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As filed with the Securities and Exchange Commission on April 30, 1998
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
WHOLE FOODS MARKET, INC.
(Exact name of registrant as specified in its charter)
Texas 74-1989366
(State of incorporation) (I.R.S. employer identification no.)
601 N. Lamar Boulevard, Suite 300
Austin, Texas 78703
512-477-4455
(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)
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Glenda J. Flanagan
Chief Financial Officer
Whole Foods Market, Inc.
601 N. Lamar Boulevard, Suite 300
Austin, Texas 78703-5413
(512) 477-4455
(Name, address including zip code, and telephone number, including area
code, of agents for service)
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Copy to:
Bruce H. Hallett
Crouch & Hallett, L.L.P.
717 N. Harwood St., Suite 1400
Dallas, Texas 75201
(214) 953-0053
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Approximate date of commencement of proposed sale to the public: From time
to time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [x]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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Title of Each Amount of
Class of Securities Amount Being Registration
Being Registered Registered (1) Fee
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Zero Coupon Convertible
Subordinated Debentures $115,967,400 $34,211
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Common stock, no par value, per share (2) None (2)
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(1) Amount represents original issue price of the Debentures plus accrued
original issue discount to date.
(2) Also being registered is such indeterminate number of shares of Common
Stock that may be issuable upon conversion of the Debentures registered
hereby, which registration is not subject to an additional registration fee
pursuant to Rule 457(i) under the Securities Act.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
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* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
SUBJECT TO COMPLETION, DATED APRIL 30, 1998
$308,807,000
WHOLE FOODS MARKET, INC.
ZERO COUPON CONVERTIBLE SUBORDINATED DEBENTURES DUE 2018
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This Prospectus relates to $308,807,000 aggregate principal amount at
maturity of Zero Coupon Convertible Subordinated Debentures Due 2018 (the
"Debentures") of Whole Foods Market, Inc., a Texas corporation (the "Company" or
"Whole Foods Market"), that may be offered and sold from time to time by the
several holders thereof (the "Selling Holders"). The Debentures were issued by
the Company on March 2, 1998 and March 16, 1998 pursuant to an Indenture, dated
March 2, 1998 (the "Indenture"), between the Company and Chase Bank of Texas,
National Association, as trustee (the "Trustee"), at the issue price of $372.43
per $1,000 principal amount at maturity (the "Issue Price"). The Debentures will
mature on March 2, 2018. The Issue Price of each Debenture represents a yield to
maturity of 5.0% per annum (computed on a semi-annual bond equivalent basis)
calculated from March 2, 1998, and there will be no periodic payments of
interest. The Company will not receive any proceeds from sales of the Debentures
by the Selling Holders. The Company has agreed to bear certain expenses in
connection with the registration of the Debentures being offered and sold by the
Selling Holders.
Each Debenture is convertible at the option of the holder thereof (the
"Holder") at any time on or prior to maturity, unless previously redeemed or
otherwise purchased. Upon conversion of a Debenture, the Company will deliver
shares of common stock, no par value, of the Company (the "Common Stock") at a
conversion rate of 5.320 shares per $1,000 principal amount at maturity (the
"Conversion Rate"). The Conversion Rate will not be adjusted for accrued
Original Issue Discount (as defined herein) but will be subject to adjustment
upon the occurrence of certain events affecting the Common Stock. Upon
conversion, a Holder will not receive any cash payment representing accrued
Original Issue Discount; such accrued Original Issue Discount will be deemed
paid by the Common Stock received on conversion. See "Description of
Debentures--Conversion of Debentures." The Common Stock is traded on the Nasdaq
National Market under the symbol "WFMI."
Each Debenture will be purchased by the Company at the option of the Holder
as of March 2, 2003, March 2, 2008 and March 2, 2013 for Purchase Prices (as
defined herein) equal to the Issue Price plus accrued Original Issue Discount to
such dates. The Company, at its option, may elect to pay any such Purchase Price
in cash or in shares of Common Stock, or any combination thereof. See
"Description of Debentures--Purchase of Debentures at the Option of the Holder."
Debentures may be repurchased at the option of the Holder if there is a Change
in Control (as defined herein) at Purchase Prices equal to the Issue Price plus
accrued Original Issue Discount to the date of repurchase. In certain
circumstances, the Company's ability to so redeem the Debentures may be limited.
See "Description of Debentures--Repurchase at Option of Holders Upon Change in
Control."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
SEE "RISK FACTORS" BEGINNING ON PAGE 3 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE DEBENTURES AND COMMON
STOCK OFFERED HEREBY.
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The date of this Prospectus is April , 1998
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The Debentures are unsecured and subordinated in right of payment to all
existing and future Senior Indebtedness (as defined herein) of the Company. As
of January 18, 1998 and on a pro forma basis after giving effect to the sale of
the Debentures, the Company had approximately $41.2 million of indebtedness
outstanding that would have constituted Senior Indebtedness and would have had
approximately $100.0 million available to be drawn upon its principal line of
credit. The Debentures will also be effectively subordinated to all existing and
future indebtedness and other liabilities of the Company's subsidiaries. See
"Description of Debentures--Subordination of Debentures."
For a discussion of certain United States federal income tax considerations
for Holders of Debentures, see "Certain United States Federal Income Tax
Considerations."
In addition, the Company has the right to suspend sales under the
Registration Statement under certain circumstances. See "Description of the
Debentures--Registration Rights." Therefore, any sales of Debentures or Common
Stock issued upon conversion of the Debentures may only be offered or sold
during such periods of suspension pursuant to an exemption from the registration
requirements of the Securities Act of 1933, as amended (the "Securities Act").
The Debentures and Common Stock issued upon conversion of the Debentures
may be offered for sale and sold by the Selling Holders from time to time in
varying amounts at prices and on terms to be determined at the time of sale. To
the extent required, the name(s) of the Selling Holder(s), the number of
Debentures or shares of Common Stock to be sold, the purchase price, the public
offering price, if applicable, the name of any agent or broker-dealer, and any
applicable commissions, discounts or other items constituting compensation
thereto with respect to a particular offering will be set forth in a supplement
or supplements to this Prospectus (each, a "Prospectus Supplement"). See "Plan
of Distribution." The Company will not receive any proceeds from any sale of
Debentures or Common Stock hereunder.
Selling Holders and any broker-dealers or agents that participate with a
Selling Holder in the distribution of any of the Debentures or Common Stock
issued upon conversion of the Debentures may be deemed to be "underwriters"
within the meaning of the Securities Act, and any discount or commission
received by them and any profit on the resale of the Debentures or Common Stock
issued upon conversion of the Debentures purchased by them may be deemed to be
underwriting discounts or commissions under the Securities Act.
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AVAILABLE INFORMATION
Whole Foods Market is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act" or the "1934 Act") and in
accordance therewith files reports and other information with the Securities and
Exchange Commission (the "Commission"). Reports, proxy statements and other
information concerning the Company can be inspected and copied at the public
reference facilities maintained by the Commission at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549; 7 World Trade Center, Suite 1300, New York, New York
10048; and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies
of such material can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates. Certain reports, proxy statements and other information filed by the
Company may also be obtained at the Commission's World Wide Web site, located at
http://www.sec.gov. In addition, such material can be inspected at the offices
of the Nasdaq Stock Market, Inc., 1735 K Street, N.W., Washington, D.C. 20006.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents have been filed by the Company with the Commission
and are hereby incorporated by reference herein:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
September 28, 1997;
(b) Quarterly Report on Form 10-Q for the quarter ended January 18, 1998;
and
(c) Current Report on Form 8-K dated March 2, 1998.
All documents subsequently filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the 1934 Act prior to the termination of the offering of
the Shares hereunder shall be deemed to be incorporated herein by reference and
shall be a part hereof from the date of the filing of such documents. Any
statements contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or replaced for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or replaces such statement. Any such statement so
modified or replaced shall not be deemed, except as so modified or replaced, to
constitute a part of this Prospectus.
Whole Foods Market will provide without charge to each person, including
any beneficial owner, to whom a Prospectus is delivered, upon written or oral
request of such person, a copy of the documents incorporated by reference
herein, other than exhibits to such documents not specifically incorporated by
reference. Such requests should be directed to Whole Foods Market, Inc., 601 N.
Lamar Boulevard, Suite 300, Austin, Texas 78703, Attention: Chief Financial
Officer (telephone (512-477-4455).
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THE COMPANY
Whole Foods Market owns and operates the country's largest chain of natural
foods supermarkets. The Company opened its first store in Austin, Texas in 1980
and operated 82 stores in 17 states and the District of Columbia as of January
18, 1998. As a result of both acquisitions and internal expansion, the Company
has grown rapidly from sales of approximately $92.5 million in fiscal 1991 to
over $1.1 billion in fiscal 1997. In fiscal 1997, the Company's stores had
average sales per square foot of $638, which the Company believes is higher than
most conventional supermarkets or food retailers, including competitors in the
large-store segment of the natural foods industry. The Company attributes these
results to its ability to differentiate itself from other retailers competing
for consumers' food dollars by tailoring its product mix, service standards and
store environment to satisfy the needs of the natural foods shopper and to
appeal to the broader market of quality-oriented consumers.
The Company provides its customers the convenience of one-stop shopping by
offering not only a much broader product selection than typical natural foods
stores but also having a full range of merchandise categories comparable to
those available in conventional supermarkets. The Company's stores average
approximately 23,000 square feet and carry approximately 10,000 to 18,000 stock
keeping units ("SKUs"). The Company is committed to offering its customers the
highest quality products. It has developed quality goals and features products
that are free of artificial flavors, sweeteners, colors, preservatives and added
chemicals. To better ensure quality and to enhance merchandising, the Company
has acquired or developed businesses that manufacture and distribute significant
product categories. For instance, Whole Foods Market operates regional
bakehouses and commissaries, a seafood wharf, a nutritional supplement
manufacturer and a coffee roaster. In addition, the Company has developed
private label products under the premium "Whole Foods Market" label and value-
priced "365" label to provide its customers with high quality goods available
only at Whole Foods Market stores.
Through its Amrion, Inc., subsidiary ("Amrion"), acquired in September
1997, the Company is engaged in the manufacture and sale of nutritional
supplements, nutriceuticals and similar fitness and health-related products, a
product category which the Company believes is of significant importance to its
customers. A majority of Amrion's product sales are through direct marketing to
consumers. The Company plans to utilize Amrion's manufacturing and marketing
expertise to improve the quality, assortment and presentation of nutritional
products within its stores. According to an industry analyst's report, the
retail market for vitamin and nutritional supplements is estimated to have grown
at a compound annual growth rate of approximately 13% from $3.5 billion in 1991
to an estimated $6.5 billion in 1996. Recent estimates indicate that
approximately 40% of the U.S. population use nutritional supplements in some
form.
The Company's principal offices are located at 601 N. Lamar Boulevard,
Suite 300, Austin, Texas 78703, and its telephone number is (512) 477-5566.
RISK FACTORS
Statements and information presented within this Prospectus contain
"forward-looking statements" within the meaning of Section 21E of the 1934 Act.
These forward-looking statements can be identified by the use of predictive,
future-tense or forward-looking terminology, such as "believes," "anticipates,"
"expects," "estimates," "may," "will" or similar terms. Forward-looking
statements also include projections of financial performance, statements
regarding management's plans and objectives and statements concerning any
assumptions relating to the foregoing. Such statements are subject to
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risks and uncertainties that could cause actual results to differ materially
from those set forth in or implied by forward-looking statements. Factors that
could cause or contribute to such differences include those discussed below, as
well as those discussed elsewhere in this Prospectus. ln addition to the other
information contained and incorporated by reference in this Prospectus, the
following risk factors should be considered carefully in evaluating the Company
and its business before purchasing the Debentures offered hereby.
Dependence on Expansion and Internal Growth. Whole Foods Market's strategy
is to expand through new store openings, the acquisition of existing stores, the
possible acquisition or development of businesses with complementary product
lines and the increase of sales to new and existing customers. Successful
implementation of this strategy is contingent on numerous conditions, some of
which are described below, and there can be no assurance that the Company's
expansion strategy can be successfully executed.
Continued growth of the Company will depend to a significant degree upon
its ability to open or acquire new stores in existing and new markets and to
operate these stores on a successful basis. Further, the Company's expansion
strategy is dependent on finding suitable locations, and the Company faces
intense competition with other retailers for such sites. There can be no
assurance that the Company will be able to open or acquire new stores in a
timely manner or operate them on a successful basis. In addition, there can be
no assurance that the Company can successfully hire and train new employees and
integrate them into its programs and policies of the Company or adapt its
distribution, management information and other operating systems to the extent
necessary to operate new or acquired stores in a successful and profitable
manner and adequately supply natural foods products to these stores at
competitive prices.
There can be no assurance that the Company will continue to grow through
acquisitions. To the extent the Company further expands by acquiring existing
businesses, there can be no assurance that it can successfully integrate the
acquired businesses into its operations and support systems, or that the
operations of acquired businesses will not be adversely affected as the
Company's decentralized approach to operations is introduced.
The Company has recently achieved a higher level of comparable store sales
as compared to historical levels due to a number of factors, including
realization of operating efficiencies in stores acquired from Fresh Fields, the
comparison of sales from stores located in Southern California in fiscal 1996
which were negatively impacted by the name change from Mrs. Gooch's to Whole
Foods Market, improvements in overall store execution and increased sales of
newly released private label products. The Company does not expect to maintain
the same level of comparable store sales increases reported for Fiscal 1998
First Quarter in the future.
Quarterly Fluctuations. The Company's quarterly results of operations may
fluctuate significantly as the result of the timing of new store openings and
the range of operating results which may be generated from newly opened stores.
The Company expenses pre-opening costs associated with a new store opening
during the quarter in which the store is opened. Accordingly, quarter to quarter
comparisons of results of operations have been and will be materially impacted
by the timing of new store openings. In accordance with the American Institute
of Certified Public Accountants' Statement of Position 98-5, "Reporting on Costs
of Start-up Activities," beginning in the first quarter of fiscal 2000, the
Company will expense pre-opening costs as incurred. In addition, the Company's
quarterly operating results could be adversely affected by factors including
losses from new stores, variations in the mix of product sales, price changes in
response to competitive factors, increases in merchandise costs and possible
supply shortages.
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Competition. The Company's competitors include other natural foods stores,
large and small traditional and specialty supermarkets and grocery stores. These
stores compete with the Company in one or more product categories. In addition,
traditional and specialty supermarkets are expanding more aggressively in
marketing a broad range of natural foods and thereby competing directly with the
Company for products, customers and locations. Some of these potential
competitors have been in business longer or have greater financial or marketing
resources than the Company and may be able to devote greater resources to the
sourcing, promotion and sale of their products. Existing or future competitors
also may seek to compete with the Company for acquisition candidates which could
have the effect of increasing the price for acquisitions or reducing the number
of suitable acquisition candidates. In February 1998, the Company opened a store
in Boulder, Colorado, the city in which the headquarters of the Company's
largest natural foods supermarket competitor is located. Increased competition
may have an adverse effect on profitability as the result of lower sales, lower
gross profits and/or greater operating costs.
The sales of nutritional supplements, nutriceuticals and other fitness and
health-related products are highly competitive, and the Company expects that
Amrion will face such continued competitive pressure in the future. Amrion's
nutritional supplement products, which are its largest source of revenue,
compete on a national and regional basis directly with other specialty health
retailers, nutritional supplement manufacturers and mass merchandisers such as
drug stores and supermarkets. Many of these competitors are substantially larger
and have greater resources than the Company.
Integration of Acquired Operations. By acquiring new stores and certain
manufacturing businesses in the last several years, the Company has materially
increased the size, scope, complexity and geographic area of its operations by
(i) increasing the number of its stores and entering new markets, and (ii)
including the manufacturing of nutriceuticals and nutritional supplements and
the direct marketing of these products. There can be no assurance that
comparable store sales of acquired stores will increase to or be maintained at
the level achieved by existing Company stores. Additionally, there can be no
assurance that the operations of acquired stores will not be adversely affected
as a result of the introduction of the Company's team approach to store
operations, or the response of customers to the changes in operations and
merchandising mix made by new ownership. With respect to the Company's
acquisition of Amrion's manufacturing operations, there can be no assurance that
current retail stores which are customers of Amrion will continue to do business
with Amrion nor can there be any assurance that the Company can realize the
expected benefits from the acquisition of Amrion. The integration of acquired
operations into the Company will require the dedication of management resources
which may temporarily detract from attention to day-to-day business of the
Company.
Food Safety. There is increasing governmental scrutiny of and public
awareness regarding food safety. The Company believes that many customers choose
to shop at Whole Foods Market because of their interest in health, nutrition and
food safety. Although the Company has intensified its food safety procedures for
perishables, it anticipates that its customers will hold it to a higher standard
than conventional supermarkets. The sale of contaminated food products, or the
perception of such sale, by the Company could have a material adverse effect on
its operations.
Negative Impact of Litigation Possible. From time to time the Company is
the subject of various lawsuits arising in the ordinary course of business.
Additionally, like other retailers, distributors and manufacturers of products
that are ingested, the Company faces an inherent risk of exposure to product
liability claims in the event that the use of its products results in injury.
The Company's results could be materially impacted by legal and settlement
expenses related to such lawsuits.
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Personnel Matters. The Company is dependent upon a number of key management
and other personnel. The loss of the services of a significant number of key
personnel within a short period of time could have a material adverse effect
upon the Company. The Company's continued success is also dependent upon its
ability to attract and retain qualified employees to meet its future needs. The
Company faces intense competition for qualified personnel, many of whom are
subject to offers from competing employers, and there can be no assurance that
the Company will be able to attract and retain such personnel. The Company does
not maintain key person insurance on any employee
Sales of Nutritional Supplements and Nutriceuticals. Three product groups
collectively comprise a significant portion of Amrion's net sales. These product
groups are known as Coenzyme Q10, Ginkgo Biloba and Bilberry. Although
historically sales of these products have increased annually, there can be no
assurance this trend will continue or that current revenues attributed to the
products will be maintained. To the extent customer demand for these product
groups declines, Amrion's sales would be adversely affected. To reduce the
potential adverse effect of a decreased demand for any of these products, Amrion
continually adds new products to its existing line.
The manufacturing, processing, formulating, packaging, labeling and
advertising of products, particularly the nutriceutical and nutritional
supplement products developed, produced and marketed by Amrion, are subject to
regulation by one or more federal agencies, including the United States Food and
Drug Administration (the "FDA"), the Federal Trade Commission (the "FTC"), the
Consumer Product Safety Commission (the "CPSC"), the United States Department of
Agriculture (the "USDA") and the Environmental Protection Agency (the "EPA").
Amrion's activities are also regulated by various agencies of the states,
localities and foreign countries to which Amrion's products are distributed and
in which Amrion's products are sold.
Whole Foods Market cannot predict the nature of future laws, regulations,
interpretations or applications, nor can it determine what effect either
additional governmental regulations or administrative orders, when and if
promulgated, would have on its business in the future. They could, however,
require the reformulation of certain products to meet new standards, the recall
or discontinuance of certain products not able to be reformulated, additional
record keeping, expanded documentation of the properties of certain products,
expanded or different labeling and/or scientific substantiation. Any or all of
such requirements could have an adverse effect on Whole Foods Market's results
of operations and financial condition.
Governmental regulations in foreign countries where Amrion plans to expand
sales may prevent or delay entry into the market or prevent or delay the
introduction, or require the reformulation, of certain of Amrion's products.
In fiscal 1998, the Company will commence construction of a new
manufacturing facility for the production of its Amrion products at a total cost
estimated to be between $20 to $30 million. There can be no assurance that the
Company will be able to timely complete the construction of this facility, that
the facility can be completed within the estimated budget or that Amrion's
operations will not be adversely affected.
Information System Upgrades and Year 2000 Compliance. The Company
continually evaluates and upgrades its management information systems. The
Company has completed a number of acquisitions in recent years, and the
information systems of some of the acquired operations have not been fully
integrated with the Company's information systems. The Company is in the process
of implementing a new retail inventory system which is designed to upgrade the
information currently available with respect to category management and would
facilitate improvement in inventory turns and
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product margins. Although the Company receives detailed information from Amrion,
the Amrion information system is not fully integrated with the Company's system,
and the Company does not intend to replace the Amrion system. Although the
Company does not anticipate any disruption in its operations or financial
reporting as a result of system upgrades or system integrations, there can be no
assurance that such disruption will not occur or that the desired benefits from
the system upgrades will be realized.
Currently, there is significant uncertainty in the software industry and
among software users regarding the impact of the year 2000 on installed
software. Software database modifications and/or implementation modifications
will be required to enable such software to distinguish between 21st and 20th
century dates. The Company uses third-party system software which will need to
be modified or replaced in order to address year 2000 compliance. The Company
considers the cost to become year 2000 compliant to be a normal operating cost
necessary to periodically upgrade system software.
Subordination. The Debentures are unsecured and subordinated in right of
payment in full to all existing and future Senior Indebtedness of the Company.
As a result of such subordination, in the event of any insolvency, liquidation
or reorganization of the Company or upon acceleration of the Debentures due to
an event of default, the assets of the Company will be available to pay
obligations on the Debentures and any other subordinated indebtedness of the
Company only after all Senior Indebtedness has been paid in full, and there may
not be sufficient assets remaining to pay amounts due on any or all of the
Debentures and any other subordinated indebtedness of the Company then
outstanding. The Debentures are effectively subordinated to the liabilities,
including trade payables, of the Company's subsidiaries. Since the Company is a
holding company that conducts its operations principally through subsidiaries,
substantially all of the Company's liabilities other than long-term debt are
liabilities of the subsidiaries. The Indenture does not prohibit or limit the
incurrence of Senior Indebtedness or the incurrence of other indebtedness and
other liabilities by the Company or its subsidiaries. The incurrence of such
indebtedness could adversely affect the Company's ability to pay its obligations
on the Debentures. As of January 18, 1998, on a pro forma basis after giving
effect to the sale of the Debentures, the Company would have had approximately
$41.2 million of indebtedness outstanding that would have constituted Senior
Indebtedness and would have had an additional $100.0 million available under its
line of credit. All borrowings under its principal line of credit will
constitute Senior Indebtedness. See "Description of DebenturesCSubordination of
Debentures."
Limitation on Repurchase of Debentures. On March 2, 2003, March 2, 2008 and
March 2, 2013 (each, a "Purchase Date"), the Company will become obligated to
purchase, at the option of the Holder thereof, any outstanding Debenture,
subject to certain conditions. In addition, upon the occurrence of a Change of
Control, each Holder of Debentures may require the Company to repurchase all or
a portion of such Holder's Debentures. There can be no assurance that the
Company would have sufficient funds or would be able to arrange financing to
repurchase such Debentures. In the case of a purchase by the Company on a
Purchase Date, if the Company did not have sufficient funds, the Company could
be required to issue shares of Common Stock to pay the Purchase Price at
valuations based on the then prevailing market prices. In connection with the
repurchase of such Debentures, on a Change of Control Purchase Date, the Company
may be required to redeem its $40.0 million principal amount of 7.29% Senior
Notes (the "7.29% Senior Notes"). The Company's ability to repurchase the
Debentures in such event may be limited by law, the Indenture and by the terms
of other agreements relating to borrowings that constitute Senior Indebtedness,
as such indebtedness or agreements may be entered into, replaced, supplemented
or amended from time to time, including without limitation, certain provisions
of the 7.29% Senior Notes which would likely prevent the Company from making any
such redemption or repurchase of the Debentures at any time when Holders of the
Debentures have the right to require that the Company repurchase or redeem the
Debentures. The Company may be required to seek the consent of its then existing
lenders to repurchase the Debentures or may be required to refinance Senior
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Indebtedness in order to make any such payment. If the Company is prohibited
from repurchasing the Debentures, such failure to purchase tendered Debentures
would constitute an Event of Default under the Indenture, which may, in turn,
constitute a further default under certain of the Company's existing agreements
relating to borrowings and the terms of other indebtedness that the Company may
enter into from time to time. In such circumstances, the subordination
provisions in the Indenture would prohibit payments to the Holders of the
Debentures. Furthermore, the Company may not have the financial ability to
repurchase the Debentures in the event payment of Senior Indebtedness is
accelerated. The term "Change in Control" is limited to certain specified
transactions and circumstances and does not include all events that could
adversely affect the Company's financial condition or operating results. The
requirement that the Company offer to repurchase the Debentures upon a Change in
Control will not necessarily protect Holders of the Debentures in the event of a
highly leveraged transaction, reorganization, merger or similar transaction
involving the Company. See "Description of Debentures--Repurchase at Option of
Holders upon Change in Control" and "--Purchase of Debentures at the Option of
the Holder."
Possible Volatility of the Debentures and Common Stock Price. The market
price of the Debentures and Common Stock could be subject to significant
fluctuation in response to various market factors and events, including
variations in the Company's earnings results, changes in earnings estimates by
securities analysts, publicity regarding the Company, its competitors, the
health food industry generally, new statutes or regulations or changes in the
interpretation of existing statutes or regulations affecting the health food
industry specifically, sales of substantial amounts of Common Stock in the
public market or the perception that such sales could occur and other factors.
In addition, in recent years, the stock market has experienced broad price and
volume fluctuations that often have been unrelated to the operating performance
of particular companies. These market fluctuations also may adversely affect the
market price of the Debentures and the Common Stock. Volatility in the price of
the Company's Common Stock, changes in prevailing interest rates and changes in
perception of the Company's creditworthiness may in the future adversely affect
the price of the Debentures.
USE OF PROCEEDS
The Company will not receive any proceeds from sales of the Debentures or
shares of Common Stock sold from time to time hereunder. The Company has agreed
to bear certain expenses in connection with the registration of the Debentures
and Common Stock issued upon conversion of the Debentures being offered and sold
by the Selling Holders.
8
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
Fiscal Quarter
Fiscal Year Ended (1) Ended
----------------------------------------------------- --------------
Sept. 26, Sept. 25, Sept. 24, Sept. 29, Sept. 28,
1993 1994 1995 1996 1997 Jan. 18, 1998
--------- --------- --------- --------- --------- --------------
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings
to fixed charges (2) -- 2.60x 2.08x -- 3.35x 4.25x
</TABLE>
- --------------------
(1) Since September 26, 1993, the Company has completed two acquisitions
accounted for as pooling-of-interests which required restatement of its
historical financial information. The Company acquired Fresh Fields Market,
Inc. ("Fresh Fields") in August 1996 and Amrion in September 1997. Fiscal
years 1993, 1994, 1995 and 1997 are 52-week years and fiscal year 1996 is a
53-week year.
(2) For purposes of computing the ratio of earnings to fixed charges, earnings
represent income (loss) before income taxes and fixed charges. Fixed
charges consist of interest expense and such portion of rental expense
which is representative of interest. For the fiscal years ended September
26, 1993 and September 29, 1996, earnings are inadequate to cover fixed
charges in the amounts of $1.8 million and $15.3 million, respectively.
9
<PAGE>
DESCRIPTION OF DEBENTURES
The Debentures were issued under the Indenture, a copy of which is filed as
an Exhibit to the Registration Statement and are being registered pursuant to
the registration rights agreement between the Company and the Initial Purchasers
(the "Registration Rights Agreement"), a copy of which is filed as an Exhibit to
the Registration Statement. Copies of the Indenture and the Registration Rights
Agreement are available from the Trustee upon request by a registered Holder of
Debentures. The following summaries of certain provisions of the Debentures, the
Indenture and the Registration Rights Agreement do not purport to be complete
and are subject to, and are qualified in their entirety by reference to, all the
provisions of the Debentures, the Indenture and the Registration Rights
Agreement, including the definitions therein of certain terms which are not
otherwise defined in this Prospectus. Wherever particular provisions or defined
terms of the Indenture (or of the form of Debenture which is a part thereof) or
the Registration Rights Agreement are referred to, such provisions or defined
terms are incorporated herein by reference.
GENERAL
The Debentures represent unsecured general obligations of the Company
subordinate in right of payment to certain other obligations of the Company as
described under "--Subordination of Debentures," and convertible into Common
Stock as described under "--Conversion of Debentures." The Debentures are
limited to $308,807,000 in aggregate principal amount at maturity and mature on
March 2, 2018 (the "Final Maturity Date"). Each Debenture was issued in
principal amounts of $1,000 at maturity and is payable, and the Debentures may
be presented for conversion, registration of transfer and exchange, without
service charge, at the office of the Company maintained for such purpose in New
York, New York, which shall initially be the office or agency of the Trustee.
The Indenture does not contain any financial covenants or any restrictions
on the payment of dividends, the incurrence of Senior Indebtedness or the
issuance or repurchase of securities of the Company. The Indenture contains no
covenants or other provisions to afford protection to Holders of Debentures in
the event of a highly leveraged transaction or a Change in Control of the
Company except to the extent described under "--Repurchase at Option of Holders
upon Change in Control."
The Debentures were originally issued at a substantial discount from their
principal amount at maturity. See "Certain Federal Income Tax Considerations--
Original Issue Discount on the Debentures." There will be no periodic payments
of interest on the Debentures. The calculation of the accrual of Original Issue
Discount (the difference between the Issue Price and the principal amount at
maturity of each Debenture) in the period during which each Debenture remains
outstanding is on a semiannual bond equivalent basis using a 360-day year
composed of twelve 30-day months, and such accrual will commence on the issue
date of the Debentures. In the event of the maturity, conversion, purchase by
the Company at the option of a Holder or redemption of a Debenture, Original
Issue Discount, if any, will cease to accrue on such Debenture, under the terms
and subject to the conditions (summaries of which are set forth below) of the
Indenture. The Company may not reissue a Debenture that has matured or been
converted, purchased by the Company at the option of a Holder, redeemed or
otherwise canceled (except for registration of transfer, exchange or replacement
thereof).
The Indenture is governed by and construed under the laws of the State of
Texas. The Registration Rights Agreement is governed by and construed under the
laws of the State of New York.
10
<PAGE>
CONVERSION OF DEBENTURES
The Holders of Debentures are entitled at any time on or prior to the close
of business on the Final Maturity Date to convert any Debentures or portions
thereof (in denominations of $1,000 principal amount at maturity or multiples
thereof) into Common Stock; provided, however, that if a Debenture is called for
redemption, the Holder may convert it at any time before the close of business
on the Redemption Date. On conversion of a Debenture, the Company will deliver
shares of Common Stock (except the Company may deliver cash in lieu of
fractional shares). A Debenture in respect of which a Holder has delivered a
Purchase Notice or a Change in Control Purchase Notice exercising the option of
such Holder to require the Company to purchase such Debenture may be converted
only if such notice is withdrawn by a written notice of withdrawal delivered by
the Holder to the Trustee prior to the close of business on the Purchase Date or
the Change in Control Purchase Date, as the case may be, in accordance with the
terms of the Indenture.
A Holder otherwise entitled to a fractional share of Common Stock will
receive cash in an amount equal to the product of such fractional share and the
Market Price (as defined below). A Holder may convert a portion of such Holder's
Debentures so long as such portion is $1,000 principal amount at maturity or an
integral multiple thereof.
The initial Conversion Rate for the Debentures is 5.320 shares of Common
Stock per $1,000 principal amount at maturity and is subject to adjustment
(under formulae set forth in the Indenture) in certain events, including: (i)
the issuance of Common Stock as a dividend or distribution on Common Stock of
the Company; (ii) certain subdivisions and combinations of the Common Stock;
(iii) the issuance to all Holders of Common Stock of certain rights or warrants
to purchase Common Stock; (iv) the distribution to all Holders of Common Stock
of shares of capital stock of the Company (other than Common Stock) or evidences
of indebtedness of the Company or assets (including securities, but excluding
those rights, warrants, dividends and distributions referred to above and
dividends and distributions in connection with the liquidation, dissolution or
winding up of the Company or paid in cash); (v) dividends or other distributions
consisting exclusively of cash (excluding any cash portion of distributions
referred to in clause (iv)) to all Holders of Common Stock to the extent that
such distributions, combined together with (A) all other such all-cash
distributions made within the preceding 12 months in respect of which no
adjustment has been made plus (B) any cash and the fair market value of other
consideration payable in respect of any tender offers by the Company for Common
Stock concluded within the preceding 12 months in respect of which no adjustment
has been made, exceeds 10% of the Company's market capitalization (being the
product of the then-current market price of the Common Stock multiplied by the
number of shares of Common Stock then outstanding on the Record Date for such
distribution); (vi) the purchase of Common Stock pursuant to a tender offer made
by the Company or any of its subsidiaries to the extent that the same involves
an aggregate consideration that, together with (X) any cash and the fair market
value of any other consideration payable in any other tender offer by the
Company or any of its subsidiaries for Common Stock expiring within the 12
months preceding such tender offer in respect of which no adjustment has been
made plus (Y) the aggregate amount of any such all-cash distributions referred
to in clause (v) above to all Holders of Common Stock within the 12 months
preceding the expiration of such tender offer in respect of which no adjustments
have been made, exceeds 10% of the Company's market capitalization on the
expiration of such tender offer; and (vii) payment in respect of a tender offer
or exchange offer by a person other than the Company or any subsidiary of the
Company in which, as of the closing date of the offer, the Board of Directors is
not recommending rejection of the offer. If an adjustment is required to be made
as set forth in clause (v) above as a result of a distribution that is not a
quarterly dividend, such adjustment would be based upon the full amount of the
distribution. The adjustment referred to in clause (vii) above will only be made
if the tender offer or exchange offer is for an amount which increases that
person's
11
<PAGE>
ownership of Common Stock to more than 25% of the total shares of Common Stock
outstanding and if the cash and value of any other consideration included in
such payment per share of Common Stock exceeds the Current Market Price per
share of Common Stock on the business day next succeeding the last date on which
tenders or exchanges may be made pursuant to such tender or exchange offer. The
adjustment referred to in clause (vii) above will not be made, however, if, as
of the closing of the offer, the offering documents with respect to such offer
disclose a plan or an intention to cause the Company to engage in a
consolidation or merger of the Company or a sale of the Company's assets, as an
entirety or substantially as an entirety.
In addition, the Indenture provides that if the Company implements a
stockholders' rights plan, such rights plan must provide that, upon conversion
of the Debentures, the Holders will receive, in addition to the Common Stock
issuable upon such conversion, such rights whether or not such rights have
separated from the Common Stock at the time of such conversion.
No adjustment in the Conversion Rate will be required unless such
adjustment would require a change of at least 1% in the Conversion Rate then in
effect, provided that any adjustment that would otherwise be required to be made
shall be carried forward and taken into account in any subsequent adjustment.
Except as stated above, the Conversion Rate will not be adjusted for the
issuance of Common Stock or any securities convertible into or exchangeable for
Common Stock or carrying the right to purchase any of the foregoing.
In the case of (i) any reclassification or change of the Common Stock or
(ii) a consolidation, merger or combination involving the Company or a sale or
conveyance to another person of the property and assets of the Company as an
entirety or substantially as an entirety, in each case as a result of which
Holders of Common Stock shall be entitled to receive stock, other securities,
other property or assets (including cash) with respect to or in exchange for
such Common Stock, the Holders of the Debentures then outstanding will be
entitled thereafter to convert such Debentures into the kind and amount of
shares of stock, other securities or other property or assets which they would
have owned or been entitled to receive upon such reclassification, change,
consolidation, merger, combination, sale or conveyance had such Debentures been
converted into Common Stock immediately prior to such reclassification, change,
consolidation, merger, combination, sale or conveyance assuming that a Holder of
Debentures would not have exercised any rights of election as to the stock,
other securities or other property or assets receivable in connection therewith.
To convert a Debenture, a Holder must (i) complete and manually sign the
conversion notice on the Debenture (or complete and manually sign a facsimile
thereof) and deliver such notice to the Conversion Agent (initially the Trustee)
at the office maintained by the Conversion Agent for such purpose, (ii)
surrender the Debenture to the Conversion Agent, (iii) if required, furnish
appropriate endorsements and transfer documents, and (iv) if required, pay all
transfer or similar taxes. Pursuant to the Indenture, the date on which all of
the foregoing requirements have been satisfied is the Conversion Date.
Upon conversion of a Debenture, a Holder will not receive any cash payment
representing accrued Original Issue Discount. The Company's delivery to the
Holder of the fixed number of shares of Common Stock into which the Debenture is
convertible (together with the cash payment, if any, in lieu of any fractional
shares) will satisfy the Company's obligation to pay the principal amount at
maturity of the Debenture, including the accrued Original Issue Discount
attributable to the period from the Issue Date to the Conversion Date. Thus, the
accrued Original Issue Discount will be deemed to be paid in full rather than
canceled, extinguished or forfeited. The Conversion Rate will not be adjusted at
any time during the term of the Debentures for accrued Original Issue Discount.
A certificate for the number of full shares of Common Stock into which any
Debenture is converted (and for cash in lieu of fractional
12
<PAGE>
shares) will be delivered through the Conversion Agent no later than the seventh
business day following the Conversion Date. For a discussion of the tax
treatment of a Holder receiving Common Stock upon conversion, see "Certain
Federal Income Tax Considerations--Conversion of Debentures."
Upon conversion of any Debenture, such shares will be delivered through the
Conversion Agent no later than the seventh Business Day (as defined in the
Indenture) following the Conversion Date.
In the event of a taxable distribution to Holders of Common Stock which
results in an adjustment of the Conversion Rate (or in which Holders otherwise
participate) or in the event the Conversion Rate is increased at the discretion
of the Company, the Holders of the Debentures may in certain circumstances, be
deemed to have received a distribution subject to United States federal income
tax as a dividend. See "Certain Federal Income Tax Considerations--Dividends;
Adjustment of Conversion Rate."
The Company from time to time may, to the extent permitted by law, increase
the Conversion Rate of the Debentures by any amount for any period of at least
20 days, in which case the Company shall give at least 15 days' notice of such
increase, if the Board of Directors has made a determination that such increase
would be in the best interests of the Company, which determination shall be
conclusive. See "Certain Federal Income Tax Considerations--Dividends;
Adjustment of Conversion Rate." The Company may, at its option, make such
increases in the Conversion Rate, in addition to those set forth above, as the
Board of Directors deems advisable to avoid or diminish any income tax to
Holders of Common Stock resulting from any dividend or distribution of stock (or
rights to acquire stock) or from any event treated as such for income tax
purposes. See "Certain Federal Income Tax Considerations--Dividends; Adjustment
of Conversion Rate."
OPTIONAL REDEMPTION BY THE COMPANY
The Debentures are not entitled to any sinking fund. At any time on or
after March 2, 2003, all or any part of the Debentures will be redeemable at the
Company's option on at least 30 but not more than 60 days' notice for cash, as a
whole or, from time to time in part. Any such redemption must be in multiples of
$1,000 principal amount at maturity.
The table below shows Redemption Prices of Debentures per $1,000 principal
amount at maturity on March 2, 2003, at each Redemption Date thereafter prior to
maturity, and at maturity on March 2, 2018, which prices reflect the accrued
Original Issue Discount calculated to each such date. The Redemption Price of a
Debenture redeemed between such dates would include an additional amount
reflecting the additional Original Issue Discount accrued since the next
preceding date in the table to, but excluding the Redemption Date.
(1) (2) (3)
--- --- ---
ACCRUED ORIGINAL REDEMPTION
---------------- ----------
DEBENTURE ISSUE DISCOUNT PRICE
--------- -------------- -----
REDEMPTION DATE ISSUE PRICE AT 5.00% (1) + (2)
--------------- ----------- -------- ---------
March 2, 2003........... $ 372.43 $ 104.31 $ 476.74
March 2, 2004........... 372.43 128.45 500.88
March 2, 2005........... 372.43 153.80 526.23
March 2, 2006........... 372.43 180.45 552.88
March 2, 2007........... 372.43 208.43 580.86
March 2, 2008........... 372.43 237.84 610.27
13
<PAGE>
March 2, 2009........... 372.43 268.74 641.17
March 2, 2010........... 372.43 301.19 673.62
March 2, 2011........... 372.43 335.30 707.73
March 2, 2012........... 372.43 371.13 743.56
March 2, 2013........... 372.43 408.77 781.20
March 2, 2014........... 372.43 448.32 820.75
March 2, 2015........... 372.43 489.87 862.30
March 2, 2016........... 372.43 533.52 905.95
March 2, 2017........... 372.43 579.38 951.81
At Stated Maturity...... 372.43 627.57 1,000.00
If fewer than all the Debentures are to be redeemed, the Trustee will
select the Debentures to be redeemed in principal amounts at maturity of $1,000
or integral multiples thereof by lot or, in its discretion, on a pro rata basis.
If any Debenture is to be redeemed in part only, a new Debenture or Debentures
in principal amount equal to the unredeemed principal portion thereof will be
issued. If a portion of a Holder's Debentures is selected for partial redemption
and such Holder converts a portion of such Debentures, such converted portion
shall be deemed to be taken from the portion selected for redemption.
REPURCHASE AT OPTION OF HOLDERS UPON CHANGE IN CONTROL
The Indenture provides that if a Change in Control occurs, each Holder of
Debentures shall have the right to require the Company to repurchase all of such
Holder's Debentures, or any portion of the principal amount thereof that is an
integral multiple of $1,000 principal amount at maturity, on the date (the
"Change in Control Purchase Date") that is 20 days after the date of the Company
Change in Control Notice (as defined below), for cash at a price equal to the
Issue Price plus accrued Original Issue Discount to the Change in Control
Purchase Date (the "Change in Control Purchase Price").
Within 15 days after the occurrence of a Change in Control, the Company or,
at the Company's request, the Trustee is obligated to mail to all Holders of
record of Debentures a notice (the "Company Change in Control Notice") of the
occurrence of such Change in Control and of the repurchase right arising as a
result thereof. The Company must also deliver a copy of the Company Change in
Control Notice to the Trustee. To exercise the repurchase right, a Holder of
such Debentures must deliver to the Trustee on or before the Change in Control
Purchase Date, written notice of the Holder's exercise of such right, together
with the Debentures with respect to which the right is being exercised, duly
endorsed for transfer to the Company (the "Change in Control Purchase Notice").
A "Change in Control" will be deemed to have occurred at such time after
the original issuance of the Debentures as:
(i) any Person (as defined) (including any syndicate or group deemed to be
a "person" under Section 13(d)(3) of the Exchange Act), other than the Company,
any subsidiary of the Company, or any employee benefit plan of the Company or
any such subsidiary, is or becomes the beneficial owner, directly or indirectly,
through a purchase or other acquisition transaction or series of transactions
(other than a merger or consolidation involving the Company), of shares of
capital stock of the Company entitling such Person to exercise in excess of 50%
of the total voting power of all shares of capital stock of the Company entitled
to vote generally in the election of directors;
14
<PAGE>
(ii) there occurs any consolidation of the Company with, or merger of the
Company into, any other Person, any merger of another Person into the Company,
or any sale or transfer of the assets of the Company, as an entirety or
substantially as an entirety, to another Person (other than (a) any such
transaction pursuant to which the Holders of the Common Stock immediately prior
to such transaction have, directly or indirectly, shares of capital stock of the
continuing or surviving corporation immediately after such transaction which
entitle such Holders to exercise in excess of 50% of the total voting power of
all shares of capital stock of the continuing or surviving corporation entitled
to vote generally in the election of directors and (b) any merger (1) which does
not result in any reclassification, conversion, exchange or cancellation of
outstanding shares of Common Stock or (2) which is effected solely to change the
jurisdiction of incorporation of the Company and results in a reclassification,
conversion or exchange of outstanding shares of Common Stock solely into shares
of common stock and separate series of common stock carrying substantially the
same relative rights as the Common Stock); or
(iii) a change in the Board of Directors of the Company in which the
individuals who constituted the Board of Directors of the Company at the
beginning of the two-year period immediately preceding such change (together
with any other director whose election by the Board of Directors of the Company
or whose nomination for election by the stockholders of the Company was approved
by a vote of at least a majority of the directors then in office either who were
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the directors then in office;
provided, however, that a Change in Control shall not be deemed to have occurred
if either (a) the closing price per share of the Common Stock for any ten
Trading Days (each, a "Pricing Trading Date") within the period of 20
consecutive Trading Days ending immediately before the Change in Control shall
equal or exceed 105% of the price determined by dividing (i) the sum of the
Issue Price plus Original Issue Discount accrued to such Trading Day, by (ii)
the Conversion Rate, provided that at least five Pricing Trading Dates occur
within the 10 consecutive Trading Days ending immediately before the Change in
Control or (b) (i) at least 90% of the consideration (excluding cash payments
for fractional shares) in the transaction or transactions constituting the
Change in Control consists of shares of common stock with full voting rights
traded on a national securities exchange or quoted on the Nasdaq National Market
(or which will be so traded or quoted when issued or exchanged in connection
with such Change in Control) (such securities being referred to as "Publicly
Traded Securities") and as a result of such transaction or transactions such
Debentures become convertible solely into such Publicly Traded Securities and
(ii) the consideration in the transaction or transactions constituting the
Change in Control consists of cash, Publicly Traded Securities or a combination
of cash and Publicly Traded Securities with an aggregate fair market value
(which, in the case of Publicly Traded Securities, shall be equal to the average
closing price of such Publicly Traded Securities during the ten consecutive
Trading Days commencing with the sixth Trading Day following consummation of the
transaction or transactions constituting the Change in Control) of at least 105%
of the price determined by dividing (i) the sum of the Issue Price plus Original
Issue Discount accrued to the date immediately preceding the date of
consummation of such Change of Control, by (ii) the Conversion Rate. The term
"beneficial owner" shall be determined in accordance with Rule 13d-3 promulgated
by the Commission under the Exchange Act.
