<PAGE>
FORM 10-Q/A
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended June 30, 1999 Commission File Number 1-5620
------------- ------
SAFEGUARD SCIENTIFICS, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 23-1609753
- --------------------------------------------------------------------------------
(state or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
800 The Safeguard Building, 435 Devon Park Drive Wayne, PA 19087
- --------------------------------------------------------------------------------
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, including area code (610) 293-0600
--------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities and Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports) and (2) has been subject
to such filing requirements for the past 90 days.
Yes X No ____
---
Number of shares outstanding as of August 30, 1999
Common Stock 34,760,585
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
<TABLE>
<CAPTION>
(a) Exhibits
Number Description
------ -----------
<S> <C>
2.1 Asset Purchase Agreement, dated as of May 10, 1999 by
and between CompuCom Systems, Inc. and Entex
Information Services, Inc./(2)/
4.1 Safeguard Scientifics, Inc. 1999 Equity Compensation
Plan/(3)/
4.2 Indenture, dated as of June 9, 1999, between Safeguard
Scientifics, Inc. and Chase Manhattan Trust Company,
National Association, as trustee, including the form of
5.0% Convertible Subordinated Note due 2006 *
4.3 Purchase Agreement of Safeguard Scientifics, Inc. to
issue and sell to Credit Suisse First Boston
Corporation Convertible Subordinated Notes due June 15,
2006. (Exhibits omitted)/(3)/
4.4 Registration Rights Agreement between Safeguard
Scientifics, Inc. and Credit Suisse First Boston
Corporation *
10.1 Amendment to Amended and Restated Credit Agreement,
dated April 12, 1999, among Safeguard Scientifics,
Inc., Safeguard Scientifics (Delaware), Inc., Safeguard
Delaware, Inc. and PNC Bank, N.A. (Exhibits omitted).
/(1)/
10.2 Form of Promissory Notes dated June 11, 1999 given by
certain executives for advances by Safeguard of income
tax withholdings on restricted stock grants/(3)/
10.3 Non-Competition, Referral and Non-Disclosure Agreement
dated as of May 10, 1999, by and between CompuCom
Systems, Inc. and ENTEX Information Services, Inc./(2)/
10.4 CompuCom Receivables MasterTrust I Pooling and
Servicing Agreement, dated as of May 7, 1999, between
Norwest Bank Minnesota National Association, CompuCom
Systems, Inc., and CSI Funding, Inc./(3)/
10.5 CompuCom Receivables MasterTrust I Pooling and
Servicing Agreement Series 1999-1 Supplement, dated as
of May 7, 1999, among PNC Bank, National Association,
Market Street Capital Corporation, Norwest Bank
Minnesota, National Association, CompuCom Systems,
Inc., and CSI Funding, Inc./(3)/
10.6 Inventory and Working Capital Financing Agreement,
dated as of May 11, 1999, between IBM Credit
Corporation and CompuCom Systems, Inc./(3)/
</TABLE>
<PAGE>
<TABLE>
<S> <C>
10.7 Attachment A to Inventory and Working Capital Financing
Agreement dated May 11, 1999./(3)/
10.8 Receivables Contribution and Sale Agreement dated May
7, 1999 between CompuCom Systems, Inc. and CSI Funding,
Inc./(3)/
27 Financial Data Schedule (electronic filing only)/(3)/
</TABLE>
* filed herewith
(1) Incorporated by reference from registrant's Form 10-Q for the
quarter ended March 31, 1999 dated May 17, 1999 and made a part
hereof by such reference.
(2) Incorporated by reference from registrant's 8-K dated May 10, 1999
and made a part hereof by such reference.
(3) Incorporated by reference from registrant's Form 10-Q for the
quarter ended June 30, 1999 dated August 16, 1999 and made a part
hereof by such reference.
(b) On May 25, 1999, the Company filed a report on Form 8-K dated May 10,
1999 in conjunction with the acquisition of certain assets of Entex
Information Systems, Inc.'s Technology Acquisition Services Division by
CompuCom Systems, Inc., the Company's majority-owned subsidiary.
CompuCom purchased product inventory, certain fixed assets and Entex's
Kentucky distribution center for approximately $137 million in cash.
On July 26, 1999, the Company filed a report on Form 8-K/A which
amended Item 7 of the Form 8-K filed by the Company on May 25, 1999 to
include financial statements that were not available at the time of the
filing of the initial report.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SAFEGUARD SCIENTIFICS, INC.
(Registrant)
Date: September 3, 1999 /s/ Michael W. Miles
---------------------------------------------
Michael W. Miles
Senior Vice President and Chief Financial
Officer
(Principal Financial and Principal Accounting
Officer)
<PAGE>
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
<S> <C>
2.1 Asset Purchase Agreement, dated as of May 10, 1999 by
and between CompuCom Systems, Inc. and Entex
Information Services, Inc./(2)/
4.1 Safeguard Scientifics, Inc. 1999 Equity Compensation
Plan/(3)/
4.2 Indenture, dated as of June 9, 1999, between Safeguard
Scientifics, Inc. and Chase Manhattan Trust Company,
National Association, as trustee, including the form of
5.0% Convertible Subordinated Note due 2006 *
4.3 Purchase Agreement of Safeguard Scientifics, Inc. to
issue and sell to Credit Suisse First Boston
Corporation Convertible Subordinated Notes due June 15,
2006. (Exhibits omitted)/(3)/
4.4 Registration Rights Agreement between Safeguard
Scientifics, Inc. and Credit Suisse First Boston
Corporation *
10.1 Amendment to Amended and Restated Credit Agreement,
dated April 12, 1999, among Safeguard Scientifics,
Inc., Safeguard Scientifics (Delaware), Inc., Safeguard
Delaware, Inc. and PNC Bank, N.A. (Exhibits omitted).
/(1)/
10.2 Form of Promissory Notes dated June 11, 1999 given by
certain executives for advances by Safeguard of income
tax withholdings on restricted stock grants/(3)/
10.3 Non-Competition, Referral and Non-Disclosure Agreement
dated as of May 10, 1999, by and between CompuCom
Systems, Inc. and ENTEX Information Services, Inc./(2)/
10.4 CompuCom Receivables MasterTrust I Pooling and
Servicing Agreement, dated as of May 7, 1999, between
Norwest Bank Minnesota National Association, CompuCom
Systems, Inc., and CSI Funding, Inc./(3)/
10.5 CompuCom Receivables MasterTrust I Pooling and
Servicing Agreement Series 1999-1 Supplement, dated as
of May 7, 1999, among PNC Bank, National Association,
Market Street Capital Corporation, Norwest Bank
Minnesota, National Association, CompuCom Systems,
Inc., and CSI Funding, Inc./(3)/
10.6 Inventory and Working Capital Financing Agreement,
dated as of May 11, 1999, between IBM Credit
Corporation and CompuCom Systems, Inc./(3)/
</TABLE>
<PAGE>
<TABLE>
<S> <C>
10.7 Attachment A to Inventory and Working Capital Financing
Agreement dated May 11, 1999./(3)/
10.8 Receivables Contribution and Sale Agreement dated May
7, 1999 between CompuCom Systems, Inc. and CSI Funding,
Inc./(3)/
27 Financial Data Schedule (electronic filing only)/(3)/
</TABLE>
* filed herewith
(1) Incorporated by reference from registrant's Form 10-Q for the
quarter ended March 31, 1999 dated May 17, 1999 and made a part
hereof by such reference.
(2) Incorporated by reference from registrant's 8-K dated May 10, 1999
and made a part hereof by such reference.
(3) Incorporated by reference from registrant's Form 10-Q for the
quarter ended June 30, 1999 dated August 16, 1999 and made a part
hereof by such reference.
<PAGE>
Exhibit 4.2
SAFEGUARD SCIENTIFICS, INC.
TO
CHASE MANHATTAN TRUST COMPANY, NATIONAL ASSOCIATION
Trustee
INDENTURE
Dated as of June 9, 1999
5.0% Convertible Subordinated Notes due 2006
<PAGE>
SAFEGUARD SCIENTIFICS, INC.
Reconciliation and Tie Between the Trust Indenture Act of 1939 and
Indenture, dated as of June 9, 1999, between Safeguard Scientifics, Inc. and
Chase Manhattan Trust Company, National Association, as Trustee.
<TABLE>
<CAPTION>
Trust Indenture Act Section Indenture Section
<S> <C>
(S) 310(a)(1).............................................................. 8.11
(a)(2)..................................................................... 8.11
(a)(3)........................................................... Not Applicable
(a)(4)........................................................... Not Applicable
(a)(5)..................................................................... 8.11
(b)................................................................... 8.6;.8.10
(S) 311(a)................................................................. 8.13
(b)........................................................................ 8.13
(b)(2)..................................................................... 8.13
(S) 312(a).......................................................... 6.1; 6.2(a)
(b)...................................................................... 6.2(b)
(c)...................................................................... 6.2(c)
(S) 313(a)............................................................... 6.3(a)
(b)...................................................................... 6.3(a)
(c)...................................................................... 6.3(a)
(d)...................................................................... 6.3(b)
(S) 314(a).................................................................. 6.4
(b).............................................................. Not Applicable
(c)(1)..................................................................... 16.5
(c)(2)..................................................................... 16.5
(c)(3)........................................................... Not Applicable
(d).............................................................. Not Applicable
(e)........................................................................ 16.5
(S) 315(a).................................................................. 8.1
(b)......................................................................... 7.8
(c)......................................................................... 8.1
(d)......................................................................... 8.1
(d)(1)...................................................................... 8.1
(d)(2)...................................................................... 8.2
(d)(3)...................................................................... 8.2
(e)......................................................................... 7.9
(S) 316(a).................................................................. 7.7
(a)(1)(A)................................................................... 7.7
(a)(1)(B)................................................................... 7.7
(a)(2)........................................................... Not Applicable
(b)......................................................................... 7.4
(S) 317(a)(1)............................................................... 7.5
(a)(2)...................................................................... 7.5
(b)......................................................................... 5.4
(S) 318(a)..................................................................16.7
</TABLE>
________________
Note: This reconciliation and tie shall not, for any purpose, be deemed to be
a part of the Indenture.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
I. Definitions.............................................................. 1
Section 1.1 Definitions............................................... 1
Affiliate........................................................... 1
Board of Directors.................................................. 1
Business Day........................................................ 2
Closing Price....................................................... 2
Commission.......................................................... 2
Common Stock........................................................ 2
Company............................................................. 2
Conversion Price.................................................... 2
Corporate Trust Office.............................................. 2
Credit Agreement.................................................... 2
Current Event....................................................... 2
Custodian........................................................... 2
Default............................................................. 2
Defaulted Interest.................................................. 2
Depositary.......................................................... 2
Event of Default.................................................... 3
Exchange Act........................................................ 3
Expiration Date..................................................... 3
Expiration Time..................................................... 3
Fundamental Change.................................................. 3
Fundamental Change Expiration Time.................................. 4
Global Note......................................................... 4
Indebtedness........................................................ 4
Indenture........................................................... 5
Initial Purchaser................................................... 5
IPO Rights.......................................................... 5
Liquidated Damages Amount........................................... 5
Majority Subsidiary................................................. 5
Note or Notes....................................................... 5
Note register....................................................... 5
Noteholder or holder................................................ 5
Officers' Certificate............................................... 5
Opinion of Counsel.................................................. 5
Optional Redemption................................................. 5
Original Conversion Ratio........................................... 5
Other Event......................................................... 5
outstanding......................................................... 5
Partnership Company................................................. 6
Person.............................................................. 6
Portal Market....................................................... 6
Predecessor Note.................................................... 6
Principal Amount.................................................... 6
QIB................................................................. 6
Reference Date...................................................... 6
Registration Rights Agreement....................................... 6
Relevant Conversion Ratio........................................... 6
Relevant Closing Date............................................... 6
Representative...................................................... 6
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
Repurchase Date..................................................................... 6
Responsible Officer................................................................. 7
Restricted Securities............................................................... 7
Rights Value per Note............................................................... 7
Rights Value per Share.............................................................. 7
Rule 144A........................................................................... 7
Securities Act...................................................................... 7
Senior Indebtedness................................................................. 7
Subscription Value per Note......................................................... 7
Subscription Value per Share........................................................ 7
Trading Day......................................................................... 7
Trust Indenture Act or TIA.......................................................... 7
Trustee............................................................................. 7
Voting Shares....................................................................... 8
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 (Including
Any Liquidated Damages Amount)............................................ 8
Section 2.4 Execution of Notes........................................................ 9
Section 2.5 Exchange and Registration of Transfer of Notes; Restrictions
on Transfer; Depositary................................................... 10
Section 2.6 Mutilated, Destroyed, Lost or Stolen Notes................................ 14
Section 2.7 Temporary Notes........................................................... 15
Section 2.8 Cancellation of Notes Paid, Etc........................................... 15
Section 2.9 CUSIP Numbers............................................................. 16
III. Redemption of Notes................................................................. 16
Section 3.1 Optional Redemption by the Company........................................ 16
Section 3.2 Notice of Redemptions; Selection of Notes for Redemption.................. 16
Section 3.3 Payment of Notes Called for Redemption.................................... 17
Section 3.4 Conversion Arrangement on Call for Redemption............................. 18
Section 3.5 Repurchase at Option of Holders........................................... 18
IV. Subordination of Notes.............................................................. 19
Section 4.1 Agreement of Subordination................................................ 19
Section 4.2 Payments to Noteholders................................................... 19
Section 4.3 Subrogation of Notes...................................................... 20
Section 4.4 Authorization to Effect Subordination..................................... 21
Section 4.5 Notice to Trustee......................................................... 21
Section 4.6 Trustee's Relation to Senior Indebtedness................................. 22
Section 4.7 No Impairment of Subordination............................................ 22
Section 4.8 Certain Conversions Not Deemed Payment.................................... 22
Section 4.9 Article Applicable to Paying Agents....................................... 23
Section 4.10 Senior Indebtedness Entitled to Rely...................................... 23
Section 4.11 Reliance on Judicial Order or Certificate of Liquidating Agent............ 23
Section 4.12 Trustee's Compensation Not Prejudiced..................................... 23
V. Particular Covenants of the Company................................................. 23
Section 5.1 Payment of Principal, Premium and Interest................................ 23
Section 5.2 Maintenance of Office or Agency........................................... 23
Section 5.3 Appointments to Fill Vacancies in Trustee's Office........................ 24
Section 5.4 Provisions as to Paying Agent............................................. 24
Section 5.5 Existence................................................................. 24
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
Section 5.6 Payment of Taxes and Other Claims......................................... 25
Section 5.7 Rule 144A Information Requirement......................................... 25
Section 5.8 Stay, Extension and Usury Laws............................................ 25
Section 5.9 Compliance Certificate.................................................... 25
VI. Noteholders' Lists and Reports by the Company and the Trustee....................... 26
Section 6.1 Noteholders' Lists........................................................ 26
Section 6.2 Preservation and Disclosure of Lists...................................... 26
Section 6.3 Reports by Trustee........................................................ 26
Section 6.4 Reports by Company........................................................ 26
VII. Remedies of the Trustee and Noteholders on an Event of Default...................... 27
Section 7.1 Events of Default......................................................... 27
Section 7.2 Payments of Notes on Default; Suit Therefor............................... 28
Section 7.3 Application of Monies Collected by Trustee................................ 29
Section 7.4 Proceedings by Noteholder................................................. 30
Section 7.5 Proceedings by Trustee.................................................... 31
Section 7.6 Remedies Cumulative and Continuing........................................ 31
Section 7.7 Direction of Proceedings and Waiver of Defaults by Majority of
Noteholders............................................................... 31
Section 7.8 Notice of Defaults........................................................ 31
VIII. Concerning the Trustee.............................................................. 31
Section 8.1 General................................................................... 31
Section 8.2 Certain Rights of Trustee................................................. 32
Section 8.3 Individual Rights of Trustee.............................................. 33
Section 8.4 Trustee's Disclaimer...................................................... 33
Section 8.5 Notice of Default......................................................... 33
Section 8.6 Conflicting Interests of Trustee.......................................... 33
Section 8.7 Compensation and Indemnity................................................ 33
Section 8.8 Replacement of Trustee.................................................... 34
Section 8.9 Successor Trustee by Merger, Etc.......................................... 34
Section 8.10 Eligibility............................................................... 35
Section 8.11 Money Held in Trust....................................................... 35
Section 8.12 Withholding Taxes......................................................... 35
Section 8.13 Preferential Collection of Claims......................................... 35
Section 8.14 Trustee's Application for Instructions from the Company................... 35
IX. Concerning the Noteholders.......................................................... 35
Section 9.1 Action by Noteholders..................................................... 35
Section 9.2 Proof of Execution by Noteholders......................................... 36
Section 9.3 Who Are Deemed Absolute Owners............................................ 36
Section 9.4 Company-Owned Notes Disregarded........................................... 36
Section 9.5 Revocation of Consents; Future Holders Bound.............................. 36
X. Noteholders' Meetings............................................................... 36
Section 10.1 Purpose of Meetings....................................................... 36
Section 10.2 Call of Meetings by Trustee............................................... 37
Section 10.3 Call of Meetings by Company or Noteholders................................ 37
Section 10.4 Qualifications for Voting................................................. 37
Section 10.5 Regulations............................................................... 37
Section 10.6 Voting.................................................................... 38
Section 10.7 No Delay of Rights by Meeting............................................. 38
Section 10.8 Exercise of Rights of Trustee or Noteholders May Not Be
Hindered or Delayed by Call of Meeting.................................... 38
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
Section 10.9 Procedures Not Exclusive.................................................. 38
XI. Supplemental Indentures............................................................. 38
Section 11.1 Supplemental Indentures Without Consent of Noteholders.................... 38
Section 11.2 Supplemental Indenture with Consent of Noteholders........................ 39
Section 11.3 Effect of Supplemental Indenture.......................................... 40
Section 11.4 Notation on Notes......................................................... 40
Section 11.5 Evidence of Compliance of Supplemental Indenture to Be
Furnished to Trustee...................................................... 40
XII. Consolidation, Merger, Sale, Conveyance and Lease................................... 40
Section 12.1 Company May Consolidate, Etc., on Certain Terms........................... 40
Section 12.2 Successor Corporation to Be Substituted................................... 41
Section 12.3 Opinion of Counsel to Be Given Trustee.................................... 41
XIII. Satisfaction and Discharge of Indenture............................................. 41
Section 13.1 Discharge of Indenture.................................................... 41
Section 13.2 Deposited Monies to Be Held in Trust by Trustee........................... 42
Section 13.3 Paying Agent to Repay Monies Held......................................... 42
Section 13.4 Return of Unclaimed Monies................................................ 42
Section 13.5 Reinstatement............................................................. 42
XIV. Immunity of Incorporators, Stockholders, Officers and Directors..................... 42
Section 14.1 Indenture and Notes Solely Corporate Obligations.......................... 42
XV. Conversion of Notes................................................................. 42
Section 15.1 Right to Convert.......................................................... 43
Section 15.2 Exercise of Conversion Privilege; Issuance of Common Stock
on Conversion; No Adjustment for Interest or Dividends.................... 43
Section 15.3 Cash Payments in Lieu of Fractional Shares................................ 44
Section 15.4 Conversion Price.......................................................... 44
Section 15.5 Adjustment of Conversion Price............................................ 44
Section 15.6 Effect of Reclassification, Consolidation, Merger or Sale................. 50
Section 15.7 Taxes on Shares Issued.................................................... 50
Section 15.8 Reservation of Shares; Shares to Be Fully Paid; Compliance with
Governmental Requirements; Listing of Common Stock........................ 50
Section 15.9 Responsibility of Trustee................................................. 51
Section 15.10 Notice to Holders Prior to Certain Actions................................ 51
XVI. Miscellaneous Provisions............................................................ 52
Section 16.1 Provisions Binding on Company's Successors................................ 52
Section 16.2 Official Acts by Successor Corporation.................................... 52
Section 16.3 Addresses for Notices, Etc................................................ 52
Section 16.4 Governing Law............................................................. 53
Section 16.5 Evidence of Compliance with Conditions Precedent; Certificates
to Trustee................................................................ 53
Section 16.6 Legal Holidays............................................................ 53
Section 16.7 Trust Indenture Act....................................................... 53
Section 16.8 No Security Interest Created.............................................. 53
Section 16.9 Benefits of Indenture..................................................... 53
Section 16.10 Table of Contents, Headings, Etc.......................................... 54
Section 16.11 Authenticating Agent...................................................... 54
Section 16.12 Execution in Counterparts................................................. 54
</TABLE>
Exhibit A: Form of Note
-4-
<PAGE>
INDENTURE
INDENTURE, dated as of June 9, 1999, between Safeguard Scientifics, Inc., a
Pennsylvania corporation (hereinafter called the "Company," as more fully set
forth in Section 1.1), and Chase Manhattan Trust Company, National Association,
a national banking corporation, as trustee hereunder (hereinafter called the
"Trustee," as more fully set forth in Section 1.1).
WITNESSETH:
Whereas, for its lawful corporate purposes, the Company has duly authorized
the issue of its 5.0% Convertible Subordinated Notes due 2006 (the "Notes"), in
an aggregate principal amount not to exceed $230,000,000 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
Fundamental Change, and a form of conversion notice 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 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:
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 that are defined in the Trust Indenture Act or
which are by reference therein defined in the Securities Act (except as herein
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, " (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with"), as applied to
any Person, means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise.
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.
<PAGE>
Business Day: The term "Business Day" shall mean each Monday, Tuesday,
Wednesday, Thursday and Friday which is not a day on which the commercial banks
in The City of New York or the city in which the Corporate Trust Office is
located are authorized by law to close.
Closing Price: The term "Closing Price" shall have the meaning
specified in Section 15.5(h)(1).
Commission: The term "Commission" shall mean the Securities and
Exchange Commission.
Common Stock: The term "Common Stock" shall mean the common stock, par
value $.10, of the Company, and any other 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 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 Safeguard Scientifics, Inc., a
Pennsylvania corporation, having its principal office at 800 The Safeguard
Building, 435 Devon Park Drive, Wayne, Pennsylvania 19087 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 in Philadelphia,
Pennsylvania, which office is, at the date as of which this Indenture is dated,
located at Chase Manhattan Trust Company, One Liberty Place, 52nd Floor, 1650
Market Street, Suite 5210, Philadelphia, PA 19103, Attention: Chase Capital
Markets Fiduciary Services (Safeguard Scientifics 5.0% Convertible Subordinated
Notes due 2006).
