<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 11, 1997
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
---------------
CENTRAL GARDEN & PET COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 5199 68-0275553
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION OF CLASSIFICATION CODE NUMBER)IDENTIFICATION NUMBER)
INCORPORATION OR
ORGANIZATION)
---------------
3697 MT. DIABLO BOULEVARD, LAFAYETTE, CALIFORNIA 94549 (510) 283-4573
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
WILLIAM E. BROWN
CENTRAL GARDEN & PET COMPANY
3697 MT. DIABLO BOULEVARD
LAFAYETTE, CALIFORNIA 94549
(510) 283-4573
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
---------------
COPIES TO:
JOHN F. SEEGAL
ORRICK, HERRINGTON & SUTCLIFFE
OLD FEDERAL RESERVE BANK BUILDING
400 SANSOME STREET
SAN FRANCISCO, CALIFORNIA 94111
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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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<TABLE>
<CAPTION>
PROPOSED PROPOSED
TITLE OF EACH CLASS AMOUNT MAXIMUM MAXIMUM
OF SECURITIES TO BE TO BE OFFERING PRICE AGGREGATE AMOUNT OF
REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
6% Convertible Subordinated Notes
due 2003........................... $115,000,000 100% $115,000,000 $34,848.48
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Common Stock, $.01 par value........ (2) -- -- (3)
</TABLE>
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(1)Estimated solely for the purpose of calculating the registration fee.
(2) Such indeterminate number of shares of Common Stock as shall be required
for issuance upon conversion of the Notes being registered hereunder.
(3) No additional consideration will be received for the Common Stock and,
therefore, no registration fee is required pursuant to Rule 457(i).
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL 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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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF ANY OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED FEBRUARY 11, 1997
PROSPECTUS
[LOGO OF CENTRAL GARDEN & PET]
$115,000,000
6% CONVERTIBLE SUBORDINATED NOTES DUE 2003
AND
SHARES OF COMMON STOCK
ISSUABLE UPON CONVERSION THEREOF
This Prospectus relates to $115,000,000 aggregate principal amount of 6%
Convertible Subordinated Notes due 2003 (the "Notes") of Central Garden & Pet
Company ("the Company") and the shares of Common Stock, par value $.01 per
share (the "Common Stock"), of the Company issuable upon the conversion of the
Notes (the "Conversion Shares"). The Notes and the Conversion Shares may be
offered from time to time for the accounts of the holders named herein (the
"Selling Securityholders").
The Common Stock has one vote per share, whereas the Company's Class B Stock
has the lesser of ten votes per share or 49% of the total votes cast. As of the
date of this Prospectus, the holders of the Class B Stock have 49% of the
combined voting power for the election of directors and all other matters
subject to stockholder vote.
The Notes are convertible at the option of the holder into shares of Common
Stock of the Company, at any time prior to redemption or maturity, at a
conversion price of $28.00 per share (equal to a conversion rate of 35.7143
shares per $1,000 principal amount of Notes and representing in the aggregate
4,107,143 shares), subject to adjustment under certain circumstances. Interest
on the Notes is payable semi-annually in arrears on March 15 and September 15
of each year, commencing on March 15, 1997.
The Notes are unsecured general obligations of the Company and are
subordinated in right of payment to all existing and future Senior Indebtedness
(as defined in the Indenture). See "Description of the Notes--Subordination."
The Notes will mature on November 15, 2003, and may be redeemed, at the option
of the Company, in whole or in part, at any time on or after November 15, 1999
at the redemption prices set forth herein plus accrued interest. In the event
of a Change of Control (as defined in the Indenture), each holder of Notes may
require the Company to repurchase all or a portion of such holder's Notes at
100% of the principal amount thereof, together with accrued interest to the
repurchase date. See "Description of Notes--Optional Redemption by the Company"
and "--Repurchase at Option of Holders upon Change in Control."
The Notes and the Conversion Shares may be offered by the Selling
Securityholders from time to time in transactions (which may include block
transactions in the case of the Conversion Shares) on any exchange or market on
which such securities are listed or quoted, as applicable, in negotiated
transactions, through a combination of such methods of sale, or otherwise, at
fixed prices that may be changed, at market prices prevailing at the time of
sale at prices related to prevailing market prices, or at negotiated prices.
The Selling Securityholders may effect such transactions by selling the Notes
or Conversion Shares directly or to or through broker-dealers, who may receive
compensation in the form of discounts, concessions or commissions from the
Selling Securityholders and/or the purchasers of the Notes or Conversion Shares
for whom such broker-dealers may act as agents or to whom they may sell as
principals, or both (which compensation as to a particular broker-dealer might
be in excess of customary commissions). The Company will not receive any of the
proceeds from the sale of the Notes or Conversion Shares by the Selling
Securityholders. The Company has agreed to pay all expenses incident to the
offer and sale of the Notes and Conversion Shares offered by the Selling
Securityholders hereby, except that the Selling Securityholders will pay all
underwriting discounts and selling commissions, if any. See "Plan of
Distribution."
The Notes have been designated for trading on the Private Offerings, Resales
and Trading through Automated Linkages ("PORTAL") Market. Notes sold pursuant
to this Prospectus are not expected to remain eligible for trading on the
PORTAL Market. The Common Stock is traded on the Nasdaq National Market under
the symbol "CENT." On February 7, 1997, the last reported sale price of the
Common Stock on the Nasdaq National Market was $24.75 per share.
-----------
THE NOTES AND THE COMMON STOCK OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 7.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-----------
The date of this Prospectus is , 1997
<PAGE>
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement under the Securities Act of 1933, as
amended (the "Securities Act"), on Form S-3 (together with all amendments and
exhibits thereto) with respect to the Notes and Common Stock offered hereby.
This Prospectus does not contain all of the information set forth in the
Registration Statement and the exhibits thereto, certain parts of which have
been omitted in accordance with the rules and regulations of the Commission.
For further information with respect to the Company, the Notes and the Common
Stock offered hereby, reference is made to the Registration Statement and the
exhibits thereto. Statements contained in this Prospectus regarding the
contents of any contract or other document are not necessarily complete and in
each instance reference is hereby made to the copy of such contract or
document filed as an exhibit to the Registration Statement. Copies of the
Registration Statement and the exhibits thereto may be inspected, without
charge, at the principal office of the Commission located at 450 Fifth Street,
N.W., Washington, D.C. 20549, the New York Regional Office located at 7 World
Trade Center, Suite 1300, New York, New York 10048, and the Chicago Regional
Office located at 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511, or obtained upon payment of prescribed rates from the Public
Reference Section of the Commission at its principal office.
The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy and information statements, and other
information with the Commission at 450 Fifth Street N.W., Room 1024,
Washington, D.C. 20549, and at the following Regional Offices of the
Commission: 7 World Trade Center, Suite 1300, New York, New York 10048; and
the Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Reports, proxy statements and other information filed by the
Company can be inspected and copied (at prescribed rates) at the offices of
the Commission. The Commission maintains a World Wide Web site that contains
reports, proxy and information statements, and other information that are
filed through the Commission's Electronic Data Gathering, Analysis and
Retrieval System. This Web site can be accessed at http://www.sec.gov.
Quotations relating to the Company's Common Stock appear on the Nasdaq
National Market and such reports, proxy statements and other information
concerning the Company can also be inspected at the offices of The Nasdaq
Stock Market, 1735 K Street, N.W., Washington, D.C. 20006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission pursuant to
the Exchange Act are hereby incorporated by reference in this Offering
Memorandum:
(1) The Company's Annual Report on Form 10-K for the fiscal year ended
September 28, 1996;
(2) The Company's Quarterly Reports on Form 10-Q for the fiscal quarter
ended December 28, 1996, and its Current Reports on Form 8-K dated October
13, 1996, November 11, 1996 and January 20, 1997; and
(3) The description of the Company's capital stock in the Company's
Registration Statement on Form 8-A dated March 30, 1993.
All documents filed by the Company pursuant to sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of the securities offered hereby shall be
deemed to be incorporated by reference in this Prospectus. Any statement
contained herein or in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained in any subsequently
filed document which also is or is deemed to be incorporated by reference
herein modifies or supersedes such statement. Any such statement so modified
or superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
2
<PAGE>
The Company hereby undertakes to provide without charge to each person to
whom a copy of this Prospectus has been delivered, upon the written or oral
request of such person, a copy of any or all of the documents referred to
above which have been or may be incorporated in this Prospectus by reference,
other than exhibits to such documents which are not specifically incorporated
by reference into the information that this Prospectus incorporates. Requests
for such copies should be directed to the Company's principal executive
offices at: Central Garden & Pet Company, 3697 Mt. Diablo Boulevard,
Lafayette, California 94549, Attn: Chief Financial Officer, (510) 283-4573.
3
<PAGE>
SUMMARY
The following summary is qualified in its entirety by, and is subject to, the
detailed information, including "Risk Factors," contained elsewhere and
incorporated by reference in this Prospectus. As used herein, "fiscal 1995"
refers to the nine month period ended September 30, 1995, "fiscal 1996" refers
to the fiscal year ended September 28, 1996 and "fiscal 1997" refers to the
fiscal year ending September 27, 1997.
THE COMPANY
Central Garden & Pet Company is the leading national distributor of lawn and
garden and pet supply products as well as a major distributor of pool supplies.
As a result of both acquisitions and internal expansion, the Company has grown
rapidly from sales of approximately $25 million in 1987 to approximately
$620 million in fiscal 1996 and increased the number of Company distribution
centers from one in 1987 to 41 currently. Since 1988, the Company has completed
23 acquisitions, making it a leader in the consolidation of distribution
channels for the lawn and garden and pet supplies industries. In fiscal 1996,
lawn and garden products accounted for approximately 76% of the Company's net
sales, pet supplies accounted for approximately 19% and pool supplies accounted
for approximately 5%. As a result of its recent acquisitions, including Kenlin
Pet Supply, Inc. ("Kenlin"), the largest distributor of pet supply products in
the eastern United States, and Four Paws Products, Ltd., Inc., a manufacturer
of dog, cat, reptile and small animal products ("Four Paws"), the Company
expects that sales of pet supplies will increase as a percentage of net sales.
With 41 distribution centers servicing most regions of the United States, the
Company offers major retailers the opportunity to satisfy their distribution
requirements through a single source of supply. Similarly, the Company provides
manufacturers access to major retailers on a national basis through one primary
distributor. By focusing on the emergence of high-volume retailers and their
needs, the Company has become the principal provider of lawn and garden
products to a variety of major retailers including Wal*Mart, Home Depot, Target
and Price/Costco as well as to numerous other retailers.
The Company's business strategy is to capitalize on its national presence,
comprehensive product selection, menu of value-added services and efficient
operations. Utilizing these capabilities, the Company strives to develop and
enhance servicing relationships with both large national and regional retailers
as well as manufacturers. Customers may select a customized array of services
from a broad menu of the Company's value-added services, which are designed to
increase the sales and profitability of both retailers and manufacturers. The
Company's services extend beyond the scope of traditional distribution
functions of order taking, shipping and billing, and include merchandising,
training and developing sales programs. The Company believes that its focus,
experience and leading industry position enable it to provide these services
efficiently, particularly in product categories which have a high number of
SKUs and require continuous inventory management and merchandising.
The Company carries a wide selection of products consisting of approximately
45,000 SKUs from approximately 1,000 manufacturers. The Company generally
focuses on providing those brand name products that are suited to distribution
due to their seasonality, variable sales movements, complexity to consumers and
retailers and handling and transportation difficulties, and which therefore
generally require value-added services. Selected brand name lawn and garden
products sold by the Company include Ortho, Round-Up, Miracle-Gro and HTH. In
addition, the Company focuses on serving specialty pet supply retailers which
sell a wide variety of pet supplies. The Company currently also distributes
proprietary product brands.
The Company entered into an agreement effective October 1, 1995 with The
Solaris Group ("Solaris"), a strategic business unit of Monsanto Company, the
manufacturer of Ortho, Round-Up and
4
<PAGE>
Green Sweep lawn and garden products, to become the master agent and master
distributor for Solaris products nationwide. This agreement has led to an
increase in the Company's sales of Solaris products, which had been adversely
impacted by Solaris' increased direct sales to retailers in recent years. Under
the agreement, which has an initial four-year term, the Company provides a wide
range of value-added services in connection with sales of Solaris products,
including logistics, order processing and fulfillment, inventory distribution
and merchandising. Solaris is the Company's largest supplier, and the Company
believes that Solaris products accounted for approximately 29% and 44% of the
Company's net sales in fiscal 1995 and fiscal 1996, respectively.
The Company has developed a multi-faceted growth strategy designed to
increase its position as the dominant distributor of lawn and garden products
and to continue to consolidate the fragmented pet supplies industry. The
Company intends to further expand in these markets by (i) continuing to make
strategic acquisitions, (ii) obtaining new customers and increasing sales to
existing customers, (iii) obtaining new product lines or expanding existing
product lines that are currently distributed by the Company and (iv) over the
long-term, developing an array of proprietary product brands that are
complementary to the products it currently distributes and which the Company
believes will have higher overall operating margins.
The Company was incorporated in Delaware in June 1992 and is the successor to
Central Garden Supply, a California corporation which was acquired in 1980 by
William E. Brown, the Company's Chairman and Chief Executive Officer. Unless
the context otherwise requires, references in this Offering Memorandum to the
Company include Central Garden & Pet Company and its subsidiaries and
predecessor companies. The Company's executive offices are located at 3697 Mt.
Diablo Boulevard, Lafayette, California 94549, and its telephone number is
(510) 283-4573. This Prospectus refers to various trademarks owned by companies
other than the Company.
PENDING ACQUISITION
In October 1996, the Company announced that it had agreed to acquire the
United States and Canada flea and tick business of Sandoz Agro, Inc. Such
acquisition is subject to approval by the Federal Trade Commission ("FTC").
There can be no assurance that FTC approval will be obtained or that the
acquisition will be consummated. See "Risk Factors--Acquisitions; Expansion"
and "Risk Factors--Pending Sandoz Flea and Tick Acquisition; Branded Products
Strategy."
THE OFFERING
Securities Offered........ $115,000,000 aggregate principal amount of 6% Con-
vertible Subordinated Notes due 2003 (the "Notes"),
and the Common Stock issuable upon conversion
thereof (the "Conversion Shares").
Interest Payment Dates.... March 15 and September 15, commencing March 15,
1997.
Maturity Date............. November 15, 2003.
Conversion................ The Notes are convertible into Common Stock at any
time through maturity, unless previously redeemed
or repurchased, at a conversion price of $28.00 per
share, subject to certain adjustments. See "De-
scription of Notes--Conversion of Notes."
Redemption at the Option
of the Company........... The Notes are not redeemable prior to November 15,
1999. Thereafter, the Notes will be redeemable on
at least 15 days' notice at the option of the Com-
pany, in whole or in part, at the redemption prices
set forth herein, in each case, together with ac-
crued interest. See "Description of Notes--Optional
Redemption by the Company."
5
<PAGE>
Repurchase at Option of
Holders upon Change in
Control ................. In the event a Change in Control (as defined) oc-
curs, each holder of Notes may require the Company
to repurchase all or a portion of such holder's
Notes at 100% of their principal amount thereof,
together with accrued interest to the repurchase
date. If a Change in Control were to occur, there
can be no assurance that the Company would have
sufficient funds to pay the repurchase price for
all Notes tendered by the holders thereof or that
the Company would be permitted to repurchase the
Notes tendered under its existing credit arrange-
ments. See "Description of Notes--Repurchase at Op-
tion of Holders upon Change in Control" and "Risk
Factors--Limitation on Repurchase of Notes upon
Change in Control."
Subordination............. The Notes are subordinated to all existing and fu-
ture Senior Indebtedness (as defined) and are ef-
fectively subordinated to all existing and future
indebtedness and other liabilities of the subsidi-
aries of the Company. As of December 28, 1996, the
Company had approximately $0.6 million of indebted-
ness outstanding that would have constituted Senior
Indebtedness. In addition, the Company has approxi-
mately $75 million available to be drawn upon its
principal line of credit that would constitute Se-
nior Indebtedness. The Indenture (as defined) does
not prohibit or limit the incurrence of Senior In-
debtedness or the incurrence of other indebtedness
and other liabilities by the Company and its sub-
sidiaries. See "Description of Notes--Subordination
of Notes."
Use of Proceeds........... The Company will not receive any of the proceeds
from the sale of the Notes or the Conversion
Shares.
Trading................... Prior to the resale thereof pursuant to this Pro-
spectus, each of the Notes was eligible for trading
in the Private Offerings, Resales and Trading
through Automated Linkages ("PORTAL") market. Notes
sold pursuant to this Prospectus will no longer be
eligible for trading in the PORTAL market. The Con-
version Shares have been authorized for listing on
the Nasdaq National Market upon official notice of
issuance. The Common Stock is traded on the Nasdaq
National Market under the symbol "CENT."
6
<PAGE>
RISK FACTORS
The statements contained in or incorporated into this Prospectus which are
not historical facts are forward-looking statements that are subject to 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. In 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 Notes and Conversion Shares
offered hereby.
Supplier Concentration; Dependence on Solaris. While the Company purchases
products from over 1,000 different manufacturers and suppliers, the Company
believes that over 59% of the Company's net sales in fiscal 1996 were derived
from products purchased from the Company's five largest suppliers. The Company
believes that approximately 29% of the Company's net sales during fiscal 1995
and 44% of the Company's net sales during fiscal 1996 were derived from sales
of products purchased from Solaris, the Company's largest supplier. Starting
in 1991, Solaris' predecessors began to sell directly to retailers. These
direct sales programs were expanded in 1994 and had a material adverse effect
on the Company's results of operations during 1994 and fiscal 1995. Because of
the dependence of the Company on sales of Solaris products, future changes
implemented by Solaris to its marketing and sales programs or any overall
decrease in the sales of Solaris products could have a material adverse effect
on the Company.
The Company entered into a four-year agreement with Solaris (the "Solaris
Agreement") effective October 1, 1995 which the Company believes has added
stability to its relationship with Solaris. As a result of the Solaris
Agreement, the Company's sales of Solaris products during fiscal 1996 have
increased substantially compared with fiscal 1995 and the Company's dependence
on Solaris is even greater than before the Solaris Agreement. The loss of, or
a significant adverse change in, the relationship between the Company and
Solaris or any other key manufacturer or supplier could have a material
adverse impact on the Company's business and financial results. In addition,
during the peak selling season, there may be unanticipated shortages of
certain high demand products. Although historically the Company has purchased
enough inventory of such products or their substitutes to satisfy retailer
demand, the unanticipated failure of any manufacturer or supplier to meet the
Company's requirements or the Company's inability to obtain substitutes could
have a material adverse effect on the Company. Although the Company has
entered into long-term agreements with certain suppliers, including Solaris,
in many cases the Company operates without written agreements with its
suppliers. Accordingly, although the Company believes it has good
relationships with its suppliers, there is a risk that one or more of its
suppliers may at any time terminate its supply relationship with the Company.
The Solaris Agreement. The Company believes that a significant portion of
its net sales and operating income during fiscal 1996 is attributable to its
relationship with Solaris. Under the Solaris Agreement, Solaris is obligated
to reimburse the Company for costs incurred in connection with services
provided by the Company to Solaris' direct sale accounts. In addition, the
Company receives payments based on the level of sales of Solaris products to
these accounts, and these payments are subject to increase based on the growth
of sales of Solaris products. The Company also shares with Solaris in the
economic benefits of certain cost reductions, if any. It is possible that
disagreements could arise between Solaris and the Company as to measurement of
the costs incurred in servicing Solaris' direct sales accounts. The cost
reimbursement arrangement is based on certain estimates which are subject to
reconciliation at the end of each fiscal year. As a result, the Solaris
Agreement could contribute to variability in the Company's operating results.
The relationship with Solaris embodied in the Solaris Agreement does not
assure that the Company will be profitable overall.
As a result of the Solaris Agreement, a majority of the Company's sales of
Solaris products are currently derived from servicing direct sales accounts,
whereas in 1994 and fiscal 1995, a majority of the Company's sales of Solaris
products were made by the Company as a traditional distributor. The Company
7
<PAGE>
acts as the master agent on direct sales of Solaris products to certain major
retailers and the master distributor in connection with sales of Solaris
products to other distributors and retailers. Solaris negotiates its sales
prices directly with its direct sales accounts. The Solaris Agreement contains
provisions which, without the consent of Solaris, could limit the Company's
ability to distribute certain lawn and garden products manufactured by
suppliers other than Solaris. These provisions could result in lower sales of
non-Solaris products, which could have an adverse effect on the Company's
business. The Solaris Agreement does not expire until September 30, 1999.
However, Solaris has the right to terminate the agreement prior to its
expiration in the event of a material breach of the agreement by the Company,
including the Company's failure to satisfy certain performance criteria, or,
under certain other circumstances, including a sale of Solaris. Any such early
termination would have a material adverse effect on the Company.
Customer Concentration; Dependence on Wal*Mart and Home Depot. Approximately
47%, 52% and 50% of the Company's net sales for the year ended December 25,
1994, the nine months ended September 30, 1995 and fiscal 1996, respectively,
were derived from sales to the Company's top ten customers. The Company's
largest customer is Wal*Mart, which accounted for approximately 19%, 22% and
23% of the Company's net sales for the year ended December 25, 1994, the nine
months ended September 30, 1995 and fiscal 1996, respectively. The Company's
second largest customer is Home Depot, which accounted for approximately 7%,
10% and 11% of the Company's net sales for the year ended December 25, 1994,
the nine months ended September 30, 1995 and fiscal 1996, respectively. The
loss of, or significant adverse change in, the relationship between the
Company and Wal*Mart or Home Depot could have a material adverse effect on the
Company's business and financial results. The loss of or reduction in orders
from any significant customer, losses arising from customer disputes regarding
shipments, fees, merchandise condition or related matters, or the Company's
inability to collect accounts receivable from any major customer could have a
material adverse impact on the Company's business and financial results. In
particular, the Company wrote off an account receivable of approximately
$500,000 from Ernst Home Centers which filed for bankruptcy in July 1996.
Direct Sales. Manufacturers and suppliers of lawn and garden products and
pet supplies have sold, and may intensify their efforts to sell, their
products directly to retailers, including major customers of the Company.
Prior to the acquisition of Ortho by Monsanto, both Ortho (in late 1991) and
Monsanto (in 1993) had initiated direct sale programs. Solaris, a strategic
business unit of Monsanto, expanded these direct sales programs in 1994. Most
of the Company's major customers, including its top ten customers, purchase
certain products--typically high volume items ordered in large quantities--
directly from manufacturers or suppliers. The Company believes that most major
manufacturers and suppliers that utilize distributors continually evaluate the
effectiveness of their distribution programs as well as the performance of
individual distributors, and accordingly, there can be no assurance that major
manufacturers and suppliers of the products distributed by the Company will
not modify their distribution programs in ways that could adversely affect the
Company. In addition to direct sales from manufacturers and suppliers to
retailers, certain retailers have, and may intensify their efforts to have,
products shipped by the Company to their internal distribution centers rather
than directly to stores. Such direct shipments generally yield lower gross
margins to the Company than shipments to retailers' stores, but the Company
believes that its associated operating costs are typically lower with such
direct shipments. If these programs become more common or if other methods of
distribution of lawn and garden products and pet supplies become more widely
accepted, the Company's business and financial results could be materially
adversely affected.
Weather and Seasonality. Because demand for lawn and garden products is
significantly influenced by weather, particularly weekend weather during the
peak gardening season, the Company's results of operations could be adversely
affected by certain weather patterns such as unseasonably cool or warm
temperatures, water shortages or floods. During the first six months of the
calendar year in both 1993 and 1995, and the first three months of the
calendar year in 1996, the Company's results of operations were negatively
affected by severe weather conditions in many parts of the country.
Additionally, the
8
<PAGE>
Company's business is highly seasonal, with approximately 66% of the Company's
sales in fiscal 1996 occurring during the second and third quarters of the
fiscal year. Substantially all of the Company's operating income is typically
generated in this period, while operating losses are generally incurred during
the rest of the calendar year. The Company seeks to mitigate the effects of
seasonality through various promotional efforts and incentives during the
second half of the calendar year and the sale of less seasonal products such
as pet supplies.
Low Margins; Competition. The distribution industry in which the Company
operates is characterized by relatively low profit margins. As a result, the
Company's success is highly dependent upon increasing revenues and profits
through internal expansion and acquisitions, effective cost and management
controls and differentiating its services from those of its competitors. The
wholesale lawn and garden and pet supplies distribution businesses are highly
competitive, with many companies competing principally on the basis of price
and service. In addition to competition from other distributors, the Company
also competes with manufacturers and suppliers that elect to distribute
certain of their products directly to retailers, including major customers of
the Company, and private label product suppliers. See "--Direct Sales." There
can be no assurance that the Company will not encounter increased competition
in the future or will not lose business from major manufacturers that elect to
sell their products directly to retailers, either of which could adversely
affect the Company's operations and financial results.
Acquisitions; Expansion. As part of its growth strategy, the Company
aggressively pursues the acquisition of other companies, assets and product
lines that either complement or expand its existing business. Acquisitions
involve a number of special risks, including the diversion of management's
attention to the assimilation of the operations and personnel of the acquired
companies, adverse short-term effects on the Company's operating results,
integration of financial reporting systems and the amortization of acquired
intangible assets. The Company completed seven acquisitions in 1993, four
acquisitions in 1994, one acquisition in 1995, two acquisitions in 1996,
including the acquisition of Kenlin, and to date, one acquisition in 1997, the
acquisition of Four Paws. There can be no assurance that the Company can
successfully integrate Kenlin or Four Paws or that the businesses of Kenlin
and Four Paws will enhance the Company's business. The Company has also had
preliminary acquisition discussions with, or has evaluated the potential
acquisition of, numerous other companies over the last several years. The
Company is unable to predict the likelihood of a material acquisition being
completed in the future. If the Company proceeds with a large acquisition for
cash, the Company may be able to use the proceeds from its convertible
subordinated notes offering in November 1996 or the increased borrowing
capacity resulting from that offering to consummate such transaction. The
Company may also seek to finance any such acquisition through additional debt
or equity financings.
The Company anticipates that one or more potential acquisition
opportunities, including those that would be material, may become available in
the near future. If and when appropriate acquisition opportunities become
available, the Company intends to pursue them actively. No assurance can be
given that any acquisition by the Company will or will not occur, that if an
acquisition does occur that it will not materially and adversely affect the
Company or that any such acquisition will be successful in enhancing the
Company's business. The Company's future results of operations will also
depend in part on its ability to successfully expand internally by increasing
the number of distribution centers and new product lines, and to manage any
future growth. No assurance can be given that the Company will be able to open
or operate new distribution centers, obtain or integrate additional product
lines or manage any future growth successfully.
Pending Sandoz Flea and Tick Acquisition; Branded Products Strategy. In
October 1996, the Company announced that it had agreed to acquire the United
States and Canada flea and tick business of Sandoz Agro, Inc. The consummation
of the acquisition is subject to FTC approval, and there can be no assurance
that FTC approval will be obtained or that the acquisition will be
consummated. If such acquisition is consummated, there can be no assurance
that the Company can successfully integrate the
9
<PAGE>
Sandoz Flea and Tick business or that it will enhance the Company's business.
The Company may seek to acquire additional manufacturers of consumer products,
such as Four Paws and Sandoz Flea and Tick, in pursuit of its branded products
strategy. Since the Company's management has limited experience in acquiring
or managing consumer products manufacturers, such acquisitions are likely to
subject the Company to additional risks and there can be no assurance that any
such acquisition will be successful in enhancing the Company's business. In
addition, there can be no assurance that the Company's branded products
strategy will not have a material adverse effect on the Company's relationship
with its suppliers or customers who may have competing products.
Dependence on Key Personnel. The Company's future performance is
substantially dependent upon the continued services of William E. Brown, its
Chairman and Chief Executive Officer, and Glenn W. Novotny, its President and
Chief Operating Officer. The loss of the services of either of such persons
could have a material adverse effect upon the Company. In addition, the
Company's future performance depends on its ability to attract and retain
skilled employees. There can be no assurance that the Company will be able to
retain its existing personnel or attract additional qualified employees in the
future.
Management Information Systems. The Company is presently upgrading and
installing one uniform, integrated management information system across the
United States at an estimated cost to complete of $1 million. The Company has
completed the installation of the new system for the Southwest, Midwest and
Southeast regions and expects to convert the remaining regions within the next
twelve months. No assurances can be given that such transition and system
enhancement can be accomplished in a timely and cost-effective manner without
disrupting the Company's operations. In addition, there can be no assurance
that the Company's current system or planned upgrade will be sufficient or
effective or that further investments in management information systems will
not be necessary.
Variability of Quarterly Results; Volatility of Stock Price. The Company
expects to continue to experience variability in its net sales and net income
on a quarterly basis. Factors that may contribute to this variability include:
(i) weather conditions and seasonality during peak gardening seasons as
described in "--Weather and Seasonality;" (ii) shifts in demand for lawn and
garden products; (iii) changes in product mix, service levels and pricing by
the Company and its competitors; (iv) the cost reimbursement and payment
provisions of the Solaris Agreement; (v) the effect of acquisitions and (vi)
economic stability of retail customers. In addition, because the Company
operates on relatively low margins, the Company's operating results in any
quarterly period could be affected significantly by slight variations in
revenues or operating costs. For the same reason, the Company's quarterly
results also may be vulnerable to problems in areas such as collectibility of
accounts receivable, inventory control and competitive price pressures. The
market price of the Common Stock could be subject to significant fluctuations
in response to these variations in quarterly operating results and other
factors including changes in stock market analysts' recommendations regarding
the Company. Fluctuations in the trading price of the Common Stock will affect
the trading price of the Notes.
Control of the Company; Disparate Voting Rights. William E. Brown, Chairman
of the Board and Chief Executive Officer of the Company controls approximately
45.8% of the voting power of the capital stock of the Company and, therefore,
will effectively control the Company, including the power to elect all of the
directors of the Company. Holders of Class B Stock are entitled to the lesser
of ten votes per share or 49% of the total votes cast. Holders of Common Stock
are entitled to one vote for each share owned. Holders of Class B Stock are
likely to be able to elect all of the Company's directors, control the
management and policies of the Company and determine the outcome of any matter
submitted to a vote of the Company's stockholders except to the extent that a
class vote of the Common Stock is required by applicable law. The
disproportionate voting rights of the Common Stock and Class B Stock could
have an adverse effect on the market price of the Common Stock. Such
disproportionate voting rights may make the Company a less attractive target
for a takeover than it otherwise might be, or render more difficult or
discourage a merger proposal, a tender offer or a proxy contest, even if such
actions were favored by stockholders of the Company other than the holders of
the Class B Stock. Accordingly, such
10
<PAGE>
disproportionate voting rights may deprive holders of Common Stock of an
opportunity to sell their shares at a premium over prevailing market prices,
since takeover bids frequently involve purchases of stock directly from
stockholders at such a premium price.
Environmental Considerations. The Company's subsidiary, Grant Laboratories,
Inc., which manufactures ant control products, and many of the products
distributed by the Company are subject to regulation by federal, state and
local authorities. In addition, in connection with Sandoz Flea and Tick
Acquisition, the Company will acquire a production facility in Texas which
manufactures, among other things, products based upon the active ingredient
Methoprene, and is subject to regulation by federal, state and local
authorities. Such regulations are often complex and are subject to change.
Environmental regulations may affect the Company by restricting the
manufacturing, transportation or use of its products or by regulating their
disposal. Regulatory or legislative changes may cause future increases in the
Company's operating costs or otherwise affect operations. Although the Company
believes it is and has been in substantial compliance with such regulations
and that it is adequately indemnified with respect to the environmental
liabilities of the operations of the Texas facility to be acquired pursuant to
the Sandoz Flea and Tick Acquisition, there is no assurance in the future that
the Company may not be adversely affected by such regulations or incur
increased operating costs in complying with such regulations. However, neither
the compliance with regulatory requirements nor the Company's environmental
procedures can ensure that the Company will not be subject to claims for
personal injury, property damages or governmental enforcement.
General Economic Conditions. The sale of lawn and garden products and pet
and pool supplies historically have been subject to fluctuation, with
purchases of these products tending to decline during periods of recession in
the general economy or uncertainty regarding future economic prospects that
affect consumer spending habits, particularly on discretionary items. These
economic cycles and any related fluctuation in consumer demand could have a
material adverse effect on the Company's results of operations and financial
condition. In addition, various retailers, including some of the Company's
customers, have experienced financial difficulties during the past several
years, thereby increasing the risk that such retailers may not pay for the
Company's products in a timely manner, if at all.
Subordination. The Notes 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 Notes due to an
event of default, the assets of the Company will be available to pay
obligations on the Notes 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
Notes and any other subordinated indebtedness of the Company then outstanding.
The Notes are effectively subordinated to the liabilities, including trade
payables, of the Company's 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 Notes. As of December 28, 1996, the Company had
approximately $0.6 million of indebtedness outstanding that would have
constituted Senior Indebtedness. In addition, as of February 7, 1997 the
Company had up to $75 million available for acquisitions and general corporate
purposes under its principal line of credit. All borrowings under its
principal line of credit will constitute Senior Indebtedness. See "Description
of Notes--Subordination of Notes."
Absence of Public Market for the Notes and Restrictions on Resale. Prior to
the date hereof, there has been no established trading market for the Notes.
The Notes have been designated for trading on the PORTAL Market; however,
Notes sold pursuant to this Prospectus are not expected to remain eligible for
trading on the PORTAL Market. The Company does not intend to list the Notes on
any national securities exchange or on The Nasdaq Stock Market. There can be
no assurance that an active trading market for
11
<PAGE>
the Notes will develop or, if one does develop, that it will be maintained. If
an active trading market for the Notes fails to develop or be sustained, the
trading price of such Notes could be adversely affected and holders of the
Notes may experience difficulty in reselling the Notes or may be unable to
sell them at all. If a public trading market develops for the Notes, future
trading prices of the Notes will depend upon many factors, including, among
other things, prevailing interest rates and the market price of the shares of
Common Stock.
Limitation on Repurchase of Notes upon Change in Control. Upon the
occurrence of a Change of Control, each holder of Notes may require the
Company to repurchase all or a portion of such holder's Notes. If a Change in
Control were to occur, there can be no assurance that the Company would have
sufficient financial resources or would be able to arrange financing to pay
the repurchase price for all Notes tendered by holders thereof. The Company's
ability to repurchase the Notes 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. The Company
may be required to refinance Senior Indebtedness in order to make any such
payment. If the Company is prohibited from repurchasing the Notes, such
failure to purchase tendered Notes 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 Notes. Furthermore, the Company may not have
the financial ability to repurchase the Notes in the event payment of Senior
Indebtedness is accelerated. See "Description of Notes--Repurchase at Option
of Holders upon Change in Control."
12
<PAGE>
USE OF PROCEEDS
The Company will not receive any proceeds from the sale by the Selling
Securityholders of the Notes or the Conversion Shares.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the Company's consolidated ratio of earnings
to fixed charges for the periods shown.
<TABLE>
<CAPTION>
FISCAL YEAR FISCAL YEAR FISCAL YEAR NINE MONTH FISCAL YEAR THREE MONTHS
ENDED ENDED ENDED PERIOD ENDED ENDED ENDED
DECEMBER 27, DECEMBER 26, DECEMBER 25, SEPTEMBER 30, SEPTEMBER 28, DECEMBER 28,
1992 1993 1994 1995 1996 1996
------------ ------------ ------------ ------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to
fixed charges.......... 1.92x 2.64x 1.39x 1.31x 4.00x --
</TABLE>
For purposes of calculating the ratio of earnings to fixed charges, (i)
earnings consist of consolidated income (loss) before income taxes and
minority interest plus fixed charges and (ii) fixed charges consist of
interest expense incurred and the portion of rental expense under operating
leases deemed by the Company to be representative of the interest factor.
Earnings were inadequate to cover fixed charges by $0.8 million in the three
months ended December 28, 1996.
13
<PAGE>
SELLING SECURITYHOLDERS
The Notes were originally issued by the Company in a private placement and
were resold by the initial purchasers thereof to qualified institutional
buyers (within the meaning of Rule 144A under the Securities Act) or other
institutional accredited investors (as defined in Rule 501(a)(1), (2), (3) or
(7) under the Securities Act) in transactions exempt from registration under
the Securities Act, and in sales outside the United States to persons other
than U.S. persons in reliance upon Regulation S under the Securities Act. The
Notes and the Conversion Shares that may be offered pursuant to this
Prospectus will be offered by the Selling Securityholders. The following table
sets forth certain information as of February 3, 1997 concerning the principal
amount of Notes beneficially owned by each Selling Securityholder and the
number of Conversion Shares that may be offered from time to time pursuant to
this Prospectus.
From time to time, Alex. Brown & Sons Incorporated and Merrill Lynch,
Pierce, Fenner & Smith Incorporated or their respective affiliates have
provided, and may continue to provide, investment banking services to the
Company, for which they received or will receive customary fees. None of the
other Selling Securityholders has had any position, office or other material
relationship with the Company or its affiliates within the past three years.
<TABLE>
<CAPTION>
NUMBER OF
CONVERSION PERCENTAGE OF
PRINCIPAL AMOUNT SHARES COMMON STOCK PERCENTAGE OF
OF NOTES PERCENTAGE THAT AND CLASS B TOTAL VOTING
BENEFICIALLY OWNED OF NOTES MAY BE STOCK POWER AFTER
NAME THAT MAY BE SOLD OUTSTANDING SOLD(1) OUTSTANDING(2) CONVERSION(3)
---- ------------------ ----------- ---------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Bank of New
York.......... $12,190,000 10.6% 435,357 2.8% 1.7%
Bankers Trust
Company....... 10,150,000 8.8 362,500 2.4 1.4
Bankers
Trust/BT
Holdings (New
York) Inc. ... 2,000,000 1.7 71,428 * *
Bear Stearns
Securities
Corp. ........ 8,100,000 7.0 289,285 1.9 1.1
Boston Safe
Deposit &
Trust Co...... 18,861,000 16.4 673,607 4.3 2.5
Brown (Alex.) &
Sons, Inc. ... 1,234,000 1.1 44,071 * *
Brown Brothers
Harriman & Co. 2,100,000 1.8 75,000 * *
Chase Manhattan
Bank.......... 3,755,000 3.3 134,107 * *
Chase Manhattan
Bank/Chemical.. 13,745,000 12.0 490,892 3.2 1.9
Citicorp
Services, Inc.. 3,050,000 2.7 108,928 * *
Custodial Trust
Company....... 2,265,000 2.0 80,892 * *
Dakota Group
Inc. (The).... 100,000 * 3,571 * *
Deutsche Morgan
Grenfell/C.J.
Lawrence Inc... 500,000 * 17,857 * *
First National
Bank of
Maryland (The). 120,000 * 4,285 * *
First Tennessee
Bank, N.A.
(Memphis)..... 335,000 * 11,964 * *
Investors Bank
& Trust/M.F.
