (A) with respect to filings required to be made
with the National Association of Securities Dealers, Inc. and (B) in compliance
with securities or Blue Sky laws (including, without limitation and in addition
to that provided for in (b) below, reasonable fees and disbursements of counsel
for the underwriters or the Special Counsel in connection with Blue Sky
qualifications of the Transfer Restricted Securities and determination of the
eligibility of the Transfer Restricted Securities for investment under the laws
of such jurisdictions as the managing underwriters, if any, or Holders of a
majority in aggregate principal amount of Transfer Restricted Securities, may
designate, (ii) printing expenses (including, without limitation, expenses of
printing certificates for Transfer Restricted Securities in a form eligible for
deposit with The Depository Trust Company and of printing Prospectuses if the
printing of Prospectuses is required by the managing underwriters, if any, or by
the Holders of a majority in aggregate principal amount of the Transfer
Restricted Securities included), (iii) messenger, telephone and delivery
expenses of the Company, (iv) fees and disbursements of counsel for the Company
and reasonable fees (not to exceed $15,000) and disbursements of the Special
Counsel (including with respect to any Blue Sky qualifications and investments
eligibility determinations, as set forth in (i) above) in accordance with the
provisions of Section 5(b) hereof, (v) fees and disbursements of all independent
certified public accountants referred to in Section 4(m)(iii) (including,
without limitation, the expenses of any special audit and "comfort" letters
required by or incident to such performance), (vi) Securities Act liability
insurance, if the Company so desires such insurance, and (vii) fees and expenses
of all other persons retained by the Company. In addition, the Company shall pay
its internal expenses (including, without limitation, all salaries and expenses
of its officers and employees performing legal or accounting duties), the
expense of an annual audit and the fees and expenses incurred in connection with
the listing of the securities to be registered on any securities exchange or the
Nasdaq or the Nasdaq National Market. Notwithstanding anything in this Agreement
to the contrary, each Holder shall pay
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all underwriting discounts and brokerage commissions with respect to any
Transfer Restricted Securities sold by it.
(b) In connection with any registration hereunder, the Company shall
reimburse the Holders of the Transfer Restricted Securities being registered or
tendered for in such registration for the reasonable fees (within the limit as
set forth in paragraph (a) of this section 5) and disbursements of not more than
one firm of attorneys representing the selling Holders, which firm shall be
chosen by the Holders of a majority in aggregate principal amount of the
Transfer Restricted Securities. Wilson Sonsini Goodrich & Rosati shall be
Special Counsel for all purposes hereof unless and until another Special Counsel
shall have been selected by a majority in aggregate principal amount of the
Transfer Restricted Securities and notice hereof shall have been given to the
Company.
6. Indemnification.
(a) The Company agrees to indemnify and hold harmless (i) each of
the Purchasers, (ii) each Holder, (iii) each person, if any, who controls
(within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) any of the foregoing (any of the persons referred to in this
clause (iii) being hereinafter referred to as a "controlling person"), and (iv)
the respective officers, directors, partners, employees, representatives and
agents of the Purchasers, the Holders (including predecessor Holders), or any
controlling person (any person referred to in clause (i), (ii), (iii) or (iv)
may hereinafter be referred to as an "Indemnified Person"), from and against any
and all losses, claims, damages, liabilities, expenses and judgments caused by
any untrue statement or alleged untrue statement of a material fact contained in
any Registration Statement or Prospectus or in any amendment or supplement
thereto or in any preliminary Prospectus, or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of any Prospectus or
supplement thereto, in light of the circumstances under which they were made)
not misleading, except insofar as such losses, claims, damages, liabilities,
expenses or judgments are caused by any such untrue statement or omission or
alleged untrue statement or omission based upon information relating to any
Indemnified Person furnished to the Company by or on behalf of such Indemnified
Person expressly for use therein; provided, however, that the foregoing
indemnity with respect to any preliminary Prospectus shall not inure to the
benefit of any Indemnified Person from whom the person asserting such losses,
claims, damages, liabilities, expenses and judgments purchased securities if
such untrue statement or omission or alleged untrue statement or omission made
in such preliminary Prospectus is eliminated or remedied in the Prospectus and a
copy of the Prospectus shall not have been furnished to such person in a timely
manner due to the wrongful action or wrongful inaction of such Indemnified
Person, whether as a result of negligence or otherwise.
(b) In case any action shall be brought against any Indemnified
Person, based upon any Registration Statement or any such Prospectus or any
amendment or supplement thereto and with respect to which indemnity may be
sought against the Company, such Indemnified Person shall promptly notify the
Company in writing and the Company shall assume the defense thereof, including
the employment of counsel reasonably satisfactory to such Indemnified Person and
payment of all fees and expenses. Any Indemnified Person shall have the right to
employ separate
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counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Person,
unless (i) the employment of such counsel shall have been specifically
authorized in writing by the Company, (ii) the Company shall have failed to
assume the defense and employ counsel or (iii) such Indemnified Person or
Persons shall have been advised by counsel that there may be a conflict between
the positions of the indemnifying party or parties and of the indemnified party
or parties in conducting the defense of such action or proceeding or that there
may be legal defenses available to such Indemnified Person or Persons different
from or in addition to those available to the indemnifying party or parties (in
which case the Company shall not have the right to assume the defense of such
action on behalf of such Indemnified Person, it being understood, however, that
the Company shall not, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the fees and
expenses of more than one separate firm of attorneys (in addition to any local
counsel) for all such Indemnified Persons, which firm shall be designated in
writing by such Indemnified Persons, and that all such fees and expenses shall
be reimbursed as they are incurred). The Company shall not be liable for any
settlement of any such action effected without its written consent but if
settled with the written consent of the Company, the Company agrees to indemnify
and hold harmless any Indemnified Person from and against any loss or liability
by reason of such settlement. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any pending
or threatened proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
(c) In connection with any Registration Statement pursuant to which
any Holder (or predecessor Holder) sold or offered for resale Transfer
Restricted Securities, such Holder (or predecessor Holder) agrees, severally and
not jointly, to indemnify and hold harmless the Company, its directors, its
officers and any person controlling the Company within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act, to the same extent as
the foregoing indemnity from the Company to each Indemnified Person but only
with reference to information relating to such Indemnified Person furnished by
or on behalf of such Indemnified Person expressly for use in such Registration
Statement. In case any action shall be brought against the Company, any of its
directors, any such officer or any person controlling the Company based on such
Registration Statement and in respect of which indemnity may be sought against
any Indemnified Person, the Indemnified Person shall have the rights and duties
given to the Company (except that if the Company shall have assumed the defense
thereof, such Indemnified Person shall not be required to do so, but may employ
separate counsel therein and participate in defense thereof but the fees and
expenses of such counsel shall be at the expense of such Indemnified Person),
and the Company, its directors, any such officers and any person controlling the
Company shall have the rights and duties given to the Indemnified Person by
Section 6(b) hereof.