Credit Agreement: The term "Credit Agreement" shall mean the current
Amended and Restated Credit Agreement among the Company, Safeguard Scientifics
(Delaware), Inc., Safeguard Delaware, Inc. and PNC Bank, N.A., as administrative
and collateral agent, and the other lenders party thereto, as such agreement may
be amended, supplemented or modified from time to time.
Current Event: The Term "Current Event" shall have the meaning
specified in Section 15.5(i).
Custodian: The term "Custodian" shall mean Chase Manhattan Trust
Company, National Association as custodian with respect to the Global Notes, 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.
Defaulted Interest: The term "Defaulted Interest" shall have the
meaning specified in Section 2.3.
Depositary: The term "Depositary" shall mean, with respect to the
Global Notes issuable or issued in whole or in part, 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.
-2-
<PAGE>
Directed Share Subscription Program: The term "Directed Share
Subscription Program" shall mean a program whereby all shareholders of the
Company are entitled to purchase a portion of the shares offered by a
Partnership Company in that Partnership Company's initial public offering.
Event of Default: The term "Event of Default" shall mean any event
specified in Section 7.1(a), (b), (c), (d), (e), (f), (g) or (h).
Exchange Act: The term "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended.
Expiration Date: The term "Expiration Date" shall have the meaning
specified in Section 15.5(e)(ii).
Expiration Time: The Term "Expiration Time" shall have the meaning
specified in Section 15.5(h).
Fundamental Change: The term "Fundamental Change" shall mean:
(a) a "person" or "group" (within the meaning of Sections 13(d) and
14(d)(2) of the Exchange Act) becoming the "beneficial owner" of Voting
Shares (as defined below) of the Company entitled to exercise more than 50%
of the total voting power of all outstanding Voting Shares of the Company
(including any right to acquire Voting Shares that are not then outstanding
of which such person or group is deemed the beneficial owner); or
(b) a change in the Board of Directors of the Company to the extent
that less than a majority of the directors who constituted the Board of
Directors one year prior to the date of the Fundamental Change remain in
office at such date; or
(c) the occurrence of any transaction or event in connection with
which (i) all or substantially all of the Common Stock shall be exchanged
for, converted into, acquired for or constitute solely the right to receive
consideration (whether by means of an exchange offer, liquidation, tender
offer, consolidation, merger, combination, reclassification,
recapitalization or otherwise) or (ii) all or substantially all of the
assets of the Company are sold or otherwise disposed of, in each case
unless the Closing Price of the Common Stock for any of the five Trading
Days before the announcement of such event or transaction is at least equal
to 105% of the Conversion Price at that time, or if the consideration is in
the form of cash or common stock listed (or, upon consummation of or
immediately following such transaction or event which will be listed), on a
United States national securities exchange or approved for quotation on the
Nasdaq National Market or any similar United States system of automated
dissemination of quotations of securities prices, and the aggregate fair
market value of such cash and securities (based upon the Closing Price of
any such securities on any of the five Trading Days after such event or
transaction) given in consideration is at least 105% of the Conversion
Price of the Notes in effect on the day preceding the closing date of such
transaction; or
(d) the liquidation or dissolution of the Company.
For the purpose of this definition:
a "beneficial owner" shall be determined in accordance with Rule 13d-3
under the Exchange Act, as in effect on the date of the Indenture, except
that the number of shares of Voting Shares of the Company shall be deemed
to include, in addition to all outstanding Voting Shares of the Company and
unissued shares (as defined below) deemed to be held by the "person" or
"group" (as defined above) or other person with respect to which the
Fundamental Change determination is being made, all unissued shares deemed
to be held by all other persons;
the term "beneficially owned" shall have a meaning correlative to that of
beneficial owner;
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"unissued shares" means Voting Shares not outstanding that are subject to
options, warrants, rights to purchase or conversion privileges exercisable
within 60 days of the date of determination of a Fundamental Change; and
the term "all or substantially all" in the context of a sale of assets
means the sale of more than 50% of the book value of the Company's assets
in one or a related series of transactions; provided that the sale of any
of the Company's interest in any one Majority Subsidiary or Partnership
Company, including, for the avoidance of doubt, CompuCom Systems, Inc.,
shall not be deemed the sale of "all or substantially all" of the Company's
assets.
Fundamental Change Expiration Time: The term "Fundamental Change
Expiration Time" shall have the meaning set forth in Section 3.5(b).
Global Note: The term "Global Note" shall have the meaning set forth
in Section 2.5(b).
Indebtedness: The term "Indebtedness" shall mean, with respect to any
Person, and without duplication:
(a) all indebtedness, obligations and other liabilities (contingent or
otherwise) of such Person for borrowed money (including obligations in
respect of overdrafts, foreign exchange contracts, currency exchange
agreements, interest rate protection agreements, and any loans or advances
from banks, whether or not evidenced by notes or similar instruments, and
all commitment, standby and other fees due and payable to financial
institutions with respect to credit facilities available to such Person) or
evidenced by bonds, debentures, notes or similar instruments (whether or
not the recourse of the lender is to the whole of the assets of such Person
or to only a portion thereof), and all obligations of such Person issued or
assumed as the deferred purchase price of property or services other than
any account payable or other accrued current liability or obligation
incurred in the ordinary course of business in connection with the
obtaining of materials or services;
(b) all reimbursement obligations and other liabilities (contingent or
otherwise) of such Person with respect to letters of credit, bank
guarantees or bankers' acceptances;
(c) all obligations and liabilities (contingent or otherwise) in
respect of leases of real or personal property or other assets of such
Person required, in conformity with generally accepted accounting
principles, to be accounted for as capitalized lease obligations on the
balance sheet of such Person and all obligations and other liabilities
(contingent or otherwise) under any lease or related document (including a
purchase agreement) in connection with the lease of real property which
provides that such Person is contractually obligated to purchase or cause a
third party to purchase the leased property and thereby guarantee a minimum
residual value of the leased property to the lessor and the obligations of
such Person under such lease or related documents to purchase or to cause a
third party to purchase such leased property;
(d) all obligations of such Person (contingent or otherwise) with
respect to an interest rate or other swap, cap or collar agreement or other
similar instrument or agreement or foreign currency hedge, exchange,
purchase or similar instrument or agreement;
(e) all direct or indirect guaranties or similar agreements by such
Person in respect of, and obligations or liabilities (contingent or
otherwise) of such Person to purchase or otherwise acquire or otherwise
assure a creditor against loss in respect of, indebtedness, obligations or
liabilities of another Person of the kind described in clauses (a) through
(d);
(f) any indebtedness or other obligations described in clauses (a)
through (e) secured by any mortgage, pledge, lien or other encumbrance
existing on property which is owned or held by such Person, regardless of
whether the indebtedness or other obligation secured thereby shall have
been assumed by such Person; and
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(g) any and all deferrals, renewals, extensions and refundings of, or
amendments, modifications or supplements to, any indebtedness, obligation
or liability of the kind described in clauses (a) through (f).
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 Purchaser: The term "Initial Purchaser" shall mean Credit
Suisse First Boston Corporation.
IPO Rights: The terms "IPO Rights" shall have the meaning specified in
Section 15.5(e).
Liquidated Damages Amount: The term "Liquidated Damages Amount" shall
have the meaning specified in Section 2(e) of the Registration Rights Agreement.
Majority Subsidiary: The term "Majority Subsidiary" shall mean any
corporation, association or other business entity of which the Company owns,
directly or indirectly, securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions.
Note or Notes: The term "Note" or "Notes" shall mean any Note or
Notes, as the case may be, authenticated and delivered under this Indenture,
including the Global Note.
Note register: The term "Note register" shall have the meaning
specified in Section 2.5(a).
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 Notes registrar's books.
Officers' Certificate: The term "Officers' Certificate," when used
with respect to the Company, shall mean a certificate signed by both (a) the
Chairman of the Board of Directors or the President or any Vice President
(whether or not designated by numbers or words added before or after the title
Vice President) and (b) the Chief Financial Officer, General Counsel, Corporate
Controller, Secretary or any Assistant Secretary of the Company. Each Officers'
Certificate (other than the certificate provided pursuant to the Trust Indenture
Act Section 314(a)(4)) shall include the statements provided for in Trust
Indenture Act Section 314(e).
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 outside
counsel to the Company, that meets the requirements of Section 16.5 hereof. Each
such Opinion of Counsel shall include the statements provided for in Trust
Indenture Act Section 314(e).
Optional Redemption: The term "Optional Redemption" shall have the
meaning specified in Section 3.1.
Original Conversion Ratio: The term "Original Conversion Ratio" shall
have the meaning specified in Section 15.5(e).
Other Event: The term "Other Event" shall have the meaning specified
in Section 15.5(i).
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;
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(b) Notes, or portions thereof, (i) for the 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 (ii) which shall have
been otherwise discharged in accordance with Article XIII;
(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; and
(d) Notes converted into Common Stock pursuant to Article XV and Notes
deemed not outstanding pursuant to Article III.
Partnership Company: The term "Partnership Company" means, in the
context of this Indenture, an entity in which the Company either directly or
indirectly through its Subsidiaries has an equity interest.
Person: The term "Person" shall mean a corporation, an association, a
partnership, a limited liability company, an individual, a joint venture, a
joint stock company, a trust, or any other entity or organization, including
government or political subdivision or agency or instrumentality 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.
Principal Amount: The Term "Principal Amount" shall have the meaning
specified in Section 2.5(b).
QIB: The term "QIB" shall mean a "qualified institutional buyer" as
defined in Rule 144A.
Reference Date: The term "Reference Date" shall have the meaning
specified in Section 15.5(d).
Registration Rights Agreement: The term "Registration Rights
Agreement" shall mean the Registration Rights Agreement, dated as of June 3,
1999, between the Company and the Initial Purchaser, and certain permitted
assigns specified therein, as amended from time to time in accordance with its
terms.
Relevant Conversion Ratio: The term "Relevant Conversion Ratio" shall
have the meaning specified in Section 15.5(f).
Relevant Closing Date: The term "Relevant Closing Date" shall have the
meaning specified in Section 15.5(e).
Representative: The term "Representative" shall mean (a) the indenture
trustee or other trustee, agent or representative for any Senior Indebtedness or
(b) with respect to any Senior Indebtedness that does not have any such trustee,
agent or other representative, (i) in the case of such Senior Indebtedness
issued pursuant to an agreement providing for voting arrangements as among the
holders or owners of such Senior Indebtedness, any holder or owner of such
Senior Indebtedness acting with the consent of the required Persons necessary to
bind such holders or owners of such Senior Indebtedness and (ii) in the case of
all other such Senior Indebtedness, the holder or owner of such Senior
Indebtedness.
Repurchase Date: The term "Repurchase Date" shall have the meaning
specified in Section 3.5(a).
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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 from to time to time by the Trustee to
administer this Indenture.
Restricted Securities: The term "Restricted Securities" shall have the
meaning specified in Section 2.5(d).
Rights IPO: The term Rights IPO shall mean an initial public offering
of the common stock of a Partnership Company solely through the issuance of
rights, by such Partnership Company, to purchase such common stock to the
shareholders of the Company.
Rights Value per Note: The term "Rights Value per Note" shall have the
meaning specified in Section 15.5(e).
Rights Value per Share: The term "Rights Value per Share" shall have
the meaning specified in Section 15.5(e).
Rule 144A: The term "Rule 144A" shall mean Rule 144A as promulgated
under the Securities Act.
Securities Act: The term "Securities Act" shall mean the Securities
Act of 1933, as amended.
Senior Indebtedness: The term "Senior Indebtedness" shall mean the
principal of, premium, if any, interest, including all interest accruing
subsequent to the commencement of any bankruptcy or similar proceeding, whether
or not a claim for post-petition interest is allowable as a claim in any such
proceeding and rent payable on or in connection with, and all fees, costs,
expenses and other amounts accrued or due on or in connection with, Indebtedness
of the Company, whether outstanding on the date of this Indenture or thereafter
created, incurred, assumed, guaranteed or in effect guaranteed by the Company
including all deferrals, renewals, extensions or refundings of, or amendments,
modifications or supplements to, the foregoing, unless in the case of any
particular Indebtedness the instrument creating or evidencing the same or the
assumption or guarantee thereof expressly provides that such Indebtedness shall
not be senior in right of payment to the Notes or expressly provides that such
Indebtedness is pari passu with or junior to the Notes. Notwithstanding the
foregoing, the term "Senior Indebtedness" shall not include any Indebtedness of
the Company to any of its subsidiaries, a majority of the voting stock of which
is owned, directly or indirectly, by the Company, or Indebtedness evidenced by
the Notes. If any payment made to any holder of any Senior Indebtedness or its
Representative with respect to such Senior Indebtedness is rescinded or must
otherwise be returned by such holder or Representative upon the insolvency,
bankruptcy or reorganization of the Company or otherwise, the reinstated
Indebtedness of the Company arising as a result of such rescission or return
shall constitute Senior Indebtedness effective as of the date of such rescission
or return.
Subscription Value per Note: The term "Subscription Value per Note"
shall have the meaning specified in Section 15.5(f).
Subscription Value per Share: The term "Subscription Value per Share"
shall have the meaning specified in Section 15.5(f).
Trading Day: The term "Trading Day" shall have the meaning specified
in Section 15.5(i)(3).
Trust Indenture Act or TIA: The terms "Trust Indenture Act" or "TIA"
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.
Trustee: The term "Trustee" shall mean Chase Manhattan Trust Company,
National Association until a successor replaces it in accordance with the
provisions of Article VIII of this Indenture and thereafter means such
successor.
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Voting Shares: The term "Voting Shares" means all the Company's
outstanding shares of any class or series of capital stock entitled to vote
generally in the election of members to the Board of Directors.
The definitions of certain other terms are as specified in Sections 2.5 and
3.5 and Article XV.
II. Issue, Description, Execution, Registration and Exchange of Notes
Section 2.1 Designation Amount and Issue of Notes. The Notes shall be
designated as "5.0% Convertible Subordinated Notes due 2006." Notes not to
exceed the aggregate principal amount of $230,000,000 (except pursuant to
Sections 2.5, 2.6, 3.3, 3.5 and 15.2 hereof) upon the execution of this
Indenture, or 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 to or upon the written order of the Company,
signed by its (a) Chief Executive Officer, President, Chief Financial Officer,
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, Assistant Treasurer, Corporate
Controller or its Secretary or any Assistant Secretary, or by two officers
listed in clause (a), 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 automated quotation system on which the Notes may be
listed, or to conform to usage.
Any 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 a 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 (including any Liquidated
Damages Amount) and premium, if any, on any 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 are hereby expressly made, a part of this
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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
(Including Any Liquidated Damages Amount). 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 in each case as
specified on the face of the form of Note attached as Exhibit A hereto.
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Interest on the Notes shall be computed on the basis of a 360-day year comprised
of twelve (12) 30-day months.
The Person in whose name any Note (or its Predecessor Note) is registered
on the Note register at the close of business on any record date with respect to
any interest payment date shall be entitled to receive the interest (including
any Liquidated Damages Amount) payable on such interest payment date, except (i)
that the interest (including any Liquidated Damages Amount) payable upon
redemption (unless the date of redemption is an interest payment date) will be
payable to the Person to whom principal is payable and (ii) as set forth in the
next succeeding sentence. In the case of any Note (or portion thereof) which is
converted into Common Stock during the period from (but excluding) a record date
to (but excluding) the next succeeding interest payment date either (i) if such
Note (or portion thereof) has been called for redemption on a redemption date
which occurs during such period, or is to be redeemed in connection with
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a Fundamental Change on a Repurchase Date (as defined in Section 3.5) which
occurs during such period, the Company shall not be required to pay interest on
such interest payment date in respect of any such Note (or portion thereof)
except to the extent required to be paid upon redemption of such Note or portion
thereof pursuant to Section 3.3 or 3.5 hereof or (ii) if otherwise, any Note (or
portion thereof) submitted for conversion during such period shall be
accompanied by funds equal to the interest payable on such succeeding interest
payment date on the principal amount so converted. Interest (including any
Liquidated Damages Amount) shall be payable at the office of the Company
maintained by the Company for such purposes at 1201 Main Street, Dallas, Texas
75202, which shall initially be an office or agency of the Trustee and may, as
the Company shall specify to the paying agent in writing by each record date, be
paid either (i) by check mailed to the address of the Person entitled thereto as
it appears in the Note register (provided that the holder of Notes with an
aggregate principal amount in excess of $10,000,000 shall, at the written
election of such holder, be paid by wire transfer in immediately available funds
to an account in the United States) or (ii) by transfer to an account maintained
by such Person located in the United States; provided, however, that payments to
the Depositary will be made by wire transfer of immediately available funds to
the account of the Depositary or its nominee. The term "record date" with
respect to any interest payment date shall mean June 1 or December 1 preceding
the relevant June 15 or December 15, respectively.
Any interest (including any Liquidated Damages Amount) on any Note which is
payable, but is not punctually paid or duly provided for, on any June 15 or
December 15 (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 (a) or (b) below:
(a) 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 Person 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 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 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 (b) of this Section 2.3.
(b) 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 (i) signed in the name
and on behalf of the Company by the manual or facsimile signature of its Chief
Executive Officer, President, Chief Financial Officer, any 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") or
Treasurer and (ii) attested by the manual or facsimile signature of its
Secretary or any of its Assistant Secretaries or its Corporate Controller or any
of its Assistant Treasurers or any other officer listed in clause (a) (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
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Note attached as Exhibit A hereto, manually executed by the Trustee (or an
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authenticating agent appointed by the Trustee as provided by Section 16.11),
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. The Note register shall be
in written form or in any form capable of being converted into written form
within a reasonably prompt period of time. The Trustee is hereby appointed "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 maintained by the Company pursuant to
Section 5.2. 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 issued upon any registration of transfer or exchange of Notes
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.
All Notes presented or surrendered for registration of transfer or for
exchange, redemption or conversion shall (if so required by the Company or the
Note registrar) be duly endorsed, or be accompanied by a written instrument or
instruments of transfer in form satisfactory to the Company, and the Notes shall
be duly executed by the Noteholder thereof or his attorney duly authorized in
writing.
No service charge shall be made for any registration of transfer or
exchange of Notes, but the Company may require payment of a sum sufficient to
cover any tax, assessment or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes.
Neither the Company nor the Trustee nor any Note registrar shall be
required to exchange or register a transfer of (i) any Notes for a period of
fifteen (15) days next preceding any selection of Notes to be redeemed or (ii)
any Notes or portions thereof called for redemption pursuant to Section 3.2 or
(iii) any Notes or portions thereof surrendered for conversion pursuant to
Article XV or (iv) any Notes or portions thereof tendered for redemption (and
not withdrawn) pursuant to Section 3.5.
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(b) So long as the Notes are eligible for book-entry settlement
with the Depositary, or unless otherwise required by law, all Notes that, upon
initial issuance are beneficially owned by QIBs or as a result of a sale or
transfer after initial issuance are beneficially owned by QIBs, will be
represented by one or more Global Notes registered in the name of the Depositary
or the nominee of the Depositary (the "Global Note"), except as otherwise
specified below. The transfer and exchange of beneficial interests in any such
Global Note shall be effected through the Depositary in accordance with this
Indenture and the procedures of the Depositary therefor. The Trustee shall make
appropriate endorsements to reflect increases or decreases in the principal
amounts of any such Global Note as set forth on the face of the Note ("Principal
Amount") to reflect any such transfers. Except as provided below, beneficial
owners of a Global Note shall not be entitled to have certificates registered in
their names, will not receive or be entitled to receive physical delivery of
certificates in definitive form and will not be considered holders of such
Global Note.
(c) So long as the Notes are eligible for book-entry settlement,
or unless otherwise required by law, upon any transfer of a definitive Note to a
QIB in accordance with Rule 144A, and upon receipt of the definitive Note or
Notes being so transferred, together with a certification, substantially in the
form on the reverse of the Note, from the transferor that the transfer is being
made in compliance with Rule 144A (or other evidence satisfactory to the
Trustee), the Trustee shall make an endorsement on the Global Note to reflect an
increase in the aggregate Principal Amount of the Notes represented by such
Global Note, and the Trustee shall cancel such definitive Note or Notes in
accordance with the standing instructions and procedures of the Depositary, the
aggregate Principal Amount of the Notes represented by such 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 such Global Note until such definitive Note is
freely tradable in accordance with Rule 144(k); provided further that the
Trustee shall issue 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 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 the legend set forth in this Section 2.5(d) (together with any Common
Stock issued upon conversion of the Notes and required to bear the legend 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 those set forth in the legend 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 the expiration of the holding period applicable to sales thereof
under Rule 144(k) under the Securities Act (or any successor provision), 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 Note has
been sold 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 unless otherwise agreed by the Company in writing, with
written notice thereof to the Trustee:
THE NOTE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE
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
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SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT
IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT); (2) AGREES THAT IT WILL NOT, PRIOR TO
EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE NOTE
EVIDENCED HEREBY UNDER RULE 144(k) UNDER THE SECURITIES ACT (OR ANY
SUCCESSOR PROVISION), RESELL OR OTHERWISE TRANSFER THE NOTE EVIDENCED
HEREBY OR THE COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH NOTE
EXCEPT (A) TO SAFEGUARD SCIENTIFICS, INC. OR ANY SUBSIDIARY THEREOF,
(B) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A
UNDER THE SECURITIES ACT, (C) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE) OR (D) 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); (3) AGREES THAT PRIOR TO
SUCH TRANSFER (OTHER THAN A TRANSFER PURSUANT TO CLAUSE (2)(D)
ABOVE), IT WILL FURNISH TO CHASE MANHATTAN TRUST COMPANY, NATIONAL
ASSOCIATION, AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS IT 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 (4) AGREES
THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE NOTE EVIDENCED HEREBY
IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
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 CHASE MANHATTAN TRUST COMPANY, NATIONAL ASSOCIATION AS
TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE).
