As filed with the Securities and Exchange Commission on March 31, 1998
Registration No. 333-3907
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-2
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
___________________
SWING-N-SLIDE CORP.
(Exact name of registrant as specified in its charter)
Delaware 36-3808989
(State of incorporation) (I.R.S. Employer
Identification No.)
1212 Barberry Drive
Janesville, WI 53545
(608) 755-4777
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
Frederic L. Contino
President and Chief Executive Officer
SWING-N-SLIDE CORP.
1212 Barberry Drive
Janesville, WI 53545
(608) 755-4777
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
With a copy to:
Joseph P. Hildebrandt, Esq.
Foley & Lardner
150 East Gilman Street
Madison, Wisconsin
53703
(608) 258-4232
____________________________
Approximate date of commencement of proposed sale to the public: As
soon as practicable after the effective date of this Registration
Statement.
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, check the following box. [X]
If the registrant elects to deliver its latest annual report to
security holders or a complete and legible facsimile thereof, pursuant to
Item 11(a)(1) of this Form, check the following box. [_]
____________________________
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
Proposed
Proposed Aggregate Amount of
Title of Each Class of Amount to be Offering Price Offering Registration Fee
Securities to be Registered Registered Per Security Price (1)
<S> <C> <C> <C> <C>
10% Convertible Subordinated
Debentures due February 15, 2004 $3,333,333 100% $3,333,333 $1,149.43(2)
10% Convertible Subordinated
Debentures due February 15,
2004(3) $212,395 100% $212,395 $73.24(2)
Common Stock, $.01 par value (4) (5) --- --- (5)
(1) A total of $1,485.08 was previously paid as registration fee in the
original filing based on a higher aggregate amount of securities to
be registered of $4,306,722.00.
(2) Based on the rate effective at the original filing of 1/29 of 1
percent of the amount to be registered.
(3) Represents the maximum amount of Debentures that may be issued as
interest under the Indenture assuming the Debentures are issued on
July 1, 1998.
(4) Represents shares issuable upon conversion of the Debentures.
(5) Such indeterminable number of shares of Common Stock as may be
issuable upon conversion of the Debentures. No additional
consideration will be received for the shares of Common Stock upon
exercise of the conversion privilege and therefore no registration
fee is required pursuant to Rule 457(i).
</TABLE>
____________________________
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.
<PAGE>
PROSPECTUS [INSERT COMPANY LOGO]
April 10, 1998
$3,333,333
SWING-N-SLIDE CORP.
(name expected to be changed on April 28, 1998 to PlayCore, Inc.)
10% Convertible Subordinated Debentures Due February 15, 2004
Swing-N-Slide Corp., a Delaware corporation, is hereby offering
$3,333,333 principal amount of its 10% Convertible Subordinated Debentures
Due February 15, 2004 (hereinafter referred to as the "Debentures" or
"Second Series Debentures"). The Debentures are being offered to record
holders of Swing-N-Slide's Common Stock as of June 27, 1996 (the "Record
Date") other than GreenGrass Holdings (the "Other Stockholders") on a pro
rata basis (the offering of Debentures is herein referred to as the
"Offering"). Each of the Other Stockholders is entitled to purchase $1.38
principal amount of Debentures for each share of Common Stock owned by
such Other Stockholder as of the Record Date. As used herein, "Swing-N-
Slide" refers to Swing-N-Slide Corp., "Newco" refers to Swing-N-Slide's
wholly-owned subsidiary, Newco, Inc., and the "Company" refers to Swing-N-
Slide and Newco together.
The Debentures are convertible into Common Stock of Swing-N-Slide at
any time prior to maturity at a conversion price of $4.70 per share,
subject to adjustment under certain circumstances. Interest on the
Debentures is payable semi-annually on April 15 and October 15 of each
year, commencing on October 15, 1998. However, interest accruing on the
Debentures through February 15, 1999 may, at the option of Swing-N-Slide,
be paid in the form of additional Debentures in a principal amount equal
to the accrued but unpaid interest. It is Swing-N-Slide's present intent
to exercise its option to pay interest in the form of additional
Debentures. Therefore, the payment of interest on October 15, 1998 will
likely consist of additional Debentures in a principal amount of the
interest accrued from the date of issuance through October 15, 1998, and
the payment of interest on April 15, 1999 will likely consist of
additional Debentures in the principal amount of the interest accrued from
October 15, 1998 through February 15, 1999 together with a cash payment
for interest accrued from February 15, 1999 through April 15, 1999. The
aggregate principal amount of additional Debentures that may be issued in
lieu of cash payment is $212,395, assuming all $3,333,333 of Debentures
offered hereby are purchased and the Debentures are issued on July 1,
1998.
Swing-N-Slide's Common Stock is traded on the American Stock Exchange
(the "AMEX") under the symbol "SWG." In the event that Swing-N-Slide
changes its name to PlayCore, Inc., which is expected to occur on April
28, 1998, Swing-N-Slide will likely seek approval from the AMEX to change
its trading symbol. Swing-N-Slide has obtained approval from the AMEX to
list on the AMEX the shares of Common Stock, registered hereunder, into
which Debentures may be converted. On March 20, 1998, the closing price
of the Common Stock as reported on the AMEX was $3.875 per share. While
Swing-N-Slide does not presently intend to apply for the listing on the
AMEX or any other exchange of the Debentures, Swing-N-Slide has agreed to
use its reasonable efforts to arrange for one or more firms to make a
market in the Debentures, subject to an adequate amount of the Debentures
being purchased by Other Stockholders to permit the development of an
adequate market. There can be no assurance, however, that such a market
will develop. See "Risk Factors--Market for Debentures."
The Debentures are redeemable at any time, in whole or in part, at
the option of Swing-N-Slide, at a redemption price equal to 100% of the
principal amount, plus accrued but unpaid interest. Upon the occurrence
of any Contingent Event (defined to include certain changes of control of
Swing-N-Slide, see "Description of Debentures"), each holder of a
Debenture may, subject to certain conditions, require Swing-N-Slide to
repurchase, in whole or in part, such Debenture at a price equal to the
principal amount of such Debenture plus accrued but unpaid interest. See
"Description of Debentures."
The Debentures are unsecured general obligations of Swing-N-Slide,
subordinated in right of payment to all existing and future Senior
Indebtedness (as hereafter defined). See "Description of Debentures--
Subordination." The Indenture (as hereafter defined) does not restrict
the incurrence of additional indebtedness including, without limitation,
Senior Indebtedness, by Swing-N-Slide or its subsidiaries. The existing
Senior Indebtedness consists of debts and obligations of Swing-N-Slide
arising under its guaranty of about $68,565,000 borrowed by Newco, its
wholly-owned subsidiary.
See "Risk Factors" on page 6 for a discussion of certain matters that
should be considered by prospective purchasers of the Debentures offered
hereby.
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.
Underwriting
Price Discounts & Proceeds
to Commissions to Swing-N-
Public (1) Slide (2)
Per Debenture........ 100% --- 100%
Total................ $3,333,333 --- $3,333,333
(1) The Debentures are being offered and sold directly by Swing-N-
Slide, and no commissions or other remuneration will be paid to any
person for soliciting purchases of the Debentures.
(2) Before deducting expenses payable by Swing-N-Slide estimated at
$75,000, including registration, trustee's fees, printing, postage,
legal and accounting fees and miscellaneous expenses.
This Prospectus is dated April 10, 1998.
<PAGE>
CERTAIN FORWARD-LOOKING STATEMENTS
THIS PROSPECTUS INCLUDES "FORWARD-LOOKING STATEMENTS" WITHIN THE
MEANING OF SECTION 27A OF THE SECURITIES ACT AND SECTION 21E OF THE
EXCHANGE ACT. ALL STATEMENTS OTHER THAN STATEMENTS OF HISTORICAL FACT
INCLUDED IN THIS PROSPECTUS, INCLUDING, WITHOUT LIMITATION, STATEMENTS
REGARDING THE COMPANY'S FUTURE FINANCIAL POSITION, BUSINESS STRATEGY, AND
PLANS AND OBJECTIVES OF MANAGEMENT FOR FUTURE OPERATIONS, ARE FORWARD-
LOOKING STATEMENTS. IN ADDITION, FORWARD-LOOKING STATEMENTS GENERALLY CAN
BE IDENTIFIED BY THE USE OF FORWARD-LOOKING TERMINOLOGY SUCH AS "MAY,"
"WILL," "EXPECT," "INTEND," "ESTIMATES," "ANTICIPATE," "BELIEVE,"
"SHOULD," "PLANS" OR "CONTINUE" OR THE NEGATIVE THEREOF OR VARIATIONS
THEREIN OR SIMILAR TERMINOLOGY. ALTHOUGH THE COMPANY BELIEVES THAT THE
EXPECTATIONS REFLECTED IN SUCH FORWARD-LOOKING STATEMENTS ARE REASONABLE,
IT CAN GIVE NO ASSURANCE THAT SUCH EXPECTATIONS WILL PROVE TO HAVE BEEN
CORRECT. IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THE COMPANY'S EXPECTATIONS ("CAUTIONARY STATEMENTS") ARE
DISCLOSED UNDER "RISK FACTORS" AND ELSEWHERE IN THIS PROSPECTUS. ALL
SUBSEQUENT WRITTEN AND ORAL FORWARD-LOOKING STATEMENTS ATTRIBUTABLE TO THE
COMPANY, OR PERSONS ACTING ON ITS BEHALF, ARE EXPRESSLY QUALIFIED IN THEIR
ENTIRETY BY THE CAUTIONARY STATEMENTS.
AVAILABLE INFORMATION
Swing-N-Slide is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act") and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy
statements and other information filed by Swing-N-Slide can be inspected
and copied at the public reference facilities maintained by the Commission
at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549, and at the Commission's Regional Offices located at Suite 1400,
Northwestern Atrium Center, 500 West Madison Street, Chicago, Illinois
60601-2511, and 13th Floor, 7 World Trade Center, New York, New York,
10048. Copies of such material can be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C., at
prescribed rates. The Commission maintains a web site (http://www.sec.gov)
that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the
Commission.
Swing-N-Slide's Common Stock is listed on the AMEX, and reports,
proxy statements and other information concerning Swing-N-Slide can be
inspected at the AMEX, 86 Trinity Place, New York, New York 10006.
Swing-N-Slide has filed with the Commission a Registration Statement
on Form S-2 (the "Registration Statement") under the Securities Act of
1933, as amended (the "Securities Act"), of which this Prospectus is a
part, with respect to the securities offered hereby. This Prospectus does
not contain all of the information set forth in the Registration Statement
and the exhibits and schedules thereto. For further information with
respect to Swing-N-Slide and such securities, reference is hereby made to
such Registration Statement, exhibits and schedules. Statements contained
in this Prospectus concerning the provisions of any document are not
necessarily complete, and, in each instance, reference is made to the copy
of such document filed as an exhibit to the Registration Statement or
otherwise filed with the Commission. Each such statement is qualified in
its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents of Swing-N-Slide that have been filed with
the Commission pursuant to the Exchange Act are hereby incorporated by
reference in this Prospectus: (a) Annual Report on Form 10-K for the
fiscal year ended December 31, 1997 (the "Form 10-K"); and (b) Current
Report on Form 8-K filed March 21, 1997, as amended by Amendment No. 1 on
Form 8-K/A filed May 5, 1997 (the "Form 8-K"). Copies of the Form 10-K
and Form 8-K are being delivered, together with this Prospectus, to each
offeree hereunder.
All documents filed by Swing-N-Slide pursuant to Sections 13(a),
13(c), 14, or 15(d) of the Exchange Act subsequent to the date of this
Prospectus are hereby incorporated by reference in this Prospectus and
shall be deemed a part hereof from the date of filing of such documents.
Any statement or information contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed modified or
superseded for the purposes of this Prospectus to the extent that a
statement contained herein or in any subsequently filed document that also
is or is deemed to be incorporated herein by reference 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.
Swing-N-Slide will provide without charge to any person to whom a
Prospectus is delivered, on written or oral request of such person, a copy
of any or all documents incorporated herein by reference (not including
the exhibits to such documents, unless such exhibits are specifically
incorporated by reference into such documents). Requests should be
directed to: Richard E. Ruegger, Vice President-Finance, Swing-N-Slide
Corp., 1212 Barberry Drive, Janesville, Wisconsin 53545, phone number
(608) 755-4777.
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more
detailed information and consolidated financial statements (including
the notes thereto) appearing elsewhere in this Prospectus and in the
documents incorporated by reference in this Prospectus.
The Company
The Company is a leading designer, manufacturer and marketer of
consumer and commercial playground equipment. The Company's consumer
playground systems are primarily sold under the brandname Swing-N-
Slide/R/. The Swing-N-Slide/R/ product line is marketed through
hardware and home center customers. The Swing-N-Slide/R/ do-it-yourself
wooden playground equipment is a market leader in the U.S. and is sold
worldwide through more than 6,000 home center, building supply and
hardware stores. The Company's commercial playground systems are
primarily sold under the brandname GameTime/R/. The Company's GameTime
division is one of the leading manufacturers and marketers of modular
and custom commercial outdoor playground equipment in the world. The
GameTime division markets its playground equipment systems and
components to municipalities, schools, park districts and other
playground equipment users through a network of independent
representatives. The mailing address of the Company's principal
executive offices is Swing-N-Slide Corp., 1212 Barberry Drive,
Janesville, Wisconsin 53545, and its telephone number is (608) 755-4777.
The Offering
Securities Offered . . . . . $3,333,333 principal amount of 10%
Convertible Subordinated Debentures due
February 15, 2004.
Interest Payment Dates . . . April 15 and October 15 of each year,
commencing October 15, 1998.
Form of Interest Payments . Interest will be paid in cash, except
that Swing-N-Slide may, at its option,
pay interest accrued through February 15,
1999 in the form of additional Debentures
in a principal amount equal to the amount
of interest accrued. It is Swing-N-
Slide's intent to exercise this option to
pay interest in the form of additional
Debentures.
Maturity . . . . . . . . . . February 15, 2004.
Conversion . . . . . . . . . The Debentures are convertible into
Swing-N-Slide's Common Stock, $.01 par
value per share (the "Common Stock"),
prior to maturity or redemption at a
conversion price of $4.70 per share,
subject to adjustment under certain
conditions.
Optional Redemption by
Swing-N-Slide . . . . . . . The Debentures are redeemable at any time
and from time to time at the option of
Swing-N-Slide, in whole or in part, at
the principal amount thereof plus accrued
and unpaid interest, but without premium,
upon not less than 45 nor more than 60
days, notice by mail.
Redemption Upon Occurrence of
Contingent Event . . . . . . Upon the occurrence of a Contingent
Event, as hereafter defined, each holder
of a Debenture may, at his option,
subject to certain conditions and
restrictions, require Swing-N-Slide to
repurchase all or a portion of such
Debenture at the principal amount thereof
plus accrued but unpaid interest, without
premium.
Subordination . . . . . . . The Debentures are subordinated to
existing and future Senior Indebtedness,
currently consisting of the guaranty by
Swing-N-Slide of the indebtedness of
Newco. The Debentures are general,
unsecured obligations of Swing-N-Slide.
The Indenture does not restrict the
ability to incur additional indebtedness,
including, without limitation, Senior
Indebtedness, by Swing-N-Slide or its
subsidiaries.
Plan of Distribution . . . . Each of the Other Stockholders is
entitled to purchase $1.38 of Debentures
for each share of Common Stock owned by
such Other Stockholder as of the Record
Date. The subscription period commences
on the date of this Prospectus and shall
remain open until June 9, 1998 (the
"Expiration Date"). Each of the Other
Stockholders who wishes to purchase
Debentures must submit to the
Subscription Agent, by 5:00 p.m., Central
daylight time, on the Expiration Date, a
Subscription Agreement indicating the
amount of Debentures to be purchased
together with payment in full of the
applicable purchase price.
Use of Proceeds . . . . . . The net proceeds will be used to reduce
Newco's existing bank debt.
RISK FACTORS
In addition to the other information in this Prospectus, the
following factors should be considered carefully in evaluating an
investment in the Debentures offered by this Prospectus.
Decreasing Sales of Consumer Playground Systems
Net sales for the Company increased by $47.6 million, or 113.7%, for
the year ended December 31, 1997, to $89.5 million from $41.9 million in
1996. The reason for the increase was the growth in sales of commercial
playground systems driven by the Company's acquisition of GameTime, Inc.
("GameTime") on March 13, 1997. Sales of the Company's consumer products
by the Swing-N-Slide division, on the other hand, decreased $5.5 million,
or 13.1%, for the year ended December 31, 1997, as compared to the same
period in 1996. Among the factors which contributed to this decline in
sales in the Company's consumer products were changes in timing of
customer orders, including ordering closer to the retail season, and
increased competition among retailers in the backyard playground equipment
industry. In addition, the slide market remained highly competitive with
no short-term improvement in pricing expected for the more commodity-type
models. The home center industry itself also experienced a difficult year
in 1997 and continues to focus on reducing retail inventories of all
products, including backyard playground equipment. Each year customer
programs are negotiated for the upcoming selling season. Poor weather in
1997, particularly during the critical spring selling season, also
contributed to decreased sales. The Company expects the market for home
playground equipment to remain highly competitive.
Controlling Interest in the Company and the Indenture
GreenGrass Holdings, a Delaware general partnership ("GreenGrass"),
which is owned in part by certain members of the Company's management,
owns approximately 68% of the outstanding Common Stock of Swing-N-Slide
(or approximately 72% if GreenGrass converted all $5,853,007 principal
amount of its 10% Convertible Subordinated Debentures (sometimes referred
to herein as the "First Series Debentures") into Common Stock and
exercised its warrant to purchase 50,000 additional shares of Common
Stock) and is able to elect each member of Swing-N-Slide's Board of
Directors. As a result, GreenGrass is able to control substantially all
decisions made by the Company, with certain exceptions established by the
Transaction Agreement (as hereafter defined). Moreover, when GreenGrass
exchanges its $5,853,007 principal amount of First Series Debentures for
Second Series Debentures issued under the Indenture, it will also own a
minimum of approximately 64% of such Debentures upon the conclusion of
this Offering assuming that all of the Debentures offered hereunder are
purchased by the Other Stockholders, and can own an even greater
percentage if less than all of the Debentures are purchased in this
Offering. See "Background of Offering." Consequently, GreenGrass would
be able to effectively control most of the decisions to be made by holders
of Debentures under the Indenture. See "Description of Debentures--
Amendments and Supplements."
Competition
The markets for both home playground equipment and commercial park
and playground equipment are highly competitive. The Company's Swing-N-
Slide division faces competition from manufacturers of metal swing sets
and pre-cut and custom built wood kits, and the Company's GameTime
division faces competition from manufacturers of commercial playground
equipment. With respect to home playground equipment, Hedstrom
Corporation is a major manufacturer and marketer of metal gym sets,
plastic and metal slides and accessories. Hedstrom Corporation also
manufactures and sells a competing line of do-it-yourself wooden
playground kits. Several other manufacturers also market kit products
which are similar to the Company's consumer kits. With respect to
commercial park and playground equipment, the three largest competitors of
the Company's GameTime division are Miracle Recreation Equipment Co.,
Landscape Structures Inc. and Little Tikes Commercial PlaySystems Inc., a
unit of Rubbermaid, Inc., each of which has nationwide distribution.
Several of the Company's competitors in both the home playground equipment
and commercial playground equipment markets have greater financial,
marketing, manufacturing and distribution resources than the Company.
The Company's Swing-N-Slide division competes on the basis of design,
a complete merchandising program, quality, timeliness of delivery,
service, price, packaging and brand name recognition. The Company
believes that its design capabilities, complete merchandising program and
reputation for on-time delivery enable it to compete effectively. The
Company's reputation as a pioneer in the market has also been an important
element of its successful operations. The Company's GameTime division
competes on the basis of new product design and innovation, price, safety,
and unique product characteristics. Although there are no significant
technological or manufacturing barriers to entering into the home or
commercial playground equipment business, factors such as brand
recognition, the Company's established relationship with its home center
and building supply retailers, its quality assurance program and its
GameTime sales representative organization may discourage new competitors
from entering the business. There can be no assurance, however, that the
Company will be able to maintain all of its competitive advantages and
other companies in the industry may succeed in acquiring market share at
the expense of the Company.
Reliance on Certain Customers
During 1997, there were no sales by the Company to any one customer
that exceeded 10% of total net sales. However, product sales of the
Company were highly concentrated prior to the acquisition of GameTime.
One customer, Lowe's, accounted for 16% and 22% of the Company's net sales
during 1995 and 1996, respectively. Sales to another customer, Menard's,
were 11% and 16% of the Company's net sales in 1995 and 1996,
respectively. Product sales of the Company's GameTime division are more
diverse, with no single customer accounting for more than 2% of its net
sales in 1997. While in the past, the loss of significant customers, such
as Lowe's or Menard's, or a significant decline in the amount of business
from such customers, could have a material adverse effect on the Company,
after the acquisition of GameTime, the Company does not believe that
presently the loss of any one customer of the Company would have a
material adverse effect on the Company.
Seasonality
The sales pattern for home playground equipment produced by the
Company's Swing-N-Slide division is highly seasonal, and the bulk of the
division's sales take place during the spring and early summer months, the
peak selling season. Historically, about 70% of the net sales of the
Swing-N-Slide division occurs between January 1 and June 30. Unseasonably
cool or rainy weather during the spring and early summer months adversely
affects the division's ability to make sales during this peak selling
season. Sales that are not completed during this season are generally not
recovered later in the year. During the first half of 1997, the Swing-N-
Slide division's sales volume suffered, partially as the result of poor
weather, resulting in decreased sales for the division in 1997. See "Risk
Factors - Decreasing Sales of Swing-N-Slide Division."
In contrast, the sales pattern for commercial park and playground
equipment produced by the Company's GameTime division is subject to
somewhat less seasonality. Revenues generally peak between June and
August and reach lows in January and February. After the acquisition of
GameTime, the Company's sales are now concentrated in the period from
April 1 through September 30. For the year ended December 31, 1997,
approximately 67% of the Company's net sales occurred between April 1 and
September 30.
Reliance on Expansion and Acquisitions Beyond Historical Core Product
Group
The Company intends to pursue an aggressive growth strategy, the
success of which will depend in part upon its ability to successfully
expand beyond its historical core product group of do-it-yourself wooden
swing set and climbing unit kits for the backyard. The Company has
embarked upon a strategy to become one of the largest manufacturers and
marketers of large scale play equipment for all environments, including
(1) commercial products of indoor and outdoor use in several venues,
(2) consumer playground equipment that includes pre-cut wood and other
materials, (3) new product categories that can be marketed through
existing retailers, and (4) expanding international markets. As part of
its growth strategy, the Company acquired GameTime on March 13, 1997, and
intends to pursue acquisitions of other companies as appropriate.
The Company has incurred and may incur further significant costs and
indebtedness (including, without limitation, indebtedness senior to the
Debentures) in connection with carrying out this strategy. There can be
no assurance that the Company will achieve its planned expansion goals,
manage its growth effectively, or continue to operate its historical core
business profitably. The failure of the Company to achieve its expansion
goals on a timely basis, manage its growth effectively or continue to
operate its historical core business profitably would have a material
adverse effect on the Company's business, financial condition and results
of operation.
Price Volatility of Lumber and Resin
Since assembly of the Company's do-it-yourself kits requires lumber,
retail prices of the complete kit package with lumber vary with the price
of lumber. Lumber prices have shown volatility over the past few years.
A substantial increase in lumber prices could cause the Company's wood-
related products to have less market acceptance or result in significant
price erosion which will have a material adverse effect on the Company's
profitability. In addition, because almost all of the Company's Swing-N-
Slide division sales are made to retailers which appeal to do-it-yourself
consumers, changes in economic activity which impact such retailers may
also have an impact on the Company's sales.
Costs of polyethylene resin, a key component in the sheet plastic
which represents approximately 70% of the cost of producing a slide, have
increased substantially in recent years due to severe resin industry
capacity constraints and increased demand. These increased costs have
adversely affected the Company's margins since the Company has not been
able to pass such price increases on to its customers. While the Company
has responded by improving the efficiency of its processes and by
redesigning its products to reduce the amount of resin in its plastic
products, there can be no assurance that market prices of polyethylene
resin and sheet plastic will not continue to have an adverse affect on the
Company's margins.
Backlog
The Company's Swing-N-Slide division does not generally have a
meaningful backlog of orders, and the division's backlog as of any given
date is not a meaningful measure because, even during peak periods, orders
will generally be filled three business days from receipt of the order.
The Company's GameTime division has a normal backlog of four to six weeks
that typically approximates 10-15% of the division's annual net sales.
The amount of backlog existent in the Company as a whole at any one time
normally does not exceed 10% of the Company's annual sales.
Dependence Upon Key Personnel
The Company is highly dependent upon the efforts and abilities of its
senior management team. The loss of the services of all or part of the
Company's senior management team, could, if competent replacements for
such individuals were not located, have a material adverse effect on the
Company's business, financial condition or results of operations. The
future success of the Company will depend to a significant degree upon the
efforts and abilities of Frederic L. Contino, the Company's President and
Chief Executive Officer, and the other members of the senior management
team.
Year 2000
Certain of the Company's older computer programs were written using
two digits rather than four to define the applicable year. As a result,
such older computer programs could misinterpret a date using "00" as the
year 1900 rather than the year 2000. The computer software of the Swing-
N-Slide division has been updated to address Year 2000 issues. The
GameTime division is in the process of updating its computer software and
is expected to complete the updating process by the end of 1998. There is
no assurance, however, that the Company will be successful in addressing
all Year 2000 issues or that the Year 2000 issues will not cause problems
for the Company or its suppliers or customers.
Declining Stock Price
Swing-N-Slide's stock has been traded on the AMEX since August 10,
1995, under the symbol "SWG." From July 6, 1995 to August 9, 1995, the
stock was traded on the over-the-counter market and prior to July 6, 1995,
the stock was traded on the NASDAQ National Market System. Set forth
below for the calendar quarters indicated are the high and low closing
prices:
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998
high low high low high low high low high low
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Q1 13 9 1/2 8 7/8 3 3/4 5 9/16 3 1/2 5 1/2 3 1/8 4 3/8* 3 3/8*
Q2 11 9 1/2 5 1/4 3 1/4 4 1/8 3 7/16 4 3/8 3 9/16 N/A N/A
Q3 10 1/4 8 1/4 4 13/16 3 5/8 3 1/2 2 1/2 4 15/16 3 3/4 N/A N/A
Q4 9 1/2 7 3/4 4 15/16 3 1/2 3 3/8 2 5/8 4 3/4 3 3/4 N/A N/A
*Through March 20, 1998.
</TABLE>
The per share price of Swing-N-Slide's stock has declined
significantly since its 1994 level, and there can be no assurance that
this decline will be significantly reversed at any time in the foreseeable
future.
Holding Company Structure; Subordination
The Debentures are a direct obligation of Swing-N-Slide, which
derives substantially all of its revenues from the operations of its
wholly-owned subsidiary, Newco. The ability of Swing-N-Slide to make
interest payments on or redeem the Debentures and to pay dividends, if
any, on the Common Stock will be primarily dependent on receipt of
dividends or other distributions from Newco. Payment of dividends from
Newco to Swing-N-Slide and the payment of any interest on or repayment of
any principal of any loans or advances made by Swing-N-Slide to Newco are
subject to statutory and contractual restrictions and are contingent upon
the earnings of Newco.
In particular, Newco is subject to a number of restrictions contained
in the Credit Agreement, dated as of March 13, 1997, among Newco, Swing-N-
Slide, certain lenders and Fleet National Bank, both in its capacity as a
lender and in its capacity as agent for itself and the other lenders (the
"Credit Agreement"). Under the terms of the Credit Agreement, Newco
obtained debt financing in the aggregate amount of $69.5 million, of
which $20.0 million comprised a senior secured revolving credit facility,
$45.0 million comprised a senior secured Term Loan A facility, and $4.5
million comprised a senior secured Term Loan B facility. The Credit
Agreement restricts Newco's ability to incur additional indebtedness, pay
cash dividends or make other distributions, issue capital stock, and sell
assets and requires Newco to maintain certain financial ratios. In
addition, the Credit Agreement requires that certain prepayments with
respect to the Term Loan A facility and Term Loan B facility be made
quarterly. The Credit Agreement also restricts Swing-N-Slide's
activities, and provides that Swing-N-Slide and Newco shall not
substantially engage in any business other than children's consumer and
commercial indoor and outdoor play products, new products that utilize
their metal fabrication or plastic forming core competencies, or
substantially similar products that may be sold through home centers, mass
merchants or commercial and industrial trade classes. As of December 31,
1997, the aggregate amount owed under the Credit Agreement was
approximately $54,065,000.
In addition, Newco is subject to a number of restrictions contained
in the Securities Purchase Agreements dated as of March 13, 1997, among
Newco, Swing-N-Slide and Massachusetts Mutual Life Insurance Company
("MassMutual") and certain of its affiliates (collectively, the
"MassMutual Agreements"). Under the terms of the MassMutual Agreements,
Newco obtained $12.5 million of debt financing from MassMutual and its
affiliates by issuing its 12% Senior Subordinated Notes due 2005 (the
"MassMutual Notes"). As part of such debt financing, MassMutual and its
affiliates has received warrants (the "MassMutual Warrants") to purchase
up to an aggregate of 618,937 shares of Swing-N-Slide's Common Stock
(subject to adjustment) at an exercise price of $.001 per share. The
MassMutual Agreements require Newco to maintain certain financial ratios
and to make certain prepayments of the principal amount of the MassMutual
Notes commencing in September, 2002. Further, the MassMutual Agreements
restrict Newco's ability to incur additional indebtedness, create or incur
liens, pay cash dividends or make other distributions, issue capital
stock, sell assets, and enter into certain other transactions. As of
December 31, 1997, the aggregate principal amount owed under the
MassMutual Notes was $12,500,000.
The Debentures are subordinated in right of payment to current and
future Senior Indebtedness, including currently the guaranty of Swing-N-
Slide of the indebtedness of Newco under the Company's (and Newco's)
credit agreements, including the Credit Agreement and the MassMutual
Agreements, and Newco's unsecured 10% Subordinated Notes due March 2005 in
the principal amount of $2,000,000 (the "GameTime Purchase Notes"). See
"Risk Factors--Substantial Indebtedness." The GameTime Purchase Notes
were issued by Newco to former shareholders of GameTime as partial payment
for Newco's acquisition of GameTime in March 1997. By reason of such
subordination, and in the event of an insolvency, liquidation or other
reorganization of Swing-N-Slide, such indebtedness must be paid in full
before the principal of, and interest on, Debentures may be paid. See
"Description of Debentures." In addition, because all of Swing-N-Slide's
operations are conducted through Newco, claims of the creditors of Newco
will have priority with respect to the assets and earnings of Newco over
the claims of the creditors of Swing-N-Slide, including holders of the
Debentures, even though such obligations may not otherwise constitute
senior indebtedness (except to the extent Swing-N-Slide is itself
recognized as a creditor of Newco or such other creditors have agreed to
subordinate their claims to the payment of the Debentures).
The Debentures are not secured by any of the assets of Swing-N-Slide
or Newco. The obligations of Newco under the Credit Agreement are secured
by pledges of substantially all of its assets. In addition, Swing-N-Slide
has pledged its stock in Newco as security for its guaranty of Newco's
obligations under the Credit Agreement and related documents.
Although Swing-N-Slide believes that distributions and dividends from
Newco permitted under the Credit Agreement and the MassMutual Agreements
would be sufficient to pay interest on the Debentures as well as to meet
the Company's other obligations, there can be no assurance that such
distributions and dividends, if any, will be sufficient.
Substantial Indebtedness
The Company has indebtedness that is substantial in relation to its
stockholders' equity. See "Capitalization." The Credit Agreement imposes
significant operating and financial restrictions on the Company. See
"Risk Factors--Holding Company Structure; Subordination." Such
restrictions will affect, and in many respects significantly limit or
prohibit, among other things, the ability of the Company to incur
additional indebtedness. These restrictions, in combination with the
leveraged nature of the Company, could limit the ability of the Company to
effect future financing or otherwise may restrict corporate activities.
The Indenture permits the Company to incur additional Senior
Indebtedness. Moreover, the Indenture does not restrict the Company's
ability to incur indebtedness other than "Senior Indebtedness" as such
term is defined herein, including additional indebtedness senior to the
Debentures, and the Company expects to borrow funds and create such
additional indebtedness as it deems necessary or desirable. No assurance
can be given, however, that the Company will be able to obtain such
additional borrowed funds. See "Risk Factors--Reliance on Expansion and
Acquisitions Beyond Historical Core Product Group."
The Company's high degree of leverage could have important
consequences to the holders of the Debentures, including the following:
(1) the Company's ability to obtain additional financing for working
capital, capital expenditures, acquisitions, and other purposes may be
impaired in the future; (2) a substantial portion of the Company's cash
flow from operations must be dedicated to the payment of principal and
interest on its indebtedness, thereby reducing the funds available to the
Company for other purposes; (3) the Company's substantial degree of
leverage may hinder its ability to adjust rapidly to changing market
conditions; (4) the Company's indebtedness could make it more vulnerable
in the event of a downturn in general economic conditions or its business;
and (5) the Company's indebtedness could result in the inability of the
Company to make its interest and principal payments on the Debentures when
due.
Funding of Repurchase Obligations; Absence of a Sinking Fund
There is no sinking fund with respect to the Debentures, and at
maturity, the entire outstanding principal amount thereof will become due
and payable by Swing-N-Slide. Also, upon the occurrence of certain
events, Swing-N-Slide may be required to repurchase all or a portion of
the outstanding Debentures. See "Description of Debentures--Repurchase of
Debentures Upon Occurrence of Contingent Event." The sources of funds for
any such payment at maturity or earlier repurchase will be Swing-N-Slide's
available cash, the current source of which is dividends and other
payments by Newco to Swing-N-Slide, which payments are subject to a number
of restrictions. There can be no assurance that sufficient funds will be
available at the time of such event to pay amounts owed under the
Debentures or to make any required repurchase or that Swing-N-Slide's
ability to access such sources will not be prohibited or restricted by its
or Newco's obligations under the Credit Agreement, the MassMutual
Agreements, or its or Newco's obligations to other creditors. See
"Description of Debentures," "Risk Factors--Holding Company Structure;
Subordination" and "Risk Factors--Substantial Indebtedness."
Stockholders' Suit
Swing-N-Slide has been named as a defendant in a class action pending
in the Court of Chancery of the State of Delaware, New Castle County (the
"Court") entitled Robert Barbieri v. Swing-N-Slide Corp., Thomas R. Baer,
Richard G. Mueller, Andrew W. Code, James M. Dodson, Peter M. Gotsch,
Terence S. Malone, Henry B. Pearsall and Brian P. Simmons, GreenGrass
Holdings and GreenGrass Management, LLC, Case No. 14239, filed April 14,
1995 (the "Civil Action"). The complaint alleges that Swing-N-Slide's
tender offer for 3.6 million of outstanding shares of the Company's Common
Stock, which was completed in January 1995, was the result of a deceptive
and manipulative plan on the part of the individual defendants to enrich
themselves. The plaintiffs also challenge on similar grounds the purchase
by GreenGrass of (1) approximately 3.5 million shares of Common Stock
pursuant to a tender offer completed in February 1996, and (2) certain
securities (the "GreenGrass Transactions"). As to the first allegation,
the plaintiffs were granted certification of the two classes of
stockholders consisting of all stockholders other than the defendants at
November 14, 1994 (the "Self Tender Offer Class") or at March 15, 1995
(the "Proxy Statement Class"). As to the second allegation, the
plaintiffs were granted certification of a class consisting of all
stockholders other than the defendants as of January 10, 1996 (the
"GreenGrass Tender Offer Class", and together with the Self Tender Offer
Class and the Proxy Statement Class, the "Classes"). On February 12,
1996, the parties entered into a Stipulation and Order (the "Stipulation
and Order"), which the Court entered on February 13, 1996, under which the
plaintiffs agreed not to seek injunctive relief with respect to GreenGrass
Transactions, and Swing-N-Slide, GreenGrass and GreenGrass Management, LLC
agreed to amend certain terms of the GreenGrass Transactions. See
"Background of Offering."
On December 31, 1997, counsel for the plaintiffs and counsel for the
Company, GreenGrass Holdings and GreenGrass Management, LLC executed a
Memorandum of Understanding (the "MOU") and tentatively agreed to a
settlement of the Civil Action. The MOU contemplates preparation and
execution by the parties of formal settlement documents, including a
Stipulation of Settlement (the "Stipulation of Settlement"), pursuant to
which (1) all claims of the Classes against all the defendants (including
Swing-N-Slide) in the Civil Action will be settled, released and dismissed
with prejudice, subject to the approval of the Court; (2) Swing-N-Slide
will pay on behalf of all the defendants a total of $700,000 (the
"Settlement Proceeds"), of which $575,000 will be paid by its insurance
carrier, to be disbursed upon final Court approval of the settlement (up
to $175,000 of the Settlement Proceeds may be used to pay reasonable
attorneys' fees, expenses and costs of plaintiffs' counsel); and (3) the
Company will file with the Commission, no later than March 31, 1998, a
registration statement for the offer and sale of the Debentures pro rata
to stockholders (other than GreenGrass) of record on June 27, 1996. See
"Background of Offering." This Prospectus and the Offering of the
Debentures pursuant hereto is in fulfillment of the Stipulation of
Settlement. Although the Company does not believe the results of the suit
or the settlement will have a material adverse effect on the financial
condition or results of operations of the Company, there can be no
assurance that other stockholder suits will not arise and that the
resolution of such other suits, if any, will not have a material adverse
effect on the financial condition or results of operations of the Company.
Product Liability Claims
Due to the nature of its business, the Company, at any particular
time, is subject to a number of product liability claims for personal
injuries allegedly related to its products. The Company has to date been
successful in defending or settling such claims. Thus far, no such claims
have resulted in any material payments on account of defending or settling
such claims. The Company's products are designed to meet the applicable
safety guidelines of the American Society for Testing and Materials.
However, sales of the Company's products have increased and several of the
Company's products are new and, therefore, the claims experience of such
products cannot be predicted. Although the Company maintains product
liability insurance at coverage levels which it believes are adequate,
there can be no assurance that the Company will not incur substantial
liability for product liability claims or that insurance will provide
adequate coverage against such liability.
Environmental Matters
The Company is subject to the environmental laws and regulations of
the United States, the State of Wisconsin, and the State of Alabama as
well as local ordinances. The Company has established procedures for
maintaining environmental law compliance, including procedures for the
disposal of limited quantities of hazardous waste, with the United States
Environmental Protection Agency ("EPA") licensed haulers and recyclers.
The Company also incurs ongoing costs monitoring compliance with
environmental laws and in connection with disposal of waste materials.
Environmental laws imposed by the EPA and state officials nationwide are
becoming more stringent and may result in higher costs for the Company and
its competitors. While liabilities for environmental compliance and waste
disposal have not been material to the Company in the past, there can be
no assurance that the Company will not incur substantial liability with
respect to environmental law compliance in the future.
Market for the Debentures
There is currently no public trading market for the Debentures. The
Company does not intend to apply for a listing of the Debentures on the
AMEX or any other exchange; however, the Company has agreed to use its
reasonable efforts to arrange for one or more firms to make a market in
the Debentures, subject to an adequate amount of the Debentures being
purchased by Other Stockholders to permit the development of an adequate
market.
In part because of the small amount of Debentures which may be held
by the public and because the Company does not know of any brokerage firms
that are making an active market in the Company's Common Stock, there can
be no assurance that any market for the Debentures will develop in the
future or that the holders of the Debentures will be able to sell their
Debentures or that there will be an adequate price at which such holders
may be able to sell their Debentures. If a market were to develop, the
Debentures could trade at prices that may be higher or lower than the
initial offering price depending on many factors, including prevailing
interest rates, the Company's operating results, the market price of
Swing-N-Slide's Common Stock, and the market for similar convertible
debentures. There can be no assurance as to the liquidity of any trading
market for the Debentures or that an active public market for the
Debentures will develop. Investors may have to convert their Debentures
into shares of Swing-N-Slide's Common Stock in order to dispose of their
Debentures.
The Common Stock of Swing-N-Slide is listed on the AMEX. The market
price of the Common Stock has over the past four years been significantly
lower than the market price in 1994, and there can be no assurance that
the price will improve. See "Risk Factors -- Declining Stock Price."
No Dividends
There have been no dividends paid to stockholders since the inception
of Swing-N-Slide in January, 1992. The Credit Agreement and the
MassMutual Agreements restrict the ability of Newco, Swing-N-Slide's
operating subsidiary, to pay dividends to Swing-N-Slide. Swing-N-Slide
does not currently intend to pay dividends on its Common Stock.
Possible Dilution of Ownership Interest
There are 7,908,964 shares of Swing-N-Slide's Common Stock presently
outstanding. Swing-N-Slide has reserved a substantial number of shares of
Common Stock for future issuances for various purposes, as discussed
below.
The Debentures may be converted into shares of Common Stock at a rate
of $4.70 for each share, subject to adjustment, and, to the extent a
holder of a Debenture converts his or her Debenture into Common Stock,
such holder will be entitled to vote on all matters presented to the
stockholders. Accordingly, stockholders who do not elect to purchase
their pro rata portion of the Debentures in full may realize a dilution in
their voting rights in Swing-N-Slide and percentage interests in future
net earnings, if any, of the Company. Although GreenGrass is not
purchasing Debentures in this Offering (see "Background of Offering"), the
$5,853,007 aggregate principal amount of First Series Debentures already
issued to GreenGrass may be converted into an additional 1,219,376 shares
of Common Stock at a conversion price of $4.80 a share. When GreenGrass
exchanges its First Series Debentures for Second Series Debentures issued
under the Indenture, its conversion price will continue to be $4.80 per
share even though the conversion price applicable to the Second Series
Debentures offered hereby is $4.70 per share. See "Background of
Offering" and "Risk Factors--Controlling Interest in the Company and the
Indenture."
In addition to the conversion of Debentures issued under this
Offering, stockholders may realize a dilution in their voting rights in
Swing-N-Slide and percentage interests in future net earnings, if any, of
the Company as a result of: (i) the issuance to GreenGrass of up to
50,000 shares underlying a warrant held by GreenGrass; (ii) the issuance
to MassMutual and certain of its affiliates of up to 618,937 shares
(subject to further adjustment) underlying warrants held by such entities;
(iii) the issuance to GreenGrass of up to 1,219,376 shares in the event of
conversion of its $5,853,007 aggregate principal amount of First Series
Debentures and up to 170,289 shares in the event of conversion of $817,388
principal amount of interest Debentures hereafter payable to GreenGrass;
(iv) the issuance to two former members of GreenGrass Management, LLC
(together with GreenGrass, the "First Series Debentures Holders"), one of
the general partners of GreenGrass Holdings, of an aggregate of up to
3,249 shares in the event of conversion of their $15,595 aggregate
principal amount of First Series Debentures held by them, and up to 453
shares in the event of conversion of $2,178 aggregate principal amount of
interest Debentures hereafter payable to them; (v) the issuance to holders
of Second Series Debentures of up to 709,219 shares in the event of
conversion of $3,333,333 principal amount of Second Series Debentures, and
up to 45,190 shares in the event of conversion of $212,395 principal
amount of interest Debentures payable thereon (assuming a July 1, 1998
issuance of $3,333,333 principal amount of Second Series Debentures); (vi)
the issuance of up to 361,207 shares issuable upon the exercise of stock
options granted under the Swing-N-Slide Corp. 1992 Stock Program; (vii)
the issuance of up to 1,038,000 shares issuable upon the exercise of stock
options granted under the Swing-N-Slide Corp. 1996 Incentive Stock Plan;
(viii) the issuance of up to 162,000 shares issuable upon the exercise of
stock options which may be granted in the future under the Swing-N-Slide
Corp. 1996 Incentive Stock Plan; (ix) the issuance of up to 25,000 shares
upon the exercise of options granted to the Company's new President and
Chief Executive Officer, Frederic L. Contino, under his employment
agreement (which are in addition to the options granted to Mr. Contino
under the Swing-N-Slide Corp. 1996 Incentive Stock Plan); and (x) the
issuance of shares as part of any future acquisitions in connection with
the pursuit of the Company's aggressive growth strategy. See
"Capitalization," "Background of Offering" and "Risk Factors -- Reliance
on Expansion and Acquisitions Beyond Historical Core Product Group."
RATIO OF EARNINGS TO FIXED CHARGES
Year Ended December 31
1993 1994 1995 1996 1997
Ratio of earnings
to fixed charges
of the Company 1 11.40 14.54 2.46 1.67 1.40
1In the ratio of earnings to fixed charges of the Company, earnings
is computed by adding fixed charges to income (loss) before income taxes
and extraordinary item, and fixed charges is calculated as the sum of
interest expense, amortization of deferred financing costs, and one-third
of the rent expense from operating leases, which management believes is a
reasonable approximation of the interest factor of the rent.
RECENT DEVELOPMENTS
Completion of Rights Offering
In order to finance in part the acquisition of GameTime, Swing-N-
Slide entered into an Investment Agreement on March 13, 1997 with
GreenGrass (the "Investment Agreement") pursuant to which Swing-N-Slide
sold to GreenGrass 1,245,331 shares of its Common Stock for an aggregate
purchase price of $5,000,000, or a per share purchase price of $4.015, and
sold its Junior Subordinated Bridge Note in the principal amount of
$2,500,000 (the "Bridge Note"), due not later than December 31, 1997
(subject to prepayment under certain circumstances), bearing interest at a
rate of 13.5% per annum, and accompanied by a ten-year warrant to purchase
50,000 shares of Common Stock, at a per share purchase price of $4.015.
To give its stockholders, other than GreenGrass, the opportunity to
mitigate the dilutive effect of the purchase by GreenGrass of Common Stock
pursuant to the Investment Agreement, Swing-N-Slide in the fall of 1997
offered, pursuant to a Registration Statement on Form S-2, to each
stockholder of Swing-N-Slide other than GreenGrass the right to purchase
up to his, her or its pro rata share of 622,665 shares of Common Stock at
a price of $4.015 per share. Any of the 622,665 shares not purchased by
the other stockholders were purchased by GreenGrass, which was
contractually obligated to purchase such shares under the Investment
Agreement. At the close of the offering in December 1997, 134,283 shares
were purchased by stockholders other than GreenGrass, and the remaining
488,382 shares were purchased by GreenGrass. The proceeds received by
Swing-N-Slide from sale of such shares were used to pay in full the
principal outstanding under the Bridge Note. Accrued interest under the
Bridge Note in the amount of $275,622 was paid by the issuance of 68,648
shares of Common Stock to GreenGrass at a rate of $4.015 per share.
New President and Chief Executive Officer
On September 2, 1997, Richard G. Mueller resigned as Chairman,
President and Chief Executive Officer of the Company. Terence S. Malone,
a Company director since September 1992, and former Chairman and Chief
Executive Officer of Johnson Worldwide Associates, Inc. (international
manufacturer and marketer of outdoor recreational products), served as the
interim Chief Executive Officer of the Company until a successor for Mr.
Mueller was named. Effective January 5, 1998, the Company hired Frederic
L. Contino as its President and Chief Executive Officer. Mr. Contino was
also appointed as a director of the Company to fill the vacancy created by
Mr. Mueller's resignation. Prior to joining the Company, Mr. Contino was
associated with Newell Companies of Freeport, Illinois, where he served as
the President for two of its subsidiaries, the consumer housewares firm of
Anchor Hocking Plastics and of the food services supplier Plastics, Inc.
In connection with his resignation, Mr. Mueller withdrew as a member
of GreenGrass Management, LLC, one of the general partners of GreenGrass.
His pro rata share of Common Stock held by GreenGrass (comprising 34,385
shares of Common Stock) were distributed to him by GreenGrass and
repurchased by Swing-N-Slide at a price of $4.75 per share. Mr. Mueller
is also entitled to receive his pro rata share of First Series Debentures
held by GreenGrass as of the date of his withdrawal in the approximate
principal amount of $55,000.
Name Change
For marketing and other reasons, the Board of Directors of Swing-N-
Slide has recommended that its name be changed from "Swing-N-Slide Corp."
to "PlayCore, Inc." and has called a special meeting of Swing-N-Slide's
stockholders to take place on April 28, 1998 in order to approve the name
change. Stockholders of record on March 25, 1998 are entitled to vote on
the name change. GreenGrass, which owns approximately 68% of the
outstanding Common Stock of Swing-N-Slide, has indicated its intent to
approve the name change. The name change will also be subject to the
consent of MassMutual and certain of its affiliates as a result of
restrictions contained in the MassMutual Agreements regarding amendments
to Swing-N-Slide's Amended and Restated Certificate of Incorporation. The
consent of MassMutual and its affiliates is being sought and Swing-N-Slide
is not aware of any reason why such consent will not be given. In
connection with the name change, Swing-N-Slide will likely seek approval
from the AMEX to change its trading symbol.
Notwithstanding any such name change, the Company's consumer
playground systems will continue to be sold primarily under the brandname
Swing-N-Slide/R/ and the Company's commercial playground systems will
continue to be sold primarily under the brandname GameTime/R/.
USE OF PROCEEDS
The maximum net proceeds (assuming all $3,333,333 of Debentures are
sold) to Swing-N-Slide from the sale of the Debentures offered hereby,
after deducting estimated expenses payable by the Company in connection
with this Offering, are estimated to be approximately $3,258,333. The net
proceeds, if any, will be used to reduce Newco's indebtedness under the
Term Loan A and Term Loan B facilities of the Credit Agreement. The Term
Loan A facility bears interest at either 0.75% to 1.50% over the prime
rate or 2.0% to 2.75% over LIBOR, with the precise rate dependent upon
Newco's debt to cash flow ratio. The principal portion of the Term Loan A
facility is payable quarterly in amounts between $500,000 and $2,900,000,
with the final quarterly payment due in December 2002. In addition,
mandatory prepayments are required based on excess cash flow, as defined
in the Credit Agreement. The Term Loan B facility bears interest at
either 2% over the prime rate or 3.25% over LIBOR, at the Company's
option. The Term Loan B facility is payable quarterly in amounts between
$16,667 and $33,334, with the final quarterly principal payment due in
June 2003. The proceeds from the Term Loan A and Term Loan B facilities
were used to provide financing for the acquisition of GameTime, to
refinance certain indebtedness of Swing-N-Slide, Newco and GameTime, and
to provide funds for working capital purposes. See "Risk Factors --
Holding Company Structure; Subordination," "Recent Developments" and
"Capitalization."
CAPITALIZATION
The following table sets forth the historical capitalization of the
Company as of December 31, 1997 and as adjusted to give effect to the
issuance and sale of $3,333,333 aggregate principal amount of Second
Series Debentures offered hereby.
December 31, 1997
Actual As Adjusted 1
(in thousands)
Short-term debt:
Revolving loan $7,615 $7,615
Current portion of long-term
debt 9,457 6,199
Long-term obligations:
Long-term debt, net of
current portion 49,590 49,590
10% Convertible Debentures
due 2004 5,8692 9,202 3
Stockholders' equity:
Preferred stock, $.01 par
value - 5,000,000 shares
authorized, no shares issued
or outstanding ----- -----
Common Stock, $.01 par
value - 25,000,000 shares
authorized, 7,907,883
shares issued and
outstanding 4 115 115
Class B Common Stock, $.01
par value - 1,750,000 shares
authorized, no shares issued
or outstanding ----- -----
Additional paid-in capital 37,518 37,518
Excess purchase price over
predecessor basis (5,627) (5,627)
Retained earnings 20,199 20,199
Cost of 3,634,385 shares of
common stock in treasury (40,511) (40,511)
Total stockholders' equity 11,694 11,694
_________________________
1 As adjusted for the net proceeds from the issuance of $3,333,333
in Debentures pursuant to this Offering (assuming that all $3,333,333
principal amount of Debentures are sold hereunder).
2 This amount consists of (a) an aggregate of $5,853,007 principal
amount of First Series Debentures held by GreenGrass, and (b) an aggregate
of $15,595 principal amount of First Series Debentures held by two former
members of GreenGrass Management, LLC, one of the general partners of
GreenGrass Holdings.
3 This amount consists of (a) $5,853,007 aggregate principal
amount of First Series Debentures held by GreenGrass, (b) $15,595
aggregate principal amount of First Series Debentures held by the two
former members of GreenGrass Management, LLC identified above; and (c)
$3,333,333 aggregate principal amount of Debentures which may be issued
hereunder.
4 As of December 31, 1997, there were 7,907,883 shares of Common
Stock issued and outstanding. This amount excludes 3,634,385 shares that
are held by Swing-N-Slide as treasury shares, 1,081 shares that were
issued on February 28, 1998 to certain key employees as management bonuses
under the Swing-N-Slide Corp. Management Bonus Plan, and up to
approximately 4,402,920 shares underlying various rights to acquire Common
Stock. See "Risk Factors -- Possible Dilution of Ownership Interest." As
of the date hereof, there were 7,908,964 shares of Common Stock issued and
outstanding.
BACKGROUND OF OFFERING
On January 4, 1996, Swing-N-Slide and GreenGrass entered into a
transaction agreement (the "Transaction Agreement") pursuant to which
GreenGrass agreed to offer to purchase (the "Tender Offer") up to
3,510,000 shares of Swing-N-Slide's Common Stock (the "Shares"). Under
the terms of the Transaction Agreement, GreenGrass also agreed to purchase
for cash from Swing-N-Slide no later than 30 days (subject to certain
exceptions) after the purchase of the Shares in the Tender Offer, certain
securities of Swing-N-Slide convertible into Shares at a conversion price
of $4.80 per Share (the "Securities") in an amount not less than
$5,000,000 and not more than $7,380,000. GreenGrass elected to purchase
$5,000,000 of First Series Debentures to satisfy this requirement to
purchase Securities. Because of concerns about complying with certain
AMEX rules, GreenGrass purchased the First Series Debentures in two
transactions: the first, in the amount of $4,300,000 was completed on
February 16, 1996; and the second, in the amount of $700,000 was completed
on April 25, 1996. In connection with their resignation as officers of
the Company and their withdrawal as members of GreenGrass Management, LLC,
one of the general partners of GreenGrass Holdings, two individuals have
since been distributed their pro rata share of the First Series Debentures
held by GreenGrass. On April 15, 1996, October 15, 1996, April 15, 1997
and October 15, 1997, GreenGrass and such other holders of the First
Series Debenture received a total of $868,603 aggregate principal amount
of First Series Debentures as "payment-in-kind" interest payments.
Under the Transaction Agreement, GreenGrass also agreed to use
reasonable efforts to cause Swing-N-Slide to file, within 90 days after
the date on which Shares were purchased in the Tender Offer, a
registration statement with the Commission under the Securities Act,
covering an offering by Swing-N-Slide of the Securities (the "Securities
Offering") to the Other Stockholders. Under the Securities Offering, each
of the Other Stockholders would be given the right, on the basis of the
number of Shares held by such Other Stockholder, to purchase his, her or
its pro rata share of the principal amount of Securities available to the
Other Stockholders as a group, for cash at the same price as GreenGrass
paid for its Securities. The amount of Securities available to the Other
Stockholders would be two-thirds of that purchased by GreenGrass. Because
GreenGrass purchased $5,000,000 in First Series Debentures, the amount of
the Debentures to be offered to the Other Stockholders is $3,333,333.
This Offering constitutes the Securities Offering required by the
Transaction Agreement.
As part of a Stipulation and Order dated February 13, 1996, in
connection with the Civil Action (see "Risk Factors--Stockholders'
Suits"), Swing-N-Slide agreed to certain modifications to the Securities
Offering, including the following:
(a) Securities offered to the Other Stockholders shall be
convertible into Common Stock of Swing-N-Slide at the rate of
one share of common stock for each $4.70 principal amount of
Debentures. Securities held by GreenGrass and the former
members of GreenGrass Management, LLC identified above shall
continue to have a conversion rate of $4.80 per share.
(b) Securities shall be offered to the Other Stockholders in one
dollar increments in order to permit holders of odd lot amounts
of Common Stock to participate on a pro rata basis in the
offering of Securities to Other Stockholders.
(c) The Securities Offering to the Other Stockholders shall occur no
earlier than 90 days after the Purchase Date (as defined in the
Transaction Agreement) and the offering shall remain open for
acceptance by Other Stockholders for not less than 60 days.
(d) In the event of prepayment for any reason of the Debentures,
Other Stockholders shall have not less than 30 days prior
written notice during which they may elect to exercise
conversion rights under the Debentures.
(e) Swing-N-Slide shall use reasonable efforts to cause market
makers in its Common Stock or other persons or entities to make
a market in Debentures (it being agreed and understood that the
ability of Swing-N-Slide to procure a market maker in the
Debentures will depend, in part, on the amount of Debentures
purchased by Other Stockholders and there is no commitment
intended hereby with respect to the liquidity of the market for
Debentures). There can be no assurance, however, that such a
market will develop. See "Risk Factors--Market for Debentures."
The Transaction Agreement was amended on February 12, 1996, to
reflect, in part, the changes to the Securities Offering required by the
Stipulation and Order.
Under the Transaction Agreement, the First Series Debenture Holders
(including GreenGrass) will, prior to the issuance of Debentures
hereunder, exchange their First Series Debentures for Second Series
Debentures issued under the Indenture. The terms of the Second Series
Debentures issued in exchange for the First Series Debentures will be
identical to the terms of the Second Series Debentures offered to the
Other Stockholders pursuant to this Offering, except that the conversion
price will remain at $4.80 per share (rather than the $4.70 per share
applicable to Other Stockholders). See "Description of Debentures." The
exchange will not reduce the amount of Debentures offered hereunder. As a
result of the exchange, GreenGrass will hold at least approximately 64% of
the principal amount of outstanding Debentures issued under the Indenture
(assuming full subscription of the Debentures offered hereby) and, even a
greater percentage to the extent that the Offering is not fully
subscribed. To a large extent, GreenGrass will be able to exercise
effective control over the Trustee and decisions to be made by Debenture
holders (including the Other Stockholders) under the Indenture. See "Risk
Factors--Controlling Interest in the Company and the Indenture."
At its meeting on April 25, 1996, the Board of Directors of Swing-N-
Slide established a Record Date of June 27, 1996 to determine the Other
Stockholders eligible to participate in the Offering, with the intention
that the Offering would commence shortly thereafter. However, as the
result of a series of events, the commencement of the Offering has been
delayed significantly. Some of the events giving rise to the delay
include the Company's consideration of several confidential acquisitions
(including the acquisition of GameTime that was later completed in March
1997), the rights offering resulting from the GameTime acquisition
financing, and the extended negotiations for the settlement of the
stockholders' suit (see "Risk Factors - Stockholders' Suit").
PLAN OF DISTRIBUTION
Subscription Period
The Subscription Period commenced on the date of this Prospectus and
remains open until June 9, 1998, the Expiration Date. Subscriptions for
the Debentures, in the form of a Subscription Agreement, must be received
by 5:00 p.m., Central daylight time, on the Expiration Date by Firstar
Trust Company, Corporate Trust Services, Attention: Pamela Warner, 1555
North RiverCenter Drive, Suite 301, Milwaukee, Wisconsin 53212 (the
"Subscription Agent"). The Expiration Date may be extended by Swing-N-
Slide from time to time in its sole discretion by issuing a press release
to that effect no later than 10:00 a.m., Eastern daylight time, on the
business day following the Expiration Date.
Debenture Offering
Swing-N-Slide is offering the Debentures to its Other Stockholders on
a pro rata basis. The Record Date for the Offering is June 27, 1996.
GreenGrass will not be allowed to purchase Debentures in this Offering.
However, effective as of the closing date of the issuance of the
Debentures, the First Series Debenture Holders (including GreenGrass) will
exchange their First Series Debentures for Second Series Debentures issued
under the Indenture. See "Background of Offering." Each Other
Stockholder is entitled to purchase $1.38 of Debentures for each share of
Common Stock beneficially owned by such Other Stockholder as of the Record
Date. The maximum amount of Debentures each Other Stockholder is entitled
to purchase pursuant to the foregoing sentence is referred to herein as
the "Maximum Subscription Amount."
Each Other Stockholder who wants to purchase Debentures must submit
to the Subscription Agent, by 5:00 p.m., Central daylight time, on the
Expiration Date, a Subscription Agreement indicating which portion, if
any, of the Maximum Subscription Amount such Other Stockholder will
purchase. Other Stockholders will be able to purchase Debentures only in
an amount up to the Maximum Subscription Amount. Each Subscription
Agreement shall be considered a non-revokable offer to purchase Debentures
in an amount up to the Maximum Subscription Amount, as set forth in the
Subscription Agreement. Once submitted to the Subscription Agent, the
Subscription Agreement and the offer to purchase set forth therein cannot
be changed or revoked.
If any of the Other Stockholders do not subscribe for their Maximum
Subscription Amount, the Debentures offered to such Other Stockholders
will not be re-offered to the remaining Other Stockholders or GreenGrass
and will not be issued.
Debentures purchased in this Offering will be delivered to the
subscribing Other Stockholders as soon as practicable after the Expiration
Date.
While Swing-N-Slide does not presently intend to apply for the
listing on the AMEX or any other exchange of the Debentures, Swing-N-Slide
has agreed to use its reasonable efforts to arrange for one or more firms
to make a market in the Debentures, subject to an adequate amount of the
Debentures being purchased by stockholders to permit the development of an
adequate market. There can be no assurance, however, that such a market
will develop. See "Risk Factors - Market for Debentures." Swing-N-Slide
has received approval from the AMEX for the listing of shares of Common
Stock issuable upon conversion of the Debentures.
Subscription Agreement and Payment
Each Other Stockholder who desires to purchase Debentures must submit
to Firstar Trust Company, Corporate Trust Services, Attention: Pamela
Warner, 1555 North RiverCenter Drive, Suite 301, Milwaukee, Wisconsin
53212, by 5:00 p.m., Central daylight time, on the Expiration Date, a
properly completed and executed Subscription Agreement, together with
payment in full of the purchase price (the "Purchase Price") for that
portion of the Maximum Subscription Amount to be purchased by such Other
Stockholder. Payment may be made only (a) by check or bank draft drawn
upon a U.S. bank, or postal, telegraphic or express money order, payable
to Swing-N-Slide Corp., or (b) by wire transfer of funds to the account
maintained by the Subscription Agent for the purpose of accepting
subscriptions, or (c) a combination of the foregoing. The Purchase Price
will be deemed to have been received by the Subscription Agent only upon
(i) clearance of any uncertified check, (ii) receipt by the Subscription
Agent of any certified check or bank draft drawn upon a U.S. bank or any
postal, telegraphic or express money order, or (iii) receipt of collected
funds in the Subscription Agent's account designated above. If paying by
uncertified personal check, please note that the funds paid thereby may
take at least five (5) business days to clear. ACCORDINGLY, OTHER
STOCKHOLDERS WHO WISH TO PAY THE PURCHASE PRICE BY MEANS OF AN UNCERTIFIED
PERSONAL CHECK ARE URGED TO MAKE PAYMENT SUFFICIENTLY IN ADVANCE OF THE
EXPIRATION DATE TO ENSURE THAT SUCH PAYMENT IS RECEIVED AND CLEARS BY SUCH
TIME AND ARE URGED TO CONSIDER IN THE ALTERNATIVE PAYMENT BY MEANS OF A
CERTIFIED OR CASHIER'S CHECK, MONEY ORDER OR WIRE TRANSFER OF FUNDS.
Because the right to purchase Debentures hereunder is
nontransferable, if a beneficial owner of Common Stock desires to purchase
Debentures, he, she or it may do so only by having the owner of record act
on his, her or its behalf. Persons who held shares of Common Stock for
the account of others as of June 27, 1996, such as brokers, trustees or
depositories for securities, should contact the respective beneficial
owners of such shares as soon as possible to ascertain those beneficial
owners' intentions and to obtain instructions with respect to responding
to this Offer. If a beneficial owner so instructs, the record holder of
that beneficial owner's shares of Common Stock should complete the
Subscription Agreement and submit it to the Subscription Agent with proper
payment. In addition, beneficial owners of Common Stock held as of June
27, 1996 through such a nominee holder should contact the nominee holder
and request the nominee holder to effect transactions in accordance with
the beneficial owner's instructions.
If an Other Stockholder does not indicate in the Subscription
Agreement the amount of the Maximum Subscription Amount, if any, which the
Other Stockholder is willing to purchase, or does not forward full payment
of the Purchase Price for the amount of Debentures the Other Stockholder
indicates he, she or it is willing to purchase, then such Other
Stockholder will be deemed to have offered to purchase an amount of
Debentures equal to the amount (up to the Maximum Subscription Amount) of
the Purchase Price received by the Subscription Agent.
All funds received by the Subscription Agent in payment of the
Purchase Price for Debentures will be retained by the Subscription Agent
and will not be delivered to the Company until the Debentures have been
issued.
THE SUBSCRIPTION AGREEMENT SHOULD BE SENT WITH PAYMENT TO FIRSTAR
TRUST COMPANY, CORPORATE TRUST SERVICES, ATTENTION: PAMELA WARNER, 1555
NORTH RIVERCENTER DRIVE, SUITE 301, MILWAUKEE, WISCONSIN 53212.
THE METHOD OF DELIVERY OF THE SUBSCRIPTION AGREEMENT AND PAYMENT OF
THE PURCHASE PRICE TO THE SUBSCRIPTION AGENT ARE AT THE ELECTION AND RISK
OF THE STOCKHOLDER. IF SENT BY MAIL, STOCKHOLDERS ARE URGED TO SEND THE
SUBSCRIPTION AGREEMENT AND PAYMENTS BY REGISTERED MAIL, PROPERLY INSURED,
WITH RETURN RECEIPT REQUESTED, AND ARE URGED TO ALLOW A SUFFICIENT NUMBER
OF DAYS TO ENSURE DELIVERY TO THE SUBSCRIPTION AGENT AND CLEARANCE OF
PAYMENT PRIOR TO THE EXPIRATION TIME. BECAUSE UNCERTIFIED PERSONAL CHECKS
MAY TAKE AT LEAST FIVE (5) BUSINESS DAYS TO CLEAR, STOCKHOLDERS ARE
STRONGLY URGED TO PAY, OR ARRANGE FOR PAYMENT, BY MEANS OF CERTIFIED OR
CASHIER'S CHECK, MONEY ORDER OR WIRE TRANSFER OF FUNDS.
All issues concerning timeliness, validity, form and eligibility
regarding this Offer will be resolved by Swing-N-Slide, whose
determinations will be final and binding. Swing-N-Slide, in its sole
discretion, may waive any defect or irregularity, or permit a defect or
irregularity to be corrected within such time as it may determine.
Subscription Agreements will not be deemed to have been received or
accepted until all irregularities have been waived or cured within such
time as Swing-N-Slide determines, in its sole discretion. Swing-N-Slide
will not be under any duty to give notification of any defect or
irregularity in connection with the submission of Subscription Agreements
or incur any liability for failure to give such notification.
Any questions or requests for assistance concerning the method of
purchasing Debentures or requests for additional copies of this Prospectus
or Subscription Agreements should be directed to Richard E. Ruegger, Vice
President - Finance, Swing-N-Slide Corp., 1212 Barberry Drive, Janesville,
Wisconsin 53545, phone number (608) 755-4777.
No Revocation; No Transfer of Rights
ONCE AN OTHER STOCKHOLDER HAS SUBMITTED HIS, HER OR ITS SUBSCRIPTION
AGREEMENT, IT MAY NOT BE REVOKED OR CHANGED.
This Offering is made only to Other Stockholders, and each Other
Stockholder is entitled to purchase only his, her or its pro rata share of
Debentures, as described above. An Other Stockholder may not transfer, in
whole or in part, his, her or its right to purchase the Debentures offered
hereby, to any other person, including another Other Stockholder.
State and Foreign Securities Law
Swing-N-Slide will not offer, sell or issue Debentures in states or
other jurisdictions where it is unlawful to do so or whose laws, rules,
regulations or orders would require Swing-N-Slide to incur costs,
obligations or time delays which Swing-N-Slide determines, in its sole
discretion, are disproportionate to the net proceeds to be realized by
Swing-N-Slide from such offers, sales or issuances. No action has been
taken in any jurisdiction outside the United States to permit offers and
sales of the Debentures. Consequently, Swing-N-Slide may reject
subscriptions for Debentures by any Other Stockholder, unless it
determines that it may lawfully accept such subscriptions, even if it
could do so by qualifying the Debentures for sale or by taking other
actions in such jurisdictions.
Rights of Subscribers
Other Stockholders will have no rights as Debenture holders until the
Debentures for which they have subscribed are issued to them. All
Debentures issued will be issued in the name of the holder of record of
the shares of Common Stock as of June 27, 1996 giving rise to the right to
purchase Debentures hereunder. An Other Stockholder will not have the
right to revoke his, her or its subscriptions after delivery of his, her
or its Subscription Agreement to the Subscription Agent.
DESCRIPTION OF DEBENTURES
The Debentures will be issued pursuant to an indenture (the
"Indenture") by and between Swing-N-Slide and Firstar Bank Milwaukee,
N.A., as trustee (the "Trustee"). The Debentures are the second series of
Debentures issued by Swing-N-Slide. Swing-N-Slide has authorized the
issuance of $8,333,333 aggregate principal amount of First Series
Debentures and Second Series Debentures (plus any additional First Series
Debentures and Second Series Debentures paid in lieu of cash interest as
permitted herein). None of the Second Series Debentures has been issued
to date. GreenGrass purchased $5,000,000 of First Series Debentures and
to date Swing-N-Slide has issued $868,603 aggregate principal amount of
First Series Debentures as "payment-in-kind" interest payments. See
"Background of the Offering." The First Series Debenture Holders will
exchange, effective as of the closing date of the issuance of Debentures,
their First Series Debentures for Second Series Debentures issued under
the Indenture, with rights, privileges, terms and conditions identical to
those of the Debentures being offered hereunder, except that the
conversion price to the First Series Debenture Holders will remain at
$4.80 per share. See "Risk Factors--Controlling Interest in the Company
and the Indenture."