To the extent applicable, the Company will comply with the provisions of
Rule 13e-4 or any other tender offer rules, and will file a Schedule 13E-4 or
any other schedule required under such rules, in connection with any offer by
the Company to repurchase Debentures upon a Change in Control.
The Change in Control feature of the Debentures may in certain
circumstances make more difficult or discourage a takeover of the Company and,
thus, the removal of incumbent management. The repurchase right is not the
result of management's knowledge of any effort to accumulate any
15
<PAGE>
Common Stock or to obtain control of the Company by means of a merger, tender
offer, solicitation or otherwise, or part of a plan by management to adopt a
series of anti-takeover provisions. Instead, this right is the result of
negotiations between the Company and the Initial Purchasers.
The foregoing provisions would not necessarily afford Holders of the
Debentures protection in the event of a highly leveraged transaction, certain
changes in control of the Company or other transactions involving the Company
that may adversely affect Holders.
The Company's ability to repurchase Debentures upon the occurrence of a
Change in Control is subject to limitations. If a Change in Control were to
occur, there could be no assurance that the Company would have sufficient
financial resources, or would be able to arrange financing, to pay the
repurchase price for all Debentures tendered by Holders thereof. Under the
occurrence of a Change in Control the Company may be required to redeem its
$40.0 million principal amount of 7.29% Senior Notes. In addition, the terms of
certain of the Company's then-existing debt agreements may prohibit the Company
from purchasing any Debentures and also identify certain events that would
constitute a Change in Control, as well as certain other events with respect to
the Company or certain of its subsidiaries, which would constitute an event of
default under such debt agreements, including, without limitation, certain
provisions of the Company's line of credit and its $40.0 million principal
amount of 7.29% Senior Notes which would likely prevent the Company from making
any such redemption or repurchase of the Debentures at any time when Holders of
the Debentures have the right to require that the Company repurchase or redeem
the Debentures. Any future credit agreements or other agreements related to
other Indebtedness (including other Senior Indebtedness) to which the Company
becomes a party may contain similar restrictions and provisions. In the event a
Change in Control occurs at a time when the Company is prohibited from
repurchasing Debentures, the Company could seek the consent of its lenders to
repurchase the Debentures or could attempt to refinance the borrowings that
contain such prohibition. If the Company does not obtain such a consent or repay
such borrowings, the Company would remain prohibited from repurchasing
Debentures. Any failure by the Company to repurchase the Debentures when
required following a Change in Control would result in an Event of Default under
the Indenture whether or not such repurchase is permitted by the subordination
provisions of the Indenture. Any such default may, in turn, cause a default
under Senior Indebtedness of the Company. Moreover, the occurrence of a Change
in Control may cause an event of default under Senior Indebtedness of the
Company. As a result, in each such case, any repurchase of the Debentures would,
absent a waiver, be prohibited under the subordination provisions of the
Indenture until the Senior Indebtedness is paid in full. See "--Subordination of
Debentures," "Risk Factors--Subordination" and "Risk Factors--Limitation on
Repurchase of Debentures."
PURCHASE OF DEBENTURES AT THE OPTION OF THE HOLDER
On March 2, 2003, March 2, 2008 and March 2, 2013, (each a "Purchase
Date"), the Company becomes obligated to purchase, at the option of the Holder
thereof, any outstanding Debenture for which a written notice has been delivered
by the Holder to the office of the Paying Agent (initially the Trustee) (a
"Purchase Notice") at any time from the opening of business on the date that is
20 Business Days prior to such Purchase Date until the close of business on such
Purchase Date and for which such Purchase Notice has not been withdrawn, subject
to certain additional conditions.
The Purchase Notice shall state (i) the certificate numbers of the
Debentures to be delivered by the Holder thereof for purchase by the Company;
(ii) the portion of the principal amount at maturity of Debentures to be
purchased, which portion must be $1,000 or a multiple thereof; (iii) that such
Debentures are to be purchased by the Company pursuant to the applicable
provisions of the Debentures; and (iv) in the event the Company elects, pursuant
to the Company Notice (as defined
16
<PAGE>
below), to pay the Purchase Price to be paid as of such Purchase Date in Common
Stock, in whole or in part, but such Purchase Price is ultimately to be paid to
such Holder entirely in cash because any of the conditions to payment of the
Purchase Price (or portion thereof) in Common Stock is not satisfied by the
Purchase Date, as described below, whether such Holder elects (x) to withdraw
such Purchase Notice as to some or all of the Debentures to which it relates
(stating the principal amount at maturity and certificate numbers of the
Debentures as to which such withdrawal shall related), or (y) to receive cash in
respect of the entire Purchase Price for all Debentures subject to such Purchase
Notice. If the Holder fails to indicate, in the Purchase Notice and in any
written notice of withdrawal relating to such Purchase Notice, such Holder's
choice with respect to the election described in clause (iv) above, such Holder
shall be deemed to have elected to receive cash in respect of the entire
Purchase Price for all Debentures subject to such Purchase Notice in such
circumstances. For a discussion of the tax treatment of a Holder receiving cash
instead of Common Stock, see "Certain Federal Income Tax Considerations."
Any Purchase Notice may be withdrawn by the Holder by a written notice of
withdrawal delivered to the Paying Agent prior to the close of business on the
Purchase Date. The notice of withdrawal shall state the principal amount at
maturity and the certificate numbers of the Debentures as to which the
withdrawal notice relates and the principal amount at maturity, if any, which
remains subject to the Purchase Notice.
The Purchase Price payable in respect of a Debenture shall be equal to the
Issue Price plus accrued Original Issue Discount to the Purchase Date. The table
below shows the Purchase Prices of a Debenture as of the specified Purchase
Dates. The Company may elect to pay the Purchase Price payable as of any
Purchase Date in cash or shares of Common Stock, or any combination thereof.
PURCHASE
--------
PURCHASE DATE PRICE
------------- -----
March 2, 2003..................................... $476.74
March 2, 2008..................................... 610.27
March 2, 2013..................................... 781.20
If the Company elects to pay the Purchase Price, in whole or in part, in
shares of Common Stock, the number of shares to be delivered in respect of the
portion of the Purchase Price to be paid in shares of Common Stock shall be
equal to such portion of the Purchase Price divided by the Market Price (as
defined below) of the Common Stock. However, no fractional shares of Common
Stock will be delivered upon any purchase by the Company of Debentures through
the delivery of shares of Common Stock in payment, in whole or in part, of the
Purchase Price. Instead, the Company will pay cash based on the Market Price for
all fractional shares of Common Stock.
The Company will give notice (the "Company Notice") not less than 20
Business Days prior to the Purchase Date (the "Company Notice Date") to all
Holders at their addresses shown in the register of the Registrar (and to
beneficial owners as required by applicable law) stating, among other things,
whether the Company will pay the Purchase Price of the Debentures in cash or
Common Stock, or any combination thereof (specifying the percentage of each)
and, if the Company elects to pay in Common Stock, in whole or in part, the
method of calculating the Market Price of the Common Stock.
The "Market Price" means the average of the Sale Prices (as defined below)
of the Common Stock for the five trading day period ending on (if the third
Business Day prior to the applicable Purchase Date is a trading day or, if not,
then on the last trading day prior to) the third Business Day prior to the
applicable Purchase Date, appropriately adjusted to take into account the
occurrence during the period
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commencing on the first of such trading days during such five trading day period
and ending on such Purchase Date of certain events that would result in an
adjustment of the Conversion Rate with respect to the Common Stock. The "Sale
Price" of the Common Stock on any date means the closing per share sale price
(or if no closing sale price is reported, the average bid and ask prices or, if
more than one in either case, the average of the average bid and average ask
prices) on such date as reported in the composite transactions for the principal
United States securities exchange on which the Common Stock is traded or, if the
Common Stock is not listed on a United States national or regional stock
exchange, as reported by the National Association of Securities Dealers
Automated Quotation System. Because the Market Price of the Common Stock is
determined prior to the applicable Purchase Date, Holders of Debentures bear the
market risk with respect to the value of the Common Stock to be received from
the date such Market Price is determined to such Purchase Date. The Company may
elect to pay the Purchase Price in Common Stock only if the information
necessary to calculate the Market Price is reported in a daily newspaper of
national circulation.
Upon determination of the actual number of shares of Common Stock in
accordance with the foregoing provisions, the Company will publish such
determination in a daily newspaper of national circulation.
The Company's right to purchase Debentures with shares of Common Stock is
subject to the Company satisfying various conditions, including: (i) the
registration of the Common Stock under the Securities Act, if required; and (ii)
compliance with other applicable federal and state securities laws, if any. If
such conditions are not satisfied by a Purchase Date, the Company will pay the
Purchase Price of the Debentures to be purchased on such Purchase Date entirely
in cash. See "Certain Federal Income Tax Considerations." The Company will
comply with the provisions of Rule 13e-4 and any other tender offer rules under
the Exchange Act which may then be applicable and will file Schedule 13E-4 or
any other schedule required thereunder in connection with any offer by the
Company to purchase Debentures at the option of Holders.
Payment of the Purchase Price for a Debenture for which a Purchase Notice
has been delivered and not withdrawn is conditioned upon book-entry transfer or
delivery of such Debenture (together with necessary endorsements) to the Paying
Agent at its office in New York, New York, or any other office of the Paying
Agent maintained for such purpose, at any time (whether prior to, on or after
the Purchase Date) after delivery of such Purchase Notice. Payment of the
Purchase Price for such Debenture will be made promptly following the later of
the Purchase Date or the time of book-entry transfer or delivery of such
Debenture. If the Paying Agent holds, in accordance with the terms of the
Indenture, money or securities sufficient to pay the Purchase Price of such
Debenture on the Business Day following the Purchase Date, then, on and after
such date, such Debenture will cease to be outstanding and Original Issue
Discount on such Debenture will cease to accrue, whether or not book-entry
transfer of such Debenture is made or such Debenture is delivered to the Paying
Agent, and all other rights of the Holder shall terminate (other than the right
to receive the Purchase Price upon delivery of the Debenture).
The Company's ability to repurchase Debentures with cash could be subject
to certain limitations. There could be no assurance that the Company would have
sufficient financial resources, or would be able to arrange financing, to
repurchase the Debentures tendered by all Holders thereof. In connection with
the repurchase of such Debentures, the Company may be required to redeem its
$40.0 million principal amount of 7.29% Senior Notes.
No Debentures may be purchased at the option of the Holder for cash if
there has occurred (prior to, on or after the giving, by the Holders of such
Debentures, of the required Purchase Notice) and is
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continuing an Event of Default described under "Event of Default and Remedies"
below (other than a default in the payment of the Purchase Price with respect to
such Debentures).
SUBORDINATION OF DEBENTURES
The Indebtedness evidenced by the Debentures is subordinated to the extent
provided in the Indenture to the prior payment in full of all Senior
Indebtedness whether presently outstanding or hereafter incurred or created.
Upon any distribution of assets of the Company upon any dissolution, winding up,
liquidation or reorganization, the payment of the principal and accrued Original
Issue Discount on the Debentures is to be subordinated to the extent provided in
the Indenture in right of payment to the prior payment, in full, in cash of all
Senior Indebtedness. In the event of any acceleration of the Debentures because
of an Event of Default (as defined in the Indenture), the Holders of any Senior
Indebtedness then outstanding would be entitled to payment in full in cash of
all obligations in respect of such Senior Indebtedness before the Holders of the
Debentures are entitled to receive any payment or distribution in respect
thereof. The Indenture will require that the Company promptly notify Holders of
Senior Indebtedness if payment of the Debentures is accelerated because of an
Event of Default.
The Company also may not make any payment upon or in respect of the
Debentures, whether at maturity or upon optional redemption, Change in Control
or purchase at option of the Holder, if (i) a default in the payment of the
principal of, premium, if any, interest, lease payment or other obligations in
respect of Senior Indebtedness occurs and is continuing beyond any applicable
period of grace or (ii) any other default occurs and is continuing with respect
to Designated Senior Indebtedness (as defined) that permits Holders of the
Designated Senior Indebtedness as to which such default relates to accelerate
its maturity and the Trustee receives a notice of such default (a "Payment
Blockage Notice") from the Company or other person permitted to give such notice
under the Indenture. Payments on the Debentures may and shall be resumed (a) in
case of a payment default, upon the date on which such default is cured or
waived and (b) in case of a nonpayment default, the earlier of the date on which
such nonpayment default is cured or waived or 179 days after the date on which
the applicable Payment Blockage Notice is received if the maturity of such
Designated Senior Indebtedness has not been accelerated. No new period of
payment blockage may be commenced pursuant to a Payment Blockage Notice unless
and until (i) 365 days have elapsed since the initial effectiveness of the
immediately prior Payment Blockage Notice and (ii) all scheduled payments of
principal and accrued Original Issue Discount on the Debentures that have come
due have been paid in full in cash. No nonpayment default that existed or was
continuing on the date of delivery of any Payment Blockage Notice to the Trustee
shall be, or be made, the basis for a subsequent Payment Blockage Notice.
By reason of the subordination provisions described above, in the event of
the Company's bankruptcy, dissolution or reorganization, Holders of Senior
Indebtedness may receive more, ratably, and Holders of the Debentures may
receive less, ratably, than the other creditors of the Company. Such
subordination will not prevent the occurrence of any Event of Default under the
Indenture.
The term "Senior Indebtedness" means 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 (as defined) of the Company, whether
outstanding on the date of the Indenture or thereafter created, incurred,
assumed, guaranteed or in effect guaranteed by the Company (including all
deferrals, renewals, extensions or refinancing 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
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Indebtedness shall not be senior in right of payment to the Debentures or
expressly provides that such Indebtedness is "pari passu" or "junior" to the
Debentures. Notwithstanding the foregoing, the term Senior Indebtedness shall
not include any Indebtedness of the Company to any Subsidiary (as defined in the
Indenture) of the Company.
The term "Indebtedness" means, with respect to any Person (as defined in
the Indenture), and without duplication, (a) the principal of and premium, if
any, and interest on, and fees, costs, enforcement expenses, collateral
protection expenses and other reimbursement or indemnity obligations in respect
to all indebtedness or obligations of the Company to any Person, including but
not limited to banks and other lending institutions, for money borrowed that is
evidenced by a note, bond, debenture, loan agreement, or similar instrument or
agreement (including purchase money obligations with original maturities in
excess of one year and noncontingent reimbursement obligations in respect of
amounts paid under letters of credit); (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 such Person
required, in conformity with generally accepted accounting principles, to be
accounted for as capital lease obligations on the balance sheet of such Person,
(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, excluding any operating leases the Company is
currently (or may become) a party to, described in clauses (a) through (d)
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 (g)
any and all deferrals, renewals, extensions and refinancing of, or amendments,
modifications or supplements to, any indebtedness, obligation or liability of
the kind described in clauses (a) through (f).
The term "Designated Senior Indebtedness" means the Company's indebtedness
outstanding from time to time under its revolving credit facility and any
particular Senior Indebtedness in which the instrument creating or evidencing
the same or the assumption or guarantee thereof (or related agreements or
documents to which the Company is a party) expressly provides that such Senior
Indebtedness shall be "Designated Senior Indebtedness" for purposes of the
Indenture (provided that such instrument, agreement or other document may place
limitations and conditions on the right of such Senior Indebtedness to exercise
the rights of Designated Senior Indebtedness).
Any right of the Company to receive any assets of any of its subsidiaries
upon their liquidation or reorganization (and the consequent right of the
Holders of the Debentures to participate in those assets) will be effectively
subordinated to the claims of that subsidiary's creditors (including trade
creditors), except to the extent that the Company is itself recognized as a
creditor of such subsidiary, in which case the claims of the Company would still
be subordinate to any security interest in the assets of such subsidiary and any
indebtedness of such subsidiary senior to that held by the Company. Because the
Company is a holding company that conducts its operations principally through
subsidiaries, substantially all of the Company's liabilities other than long-
term debt are liabilities of the subsidiaries.
At January 18, 1998, on a pro forma basis after giving effect to the sale
of the Debentures, the Company would have had approximately $41.2 million of
indebtedness outstanding that would have constituted Senior Indebtedness and
would have had approximately $100.0 million available to be drawn
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upon its principal line of credit. The Indenture does not limit the amount of
additional Indebtedness, including Senior Indebtedness, which the Company can
create, incur, assume or guarantee, nor will the Indenture limit the amount of
Indebtedness which any Subsidiary can create, incur, assume or guarantee.
In the event that, notwithstanding the foregoing, the Trustee or any Holder
of Debentures receives any payment or distribution of assets of the Company of
any kind in contravention of any of the subordination provisions of the
Indenture, whether in cash, property or securities, including, without
limitation, by way of set-off or otherwise, in respect of the Debentures before
all Senior Indebtedness is paid in full, then such payment or distribution will
be held by the recipient in trust for the benefit of Holders of Senior
Indebtedness or their representative or representatives to the extent necessary
to make payment in full of all Senior Indebtedness remaining unpaid, after
giving effect to any concurrent payment or distribution, or provision therefor,
to or for the Holders of Senior Indebtedness.
The Company is obligated to pay reasonable compensation to the Trustee and
to indemnify the Trustee against any losses, liabilities or expenses incurred by
it in connection with its duties relating to the Debentures. The Trustee's
claims for such payments will be senior to those of Holders of the Debentures in
respect of all funds collected or held by the Trustee.
COMPLIANCE CERTIFICATE
The Indenture requires the Company to deliver to the Trustee, within 90
days after the end of each fiscal year, an Officers' Certificate as to the
signer's knowledge of the Company's compliance with all conditions and covenants
on its part contained in the Indenture and stating whether or not the signer
knows of any Default or Event of Default. If such signer knows of such a
Default or Event of Default, the Officers' Certificate must describe the Default
or Event of Default and the efforts to remedy the same. For the purposes of
this provision of the Indenture, compliance shall be determined without regard
to any grace period or requirement of notice provided pursuant to the terms of
the Indenture.
EVENTS OF DEFAULT AND REMEDIES
The following are Events of Default under the Indenture: (i) default in the
payment of any principal, Original Issue Discount, Redemption Price, Purchase
Price, or Change in Control Purchase Price due with respect to the Debentures;
(ii) default by the Company or any subsidiary with respect to its obligation to
pay principal of or interest on indebtedness for borrowed money, which default
shall have resulted in the acceleration of indebtedness aggregating more than
$25 million; (iii) default by the Company with respect to indebtedness for
borrowed money, which default results in the acceleration of such indebtedness
in an amount exceeding $25 million, which indebtedness has not been discharged
or such acceleration has not been rescinded or annulled for a period of 10 days;
(iv) failure to perform any other covenant or warranty of the Company, continued
for 60 days after written notice as provided in the Indenture; (v) final
judgments or orders are rendered against the Company or any of its subsidiaries
which require the payment by the Company or any of its subsidiaries of an amount
(to the extent not covered by insurance) in excess of $25 million and such
judgments or orders remain unstayed or unsatisfied for more than 60 days and are
not being contested in good faith by appropriate proceedings; and (vi) certain
events of bankruptcy, insolvency or reorganization with respect to the Company.
The Indenture provides that if an Event of Default shall have occurred and
be continuing, the Trustee or the Holders of not less than 25% in principal
amount of the Debentures then outstanding may declare the Issue Price plus
Original Issue Discount of the Debentures accrued to the date of declaration to
be due and payable immediately, but if the Company shall cure all defaults
(except the nonpayment
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of principal and accrued Original Issue Discount on any of the Debentures which
shall have become due by acceleration) and certain other conditions are met,
with certain exceptions, such declaration may be annulled and past defaults may
be waived by the Holders of a majority of the principal amount of the Debentures
then outstanding. In the case of certain events of bankruptcy or insolvency, the
Issue Price plus Original Issue Discount of the Debentures accrued to the date
of the occurrence of the bankruptcy or insolvency shall automatically become and
be immediately due and payable.
The Indenture provides that the Trustee will within 90 days after a Trust
Officer (as defined in the Indenture) has knowledge of the occurrence of a
Default or any Event of Default, mail to all Holders, as the names and addresses
of such Holders appear upon the Debenture register, notice of all Defaults or
Events of Default known to a Trust Officer, unless such Default or Event of
Default is cured or waived before the giving of such notice and provided that,
except in the case of default in the payment of the Principal Amount, Issue
Price, accrued Original Issue Discount, accrued Liquidated Damages, if any,
Redemption Price, Purchase Price, Change in Control Purchase Price or interest,
if any, as the case may on any of the Debentures, the Trustee will be protected
in withholding such notice if and so long as a trust committee of directors
and/or officers of the Trustee in good faith determines that the withholding of
such notice is in the interest of the Holders.
The Holders of a majority in principal amount of the Debentures then
outstanding shall have the right to direct the time, method and place of
conducting any proceedings for any remedy available to the Trustee, subject to
certain limitations specified in the Indenture.
MODIFICATIONS OF THE INDENTURE
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the Holders of not less than a majority in principal amount
of the Debentures at the time outstanding, to modify the Indenture or any
supplemental indenture or the rights of the Holders of the Debentures, except
that no such modification shall (i) extend the fixed maturity of any Debenture,
reduce the principal amount at the Final Maturity Date, Issue Price, Purchase
Price, Change in Control Purchase Price, Redemption Price or amount of cash paid
in lieu of shares of Common Stock, change the obligation of the Company to
repurchase any Debenture upon the occurrence of any Change in Control in a
manner adverse to Holders of Debentures, impair the right of a Holder to
institute suit for the payment thereof, change the currency in which the
Debentures are payable, or impair the right to convert the Debentures into
Common Stock in any material respect, or modify the provisions of the Indenture
with respect to the subordination of the Debentures in a manner adverse to the
Holders of the Debentures in any material respect, without the consent of the
Holder of each Debenture so affected, or (ii) reduce the aforesaid percentage of
Debentures the Holders of which are required to consent to any such supplemental
indenture, without the consent of the Holders of all of the Debentures then
outstanding.
BOOK ENTRY, DELIVERY AND FORM
The Debentures were issued in fully registered form, without coupons, in
denominations of $1,000 principal amount at final maturity and multiples
thereof.
Global Debenture, Book-Entry Form. Debentures held by qualified
institutional buyers, as defined in Rule 144A under the Securities Act ("QIBs"),
and Debentures held by institutional "accredited investors" as defined in Rule
501(a)(l), (2), (3) or (7) are evidenced by one or more global Debentures (the
"Global Debenture") which was deposited with, or on behalf of, DTC and
registered in the name of Cede & Co. ("Cede") as DTC's nominee. Except as set
forth below, record ownership of the Global
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Debenture may be transferred, in whole or in part, only to another nominee of
DTC or to a successor of DTC or its nominee.
QIBs and institutional "accredited investors" may hold interests in the
Global Debenture directly through DTC, if such QIB or institutional "accredited
investor" is a participant in DTC, or indirectly through organizations which are
participants in DTC (the "Participants"). Transfers between Participants will be
effected in the ordinary way in accordance with DTC rules and will be settled in
same-day funds. The laws of some states require that certain persons take
physical delivery of securities in definitive form. Consequently, the ability to
transfer beneficial interest in the Global Debenture to such persons may be
limited.
QIBs who are not Participants may beneficially own interests in the Global
Debenture held by DTC only through Participants, or certain banks, brokers,
dealers, trust companies and other parties that clear through or maintain a
custodial relationship with a Participant, either directly or indirectly
("Indirect Participants"). So long as Cede, as the nominee of DTC, is the
registered owner of the Global Debenture, Cede for all purposes will be
considered the sole Holder of the Global Debenture. Except as provided below,
owners of beneficial interests in the Global Debenture will 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 thereof.
Payment of the Redemption Price, Purchase Price, Change in Control Purchase
Price of or any other amounts with respect to the Global Debenture will be made
to Cede, the nominee of DTC, as the registered owner of the Global Debenture, by
wire transfer of immediately available funds on the applicable payment date
therefor. Neither the Company, the Trustee nor any paving agent will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the Global
Debenture or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
The Company has been informed by DTC that, with respect to any payments in
connection with the Global Debenture, DTC's practice is to credit Participants'
accounts on the applicable payment date therefor with payments in amounts
proportionate to their respective beneficial interests in the Debentures
represented by the Global Debenture, as shown on the records of DTC (adjusted as
necessary so that such payments are made with respect to whole Debentures only),
unless DTC has reason to believe that it will not receive payment on such
payment date. Payments by Participants to owners of beneficial interests in
Debentures represented by the Global Debenture held through such Participants
will be the responsibility of such Participants, as is now the case with
securities held for the accounts of customers registered in "street name."
Holders who desire to convert their Debentures into Common Stock pursuant
to the terms of the Debentures should contact their brokers or other
Participants or Indirect Participants to obtain information on procedures,
including proper forms and cut-off times, for submitting such requests.
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a person
having a beneficial interest in Debentures represented by the Global Debenture
to pledge such interest to persons or entities that do not participate in the
DTC system, or otherwise, take actions in respect of such interest, may be
affected by the lack of a physical certificate evidencing such interest.
Neither the Company nor the Trustee (or any registrar, paying agent or
conversion agent under the Indenture) has any responsibility for the performance
by DTC or its Participants or Indirect
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Participants of their respective obligations under the rules and procedures
governing their operations. DTC has advised the Company that it will take any
action permitted to be taken by a Holder of Debentures (including, without
limitation, the presentation of Debentures for exchange as described below),
only at the direction of one or more Participants to whose account DTC interests
in the Global Debenture are credited and only in respect of the principal amount
of the Debentures represented by the Global Debenture as to which such
Participant or Participants has or have given such direction.
DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a "banking
organization" within the meaning of the New York Banking Law, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC holds securities for its
Participants. DTC also facilitates the clearance and settlement among
Participants of securities transactions, such as transfers and pledges, in
deposited securities through electronic book-entry changes to accounts of its
Participants, thereby eliminating the need for physical movement of
certificates. Participants include securities brokers and dealers, banks, trust
companies and clearing corporations and may include certain other organizations
such as the Initial Purchasers. Certain of such Participants (or their
representatives), together with other entities, own DTC. Indirect access to the
DTC system is available to others such as banks, brokers, dealers and trust
companies that clear through, or maintain a custodial relationship, with, a
Participant, either directly or indirectly. The rules applicable to DTC and its
Participants are on file with the Commission.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Debenture among Participants of DTC, DTC is
under no obligation to perform or continue to perform such procedures, and such
procedures may be discontinued at any time. If DTC is at any time unwilling or
unable to continue as depository and a successor depository is not appointed by
the Company within 90 days, the Company will cause Debentures to be issued in
definitive form in exchange for the Global Debenture. None of the Company, the
Trustee nor any of their respective agents will have any responsibility for the
performance by DTC, their Participants or Indirect Participants of their
respective obligations under the rules and procedures governing their
operations, including maintaining, supervising or reviewing the records relating
to, or payments made on account of, beneficial ownership interests in Global
Debentures.
Certificated Debentures. Subject to certain conditions, any person having
a beneficial interest in the Global Debenture may, upon request to the Trustee,
exchange such beneficial interest for Debentures in certificated form
("Certificated Debentures"). Upon any such issuance, the Trustee is required to
register such Certificated Debentures in the name of, and cause the same to be
delivered to, such person or persons (or the nominee of any thereof). All such
certificated Debentures would be subject to the legend requirements described
herein under "Transfer Restrictions." Certificated Debentures may be issued in
exchange for Debentures represented by the Global Debenture if no successor
depository is appointed by the Company as set forth above under "CGlobal
Debenture, Book Entry Form."
Restrictions on Transfer; Legends. The Debentures are subject to certain
transfer restrictions as described below under "Transfer Restrictions" and
certificates evidencing the Debentures will bear a legend to such effect.
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REGISTRATION RIGHTS
Pursuant to the Registration Rights Agreement, the Company has agreed to
use all reasonable efforts to keep the Registration Statement effective for two
years after the latest date of initial issuance of Debentures. The Company is
permitted to suspend the use of this Prospectus during certain periods of time
and under certain circumstances relating to pending corporate developments,
public filings with the Commission and similar events. If the Prospectus is
unavailable for periods in excess of those permitted under the Registration
Rights Agreement, the Company has agreed to pay liquidated damages to (i) each
Holder of Debentures at a rate equal to one-half of one percent per annum (50
basis points) on the aggregate principal amount of the Debentures and (ii) each
Holder of shares of Common Stock issued upon conversion of the Debentures at a
rate equal to one-half of one percent per annum (50 basis points) calculated on
the product of (a) the (i) the sum of the Issue Price plus Original Issue
Discount accrued to such Trading Day, by (ii) the Conversion Rate, times (b) the
number of shares of such Common Stock held by such Holder. The Company will pay
all expenses of the shelf registration statement, provide to each registered
Holder requesting to sell Debentures or shares of Common Stock copies of such
prospectus, notify each registered Holder when the shelf registration statement
has become effective and take certain other actions as are required to permit,
subject to the foregoing, unrestricted resales of the securities.
CONCERNING THE TRUSTEE
Chase Bank of Texas, National Association, the Trustee under the Indenture,
has been appointed by the Company as the initial paying agent, conversion agent,
registrar and custodian with regard to the Debentures. The Company may maintain
deposit accounts and conduct other banking transactions with the Trustee or its
affiliates in the ordinary course of business, and the Trustee and its
affiliates may from time to time in the future provide banking and other
services to the Company in the ordinary course of their business. At present,
the Trustee is a lender and the agent for the other lenders under the Company's
line of credit.
DISCHARGE OF THE INDENTURE
The Company may satisfy and discharge its obligations under the Indenture
by delivering to the Trustee for cancellation all outstanding Debentures or by
depositing with the Trustee, after all outstanding Debentures have become due
and payable (or are by their terms to become due and payable within one year or
are to be cancelled upon redemption within one year), whether at stated
maturity, or any Redemption Date, or a Change of Control Purchase Date, or upon
conversion or otherwise, cash sufficient to pay all of the outstanding
Debentures and paying all other sums payable under the Indenture by the Company.
Upon the deposit of such funds with the Trustee, then the Indenture will cease
to be of further effect (except as to (i) remaining rights of registration of
transfer, substitution and exchange and conversion of Debentures, (ii) rights of
Holders under the Indenture to receive payments of the Principal Amount,
including Original Issue Discount due with respect to the Debentures and the
other rights, duties and obligations of Holders, as beneficiaries with respect
to the amounts, if any, so deposited with the Trustee and (iii) the rights,
obligations and immunities of the Trustee under the Indenture).
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DESCRIPTION OF CAPITAL STOCK
The Company is authorized to issue 100,000,000 shares of Common Stock, no
par value, of which approximately 26,219,605 shares were outstanding as of April
24, 1998 and 5,000,000 shares of Preferred Stock, $.01 par value ("Preferred
Stock"), none of which are outstanding.
Holders of Common Stock are entitled to one vote per share on any matter
submitted to the vote of shareholders, and cumulative voting is prohibited in
the election of directors. Subject to preferences that may be applicable to any
outstanding Preferred Stock, the holders of Common Stock are entitled to receive
ratably such dividends, if any, as may be declared from time to time by the
Board of Directors out of funds legally available therefor. The Common Stock is
non-assessable, not redeemable, does not have any conversion rights and is not
subject to call. Holders of shares of Common Stock have no preemptive rights to
maintain their respective percentage of ownership in future offerings or sales
of stock by the Company.
The Company may issue Preferred Stock in one or more series and the Board
of Directors may designate the dividend rate, voting rights and other rights,
preferences and restrictions of each series. It is not possible to state the
actual effect of the issuance of any shares of Preferred Stock upon the rights
of holders of the Common Stock until the Board of Directors of the Company
determines the specific rights of holders of such Preferred Stock. However, such
effects might include, among other things, restricting dividends on the Common
Stock, diluting the voting power of the Common Stock, impairing the liquidation
rights of the Common Stock and delaying or preventing a change in control of the
Company without further action by the shareholders.
The Transfer Agent and Registrar for the Common Stock is Securities
Transfer Corp., Dallas, Texas.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a general discussion of certain material U.S. federal
income tax considerations relating to the purchase, ownership and disposition of
the Debentures and Common Stock to U.S. Holders (as defined below), but does not
purport to be a complete analysis of all the potential tax considerations
relating thereto. This discussion is based upon the Internal Revenue Code of
1986, as amended (the "Code"), existing and proposed Treasury Regulations, and
judicial decisions and administrative interpretations thereunder, as of the date
hereof, all of which are subject to change, possibly with retroactive effect, or
different interpretations. There can be no assurance that the Internal Revenue
Service (the "IRS") will not challenge one or more of the tax consequences
described herein.
The Company has been advised by its counsel that, based on current laws,
regulations and administrative and judicial standards, all of which are subject
to change, the Debentures will be treated as indebtedness for United States
federal income tax purposes.
This discussion does not purport to address all tax consequences that may
be important to a particular Holder in light of the Holder's circumstances (such
as the alternative minimum tax provisions of the Code), or to certain categories
of investors (such as certain financial institutions, insurance companies, tax-
exempt organizations, dealers in securities, or persons who hold Debentures or
Common Stock as part of a hedge, conversion or constructive sale transaction,
straddle or other risk reduction transaction) that may be subject to special
rules. In addition, the following does not address the tax consequences to a
Holder that is not a "U.S. Holder." As used herein, the term "U.S. Holder" means
26
<PAGE>
a Holder of a Debenture or Common Stock that is (i) for United States federal
income tax purposes, a citizen or resident of the United States, (ii) a
corporation, partnership or other entity created or organized in or under the
laws of the United States or of any political subdivision thereof, (iii) an
estate, the income of which is subject to United States federal income taxation
regardless of its source, or (iv) a trust, the administration of which is
subject to the primary supervision of a court within the United States and which
has one or more United States persons with authority to control all substantial
decisions. This discussion is limited to Holders of Debentures who hold the
Debentures and any Common Stock into which the Debentures are converted as
capital assets. This discussion also does not address the tax consequences
arising under the laws of any foreign, state or local jurisdiction.
PERSONS CONSIDERING THE PURCHASE OF A DEBENTURE SHOULD CONSULT THEIR OWN
TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF ACQUIRING,
HOLDING, CONVERTING OR OTHERWISE DISPOSING OF THE DEBENTURES AND COMMON STOCK,
INCLUDING THE EFFECT AND APPLICABILITY OF STATE, LOCAL OR FOREIGN TAX LAWS.
ORIGINAL ISSUE DISCOUNT ON THE DEBENTURES
The Debentures were issued at a substantial discount from their stated
redemption price at maturity. For federal income tax purposes, the excess of the
stated redemption price at maturity of each Debenture over its issue price
constitutes original issue discount ("Original Issue Discount"). The issue price
of the Debentures will equal the initial price at which a substantial amount of
the Debentures is sold (not including sales to underwriters or placement agents,
including the Initial Purchasers). U.S. Holders of the Debentures will be
required to include Original Issue Discount in income as it accrues, in
accordance with the constant yield method described below, before receipt of the
cash attributable to such income, regardless of such U.S. Holder's regular
method of accounting for United States federal income tax purposes. A U.S.
Holder of a Debenture must include in gross income for federal income tax
purposes the sum of the daily portions of Original Issue Discount with respect
to the Debenture for each day during the taxable year or portion of a taxable
year on which such U.S. Holder holds the Debenture. The daily portion is
determined by allocating to each day of each accrual period a pro rata portion
of an amount equal to the adjusted issue price of the Debenture at the beginning
of the accrual period multiplied by the yield to maturity of the Debenture
(determined by compounding at the close of each accrual period and adjusted for
the length of the accrual period). The adjusted issue price of a Debenture at
the start of any accrual period will be the issue price of the Debenture
increased by the accrued Original Issue Discount for each prior accrual period.
Under these rules, U.S. Holders will have to include in gross income
increasingly greater amounts of Original Issue Discount in each successive
accrual period. A U.S. Holder's original tax basis for determining gain or loss
on the sale or other disposition of a Debenture will be increased by any accrued
Original Issue Discount includable in such U.S. Holder's gross income.
There are several circumstances under which the Company could make a
payment on a Debenture which would affect the yield to maturity of a Debenture,
including (as described under "Description of Debentures") the payment of
liquidated damages due to the failure to timely file a registration statement
with respect to the Debentures and the Common Stock issuable upon conversion
thereof, effect the Exchange Offer, or the redemption or repurchase of
Debentures. According to Treasury Regulations, the possibility of a change in
the yield will not be treated as affecting the amount of Original Issue Discount
required to be realized by a Holder (or the timing of such recognition) if the
likelihood of the change, as of the date the debt obligations are issued, is
remote. The Company intends to report on the basis that the likelihood of any
change in the yield on the Debentures is remote. The Company also intends to
report on the basis that there is no alternative payment schedule that would
minimize the yield on the Debentures to the Company.
27
<PAGE>
MARKET DISCOUNT
Any principal payment or gain realized by a U.S. Holder on disposition or
retirement of a Debenture will be treated as ordinary income to the extent that
there is accrued market discount on the Debenture. The amount of market discount
on a Debenture for a Holder will equal the excess of the adjusted issue price of
such Debenture over the initial tax basis of such Debentures in the hands of
such Holder. To the extent a Holder exchanges or converts a Debenture into
Common Stock in a transaction that is otherwise tax free, any accrued market
discount will carry over and generally be recognized upon a disposition of the
Common Stock. Unless a U.S. Holder irrevocably elects to accrue market discount
under a constant-interest method, accrued market discount is the total market
discount multiplied by a fraction, the numerator of which is the number of days
the U.S. Holder has held the obligation and the denominator of which is the
number of days from the date the Holder acquired the obligation until its
maturity. A U.S. Holder may be required to defer a portion of its interest
deductions for the taxable year attributable to any indebtedness incurred or
continued to purchase or carry a Debenture purchased with market discount. Any
such deferred interest expense would not exceed the market discount that accrues
during such taxable year and is, in general, allowed as a deduction not later
than the year in which such market discount is includable in income. If the
Holder elects to include market discount in income currently as it accrues on
all market discount instruments acquired by the U.S. Holder in that taxable year
or thereafter, the (i) interest deferral described above will not apply and (ii)
market discount will not carry over into Common Stock as described above. Any
such election is terminable only with the consent of the IRS and applies to all
market discount bonds acquired during or after the year for which it is made.
ACQUISITION PREMIUM
A U.S. Holder will be considered to have "acquisition premium" to the
extent the U.S. Holder's initial tax basis in a Debenture is greater than (x)
the adjusted issue price of such Debenture but less than (y) the stated
redemption price at maturity of such Debenture. Acquisition premium may offset
the amount of Original Issue Discount received on such Debenture that the U.S.
Holder is required to include in income.
SALE, EXCHANGE OR RETIREMENT OF THE DEBENTURES
Upon the sale, exchange or retirement of a Debenture, including as a result
of a tender upon the occurrence of a Change in Control, and, except as discussed
in the next paragraph on a Purchase Date, a Holder will recognize gain or loss
equal to the difference between the sale or redemption proceeds and the U.S.
Holder's adjusted tax basis in the Debenture.
If a U.S. Holder elects to exercise its option to tender the Debentures to
the Company on a Purchase Date and the Company issues Common Stock in
satisfaction of all or part of the Purchase Price, the exchange of the
Debentures for Common Stock should qualify as a reorganization for federal
income tax purposes. If the Purchase Price is paid solely in Common Stock,
except in the case of a fractional share described below, a U.S. Holder will not
be required to recognize any gain realized and will not be permitted to
recognize any loss. If the Purchase Price is paid in a combination of Common
Stock and cash (other than cash received in lieu of a fractional share), gain
(but not loss) realized by the U.S. Holder would be recognized, but only to the
extent of the cash received. A U.S. Holder's initial tax basis in the Common
Stock received would be equal to such U.S. Holder's adjusted tax basis in the
Debenture tendered (except for any portion allocable to a fractional share of
Common Stock), increased by the amount of gain recognized (other than with
respect to a fractional share) and decreased by the amount of any cash received
(except cash received in lieu of a fractional share). The holding period for
28
<PAGE>
Common Stock received in the exchange will include the holding period of the
Debenture tendered to the Company in exchange therefor. The receipt of cash in
lieu of a fractional share of Common Stock should generally result in capital
gain or loss, measured by the difference between the amount of cash received for
the fractional share and the U.S. Holder's tax basis in the fractional share
interest.
A Holder's adjusted tax basis in a Debenture will generally equal the
Holder's cost of the Debenture increased by any Original Issue Discount
previously included in income by such Holder with respect to such Debenture and
decreased by any payments received thereon. Except to the extent of any accrued
market discount, gain or loss realized on the sale, exchange or retirement of a
Debenture will generally be capital gain or loss and will be long-term capital
gain or loss if the Debenture is held for more than one year. For individual
U.S. Holders, the maximum rate of United States federal income tax generally is
28% if the Debenture disposed of is held for more than one year but not more
than 18 months, and the maximum rate is 20% if the Debenture disposed of is held
more than 18 months.
CONVERSION OF DEBENTURES
A U.S. Holder's conversion of a Debenture into Common Stock will generally
not be a taxable event (except with respect to cash received in lieu of a
fractional share). A U.S. Holder's basis in the Common Stock received on
conversion of a Debenture will be the same as the U.S. Holder's basis in the
Debenture at the time of conversion, including accrued Original Issue Discount
(exclusive of any tax basis allocable to a fractional share), and the holding
period for the Common Stock received on conversion will include the holding
period of the Debenture converted. The receipt of cash in lieu of fractional
Common Stock should generally result in capital gain or loss (measured by the
difference between the cash received for the fractional share interest and the
U.S. Holder's tax basis in the fractional share interest).
DIVIDENDS; ADJUSTMENT OF CONVERSION RATE
Dividends, if any, paid on the Common Stock generally will be includable in
the income of a U.S. Holder as ordinary income to the extent of the Company's
current or accumulated earnings and profits.
If at any time the Company makes a distribution of property to shareholders
that would be taxable to such shareholders as a dividend for federal income tax
purposes (for example, distributions of indebtedness or assets of the Company,
but generally not stock dividends or rights to subscribe for Common Stock) and,
pursuant to the anti-dilution provisions of the Indenture, the Conversion Rate
of the Debentures is increased, such increase may be deemed to be the payment of
a taxable dividend to U.S. Holders of Debentures. If the Conversion Rate is
increased at the discretion of the Company or in certain other circumstances,
such increase also may be deemed to be the payment of a taxable dividend to U.S.
Holders of Debentures.
SALE OF COMMON STOCK
Upon the sale or exchange of Common Stock, U.S. Holders generally will
recognize capital gain (except to the extent of any accrued market discount not
previously included in income) or capital loss equal to the difference between
the amount realized on such sale or exchange and the Holder's adjusted tax basis
in such shares. For individual U.S. Holders, the maximum rate of United States
federal income tax generally is 28% if the Common Stock disposed of is held for
more than one year but not more than 18 months, and the maximum rate is 20% if
the Common Stock disposed of is held more than 18 months.
29
<PAGE>
BACKUP WITHHOLDING AND INFORMATION REPORTING
Information reporting will apply to payments of interest or dividends on or
the proceeds of the sale or other disposition of the Debentures or shares of
Common Stock made by the Company with respect to certain U.S. Holders, and
backup withholding at a rate of 31% may apply unless the recipient of such
payment supplies a taxpayer identification number, certified under penalties of
perjury, as well as certain other information or otherwise establishes an
exemption from backup withholding. Any amount withheld under the backup
withholding rules is allowable as a credit against the U.S. Holder's federal
income tax, provided that the required information is timely filed with the IRS.
30
<PAGE>
SELLING HOLDERS
The Debentures were originally issued by the Company and resold by BT Alex.
Brown Incorporated and Morgan Stanley & Co. Incorporated (the "Initial
Purchasers"), in transactions exempt from the registration requirements of the
Securities Act, to persons reasonably believed by the Initial Purchasers to be
"qualified institutional buyers" (as defined in Rule 144A under the Securities
Act ("QIBs") in compliance with Rule 144A under the Securities Act, such persons
constituting "Selling Holders." The Selling Holders (which term includes their
transferees, pledgees, donees or their successors) may from time to time offer
and sell pursuant to this Prospectus any or all of the Debentures and Common
Stock issued upon conversion of the Debentures.