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 or as to conditions for removal of the foregoing legend set forth therein
have been satisfied 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 the second paragraph of Section 2.5(c) and in this
Section 2.5(d)), a 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 Notes. Initially, the Global Note shall
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be issued to the Depositary, registered in the name of Cede & Co., as the
nominee of the Depositary, and deposited with the Custodian for Cede & Co.
If at any time the Depositary for a 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 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 certificated form, in aggregate
principal amount equal to the principal amount of such Global Note, in exchange
for such Global Note.
If a Note in certificated form is issued in exchange for any portion of a
Global Note after the close of business at the office or agency where such
exchange occurs on any record date 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 Note, but will be
payable on such interest payment date, subject to the provisions of Section 2.3,
only to the Person to whom interest in respect of such portion of such Global
Note is payable in accordance with the provisions of this Indenture.
Notes in certificated form issued in exchange for all or a part of a Global
Note pursuant to this Section 2.5 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 Notes in
certificated form to the Persons in whose names such Notes in certificated form
are so registered.
At such time as all interests in a Global Note have been redeemed,
converted, canceled, exchanged for Notes in certificated form, or transferred to
a transferee who receives Notes in certificated form thereof, such Global Note
shall, upon receipt thereof, be 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 a global
Note is exchanged for Notes in certificated form, redeemed, converted,
repurchased or canceled, exchanged for Notes in certificated form or transferred
to a transferee who receives Notes in certificated form therefor or any Note in
certificated form is exchanged or transferred for part of a Global Note, the
principal amount of such 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 such Global Note, by the Trustee or the Custodian, at the
direction of the Trustee, to reflect such reduction or increase.
(e) Until the expiration of the holding period applicable to sales
thereof under Rule 144(k) under the Securities Act (or any successor provision),
any stock certificate representing Common Stock issued upon conversion of any
Note shall bear a legend in substantially the following form, unless such Common
Stock has been sold 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 in writing with written notice thereof to the transfer agent:
THE COMMON STOCK EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
ANY STATE SECURITIES LAWS, AND, ACCORDINGLY, THE HOLDER HEREOF AGREES
THAT, UNTIL THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES
OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(k) UNDER THE
SECURITIES ACT (OR ANY SUCCESSOR PROVISION), (1) IT WILL NOT RESELL
OR OTHERWISE TRANSFER THE COMMON STOCK EVIDENCED HEREBY EXCEPT (A) TO
SAFEGUARD SCIENTIFICS, INC. OR ANY
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SUBSIDIARY THEREOF, (B) TO A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN COMPLIANCE WITH
RULE 144A, (C) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED
BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (D) 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 SUCH TRANSFER (OTHER THAN A TRANSFER
PURSUANT TO CLAUSE (1)(D) ABOVE), IT WILL FURNISH TO CHASE MELLON
SHAREHOLDER SERVICES L.L.C., AS TRANSFER AGENT (OR A SUCCESSOR
TRANSFER AGENT, AS APPLICABLE), SUCH CERTIFICATIONS, LEGAL OPINIONS
OR OTHER INFORMATION AS SUCH TRANSFER AGENT 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(D) 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) ABOVE OR UPON ANY TRANSFER
OF THE COMMON STOCK EVIDENCED HEREBY AFTER THE EXPIRATION OF THE
HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY
UNDER RULE 144(k) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR
PROVISION).
Any such Common Stock as to which such restrictions on transfer shall have
expired in accordance with their terms or as to which the conditions for removal
of the foregoing legend set forth therein have been satisfied 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 number of
shares of Common Stock, which shall bear any 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 which results
in such Notes or Common Stock, as the case may be, no longer being "restricted
securities" (as defined under Rule 144).
Section 2.6 Mutilated, Destroyed, Lost or Stolen Notes. In case any
Note shall become mutilated, defaced or be destroyed, lost or stolen, the
Company will execute, and upon its written request the Trustee or an
authenticating agent appointed by the Trustee shall authenticate and make
available for delivery, 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
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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.
Following receipt by the Trustee or such authenticating agent, as the case
may be, of satisfactory security or indemnity and evidence, as described in the
preceding paragraph, the Trustee or such authenticating agent may authenticate
any such substituted Note and make available for delivery such Note. 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 has
been tendered for redemption (and not withdrawn) 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 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 Notes in
certificated form, the Company may execute and the Trustee or an authenticating
agent appointed by the Trustee shall, upon the 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 Notes in certificated form, 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 Notes in certificated form. Without unreasonable delay the Company will
execute and deliver to the Trustee or such authenticating agent Notes in
certificated form (other than in the case of Global Notes) and thereupon any or
all temporary Notes (other than any such 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 make available for delivery in exchange for such temporary Notes an equal
aggregate principal amount of Notes in certificated form. 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 Notes in
certificated form authenticated and delivered hereunder.
Section 2.8 Cancellation of Notes Paid, Etc. All Notes surrendered for the
purpose of payment, redemption, 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. The Trustee shall dispose of such canceled
Notes in accordance with its customary procedures. 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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Section 2.9 CUSIP Numbers. The Company in issuing the Notes may use
"CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use
"CUSIP" numbers in notices of redemption as a convenience to Noteholders;
provided that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Notes or as contained in
any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Notes, and any such redemption shall not
be affected by any defect in or omission of such numbers. The Company will
promptly notify the Trustee of any change in the "CUSIP" numbers.
III. Redemption of Notes
Section 3.1 Optional Redemption by the Company. At any time on or after
June 18, 2002, and prior to maturity, the Notes may be redeemed at the option of
the Company (an "Optional Redemption"), in whole or in part, upon notice as set
forth in Section 3.2, at the following optional redemption prices (expressed as
percentages of the principal amount), together in each case with accrued and
unpaid interest, if any (including any Liquidated Damages Amount), to, but
excluding, the date fixed for redemption.
If redeemed during the period beginning June 18, 2002 and ending on June
15, 2003, at a redemption price of 102.50% and if redeemed during the 12-month
period beginning June 16:
Year Redemption Price
---- ----------------
2003..............101.67%
2004..............100.83%
2005..............100.00%
and 100% at June 15, 2006; provided that if the date fixed for redemption is
after an interest payment record date and on or before June 15 or December 15,
then the interest payable on such date shall be paid to the holder of record on
the preceding June 1 or December 1, respectively.
Section 3.2 Notice of Redemptions; Selection of Notes for Redemption. In
case the Company shall desire to exercise the right of Optional Redemption in
respect of all or, as the case may be, any part of the Notes, it shall fix a
date for redemption and at its written request received by the Trustee not fewer
than thirty (30) days prior (or such shorter period of time as may be acceptable
to the Trustee) to the date fixed for redemption, the Trustee in the name of and
at the expense of the Company, shall send a notice of such redemption not fewer
than twenty (20) days or 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 written notice, and
written notice of the Notes to be redeemed in the case of a redemption, to the
Trustee. The Company may not give notice of any redemption of any of the Notes
if a default in payment of interest on the Notes has occurred and is continuing.
Such mailing shall be sent in accordance with Section 16.3. The notice if sent
in the manner therein 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.
In the case of a redemption, each notice of redemption shall specify the
aggregate principal amount of Notes to be redeemed, the CUSIP number or numbers
of the Notes being redeemed, the date fixed for redemption (which shall be a
Business Day), 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 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 (including CUSIP numbers, if any). In case
any Note is to be redeemed in part only, the notice of redemption shall state
the portion of the principal amount
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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 3.2, 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 provided in Section 5.4)
an amount of money in immediately available funds 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 prior to such redemption, 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
written request, or, if then held by the Company, shall be discharged from such
trust.
Whenever any Notes are to be redeemed, the Company will give the Trustee
written notice in the form of an Officers' Certificate not fewer than thirty
(30) 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 of the Global Note or the Notes in certificated
form to be redeemed (in principal amounts of $1,000 or integral multiples
thereof), by lot or by another method the Trustee deems fair and appropriate.
Upon any redemption of fewer than all Notes, the Company and the Trustee
may (but need not), solely for purposes of determining the pro rata allocation
among such Notes as are unconverted and outstanding at the time of redemption,
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 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 fixed for
redemption 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 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 8.11 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 to
(but excluding) the date fixed for redemption. On presentation and surrender of
such Notes at a place of payment specified in said notice, the said Notes or the
specified portions thereof 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 instead of the holders
surrendering such Notes for redemption on such date.
Upon presentation of any Note redeemed in part only, the Company shall
execute and the Trustee shall authenticate and make available for delivery 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 redemption during the continuance of a default in payment of
interest on the Notes. 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
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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. 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 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 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 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.
Section 3.5 Repurchase at Option of Holders.
(a) If there shall occur a Fundamental Change at any time prior to
maturity of the Notes, 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 that is an integral multiple of $1,000 principal
amount, on the date (the "Repurchase Date") that is thirty (30) days after the
date of the Company Notice (as defined in Section 3.5(b) below) of such
Fundamental Change (or, if such 30th day is not a Business Day, the immediately
succeeding Business Day) at a repurchase price equal to 100% of the principal
amount thereof, together with accrued interest to (but excluding) the Repurchase
Date; provided that, if such Repurchase Date is after June 1 or December 1 and
prior to the next June 15 or December 15, respectively, then the interest
payable on the Repurchase Date shall be paid to the holders of record of the
Notes on the aforementioned June 1 or December 1, respectively.
Upon presentation of any Note redeemed in part only, the Company shall
execute and, upon the Company's written direction to the Trustee, 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.
(b) On or before the 20th day after the occurrence of a
Fundamental Change, the Company or, at its written request (which must be
received by the Trustee at least five (5) Business Days prior to the date the
Trustee is requested to give notice as described below, unless the Trustee shall
agree in writing to a shorter period), the Trustee in the name of and at the
expense of the Company, shall give to all holders of record on the date of the
Fundamental Change a notice (the "Company Notice") of the occurrence of such
Fundamental Change and of the repurchase right at the option of the holders
arising as a result thereof. Such notice shall be mailed in the manner and with
the effect set forth in the first paragraph of Section 3.2 (without regard for
the time limits set forth therein). If the Company shall give such notice, the
Company shall also deliver a copy of the Company Notice to the Trustee at such
time as it is mailed to Noteholders.
Each Company Notice shall specify the circumstances constituting the
Fundamental Change, the Repurchase Date, the price at which the Company shall be
obligated to repurchase Notes, that the holder must exercise the repurchase
right on or prior to the close of business on the Repurchase Date (the
"Fundamental Change Expiration Time"), a description of the procedure which a
Noteholder must follow to exercise such repurchase right, the place or places
where the holder is to surrender such holder's Notes, and the amount of interest
accrued on each Note to the Repurchase Date.
No failure of the Company to give the foregoing notices and no defect
therein shall limit the Noteholders' repurchase rights or affect the validity of
the proceedings for the repurchase of the Notes pursuant to this Section 3.5.
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(c) For a Note to be so repaid at the option of the holder, the
Company must receive at the office or agency of the Company maintained for that
purpose or, at the option of such holder, the Corporate Trust Office, such Note
with the form entitled "Option to Elect Repayment Upon A Fundamental Change" on
the reverse thereof duly completed, together with such Notes duly endorsed for
transfer, on or before the Fundamental Change Expiration Time and submission of
such duly completed form shall be irrevocable on the part of such holder. All
questions as to the validity, eligibility (including time of receipt) and
acceptance of any Note for repayment shall be determined by the Company, whose
determination shall be final and binding absent manifest error.
(d) On or prior to the Repurchase Date, 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 provided in
Section 5.4) an amount of money sufficient to repay on the Repurchase Date all
the Notes to be repaid on such date at the appropriate repurchase price,
together with accrued interest to (but excluding) the Repurchase Date; provided
that if such 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. Payment for Notes repurchased for redemption prior to the
Fundamental Change Expiration Time will be made promptly (but in no event more
than five (5) Business Days) following the Repurchase Date for the amount
payable to the holders of such Notes entitled thereto as they shall appear on
the registry books of the Company.
(e) The Company will comply with the provisions of Rule 13e-4 and
any other tender offer rules under the Exchange Act to the extent then
applicable in connection with the repurchase rights of the holders of Notes in
the event of a Fundamental Change.
IV. Subordination of Notes
Section 4.1 Agreement of Subordination. The Company covenants and agrees,
and each holder of Notes issued hereunder by its 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 registration of 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 (including
Liquidated Damages Amount, if any) on all Notes (including, but not limited to,
the redemption or repurchase price with respect to the Notes called for
repurchase in accordance with Section 3.2 or submitted for redemption in
accordance with Section 3.5, as the case may be, as provided in this Indenture)
issued hereunder shall, to the extent and in the manner hereinafter set forth,
be subordinated and subject 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, whether outstanding at the date of this Indenture or
thereafter incurred.
No provision of this Article IV shall prevent the occurrence of any default
or Event of Default hereunder.
Section 4.2 Payments to Noteholders. 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 or winding up or
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 other payment satisfactory to the holders of such Senior Indebtedness,
or payment thereof in accordance with its terms provided for in cash or other
payment satisfactory to the holders of such Senior Indebtedness before any
payment is made on account of the principal of, premium, if any, or interest
(including Liquidation Damages Amount, if any) on the Notes (except payments
made pursuant to Article XIII from monies deposited with the Trustee pursuant
thereto prior to commencement of proceedings for such dissolution, winding up,
liquidation or reorganization); and upon any such dissolution or winding up or
liquidation or reorganization of the Company or bankruptcy, insolvency,
receivership or other proceeding, 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 would be entitled,
except for the provisions of this Article IV, shall (except as aforesaid) be
paid by the Company or by any receiver,
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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 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 other payment satisfactory to the holders of such 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.
For purposes of this Article IV, 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 any reorganization or readjustment, and (ii)
the rights of the holders of Senior Indebtedness (other than leases which are
not assumed by the Company or 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 Person 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 Person 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 4.2 if such other
Person shall, as a part of such consolidation, merger, conveyance or transfer,
comply with the conditions stated in Article XII.
In the event of the acceleration of the Notes because of an Event of
Default, no payment or distribution shall be made to the Trustee or any holder
of Notes in respect of the principal of, premium, if any, or interest (including
Liquidated Damages Amount, if any) on the Notes (including, but not limited to,
the redemption price with respect to the Notes called for redemption or
repurchase in accordance with Section 3.2 or submitted for repurchase at the
option of the holder in accordance with Section 3.5, as the case may be, as
provided in this Indenture), except payments and distributions made by the
Trustee as permitted by the first or second paragraph of Section 4.5, 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.
In the event that, notwithstanding the foregoing provisions, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities (including, without limitation, by way of setoff or
otherwise), prohibited by the foregoing provisions in this Section 4.2, shall be
received by the Trustee or the holders of the Notes before all Senior
Indebtedness is paid in full in cash or other payment satisfactory to the
holders of such Senior Indebtedness, or provision is made for such payment
thereof in accordance with its terms in cash or other payment satisfactory to
the holders of such Senior Indebtedness, such payment or distribution shall be
held in trust for the benefit of and shall be paid over or delivered to the
holders of Senior Indebtedness 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 any Senior Indebtedness remaining unpaid to the extent necessary to
pay all Senior Indebtedness in full in cash or other payment satisfactory to the
holders of such Senior Indebtedness, after giving effect to any concurrent
payment or distribution to or for the holders of such Senior Indebtedness.
Nothing in this Section 4.2 shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 8.7. This Section 4.2 shall be subject to
the further provisions of Section 4.5.
Section 4.3 Subrogation of Notes. Subject to the payment in full 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 that 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
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Indebtedness to receive payments or distributions of cash, property or
securities of the Company applicable to the Senior Indebtedness until the
principal, premium, if any, and interest (including Liquidated Damages Amount,
if any) 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 among 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
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, premium, if any, and interest (including
Liquidated Damages Amount, if any) 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 and all other facts pertinent thereto or to this Article IV.
Section 4.4 Authorization to Effect Subordination. Each holder of a Note,
by its acceptance thereof, authorizes and directs the Trustee on the holder's
behalf to take such action as may be necessary or appropriate to effectuate the
subordination as provided in this Article IV and appoints the Trustee to act as
the holder's 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 4.5 Notice to Trustee. 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 that 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 knowledge of the existence of
any facts that 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 Representative or a holder or holders of
Senior Indebtedness or from any trustee thereof; 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 not less than two 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 (including Liquidated Damages Amount, if any) on any Note) the
Trustee shall not have received, with respect
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to such monies, the notice provided for in this Section 4.5, then, anything
herein contained to the contrary notwithstanding, the Trustee shall have full
power and authority to apply monies received to the purpose for which they were
received, and shall not be affected by any notice to the contrary that may be
received by it on or after such prior date.
Notwithstanding anything in this Article IV to the contrary, nothing shall
prevent any payment by the Trustee to the Noteholders of monies deposited with
it pursuant to Section 13.1, and any such payment shall not be subject to the
provisions of Section 4.1 or 4.2.
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 Representative or 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
Representative or a holder of Senior Indebtedness or a trustee on behalf of any
such holder or holders. The Trustee shall not be required to make any payment
or distribution to or on behalf of a holder of Senior Indebtedness pursuant to
this Article IV unless it has received satisfactory evidence 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 to the Trustee, the Trustee may defer any payment to
such Person pending judicial determination as to the right of such Person to
receive such payment.
Section 4.6 Trustee's Relation to Senior Indebtedness. 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 of any of its
rights as such holder.
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 8.1, the Trustee shall not be liable to any holder of
Senior Indebtedness (i) for any failure to make any payments or distributions to
such holder or (ii) 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 4.7 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 4.8 Certain Conversions Not 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, premium, if
any, or interest (including Liquidated Damages Amount, if any) on Notes or on
account of the purchase or other acquisition of Notes, and (2) the payment,
issuance or delivery of cash (except in satisfaction of fractional shares
pursuant to Section 15.3), property or securities (other than junior securities)
upon conversion of a Note shall be deemed to constitute payment on account of
the principal of, premium, if any, or interest (including Liquidated Damages
Amount, if any) on such Note. For the purposes of this Section 4.8, the term
"junior securities" means (a) shares of any stock of any class of the Company or
(b) securities of the Company that are subordinated in right of payment to all
Senior Indebtedness that 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 IV 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 Noteholders, the right, which is
absolute and unconditional, of the holder of any Note to convert such Note in
accordance with Article XV.
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Section 4.9 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 term "Trustee" as used in this Article shall (unless
the context otherwise requires) be construed as extending to and including such
paying agent within its meaning as fully for all intents and purposes as if such
paying agent were named in this Article in addition to or in place of the
Trustee; provided, however, that the first paragraph 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.
The Trustee shall not be responsible for the actions or inactions of any
other paying agents (including the Company if acting as its own paying agent)
and shall have no control of any funds held by such other paying agents.
Section 4.10 Senior Indebtedness Entitled to Rely. The holders of Senior
Indebtedness shall have the right to rely upon this Article IV, and no amendment
or modification of the provisions contained herein shall diminish the rights of
such holders unless such holders shall have agreed in writing thereto.
Section 4.11 Reliance on Judicial Order or Certificate of Liquidating
Agent. Upon any payment or distribution of assets of the Company referred to in
this Article, the Trustee and the Noteholders shall be entitled to rely upon any
order or decree entered by any court of competent jurisdiction in which such
insolvency, bankruptcy, receivership, liquidation, reorganization, distribution,
winding up or similar case or proceeding is pending, or a certificate of the
trustee in bankruptcy, liquidating trustee, custodian, receiver, assignee for
the benefit of creditors, agent or other Person making such payment or
dissolution, delivered to the Trustee or to the Noteholders, for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of Senior Indebtedness and other indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article.
Section 4.12 Trustee's Compensation Not Prejudiced. Nothing in this
Article IV will apply to amounts due to the Trustee pursuant to other sections
of this Indenture.
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 (including the redemption price upon
redemption pursuant to Article III), and interest (including Liquidated Damages
Amount, if any), on each of the Notes at the places, at the respective times and
in the manner provided herein and in the Notes.
Section 5.2 Maintenance of Office or Agency. The Company will maintain an
office or agency in the Borough of Manhattan, The City of New York (currently at
Chase Manhattan Bank, 55 Water Street, New York, NY 10041 (attn: CTWindow))
where the Notes may be surrendered for registration of transfer or exchange or
for presentation for payment or for conversion or redemption 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 of the Trustee.
The Company may also from time to time designate co-registrars and one or
more 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. The
Company will give prompt written notice of any such designation or rescission
and of any change in the location of any such other office or agency.
The Company hereby initially designates the Trustee as paying agent, Note
registrar, Custodian and conversion agent and the corporate trust office of the
Trustee in Dallas, Texas, as the office or agency of the Company for each of the
aforesaid purposes.
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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 8.8. If co-registrars
have been appointed in accordance with this Section, the Trustee shall mail such
notices only to the Company and the holders of Notes it can identify from its
records.
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 8.8, 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, the Company 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 shall be received by the paying agent by 10:00 a.m. New York
City time, on such date.
(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
(including Liquidated Damages Amount, if any) 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 (including Liquidated
Damages Amount, if any) so becoming due and will promptly 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 (including Liquidated Damages Amount, if any) 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 is 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.
The Trustee shall not be responsible for the actions of any other
paying agents (including the Company if acting as its own paying agent) and
shall have no control of any funds held by such other paying agents.
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 existence and rights (charter and statutory); provided, however,
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that the Company shall not be required to preserve any such right if the Company
shall determine that the preservation thereof is no longer desirable in the
conduct of the business of the Company and that the loss thereof is not
disadvantageous in any material respect to the holders.
Section 5.6 Payment of Taxes and Other Claims. The Company will pay or
discharge, or cause to be paid or discharged, before the same may become
delinquent, (i) all taxes, assessments and governmental charges levied or
imposed upon the Company or upon the income, profits or property of the Company,
(ii) all claims for labor, materials and supplies which, if unpaid, might by law
become a lien or charge upon the property of the Company and (iii) all stamps
and other duties, if any, which may be imposed by the United States or any
political subdivision thereof or therein in connection with the issuance,
transfer, exchange or conversion of any Notes or with respect to this Indenture;
provided, however, that, in the case of clauses (i) and (ii), the Company shall
not be required to pay or discharge or cause to be paid or discharged any such
tax, assessment, charge or claim (a) if the failure to do so will not, in the
aggregate, have a material adverse impact on the Company, or (b) if the amount,
applicability or validity is being contested in good faith by appropriate
proceedings.