The following summary of the Debentures and the Indenture does not
purport to be complete and is subject to, and is qualified in its entirety
by, reference to all the provisions of the Debentures and the Indenture,
copies of which have been filed as exhibits to the Registration Statement
of which this Prospectus constitutes a part. The terms of the Indenture
are also governed by certain provisions contained in the Trust Indenture
Act of 1939, as amended. Capitalized terms used herein without definition
have the meanings ascribed to them in the Indenture. Wherever particular
provisions of the Indenture are referred to in this summary, such
provisions are incorporated by reference as a part of the statements made
and such statements are qualified in their entirety by such reference.
General
The Debentures will be unsecured, subordinated, general obligations
of Swing-N-Slide, limited in aggregate principal amount to $9,494,562
(consisting of $3,333,333 principal amount of Debentures offered hereby
and $6,161,229 principal amount of First Series Debentures to be exchanged
by the First Series Debentures Holders into Second Series Debentures,
which includes $5,868,602 principal amount of First Series Debentures
presently outstanding and $292,627 of First Series Debentures to be issued
on April 15, 1998 in lieu of cash interest thereon). The Debentures will
be subordinated in right of payment to all Senior Indebtedness of Swing-N-
Slide, as described under "Subordination" below. The Debentures will be
issued only in fully registered form, without coupons, in denominations of
$1 and integral multiples thereof.
The Debentures will mature on February 15, 2004. Except as otherwise
provided in the following paragraph, the Debentures will bear interest at
the rate of 10% per annum from the date of issuance or from the most
recent Interest Payment Date to which interest has been paid or provided
for, payable semi-annually on April 15 and October 15 of each year,
commencing October 15, 1998, to the persons in whose names such Debentures
are registered at the close of business on the Regular Record Date for
such interest. Interest shall be calculated based on a year composed of
365 days.
Interest whose Stated Maturity is after the date of conversion of any
Debenture shall not be payable. In the case of any Debenture which is
converted after any Regular Record Date and on or prior to the next
succeeding Interest Payment Date, interest whose Stated Maturity is on
such Interest Payment Date shall not be payable on such Interest Payment
Date and shall not be paid to the Person in whose name that Debenture is
registered at the close of business on such Regular Record Date.
Until February 15, 1999, interest on the Debentures may, at the
option of Swing-N-Slide (which option Swing-N-Slide currently intends to
exercise), be paid in the form of additional Debentures, issued pursuant
to the Indenture, in the principal amount of the interest so payable,
dated the Interest Payment Date for such interest payment, with interest
payable as provided in the Indenture with a Stated Maturity of principal
and interest as provided in the Indenture and otherwise identical to the
Debentures. It is Swing-N-Slide's present intent to exercise its option
to pay interest in the form of additional Debentures. Therefore, the
payment of interest on October 15, 1998 will likely consist of additional
Debentures in a principal amount of the interest accrued from the date of
issuance through October 15, 1998, and the payment of interest on April
15, 1999 will likely consist of additional Debentures in the principal
amount of the interest accrued from October 15, 1998 through February 15,
1999 together with a cash payment for interest accrued from February 15,
1999 through April 15, 1999. The aggregate principal amount of additional
Debentures that may be issued in lieu of cash payment is $212,395,
assuming all $3,333,333 of Debentures offered hereby are purchased and the
Debentures are issued on July 1, 1998.
Principal or premium, if any, and interest on the Debentures will be
payable, the Debentures will be convertible, and the Debentures may be
presented for registration of transfer or exchange at the office or agency
of Swing-N-Slide maintained for such purpose. At the option of Swing-N-
Slide, payment of interest may be made by check (or Debentures, as
described above) mailed to the holders of the Debentures (individually a
"Holder" and collectively the "Holders") at the addresses set forth upon
the registry books of Swing-N-Slide. No service charge will be made on
any registration of transfer or exchange of the Debentures, but Swing-N-
Slide may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. Until otherwise
designated by Swing-N-Slide, Swing-N-Slide's office or agency will be the
office of the Trustee presently located at 1555 North Rivercenter Drive,
Suite 301, Post Office Box 2077, Milwaukee, Wisconsin 53201-2077.
The covenants and provisions contained in the Indenture and the
Debentures would not necessarily afford the Holders protection in the
event of a highly-leveraged transaction involving Swing-N-Slide, including
a leveraged transaction initiated or supported by Swing-N-Slide, the
management of Swing-N-Slide or any affiliate of either party.
Authentication and Delivery
Any time and from time to time after the execution and delivery of
the Indenture, the Company may deliver Debentures executed by the Company
to the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Debentures. The Trustee will, in
accordance with such Company Order, authenticate and deliver such
Debentures as provided in the Indenture.
Conversion Rights
The Holder of any Debentures will have the right, at the Holder's
option, at any time prior to maturity, to convert the principal amount
thereof (or any portion of the principal thereof which is $1 or an
integral multiple of $1) into fully paid and nonassessable (except as
otherwise provided by law) shares of Common Stock of Swing-N-Slide at the
conversion price of $4.70 per share (except in the case of Second Series
Debentures issued to GreenGrass and the other holders of First Series
Debentures in exchange thereof or as interest thereon, which shall be
convertible at a price of $4.80 per share), subject to adjustment as
described below. The right to convert a Debenture, or portion thereof,
called for redemption will terminate on the close of business on the 5th
Business Day prior to the Redemption Date for such Debentures, or portion
thereof, unless Swing-N-Slide subsequently fails to pay the applicable
Redemption Price.
No fractional shares will be issued upon conversion but, in lieu
thereof, an appropriate amount will be paid in cash by Swing-N-Slide based
on the market price of Common Stock (as determined in accordance with the
Indenture) at the close of business on the day of conversion.
The Conversion Price will be subject to adjustment in certain events,
including: (a) any dividend payable in Common Stock on Common Stock, (b)
any issuance to all holders of Common Stock of rights or warrants
entitling them to subscribe for or purchase Common Stock at less than the
then current market price (as determined in accordance with the Indenture)
of Common Stock, and (c) any subdivision, combination or reclassification
of Common Stock. In the event of any distribution to all holders of
Common Stock of capital stock (other than Common Stock), evidence of
indebtedness of Swing-N-Slide or assets (excluding cash dividends paid out
of retained earnings of Swing-N-Slide) or rights or warrants to subscribe
or purchase (excluding those referred to in (b) above) (collectively
referred to as "Distributions on Common Stock"), then in each such case,
each Holder shall receive the Distribution on Common Stock to which such
Holder would be entitled if he, she or it had converted the Debentures for
Common Stock immediately prior to the record date for the purpose of
determining stockholders entitled to receive such Distribution on Common
Stock.
Swing-N-Slide reserves the right to make such reductions in the
conversion rate, in addition to those required in the Indenture, as it
considers to be advisable in order that any event treated for federal
income tax purposes as a dividend of stock or stock rights shall not be
taxable to the recipients. No adjustment in the conversion rate shall be
required unless the cumulative adjustments amount to 1% or more of the
conversion price as last adjusted.
Within 10 days after receipt of any Debenture and an election to
convert all or a portion of the principal amount of such Debenture
pursuant to the terms of the Indenture, Swing-N-Slide will pay to the
Holder any unpaid interest accrued to the date of conversion of such
Debenture, on the principal amount converted, provided that until February
15, 1999, such interest may, at the option of the Swing-N-Slide, be paid
by the issuance of additional Debentures as described in the Indenture.
In the case of any consolidation of Swing-N-Slide with, or merger of
Swing-N-Slide into, any other Person (with certain exceptions) or any sale
or transfer of all or substantially all of the assets of Swing-N-Slide
(whether such assets are held by Swing-N-Slide or its Subsidiaries), the
Holder of each Debenture then outstanding shall have the right thereafter,
during the period such Debenture shall be convertible, under the
Indenture, to convert such Debenture only into the kind and amount of
securities, cash and other property receivable upon such consolidation,
merger, sale or transfer by a holder of the number of shares of Common
Stock of Swing-N-Slide into which such Debenture might have been converted
immediately prior to such consolidation, merger, sale or transfer assuming
such holder of Common Stock (i) is not a party to such transaction or an
Affiliate of a party to such transaction, and (ii) failed to exercise any
rights of election and received per share the kind and amount received per
share by a plurality of non-electing shares.
Subordination; Additional Indebtedness
The Debentures are general unsecured obligations of Swing-N-Slide,
subordinated in right of payment to all existing and future Senior
Indebtedness. The Senior Indebtedness currently consists of Swing-N-
Slide's guaranty of money borrowed by Newco, Swing-N-Slide's wholly-owned
subsidiary, whether outstanding on the date hereof or hereafter, and all
renewals, extensions and refundings of such borrowings. As of December
31, 1997, the Newco Indebtedness was approximately $68,565,000. There is
no restriction in the Indenture on the incurrence of additional Newco
Indebtedness, nor is there any restriction on Swing-N-Slide's ability to
guarantee any such Newco Indebtedness, thereby creating additional Senior
Indebtedness to which the Debentures are subordinate. Moreover, there is
no restriction on Swing-N-Slide's ability to incur any other indebtedness,
whether or not senior to the Debentures. The subordination provisions of
the Indenture are intended solely for the purpose of defining the relative
rights of the Holders of the Debentures, on the one hand, and holders of
Senior Indebtedness, on the other. Nothing in the Indenture's
subordination provisions is intended to or will affect the relative rights
against Swing-N-Slide of the Holders of the Debentures and creditors of
the Company other than the holders of Senior Indebtedness.
The Indenture provides that (a) in the event and during the
continuation of any default in the payment of principal (or premium, if
any) or interest on any Newco Indebtedness beyond any applicable grace
period with respect thereto, or in the event that any event of default
with respect to any Newco Indebtedness shall have occurred and be
continuing permitting the holders of such Newco Indebtedness (or Trustee
on behalf of the holders thereof) to declare such Newco Indebtedness due
and payable prior to the date on which it would otherwise have become due
and payable, unless and until such event of default shall have been cured
or waived or shall have ceased to exist and such acceleration shall have
been rescinded or annulled, or (b) in the event any judicial proceeding
shall be pending with respect to any such default in payment or event of
default, then no payment (including any payment which may be payable by
reason of the payment of any other indebtedness of Swing-N-Slide being
subordinated to the payment of the Debentures) may be made by Swing-N-
Slide on account of principal of (or premium, if any) or interest on the
Debentures or on account of the purchase or other acquisition of
Debentures.
In the event that, notwithstanding the foregoing, Swing-N-Slide shall
make any payment to the Trustee or the Holder of any Debenture prohibited
by the foregoing, and if such fact shall then have been made known to the
Trustee or, as the case may be, such Holder, then and in such event such
payment shall be paid over and delivered forthwith to Swing-N-Slide for
the benefit of the holders of Newco Indebtedness.
Upon any distribution of assets of Swing-N-Slide in the event of (a)
any insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or other similar case or proceeding in
connection therewith, relative to Swing-N-Slide or to its creditors, as
such, or to its assets, or (b) any liquidation, dissolution or other
winding up of Swing-N-Slide, or (c) any assignment for the benefit of
creditors or any other marshalling of assets and liabilities of Swing-N-
Slide, then the holders of Senior Indebtedness will be entitled to receive
payment in full of all amounts due or to become due on or in respect of
all Senior Indebtedness, or provision shall be made for such payment,
before Holders of Debentures are entitled to receive any payment on
account of principal of (or premium, if any) or interest on the
Debentures.
Notwithstanding any other provision in the Indenture, each Holder
shall have the right, which is absolute and unconditional, to receive
payment of the principal of (and premium, if any) and interest on
Debentures on the date when due (or, in the case of redemption, on the
Redemption Date) and to convert Debentures in accordance with the
Indenture and to institute suit for the enforcement of any such payment
and right to convert.
As a result of these subordination provisions, in the event of the
liquidation, bankruptcy, reorganization, insolvency, receivership or
similar proceeding or an assignment for the benefit of the creditors of
Swing-N-Slide or any of its Subsidiaries or a marshalling of assets or
liabilities of Swing-N-Slide and its Subsidiaries, Holders of Debentures
may receive ratably less than other creditors, including possibly nothing
at all.
Redemption at Swing-N-Slide's Option
The Debentures will be subject to redemption upon not less than 45
nor more than 60 days' notice by mail, at any time, as a whole or in part,
at the election of Swing-N-Slide, at a Redemption Price equal to 100% of
the principal amount, together with accrued but unpaid interest to the
Redemption Date. The Debentures will not be subject to any sinking fund.
See "Risk Factors--Funding of Repurchase Obligations; Absence of a Sinking
Fund."
Notice of any redemption will be sent by first-class mail, at least
45 days and not more than 60 days prior to the Redemption Date, to each
Holder whose Debentures are to be redeemed at his, her or its address
appearing in the Security Register. The notice of redemption must state
(a) the Redemption Date, (b) the Redemption Price, (c) if less than all of
the outstanding Debentures are to be redeemed, the identification (and, in
the case of partial redemption, the principal amounts) of the particular
Debentures to be redeemed, (d) that on the Redemption Date the Redemption
Price will become due and payable upon each such Debenture to be redeemed
and that interest thereon will cease to accrue on and after said date, (e)
the conversion rate, the date on which the right to convert the principal
of the Debentures to be redeemed will terminate and the place or places
where such Debentures may be surrendered for conversion, and (f) the place
or places where such Debentures are to be surrendered for payment of the
Redemption Price.
Repurchase of Debentures Upon Occurrence of Contingent Event
In the event that a Contingent Event (as defined below) occurs, each
Holder, at his option, may by written notice require Swing-N-Slide to
purchase his, her or its Debentures, in whole or, in part, at the
repurchase price (the "Repurchase Price") equal to the principal amount of
Debentures so purchased plus accrued but unpaid interest, on the date (the
"Repurchase Date") specified by the Holder (which is not less than 15 days
after receipt of such notice by Swing-N-Slide, but in no event earlier
than such Contingent Event, except that such date may be the same date as
a Contingent Event if requested by the Holder). This obligation to
repurchase is subject to the restriction that Swing-N-Slide may not
repurchase Debentures at any time when the Indenture's subordination
provisions would prohibit Swing-N-Slide from making a payment of
principal, premium or interest on the Debentures.
As used herein, "Contingent Event" means any one or more of the
following events which shall occur subsequent to the date of the first
issuance of the Debentures:
a. Swing-N-Slide shall convey, transfer or lease all or
substantially all of its assets (whether held directly or indirectly
through Subsidiaries) to any Person (other than a Subsidiary of
Swing-N-Slide);
b. any Person (other than Swing-N-Slide), including a "group"
(within the meaning of Sections 13(d) and 14(d)(2) of the Exchange
Act) that includes such Person, shall acquire, directly or
indirectly, beneficial ownership, in the aggregate, of (i) 50% or
more of the Common Stock, or (ii) securities representing 50% or more
of the combined voting power of Swing-N-Slide's voting securities, in
either case, outstanding on the date immediately prior to the date of
the last such acquisition by such Person; or
c. on any day (a "Calculation Date") (i) (A) Swing-N-Slide
shall distribute cash, securities or other properties, including cash
dividends (other than Common Stock, or rights or warrants to acquire
Common Stock or preferred stock substantially equivalent to Common
Stock) to holders of Common Stock, whether by means of dividend,
reclassification, recapitalization or otherwise, or (B) Swing-N-Slide
shall acquire, directly or indirectly, beneficial ownership of Common
Stock; and (ii) the sum of the Applicable Percentages (as defined
below) of all such distributions and acquisitions which have occurred
on the Calculation Date and during the 365-day period immediately
preceding the Calculation Date shall exceed 30%.
As used herein, "Applicable Percentage" means (i) in the case of each
distribution referred to in clause (c) above, the percentage determined as
of the Calculation Date of each such distribution by dividing the
aggregate fair market value (as determined in good faith by the Board of
Directors of Swing-N-Slide) of such distribution by the fair market value
(based on the then current market price) of all of the shares of Common
Stock outstanding on the day immediately prior to such Calculation Date;
and (ii) in the case of each acquisition referred to in clause (c) above,
the percentage determined as of the Calculation Date of each such
acquisition by dividing all amounts expended by Swing-N-Slide (such
amounts, if other than in cash, as determined in good faith by the Board
of Directors of Swing-N-Slide) in connection with the acquisition of any
shares of Common Stock by the fair market value (based on the then current
market price) of all of the shares of Common Stock outstanding on the day
immediately prior to such Calculation Date.
The term "all or substantially all" is likely to be interpreted by
reference to applicable state law at the time applicable, and will be
dependent on the facts and circumstances existing at such time. As a
result, there may be a degree of uncertainty in ascertaining whether a
sale or transfer of "all or substantially all" of the assets of Swing-N-
Slide has occurred. In addition, no assurances can be given that Swing-N-
Slide will be able to acquire the Debentures tendered upon the occurrence
of a Contingent Event. See "Risk Factors--Holding Company Structure:
Subordination," "Risk Factors -- Substantial Indebtedness" and "Risk
Factors--Funding of Repurchase Obligations; Absence of a Sinking Fund."
To the extent applicable and if required by law, Swing-N-Slide will
comply with Section 14 of the Exchange Act and the provisions of
Regulation 14E, Rule 13E-4 and any other tender offer rules under the
Exchange Act and any other securities laws, rules and regulations which
may then be applicable to any offer by Swing-N-Slide to purchase
Debentures at the option of Holders upon a Contingent Event.
The obligation of Swing-N-Slide to repurchase Debentures as a result
of the occurrence of a Contingent Event could create an event of default
under the Senior Indebtedness as a result of which any repurchase could,
absent a waiver, be blocked by the subordination provisions of the
Debentures. See "Subordination." Failure of Swing-N-Slide to repurchase
the Debentures when required would result in a default with respect to the
Debentures except when such repurchase is not permitted by the
subordination provisions.
The right to require Swing-N-Slide to repurchase the Debentures upon
the occurrence of certain events could make more difficult, and thereby
discourage, attempts to acquire control of Swing-N-Slide. Repurchasing
the Debentures might adversely affect Swing-N-Slide's capital structure by
causing the replacement of the Debentures by other financing. In
addition, such a repurchase would consume cash or borrowing capacity of
Swing-N-Slide that otherwise might be employed by a prospective acquiror
as a means of financing its acquisition of control.
Limitation on Merger, Sale or Consolidation
The Indenture provides that Swing-N-Slide may not consolidate with or
merge into any other Person or convey, transfer or lease its properties
and assets substantially as an entirety (whether such properties and
assets are held by Swing-N-Slide directly or through its Subsidiaries) to
any Person, unless:
(1) the Person formed by such consolidation or into which
Swing-N-Slide is merged or the Person which acquires by conveyance or
transfer, or which leases, the properties and assets of Swing-N-Slide
substantially as an entirety shall be a corporation organized and
existing under the laws of the United States of America, any State
thereof or the District of Columbia and shall expressly assume, by a
supplemental indenture, all of the obligations of Swing-N-Slide in
connection with the Debentures and the Indenture and shall have
provided for conversion rights in accordance with the Indenture; and
(2) immediately after giving effect to such transaction, no
Event of Default (as defined below), and no event which, after notice
or lapse of time or both, would become an Event of Default, shall
have happened and be continuing.
Upon any consolidation or merger by Swing-N-Slide with or into any
other Person or any conveyance, transfer or lease of the properties and
assets of Swing-N-Slide substantially as an entirety in accordance with
the foregoing, the successor corporation formed by such consolidation or
into which Swing-N-Slide is merged or to which such conveyance, transfer
or lease is made shall succeed to, and be substituted for, and may
exercise every right and power of Swing-N-Slide under the Indenture with
the same effect as if such successor corporation had been named therein as
Swing-N-Slide.
Reports
Swing-N-Slide shall deliver to the Trustee its annual and quarterly
reports within 15 days after it is required to file such reports with the
Commission pursuant to the reporting requirements of Section 13 or 15(d)
of the Exchange Act. If Swing-N-Slide is not required to file
information, documents or reports pursuant to either Section 13 or Section
15(d) of the Exchange Act, then it shall file with the Trustee and the
Commission, in accordance with rules and regulations prescribed by the
Commission, such of the supplementary and periodic information, documents,
and reports which may be required pursuant to Section 13 of the Exchange
Act, in respect of a security listed and registered on a national
securities exchange as may be prescribed in such rules and regulations.
In addition, the Indenture requires Swing-N-Slide, each year, to deliver
to the Trustee an Officers' Certificate stating that Swing-N-Slide
fulfilled all of its obligations under the Indenture during such year, or,
if there has been a default, describing the default.
Events of Default and Remedies
The Indenture defines an "Event of Default" as (i) default in the
payment of any interest upon any Debenture when it becomes due and payable
and continuance of such default for a period of at least 10 days; or (ii)
default in the payment of the principal of (or premium, if any, on) any
Debenture at its Maturity whether or not such payment is prohibited by the
subordination provisions of the Indenture and continuance of such default
for a period of at least 30 days; or (iii) default in the performance, or
breach, of any covenant or warranty of Swing-N-Slide in the Indenture
(other than a covenant or warranty a default in whose performance or whose
breach is elsewhere in the Indenture specifically dealt with), and
continuance of such default or breach for a period of at least 30 days
after there has been given, by registered or certified mail, to Swing-N-
Slide by the Trustee or to Swing-N-Slide and the Trustee by Holders of at
least 10% in principal amount of the outstanding Debentures a written
notice specifying such default or breach and requiring it to be remedied
and stating that such notice is a "Notice of Default" under the Indenture;
or (iv) certain events of bankruptcy, insolvency or reorganization in
respect of Swing-N-Slide. The Indenture provides that if a default occurs
thereunder, the Trustee must, within 90 days after the occurrence of such
default, give the Holders written notice of the default unless such
default shall have been cured or waived; provided, however, that, except
in the case of a default in the payment of the principal of (or premium,
if any) or interest on any Security, the Trustee will be protected in
withholding such notice if and so long as the board of directors, the
executive committee or a trust committee of directors or Responsible
Officers of the Trustee in good faith determine that the withholding of
such notice is in the interest of the Holders; and provided further that
in the case of any default involving certain involuntary events of
bankruptcy, insolvency or reorganization specified in the Indenture in
respect of Swing-N-Slide, no such notice to Holders will be given until at
least 30 days after the occurrence thereof. For the purpose of this
paragraph, the term "default" means any event which is, or after notice or
lapse of time or both would become, an Event of Default.
The Indenture provides that if an Event of Default, other than an
Event of Default described in item (iv) of the preceding paragraph, occurs
and is continuing, then in every such case the Trustee or the Holders of
not less than 25% in principal amount of the outstanding Debentures may
declare the principal of all the Debentures to be due and payable
immediately, by a notice in writing to Swing-N-Slide (and to the Trustee
if given by the Holders). If an Event of Default described in item (iv)
of the preceding paragraph occurs, then in every such case the unpaid
principal balance and all accrued and unpaid interest shall automatically
become due and payable. The Holders of no less than a majority in
principal amount of the outstanding Debentures generally are authorized to
rescind such acceleration if all existing Events of Default, other than
the nonpayment of the principal of Debentures which have become due solely
by such declaration of acceleration, have been cured or waived.
Prior to the declaration of acceleration, the Holders of not less
than a majority in principal amount of the outstanding Debentures may on
behalf of the Holders of all Debentures waive any past default under the
Indenture except a default in payment of principal of (or premium, if any)
or interest on any Debenture, and certain other defaults described in the
Indenture. Subject to the provisions of the Indenture relating to the
duties of the Trustee, the Trustee will be under no obligation to exercise
any of the rights or powers vested in it by the Indenture at the request
or direction of any of the Holders pursuant to the Indenture, unless such
Holders shall have offered to the Trustee reasonable security or
indemnity. Subject to the provisions of the Indenture and applicable law,
the Holders of a majority in aggregate principal amount of outstanding
Debentures will 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. The Indenture
provides that for purposes of (1) directing the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power available to the Trustee, (2) consenting to
the waiver of any past default, and (3) determining whether the Trustee
will be protected in relying on any such direction or consent, in
determining whether the Holders of the required principal amount of
outstanding Debentures have concurred in any such direction or consent,
outstanding Debentures owned by Swing-N-Slide, or by any Affiliate of
Swing-N-Slide (which includes GreenGrass at this time), will be
disregarded, except that for purposes of determining whether the Trustee
will be protected in relying on any such direction or consent, only
outstanding Debentures which the Trustee knows are so owned will be so
disregarded. Except as otherwise provided in the preceding sentence, when
GreenGrass exchanges its First Series Debentures for Second Series
Debentures governed by the Indenture, it would be able to exercise
substantial, and often decisive, control over issues involving the
Debentures and the Indenture. See "Risk Factors--Controlling Interest in
the Company and the Indenture."
Amendments and Supplements
The Indenture contains provisions permitting Swing-N-Slide and the
Trustee to enter into a supplemental indenture for certain limited
purposes without the consent of the Holders. With the consent of the
Holders of not less than two-thirds in aggregate principal amount of the
outstanding Debentures, Swing-N-Slide and the Trustee are permitted to
amend or supplement the Indenture or any supplemental indenture or modify
the rights of the Holders; provided, that no such modification may,
without the consent of each Holder of outstanding Debentures affected
thereby, (i) change the Stated Maturity of the principal of, or any
installment of interest on, any Debenture, or reduce the principal amount
thereof or the rate of interest thereon or any premium payable upon the
redemption thereof, or change the place of payment where, or the coin or
currency in which, any Debenture or any premium or interest thereon is
payable, or impair the right to institute suit for the enforcement of any
payment on or with respect to any Debentures, or adversely affect the
right to convert any Debenture as provided in the Indenture or modify the
provisions of the Indenture with respect to the subordination of the
Debentures in a manner adverse to the Holders, or (ii) reduce the
percentage in principal amount of outstanding Debentures, the consent of
whose Holders is required for any such supplemental indenture, or the
consent of whose Holders is required for any waiver provided for in the
Indenture, or (iii) modify any of the provisions relating to amendments
and supplements with consent of Holders or waiver of past default
provisions, except to increase any such percentage or to provide that
certain other provisions of the Indenture cannot be modified or waived
without the consent of the Holder of each outstanding Debenture affected
thereby. Assuming that all $3,333,333 principal amount of Debentures are
issued hereunder, GreenGrass will, after it exchanges its First Series
Debentures for Second Series Debentures governed by the Indenture, possess
at least approximately 64% of all Debentures governed by the Indenture.
See "Risk Factors -- Controlling Interest in the Company and the
Indenture."
Satisfaction and Discharge
The Indenture will cease to be of further effect (except as to any
surviving rights of conversion, registration of transfer or exchange of
the Debentures expressly provided for in the Indenture), and the Trustee,
on the demand of and at the expense of Swing-N-Slide, must execute proper
instruments acknowledging satisfaction and discharge of the Indenture,
when (1) either (i) all Debentures authenticated and delivered (other than
(x) Debentures which have been destroyed, lost or stolen and which have
been replaced or repaid and (y) Debentures for whose payment money has
been deposited in trust or segregated and held in trust by Swing-N-Slide
and thereafter repaid to Swing-N-Slide or discharged from such trust) have
been delivered to the Trustee for cancellation; or (ii) all such
Debentures not delivered to the Trustee for cancellation (A) have become
due and payable; (B) will become due and payable at their Stated Maturity
within one year; or (C) are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of Swing-N-
Slide; and Swing-N-Slide, in the case of (A), (B) or (C) above, has
deposited or caused to be deposited with the Trustee as trust funds in
trust for the purpose an amount sufficient to pay and discharge the entire
indebtedness on such Debentures not delivered to the Trustee for
cancellation, for principal (and premium, if any) and interest to the date
of such deposit (in the case of Debentures which have become due and
payable) or to the Stated Maturity or Redemption Date, as the case may be;
(2) Swing-N-Slide has paid or caused to be paid all other sums payable
under the Indenture by Swing-N-Slide; and (3) Swing-N-Slide has delivered
to the Trustee an Officers' Certificate and an Opinion of Counsel, each
stating that all conditions precedent herein provided for the satisfaction
and discharge of the Indenture have been complied with.
Trustee
The name of the Trustee is Firstar Bank Milwaukee, N.A.
Certain Definitions
"Affiliate" of any specified person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this
definition, "control" when used with respect to any specified Person means
the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in New York, New
York are authorized or obligated by law or executive order to close.
"Company Order" means a written request or order signed in the name
of the Company by its Chairman of the Board, its President or a Vice
President, and by its Treasurer, an Assistant Treasurer, its Secretary or
an Assistant Secretary, and delivered to the Trustee.
"Debt" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of
such Person evidenced by bonds, debentures, notes or other similar
instruments, (iii) all obligations of such Person as lessee under leases
which are or may be capitalized under generally accepted accounting
principles, (iv) all Debt of others secured by a lien on any asset of such
Person, whether or not such Debt is assumed by such Person, or (v) all
Debt of others for the payment of which such Person is responsible or
liable as obligor, guarantor or otherwise.
"Interest Payment Date" means the Stated Maturity of an installment
of interest on the Debentures.
"Maturity" when used with respect to any Debenture means the date on
which the principal of such Debenture becomes due and payable as therein
or herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise.
"Newco Indebtedness" means the principal, premium, if any, and unpaid
interest on indebtedness for money borrowed by Newco and guaranteed by
Swing-N-Slide (at any time and from time to time), whether outstanding on
the date hereof or hereafter, and all renewals, extensions and refundings
of any such Debt; provided, however, that the following shall not
constitute Newco Indebtedness: any Debt which by its terms refers
explicitly to the Debentures issued hereunder and states that such Debt
shall not be senior in right of payment thereto.
"Officers' Certificate" means a certificate signed by the Chairman of
the Board, the President or Vice President, and by the Treasurer, an
Assistant Treasurer, the Secretary or an Assistant Secretary of the
Company, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company or other counsel acceptable to the Trustee.
"Person" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated
organization or government or any agent or political subdivision thereof.
"Redemption Date," when used with respect to any Debenture to be
redeemed, means the date fixed for such redemption by or pursuant to the
Indenture.
"Redemption Price" when used with respect to any Debenture to be
redeemed, means the price at which it is to be redeemed pursuant to the
Indenture.
"Regular Record Date" for the interest payable on any Interest
Payment Date means the April 1st or the October 1st (whether or not a
Business Day), as the case may be, next preceding such Interest Payment
Date.
"Responsible Officer," when used with respect to the Trustee, means
any officer of the Trustee assigned by the Trustee to administer its
corporate trust matters and also means, with respect to a particular trust
matter, any other officer to whom such matter is referred because of his
or her knowledge of and familiarity with the particular subject.
"Senior Indebtedness" means all Debts, obligations and liabilities of
Swing-N-Slide arising under the guarantee by Swing-N-Slide of the Newco
Indebtedness, whether such guarantee is outstanding on the date hereof or
hereafter, and all renewals, replacements and extensions thereof. The
Indenture does not restrict the Company's ability to incur additional
"Senior Indebtedness" or indebtedness senior to the Debentures other than
"Senior Indebtedness" as defined herein. See "Risk Factors--Substantial
Indebtedness."
"Stated Maturity," when used with respect to any Debenture or any
installment of interest thereon, means the date specified in such
Debenture as the fixed date on which the principal of such Debenture or
such installment of interest is due and payable.
"Subsidiary" means a corporation more than 50% of the outstanding
voting stock of which is owned, directly or indirectly, by Swing-N-Slide
or by one or more other Subsidiaries, or by Swing-N-Slide and one or more
other Subsidiaries. For the purposes of this definition, "voting stock"
means stock which ordinarily has voting power for the election of
directors, whether at all times or only so long as no senior class of
stock has such voting power by reason of any contingency.
DESCRIPTION OF CAPITAL STOCK
Debentures are convertible, under the terms and conditions of the
Indenture, into Common Stock (as defined below). See "Description of
Debentures." Swing-N-Slide has 31,750,000 authorized shares of capital
stock, divided into three classes as follows: 25,000,000 shares, par
value $0.01 per share, of common stock (for purposes of this section, the
"Common Stock"), 1,750,000 shares, par value $0.01 per share, of Class B
Common Stock (the "Class B Common Stock"), and 5,000,000 shares, par value
$0.01 per share of Preferred Stock (the "Preferred Stock"). As of the
date hereof, 7,908,964 shares of Common Stock were issued and outstanding,
and no shares of Class B Common Stock or Preferred Stock were issued or
outstanding. All outstanding shares of Common Stock are fully paid and
nonassessable (except as otherwise provided by law).
Common Stock
Holders of Common Stock are entitled to one vote per share on all
matters which, pursuant to the Delaware General Corporation Law (the
"DGCL"), require the approval of Swing-N-Slide's stockholders. Holders of
Class B Common Stock have no right to vote on any matters to be voted on
by Swing-N-Slide's stockholders. GreenGrass' ownership of approximately
68% of the currently issued and outstanding Common Stock (approximately
72% if GreenGrass converted all $5,853,007 aggregate principal amount in
First Series Debentures into Common Stock and if GreenGrass exercised its
right to purchase 50,000 shares under its warrant), along with GreenGrass'
potential ownership of at least approximately 64% of the Debentures
governed by the Indenture, give it effective control over Swing-N-Slide.
See "Risk Factors--Controlling Interest in the Company and the Indenture."
In the event of a liquidation, dissolution or winding up of Swing-N-
Slide, holders of Common Stock and Class B Common Stock are entitled to
participate ratably in all distributions after payment of liabilities and
satisfaction of any preferential rights of holders of Preferred Stock, if
any. Holders of Common Stock and Class B Common Stock are not entitled to
any preemptive rights. Subject to any preferences that may be applicable
to any outstanding shares of Preferred Stock, holders of Common Stock and
Class B Common Stock are entitled to receive cash dividends ratably on a
per share basis if and when such dividends are declared by the Board of
Directors from funds legally available therefor. But see "Risk Factors--
No Dividends."
Shares of Common Stock can be converted into shares of Class B Common
Stock by "Regulated Stockholders" (defined in Swing-N-Slide's Amended and
Restated Certificate of Incorporation to mean stockholders who, among
other things, are subject to Regulation Y of the Board of Governors of the
Federal Reserve System). Currently, there are no Regulated Stockholders.
Each holder of Class B Common Stock can convert it into Common Stock under
certain circumstances described in the Amended Certificate of
Incorporation. Currently, there are no holders of Class B Common Stock.
The rights, preferences, and privileges of Common Stock and Class B
Common Stock are subject to, and may be adversely affected by, the rights
of holders of shares of any series of Preferred Stock which Swing-N-Slide
may designate and issue in the future.
Preferred Stock
The Board of Directors of Swing-N-Slide is authorized to provide for
the issuance by Swing-N-Slide of Preferred Stock in one or more series and
to fix the rights, preferences, privileges, qualifications, limitations,
and restrictions thereof, including, without limitation, dividend rights,
dividend rates, conversion rights, voting rights, terms of redemption or
repurchase, redemption or repurchase prices, limitations or restrictions
thereon, 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 any series of Preferred Stock
may have an adverse effect on the rights of holders of Common Stock, and
could decrease the amount of earnings and assets available for
distribution to holders of Common Stock. In addition, any issuance of
Preferred Stock could have the effect of delaying, deferring or preventing
a change in control of Swing-N-Slide. Swing-N-Slide has no present plans
to issue any shares of Preferred Stock.
Section 203 of the Delaware Law
Generally, Section 203 of the DGCL prohibits certain Delaware
corporations from engaging in a business combination with an interested
stockholder for a period of three years after the date of the transaction
in which the person became an interested stockholder, subject to certain
exceptions. A Delaware corporation may "opt out" from the application of
Section 203 of the DGCL through a provision in its certificate of
incorporation or by-laws. Swing-N-Slide has "opted out" from the
application of Section 203. Swing-N-Slide's election not to be governed
by Section 203 will not, however, apply to any business combination
between Swing-N-Slide and any person who became an interested stockholder
on or prior to June 18, 1992.
Certain Certificate of Incorporation and Bylaw Provisions
The Amended and Restated Certificate of Incorporation (the "Amended
Certificate of Incorporation") of Swing-N-Slide provides that the number
of directors of Swing-N-Slide shall consist of not less than one and not
more than ten, with the exact number to be determined by a vote of a
majority of the Board. There are currently seven members of the Board of
Directors. Any vacancies on the Board may be filled for the unexpired
portion of the term by a majority vote of the remaining directors.
Election of directors at all meetings of the stockholders at which
directors are to be elected shall be by ballot, and, except as may be
limited by the rights of holders of Preferred Stock, a plurality of votes
cast thereat shall elect. Except as otherwise provided by law or the
Amended Certificate of Incorporation, all matters other than the election
of directors submitted to the stockholders at any meeting shall be decided
by a majority of the votes cast with respect thereto.
The Amended Certificate of Incorporation prohibits stockholders of
Swing-N-Slide from taking action by written consent without a meeting of
stockholders. The Amended Certificate of Incorporation provides, with
certain exceptions, that meetings of stockholders of the Corporation may
be called only by the Chairman of the Board of Directors or the President
of Swing-N-Slide, a majority of the Board of Directors, or holders of a
majority of the shares of Common Stock. The Amended Certificate of
Incorporation and Amended and Restated Bylaws of Swing-N-Slide, as amended
(the "Bylaws"), further provide that nominations for the election of
directors and advance notice of other action to be taken at meetings of
stockholders of Swing-N-Slide must be given in the manner provided in the
Bylaws, and the Bylaws contain detailed notice requirements relating to
nominations and other action.
Swing-N-Slide may change or repeal any provision contained in the
Amended Certificate of Incorporation (except as provided below) and any
other provision authorized by the laws of the State of Delaware at the
time in force may be added (except as provided below) in the manner
prescribed by law. Notwithstanding the foregoing, the affirmative vote of
the holders of at least a majority of the voting power of the shares of
the then outstanding voting stock of Swing-N-Slide, voting together as a
single class, shall be required to amend or repeal, or adopt any
provisions inconsistent with, Articles FIFTH (election of directors),
EIGHTH (indemnification of directors and officers), NINTH (limiting
liability of directors for money damages), or TENTH (stockholders meeting
requirements).
GreenGrass' position as majority stockholder and Debenture holder
will, in most instances, allow it to effectively prevent changes of
control of the Company without its consent. See "Risk Factors--
Controlling Interest in the Company and the Indenture" and "Risk Factors--
Certain Anti-Takeover Measures."
The provisions in the Indenture obligating Swing-N-Slide to
repurchase the Debentures (and similar provisions with regard to the First
Series Debentures) upon the happening of a Contingent Event could have the
effect of delaying, deferring or preventing a change in control or the
removal of existing management of Swing-N-Slide. See "Description of
Debentures" and "Risk Factors--Certain Anti-Takeover Measures."
Limitation of Liability
Swing-N-Slide's Amended Certificate of Incorporation provides that
directors of Swing-N-Slide shall not be personally liable to Swing-N-Slide
or its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty
of loyalty to Swing-N-Slide or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the DGCL, relating to
prohibited dividends or distributions or the repurchase or redemption of
stock, or (iv) for any transaction from which the director derives an
improper personal benefit. Such limitation of liability does not affect
the availability of equitable remedies such as injunctive relief or
rescission.
Transfer Agent and Registrar
The transfer agent and registrar for Swing-N-Slide is First Chicago
Trust Company of New York, P.O. Box 13701, Newark, New Jersey 07188.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The discussion set forth in this summary is based on the provisions
of the Internal Revenue Code of 1986, as amended (the "Code"), Treasury
regulations promulgated thereunder (the "Treasury Regulations"), and
administrative and judicial interpretations thereof, all as in effect on
the date hereof and all of which are subject to change (possibly on a
retroactive basis). Legislative, judicial or administrative changes or
interpretations may be forthcoming that could affect the tax consequences
to Holders of the Debentures.
This summary is for general information only and does not purport to
address all of the United States federal income tax consequences that may
be applicable to the acquisition, ownership and disposition of the
Debentures. This discussion assumes that the Debentures will be held as
capital assets. The tax treatment of a Holder may vary depending on the
Holder's particular situation. For example, certain Holders, including
individual retirement and other tax-deferred accounts, insurance
companies, tax-exempt organizations, financial institutions, broker-
dealers, foreign corporations, and non-U.S. persons, may be subject to
special rules not discussed below. A ruling from the Internal Revenue
Service ("IRS") on the matters discussed below has not been requested.
Thus, no assurance can be provided that the statements set forth
herein would be sustained by a court if contested by the IRS. The costs
of any contest with the IRS will be borne directly or indirectly by each
Holder or prospective Holder.
EACH PROSPECTIVE PURCHASER OF DEBENTURES SHOULD CONSULT HIS, HER OR
ITS OWN TAX ADVISOR WITH RESPECT TO THE UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES SET FORTH BELOW AND ANY OTHER FEDERAL, STATE, LOCAL OR
FOREIGN TAX CONSEQUENCES OF ACQUIRING, HOLDING, CONVERTING OR DISPOSING OF
THE DEBENTURES.
Original Issue Discount
Because Swing-N-Slide may issue additional Debentures (the "PIKs") in
lieu of paying cash interest on the Debentures on or prior to February 15,
1999, the Debentures are issued with original issue discount within the
meaning of Section 1273 of the Code, and no payment of interest on the
Debentures is treated as "qualified stated interest." Accordingly, each
Holder of a Debenture will recognize, as ordinary income, through the
accrual of original issue discount, the full amount of interest with
respect to the Debenture and such Holder will not recognize ordinary
income upon receipt of a PIK or upon a cash payment of stated interest.
As discussed below, each Holder of a Debenture will be required to include
such original issue discount in income on a constant yield to maturity
basis, regardless of the Holder's method of tax accounting.
The total amount of original issue discount with respect to a
Debenture will be the excess of its stated redemption price at maturity
over its issue price. The issue price of a Debenture is the first price
at which a substantial amount of the Debentures are sold to investors.
The stated redemption price at maturity of a Debenture is the sum of all
amounts payable over the life of the Debenture (determined as if all
interest will be paid in cash and not in PIKs).
Under the Treasury Regulations, the portion of original issue
discount includable in the income of a Holder of a Debenture for any
accrual period is equal to the product of (x) the "adjusted issue price"
of the Debenture at the beginning of the accrual period and (y) the yield
of the Debenture. The "adjusted issue price" of a Debenture is equal to
the original issue price, plus any previously accrued original issue
discount, minus any cash payments previously made on the Debenture or a
PIK issued with respect to such Debenture. An accrual period may be of
any length and may vary in length, provided that each accrual period is no
longer than one year and April 15 and October 15 in each year occur at the
beginning or end of an accrual period.
Original issue discount as determined above will be allocated ratably
to each day in the accrual period, and the amount includable in a Holder's
income (whether such Holder is on the cash or accrual method of
accounting) with respect to the Debenture will be the sum of the resulting
daily portions of original issue discount for each day of the taxable year
on which the Holder holds the Debenture. The amount of original issue
discount required to be accrued annually with respect to a Debenture will
increase each year, reflecting the compounding of original issue discount
on the Debenture. In addition, the amount of original issue discount for
any accrual period may be greater than the amount of cash payments
denominated as interest that are made during the accrual period.
Generally, the tax basis of a Debenture in the hands of the Holder will be
increased by the amount of any original issue discount on the Debenture
that is included in the Holder's income pursuant to these rules and will
be decreased by the amount of any cash payments received with respect to
the Debenture whether such payments are denominated as principal or
interest.
Market Discount
If a Holder acquires a Debenture at a market discount (i.e., at a
price less than the stated redemption price at maturity of the Debenture),
the Debenture is subject to the market discount rules of the Code unless
the market discount is de minimis. Market discount is de minimis if it is
less than one quarter of one percent of the principal amount of the
Debenture multiplied by the number of complete years to maturity after the
Holder acquires the Debenture. Debentures that have more than de minimis
market discount are herein referred to as "Market Discount Notes."
Any gain recognized on the maturity or disposition of a Market
Discount Note will be treated as ordinary income to the extent that such
gain does not exceed the accrued market discount on the Market Discount
Note. In addition, the Holder could be required to defer the deduction of
a portion of the interest paid on any indebtedness incurred or continued
to purchase a Market Discount Note.
A Holder of a debt instrument acquired at a market discount may elect
to include the market discount in income as the discount thereon accrues,
either on a straight line basis or, if elected, on a constant interest
rate basis. The current inclusion election, once made, applies to all
market discount obligations acquired by such Holder on or after the first
day of the first taxable year to which the election applies, and may not
be revoked without the consent of the IRS. If a Holder of a Market
Discount Note elects to include market discount in income in accordance
with the preceding sentence, the foregoing rules with respect to the
recognition of ordinary income on a sale or certain other dispositions of
such Market Discount Note and the deferral of interest deductions on
indebtedness related to such Market Discount Note would not apply.
Amortizable Bond Premium
A Holder that purchases a Debenture for an amount in excess of its
principal amount may elect to treat such excess as "amortizable bond
premium," in which case the amount required to be included in the Holder's
income each year with respect to interest on the Debenture will be reduced
by the amount of amortizable bond premium allocable (based on the yield to
maturity of the Debenture) to such year. Any election to amortize bond
premium shall apply to all debt instruments (other than debt instruments
the interest on which is excludable from gross income) held by the Holder
at the beginning of the first taxable year to which the election applies
or thereafter acquired by the Holder, and is irrevocable without the
consent of the IRS.
Disposition of a Debenture or a PIK
In general, a Holder of a Debenture will recognize gain or loss upon
the sale, exchange, redemption or other taxable disposition of the
Debenture measured by the difference between (i) the amount of cash and
the fair market value of property received and (ii) the Holder's tax basis
in the Debenture (i.e., such Holder's original purchase price as increased
by any original issue discount and market discount previously included in
income by the Holder and decreased by any cash payments received with
respect to the Debenture). If a Holder has received PIKs in lieu of cash
payments of interest on the Debenture and separately disposes of such
Debenture or PIK, the tax basis in the Debenture generally will be
allocated among the Debenture and the PIKs in proportion to their
respective principal amounts. Subject to the original issue discount and
market discount rules discussed above, any such gain or loss will
generally be long-term capital gain or loss, provided the Debenture had
been held for more than 18 months.
Backup Withholding
A Holder of a Debenture may be subject to backup withholding at the
rate of 31% with respect to interest paid on, original issue discount
accrued on, and gross proceeds of a sale of, the Debenture, unless such
Holder (a) is a corporation or qualifies under certain other exempt
categories and, when required, demonstrates this fact or (b) provides a
correct taxpayer identification number, certifies as to no loss of
exemption from backup withholding and otherwise complies with applicable
requirements of the backup withholding rules. A Holder of a Debenture who
does not provide Swing-N-Slide with its correct taxpayer identification
number may be subject to penalties imposed by the IRS. Any amount
withheld under these rules will be creditable against the Holder's federal
income tax liability.
Swing-N-Slide will report to the Holders of the Debentures and the
IRS the amount of any "reportable payments" (including any interest paid
and any original issue discount accrued on the Debentures) and any amount
withheld with respect to the Holders during the calendar year.
Conversion
A Holder will not recognize gain or loss on the conversion of the
Debentures into Common Stock, except with respect to any cash received in
lieu of a fractional share. A Holder who receives cash in lieu of a
fractional share will be treated as if he had received the fractional
share and Swing-N-Slide simultaneously redeemed the fractional share for
the cash payment. Gain or loss recognized on the receipt of cash paid in
lieu of such a fractional share generally will be equal to the difference
between the amount of cash received and the amount of tax basis allocable
to the fractional share treated as having been redeemed. The holding
period of the Common Stock received by the Holder upon conversion of a
Debenture will include the period during which the Debenture was held
prior to conversion. The Holder's aggregate tax basis in the Common Stock
received upon conversion of a Debenture will equal the Holder's aggregate
tax basis in the Debentures exchanged therefor (less the allocable portion
of the basis attributable to any fractional share exchanged for cash).
If a Debenture as to which there is accrued market discount not yet
recognized in taxable income (see "--Market Discount" above) is converted
into Common Stock, such unrecognized accrued discount should carry over to
the Common Stock and any gain realized upon the subsequent disposition of
such Common Stock will, to the extent of such unrecognized accrued market
discount, be taxable as ordinary income.
A taxable distribution to the Holders of the Common Stock which
results in an adjustment of the conversion price of the Debentures may, in
certain circumstances, be treated as a deemed distribution to the Holders.
In certain other circumstances, the absence of such an adjustment may
result in a deemed distribution to the Holders of Common Stock. Such
deemed distributions will be taxable as a dividend, as a return of
capital, or as a capital gain, depending upon the earnings and profits of
the Company.
THE FOREGOING DISCUSSION OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES
IS FOR GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE. ACCORDINGLY, EACH
PROSPECTIVE PURCHASER OF DEBENTURES SHOULD CONSULT HIS, HER OR ITS OWN TAX
ADVISOR WITH RESPECT TO THE TAX CONSEQUENCES OF THE ACQUISITION, OWNERSHIP
AND DISPOSITION OF THE DEBENTURES, INCLUDING THE APPLICATION AND EFFECT OF
STATE, LOCAL, FOREIGN AND OTHER TAX LAWS.
LEGAL MATTERS
The validity of the Debentures and Common Stock registered hereunder
will be passed upon for Swing-N-Slide by Foley & Lardner, Madison and
Milwaukee, Wisconsin.
EXPERTS
The consolidated financial statements and related consolidated
financial statement schedules of Swing-N-Slide Corp. appearing in Swing-N-
Slide's Annual Report on Form 10-K for the year ended December 31, 1997,
which accompanies this Prospectus, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included
therein and incorporated herein by reference. Such consolidated financial
statements and financial statement schedules are incorporated herein by
reference in reliance upon such report given upon the authority of such
firm as experts in accounting and auditing.
No person has been authorized in connection with the Offering made
hereby to give any information or to make any representation not contained
in this Prospectus and, if given or made, such information or
representation must not be relied upon as having been authorized by the
Company or by any other person. This Prospectus does not constitute an
offer to sell or a solicitation of any offer to buy any of the securities
offered hereby to any person or by anyone in any jurisdiction in which it
is unlawful to make such offer or solicitation. Neither the delivery of
this Prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that the information contained
herein is correct as of any date subsequent to the date hereof.
Table of Contents
Page
Available Information . . . . . . . . . . . . . . . . . . . . . . . . . 3
Incorporation of Certain Documents by Reference . . . . . . . . . . . . 3
Prospectus Summary . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Ratio of Earning to Fixed Changes . . . . . . . . . . . . . . . . . . . 14
Recent Developments . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Background of Offering . . . . . . . . . . . . . . . . . . . . . . . . 17
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . 18
Description of Debentures . . . . . . . . . . . . . . . . . . . . . . . 21
Description of Capital Stock . . . . . . . . . . . . . . . . . . . . . 31
Certain Federal Income Tax Considerations . . . . . . . . . . . . . . . 33
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth the estimated expenses in connection
with the issuance and distribution of the securities being registered, all
of which are being borne by the Registrant:
Securities and Exchange Commission
Registration Fee . . . . . . . . . . . . . . . . . . . . . $1,485.08
AMEX Listing fee . . . . . . . . . . . . . . . . . . . . . . . $5,000
Legal fees and expenses . . . . . . . . . . . . . . . . . $35,000.00
Accounting fees and expenses . . . . . . . . . . . . . . . $5,000.00
Printing and mailing fees . . . . . . . . . . . . . . . . $10,000.00
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . $18,514.92
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . $75,000.00
Item 15. Indemnification of Directors and Officers
Set forth below is a description of certain provisions of Swing-N-
Slide's Amended Certificate of Incorporation and Bylaws and the DGCL, as
such provisions relate to the indemnification of the directors and
officers of Swing-N-Slide. This description is intended only as a summary
and is qualified in its entirety by reference to the Amended Certificate
of Incorporation, Bylaws, and the DGCL.
Swing-N-Slide's Amended Certificate of Incorporation provides that
Swing-N-Slide shall, to the full extent permitted by the DGCL, as amended
from time to time, indemnify its directors, officers and certain other
persons (subject to certain conditions and qualifications) and eliminates
the personal liability of its directors to the full extent permitted by
Section 102(b)(7) of the DGCL, as amended from time to time.
Section 145 of the DGCL permits a corporation to indemnify its
directors and officers against expenses (including attorney's fees),
judgments, fines and amounts paid in settlements actually and reasonably
incurred by them in connection with any action, suit or proceeding brought
by third parties, if such directors or officers acted in good faith and in
a manner they reasonably believed to be in or not opposed to the best
interests of the corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe their conduct was unlawful.
In a derivative action, i.e., one by or in the right of the corporation,
indemnification may be made only for expenses actually and reasonably
incurred by directors and officers in connection with the defense or
settlement of an action or suit, and only with respect to a matter as to
which they shall have acted in good faith and in a manner they reasonably
believed to be in or not opposed to the best interests of the corporation,
except that no indemnification shall be made if such person shall have
been adjudged liable for negligence or misconduct in the performance of
his respective duties to the corporation, although the court in which the
action or suit was brought may determine upon application that the
defendant officers or directors are reasonably entitled to indemnification
for such expenses despite such adjudication of liability.
Section 102(b)(7) of the DGCL provides that a corporation may
eliminate or limit the personal liability of a director to the corporation
or its stockholders for monetary damages for breach of fiduciary duty as a
director, provided that such provision shall not eliminate or limit the
liability of a director (i) for any breach of the director's duty of
loyalty to the corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing
violation of law (iii) under Section 174 of the DGCL, or (iv) for any
transaction from which the director derived an improper personal benefit.
No such provision shall eliminate or limit the ability of a director for
any act or omission occurring prior to the date which such provision
becomes effective.
Swing-N-Slide maintains insurance on behalf of its officers and
directors which, subject to certain exceptions, covers liabilities under
the Securities Act of 1933.
Under the Transaction Agreement, Swing-N-Slide is required to
indemnify and provide insurance to the officers and directors of Swing-N-
Slide and Newco, and to certain other persons (the "Indemnified Persons").
These obligations require, among other things, that: (a) for three years
and sixty days after the date on which shares of Common Stock were
purchased in the tender offer (the "Purchase Date"), Swing-N-Slide must
(subject to certain terms, conditions and qualifications) provide
officers' and directors' liability insurance covering each present and
former director or officer of Swing-N-Slide or Newco, and fiduciary
liability insurance covering each present and former Fiduciary (as defined
in the Transaction Agreement), with respect to events, actions and
omissions occurring on or prior to the Purchase Date, including any which
relate to the transactions contemplated by the Transaction Agreement; (b)
for not less than six years after the date on which the tender offer
expired, Swing-N-Slide's certificate of incorporation and bylaws shall
provide indemnification to the Indemnified Persons on terms no less
favorable to the Indemnified Persons than those contained in Swing-N-
Slide's Amended Certificate of Incorporation and Bylaws, and Newco's
Articles of Incorporation and Bylaws, as in effect on January 4, 1996; and
(c) proper provision be made so that Swing-N-Slide's successors, assigns
and transferees of all or substantially all Swing-N-Slide's assets assume
the indemnification and insurance obligations set forth in the Transaction
Agreement (without relieving Swing-N-Slide of its obligations thereunder).
Item 16. Exhibits
Exhibit
Number Description
2.(1) Transaction Agreement dated January 4, 1996 between GreenGrass
Holdings and Swing-N-Slide.(1)
2.(2) Amendment No. 1 to Transaction Agreement dated February 12,
1996 between GreenGrass Holdings and Swing-N-Slide.(2)
2.(3) Amended and Restated Registration Rights Agreement dated March
13, 1997 between GreenGrass Holdings and Swing-N-Slide.(3)
2.(4) Stipulation and Order dated February 13, 1996 relating to
Barbieri v. Swing-N-Slide Corp., et al., Court of Chancery of
the State of Delaware, New Castle County, Civil Action No.
14239.(4)
2.(5) Amended and Restated Stock Purchase Agreement, dated as of
March 13, 1997, by and among Newco, Inc., Game Time, Inc. and
Ross D. Siragusa, Jr., John R. Siragusa and Richard D.
Siragusa.(5)
2.(6) Articles of Merger Merging Game Time, Inc. With and Into Newco,
Inc., dated as of March 13, 1997.(6)
2.(7) Memorandum of Understanding dated December 31, 1997 relating to
Barbieri v. Swing-N-Slide Corp., et al.
4.(i)(1) Indenture dated as of March 27, 1998, between Swing-N-Slide and
Firstar Trust Company relating to 10% Convertible Subordinated
Debentures due 2004.
4.(i)(2) Form of Debenture.
4.(i)(3) Amended and Restated Certificate of Incorporation of Swing-N-
Slide.(7)
5. Opinion of Foley & Lardner.
10.(1) Credit Agreement, dated as of March 13, 1997, among Swing-N-
Slide Corp., Newco, Inc., the Lenders party thereto and Fleet
National Bank, as lender and agent, together with the notes
related thereto.(8)
10.(2) Securities Purchase Agreement, dated as of March 13, 1997,
among Swing-N-Slide Corp., Newco, Inc. and Massachusetts Mutual
Life Insurance Company, together with the notes and warrants
related thereto.(9)
10.(3) Securities Purchase Agreement, dated as of March 13, 1997,
among Swing-N-Slide Corp., Newco, Inc. and MassMutual Corporate
Investors, together with the note and warrant related
thereto.(10)
10.(4) Securities Purchase Agreement, dated as of March 13, 1997,
among Swing-N-Slide Corp., Newco, Inc. and MassMutual
Participation Investors, together with the note and warrant
related thereto.(11)
10.(5) Securities Purchase Agreement, dated as of March 13, 1997,
among Swing-N-Slide Corp., Newco, Inc. and MassMutual Corporate
Value Partners Limited, together with the note and warrant
related thereto.(12)
10.(6) 10% Convertible Subordinated Debenture due 2004, dated February
15, 1996, in the original principal amount of $4,300,000 issued
by Swing-N-Slide Corp. to GreenGrass Holdings (canceled).(4)
10.(7) 10% Convertible Subordinated Debenture due 2004, dated April
25, 1996, in the original principal amount of $700,000 issued
by Swing-N-Slide Corp. to GreenGrass Holdings (canceled).(4)
10.(8) Amended and Restated 10% Convertible Subordinated Debenture due
2004 dated February 15, 1996, in the original principal amount
of $4,300,000 issued by Swing-N-Slide Corp. to GreenGrass
Holdings.
10.(9) Amended and Restated 10% Convertible Subordinated Debenture due
2004 dated April 25, 1996 in the original principal amount of
$700,000 issued by Swing-N-Slide Corp. to GreenGrass Holdings.
10.(10) 10% Convertible Subordinated Debenture due 2004 dated April 15,
1996 in the original principal amount of $70,684.93 issued by
Swing-N-Slide Corp. to GreenGrass Holdings.
10.(11) 10% Convertible Subordinated Debenture due 2004 dated October
15, 1996 in the original principal amount of $19,033.75 issued
by Swing-N-Slide Corp. to GreenGrass Holdings.
10.(12) 10% Convertible Subordinated Debenture due 2004 dated October
15, 1996 in the original principal amount of $218,534.20 issued
by Swing-N-Slide Corp. to GreenGrass Holdings.
10.(13) 10% Convertible Subordinated Debenture due 2004 dated October
15, 1996 in the original principal amount of $9,429.51 issued
by Swing-N-Slide Corp. to James R. Rastetter.
10.(14) 10% Convertible Subordinated Debenture due 2004 dated October
15, 1996 in the original principal amount of $4,714.82 issued
by Swing-N-Slide Corp. to Brian K. Zeilinger.
10.(15) 10% Convertible Subordinated Debenture due 2004 dated April 15,
1997 in the original principal amount of $264,685.49 issued by
Swing-N-Slide Corp. to GreenGrass Holdings.
10.(16) 10% Convertible Subordinated Debenture due 2004 dated October
15, 1997 in the original principal amount of $280,068.71 issued
by Swing-N-Slide Corp. to GreenGrass Holdings.
10.(17) Swing-N-Slide Corp. Bridge Note, dated as of March 13, 1997, in
the principal amount of $2,500,000 (canceled).(13)
10.(18) Warrant No. 1 for the Purchase of Common Stock of Swing-N-Slide
Corp., dated as of March 13, 1997.(14)
10.(19) Investment Agreement, dated as of March 13, 1997, between
Swing-N-Slide Corp. and GreenGrass Holdings.(15)
10.(20) Employment Agreement dated January 5, 1998 between Swing-N-
Slide and Frederic L. Contino.(16)
10.(21) Consulting Agreement dated September 2, 1997 between Swing-N-
Slide and Terry Malone.
10.(22) Letter Agreement dated November 10, 1997, between Swing-N-Slide
and Richard G. Mueller confirming mutual understanding
regarding Mueller's resignation effective October 1, 1997 from
employment with Swing-N-Slide.
10.(23) Severance and Change of Control Agreement dated February 15,
1996 between Swing-N-Slide and Curtis Cole.(4)
10.(24) Severance and Change of Control Agreement dated February 15,
1996 between Swing-N-Slide and Richard Ruegger.(4)
10.(25) Severance and Change of Control Agreement dated February 15,
1996 between Swing-N-Slide and David Hammelman.(4)
10.(26) Severance and Change of Control Agreement dated February 15,
1996 between Swing-N-Slide and Kenneth Jonas.(4)
10.(27) Swing-N-Slide Corp. 1996 Incentive Stock Plan.(4)
10.(28) Swing-N-Slide Corp. Stock Program.(17)
10.(29) Management Consulting Agreement dated as of February 16, 1996,
by and among Newco, Inc., Swing-N-Slide Corp., Glencoe
Investment Corporation and Desai Capital Management
Incorporated.(18)
10.(30) Acquisition consulting agreement relating to GameTime
transaction dated as of September 6, 1996, by and among Swing-
N-Slide Corp., Glencoe Investment Corporation and Desai Capital
Management Incorporated.(19)
12. Statement re Computation of Ratios.
13.(1) Annual Report of Swing-N-Slide for the year ended December 31,
1997.(20)
13.(2) Current Report on Form 8-K of Swing-N-Slide filed March 21,
1997, as amended by Amendment No. 1 on Form 8-K/A filed May 5,
1997.(21)
21. Subsidiaries of Swing-N-Slide.(22)
23.(i)(1) Consent of Ernst & Young LLP.
23.(i)(2) Consent of Foley & Lardner.(23)
24. Power of Attorney.
25. Statement of Eligibility of Firstar Bank Milwaukee, N.A.
99. Form of Subscription Agreement.
See Exhibit Index below for explanation of footnotes.
Item 17. Undertakings
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1993, 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 offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.
The undersigned registrant hereby undertakes to file an application
for the purpose of determining the eligibility of the trustee to act under
subsection (a) of section 310 of the Trust Indenture Act ("Act") in
accordance with the rules and regulations prescribed by the Commission
under section 305(b)(2) of the Act.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) (Section 230.424(b) of this chapter) if, in the
aggregate, the changes in volume and price represent not more than a 20%
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-2 and has duly caused this
registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Janesville, State of Wisconsin
on March 27, 1998.
SWING-N-SLIDE CORP.
By: /s/
Frederic L. Contino
President and Chief Executive Officer
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.
/s/
Frederic L. Contino
President and Chief Executive Officer,
Director
Date: March 27, 1998
/s/
Richard E. Ruegger, Vice President-Finance,
Chief Financial Officer, Secretary and
Treasurer (Principal Financial and
Accounting Officer)
Date: March 27, 1998
David S. Evans, Director*
Date: March 27, 1998
George N. Herrera, Director*
Date: March 27, 1998
Timothy R. Kelleher, Director*
Date: March 27, 1998
Terence S. Malone, Director*
Date: March 27, 1998
Gary A. Massel, Director*
Date: March 27, 1998
Caroline L. Williams, Director*
Date: March 27, 1998
*By: /s/
Richard E. Ruegger
Attorney-in-Fact
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
2.(1) Transaction Agreement dated January 4, 1996 between GreenGrass
Holdings and Swing-N-Slide.(1)
2.(2) Amendment No. 1 to Transaction Agreement dated February 12,
1996 between GreenGrass Holdings and Swing-N-Slide.(2)
2.(3) Amended and Restated Registration Rights Agreement dated March
13, 1997 between GreenGrass Holdings and Swing-N-Slide.(3)
2.(4) Stipulation and Order dated February 13, 1996 relating to
Barbieri v. Swing-N-Slide Corp., et al., Court of Chancery of
the State of Delaware, New Castle County, Civil Action No.
14239.(4)
2.(5) Amended and Restated Stock Purchase Agreement, dated as of
March 13, 1997, by and among Newco, Inc., Game Time, Inc. and
Ross D. Siragusa, Jr., John R. Siragusa and Richard D.
Siragusa.(5)
2.(6) Articles of Merger Merging Game Time, Inc. With and Into Newco,
Inc., dated as of March 13, 1997.(6)
2.(7) Memorandum of Understanding dated December 31, 1997 relating to
Barbieri v. Swing-N-Slide Corp., et al.
4.(i)(1) Indenture dated as of March 27, 1998, between Swing-N-Slide and
Firstar Trust Company relating to 10% Convertible Subordinated
Debentures due 2004.
4.(i)(2) Form of Debenture.
4.(i)(3) Amended and Restated Certificate of Incorporation of Swing-N-
Slide.(7)
5. Opinion of Foley & Lardner.
10.(1) Credit Agreement, dated as of March 13, 1997, among Swing-N-
Slide Corp., Newco, Inc., the Lenders party thereto and Fleet
National Bank, as lender and agent, together with the notes
related thereto.(8)
10.(2) Securities Purchase Agreement, dated as of March 13, 1997,
among Swing-N-Slide Corp., Newco, Inc. and Massachusetts Mutual
Life Insurance Company, together with the notes and warrants
related thereto.(9)
10.(3) Securities Purchase Agreement, dated as of March 13, 1997,
among Swing-N-Slide Corp., Newco, Inc. and MassMutual Corporate
Investors, together with the note and warrant related
thereto.(10)
10.(4) Securities Purchase Agreement, dated as of March 13, 1997,
among Swing-N-Slide Corp., Newco, Inc. and MassMutual
Participation Investors, together with the note and warrant
related thereto.(11)
10.(5) Securities Purchase Agreement, dated as of March 13, 1997,
among Swing-N-Slide Corp., Newco, Inc. and MassMutual Corporate
Value Partners Limited, together with the note and warrant
related thereto.(12)
10.(6) 10% Convertible Subordinated Debenture due 2004, dated February
15, 1996, in the original principal amount of $4,300,000 issued
by Swing-N-Slide Corp. to GreenGrass Holdings (canceled).(4)
10.(7) 10% Convertible Subordinated Debenture due 2004, dated April
25, 1996, in the original principal amount of $700,000 issued
by Swing-N-Slide Corp. to GreenGrass Holdings (canceled).(4)
10.(8) Amended and Restated 10% Convertible Subordinated Debenture due
2004 dated February 15, 1996, in the original principal amount
of $4,300,000 issued by Swing-N-Slide Corp. to GreenGrass
Holdings.
10.(9) Amended and Restated 10% Convertible Subordinated Debenture due
2004 dated April 25, 1996 in the original principal amount of
$700,000 issued by Swing-N-Slide Corp. to GreenGrass Holdings.
10.(10) 10% Convertible Subordinated Debenture due 2004 dated April 15,
1996 in the original principal amount of $70,684.93 issued by
Swing-N-Slide Corp. to GreenGrass Holdings.
10.(11) 10% Convertible Subordinated Debenture due 2004 dated October
15, 1996 in the original principal amount of $19,033.75 issued
by Swing-N-Slide Corp. to GreenGrass Holdings.
10.(12) 10% Convertible Subordinated Debenture due 2004 dated October
15, 1996 in the original principal amount of $218,534.20 issued
by Swing-N-Slide Corp. to GreenGrass Holdings.
10.(13) 10% Convertible Subordinated Debenture due 2004 dated October
15, 1996 in the original principal amount of $9,429.51 issued
by Swing-N-Slide Corp. to James R. Rastetter.
10.(14) 10% Convertible Subordinated Debenture due 2004 dated October
15, 1996 in the original principal amount of $4,714.82 issued
by Swing-N-Slide Corp. to Brian K. Zeilinger.
10.(15) 10% Convertible Subordinated Debenture due 2004 dated April 15,
1997 in the original principal amount of $264,685.49 issued by
Swing-N-Slide Corp. to GreenGrass Holdings.
10.(16) 10% Convertible Subordinated Debenture due 2004 dated October
15, 1997 in the original principal amount of $280,068.71 issued
by Swing-N-Slide Corp. to GreenGrass Holdings.
10.(17) Swing-N-Slide Corp. Bridge Note, dated as of March 13, 1997, in
the principal amount of $2,500,000 (canceled).(13)
10.(18) Warrant No. 1 for the Purchase of Common Stock of Swing-N-Slide
Corp., dated as of March 13, 1997.(14)
10.(19) Investment Agreement, dated as of March 13, 1997, between
Swing-N-Slide Corp. and GreenGrass Holdings.(15)
10.(20) Employment Agreement dated January 5, 1998 between Swing-N-
Slide and Frederic L. Contino.(16)
10.(21) Consulting Agreement dated September 2, 1997 between Swing-N-
Slide and Terry Malone.
10.(22) Letter Agreement dated November 10, 1997, between Swing-N-Slide
and Richard G. Mueller confirming mutual understanding
regarding Mueller's resignation effective October 1, 1997 from
employment with Swing-N-Slide.