The following table sets forth information with respect to the Selling
Holders and the respective principal amounts of Debentures and shares of Common
Stock beneficially owned by each Selling Holder. Such information has been
obtained from the Selling Holders. Except as otherwise disclosed herein, none
of the Selling Holders has, or within the past three years has had, any position
office or other material relationship with the Company or any of its
predecessors or affiliates. Because the Selling Holders may offer all or some
portion of the Debentures or the Common Stock issuable upon conversion thereof
pursuant to this Prospectus, no estimate can be given as to the amount of the
Debentures or the Common Stock issuable upon conversion thereof that will be
held by the Selling Holders upon termination at any such sales. In addition,
the Selling Holders identified below may have sold, transferred or otherwise
disposed of all or a portion of their Debentures, since the date on which they
provided the information regarding their Debentures, in transactions exempt from
the registration requirements of the Securities Act.
<TABLE>
<CAPTION>
Principal Amount of
Debentures Beneficially Owned Number of Shares of Common
Selling Holder and That May Be Offered Hereby Stock Beneficially Owned (1)
- ------------------------------- ------------------------------- -------------------------------
<S> <C> <C>
BT Alex. Brown $27,072,000 ---
130 Liberty Street
New York, NY 10006
Deutsche Bank AG 21,250,000 ---
600 Steamboat Road
Greenwich, CT 06830
R/2/ Investments, LTD 4,850,000 ---
SBC Warburg Dillon Reed 800,000 ---
</TABLE>
____________________
(1) Does not include shares of Common Stock issuable upon conversion of
Debentures.
PLAN OF DISTRIBUTION
The Debentures and Common Stock issued upon conversion thereof may be
offered for sale and sold by the several Selling Holders in one or more
transactions, including block transactions, at a fixed price or prices (which
may be changed), at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at prices determined on a negotiated
or competitive bid basis. Debentures and Common Stock issued upon conversion
thereof may be sold by a Selling Holder directly, through agents designated from
time to time or to or through broker-dealers designated from time to time, or by
such other means as may be specified in the applicable Prospectus Supplement.
31
<PAGE>
Debentures and Common Stock issued upon conversion thereof may be sold
through a broker-dealer acting as agent or broker for the Selling Holders or to
a broker-dealer acting as principal. In the latter case, the broker-dealer may
then resell such Debentures or Common Stock to the public at varying prices to
be determined by such broker-dealer at the time of resale.
The Selling Holders and any agents or broker-dealers that participate with
the Selling Holders in the distribution of any of the Debentures or Common Stock
issued upon conversion thereof may be deemed to be "underwriters" within the
meaning of the Securities Act, and any discount or commission received by them
and any profit on the resale of the Debentures or Common Stock issued upon
conversion thereof purchased by them may be deemed to be underwriting discounts
or commissions under the Securities Act.
To the extent required, the number of Debentures or Common Stock issued upon
conversion thereof to be sold, certain information relating to the Selling
Holders, the purchase price, the public offering price, if applicable, the name
of any underwriter, agent or broker-dealer, and any applicable commissions,
discounts or other items constituting compensation to such underwriters, agents
or broker-dealers with respect to a particular offering will be set in an
accompanying Prospectus Supplement.
LEGAL MATTERS
The validity of the Debentures and the shares of Common Stock issuable upon
the conversion thereof was passed upon for the Company by Crouch & Hallett,
L.L.P., Dallas, Texas.
EXPERTS
The consolidated financial statements of the Company as of September 28,
1997 and September 29, 1996 and for each of the fiscal years in the three-year
period ended September 28, 1997, have been incorporated by reference herein in
reliance upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing. To the extent that KPMG Peat
Marwick LLP audits and reports upon consolidated financial statements of the
Company issued at future dates, and consents to the use of their report thereon,
such financial statements also will be incorporated by reference herein in
reliance upon their reports and said authority.
32
<PAGE>
================================================================================
NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY
TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION OTHER THAN AS CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY, THE SELLING HOLDERS OR ANY OF THEIR RESPECTIVE AFFILIATES. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER
TO BUY, ANY OF THE SECURITIES OFFERED HEREBY BY ANY PERSON IN ANY JURISDICTION
IN WHICH OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFERING OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL UNDER ANY CIRCUMSTANCES, IMPLY THAT THE INFORMATION CONTAINED IN
THIS PROSPECTUS OR ANY DOCUMENT INCORPORATED BY REFERENCE HEREIN IS CORRECT AS
OF ANY DATE SUBSEQUENT TO THE DATE HEREOF OR THEREOF.
-------------------------------
TABLE OF CONTENTS
PAGE
----
Available Information.................................... 2
Documents Incorporated by Reference...................... 2
The Company.............................................. 3
Risk Factors............................................. 3
Use of Proceeds.......................................... 8
Ratio of Earnings to Fixed Charges....................... 9
Description of Debentures................................ 10
Description of Capital Stock............................. 26
Certain Federal Income Tax Considerations................ 26
Selling Holders.......................................... 31
Plan of Distribution..................................... 31
Legal Matters............................................ 32
Experts.................................................. 32
================================================================================
================================================================================
$308,807,000
[LOGO OF WHOLE FOODS MARKET APPEARS HERE]
Zero Coupon Convertible
Subordinated debentures
Due 2018
--------------
PROSPECTUS
--------------
April , 1998
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following expenses will be paid by the Company:
Item Amount (1)
- ---- ----------
SEC registration fee $34,211
Nasdaq listing fee 17,500
Legal fees and expenses 15,000
Accounting fees 7,500
Trustee's fees and expenses 10,000
Miscellaneous 15,789
----------
Total $100,000
________
(1) All items other than SEC registration fee are estimated
Item 15. Indemnification of Directors and Officers.
Article 2.02-1 of the Texas Business Corporation Act provides for
indemnification of directors and officers in certain circumstances. Reference
is made to Article VII of the Bylaws of the registrant filed as an exhibit
hereto.
The Company's Restated Articles of Incorporation provide that no director
shall be liable to the registrant or its shareholders for an act or omission in
such capacity as a director, except for liability as a result of (i) a breach of
the director's duty of loyalty to the registrant or its shareholders, (ii) an
act or omission not in good faith or which involve intentional misconduct or
knowing violation of law, (iii) an transaction from which such director derived
an improper personal benefit, (iv) an act or omission for which the liability of
a director is expressly provided by law or (v) an act related to an unlawful
stock repurchase of payment of a dividend.
An insurance policy obtained by the registrant provides for indemnification of
officers and directors of the registrant and certain other persons against
liabilities and expenses incurred by any of them in certain stated proceedings
and under certain stated conditions.
Item 16. Exhibits.
Exhibit No. Description
4.1 Form of Zero Coupon Convertible Subordinated Debenture
Due 2018.
4.2 Indenture between the Company and Chase Bank of Texas,
National Association, as Trustee.
4.3 Registration Rights Agreement by and among the Company
and BT Alex Brown Incorporated and Morgan Stanley & Co.
Incorporated.
5.1 Opinion of Crouch & Hallett, L.L.P. regarding the
legality of securities being registered.
8.1 Opinion of Crouch & Hallett, L.L.P. regarding certain tax
matters.
II-1
<PAGE>
12 Computation of Ratio of Earnings to Fixed Charges.
23.1 Consent of KPMG Peat Marwick LLP, Independent Auditors.
23.2 Consent of Crouch & Hallett, L.L.P. (included in Exhibit
5 to this Registration Statement).
24 Powers of Attorney (included on pages II-3 and II-4 of
this Registration Statement).
25 Statement of Eligibility of Trustee on Form T-1.
Item 17. Undertakings.
(a) Rule 415 Offering
The registrant hereby undertakes (1) to file, during any period in
which offers or sales are being made of the Shares registered hereby, a
post-effective amendment to this Registration Statement to include any
material information with respect to the plan of distribution not
previously disclosed in this Registration Statement or any material change
to such information in this Registration Statement; (2) that, for the
purpose of determining any liability under the Securities Act of 1933, each
such post-effective amendment shall be deemed to be a new Registration
Statement relating to the securities offered herein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof; and (3) to remove from registration by means of a post-
effective amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) Filings Incorporating Subsequent Exchange Act Documents by Reference
The registrant hereby undertakes that, for purposes of determining
any liability under the Securities Act of 1933, each filing of the
Company's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered herein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
(c) Indemnification for Liability under the Securities Act of 1933
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer, or controlling person of the registrant in the successful defense
of any action, suit, or proceeding) is asserted by such director, officer,
or controlling person in connection with the securities being registered,
the registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Austin and State of Texas on the 30th day of April,
1998.
WHOLE FOODS MARKET, INC.
By /s/ Glenda Flanagan
-------------------------------------------
Glenda Flanagan, Vice President and
Chief Financial Officer
POWER OF ATTORNEY
Each of the undersigned hereby appoints John Mackey and Glenda Flanagan,
and each of them (with full power to act alone), as attorneys and agents for the
undersigned, with full power of substitution, for and in the name, place and
stead of the undersigned, to sign and file with the Securities and Exchange
Commission under the Securities Act of 1933 as amended any and all amendments
and exhibits to this Registration Statement and any and all applications,
instruments and other documents to be filed with the Securities and Exchange
Commission pertaining to the registration of the securities covered hereby, with
full power and authority to do and perform any and all acts and things
whatsoever requisite or desirable.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons in
the capacities and on April 1998.
Signature Title
- --------- -----
/s/ John Mackey Chairman of the Board
- ------------------------------ and Director
John Mackey (Principal Executive Officer)
/s/ Glenda Flanagan Vice President and Chief Financial Officer
- ------------------------------ (Principal Financial Officer and Accounting
Glenda Flanagan Officer)
/s/ Cristina G. Banks Director
- ------------------------------
Dr. Cristina G. Banks
/s/ David W. Dupree Director
- ------------------------------
David W. Dupree
II-3
<PAGE>
- ------------------------------ Director
Dr. John B. Elstrott
/s/ Avram J. Goldberg Director
- ------------------------------
Avram J. Goldberg
/s/ Fred "Chico" Lager Director
- ------------------------------
Fred "Chico" Lager
- ------------------------------ Director
Linda A. Mason
/s/ Ralph Z. Sorenson Director
- ------------------------------
Dr. Ralph Z. Sorenson
II-4
<PAGE>
EXHIBIT 4.1
THE DEBENTURE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS,
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT AS SET FORTH IN THE
FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER: (1) REPRESENTS THAT
(A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED
IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) ("INSTITUTIONAL
ACCREDITED INVESTOR"); (2) AGREES THAT IT WILL NOT PRIOR TO 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) (THE
"RESTRICTION TERMINATION DATE") RESELL OR OTHERWISE TRANSFER THE DEBENTURE
EVIDENCED HEREBY OR THE COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH DEBENTURES
EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C)
TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES
TO CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, AS TRUSTEE (OR A SUCCESSOR
TRUSTEE, AS APPLICABLE), A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THE DEBENTURE EVIDENCED
HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH TRUSTEE OR A
SUCCESSOR TRUSTEE, AS APPLICABLE), (D) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), OR
(E) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER
THE SECURITIES ACT (AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH
TRANSFER); AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE
DEBENTURE EVIDENCED HEREBY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT
OF THIS LEGEND, IN CONNECTION WITH ANY TRANSFER OF THE DEBENTURE EVIDENCED
HEREBY BEFORE THE RESTRICTION TERMINATION DATE, THE HOLDER MUST CHECK THE
APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH
TRANSFER AND SUBMIT THIS DEBENTURE TO CHASE BANK OF TEXAS, NATIONAL ASSOCIATION,
AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE). IF THE PROPOSED TRANSFER IS
PURSUANT TO CLAUSE (C) OR (D) ABOVE, THE HOLDER MUST, PRIOR TO SUCH TRANSFER,
FURNISH TO CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, AS TRUSTEE (OR A SUCCESSOR
TRUSTEE, AS APPLICABLE), SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER
INFORMATION AS IT MAY REASONABLE REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING
MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED
UPON ANY TRANSFER OF THE DEBENTURE EVIDENCED HEREBY UPON THE RESTRICTION
TERMINATION DATE.
<PAGE>
WHOLE FOODS MARKET, INC.
ZERO COUPON CONVERTIBLE SUBORDINATED DEBENTURE DUE 2018
No. __
Issue Date: March 2, 1998 Original Issue Discount: $627.57
Issue Price: $372.43 (for each $1,000 Principal
(for each $1,000 Principal Amount at Final Maturity)
Amount at Final Maturity)
CUSIP:
----------------
Whole Foods Market, Inc., a Texas corporation, promises to pay to
__________ or registered assigns, on March 2, 2018 the Principal Amount of
__________ Dollars ($__________).
This Debenture shall not bear interest except as specified on the other
side of this Debenture. Original Issue Discount will accrue as specified on the
other side of this Debenture. This Debenture is convertible as specified on the
other side of this Debenture.
Additional provisions of this Debenture are set forth on the other side of
this Debenture.
<PAGE>
IN WITNESS WHEREOF, Whole Foods Market, Inc. has caused this instrument to
be duly executed under its corporate seal.
WHOLE FOODS MARKET, INC.
By:
--------------------------------------
Title:
Attest:
By:
--------------------------------------
Title:
[SEAL]
Dated: March 2, 1998
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION,
as Trustee, certifies that this is one of the Debentures
referred to in the within-mentioned Indenture.
By:
--------------------------------------
Authorized Signatory
<PAGE>
WHOLE FOODS MARKET, INC.
ZERO COUPON CONVERTIBLE SUBORDINATED DEBENTURE DUE 2018
1. INTEREST
This Debenture shall not bear interest, except that if the Principal hereof
or any portion of such Principal is not paid when due (whether upon acceleration
pursuant to Section 7.1 of the Indenture, upon the date set for payment of the
Redemption Price pursuant to paragraph 3.1 hereof, upon the date set for payment
of a Purchase Price or Change in Control Purchase Price pursuant to paragraph 6
hereof or upon the Final Maturity of this Debenture), then in each such case the
overdue amount shall bear interest at the rate of 5.00% per annum, compounded
semiannually (to the extent that the payment of such interest shall be legally
enforceable), which interest shall accrue from the date such overdue amount was
due to the date payment of such amount, including interest thereon, has been
made or duly provided for. All such interest shall be payable on demand. The
accrual of such interest on overdue amounts shall be in lieu of, and not in
addition to, the continued accrual of Original Issue Discount.
The Original Issue Discount (the difference between the Issue Price and the
Principal Amount at Final Maturity of the Debenture) in the period during which
a Debenture remains outstanding, shall accrue at 5.00% per annum, on a
semiannual bond equivalent basis using a 360-day year composed of twelve 30-day
months, commencing on the Issue Date of this Debenture.
2. METHOD OF PAYMENT
Subject to the terms and conditions of the Indenture, the Company will make
payments in respect of the Debentures to the Persons who are registered Holders
of Debentures at the close of business on the Business Day preceding the
Redemption Date or Final Maturity, as the case may be, or at the close of
business on a Purchase Date or Change in Control Purchase Date, as the case may
be. Holders must surrender Debentures to a Paying Agent to collect such
payments in respect of the Debentures. The Company will pay cash amounts in
money of the United States that at the time of payment is legal tender for
payment of public and private debts. However, the Company may make such cash
payments by check payable in such money.
3. PAYING AGENT, CONVERSION AGENT AND REGISTRAR
Initially, Chase Bank of Texas, National Association, a national banking
association (the "Trustee"), will act as Paying Agent, Conversion Agent and
Registrar. The Company may appoint and change any Paying Agent, Conversion
Agent, Registrar or co-registrar without notice, other than notice to the
Trustee. The Company or any of its Subsidiaries or any of their Affiliates may
act as Paying Agent, Conversion Agent, Registrar or co-registrar.
4. INDENTURE
The Company issued the Debentures under an indenture (the "Indenture"),
dated as of March 2, 1998, between the Company and the Trustee. Capitalized
terms used herein and not defined
<PAGE>
herein have the meanings ascribed thereto in the Indenture. The Debentures are
subject to all such terms, and Holders are referred to the Indenture for a
statement of those terms.
The Debentures are general unsecured obligations of the Company limited to
$268,507,000 aggregate Principal Amount (subject to Sections 2.4 and 2.9 of the
Indenture). The Indenture does not limit other indebtedness of the Company,
secured or unsecured, including Senior Indebtedness of the Company.
5. REDEMPTION AT THE OPTION OF THE COMPANY
No sinking fund is provided for the Debentures. The Debentures are
redeemable as a whole, or from time to time in part, at any time at the option
of the Company at the Redemption Prices set forth below, provided that the
Debentures are not redeemable prior to March 2, 2003.
The table below shows Redemption Prices of a Debenture per $1,000 Principal
Amount on the dates shown below and at Final Maturity, which prices reflect
accrued Original Issue Discount calculated to each such date. The Redemption
Price of a Debenture redeemed between such dates would include an additional
amount reflecting the additional Original Issue Discount accrued since the next
preceding date in the table to but excluding the actual Redemption Date.
<TABLE>
<CAPTION>
ACCRUED ORIGINAL ISSUE REDEMPTION PRICE
REDEMPTION DATE DEBENTURE ISSUE PRICE DISCOUNT AT 5.00 % (1) + (2)
--------------- --------------------- ---------------------- ----------------
<S> <C> <C> <C>
March 2, 2003..... $372.43 $104.31 $476.74
March 2, 2004..... 372.43 128.45 500.88
March 2, 2005..... 372.43 153.80 526.23
March 2, 2006..... 372.43 180.45 552.88
March 2, 2007..... 372.43 208.43 580.86
March 2, 2008..... 372.43 237.84 610.27
March 2, 2009..... 372.43 268.74 641.17
March 2, 2010..... 372.43 301.19 673.62
March 2, 2011..... 372.43 335.30 707.73
March 2, 2012..... 372.43 371.13 743.56
March 2, 2013..... 372.43 408.77 781.20
March 2, 2014..... 372.43 448.32 820.75
March 2, 2015..... 372.43 489.87 862.30
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
March 2, 2016..... 372.43 533.52 905.95
March 2, 2017..... 372.43 579.38 951.81
At Final Maturity. 372.43 627.57 1,000.00
</TABLE>
6. PURCHASE BY THE COMPANY AT THE OPTION OF THE HOLDER; PURCHASE AT THE OPTION
OF THE HOLDER UPON A CHANGE IN CONTROL
(a) Subject to the terms and conditions of the Indenture, the Company shall
become obligated to purchase, at the option of the Holder, the Debentures held
by such Holder on the following Purchase Dates and at the following Purchase
Prices per $1,000 Principal Amount at Final Maturity, upon delivery of a
Purchase Notice containing the information set forth in the Indenture, from the
opening of business on the date that is 20 Business Days prior to such Purchase
Date until the close of business on such Purchase Date and upon delivery of the
Debentures to the Paying Agent by the Holder as set forth in the Indenture.
Such Purchase Prices may be paid, at the option of the Company, in cash or by
the issuance and delivery of shares of Common Stock of the Company, or in any
combination thereof.
PURCHASE DATE PURCHASE PRICE
------------- --------------
March 2, 2003............................. $476.74
March 2, 2008............................. 610.27
March 2, 2013............................. 781.20
Debentures in denominations larger than $1,000 of Principal Amount at Final
Maturity may be purchased in part, but only in multiples of $1,000 of Principal
Amount at Final Maturity.
(b) At the option of the Holder and subject to the terms and conditions of
the Indenture, the Company shall become obligated to purchase the Debentures
held by such Holder 20 days after the date of the Company's Change in Control
Notice occurring on or prior to March 2, 2018 for a Change in Control Purchase
Price equal to the Issue Price plus accrued Original Issue Discount to the
Change in Control Purchase Date, which Change in Control Purchase Price shall be
paid in cash. Debentures in denominations larger than $1,000 of Principal
Amount at Final Maturity may be redeemed in part in connection with a Change in
Control, but only in multiples of $1,000 of Principal Amount at Final Maturity.
(c) Holders have the right to withdraw any Purchase Notice or Change in
Control Purchase Notice, as the case may be, be delivery to the Paying Agent a
written notice of withdrawal in accordance with the provisions of the Indenture.
(d) If cash (and/or Stock if permitted under the Indenture) sufficient to
pay a Purchase Price or Change in Control Purchase Price, as the case may be, of
all Debentures or portions thereof to be purchased as of the Purchase Date or
the Change in Control Purchase Date, as the case may be,
<PAGE>
is deposited with the Paying Agent on the Business Day following the Purchase
Date or the Change in Control Purchase Date, as the case may be, Original Issue
Discount ceases to accrue on such Debentures (or portions thereof) on and after
such date, and the Holder thereof shall have no other rights as such (other than
the right to receive the Purchase Price or Change in Control Purchase Price, as
the case may be, upon surrender or such Debenture) .
7. NOTICE OF REDEMPTION AT THE OPTION OF THE COMPANY
Notice of redemption at the option of the Company will be mailed at least
30 days but not more than 60 days before the Redemption Date to each Holder of
Debentures to be redeemed at the Holder's registered address. If money
sufficient to pay the Redemption Price of all Debentures (or portions thereof)
to be redeemed on the Redemption Date is deposited with the Paying Agent prior
to or on the Redemption Date, on and after such date Original Issue Discount
ceases to accrue on such Debentures or portions thereof. Debentures in
denominations larger than $1,000 Principal Amount at Final Maturity may be
redeemed in part but only in multiples of $1,000 or Principal Amount at Final
Maturity.
8. SUBORDINATION
The Debentures are subordinated to all existing and future Senior
Indebtedness of the Company. To the extent provided in the Indenture, Senior
Indebtedness of the Company must be paid before the Debentures may be paid. The
Indenture does not limit the present or future amount of Senior Indebtedness
that the Company may have. The Company agrees, and each Debentureholder by
accepting a Debenture agrees, to the subordination and authorizes the Trustee to
give it effect and appoints the Trustee as attorney-in-fact for such purpose.
9. CONVERSION
Subject to the next two succeeding sentences, a Holder of a Debenture may
convert this Debenture for Common Stock of the Company at any time on or before
the close of business on March 2, 2018. If this Debenture is called for
redemption, the Holder may convert it at any time before the close on the
Redemption Date. A Debenture in respect of which a Holder has delivered a
notice of exercise of the option to require the Company to purchase such
Debenture or to purchase such Debenture in the event of a Change in Control may
be converted only if the notice of exercise is withdrawn in accordance with the
terms of the Indenture.
The initial Conversion Rate is 5.320 shares of Common Stock per $1,000
Principal Amount at Final Maturity, subject to adjustment in certain events
described in the Indenture. The Company will deliver cash or a check in lieu of
any fractions share of Common Stock.
To convert this Debenture a Holder must (1) complete and manually sign the
conversion notice on the back of this Debenture (or complete and manually sign a
facsimile of such notice) and deliver such notice to the Conversion Agent at the
office maintained by the Conversion Agent for such purpose, (2) surrender this
Debenture to the Conversion Agent, (3) furnish appropriate endorsements and
transfer documents if required by the Conversion Agent, the Company or the
Trustee and (4) pay any transfer or similar tax, if required.
<PAGE>
A Holder may convert a portion of this Debenture if the Principal Amount at
Final Maturity of such portion is $1,000 or a multiple of $1,000. No payment or
adjustment will be made for dividends on the Common Stock except as provided in
the Indenture. On conversion of this Debenture, that portion of accrued
Original Issue Discount attributable to the period from the Issue Date to the
Conversion Date with respect to the converted portion of this Debenture shall
not be canceled, extinguished or forfeited, but rather shall be deemed to be
paid in full to the Holder thereof through the delivery of the Common Stock
(together with any cash payment in lieu of fractional shares) in exchange for
the portion of this Debenture being converted pursuant to the terms hereof.
10. CONVERSION ARRANGEMENT ON CALL FOR REDEMPTION
Any Debentures called for redemption, unless surrendered for conversion
before the close of business on the Redemption Date, may be deemed to be
purchased from the Holders of such Debentures at an amount not less than the
Redemption Price, by one or more investment bankers or other purchasers who may
agree with the Company to purchase such Debentures from the Holders, to convert
them for Common Stock of the Company and to make payment for such Debentures to
the Trustee in trust for such Holders.
11. REGISTRATION RIGHTS
The Holder of this Debenture and the Common Stock issuable upon conversion
thereof is entitled to the benefits of a Registration Rights Agreement (subject
to the provisions thereof), dated as of March 2,1998, between the Company and
the Initial Purchasers.
12. DENOMINATIONS; TRANSFER; EXCHANGE
The Debentures are in registered form, without coupons, in denominations of
$1,000 of Principal Amount at Final Maturity and multiplies of $1,000. A Holder
may transfer or convert Debentures in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not transfer or exchange
any Debentures selected for redemption (except, in the case of a Debenture to be
redeemed in part, the portion of the Debenture not to be redeemed) or any
Debentures in respect of which a Purchase Notice or Change in Control Purchase
Notice has been given and not withdrawn (except, in the case of a Debenture to
be purchased in part, the portion of the Debenture not to be purchased) or any
Debentures for a period of 15 days before any selection of Debentures to be
redeemed.
13. PERSONS DEEMED OWNERS
The registered Holder of this Debenture may be treated as the owner of this
Debenture for all purposes.
14. UNCLAIMED MONEY OR DEBENTURES
The Trustee and the Paying Agent shall return to the Company upon written
request any money or Debentures held by them for the payment of any amount with
respect to the Debentures that remains unclaimed for two years, provided,
however, that the Trustee or such Paying Agent,
<PAGE>
before being required to make any such return, shall at the expense of the
Company cause to be published once in a newspaper of general circulation in The
City of New York or mail to each such Holder notice that such money or
Debentures remains unclaimed and that, after a date specified therein, which
shall not be less than 30 days from the date of such publication or mailing, any
unclaimed money or Debentures then remaining will be returned to the Company.
After return to the Company, Holders entitled to the money or Debentures must
look to the Company for payment as general creditors unless an applicable
abandoned property law designates another Person.
15. AMENDMENT; WAIVER
Subject to certain exceptions set forth in the Indenture, (i) the Indenture
or the Debentures may be amended with the written consent of the Holders of at
least a majority in aggregate Principal Amount at Final Maturity of the
Debentures at the time outstanding and (ii) certain defaults or noncompliance
with certain provisions may be waived with the written consent of the Holders of
a majority in aggregate Principal Amount of the Debentures at the time
outstanding. Subject to certain exceptions set forth in the Indenture, without
the consent of any Debentureholder, the Company and the Trustee may amend the
Indenture or the Debentures to cure any ambiguity, defect or inconsistency, to
make any change that does not adversely affect the right of any Debentureholder,
to convey, transfer, assign, mortgage or pledge to the Trustee as security for
the Debentures, any property or assets, to convey, transfer, assign, mortgage or
pledge to the Trustee as security for the Debentures, any property or assets, to
evidence the succession of another corporation to the Company, or successive
successions, and the assumption by the successor corporation of the covenants,
agreements and obligations of the Company pursuant to Article XII of the
Indenture, to add to the covenants of the Company such further covenants,
restrictions or conditions as the Board of Directors and the Trustee shall
consider to be for the benefit of the Holders of Debentures, 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 the Indenture, to evidence and provide for the acceptance of
appointment hereunder by a successor Trustee with respect to the Debentures, or
to modify, eliminate or add to the provisions of the Indenture to such extent as
shall be necessary to comply with the Indenture under the Trust Indenture Act,
or under any similar federal statue hereafter enacted
16. DEFAULTS AND REMEDIES
Under the Indenture, Events of Default include (i) default in payment of
the Principal Amount, Issue Price, accrued Original Issue Discount, accrued
Liquidated Damages, if any, Redemption Price, Purchase Price or Change in
Control Price, as the case may be, in respect of the Debentures when the same
becomes due and payable, provided that in the case of any failure to pay
Liquidated Damages, such failure to pay continues for a period of 30 days; (ii)
failure by the Company to comply with other agreements in the Indenture or the
Debentures, subject to notice and lapse of time; (iii) default in payment of
principal or interest of other Indebtedness of the Company equal or exceeding
$25,000,000 or the failure by the Company to comply with agreement governing
such Indebtedness, if such failure would result in the acceleration of such
Indebtedness, (iv) certain judgments, defaults and decrees against the Company,
and (v) certain events of bankruptcy or insolvency. If an Event of Default
occurs and is continuing, the Trustee, or the Holders of at least 25% in
aggregate Principal Amount of the Debentures at the time outstanding, may
declare all the Debentures to be due and payable immediately. Certain events of
bankruptcy or insolvency are
<PAGE>
Events of Default which will result in the Debentures being declared due and
payable immediately upon the occurrence of such Events of Default.
Holders may not enforce the Indenture or the Debentures except as provided
in the Indenture. The Trustee may refuse to enforce the Indenture or the
Debentures unless it receives reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in aggregate Principal Amount of the
Debentures at the time outstanding may direct the Trustee in its exercise of any
trust or power. The Trustee may withhold from Holders notice of any continuing
default (except a default in payment of amounts specified in clause (i) above)
if it determines that withholding notice is in their interests.
17. TRUSTEE DEALINGS WITH THE COMPANY
The Trustee under the Indenture, in its individual or any other capacity,
may become the owner or pledgee of Debentures and may otherwise deal with and
collect obligations owed to it by the Company or its Affiliates and may
otherwise deal with the Company or its Affiliates with the same rights it would
have if it were not Trustee.
18. NO RECOURSE AGAINST OTHERS
A director, officer, employee or stockholder, as such, of the Company shall
not have any liability for any obligations of the Company under the Debentures
or the Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Debenture, each Debentureholder
waives and releases all such liability. The waiver and release are part of the
consideration for the issue of the Debentures.
19. AUTHENTICATION
This Debenture shall not be valid until an authorized officer of the
Trustee manually signs the Trustee's Certificate of Authentication on the other
side of this Debenture.
20. ABBREVIATIONS
Customary abbreviations may be used in the name of a Debentureholder or an
assignee, such as TEN COM (=tenants in common), TENANT (=tenants by the
entireties), JT TEN (=joint tenants with right of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
21. GOVERNING LAW
THE LAWS OF THE STATE OF TEXAS SHALL GOVERN THE INDENTURE AND THIS
DEBENTURE.
The Company will furnish to any Debentureholder upon written request and
without charge a copy of the Indenture which has in it the text of this
Debenture in larger type. Requests may be made to:
<PAGE>
Whole Foods Market, Inc.
601 North Lamar Blvd. Suite #300
Austin, Texas 78703
Attn: Glenda Flanagan
<PAGE>
CONVERSION NOTICE
To: Whole Foods Market, Inc.
The undersigned registered holder of this Debenture hereby irrevocably
exercises the option to convert this Debenture, or portion hereof (which is
$1,000 Principal Amount at Final Maturity or a multiple thereof) below
designated, for shares of Common Stock of Whole Foods Market, Inc. in accordance
with the terms of the Indenture referred to in this Debenture, and directs that
the shares issuable and deliverable upon such conversion, together with any
check in payment for fractional shares and any Debentures 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 Debenture not converted are to be issued in the name of a
Person other than the undersigned, the undersigned will pay all transfer taxes
payable with respect thereto.
Dated:
----------------------------------------
----------------------------------------
Signature(s)
Fill in for registration of shares if to
be delivered, and Debentures if to be issued other
than to and in the name of registered holder:
- -------------------------------------------------
(Name)
- -------------------------------------------------
(Street Address)
- -------------------------------------------------
(City, state and zip code)
Please print name and address
Principal Amount at Final Maturity to be converted
(if less than all):
$__,000
-----------------------------------------------
Social Security or Other Taxpayer
Identification Number
<PAGE>
CHANGE IN CONTROL PURCHASE NOTICE
To: Whole Foods Market, Inc.
The undersigned registered holder of this Debenture hereby acknowledges
receipt of a notice from Whole Foods Market, Inc. (the "Company") as to the
occurrence of a Change in Control with respect to the Company and requests and
instructs the Company to repurchase this Debenture, or the portion hereof (which
is $1,000 Principal Amount at Final Maturity or a multiple thereof) below
designated, in accordance with the terms of the Indenture referred to in this
Debenture.
Dated:
--------------------------------------------------
Signature(s)
Principal Amount at Final Maturity to be converted
(if less than all):
$
----------
--------------------------------------------------
Social Security or other Taxpayer Identification
Number
<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 Debenture, and hereby irrevocably constitutes and
appoints __________ attorney to transfer the said Debenture on the books of the
Company, with full power of substitution in the premises.
In connection with any transfer of the Debenture within the period prior to
the expiration of the holding period applicable to sales thereof under Rule
144(k) (other than any transfer purchase to a registration statements that has
been declared effective under the Securities Act), under the Securities Act (or
any successor provision), the undersigned confirms that such Debenture is being
transferred:
To Whole Foods Market, Inc. or a subsidiary thereof; or
Pursuant to and in compliance with Rule 144A under the Securities Act
of 1933, as amended; or
To an Institutional Accredited Investor pursuant to and in compliance
with the Securities Act of 1933, as amended; or
Pursuant to and in compliance with Rule 144 under the Securities Act
of 1933, as amended; or
and unless the box below is checked, the undersigned confirms that to its
knowledge such Debenture 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 a commercial
bank or trust company or a member firm of a major
stock exchange if shares of Common Stock are to be
issued, or Debentures to be delivered, other than
to or in the name of the registered holder.
-------------------------------------------------
Signature Guarantee
NOTICE: The above signatures of the holder(s) hereof must correspond with the
name as written upon the face of the Debenture in every particular without
alteration or enlargement or any change whatever.
<PAGE>
EXHIBIT 4.2
===============================================================================
WHOLE FOODS MARKET, INC.
$268,507,000
ZERO COUPON CONVERTIBLE SUBORDINATED DEBENTURES DUE 2018
___________________
INDENTURE
DATED AS OF MARCH 2, 1998
___________________
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION
TRUSTEE
===============================================================================
<PAGE>
INDENTURE dated as of March 2, 1998, between Whole Foods Market, Inc., a
Texas corporation (hereinafter sometimes called the "Company," as more fully set
forth in Section 1.1), and Chase Bank of Texas, National Association, a national
banking association, as trustee hereunder (hereinafter sometimes called the
"Trustee," as more fully set forth in Section 1.1).
W I T N E S S E T H:
WHEREAS, for its lawful corporate purposes, the Company has duly authorized
the issue of its Zero Coupon Convertible Subordinated Debentures due 2018
(hereinafter sometimes called the "Debentures"), in an aggregate principal
amount not to exceed $268,507,000 ($308,807,000 if the overallotment option is
exercised in full) and, to provide the terms and conditions upon which the
Debentures are to be authenticated, issued and delivered, the Company has duly
authorized the execution and delivery of this Indenture;
WHEREAS, the Debentures, the certificate of authentication to be borne by
the Debentures, a form of assignment, a form of option to elect repurchase upon
a Change in Control and a form of conversion notice to be borne by the
Debentures are to be substantially in the forms hereinafter provided for; and
WHEREAS, all acts and things necessary to make the Debentures, when
executed by the Company and authenticated and delivered by the Trustee or a duly
authorized authenticating agent, as in this Indenture provided, the valid,
binding and legal obligations of the Company, and to constitute these presents a
valid agreement according to its terms, have been done and performed, and the
execution of this Indenture and the issue hereunder of the Debentures have in
all respects been duly authorized.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
That in order to declare the terms and conditions upon which the Debentures
are, and are to be, authenticated, issued and delivered, and in consideration of
the premises and of the purchase and acceptance of the Debentures 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
Debentures (except as otherwise provided below), as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions.
The terms defined in this Section 1.1 (except as herein otherwise expressly
provided or unless the context otherwise requires) for all purposes of this
Indenture and of any indenture supplemental hereto shall have the respective
meanings specified in this Section 1.1. All other terms used in this Indenture
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.
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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" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agent" means any Debenture Registrar, Paying Agent or Conversion Agent or
any successor thereto.
"Board of Directors" means either the Board of Directors of the Company or
any committee of such Board duly authorized to act for it hereunder.
"Business Day" means any day other than (i) a Saturday or Sunday or (ii) a
day on which banking institutions in the City of New York are authorized or
required by law or executive order to remain closed.
"Capitalized Lease Obligation" means indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with generally accepted accounting principles;
the amount of such indebtedness shall be the capitalized amount of such
obligations determined in accordance with such principles.
"Cash" or "cash" means such coin or currency of the United States as at any
time of payment is legal tender for the payment of public and private debts.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act, or if at any time after the
execution of this instrument such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties on such date.
"Common Stock" means the common stock, no par value per share, of the
Company.
"Company" means Whole Foods Market, Inc. until a successor corporation
shall have become such pursuant to the applicable provisions of this Indenture,
and thereafter "Company" shall mean such successor corporation.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman of the Board, a Vice Chairman,
its, Chief Executive Officer, its President, its Chief Financial Officer or a
Vice President, and by its Treasurer, an Assistant Treasurer, its Secretary or
an Assistant Secretary, and delivered to the Trustee.
"Corporate Trust Office" means the principal offices of the Trustee at
which at any particular time its corporate trust business shall be administered,
which offices as of the date of this Indenture are located at 700 Lavaca, 5th
Floor, Austin, Texas 78701.
"Custodian" means Chase Bank of Texas, National Association, as custodian
with respect to the Debentures in global form, or any successor entity thereto.
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"Default" means any event which is, or after notice or passage of time, or
both, would be, an Event of Default.
"Depositary" means, with respect to the Debentures issued or issuable in
whole or in part in global form, the Person designated as Depositary by the
Company pursuant to Section 2.8 with respect to such Debentures (or any
successor thereto).
"Designated Senior Indebtedness" means the Company's Indebtedness
outstanding from time to time under its revolving credit facility and any
particular Senior Indebtedness in which the instrument creating or evidencing
the same or the assumption or guarantee thereof (or related agreements or
documents to which the Company is a party) expressly provides that such Senior
Indebtedness shall be "Designated Senior Indebtedness" for purposes of the
Indenture (provided that such instrument, agreement or other document may place
limitations and conditions on the right of such Senior Indebtedness to exercise
the rights of Designated Senior Indebtedness).
"Event of Default" means any event specified in Section 7.1(a), (b), (c),
(d), (e), (f), or (g).
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"Final Maturity" or "Final Maturity Date" means March 2, 2018.
"Holder" or "Debentureholder" means a Person in whose name a Debenture is
registered on the Debenture Register.
"Indebtedness" means, with respect to any Person, and without duplication,
(a) the principal of and premium, if any, and interest on, and fees, costs,
enforcement expenses, collateral protection expenses and other reimbursement or
indemnity obligations in respect to all indebtedness or obligations of the
Company to any Person, including but not limited to banks and other lending
institutions, for money borrowed that is evidenced by a note, bond, loan
agreement, or similar instrument or agreement (including purchase money
obligations with original maturities in excess of one year and noncontingent
reimbursement obligations in respect of amounts paid under letters of credit),
(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 Capitalized Lease Obligations on the balance sheet of
such Person, (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, excluding any operating leases
the Company is currently (or may become) a party to, described in clauses (a)
through (d) 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 (g) any and all deferrals, renewals,
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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" means this instrument as originally executed or, if
supplemented or amended as herein provided, as so supplemented or amended.
"Initial Purchasers" means BT Alex. Brown Incorporated and Morgan Stanley &
Co. Incorporated.
"Institutional Accredited Investor" means an institutional accredited
investor within the meaning of Rule 501(a)(1), (2), (3) or (7) of Regulation D
under the Securities Act.
"Issue Date" of any Debenture means the date on which the Debenture was
originally issued or deemed issued as set forth on the face of the Debenture.
"Issue Price" of any Debenture means, in connection with the original
issuance of such Debenture, the initial issue price at which the Debenture is
issued as set forth on the face of the Debenture.
"Liquidated Damages" shall have the meaning specified in the Registration
Rights Agreement.
"Officer" means the Chairman of the Board, the President, the Chief
Financial Officer, the Controller, the Secretary, any Assistant Secretary or any
Vice President of the Company.
"Officer's Certificate" means a certificate signed by two Officers, one of
whom must be the Chairman of the Board, the President, the Chief Financial
Officer or a Vice President of the Company.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel
for the Company, and who shall be acceptable to the Trustee.
"Original Issue Discount" of any Debenture means the difference between the
Issue Price and the Principal Amount of the Debenture as set forth on the face
of the Debenture. For purposes of this Indenture and the Debentures, accrual of
Original Issue Discount shall be calculated on the basis of a 360 day year of
twelve 30 day months.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, trust, association, joint stock company, unincorporated
organization or government or any agency or political subdivision thereof.
"PORTAL Market" means the Private Offerings, Resales and Trading through
Automated Linkages Market operated by the National Association of Securities
Dealers, Inc. or any successor thereto.
"Principal" "Principal Amount" or "principal" of a debt security, including
the Debentures, means the principal of the security plus, when appropriate, the
premium, if any, on the security.
"QIB" shall mean a "qualified institutional buyer" as defined in Rule 144A
under the Securities Act.
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"Redemption Date," when used with respect to any Debenture to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price," when used with respect to any Debenture to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.
"Registration Rights Agreement" means that certain Registration Rights
Agreement, dated as of March 2, 1998, between the Company and the Initial
Purchasers.
"Regulation D" means Regulation D promulgated under the Securities Act (or
any successor provision), as it may be amended from time to time.
"Representative" means the indenture trustee or other trustee, agent or
representative for the holders of any Senior Indebtedness.
"SEC" or "Commission" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Senior Indebtedness" means 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 Debentures or expressly provides that such
Indebtedness is "pari passu" with or "junior" to the Debentures.
Notwithstanding the foregoing, the term Senior Indebtedness shall not include
any Indebtedness of the Company to any Subsidiary of the Company.
"Subsidiary" means with respect to any Person, (i) any corporation, limited
liability company, association or other business entity of which more than 50%
of the total voting power of shares of capital stock or other ownership
interests entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof is at the time owned
or controlled, directly or indirectly, by such person or one or more
Subsidiaries of such person (or a combination thereof) and (ii) any partnership
(a) the sole general partner or managing general partner of which is such person
or a Subsidiary of such person or (b) the only general partners of which are
such person or one or more Subsidiaries of such Person (or any combination
thereof).
"TIA" or "Trust Indenture Act" means the Trust Indenture Act of 1939 (15
U.S.C. (SS) 77aaa-77666), as amended by the Trust Indenture Reform Act of 1990,
and as in effect on the date of this Indenture, except as provided in Sections
11.3 and 15.12 of this Indenture, and except
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to the extent any amendment to the Trust Indenture Act expressly provides for
application of the Trust Indenture Act as in effect on another date.
"Trading Day" or "trading day" means, with respect to any security, each
Monday, Tuesday, Wednesday, Thursday and Friday, other than any day on which
securities are not traded on the exchange or market in which such security is
traded.
"Trustee" means the party named as such in this Indenture until a successor
replaces it in accordance with the provisions of this Indenture, and thereafter
means the successor.
"Trust Officer" means any officer or corporate trust officer or assistant
corporate trust officer of the Trustee assigned by the Trustee to administer its
corporate trust matters.
"U.S. Government Obligations" means direct noncallable obligations of, or
noncallable obligations guaranteed by, the United States of America for the
payment of which obligation or guarantee the full faith and credit of the United
States is pledged.
"Vice President" when used with respect to the Company, means any duly
appointed vice president, whether or not designated by a number or a word or
words added before or after the title "vice president."
Section 1.2. Other Definitions.
TERM DEFINED IN SECTION
"Change in Control" Section 3.9
"Change in Control Purchase Date" Section 3.9
"Change in Control Purchase Notice" Section 3.9
"Change in Control Purchase Price" Section 3.9
"Closing Price" Section 15.6
"Conversion Agent" Section 2.5
"Conversion Rate" Section 15.1
"Current Market Price" Section 15.6
"Debenture Registrar" Section 2.8
"Distributed Securities" Section 15.6
"Expiration Time" Section 15.6
"Global Debenture" Section 2.8(b)
"Investment Letter" Section 2.8(b)
"Legal Holiday" Section 16.6
"Paying Agent" Section 2.5
"Payment Blockage Notice" Section 4.2
"Purchase Date" Section 3.8
"Purchase Note" Section 3.8
"Purchase Price Section 3.8
"Purchased Shares" Section 15.6
"Record Date" Section 15.6
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"Regulation D Global Debenture" Section 2.8(b)
"Rule 144A Global Debenture" Section 2.8(b)
Section 1.3. Rules of Construction.
Unless the context otherwise requires:
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(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with generally accepted accounting principles in effect on
the date hereof, and any reference in this Indenture to "generally accepted
accounting principles" refers to generally accepted accounting principles in
effect on the date hereof;
(3) words in the singular include the plural, and words in the plural
include the singular;
(4) provisions apply to successive events and transactions; and
(5) "herein," "hereof" and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or other
subdivision.
ARTICLE II
THE DEBENTURES
Section 2.1. Designation, Amount and Issue of Debentures.