Section 5.7 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
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 5.8 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 law which would prohibit or forgive
the Company from paying all or any portion of the principal of, premium, if any,
or interest (including Liquidated Damages Amount, if any) 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 had been enacted.
Section 5.9 Compliance Certificate. The Company shall deliver to the
Trustee, within ninety (90) days after the end of each fiscal year of the
Company, a certificate signed by either the principal executive officer,
principal financial officer or principal accounting officer of the Company,
stating whether or not to the best knowledge of the signer thereof the Company
is in default in the performance and observance of any of the terms, provisions
and conditions of this Indenture (without regard to any period of grace or
requirement of notice provided hereunder) and, if the Company shall be in
default, specifying all such defaults and the nature and the status thereof of
which the signer may have knowledge.
The Company will deliver to the Trustee, forthwith (and in any event within
five Business Days) upon becoming aware of any default in the performance or
observance of any covenant, agreement or condition contained in this Indenture,
any event which, with notice or the lapse of time or both, would constitute an
Event of Default or any Event of Default, an Officers' Certificate specifying
with particularity such default or Event of Default and further stating what
action the Company has taken, is taking or proposes to take with respect
thereto.
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Any notice required to be given under this Section 5.9 shall be delivered
to a Responsible Officer of the Trustee at its Corporate Trust Office.
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, semiannually, not more
than fifteen (15) days after each June 1 and December 1 in each year beginning
with December 1, 1999, 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 by the Company to the Trustee so long as the Trustee is
acting as the sole 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 or
co-registrar in respect of the Notes, 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.
(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) Within sixty (60) days after June 15 of each year commencing
with the year 2000, the Trustee shall transmit to holders of Notes such reports
dated as of June 15 of the year in which such reports are made 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 promptly notify the Trustee in writing when the Notes are
listed on any stock exchange or automated quotation system or delisted
therefrom.
Section 6.4 Reports by Company. The Company shall file with the Trustee
(and the Commission if at any time after the Indenture becomes qualified under
the Trust Indenture Act), 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, whether or not the Notes are governed by 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 fifteen (15) days after the same is so required to
be filed with the Commission. Delivery of such reports, information and
documents to the Trustee is for informational purposes only and the Trustee's
receipt of such shall not constitute constructive notice of any information
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contained therein or determinable from information contained therein, including
the Company's compliance with any of its covenants hereunder (as to which the
Trustee is entitled to rely exclusively on Officers' Certificates).
VII. Remedies of the Trustee and Noteholders on an Event of Default
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 any installment of interest
(including Liquidated Damages Amount, if any) upon any of the Notes as and when
the same shall become due and payable, and continuance of such default for a
period of thirty (30) days, whether or not such payment is permitted under
Article IV hereof; or
(b) default in the payment of the principal of or 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 pursuant to Article III,
by acceleration or otherwise, whether or not such payment is permitted under
Article IV hereof; or
(c) failure on the part of the Company duly to observe or
perform any other of the covenants or agreements on the part of the Company in
the Notes or in this Indenture (other than a covenant or agreement a default in
whose performance or whose breach is elsewhere in this Section 7.1 specifically
dealt with) continued 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 in accordance with the provision
of Section 8.2 hereof, or to the Company and a Responsible Officer of the
Trustee by the holders of at least twenty-five percent (25%) in aggregate
principal amount of the Notes at the time outstanding determined in accordance
with Section 9.4; or
(d) the Company 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 50% or more of the
total assets of the Company 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
(e) an 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 50% or more of the
total assets of the Company, and such involuntary case or other proceeding shall
remain undismissed and unstayed for a period of sixty (60) consecutive days; or
(f) default by the Company in the conversion of any Note in
accordance with Article XV hereof; or
(g) failure on the part of the Company or any Majority
Subsidiary to pay principal at maturity of, or where an event of default shall
have occurred, and be continuing under and resulted in the acceleration of, any
loan agreement, mortgage, indenture or other instrument under which there is
issued or by which there is secured or evidenced any Indebtedness (other than
the Notes) of the Company or any Majority Subsidiary, whether such Indebtedness
exists on the date of the issuance of the Notes or shall be created hereafter,
and the principal amount of such Indebtedness which, together with any such
other Indebtedness so accelerated or not paid at maturity, aggregates an amount
equal to or greater than $25,000,000; or
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(h) a final judgment, order or decree other than a judgment,
order or decree in respect of any Indebtedness which, together with other such
outstanding final judgments, orders or decrees entered against the Company
and/or any Majority Subsidiary, is equal to or exceeds an aggregate of
$15,000,000 (not covered by valid and collectible insurance from solvent
unaffiliated insurers) shall be entered against the Company and/or any Majority
Subsidiaries and within forty-five (45) days after entry thereof such judgment
or judgments shall not have vacated, satisfied or discharged or execution
thereof stayed or, within 45 days after expiration of any such stay, such
judgment shall not have vacated, satisfied or discharged,
then, unless the principal of all of the Notes shall have already become due and
payable, and so long as such Event of Default is continuing, in the case of an
Event of Default specified in Section 7.1(a) or (b) the Trustee, and in any
other case (other than an Event of Default if specified in Section 7.1(d) or
(e)) the Trustee at the direction of the holders of not less than twenty-five
percent (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), shall declare the
principal of and premium, if any, on all the Notes and the interest accrued
thereon (including Liquidated Damages Amount, if any) 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(d) or (e) occurs, the principal of all the Notes and the interest
accrued thereon shall (including Liquidated Damages Amount, if any) be
immediately and automatically due and payable without necessity of further
action. 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 (including Liquidated Damages Amount, if any) 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 (including Liquidated Damages Amount, if any) (to the
extent that payment of such interest is enforceable under applicable law) and on
such principal and premium, if any, at the same rate as the rate borne by the
Notes, to the date of such payment or deposit) and amounts due to the Trustee
pursuant to Section 8.7, and if any and all defaults under this Indenture, other
than the nonpayment of principal of and premium, if any, and accrued interest on
(including Liquidated Damages Amount, if any) 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 a
Responsible Officer of the Trustee, promptly (and in any event within five
Business Days) upon becoming aware thereof, of any Event of Default.
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 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 taken.
Section 7.2 Payments of Notes on Default; Suit Therefor. The Company
covenants that (i) in case default shall be made in the payment of any
installment of interest upon (including Liquidated Damages Amount, if any) 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 (ii) 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, upon a declaration
of acceleration or otherwise and 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 (including Liquidated Damages Amount,
if any), as the case may be, with interest to the date of such payment 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 (including Liquidated Damages Amount, if any) at the same rate as the
rate borne by the Notes; and, in addition
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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 all other amounts due the Trustee under
Section 8.6. Until such demand by the Trustee, the Company may pay the principal
of and premium, if any, and interest on (including Liquidated Damages Amount, if
any) 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
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 shall 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 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 at the direction of holders of
not less than 25% of aggregate principal amount of the Notes then outstanding,
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 (including Liquidated Damages
Amount, if any) owing and unpaid in respect of the Notes, and, in case of any
judicial proceedings, to file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of the Trustee 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 8.7; 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 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 at 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 agent 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
following order, 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:
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First: To the payment of all amounts due the Trustee under Section
8.7;
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 (including Liquidated Damages Amount, if any) 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 overdue installments of interest
(including Liquidated Damages Amount, if any) at the same rate as 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
(including Liquidated Damages Amount, if any), 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
(including Liquidated Damages Amount, if any) at the same rate as 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 (including
Liquidated Damages Amount, if any) without preference or priority of
principal and premium, if any, over interest (including Liquidated Damages
Amount, if any), or of interest (including Liquidated Damages Amount, if
any) 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.
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 twenty-five percent (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 it may require 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.
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 (including the redemption price pursuant to
Article III), and accrued interest on (including Liquidated Damages Amount, if
any) such Note, on or after the respective due dates expressed in such Note or
in the event of redemption, 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 its own behalf and for its own benefit, may enforce, and
may institute and maintain any proceeding suitable to enforce, its rights of
conversion as provided herein.
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Section 7.5 Proceedings by Trustee. In case of an Event of Default, the
Trustee (but only in the case of an Event of Default as specified in Section
7.1(c), (f), (g) and (h), at the request of the holders of not less than 25% in
the aggregate principal amount of the Notes then outstanding) shall proceed to
protect and enforce the rights vested in it by this Indenture by such
appropriate judicial proceedings as are necessary 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
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, (b) the Trustee may
take any other action which is not inconsistent with such direction, (c) the
Trustee may decline to take any action that would benefit some Noteholders to
the detriment of other Noteholders and (d) the Trustee may refuse to follow any
direction that may involve the Trustee in personal liability. 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 (including
Liquidated Damages Amount, if any) or premium, if any, on, or the principal of,
the Notes, (ii) a failure by the Company to convert any Notes into Common Stock,
(iii) a default in the payment of the redemption price pursuant to Article III
or (iv) 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
each or all Notes then outstanding or affected thereby. 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. If any default occurs and if such default
is known to a Responsible Officer of the Trustee, the Trustee shall mail to all
Noteholders in the manner and to the extent provided in TIA Section 313(c)
notice of such default within ninety (90) days after it occurs, unless such
default 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 (including Liquidated Damages Amount, if any) on
any of the Notes, 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 determines that the withholding of such notice is in the
interests of the Noteholders.
VIII. Concerning the Trustee
Section 8.1 General. The duties and responsibilities of the Trustee shall
be as provided by the TIA and as set forth herein. Notwithstanding the
foregoing, no provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder, or in
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the exercise of any of its rights or powers, if it in its sole discretion shall
believe that repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it. Whether or not herein expressly so
provided, every provision of this Indenture relating to the conduct or affecting
the liability of or affording protection to the Trustee shall be subject to the
provisions of this Article VIII.
Section 8.2 Certain Rights of Trustee. Subject to TIA Sections 315(a)
through (d):
(i) the Trustee may rely, and shall be protected in acting or
refraining from acting, upon any resolution, certificate, statement,
instrument, facsimile transmission, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be genuine and to
have been signed, made or presented by the proper person and may accept and
rely upon the same as conclusive evidence of the truth and accuracy of the
statement and opinions contained therein. The Trustee need not investigate
any fact or matter stated in any such document;
(ii) before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel, which shall
conform to Section 16.5. The Trustee shall not be liable for any action it
takes or omits to take in good faith in reliance on such certificate or
opinion;
(iii) the Trustee may consult with counsel and the written advice of
such counsel shall be full and complete authorization and protection with
respect to any action taken, suffered or omitted by it hereunder in good
faith and reliance thereon and may act through its attorneys and agents and
shall not be responsible for the misconduct or negligence of any attorney
or agent appointed with due care;
(iv) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request or
direction of any of the holders, unless such holders shall have offered to
the Trustee reasonable security or indemnity against the costs, expenses
and liabilities that might be incurred by it in compliance with such
request or direction;
(v) the Trustee shall not be liable for any action it takes or
omits to take in good faith that it believes to be authorized or within its
rights or powers or for any action it takes or omits to take in accordance
with the written direction of the holders of a majority in principal amount
of the outstanding Notes 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;
(vi) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officers' Certificate;
(vii) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry
or investigation into such facts or matters as it may see fit, and, if the
Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of the Company
personally or by agent or attorney;
(viii) the Trustee shall not be required to take notice or be deemed
to have notice of any default hereunder unless the Trustee be specifically
notified of such default in writing by the Company or any holder of the
Notes, and in the absence of such notice the Trustee may conclusively
assume that there is no default; provided that the Trustee shall be
required to take and be deemed to have notice of its failure to receive
payments of interest or principal hereunder;
(ix) except for information provided by the Trustee concerning the
Trustee, the Trustee shall have no responsibility with respect to any
information in any offering memorandum or other disclosure
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material distributed with respect to the Notes, and the Trustee shall have
no responsibility for compliance with securities laws in connection with
the issuance and sale of the Notes;
(x) in the event the Trustee shall receive inconsistent or
conflicting requests and indemnity from two or more groups of holders of
the Notes, each representing at least 25% (but less than 50%) of the
aggregate principal amount of the Notes then outstanding, the Trustee will
act in accordance with instructions received by the holders of the greater
percentage thereof;
(xi) except as otherwise expressly provided by the provisions of
this Indenture, the Trustee shall not be obligated and may not be required
to give or furnish any notice, demand, report, request, reply, statement,
advice or opinion to the holder of any Note or to the Company or any other
Person, and the Trustee shall not incur any liability for its failure or
refusal to give or furnish the same unless obligated or required to do so
by the express provisions hereof; and
(xii) the Trustee shall not be required to give any bond or surety
with respect to the performance of its duties or the exercise of its powers
under this Indenture.
Section 8.3 Individual Rights of Trustee. The Trustee, in its individual
or any other capacity, may become the owner or pledgee of Notes and may
otherwise deal with the Company or its Affiliates with the same rights it would
have if it were not the Trustee. Any registrar, co-registrar, paying agent,
conversion agent or authenticating agent may do the same with like rights.
However, the Trustee is subject to TIA Sections 310(b) and 311.
Section 8.4 Trustee's Disclaimer. The Trustee (i) makes no representation
as to the validity or adequacy of this Indenture or the Notes, (ii) shall not be
accountable for the Company's use or application of the proceeds from the Notes
and (iii) shall not be responsible for any statement in the Notes other than its
certificate of authentication.
Section 8.5 Notice of Default. If any Event of Default occurs and is
continuing and if the Trustee has actual knowledge of such Event of Default, the
Trustee shall mail to each holder in the manner and to the extent provided in
TIA Section 313(c) notice of the Event of Default within 90 days after it
occurs, unless such Event of Default has been cured.
Section 8.6 Conflicting Interests of Trustee. If the Trustee has or shall
acquire a conflicting interest within the meaning of the TIA, 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 TIA and this Indenture.
Section 8.7 Compensation and Indemnity. The Company shall pay to the
Trustee such compensation as shall be agreed upon in writing for its services.
The compensation of the Trustee shall not be limited by any law on compensation
of a trustee of an express trust. The Company shall reimburse the Trustee upon
request for all reasonable out-of-pocket expenses and advances incurred or made
by the Trustee in accordance with this Indenture. Such expenses shall include
the reasonable compensation and expenses of the Trustee's agents and counsel.
The Company shall indemnify and hold harmless the Trustee and its
directors, agents and employees (collectively the "Indemnities") against any and
all losses, liabilities, obligations, damages, penalties, fines, judgments,
actions, suits, proceedings, reasonable costs and expenses (including reasonable
fees and disbursements of counsel) of any kind whatsoever which may be incurred
by or imposed on the Indemnities or any of them in connection with any
investigative, administrative or judicial proceeding (whether or not such
indemnified party is designated a party to such proceeding) arising out of or in
connection with the acceptance or administration of its duties under this
Indenture; provided, however, that the Company need not reimburse any expense or
indemnify against any loss, obligation, damage, penalty, fine, judgment, action,
suit, proceeding, reasonable cost or expense (including reasonable fees and
disbursements of counsel) of any kind whatsoever which may be incurred by
Indemnities or any of them in connection with any investigative, administrative
or judicial proceeding (whether or not such indemnified party is designated a
party to such proceeding) in which (i) the Trustee is not following any
instructions or other direction upon which it is authorized to rely and (ii) it
is determined that the Indemnities or any of them acted with negligence or
willful misconduct. The Trustee shall notify the Company promptly of any claim
for which it may seek indemnity. Failure
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by the Trustee to so notify the Company shall not relieve the Company of its
obligations hereunder, unless the Company is materially prejudiced thereby. The
Company shall defend the claim and the Trustee shall cooperate in the defense.
Unless otherwise set forth herein, the Indemnities of any of them may have
separate counsel and the Company shall pay the reasonable fees and expenses of
such counsel. The Company need not pay for any settlement made without its
consent, which consent shall not be unreasonably withheld. The provisions of
this Section 8.7 shall survive the termination of this Indenture and the
resignation or removal of the Trustee for any reason.
To secure the Company's payment obligations in this Section 8.7, the
Trustee shall have a lien prior to the Notes on all money or property held or
collected by the Trustee, in its capacity as Trustee, except money or property
held in trust to pay principal of, premium, if any, and interest on particular
Notes.
If the Trustee incurs expenses or renders services after the occurrence of
an Event of Default specified in clause (d) or (e) of Section 7.1, the expenses
and the compensation for the services will be intended to constitute expenses of
administration under Title 11 of the United States Bankruptcy Code or any
applicable federal or state law for the relief of debtors.
Section 8.8 Replacement of Trustee. A resignation or removal of the
Trustee and appointment of a successor Trustee shall become effective only upon
the successor Trustee's acceptance of appointment as provided in this Section
8.8.
The Trustee may resign at any time by so notifying the Company in writing
at least thirty (30) days prior to the date of the proposed resignation. The
holders of a majority in principal amount of the outstanding Notes may remove
the Trustee by so notifying the Trustee in writing and may appoint a successor
Trustee with the prior consent of the Company. The Company may remove the
Trustee if: (i) the Trustee is no longer eligible under Section 8.10; (ii) the
Trustee is adjudged a bankrupt or an insolvent; (iii) a receiver or other public
officer takes charge of the Trustee or its property; or (iv) the Trustee becomes
incapable of acting.
If the Trustee resigns or is removed, or if a vacancy exists in the office
of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the holders
of a majority in principal amount of the outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company. If
the successor Trustee does not deliver its written acceptance required by the
next succeeding paragraph of this Section 8.8 within thirty (30) days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
holders of a majority in principal amount of the outstanding Notes may petition
any court of competent jurisdiction for the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Immediately after the delivery of
such written acceptance, subject to the lien provided in Section 8.7, (i) the
retiring Trustee shall transfer all property held by it as Trustee to the
successor Trustee, (ii) the resignation or removal of the retiring Trustee shall
become effective and (iii) the successor Trustee shall have all the rights,
powers and duties of the Trustee under this Indenture. A successor Trustee
shall mail notice of its succession to each holder.
If the Trustee is no longer eligible under Section 8.10, any holder who
satisfies the requirements of TIA Section 310(b) may petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee.
The Company shall give notice of any resignation and any removal of the
Trustee and each appointment of a successor Trustee to all holders. Each notice
shall include the name of the successor Trustee and the address of its Corporate
Trust Office.
Notwithstanding replacement of the Trustee pursuant to this Section 8.8,
the Company's obligation under Section 8.7 shall continue for the benefit of the
retiring Trustee.
Section 8.9 Successor Trustee by Merger, Etc. If the Trustee consolidates
with, merges or converts into, or transfers all or substantially all of its
corporate trust business to, another corporation or national banking
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association, the resulting, surviving or transferee corporation or national
banking association without any further act shall be the successor Trustee with
the same effect as if the successor Trustee had been named as the Trustee
herein.
Section 8.10 Eligibility. This Indenture shall always have a Trustee
who satisfies the requirements of TIA Section 310(a)(1). The Trustee (or the
bank holding company to which the Trustee is a member) shall have a combined
capital and surplus of at least $25 million as set forth in its most recent
published annual report of condition.
Section 8.11 Money Held in Trust. Subject to the provisions of Section
13.4 and Section 4.2, 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. The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law and except for money held in trust under Article XIII of
this Indenture.
Section 8.12 Withholding Taxes. The Trustee, as agent for the Company,
shall exclude and withhold from each payment of principal and interest and other
amounts due hereunder or under the Notes any and all withholding taxes
applicable thereto as required by law. The Trustee agrees to act as such
withholding agent and, in connection therewith, whenever any present or future
taxes or similar charges are required to be withheld with respect to any amounts
payable in respect of the Notes, to withhold such amounts and timely pay the
same to the appropriate authority in the name of and on behalf of the holders of
the Notes, that it will file any necessary withholding tax returns or statements
when due, and that, as promptly as possible after the payment thereof, it will
deliver to each holder of a Note appropriate documentation showing the payment
thereof, together with such additional documentary evidence as such holders may
reasonably request from time to time.
Section 8.13 Preferential Collection of Claims. If and when the Trustee
shall be or become a creditor of the Company (or any other obligor upon the
Notes), the Trustee shall be subject to the provisions of the Trust Indenture
Act regarding the collection of the claims against the Company (or any such
other obligor).
Section 8.14 Trustee's Application for Instructions from the Company.
Any application by the Trustee for written instructions from the Company (other
than with regard to any action proposed to be taken or omitted to be taken by
the Trustee that affects the rights of the holders of the Notes or holders of
Senior Indebtedness under this Indenture, including, without limitation, under
Article IV hereof) may, at the option of the Trustee, set forth in writing any
action proposed to be taken or omitted by the Trustee under this Indenture and
the date on and/or after which such action shall be taken or such omission shall
be effective. The Trustee shall not be liable for any action taken by, or
omission of, the Trustee in accordance with a proposal included in such
application on or after the date specified in such application (which date shall
not be less than ten (10) Business Days after the date any officer of the
Company actually receives such application, unless any such officer shall have
consented in writing to any earlier date) unless prior to taking any such action
(or the effective date in the case of an omission), the Trustee shall have
received written instructions in response to such application specifying the
action to be taken or omitted.
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.
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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 its 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 registry of such Notes 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
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 it 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, waiver or other action under this Indenture, Notes which
are owned by the Company or any other obligor on the Notes or any Affiliate of
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 any Affiliate of 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
therefore, irrespective of whether any notation in regard thereto is made upon
such Note or any Note issued in exchange or substitution therefore.
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 action authorized to be taken by Noteholders pursuant to
any of the provisions of Article VII;
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(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; or
(4) to take any other action authorized to be taken by or on
behalf of the holders of any specified aggregate principal amount of the Notes
under any other provision of 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 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 forty-five (45) 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 twenty-five percent (25%) 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 one or more Notes on the record
date pertaining to such meeting. 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
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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 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.
Section 10.8 Exercise of Rights of Trustee or Noteholders May Not Be
Hindered or Delayed by Call of Meeting. Nothing contained in this Article X will
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 the Notes.