10.(23) Severance and Change of Control Agreement dated February 15,
1996 between Swing-N-Slide and Curtis Cole.(4)
10.(24) Severance and Change of Control Agreement dated February 15,
1996 between Swing-N-Slide and Richard Ruegger.(4)
10.(25) Severance and Change of Control Agreement dated February 15,
1996 between Swing-N-Slide and David Hammelman.(4)
10.(26) Severance and Change of Control Agreement dated February 15,
1996 between Swing-N-Slide and Kenneth Jonas.(4)
10.(27) Swing-N-Slide Corp. 1996 Incentive Stock Plan.(4)
10.(28) Swing-N-Slide Corp. Stock Program.(17)
10.(29) Management Consulting Agreement dated as of February 16, 1996,
by and among Newco, Inc., Swing-N-Slide Corp., Glencoe
Investment Corporation and Desai Capital Management
Incorporated.(18)
10.(30) Acquisition consulting agreement relating to GameTime
transaction dated as of September 6, 1996, by and among Swing-
N-Slide Corp., Glencoe Investment Corporation and Desai Capital
Management Incorporated.(19)
12. Statement re Computation of Ratios.
13.(1) Annual Report of Swing-N-Slide for the year ended December 31,
1997.(20)
13.(2) Current Report on Form 8-K of Swing-N-Slide filed March 21,
1997, as amended by Amendment No. 1 on Form 8-K/A filed May 5,
1997.(21)
21. Subsidiaries of Swing-N-Slide.(22)
23.(i)(1) Consent of Ernst & Young LLP.
23.(i)(2) Consent of Foley & Lardner.(23)
24. Power of Attorney.
25. Statement of Eligibility of Firstar Bank Milwaukee, N.A.
99. Form of Subscription Agreement.
________________________________________
(1) Incorporated by reference to Swing-N-Slide's Schedule 14D-9 (File No.
0-20450).
(2) Incorporated by reference to Swing-N-Slide Corp.'s Registration
Statement on Form S-2 (Registration No. 333-33049).
(3) Incorporated by reference to Exhibit 4.28 of Swing-N-Slide Corp.'s
Current Report on Form 8-K filed March 21, 1997 (SEC file Number
0-20450).
(4) Previously filed.
(5) Incorporated by reference to Exhibit 2.1 of Swing-N-Slide Corp.'s
Current Report on Form 8-K filed March 21, 1997 (SEC File Number 0-
20450).
(6) Incorporated by reference to Exhibit 2.2 of Swing-N-Slide Corp.'s
Current Report on Form 8-K filed March 21, 1997 (SEC File Number 0-
20450).
(7) Incorporated by reference to Swing-N-Slide Corp.'s Registration
Statement on Form S-8 (Registration No. 33-48735).
(8) Incorporated by reference to Exhibits 4.1 through 4.10 of Swing-N-
Slide Corp.'s Current Report on Form 8-K filed March 21, 1997 (SEC
File Number 0-20450).
(9) Incorporated by reference to Exhibits 4.11, 4.15, 4.16, 4.20, and
4.21 of Swing-N-Slide Corp.'s Current Report on Form 8-K filed March
21, 1997 (SEC File Number 0-20450).
(10) Incorporated by reference to Exhibits 4.12, 4.17 and 4.22 of Swing-N-
Slide Corp.'s Current Report on Form 8-K filed March 21, 1997 (SEC
File Number 0-20450).
(11) Incorporated by reference to Exhibits 4.13, 4.18 and 4.23 of Swing-N-
Slide Corp.'s Current Report on Form 8-K filed March 21, 1997 (SEC
File Number 0-20450).
(12) Incorporated by reference to Exhibits 4.14, 4.19 and 4.24 of Swing-N-
Slide Corp.'s Current Report on Form 8-K filed March 21, 1997 (SEC
File Number 0-20450).
(13) Incorporated by reference to Exhibit 4.26 of Swing-N-Slide Corp.'s
Current Report on Form 8-K filed March 21, 1997 (SEC File Number 0-
20450).
(14) Incorporated by reference to Exhibit 4.27 of Swing-N-Slide Corp.'s
Current Report on Form 8-K filed March 21, 1997 (SEC File Number 0-
20450).
(15) Incorporated by reference to Exhibit 4.25 of Swing-N-Slide Corp.'s
Current Report on Form 8-K filed March 21, 1997 (SEC File Number 0-
20450).
(16) Incorporated by reference to Exhibit 10.4 of Swing-N-Slide Corp.'s
Annual Report on Form 10-K for the year ended December 31, 1997 (SEC
File No. 0-20450).
(17) Incorporated by reference to Swing-N-Slide's Registration Statement
on Form S-8 (Registration No. 33-48735).
(18) Incorporated by reference to Exhibit 10.5 of Swing-N-Slide Corp.'s
Annual Report on Form 10-K for the year ended December 31, 1996 (SEC
File No. 0-20450).
(19) Incorporated by reference to Exhibit 10.6 of Swing-N-Slide Corp.'s
Annual Report on Form 10-K for the year ended December 31, 1996 (SEC
File No. 0-20450).
(20) Incorporated by reference to Swing-N-Slide Corp.'s Annual Report on
Form 10-K for the year ended December 31, 1997.
(21) Incorporated by reference to Swing-N-Slide Corp.'s Current Report on
Form 8-K filed March 21, 1997 as amended by Amendment No. 1 on Form
8-K/A filed May 5, 1997.
(22) Incorporated by reference to Exhibit 21 Swing-N-Slide Corp.'s Annual
Report on Form 10-K for the year ended December 31, 1997.
(23) Included in Exhibit 5.
[Letterhead of Foley & Lardner]
December 23, 1997
VIA FACSIMILE
Terry Rose Saunders
30 N. LaSalle St., Suite 3200
Chicago, Illinois 60602
Re: Barbieri v. Swing-N-Slide Corp., et al.
Dear Terry:
This letter is the memorandum of understanding regarding the
settlement of the above-referenced lawsuit and related claims. We
anticipate preparation and execution of formal settlement documents,
including a stipulation of settlement. If you are in agreement regarding
the terms of our understanding, please sign below as class counsel and
return this letter to me at your soonest convenience.
1. The defendants will pay the total amount of $700,000 to the
classes.
2. The amount of class counsel's fees and expenses will be
determined by the Court. Any award of fees and costs will come out of
the $700,000 amount and will not be in addition to this amount.
3. Swing-N-Slide will pay the cost of providing notice to the
classes in a form determined by the Court, but which is anticipated to
including mailing and publication in some form.
4. All of the defendants and their affiliated persons and
entities, representatives, agents, insurers, and so forth will receive a
full release of all claims that were made or could have been made by the
classes in this litigation. The Court's approval of the releases is
obviously a condition of settlement.
5. The lawsuit and all claims made by the classes in the
lawsuit will be dismissed on the merits and with prejudice.
6. The defendants will make no admission of wrongdoing or
liability.
7. The class will also receive the benefit of the favored
debenture purchase terms that you arranged with Marty Mann in early 1996.
Very truly yours,
/s/ Douglas Hagerman
Douglas M. Hagerman
cc: John S. Skilton
Theodore Low
John Scotellaro
Agreed this 31st day of December, 1997.
/s/ Terry Rose Saunders
Terry Rose Saunders
Counsel for the plaintiff classes
Exhibit 4.(i)(1)
SWING-N-SLIDE CORP.
TO
FIRSTAR BANK MILWAUKEE, N.A.
Trustee
INDENTURE
Dated as of March 27, 1998
10% Convertible Subordinated Debentures due 2004
<PAGE>
SWING-N-SLIDE CORP.
Reconciliation and tie between
Trust Indenture Act of 1939 and
Indenture, dated as of March 27, 1998
Trust Indenture
Act Section Indenture Section
Section 310(a)(1) 6.09
(a)(2) 6.09
(a)(3) Not Applicable
(a)(4) Not Applicable
(b) 6.08
6.10
Section 311(a) 6.13(a)
(b) 6.13(b)
(b)(2) 7.03(a)(2)
Section 312(a) 7.01
7.02(a)
(b) 7.02(b)
(c) 7.02(c)
Section 313(a) 7.03(a)
(b) 7.03(b)
(c) 7.03(a), 7.03(b)
(d) 7.03(c)
Section 314(a) 7.04, 10.04
(b) Not Applicable
(c)(1) 1.02
(c)(2) 1.02
(c)(3) Not Applicable
(d) Not Applicable
(e) 1.02
Section 315(a) 6.01(a)
(b) 6.02
7.03(a)(6)
(c) 6.01(b)
(d) 6.01(c)
(d)(1) 6.01(a)(1), (2)
(d)(2) 6.01(c)(2)
(d)(3) 6.01(c)(3)
(e) 5.14
Section 316(a)
(a)(1)(A) 5.12
(a)(1)(B) 5.13
(a)(2) Not Applicable
(b) 5.08
(c) 5.13
Section 317(a)(1) 5.03
(a)(2) 5.04
(b) 10.03
Section 318(a) 1.07
Note: This reconciliation and tie shall not, for any purpose, be
deemed to be part of the Indenture.
TABLE OF CONTENTS
PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I. DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION . . . . . . . . . . . . . . . . . . 1
SECTION 1.01 Definitions . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Compliance Certificates and Opinions . . . . . . 6
SECTION 1.03. Form of Documents Delivered to Trustee . . . . . 6
SECTION 1.04. Acts of Securityholders . . . . . . . . . . . . . 7
SECTION 1.05. Notices, etc., to Trustee and Company . . . . . . 8
SECTION 1.06. Notice to Securityholders; Waiver . . . . . . . . 8
SECTION 1.07. Conflict with Trust Indenture Act . . . . . . . . 8
SECTION 1.08. Effect of Headings and Table of Contents . . . . 8
SECTION 1.09. Successors and Assigns . . . . . . . . . . . . . 8
SECTION 1.10. Separability Clause . . . . . . . . . . . . . . . 9
SECTION 1.11. Benefits of Indenture . . . . . . . . . . . . . . 9
SECTION 1.12. Governing Law; Choice of Forum . . . . . . . . . 9
SECTION 1.13. Legal Holidays . . . . . . . . . . . . . . . . . 9
ARTICLE II. SECURITY FORMS . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.01. Forms Generally . . . . . . . . . . . . . . . . . . 9
SECTION 2.02. Form of Face of Security . . . . . . . . . . . . 10
SECTOPM 2.03. Form of Reverse of Security . . . . . . . . . . . . 11
SECTION 2.04. Form of Trustee's Certificate of Authentication . 14
SECTION 2.05. Form of Election to Convert . . . . . . . . . . . 14
ARTICLE III. THE SECURITIES . . . . . . . . . . . . . . . . . . . . 15
SECTION 3.01. Title and Terms . . . . . . . . . . . . . . . . . 15
SECTION 3.02. Denominations . . . . . . . . . . . . . . . . . . 15
SECTION 3.03. Execution, Authentication, Delivery and Dating . 15
SECTION 3.04. Temporary Securities . . . . . . . . . . . . . . 16
SECTION 3.05. Registration, Registration of Transfer and
Exchange . . . . . . . . . . . . . . . . . . . . 16
SECTION 3.06. Mutilated, Destroyed, Lost and Stolen Securities 17
SECTION 3.07. Payment of Interest; Interest Rights Preserved . 18
SECTION 3.08. Persons Deemed Owners . . . . . . . . . . . . . . 19
SECTION 3.09. Cancellation . . . . . . . . . . . . . . . . . . 19
SECTION 3.10. Computation of Interest . . . . . . . . . . . . . 19
SECTION 3.11. CUSIP Numbers . . . . . . . . . . . . . . . . . . 19
ARTICLE IV. SATISFACTION AND DISCHARGE . . . . . . . . . . . . . . . 20
SECTION 4.01. Satisfaction and Discharge of Indenture . . . . . 20
SECTION 4.02. Application of Trust Money . . . . . . . . . . . 21
ARTICLE V. REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 5.01. Events of Default . . . . . . . . . . . . . . . . 21
SECTION 5.02. Acceleration of Maturity; Rescission and
Annulment . . . . . . . . . . . . . . . . . . . . 22
SECTION 5.03. Collection of Indebtedness and Suits for
Enforcement by Trustee . . . . . . . . . . . . . 23
SECTION 5.04. Trustee May File Proofs of Claim . . . . . . . . 23
SECTION 5.05. Trustee May Enforce Claims Without Possession of
Securities . . . . . . . . . . . . . . . . . . . 24
SECTION 5.06. Application of Money Collected . . . . . . . . . 24
SECTION 5.07. Limitation on Suits . . . . . . . . . . . . . . . 24
SECTION 5.08. Unconditional Right of Holders to Receive
Principal, Premium and Interest and to Convert . 25
SECTION 5.09. Restoration of Rights and Remedies . . . . . . . 25
SECTION 5.10. Rights and Remedies Cumulative . . . . . . . . . 25
SECTION 5.11. Delay or Omission Not Waiver . . . . . . . . . . 26
SECTION 5.12. Control by Holders . . . . . . . . . . . . . . . 26
SECTION 5.13. Waiver of Past Defaults . . . . . . . . . . . . . 26
SECTION 5.14. Undertaking for Costs . . . . . . . . . . . . . . 27
SECTION 5.15. Waiver of Stay or Extension Laws . . . . . . . . 27
ARTICLE VI. THE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 6.01. Certain Duties and Responsibilities . . . . . . . 27
SECTION 6.02. Notice of Defaults . . . . . . . . . . . . . . . 28
SECTION 6.03. Certain Rights of Trustee . . . . . . . . . . . . 28
SECTION 6.04. Not Responsible for Recitals or Issuances of
Securities . . . . . . . . . . . . . . . . . . . 29
SECTION 6.05. May Hold Securities . . . . . . . . . . . . . . . 30
SECTION 6.06. Money Held in Trust . . . . . . . . . . . . . . . 30
SECTION 6.07. Compensation and Reimbursement . . . . . . . . . 30
SECTION 6.08. Disqualification; Conflicting Interests . . . . . 30
SECTION 6.09. Corporate Trustee Required; Eligibility . . . . . 35
SECTION 6.10. Resignation and Removal; Appointment of
Successor . . . . . . . . . . . . . . . . . . . . 35
SECTION 6.11. Acceptance of Appointment by Successor . . . . . 36
SECTION 6.12. Merger, Conversion, Consolidation or Succession
to Business . . . . . . . . . . . . . . . . . . . 36
SECTION 6.13. Preferential Collection of Claims Against
Company . . . . . . . . . . . . . . . . . . . . . 37
SECTION 6.14. Appointment of Authenticating Agent . . . . . . . 40
ARTICLE VII. HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY . . . 41
SECTION 7.01. Company to Furnish Trustee Names and Addresses of
Holders . . . . . . . . . . . . . . . . . . . . . 41
SECTION 7.02. Preservation of Information Communications to
Holders . . . . . . . . . . . . . . . . . . . . . 42
SECTION 7.03. Reports by Trustee . . . . . . . . . . . . . . . 43
SECTION 7.04. Reports by Company . . . . . . . . . . . . . . . 44
ARTICLE VIII. CONSOLIDATION, MERGER, CONVEYANCE,
TRANSFER OR LEASE . . . . . . . . . . . . . . . . . . . . . 44
SECTION 8.01. Company May Consolidate, etc. Only on Certain
Terms . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 8.02. Successor Corporation Substituted . . . . . . . . 45
ARTICLE IX. SUPPLEMENTAL INDENTURES . . . . . . . . . . . . . . . . 45
SECTION 9.01. Supplemental Indentures Without Consent of
Holders . . . . . . . . . . . . . . . . . . . . . 45
SECTION 9.02. Supplemental Indentures with Consent of Holders . 46
SECTION 9.03. Execution of Supplemental Indentures . . . . . . 46
SECTION 9.04. Effect of Supplemental Indentures . . . . . . . . 47
SECTION 9.05. Conformity with Trust Indenture Act . . . . . . . 47
SECTION 9.06. Reference in Securities to Supplemental
Indentures . . . . . . . . . . . . . . . . . . . 47
ARTICLE X. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 10.01. Payment of Principal, Premium and Interest . . . 47
SECTION 10.02. Maintenance of Office or Agency . . . . . . . . 47
SECTION 10.03. Money for Securities Payments to Be Held in
Trust . . . . . . . . . . . . . . . . . . . . . 47
SECTION 10.04. Statement as to Compliance . . . . . . . . . . . 48
SECTION 10.05. Further Instruments and Acts . . . . . . . . . . 49
ARTICLE XI. OPTIONAL REDEMPTION OF SECURITIES . . . . . . . . . . . 49
SECTION 11.01. Right of Redemption . . . . . . . . . . . . . . 49
SECTION 11.02. Applicability of Article . . . . . . . . . . . . 49
SECTION 11.03. Election to Redeem; Notice to Trustee . . . . . 49
SECTION 11.04. Selection by Trustee of Securities to Be
Redeemed . . . . . . . . . . . . . . . . . . . . 49
SECTION 11.05. Notice of Redemption . . . . . . . . . . . . . . 50
SECTION 11.06. Deposit of Redemption Price . . . . . . . . . . 50
SECTION 11.07. Securities Payable on Redemption Date . . . . . 51
SECTION 11.08. Securities Redeemed in Part . . . . . . . . . . 51
ARTICLE XII. [Reserved] . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE XIII. CONVERSION OF SECURITIES . . . . . . . . . . . . . . . 51
SECTION 13.01. Right of Conversion . . . . . . . . . . . . . . 51
SECTION 13.02. Issuance of Common Stock; Time of Conversion . . 52
SECTION 13.03. No Adjustments in Respect of Interest or
Dividends . . . . . . . . . . . . . . . . . . . 53
SECTION 13.04. Adjustment of Conversion Price . . . . . . . . . 53
SECTION 13.05. No Fractional Shares . . . . . . . . . . . . . . 55
SECTION 13.06. Consolidation, Merger or Sale of Assets . . . . 56
SECTION 13.07. Prior Notice of Certain Events . . . . . . . . . 56
SECTION 13.08. Shares to be Reserved; Accounting Treatment of
Consideration . . . . . . . . . . . . . . . . . 57
SECTION 13.09. Registration and Listing of Shares . . . . . . . 57
SECTION 13.10. Taxes and Charges . . . . . . . . . . . . . . . 58
SECTION 13.11. Trustee and Conversion Agents Not Liable . . . . 58
ARTICLE XIV. SUBORDINATION OF SECURITIES . . . . . . . . . . . . . . 58
SECTION 14.01. Securities Subordinate to Senior Indebtedness . 58
SECTION 14.02. Payment Over of Proceeds Upon Dissolution Etc. . 58
SECTION 14.03. Prior Payment to Senior Indebtedness Upon
Acceleration of Securities . . . . . . . . . . . 59
SECTION 14.04. No Payment When Senior Indebtedness in Default . 60
SECTION 14.05. Payment Permitted if No Default . . . . . . . . 60
SECTION 14.06. Subrogation to Rights of Holders of Senior
Indebtedness . . . . . . . . . . . . . . . . . . 61
SECTION 14.07. Provisions Solely to Define Relative Rights . . 61
SECTION 14.08. Trustee to Effectuate Subordination . . . . . . 61
SECTION 14.09. No Waiver of Subordination Provisions . . . . . 61
SECTION 14.10. Notice to Trustee . . . . . . . . . . . . . . . 62
SECTION 14.11. Reliance on Judicial Order or Certificate of
Liquidating Agent . . . . . . . . . . . . . . . 62
SECTION 14.12. Trustee Not Fiduciary For Holders of Senior
Indebtedness . . . . . . . . . . . . . . . . . . 63
SECTION 14.13. Rights of Trustee as Holder of Senior
Indebtedness; Preservation of Trustee's Rights . 63
SECTION 14.14. Article Applicable to Paying Agent . . . . . . . 63
ARTICLE XV. REPURCHASE OF SECURITIES BY THE COMPANY
UPON THE OCCURRENCE OF A CONTINGENT EVENT . . . . . . . . . 63
SECTION 15.01. Obligation to Repurchase . . . . . . . . . . . . 63
SECTION 15.02. Notice; Method of Exercising Repurchase Right . 63
SECTION 15.03. Certain Definitions . . . . . . . . . . . . . . 64
INDENTURE, dated as of March 27, 1998, between Swing-N-Slide
Corp., a corporation duly organized and existing under the laws of the
State of Delaware (herein called the "Company"), having its principal
office at 1212 Barberry Drive, Janesville, Wisconsin 53545, and Firstar
Bank Milwaukee, N.A., a national banking association duly organized and
existing under the laws of the United States of America, as Trustee
hereunder (herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an issue of its
Securities (herein called the "Securities") of substantially the tenor and
amount hereinafter set forth, and to provide therefor the Company has duly
authorized the execution and delivery of this Indenture.
All things necessary to make the Securities, when executed by
the Company and authenticated and delivered hereunder and duly issued by
the Company, the valid obligations of the Company, and to make this
Indenture a valid agreement of the Company, in accordance with their and
its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Securityholders thereof, it is mutually covenanted and
agreed, for the equal and proportionate benefit of all Securityholders, as
follows:
ARTICLE I.
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.01 Definitions. For all purposes of this Indenture,
except as otherwise expressly provided or unless the context otherwise
requires:
(1) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as
well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein,
have the meanings assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally
accepted accounting principles; and
(4) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole
and not to any particular Article, Section or other
subdivision.
Certain terms, used principally in Article VI, are defined in
that Article.
"Act" when used with respect to any Securityholder has the
meaning specified in Section 1.04.
"Affiliate" of any specified person means any other Person
directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of
this definition, "control" when used with respect to any specified Person
means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Authenticating Agent" means any Person authorized by the
Trustee to act on behalf of the Trustee to authenticate Securities.
"Board of Directors" means either the board of directors of the
Company or any committee of that board duly authorized to act for such
board hereunder.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly
adopted by the Board of Directors and to be in full force and effect on
the date of such certification, and delivered to the Trustee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions in New York,
New York are authorized or obligated by law or executive order to close.
"Certificate of a Firm of Independent Public Accountants" means
a certificate signed by a nationally recognized independent certified
public accountant or a firm of nationally recognized independent certified
public accountants (who may be the independent certified public
accountants regularly retained by the Company) reasonably acceptable to
the Trustee. Such accountant or firm shall be entitled to rely upon any
Opinion of Counsel as to the interpretation of any legal matters relating
to such certificate. Any certificate or opinion of any independent firm
of certified public accountants filed with the Trustee shall contain a
statement that such firm is independent.
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Securities Exchange Act
of 1934, or, if at any time after the execution of this instrument such
Commission is not existing and performing the duties now assigned to it
under the Trust Indenture Act, then the body performing such duties at
such time.
"Common Stock" means all shares now or hereafter authorized of
the class of Common Stock of the Company currently authorized and stock of
any other class into which such shares may hereafter have been changed.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor corporation shall have
become such pursuant to the applicable provisions of this Indenture, and
thereafter "Company" shall mean such successor corporation.
"Company Request" or "Company Order" means a written request or
order signed in the name of the Company by its Chairman of the Board, its
President or a Vice President, and by its Treasurer, an Assistant
Treasurer, its Secretary or an Assistant Secretary, and delivered to the
Trustee.
"Contingent Event" has the meaning specified in Section 15.03.
"Corporate Trust Office" means the principal office of the
Trustee in Milwaukee, Wisconsin at which at any particular time its
corporate trust business shall be administered.
"Corporation" includes corporations, associations, companies and
business trusts.
"Debt" of any Person means at any due, without duplication, (i)
all obligations of such Person for borrowed money, (ii) all obligations of
such Person evidenced by bonds, debentures, notes or other similar
instruments, (iii) all obligations of such Person as lessee under leases
which are or may be capitalized under generally accepted accounting
principles, (iv) all Debt of others secured by a lien on any asset of such
Person, whether or not such Debt is assumed by such Person, or (v) all
Debt of others for the payment of which such Person is responsible or
liable as obligor, guarantor or otherwise.
"Defaulted Interest" has the meanings specified in Section 3.07.
"Event of Default" has the meaning specified in Section 5.01.
"Holder" or "Securityholder" means a Person in whose name a
Security is registered in the Security Register.
"Indenture" means this instrument as originally executed or as
it may from time to time be supplemented or amended by one or more
indentures supplemental hereto entered into pursuant to the applicable
provisions hereof.
"Independent," when used with respect to any specified Person,
means such a Person who (1) is in fact independent, (2) does not have any
direct financial interest or any material indirect financial interest in
the Company or in any other obligor upon the Securities or in any
Affiliate of the Company or of such other obligor, and (3) is not
connected with the Company or such other obligor or any Affiliate of the
Company or of such other obligor, as an officer, employee, promoter,
organizer, underwriter, trustee, partner, director or Person performing
similar functions. Whenever it is herein provided that any Independent
Person's opinion or certificate shall be furnished to the Trustee, such
Person shall be appointed by a Company Order, and such opinion or
certificate shall state that the signer has read this definition and that
the signer is Independent within the meaning hereof.
"Interest Payment Date" means the Stated Maturity of an
installment of interest on the Securities.
"Maturity" when used with respect to any Security means the date
on which the principal of such Security becomes due and payable as therein
or herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise.
"Newco" means Newco, Inc., a Wisconsin corporation and any
successor thereto.
"Newco Indebtedness" means the principal, premium, if any, and
unpaid interest on indebtedness for money borrowed by Newco and guaranteed
by the Company (at any time and from time to time), whether outstanding on
the date hereof or hereafter, and all renewals, extensions and refundings
of any such Debt; provided, however, that the following shall not
constitute Newco Indebtedness: any Debt which by its terms refers
explicitly to the Securities issued hereunder and states that such Debt
shall not be senior in right of payment thereto.
"Officers' Certificate" means a certificate signed by the
Chairman of the Board, the President or a Vice President, and by the
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary
of the Company, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may
be counsel for the Company or other counsel acceptable to the Trustee.
"Outstanding," when used with respect to Securities means, as of
the date of determination, all Securities theretofore authenticated and
delivered under the Indenture, except:
(i) Securities theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the
Trustee or any Paying Agent (other than the Company) in
trust or set aside and segregated in trust by the Company
(if the Company shall act as its own Paying Agent) for
the Securityholders; provided that if such Securities are
to be redeemed, notice of such redemption has been duly
given pursuant to this Indenture or provision therefor
satisfactory to the Trustee has been made; and
(iii) Securities which have been paid pursuant to Section 3.06
or in exchange for or in lieu of which other Securities
have been authenticated and delivered pursuant to this
Indenture, other than any such Securities in respect of
which there shall have been presented to the Trustee
proof satisfactory to it that such Securities are held by
a bona fide purchaser in whose hands such Securities are
valid obligations of the Company;
provided, however that in determining whether the Securityholders of the
requisite principal amount of the Outstanding Securities have given any
request, demand, authorization, direction, notice, consent or waiver
hereunder, Securities owned by the Company or any other obligor upon the
Securities shall be disregarded and deemed not to be Outstanding, except
that, in determining whether the Trustee shall be protected in relying
upon any such request, demand, authorization, direction, notice, consent
or waiver, only Securities which the Trustee knows to be so owned shall be
so disregarded. Securities so owned which have been pledged in good faith
may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to and with respect to
such Securities and that the pledgee is not the Company or any other
obligor upon the Securities.
"Paying Agent" means any Person authorized by the Company to pay
the principal of (and premium, if any) or interest on any Securities on
behalf of the Company.
"Person" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated
organization or government or any agent or political subdivision thereof.
"Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same debt as that
evidenced by such particular Security; and, for the purposes of this
definition, any Security authenticated and delivered under Section 3.06 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Security
shall be deemed to evidence the same debt as the mutilated, destroyed,
lost or stolen Security.
"Redemption Date," when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price," when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Regular Record Date" for the interest payable on any Interest
Payment Date means the April 1st or the October 1st (whether or not a
Business Day), as the case may be, next preceding such Interest Payment
Date.
"Responsible Officer," when used with respect to the Trustee,
means any officer of the Trustee assigned by the Trustee to administer its
corporate trust matters and also means, with respect to a particular trust
matter, any other officer to whom such matter is referred because of his
or her knowledge of and familiarity with the particular subject.
"Securities" has the meaning specified in the recitals to this
instrument.
"Security Holder" or "Holder" means a person in whose name a
Security is registered in the Security Register.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 3.05.
"Senior Indebtedness" means all Debts, obligations and
liabilities of the Company arising under the guarantee by the Company of
the Newco Indebtedness, whether such guarantee is outstanding on the date
hereof or hereafter, and all renewals, replacements and extensions
thereof.
"Special Record Date" for the payment of any Defaulted Interest
means a date fixed by the Trustee pursuant to Section 3.07.
"Stated Maturity," when used with respect to any Security or any
installment of interest thereon, means the date specified in such Security
as the fixed date on which the principal of such Security or such
installment of interest is due and payable.
"Subsidiary" means a corporation more than 50% of the
outstanding voting stock of which is owned, directly or indirectly, by the
Company or by one or more other Subsidiaries, or by the Company and one or
more other Subsidiaries. For the purposes of this definition, "voting
stock" means stock which ordinarily has voting power for the election of
directors, whether at all times or only so long as no senior class of
stock has such voting power by reason of any contingency.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become
such pursuant to the applicable provisions of this Indenture, and
thereafter "Trustee" shall mean such successor Trustee.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as
in force at the date as of which this instrument was executed, except as
provided in Section 9.05.
"Vice President," when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number
or a word or words added before or after the title "vice president."
SECTION 1.02. Compliance Certificates and Opinions. Upon any
application or request by the Company to the Trustee to take any action
under any provision of this Indenture, the Company shall furnish to the
Trustee 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, if any, have been complied
with, except that in the case of any such application or request as to
which the furnishing of such documents is specially required by any
provision of this Indenture relating to such particular application or
request, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the
definitions herein relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statement or
opinions contained in such certificate or opinion are
based;
(3) a statement that, in the opinion of each such individual,
he has made such examination or investigation as is
necessary to enable him to express an informed opinion as
to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied
with.
SECTION 1.03. Form of Documents Delivered to Trustee. In any
case where several matters are required to be certified by, or covered by
an opinion of, any specified Person, it is not necessary that all such
matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but
one such Person may certify or give an opinion with respect to some
matters and one or more other such Persons as to other matters, and any
such Person may certify or give an opinion as to such matters in one or
several documents.
Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or
opinion of, or representations by, counsel, unless such officer knows, or
in the exercise of reasonable care should know, that the certificate or
opinion or representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any such certificate or
Opinion of Counsel may be based, insofar as it relates to factual matters,
upon a certificate or opinion of, or representations by, an officer or
officers of the Company stating that the information with respect to such
factual matters is in the possession of the Company, unless such counsel
knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to such matters are
erroneous.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions
or other instruments under this Indenture, they may, but need not, be
consolidated and form one instrument.
SECTION 1.04. Acts of Securityholders. (a) Any request,
demand, authorization, direction, notice, consent, waiver or other action
provided by this Indenture to be given or taken by Securityholders may be
embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such Securityholders in person or by an agent duly
appointed in writing; and, except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Trustee and, where it is hereby expressly required, to
the Company. Such instrument or instruments (and the action embodied
therein and evidenced thereby) are herein sometimes referred to as the
"Act" of the Securityholders signing such instrument or instruments.
Proof of execution of any such instrument or of a writing appointing any
such agent shall be sufficient for any purpose of this Indenture and
(subject to Section 6.01) conclusive in favor of the Trustee and the
Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a witness of
such execution or by a certificate of a notary public or other officer
authorized by law to take acknowledgments of deeds, certifying that the
individual signing such instrument or writing acknowledged to him the
execution thereof. Where such execution is by a signer acting in a
capacity other than his individual capacity, such certificate or affidavit
shall also constitute sufficient proof of his authority. The fact and
date of the execution of any such instrument or writing, or the authority
of the Person executing the same, may also be proved in any other manner
which the Trustee deems sufficient.
(c) The ownership of Securities shall be proved by the
Security Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Securityholder of any Security shall
bind every future Securityholder of the same Security and the
Securityholder of every Security issued upon the registration of transfer
thereof or in exchange therefor or in lieu thereof in respect of anything
done, omitted or suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made upon such
Security.
(e) Whenever the Company or the Trustee solicits an Act of
the Securityholders, the Company or the Trustee, as the case may be, may
fix a date as a record date for determining the Securityholders entitled
to perform said Act. Such record date shall be not more than 15 days
prior to the date of the solicitation of said Act.
SECTION 1.05. Notices, etc., to Trustee and Company. Any
request, demand, authorization, direction, notice, consent, waiver or Act
of Securityholders or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with:
(1) the Trustee by any Securityholder or by the Company shall
be sufficient for every purpose hereunder if made, given, furnished
or filed in writing to or with the Trustee at its Corporate Trust
Office at the following address:
Firstar Bank Milwaukee, N.A.
c/o Firstar Trust Company
1555 North RiverCenter Drive
Suite 301
Milwaukee, Wisconsin 53212
Attention: Corporate Trust Department; or
(2) the Company by the Trustee or by any Securityholder shall
be sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first class postage
prepaid, to the Company addressed to it at the address of its
principal office specified in the first paragraph of this instrument
or at any other address previously furnished in writing to the
Trustee by the Company.
SECTION 1.06. Notice to Securityholders; Waiver. Where this
Indenture provides for notice to Securityholders of any event, such notice
shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first class postage prepaid, to each
Securityholder affected by such event, at his address as it appears in the
Security Register, not later than the latest date, and not earlier than
the earliest date, prescribed for the giving of such notice. In any case
where notice to Securityholders is given by mail, neither the failure to
mail such notice, nor any defect in any notice so mailed, to any
particular Securityholder shall affect the sufficiency of such notice with
respect to other Securityholders. Where this Indenture provides for
notice in any manner, such notice may be waived in writing by the Person
entitled to receive such notice, either before or after the event, and
such waiver shall be the equivalent of such notice. Waivers of notice by
Securityholders shall be filed with the Trustee, but such filing shall not
be a condition precedent to the validity of any action taken in reliance
upon such waiver.
In case by reason of the suspension of regular mail service or
by reason of any other cause it shall be impracticable to give such notice
by mail, then such notification as shall be made with the approval of the
Trustee shall constitute a sufficient notification for every purpose
hereunder.
SECTION 1.07. Conflict with Trust Indenture Act. If any
provision hereof limits, qualifies or conflicts with another provision
hereof which is required to be included in this Indenture by any of the
provisions of the Trust Indenture Act, such required provision shall
control.
SECTION 1.08. Effect of Headings and Table of Contents. The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 1.09. Successors and Assigns. All covenants and
agreements in this Indenture by the Company shall bind its successors and
assigns, whether so expressed or not.
SECTION 1.10. Separability Clause. In case any provision in
this Indenture or in the Securities shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
SECTION 1.11. Benefits of Indenture. Nothing in this Indenture
or in the Securities, express or implied, shall give to any Person, other
than the parties hereto and their successors hereunder, the holders of
Senior Indebtedness and the Securityholders, any benefit or any legal or
equitable right, remedy or claim under this Indenture.
SECTION 1.12. Governing Law; Choice of Forum. This Indenture
and the Securities shall be governed by and construed in accordance with
the laws of the State of Wisconsin. If any action or proceeding shall be
brought by the Trustee or by a Holder of any of the Securities in order to
enforce any right or remedy under this Indenture or under the Securities,
the Company hereby consents and submits to the jurisdiction of the courts
of the State of Wisconsin and of any Federal court sitting in The City of
Milwaukee, State of Wisconsin. Any action or proceeding brought by the
Company to enforce any right, assert any claim or obtain any relief
whatsoever in connection with this Indenture or the Securities shall be
brought by the Company exclusively in the courts of the State of Wisconsin
or in any Federal court sitting in The City of Milwaukee, State of
Wisconsin.
SECTION 1.13. Legal Holidays. In any case where any Interest
Payment Date, Redemption Date or Stated Maturity of any Security or the
last date on which a Securityholder has the right to convert his
Securities shall not be a Business Day, then (notwithstanding any other
provision of this Indenture or of the Securities) payment of interest or
principal (and premium, if any) or conversion of the Securities 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 Interest Payment Date or
Redemption Date, or at the Stated Maturity, or on such last day for
conversion, provided that in the case of payment no interest shall accrue
for the period from and after such Interest Payment Date, Redemption Date
or Stated Maturity, as the case may be.
ARTICLE II.
SECURITY FORMS
SECTION 2.01. Forms Generally. The Securities and the
Trustee's certificates of authentication shall be in substantially the
forms set forth in this Article, with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted
by this Indenture and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any security exchange or as may,
consistently herewith, be determined by the officers executing such
Securities, as evidenced by their execution of the Securities.
The definitive Securities shall be printed, lithographed or
engraved or produced by any combination of these methods on steel engraved
borders or may be produced in any other manner permitted by the rules of
any securities exchange on which the Securities may be listed, all as
determined by the officers executing such Securities, as evidenced by
their execution of such Securities.
SECTION 2.02. Form of Face of Security.
10% Convertible Subordinated Debenture due 2004
No. $
Swing-N-Slide Corp., a corporation duly organized and existing
under the laws of the State of Delaware (herein called the "Company,"
which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
_______________________________________________________, or registered
assigns, the principal sum of ______________________
_____________________________ Dollars on February 15, 2004, and to pay
interest thereon from ________________________________________,(1) or from
the most recent Interest Payment Date to which interest has been paid or
duly provided for, semiannually on April 15 and October 15, in each year,
commencing _________________________________________,(2) at the rate of
10% per annum, until the principal hereof is paid or made available for
payment. The first interest payment date on this Debenture is October 15,
1998. Except as otherwise provided in the following sentence, the
interest so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in such Indenture, be paid to the
Person in whose name this Debenture (or one or more Predecessor
Debentures) is registered at the close of business on the Regular Record
Date for such interest, which shall be the April 1st and October 1st
(whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date. In the case of any Debenture which is converted
after any Regular Record Date and on or prior to the next succeeding
Interest Payment Date, interest whose stated Maturity is on such Interest
Payment Date shall not be payable on such Interest Payment Date and shall
not be paid to the Person in whose name that Debenture (or one or more
predecessor Debentures) is registered at the close of business on such
Regular Record Date. Subject to the preceding sentence, any such interest
not so punctually paid or duly provided for will forthwith cease to be
payable to the Holder on such Regular Record Date and may either be paid
to the Person in whose name this Debenture (or one or more Predecessor
Debentures) is registered at the close of business on a Special Record
Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of Debentures not less
than 10 days prior to such Special Record Date, or be paid at any time in
any other lawful manner not inconsistent with the requirement of any
securities exchange on which the Debentures may be listed, and upon such
notice as may be required by such exchange, all as more fully provided in
said Indenture. Payment of the principal of (and premium, if any) and
interest on this Debenture will be made at the office or agency of the
Company maintained for that purpose in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts; provided, however, that (i) at the option of the
Company payment of interest may be made by check mailed to the address of
the Person entitled thereto as such address shall appear in the Security
Register and (ii) until February 15, 1999 interest on this Debenture may,
at the option of the Company, be paid by the issuance of an additional
debenture, in the form of this Debenture, in the principal amount of the
interest so payable, dated the Interest Payment Date for such interest
payment, with interest payable as provided herein with a stated maturity
of principal and interest as provided in this Debenture and otherwise
identical to this Debenture.
-----------
(1) Insert the date of issuance.
(2) Insert the first Interest Payment Date after the date of issuance.
Reference is hereby made to the further provisions of this
Debenture set forth on the reverse hereof, which further provisions shall
for all purposes have the same effect as if set forth at this place. The
Indenture includes limitations on the right of the Holder to institute a
proceeding, judicial or otherwise, with respect to the Indenture, for the
appointment of a receiver or trustee, or for any other remedy under the
Indenture.
Unless the certificate of authentication hereon has been
executed by the Trustee referred to on the reverse hereof by manual
signature, this Debenture shall not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose.(3)
-----------
(3) Insert disclosure language required, if any, under sections 1271 to
1275 of the Internal Revenue Code (or successor provisions of the Internal
Revenue Code).
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed under its corporate seal.
Dated:
[SEAL] SWING-N-SLIDE CORP.
By:
Attest:
SECTION 2.03. Form of Reverse of Security.
This Debenture is one of a duly authorized issue of Debentures
of the Company designated as its 10% Convertible Subordinated Debentures
due 2004 (herein called the "Debentures"), limited in aggregate principal
amount to Nine Million Four Hundred Ninety-Four Thousand Five Hundred
Sixty-Two and 19/100 Dollars ($9,494,562.19) (plus any additional
Debentures paid in lieu of cash interest as permitted herein), issued and
to be issued under an Indenture, dated as of March 27, 1998 (herein called
the "Indenture"), between the Company and Firstar Trust Company as Trustee
(herein called the "Trustee," which term includes any successor trustee
under the Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Company,
the Trustee, the holders of Senior Indebtedness and the Holders of the
Debentures and of the terms upon which the Debentures are, and are to be,
authenticated and delivered.
Subject to the provisions of the Indenture, the Holder hereof
has the right, at his option, at any time prior to maturity or at least
five Business Days prior to a Redemption Date, to convert the principal
amount of this Debenture (or any portion of the principal amount hereof
which is $1.00 or an integral multiple of $1.00) into fully paid and
nonassessable (except as otherwise provided by law) shares of Common Stock
of the Company at the conversion rate of 1.0 shares of Common Stock for
each $______(4) principal amount of Debentures, subject to such
adjustment, if any, of the conversion rate and the securities or other
property issuable upon conversion as may be required by the provisions of
the Indenture, except that, in case this Debenture (or any portion hereof)
shall be called for redemption before maturity, such right shall terminate
at the close of business on the fifth Business Day prior to the Redemption
Date for this Debenture (or such portion hereof), unless in any such case
the Company shall default in payment due upon such redemption, but only
upon surrender of this Debenture for the property of such conversion to
the Company at the designated office or agency of the Company or any other
office or agency designated by the Company for such purpose pursuant to
the provisions of the Indenture, accompanied by written notice that the
Holder elects to convert this Debenture or any portion hereof and
specifying the name or names (with address or addresses) in which a
certificate or certificates for shares of Common Stock are to be issued
and (if so required by the Company or the Trustee) by a written instrument
or instruments of transfer in form satisfactory to the Company and the
Trustee duly executed by the registered Holder or his duly authorized
legal representative and transfer tax stamps or funds therefor, if
required, pursuant to the provisions of the Indenture. No adjustment is
to be made on conversion for interest accrued hereon or for dividends on
shares of Common Stock issued on conversion. No fractional shares are
issuable upon any conversion, but in lieu thereof the Company shall pay
therefor in cash as provided in the Indenture. Within ten (10) calendar
days after receipt of any Debenture and an election to convert all or a
portion of the principal amount of such Debenture pursuant to the terms of
the Indenture, the Company will pay to the Holder any unpaid interest,
accrued to the date of conversion of such Debenture, on the principal
amount converted; provided that until February 15, 1999, such interest
may, at the option of the Company, be paid by the issuance of an
additional debenture as described in subclause (ii) on the face of this
Debenture.
------------
(4) Insert $4.80 for debentures issued hereunder to GreenGrass Holdings,
James R. Rastetter, Brian K. Zeilinger, and Richard G. Mueller in exchange
for debentures of the Company presently held by such persons, and any
debentures issued with respect thereto as interest payments. Insert $4.70
for debentures issued hereunder pursuant to the Company's registration
statement on Form S-2, and any debentures issued with respect thereto as
interest payments.
The Debentures are subject to redemption upon not less than 45
or more than 60 days' notice by mail, at any time, as a whole or in part,
at the election of the Company, at a Redemption Price equal to 100% of the
principal amount, together with accrued interest to the Redemption Date,
but interest installments whose Stated Maturity is on or prior to such
Redemption Date will be payable to the Holders of such Debentures, or one
or more Predecessor Debentures of record at the close of business on the
relevant Record Dates referred to on the face hereof, all as provided in
the Indenture.
In the event of redemption or conversion of this Debenture in
part only, a new Debenture or Debentures for the unredeemed or unconverted
portion hereof will be issued in the name of the Holder hereof upon the
cancellation hereof.
The indebtedness evidenced by the Debentures is, to the extent
and the manner provided in the Indenture, expressly subordinate and
subject in right of payment to the prior payment in full of any Senior
Indebtedness of the Company or provision for such payment, whether
outstanding at the date of the Indenture or thereafter incurred, and each
Holder of this Debenture, by his acceptance hereof, agrees to and shall be
bound by such provisions of the Indenture and authorizes and directs the
Trustee in his behalf to take such action as may be necessary or
appropriate to effectuate such subordination and appoints the Trustee his
attorney-in-fact for any and all such purposes.
If an Event of Default other than involving certain events of
bankruptcy, insolvency or reorganization in respect of the Company as
provided in the Indenture shall occur and be continuing, the principal of
all the Debentures may be declared due and payable in the manner and with
the effect provided in the Indenture. If an Event of Default involves
certain events of bankruptcy, insolvency or reorganization in respect of
the Company as provided in the Indenture shall occur, then in every such
case the unpaid principal balance and all accrued and unpaid interest
shall automatically become due and payable in the manner and with the
effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the Trustee (including the waiver of
compliance by the Company with the provisions of the Indenture and past
defaults under the Indenture and their consequences) with the consent of
the Holders of a majority in aggregate principal amount of the Debentures
at the time Outstanding. Any such consent or waiver by the Holder of this
Debenture shall be conclusive and binding upon such Holder and upon all
future Holders of this Debenture and of any Debenture issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof,
whether or not notation of such consent or waiver is made upon this
Debenture.
No reference herein to the Indenture and no provision of this
Debenture or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of (and
premium, if any) and interest on this Debenture at the times, place and
rate, and in the coin or currency or with another debenture, herein
prescribed or to convert this Debenture as provided in the Indenture.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Debenture is registrable in the
Security Register, upon surrender of this Debenture for registration of
transfer at the office or agency of the Company, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to
the Company and the Security Registrar duly executed by, the Holder hereof
or his attorney duly authorized in writing, and thereupon one or more new
Debentures, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or
transferees.
The Debentures are issuable only in registered form without
coupons in denominations of $1.00 and any integral multiple thereof, as
provided in the Indenture and subject to certain limitations and
exceptions therein set forth. Debentures are exchangeable for a like
aggregate principal amount of Debentures of a different authorized
denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in
connection therewith.
The Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name this Debenture is registered as
the owner hereof for all purposes, whether or not this Debenture be
overdue, and neither the Company, the Trustee nor any such agent shall be
affected by notice to the contrary.
All terms used in this Debenture which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
SECTION 2.04. Form of Trustee's Certificate of Authentication.
This is one of the Debentures referred to in the within-
mentioned Indenture.
FIRSTAR BANK MILWAUKEE, N.A., as Trustee
By
Authorized Signature
SECTION 2.05. Form of Election to Convert.
To Swing-N-Slide Corp.:
The undersigned owner of this Debenture hereby irrevocably
exercises the option to convert this Debenture, or the portion below
designated, into shares of Common Stock of Swing-N-Slide Corp., in
accordance with the terms of the Indenture referred to in this Debenture,
and directs that the shares issuable and deliverable upon conversion,
together with any check in payment for fractional shares, be issued in the
name of and delivered to the undersigned, unless a different name has been
indicated in the assignment below. If shares are to be issued in the name
of a person other than the undersigned, the undersigned will pay all
transfer taxes payable with respect thereto.
Dated:
Portion of Debenture to be
converted ($1.00 or an integral
multiple thereof):
$
Signature (for conversion only)
Please Print or Type Name and
Address, Including Zip code,
and Social Security or Other
Identifying Number
ARTICLE III.
THE SECURITIES
SECTION 3.01. Title and Terms. The aggregate principal amount
of Securities which may be authenticated and delivered under this
Indenture is limited to Nine Million Four Hundred Ninety-Four Thousand
Five Hundred Sixty-Two and 19/100 Dollars ($9,494,562.19) (plus any
additional Securities paid in lieu of cash interest as permitted herein),
except for Securities authenticated and delivered upon registration of
transfer of, or in exchange for, or in lieu of, other Securities pursuant
to Section 3.04, 3.05, 3.06, 9.06, 11.08, 13.01 or 15.02.
The Securities shall be known and designated as the "10%
Convertible Subordinated Debentures due 2004" of the Company. Their
Stated Maturity shall be February 15, 2004, and they shall bear interest
at the rate of 10% per annum, from the date of issuance or from the most
recent Interest Payment Date to which interest has been paid or duly
provided for, as the case may be, payable semiannually on April 15 and
October 15 commencing on the first such Interest Payment Date after the
date of issuance, until the principal thereof is paid or made available
for payment.
The principal of (and premium, if any) and interest on the
Securities shall be payable at the office or agency of the Company
maintained for such purpose and at any other office or agency maintained
by the Company for such purpose; provided, however, that (i) at the option
of the Company payment of interest may be made by check mailed to the
address of the Person entitled thereto as such address shall appear in the
Security Register and (ii) until February 15, 1999 interest on the
Securities may, at the option of the Company, be paid by the issuance of
additional securities, in the form of the Securities, in the principal
amount of the interest so payable, dated the Interest Payment Date for
such interest payment, with interest payable as provided herein with a
Stated Maturity of principal and interest as provided in the Securities
and otherwise identical to the Securities.
The Securities shall be redeemable as provided in Article XI.
The Securities shall be convertible as provided in Article XIII.
The Securities shall be subordinated in right of payment to
Senior Indebtedness as provided in Article XIV.
SECTION 3.02. Denominations. The Securities shall be issuable
only in registered form without coupons and only in denominations of $1.00
and any integral multiple thereof, except that when interest is payable in
Securities, the principal amount of the Securities shall be the amount of
the interest so payable and any fractional amount will be paid in cash.
SECTION 3.03. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its Chairman
of the Board, its President or one of its Vice Presidents, under its
corporate seal reproduced thereon attested by its Secretary or one of its
Assistant Secretaries. The signature of any of these officers on the
Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall
bind the Company, notwithstanding that such individuals or any of them
have ceased to hold such offices prior to the authentication and delivery
of such Securities or did not hold such offices at the date of such
Securities.
Any time and from time to time after the execution and delivery
of this Indenture, the Company may deliver Securities executed by the
Company to the Trustee for authentication, together with a Company Order
for the authentication and delivery of such Securities; and the Trustee in
accordance with such Company Order shall authenticate and deliver such
Securities as in this Indenture provided and not otherwise.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there appears
on such Security a certificate of authentication substantially in the form
provided for herein executed by the Trustee by manual signature, and such
certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered
hereunder.
SECTION 3.04. Temporary Securities. Pending the preparation of
definitive Securities, the Company may execute, and upon Company Order the
Trustee shall authenticate and deliver, temporary Securities which are
printed, lithographed, typewritten, mimeographed or otherwise produced, in
any authorized denomination, substantially of the tenor of the definitive
Securities in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the officers
executing such Securities may determine, as evidenced by their execution
of such Securities.
If temporary Securities are issued, the Company will cause
definitive Securities to be prepared without unreasonable delay. After
the preparation of definitive Securities, the temporary Securities shall
be exchangeable for definitive Securities upon surrender of the temporary
Securities at any office or agency of the Company designated pursuant to
Section 10.02, without charge to the Securityholder. Upon surrender for
cancellation of any one or more temporary Securities the Company shall
execute and the Trustee shall authenticate and deliver in exchange
therefor a like principal amount of definitive Securities of authorized
denominations. Until so exchanged the temporary Securities shall in all
respects be entitled to the same benefits under this Indenture as
definitive Securities.
SECTION 3.05. Registration, Registration of Transfer and
Exchange. The Company shall cause to be kept at the Corporate Trust
Office of the Trustee a register (the register maintained in such office
and in any other office or agency designated pursuant to Section 10.02
being herein sometimes collectively referred to as the "Security
Register") in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration of Securities
and of transfers of Securities. The Trustee is hereby appointed "Security
Registrar" for the purpose of registering Securities and transfers of
Securities as herein provided.
Upon surrender for registration of transfer of any Security at
an office or agency of the Company designated pursuant to Section 10.02
for such purpose, the Company shall execute, and the Trustee shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Securities of any authorized denominations,
of a like aggregate principal amount.
At the option of the Holder, Securities may be exchanged for
other Securities of any authorized denominations, of a like aggregate
principal amount, upon surrender of the Securities to be exchanged at such
office or agency. Whenever any Securities are so surrendered for
exchange, the Company shall execute, and the Trustee shall authenticate
and deliver, the Securities which the Securityholder making the exchange
is entitled to receive.
All Securities issued upon any registration of transfer or
exchange of Securities shall be the valid obligations of the Company,
evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Securities surrendered upon such registration of
transfer or exchange.
Every Security presented or surrendered for registration of
transfer or for exchange shall (if so required by the Company or the
Trustee) be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Company and the Security Registrar
duly executed, by the Securityholder thereof or his attorney duly
authorized in writing.
No service charge shall be made for any registration of transfer
or exchange of Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of
Securities, other than exchanges pursuant to Section 3.04, 9.06, 11.05 or
13.02 not involving any transfer.
The Company shall not be required (i) to issue, register the
transfer of or exchange any Security during a period beginning at the
opening of business 15 days before the day of the mailing of a notice of
redemption of Securities selected for redemption under Section 11.04 and
ending at the close of business on the day of such mailing, or (ii) to
register the transfer of or exchange any Security so selected for
redemption in whole or in part, except the unreturned portion of any
Security being redeemed in part.
SECTION 3.06. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee, the Company shall
execute and the Trustee shall authenticate and deliver in exchange
therefor a new Security of like tenor and principal amount and bearing a
number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any
Security and (ii) such security or indemnity as may be required by them to
save each of them and any agent of either of them harmless, then, in the
absence of notice to the Company or the Trustee that such Security has
been acquired by a bona fide purchaser, the Company shall execute and upon
its request the Trustee shall authenticate and deliver, in lieu of any
such destroyed, lost or stolen Security, a new Security of like tenor and
principal amount and bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security
has become or is about to become due and payable, the Company in its
discretion may, instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, 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 (including the fees and expenses of the Trustee) connected
therewith.
Every new Security issued pursuant to this Section in lieu of
any destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the
destroyed, lost or stolen Security shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Indenture
equally and proportionately with any and all other Securities duly issued
hereunder.
The provisions of this Section are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or repayment of mutilated, destroyed, lost or stolen
Securities.
SECTION 3.07. Payment of Interest; Interest Rights Preserved.
Except as provided in the last paragraph of this Section 3.07, interest on
any Security which is payable, and is punctually paid or duly provided
for, on any Interest Payment Date shall be paid to the Person in whose
name that Security (or one or more Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest.
Subject to the last paragraph of this Section 3.07, any interest
on any Security which is payable, but is not punctually paid or duly
provided for, on any Interest Payment Date (herein called "Defaulted
Interest") shall forthwith cease to be payable to the Securityholder on
the relevant Regular Record Due by virtue of having been such
Securityholder, and such Defaulted Interest may be paid by the Company, at
its election in each case, as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Securities (or their
respective Predecessor Securities) are registered at the close of
business on a Special Record Date for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The Company
shall notify the Trustee in writing of the amount of Defaulted
Interest proposed to be paid on each Security and the date of the
proposed payment, and at the same time the Company shall deposit with
the Trustee an amount of money (or, if the Defaulted Interest is
payable in Securities, Securities) equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or shall
make arrangements satisfactory to the Trustee for such deposit prior
to the date of the proposed payment, such money or Securities, as the
case may be, 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
15 days and not less than 10 days prior to the date of the proposed
payment and not less than 15 days (unless a shorter time period shall
be satisfactory to the Trustee) 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
Securityholder at his address as it appears in the Security Register,
not less than 10 days prior to such Special Record Date. Notice of
the proposed payment of such Defaulted Interest and the Special
Record Date therefor having been so mailed, such Defaulted Interest
shall be paid to the Persons in whose names the Securities (or their
respective Predecessor Securities) are registered at the close of
business on such Special Record Date and shall no longer be payable
pursuant to the following Clause (2).
(2) The Company may make payment of any Defaulted Interest
in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Securities may be listed, and
upon such notice as may be required by such exchange, if, after
notice given by the Company to the Trustee of the proposed payment
pursuant to this Clause, such manner of payment shall be deemed
practicable by the Trustee.
Subject to the foregoing provisions of this Section, each
Security delivered under this Indenture upon registration of transfer of
or in exchange for or in lieu of any other Security shall carry the rights
to interest accrued and unpaid, and to accrue, which were carried by such
other Security.
Interest whose Stated Maturity is after the date of conversion
of any Security shall not be payable. In the case of any Security which
is converted after any Regular Record Date and on or prior to the next
succeeding Interest Payment Date, interest whose Stated Maturity is on
such Interest Payment Date shall not be payable on such Interest Payment
Date and shall not be paid to the Person in whose name that Security (or
one or more Predecessor Securities) is registered at the close of business
on such Regular Record Date.
SECTION 3.08. Persons Deemed Owners. Prior to due presentment
of a Security for registration of transfer, the Company, the Trustee and
any agent of the Company or the Trustee may treat the Person in whose name
such Security is registered as the owner of such Security for the purpose
of receiving payment of principal of (and premium, if any) and (subject to
Section 3) interest on such Security and for all other purposes whatsoever
whether or not such Security be overdue, and neither the Company, the
Trustee nor any agent of the Company or the Trustee shall be affected by
notice to the contrary.
SECTION 3.09. Cancellation. All Securities surrendered to
payment, redemption, registration of transfer or exchange or conversion
shall, if surrendered to any Person other than the Trustee, be delivered
to the Trustee and shall, subject to any limitation imposed by law or
regulation on the destruction of securities, be promptly canceled by it.
The Company may at any time deliver to the Trustee for cancellation any
Securities previously authenticated and delivered hereunder which the
Company may have acquired in any manner whatsoever, and all Securities so
delivered shall, subject to any limitation imposed by law or regulation on
the destruction of securities, be promptly canceled by the Trustee. No
Securities shall be authenticated in lieu of or in exchange for any
Securities canceled as provided in this Section, except as expressly
permitted by this Indenture. All canceled Securities held by the Trustee
shall, subject to any limitation imposed by law or regulation on the
destruction of securities, be destroyed by the Trustee unless the Company
instructs the Trustee by Company Order to return the Securities to the
Company.
SECTION 3.10. Computation of Interest. Interest on
the Securities shall be computed for the actual number of days elapsed on
the basis of a year of 365 days.
SECTION 3.11. CUSIP Numbers. Pursuant to a recommendation
promulgated by the Committee On Uniform Security Identification Procedures
("CUSIP"), the Company may cause CUSIP numbers (the "CUSIP Numbers") to be
printed on the Securities and may direct the Trustee to use CUSIP Numbers
in notices of redemption as a convenience to Holders of Securities. No
representation is made as to the accuracy of the CUSIP Numbers either as
printed on the Securities or as contained in any notice of redemption and
reliance may be placed only on the other identification numbers placed
thereon.
ARTICLE IV.
SATISFACTION AND DISCHARGE
SECTION 4.01. Satisfaction and Discharge of Indenture. This
Indenture shall cease to be of further effect (except as to any surviving
rights of conversion, registration of transfer or exchange of Securities
herein expressly provided for), and the Trustee, on demand of and at the
expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when:
(1) either:
(i) all Securities theretofore authenticated and
delivered (other than (x) Securities which have been
destroyed, lost or stolen and which have been replaced or
paid as provided in Section 3.06 and (y) Securities for
whose payment money has theretofore been deposited in
trust or segregated and held in trust by the Company and
thereafter repaid to the Company or discharged from such
trust, as provided in Section 10.03) have been delivered,
to the Trustee for cancellation; or
(ii) all such Securities not theretofore delivered to
the Trustee for cancellation:
(A) have become due and payable; or
(B) will become due and payable at their Stated
Maturity within one year; or
(C) are to be called for redemption within one
year under arrangements satisfactory to the Trustee
for the giving of notice of redemption by the Trustee
in the name, and at the expense, of the Company;
and the Company, in the case of (A), (B) or (C) above, has deposited
or caused to be deposited with the Trustee as trust funds in trust
for the purpose an amount sufficient to pay and discharge the entire
indebtedness on such Securities not theretofore delivered to the
Trustee for cancellation, for principal (and premium, if any) and
interest to the date of such deposit (in the case of Securities which
have become due and payable) or to the Stated Maturity or Redemption
Date, as the case may be;
(2) the Company has paid or caused to be paid all other
sums payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent herein provided for relating to the satisfaction
and discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 6.07 and the
obligations of the Trustee to any Authenticating Agent under Section 6.14
shall survive and, if money shall have been deposited with the Trustee
pursuant to subclause (ii) of clause (1) of this Section, the obligations
of the Trustee under Section 4.02 and the last paragraph of Section 10.03
shall survive.
SECTION 4.02. Application of Trust Money. Subject to the
provisions of the last paragraph of Section 10.03, all money deposited
with the Trustee pursuant to Section 4.01 shall be held in trust and
applied by it in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium,
if any) and interest for whose payment such money has been deposited with
the Trustee. All moneys deposited with the Trustee pursuant to Section
4.01 (and held by it or any Paying Agent) for the payment of Securities
subsequently converted shall be returned to the Company upon Company
Request.
ARTICLE V.
REMEDIES
SECTION 5.01. Events of Default. "Event of Default," wherever
used herein, means any one of the following events (whatever the reason
for such Event of Default and whether it shall be occasioned by the
provisions of Article XIV or be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court
or any order, rule or regulation or any administrative or governmental
body):
(1) default in the payment of any interest upon any
Security when it becomes due and payable and continuance of such
default for a period of 10 days; or
(2) default in the payment of the principal of (or
premium, if any, on) any Security at its Maturity whether or not such
payment is prohibited by the subordination provisions of this
Indenture and continuance of such default for a period of 30 days; or
(3) default in the performance, or breach, of any covenant
or warranty of the Company in this Indenture (other than a covenant
or warranty a default in whose performance or whose breach is
elsewhere in this Section specifically dealt with), and continuance
of such default or breach for a period of 30 days after there has
been given, by registered or certified mail, to the Company by the
Trustee or to the Company and the Trustee by the holders of at least
10% in principal amount of the Outstanding Securities a written
notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice of Default"
hereunder; or
(4) the entry by a court having jurisdiction in the
premises of (A) a decree or order for relief in respect of the
Company in an involuntary case or proceeding under any applicable
Federal or state bankruptcy, insolvency, reorganization or other
similar law or (B) a decree or order adjudging the Company a bankrupt
or insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or in
respect of the Company under any applicable Federal or state law, or
appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or of any
substantial part of its property, or ordering the winding up or
liquidation of its affairs, and the continuance of any such decree or
order for relief or any such other decree or order unstayed and in
effect for a period of 60 consecutive days; or
(5) the commencement by the Company of a voluntary case or
proceeding under any applicable Federal or state bankruptcy,
insolvency, reorganization or other similar law or of any other case
or proceeding to be adjudicated a bankrupt or insolvent, or the
consent by it to the entry of a decree or order for relief in respect
of the Company in an involuntary case or proceeding under any
applicable Federal or state bankruptcy, insolvency, reorganization or
other similar law or to the commencement of any bankruptcy or
insolvency case or proceeding against it, or the filing by it of a
petition or answer or consent seeking reorganization or relief under
any applicable Federal or state law, or the consent by it to the
filing of such petition or to the appointment of or taking possession
by a custodian, receiver, liquidator, assignee, trustee, sequestrator
or similar official of the Company or of any substantial part of its
property, or the making by it of an assignment for the benefit of
creditors, or the admission by it in writing of its inability to pay
its debts generally as they become due, or the taking of corporate
action by the Company in furtherance of any such action.
SECTION 5.02. Acceleration of Maturity; Rescission and
Annulment. If any Event of Default other than an event of default
described in Subsections 5.01(4) and 5.01(5) occurs and is continuing,
then and in every such case the Trustee or the Holders of not less than
25% in principal amount of the Outstanding Securities may declare the
principal of all the Securities to be due and payable immediately, by a
notice in writing to the Company (and to the Trustee if given by Holders),
and upon any such declaration such principal shall become immediately due
and payable. If an Event of Default described in Subsections 5.01(4) and
5.01(5) shall occur, then in every such case the unpaid principal balance
hereof and all accrued and unpaid interest shall automatically become due
and payable.
At any time after such a declaration of acceleration has been
made and before a judgment or decree for payment of the money due has been
obtained by the Trustee as hereinafter in this Article provided, the
Holders of a majority in principal amount of the Outstanding Securities,
by written notice to the Company and the Trustee, may rescind and annul
such declaration and its consequences if:
(1) the Company has paid or deposited with the Trustee a
sum (or Securities, if applicable) sufficient to pay:
(A) all overdue installments of interest on all
Securities;
(B) the principal of (and premium, if any, on) any
Securities which have become due otherwise than by such
declaration of acceleration and interest thereon at the
rate borne by the Securities;
(C) to the extent that payment of such interest is
lawful, interest upon overdue installments of interest at
the rate borne by the Securities; and
(D) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel; and
(2) all Events of Default, other than the nonpayment of
the principal of Securities which have become due solely by such
declaration of acceleration, have been cured or waived as provided in
Section 5.13.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 5.03. Collection of Indebtedness and Suits for
Enforcement by Trustee. The Company covenants that if:
(1) default is made in the payment of any installment of
interest on any Security when such interest become due and payable
and such default continues for a period of 30 days; or
(2) default is made in the payment of the principal of (or
premium, if any, on) any Security at the Maturity thereof;
the Company will, upon demand of the Trustee, pay to it, for the benefit
of the Holders of such Securities, the whole amount then due and payable
on such Securities for principal (and premium, if any) and interest, with
interest upon the overdue principal (and premium, if any) and, to the
extent that payment of such interest shall be legally enforceable, upon
overdue installments of interest, at the rate borne by the Securities and,
in addition thereto, such further amount as shall be sufficient to cover
the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee and any
predecessor Trustee, their agents and counsel.
If the Company fails to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express trust,
may institute a judicial proceeding for the collection of the sums so due
and unpaid, may prosecute such proceeding to judgment or final decree and
may enforce the same against the Company or any other obligor upon the
Securities and collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Company or any other
obligor upon the Securities, wherever situated.
If an Event of Default occurs and is continuing, the Trustee may
in its discretion proceed to protect and enforce its rights and the rights
of the Holders by such appropriate judicial proceedings as the Trustee
shall deem most effectual to protect and enforce any such rights, whether
for the specific enforcement of any covenant or agreement in this
Indenture or in aid of the exercise of any power granted herein, or to
enforce any other proper remedy.
SECTION 5.04. Trustee May File Proofs of Claim. In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or
their creditors, the Trustee (irrespective of whether the principal of the
Securities shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Trustee shall
have made any demand on the Company for the payment of overdue principal
or interest) shall be entitled and empowered, by intervention and in such
proceeding or otherwise:
(1) to file and prove a claim for the whole amount of
principal (and premium, if any) and interest owing and unpaid in
respect of the Securities and to file such other papers or documents
as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee and any
predecessor Trustee, their agents and counsel) and of the Holders
allowed in such judicial proceeding; and
(2) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator
or other similar official in any such judicial proceeding is hereby
authorized by each Holder to make such payments to the Trustee and, in the
event that the Trustee shall consent to the making of such payments
directly to Holders, to pay to the Trustee any amount due it or any
predecessor Trustee for the reasonable compensation, expenses,
disbursements and advances of the Trustee and any predecessor Trustee,
their agents and counsel, and any other amounts due the Trustee or any
predecessor Trustee under Section 6.07.
Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Securities or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder in any
such proceeding.
SECTION 5.05. Trustee May Enforce Claims Without Possession of
Securities. All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the
possession of any of the Securities or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the
Trustee shall be brought in its own name as trustee of an express trust,
and any recovery of judgment shall, after provision for the payment of the
reasonable compensation, expenses, disbursements and advances of the
Trustee and any predecessor Trustee, their agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
SECTION 5.06. Application of Money Collected. Subject to
Article XIV, any money collected by the Trustee pursuant to this Article
shall be applied in the following order, at the date or dates fixed by the
Trustee and, in case of the distribution of such money or Securities, as
the case may be, on account of principal (or premium, if any) or interest,
upon presentation of the Securities and the notation thereon of the
payment if only partially paid and upon surrender thereof if fully paid:
FIRST: to the payment of all amounts due the Trustee or
any predecessor Trustee under Section 6.07; and
SECOND: to the payment of the amounts then due and unpaid
for principal of (and premium, if any) and interest on the
Securities in respect of which or for the benefit of which such
money or Securities, as the case may be, has been collected,
ratably, without preference or priority of any kind, according
to the amounts due and payable on such Securities for principal
(and premium, if any) and interest, respectively.
SECTION 5.07. Limitation on Suits. No Holder of any Security
shall have any right to institute any proceeding, judicial or otherwise,
with respect to this Indenture, or for the appointment of a receiver or
trustee, or for any other remedy hereunder, unless:
(1) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(2) the Holders of not less than 25% in principal amount
of the Outstanding Securities shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default
in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to
be incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute any
such proceeding; and
(5) no direction inconsistent with such written request
has been given to the Trustee during such 60-day period by the
Holders of a majority in principal amount of the Outstanding
Securities; it being understood and intended that no one or more
Holders shall have any right in any manner whatever by virtue of, or
by availing of, any provision of the Indenture to affect, disturb or
prejudice the rights of any other Holders, or to obtain or to seek to
obtain priority or preference over any other Holders or to enforce
any right under this Indenture, except in the manner herein provided
and for the equal and ratable benefit of all the Holders.
SECTION 5.08. Unconditional Right of Holders to Receive
Principal, Premium and Interest and to Convert. Notwithstanding any other
provision in this Indenture, the Holder of any Security shall have the
right, which is absolute and unconditional, to receive payment of the
principal of (and premium, if any) and (subject to Section 3.07) interest
on such Security on the respective Stated Maturities expressed in such
Security (or, in the case of redemption, on the Redemption Date) and to
convert such Security in accordance with Article XIII and to institute
suit for the enforcement of any such payment and right to convert, and
such rights shall not be impaired without consent of such Holder.
SECTION 5.09. Restoration of Rights and Remedies. If the
Trustee or any Holder has instituted any proceeding to enforce any right
or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the
Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders
shall be restored severally and respectively to their former positions
hereunder and thereafter all rights and remedies of the Trustee and the
Holders shall continue as though no such proceeding had been instituted.