The Debentures shall be designated as "Zero Coupon Convertible
Subordinated Debentures due 2018." Debentures not to exceed the aggregate
principal amount of $268,507,000 (or $308,807,000 if the over-allotment option
set forth in Section 2(b) of the Purchase Agreement, dated February 25, 1998, by
and between the Company and the Initial Purchasers is exercised in full, the
"Over-Allotment Option") upon the execution of this Indenture, or (except
pursuant to Sections 2.8, 2.9, 3.9 and 15.2 hereof) 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
Debentures to or upon the written order of the Company, signed by its (a)
Chairman of the Board, President or any Vice President (whether or not
designated by a number or numbers or word or words added before or after the
title "Vice President") and (b) Treasurer or Assistant Treasurer or its
Secretary or Assistant Secretary, without any further action by the Company
hereunder.
Section 2.2. Form of Debentures.
The Debentures and the Trustee's certificate of authentication to be borne
by such Debentures shall be substantially in the form set forth in Exhibit A,
which is incorporated in and part of this Indenture.
Any of the Debentures may have such letters, numbers or other marks of
identification
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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 Debentures may be listed, or to conform to usage.
Any Debenture in global form shall represent such of the outstanding
Debentures as shall be specified therein and shall provide that it shall
represent the aggregate amount of outstanding Debentures from time to time
endorsed thereon and that the aggregate amount of outstanding Debentures
represented thereby may from time to time be increased or reduced to reflect
transfers or exchanges permitted hereby. Any endorsement of a Debenture in
global form to reflect the amount of any increase or decrease in the amount of
outstanding Debentures 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 Debentures in accordance with this Indenture.
Payment of Principal, Issue Price, accrued Original Issue Discount, accrued
Liquidated Damages, if any, Redemption Price, Purchase Price, and Change in
Control Purchase Price on any Debenture in global form shall be made to the
Holder of such Debenture.
The terms and provisions contained in the form of Debenture attached as
Exhibit A hereto shall constitute, and are hereby expressly made, a part of this
Indenture and, to the extent applicable, the Company and the Trustee, by their
execution and delivery of this Indenture, expressly agree to such terms and
provisions and to be bound thereby.
Neither the Company nor the Trustee shall have any responsibility for any
defect in the CUSIP number that appears on any Debenture, check, advice of
payment or redemption notice, and any such document may contain a statement to
the effect that CUSIP numbers have been assigned by an independent service for
convenience of reference and that neither the Company nor the Trustee shall be
liable for any inaccuracy in such numbers.
Section 2.3. Date and Denomination of Debentures.
The Debentures shall be issuable in registered form in denominations of
$1,000 principal amount at the Final Maturity Date. Every Debenture shall be
dated March 2, 1998.
Section 2.4. Execution of Debentures.
The Debentures shall be signed in the name and on behalf of the Company by
the manual or facsimile signage of its Chairman of the Board, the Chief
Executive Officer, President, the Chief Financial Officer, 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 attested by the manual or facsimile
signature of its Secretary or any of its Assistant Secretaries (which may be
printed, engraved or otherwise reproduced thereon, by facsimile or otherwise).
Only such Debentures as shall bear thereon a certificate of authentication
substantially in the form set forth on the form of Debenture attached as Exhibit
A hereto, manually executed by the Trustee (or an 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 Debenture executed by
the Company shall be conclusive evidence that the Debenture so authenticated has
been duly authenticated and delivered hereunder and that the Holder is entitled
to the benefits of this Indenture.
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In case any Officer who shall have signed any of the Debentures shall cease
to be such Officer before the Debentures so signed shall have been authenticated
and delivered by the Trustee, or disposed of by the Company, such Debentures
nevertheless may be authenticated and delivered or disposed of as though the
Person who signed such Debentures had not ceased to be such Officer and any
Debenture may be signed on behalf of the Company by such Persons as, at the
actual date of the execution of such Debenture, shall be the proper Officers,
although at the date of the execution of this Indenture any such Person was not
such an Officer.
The Trustee shall authenticate and deliver Debentures for original issue in
an aggregate Principal Amount of up to $268,507,000 upon a Company Order without
any further action by the Company; provided, however, that if the Company sells
any Debentures pursuant to the Over-Allotment Option, then the Trustee shall
also authenticate and deliver additional Debentures for original issue in an
aggregate Principal Amount of up to $40,300,000 or such lesser amount of
Debentures sold pursuant to the Over-Allotment Option upon a Company Order
without any further action by the Company. The aggregate Principal Amount of
Debentures outstanding at any time may not exceed the amount set forth in the
foregoing sentence, except as provided in Section 2.9 hereof.
Section 2.5. Debenture Registrar, Paying Agent and Conversion Agent.
The Company shall maintain an office or agency where Debentures may be
presented for registration of transfer or for exchange (the "Debenture
Registrar"), an office or agency where Debentures may be presented for payment
(the "Paying Agent"), an office or agency where Debentures may be presented for
conversion (the "Conversion Agent") and an office or agency where notices and
demands to or upon the Company in respect of the Debentures and this Indenture
may be served. The Debenture Registrar shall keep a register of the Debentures
and of their transfer and exchange.
The Company shall enter into an appropriate agency agreement with any Agent
not a party to this Indenture. The agreement shall implement the provisions of
this Indenture that relate to such Agent. The Company shall notify the Trustee
of the name and address of any Agent not a party to this Indenture. If the
Company fails to maintain a Debenture Registrar, Paying Agent, Conversion Agent
or agent for service of notices and demands, or fails to give the foregoing
notice, the Trustee shall act as such. Subject to the provisions of this
Indenture, the Company or any Affiliate of the Company may act as Paying Agent,
Debenture Registrar or Conversion Agent. The Company may appoint one or more
co-Debenture Registrars, acceptable to the Trustee, in accordance with Section
5.3.
The Company initially appoints the Trustee as Debenture Registrar, Paying
Agent, Conversion Agent and agent for service of notices and demands in
connection with the Debentures.
Section 2.6. Paying Agent to Hold Money in Trust.
Except as otherwise provided herein, prior to or on each due date of
payments in respect of any Security, the Company shall deposit with the Paying
Agent a sum of money or securities sufficient to make such payments when such
payments are due. The Company shall require each Paying Agent (other than the
Trustee) to agree in writing that the Paying Agent shall hold in trust for the
benefit of Holders or the Trustee all money and securities held by the Paying
Agent for the making of payments in respect of the Securities and shall notify
the Trustee of any default by the Company in making any such payment. At any
time during the continuance of any such default, the Paying Agent shall, upon
the written request of the Trustee, forthwith pay to the Trustee all money and
securities so held in trust. If the Company or an Affiliate of the Company
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acts as Paying Agent, it shall segregate the money and securities held by it as
Paying Agent and hold it as a separate trust fund. The Company at any time may
require a Paying Agent to pay all money and securities held by it to the Trustee
and to account for any funds and securities disbursed by it. Upon doing so, the
Paying Agent shall have no further liability for the money or securities.
Section 2.7. Debentureholder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders. If the Trustee is not the Debenture Registrar, the Company shall cause
to be furnished to the Trustee at least semiannually on April 1 and October 1 a
listing of Holders dated within 15 days of the date on which the list is
furnished and at such other times as the Trustee may request in writing a list
in such form and as of such date as the Trustee may reasonably require of the
names and addresses of Holders, and the Company shall otherwise comply with TIA
Section 312(a).
Section 2.8. Exchange and Registration of Transfer of Debentures;
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 5.3 being herein sometimes
collectively referred to as the "Debenture Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Debentures and of transfers of Debentures. The Debenture
Register shall be in written form or in any form capable of being converted into
written form within a reasonably prompt period of time.
Upon surrender for registration of transfer of any Debenture to
the Debenture Registrar or any co-Debenture Registrar, and satisfaction of the
requirements for such transfer set forth in this Section 2.8, the Company shall
execute, and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Debentures of any
authorized denominations and of a like aggregate principal amount and bearing
such restrictive legends as may be required by this Indenture.
Debentures may be exchanged for other Debentures of any
authorized denominations and of a like aggregate principal amount, upon
surrender of the Debentures to be exchanged at any such office or agency
maintained by the Company pursuant to Section 5.3. Whenever any Debentures are
so surrendered for exchange, the Company shall execute, and the Trustee shall
authenticate and deliver, the Debentures which the Debentureholder making the
exchange is entitled to receive bearing registration numbers not
contemporaneously outstanding.
All Debentures issued upon any registration of transfer or
exchange of Debentures shall be the valid obligations of the Company, evidencing
the same debt, and entitled to the same benefits under this Indenture, as the
Debentures surrendered upon such registration of transfer or exchange.
All Debentures presented or surrendered for registration of
transfer or for exchange, redemption, repurchase or conversion shall (if so
required by the Company or the Debenture Registrar) be duly endorsed, or be
accompanied by a written instrument or instruments of transfer in form
satisfactory to the Company and the Trustee, and the Debentures shall be duly
executed by the Debentureholder thereof or his attorney duly authorized in
writing.
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No service charge shall be made for any registration of transfer
or exchange of Debentures, 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
Debentures.
Neither the Company nor the Trustee nor any Debenture Registrar
nor any co-Debenture Registrar shall be required to exchange or register a
transfer of (a) any Debentures for a period of 15 days next preceding any
selection of Debentures to be redeemed or (b) any Debentures or portions thereof
called for redemption pursuant to Article III or (c) any Debentures or portions
thereof surrendered for conversion pursuant to Article XV or (d) any Securities
or portion thereof surrendered for purchase or redemption (and not withdrawn)
pursuant to Sections 3.08 or 3.09, respectively.
(b) So long as the Debentures are eligible for book-entry
settlement with the Depositary, unless otherwise required by law, all Debentures
to be traded (i) on the PORTAL Market shall be represented by a Debenture in
global form (the "Rule 144A Global Debenture") or (ii) to an Institutional
Accredited Investor that, prior to such transfer, is required to furnish to the
Trustee a signed letter containing certain representations and agreements
relating to the restrictions on transfer of the Debentures ("Investment
Letter"), shall be represented by a Debenture in global form (the "Regulation D
Global Debenture") (the Rule 144A Global Debenture and the Regulation D Global
Debenture are collectively referred to in this Indenture as the "Global
Debenture"), the Rule 144A Global Debenture and the Regulation D Global
Debenture being registered in the name of the Depositary or the nominee of the
Depositary. The transfer and exchange of beneficial interests in the Global
Debenture, which does not involve the issuance of a Debenture in certificated
form, shall be effected through the Depositary, in accordance with this
Indenture (including restrictions on transfer set forth herein) and the
procedures of the Depositary therefor.
At any time at the request of the beneficial Holder of an
interest in the Global Debenture to obtain a Debenture in certificated form,
such beneficial Holder shall be entitled to obtain a Debenture in certificated
form upon written request to the Trustee and the Custodian in accordance with
the standing instructions and procedures existing between the Custodian and
Depositary for the issuance thereof. Upon receipt of any such request, the
Trustee, or the Custodian at the discretion of the Trustee, will cause, in
accordance with the standing instructions and procedures existing between the
Depositary and the Custodian, the aggregate principal amount of the Rule 144A
Global Debenture or the Regulation D Global Debenture, as appropriate, to be
reduced by the principal amount of the Debenture in certified form issued upon
such request to such beneficial Holder and, following such reduction, the
Company will execute and the Trustee will authenticate and deliver to such
beneficial Holder (or its nominee) a Debenture or Debentures in certificated
form in the appropriate aggregate principal amount in the name of such
beneficial Holder (or its nominee) and bearing such restrictive legends as may
be required by this Indenture.
Any transfer of a beneficial interest in the Global Debenture
which cannot be effected through book-entry settlement must be effected by the
delivery to the transferee (or its nominee) of a Debenture or Debentures in
certificated form registered in the name of the transferee (or its nominee) on
the books maintained by the Debenture Registrar in accordance with the transfer
restrictions set forth herein. With respect to any such transfer, the Trustee,
or the Custodian at the direction of the Trustee, will cause, in accordance with
the standing instructions and procedures existing between the Depositary and the
Custodian, the aggregate principal amount of the Rule 144A Global Debenture or
the Regulation D Global Debenture, as appropriate, to be reduced by the
principal amount of the respective beneficial interest in the
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Rule 144A Global Debenture or the Regulation D Global Debenture, respectively,
being transferred and, following such reduction, the Company will execute and
the Trustee will authenticate and deliver to the transferee (or such
transferee's nominee, as the case may be), a Debenture or Debentures in
certificated form in the appropriate aggregate principal amount in the name of
such transferee (or its nominee) bearing such restrictive legends as may be
registered by this Indenture.
(c) So long as the Debentures are eligible for book-entry
settlement, or unless otherwise required by law, upon any transfer of a
Debenture in certificated form to a QIB in accordance with Rule 144A or an
Institutional Accredited Investor that is required to deliver a Investment
Letter, and upon receipt of the Debenture or Debentures in certificated form
being so transferred, together with a certification from the transferor that the
transferee is a QIB or an Institutional Accredited Investor (and, in the case of
an Institutional Accredited Investor, that such transferee has delivered an
Investment Letter) the Trustee shall make, or direct the Custodian to make, an
endorsement on the Rule 144A Global Debenture or the Regulation D Global
Debenture, as appropriate, to reflect an increase in the aggregate principal
amount of the Debentures represented by the Rule 144A Global Debenture or the
Regulation D Global Debenture, and the Trustee shall cancel such Debenture or
Debentures in certificated form and cause, or direct the Custodian to cause, in
accordance with the standing instructions and procedures existing between the
Depositary and the Custodian, the aggregate principal amount of Debentures
represented by the Rule 144A Global Debenture or the Regulation D Global
Debenture, as appropriate, to be increased accordingly provided that no
Debenture in certificated form, or portion thereof, in respect of which the
Company or an Affiliate of the Company held any beneficial interest shall be
included in the Global Debenture until such Debenture in certificated form is
freely tradable in accordance with Rule 144(k) provided further that the Trustee
shall issue Debentures in certificated form upon any transfer of a beneficial
interest in the Global Debenture to the Company or an Affiliate of the Company.
Any Global Debenture 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
Debentures to be tradable on the PORTAL Market or as may be required for the
Debentures to be tradable on any other market developed for trading of
securities pursuant to Rule 144A under the Securities Act 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 Debentures 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 Debentures are subject.
(d) Every Debenture that bears or is required under this Section
2.8(d) to bear the legend set forth in this Section 2.8(d) (together with any
Common Stock issued upon conversion of the Debentures and required to bear the
legend set forth in Section 2.8(e), collectively, the "Restricted Debentures")
shall be subject to the restrictions on transfer set forth in this Section
2.8(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 (with
written notice to the Trustee), and the Holder of each such Restricted
Debenture, by such Debentureholder's acceptance thereof, agrees to be bound by
all such restrictions on transfer. As used in Section 2.8(d) and 2.8(e), the
term "transfer" encompasses any sale, pledge, transfer or other disposition
whatsoever of any Restricted Debenture.
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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 Debenture (and all securities issued in exchange
therefor or substitution thereof, other than Common Stock, if any, issued upon
conversion therefor, which shall bear the legend set forth in Section 2.8(e), if
applicable) shall bear a legend in substantially the following form, unless such
Debenture 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 DEBENTURE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE
SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT AS SET
FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER: (1)
REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES
ACT) ("INSTITUTIONAL ACCREDITED INVESTOR"); (2) AGREES THAT IT WILL NOT PRIOR TO
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) (THE "RESTRICTION TERMINATION DATE") RESELL OR OTHERWISE TRANSFER THE
DEBENTURE EVIDENCED HEREBY OR THE COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH
DEBENTURES EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (C) TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER,
FURNISHES TO CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, AS TRUSTEE (OR A
SUCCESSOR TRUSTEE, AS APPLICABLE), A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THE
DEBENTURE EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH
TRUSTEE OR A SUCCESSOR TRUSTEE, AS APPLICABLE), (D) PURSUANT TO THE EXEMPTION
FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE),
OR (E) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE
UNDER THE SECURITIES ACT (AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF
SUCH TRANSFER); AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE
DEBENTURE EVIDENCED HEREBY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT
OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THE DEBENTURE EVIDENCED
HEREBY BEFORE THE RESTRICTION TERMINATION DATE, THE HOLDER MUST CHECK THE
APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH
TRANSFER AND SUBMIT THIS DEBENTURE TO CHASE BANK OF TEXAS, NATIONAL ASSOCIATION,
AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE). IF THE PROPOSED TRANSFER IS
PURSUANT TO CLAUSE (C) OR (D) ABOVE, THE HOLDER MUST, PRIOR TO SUCH TRANSFER,
FURNISH TO CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, AS TRUSTEE (OR A SUCCESSOR
TRUSTEE, AS APPLICABLE), SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER
INFORMATION AS IT MAY REASONABLE REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING
MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
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THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED
UPON ANY TRANSFER OF THE DEBENTURE EVIDENCED HEREBY UPON THE RESTRICTION
TERMINATION DATE.
Any Debenture (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 which the conditions for removal of the
foregoing legend set forth therein have been satisfied may, upon surrender of
such Debenture for exchange to the Debenture Registrar in accordance with the
provisions of this Section 2.8, be exchanged for a new Debenture or Debentures,
of like tenor and aggregate principal amount, which shall not bear the
restrictive legend required by this Section 2.8(d).
Notwithstanding any other provisions of this Indenture (other
than the provisions set forth in the second paragraph of Section 2.8(b) and in
this Section 2.8(d), a Global Debenture 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 Debenture. Initially, the Rule
144A Global Debenture and the Regulation D Global Debenture shall 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.
The Trustee is hereby authorized and requested to execute and
deliver a Letter of Representation to the Depositary and, in connection with any
successor nominee for the Depositary or any successor Depositary, enter into
comparable arrangements, and shall have the same rights with respect to its
actions thereunder as it has with respect to its action under this Indenture.
If at any time the Depositary for the Global Debenture notifies
the Company that it is unwilling or unable to continue as Depositary for the
Global Debenture, the Company may appoint a successor Depositary with respect to
such Global Debenture. If a successor Depositary is not appointed by the Company
within 90 days after the Company receives such notice, the Company will execute,
and the Trustee, upon receipt of a Company Order for the authentication and
delivery of Debentures, will authenticate and deliver, Debentures in
certificated form, in an aggregate principal amount equal to the principal
amount of the Global Debenture, in exchange for the Global Debenture.
Debentures in certificated form issued in exchange for all or a
part of a Global Debenture pursuant to this Section 2.8 shall be registered in
such names and in such authorized denominations as the Depositary, pursuant to
instruction from its direct or indirect participants or otherwise, shall
instruct the Trustee in writing. Upon execution and authentication, the Trustee
shall deliver such Debentures in certificated form to the Persons in whose names
such Debentures in certificated form are so registered.
At such time as all interests in a Global Debenture have been
redeemed, repurchased, converted, canceled, exchanged for Debentures in
certificated form, or transferred
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to a transferee who receives Debentures in certificated form, such Global
Debenture 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 Debenture is exchanged for Debentures in certificated form, redeemed,
converted, repurchased or canceled, or transferred to a transferee who receives
Debentures in certificated form therefor or any Debenture in certificated form
is exchanged or transferred for part of a Global Debenture, the principal amount
of such Global Debenture 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 Debenture, by the Trustee or the Custodian, at the direction of the
Trustee, to reflect such reduction or increase. In the event of any transfer of
any beneficial interest between the Rule 144A Global Debenture and the
Regulation D Global Debenture in accordance with the standing procedures and
instruction between the Depositary and the Custodian and the transfer
restrictions set forth herein, the aggregate principal amount of each of the
Rule 144A Global Debenture and the Regulation D Global Debenture shall be
appropriately increased or decreased, as the case may be, and an endorsement
shall be made on each of the Rule 144A Global Debenture and the Regulation D
Global Debenture 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 a Security 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 Securities 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 for the Common Stock:
THE COMMON STOCK EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT", OR ANY STATE
SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT AS SET
FORTH IN THE FOLLOWING SENTENCE. 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)
(THE "RESTRICTION TERMINATION DATE"); (1) IT WILL NOT RESELL OR OTHERWISE
TRANSFER THE COMMON STOCK EVIDENCED HEREBY EXCEPT (A) TO THE COMPANY, OR ANY
SUBSIDIARY THEREOF, (B) TO A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT) IN COMPLIANCE WITH RULE 144A, (C) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR
(7) UNDER THE SECURITIES ACT) THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO
SECURITIES TRANSFER CORP., AS TRANSFER AGENT (OR A SUCCESSOR TRANSFER AGENT, AS
APPLICABLE), A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS IN TRANSFER OF THE COMMON STOCK EVIDENCED HEREBY
(THE FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH TRANSFER AGENT (OR A
SUCCESSOR TRANSFER AGENT, AS APPLICABLE)), (D) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), OR
(E)
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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 BEFORE THE RESTRICTION TERMINATION DATE
(OTHER THAN A TRANSFER PURSUANT TO CLAUSE 1(E) ABOVE), IT WILL FURNISH
SECURITIES TRANSFER CORP., AS TRANSFER AGENT (OR A SUCCESSOR TRANSFER AGENT, 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 (3) IT WILL DELIVER TO EACH PERSON TO
WHOM THE COMMON STOCK EVIDENCED HEREBY IS TRANSFERRED (OTHER THAN A TRANSFER
PURSUANT TO CLAUSE 1(E) ABOVE) A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND. THIS LEGEND WILL BE REMOVED UPON THE EARLIER OF THE TRANSFER OF THE
COMMON STOCK EVIDENCED HERE PURSUANT TO CLAUSE 1(E) ABOVE OR UPON THE
RESTRICTION TERMINATION DATE.
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 not bear the restrictive legend required by
this Section 2.8(e).
(f) Any Debenture or Common Stock issued upon the conversion or
exchange of a Debenture that, prior to the expiration of the holding period
applicable to sales thereof under Rule l44(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 Securities or Common Stock, as the case may be, no longer being
"restricted securities" (as defined under Rule 144).
Section 2.9. Mutilated, Destroyed, Lost or Stolen Debentures.
In case any Debenture shall become mutilated or be destroyed, lost or
stolen, the Company in its discretion may execute and upon its written request
the Trustee or an authenticating agent appointed by the Trustee shall
authenticate and deliver, a new Debenture, bearing a number not
contemporaneously outstanding, in exchange and substitution for the mutilated
Debenture, or in lieu of and in substitution for the Debenture so destroyed,
lost or stolen. In every case the applicant for a substituted Debenture shall
furnish to the Company, to the Trustee and, if applicable, to such
authenticating agent such security or indemnity as may be required by each of
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 furnish to the Company, to the
Trustee and, if applicable, to such authenticating
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agent evidence to their satisfaction of the destruction, loss or theft of such
Debenture and of the ownership thereof.
The Trustee or such authenticating agent may authenticate any such
substituted Debenture and deliver the same upon the receipt of such security or
indemnity as the Trustee, the Company and, if applicable, such authenticating
agent may require. Upon the issuance of any substituted Debenture, 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 Debenture which has matured or is
about to mature or has been called for redemption or is about to be converted
into Common Stock shall become mutilated or be destroyed, lost or stolen, the
Company may, instead of issuing a substitute Debenture, 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 Debenture), 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 Debenture and of the ownership thereof.
Every substitute Debenture issued pursuant to the provisions of this
Section 2.9 by virtue of the fact that any Debenture is destroyed, lost or
stolen shall constitute an additional contractual obligation of the Company,
whether or not the destroyed, lost or stolen Debenture 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 proportionally with any
and all other Debentures duly issued hereunder. To the extent permitted by law,
all Debentures 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 Debentures 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 2.10. Treasury Debentures.
In determining whether the Holders of the required principal amount of
Debentures have concurred in any notice, direction, waiver or consent,
Debentures owned by the Company or any other obligor on the Debentures or by any
Affiliate of the Company or of such other obligor on the Debentures shall be
disregarded, except that, for purposes of determining whether the Trustee shall
be protected in relying on any such notice, direction, waiver or consent, only
Debentures which the Trustee knows are so owned shall be so disregarded.
Debentures so owned which have been pledged in good faith shall not be
disregarded if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to the Debentures and that the pledgee is
not the Company or any other obligor on the Debentures or any Affiliate of the
Company or of such other obligor.
Section 2.11. Temporary Debentures.
Until definitive Debentures are ready for delivery, the Company may prepare
and execute, and, upon the order of the Company, the Trustee shall authenticate
and deliver temporary Debentures. Temporary Debentures shall be substantially
in the form of definitive Debentures but may have variation that the Company
with the consent of the Trustee considers appropriate for temporary Debentures.
Without unreasonable delay, the Company shall prepare
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and the Trustee shall authenticate and deliver definitive Debentures in exchange
for temporary Debentures.
Section 2.12. Cancellation.
All Debentures surrendered for the purpose of payment, redemption,
repurchase, conversion, exchange or registration of transfer, shall, if
surrendered to the Company or any paying agent or any Debenture 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
Debentures shall be issued in lieu thereof except as expressly permitted by any
of the provisions of this Indenture provided that any Debenture or portion
thereof surrendered for repurchase shall only be canceled at such time as such
Debenture or portion thereof has been repurchased pursuant to Article III
hereof. The Trustee shall destroy canceled Debentures (unless the Company
directs it to do otherwise) and, after such destruction, shall, if requested by
the Company, deliver a certificate of such destruction to the Company. If the
Company shall acquire any of the Debentures, such acquisitions shall not operate
as a redemption or satisfaction of the indebtedness represented by such
Debentures unless and until the same are delivered to the Trustee for
cancellation.
Section 2.13. Persons Deemed Owners.
Prior to due presentment of a Debenture for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name such Debenture is registered as the owner of such Security
for the purpose of receiving payment of Principal, Issue Price, accrued Original
Issue Discount, accrued Liquidated Damages, if any, Redemption Price, Purchase
Price, Change in Control Purchase Price in respect thereof, for the purpose of
conversion and for all other purposes whatsoever, and none of the Company, the
Trustee or any agent of the Company or the Trustee shall be affected by notice
to the contrary.
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ARTICLE III
REDEMPTION OF DEBENTURES
Section 3.1. Right to Redeem; Notice to Trustee.
The Company, at its option, may redeem the Debentures in accordance with
the provisions of paragraphs 5 and 7 of the Debentures. If the Company elects
to redeem Debentures pursuant to paragraph 5 of the Debentures, it shall notify
the Trustee in writing of the Redemption Date, the Principal of Debentures to be
redeemed and the Redemption Price.
The Company shall give the notice to the Trustee provided for in this
Section 3.1 at least 30 days but not more than 60 days before the Redemption
Date (unless a shorter notice shall be satisfactory to the Trustee). If fewer
than all the Debentures are to be redeemed, the record date relating to such
redemption shall be selected by the Company and given to the Trustee.
Section 3.2. Selection of Debentures to Be Redeemed.
If fewer than all of the Debentures are to be redeemed, the Trustee shall,
at least 30 days but not more than 60 days prior to the Redemption Date, select
the Debentures to be redeemed by lot or, in the Trustee's discretion, on a pro
rata basis; provided, however, that such method is not prohibited by any stock
exchange or automated quotations system on which the Debentures are then listed
or traded, and if both of such methods are so prohibited, the Trustee shall
select the Debentures to be redeemed in a manner that (i) the Trustee considers
fair and appropriate and (ii) is not so prohibited. The Trustee shall make the
selection from the Debentures outstanding and not previously called for
redemption. The Trustee shall select for redemption Debentures and portions of
Debentures that have Principal Amounts at Final Maturity of $1,000 or in
integral multiples of $1,000. Provisions of this Indenture that apply to
Debentures called for redemption also apply to portions of Debentures called for
redemption. The Trustee shall notify the Company promptly of the Debentures or
portions of Debentures to be redeemed.
If any Debenture selected for partial redemption is thereafter surrendered
for conversion in part before termination of the conversion right with respect
to the portion of the Debenture so selected, the converted portion of such
Debenture shall be deemed (so far as may be), solely for purposes of determining
the aggregate Principal Amount of Debentures to be redeemed by the Company, to
be the portion selected for redemption. Debentures which have been converted
during a selection of Debentures to be redeemed may be treated by the Trustee as
outstanding for the purpose of such selection. Nothing in this Section 3.2
shall affect the right of any Holder to convert any Debenture pursuant to
Article XV before the termination of the conversion right with respect thereto.
Section 3.3. Notice of Redemption.
At least 30 days but not more than 60 days before a Redemption Date, the
Company shall mail or cause to be mailed a notice of redemption by first-class
mail to the Trustee and to each Holder of Debentures to be redeemed at such
Holder's address as it appears on the Debenture register.
The notice shall identify the Debentures to be redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) the Conversion Rate;
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(4) the name and address of the Paying Agent and the Conversion Agent;
(5) that Debentures called for redemption must be presented and
surrendered to the Paying Agent to collect the Redemption Price;
(6) that the Debentures called for redemption may be converted at any time
before the close of business on the Redemption Date;
(7) that Holders who wish to convert Debentures must satisfy the
requirements in paragraph 9 of the Debentures;
(8) that, unless the Company defaults in making the redemption payment,
the only remaining right of the Holder shall be to receive payment of the
Redemption Price upon presentation and surrender to the Paying Agent of the
Debentures;
(9) if fewer than all the outstanding Debentures are to be redeemed, the
certificate number and Principal Amounts of the particular Debentures to be
redeemed;
(10) that Original Issue Discount on Debentures called for redemption will
cease to accrue on and after the Redemption Date; and
(10) the CUSIP number or numbers for the Debentures called for redemption.
At the Company's request, the Trustee shall give the notice of redemption
in the Company's name and at the Company's expense.
Section 3.4. Effect of Notice of Redemption.
Once notice of redemption is mailed, Debentures called for redemption
become due and payable on the Redemption Date and at the Redemption Price stated
in the notice, except for Debentures that are converted in accordance with the
provisions of Article XV. Upon presentation and surrender to the Paying Agent,
Debentures called for redemption shall be paid at the Redemption Price.
Section 3.5. Deposit of Redemption Price.
On or before 10:00 a.m. New York City time on any Redemption Date, the
Company shall deposit with the Paying Agent (or if the Company or an Affiliate
of the Company is the Paying Agent, shall segregate and hold in trust) money
sufficient to pay the Redemption Price of all Debentures to be redeemed on that
date, other than Debentures or portions thereof called for redemption on that
date which have been delivered by the Company to the Trustee for cancellation or
have been converted. The Paying Agent shall promptly return to the Company any
money not required for that purpose because of the conversion of Debentures
pursuant to Article XV or otherwise. If such money is instead held by the
Company or an Affiliate of the Company in trust and is not required for such
purpose because of the conversion of Debentures pursuant to Article XV or
otherwise, it shall be discharged from the trust.
Section 3.6. Debentures Redeemed in Part.
Upon presentation and surrender of a Debenture that is redeemed in part,
the Company shall execute and the Trustee shall authenticate for and deliver to
the Holder a new Debenture equal in principal amount to the unredeemed portion
of the Debenture surrendered.
Section 3.7. Conversion Arrangement on Call for Redemption.
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In connection with any redemption of Debentures, the Company may arrange
for the purchase and conversion of any Debentures by an agreement with one or
more investment bankers or other purchasers to purchase such Debentures by
paying to the Trustee in trust for the Holders, on or before the date fixed for
redemption, an amount not less than the applicable Redemption Price of such
Debentures. Notwithstanding anything to the contrary contained in this Article
III, the obligation of the Company to pay the Redemption Price of such
Debentures 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 shall be filed with the Trustee prior to the date fixed for
redemption), any Debentures 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 surrendered
by such purchasers for conversions, all as of immediately prior to the close of
business on the date fixed for redemption (and the right to convert any such
Debentures shall be extended through such time), subject to payment of the above
amount as aforesaid. At the written 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 Debentures.
Without the Trustee's prior written consent, no arrangement between the Company
and such purchasers for the purchase and conversion of any Debentures shall
increase or otherwise affect any of the powers, duties, responsibilities or
obligations of the Trustee as set forth in this Indenture, and the Company
agrees to indemnify and defend the Trustee from, and hold it harmless against,
any claim, action, damage, penalty, judgment, loss, liability or expense arising
out of or in connection with any such arrangement for the purchase and
conversion of any Debentures between the Company and such purchasers to which
the Trustee has not consented in writing, including the costs and expenses,
including reasonable legal fees, incurred by the Trustee in the defense of any
claim or liability arising out of or in connection with the exercise or
performance of any of its powers, duties, responsibilities or obligations under
this Indenture.
Section 3.8. Purchase of Debentures at Option of the Holder.
(a) General. Debentures shall be purchased by the Company pursuant
to paragraph 6 of the Debentures as of March 2, 2003, March 2, 2008 and March 2,
2013 (each, a "Purchase Date"), at the purchase price specified therein (each, a
"Purchase Price") at the option of the Holder thereof, upon:
(1) delivery to the Paying Agent by the Holder of a written notice of
purchase (a "Purchase Notice") at any time from the opening of business on the
date that is 20 Business Days prior to a Purchase Date until the close of
business on such Purchase Date, stating:
(A) the certificate numbers of the Debentures which the Holder will
deliver to be purchased;
(B) the portion of the Principal Amount at Final Maturity of the
Debentures which the Holder will deliver to be purchased, which portion must be
$1,000 in Principal Amount or a multiple thereof;
(C) that such Debentures shall be purchased as of the Purchase Date
pursuant to the terms and conditions specified in paragraph 6 of the Debentures
and in this Indenture; and
(D) if the Company elects, pursuant to a Company Notice, to pay the
Purchase Price to be paid as of such Purchase Date, in whole or in part, in
Common Stock but such portion of the Purchase Price shall ultimately be payable
to such Holder in Cash because
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any of the conditions to the payment of the Purchase Price in Common Stock are
not satisfied prior to or on the Purchase Date, as set forth in Section 3.8(d),
whether such Holder elects (x) to withdraw such Purchase Notice as to some or
all of the Debentures to which such Purchase Notice relates (stating the
Principal Amount and certificate numbers of the Debentures as to which such
withdrawal shall relate), or (y) to receive Cash in respect of the entire
Purchase Price for all Debentures (or portions thereof) to which such Purchase
Notice relates; and
(2) delivery of such Debenture to the Paying Agent prior to, on or
after the Purchase Date (together with all necessary endorsements) at the
offices of the Paying Agent, such delivery being a condition to receipt by the
Holder of the Purchase Price therefor; provided, however, that such Purchase
Price shall be so paid pursuant to this Section 3.8 only if the Debenture so
delivered to the Paying Agent shall conform in all respects to the description
thereof in the related Purchase Notice.
If a Holder, in such Holder's Purchase Notice (and in any written notice of
withdrawal of a portion of a Holder's Debentures previously submitted for
purchase pursuant to a Purchase Notice, the portion that remains subject to the
Purchase Notice), fails to indicate such Holder's choice with respect to the
election set forth in clause (D) of Section 3.8(a)(1), such Holder shall be
deemed to have elected to receive Cash in respect of all Debentures subject to
such Purchase Notice in the circumstances set forth in such clause (D).
The Company shall purchase from the Holder thereof, pursuant to this
Section 3.8, a portion of a Debenture if the Principal Amount of such portion is
$1,000 at Final Maturity or a multiple of $1,000. Provisions of this Indenture
that apply to the purchase of all of a Debenture also apply to the purchase of
such portion of such Debenture.
Any purchase by the Company contemplated pursuant to the provisions of this
Section 3.8 shall be consummated by the delivery of the consideration to be
received by the Holder promptly following the later of the Purchase Date and the
time of delivery of the Debenture.
Notwithstanding anything herein to the contrary, any Holder delivering to
the Paying Agent the Purchase Notice contemplated by this Section 3.8(a) shall
have the right at any time prior to the close of business on the Purchase Date
to withdraw such Purchase Notice (in whole or in part) by delivery of a written
notice of withdrawal to the Paying Agent in accordance with Section 3.10.
The Paying Agent shall promptly notify the Company of the receipt by it of
any Purchase Notice or written notice of withdrawal thereof.
(b) Company's Right to Elect Manner of Payment of Purchase Price.
The Company may elect with respect to any Purchase Date to pay the Purchase
Price in respect of the Debentures to be purchased pursuant to Section 3.8(a) as
of such Purchase Date, in U.S. legal tender ("Cash") or Common Stock, or in any
combination of Cash and Common Stock, subject to the conditions set forth in
Sections 3.8(c) and (d). The Company shall designate, in the Company Notice
delivered pursuant to Section 3.8(e), whether the Company will purchase the
Debentures for Cash or Common Stock, or, if a combination thereof, the
percentages of the Purchase Price of Debentures in respect of which it will pay
in Cash and/or Common Stock; provided that the Company will pay Cash for
fractional interests in Common Stock. For purposes of determining the existence
of potential fractional interests, all Debentures subject to purchase by the
Company
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held by a Holder shall be considered together (no matter how many separate
certificates are to be presented). Each Holder whose Debentures are purchased
pursuant to this Section 3.8 shall receive the same percentage of Cash and/or
Common Stock in payment of the Purchase Price for such Debentures, except (i) as
provided in Section 3.8(d) with regard to the payment of Cash in lieu of
fractional interests in Common Stock and (ii) in the event that the Company is
unable to purchase the Debentures of a Holder or Holders for Common Stock
because any necessary qualifications or registrations of the Common Stock under
applicable federal or state securities laws cannot be obtained, the Company may
purchase the Debentures of such Holder or Holders for Cash. Once the Company has
given its Company Notice to Holders the Company may not change its election with
respect to the consideration (or components or percentages of components
thereof) to be paid except pursuant to this Section 3.8(b) or Section 3.8(d).
At least five Business Days before the Company Notice Date (as defined in
Section 3.8(c)), the Company shall deliver an Officers' Certificate to the
Trustee specifying:
(i) the manner of payment selected by the Company,
(ii) the information required by Section 3.8(e),
(iii) if the Company elects to pay the Purchase Price, or a specified
percentage thereof, in Common Stock, that the conditions to such manner of
payment set forth in Section 3.8(d) have been or will be complied with, and
(iv) whether the Company desires the Trustee to give the Company
Notice required by Section 3.8(e).
(c) Purchase with Cash. At the option of the Company, the Purchase
Price of Debentures in respect of which a Purchase Notice pursuant to Section
3.8(a) has been given, or a specified percentage thereof, may be paid by the
Company with Cash equal to the aggregate Purchase Price, or such specified
percentage thereof, as the case may be, of such Debentures. No Debentures may be
purchased at the option of the Holders with Cash if there has occurred and is
continuing an Event of Default (other than a default in the payment of the
Purchase Price with respect to such Debentures).
(d) Payment by Issuance of Common Stock. At the option of the
Company, the Purchase Price of Debentures in respect of which a Purchase Notice
pursuant to Section 3.8(a) has been given, or a specified percentage thereof,
may be paid by the Company by the issuance of a number of shares of Common Stock
equal to the quotient obtained by dividing (i) the amount of Cash to which the
Holders would have been entitled had the Company elected to pay all or such
specified percentage, as the case may be, of the Purchase Price of such
Debentures in Cash by (ii) the Market Price of a share of Common Stock, subject
to the next succeeding paragraph.
The Company will not issue a fractional share of Common Stock in payment of
the Purchase Price. Instead the Company will pay Cash for the current market
value of the fractional share. The current market value of a fraction of a
share shall be determined by multiplying the Market Price by such fraction and
rounding the product to the nearest whole cent. It is understood that if a
Holder elects to have more than one Debenture purchased, the number of shares of
Common Stock shall be based on the aggregate amount of Debentures to be
purchased.
The Company's right to exercise its election to purchase the Debentures
pursuant to Section 3.8 through the issuance of shares of Common Stock shall be
conditioned upon:
(i) the Company having given timely Company Notice of election to
purchase all or a specified percentage of the Debentures with Common Stock as
provided herein;
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(ii) the registration of the shares of Common Stock to be issued in
respect of the payment of the specified percentage of the Purchase Price under
the Securities Act and the Securities Exchange Act of 1934, as amended; unless
the shares of Common Stock so issued can be resold by the Debentureholder
receiving such shares without registration under the Securities Act pursuant to
Rule 144 under the Securities Act or otherwise (unless such Debentureholder is
the Company or an Affiliate of the Company);
(iii) any necessary qualification or registration under applicable
state securities laws or the availability of an exemption from such
qualification and registration; and
(iv) the receipt by the Trustee of an Officers' Certificate and an
Opinion of Counsel each stating that (A) the terms of the issuance of the Common
Stock are in conformity with this Indenture and (B) the shares of Common Stock
to be issued by the Company in payment of the specified percentage of the
Purchase Price in respect of Debentures have been duly authorized and, when
issued and delivered pursuant to the terms of this Indenture in payment of the
specified percentage of the Purchase Price in respect of Debentures, will be
validly issued, fully paid and nonassessable, and, in the case of such Officers'
Certificate, stating that conditions (i), (ii) and (iii) above have been
satisfied and, in the case of such Opinion of Counsel, stating that conditions
(ii) and (iii) above have been satisfied.
Such Officers' Certificate shall also set forth the number of shares of
Common Stock to be issued for each $1,000 Principal Amount at Final Maturity of
Debentures and the Sale Price of a share of Common Stock on each Trading Day
during the period during which the Market Price is calculated and ending on the
Purchase Date. The Company may elect to pay the Purchase Price (or any portion
thereof) in Common Stock only if the information necessary to calculate the
Market Price is reported in a daily newspaper of national circulation. If any
of the conditions set forth in this Section 3.8(d) are not satisfied with
respect to a Holder or Holders prior to or on the Purchase Date and the Company
elected to purchase the Debentures to be purchased as of such Purchase Date
pursuant to this Section 3.8 through the issuance of shares of Common Stock, the
Company shall pay the entire Purchase Price in respect of such Debentures of
such Holder or Holders in Cash.
The "Market Price" means the average of the Sale Prices of the Common Stock
for the five Trading Day period ending on (if the third Business Day prior to
the applicable Purchase Date is a Trading Day or, if it is not a Trading Day
then on the last Trading Day prior to) the third Business Day prior to the
applicable Purchase Date, appropriately adjusted to take into account the
occurrence, during the period commencing on the first of such Trading Days
during such five Trading Day period and ending on such Purchase Date, of any
event described in Section 15.6, subject, however, to the conditions set forth
in Sections 15.7 and 15.8. The "Sale Price" of the Common Stock on any date
means the closing per share sale price (or if no closing sale price is reported
the average of the bid and ask prices or, if more than one in either case, the
average of the average bid and average ask prices) on such date as reported in
the composite transactions for the principal United States securities exchange
on which the Common Stock is traded or, if the Common Stock is not listed on a
United States national or regional stock exchange, as reported by the NASDAQ
National Market.
Upon determination of the actual number of shares of Common Stock which the
Holder of each $1,000 Principal Amount at Final Maturity of the Debentures will
receive, the Company shall publish such determination in a daily newspaper of
national circulation.
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(e) Notice of Election. The Company's notices of election to purchase
with Cash or Common Stock, or any combination thereof (each a "Company Notice"),
shall be sent to the Holders (and to beneficial owners as required by applicable
law) in the manner provided in Section 12 and shall be sent to Holders (and to
beneficial owners as required by applicable law) not less than 20 Business Days
prior to the Purchase Date (the "Company Notice Date"). Such Company Notices
shall state the manner of payment elected and shall contain the following
information:
In the event the Company has elected to pay a Purchase Price (or a
specified percentage thereof) with Common Stock, the Company Notice shall:
(1) state that each Holder will receive Common Stock with a Market
Price determined as of a specified date prior to the Purchase Date equal to such
specified percentage of the Purchase Price of the Debentures held by such Holder
(except any Cash amount to be paid in lieu of fractional share); and
(2) set forth the method of calculating the Market Price and state
that because the Market Price of Common Stock will be determined prior to the
Purchase Date, the Holders will bear the market risk with respect to the value
of the Common Stock to be received from the date such Market Price is determined
to the Purchase Date.
In any case, each Company Notice shall include a form of Purchase Notice to
be completed by a Debentureholder and shall state:
(i) the Purchase Price and Conversion Rate;
(ii) the name and address of the Paying Agent and the Conversion
Agent;
(iii) that Debentures as to which a Purchase Notice has been given may
be converted only if the applicable Purchase Notice has been withdrawn in
accordance with the terms of this Indenture;
(iv) that Debentures must be surrendered to the Paying Agent to
collect payment;
(v) that the Purchase Price for any Debenture as to which a Purchase
Notice has been given and not withdrawn will be paid promptly following the
later of the Purchase Date and the time of surrender of such Debenture as
described in (iv);
(vi) the procedures the Holder must follow under Section 3.8;
(vii) briefly, the conversion rights of the Debentures; and
(viii) the procedures for withdrawing a Purchase Notice (including,
without limitation, for a conditional withdrawal pursuant to the terms of
Section 3.8 (a) (1) (D) or Section 3.10).
At the Company's request and at the Company's expense, the Trustee shall
give the Company Notice in the Company's name; provided, however, that, in all
cases, the text of the Company Notice shall be prepared by the Company.
(f) Covenants of the Company. All shares of Common Stock delivered
upon conversion or purchase of the Debentures shall be newly issued shares or
treasury shares, shall be fully paid and nonassessable and shall be free from
preemptive rights and free of any lien or adverse claim.