Section 10.9 Procedures Not Exclusive. The procedures set forth in this
Article X are not exclusive and the rights and obligations of the Company, the
Trustee and the Noteholders under other Articles of this Indenture will in no
way be limited by the provisions of this Article X.
XI. Supplemental Indentures
Section 11.1 Supplemental Indentures Without Consent of Noteholders. The
Company, when authorized by the resolutions of the Board of Directors (as
evidenced by a Board Resolution delivered to the Trustee), 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 and the
repurchase obligations of the Company pursuant to the requirements of Section
3.5(e);
(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 Person to the Company,
or successive successions, and the assumption by the successor Person of the
covenants, agreements and obligations of the Company pursuant to Article XII;
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(d) to add to the covenants of the Company such further covenants,
restrictions or conditions as the Board of Directors shall consider to be 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 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 registrable 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 that 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 that 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.
Upon the written 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 supplemental indenture, 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 that 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
that 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.
Notwithstanding any other provision of the Indenture or the Notes, the
Registration Rights Agreement and the obligation to pay Liquidated Damages
Amount thereunder may be amended, modified or waived in accordance with the
provisions of the Registration Rights Agreement.
Section 11.2 Supplemental Indenture 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, the
Company, when authorized by the resolutions of the Board of Directors, and the
Trustee shall, 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 thereof,
or impair the right of any Noteholder to institute suit for the payment thereof,
or make the principal thereof or interest or premium, if any, thereon payable in
any coin or currency other than that provided in the Notes, or modify the
provisions of this Indenture with respect to the subordination of the Notes in a
manner adverse to the Noteholders in any material respect, or change the
obligation of the Company to repurchase any Note upon the happening of a
Fundamental Change in a manner adverse to the holder of Notes, or impair the
right to convert the Notes
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into Common Stock subject to the terms set forth herein, including Section 15.6,
or reduce the percentage of Notes necessary to waive any Event of Default, in
each case, 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 written request of the Company, accompanied by a copy of the
resolutions of the Board of Directors certified by its Secretary or Assistant
Secretary and 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 its 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 Indenture. Any supplemental indenture
executed pursuant to the provisions of this Article XI shall comply with the
Trust Indenture Act, as then in effect, provided that this Section 11.3 shall
not require such supplemental indenture or the Trustee to 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 or the Indenture has been qualified
under the Trust Indenture Act, nor shall it constitute any admission or
acknowledgment by any party to such supplemental indenture that any such
qualification is required prior to the time such qualification is in fact
required under the terms of the Trust Indenture Act or the Indenture has been
qualified under the Trust Indenture Act. 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 term 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 16.11) and delivered in
exchange for the Notes then outstanding, upon surrender of such Notes then
outstanding.
Section 11.5 Evidence of Compliance of Supplemental Indenture to Be
Furnished to Trustee. Prior to entering into any supplemental indenture, the
Trustee may request and shall be fully protected in relying on an Officers'
Certificate and an Opinion of Counsel meeting the requirements set forth in
Section 16.5 as conclusive evidence that any supplemental indenture executed
pursuant hereto complies with the requirements of this Article XI. The Opinion
of Counsel shall also state that the Supplemental Indenture will be valid and
binding upon the Company, subject to customary exceptions.
XII. Consolidation, Merger, Sale, Conveyance and Lease
Section 12.1 Company May Consolidate, Etc., on Certain Terms. Subject to
the provisions of Section 12.2, nothing contained in this Indenture or in any of
the Notes shall prevent any consolidation or merger of the Company with or into
any other Person or Persons (whether or not affiliated with the Company), or
successive consolidations or mergers in which the Company or its successor or
successors shall be a party or parties, or shall prevent any sale, conveyance or
lease (or successive sales, conveyances or leases) of all or substantially all
of the property of the Company, to any other Person (whether or not affiliated
with the Company), authorized to acquire and
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operate the same and that shall be organized under the laws of the United States
of America, any state thereof or the District of Columbia; provided that upon
any such consolidation, merger, sale, conveyance or lease, the due and punctual
payment of the principal of and premium, if any, and interest (including
Liquidated Damages Amount, if any) on all of the Notes, according to their tenor
and the due and punctual performance and observance of all of the covenants and
conditions of this Indenture to be performed by the Company, shall be expressly
assumed, by supplemental indenture satisfactory in form to the Trustee, executed
and delivered to the Trustee by the Person (if other than the Company) formed by
such consolidation, or into which the Company shall have been merged, or by the
Person that shall have acquired or leased such property, and such supplemental
indenture shall provide for the applicable conversion rights set forth in
Section 15.6.
Section 12.2 Successor Corporation to Be Substituted. In case of any such
consolidation, merger, sale, conveyance or lease and upon the assumption by the
successor Person, 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 Person shall succeed to
and be substituted for the Company, with the same effect as if it had been named
herein as the party of this first part. Such successor Person thereupon may
cause to be signed, and may issue either in its own name or in the name of
Safeguard Scientifics, Inc., any or all of the Notes, issuable hereunder that
theretofore shall not have been signed by the Company and delivered to the
Trustee; and, upon the order of such successor Person 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 that previously shall have been signed
and delivered by the officers of the Company to the Trustee for authentication,
and any Notes that such successor Person 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 that 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 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.
XIII. Satisfaction and Discharge of Indenture
Section 13.1 Discharge of Indenture. When (a) all sums due and payable
under the terms of the Notes and the Indenture have been paid, or (b) the
Company shall deliver to the Trustee for cancellation all Notes theretofore
authenticated (other than any Notes that have been destroyed, lost or stolen and
in lieu of or in substitution for which other Notes shall have been
authenticated and delivered) and not theretofore canceled, or (c) 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 that 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 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,
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if any, so deposited with the Trustee and (iii) the rights, obligations and
immunities of the Trustee hereunder), and the Trustee, on written demand of the
Company accompanied by an Officers' Certificate and an Opinion of Counsel as
required by Section 16.5 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,
provided such deposit was not in violation of Article IV, shall be held in trust
for the sole benefit of the Noteholders and not to be subject to the
subordination provisions of Article IV, and such monies shall be applied by the
Trustee to the payment, either directly or through any paying agent (including
the Company if acting as its own paying agent), to the holders of the particular
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 written request of the Company set
forth in an Officer's Certificate, 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 monies; and the holder of any of the Notes shall thereafter look
only to the Company for any payment that such holder may be entitled to collect
unless an applicable abandoned property law designates another Person.
Section 13.5 Reinstatement. If 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, 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.
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, 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.
XV. Conversion of Notes
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Section 15.1 Right to Convert. Subject to and upon compliance with the
provisions of this Indenture, including, without limitation, Article IV, the
holder of any Note shall have the right, at its option, at any time following
the original issuance of the Notes hereunder to the close of business on the
final maturity date of the Notes (except that, with respect to any Note or
portion of a Note that shall be called for redemption, such right shall
terminate, except as provided in Section 15.2 or Section 3.4, at 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, together with any required
funds, 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 its Notes to Common
Stock, and only to the extent such Notes are deemed to have been converted to
Common Stock under this Article XV.
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 certificated 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
the portion thereof specified in said notice. Such notice shall also state the
name or names (with address or addresses) 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 a Global Note, a Noteholder must complete the appropriate instruction form
for conversion pursuant to the Depository's book-entry conversion program,
deliver by book-entry delivery an interest in such 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 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 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. 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.
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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 to
the close of business on the Business Day next preceding the following interest
payment date shall (unless such Note or portion thereof being converted shall
have been called for redemption on a redemption date that occurs during the
period from the close of business on such record date to the close of business
on the Business Day next preceding the following interest payment date) be
accompanied by payment, in same day 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. Except as provided above
in this Section 15.2, no payment or other 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 a Global Note, the Trustee (or other
conversion agent appointed by the Company), or the Custodian at the direction of
the Trustee (or other conversion agent appointed by the Company), shall make a
notation on such Global Note as to the reduction in the principal amount
represented thereby. The Company shall notify the Trustee in writing of any
conversions of Notes effected through any conversion agent other than the
Trustee.
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. If more than one Note shall be surrendered for
conversion at one time by the same holder, the number of full shares that 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 thereby) so surrendered. If any fractional share of stock would be
issuable upon the conversion of any Note or Notes, the Company shall make an
adjustment and payment therefore in cash at the current market price thereof to
the holder of Notes. The current market price of a share of Common Stock shall
be the Closing Price on the last Business Day immediately preceding the day on
which the Notes (or specified portions thereof) are deemed to have been
converted.
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 and which is, at the date of this Indenture, $77.625, subject
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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 pay or make a dividend or other
distribution on its Common Stock exclusively in Common Stock or shall pay or
make a dividend or other distribution on any other class of capital stock of the
Company which dividend or distribution includes Common Stock, the Conversion
Price in effect at the opening of business on the day next following the date
fixed for the determination of shareholders entitled to receive such dividend or
other distribution shall be reduced by multiplying such Conversion Price by a
fraction of which the numerator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such determination
and the denominator shall be the sum of such number of shares and the total
number of shares constituting such dividend or other distribution, such
reduction to become effective immediately after the opening of business on the
day next following the date fixed for such determination. For the purposes of
this Section 15.5(a), the number of shares of Common Stock at any time
outstanding shall not include shares held in the treasury of the Company but
shall include shares issuable in respect of scrip certificates issued in lieu of
fractions of shares of Common Stock. The Company shall not pay any dividend or
make any distribution on shares of Common Stock held in the treasury of the
Company.
(b) In case the Company shall pay or make a dividend or other
distribution on its Common Stock consisting exclusively of, or shall otherwise
issue to all holders of the Company's Common Stock, rights, warrants or options
entitling the holders thereof for a period not exceeding 60 days to subscribe
for or purchase shares of the Company's Common Stock at a price per share less
than the current market price per share (determined as provided in paragraph (i)
of this Section 15.5) of the Company's Common Stock on the date fixed for the
determination of shareholders entitled to receive such rights, warrants or
options, the Conversion Price in effect at the opening of business on the day
following the date fixed for such determination shall be reduced by multiplying
such Conversion Price by
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a fraction of which the numerator shall be the number of shares of the Company's
Common Stock outstanding at the close of business on the date fixed for such
determination plus the number of shares of the Company's Common Stock which the
aggregate of the offering price of the total number of shares of the Company's
Common Stock so offered for subscription or purchase would purchase at such
current market price and the denominator shall be the number of shares of Common
Stock outstanding at the close of business on the date fixed for such
determination plus the number of shares of the Company's Common Stock so offered
for subscription or purchase, such reduction to become effective immediately
after the opening of business on the day following the date fixed for such
determination. For the purposes of this Section 15.5(b), the number of shares of
the Company's 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 the Company's Common
Stock. The Company shall not issue any rights, warrants or options in respect of
shares of the Company's Common Stock held in the treasury of the Company.
(c) In case outstanding shares of the Company's Common Stock shall be
subdivided into a greater number of shares of the Company's 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 the Company's Common
Stock shall each be combined into a smaller number of shares of Common Stock,
the Conversion Price in effect at the opening of business on the day following
the day upon which such combination becomes effective shall be proportionately
increased, such reduction or increase, as the case may be, to become effective
immediately after the opening of business on the day following the day upon
which such subdivision or combination becomes effective.
(d) Subject to the last sentence of this Section 15.5(d), in case the
Company shall, by dividend or otherwise, distribute to all holders of the
Company's Common Stock (i) evidences of its indebtedness, (ii) shares of any
class of its capital stock (other than Common Stock), or (iii) securities, cash
or assets (excluding any rights, warrants or options referred to in Section
15.5(b), any dividend or distribution paid exclusively in cash and any dividend
or distribution referred to in Section 15.5(a), the Conversion Price shall be
reduced so that the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the effectiveness of the
Conversion Price reduction contemplated by this Section 15.5(d) by a fraction of
which the numerator shall be the current market price per share (determined as
provided in Section 15.5(h) of the Common Stock on the date of such
effectiveness less the fair market value (as determined in good faith by the
Board of Directors, whose determination shall be conclusive and described in a
Board Resolution and shall, in the case of securities being distributed for
which prior thereto there is an actual or when issued trading market, be no less
than the value determined by reference to the average of the closing prices in
such market over the period specified in the succeeding sentence), on the date
of such effectiveness, of the portion of the evidences of indebtedness, shares
of capital stock, securities, cash and property so distributed applicable to one
share of Common Stock and the denominator shall be such current market price per
share of the Common Stock, such reduction to become effective immediately prior
to the opening of business on the day next following the later of (a) the date
fixed for the payment of such distribution and (b) the date 20 days after the
notice relating to such distribution is given pursuant to Section 15.10(a) (such
later date of (a) and (b) being referred to as the "Reference Date"). The
provisions of this Section 15.5(d) shall not be applicable to a Rights IPO or
any other public offering by a Partnership Company that includes a Directed
Share Subscription Program. 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 such
distribution, it must in doing so consider the prices in such market over the
same period used in computing the current market price per share pursuant to
Section 15.5(i). For purposes of this Section 15.5(d), any dividend or
distribution that includes shares of Common Stock or rights, warrants or options
to subscribe for or purchase shares of Common Stock shall be deemed instead to
be (a) a dividend or distribution of the evidences of indebtedness, cash,
property, shares of capital stock or securities other than such shares of Common
Stock or such rights, warrants or options (making any Conversion Price reduction
required by this Section 15.5(d) immediately followed by (b) a dividend or
distribution of such shares of Common Stock or such rights, warrants or options
(making any further Conversion Price reduction required by Section 15.5(a) or
(b) except (i) the Reference Date of such dividend or distribution as defined in
this paragraph (d) shall be substituted as "the date fixed for the determination
of shareholders entitled to receive such dividend or other distributions", "the
date fixed for the determination of shareholders entitled to receive such
rights, warrants or options" and "the date fixed for such determination" within
the meaning of paragraphs (a) and (b) of this Section 15.5 and (ii) any shares
of Common Stock
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included in such dividend or distribution shall not be deemed "outstanding at
the close of business on the date fixed for such determination" within the
meaning of paragraph (a) of this Section 15.5).
(e) In case a Partnership Company shall issue rights ("IPO Rights")
in a Rights IPO, effective on the date of such Partnership Company's initial
public offering (the "Relevant Closing Date"), the Conversion Price on the date
immediately following the Relevant Closing Date shall be obtained by making the
following adjustment calculation:
(i) dividing the average closing price of the IPO Rights on the
last ten trading days that the IPO Rights were publicly traded,
by the number of shares of Common Stock that are required,
under the terms of the IPO Rights, to allow a holder of Common
Stock to receive one IPO Right (the "Rights Value Per Share"),
then
(ii) multiplying (A) the Rights Value Per Share by (B) the principal
amount of each Note divided by the Conversion Price in effect
on the last day (the "Expiration Date") that the IPO Rights are
publicly traded (the "Original Conversion Ratio" and, the
product of such function, the "Rights Value Per Note"), then
(iii) dividing (A) the Rights Value Per Note by (B) the Closing Price
for the Company's Common Stock on the Expiration Date minus the
Rights Value per Share, and then
(iv) dividing (A) the principal amount of each Note by (B) the sum
of (iii) plus the Original Conversion Ratio.
Any adjustment shall be successively made whenever any Rights IPO is
completed, and shall become effective on the Business Day following the closing
of a Rights IPO.
(f) In case a Partnership Company shall undertake, as part of the
initial public offering of its common stock pursuant to a registration statement
filed on Form S-1 under the Securities Act that includes a Directed Share
Subscription Program, the Conversion Price shall be subject to the following
adjustment:
(i) dividing the difference (if any, and in each case only
where (A) is a higher number than (B) between (A) the
average closing or last sale prices, as applicable, of
the common stock of that Partnership Company on the first
four Days its common stock is publicly traded and (B) the
initial public offering price of its common stock, by (C)
the number of shares of the Company's Common Stock
required to subscribe for one share of common stock of
that Partnership Company (the "Subscription Value per
Share"), then
(ii) multiplying (A) the Subscription Value per Share by (B)
the principal amount of each Note divided by the
Conversion Price in effect on the fourth day that the
common stock of the Partnership Company was publicly
traded (the "Relevant Conversion Ratio"), the product of
such calculation being the "Subscription Value per Note",
then
(iii) taking the Subscription Value per Note and dividing by
the Conversion Price in effect immediately prior to the
adjustment made hereunder, and then
(iv) dividing (A) the principal amount of each Note by (B) the
sum of (iii) plus the Relevant Conversion Ratio.
Any adjustment shall be successively made whenever Partnership's Company
completes an initial public offering which includes a Directed Share
Subscription Program, if any, and will be effective on the fifth Business Day
following the Relevant Closing Date.
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(g) In case the Company shall, by dividend or otherwise, make a
distribution to all holders of its Common Stock exclusively in cash in an
aggregate amount that, together with (i) the aggregate amount of any other
distributions to all holders of its Common Stock made exclusively in cash within
the 12 months preceding the date of payment of such distribution and in respect
of which no Conversion Price adjustment pursuant to this Section 15.5(g) has
been made and (ii) the aggregate of any cash plus the fair market value (as
determined in good faith by the Board of Directors, whose determination shall be
conclusive and described in a Board Resolution), as of the expiration of the
tender or exchange offer referred to below, of consideration payable in respect
of any tender or exchange offer by the Company or any of the Company's
subsidiaries for all or any portion of the Common Stock concluded within the 12
months preceding the date of payment of such distribution and in respect of
which no Conversion Price adjustment pursuant to Section 15.5(h) has been made,
exceeds ten percent (10%) of the product of the current market price per share
(determined as provided in Section 15.5(i)) of the Common Stock on the date
fixed for shareholders entitled to receive such distribution times the number of
shares of Common Stock outstanding on such date, the Conversion Price shall be
reduced so that the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the effectiveness of the
Conversion Price reduction contemplated by this Section 15.5(g) by a fraction of
which the numerator shall be the current market price per share (determined as
provided in Section 15.5(i)) of the Common Stock on the date of such
effectiveness less the amount of cash so distributed applicable to one share of
Common Stock and the denominator shall be such current market price per share of
the Common Stock, such reduction to become effective immediately prior to the
opening of business on the later of (a) the day following the date fixed for the
payment of such distribution and (b) the date 20 days after the notice relating
to such distribution is given pursuant to Section 15.10(a).
(h) In case a successful tender or exchange offer made by the Company
or any of the Company's subsidiaries for all or any portion of the Common Stock
shall involve an aggregate consideration having a fair market value (as
determined in good faith by the Board of Directors, whose determination shall be
conclusive and described in a Board Resolution) at the last time (the
"Expiration Time") tenders or exchanges may be made pursuant to such tender or
exchange offer (as it may be amended) that, together with (i) the aggregate of
the cash plus the fair market value (as determined in good faith by the Board of
Directors, whose determination shall be conclusive and described in a Board
Resolution), as of the expiration of the other tender or exchange offer referred
to below, of consideration payable in respect of any other tender or exchange
offer by the Company or any of the Company's subsidiaries for all or any portion
of the Common Stock concluded within the preceding 12 months and in respect of
which no Conversion Price adjustment pursuant to this Section 15.5(h) has been
made and (ii) the aggregate amount of any distributions to all holders of the
Common Stock made exclusively in cash within the preceding 12 months and in
respect of which no Conversion Price adjustment pursuant to Section 15.5(g) has
been made, exceeds ten percent (10%) of the product of the current market price
per share (determined as provided in Section 15.5(i)) of the Common Stock on the
Expiration Time times the number of shares of Common Stock outstanding
(including any tendered shares) on the Expiration Time, the Conversion Price
shall be reduced (but not increased) so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
the Expiration Time by a fraction of which the numerator shall be (i) the
product of the current market price per share (determined as provided in Section
15.5(i)) of the Common Stock at the Expiration Time times the number of shares
of Common Stock outstanding (including any tendered or exchanged shares) at the
Expiration Time minus (ii) the fair market value (determined as aforesaid) of
the aggregate consideration payable to shareholders based on the acceptance (up
to any maximum specified in the terms of the tender or exchange offer) of all
shares validly tendered or exchanged and not withdrawn as of the Expiration Time
(the shares deemed so accepted, up to any such maximum, being referred to as the
"Purchased Shares") and the denominator shall be the product of (i) such current
market price per share at the Expiration Time times (ii) such number of
outstanding shares at the Expiration Time less the number of Purchased Shares,
such reduction to become effective immediately prior to the opening of business
on the day following the Expiration Time.