(d) If the indemnification provided for in this Section 6 is
unavailable to an indemnified party in respect of any losses, claims, damages,
liabilities, expenses or judgments referred to therein, then each indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
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claims, damages, liabilities, expenses and judgments (i) in such proportion as
is appropriate to reflect the relative benefits received by the Company on the
one hand and each Indemnified Person on the other hand pursuant tot he Purchase
Agreement or from the offering for resale of the Transfer Restricted Securities
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company and each such Indemnified Person in connection with the statements
or omissions which resulted in such losses, claims, damages, liabilities,
expenses or judgments, as well as any other relevant equitable considerations.
The relative fault of the Company and each such Indemnified Person shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the Company or such Indemnified Person and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission.
The Company, the Holders and the Purchasers agree that it would not
be just and equitable if contribution pursuant to this Section 6(d) were
determined by pro rata allocation (even if the Indemnified Person were treated
as one entity for such purpose) or by any other method of allocation which does
not take account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities, expenses or judgments
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 6, no Indemnified Person shall be required to contribute any amount in
excess of the amount by which the total net profit received by it in connection
with the sale of the Transfer Restricted Securities pursuant to this Agreement
exceeds the amount of any damages which such Indemnified Person has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Indemnified Persons' obligations to contribute pursuant
to this Section 6(d) are several in proportion to the respective amount of
Transfer Restricted Securities included in and sold pursuant to any such
Registration Statement by each Indemnified Person and not joint.
7. Rules 144 and 144A.
The Company shall to file the reports required to be filed by it
under the Securities Act and the Exchange Act in a timely manner and, if at any
time it is not required to file such reports but in the past had been required
to or did file such reports, it will, upon the request of any Holder, make
available other information as required by, and so long as necessary to permit
sales of, its Transfer Restricted Securities pursuant to Rule 144 and Rule 144A.
Notwithstanding the foregoing, nothing in this Section 7 shall be deemed to
require the Company to register any of its securities pursuant to the Exchange
Act.
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<PAGE>
8. Underwritten Registrations.
If any of the Transfer Restricted Securities covered by any Shelf
Registration Statement are to be sold in an underwritten offering, the
investment banker or investment bankers and manager or managers that will
administer the offering will be investment bankers of recognized national
standing selected by the Holders of a majority in aggregate principal amount of
such Transfer Restricted Securities included in such offering, subject to the
consent of the Company (which will not be unreasonably withheld or delayed).
No person may participate in any underwritten registration
hereunder unless such person (i) agrees to sell such person's Transfer
Restricted Securities on the basis reasonably provided in any underwriting
arrangements approved by the persons entitled hereunder to approve such
arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities underwriting agreements, lock-up agreements and other
documents reasonably required under the terms of such underwriting arrangements.
9. Miscellaneous.
(a) Remedies. In the event of a breach by the Company or by a Holder
of any of their respective obligations under this Agreement, each Holder or the
Company, in addition to being entitled to exercise all rights granted by law,
including, without limitation, recovery of damages, will be entitled to specific
performance of its rights under this Agreement. The Company and each Holder
agree that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by it of any of the provisions of this Agreement
and hereby further agree that, in the event of any action for specific
performance in respect of such breach, they shall waive the defense that a
remedy at law would be adequate. This Section 9(a) shall not apply to any breach
for which Liquidated Damages have been specifically provided hereunder.
(b) No Inconsistent Agreements. The Company shall not enter into any
agreement with respect to its securities that is inconsistent with the rights
granted to the Holders in this Agreement or otherwise conflicts with the
provisions hereof. The Company is not currently a party to any agreement
granting any registration rights with respect to any of its securities to any
person which conflicts with the Company's obligations hereunder or gives any
other party the right to include any securities in any Registration Statement
filed pursuant hereto, except for such rights and conflicts as have been
irrevocably waived. Without limiting the generality of the foregoing, without
the written consent of the Holders of a majority in aggregate principal amount
of the Transfer Restricted Securities, the Company shall not grant to any person
the right to request it to register any of its securities under the Securities
Act unless the rights so granted are subject in all respect to the prior rights
of the Holders set forth herein, and are not otherwise in conflict or
inconsistent with the provisions of this Agreement.
(c) No Adverse Action Affecting the Transfer Restricted Securities
The Company will not take any action with respect to the Transfer Restricted
Securities which would adversely affect the ability of any of the Holders to
include such Transfer Restricted Securities in a registration undertaken
pursuant to this Agreement.
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(d) No Piggyback on Registrations. After the date hereof, the
Company shall not grant to any of its security holders (other than
the Holders in such capacity) the right to include any of its
securities in any Shelf Registration Statement.
(e) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from
the provisions hereof, may not be given, without the written consent
of the Holders of a majority in aggregate principal amount of the
Transfer Restricted Securities; provided, however, that, for the
purposes of this Agreement, Transfer Restricted Securities that are
owned, directly or indirectly, by either the Company or an Affiliate
of the Company are not deemed outstanding. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof
with respect to a matter that relates exclusively to the rights of
Holders whose Transfer Restricted Securities are being sold pursuant
to an underwritten offering and that does not directly or indirectly
affect the rights of other Holders may be given by Holders of a
majority in aggregate principal amount of the Transfer Restricted
Securities being sold by such Holders pursuant to such an
underwritten offering; provided, however, that the provisions of
this sentence may not be amended, modified, or supplemented except
in accordance with the provisions of the immediately preceding
sentence.
(f) Notices. All notices and other communications provided for
herein shall be made in writing by hand-delivery, next day air
courier, certified first-class mail, return receipt requested or
telecopy:
(i) if to a Holder, to the address of such Holder as it appears
in the Note or Common Stock register of the Company, as
applicable;
(ii) if to the Company, to:
Financial Federal Corporation
8th Floor
New York, NY 10022
(212) 888-3344
Attn: General Counsel
Telecopy No.: (212) 888 0695
with a copy to:
Orrick, Herrington & Sutcliffe LLP
666 Fifth Avenue
New York, NY 10103
Attn: Lawrence B. Fisher
Telecopy No.: (212) 506-5151
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<PAGE>
(iii) if to the Special Counsel, to:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304
Attn: John A. Fore, Esq.