SECTION 5.10. Rights and Remedies Cumulative. Except as
otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities in the last paragraph of
Section 3.06, no right or remedy herein conferred upon or reserved to the
Trustee or to the Holders is intended to be exclusive of any other right
or remedy, and every right and remedy shall, to the extent permitted by
law, be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise.
The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any
other appropriate right or remedy.
SECTION 5.11. Delay or Omission Not Waiver. No delay or
omission of the Trustee or of any Holder of any Security to exercise any
right or remedy accruing upon any Event of Default shall impair any such
right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by
law to the Trustee or to the Holders may be exercised from time to time,
and as often as may be deemed expedient, by the Trustee or by the Holders,
as the case may be.
SECTION 5.12. Control by Holders. The Holders of a majority in
principal amount of the Outstanding Securities (determined as provided in
Section 5.13) shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, provided, that:
(1) such direction shall not be in conflict with any rule
of law or with this Indenture; and
(2) such direction shall not impose additional liability
on the Trustee; and
(3) the Trustee may take any other action deemed proper by
the Trustee which is not inconsistent with such direction.
SECTION 5.13. Waiver of Past Defaults. The Holders of not less
than a majority in principal amount of the Outstanding Securities may on
behalf of the Holders of all the Securities consent to the waiver of any
past default hereunder and its consequences except a default:
(1) in the payment of the principal of (or premium, if
any) or interest on any Security; or
(2) in respect of a covenant or provision hereof which
under Article IX cannot be modified or amended without the consent of
the Holder of each Outstanding Security affected.
Upon any such waiver, such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
For the purposes of this Section 5.13, Section 5.12 and
paragraph (3) of Subsection 6.01(c) below in determining whether the
Holders of the required principal amount of the Outstanding Securities
have concurred in any such direction or consent, Outstanding Securities
owned by the Company, or by any Affiliate of the Company, shall be
disregarded, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction or consent,
only Outstanding Securities which the Trustee knows are so owned shall be
so disregarded.
The record date for purposes of determining the identity of the
Holders entitled to vote or consent to any action by vote or consent
authorized or permitted by Sections 5.12 and 5.13 shall be the later of
thirty (30) days prior to the first solicitation of such consent or the
date of the most recent list of holders furnished to the Trustee pursuant
to Section 7.01 prior to such solicitation.
SECTION 5.14. Undertaking for Costs. All parties to this
Indenture agree, and each Holder of any Security 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,
suffered 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; but the provisions of this Section shall not apply to any
suit instituted by the Trustee, to any suit instituted by any Holder, or
group of Holders, holding in the aggregate more than 10% in principal
amount of the Outstanding Securities, or to any suit instituted by any
Holder of the enforcement of the payment of the principal of (or premium,
if any) or interest on any Security on or after the respective Stated
Maturities expressed in such Security (or, in the case of redemption, on
or after the Redemption Date) or for the enforcement of the right to
convert any Security in accordance with Article XIII.
SECTION 5.15. Waiver of Stay or Extension Laws. The Company
covenants (to the extent that it may lawfully do so) that it will not at
any time insist upon, or plead, or in any manner whatsoever claim or take
the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or
the performance of this Indenture; and the Company (to the extent that it
may lawfully do so) hereby expressly waives all benefit or advantage of
any such law and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and
permit the execution of every such power as though no such law had been
enacted.
ARTICLE VI.
THE TRUSTEE
SECTION 6.01. Certain Duties and Responsibilities. (a) Except
during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon 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 provision 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) In case an Event of Default has occurred and is
continuing, 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.
(c) 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 wilful
misconduct, except that:
(1) this Subsection shall not be construed to limit the
effect of Subsection (a) of this Section;
(2) the Trustee shall not be liable for any error or
judgment made in good faith by a Responsible Officer, unless it shall
be proved that the Trustee was negligent in ascertaining the
pertinent facts;
(3) 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 Outstanding Securities (determined as
provided in Section 5.13) 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
(4) no provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if it
shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(d) whether or not therein expressly so provided, every
provision of this Indenture relating to the conduct or affecting the
liability of or affording protection to the Trustee shall be subject
to the provisions of this Section.
SECTION 6.02. Notice of Defaults. Within 90 days after the
occurrence of any default hereunder, the Trustee shall transmit by mail to
all Holders, as their names and addresses appear in the Security Register,
notice of such default hereunder known to the Trustee, unless such default
shall have been cured or waived; provided, however, that, except in the
case of a default in the payment of the principal of (or premium, if any)
or interest on any Security, the Trustee shall be protected in withholding
such notice if and so long as the board of directors, the executive
committee or a trust committee of directors or Responsible Officers of the
Trustee in good faith determine that the withholding of such notice is in
the interest of the Holders; and provided further that in the case of any
default of the character specified in Section 5.01(4), no such notice to
Holders shall be given until at least 30 days after the occurrence
thereof. For the purpose of this Section, the term "default" means any
event which is, or after notice or lapse of time or both would become, an
Event of Default.
SECTION 6.03. Certain Rights of Trustee. Subject to the
provisions of Section 6.01, which such section shall govern in the case of
any conflict between Section 6.01 and this Section 6.03:
(1) the Trustee may rely and shall be protected in acting
or refraining upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note or other paper or document believed by
it to be genuine and to have been signed or presented by the proper
party or parties;
(2) any request or direction of the Company mentioned
herein shall be sufficiently evidenced by a Company Request or
Company Order and any resolution of the Board of Directors may be
sufficiently evidenced by a Board Resolution;
(3) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any action
hereunder, the Trustee (unless other evidence be herein specifically
prescribed) may request, and the Company shall provide, an Officers'
Certificate with respect to such matter and, in the absence of bad
faith on its part, the Trustee may rely upon such Officers'
Certificate;
(4) the Trustee may consult with counsel and request the
written advice of such counsel or an Opinion of Counsel, which shall
be full and complete authorization and protection in respect of any
action taken, suffered or omitted by it hereunder in good faith and
in reliance thereon;
(5) the Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Indenture at the
request or direction of any of the Holders pursuant to this
Indenture, unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with such
request or direction;
(6) the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note 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;
(7) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder;
(8) the Trustee shall not be liable for any action taken
or omitted by it in good faith and believed by it to be authorized or
within the discretion, rights or powers conferred upon it by this
Indenture; and
(9) the Trustee shall not be deemed to have knowledge or
notice of any default or Event of Default unless a Responsible
Officer has actual knowledge thereof or unless the holders of not
less than 25% of the aggregate principal amount of the Securities
then outstanding have notified the Trustee thereof.
SECTION 6.04. Not Responsible for Recitals or Issuances of
Securities. The recitals contained herein and in the Securities, except
the Trustee's certificates of authentication, shall be taken as the
statements of the Company, and the Trustee assumes no responsibility for
their correctness. The Trustee makes no representations as to the
validity or sufficiency of this Indenture or of the Securities. The
Trustee shall not be accountable for the use or application by the Company
of Securities or the proceeds thereof.
SECTION 6.05. May Hold Securities. The Trustee, any
Authenticating Agent, any Paying Agent, any Security Registrar or any
other agent of the Company, in its individual or any other capacity, may
become the owner or pledgee of Securities and, subject to Sections 6.08
and 6.13, may otherwise deal with the Company with the same rights it
would have if it were not Trustee, Authenticating Agent, Paying Agent,
Security Registrar or such other agent.
SECTION 6.06. Money Held in Trust. Money held by the Trustee
in trust hereunder need not be segregated from other funds except to the
extent required by law. The Trustee shall be under no liability for
interest on any money received by it hereunder except as otherwise agreed
with the Company.
SECTION 6.07. Compensation and Reimbursement. The Company
agrees
(1) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it herein (which
compensation shall not be limited by any provision of law in regard
to the compensation of a trustee of any express trust);
(2) to reimburse the Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by
the Trustee in accordance with any provisions of this Indenture
(including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or
bad faith; and
(3) to indemnify each of the Trustee and any predecessor
Trustee for, and to hold them harmless against, any loss, liability
or expense (except to the extent due to its negligence or bad faith)
arising out of or in connection with the acceptance or administration
of this trust or the performance of its duties hereunder, including
the costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of
its powers or duties hereunder.
Whenever the Trustee incurs expenses or renders services after
the occurrence of an Event of Default specified in Clause (4) or (5) of
Section 5.01, such expenses and all compensation for such services are
intended to constitute expenses of administration under any applicable
Federal or state bankruptcy, insolvency, reorganization or other similar
law.
SECTION 6.08. Disqualification; Conflicting Interests. (a) If
the Trustee has or shall acquire any conflicting interest, as defined in
this Section, it shall, within 90 days after ascertaining that it has such
conflicting interest, either eliminate such conflicting interest or resign
in the manner and with the effect hereinafter specified in this Article.
(b) In the event that the Trustee shall fail to comply with
the provisions of Subsection (a) of this Section, the Trustee shall,
within 10 days after the expiration of such 90 day period, transmit by
mail to all Holders, as their names and addresses appear in the Security
Register, notice of such failure.
(c) For the purposes of this Section, the Trustee shall be
deemed to have a conflicting interest if:
(1) the Trustee is trustee under another indenture under
which any other securities, or certificates of interest or
participation in any other securities, of the Company are
outstanding, unless such other indenture is a collateral trust
indenture under which the only collateral consists of Securities
issued under this Indenture, provided that there shall be excluded
from the operation of this paragraph any indenture or indentures
under which other securities, or certificates of interest or
participation in other securities, of the Company are outstanding,
if:
(i) this Indenture and such other indenture or
indentures are wholly unsecured and such other indenture or
indentures are hereafter qualified under the Trust Indenture
Act, unless the Commission shall have found and declared by
order pursuant to Section 3.05(b) or Section 3.07(c) of the
Trust Indenture Act that differences exist between the
provisions of this Indenture and the provisions of such other
indenture or indentures which are so likely to involve a
material conflict of interest as to make it necessary in the
public interest or for the protection of investors to disqualify
the Trustee from acting as such under this Indenture or such
other indenture or indentures; or
(ii) the Company shall have sustained the burden of
proving, on application to the Commission and after opportunity
for hearing thereon, that trusteeship under this Indenture and
such other indenture or indentures is not so likely to involve a
material conflict of interest as to make it necessary in the
public interest or for the protection of investors to disqualify
the Trustee from acting as such under one of such indentures;
(2) the Trustee or any of its directors or executive
officers is an obligor upon the Securities or an underwriter for the
Company;
(3) the Trustee directly or indirectly controls or is
directly or indirectly controlled by or is under direct or indirect
common control with the Company or an underwriter for the Company;
(4) the Trustee or any of its directors or executive
officers is a director, officer, partner, employee, appointee or
representative of the Company, or of an underwriter (other than the
Trustee itself) for the Company who is currently engaged in the
business of underwriting, except that (i) one individual may be a
director or a executive or both, of the Trustee and a director or an
executive officer, or both, of the Company but may not be at the same
time an executive officer of both the Trustee and the Company; (ii)
if and so long as the number of directors of the Trustee in office is
more than nine, one additional individual may be a director or an
executive officer, or both, of the Trustee and a director of the
Company; and (iii) the Trustee may be designated by the Company or by
an underwriter for the Company to act in the capacity of transfer
agent, registrar, custodian, paying agent, fiscal agent, escrow agent
and depositary, or in any other similar capacity, or, subject to the
provisions of paragraph (1) of this Subsection, as trustee, whether
under an indenture or otherwise;
(5) 10% or more of the voting securities of the Trustee is
beneficially owned either by the Company or by any director, partner
or executive officer thereof, or 20% or more of such voting
securities is beneficially owned, collectively, by any two or more of
such persons; or 10% or more of the voting securities of the Trustee
is beneficially owned either by an underwriter for the Company or by
any director, partner or executive officer thereof, or is
beneficially owned, collectively, by any two or more such persons;
(6) the Trustee is the beneficial owner of, or holds as
collateral security for an obligation which is in default (as
hereinafter in this Subsection defined), (i) 5% or more of the voting
securities, or 10% or more of any other class of security, of the
Company not including the Securities issued under this Indenture and
securities under any other indenture under which the Trustee is also
trustee, or (ii) 10% or more of any class of security of a
underwriter for the Company;
(7) the Trustee is the beneficial owner of, or holds as
collateral security for an obligation which is in default (as
hereinafter in this Subsection defined), 5% or more of the voting
securities of any person who, to the knowledge of the Trustee, owns
10% or more of the voting securities of, or controls directly or
indirectly or is under direct or indirect common control with, the
Company;
(8) the Trustee is the beneficial owner of, or holds as
collateral security for an obligation which is in default (as
hereinafter in this Subsection defined), 10% or more of any class of
security of any person who, to the knowledge of the Trustee, owns 50%
or more of the voting securities of the Company; or
(9) the Trustee owns, on April 15th in any calendar year,
in the capacity of executor, administrator, testamentary or inter
vivos trustee, guardian, committee or conservator, or in any other
similar capacity, an aggregate of 25% or more of the voting
securities, or of any class of security, of any person, the
beneficial ownership of a specified percentage of which would have
constituted a conflicting interest under paragraph (6), (7) or (8) of
this Subsection. As to any such securities of which the Trustee
acquired ownership through becoming executor, administrator or
testamentary trustee of an estate which included them, the provisions
of the preceding sentence shall not apply, for a period of two years
from the date of such acquisition, to the extent that such securities
included in such estate do not exceed 25% of such voting securities
or 25% of any such class of security. Promptly after April 15th in
each calendar year, the Trustee shall make a check of its holdings of
such securities in any of the above-mentioned capacities as of such
April 15th. If the Company fails to make payment in full of the
principal of (or premium, if any) or interest on any of the
Securities when and as the same becomes due and payable, and such
failure continues for 30 days thereafter, the Trustee shall make a
prompt check of its holdings of such securities in any of the above-
mentioned capacities as of the date of the expiration of such 30-day
period, and after such date, notwithstanding the foregoing provisions
of this paragraph, all such securities so held by the Trustee, with
sole or joint control over such securities vested in it, shall, but
only so long as such failure shall continue, be considered as though
beneficially owned by the Trustee for the purposes of paragraphs (6),
(7) and (8) of this Subsection.
(10) except under the circumstances described in paragraphs
(1), (3), (4), (5), (6) of Subsection 6.13(b), the Trustee shall be
or shall become a creditor of the obligor.
The specification of percentages in paragraphs (5) to (9),
inclusive, of this Subsection shall not be construed as indicating that
the ownership of such percentages of the securities of a person is or is
not necessary or sufficient to constitute direct or indirect control for
the purposes of paragraph (3) or (7) of this Subsection.
For the purposes of paragraphs (6), (7), (8) and (9) of this
Subsection only, (i) the terms "security" and "securities" shall include
only such securities as are generally known as corporate securities, but
shall not include any note or other evidence of indebtedness issued to
evidence an obligation to repay moneys lent to a person by one or more
banks, trust companies or banking firms, or any certificate of interest or
participation in any such note or evidence of indebtedness; (ii) an
obligation shall be deemed to be "in default" when a default in payment of
principal shall have continued for 30 days or more and shall not have been
cured; and (iii) the Trustee shall not be deemed to be the owner or holder
of (A) any security which it holds as collateral security, as trustee or
otherwise, for an obligation which is not in default as defined in clause
(ii) above, or (B) any security which it holds as collateral security
under this Indenture, irrespective of any default hereunder, or (C) any
security which it holds as agent for collection, or as custodian, escrow
agent or depositary, or in any similar representative capacity.
(d) For the purpose of this Section:
(1) The term "underwriter," when used with reference to
the Company, means every person who, within three years prior to the
time as of which the determination is made, has purchased from the
Company with a view to, or has offered or sold for the Company in
connection with, the distribution of any security of the Company
outstanding at such time, or has participated or has had a direct or
indirect participation in any such undertaking, or has participated
or has had a participation in the direct or indirect underwriting of
any such undertaking, but such term shall not include a person whose
interest was limited to a commission from an underwriter or dealer
not in excess of the usual and customary distributors' or sellers'
commission.
(2) The term "director" means any director of a
corporation or any individual performing similar functions with
respect to any organization, whether incorporated or unincorporated.
(3) The term "person" means an individual, a corporation,
a partnership, an association, a joint-stock company, a trust, an
unincorporated organization or a government or political subdivision
thereof. As used in this paragraph, the term "trust" shall include
only a trust where the interest or interests of the beneficiary or
beneficiaries are evidenced by a security.
(4) The term "voting security" means any security
presently entitling the owner or holder to vote in the direction or
management of the affairs of a person, or any security issued under
or pursuant to any trust, agreement or arrangement whereby a trustee
or trustees or agent or agents for the owner or holder of such
security are presently entitled to vote in the direction or
management of the affairs of a person.
(5) The term "Company" means any obligor upon the
Securities.
(6) The term "executive officer" means the president,
every vice president, every trust officer, the cashier, the secretary
and the treasurer of a corporation, and any individual customarily
performing similar functions with respect to any organization whether
incorporated or unincorporated but shall not include the chairman of
the board of directors.
(e) The percentages of voting securities and other
securities specified in this Section shall be calculated in accordance
with the following provisions:
(1) A specified percentage of the voting securities of the
Trustee, the Company or any other person referred to in this Section
(each of whom is referred to as a "person" in this paragraph) means
such amount of the outstanding voting securities of such person as
entitles the holder or holders thereof to cast such specified
percentage of the aggregate votes which the holders of all the
outstanding voting securities of such person are entitled to cast in
the direction or management of the affairs of such person.
(2) A specified percentage of a class of securities of a
person means such percentage of the aggregate amount of securities of
the class outstanding.
(3) The term "amount," when used in regard to securities,
means the principal amount if relating to evidences of indebtedness,
the number of shares if relating to capital shares and the number of
units if relating to any other kind of security.
(4) The term "outstanding" means issued and not held by or
for the account of the issuer. The following securities shall not be
deemed outstanding within the meaning of this definition:
(i) securities of an issuer held in a sinking fund
relating to securities of the issuer of the same class;
(ii) securities of an issuer held in a sinking fund
relating to another class of securities of the issuer, if the
obligation evidenced by such other class of securities is not in
default as to principal or interest or otherwise;
(iii) securities pledged by the issuer thereof as
security for an obligation of the issuer not in default as to
principal or interest or otherwise; and
(iv) securities held in escrow if placed in escrow by
the issuer thereof;
provided, however, that voting securities of any issuer shall be
deemed outstanding if any person other than the issuer is entitled to
exercise the voting rights thereof.
(5) A security shall be deemed to be of the same class as
another security if both securities confer upon the holder or holders
thereof substantially the same rights and privileges; provided,
however, that, in the ease of secured evidences of indebtedness, all
of which are issued under a single indenture, differences in the
interest rate or maturity dates of various series thereof shall not
be deemed sufficient to constitute such series different classes; and
that, in the case of unsecured evidences of indebtedness, differences
in the interest rates or maturity dates thereof shall not be deemed
sufficient to constitute them securities of different classes,
whether or not they are issued under a single indenture.
SECTION 6.09. Corporate Trustee Required; Eligibility. There
shall at all times be a Trustee hereunder which shall be a corporation
organized and doing business under the laws of the United States of
America, any State thereof or the District of Columbia, authorized under
such laws to exercise corporate trust powers, having a combined capital
and surplus of at least $50,000,000 and subject to supervision or
examination by Federal or State authority. If such corporation publishes
reports of condition at least annually, pursuant to law or the
requirements of said supervising or examining authority, then for the
purposes of this Section, the combined capital and surplus of such
corporation 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 provision of
this Section, it shall resign immediately in the manner and with the
effect hereinafter specified in this Article.
SECTION 6.10. Resignation and Removal; Appointment of
Successor.
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the successor
Trustee under Section 6.11.
(b) The Trustee may resign at any time by giving written
notice thereof to the Company. If an instrument of acceptance by a
successor Trustee shall not have been delivered to the Trustee within
30 days after the giving of such notice of resignation, the resigning
Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the
Holders of a majority in principal amount of the outstanding
Securities, delivered to the Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section
6.08(a) after written request therefor by the Company or by any
Holder who has been a bona fide Holder of a Security for at
least six months; or
(2) the Trustee shall cease to be eligible under
Section 6.09 and shall fail to resign after written request
therefor by the Company or by any such Holder; or
(3) the Trustee shall become incapable of acting or
shall be adjudged a bankrupt or insolvent or a receiver of the
Trustee or of its property shall be appointed or any public
officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation,
conservation or liquidation;
then in any such case, (A) the Company by a Board Resolution may remove
the Trustee, or (B) subject to Section 5.14, any Holder who has been a
bona fide Holder of a Security for at least six months may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of
Trustee for any cause, the Company, by a Board Resolution, shall
promptly appoint a successor Trustee. If, within one year after such
resignation, removal or incapability, or the occurrence of such
vacancy, a Trustee shall be appointed by Act of the Holders of a
majority in principal amount of the Outstanding Securities delivered
to the Company and the retiring Trustee, the Trustee so appointed
shall, forthwith upon its acceptance of such appointment, become the
Trustee and supersede the successor Trustee appointed by the Company.
If no successor Trustee shall have been so appointed by the Company
or the Holders and accepted appointment in the manner hereinafter
provided, any Holder who has been a bona fide Holder for at least six
months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the appointment of a
successor Trustee.
(f) The Company shall give notice of each resignation and
each removal of the Trustee and each appointment of a successor
Trustee by mailing written notice of such event by first-class mail,
postage prepaid, to all Holders as their names and addresses appear
in the Security Register. Each notice shall include the name of the
successor Trustee and the address of its Corporate Trust Office.
SECTION 6.11. Acceptance of Appointment by Successor. Every
successor Trustee appointed hereunder shall execute, acknowledge and
deliver to the Company and to the retiring Trustee an instrument accepting
such appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee; but, on request of the
Company or the successor Trustee, such retiring Trustee shall, upon
payment of its charges, execute and deliver an instrument transferring to
such successor Trustee all the rights, powers and trusts of the retiring
Trustee and shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder.
Upon request of any successor Trustee, the Company shall execute any and
all instruments for more fully and certainly vesting in and confirming to
such successor Trustee all such rights, power and trusts.
No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and
eligible under this Article.
SECTION 6.12. Merger, Conversion, Consolidation or Succession
to Business. Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation succeeding to all or
substantially all the corporate trust business of the Trustee, shall be
the successor of the Trustee hereunder, provided such corporation shall be
otherwise qualified and eligible under this Article, without the execution
or filing of any paper or any further act on the part of any of the
parties hereto. In case any Securities shall have been authenticated, but
not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such
Securities.
SECTION 6.13. Preferential Collection of Claims Against
Company. (a) Subject to Subsection (b) of this Section, if the Trustee
shall be or shall become a creditor, directly or indirectly, secured or
unsecured, of the Company within four months prior to a default, as
defined in Subsection (c) of this Section, or subsequent to such a
default, then, unless and until such default shall be cured, the Trustee
shall set apart and hold in a special account for the benefit of the
Trustee individually, the Holders of the Securities and the holders of
other indenture securities, as defined in Subsection (c) of this Section:
(1) an amount equal to any and all reductions in the
amount due and owing upon any claim as such creditor in respect of
principal or interest, effected after the beginning of such four
months' period and valid as against the Company and its other
creditors, except any such reduction resulting from the receipt or
disposition of any property described in paragraph (2) of this
Subsection, or from the exercise of any right of set-off which the
Trustee could have exercised if a petition in bankruptcy had been
filed by or against the Company upon the date of such default; and
(2) all property received by the Trustee in respect of any
claims as such creditor, either as security therefor, or in
satisfaction or composition thereof, or otherwise, after the
beginning of such four months' period, or an amount equal to the
proceeds of any such property, if disposed of; subject, however, to
the rights, if any, of the Company and its other creditors in such
property or such proceeds.
Nothing herein contained, however, shall affect the right of the
Trustee:
(A) to retain for its own account (i) payments made on
account of any such claim by any Person (other than the Company) who
is liable thereon, and (ii) the proceeds of the bona fide sale of any
such claim by the Trustee to a third Person, and (iii) distributions
made in cash, securities or other property in respect of claims flied
against the Company in bankruptcy or receivership or in proceedings
for reorganization pursuant to the Federal Bankruptcy Act or
applicable State law;
(B) to realize, for its own account, upon any property
held by it as security for any such claim, if such property was so
held prior to the beginning of such four months' period;
(C) to realize, for its own account, but only to the
extent of the claim hereinafter mentioned, upon any property held by
it as security for any such claim, if such claim was created after
the beginning of such four months' period and such property was
received as security therefor simultaneously with the creation
thereof, and if the Trustee shall sustain the burden of proving that
at the time such property was so received the Trustee has no
reasonable cause to believe that a default, as defined in Subsection
(c) of this Section, would occur within four months; or
(D) to receive payment on any claim referred to in
paragraph (B) or (C), against the release of any property held as
security for such claim provided in paragraph (B) or (C), as the case
may be, to the extent of the fair value of such property.
For the purposes of paragraphs (B), (C) and (D), property
substituted after the beginning of such four months' period for property
held as security at the time of such substitution shall, to the extent of
the fair value of the property released, have the same status as the
property released, and, to the extent that any claim referred to in any of
such paragraphs is created in renewal of or in substitution for or for the
purpose of repaying or refunding any pre-existing claim of the Trustee as
such creditor, such claim shall have the same status as such pre-existing
claim.
If the Trustee shall be required to account, the funds and
property held in such special account and the proceeds thereof shall be
apportioned among the Trustee, the Holders and the holders of other
indenture securities in such manner that the Trustee, the Holders and the
holders of other indenture securities realize, as a result of payments
from such special account and payments of dividends on claims filed
against the Company in bankruptcy or receivership or in proceedings for
reorganization pursuant to the Federal Bankruptcy Act or applicable State
law, the same percentage of their respective claims, figured before
crediting against the claim of the Trustee anything on account of the
receipt by it from the Company of the funds and property in such special
account and before crediting to the respective claims of the Trustee and
the Holders and the holders of other indenture securities dividends on
claims filed against the Company in bankruptcy or receivership or in
proceedings for reorganization pursuant to the Federal Bankruptcy Act or
applicable State law, but after crediting thereon receipts on account of
the indebtedness presented by their respective claims from all sources
other than from such dividends and from the funds and property so held in
such special account. As used in this paragraph, with respect to any
claim, the term "dividends" shall include any distribution with respect to
such claim, in bankruptcy or receivership or proceedings for
reorganization pursuant to the Federal Bankruptcy Act or applicable State
law, whether such distribution is made in cash, securities or other
property, but shall not include any such distribution with respect to the
secured portion, if any, of such claim. The court in which such
bankruptcy, receivership or proceedings for reorganization are pending
shall have jurisdiction (i) to apportion among the Trustee, the Holders
and the holders of other indenture securities, in accordance with the
provisions of this paragraph, the funds and property held in such special
account and proceeds thereof, or (ii) in lieu of such appointment, in
whole or in part, to give to the provisions of this paragraph due
consideration in determining the fairness of the distributions to be made
to the Trustee and the Holders and the holders of other indenture
securities with respect to their respective claims, in which event it
shall not be necessary to liquidate or to appraise the value of any
securities or other property held in such special account or a security
for any such claim, or to make a specific allocation of such distributions
as between the secured and unsecured portions of such claims, or otherwise
to apply the provisions of this paragraph as a mathematical formula.
Any Trustee which has resigned or been removed after the
beginning of such four months' period shall be subject to the provisions
of this Subsection as though such resignation or removal had not occurred.
If any Trustee has resigned or been removed prior to the beginning of such
four months' period, it shall be subject to the provisions of this
Subsection if and only if the following conditions exist:
(i) the receipt of property or reduction of claim,
which would have given rise to the obligation to account, if
such Trustee had continued as Trustee, occurred after the
beginning of such four months' period; and
(ii) such receipt of property or reduction of claim
occurred within four months after such resignation or removal.
(b) There shall be excluded from the operation of
Subsection (a) of this Section a creditor relationship arising from:
(1) the ownership or acquisition of securities issued
under any indenture, or any security or securities having a maturity
of one year or more at the time of acquisition by the Trustee;
(2) advances authorized by a receivership or bankruptcy
court of competent jurisdiction or by this Indenture, for the purpose
of preserving any property which shall at any time be subject to the
lien of this Indenture or of discharging tax liens or other prior
liens or encumbrances thereon, if notice of such advances and of the
circumstances surrounding the making thereof is given to the Holders
at the time and in the manner provided in this Indenture;
(3) disbursements made in the ordinary course of business
in the capacity of trustee under an indenture, transfer agent,
registrar, custodian, paying agent, fiscal agent or depositary, or
other similar capacity;
(4) an indebtedness created as a result of services
rendered or premises rented, or an indebtedness created as a result
of goods or securities sold in a cash transaction, as defined in
Subsection (c) of this Section;
(5) the ownership of stock or of other securities of a
corporation organized under the provisions of Section 25(a) of the
Federal Reserve Act, as amended, which is directly or indirectly a
creditor of the Company; and
(6) the acquisition, ownership, acceptance or negotiation
of any drafts, bills of exchange, acceptances or obligations which
fall within the classification of self-liquidating paper, as defined
in Subsection (c) of this Section.
(c) For the purposes of this Section only:
(1) the term "default" means any failure to make payment
in full of the principal of or interest on any of the Securities or
upon the other indenture securities when and as such principal or
interest becomes due and payable;
(2) the term "other indenture securities" means securities
upon which the Company is an obligor outstanding under any other
indenture (i) under which the Trustee is also trustee, (ii) which
contains provisions substantially similar to the provisions of this
Section, and (iii) under which a default exists at the time of the
appointment of the funds and property held in such special account;
(3) the term "cash transaction" means any transaction in
which full payment for goods or securities sold is made within seven
days after delivery of the goods or securities in currency or in
checks or other orders drawn upon banks or bankers and payable upon
demand;
(4) the-term "self-liquidating paper" means any draft,
bill of exchange, acceptance or obligation which is made, drawn,
negotiated or incurred by the Company for the purpose of financing
the purchase, processing, manufacturing, shipment, storage or sale of
goods, wares or merchandise and which is secured by documents
evidencing title to, possession of, or a lien upon, the goods, wares
or merchandise or the receivables or proceeds arising from the sale
of the goods, wares or merchandise previously constituting the
security, provided the security is received by the Trustee
simultaneously with the creation of the creditor relationship with
the Company arising from the making, drawing, negotiating or
incurring of the draft, bill of exchange, acceptance or obligation;
(5) the term "Company" means any obligor upon the
Securities; and
(6) the term "Federal Bankruptcy Act" means the Bankruptcy
Act or Title 11 of the United States Code.
SECTION 6.14. Appointment of Authenticating Agent. The Trustee
may appoint an Authenticating Agent or Agents which shall be authorized to
and on behalf of the Trustee to authenticate Securities issued upon
original issuance or upon exchange, registration or transfer or partial
redemption or conversion thereof or pursuant to Section 3.06, and
Securities so authenticated shall be entitled to the benefits of this
Indenture and shall be valid and obligatory for all purposes as if
authenticated by the Trustee hereunder. Wherever reference is made in
this Indenture to the authentication and delivery of Securities by the
Trustee or the Trustee's certificate of authentication, such reference
shall be deemed to include authentication and delivery on behalf of the
Trustee by an Authenticating Agent and a certificate of authentication
executed on behalf of the Trustee by an Authenticating Agent. Each
Authenticating Agent shall be acceptable to the Company and shall at all
times be a corporation organized and doing business under the laws of the
United States of America, any State thereof or the District of Columbia,
authorized under such laws to and as Authenticating Agent, having a
combined capital and surplus of not less than $50,000,000 and subject to
supervision or examination by Federal or State authority. If such
Authenticating Agent publishes reports of condition at least annually,
pursuant to law or to the requirements of said supervising or examining
authority, then, for the purposes of this Section, the combined capital
and surplus of such Authenticating Agent 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 an Authenticating Agent shall
cease to be eligible in accordance with the provisions of this Section,
such Authenticating Agent shall resign immediately in the manner and with
the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged
or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which such
Authenticating Agent shall be a party, or any corporation succeeding to
the corporate agency or corporate trust business of an Authenticating
Agent, shall continue to be an Authenticating Agent provided such
corporation shall be otherwise eligible under this Section, without the
execution or filing of any paper or any further act on the part of the
Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Company. The Trustee may at any
time terminate the agency of an Authenticating Agent by giving written
notice thereof 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 such Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section, the Trustee may appoint a
successor Authenticating Agent which shall be acceptable to the Company
and shall mail written notice of such appointment by first-class mail,
postage prepaid, to all Holders as their names and addresses appear in the
Security Register. Any successor Authenticating Agent upon acceptance of
its appointment hereunder shall become vested with all the rights, powers
and duties of its predecessor hereunder, with like effect as if originally
named as an Authenticating Agent. No successor Authenticating Agent shall
be appointed unless eligible under the provisions of this Section.
The Trustee agrees to pay to each Authenticating Agent from time
to time reasonable compensation for its services under this Section, and
the Trustee shall be entitled to be reimbursed for such payments, subject
to the provisions of Section 6.07.
If an appointment is made pursuant to this Section, the
Securities may have endorsed thereon, in addition to the Trustee's
certificate of authentication, an alternative certificate of
authentication in the following form:
This is one of the Debentures described in the within-mentioned
Indenture.
As Trustee
By:
As Authenticating Agent
By:
Authorized Officer
ARTICLE VII.
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 7.01. Company to Furnish Trustee Names and Addresses of
Holders. The Company will furnish or cause to be furnished to the
Trustee:
(1) semi-annually, not more than 15 days after each
Regular Record Date, a list, in such form as the Trustee may
reasonably require, of the names and addresses of the Holders as of
such Regular Record Date; and
(2) at such other times as the Trustee may request in
writing within 30 days after the receipt by the Company of any such
request, a list of similar form and content as of a date not more
than 15 days prior to the time such list is furnished;
excluding from any such list names and addresses received by the Trustee
in its capacity as Security Registrar.
SECTION 7.02. Preservation of Information Communications to
Holders. (a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders contained in
the most recent list furnished to the Trustee as provided in Section 7.01
and the names and addresses of Holders received by the Trustee in its
capacity as Security Registrar. The Trustee may destroy any list
furnished to it as provided in Section 7.01 upon receipt of a new list so
furnished.
(b) If three or more Holders (herein referred to as
"applicants") apply in writing to the Trustee, and furnish to the Trustee
reasonable proof that each such applicant has owned a Security for a
period of at least six months preceding the date of such application, and
such application states that the applicants desire to communicate with
other Holders with respect to their rights under this Indenture or under
the Securities and is accompanied by a copy of the form of proxy or other
communication which such applicants propose to transmit, then the Trustee
shall, within five business days after the receipt of such application, at
its election, either:
(1) afford such applicants access to the information
preserved at the time by the Trustee in accordance with Section
7.02(a); or
(2) inform such applicants as to the approximate number of
Holders whose names and addresses appear in the information preserved
at the time by the Trustee in accordance with Section 7.02(a), and as
to the approximate cost of mailing to such Holders the form of proxy
or other communication, if any, specified in such application.
If the Trustee shall elect not to afford such applicants access to
such information, the Trustee shall, upon the written request of such
applicants, mail to each Holder whose name and address appear in the
information preserved at the time by the Trustee in accordance with
Section 7.02(a) a copy of the form of proxy or other communication
which is specified in such request, with reasonable promptness after
a tender to the Trustee of the material to be mailed and of payment,
or provision for the payment, of the reasonable expenses of mailing,
unless within five days after such tender the Trustee shall mail to
such applicants and file with the Commission, together with a copy of
the material to be mailed, a written statement to the effect that, in
the opinion of the Trustee, such mailing would be contrary to the
best interest of the Holders or would be in violation of applicable
law. Such written statement shall specify the basis of such opinion.
If the Commission, after opportunity for a hearing upon the
objections specified in the written statement so filed, shall enter
an order refusing to sustain any of such objections or if, after the
entry of an order sustaining one or more of such objections, the
Commission shall find, after notice and opportunity for hearing, that
all the objections so sustained have been met and shall enter an
order so declaring, the Trustee shall mail copies of such material to
all such Holders with reasonable promptness after the entry of such
order and the renewal of such tender; otherwise the Trustee shall be
relieved of any obligations or duty to such applicants respecting
their application.
(c) Every Holder of Securities, by receiving and holding
the same, agrees with the Company and the Trustee that neither the Company
nor the Trustee nor any agent of either of them shall be held accountable
by reason of the disclosure of any such information as to the names and
addresses of the Holders in accordance with Section 7.02(b), regardless of
the source from which such information was derived, and that the Trustee
shall not be held accountable by reason of mailing any material pursuant
to a request made under Section 7.02(b).
SECTION 7.03. Reports by Trustee. (a) In the event that there
is a change in any of the information set forth below from that existing
on the date hereof, then within 60 days after April 15th of such calendar
year, the Trustee shall transmit by mail to all Holders, as their names
and addresses appear in the Security Register, a brief report dated as of
such April 15th with respect to the item below that has changed:
(1) its eligibility under Section 6.09 and its
qualifications under Section 6.08, or in lieu thereof, if to the best
of its knowledge it has continued to be eligible and qualified under
said Sections, a written statement to such effect;
(2) the character and amount of any advances (and if the
Trustee elects so to state, the circumstances surrounding the making
thereof) made by the Trustee (as such) which remain unpaid on the
date of such report, and for the reimbursement of which it claims or
may claim a lien or charge, prior to that of the Securities, on any
property or funds held or collected by it as Trustee, except that the
Trustee shall not be required (but may elect) to report such advances
if such advances so remaining unpaid aggregate not more than 1/2 of 1%
of the principal amount of the Securities outstanding on the date of
such report;
(3) the amount, interest rate and maturity date of all
other indebtedness owing by the Company (or by any other obligor on
the Securities) to the Trustee in its individual capacity, on the
date of such report, with a brief description of any property held as
collateral security therefor, except an indebtedness based upon a
creditor relationship arising in any manner described in Section
6.13(b) (2), (3), (4) or (6);
(4) the property and funds, if any, physically in the
possession of the Trustee as such on the date of such report;
(5) any additional issue of Securities which the Trustee
has not previously reported; and
(6) any action taken by the Trustee in the performance of
its duties hereunder which it has not previously reported and which
in its opinion materially affects the Securities, except action in
respect of a default, notice of which has been or is to be withheld
by the Trustee in accordance with Section 6.02.
(b) The Trustee shall transmit by mail to all
Holders, as their names and addresses appear in the Security
Register, a brief report with respect to the character and
amount of any advances (and if the Trustee elects so to state,
the circumstances surrounding the making thereof) made by the
Trustee (as such) since the date of the last report transmitted
pursuant to Subsection (a) of this Section (or if no such report
has yet been so transmitted, since the date of execution of this
instrument) for the reimbursement of which it claims or may
claim a lien or charge, prior to that of the Securities, on
property or funds held or collected by it as Trustee and which
it has not previously reported pursuant to this Subsection,
except that the Trustee shall not be required (but may elect) to
report such advances if such advances remaining unpaid at any
time aggregate 10% or less of the principal amount of the
Securities Outstanding at such time, such report to be
transmitted within 90 days after such time.
(c) A copy of each such report shall, at the time of
such transmission to Holders, be filed by the Trustee with each
stock exchange upon which the Securities are listed, with the
Commission and with the Company. The Company will notify the
Trustee when the Securities are listed on any stock exchange and
of any delisting thereof.
(d) The Trustee shall transmit by mail to all Holders
who send a written request to the Trustee, as their names and
addresses appear in the Security Register, a copy of the
information, documents and reports filed with the Trustee
pursuant to Section 7.04(1). The Trustee may destroy all
information, documents and reports furnished to it pursuant to
Section 7.04 upon receipt of new information, documents and
reports so furnished.
SECTION 7.04. Reports by Company. The Company shall:
(1) file with the Trustee, within 15 days after the
Company is required to file the same with the Commission, copies of
the annual reports and of the information, documents and other
reports (or copies of such portions of any of the foregoing as the
Commission may from time to time by rules and regulations prescribe)
which the Company may be required to file with the Commission
pursuant to Section 13 or Section 15(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"); and, if the Company is
not required to file information, documents or reports pursuant to
either of said Sections, then it shall file with the Trustee and the
Commission, in accordance with rules and regulations prescribed by
the Commission, such of the supplementary and periodic information,
documents, and reports which may be required pursuant to Section 13
of the Exchange Act, in respect of a security listed and registered
on a national securities exchange as may be prescribed in such rules
and regulations;
(2) file with the Trustee and the Commission, in
accordance with rules and regulations prescribed from time to time by
the Commission, such additional information, documents and reports
with respect to compliance by the Company with the conditions and
covenants of this Indenture as may be required from time to time by
such rules and regulations; and
(3) transmit by mail to all Holders, as their names and
addresses appear in the Security Register, within 30 days after the
filing thereof with the Trustee, such summaries of any information,
documents, and reports required to be filed by the Company pursuant
to paragraphs (1) and (2) of this Section as may be required by rules
and regulations prescribed from time to time by the Commission.
ARTICLE VIII.
CONSOLIDATION, MERGER, CONVEYANCE,
TRANSFER OR LEASE
SECTION 8.01. Company May Consolidate, etc. Only on Certain
Terms. The Company shall not consolidate with or merge into any other
Person or convey, transfer or lease its properties and assets
substantially as an entirety (whether such properties and assets are held
by the Company directly or through its Subsidiaries) to any Person,
unless:
(1) the Person formed by such consolidation or into which
the Company is merged or the Person which acquires by conveyance or
transfer, or which leases, the properties and assets of the Company
substantially as a entirety shall be a corporation organized and
existing under the laws of the United States of America, any State
thereof or the District of Columbia and shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the Trustee,
in form satisfactory to the Trustee, the due and punctual payment of
the principal of (and premium, if any) and interest on all the
Securities and the performance of every covenant of this Indenture on
the part of the Company to be performed or observed and shall have
provided for conversion rights in accordance with Section 13.06;
(2) immediately after giving effect to such transaction,
no Event of Default, and no event which, after notice or lapse of
time or both, would become an Event of Default, shall have happened
and be continuing; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and, if a
supplemental indenture is required in connection with such
transaction, such supplemental indenture comply with this Article and
that all conditions precedent herein provided for relating to such
transaction have been complied with.
SECTION 8.02. Successor Corporation Substituted. Upon any
consolidation or merger by the Company with or into any other Person or
any conveyance, transfer or lease of the properties and assets of the
Company substantially as a entirety (whether such properties and assets
are held by the Company directly or through its Subsidiaries) to any
Person in accordance with Section 8.01, the successor corporation formed
by such consolidation or into which the Company is merged or to which such
conveyance, transfer or lease is made shall succeed to, and be substituted
for, and may exercise every right and power of the Company under this
Indenture with the same effect as if such successor corporation had been
named as the Company herein, and thereunder, except in the case of a lease
to another Person, the predecessor corporation shall be relieved of all
obligations and covenants under this Indenture and the Securities.
ARTICLE IX.
SUPPLEMENTAL INDENTURES
SECTION 9.01. Supplemental Indentures Without Consent of
Holders. Without the consent of any Holders, the Company, when authorized
by a Board Resolution, and the Trustee, at any time and from time to time,
may enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee and the Company, for any of the following
purposes:
(1) to evidence the succession of another corporation to
the Company and the assumption by any such successor of the covenants
of the Company herein and in the Securities; or
(2) to add to the covenants of the Company for the benefit
of the Holders, or to surrender any right or power herein conferred
upon the Company; or
(3) to make provision with respect to the conversion
rights of Holders pursuant to the requirements of Section 13.06; or
(4) to cure any ambiguity, to correct or supplement any
provision herein which may be inconsistent with any other provision
herein, or to make any other provisions with respect to matters or
questions arising under this Indenture which shall not be
inconsistent with the provisions of this Indenture; provided,
however, that such action pursuant to this clause (4) shall not
adversely affect the interests of the Holders in any material
respect.
SECTION 9.02. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than two-thirds in principal
amount of the Outstanding Securities, by Act of said Holders delivered to
the Company and the Trustee, the Company, when authorized by a Board
Resolution, and the Trustee may 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 of modifying in any manner the rights of the Holders under
this Indenture; provided, however, that no such supplemental indenture
shall, without the consent of the Holder of each Outstanding Security
affected thereby:
(1) change the Stated Maturity of the principal of, or any
installment of interest on, any Security, or reduce the principal
amount thereof or the rate of interest thereon or any premium payable
upon the redemption thereof, or change the place of payment where, or
the coin or currency in which, any Security or any premium or
interest thereon is payable, or impair the right to institute suit
for the enforcement of any payment on or with respect to any
Securities, or adversely affect the right to convert any Security as
provided in Article XIII or modify the provisions of this Indenture
with respect to the subordination of the Securities in a manner
adverse to the Holders; or
(2) reduce the percentage in principal amount of the
Outstanding Securities, the consent of whose Holders is required for
any such supplemental indenture, or the consent of whose Holders is
required for any waiver (of compliance with certain provisions of
this Indenture or certain defaults hereunder and their consequences)
provided for in this Indenture; or
(3) modify any of the provisions of this Section or
Section 5.13 except to increase any such percentage or to provide
that certain other provisions of this Indenture cannot be modified or
waived without the consent of the Holder of each Outstanding Security
affected thereby.
It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the
substance thereof.
SECTION 9.03. Execution of Supplemental Indentures. In
executing, or accepting the additional trusts created by, any supplemental
indenture permitted by this Article or the modifications thereby of the
trusts created by this Indenture, the Trustee shall be entitled to
receive, and (subject to Section 6.01) shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture. The
Trustee may, but shall not be obligated to, enter into any supplemental
indenture which affects the Trustee's own rights, duties or immunities
under this Indenture or otherwise.
SECTION 9.04. Effect of Supplemental Indentures. Upon the
execution of any supplemental indenture under this Article, this Indenture
shall be modified in accordance therewith, and such supplemental indenture
shall form a part of this Indenture for all purposes; and every Holder of
Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
SECTION 9.05. Conformity with Trust Indenture Act. Every
supplemental indenture executed pursuant to this Article shall conform to
the requirements of the Trust Indenture Act as then in effect.
SECTION 9.06. Reference in Securities to Supplemental
Indentures. Securities authenticated and delivered after the execution of
any supplemental indenture pursuant to this Article may, and shall if
required by the Trustee, bear a notation in form approved by the Trustee
as to any matter provided for in such supplemental indenture. If the
Company shall so determine, new Securities so modified as to conform, in
the opinion of the Trustee and the Board of Directors, to any such
supplemental indenture may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for Outstanding
Securities.
ARTICLE X.
COVENANTS
SECTION 10.01. Payment of Principal, Premium and Interest. The
Company will duly and punctually pay the principal of (and premium, if
any) and interest on the Securities in accordance with the terms of the
Securities and this Indenture.
SECTION 10.02. Maintenance of Office or Agency. The Company
will maintain an office or agency where Securities may be presented or
surrendered for payment, where Securities may be surrendered for
registration of transfer or exchange, where Securities may be surrendered
for conversion or repurchase, and where notices and demands to or upon the
Company in respect of the Securities 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. If at
any time the Company shall fail to maintain any such required office or
agency or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at
the Corporate Trust Office of the Trustee, and the Company hereby appoints
the Trustee as its agent to receive all such presentations, surrenders,
notices and demands.
The Company may also from time to time designate one or more
other offices or agencies where the Securities may be presented or
surrendered for any or all such purposes and may from time to time rescind
such designations. The Company will give prompt written notice to the
Trustee of any such designation or rescission and of any change in the
location of any such other office or agency.
SECTION 10.03. Money for Securities Payments to Be Held in
Trust. If the Company shall at any time act as its own Paying Agent, it
will, on or before each due date of the principal of (and premium, if any)
or interest (if payable in cash) on any of the Securities, segregate and
hold in trust for the benefit of the Persons entitled thereto a sum
sufficient to pay the principal (and premium, if any) or interest on any
of the Securities so becoming due until such sums shall be paid to such
Persons or otherwise disposed of as herein provided and will promptly
notify the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents, it
will, prior to each due date of the principal of (and premium, if any) or
interest (if payable in cash) on any Securities, deposit with a Paying
Agent a sum sufficient to pay the principal (and premium, if any) or
interest so becoming due, such sum to be held in trust for the benefit of
the Persons entitled to such principal, premium or interest, and (unless
such Paying Agent is the Trustee) the Company will promptly notify the
Trustee of its action or failure so to act.
The Company will cause each Paying Agent other than the Trustee
to execute and deliver to the Trustee an instrument in which such Paying
Agent shall agree with the Trustee, subject to the provisions of this
Section, that such Paying Agent will:
(1) hold all sums held by it for the payment of the
principal of (and premium, if any) or interest on Securities in trust
for the benefit of the Persons entitled thereto until such sums shall
be paid to such Persons or otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company
(or any other obligor upon the Securities) in the making of any
payment of principal (and premium, if any) or interest; and
(3) at any time during the continuance of any such
default, upon the written request of the Trustee, forthwith pay to
the Trustee all sums so held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose,
pay, or by Company Order direct any Paying Agent to pay, to the Trustee
all sums held by the Trustee upon the same trusts as those upon which such
sums were held by the Company or such Paying Agent; and, upon such payment
by any Paying Agent to the Trustee, such Paying Agent shall be released
from all further liability with respect to such money.
Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of
(and premium, if any) or interest on any Security and remaining unclaimed
for two years after such principal (and premium, if any) or interest has
become due and payable shall be paid to the Company on Company Request, or
(if then held by the Company) shall be discharged from such trust; and the
Holder of such Security shall thereafter, as an unsecured general
creditor, look only to the Company for payment thereof, and all liability
of the Trustee or such Paying Agent with respect to such trust money, and
all liability of the Company as trustee thereof, shall thereupon cease:
provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Company
cause to be published once, in a newspaper published in the English
language, customarily published on each Business Day and of general
circulation in New York, New York, notice that such money remains
unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such publication, any unclaimed balance
of such money then remaining will be repaid to the Company.
SECTION 10.04. Statement as to Compliance. The Company will
deliver to the Trustee, within 120 days after the end of each fiscal year,
an Officers' Certificate stating, as to each signer thereof, that:
(1) a review of the activities of the Company and its
Subsidiaries during such year and of performance under this Indenture
has been made under his supervision; and
(2) to the best of his knowledge, based on such review,
the Company has fulfilled all its obligations under this Indenture
throughout such year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default
known to him and the nature and status thereof.
SECTION 10.05. Further Instruments and Acts. From time to time
the Company will, at its own expense and upon request of the Trustee,
execute and deliver or cause to be executed and delivered such further
instruments and do such further acts as may reasonably be necessary or
desirable to carry out the purposes of this Indenture or to secure the
rights and remedies hereunder of the Holders.
ARTICLE XI.
OPTIONAL REDEMPTION OF SECURITIES
SECTION 11.01. Right of Redemption. The Securities may be
redeemed at the election of the Company, as a whole or from time to time
in part, at any time and from time to time at the Redemption Price
specified in the form of Security hereinbefore set forth for optional
redemptions, together with accrued interest to the Redemption Date.
SECTION 11.02. Applicability of Article. Redemption of
Securities at the election of the Company as permitted by any provision of
this Indenture shall be made in accordance with such provision and this
Article.
SECTION 11.03. Election to Redeem; Notice to Trustee. The
election of the Company to redeem any Securities pursuant to Section 11.01
shall be evidenced by a Board Resolution. The Company shall, at least 45
but not more than 60 days prior to the Redemption Date fixed by the
Company (unless a shorter notice shall be satisfactory to the Trustee),
notify the Trustee of such Redemption Date and of the principal amount of
Securities to be redeemed.
SECTION 11.04. Selection by Trustee of Securities to Be
Redeemed. If less than all the Securities are to be redeemed, the
particular Securities to be redeemed shall be selected not more than 60
days prior to the Redemption Date by the Trustee, from the Outstanding
Securities not previously called for redemption, by such method as the
Trustee shall deem fair and appropriate and which may provide for the
selection for redemption of portions (equal to $1.00 or any integral
multiple thereof) of the principal amount of Securities of a denomination
larger than $1.00.
If any Security selected for partial redemption is converted in
part before termination of the conversion right with respect to the
portion of the Security so selected, the converted portion of such
Security shall be deemed (so far as may be) to be the portion selected for
redemption. Securities which have been converted during a selection of
Securities to be redeemed shall be treated by the Trustee as Outstanding
for the purpose of such selection.
The Trustee shall promptly notify the Company and each Security
Registrar in writing of the Securities selected for redemption and, in the
case of any Securities selected for partial redemption, the principal
amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall
relate, in the case of any Securities redeemed or to be redeemed only in
part, to the portion of the principal amount of such Security which has
been or is to be redeemed.
SECTION 11.05. Notice of Redemption. Notice of redemption
shall be given by first-class mail, postage prepaid, mailed not less than
45 nor more than 60 days prior to the Redemption Date, to each
Securityholder to be redeemed, at his address appearing in the Security
Register.
All notices of redemption shall identify the Securities to be
redeemed (including the respective CUSIP Numbers of such Securities) and
state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) if less than all the Outstanding Securities are to be
redeemed, the identification (and, in the case of partial redemption,
the principal amounts) of the particular Securities to be redeemed;
(4) that on the Redemption Date the Redemption Price will
become due and payable upon each such Security to be redeemed and
that interest thereon will cease to accrue on and after said date;
(5) the conversion rate, the date on which the right to
convert the principal of the Securities to be redeemed will terminate
and the place or places where such Securities may be surrendered for
conversion; and
(6) the place or places where such Securities are to be
surrendered for payment of the Redemption Price.
Notice of redemption of Securities to be redeemed at the
election of the Company shall be given by the Company or at the Company's
request, (which request shall be delivered to the Trustee together with
the notice of redemption to the Trustee pursuant to Section 11.03 and
shall set forth the information required by clauses (2), (5) and (6) of
this Section 11.05), by the Trustee in the name and at the expense of the
Company.
SECTION 11.06. Deposit of Redemption Price. Prior to any
Redemption Date, the Company shall deposit with the Trustee or with a
Paying Agent (or, if the Company is acting as its own Paying Agent,
segregate and hold in trust as provided in Section 10.03) an amount of
money sufficient to pay the Redemption Price of, and (except if the
Redemption Date shall be an Interest Payment Date) accrued interest on,
all the Securities which are to be redeemed on that date other than any
Securities called for redemption on that date which have been converted
prior to the date of such deposit.
If any Security called for redemption is converted, any money
deposited with the Trustee or with any Paying Agent or so segregated and
held in trust for the redemption of such Security shall (subject to any
right of the Securityholder or Holder of any Predecessor Security to
receive unpaid accrued interest as provided in the second paragraph of
Section 13.03) be paid to the Company upon Company Request or, if then
held by the Company, shall be discharged from such trust.
SECTION 11.07. Securities Payable on Redemption Date. Notice
of redemption having been given as aforesaid, the Securities so to be
redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless
the Company shall default in the payment of the Redemption Price and any
accrued interest) such Securities shall cease to bear interest. Upon
surrender of any such Security for redemption in accordance with said
notice, such Security shall be paid by the Company at the Redemption
Price, together with accrued interest to the Redemption Date; provided,
however, that installments of interest whose Stated Maturity is on or
prior to the Redemption Date shall be payable to the Holders of the
Securities, or one or more Predecessor Securities, registered as such at
the close of business on the relevant Record Dates according to their
terms and the provisions of Section 3.07.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any)
shall, until paid, bear interest from the Redemption Date at the rate
borne by the Security.
SECTION 11.08. Securities Redeemed in Part. Any Security which
is to be redeemed only in part shall be surrendered at an office or agency
of the Company designated for that purpose pursuant to Section 10.02
(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 Security without
service charge, a new Security or Securities, of any authorized
denomination as requested by such Securityholder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the
principal of the Security so surrendered.
ARTICLE XII.
[Reserved]
ARTICLE XIII.
CONVERSION OF SECURITIES
SECTION 13.01. Right of Conversion. The Holder of any Security
or Securities shall have the right at any time prior to maturity, at his
option, to convert, subject to the terms and provisions of this Article
XIII, the principal of any such Security or Securities (or any portion of
the principal thereof which is $1.00 or an integral multiple of $1.00)
into fully paid and nonassessable (except as otherwise provided by law)
shares of Common Stock of the Company at the rate of one share of Common
Stock for each: $4.80 principal amount of Securities issued hereunder to
GreenGrass Holdings, James R. Rastetter, Brian K. Zeilinger, and Richard
G. Mueller in exchange for debentures of the Company presently held by
such persons, and any Securities issued with respect thereto as interest
payments; $4.70 principal amount of Securities issued hereunder pursuant
to the Company's registration statement on Form S-2, and any Securities
issued with respect thereto as interest payments; or, in case an
adjustment therein has taken place pursuant to the provisions of Section
13.04, then at the rate as so adjusted (except that with respect to any
Security or Securities, or any such portion, which shall be called for
redemption, such right shall terminate, except as provided in the last
paragraph of Section 13.02, at the close of business on the fifth Business
Day prior to the Redemption Date for such Security or Securities or
portion, unless the Company shall default in payment due upon redemption
thereof). Such right shall be exercised by the surrender of the Security
or Securities, the principal of which is so to be converted, to the
Company at any time during usual business hours at any office or agency to
be maintained by it in accordance with the provisions of Section 10.02,
accompanied by written notice that the Holder elects to convert such
Security or Securities or any portion thereof and specifying the name or
names (with address) in which a certificate or certificates for Common
Stock are to be issued and (if so required by the Company or the Trustee)
by a written instrument or instruments of transfer in form satisfactory to
the Company and the Trustee duly executed by the Holder or his attorney
duly authorized in writing and transfer tax stamps or funds therefor, if
required pursuant to Section 13.10. For convenience, the conversion of
all or a portion, as the case may be, of the principal of any Security
(including without limitation any Security issued in lieu of interest in
accordance with Section 2.02 hereof) into the Common Stock of the Company
is hereinafter sometimes referred to as the conversion of such Security.
All Securities surrendered for conversion shall, if surrendered to the
Company or any conversion agent, be delivered to the Trustee for
cancellation and canceled by it or, if surrendered to the Trustee, shall
be canceled by it, and, subject to the next succeeding sentence, no
Securities shall be issued in lieu thereof. In the case of any Security
which is converted in part only, upon such conversion the Company shall
execute and the Trustee shall authenticate and deliver to the Holder
thereof a new Security or Securities of authorized denominations in an
aggregate principal amount equal to the unconverted portion of such
Security.
A Security shall continue to be convertible, in whole or in
part, even though the Company may have given notice of redemption with
respect to the Security or any part thereof, so long as the Holder's
election to convert shall have been delivered to the Company prior to the
close of business on the fifth Business Day prior to the Redemption Date
for such Security or portion thereof.
SECTION 13.02. Issuance of Common Stock; Time of Conversion.
As promptly as practicable after the surrender, as herein provided, of any
Security or Securities for conversion, the Company shall deliver or cause
to be delivered at any office or agency to be retained by it in accordance
with the provisions of Section 10.02 to or upon the written order of the
Holder of the Security or Securities so surrendered a certificate or
certificates representing the number of fully paid and nonassessable
(except as otherwise provided by law) shares of Common Stock of the
Company into which such Security or Securities (or portion thereof) may be
converted together with payment in lieu of any fraction of a share, as
provided in Section 13.05. Subject to the following provisions of this
paragraph and of Section 13.04, such conversion shall be deemed to have
been made immediately prior to the close of business on the date that such
Security or Securities shall have been surrendered in satisfactory form
for conversion (except that if such conversion is in connection with an
underwritten public offering of Common Stock, then such conversion shall
be deemed to have been effected upon such surrender), so that the rights
of the Holder as a Holder shall cease with respect to such Security or
Securities (or the portion thereof) being converted at such time, and the
Person or Persons entitled to receive the shares of Common Stock
deliverable upon conversion of such Security or Securities shall be
treated for all purposes as having become the record holder or holders of
such shares of Common Stock at such time, and such conversion shall be at
the conversion rate in effect at such time; provided, however, that no
such surrender on any date when the stock transfer books of the Company
shall be closed shall be effective to constitute the Person or Persons
entitled to receive the shares of Common Stock deliverable upon such
conversion as the record holder or holders of such shares of Common Stock
on such date, but such surrender shall be effective to constitute the
Person or Persons entitled to receive such shares of Common Stock as the
record holder or holders thereof for all purposes immediately prior to the
close of business on the next succeeding day on which such stock transfer
books are open, and such conversion shall be deemed to have been made at,
and shall be made at the conversion rate in effect at, such time on such
next succeeding day.
If the last day for the exercise of the conversion right shall
not be a Business Day, then such conversion right may be exercised on the
next succeeding Business Day.
SECTION 13.03. No Adjustments in Respect of Interest or
Dividends. No payment or adjustment shall be made upon any conversion on
account of any interest accrued on the Securities surrendered for
conversion or on account of any dividends on the shares of Common Stock
issued upon conversion.
Within ten (10) calendar days after receipt of any Security and
an election to convert all or a portion of the principal amount of such
Security pursuant to the terms of this Indenture, the Company will pay to
the Holder any unpaid interest, accrued to the date of conversion of such
Security, on the principal amount converted; provided that until February
15, 1999, such interest may, at the option of the Company, be paid by the
issuance of an additional debenture as described in Section 2.02 of this
Indenture.
SECTION 13.04. Adjustment of Conversion Price. The conversion
rate shall be subject to adjustment as follows:
(a) In case the Company shall (i) pay a dividend on Common
Stock in Common Stock, (ii) subdivide its outstanding shares of
Common Stock, or (iii) combine its outstanding shares of Common Stock
into a smaller number of shares, the conversion rate in effect
immediately prior thereto shall be adjusted retroactively as provided
below so that the Holder of any Security there surrendered for
conversion shall be entitled to receive the number of shares of
Common Stock of the Company which he would have owned or have been
entitled to receive after the happening of any of the events
described above had such Security been converted immediately prior to
the happening of such event. An adjustment made pursuant to this
paragraph (a) shall become effective immediately after the record
date in the case of a dividend and shall become effective immediately
after the effective date in the case of a subdivision or combination.
(b) In case the Company shall issue rights or warrants to
all holders of its Common Stock entitling them to subscribe for or
purchase shares of Common Stock at a price per share less than the
current market price per share (determined as provided in paragraph
(e) of this Section) of the Common Stock on the date fixed for the
determination of stockholders entitled to receive such rights or
warrants, the conversion rate in effect at the opening of business on
the day following the day fixed for such determination shall be
increased by multiplying such conversion rate by a fraction of which
the numerator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such
determination plus the number of shares of Common Stock so offered
for subscription or purchase and the denominator shall be the number
of shares of Common Stock outstanding at the close of business on the
date fixed for such determination plus the number of shares of Common
Stock which the aggregate of the offering price of the total number
of shares of Common Stocks offered for subscription or purchase would
purchase at such current market price, such increase to become
effective immediately after the opening of business on the day
following the date fixed for such determination; provided, however,
in the event that all the shares of Common Stock offered for
subscription or purchase are not delivered upon the exercise of such
rights or warrants, upon the expiration of such rights or warrants
the conversion rate shall be readjusted to the conversion rate which
would have been in effect had the numerator and the denominator of
the foregoing fraction and the resulting adjustment been made based
upon the number of shares of Common Stock actually delivered upon the
exercise of such rights or warrants rather than upon the number of
shares of Common Stock offered for subscription or purchase. For the
purposes of this paragraph (b), the number of shares of Common Stock
at any time outstanding shall not include shares held in the treasury
of the Company.
(c) In case the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock shares of its capital
stock (other than Common Stock), evidences of its indebtedness or
assets (excluding cash dividends paid out of the retained earnings of
the Company) or rights or warrants to subscribe or purchase
(excluding those referred to in paragraph (b) above), (hereinafter
collectively referred to as "Distributions on Common Stock"), then in
each such case, the Company shall deliver to the Holder the
Distribution on Common Stock to which the Holder would be entitled if
it had converted the Security for Common Stock immediately prior to
the record date for the purpose of determining stockholders entitled
to receive such Distribution on Common Stock.
(d) The reclassification (including any reclassification
upon a merger in which the Company is the continuing corporation) of
Common Stock into securities including other than Common Stock (other
than any reclassification upon a consolidation or merger to which
Section 13.06 applies) shall be deemed to involve (i) a distribution
of such securities other than Common Stock to all holders of Common
Stock (and the effective date of such reclassification shall be
deemed to be "the date fixed for the determination of stockholders
entitled to receive such distribution" and "the date fixed for such
determination" within the meaning of paragraph (e) of this Section),
and (ii) a subdivision or combination, as the case may be, of the
number of shares of Common Stock outstanding immediately prior to
such reclassification into the number of shares of Common Stock
outstanding immediately thereafter.
(e) For the purpose of any computation under paragraphs
(b) and (d) of this Section, the current market price per share of
Common Stock on any date shall be deemed to be the average of the
daily closing prices for the thirty consecutive Business Days
selected by the Company commencing with the forty-fifth Business Day
before the day in question. The closing price for each day shall be
the last reported sales price regular way or, in case no such
reported sale takes place on such day, the average of the reported
closing bid and asked prices regular way, in either case on the
American Stock Exchange or if the Common Stock is not listed or
admitted to trading on such Exchange, on the principal national
securities exchange on which the Common Stock is listed or admitted
in trading or, if not listed or admitted in trading on any national
securities exchange, on the National Association of Securities
Dealers Automated Quotations National Market System or, if the Common
Stock is not listed or admitted to trading on any national securities
exchange or quoted on such National Market System, the average of the
closing bid and asked prices in the over-the-counter market as
furnished by any New York Stock Exchange or American Stock Exchange
member firm selected from time to time by the Company for that
purpose. If the current market price per share of Common Stock
cannot be determined in accordance with the above procedures under
this paragraph (e), such current market price shall be determined in
good faith by the Board of Directors of the Company.
(f) No adjustment in the conversion rate shall be required
unless such adjustment would require an increase or decrease of at
least 1% of such rate; provided, however, that the Company may make
any such adjustment at its election and provided, further, that any
adjustments which by reason of this paragraph (f) are not required to
be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Article XIII
shall be made to the nearest cent or to the nearest one-hundredth of
a share, as the case may be. Anything in this Section 13.04
notwithstanding, the Company may make such reductions in the
conversion rate, in addition to those required by this Section, as it
considers to be advisable in order that any event treated for Federal
income tax purposes as a dividend of stock or stock rights shall not
be taxable to the recipients.
(g) Whenever the conversion rate is adjusted as herein
provided:
(1) the Company shall compute the adjusted conversion
rate in accordance with paragraph (a) and shall prepare an Officers'
Certificate setting forth the adjusted conversion rate, the effective
date of the adjusted conversion rate and showing in reasonable detail
the facts upon which such adjustment is based, and such certificate
shall forthwith be filed at each office or agency maintained for the
purpose of conversion of Securities; and
(2) notice stating that the conversion rate has been
adjusted and setting forth the adjusted conversion rate shall
forthwith be required, and as soon as practicable after it is
required, such notice shall be mailed or caused to be mailed by the
Company to all Holders at their last addresses as they shall appear
in the Security Register.
(h) For the purpose of this Section 13.04, the term
"Common Stock" shall include any stock of any class of the Company
which has no preference in respect of dividends or of amounts payable
in the event of any voluntary or involuntary liquidation, dissolution
or winding up of the Company and which is not subject to redemption
by the Company. However, shares issuable on conversion of shares of
this Series shall include only shares of the class designated as
Common Stock of the Company as of 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,
however, that if at any time there shall be more than one such
resulting class, the shares of each such class then so issuable shall
be substantially in the proportion which the total number of shares
of such class resulting from all such reclassifications bears to the
total number of shares of all such classes resulting from all such
reclassifications.
SECTION 13.05. No Fractional Shares. No fractional shares of
Common Stock shall be issued upon conversion of Securities. If more than
one Security shall be surrendered for conversion at one time by the same
Holder, the number of full shares which shall be issuable upon conversion
thereof shall be computed on the basis of the aggregate principal amount
of the Securities for specified portions thereof so surrendered. Instead
of any fractional share of Common Stock which would otherwise be issuable
upon conversion of any Security or Securities or specified portions
thereof, the Company shall pay a cash adjustment in respect of such
fraction in amount equal to the same fraction of the current market price
per share of Common Stock (determined as provided in paragraph (e) of
Section 13.04) at the close of business on the day of conversion.
SECTION 13.06. Consolidation, Merger or Sale of Assets. In
case of any consolidation of the Company with, or merger of the Company
into, any other Person, (other than a merger which does not result in any
reclassification, conversion, exchange or cancellation of outstanding
shares of Common Stock of the Company) or any sale or transfer of all or
substantially all of the assets of the Company (whether such assets are
held by the Company directly or indirectly through its Subsidiaries), the
Person formed by such consolidation or resulting from such merger or which
acquires such assets, as the case may be, shall execute and deliver to the
Trustee a supplemental indenture providing that the Holder of each
Security then outstanding shall have the right thereafter, during the
period such Security shall be convertible, pursuant to Section 13.01, to
convert such Security only into the kind and amount of securities, cash
and other property receivable upon such consolidation, merger, sale or
transfer by a holder of the number of shares of Common Stock of the
Company into which such Security might have been converted immediately
prior to such consolidation, merger, sale or transfer assuming such holder
of Common Stock of the Company (i) is not a Person with which the Company
consolidated or into which the Company merged or to which such sale or
transfer was made, as the case may be ("constituent Person"), or an
Affiliate of a constituent Person and (ii) failed to exercise his rights
of election, if any, as to the kind or amount of securities, cash and
other property receivable upon such consolidation, merger, sale or
transfer (provided that if the kind or amount of securities, cash and
other property receivable upon such consolidation, merger, sale or
transfer is not the same for each share of Common Stock of the Company
held immediately prior to such consolidation, merger, sale or transfer by
other than a constituent Person or an Affiliate thereof and in respect of
which such rights of election shall not have been exercised ("non-electing
share") then for the purpose of this Section the kind and amount of
securities, cash and other property receivable upon such consolidation,
merger, sale or transfer by 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, for events subsequent to the effective date of such
supplemental indenture, shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Article. The above
provisions of this Section shall similarly apply to successive
consolidations, mergers, sales or transfers.