Custody....... 1,055,000 * 37,678 * *
Lehman
Brothers, Inc. 1,800,000 1.6 64,285 * *
Lehman Brothers
International
(Europe)--
Prime Broker
(LBI)......... 990,000 * 35,357 * *
Mercantile,
Safe Deposit
and Trust
Company....... 1,310,000 1.1 46,785 * *
Merrill Lynch,
Pierce, Fenner
& Smith
Safekeeping... 6,000,000 5.2 214,285 1.4 *
Morgan Stanley
& Co.,
Incorporated.. 1,850,000 1.6 66,071 * *
NBD Bank....... 1,040,000 * 37,142 * *
North Dakota
State Land
Board/Trust
Company of the
West.......... 250,000 * 8,928 * *
Northern Trust
Company....... 2,765,000 2.4 98,750 * *
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
CONVERSION PERCENTAGE OF
PRINCIPAL AMOUNT SHARES COMMON STOCK PERCENTAGE OF
OF NOTES PERCENTAGE THAT AND CLASS B TOTAL VOTING
BENEFICIALLY OWNED OF NOTES MAY BE STOCK POWER AFTER
NAME THAT MAY BE SOLD OUTSTANDING SOLD(1) OUTSTANDING(2) CONVERSION(3)
---- ------------------ ----------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Salkeld &
Co. ....... 1,005,000 * 35,892 * *
Sanwa Bank
California.. 825,000 * 29,496 * *
SBC Warburg
Inc........ 1,750,000 1.5 62,500 * *
SSB--
Custodian.. 10,780,000 9.4 385,000 2.5 1.5
Swiss
American
Securities,
Inc........ 50,000 * 1,785 * *
Wachovia
Bank North
Carolina... 525,000 * 18,750 * *
Wagner,
Stott &
Co......... 4,500,000 3.9 160,714 1.1 *
</TABLE>
- --------
* Less than 1%.
(1) Assumes conversion of the full amount of Notes held by such holder at the
initial conversion price of $28.00 per share; such conversion price is
subject to adjustment as described under "Description of the Notes--
Conversion." Accordingly, the number of shares of Common Stock issuable
upon conversion of the Notes may increase or decrease from time to time.
Under the terms of the Indenture, fractional shares will not be issued
upon conversion of the Notes; cash will be paid in lieu of fractional
shares, if any.
(2) Computed in accordance with Rule 13d-3(d)(i) promulgated under the
Exchange Act and based upon 13,061,957 shares of Common Stock and
1,863,167 shares of Class B Stock, respectively, outstanding as of
February 3, 1997, treating as outstanding the number of Conversion Shares
shown as being issuable upon the assumed conversion by the named holder of
the full amount of such holder's Notes but not assuming the conversion of
the Notes of any other holder.
(3) The percentage of total voting power after conversion represents the
percentage of the voting power each stockholder will have after the
conversion based upon 13,061,957 shares of Common Stock and 1,863,167
shares of Class B Stock, respectively, outstanding as of February 3, 1997,
treating as outstanding the number of Conversion Shares as being issuable
upon the assumed conversion by the named holder of the full amount of such
holder's Notes but not assuming the conversion of the Notes of any other
holder, and giving effect to the disparate voting rights between Class B
Stock and the Common Stock and the 49% aggregate maximum voting right of
the Class B Stock.
The preceding table has been prepared based, in part, upon the information
furnished to the Company by Chemical Trust Company of California, as trustee
(the "Trustee") for the Notes, and by The Depository Trust Company ("DTC").
The Selling Securityholders identified above may have sold, transferred or
otherwise disposed of, in transactions exempt from the registration
requirements of the Securities Act, all or a portion of their Notes since the
date on which the information in the preceding table is presented. Information
concerning the Selling Securityholders may change from time to time and any
such changed information will be set forth in supplements to this Prospectus
if and when necessary. Because the Selling Securityholders may offer all or
some of the Notes that they hold and/or Conversion Shares pursuant to the
offering contemplated by this Prospectus, no estimate can be given as to the
amount of the Notes or Conversion Shares that will be held by the Selling
Securityholders upon the termination of this offering. See "Plan of
Distribution."
15
<PAGE>
DESCRIPTION OF NOTES
The Notes have been issued under an indenture dated as of November 15, 1996
(the "Indenture"), between the Company and Chemical Trust Company of
California, as Trustee (the "Trustee"). The following summaries of certain
provisions of the Notes and the Indenture do not purport to be complete and
are subject to, and are qualified in their entirety by reference to, all the
provisions of the Notes and the Indenture, including the definitions therein
of certain terms which are not otherwise defined in this Prospectus. Wherever
particular provisions or defined terms of the Indenture (or of the form of
Note which is a part thereof) are referred to, such provisions or defined
terms are incorporated herein by reference.
GENERAL
The Notes are unsecured general obligations of the Company subordinate in
right of payment to certain other obligations of the Company as described
under "--Subordination of Notes," and convertible into Common Stock as
described under "--Conversion of Notes." The Notes are limited to $115,000,000
aggregate principal amount, will be issued only in denominations of $1,000 or
any multiple thereof and will mature on November 15, 2003, unless earlier
redeemed at the option of the Company or repurchased by the Company at the
option of the holder upon a Change in Control.
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 Notes 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 Notes bear interest from the most recent date that interest has been
paid, or if no interest has been paid, from November 15, 1996, payable semi-
annually on March 15 and September 15, commencing on March 15, 1997, to
holders of record at the close of business on the March 1 and September 1,
respectively (other than with respect to a Note or portion thereof called for
redemption on a redemption date, or repurchased in connection with a Change in
Control on a Repurchase Date (as defined below) during the period from the
record date to (but excluding) the next succeeding interest payment date (in
which case accrued interest shall be payable to the extent required to the
holder of the Note or portion thereof redeemed or repurchased) or converted
after the record date and before the next succeeding interest payment date
except to the extent that, at the time such Note or portion thereof is
submitted for conversion, such Note or portion thereof was required to be
accompanied by funds equal to interest payable on such succeeding interest
payment date on the principal amount so converted (see "--Conversion of Notes"
below). Interest may, at the Company's option, be paid by check mailed to such
holders, provided that a holder of Notes with an aggregate principal amount in
excess of $5,000,000 will be paid by wire transfer in immediately available
funds at the election of such holder. Interest will be computed on the basis
of a 360-day year comprised of twelve 30-day months.
Principal and premium, if any, will be payable, and the Notes 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 is governed by and construed under the laws of the state of
New York.
BOOK ENTRY, DELIVERY AND FORM
The Notes have been issued in fully registered form, without coupons, in
denominations of $1,000 principal amount and multiples thereof. Except as
otherwise provided in the Indenture, Notes will be evidenced by one or more
global Notes ("Global Notes") deposited with the Trustee as custodian for DTC
16
<PAGE>
and registered in the name of Cede & Co. ("Cede") as DTC's nominee. Record
ownership of the Global Notes may be transferred, in whole or in part, only to
another nominee of DTC or to a successor of DTC or its nominee.
Owners of beneficial interests in the Notes may hold their interests in the
Global Notes directly through DTC if they are participants in DTC
("Participants"), indirectly through Participants, through the Euroclear
System ("Euroclear") or Cedel Bank, societe anonyme ("Cedel"), if they are
participants in such systems, or indirectly through organizations that clear
through or maintain a custodial relationship with a Participant ("Indirect
Participants"). Euroclear and Cedel will hold interests in the Global Notes on
behalf of their participants through customers' securities accounts in their
respective names on the books of their respective depositaries, which, in
turn, will hold such interests in the Global Notes in customers' securities
accounts in the depositaries' names on the books of DTC. All interests in
Global Notes, including those held through Euroclear or Cedel, may be subject
to the procedures and requirements of DTC. Those interests held through
Euroclear and Cedel may also be subject to the procedures and requirements of
such systems.
Payment of interest on and the redemption price of the Global Notes will be
made to Cede, the nominee for DTC, as the registered owner of the Global
Notes, by wire transfer of immediately available funds on each interest
payment date. Neither the Company, the Trustee nor any paying 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 Notes
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 payment of
interest on, or the redemption price of, the Global Notes, DTC's practice is
to credit Participants' accounts on the payment date therefor with payments in
amounts proportionate to their respective beneficial interests in the Notes
represented by the Global Notes, as shown on the records of DTC (adjusted as
necessary so that such payments are made with respect to whole Notes 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
Notes represented by the Global Notes 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 Notes into Common Stock pursuant to the
terms of the Notes 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 Notes represented by the Global Notes 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) will have any responsibility for the
performance by DTC or its Participants or Indirect 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 Notes (including, without limitation, the
presentation of Notes for exchange as described below), only at the direction
of one or more Participants to whose account with DTC interests in the Global
Notes are credited and only in respect of the principal amount of the Notes
represented by the Global Notes as to which such Participant or Participants
has or have given such direction.
17
<PAGE>
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 member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). DTC was created to hold securities for its Participants
and to facilitate the clearance and settlement of securities transactions
between Participants 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. 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.
Although DTC, Euroclear and Cedel have agreed to the foregoing procedures in
order to facilitate transfers of interests in the Global Notes among
Participants of DTC, Euroclear and Cedel, they are 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 depositary and a successor depositary is not appointed by the
Company within 90 days, the Company will cause Notes to be issued in
definitive form in exchange for the Global Notes. None of the Company, the
Trustee nor any of their respective agents will have any responsibility for
the performance by DTC, Euroclear and Cedel, 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 Notes.
CONVERSION OF NOTES
The holders of Notes are entitled at any time through the close of business
on the final maturity date of the Notes, subject to prior redemption or
repurchase, to convert any Notes or portions thereof (in denominations of
$1,000 or multiples thereof) into Common Stock of the Company, at the
conversion price set forth on the cover page of this Prospectus, subject to
adjustment as described below. Except as described below, no adjustment will
be made on conversion of any Notes for interest accrued thereon or for
dividends on any Common Stock issued upon conversion of the Notes.
In the event a Note is called for redemption on or after November 15, 1999
and before March 15, 2000 and the holder elects to convert such note after it
has been called for redemption, the holder will be entitled to receive
interest on such Note for the period from September 15, 1999 through November
15, 1999 in addition to any rights such holder may have upon conversion of the
Notes. If any Notes not called for redemption are converted after a record
date for the payment of interest and prior to the next succeeding interest
payment date, such Notes must be accompanied by funds equal to the interest
payable on such succeeding interest payment date on the principal amount so
converted. No such payment will be required if the Company exercises its right
to redeem such Notes on a redemption date that is an interest payment date.
The Company is not required to issue fractional shares of Common Stock upon
conversion of Notes and, in lieu thereof, will pay a cash adjustment based
upon the market price of the Common Stock on the last Trading Day (as defined)
prior to the date of conversion. In the case of Notes called for redemption,
conversion rights will expire at the close of business on the fifth business
day preceding the date fixed for redemption, unless the Company defaults in
payment of the redemption price. A Note in respect of which a holder is
exercising its option to require repurchase upon a Change in Control may be
converted only if such holder withdraws its election to exercise its option in
accordance with the terms of the Indenture.
The initial conversion price of $28.00 per share of Common Stock is subject
to adjustment (under formulae set forth in the Indenture) in certain events,
including: (i) the issuance of Common Stock and/or Class B Stock as a dividend
or distribution on Common Stock and/or Class B Stock of the Company;
(ii) certain subdivisions and combinations of the Common Stock and/or Class B
Stock; (iii) the issuance to
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<PAGE>
all holders of Common Stock and/or Class B Stock of certain rights or warrants
to purchase Common Stock and/or Class B Stock; (iv) the distribution to all
holders of Common Stock and/or Class B Stock of shares of capital stock of the
Company (other than Common Stock and/or Class B 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
and/or Class B 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 and/or Class B 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 times the number of shares of
Common Stock then outstanding plus the product of the then current market
price of the Class B Stock times the number of shares of Class B Stock
outstanding) on the record date for such distribution; (vi) the purchase of
Common Stock and/or Class B 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 and/or Class B 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
and/or Class B 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
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 Notes the holders will receive, in addition to the Common Stock
issuable upon such conversion, such rights whether or not such rights have
separated from the Common Stock at the time of such conversion.
No adjustment in the conversion price will be required unless such
adjustment would require a change of at least l% in the conversion price then
in effect; provided that any adjustment that would otherwise be required to be
made shall be carried forward and taken into account in any subsequent
adjustment. Except as stated above, the conversion price will not be adjusted
for the issuance of Common Stock or any securities convertible into or
exchangeable for Common Stock or carrying the right to purchase any of the
foregoing.
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
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<PAGE>
assets of the Company as an entirety or substantially as an entirety, in each
case as a result of which holders of Common Stock shall be entitled to receive
stock, other securities, other property or assets (including cash) with
respect to or in exchange for such Common Stock, the holders of the Notes then
outstanding will be entitled thereafter to convert such Notes into the kind
and amount of shares of stock, other securities or other property or assets
which they would have owned or been entitled to receive upon such
reclassification, change, consolidation, merger, combination, sale or
conveyance had such Notes been converted into Common Stock immediately prior
to such reclassification, change, consolidation, merger, combination, sale or
conveyance assuming that a holder of Notes would not have exercised any rights
of election as to the stock, other securities or other property or assets
receivable in connection therewith.
In the event of a taxable distribution to holders of Common Stock and/or
Class B Stock (or other transaction) which results in any adjustment of the
conversion price, the holders of Notes may, in certain circumstances, be
deemed to have received a distribution subject to United States income tax as
a dividend; in certain other circumstances, the absence of such an adjustment
may result in a taxable dividend to the holders of Common Stock.
The Company from time to time may, to the extent permitted by law, reduce
the conversion price of the Notes by any amount for any period of at least 20
days, in which case the Company shall give at least 15 days' notice of such
decrease, if the Board of Directors has made a determination that such
decrease would be in the best interests of the Company, which determination
shall be conclusive. The Company may, at its option, make such reductions in
the conversion price, in addition to those set forth above, as the Board of
Directors deems advisable to avoid or diminish any income tax to holders of
Common Stock and/or Class B 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.
OPTIONAL REDEMPTION BY THE COMPANY
The Notes are not entitled to any sinking fund. At any time on or after
November 15, 1999, all or any part of the Notes are redeemable at the
Company's option on at least 15 but not more than 60 days' notice, as a whole
or, from time to time in part, at the following prices (expressed in
percentages of the principal amount), together with accrued interest to, but
excluding, the date fixed for redemption.
If redeemed during the 12-month period beginning November 15:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
---- ----------------
<S> <C>
1999.................................................... 103.428%
2000.................................................... 102.571
2001.................................................... 101.714
2002.................................................... 100.857
</TABLE>
and 100% at November 15, 2003; provided that any semi-annual payment of
interest becoming due on the date fixed for redemption shall be payable to the
holders of record on the relevant record date of the Notes being redeemed.
If fewer than all the Notes are to be redeemed, the Trustee will select the
Notes to be redeemed in principal amounts of $1,000 or multiples thereof by
lot or, in its discretion, on a pro rata basis. If any Note is to be redeemed
in part only, a new Note or Notes in principal amount equal to the unredeemed
principal portion thereof will be issued. If a portion of a holder's Notes is
selected for partial redemption and such holder converts a portion of such
Notes, such converted portion shall be deemed to be taken from the portion
selected for redemption.
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<PAGE>
REPURCHASE AT OPTION OF HOLDERS UPON CHANGE IN CONTROL
The Indenture provides that if a Change in Control occurs, each holder of
Notes shall have the right to require the Company to repurchase all of such
holder's Notes, or any portion of the principal amount thereof that is an
integral multiple of $1,000, on the date (the "Repurchase Date") that is 30
days after the date of the Company Notice (as defined below), for cash at a
price equal to 100% of the principal amount thereof (the "Repurchase Price"),
together with accrued and unpaid interest to, but excluding, the Repurchase
Date; provided that any semi-annual payment of interest becoming due on the
Repurchase Date shall be payable to the holders of record on the relevant
record date of the Notes being repurchased.
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 Notes a notice (the "Company 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 Notice to the Trustee. To
exercise the repurchase right, a holder of such Notes must deliver to the
Trustee on or before the Repurchase Date written notice of the holder's
exercise of such right, together with the Notes with respect to which the
right is being exercised, duly endorsed for transfer to the Company.
A "Change in Control" will be deemed to have occurred at such time after the
original issuance of the Notes 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, William E. Brown, members of his
immediate family, his heirs or any entity Controlled 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 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 or
Class B 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 Class B 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 or Class B Stock solely into shares of common stock
and separate series of common stock carrying substantially the same
relative rights as the Common Stock and Class B 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
10 Trading Days within the period of 20 consecutive Trading Days ending
immediately before the Change in Control shall equal or exceed 105% of the
conversion price
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<PAGE>
in effect on each such Trading Day, 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 Notes 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) is at least 105% of the
Conversion Price in effect on the date immediately preceding the date of
consummation of such Change in Control. 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 Notes at the option of the holders thereof upon a
Change in Control.
The Change in Control feature of the Notes 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 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 Notes
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 Notes upon the occurrence of a Change in
Control is subject to limitations. If a Change in Control were to occur, there
can be no assurance that the Company would have sufficient financial
resources, or would be able to arrange financing, to pay the repurchase price
for all Notes tendered by holders thereof. In addition, the terms of certain
of the Company's existing debt agreements prohibit the Company from purchasing
any Notes 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. 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 Notes, the Company could seek the consent of its lenders to
repurchase the Notes or could attempt to refinance the borrowings that contain
such prohibition. If the Company does not obtain such a consent or repay such
borrowings, the Company would remain prohibited from repurchasing Notes. Any
failure by the Company to repurchase the Notes 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 case, any repurchase of the Notes would, absent a waiver, be
prohibited under the subordination provisions of the Indenture until the
Senior Indebtedness is paid in full. See "--Subordination of Notes" below,
"Risk Factors--Subordination" and "Risk Factors--Limitation on Repurchase of
Notes upon Change in Control."
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<PAGE>
SUBORDINATION OF NOTES
The indebtedness evidenced by the Notes is subordinated to the extent
provided in the Indenture to the prior payment in full of all Senior
Indebtedness. Upon any distribution of assets of the Company upon any
dissolution, winding up, liquidation or reorganization, the payment of the
principal of, or premium, if any, and interest on the Notes is to be
subordinated to the extent provided in the Indenture in right of payment to
the prior payment in full in cash of all Senior Indebtedness. In the event of
any acceleration of the Notes 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 Notes are entitled to receive
any payment or distribution in respect thereof. The Indenture requires that
the Company promptly notify holders of Senior Indebtedness if payment of the
Notes is accelerated because of an Event of Default.
The Company also may not make any payment upon or in respect of the Notes if
(i) a default in the payment of the principal of, premium, if any, interest,
rent 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 Notes 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, premium, if any,
and interest on the Notes 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 Notes 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 refundings of, or
amendments, modifications or supplements to, the foregoing), unless in the
case of any particular Indebtedness the instrument creating or evidencing the
same or the assumption or guarantee thereof expressly provides that such
Indebtedness shall not be senior in right of payment to the Notes or expressly
provides that such Indebtedness is "pari passu" or "junior" to the Notes.
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
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<PAGE>
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 a capitalized lease obligations on
the balance sheet of such Person and all obligations and other liabilities
(contingent or otherwise) under any lease or related document (including a
purchase agreement) in connection with the lease of real property which
provides that such Person is contractually obligated to purchase or cause a
third party to purchase the leased property and thereby guarantee a minimum
residual value of the leased property to the lessor and the obligations of
such Person under such lease or related document to purchase or to cause a
third party to purchase such leased property, (d) all obligations of such
Person (contingent or otherwise) with respect to an interest rate or other
swap, cap or collar agreement or other similar instrument or agreement or
foreign currency hedge, exchange, purchase or similar instrument or agreement,
(e) all direct or indirect guaranties or similar agreements by such Person in
respect of, and obligations or liabilities (contingent or otherwise) of such
Person to purchase or otherwise acquire or otherwise assure a creditor against
loss in respect of, indebtedness, obligations or liabilities of another Person
of the kind described in clauses (a) through (d), (f) any indebtedness or
other obligations described in clauses (a) through (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 refundings 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 Indebtedness under the Credit Agreement (as defined in the
Indenture), 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 Notes to participate in those assets) will be effectively
subordinated to the claims of that subsidiary's creditors (including trade
creditors), except to the extent that the Company is itself recognized as a
creditor of such subsidiary, in which case the claims of the Company would
still be subordinate to any security interest in the assets of such subsidiary
and any indebtedness of such subsidiary senior to that held by the Company.
As of December 28, 1996, the Company had approximately $0.6 million of
indebtedness outstanding that would have constituted Senior Indebtedness. In
addition, the Company has approximately $75 million available to be drawn upon
its principal line of credit that would constitute Senior Indebtedness. The
Indenture does not limit the amount of additional indebtedness, including
Senior Indebtedness, which the Company can create, incur, assume or guarantee,
nor does the Indenture limit the amount of indebtedness which any subsidiary
can create, incur, assume or guarantee.
In the event that, notwithstanding the foregoing, the Trustee or any holder
of Notes receives any payment or distribution of assets of the Company of any
kind in contravention of any of the 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 Notes 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.
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<PAGE>
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 Notes. The Trustee's
claims for such payments will be senior to those of holders of the Notes in
respect of all funds collected or held by the Trustee.
EVENTS OF DEFAULT AND REMEDIES
The following are Events of Default under the Indenture: (i) default in the
payment of any interest, continued for 30 days, (ii) default in the payment of
principal or premium, if any, when due or in the payment of any redemption
obligation, (iii) default by the Company or any Significant Subsidiary with
respect to its obligation to pay principal of or interest on indebtedness for
borrowed money aggregating more than $10,000,000, or the acceleration of such
indebtedness under the terms of the instruments evidencing such indebtedness
which has not been withdrawn within 10 days from the date of such default,
(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
Significant Subsidiaries which require the payment by the Company or any of
its Significant Subsidiaries of an amount (to the extent not covered by
insurance) in excess of $10,000,000 and such judgments or orders remain
unsatisfied, undischarged, unvacated, unbonded and unstayed 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 Notes then outstanding may declare the principal of and accrued
interest on the Notes to be due and payable immediately, but if the Company
shall cure all defaults (except the nonpayment of principal of, premium, if
any, and interest on any of the Notes 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 Notes then outstanding.
In the case of certain events of bankruptcy or insolvency, the principal of
and accrued interest on the Notes shall automatically become and be
immediately due and payable.
The holders of a majority in principal amount of the Notes 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 Notes at the time outstanding, to modify the Indenture or any
supplemental indenture or the rights of the holders of the Notes, except that
no such modification shall (i) extend the fixed maturity of any Note, reduce
the rate or extend the time of payment of interest thereon, reduce the
principal amount thereof or premium, if any, thereon, reduce any amount
payable upon redemption thereof, change, the obligation of the Company to
repurchase any Note upon the occurrence of any Change in Control in a manner
adverse to holders of Notes, impair the right of a holder to institute suit
for the payment thereof, change the currency in which the Notes are payable,
or impair the right to convert the Notes into Common Stock in any material
respect, or modify the provisions of the Indenture with respect to the
subordination of the Notes in a manner adverse to the holders of the Notes in
any material respect, without the consent of the holder of each Note so
affected, or (ii) reduce the aforesaid percentage of Notes the holders of
which are required to consent to any such supplemental indenture, without the
consent of the holders of all of the Notes then outstanding.
25
<PAGE>
CONCERNING THE TRUSTEE
Chemical Trust Company of California, the Trustee under the Indenture, has
been appointed by the Company as the initial paying agent, conversion agent,
registrar and custodian with regard to the Notes. The Company may maintain
deposit accounts and conduct other banking transactions with the Trustee or
its affiliates in the ordinary course of business, and the Trustee and its
affiliates may from time to time in the future provide banking and other
services to the Company in the ordinary course of their business.
DESCRIPTION OF CAPITAL STOCK
As of the date of this Prospectus, the authorized capital stock of the
Company consists of 40,000,000 shares of Common Stock ("Common Stock"),
3,000,000 shares of Class B Stock ("Class B Stock") and 1,000 shares of
Preferred Stock ("Preferred Stock").
COMMON STOCK AND CLASS B STOCK
Voting, Dividend and Other Rights. The voting powers, preferences and
relative rights of the Common Stock and the Class B Stock are identical in all
respects, except that (i) the holders of Common Stock are entitled to one vote
per share and the holders of Class B Stock are entitled to the lesser of ten
votes per share or 49% of the total votes cast, (ii) stock dividends on Common
Stock may be paid only in shares of Common Stock and stock dividends on Class
B Stock may be paid only in shares of Class B Stock and (iii) shares of Class
B Stock have certain conversion rights and are subject to certain restrictions
on ownership and transfer described below under "Conversion Rights and
Restrictions on Transfer of Class B Stock." Except as described above,
issuances of additional shares of Class B Stock and modifications of the terms
of the Class B Stock require the approval of a majority of the holders of the
Common Stock and Class B Stock, voting as separate classes. The Certificate of
Incorporation cannot be modified, revised or amended without the affirmative
vote of the majority of outstanding shares of Common Stock and Class B Stock,
voting separately as a class. Except as described above or as required by law,
holders of Common Stock and Class B Stock vote together on all matters
presented to the stockholders for their vote or approval, including the
election of directors. The stockholders are not entitled to vote cumulatively
for the election of directors.
The outstanding shares of Common Stock equal 87.5% of the total shares
outstanding (and, together with the 100 shares of Series A Preferred Stock
owned by Monsanto Company, have 51% of the combined voting power of the
outstanding shares), and the holders of Class B Stock have 49% of the combined
voting power of the outstanding shares. The holders of the Class B Stock are,
therefore, likely to be able to elect the entire Board of Directors of the
Company and to determine the outcome of any matter submitted to the
stockholders for approval including the power to determine the outcome of all
corporate transactions.
Each share of Common Stock and Class B Stock is entitled to receive
dividends if, as and when declared by the Board of Directors of the Company
out of funds legally available therefor. The Common Stock and Class B Stock
share equally, on a share-for-share basis, in any cash dividends declared by
the Board of Directors.
Stockholders of the Company have no preemptive or other rights to subscribe
for additional shares. Subject to any rights of holders of any Preferred
Stock, all holders of Common Stock and Class B Stock, regardless of class, are
entitled to share equally on a share-for-share basis in any assets available
for distribution to stockholders on liquidation, dissolution or winding up of
the Company. No Common Stock or Class B Stock is subject to redemption or a
sinking fund. All shares of Common Stock offered hereby will be, when so
issued or sold, validly issued, fully paid and nonassessable.
26
<PAGE>
Conversion Rights and Restrictions on Transfer of Class B Stock. The Common
Stock has no conversion rights. However, at the option of the holder, each
share of Class B Stock is convertible at any time and from time to time into
one share of Common Stock. If at any time the holders of a majority of
outstanding shares of Class B Stock vote to convert the outstanding shares of
Class B Stock to Common Stock, then all outstanding shares of Class B Stock
shall be deemed automatically converted into shares of Common Stock.
The Company's Certificate of Incorporation provides that any holder of
shares of Class B Stock desiring to transfer such shares to a person other
than a Permitted Transferee (as defined below) must present such shares to the
Company for conversion into an equal number of shares of Common Stock upon
such transfer. Thereafter, such shares of Common Stock may be freely
transferred to persons other than Permitted Transferees, subject to applicable
securities laws.
Shares of Class B Common Stock may not be transferred except generally to
family members, certain trusts, heirs and devisees (collectively, "Permitted
Transferees"). Upon any sale or transfer of ownership or voting rights to a
transferee other than a Permitted Transferee or to the extent an entity no
longer remains a Permitted Transferee, such shares of Class B Stock will
automatically convert into an equal number of shares of Common Stock.
Accordingly, no trading market is expected to develop in the Class B Stock and
the Class B Stock will not be listed or traded on any exchange or in any
market.
Effects of Disproportionate Voting Rights. The disproportionate voting
rights of the Common Stock and Class B Stock could have an adverse effect on
the market price of the Common Stock. Such disproportionate voting rights may
make the Company a less attractive target for a takeover than it otherwise
might be, or render more difficult or discourage a merger proposal, a tender
offer or a proxy contest, even if such actions were favored by stockholders of
the Company other than the holders of the Class B Stock. Accordingly, such
disproportionate voting rights may deprive holders of Common Stock of an
opportunity to sell their shares at a premium over prevailing market prices,
since takeover bids frequently involve purchases of stock directly from
stockholders at such a premium price.
PREFERRED STOCK
The Board of Directors has the authority to cause the Company to issue up to
1,000 shares of Preferred Stock in one or more series and to fix the rights,
preferences, privileges and restrictions thereof, including dividend rights,
conversion rights, voting rights, terms of redemption, liquidation preferences
and the number of shares constituting any series or the designation of such
series, without any further vote or action by the stockholders. The issuance
of Preferred Stock may have the effect of delaying, deferring or preventing a
change in control of the Company without further action by the stockholders.
The issuance of Preferred Stock with voting and conversion rights may
adversely affect the voting power of the holders of the Common Stock.
In July 1995, the Company issued 100 shares of Series A Preferred Stock to
Monsanto Company, of which Solaris is a strategic business unit. The Series A
Preferred Stock is entitled to receive a cumulative 5% annual cash dividend
which must be paid prior to the declaration or payment of any dividends on the
Common Stock. Each share of Series A Preferred Stock is entitled to a
liquidation preference of $9,000 per share, is convertible into 1,000 shares
of Common Stock, votes together with the Common Stock and has a number of
votes equal to the number of shares of Common Stock into which it is
convertible.
The Company has no present plans to issue any additional shares of Preferred
Stock.
SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW
The Company is subject to the provisions of Section 203 of the Delaware
General Corporation Law. This statute generally prohibits, under certain
circumstances, a Delaware corporation whose stock is publicly traded, from
engaging in a "business combination" with an "interested stockholder" for a
period
27
<PAGE>
of three years after the date of the transaction in which the person became an
interested stockholder, unless (i) a corporation has elected in its
certificate of incorporation or bylaws not to be governed by this Delaware law
(the Company has not made such an election); (ii) prior to the time the
stockholder became an interested stockholder, the board of directors approved
either the business combination or the transaction which resulted in the
person becoming an interested stockholder, (iii) the stockholder owned at
least 85% of the outstanding voting stock of the corporation (excluding shares
held by directors who were also officers or held in certain employee stock
plans) upon consummation of the transaction which resulted in the stockholder
becoming an interested stockholder or (iv) the business combination was
approved by the board of directors and by two-thirds of the outstanding voting
stock of the corporation (excluding shares held by the interested
stockholder). An "interested stockholder" is a person who, together with
affiliates and associates, owns (or any time within the prior three years did
own) 15% or more of the corporation's outstanding voting stock. The term
"business combination" is defined generally to include mergers,
consolidations, stock sales, asset-based transactions, and other transactions
resulting in a financial benefit to the interested stockholder.
TRANSFER AGENT AND REGISTRAR
ChaseMellon Shareholder Services, L.L.C. serves as the transfer agent and
registrar for the Company's Common Stock.
PLAN OF DISTRIBUTION
Pursuant to a Registration Rights Agreement dated as of November 15, 1996
(the "Registration Rights Agreement") between the Company and the initial
purchasers named therein entered into in connection with the offering of the
Notes, the Registration Statement of which this Prospectus forms a part was
filed with the Commission covering the resale of the Notes and the Common
Stock issuable upon conversion of the Notes (the "Securities"). The Company
has agreed to use all reasonable efforts to keep the Registration Statement
effective until November 15, 1999 (or such earlier date when the holders of
the Securities are able to sell all such Securities immediately without
restriction pursuant to Rule 144(k) under the Securities Act or any successor
rule thereto or otherwise). The Company will be permitted to suspend the use
of this Prospectus (which is a part of the Registration Statement) in
connection with sales of Securities by holders during certain periods of time
under certain circumstances relating to pending corporate developments and
public filings with the Commission and similar events. The specific provisions
relating to the registration rights described above are contained in the
Registration Rights Agreement, and the foregoing summary is qualified in its
entirety by reference to the provisions of such agreement.
Sales of the Notes and the Conversion Shares may be effected by or for the
account of the Selling Securityholders from time to time in transactions
(which may include block transactions in the case of the Conversion Shares) on
any exchange or market on which such securities are listed or quoted, as
applicable, in negotiated transactions, through a combination of such methods
of sale, or otherwise, at fixed prices that may be changed, at market prices
prevailing at the time of sale, at prices related to prevailing market prices,
or at negotiated prices. The Selling Securityholders may effect such
transactions by selling the Notes or Conversion Shares directly to purchasers,
through broker-dealers acting as agents for the Selling Securityholders, or to
broker-dealers who may purchase Notes or Conversion Shares as principals and
thereafter sell the Notes or Conversion Shares from time to time in
transactions (which may include block transactions in the case of the
Conversion Shares) on any exchange or market on which such securities are
listed or quoted, as applicable, in negotiated transactions, through a
combination of such methods of sale, or otherwise. In effecting sales, broker-
dealers engaged by Selling Securityholders may arrange for other broker-
dealers to participate. Such broker-dealers, if any, may receive compensation
in the form of discounts, concessions or commissions from the Selling
Securityholders and/or the purchasers of the Notes or Conversion Shares for
whom such broker-dealers may act as agents or to whom
28
<PAGE>
they may sell as principals, or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions).
The Selling Securityholders and any broker-dealers, agents or underwriters
that participate with the Selling Securityholders in the distribution of the
Notes or Conversion Shares may be deemed to be "underwriters" within the
meaning of the Securities Act. Any commissions paid or any discounts or
concessions allowed to any such persons, and any profits received on the
resale of the Notes or Conversion Shares offered hereby and purchased by them
may be deemed to be underwriting commissions or discounts under the Securities
Act.
At the time a particular offering of the Notes and/or the Conversion Shares
is made and to the extent required, the aggregate principal amount of Notes
and number of Conversion Shares being offered, the name or names of the
Selling Securityholders, and the terms of the offering, including the name or
names of any underwriters, broker-dealers or agents, any discounts,
concessions or commissions and other terms constituting compensation from the
Selling Securityholders, and any discounts, concessions or commissions allowed
or reallowed or paid to broker-dealers, will be set forth in an accompanying
Prospectus Supplement.
Pursuant to the Registration Rights Agreement, the Company has agreed to pay
all expenses incident to the offer and sale of the Notes and Conversion Shares
offered by the Selling Securityholders hereby, except that the Selling
Securityholders will pay all underwriting discounts and selling commissions,
if any. The Company has agreed to indemnify the Selling Securityholders
against certain labilities, including liabilities under the Securities Act,
and to contribute to payments the Selling Securityholders may be required to
make in respect thereof.
To comply with the securities laws of certain jurisdictions, if applicable,
the Notes and Conversion Shares offered hereby will be offered or sold in such
jurisdictions only through registered or licensed brokers or dealers.
Under applicable rules and regulations under the Exchange Act, any person
engaged in a distribution of the Notes or the Conversion Shares may be limited
in its ability to engage in market activities with respect to such Note or
Conversion Shares. In addition and without limiting the foregoing, each
Selling Securityholder will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder, which provisions may
limit the timing of purchase and sales of any of the Notes and Conversion
Shares by the Selling Securityholders. The foregoing may affect the
marketability of the Notes and the Conversion Shares.
From time to time, Alex. Brown & Sons Incorporated and Merrill Lynch,
Pierce, Fenner & Smith Incorporated or their respective affiliates have
provided, and may continue to provide investment banking services to the
Company, for which they received or will receive customary fees. See "Selling
Securityholders."
LEGAL MATTERS
Certain legal matters with respect to the validity of the securities offered
hereby will be passed upon for the Company by Orrick, Herrington & Sutcliffe
LLP, San Francisco, California.
EXPERTS
The consolidated financial statements and related financial statement
schedule incorporated in this Prospectus by reference from the Company's
Annual Report on Form 10-K for the year ended September 28, 1996 have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
reports, which are incorporated herein by reference, and have been so
incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
29
<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. 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
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Additional Information..................................................... 2
Incorporation of Certain Documents by Reference............................ 2
Summary.................................................................... 4
Risk Factors............................................................... 7
Use of Proceeds............................................................ 13
Ratio of Earnings to Fixed Charges......................................... 13
Selling Securityholders.................................................... 14
Description of Notes....................................................... 16
Description of Capital Stock............................................... 26
Plan of Distribution....................................................... 28
Legal Matters.............................................................. 29
Experts.................................................................... 29
</TABLE>
===============================================================================
===============================================================================
$115,000,000
[LOGO OF CENTRAL GARDEN & PET]
6% Convertible Subordinated
Notes due 2003
And
Shares of Common Stock
Issuable upon Conversion Thereof
-----------
PROSPECTUS
-----------
FEBRUARY , 1997
===============================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses payable by the
Registrant in connection with the sale and distribution of the securities
being registered. All amounts are estimated except the SEC registration fee
and the Nasdaq Listing Application Fee.
<TABLE>
<S> <C>
SEC Registration Fee......................................... $ 34,848.48
Nasdaq Listing Application Fee............................... 17,500.00
Accounting Fees.............................................. 12,000.00
Legal Fees and Expenses...................................... 25,000.00
Printing and Engraving....................................... 15,000.00
Miscellaneous................................................ 25,651.52
-----------
Total...................................................... $130,000.00
===========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article Sixth, Section 2 of the Registrant's Certificate of Incorporation
provides that directors of the Registrant shall not be personally liable to
the Registrant or its stockholders for monetary damages for breach of
fiduciary duty as a director, to the fullest extent permitted by the General
Corporation Law of the State of Delaware. Article V of the Registrant's By-
laws provides for indemnification of officers and directors to the full extent
and in the manner permitted by Delaware law. Section 145 of the Delaware
General Corporation Law makes provision for such indemnification in terms
sufficiently broad to cover officers and directors under certain circumstances
for liabilities arising under the Securities Act of 1933.
The Registrant has entered into indemnification agreements with each
director which provide indemnification under certain circumstances for acts
and omissions which may not be covered by any directors' and officers'
liabilities insurance.
The form of Underwriting Agreement, filed as Exhibit 1.1 to the Registration
Statement, provides for indemnification of the Registrant and its controlling
persons against certain liabilities under the Securities Act of 1933, as
amended.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
Set forth below is a list of exhibits that are being filed with this
Registration Statement:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
------- -------
<C> <S>
2.1 Form of Agreement of Merger and Plan of Merger between Central
Garden Supply of Southern California and Central Garden & Pet
Company (Incorporated by reference from Exhibit 2.1 to
Registration Statement No. 33-48070).
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
------- -------
<C> <S>
2.2 Form of Agreement of Merger and Plan of Merger between Central
Garden Sales Corp. and Central Garden & Pet Company
(Incorporated by reference from Exhibit 2.2 to Registration
Statement No. 33-48070).
2.3 Form of Reorganization Agreement between Central Garden Supply
and Central Garden & Pet Company (Incorporated by reference
from Exhibit 2.3 to Registration Statement No. 33-48070).
2.4 Agreement and Plan of Merger between Central Garden & Pet Supply
Company and Central Garden & Pet Company dated as of June 11,
1992 (Incorporated by reference from Exhibit 2.4 to
Registration Statement No. 33-48070).
4.1 Specimen Common Stock Certificate (Incorporated by reference
from Exhibit 4.1 to Registration Statement No. 33-48070).
4.2 Indenture, dated as of November 15, 1996, between the Company
and Chemical Trust Company of California, as Trustee, including
the form of Notes.
4.3 Registration Rights Agreement, dated as of November 15, 1996,
among the Company, Alex. Brown & Sons Incorporated, Merrill
Lynch, Pierce, Fenner & Smith Incorporated, Hambrecht & Quist
LLC and Wasserstein Perella Securities, Inc.
5.1 Opinion of Orrick, Herrington & Sutcliffe LLP, including
consent.
12.1 Statement re computation ratios.
23.1 Independent Auditors' Consent (Deloitte & Touche LLP).
23.2 Consent of Orrick, Herrington & Sutcliffe LLP (See Exhibit 5.1).
24 Power of Attorney (See page II-4).
25.1 Statement of Eligibility and Qualification Under the Trust
Indenture Act of 1939 of Chemical Trust Company of California,
as Trustee, on Form T-1.