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The Company shall cause to have listed or quoted all such shares of Common
Stock on each United States national securities exchange or over-the counter or
other domestic market on which the Common Stock is then listed or quoted.
(g) Procedure Upon Purchase. On or before 10:00 a.m. New York City
time on the Purchase Date, the Company shall deposit with the Paying Agent Cash
(in respect of a Cash purchase under Section 3.8(c) or for fractional interests,
as applicable), or shares of Common Stock, or a combination thereof, as
applicable, sufficient to pay the aggregate Purchase Price of the Debentures to
be purchased pursuant to this Section 3.8. As soon as practicable after the
Purchase Date, the Company shall deliver to each Holder entitled to receive
Common Stock, through the Paying Agent, a certificate for the number of full
shares of Common Stock, as applicable, issuable in payment of such Purchase
Price and Cash in lieu of any fractional interests. The Person in whose name the
certificate for Common Stock is registered shall be treated as a holder of
record following the Purchase Date. Subject to Section 3.8(d), no payment or
adjustment will be made for dividends on the Common Stock the record date for
which occurred on or prior to the Purchase Date.
(h) Taxes. If a Holder of a Debenture is paid in Common Stock, the
Company shall pay any documentary, stamp or similar issue or transfer tax due on
such issue of shares of Common Stock. However, the Holder shall pay any such tax
which is due because the Holder requests the shares of Common Stock to be issued
in a name other than the Holder's name. The Paying Agent may refuse to deliver
the certificates representing the Common Stock being issued in a name other than
the Holder's name until the Paying Agent receives a sum sufficient to pay any
tax which will be due because the shares of Common Stock are to be issued in a
name other than the Holder's name. Nothing herein shall preclude any income tax
withholding required by law or regulations.
Section 3.9. Repurchase at Option of the Holder Upon a Change in Control.
(a) If a Change in Control shall occur at any time prior to the Final
Maturity Date, each Holder of Debentures shall have the right, at such Holder's
option, to require the Company to purchase such Holder's Debentures on the date
(the "Change in Control Purchase Date") (or if such date is not a Business Day,
the next succeeding Business Day) that is 20 days after the date of the Company
Change in Control Notice. The Debentures will be repurchased in part in integral
multiples of $l,000 of Principal Amount at the Final Maturity Date. The Company
shall purchase such Debentures for Cash at a price (the "Change in Control
Purchase Price") equal to the Issue Price plus accrued Original Issue Discount
to the Change in Control Purchase Date. No Debentures may be repurchased at the
option of the Holders due to a Change in Control if there has occurred and is
continuing an Event of Default (other than a default in the payment of the
Change in Control Purchase Price with respect to such Debentures).
(b) The Company, or at its request (which must be received by the
Trustee at least three Business Days prior to the date the Trustee is requested
to give such notice as described below) the Trustee in the name of and at the
expense of the Company, shall mail to all Holders of record of the Debentures a
notice (a "Company Change in Control Notice") of the occurrence of a Change in
Control and of the repurchase right arising as a result thereof on or before the
fifteenth day after the occurrence of such Change in Control. The Company shall
promptly furnish to the Trustee a copy of such notice.
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(c) For a Debenture to be so repurchased at the option of the Holder,
the Paying Agent must receive such Debenture with the form entitled "Change in
Control Purchase Notice" on the reverse thereof duly completed, together with
such Debenture duly endorsed for transfer, on or before the Change in Control
Purchase Date. All questions as to the validity, eligibility (including time of
receipt) and acceptance of any Debenture for redemption shall be determined by
the Company, whose determination shall be final and binding.
(d) A "Change in Control" shall be deemed to have occurred at such
time after the original issuance of the Debentures as:
(i) any Person, other than the Company, any subsidiary of the Company
or any entity Controlled (as defined below) by the foregoing, or any employee
benefit plan of the Company or any such subsidiary, is or becomes the beneficial
owner, directly or indirectly, through a purchase or other acquisition
transaction or series of transactions (other than a merger or consolidation
involving the Company), of shares of capital stock of the Company entitling such
Person to exercise in excess of 50% of the total voting power of all shares of
capital stock of the Company entitled to vote generally in the election of
directors;
(ii) there occurs any consolidation of the Company with, or merger of
the Company into, any other Person, any merger of another Person into the
Company, or any sale or transfer of the assets of the Company as, or
substantially as, an entirety to another Person (other than (i) any such
transaction pursuant to which the Holders of the Common Stock immediately prior
to such transaction have, directly or indirectly, shares of capital stock of the
continuing or surviving corporation immediately after such transaction which
entitle such Holders to exercise in excess of 50% of the total voting power of
all shares of capital stock of the continuing or surviving corporation entitled
to vote generally in the election of directors and (ii) any merger (1) which
does not result in any reclassification, conversion, exchange or cancellation of
outstanding shares of Common Stock or (2) which is effected solely to change the
jurisdiction of incorporation of the Company and results in a reclassification,
conversion or exchange of outstanding shares of Common Stock solely into shares
of Common Stock and separate series of Common Stock carrying substantially the
same relative rights as the Common Stock); or
(iii) a change in the Board of Directors of the Company in which the
individuals who constituted the Board of Directors of the Company at the
beginning of the two-year period immediately preceding such change (together
with any other director whose election by the Board of Directors of the Company
or whose nomination for election by the stockholders of the Company was approved
by a vote of at least a majority of the directors then in office either who were
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the directors then in office;
provided, however, that a Change in Control shall not be deemed to have
occurred if either (a) the Closing Price per share of the Common Stock for any
ten (10) Trading Days (each, a "Pricing Trading Date") within the period of 20
consecutive Trading Days ending immediately before the Change in Control shall
equal or exceed 105% of the price determined by dividing (i) the sum of the
Issue Price plus Original Issue Discount accrued to such Trading Day, by (ii)
the Conversion Rate, provided that at least five Pricing Trading Days occur
within the 10 consecutive Trading Days ending immediately before the Change in
Control, or (b) (i) at least 90% of the consideration (excluding cash payments
for fractional shares) in the transaction or transactions constituting the
Change in Control consists of shares of Common Stock with full voting rights
traded on a national securities exchange or quoted on the NASDAQ National Market
(or which will be so traded or quoted when issued or exchanged in connection
with such
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Change in Control) (such securities being referred to as "Publicly
Traded Securities") and as a result of such transaction or transactions such
Debentures become convertible solely into such Publicly Traded Securities and
(ii) the consideration in the transaction or transactions constituting the
Change of Control consists of cash, Publicly Traded Securities or a combination
of cash and Publicly Traded Securities with an aggregate fair market value
(which, in the case of Publicly Traded Securities, shall be equal to the average
Closing Price of such Publicly Traded Securities during the ten (10) consecutive
Trading Days, commencing with the sixth Trading Day, following consummation of
the transaction or transactions constituting the Change in Control) which is at
least 105% of the price determined by dividing (i) the sum of the Issue Price
plus Original Issue Discount accrued to such Trading Day, by (ii) the Conversion
Rate.
(iv) For purposes of this Article III,
(A) the term "beneficial owner" shall be determined in accordance
with Rule 13d-3 promulgated by the Commission pursuant to the Exchange Act;
(B) the term "Person" shall include any syndicate or group which
would be deemed to be a "Person" under Section 13(d)(3) of the Exchange Act; and
(C) The term "Controlled" shall mean ownership or control of more
than 50% of the voting power of such entity.
Section 3.10. Effect of Purchase Notice or Change in Control Purchase
Notice.
Upon receipt by the Company of the Purchase Notice or Change in Control
Purchase Notice specified in Section 3.8(a) or Section 3.9(b), as applicable,
the Holder of the Debenture in respect of which such Purchase Notice or Change
in Control Purchase Notice, as the case may be, was given shall (unless such
Purchase Notice or Change in Control Purchase Notice is withdrawn as specified
in the following two paragraphs) thereafter be entitled to receive solely the
Purchase Price or Change in Control Purchase Price, as the case may be, with
respect to such Debenture. Such Purchase Price or Change in Control Purchase
Price shall be paid to such Holder promptly following the later of (x) the
Purchase Date or the Change in Control Purchase Date, as the case may be, with
respect to such Debenture (provided the conditions in Section 3.8(a) or Section
3.9(c), as applicable, have been satisfied) and (y) the time of delivery of such
Debenture to the Paying Agent by the Holder thereof in the manner required by
Section 3.8(a) or Section 3.9(c), as applicable. Debentures in respect of which
a Purchase Notice or Change in Control Purchase Notice, as the case may be, has
been given by the Holder thereof may not be converted for shares of Common Stock
on or after the date of the delivery of such Purchase Notice (or Change in
Control Purchase Notice, as the case may be), unless such Purchase Notice (or
Change in Control Purchase Notice, as the case may be) has first been validly
withdrawn as specified in the following two paragraphs.
A Purchase Notice or Change in Control Purchase Notice, as the case may be,
may be withdrawn by means of a written notice of withdrawal delivered to the
office of the Paying Agent at any time prior to the close of business on the
Purchase Date or the Change in Control Purchase Date, as the case may be, to
which it relates specifying;
(1) the certificate number of the Debenture in respect of which such
notice of withdrawal is being submitted,
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(2) the Principal Amount at the Final Maturity Date of the Debenture with
respect to which such notice of withdrawal is being submitted, and
(3) the Principal Amount at the Final Maturity Date , if any, of such
Debenture which remains subject to the original Purchase Notice or Company
Change in Control Notice, as the case may be, and which has been or will be
delivered for purchase by the Company.
A written notice of withdrawal of a Purchase Notice may be in the form of
(i) a conditional withdrawal contained in a Purchase Notice pursuant to the
terms of Section 3.8(a)(1)(D) or (ii) a conditional withdrawal containing the
information set forth in Section 3.8(a)(1)(D) and the preceding paragraph and
contained in a written notice of withdrawal delivered to the Paying Agent as set
forth in the preceding paragraph.
There shall be no purchase of any Debentures pursuant to Section 3.8 (other
than through the issuance of Common Stock in payment of the Purchase Price,
including Cash in lieu of any fractional shares) or redemption pursuant to
Section 3.9 if there has occurred prior to, on or after, as the case may be, the
giving, by the Holders of such Debentures, of the required Purchase Notice (or
Change in Control Purchase Notice, as the case may be) and is continuing an
Event of Default (other than a default in the payment of the Purchase Price or
Change in Control Purchase Price, as the case may be, with respect to such
Debentures).
Section 3.11. Deposit of Purchase Price or Change in Control Purchase
Price.
On or before 10:00 a.m. New York City time on a Purchase Date or a Change
in Control Purchase Date, as the case may be, the Company shall deposit with the
Trustee or with the Paying Agent (or, if the Company or an Affiliate of the
Company is acting as the Paying Agent, shall segregate and hold in trust as
provided in Section 2.4) an amount of money and/or Common Stock, if permitted
hereunder, sufficient to pay the aggregate Purchase Price or Change in Control
Purchase Price, as the case may be, of all the Debentures or portions thereof
which are to be purchased as of such Purchase Date or Change in Control
Redemption Date, as the case may be.
Section 3.12. Debentures Purchased in Part.
Any Debenture that is to be purchased, or redeemed upon a Change in
Control, only in part shall be surrendered at the office of the Paying Agent
(with, if the Company or the Trustee so requires, due endorsement by, or a
written instrument of transfer in form satisfactory to the Company and the
Trustee duly executed by, the Holder thereof or such Holder's attorney duly
authorized in writing) and the Company shall execute and the Trustee shall
authenticate and deliver to the Holder of such Debenture, without service
charge, a new Debenture or Debentures, of any authorized denomination as
requested by such Holder in aggregate Principal Amount equal to, and in exchange
for, the portion of the Principal Amount of the Debenture so surrendered which
is not purchased or redeemed.
Section 3.13. Covenant to Comply with Securities Laws Upon Purchase of
Debentures.
In connection with any offer to purchase Debentures
under Section 3.8 or 3.9 hereof, the Company shall (i)
comply with Rule 13e-4 (which term, as used herein, includes
any successor provision thereto) under the Exchange Act, if
applicable, (ii) file the related Schedule 13E-4 (or any
successor schedule, form or report) under the Exchange Act,
if applicable, and (iii) otherwise comply with all Federal
and state Securities laws so as to permit the rights and
obligations under
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Section 3.8 and 3.9 to be exercised in the time and in the
manner specified in Section 3.8 and 3.9.
Section 3.14. Repayment to the Company.
The Trustee and the Paying Agent shall return to the
Company any cash or shares of Common Stock that remain
unclaimed as provided in paragraph 14 of the Debentures,
together with interest that the Trustee has agreed to pay
pursuant to Section 8.5, if any, or dividends, if any, paid
thereon while such shares are held by the Trustee or the
Paying Agent, held by them for the payment of a Purchase
Price or Change in Control Purchase Price, as the case may
be; provided, however, that to the extent that the aggregate
amount of cash or shares of Common Stock deposited by the
Company pursuant to Section 3.11 exceeds the aggregate
Purchase Price or Change in Control Purchase Price, as the
case may be, of the Debentures or portions thereof which the
Company is obligated to purchase as of the Purchase Date or
Change in Control Purchase Date, as the case may be, then
promptly after the Business Day following the Purchase Date
or Change in Control Purchase Date, as the case may be, the
Trustee and the Paying Agent shall return any such excess to
the Company together with interest that the Trustee has
agreed to pay pursuant to Section 8.5, if any, or dividends,
if any, paid thereon while such shares are held by the
Trustee or the Paying Agent.
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ARTICLE IV
SUBORDINATION OF DEBENTURES
Section 4.1. Debentures Subordinated to Senior Indebtedness.
The Company covenants and agrees, and each Holder of
Debentures issued hereunder by his or her acceptance thereof
likewise covenants and agrees, that all Debentures shall be
issued subject to the provisions of this Article IV; and
each Person holding any Debenture, whether upon original
issue or upon transfer or assignment thereof, accepts and
agrees to be bound by such provisions.
The payment of the Principal Amount, Issue Price,
accrued Original Issue Discount, accrued Liquidated Damages,
if any, Redemption Price, Purchase Price, Change in Control
Purchase Price, interest and any other amounts payable, if
any, in respect of all Debentures 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 of
the Company, whether outstanding at the date of this
Indenture or thereafter incurred, or thereafter created,
assumed or guaranteed.
No provision of this Article IV shall prevent the
occurrence of any Default or Event of Default hereunder.
Section 4.2. Payments to Holders.
No payment shall be made with respect to the payment of
Principal Amount, Issue Price, accrued Liquidated Damages,
if any, accrued Original Issue Discount, Redemption Price,
Purchase Price, Change in Control Purchase Price, interest
and any other amounts payable, if any, on the Debentures
except payments and distributions made by the Trustee as
permitted by Section 4.6, if:
(a) a default in the payment of principal, premium,
interest, rent or other obligations due on any Senior
Indebtedness occurs and is continuing (or, in the case of
Senior Indebtedness for which there is a period of grace, in
the event of such a default that continues beyond the period
of grace, if any, specified in the instrument or lease
evidencing such Senior Indebtedness), unless and until such
default shall have been cured or waived or shall have ceased
to exist, or
(b) a default, other than a payment default, on any
Designated Senior Indebtedness occurs and is continuing that
then permits holders of such Designated Senior Indebtedness
to accelerate its maturity and the Trustee receives a
written notice of the default (a "Payment Blockage Notice")
from a Representative or the Company.
If the Trustee receives any Payment Blockage Notice
pursuant to clause (b) above, no subsequent Payment Blockage
Notice shall be effective for purposes of this Section
unless and until (A) at least 365
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days shall have elapsed since the initial effectiveness of
the immediately prior Payment Blockage Notice, and (B) all
scheduled payments of the Principal Amount due at the Final
Maturity Date, Purchase Price, Redemption Price, or Change
in Control Purchase Price, as applicable, on the Debentures
that have come due have been paid in full in cash. No
nonpayment default that existed or was continuing on the
date of delivery of any Payment Blockage Notice to the
Trustee shall be, or be made, the basis for a subsequent
Payment Blockage Notice.
The Company, after providing written notice to the
Trustee, shall resume payments on and distributions in
respect of the Debentures upon the earlier of:
(a) the date upon which the default is cured or waived
or ceases to exist, or
(b) in the case of a default referred to in clause (b)
above, 179 days pass after notice is received if the
maturity of such Designated Senior Indebtedness has not been
accelerated;
unless this Article IV otherwise prohibits the payment
or distribution at the time of such payment or distribution.
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 Amount due at the Final
Maturity Date, Purchase Price, Redemption Price, or Change
in Control Purchase Price, as applicable, on the Debentures
(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 Debentures or the Trustee would be
entitled, except for the provision of this Article IV, shall
(except as aforesaid) be paid by the Company or by any
receiver, trustee in bankruptcy, liquidating trustee, agent
or other Person making such payment or distribution, or by
the holders of the Debentures or by the
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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 or
provision therefor is made to the holders of the Debentures
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 Debentures
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 corporation or the
liquidation or dissolution of the Company following the
conveyance or transfer of its property as an entirety, or
substantially as an entirety, to another corporation upon
the terms and conditions provided for in Article XII shall
not be deemed a dissolution, winding up, liquidation or
reorganization for the purposes of this Section 4.2 if such
other corporation 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 Debentures
because of an Event of Default, no payment or distribution
shall be made to the Trustee or any holder of Debentures in
respect of the Debentures (including, but not limited to,
the Redemption Price, Purchase Price or Change in Control
Purchase Price ), except payments and distributions made by
the Trustee as permitted by Section 4.6, until all Senior
Indebtedness has been paid in full in cash or other payment
satisfactory to the holders of Senior Indebtedness or such
acceleration is rescinded in accordance with the terms of
this Indenture. If payment of the Debentures is accelerated
because of an Event of Default, the Company shall promptly
notify holders of Senior Indebtedness of the acceleration.
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In the event that, notwithstanding the foregoing
provisions, any payment or distribution of assets of the
Company of any kind or character, whether in cash, property
or securities (including, without limitation, by way of
setoff or otherwise), prohibited by the foregoing, shall be
received by the Trustee or the Holders 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 all 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
8.6. This Section 4.2 shall be subject to the further
provisions of Section 4.6, and the right to rescind and
annul acceleration of any notice given pursuant to Section
7.1.
Section 4.3. Debentures to Be Subrogated to Rights of Holders of Senior
Indebtedness.
Subject to the payment in full in cash or other payment
satisfactory to the holders of Senior Indebtedness of all
Senior Indebtedness of the Company, the rights of the
Holders of the Debentures shall be subrogated to the rights
of the holders of such Senior Indebtedness to receive
payments or distributions of cash, property or Debentures of
the Company applicable to such Senior Indebtedness until the
Principal Amount, Issue Price, accrued Original Issue
Discount, accrued Liquidated Damages, if any, Redemption
Price, Purchase Price, Change in Control Purchase Price in
respect of the Debentures shall be paid in full, and, for
purposes of such subrogation, no payments or distributions
to the holders of Senior Indebtedness of assets, whether in
cash, property or securities, distributable to the holders
of Senior Indebtedness under the provisions hereof to which
the Holders would be entitled except for the provisions of
this Article IV, and no payment pursuant to the provisions
of this Article IV to the holders of Senior Indebtedness by
the Holders shall, as among the Company, its creditors other
than the holders of Senior Indebtedness, and the Holders, be
deemed to be a payment by the Company to or on account of
Senior Indebtedness, it being understood that the provisions
of this Article IV are, and are intended, solely for the
purpose of
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defining the relative rights of the Holders, on the one
hand, and the holders of Senior Indebtedness, on the other
hand.
Upon any payment or distribution of assets of the
Company referred to in this Article IV, the Trustee and the
Holders of the Debentures shall be entitled to rely upon any
order or decree made by any court of competent jurisdiction
in which such 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, to the Holders of the Debentures
for the purpose of ascertaining the Persons entitled to
participate in such distribution, the holders of the Senior
Indebtedness and other indebtedness of the Company, the
amount thereof or payable thereon, the amount or amounts
paid or distributed thereon and all other facts pertinent
thereto or to this Article IV.
Section 4.4. Obligations of the Company Unconditional.
Nothing contained in this Article IV or elsewhere in
this Indenture or in any Debenture is intended to or shall
impair, as among the Company, its creditors other than the
holders of Senior Indebtedness, and the Holders, the
obligation of the Company, which is absolute and
unconditional, to pay to the Holders the Principal Amount,
Issue Price, accrued Original Issue Discount, accrued
Liquidated Damages, if any, Redemption Price, Purchase
Price, Change in Control Purchase Price on the Debentures,
as the same shall become due and payable in accordance with
the terms of the Debentures, or to affect the relative
rights of the Holders and other creditors of the Company
other than the holders of Senior Indebtedness, nor shall
anything herein or therein prevent the Trustee or any Holder
from exercising all remedies otherwise permitted by
applicable law upon the happening of an Event of Default
under this Indenture, subject to the provisions of Article
VIII, and the rights, if any, under this Article IV of the
holders of Senior Indebtedness in respect of assets, whether
in cash, property or securities, of the Company received
upon the exercise of any such remedy.
Section 4.5. Notice to Trustee.
The Company shall give prompt written notice to the
Trustee of any fact known to the Company which would
prohibit the making of any payment to or by the Trustee in
respect of the Debentures. Notwithstanding the provisions of
this Article IV or any other provision of this Indenture,
the Trustee shall not at any time be charged with knowledge
of the existence of any facts which would prohibit the
making of any payment to or by the Trustee, unless and until
the Trustee shall have received written notice thereof from
the Company or from the holder or holders of Senior
Indebtedness or from their Representative or
Representatives; and, prior to the receipt of any such
written notice, the Trustee, subject to the provisions of
Sections 8.1 and 8.2, shall be entitled to assume
conclusively that such facts do not exist.
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The Trustee shall be entitled to rely on the delivery
to it of a written notice by a Person representing himself
or herself to be a holder of Senior Indebtedness (or a
Representative of such holder) to establish that such notice
has been given by a holder of Senior Indebtedness or a
Representative of any such holder. In the event that the
Trustee determines in good faith that further evidence is
required with respect to the right of any Person as a holder
of Senior Indebtedness to participate in any payment or
distribution pursuant to this Article IV, the Trustee may
request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Senior
Indebtedness held by such Person, the extent to which such
Person is entitled to participate in such payment or
distribution and any other facts pertinent to the rights of
each Person under this Article IV, and, if such evidence is
not furnished, the Trustee may defer any payment to such
Person pending judicial determination as to the right of
such Person to receive such payment.
Section 4.6. Application by Trustee of Monies Deposited With It.
Money or U.S. Government Obligations deposited with the
Trustee or any Paying Agent (whether or not in trust) for
the payment of the Principal Amount, Issue Price, accrued
Original Issue Discount, accrued Liquidated Damages, if any,
Redemption Price, Purchase Price, and Change in Control
Purchase Price on any Debentures shall be subject to the
provisions of Sections 4.1, 4.2, 4.3 and 4.4; except that,
if two (2) Business Days prior to the date on which by the
terms of this Indenture any such monies or U.S. Government
Obligations may become payable for any purpose (including,
without limitation, the payment of the Principal Amount,
Issue Price, accrued Original Issue Discount, accrued
Liquidated Damages, if any, Redemption Price, Purchase
Price, and Change in Control Purchase Price on any
Debenture) the Trustee shall not have received with respect
to such monies or U.S. Government Obligations the notice
provided for in Section 4.5, then the Trustee or any Paying
Agent shall have full power and authority to receive such
monies and to apply such monies to the purpose for which
they were received, and shall not be affected by any notice
to the contrary which may be received by it on or after such
date. This Section 4.6 shall be construed solely for the
benefit of the Trustee and the Paying Agent and shall not
otherwise affect the rights that holders of Senior
Indebtedness may have to recover any such payments from the
Holders in accordance with the provisions of this Article
IV.
Section 4.7. Subordination Rights Not Impaired by Acts or Omissions of
Company or holders of Senior Indebtedness.
No right of any present or future holders 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,
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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 be otherwise charged with. The holders of any
Senior Indebtedness may extend, renew, modify or amend the
terms of such Senior Indebtedness or any security therefor
and release, sell or exchange such security and otherwise
deal freely with the Company, all without affecting the
liabilities and obligations of the parties to this Indenture
or the Holders. No provision in any supplemental indenture
which affects the superior position of the holders of the
Senior Indebtedness shall be effective against the holders
of the Senior Indebtedness unless the holders of such Senior
Indebtedness (required pursuant to the terms of such Senior
Indebtedness to give such consent) have consented thereto.
Section 4.8. Trustee to Effectuate Subordination.
Each Holder of a Debenture by his or her acceptance
thereof authorizes and directs the Trustee on his or her
behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this
Article IV and appoints the Trustee his or her attorney-in-
fact for any and all such purposes.
Section 4.9. Right of Trustee to Hold Senior Indebtedness.
The Trustee, in its individual capacity, shall be
entitled to all of the rights set forth in this Article IV
in respect of any Senior Indebtedness at any time held by it
(including without limitation the Senior Indebtedness held
by it as of the date of this Indenture) to the same extent
as any other holder of Senior Indebtedness, and nothing in
this Indenture shall be construed to deprive the Trustee of
any of its rights as such holder.
Section 4.10. Article IV Not to Prevent Events of Default.
The failure to make a payment on account of the
Principal Amount due at the Final Maturity Date, Purchase
Price, Redemption Price, or Change in Control Purchase
Price, as applicable, on the Debentures by reason of any
provision in this Article IV shall not be construed as
preventing the occurrence of an Event of Default under
Section 7.1.
Section 4.11. No Fiduciary Duty Created to Holders of Senior Indebtedness.
Notwithstanding any other provision in this Article IV,
the Trustee shall not be deemed to owe any fiduciary duty to
the holders of Senior Indebtedness by virtue of the
provisions of this Article IV.
Section 4.12. Article Applicable to Paying Agent.
In case at any time any Paying Agent other than the
Trustee shall have been appointed by the Company and be then
acting hereunder, the term "Trustee" as used in this Article
IV shall in such case (unless the context shall otherwise
require) be construed as extending to and including such
Paying Agent within its meaning as
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fully for all intents and purposes as if such Paying Agent
were named in this Article IV in addition to or in place of
the Trustee.
Section 4.13. Treatment of Conversion Payments.
Notwithstanding anything in this Indenture to the
contrary, neither the issuance and delivery of junior
Debentures upon conversion of the Debentures in accordance
with Article XV nor the payment of cash in lieu of
fractional shares of Common Stock in accordance with Article
XV shall be deemed to constitute a payment or distribution
on account of the Principal Amount, Issue Price, accrued
Original Issue Discount, accrued Liquidated Damages, if any,
Redemption Price Purchase Price or Change in Control
Purchase Price in respect of the Debentures. For the
purposes of this paragraph, the term "junior Debentures"
means (a) shares of any stock of any class of the Company,
(b) Debentures of the Company which are subordinated in
right of payment to all Senior Indebtedness of the Company
which may be outstanding at the time of issuance or delivery
of such Debentures to substantially the same extent as, or
to a greater extent than, the Debentures are so subordinated
as provided in this Article IV, and (c) any Debentures into
which the Debentures become convertible pursuant to Section
12.1 which are Debentures of a Person required to enter into
a supplemental indenture pursuant to such Section 12.1 and
are either (x) shares of any stock of any class of such
Person, or (y) Debentures of such Person which are
subordinated in right of payment to all Senior Indebtedness
of such Person which may be outstanding at the time of
issuance or delivery of such Debentures to substantially the
same extent as, or to a greater extent than, the Debentures
or, are so subordinated as provided in this Article IV.
Nothing contained in this Article or elsewhere in this
Indenture or in the Debentures is intended to or shall
impair, as among the Company, its creditors other than the
holders of Senior Indebtedness, and the holders of the
Debentures, the right, which is absolute and unconditional,
of the holder of any Debenture to convert such Debenture in
accordance with Article XV.
Section 4.14. Reliance on Judicial Order or Certificate of Liquidating
Agent.
Upon any payment or distribution of assets of the
Company referred to in this Article IV, the Trustee and the
Holders of Debentures shall be entitled to rely upon any
order or decree entered by any court of competent
jurisdiction in which such insolvency, bankruptcy,
receivership, liquidation, reorganization, dissolution,
winding up or similar case or proceeding is pending, or a
certificate of the trustee in bankruptcy, liquidating
trustee, custodian, receiver, assignee for the benefit of
creditors, agent or other Person making such payment or
distribution, delivered to the Trustee or to the Holders of
Debentures, 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,
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the amount or amounts paid or distributed thereon and all
other facts pertinent thereto or to this Article IV.
ARTICLE V
COVENANTS
Section 5.1. Payment of Debentures.
The Company shall promptly make all payments in respect
of the Debentures on the dates and in the manner provided in
the Debentures or pursuant to this Indenture. Principal
Amount, Issue Price, accrued Original Issue Discount,
accrued Liquidated Damages, if any, Redemption Price,
Purchase Price, Change in Control Purchase Price and
interest, if any, shall be considered paid on the applicable
date due or, in the case of a Purchase Price or Change in
Control Purchase Price, on the Business Day following the
applicable Purchase Date or Change in Control Purchase Date,
as the case may be, if on such date the Trustee or the
Paying Agent holds, in accordance with this Indenture, money
or Debentures, if permitted hereunder, sufficient to pay all
such amount then due.
The Company shall pay interest on overdue amounts at
the rate set forth in paragraph 1 of the Debentures and it
shall pay interest on overdue interest at the same rate
compounded semiannually (to the extent that the payment of
such interest shall be legally enforceable), which interest
on overdue interest shall accrue from the date such amounts
became overdue and shall be in lieu of, and not in addition
to, the continued accrual of Original Issue Discount.
Section 5.2. SEC Reports.
So long as the Debentures or the Common Stock issued
upon conversion of the Debentures are Restricted Securities,
if the Company is not subject to either Section 13 or 15(d)
of the Exchange Act, the Company shall at the request of any
Holder of Debentures (or holders of Common Stock issued upon
conversion of the Debentures) provide to such Holder of
Debentures (or holders of such Common Stock) and any
prospective purchaser designated by such Holders (or holders
of such Common Stock), as the case may be, such information,
if any, required by Rule 144A(d)(4) under the Securities
Act.
The Company shall file with the Trustee, within 15 days
after it files such annual and quarterly reports,
information, documents and other reports with the SEC,
copies of its annual report and of the information,
documents and other reports (or copies of such portions of
any of the foregoing as the SEC may by rules and regulations
prescribe) which the Company is required to file with the
SEC pursuant to Section 13 or 15(d) of the Exchange Act.
Section 5.3. Maintenance of Office or Agency.
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The Company will maintain in the Borough of Manhattan, the City of New York
office or agency (which may be the Corporate Trust Office) where the Debentures
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 Debentures and this Indenture may be served.
The Company will give prompt written notice to the Trustee of the location, and
any change in the location, of such office or agency not designated or appointed
by the Trustee. If at any time the Company shall fail to maintain any such
required office or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the Corporate Trust Office or the office or agency of the Trustee in
the Borough of Manhattan, the City of New York.
The Company may also from time to time designate one or more other offices
or agencies where the Debentures may be presented or surrendered for any or all
such purposes and may from time to time rescind such designations provided that
no such designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in New York, New York, for such
purposes. The Company will give prompt written notice to the holders 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 each of the Corporate Trust Office
of the Trustee and the office or agency of the Trustee in New York, New York as
one such office or agency of the Company for each of the aforesaid purposes.
Section 5.4. Waiver of Stay, Extension or 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 claims or
take the benefit or advantage of, any stay, extension, usury law or other law
which would prohibit or forgive the Company from paying all or any portion of
any amounts due on or with respect to the Debentures 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 benefits or advantage of any
such law, and covenants that it will not, by resort to any such law, hinder,
delay or impede the execution of any power herein granted to the Trustee, but
will suffer and permit the execution of every such power as though no such law
has been enacted.
Section 5.5. Liquidation.
Subject to the provisions of Article IV, so far as they may be applicable
hereto, the Board of Directors or the shareholders of the Company may not adopt
a plan of liquidation, which plan provides for, contemplates or the effectuation
of which is preceded by (a) the sale, lease, conveyance or other disposition of
all or substantially all of the assets of the Company otherwise than
substantially as an entirety (any such sale, lease, conveyance or other
disposition substantially as an entirety being governed by Article VII) and (b)
the distribution of all or substantially all of the proceeds of such sale,
lease, conveyance or other disposition and of the remaining assets of the
Company to the holders of the capital stock of the Company, unless the Company
shall in connection with the adoption of such plan make provision for, or agree
that prior to making any liquidating distributions it will make provision for,
the satisfaction of the
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Company's obligations hereunder and under the Debentures as to the payment of
the Principal Amount at the Final Maturity Date. The Company shall be deemed to
make provision for such payments only if (1) the Company irrevocably deposits in
trust with the Trustee money or U.S. Government Obligations maturing as to
principal and interest in such amounts and at such times as are sufficient,
without consideration of any reinvestment of such interest, to pay the Principal
Amount of the Debentures then outstanding and to pay all other sums payable by
it hereunder or (2) there is an express assumption of the due and punctual
payment of the Company's obligations hereunder and under the Debentures and the
performance and observance of all covenants and conditions to be performed by
the Company hereunder, by the execution and delivery of a supplemental indenture
in form satisfactory to the Trustee by a Person who acquires, or will acquire
(otherwise than pursuant to a lease), all or substantially all of the assets of
the Company, and which Person will have assets (immediately after the
acquisition) and aggregate earnings (for such Person's four full fiscal quarters
immediately preceding such acquisition) at least equal to the assets of the
Company (immediately preceding such acquisition) and the aggregate earnings of
the Company (for its four (4) full fiscal quarters immediately preceding the
acquisition), respectively, and which is a corporation organized under the laws
of the United States, any State thereof or the District of Columbia; provided,
however, that the Company shall not make any liquidating distribution until
after the Company (x) has certified to the Trustee with an Officers' Certificate
at least five (5) days prior to the making of any liquidating distribution that
it has complied with the provisions of this Section 5.5 and (y) delivered to the
Trustee an Opinion of Counsel that all conditions precedent to such liquidation
have been complied with.
Section 5.6. Compliance Certificates.
The Company shall deliver to the Trustee, within 90 days after the end of
each fiscal year of the Company, an Officers' Certificate as to the signer's
knowledge of the Company's compliance with all conditions and covenants on its
part contained in this Indenture and stating whether or not the signer knows of
any Default or Event of Default. If such signer knows of such a Default or Event
of Default, the Officers' Certificate shall describe the Default or Event of
Default and the efforts to remedy the same. For the purposes of this Section
5.6, compliance shall be determined without regard to any grace period or
requirement of notice provided pursuant to the terms of this Indenture.
Section 5.7. Notice of Defaults.
In the event (a) that Indebtedness of the Company in an aggregate amount in
excess of $25,000,000 is declared due and payable before its maturity because of
the occurrence of any default under such Indebtedness, or (b) of the occurrence
of any event which, with the giving of notice or the passage of time, or both,
would entitle the holder or holders of such Indebtedness to declare such
Indebtedness due and payable before its maturity, the Company will promptly give
written notice to the Trustee of such declaration.
Section 5.8. Payment of Taxes and Other Claims.
The Company will pay or discharge or cause to be paid or discharged, before
the same shall become delinquent, (a) all material taxes, assessments and
governmental charges levied or imposed upon the Company, directly or by reason
of its ownership of any Subsidiary, or upon the income, profits or property of
the Company and (b) all material lawful claims for labor, materials and
supplies, which, if unpaid, might by law become a lien upon the property of the
Company; provided, however, that the Company shall not be required to pay or
discharge or cause to be paid or discharged any such tax, assessment, charge or
claim whose amount, applicability or validity is being contested in good faith
by appropriate proceedings and for which adequate provision has been made.
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Section 5.9. Corporate Existence.
Subject to Article XII, the Company will do or cause to be done all things
necessary to preserve and keep in full force and effect its corporate existence
and rights (charter and statutory); provided, however, that the Company shall
not be required to preserve any right if the Board of Directors shall determine
in good faith that the preservation is no longer desirable in the conduct of the
Company's business and that the loss thereof is not, and will not be, adverse in
any material respect to the Holders.
Section 5.10. Maintenance of Properties.
Subject to Section 5.5, the Company and its Subsidiaries will cause all
material properties (real and personal) owned, leased or licensed in the conduct
of their business to be maintained and kept in good condition, repair and
working order and supplied with all necessary equipment and will cause to be
made all necessary repairs, renewals, replacements, betterments and improvements
thereof and thereto, all as in the reasonable judgment of the Board of Directors
may be necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times while any Debentures are
outstanding, provided, however, that nothing in this Section 5.10 shall prevent
the Company and its Subsidiaries from discontinuing the maintenance of any such
properties if, in the reasonable judgment of the Board of Directors, such
discontinuance is desirable in the conduct of the Company's business and is not,
and will not be, adverse in any material respect to the Holders.
Section 5.11. Further Instruments and Acts.
Upon request of the Trustee, the Company will execute and deliver such
further instruments and do such further acts as may be reasonably necessary or
proper to carry out more effectively the purposes of this Indenture.
ARTICLE VI
DEBENTUREHOLDERS' LISTS AND REPORTS
BY THE TRUSTEE
Section 6.1. Holders' Lists.
The Company covenants and agrees that it will furnish or cause to be
furnished to the Trustee, semiannually, not more than 15 days after each April 1
and October 1 in each year beginning with 1998, and at such other times as the
Trustee may request in writing, within 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 Debentures as of a date not more than 15 days (or
such other date as the Trustee may reasonably request in order to so provide any
such notices) prior to the time such information is furnished, except that no
such list need be furnished so long as the Trustee is acting as Debenture
Registrar.
Section 6.2. Preservation and Disclosure of Lists.
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(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
Debentures contained in the most recent list furnished to it as provided in
Section 6.1 or maintained by the Trustee in its capacity as Debenture Registrar,
if so acting. The Trustee may destroy any list furnished to it as provided in
Section 6.1 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders of Debentures
with respect to their rights under this Indenture or under the Debentures, and
the corresponding rights and duties of the Trustee, shall be as provided by the
Trust Indenture Act.
(c) Every Debentureholder, 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 Debentures made pursuant to
the Trust Indenture Act.
Section 6.3. Reports by Trustee.
(a) Within 60 days after December 31 of each year commencing with the year
1998, the Trustee shall transmit to Holders of Debentures such reports dated as
of December 31 of the year for 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 Debentures, be filed by the Trustee with each stock exchange or
automated quotation system upon which the Debentures may be listed or traded and
with the Company. The Company will notify the Trustee in writing within a
reasonable time if the Debentures are listed on any stock exchange or automated
quotation system.
ARTICLE VII
REMEDIES OF THE TRUSTEE AND DEBENTUREHOLDERS
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 the Principal Amount, Issue Price, accrued
Original Issue Discount, accrued Liquidated Damages, if any, Redemption Price,
Purchase Price or Change in Control Purchase Price on any Debenture when the
same becomes due and payable at its Stated Maturity, upon redemption, upon
declaration, when due for purchase by the Company or otherwise (provided that in
the case of a default in the payment of Liquidated Damages, such default in
payment of Liquidated Damages continues for a period of 30 days), whether or not
such payment is permitted under Article IV hereof; or
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(b) failure on the part of the Company or any Subsidiary with respect to
its obligation to pay principal of or interest on Indebtedness for borrowed
money which default shall have resulted in the acceleration of Indebtedness in
an amount in excess of $25,000,000; or
(c) default by the Company with respect to any Indebtedness for borrowed
money of the Company, which default results in acceleration of any such
Indebtedness in an amount of in excess of $25,000,000 without such Indebtedness
having been discharged, or such acceleration having been rescinded or annulled
for a period of 10 days; or
(d) 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
Debentures 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) for a period of 60 days after the date on which written notice of
such failure, requiring the Company to remedy the same, shall have been given to
the Company by the Trustee, or to the Company and a Trust Officer of the Trustee
by the Holders of at least 25% in aggregate principal amount of the Debentures
at the time outstanding determined in accordance with Section 9.4; or
(e) 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 any substantial part of its
property, or shall consent to any such relief or to the appointment of or taking
possession by any such official in an involuntary case or other proceeding
commenced against it, or shall make a general assignment for the benefit of
creditors, or shall fail generally to pay its debts as they become due; or
(f) 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 any substantial part of
its property, and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of 60 consecutive days; or
(g) the entry by a court having jurisdiction in the premises of a final
judgment, decree or order against the Company or any Subsidiary which shall
require the payment by the Company or any Subsidiary of an amount (to the extent
not covered by insurance) in excess of $25,000,000 and the continuance of any
such judgment, decree or order unstayed or unsatisfied and in effect for a
period of 60 consecutive days which is not being contested in good faith by
appropriate proceedings;
then, and in each and every such case (other than an Event of Default
specified in Section 7.1(e) or (f)), the Trustee by notice to the Company, or
the Holders of at least 25% in aggregate Principal Amount of the Debentures at
the time outstanding by notice to the Company and the Trustee, may declare the
Issue Price and accrued Original Issue Discount to the date of declaration on
all the Debentures to be immediately due and payable. Upon such a declaration,
such Issue Price and accrued Original Issue Discount shall be due and payable
immediately. If an Event of Default specified in Section 7.1(e) or (f) occurs
and is continuing, the Issue Price and
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accrued Original Issue Discount on all the Debentures shall become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holders. The Holders of a majority in aggregate Principal
Amount of the Debentures at the time outstanding, by notice to the Company and
the Trustee (and without notice to any other Debentureholder), may rescind an
acceleration and its consequences if the rescission would not conflict with any
judgment or decree and if all existing Events of Default have been cured or
waived except nonpayment of the Issue Price and accrued Original Issue Discount
that have become due solely as a result of acceleration and if all amounts due
to the Trustee under Section 8.6 have been paid. No such rescission shall affect
any subsequent Default or impair any right consequent thereto.
In case the Trustee shall have proceeded to enforce any right under this
Indenture and such proceedings shall have been discontinued or abandoned because
of such waiver or rescission and annulment or for any other reason or shall have
been determined adversely to the Trustee, then and in every such case the
Company, the Holders of Debentures, 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 Debentures, and the Trustee
shall continue as though no such proceeding had been taken.
Section 7.2. Collection Suit by Trustee; Trustee May File Proofs of
Claim.
(a) If an Event of Default described in Section 7.1(a) occurs and is
continuing, the Trustee may recover judgment in its own name and as trustee of
an express trust against the Company for the whole amount owing with respect to
the Debentures and the amounts provided for in Section 8.6.
(b) In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Debentures or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the Principal Amount, Issue
Price, accrued Original Issue Discount, accrued Liquidated Damages, if any,
Redemption Price, Purchase Price, Change in Control Purchase Price or interest,
if any, in respect of the Debentures 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 on the Company for the payment of any such amount)
shall be entitled and empowered, by intervention in such proceeding or
otherwise,
(i) to file and prove a claim for the whole amount of the Principal
Amount, Issue Price, accrued Original Issue Discount, accrued Liquidated
Damages, if any, Redemption Price, Purchase Price, Change in Control
Purchase Price or interest, if any, and to file such other papers or
documents as may be necessary or advisable in order to have the claims of
the Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and of
the Holders allowed in such judicial proceeding, and
(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
similar official in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly
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to the Holders, to pay the Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 8.6.
If the Trustee does not file a claim or proof of debt in the form required
in such proceedings prior to 30 days before the expiration of the time to file
such claims or proofs, then any holder or holders of Senior Indebtedness or
their representative or representatives shall have the right to demand, sue for,
collect, receive and receipt for the payments and distributions in respect of
the Debentures which are required to be paid or delivered to the holders of
Senior Indebtedness as provided in this Article and to file and prove all claims
therefor and to take all such other action in the name of the holders or
otherwise, as such holders of Senior Indebtedness or representative thereof may
determine to be necessary or appropriate for the enforcement of the provisions
of this Article.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Debentures
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claims of any Holder in any such proceeding.
Section 7.3. Application of Monies Collected by Trustee.
If the Trustee collects any money pursuant to this Article VII, it shall
pay out the money in the following order:
First: to the Trustee for amounts due under Section 8.6;
Second: to holders of Senior Indebtedness to the extent required by
Article IV;
Third: subject to the provisions of Article IV, to Holders for amounts due
and unpaid on the Debentures for the Principal Amount, Issue Price, accrued
Original Issue Discount, accrued Liquidated Damages, if any, Redemption Price,
Purchase Price, Change in Control Purchase Price or interest, if any, as the
case may be, ratably, without preference or priority of any kind, according to
such amounts due and payable on the Debentures; and
Fourth: subject to the provisions of Article IV, the balance, if any, to
the Company.
The Trustee may fix a record date and payment date for any payment to
Holders pursuant to this Section 7.3. At least 15 days before such record date,
the Trustee shall, at the Company's expense, mail to each Debentureholder and
the Company a notice that states the record date, the payment date and amount to
be paid.