Telecopy No.: (650) 493-6811
or such other Special Counsel at such other address and telecopy
number as a majority in aggregate principal amount of the
Transfer Restricted Securities shall have given notice to the
Company as contemplated by Section 5(b) hereof.
Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given, when delivered by hand,
if personally delivered; one Business Day after being timely delivered to a
next-day air courier, five Business Days after being deposited in the mail,
postage prepaid, if mailed; and when receipt is acknowledged by the recipient's
telecopier machine, if telecopied.
(g) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of each of
the parties and shall inure to the benefit of each existing and future Holder.
The Company may not assign its rights or obligations hereunder without the prior
written consent of the Holders of a majority in aggregate principal amount of
the Transfer Restricted Securities, other than by operation of law pursuant to a
merger or consolidation to which the Company is a party. In the event the Notes
constituting Transfer Restricted Securities become convertible into common stock
of another person pursuant to Section 15.6 of the Indenture, the Company shall
cause such person to assume the Company's obligations hereunder.
(h) Counterparts. This Agreement may be executed in any number of
counterparts by the parties hereto, 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 instrument.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.
(j) Severability. The remedies provided herein are cumulative and
not exclusive of any remedies provided by law. If any term, provision, covenant
or restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
the parties hereto shall use their best efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
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<PAGE>
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
(k) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof. All
references made in this Agreement to "Section" and "paragraph" refer to such
Section or paragraph of this Agreement, unless expressly stated otherwise.
(l) Attorneys' Fees. In any action or proceeding brought to enforce
any provision of this Agreement, or where any provision hereof is validly
asserted as a defense, the prevailing party, as determined by the court, shall
be entitled to recover its reasonable attorneys' fees in addition to any other
available remedy.
{Remainder of page intentionally left blank}
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IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of the date first written above.
FINANCIAL FEDERAL CORPORATION
By:______________________________________
Name:____________________________________
Title:___________________________________
The foregoing Registration Rights Agreement
is hereby confirmed and agreed to as of the
date first written above:
BANCAMERICA ROBERTSON STEPHENS
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
PIPER JAFFRAY INC.
CIBC OPPENHEIMER CORPORATION
FRIEDMAN, BILLINGS, RAMSEY & CO., INC.
SCHRODER & CO. INC.
WHEAT, FIRST SECURITIES, INC.
By: BANCAMERICA ROBERTSON STEPHENS
Acting on behalf of itself and the other Purchasers
By: /s/
---------------------------------------------
Authorized Signatory
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<PAGE>
FINANCIAL FEDERAL CORPORATION
4 1/2% CONVERTIBLE SUBORDINATED NOTE DUE 2005
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR REGISTERED
SECURITIES IN DEFINITIVE REGISTERED FORM IN THE LIMITED CIRCUMSTANCES REFERRED
TO IN THE INDENTURE, THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A
WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE
DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITARY.
<PAGE>
FINANCIAL FEDERAL CORPORATION
4-1/2% CONVERTIBLE SUBORDINATED NOTE DUE 2005
No. R-__ CUSIP NO. 317492 AC 0
U.S. $___________
Financial Federal Corporation, a corporation duly organized and validly
existing under the laws of the State of Nevada (herein called the "Company",
which term includes any successor corporation under the Indenture referred to on
the reverse hereof), for value received hereby promises to pay to CEDE & CO., or
registered assigns, the principal sum of _______________ United States Dollars
($___________) on May 1, 2005, and to pay interest on said principal sum
semi-annually on May 1 and November 1 of each year, commencing November 1, 1998,
at the rate per annum specified in the title of this Note, accrued from the May
1 or November 1, as the case may be, next preceding the date of this Note to
which interest has been paid or duly provided for, unless the date of this Note
is a date to which interest has been paid or duly provided for, in which case
interest shall accrue from the date of this Note, or unless no interest has been
paid or duly provided for, in which case interest shall accrue from April 29,
1998, until payment of said principal sum has been made or duly provided for.
Notwithstanding the foregoing, if the date hereof is after any April 15 or
October 15, as the case may be, and before the following May 1 or November 1,
this Note shall bear interest from such May 1 or November 1, respectively;
provided however, that if the Company shall default in the payment of interest
due on such May 1 or November 1, then this Note shall bear interest from the
next preceding May 1 or November 1 to which interest has been paid or duly
provided for or, if no interest has been paid or duly provided for on this Note,
from April 29, 1998. The interest so payable on any May 1 or November 1 will be
paid to the person in whose name this Note (or one or more Predecessor Notes) is
registered at the close of business on the record date, which shall be the April
15 or October 15 (whether or not a Business Day) next preceding such May 1 or
November 1, respectively; provided that any such interest not punctually paid or
duly provided for shall be payable as provided in the Indenture. Payment of the
principal of and interest accrued on this Note shall be made at the office or
agency of the Company maintained for that purpose in the Borough of Manhattan,
The City of New York, or, at the option of the holder of this Note, at the
Corporate Trust Office, in such lawful money of the United States of America as
at the time of payment shall be legal tender for the payment of public and
private debts; provided, however, that at the option of the Company, payment of
interest may be made by check mailed to the registered address of the person
entitled thereto; provided, further, that, with respect to any holder of Notes
with an aggregate principal amount equal to or in excess of $5,000,000, at the
request of such holder in writing to the Company, interest on such holder's
Notes shall be paid by wire transfer in immediately available funds in
accordance with the wire transfer instruction supplied by such holder from time
to time to the Trustee and paying agent (if different from Trustee) at least two
days prior to the applicable record date.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, including, without limitation, provisions subordinating the
payment of principal of and premium, if any, and interest on, this Note to the
prior payment in full of all Senior Indebtedness as defined in the Indenture and
<PAGE>
provisions giving the holder of this Note the right to convert this Note into
Common Stock of the Company on the terms and subject to the limitations referred
to on the reverse hereof and as more fully specified in the Indenture. Such
further provisions shall for all purposes have the same effect as though fully
set forth at this place.
This Note shall be deemed to be a contract made under the laws of the
State of New York, and for all purposes shall be construed in accordance with
and governed by the laws of said State (without regard to the conflict of laws
provisions thereof).
This Note shall not be valid or become obligatory for any purpose until
the certificate of authentication hereon shall have been manually signed by the
Trustee or a duly authorized authenticating agent under the Indenture.
IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed under its corporate seal.
Dated: ____________________
FINANCIAL FEDERAL CORPORATION
[Seal]
By: _______________________________________
Name: Michael C. Palitz
Title: Executive Vice President
Attest:
By: _______________________________________
Name: Troy H. Geisser
Title: Senior Vice President, General
Counsel and Secretary
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
Dated: ____________________
This is one of the Notes described in the within-named Indenture.
THE FIRST NATIONAL BANK
OF CHICAGO, as Trustee
By: _______________________________
Authorized Signatory
<PAGE>
[REVERSE OF NOTE]
FINANCIAL FEDERAL CORPORATION
4-1/2% CONVERTIBLE SUBORDINATED NOTE DUE 2005
This Note is one of a duly authorized issue of Notes of the Company,
designated as its 4-1/2% Convertible Subordinated Notes due 2005 (herein called
the "Notes"), limited to the aggregate principal amount of $100,000,000
($115,000,000 if the over-allotment option is exercised in full) all issued or
to be issued under and pursuant to an Indenture dated as of April 15, 1998
(herein called the "Indenture"), between the Company and The First National Bank
of Chicago, as trustee (herein called the "Trustee"), to which Indenture and all
indentures supplemental thereto reference is hereby made for a description of
the rights, limitations of rights, obligations, duties and immunities thereunder
of the Trustee, the Company and the holders of the Notes.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of, or premium, if any, and accrued
interest on all Notes may be declared, and upon said declaration shall become,
due and payable, in the manner, with the effect and subject to the conditions
provided in the Indenture.
The Indenture contains provisions permitting the Company and the
Trustee in certain limited circumstances, without the consent of the holders of
the Notes, and in other circumstances, with the consent of the holders of not
less than a majority of the aggregate principal amount of the Notes at the time
outstanding, evidenced as in the Indenture provided, to execute supplemental
indentures adding any provisions to or changing in any manner or eliminating any
of the provisions of the Indenture or of any supplemental indenture or modifying
in any manner the rights of the holders of the Notes; provided, however that no
such supplemental indenture shall (i) extend the fixed maturity of any Note, or
reduce the rate or extend the time of payment of interest thereon, or reduce the
principal amount thereof or premium, if any, thereon, or reduce any amount
payable on redemption or repurchase thereof, impair, or change in any respect
adverse to the holder of Notes, the obligation of the Company to repurchase any
Note at the option of the holder upon the happening of a Repurchase Event, or
impair or adversely affect the right of any Noteholder to institute suit for the
payment thereof, or change the currency in which the Notes are payable, or
impair or change in any respect adverse to the holders of the Notes, the right
to convert the Notes into Common Stock subject to the terms set forth in the
Indenture, including Section 15.6 thereof, or modify the provisions of the
Indenture with respect to the subordination of the Notes in a manner adverse to
the Noteholders, without the consent of the holder of each Note so affected or
(ii) reduce the aforesaid percentage of Notes, the holders of which are required
to consent to any such supplemental indenture, without the consent of the
holders of all Notes then outstanding. It is also provided in the Indenture
that, prior to any declaration accelerating the maturity of the Notes, the
holders of a majority in aggregate principal amount of the Notes at the time
outstanding may on behalf of the holders of all of the Notes waive any past
default or Event of Default under the Indenture and its consequences except a
default in the payment of interest or any premium, if any, on or the principal
of, any of the Notes when due or a failure by the Company to convert any Notes
<PAGE>
into Common Stock of the Company or a default in respect of a covenant or
provisions of the Indenture which under Article XI thereof cannot be modified or
amended without the consent of the holders of all Notes then outstanding. Any
such consent or waiver by the holder of this Note (unless revoked as provided in
the Indenture) shall be conclusive and binding upon such holder and upon all
future holders and owners of this Note and any Notes which may be issued in
exchange or substitution hereof, irrespective of whether or not any notation
thereof is made upon this Note or such other Notes.
The indebtedness evidenced by the Notes is, to the extent and in the
manner provided in the Indenture, expressly subordinate and subject in right of
payment to the prior payment in full of all Senior Indebtedness of the Company,
as defined in the Indenture, whether outstanding at the date of the Indenture or
thereafter incurred or created, and this Note is issued subject to the
provisions of the Indenture with respect to such subordination. Each holder of
this Note, by accepting the same, agrees to and shall be bound by such
provisions and authorizes the Trustee on his behalf to take such action as may
be necessary or appropriate to effectuate the subordination so provided and
appoints the Trustee his attorney in fact for any and all such purpose.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and any premium and interest
on this Note at the place, at the respective times, at the rate and in the coin
or currency herein prescribed.
Interest on the Notes shall be computed on the basis of a 360-day year
comprised of twelve 30-day months compounded semi-annually.
The Notes are issuable in registered form without coupons in
denominations of $1,000 principal amount and integral multiples thereof. At the
office or agency of the Company referred to on the face hereof, and in the
manner and subject to the limitations provided in the Indenture, without payment
of any service charge but with payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection with any
registration or exchange of Notes, Notes may be exchanged for a like aggregate
principal amount of Notes of other authorized denominations.
The Notes will not be redeemable at the option of the Company prior to
May 4, 2001. At any time on or after such date and prior to maturity, the Notes
may be redeemed at the option of the Company as a whole, or from time to time in
part, upon mailing a notice of such redemption not less than 20 nor more than 60
days before the date fixed for redemption to the holders of Notes at their last
registered addresses, all as provided in the Indenture, at the following
redemption prices (expressed as percentages of the principal amount), together
in each case with accrued interest to, but excluding, the date fixed for
redemption; provided that if a redemption date is an interest payment date, the
semi-annual interest payment becoming due on such date shall be payable to the
holder of record of this Note as of the relevant record date.
<PAGE>
If redeemed during the 12-month period beginning May 1 (May 4, 2001
through April 30, 2002 in the case of the first such period):
- --------------------------------------------------------------------------------
Year Percentage Year Percentage
- --------------------------------------------------------------------------------
2001 102.571% 2003 101.286%
- --------------------------------------------------------------------------------
2002 101.929% 2004 100.643%
- --------------------------------------------------------------------------------
and 100% at May 1, 2005.
The Notes are not subject to redemption through the operation of any
sinking fund.