</TABLE>
- --------
ITEM 17. UNDERTAKINGS
A. The undersigned registrant hereby undertakes that for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (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 offering therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
B. Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended, may be permitted to directors, officers, and
controlling persons of the Registrant pursuant to the provisions described on
Item 15 above, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act, 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 of 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>
C. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(a) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(b) To reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this Registration Statement; and
(c) 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 post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-offering amendment any
of the securities being registered which remain unsold at the termination
of the offering.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, CENTRAL GARDEN &
PET COMPANY 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 LAFAYETTE, STATE OF CALIFORNIA, ON
FEBRUARY 11, 1997.
Central Garden & Pet Company
/s/ William E. Brown
By: _________________________________
(WILLIAM E. BROWN, CHIEF EXECUTIVE
OFFICER AND DIRECTOR)
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints William E. Brown and Glenn W. Novotny, or
either of them, each with the power of substitution, his attorney-in-fact, to
sign any amendments to this Registration Statement (including any and all
post-effective amendments), and any related registration statement that is to
be effective upon filing pursuant to Rule 462(b) under the Securities Act of
1933 and to file the same, with exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming all that each of said attorneys-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
--------- -------- ----
<S> <C> <C>
/s/ William E. Brown Chief Executive February 11, 1997
- ------------------------------------- Officer and
(WILLIAM E. BROWN) Director (Principal
Executive Officer)
/s/ Robert B. Jones Vice President, February 11, 1997
- ------------------------------------- Chief Financial
(ROBERT B. JONES) Officer (Principal
Financial Officer
and Principal
Accounting Officer)
/s/ Glenn W. Novotny Director February 11, 1997
- -------------------------------------
(GLENN W. NOVOTNY)
/s/ Daniel P. Hogan, Jr. Director February 11, 1997
- -------------------------------------
(DANIEL P. HOGAN, JR.)
/s/ Lee D. Hines, Jr. Director February 11, 1997
- -------------------------------------
(LEE D. HINES, JR.)
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION NUMBERED PAGE
------- ----------- -------------
<C> <S> <C>
2.1 Form of Agreement of Merger and Plan of Merger
between Central Garden Supply of Southern
California and Central Garden & Pet Company
(Incorporated by reference from Exhibit 2.1 to
Registration Statement No. 33-48070).
2.2 Form of Agreement of Merger and Plan of Merger
between Central Garden Sales Corp. and Central
Garden & Pet Company (Incorporated by reference
from Exhibit 2.2 to Registration Statement No.
33-48070).
2.3 Form of Reorganization Agreement between Central
Garden Supply and Central Garden & Pet Company
(Incorporated by reference from Exhibit 2.3 to
Registration Statement No. 33-48070).
2.4 Agreement and Plan of Merger between Central
Garden & Pet Supply Company and Central Garden &
Pet Company dated as of June 11, 1992
(Incorporated by reference from Exhibit 2.4 to
Registration Statement No. 33-48070).
4.1 Specimen Common Stock Certificate (Incorporated by
reference from Exhibit 4.1 to Registration
Statement No. 33-48070).
4.2 Indenture, dated as of November 15, 1996, between
the Company and Chemical Trust Company of
California, as Trustee, including the form of
Notes.
4.3 Registration Rights Agreement, dated as of
November 15, 1996, among the Company, Alex. Brown
& Sons Incorporated, Merrill Lynch, Pierce,
Fenner & Smith Incorporated, Hambrecht & Quist
LLC and Wasserstein Perella Securities, Inc.
5.1 Opinion of Orrick, Herrington & Sutcliffe LLP,
including consent.
12.1 Statement re computation ratios.
23.1 Independent Auditors' Consent (Deloitte & Touche
LLP).
23.2 Consent of Orrick, Herrington & Sutcliffe LLP (See
Exhibit 5.1).
24 Power of Attorney (See page II-4).
25.1 Statement of Eligibility and Qualification Under
the Trust Indenture Act of 1939 of Chemical Trust
Company of California, as Trustee, on Form T-1.
</TABLE>
<PAGE>
EXHIBIT 4.2
- --------------------------------------------------------------------------------
CENTRAL GARDEN & PET COMPANY
TO
Chemical Trust Company of California
Trustee
INDENTURE
Dated as of November 15, 1996
6% Convertible Subordinated Notes due 2003
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I. DEFINITIONS................................................... 1
Section 1.1 Definitions................................................... 1
Affiliate..................................................... 2
Board of Directors............................................ 2
Business Day.................................................. 2
Cedel......................................................... 2
Change in Control............................................. 2
Closing Price................................................. 2
Commission.................................................... 2
Common Stock.................................................. 2
Company....................................................... 3
Conversion Price.............................................. 3
Corporate Trust Office........................................ 3
Credit Agreement.............................................. 3
Custodian..................................................... 3
default....................................................... 3
Defaulted Interest............................................ 3
Depositary.................................................... 3
Designated Senior Indebtedness................................ 3
Exchange Act.................................................. 4
Expiration Time............................................... 4
Euroclear..................................................... 4
Event of Default.............................................. 4
Foreign Person................................................ 4
Global Note................................................... 4
Indebtedness.................................................. 4
Indenture..................................................... 5
Initial Purchasers............................................ 5
Note or Notes................................................. 5
Noteholder or holder.......................................... 5
Note register................................................. 5
Offering Memorandum........................................... 5
Officers' Certificate......................................... 5
Opinion of Counsel............................................ 5
outstanding................................................... 5
Payment Blockage Notice....................................... 6
Person........................................................ 6
PORTAL Market................................................. 6
Predecessor Note.............................................. 6
</TABLE>
i
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION> Page
----
<S> <C> <C>
Purchased Shares.............................................. 6
QIB........................................................... 6
Registration Rights Agreement................................. 6
Regulation D.................................................. 7
Regulation S.................................................. 7
Regulation S Global Note...................................... 7
Representative................................................ 7
Responsible Officer........................................... 7
Repurchase Date............................................... 7
Repurchase Price.............................................. 7
Restricted Securities......................................... 7
Rule 144A..................................................... 7
Rule 144A Global Note......................................... 7
Rule 144(k)................................................... 7
Securities Act................................................ 7
Senior Indebtedness........................................... 8
Significant Subsidiary........................................ 8
Subsidiary.................................................... 8
Trading Day................................................... 8
Trigger Event................................................. 8
Trust Indenture Act........................................... 8
Trustee....................................................... 8
ARTICLE II. ISSUE, DESCRIPTION, EXECUTION, REGISTRATION
AND EXCHANGE OF NOTES........................................ 9
Section 2.1 Designation, Amount and Issue of Notes....................... 9
Section 2.2 Form of Notes................................................ 9
Section 2.3 Date and Denomination of Notes Payments of Interest.......... 10
Section 2.4 Execution of Notes........................................... 12
Section 2.5 Exchange and Registration of Transfer of Notes; Restrictions
on Transfer; Depositary...................................... 12
Section 2.6 Mutilated, Destroyed, Lost or Stolen Notes................... 22
Section 2.7 Temporary Notes.............................................. 23
Section 2.8 Cancellation of Notes Paid, Etc.............................. 23
ARTICLE III. REDEMPTION OF NOTES.......................................... 24
Section 3.1 Redemption Prices............................................ 24
Section 3.2 Notice of Redemption Selection of Notes...................... 24
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Section 3.3 Payment of Notes Called for Redemption...................... 25
Section 3.4 Conversion Arrangement on Call for Redemption............... 26
ARTICLE IV. SUBORDINATION OF NOTES...................................... 27
Section 4.1 Agreement of Subordination.................................. 27
Section 4.2 Payments to Noteholders..................................... 27
Section 4.3 Subrogation of Notes........................................ 30
Section 4.4 Authorization to Effect Subordination....................... 31
Section 4.5 Notice to Trustee........................................... 31
Section 4.6 Trustee's Relation to Senior Indebtedness................... 32
Section 4.7 No Impairment of Subordination.............................. 33
Section 4.8 Certain Conversions Deemed Payment.......................... 33
Section 4.9 Article Applicable to Paying Agents......................... 33
Section 4.10 Senior Indebtedness Entitled to Rely........................ 33
ARTICLE V. PARTICULAR COVENANTS OF THE COMPANY......................... 34
Section 5.1 Payment of Principal, Premium and Interest.................. 34
Section 5.2 Maintenance of Office or Agency............................. 34
Section 5.3 Appointments to Fill Vacancies in Trustee's Office.......... 35
Section 5.4 Provisions as to Paying Agent............................... 35
Section 5.5 Corporate Existence......................................... 36
Section 5.6 Rule 144A Information Requirement........................... 36
Section 5.7 Stay, Extension and Usury Laws.............................. 36
Section 5.8 Compliance Certificate...................................... 37
ARTICLE VI. NOTEHOLDERS' LISTS AND REPORTS BY THE
COMPANY AND TRUSTEE......................................... 37
Section 6.1 Noteholders' Lists.......................................... 37
Section 6.2 Preservation and Disclosure of Lists........................ 37
Section 6.3 Reports by Trustee.......................................... 37
Section 6.4 Reports by Company.......................................... 38
ARTICLE VII. REMEDIES OF THE TRUSTEE AND NOTEHOLDERS
ON AN EVENT OF DEFAULT...................................... 38
Section 7.1 Events of Default........................................... 38
Section 7.2 Payments of Notes on Default; Suit Therefor................. 40
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Section 7.3 Application of Monies Collected by Trustee.................. 42
Section 7.4 Proceedings by Noteholder................................... 43
Section 7.5 Proceedings by Trustee...................................... 43
Section 7.6 Remedies Cumulative and Continuing.......................... 44
Section 7.7 Direction of Proceedings and Waiver of Defaults by Majority
of Noteholders.............................................. 44
Section 7.8 Notice of Defaults.......................................... 44
Section 7.9 Undertaking to Pay Costs.................................... 45
ARTICLE VIII. CONCERNING THE TRUSTEE...................................... 45
Section 8.1 Duties and Responsibilities of Trustee...................... 45
Section 8.2 Reliance on Documents, Opinions, Etc........................ 46
Section 8.3 No Responsibility for Recitals, Etc........................ 47
Section 8.4 Trustee, Paying Agents, Conversion Agents or Registrar May
Own Notes................................................... 48
Section 8.5 Monies to Be Held in Trust.................................. 48
Section 8.6 Compensation and Expenses of Trustee........................ 48
Section 8.7 Officers' Certificate as Evidence........................... 49
Section 8.8 Conflicting Interests of Trustee............................ 49
Section 8.9 Eligibility of Trustee...................................... 49
Section 8.10 Resignation or Removal of Trustee........................... 49
Section 8.11 Acceptance by Successor Trustee............................. 50
Section 8.12 Succession by Merger, Etc................................... 51
Section 8.13 Limitation on Rights of Trustee as Creditor................. 51
ARTICLE IX. CONCERNING THE NOTEHOLDERS.................................. 52
Section 9.1 Action by Noteholders....................................... 52
Section 9.2 Proof of Execution by Noteholders........................... 52
Section 9.3 Who Are Deemed Absolute Owners.............................. 52
Section 9.4 Company-Owned Notes Disregarded............................. 53
Section 9.5 Revocation of Consents: Future Holders Bound................ 53
ARTICLE X. NOTEHOLDERS' MEETINGS....................................... 53
Section 10.1 Purpose of Meetings......................................... 53
Section 10.2 Call of Meetings by Trustee................................. 54
Section 10.3 Call of Meetings by Company or Noteholders.................. 54
Section 10.4 Qualifications for Voting................................... 54
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Section 10.5 Regulations................................................. 55
Section 10.6 Voting...................................................... 55
Section 10.7 No Delay of Rights by Meeting............................... 56
ARTICLE XI. SUPPLEMENTAL INDENTURES..................................... 56
Section 11.1 Supplemental Indentures Without Consent of Noteholders...... 56
Section 11.2 Supplemental Indentures with Consent of Noteholders......... 57
Section 11.3 Effect of Supplemental Indenture............................ 58
Section 11.4 Notation on Notes........................................... 58
Section 11.5 Evidence of Compliance of Supplemental Indenture to Be
Furnished Trustee........................................... 59
ARTICLE XII. CONSOLIDATION, MERGER, SALE, CONVEYANCE
AND LEASE................................................... 59
Section 12.1 Company May Consolidate Etc. on Certain Terms............... 59
Section 12.2 Successor Corporation to Be Substituted..................... 59
Section 12.3 Opinion of Counsel to Be Given Trustee...................... 60
ARTICLE XIII. SATISFACTION AND DISCHARGE OF INDENTURE..................... 60
Section 13.1 Discharge of Indenture...................................... 60
Section 13.2 Deposited Monies to Be Held in Trust by Trustee............. 61
Section 13.3 Paying Agent to Repay Monies Held........................... 61
Section 13.4 Return of Unclaimed Monies.................................. 61
Section 13.5 Reinstatement............................................... 61
ARTICLE XIV. IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS...................................... 62
Section 14.1 Indenture and Notes Solely Corporate Obligations............ 62
ARTICLE XV. CONVERSION OF NOTES......................................... 62
Section 15.1 Right to Convert............................................ 62
Section 15.2 Exercise of Conversion Privilege; Issuance of Common Stock
on Conversion; No Adjustment for Interest or Dividends...... 62
Section 15.3 Cash Payments in Lieu of Fractional Shares.................. 64
Section 15.4 Conversion Price............................................ 64
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Section 15.5 Adjustment of Conversion Price.............................. 64
Section 15.6 Effect of Reclassification, Consolidation, Merger or Sale... 74
Section 15.7 Taxes on Shares Issued...................................... 75
Section 15.8 Reservation of Shares to Be Fully Paid; Compliance with
Governmental Requirements; Listing of Common Stock....... 75
Section 15.9 Responsibility of Trustee................................... 76
Section 15.10 Notice to Holders Prior to Certain Actions.................. 76
ARTICLE XVI. REPURCHASE OF NOTES AT OPTION OF THE
HOLDER UPON CHANGE IN CONTROL............................... 77
Section 16.1 Right to Require Repurchase................................. 77
Section 16.2 Notices: Method of Exercising Repurchase Right, Etc......... 78
Section 16.3 Certain Definitions......................................... 80
Section 16.4 Change in Control........................................... 80
Section 16.5 Consolidation, Merger, Etc.................................. 81
ARTICLE XVII. MISCELLANEOUS PROVISIONS.................................... 82
Section 17.1 Provisions Binding on Company's Successors.................. 82
Section 17.2 Official Acts by Successor Corporation...................... 82
Section 17.3 Addresses for Notices, Etc.................................. 82
Section 17.4 Governing Law............................................... 82
Section 17.5 Evidence of Compliance with Conditions Precedent
Certificates to Trustee..................................... 82
Section 17.6 Legal Holidays.............................................. 83
Section 17.7 Trust Indenture Act......................................... 83
Section 17.8 No Security Interest Created................................ 83
Section 17.9 Benefits of Indenture....................................... 83
Section 17.10 Table of Contents, Headings, Etc............................ 84
Section 17.11 Authenticating Agent........................................ 84
Section 17.12 Execution in Counterparts................................... 85
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INDENTURE dated as of November 15, 1996, between Central Garden & Pet
Company, a Delaware corporation (hereinafter sometimes called the "Company," as
more fully set forth in Section 1.1), and Chemical Trust Company of California,
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 6% Convertible Subordinated Notes due 2003 (hereinafter
sometimes called the "Notes"), in an aggregate principal amount not to exceed
$100,000,000 ($115,000,000 if the over-allotment option is exercised in full)
and, to provide the terms and conditions upon which the Notes are to be
authenticated, issued and delivered, the Company has duly authorized the
execution and delivery of this Indenture and
WHEREAS, the Notes, the certificate of authentication to be borne by the
Notes, a form of assignment, a form of option to elect repurchase upon a Change
in Control and a form of conversion notice to be borne by the Notes are to be
substantially in the forms hereinafter provided for and
WHEREAS, all acts and things necessary to make the Notes, when executed by
the Company and authenticated and delivered by the Trustee or a duly authorized
authenticating agent, as in this Indenture provided, the valid, binding and
legal obligations of the Company, and to constitute these presents a valid
agreement according to its terms, have been done and performed, and the
execution of this Indenture and the issue hereunder of the Notes have in all
respects been duly authorized.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
That in order to declare the terms and conditions upon which the Notes are,
and are to be, authenticated, issued and delivered, and in consideration of the
premises and of the purchase and acceptance of the Notes by the holders thereof,
the Company covenants and agrees with the Trustee for the equal and
proportionate benefit of the respective holders from time to time of the Notes
(except as otherwise provided below), as follows:
ARTICLE I.
DEFINITIONS
Section 1.1 Definitions. The terms defined in this Section 1.1 (except as
-----------
herein otherwise expressly provided or unless the context otherwise requires)
for all purposes of this Indenture and of any indenture supplemental hereto
shall have the respective meanings specified in this Section 1.1. All other
terms used in this Indenture 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
1
<PAGE>
to such terms in said Trust Indenture Act and in said Securities Act as in force
at the date of the execution of this Indenture. The words "herein," "hereof,"
"hereunder," and words of similar import refer to this Indenture as a whole and
not to any particular Article, Section or other Subdivision. The terms defined
in this Article include the plural as well as the singular.
Affiliate: The term "Affiliate" of any specified Person shall mean any
---------
other Person directly or indirectly controlling or controlled by or under direct
or indirect common control with such specified Person. For the purposes of this
definition, "control," when used with respect to any specified Person, means the
power to direct or cause the direction of the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Board of Directors: The term "Board of Directors" shall mean the Board of
------------------
Directors of the Company or a committee of such Board duly authorized to act for
it hereunder.
Business Day: The term "Business Day" means each Monday, Tuesday,
------------
Wednesday, Thursday and Friday which is not a day on which the banking
institutions in The City of New York and San Francisco are authorized or
obligated by law or executive order to close or be closed.
Cedel: The term "Cedel" shall mean Cedel, S.A.
-----
Change in Control: The term "Change in Control" shall have the meaning
-----------------
specified in Section 16.4.
Class B Stock: The term "Class B Stock" shall mean the Company's Class B
-------------
Stock.
Closing Price: The term "Closing Price" shall have the meaning specified
-------------
in Section 15.5(h)(1).
Commission: The term "Commission" shall mean the Securities and Exchange
----------
Commission.
Common Stock: The term "Common Stock" shall mean any stock of any class of
------------
the Company which has no preference in respect of dividends or of amounts
payable in the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company and which is not subject to redemption by the Company.
Subject to the provisions of Section 15.6, however, shares issuable on
conversion of Notes shall include only shares of the class designated as common
stock of the Company at the date of this Indenture or shares of any class or
classes resulting from any reclassification or reclassifications thereof and
which have no preference in respect of dividends or of amounts payable in the
event of any voluntary or involuntary liquidation, dissolution or winding up of
the Company and which are not subject to redemption by the Company, provided
--------
that if at any time there shall be more than one such resulting class,
2
<PAGE>
the shares of each such class then so issuable shall be substantially in the
proportion which the total number of shares of such class resulting from all
such reclassifications bears to the total number of shares of all such classes
resulting from all such reclassifications.
Company: The term "Company" shall mean Central Garden & Pet Company, a
-------
Delaware corporation, and, subject to the provisions of Article XII, shall
include its successors and assigns.
Conversion Price: The term "Conversion Price" shall have the meaning
----------------
specified in Section 15.4.
Corporate Trust Office: The term "Corporate Trust Office" or other similar
----------------------
term shall mean the office of the Trustee at which at any particular time its
corporate trust business shall be principally administered, which office is, at
the date as of which this Indenture is dated, located at 101 California Street,
Suite 2725, San Francisco, California, Attention: Jim Nagy (Central Garden &
Pet Company, 6% Convertible Subordinated Notes due 2003).
Credit Agreement: The term "Credit Agreement" shall mean the Accounts
----------------
Financing Agreement [Security Agreement] between Congress Financial Corporation
(Western) and Central Garden Supply, Central Garden & Pet Company, Central
Garden & Pet Supply Company, Matthews Redwood and Nursery Supply, Inc., and Cal
Liquid Corp. dated as of June 12, 1992 as amended through the date hereof, as
further amended, amended and restated, supplemented or otherwise modified from
time to time.
Custodian: The term "Custodian" shall mean Chemical Trust Company of
---------
California, as custodian with respect to the Notes in global form, or any
successor entity thereto.
default: The term "default" shall mean any event that is, or after notice
-------
or passage of time, or both, would be, an Event of Default.
Defaulted Interest: The term "Defaulted Interest" shall have the meaning
------------------
specified in Section 2.3.
Depositary: The term "Depositary" means, with respect to the Notes
----------
issuable or issued in whole or in part in global form, the person specified in
Section 2.5(d) as the Depositary with respect to such Notes, until a successor
shall have been appointed and become such pursuant to the applicable provisions
of this Indenture, and thereafter "Depositary" shall mean or include such
successor.
Designated Senior Indebtedness: The term "Designated Senior Indebtedness"
------------------------------
means the Credit Agreement 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,
3
<PAGE>
agreement or other document may place limitations and conditions on the right of
such Senior Indebtedness to exercise the rights of Designated Senior
Indebtedness).
Exchange Act: The term "Exchange Act" shall mean the Securities Exchange
------------
Act of 1934, as amended, and the rules and regulations promulgated thereunder,
as in effect from time to time.
Expiration Time: The term "Expiration Time" shall have the meaning
---------------
specified in Section 15.5(f).
Euroclear: The term "Euroclear" shall mean the Euroclear System.
---------
Event of Default: The term "Event of Default" shall mean any event
----------------
specified in Section 7.1(a), (b), (c), (d), (e), (f) or (g).
Foreign Person: The term "Foreign Person" shall have the meaning specified
--------------
in Section 2.5(b).
Global Note: The term "Global Note" shall have the meaning specified in
-----------
Section 2.5(d).
Indebtedness: The term "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, 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 capitalized
lease obligations on the balance sheet of such Person and all obligations and
other liabilities (contingent or otherwise) under any lease or related document
(including a purchase agreement) in connection with the lease of real property
which provides that such Person is contractually obligated to purchase or cause
a third party to purchase the leased property and thereby guarantee a minimum
residual value of the leased property to the lessor and the obligations of such
Person under such lease or related document to purchase or to cause a third
party to purchase such leased property, (d) all obligations of such Person
(contingent or otherwise) with respect to an interest rate or other swap, cap or
collar agreement or other similar instrument or agreement or foreign currency
hedge, exchange, purchase or similar instrument or agreement, (e) all direct or
indirect guaranties or similar agreements by such Person in respect of, and
obligations or liabilities (contingent or otherwise) of such Person to purchase
or otherwise acquire or otherwise assure a creditor against loss in respect of
indebtedness, obligations or liabilities of another Person of
4
<PAGE>
the kind described in clauses (a) through (d), (f) any indebtedness or other
obligations 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 refundings of, or amendments, modifications or
supplements to, any indebtedness, obligation or liability of the kind described
in clauses (a) through (f).
Indenture: The term "Indenture" shall mean this instrument as originally
---------
executed or, if amended or supplemented as herein provided, as so amended or
supplemented.
Initial Purchasers: The term "Initial Purchasers" means Alex. Brown & Sons
------------------
Incorporated, Hambrecht & Quist LLC, Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Wasserstein Perella Securities, Inc.
Note or Notes: The terms "Note" or "Notes" shall mean any Note or Notes,
---- -----
as the case may be, authenticated and delivered under this Indenture.
Noteholder or holder: The terms "Noteholder" or "holder" as applied to any
---------- ------
Note, or other similar terms (but excluding the term "beneficial holder"), shall
mean any person in whose name at the time a particular Note is registered on the
Note registrar's books.
Note register: The term "Note register" shall have the meaning specified
-------------
in Section 2.5.
Offering Memorandum: The term "Offering Memorandum" means that certain
-------------------
Offering Memorandum, dated November 12, 1996, used in connection with the
offering of the Notes by the Company.
Officers' Certificate: The term "Officers' Certificate," when used with
---------------------
respect to the Company, shall mean a certificate signed by both (a) the
President, the Chief Executive Officer, Executive or Senior Vice President or
any Vice President (whether or not designated by a number or numbers or word or
words added before or after the title "Vice President") and (b) the Treasurer or
any Assistant Treasurer or Secretary or any Assistant Secretary of the Company.
Opinion of Counsel: The term "Opinion of Counsel" shall mean an opinion in
------------------
writing signed by legal counsel, who may be an employee of or counsel to the
Company, or other counsel acceptable to the Trustee.
outstanding: The term "outstanding," when used with reference to Notes,
-----------
shall, subject to the provisions of Section 9.4, mean, as of any particular
time, all Notes authenticated and delivered by the Trustee under this Indenture,
except
(a) Notes theretofore canceled by the Trustee or delivered to the
Trustee for cancellation
5
<PAGE>
(b) Notes, or portions thereof, for the redemption of which monies in
the necessary amount shall have been deposited in trust with the Trustee or
with any paying agent (other than the Company) or shall have been set aside
and segregated in trust by the Company (if the Company shall act as its own
paying agent) provided that if such Notes are to be redeemed prior to the
--------
maturity thereof, notice of such redemption shall have been given as in
Article III provided, or provision satisfactory to the Trustee shall have
been made for giving such notice
(c) Notes in lieu of which, or in substitution for which, other Notes
shall have been authenticated and delivered pursuant to the terms of
Section 2.6 unless proof satisfactory to the Trustee is presented that any
such Notes are held by bona fide holders in due course and
(d) Notes converted into Common Stock pursuant to Article XV and Notes
deemed not outstanding pursuant to Article III.
Payment Blockage Notice: The term "Payment Blockage Notice" has the
-----------------------
meaning specified in Section 4.2.
Person: The term "Person" shall mean a corporation, an association, a
------
partnership, an individual, a joint venture, a joint stock company, a trust, an
unincorporated organization or a government or an agency or a political
subdivision thereof.
PORTAL Market: The term "PORTAL Market" shall mean the Private Offerings,
-------------
Resales and Trading through Automated Linkages Market operated by the National
Association of Securities Dealers, Inc. or any successor thereto.
Predecessor Note: The term "Predecessor Note" of any particular Note shall
----------------
mean every previous Note evidencing all or a portion of the same debt as that
evidenced by such particular Note and, for the purposes of this definition, any
Note authenticated and delivered under Section 2.6 in lieu of a lost, destroyed
or stolen Note shall be deemed to evidence the same debt as the lost, destroyed
or stolen Note that it replaces.
Purchased Shares: The term "Purchased Shares" has the meaning specified in
----------------
Section 15.5(f).
QIB: The term "QIB" shall mean a "qualified institutional buyer" as
---
defined in Rule 144A.
Registration Rights Agreement: The term "Registration Rights Agreement"
-----------------------------
means that certain Registration Rights Agreement, dated as of November 15, 1996,
between the Company and the Initial Purchasers.
6
<PAGE>
Regulation D: The term "Regulation D" shall mean Regulation D as
------------
promulgated under the Securities Act.
Regulation S: The term "Regulation S" shall mean Regulation S as
------------
promulgated under the Securities Act.
Regulation S Global Note: The term "Regulation S Global Note" shall have
------------------------
the meaning specified in Section 2.5(b).
Representative: The term "Representative" means the (a) indenture trustee
--------------
or other trustee, agent or representative for any Senior Indebtedness or (b)
with respect to any Senior Indebtedness that does not have any such trustee,
agent or other representative, (i) in the case of such Senior Indebtedness
issued pursuant to an agreement providing for voting arrangements as among the
holders or owners of such Senior Indebtedness, any holder or owner of such
Senior Indebtedness acting with the consent of the required persons necessary to
bind such holders or owners of such Senior Indebtedness and (ii) in the case of
all other such Senior Indebtedness, the holder or owner of such Senior
Indebtedness.
Responsible Officer: The term "Responsible Officer," when used with
-------------------
respect to the Trustee, shall mean an officer of the Trustee in the Corporate
Trust Office assigned and duly authorized by the Trustee to administer the
corporate trust matters hereunder.
Repurchase Date: The term "Repurchase Date" shall have the meaning
---------------
specified in Section 16.1.
Repurchase Price: The term "Repurchase Price" shall have the meaning
----------------
specified in Section 16.1.
Restricted Securities: The term "Restricted Securities" has the meaning
---------------------
specified in Section 2.5.
Rule 144A: The term "Rule 144A" shall mean Rule 144A as promulgated under
---------
the Securities Act.
Rule 144A Global Note: The term "Rule 144A Global Note" shall have the
---------------------
meaning specified in Section 2.5(b).
Rule 144(k): The term "Rule 144(k)" shall mean Rule 144(k) as promulgated
-----------
under the Securities Act.
Securities Act: The term "Securities Act" shall mean the Securities Act of
--------------
1933, as amended, and the rules and regulations promulgated thereunder.
7
<PAGE>
Senior Indebtedness: 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 of the Company,
whether outstanding on the date of this Indenture or thereafter created,
incurred, assumed, guaranteed or in effect guaranteed by the Company (including
all deferrals, renewals, extensions or refundings of, or amendments,
modifications or supplements to, the foregoing), unless in the case of any
particular Indebtedness the instrument creating or evidencing the same or the
assumption or guarantee thereof expressly provides that such Indebtedness shall
not be senior in right of payment to the Notes or expressly provides that such
Indebtedness is "pari passu" with or "junior" to the Notes. Notwithstanding the
foregoing, the term Senior Indebtedness shall not include any Indebtedness of
the Company to any Subsidiary of the Company.
Significant Subsidiary: The term "Significant Subsidiary" means a
----------------------
corporation or other entity of the Company within the meaning of Rule 1-02 under
Regulation S-X promulgated by the Securities and Exchange Commission.
Subsidiary: The term "Subsidiary" means, with respect to any Person, (i)
----------
any corporation, association or other business entity of which more than 50% of
the total voting power of shares of capital stock 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).
Trading Day: The term "Trading Day" shall have the meaning specified in
-----------
Section 15.5(h)(5).
Trigger Event: The term "Trigger Event" shall have the meaning specified
-------------
in Section 15.5(d).
Trust Indenture Act: The term "Trust Indenture Act" shall mean the Trust
-------------------
Indenture Act of 1939, as amended, as it was in force at the date of execution
of this Indenture, except as provided in Sections 11.3, 15.6 and 16.5 provided,
--------
however, that in the event the Trust Indenture Act of 1939 is amended after the
- -------
date hereof, the term "Trust Indenture Act" shall mean, to the extent required
by such amendment, the Trust Indenture Act of 1939 as so amended.
Trustee: The term "Trustee" shall mean Chemical Trust Company of
-------
California, and its successors and any corporation resulting from or surviving
any consolidation or merger to which
8
<PAGE>
it or its successors may be a party and any successor trustee at the time
serving as successor trustee hereunder.
The definitions of certain other terms are as specified in Section 2.5,
Article XV and Article XVI.
ARTICLE II.
ISSUE, DESCRIPTION, EXECUTION, REGISTRATION
AND EXCHANGE OF NOTES
Section 2.1 Designation, Amount and Issue of Notes. The Notes shall be
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designated as "6% Convertible Subordinated Notes due 2003." Notes not to exceed
the aggregate principal amount of $100,000,000 (or $115,000,000 if the over-
allotment option set forth in Section 2 of the Purchase Agreement, dated
November 15, 1996 (as amended from time to time by the parties thereto) by and
between the Company and the Initial Purchasers is exercised in full) upon the
execution of this Indenture, or (except pursuant to Sections 2.5, 2.6, 3.3, 15.2
and 16.2 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 Notes to or upon the written order of the Company,
signed by its (a) President, Executive or Senior Vice President or any Vice
President (whether or not designated by a number or numbers or word or words
added before or after the title "Vice President") and (b) Treasurer or Assistant
Treasurer or its Secretary or any Assistant Secretary, without any further
action by the Company hereunder.
Section 2.2 Form of Notes. The Notes and the Trustee's certificate of
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authentication to be borne by such Notes shall be substantially in the form set
forth in Exhibit A, which is incorporated in and made a part of this Indenture.
Any of the Notes may have such letters, numbers or other marks of
identification and such notations, legends and endorsements as the officers
executing the same may approve (execution thereof to be conclusive evidence of
such approval) and as are not inconsistent with the provisions of this
Indenture, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any
securities exchange or automated quotation system on which the Notes may be
listed, or to conform to usage.
Any Note in global form shall represent such of the outstanding Notes as
shall be specified therein and shall provide that it shall represent the
aggregate amount of outstanding Notes from time to time endorsed thereon and
that the aggregate amount of outstanding Notes represented thereby may from
time to time be increased or reduced to reflect transfers or exchanges permitted
hereby. Any endorsement of a Note in global form
to reflect the amount of any increase or decrease in the amount of outstanding
Notes represented thereby shall be made by the Trustee or the Custodian, at the
direction of the Trustee, in such manner and upon instructions given by the
holder of such Notes in accordance with this
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Indenture. Payment of principal of and interest and premium, if any, on any
Note in global form shall be made to the holder of such Note.
The terms and provisions contained in the form of Note attached as Exhibit
A hereto shall constitute, and are hereby expressly made, a part of this
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 Note, 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 Notes Payments of Interest. The
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Notes shall be issuable in registered form without coupons in denominations of
$1,000 principal amount ($100,000 and integral multiples of $1,000 in excess
thereof, in the case of notes issued pursuant to Regulation D) and integral
multiples thereof. Every Note shall be dated the date of its authentication and
shall bear interest from the applicable date in each case as specified on the
face of the form of Note attached as Exhibit A hereto. Interest on notes shall
be paid in arrears on each March 15 and September 15 commencing March 15, 1997
and ending on November 15, 2003, unless redeemed, repurchased or converted
earlier pursuant to the terms of this Indenture. Interest on the Notes shall be
computed on the basis of a 360-day year comprised of twelve 30-day months.
The person in whose name any Note (or its Predecessor Note) is registered
at the close of business on any record date with respect to any interest payment
date (including any Note that is converted after the record date and on or
before the interest payment date) shall be entitled to receive the interest
payable on such interest payment date notwithstanding the cancellation of such
Note upon any transfer, exchange or conversion subsequent to the record date and
on or prior to such interest payment date provided, that in the case of any
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Note, or portion thereof, called for redemption on a redemption date or
repurchased in connection with a Change in Control on a Repurchase Date that is
after a record date and prior to (but excluding) the next succeeding interest
payment date, interest shall not be paid to the person in whose name the Note,
or portion thereof, is registered on the close of business on such record date
and the Company shall have no obligation to pay interest on such Note or such
portion except to the extent required to be paid upon redemption or repurchase
of such Note or portion thereof pursuant to Section 3.3 or 16.1 hereof.
Interest may, at the option of the Company, be paid by check mailed to the
address of such person on the Note register provided that, with respect to any
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holder of Notes with an aggregate principal amount equal to or in excess of
$5,000,000, at the request of such holder in writing to the Company at least
five (5) days prior to the date set for payment of interest (who shall then
furnish written notice to such effect to the Trustee), interest on such holder's
Notes shall be paid by wire transfer in immediately available funds in
accordance with the wire transfer instructions supplied by such holder to the
Trustee and paying
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agent (if different from the Trustee). The term "interest payment date" shall
mean March 15 and September 15 of each year commencing on March 15, 1997. The
term "record date" with respect to any interest payment date shall mean the
March 1 or September 1 preceding said March 15 or September 15, respectively.
Any interest on any Note which is payable, but is not punctually paid or
duly provided for, on any said March 15 or September 15 (herein called
"Defaulted Interest") shall forthwith cease to be payable to the Noteholder on
the relevant record date by virtue of his having been such Noteholder and such
Defaulted Interest shall be paid by the Company, at its election in each case,
as provided in clause (1) or (2) below.
(1) The Company may elect to make payment of any Defaulted Interest to
the Persons in whose names the Notes (or their respective Predecessor
Notes) are registered at the close of business on a special record date for
the payment of such Defaulted Interest, which shall be fixed in the
following manner. The Company shall notify the Trustee in writing of the
amount of Defaulted Interest to be paid on each Note and the date of the
payment (which shall be not less than twenty-five (25) days after the
receipt by the Trustee of such notice, unless the Trustee shall consent to
an earlier date), and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount to be paid in
respect of such Defaulted Interest or shall make arrangements satisfactory
to the Trustee for such deposit prior to the date of the proposed payment,
such money when deposited to be held in trust for the benefit of the
Persons entitled to such Defaulted Interest as in this clause provided.
Thereupon the Trustee shall fix a special record date for the payment of
such Defaulted Interest which shall be not more than fifteen (15) days and
not less than ten (10) days prior to the date of the proposed payment and
not less than ten (10) days after the receipt by the Trustee of the notice
of the proposed payment. The Trustee shall promptly notify the Company of
such special record date and, in the name and at the expense of the
Company, shall cause notice of the proposed payment of such Defaulted
Interest and the special record date therefor to be mailed, first-class
postage prepaid, to each Noteholder at his address as it appears in the
Note register, not less than ten (10) days prior to such special record
date. Notice of the proposed payment of such Defaulted Interest and the
special record date therefor having been so mailed, such Defaulted Interest
shall be paid to the Persons in whose names the Notes (or their respective
Predecessor Notes) were registered at the close of business on such special
record date and shall no longer be payable pursuant to the following clause
(2).
(2) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange and automated quotation system on which the Notes may
be listed or designated for listing, and upon such notice as may be
required by such exchange and automated quotation system, if, after notice
given by the Company to the Trustee of the proposed payment pursuant to
this clause, such manner of payment shall be deemed practicable by the
Trustee.
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Section 2.4 Execution of Notes. The Notes shall be signed in the name and
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on behalf of the Company by the facsimile signature of its President, any
Executive or Senior Vice President or any Vice President (whether or not
designated by a number or numbers or word or words added before or after the
title "Vice President") and attested by the facsimile signature of its Secretary
or any of its Assistant Secretaries (which may be printed, engraved or otherwise
reproduced thereon, by facsimile or otherwise). Only such Notes as shall bear
thereon a certificate of authentication substantially in the form set forth on
the form of Note attached as Exhibit A hereto, manually executed by the Trustee
(or an authenticating agent appointed by the Trustee as provided by Section
17.11), shall be entitled to the benefits of this Indenture or be valid or
obligatory for any purpose. Such certificate by the Trustee (or such an
authenticating agent) upon any Note executed by the Company shall be conclusive
evidence that the Note so authenticated has been duly authenticated and
delivered hereunder and that the holder is entitled to the benefits of this
Indenture.
In case any officer of the Company who shall have signed any of the Notes
shall cease to be such officer before the Notes so signed shall have been
authenticated and delivered by the Trustee, or disposed of by the Company, such
Notes nevertheless may be authenticated and delivered or disposed of as though
the person who signed such Notes had not ceased to be such officer of the
Company and any Note may be signed on behalf of the Company by such persons as,
at the actual date of the execution of such Note, shall be the proper officers
of the Company, although at the date of the execution of this Indenture any such
person was not such an officer.
Section 2.5 Exchange and Registration of Transfer of Notes; Restrictions
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on Transfer; Depositary.
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(a) The Company shall cause to be kept at the Corporate Trust Office a
register (the register maintained in such office and in any other office or
agency of the Company designated pursuant to Section 5.2 being herein
sometimes collectively referred to as the "Note register") in which,
subject to such reasonable regulations as it may prescribe, the Company
shall provide for the registration of Notes and of transfers of Notes. The
Note register shall be in written form or in any form capable of being
converted into written form within a reasonably prompt period of time. The
Trustee is hereby appointed "Note registrar" for the purpose of registering
Notes and transfers of Notes as herein provided. The Company may appoint
one or more co-registrars in accordance with Section 5.2.
Upon surrender for registration of transfer of any Note to the Note
registrar or any co-registrar, and satisfaction of the requirements for
such transfer set forth in this Section 2.5, the Company shall execute, and
the Trustee shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Notes of any authorized
denominations and of a like aggregate principal amount and bearing such
restrictive legends as may be required by this Indenture.