Section 7.4. Proceedings by Holders.
No Holder 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
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hereinbefore provided, and unless also the Holders of not less than 25% in
aggregate principal amount of the Debentures then outstanding determined in
accordance with Section 9.4 shall have made written request upon the Trustee to
institute such action, suit or proceedings in its own name as Trustee hereunder
and shall have offered to the Trustee such reasonable indemnity as it may
require against the costs, expenses and liabilities to be incurred therein or
thereby, and the Trustee for 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 Debenture with every other taker and Holder of the Debentures and the
Trustee, that no one or more Holders shall have any right in any manner whatever
by virtue of or by availing of any provision of this Indenture to affect,
disturb or prejudice the rights of any other Holder of Debentures, 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 (except as otherwise
provided herein). For the protection and enforcement of this Section 7.4, each
and every Debentureholder 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 Debenture, the right of any Holder of any Debenture to receive payment of
the Principal Amount, Issue Price, accrued Original Issue Discount, accrued
Liquidated Damages, if any, Redemption Price, Purchase Price, Change in Control
Purchase Price or interest, if any, as the case may be on or after the
respective due dates therefor as set forth in such Debenture or in this
Indenture, 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 Debentures to the contrary
notwithstanding, the Holder of any Debenture, without the consent of either the
Trustee or the Holder of any other Debenture, in his own behalf and for his own
benefit, may enforce, and may institute and maintain any proceeding suitable to
enforce, his rights of conversion as provided herein.
Section 7.5. Proceedings by Trustee.
If an Event of Default occurs and is continuing, the Trustee may pursue any
available remedy to collect the payment of the Issue Price, Original Issue
Discount, accrued Liquidated Damages, if any, Redemption Price, Purchase Price,
Change in Control Purchase Price, or interest, if any, as the case may be on the
Debentures or to enforce the performance of any provision of the Debentures or
this Indenture.
In case of an Event of Default, the Trustee may in its discretion proceed
to protect and enforce the rights vested in it by this Indenture by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any of such rights, either by suit in equity or by action at
law or by proceeding in bankruptcy or otherwise, whether for the specific
enforcement of any covenant or agreement contained in this Indenture or in aid
of the exercise of any power granted in this Indenture, or to enforce any other
legal or equitable right vested in the Trustee by this Indenture or by law.
Section 7.6. Remedies Cumulative and Continuing.
Except as provided in the last paragraph of Section 2.9, all powers and
remedies given by this Article VII to the Trustee or to the Holders shall, to
the extent permitted by law, be deemed
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cumulative and not exclusive of any thereof or of any other powers and remedies
available to the Trustee or the Holders, 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 Debentures 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 Holders may be exercised from time to time, and as often as shall be
deemed expedient, by the Trustee or by the Holders.
Section 7.7. Control by Majority of Holders.
The Holders of a majority in aggregate Principal Amount of the Debentures
at the time outstanding may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or of exercising any trust or
power conferred on the Trustee. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture or that the Trustee
determines in good faith is unduly prejudicial to the rights of other Holders or
would involve the Trustee in personal liability unless the Trustee is offered
indemnity satisfactory to it.
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Section 7.8. Notice of Defaults.
The Trustee shall, within 90 days after a Trust Officer has knowledge of
the occurrence of a Default or any Event of Default, mail to all Holders, as the
names and addresses of such Holders appear upon the Debenture register, notice
of all Defaults or Events of Default known to a Trust Officer, unless such
Defaults or Events of 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 Amount, Issue Price, accrued Original Issue Discount, accrued
Liquidated Damages, if any, Redemption Price, Purchase Price, Change in Control
Purchase Price or interest, if any, as the case may on any of the Debentures,
the Trustee shall be protected in withholding such notice if and so long as a
trust committee of directors and/or officers of the Trustee in good faith
determines that the withholding of such notice is in the interest of the
Holders.
Section 7.9. Undertaking to Pay Costs.
All parties to this Indenture agree, and each Holder of any Debenture by
his acceptance thereof shall be deemed to have agreed, that any court may, in
its discretion, require, in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Trustee for any action taken or
omitted by it as Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant, provided that
the provisions of this Section 7.9 (to the extent permitted by law) shall not
apply to any suit instituted by the Trustee, to any suit instituted by any
Debentureholder, or group of Holders, holding in the aggregate more than ten
percent in principal amount of the Debentures at the time outstanding determined
in accordance with Section 9.4, or to any suit instituted by any Debentureholder
for the enforcement of the payment of the Principal Amount due at the Final
Maturity Date, Purchase Price, Redemption Price, or Change in Control Purchase
Price, as applicable, on any Debenture on or after the due date therefor or to
any suit for the enforcement of the right to convert any Debenture in accordance
with the provisions of Article XV or to require the Company to repurchase any
Debenture in accordance with Section 3.8.
ARTICLE VIII
CONCERNING THE TRUSTEE
Section 8.1. Duties and Responsibilities of Trustee.
The Trustee, prior to the occurrence of an Event of Default and after the
curing of all Events of Default which may have occurred, undertakes to perform
such duties and only such duties as are specifically set forth in this
Indenture. In case an Event of Default has occurred (which has not been cured
or waived), the Trustee shall exercise such of the rights and powers vested in
it by this Indenture, and use the same degree of care and skill in their
exercise as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs.
No provision of this Indenture shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act or
its own willful misconduct, except that:
(a) prior to the occurrence of an Event of Default and after the curing or
waiving of all Events of Default which may have occurred:
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(1) the duties and obligations of the Trustee shall be determined solely
by the express provisions of this Indenture and the Trust Indenture Act, and the
Trustee shall not be liable except for the performance of such duties and
obligations as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture or the Trust
Indenture Act against the Trustee; and
(2) in the absence of bad faith and willful misconduct on the part of the
Trustee, the Trustee may conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed therein, upon any certificates or
opinions furnished to the Trustee and conforming to the requirements of this
Indenture but, in the case of any such certificates or opinions which by any
provisions hereof are specifically required to be furnished to the Trustee, the
Trustee shall be under a duty to examine the same to determine whether or not
they conform to the requirements of this Indenture;
(b) the Trustee shall not be liable for any error of judgment made in good
faith by a Trust Officer or Officers, unless the Trustee was negligent in
ascertaining the pertinent facts;
(c) the Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with the direction of the
Holders of not less than a majority in Principal Amount of the Debentures at the
time outstanding determined as provided in Section 9.4 relating to the time,
method and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee, under this
Indenture; and
(d) whether or not therein provided, every provision of this Indenture
relating to the conduct or affecting the liability of, or affording protection
to, the Trustee as Trustee, Paying Agent, Debenture Registrar, Custodian or
Conversion Agent shall be subject to the provisions of this Section.
None of the provisions contained in this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in the exercise of any of
its rights or powers.
Section 8.2. Reliance on Documents, Opinions, Etc.
Except as otherwise provided in Section 8.1,
(a) the Trustee may rely and shall be protected in acting upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, bond, note, coupon or other paper or document believed
by it in good faith to be genuine and to have been signed or presented by the
proper party or parties;
(b) any request, direction, order or demand of the Company mentioned
herein shall be sufficiently evidenced by an Officers' Certificate (unless other
evidence in respect thereof be herein specifically prescribed) and any
resolution of the Board of Directors may be evidenced to the Trustee by a copy
thereof certified by the Secretary or an Assistant Secretary of the Company;
(c) the Trustee may consult with counsel, and any advice or Opinion of
Counsel shall be full and complete authorization and protection in respect of
any action taken or omitted by it thereunder in good faith and in accordance
with such advice or Opinion of Counsel;
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(d) the Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request, order or direction of
any of the Holders pursuant to the provisions of this Indenture, unless such
Holders shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which may be incurred therein or
thereby;
(e) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, Debenture or
other paper or document, but the Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises
of the Company, personally or by agent or attorney, provided, however, that if
the payment within a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such investigation is,
in the opinion of the Trustee, not reasonably assured to the Trustee by the
security afforded to it by the terms of this Indenture, the Trustee may require
reasonable indemnity against such expenses or liability as a condition to so
proceeding and the reasonable expenses of every such examination shall be paid
by the Company or, if paid by the Trustee or any predecessor Trustee, shall be
repaid by the Company upon demand;
(f) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed by it with due care
hereunder;
(g) the Trustee shall not be deemed to have notice of an Event of Default
or of any event or condition which, with the giving of notice, the passage of
time, or both, might constitute an Event of Default unless (i) the Trustee has
received written notice thereof from the Company or any Debentureholder or (ii)
a Trust Officer shall have actual knowledge thereof;
(h) the Trustee shall not be liable for any action it takes in good faith
which it believes to be authorized or within its rights or powers;
(i) in the absence of bad faith on its part, the Trustee shall be
protected in acting upon any notice, request, consent, certificate, order,
affidavit, letter, telegram or other paper or document reasonably believed by it
to be genuine and correct and to have been signed or sent by the proper Person
or Persons. Any action taken by the Trustee pursuant to this Indenture upon the
request or authority or consent of any Person who at the time of making such
request or giving such authority or consent is the owner of any Debenture shall
be conclusive and binding upon all future owners of the same Debenture and upon
Debentures issued in exchange therefor or in place thereof;
(j) the Trustee shall be responsible only for performing those duties of
the Trustee specifically provided for herein and no implied duties or
liabilities shall be read into this Indenture against the Trustee;
(k) the Trustee shall not be responsible or liable for any loss suffered
in connection with any investment of funds made by it in accordance with this
Indenture; and
(l) the Trustee shall not be required to give any bond or surety in
respect of the execution of its rights and duties under this Indenture.
Section 8.3. No Responsibility for Recitals, Etc.
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The recitals contained herein and in the Debentures (except in the
Trustee's certificate of authentication) shall be taken as the statements of the
Company, and the Trustee assumes no responsibility for the correctness of the
same. The Trustee makes no representations as to the validity or sufficiency of
this Indenture or of the Debentures. The Trustee shall not be accountable for
the use or application by the Company of any Debentures or the proceeds of any
Debentures authenticated and delivered by the Trustee in conformity with the
provisions of this Indenture.
Section 8.4. Trustee, Paying Agents, Conversion Agents or Debenture
Registrar May Own Debentures.
The Trustee, any Paying Agent, any Conversion Agent or Debenture Registrar,
in its individual or any other capacity, may become the owner or pledgee of
Debentures and may otherwise deal with the Company and its Affiliates with the
same rights it would have if it were not Trustee, Paying Agent, Conversion Agent
or Debenture Registrar.
Section 8.5. Monies to Be Held in Trust.
Subject to the provisions of Section 13.4, all monies received by the
Trustee shall, until used or applied as herein provided, be held in trust for
the purposes for which they were received. Money held by the Trustee in trust
thereunder need not be segregated from other funds except to the extent required
by law. The Trustee shall be under no liability for interest on any money
received by it hereunder except as may be agreed from time to time in writing by
the Company and the Trustee.
Section 8.6. Compensation and Indemnity of Trustee.
The Company covenants and agrees to pay to the Trustee from time to time,
and the Trustee shall be entitled to, reasonable compensation for all services
rendered by it hereunder in any capacity (which shall not be limited by any
provision of law in regard to the compensation of a Trustee of an express
trust), and the Company will pay or reimburse the Trustee upon its request for
all reasonable expenses, disbursements and advances reasonably incurred or made
by the Trustee in accordance with any of the provisions of this Indenture
(including without limitation the reasonable compensation and the expenses and
disbursements of its counsel and of all Persons not regularly in its employ),
except any such expense, disbursement or advance as may arise from the Trustee's
negligence, willful misconduct or bad faith. The Company also covenants to
indemnify and defend the Trustee in any capacity under this Indenture and its
agents and any authenticating agent for, and to hold them harmless against, any
claim, action, damage, penalty, judgment, loss, liability or expense incurred
without negligence, willful misconduct, or bad faith on the part of the Trustee
or such Agent or authenticating agent, as the case may be, and arising out of or
in connection with this Indenture or any action or failure within the
discretion, rights or powers conferred upon the Trustee hereunder or with the
acceptance or administration of this trust or in any other capacity hereunder,
including without limitation the costs and expenses of defending themselves
against any claim of liability in the premises. All indemnifications and
releases from liability granted under this Indenture to the Trustee shall extend
to its Officers, directors, employees, agents, successors and assigns and to the
Trustee in any capacity, including without limitation, Trustee, Debenture
Registrar, Paying Agent, Conversion Agent or Custodian. The obligations of the
Company under this Section 8.6 to compensate or indemnify the Trustee and to pay
or reimburse the Trustee for expenses, disbursements and advances shall be
secured by a lien prior to that of the Debentures upon all
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property and funds held or collected by the Trustee as such, except funds held
in trust for the benefit of the Holders of particular Debentures. The obligation
of the Company under this Section 8.6 shall survive the satisfaction and
discharge of this Indenture or the resignation or removal of the Trustee.
When the Trustee and its agents and any authenticating agent incur expenses
or render services after an Event of Default specified in Section 7.1(e) or (f)
occurs, the expenses and the compensation for the services are intended to
constitute expenses of administration under any bankruptcy, insolvency or
similar laws.
Section 8.7. Officers' Certificate as Evidence.
Except as otherwise provided in Section 8.1, wherever in the administration
of the provisions of this Indenture, the Trustee shall deem it necessary or
desirable that a matter be proved or established prior to taking or omitting any
action hereunder, such matter (unless other evidence in respect thereof be
herein specifically prescribed) may, in the absence of negligence, willful
misconduct, recklessness, or bad faith on the part of the Trustee, be deemed to
be conclusively proved and established by an Officers' Certificate delivered to
the Trustee.
Section 8.8. Conflicting Interests of Trustee.
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture.
Section 8.9. Eligibility of Trustee.
There shall at all times be a Trustee hereunder which shall be a Person
that is eligible pursuant to the Trust Indenture Act to act as such and which
shall have (or, in the case of a corporation included in a bank holding company
system, the related bank holding company shall have) a combined capital and
surplus of at least $50,000,000. If such Person publishes reports of condition
at least annually, pursuant to law or to the requirements of any supervising or
examining authority, then for the purposes of this Section 8.9, the combined
capital and surplus of such Person shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so published.
If at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 8.9, it shall resign immediately in the manner and
with the effect hereinafter specified in this Article VIII.
Section 8.10. Resignation or Removal of Trustee.
(a) The Trustee may at any time resign by giving written notice of
such resignation to the Company and to the Holders of Debentures. Upon
receiving such notice of resignation, the Company shall promptly appoint a
successor Trustee by written instrument, in duplicate, executed by order of the
Board of Directors, one copy of which instrument shall be delivered to the
resigning Trustee and one copy to the successor Trustee. If no successor
Trustee shall have been so appointed and have accepted appointment within 60
days after the mailing of such notice of resignation to the Holders, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee, or any Debentureholder who has been a bona
fide Holder of a Debenture or Debentures for at least six months may, subject to
the provisions of Section 7.9, on behalf of himself and all others similarly
situated, petition any such court for the appointment of a successor Trustee.
Such court may thereupon, after such notice, if any, as it may deem proper and
prescribe, appoint a successor Trustee.
(b) In case at any time any of the following shall occur:
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(1) the Trustee shall fail to comply with Section 8.8 after written
request therefor by the Company or by any Debentureholder who has been a bona
fide Holder of a Debenture or Debentures for at least six (6) months; or
(2) the Trustee shall cease to be eligible in accordance with the
provisions of Section 8.9 and shall fail to resign after written request
therefor by the Company or by any such Debentureholder; or
(3) the Trustee shall become incapable of acting, or shall be
adjudged a bankrupt or insolvent, or a receiver of the Trustee or of its
property shall be appointed, or any public officer shall take charge or control
of the Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation;
then, in any such case, the Company may remove the Trustee and appoint a
successor Trustee by written instrument, in duplicate, executed by order of the
Board of Directors, one copy of which instrument shall be delivered to the
Trustee so removed and one copy to the successor Trustee, or, subject to the
provisions of Section 7.9, any Debentureholder who has been a bona fide Holder
of a Debenture or Debentures for at least six (6) months may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee. Such court may thereupon, after such notice, if any, as it may deem
proper and prescribe, remove the Trustee and appoint a successor Trustee.
(c) The Holders of a majority in aggregate principal amount of the
Debentures at the time outstanding may at any time remove the Trustee and
nominate a successor Trustee which shall be deemed appointed as successor
Trustee unless within ten (10) days after notice to the Company of such
nomination, the Company objects thereto, in which case the Trustee so removed or
any Debentureholder, upon the terms and conditions and otherwise as in Section
8.10(a) provided, may petition any court of competent jurisdiction for an
appointment of a successor Trustee.
(d) Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 8.10 shall
become effective upon acceptance of appointment by the successor Trustee as
provided in Section 8.11.
Section 8.11. Acceptance by Successor Trustee.
Any successor Trustee appointed as provided in Section 8.10 shall execute,
acknowledge and deliver to the Company and to its predecessor Trustee an
instrument accepting such appointment hereunder, and thereupon the resignation
or removal of the predecessor Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, duties and obligations of its predecessor hereunder,
with like effect as if originally named as Trustee herein but, nevertheless, on
the written request of the Company or of its successor Trustee, the Trustee
ceasing to act shall, upon payment of any amounts then due it pursuant to the
provisions of Section 8.6, execute and deliver an instrument transferring to
such successor Trustee all the rights and powers of the Trustee so ceasing to
act. Upon request of any such successor Trustee, the Company shall execute any
and all instruments in writing for more fully and certainly vesting in and
confirming to such successor Trustee all such rights and powers. Any Trustee
ceasing to act shall, nevertheless, retain a lien upon all property and funds
held or collected by such Trustee as such,
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except for funds held in trust for the benefit of Holders of particular
Debentures, to secure any amounts then due it pursuant to the provisions of
Section 8.6.
No successor Trustee shall accept appointment as provided in this Section
8.11 unless at the time of such acceptance, such successor Trustee shall be
qualified under the provisions of Section 8.8 and be eligible under the
provisions of Section 8.9.
Upon acceptance of appointment by a successor Trustee as provided in this
Section 8.11, the Company (or the former Trustee, at the written direction of
the Company) shall mail or cause to be mailed notice of the succession of such
Trustee hereunder the Holders of Debentures at their addresses as they shall
appear on the Debenture register. If the Company fails to mail such notice
within ten (10) days after acceptance of appointment by the successor Trustee,
the successor Trustee shall cause such notice to be mailed at the expense of the
Company.
Section 8.12. Succession by Merger, Etc.
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee (including any trust created by this Indenture), shall
be the successor to the Trustee hereunder without the execution or filing of any
paper or any further act on the part of any of the parties hereto, provided that
in the case of any corporation succeeding to all or substantially all of the
corporate trust business of the Trustee, such corporation shall be qualified
under the provisions of Section 8.8 and eligible under the provisions of Section
8.9.
In case at the time such successor to the Trustee shall succeed to the
trusts created by this Indenture, any of the Debentures shall have been
authenticated but not delivered, any such successor to the Trustee may adopt the
certificate of authentication of any predecessor Trustee or authenticating agent
appointed by such predecessor Trustee, and deliver such Debentures so
authenticated and in case at that time any of the Debentures shall not have been
authenticated, any successor to the Trustee or an authenticating agent appointed
by such successor Trustee may authenticate such Debentures either in the name of
any predecessor Trustee hereunder or in the name of the successor Trustee and in
all such cases such certificates shall have the full force which it is anywhere
in the Debentures or in this Indenture provided, however, that the right to
adopt the certificate of authentication of any predecessor Trustee shall apply
only to its successor or successors by merger, conversion or consolidation.
Section 8.13. Limitation on Rights of Trustee as Creditor.
If and when the Trustee shall be or become a creditor of the Company (or
any other obligor upon the Debentures), 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).
ARTICLE IX
CONCERNING THE DEBENTUREHOLDERS
Section 9.1. Action by Holders.
When in this Indenture it is provided that the Holders of a specified
percentage in aggregate principal amount of the Debentures 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
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joined therein may be evidenced (a) by any instrument or any number of
instruments of similar tenor executed by Holders in Person or by agent or proxy
appointed in writing, or (b) by the record of the Holders of Debentures voting
in favor thereof at any meeting of Holders 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 Holders. Whenever the
Company or the Trustee solicits the taking of any action by the Holders, 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 15 days prior to the date of commencement of
solicitation of such action.
Section 9.2. Proof of Execution by Holders.
Subject to the provisions of Sections 8.1, 8.2 and 10.5, proof of the
execution of any instrument by a Debentureholder or his Agent or proxy shall be
sufficient if made in accordance with such reasonable rules and regulations as
may be prescribed by the Trustee or in such manner as shall be satisfactory to
the Trustee. Evidence of the holding of Debentures shall be provided by the
registry of such Debentures or by a certificate of the Debenture Registrar.
The record of any Holders' meeting shall be proved in the manner provided
in Section 10.6.
Section 9.3. Who are Deemed Absolute Owners.
The Company, any other obligor on the Debentures, the Trustee, any
authenticating agent, any Paying Agent, any Conversion Agent and any Debenture
Registrar may deem the Person in whose name such Debenture shall be registered
upon the Debenture register to be, and may treat him as, the absolute owner of
such Debenture (whether or not such Debenture 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 Amount, Issue
Price, accrued Original Issue Discount, accrued Liquidated Damages, if any,
Redemption Price, Purchase Price, Change in Control Purchase Price, or interest,
if any, on any such Debenture, for conversion of such Debenture and for all
other purposes and none of the Company, the Trustee or any authenticating agent
nor any Debenture 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 such Debenture.
Section 9.4. Company-Owned Debentures Disregarded.
In determining whether the Holders of the requisite aggregate principal
amount of Debentures have concurred in any direction, consent, waiver or other
action under this Indenture, Debentures which are owned by the Company or any
other obligor on the Debentures or by any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Company or any other obligor on the Debentures 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 Debentures
which a Trust Officer knows are so owned shall be so disregarded. Debentures so
owned which have been pledged in good faith may be regarded as outstanding for
the purpose of this Section 9.4 if the pledgee shall establish to the
satisfaction of the Trustee the pledgee's right to vote such Debentures and that
the pledgee is not the
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Company, any other obligor on the Debentures or an Affiliate of the Company or
any other obligor on the Debentures. 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 Debentures, 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 Debentures not
listed therein are outstanding for the purpose of any determination under this
Section 9.4.
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 Debentures specified in this
Indenture in connection with such action, any Holder of a Debenture which is
shown by the evidence to be included in the Debentures 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 it concerns such Debenture. Except as aforesaid,
any such action taken by the Holder of any Debenture shall be conclusive and
binding upon such Holder and upon all future Holders and owners of such
Debenture and of any Debentures issued in exchange or substitution therefor,
irrespective of whether any notation in regard thereto is made upon such
Debenture or any Debenture issued in exchange or substitution therefor.
ARTICLE X
DEBENTUREHOLDERS' MEETINGS
Section 10.1. Purpose of Meetings.
A meeting of Holders 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:
(a) 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 Holders pursuant to any of
the provisions of Article VII;
(b) to remove the Trustee and nominate a successor Trustee pursuant
to the provisions of Article VIII;
(c) to consent to the execution of an indenture or indentures
supplemental hereto pursuant to the provisions of Section 11.2; or
(d) to take any other action authorized to be taken by or on behalf
of the Holders of any specified aggregate principal amount of the Debentures
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 Holders to take any action
specified in Section 10.1, to be held at such time and at such place at a
location within ten (10) miles of the Corporate Trust Office or in New York, New
York, as the Trustee shall determine. Notice of every meeting of the Holders,
setting forth the time and the place of such meeting and in general
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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
Debentures at their addresses as they shall appear on the Debenture register.
Such notice shall also be mailed to the Company. Such notices shall be mailed
not less than 20 nor more than 90 days prior to the date fixed for the meeting.
Any meeting of Holders shall be valid without notice if the Holders of all
Debentures then outstanding are present in Person or by proxy or if notice is
waived before or after the meeting by the Holders of all Debentures 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 Holders.
In case at any time the Company, pursuant to a resolution of its Board of
Directors, or the Holders of at least ten percent in aggregate principal amount
of the Debentures then outstanding, shall have requested the Trustee to call a
meeting of Holders, by written request setting forth in reasonable detail the
action proposed to be taken at the meeting, and the Trustee shall not have
mailed the notice of such meeting within 20 days after receipt of such request,
then the Company or such Holders may determine the time and the place at any
location within 10 miles of the Corporate Trust Office or New York, New York 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 Holders a Person shall (a) be a
Holder of one or more Debentures on the record date pertaining to such meeting
or (b) be a Person appointed by an instrument in writing as proxy by such a
Holder of one or more Debentures. The only Persons who shall be entitled to be
present or to speak at any meeting of Holders 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
Holders, in regard to proof of the holding of Debentures 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 Holders as provided in Section 10.3, in which case the Company or
the Holders 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 at the Final Maturity Date of the Debentures represented at the meeting
and entitled to vote at the meeting.
Subject to the provisions of Section 9.4, at any meeting each
Debentureholder or proxy Holder shall be entitled to one vote for each $1,000
principal amount of Debentures at the Final
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Maturity Date then outstanding and held or represented by him, provided,
however, that no vote shall be cast or counted at any meeting in respect of any
Debenture 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 Debentures held by him or instruments in writing as
aforesaid duly designating him as the proxy vote on behalf of other Holders. Any
meeting of Holders 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 Debentures 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 Holders shall be
by written ballot on which shall be subscribed the signatures of the Holders of
Debentures or of their representative by proxy and the principal amount of the
Debentures 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 Holders 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 Debentures 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 shall be deemed or construed to authorize or
permit, by reason of any call of a meeting of Holders 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 Holders under any of the provisions of this Indenture or of the Debentures.
ARTICLE XI
SUPPLEMENTAL INDENTURES
Section 11.1. Supplemental Indentures Without Consent of Holders.
The Company, when authorized by resolutions of the Board of Directors
certified by its Secretary or an Assistant Secretary, 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 any change that does not adversely affect the right of
any Debentureholder ;
(b) subject to Article IV, to convey, transfer, assign, mortgage or
pledge to the Trustee as security for the Debentures, any property or assets;
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(c) to evidence the succession of another corporation to the Company,
or successive successions, and the assumption by the successor corporation of
the covenants, agreements and obligations of the Company pursuant to Article
XII;
(d) to add to the covenants of the Company such further covenants,
restrictions or conditions as the Board of Directors and the Trustee shall
consider to be for the benefit of the Holders of Debentures, 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 covenants, restrictions or conditions 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 cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture which may be defective or
inconsistent with any other provisions contained herein or in any supplemental
indenture, or to make such other provisions in regard to matters or questions
arising under this Indenture which shall not materially adversely affect the
interests of the Holders;
(f) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Debentures; or
(g) to modify, eliminate or add to the provisions of this Indenture to
such extent as shall be necessary to effect comply with the Trust Indenture Act,
or under any similar federal statue hereafter enacted.
The Trustee is hereby authorized to join with the Company in the execution
of any such supplemental indenture, to make any further appropriate agreements
and stipulations which may be therein contained and to accept the conveyance,
transfer and assignment of any property thereunder, but the Trustee shall not be
obligated to, but may in its discretion, enter into any supplemental indenture
which affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise. In signing or refusing to sign such supplemental
indenture, the Trustee shall be entitled to receive and, subject to Section 8.1,
shall be fully protected in relying upon, an Opinion of Counsel stating that
such supplemental indenture is authorized or permitted by this Indenture.
Every amendment to or supplement of this Indenture or the Debentures shall
comply with the Trust Indenture Act as then in effect.
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 Debentures at the time outstanding, notwithstanding any of
the provisions of Section 11.2.
Section 11.2. Supplemental Indentures with Consent of Holders.
With the consent (evidenced as provided in Article IX) of the Holders of
not less than a majority in aggregate principal amount of the Debentures at the
time outstanding determined in accordance with Section 9.4, the Company, when
authorized by the resolutions of the Board of Directors, and the Trustee may
from time to time and at any time enter into an indenture or
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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, provided, however, that no such supplemental indenture shall (i) extend
the fixed maturity of any Debenture, reduce the Principal Amount at the Final
Maturity Date, Issue Price, Purchase Price, Change in Control Purchase Price,
Redemption Price or amount of cash paid in lieu of shares of Common Stock,
change the obligation of the Company to repurchase any Debenture upon the
occurrence of a Change in Control in a manner adverse to the Holder of
Debentures, impair the right of any Debentureholder to institute suit for the
payment thereof, change the currency in which the Debentures are payable, or
impair the right to convert the Debentures in any material respect, or modify
the provisions of this Indenture with respect to the subordination of the
Debentures in a manner adverse to the Holders in any material respect, without
the consent of the Holder of each Debenture so affected, or (ii) reduce the
aforesaid percentage of Debentures, the Holders of which are required to consent
to any such supplemental indentures, without the consent of the Holders of all
Debentures then outstanding.
Upon the request of the Company, accompanied by a copy of the resolutions
of the Board of Directors certified by its Secretary or an Assistant Secretary
authorizing the execution of any such supplemental indenture, and upon the
filing with the Trustee of evidence of the consent of Holders 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 Holders 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 Debentures shall thereafter be determined, exercised
and enforced hereunder subject in all respects to such modifications and
amendments and all the terms and conditions of any such supplemental indenture
shall be and be deemed to be part of the terms and conditions of this Indenture
for any and all purposes.
Section 11.4. Notation on Debentures.
Debentures 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
Debentures 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
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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
Debentures then outstanding, upon surrender of such Debentures then outstanding.
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Section 11.5. Evidence of Compliance of Supplemental Indenture to Be
Furnished Trustee.
The Trustee, subject to the provisions of Sections 8.1 and 8.2, may require
an Officers' Certificate and an Opinion of Counsel as conclusive evidence that
any supplemental indenture executed pursuant hereto complies with the
requirements of this Article XI.
ARTICLE XII
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
Section 12.1. Company May Consolidate Etc. on Certain Terms.
Subject to the provisions of Sections 3.9 and 12.2, nothing contained in
this Indenture or in any of the Debentures shall prevent any consolidation or
merger of the Company with or into any other corporation or corporations
(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 the property of the Company, substantially as an
entirety, to any other corporation (whether or not affiliated with the Company),
authorized to acquire and operate the same and which, in each case, 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, if the Company is not the surviving entity, the due
and punctual payment of the Principal Amount at the Final Maturity Date, Issue
Price, Purchase Price, Change in Control Purchase Price, Redemption Price on all
of the Debentures, 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 corporation (if other than the Company) formed
by such consolidation, or into which the Company shall have been merged, or by
the corporation which shall have acquired or leased such property, and such
supplemental indenture shall provide for the applicable conversion rights set
forth in Section 15.12, provided, further, immediately after giving effect to
such transaction, no Default or Event of Default shall have occurred and be
continuing.
Section 12.2. Successor Corporation to Be Substituted.
In case of any such consolidation, merger, sale, conveyance or lease
referenced in Section 12.1 and upon the assumption by any successor corporation,
by supplemental indenture required by Section 12.1, executed and delivered to
the Trustee and satisfactory in form to the Trustee, of the due and punctual
payment of the Principal Amount at the Final Maturity Date, Issue Price,
Purchase Price, Change in Control Purchase Price, Redemption Price on any
Debenture and the due and punctual performance of all of the covenants and
conditions of this Indenture to be performed by Company, such successor
corporation shall succeed to and be substituted for the Company, with the same
effect as if it had been named herein as such. Such successor corporation
thereupon may cause to be signed and may issue either in its own name or in the
name of Whole Foods Market, Inc. any or all of the Debentures issuable hereunder
which theretofore shall not have been signed by the Company and delivered to the
Trustee and, upon the order of such successor corporation instead of the Company
and subject to all the terms, conditions and limitations in this Indenture
prescribed, the Trustee shall authenticate and shall deliver, or cause to be
authenticated and delivered, any Debentures which previously shall have been
signed and
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delivered by the Officers of the Company to the Trustee for
authentication, and any Debentures which such successor corporation thereafter
shall cause to be signed and delivered to the Trustee for that purpose. All the
Debentures so issued shall in all respects have the same legal rank and benefit
under this Indenture as the Debentures theretofore or thereafter issued in
accordance with the terms of this Indenture as though all of such Debentures had
been issued at the date of the execution hereof. In the event of any such
consolidation, merger, sale or conveyance (but not in the event of any such
lease), the Person named as the "Company" in the first paragraph of this
Indenture or any successor which shall thereafter have become such in the manner
prescribed in this Article XII shall be released from its liabilities as obligor
and maker of the Debentures 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
Debentures thereafter to be issued as may be appropriate.
Section 12.3. Opinion of Counsel to Be Given Trustee.
The Trustee, subject to Sections 8.1 and 8.2, shall receive an Officers'
Certificate and an Opinion of Counsel as conclusive evidence that any such
consolidation, merger, sale, conveyance or lease and any such assumption
complies with the provisions of this Article XII.
ARTICLE XIII
SATISFACTION AND DISCHARGE OF INDENTURE
Section 13.1. Discharge of Indenture.
When (a) the Company shall deliver to the Trustee for cancellation all
Debentures theretofore authenticated (other than any Debentures which have been
destroyed, lost or stolen and in lieu of or in substitution for which other
Debentures shall have been authenticated and delivered) and not theretofore
canceled, or (b) all the Debentures 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 canceled upon
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, monies sufficient to pay at the Final Maturity Date or upon
redemption all of the Debentures (other than any Debentures which shall have
been mutilated, destroyed, lost or stolen and in lieu of or in substitution for
which other Debentures shall have been authenticated and delivered) not
theretofore canceled or delivered to the Trustee for cancellation, including the
Principal Amount, including Original Issue Discount due or to become due to such
Final Maturity Date or Redemption Date, as the case may be, and if in either
case the Company shall also pay or cause to be paid all other sums payable
hereunder by the Company, then this Indenture shall cease to be of further
effect (except as to (i) remaining rights of registration of transfer,
substitution and exchange and conversion of Debentures, (ii) rights hereunder of
Holders to receive payments of the Principal Amount, including Original Issue
Discount due with respect to the Debentures and the other rights, duties and
obligations of Holders, as beneficiaries hereof with respect to the amounts, if
any, so deposited with the Trustee and (iii) the rights, obligations and
immunities of the Trustee hereunder), and the Trustee, on demand of the Company
accompanied by an Officers' Certificate and an Opinion of Counsel as required by
Section 16.5 and at the cost and expense of the Company, shall execute proper
instruments acknowledging satisfaction of and discharging this Indenture; the
Company,
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however, hereby agrees 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 Debentures.
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 and not in violation of Article IV shall be held in trust for the
sole benefit of the Holders and shall 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 Debentures 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 the Principal Amount,
including Original Issue Discount.
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 for the Debentures (other than the Trustee) shall, upon
written request of the Company, be repaid to the Company 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 Amount at the Final Maturity
Date, including Original Issue Discount on Debentures, and not applied but
remaining unclaimed by the Holders of Debentures for two years after the date
upon which the Principal Amount at the Final Maturity Date, including Original
Issue Discount on such Debentures, 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
Debentures shall thereafter look only to the Company for any payment which such
Holder may be entitled to collect, except if an applicable abandoned property
law does not so permit.
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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 of
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Company's obligations under this Indenture and the Debentures
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 Principal Amount or Original Issue Discount of
any Debenture following the reinstatement of its obligations, the Company shall
be subrogated to the rights of the Holders of such Debentures to receive such
payment from the money held by the Trustee or Paying Agent.
ARTICLE XIV
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS
Section 14.1. Indenture and Debentures Solely Corporate Obligations.
No recourse for the payment of the Principal Amount or any Original Issue
Discount on any Debenture, 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 Debenture, 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 Debentures.
ARTICLE XV
CONVERSION OF DEBENTURES
Section 15.1. Right to Convert.
A Holder of a Debenture may convert such Debenture for Common Stock at any
time during the period stated in paragraph 9 of the Debentures. The number of
shares of Common Stock issuable upon conversion of a Debenture per $1,000 of
Principal Amount at the Final Maturity Date (the "Conversion Rate") shall be
that set forth in paragraph 9 in the Debentures, subject to adjustment as herein
set forth.
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A Holder may convert a portion of the Principal Amount at the Final
Maturity Date of a Debenture if the portion is $1,000 or a multiple of $1,000.
Provisions of this Indenture that apply to conversion of all of a Debenture also
apply to conversion of a portion of a Debenture.
Section 15.2. Conversion Procedures.
To convert a Debenture a Holder must satisfy the requirements in paragraph
9 of the Debentures. The date on which the Holder of Debentures satisfies all
those requirements is the conversion date (the "Conversion Date"). As soon as
practicable, but in no event later than the seventh Business Day, after the
Conversion Date the Company shall deliver to the Holder, through the Conversion
Agent, a certificate for the number of full shares of Common Stock issuable upon
the conversion and Cash in lieu of any fractional share determined pursuant to
Section 15.3. The Person in whose name the certificate is registered shall be
treated as a stockholder of record on and after the Conversion Date; provided,
however, that no surrender of a Debenture on any date when the stock transfer
books of the Company shall be closed shall be effective to constitute the Person
or Persons entitled to receive the shares of Common Stock upon such conversion
as the record holder or holders of such shares of Common Stock on such date, but
such surrender shall be effective to constitute the Person or Persons entitled
to receive such shares of Common Stock as the record holder or holders thereof
for all purposes at the close of business on the next succeeding day on which
such stock transfer books are open; such conversion shall be at the Conversion
Rate in effect on the date that such Debenture shall have been surrendered for
conversion, as if the stock transfer books of the Company had not been closed.
Upon conversion of a Debenture, such Person shall no longer be a Holder of such
Debenture.
No payment or adjustment will be made for dividends on or other
distributions with respect to any Common Stock except as provided in this
Article XV. On conversion of a Debenture, that portion of accrued Original
Issue Discount attributable to the period from the Issue Date of the Debenture
to the Conversion Date with respect to the converted Debenture shall not be
canceled, extinguished or forfeited, but rather shall be deemed to be paid in
full to the Holder thereof through delivery of the Common Stock (together with
the Cash payment, if any, in lieu of fractional shares) in exchange for the
Debenture being converted pursuant to the provisions hereof.
If a Holder converts more than one Debenture at the same time, the number
of shares of Common Stock issuable upon the conversion shall be based on the
total Principal Amount of the Debentures converted.
Upon surrender of a Debenture that is converted in part, the Company shall
execute, and the Trustee shall authenticate and deliver to the Holder, a new
Debenture in an authorized denomination equal in Principal Amount to the
unconverted portion of the Debenture surrendered.
If the last day on which a Debenture may be converted is a Legal Holiday in
a place where a Conversion Agent is located, the Debenture may be surrendered to
that Conversion Agent on the next succeeding day that it is not a Legal Holiday.
Section 15.3. Cash Payments in Lieu of Fractional Shares.
The Company will not issue a fractional share of Common Stock upon
conversion of a Debenture. Instead the Company will deliver Cash for the
current market value of the fractional share. The current market value of a
fractional share shall be determined to the nearest 1/10,000th of a share by
multiplying the last reported sale price (determined as set forth in the
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definition of Current Market Price) on the last Trading Day prior to the
Conversion Date of a full share by the fractional amount and rounding the
product to the nearest whole cent.
Section 15.4. Taxes on Conversion.
If a Holder converts a Debenture, the Company shall pay any documentary,
stamp or similar issue or transfer tax due on the issue of shares of Common
Stock upon the conversion. However, the Holder shall pay any such tax which is
due because the Holder requests the shares to be issued in a name other than the
Holder's name. The Conversion Agent may refuse to deliver the certificates
representing the Common Stock being issued in a name other than the Holder's
name until the Conversion Agent receives a sum sufficient to pay any tax which
will be due because the shares are to be issued in a name other than the
Holder's name. Nothing herein shall preclude any tax withholding required by
law or regulations.
Section 15.5. Company to Provide Stock.
The Company shall, prior to issuance of any Debentures hereunder, and from
time to time as may be necessary, reserve out of its authorized but unissued
Common Stock a sufficient number of shares of Common Stock to permit the
conversion of the Debentures.
All shares of Common Stock delivered upon conversion of the Debentures
shall be newly issued shares or treasury shares, shall be duly and validly
issued and fully paid and nonassessable and shall be free from preemptive rights
and free of any lien or adverse claim.
The Company will endeavor promptly to comply with all Federal and state
Securities laws regulating the order and delivery of shares of Common Stock upon
conversion of Debentures, if any, and will endeavor promptly, if permitted by
the rules of such exchange, over-the-counter market or other market, to list or
cause to have quoted such shares of Common Stock on each national securities
exchange or in the over-the-counter market or such other market on which the
Common Stock is then listed or quoted.
Section 15.6. Adjustment of Conversion Rate.
The Conversion Rate shall be adjusted from time to time by the Company as
follows:
(a) In case the Company shall (i) pay a dividend, or make a distribution,
in shares of its Common Stock, on its Common Stock, (ii) subdivide its
outstanding Common Stock into a greater number of shares, or (iii) combine its
outstanding Common Stock into a smaller number of shares, the Conversion Rate in
effect immediately prior thereto shall be adjusted so that the holder of any
Debenture thereafter surrendered for conversion shall be entitled to receive the
number of shares of Common Stock of the Company which such holder would have
owned or have been entitled to receive after the happening of any of the events
described above had such Debenture been converted immediately prior to the
happening of such event. If any dividend or distribution of the type described
in clause (i) above is not so paid or made, the Conversion Rate shall again be
adjusted to the Conversion Rate which would then be in effect if such dividend
or distribution had not been declared. An adjustment made pursuant to this
Section 15.6(a) shall become effective immediately after the Record Date in the
case of a dividend and shall become effective immediately after the effective
date in the case of subdivision or combination.
(b) In case the Company shall issue rights or warrants to all holders of
its Common Stock entitling them (for a period expiring within 45 days after the
date fixed for determination of stockholders entitled to receive such rights or
warrants) to subscribe for or purchase Common
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Stock at a price per share less than the Current Market Price per share of
Common Stock at the Record Date for the determination of stockholders entitled
to receive such rights or warrants, the Conversion Rate in effect immediately
prior thereto shall be adjusted so that the same shall equal the Conversion Rate
determined by multiplying the Conversion Rate in effect immediately prior to the
date of issuance of such rights or warrants by a fraction of which the numerator
shall be the number of shares of Common Stock outstanding on the date of
issuance of such rights or warrants plus the number of additional shares of
Common Stock offered for subscription or purchase, and of which the denominator
shall be the number of shares of Common Stock outstanding on the date of
issuance of such rights or warrants plus the number of shares which the
aggregate offering price of the total number of shares so offered would purchase
at such Current Market Price. Such adjustment shall be made successively
whenever any such rights or warrants are issued, and shall become effective
immediately after the opening of business on the day following the Record Date
for the determination of the stockholders entitled to receive such rights or
warrants. To the extent that shares of Common Stock are not delivered after the
expiration of such rights or warrants, the Conversion Rate shall be readjusted
to the Conversion Rate which would then be in effect had the adjustments made
upon the issuance of such rights or warrants been made on the basis of delivery
of only the number of shares of Common Stock actually delivered. If such rights
or warrants are not so issued, the Conversion Rate shall again be adjusted to be
the Conversion Rate which would then be in effect if such Record Date for the
determination of stockholders entitled to receive such rights or warrants had
not been fixed. In determining whether any rights or warrants entitle the
holders to subscribe for or purchase shares of Common Stock at less than such
Current Market Price, and in determining the aggregate offering price of such
shares of Common Stock, there shall be taken into account any consideration
received by the Company for such rights or warrants, the value of such
consideration, if other than cash, to be determined by the Board of Directors.
(c) In case the Company shall, by dividend or otherwise, distribute to all
holders of its Common Stock (excluding any distribution in connection with the
liquidation, dissolution or winding up of the Company, whether voluntary or
involuntary) any shares of any class of capital stock of the Company (other than
Common Stock) or evidences of its indebtedness or assets (other than cash) or
rights or warrants to subscribe for or purchase any of its Debentures (excluding
those referred to in Section 15.6(b) hereof) (any of the foregoing hereinafter
in this Section 15.6(c) called the "Distributed Securities"), then, the
Conversion Rate shall be adjusted so that the same shall equal the Conversion
Rate determined by multiplying the Conversion Rate in effect immediately prior
to the date of such distribution by a fraction of which the denominator shall be
the Current Market Price per share of the Common Stock on the Record Date
mentioned below, and the denominator shall be the Current Market Price per share
of the Common Stock on such Record Date less the fair market value on such
Record Date (as determined by the Board of Directors of the Company, whose
determination shall be conclusive, and described in a certificate filed with the
Trustee) of the Distributed Securities so distributed applicable to one share of
Common Stock. Such adjustment shall become effective immediately after the
Record Date for the determination of stockholders entitled to receive such
distribution. Notwithstanding the foregoing, in the event the then fair market
value (as so determined) of the portion of the Distributed Securities so
distributed applicable to one share of Common Stock is equal to or greater than
the Current Market Price of the Common Stock on the Record Date, in lieu of the
foregoing adjustment, adequate provision shall be made so that each
Debentureholder shall have the right to receive upon conversion the amount of
Distributed Securities such Holder would have received had such Holder converted
each Debenture on such Record Date. In the event that such distribution is not
so paid or made, the Conversion Rate shall again be adjusted to the Conversion
Rate which would then be in effect if such distribution had not been declared.