Notice of the execution of such a supplemental indenture shall
be given by the Company to each Holder by mailing or causing to be mailed
such notice to his last address appearing on the Security Register.
The Trustee shall not be under any responsibility to determine
the correctness of any provisions contained in any such supplemental
indenture relating either to the kind or amount of shares of stock or
securities or cash or property receivable by Holders of Securities upon
the conversion of their Securities after any such reclassification,
change, consolidation, merger, sale or conveyance or to any such
adjustment, but, subject to the provisions of Section 6.01, may accept as
conclusive evidence of the correctness of any such provisions, and shall
be protected in relying upon, an Opinion of Counsel with respect thereto,
which the Company shall cause to be furnished to the Trustee upon request.
SECTION 13.07. Prior Notice of Certain Events. In case:
(1) the Company shall declare a dividend (or any other
distribution) on its Common Stock (other than cash dividends paid out of
the earned surplus of the Company and dividends payable in Common Stock);
or
(2) the Company shall authorize the granting to the holders of
its Common Stock of rights or warrants to subscribe for or purchase any
shares of stock of any class or of any other rights or warrants; or
(3) of any reclassification of the Common Stock of the Company
(other than a subdivision or combination of its outstanding Common Stock,
or a change in par value, or from par value to no par value, or from no
par value to par value), or of any consolidation or merger to which the
Company is a party and for which approval of any shareholders of the
Company is required, or of the sale or transfer of all or substantially
all of the assets of the Company; or
(4) of the voluntary or involuntary dissolution, liquidation
or winding up of the Company;
then the Company shall cause to be filed with the Trustee and to be mailed
to each Holder of Securities at his last address appearing on the Security
Register, as promptly as possible but in any event at least 15 days prior
to the applicable date hereinafter specified, a notice stating (x) the
date on which a record is to be taken for the purpose of such dividend,
distribution or rights or warrants or, if a record is not to be taken, the
date as of which the holders of Common Stock of record to be entitled to
such dividend, distribution or rights 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, and the date as of which it is expected that holders of Common
Stock of record shall be entitled to exchange their shares of Common Stock
for securities or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding
up.
SECTION 13.08. Shares to be Reserved; Accounting Treatment of
Consideration. The Company covenants that it will at all times reserve
and keep available out of its authorized Common Stock, solely for the
purpose of issue upon conversion of Securities as herein provided, such
number of shares of Common Stock as shall then be issuable upon the
conversion of all outstanding Securities. The Company covenants that all
shares of Common Stock which shall be so issuable shall, when issued, be
duly and validly issued and fully paid and nonassessable.
The Company covenants that, upon conversion of Securities as
herein provided, there will be credited to the Common Stock capital
account from the consideration for which the shares of Common Stock
issuable upon such conversion are issued an amount per share of Common
Stock so issued as determined by the Board of Directors, which amount
shall not be less than the amount required by law and by the Company's
articles of incorporation, as amended and restated, as in effect on the
date of such conversion. For the purposes of this covenant the
liquidation preference of the Securities converted, less any cash paid in
respect of fractional share interests upon such conversion, shall be
deemed to be the amount of consideration for which the shares of Common
Stock issuable upon such conversion are issued.
SECTION 13.09. Registration and Listing of Shares. The Company
covenants that if any shares of Common Stock, required to be reserved for
purposes of conversion of Securities hereunder, require registration with
or approval of any governmental authority under any Federal or State law
before such shares may be issued upon conversion, the Company will in good
faith and as expeditiously as possible endeavor to cause such shares to be
duly registered or approved, as the case may be. The Company further
covenants that so long as the Common Stock of the Company is listed on the
American Stock Exchange or any other national securities exchange, the
Company will, if permitted by the rules of such exchange, list and keep
listed on such exchange, upon official notice of issuance, all shares of
Common Stock issuable upon conversion of Securities.
SECTION 13.10. Taxes and Charges. The issuance of certificates
for shares of Common Stock upon the conversion of Securities shall be made
without charge to the converting Holder of Securities for such
certificates or for any tax in respect of the issuance of such
certificates or the securities represented thereby, and such certificates
shall be issued in the respective names of, or in such names as may be
directed by, the Holders of the Securities converted; provided, however,
that the Company shall not be required to pay any tax which may be payable
in respect of any transfer involved in the issuance and delivery of any
such certificate in a name other than that of the Holder of the Security
converted, and the Company shall not be required to issue or deliver such
certificates unless or until the Person or Persons requesting the issuance
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 13.11. Trustee and Conversion Agents Not Liable.
Neither the Trustee nor any conversion agent shall at any time be under
any duty or responsibility to any Holder of Securities with respect to the
establishment of the conversion rate, or to determine whether any facts
exist which may require any adjustment of the conversion rate, or with
respect to the nature or extent of any such adjustment when made, or with
respect to the method employed, or herein or in any supplemental indenture
provided to be employed, in making the same. Neither the Trustee nor any
conversion agent shall be accountable with respect to the validity or
value (or the kind or amount) of any shares of Common Stock or of any
securities or cash or other property which may at any time be issued or
delivered upon the conversion of any Security, or makes any representation
with respect thereto. Neither the Trustee nor any conversion agent shall
be responsible for any failure of the Company to make any cash payment or
to issue, transfer or deliver any shares of Common Stock or stock
certificates or other securities or property upon the surrender of any
Security for the purpose of conversion, or, subject to Section 6.01, with
any of the covenants of the Company contained in this Article XIII.
ARTICLE XIV.
SUBORDINATION OF SECURITIES
SECTION 14.01. Securities Subordinate to Senior Indebtedness.
The Company covenants and agrees, and each Holder of a Security by his
acceptance thereof likewise covenants and agrees, that, to the extent and
in the manner hereinafter set forth in this Article, the indebtedness
represented by the Securities and the payment of the principal of (and
premium, if any) and interest on each and all of the Securities are hereby
expressly made subordinate and subject in right of payment to the prior
payment in full of all Senior Indebtedness.
SECTION 14.02. Payment Over of Proceeds Upon Dissolution Etc.
Upon any distribution of assets of the Company in the event of (a) any
insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or other similar case or proceeding in
connection therewith, relative to the Company or to its creditors, as
such, or to its assets, or (b) any liquidation, dissolution or other
winding up of the Company, whether voluntary or involuntary and whether or
not involving insolvency or bankruptcy, or (c) any assignment for the
benefit of creditors or any other marshalling of assets and liabilities of
the Company, then and in such event the holders of Senior Indebtedness
shall be entitled to receive payment in full of all amounts due or to
become due on or in respect of all Senior Indebtedness, or provision shall
be made for such payment, in money or money's worth, before the Holders of
the Securities are entitled to receive any payment on account of principal
of (or premium, if any) or interest on the Securities, and to that end the
holders of Senior Indebtedness shall be entitled to receive, for
application to the payment thereof, any payment or distribution of any
kind or character, whether in cash, property or securities, including any
such payment or distribution which may be payable or deliverable by reason
of the payment of any other indebtedness of the Company being subordinated
to the payment of the Securities, which may be payable or deliverable in
respect of the Securities in any such case, proceeding, dissolution,
liquidation or other winding up or event.
In the event that, notwithstanding the foregoing provisions of
this Section, the Trustee or the Holder of any Security shall have
received any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities, including any such
payment or distribution which may be payable or deliverable by reason of
the payment of any other indebtedness of the Company being subordinated to
the payment of the Securities, before all Senior Indebtedness is paid in
full or payment thereof provided for, and if such fact shall then have
been made known to the Trustee, or, as the case may be, such Holder, then
and in such event such payment or distribution shall be paid over or
delivered forthwith to the trustee in bankruptcy, receiver, liquidating
trustee, custodian, assignee, agent or other Person making payment or
distribution of assets of the Company for application to the payment of
all Senior Indebtedness remaining unpaid, to the extent necessary to pay
all Senior Indebtedness in full, after giving effect to any concurrent
payment or distribution to or for the holders of Senior Indebtedness.
For purposes of this Article only, 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 with respect to the Securities to the payment of all Senior
Indebtedness which may at the time be outstanding: provided, however,
that (i) Senior Indebtedness is assumed by the new corporation, if any,
resulting from any such reorganization or readjustment, and (ii) the
rights of the holders of the Senior Indebtedness 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 properties and assets
substantially as an entirety to another Person upon the terms and
conditions set forth in Article VIII shall not be deemed a dissolution,
winding up, liquidation, reorganization, assignment for the benefit of
creditors or marshalling of assets and liabilities of the Company for the
purposes of this Section if the corporation formed by such consolidation
or into which the Company is merged or the Person which acquires by
conveyance or transfer such properties and assets substantially as a
entirety, as the case may be, shall, as a part of such consolidation,
merger, conveyance or transfer, comply with the conditions set forth in
Article VIII.
SECTION 14.03. Prior Payment to Senior Indebtedness Upon
Acceleration of Securities. In the event that any Securities are declared
due and payable before their Stated Maturity, then and in such event the
holders of Senior Indebtedness outstanding at the time such Securities so
become due and payable shall be entitled to receive payment in full of all
amounts due or to become due on or in respect of all such Senior
Indebtedness, or provision shall be made for such payment in money or
money's worth, before the Holders of the Securities are entitled to
receive any payment (including any payment which may be payable by reason
of the payment of any other indebtedness of the Company being subordinated
to the payment of the Securities) by the Company on account of the
principal of (or premium, if any) or interest on the Securities or on
account of the purchase or other acquisition of Securities.
In the event that, notwithstanding the foregoing, the Company
shall make any payment to the Trustee or the Holder of any Securities
prohibited by the foregoing provisions of this Section, and if such facts
shall then have been made known to the Trustee or, as the case may be,
such Holder, then and in such event such payment shall be paid over and
delivered forthwith to the Company for the benefit of the holders of
Senior Indebtedness.
The provisions of this Section shall not apply to any payment
with respect to which Section 14.02 would be applicable.
SECTION 14.04. No Payment When Senior Indebtedness in Default.
(a) In the event and during the continuation of any default in the
payment of principal (or premium, if any) or interest on any Newco
Indebtedness beyond any applicable grace period with respect thereto, or
in the event that any event of default with respect to any Newco
Indebtedness shall have occurred and be continuing permitting the holders
of such Newco Indebtedness (or a trustee on behalf of the holders thereof)
to declare such Newco Indebtedness due and payable prior to the date on
which it would otherwise have become due and payable, unless and until
such event of default shall have been cured or waived or shall have ceased
to exist and such acceleration shall have been rescinded or annulled, or
(b) in the event any judicial proceeding shall be pending with respect to
any such default in payment or event of default, then no payment
(including any payment which may be payable by reason of the payment of
any other indebtedness of the Company being subordinated to the payment of
the Securities) shall be made by the Company on account of principal of
(or premium, if any) or interest on the Securities or on account of the
purchase or other acquisition of Securities.
In the event that, notwithstanding the foregoing, the Company
shall make any payment to the Trustee or the Holder of any Security
prohibited by the foregoing provisions of this Section, and if such fact
shall then have been made known to the Trustee or, as the case may be,
such Holder, then and in such event such payment shall be paid over and
delivered forthwith to the Company for the benefit of the holders of Newco
Indebtedness.
The provisions of this Section shall not apply to any payment
with respect to which Section 14.02 would be applicable.
SECTION 14.05. Payment Permitted if No Default. Nothing
contained in this Article or elsewhere in this Indenture or in any of the
Securities shall prevent (x) the Company, at any time except during the
pendency of any case, proceeding, dissolution, liquidation or other
winding up, assignment for the benefit of creditors or other marshalling
of assets and liabilities of the Company referred to in Section 14.02 or
under the conditions described in Section 14.03 or 14.04, from making
payments at any time of principal of (and premium, if any) or interest on
the Securities, or (y) the application by the Trustee or the retention
thereof by the Holders of any money deposited with it hereunder to the
payment of or on account of the principal of (and premium, if any) or
interest on the Securities if, at the time of such application, the
Trustee did not have knowledge that such payment would have been
prohibited by the provisions of this Article.
SECTION 14.06. Subrogation to Rights of Holders of Senior
Indebtedness. Subject to the payment in full of all Senior Indebtedness,
the Holders of the Securities 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 to the rights of the holders of
such Senior Indebtedness to receive payments or distributions of cash,
property or securities applicable to the Senior Indebtedness until the
principal of (and premium, if any) and interest on the Securities shall be
paid in full. For purposes of such subrogation, no payments or
distributions to the holders of the Senior Indebtedness of any cash,
property or securities to which the Holders of the Securities or the
Trustee would be entitled except for the provisions of this Article, and
no payments over pursuant to the provisions of this Article to the Company
or to the holders of Senior Indebtedness by Holders of the Securities or
the Trustee, shall, as between the Company, its creditors other than
holders of Senior Indebtedness and the Holders of the Securities, be
deemed to be a payment or distribution by the Company to or on account of
the Securities.
SECTION 14.07. Provisions Solely to Define Relative Rights.
The provisions of this Article are and are intended solely for the purpose
of defining the relative rights of the Holders of the Securities, on the
one hand, and the holders of Senior Indebtedness, on the other hand.
Nothing contained in this Article or elsewhere in this Indenture or in the
Securities is intended to or shall impair, as between the Company, its
creditors other than the holders of Senior Indebtedness and the Holders of
the Securities, the obligation of the Company, which is absolute and
unconditional, to pay to the Holders of the Securities the principal of
(and premium, if any) and interest on the Securities as and when the same
shall become due and payable in accordance with their terms and which,
subject to the rights under this Article of the holders of Senior
Indebtedness, is intended to rank equally with all other general
obligations of the Company, or is intended to or shall affect the relative
rights against the Company of the Holders of the Securities and creditors
of the Company other than the holders of Senior Indebtedness, nor shall
anything herein or therein prevent the Trustee, or the Holder of any
Security from exercising all remedies otherwise permitted by applicable
law upon default under this Indenture, subject to the rights, if any,
under this Article of the holders of Senior Indebtedness to receive cash,
property or securities otherwise payable or deliverable to the Trustee or
such Holder, and nothing herein shall prevent the conversion of any
Security (or part thereof) in accordance with the terms hereof.
SECTION 14.08. Trustee to Effectuate Subordination. Each
Holder of a Security by his acceptance thereof authorizes and directs the
Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article and
appoints the Trustee his attorney-in-fact for any and all such purposes.
SECTION 14.09. No Waiver of Subordination Provisions. No right
of any present or future holder of any Senior Indebtedness to enforce
subordination 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 any such holder may
have or be otherwise charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness may, at any time and from
time to time, without the consent of or notice to the Trustee or the
Holders of the Securities, without incurring responsibility to the Holders
of the Securities and without impairing or releasing the subordination
provided in this Article or the obligations hereunder of the Holders of
the Securities to the holders of Senior Indebtedness, do any one or more
of the following: (i) change the manner, place or terms of payment or
extend the time of payment of, or renew or alter, Senior Indebtedness, or
otherwise amend or supplement in any manner Senior Indebtedness or any
instrument evidencing the same or any agreement under which Senior
Indebtedness is outstanding; (ii) sell, exchange, release otherwise or
otherwise deal with any property pledged, mortgaged or securing Senior
Indebtedness; (iii) release any Person liable in any manner for the
collection of Senior Indebtedness; and (iv) exercise or refrain from
exercising any rights against the Company and any other Person.
SECTION 14.10. Notice to Trustee. The Company shall give
prompt written notice to the Trustee of any fact known to the Company
which would prohibit the making of any payment to or by the Trustee in
respect of the Securities. Failure to give such notice shall not affect
the subordination of the Securities to Senior Indebtedness.
Notwithstanding the provisions of this Article or any other provision of
this Indenture, the Trustee shall not be charged with knowledge of the
existence of any facts which would prohibit the making of any payment to
or by the Trustee in respect of the Securities, unless and until the
Trustee shall have received written notice thereof from the Company or a
holder of Senior Indebtedness or from any trustee therefor; and, prior to
the receipt of any such written notice, the Trustee, subject to the
provisions of Section 6.01, shall be entitled in all respects to assume
that no such facts exist; provided, however, that if the Trustee shall not
have received at least three Business Days prior to the date upon which by
the terms hereof any such money may become payable for any purpose
(including, without limitation, the payment of the principal of (and
premium, if any) or interest on any Security), the notice with respect to
such money provided for in this Section, then, anything herein contained
to the contrary notwithstanding, the Trustee shall have full power and
authority to receive such money and to apply the same to the purpose for
which such money was received and shall not be affected by any notice to
the contrary which may be received by it within three Business Days prior
to such date.
Subject to the provisions of Section 6.01, the Trustee shall be
entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Indebtedness (or a trustee
on behalf of such holder) to establish that such notice has been given by
a holder of Senior Indebtedness (or a trustee on behalf of any such
holder). 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, 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,
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 14.11. Reliance on Judicial Order or Certificate of
Liquidating Agent. Upon any payment or distribution of assets of the
Company referred to in this Article, the Trustee, subject to the
provisions of Section 6.01, and the Holders of the Securities shall be
entitled to rely upon any order or decree entered by any court of
competent jurisdiction in which such insolvency, bankruptcy, receivership,
liquidation, reorganization, dissolution, winding up or similar case or
proceeding is pending, or a certificate of the trustee in bankruptcy,
liquidating trustee, custodian, receiver, assignee for the benefit of
creditors, agent or other Person making such payment or distribution,
delivered to the Trustee or to the Holders of Securities, for the purpose
of ascertaining the Persons entitled to participate in such payment or
distribution, the holders of Senior Indebtedness and other indebtedness of
the Company, the amount thereof or payable thereon, amounts paid or
distributed thereon and all other distributions made pursuant to this
Article.
SECTION 14.12. Trustee Not Fiduciary For Holders of Senior
Indebtedness. The Trustee shall not be deemed to have any fiduciary duty
to the holders of Senior Indebtedness and shall not be liable to any such
holders if it shall in good faith mistakenly pay over or distribute to
Holders of Securities or to the Company or to any other Person cash,
property or securities in which any holders of Senior Indebtedness shall
be entitled by virtue of this Article or otherwise.
SECTION 14.13. Rights of Trustee as Holder of Senior
Indebtedness; Preservation of Trustee's Rights. The Trustee in its
individual capacity shall be entitled to all the rights set forth in this
Article with respect to any Senior Indebtedness which may at any time be
held by it to the same degree as any other holder of Senior Indebtedness
and nothing in this Indenture shall deprive the Trustee of any of its
rights as such holder.
Nothing in this Article shall apply to claims on, or payments
to, the Trustee or any predecessor Trustee under or pursuant to Section
6.07.
SECTION 14.14. Article Applicable to Paying Agent. In case at
any time any Paying Agent other than the Trustee shall have been appointed
by the Company and be then acting hereunder, the term "Trustee" as defined
in this Article shall in such case, unless the context otherwise implies,
be construed as extending to and including such Paying Agent in 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 Section 14.13 shall not apply to the Company if it acts as
Paying Agent.
ARTICLE XV.
REPURCHASE OF SECURITIES BY THE COMPANY
UPON THE OCCURRENCE OF A CONTINGENT EVENT
SECTION 15.01. Obligation to Repurchase. Upon the occurrence
of any Contingent Event, the Holder shall have the right, at such Holder's
option, to require Company to redeem, all or part of such Holder's
Securities on the date (the "Repurchase Date") provided in Section
15.02(c), at a repurchase price (the "Repurchase Price") equal to the
principal amount of Securities so purchased plus accrued and unpaid
interest on the principal amount of Securities so purchased to the
Repurchase Date. This right to require repurchase may not be exercised at
any time when the subordination provisions of this Indenture would not
permit the Company to make a payment of principal, premium or interest on
the Securities.
SECTION 15.02. Notice; Method of Exercising Repurchase Right.
(a) Promptly (and in any event within ten (10) calendar days)
after the occurrence of any Contingent Event, and not more than thirty
(30) calendar days before such Contingent Event, the Company or, at the
written request of the Company to be communicated to the Trustee at the
same time the notice referred to in the second to last sentence of this
paragraph is given, the Trustee shall, at the Company's expense, give
notice of the occurrence of a Contingent Event and of the repurchase right
set forth herein arising as a result thereof by first-class mail, postage
prepaid, to each Holder of Securities at such Holder's address appearing
in the Security Register. The Company shall notify the Trustee of the
occurrence of a Contingent Event as promptly as practical (but in no event
more than five days) after such occurrence. No failure of the Company to
give the foregoing notice shall limit the Company's obligation repurchase
Securities.
(b) Such repurchase option shall be exercised by written
notice from the Holder to the Company under subsection (c) hereof given at
any time from and after the thirtieth (30th) calendar day before such
Contingent Event through the thirtieth (30th) calendar day after such
Contingent Event (or, if later, through the thirtieth (30th) calendar day
after the Holder receives written notice from the Company or Trustee, as
the case may be, of such Contingent Event).
(c) In order to exercise its rights to require a repurchase
under this Article XV, the Holder shall send to the Company a written
notice demanding prepayment under this Article XV and specifying the date
of such prepayment (which shall not be less than fifteen (15) calendar
days after receipt of such notice by the Company, but in no event earlier
than such Contingent Event, except that such date may be the same date as
a Contingent Event if requested by the Holder).
SECTION 15.03. Certain Definitions. As used in this Article:
(1) "Contingent Event" means any one or more of the
following events which shall occur subsequent to the date of the
first issuance of the Securities under this Indenture:
(i) the Company shall convey, transfer or lease all
or substantially all of its assets (whether held directly or
indirectly through Subsidiaries) to any Person (other than to a
Subsidiary of the Company);
(ii) any Person (other than the Company), including a
"group" (within the meaning of Section 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934, as amended) that includes such
Person, shall acquire, directly or indirectly, beneficial ownership,
in the aggregate, of (x) 50 percent or more of the Common Stock, or
(y) securities representing 50 percent or more of the combined voting
power of the Company's voting securities, in either case, outstanding
on the date immediately prior to the date of the last such
acquisition by such Person; or
(iii) on any day (a "Calculation Date") (x) (A) the
Company shall distribute cash, securities or other properties,
including cash dividends (other than Common Stock, or rights or
warrants to acquire Common Stock or preferred stock substantially
equivalent to Common Stock) to holders of Common Stock, whether by
means of dividend, reclassification, recapitalization or otherwise,
or (B) the Company shall acquire, directly or indirectly, beneficial
ownership of Common Stock; and (y) the sum of the Applicable
Percentages (as defined below) of all such distributions and
acquisitions which have occurred on the Calculation Date and during
the 365-day period immediately preceding the Calculation Date shall
exceed 30 percent.
(2) "Applicable Percentage" means (x) In the case of each
distribution referred to in clause (iii) above, the percentage
determined as of the Calculation Date of each such distribution by
dividing the aggregate fair market value (as determined in good faith
by the Board of Directors, whose determination shall be conclusive)
of such distribution, by the fair market value (based on the then
current market price) of all of the shares of Common Stock
outstanding on the day immediately prior to such Calculation Date;
and (y) in the case of each acquisition referred to in clause (iii)
above, the percentage determined as of the Calculation Date of each
such acquisition by dividing all amounts expended by the Company
(such amounts, if other than in cash, as determined in good faith by
the Board of Directors, whose determination shall be conclusive) in
connection with the acquisition of any shares of Common Stock, by the
fair market value (based on the then current market price) of all of
the shares of Common Stock outstanding on the day immediately prior
to such Calculation Date.
This instrument may be executed in any number of counterparts,
each of which so executed shall be deemed as an original, but all such
counterparts shall together constitute but one and the same instrument.
[The remainder of this page is intentionally left blank.]
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above
written.
SWING-N-SLIDE CORP.
By /s/ Richard E. Ruegger
Name Richard E. Ruegger ItsVice-
President/ CFO
Attest:
By /s/ D. Hammelman
Name David H. Hammelman
Its Vice President - HR & Admin.
FIRSTAR BANK MILWAUKEE, N.A., as
Trustee
By /s/ Peter M. Brennan
Name Peter M. Brennan
Its Trust Officer
Attest:
By /s/ Charles F. Pedersen
Name Charles F. Pedersen
Its Trust Officer
STATE OF WISCONSIN )
) ss
COUNTY OF ROCK )
On the 27 day of March , 1998, before me personally
came Richard E. Ruegger, to me known, who, being by me duly sworn, did
depose and say that he is CFO of Swing-N-Slide Corp., one of the
corporations described in and which executed the foregoing instrument;
that he knows the seal of said corporation; that the seal affixed to said
instrument is such corporate seal; that it was so affixed by authority of
the Board of Directors of said corporation, and that he signed his name
thereto by like authority.
/s/ Cese Diotts Turner
[Notary Seal] Notary Public
Rock County, Wisconsin
My Commission expires 10-15-00
STATE OF WISCONSIN )
)ss
COUNTY OF MILWAUKEE )
On this 27 day of March , 1998, before me
personally came Peter M. Brennan, to me known, who, being by me duly
sworn, did depose and say that he is a Trust Officer of Firstar Bank
Milwaukee, N.A., one of the corporations or associations described in and
which executed the above instrument; that he knows the seal of said
corporation or association; that one of the seals affixed to said
instrument is such seal; that it was so affixed by authority of the By-
laws of said corporation or association; and that he signed his name
thereto by like authority.
/s/ Janice S. Grezinski
[Notary Seal] Notary Public
Milwaukee, Wisconsin
My Commission expires 2-4-01
STATE OF WISCONSIN )
) ss
COUNTY OF ROCK )
On the 27 day of March , 1998, before me personally
came David H. Hammelman , to me known, who, being by me duly sworn, did
depose and say that he is
VP - HR of Swing-N-Slide Corp., one of the corporations described in
and which executed the foregoing instrument; that he knows the seal of
said corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation, and that he signed his name thereto by like
authority.
/s/ Cese Diotts Turner
[Notary Seal] Notary Public
Rock County, Wisconsin
My Commission expires 10-15-00
STATE OF WISCONSIN )
) ss
COUNTY OF MILWAUKEE )
On this 27 day of March , 1998, before me personally came
Charles F. Pedersen, to me known, who, being by me duly sworn, did depose
and say that he is a Trust Officer of Firstar Bank Milwaukee, N.A.,
one of the corporations or associations described in and which executed
the above instrument; that he knows the seal of said corporation or
association; that one of the seals affixed to said instrument is such
seal; that it was so affixed by authority of the By-laws of said
corporation or association; and that he signed his name thereto by like
authority.
/s/ Janice S. Grezinski
[Notary Seal] Notary Public
Milwaukee County, Wisconsin
My Commission expires 2-4-01
STATE OF WISCONSIN )
)ss
COUNTY OF )
On the day of , 1998, before me
personally came , to me known, who, being by me
duly sworn, did depose and say that he is ___________ of Swing-N-Slide
Corp., one of the corporations described in and which executed the
foregoing instrument; that he knows the seal of said corporation; that the
seal affixed to said instrument is such corporate seal; that it was so
affixed by authority of the Board of Directors of said corporation, and
that he signed his name thereto by like authority.
___________________________________
[Notary Seal] Notary Public
County, Wisconsin
My Commission expires______________
STATE OF WISCONSIN )
)ss
COUNTY OF MILWAUKEE )
On this day of , 1998, before me
personally came known, who, being by me duly
sworn, did depose and say that he is a
of Firstar Bank Milwaukee, N.A., one of the corporations
or associations described in and which executed the above instrument; that
he knows the seal of said corporation or association; that one of the
seals affixed to said instrument is such seal; that it was so affixed by
authority of the By-laws of said corporation or association; and that he
signed his name thereto by like authority.
___________________________________
[Notary Seal] Notary Public
Milwaukee County, Wisconsin
My Commission expires______________
Exhibit 4.(i)(2)
SWING-N-SLIDE CORP.
10% Convertible Subordinated Debenture due 2004
No. $____________
Swing-N-Slide Corp., a corporation duly organized and existing
under the laws of the State of Delaware (herein called the "Company,"
which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
_________________ ______________________________________, or registered
assigns, the principal sum of _____________
______________________________________ Dollars on February 15, 2004, and
to pay interest thereon from ________________________________________,(1)
or from the most recent Interest Payment Date to which interest has been
paid or duly provided for, semiannually on April 15 and October 15, in
each year, commencing _________________________________________,(2) at the
rate of 10% per annum, until the principal hereof is paid or made
available for payment. The first interest payment date on this Debenture
is October 15, 1998. Except as otherwise provided in the following
sentence, the interest so payable, and punctually paid or duly provided
for, on any Interest Payment Date will, as provided in such Indenture, be
paid to the Person in whose name this Debenture (or one or more
Predecessor Debentures) is registered at the close of business on the
Regular Record Date for such interest, which shall be the April 1st and
October 1st (whether or not a Business Day), as the case may be, next
preceding such Interest Payment Date. In the case of any Debenture which
is converted after any Regular Record Date and on or prior to the next
succeeding Interest Payment Date, interest whose stated Maturity is on
such Interest Payment Date shall not be payable on such Interest Payment
Date and shall not be paid to the Person in whose name that Debenture (or
one or more predecessor Debentures) is registered at the close of business
on such Regular Record Date. Subject to the preceding sentence, any such
interest not so punctually paid or duly provided for will forthwith cease
to be payable to the Holder on such Regular Record Date and may either be
paid to the Person in whose name this Debenture (or one or more
Predecessor Debentures) is registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest to be fixed
by the Trustee, notice whereof shall be given to Holders of Debentures not
less than 10 days prior to such Special Record Date, or be paid at any
time in any other lawful manner not inconsistent with the requirement of
any securities exchange on which the Debentures may be listed, and upon
such notice as may be required by such exchange, all as more fully
provided in said Indenture. Payment of the principal of (and premium, if
any) and interest on this Debenture will be made at the office or agency
of the Company maintained for that purpose in such coin or currency of the
United States of America as at the time of payment is legal tender for
payment of public and private debts; provided, however, that (i) at the
option of the Company payment of interest may be made by check mailed to
the address of the Person entitled thereto as such address shall appear in
the Security Register and (ii) until February 15, 1999 interest on this
Debenture may, at the option of the Company, be paid by the issuance of an
additional debenture, in the form of this Debenture, in the principal
amount of the interest so payable, dated the Interest Payment Date for
such interest payment, with interest payable as provided herein with a
stated maturity of principal and interest as provided in this Debenture
and otherwise identical to this Debenture.
-----------
(1) Insert the date of issuance.
(2) Insert the first Interest Payment Date after the date of issuance.
Reference is hereby made to the further provisions of this
Debenture set forth on the reverse hereof, which further provisions shall
for all purposes have the same effect as if set forth at this place. The
Indenture includes limitations on the right of the Holder to institute a
proceeding, judicial or otherwise, with respect to the Indenture, for the
appointment of a receiver or trustee, or for any other remedy under the
Indenture.
Unless the certificate of authentication hereon has been
executed by the Trustee referred to on the reverse hereof by manual
signature, this Debenture shall not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose.(3)
-----------
(3) Insert disclosure language required, if any, under sections 1271
to 1275 of the Internal Revenue Code (or successor provisions of the
Internal Revenue Code).
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed under its corporate seal.
Dated:
[SEAL] SWING-N-SLIDE CORP.
By:
Attest:
<PAGE>
[Form of Reverse of Debenture]
This Debenture is one of a duly authorized issue of Debentures
of the Company designated as its 10% Convertible Subordinated Debentures
due 2004 (herein called the "Debentures"), limited in aggregate principal
amount to Nine Million Four Hundred Ninety-Four Thousand Five Hundred
Sixty-Two and 19/100 Dollars ($9,494,562.19) (plus any additional
Debentures paid in lieu of cash interest as permitted herein), issued and
to be issued under an Indenture, dated as of March 27, 1998 (herein called
the "Indenture"), between the Company and Firstar Trust Company as Trustee
(herein called the "Trustee," which term includes any successor trustee
under the Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Company,
the Trustee, the holders of Senior Indebtedness and the Holders of the
Debentures and of the terms upon which the Debentures are, and are to be,
authenticated and delivered.
Subject to the provisions of the Indenture, the Holder hereof
has the right, at his option, at any time prior to maturity or at least
five Business Days prior to a Redemption Date, to convert the principal
amount of this Debenture (or any portion of the principal amount hereof
which is $1.00 or an integral multiple of $1.00) into fully paid and
nonassessable (except as otherwise provided by law) shares of Common Stock
of the Company at the conversion rate of 1.0 shares of Common Stock for
each $______(4) principal amount of Debentures, subject to such
adjustment, if any, of the conversion rate and the securities or other
property issuable upon conversion as may be required by the provisions of
the Indenture, except that, in case this Debenture (or any portion hereof)
shall be called for redemption before maturity, such right shall terminate
at the close of business on the fifth Business Day prior to the Redemption
Date for this Debenture (or such portion hereof), unless in any such case
the Company shall default in payment due upon such redemption, but only
upon surrender of this Debenture for the property of such conversion to
the Company at the designated office or agency of the Company or any other
office or agency designated by the Company for such purpose pursuant to
the provisions of the Indenture, accompanied by written notice that the
Holder elects to convert this Debenture or any portion hereof and
specifying the name or names (with address or addresses) in which a
certificate or certificates for shares of Common Stock are to be issued
and (if so required by the Company or the Trustee) by a written instrument
or instruments of transfer in form satisfactory to the Company and the
Trustee duly executed by the registered Holder or his duly authorized
legal representative and transfer tax stamps or funds therefor, if
required, pursuant to the provisions of the Indenture. No adjustment is
to be made on conversion for interest accrued hereon or for dividends on
shares of Common Stock issued on conversion. No fractional shares are
issuable upon any conversion, but in lieu thereof the Company shall pay
therefor in cash as provided in the Indenture. Within ten (10) calendar
days after receipt of any Debenture and an election to convert all or a
portion of the principal amount of such Debenture pursuant to the terms of
the Indenture, the Company will pay to the Holder any unpaid interest,
accrued to the date of conversion of such Debenture, on the principal
amount converted; provided that until February 15, 1999, such interest
may, at the option of the Company, be paid by the issuance of an
additional debenture as described in subclause (ii) on the face of this
Debenture.
-----------
(4) Insert $4.80 for debentures issued hereunder to GreenGrass Holdings,
James R. Rastetter, Brian K. Zeilinger, and Richard G. Mueller in
exchange for debentures of the Company presently held by such
persons, and any debentures issued with respect thereto as interest
payments. Insert $4.70 for debentures issued hereunder pursuant to
the Company's registration statement on Form S-2, and any debentures
issued with respect thereto as interest payments.
The Debentures are subject to redemption upon not less than 45
or more than 60 days' notice by mail, at any time, as a whole or in part,
at the election of the Company, at a Redemption Price equal to 100% of the
principal amount, together with accrued interest to the Redemption Date,
but interest installments whose Stated Maturity is on or prior to such
Redemption Date will be payable to the Holders of such Debentures, or one
or more Predecessor Debentures of record at the close of business on the
relevant Record Dates referred to on the face hereof, all as provided in
the Indenture.
In the event of redemption or conversion of this Debenture in
part only, a new Debenture or Debentures for the unredeemed or unconverted
portion hereof will be issued in the name of the Holder hereof upon the
cancellation hereof.
The indebtedness evidenced by the Debentures is, to the extent
and the manner provided in the Indenture, expressly subordinate and
subject in right of payment to the prior payment in full of any Senior
Indebtedness of the Company or provision for such payment, whether
outstanding at the date of the Indenture or thereafter incurred, and each
Holder of this Debenture, by his acceptance hereof, agrees to and shall be
bound by such provisions of the Indenture and authorizes and directs the
Trustee in his behalf to take such action as may be necessary or
appropriate to effectuate such subordination and appoints the Trustee his
attorney-in-fact for any and all such purposes.
If an Event of Default other than involving certain events of
bankruptcy, insolvency or reorganization in respect of the Company as
provided in the Indenture shall occur and be continuing, the principal of
all the Debentures may be declared due and payable in the manner and with
the effect provided in the Indenture. If an Event of Default involves
certain events of bankruptcy, insolvency or reorganization in respect of
the Company as provided in the Indenture shall occur, then in every such
case the unpaid principal balance and all accrued and unpaid interest
shall automatically become due and payable in the manner and with the
effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the Trustee (including the waiver of
compliance by the Company with the provisions of the Indenture and past
defaults under the Indenture and their consequences) with the consent of
the Holders of a majority in aggregate principal amount of the Debentures
at the time Outstanding. Any such consent or waiver by the Holder of this
Debenture shall be conclusive and binding upon such Holder and upon all
future Holders of this Debenture and of any Debenture issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof,
whether or not notation of such consent or waiver is made upon this
Debenture.
No reference herein to the Indenture and no provision of this
Debenture or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of (and
premium, if any) and interest on this Debenture at the times, place and
rate, and in the coin or currency or with another debenture, herein
prescribed or to convert this Debenture as provided in the Indenture.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Debenture is registrable in the
Security Register, upon surrender of this Debenture for registration of
transfer at the office or agency of the Company, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to
the Company and the Security Registrar duly executed by, the Holder hereof
or his attorney duly authorized in writing, and thereupon one or more new
Debentures, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or
transferees.
The Debentures are issuable only in registered form without
coupons in denominations of $1.00 and any integral multiple thereof, as
provided in the Indenture and subject to certain limitations and
exceptions therein set forth. Debentures are exchangeable for a like
aggregate principal amount of Debentures of a different authorized
denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in
connection therewith.
The Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name this Debenture is registered as
the owner hereof for all purposes, whether or not this Debenture be
overdue, and neither the Company, the Trustee nor any such agent shall be
affected by notice to the contrary.
All terms used in this Debenture which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
This is one of the Debentures referred to in the within-
mentioned Indenture.
FIRSTAR BANK MILWAUKEE, N.A., as Trustee
By
Authorized Signature
Exhibit 5
F O L E Y & L A R D N E R
A T T O R N E Y S A T L A W
CHICAGO FIRSTAR CENTER SAN DIEGO
JACKSONVILLE 777 EAST WISCONSIN AVENUE SAN FRANCISCO
LOS ANGELES MILWAUKEE, WISCONSIN 53202-5367 TALLAHASSEE
MADISON TELEPHONE (414) 271-2400 TAMPA
ORLANDO FACSIMILE (414) 297-4900 WASHINGTON, D.C.
SACRAMENTO WEST PALM BEACH
WRITER'S DIRECT LINE
March 31, 1998
Swing-N-Slide Corp.
1212 Barberry Drive
Janesville, Wisconsin 53545
Ladies and Gentlemen:
We have acted as counsel to Swing-N-Slide Corp., a Delaware
corporation (the "Company"), in connection with the offering of up to an
aggregate $3,333,333 principal amount of the Company's 10% Convertible
Subordinated Debentures due February 15, 2004 (the "Debentures"), in
accordance with the terms and subject to the conditions set forth in the
prospectus forming a part of the registration statement on SEC Form S-2
filed by the Company with the Securities and Exchange Commission on May
16, 1996, and amended on the date hereof. The registration statement and
prospectus identified above are referred to herein respectively as the
"Registration Statement" and "Prospectus." You have requested our opinion
as counsel to the Company with respect to the Registration Statement.
In connection with the rendering of this opinion, we have
examined originals, or copies certified to our satisfaction, of the
Amended and Restated Certificate of Incorporation and Amended and Restated
Bylaws of the Company, as amended (referred to herein collectively as the
"Organizational Documents"), the Transaction Agreement dated January 4,
1996, by and between the Company and GreenGrass Holdings, as amended (the
"Transaction Agreement"), the Registration Statement and Prospectus, the
form of Indenture relating to the issuance of the Debentures, certificates
of officers of the Company, certificates of public officials, and such
other proceedings, documents, and records as we deemed necessary to enable
us to render this opinion.
Based on the foregoing, and subject to the assumptions and
qualifications set forth herein, we are of the opinion that:
1. The Company is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware,
and has the corporate power and authority to issue and sell the
Debentures.
2. The issuance and sale of the Debentures by the Company, the
reservation of 2,350,950 shares of the Common Stock for the conversion of
such Debentures, and the issuance of up to 2,350,950 shares of Common
Stock upon conversion of the Debentures has been duly authorized by the
Board of Directors of the Company. When duly executed and delivered on
behalf of the Company, the Debentures will constitute the valid and
legally binding obligations of the Company, enforceable against the
Company in accordance with their terms.
3. When the Registration Statement has become effective under
the Securities Act of 1933, as amended (the "Securities Act"),
subscriptions for the Debentures have been received and accepted by or on
behalf of the Company, the Debentures so subscribed have been duly issued,
and such Debentures are converted into shares of the Common Stock pursuant
to the terms and conditions thereof, the shares of Common Stock issued
upon such conversion will be validly issued, fully paid, and nonassessable
(except to the extent, if any, that Section 180.0622(2)(b) of the
Wisconsin Statutes relating to unpaid employee wage claims may be
applicable to such shares of Common Stock).
Our foregoing opinions are further subject to the following
assumptions and qualifications:
(a) We express no opinion herein other than as to (i) the
General Corporation Law of the State of Delaware, (ii) the
Wisconsin Business Corporation Law, and (iii) the federal
laws of the United States.
(b) Our opinion as to the enforceability of any agreement,
instrument, or document is limited by the following:
(i) Applicable bankruptcy, insolvency, fraudulent
conveyance or transfer, reorganization, moratorium,
and other similar laws and equitable principles of
general application affecting the rights of creditors
generally;
(ii) The availability or efficacy of specific performance,
injunctive relief, or any other equitable remedy
(regardless of whether such enforceability is
considered in a proceeding in equity or at law);
(iii) The availability of rights to indemnity or
contribution, or both, thereunder which may be limited
by federal or state securities laws or the public
policy underlying such laws; and
(iv) The enforceability of provisions relating to venue or
jurisdiction of disputes.
(c) This opinion is given as of the date hereof and is
intended to apply only to those facts and
circumstances which exist on the date hereof, and we
assume no obligation or responsibility to update or
supplement this opinion to reflect any facts or
circumstances which may hereafter come to our
attention, any changes in laws which may hereafter
occur, or to inform the addressee of any change in
circumstances occurring after the date of this opinion
which would alter the opinions rendered herein.
This opinion has been rendered in connection with the Registration
Statement of the Company solely for the benefit of the addressee, and may
not be used or relied upon by any other person or entity or for any other
purpose. Any further distribution or reproduction of the contents hereof,
without our prior written consent, is strictly prohibited. We hereby
consent to the use of the foregoing opinion as an exhibit to the
Registration Statement and to the use of our name in such Registration
Statement and in the Prospectus under the heading "Legal Matters."
Very truly yours,
/s/ Foley & Lardner
FOLEY & LARDNER
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS
OF ANY STATE BY REASON OF SPECIFIC EXEMPTIONS UNDER THE PROVISIONS OF THE
AFOREMENTIONED ACT AND LAWS AND/OR RULES AND REGULATIONS PROMULGATED
THEREUNDER. ACCORDINGLY, THIS INSTRUMENT MAY NOT BE OFFERED FOR SALE,
SOLD, OR OTHERWISE TRANSFERRED EXCEPT UPON AN EFFECTIVE REGISTRATION OF
THE SECURITIES REPRESENTED BY THIS INSTRUMENT UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS, OR UPON
ACCEPTANCE BY THE ISSUER OF AN OPINION OF COUNSEL IN SUCH FORM AND BY SUCH
COUNSEL, OR OTHER DOCUMENTATION, AS SHALL BE SATISFACTORY TO COUNSEL FOR
THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
SWING-N-SLIDE CORP.
Amended and Restated
10% Convertible Subordinated Debenture due 2004
$4,300,000 February 15, 1996
Swing-N-Slide Corp., a corporation duly organized and existing
under the laws of Delaware, and its permitted successors and assigns
(herein called the "Company"), for value received, hereby promises to pay
to the order of GreenGrass Holdings, a Delaware general partnership, and
its successors and assigns (the "Holder"), the principal sum of FOUR
MILLION THREE HUNDRED THOUSAND DOLLARS ($4,300,000.00) on February 15,
2004, and to pay interest thereon commencing April 15, 1996 and on April
15 and October 15, in each year thereafter, at the rate of 10% per annum,
until the principal hereof is paid in full. Payment of the principal of
(and premium, if any) and interest on this Debenture will be made by check
payable in money of the United States of America that at the time of
payment is legal tender for payment of public and private debts, mailed to
the Holder at its principal office in Chicago, Illinois or such other
address as may be designated by the Holder; provided, however, that until
February 15, 1999, at the option of the Company, interest on this
Debenture may be paid by the issuance of an additional debenture, in the
form of this Debenture, in the principal amount of the interest so
payable, dated the interest payment date for such interest payment, with
interest payable as provided herein with a stated maturity of principal
and interest as provided in this Debenture and otherwise identical to this
Debenture. Interest shall be calculated based on a year composed of 365
days.
Section A. Securities Offering. If debentures are issued to
shareholders of the Company as contemplated by Section 4.8(c) of the
Transaction Agreement, dated January 4, 1996, between GreenGrass Holdings
and the Company, then contemporaneously with the closing of such offer
this Debenture may be exchanged, at the option of the Holder, for
debentures issued under the indenture entered into by the Company in
connection with such offer, at par plus any accrued and unpaid interest,
except that any such debentures issued to the Holder will continue to be
convertible at the Conversion Rate (as defined below) specified below.
Section B. Conversion Rights.
1. General. The Holder shall have the right at any time prior
to maturity, at its option, to convert the principal of this
Debenture (or any portion of the principal thereof which is $1.00 or
an integral multiple of $1.00) into fully paid and nonassessable
(except as otherwise provided by law) shares of Common Stock of the
Company at the rate of one share of Common Stock for each $4.80
principal amount of Debentures or, in case an adjustment to the
number of shares of Common Stock issuable for each $4.80 principal
amount of Debentures (the "Conversion Rate" or "rate") has taken
place pursuant to the provisions hereof, then at the rate as so
adjusted. Such right shall be exercised by the surrender of the
Debenture, the principal of which is so to be converted, to the
Company, accompanied by written notice that the Holder elects to
convert the Debenture or any portion thereof and specifying the name
or names (with address) in which a certificate or certificates for
Common Stock are to be issued. For convenience, the conversion of
all or a portion, as the case may be, of the principal of this
Debenture (and any other Debentures (including without limitation any
Debentures issued in lieu of interest in accordance with the first
paragraph of this Debenture)) into the Common Stock of the Company is
hereinafter sometimes referred to as the conversion of this
Debenture. If this Debenture is converted in part only, upon such
conversion the Company shall execute and deliver to the Holder a new
Debenture or Debentures of authorized denominations in an aggregate
principal amount equal to the unconverted portion of such Debenture.
This Debenture shall continue to be convertible, in whole or in
part, (i) even though the Company or the Holder may have given notice
of prepayment or redemption with respect to this Debenture or any
part thereof pursuant to Sections C or E hereof, so long as this
Debenture and the Holder's election to convert shall have been
delivered to the Company pursuant to this Section B prior to the date
fixed for such prepayment or redemption and (ii) whether or not a
mandatory, optional or mandatory optional prepayment or redemption
prior to the date fixed for such prepayment or redemption, is due on
this Debenture on any date following such time.
2. Issuance of Common Stock; Time of Conversion. As promptly
as practicable after the surrender, as herein provided, of this
Debenture for conversion, the Company shall deliver to the Holder a
certificate or certificates representing the number of fully paid and
nonassessable (except as otherwise provided by law) shares of Common
Stock of the Company into which this Debenture (or portion thereof)
may be converted together with payment in lieu of any fraction of a
share. Subject to the following provisions of this Debenture, such
conversion shall be deemed to have been made immediately prior to the
close of business on the date that this Debenture shall have been
surrendered for conversion (except that if such conversion is in
connection with an underwritten public offering of Common Stock, then
such conversion shall be deemed to have been effected upon such
surrender), so that the rights of the Holder as a Holder shall cease
with respect to this Debenture (or the portion thereof) being
converted at such time, and the Person or Persons entitled to receive
the shares of Common Stock deliverable upon conversion of this
Debenture shall be treated for all purposes as having become the
record holder or holders of such shares of Common Stock at such time,
and such conversion shall be at the conversion rate in effect at such
time; provided, however, that no such surrender on any date when the
stock transfer books of the Company shall be closed shall be
effective to constitute the Person or Persons entitled to receive the
shares of Common Stock deliverable upon such conversion as the record
holder or holders of such shares of Common Stock on such date, but
such surrender shall be effective to constitute the Person or Persons
entitled to receive such shares of Common Stock as the record holder
or holders thereof for all purposes immediately prior to the close of
business on the next succeeding day on which such stock transfer
books are open, and such conversion shall be deemed to have been made
at, and shall be made at the conversion rate in effect at, such time
on such next succeeding day.
If the last day for the exercise of the conversion right shall
not be a business day, then such conversion right may be exercised on
the next succeeding business day.
3. Payment of Accrued Interest. Within ten (10) days after
receipt of any Debenture and an election to convert all or a portion
of the principal amount of such Debenture pursuant to this Section B,
the Company will pay to the Holder any unpaid interest, accrued to
the date of conversion of such Debenture, on the principal amount so
converted.
4. Adjustment of Conversion Price. The conversion rate shall
be subject to adjustment as follows:
a. In case the Company shall (i) pay a dividend on Common
Stock in Common Stock, (ii) subdivide its outstanding shares of
Common Stock, or (iii) combine its outstanding shares of Common
Stock into a smaller number of shares, the conversion rate in
effect immediately prior thereto shall be adjusted retroactively
as provided below so that the Holder shall be entitled to
receive the number of shares of Common Stock of the Company
which it would have owned or have been entitled to receive after
the happening of any of the events described above had this
Debenture been converted immediately prior to the happening of
such event. An adjustment made pursuant to this paragraph (a)
shall become effective immediately after the record date in the
case of a dividend and shall become effective immediately after
the effective date in the case of a subdivision or combination.
b. In case the Company shall issue rights or warrants to
all holders of its Common Stock entitling them to subscribe for
or purchase shares of Common Stock at a price per share less
than the current market price per share (determined as provided
in paragraph (e) of this Section) of the Common Stock on the
date fixed for the determination of stockholders entitled to
receive such rights or warrants, the conversion rate in effect
at the opening of business on the day following the day fixed
for such determination shall be increased by multiplying such
conversion rate by a fraction of which the numerator shall be
the number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination plus the
number of shares of Common Stock so offered for subscription or
purchase and the denominator shall be the number of shares of
Common Stock outstanding at the close of business on the date
fixed for such determination plus the number of shares of Common
Stock which the aggregate of the offering price of the total
number of shares of Common Stocks offered for subscription or
purchase would purchase at such current market price, such
increase to become effective immediately after the opening of
business on the day following the date fixed for such
determination; provided, however, in the event that all the
shares of Common Stock offered for subscription or purchase are
not delivered upon the exercise of such rights or warrants, upon
the expiration of such rights or warrants the conversion rate
shall be readjusted to the conversion rate which would have been
in effect had the numerator and the denominator of the foregoing
fraction and the resulting adjustment been made based upon the
number of shares of Common Stock actually delivered upon the
exercise of such rights or warrants rather than upon the number
of shares of Common Stock offered for subscription or purchase.
For the purposes of this paragraph (b), the number of shares of
Common Stock at any time outstanding shall not include shares
held in the treasury of the Company.
c. In case the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock shares of its
capital stock (other than Common Stock), or assets (excluding
cash dividends paid out of the retained earnings of the Company)
or rights or warrants to subscribe or purchase (excluding those
referred to in paragraph (b) above) (hereinafter collectively
referred to as "Distributions on Common Stock"), then in each
such case, the Company shall deliver to the Holder the
Distribution on Common Stock to which the Holder would be
entitled if it had converted the Debentures for Common Stock
immediately prior to the record date for the purpose of
determining stockholders entitled to receive such Distribution
on Common Stock.
d. The reclassification (including any reclassification
upon a merger in which the Company is the continuing
corporation) of Common Stock into securities including other
than Common Stock (other than any reclassification upon a
consolidation or merger to which Subsection B(6) applies) shall
be deemed to involve (i) a distribution of such securities other
than Common Stock to all holders of Common Stock (and the
effective date of such reclassification shall be deemed to be
"the date fixed for the determination of stockholders entitled
to receive such distribution" and "the date fixed for such
determination" within the meaning of paragraph (e) of this
Section), and (ii) a subdivision or combination, as the case may
be, of the number of shares of Common Stock outstanding
immediately prior to such reclassification into the number of
shares of Common Stock outstanding immediately thereafter.
e. For the purpose of any computation under paragraphs
(b) and (c) of this Section, the current market price per share
of Common Stock on any date shall be deemed to be the average of
the daily closing prices for the thirty consecutive business
days selected by the Company commencing with the forty-fifth
business day before the day in question. The closing price for
each day shall be the last reported sales price regular way or,
in case no such reported sale takes place on such day, the
average of the reported closing bid and asked prices regular
way, in either case on the American Stock Exchange or if the
Common Stock is not listed or admitted to trading on such
Exchange, on the principal national securities exchange on which
the Common Stock is listed or admitted to trading or, if not
listed or admitted to trading on any national securities
exchange, on the National Association of Securities Dealers
Automated Quotations National Market System or, if the Common
Stock is not listed or admitted to trading on any national
securities exchange or quoted on such National Market System,
the average of the closing bid and asked prices in the over-the-
counter market as furnished by any New York Stock Exchange or
American Stock Exchange member firm selected from time to time
by the Company for that purpose. If the current market price
per share of Common Stock cannot be determined in accordance
with the above procedures under this paragraph (e), such current
market price shall be determined in good faith by the Board of
Directors of the Company.
f. No adjustment in the conversion rate shall be required
unless such adjustment would require an increase or decrease of
at least 1% of such rate; provided, however, that the Company
may make any such adjustment at its election and provided,
further, that any adjustments which by reason of this paragraph
(f) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All
calculations under this Section B shall be made to the nearest
cent or to the nearest one-hundredth of a share, as the case may
be. Anything in this Section B notwithstanding, the Company may
make such reductions in the conversion rate, in addition to
those required by this Section, as it considers to be advisable
in order that any event treated for Federal income tax purposes
as a dividend of stock or stock rights shall not be taxable to
the recipients.
g. Whenever the conversion rate is adjusted as herein
provided
(1) the Company shall compute the adjusted
conversion rate in accordance with paragraph (a); and
(2) notice stating that the conversion rate has
been adjusted and setting forth the adjusted
conversion rate shall forthwith be mailed to the
Holder.
h. For the purpose of this Section B(4), the term "Common
Stock" shall include any stock of any class of the Company which
has no preference in respect of dividends or of amounts payable
in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Company and which is not
subject to redemption by the Company. However, shares issuable
on conversion of shares of this Series shall include only shares
of the class designated as Common Stock of the Company as of
January 1, 1996, 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, however, that if
at any time there shall be more than one such resulting class,
the shares of each such class then so issuable shall be
substantially in the proportion which the total number of shares
of such class resulting from all such reclassifications bears to
the total number of shares of all such classes resulting from
all such reclassifications.
5. No Fractional Shares. No fractional shares of Common Stock
shall be issued upon conversion of this Debenture. If more than one
Debenture shall be surrendered for conversion at one time by the
Holder, the number of full shares which shall be issuable upon
conversion thereof shall be computed on the basis of the aggregate
principal amount of the Debentures or specified portions thereof so
surrendered. Instead of any fractional share of Common Stock which
would otherwise be issuable upon conversion of this Debenture or any
Debentures or specified portions thereof, the Company shall pay a
cash adjustment in respect of such fraction in amount equal to the
same fraction of the current market price per share of Common Stock
(as determined in accordance with Section B.4.(e) above) at the close
of business on the day of conversion.
6. Consolidation, Merger or Sale of Assets. In case of any
consolidation of the Company with, or merger of the Company into, any
other Person, (other than a merger which does not result in any
reclassification, conversion, exchange or cancellation of outstanding
shares of Common Stock of the Company) or any sale or transfer of all
or substantially all of the assets of the Company (whether such
assets are held by the Company directly or indirectly through its
Subsidiaries), the Person formed by such consolidation or resulting
from such merger or which acquires such assets, as the case may be,
shall execute and deliver to the Holder an instrument providing that
the Holder shall have the right thereafter, during the period this
Debenture shall be convertible to convert this Debenture only into
the kind and amount of securities, cash and other property receivable
upon such consolidation, merger, sale or transfer by a holder of the
number of shares of Common Stock of the Company into which this
Debenture might have been converted immediately prior to such
consolidation, merger, sale or transfer assuming such holder of
Common Stock of the Company (i) is not a Person with which the
Company consolidated or into which the Company merged or to which
such sale or transfer was made, as the case may be ("constituent
Person"), or an Affiliate of a constituent Person and (ii) failed to
exercise his rights of election, if any, as to the kind or amount of
securities, cash and other property receivable upon such
consolidation, merger, sale or transfer (provided that if the kind or
amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer is not the same for each
share of Common Stock of the Company held immediately prior to such
consolidation, merger, sale or transfer by other than a constituent
Person or an Affiliate thereof and in respect of which such rights of
election shall not have been exercised ("non-electing share") then
for the purpose of this subsection the kind and amount of securities,
cash and other property receivable upon such consolidation, merger,
sale or transfer by 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 instrument shall provide for adjustments
which, for events subsequent to the effective date of such
instrument, shall be as nearly equivalent as may be practicable to
the adjustments provided for in this Section. The above provisions
of this subsection shall similarly apply to successive
consolidations, mergers, sales or transfers.
7. Shares to be Reserved. The Company covenants that it will
at all times reserve and keep available out of its authorized Common
Stock, solely for the purpose of issue upon conversion of Debentures
as herein provided, such number of shares of Common Stock as shall
then be issuable upon the conversion of all outstanding Debentures.
The Company covenants that all shares of Common Stock which shall be
so issuable shall, when issued, be duly and validly issued and fully
paid and nonassessable.
8. Registration and Listing of Shares. The Company covenants
that if any shares of Common Stock, required to be reserved for
purposes of conversion of Debentures hereunder, require registration
with or approval of any governmental authority under any Federal or
State law before such shares may be issued upon conversion, the
Company will in good faith and as expeditiously as possible endeavor
to cause such shares to be duly registered or approved, as the case
may be. The Company further covenants that so long as the Common
Stock of the Company is listed on the American Stock Exchange or any
other national securities exchange, the Company will, if permitted by
the rules of such exchange, list and keep listed on such exchange,
upon official notice of issuance, all shares of Common Stock issuable
upon conversion of Debentures.
9. Taxes and Charges. The issuance of certificates for shares
of Common Stock upon the conversion of Debentures shall be made
without charge to the Holder for such certificates or for any tax in
respect of the issuance of such certificates or the securities
represented thereby, and such certificates shall be issued in the
name of, or in such names as may be directed by, the Holder;
provided, however, that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the
issuance and delivery of any such certificate in a name other than
that of the Holder, and the Company shall not be required to issue or
deliver such certificates unless or until the Person or Persons
requesting the issuance 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 C. Optional Redemption.
The Debentures are subject to redemption upon not less than 30
or more than 60 days' notice by mail, at any time, as a whole or in
part, at the election of the Company, at a redemption price equal to
100% of the principal amount, together with accrued interest to the
redemption date, but interest installments whose stated maturity is
on or prior to such redemption date will be payable to the Holder.
In the event of redemption or conversion of this Debenture is in
part only, a new Debenture or Debentures for the unredeemed or
unconverted portion hereof will be issued in the name of the Holder
upon the cancellation hereof.
Section D. Subordination.
1. Debentures Subordinate to Senior Indebtedness. The Company
covenants and agrees, and the Holder by its acceptance hereof
likewise covenants and agrees, that, to the extent and in the manner
hereinafter set forth in this Section, the indebtedness represented
by this Debenture and the payment of the principal of (and premium,
if any) and interest on this Debenture are hereby expressly made
subordinate and subject in right of payment to the prior payment in
full of all Senior Indebtedness.
2. Payment Over of Proceeds Upon Dissolution Etc. Upon any
distribution of assets of the Company in the event of (a) any
insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or other similar case or proceeding in
connection therewith, relative to the Company or to its creditors, as
such, or to its assets, or (b) any liquidation, dissolution or other
winding up of the Company, whether voluntary or involuntary and
whether or not involving insolvency or bankruptcy, or (c) any
assignment for the benefit of creditors or any other marshalling of
assets and liabilities of the Company, then and in such event the
holders of Senior Indebtedness shall be entitled to receive payment
in full of all amounts due or to become due on or in respect of all
Senior Indebtedness, or provision shall be made for such payment, in
money or money's worth, before the Holder is entitled to receive any
payment on account of principal of (or premium, if any) or interest
on the Debentures, and to that end the holders of Senior Indebtedness
shall be entitled to receive, for application to the payment thereof,
any payment or distribution of any kind or character, whether in
cash, property or securities, including any such payment or
distribution which may be payable or deliverable by reason of the
payment of any other indebtedness of the Company being subordinated
to the payment of the Debentures, which may be payable or deliverable
in respect of the Debentures in any such case, proceeding,
dissolution, liquidation or other winding up or event.
In the event that, notwithstanding the foregoing provisions of
this Subsection, the Holder shall have received any payment or
distribution of assets of the Company of any kind or character,
whether in cash, property or securities, including any such payment
or distribution which may be payable or deliverable by reason of the
payment of any other indebtedness of the Company being subordinated
to the payment of the Debentures, before all Senior Indebtedness is
paid in full or payment thereof provided for, and if such fact shall
then have been made known to the Holder, then and in such event such
payment or distribution shall be paid over or delivered forthwith to
the trustee in bankruptcy, receiver, liquidating trustee, custodian,
assignee, agent or other Person making payment or distribution of
assets of the Company for application to the payment of all Senior
Indebtedness remaining unpaid, to the extent necessary to pay all
Senior Indebtedness in full, after giving effect to any concurrent
payment or distribution to or for the holders of Senior Indebtedness.
For purposes of this Section only, 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 Subsection with respect to the Debentures to
the payment of all Senior Indebtedness which may at the time be
outstanding: provided, however, that (i) Senior Indebtedness is
assumed by the new corporation, if any, resulting from any such
reorganization or readjustment, and (ii) the rights of the holders of
the Senior Indebtedness 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 properties and assets
substantially as an entirety to another Person upon the terms and
conditions set forth in Section G shall not be deemed a dissolution,
winding up, liquidation, reorganization, assignment for the benefit
of creditors or marshalling of assets and liabilities of the Company
for the purposes of this Section if the corporation formed by such
consolidation or into which the Company is merged or the Person which
acquires by conveyance or transfer such properties and assets
substantially as a entirety, as the case may be, shall, as a part of
such consolidation, merger, conveyance or transfer, comply with the
conditions set forth in Section G.
3. Prior Payment to Senior Indebtedness Upon Acceleration of
Debentures. In the event that any of the Debentures are declared due
and payable before their Stated Maturity, then and in such event the
holders of Senior Indebtedness outstanding at the time such
Debentures so become due and payable shall be entitled to receive
payment in full of all amounts due or to become due on or in respect
of all such Senior Indebtedness, or provision shall be made for such
payment in money or money's worth, before the Holder is entitled to
receive any payment (including any payment which may be payable by
reason of the payment of any other indebtedness of the Company being
subordinated to the payment of the Debentures) by the Company on
account of the principal of (or premium, if any) or interest on the
Debentures or on account of the purchase or other acquisition of
Debentures.
In the event that, notwithstanding the foregoing, the Company
shall make any payment to the Holder prohibited by the foregoing
provisions of this Subsection, and if such facts shall then have been
made known to the Holder, then and in such event such payment shall
be paid over and delivered forthwith to the Company for the benefit
of the holders of Senior Indebtedness.
The provisions of this Section shall not apply to any payment
with respect to which Subsection 2 would be applicable.
4. No Payment When Newco Indebtedness in Default. (a) In the
event and during the continuation of any default in the payment of
principal (or premium, if any) or interest on any Newco Indebtedness
beyond any applicable grace period with respect thereto, or in the
event that any event of default with respect to any Newco
Indebtedness shall have occurred and be continuing permitting the
holders of such Newco Indebtedness (or a trustee on behalf of the
holders thereof) to declare such Newco Indebtedness due and payable
prior to the date on which it would otherwise have become due and
payable, unless and until such event of default shall have been cured
or waived or shall have ceased to exist and such acceleration shall
have been rescinded or annulled, or (b) in the event any judicial
proceeding shall be pending with respect to any such default in
payment or event of default, then no payment (including any payment
which may be payable by reason of the payment of any other
indebtedness of the Company being subordinated to the payment of the
Debentures) shall be made by the Company on account of principal of
(or premium, if any) or interest on the Debentures or on account of
the purchase or other acquisition of Debentures.
In the event that, notwithstanding the foregoing, the Company
shall make any payment to the Holder prohibited by the foregoing
provisions of this Subsection, and if such fact shall then have been
made known to the Holder, then and in such event such payment shall
be paid over and delivered forthwith to the Company for the benefit
of the holders of Newco Indebtedness.
The provisions of this Section shall not apply to any payment
with respect to which Subsection D(2) would be applicable.
5. Payment Permitted if No Default. Nothing contained in this
Section or elsewhere or in any of the Debentures shall prevent (x)
the Company, at any time except during the pendency of any case,
proceeding, dissolution, liquidation or other winding up, assignment
for the benefit of creditors or other marshalling of assets and
liabilities of the Company referred to in Subsection D(2) or under
the conditions described in Subsections D(3) or D(4), from making
payments at any time of principal of (and premium, if any) or
interest on the Debentures, or (y) the retention by the Holder of any
money deposited with it hereunder to the payment of or on account of
the principal of (and premium, if any) or interest on the Debentures
if, at the time of such retention the Holder did not have knowledge
that such payment would have been prohibited by the provisions of
this Section.
6. Subrogation to Rights of Holders of Senior Indebtedness.
Subject to the payment in full of all Senior Indebtedness, the Holder
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 Section to the rights of the holders of such
Senior Indebtedness to receive payments or distributions of cash,
property or securities applicable to the Senior Indebtedness until
the principal of (and premium, if any) and interest on the Debentures
shall be paid in full. For purposes of such subrogation, no payments
or distributions to the holders of the Senior Indebtedness of any
cash, property or securities to which the Holder would be entitled
except for the provisions of this Section, and no payments over
pursuant to the provisions of this Section to the Company or to the
holders of Senior Indebtedness by the Holder, shall, as between the
Company, its creditors other than holders of Senior Indebtedness and
the Holder, be deemed to be a payment or distribution by the Company
to or on account of the Debentures.
7. Provisions Solely to Define Relative Rights. The
provisions of this Section are and are intended solely for the
purpose of defining the relative rights of the Holder, on the one
hand, and the holders of Senior Indebtedness, on the other hand.
Nothing contained in this Section or elsewhere in this Debenture is
intended to or shall impair, as between the Company, its creditors
other than the holders of Senior Indebtedness and the Holder, the
obligation of the Company, which is absolute and unconditional, to
pay to the Holder the principal of (and premium, if any) and interest
on the Debenture as and when the same shall become due and payable in
accordance with their terms and which, subject to the rights under
this Section of the holders of Senior Indebtedness, is intended to
rank equally with all other general obligations of the Company, or is
intended to or shall affect the relative rights against the Company
of the Holder and creditors of the Company other than the holders of
Senior Indebtedness, nor shall anything herein or therein prevent the
Holder from exercising all remedies otherwise permitted by applicable
law upon default under this Debenture, subject to the rights, if any,
under this Section of the holders of Senior Indebtedness to receive
cash, property or securities otherwise payable or deliverable to the
Holder, and nothing herein shall prevent the conversion of this
Debenture (or any part thereof) in accordance with the terms hereof.
8. No Waiver of Subordination Provisions. No right of any
present or future holder of any Senior Indebtedness to enforce
subordination 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 Debenture, regardless of any
knowledge thereof any such holder may have or be otherwise charged
with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness may, at any time and
from time to time, without the consent of or notice to the Holder,
without incurring responsibility to the Holder and without impairing
or releasing the subordination provided in this Section or the
obligations hereunder of the Holder to the holders of Senior
Indebtedness, do any one or more of the following: (i) change the
manner, place or terms of payment or extend the time of payment of,
or renew or alter, Senior Indebtedness, or otherwise amend or
supplement in any manner Senior Indebtedness or any instrument
evidencing the same or any agreement under which Senior Indebtedness
is outstanding; (ii) sell, exchange, release otherwise or otherwise
deal with any property pledged, mortgaged or securing Senior
Indebtedness; (iii) release any Person liable in any manner for the
collection of Senior Indebtedness; and (iv) exercise or refrain from
exercising any rights against the Company and any other Person.
9. Notice to Holder. The Company shall give prompt written
notice to the Holder of any fact known to the Company which would
prohibit the making of any payment to the Holder in respect of the
Debentures. Failure to give such notice shall not affect the
subordination of the Debenture to Senior Indebtedness.
Notwithstanding the provisions of this Section or any other provision
of this Debenture, the Holder shall not be charged with knowledge of
the existence of any facts which would prohibit the making of any
payment to the Holder in respect of the Debenture, unless and until
the Holder shall have received written notice thereof from the
Company or a holder of Senior Indebtedness or from any trustee
therefor.
Section E. Optional Mandatory Repurchase.
1. Obligation to Repurchase.
a. Upon the occurrence of any Contingent Event, the
Holder shall have the right, at such Holder's option, to require
the Company to redeem this Debenture in whole or in part at a
repurchase price equal to the principal amount of this Debenture
so repurchased plus accrued and unpaid interest on the principal
amount of this Debenture so repurchased.