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Notes may be exchanged for other Notes of any authorized denominations
and of a like aggregate principal amount, upon surrender of the Notes to be
exchanged at any such office or agency maintained by the Company pursuant
to Section 5.2. Whenever any Notes are so surrendered for exchange, the
Company shall execute, and the Trustee shall authenticate and deliver, the
Notes which the Noteholder making the exchange is entitled to receive
bearing registration numbers not contemporaneously outstanding.
All Notes issued upon any registration of transfer or exchange of
Notes shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Notes
surrendered upon such registration of transfer or exchange.
All Notes presented or surrendered for registration of transfer or for
exchange, redemption, repurchase or conversion shall (if so required by the
Company or the Note registrar) be duly endorsed, or be accompanied by a
written instrument or instruments of transfer in form satisfactory to the
Company and the Trustee, and the Notes shall be duly executed by the
Noteholder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Notes, but the Company may require payment of a sum sufficient
to cover any tax, assessment or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of
Notes.
Neither the Company nor the Trustee nor any Note registrar nor any co-
registrar shall be required to exchange or register a transfer of (a) any
Notes for a period of fifteen (15) days next preceding any selection of
Notes to be redeemed or (b) any Notes or portions thereof called for
redemption pursuant to Article III or (c) any Notes or portion thereof
surrendered for conversion pursuant to Article XV.
(b) So long as the Notes are eligible for book-entry settlement with
the Depositary, unless otherwise required by law, all Notes to be traded
(i) on the PORTAL Market shall be represented by a Note in global form (the
"Rule 144A Global Note") or (ii) to a Person who is not a U.S. Person (as
defined in Regulation S) who is acquiring the Note in an offshore
transaction (a "Foreign Person") in accordance with Regulation S shall be
represented by a Note in global form (the "Regulation S Global Note") (the
Rule 144A Global Note and the Regulation S Global Note collectively
referred to in this Indenture as the "Global Note"), the Rule 144A Global
Note and the Regulation S Global Note being registered in the name of the
Depositary or the nominee of the Depositary. The transfer and exchange of
beneficial interests in the Global Note, which does not involve the
issuance of a Note in certificated form, shall be effected through the
Depositary, in accordance with this Indenture (including the restrictions
on transfer set forth herein) and the procedures of the Depositary
therefor.
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At any time at the request of the beneficial holder of an interest in
the Global Note to obtain a Note in certificated form, such beneficial
holder shall be entitled to obtain a Note 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 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 Note or Regulation S Global Note, as appropriate, to be reduced
by the principal amount of the Note in certificated 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 Note or Notes 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 Note which cannot
be effected through book-entry settlement must be effected by the delivery
to the transferee (or its nominee) of a Note or Notes in certificated form
registered in the name of the transferee (or its nominee) on the books
maintained by the Note 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 Note or Regulation S Global Note to be reduced by the
principal amount of the respective beneficial interest in the Rule 144A
Global Note or Regulation S Global Note being transferred and, following
such reduction, the Company will execute and the Trustee will authenticate
and deliver to the transferee (or such transferee's nominee, as the case
may be), a Note or Notes in certificated form in the appropriate aggregate
principal amount in the name of such transferee (or its nominee) and
bearing such restrictive legends as may be required by this Indenture.
(c) So long as the Notes are eligible for book-entry settlement, or
unless otherwise required by law, upon any transfer of a Note in
certificated form to a QIB in accordance with Rule 144A or a Foreign Person
in accordance with Regulation S, and upon receipt of the Note or Notes in
certificated form being so transferred, together with a certification from
the transferor that the transferee is a QIB or a Foreign Person (or other
evidence satisfactory to the Trustee), the Trustee shall make, or direct
the Custodian to make, an endorsement on the Rule 144A Global Note or
Regulation S Global Note to reflect an increase in the aggregate principal
amount of the Notes represented by the Rule 144A Global Note or Regulation
S Global Note, and the Trustee shall cancel such Note or Notes 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 Notes
represented by the Rule 144A Global Note or Regulation S Global Note to be
increased accordingly
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provided that no Note in certificated form, or portion thereof, in respect
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of which the Company or an Affiliate of the Company held any beneficial
interest shall be included in the Global Note until such Note in
certificated form is freely tradeable in accordance with Rule 144(k)
provided further that the Trustee shall issue Notes in certificated form
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upon any transfer of a beneficial interest in the Global Note to the
Company or an Affiliate of the Company.
Any Global Note may be endorsed with or have incorporated in the text
thereof such legends or recitals or changes not inconsistent with the
provisions of this Indenture as may be required by the Custodian, the
Depositary or by the National Association of Securities Dealers, Inc. in
order for the Notes to be tradeable on the PORTAL Market or tradeable on
Euroclear or Cedel or as may be required for the Notes to be tradeable on
any other market developed for trading of securities pursuant to Rule 144A
or Regulation S 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 Notes may be listed or traded or to conform with any usage with
respect thereto, or to indicate any special limitations or restrictions to
which any particular Notes are subject.
(d) Every Note that bears or is required under this Section 2.5(d) to
bear the legend set forth in this Section 2.5(d) (together with any Common
Stock issued upon conversion of the Notes and required to bear the legend
set forth in Section 2.5(e), collectively, the "Restricted Securities")
shall be subject to the restrictions on transfer set forth in this Section
2.5(d) (including those set forth in the legend set forth below) unless
such restrictions on transfer shall be waived by written consent of the
Company, and the holder of each such Restricted Security, by such
Noteholder's acceptance thereof, agrees to be bound by all such
restrictions on transfer. As used in Sections 2.5(d) and 2.5(e), the term
"transfer" encompasses any sale, pledge, transfer or other disposition
whatsoever of any Restricted Security.
Until three (3) years after the original issuance date of any Note,
any certificate evidencing such Note (and all securities issued in exchange
therefor or substitution thereof, other than Common Stock, if any, issued
upon conversion thereof, which shall bear the legend set forth in Section
2.5(e), if applicable) shall bear a legend in substantially the following
form, unless otherwise agreed by the Company in writing, with written
notice thereof to the Trustee:
THE NOTE EVIDENCED HEREBY HAS NOT BEEN AND WILL NOT BE 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
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE.
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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") OR (C) IT IS NOT A U.S. PERSON AND IS
ACQUIRING THE NOTE EVIDENCED HEREBY IN OFFSHORE TRANSACTION; (2) AGREES
THAT IT WILL NOT PRIOR TO THE DATE THAT IS THREE YEARS AFTER THE LATER OF
THE ORIGINAL ISSUANCE OF THE NOTE EVIDENCED HEREBY AND THE LAST DATE ON
WHICH CENTRAL GARDEN & PET COMPANY (THE "COMPANY") OR ANY "AFFILIATE" (AS
DEFINED IN RULE 144 UNDER THE SECURITIES ACT) OF THE COMPANY WAS THE OWNER
OF THE NOTE (THE "RESTRICTION TERMINATION DATE") RESELL OR OTHERWISE
TRANSFER THE NOTE EVIDENCED HEREBY OR THE COMMON STOCK ISSUABLE UPON
CONVERSION OF SUCH NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY
THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED
STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR OR A PURCHASER WHO IS NOT A
U.S. PERSON THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO CHEMICAL TRUST
COMPANY OF CALIFORNIA, AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE),
A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING
TO THE RESTRICTIONS ON TRANSFER OF THE NOTE EVIDENCED HEREBY (THE FORM OF
WHICH LETTER CAN BE OBTAINED FROM SUCH TRUSTEE OR A SUCCESSOR TRUSTEE, AS
APPLICABLE), (D) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904
UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION
PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), OR (F)
PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE
UNDER THE SECURITIES ACT (AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME
OF SUCH TRANSFER); AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO
WHOM THE NOTE EVIDENCED HEREBY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND.
IN CONNECTION WITH ANY TRANSFER OF THE NOTE 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 NOTE TO CHEMICAL TRUST COMPANY OF CALIFORNIA, AS TRUSTEE (OR A
SUCCESSOR TRUSTEE, AS APPLICABLE). IF THE PROPOSED TRANSFER IS PURSUANT TO
CLAUSE (C), (D) OR (E) ABOVE, THE HOLDER MUST, PRIOR TO SUCH TRANSFER,
FURNISH TO CHEMICAL TRUST COMPANY OF CALIFORNIA, AS TRUSTEE (OR A SUCCESSOR
TRUSTEE, AS
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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.
THIS LEGEND WILL BE REMOVED AFTER THE EXPIRATION OF THREE YEARS FROM
THE ORIGINAL ISSUANCE OF THE NOTE EVIDENCED HEREBY. AS USED HEREIN, THE
TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE
MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
Any Note (or security issued in exchange or substitution therefor) as
to which such restrictions on transfer shall have expired in accordance
with their terms or as to which the conditions for removal of the foregoing
legend set forth therein have been satisfied may, upon surrender of such
Note for exchange to the Note registrar in accordance with the provisions
of this Section 2.5, be exchanged for a new Note or Notes, of like tenor
and aggregate principal amount, which shall not bear the restrictive legend
required by this Section 2.5(d).
Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in the second paragraph of Section 2.5(b) and in this
Section 2.5(d)), a Global Note may not be transferred as a whole or in part
except by the Depositary to a nominee of the Depositary or by a nominee of
the Depositary to the Depositary or another nominee of the Depositary or by
the Depositary or any such nominee to a successor Depositary or a nominee
of such successor Depositary.
The Depositary shall be a clearing agency registered under the
Exchange Act. The Company initially appoints The Depository Trust Company
to act as Depositary with respect to the Global Note. Initially, the Rule
144A Global Note and the Regulation S Global Note shall be issued to the
Depositary, registered in the name of Cede & Co., as the nominee of the
Depositary, and deposited with the 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 actions under this
Indenture.
If at any time the Depositary for the Global Note notifies the Company
that it is unwilling or unable to continue as Depositary for the Note, the
Company may appoint a successor Depositary with respect to such Note. If a
successor Depositary is not appointed by the Company within ninety (90)
days after the Company receives such notice, the Company will execute, and
the Trustee, upon receipt of an Officers'
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Certificate for the authentication and delivery of Notes, will authenticate
and deliver, Notes in certificated form, in an aggregate principal amount
equal to the principal amount of the Global Note, in exchange for the
Global Note.
If a Note in certificated form is issued in exchange for any portion
of a Global Note after the close of business at the office or agency where
such exchange occurs on any record date and before the opening of business
at such office or agency on the next succeeding interest payment date,
interest will not be payable on such interest payment date in respect of
such Note, but will be payable on such interest payment date only to the
person to whom interest in respect of such portion of such Global Note is
payable in accordance with the provisions of this Indenture.
Notes in certificated form issued in exchange for all or a part of a
Global Note pursuant to this Section 2.5 shall be registered in such names
and in such authorized denominations as the Depositary, pursuant to
instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee in writing. Upon execution and authentication, the
Trustee shall deliver such Notes in certificated form to the persons in
whose names such Notes in certificated form are so registered.
At such time as all interests in a Global Note have been redeemed,
repurchased, converted, canceled, exchanged for Notes in certificated form,
or transferred to a transferee who receives Notes in certificated form,
such Global Note shall, upon receipt thereof, be canceled by the Trustee in
accordance with standing procedures and instructions existing between the
Depositary and the Custodian. At any time prior to such cancellation, if
any interest in a Global Note is exchanged for Notes in certificated form,
redeemed, converted, repurchased or canceled, or transferred to a
transferee who receives Notes in certificated form therefor or any Note in
certificated form is exchanged or transferred for part of a Global Note,
the principal amount of such Global Note shall, in accordance with the
standing procedures and instructions existing between the Depositary and
the Custodian, be appropriately reduced or increased, as the case may be,
and an endorsement shall be made on such Global Note, by the Trustee or the
Custodian, at the direction of the Trustee, to reflect such reduction or
increase. In the event of any transfer of any beneficial interest between
the Rule 144A Global Note and the Regulation S Global Note in accordance
with the standing procedures and instructions between the Depositary and
the Custodian and the transfer restrictions set forth herein, the aggregate
principal amount of each of the Rule 144A Global Note and the Regulation S
Global Note shall be appropriately increased or decreased, as the case may
be, and an endorsement shall be made on each of the Rule 144A Global Note
and the Regulation S Global Note by the Trustee or the Custodian, at the
direction of the Trustee, to reflect such reduction or increase.
(e) Until three (3) years after the original issuance date of any
Note, any stock certificate representing Common Stock issued upon
conversion of such Note shall bear a legend in substantially the following
form, unless such Common Stock has been
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transferred pursuant to a registration statement that has been declared
effective under the Securities Act (and which continues to be effective at
the time of such transfer) or such Common Stock has been issued upon
conversion of Notes that have been transferred pursuant to a registration
statement that has been declared effective under the Securities Act, or
unless otherwise agreed by the Company in writing with written notice
thereof to the transfer agent:
THE COMMON STOCK EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN
THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS
EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE.
THE HOLDER HEREOF AGREES THAT PRIOR TO THE DATE THAT IS THREE YEARS
AFTER THE LATER OF THE ORIGINAL ISSUANCE OF THE NOTE UPON THE CONVERSION OF
WHICH THE COMMON STOCK EVIDENCED HEREBY WAS ISSUED AND THE LAST DATE ON
WHICH CENTRAL GARDEN & PET COMPANY (THE "COMPANY") OR ANY "AFFILIATE" (AS
DEFINED IN RULE 144 UNDER THE SECURITIES ACT) OF THE COMPANY WAS THE OWNER
OF THE NOTE (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) INSIDE THE UNITED STATES TO A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) IN COMPLIANCE WITH RULE 144A, (C) INSIDE THE UNITED STATES
TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1),
(2), (3) OR (7) UNDER THE SECURITIES ACT) OR A PURCHASER WHO IS NOT A U.S.
PERSON THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO CHASEMELLON SHAREHOLDER
SERVICES L.L.C., AS TRANSFER AGENT (OR A SUCCESSOR TRANSFER AGENT, AS
APPLICABLE), A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THE COMMON STOCK
EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH
TRANSFER AGENT (OR A SUCCESSOR TRANSFER AGENT, AS APPLICABLE)), (D) OUTSIDE
THE UNITED STATES IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E)
PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE), OR (F) 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(F) ABOVE), IT WILL FURNISH CHASEMELLON
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SHAREHOLDER SERVICES L.L.C., 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(F) ABOVE) A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
THIS LEGEND WILL BE REMOVED UPON THE EARLIER OF THE TRANSFER OF THE
COMMON STOCK EVIDENCED HEREBY PURSUANT TO CLAUSE 1(F) ABOVE OR UPON THE
RESTRICTION TERMINATION DATE OR UPON THE EARLIER SATISFACTION OF
CHASEMELLON SHAREHOLDER SERVICES L.L.C., AS TRANSFER AGENT (OR A SUCCESSOR
TRANSFER AGENT, AS APPLICABLE), THAT THE COMMON STOCK HAS BEEN OR IS BEING
OFFERED AND SOLD IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT.
AS USED HEREIN, THE TERMS "UNITED STATES" AND "U.S. PERSON" HAVE THE
MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
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 2.5(e).
(f) Any certificate evidencing a Note that has been transferred to an
Affiliate of the Company within three (3) years after the original issuance
date of the Note, as evidenced by a notation on the Assignment Form for
such transfer or in the representation letter delivered in respect thereof
(substantially in the form attached as an exhibit to the Offering
Memorandum), shall, until three (3) years after the last day on which the
Company or any Affiliate of the Company was an owner of such note, bear a
legend in substantially the following form, unless otherwise agreed by the
Company (with written notice thereof to the Trustee):
THE NOTE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE
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OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE.
BY ACQUISITION HEREOF, THE HOLDER AGREES (1) THAT IT WILL NOT RESELL
OR OTHERWISE TRANSFER THE NOTE EVIDENCED HEREBY OR THE COMMON STOCK
ISSUABLE UPON CONVERSION OF SUCH NOTE EXCEPT (A) TO CENTRAL GARDEN & PET
COMPANY OR ANY SUBSIDIARY THEREOF, (B) IN A TRANSACTION REGISTERED UNDER
THE SECURITIES ACT OR (C) PURSUANT TO THE EXEMPTION FROM REGISTRATION
PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) AND (2) THAT
IT WILL DELIVER TO EACH PERSON TO WHOM THE NOTE EVIDENCED HEREBY IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. THIS
LEGEND SHALL BE REMOVED UPON THE TRANSFER OF THE NOTE EVIDENCED HEREBY OR
THE COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH NOTE PURSUANT TO THE
IMMEDIATELY PRECEDING SENTENCE.
IF THE PROPOSED TRANSFER IS PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT, THE HOLDER
MUST, PRIOR TO SUCH TRANSFER, FURNISH CHEMICAL TRUST COMPANY OF CALIFORNIA,
AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), SUCH CERTIFICATIONS,
LEGAL OPINIONS OR OTHER INFORMATION AS THE COMPANY MAY REASONABLY REQUIRE
TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT.
AS USED HEREIN, THE TERMS "UNITED STATES" AND "U.S. PERSON" HAVE THE
MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
Any stock certificate representing Common Stock issued upon conversion
of such Note shall also bear a legend in substantially the form indicated
above, unless otherwise agreed by the Company (with written notice thereof
to the Trustee).
(g) Notwithstanding any provision of Section 2.5 to the contrary, in
the event Rule 144(k) (or any successor rule) is amended to shorten the
three (3) year period under Rule 144(k) (or the corresponding period under
any successor rule), from and after receipt by the Trustee of the Officers'
Certificate and Opinion of Counsel provided for in this Section 2.5(g), (i)
the references in the first sentence of the second paragraph of Section
2.5(d) to "three (3) years" and in the restrictive legend set forth in such
paragraph to "THREE YEARS" shall be deemed for all purposes hereof to be
references to such shorter period, (ii) the references in the first
paragraph of Section 2.5(e) to "three
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(3) years" and in the restrictive legend set forth in such paragraph to
"THREE YEARS" shall be deemed for all purposes hereof to be references to
such shorter period and (iii) all corresponding references in the Notes and
the restrictive legends on the Restricted Securities shall be deemed for
all purposes hereof to be references to such shorter period, provided that
such changes shall not become effective if they are otherwise prohibited
by, or would otherwise cause a violation of, the then-applicable federal
securities laws. As soon as practicable after the Company has knowledge of
the effectiveness of any such amendment to shorten the three (3) year
period under Rule 144(k) (or the corresponding period under any successor
rule), unless such changes would otherwise be prohibited by, or would
otherwise cause a violation of, the then-applicable securities laws, the
Company shall provide to the Trustee an Officers' Certificate and Opinion
of Counsel informing the Trustee of the effectiveness of such amendment and
the effectiveness of the foregoing changes to Sections 2.5(d) and 2.5(e)
and the restrictive legends on the Restricted Securities. This Section
2.5(g) shall apply to successive amendments to Rule 144(k) (or any
successor rule) shortening the holding period thereunder.
Section 2.6 Mutilated, Destroyed, Lost or Stolen Notes. In case any Note
------------------------------------------
shall become mutilated or be destroyed, lost or stolen, the Company in its
discretion may execute, and upon its written request the Trustee or an
authenticating agent appointed by the Trustee shall authenticate and deliver, a
new Note, bearing a number not contemporaneously outstanding, in exchange and
substitution for the mutilated Note, or in lieu of and in substitution for the
Note so destroyed, lost or stolen. In every case the applicant for a
substituted Note shall furnish to the Company, to the Trustee and, if
applicable, to such authenticating agent such security or indemnity as may be
required by them to save each of them harmless for any loss, liability, cost or
expense caused by or connected with such substitution, and, in every case of
destruction, loss or theft, the applicant also shall furnish to the Company, to
the Trustee and, if applicable, to such authenticating agent evidence to their
satisfaction of the destruction, loss or theft of such Note and of the ownership
thereof.
The Trustee or such authenticating agent may authenticate any such
substituted Note and deliver the same upon the receipt of such security or
indemnity as the Trustee, the Company and, if applicable, such authenticating
agent may require. Upon the issuance of any substituted Note, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses connected
therewith. In case any Note which has matured or is about to mature or has been
called for redemption or is about to be converted into Common Stock shall become
mutilated or be destroyed, lost or stolen, the Company may, instead of issuing a
substitute Note, pay or authorize the payment of or convert or authorize the
conversion of the same (without surrender thereof except in the case of a
mutilated Note), as the case may be, if the applicant for such payment or
conversion shall furnish to the Company, to the Trustee and, if applicable, to
such authenticating agent such security or indemnity as may be required by them
to save each of them harmless for any loss, liability, cost or expense caused by
or connected with such substitution, and, in case of destruction, loss or theft,
evidence satisfactory to the Company, the Trustee and,
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if applicable, any paying agent or conversion agent of the destruction, loss or
theft of such Note and of the ownership thereof.
Every substitute Note issued pursuant to the provisions of this Section 2.6
by virtue of the fact that any Note is destroyed, lost or stolen shall
constitute an additional contractual obligation of the Company, whether or not
the destroyed, lost or stolen Note shall be found at any time, and shall be
entitled to all the benefits of (but shall be subject to all the limitations set
forth in) this Indenture equally and proportionately with any and all other
Notes duly issued hereunder. To the extent permitted by law, all Notes shall be
held and owned upon the express condition that the foregoing provisions are
exclusive with respect to the replacement or payment or conversion of mutilated,
destroyed, lost or stolen Notes and shall preclude any and all other rights or
remedies notwithstanding any law or statute existing or hereafter enacted to the
contrary with respect to the replacement or payment or conversion of negotiable
instruments or other securities without their surrender.
Section 2.7 Temporary Notes. Pending the preparation of Notes in
---------------
certificated form, the Company may execute and the Trustee or an authenticating
agent appointed by the Trustee shall, upon the written request of the Company,
authenticate and deliver temporary Notes (printed, typewritten or lithographed).
Temporary Notes shall be issuable in any authorized denomination, and
substantially in the form of the Notes in certificated form, but with such
omissions, insertions and variations as may be appropriate for temporary Notes,
all as may be determined by the Company. Every such temporary Note shall be
executed by the Company and authenticated by the Trustee or such authenticating
agent upon the same conditions and in substantially the same manner, and with
the same effect, as the Notes in certificated form. Without unreasonable delay
the Company will execute and deliver to the Trustee or such authenticating agent
Notes in certificated form (other than in the case of Notes in global form) and
thereupon any or all temporary Notes (other than any such Note in global form)
may be surrendered in exchange therefor, at each office or agency maintained by
the Company pursuant to Section 5.2 and the Trustee or such authenticating agent
shall authenticate and deliver in exchange for such temporary Notes an equal
aggregate principal amount of Notes in certificated form. Such exchange shall
be made by the Company at its own expense and without any charge therefor.
Until so exchanged, the temporary Notes shall in all respects be entitled to the
same benefits and subject to the same limitations under this Indenture as Notes
in certificated form authenticated and delivered hereunder.
Section 2.8 Cancellation of Notes Paid, Etc. All Notes surrendered for
-------------------------------
the purpose of payment, redemption, repurchase, conversion, exchange or
registration of transfer, shall, if surrendered to the Company or any paying
agent or any Note registrar or any conversion agent, be surrendered to the
Trustee and promptly canceled by it, or, if surrendered to the Trustee, shall be
promptly canceled by it, and no Notes shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Indenture provided that any
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Note or portion thereof surrendered for repurchase shall only be canceled at
such time as such Note or portion thereof has been repurchased pursuant to
Article XVI hereof. The Trustee shall destroy canceled Notes (unless the
Company directs it to do otherwise) and, after such destruction, shall, if
requested
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by the Company, deliver a certificate of such destruction to the Company. If
the Company shall acquire any of the Notes, such acquisition shall not operate
as a redemption or satisfaction of the indebtedness represented by such Notes
unless and until the same are delivered to the Trustee for cancellation.
ARTICLE III.
REDEMPTION OF NOTES
Section 3.1 Redemption Prices. The Company may not redeem the Notes prior
-----------------
to November 15, 1999. At any time on or after November 15, 1999, the Company
may, at its option from time to time, redeem all or any part of the Notes on any
date prior to maturity, upon notice as set forth in Section 3.2, and at the
optional redemption prices set forth in the form of Note attached as Exhibit A
hereto, together with accrued interest to, but excluding, the date fixed for
redemption.
Section 3.2 Notice of Redemption Selection of Notes. In case the Company
---------------------------------------
shall desire to exercise the right to redeem all or, as the case may be, any
part of the Notes pursuant to Section 3.1, it shall fix a date for redemption
and it or, at its request, the Trustee in the name of and at the expense of the
Company, shall mail or cause to be mailed a notice of such redemption at least
15 and not more than 60 days prior to the date fixed for redemption to the
holders of Notes so to be redeemed as a whole or in part at their last addresses
as the same appear on the Note register (provided that if the Company shall give
--------
such notice, it shall also give written notice, and written notice of the Notes
to be redeemed, to the Trustee). Such mailing shall be by first class mail.
The notice if mailed in the manner herein provided shall be conclusively
presumed to have been duly given, whether or not the holder receives such
notice. In any case, failure to give such notice by mail or any defect in the
notice to the holder of any Note designated for redemption as a whole or in part
shall not affect the validity of the proceedings for the redemption of any other
Note.
Each such notice of redemption shall specify the aggregate principal amount
of Notes to be redeemed, the date fixed for redemption, the redemption price at
which Notes are to be redeemed, the place or places of payment, that payment
will be made upon presentation and surrender of such Notes, that interest
accrued to, but excluding, the date fixed for redemption will be paid as
specified in said notice, and that on and after said date interest thereon or on
the portion thereof to be redeemed will cease to accrue. Such notice shall also
state the current Conversion Price and the date on which the right to convert
such Notes or portions thereof into Common Stock will expire. If fewer than all
the Notes are to be redeemed, the notice of redemption shall identify the Notes
to be redeemed. In case any Note is to be redeemed in part only, the notice of
redemption shall state the portion of the principal amount thereof to be
redeemed and shall state that on and after the date fixed for redemption, upon
surrender of such Note, a new Note or Notes in principal amount equal to the
unredeemed portion thereof will be issued.
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On or prior to the redemption date specified in the notice of redemption
given as provided in this Section 3.2, the Company will deposit with the Trustee
or with one or more paying agents (or, if the Company is acting as its own
paying agent, set aside, segregate and hold in trust as provided in Section 5.4)
an amount of money sufficient to redeem on the redemption date all the Notes (or
portions thereof) so called for redemption (other than those theretofore
surrendered for conversion into Common Stock) at the appropriate redemption
price, together with accrued interest to, but excluding, the date fixed for
redemption provided that if such payment is made on the redemption date it must
--------
be received by the Trustee or paying agent, as the case may be, by 10:00 a.m.
New York City time, on such date. If any Note called for redemption is
converted pursuant hereto, any money deposited with the Trustee or any paying
agent or so segregated and held in trust for the redemption of such Note shall
be paid to the Company upon its written request, or, if then held by the
Company, shall be discharged from such trust. If fewer than all the Notes are
to be redeemed, the Company will give the Trustee written notice in the form of
an Officers' Certificate not fewer than forty-five (45) days (or such shorter
period of time as may be acceptable to the Trustee) prior to the redemption date
as to the aggregate principal amount of Notes to be redeemed.
If fewer than all the Notes are to be redeemed, the Trustee shall select
the Notes or portions thereof to be redeemed (in principal amounts of $1,000 or
integral multiples thereof) by lot or, in its discretion, on a pro rata basis
with such adjustments up to $1,000 in order to retain the minimum denominations
of the Notes. If any Note selected for partial redemption is converted in part
after such selection, the converted portion of such Note shall be deemed (so far
as may be) to be the portion to be selected for redemption. The Notes (or
portions thereof) so selected shall be deemed duly selected for redemption for
all purposes hereof, notwithstanding that any such Note is converted as a whole
or in part before the mailing of the notice of redemption.
Upon any redemption of less than all Notes, the Company and the Trustee may
(but need not) treat as outstanding any Notes surrendered for conversion during
the period of fifteen (15) days next preceding the mailing of a notice of
redemption and may (but need not) treat as outstanding any Note authenticated
and delivered during such period in exchange for the unconverted portion of any
Note converted in part during such period.
Section 3.3 Payment of Notes Called for Redemption. If notice of
--------------------------------------
redemption has been given as above provided, the Notes or portion of Notes with
respect to which such notice has been given shall, unless converted into Common
Stock pursuant to the terms hereof, become due and payable on the date and at
the place or places stated in such notice at the applicable redemption price,
together with interest accrued to (but excluding) the date fixed for redemption,
and on and after said date (unless the Company shall default in the payment of
such Notes at the redemption price, together with interest accrued to said date)
interest on the Notes or portion of Notes so called for redemption shall cease
to accrue and such Notes shall cease after the close of business on the fifth
Business Day preceding the date fixed for redemption to be convertible into
Common Stock and, except as provided in Sections 8.5 and 13.4, to be entitled to
any benefit or security under this Indenture, and the holders thereof shall have
no right in respect
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of such Notes except the right to receive the redemption price thereof and
unpaid interest to (but excluding) the date fixed for redemption. On
presentation and surrender of such Notes at a place of payment in said notice
specified, the said Notes or the specified portions thereof shall be paid and
redeemed by the Company at the applicable redemption price, together with
interest accrued thereon to (but excluding) the date fixed for redemption
provided that, if the applicable redemption date is an interest payment date,
- --------
the semi-annual payment of interest becoming due on such date shall be payable
to the holders of such Notes registered as such on the relevant record date
instead of the holders surrendering such Notes for redemption on such date.
Upon presentation of any Note redeemed in part only, the Company shall
execute and the Trustee shall authenticate and deliver to the holder thereof, at
the expense of the Company, a new Note or Notes, of authorized denominations, in
principal amount equal to the unredeemed portion of the Notes so presented.
Notwithstanding the foregoing, the Trustee shall not pay the redemption
price of any Notes or mail any notice of optional redemption during the
continuance of a default in payment of interest or premium on the Notes or of
any Event of Default of which, in the case of any Event of Default other than
under Sections 7.1 (a) or 7.1 (b), a Responsible Officer of the Trustee has
knowledge. If any Note called for redemption shall not be so paid upon
surrender thereof for redemption, the principal and premium, if any, shall,
until paid or duly provided for, bear interest from the date fixed for
redemption at the rate borne by the Note and such Note shall remain convertible
into Common Stock until the principal and premium, if any, shall have been paid
or duly provided for.
Section 3.4 Conversion Arrangement on Call for Redemption. In connection
---------------------------------------------
with any redemption of Notes, the Company may arrange for the purchase and
conversion of any Notes by an agreement with one or more investment bankers or
other purchasers to purchase such Notes by paying to the Trustee in trust for
the Noteholders, on or before the date fixed for redemption, an amount not less
than the applicable redemption price, together with interest accrued to (but
excluding) the date fixed for redemption, of such Notes. Notwithstanding
anything to the contrary contained in this Article III, the obligation of the
Company to pay the redemption price of such Notes, together with interest
accrued to (but excluding) the date fixed for redemption, shall be deemed to be
satisfied and discharged to the extent such amount is so paid by such
purchasers. If such an agreement is entered into (a copy of which shall be
filed with the Trustee prior to the date fixed for redemption), any Notes not
duly surrendered for conversion by the holders thereof may, at the option of the
Company, be deemed, to the fullest extent permitted by law, acquired by such
purchasers from such holders and (notwithstanding anything to the contrary
contained in Article XV) surrendered by such purchasers for conversion, all as
of immediately prior to the close of business on the date fixed for redemption
(and the right to convert any such Notes shall be extended through such time),
subject to payment of the above amount as aforesaid. At the 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 Notes. Without the Trustee's prior written consent, no
arrangement between the Company and such purchasers for the purchase and
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<PAGE>
conversion of any Notes shall increase or otherwise affect any of the powers,
duties, responsibilities or obligations of the Trustee as set forth in this
Indenture, and the Company agrees to indemnify the Trustee from, and hold it
harmless against, any loss, liability or expense arising out of or in connection
with any such arrangement for the purchase and conversion of any Notes between
the Company and such purchasers 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.
ARTICLE IV.
SUBORDINATION OF NOTES
Section 4.1 Agreement of Subordination. The Company covenants and agrees,
--------------------------
and each holder of Notes issued hereunder by his acceptance thereof likewise
covenants and agrees, that all Notes shall be issued subject to the provisions
of this Article IV and each Person holding any Note, whether upon original issue
or upon transfer, assignment or exchange thereof, accepts and agrees to be bound
by such provisions.
The payment of the principal of, premium, if any, and interest on all Notes
(including, but not limited to, the redemption price with respect to the Notes
called for redemption in accordance with Section 3.2 or submitted for repurchase
in accordance with Section 16.2, as the case may be, as provided in the
Indenture) issued hereunder shall, to the extent and in the manner hereinafter
set forth, be subordinated and subject in right of payment to the prior payment
in full of all Senior Indebtedness, whether outstanding at the date of this
Indenture or thereafter incurred.
No provision of this Article IV shall prevent the occurrence of any default
or Event of Default hereunder.
Section 4.2 Payments to Noteholders. No payment shall be made with
-----------------------
respect to the principal of, or premium, if any, or interest on the Notes
(including, but not limited to, the redemption price with respect to the Notes
to be called for redemption in accordance with Section 3.2 or submitted for
repurchase in accordance with Section 16.2, as the case may be, as provided in
the Indenture), except payments and distributions made by the Trustee as
permitted by the first or second paragraph of Section 4.5, if:
(1) 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
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(2) 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 (2)
above, no subsequent Payment Blockage Notice shall be effective for purposes of
this Section unless and until (A) at least 365 days shall have elapsed since the
initial effectiveness of the immediately prior Payment Blockage Notice, and (B)
all scheduled payments of principal, premium, if any, and interest on the Notes
that have come due have been paid in full in cash. 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 may and shall resume payments on and distributions in respect
of the Notes upon the earlier of:
(1) the date upon which the default is cured or waived or ceases to
exist, or
(2) in the case of a default referred to in clause (2) 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 of, premium, if any, or interest on the Notes (except payments
made pursuant to Article XIII from monies deposited with the Trustee pursuant
thereto prior to commencement of proceedings for such dissolution, winding up,
liquidation or reorganization) and upon any such dissolution or winding up or
liquidation or reorganization of the Company or bankruptcy, insolvency,
receivership or other proceeding, any payment by the Company, or distribution of
assets of the Company of any kind or character, whether in cash, property or
securities, to which the holders of the Notes or the Trustee would be entitled,
except for the provision of this Article IV, shall (except as aforesaid) be paid
by the Company or by any receiver, trustee in bankruptcy, liquidating trustee,
agent or other Person making such payment or distribution, or by the holders of
the Notes or by the Trustee under this Indenture if received by them or it,
directly to the holders of Senior Indebtedness (pro rata to such holders on the
basis of the respective amounts of Senior Indebtedness held by such holders,
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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
Notes or to the Trustee.
For purposes of this Article IV, the words, "cash, property or securities"
shall not be deemed to include shares of stock of the Company as reorganized or
readjusted, or securities of the Company or any other corporation provided for
by a plan of reorganization or readjustment, the payment of which is
subordinated at least to the extent provided in this Article IV with respect to
the Notes to the payment of all Senior Indebtedness which may at the time be
outstanding provided that (i) the Senior Indebtedness is assumed by the new
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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 Notes because of an Event of
Default, no payment or distribution shall be made to the Trustee or any holder
of Notes in respect of the principal of, premium, if any, or interest on the
Notes (including, but not limited to, the redemption price with respect to the
Notes called for redemption in accordance with Section 3.2 or submitted for
repurchase in accordance with Section 16.2, as the case may be, as provided in
the Indenture), except payments and distributions made by the Trustee as
permitted by the first or second paragraph of Section 4.5, until all Senior
Indebtedness has been paid in full in cash or other payment satisfactory to the
holders of Senior Indebtedness or such acceleration is rescinded in accordance
with the terms of this Indenture. If payment of the Notes is accelerated
because of an Event of Default, the Company shall promptly notify holders of
Senior Indebtedness of the acceleration and the Trustee shall use its best
efforts to promptly notify Congress Financial Corporation (Western), whose
address is 225 South Lake Avenue, Suite 1000, Pasadena, California, 91101, under
the Credit Agreement (or any successor agent thereunder of which it has received
prior written notice) of such acceleration, in each case at the address set
forth in the notice from the Agent (or successor agent) to the Trustee as being
the address to which the Trustee should send its notice pursuant to this Section
4.2, unless, in each case, there are no payment obligations of the Company
thereunder and all obligations thereunder to extend credit have been terminated
or expired.
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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 of the Notes before all Senior Indebtedness is paid in full in cash or
other payment satisfactory to the holders of such Senior Indebtedness, or
provision is made for such payment thereof in accordance with its terms in cash
or other payment satisfactory to the holders of such Senior Indebtedness, such
payment or distribution shall be held in trust for the benefit of and shall be
paid over or delivered to the holders of Senior Indebtedness or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any Senior Indebtedness
may have been issued, as their respective interests may appear, as calculated by
the Company, for application to the payment of 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 4.5, and the right to rescind and annul
acceleration of the notice pursuant to Section 7.1.
Section 4.3 Subrogation of Notes. Subject to the payment in full of all
--------------------
Senior Indebtedness, the rights of the holders of the Notes shall be subrogated
to the extent of the payments or distributions made to the holders of such
Senior Indebtedness pursuant to the provisions of this Article IV (equally and
ratably with the holders of all indebtedness of the Company which by its express
terms is subordinated to other indebtedness of the Company to substantially the
same extent as the Notes are subordinated and is entitled to like rights of
subrogation) to the rights of the holders of Senior Indebtedness to receive
payments or distributions of cash, property or securities of the Company
applicable to the Senior Indebtedness until the principal, premium, if any, and
interest on the Notes shall be paid in full and, for the purposes of such
subrogation, no payments or distributions to the holders of the Senior
Indebtedness of any cash, property or securities to which the holders of the
Notes or the Trustee would be entitled except for the provisions of this Article
IV, and no payment pursuant to the provisions of this Article IV, to or for the
benefit of the holders of Senior Indebtedness by holders of the Notes or the
Trustee, shall, as between the Company, its creditors other than holders of
Senior Indebtedness, and the holders of the Notes, be deemed to be a payment by
the Company to or on account of the Senior Indebtedness and no payments or
distributions of cash, property or securities to or for the benefit of the
holders of the Notes pursuant to the subrogation provisions of this Article IV,
which would otherwise have been paid to the holders of Senior Indebtedness shall
be deemed to be a payment by the Company to or for the account of the Notes. It
is understood that the provisions of this Article IV are and are intended solely
for the purposes of defining the relative rights of the holders of the Notes, on
the one hand, and the holders of the Senior Indebtedness, on the other hand.
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Nothing contained in this Article IV or elsewhere in this Indenture or in
the Notes is intended to or shall impair, as among the Company, its creditors
other than the holders of Senior Indebtedness, and the holders of the Notes, the
obligation of the Company, which is absolute and unconditional, to pay to the
holders of the Notes the principal of (and premium, if any) and interest on the
Notes as and when the same shall become due and payable in accordance with their
terms, or is intended to or shall affect the relative rights of the holders of
the Notes and creditors of the Company other than the holders of the Senior
Indebtedness, nor shall anything herein or therein prevent the Trustee or the
holder of any Note from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, subject to the rights, if any,
under this Article IV of the holders of Senior Indebtedness in respect of cash,
property or securities of the Company received upon the exercise of any such
remedy.