(i) For the purpose of any computation under this Section 15.5(i) and
paragraphs (b), (d) and (g) (but not for (e) and (f)) of this Section 15.5, the
current market price per share of Common Stock on any date in question shall be
deemed to be the average of the daily Closing Prices for the five (5)
consecutive Trading Days selected by the Company commencing not more than twenty
(20) Trading Days before, and ending not later than, the date in question;
provided, however, that (i) if the "ex" date (as hereinafter defined) for any
event (other than the issuance or distribution requiring such computation) that
requires an adjustment to the Conversion Price pursuant to paragraph (a), (b),
(c), (d), (g) or (h) above (but not (e) or (f)) ("Other Event") occurs on or
after the twentieth (20th) Trading Day
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prior to the date in question and prior to the "ex" date for the issuance or
distribution requiring such computation (the "Current Event"), the Closing Price
for each Trading Day prior to the "ex" date for such Other Event shall be
adjusted by multiplying such Closing Price by the same fraction by which the
Conversion Price is so required to be adjusted as a result of such Other Event,
(ii) if the "ex" date for any Other Event occurs after the "ex" date for the
Current Event and on or prior to the date in question, the Closing Price for
each Trading Day on and after the "ex" date for such Other Event shall be
adjusted by multiplying such Closing Price by the reciprocal of the fraction by
which the Conversion Price is so required to be adjusted as a result of such
Other Event, (iii) if the "ex" date for any Other Event occurs on the "ex" date
for the Current Event, one of those events shall be deemed for purposes of
clauses (i) and (ii) of this proviso to have an "ex" date occurring prior to the
"ex" date for the other event, and (iv) if the "ex" date for the Current Event
is on or prior to the date in question, after taking into account any adjustment
required pursuant to clause (ii) of this proviso, the Closing Price for each
Trading Day on or after such "ex" date shall be adjusted by adding thereto the
amount of any cash and the fair market value on the date in question (as
determined in good faith by the Board of Directors in a manner consistent with
any determination of such value for purposes of paragraph (d) or (g) of this
Section 15.5, whose determination shall be conclusive and described in a Board
Resolution) of the portion of the rights, warrants, options, evidences of
indebtedness, shares of capital stock, securities, cash or property being
distributed applicable to one share of Common Stock. For the purpose of any
computation under paragraph (h) of this Section 15.5, the current market price
per share of Common Stock on any date in question shall be deemed to be the
average of the daily Closing Prices for the five (5) consecutive Trading Days
selected by the Company commencing on or after the latest (the "Commencement
Date") of (i) the date twenty (20) Trading Days before the date in question,
(ii) the date of commencement of the tender or exchange offer requiring such
computation and (iii) the date of the last amendment, if any, of such tender or
exchange offer involving a change in the maximum number of shares for which
tenders are sought or a change in the consideration offered, and ending not
later than the date of the Expiration Time of such tender or exchange offer (or,
if such Expiration Time occurs before the close of trading on a Trading Day, not
later than the Trading Day immediately preceding the date of such Expiration
Time); provided, however, that if the "ex" date for any Other Event (other than
the tender or exchange offer requiring such computation) occurs on or after the
Commencement Date and on or prior to the date of the Expiration Time for the
tender or exchange offer requiring such computation, the Closing Price for each
Trading Day prior to the "ex" date for such Other Event shall be adjusted by
multiplying such Closing Price by the same fraction by which the Conversion
Price is so required to be adjusted as a result of such other event. For
purposes of this paragraph, the term "ex" date, (i) when used with respect to
any issuance or distribution, means the first date on which the Common Stock
trades regular way on the relevant exchange or in the relevant market from which
the Closing Price was obtained without the right to receive such issuance or
distribution, (ii) when used with respect to any subdivision or combination of
shares of Common Stock, means the first date on which the Common Stock trades
regular way on such exchange or in such market after the time at which such
subdivision or combination becomes effective, and (iii) when used with respect
to any tender or exchange offer means the first date on which the Common Stock
trades regular way on such exchange or in such market after the Expiration Time
of such tender or exchange offer. 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 as quoted on the Nasdaq National Market or, if
such security is not quoted or listed or admitted to trading on such Nasdaq
National Market, on the principal national security exchange or 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 or, to the extent permitted by applicable law, a duly authorized
committee thereof, whose determination shall be conclusive.
(2) "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
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cash, securities or other property (whether such date is fixed by the Board of
Directors or by statute, contract or otherwise).
(3) "Trading Day" shall mean (x) if the applicable security is
quoted on the Nasdaq National Market, a day on which trades may be made thereon
or (y) 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 (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.
(j) 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), (g),
(h) or (i) (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. Whenever the Conversion Price is reduced pursuant to the
preceding sentence, the Company shall give holders of record of the Notes 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.
(k) No adjustment in the Conversion Price shall be required unless
such adjustment would require an increase or decrease of at least one percent
(1%) in such price; provided, however, that any adjustments that by reason of
this Section 15.5(k) 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 (1/100) of a share, as the case may be. No
adjustment need be made for rights to purchase Common Stock pursuant to a
Company plan for reinvestment of dividends or interest. To the extent the Notes
become convertible into cash, assets, property or securities (other than capital
stock of the Company), no adjustment need be made thereafter as to the cash,
assets, property or such securities. Interest will not accrue on the cash.
(l) 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. Unless and until a Responsible Officer of the Trustee shall have
received such Officers' Certificate, the Trustee shall not be deemed to have
knowledge of any adjustment of the Conversion Price and may assume without
inquiry that the last Conversion Price of which it has knowledge is still in
effect. 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 give 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 of this Indenture, within twenty (20) days after execution thereof.
Failure to deliver such notice shall not affect the legality or validity of any
such adjustment.
(m) 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 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.
(n) 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
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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.
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 subdivision or
combination to which Section 15.5(c) applies), (ii) any consolidation, merger or
combination of the Company with another Person as a result of which holders of
Common Stock shall be entitled to receive stock, other 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 all or substantially all of the
properties and assets of the Company to any other Person as a result of which
holders of Common Stock shall be entitled to receive stock, other 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 Person, 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) providing that such Note shall be convertible
into the kind and amount of shares of stock, other securities or other 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
reclassification, change, consolidation, merger, combination, sale or conveyance
(provided that, if the kind or amount of stock, other securities or other
property or assets (including cash) receivable upon such reclassification,
change, consolidation, merger, combination, 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 reclassification, change, consolidation, merger,
combination, 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.
The Company shall cause notice of the execution of such supplemental
indenture to be mailed to each holder of Notes, at its 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.
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; Compliance
with Governmental Requirements; 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 of Common Stock 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
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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 which may be issued
upon conversion of Notes will upon issue 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 covenants that, if any shares of Common Stock to be provided
for the purpose of conversion of Notes hereunder require registration with or
approval of any governmental authority under any federal or state law before
such shares may be validly issued upon conversion, the Company will in good
faith and as expeditiously as possible endeavor to secure such registration or
approval, as the case may be.
The Company further covenants that, if at any time the Common Stock shall
be listed on the New York Stock Exchange, the Nasdaq National Market 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 Note; provided, however, that, if the rules of such exchange
or automated quotation system permit the Company to defer the listing of such
Common Stock until the first conversion of the Notes into Common Stock in
accordance with the provisions of this Indenture, the Company covenants to list
such Common Stock issuable upon conversion of the Notes in accordance with the
requirements of such exchange or automated quotation system at such time.
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 the Conversion Price or 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 Note; and the Trustee and any other conversion agent make no representations
with respect thereto. 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 by it to the holders of
all or substantially all of its Common Stock of rights or warrants to subscribe
for or purchase any capital stock of the Company; or
(c) of any reclassification or reorganization 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 stockholders of the Company is
required, or of the sale or transfer of all or substantially all of the assets
of the Company or any Significant Subsidiary; or
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(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company or any Significant Subsidiary,
the Company shall cause to be filed with the Trustee and to be given
to each holder of Notes pursuant to Section 16.3 at its 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 ten (10) 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, 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.
XVI. Miscellaneous Provisions
Section 16.1 Provisions Binding on Company's Successors. All the
covenants, stipulations, promises and agreements by the Company contained in
this Indenture shall bind its successors and assigns whether so expressed or
not.
Section 16.2 Official Acts by Successor Corporation. Any act or
proceeding by any provision of this Indenture authorized or required to be done
or performed by any board, committee or officer of the Company shall and may be
done and performed with like force and effect by the like board, committee or
officer of any Person that shall at the time be the lawful sole successor of the
Company.
Section 16.3 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 sent by reputable
guaranteed overnight delivery service or hand delivery addressed (until another
address is filed by the Company with the Trustee) to Safeguard Scientifics,
Inc., at the Safeguard Building, 435 Devon Park Drive, Wayne, Pennsylvania
19087, Attention: General Counsel. 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, which office is, at the date as of which this
Indenture is dated, located at One Liberty Place, 52nd Floor, 1650 Market
Street, Suite 5210, Philadelphia, PA 19103, Attention: Chase Capital Markets
Fiduciary Services (Safeguard Scientifics, Inc., 5% Convertible Subordinated
Notes due 2006).
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.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by the Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Noteholders shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
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In case by reason of the suspension of regular mail service or by reason of
any other cause it shall be impracticable to give such notice by mail, then such
notification as shall be made with the approval of the Trustee shall constitute
a sufficient notification for every purpose hereunder.
Section 16.4 Governing Law. This Indenture and each 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 the laws of the State of New
York. The Trustee, the Company and the Noteholders agree to submit to the
jurisdiction of the federal courts of the state of New York, Borough of
Manhattan in any action or proceeding arising out of or relating to this
Indenture or the Notes.
Section 16.5 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 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 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 16.6 Legal Holidays. In any case in which 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 16.7 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 or as hereafter amended or modified;
provided further that this Section 16.7 shall not require this Indenture or the
Trustee to 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 to the
Indenture 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 16.8 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 in which property of the
Company or its subsidiaries is located.
Section 16.9 Benefits of Indenture. Nothing in this Indenture or in the
Notes, express or implied, shall give to any Person, other than the parties
hereto, any paying agent, any 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.
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Section 16.10 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 16.11 Authenticating Agent. The Trustee may appoint an
authenticating agent that 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, 3.3 and 3.5, 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 8.10.
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 16.11, 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 either promptly appoint a successor authenticating agent or itself assume
the duties and obligations of the former authenticating agent under this
Indenture and, upon such appointment of a successor authenticating agent, if
made, shall give written notice of such appointment of a successor
authenticating agent to the Company and shall mail notice of such appointment of
a successor authenticating agent to all holders of Notes as the names and
addresses of such holders appear on the Note register.
The Company agrees to pay to the authenticating agent from time to time
such reasonable compensation for its services as shall be agreed upon in writing
between the Company and the authenticating agent.
The provisions of Sections 8.2, 8.3, 8.4, 9.3 and this Section 16.11 shall
be applicable to any authenticating agent.
Section 16.12 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.
Chase Manhattan Trust Company, National Association hereby accepts the
trusts in this Indenture declared and provided, upon the terms and conditions
herein above set forth.
-54-
<PAGE>
In Witness Whereof, the parties hereto have caused this Indenture to be
duly executed.
SAFEGUARD SCIENTIFICS, INC.
By: /s/ James A. Ounsworth
----------------------
Name: James A. Ounsworth
Title: Senior Vice President, General Counsel
& Secretary
CHASE MANHATTAN TRUST COMPANY,
NATIONAL ASSOCIATION
as Trustee
By: /s/ Judy Gordon
---------------
Name: Judy Gordon
Title: Trust Officer
-55-
<PAGE>
EXHIBIT A
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (THE
"DEPOSITARY," WHICH TERM INCLUDES ANY SUCCESSOR DEPOSITARY FOR THE CERTIFICATES)
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 REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DEPOSITARY AND ANY
PAYMENT HEREIN IS MADE TO CEDE & CO. (OR TO SUCH OTHER ENTITY AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER, PLEDGE, OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INSOFAR AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS SECURITY AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS
SECURITY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY,
THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY NOR ANY
INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE OFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
REGISTRATION.
THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD
UNDER RULE 144(k) (OR ANY SUCCESSOR PROVISION) UNDER THE SECURITIES ACT THAT IS
APPLICABLE TO THIS SECURITY (THE "RESALE RESTRICTION TERMINATION DATE"), ONLY
(A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) FOR SO LONG AS THIS SECURITY
IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES
IS A "QUALIFIED INSTITUTIONAL BUYER," AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHICH NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (C) PURSUANT TO A REGISTRATION STATEMENT
THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (D) PURSUANT TO AND
IN COMPLIANCE WITH RULE 144 UNDER THE SECURITIES ACT, IF AVAILABLE, OR (E)
PURSUANT TO AND IN COMPLIANCE WITH ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (SUBJECT TO THE CONDITION THAT,
IF THIS SECURITY IS SOLD OR TRANSFERRED PURSUANT TO THIS CLAUSE (E), THIS
SECURITY MUST UPON SUCH SALE OR TRANSFER CEASE TO BE A "RESTRICTED SECURITY"
WITHIN THE MEANING OF RULE 144 (OR ANY SUCCESSOR PROVISION) UNDER THE SECURITIES
ACT), SUBJECT TO THE RIGHT OF THE COMPANY, ANY REGISTRAR FOR THIS SECURITY AND
THE TRUSTEE, PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D) OR
(E), TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR
OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN EACH OF THE FOREGOING
CASES, A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS
SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE OR A
REGISTRAR. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE
RESALE RESTRICTION TERMINATION DATE.
THE HOLDER OF THIS SECURITY IS ENTITLED TO THE BENEFITS OF A REGISTRATION RIGHTS
AGREEMENT (AS SUCH TERM IS DEFINED IN THE INDENTURE REFERRED TO ON THE REVERSE
HEREOF) AND, BY ITS ACCEPTANCE HEREOF, AGREES TO BE BOUND BY AND TO COMPLY WITH
THE PROVISIONS OF SUCH REGISTRATION RIGHTS AGREEMENT.
A-1
<PAGE>
SAFEGUARD SCIENTIFICS, INC.
5.0% CONVERTIBLE SUBORDINATED NOTES DUE 2006
CUSIP: 786449ADO
No.: 1 PORTAL SYMBOL: SFEPGB06
$200,000,000
Safeguard Scientifics, Inc., a corporation duly organized and validly
existing under the laws of the Commonwealth of Pennsylvania (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 Two Hundred Million
Dollars ($200,000,000) on June 15, 2006, at the office or agency of the Company
maintained for that purpose in accordance with the terms of the Indenture, or,
at the option of the holder of this Note, at the Corporate Trust Office, in such
coin or currency of the United States of America as at the time of payment shall
be legal tender for the payment of public and private debts, and to pay
interest, semi-annually on June 15 and December 15 of each year, commencing
December 15, 1999, on said principal sum at said office or agency, in like coin
or currency, at the rate per annum of 5.0 %, from June 15 or December 15 , 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 hereof is a date to which interest
has been paid or duly provided for, in which case from the date of this Note, or
unless no interest has been paid or duly provided for on the Notes, in which
case from June 9, 1999, until payment of said principal sum has been made or
duly provided for. Notwithstanding the foregoing, if the date hereof is after
any June 1 or December 1, as the case may be, and before the following June 15
or December 15, this Note shall bear interest from such June 15 or December 15;
provided, however, that if the Company shall default in the payment of interest
due on such June 15 or December 15, then this Note shall bear interest from the
next preceding June 15 or December 15, to which interest has been paid or duly
provided for or, if no interest has been paid or duly provided for on such Note,
from June 9, 1999. The interest payable on the Note pursuant to the Indenture on
any June 15 or December 15 will be paid to the Person entitled thereto as it
appears in the Note register at the close of business on the record date, which
shall be the June 1 or December 1 (whether or not a Business Day) next preceding
such June 15 or December 15, as provided in the Indenture; provided that any
such interest not punctually paid or duly provided for shall be payable as
provided in the Indenture. Interest may, at the option of the Company, be paid
either (i) by check mailed to the registered address of such Person (provided
that the holder of Notes with an aggregate principal amount in excess of
$10,000,000 shall, at the written election of such holder, be paid by wire
transfer of immediately available funds) or (ii) by transfer to an account
maintained by such Person located in the United States; provided, however, that
payments to the Depositary will be made by wire transfer of immediately
available funds to the account of the Depositary or its nominee.
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 the Notes to the
prior payment in full of all Senior Indebtedness, as defined in the Indenture,
and 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.
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.
A-2
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note to be duly executed
and delivered.
SAFEGUARD SCIENTIFICS, INC.
By: __________________________________________
Name: __________________________________________
Title __________________________________________
Attest: __________________________________________
Name: __________________________________________
Title: __________________________________________
Dated:_________________
- --------------------------------------------------------------------------------
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the 5.0% Convertible Subordinated Notes due 2006 described in the
within-named Indenture.
CHASE MANHATTAN TRUST COMPANY,
NATIONAL ASSOCIATION, as Trustee
By: ______________________________________________
Authorized Signatory
By: ---------------------------------------------
As Authenticating Agent
(if different from Trustee)
[Reverse of Note on Next Page]
A-3
<PAGE>
[FORM OF REVERSE OF NOTE]
SAFEGUARD SCIENTIFICS, INC.
5.0% CONVERTIBLE SUBORDINATED NOTES DUE 2006
This Note is one of a duly authorized issue of Notes of the Company,
designated as its 5.0% Convertible Subordinated Notes due 2006 (herein called
the "Notes"), limited to the aggregate principal amount of $230,000,000, all
issued or to be issued under and pursuant to an indenture dated as of June 15,
1999 (herein called the "Indenture"), between the Company and Chase Manhattan
Trust Company, National Association, 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, premium, if any, and accrued
interest (including Liquidated Damages Amount (as defined in the Indenture), if
any) 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,
with the consent of the holders of not less than a majority in 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 thereof,
or impair the right of any Noteholder to institute suit for the payment thereof,
or make the principal thereof or interest or premium, if any, thereon payable in
any coin or currency other than that provided in the Note, or modify the
provisions of the Indenture with respect to the subordination of the Notes in a
manner adverse to the Noteholders in any material respect, or change the
obligation of the Company to make redemption of any Note upon the happening of a
Fundamental Change (as defined in the Indenture) in a manner adverse to the
holder of the Notes, or impair the right to convert the Notes into Common Stock
subject to the terms set forth in the Indenture, including Section 15.6 thereof,
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. Subject to the provisions of the Indenture, 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 (including Liquidated Damages Amount, if any) or any premium on or
the principal of any of the Notes or a failure by the Company to convert any
Notes into Common Stock of the Company or a default in respect of a covenant or
provisions hereof which under Article XI cannot be modified without the consent
of the holders of each or all Notes then outstanding or affected thereby. 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 substitute 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, 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 its 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 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
A-4
<PAGE>
(including Liquidated Damages Amount, if any) 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 of
twelve 30-day months.
The Notes are issuable in fully registered form without coupons in
denominations of $1,000 and any integral multiple of $1,000. 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 this 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.
At any time on or after June 18, 2002, and prior to maturity, the Notes may
be redeemed at the option of the Company, in whole or in part, upon notice as
set forth in the Indenture, at the following optional redemption prices
(expressed as percentages of the principal amount), together in each case with
accrued and unpaid interest, if any (including Liquidated Damages Amount, if
any) to, but excluding, the date fixed for redemption.
If redeemed during the period beginning June 18, 2002 and ending on June
15, 2003, at a redemption price of 102.50% and if redeemed during the 12-month
period beginning June 16:
Year Redemption Price
---- ----------------
2003................101.67%
2004................100.83%
2005................100.00%
and 100% at June 15, 2006; provided that if the date fixed for redemption is
after an interest payment record date and on or before June 15 or December 15,
then the interest payable on such date shall be paid to the holder of record on
the preceding June 1 or, December 1, respectively.
The Company shall not give notice of any redemption if a default in the
payment of interest on the Notes has occurred and is continuing.
The Notes are not subject to redemption through the operation of any
sinking fund.
If a Fundamental Change occurs at any time prior to maturity of the Notes,
the Notes will be repurchasable on the 30th day after notice thereof at the
option of the holder at a repurchase price equal to 100% of the principal amount
thereof, together with accrued interest to (but excluding) the repurchase date;
provided that, if such repurchase date is June 15 or December 15 the interest
payable on such date shall be paid to the holder of record of the Notes on the
preceding June 1 or December 1, respectively. The Notes will be repurchased in
multiples of $1,000 principal amount. The Company shall mail to all holders of
record of the Notes a notice of the occurrence of a Fundamental Change and of
the right arising as a result thereof on or before the 20th day after the
occurrence of such Fundamental Change. For a Note to be so repurchased at the
option of the holder, the Company must receive at the office or agency of the
Company maintained for that purpose in accordance with the terms of the
Indenture, such Note with the form entitled "Option to Elect Repayment Upon a
Fundamental Change" on the reverse thereof duly completed, together with such
Notes duly endorsed for transfer, on or before the 30th day after the date of
such notice (or if such 30th day is not a Business Day, the immediately
preceding Business Day). The submission of such a duly completed notice by a
holder is irrevocable.
Subject to the provisions of the Indenture, the holder hereof has the
right, at its option, at any time following the original issuance of any Notes
through the close of business on the final maturity date of the Notes, or, as to
all or any portion hereof called for redemption, prior to the close of business
on the Business Day immediately preceding the date fixed for redemption (unless
the Company shall default in payment due upon redemption thereof) to convert the
principal hereof or any portion of such principal which is $1,000 or an integral
multiple thereof into that number of shares of the Company's Common Stock, as
said shares shall be constituted at the date of conversion, obtained by
A-5
<PAGE>
dividing the principal amount of this Note or portion thereof to be converted by
the Conversion Price of $77.625 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, to the Company at the office
or agency of the Company maintained for that purpose in accordance with the
terms of the Indenture, 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 to the close of business on the Business
Day preceding the interest payment date, this Note (unless it or the portion
being converted shall have been called for redemption during the period from the
close of business on any record date for the payment of interest to the close of
business on the Business Day preceding the interest payment date) must be
accompanied by an amount, in same day funds or other funds acceptable to the
Company, equal to the interest payable on such interest payment date on the
principal amount being converted. No fractional shares will be issued upon any
conversion, but an adjustment in cash will be made, as provided in 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.
Upon due presentment for registration of transfer of this Note at the
office or agency of the Company maintained for that purpose in accordance with
the terms of the Indenture, 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 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 or director or
subsidiary, as such, past, present or future, of the Company or of any successor
Person, either directly or through the Company or any successor Person, 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 acceptance
hereof and as part of the consideration for the issue hereof, expressly waived
and released.
This 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 principles of conflicts of laws.
Terms used in this Note and defined in the Indenture are used herein as
therein defined.
A-6
<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.
<TABLE>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT - __________ Custodian _____________
TEN ENT - as tenant by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right under Uniform Gifts to Minors Act
of survivorship and not as
tenants in common ______________________________________________________
(State)
</TABLE>
Additional abbreviations may also be used
though not in the above list.
A-7
<PAGE>
CONVERSION NOTICE
TO: SAFEGUARD SCIENTIFICS, INC.
The undersigned registered owner of this Note hereby irrevocably exercises
the option to convert this Note, or the portion thereof (which is $1,000 or an
integral multiple thereof) below designated, into shares of Common Stock of
Safeguard Scientifics, Inc. 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
provide the appropriate information below and 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" meeting the
requirements of the Note registrar, which
requirements include membership or
participation in the Security Transfer Agent
Medallion Program ("STAMP") or such other
"signature guarantee program" as may be
determined by the Note registrar in addition
to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act
of 1934, as amended.
_____________________________________________
Signature Guarantee
A-8
<PAGE>
Fill in the registration of shares of Common Stock 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): $___________________
Social Security or Other Taxpayer
Identification Number:___________________
A-9
<PAGE>
OPTION TO ELECT REPURCHASE
UPON A FUNDAMENTAL CHANGE
TO: SAFEGUARD SCIENTIFICS, INC.