Such option under this Section E shall be exercised by written
notice to the Company under Section E.b. hereof given at any
time from and after the thirtieth (30th) day before such
Contingent Event through the thirtieth (30th) day after such
Contingent Event (or, if later, through the thirtieth (30th) day
after the Holder receives written notice from the Company of
such Contingent Event). Promptly (and in any event within ten
(10) days) after the occurrence of any Contingent Event, and not
more than thirty (30) days before such Contingent Event, the
Company shall given written notice to the Holder notifying such
Holder of the occurrence of such Contingent Event and informing
such Holder of its right to exercise an option to require a
repurchase under this Section E.
b. In order to exercise its rights to require a
repurchase under this Section E, the Holder shall send to the
Company a written notice demanding prepayment under this Section
E and specifying the date of such prepayment (which shall not be
less than fifteen (15) days after receipt of such notice by the
Company, but in no event earlier than such Contingent Event,
except that such date may be the same date as a Contingent Event
if requested by the Holder).
c. This obligation to repurchase is subject to the
restriction that the Company may not buy any Debenture at any
time when the subordination provisions of this Debenture would
not permit the Company to make a payment of principal, premium
or interest on the Debentures.
2. Certain Definitions. As used in this Section:
a. "Contingent Event" means any one or more of the
following events which shall occur subsequent to the date of
this Debenture:
(1) the Company shall convey, transfer or lease all
or substantially all of its assets (whether held directly
or indirectly through Subsidiaries) to any Persons (other
than to a Subsidiary of the Company);
(2) any Person (other than the Company), including a
"group" (within the meaning of Section 13(d) and 14(d)(2)
of the Securities Exchange Act of 1934, as amended) that
includes such Person, shall acquire, directly or
indirectly, beneficial ownership, in the aggregate, of (x)
50 percent or more of the Common Stock, or (y) securities
representing 50 percent or more of the combined voting
power of the Company's voting securities, in either case,
outstanding on the date immediately prior to the date of
the last such acquisition by such Person; or
(3) on any day (a "Calculation Date") (x) (A) the
Company shall distribute cash, securities or other
properties, including cash dividends (other than Common
Stock, or rights or warrants to acquire Common Stock or
preferred stock substantially equivalent to Common Stock)
to holders of Common Stock, whether by means of dividend,
reclassification, recapitalization or otherwise, or (B) the
Company shall acquire, directly or indirectly, beneficial
ownership of Common Stock; and (y) the sum of the
Applicable Percentages (as defined below) of all such
distributions and acquisitions which have occurred on the
Calculation Date and during the 365-day period immediately
preceding the Calculation Date shall exceed 30 percent.
b. "Applicable Percentage" means (x) In the case of each
distribution referred to in clause (3) above, the percentage
determined as of the Calculation Date of each such distribution
by dividing the aggregate fair market value (as determined in
good faith by the Board of Directors), of such distribution, by
the fair market value (based on the then current market price)
of all of the shares of Common Stock outstanding on the day
immediately prior to such Calculation Date; and (y) in the case
of each acquisition referred to in clause (3) above, the
percentage determined as of the Calculation Date of each such
acquisition by dividing all amounts expended by the Company
(such amounts, if other than in cash, as determined in good
faith by the Board of Directors), in connection with the
acquisition of any shares of Common Stock, by the fair market
value (based on the then current market price) of all of the
shares of Common Stock outstanding on the day immediately prior
to such Calculation Date.
Section F. Covenants.
1. Payment of Principal, Premium and Interest. The Company
will duly and punctually pay the principal of (and premium, if any)
and interest on this Debenture in accordance with the terms hereof.
2. Statement as to Compliance. The Company will deliver to
the Holder, within 120 days after the end of each fiscal year, an
Officers' Certificate stating, as to each signer thereof, that
a. a review of the activities of the Company and its
Subsidiaries during such year and of performance under this
Debenture has been made under his supervision, and
b. to the best of his knowledge, based on such review,
the Company has fulfilled all its obligations under this
Debenture throughout such year, or, if there has been a default
in the fulfillment of any such obligation, specifying each such
default known to him and the nature and status thereof.
3. Further Instruments and Acts. From time to time the
Company will, at its own expense and upon request of the Holder,
execute and deliver or cause to be executed and delivered such
further instruments and do such further acts as may reasonably be
necessary or desirable to carry out the purposes of this Debenture.
Section G. Consolidation, Merger, Conveyance, Transfer or Lease.
1. Company May Consolidate, etc. Only on Certain Terms. The
Company shall not consolidate with or merge into any other Person or
convey, transfer or lease its properties and assets substantially as
an entirety (whether such properties and assets are held by the
Company directly or through its Subsidiaries) to any Person, unless:
a. the Person formed by such consolidation or into which
the Company is merged or the Person which acquires by conveyance
or transfer, or which leases, the properties and assets of the
Company substantially as a entirety shall be a corporation
organized and existing under the laws of the United States of
America, any State thereof or the District of Columbia and shall
expressly assume, by an instrument, executed and delivered to
the Holder, in form satisfactory to the Holder, the due and
punctual payment of the principal of (and premium, if any) and
interest on this Debenture and the performance of every
obligation herein on the part of the Company to be performed or
observed and shall have provided for conversion rights in
accordance with Subsection (B)(6).
b. immediately after giving effect to such transaction,
no Event of Default, and no event which, after notice or lapse
of time or both, would become an Event of Default, shall have
happened and be continuing; and
c. the Company has delivered to the Holder an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and, if an
instrument is required hereunder in connection with such
transaction, such instrument comply with this Section and that
all conditions precedent herein provided for relating to such
transaction have been complied with.
2. Successor Corporation Substituted. Upon any consolidation
or merger by the Company with or into any other Person or any
conveyance, transfer or lease of the properties and assets of the
Company substantially as a entirety (whether such properties and
assets are held by the Company directly or through its Subsidiaries)
to any Person in accordance with Subsection (G)(1), the successor
corporation formed by such consolidation or into which the Company is
merged or to which such conveyance, transfer or lease is made shall
succeed to, and be substituted for, and may exercise every right and
power of the Company hereunder with the same effect as if such
successor corporation had been named as the Company herein, and
thereunder, except in the case of a lease to another Person, the
predecessor corporation shall be relieved of all obligations and
covenants under this Debenture.
Section H. Reports by Company. The Company shall mail to
the Holder, within 15 days after the Company is required to file the
same with the Commission, copies of the annual reports and of the
information, documents and other reports (or copies of such portions
of any of the foregoing as the Commission may from time to time by
rules and regulations prescribe) which the Company may be required to
file with the Commission pursuant to Section 13(a) or Section 15(d)
of the Securities Exchange Act of 1934, as amended; and, if the
Company is not required to file information, documents or reports
pursuant to either of said Sections, then it shall nonetheless mail
the same to the Holder as if it were required to do so by the
Commission.
Section I. Remedies.
1. Events of Default. "Event of Default," wherever used
herein, means any one of the following events (whatever the reason
for such Event of Default and whether it shall be occasioned by the
provisions of Section (B) or be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or
order of any court or any order, rule or regulation or any
administrative or governmental body):
a. default in the payment of any interest upon this
Debenture and any other Debenture issued to the Holder when it
becomes due and payable and continuance of such default for a
period of 10 days; or
b. default in the payment of the principal of (or
premium, if any, on) this Debenture and any other Debenture
issued to the Holder at its Maturity whether or not such payment
is prohibited by the subordination provisions of this Debenture
and continuance of such default for a period of 30 days; or
c. default in the performance, or breach, of any covenant
or warranty of the Company in this Debenture (other than a
covenant or warranty a default in whose performance or whose
breach is elsewhere in this Section specifically dealt with),
and continuance of such default or breach for a period of 30
days after there has been given, by registered or certified
mail, to the Company by the Holder a written notice specifying
such default or breach and requiring it to be remedied and
stating that such notice is a "Notice of Default" hereunder; or
d. the entry by a court having jurisdiction in the
premises of (A) a decree or order for relief in respect of the
Company in an involuntary case or proceeding under any
applicable Federal or state bankruptcy, insolvency,
reorganization or other similar law or (B) a decree or order
adjudging the Company a bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement,
adjustment or composition of or in respect of the Company under
any applicable Federal or state law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or of any substantial part of
its property, or ordering the winding up or liquidation of its
affairs, and the continuance of any such decree or order for
relief or any such other decree or order unstayed and in effect
for a period of 60 consecutive days; or
e. the commencement by the Company of a voluntary case or
proceeding under any applicable Federal or state bankruptcy,
insolvency, reorganization or other similar law or of any other
case or proceeding to be adjudicated a bankrupt or insolvent, or
the consent by it to the entry of a decree or order for relief
in respect of the Company in an involuntary case or proceeding
under any applicable Federal or state bankruptcy, insolvency,
reorganization or other similar law or to the commencement of
any bankruptcy or insolvency case or proceeding against it, or
the filing by it of a petition or answer or consent seeking
reorganization or relief under any applicable Federal or state
law, or the consent by it to the filing of such petition or to
the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator or similar
official of the Company or of any substantial part of its
property, or the making by it of an assignment for the benefit
of creditors, or the admission by it in writing of its inability
to pay its debts generally as they become due, or the taking of
corporate action by the Company in furtherance of any such
action.
2. Acceleration of Maturity; Rescission and Annulment. If any
Event of Default occurs and is continuing (other than an Event of
Default described in Subsections I(1)(d) and (e)), then and in every
such case the Holder may declare the principal and all accrued and
unpaid interest of all the Debentures issued to the Holder to be due
and payable immediately, by a notice in writing to the Company, and
upon any such declaration such principal shall become immediately due
and payable. If an Event of Default described in Subsections I(1)(d)
and (e) shall occur, then in every such case the unpaid principal
balance hereof and all accrued and unpaid interest shall
automatically become due and payable.
3. Collection of Indebtedness and Suits for Enforcement. The
Company covenants that if
a. default is made in the payment of any installment of
interest on any Debenture issued to the Holder when such
interest become due and payable and such default continues for a
period of 30 days, or
b. default is made in the payment of the principal of (or
premium, if any, on) any Debenture issued to the Holder at the
Maturity thereof,
the Company will, upon demand by the Holder, pay to it, the whole
amount then due and payable on such Debentures for principal (and
premium, if any) and interest, with interest upon the overdue
principal (and premium, if any) and, to the extent that payment of
such interest shall be legally enforceable, upon overdue installments
of interest, at the rate borne by the Debentures and, in addition
thereto, such further amount as shall be sufficient to cover the
costs and expenses of collection, including the reasonable
compensation, expenses and disbursements of the Holder, its agents
and counsel.
If the Company fails to pay such amounts forthwith upon such
demand, the Holder may institute a judicial proceeding for the
collection of the sums so due and unpaid, may prosecute such
proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon the Debentures and
collect the moneys adjudged or decreed to be payable in the manner
provided by law out of the property of the Company or any other
obligor upon the Debentures, wherever situated.
If an Event of Default occurs and is continuing, the Holder may
in its discretion proceed to protect and enforce its rights by such
appropriate judicial proceedings as it shall deem most effectual to
protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Debenture or in aid
of the exercise of any power granted herein, or to enforce any other
proper remedy.
4. Application of Money Collected. Subject to Section D, any
money collected by the Holder pursuant to this Section shall be
applied first to the payment of all fees, costs and expenses
(including attorneys fees and expenses) incurred by the Holder
(whether before or after judgment) in the collection of such sums and
second, to the payment of the amounts then due and unpaid for
principal of (and premium, if any) and interest on the Debentures in
respect of which or for the benefit of which such money or
Debentures, as the case may be, has been collected.
5. Unconditional Right of Holder to Receive Principal, Premium
and Interest and to Convert. Notwithstanding any other provision
herein, the Holder shall have the right, which is absolute and
unconditional, to receive payment of the principal of (and premium,
if any) and interest on this Debenture on the date when due (or, in
the case of redemption, on the Redemption Date) and to convert this
Debenture in accordance with Section B and to institute suit for the
enforcement of any such payment and right to convert.
6. Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Holder is intended to be exclusive
of any other right or remedy, and every right and remedy shall, to
the extent permitted by law, be cumulative and in addition to every
other right and remedy given hereunder or now or hereafter existing
at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or
remedy.
7. Delay or Omission Not Waiver. No delay or omission of the
Holder to exercise any right or remedy accruing upon any Event of
Default shall impair any such right or remedy or constitute a waiver
of any such Event of Default or an acquiescence therein. Every right
and remedy given by this Section or by law to the Holder may be
exercised from time to time, and as often as may be deemed expedient,
by the Holder.
8. Amendments; Governing Law etc.. This Debenture may be
amended only by a writing signed by the Company and the Holder. The
Article and Section headings herein are for convenience only and
shall not affect the construction hereof. All covenants and
agreements in this Debenture by the Company shall bind its successors
and assigns, whether so expressed or not. In case any provision in
this Debenture shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby. This Debenture
shall be governed by and construed in accordance with the laws of the
State of Wisconsin. If any action or proceeding shall be brought by
the Holder in order to enforce any right or remedy under this
Debenture, the Company hereby consents and submits to the
jurisdiction of the courts of the State of Wisconsin and of any
Federal court sitting in The City of Milwaukee, State of Wisconsin.
Any action or proceeding brought by the Company to enforce any right,
assert any claim or obtain any relief whatsoever in connection with
this Debenture shall be brought by the Company exclusively in the
courts of the State of Wisconsin or in any Federal court sitting in
The City of Milwaukee, State of Wisconsin.
No provision of this Debenture shall alter or impair the
obligation of the Company, which is absolute and unconditional, to
pay the principal of (and premium, if any) and interest on this
Debenture at the times, place and rate, and in the coin or currency
or with another debenture, herein prescribed or to convert this
Debenture as provided herein.
Debentures are exchangeable for a like aggregate principal
amount of Debentures of a different authorized denomination, as
requested by the Holder.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in
connection therewith.
9. Definitions. The following terms shall have the meanings
specified below:
"Affiliate" of any specified person means any other Person
directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of
this definition, "control" when used with respect to any specified Person
means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly
adopted by the Board of Directors and to be in full force and effect on
the date of such certification, and delivered to the Trustee.
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Securities Exchange Act
of 1934, or, if at any time after the execution of this instrument such
Commission is not existing and performing the duties now assigned to it
under the Trust Indenture Act, then the body performIng such duties at
such time.
"Common Stock" means all shares now or hereafter authorized of
the class of Common Stock of the Company currently authorized and stock of
any other class into which such shares may hereafter have been changed.
"Debentures" means this Debenture and all other Debentures of
the Company issued to the Holder.
"Event of Default" has the meaning specified in Section I.
"Interest Payment Date" means the Stated Maturity of a
installment of interest on the Debentures.
"Maturity" when used with respect to any Debenture means the
date on which the principal of such Debenture becomes due and payable as
therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
"Newco" means Newco, Inc., a Wisconsin corporation and any
successor thereto.
"Newco Indebtedness" means the principal, premium, if any, and
unpaid interest on indebtedness for money borrowed by Newco and guaranteed
by the Company (at any time and from time to time), whether outstanding on
the date hereof or hereafter, and all renewals, extensions and refundings
of any such Debt; provided, however, that the following shall not
constitute Newco Indebtedness: any Debt which by its terms refers
explicitly to the Debentures issued hereunder and states that such Debt
shall not be senior in right of payment thereto.
"Officers" Certificate" means a certificate signed by the
Chairman of the Board, the President or a Vice President, and by the
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary
of the Company, and delivered to the Holder.
"Opinion of Counsel" means a written opinion of counsel, who may
be counsel for the Company or other counsel acceptable to the Holder.
"Person" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated
organization or government or any agent or political subdivision thereof.
"Redemption Date," when used with respect to any Debenture to be
redeemed, means the date fixed for such redemption by or pursuant to this
Debenture.
"Redemption Price," when used with respect to any Debenture to
be redeemed, means the price at which it is to be redeemed pursuant to
this Debenture.
"Regular Record Date" for the interest payable on any Interest
Payment Date means the April 1st or the September 1st (whether or not a
Business Day), as the case may be, next preceding such Interest Payment
Date.
"Senior Indebtedness" means all Debts, obligations and
liabilities of the Company arising under the guarantee by the Company of
the Newco Indebtedness, whether such guarantee is outstanding on the date
hereof or hereafter, and all renewals, replacements and extensions
thereof.
"Stated Maturity," when used with respect to any Debenture or
any installment of interest thereon, means the date specified in such
Debenture as the fixed date on which the principal of such Debenture or
such installment of interest is due and payable.
"Subsidiary" means a corporation more than 50% of the
outstanding voting stock of which is owned, directly or indirectly, by the
Company or by one or more other Subsidiaries, or by the Company and one or
more other Subsidiaries. For the purposes of this definition, "voting
stock" means stock which ordinarily has voting power for the election of
directors, whether at all times or only so long as no senior class of
stock has such voting power by reason of any contingency.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed under its corporate seal.
SWING-N-SLIDE CORP.
By:/s/ Richard G. Mueller
Richard G. Mueller
President
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS
OF ANY STATE BY REASON OF SPECIFIC EXEMPTIONS UNDER THE PROVISIONS OF THE
AFOREMENTIONED ACT AND LAWS AND/OR RULES AND REGULATIONS PROMULGATED
THEREUNDER. ACCORDINGLY, THIS INSTRUMENT MAY NOT BE OFFERED FOR SALE,
SOLD, OR OTHERWISE TRANSFERRED EXCEPT UPON AN EFFECTIVE REGISTRATION OF
THE SECURITIES REPRESENTED BY THIS INSTRUMENT UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS, OR UPON
ACCEPTANCE BY THE ISSUER OF AN OPINION OF COUNSEL IN SUCH FORM AND BY SUCH
COUNSEL, OR OTHER DOCUMENTATION, AS SHALL BE SATISFACTORY TO COUNSEL FOR
THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
SWING-N-SLIDE CORP.
Amended and Restated
10% Convertible Subordinated Debenture due 2004
$700,000 April 25, 1996
Swing-N-Slide Corp., a corporation duly organized and existing
under the laws of Delaware, and its permitted successors and assigns
(herein called the "Company"), for value received, hereby promises to pay
to the order of GreenGrass Holdings, a Delaware general partnership, and
its successors and assigns (the "Holder"), the principal sum of SEVEN
HUNDRED THOUSAND DOLLARS ($700,000.00) on February 15, 2004, and to pay
interest thereon commencing October 15, 1996 and on April 15 and October
15, in each year thereafter, at the rate of 10% per annum, until the
principal hereof is paid in full. Payment of the principal of (and
premium, if any) and interest on this Debenture will be made by check
payable in money of the United States of America that at the time of
payment is legal tender for payment of public and private debts, mailed to
the Holder at its principal office in Chicago, Illinois or such other
address as may be designated by the Holder; provided, however, that until
February 15, 1999, at the option of the Company, interest on this
Debenture may be paid by the issuance of an additional debenture, in the
form of this Debenture, in the principal amount of the interest so
payable, dated the interest payment date for such interest payment, with
interest payable as provided herein with a stated maturity of principal
and interest as provided in this Debenture and otherwise identical to this
Debenture. Interest shall be calculated based on a year composed of 365
days.
Section A. Securities Offering. If debentures are issued to
shareholders of the Company as contemplated by Section 4.8(c) of the
Transaction Agreement, dated January 4, 1996, between GreenGrass Holdings
and the Company, then contemporaneously with the closing of such offer
this Debenture may be exchanged, at the option of the Holder, for
debentures issued under the indenture entered into by the Company in
connection with such offer, at par plus any accrued and unpaid interest,
except that any such debentures issued to the Holder will continue to be
convertible at the Conversion Rate (as defined below) specified below.
Section B. Conversion Rights.
1. General. The Holder shall have the right at any time prior
to maturity, at its option, to convert the principal of this
Debenture (or any portion of the principal thereof which is $1.00 or
an integral multiple of $1.00) into fully paid and nonassessable
(except as otherwise provided by law) shares of Common Stock of the
Company at the rate of one share of Common Stock for each $4.80
principal amount of Debentures or, in case an adjustment to the
number of shares of Common Stock issuable for each $4.80 principal
amount of Debentures (the "Conversion Rate" or "rate") has taken
place pursuant to the provisions hereof, then at the rate as so
adjusted. Such right shall be exercised by the surrender of the
Debenture, the principal of which is so to be converted, to the
Company, accompanied by written notice that the Holder elects to
convert the Debenture or any portion thereof and specifying the name
or names (with address) in which a certificate or certificates for
Common Stock are to be issued. For convenience, the conversion of
all or a portion, as the case may be, of the principal of this
Debenture (and any other Debentures (including without limitation any
Debentures issued in lieu of interest in accordance with the first
paragraph of this Debenture)) into the Common Stock of the Company is
hereinafter sometimes referred to as the conversion of this
Debenture. If this Debenture is converted in part only, upon such
conversion the Company shall execute and deliver to the Holder a new
Debenture or Debentures of authorized denominations in an aggregate
principal amount equal to the unconverted portion of such Debenture.
This Debenture shall continue to be convertible, in whole or in
part, (i) even though the Company or the Holder may have given notice
of prepayment or redemption with respect to this Debenture or any
part thereof pursuant to Sections C or E hereof, so long as this
Debenture and the Holder's election to convert shall have been
delivered to the Company pursuant to this Section B prior to the date
fixed for such prepayment or redemption and (ii) whether or not a
mandatory, optional or mandatory optional prepayment or redemption
prior to the date fixed for such prepayment or redemption, is due on
this Debenture on any date following such time.
2. Issuance of Common Stock; Time of Conversion. As promptly
as practicable after the surrender, as herein provided, of this
Debenture for conversion, the Company shall deliver to the Holder a
certificate or certificates representing the number of fully paid and
nonassessable (except as otherwise provided by law) shares of Common
Stock of the Company into which this Debenture (or portion thereof)
may be converted together with payment in lieu of any fraction of a
share. Subject to the following provisions of this Debenture, such
conversion shall be deemed to have been made immediately prior to the
close of business on the date that this Debenture shall have been
surrendered for conversion (except that if such conversion is in
connection with an underwritten public offering of Common Stock, then
such conversion shall be deemed to have been effected upon such
surrender), so that the rights of the Holder as a Holder shall cease
with respect to this Debenture (or the portion thereof) being
converted at such time, and the Person or Persons entitled to receive
the shares of Common Stock deliverable upon conversion of this
Debenture shall be treated for all purposes as having become the
record holder or holders of such shares of Common Stock at such time,
and such conversion shall be at the conversion rate in effect at such
time; provided, however, that no such surrender on any date when the
stock transfer books of the Company shall be closed shall be
effective to constitute the Person or Persons entitled to receive the
shares of Common Stock deliverable upon such conversion as the record
holder or holders of such shares of Common Stock on such date, but
such surrender shall be effective to constitute the Person or Persons
entitled to receive such shares of Common Stock as the record holder
or holders thereof for all purposes immediately prior to the close of
business on the next succeeding day on which such stock transfer
books are open, and such conversion shall be deemed to have been made
at, and shall be made at the conversion rate in effect at, such time
on such next succeeding day.
If the last day for the exercise of the conversion right shall
not be a business day, then such conversion right may be exercised on
the next succeeding business day.
3. Payment of Accrued Interest. Within ten (10) days after
receipt of any Debenture and an election to convert all or a portion
of the principal amount of such Debenture pursuant to this Section B,
the Company will pay to the Holder any unpaid interest, accrued to
the date of conversion of such Debenture, on the principal amount so
converted.
4. Adjustment of Conversion Price. The conversion rate shall
be subject to adjustment as follows:
a. In case the Company shall (i) pay a dividend on Common
Stock in Common Stock, (ii) subdivide its outstanding shares of
Common Stock, or (iii) combine its outstanding shares of Common
Stock into a smaller number of shares, the conversion rate in
effect immediately prior thereto shall be adjusted retroactively
as provided below so that the Holder shall be entitled to
receive the number of shares of Common Stock of the Company
which it would have owned or have been entitled to receive after
the happening of any of the events described above had this
Debenture been converted immediately prior to the happening of
such event. An adjustment made pursuant to this paragraph (a)
shall become effective immediately after the record date in the
case of a dividend and shall become effective immediately after
the effective date in the case of a subdivision or combination.
b. In case the Company shall issue rights or warrants to
all holders of its Common Stock entitling them to subscribe for
or purchase shares of Common Stock at a price per share less
than the current market price per share (determined as provided
in paragraph (e) of this Section) of the Common Stock on the
date fixed for the determination of stockholders entitled to
receive such rights or warrants, the conversion rate in effect
at the opening of business on the day following the day fixed
for such determination shall be increased by multiplying such
conversion rate by a fraction of which the numerator shall be
the number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination plus the
number of shares of Common Stock so offered for subscription or
purchase and the denominator shall be the number of shares of
Common Stock outstanding at the close of business on the date
fixed for such determination plus the number of shares of Common
Stock which the aggregate of the offering price of the total
number of shares of Common Stocks offered for subscription or
purchase would purchase at such current market price, such
increase to become effective immediately after the opening of
business on the day following the date fixed for such
determination; provided, however, in the event that all the
shares of Common Stock offered for subscription or purchase are
not delivered upon the exercise of such rights or warrants, upon
the expiration of such rights or warrants the conversion rate
shall be readjusted to the conversion rate which would have been
in effect had the numerator and the denominator of the foregoing
fraction and the resulting adjustment been made based upon the
number of shares of Common Stock actually delivered upon the
exercise of such rights or warrants rather than upon the number
of shares of Common Stock offered for subscription or purchase.
For the purposes of this paragraph (b), the number of shares of
Common Stock at any time outstanding shall not include shares
held in the treasury of the Company.
c. In case the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock shares of its
capital stock (other than Common Stock), or assets (excluding
cash dividends paid out of the retained earnings of the Company)
or rights or warrants to subscribe or purchase (excluding those
referred to in paragraph (b) above) (hereinafter collectively
referred to as "Distributions on Common Stock"), then in each
such case, the Company shall deliver to the Holder the
Distribution on Common Stock to which the Holder would be
entitled if it had converted the Debentures for Common Stock
immediately prior to the record date for the purpose of
determining stockholders entitled to receive such Distribution
on Common Stock.
d. The reclassification (including any reclassification
upon a merger in which the Company is the continuing
corporation) of Common Stock into securities including other
than Common Stock (other than any reclassification upon a
consolidation or merger to which Subsection B(6) applies) shall
be deemed to involve (i) a distribution of such securities other
than Common Stock to all holders of Common Stock (and the
effective date of such reclassification shall be deemed to be
"the date fixed for the determination of stockholders entitled
to receive such distribution" and "the date fixed for such
determination" within the meaning of paragraph (e) of this
Section), and (ii) a subdivision or combination, as the case may
be, of the number of shares of Common Stock outstanding
immediately prior to such reclassification into the number of
shares of Common Stock outstanding immediately thereafter.
e. For the purpose of any computation under paragraphs
(b) and (c) of this Section, the current market price per share
of Common Stock on any date shall be deemed to be the average of
the daily closing prices for the thirty consecutive business
days selected by the Company commencing with the forty-fifth
business day before the day in question. The closing price for
each day shall be the last reported sales price regular way or,
in case no such reported sale takes place on such day, the
average of the reported closing bid and asked prices regular
way, in either case on the American Stock Exchange or if the
Common Stock is not listed or admitted to trading on such
Exchange, on the principal national securities exchange on which
the Common Stock is listed or admitted to trading or, if not
listed or admitted to trading on any national securities
exchange, on the National Association of Securities Dealers
Automated Quotations National Market System or, if the Common
Stock is not listed or admitted to trading on any national
securities exchange or quoted on such National Market System,
the average of the closing bid and asked prices in the over-the-
counter market as furnished by any New York Stock Exchange or
American Stock Exchange member firm selected from time to time
by the Company for that purpose. If the current market price
per share of Common Stock cannot be determined in accordance
with the above procedures under this paragraph (e), such current
market price shall be determined in good faith by the Board of
Directors of the Company.
f. No adjustment in the conversion rate shall be required
unless such adjustment would require an increase or decrease of
at least 1% of such rate; provided, however, that the Company
may make any such adjustment at its election and provided,
further, that any adjustments which by reason of this paragraph
(f) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All
calculations under this Section B shall be made to the nearest
cent or to the nearest one-hundredth of a share, as the case may
be. Anything in this Section B notwithstanding, the Company may
make such reductions in the conversion rate, in addition to
those required by this Section, as it considers to be advisable
in order that any event treated for Federal income tax purposes
as a dividend of stock or stock rights shall not be taxable to
the recipients.
g. Whenever the conversion rate is adjusted as herein
provided
(1) the Company shall compute the adjusted
conversion rate in accordance with paragraph (a); and
(2) notice stating that the conversion rate has
been adjusted and setting forth the adjusted
conversion rate shall forthwith be mailed to the
Holder.
h. For the purpose of this Section B(4), the term "Common
Stock" shall include any stock of any class of the Company which
has no preference in respect of dividends or of amounts payable
in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Company and which is not
subject to redemption by the Company. However, shares issuable
on conversion of shares of this Series shall include only shares
of the class designated as Common Stock of the Company as of
January 1, 1996, 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, however, that if
at any time there shall be more than one such resulting class,
the shares of each such class then so issuable shall be
substantially in the proportion which the total number of shares
of such class resulting from all such reclassifications bears to
the total number of shares of all such classes resulting from
all such reclassifications.
5. No Fractional Shares. No fractional shares of Common Stock
shall be issued upon conversion of this Debenture. If more than one
Debenture shall be surrendered for conversion at one time by the
Holder, the number of full shares which shall be issuable upon
conversion thereof shall be computed on the basis of the aggregate
principal amount of the Debentures or specified portions thereof so
surrendered. Instead of any fractional share of Common Stock which
would otherwise be issuable upon conversion of this Debenture or any
Debentures or specified portions thereof, the Company shall pay a
cash adjustment in respect of such fraction in amount equal to the
same fraction of the current market price per share of Common Stock
(as determined in accordance with Section B.4.(e) above) at the close
of business on the day of conversion.
6. Consolidation, Merger or Sale of Assets. In case of any
consolidation of the Company with, or merger of the Company into, any
other Person, (other than a merger which does not result in any
reclassification, conversion, exchange or cancellation of outstanding
shares of Common Stock of the Company) or any sale or transfer of all
or substantially all of the assets of the Company (whether such
assets are held by the Company directly or indirectly through its
Subsidiaries), the Person formed by such consolidation or resulting
from such merger or which acquires such assets, as the case may be,
shall execute and deliver to the Holder an instrument providing that
the Holder shall have the right thereafter, during the period this
Debenture shall be convertible to convert this Debenture only into
the kind and amount of securities, cash and other property receivable
upon such consolidation, merger, sale or transfer by a holder of the
number of shares of Common Stock of the Company into which this
Debenture might have been converted immediately prior to such
consolidation, merger, sale or transfer assuming such holder of
Common Stock of the Company (i) is not a Person with which the
Company consolidated or into which the Company merged or to which
such sale or transfer was made, as the case may be ("constituent
Person"), or an Affiliate of a constituent Person and (ii) failed to
exercise his rights of election, if any, as to the kind or amount of
securities, cash and other property receivable upon such
consolidation, merger, sale or transfer (provided that if the kind or
amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer is not the same for each
share of Common Stock of the Company held immediately prior to such
consolidation, merger, sale or transfer by other than a constituent
Person or an Affiliate thereof and in respect of which such rights of
election shall not have been exercised ("non-electing share") then
for the purpose of this subsection the kind and amount of securities,
cash and other property receivable upon such consolidation, merger,
sale or transfer by 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 instrument shall provide for adjustments
which, for events subsequent to the effective date of such
instrument, shall be as nearly equivalent as may be practicable to
the adjustments provided for in this Section. The above provisions
of this subsection shall similarly apply to successive
consolidations, mergers, sales or transfers.
7. Shares to be Reserved. The Company covenants that it will
at all times reserve and keep available out of its authorized Common
Stock, solely for the purpose of issue upon conversion of Debentures
as herein provided, such number of shares of Common Stock as shall
then be issuable upon the conversion of all outstanding Debentures.
The Company covenants that all shares of Common Stock which shall be
so issuable shall, when issued, be duly and validly issued and fully
paid and nonassessable.
8. Registration and Listing of Shares. The Company covenants
that if any shares of Common Stock, required to be reserved for
purposes of conversion of Debentures hereunder, require registration
with or approval of any governmental authority under any Federal or
State law before such shares may be issued upon conversion, the
Company will in good faith and as expeditiously as possible endeavor
to cause such shares to be duly registered or approved, as the case
may be. The Company further covenants that so long as the Common
Stock of the Company is listed on the American Stock Exchange or any
other national securities exchange, the Company will, if permitted by
the rules of such exchange, list and keep listed on such exchange,
upon official notice of issuance, all shares of Common Stock issuable
upon conversion of Debentures.
9. Taxes and Charges. The issuance of certificates for shares
of Common Stock upon the conversion of Debentures shall be made
without charge to the Holder for such certificates or for any tax in
respect of the issuance of such certificates or the securities
represented thereby, and such certificates shall be issued in the
name of, or in such names as may be directed by, the Holder;
provided, however, that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the
issuance and delivery of any such certificate in a name other than
that of the Holder, and the Company shall not be required to issue or
deliver such certificates unless or until the Person or Persons
requesting the issuance 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 C. Optional Redemption.
The Debentures are subject to redemption upon not less than 30
or more than 60 days' notice by mail, at any time, as a whole or in
part, at the election of the Company, at a redemption price equal to
100% of the principal amount, together with accrued interest to the
redemption date, but interest installments whose stated maturity is
on or prior to such redemption date will be payable to the Holder.
In the event of redemption or conversion of this Debenture is in
part only, a new Debenture or Debentures for the unredeemed or
unconverted portion hereof will be issued in the name of the Holder
upon the cancellation hereof.
Section D. Subordination.
1. Debentures Subordinate to Senior Indebtedness. The Company
covenants and agrees, and the Holder by its acceptance hereof
likewise covenants and agrees, that, to the extent and in the manner
hereinafter set forth in this Section, the indebtedness represented
by this Debenture and the payment of the principal of (and premium,
if any) and interest on this Debenture are hereby expressly made
subordinate and subject in right of payment to the prior payment in
full of all Senior Indebtedness.
2. Payment Over of Proceeds Upon Dissolution Etc. Upon any
distribution of assets of the Company in the event of (a) any
insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or other similar case or proceeding in
connection therewith, relative to the Company or to its creditors, as
such, or to its assets, or (b) any liquidation, dissolution or other
winding up of the Company, whether voluntary or involuntary and
whether or not involving insolvency or bankruptcy, or (c) any
assignment for the benefit of creditors or any other marshalling of
assets and liabilities of the Company, then and in such event the
holders of Senior Indebtedness shall be entitled to receive payment
in full of all amounts due or to become due on or in respect of all
Senior Indebtedness, or provision shall be made for such payment, in
money or money's worth, before the Holder is entitled to receive any
payment on account of principal of (or premium, if any) or interest
on the Debentures, and to that end the holders of Senior Indebtedness
shall be entitled to receive, for application to the payment thereof,
any payment or distribution of any kind or character, whether in
cash, property or securities, including any such payment or
distribution which may be payable or deliverable by reason of the
payment of any other indebtedness of the Company being subordinated
to the payment of the Debentures, which may be payable or deliverable
in respect of the Debentures in any such case, proceeding,
dissolution, liquidation or other winding up or event.
In the event that, notwithstanding the foregoing provisions of
this Subsection, the Holder shall have received any payment or
distribution of assets of the Company of any kind or character,
whether in cash, property or securities, including any such payment
or distribution which may be payable or deliverable by reason of the
payment of any other indebtedness of the Company being subordinated
to the payment of the Debentures, before all Senior Indebtedness is
paid in full or payment thereof provided for, and if such fact shall
then have been made known to the Holder, then and in such event such
payment or distribution shall be paid over or delivered forthwith to
the trustee in bankruptcy, receiver, liquidating trustee, custodian,
assignee, agent or other Person making payment or distribution of
assets of the Company for application to the payment of all Senior
Indebtedness remaining unpaid, to the extent necessary to pay all
Senior Indebtedness in full, after giving effect to any concurrent
payment or distribution to or for the holders of Senior Indebtedness.
For purposes of this Section only, 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 Subsection with respect to the Debentures to
the payment of all Senior Indebtedness which may at the time be
outstanding: provided, however, that (i) Senior Indebtedness is
assumed by the new corporation, if any, resulting from any such
reorganization or readjustment, and (ii) the rights of the holders of
the Senior Indebtedness 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 properties and assets
substantially as an entirety to another Person upon the terms and
conditions set forth in Section G shall not be deemed a dissolution,
winding up, liquidation, reorganization, assignment for the benefit
of creditors or marshalling of assets and liabilities of the Company
for the purposes of this Section if the corporation formed by such
consolidation or into which the Company is merged or the Person which
acquires by conveyance or transfer such properties and assets
substantially as a entirety, as the case may be, shall, as a part of
such consolidation, merger, conveyance or transfer, comply with the
conditions set forth in Section G.
3. Prior Payment to Senior Indebtedness Upon Acceleration of
Debentures. In the event that any of the Debentures are declared due
and payable before their Stated Maturity, then and in such event the
holders of Senior Indebtedness outstanding at the time such
Debentures so become due and payable shall be entitled to receive
payment in full of all amounts due or to become due on or in respect
of all such Senior Indebtedness, or provision shall be made for such
payment in money or money's worth, before the Holder is entitled to
receive any payment (including any payment which may be payable by
reason of the payment of any other indebtedness of the Company being
subordinated to the payment of the Debentures) by the Company on
account of the principal of (or premium, if any) or interest on the
Debentures or on account of the purchase or other acquisition of
Debentures.
In the event that, notwithstanding the foregoing, the Company
shall make any payment to the Holder prohibited by the foregoing
provisions of this Subsection, and if such facts shall then have been
made known to the Holder, then and in such event such payment shall
be paid over and delivered forthwith to the Company for the benefit
of the holders of Senior Indebtedness.
The provisions of this Section shall not apply to any payment
with respect to which Subsection 2 would be applicable.
4. No Payment When Newco Indebtedness in Default. (a) In the
event and during the continuation of any default in the payment of
principal (or premium, if any) or interest on any Newco Indebtedness
beyond any applicable grace period with respect thereto, or in the
event that any event of default with respect to any Newco
Indebtedness shall have occurred and be continuing permitting the
holders of such Newco Indebtedness (or a trustee on behalf of the
holders thereof) to declare such Newco Indebtedness due and payable
prior to the date on which it would otherwise have become due and
payable, unless and until such event of default shall have been cured
or waived or shall have ceased to exist and such acceleration shall
have been rescinded or annulled, or (b) in the event any judicial
proceeding shall be pending with respect to any such default in
payment or event of default, then no payment (including any payment
which may be payable by reason of the payment of any other
indebtedness of the Company being subordinated to the payment of the
Debentures) shall be made by the Company on account of principal of
(or premium, if any) or interest on the Debentures or on account of
the purchase or other acquisition of Debentures.
In the event that, notwithstanding the foregoing, the Company
shall make any payment to the Holder prohibited by the foregoing
provisions of this Subsection, and if such fact shall then have been
made known to the Holder, then and in such event such payment shall
be paid over and delivered forthwith to the Company for the benefit
of the holders of Newco Indebtedness.
The provisions of this Section shall not apply to any payment
with respect to which Subsection D(2) would be applicable.
5. Payment Permitted if No Default. Nothing contained in this
Section or elsewhere or in any of the Debentures shall prevent (x)
the Company, at any time except during the pendency of any case,
proceeding, dissolution, liquidation or other winding up, assignment
for the benefit of creditors or other marshalling of assets and
liabilities of the Company referred to in Subsection D(2) or under
the conditions described in Subsections D(3) or D(4), from making
payments at any time of principal of (and premium, if any) or
interest on the Debentures, or (y) the retention by the Holder of any
money deposited with it hereunder to the payment of or on account of
the principal of (and premium, if any) or interest on the Debentures
if, at the time of such retention the Holder did not have knowledge
that such payment would have been prohibited by the provisions of
this Section.
6. Subrogation to Rights of Holders of Senior Indebtedness.
Subject to the payment in full of all Senior Indebtedness, the Holder
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 Section to the rights of the holders of such
Senior Indebtedness to receive payments or distributions of cash,
property or securities applicable to the Senior Indebtedness until
the principal of (and premium, if any) and interest on the Debentures
shall be paid in full. For purposes of such subrogation, no payments
or distributions to the holders of the Senior Indebtedness of any
cash, property or securities to which the Holder would be entitled
except for the provisions of this Section, and no payments over
pursuant to the provisions of this Section to the Company or to the
holders of Senior Indebtedness by the Holder, shall, as between the
Company, its creditors other than holders of Senior Indebtedness and
the Holder, be deemed to be a payment or distribution by the Company
to or on account of the Debentures.
7. Provisions Solely to Define Relative Rights. The
provisions of this Section are and are intended solely for the
purpose of defining the relative rights of the Holder, on the one
hand, and the holders of Senior Indebtedness, on the other hand.
Nothing contained in this Section or elsewhere in this Debenture is
intended to or shall impair, as between the Company, its creditors
other than the holders of Senior Indebtedness and the Holder, the
obligation of the Company, which is absolute and unconditional, to
pay to the Holder the principal of (and premium, if any) and interest
on the Debenture as and when the same shall become due and payable in
accordance with their terms and which, subject to the rights under
this Section of the holders of Senior Indebtedness, is intended to
rank equally with all other general obligations of the Company, or is
intended to or shall affect the relative rights against the Company
of the Holder and creditors of the Company other than the holders of
Senior Indebtedness, nor shall anything herein or therein prevent the
Holder from exercising all remedies otherwise permitted by applicable
law upon default under this Debenture, subject to the rights, if any,
under this Section of the holders of Senior Indebtedness to receive
cash, property or securities otherwise payable or deliverable to the
Holder, and nothing herein shall prevent the conversion of this
Debenture (or any part thereof) in accordance with the terms hereof.
8. No Waiver of Subordination Provisions. No right of any
present or future holder of any Senior Indebtedness to enforce
subordination 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 Debenture, regardless of any
knowledge thereof any such holder may have or be otherwise charged
with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness may, at any time and
from time to time, without the consent of or notice to the Holder,
without incurring responsibility to the Holder and without impairing
or releasing the subordination provided in this Section or the
obligations hereunder of the Holder to the holders of Senior
Indebtedness, do any one or more of the following: (i) change the
manner, place or terms of payment or extend the time of payment of,
or renew or alter, Senior Indebtedness, or otherwise amend or
supplement in any manner Senior Indebtedness or any instrument
evidencing the same or any agreement under which Senior Indebtedness
is outstanding; (ii) sell, exchange, release otherwise or otherwise
deal with any property pledged, mortgaged or securing Senior
Indebtedness; (iii) release any Person liable in any manner for the
collection of Senior Indebtedness; and (iv) exercise or refrain from
exercising any rights against the Company and any other Person.
9. Notice to Holder. The Company shall give prompt written
notice to the Holder of any fact known to the Company which would
prohibit the making of any payment to the Holder in respect of the
Debentures. Failure to give such notice shall not affect the
subordination of the Debenture to Senior Indebtedness.
Notwithstanding the provisions of this Section or any other provision
of this Debenture, the Holder shall not be charged with knowledge of
the existence of any facts which would prohibit the making of any
payment to the Holder in respect of the Debenture, unless and until
the Holder shall have received written notice thereof from the
Company or a holder of Senior Indebtedness or from any trustee
therefor.
Section E. Optional Mandatory Repurchase.
1. Obligation to Repurchase.
a. Upon the occurrence of any Contingent Event, the
Holder shall have the right, at such Holder's option, to require
the Company to redeem this Debenture in whole or in part at a
repurchase price equal to the principal amount of this Debenture
so repurchased plus accrued and unpaid interest on the principal
amount of this Debenture so repurchased.
Such option under this Section E shall be exercised by written
notice to the Company under Section E.b. hereof given at any
time from and after the thirtieth (30th) day before such
Contingent Event through the thirtieth (30th) day after such
Contingent Event (or, if later, through the thirtieth (30th) day
after the Holder receives written notice from the Company of
such Contingent Event). Promptly (and in any event within ten
(10) days) after the occurrence of any Contingent Event, and not
more than thirty (30) days before such Contingent Event, the
Company shall given written notice to the Holder notifying such
Holder of the occurrence of such Contingent Event and informing
such Holder of its right to exercise an option to require a
repurchase under this Section E.
b. In order to exercise its rights to require a
repurchase under this Section E, the Holder shall send to the
Company a written notice demanding prepayment under this Section
E and specifying the date of such prepayment (which shall not be
less than fifteen (15) days after receipt of such notice by the
Company, but in no event earlier than such Contingent Event,
except that such date may be the same date as a Contingent Event
if requested by the Holder).
c. This obligation to repurchase is subject to the
restriction that the Company may not buy any Debenture at any
time when the subordination provisions of this Debenture would
not permit the Company to make a payment of principal, premium
or interest on the Debentures.
2. Certain Definitions. As used in this Section:
a. "Contingent Event" means any one or more of the
following events which shall occur subsequent to the date of
this Debenture:
(1) the Company shall convey, transfer or lease all
or substantially all of its assets (whether held directly
or indirectly through Subsidiaries) to any Persons (other
than to a Subsidiary of the Company);
(2) any Person (other than the Company), including a
"group" (within the meaning of Section 13(d) and 14(d)(2)
of the Securities Exchange Act of 1934, as amended) that
includes such Person, shall acquire, directly or
indirectly, beneficial ownership, in the aggregate, of (x)
50 percent or more of the Common Stock, or (y) securities
representing 50 percent or more of the combined voting
power of the Company's voting securities, in either case,
outstanding on the date immediately prior to the date of
the last such acquisition by such Person; or
(3) on any day (a "Calculation Date") (x) (A) the
Company shall distribute cash, securities or other
properties, including cash dividends (other than Common
Stock, or rights or warrants to acquire Common Stock or
preferred stock substantially equivalent to Common Stock)
to holders of Common Stock, whether by means of dividend,
reclassification, recapitalization or otherwise, or (B) the
Company shall acquire, directly or indirectly, beneficial
ownership of Common Stock; and (y) the sum of the
Applicable Percentages (as defined below) of all such
distributions and acquisitions which have occurred on the
Calculation Date and during the 365-day period immediately
preceding the Calculation Date shall exceed 30 percent.
b. "Applicable Percentage" means (x) In the case of each
distribution referred to in clause (3) above, the percentage
determined as of the Calculation Date of each such distribution
by dividing the aggregate fair market value (as determined in
good faith by the Board of Directors), of such distribution, by
the fair market value (based on the then current market price)
of all of the shares of Common Stock outstanding on the day
immediately prior to such Calculation Date; and (y) in the case
of each acquisition referred to in clause (3) above, the
percentage determined as of the Calculation Date of each such
acquisition by dividing all amounts expended by the Company
(such amounts, if other than in cash, as determined in good
faith by the Board of Directors), in connection with the
acquisition of any shares of Common Stock, by the fair market
value (based on the then current market price) of all of the
shares of Common Stock outstanding on the day immediately prior
to such Calculation Date.
Section F. Covenants.
1. Payment of Principal, Premium and Interest. The Company
will duly and punctually pay the principal of (and premium, if any)
and interest on this Debenture in accordance with the terms hereof.
2. Statement as to Compliance. The Company will deliver to
the Holder, within 120 days after the end of each fiscal year, an
Officers' Certificate stating, as to each signer thereof, that
a. a review of the activities of the Company and its
Subsidiaries during such year and of performance under this
Debenture has been made under his supervision, and
b. to the best of his knowledge, based on such review,
the Company has fulfilled all its obligations under this
Debenture throughout such year, or, if there has been a default
in the fulfillment of any such obligation, specifying each such
default known to him and the nature and status thereof.
3. Further Instruments and Acts. From time to time the
Company will, at its own expense and upon request of the Holder,
execute and deliver or cause to be executed and delivered such
further instruments and do such further acts as may reasonably be
necessary or desirable to carry out the purposes of this Debenture.
Section G. Consolidation, Merger, Conveyance, Transfer or Lease.
1. Company May Consolidate, etc. Only on Certain Terms. The
Company shall not consolidate with or merge into any other Person or
convey, transfer or lease its properties and assets substantially as
an entirety (whether such properties and assets are held by the
Company directly or through its Subsidiaries) to any Person, unless:
a. the Person formed by such consolidation or into which
the Company is merged or the Person which acquires by conveyance
or transfer, or which leases, the properties and assets of the
Company substantially as a entirety shall be a corporation
organized and existing under the laws of the United States of
America, any State thereof or the District of Columbia and shall
expressly assume, by an instrument, executed and delivered to
the Holder, in form satisfactory to the Holder, the due and
punctual payment of the principal of (and premium, if any) and
interest on this Debenture and the performance of every
obligation herein on the part of the Company to be performed or
observed and shall have provided for conversion rights in
accordance with Subsection (B)(6).
b. immediately after giving effect to such transaction,
no Event of Default, and no event which, after notice or lapse
of time or both, would become an Event of Default, shall have
happened and be continuing; and
c. the Company has delivered to the Holder an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and, if an
instrument is required hereunder in connection with such
transaction, such instrument comply with this Section and that
all conditions precedent herein provided for relating to such
transaction have been complied with.
2. Successor Corporation Substituted. Upon any consolidation
or merger by the Company with or into any other Person or any
conveyance, transfer or lease of the properties and assets of the
Company substantially as a entirety (whether such properties and
assets are held by the Company directly or through its Subsidiaries)
to any Person in accordance with Subsection (G)(1), the successor
corporation formed by such consolidation or into which the Company is
merged or to which such conveyance, transfer or lease is made shall
succeed to, and be substituted for, and may exercise every right and
power of the Company hereunder with the same effect as if such
successor corporation had been named as the Company herein, and
thereunder, except in the case of a lease to another Person, the
predecessor corporation shall be relieved of all obligations and
covenants under this Debenture.
Section H. Reports by Company. The Company shall mail to
the Holder, within 15 days after the Company is required to file the
same with the Commission, copies of the annual reports and of the
information, documents and other reports (or copies of such portions
of any of the foregoing as the Commission may from time to time by
rules and regulations prescribe) which the Company may be required to
file with the Commission pursuant to Section 13(a) or Section 15(d)
of the Securities Exchange Act of 1934, as amended; and, if the
Company is not required to file information, documents or reports
pursuant to either of said Sections, then it shall nonetheless mail
the same to the Holder as if it were required to do so by the
Commission.
Section I. Remedies.
1. Events of Default. "Event of Default," wherever used
herein, means any one of the following events (whatever the reason
for such Event of Default and whether it shall be occasioned by the
provisions of Section (B) or be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or
order of any court or any order, rule or regulation or any
administrative or governmental body):
a. default in the payment of any interest upon this
Debenture and any other Debenture issued to the Holder when it
becomes due and payable and continuance of such default for a
period of 10 days; or
b. default in the payment of the principal of (or
premium, if any, on) this Debenture and any other Debenture
issued to the Holder at its Maturity whether or not such payment
is prohibited by the subordination provisions of this Debenture
and continuance of such default for a period of 30 days; or
c. default in the performance, or breach, of any covenant
or warranty of the Company in this Debenture (other than a
covenant or warranty a default in whose performance or whose
breach is elsewhere in this Section specifically dealt with),
and continuance of such default or breach for a period of 30
days after there has been given, by registered or certified
mail, to the Company by the Holder a written notice specifying
such default or breach and requiring it to be remedied and
stating that such notice is a "Notice of Default" hereunder; or
d. the entry by a court having jurisdiction in the
premises of (A) a decree or order for relief in respect of the
Company in an involuntary case or proceeding under any
applicable Federal or state bankruptcy, insolvency,
reorganization or other similar law or (B) a decree or order
adjudging the Company a bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement,
adjustment or composition of or in respect of the Company under
any applicable Federal or state law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or of any substantial part of
its property, or ordering the winding up or liquidation of its
affairs, and the continuance of any such decree or order for
relief or any such other decree or order unstayed and in effect
for a period of 60 consecutive days; or
e. the commencement by the Company of a voluntary case or
proceeding under any applicable Federal or state bankruptcy,
insolvency, reorganization or other similar law or of any other
case or proceeding to be adjudicated a bankrupt or insolvent, or
the consent by it to the entry of a decree or order for relief
in respect of the Company in an involuntary case or proceeding
under any applicable Federal or state bankruptcy, insolvency,
reorganization or other similar law or to the commencement of
any bankruptcy or insolvency case or proceeding against it, or
the filing by it of a petition or answer or consent seeking
reorganization or relief under any applicable Federal or state
law, or the consent by it to the filing of such petition or to
the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator or similar
official of the Company or of any substantial part of its
property, or the making by it of an assignment for the benefit
of creditors, or the admission by it in writing of its inability
to pay its debts generally as they become due, or the taking of
corporate action by the Company in furtherance of any such
action.
2. Acceleration of Maturity; Rescission and Annulment. If any
Event of Default occurs and is continuing (other than an Event of
Default described in Subsections I(1)(d) and (e)), then and in every
such case the Holder may declare the principal and all accrued and
unpaid interest of all the Debentures issued to the Holder to be due
and payable immediately, by a notice in writing to the Company, and
upon any such declaration such principal shall become immediately due
and payable. If an Event of Default described in Subsections I(1)(d)
and (e) shall occur, then in every such case the unpaid principal
balance hereof and all accrued and unpaid interest shall
automatically become due and payable.
3. Collection of Indebtedness and Suits for Enforcement. The
Company covenants that if
a. default is made in the payment of any installment of
interest on any Debenture issued to the Holder when such
interest become due and payable and such default continues for a
period of 30 days, or
b. default is made in the payment of the principal of (or
premium, if any, on) any Debenture issued to the Holder at the
Maturity thereof,
the Company will, upon demand by the Holder, pay to it, the whole
amount then due and payable on such Debentures for principal (and
premium, if any) and interest, with interest upon the overdue
principal (and premium, if any) and, to the extent that payment of
such interest shall be legally enforceable, upon overdue installments
of interest, at the rate borne by the Debentures and, in addition
thereto, such further amount as shall be sufficient to cover the
costs and expenses of collection, including the reasonable
compensation, expenses and disbursements of the Holder, its agents
and counsel.
If the Company fails to pay such amounts forthwith upon such
demand, the Holder may institute a judicial proceeding for the
collection of the sums so due and unpaid, may prosecute such
proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon the Debentures and
collect the moneys adjudged or decreed to be payable in the manner
provided by law out of the property of the Company or any other
obligor upon the Debentures, wherever situated.
If an Event of Default occurs and is continuing, the Holder may
in its discretion proceed to protect and enforce its rights by such
appropriate judicial proceedings as it shall deem most effectual to
protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Debenture or in aid
of the exercise of any power granted herein, or to enforce any other
proper remedy.
4. Application of Money Collected. Subject to Section D, any
money collected by the Holder pursuant to this Section shall be
applied first to the payment of all fees, costs and expenses
(including attorneys fees and expenses) incurred by the Holder
(whether before or after judgment) in the collection of such sums and
second, to the payment of the amounts then due and unpaid for
principal of (and premium, if any) and interest on the Debentures in
respect of which or for the benefit of which such money or
Debentures, as the case may be, has been collected.
5. Unconditional Right of Holder to Receive Principal, Premium
and Interest and to Convert. Notwithstanding any other provision
herein, the Holder shall have the right, which is absolute and
unconditional, to receive payment of the principal of (and premium,
if any) and interest on this Debenture on the date when due (or, in
the case of redemption, on the Redemption Date) and to convert this
Debenture in accordance with Section B and to institute suit for the
enforcement of any such payment and right to convert.
6. Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Holder is intended to be exclusive
of any other right or remedy, and every right and remedy shall, to
the extent permitted by law, be cumulative and in addition to every
other right and remedy given hereunder or now or hereafter existing
at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or
remedy.
7. Delay or Omission Not Waiver. No delay or omission of the
Holder to exercise any right or remedy accruing upon any Event of
Default shall impair any such right or remedy or constitute a waiver
of any such Event of Default or an acquiescence therein. Every right
and remedy given by this Section or by law to the Holder may be
exercised from time to time, and as often as may be deemed expedient,
by the Holder.
8. Amendments; Governing Law etc.. This Debenture may be
amended only by a writing signed by the Company and the Holder. The
Article and Section headings herein are for convenience only and
shall not affect the construction hereof. All covenants and
agreements in this Debenture by the Company shall bind its successors
and assigns, whether so expressed or not. In case any provision in
this Debenture shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby. This Debenture
shall be governed by and construed in accordance with the laws of the
State of Wisconsin. If any action or proceeding shall be brought by
the Holder in order to enforce any right or remedy under this
Debenture, the Company hereby consents and submits to the
jurisdiction of the courts of the State of Wisconsin and of any
Federal court sitting in The City of Milwaukee, State of Wisconsin.
Any action or proceeding brought by the Company to enforce any right,
assert any claim or obtain any relief whatsoever in connection with
this Debenture shall be brought by the Company exclusively in the
courts of the State of Wisconsin or in any Federal court sitting in
The City of Milwaukee, State of Wisconsin.
No provision of this Debenture shall alter or impair the
obligation of the Company, which is absolute and unconditional, to
pay the principal of (and premium, if any) and interest on this
Debenture at the times, place and rate, and in the coin or currency
or with another debenture, herein prescribed or to convert this
Debenture as provided herein.
Debentures are exchangeable for a like aggregate principal
amount of Debentures of a different authorized denomination, as
requested by the Holder.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in
connection therewith.
9. Definitions. The following terms shall have the meanings
specified below:
"Affiliate" of any specified person means any other Person
directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of
this definition, "control" when used with respect to any specified Person
means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly
adopted by the Board of Directors and to be in full force and effect on
the date of such certification, and delivered to the Trustee.
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Securities Exchange Act
of 1934, or, if at any time after the execution of this instrument such
Commission is not existing and performing the duties now assigned to it
under the Trust Indenture Act, then the body performIng such duties at
such time.
"Common Stock" means all shares now or hereafter authorized of
the class of Common Stock of the Company currently authorized and stock of
any other class into which such shares may hereafter have been changed.
"Debentures" means this Debenture and all other Debentures of
the Company issued to the Holder.
"Event of Default" has the meaning specified in Section I.
"Interest Payment Date" means the Stated Maturity of a
installment of interest on the Debentures.
"Maturity" when used with respect to any Debenture means the
date on which the principal of such Debenture becomes due and payable as
therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
"Newco" means Newco, Inc., a Wisconsin corporation and any
successor thereto.
"Newco Indebtedness" means the principal, premium, if any, and
unpaid interest on indebtedness for money borrowed by Newco and guaranteed
by the Company (at any time and from time to time), whether outstanding on
the date hereof or hereafter, and all renewals, extensions and refundings
of any such Debt; provided, however, that the following shall not
constitute Newco Indebtedness: any Debt which by its terms refers
explicitly to the Debentures issued hereunder and states that such Debt
shall not be senior in right of payment thereto.
"Officers" Certificate" means a certificate signed by the
Chairman of the Board, the President or a Vice President, and by the
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary
of the Company, and delivered to the Holder.
"Opinion of Counsel" means a written opinion of counsel, who may
be counsel for the Company or other counsel acceptable to the Holder.
"Person" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated
organization or government or any agent or political subdivision thereof.
"Redemption Date," when used with respect to any Debenture to be
redeemed, means the date fixed for such redemption by or pursuant to this
Debenture.
"Redemption Price," when used with respect to any Debenture to
be redeemed, means the price at which it is to be redeemed pursuant to
this Debenture.
"Regular Record Date" for the interest payable on any Interest
Payment Date means the April 1st or the September 1st (whether or not a
Business Day), as the case may be, next preceding such Interest Payment
Date.
"Senior Indebtedness" means all Debts, obligations and
liabilities of the Company arising under the guarantee by the Company of
the Newco Indebtedness, whether such guarantee is outstanding on the date
hereof or hereafter, and all renewals, replacements and extensions
thereof.
"Stated Maturity," when used with respect to any Debenture or
any installment of interest thereon, means the date specified in such
Debenture as the fixed date on which the principal of such Debenture or
such installment of interest is due and payable.
"Subsidiary" means a corporation more than 50% of the
outstanding voting stock of which is owned, directly or indirectly, by the
Company or by one or more other Subsidiaries, or by the Company and one or
more other Subsidiaries. For the purposes of this definition, "voting
stock" means stock which ordinarily has voting power for the election of
directors, whether at all times or only so long as no senior class of
stock has such voting power by reason of any contingency.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed under its corporate seal.
SWING-N-SLIDE CORP.
By:/s/ Richard G. Mueller
Richard G. Mueller
President
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS
OF ANY STATE BY REASON OF SPECIFIC EXEMPTIONS UNDER THE PROVISIONS OF THE
AFOREMENTIONED ACT AND LAWS AND/OR RULES AND REGULATIONS PROMULGATED
THEREUNDER. ACCORDINGLY, THIS INSTRUMENT MAY NOT BE OFFERED FOR SALE,
SOLD, OR OTHERWISE TRANSFERRED EXCEPT UPON AN EFFECTIVE REGISTRATION OF
THE SECURITIES REPRESENTED BY THIS INSTRUMENT UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS, OR UPON
ACCEPTANCE BY THE ISSUER OF AN OPINION OF COUNSEL IN SUCH FORM AND BY SUCH
COUNSEL, OR OTHER DOCUMENTATION, AS SHALL BE SATISFACTORY TO COUNSEL FOR
THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
SWING-N-SLIDE CORP.
10% Convertible Subordinated Debenture due 2004
$70,684.93 April 15, 1996
Swing-N-Slide Corp., a corporation duly organized and existing
under the laws of Delaware, and its permitted successors and assigns
(herein called the "Company"), for value received, hereby promises to pay
to the order of GreenGrass Holdings, a Delaware general partnership, and
its successors and assigns (the "Holder"), the principal sum of SEVENTY
THOUSAND SIX HUNDRED EIGHTY-FOUR and 93/100 DOLLARS ($70,684.93) on
February 15, 2004, and to pay interest thereon commencing October 15, 1996
and on April 15 and October 15, in each year thereafter, at the rate of
10% per annum, until the principal hereof is paid in full. Payment of the
principal of (and premium, if any) and interest on this Debenture will be
made by check payable in money of the United States of America that at the
time of payment is legal tender for payment of public and private debts,
mailed to the Holder at its principal office in Chicago, Illinois or such
other address as may be designated by the Holder; provided, however, that
until February 15, 1999, at the option of the Company, interest on this
Debenture may be paid by the issuance of an additional debenture, in the
form of this Debenture, in the principal amount of the interest so
payable, dated the interest payment date for such interest payment, with
interest payable as provided herein with a stated maturity of principal
and interest as provided in this Debenture and otherwise identical to this
Debenture. Interest shall be calculated based on a year composed of 365
days.
Section A. Securities Offering. If debentures are issued to
shareholders of the Company as contemplated by Section 4.8(c) of the
Transaction Agreement, dated January 4, 1996, between GreenGrass Holdings
and the Company, then contemporaneously with the closing of such offer
this Debenture may be exchanged, at the option of the Holder, for
debentures issued under the indenture entered into by the Company in
connection with such offer, at par plus any accrued and unpaid interest,
except that any such debentures issued to the Holder will continue to be
convertible at the Conversion Rate (as defined below) specified below.
Section B. Conversion Rights.
1. General. The Holder shall have the right at any time prior
to maturity, at its option, to convert the principal of this
Debenture (or any portion of the principal thereof which is $1.00 or
an integral multiple of $1.00) into fully paid and nonassessable
(except as otherwise provided by law) shares of Common Stock of the
Company at the rate of one share of Common Stock for each $4.80
principal amount of Debentures or, in case an adjustment to the
number of shares of Common Stock issuable for each $4.80 principal
amount of Debentures (the "Conversion Rate" or "rate") has taken
place pursuant to the provisions hereof, then at the rate as so
adjusted. Such right shall be exercised by the surrender of the
Debenture, the principal of which is so to be converted, to the
Company, accompanied by written notice that the Holder elects to
convert the Debenture or any portion thereof and specifying the name
or names (with address) in which a certificate or certificates for
Common Stock are to be issued. For convenience, the conversion of
all or a portion, as the case may be, of the principal of this
Debenture (and any other Debentures (including without limitation any
Debentures issued in lieu of interest in accordance with the first
paragraph of this Debenture)) into the Common Stock of the Company is
hereinafter sometimes referred to as the conversion of this
Debenture. If this Debenture is converted in part only, upon such
conversion the Company shall execute and deliver to the Holder a new
Debenture or Debentures of authorized denominations in an aggregate
principal amount equal to the unconverted portion of such Debenture.
This Debenture shall continue to be convertible, in whole or in
part, (i) even though the Company or the Holder may have given notice
of prepayment or redemption with respect to this Debenture or any
part thereof pursuant to Sections C or E hereof, so long as this
Debenture and the Holder's election to convert shall have been
delivered to the Company pursuant to this Section B prior to the date
fixed for such prepayment or redemption and (ii) whether or not a
mandatory, optional or mandatory optional prepayment or redemption
prior to the date fixed for such prepayment or redemption, is due on
this Debenture on any date following such time.
2. Issuance of Common Stock; Time of Conversion. As promptly
as practicable after the surrender, as herein provided, of this
Debenture for conversion, the Company shall deliver to the Holder a
certificate or certificates representing the number of fully paid and
nonassessable (except as otherwise provided by law) shares of Common
Stock of the Company into which this Debenture (or portion thereof)
may be converted together with payment in lieu of any fraction of a
share. Subject to the following provisions of this Debenture, such
conversion shall be deemed to have been made immediately prior to the
close of business on the date that this Debenture shall have been
surrendered for conversion (except that if such conversion is in
connection with an underwritten public offering of Common Stock, then
such conversion shall be deemed to have been effected upon such
surrender), so that the rights of the Holder as a Holder shall cease
with respect to this Debenture (or the portion thereof) being
converted at such time, and the Person or Persons entitled to receive
the shares of Common Stock deliverable upon conversion of this
Debenture shall be treated for all purposes as having become the
record holder or holders of such shares of Common Stock at such time,
and such conversion shall be at the conversion rate in effect at such
time; provided, however, that no such surrender on any date when the
stock transfer books of the Company shall be closed shall be
effective to constitute the Person or Persons entitled to receive the
shares of Common Stock deliverable upon such conversion as the record
holder or holders of such shares of Common Stock on such date, but
such surrender shall be effective to constitute the Person or Persons
entitled to receive such shares of Common Stock as the record holder
or holders thereof for all purposes immediately prior to the close of
business on the next succeeding day on which such stock transfer
books are open, and such conversion shall be deemed to have been made
at, and shall be made at the conversion rate in effect at, such time
on such next succeeding day.
If the last day for the exercise of the conversion right shall
not be a business day, then such conversion right may be exercised on
the next succeeding business day.
3. Payment of Accrued Interest. Within ten (10) days after
receipt of any Debenture and an election to convert all or a portion
of the principal amount of such Debenture pursuant to this Section B,
the Company will pay to the Holder any unpaid interest, accrued to
the date of conversion of such Debenture, on the principal amount so
converted.
4. Adjustment of Conversion Price. The conversion rate shall
be subject to adjustment as follows:
a. In case the Company shall (i) pay a dividend on Common
Stock in Common Stock, (ii) subdivide its outstanding shares of
Common Stock, or (iii) combine its outstanding shares of Common
Stock into a smaller number of shares, the conversion rate in
effect immediately prior thereto shall be adjusted retroactively
as provided below so that the Holder shall be entitled to
receive the number of shares of Common Stock of the Company
which it would have owned or have been entitled to receive after
the happening of any of the events described above had this
Debenture been converted immediately prior to the happening of
such event. An adjustment made pursuant to this paragraph (a)
shall become effective immediately after the record date in the
case of a dividend and shall become effective immediately after
the effective date in the case of a subdivision or combination.
b. In case the Company shall issue rights or warrants to
all holders of its Common Stock entitling them to subscribe for
or purchase shares of Common Stock at a price per share less
than the current market price per share (determined as provided
in paragraph (e) of this Section) of the Common Stock on the
date fixed for the determination of stockholders entitled to
receive such rights or warrants, the conversion rate in effect
at the opening of business on the day following the day fixed
for such determination shall be increased by multiplying such
conversion rate by a fraction of which the numerator shall be
the number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination plus the
number of shares of Common Stock so offered for subscription or
purchase and the denominator shall be the number of shares of
Common Stock outstanding at the close of business on the date
fixed for such determination plus the number of shares of Common
Stock which the aggregate of the offering price of the total
number of shares of Common Stocks offered for subscription or
purchase would purchase at such current market price, such
increase to become effective immediately after the opening of
business on the day following the date fixed for such
determination; provided, however, in the event that all the
shares of Common Stock offered for subscription or purchase are
not delivered upon the exercise of such rights or warrants, upon
the expiration of such rights or warrants the conversion rate
shall be readjusted to the conversion rate which would have been
in effect had the numerator and the denominator of the foregoing
fraction and the resulting adjustment been made based upon the
number of shares of Common Stock actually delivered upon the
exercise of such rights or warrants rather than upon the number
of shares of Common Stock offered for subscription or purchase.