Upon any payment or distribution of assets of the Company referred to in
this Article IV, the Trustee, subject to the provisions of Section 8.1, and the
holders of the Notes shall be entitled to rely upon any order or decree made by
any court of competent jurisdiction in which such bankruptcy, dissolution,
winding up, liquidation or reorganization proceedings are pending, or a
certificate of the receiver, trustee in bankruptcy, liquidating trustee, agent
or other person making such payment or distribution, delivered to the Trustee or
to the holders of the Notes, for the purpose of ascertaining the persons
entitled to participate in such distribution, the holders of the Senior
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon and all other facts pertinent thereto or to this Article IV.
Section 4.4 Authorization to Effect Subordination. Each holder of a Note
-------------------------------------
by the holder's acceptance thereof authorizes and directs the Trustee on the
holder's behalf to take such action as may be necessary or appropriate to
effectuate the subordination as provided in this Article IV and appoints the
Trustee to act as the holder's attorney-in-fact for any and all such purposes.
If the Trustee does not file a proper proof of claim or proof of debt in the
form required in any proceeding referred to in the third paragraph of Section
7.2 hereof at least 30 days before the expiration of the time to file such
claim, the holders of any Senior Indebtedness or their representatives are
hereby authorized to file an appropriate claim for and on behalf of the holders
of the Notes.
Section 4.5 Notice to Trustee. The Company shall give prompt written
-----------------
notice in the form of an Officers' Certificate to a Responsible Officer of the
Trustee and to any paying agent of any fact known to the Company which would
prohibit the making of any payment of monies to or by the Trustee or any paying
agent in respect of the Notes pursuant to the provisions of this Article IV.
Notwithstanding the provisions of this Article IV or any other provision of this
Indenture, the Trustee shall not be charged with knowledge of the existence of
any facts which would prohibit the making of any payment of monies to or by the
Trustee in respect of the Notes pursuant to the provisions of this Article IV,
unless and until a Responsible Officer of the Trustee shall have received
written notice thereof at the Corporate Trust Office from the Company (in the
form of an Officers' Certificate) or a Representative or a holder or holders of
Senior Indebtedness or from any trustee thereof and before the receipt of any
such written notice, the Trustee, subject to the provisions of Section 8.1,
shall be entitled in all respects to
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assume that no such facts exist provided that if on a date not fewer than two
--------
Business Days prior to the date upon which by the terms hereof any such monies
may become payable for any purpose (including, without limitation, the payment
of the principal of, or premium, if any, or interest on any Note) the Trustee
shall not have received, with respect to such monies, the notice provided for in
this Section 4.5, then, anything herein contained to the contrary
notwithstanding, the Trustee shall have full power and authority to receive such
monies and to apply the same to the purpose for which they were received, and
shall not be affected by any notice to the contrary which may be received by it
on or after such prior dare.
Notwithstanding anything in this Article IV to the contrary, nothing shall
prevent any payment by the Trustee to the Noteholders of monies deposited with
it pursuant to Section 13.1, and any such payment shall not be subject to the
provisions of Section 4.1 or 4.2 provided, however, that if the deposit of
-------- -------
monies with the Trustee was effected in violation of the provisions of the
Credit Agreement, the payment of monies so deposited shall be subject to the
provisions of Sections 4.1 and 4.2. The Trustee shall not be deemed to have
knowledge of any such violation unless the Company has delivered written notice
thereof to a Responsible Officer of the Trustee.
The Trustee, subject to the provisions of Section 8.1, shall be entitled to
rely on the delivery to it of a written notice by a Representative or a person
representing himself to be a holder of Senior Indebtedness (or a trustee on
behalf of such holder) to establish that such notice has been given by a
Representative or a holder of Senior Indebtedness or a trustee on behalf of any
such holder or holders. In the event that the Trustee determines in good faith
that further evidence is required with respect to the right of any person as a
holder of Senior Indebtedness to participate in any payment or distribution
pursuant to this Article IV, the Trustee may request such person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of
Senior Indebtedness held by such person, the extent to which such person is
entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such person under this Article IV, and if such
evidence is not furnished, the Trustee may defer any payment to such person
pending judicial determination as to the right of such person to receive such
payment.
Section 4.6 Trustee's Relation to Senior Indebtedness. The Trustee in its
-----------------------------------------
individual capacity shall be entitled to all the rights set forth in this
Article IV in respect of any Senior Indebtedness at any time held by it, to the
same extent as any other holder of Senior Indebtedness, and nothing in Section
8.13 or elsewhere in this Indenture shall deprive the Trustee of any of its
rights as such holder.
With respect to the holders of Senior Indebtedness, the Trustee undertakes
to perform or to observe only such of its covenants and obligations as are
specifically set forth in this Article IV, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness and, subject to the
provisions of Section 8.1, the Trustee shall not be liable to any holder of
Senior Indebtedness
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if it shall pay over or deliver to holders of Notes, the Company or any other
person money or assets to which any holder of Senior Indebtedness shall be
entitled by virtue of this Article IV or otherwise.
Section 4.7 No Impairment of Subordination. No right of any present or
------------------------------
future holder of any Senior Indebtedness to enforce subordination as herein
provided shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Company or by any act or failure to act, in
good faith, by any such holder, or by any noncompliance by the Company with the
terms, provisions and covenants of this Indenture, regardless of any knowledge
thereof which any such holder may have or otherwise be charged with.
Section 4.8 Certain Conversions Deemed Payment. For the purposes of this
----------------------------------
Article IV only, (1) the issuance and delivery of junior securities upon
conversion of Notes in accordance with Article XV shall not be deemed to
constitute a payment or distribution on account of the principal of (or premium,
if any) or interest on Notes or on account of the purchase or other acquisition
of Notes, and (2) the payment, issuance or delivery of cash (except in
satisfaction of fractional shares pursuant to Section 15.2), property or
securities (other than junior securities) upon conversion of a Note shall be
deemed to constitute payment on account of the principal of such Note. For the
purposes of this Section 4.8, the term "junior securities" means (a) shares of
any stock of any class of the Company, or (b) securities of the Company which
are subordinated in right of payment to all Senior Indebtedness which may be
outstanding at the time of issuance or delivery of such securities to
substantially the same extent as, or to a greater extent than, the Notes are so
subordinated as provided in this Article. Nothing contained in this Article IV
or elsewhere in this Indenture or in the Notes is intended to or shall impair,
as among the Company, its creditors other than holders of Senior Indebtedness
and the Noteholders, the right, which is absolute and unconditional, of the
Holder of any Note to convert such Note in accordance with Article XV.
Section 4.9 Article Applicable to Paying Agents. If at any time any
-----------------------------------
paying agent other than the Trustee shall have been appointed by the Company and
be then acting hereunder, the term "Trustee" as used in this Article shall
(unless the context otherwise requires) be construed as extending to and
including such paying agent within its meaning as fully for all intents and
purposes as if such paying agent were named in this Article in addition to or in
place of the Trustee provided, however, that the first paragraph of Section 4.5
-------- -------
shall not apply to the Company or any Affiliate of the Company if it or such
Affiliate acts as paying agent.
Section 4.10 Senior Indebtedness Entitled to Rely. The holders of Senior
------------------------------------
Indebtedness (including, without limitation, Designated Senior Indebtedness)
shall have the right to rely upon this Article IV, and no amendment or
modification of the provisions contained herein shall diminish the rights of
such holders unless such holders shall have agreed in writing thereto.
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ARTICLE V.
PARTICULAR COVENANTS OF THE COMPANY
Section 5.1 Payment of Principal, Premium and Interest. The Company
------------------------------------------
covenants and agrees that it will duly and punctually pay or cause to be paid
the principal of and premium, if any, and interest on each of the Notes at the
places, at the respective times and in the manner provided herein and in the
Notes. Each installment of interest on the Notes due on any semi-annual
interest payment date may be paid by mailing checks for the interest payable to
or upon the written order of the holders of Notes entitled thereto as they shall
appear on the Note register provided, that with respect to any holder of Notes
--------
with an aggregate principal amount equal to or in excess of $5,000,000, at the
request of such holder in writing to the Company at least five (5) days prior to
the date set for payment of interest (who shall then furnish notice to such
effect to the Trustee), interest on such holder's Notes shall be paid by wire
transfer in immediately available funds in accordance with the wire transfer
instructions supplied by such holder to the Trustee and paying agent (if
different from the Trustee).
Section 5.2 Maintenance of Office or Agency. The Company will maintain in
-------------------------------
the Borough of Manhattan, The City of New York, an office or agency where the
Notes may be surrendered for registration of transfer or exchange or for
presentation for payment or for conversion or redemption and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served. The Company will give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency not
designated or appointed by the Trustee. If at any time the Company shall fail
to maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the Corporate Trust Office or the office or
agency of the Trustee in the Borough of Manhattan, The City of New York.
The Company may also from time to time designate one or more other offices
or agencies where the Notes may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations provided that no
--------
such designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in the Borough of Manhattan, The City
of New York, for such purposes. The Company will give prompt written notice to
the 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 the Trustee as paying agent, Note
registrar, Custodian and conversion agent, and each of the Corporate Trust
Office of the Trustee and the office or agency of the Trustee in the Borough of
Manhattan, The City of New York (which shall initially be The Chase Manhattan
Bank, located at 55 Water Street, Room 234, North Building, New York, New York
10041), one such office or agency of the Company for each of the aforesaid
purposes.
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The Trustee agrees to mail, or cause to be mailed, the notices set forth in
Section 8.10(a) and the third paragraph of Section 8.11.
Section 5.3 Appointments to Fill Vacancies in Trustee's Office. The
--------------------------------------------------
Company, whenever necessary to avoid or fill a vacancy in the office of Trustee,
will appoint, in the manner provided in Section 8.10, a Trustee, so that there
shall at all times be a Trustee hereunder.
Section 5.4 Provisions as to Paying Agent.
-----------------------------
(a) If the Company shall appoint a paying agent other than the
Trustee, or if the Trustee shall appoint such a paying agent, it will cause
such paying agent to execute and deliver to the Trustee an instrument in
which such agent shall agree with the Trustee, subject to the provisions of
this Section 5.4:
(1) that it will hold all sums held by it as such agent for the
payment of the principal of and premium, if any, or interest on the
Notes (whether such sums have been paid to it by the Company or by any
other obligor on the Notes) in trust for the benefit of the holders of
the Notes
(2) that it will give the Trustee notice of any failure by the
Company (or by any other obligor on the Notes) to make any payment of
the principal of and premium, if any, or interest on the Notes when
the same shall be due and payable and
(3) that at any time during the continuance of an Event of
Default, upon request of the Trustee, it will forthwith pay to the
Trustee all sums so held in trust.
The Company shall, on or before each due date of the principal of,
premium, if any, or interest on the Notes, deposit with the paying agent a
sum sufficient to pay such principal, premium, if any, or interest, and
(unless such paying agent is the Trustee) the Company will promptly notify
the Trustee of any failure to take such action provided that if such
--------
deposit is made on the due date, such deposit shall be received by the
paying agent by 10:00 a.m. New York City time, on such date.
(b) If the Company shall act as its own paying agent, it will, on or
before each due date of the principal of, premium, if any, or interest on
the Notes, set aside, segregate and hold in trust for the benefit of the
holders of the Notes a sum sufficient to pay such principal, premium, if
any, or interest so becoming due and will notify the Trustee of any failure
to take such action and of any failure by the Company (or any other obligor
under the Notes) to make any payment of the principal of, premium, if any,
or interest on the Notes when the same shall become due and payable.
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(c) Anything in this Section 5.4 to the contrary notwithstanding, the
Company may, at any time, for the purpose of obtaining a satisfaction and
discharge of this Indenture, or for any other reason, pay or cause to be
paid to the Trustee all sums held in trust by the Company or any paying
agent hereunder as required by this Section 5.4, such sums to be held by
the Trustee upon the trusts herein contained and upon such payment by the
Company or any paying agent to the Trustee, the Company or such paying
agent shall be released from all further liability with respect to such
sums.
(d) Anything in this Section 5.4 to the contrary notwithstanding, the
agreement to hold sums in trust as provided in this Section 5.4 is subject
to Sections 13.3 and 13.4.
Section 5.5 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.
Section 5.6 Rule 144A Information Requirement. During the period
---------------------------------
beginning on the latest date of the original issuance of the Notes and ending on
the date that is three years from such date, the Company covenants and agrees
that it shall, during any period in which it is not subject to Section 13 or
15(d) under the Exchange Act, make available to any holder or beneficial holder
of Notes or any Common Stock issued upon conversion thereof which continue to be
Restricted Securities in connection with any sale thereof and any prospective
purchaser of Notes or such Common Stock from such holder or beneficial holder,
the information required pursuant to Rule 144A(d)(4) under the Securities Act
upon the request of any holder or beneficial holder of the Notes or such Common
Stock and it will take such further action as any holder or beneficial holder of
such Notes or such Common Stock may reasonably request, all to the extent
required from time to time to enable such holder or beneficial holder to sell
its Notes or Common Stock without registration under the Securities Act within
the limitation of the exemption provided by Rule 144A, as such Rule may be
amended from time to time. Upon the request of any holder or any beneficial
holder of the Notes or such Common Stock, the Company will deliver to such
holder a written statement as to whether it has complied with such requirements.
Section 5.7 Stay, Extension and Usury Laws. The Company covenants (to the
------------------------------
extent that it may lawfully do so) that it shall not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay, extension or usury law or other law which would prohibit or forgive
the Company from paying all or any portion of the principal of, premium, if any,
or interest on the Notes as contemplated herein, wherever enacted, now or at any
time hereafter in force, or which may affect the covenants or the performance of
this Indenture and the Company (to the extent it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not, by resort to any such law, hinder, delay or impede the execution of
any power herein granted to the Trustee, but will suffer and permit the
execution of every such power as though no such law has been enacted.
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Section 5.8 Compliance Certificate. The Company shall deliver to the
----------------------
Trustee within 120 days after the end of each fiscal year of the Company
(beginning with the fiscal year ending closest to December 31, 1997) an
Officers' Certificate stating whether or not the signers know of any Event of
Default that occurred during such period. If they do, such Officers'
Certificate shall describe the Event of Default and its status.
ARTICLE VI.
NOTEHOLDERS' LISTS AND REPORTS BY
THE COMPANY AND TRUSTEE
Section 6.1 Noteholders' Lists. The Company covenants and agrees that it
------------------
will furnish or cause to be furnished to the Trustee, semiannually, not more
than fifteen (15) days after each March 1 and September 1 in each year beginning
with March 1, 1997, and at such other times as the Trustee may request in
writing, within thirty (30) days after receipt by the Company of any such
request (or such lesser time as the Trustee may reasonably request in order to
enable it to timely provide any notice to be provided by it hereunder), a list
in such form as the Trustee may reasonably require of the names and addresses of
the holders of Notes as of a date not more than fifteen (15) days (or such other
date as the Trustee may reasonably request in order to so provide any such
notices) prior to the time such information is furnished, except that no such
list need be furnished so long as the Trustee is acting as Note registrar.
Section 6.2 Preservation and Disclosure of Lists.
------------------------------------
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, all information as to the names and addresses of the holders
of Notes contained in the most recent list furnished to it as provided in
Section 6.1 or maintained by the Trustee in its capacity as Note registrar,
if so acting. The Trustee may destroy any list furnished to it as provided
in Section 6.1 upon receipt of a new list so furnished.
(b) The rights of Noteholders to communicate with other holders of
Notes with respect to their rights under this Indenture or under the Notes,
and the corresponding rights and duties of the Trustee, shall be as
provided by the Trust Indenture Act.
(c) Every Noteholder, by receiving and holding the same, agrees with
the Company and the Trustee that neither the Company nor the Trustee nor
any agent of either of them shall be held accountable by reason of any
disclosure of information as to names and addresses of holders of Notes
made pursuant to the Trust Indenture Act.
Section 6.3 Reports by Trustee.
------------------
(a) Within 60 days after May 15 of each year commencing with the year
1997, the Trustee shall transmit to holders of Notes such reports dated as
of May 15 of the year in which such reports are made concerning the Trustee
and its actions under this
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Indenture as may be required pursuant to the Trust Indenture Act at the
times and in the manner provided pursuant thereto.
(b) A copy of such report shall, at the time of such transmission to
holders of Notes, be filed by the Trustee with each stock exchange and
automated quotation system upon which the Notes are listed and with the
Company. The Company will notify the Trustee in writing within a
reasonable time when the Notes are listed on any stock exchange and
automated quotation system.
Section 6.4 Reports by Company. The Company shall file with the Trustee
------------------
(and the Commission if at any time the Indenture becomes qualified under the
Trust Indenture Act), and transmit to holders of Notes, such information,
documents and other reports and such summaries thereof, as may be required
pursuant to the Trust Indenture Act at the times and in the manner provided
pursuant to such Act provided that any such information, documents or reports
--------
required to be filed with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act shall be filed with the Trustee within fifteen (15) days after the
same is so required to be filed with the Commission.
ARTICLE VII.
REMEDIES OF THE TRUSTEE AND NOTEHOLDERS
ON AN EVENT OF DEFAULT
Section 7.1 Events of Default. In case one or more of the following
-----------------
Events of Default (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body) shall have occurred and be
continuing:
(a) default in the payment of any installment of interest upon any of
the Notes as and when the same shall become due and payable, and
continuance of such default for a period of thirty (30) days, whether or
not such payment is permitted under Article IV hereof or
(b) default in the payment of the principal of or premium, if any, on
any of the Notes as and when the same shall become due and payable either
at maturity or in connection with any redemption pursuant to Article III or
repurchase pursuant to Article XVI, by acceleration or otherwise, whether
or not such payment is permitted under Article IV hereof or
(c) failure on the part of the Company duly to observe or perform any
other of the covenants or agreements on the part of the Company in the
Notes or in this Indenture (other than a covenant or agreement a default in
whose performance or whose breach is elsewhere in this Section 7.1
specifically dealt with) continued for a period of
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sixty (60) days after the date on which written notice of such failure,
requiring the Company to remedy the same, shall have been given to the
Company by the Trustee, or to the Company and a Responsible Officer of the
Trustee by the holders of at least 25 percent in aggregate principal amount
of the Notes at the time outstanding determined in accordance with Section
9.4 or
(d) failure on the part of the Company or any Significant Subsidiary
with respect to its obligation to pay principal of or interest on
indebtedness for borrowed money which default shall have resulted in
indebtedness in an amount in excess of $10 million or
(e) default by the Company with respect to any indebtedness for
borrowed money of the Company, which default results in acceleration of any
such indebtedness which is in an amount of in excess of $10 million without
such indebtedness having been discharged, or such acceleration having been
rescinded or annulled for a period of ten (10) days or
(f) 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
(g) 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 sixty (60)
consecutive days or
(h) the entry by a court having jurisdiction in the premises of a
final judgment, decree or order against the Company or any Significant
Subsidiary which shall require the payment by the Company or any of its
Significant Subsidiaries of an amount (to the extent not covered by
insurance) in excess of $10 million and the continuance of any such
judgment, decree or order unstayed 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(f) or (g)), unless the principal of all of the Notes shall have
already become due and payable, either the Trustee or the holders of not less
than 25 percent in aggregate principal amount of the
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Notes then outstanding hereunder determined in accordance with Section 9.4, by
notice in writing to the Company (and to the Trustee if given by Noteholders),
may declare the principal of all the Notes and the interest accrued thereon to
be due and payable immediately, and upon any such declaration the same shall
become and shall be immediately due and payable, anything in this Indenture or
in the Notes contained to the contrary notwithstanding. If an Event of Default
specified in Section 7.1(f) or (g) occurs, the principal of all the Notes and
the interest accrued thereon shall be immediately and automatically due and
payable without necessity of further action. This provision, however, is
subject to the condition that if, at any time after the principal of the Notes
shall have been so declared due and payable, and before any judgment or decree
for the payment of the monies due shall have been obtained or entered as
hereinafter provided, the Company shall pay or shall deposit with the Trustee a
sum sufficient to pay all matured installments of interest upon all Notes and
the principal of and premium, if any, on any and all Notes which shall have
become due otherwise than by acceleration (with interest on overdue installments
of interest (to the extent that payment of such interest is enforceable under
applicable law) and on such principal and premium, if any, at the rate borne by
the Notes, to the date of such payment or deposit) and amounts due to the
Trustee pursuant to Section 8.6, and if any and all defaults under this
Indenture, other than the nonpayment of principal of and premium, if any, and
accrued interest on Notes which shall have become due by acceleration, shall
have been cured or waived pursuant to Section 7.7, then and in every such case
the holders of a majority in aggregate principal amount of the Notes then
outstanding determined in accordance with Section 9.4, by written notice to the
Company and to the Trustee, may waive all defaults or Events of Default and
rescind and annul such declaration and its consequences but no such waiver or
rescission and annulment shall extend to or shall affect any subsequent default
or Event of Default, or shall impair any right consequent thereon. The Company
shall notify a Responsible Officer of the Trustee, promptly upon becoming aware
thereof, of any Event of Default.
In case the Trustee shall have proceeded to enforce any right under this
Indenture and such proceedings shall have been discontinued or abandoned because
of such waiver or rescission and annulment or for any other reason or shall have
been determined adversely to the Trustee, then and in every such case the
Company, the holders of Notes, and the Trustee shall be restored respectively to
their several positions and rights hereunder, and all rights, remedies and
powers of the Company, the holders of Notes, and the Trustee shall continue as
though no such proceeding had been taken.
Section 7.2 Payments of Notes on Default; Suit Therefor. The Company
-------------------------------------------
covenants that (a) in case default shall be made in the payment of any
installment of interest upon any of the Notes as and when the same shall become
due and payable, and such default shall have continued for a period of thirty
(30) days, or (b) in case default shall be made in the payment of the principal
of or premium, if any, on any of the Notes as and when the same shall have
become due and payable, whether at maturity of the Notes or in connection with
any redemption or repurchase, under this Indenture, by declaration or otherwise,
then, upon demand of the Trustee, the Company will pay to the Trustee, for the
benefit of the holders of the Notes, the whole amount that then shall have
become due and payable on all such Notes for principal and
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premium, if any, or interest, or both, as the case may be, with interest upon
the overdue principal and premium, if any, and (to the extent that payment of
such interest is enforceable under applicable law) upon the overdue installments
of interest at the rate borne by the Notes and, in addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of
collection, including compensation to the Trustee, its agents, attorney and
counsel, and any expenses or liabilities incurred by the Trustee hereunder.
Until such demand by the Trustee, the Company may pay the principal of and
premium, if any, and interest on the Notes to the registered holders, whether or
not the Notes are overdue.
In case the Company shall fail forthwith to pay such amounts upon such
demand, the Trustee, in its own name and as trustee of an express trust, shall
be entitled and empowered to institute any actions or proceedings at law or in
equity for the collection of the sums so due and unpaid, and may prosecute any
such action or proceeding to judgment or final decree, and may enforce any such
judgment or final decree against the Company or any other obligor on the Notes
and collect in the manner provided by law out of the property of the Company or
any other obligor on the Notes wherever situated the monies adjudged or decreed
to be payable.
In the case there shall be pending proceedings for the bankruptcy or for
the reorganization of the Company or any other obligor on the Notes under Title
11 of the United States Code, or any other applicable law, or in case a
receiver, assignee or trustee in bankruptcy or reorganization, liquidator,
sequestrator or similar official shall have been appointed for or taken
possession of the Company or such other obligor, the property of the Company or
such other obligor, or in the case of any other judicial proceedings relative to
the Company or such other obligor upon the Notes, or to the creditors or
property of the Company or such other obligor, the Trustee, irrespective of
whether the principal of the Notes shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the Trustee
shall have made any demand pursuant to the provisions of this Section 7.2, shall
be entitled and empowered, by intervention in such proceedings or otherwise, to
file and prove a claim or claims for the whole amount of principal, premium, if
any, and interest owing and unpaid in respect of the Notes, and, in case of any
judicial proceedings, to file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of the Trustee and
of the Noteholders allowed in such judicial proceedings relative to the Company
or any other obligor on the Notes, its or their creditors, or its or their
property, and to collect and receive any monies or other property payable or
deliverable on any such claims, and to distribute the same after the deduction
of any amounts due the Trustee under Section 8.6 and any receiver, assignee or
trustee in bankruptcy or reorganization, liquidator, custodian or similar
official is hereby authorized by each of the Noteholders to make such payments
to the Trustee, and, in the event that the Trustee shall consent to the making
of such payments directly to the Noteholders, to pay to the Trustee any amount
due it for reasonable compensation, expenses, advances and disbursements,
including counsel fees incurred by it up to the date of such distribution. To
the extent that such payment of reasonable compensation, expenses, advances and
disbursements out of the estate in any such proceedings shall be denied for any
reason, payment of the same shall be secured by a lien on, and shall be paid out
of, any and all distributions, dividends, monies, securities and other property
which the holders of the Notes
41
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may be entitled to receive in such proceedings, whether in liquidation or under
any plan of reorganization or arrangement or otherwise.
All rights of action and of asserting claims under this Indenture, or under
any of the Notes, may be enforced by the Trustee without the possession of any
of the Notes, or the production thereof at any trial or other proceeding
relative thereto, and any such suit or proceeding instituted by the Trustee
shall be brought in its own name as trustee of an express trust, and any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, be for the ratable benefit of the holders of the Notes.
In any proceedings brought by the Trustee (and in any proceedings involving
the interpretation of any provision of this Indenture to which the Trustee shall
be a party) the Trustee shall be held to represent all the holders of the Notes,
and it shall not be necessary to make any holders of the Notes parties to any
such proceedings.
Section 7.3 Application of Monies Collected by Trustee. Any monies
------------------------------------------
collected by the Trustee pursuant to this Article VII shall be applied in the
order following, at the date or dates fixed by the Trustee for the distribution
of such monies, upon presentation of the several Notes, and stamping thereon the
payment, if only partially paid, and upon surrender thereof, if fully paid:
First: to the payment of all amounts due the Trustee under Section
8.6
Second: subject to the provisions of Article IV, in case the
principal of the outstanding Notes shall not have become due and be unpaid,
to the payment of interest on the Notes in default in the order of the
maturity of the installments of such interest, with interest (to the extent
that such interest has been collected by the Trustee) upon the overdue
installments of interest at the rate borne by the Notes, such payments to
be made ratably to the persons entitled thereto
Third: subject to the provisions of Article IV, in case the principal
of the outstanding Notes shall have become due, by declaration or
otherwise, and be unpaid, to the payment of the whole amount then owing and
unpaid upon the Notes for principal and premium, if any, and interest, with
interest on the overdue principal and premium, if any, and (to the extent
that such interest has been collected by the Trustee) upon overdue payments
of interest at the rate borne by the Notes and in case such monies shall be
insufficient to pay in full the whole amounts so due and unpaid upon the
Notes, then to the payment of such principal and premium, if any, and
interest without preference or priority of principal and premium, if any,
over interest, or of interest over principal and premium, if any, or of any
installment of interest over any other installment of interest, or of any
Note over any other Note, ratably to the aggregate of such principal and
premium, if any, and accrued and unpaid interest and
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Fourth: subject to the provisions of Article IV, to the payment of
the remainder, if any, to the Company or any other person lawfully entitled
thereto.
Section 7.4 Proceedings by Noteholder. No holder of any Note shall have
-------------------------
any right by virtue of or by availing of any provision of this Indenture to
institute any suit, action or proceeding in equity or at law upon or under or
with respect to this Indenture, or for the appointment of a receiver, trustee,
liquidator, custodian or other similar official, or for any other remedy
hereunder, unless such holder previously shall have given to the Trustee written
notice of an Event of Default and of the continuance thereof, as hereinbefore
provided, and unless also the holders of not less than 25 percent in aggregate
principal amount of the Notes then outstanding determined in accordance with
Section 9.4 shall have made written request upon the Trustee to institute such
action, suit or proceeding in its own name as Trustee hereunder and shall have
offered to the Trustee such reasonable indemnity as it may require against the
costs, expenses and liabilities to be incurred therein or thereby, and the
Trustee for sixty (60) days after its receipt of such notice, request and offer
of indemnity, shall have neglected or refused to institute any such action, suit
or proceeding and no direction inconsistent with such written request shall have
been given to the Trustee pursuant to Section 7.7 it being understood and
intended, and being expressly covenanted by the taker and holder of every Note
with every other taker and holder and the Trustee, that no one or more holders
of Notes shall have any right in any manner whatever by virtue of or by availing
of any provision of this Indenture to affect, disturb or prejudice the rights of
any other holder of Notes, or to obtain or seek to obtain priority over or
preference to any other such holder, or to enforce any right under this
Indenture, except in the manner herein provided and for the equal, ratable and
common benefit of all holders of Notes (except as otherwise provided herein).
For the protection and enforcement of this Section 7.4, each and every
Noteholder and the Trustee shall be entitled to such relief as can be given
either at law or in equity.
Notwithstanding any other provision of this Indenture and any provision of
any Note, the right of any holder of any Note to receive payment of the
principal of and premium, if any, and interest on such Note, on or after the
respective due dates therefor, or to institute suit for the enforcement of any
such payment on or after such respective dates against the Company shall not be
impaired or affected without the consent of such holder.
Anything in this Indenture or the Notes to the contrary notwithstanding,
the holder of any Note, without the consent of either the Trustee or the holder
of any other Note, in his own behalf and for his own benefit, may enforce, and
may institute and maintain any proceeding suitable to enforce, his rights of
conversion as provided herein.
Section 7.5 Proceedings by Trustee. In case of an Event of Default the
----------------------
Trustee may in its discretion proceed to protect and enforce the rights vested
in it by this Indenture by such appropriate judicial proceedings as the Trustee
shall deem most effectual to protect and enforce any of such rights, either by
suit in equity or by action at law or by proceeding in bankruptcy or otherwise,
whether for the specific enforcement of any covenant or agreement contained in
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this Indenture or in aid of the exercise of any power granted in this Indenture,
or to enforce any other legal or equitable right vested in the Trustee by this
Indenture or by law.
Section 7.6 Remedies Cumulative and Continuing. Except as provided in the
----------------------------------
last paragraph of Section 2.6, all powers and remedies given by this Article VII
to the Trustee or to the Noteholders shall, to the extent permitted by law, be
deemed cumulative and not exclusive of any thereof or of any other powers and
remedies available to the Trustee or the holders of the Notes, by judicial
proceedings or otherwise, to enforce the performance or observance of the
covenants and agreements contained in this Indenture, and no delay or omission
of the Trustee or of any holder of any of the Notes to exercise any right or
power accruing upon any default or Event of Default occurring and continuing as
aforesaid shall impair any such right or power, or shall be construed to be a
waiver of any such default or any acquiescence therein and, subject to the
provisions of Section 7.4, every power and remedy given by this Article VII or
by law to the Trustee or to the Noteholders may be exercised from time to time,
and as often as shall be deemed expedient, by the Trustee or by the Noteholders.
Section 7.7 Direction of Proceedings and Waiver of Defaults by Majority of
--------------------------------------------------------------
Noteholders. The holders of a majority in aggregate principal amount of the
- -----------
Notes at the time outstanding determined in accordance with Section 9.4 shall
have the right to direct the time, method, and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee provided, however, that (a) such direction shall
-------- -------
not be in conflict with any rule of law or with this Indenture, and (b) the
Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction. The holders of a majority in aggregate
principal amount of the Notes at the time outstanding determined in accordance
with Section 9.4 may on behalf of the holders of all of the Notes waive any past
default or Event of Default hereunder and its consequences except (i) a default
in the payment of interest or premium, if any, on, or the principal of, the
Notes, (ii) a failure by the Company to convert any Notes into Common Stock,
(iii) a default in the payment of redemption price pursuant to Article III or
repurchase price pursuant to Article XVI or (iv) a default in respect of a
covenant or provisions hereof which under Article XI cannot be modified or
amended without the consent of the holders of all Notes then outstanding. Upon
any such waiver the Company, the Trustee and the holders of the Notes shall be
restored to their former positions and rights hereunder but no such waiver shall
extend to any subsequent or other default or Event of Default or impair any
right consequent thereon. Whenever any default or Event of Default hereunder
shall have been waived as permitted by this Section 7.7, said default or Event
of Default shall for all purposes of the Notes and this Indenture be deemed to
have been cured and to be not continuing but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.
Section 7.8 Notice of Defaults. The Trustee shall, within ninety (90)
------------------
days after a Responsible Officer has knowledge of the occurrence of a default,
mail to all Noteholders, as the names and addresses of such holders appear upon
the Note register, notice of all defaults known to a Responsible Officer, unless
such defaults shall have been cured or waived before the giving of such notice
and provided that, except in the case of default in the payment of the
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principal of, or premium, if any, or interest on any of the Notes, the Trustee
shall be protected in withholding such notice if and so long as a trust
committee of directors and/or officers of the Trustee in good faith determine
that the withholding of such notice is in the interests of the Noteholders.
Section 7.9 Undertaking to Pay Costs. All parties to this Indenture
------------------------
agree, and each holder of any Note by his acceptance thereof shall be deemed to
have agreed, that any court may, in its discretion, require, in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against
the Trustee for any action taken or omitted by it as Trustee, the filing by any
party litigant in such suit of an undertaking to pay the costs of such suit and
that such court may in its discretion assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in such suit, having due
regard to the merits and good faith of the claims or defenses made by such party
litigant provided that the provisions of this Section 7.9 (to the extent
--------
permitted by law) shall not apply to any suit instituted by the Trustee, to any
suit instituted by any Noteholder, or group of Noteholders, holding in the
aggregate more than ten percent in principal amount of the Notes at the time
outstanding determined in accordance with Section 9.4, or to any suit instituted
by any Noteholder for the enforcement of the payment of the principal of or
premium, if any, or interest on any Note on or after the due date therefor or to
any suit for the enforcement of the right to convert any Note in accordance with
the provisions of Article XV or to require the Company to repurchase any Note in
accordance with Article XVI.
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:
(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
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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 Responsible Officer or Officers of the Trustee, 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 Notes
at the time outstanding determined as provided in Section 9.4 relating to
the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred upon
the Trustee, under this Indenture and
(d) whether or not therein provided, every provision of this Indenture
relating to the conduct or affecting the liability of, or affording
protection to, the Trustee as trustee, paying agent, Note 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, debenture, 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
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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 hereunder in good faith and in
accordance with such advice or Opinion of Counsel
(d) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Noteholders pursuant to the provisions of this
Indenture, unless such Noteholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby
(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 and
(f) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed by it with due
care hereunder.
(g) The Trustee shall not be deemed to have notice of an Event of
Default or of any event or conditions 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
Noteholder or (ii) a Responsible Officer of the Trustee shall have actual
knowledge thereof.
Section 8.3 No Responsibility for Recitals, Etc. The recitals contained
------------------------------------
herein and in the Notes (except in the Trustee's certificate of authentication)
shall be taken as the statements of the Company, and the Trustee assumes no
responsibility for the correctness of the same. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
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Notes. The Trustee shall not be accountable for the use or application by the
Company of any Notes or the proceeds of any Notes authenticated and delivered by
the Trustee in conformity with the provisions of this Indenture.
Section 8.4 Trustee, Paying Agents, Conversion Agents or Registrar May Own
--------------------------------------------------------------
Notes. The Trustee, any paying agent, any conversion agent or Note registrar,
- -----
in its individual or any other capacity, may become the owner or pledgee of
Notes with the same rights it would have if it were not Trustee, paying agent,
conversion agent or Note registrar.
Section 8.5 Monies to Be Held in Trust. Subject to the provisions of
--------------------------
Section 13.4, all monies received by the Trustee shall, until used or applied as
herein provided, be held in trust for the purposes for which they were received.
Money held by the Trustee in trust hereunder need not be segregated from other
funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as may be
agreed from time to time by the Company and the Trustee.
Section 8.6 Compensation and Expenses of Trustee. The Company covenants
------------------------------------
and agrees to pay to the Trustee from time to time, and the Trustee shall be
entitled to, reasonable compensation for all services rendered by it hereunder
in any capacity (which shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust), and the Company will pay or
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances reasonably incurred or made by the Trustee in
accordance with any of the provisions of this Indenture (including the
reasonable compensation and the expenses and disbursements of its counsel and of
all persons not regularly in its employ) except any such expense, disbursement
or advance as may arise from its negligence, willful misconduct, recklessness or
bad faith. The Company also covenants to indemnify the Trustee in any capacity
under this Indenture and its agents and any authenticating agent for, and to
hold them harmless against, any loss, liability or expense incurred without
negligence, willful misconduct, recklessness, or bad faith on the part of the
Trustee or such agent or authenticating agent, as the case may be, and arising
out of or in connection with the acceptance or administration of this trust or
in any other capacity hereunder, including the costs and expenses of defending
themselves against any claim of liability in the premises. All indemnifications
and releases from liability granted hereunder to the Trustee shall extend to its
officers, directors, employees, agents, successors and assigns. The obligations
of the Company under this Section 8.6 to compensate or indemnify the Trustee and
to pay or reimburse the Trustee for expenses, disbursements and advances shall
be secured by a lien prior to that of the Notes upon all property and funds held
or collected by the Trustee as such, except funds held in trust for the benefit
of the holders of particular Notes. The obligation of the Company under this
Section shall survive the satisfaction and discharge of this Indenture.
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(f) or (g)
occurs, the expenses and the compensation for the services are intended to
constitute expenses of administration under any bankruptcy, insolvency or
similar laws.
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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, the combined capital and surplus of such person shall
be deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. If at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article.
Section 8.10 Resignation or Removal of Trustee.
---------------------------------
(a) The Trustee may at any time resign by giving written notice of
such resignation to the Company and to the holders of Notes. 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 sixty (60) days after the mailing of such notice of
resignation to the Noteholders, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor trustee,
or any Noteholder who has been a bona fide holder of a Note or Notes for at
least six months may, subject to the provisions of Section 7.9, on behalf
of himself and all others similarly situated, petition any such court for
the appointment of a successor trustee. Such court may thereupon, after
such notice, if any, as it may deem proper and prescribe, appoint a
successor trustee.
(b) In case at any time any of the following shall occur:
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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 Noteholder who has
been a bona fide holder of a Note or Notes for at least six months or
(2) the Trustee shall cease to be eligible in accordance with the
provisions of Section 8.9 and shall fail to resign after written
request therefor by the Company or by any such Noteholder or
(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 Noteholder who has been a bona fide
holder of a Note or Notes for at least six months may, on behalf of himself
and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a
successor trustee. Such court may thereupon, after such notice, if any, as
it may deem proper and prescribe, remove the Trustee and appoint a
successor trustee.
(c) The holders of a majority in aggregate principal amount of the
Notes at the time outstanding may at any time remove the Trustee and
nominate a successor trustee which shall be deemed appointed as successor
trustee unless within ten (10) days after notice to the Company of such
nomination the Company objects thereto, in which case the Trustee so
removed or any Noteholder, upon the terms and conditions and otherwise as
in Section 8.10(a) provided, may petition any court of competent
jurisdiction for an appointment of a successor trustee.
(d) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 8.10
shall become effective upon acceptance of appointment by the successor
trustee as provided in Section 8.11.
Section 8.11 Acceptance by Successor Trustee. Any successor trustee
-------------------------------
appointed as provided in Section 8.10 shall execute, acknowledge and deliver to
the Company and to its predecessor trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become vested with all the rights,
powers, duties and obligations of its predecessor hereunder, with like effect as
if originally named as trustee herein but, nevertheless, on the written request
of the Company or of the successor trustee, the trustee ceasing to act shall,
upon payment of any amounts then due it pursuant to the provisions of Section
8.6, execute and deliver an instrument transferring to such
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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, except for funds held in trust for
the benefit of holders of particular Notes, to secure any amounts then due it
pursuant to the provisions of Section 8.6.