Upon the occurrence of a "Repurchase Event" at any time prior to May 1,
2005, the Noteholder has the right, at such holder's option, to require the
Company to repurchase all or any portion of such holder's Notes on the 40th
calendar day (or, if such 40th day is not a Business Day, the next succeeding
Business Day) after notice of such Repurchase Event at a price equal to 100% of
the principal amount of the Notes, together in each case with accrued interest
to the repurchase date; provided that if such repurchase date is May 1 or
November 1, then the interest payable on such date shall be paid to the holder
of record of the Note on the next preceding April 15 or October 15,
respectively. The Company or, at the request of the Company, the Trustee shall
mail to all holders of record of the Notes a notice of the occurrence of a
Repurchase Event and of the repurchase right arising as a result thereof on or
before 15 calendar days after the occurrence of such Repurchase Event. Payment
of the repurchase price may be made in shares of the Company's Common Stock
under certain circumstances, as provided in Section 16.3 of the Indenture.
Subject to the provisions of the Indenture, the holder hereof has the
right, at its option, at any time following the date of original issuance of the
Notes and prior to the close of business on May 1, 2005, or, as to all or any
portion hereof called for redemption, prior to the close of business on the
Business Day next preceding the date fixed for redemption (unless the Company
shall default in payment due upon redemption), to convert the principal hereof
or any portion of such principal which is $1,000 or an integral multiple
thereof, into that number of fully paid and non-assessable shares of Company's
Common Stock, as said shares shall be constituted at the date of conversion,
obtained by dividing the principal amount of this Note or portion thereof to be
converted by the conversion price of $30.15625 or such conversion price as
adjusted from time to time as provided in the Indenture, upon surrender of this
Note, together with a conversion notice as provided in the Indenture and this
Note, to the Company at the office or agency of the Company maintained for that
purpose in the Borough of Manhattan, The City of New York, or at the option of
such holder, the Corporate Trust Office, and, unless the shares issuable on
conversion are to be issued in the same name as this Note, duly endorsed by, or
accompanied by instruments of transfer in form satisfactory to the Company duly
executed by, the holder or by his duly authorized attorney. No adjustment in
respect of interest or dividends will be made upon any conversion; provided,
however, that if this Note shall be surrendered for conversion during the period
from the close of business on any record date for the payment of interest
through the close of business on the Business Day next preceding the following
interest payment date, this Note (unless such Note or portion thereof being
converted shall have been called for redemption pursuant to a redemption notice
mailed to the Noteholders in accordance with Section 3.2 of the Indenture) must
be accompanied by an amount, in funds acceptable to the Company, equal to the
interest otherwise payable on such interest payment date on the principal amount
being converted. No fractional shares of Common Stock will be issued upon any
conversion, but an adjustment in cash will be paid to the holder, as provided in
<PAGE>
the Indenture, in respect of any fraction of a share which would otherwise be
issuable upon the surrender of any Note or Notes for conversion.
Any Notes called for redemption, unless surrendered for conversion on
or before the close of business on the date fixed for redemption, may be deemed
to be purchased from the holder of such Notes at an amount not less than the
applicable redemption price, together with accrued interest to the date fixed
for redemption, by one or more investment bankers or other purchasers who may
agree with the Company to purchase such Notes from the holders thereof and
convert them into Common Stock of the Company and to make payment for such Notes
as aforesaid to the Trustee in trust for such holders.
Upon due presentment for registration of transfer of this Note at the
office or agency of the Company in the Borough of Manhattan, The City of New
York, or at the option of the holder of this Note, at the Corporate Trust
Office, a new Note or Notes of authorized denominations for an equal aggregate
principal amount will be issued to the transferee in exchange thereof, subject
to the limitations provided in the Indenture, without charge except for any tax
or other governmental charge imposed in connection therewith.
The Company, the Trustee, any authenticating agent, any paying agent,
any conversion agent and any Note registrar may deem and treat the registered
holder hereof as the absolute owner of this Note (whether or not this Note shall
be overdue and notwithstanding any notation of ownership or other writing hereon
made by anyone other than the Company or any Note registrar), for the purpose of
receiving payment hereof, or on account hereof, for the conversion hereof and
for all other purposes, and neither the Company nor the Trustee nor any other
authenticating agent nor any paying agent nor any other conversion agent nor any
Note registrar shall be affected by any notice to the contrary. All payments
made to or upon the order of such registered holder shall, to the extent of the
sum or sums paid, satisfy and discharge liability for monies payable on this
Note.
No recourse for the payment of the principal of or any premium or
interest on this Note, or for any claim based hereon or otherwise in respect
hereof, and no recourse under or upon any obligation, covenant or agreement of
the Company in the Indenture or any indenture supplemental thereto or in any
Note, or because of the creation of any indebtedness represented thereby, shall
be had against any incorporator, stockholder, employee, agent, officer, director
or subsidiary, as such, past, present or future, of the Company or of any
successor corporation, either directly or through the Company or any successor
corporation, whether by virtue of any constitution, statute or rule of law or by
the enforcement of any assessment or penalty or otherwise, all such liability
being, by the acceptance hereof and as part of the consideration for the issue
hereof, expressly waived and released.
Terms used in this Note and defined in the Indenture are used herein as
therein defined.
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription of the face
of this Note, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT -
Custodian ___ (Cust) (Minor)___
under Uniform Gifts to Minors Act
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with ___________________________________
right of survivorship (State)
and not as tenants in
common
Additional abbreviations may also be used
though not in the above list.
<PAGE>
CONVERSION NOTICE
To: The First National Bank of Chicago
The undersigned registered owner of this Note hereby irrevocably
exercises the option to convert this Note, or the portion hereof (which is
$1,000 principal amount or an integral multiple thereof) below designated, into
shares of Common Stock in accordance with the terms of the Indenture referred to
in this Note, and directs that the shares issuable and deliverable upon such
conversion, together with any check in payment for fractional shares and any
Notes representing any unconverted principal amount hereof, be issued and
delivered to the registered holder hereof unless a different name has been
indicated below. If shares or any portion of this Note 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. Any amount required to be
paid to the undersigned on account of interest accompanies this Note.
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 Notes to be delivered,
other than to and in the name of the
registered holder.