The undersigned registered owner of this Note hereby irrevocably
acknowledges receipt of a notice from Safeguard Scientifics, Inc. (the
"Company") as to the occurrence of a Fundamental Change with respect to the
Company and requests and instructs the Company to repurchase the entire
principal amount of this Note, or the portion thereof (which is $1,000 or an
integral multiple thereof) below designated, in accordance with the terms of the
Indenture referred to in this Note at the repurchase price, together with
accrued interest to, but excluding, such date, to the registered holder hereof.
Date: ___________________ ________________________________
__________________________________________________
Signature(s)
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.
Principal amount to be repurchased (if less than
all):
$_______________
__________________________________________________
Social Security or Other
Taxpayer Identification Number
A-10
<PAGE>
ASSIGNMENT
For value received _________________________ hereby sell(s), assign(s) and
transfer(s) unto _________________________ (Please insert social security or
other 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 Note within the United States or to,
or for the account of, U.S. persons (in each case as defined in Regulation S
under the Securities Act) and 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) (other than any transfer pursuant to
a registration statement that has been declared effective under the Securities
Act), the undersigned confirms that such Note is being transferred:
[_] To Safeguard Scientifics, Inc. or a subsidiary thereof; or
[_] Pursuant to and in compliance with Rule 144A 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").
[_] The transferee is an Affiliate of the Company.
Dated:_______________________ _____________________________________________
Signature(s)
Signature(s) must be guaranteed by an
"eligible guarantor institution" meeting the
requirements of the Note registrar, which
requirements include membership or
participation in the Security Transfer Agent
Medallion Program ("STAMP") or such other
"signature guarantee program" as may be
determined by the Note registrar in addition
to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act
of 1934, as amended.
_____________________________________________
Signature Guarantee
NOTICE: The signature of the conversion notice, the option to elect to
repurchase upon a Fundamental Change 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.
-11-
<PAGE>
EXHIBIT 4.4
EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT
by and among
SAFEGUARD SCIENTIFICS, INC.
as Issuer,
and
CREDIT SUISSE FIRST BOSTON CORPORATION
as Initial Purchaser
Dated June 3, 1999
<PAGE>
THIS REGISTRATION RIGHTS AGREEMENT is made and entered into as of June 3,
1999 by and among Safeguard Scientifics, Inc., a Pennsylvania corporation (the
"Company"), and Credit Suisse First Boston Corporation (the "Initial Purchaser")
pursuant to the Purchase Agreement, dated June 3, 1999 (the "Purchase
Agreement"), among the Company and the Initial Purchaser. In order to induce the
Initial Purchaser to enter into the Purchase Agreement, the Company has agreed
to provide the registration rights set forth in this Agreement. The execution of
this Agreement is a condition to the closing under the Purchase Agreement.
The Company agrees with the Initial Purchaser, (i) for its benefit as
Initial Purchaser and (ii) for the benefit of the beneficial owners (including
the Initial Purchaser) from time to time of the Notes (as defined herein) and
the beneficial owners from time to time of the Underlying Common Stock (as
defined herein) issued upon conversion of the Notes (each of the foregoing a
"Holder" and, together, the "Holders"), as follows:
SECTION 1. Definitions. Capitalized terms used herein without definition
shall have their respective meanings set forth in the Purchase Agreement. As
used in this Agreement, the following terms shall have the following meanings:
Affiliate: With respect to any specified person, an "affiliate," as defined
in Rule 144, of such person.
Amendment Effectiveness Deadline Date: See Section 2(d) hereof.
Applicable Conversion Price: The Applicable Conversion Price as of any date
of determination means the Conversion Price in effect as of such date of
determination or, if no Notes are then outstanding, the Conversion Price that
would be in effect were Notes then outstanding.
Business Day: Each Monday, Tuesday, Wednesday, Thursday and Friday that is
not a day on which banking institutions in The City of New York are authorized
or obligated by law or executive order to close.
Common Stock: The shares of common stock, $0.10 par value, of the Company
and any other shares of common stock as may constitute "Common Stock" for
purposes of the Indenture (as defined herein), including the Underlying Common
Stock.
Company: The Company shall have the meaning set forth in the first
paragraph of this Agreement and shall also include the Company's successors.
Conversion Price: Conversion Price shall have the meaning assigned such
term in the Indenture.
Damages Accrual Period: See Section 2(e) hereof.
<PAGE>
Damages Payment Date: Each interest payment date under the Indenture in the
case of Notes, and each June 9 and December 9 in the case of the Underlying
Common Stock.
Deferral Notice: See Section 3(i) hereof.
Deferral Period: See Section 3(i) hereof.
Effectiveness Deadline Date: See Section 2(a) hereof.
Effectiveness Period: Two years from the date of the Initial Shelf
Registration Statement or, if a shorter period, from the date of the Initial
Shelf Registration Statement until either of (i) the sale pursuant to a Shelf
Registration Statement of all the Registrable Securities or (ii) the expiration
of the holding period applicable to the Registrable Securities held by Holders
that are not Affiliates of the Company under Rule 144(k) under the Securities
Act.
Event: See Section 2(e) hereof.
Event Date: See Section 2(e) hereof.
Event Termination Date: See Section 2(e) hereof.
Exchange Act: The Securities Exchange Act of 1934, as amended, and the
rules and regulations of the SEC promulgated thereunder.
Filing Deadline Date: See Section 2(a) hereof.
Holder: See the second paragraph of this Agreement.
Indenture: The Indenture dated as of the date hereof between the Company
and Chase Manhattan Trust Company, National Association as trustee, pursuant to
which the Notes are being issued.
Initial Shelf Registration Statement: See Section 2(a) hereof.
Issue Date: June 9, 1999.
Liquidated Damages Amount: See Section 2(e) hereof.
Losses: See Section 6 hereof.
Material Event: See Section 3(i) hereof.
<PAGE>
Notes: The Convertible Subordinated Notes due 2006 of the Company to be
purchased pursuant to the Purchase Agreement.
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 IV to the Offering
Memorandum of the Company issued June 3, 1999 relating to the Notes.
Notice Holder: On any date, any Holder that has delivered a Notice and
Questionnaire to the Company on or prior to such date and holds Registrable
Securities, as of such dates.
Prospectus: The prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any amendment or prospectus supplement, including
post-effective amendments, and all materials incorporated by reference or
explicitly deemed to be incorporated by reference in such Prospectus.
Purchase Agreement: See the first paragraph of this Agreement.
Initial Purchaser: Credit Suisse First Boston Corporation.
Record Holder: (i) With respect to any Damages Payment Date relating to
any Notes as to which any such Liquidated Damages Amount has accrued, the holder
of record 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 the Underlying Common Stock
as to which any such Liquidated Damages Amount has accrued, the registered
holder of such Underlying Common Stock fifteen (15) days prior to the next
succeeding Damages Payment Date.
Registrable Securities: The Notes, until such Notes have been converted or
exchanged into the Underlying Common Stock and, at all times subsequent to any
such conversion or exchange, the Underlying Common Stock and any securities into
or for which such Underlying Common Stock have been converted or exchanged, and
any security issued with respect thereto upon any stock dividend, split or
similar event until, in the case of any such security, (A) the earliest of (i)
its effective registration under the Securities Act and resale in accordance
with the Registration Statement covering it, (ii) expiration of the holding
period that would be applicable thereto under Rule 144(k) under the Securities
Act were it not held by an Affiliate of the Company or (iii) its sale to the
public pursuant to Rule 144, and (B) as a result of the event or circumstance
described in any of the foregoing clauses (i) through (iii), the legends with
respect to transfer restrictions required under the Indenture are removed or
removable in accordance with the terms of the Indenture.
Registration Expenses: See Section 5 hereof.
<PAGE>
Registration Statement: Any registration statement of the Company that
covers any of the Registrable Securities pursuant to the provisions of this
Agreement including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits, and
all materials incorporated by reference or explicitly deemed to be incorporated
by reference in such registration statement.
Restricted Securities: As this term is defined in Rule 144.
Rule 144: Rule 144 under the Securities Act, as such Rule may be amended
from time to time, or any similar rule or regulation hereafter adopted by the
SEC.
Rule 144A: Rule 144A under the Securities Act, as such Rule may be amended
from time to time, or any similar rule or regulation hereafter adopted by the
SEC.
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: See Section 2(a) hereof.
Subsequent Shelf Registration Statement: See Section 2(b) hereof.
TIA: The Trust Indenture Act of 1939, as amended.
Trustee: Chase Manhattan Trust Company, National Association (or any
successor entity), the Trustee under the Indenture.
Underlying Common Stock: The Common Stock into which the Notes are
convertible or issued upon any such conversion.
SECTION 2. Shelf Registration. (a) The Company shall prepare and file or
cause to be prepared and filed with the SEC, as soon as practicable but in any
event by the date (the "Filing Deadline Date") ninety (90) days after the Issue
Date, a Registration Statement for an offering to be made on a delayed or
continuous basis pursuant to Rule 415 of the Securities Act (a "Shelf
Registration Statement") registering the resale from time to time by Holders
thereof of all of the Registrable Securities (the "Initial Shelf Registration
Statement"). The Initial Shelf Registration Statement shall be on Form S-3 or
another appropriate form permitting registration of such Registrable Securities
for resale by such Holders in accordance with the methods of distribution
elected by the Holders and set forth in the Initial Shelf Registration
Statement. The Company shall use its commercially reasonable efforts to cause
the Initial Shelf Registration Statement to be declared effective under the
Securities Act as promptly as is practicable but in any event by the date
<PAGE>
(the "Effectiveness Deadline Date") that is six months after the Issue Date, and
to keep the Initial Shelf Registration Statement (or any Subsequent Shelf
Registration Statement) continuously effective under the Securities Act until
the expiration of the Effectiveness Period. At the time the Initial Shelf
Registration Statement is declared effective, each Holder that became a Notice
Holder on or prior to the date ten (10) Business Days prior to such time of
effectiveness shall be named as a selling securityholder in the Initial Shelf
Registration Statement and the related Prospectus in such a manner as to permit
such Holder to deliver such Prospectus to purchasers of Registrable Securities
in accordance with applicable law. None of the Company's security holders (other
than the Holders of Registrable Securities) shall have the right to include any
of the Company's securities in the Shelf Registration Statement.
(b) If the Initial Shelf Registration Statement or any Subsequent Shelf
Registration Statement ceases to be effective for any reason at any time during
the Effectiveness Period, the Company shall use its reasonable efforts to obtain
the prompt withdrawal of any order suspending the effectiveness thereof, and in
any event shall within thirty (30) days of such cessation of effectiveness amend
the Shelf Registration Statement in a manner reasonably expected to obtain the
withdrawal of the order suspending the effectiveness thereof, or file an
additional Shelf Registration Statement covering all of the securities that as
of the date of such filing are Registrable Securities (a "Subsequent Shelf
Registration Statement"). If a Subsequent Shelf Registration Statement is filed,
the Company shall use reasonable efforts to cause the Subsequent Shelf
Registration Statement to become effective as promptly as is practicable after
such filing and to keep such Registration Statement (or subsequent Shelf
Registration Statement) continuously effective until the end of the
Effectiveness Period.
(c) The Company shall supplement and amend the Shelf Registration
Statement if required by the rules, regulations or instructions applicable to
the registration form used by the Company for such Shelf Registration Statement,
if required by the Securities Act or, to the extent to which the Company does
not reasonably object, as reasonably requested by the Initial Purchaser or by
the Trustee on behalf of the registered Holders or by any managing underwriter
in the event of an underwritten offering.
(d) Each Holder of Registrable Securities agrees that if such Holder
wishes to sell Registrable Securities pursuant to a Shelf Registration Statement
and related Prospectus, it will do so only in accordance with this Section 2(d)
and Section 3(i). Each Holder of Registrable Securities wishing to sell
Registrable Securities pursuant to a Shelf Registration Statement and related
Prospectus agrees to deliver a Notice and Questionnaire to the Company at least
three (3) Business Days prior to any intended distribution of Registrable
Securities under the Shelf Registration Statement. From and after the date the
Initial Shelf Registration Statement is declared effective, the Company shall,
as promptly as practicable after the date a Notice and Questionnaire, is
delivered (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
<PAGE>
securityholder in the Shelf Registration Statement and the related Prospectus in
such a manner as to permit such Holder to deliver such Prospectus to purchasers
of the Registrable Securities in accordance with applicable law and, if the
Company shall file a post-effective amendment to the Shelf Registration
Statement, use reasonable efforts to cause such post-effective amendment to be
declared effective under the Securities Act as promptly as is practicable, but
in any event by the date (the "Amendment Effectiveness Deadline Date") that is
forty-five (45) days after the date such post-effective amendment is required by
this clause to be filed; (ii) provide such Holder copies of any documents filed
pursuant to Section 2(d)(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(d)(i); provided that if such
Notice and Questionnaire is delivered during a Deferral Period, the Company
shall so inform the Holder delivering such Notice and Questionnaire and shall
take the actions set forth in clauses (i), (ii) and (iii) above upon expiration
of the Deferral Period in accordance with Section 3(i). Notwithstanding anything
contained herein to the contrary, (i) the Company shall be under no obligation
to name any Holder that is not a Notice Holder as a selling securityholder in
any Registration Statement or related Prospectus and (ii) the Amendment
Effectiveness Deadline Date shall be extended by up to ten (10) Business Days
from the expiration of a Deferral Period (and the Company shall incur no
obligation to pay Liquidated Damages during such extension) if such Deferral
Period shall be in effect on the Amendment Effectiveness Deadline Date.
(e) The parties hereto agree that the Holders of Registrable Securities
will suffer damages, and that it would not be feasible to ascertain the extent
of such damages with precision, if (i) the Initial Shelf Registration Statement
has not been filed on or prior to the Filing Deadline Date, (ii) the Initial
Shelf Registration Statement has not been declared effective under the
Securities Act on or prior to the Effectiveness Deadline Date, (iii) the Company
has failed to perform its obligations set forth in Section 2(d) within the time
period required therein or (iv) the aggregate duration of Deferral Periods in
any period exceeds the number of days permitted in respect of such period
pursuant to Section 3(i) hereof or (each of the events of a type described in
any of the foregoing clauses (i) through (iv) are individually referred to
herein as an "Event," and the Filing Deadline Date in the case of clause (i),
the Effectiveness Deadline Date in the case of clause (ii), the date by which
the Company is required to perform its obligations set forth in Section 2(d) in
the case of clause (iii) (including the filing of any post-effective amendment
prior to the Amendment Effectiveness Deadline Date) and the date on which the
aggregate duration of Deferral Periods in any period exceeds the number of days
permitted by Section 3(i) hereof in the case of clause (iv) being referred to
herein as an "Event Date"). Events shall be deemed to continue until the "Event
Termination Date," which shall be the following dates with respect to the
respective types of Events: the date the Initial Shelf Registration Statement is
filed in the case of an Event of the type described in clause (i), the date the
Initial Shelf Registration Statement is declared effective under the Securities
Act in the case of an Event of the type described in clause (ii), the date the
Company performs its obligations set forth in Section 2(d) in the case of an
Event of the type described in clause (iii) (including, without limitation, the
date the relevant post-effective amendment to the Shelf Registration Statement
is declared effective under the Securities Act), and termination of the Deferral
Period that caused the limit on the aggregate duration of Deferral Periods in a
period set forth in
<PAGE>
Section 3(i) to be exceeded in the case of the commencement of an Event of the
type described in clause (iv).
Accordingly, commencing on (and including) any Event Date and ending on
(but excluding) the relevant Event Termination Date (a "Damages Accrual
Period"), the Company agrees to pay, as liquidated damages and not as a penalty,
an amount (the "Liquidated Damages Amount"), payable on the Damages Payment
Dates to Record Holders of Registrable Securities, for each portion of such
Damages Accrual Period beginning on and including a Damages Payment Date (or, in
respect of the first time that the Liquidated Damages Amount is to be paid to
Holders on a Damages Payment Date as a result of the occurrence of any
particular Event, from the Event Date) and ending on but excluding the first to
occur of (A) the date of the end of the Damages Accrual Period or (B) the next
Damages Payment Date, with respect to Notes at a rate per annum equal to one-
half of one percent (0.5 %) of the aggregate principal amount of such Notes or,
with respect to any Underlying Common Stock, a rate per annum equal to one half
of one percent (0.5%) of the Applicable Conversion Price, as the case may be, in
each case determined as of the Business Day immediately preceding the next
Damages Payment Date; provided that in the case of a Damages Accrual Period that
is in effect solely as a result of an Event of the type described in clause
(iii) of the immediately preceding paragraph, such Liquidated Damages Amount
shall be paid only to the Holders that have delivered Notice and Questionnaires
that caused the Company to incur the obligations set forth in Section 2(d) the
non-performance of which is the basis of such Event, provided further, that any
Liquidated Damages Amount accrued with respect to any Note or portion thereof
called for redemption on a redemption date or converted into Underlying 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 or conversion on the applicable redemption date or conversion
date, as the case may be, on such date (or promptly following the conversion
date, in the case of conversion). Notwithstanding the foregoing, no Liquidated
Damages Amounts shall accrue as to any Registrable Security from and after the
earlier of (x) the date such security is no longer a Registrable Security and
(y) the expiration of the Effectiveness Period. The rate of accrual of the
Liquidated Damages Amount with respect to any period shall not exceed the rate
provided for in this paragraph notwithstanding the occurrence of multiple
concurrent Events. Following the cure of all Events requiring the payment by the
Company of Liquidated Damages Amounts to the Holders of Registrable Securities
pursuant to this Section, the accrual of Liquidated Damages Amounts will cease
(without in any way limiting the effect of any subsequent Event requiring the
payment of Liquidated Damages Amount by the Company).
The Trustee shall be entitled, on behalf of Holders of Notes or Underlying
Common Stock, to seek any available remedy for the enforcement of this
Agreement, including for the payment of any Liquidated Damages Amount.
Notwithstanding the foregoing, the parties agree that Liquidated Damages payable
for a violation of the terms of this Agreement shall be the sole quantum of
damages payable for breach of such provisions. Nothing shall preclude a Notice
Holder or Holder of Registrable Securities from pursuing or obtaining specific
performance or other equitable relief with respect to this Agreement.
<PAGE>
All of the Company's obligations set forth in this Section 2(e) that are
outstanding with respect to any Registrable Security at the time such security
ceases to be a Registrable Security shall survive until such time as all such
obligations with respect to such security have been satisfied in full
(notwithstanding termination of this Agreement pursuant to Section 8(k)).
The parties hereto agree that the liquidated damages provided for in this
Section 2(e) constitute a reasonable estimate of the damages that may be
incurred by Holders of Registrable Securities by reason of the failure of the
Initial Shelf Registration Statement to be filed or declared effective or
available for effecting resales of Registrable Securities in accordance with the
provisions hereof.
SECTION 3. Registration Procedures. In connection with the registration
obligations of the Company under Section 2 hereof, the Company shall:
(a) Before filing any Registration Statement or Prospectus or any
amendments or supplements thereto with the SEC, furnish to the Initial Purchaser
and counsel to the Initial Purchaser copies of all such documents proposed to be
filed and use reasonable efforts to reflect in each such document when so filed
with the SEC such comments as the Initial Purchaser and counsel to the Initial
Purchaser reasonably shall propose within three (3) Business Days of the
delivery of such copies to the Initial Purchaser and counsel to the Initial
Purchaser.
(b) Prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary to keep such
Registration Statement continuously effective for the applicable period
specified in Section 2(a); cause the related Prospectus to be supplemented by
any required Prospectus supplement, and as so supplemented to be filed pursuant
to Rule 424 (or any similar provisions then in force) under the Securities Act;
and use its reasonable best efforts to comply with the provisions of the
Securities Act applicable to it with respect to the disposition of all
securities covered by such Registration Statement during the Effectiveness
Period in accordance with the intended methods of disposition by the sellers
thereof set forth in such Registration Statement as so amended or such
Prospectus as so supplemented.
(c) As promptly as practicable (i) give notice to the Holders, counsel to
the Notice Holders and the Initial Purchaser when any Prospectus, Prospectus
supplement, Registration Statement or post-effective amendment to a Registration
Statement has been filed with the SEC and, with respect to a Registration
Statement or any post-effective amendment, when the same has been declared
effective and (ii) give notice to the Notice Holders, counsel to the Notice
Holders and the Initial Purchaser (A) of any request, following the
effectiveness of the Initial Shelf Registration Statement under the Securities
Act, by the SEC or any other federal or state governmental authority for
amendments or supplements to any Registration Statement or related Prospectus or
for additional information, (B) of the issuance by the SEC or any other federal
or state governmental authority of any stop order suspending the effectiveness
of any Registration Statement or the initiation or threatening of any
proceedings for that purpose, (C) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of
<PAGE>
any of the Registrable Securities for sale in any jurisdiction or the initiation
or threatening of any proceeding for such purpose, (D) of the occurrence of (but
not the nature of or details concerning) a Material Event and (E) of the
determination by the Company that a post-effective amendment to a Registration
Statement will be filed with the SEC, which notice may, at the discretion of the
Company (or as required pursuant to Section 3(i)), state that it constitutes a
Deferral Notice, in which event the provisions of Section 3(i) shall apply.
(d) Use reasonable efforts to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement or the lifting of any
suspension of the qualification (or exemption from qualification) of any of the
Registrable Securities for sale in any jurisdiction in which they have been
qualified for sale, in either case at the earliest possible moment.
(e) If reasonably requested by the Initial Purchaser or any Notice Holder,
as promptly as practicable incorporate in a Prospectus supplement or post-
effective amendment to a Registration Statement such information as the Initial
Purchaser or such Notice Holder shall, on the basis of an opinion of nationally
recognized counsel experienced in such matters, determine to be required to be
included therein and make any required filings of such Prospectus supplement or
such post-effective amendment; provided, that the Company shall not be required
to take any actions under this Section 3(e) that are not, in the reasonable
opinion of counsel for the Company, in compliance with applicable law.
(f) As promptly as practicable furnish to each Notice Holder and the
Initial Purchaser, without charge, at least one (1) conformed copy of the
Registration Statement and any 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 to the
Company by such Notice Holder or the Initial Purchaser, as the case may be).