No successor trustee shall accept appointment as provided in this Section
8.11 unless at the time of such acceptance such successor trustee shall be
qualified under the provisions of Section 8.8 and be eligible under the
provisions of Section 8.9.
Upon acceptance of appointment by a successor trustee as provided in this
Section 8.11, 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 to the holders of Notes at their addresses as they shall
appear on the Note register. If the Company fails to mail such notice within
ten (10) days after acceptance of appointment by the successor trustee, the
successor trustee shall cause such notice to be mailed at the expense of the
Company.
Section 8.12 Succession by Merger, Etc. Any corporation 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 Notes shall have been authenticated
but not delivered, any such successor to the Trustee may adopt the certificate
of authentication of any predecessor trustee or authenticating agent appointed
by such predecessor trustee, and deliver such Notes so authenticated and in case
at that time any of the Notes shall not have been authenticated, any successor
to the Trustee or an authenticating agent appointed by such successor trustee
may authenticate such Notes either in the name of any predecessor trustee
hereunder or in the name of the successor trustee and in all such cases such
certificates shall have the full force which it is anywhere in the Notes or in
this Indenture provided that the certificate of the Trustee shall have provided,
--------
however, that the right to adopt the certificate of authentication of any
- -------
predecessor Trustee or authenticate Notes in the name of any predecessor Trustee
shall apply only to its successor or successors by merger, conversion or
consolidation.
Section 8.13 Limitation on Rights of Trustee as Creditor. If and when the
-------------------------------------------
Trustee shall be or become a creditor of the Company (or any other obligor upon
the Notes), the Trustee shall
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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 NOTEHOLDERS
Section 9.1 Action by Noteholders. When in this Indenture it is provided
---------------------
that the holders of a specified percentage in aggregate principal amount of the
Notes may take any action (including the making of any demand or request, the
giving of any notice, consent or waiver or the taking of any other action), the
fact that at the time of taking any such action, the holders of such specified
percentage have joined therein may be evidenced (a) by any instrument or any
number of instruments of similar tenor executed by Noteholders in person or by
agent or proxy appointed in writing, or (b) by the record of the holders of
Notes voting in favor thereof at any meeting of Noteholders duly called and held
in accordance with the provisions of Article X, or (c) by a combination of such
instrument or instruments and any such record of such a meeting of Noteholders.
Whenever the Company or the Trustee solicits the taking of any action by the
holders of the Notes, the Company or the Trustee may fix in advance of such
solicitation, a date as the record date for determining holders entitled to take
such action. The record date shall be not more than fifteen (15) days prior to
the date of commencement of solicitation of such action.
Section 9.2 Proof of Execution by Noteholders. Subject to the provisions
---------------------------------
of Sections 8.1, 8.2 and 10.5, proof of the execution of any instrument by a
Noteholder or his agent or proxy shall be sufficient if made in accordance with
such reasonable rules and regulations as may be prescribed by the Trustee or in
such manner as shall be satisfactory to the Trustee. The holding of Notes shall
be proved by the registry of such Notes or by a certificate of the Note
registrar.
The record of any Noteholders' meeting shall be proved in the manner
provided in Section 10.6.
Section 9.3 Who Are Deemed Absolute Owners. The Company, any other
------------------------------
obligor on the Notes, the Trustee, any authenticating agent, any paying agent,
any conversion agent and any Note registrar may deem the person in whose name
such Note shall be registered upon the Note register to be, and may treat him
as, the absolute owner of such Note (whether or not such Note shall be overdue
and notwithstanding any notation of ownership or other writing thereon) for the
purpose of receiving payment of or on account of the principal of, premium, if
any, and interest on such Note, for conversion of such Note and for all other
purposes and neither the Company nor any other obligor on the Notes nor the
Trustee nor any paying agent nor any conversion agent nor any authenticating
agent nor any Note registrar shall be affected by any notice to the contrary.
All such payments so made to any holder for the time being, or upon his order,
shall be valid, and, to the extent of the sum or sums so paid, effectual to
satisfy and discharge the liability for monies payable upon any such Note.
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Section 9.4 Company-Owned Notes Disregarded. In determining whether the
-------------------------------
holders of the requisite aggregate principal amount of Notes have concurred in
any direction, consent, waiver or other action under this Indenture, Notes which
are owned by the Company or any other obligor on the Notes or by any person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Company or any other obligor on the Notes shall be
disregarded and deemed not to be outstanding for the purpose of any such
determination provided that for the purposes of determining whether the Trustee
--------
shall be protected in relying on any such direction, consent, waiver or other
action only Notes which a Responsible Officer knows are so owned shall be so
disregarded. Notes so owned which have been pledged in good faith may be
regarded as outstanding for the purposes of this Section 9.4 if the pledgee
shall establish to the satisfaction of the Trustee the pledgee's right to vote
such Notes and that the pledgee is not the Company, any other obligor on the
Notes or a person directly or indirectly controlling or controlled by or under
direct or indirect common control with the Company or any such other obligor.
In the case of a dispute as to such right, any decision by the Trustee taken
upon the advice of counsel shall be full protection to the Trustee. Upon
request of the Trustee, the Company shall furnish to the Trustee promptly an
Officers' Certificate listing and identifying all Notes, if any, known by the
Company to be owned or held by or for the account of any of the above-described
persons and, subject to Section 8.1, the Trustee shall be entitled to accept
such Officers' Certificate as conclusive evidence of the facts therein set forth
and of the fact that all Notes not listed therein are outstanding for the
purpose of any such determination.
Section 9.5 Revocation of Consents: Future Holders Bound. At any time
--------------------------------------------
prior to (but not after) the evidencing to the Trustee, as provided in Section
9.1, of the taking of any action by the holders of the percentage in aggregate
principal amount of the Notes specified in this Indenture in connection with
such action, any holder of a Note which is shown by the evidence to be included
in the Notes the holders of which have consented to such action may, by filing
written notice with the Trustee at its Corporate Trust Office and upon proof of
holding as provided in Section 9.2, revoke such action so far as it concerns
such Note. Except as aforesaid, any such action taken by the holder of any Note
shall be conclusive and binding upon such holder and upon all future holders and
owners of such Note and of any Notes issued in exchange or substitution
therefor, irrespective of whether any notation in regard thereto is made upon
such Note or any Note issued in exchange or substitution therefor.
ARTICLE X.
NOTEHOLDERS' MEETINGS
Section 10.1 Purpose of Meetings. A meeting of Noteholders may be called
-------------------
at any time and from time to time pursuant to the provisions of this Article X
for any of the following purposes:
(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
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any default or Event of Default hereunder and its consequences, or to take
any other action authorized to be taken by Noteholders pursuant to any of
the provisions of Article VII
(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 Notes under
any other provision of this Indenture or under applicable law.
Section 10.2 Call of Meetings by Trustee. The Trustee may at any time
---------------------------
call a meeting of Noteholders to take any action specified in Section 10.1, to
be held at such time and at such place at a location within 10 miles of the
Corporate Trust Office or the Borough of Manhattan, The City of New York, as the
Trustee shall determine. Notice of every meeting of the Noteholders, setting
forth the time and the place of such meeting and in general terms the action
proposed to be taken at such meeting and the establishment of any record date
pursuant to Section 9.1, shall be mailed to holders of Notes at their addresses
as they shall appear on the Note register. Such notice shall also be mailed to
the Company. Such notices shall be mailed not less than twenty (20) nor more
than ninety (90) days prior to the date fixed for the meeting.
Any meeting of Noteholders shall be valid without notice if the holders of
all Notes then outstanding are present in person or by proxy or if notice is
waived before or after the meeting by the holders of all Notes outstanding, and
if the Company and the Trustee are either present by duly authorized
representatives or have, before or after the meeting, waived notice.
Section 10.3 Call of Meetings by Company or Noteholders. In case at any
------------------------------------------
time the Company, pursuant to a resolution of its Board of Directors, or the
holders of at least ten percent in aggregate principal amount of the Notes then
outstanding, shall have requested the Trustee to call a meeting of Noteholders,
by written request setting forth in reasonable detail the action proposed to be
taken at the meeting, and the Trustee shall not have mailed the notice of such
meeting within twenty (20) days after receipt of such request, then the Company
or such Noteholders may determine the time and the place at any location within
10 miles of the Corporate Trust Office or the Borough of Manhattan, The City of
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 Noteholders a person shall (a) be a holder of one or more Notes on
the record date pertaining to such meeting or (b) be a person appointed by an
instrument in writing as proxy by a holder of one or more Notes. The only
persons who shall be entitled to be present or to speak at any
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meeting of Noteholders shall be the persons entitled to vote at such meeting and
their counsel and any representatives of the Trustee and its counsel and any
representatives of the Company and its counsel.
Section 10.5 Regulations. Notwithstanding any other provisions of this
-----------
Indenture, the Trustee may make such reasonable regulations as it may deem
advisable for any meeting of Noteholders, in regard to proof of the holding of
Notes and of the appointment of proxies, and in regard to the appointment and
duties of inspectors of votes, the submission and examination of proxies,
certificates and other evidence of the right to vote, and such other matters
concerning the conduct of the meeting as it shall think fit.
The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Noteholders as provided in Section 10.3, in which case the Company
or the Noteholders calling the meeting, as the case may be, shall in like manner
appoint a temporary chairman. A permanent chairman and a permanent secretary of
the meeting shall be elected by vote of the holders of a majority in principal
amount of the Notes represented at the meeting and entitled to vote at the
meeting.
Subject to the provisions of Section 9.4, at any meeting each Noteholder or
proxyholder shall be entitled to one vote for each $1,000 principal amount of
Notes held or represented by him provided, however, that no vote shall be cast
-------- -------
or counted at any meeting in respect of any Note challenged as not outstanding
and ruled by the chairman of the meeting to be not outstanding. The chairman of
the meeting shall have no right to vote other than by virtue of Notes held by
him or instruments in writing as aforesaid duly designating him as the proxy to
vote on behalf of other Noteholders. Any meeting of Noteholders duly called
pursuant to the provisions of Section 10.2 or 10.3 may be adjourned from time to
time by the holders of a majority of the aggregate principal amount of Notes
represented at the meeting, whether or not constituting a quorum, and the
meeting may be held as so adjourned without further notice.
Section 10.6 Voting. The vote upon any resolution submitted to any
------
meeting of Noteholders shall be by written ballot on which shall be subscribed
the signatures of the holders of Notes or of their representatives by proxy and
the principal amount of the Notes held or represented by them. The permanent
chairman of the meeting shall appoint two inspectors of votes who shall count
all votes cast at the meeting for or against any resolution and who shall make
and file with the secretary of the meeting their verified written reports in
duplicate of all votes cast at the meeting. A record in duplicate of the
proceedings of each meeting of Noteholders shall be prepared by the secretary of
the meeting and there shall be attached to said record the original reports of
the inspectors of votes on any vote by ballot taken thereat and affidavits by
one or more persons having knowledge of the facts setting forth a copy of the
notice of the meeting and showing that said notice was mailed as provided in
Section 10.2. The record shall show the principal amount of the Notes voting in
favor of or against any resolution. The 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
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other to the Trustee to be preserved by the Trustee, the latter to have attached
thereto the ballots voted at the meeting.
Any record so signed and verified shall be conclusive evidence of the
matters therein stated.
Section 10.7 No Delay of Rights by Meeting. Nothing in this Article X
-----------------------------
contained shall be deemed or construed to authorize or permit, by reason of any
call of a meeting of Noteholders or any rights expressly or impliedly conferred
hereunder to make such call, any hindrance or delay in the exercise of any right
or rights conferred upon or reserved to the Trustee or to the Noteholders under
any of the provisions of this Indenture or of the Notes.
ARTICLE XI.
SUPPLEMENTAL INDENTURES
Section 11.1 Supplemental Indentures Without Consent of Noteholders. The
------------------------------------------------------
Company, when authorized by the resolutions of the Board of Directors, and the
Trustee may from time to time and at any time enter into an indenture or
indentures supplemental hereto for one or more of the following purposes:
(a) to make provision with respect to the conversion rights of the
holders of Notes pursuant to the requirements of Section 15.6 or the
repurchase obligations of the Company pursuant to the requirements of
Section 16.5
(b) subject to Article IV, to convey, transfer, assign, mortgage or
pledge to the Trustee as security for the Notes, any property or assets
(c) to evidence the succession of another corporation to the Company,
or successive successions, and the assumption by the successor corporation
of the covenants, agreements and obligations of the Company pursuant to
Article XII
(d) to add to the covenants of the Company such further covenants,
restrictions or conditions as the Board of Directors and the Trustee shall
consider to be for the benefit of the holders of Notes, and to make the
occurrence, or the occurrence and continuance, of a default in any such
additional covenants, restrictions or conditions a default or an Event of
Default permitting the enforcement of all or any of the several remedies
provided in this Indenture as herein set forth provided, however, that in
-------- -------
respect of any such additional covenant, restriction or condition such
supplemental indenture may provide for a particular period of grace after
default (which period may be shorter or longer than that allowed in the
case of other defaults) or may provide for an immediate enforcement upon
such default or may limit the remedies available to the Trustee upon such
default
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(e) to provide for the issuance under this Indenture of Notes in
coupon form (including Notes registrable as to principal only) and to
provide for exchangeability of such Notes with the Notes issued hereunder
in fully registered form and to make all appropriate changes for such
purpose
(f) to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture which may be defective or
inconsistent with any other provision contained herein or in any
supplemental indenture, or to make such other provisions in regard to
matters or questions arising under this Indenture which shall not
materially adversely affect the interests of the holders of the Notes
(g) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Notes or
(h) to modify, eliminate or add to the provisions of this Indenture to
such extent as shall be necessary to effect the qualification of this
Indenture under the Trust Indenture Act, or under any similar federal
statute hereafter enacted.
The Trustee is hereby authorized to join with the Company in the execution
of any such supplemental indenture, to make any further appropriate agreements
and stipulations which may be therein contained and to accept the conveyance,
transfer and assignment of any property thereunder, but the Trustee shall not be
obligated to, but may in its discretion, enter into any supplemental indenture
which affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this Section
11.1 may be executed by the Company and the Trustee without the consent of the
holders of any of the Notes at the time outstanding, notwithstanding any of the
provisions of Section 11.2.
Section 11.2 Supplemental Indentures with Consent of Noteholders. With
---------------------------------------------------
the consent (evidenced as provided in Article IX) of the holders of not less
than a majority in aggregate principal amount of the Notes at the time
outstanding determined in accordance with Section 9.4, the Company, when
authorized by the resolutions of the Board of Directors, and the Trustee may
from time to time and at any time enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or any
supplemental indenture or of modifying in any manner the rights of the holders
of the Notes provided, however, that no such supplemental indenture shall (i)
-------- -------
extend the fixed maturity of any Note, or reduce the rate or extend the time of
payment of interest thereon, or reduce the principal amount thereof or premium,
if any, thereon, or reduce any amount payable on redemption thereof, or impair
the right of any Noteholder to institute suit for the payment thereof, or make
the principal thereof or interest or premium, if any, thereon payable in any
coin or currency other than that provided in the Notes, or modify the provisions
of this Indenture with respect to the subordination of the Notes in a manner
adverse to the Noteholders in any material respect, or change the obligation of
the Company to repurchase any
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Note upon the occurrence of a Change in Control in a manner adverse to the
holder of Notes, or impair the right to convert the Notes into Common Stock in
any material respect, without the consent of the holder of each Note so
affected, or (ii) reduce the aforesaid percentage of Notes, the holders of which
are required to consent to any such supplemental indenture, without the consent
of the holders of all Notes then outstanding.
Upon the request of the Company, accompanied by a copy of the resolutions
of the Board of Directors certified by its Secretary or an Assistant Secretary
authorizing the execution of any such supplemental indenture, and upon the
filing with the Trustee of evidence of the consent of Noteholders as aforesaid,
the Trustee shall join with the Company in the execution of such supplemental
indenture unless such supplemental indenture affects the Trustee's own rights,
duties or immunities under this Indenture or otherwise, in which case the
Trustee may in its discretion, but shall not be obligated to, enter into such
supplemental indenture.
It shall not be necessary for the consent of the Noteholders under this
Section 11.2 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.
Section 11.3 Effect of Supplemental Indenture. Any supplemental indenture
--------------------------------
executed pursuant to the provisions of this Article XI shall comply with the
Trust Indenture Act, as then in effect provided that this Section 11.3 shall not
--------
require such supplemental indenture or the Trustee to be qualified under the
Trust Indenture Act prior to the time such qualification is in fact required
under the terms of the Trust Indenture Act or the Indenture has been qualified
under the Trust Indenture Act, nor shall it constitute any admission or
acknowledgment by any party to such supplemental indenture that any such
qualification is required prior to the time such qualification is in fact
required under the terms of the Trust Indenture Act or the Indenture has been
qualified under the Trust Indenture Act. Upon the execution of any supplemental
indenture pursuant to the provisions of this Article XI, this Indenture shall be
and be deemed to be modified and amended in accordance therewith and the
respective rights, limitation of rights, obligations, duties and immunities
under this Indenture of the Trustee, the Company and the holders of Notes shall
thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments and all the terms and conditions
of any such supplemental indenture shall be and be deemed to be part of the
terms and conditions of this Indenture for any and all purposes.
Section 11.4 Notation on Notes. Notes authenticated and delivered after
-----------------
the execution of any supplemental indenture pursuant to the provisions of this
Article XI may bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company or the Trustee
shall so determine, new Notes so modified as to conform, in the opinion of the
Trustee and the Board of Directors, to any modification of this Indenture
contained in any such supplemental indenture may, at the Company's expense, be
prepared and executed by the Company, authenticated by the Trustee (or an
authenticating agent duly appointed by the Trustee pursuant to Section 17.11)
and delivered in exchange for the Notes then outstanding, upon surrender of such
Notes then outstanding.
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Section 11.5 Evidence of Compliance of Supplemental Indenture to Be
------------------------------------------------------
Furnished Trustee. The Trustee, subject to the provisions of Sections 8.1 and
- -----------------
8.2, may receive an Officers' Certificate and an Opinion of Counsel as
conclusive evidence that any supplemental indenture executed pursuant hereto
complies with the requirements of this Article XI.
ARTICLE XII.
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
Section 12.1 Company May Consolidate Etc. on Certain Terms. Subject to
---------------------------------------------
the provisions of Section 12.2, nothing contained in this Indenture or in any of
the Notes shall prevent any consolidation or merger of the Company with or into
any other 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, the due and punctual
payment of the principal of and premium, if any, and interest on all of the
Notes, according to their tenor, and the due and punctual performance and
observance of all of the covenants and conditions of this Indenture to be
performed by the Company, shall be expressly assumed, by supplemental indenture
satisfactory in form to the Trustee, executed and delivered to the Trustee by
the 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 15.6.
Section 12.2 Successor Corporation to Be Substituted. In case of any such
---------------------------------------
consolidation, merger, sale, conveyance or lease and upon the assumption by the
successor corporation, by supplemental indenture, executed and delivered to the
Trustee and satisfactory in form to the Trustee, of the due and punctual payment
of the principal of and premium, if any, and interest on all of the Notes and
the due and punctual performance of all of the covenants and conditions of this
Indenture to be performed by the Company, such successor corporation shall
succeed to and be substituted for the Company, with the same effect as if it had
been named herein as such. Such successor corporation thereupon may cause to be
signed, and may issue either in its own name or in the name of Central Garden &
Pet Company any or all of the Notes issuable hereunder which theretofore shall
not have been signed by the Company and delivered to the Trustee and, upon the
order of such successor corporation instead of the Company and subject to all
the terms, conditions and limitations in this Indenture prescribed, the Trustee
shall authenticate and shall deliver, or cause to be authenticated and
delivered, any Notes which previously shall have been signed and delivered by
the officers of the Company to the Trustee for authentication, and any Notes
which such successor corporation thereafter shall cause to be signed and
delivered to the Trustee for that purpose. All the Notes so issued shall
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in all respects have the same legal rank and benefit under this Indenture as the
Notes theretofore or thereafter issued in accordance with the terms of this
Indenture as though all of such Notes had been issued at the date of the
execution hereof. In the event of any such consolidation, merger, sale 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 Notes and from its
obligations under this Indenture.
In case of any such consolidation, merger, sale, conveyance or lease, such
changes in phraseology and form (but not in substance) may be made in the Notes
thereafter to be issued as may be appropriate.
Section 12.3 Opinion of Counsel to Be Given Trustee. The Trustee, subject
--------------------------------------
to Sections 8.1 and 8.2, shall receive an Officers' Certificate and an Opinion
of Counsel as conclusive evidence that any such consolidation, merger, sale,
conveyance or lease and any such assumption complies with the provisions of this
Article XII.
ARTICLE XIII.
SATISFACTION AND DISCHARGE OF INDENTURE
Section 13.1 Discharge of Indenture. When (a) the Company shall deliver
----------------------
to the Trustee for cancellation all Notes theretofore authenticated (other than
any Notes which have been destroyed, lost or stolen and in lieu of or in
substitution for which other Notes shall have been authenticated and delivered)
and not theretofore canceled, or (b) all the Notes not theretofore canceled or
delivered to the Trustee for cancellation shall have become due and payable, or
are by their terms to become due and payable within one year or are to be called
for redemption within one year under arrangements satisfactory to the Trustee
for the giving of notice of redemption, and the Company shall deposit (without
violating the provisions of the Credit Agreement) with the Trustee, in trust,
monies sufficient to pay at maturity or upon redemption of all of the Notes
(other than any Notes which shall have been mutilated, destroyed, lost or stolen
and in lieu of or in substitution for which other Notes shall have been
authenticated and delivered) not theretofore canceled or delivered to the
Trustee for cancellation, including principal and premium, if any, and interest
due or to become due to such date of maturity or redemption date, as the case
may be, and if in either case the Company shall also pay or cause to be paid all
other sums payable hereunder by the Company, then this Indenture shall cease to
be of further effect (except as to (i) remaining rights of registration of
transfer, substitution and exchange and conversion of Notes, (ii) rights
hereunder of Noteholders to receive payments of principal of and premium, if
any, and interest on, the Notes and the other rights, duties and obligations of
Noteholders, as beneficiaries hereof with respect to the amounts, if any, so
deposited with the Trustee and (iii) the rights, obligations and immunities of
the Trustee hereunder), and the Trustee, on demand of the Company accompanied by
an Officers' Certificate and an Opinion of Counsel as required by Section 17.5
and at the cost and use of the Company, shall execute proper instruments
acknowledging satisfaction of and discharging this Indenture
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the Company, however, hereby agreeing to reimburse the Trustee for any costs or
expenses thereafter reasonably and properly incurred by the Trustee and to
compensate the Trustee for any services thereafter reasonably and properly
rendered by the Trustee in connection with this Indenture or the Notes.
Section 13.2 Deposited Monies to Be Held in Trust by Trustee. Subject to
-----------------------------------------------
Section 13.4, all monies deposited with the Trustee pursuant to Section 13.1 and
not in violation of Article IV shall be held in trust for the sole benefit of
the Noteholders and not to be subject to the subordination provisions of Article
IV, and such monies shall be applied by the Trustee to the payment, either
directly or through any paying agent (including the Company if acting as its own
paying agent), to the holders of the particular Notes for the payment or
redemption of which such monies have been deposited with the Trustee, of all
sums due and to become due thereon for principal and interest and premium, if
any.
Section 13.3 Paying Agent to Repay Monies Held. Upon the satisfaction and
---------------------------------
discharge of this Indenture, all monies then held by any paying agent for the
Notes (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 of, premium, if any, or interest on Notes and not applied but
remaining unclaimed by the holders of Notes for two years after the date upon
which the principal of, premium, if any, or interest on such Notes, as the case
may be, shall have become due and payable, shall be repaid to the Company by the
Trustee on demand and all liability of the Trustee shall thereupon cease with
respect to such monies and the holder of any of the Notes shall thereafter look
only to the Company for any payment which such holder may be entitled to collect
unless an applicable abandoned property law designates another Person.
Section 13.5 Reinstatement. If the Trustee or the paying agent is unable
-------------
to apply any money in accordance with Section 13.2 by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Notes shall be revived and reinstated as though no deposit had
occurred pursuant to Section 13.1 until such time as the Trustee or the paying
agent is permitted to apply all such money in accordance with Section 13.2
provided, however, that if the Company makes any payment of interest or premium,
- -------- -------
if any, on or principal of any Note following the reinstatement of its
obligations, the Company shall be subrogated to the rights of the holders of
such Notes to receive such payment from the money held by the Trustee or paying
agent.
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ARTICLE XIV.
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
Section 14.1 Indenture and Notes Solely Corporate Obligations. No
------------------------------------------------
recourse for the payment of the principal of or premium, if any, or interest on
any Note, or for any claim based thereon or otherwise in respect thereof, and no
recourse under or upon any obligation, covenant or agreement of the Company in
this Indenture or in any supplemental indenture or in any Note, or because of
the creation of any indebtedness represented thereby, shall be had against any
incorporator, stockholder, employee, agent, officer, or director or subsidiary,
as such, past, present or future, of the Company or of any successor
corporation, either directly or through the Company or any successor
corporation, whether by virtue of any constitution, statute or rule of law, or
by the enforcement of any assessment or penalty or otherwise it being expressly
understood that all such liability is hereby expressly waived and released as a
condition of, and as a consideration for, the execution of this Indenture and
the issue of the Notes.
ARTICLE XV.
CONVERSION OF NOTES
Section 15.1 Right to Convert. Subject to and upon compliance with the
----------------
provisions of this Indenture, the holder of any Note shall have the right, at
his option, at any time on or after sixty (60) days following the latest date of
original issuance of the Notes and prior to the close of business on November
15, 2003 (except that, with respect to any Note or portion of a Note which shall
be called for redemption, such right shall terminate, except as provided in
Section 15.2 or Section 3.4, at the close of business on the fifth Business Day
preceding the date fixed for redemption of such Note or portion of a Note,
unless the Company shall default in payment due upon redemption thereof) to
convert the principal amount of any such Note, or any portion of such principal
amount which is $1,000 or an integral multiple thereof, into that number of
fully paid and non-assessable shares of Common Stock (as such shares shall then
be constituted) obtained by dividing the principal amount of the Note or portion
thereof surrendered for conversion by the Conversion Price in effect at such
time, by surrender of the Note so to be converted in whole or in part in the
manner provided, together with any required funds, in Section 15.2. A holder of
Notes is not entitled to any rights of a holder of Common Stock until such
holder has converted his Notes to Common Stock, and only to the extent such
Notes are deemed to have been converted to Common Stock under this Article XV.
Section 15.2 Exercise of Conversion Privilege; Issuance of Common Stock on
-------------------------------------------------------------
Conversion; No Adjustment for Interest or Dividends. In order to exercise the
- ---------------------------------------------------
conversion privilege with respect to any Note in certificated form, the holder
of any such Note to be converted in whole or in part shall surrender such Note,
duly endorsed, at an office or agency maintained by the Company pursuant to
Section 5.2, accompanied by the funds, if any, required by the penultimate
paragraph of this Section 15.2, and shall give written notice of conversion
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in the form provided on the Notes (or such other notice which is acceptable to
the Company) to the office or agency that the holder elects to convert such Note
or the portion thereof specified in said notice. Such notice shall also state
the name or names (with address or addresses) in which the certificate or
certificates for shares of Common Stock which shall be issuable on such
conversion shall be issued, and shall be accompanied by transfer taxes, if
required pursuant to Section 15.7. Each such Note surrendered for conversion
shall, unless the shares issuable on conversion are to be issued in the same
name as the registration of such Note, be duly endorsed by, or be accompanied by
instruments of transfer in form satisfactory to the Company duly executed by,
the holder or his duly authorized attorney.
In order to exercise the conversion privilege with respect to any interest
in a Note in global form, the beneficial holder must complete the appropriate
instruction form for conversion pursuant to the Depositary's book-entry
conversion program, deliver by book-entry delivery an interest in such Note in
global form, furnish appropriate endorsements and transfer documents if required
by the Company or the Trustee or conversion agent, and pay the funds, if any,
required by this Section 15.2 and any transfer taxes if required pursuant to
Section 15.7.
As promptly as practicable after satisfaction of the requirements for
conversion set forth above, subject to compliance with any restrictions on
transfer if shares issuable on conversion are to be issued in a name other than
that of the Noteholder (as if such transfer were a transfer of the Note or Notes
(or portion thereof) so converted), the Company shall issue and shall deliver to
such holder at the office or agency maintained by the Company for such purpose
pursuant to Section 5.2, a certificate or certificates for the number of full
shares of Common Stock issuable upon the conversion of such Note or portion
thereof in accordance with the provisions of this Article and a check or cash in
respect of any fractional interest in respect of a share of Common Stock arising
upon such conversion, as provided in Section 15.3. In case any Note of a
denomination greater than $1,000 shall be surrendered for partial conversion,
and subject to Section 2.3, the Company shall execute and the Trustee shall
authenticate and deliver to the holder of the Note so surrendered, without
charge to him, a new Note or Notes in authorized denominations in an aggregate
principal amount equal to the unconverted portion of the surrendered Note.
Each conversion shall be deemed to have been effected as to any such Note
(or portion thereof) on the date on which the requirements set forth above in
this Section 15.2 have been satisfied as to such Note (or portion thereof), and
the person in whose name any certificate or certificates for shares of Common
Stock shall be issuable upon such conversion shall be deemed to have become on
said date the holder of record of the shares represented thereby provided,
--------
however, that any such surrender on any date when the stock transfer books of
- -------
the Company shall be closed shall constitute the person in whose name the
certificates are to be issued as the record holder thereof for all purposes on
the next succeeding day on which such stock transfer books are open, but such
conversion shall be at the Conversion Price in effect on the date upon which
such Note shall be surrendered.
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Any Note or portion thereof surrendered for conversion during the period
from the close of business on the record date for any interest payment date to
the close of business on the Business Day next preceding the following interest
payment date shall (unless such Note or portion thereof being converted shall
have been called for redemption during the period from the close of business on
such record date to the close of business on the Business Day next preceding the
following interest payment date) be accompanied by payment, in New York Clearing
House funds or other funds acceptable to the Company, of an amount equal to the
interest payable on such interest payment date on the principal amount being
converted provided, however, that no such payment need be made if there shall
-------- -------
exist at the time of conversion a default in the payment of interest on the
Notes. In the event a Note or portion thereof is called for redemption on or
after November 15, 1999 and before March 15, 2000 and the holder elects to
convert such Note after it has been called for redemption, the holder will be
entitled to receive interest on such Note for the period from September 15, 1999
through November 15, 1999. Except as provided above in this Section 15.2, no
adjustment shall be made for interest accrued on any Note converted or for
dividends on any shares issued upon the conversion of such Note as provided in
this Article.
Upon the conversion of an interest in a Note in global form, the Trustee,
or the Custodian at the direction of the Trustee, shall make a notation on such
Note in global form as to the reduction in the principal amount represented
thereby.
Section 15.3 Cash Payments in Lieu of Fractional Shares. No fractional
------------------------------------------
shares of Common Stock or scrip representing fractional shares shall be issued
upon conversion of Notes. If more than one Note shall be surrendered for
conversion at one time by the same holder, the number of full shares which shall
be issuable upon conversion shall be computed on the basis of the aggregate
principal amount of the Notes (or specified portions thereof to the extent
permitted hereby) so surrendered. If any fractional share of stock would be
issuable upon the conversion of any Note or Notes, the Company shall make an
adjustment and payment therefor in cash at the current market value thereof to
the holder of Notes. The current market value of a share of Common Stock shall
be the Closing Price on the first Trading Day immediately preceding the day on
which the Notes (or specified portions thereof) are deemed to have been
converted.
Section 15.4 Conversion Price. The conversion price shall be as specified
----------------
in the form of Note (herein called the "Conversion Price") attached as Exhibit A
hereto, subject to adjustment as provided in this Article XV.
Section 15.5 Adjustment of Conversion Price. The Conversion Price shall
------------------------------
be adjusted from time to time by the Company as follows:
(a) In case the Company shall hereafter pay a dividend or make a
distribution to all holders of the outstanding Common Stock in shares of
Common Stock and/or Class B Stock, the Conversion Price in effect at the
opening of business on the date following the date fixed for the
determination of stockholders entitled to receive such dividend or
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other distribution shall be reduced by multiplying such Conversion Price by
a fraction of which the numerator shall be the number of shares of Common
Stock and/or Class B Stock outstanding at the close of business on the date
fixed for such determination and the denominator shall be the sum of such
number of shares and the total number of shares constituting such dividend
or other distribution, such reduction to become effective immediately after
the opening of business on the day following the date fixed for such
determination. The Company will not pay any dividend or make any
distribution on shares of Common Stock held in the treasury of the Company.
If any dividend or distribution of the type described in this Section
15.5(a) is declared but not so paid or made, the Conversion Price shall
again be adjusted to the Conversion Price which would then be in effect if
such dividend or distribution had not been declared.
(b) In case the Company shall issue rights or warrants to all holders
of its outstanding shares of Common Stock and/or Class B 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 shares of Common Stock and/or Class B Stock at
a price per share less than the Current Market Price (as defined below) on
the date fixed for determination of stockholders entitled to receive such
rights or warrants, the Conversion Price shall be adjusted so that the same
shall equal the price determined by multiplying the Conversion Price in
effect immediately prior to the date fixed for determination of
stockholders entitled to receive such rights or warrants by a fraction of
which the numerator shall be the number of shares of Common Stock and/or
Class B Stock outstanding at the close of business on the date fixed for
determination of stockholders entitled to receive such rights and 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,
and of which the denominator shall be the number of shares of Common Stock
and/or Class B Stock outstanding on the date fixed for determination of
stockholders entitled to receive such rights and warrants plus the total
number of additional shares of Common Stock and/or Class B Stock offered
for subscription or purchase. Such adjustment shall be successively made
whenever any such rights and warrants are issued, and shall become
effective immediately after the opening of business on the day following
the date fixed for determination of stockholders entitled to receive such
rights or warrants. To the extent that shares of Common Stock and/or Class
B Stock are not delivered after the expiration of such rights or warrants,
the Conversion Price shall be readjusted to the Conversion Price which
would then be in effect had the adjustments made upon the issuance of such
rights or warrants been made on the basis of delivery of only the number of
shares of Common Stock and/or Class B Stock actually delivered. In the
event that such rights or warrants are not so issued, the Conversion Price
shall again be adjusted to be the Conversion Price which would then be in
effect if such date fixed for the determination of stockholders entitled to
receive such rights or warrants had not been fixed. In determining whether
any rights or warrants entitle the holders to subscribe for or purchase
shares of Common Stock and/or Class B Stock at less than such Current
Market Price, and in determining the aggregate offering price of such
shares of Common Stock and/or Class B Stock, there shall be taken into
account
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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 outstanding shares of Common Stock and/or Class B Stock
shall be subdivided into a greater number of shares of Common Stock and/or
Class B Stock, the Conversion Price in effect at the opening of business on
the day following the day upon which such subdivision becomes effective
shall be proportionately reduced, and conversely, in case outstanding
shares of Common Stock and/or Class B Stock shall be combined into a
smaller number of shares of Common Stock and/or Class B Stock, the
Conversion Price in effect at the opening of business on the day following
the day upon which such combination becomes effective shall be
proportionately increased, such reduction or increase, as the case may be,
to become effective immediately after the opening of business on the day
following the day upon which such subdivision or combination becomes
effective.
(d) In case the Company shall, by dividend or otherwise, distribute to
all holders of its Common Stock and/or Class B Stock shares of any class of
capital stock of the Company (other than any dividends or distributions to
which Section 15.5(a) applies) or evidences of its indebtedness or assets
(including securities, but excluding any rights or warrants referred to in
Section 15.5(b), and excluding any dividend or distribution paid
exclusively in cash (any of the foregoing hereinafter in this Section
15.5(d) called the "Securities")), then, in each such case (unless the
Company elects to reserve such Securities for distribution to the
Noteholders upon the conversion of the Notes so that any such holder
converting Notes will receive upon such conversion, in addition to the
shares of Common Stock and/or Class B Stock to which such holder is
entitled, the amount and kind of such Securities which such holder would
have received if such holder had converted its Notes into Common Stock
immediately prior to the Record Date (as defined in Section 15.5(h) for
such distribution of the Securities)), the Conversion Price shall be
reduced so that the same shall be equal to the price determined by
multiplying the Conversion Price in effect on the Record Date (as defined
below) with respect to such distribution by a fraction of which the
numerator shall be the Current Market Price per share of the Common Stock
and/or Class B Stock on such Record Date less 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) on the
Record Date of the portion of the Securities so distributed applicable to
one share of Common Stock and/or Class B Stock and the denominator shall be
the Current Market Price per share of the Common Stock and/or Class B
Stock, such reduction to become effective immediately prior to the opening
of business on the day following such Record Date provided, however, that
-------- -------
in the event the then fair market value (as so determined) of the portion
of the Securities so distributed applicable to one share of Common Stock
and/or Class B Stock is equal to or greater than the Current Market Price
of the Common Stock and/or Class B Stock on the Record Date, in lieu of the
foregoing adjustment, adequate provision shall be made so that each
Noteholder shall have the right to receive upon conversion the amount of
Securities such holder would
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have received had such holder converted each Note on the Record Date. In
the event that such dividend or distribution is not so paid or made, the
Conversion Price shall again be adjusted to be the Conversion Price which
would then be in effect if such dividend or distribution had not been
declared. If the Board of Directors determines the fair market value of
any distribution for purposes of this Section 15.5(d) by reference to the
actual or when issued trading market for any securities, 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 and/or Class B
Stock.
In the event the Company implements a stockholder rights plan, such
rights plan shall provide that upon conversion of the Notes the holders
will receive, in addition to the Common Stock and/or Class B 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 and/or Class B Stock at or prior to the time of
conversion).
Rights or warrants distributed by the Company to all holders of Common
Stock and/or Class B Stock entitling the holders thereof to subscribe for
or purchase shares of the Company's capital stock (either initially or
under certain circumstances), which rights or warrants, until the
occurrence of a specified event or events ("Trigger Event"): (i) are deemed
to be transferred with such shares of Common Stock and/or Class B Stock
(ii) are not exercisable and (iii) are also issued in respect of future
issuances of Common Stock and/or Class B Stock, shall be deemed not to have
been distributed for purposes of this Section 15.5 (and no adjustment to
the Conversion Price under this Section 15.5 will be required) until the
occurrence of the earliest Trigger Event, whereupon such rights and
warrants shall be deemed to have been distributed and an appropriate
adjustment (if any is required) to the Conversion Price shall be made under
this Section 15.5(d). If any such right or warrant, including any such
existing rights or warrants distributed prior to the date of this
Indenture, are subject to events, upon the occurrence of which such rights
or warrants become exercisable to purchase different securities, evidences
of indebtedness or other assets, then the date of the occurrence of any and
each such event shall be deemed to be the date of distribution and record
date with respect to new rights or warrants with such rights (and a
termination or expiration of the existing rights or warrants without
exercise by any of the holders thereof). In addition, in the event of any
distribution (or deemed distribution) of rights or warrants, or any Trigger
Event or other event (of the type described in the preceding sentence) with
respect thereto that was counted for purposes of calculating a distribution
amount for which an adjustment to the Conversion Price under this Section
15.5 was made, (1) in the case of any such rights or warrants which shall
all have been redeemed or repurchased without exercise by any holders
thereof, the Conversion Price shall be readjusted upon such final
redemption or repurchase to give effect to such distribution or Trigger
Event, as the case may be, as though it were a cash distribution, equal to
the per share redemption or repurchase price received by a holder or
holders of Common Stock and/or Class B Stock with respect to such rights or
warrants (assuming such holder
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had retained such rights or warrants), made to all holders of Common Stock
and/or Class B Stock as of the date of such redemption or repurchase, and
(2) in the case of such rights or warrants which shall have expired or been
terminated without exercise by any holders thereof, the Conversion Price
shall be readjusted as if such rights and warrants had not been issued.