_______________________________________
Signature Guarantee
<PAGE>
Fill in for registration of shares if to be issued, and Notes if to be
delivered, other than to and in the name of the registered holder:
__________________________________
(Name)
__________________________________
(Street Address)
__________________________________
(City, State and Zip Code)
Please print name and address
Principal amount to be converted (if
less than all): $____,000
__________________________________
Social Security or Other Taxpayer
Identification Number
<PAGE>
OPTION TO ELECT REPAYMENT
UPON A REPURCHASE EVENT
To: The First National Bank of Chicago
The undersigned registered owner of this Note hereby acknowledges
receipt of a notice from Financial Federal Corporation (the "Company") as to the
occurrence of a Repurchase Event with respect to the Company and requests and
instructs the Company to repay the entire principal amount of this Note, or the
portion thereof (which is $1,000 principal amount or an integral multiple
thereof) below designated, in accordance with the terms of the Indenture
referred to in this Note, together with accrued interest to such date, to the
registered holder hereof.
Dated: ___________________________
_______________________________________
Signature(s)
_______________________________________
Social Security or Other Taxpayer
Identification Number
Principal amount to be repaid (if less
than all): $____,000
NOTICE: The above signatures of the
holder(s) hereof must correspond
with the name as written upon the
face of the Note in every particular
without alteration or enlargement or
any change whatever.
<PAGE>
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 Note, and hereby irrevocably
constitutes and appoints ___________________________ attorney to transfer the
said Note on the books of the Company, with full power of substitution in the
premises.
In connection with any transfer of the within Note occurring within two
years of the original issuance of such Note (unless such Note is being
transferred pursuant to a registration statement that has been declared
effective under the Securities Act), the undersigned confirms that such Note is
being transferred:
[ ] To Financial Federal Corporation or a subsidiary thereof; or
[ ] Pursuant to and in compliance with Rule 144A under the
Securities Act of 1933, as amended; or
[ ] To an Institutional Accredited Investor pursuant to and in
compliance with the Securities Act of 1933, as amended; or
[ ] Pursuant to and in compliance with Rule 144 under the
Securities Act of 1933, as amended;
and unless the box below is checked, the undersigned confirms that such Note is
not being transferred to an "affiliate" of the Company as defined in Rule 144
under the Securities Act of 1933, as amended (an "Affiliate"):
<PAGE>
[ ] The transferee is an Affiliate of the Company.
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 Notes to be delivered,
other than to and in the name of the
registered holder.
_______________________________________
Signature Guarantee
NOTICE: The signature on the conversion notice, the option to elect repurchase
upon a Repurchase Event or the assignment must correspond with the name as
written upon the face of the Note in every particular without alteration or
enlargement or any change whatever.
<PAGE>
Exhibit 4.4
FINANCIAL FEDERAL CORPORATION
INCORPORATED UNDER THE LAWS OF THE STATE OF NEVADA
NUMBER _______ SHARES ________
COMMON STOCK CUSIP 317492 10 6
THIS CERTIFIES THAT is the owner of
--------------------------------------------
- --------------------------------------------------------------------------------
FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK, PAR VALUE FIFTY CENTS
($.50) PER SHARE, OF
FINANCIAL FEDERAL CORPORATION transferable on the books of the Corporation by
the holder hereof in person or by duly authorized attorney upon surrender of
this Certificate properly endorsed. This Certificate is not valid unless
countersigned by the Transfer Agent and Registrar. WITNESS the facsimile seal of
the Corporation and the facsimile signatures of its duly authorized officers.
[Seal] Dated:
------------------
- ----------------------------------- --------------------------------
Secretary Chairman of the Board
Countersigned and Registered:
THE BANK OF NEW YORK
Transfer Agent and Registrar
By:
---------------------------------------------------
Authorized Officer
<PAGE>
[Reverse of Certificate]
FINANCIAL FEDERAL CORPORATION
THE CORPORATION WILL FURNISH, WITHOUT CHARGE TO STOCKHOLDER WHO SO
REQUESTS, A DESCRIPTION OF THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE,
PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS, AND THE QUALIFICATIONS,
LIMITATIONS OR RESTRICTIONS, OF EACH CLASS OF CAPITAL STOCK OR SERIES THEREOF
WHICH THE CORPORATION IS AUTHORIZED TO ISSUE. SUCH REQUEST SHOULD BE DIRECTED TO
THE OFFICE OF THE SECRETARY OF THE CORPORATION OR TO THE TRANSFER AGENT.
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to the applicable laws or regulations:
<TABLE>
<CAPTION>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT - .....Custodian....
[Cust] [Minor]
TEN ENT - as tenants by the entireties under Uniform Gifts
Gifts to Minors Act
JT TEN - as joint tenants with right ___________________
of survivorship and not as State
tenants in common
</TABLE>
Additional abbreviations may also be used though
not in the above list.
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- ------------------------------------------
- --------------------------------------------------------------------------------
Please print or typewrite name and address including postal zip code of assignee
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares
- ------------------------------------------------------------------------
Of capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
--------------------------------------------
Attorney to transfer such shares of the books of the within-named Corporation
with full power of substitution in the premises.
Dated:
--------------------------
Signature Guaranteed:
------------------------------------
NOTICE: The signature to this assignment
must correspond with the name as
written upon the face of the
Certificate, in every particular,
without alteration or enlargement,
or any change whatever.
<PAGE>
Exhibit 5.1
Erwin Thompson & Hascheff
A Law Partnership
Including Professional Corporations
ONE EAST LIBERTY, SUITE 424 TELEPHONE: (702) 786-9494
POST OFFICE BOX 40817 FACSIMILE: (702) 786-1180
RENO, NEVADA 89504 E-MAIL: [email protected]
WWW:http://www.renolaw.com
THOMAS P. ERWIN
FRANK W. THOMPSON
PIERRE A. HASCHEFF
June 1, 1998
Financial Federal Corporation
400 Park Avenue, 8th Floor
New York, NY 10022
Re: Registration Statement on Form S-3
We are acting as counsel for Financial Federal Corporation, a Nevada
corporation (the "Company"), in connection with the registration under the
Securities Act of 1933, as amended, of $115,000,000 aggregate principal amount
of 42% Convertible Subordinated Notes due 2005 (the "Notes"), and such
indeterminate number of shares of Common Stock, $0.50 par value per share (the
"Common Stock"), of the Company, as may be required for issuance upon conversion
of the Notes (the "Conversion Shares"). The Notes and the Conversion Shares are
to be offered and sold by certain securityholders of the Company (the "Selling
Securityholders"). In this regard we have participated in the preparation of a
Registration Statement on Form S-3 relating to the Notes and the Conversion
Shares. (Such Registration Statement, as it may be amended from time to time, is
herein referred to as the "Registration Statement")
We are of the opinion that the Notes have been duly authorized and are
binding obligations of the Company entitled to the benefits of the Indenture
dated as of April 15, 1998, between the Company and The First National Bank of
Chicago, as Trustee. We are of the further opinion that the Conversion Shares
have been duly authorized and, when issued by the Company upon conversion of the
Notes in accordance with the Indenture, will be legally issued, fully paid and
nonassessable.
We consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and to the use of our name under the caption "Legal
Matters" in the Registration Statement and in the Prospectus included therein,
as originally filed or as subsequently amended or supplemented. In giving such
consent, we do not consider that we are "experts" within the meaning of such
term as used in the Securities Act of 1933, as amended, or the rules and
regulations of the Securities and Exchange Commission issued thereunder, with
respect to any part of the Registration Statement, including this opinion as an
exhibit or otherwise.
Very truly yours,
/s/ ERWIN THOMPSON & HASCHEFF
-----------------------------
ERWIN THOMPSON & HASCHEFF
<PAGE>
Exhibit 5.2
June 9, 1998
Financial Federal Corporation
400 Park Avenue, 8th Floor
New York, New York 10022
Re: Financial Federal Corporation
Registration Statement on Form S-3
Dear Ladies and Gentlemen:
We have acted as special tax counsel for Financial Federal
Corporation (the "Company"), in connection with the preparation of the
Registration Statement on Form S-3 to be filed with the Securities and Exchange
Commission on June 9, 1998 (the "Registration Statement"), under the Securities
Act of 1933, as amended (the "Act"), for the registration under the Act of 4
1/2% Convertible Subordinated Notes due 2005 ("Notes") and shares of Common
Stock, $0.50 par value of the Company, issuable upon conversion of the Notes
("Common Stock").
We hereby confirm that the statements set forth under the
heading "Certain Federal Income Tax Considerations" in the prospectus relating
to the Notes and Common Stock (the "Prospectus") forming a part of the
Registration Statement, insofar as such statements constitute a summary the
United States federal income tax laws, are accurate in all material respects.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement. We also consent to the reference to Orrick,
Herrington & Sutcliffe LLP under the caption "Legal Matters" in the Prospectus.
In giving such consent, we do not consider that we are "experts," within the
meaning of the term used in the Act or the rules and regulations of the
Securities and Exchange Commission promulgated thereunder, with respect to any
part of the Registration Statement, including this opinion as an exhibit or
otherwise.
Very truly yours,
/s/ ORRICK, HERRINGTON & SUTCLIFFE LLP
-------------------------------------------
ORRICK, HERRINGTON & SUTCLIFFE LLP
<PAGE>
EXHIBIT 12.1
FINANCIAL FEDERAL CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED JULY 31, APRIL 30,
----------------------------------------------- -----------------
1993 1994 1995 1996 1997 1997 1998
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Fixed Charges
Interest expense.............. $ 8,031 $ 9,886 $16,253 $19,271 $23,437 $16,698 $23,516
Interest factor in rent (a)... 117 143 158 183 226 169 194
------- ------- ------- ------- ------- ------- -------
Total...................... $ 8,148 $10,029 $16,411 $19,454 $23,663 16,892 23,710
======= ======= ======= ======= ======= ======= =======
Earnings before income taxes.... $ 7,925 $ 9,484 $11,572 $15,429 $20,987 $15,271 $20,152
Fixed charges................... 8,148 10,029 16,411 19,454 23,663 16,892 23,710
------- ------- ------- ------- ------- ------- -------
Earnings, as adjusted...... $16,073 $19,513 $27,983 $34,883 $44,650 $32,163 $43,862
======= ======= ======= ======= ======= ======= =======
Ratio of Earnings to Fixed
Charges....................... 1.97 1.95 1.70 1.79 1.89 1.90 1.85
======= ======= ======= ======= ======= ======= =======
</TABLE>
(a) Estimated at one third of rent expense.
<PAGE>
[LETTERHEAD OF EISNER & LUBIN LLP]
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report dated
September 4, 1997 appearing on page 24 of Financial Federal Corporation's Annual
Report on Form 10-K for the year ended July 31, 1997. We also consent to the
reference to us under the heading "Experts" in such Prospectus.
/s/ Eisner & Lubin LLP
-----------------------------
CERTIFIED PUBLIC ACCOUNTANTS
New York, New York
June 3, 1998
<PAGE>
Exhibit 25.1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
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 FIRST NATIONAL BANK OF CHICAGO
(Exact name of trustee as specified in its charter)
A National Banking Association 36-0899825
(I.R.S. employer
identification number)
One First National Plaza, Chicago, Illinois 60670-0126
(Address of principal executive offices) (Zip Code)
The First National Bank of Chicago
One First National Plaza, Suite 0286
Chicago, Illinois 60670-0286
Attn: Lynn A. Goldstein, Law Department (312) 732-6919
(Name, address and telephone number of agent for service)
----------------------------------------------
Financial Federal Corporation
(Exact name of obligors as specified in their trust agreements)
Nevada 88-0244792
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
400 Park Avenue, 8th Floor
New York, New York 10022
(Address of principal executive offices) (Zip Code)
Convertible Subordinated Notes
(Title of Indenture Securities)
<PAGE>
Item 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.
Comptroller of Currency, Washington, D.C.; Federal Deposit
Insurance Corporation, Washington, D.C.; The Board of
Governors of the Federal Reserve System, Washington D.C..
(b) Whether it is authorized to exercise
corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
Item 2. Affiliations With the Obligor. If the obligor
is an affiliate of the trustee, describe each
such affiliation.
No such affiliation exists with the trustee.
Item 16. List of exhibits. List below all exhibits filed as a part
of this Statement of Eligibility.
1. A copy of the articles of association of the
trustee now in effect.*
2. A copy of the certificates of authority of the trustee to
commence business.*
3. A copy of the authorization of the trustee to exercise
corporate trust powers.*
4. A copy of the existing by-laws of the trustee.*
5. Not Applicable.
6. The consent of the trustee required by Section 321(b) of
the Act.
<PAGE>
7. A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its
supervising or examining authority.
8. Not Applicable.
9. Not Applicable.
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, The First National Bank of Chicago, a national
banking association organized and existing under the laws of the United
States of America, has duly caused this Statement of Eligibility to be
signed on its behalf by the undersigned, thereunto duly authorized, all
in the City of Chicago and State of Illinois, on the 20th day of May,
1998.