For the purposes of this paragraph (b), the number of shares of
Common Stock at any time outstanding shall not include shares
held in the treasury of the Company.
c. In case the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock shares of its
capital stock (other than Common Stock), or assets (excluding
cash dividends paid out of the retained earnings of the Company)
or rights or warrants to subscribe or purchase (excluding those
referred to in paragraph (b) above) (hereinafter collectively
referred to as "Distributions on Common Stock"), then in each
such case, the Company shall deliver to the Holder the
Distribution on Common Stock to which the Holder would be
entitled if it had converted the Debentures for Common Stock
immediately prior to the record date for the purpose of
determining stockholders entitled to receive such Distribution
on Common Stock.
d. The reclassification (including any reclassification
upon a merger in which the Company is the continuing
corporation) of Common Stock into securities including other
than Common Stock (other than any reclassification upon a
consolidation or merger to which Subsection B(6) applies) shall
be deemed to involve (i) a distribution of such securities other
than Common Stock to all holders of Common Stock (and the
effective date of such reclassification shall be deemed to be
"the date fixed for the determination of stockholders entitled
to receive such distribution" and "the date fixed for such
determination" within the meaning of paragraph (e) of this
Section), and (ii) a subdivision or combination, as the case may
be, of the number of shares of Common Stock outstanding
immediately prior to such reclassification into the number of
shares of Common Stock outstanding immediately thereafter.
e. For the purpose of any computation under paragraphs
(b) and (c) of this Section, the current market price per share
of Common Stock on any date shall be deemed to be the average of
the daily closing prices for the thirty consecutive business
days selected by the Company commencing with the forty-fifth
business day before the day in question. The closing price for
each day shall be the last reported sales price regular way or,
in case no such reported sale takes place on such day, the
average of the reported closing bid and asked prices regular
way, in either case on the American Stock Exchange or if the
Common Stock is not listed or admitted to trading on such
Exchange, on the principal national securities exchange on which
the Common Stock is listed or admitted to trading or, if not
listed or admitted to trading on any national securities
exchange, on the National Association of Securities Dealers
Automated Quotations National Market System or, if the Common
Stock is not listed or admitted to trading on any national
securities exchange or quoted on such National Market System,
the average of the closing bid and asked prices in the over-the-
counter market as furnished by any New York Stock Exchange or
American Stock Exchange member firm selected from time to time
by the Company for that purpose. If the current market price
per share of Common Stock cannot be determined in accordance
with the above procedures under this paragraph (e), such current
market price shall be determined in good faith by the Board of
Directors of the Company.
f. No adjustment in the conversion rate shall be required
unless such adjustment would require an increase or decrease of
at least 1% of such rate; provided, however, that the Company
may make any such adjustment at its election and provided,
further, that any adjustments which by reason of this paragraph
(f) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All
calculations under this Section B shall be made to the nearest
cent or to the nearest one-hundredth of a share, as the case may
be. Anything in this Section B notwithstanding, the Company may
make such reductions in the conversion rate, in addition to
those required by this Section, as it considers to be advisable
in order that any event treated for Federal income tax purposes
as a dividend of stock or stock rights shall not be taxable to
the recipients.
g. Whenever the conversion rate is adjusted as herein
provided
(1) the Company shall compute the adjusted
conversion rate in accordance with paragraph (a); and
(2) notice stating that the conversion rate has
been adjusted and setting forth the adjusted
conversion rate shall forthwith be mailed to the
Holder.
h. For the purpose of this Section B(4), the term "Common
Stock" shall include any stock of any class of the Company which
has no preference in respect of dividends or of amounts payable
in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Company and which is not
subject to redemption by the Company. However, shares issuable
on conversion of shares of this Series shall include only shares
of the class designated as Common Stock of the Company as of
January 1, 1996, 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, however, that if
at any time there shall be more than one such resulting class,
the shares of each such class then so issuable shall be
substantially in the proportion which the total number of shares
of such class resulting from all such reclassifications bears to
the total number of shares of all such classes resulting from
all such reclassifications.
5. No Fractional Shares. No fractional shares of Common Stock
shall be issued upon conversion of this Debenture. If more than one
Debenture shall be surrendered for conversion at one time by the
Holder, the number of full shares which shall be issuable upon
conversion thereof shall be computed on the basis of the aggregate
principal amount of the Debentures or specified portions thereof so
surrendered. Instead of any fractional share of Common Stock which
would otherwise be issuable upon conversion of this Debenture or any
Debentures or specified portions thereof, the Company shall pay a
cash adjustment in respect of such fraction in amount equal to the
same fraction of the current market price per share of Common Stock
(as determined in accordance with Section B.4.(e) above) at the close
of business on the day of conversion.
6. Consolidation, Merger or Sale of Assets. In case of any
consolidation of the Company with, or merger of the Company into, any
other Person, (other than a merger which does not result in any
reclassification, conversion, exchange or cancellation of outstanding
shares of Common Stock of the Company) or any sale or transfer of all
or substantially all of the assets of the Company (whether such
assets are held by the Company directly or indirectly through its
Subsidiaries), the Person formed by such consolidation or resulting
from such merger or which acquires such assets, as the case may be,
shall execute and deliver to the Holder an instrument providing that
the Holder shall have the right thereafter, during the period this
Debenture shall be convertible to convert this Debenture only into
the kind and amount of securities, cash and other property receivable
upon such consolidation, merger, sale or transfer by a holder of the
number of shares of Common Stock of the Company into which this
Debenture might have been converted immediately prior to such
consolidation, merger, sale or transfer assuming such holder of
Common Stock of the Company (i) is not a Person with which the
Company consolidated or into which the Company merged or to which
such sale or transfer was made, as the case may be ("constituent
Person"), or an Affiliate of a constituent Person and (ii) failed to
exercise his rights of election, if any, as to the kind or amount of
securities, cash and other property receivable upon such
consolidation, merger, sale or transfer (provided that if the kind or
amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer is not the same for each
share of Common Stock of the Company held immediately prior to such
consolidation, merger, sale or transfer by other than a constituent
Person or an Affiliate thereof and in respect of which such rights of
election shall not have been exercised ("non-electing share") then
for the purpose of this subsection the kind and amount of securities,
cash and other property receivable upon such consolidation, merger,
sale or transfer by 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 instrument shall provide for adjustments
which, for events subsequent to the effective date of such
instrument, shall be as nearly equivalent as may be practicable to
the adjustments provided for in this Section. The above provisions
of this subsection shall similarly apply to successive
consolidations, mergers, sales or transfers.
7. Shares to be Reserved. The Company covenants that it will
at all times reserve and keep available out of its authorized Common
Stock, solely for the purpose of issue upon conversion of Debentures
as herein provided, such number of shares of Common Stock as shall
then be issuable upon the conversion of all outstanding Debentures.
The Company covenants that all shares of Common Stock which shall be
so issuable shall, when issued, be duly and validly issued and fully
paid and nonassessable.
8. Registration and Listing of Shares. The Company covenants
that if any shares of Common Stock, required to be reserved for
purposes of conversion of Debentures hereunder, require registration
with or approval of any governmental authority under any Federal or
State law before such shares may be issued upon conversion, the
Company will in good faith and as expeditiously as possible endeavor
to cause such shares to be duly registered or approved, as the case
may be. The Company further covenants that so long as the Common
Stock of the Company is listed on the American Stock Exchange or any
other national securities exchange, the Company will, if permitted by
the rules of such exchange, list and keep listed on such exchange,
upon official notice of issuance, all shares of Common Stock issuable
upon conversion of Debentures.
9. Taxes and Charges. The issuance of certificates for shares
of Common Stock upon the conversion of Debentures shall be made
without charge to the Holder for such certificates or for any tax in
respect of the issuance of such certificates or the securities
represented thereby, and such certificates shall be issued in the
name of, or in such names as may be directed by, the Holder;
provided, however, that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the
issuance and delivery of any such certificate in a name other than
that of the Holder, and the Company shall not be required to issue or
deliver such certificates unless or until the Person or Persons
requesting the issuance 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 C. Optional Redemption.
The Debentures are subject to redemption upon not less than 30
or more than 60 days' notice by mail, at any time, as a whole or in
part, at the election of the Company, at a redemption price equal to
100% of the principal amount, together with accrued interest to the
redemption date, but interest installments whose stated maturity is
on or prior to such redemption date will be payable to the Holder.
In the event of redemption or conversion of this Debenture is in
part only, a new Debenture or Debentures for the unredeemed or
unconverted portion hereof will be issued in the name of the Holder
upon the cancellation hereof.
Section D. Subordination.
1. Debentures Subordinate to Senior Indebtedness. The Company
covenants and agrees, and the Holder by its acceptance hereof
likewise covenants and agrees, that, to the extent and in the manner
hereinafter set forth in this Section, the indebtedness represented
by this Debenture and the payment of the principal of (and premium,
if any) and interest on this Debenture are hereby expressly made
subordinate and subject in right of payment to the prior payment in
full of all Senior Indebtedness.
2. Payment Over of Proceeds Upon Dissolution Etc. Upon any
distribution of assets of the Company in the event of (a) any
insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or other similar case or proceeding in
connection therewith, relative to the Company or to its creditors, as
such, or to its assets, or (b) any liquidation, dissolution or other
winding up of the Company, whether voluntary or involuntary and
whether or not involving insolvency or bankruptcy, or (c) any
assignment for the benefit of creditors or any other marshalling of
assets and liabilities of the Company, then and in such event the
holders of Senior Indebtedness shall be entitled to receive payment
in full of all amounts due or to become due on or in respect of all
Senior Indebtedness, or provision shall be made for such payment, in
money or money's worth, before the Holder is entitled to receive any
payment on account of principal of (or premium, if any) or interest
on the Debentures, and to that end the holders of Senior Indebtedness
shall be entitled to receive, for application to the payment thereof,
any payment or distribution of any kind or character, whether in
cash, property or securities, including any such payment or
distribution which may be payable or deliverable by reason of the
payment of any other indebtedness of the Company being subordinated
to the payment of the Debentures, which may be payable or deliverable
in respect of the Debentures in any such case, proceeding,
dissolution, liquidation or other winding up or event.
In the event that, notwithstanding the foregoing provisions of
this Subsection, the Holder shall have received any payment or
distribution of assets of the Company of any kind or character,
whether in cash, property or securities, including any such payment
or distribution which may be payable or deliverable by reason of the
payment of any other indebtedness of the Company being subordinated
to the payment of the Debentures, before all Senior Indebtedness is
paid in full or payment thereof provided for, and if such fact shall
then have been made known to the Holder, then and in such event such
payment or distribution shall be paid over or delivered forthwith to
the trustee in bankruptcy, receiver, liquidating trustee, custodian,
assignee, agent or other Person making payment or distribution of
assets of the Company for application to the payment of all Senior
Indebtedness remaining unpaid, to the extent necessary to pay all
Senior Indebtedness in full, after giving effect to any concurrent
payment or distribution to or for the holders of Senior Indebtedness.
For purposes of this Section only, 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 Subsection with respect to the Debentures to
the payment of all Senior Indebtedness which may at the time be
outstanding: provided, however, that (i) Senior Indebtedness is
assumed by the new corporation, if any, resulting from any such
reorganization or readjustment, and (ii) the rights of the holders of
the Senior Indebtedness 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 properties and assets
substantially as an entirety to another Person upon the terms and
conditions set forth in Section G shall not be deemed a dissolution,
winding up, liquidation, reorganization, assignment for the benefit
of creditors or marshalling of assets and liabilities of the Company
for the purposes of this Section if the corporation formed by such
consolidation or into which the Company is merged or the Person which
acquires by conveyance or transfer such properties and assets
substantially as a entirety, as the case may be, shall, as a part of
such consolidation, merger, conveyance or transfer, comply with the
conditions set forth in Section G.
3. Prior Payment to Senior Indebtedness Upon Acceleration of
Debentures. In the event that any of the Debentures are declared due
and payable before their Stated Maturity, then and in such event the
holders of Senior Indebtedness outstanding at the time such
Debentures so become due and payable shall be entitled to receive
payment in full of all amounts due or to become due on or in respect
of all such Senior Indebtedness, or provision shall be made for such
payment in money or money's worth, before the Holder is entitled to
receive any payment (including any payment which may be payable by
reason of the payment of any other indebtedness of the Company being
subordinated to the payment of the Debentures) by the Company on
account of the principal of (or premium, if any) or interest on the
Debentures or on account of the purchase or other acquisition of
Debentures.
In the event that, notwithstanding the foregoing, the Company
shall make any payment to the Holder prohibited by the foregoing
provisions of this Subsection, and if such facts shall then have been
made known to the Holder, then and in such event such payment shall
be paid over and delivered forthwith to the Company for the benefit
of the holders of Senior Indebtedness.
The provisions of this Section shall not apply to any payment
with respect to which Subsection 2 would be applicable.
4. No Payment When Newco Indebtedness in Default. (a) In the
event and during the continuation of any default in the payment of
principal (or premium, if any) or interest on any Newco Indebtedness
beyond any applicable grace period with respect thereto, or in the
event that any event of default with respect to any Newco
Indebtedness shall have occurred and be continuing permitting the
holders of such Newco Indebtedness (or a trustee on behalf of the
holders thereof) to declare such Newco Indebtedness due and payable
prior to the date on which it would otherwise have become due and
payable, unless and until such event of default shall have been cured
or waived or shall have ceased to exist and such acceleration shall
have been rescinded or annulled, or (b) in the event any judicial
proceeding shall be pending with respect to any such default in
payment or event of default, then no payment (including any payment
which may be payable by reason of the payment of any other
indebtedness of the Company being subordinated to the payment of the
Debentures) shall be made by the Company on account of principal of
(or premium, if any) or interest on the Debentures or on account of
the purchase or other acquisition of Debentures.
In the event that, notwithstanding the foregoing, the Company
shall make any payment to the Holder prohibited by the foregoing
provisions of this Subsection, and if such fact shall then have been
made known to the Holder, then and in such event such payment shall
be paid over and delivered forthwith to the Company for the benefit
of the holders of Newco Indebtedness.
The provisions of this Section shall not apply to any payment
with respect to which Subsection D(2) would be applicable.
5. Payment Permitted if No Default. Nothing contained in this
Section or elsewhere or in any of the Debentures shall prevent (x)
the Company, at any time except during the pendency of any case,
proceeding, dissolution, liquidation or other winding up, assignment
for the benefit of creditors or other marshalling of assets and
liabilities of the Company referred to in Subsection D(2) or under
the conditions described in Subsections D(3) or D(4), from making
payments at any time of principal of (and premium, if any) or
interest on the Debentures, or (y) the retention by the Holder of any
money deposited with it hereunder to the payment of or on account of
the principal of (and premium, if any) or interest on the Debentures
if, at the time of such retention the Holder did not have knowledge
that such payment would have been prohibited by the provisions of
this Section.
6. Subrogation to Rights of Holders of Senior Indebtedness.
Subject to the payment in full of all Senior Indebtedness, the Holder
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 Section to the rights of the holders of such
Senior Indebtedness to receive payments or distributions of cash,
property or securities applicable to the Senior Indebtedness until
the principal of (and premium, if any) and interest on the Debentures
shall be paid in full. For purposes of such subrogation, no payments
or distributions to the holders of the Senior Indebtedness of any
cash, property or securities to which the Holder would be entitled
except for the provisions of this Section, and no payments over
pursuant to the provisions of this Section to the Company or to the
holders of Senior Indebtedness by the Holder, shall, as between the
Company, its creditors other than holders of Senior Indebtedness and
the Holder, be deemed to be a payment or distribution by the Company
to or on account of the Debentures.
7. Provisions Solely to Define Relative Rights. The
provisions of this Section are and are intended solely for the
purpose of defining the relative rights of the Holder, on the one
hand, and the holders of Senior Indebtedness, on the other hand.
Nothing contained in this Section or elsewhere in this Debenture is
intended to or shall impair, as between the Company, its creditors
other than the holders of Senior Indebtedness and the Holder, the
obligation of the Company, which is absolute and unconditional, to
pay to the Holder the principal of (and premium, if any) and interest
on the Debenture as and when the same shall become due and payable in
accordance with their terms and which, subject to the rights under
this Section of the holders of Senior Indebtedness, is intended to
rank equally with all other general obligations of the Company, or is
intended to or shall affect the relative rights against the Company
of the Holder and creditors of the Company other than the holders of
Senior Indebtedness, nor shall anything herein or therein prevent the
Holder from exercising all remedies otherwise permitted by applicable
law upon default under this Debenture, subject to the rights, if any,
under this Section of the holders of Senior Indebtedness to receive
cash, property or securities otherwise payable or deliverable to the
Holder, and nothing herein shall prevent the conversion of this
Debenture (or any part thereof) in accordance with the terms hereof.
8. No Waiver of Subordination Provisions. No right of any
present or future holder of any Senior Indebtedness to enforce
subordination 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 Debenture, regardless of any
knowledge thereof any such holder may have or be otherwise charged
with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness may, at any time and
from time to time, without the consent of or notice to the Holder,
without incurring responsibility to the Holder and without impairing
or releasing the subordination provided in this Section or the
obligations hereunder of the Holder to the holders of Senior
Indebtedness, do any one or more of the following: (i) change the
manner, place or terms of payment or extend the time of payment of,
or renew or alter, Senior Indebtedness, or otherwise amend or
supplement in any manner Senior Indebtedness or any instrument
evidencing the same or any agreement under which Senior Indebtedness
is outstanding; (ii) sell, exchange, release otherwise or otherwise
deal with any property pledged, mortgaged or securing Senior
Indebtedness; (iii) release any Person liable in any manner for the
collection of Senior Indebtedness; and (iv) exercise or refrain from
exercising any rights against the Company and any other Person.
9. Notice to Holder. The Company shall give prompt written
notice to the Holder of any fact known to the Company which would
prohibit the making of any payment to the Holder in respect of the
Debentures. Failure to give such notice shall not affect the
subordination of the Debenture to Senior Indebtedness.
Notwithstanding the provisions of this Section or any other provision
of this Debenture, the Holder shall not be charged with knowledge of
the existence of any facts which would prohibit the making of any
payment to the Holder in respect of the Debenture, unless and until
the Holder shall have received written notice thereof from the
Company or a holder of Senior Indebtedness or from any trustee
therefor.
Section E. Optional Mandatory Repurchase.
1. Obligation to Repurchase.
a. Upon the occurrence of any Contingent Event, the
Holder shall have the right, at such Holder's option, to require
the Company to redeem this Debenture in whole or in part at a
repurchase price equal to the principal amount of this Debenture
so repurchased plus accrued and unpaid interest on the principal
amount of this Debenture so repurchased.
Such option under this Section E shall be exercised by written
notice to the Company under Section E.b. hereof given at any
time from and after the thirtieth (30th) day before such
Contingent Event through the thirtieth (30th) day after such
Contingent Event (or, if later, through the thirtieth (30th) day
after the Holder receives written notice from the Company of
such Contingent Event). Promptly (and in any event within ten
(10) days) after the occurrence of any Contingent Event, and not
more than thirty (30) days before such Contingent Event, the
Company shall given written notice to the Holder notifying such
Holder of the occurrence of such Contingent Event and informing
such Holder of its right to exercise an option to require a
repurchase under this Section E.
b. In order to exercise its rights to require a
repurchase under this Section E, the Holder shall send to the
Company a written notice demanding prepayment under this Section
E and specifying the date of such prepayment (which shall not be
less than fifteen (15) days after receipt of such notice by the
Company, but in no event earlier than such Contingent Event,
except that such date may be the same date as a Contingent Event
if requested by the Holder).
c. This obligation to repurchase is subject to the
restriction that the Company may not buy any Debenture at any
time when the subordination provisions of this Debenture would
not permit the Company to make a payment of principal, premium
or interest on the Debentures.
2. Certain Definitions. As used in this Section:
a. "Contingent Event" means any one or more of the
following events which shall occur subsequent to the date of
this Debenture:
(1) the Company shall convey, transfer or lease all
or substantially all of its assets (whether held directly
or indirectly through Subsidiaries) to any Persons (other
than to a Subsidiary of the Company);
(2) any Person (other than the Company), including a
"group" (within the meaning of Section 13(d) and 14(d)(2)
of the Securities Exchange Act of 1934, as amended) that
includes such Person, shall acquire, directly or
indirectly, beneficial ownership, in the aggregate, of (x)
50 percent or more of the Common Stock, or (y) securities
representing 50 percent or more of the combined voting
power of the Company's voting securities, in either case,
outstanding on the date immediately prior to the date of
the last such acquisition by such Person; or
(3) on any day (a "Calculation Date") (x) (A) the
Company shall distribute cash, securities or other
properties, including cash dividends (other than Common
Stock, or rights or warrants to acquire Common Stock or
preferred stock substantially equivalent to Common Stock)
to holders of Common Stock, whether by means of dividend,
reclassification, recapitalization or otherwise, or (B) the
Company shall acquire, directly or indirectly, beneficial
ownership of Common Stock; and (y) the sum of the
Applicable Percentages (as defined below) of all such
distributions and acquisitions which have occurred on the
Calculation Date and during the 365-day period immediately
preceding the Calculation Date shall exceed 30 percent.
b. "Applicable Percentage" means (x) In the case of each
distribution referred to in clause (3) above, the percentage
determined as of the Calculation Date of each such distribution
by dividing the aggregate fair market value (as determined in
good faith by the Board of Directors), of such distribution, by
the fair market value (based on the then current market price)
of all of the shares of Common Stock outstanding on the day
immediately prior to such Calculation Date; and (y) in the case
of each acquisition referred to in clause (3) above, the
percentage determined as of the Calculation Date of each such
acquisition by dividing all amounts expended by the Company
(such amounts, if other than in cash, as determined in good
faith by the Board of Directors), in connection with the
acquisition of any shares of Common Stock, by the fair market
value (based on the then current market price) of all of the
shares of Common Stock outstanding on the day immediately prior
to such Calculation Date.
Section F. Covenants.
1. Payment of Principal, Premium and Interest. The Company
will duly and punctually pay the principal of (and premium, if any)
and interest on this Debenture in accordance with the terms hereof.
2. Statement as to Compliance. The Company will deliver to
the Holder, within 120 days after the end of each fiscal year, an
Officers' Certificate stating, as to each signer thereof, that
a. a review of the activities of the Company and its
Subsidiaries during such year and of performance under this
Debenture has been made under his supervision, and
b. to the best of his knowledge, based on such review,
the Company has fulfilled all its obligations under this
Debenture throughout such year, or, if there has been a default
in the fulfillment of any such obligation, specifying each such
default known to him and the nature and status thereof.
3. Further Instruments and Acts. From time to time the
Company will, at its own expense and upon request of the Holder,
execute and deliver or cause to be executed and delivered such
further instruments and do such further acts as may reasonably be
necessary or desirable to carry out the purposes of this Debenture.
Section G. Consolidation, Merger, Conveyance, Transfer or Lease.
1. Company May Consolidate, etc. Only on Certain Terms. The
Company shall not consolidate with or merge into any other Person or
convey, transfer or lease its properties and assets substantially as
an entirety (whether such properties and assets are held by the
Company directly or through its Subsidiaries) to any Person, unless:
a. the Person formed by such consolidation or into which
the Company is merged or the Person which acquires by conveyance
or transfer, or which leases, the properties and assets of the
Company substantially as a entirety shall be a corporation
organized and existing under the laws of the United States of
America, any State thereof or the District of Columbia and shall
expressly assume, by an instrument, executed and delivered to
the Holder, in form satisfactory to the Holder, the due and
punctual payment of the principal of (and premium, if any) and
interest on this Debenture and the performance of every
obligation herein on the part of the Company to be performed or
observed and shall have provided for conversion rights in
accordance with Subsection (B)(6).
b. immediately after giving effect to such transaction,
no Event of Default, and no event which, after notice or lapse
of time or both, would become an Event of Default, shall have
happened and be continuing; and
c. the Company has delivered to the Holder an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and, if an
instrument is required hereunder in connection with such
transaction, such instrument comply with this Section and that
all conditions precedent herein provided for relating to such
transaction have been complied with.
2. Successor Corporation Substituted. Upon any consolidation
or merger by the Company with or into any other Person or any
conveyance, transfer or lease of the properties and assets of the
Company substantially as a entirety (whether such properties and
assets are held by the Company directly or through its Subsidiaries)
to any Person in accordance with Subsection (G)(1), the successor
corporation formed by such consolidation or into which the Company is
merged or to which such conveyance, transfer or lease is made shall
succeed to, and be substituted for, and may exercise every right and
power of the Company hereunder with the same effect as if such
successor corporation had been named as the Company herein, and
thereunder, except in the case of a lease to another Person, the
predecessor corporation shall be relieved of all obligations and
covenants under this Debenture.
Section H. Reports by Company. The Company shall mail to
the Holder, within 15 days after the Company is required to file the
same with the Commission, copies of the annual reports and of the
information, documents and other reports (or copies of such portions
of any of the foregoing as the Commission may from time to time by
rules and regulations prescribe) which the Company may be required to
file with the Commission pursuant to Section 13(a) or Section 15(d)
of the Securities Exchange Act of 1934, as amended; and, if the
Company is not required to file information, documents or reports
pursuant to either of said Sections, then it shall nonetheless mail
the same to the Holder as if it were required to do so by the
Commission.
Section I. Remedies.
1. Events of Default. "Event of Default," wherever used
herein, means any one of the following events (whatever the reason
for such Event of Default and whether it shall be occasioned by the
provisions of Section (B) or be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or
order of any court or any order, rule or regulation or any
administrative or governmental body):
a. default in the payment of any interest upon this
Debenture and any other Debenture issued to the Holder when it
becomes due and payable and continuance of such default for a
period of 10 days; or
b. default in the payment of the principal of (or
premium, if any, on) this Debenture and any other Debenture
issued to the Holder at its Maturity whether or not such payment
is prohibited by the subordination provisions of this Debenture
and continuance of such default for a period of 30 days; or
c. default in the performance, or breach, of any covenant
or warranty of the Company in this Debenture (other than a
covenant or warranty a default in whose performance or whose
breach is elsewhere in this Section specifically dealt with),
and continuance of such default or breach for a period of 30
days after there has been given, by registered or certified
mail, to the Company by the Holder a written notice specifying
such default or breach and requiring it to be remedied and
stating that such notice is a "Notice of Default" hereunder; or
d. the entry by a court having jurisdiction in the
premises of (A) a decree or order for relief in respect of the
Company in an involuntary case or proceeding under any
applicable Federal or state bankruptcy, insolvency,
reorganization or other similar law or (B) a decree or order
adjudging the Company a bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement,
adjustment or composition of or in respect of the Company under
any applicable Federal or state law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or of any substantial part of
its property, or ordering the winding up or liquidation of its
affairs, and the continuance of any such decree or order for
relief or any such other decree or order unstayed and in effect
for a period of 60 consecutive days; or
e. the commencement by the Company of a voluntary case or
proceeding under any applicable Federal or state bankruptcy,
insolvency, reorganization or other similar law or of any other
case or proceeding to be adjudicated a bankrupt or insolvent, or
the consent by it to the entry of a decree or order for relief
in respect of the Company in an involuntary case or proceeding
under any applicable Federal or state bankruptcy, insolvency,
reorganization or other similar law or to the commencement of
any bankruptcy or insolvency case or proceeding against it, or
the filing by it of a petition or answer or consent seeking
reorganization or relief under any applicable Federal or state
law, or the consent by it to the filing of such petition or to
the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator or similar
official of the Company or of any substantial part of its
property, or the making by it of an assignment for the benefit
of creditors, or the admission by it in writing of its inability
to pay its debts generally as they become due, or the taking of
corporate action by the Company in furtherance of any such
action.
2. Acceleration of Maturity; Rescission and Annulment. If any
Event of Default occurs and is continuing (other than an Event of
Default described in Subsections I(1)(d) and (e)), then and in every
such case the Holder may declare the principal and all accrued and
unpaid interest of all the Debentures issued to the Holder to be due
and payable immediately, by a notice in writing to the Company, and
upon any such declaration such principal shall become immediately due
and payable. If an Event of Default described in Subsections I(1)(d)
and (e) shall occur, then in every such case the unpaid principal
balance hereof and all accrued and unpaid interest shall
automatically become due and payable.
3. Collection of Indebtedness and Suits for Enforcement. The
Company covenants that if
a. default is made in the payment of any installment of
interest on any Debenture issued to the Holder when such
interest become due and payable and such default continues for a
period of 30 days, or
b. default is made in the payment of the principal of (or
premium, if any, on) any Debenture issued to the Holder at the
Maturity thereof,
the Company will, upon demand by the Holder, pay to it, the whole
amount then due and payable on such Debentures for principal (and
premium, if any) and interest, with interest upon the overdue
principal (and premium, if any) and, to the extent that payment of
such interest shall be legally enforceable, upon overdue installments
of interest, at the rate borne by the Debentures and, in addition
thereto, such further amount as shall be sufficient to cover the
costs and expenses of collection, including the reasonable
compensation, expenses and disbursements of the Holder, its agents
and counsel.
If the Company fails to pay such amounts forthwith upon such
demand, the Holder may institute a judicial proceeding for the
collection of the sums so due and unpaid, may prosecute such
proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon the Debentures and
collect the moneys adjudged or decreed to be payable in the manner
provided by law out of the property of the Company or any other
obligor upon the Debentures, wherever situated.
If an Event of Default occurs and is continuing, the Holder may
in its discretion proceed to protect and enforce its rights by such
appropriate judicial proceedings as it shall deem most effectual to
protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Debenture or in aid
of the exercise of any power granted herein, or to enforce any other
proper remedy.
4. Application of Money Collected. Subject to Section D, any
money collected by the Holder pursuant to this Section shall be
applied first to the payment of all fees, costs and expenses
(including attorneys fees and expenses) incurred by the Holder
(whether before or after judgment) in the collection of such sums and
second, to the payment of the amounts then due and unpaid for
principal of (and premium, if any) and interest on the Debentures in
respect of which or for the benefit of which such money or
Debentures, as the case may be, has been collected.
5. Unconditional Right of Holder to Receive Principal, Premium
and Interest and to Convert. Notwithstanding any other provision
herein, the Holder shall have the right, which is absolute and
unconditional, to receive payment of the principal of (and premium,
if any) and interest on this Debenture on the date when due (or, in
the case of redemption, on the Redemption Date) and to convert this
Debenture in accordance with Section B and to institute suit for the
enforcement of any such payment and right to convert.
6. Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Holder is intended to be exclusive
of any other right or remedy, and every right and remedy shall, to
the extent permitted by law, be cumulative and in addition to every
other right and remedy given hereunder or now or hereafter existing
at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or
remedy.
7. Delay or Omission Not Waiver. No delay or omission of the
Holder to exercise any right or remedy accruing upon any Event of
Default shall impair any such right or remedy or constitute a waiver
of any such Event of Default or an acquiescence therein. Every right
and remedy given by this Section or by law to the Holder may be
exercised from time to time, and as often as may be deemed expedient,
by the Holder.
8. Amendments; Governing Law etc.. This Debenture may be
amended only by a writing signed by the Company and the Holder. The
Article and Section headings herein are for convenience only and
shall not affect the construction hereof. All covenants and
agreements in this Debenture by the Company shall bind its successors
and assigns, whether so expressed or not. In case any provision in
this Debenture shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby. This Debenture
shall be governed by and construed in accordance with the laws of the
State of Wisconsin. If any action or proceeding shall be brought by
the Holder in order to enforce any right or remedy under this
Debenture, the Company hereby consents and submits to the
jurisdiction of the courts of the State of Wisconsin and of any
Federal court sitting in The City of Milwaukee, State of Wisconsin.
Any action or proceeding brought by the Company to enforce any right,
assert any claim or obtain any relief whatsoever in connection with
this Debenture shall be brought by the Company exclusively in the
courts of the State of Wisconsin or in any Federal court sitting in
The City of Milwaukee, State of Wisconsin.
No provision of this Debenture shall alter or impair the
obligation of the Company, which is absolute and unconditional, to
pay the principal of (and premium, if any) and interest on this
Debenture at the times, place and rate, and in the coin or currency
or with another debenture, herein prescribed or to convert this
Debenture as provided herein.
Debentures are exchangeable for a like aggregate principal
amount of Debentures of a different authorized denomination, as
requested by the Holder.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in
connection therewith.
9. Definitions. The following terms shall have the meanings
specified below:
"Affiliate" of any specified person means any other Person
directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of
this definition, "control" when used with respect to any specified Person
means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly
adopted by the Board of Directors and to be in full force and effect on
the date of such certification, and delivered to the Trustee.
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Securities Exchange Act
of 1934, or, if at any time after the execution of this instrument such
Commission is not existing and performing the duties now assigned to it
under the Trust Indenture Act, then the body performIng such duties at
such time.
"Common Stock" means all shares now or hereafter authorized of
the class of Common Stock of the Company currently authorized and stock of
any other class into which such shares may hereafter have been changed.
"Debentures" means this Debenture and all other Debentures of
the Company issued to the Holder.
"Event of Default" has the meaning specified in Section I.
"Interest Payment Date" means the Stated Maturity of a
installment of interest on the Debentures.
"Maturity" when used with respect to any Debenture means the
date on which the principal of such Debenture becomes due and payable as
therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
"Newco" means Newco, Inc., a Wisconsin corporation and any
successor thereto.
"Newco Indebtedness" means the principal, premium, if any, and
unpaid interest on indebtedness for money borrowed by Newco and guaranteed
by the Company (at any time and from time to time), whether outstanding on
the date hereof or hereafter, and all renewals, extensions and refundings
of any such Debt; provided, however, that the following shall not
constitute Newco Indebtedness: any Debt which by its terms refers
explicitly to the Debentures issued hereunder and states that such Debt
shall not be senior in right of payment thereto.
"Officers" Certificate" means a certificate signed by the
Chairman of the Board, the President or a Vice President, and by the
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary
of the Company, and delivered to the Holder.
"Opinion of Counsel" means a written opinion of counsel, who may
be counsel for the Company or other counsel acceptable to the Holder.
"Person" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated
organization or government or any agent or political subdivision thereof.
"Redemption Date," when used with respect to any Debenture to be
redeemed, means the date fixed for such redemption by or pursuant to this
Debenture.
"Redemption Price," when used with respect to any Debenture to
be redeemed, means the price at which it is to be redeemed pursuant to
this Debenture.
"Regular Record Date" for the interest payable on any Interest
Payment Date means the April 1st or the September 1st (whether or not a
Business Day), as the case may be, next preceding such Interest Payment
Date.
"Senior Indebtedness" means all Debts, obligations and
liabilities of the Company arising under the guarantee by the Company of
the Newco Indebtedness, whether such guarantee is outstanding on the date
hereof or hereafter, and all renewals, replacements and extensions
thereof.
"Stated Maturity," when used with respect to any Debenture or
any installment of interest thereon, means the date specified in such
Debenture as the fixed date on which the principal of such Debenture or
such installment of interest is due and payable.
"Subsidiary" means a corporation more than 50% of the
outstanding voting stock of which is owned, directly or indirectly, by the
Company or by one or more other Subsidiaries, or by the Company and one or
more other Subsidiaries. For the purposes of this definition, "voting
stock" means stock which ordinarily has voting power for the election of
directors, whether at all times or only so long as no senior class of
stock has such voting power by reason of any contingency.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed under its corporate seal.
SWING-N-SLIDE CORP.
By:/s/ Richard G. Mueller
Richard G. Mueller
President
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS
OF ANY STATE BY REASON OF SPECIFIC EXEMPTIONS UNDER THE PROVISIONS OF THE
AFOREMENTIONED ACT AND LAWS AND/OR RULES AND REGULATIONS PROMULGATED
THEREUNDER. ACCORDINGLY, THIS INSTRUMENT MAY NOT BE OFFERED FOR SALE,
SOLD, OR OTHERWISE TRANSFERRED EXCEPT UPON AN EFFECTIVE REGISTRATION OF
THE SECURITIES REPRESENTED BY THIS INSTRUMENT UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS, OR UPON
ACCEPTANCE BY THE ISSUER OF AN OPINION OF COUNSEL IN SUCH FORM AND BY SUCH
COUNSEL, OR OTHER DOCUMENTATION, AS SHALL BE SATISFACTORY TO COUNSEL FOR
THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
SWING-N-SLIDE CORP.
10% Convertible Subordinated Debenture due 2004
$19,033.75 October 15, 1996
Swing-N-Slide Corp., a corporation duly organized and existing
under the laws of Delaware, and its permitted successors and assigns
(herein called the "Company"), for value received, hereby promises to pay
to the order of GreenGrass Holdings, a Delaware general partnership, and
its successors and assigns (the "Holder"), the principal sum of NINETEEN
THOUSAND THIRTY-THREE and 75/100 DOLLARS ($19,033.75) on February 15,
2004, and to pay interest thereon commencing April 15, 1997 and on April
15 and October 15, in each year thereafter, at the rate of 10% per annum,
until the principal hereof is paid in full. Payment of the principal of
(and premium, if any) and interest on this Debenture will be made by check
payable in money of the United States of America that at the time of
payment is legal tender for payment of public and private debts, mailed to
the Holder at its principal office in Chicago, Illinois or such other
address as may be designated by the Holder; provided, however, that until
February 15, 1999, at the option of the Company, interest on this
Debenture may be paid by the issuance of an additional debenture, in the
form of this Debenture, in the principal amount of the interest so
payable, dated the interest payment date for such interest payment, with
interest payable as provided herein with a stated maturity of principal
and interest as provided in this Debenture and otherwise identical to this
Debenture. Interest shall be calculated based on a year composed of 365
days.
Section A. Securities Offering. If debentures are issued to
shareholders of the Company as contemplated by Section 4.8(c) of the
Transaction Agreement, dated January 4, 1996, between GreenGrass Holdings
and the Company, then contemporaneously with the closing of such offer
this Debenture may be exchanged, at the option of the Holder, for
debentures issued under the indenture entered into by the Company in
connection with such offer, at par plus any accrued and unpaid interest,
except that any such debentures issued to the Holder will continue to be
convertible at the Conversion Rate (as defined below) specified below.
Section B. Conversion Rights.
1. General. The Holder shall have the right at any time prior
to maturity, at its option, to convert the principal of this
Debenture (or any portion of the principal thereof which is $1.00 or
an integral multiple of $1.00) into fully paid and nonassessable
(except as otherwise provided by law) shares of Common Stock of the
Company at the rate of one share of Common Stock for each $4.80
principal amount of Debentures or, in case an adjustment to the
number of shares of Common Stock issuable for each $4.80 principal
amount of Debentures (the "Conversion Rate" or "rate") has taken
place pursuant to the provisions hereof, then at the rate as so
adjusted. Such right shall be exercised by the surrender of the
Debenture, the principal of which is so to be converted, to the
Company, accompanied by written notice that the Holder elects to
convert the Debenture or any portion thereof and specifying the name
or names (with address) in which a certificate or certificates for
Common Stock are to be issued. For convenience, the conversion of
all or a portion, as the case may be, of the principal of this
Debenture (and any other Debentures (including without limitation any
Debentures issued in lieu of interest in accordance with the first
paragraph of this Debenture)) into the Common Stock of the Company is
hereinafter sometimes referred to as the conversion of this
Debenture. If this Debenture is converted in part only, upon such
conversion the Company shall execute and deliver to the Holder a new
Debenture or Debentures of authorized denominations in an aggregate
principal amount equal to the unconverted portion of such Debenture.
This Debenture shall continue to be convertible, in whole or in
part, (i) even though the Company or the Holder may have given notice
of prepayment or redemption with respect to this Debenture or any
part thereof pursuant to Sections C or E hereof, so long as this
Debenture and the Holder's election to convert shall have been
delivered to the Company pursuant to this Section B prior to the date
fixed for such prepayment or redemption and (ii) whether or not a
mandatory, optional or mandatory optional prepayment or redemption
prior to the date fixed for such prepayment or redemption, is due on
this Debenture on any date following such time.
2. Issuance of Common Stock; Time of Conversion. As promptly
as practicable after the surrender, as herein provided, of this
Debenture for conversion, the Company shall deliver to the Holder a
certificate or certificates representing the number of fully paid and
nonassessable (except as otherwise provided by law) shares of Common
Stock of the Company into which this Debenture (or portion thereof)
may be converted together with payment in lieu of any fraction of a
share. Subject to the following provisions of this Debenture, such
conversion shall be deemed to have been made immediately prior to the
close of business on the date that this Debenture shall have been
surrendered for conversion (except that if such conversion is in
connection with an underwritten public offering of Common Stock, then
such conversion shall be deemed to have been effected upon such
surrender), so that the rights of the Holder as a Holder shall cease
with respect to this Debenture (or the portion thereof) being
converted at such time, and the Person or Persons entitled to receive
the shares of Common Stock deliverable upon conversion of this
Debenture shall be treated for all purposes as having become the
record holder or holders of such shares of Common Stock at such time,
and such conversion shall be at the conversion rate in effect at such
time; provided, however, that no such surrender on any date when the
stock transfer books of the Company shall be closed shall be
effective to constitute the Person or Persons entitled to receive the
shares of Common Stock deliverable upon such conversion as the record
holder or holders of such shares of Common Stock on such date, but
such surrender shall be effective to constitute the Person or Persons
entitled to receive such shares of Common Stock as the record holder
or holders thereof for all purposes immediately prior to the close of
business on the next succeeding day on which such stock transfer
books are open, and such conversion shall be deemed to have been made
at, and shall be made at the conversion rate in effect at, such time
on such next succeeding day.
If the last day for the exercise of the conversion right shall
not be a business day, then such conversion right may be exercised on
the next succeeding business day.
3. Payment of Accrued Interest. Within ten (10) days after
receipt of any Debenture and an election to convert all or a portion
of the principal amount of such Debenture pursuant to this Section B,
the Company will pay to the Holder any unpaid interest, accrued to
the date of conversion of such Debenture, on the principal amount so
converted.
4. Adjustment of Conversion Price. The conversion rate shall
be subject to adjustment as follows:
a. In case the Company shall (i) pay a dividend on Common
Stock in Common Stock, (ii) subdivide its outstanding shares of
Common Stock, or (iii) combine its outstanding shares of Common
Stock into a smaller number of shares, the conversion rate in
effect immediately prior thereto shall be adjusted retroactively
as provided below so that the Holder shall be entitled to
receive the number of shares of Common Stock of the Company
which it would have owned or have been entitled to receive after
the happening of any of the events described above had this
Debenture been converted immediately prior to the happening of
such event. An adjustment made pursuant to this paragraph (a)
shall become effective immediately after the record date in the
case of a dividend and shall become effective immediately after
the effective date in the case of a subdivision or combination.
b. In case the Company shall issue rights or warrants to
all holders of its Common Stock entitling them to subscribe for
or purchase shares of Common Stock at a price per share less
than the current market price per share (determined as provided
in paragraph (e) of this Section) of the Common Stock on the
date fixed for the determination of stockholders entitled to
receive such rights or warrants, the conversion rate in effect
at the opening of business on the day following the day fixed
for such determination shall be increased by multiplying such
conversion rate by a fraction of which the numerator shall be
the number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination plus the
number of shares of Common Stock so offered for subscription or
purchase and the denominator shall be the number of shares of
Common Stock outstanding at the close of business on the date
fixed for such determination plus the number of shares of Common
Stock which the aggregate of the offering price of the total
number of shares of Common Stocks offered for subscription or
purchase would purchase at such current market price, such
increase to become effective immediately after the opening of
business on the day following the date fixed for such
determination; provided, however, in the event that all the
shares of Common Stock offered for subscription or purchase are
not delivered upon the exercise of such rights or warrants, upon
the expiration of such rights or warrants the conversion rate
shall be readjusted to the conversion rate which would have been
in effect had the numerator and the denominator of the foregoing
fraction and the resulting adjustment been made based upon the
number of shares of Common Stock actually delivered upon the
exercise of such rights or warrants rather than upon the number
of shares of Common Stock offered for subscription or purchase.
For the purposes of this paragraph (b), the number of shares of
Common Stock at any time outstanding shall not include shares
held in the treasury of the Company.
c. In case the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock shares of its
capital stock (other than Common Stock), or assets (excluding
cash dividends paid out of the retained earnings of the Company)
or rights or warrants to subscribe or purchase (excluding those
referred to in paragraph (b) above) (hereinafter collectively
referred to as "Distributions on Common Stock"), then in each
such case, the Company shall deliver to the Holder the
Distribution on Common Stock to which the Holder would be
entitled if it had converted the Debentures for Common Stock
immediately prior to the record date for the purpose of
determining stockholders entitled to receive such Distribution
on Common Stock.
d. The reclassification (including any reclassification
upon a merger in which the Company is the continuing
corporation) of Common Stock into securities including other
than Common Stock (other than any reclassification upon a
consolidation or merger to which Subsection B(6) applies) shall
be deemed to involve (i) a distribution of such securities other
than Common Stock to all holders of Common Stock (and the
effective date of such reclassification shall be deemed to be
"the date fixed for the determination of stockholders entitled
to receive such distribution" and "the date fixed for such
determination" within the meaning of paragraph (e) of this
Section), and (ii) a subdivision or combination, as the case may
be, of the number of shares of Common Stock outstanding
immediately prior to such reclassification into the number of
shares of Common Stock outstanding immediately thereafter.
e. For the purpose of any computation under paragraphs
(b) and (c) of this Section, the current market price per share
of Common Stock on any date shall be deemed to be the average of
the daily closing prices for the thirty consecutive business
days selected by the Company commencing with the forty-fifth
business day before the day in question. The closing price for
each day shall be the last reported sales price regular way or,
in case no such reported sale takes place on such day, the
average of the reported closing bid and asked prices regular
way, in either case on the American Stock Exchange or if the
Common Stock is not listed or admitted to trading on such
Exchange, on the principal national securities exchange on which
the Common Stock is listed or admitted to trading or, if not
listed or admitted to trading on any national securities
exchange, on the National Association of Securities Dealers
Automated Quotations National Market System or, if the Common
Stock is not listed or admitted to trading on any national
securities exchange or quoted on such National Market System,
the average of the closing bid and asked prices in the over-the-
counter market as furnished by any New York Stock Exchange or
American Stock Exchange member firm selected from time to time
by the Company for that purpose. If the current market price
per share of Common Stock cannot be determined in accordance
with the above procedures under this paragraph (e), such current
market price shall be determined in good faith by the Board of
Directors of the Company.
f. No adjustment in the conversion rate shall be required
unless such adjustment would require an increase or decrease of
at least 1% of such rate; provided, however, that the Company
may make any such adjustment at its election and provided,
further, that any adjustments which by reason of this paragraph
(f) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All
calculations under this Section B shall be made to the nearest
cent or to the nearest one-hundredth of a share, as the case may
be. Anything in this Section B notwithstanding, the Company may
make such reductions in the conversion rate, in addition to
those required by this Section, as it considers to be advisable
in order that any event treated for Federal income tax purposes
as a dividend of stock or stock rights shall not be taxable to
the recipients.
g. Whenever the conversion rate is adjusted as herein
provided
(1) the Company shall compute the adjusted
conversion rate in accordance with paragraph (a); and
(2) notice stating that the conversion rate has
been adjusted and setting forth the adjusted
conversion rate shall forthwith be mailed to the
Holder.
h. For the purpose of this Section B(4), the term "Common
Stock" shall include any stock of any class of the Company which
has no preference in respect of dividends or of amounts payable
in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Company and which is not
subject to redemption by the Company. However, shares issuable
on conversion of shares of this Series shall include only shares
of the class designated as Common Stock of the Company as of
January 1, 1996, 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, however, that if
at any time there shall be more than one such resulting class,
the shares of each such class then so issuable shall be
substantially in the proportion which the total number of shares
of such class resulting from all such reclassifications bears to
the total number of shares of all such classes resulting from
all such reclassifications.
5. No Fractional Shares. No fractional shares of Common Stock
shall be issued upon conversion of this Debenture. If more than one
Debenture shall be surrendered for conversion at one time by the
Holder, the number of full shares which shall be issuable upon
conversion thereof shall be computed on the basis of the aggregate
principal amount of the Debentures or specified portions thereof so
surrendered. Instead of any fractional share of Common Stock which
would otherwise be issuable upon conversion of this Debenture or any
Debentures or specified portions thereof, the Company shall pay a
cash adjustment in respect of such fraction in amount equal to the
same fraction of the current market price per share of Common Stock
(as determined in accordance with Section B.4.(e) above) at the close
of business on the day of conversion.
6. Consolidation, Merger or Sale of Assets. In case of any
consolidation of the Company with, or merger of the Company into, any
other Person, (other than a merger which does not result in any
reclassification, conversion, exchange or cancellation of outstanding
shares of Common Stock of the Company) or any sale or transfer of all
or substantially all of the assets of the Company (whether such
assets are held by the Company directly or indirectly through its
Subsidiaries), the Person formed by such consolidation or resulting
from such merger or which acquires such assets, as the case may be,
shall execute and deliver to the Holder an instrument providing that
the Holder shall have the right thereafter, during the period this
Debenture shall be convertible to convert this Debenture only into
the kind and amount of securities, cash and other property receivable
upon such consolidation, merger, sale or transfer by a holder of the
number of shares of Common Stock of the Company into which this
Debenture might have been converted immediately prior to such
consolidation, merger, sale or transfer assuming such holder of
Common Stock of the Company (i) is not a Person with which the
Company consolidated or into which the Company merged or to which
such sale or transfer was made, as the case may be ("constituent
Person"), or an Affiliate of a constituent Person and (ii) failed to
exercise his rights of election, if any, as to the kind or amount of
securities, cash and other property receivable upon such
consolidation, merger, sale or transfer (provided that if the kind or
amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer is not the same for each
share of Common Stock of the Company held immediately prior to such
consolidation, merger, sale or transfer by other than a constituent
Person or an Affiliate thereof and in respect of which such rights of
election shall not have been exercised ("non-electing share") then
for the purpose of this subsection the kind and amount of securities,
cash and other property receivable upon such consolidation, merger,
sale or transfer by 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 instrument shall provide for adjustments
which, for events subsequent to the effective date of such
instrument, shall be as nearly equivalent as may be practicable to
the adjustments provided for in this Section. The above provisions
of this subsection shall similarly apply to successive
consolidations, mergers, sales or transfers.
7. Shares to be Reserved. The Company covenants that it will
at all times reserve and keep available out of its authorized Common
Stock, solely for the purpose of issue upon conversion of Debentures
as herein provided, such number of shares of Common Stock as shall
then be issuable upon the conversion of all outstanding Debentures.
The Company covenants that all shares of Common Stock which shall be
so issuable shall, when issued, be duly and validly issued and fully
paid and nonassessable.
8. Registration and Listing of Shares. The Company covenants
that if any shares of Common Stock, required to be reserved for
purposes of conversion of Debentures hereunder, require registration
with or approval of any governmental authority under any Federal or
State law before such shares may be issued upon conversion, the
Company will in good faith and as expeditiously as possible endeavor
to cause such shares to be duly registered or approved, as the case
may be. The Company further covenants that so long as the Common
Stock of the Company is listed on the American Stock Exchange or any
other national securities exchange, the Company will, if permitted by
the rules of such exchange, list and keep listed on such exchange,
upon official notice of issuance, all shares of Common Stock issuable
upon conversion of Debentures.
9. Taxes and Charges. The issuance of certificates for shares
of Common Stock upon the conversion of Debentures shall be made
without charge to the Holder for such certificates or for any tax in
respect of the issuance of such certificates or the securities
represented thereby, and such certificates shall be issued in the
name of, or in such names as may be directed by, the Holder;
provided, however, that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the
issuance and delivery of any such certificate in a name other than
that of the Holder, and the Company shall not be required to issue or
deliver such certificates unless or until the Person or Persons
requesting the issuance 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 C. Optional Redemption.
The Debentures are subject to redemption upon not less than 30
or more than 60 days' notice by mail, at any time, as a whole or in
part, at the election of the Company, at a redemption price equal to
100% of the principal amount, together with accrued interest to the
redemption date, but interest installments whose stated maturity is
on or prior to such redemption date will be payable to the Holder.
In the event of redemption or conversion of this Debenture is in
part only, a new Debenture or Debentures for the unredeemed or
unconverted portion hereof will be issued in the name of the Holder
upon the cancellation hereof.
Section D. Subordination.
1. Debentures Subordinate to Senior Indebtedness. The Company
covenants and agrees, and the Holder by its acceptance hereof
likewise covenants and agrees, that, to the extent and in the manner
hereinafter set forth in this Section, the indebtedness represented
by this Debenture and the payment of the principal of (and premium,
if any) and interest on this Debenture are hereby expressly made
subordinate and subject in right of payment to the prior payment in
full of all Senior Indebtedness.
2. Payment Over of Proceeds Upon Dissolution Etc. Upon any
distribution of assets of the Company in the event of (a) any
insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or other similar case or proceeding in
connection therewith, relative to the Company or to its creditors, as
such, or to its assets, or (b) any liquidation, dissolution or other
winding up of the Company, whether voluntary or involuntary and
whether or not involving insolvency or bankruptcy, or (c) any
assignment for the benefit of creditors or any other marshalling of
assets and liabilities of the Company, then and in such event the
holders of Senior Indebtedness shall be entitled to receive payment
in full of all amounts due or to become due on or in respect of all
Senior Indebtedness, or provision shall be made for such payment, in
money or money's worth, before the Holder is entitled to receive any
payment on account of principal of (or premium, if any) or interest
on the Debentures, and to that end the holders of Senior Indebtedness
shall be entitled to receive, for application to the payment thereof,
any payment or distribution of any kind or character, whether in
cash, property or securities, including any such payment or
distribution which may be payable or deliverable by reason of the
payment of any other indebtedness of the Company being subordinated
to the payment of the Debentures, which may be payable or deliverable
in respect of the Debentures in any such case, proceeding,
dissolution, liquidation or other winding up or event.
In the event that, notwithstanding the foregoing provisions of
this Subsection, the Holder shall have received any payment or
distribution of assets of the Company of any kind or character,
whether in cash, property or securities, including any such payment
or distribution which may be payable or deliverable by reason of the
payment of any other indebtedness of the Company being subordinated
to the payment of the Debentures, before all Senior Indebtedness is
paid in full or payment thereof provided for, and if such fact shall
then have been made known to the Holder, then and in such event such
payment or distribution shall be paid over or delivered forthwith to
the trustee in bankruptcy, receiver, liquidating trustee, custodian,
assignee, agent or other Person making payment or distribution of
assets of the Company for application to the payment of all Senior
Indebtedness remaining unpaid, to the extent necessary to pay all
Senior Indebtedness in full, after giving effect to any concurrent
payment or distribution to or for the holders of Senior Indebtedness.
For purposes of this Section only, 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 Subsection with respect to the Debentures to
the payment of all Senior Indebtedness which may at the time be
outstanding: provided, however, that (i) Senior Indebtedness is
assumed by the new corporation, if any, resulting from any such
reorganization or readjustment, and (ii) the rights of the holders of
the Senior Indebtedness 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 properties and assets
substantially as an entirety to another Person upon the terms and
conditions set forth in Section G shall not be deemed a dissolution,
winding up, liquidation, reorganization, assignment for the benefit
of creditors or marshalling of assets and liabilities of the Company
for the purposes of this Section if the corporation formed by such
consolidation or into which the Company is merged or the Person which
acquires by conveyance or transfer such properties and assets
substantially as a entirety, as the case may be, shall, as a part of
such consolidation, merger, conveyance or transfer, comply with the
conditions set forth in Section G.
3. Prior Payment to Senior Indebtedness Upon Acceleration of
Debentures. In the event that any of the Debentures are declared due
and payable before their Stated Maturity, then and in such event the
holders of Senior Indebtedness outstanding at the time such
Debentures so become due and payable shall be entitled to receive
payment in full of all amounts due or to become due on or in respect
of all such Senior Indebtedness, or provision shall be made for such
payment in money or money's worth, before the Holder is entitled to
receive any payment (including any payment which may be payable by
reason of the payment of any other indebtedness of the Company being
subordinated to the payment of the Debentures) by the Company on
account of the principal of (or premium, if any) or interest on the
Debentures or on account of the purchase or other acquisition of
Debentures.
In the event that, notwithstanding the foregoing, the Company
shall make any payment to the Holder prohibited by the foregoing
provisions of this Subsection, and if such facts shall then have been
made known to the Holder, then and in such event such payment shall
be paid over and delivered forthwith to the Company for the benefit
of the holders of Senior Indebtedness.
The provisions of this Section shall not apply to any payment
with respect to which Subsection 2 would be applicable.
4. No Payment When Newco Indebtedness in Default. (a) In the
event and during the continuation of any default in the payment of
principal (or premium, if any) or interest on any Newco Indebtedness
beyond any applicable grace period with respect thereto, or in the
event that any event of default with respect to any Newco
Indebtedness shall have occurred and be continuing permitting the
holders of such Newco Indebtedness (or a trustee on behalf of the
holders thereof) to declare such Newco Indebtedness due and payable
prior to the date on which it would otherwise have become due and
payable, unless and until such event of default shall have been cured
or waived or shall have ceased to exist and such acceleration shall
have been rescinded or annulled, or (b) in the event any judicial
proceeding shall be pending with respect to any such default in
payment or event of default, then no payment (including any payment
which may be payable by reason of the payment of any other
indebtedness of the Company being subordinated to the payment of the
Debentures) shall be made by the Company on account of principal of
(or premium, if any) or interest on the Debentures or on account of
the purchase or other acquisition of Debentures.
In the event that, notwithstanding the foregoing, the Company
shall make any payment to the Holder prohibited by the foregoing
provisions of this Subsection, and if such fact shall then have been
made known to the Holder, then and in such event such payment shall
be paid over and delivered forthwith to the Company for the benefit
of the holders of Newco Indebtedness.
The provisions of this Section shall not apply to any payment
with respect to which Subsection D(2) would be applicable.
5. Payment Permitted if No Default. Nothing contained in this
Section or elsewhere or in any of the Debentures shall prevent (x)
the Company, at any time except during the pendency of any case,
proceeding, dissolution, liquidation or other winding up, assignment
for the benefit of creditors or other marshalling of assets and
liabilities of the Company referred to in Subsection D(2) or under
the conditions described in Subsections D(3) or D(4), from making
payments at any time of principal of (and premium, if any) or
interest on the Debentures, or (y) the retention by the Holder of any
money deposited with it hereunder to the payment of or on account of
the principal of (and premium, if any) or interest on the Debentures
if, at the time of such retention the Holder did not have knowledge
that such payment would have been prohibited by the provisions of
this Section.
6. Subrogation to Rights of Holders of Senior Indebtedness.
Subject to the payment in full of all Senior Indebtedness, the Holder
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 Section to the rights of the holders of such
Senior Indebtedness to receive payments or distributions of cash,
property or securities applicable to the Senior Indebtedness until
the principal of (and premium, if any) and interest on the Debentures
shall be paid in full. For purposes of such subrogation, no payments
or distributions to the holders of the Senior Indebtedness of any
cash, property or securities to which the Holder would be entitled
except for the provisions of this Section, and no payments over
pursuant to the provisions of this Section to the Company or to the
holders of Senior Indebtedness by the Holder, shall, as between the
Company, its creditors other than holders of Senior Indebtedness and
the Holder, be deemed to be a payment or distribution by the Company
to or on account of the Debentures.
7. Provisions Solely to Define Relative Rights. The
provisions of this Section are and are intended solely for the
purpose of defining the relative rights of the Holder, on the one
hand, and the holders of Senior Indebtedness, on the other hand.
Nothing contained in this Section or elsewhere in this Debenture is
intended to or shall impair, as between the Company, its creditors
other than the holders of Senior Indebtedness and the Holder, the
obligation of the Company, which is absolute and unconditional, to
pay to the Holder the principal of (and premium, if any) and interest
on the Debenture as and when the same shall become due and payable in
accordance with their terms and which, subject to the rights under
this Section of the holders of Senior Indebtedness, is intended to
rank equally with all other general obligations of the Company, or is
intended to or shall affect the relative rights against the Company
of the Holder and creditors of the Company other than the holders of
Senior Indebtedness, nor shall anything herein or therein prevent the
Holder from exercising all remedies otherwise permitted by applicable
law upon default under this Debenture, subject to the rights, if any,
under this Section of the holders of Senior Indebtedness to receive
cash, property or securities otherwise payable or deliverable to the
Holder, and nothing herein shall prevent the conversion of this
Debenture (or any part thereof) in accordance with the terms hereof.
8. No Waiver of Subordination Provisions. No right of any
present or future holder of any Senior Indebtedness to enforce
subordination 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 Debenture, regardless of any
knowledge thereof any such holder may have or be otherwise charged
with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness may, at any time and
from time to time, without the consent of or notice to the Holder,
without incurring responsibility to the Holder and without impairing
or releasing the subordination provided in this Section or the
obligations hereunder of the Holder to the holders of Senior
Indebtedness, do any one or more of the following: (i) change the
manner, place or terms of payment or extend the time of payment of,
or renew or alter, Senior Indebtedness, or otherwise amend or
supplement in any manner Senior Indebtedness or any instrument
evidencing the same or any agreement under which Senior Indebtedness
is outstanding; (ii) sell, exchange, release otherwise or otherwise
deal with any property pledged, mortgaged or securing Senior
Indebtedness; (iii) release any Person liable in any manner for the
collection of Senior Indebtedness; and (iv) exercise or refrain from
exercising any rights against the Company and any other Person.
9. Notice to Holder. The Company shall give prompt written
notice to the Holder of any fact known to the Company which would
prohibit the making of any payment to the Holder in respect of the
Debentures. Failure to give such notice shall not affect the
subordination of the Debenture to Senior Indebtedness.
Notwithstanding the provisions of this Section or any other provision
of this Debenture, the Holder shall not be charged with knowledge of
the existence of any facts which would prohibit the making of any
payment to the Holder in respect of the Debenture, unless and until
the Holder shall have received written notice thereof from the
Company or a holder of Senior Indebtedness or from any trustee
therefor.
Section E. Optional Mandatory Repurchase.
1. Obligation to Repurchase.
a. Upon the occurrence of any Contingent Event, the
Holder shall have the right, at such Holder's option, to require
the Company to redeem this Debenture in whole or in part at a
repurchase price equal to the principal amount of this Debenture
so repurchased plus accrued and unpaid interest on the principal
amount of this Debenture so repurchased.
Such option under this Section E shall be exercised by written
notice to the Company under Section E.b. hereof given at any
time from and after the thirtieth (30th) day before such
Contingent Event through the thirtieth (30th) day after such
Contingent Event (or, if later, through the thirtieth (30th) day
after the Holder receives written notice from the Company of
such Contingent Event). Promptly (and in any event within ten
(10) days) after the occurrence of any Contingent Event, and not
more than thirty (30) days before such Contingent Event, the
Company shall given written notice to the Holder notifying such
Holder of the occurrence of such Contingent Event and informing
such Holder of its right to exercise an option to require a
repurchase under this Section E.
b. In order to exercise its rights to require a
repurchase under this Section E, the Holder shall send to the
Company a written notice demanding prepayment under this Section
E and specifying the date of such prepayment (which shall not be
less than fifteen (15) days after receipt of such notice by the
Company, but in no event earlier than such Contingent Event,
except that such date may be the same date as a Contingent Event
if requested by the Holder).
c. This obligation to repurchase is subject to the
restriction that the Company may not buy any Debenture at any
time when the subordination provisions of this Debenture would
not permit the Company to make a payment of principal, premium
or interest on the Debentures.
2. Certain Definitions. As used in this Section:
a. "Contingent Event" means any one or more of the
following events which shall occur subsequent to the date of
this Debenture:
(1) the Company shall convey, transfer or lease all
or substantially all of its assets (whether held directly
or indirectly through Subsidiaries) to any Persons (other
than to a Subsidiary of the Company);
(2) any Person (other than the Company), including a
"group" (within the meaning of Section 13(d) and 14(d)(2)
of the Securities Exchange Act of 1934, as amended) that
includes such Person, shall acquire, directly or
indirectly, beneficial ownership, in the aggregate, of (x)
50 percent or more of the Common Stock, or (y) securities
representing 50 percent or more of the combined voting
power of the Company's voting securities, in either case,
outstanding on the date immediately prior to the date of
the last such acquisition by such Person; or
(3) on any day (a "Calculation Date") (x) (A) the
Company shall distribute cash, securities or other
properties, including cash dividends (other than Common
Stock, or rights or warrants to acquire Common Stock or
preferred stock substantially equivalent to Common Stock)
to holders of Common Stock, whether by means of dividend,
reclassification, recapitalization or otherwise, or (B) the
Company shall acquire, directly or indirectly, beneficial
ownership of Common Stock; and (y) the sum of the
Applicable Percentages (as defined below) of all such
distributions and acquisitions which have occurred on the
Calculation Date and during the 365-day period immediately
preceding the Calculation Date shall exceed 30 percent.
b. "Applicable Percentage" means (x) In the case of each
distribution referred to in clause (3) above, the percentage
determined as of the Calculation Date of each such distribution
by dividing the aggregate fair market value (as determined in
good faith by the Board of Directors), of such distribution, by
the fair market value (based on the then current market price)
of all of the shares of Common Stock outstanding on the day
immediately prior to such Calculation Date; and (y) in the case
of each acquisition referred to in clause (3) above, the
percentage determined as of the Calculation Date of each such
acquisition by dividing all amounts expended by the Company
(such amounts, if other than in cash, as determined in good
faith by the Board of Directors), in connection with the
acquisition of any shares of Common Stock, by the fair market
value (based on the then current market price) of all of the
shares of Common Stock outstanding on the day immediately prior
to such Calculation Date.
Section F. Covenants.
1. Payment of Principal, Premium and Interest. The Company
will duly and punctually pay the principal of (and premium, if any)
and interest on this Debenture in accordance with the terms hereof.
2. Statement as to Compliance. The Company will deliver to
the Holder, within 120 days after the end of each fiscal year, an
Officers' Certificate stating, as to each signer thereof, that
a. a review of the activities of the Company and its
Subsidiaries during such year and of performance under this
Debenture has been made under his supervision, and
b. to the best of his knowledge, based on such review,
the Company has fulfilled all its obligations under this
Debenture throughout such year, or, if there has been a default
in the fulfillment of any such obligation, specifying each such
default known to him and the nature and status thereof.
3. Further Instruments and Acts. From time to time the
Company will, at its own expense and upon request of the Holder,
execute and deliver or cause to be executed and delivered such
further instruments and do such further acts as may reasonably be
necessary or desirable to carry out the purposes of this Debenture.
Section G. Consolidation, Merger, Conveyance, Transfer or Lease.
1. Company May Consolidate, etc. Only on Certain Terms. The
Company shall not consolidate with or merge into any other Person or
convey, transfer or lease its properties and assets substantially as
an entirety (whether such properties and assets are held by the
Company directly or through its Subsidiaries) to any Person, unless:
a. the Person formed by such consolidation or into which
the Company is merged or the Person which acquires by conveyance
or transfer, or which leases, the properties and assets of the
Company substantially as a entirety shall be a corporation
organized and existing under the laws of the United States of
America, any State thereof or the District of Columbia and shall
expressly assume, by an instrument, executed and delivered to
the Holder, in form satisfactory to the Holder, the due and
punctual payment of the principal of (and premium, if any) and
interest on this Debenture and the performance of every
obligation herein on the part of the Company to be performed or
observed and shall have provided for conversion rights in
accordance with Subsection (B)(6).
b. immediately after giving effect to such transaction,
no Event of Default, and no event which, after notice or lapse
of time or both, would become an Event of Default, shall have
happened and be continuing; and
c. the Company has delivered to the Holder an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and, if an
instrument is required hereunder in connection with such
transaction, such instrument comply with this Section and that
all conditions precedent herein provided for relating to such
transaction have been complied with.
2. Successor Corporation Substituted. Upon any consolidation
or merger by the Company with or into any other Person or any
conveyance, transfer or lease of the properties and assets of the
Company substantially as a entirety (whether such properties and
assets are held by the Company directly or through its Subsidiaries)
to any Person in accordance with Subsection (G)(1), the successor
corporation formed by such consolidation or into which the Company is
merged or to which such conveyance, transfer or lease is made shall
succeed to, and be substituted for, and may exercise every right and
power of the Company hereunder with the same effect as if such
successor corporation had been named as the Company herein, and
thereunder, except in the case of a lease to another Person, the
predecessor corporation shall be relieved of all obligations and
covenants under this Debenture.
Section H. Reports by Company. The Company shall mail to
the Holder, within 15 days after the Company is required to file the
same with the Commission, copies of the annual reports and of the
information, documents and other reports (or copies of such portions
of any of the foregoing as the Commission may from time to time by
rules and regulations prescribe) which the Company may be required to
file with the Commission pursuant to Section 13(a) or Section 15(d)
of the Securities Exchange Act of 1934, as amended; and, if the
Company is not required to file information, documents or reports
pursuant to either of said Sections, then it shall nonetheless mail
the same to the Holder as if it were required to do so by the
Commission.
Section I. Remedies.
1. Events of Default. "Event of Default," wherever used
herein, means any one of the following events (whatever the reason
for such Event of Default and whether it shall be occasioned by the
provisions of Section (B) or be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or
order of any court or any order, rule or regulation or any
administrative or governmental body):
a. default in the payment of any interest upon this
Debenture and any other Debenture issued to the Holder when it
becomes due and payable and continuance of such default for a
period of 10 days; or
b. default in the payment of the principal of (or
premium, if any, on) this Debenture and any other Debenture
issued to the Holder at its Maturity whether or not such payment
is prohibited by the subordination provisions of this Debenture
and continuance of such default for a period of 30 days; or
c. default in the performance, or breach, of any covenant
or warranty of the Company in this Debenture (other than a
covenant or warranty a default in whose performance or whose
breach is elsewhere in this Section specifically dealt with),
and continuance of such default or breach for a period of 30
days after there has been given, by registered or certified
mail, to the Company by the Holder a written notice specifying
such default or breach and requiring it to be remedied and
stating that such notice is a "Notice of Default" hereunder; or
d. the entry by a court having jurisdiction in the
premises of (A) a decree or order for relief in respect of the
Company in an involuntary case or proceeding under any
applicable Federal or state bankruptcy, insolvency,
reorganization or other similar law or (B) a decree or order
adjudging the Company a bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement,
adjustment or composition of or in respect of the Company under
any applicable Federal or state law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or of any substantial part of
its property, or ordering the winding up or liquidation of its
affairs, and the continuance of any such decree or order for
relief or any such other decree or order unstayed and in effect
for a period of 60 consecutive days; or
e. the commencement by the Company of a voluntary case or
proceeding under any applicable Federal or state bankruptcy,
insolvency, reorganization or other similar law or of any other
case or proceeding to be adjudicated a bankrupt or insolvent, or
the consent by it to the entry of a decree or order for relief
in respect of the Company in an involuntary case or proceeding
under any applicable Federal or state bankruptcy, insolvency,
reorganization or other similar law or to the commencement of
any bankruptcy or insolvency case or proceeding against it, or
the filing by it of a petition or answer or consent seeking
reorganization or relief under any applicable Federal or state
law, or the consent by it to the filing of such petition or to
the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator or similar
official of the Company or of any substantial part of its
property, or the making by it of an assignment for the benefit
of creditors, or the admission by it in writing of its inability
to pay its debts generally as they become due, or the taking of
corporate action by the Company in furtherance of any such
action.