If the Board of Directors determines the fair market value of any distribution
for purposes of this
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Section 15.6(c) by reference to the actual or when issued trading market for any
Debentures, it must in doing so consider the prices in such market over the same
period used in computing the Current Market Price of the Common Stock.
Notwithstanding the foregoing provisions of this Section 15.6(c), no
adjustment shall be made thereunder for any distribution of Distributed
Securities if the Company makes proper provision so that each Holder of a
Debenture who converts such Debenture (or any portion thereof) after the Record
Date for such distribution shall be entitled to receive upon such conversion, in
addition to the shares of Common Stock issuable upon such conversion, the amount
and kind of Distributed Securities that such Holder would have been entitled to
receive if such Holder had, immediately prior to such Record Date, converted
such Debenture for Common Stock; provided that, with respect to any Distributed
Securities that are convertible, exchangeable or exercisable, the foregoing
provision shall only apply to the extent (and so long as) the Distributed
Securities receivable upon conversion of such Debenture would be convertible,
exchangeable or exercisable, as applicable, without any loss of rights or
privileges for a period of at least 60 days following conversion of such
Debenture.
In the event the Company implements a stockholder rights plan, such rights
plan shall provide that upon conversion of the Debentures the Holders will
receive, in addition to the Common Stock issuable upon such conversion, the
rights issued under such rights plan (notwithstanding the occurrence of an event
causing such rights to separate from the Common Stock at or prior to the time of
conversion).
(d) In case the Company shall, by dividend or otherwise, distribute to all
holders of its Common Stock cash (excluding any cash that is distributed upon a
merger or consolidation to which Section 15.12 applies or as part of a
distribution referred to in Section 15.6(c)) in an aggregate amount that,
combined together with (1) the aggregate amount of any other such distributions
to all holders of its Common Stock made exclusively in cash within the 12 months
preceding the date of payment of such distribution, and in respect of which no
adjustment pursuant to this Section 15.6(d) has been made, and (2) the aggregate
of any cash plus the fair market value (as determined by the Board of Directors,
whose determination shall be conclusive and described in a resolution of the
Board of Directors) of consideration payable in respect of any tender offer by
the Company 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 adjustment pursuant to Section 15.6(e) has been made, exceeds 10% of
the product of the Current Market Price (determined as provided in Section
15.6(g)) on the Record Date with respect to such distribution times the number
of shares of Common Stock outstanding on such date, then, and in each such case,
immediately after the close of business on such date, the Conversion Rate shall
be increased so that the same shall equal the Conversion Rate determined by
multiplying the Conversion Rate in effect immediately prior to the record date
by a fraction of which the numerator shall be such Current Market Price of the
Common Stock and the denominator shall be the Current Market Price of the Common
Stock on the record date less the amount of cash so distributed (and not
excluded as provided above) applicable to one share of Common Stock, such
increase to be effective immediately prior to the opening of business on the day
following the record date and (y) the number of shares of Common Stock
outstanding on the Record Date and provided, however, that, if the portion of
the cash so distributed applicable to one share of Common Stock is equal to or
greater than the Current Market Price of the Common Stock on the Record Date, in
lieu of the foregoing adjustment, adequate provision shall be made so that each
Debentureholder shall have the right to receive upon conversion the amount of
cash
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such Holder would have received had such Holder converted such Debenture
immediately prior to such Record Date. If such dividend or distribution is not
so paid or made, the Conversion Rate shall again be adjusted to be the
Conversion Rate which would then be in effect if such dividend or distribution
had not been declared. If any adjustment is required to be made as set forth in
this Section 15.6(d) as a result of a distribution that is a quarterly dividend,
such adjustment shall be based upon the amount by which such distribution
exceeds the amount of the quarterly cash dividend permitted to be excluded
pursuant hereto. If an adjustment is required to be made as set forth in this
Section 15.6(d) above as a result of a distribution that is not a quarterly
dividend, such adjustment shall be based upon the full amount of the
distribution.
(e) In case a tender offer made by the Company or any of its subsidiaries
for all or any portion of the Common Stock expires and such tender offer (as
amended upon the expiration thereof) requires the payment to stockholders (based
on the acceptance (up to any maximum specified in the terms of the tender offer)
of Purchased Shares (as defined below)) of an aggregate consideration having a
fair market value (as determined by the Board of Directors, whose determination
shall be conclusive and described in a resolution of the Board of Directors)
that, combined together with (1) the aggregate of the cash plus the fair market
value (as determined by the Board of Directors, whose determination shall be
conclusive and described in a resolution of the Board of Directors), as of the
expiration of such tender offer, of consideration payable in respect of any
other tender offers, by the Company or any of its subsidiaries for all or any
portion of the Common Stock expiring within the 12 months preceding the
expiration of such tender offer and in respect of which no adjustment pursuant
to this Section 15.6(e) has been made, and (2) the aggregate amount of any
distributions to all holders of the Common Stock made exclusively in cash within
12 months preceding the expiration of such tender offer and in respect of which
no adjustment pursuant to Section 15.6(d) has been made, exceeds 10% of the
product of the Current Market Price (determined as provided in Section 15.6(g))
as of the last time (the "Expiration Time") tenders could have been made
pursuant to such tender offer (as it may be amended) times the number of shares
of Common Stock outstanding (including any tendered shares) at the Expiration
Time, then, and in each such case, immediately prior to the opening of business
on the day after the date of the Expiration Time, the Conversion Rate shall be
increased so that the same shall equal the Conversion Rate determined by
multiplying the Conversion Rate in effect immediately prior to the Expiration
Time by a fraction of which the numerator shall be the number of shares of
Common Stock outstanding (including any tendered or exchanged shares) on the
Expiration Time multiplied by the Current Market Price of the Common Stock on
the Trading Day next succeeding the Expiration Time and the denominator shall be
the sum of (x) the fair market value (determined as aforesaid) of the aggregate
consideration payable to stockholders based on the acceptance (up to an maximum
specified in the terms of the tender or exchanged offer) of all shares validly
tendered or exchanged and not withdrawn as of the Expiration Time (the shares
deemed so accepted, up to any such maximum, being referred to as the "Purchased
Shares") and (y) the product of the number of shares of Common Stock outstanding
(less any Purchased Shares) on the Expiration Time and the Current Market Price
of the Common Stock on the Trading Day next succeeding the Expiration Time such
reduction (if any) to become effective immediately prior to the opening of
business on the day following the Expiration Time. If the Company is obligated
to purchase shares pursuant to any such tender offer, but the Company is
permanently prevented by applicable law from effecting any such purchases or all
such purchases are rescinded, the Conversion Rate shall again be adjusted to be
the Conversion Rate which would then be in effect if such tender offer had not
been made.
(f) In case of a tender or exchange offer by a Person other than the
Company or any Subsidiary for an amount which increases the offeror's ownership
of Common Stock to more
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than 25% of the Common Stock outstanding and shall involve the payment by such
Person of consideration per share of Common Stock having a fair market value (as
determined by the Board of Directors, whose determination shall be conclusive,
and described in a resolution of the Board of Directors at the last time (the
"Tender Expiration Time") tenders or exchanges may be made pursuant to such
tender or exchange offer (as it shall have been amended)) at the Tender
Expiration Time that exceeds the Current Market Price of the Common Stock on the
Trading Day next succeeding the Tender Expiration Time, and in which, as of the
Tender Expiration Time the Board of Directors is not recommending rejection of
the offer, the Conversion Rate shall be increased so that the same shall equal
the Conversion Rate determined by multiplying the Conversion Rate in effect
immediately prior to the Tender Expiration Time by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding (including
any tendered or exchanged shares) on the Tender Expiration Time multiplied by
the Current Market Price of the Common Stock on the Trading Day next succeeding
the Tender Expiration Time and the denominator shall be the sum of (x) the fair
market value (determined as aforesaid) of the aggregate consideration payable to
stockholders based on the acceptance (up to an maximum specified in the terms of
the tender or exchanged offer) of all shares validly tendered or exchanged and
not withdrawn as of the Tender Expiration Time (the shares deemed so accepted,
up to any such maximum, being referred to as the "Tender Purchased Shares") and
(y) the product of the number of shares of Common Stock outstanding (less any
Tender Purchased Shares) on the Tender Expiration Time and the Current Market
Price of the Common Stock on the Trading Day next succeeding the Tender
Expiration Time, such reduction to become effective immediately prior to the
opening of business on the day following the Tender Expiration Time. In the
event that such Person is obligated to purchase shares pursuant to any such
tender or exchange offer, but such Person is permanently prevented by applicable
law from effecting any such purchases or all such purchases are rescinded, the
Conversion Rate shall again be adjusted to be the Conversion Rate which would
then be in effect if such tender or exchange offer had not been made.
Notwithstanding the foregoing, the adjustment described in this Section 15.6(f)
shall not be made if as of the Tender Expiration Time, the offering documents
with respect to such offer disclose a plan or intention to cause the Company to
engage in any transaction described in Article XII.
(g) For purposes of this Section 15.6, the following terms shall have the
meaning indicated:
(1) "Closing Price" with respect to any securities on any day shall mean
the closing sale price regular way on such day or, in case no such sale takes
place on such day, the average of the reported closing bid and asked prices,
regular way, in each case on the New York Stock Exchange, or, if such security
is not listed or admitted to trading on such Exchange, 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.
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(2) "Current Market Price" shall mean the average of the daily Closing
Prices per share of Common Stock for the ten consecutive Trading Days
immediately prior to the date in question provided, however, that if the "ex -
dividend" trading for such rights, options warrants or distribution on the New
York Stock Exchange or such other national or regional exchange or market on
which the shares of Common Stock are then listed (or the effective date in the
case of any subdivision, combination, or reclassification) occurs during such
ten consecutive Trading Days, the "Current Market Price" shall be calculated for
such period in a manner determined in good faith by the Board of Directors to
reflect the impact of such dividend, subdivision, combination or
reclassification on the Closing Price of the Common Stock during such period.
(3) "fair market value" shall mean the amount which a willing buyer would
pay a willing seller in an arm's length transaction.
(4) "Record Date" shall mean, with respect to any dividend, distribution or
other transaction or event in which the holders of Common Stock have the right
to receive any cash, securities or other property or in which the Common Stock
(or other applicable security) is exchanged for or converted into any
combination of cash, securities or other property, the date fixed for
determination of shareholders entitled to receive such cash, securities or other
property (whether such date is fixed by the Board of Directors or by statute,
contract or otherwise).
(5) "Trading Day" shall mean (x) if the applicable security is listed or
admitted for trading on the New York Stock Exchange, the NASDAQ Stock Market
(National Market) or another national security exchange, a day on which the New
York Stock Exchange, the NASDAQ Stock Market (National Market) or another
national security exchange is open for business or (y) if the applicable
security is quoted on the NASDAQ National Market, a day on which trades may be
made thereon or (z) if the applicable security is not so listed, admitted for
trading or quoted, any day other than a Saturday or Sunday or a day on which
banking institutions in the State of New York are authorized or obligated by law
or executive order to close.
(i) For purposes of this Section 15.6, the number of shares of Common
Stock at any time outstanding shall not include shares held in the treasury of
the Company but shall include shares issuable in respect of scrip certificates
issued in lieu of fractions of shares of Common Stock. The Company will not pay
any dividend or make any distribution on shares of Common Stock held in the
treasury of the Company.
Section 15.7. When Adjustment May be Deferred.
No adjustment in the Conversion Rate need be made unless the adjustment
would require an increase or decrease of at least 1% in the Conversion Rate then
in effect. Any adjustments that are made shall be carried forward and taken
into account any subsequent adjustment.
All calculations under this Article XV shall be made to the nearest cent or
to the nearest 1/10,000th of a share, as the case may be.
Section 15.8. When No Adjustment Required.
No adjustment need be made for rights to purchase Common Stock pursuant to
a Company plan for reinvestment of dividends or interest.
No adjustment need be made for a change in the par value or no par value of
the Common Stock.
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To the extent the Debentures become convertible into cash, assets, property
or Debentures (other than capital stock of the Company), no adjustment need be
made thereafter as to the cash, assets, property or such Debentures. Interest
will not accrue on the cash.
Section 15.9 Notice of Adjustment.
Whenever the Conversion Rate is adjusted, the Company shall promptly mail
to Holders a notice of the adjustment. The Company shall file with the Trustee
and the Conversion Agent such notice. The certificate shall, absent manifest
error, be conclusive evidence that the adjustment is correct. Neither the
Trustee nor any Conversion Agent shall be under any duty or responsibility with
respect to any such certificate except to exhibit the same to any Holder
desiring inspection thereof.
Section 15.10. Voluntary Increase.
The Company may make such increases in the Conversion Rate, in addition to
those required by Sections 15.6, 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 may from
time to time increase the Conversion Rate by any amount for any period of time
if the period is at least 20 days, the increase is irrevocable during the period
and the Board of Directors shall have made a determination that such increase
would be in the best interests of the Company, which determination shall be
conclusive. Whenever the Conversion Rate is so increased, the Company shall
mail to Holders and file with the Trustee and the Conversion Agent a notice of
such increase. Neither the Trustee nor any Conversion Agent shall be under any
duty or responsibility with respect to any such certificate except to exhibit
the same to any Holder desiring inspection thereof. Such Company shall mail the
notice at least 15 days before the date the increased Conversion Rate takes
effect. The notice shall state the increased Conversion Rate and the period it
will be in effect.
Section 15.11. 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 Rate pursuant to Section 15.6; or
(b) the Company shall authorize the granting to all or
substantially all the Holders of its Common Stock of rights or warrants to
subscribe for or purchase any share of any class or any other rights or
warrants; or
(c) of any reclassification 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 shareholders of the Company is
required, or of the sale or transfer of all or substantially all of the assets
of the Company; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
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the Company shall cause to be filed with the Trustee and to be mailed to
each Holder of Debentures at his address appearing on the Debenture register
provided for in Section 2.5 of this Indenture, as promptly as possible but in
any event at least 15 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 or warrants 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 deliver-able 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.
Section 15.12. Effect of Reclassification, Consolidation, Merger or Sale.
If any of the following events occur, namely (i) any reclassification or
change of outstanding shares of Common Stock (other than a change in par value,
or from par value to no par value, or from no par value to par value, or as a
result of a subdivision or combination), (ii) any consolidation, merger or
combination of the Company with another corporation as a result of which holders
of Common Stock shall be entitled to receive stock, Debentures or other property
or assets (including cash) with respect to or in exchange for such Common Stock,
or (iii) any sale or conveyance of the properties and assets of the Company as,
or substantially as, an entirety to any other corporation as a result of which
holders of Common Stock shall be entitled to receive stock, Debentures or other
property or assets (including cash) with respect to or in exchange for such
Common Stock, then the Company or the successor or purchasing corporation, as
the case may be, shall execute with the Trustee a supplemental indenture,
providing that each Debenture shall be convertible into the kind and amount of
shares of stock and other Debentures or property or assets (including cash)
receivable upon such reclassification, change, consolidation, merger,
combination, sale or conveyance by a holder of a number of shares of Common
Stock issuable upon conversion of such Debentures immediately prior to such
reclassification, change, consolidation, merger, combination, sale or
conveyance. 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 Debentures, at his address appearing on
the Debenture register provided for in Section 2.5 of this Indenture, within 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 15.12 applies to any event or occurrence, Section 15.6
shall not apply.
Section 15.13. 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 Debentures to either calculate the
Conversion Rate or determine whether any facts exist which may require any
adjustment of the Conversion Rate, 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
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making the same and shall be protected in relying upon an Officer's Certificate
with respect to 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 Debenture and the Trustee
and any other Conversion Agent make no representations with respect thereto.
Subject to the provisions of Section 8.1, neither the Trustee nor any Conversion
Agent shall be responsible for any failure of the Company to issue, transfer or
deliver any shares of Common Stock or stock certificates or other securities or
property or cash upon the surrender of any Debenture 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 15.12 relating either to
the kind or amount of shares of stock or securities or property (including cash)
receivable by Holders upon the conversion of their Debentures after any event
referred to in such Section 15.12 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 Officer's 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 15.13. Simultaneous Adjustments.
In the event that this Article XV requires adjustments to the Conversion
Rate under more than one of Sections 15.6(a), (b), (c) or (d), and the Record
Dates for the distributions giving rise to such adjustments shall occur on the
same date, then such adjustments shall be made by applying, first, the
provisions of Section 15.6(c), second, the provisions of Section 15.6(d), third,
the provisions of Section 15.6(a), and fourth, the provisions of 15.6(b).
Section 15.14. Successive Adjustments.
After an adjustment to the Conversion Rate under this Article XV, any
subsequent event requiring an adjustment under this Article XV shall cause an
adjustment to the Conversion Rate as so adjusted.
Section 15.15. General Considerations.
Whenever successive adjustments to the Conversion Rate are called for
pursuant to this Article XV, such adjustments shall be made to the Current
Market Price as may be necessary or appropriate to effectuate the intent of this
Article XV and to avoid unjust or inequitable results as determined in good
faith by the Board of Directors.
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ARTICLE 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 corporation 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
Debentures on the Company shall be deemed to have been sufficiently given or
made, for all purposes, if given or served by being deposited postage prepaid by
registered or certified mail in a post office letter box addressed (until
another address is filed by the Company with the Trustee) to Whole Foods Market,
Inc., 601 North Lamar Blvd., Suite # 300, Austin, Texas 78703, Attention: Glenda
Flanagan, Vice President and Chief Financial Officer. Any notice, direction,
request or demand hereunder to or upon the Trustee shall be deemed to have been
sufficiently given or made, for all purposes, if given or served by being
deposited postage prepaid by registered or certified mail in a post office
letter box addressed to the Corporate Trust Office, which office is, at the date
as of which this Indenture is dated, located at 700 Lavaca, 5th Floor, Austin,
Texas 78701, Attention: Global Trust Services.
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 Debentureholder shall be mailed to
him by first class mail, postage prepaid, at his address as it appears on the
Debenture register and shall be sufficiently given to him if so mailed within
the time prescribed.
Failure to mail a notice or communication to a Debentureholder or any
defect in it shall not affect its sufficiency with respect to other Holders. If
a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
Section 16.4. Governing Law.
This Indenture and each Debenture shall be deemed to be a contract made
under the laws of the State of Texas and for all purposes shall be construed in
accordance with the laws of the State of Texas.
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
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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 of Counsel 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 where the Final Maturity Date of the Debentures or the date (a
"Legal Holiday") fixed for redemption or repurchase of any Debenture will not be
a Business Day, then payment of such interest on or principal of the Debentures
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 Final Maturity Date or the
date fixed for redemption or repurchase, and no interest or Original Issue
Discount 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 Debentures 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 this 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.
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Section 16.8. No Security Interest Created.
Nothing in this Indenture or in the Debentures, 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 where property of the Company or its subsidiaries is located.
Section 16.9. Benefits of Indenture.
Nothing in this Indenture or in the Debentures, expressed or implied, shall
give to any Person, other than the parties hereto, any Paying Agent, any
authenticating agent, any Custodian, any Conversion Agent, any Debenture
Registrar and their successors hereunder, the Holders of Debentures and the
Holders of Senior Indebtedness, any benefit or any legal or equitable right,
remedy or claim under this Indenture.
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 which shall be authorized
to act on its behalf and subject to its direction in the authentication and
delivery of Debentures in connection with the original issuance thereof and
transfers and exchanges of Debentures hereunder, including under Sections 2.4,
2.5, 2.6, 2.7, 3.3, and 15.2, 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 Debentures. For all purposes of this
Indenture, the authentication and delivery of Debentures by the authenticating
agent shall be deemed to be authentication and delivery of such Debentures "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 Debentures for the Trustee's certificate of authentication.
Such authenticating agent shall at all times be a Person eligible to serve as
Trustee hereunder pursuant to Section 8.9.
Any corporation into which any authenticating agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any authenticating agent
shall be a party, or any corporation succeeding to the corporate trust business
of any authenticating agent, shall be the successor of the authenticating agent
hereunder, if such successor corporation is otherwise eligible under this
Section 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
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successor authenticating agent to all Holders of Debentures as the names and
addresses of such Holders appear on the Debenture register.
The Trustee agrees to pay to the authenticating agent from time to time
reasonable compensation for its services (to the extent pre-approved by the
Company in writing), and the Trustee shall be entitled to be reimbursed for such
pre-approved payments, subject to Section 8.6.
The provisions of Sections 8.1, 8.2, 8.3, 8.4, 8.7, 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 countervails shall together constitute but one
and the same instrument.
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Chase Bank of Texas, National Association hereby accepts the trusts in this
Indenture declared and provided, upon the terms and conditions hereinabove set
forth.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly signed, all as of the date first written above.
Attest: WHOLE FOODS MARKET, INC.
/s/ Authorized Officer By: /s/ Authorized Officer
-------------------------------- ----------------------------
Attest: CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION, AS TRUSTEE
/s/ Authorized Officer By: /s/ Authorized Officer
--------------------------------- -----------------------------
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EXHIBIT A
A-83
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
Number
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<S> <C>
ARTICLE I DEFINITIONS i
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Section 1.1. Definitions. i
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Section 1.2. Other Definitions. i
-
Section 1.3. Rules of Construction. i
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ARTICLE II THE DEBENTURES i
-
Section 2.1. Designation, Amount and Issue of Debentures. i
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Section 2.2. Form of Debentures. i
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Section 2.3. Date and Denomination of Debentures. i
-
Section 2.4. Execution of Debentures. i
-
Section 2.5. Debenture Registrar, Paying Agent and Conversion Agent. i
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Section 2.6. Paying Agent to Hold Money in Trust. i
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Section 2.7. Debentureholder Lists. i
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Section 2.8. Exchange and Registration of Transfer of Debentures; Restrictions
on Transfer; Depositary. i
-
Section 2.9. Mutilated, Destroyed, Lost or Stolen Debentures. i
-
Section 2.10. Treasury Debentures. i
-
Section 2.11. Temporary Debentures. i
-
Section 2.12. Cancellation. i
-
Section 2.13. Persons Deemed Owners. i
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</TABLE>
i
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<TABLE>
<CAPTION>
<S> <C>
ARTICLE III REDEMPTION OF DEBENTURES ii
--
Section 3.1. Right to Redeem; Notice to Trustee. ii
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Section 3.2. Selection of Debentures to Be Redeemed. ii
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Section 3.3. Notice of Redemption. ii
--
Section 3.4. Effect of Notice of Redemption. ii
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Section 3.5. Deposit of Redemption Price. ii
--
Section 3.6. Debentures Redeemed in Part. ii
--
Section 3.7. Conversion Arrangement on Call for Redemption. ii
--
Section 3.8. Purchase of Debentures at Option of the Holder. ii
--
Section 3.9. Repurchase at Option of the Holder Upon a Change in Control. ii
--
Section 3.10. Effect of Purchase Notice or Change in Control Purchase Notice. ii
--
Section 3.11. Deposit of Purchase Price or Change in Control Purchase Price ii
--
Section 3.12. Debentures Purchased in Part ii
--
Section 3.13. Covenant to Comply with Securities Laws Upon Purchase of
Debentures. ii
--
Section 3.14. Repayment to the Company. ii
--
ARTICLE IV SUBORDINATION OF DEBENTURES ii
--
Section 4.1. Debentures Subordinated to Senior Indebtedness. ii
--
Section 4.2. Payments to Holders. ii
--
Section 4.3. Debentures to Be Subrogated to Rights of Holders of Senior
Indebtedness. ii
--
Section 4.4. Obligations of the Company Unconditional. ii
--
Section 4.5. Notice to Trustee. ii
--
Section 4.6. Application by Trustee of Monies Deposited With It. ii
--
Section 4.7. Subordination Rights Not Impaired by Acts or Omissions of Company
or holders of Senior Indebtedness. ii
--
Section 4.8. Trustee to Effectuate Subordination. ii
--
Section 4.9. Right of Trustee to Hold Senior Indebtedness. ii
--
Section 4.10. Article IV Not to Prevent Events of Default. ii
--
</TABLE>
ii
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<TABLE>
<CAPTION>
<S> <C>
Section 4.11. No Fiduciary Duty Created to Holders of Senior Indebtedness. iii
---
Section 4.12. Article Applicable to Paying Agent. iii
---
Section 4.13. Treatment of Conversion Payments iii
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Section 4.14. Reliance on Judicial Order or Certificate of Liquidating Agent iii
---
ARTICLE V COVENANTS iii
---
Section 5.1. Payment of Debentures. iii
---
Section 5.2. SEC Reports. iii
---
Section 5.3. Maintenance of Office or Agency. iii
---
Section 5.4. Waiver of Stay, Extension or Usury Laws. iii
---
Section 5.5. Liquidation. iii
---
Section 5.6. Compliance Certificates. iii
---
Section 5.7. Notice of Defaults. iii
---
Section 5.8. Payment of Taxes and Other Claims. iii
---
Section 5.9. Corporate Existence. iii
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Section 5.10. Maintenance of Properties. iii
---
Section 5.11. Further Instruments and Acts. iii
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ARTICLE VI DEBENTUREHOLDERS' LISTS AND REPORTS BY THE TRUSTEE iii
---
Section 6.1. Holders' Lists. iii
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Section 6.2. Preservation and Disclosure of Lists. iii
---
Section 6.3. Reports by Trustee. iii
---
ARTICLE VII REMEDIES OF THE TRUSTEE AND DEBENTUREHOLDERS ON AN EVENT OF
DEFAULT iii
---
Section 7.1. Events of Default. iii
---
Section 7.2. Collection Suit by Trustee; Trustee May File Proofs of Claim. iii
---
Section 7.3. Application of Monies Collected by Trustee. iii
---
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
Section 7.4. Proceedings by Holders. iv
--
Section 7.5. Proceedings by Trustee. iv
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Section 7.6. Remedies Cumulative and Continuing. iv
--
Section 7.7. Control by Majority of Holders. iv
--
Section 7.8. Notice of Defaults. iv
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Section 7.9. Undertaking to Pay Costs. iv
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ARTICLE VIII CONCERNING THE TRUSTEE iv
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Section 8.1. Duties and Responsibilities of Trustee. iv
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Section 8.2. Reliance on Documents, Opinions, Etc. iv
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Section 8.3. No Responsibility for Recitals, Etc. iv
--
Section 8.4. Trustee, Paying Agents, Conversion Agents or Debenture Registrar
May Own Debentures. iv
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Section 8.5. Monies to Be Held in Trust. iv
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Section 8.6. Compensation and Indemnity of Trustee. iv
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Section 8.7. Officers' Certificate as Evidence. iv
--
Section 8.8. Conflicting Interests of Trustee. iv
--
Section 8.9. Eligibility of Trustee. iv
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Section 8.10. Resignation or Removal of Trustee. iv
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Section 8.11. Acceptance by Successor Trustee. iv
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Section 8.12. Succession by Merger, Etc. iv
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Section 8.13. Limitation on Rights of Trustee as Creditor. iv
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ARTICLE IX CONCERNING THE DEBENTUREHOLDERS iv
--
Section 9.1. Action by Holders. iv
--
Section 9.2. Proof of Execution by Holders. iv
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Section 9.3. Who are Deemed Absolute Owners. iv
--
Section 9.4. Company-Owned Debentures Disregarded. iv
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Section 9.5. Revocation of Consents; Future Holders Bound. iv
--
</TABLE>
iv
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<TABLE>
<CAPTION>
<S> <C>
ARTICLE X DEBENTUREHOLDERS' MEETINGS v
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Section 10.1. Purpose of Meetings. v
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Section 10.2. Call of Meetings by Trustee. v
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Section 10.3. Call of Meetings by Company or Holders. v
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Section 10.4. Qualifications for Voting. v
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Section 10.5. Regulations. v
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Section 10.6. Voting. v
-
Section 10.7. No Delay of Rights by Meeting. v
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ARTICLE XI SUPPLEMENTAL INDENTURES v
-
Section 11.1. Supplemental Indentures Without Consent of Holders. v
-
Section 11.2. Supplemental Indentures with Consent of Holders. v
-
Section 11.3. Effect of Supplemental Indenture. v
-
Section 11.4. Notation on Debentures. v
-
Section 11.5. Evidence of Compliance of Supplemental Indenture to Be Furnished
Trustee. v
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ARTICLE XII CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE v
-
Section 12.1. Company May Consolidate Etc. on Certain Terms. v
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Section 12.2. Successor Corporation to Be Substituted. v
-
Section 12.3. Opinion of Counsel to Be Given Trustee. v
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ARTICLE XIII SATISFACTION AND DISCHARGE OF INDENTURE v
-
Section 13.1. Discharge of Indenture. v
-
Section 13.2. Deposited Monies to Be Held in Trust by Trustee. v
-
Section 13.3. Paying Agent to Repay Monies Held. v
-
Section 13.4. Return of Unclaimed Monies. v
-
Section 13.5. Reinstatement. v
-
</TABLE>
v
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
ARTICLE XIV IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS vi
--
Section 14.1. Indenture and Debentures Solely Corporate Obligations. vi
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ARTICLE XV CONVERSION OF DEBENTURES vi
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Section 15.1. Right to Convert. vi
--
Section 15.2. Conversion Procedures. vi
--
Section 15.3. Cash Payments in Lieu of Fractional Shares. vi
--
Section 15.4. Taxes on Conversion. vi
--
Section 15.5. Company to Provide Stock. vi
--
Section 15.6. Adjustment of Conversion Rate. vi
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Section 15.7. When Adjustment May be Deferred. vi
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Section 15.8. When No Adjustment Required. vi
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Section 15.9 Notice of Adjustment vi
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Section 15.10. Voluntary Increase vi
--
Section 15.11. Notice to Holders Prior to Certain Actions. vi
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Section 15.12. Effect of Reclassification, Consolidation, Merger or Sale. vi
--
Section 15.13. Responsibility of Trustee. vi
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Section 15.13. Simultaneous Adjustments. vi
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Section 15.14. Successive Adjustments vi
--
Section 15.15. General Considerations. vi
--
ARTICLE XVI MISCELLANEOUS PROVISIONS vi
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Section 16.1. Provisions Binding on Company's Successors. vi
--
Section 16.2. Official Acts by Successor Corporation. vi
--
Section 16.3. Addresses for Notices, Etc. vi
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Section 16.4. Governing Law. vi
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Section 16.5. Evidence of Compliance with Conditions Precedent Certificates to
Trustee. vi
--
</TABLE>
vi
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Section 16.6. Legal Holidays. vii
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Section 16.7. Trust Indenture Act. vii
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Section 16.8. No Security Interest Created. vii
---
Section 16.9. Benefits of Indenture. vii
---
Section 16.10. Table of Contents, Headings, Etc. vii
---
Section 16.11. Authenticating Agent. vii
---
Section 16.12. Execution in Counterparts. vii
---
</TABLE>
vii
<PAGE>
EXHIBIT 4.3
-----------
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and entered
into as of March 2, 1998, by and among Whole Foods Market, Inc., a Texas
corporation (the "Company"), BT Alex. Brown Incorporated and Morgan Stanley &
Co., Incorporated (collectively, the "Initial Purchasers") pursuant to the
Purchase Agreement dated as of February 25, 1998 (the "Purchase Agreement"),
between the Company and the Initial Purchasers. In order to induce the Initial
Purchasers 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 Purchasers, (i) for their benefit as
Initial Purchasers and (ii) for the benefit of the holders from time to time of
the Debentures (including the Initial Purchasers) and the holders from time to
time of the Common Stock issued upon conversion of the Debentures (each of the
foregoing a "Holder" and together the "Holders"), as follows:
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, (i) any other Person
directly or indirectly controlling or controlled by, or under direct or indirect
common control with, such specified Person or (ii) any officer or director of
such other Person. For purposes of this definition, the term "control" of a
Person means the possession, direct or indirect, of the power (whether or not
exercised) 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, and the terms Acontrolling,@ Acontrolled by,@ and Aunder direct or
indirect common control with@ have meanings correlative thereto.
Amendment Effectiveness Target Date: See Section 2(b) hereof.
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, no par value, of the
Company and any other shares of common stock as may constitute "Common Stock"
for purposes of the Indenture, in each case, as issuable or issued upon
conversion of the Debentures.
Damages Accrual Period: See Section 2(e) hereof.
<PAGE>
Damages Payment Date: Each of the dates specified pursuant to Section
2.7 in the Indenture, whether or not Liquidated Damages are payable on such
date.
Debentures: The Zero Coupon Convertible Subordinated Debentures due
2018 of the Company being issued and sold pursuant to the Indenture and the
Purchase Agreement.
Effectiveness Period: The period commencing with the date hereof and
ending on the earlier of the date that is two years after the latest date of
initial issuance of the Debentures and the date that all Registrable Securities
have ceased to be Registrable Securities.
Effectiveness Target Date: See Section 2(a) hereof.
Event: See Section 2(e) hereof.
Event 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 Date: See Section 2(a) hereof.
Holder: See the second paragraph of this Agreement.
Indemnified Party: See Section 5(c) hereof.
Indemnifying Party: See Section 5(c) hereof.
Indenture: The Indenture, dated as of March 2, 1998, between the
Company and Chase Bank of Texas, National Association, as trustee, pursuant to
which the Debentures are being issued, as amended or supplemented from time to
time in accordance with the terms thereof.
Initial Purchasers: See the first paragraph of this Agreement.
Initial Shelf Registration: See Section 2(a) hereof.
Liquidated Damages: See Section 2(e) hereof.
Losses: See Section 5(a) hereof.
Majority of Registrable Securities: A majority of the then
outstanding aggregate principal amount of Registrable Securities. For purposes
of this calculation, Registrable Securities which have been converted into
shares of Common Stock shall be deemed to bear the principal amount at which
such Registrable Securities were converted.
2
<PAGE>
Managing Underwriters: The investment banking firm or firms that
shall manage or co-manage an Underwritten Offering that are reasonably
acceptable to the Company.
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 B to the Offering
Memorandum of the Company dated February 25, 1998 relating to the Debentures.
Notice Holder: On any date, any Holder that has delivered a Notice
and Questionnaire to the Company on or prior to such date.
Person: Any natural person, corporation, partnership, limited
liability partnership, limited liability company, trust or other legal entity.
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 material incorporated by reference or deemed
to be incorporated by reference in such Prospectus.
Purchase Agreement: See the first paragraph of this Agreement.
Record Holder: (i) with respect to any Damages Payment Date relating
to the Debentures, each Person who is a registered holder of such Debentures on
the most recent record date under Section 2.7 of the Indenture on which such
Damages Payment Date shall occur and (ii) with respect to any Damages Payment
Date relating to the Common Stock, each Person who is a registered holder of
such Common Stock 15 days prior to such Damages Payment Date.
Registrable Securities: Each Debenture and each share of Common Stock
into which the Debentures are convertible or converted upon original issuance
thereof, and at all times subsequent thereto, and any Common Stock issued with
respect thereto upon any stock dividend, split or similar event, until, in the
case of any such Debenture or share of Common Stock, (i) it is effectively
registered under the Securities Act and disposed of in accordance with the
Registration Statement covering it, (ii) it is salable by the holder thereof
pursuant to Rule 144(k) or (iii) it is sold to the public pursuant to Rule 144,
and, as a result of an event or circumstance described in any of the foregoing
clauses (i) through (iii), the legends with respect to transfer restrictions
required under the Indenture (other than any such legends required solely as the
consequences of the fact that the Registrable Securities are owned by, or were
previously owned by, the Company or an Affiliate of the Company) are removed or
removable in accordance with the terms of the Indenture.
Registration Expenses: See Section 4 hereof.
3
<PAGE>
Registration Statement: Any registration statement of the Company
which 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 material incorporated by reference or deemed to be incorporated by reference
in such registration statement.
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 of the SEC promulgated thereunder.
Selling Holder: A Holder offering to sell Registrable Securities.
Shelf Registration: See Section 2(a) hereof.
Special Counsel: Gibson, Dunn & Crutcher, LLP, or such other
successor counsel as shall be specified by the Holders of a Majority of
Registrable Securities and which is reasonable acceptable to the Company, the
fees and expenses of which will be paid by the Company pursuant to Section 5
hereof.
Subsequent Shelf Registration: See Section 2(c) hereof.
Suspension Period: See Section 2(d).
TIA: The Trust Indenture Act of 1939, as amended.
Trustee: The Trustee under the Indenture.
Underwritten Registration or Underwritten Offering: A registration in
which the Registrable Securities are sold by Holders thereof to an underwriter
for reoffering to the public.
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 on or prior to the
date 90 days following the latest date of initial issuance of the Debentures
(the "Filing Date"), a Registration Statement for an offering to be made on a
continuous basis pursuant to Rule 415 of the Securities Act (a "Shelf
Registration") registering the resale from time to time by the Holders thereof
of all of the Registrable Securities (the "Initial Shelf Registration"). The
Initial Shelf Registration shall be on Form S-3 or another appropriate SEC
Registration
4
<PAGE>
Statement form permitting registration of such Registrable Securities for resale
by such Holders in the manner or manners designated by them (including, without
limitation, one or more Underwritten Offerings) and set forth in the Initial
Shelf Registration. The Company shall use its best efforts to cause the Initial
Shelf Registration to be declared effective under the Securities Act as soon as
practicable but in any event on or prior to the date 180 days following the
latest date of initial issuance of the Debentures (the "Effectiveness Target
Date"), and shall use its reasonable efforts to keep the Initial Shelf
Registration continuously effective under the Securities Act, subject to the
provisions of Section 2(d), until the earlier of the expiration of the
Effectiveness Period or the date a Subsequent Shelf Registration (as defined
below) covering all of the Registrable Securities has been declared effective
under the Securities Act. At the time the Initial Shelf Registration is declared
effective, each Holder that became a Notice Holder three Business Days prior to
such time of effectiveness shall be named as a selling securityholder in the
Initial Shelf Registration. Subject to the right of the Company to have the
Initial Shelf Registration not be effective, or not to be updated, amended or
supplemented, for periods of time set forth in Section 2(d), the Company further
agrees to use its best efforts to prevent the happening of any event that would
cause the Initial Shelf Registration to contain a material misstatement or
omission or to be not effective and usable for resale of the Registrable
Securities during the Effectiveness Period. None of the Company's
securityholders (other than the Holders of Registrable Securities) shall have
the right to include any of the Company's securities in the Shelf Registration.
(b) 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(b).
Each Holder of Registrable Securities wishing to sell Registrable Securities
pursuant to a Shelf Registration and related Prospectus agrees to deliver a
Notice and Questionnaire to the Company at least three 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
becomes effective, the Company shall, as promptly as is practicable after the
date a Notice and Questionnaire is delivered, and in any event within five
Business Days after such date, (i) if required by applicable law, file with the
SEC a post-effective amendment to the Shelf Registration Statement or prepare
and, if required by applicable law, file a supplement to the related Prospectus
or a supplement or amendment to any document incorporated therein by reference
or file any other required document so that the Holder delivering such Notice
and Questionnaire is named as a selling securityholder in the Shelf Registration
Statement and the related Prospectus in such a manner as to permit such Holder
to deliver such Prospectus to purchasers of the Registrable Securities in
accordance with applicable law and, if the Company shall file a post-effective
amendment to the Shelf Registration Statement, its best efforts to cause such
post-effective amendment to become effective under the Securities Act as
promptly as is practicable, but in any event by the date (the "Amendment
Effectiveness Target Date") that is 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(b)(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(b)(i); provided,
that if such Notice and Questionnaire
5
<PAGE>
is delivered during a Suspension 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 Suspension Period;
provided, further, that if under applicable law the Company has more than one
option as to the type or manner of making any such filing, it will make the
required filing or filings in the manner or of a type reasonably expected to
result in the earliest availability of the Prospectus for effecting resales of
Registrable Securities. Notwithstanding anything contained herein to the
contrary, 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; provide, however, that any Holder that becomes a Notice
Holder pursuant to the provisions of Section 2(b) of this Agreement (whether or
not such Holder was a Notice Holder at the time the Registration Statement was
declared effective) shall be named as a selling securityholder in the
Registration Statement or related Prospectus.
(c) If the Initial Shelf Registration or any Subsequent Shelf
Registration (as defined below) ceases to be effective for any reason as a
result of the issuance of a stop order by the SEC at any time during the
Effectiveness Period, the Company shall use its best efforts to obtain the
prompt withdrawal of any order suspending the effectiveness thereof, and in any
event shall within 30 days of such cessation of effectiveness amend the Shelf
Registration in a manner reasonably expected to obtain the withdrawal of the
order suspending the effectiveness thereof, or file an additional Shelf
Registration covering all of the Registrable Securities (a "Subsequent Shelf
Registration"). If a Subsequent Shelf Registration is filed, the Company shall
use its best efforts to cause the Subsequent Shelf Registration to be declared
effective as soon as practicable after such filing and to keep such Registration
Statement continuously effective until the end of the Effectiveness Period.
(d) In the event (A) of the happening of any event of the kind
described in Section 3(c)(ii), 3(c)(iii), 3(c)(iv), 3(c)(v) or 3(c)(vi) hereof
or (B) that, in the good faith-judgment of the Company, it is advisable to
suspend the use of the Prospectus for a discrete period of time due to pending
material corporate developments or similar material events that have not yet
been publicly disclosed and as to which the Company believes public disclosure
will be prejudicial to the Company with the advice of legal counsel, the Company
shall deliver a certificate in writing, signed by an authorized executive
officer of the Company, to the Special Counsel, the Initial Purchasers and the
Managing Underwriters, if any, to the effect of the foregoing and thereafter the
use of the Prospectus shall be suspended, and the Company, subject to the terms
of this Section 2(d), shall thereafter subject to the limitations specified
below, not be required to maintain the effectiveness or update the Shelf
Registration. The Company will use its best efforts to ensure that the use of
the Prospectus may be resumed as soon as practicable, in the case of suspension
under Section 2(d)(A), and, in the case of a pending development or event
referred to in Section 2(d)(B) hereof, as soon as, in the good faith-judgment of
the Company, public disclosure of such material corporate development or similar
material event would not have a material adverse effect on the Company.
Notwithstanding the foregoing, the Company shall not under any circumstances be
entitled to exercise its right under this Section 2(d) to suspend the use of the
Prospectus (whether as a result of events referred to in Section 2(d)(A) hereof
or as a result of the pending development or event referred to in Section
2(d)(B) hereof) more than one time in
6
<PAGE>
any three month period or three times in any twelve month period, and the
periods in which the use of the Prospectus is suspended, without being subjected
to Liquidated Damages, shall not exceed 60 days in any twelve month period or 30
days in any three-month period (each a "Suspension Period").
(e) The parties hereto agree that the Holders of Registrable
Securities will suffer damages, and that it would not be feasible to ascertain
the extent of such damages with precision, if (i) the Initial Shelf Registration
has not been filed on or prior to the Filing Date, (ii) the Initial Shelf
Registration, or amendment required pursuant to Section 2(b), has not been
declared effective by the Effectiveness Target Date or Amendment Effectiveness
Target Date, respectively, (iii) prior to the end of the Effectiveness Period,
the SEC shall have issued a stop order suspending the effectiveness of the Shelf
Registration or proceedings have been initiated with respect to the Shelf
Registration under Section 8(d) or 8(e) of the Securities Act, (iv) the
aggregate number of days in any one Suspension Period exceeds the period
permitted pursuant to Section 2(d) hereof or (v) the number of Suspension
Periods exceeds the number permitted pursuant to Section 2(d) hereof (each of
the events of a type described in any of the foregoing clauses (i) through (v)
are individually referred to herein as an "Event," and the Filing Date in the
case of clause (i), the Effectiveness Target Date or Amendment Effectiveness
Target Date, respectively in the case of clause (ii), the date on which the
effectiveness of the Shelf Registration has been suspended or proceedings with
respect to the Shelf Registration under Section 8(d) or 8(e) of the Securities
Act have been commenced in the case of clause (iii), the date on which the
duration of a Suspension Period exceeds the period permitted by Section 2(d)
hereof in the case of clause (iv), and the date of the commencement of a
Suspension Period that causes the limit on the number of Suspension Periods
under Section 2(d) hereof to be exceeded in the case of clause (v), being
referred to herein as an "Event Date").