For purposes of this Section 15.5(d) and Sections 15.5(a) and (b), any
dividend or distribution to which this Section 15.5(d) is applicable that
also includes shares of Common Stock and/or Class B Stock, or rights or
warrants to subscribe for or purchase shares of Common Stock and/or Class B
Stock (or both), shall be deemed instead to be (1) a dividend or
distribution of the evidences of indebtedness, assets or shares of capital
stock other than such shares of Common Stock and/or Class B Stock or rights
or warrants (and any further Conversion Price reduction required by this
Section 15.5(d) with respect to such dividend or distribution shall then be
made) immediately followed by (2) a dividend or distribution of such shares
of Common Stock and/or Class B Stock or such rights or warrants (and any
further Conversion Price reduction required by Sections 15.5(a) and (b)
with respect to such dividend or distribution shall then be made), except
(A) the Record Date of such dividend or distribution shall be substituted
as "the date fixed for the determination of stockholders entitled to
receive such dividend or other distribution" and "the date fixed for such
determination" within the meaning of Sections 15.5(a) and (b) and (B) any
shares of Common Stock and/or Class B Stock included in such dividend or
distribution shall not be deemed "outstanding at the close of business on
the date fixed for such determination" within the meaning of Section
15.5(a).
(e) In case the Company shall, by dividend or otherwise, distribute to
all holders of its Common Stock and/or Class B Stock cash (excluding any
cash that is distributed upon a merger or consolidation to which Section
15.6 applies or as part of a distribution referred to in Section 15.5(d))
in an aggregate amount that, combined together with (1) the aggregate
amount of any other such distributions to all holders of its Common Stock
and/or Class B 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 15.5(e) has been made, and (2) the
aggregate of any cash plus the fair market value (as determined by the
Board of Directors, whose determination shall be conclusive and described
in a 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 and/or Class B Stock concluded within the 12 months preceding
the date of payment of such distribution, and in respect of which no
adjustment pursuant to Section 15.5(f) has been made, exceeds 10% of the
product of the Current Market Price (determined as provided in Section
15.5(h)) on the Record Date with respect to such distribution times the
number of shares of Common Stock outstanding on such date, plus the product
of then the Current Market Price of the Class B Stock times the number of
shares of Class B Stock outstanding on such date, then, and in each such
case, immediately after the close of business on such date, the Conversion
Price shall be
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reduced so that the same shall equal the price determined by multiplying
the Conversion Price in effect immediately prior to the close of business
on such Record Date by a fraction (i) the numerator of which shall be equal
to the Current Market Price on the Record Date less an amount equal to the
quotient of (x) the excess of such combined amount over such 10% and (y)
the number of shares of Common Stock and/or Class B Stock outstanding on
the Record Date and (ii) the denominator of which shall be equal to the
Current Market Price on such Record Date provided, however, that, if the
-------- -------
portion of the cash so distributed applicable to one share of Common Stock
and/or Class B Stock is equal to or greater than the Current Market Price
of the Common Stock and/or Class B Stock on the Record Date, in lieu of the
foregoing adjustment, adequate provision shall be made so that each
Noteholder shall have the right to receive upon conversion the amount of
cash such holder would have received had such Holder converted such Note
immediately prior to such Record Date. If such dividend or distribution is
not so paid or made, the Conversion Price shall again be adjusted to be the
Conversion Price which would then be in effect if such dividend or
distribution had not been declared.
(f) In case a tender offer made by the Company or any of its
subsidiaries for all or any portion of the Common Stock and/or Class B
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
and/or Class B Stock expiring within the 12 months preceding the expiration
of such tender offer and in respect of which no adjustment pursuant to this
Section 15.5(f) has been made and (2) the aggregate amount of any
distributions to all holders of the Common Stock and/or Class B 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
15.5(e) has been made, exceeds 10% of the product of the Current Market
Price (determined as provided in Section 15.5(h)) as of the last time (the
"Expiration Time") tenders could have been made pursuant to such tender
offer (as it may be amended) times the number of shares of Common Stock
and/or Class B 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 Price shall be adjusted so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior
to the close of business on the date of the Expiration Time by a fraction
of which the numerator shall be the number of shares of Common Stock and/or
Class B Stock outstanding (including any tendered shares) at the Expiration
Time multiplied by the Current Market Price of the Common Stock and/or
Class B Stock
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on the Trading Day next succeeding the Expiration Time and the denominator
shall be the sum of (x) the fair market value (determined as aforesaid) of
the aggregate consideration payable to stockholders based on the acceptance
(up to any maximum specified in the terms of the tender offer) of all
shares validly tendered and not withdrawn as of the Expiration Time (the
shares deemed so accepted, up to any such maximum, being referred to as the
"Purchased Shares") and (y) the product of the number of shares of Common
Stock and/or Class B Stock outstanding (less any Purchased Shares) at the
Expiration Time and the Current Market Price of the Common Stock and/or
Class B 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 Price shall
again be adjusted to be the Conversion Price which would then be in effect
if such tender offer had not been made. If the application of this Section
15.5(f) to any tender offer would result in an increase in the Conversion
Price, no adjustment shall be made for such tender offer under this Section
15.5(f).
(g) In case of a tender or exchange offer made by a person other than
the Company or any subsidiary of the Company for an amount which increases
the offeror's ownership of Common Stock and/or Class B Stock to more than
25% of the Common Stock and/or Class B Stock outstanding and shall involve
the payment by such person of consideration per share of Common Stock
and/or Class B 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 Expiration Time that exceeds
the Current Market Price of the Common Stock and/or Class B Stock on the
Trading Day next succeeding the Expiration Time, and in which, as of the
Expiration Time the Board of Directors is not recommending rejection of the
offer, the Conversion Price shall be reduced so that the same shall equal
the price determined by multiplying the Conversion Price in effect
immediately prior to the Expiration Time by a fraction of which the
numerator shall be the number of shares of Common Stock and/or Class B
Stock outstanding (including any tendered or exchanged shares) on the
Expiration Time multiplied by the current Market Price of the Common Stock
and/or Class B Stock on the Trading Day next succeeding the Expiration Time
and the denominator shall be the sum of (x) the fair market value
(determined as aforesaid) of the aggregate consideration payable to
stockholders based on the acceptance (up to any maximum specified in the
terms of the tender or exchange offer) of all shares validly tendered or
exchanged and not withdrawn as of the Expiration Time (the shares deemed so
accepted, up to any such maximum, being referred to as the "Purchased
Shares") and (y) the product of the number of shares of Common Stock and/or
Class B Stock outstanding (less any Purchased Shares) on the Expiration
Time and the Current Market Price of the Common Stock and/or Class B Stock
on the Trading Day next succeeding the Expiration Time, such reduction to
become effective as of immediately prior to the opening of business on the
day following the Expiration Time. In the event that such person is
obligated to
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purchase shares pursuant to any such tender or exchange offer, but such
person is permanently prevented by applicable law from effecting any such
purchases or all such purchases are rescinded, the Conversion Price shall
again be adjusted to be the Conversion Price which would then be in effect
if such tender or exchange offer had not been made. Notwithstanding the
foregoing, the adjustment described in this Section 15.5(g) shall not be
made if, as of the Expiration Time, the offering documents with respect to
such offer disclose a plan or intention to cause the Company to engage in
any transaction described in Article XII.
(h) For purposes of this Section 15.5, the following terms shall have
the meaning indicated:
(1) "Closing Price" with respect to any securities on any day
shall mean the closing sale price regular way on such day or, in case
no such sale takes place on such day, the average of the reported
closing bid and asked prices, regular way, in each case on the 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.
(2) "Current Market Price" shall mean the average of the daily
Closing Prices per share of Common Stock and/or Class B Stock for the
ten consecutive Trading Days immediately prior to the date in question
provided, however, that (1) if the "ex" date (as hereinafter defined)
-------- -------
for any event (other than the issuance or distribution requiring such
computation) that requires an adjustment to the Conversion Price
pursuant to Section 15.5(a), (b), (c), (d), (e), (f) or (g) occurs
during such ten consecutive Trading Days, the Closing Price for each
Trading Day prior to the "ex" date for such other event shall be
adjusted by multiplying such Closing Price by the same fraction by
which the Conversion Price is so required to be adjusted as a result
of such other event, (2) if the "ex" date for any event (other than
the issuance or distribution requiring such computation) that requires
an adjustment to the Conversion Price pursuant to Section 15.5(a),
(b), (c), (d), (e), (f) or (g) occurs on or after the "ex" date for
the issuance or distribution requiring such computation and prior to
the day in question, the Closing Price for each Trading Day on and
after the "ex" date for such other event shall be adjusted by
multiplying such Closing Price by the reciprocal of the
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fraction by which the Conversion Price is so required to be adjusted
as a result of such other event, and (3) if the "ex" date for the
issuance or distribution requiring such computation is prior to the
day in question, after taking into account any adjustment required
pursuant to clause (1) or (2) of this proviso, the Closing Price for
each Trading Day on or after such "ex" date shall be adjusted by
adding thereto the amount of any cash and the fair market value (as
determined by the Board of Directors or, to the extent permitted by
applicable law, a duly authorized committee thereof in a manner
consistent with any determination of such value for purposes of
Section 15.5(d), (f) or (g), whose determination shall be conclusive
and described in a resolution of the Board of Directors or such duly
authorized committee thereof, as the case may be) of the evidences of
indebtedness, shares of capital stock or assets being distributed
applicable to one share of Common Stock and/or Class B Stock as of the
close of business on the day before such "ex" date. For purposes of
any computation under Section 15.5(f) or (g), the Current Market Price
of the Common Stock and/or Class B Stock on any date shall be deemed
to be the average of the daily Closing Prices per share of Common
Stock and/or Class B Stock for such day and the next two succeeding
Trading Days provided, however, that if the "ex" date for any event
-------- -------
(other than the tender or exchange offer requiring such computation)
that requires an adjustment to the Conversion Price pursuant to
Section 15.5(a), (b), (c), (d), (e), (f) or (g) occurs on or after the
Expiration Time for the tender or exchange offer requiring such
computation and prior to the day in question, the Closing Price for
each Trading Day on and after the "ex" date for such other event shall
be adjusted by multiplying such Closing Price by the reciprocal of the
fraction by which the Conversion Price is so required to be adjusted
as a result of such other event. For purposes of this paragraph, the
term "ex" date, (1) when used with respect to any issuance or
distribution, means the first date on which the Common Stock and/or
Class B Stock trades regular way on the relevant exchange or in the
relevant market from which the Closing Price was obtained without the
right to receive such issuance or distribution, (2) when used with
respect to any subdivision or combination of shares of Common Stock
and/or Class B Stock, means the first date on which the Common Stock
and/or Class B Stock trades regular way on such exchange or in such
market after the time at which such subdivision or combination becomes
effective, and (3) when used with respect to any tender or exchange
offer means the first date on which the Common Stock and/or Class B
Stock trades regular way on such exchange or in such market after the
Expiration Time of such offer.
(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 and/or Class B Stock have the right to receive any cash,
securities or other
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property or in which the Common Stock and/or Class B 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 or
another national security exchange, a day on which the New York Stock
Exchange or another national security exchange is open for business or
(y) if the applicable security is quoted on the Nasdaq National
Market, a day on which trades may be made thereon or (z) if the
applicable security is not so listed, admitted for trading or quoted,
any day other than a Saturday or Sunday or a day on which banking
institutions in the State of New York are authorized or obligated by
law or executive order to close.
(i) The Company may make such reductions in the Conversion Price, in
addition to those required by Sections 15.5(a), (b), (c), (d), (e), (f) and
(g), as the Board of Directors considers to be advisable to avoid or
diminish any income tax to holders of Common Stock and/or Class B Stock or
rights to purchase Common Stock and/or Class B Stock resulting from any
dividend or distribution of stock (or rights to acquire stock) or from any
event treated as such for income tax purposes.
To the extent permitted by applicable law, the Company from time to
time may reduce the Conversion Price by any amount for any period of time
if the period is at least twenty (20) days, the reduction is irrevocable
during the period and the Board of Directors shall have made a
determination that such reduction would be in the best interests of the
Company, which determination shall be conclusive. Whenever the Conversion
Price is reduced pursuant to the preceding sentence, the Company shall mail
to holders of record of the Notes a notice of the reduction at lease
fifteen (15) days prior to the date the reduced Conversion Price takes
effect, and such notice shall state the reduced Conversion Price and the
period during which it will be in effect.
(j) No adjustment in the Conversion Price shall be required unless
such adjustment would require an increase or decrease of at least 1.00% in
such price provided, however, that any adjustments which by reason of this
-------- -------
Section 15.5(j) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under
this Article XV shall be made by the Company and shall be made to the
nearest cent or to the nearest one hundredth of a share, as the case may
be.
(k) Whenever the Conversion Price is adjusted as herein provided, the
Company shall promptly file with the Trustee and any conversion agent other
than the Trustee an Officers' Certificate setting forth the Conversion
Price after such adjustment
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and setting forth a brief statement of the facts requiring such adjustment.
Promptly after delivery of such certificate, the Company shall prepare a
notice of such adjustment of the Conversion Price setting forth the
adjusted Conversion Price and the date on which each adjustment becomes
effective and shall mail notice of such adjustment of the Conversion Price
to the holder of each Note at his last address appearing on the Note
register provided for in Section 2.5 of this Indenture, within twenty (20)
days after execution thereof. Failure to deliver such notice shall not
affect the legality or validity of any such adjustment.
(l) In any case in which this Section 15.5 provides that an adjustment
shall become effective immediately after a record date for an event, the
Company may defer until the occurrence of such event (i) issuing to the
holder of any Note converted after such record date and before the
occurrence of such event the additional shares of Common Stock issuable
upon such conversion by reason of the adjustment required by such event
over and above such conversion by reason of the adjustment required by such
event and above the Common Stock issuable upon such conversion before
giving effect to such adjustment and (ii) paying to such holder any amount
in cash in lieu of any fraction pursuant to Section 15.5.
(m) For purposes of this Section 15.5, the number of shares of Common
Stock at any time outstanding shall not include shares held in the treasury
of the Company but shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of shares of Common Stock. The
Company will not pay any dividend or make any distribution on shares of
Common Stock held in the treasury of the Company.
Section 15.6 Effect of Reclassification, Consolidation, Merger or Sale.
---------------------------------------------------------
If any of the following events occur, namely (i) any reclassification or change
of the outstanding shares of Common Stock (other than a subdivision or
combination to which Section 15.5(c) applies), (ii) any consolidation, merger or
combination of the Company with another corporation as a result of which holders
of Common Stock shall be entitled to receive stock, securities or other property
or assets (including cash) with respect to or in exchange for such Common Stock,
or (iii) any sale or conveyance of the properties and assets of the Company as,
or substantially as, an entirety to any other corporation as a result of which
holders of Common Stock shall be entitled to receive stock, securities or other
property or assets (including cash) with respect to or in exchange for such
Common Stock, then the Company or the successor or purchasing corporation, as
the case may be, shall execute with the Trustee a supplemental indenture (which
shall comply with the Trust Indenture Act as in force at the date of execution
of such supplemental indenture) providing that such Note shall be convertible
into the kind and amount of shares of stock and other securities or property or
assets (including cash) receivable upon such reclassification, change,
consolidation, merger, combination, sale or conveyance by a holder of a number
of shares of Common Stock issuable upon conversion of such Notes (assuming, for
such purposes, a sufficient number of authorized shares of Common Stock
available to convert all such Notes) immediately prior to such reclassification,
change, consolidation, merger, combination, sale or conveyance assuming such
holder of Common Stock did not exercise his
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rights of election, if any, as to the kind or amount of shares of stock and
other securities or property or assets (including cash) receivable upon such
reclassification, change, consolidation, merger, combination, sale or conveyance
(provided that, if the kind or amount of shares of stock and other securities or
property or assets (including cash) receivable upon such reclassification,
change, consolidation, merger, combination, sale or conveyance is not the same
for each share of Common Stock in respect of which such rights of election shall
not have been exercised ("nonelecting share"), then for the purposes of this
Section 15.6 the kind and amount of shares of stock and other securities or
property or assets (including cash) receivable upon such reclassification,
change, consolidation, merger, combination, sale or conveyance for each non-
electing share shall be deemed to be the kind and amount so receivable per share
by a plurality of the non-electing shares. Such supplemental indenture shall
provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Article.
The Company shall cause notice of the execution of such supplemental
indenture to be mailed to each holder of Notes, at his address appearing on the
Note register provided for in Section 2.5 of this Indenture, within twenty (20)
days after execution thereof. Failure to deliver such notice shall not affect
the legality or validity of such supplemental indenture.
The above provisions of this Section shall similarly apply to successive
reclassifications, changes, consolidations, mergers, combinations, sales and
conveyances.
If this Section 15.6 applies to any event or occurrence, Section 15.5 shall
not apply.
Section 15.7 Taxes on Shares Issued. The issue of stock certificates on
----------------------
conversions of Notes shall be made without charge to the converting Noteholder
for any tax in respect of the issue thereof. The Company shall not, however, be
required to pay any tax which may be payable in respect of any transfer involved
in the issue and delivery of stock in any name other than that of the holder of
any Note converted, and the Company shall not be required to issue or deliver
any such stock certificate unless and until the person or persons requesting the
issue thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.
Section 15.8 Reservation of Shares to Be Fully Paid; Compliance with
-------------------------------------------------------
Governmental Requirements; Listing of Common Stock. The Company shall reserve,
- --------------------------------------------------
free from preemptive rights, out of its authorized but unissued shares or shares
held in treasury sufficient shares of Common Stock to provide for the conversion
of the Notes from time to time as such Notes are presented for conversion.
Before taking any action which would cause an adjustment reducing the
Conversion Price below the then par value, if any, of the shares of Common Stock
issuable upon conversion of the Notes, the Company will take all corporate
action which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue shares of such Common Stock at such
adjusted Conversion Price.
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The Company covenants that all shares of Common Stock which may be issued
upon conversion of Notes will upon issue be fully paid and non-assessable by the
Company and free from all taxes, liens and charges with respect to the issue
thereof.
The Company covenants that if any shares of Common Stock to be provided for
the purpose of conversion of Notes hereunder require registration with or
approval of any governmental authority under any federal or state law before
such shares may be validly issued upon conversion, the Company will in good
faith and as expeditiously as possible endeavor to secure such registration or
approval, as the case may be.
The Company further covenants that if at any time the Common Stock shall be
listed on the New York Stock Exchange or any other national securities exchange
the Company will, if permitted by the rules of such exchange, list and keep
listed so long as the Common Stock shall be so listed on such exchange, all
Common Stock issuable upon conversion of the Notes.
Section 15.9 Responsibility of Trustee. The Trustee and any other
-------------------------
conversion agent shall not at any time be under any duty or responsibility to
any holder of Notes to determine whether any facts exist which may require any
adjustment of the Conversion Price, or with respect to the nature or extent or
calculation of any such adjustment when made, or with respect to the method
employed, or herein or in any supplemental indenture provided to be employed, in
making the same. The Trustee and any other conversion agent shall not be
accountable with respect to the validity or value (or the kind or amount) of any
shares of Common Stock, or of any securities or property, which may at any time
be issued or delivered upon the conversion of any Note and the Trustee and any
other conversion agent make no representations with respect thereto. Subject to
the provisions of Section 8.1, neither the Trustee nor any conversion agent
shall be responsible for any failure of the Company to issue, transfer or
deliver any shares of Common Stock or stock certificates or other securities or
property or cash upon the surrender of any Note for the purpose of conversion or
to comply with any of the duties, responsibilities or covenants of the Company
contained in this Article. Without limiting the generality of the foregoing,
neither the Trustee nor any conversion agent shall be under any responsibility
to determine the correctness of any provisions contained in any supplemental
indenture entered into pursuant to Section 15.6 relating either to the kind or
amount of shares of stock or securities or property (including cash) receivable
by Noteholders upon the conversion of their Notes after any event referred to in
such Section 15.6 or to any adjustment to be made with respect thereto, but,
subject to the provisions of Section 8.1, may accept as conclusive evidence of
the correctness of any such provisions, and shall be protected in relying upon,
the Officers' Certificate (which the Company shall be obligated to file with the
Trustee prior to the execution of any such supplemental indenture) with respect
thereto.
Section 15.10 Notice to Holders Prior to Certain Actions. In case:
------------------------------------------
(a) the Company shall declare a dividend (or any other distribution)
on its Common Stock that would require an adjustment in the Conversion
Price pursuant to Section 15.5 or
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(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
the Company shall cause to be filed with the Trustee and to be mailed to each
holder of Notes at his address appearing on the Note register provided for in
Section 2.5 of this Indenture, as promptly as possible but in any event at least
fifteen (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 deliverable upon such reclassification, consolidation, merger,
sale, transfer, dissolution, liquidation or winding-up. Failure to give such
notice, or any defect therein, shall not affect the legality or validity of such
dividend, distribution, reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding-up.
ARTICLE XVI.
REPURCHASE OF NOTES AT
OPTION OF THE HOLDER UPON CHANGE IN CONTROL
Section 16.1 Right to Require Repurchase. In the event that a Change in
---------------------------
Control (as hereinafter defined) shall occur, then each holder shall have the
right, at the holder's option, to require the Company to repurchase, and upon
the exercise of such right the Company shall repurchase, all of such holder's
Notes, or any portion of the principal amount thereof that is an integral
multiple of $1,000 (provided that no single Note may be repurchased in part
unless the portion of the principal amount of such Note to be outstanding after
such repurchase is equal to $1,000 or an integral multiple of $1,000), on the
date (the "Repurchase Date") that is 30 days after the date of the Company
Notice (as defined in Section 16.2) for cash at a purchase price equal to 100%
of the principal amount (the "Repurchase Price") plus interest accrued and
unpaid interest to, but excluding, the Repurchase Date provided that if the
---------
Repurchase Date is March 15
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or September 15, then the interest payable on such date shall be paid to the
holder of record of the Note on the next preceding March 1 or September 1,
respectively. Whenever in this Indenture there is a reference, in any context,
to the principal of any Note as of any time, such reference shall be deemed to
include reference to the Repurchase Price payable in respect of such Note to the
extent that such Repurchase Price is, was or would be so payable at such time,
and express mention of the Repurchase Price in any provision of this Indenture
shall not be construed as excluding the Repurchase Price in those provisions of
this Indenture when such express mention is not made.
Section 16.2 Notices: Method of Exercising Repurchase Right, Etc.
---------------------------------------------------
(a) Unless the Company shall have theretofore called for redemption
all of the outstanding Notes pursuant to Article III, on or before the 15th
day after the occurrence of a Change in Control, the Company or, at the
written request of the Company on or before the 10th day after receipt of
such request, the Trustee shall give to all holders of Notes notice (the
"Company Notice") of the occurrence of the Change in Control and of the
repurchase right set forth herein arising as a result thereof. The Company
shall also deliver a copy of such notice of a repurchase right to the
Trustee.
Each notice of a repurchase right shall state:
(1) the Repurchase Date,
(2) the date by which the repurchase right must exercised,
(3) the Repurchase Price,
(4) a description of the procedure which a holder must follow to
exercise a repurchase right,
(5) that on the Repurchase Date the Repurchase Price will become
due and payable upon each such Note designated by the holder to be
repurchased, and that interest thereon shall cease to accrue on and
after said date,
(6) the Conversion Price, the date on which the right to convert
the Notes to be repurchased will terminate and the places where such
Notes may be surrendered for conversion, and
(7) the place or places where such Notes are to be surrendered
for payment of the Repurchase Price and accrued interest, if any.
No failure of the Company to give the foregoing notices or defect therein
shall limit any holder's right to exercise a repurchase right or affect the
validity of the proceedings for the repurchase of Notes.
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If any of the foregoing provisions or other provisions of this Article are
inconsistent with applicable law, such law shall govern.
(b) To exercise a repurchase right, a holder shall deliver to the
Trustee or any paying agent on or before the 30th day after the date of the
Company Notice (i) written notice of the holder's exercise of such right,
which notice shall set forth the name of the holder, the principal amount
of the Notes to be repurchased (and, if any Note is to be repurchased in
part, the serial number thereof, the portion of the principal amount
thereof to be repurchased and the name of the Person in which the portion
thereof to remain outstanding after such repurchase is to be registered)
and a statement that an election to exercise the repurchase right is being
made thereby, and (ii) the Notes with respect to which the repurchase right
is being exercised.
(c) In the event a repurchase right shall be exercised in accordance
with the terms hereof, the Company shall pay or cause to be paid to the
Trustee or the paying agent the Repurchase Price in cash, for payment to
the holder on the Repurchase Date, together with accrued and unpaid
interest to, but excluding, the Repurchase Date payable with respect to the
Notes as to which the repurchase right has been exercised.
(d) If any Note (or portion thereof) surrendered for repurchase shall
not be so paid on the Repurchase Date, the principal amount of such Note
(or portion thereof, as the case may be) shall, until paid, bear interest
from the Repurchase Date at the rate of 6% per annum, and each Note shall
remain convertible into Common Stock until the principal of such Note (or
portion thereof, as the case may be) shall have been paid or duly provided
for.
(e) Any Note which is to be repurchased only in part shall be
surrendered to the Trustee (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 his attorney duly authorized in writing), and the Company shall
execute, and the Trustee shall authenticate and deliver to the holder of
such Note without service charge, a new Note or Notes, containing identical
terms and conditions, each in an authorized denomination in aggregate
principal amount equal to and in exchange for the portion of the principal
of the Note so surrendered that was not repurchased.
(f) Any holder that has delivered to the Trustee its written notice
exercising its right to require the Company to repurchase its Notes upon a
Change in Control shall have the right to withdraw such notice at any time
prior to the close of business on the Repurchase Date by delivery of a
written notice of withdrawal to the Trustee prior to the close of business
on such date. A Note in respect of which a holder is exercising its option
to require repurchase upon a Change in Control may be converted into Common
Stock in accordance with Article XV only if such holder withdraws its
notice in accordance with the preceding sentence.
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Section 16.3 Certain Definitions. For purposes of this Article XVI,
-------------------
(a) the term "beneficial owner" shall be determined in accordance with
Rule 13d-3 promulgated by the Commission pursuant to the Exchange Act and
(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.
Section 16.4 Change in Control. A "Change in Control" shall be deemed to
-----------------
have occurred at such time after the original issuance of the Notes as:
(a) any Person, other than the Company, any subsidiary of the Company,
William E. Brown, members of his immediate family, his heirs 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;
(b) 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 or Class B
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 Class B 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 or Class B Stock solely into shares of common stock and separate
series of common stock carrying substantially the same relative rights as
the Common Stock and Class B Stock); or
(c) 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;
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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 within the period of twenty (20) consecutive Trading Days ending
immediately before the Change in Control shall equal or exceed 105% of the
Conversion Price in effect on each such Trading Day, 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 Notes 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) is at least 105% of the Conversion Price in
effect on the date immediately preceding the date of consummation of such Change
in Control. The term "Controlled" shall mean ownership or control of more than
50% of the voting power of such entity.
Section 16.5 Consolidation, Merger, Etc. In the case of any
--------------------------
reclassification, change, consolidation, merger, combination, sale or conveyance
to which Section 15.6 applies, in which the Common Stock of the Company is
changed or exchanged as a result into the right to receive shares of stock and
other securities or property or assets (including cash) which includes shares of
Common Stock of the Company or common stock of another person that are, or upon
issuance will be, traded on a United States national securities exchange or
approved for trading on an established automated over-the-counter trading market
in the United States and such shares constitute at the time such change or
exchange becomes effective in excess of 50% of the aggregate fair market value
of such shares of stock and other securities, property and assets (including
cash) (as determined by the Company, which determination shall be conclusive and
binding), then the person formed by such consolidation or resulting from such
merger or combination or which acquires the properties or assets (including
cash) of the Company, as the case may be, shall execute and deliver to the
Trustee a supplemental indenture (which shall comply with the Trust Indenture
Act as in force at the date of execution of such supplemental indenture)
modifying the provisions of this Indenture relating to the right of holders of
the Notes to cause the Company to repurchase the Notes following a Change in
Control, including without limitation the applicable provisions of this Article
XVI and the definitions of the Common Stock and Change in Control, as
appropriate, and such other related definitions set forth herein as determined
in good faith by the Company (which determination shall be conclusive and
binding), to make such provisions apply to the common stock and the issuer
thereof if different from the Company and Common Stock of the Company (in lieu
of the Company and the Common Stock of the Company).
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ARTICLE XVII.
MISCELLANEOUS PROVISIONS
Section 17.1 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 17.2 Official Acts by Successor Corporation. Any act or
--------------------------------------
proceeding by any provision of this Indenture authorized or required to be done
or performed by any board, committee or officer of the Company shall and may be
done and performed with like force and effect by the like board, committee or
officer of any corporation that shall at the time be the lawful sole successor
of the Company.
Section 17.3 Addresses for Notices, Etc. Any notice or demand which by
--------------------------
any provision of this Indenture is required or permitted to be given or served
by the Trustee or by the holders of Notes on the Company shall be deemed to have
been sufficiently given or made, for all purposes, if given or served by being
deposited postage prepaid by registered or certified mail in a post office
letter box addressed (until another address is filed by the Company with the
Trustee) to Central Garden & Pet Company, 3697 Mt. Diablo Boulevard, Lafayette,
California 94549. 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 101 California Street, Suite 2725, San Francisco, California, 94111,
Attention: Jim Nagy.
The Trustee, by notice to the Company, may designate additional or
different addresses for subsequent notices or communications.
Any notice or communication mailed to a Noteholder shall be mailed to him
by first class mail, postage prepaid, at his address as it appears on the Note
register and shall be sufficiently given to him if so mailed within the time
prescribed.
Failure to mail a notice or communication to a Noteholder or any defect in
it shall not affect its sufficiency with respect to other Noteholders. If a
notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
Section 17.4 Governing Law. This Indenture and each Note shall be deemed
-------------
to be a contract made under the laws of New York, and for all purposes shall be
construed in accordance with the laws of New York.
Section 17.5 Evidence of Compliance with Conditions Precedent Certificates
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to Trustee. Upon any application or demand by the Company to the Trustee to
- ----------
take any action under any
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of the provisions of this Indenture, the Company shall furnish to the Trustee an
Officers' Certificate stating that all conditions precedent, if any, provided
for in this Indenture relating to the proposed action have been complied with,
and an Opinion of Counsel stating that, in the opinion of such counsel, all such
conditions precedent have been complied with.
Each certificate or opinion provided for in this Indenture and delivered to
the Trustee with respect to compliance with a condition or covenant provided for
in this Indenture shall include (1) a statement that the person making such
certificate or opinion has read such covenant or condition (2) a brief statement
as to the nature and scope of the examination or investigation upon which the
statement or opinion contained in such certificate or opinion is based (3) a
statement that, in the opinion of such person, he has made such examination or
investigation as is necessary to enable him to express an informed opinion as to
whether or not such covenant or condition has been complied with and (4) a
statement as to whether or not, in the opinion of such person, such condition or
covenant has been complied with.
Section 17.6 Legal Holidays. In any case where the date of maturity of
--------------
interest on or principal of the Notes or the date fixed for redemption or
repurchase of any Note will not be a Business Day, then payment of such interest
on or principal of the Notes need not be made on such date, but may be made on
the next succeeding Business Day with the same force and effect as if made on
the date of maturity or the date fixed for redemption or repurchase, and no
interest shall accrue for the period from and after such date.
Section 17.7 Trust Indenture Act. This Indenture is hereby made subject
-------------------
to, and shall be governed by, the provisions of the Trust Indenture Act required
to be part of and to govern indentures qualified under the Trust Indenture Act
provided, however, that, unless otherwise required by law, notwithstanding the
- -------- -------
foregoing, this Indenture and the Notes issued hereunder shall not be subject to
the provisions of subsections (a)(1), (a)(2), and (a)(3) of Section 314 of the
Trust Indenture Act as now in effect or as hereafter amended or modified
provided, further, that this Section 17.7 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 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. If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required to be included in an indenture qualified
under the Trust Indenture Act, such required provision shall control.
Section 17.8 No Security Interest Created. Nothing in this Indenture or
----------------------------
in the Notes, expressed or implied, shall be construed to constitute a security
interest under the Uniform Commercial Code or similar legislation, as now or
hereafter enacted and in effect, in any jurisdiction where property of the
Company or its subsidiaries is located.
Section 17.9 Benefits of Indenture. Nothing in this Indenture or in the
---------------------
Notes, expressed or implied, shall give to any Person, other than the parties
hereto, any paying agent, any
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authenticating agent, any Custodian, any conversion agent, any Note registrar
and their successors hereunder, the holders of Notes and the holders of Senior
Indebtedness, any benefit or any legal or equitable right, remedy or claim under
this Indenture.
Section 17.10 Table of Contents, Headings, Etc. The table of contents and
--------------------------------
the titles and headings of the articles and sections of this Indenture have been
inserted for convenience of reference only, are not to be considered a part
hereof, and shall in no way modify or restrict any of the terms or provisions
hereof.
Section 17.11 Authenticating Agent. The Trustee may appoint an
--------------------
authenticating agent which shall be authorized to act on its behalf and subject
to its direction in the authentication and delivery of Notes in connection with
the original issuance thereof and transfers and exchanges of Notes hereunder,
including under Sections 2.4, 2.5, 2.6, 2.7, 3.3, 15.2 and 16.2, 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
Notes. For all purposes of this Indenture, the authentication and delivery of
Notes by the authenticating agent shall be deemed to be authentication and
delivery of such Notes "by the Trustee" and a certificate of authentication
executed on behalf of the Trustee by an authenticating agent shall be deemed to
satisfy any requirement hereunder or in the Notes for the Trustee's certificate
of authentication. Such authenticating agent shall at all times be a person
eligible to serve as trustee hereunder pursuant to Section 8.9.
Any corporation into which any authenticating agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any authenticating agent
shall be a party, or any corporation succeeding to the corporate trust business
of any authenticating agent, shall be the successor of the authenticating agent
hereunder, if such successor corporation is otherwise eligible under this
Section 17.11, without the execution or filing of any paper or any further act
on the part of the parties hereto or the authenticating agent or such successor
corporation.
Any authenticating agent may at any time resign by giving written notice of
resignation to the Trustee and to the Company. The Trustee may at any time
terminate the agency of any authenticating agent by giving written notice of
termination to such authenticating agent and to the Company. Upon receiving
such a notice of resignation or upon such a termination, or in case at any time
any authenticating agent shall cease to be eligible under this Section, the
Trustee shall either promptly appoint a successor authenticating agent or itself
assume the duties and obligations of the former authenticating agent under this
Indenture, and upon such appointment of a successor authenticating agent, if
made, shall give written notice of such appointment of a successor
authenticating agent to the Company and shall mail notice of such appointment of
a successor authenticating agent to all holders of Notes as the names and
addresses of such holders appear on the Note register.
The 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
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<PAGE>
Trustee shall be entitled to be reimbursed for such pre-approved payments,
subject to Section 8.6.
The provisions of Sections 8.2, 8.3, 8.4, 9.3 and this Section 17.11 shall
be applicable to any authenticating agent.
Section 17.12 Execution in Counterparts. This Indenture may be executed
-------------------------
in any number of counterparts, each of which shall be an original, but such
counterparts shall together constitute but one and the same instrument.
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<PAGE>
Chemical Trust Company of California 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.
CENTRAL GARDEN & PET COMPANY
By: /s/ WILLIAM E. BROWN
----------------------------------
Name: William E. Brown
Title: Chairman of the Board and Chief
Executive Officer
Attest:
/s/ ROBERT B. JONES
--------------------------
Title: V.P. Finance and CFO
CHEMICAL TRUST COMPANY OF CALIFORNIA, as Trustee
By: /s/ JAMES NAGY
-----------------------------
Name: James Nagy
Title: Assistant Vice President
Attest:
/s/ HANS H. HELLEY
--------------------
Title: Assistant Vice President
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<PAGE>
EXHIBIT A
---------
[For Global Note only:]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (THE
"DEPOSITARY," WHICH TERM INCLUDES ANY SUCCESSOR DEPOSITARY FOR THE CERTIFICATES)
TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY AND
ANY PAYMENT HEREON IS MADE TO CEDE & CO. (OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER,
PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
[For all Notes:]
THE NOTE EVIDENCED HEREBY HAS NOT BEEN AND WILL NOT BE 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 WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS 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") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THE NOTE EVIDENCED
HEREBY IN AN OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT WITHIN THREE
YEARS AFTER THE ORIGINAL ISSUANCE OF THE NOTE EVIDENCED HEREBY RESELL OR
OTHERWISE TRANSFER THE NOTE EVIDENCED HEREBY OR THE COMMON STOCK ISSUABLE UPON
CONVERSION OF SUCH NOTE EXCEPT (A) TO CENTRAL GARDEN & PET COMPANY OR ANY
SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL
BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE
UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR OR A PURCHASER THAT IS NOT
A U.S. PERSON THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO CHEMICAL TRUST COMPANY
OF CALIFORNIA, AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), A SIGNED
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THE NOTE EVIDENCED
1
<PAGE>
HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH TRUSTEE OR A
SUCCESSOR TRUSTEE, AS APPLICABLE), (D) OUTSIDE THE UNITED STATES IN COMPLIANCE
WITH RULE 904 UNDER THE SECURITIES ACT OR (E) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) AND
(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE NOTE EVIDENCED HEREBY
IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
IN CONNECTION WITH ANY TRANSFER OF THE NOTE EVIDENCED HEREBY WITHIN THREE
YEARS AFTER THE ORIGINAL ISSUANCE OF SUCH NOTE, THE HOLDER MUST CHECK THE
APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH
TRANSFER AND SUBMIT THIS NOTE TO CHEMICAL TRUST COMPANY OF CALIFORNIA, AS
TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE). IF THE PROPOSED TRANSFEREE IS
AN INSTITUTIONAL ACCREDITED INVESTOR OR A PURCHASER WHO IS NOT A U.S. PERSON,
THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO CHEMICAL TRUST COMPANY OF
CALIFORNIA, AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS IT MAY REASONABLY REQUIRE
TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN
A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT.
THIS LEGEND WILL BE REMOVED AFTER THE EXPIRATION OF THREE YEARS FROM THE
ORIGINAL ISSUANCE OF THE NOTE EVIDENCED HEREBY. AS USED HEREIN, THE TERMS
"OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS
GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
2
<PAGE>
CENTRAL GARDEN & PET COMPANY
6% CONVERTIBLE SUBORDINATED NOTE DUE 2003
No. ___ CUSIP [____]
Central Garden & Pet Company, a corporation duly organized and validly
existing under the laws of the State of Delaware (herein called the "Company"),
which term includes any successor corporation under the Indenture referred to on
the reverse hereof, for value received hereby promises to pay to [for global
Note, insert: CEDE & CO.] or registered assigns, the principal sum of
[__________ ($__________)] [For Global Note only (as increased or decreased from
time to time in accordance with the procedures of DTC)] on November 15, 2003, at
the office or agency of the Company maintained for that purpose in the Borough
of Manhattan, The City of New York, or, at the option of the holder of this
Note, at the Corporate Trust Office, in such coin or currency of the United
States of America as at the time of payment shall be legal tender for the
payment of public and private debts, and to pay interest, semi-annually on March
15 and September 15 of each year, commencing March 15, 1997, on said principal
sum at said office or agency, in like coin or currency, at the rate per annum of
6%, from March 15 or September 15, as the case may be, next preceding the date
of this Note to which interest has been paid or duly provided for, unless the
date hereof is a date to which interest has been paid or duly provided for, in
which case from the date of this Note, or unless no interest has been paid or
duly provided for on the Notes, in which case from November 15, 1996, until
payment of said principal sum has been made or duly provided for.