(g) During the Effectiveness Period, deliver to each Notice Holder in
connection with any sale of Registrable Securities pursuant to a Registration
Statement, without charge, as many copies of the Prospectus or Prospectuses
relating to such Registrable Securities (including each preliminary prospectus)
and any amendment or supplement thereto as such Notice Holder may reasonably
request; and the Company hereby consents (except during such periods that a
Deferral Notice is outstanding and has not been revoked) to the use of such
Prospectus or each amendment or supplement thereto by each Notice Holder in
connection with any offering and sale of the Registrable Securities covered by
such Prospectus or any amendment or supplement thereto in the manner set forth
therein.
(h) Prior to any public offering of the Registrable Securities pursuant to
a Shelf Registration Statement, register or qualify or cooperate with the Notice
Holders in connection with the registration or qualification (or exemption from
such registration or qualification) of such Registrable Securities for offer and
sale under the securities or Blue Sky laws of such jurisdictions within the
United States as any Notice Holder reasonably requests in writing (which request
may be included in the Notice and Questionnaire); prior to any public offering
of the Registrable Securities
<PAGE>
pursuant to a Shelf Registration Statement, keep each such registration or
qualification (or exemption therefrom) effective during the Effectiveness Period
in connection with such Notice Holder's offer and sale of Registrable Securities
pursuant to such registration or qualification (or exemption therefrom) and do
any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of such Registrable Securities in the manner
set forth in the relevant Registration Statement and the related Prospectus;
provided, that the Company will not be required to (i) qualify as a foreign
corporation or as a dealer in securities in any jurisdiction where it would not
otherwise be required to qualify but for this Agreement or (ii) take any action
that would subject it to general service of process in suits or to taxation in
any such jurisdiction where it is not then so subject.
(i) Upon (A) the issuance by the SEC of a stop order suspending the
effectiveness of a Shelf Registration Statement or the initiation of proceedings
with respect to a Shelf Registration Statement under Section 8(d) or 8(e) of the
Securities Act, (B) the occurrence of any event or the existence of any fact (a
"Material Event") as a result of which any Registration Statement shall 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, or any Prospectus shall 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 the light of the circumstances
under which they were made, not misleading, or (C) the occurrence or existence
of any pending corporate development, public filing with the SEC or other
similar event with respect to the Company that, in the reasonable discretion of
the Company, makes it appropriate to suspend the availability of a Shelf
Registration Statement and the related Prospectus, (i) in the case of clause (B)
above, subject to the next sentence, as promptly as practicable prepare and
file, if necessary pursuant to applicable law, a post-effective amendment to
such Registration Statement or a supplement to the related Prospectus or any
document incorporated therein by reference or file any other required document
that would be incorporated by reference into such Registration Statement and
Prospectus so that such Registration Statement does 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
such Prospectus does 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 the light of the circumstances under which they were
made, not misleading, and, in the case of a post-effective amendment to a
Registration Statement, subject to the next sentence, use its reasonable efforts
to cause it to be declared effective as promptly as is practicable, and (ii)
give notice to the Notice Holders that the availability of the Shelf
Registration Statement is suspended (a "Deferral Notice") and, upon receipt of
any Deferral Notice, each Notice Holder agrees not to sell any Registrable
Securities pursuant to the Registration Statement until such Notice Holder's
receipt of copies of the supplemented or amended Prospectus provided for in
clause (i) above, or until it is advised in writing by the Company that the
Prospectus may be used, and has received copies of any additional or
supplemental filings that are incorporated or deemed incorporated by reference
in such Prospectus. The Company will use reasonable best efforts to ensure that
the use of the Prospectus may be resumed (x) in the case of clause (A) above, as
promptly as is practicable, (y) in the case of clause (B) above, as soon as, in
the sole judgment of the Company, public disclosure of such Material Event
<PAGE>
would not be prejudicial to or contrary to the interests of the Company or, if
necessary to avoid unreasonable burden or expense, as soon as practicable
thereafter and (z) in the case of clause (C) above, as soon as, in the
discretion of the Company, such suspension is no longer appropriate. The Company
shall be entitled to exercise its right under this Section 3(i) to suspend the
availability of the Shelf Registration Statement or any Prospectus, without
incurring or accruing any obligation to pay liquidated damages pursuant to
Section 2(e), for one or more periods not to exceed 30 days in any three-month
period or not to exceed an aggregate 90 days in any 12-month period (such
period, during which the availability of the Registration Statement and any
Prospectus is suspended being a "Deferral Period").
(j) Use its reasonable best efforts to comply with all applicable rules
and regulations of the SEC and make generally available to its securityholders
earning statements (which need not be audited) satisfying the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder (or any similar rule
promulgated under the Securities Act) no later than 45 days after the end of any
3-month period (or 90 days after the end of any 12-month period if such period
is a fiscal year) commencing on the first day of the first fiscal quarter of the
Company commencing after the effective date of a Registration Statement, which
statements shall cover said periods.
(k) In the case of registration of resales of the Notes, cause the
Indenture to be qualified under the Trust Indenture Act of 1939, as amended (the
"TIA"), cooperate with the Trustee and the Notice Holders to effect such changes
to the Indenture as may be required for the Indenture to be so qualified in
accordance with the terms of the TIA and execute, and use its reasonable best
efforts to cause the Trustee to execute, all documents as may be required to
effect such changes and all other forms and documents required to be filed with
the SEC to enable the Indenture to be so qualified in a timely manner.
(l) Cooperate with each Notice Holder to facilitate the timely preparation
and delivery of certificates representing Registrable Securities sold or to be
sold pursuant to a Registration Statement, which certificates shall not bear any
restrictive legends, and cause such Registrable Securities to be in such
denominations as are permitted by the Indenture and registered in such names as
such Notice Holder may request in writing at least two (2) Business Days prior
to any sale of such Registrable Securities.
(m) Provide a CUSIP number for all Registrable Securities covered by each
Registration Statement not later than the effective date of such Registration
Statement and provide the Trustee and the transfer agent for the Common Stock
with printed certificates for the Registrable Securities that are in a form
eligible for deposit with The Depository Trust Company.
(n) Use its reasonable best efforts to cause the Underlying Common Stock
to be listed on any securities exchange or any automated quotation system on
which similar securities issued by the Company are then listed, to the extent
the Underlying Common Stock satisfies applicable listing requirements.
<PAGE>
(o) Provide such information as is required for any filings required to be
made with the National Association of Securities Dealers, Inc.
SECTION 4. Holder's Obligations. Each Holder agrees, by acquisition of the
Registrable Securities, that no Holder of Registrable Securities shall be
entitled to sell any of such Registrable Securities pursuant to a Registration
Statement or to receive a Prospectus relating thereto, unless such Holder has
furnished the Company with a Notice and Questionnaire as required pursuant to
Section 2(d) hereof (including the information required to be included in such
Notice and Questionnaire) and the information set forth in the next sentence.
Each Notice Holder agrees promptly to furnish to the Company all information
required to be disclosed in order to make the information previously furnished
to the Company by such Notice Holder not misleading and any other information
regarding such Notice Holder and the distribution of such Registrable Securities
as the Company may from time to time reasonably request. Any sale of any
Registrable Securities by any Holder shall constitute a representation and
warranty by such Holder that the information relating to such Holder and its
plan of distribution is as set forth in the Prospectus delivered by such Holder
in connection with such disposition, that such Prospectus does not as of the
time of such sale contain any untrue statement of a material fact relating to or
provided by such Holder or its plan of distribution and that such Prospectus
does not as of the time of such sale omit to state any material fact relating to
or provided by such Holder or its plan of distribution necessary to make the
statements in such Prospectus, in the light of the circumstances under which
they were made, not misleading.
SECTION 5. Registration Expenses. The Company shall bear all fees and
expenses incurred in connection with the performance by the Company of its
obligations under this Agreement whether or not any of the Registration
Statements are declared effective. Such fees and expenses shall include, without
limitation, (i) all registration and filing fees (including, without limitation,
fees and expenses (x) with respect to filings required to be made with the
National Association of Securities Dealers, Inc. and (y) of compliance with
federal and state securities or Blue Sky laws (including, without limitation,
reasonable fees and disbursements of the counsel specified in the next sentence
in connection with Blue Sky qualifications of the Registrable Securities under
the laws of such jurisdictions as the Notice Holders of a majority of the
Registrable Securities being sold pursuant to a Registration Statement may
designate), (ii) printing expenses (including, without limitation, expenses of
printing certificates for Registrable Securities in a form eligible for deposit
with The Depository Trust Company), (iii) duplication expenses relating to
copies of any Registration Statement or Prospectus delivered to any Holders
hereunder, (iv) fees and disbursements of counsel for the Company in connection
with the Shelf Registration Statement, (v) the fees and disbursements of the
independent public accountants of the Company, including the expenses of any
special audits or "cold comfort" letters required by or incident to such
performance and compliance, (vi) reasonable fees and disbursements of the
Trustee and of the registrar and transfer agent for the Common Stock and their
respective counsel and (vii) Securities Act liability insurance obtained by the
Company in its sole discretion. In addition, the Company shall bear or reimburse
the Notice Holders for the reasonable fees and disbursements of one firm of
legal counsel for the Holders, which shall initially be Shearman & Sterling, but
which may, with the written consent of the Initial
<PAGE>
Purchaser (which shall not be unreasonably withheld), be another nationally
recognized law firm experienced in securities law matters designated by the
Company. In addition, the Company shall pay the internal expenses of the Company
(including, without limitation, all salaries and expenses of officers and
employees performing legal or accounting duties), the expense of any annual
audit, the fees and expenses incurred in connection with the listing of the
Registrable Securities on any securities exchange on which similar securities of
the Company are then listed and the fees and expenses of any person, including
special experts, retained by the Company. Notwithstanding the provisions of this
Section 5, each seller of Registrable Securities shall pay selling expenses and
all registration expenses to the extent required by applicable law.
SECTION 6. Indemnification.
(a) Indemnification by the Company. The Company shall indemnify and hold
harmless each Notice Holder and each person, if any, who controls any Notice
Holder (within the meaning of either Section 15 of the Securities Act or Section
20 of the Exchange Act) from and against any losses, liabilities, claims,
damages and expenses (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) (collectively, "Losses"), arising out of or based upon 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 arising out of or based upon any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, provided,
however, that the Company shall not be liable in any such case to the extent
that any such Losses arise out of or are based upon an untrue statement or
alleged untrue statement contained in or omission or alleged omission from any
of such documents in reliance upon and conformity with any of the information
relating to the Holders furnished to the Company in writing by a Holder
expressly for use therein; provided further that the indemnification contained
in this paragraph shall not inure to the benefit of any Holder of Registrable
Securities (or to the benefit of any person controlling such Holder) on account
of any such Losses arising out of or based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in any preliminary
prospectus provided in each case the Company has completed with its several
obligations under Section 3(a) hereof if either (A) (i) such Holder failed to
send or deliver a copy of the Prospectus with or prior to the delivery of
written confirmation of the sale by such Holder to the person asserting the
claim from which such Losses arise and (ii) the Prospectus would have corrected
such untrue statement or alleged untrue statement or such omission or alleged
omission, or (B) (x) such untrue statement or alleged untrue statement, omission
or alleged omission is corrected in an amendment or supplement to the Prospectus
and (y) having previously been furnished by or on behalf of the Company with
copies of the Prospectus as so amended or supplemented, such Holder thereafter
fails to deliver such Prospectus as so amended or supplemented, with or prior to
the delivery of written confirmation of the sale of a Registrable Security to
the person asserting the claim from which such Losses arise.
(b) Indemnification by Holders of Registrable Securities. Each Holder
agrees severally and not jointly to indemnify and hold harmless the Company and
its respective directors and officers,
<PAGE>
and each person, if any, who controls the Company (within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act) or any other
Holder, from and against all Losses arising out of or based upon 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 arising out of or based upon any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with information furnished to the Company in writing by such Holder
expressly for use in such Registration Statement or Prospectus or amendment or
supplement thereto. In no event shall the liability of any selling Holder of
Registrable Securities hereunder be greater in amount than the dollar amount of
the proceeds received by such Holder upon the sale of the Registrable Securities
pursuant to the Registration Statement giving rise to such indemnification
obligation.
(c) Conduct of Indemnification Proceedings. In case any proceeding
(including any governmental investigation) shall be instituted involving any
person in respect of which indemnity may be sought pursuant to either of the two
preceding paragraphs, such person (the "indemnified party") shall promptly
notify the person against whom such indemnity may be sought (the "indemnifying
party") in writing and the indemnifying party, upon request of the indemnified
party, shall retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying party may
designate in such proceeding and shall pay the reasonable fees and disbursements
of such counsel related to such proceeding. In any such proceeding, any
indemnified party shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying party and the indemnified party shall have mutually
agreed to the retention of such counsel or (ii) the named parties to any such
proceeding (including any impleaded parties) include both the indemnifying party
and the indemnified party and representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them. It is understood that the indemnifying party shall not, in respect of the
legal expenses of any indemnified party in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the fees and
expenses of more than one separate firm (in addition to any local counsel) for
all indemnified parties, and that all such fees and expenses shall be reimbursed
as they are incurred. Such separate firm shall be designated in writing by, in
the case of parties indemnified pursuant to Section 6(a), the Holders of a
majority (with Holders of Notes deemed to be the Holders, for purposes of
determining such majority, of the number of shares of Underlying Common Stock
into which such Notes are or would be convertible or exchangeable as of the date
on which such designation is made) of the Registrable Securities covered by the
Registration Statement held by Holders that are indemnified parties pursuant to
Section 6(a) and, in the case of parties indemnified pursuant to Section 6(b),
the Company. The indemnifying party shall not be liable for any settlement of
any proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any
<PAGE>
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.
(d) Contribution. To the extent that the indemnification provided for in
this Section 6 is unavailable to an indemnified party under Section 6(a) or 6(b)
hereof in respect of any Losses or is insufficient to hold such indemnified
party harmless, then each applicable 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 (i) in such proportion as is
appropriate to reflect the relative benefits received by the indemnifying party
or parties on the one hand and the indemnified party or parties on the other
hand or (ii) if the allocation provided in 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 to the relative fault
of the indemnifying party or parties on the one hand and of the indemnified
party or parties on the other hand in connection with the statements or
omissions that resulted in such Losses, as well as any other relevant equitable
considerations. Benefits received by the Company shall be deemed to be equal to
the total net proceeds from the initial placement pursuant to the Purchase
Agreement (before deducting expenses) of the Registrable Securities to which
such Losses relate. Benefits received by any Holder shall be deemed to be equal
to the value of receiving Registrable Securities that are registered under the
Securities Act. The relative fault of the Holders on the one hand and the
Company on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Holders or by the Company, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Holders' respective obligations to contribute
pursuant to this paragraph are several in proportion to the respective number of
Registrable Securities they have sold pursuant to a Registration Statement, and
not joint.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6(d) were determined by pro rata
allocation or by any other method or allocation that does not take into account
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
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 this Section 6(d), an
indemnifying party that is a selling Holder of Registrable Securities shall not
be required to contribute any amount in excess of the amount by which the total
price at which the Registrable Securities sold by such indemnifying party and
distributed to the public were offered to the public exceeds the amount of any
damages that such indemnifying party 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.
<PAGE>
(e) The indemnity, contribution and expense reimbursement obligations of
the parties hereunder shall be in addition to any liability any indemnified
party may otherwise have hereunder, under the Purchase Agreement or otherwise.
(f) The indemnity and contribution provisions contained in this Section 6
shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of
any Holder or any person controlling any Holder, or the Company, or the
Company's officers or directors or any person controlling the Company and (iii)
the sale of any Registrable Securities by any Holder.
SECTION 7. Information Requirements. The Company covenants that, if at any
time before the end of the Effectiveness Period the Company is not subject to
the reporting requirements of the Exchange Act, it will cooperate with any
Holder of Registrable Securities and take such further reasonable action as any
Holder of Registrable Securities may reasonably request in writing (including,
without limitation, making such reasonable representations as any such Holder
may reasonably request), all to the extent required from time to time to enable
such Holder to sell Registrable Securities without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144 and
Rule 144A under the Securities Act and customarily taken in connection with
sales pursuant to such exemptions. Upon the written request of any Holder of
Registrable Securities, the Company shall deliver to such Holder a written
statement as to whether it has complied with such filing requirements, unless
such a statement has been included in the Company's most recent report filed
pursuant to Section 13 or Section 15(d) of Exchange Act. Notwithstanding the
foregoing, nothing in this Section 7 shall be deemed to require the Company to
register any of its securities (other than the Common Stock) under any section
of the Exchange Act.
SECTION 8. Miscellaneous.
(a) No Conflicting Agreements. The Company is not, as of the date hereof,
a party to, nor shall it, on or after the date of this Agreement, enter into,
any agreement with respect to its securities that conflicts with the rights
granted to the Holders of Registrable Securities in this Agreement. The Company
represents and warrants that the rights granted to the Holders of Registrable
Securities hereunder do not in any way conflict with the rights granted to the
holders of the Company's securities under any other agreements.
(b) Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given, unless the Company has obtained the written consent of Holders of a
majority of the then outstanding Underlying Common Stock constituting
Registrable Securities (with Holders of Notes deemed to be the Holders, for
purposes of this Section, of the number of outstanding shares of Underlying
Common Stock into which such Notes are or would be convertible or exchangeable
as of the date on which such consent is
<PAGE>
requested). 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 of Registrable Securities whose securities are being sold
pursuant to a Registration Statement and that does not directly or indirectly
affect the rights of other Holders of Registrable Securities may be given by
Holders of at least a majority of the Registrable Securities being sold by such
Holders pursuant to such Registration Statement; provided, that the provisions
of this sentence may not be amended, modified, or supplemented except in
accordance with the provisions of the immediately preceding sentence. Each
Holder of Registrable Securities outstanding at the time of any such amendment,
modification, supplement, waiver or consent or thereafter shall be bound by any
such amendment, modification, supplement, waiver or consent effected pursuant to
this Section 8(b), whether or not any notice, writing or marking indicating such
amendment, modification, supplement, waiver or consent appears on the
Registrable Securities or is delivered to such Holder.
(c) Notices. All notices and other communications provided for or
permitted hereunder shall he made in writing by hand delivery, by telecopier, by
courier guaranteeing overnight delivery or by first-class mail, return receipt
requested, and shall be deemed given (i) when made, if made by hand delivery,
(ii) upon confirmation, if made by telecopier, (iii) one (1) Business Day after
being deposited with such courier, if made by overnight courier or (iv) on the
date indicated on the notice of receipt, if made by first-class mail, to the
parties as follows:
(1) if to a Holder of Registrable Securities that is not a Notice
Holder, at the address for such Holder then appearing in the Note
Register (as defined in the Indenture);
(2) if to a Notice Holder, at the most current address given by such
Holder to the Company in a Notice and Questionnaire or any amendment
thereto;
(3) if to the Company, to:
Safeguard Scientifics, Inc.
800 The Safeguard Building
435 Devon Park Drive
Wayne, PA 19087-5495
Attention: James A. Ounsworth, General Counsel
Telecopy No.: (610) 293-0601
and
Morgan Lewis & Bockius LLP
1701 Market Street
Philadelphia, PA 19103-2921
Attention: Tom Sharbaugh, Esq.
Telecopy No.: (215) 963-5299
<PAGE>
(4) if to the Initial Purchaser to:
Credit Suisse First Boston
11 Madison Avenue
New York, New York 10010
Attention: Transaction Advisory Group
Telecopy No.: (212) 325-8278
and
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Attention: Marc Rossell, Esq.
Telecopy No.: (212) 848-7179
(5) if to counsel for the Initial Purchaser, to Shearman & Sterling
at the above address and telecopy number (or as otherwise requested by
the Notice Holders),
or to such other address as such person may have furnished to the other persons
identified in this Section 8(c) in writing in accordance herewith.
(d) Approval of Holders. Whenever the consent or approval of Holders of a
specified percentage of Registrable Securities is required hereunder,
Registrable Securities held by the Company or its affiliates (as such term is
defined in Rule 405 under the Securities Act) (other than the Initial Purchaser
or subsequent Holders of Registrable Securities if such subsequent Holders are
deemed to be such affiliates solely by reason of their holdings of such
Registrable Securities) shall not be counted in determining whether such consent
or approval was given by the Holders of such required percentage.
(e) Successors and Assigns. Any person who purchases any Registrable
Securities from the Initial Purchaser shall be deemed, for purposes of this
Agreement, to be an assignee of the Initial Purchaser. This Agreement shall
inure to the benefit of and be binding upon the successors and assigns of each
of the parties and shall inure to the benefit of and be binding upon each Holder
of any Registrable Securities.
(f) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be original and all of which taken together
shall constitute one and the same agreement.
<PAGE>
(g) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(i) Severability. If any term provision, covenant or restriction of this
Agreement is held 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 thereby, 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
being intended that all of the rights and privileges of the parties shall be
enforceable to the fullest extent permitted by law.
(j) Entire Agreement. This Agreement is intended by the parties as a final
expression of their agreement and is intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein and the registration rights granted by the
Company with respect to the Registrable Securities. Except as provided in the
Purchase Agreement, there are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein, with respect to
the registration rights granted by the Company with respect to the Registrable
Securities. This Agreement supersedes all prior agreements and undertakings
among the parties with respect to such registration rights. No party hereto
shall have any rights, duties or obligations other than those specifically set
forth in this Agreement.
In no event shall the method of distribution of the Registrable
Securities take the form of an underwritten offering without prior agreement of
the Company.
(k) Termination. This Agreement and the obligations of the parties
hereunder shall terminate upon the end of the Effectiveness Period, except for
any liabilities or obligations under Section 5 or 6 hereof and the obligations
to make payments of and provide for liquidated damages under Section 2(e) hereof
to the extent such damages accrue prior to the end of the Effectiveness Period,
each of which shall remain in effect in accordance with its terms.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
SAFEGUARD SCIENTIFICS, INC.
By: /s/ James A. Ounsworth
---------------------------------------------
Name: James A. Ounsworth
Title: Senior Vice President, General Counsel
& Secretary
Confirmed and accepted as of
the date first above written:
CREDIT SUISSE FIRST BOSTON CORPORATION
By:/s/ Jake Peters
-----------------------------
Name: Jake Peters
Title: Managing Director