Notwithstanding the foregoing, the parties hereto agree that an Event shall
be deemed not to have occurred to the extent the parties hereto mutually agree
that the direct, proximate cause of said Event was the act or failure to act of
one or more Holders, the Initial Purchasers or the Managing Underwriters. An
Event shall commence on the Event Date and shall be deemed to continue until the
date of the termination of such Event, which shall be the following dates with
respect to the respective types of Events: the date the Initial Registration
Statement is filed in the case of an Event of the type described in clause (i),
the date the Initial Shelf Registration or amendment, respectively, is declared
effective in the case of an Event of the described in clause (ii), the date that
all stop orders suspending effectiveness of the Shelf Registration have been
removed and the proceedings initiated with respect to the Shelf Registration
under Section 8(d) or 8(e) of the Securities Act have terminated, as the case
may be, in the case of Events of the types described in clause (iii),
termination of the Suspension Period which caused the aggregate number of days
in any one Suspension Period to exceed the number permitted by Section 2(d) to
be exceeded in the case of Events of the types described in clause (iv), and
termination of the Suspension Periods, the commencement of which caused the
number of Suspension Periods permitted by Section 2(d) to be exceeded in the
case of Events of the types described in clause (v).
Accordingly, upon the occurrence of any Event and until such time as there
are no Events which have occurred and are continuing (the "Damages Accrual
Period"),
7
<PAGE>
commencing on the Event Date on which such Damages Accrual Period began, the
Company agrees to pay, as liquidated damages, and not as a penalty, an
additional amount (the "Liquidated Damages"): (i) to each holder of Debentures
that are Registrable Securities, accruing at a rate equal to one-half of one
percent per annum (50 basis points) on the aggregate principal amount of
Debentures that are Registrable Securities held by such Holder and (ii) to each
holder of shares of Common Stock that are Registrable Securities, accruing at a
rate equal to one-half of one percent per annum (50 basis points) calculated on
an amount equal to the product of (x) the Issue Price (as defined in the
Indenture) plus accrued Original Issued Discount divided by the then applicable
Conversion Rate (as defined in the Indenture), times (y) the number of shares of
Common Stock that are Registrable Securities held by such holder.
Notwithstanding the foregoing, no Liquidated Damages shall accrue as to any
Registrable Securities from and after the earlier of (x) the date such
securities are no longer Registrable Securities, and (y) the expiration of the
Effectiveness Period. The rate of accrual of the Liquidated Damages with respect
to any period shall not exceed the rate provided for in this paragraph
notwithstanding the occurrence of multiple concurrent Events.
The Company shall pay the Liquidated Damages due on any Debentures or
Common Stock by depositing with the Trustee under the Indenture, in trust, for
the benefit of the holders of Debentures or Common Stock, as the case may be,
entitled thereto, at least one Business Day prior to the applicable Damages
Payment Date, sums sufficient to pay the Liquidated Damages accrued or accruing
since the last preceding Damages Payment Date through such Damages Payment Date.
The Liquidated Damages shall be paid by the Company to the Record Holders on
each Damages Payment Date by wire transfer of immediately available funds to the
account specified by them, or if no such accounts have been specified on or
before the Damage Payment Date by mailing checks to their registered addresses
as they appear in the Debenture register (as defined in the Indenture), in the
case of the Debentures, and in the register of the Company for the Common Stock,
in the case of the Common Stock, provided, however, that any Liquidated Damages
accrued with respect to any Debenture or portion thereof called for redemption
on a redemption date, or repurchased in connection with a Change in Control (as
defined in the Indenture) on a repurchase date, or converted into Common Stock
on a conversion date prior to the Damages Payment Date, shall, in any such
event, be paid instead to the holder who submitted such Debenture or portion
thereof for redemption, repurchase or conversion on the applicable redemption
date, repurchase date or conversion date, as the case may be, on such date (or
promptly following the conversion date, in the case of conversion of a
Debenture). If a holder of a Debenture submits a Debenture for conversion
during the period between a record date for the payment of Liquidated Damages
and the related Damages Payment Date, Liquidated Damages for the period from the
conversion date through the next succeeding Damages Payment Date shall accrue
and be payable to the holder of Common Stock received on conversion on the next
succeeding Damages Payment Date, notwithstanding that such holder was not a
Record Holder with respect to such Damages Payment Date. The Trustee shall be
entitled, on behalf of the Holders of Debentures and Common Stock to seek any
available remedy for the enforcement of this Agreement, including for the
payment of such Liquidated Damages. Nothing shall preclude a Holder of
Registrable Securities from pursuing or obtaining specific performance or other
equitable relief with respect to this Agreement.
8
<PAGE>
All of the Company's obligations set forth in this Section 2(e) which are
outstanding with respect to any Registrable Securities 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 the Agreement pursuant to Section 7(o)).
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 (other than the Initial
Purchasers) by reason of the failure of the Shelf Registration to be filed or
declared effective or available (absolutely or as a practical matter) for
effecting resales of Registrable Securities, as the case may be, in accordance
with the provisions hereof.
3. REGISTRATION PROCEDURES. In connection with the Company's
registration obligations under Section 2 hereof, the Company shall effect such
registrations to permit the sale of the Registrable Securities in accordance
with the intended method or methods of disposition thereof, and pursuant thereto
the Company shall as expeditiously as possible:
(a) Prepare and file with the SEC a Registration Statement or
Registration Statements on any appropriate form under the Securities Act
available for the sale of the Registrable Securities by the Holders thereof in
accordance with the intended method or methods of distribution thereof and shall
include all required financial statements, and use its best efforts to cause
each such Registration Statement to become effective and remain effective as
provided herein; provided, that before filing, any such Registration Statement
or Prospectus or any amendments or supplements thereto the Company shall furnish
within a reasonable time period to each Selling Holder (if requested by such
Selling Holder), the Initial Purchasers, the Special Counsel and the Managing
Underwriters of such offering, if any, copies of all such documents proposed to
be filed, which documents will be subject to the review of each Selling Holder
(if requested by such Selling Holder), the Initial Purchasers, the Special
Counsel and such Managing Underwriters, and the Company shall not file any such
Registration Statement or amendment thereto or any Prospectus or any supplement
thereto to which the Holders of a Majority of Registrable Securities covered by
such Registration Statement, the Initial Purchasers or the Special Counsel shall
reasonably object in writing within five Business Days after the receipt
thereof. In addition, the Company shall use its best efforts to reflect in each
such document referenced in this paragraph so filed with the SEC such comments
as the Initial Purchasers, Special Counsel and the Managing Underwriters, if
any, may propose.
(b) Subject to Section 2(d), 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 comply with the provisions of the Securities Act with respect
to the disposition of all securities covered by such Registration Statement
during the applicable period in accordance with the intended methods
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of disposition by the sellers thereof set forth in such Registration Statement
as so amended or such Prospectus as so supplemented. The Company shall ensure
that (i) any Shelf Registration and any amendment thereto and any Prospectus
forming a part thereof and any amendment or supplement thereto complies in all
material respects with the Act and the rules and regulations thereunder, (ii)
any Shelf Registration and any amendment thereto does not, when it becomes
effective, contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading and (iii) any Prospectus forming part of any Shelf
Registration, and any amendment or supplement to such Prospectus, does not
include an untrue statement or a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
(c) Notify the Holders, the Initial Purchasers, the Special Counsel
and the Managing Underwriters, if any, as promptly as practicable, and (if
requested by any such Person) confirm such notice in writing, (i) when a
Prospectus, any Prospectus supplement, a Registration Statement or a 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 become effective; (ii) of any request by the SEC or any other
federal or state governmental authority for amendments or supplements to a
Registration Statement or related Prospectus or for additional information,
(iii) of the issuance by the SEC or any other federal or state governmental
authority of any stop order suspending the effectiveness of a Registration
Statement or the initiation or threatening of any proceedings for that purpose,
(iv) of the receipt by the Company of any notification with respect to the
suspension of the qualification (or exemption from qualification) of any of the
Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceedings for such purpose, (v) of the existence of any
fact or occurrence of any event which makes any statement of a material fact in
such Registration Statement or related Prospectus or any document incorporated
or deemed to be incorporated therein by reference untrue or which would require
the making of any changes in the Registration Statement or Prospectus in order
that the Registration Statement will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and that the
Prospectus will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and (vi) of the Company's determination that a post-effective
amendment to a Registration Statement would be appropriate.
(d) Use its best 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, at the earliest possible
moment.
(e) If requested by the Initial Purchasers, the Special Counsel or
the Managing Underwriters, if any, or the Holders of a Majority of the
Registrable Securities being sold, (i) promptly incorporate in a Prospectus
supplement or post-effective amendment to the Registration Statement such
information as the Initial Purchasers, the Special Counsel, the Managing
Underwriters, if any, or such Holders and the Company mutually agree should
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be included therein, and (ii) make all required filings of such Prospectus
supplement or such post-effective amendment as soon as practicable after the
Company has received notification of the matters proposed to be incorporated in
such Prospectus supplement or 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 opinion of counsel to the Company, in compliance with applicable
law.
(f) Promptly furnish to each Selling Holder (if requested by such
Selling Holder in writing), the Special Counsel, the Initial Purchasers, and
each Managing Underwriter, if any, without charge, at least one conformed copy
of the Registration Statement or Statements 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 of the Company by such Selling Holder, Special Counsel, Initial
Purchaser or Managing Underwriter, as the case may be).
(g) Deliver to each Selling Holder, the Special Counsel, the Initial
Purchasers and each Managing Underwriter, if any, in connection with any
offering of Registrable Securities, 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
Persons may reasonably request; and the Company hereby consents to the use of
such Prospectus or each amendment or supplement thereto by each of the Selling
Holders of Registrable Securities and the Underwriters, if any, in connection
with any offering and sale of the Registrable Securities covered by such
Prospectus or any amendment or supplement thereto.
(h) Prior to any public offering of Registrable Securities, to
register or qualify or cooperate with the Selling Holders, the Managing
Underwriters, if any, and the Special Counsel 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 Selling Holder or Managing Underwriter reasonably requests in writing, keep
each such registration or qualification (or exemption therefrom) effective
during the period such Registration Statement is required to be kept effective
and do any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities covered by the
applicable Registration Statement, provided, that the Company will not be
required to (i) qualify generally to do business in any jurisdiction where it is
not then so qualified (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) Cause the Registrable Securities covered by the applicable
Registration Statement to be registered with or approved by such other
governmental agencies in addition to the SEC or authorities within the United
States as may be necessary to enable the Selling Holder or Holders thereof or
the Managing Underwriters, if any, to consummate the disposition of such
Registrable Securities.
(j) During the Effectiveness Period (subject to the provisions of
Section 2(d)), immediately upon the existence of any fact or the occurrence of
any event as a result
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of which (i) a 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 (ii) a 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 light of the circumstances under which they were made, not
misleading, promptly prepare and file a post-effective amendment to each
Registration Statement or a supplement to the related Prospectus or any document
incorporated therein by reference or file any other required document (such as a
Current Report on Form 8-K) that would be incorporated by reference into the
Registration Statement so that the Registration Statement shall 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 so that the Prospectus will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, as thereafter delivered to the purchasers
of the Registrable Securities being sold thereunder; and in the case of a post-
effective amendment to a Registration Statement, use its best efforts to cause
it to become effective as soon as practicable.
(k) Enter into such agreements (including, in the event of an
Underwritten Offering, an underwriting agreement in form, scope and substance as
is customary in Underwritten Offerings) and take all such other actions in
connection therewith (including, in the event of an the Underwritten Offering,
those reasonably requested by the Managing Underwriters, if any, or the Holders
of a Majority of the Registrable Securities being sold) in order to expedite or
facilitate the disposition of such Registrable Securities and in such
connection, whether or not an underwriting agreement is entered into, and if the
registration is an Underwritten Registration, (i) make such representations and
warranties to the Holders of such Registrable Securities and the underwriters
with respect to the business of the Company and its subsidiaries, the
Registration Statement, Prospectus and documents incorporated by reference or
deemed incorporated by reference, if any, in each case, in form, substance and
scope as are customarily made by issuers to underwriters in underwritten
offerings and confirm the same if and when requested; (ii) use its reasonable
efforts to obtain opinions of counsel to the Company and updates thereof (which
counsel and opinions (in form, scope and substance) shall be reasonably
satisfactory to the Managing Underwriters, if any, Special Counsel and the
Holders of a Majority of Registrable Securities being sold) addressed to each of
the underwriters covering the matters customarily covered in opinions requested
in underwritten offerings and such other matters as may be reasonably requested
by such Special Counsel and Managing Underwriters; (iii) use its reasonable
efforts to obtain "cold comfort" letters and updates thereof from the
independent certified public accountants of the Company (and, if necessary, any
other certified public accountants of any subsidiary of the Company or any
business acquired or to be acquired by the Company for which financial
statements and financial data are, or are required to be, included in the
Registration Statement), addressed to each of the Managing Underwriters, if any,
such letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with Underwritten
Offerings, and (iv) deliver such documents and certificates as may be reasonably
requested by the Holders of a majority of the Registrable Securities being sold,
the Special Counsel and the Managing Underwriters, if any, to
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<PAGE>
evidence the continued validity of the representations and warranties of the
Company and its subsidiaries made pursuant to clause (i) above and to evidence
compliance with any customary conditions contained in the underwriting agreement
or other agreement entered into by the Company. The above shall be done at each
closing under such underwriting or similar agreement as and to the extent
required thereunder.
(1) Make available for inspection during normal business hours by a
representative of the Holders of Registrable Securities being sold, any Managing
Underwriter participating in any disposition of Registrable Securities, if any,
and any attorney or accountant retained by such Selling Holders or underwriter,
financial and other records, pertinent corporate documents and properties of the
Company and its subsidiaries, and cause the appropriate executive officers,
directors and employees of the Company and its subsidiaries to supply all
information reasonably requested by any such representative, Managing
Underwriter, attorney or accountant in connection with such disposition, in each
case as is customary for similar "due diligence" examinations; provided,
however, that any information that is reasonably and in good faith designated by
the Company in writing as confidential at the time of delivery of such
information shall be kept confidential by such Persons and shall be used solely
for the purposes of exercising rights under this Agreement, unless (i)
disclosure of such information is required by court or administrative order or
is necessary to respond to inquiries of regulatory authorities, (ii) disclosure
of such information is required by law (including any disclosure requirements
pursuant to federal securities laws in connection with the filing of any
Registration Statement or the use of any prospectus referred to in this
Agreement), (iii) such information becomes generally available to the public
other than as a result of disclosure or failure to safeguard by any such Person
or (iv) such information becomes available to any such Person from a source
other than the Company and such source is not bound by a confidentiality
agreement.
(m) Comply with all applicable rules and regulations of the SEC in
all material respects and make generally available to its securityholders
earnings statements satisfying the provisions of Section 11(a) of the Securities
Act and Rule 158 thereunder (or any similar rule promulgated under the
Securities Act) no later than 45 days after the end of any fiscal quarter (or 90
days after the end of any fiscal year) (i) commencing at the end of any fiscal
quarter in which Registrable Securities are sold to underwriters in a firm
commitment or best efforts underwritten offering and (ii) if not sold to
underwriters in such an offering, commencing on the first day of the first
fiscal quarter of the Company commencing after the effective date of a
Registration Statement.
(n) Cooperate with the Selling Holders of Registrable Securities, the
Initial Purchasers, the Special Counsel and the Managing Underwriters, if any,
to facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold and not bearing any restrictive legends, and
enable such Registrable Securities to be in such denominations as are permitted
in the Indenture and registered in such names as the Holders may request.
(o) Not later than the effectiveness date of any Registration
Statement hereunder, provide a CUSIP number for the Registrable Securities
registered under such Registration Statement, and provide the Trustee under the
Indenture and the transfer agent
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<PAGE>
for the Common Stock with printed certificates for the Registrable Securities
which are in a form eligible for deposit with The Depository Trust Company.
(p) Cause all shares of Common Stock covered by the Registration
Statement to be listed on each securities exchange or quotation system on which
the Company's Common Stock is then listed or quoted no later than the date the
Registration Statement is declared effective.
(q) Cooperate and assist in any filing required to be made with the
National Association of Securities Dealers, Inc.
(r) Cause the Indenture to be qualified under the TIA no later than
the date the Registration Statement is declared effective, and, in connection
therewith, cooperate with the Trustee and the Holders, the Initial Purchasers,
the Special Counsel and the Managing Underwriters, if any, to effect such
changes to the Indenture as may be required for such Indenture to be so
qualified in accordance with the terms of the TIA; and execute and use its best
efforts to cause the Trustee to execute all documents as may be required to
effect such changes and all other forms and documents required to be filed with
the SEC to enable such Indenture to be so qualified in a timely manner.
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 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
reasonable 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
light of the circumstances under which they were made, not misleading.
4. REGISTRATION EXPENSES. All fees and expenses incident to the
Company's obligations under this Agreement shall be borne by the Company whether
or not any of the Registration Statements become effective. Such fees and
expenses shall include, without limitation, (i) all registration and filing fees
(including, without limitation, fees and expenses with respect to filings
required to be made with the National Association of Securities Dealers, Inc.),
(ii) printing expenses (including, without limitation, expenses of printing
certificates for Registrable Securities in a form eligible for deposit with The
Depository Trust Company and of printing Prospectuses if the printing of
Prospectuses is requested by the
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<PAGE>
Special Counsel, the Initial Purchasers, the Managing Underwriters or the
holders of a Majority of Registrable Securities included in any Registration
Statement), (iii) reasonable fees and disbursements of counsel for the Company
and the Special Counsel in connection with the Shelf Registration (provided that
the Company shall not be liable for the fees and expenses of more than one
separate firm for all parties (other than the Company) participating in any
transaction hereunder), (iv) fees and disbursements of all independent certified
public accountants referred to in Section 3(k)(iii) hereof (including the
expenses of any special audits and "cold comfort" letters required by or
incident to such performance), (v) fees and expenses in connection with
compliance with state securities or Blue Sky laws, (vi) fees and disbursements
of the Trustee and its counsel and of the registrar and transfer agent for the
Common Stock and (vii) Securities Act liability insurance obtained by the
Company in its sole discretion, but shall not include underwriting fees,
discounts and commissions. In addition, the Company shall pay the fees and
expenses incurred in connection with the listing or quotation of the securities
to be registered on any securities exchange or quotation system on which similar
securities issued by the Company are then listed and the fees and expenses of
any Person, including special experts, retained by the Company.
5. INDEMNIFICATION.
(a) Indemnification by the Company. The Company shall indemnify and
hold harmless each Holder, the directors, officers, employees and agents of each
such Holder and each Person, if any, who controls any such Holder (within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act) from and against all losses, liabilities, damages and expenses (including
without limitation, any reasonable legal or other expenses 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 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, in light of the circumstances under which they were
made, except insofar as such Losses arise out of or are based upon an untrue
statement or omission or alleged omission from any of such documents in reliance
upon and conformity with any information relating to any Holder furnished to the
Company in writing by such Holder expressly for use therein provided, 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 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 assisting 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 is corrected in any amendment or supplement to the Prospectus and (y)
having been previously 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
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of a Registrable Security to the person asserting the claim from which such
Losses arise. The Company shall also indemnify each underwriter, their officers
and directors, and each Person who controls such Person (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) to the same
extent and with the same limitations as provided above with respect to the
indemnification of the Holders of Registrable Securities.
(b) Indemnification by Holder of Registrable Securities. Each
Holder, agrees severally and not jointly to indemnify and hold harmless the
Company, its directors, its officers who sign a Registration Statement 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), from and against
all Losses arising out of or based upon any untrue statement of a material fact
contained in any Registration Statement or Prospectus or arising out of or based
upon any omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading, in light of the circumstances
under which they were made, to the extent, but only to the extent, that such
untrue statement or omission is contained in any information relating to such
Holder furnished in writing by such Holder to the Company expressly for use in
such Registration Statement or Prospectus. 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 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, but failure so to notify an Indemnifying Party shall not
relieve such Indemnifying Party from any liability hereunder to the extent it is
not materially prejudiced as a result thereof. The Indemnifying Party, upon
request of the Indemnified Party, shall retain counsel 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 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 to such counsel, (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, or (iii) the Indemnifying Party shall not have
employed counsel satisfactory to the Indemnified Party to represent the
Indemnified Party within a reasonable time after notice of commencement of the
action. 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 under Section 5(a) or 5(b) hereof who are parties to
such proceeding or proceedings, and that all such fees and expenses shall be
reimbursed as they are incurred. Such separate form shall be designated in
writing by, in
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the case of the Holders, the Holders of a Majority of Registrable Securities
covered by the Registration Statement held by Holders that are Indemnified
Parties pursuant to Section 5(a) and, in the case of Persons indemnified
pursuant to Section 5(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.
Notwithstanding the foregoing sentence, if at any time an Indemnified Party
shall have requested an Indemnifying Party to reimburse the Indemnified Party
for fees and expenses of counsel as contemplated by the second and third
sentences of this paragraph, such Indemnifying Party agrees that it shall be
liable for any settlements of any proceeding effected without its written
consent if (i) such settlement is entered into more than 30 days after receipt
by such Indemnifying Party of the aforesaid request and (ii) such Indemnifying
Party shall not have reimbursed the Indemnified Party in accordance with such
request prior to the date of such settlement. No Indemnifying Party shall,
without the prior written consent of the Indemnified Party, effect any
settlement of any pending or threatened proceeding in respect of which any
Indemnified Party is or could have been a party and indemnity could have been
sought hereunder by such Indemnified Party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims
that are the subject matter of such proceeding.
(d) Contribution. If the indemnification provided for in this
Section 5 is unavailable to an Indemnified Party under Section 5(a) or 5(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 Indemnifying Parties on the one hand and the Indemnified Party or Indemnified
Parties an the other hand or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the Indemnifying Party or Indemnified Parties on the one
hand and of the Indemnified Party or Indemnifying 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 of the Debentures pursuant to the Purchase Agreement. Benefits
received by the Initial Purchasers shall be deemed to be equal to the total
purchase discounts and commissions received by them pursuant to the Purchase
Agreement and benefits received by any other Holders shall be deemed to be equal
to the value of receiving Debentures registered under the Securities Act.
Benefits received by any underwriter shall be deemed to be equal to the total
underwriting discounts and commissions, as set forth on the cover page of the
Prospectus forming a part of the Registration Statement which resulted in such
Losses. 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
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<PAGE>
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 5(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 5(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 which 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. The
indemnity, contribution and expense reimbursement obligations of the Company
hereunder shall be in addition to any liability the Company may otherwise have
hereunder, under the Purchase Agreement or otherwise.
The indemnity and contribution provisions contained in this Section 5 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, its officers or directors or
any Person controlling the Company and (iii) the sale of any Registrable
Securities by any Holder.
6. INFORMATION REQUIREMENTS.
(a) The Company shall file the reports required to be filed by it
under the Securities Act and the Exchange Act, and if at any time the Company is
not required to file such reports, it will, upon the request of any Holder of
Registrable Securities, make publicly available other information so long as
necessary to permit sales pursuant to Rule 144 and Rule 144A under the
Securities Act.
The Company further covenants that it will cooperate with any Holder
of Registrable Securities and take such further reasonable action as any Holder
of Registrable Securities may reasonably request (including, without limitation,
making such reasonable representations as any such Holder may reasonably
request), all to the extent required from 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. Notwithstanding the foregoing, nothing in this Section 6 shall
be deemed to require the Company to register any of its securities under any
section of the Exchange Act.
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(b) The Company shall file the reports required to be filed by it
under the Exchange Act and shall comply with all other requirements set forth in
the instructions to the appropriate SEC Registration Statement form permitting
registration of the Registrable Securities for resale by the Holders thereof in
the manner or manners designated by them.
7. MISCELLANEOUS.
(a) Remedies. In the event of a breach by the Company of its
obligations under this Agreement, each Holder of Registrable Securities, in
addition to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under this Agreement. The Company agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of any
of the provisions of this Agreement and hereby further agrees that, in the event
of any action for specific performance in respect of such breach, it shall waive
the defense that a remedy at law would be adequate.
(b) No Conflicting Agreements. The Company has not entered into as
of the date hereof, and shall not enter into on or after the date hereof, any
agreement with respect to its securities which 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.
(c) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the written consent of Holders
of a Majority of Registrable Securities. 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 so sold; 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.
(d) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing and shall be deemed given (i) when
made, if made by hand delivery, (ii) upon confirmation, if made by telecopier,
(iii) one business day after being deposited with a reputable next day courier,
postage prepaid, or (iv) on the date indicated on the notice of receipt, if made
by first-class mail, to the parties as follows:
(x) if to a holder of Registrable Securities, at the most
current address given by such holder to the Company in accordance with the
provisions of Section 7(e):
19
<PAGE>
(y) if to the Company, to:
Whole Foods Market, Inc.
601 North Lamar Boulevard, Suite 300
Austin, Texas 78703
Attention: Chief Executive Officer
Telecopy No.: (512) 477-1069
with a copy to:
Crouch & Hallett, LLP
717 N. Harwood Street, Suite 1400
Dallas, Texas 75201
Attention: Bruce H. Hallett
Telecopy No.: (214) 953-3154
and
(z) if to the Special Counsel to:
Gibson, Dunn & Crutcher, LLP
One Montgomery Street, Telesis Tower
San Francisco, California 94104
Attention: William L. Hudson, Esq.
Telecopy No.: (415) 986-5309
or to such other address as such Person may have furnished to the other Persons
identified in this Section 7(d) in writing in accordance herewith.
Copies of all notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee under the
Indenture at the address specified in the Indenture.
(e) Owner of Registrable Securities. The Company will maintain, or
will cause its registrar and transfer agent to maintain, a register with respect
to the Registrable Securities in which all transfers of Registrable Securities
of which the Company has received notice will be recorded. The Company may deem
and treat the Person in whose name Registrable Securities are registered in such
register of the Company as the owner thereof for all purposes, including,
without limitation, the giving of notices under this Agreement.
(f) 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 Purchasers
or subsequent holders of Registrable Securities if such subsequent holders are
deemed to be such affiliates solely by reason of
20
<PAGE>
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.
(g) Successors and Assigns. Any Person who purchases any Registrable
Securities from an Initial Purchaser shall be deemed, for purposes of this
Agreement to be an assignee of such Initial Purchaser. The 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.
(h) 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.
(i) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(j) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF NEW YORK AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK WITHOUT REGARD TO
PRINCIPLES OF CONFLICT OF LAWS.
(k) 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 is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms, provisions, covenants
and restrictions without including any of such which may be hereafter declared
invalid, illegal, void or unenforceable.
(l) 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. Except as provided in the
Purchase Agreement and the Indenture, 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 securities sold pursuant to the Purchase Agreement and the Indenture. This
Agreement supersedes all prior agreements and understandings among the parties
with respect to such subject matter.
(m) Attorneys' Fees. In any action or proceeding brought to enforce
any provision of this Agreement, or where any provision hereof is validly
asserted as a defense,
21
<PAGE>
the prevailing party, as determined by the court, shall be entitled to recover
reasonable attorneys' fees in addition to any other available remedy.
(n) Further Assurances. Each of the parties hereto shall use all
reasonable efforts to take, or cause to be taken, all appropriate action, do or
cause to be done all things reasonably necessary, proper or advisable under
applicable law, and execute and deliver such documents and other papers, as may
be required to carry out the provisions of this Agreement and the other
documents contemplated hereby and consummate and make effective the transactions
contemplated hereby.
(o) 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 Sections 2(e), 4 or 5 hereof, each of which
shall remain in effect in accordance with their terms.
(p) Third Party Beneficiaries. The Company and the Initial
Purchasers agree that each Holder shall be a third party beneficiary of this
Agreement.
22
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
WHOLE FOODS MARKET, INC.
By: /s/ Authorized Officer
Accepted as of the date first above written:
BT ALEX. BROWN INCORPORATED
MORGAN STANLEY & CO. INCORPORATED
By: BT Alex. Brown Incorporated
By: /s/ Authorized Officer
--------------------------------------------
23
<PAGE>
EXHIBIT 5.1
[CROUCH & HALLETT LETTERHEAD]
April 30, 1998
Whole Foods Market, Inc.
601 N. Lamar Blvd., Suite 300
Austin, Texas 78703
Re: $308,807,000 Aggregate Principal Amount at Maturity of Zero Coupon
Convertible Subordinated Debentures Due 2018
Ladies and Gentlemen:
We have acted as counsel to Whole Foods Market, Inc., a Texas corporation
(the "Company"), in connection with (i) the issuance and sale by the Company of
$308,807,000 aggregate principal amount at maturity of Zero Coupon Convertible
Subordinated Debentures due 2018 (the "Debentures") on March 2, 1998 and March
16, 1998 in transactions exempt from the registration requirements of the
Securities Act of 1933, as amended (the "Act"), and (ii) the filing of the
Company's Registration Statement on Form S-3 to which this opinion is an Exhibit
(the "Registration Statement") with respect to the offer and sale of the
Debentures by the several Holders of the Debentures (the "Selling Holders").
We are familiar with the corporate action taken by the Company in
connection with the authorization, issuance and sale of the Debentures and have
made such other legal or factual inquiries as we deemed necessary or appropriate
for purposes of rendering this opinion.
We have assumed the genuineness of all signatures, the legal capacity of
natural persons, the authenticity of all documents submitted to us as originals,
and the conformity to original documents of all documents submitted to us as
copies and the authenticity of the originals of such copied documents.
On the basis of and in reliance upon the foregoing, and subject to the
assumptions, qualifications, limitations and exceptions contained herein, we are
of the opinion that:
1. The Debentures are validly issued, fully paid and non-assessable and
are valid and binding obligations of the Company entitled to the benefits of the
Indenture, dated March 2, 1998, by and between the Company and Chase Bank of
Texas, National Association, as trustee, as now or hereafter supplemented, under
which the Debentures were issued (the "Indenture"); and
2. The shares of Common Stock, no par value, of the Company issuable upon
conversion of the Debentures (the "Shares"), when issued in accordance with the
terms of the Indenture, will be validly issued, fully paid and non-assessable.
The opinions set forth above are subject to the following assumptions,
qualifications, limitations and exceptions being true and correct at or prior to
the time of the delivery of any of the Shares:
<PAGE>
(a) at the time any of the Debentures are offered or sold, (i) the
Registration Statement will be effective or such Debentures will be sold in a
transaction exempt from the requirements of the Act and (ii) all applicable
"Blue Sky" and state securities laws will have been complied with; and
(b) the Indenture has been qualified under the Trust Indenture Act of 1939,
as amended.
Our opinion set forth in numbered paragraph 1 above is subject to the
effect of (i) applicable bankruptcy, reorganization, insolvency, moratorium and
other similar laws and court decisions of general application (including,
without limitation, statutory or other laws regarding fraudulent or preferential
transfers) relating to, limiting or affecting the enforcement of creditors'
rights generally, (ii) general principles of equity that may limit the
enforceability of any of the remedies, covenants or other provisions of the
Debentures and the Indenture, and (iii) the application of principles of equity
(regardless of whether enforcement is considered in proceedings at law or in
equity) as such principles relate to, limit or effect the enforcement of
creditors' rights generally.
We express no opinion as to (i) any provision of the Debentures or the
Indenture regarding the remedies available to any person (A) to take action that
is arbitrary, unreasonable or capricious or is not taken in good faith or in a
commercially reasonable manner, whether or not such action is permitted under
the Debentures or the Indenture, or (B) for violations or breaches that are
determined by a court to be non-material or without substantially adverse effect
upon the ability of the Company to perform its material obligations under the
Debentures or the Indenture; or (ii) any provision of the Debentures or the
Indenture that may provide for interest on interest or penalty interest.
This opinion is limited to Texas and federal law.
You have informed us that the Selling Holders may sell the Debentures or
the Shares from time to time after the date of the Registration Statement, and
this opinion is limited to the laws referred to above as in effect on the date
hereof.
This opinion may not be quoted in whole or in part without our prior
written consent.
We hereby consent to the use of our name under the caption "Legal Matters"
in the Prospectus forming a part of the Registration Statement and to the filing
of this opinion as an Exhibit to the Registration Statement. In giving this
consent, we do not admit that we are within the category of persons whose
consent is required under Section 7 of the Act or the General Rules and
Regulations of the Securities and Exchange Commission.
Very truly yours,
/s/ CROUCH & HALLETT, L.L.P.
<PAGE>
EXHIBIT 8.1
[Crouch & Hallett, L.L.P. Letterhead]
April 30, 1998
Whole Foods Market, Inc.
601 N. Lamar Blvd., Suite 300
Austin, Texas 78703
Re: Federal Income Tax Considerations Relating to Public Offering of
$308,807,000 Aggregate Principal Amount at Maturity of Zero Coupon
Convertible Subordinated Debentures Due 2018
Ladies and Gentlemen:
We have acted as tax counsel to Whole Foods Market, Inc., a Texas
corporation (the "Company"), in connection with (i) the issuance and sale by the
Company of $308,807,000 aggregate principal amount at maturity of Zero Coupon
Convertible Subordinated Debentures Due 2018 (the "Debentures") on March 2, 1998
and March 16, 1998 in transactions exempt from the registration requirements of
the Securities Act of 1933, as amended (the "Act"), and (ii) the filing of the
Company's Registration Statement on Form S-3 to which this opinion is an Exhibit
and the Prospectus forming a part thereof (the "Prospectus") with respect to the
offer and sale of the Debentures and Common Stock of the Company issued upon
conversion of the Debentures by the several Holders of the Debentures.
We hereby confirm our opinion set forth under the caption "Certain United
States Federal Income Tax Considerations" in the Prospectus.
Very truly yours,
/s/ Crouch & Hallett, L.L.P.
<PAGE>
EXHIBIT 12
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
Qtr.
Fiscal Year Ended (1) Ended(1)
----------------------------------------------------------
Sept. 26, Sept. 25, Sept. 24, Sept. 29, Sept. 28, Jan. 18,
1993 1994 1995 1996 1997 1988
----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income (loss) from continuing operations
(before income taxes and interest
expense) (1,013) 8,994 13,451 (9,448) 45,412 21,090
Rent (one-third of period expense) 3,208 4,795 6,370 8,145 9,620 3,528
--------------------------------------------------------
Total available earnings 2,195 13,789 19,821 (1,303) 55,032 24,618
========================================================
Fixed charges:
Interest (including capitalized
interest) 757 499 3,177 5,854 6,814 2,261
Rent (one-third of period expense) 3,208 4,795 6,370 8,145 9,620 3,528
--------------------------------------------------------
Total fixed charges 3,965 5,294 9,547 13,999 16,434 5,789
========================================================
Ratio of available earnings to fixed
charges (2) -- 2.60x 2.08x -- 3.35x 4.25x
========================================================
</TABLE>
(1) Fiscal years 1997, 1995, 1994 and 1993 are 52-week years and fiscal year
1996 is a 53-week year. The quarter ended January 18, 1998 is a 16-week
quarter.
(2) For the fiscal years ended September 26, 1993 and September 29, 1996,
earnings were inadequate to cover fixed charges in the amount of $1.8
million and $15.3 million, respectively.
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
- --------------------------------------------------------------------------------
The Board of Directors
Whole Foods Market, Inc.:
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
Austin, Texas
April 12, 1998
<PAGE>
EXHIBIT 25
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE
TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) ____
--------------
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION
(EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER)
74-0800980
(I.R.S. EMPLOYER IDENTIFICATION NUMBER)
712 MAIN STREET, HOUSTON, TEXAS 77002
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
LEE BOOCKER, 712 MAIN STREET, 26TH FLOOR
HOUSTON, TEXAS 77002 (713) 216-2448
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
WHOLE FOODS MARKET, INC.
(EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER)
TEXAS 74-1989366
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
601 N. LAMAR BOULEVARD, SUITE 300
AUSTIN, TEXAS 78703
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
ZERO COUPON CONVERTIBLE SUBORDINATED DEBENTURES
(TITLE OF INDENTURE SECURITIES)
================================================================================
<PAGE>
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising
authority to which it is subject.
Comptroller of the Currency, Washington, D.C.
Federal Deposit Insurance Corporation, Washington, D.C.
Board of Governors of the Federal Reserve System, Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
Item 2. Affiliations with the obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
The obligor is not an affiliate of the trustee. (See Note on Page 7.)
Item 3. Voting Securities of the trustee.
Furnish the following information as to each class of voting
securities of the trustee.
Col. A Col. B
Title of class Amount outstanding
-------------- ------------------
Not applicable by virtue of Form T-1 General Instruction B and
response to Item 13.
Item 4. Trusteeships under other indentures.
If the trustee is a trustee under another indenture under which any
other securities, or certificates of interest or participation in any
other securities, of the obligor are outstanding, furnish the
following information:
(a) Title of the securities outstanding under each such other
indenture.
2
<PAGE>
Not applicable by virtue of Form T-1 General Instruction B and
response to Item 13.
Item 4. (Continued)
(b) A brief statement of the facts relied upon as a basis for the
claim that no conflicting interest within the meaning of Section
310(b)(1) of the Act arises as a result of the trusteeship under any
such other indenture, including a statement as to how the indenture
securities will rank as compared with the securities issued under such
other indenture.
Not applicable by virtue of Form T-1 General Instruction B and
response to Item 13.
Item 5. Interlocking directorates and similar relationships with obligor or
underwriters.
If the trustee or any of the directors or executive officer of the
trustee is a director, officer, partner, employee, appointee, or
representative of the obligor or of any underwriter for the obligor,
identify each such person having any such connection and state the
nature of each such connection.
Not applicable by virtue of Form T-1 General Instruction B and
response to Item 13.
Item 6. Voting securities of the trustee owned by the obligor or its
officials.
Furnish the following information as to the voting securities of the
trustee owned beneficially by the obligor and each director, partner
and executive officer of the obligor.
Col. A Col. B Col. C Col. D
Percentage of
voting securities
represented by
Amount owned amount given in
Name of owner Title of class beneficially Col. C
------------- -------------- ------------ ---------------
Not applicable by virtue of Form T-1 General Instruction B and response to
Item 13.
3
<PAGE>
Item 7. Voting securities of the trustee owned by underwriters or their
officials.
Furnish the following information as to the voting securities of the
trustee owned beneficially by each underwriter for the obligor and
each director, partner and executive officer of each such underwriter.
Col. A Col. B Col. C Col. D
Percentage of
voting securities
represented by
Amount owned amount given in
Name of owner Title of class beneficially Col. C
------------- -------------- ------------ ---------------
Not applicable by virtue of Form T-1 General Instruction B and response to
Item 13.
Item 8. Securities of the obligor owned or held by the trustee.
Furnish the following information as to the securities of the obligor
owned beneficially or held as collateral security for obligations in
default by the trustee.
Col. A Col. B Col. C Col. D
Amount owned
Whether the beneficially or Percent of
securities held as collateral class
are voting security for represented by
or nonvoting obligations in amount given
Title of class securities default in Col. C
-------------- ---------- ------- ---------
Not applicable by virtue of Form T-1 General Instruction B and response to
Item 13.
4
<PAGE>
Item 9. Securities of underwriters owned or held by the trustee.
If the trustee owns beneficially or holds as collateral security for
obligations in default any securities of an underwriter for the
obligor, furnish the following information as to each class of
securities of such underwriter any of which are so owned or held by
the trustee.
Col. A Col. B Col. C Col. D
Amount owned
beneficially or Percent of
held as collateral class
Title of issuer security for represented by
and Amount obligations in amount given
Title of class outstanding default by trustee in Col. C
-------------- ----------- ------------------ ---------
Not applicable by virtue of Form T-1 General Instruction B and response to
Item 13.
Item 10. Ownership or holdings by the trustee of voting securities of certain
affiliates or security holders of the obligor.
If the trustee owns beneficially or holds as collateral security for
obligations in default voting securities of a person who, to the
knowledge of the trustee (1) owns 10% or more of the voting securities
of the obligor or (2) is an affiliate, other than a subsidiary, of the
obligor, furnish the following information as to the voting securities
of such person.
5
<PAGE>
Col. A Col. B Col. C Col. D
Amount owned
beneficially or Percent of
held as collateral class
Title of issuer security for represented by
and Amount obligations in amount given
Title of class outstanding default by trustee in Col. C
-------------- ----------- ------------------ ---------
Not applicable by virtue of Form T-1 General Instruction B and response to
Item 13.
Item 11. Ownership or holdings by the trustee of any securities of a person
owning 50% or more of the voting securities of the obligor.
If the trustee owns beneficially or holds as collateral security for
obligations in default any securities of a person who, to the
knowledge of the trustee, owns 50% or more of the voting securities of
the obligor, furnish the following information as to each class of
securities or such person any of which are so owned or held by the
trustee.
Col. A Col. B Col. C Col. D
Amount owned
beneficially or Percent of
held as collateral class
Title of issuer security for represented by
and Amount obligations in amount given
Title of class outstanding default by trustee in Col. C
-------------- ----------- ------------------ ---------
Not applicable by virtue of Form T-1 General Instruction B and response to
Item 13.
Item 12. Indebtedness of the Obligor to the Trustee.
Except as noted in the instructions, if the obligor is indebted to the
trustee, furnish the following information:
6
<PAGE>
Col. A Col. B Col. C
Nature of Amount
Indebtedness outstanding Date Due
------------ ----------- --------
Not applicable by virtue of Form T-1 General Instruction B and response to
Item 13.
Item 13. Defaults by the Obligor.
(a) State whether there is or has been a default with respect to the
securities under this indenture. Explain the nature of any such
default.
There is not, nor has there been, a default with respect to the securities
under this indenture. (See Note on Page 7.)
Item 13. (Continued)
(b) If the trustee is a trustee under another indenture under which any
securities, or certificates of interest or participation in any other
securities, of the obligor are outstanding, or is trustee for more than one
outstanding series of securities under the indenture, state whether there
has been a default under any such indenture or series, identify the
indenture or series affected, and explain the nature of any such default.
There has not been a default under any such indenture or series. (See Note
on Page 7.)
Item 14. Affiliations with the Underwriters.
If any underwriter is an affiliate of the trustee, describe each such
affiliation.
Not applicable by virtue of Form T-1 General Instruction B and
response to Item 13.
Item 15. Foreign Trustee.
Identify the order or rule pursuant to which the foreign trustee is
authorized to act as sole trustee under indentures qualified or to be
qualified under the Act.
Not applicable.
7
<PAGE>
Item 16. List of Exhibits.
List below all exhibits filed as part of this statement of
eligibility.
$ 1. A copy of the articles of association of the trustee now in
effect.
# 2. A copy of the certificate of authority of the trustee to
commence business.
* 3. A copy of the certificate of authorization of the trustee to
exercise corporate trust powers issued by the Board of Governors
of the Federal Reserve System under date of January 21, 1948.
+ 4. A copy of the existing bylaws of the trustee.
5. Not applicable.
6. The consent of United States institutional trustees required by
Section 321(b) of the Act.
n 7. A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or
examining authority.
8. Not applicable.
9. Not applicable.
NOTE REGARDING INCORPORATED EXHIBITS
Effective January 20, 1998, the name of the Trustee was changed from Texas
Commerce Bank National Association to Chase Bank of Texas, National
Association. The exhibits incorporated herein by reference, including
Exhibit 7, the Trustee's Consolidated Reports of Condition and Income for
the fourth quarter of 1997, were filed under the former name of the
Trustee.
$ Incorporated by reference to exhibit bearing the same designation
and previously filed with the Securities and Exchange Commission
as exhibits to the Form S-3 File No. 33-56195.
# Incorporated by reference to exhibit bearing the same designation
and previously filed with the Securities and Exchange Commission
as exhibits to the Form S-3 File No. 33-42814.
8
<PAGE>
* Incorporated by reference to exhibit bearing the same designation
and previously filed with the Securities and Exchange Commission
as exhibits to the Form S-11 File No. 33-25132.
+ Incorporated by reference to exhibit bearing the same designation
and previously filed with the Securities and Exchange Commission
as exhibits to the Form S-3 File No. 33-65055.
n Incorporated by reference to exhibit bearing the same designation
and previously filed with the Securities and Exchange Commission
as exhibits to the Form S-4 File No. 333-47745.
NOTE
Inasmuch as this Form T-1 is filed prior to the ascertainment by the
trustee of all facts on which to base responsive answers to Items 2 and 13,
the answers to said Items are based on incomplete information. Such Items
may, however, be considered as correct unless amended by an amendment to
this Form T-1.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
trustee, Chase Bank of Texas, National Association, a national banking
association organized and existing under the laws of the United States of
America, has duly caused this statement of eligibility to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the City of Austin,
and State of Texas, on the 28th day of April, 1998.
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION
(Trustee)
By: /S/ CARY W. GILLIAM
----------------------------------------------
Cary W. Gilliam
Vice President and Trust Officer
9
<PAGE>
Exhibit 6
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
The undersigned is trustee under an Indenture dated as of March 2, 1998,
between Whole Foods Market, Inc. (the "Company") and Chase Bank of Texas,
National Association, as Trustee, entered into in connection with the issuance
of the Company's Zero Coupon Convertible Subordinated Debentures.
In accordance with Section 321(b) of the Trust Indenture Act of 1939, the
undersigned hereby consents that reports of examinations of the undersigned,
made by Federal or State authorities authorized to make such examinations, may
be furnished by such authorities to the Securities and Exchange Commission upon
its request therefor.
Very truly yours,
CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION, as Trustee
By: /S/ CARY W. GILLIAM
--------------------------------
Cary W. Gilliam
Vice President and
Trust Officer
10