Notwithstanding the foregoing, if the date hereof is after any March 1 or
September 1, as the case may be, and before the following March 15 or September
15, this Note shall bear interest from such March 15 or September 15 provided,
--------
however, that if the Company shall default in the payment of interest due on
- -------
such March 15 or September 15, then this Note shall bear interest from the next
preceding March 15 or September 15 to which interest has been paid or duly
provided for or, if no interest has been paid or duly provided for on such Note,
from November 15, 1996. The interest payable on this Note pursuant to the
Indenture on any March 15 or September 15 will be paid to the person in whose
name this Note (or one or more Predecessor Notes) is registered at the close of
business on the record date, which shall be the March 1 or September 1 (whether
or not a Business Day) next preceding such March 15 or September 15, as provided
in the Indenture provided that any such interest not punctually paid or duly
provided for shall be payable as provided in the Indenture. Interest may, at
the option of the Company, be paid by check mailed to the registered address of
such person provided that with respect to any holder of Notes with an aggregate
--------
principal amount equal to or in excess of $5,000,000 interest may be paid by
wire transfer as more fully specified in the Indenture.
Reference is made to the further provisions of this Note set forth on the
reverse hereof, including, without limitation, provisions subordinating the
payment of principal of and premium, if any, and interest on the Notes to the
prior payment in full of all Senior Indebtedness, as defined in the Indenture,
and provisions giving the holder of this Note the right to convert this Note
into Common Stock of the Company on the terms and subject to the limitations
referred
1
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to on the reverse hereof and as more fully specified in the Indenture. Such
further provisions shall for all purposes have the same effect as though fully
set forth at this place.
This Note shall be deemed to be a contract made under the laws of the State
of New York, and for all purposes shall be construed in accordance with and
governed by the laws of said State.
This Note shall not be valid or become obligatory for any purpose until the
certificate of authentication hereon shall have been manually signed by the
Trustee or a duly authorized authenticating agent under the Indenture.
IN WITNESS WHEREOF, the Company has caused this Note to be duly executed
under its corporate seal.
Dated: CENTRAL GARDEN & PET COMPANY
By:
---------------------------
[SEAL] Attest:
-----------------------
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes described in the within-named Indenture.
CHEMICAL TRUST COMPANY OF CALIFORNIA, as Trustee
By:
----------------------------------------------------
Authorized Signatory
By:
----------------------------------------------------
As Authenticating Agent (if different from Trustee)
2
<PAGE>
[FORM OF REVERSE OF NOTE]
CENTRAL GARDEN & PET COMPANY
6% CONVERTIBLE SUBORDINATED NOTE DUE 2003
This Note is one of a duly authorized issue of Notes of the Company,
designated as its 6% Convertible Subordinated Notes due 2003 (herein called the
"Notes"), limited to the aggregate principal amount of $100,000,000
($115,000,000 if the over-allotment option is exercised in full) issued or to be
issued under and pursuant to an indenture dated as of November 15, 1996 (herein
called the "Indenture"), between the Company and Chemical Trust Company of
California, as trustee (herein called the "Trustee"), to which Indenture and all
indentures supplemental thereto reference is hereby made for a description of
the rights, limitations of rights, obligations, duties and immunities thereunder
of the Trustee, the Company and the holders of the Notes.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of and accrued interest on all Notes
may be declared, and upon said declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the holders of not less than a majority in aggregate
principal amount of the Notes at the time outstanding, evidenced as in the
Indenture provided, to execute supplemental indentures adding any provisions to
or changing in any manner or eliminating any of the provisions of the Indenture
or of any supplemental indenture or modifying in any manner the rights of the
holders of the Notes provided, however, that no such supplemental indenture
-------- -------
shall (i) extend the fixed maturity of any Note, or reduce the rate or extend
the time of payment of interest thereon, or reduce the principal amount thereof
or premium, if any, thereon, or reduce any amount payable on redemption thereof,
or impair the right of any Noteholder to institute suit for the payment thereof,
or make the principal thereof or interest or premium, if any, thereon payable in
any coin or currency other than that provided in the Note, or modify the
provisions of the Indenture with respect to the subordination of the Notes in a
manner adverse to the Noteholders in any material respect, or change the
obligation of the Company to repurchase any Note upon the occurrence of a Change
in Control in a manner adverse to the holder of the Notes, or impair the right
to convert the Notes into Common Stock in any material respect, without the
consent of the holder of each Note so affected or (ii) reduce the aforesaid
percentage of Notes, the holders of which are required to consent to any such
supplemental indenture, without the consent of the holders of all Notes then
outstanding. It is also provided in the Indenture that the holders of a
majority in aggregate principal amount of the Notes at the time outstanding may
on behalf of the holders of all of the Notes waive any past default or Event of
Default under the Indenture and its consequences except a default in the payment
of interest or any premium on or the principal of any of the Notes, a default in
the payment of redemption price pursuant to Article III or repurchase price
pursuant to Article XVI or a failure by the Company to convert any Notes into
1
<PAGE>
Common Stock of the Company. Any such consent or waiver by the holder of this
Note (unless revoked as provided in the Indenture) shall be conclusive and
binding upon such holder and upon all future holders and owners of this Note and
any Notes which may be issued in exchange or substitute hereof, irrespective of
whether or not any notation thereof is made upon this Note or such other Notes.
The indebtedness evidenced by the Notes is, to the extent and in the manner
provided in the Indenture, expressly subordinate and subject in right of payment
to the prior payment in full of all Senior Indebtedness of the Company, as
defined in the Indenture, whether outstanding at the date of the Indenture or
thereafter incurred, and this Note is issued subject to the provisions of the
Indenture with respect to such subordination. Each holder of this Note by
accepting the same, agrees to and shall be bound by such provisions and
authorizes the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination so provided and appoints the Trustee
his attorney-in-fact for such purpose.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and any premium and interest
on this Note at the place, at the respective times, at the rate and in the coin
or currency herein prescribed.
Interest on the Notes shall be computed on the basis of a 360-day year
comprised of twelve 30-day months.
The Notes are issuable in registered form without coupons in minimum
denominations of $1,000 [$100,000 in the case of Notes issued pursuant to
Regulation D] and any integral multiple of $1,000. At the office or agency of
the Company referred to on the face hereof, and in the manner and subject to the
limitations provided in the Indenture, without payment of any service charge but
with payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any registration or exchange of Notes,
Notes may be exchanged for a like aggregate principal amount of Notes of other
authorized denominations.
The Notes will not be redeemable at the option of the Company prior to
November 15, 1999. At any time on or after November 15, 1999, and prior to
maturity the Notes may be redeemed at the option of the Company from time to
time, as a whole or in part, upon mailing a notice of such redemption not less
than 15 nor more than 60 days before the date fixed for redemption to the
holders of Notes at their last registered addresses, all as provided in the
Indenture, at the following optional redemption prices (expressed as percentages
of the principal amount), together in each case with accrued interest to, but
excluding, the date fixed for redemption.
2
<PAGE>
If redeemed during the 12-month period beginning November 15:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
------- -----------
<S> <C>
1999.............. 103.428%
2000.............. 102.571
2001.............. 101.714
2002.............. 100.857
</TABLE>
and 100% at November 15, 2003 provided that if the date fixed for redemption is
--------
on March 15 or September 15, then the interest payable on such date shall be
paid to the holder of record of the Note on the next preceding March 1 or
September 1, respectively.
The Notes are not subject to redemption through the operation of any
sinking fund.
If a Change in Control (as defined in the Indenture) occurs prior to
maturity, the holder of this Note shall have the right, in accordance with the
provisions of the Indenture, to require the Company to repurchase this Note or
any portion of the principal amount hereof that is an integral multiple of
$1,000 for cash at a Repurchase Price equal to 100% of the principal amount plus
accrued and unpaid interest to, but excluding, the Repurchase Date provided that
--------
if such Repurchase Date is March 15 or September 15, then the interest payable
on such date shall be paid to the holder of record of the Note on the next
preceding March 1 or September 1, respectively. Within 15 days after the
occurrence of a Change in Control, the Company is obligated to give all holders
of record of Notes notice of the occurrence of such Change in Control and of the
repurchase right arising as a result thereof.
Subject to the provisions of the Indenture, the holder hereof has the
right, at its option, at any time after 60 days following the latest date of
original issuance of the Notes and prior to the close of business on the
maturity date, subject to prior redemption or repurchase, or, as to all or any
portion hereof called for redemption, prior to the close of business on the
fifth Business Day preceding the date fixed for redemption (unless the Company
shall default in payment due upon redemption thereof), to convert the principal
hereof or any portion of such principal which is $1,000 or an integral multiple
thereof, into that number of shares of the Company's Common Stock, as said
shares shall be constituted at the date of conversion, obtained by dividing the
principal amount of this Note or portion thereof to be converted by the
Conversion Price of $28.00 or such Conversion Price as adjusted from time to
time as provided in the Indenture, upon surrender of this Note, together with a
conversion notice as provided in the Indenture, to the Company at the office or
agency of the Company maintained for that purpose in the Borough of Manhattan,
The City of New York, or at the option of such holder, the Corporate Trust
Office, and, unless the shares issuable on conversion are to be issued in the
same name as this Note, duly endorsed by, or accompanied by instruments of
transfer in form satisfactory to the Company duly executed by, the holder or by
his duly authorized attorney. No adjustment in respect of interest or dividends
will be made upon any conversion provided,
--------
3
<PAGE>
however, that if this Note shall be surrendered for conversion during the period
- -------
from the close of business on any record date for the payment of interest to the
close of business on the Business Day preceding the interest payment date, this
Note (unless it or the portion being converted shall have been called for
redemption during the period from the close of business on any record date for
the payment of interest to the close of business on the Business Day preceding
the interest payment date) must be accompanied by an amount, in New York
Clearing House funds or other funds acceptable to the Company, equal to the
interest payable on such interest payment date on the principal amount being
converted, provided further however, that in the event this Note or a portion
-------- ------- -------
thereof is called for redemption on or after November 15, 1999 and before March
15, 2000 and the holder elects to convert such Note, the holder will be entitled
to receive interest on such Note for the period from September 15, 1999 through
November 15, 1999 (provided however, that no such payment need be made if there
-------- -------
shall exist at the time of conversion a default in the payment of interest on
the Notes.) No fractional shares will be issued upon any conversion, but an
adjustment in cash will be made, as provided in the Indenture, in respect of any
fraction of a share which would otherwise be issuable upon the surrender of any
Note or Notes for conversion.
Any Notes called for redemption, unless surrendered for conversion on or
before the close of business on the date fixed for redemption, may be deemed to
be purchased from the holder of such Notes at an amount equal to the applicable
redemption price, together with accrued interest to the date fixed for
redemption, by one or more investment bankers or other purchasers who may agree
with the Company to purchase such Notes from the holders thereof and convert
them into Common Stock of the Company and to make payment for such Notes as
aforesaid to the Trustee in trust for such holders.
Upon due presentment for registration of transfer of this Note at the
office or agency of the Company in the Borough of Manhattan, The City of New
York, or at the option of the holder of this Note, at the Corporate Trust
Office, a new Note or Notes of authorized denominations for an equal aggregate
principal amount will be issued to the transferee in exchange thereof, subject
to the limitations provided in the Indenture, without charge except for any tax
or other governmental charge imposed in connection therewith.
The Company, the Trustee, any authenticating agent, any paying agent, any
conversion agent and any Note registrar may deem and treat the registered holder
hereof as the absolute owner of this Note (whether or not this Note shall be
overdue and notwithstanding any notation of ownership or other writing hereon),
for the purpose of receiving payment hereof, or on account hereof, for the
conversion hereof and for all other purposes, and neither the Company nor the
Trustee nor any other authenticating agent nor any paying agent nor any other
conversion agent nor any Note registrar shall be affected by any notice to the
contrary. All payments made to or upon the order of such registered holder
shall, to the extent of the sum or sums paid, satisfy and discharge liability
for monies payable on this Note.
No recourse for the payment of the principal of or any premium or interest
on this Note, or for any claim based hereon or otherwise in respect hereof, and
no recourse under or upon any
4
<PAGE>
obligation, covenant or agreement of the Company in the Indenture or any
indenture supplemental thereto or in any Note, or because of the creation of any
indebtedness represented thereby, shall be had against any incorporator,
stockholder, employee, agent, officer or director or subsidiary, as such, past,
present or future, of the Company or of any successor corporation, either
directly or through the Company or any successor corporation, whether by virtue
of any constitution, statute or rule of law or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issue hereof, expressly waived
and released.
Terms used in this Note and defined in the Indenture are used herein as
therein defined.
5
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription of the face of
this Note, shall be construed as though they were written out in full according
to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - ____ Custodian _____
TEN ENT - as tenants by the (Cust) (Minor)
entireties
JT TEN - as joint tenants with under Uniform Gifts to Minors Act
right to survivorship and
not as tenants in
common -----------------------------------
(State)
Additional abbreviations may also be used
though not in the above list.
1
<PAGE>
CONVERSION NOTICE
To: CENTRAL GARDEN & PET COMPANY
The undersigned registered owner of this Note hereby irrevocably exercises
the option to convert this Note, or the portion hereof (which is $1,000 or an
integral multiple thereof) below designated, into shares of Common Stock of
Central Garden & Pet Company in accordance with the terms of the Indenture
referred to in this Note, and directs that the shares issuable and deliverable
upon such conversion, together with any check in payment for fractional shares
and any Notes representing any unconverted principal amount hereof, be issued
and delivered to the registered holder hereof unless a different name has been
indicated below. If shares or any portion of this Note not converted are to be
issued in the name of a person other than the undersigned, the undersigned will
check the appropriate box below and pay all transfer taxes payable with respect
thereto. Any amount required to be paid to the undersigned on account of
interest accompanies this Note.
Dated:
-----------------
-----------------------------------------------
-----------------------------------------------
Signature(s)
Signature(s) must be guaranteed by an eligible
Guarantor Institution (banks, stock brokers,
savings and loan associations and credit unions)
with membership in an approved signature guarantee
medallion program pursuant to Securities and
Exchange Commission Rule 17Ad-15 if shares of
Common Stock are to be issued, or Notes to be
delivered, other than to and in the name of the
registered holder.
-----------------------------------------------
Signature Guarantee
1
<PAGE>
Fill in for registration of shares
of Common Stock if to be issued,
and Notes if to be delivered, other
than to and in the name of the
registered holder:
- ----------------------------------
(Name)
- ----------------------------------
(Street Address)
- ----------------------------------
(City, State and Zip Code)
Please print name and address
Principal amount to be converted
(if less than all): $__________
----------------------------------
Social Security or Other Taxpayer
Identification Number
2
<PAGE>
ASSIGNMENT
For value received _______________ hereby sell(s), assign(s) and transfer(s)
unto
____________________________________________________________________________
(Please insert name, social security or other Taxpayer Identification Number of
assignee)
the within Note, and hereby irrevocably constitutes and appoints
____________________________________________________________________________
attorney to transfer the said Note on the books of the Company, with full power
of substitution in the premises.
In connection with any transfer of the within Note within three years of
the date of original issuance of such Note, the undersigned confirms that such
Note is being transferred:
[_] To Central Garden & Pet Company 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 Regulation S under the Securities
Act of 1933, as amended or
[_] Pursuant to and in compliance with Rule 144 under the Securities Act
of 1933, as amended
and unless the box below is checked, the undersigned confirms that such Note is
not being transferred to an "affiliate" of the Company as defined in Rule 144
under the Securities Act of 1933, as amended (an "Affiliate").
1
<PAGE>
[_] The transferee is an Affiliate of the Company.
Dated:
----------------------------------
----------------------------------
----------------------------------
Signature(s)
Signature(s) must be guaranteed by an eligible
Guarantor Institution (banks, stock brokers,
savings and loan associations and credit unions)
with membership in an approved signature guarantee
medallion program pursuant to Securities and
Exchange Commission Rule 17Ad-15 if shares of
Common Stock are to be issued, or Notes to be
delivered, other than to and in the name of the
registered holder.
----------------------------------
Signature Guarantee
2
<PAGE>
OPTION TO ELECT REPURCHASE
UPON A CHANGE IN CONTROL
To: CENTRAL GARDEN & PET COMPANY
The undersigned registered owner of this Note hereby irrevocably
acknowledges receipt of a notice from Central Garden & Pet Company (the
"Company") as to the occurrence of a Change in Control with respect to the
Company and requests and instructs the Company to repay the entire principal
amount of this Note, or the portion thereof (which is $1,000 or an integral
multiple thereof) below designated, in accordance with the terms of the
Indenture referred to in this Note at the repurchase price, together with
accrued interest to, but excluding, such date, to the registered holder hereof.
Dated: _________________
----------------------------------
----------------------------------
Signature(s)
NOTICE: The above signatures of the holder(s)
hereof must correspond with the name as written
upon the face of the Note in every particular
without alteration, enlargement or any change
whatever.
Principal amount to be repurchased (if less than
all):
$ ___________
--------------------------------------
Social Security or Other Taxpayer
Identification Number
3
<PAGE>
EXHIBIT 4.3
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and entered
into as of November 15, 1996, by and among Central Garden & Pet Company, a
Delaware corporation (the "Company"), Alex. Brown & Sons Incorporated, Merrill
Lynch, Pierce, Fenner & Smith Incorporated, Hambrecht & Quist LLC and
Wasserstein Perella Securities, Inc. (the "Initial Purchasers") pursuant to the
Purchase Agreement, dated as of November 15, 1996 (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 Notes (including the Initial Purchasers) and the holders from time to time
of the Common Stock issued upon conversion of the Notes (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: "Affiliate" means, 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" (including the terms "controlling," "controlled by" and "under
common control with") 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 a person, whether through the ownership of voting
securities, by contract, or otherwise.
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, $.01 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 Notes.
Damages Accrual Period: See Section 2(d) hereof.
----------------------
Damages Payment Date: Each of the semi-annual interest payment dates
--------------------
provided in the Indenture, whether or not Liquidated Damages are payable on such
date.
1
<PAGE>
Effectiveness Period: The period commencing with the date hereof and
--------------------
ending on the earlier of the date that is three years after the latest date of
original issuance of the Notes 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(d) hereof.
-----
Event Date: See Section 2(d) 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.
------
Indenture: The Indenture, dated as of November 15, 1996, between the
---------
Company and Chemical Trust Company of California, as trustee, pursuant to which
the Notes 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(d) hereof.
------------------
Losses: See Section 5 hereof.
------
Managing Underwriters: The investment banking firm or firms that shall
---------------------
manage or co-manage an Underwritten Offering.
Notes: The 6% Convertible Subordinated Notes due 2003 of the Company being
-----
issued and sold pursuant to the Purchase Agreement and the Indenture.
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.
------------------
2
<PAGE>
Record Holder: (i) with respect to any Damages Payment Date relating to
-------------
the Notes, each Person who is a registered holder of such Notes on the record
date with respect to the interest payment date under the Indenture on which such
Damages Payment Date shall occur and (ii) with respect to any Damages Payment
Date relating to the Common Stock, each Person who is a registered holder of
such Common Stock 15 days prior to such Damages Payment Date.
Registrable Securities: Each Note and each share of Common Stock into
----------------------
which the Notes 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 Note 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 saleable 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 the
event or circumstance described in any of the foregoing clauses (i) through
(iii), the legends with respect to transfer restrictions required under the
Indenture (other than any such legends required solely as the consequences or
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 5 hereof.
---------------------
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 promulgated by the SEC thereunder.
Shelf Registration: See Section 2(a) hereof.
------------------
Special Counsel: Brobeck, Phleger & Harrison LLP, or such other successor
---------------
counsel as shall be specified by the holders of a majority of the Registrable
Securities, the fees and expenses of which will be paid by the Company pursuant
to Section 5 hereof.
3
<PAGE>
Subsequent Shelf Registration: See Section 2(b) 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 securities of the Company are sold to an underwriter for reoffering to the
public.
2. Shelf Registration.
------------------
(a) Shelf Registration. The Company shall prepare and file with the
------------------
SEC, as soon as practicable but in any event on or prior to the date ninety (90)
days following the latest date of original issuance of the Notes (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 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 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). 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 one hundred and
twenty (120) days following the Filing Date (the "Effectiveness Target Date"),
and shall use its best efforts to keep the Initial Shelf Registration
continuously effective under the Securities Act, subject to the provisions of
Section 2(c), 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.
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(c), 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
Effective Period.
(b) If the Initial Shelf Registration or any subsequent Shelf
Registration 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 thirty (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
4
<PAGE>
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.
(c) 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, 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(c), shall
thereafter 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(c)(A), and, in the case of a pending development or event
referred to in Section 2(c)(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(c) to suspend the use of the
Prospectus (whether as a result of events referred to in Section 2(c)(A) hereof
or as a result of the pending development or event referred to in Section
2(c)(B) hereof) more than one (1) time in any three (3) month period, and the
periods in which the use of the Prospectus is suspended shall not exceed fifteen
(15) days in any three-month period (a "Suspension Period").
(d) 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 has not been declared effective by the Effectiveness Target Date,
(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(c) hereof
or (v) the number of Suspension Periods exceeds the number permitted pursuant to
Section 2(c) 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 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(c) hereof in the
case of clause (iv), and the date of the commencement of a Suspension Period
that causes the
5
<PAGE>
limit on the number of Suspension Periods under Section 2(c) hereof to be
exceeded in the case of clause (v), being referred to herein as an "Event
Date"). Events 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 is declared effective in the case of 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) or 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(c) 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
type 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 (a "Damages Accrual
Period"), 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 Notes
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 Notes
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 then-applicable Conversion Price (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 Notes or
Common Stock by depositing with the Trustee under the Indenture, in trust, for
the benefit of the holders of Notes 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 by mailing checks to their registered addresses as
they appear in the Note register (as defined in the Indenture), in the case of
the Notes, and in the register of the Company for the Common Stock, in the case
of the Common Stock, if no such accounts have been specified on or before the
Damage Payment Date; provided, however, that any Liquidated Damages accrued with
-------- -------
respect to any
6
<PAGE>
Note 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 Note or portion thereof for redemption, repurchase or
conversion on the applicable redemption date, repurchase date or conversion
date, as the case may be, on such date (or promptly following the conversion
date, in the case of conversion of a Note). If a holder of a Note submits a
Note 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 Notes 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.
All of the Company's obligations set forth in this Section 2(d) 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(d) 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 unavailable (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
7
<PAGE>
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 the 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(c), 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; 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 or
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 the 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, promptly, 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
8
<PAGE>
any jurisdiction or the initiation or threatening of any proceeding for such
purpose, (v) of the existence of any fact or happening 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, in the case of the
Registration Statement, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and that in the case of
the Prospectus, it will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in the 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 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 a Registration Statement such information as the Initial
Purchaser, the Special Counsel, the Managing Underwriters, if any, or such
Holders agree should be included therein, and (ii) make all required filings of
such Prospectus supplement or such post-effective amendment as soon as
practicable after the Company has received notification of the matters to be
incorporated in such Prospectus supplement or post-effective amendment.
(f) Furnish to each selling Holder (if requested by such selling
Holder), 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.
(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.
9
<PAGE>
(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(c)), immediately upon the existence of any fact or the occurrence of
any event as a result of which 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 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 the 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 or 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 or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, 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
10
<PAGE>
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 the
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 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.
(l) Make available for inspection 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 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: provided, however, that any information that
-------- -------
is reasonable 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, 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
11
<PAGE>
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 and
make generally available to its securityholders earnings statements (which need
not be audited) satisfying the provisions of Section 11(a) of the Securities Act
and Rule 158 thereunder (or any similar rule promulgated under the Securities
Act) no later than 45 days after the end of any 12-month period (or 90 days
after the end of any 12-month period if such period is a fiscal year) (i)
commencing at the end of any fiscal quarter in which 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, which statements shall cover said
12-month periods.
(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 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 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 no later than the date the
Registration Statement is declared effective, and, in connection therewith, to
the extent applicable, to make such filings under the Exchange Act (e.g., the
filing of a Registration Statement on Form 8-A) and to have such filings
declared effective thereunder.
(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, 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
12
<PAGE>
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.
The Company may require each Holder of securities to be sold pursuant
to any Registration Statement to furnish to the Company such information
regarding the Holder and the distribution of such securities as the Company may
from time to time reasonably require for inclusion in such Registration
Statement. Any Holder who fails to provide such information shall not be
entitled to use the Prospectus.
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 (x) with respect to filings
required to be made with the National Association of Securities Dealers, Inc.
and (y) of compliance with federal securities or Blue Sky laws (including,
without limitation, fees and disbursements of the Special Counsel in connection
with qualifications of the Registrable Securities under the Blue Sky laws of
such jurisdictions as the Managing Underwriters, if any, or Holders of a
majority of the Registrable Securities being sold may designate)), (ii) printing
expenses (including, without limitation, expenses of printing certificates for
Registrable Securities in a form eligible for deposit with The Depository Trust
Company and of printing Prospectuses if the printing of Prospectuses is
requested by the Special Counsel, the Initial Purchasers, the Managing
Underwriters or the holders of a majority of the Registrable Securities included
in any Registration Statement), (iii) messenger, telephone and delivery
expenses, (iv) 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), (v) fees and disbursements of all independent certified public
accountants referred to in Section 3(k)(iii) hereof (including the expenses of
any special audit and "cold comfort" letters required by or incident to such
performance) and (vi) Securities Act liability insurance obtained by the Company
in its sole discretion. In addition, the Company shall pay its internal
expenses (including, without limitation, all salaries and expenses to its
officers and employees performing legal or accounting duties), the expense of
any annual audit, the fees and expenses incurred in connection with the listing
of the securities to be registered on any securities exchange 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. Notwithstanding
the provisions of this Section 4, each seller of Registrable Securities shall
pay all selling expenses and all registration expenses to the extent that the
Company is prohibited by applicable Blue Sky laws from paying for or on behalf
of such seller of Registrable Securities.
5. Indemnification.
---------------
13
<PAGE>
(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 legal or other expenses reasonably incurred in
connection with defending or investigating any such action or claim)
(collectively, "Losses"), arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement or Prospectus or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
Losses arise out of or are based upon the information relating to any Holder
furnished to the Company in writing by any Holder expressly for use therein;
provided, that the Company shall not be liable to any holder of Registrable
Securities (or any person controlling such Holder) to the extent that any such
Losses arise out of or are based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in any preliminary prospectus if
(i) such Holder failed to send or deliver a copy of the Prospectus with or prior
to the delivery of written confirmation of the sale by such Holder to the person
asserting the claims 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. 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 or 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, Prospectus or preliminary 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, to the
extent, but only to the extent, that such untrue statement or omission is
contained in any information relating to such Holder so 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
14
<PAGE>
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 or 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. 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 45 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
15
<PAGE>
or parties on the one hand and the indemnified party or parties on 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 parties on the one hand and of the indemnified party
or parties on the other hand in connection with the statements or omissions that
resulted in such Losses, as well as any other relevant equitable considerations.
Benefits received by the Company shall be deemed to be equal to the total net
proceeds from the initial placement of the Notes 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 Notes 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 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
provisions of this Section 5
16
<PAGE>
shall survive so long as Registrable Securities remain outstanding,
notwithstanding any transfer of the Registrable Securities by any holder or any
termination of this Agreement.
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 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. Upon the request of any holder of Registrable
Securities, the Company shall deliver to such holder a written statement as to
whether it has complied with such filing requirements. 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.
(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 Form S-3 in order to allow the Company to be eligible to
file registration statements on Form S-3.
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 or 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.
17
<PAGE>
(b) No Conflicting Agreements. Except as set forth in the
-------------------------
Registration Rights Agreement dated April 10, 1993, as amended on August 3,
1995, the Company has not, as of the date hereof and shall not, on or after the
date of this Agreement, entered into 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 the then outstanding Registrable Securities (for purposes of
such calculation, with holders of Common Stock deemed to be the holders of the
aggregate principal amount of Notes that have been converted into such Common
Stock). 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 ar least a majority of the Registrable Securities being sold by such
holders; 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 or
(iii) one business day after being deposited with a reputable next-day courier,
postage prepaid, 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);
(y) if to the Company, to:
Central Garden & Pet Company
3697 Mt. Diablo Boulevard
Lafayette, CA 94549
Attention: William E. Brown
Telecopy No.: (510) 283-4984
18
<PAGE>
with a copy to:
Orrick, Herrington & Sutcliffe
Old Federal Reserve Building
400 Sansome Street
San Francisco, CA 94111
Attention: John Seegal
Telecopy No.: (415) 773-5759
and
(z) if to the Special Counsel to:
Brobeck, Phleger & Harrison LLP
Spear Street Tower
Market
San Francisco, CA 94105
Attention: William L. Hudson
Telecopy No.: (415) 442-1400
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 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. For purposes
of calculating the consent or approval of Holders of a majority of the then
outstanding aggregate principal amount of Registrable Securities, Registrable
Securities which
19
<PAGE>
have been converted into shares of Common Stock shall be deemed to bear the
principal amount at which such securities were converted.
(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 STATE 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.
20
<PAGE>
(m) Attorneys' Fees. In any action or proceeding brought to enforce
---------------
any provision to this Agreement, or where any provision hereof is validly
asserted as a defense, the prevailing party, as determined by the court, shall
be entitled to recover 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 (d), 4 or 5 hereof, each of
which shall remain in effect in accordance with their terms.
21
<PAGE>
(p) 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
[Remainder of page intentionally left blank.]
22
<PAGE>
the provisions of this Agreement and the other documents contemplated hereby and
consummate and make effective the transactions contemplated hereby.
(q) 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 (d), 4 or 5 hereof, each of
which shall remain in effect in accordance with their terms.
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
CENTRAL GARDEN & PET COMPANY
By: /s/ WILLIAM E. BROWN
----------------------
Name: William E. Brown
Title: Chairman and Chief
Executive Officer
Accepted as of the date first above written:
ALEX. BROWN & SONS INCORPORATED
HAMBRECHT & QUIST LLC
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
WASSERSTEIN PERELLA SECURITIES, INC.
By: Alex. Brown & Sons Incorporated
By: /s/ PETER B. BRECK
---------------------
Authorized Signatory
23
<PAGE>
EXHIBIT 5.1
[Letterhead of Orrick, Herrington & Sutcliffe LLP]
February 11, 1997
Central Garden & Pet Company
3697 Mt. Diablo Boulevard
Lafayette, CA 94549
Re: Central Garden & Pet Company
Registration Statement on Form S-3
----------------------------------
Ladies and Gentlemen:
At your request, we have examined the Registration Statement on
Form S-3 (the "Registration Statement"), in the form being filed with the
Securities and Exchange Commission in connection with the registration under
the Securities Act of 1933, as amended, of $115,000,000 aggregate principal
amount of 6% Convertible Subordinated Notes due 2003 (the "Notes"), and such
indeterminate number of shares of Common Stock, $.01 par value (the "Common
Stock"), of Central Garden & Pet Company, a Delaware corporation (the
"Company"), as may be required for issuance upon conversion of the Notes (the
"Conversion Shares"). The Notes and the Conversion Shares are to be offered and
sold by certain securityholders of the Company (the "Selling Securityholders").
We have examined instruments, documents, and records which we
deemed relevant and necessary for the basis of our opinion hereinafter
expressed. In such examination, we have assumed the following: (a) the
authenticity of original documents and the genuineness of all signatures; (b)
the conformity to the originals of all documents submitted to us as copies; and
(c) the truth, accuracy, and completeness of the information, representations,
and warranties contained in the records, documents, instruments, and
certificates we have reviewed.
Based on such examination, we are of the opinion that the Notes
have been duly authorized and are binding obligations of the Company entitled to
the benefits of the Indenture dated as of November 15, 1996 between the Company
and Chemical Trust Company of California, as Trustee. We are of the further
opinion that the Conversion Shares have been duly authorized and, when issued by
the Company upon conversion of the Notes in accordance with the Indenture, will
be legally issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as Exhibit 5.1 to
the above referenced Registration Statement and to the use of our name under the
caption "Legal Matters" in the Registration Statement and in the Prospectus
included therein, and any amendment or supplement thereto. In giving such
consent, we do not consider that we are "experts" within the meaning of such
term as used in the Securities Act of 1933, as amended, or the rules and
regulations of the Securities and Exchange Commission issued thereunder, with
respect to any part of the Registration Statement, including this opinion as an
exhibit or otherwise.
Very truly yours,
/s/ ORRICK, HERRINGTON & SUTCLIFFE LLP
ORRICK, HERRINGTON & SUTCLIFFE LLP
<PAGE>
EXHIBIT 12.1
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
FISCAL YEAR FISCAL YEAR FISCAL YEAR NINE MONTH FISCAL YEAR THREE MONTHS
ENDED ENDED ENDED PERIOD ENDED ENDED ENDED
DECEMBER 27, DECEMBER 26, DECEMBER 25, SEPTEMBER 30, SEPTEMBER 28, DECEMBER 28,
1992 1993 1994 1995 1996 1996
------------ ------------ ------------ ------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Income (loss) before
income taxes and
minority interest...... 3,938 6,605 2,341 1,983 14,465 (3,116)
Fixed charges(1)........ 4,286 4,029 6,037 6,414 4,826 1,156
----- ------ ----- ----- ------ ------
Total earnings and
fixed charges........ 8,224 10,634 8,378 8,397 19,291 (1,960)
Fixed charges(1)........ 4,286 4,029 6,037 6,414 4,826 1,156
Ratio of earnings to
fixed charges(2)....... 1.92 2.64 1.39 1.31 4.00 --
===== ====== ===== ===== ====== ======
</TABLE>
- --------
(1) Fixed charges consist of interest expense incurred and the portion of
rental expense under operating leases deemed by the Company to be
representative of the interest factor.
(2) Earnings were inadequate to cover fixed charges by $0.8 million in the
three months ended December 28, 1996.
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
Board of Directors
Central Garden & Pet Company
Lafayette, California
We consent to the incorporation by reference in this Registration Statement
of Central Garden & Pet Company on Form S-3 of our reports dated November 15,
1996, appearing in the Annual Report on Form 10-K of Central Garden & Pet
Company for the year ended September 28, 1996, and to the reference to us
under the heading "Experts" in the Prospectus, which is a part of this
Registration Statement.
Deloitte & Touche LLP
San Francisco, California
February 11, 1997
<PAGE>
Exhibit 25.1
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------
FORM T-l
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)_________
---------------------------
CHEMICAL TRUST COMPANY OF CALIFORNIA
(formerly Manufacturers Hanover Trust Company of California)
(Exact name of trustee as specified in its charter)
CALIFORNIA 94-2926573
(State of incorporation I.R.S. employer
if not a national bank) identification No.)
101 California Street
San Francisco, California 94111
(Address of principal executive offices) (Zip Code)
---------------------------
CENTRAL GARDEN & PET COMPANY
(Exact name of obligor as specified in its charter)
DELAWARE 68-0275553
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
3697 Mt. Diablo Boulevard
LaFayette, California 94549
(Address of principal executive offices) (Zip Code)
-----------------------------------
Convertible Subordinated Notes
(Title of the indenture securities)
-----------------------------------
<PAGE>
GENERAL
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.
Superintendent of Banks of the State of California,
235 Montgomery Street, San Francisco, California 94104-2980.
Board of Governors of the Federal Reserve System,
Washington, D.C. 20551
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
ITEM 16. LIST OF EXHIBITS
List below all exhibits filed as a part of this Statement of Eligibility.
1. A copy of the Articles of Incorporation of the Trustee as now in
effect, including the Restated Articles of Incorporation dated December 23, 1986
and the Certificate of Amendment dated March 26, 1992 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 33-55136, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (See Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-55136, which is incorporated by reference).
3. Authorization to exercise corporate trust powers (Contained in
Exhibit 2).
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to
Form T-1 filed in connection with Registration Statement No. 33-55136, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 21(b) of the Act
(See Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-55136, which is incorporated by reference).
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.
2
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, Chemical Trust Company of California, a corporation organized and
existing under the laws of the State of California, has duly caused this
statement of eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of San Francisco and State of
California, on the 4th day of February, 1997.
CHEMICAL TRUST COMPANY OF CALIFORNIA
By /s/ James Nagy
------------------------
JAMES NAGY
Assistant Vice President
3
<PAGE>
EXHIBIT 7. REPORT OF CONDITION OF THE TRUSTEE.
- --------------------------------------------------------------------------------
TRUST COMPANY
CONSOLIDATED REPORT OF CONDITION OF Chemical Trust Company of California
--------------------------------------
(Legal Title)
LOCATED AT San Francisco San Francisco CA 94111
------------------------------------------------------------------
(City) (County) (State) (Zip)
AS OF CLOSE OF BUSINESS ON December 31, 1996 BANK NO. 1476
---------------------- --------------
================================================================================
ASSETS DOLLAR AMOUNT IN THOUSANDS
<TABLE>
<CAPTION>
<C> <S> <C>
1. Cash and due from banks 10,939
2. U.S. Treasury securities 10,215
3. Obligations of other U.S. Government agencies and corporations
4. Obligations of States and political subdivisions
5. Other securities (including $____________corporate stock
(a) Loans
(b) Less: Reserve for possible loan losses
(c) Loans (Net)
7. Bank Premises, furniture and fixtures and other assets representing
bank premises (including $ -0- capital leases) 103
----------------
8. Real estate owned other than bank premises
9. Investments in subsidiaries not consolidated
10. Other assets (complete schedule on reverse)
(including $_____________ intangibles) 939
11. TOTAL ASSETS 22,196
LIABILITIES
12. Liabilities For borrowed money
13. Mortgage indebtedness (including $_________ capital leases)
14. Other liabilities (complete on schedule on reverse 2,699
15. TOTAL LIABILITIES 2,699
======
16. Capital notes and debentures
SHAREHOLDERS EQUITY
17. Preferred stock--
(Number shares outstanding _____________) Amount $
18. Common stock--
(Number shares authorized 100 ) Amount $
-------------
(Number shares outstanding 100 ) Amount $ 10
-------------
19. Surplus Amount $ 9,990
20. TOTAL CONTRIBUTED CAPITAL 10,000
21. Retained earnings and other capital reserves 9,497
22. TOTAL SHAREHOLDERS EQUITY 19,497
23. TOTAL LIABILITIES AND CAPITAL ACCOUNTS 22,196
======
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
MEMORANDA
1. Assets deposited with State Treasurer to qualify for exercise of fiduciary
powers (market value) 605
- --------------------------------------------------------------------------------------------------
The undersigned, Francis J. Farrell, VP & Manager and Frank J. Seidel, Vice President
--------------------------------------------------------------------
(Name and Title) (Name and Title)
of the above named trust company, each declares, for himself alone and not for
the other: I have a personal knowledge of the matters contained in this report
(including the reverse side hereof), and I believe that each statement in said
report is true. Each of the undersigned, for himself alone and not for the
other, certifies under penalty of perjury that the foregoing is true and
correct.
Executed on 1/30/97 , at San Francisco , California
------------ -----------------
(Date) (City)
s/Francis J. Farrell s/Frank J. Seidel
-------------------- -----------------
(Signature) (Signature)
SCHEDULE OF OTHER ASSETS
<S> <C>
Accounts Receivable $422
Accrued Interest 37
Deferred Taxes 396
Other 84
----
Total (same as Item 10) $939
SCHEDULE OF OTHER LIABILITIES
Accrued Income Taxes $1,507
Accrued Expenses & A/P 377
Accrued Pension & Benefits 815
------
Total (same as Item 14) $2,699
</TABLE>
5