The First National Bank of Chicago,
Trustee
By /s/ Steven M. Wagner
--------------------------------------------
Steven M. Wagner
First Vice President
* Exhibit 1, 2, 3 and 4 are herein incorporated by reference to Exhibits bearing
identical numbers in Item 16 of the Form T-1 of The First National Bank of
Chicago, filed as Exhibit 25.1 to the Registration Statement on Form S-3 of
SunAmerica Inc., filed with the Securities and Exchange Commission on October
25, 1996 (Registration No. 333-14201).
<PAGE>
EXHIBIT 6
THE CONSENT OF THE TRUSTEE REQUIRED
BY SECTION 321(b) OF THE ACT
May 20, 1998
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In connection with the qualification of the indenture between Financial Federal
Corporation and The First National Bank of Chicago, as Trustee, the undersigned,
in accordance with Section 321(b) of the Trust Indenture Act of 1939, as
amended, hereby consents that the reports of examinations of the undersigned,
made by Federal or State authorities authorized to make such examinations, may
be furnished by such authorities to the Securities and Exchange Commission upon
its request therefor.
Very truly yours,
The First National Bank of Chicago,
Trustee
By /s/ Steven M. Wagner
--------------------------------------------
Steven M. Wagner
First Vice President
<PAGE>
EXHIBIT 7
<TABLE>
<CAPTION>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/97 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0303 Page RC-1
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
Consolidated Report of Condition for Insured Commercial
and State-Chartered Savings Banks for December 31, 1997
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
Schedule RC--Balance Sheet
Dollar Amounts in C400
Thousands RCFD BIL MIL THOU
<S> <C> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions (from Schedule RC-A):
a. Noninterest-bearing balances and currency and coin(1) 0081 4,267,336 1.a.
b. Interest-bearing balances(2).................. 0071 6,893,837 1.b.
2. Securities
a. Held-to-maturity securities(from Schedule RC-B, column A) 1754 0 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D)............ 1773 5,691,722 2.b.
3. Federal funds sold and securities purchased under agreements to
resell 1350 6,339,940 3.
4. Loans and lease financing receivables: a. Loans and leases, net of unearned
income (from Schedule
RC-C)............................................ RCFD 2122 25,202,984 4.a.
b. LESS: Allowance for loan and lease losses..... RCFD 3123 419,121 4.b.
c. LESS: Allocated transfer risk reserve......... RCFD 3128 0 4.c.
d. Loans and leases, net of unearned income, allowance, and
reserve (item 4.a minus 4.b and 4.c). 2125 24,783,863 4.d.
5. Trading assets (from Schedule RD-D)......... 3545 6,703,332 5.
6. Premises and fixed assets (including capitalized leases) 2145 743,426 6.
7. Other real estate owned (from Schedule RC-M) 2150 7,727 7.
8. Investments in unconsolidated subsidiaries and associated
companies (from Schedule RC-M)................... 2130 134,959 8.
9. Customers' liability to this bank on acceptances outstanding 2155 644,340 9.
10. Intangible assets (from Schedule RC-M)...... 2143 268,501 10.
11. Other assets (from Schedule RC-F)........... 2160 2,004,432 11.
12. Total assets (sum of items 1 through 11).... 2170 58,483,415 12.
</TABLE>
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Legal Title of Bank: The First National Bank of Chicago Call Date: 09/30/97 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0303 Page RC-2
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
Schedule RC-Continued
Dollar Amounts in
Thousands Bil Mil Thou
LIABILITIES
13. Deposits:
a. In domestic offices (sum of totals of columns A and C
from Schedule RC-E, part 1).......... RCON 2200 21,756,846 13.a
(1) Noninterest-bearing(1)........... RCON 6631 9,197,227 13.a.1
(2) Interest-bearing................. RCON 6636 559,619 13.a.2
b. In foreign offices, Edge and Agreement subsidiaries, and
IBFs (from Schedule RC-E, part II) RCFN 2200 14,811,410 13.b.
(1) Noninterest bearing.............. RCFN 6631 332,801 13.b.1
(2) Interest-bearing................. RCFN 6636 14,478,609 13.b.2
14. Federal funds purchased and securities sold under agreements
to repurchase: RCFD 2800 4,535,422 14
15. a. Demand notes issued to the U.S. Treasury RCON 2840 43,763 15.a
b. Trading Liabilities(from Schedule RC-D) RCFD 3548 6,523,239 15.b
16. Other borrowed money:
a. With a remaining maturity of one year or less RCFD 2332 1,360,165 16.a
b. With a remaining maturity of than one year through three years A547 576,492 16.b
c. With a remaining maturity of more than three years A548 703,981 16.c
17. Not applicable
18. Bank's liability on acceptance executed and outstanding RCFD 2920 644,341 18
19. Subordinated notes and debentures (2) RCFD 3200 1,700,000 19
20. Other liabilities (from Schedule RC-G) RCFD 2930 1,322,077 20
21. Total liabilities (sum of items 13 through 20) RCFD 2948 53,987,736 21
22. Not applicable
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus RCFD 3838 0 23
24.Common stock............................. RCFD 3230 200,858 24
25. Surplus (exclude all surplus related to preferred stock) RCFD 3839 2,999,001 25
26. a. Undivided profits and capital reserves RCFD 3632 1,273,239 26.a.
b. Net unrealized holding gains (losses) on available-for-sale
securities........................... RCFD 8434 24,096 26.b.
27. Cumulative foreign currency translation adjustments RCFD 3284 (1,515) 27
28. Total equity capital (sum of items 23 through 27) RCFD 3210 4,495,679 28
29. Total liabilities and equity capital (sum of items 21 and 28) RCFD 3300 58,483,415 29
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best
describes the most comprehensive level of auditing work performed for the
bank by independent external
Number
----------------
auditors as of any date during 1996 . . . . . . . . . . . . . . . . . . . . . . . . . RCFD 6724 | N/A | M.1
----------------
</TABLE>
<PAGE>
1 = Independent audit of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm which
submits a report on the bank
2 = Independent audit of the bank's parent holding company conducted in
accordance with generally accepted auditing standards by a certified
public accounting firm which submits a report on the consolidated holding
company (but not on the bank separately)
3 = Directors' examination of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm (may be
required by state chartering authority)
4 = Directors' examination of the bank by other external auditors (may be
required by state chartering authority)
5 = Review of the bank's financial statements by external auditors
6 = Compilation of the bank's financial statements by external auditors
7 = Other audit procedures (excluding tax preparation work)
8 = No external audit work
- -------------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
(2) Includes limited-life preferred stock and related surplus.