2. Acceleration of Maturity; Rescission and Annulment. If any
Event of Default occurs and is continuing (other than an Event of
Default described in Subsections I(1)(d) and (e)), then and in every
such case the Holder may declare the principal and all accrued and
unpaid interest of all the Debentures issued to the Holder to be due
and payable immediately, by a notice in writing to the Company, and
upon any such declaration such principal shall become immediately due
and payable. If an Event of Default described in Subsections I(1)(d)
and (e) shall occur, then in every such case the unpaid principal
balance hereof and all accrued and unpaid interest shall
automatically become due and payable.
3. Collection of Indebtedness and Suits for Enforcement. The
Company covenants that if
a. default is made in the payment of any installment of
interest on any Debenture issued to the Holder when such
interest become due and payable and such default continues for a
period of 30 days, or
b. default is made in the payment of the principal of (or
premium, if any, on) any Debenture issued to the Holder at the
Maturity thereof,
the Company will, upon demand by the Holder, pay to it, the whole
amount then due and payable on such Debentures for principal (and
premium, if any) and interest, with interest upon the overdue
principal (and premium, if any) and, to the extent that payment of
such interest shall be legally enforceable, upon overdue installments
of interest, at the rate borne by the Debentures and, in addition
thereto, such further amount as shall be sufficient to cover the
costs and expenses of collection, including the reasonable
compensation, expenses and disbursements of the Holder, its agents
and counsel.
If the Company fails to pay such amounts forthwith upon such
demand, the Holder may institute a judicial proceeding for the
collection of the sums so due and unpaid, may prosecute such
proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon the Debentures and
collect the moneys adjudged or decreed to be payable in the manner
provided by law out of the property of the Company or any other
obligor upon the Debentures, wherever situated.
If an Event of Default occurs and is continuing, the Holder may
in its discretion proceed to protect and enforce its rights by such
appropriate judicial proceedings as it shall deem most effectual to
protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Debenture or in aid
of the exercise of any power granted herein, or to enforce any other
proper remedy.
4. Application of Money Collected. Subject to Section D, any
money collected by the Holder pursuant to this Section shall be
applied first to the payment of all fees, costs and expenses
(including attorneys fees and expenses) incurred by the Holder
(whether before or after judgment) in the collection of such sums and
second, to the payment of the amounts then due and unpaid for
principal of (and premium, if any) and interest on the Debentures in
respect of which or for the benefit of which such money or
Debentures, as the case may be, has been collected.
5. Unconditional Right of Holder to Receive Principal, Premium
and Interest and to Convert. Notwithstanding any other provision
herein, the Holder shall have the right, which is absolute and
unconditional, to receive payment of the principal of (and premium,
if any) and interest on this Debenture on the date when due (or, in
the case of redemption, on the Redemption Date) and to convert this
Debenture in accordance with Section B and to institute suit for the
enforcement of any such payment and right to convert.
6. Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Holder is intended to be exclusive
of any other right or remedy, and every right and remedy shall, to
the extent permitted by law, be cumulative and in addition to every
other right and remedy given hereunder or now or hereafter existing
at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or
remedy.
7. Delay or Omission Not Waiver. No delay or omission of the
Holder to exercise any right or remedy accruing upon any Event of
Default shall impair any such right or remedy or constitute a waiver
of any such Event of Default or an acquiescence therein. Every right
and remedy given by this Section or by law to the Holder may be
exercised from time to time, and as often as may be deemed expedient,
by the Holder.
8. Amendments; Governing Law etc.. This Debenture may be
amended only by a writing signed by the Company and the Holder. The
Article and Section headings herein are for convenience only and
shall not affect the construction hereof. All covenants and
agreements in this Debenture by the Company shall bind its successors
and assigns, whether so expressed or not. In case any provision in
this Debenture shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby. This Debenture
shall be governed by and construed in accordance with the laws of the
State of Wisconsin. If any action or proceeding shall be brought by
the Holder in order to enforce any right or remedy under this
Debenture, the Company hereby consents and submits to the
jurisdiction of the courts of the State of Wisconsin and of any
Federal court sitting in The City of Milwaukee, State of Wisconsin.
Any action or proceeding brought by the Company to enforce any right,
assert any claim or obtain any relief whatsoever in connection with
this Debenture shall be brought by the Company exclusively in the
courts of the State of Wisconsin or in any Federal court sitting in
The City of Milwaukee, State of Wisconsin.
No provision of this Debenture shall alter or impair the
obligation of the Company, which is absolute and unconditional, to
pay the principal of (and premium, if any) and interest on this
Debenture at the times, place and rate, and in the coin or currency
or with another debenture, herein prescribed or to convert this
Debenture as provided herein.
Debentures are exchangeable for a like aggregate principal
amount of Debentures of a different authorized denomination, as
requested by the Holder.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in
connection therewith.
9. Definitions. The following terms shall have the meanings
specified below:
"Affiliate" of any specified person means any other Person
directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of
this definition, "control" when used with respect to any specified Person
means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly
adopted by the Board of Directors and to be in full force and effect on
the date of such certification, and delivered to the Trustee.
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Securities Exchange Act
of 1934, or, if at any time after the execution of this instrument such
Commission is not existing and performing the duties now assigned to it
under the Trust Indenture Act, then the body performIng such duties at
such time.
"Common Stock" means all shares now or hereafter authorized of
the class of Common Stock of the Company currently authorized and stock of
any other class into which such shares may hereafter have been changed.
"Debentures" means this Debenture and all other Debentures of
the Company issued to the Holder.
"Event of Default" has the meaning specified in Section I.
"Interest Payment Date" means the Stated Maturity of a
installment of interest on the Debentures.
"Maturity" when used with respect to any Debenture means the
date on which the principal of such Debenture becomes due and payable as
therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
"Newco" means Newco, Inc., a Wisconsin corporation and any
successor thereto.
"Newco Indebtedness" means the principal, premium, if any, and
unpaid interest on indebtedness for money borrowed by Newco and guaranteed
by the Company (at any time and from time to time), whether outstanding on
the date hereof or hereafter, and all renewals, extensions and refundings
of any such Debt; provided, however, that the following shall not
constitute Newco Indebtedness: any Debt which by its terms refers
explicitly to the Debentures issued hereunder and states that such Debt
shall not be senior in right of payment thereto.
"Officers" Certificate" means a certificate signed by the
Chairman of the Board, the President or a Vice President, and by the
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary
of the Company, and delivered to the Holder.
"Opinion of Counsel" means a written opinion of counsel, who may
be counsel for the Company or other counsel acceptable to the Holder.
"Person" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated
organization or government or any agent or political subdivision thereof.
"Redemption Date," when used with respect to any Debenture to be
redeemed, means the date fixed for such redemption by or pursuant to this
Debenture.
"Redemption Price," when used with respect to any Debenture to
be redeemed, means the price at which it is to be redeemed pursuant to
this Debenture.
"Regular Record Date" for the interest payable on any Interest
Payment Date means the April 1st or the September 1st (whether or not a
Business Day), as the case may be, next preceding such Interest Payment
Date.
"Senior Indebtedness" means all Debts, obligations and
liabilities of the Company arising under the guarantee by the Company of
the Newco Indebtedness, whether such guarantee is outstanding on the date
hereof or hereafter, and all renewals, replacements and extensions
thereof.
"Stated Maturity," when used with respect to any Debenture or
any installment of interest thereon, means the date specified in such
Debenture as the fixed date on which the principal of such Debenture or
such installment of interest is due and payable.
"Subsidiary" means a corporation more than 50% of the
outstanding voting stock of which is owned, directly or indirectly, by the
Company or by one or more other Subsidiaries, or by the Company and one or
more other Subsidiaries. For the purposes of this definition, "voting
stock" means stock which ordinarily has voting power for the election of
directors, whether at all times or only so long as no senior class of
stock has such voting power by reason of any contingency.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed under its corporate seal.
SWING-N-SLIDE CORP.
By:/s/ Richard G. Mueller
Richard G. Mueller
President
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS
OF ANY STATE BY REASON OF SPECIFIC EXEMPTIONS UNDER THE PROVISIONS OF THE
AFOREMENTIONED ACT AND LAWS AND/OR RULES AND REGULATIONS PROMULGATED
THEREUNDER. ACCORDINGLY, THIS INSTRUMENT MAY NOT BE OFFERED FOR SALE,
SOLD, OR OTHERWISE TRANSFERRED EXCEPT UPON AN EFFECTIVE REGISTRATION OF
THE SECURITIES REPRESENTED BY THIS INSTRUMENT UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS, OR UPON
ACCEPTANCE BY THE ISSUER OF AN OPINION OF COUNSEL IN SUCH FORM AND BY SUCH
COUNSEL, OR OTHER DOCUMENTATION, AS SHALL BE SATISFACTORY TO COUNSEL FOR
THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
SWING-N-SLIDE CORP.
10% Convertible Subordinated Debenture due 2004
$218,534.20 October 15, 1996
Swing-N-Slide Corp., a corporation duly organized and existing
under the laws of Delaware, and its permitted successors and assigns
(herein called the "Company"), for value received, hereby promises to pay
to the order of GreenGrass Holdings, a Delaware general partnership, and
its successors and assigns (the "Holder"), the principal sum of TWO
HUNDRED EIGHTEEN THOUSAND FIVE HUNDRED THIRTY FOUR and 20/100 DOLLARS
($218,534.20) on February 15, 2004, and to pay interest thereon commencing
October 15, 1996 and on April 15 and October 15, in each year thereafter,
at the rate of 10% per annum, until the principal hereof is paid in full.
Payment of the principal of (and premium, if any) and interest on this
Debenture will be made by check payable in money of the United States of
America that at the time of payment is legal tender for payment of public
and private debts, mailed to the Holder at its principal office in
Chicago, Illinois or such other address as may be designated by the
Holder; provided, however, that until February 15, 1999, at the option of
the Company, interest on this Debenture may be paid by the issuance of an
additional debenture, in the form of this Debenture, in the principal
amount of the interest so payable, dated the interest payment date for
such interest payment, with interest payable as provided herein with a
stated maturity of principal and interest as provided in this Debenture
and otherwise identical to this Debenture. Interest shall be calculated
based on a year composed of 365 days.
Section A. Securities Offering. If debentures are issued to
shareholders of the Company as contemplated by Section 4.8(c) of the
Transaction Agreement, dated January 4, 1996, between GreenGrass Holdings
and the Company, then contemporaneously with the closing of such offer
this Debenture may be exchanged, at the option of the Holder, for
debentures issued under the indenture entered into by the Company in
connection with such offer, at par plus any accrued and unpaid interest,
except that any such debentures issued to the Holder will continue to be
convertible at the Conversion Rate (as defined below) specified below.
Section B. Conversion Rights.
1. General. The Holder shall have the right at any time prior
to maturity, at its option, to convert the principal of this
Debenture (or any portion of the principal thereof which is $1.00 or
an integral multiple of $1.00) into fully paid and nonassessable
(except as otherwise provided by law) shares of Common Stock of the
Company at the rate of one share of Common Stock for each $4.80
principal amount of Debentures or, in case an adjustment to the
number of shares of Common Stock issuable for each $4.80 principal
amount of Debentures (the "Conversion Rate" or "rate") has taken
place pursuant to the provisions hereof, then at the rate as so
adjusted. Such right shall be exercised by the surrender of the
Debenture, the principal of which is so to be converted, to the
Company, accompanied by written notice that the Holder elects to
convert the Debenture or any portion thereof and specifying the name
or names (with address) in which a certificate or certificates for
Common Stock are to be issued. For convenience, the conversion of
all or a portion, as the case may be, of the principal of this
Debenture (and any other Debentures (including without limitation any
Debentures issued in lieu of interest in accordance with the first
paragraph of this Debenture)) into the Common Stock of the Company is
hereinafter sometimes referred to as the conversion of this
Debenture. If this Debenture is converted in part only, upon such
conversion the Company shall execute and deliver to the Holder a new
Debenture or Debentures of authorized denominations in an aggregate
principal amount equal to the unconverted portion of such Debenture.
This Debenture shall continue to be convertible, in whole or in
part, (i) even though the Company or the Holder may have given notice
of prepayment or redemption with respect to this Debenture or any
part thereof pursuant to Sections C or E hereof, so long as this
Debenture and the Holder's election to convert shall have been
delivered to the Company pursuant to this Section B prior to the date
fixed for such prepayment or redemption and (ii) whether or not a
mandatory, optional or mandatory optional prepayment or redemption
prior to the date fixed for such prepayment or redemption, is due on
this Debenture on any date following such time.
2. Issuance of Common Stock; Time of Conversion. As promptly
as practicable after the surrender, as herein provided, of this
Debenture for conversion, the Company shall deliver to the Holder a
certificate or certificates representing the number of fully paid and
nonassessable (except as otherwise provided by law) shares of Common
Stock of the Company into which this Debenture (or portion thereof)
may be converted together with payment in lieu of any fraction of a
share. Subject to the following provisions of this Debenture, such
conversion shall be deemed to have been made immediately prior to the
close of business on the date that this Debenture shall have been
surrendered for conversion (except that if such conversion is in
connection with an underwritten public offering of Common Stock, then
such conversion shall be deemed to have been effected upon such
surrender), so that the rights of the Holder as a Holder shall cease
with respect to this Debenture (or the portion thereof) being
converted at such time, and the Person or Persons entitled to receive
the shares of Common Stock deliverable upon conversion of this
Debenture shall be treated for all purposes as having become the
record holder or holders of such shares of Common Stock at such time,
and such conversion shall be at the conversion rate in effect at such
time; provided, however, that no such surrender on any date when the
stock transfer books of the Company shall be closed shall be
effective to constitute the Person or Persons entitled to receive the
shares of Common Stock deliverable upon such conversion as the record
holder or holders of such shares of Common Stock on such date, but
such surrender shall be effective to constitute the Person or Persons
entitled to receive such shares of Common Stock as the record holder
or holders thereof for all purposes immediately prior to the close of
business on the next succeeding day on which such stock transfer
books are open, and such conversion shall be deemed to have been made
at, and shall be made at the conversion rate in effect at, such time
on such next succeeding day.
If the last day for the exercise of the conversion right shall
not be a business day, then such conversion right may be exercised on
the next succeeding business day.
3. Payment of Accrued Interest. Within ten (10) days after
receipt of any Debenture and an election to convert all or a portion
of the principal amount of such Debenture pursuant to this Section B,
the Company will pay to the Holder any unpaid interest, accrued to
the date of conversion of such Debenture, on the principal amount so
converted.
4. Adjustment of Conversion Price. The conversion rate shall
be subject to adjustment as follows:
a. In case the Company shall (i) pay a dividend on Common
Stock in Common Stock, (ii) subdivide its outstanding shares of
Common Stock, or (iii) combine its outstanding shares of Common
Stock into a smaller number of shares, the conversion rate in
effect immediately prior thereto shall be adjusted retroactively
as provided below so that the Holder shall be entitled to
receive the number of shares of Common Stock of the Company
which it would have owned or have been entitled to receive after
the happening of any of the events described above had this
Debenture been converted immediately prior to the happening of
such event. An adjustment made pursuant to this paragraph (a)
shall become effective immediately after the record date in the
case of a dividend and shall become effective immediately after
the effective date in the case of a subdivision or combination.
b. In case the Company shall issue rights or warrants to
all holders of its Common Stock entitling them to subscribe for
or purchase shares of Common Stock at a price per share less
than the current market price per share (determined as provided
in paragraph (e) of this Section) of the Common Stock on the
date fixed for the determination of stockholders entitled to
receive such rights or warrants, the conversion rate in effect
at the opening of business on the day following the day fixed
for such determination shall be increased by multiplying such
conversion rate by a fraction of which the numerator shall be
the number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination plus the
number of shares of Common Stock so offered for subscription or
purchase and the denominator shall be the number of shares of
Common Stock outstanding at the close of business on the date
fixed for such determination plus the number of shares of Common
Stock which the aggregate of the offering price of the total
number of shares of Common Stocks offered for subscription or
purchase would purchase at such current market price, such
increase to become effective immediately after the opening of
business on the day following the date fixed for such
determination; provided, however, in the event that all the
shares of Common Stock offered for subscription or purchase are
not delivered upon the exercise of such rights or warrants, upon
the expiration of such rights or warrants the conversion rate
shall be readjusted to the conversion rate which would have been
in effect had the numerator and the denominator of the foregoing
fraction and the resulting adjustment been made based upon the
number of shares of Common Stock actually delivered upon the
exercise of such rights or warrants rather than upon the number
of shares of Common Stock offered for subscription or purchase.
For the purposes of this paragraph (b), the number of shares of
Common Stock at any time outstanding shall not include shares
held in the treasury of the Company.
c. In case the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock shares of its
capital stock (other than Common Stock), or assets (excluding
cash dividends paid out of the retained earnings of the Company)
or rights or warrants to subscribe or purchase (excluding those
referred to in paragraph (b) above) (hereinafter collectively
referred to as "Distributions on Common Stock"), then in each
such case, the Company shall deliver to the Holder the
Distribution on Common Stock to which the Holder would be
entitled if it had converted the Debentures for Common Stock
immediately prior to the record date for the purpose of
determining stockholders entitled to receive such Distribution
on Common Stock.
d. The reclassification (including any reclassification
upon a merger in which the Company is the continuing
corporation) of Common Stock into securities including other
than Common Stock (other than any reclassification upon a
consolidation or merger to which Subsection B(6) applies) shall
be deemed to involve (i) a distribution of such securities other
than Common Stock to all holders of Common Stock (and the
effective date of such reclassification shall be deemed to be
"the date fixed for the determination of stockholders entitled
to receive such distribution" and "the date fixed for such
determination" within the meaning of paragraph (e) of this
Section), and (ii) a subdivision or combination, as the case may
be, of the number of shares of Common Stock outstanding
immediately prior to such reclassification into the number of
shares of Common Stock outstanding immediately thereafter.
e. For the purpose of any computation under paragraphs
(b) and (c) of this Section, the current market price per share
of Common Stock on any date shall be deemed to be the average of
the daily closing prices for the thirty consecutive business
days selected by the Company commencing with the forty-fifth
business day before the day in question. The closing price for
each day shall be the last reported sales price regular way or,
in case no such reported sale takes place on such day, the
average of the reported closing bid and asked prices regular
way, in either case on the American Stock Exchange or if the
Common Stock is not listed or admitted to trading on such
Exchange, on the principal national securities exchange on which
the Common Stock is listed or admitted to trading or, if not
listed or admitted to trading on any national securities
exchange, on the National Association of Securities Dealers
Automated Quotations National Market System or, if the Common
Stock is not listed or admitted to trading on any national
securities exchange or quoted on such National Market System,
the average of the closing bid and asked prices in the over-the-
counter market as furnished by any New York Stock Exchange or
American Stock Exchange member firm selected from time to time
by the Company for that purpose. If the current market price
per share of Common Stock cannot be determined in accordance
with the above procedures under this paragraph (e), such current
market price shall be determined in good faith by the Board of
Directors of the Company.
f. No adjustment in the conversion rate shall be required
unless such adjustment would require an increase or decrease of
at least 1% of such rate; provided, however, that the Company
may make any such adjustment at its election and provided,
further, that any adjustments which by reason of this paragraph
(f) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All
calculations under this Section B shall be made to the nearest
cent or to the nearest one-hundredth of a share, as the case may
be. Anything in this Section B notwithstanding, the Company may
make such reductions in the conversion rate, in addition to
those required by this Section, as it considers to be advisable
in order that any event treated for Federal income tax purposes
as a dividend of stock or stock rights shall not be taxable to
the recipients.
g. Whenever the conversion rate is adjusted as herein
provided
(1) the Company shall compute the adjusted
conversion rate in accordance with paragraph (a); and
(2) notice stating that the conversion rate has
been adjusted and setting forth the adjusted
conversion rate shall forthwith be mailed to the
Holder.
h. For the purpose of this Section B(4), the term "Common
Stock" shall include any stock of any class of the Company which
has no preference in respect of dividends or of amounts payable
in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Company and which is not
subject to redemption by the Company. However, shares issuable
on conversion of shares of this Series shall include only shares
of the class designated as Common Stock of the Company as of
January 1, 1996, 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, however, that if
at any time there shall be more than one such resulting class,
the shares of each such class then so issuable shall be
substantially in the proportion which the total number of shares
of such class resulting from all such reclassifications bears to
the total number of shares of all such classes resulting from
all such reclassifications.
5. No Fractional Shares. No fractional shares of Common Stock
shall be issued upon conversion of this Debenture. If more than one
Debenture shall be surrendered for conversion at one time by the
Holder, the number of full shares which shall be issuable upon
conversion thereof shall be computed on the basis of the aggregate
principal amount of the Debentures or specified portions thereof so
surrendered. Instead of any fractional share of Common Stock which
would otherwise be issuable upon conversion of this Debenture or any
Debentures or specified portions thereof, the Company shall pay a
cash adjustment in respect of such fraction in amount equal to the
same fraction of the current market price per share of Common Stock
(as determined in accordance with Section B.4.(e) above) at the close
of business on the day of conversion.
6. Consolidation, Merger or Sale of Assets. In case of any
consolidation of the Company with, or merger of the Company into, any
other Person, (other than a merger which does not result in any
reclassification, conversion, exchange or cancellation of outstanding
shares of Common Stock of the Company) or any sale or transfer of all
or substantially all of the assets of the Company (whether such
assets are held by the Company directly or indirectly through its
Subsidiaries), the Person formed by such consolidation or resulting
from such merger or which acquires such assets, as the case may be,
shall execute and deliver to the Holder an instrument providing that
the Holder shall have the right thereafter, during the period this
Debenture shall be convertible to convert this Debenture only into
the kind and amount of securities, cash and other property receivable
upon such consolidation, merger, sale or transfer by a holder of the
number of shares of Common Stock of the Company into which this
Debenture might have been converted immediately prior to such
consolidation, merger, sale or transfer assuming such holder of
Common Stock of the Company (i) is not a Person with which the
Company consolidated or into which the Company merged or to which
such sale or transfer was made, as the case may be ("constituent
Person"), or an Affiliate of a constituent Person and (ii) failed to
exercise his rights of election, if any, as to the kind or amount of
securities, cash and other property receivable upon such
consolidation, merger, sale or transfer (provided that if the kind or
amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer is not the same for each
share of Common Stock of the Company held immediately prior to such
consolidation, merger, sale or transfer by other than a constituent
Person or an Affiliate thereof and in respect of which such rights of
election shall not have been exercised ("non-electing share") then
for the purpose of this subsection the kind and amount of securities,
cash and other property receivable upon such consolidation, merger,
sale or transfer by 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 instrument shall provide for adjustments
which, for events subsequent to the effective date of such
instrument, shall be as nearly equivalent as may be practicable to
the adjustments provided for in this Section. The above provisions
of this subsection shall similarly apply to successive
consolidations, mergers, sales or transfers.
7. Shares to be Reserved. The Company covenants that it will
at all times reserve and keep available out of its authorized Common
Stock, solely for the purpose of issue upon conversion of Debentures
as herein provided, such number of shares of Common Stock as shall
then be issuable upon the conversion of all outstanding Debentures.
The Company covenants that all shares of Common Stock which shall be
so issuable shall, when issued, be duly and validly issued and fully
paid and nonassessable.
8. Registration and Listing of Shares. The Company covenants
that if any shares of Common Stock, required to be reserved for
purposes of conversion of Debentures hereunder, require registration
with or approval of any governmental authority under any Federal or
State law before such shares may be issued upon conversion, the
Company will in good faith and as expeditiously as possible endeavor
to cause such shares to be duly registered or approved, as the case
may be. The Company further covenants that so long as the Common
Stock of the Company is listed on the American Stock Exchange or any
other national securities exchange, the Company will, if permitted by
the rules of such exchange, list and keep listed on such exchange,
upon official notice of issuance, all shares of Common Stock issuable
upon conversion of Debentures.
9. Taxes and Charges. The issuance of certificates for shares
of Common Stock upon the conversion of Debentures shall be made
without charge to the Holder for such certificates or for any tax in
respect of the issuance of such certificates or the securities
represented thereby, and such certificates shall be issued in the
name of, or in such names as may be directed by, the Holder;
provided, however, that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the
issuance and delivery of any such certificate in a name other than
that of the Holder, and the Company shall not be required to issue or
deliver such certificates unless or until the Person or Persons
requesting the issuance 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 C. Optional Redemption.
The Debentures are subject to redemption upon not less than 30
or more than 60 days' notice by mail, at any time, as a whole or in
part, at the election of the Company, at a redemption price equal to
100% of the principal amount, together with accrued interest to the
redemption date, but interest installments whose stated maturity is
on or prior to such redemption date will be payable to the Holder.
In the event of redemption or conversion of this Debenture is in
part only, a new Debenture or Debentures for the unredeemed or
unconverted portion hereof will be issued in the name of the Holder
upon the cancellation hereof.
Section D. Subordination.
1. Debentures Subordinate to Senior Indebtedness. The Company
covenants and agrees, and the Holder by its acceptance hereof
likewise covenants and agrees, that, to the extent and in the manner
hereinafter set forth in this Section, the indebtedness represented
by this Debenture and the payment of the principal of (and premium,
if any) and interest on this Debenture are hereby expressly made
subordinate and subject in right of payment to the prior payment in
full of all Senior Indebtedness.
2. Payment Over of Proceeds Upon Dissolution Etc. Upon any
distribution of assets of the Company in the event of (a) any
insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or other similar case or proceeding in
connection therewith, relative to the Company or to its creditors, as
such, or to its assets, or (b) any liquidation, dissolution or other
winding up of the Company, whether voluntary or involuntary and
whether or not involving insolvency or bankruptcy, or (c) any
assignment for the benefit of creditors or any other marshalling of
assets and liabilities of the Company, then and in such event the
holders of Senior Indebtedness shall be entitled to receive payment
in full of all amounts due or to become due on or in respect of all
Senior Indebtedness, or provision shall be made for such payment, in
money or money's worth, before the Holder is entitled to receive any
payment on account of principal of (or premium, if any) or interest
on the Debentures, and to that end the holders of Senior Indebtedness
shall be entitled to receive, for application to the payment thereof,
any payment or distribution of any kind or character, whether in
cash, property or securities, including any such payment or
distribution which may be payable or deliverable by reason of the
payment of any other indebtedness of the Company being subordinated
to the payment of the Debentures, which may be payable or deliverable
in respect of the Debentures in any such case, proceeding,
dissolution, liquidation or other winding up or event.
In the event that, notwithstanding the foregoing provisions of
this Subsection, the Holder shall have received any payment or
distribution of assets of the Company of any kind or character,
whether in cash, property or securities, including any such payment
or distribution which may be payable or deliverable by reason of the
payment of any other indebtedness of the Company being subordinated
to the payment of the Debentures, before all Senior Indebtedness is
paid in full or payment thereof provided for, and if such fact shall
then have been made known to the Holder, then and in such event such
payment or distribution shall be paid over or delivered forthwith to
the trustee in bankruptcy, receiver, liquidating trustee, custodian,
assignee, agent or other Person making payment or distribution of
assets of the Company for application to the payment of all Senior
Indebtedness remaining unpaid, to the extent necessary to pay all
Senior Indebtedness in full, after giving effect to any concurrent
payment or distribution to or for the holders of Senior Indebtedness.
For purposes of this Section only, 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 Subsection with respect to the Debentures to
the payment of all Senior Indebtedness which may at the time be
outstanding: provided, however, that (i) Senior Indebtedness is
assumed by the new corporation, if any, resulting from any such
reorganization or readjustment, and (ii) the rights of the holders of
the Senior Indebtedness 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 properties and assets
substantially as an entirety to another Person upon the terms and
conditions set forth in Section G shall not be deemed a dissolution,
winding up, liquidation, reorganization, assignment for the benefit
of creditors or marshalling of assets and liabilities of the Company
for the purposes of this Section if the corporation formed by such
consolidation or into which the Company is merged or the Person which
acquires by conveyance or transfer such properties and assets
substantially as a entirety, as the case may be, shall, as a part of
such consolidation, merger, conveyance or transfer, comply with the
conditions set forth in Section G.
3. Prior Payment to Senior Indebtedness Upon Acceleration of
Debentures. In the event that any of the Debentures are declared due
and payable before their Stated Maturity, then and in such event the
holders of Senior Indebtedness outstanding at the time such
Debentures so become due and payable shall be entitled to receive
payment in full of all amounts due or to become due on or in respect
of all such Senior Indebtedness, or provision shall be made for such
payment in money or money's worth, before the Holder is entitled to
receive any payment (including any payment which may be payable by
reason of the payment of any other indebtedness of the Company being
subordinated to the payment of the Debentures) by the Company on
account of the principal of (or premium, if any) or interest on the
Debentures or on account of the purchase or other acquisition of
Debentures.
In the event that, notwithstanding the foregoing, the Company
shall make any payment to the Holder prohibited by the foregoing
provisions of this Subsection, and if such facts shall then have been
made known to the Holder, then and in such event such payment shall
be paid over and delivered forthwith to the Company for the benefit
of the holders of Senior Indebtedness.
The provisions of this Section shall not apply to any payment
with respect to which Subsection 2 would be applicable.
4. No Payment When Newco Indebtedness in Default. (a) In the
event and during the continuation of any default in the payment of
principal (or premium, if any) or interest on any Newco Indebtedness
beyond any applicable grace period with respect thereto, or in the
event that any event of default with respect to any Newco
Indebtedness shall have occurred and be continuing permitting the
holders of such Newco Indebtedness (or a trustee on behalf of the
holders thereof) to declare such Newco Indebtedness due and payable
prior to the date on which it would otherwise have become due and
payable, unless and until such event of default shall have been cured
or waived or shall have ceased to exist and such acceleration shall
have been rescinded or annulled, or (b) in the event any judicial
proceeding shall be pending with respect to any such default in
payment or event of default, then no payment (including any payment
which may be payable by reason of the payment of any other
indebtedness of the Company being subordinated to the payment of the
Debentures) shall be made by the Company on account of principal of
(or premium, if any) or interest on the Debentures or on account of
the purchase or other acquisition of Debentures.
In the event that, notwithstanding the foregoing, the Company
shall make any payment to the Holder prohibited by the foregoing
provisions of this Subsection, and if such fact shall then have been
made known to the Holder, then and in such event such payment shall
be paid over and delivered forthwith to the Company for the benefit
of the holders of Newco Indebtedness.
The provisions of this Section shall not apply to any payment
with respect to which Subsection D(2) would be applicable.
5. Payment Permitted if No Default. Nothing contained in this
Section or elsewhere or in any of the Debentures shall prevent (x)
the Company, at any time except during the pendency of any case,
proceeding, dissolution, liquidation or other winding up, assignment
for the benefit of creditors or other marshalling of assets and
liabilities of the Company referred to in Subsection D(2) or under
the conditions described in Subsections D(3) or D(4), from making
payments at any time of principal of (and premium, if any) or
interest on the Debentures, or (y) the retention by the Holder of any
money deposited with it hereunder to the payment of or on account of
the principal of (and premium, if any) or interest on the Debentures
if, at the time of such retention the Holder did not have knowledge
that such payment would have been prohibited by the provisions of
this Section.
6. Subrogation to Rights of Holders of Senior Indebtedness.
Subject to the payment in full of all Senior Indebtedness, the Holder
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 Section to the rights of the holders of such
Senior Indebtedness to receive payments or distributions of cash,
property or securities applicable to the Senior Indebtedness until
the principal of (and premium, if any) and interest on the Debentures
shall be paid in full. For purposes of such subrogation, no payments
or distributions to the holders of the Senior Indebtedness of any
cash, property or securities to which the Holder would be entitled
except for the provisions of this Section, and no payments over
pursuant to the provisions of this Section to the Company or to the
holders of Senior Indebtedness by the Holder, shall, as between the
Company, its creditors other than holders of Senior Indebtedness and
the Holder, be deemed to be a payment or distribution by the Company
to or on account of the Debentures.
7. Provisions Solely to Define Relative Rights. The
provisions of this Section are and are intended solely for the
purpose of defining the relative rights of the Holder, on the one
hand, and the holders of Senior Indebtedness, on the other hand.
Nothing contained in this Section or elsewhere in this Debenture is
intended to or shall impair, as between the Company, its creditors
other than the holders of Senior Indebtedness and the Holder, the
obligation of the Company, which is absolute and unconditional, to
pay to the Holder the principal of (and premium, if any) and interest
on the Debenture as and when the same shall become due and payable in
accordance with their terms and which, subject to the rights under
this Section of the holders of Senior Indebtedness, is intended to
rank equally with all other general obligations of the Company, or is
intended to or shall affect the relative rights against the Company
of the Holder and creditors of the Company other than the holders of
Senior Indebtedness, nor shall anything herein or therein prevent the
Holder from exercising all remedies otherwise permitted by applicable
law upon default under this Debenture, subject to the rights, if any,
under this Section of the holders of Senior Indebtedness to receive
cash, property or securities otherwise payable or deliverable to the
Holder, and nothing herein shall prevent the conversion of this
Debenture (or any part thereof) in accordance with the terms hereof.
8. No Waiver of Subordination Provisions. No right of any
present or future holder of any Senior Indebtedness to enforce
subordination 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 Debenture, regardless of any
knowledge thereof any such holder may have or be otherwise charged
with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness may, at any time and
from time to time, without the consent of or notice to the Holder,
without incurring responsibility to the Holder and without impairing
or releasing the subordination provided in this Section or the
obligations hereunder of the Holder to the holders of Senior
Indebtedness, do any one or more of the following: (i) change the
manner, place or terms of payment or extend the time of payment of,
or renew or alter, Senior Indebtedness, or otherwise amend or
supplement in any manner Senior Indebtedness or any instrument
evidencing the same or any agreement under which Senior Indebtedness
is outstanding; (ii) sell, exchange, release otherwise or otherwise
deal with any property pledged, mortgaged or securing Senior
Indebtedness; (iii) release any Person liable in any manner for the
collection of Senior Indebtedness; and (iv) exercise or refrain from
exercising any rights against the Company and any other Person.
9. Notice to Holder. The Company shall give prompt written
notice to the Holder of any fact known to the Company which would
prohibit the making of any payment to the Holder in respect of the
Debentures. Failure to give such notice shall not affect the
subordination of the Debenture to Senior Indebtedness.
Notwithstanding the provisions of this Section or any other provision
of this Debenture, the Holder shall not be charged with knowledge of
the existence of any facts which would prohibit the making of any
payment to the Holder in respect of the Debenture, unless and until
the Holder shall have received written notice thereof from the
Company or a holder of Senior Indebtedness or from any trustee
therefor.
Section E. Optional Mandatory Repurchase.
1. Obligation to Repurchase.
a. Upon the occurrence of any Contingent Event, the
Holder shall have the right, at such Holder's option, to require
the Company to redeem this Debenture in whole or in part at a
repurchase price equal to the principal amount of this Debenture
so repurchased plus accrued and unpaid interest on the principal
amount of this Debenture so repurchased.
Such option under this Section E shall be exercised by written
notice to the Company under Section E.b. hereof given at any
time from and after the thirtieth (30th) day before such
Contingent Event through the thirtieth (30th) day after such
Contingent Event (or, if later, through the thirtieth (30th) day
after the Holder receives written notice from the Company of
such Contingent Event). Promptly (and in any event within ten
(10) days) after the occurrence of any Contingent Event, and not
more than thirty (30) days before such Contingent Event, the
Company shall given written notice to the Holder notifying such
Holder of the occurrence of such Contingent Event and informing
such Holder of its right to exercise an option to require a
repurchase under this Section E.
b. In order to exercise its rights to require a
repurchase under this Section E, the Holder shall send to the
Company a written notice demanding prepayment under this Section
E and specifying the date of such prepayment (which shall not be
less than fifteen (15) days after receipt of such notice by the
Company, but in no event earlier than such Contingent Event,
except that such date may be the same date as a Contingent Event
if requested by the Holder).
c. This obligation to repurchase is subject to the
restriction that the Company may not buy any Debenture at any
time when the subordination provisions of this Debenture would
not permit the Company to make a payment of principal, premium
or interest on the Debentures.
2. Certain Definitions. As used in this Section:
a. "Contingent Event" means any one or more of the
following events which shall occur subsequent to the date of
this Debenture:
(1) the Company shall convey, transfer or lease all
or substantially all of its assets (whether held directly
or indirectly through Subsidiaries) to any Persons (other
than to a Subsidiary of the Company);
(2) any Person (other than the Company), including a
"group" (within the meaning of Section 13(d) and 14(d)(2)
of the Securities Exchange Act of 1934, as amended) that
includes such Person, shall acquire, directly or
indirectly, beneficial ownership, in the aggregate, of (x)
50 percent or more of the Common Stock, or (y) securities
representing 50 percent or more of the combined voting
power of the Company's voting securities, in either case,
outstanding on the date immediately prior to the date of
the last such acquisition by such Person; or
(3) on any day (a "Calculation Date") (x) (A) the
Company shall distribute cash, securities or other
properties, including cash dividends (other than Common
Stock, or rights or warrants to acquire Common Stock or
preferred stock substantially equivalent to Common Stock)
to holders of Common Stock, whether by means of dividend,
reclassification, recapitalization or otherwise, or (B) the
Company shall acquire, directly or indirectly, beneficial
ownership of Common Stock; and (y) the sum of the
Applicable Percentages (as defined below) of all such
distributions and acquisitions which have occurred on the
Calculation Date and during the 365-day period immediately
preceding the Calculation Date shall exceed 30 percent.
b. "Applicable Percentage" means (x) In the case of each
distribution referred to in clause (3) above, the percentage
determined as of the Calculation Date of each such distribution
by dividing the aggregate fair market value (as determined in
good faith by the Board of Directors), of such distribution, by
the fair market value (based on the then current market price)
of all of the shares of Common Stock outstanding on the day
immediately prior to such Calculation Date; and (y) in the case
of each acquisition referred to in clause (3) above, the
percentage determined as of the Calculation Date of each such
acquisition by dividing all amounts expended by the Company
(such amounts, if other than in cash, as determined in good
faith by the Board of Directors), in connection with the
acquisition of any shares of Common Stock, by the fair market
value (based on the then current market price) of all of the
shares of Common Stock outstanding on the day immediately prior
to such Calculation Date.
Section F. Covenants.
1. Payment of Principal, Premium and Interest. The Company
will duly and punctually pay the principal of (and premium, if any)
and interest on this Debenture in accordance with the terms hereof.
2. Statement as to Compliance. The Company will deliver to
the Holder, within 120 days after the end of each fiscal year, an
Officers' Certificate stating, as to each signer thereof, that
a. a review of the activities of the Company and its
Subsidiaries during such year and of performance under this
Debenture has been made under his supervision, and
b. to the best of his knowledge, based on such review,
the Company has fulfilled all its obligations under this
Debenture throughout such year, or, if there has been a default
in the fulfillment of any such obligation, specifying each such
default known to him and the nature and status thereof.
3. Further Instruments and Acts. From time to time the
Company will, at its own expense and upon request of the Holder,
execute and deliver or cause to be executed and delivered such
further instruments and do such further acts as may reasonably be
necessary or desirable to carry out the purposes of this Debenture.
Section G. Consolidation, Merger, Conveyance, Transfer or Lease.
1. Company May Consolidate, etc. Only on Certain Terms. The
Company shall not consolidate with or merge into any other Person or
convey, transfer or lease its properties and assets substantially as
an entirety (whether such properties and assets are held by the
Company directly or through its Subsidiaries) to any Person, unless:
a. the Person formed by such consolidation or into which
the Company is merged or the Person which acquires by conveyance
or transfer, or which leases, the properties and assets of the
Company substantially as a entirety shall be a corporation
organized and existing under the laws of the United States of
America, any State thereof or the District of Columbia and shall
expressly assume, by an instrument, executed and delivered to
the Holder, in form satisfactory to the Holder, the due and
punctual payment of the principal of (and premium, if any) and
interest on this Debenture and the performance of every
obligation herein on the part of the Company to be performed or
observed and shall have provided for conversion rights in
accordance with Subsection (B)(6).
b. immediately after giving effect to such transaction,
no Event of Default, and no event which, after notice or lapse
of time or both, would become an Event of Default, shall have
happened and be continuing; and
c. the Company has delivered to the Holder an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and, if an
instrument is required hereunder in connection with such
transaction, such instrument comply with this Section and that
all conditions precedent herein provided for relating to such
transaction have been complied with.
2. Successor Corporation Substituted. Upon any consolidation
or merger by the Company with or into any other Person or any
conveyance, transfer or lease of the properties and assets of the
Company substantially as a entirety (whether such properties and
assets are held by the Company directly or through its Subsidiaries)
to any Person in accordance with Subsection (G)(1), the successor
corporation formed by such consolidation or into which the Company is
merged or to which such conveyance, transfer or lease is made shall
succeed to, and be substituted for, and may exercise every right and
power of the Company hereunder with the same effect as if such
successor corporation had been named as the Company herein, and
thereunder, except in the case of a lease to another Person, the
predecessor corporation shall be relieved of all obligations and
covenants under this Debenture.
Section H. Reports by Company. The Company shall mail to
the Holder, within 15 days after the Company is required to file the
same with the Commission, copies of the annual reports and of the
information, documents and other reports (or copies of such portions
of any of the foregoing as the Commission may from time to time by
rules and regulations prescribe) which the Company may be required to
file with the Commission pursuant to Section 13(a) or Section 15(d)
of the Securities Exchange Act of 1934, as amended; and, if the
Company is not required to file information, documents or reports
pursuant to either of said Sections, then it shall nonetheless mail
the same to the Holder as if it were required to do so by the
Commission.
Section I. Remedies.
1. Events of Default. "Event of Default," wherever used
herein, means any one of the following events (whatever the reason
for such Event of Default and whether it shall be occasioned by the
provisions of Section (B) or be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or
order of any court or any order, rule or regulation or any
administrative or governmental body):
a. default in the payment of any interest upon this
Debenture and any other Debenture issued to the Holder when it
becomes due and payable and continuance of such default for a
period of 10 days; or
b. default in the payment of the principal of (or
premium, if any, on) this Debenture and any other Debenture
issued to the Holder at its Maturity whether or not such payment
is prohibited by the subordination provisions of this Debenture
and continuance of such default for a period of 30 days; or
c. default in the performance, or breach, of any covenant
or warranty of the Company in this Debenture (other than a
covenant or warranty a default in whose performance or whose
breach is elsewhere in this Section specifically dealt with),
and continuance of such default or breach for a period of 30
days after there has been given, by registered or certified
mail, to the Company by the Holder a written notice specifying
such default or breach and requiring it to be remedied and
stating that such notice is a "Notice of Default" hereunder; or
d. the entry by a court having jurisdiction in the
premises of (A) a decree or order for relief in respect of the
Company in an involuntary case or proceeding under any
applicable Federal or state bankruptcy, insolvency,
reorganization or other similar law or (B) a decree or order
adjudging the Company a bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement,
adjustment or composition of or in respect of the Company under
any applicable Federal or state law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or of any substantial part of
its property, or ordering the winding up or liquidation of its
affairs, and the continuance of any such decree or order for
relief or any such other decree or order unstayed and in effect
for a period of 60 consecutive days; or
e. the commencement by the Company of a voluntary case or
proceeding under any applicable Federal or state bankruptcy,
insolvency, reorganization or other similar law or of any other
case or proceeding to be adjudicated a bankrupt or insolvent, or
the consent by it to the entry of a decree or order for relief
in respect of the Company in an involuntary case or proceeding
under any applicable Federal or state bankruptcy, insolvency,
reorganization or other similar law or to the commencement of
any bankruptcy or insolvency case or proceeding against it, or
the filing by it of a petition or answer or consent seeking
reorganization or relief under any applicable Federal or state
law, or the consent by it to the filing of such petition or to
the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator or similar
official of the Company or of any substantial part of its
property, or the making by it of an assignment for the benefit
of creditors, or the admission by it in writing of its inability
to pay its debts generally as they become due, or the taking of
corporate action by the Company in furtherance of any such
action.
2. Acceleration of Maturity; Rescission and Annulment. If any
Event of Default occurs and is continuing (other than an Event of
Default described in Subsections I(1)(d) and (e)), then and in every
such case the Holder may declare the principal and all accrued and
unpaid interest of all the Debentures issued to the Holder to be due
and payable immediately, by a notice in writing to the Company, and
upon any such declaration such principal shall become immediately due
and payable. If an Event of Default described in Subsections I(1)(d)
and (e) shall occur, then in every such case the unpaid principal
balance hereof and all accrued and unpaid interest shall
automatically become due and payable.
3. Collection of Indebtedness and Suits for Enforcement. The
Company covenants that if
a. default is made in the payment of any installment of
interest on any Debenture issued to the Holder when such
interest become due and payable and such default continues for a
period of 30 days, or
b. default is made in the payment of the principal of (or
premium, if any, on) any Debenture issued to the Holder at the
Maturity thereof,
the Company will, upon demand by the Holder, pay to it, the whole
amount then due and payable on such Debentures for principal (and
premium, if any) and interest, with interest upon the overdue
principal (and premium, if any) and, to the extent that payment of
such interest shall be legally enforceable, upon overdue installments
of interest, at the rate borne by the Debentures and, in addition
thereto, such further amount as shall be sufficient to cover the
costs and expenses of collection, including the reasonable
compensation, expenses and disbursements of the Holder, its agents
and counsel.
If the Company fails to pay such amounts forthwith upon such
demand, the Holder may institute a judicial proceeding for the
collection of the sums so due and unpaid, may prosecute such
proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon the Debentures and
collect the moneys adjudged or decreed to be payable in the manner
provided by law out of the property of the Company or any other
obligor upon the Debentures, wherever situated.
If an Event of Default occurs and is continuing, the Holder may
in its discretion proceed to protect and enforce its rights by such
appropriate judicial proceedings as it shall deem most effectual to
protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Debenture or in aid
of the exercise of any power granted herein, or to enforce any other
proper remedy.
4. Application of Money Collected. Subject to Section D, any
money collected by the Holder pursuant to this Section shall be
applied first to the payment of all fees, costs and expenses
(including attorneys fees and expenses) incurred by the Holder
(whether before or after judgment) in the collection of such sums and
second, to the payment of the amounts then due and unpaid for
principal of (and premium, if any) and interest on the Debentures in
respect of which or for the benefit of which such money or
Debentures, as the case may be, has been collected.
5. Unconditional Right of Holder to Receive Principal, Premium
and Interest and to Convert. Notwithstanding any other provision
herein, the Holder shall have the right, which is absolute and
unconditional, to receive payment of the principal of (and premium,
if any) and interest on this Debenture on the date when due (or, in
the case of redemption, on the Redemption Date) and to convert this
Debenture in accordance with Section B and to institute suit for the
enforcement of any such payment and right to convert.
6. Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Holder is intended to be exclusive
of any other right or remedy, and every right and remedy shall, to
the extent permitted by law, be cumulative and in addition to every
other right and remedy given hereunder or now or hereafter existing
at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or
remedy.
7. Delay or Omission Not Waiver. No delay or omission of the
Holder to exercise any right or remedy accruing upon any Event of
Default shall impair any such right or remedy or constitute a waiver
of any such Event of Default or an acquiescence therein. Every right
and remedy given by this Section or by law to the Holder may be
exercised from time to time, and as often as may be deemed expedient,
by the Holder.
8. Amendments; Governing Law etc.. This Debenture may be
amended only by a writing signed by the Company and the Holder. The
Article and Section headings herein are for convenience only and
shall not affect the construction hereof. All covenants and
agreements in this Debenture by the Company shall bind its successors
and assigns, whether so expressed or not. In case any provision in
this Debenture shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby. This Debenture
shall be governed by and construed in accordance with the laws of the
State of Wisconsin. If any action or proceeding shall be brought by
the Holder in order to enforce any right or remedy under this
Debenture, the Company hereby consents and submits to the
jurisdiction of the courts of the State of Wisconsin and of any
Federal court sitting in The City of Milwaukee, State of Wisconsin.
Any action or proceeding brought by the Company to enforce any right,
assert any claim or obtain any relief whatsoever in connection with
this Debenture shall be brought by the Company exclusively in the
courts of the State of Wisconsin or in any Federal court sitting in
The City of Milwaukee, State of Wisconsin.
No provision of this Debenture shall alter or impair the
obligation of the Company, which is absolute and unconditional, to
pay the principal of (and premium, if any) and interest on this
Debenture at the times, place and rate, and in the coin or currency
or with another debenture, herein prescribed or to convert this
Debenture as provided herein.
Debentures are exchangeable for a like aggregate principal
amount of Debentures of a different authorized denomination, as
requested by the Holder.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in
connection therewith.
9. Definitions. The following terms shall have the meanings
specified below:
"Affiliate" of any specified person means any other Person
directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of
this definition, "control" when used with respect to any specified Person
means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly
adopted by the Board of Directors and to be in full force and effect on
the date of such certification, and delivered to the Trustee.
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Securities Exchange Act
of 1934, or, if at any time after the execution of this instrument such
Commission is not existing and performing the duties now assigned to it
under the Trust Indenture Act, then the body performIng such duties at
such time.
"Common Stock" means all shares now or hereafter authorized of
the class of Common Stock of the Company currently authorized and stock of
any other class into which such shares may hereafter have been changed.
"Debentures" means this Debenture and all other Debentures of
the Company issued to the Holder.
"Event of Default" has the meaning specified in Section I.
"Interest Payment Date" means the Stated Maturity of a
installment of interest on the Debentures.
"Maturity" when used with respect to any Debenture means the
date on which the principal of such Debenture becomes due and payable as
therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
"Newco" means Newco, Inc., a Wisconsin corporation and any
successor thereto.
"Newco Indebtedness" means the principal, premium, if any, and
unpaid interest on indebtedness for money borrowed by Newco and guaranteed
by the Company (at any time and from time to time), whether outstanding on
the date hereof or hereafter, and all renewals, extensions and refundings
of any such Debt; provided, however, that the following shall not
constitute Newco Indebtedness: any Debt which by its terms refers
explicitly to the Debentures issued hereunder and states that such Debt
shall not be senior in right of payment thereto.
"Officers" Certificate" means a certificate signed by the
Chairman of the Board, the President or a Vice President, and by the
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary
of the Company, and delivered to the Holder.
"Opinion of Counsel" means a written opinion of counsel, who may
be counsel for the Company or other counsel acceptable to the Holder.
"Person" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated
organization or government or any agent or political subdivision thereof.
"Redemption Date," when used with respect to any Debenture to be
redeemed, means the date fixed for such redemption by or pursuant to this
Debenture.
"Redemption Price," when used with respect to any Debenture to
be redeemed, means the price at which it is to be redeemed pursuant to
this Debenture.
"Regular Record Date" for the interest payable on any Interest
Payment Date means the April 1st or the September 1st (whether or not a
Business Day), as the case may be, next preceding such Interest Payment
Date.
"Senior Indebtedness" means all Debts, obligations and
liabilities of the Company arising under the guarantee by the Company of
the Newco Indebtedness, whether such guarantee is outstanding on the date
hereof or hereafter, and all renewals, replacements and extensions
thereof.
"Stated Maturity," when used with respect to any Debenture or
any installment of interest thereon, means the date specified in such
Debenture as the fixed date on which the principal of such Debenture or
such installment of interest is due and payable.
"Subsidiary" means a corporation more than 50% of the
outstanding voting stock of which is owned, directly or indirectly, by the
Company or by one or more other Subsidiaries, or by the Company and one or
more other Subsidiaries. For the purposes of this definition, "voting
stock" means stock which ordinarily has voting power for the election of
directors, whether at all times or only so long as no senior class of
stock has such voting power by reason of any contingency.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed under its corporate seal.
SWING-N-SLIDE CORP.
By:/s/ Richard G. Mueller
Richard G. Mueller
President
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS
OF ANY STATE BY REASON OF SPECIFIC EXEMPTIONS UNDER THE PROVISIONS OF THE
AFOREMENTIONED ACT AND LAWS AND/OR RULES AND REGULATIONS PROMULGATED
THEREUNDER. ACCORDINGLY, THIS INSTRUMENT MAY NOT BE OFFERED FOR SALE,
SOLD, OR OTHERWISE TRANSFERRED EXCEPT UPON AN EFFECTIVE REGISTRATION OF
THE SECURITIES REPRESENTED BY THIS INSTRUMENT UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS, OR UPON
ACCEPTANCE BY THE ISSUER OF AN OPINION OF COUNSEL IN SUCH FORM AND BY SUCH
COUNSEL, OR OTHER DOCUMENTATION, AS SHALL BE SATISFACTORY TO COUNSEL FOR
THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
SWING-N-SLIDE CORP.
10% Convertible Subordinated Debenture due 2004
$9,429.51 October 15, 1996
Swing-N-Slide Corp., a corporation duly organized and existing
under the laws of Delaware, and its permitted successors and assigns
(herein called the "Company"), for value received, hereby promises to pay
to the order of James R. Rastetter, and his successors and assigns (the
"Holder"), the principal sum of NINE THOUSAND FOUR HUNDRED TWENTY-NINE and
51/100 DOLLARS ($9,429.51) on February 15, 2004, and to pay interest
thereon commencing April 15, 1997 and on April 15 and October 15, in each
year thereafter, at the rate of 10% per annum, until the principal hereof
is paid in full. Payment of the principal of (and premium, if any) and
interest on this Debenture will be made by check payable in money of the
United States of America that at the time of payment is legal tender for
payment of public and private debts, mailed to the Holder at 507 Apache
Drive, Janesville, Wisconsin, or such other address as may be designated
by the Holder; provided, however, that until February 15, 1999, at the
option of the Company, interest on this Debenture may be paid by the
issuance of an additional debenture, in the form of this Debenture, in the
principal amount of the interest so payable, dated the interest payment
date for such interest payment, with interest payable as provided herein
with a stated maturity of principal and interest as provided in this
Debenture and otherwise identical to this Debenture. Interest shall be
calculated based on a year composed of 365 days.
Section A. Securities Offering. If debentures are issued to
shareholders of the Company as contemplated by Section 4.8(c) of the
Transaction Agreement, dated January 4, 1996, between GreenGrass Holdings
and the Company, then contemporaneously with the closing of such offer
this Debenture may be exchanged, at the option of the Holder, for
debentures issued under the indenture entered into by the Company in
connection with such offer, at par plus any accrued and unpaid interest,
except that any such debentures issued to the Holder will continue to be
convertible at the Conversion Rate (as defined below) specified below.
Section B. Conversion Rights.
1. General. The Holder shall have the right at any time prior
to maturity, at its option, to convert the principal of this
Debenture (or any portion of the principal thereof which is $1.00 or
an integral multiple of $1.00) into fully paid and nonassessable
(except as otherwise provided by law) shares of Common Stock of the
Company at the rate of one share of Common Stock for each $4.80
principal amount of Debentures or, in case an adjustment to the
number of shares of Common Stock issuable for each $4.80 principal
amount of Debentures (the "Conversion Rate" or "rate") has taken
place pursuant to the provisions hereof, then at the rate as so
adjusted. Such right shall be exercised by the surrender of the
Debenture, the principal of which is so to be converted, to the
Company, accompanied by written notice that the Holder elects to
convert the Debenture or any portion thereof and specifying the name
or names (with address) in which a certificate or certificates for
Common Stock are to be issued. For convenience, the conversion of
all or a portion, as the case may be, of the principal of this
Debenture (and any other Debentures (including without limitation any
Debentures issued in lieu of interest in accordance with the first
paragraph of this Debenture)) into the Common Stock of the Company is
hereinafter sometimes referred to as the conversion of this
Debenture. If this Debenture is converted in part only, upon such
conversion the Company shall execute and deliver to the Holder a new
Debenture or Debentures of authorized denominations in an aggregate
principal amount equal to the unconverted portion of such Debenture.
This Debenture shall continue to be convertible, in whole or in
part, (i) even though the Company or the Holder may have given notice
of prepayment or redemption with respect to this Debenture or any
part thereof pursuant to Sections C or E hereof, so long as this
Debenture and the Holder's election to convert shall have been
delivered to the Company pursuant to this Section B prior to the date
fixed for such prepayment or redemption and (ii) whether or not a
mandatory, optional or mandatory optional prepayment or redemption
prior to the date fixed for such prepayment or redemption, is due on
this Debenture on any date following such time.
2. Issuance of Common Stock; Time of Conversion. As promptly
as practicable after the surrender, as herein provided, of this
Debenture for conversion, the Company shall deliver to the Holder a
certificate or certificates representing the number of fully paid and
nonassessable (except as otherwise provided by law) shares of Common
Stock of the Company into which this Debenture (or portion thereof)
may be converted together with payment in lieu of any fraction of a
share. Subject to the following provisions of this Debenture, such
conversion shall be deemed to have been made immediately prior to the
close of business on the date that this Debenture shall have been
surrendered for conversion (except that if such conversion is in
connection with an underwritten public offering of Common Stock, then
such conversion shall be deemed to have been effected upon such
surrender), so that the rights of the Holder as a Holder shall cease
with respect to this Debenture (or the portion thereof) being
converted at such time, and the Person or Persons entitled to receive
the shares of Common Stock deliverable upon conversion of this
Debenture shall be treated for all purposes as having become the
record holder or holders of such shares of Common Stock at such time,
and such conversion shall be at the conversion rate in effect at such
time; provided, however, that no such surrender on any date when the
stock transfer books of the Company shall be closed shall be
effective to constitute the Person or Persons entitled to receive the
shares of Common Stock deliverable upon such conversion as the record
holder or holders of such shares of Common Stock on such date, but
such surrender shall be effective to constitute the Person or Persons
entitled to receive such shares of Common Stock as the record holder
or holders thereof for all purposes immediately prior to the close of
business on the next succeeding day on which such stock transfer
books are open, and such conversion shall be deemed to have been made
at, and shall be made at the conversion rate in effect at, such time
on such next succeeding day.
If the last day for the exercise of the conversion right shall
not be a business day, then such conversion right may be exercised on
the next succeeding business day.
3. Payment of Accrued Interest. Within ten (10) days after
receipt of any Debenture and an election to convert all or a portion
of the principal amount of such Debenture pursuant to this Section B,
the Company will pay to the Holder any unpaid interest, accrued to
the date of conversion of such Debenture, on the principal amount so
converted.
4. Adjustment of Conversion Price. The conversion rate shall
be subject to adjustment as follows:
a. In case the Company shall (i) pay a dividend on Common
Stock in Common Stock, (ii) subdivide its outstanding shares of
Common Stock, or (iii) combine its outstanding shares of Common
Stock into a smaller number of shares, the conversion rate in
effect immediately prior thereto shall be adjusted retroactively
as provided below so that the Holder shall be entitled to
receive the number of shares of Common Stock of the Company
which it would have owned or have been entitled to receive after
the happening of any of the events described above had this
Debenture been converted immediately prior to the happening of
such event. An adjustment made pursuant to this paragraph (a)
shall become effective immediately after the record date in the
case of a dividend and shall become effective immediately after
the effective date in the case of a subdivision or combination.
b. In case the Company shall issue rights or warrants to
all holders of its Common Stock entitling them to subscribe for
or purchase shares of Common Stock at a price per share less
than the current market price per share (determined as provided
in paragraph (e) of this Section) of the Common Stock on the
date fixed for the determination of stockholders entitled to
receive such rights or warrants, the conversion rate in effect
at the opening of business on the day following the day fixed
for such determination shall be increased by multiplying such
conversion rate by a fraction of which the numerator shall be
the number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination plus the
number of shares of Common Stock so offered for subscription or
purchase and the denominator shall be the number of shares of
Common Stock outstanding at the close of business on the date
fixed for such determination plus the number of shares of Common
Stock which the aggregate of the offering price of the total
number of shares of Common Stocks offered for subscription or
purchase would purchase at such current market price, such
increase to become effective immediately after the opening of
business on the day following the date fixed for such
determination; provided, however, in the event that all the
shares of Common Stock offered for subscription or purchase are
not delivered upon the exercise of such rights or warrants, upon
the expiration of such rights or warrants the conversion rate
shall be readjusted to the conversion rate which would have been
in effect had the numerator and the denominator of the foregoing
fraction and the resulting adjustment been made based upon the
number of shares of Common Stock actually delivered upon the
exercise of such rights or warrants rather than upon the number
of shares of Common Stock offered for subscription or purchase.
For the purposes of this paragraph (b), the number of shares of
Common Stock at any time outstanding shall not include shares
held in the treasury of the Company.
c. In case the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock shares of its
capital stock (other than Common Stock), or assets (excluding
cash dividends paid out of the retained earnings of the Company)
or rights or warrants to subscribe or purchase (excluding those
referred to in paragraph (b) above) (hereinafter collectively
referred to as "Distributions on Common Stock"), then in each
such case, the Company shall deliver to the Holder the
Distribution on Common Stock to which the Holder would be
entitled if it had converted the Debentures for Common Stock
immediately prior to the record date for the purpose of
determining stockholders entitled to receive such Distribution
on Common Stock.
d. The reclassification (including any reclassification
upon a merger in which the Company is the continuing
corporation) of Common Stock into securities including other
than Common Stock (other than any reclassification upon a
consolidation or merger to which Subsection B(6) applies) shall
be deemed to involve (i) a distribution of such securities other
than Common Stock to all holders of Common Stock (and the
effective date of such reclassification shall be deemed to be
"the date fixed for the determination of stockholders entitled
to receive such distribution" and "the date fixed for such
determination" within the meaning of paragraph (e) of this
Section), and (ii) a subdivision or combination, as the case may
be, of the number of shares of Common Stock outstanding
immediately prior to such reclassification into the number of
shares of Common Stock outstanding immediately thereafter.
e. For the purpose of any computation under paragraphs
(b) and (c) of this Section, the current market price per share
of Common Stock on any date shall be deemed to be the average of
the daily closing prices for the thirty consecutive business
days selected by the Company commencing with the forty-fifth
business day before the day in question. The closing price for
each day shall be the last reported sales price regular way or,
in case no such reported sale takes place on such day, the
average of the reported closing bid and asked prices regular
way, in either case on the American Stock Exchange or if the
Common Stock is not listed or admitted to trading on such
Exchange, on the principal national securities exchange on which
the Common Stock is listed or admitted to trading or, if not
listed or admitted to trading on any national securities
exchange, on the National Association of Securities Dealers
Automated Quotations National Market System or, if the Common
Stock is not listed or admitted to trading on any national
securities exchange or quoted on such National Market System,
the average of the closing bid and asked prices in the over-the-
counter market as furnished by any New York Stock Exchange or
American Stock Exchange member firm selected from time to time
by the Company for that purpose. If the current market price
per share of Common Stock cannot be determined in accordance
with the above procedures under this paragraph (e), such current
market price shall be determined in good faith by the Board of
Directors of the Company.
f. No adjustment in the conversion rate shall be required
unless such adjustment would require an increase or decrease of
at least 1% of such rate; provided, however, that the Company
may make any such adjustment at its election and provided,
further, that any adjustments which by reason of this paragraph
(f) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All
calculations under this Section B shall be made to the nearest
cent or to the nearest one-hundredth of a share, as the case may
be. Anything in this Section B notwithstanding, the Company may
make such reductions in the conversion rate, in addition to
those required by this Section, as it considers to be advisable
in order that any event treated for Federal income tax purposes
as a dividend of stock or stock rights shall not be taxable to
the recipients.
g. Whenever the conversion rate is adjusted as herein
provided
(1) the Company shall compute the adjusted
conversion rate in accordance with paragraph (a); and
(2) notice stating that the conversion rate has
been adjusted and setting forth the adjusted
conversion rate shall forthwith be mailed to the
Holder.
h. For the purpose of this Section B(4), the term "Common
Stock" shall include any stock of any class of the Company which
has no preference in respect of dividends or of amounts payable
in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Company and which is not
subject to redemption by the Company. However, shares issuable
on conversion of shares of this Series shall include only shares
of the class designated as Common Stock of the Company as of
January 1, 1996, 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, however, that if
at any time there shall be more than one such resulting class,
the shares of each such class then so issuable shall be
substantially in the proportion which the total number of shares
of such class resulting from all such reclassifications bears to
the total number of shares of all such classes resulting from
all such reclassifications.
5. No Fractional Shares. No fractional shares of Common Stock
shall be issued upon conversion of this Debenture. If more than one
Debenture shall be surrendered for conversion at one time by the
Holder, the number of full shares which shall be issuable upon
conversion thereof shall be computed on the basis of the aggregate
principal amount of the Debentures or specified portions thereof so
surrendered. Instead of any fractional share of Common Stock which
would otherwise be issuable upon conversion of this Debenture or any
Debentures or specified portions thereof, the Company shall pay a
cash adjustment in respect of such fraction in amount equal to the
same fraction of the current market price per share of Common Stock
(as determined in accordance with Section B.4.(e) above) at the close
of business on the day of conversion.
6. Consolidation, Merger or Sale of Assets. In case of any
consolidation of the Company with, or merger of the Company into, any
other Person, (other than a merger which does not result in any
reclassification, conversion, exchange or cancellation of outstanding
shares of Common Stock of the Company) or any sale or transfer of all
or substantially all of the assets of the Company (whether such
assets are held by the Company directly or indirectly through its
Subsidiaries), the Person formed by such consolidation or resulting
from such merger or which acquires such assets, as the case may be,
shall execute and deliver to the Holder an instrument providing that
the Holder shall have the right thereafter, during the period this
Debenture shall be convertible to convert this Debenture only into
the kind and amount of securities, cash and other property receivable
upon such consolidation, merger, sale or transfer by a holder of the
number of shares of Common Stock of the Company into which this
Debenture might have been converted immediately prior to such
consolidation, merger, sale or transfer assuming such holder of
Common Stock of the Company (i) is not a Person with which the
Company consolidated or into which the Company merged or to which
such sale or transfer was made, as the case may be ("constituent
Person"), or an Affiliate of a constituent Person and (ii) failed to
exercise his rights of election, if any, as to the kind or amount of
securities, cash and other property receivable upon such
consolidation, merger, sale or transfer (provided that if the kind or
amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer is not the same for each
share of Common Stock of the Company held immediately prior to such
consolidation, merger, sale or transfer by other than a constituent
Person or an Affiliate thereof and in respect of which such rights of
election shall not have been exercised ("non-electing share") then
for the purpose of this subsection the kind and amount of securities,
cash and other property receivable upon such consolidation, merger,
sale or transfer by 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 instrument shall provide for adjustments
which, for events subsequent to the effective date of such
instrument, shall be as nearly equivalent as may be practicable to
the adjustments provided for in this Section. The above provisions
of this subsection shall similarly apply to successive
consolidations, mergers, sales or transfers.
7. Shares to be Reserved. The Company covenants that it will
at all times reserve and keep available out of its authorized Common
Stock, solely for the purpose of issue upon conversion of Debentures
as herein provided, such number of shares of Common Stock as shall
then be issuable upon the conversion of all outstanding Debentures.
The Company covenants that all shares of Common Stock which shall be
so issuable shall, when issued, be duly and validly issued and fully
paid and nonassessable.
8. Registration and Listing of Shares. The Company covenants
that if any shares of Common Stock, required to be reserved for
purposes of conversion of Debentures hereunder, require registration
with or approval of any governmental authority under any Federal or
State law before such shares may be issued upon conversion, the
Company will in good faith and as expeditiously as possible endeavor
to cause such shares to be duly registered or approved, as the case
may be. The Company further covenants that so long as the Common
Stock of the Company is listed on the American Stock Exchange or any
other national securities exchange, the Company will, if permitted by
the rules of such exchange, list and keep listed on such exchange,
upon official notice of issuance, all shares of Common Stock issuable
upon conversion of Debentures.
9. Taxes and Charges. The issuance of certificates for shares
of Common Stock upon the conversion of Debentures shall be made
without charge to the Holder for such certificates or for any tax in
respect of the issuance of such certificates or the securities
represented thereby, and such certificates shall be issued in the
name of, or in such names as may be directed by, the Holder;
provided, however, that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the
issuance and delivery of any such certificate in a name other than
that of the Holder, and the Company shall not be required to issue or
deliver such certificates unless or until the Person or Persons
requesting the issuance 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 C. Optional Redemption.
The Debentures are subject to redemption upon not less than 30
or more than 60 days' notice by mail, at any time, as a whole or in
part, at the election of the Company, at a redemption price equal to
100% of the principal amount, together with accrued interest to the
redemption date, but interest installments whose stated maturity is
on or prior to such redemption date will be payable to the Holder.
In the event of redemption or conversion of this Debenture is in
part only, a new Debenture or Debentures for the unredeemed or
unconverted portion hereof will be issued in the name of the Holder
upon the cancellation hereof.
Section D. Subordination.
1. Debentures Subordinate to Senior Indebtedness. The Company
covenants and agrees, and the Holder by its acceptance hereof
likewise covenants and agrees, that, to the extent and in the manner
hereinafter set forth in this Section, the indebtedness represented
by this Debenture and the payment of the principal of (and premium,
if any) and interest on this Debenture are hereby expressly made
subordinate and subject in right of payment to the prior payment in
full of all Senior Indebtedness.
2. Payment Over of Proceeds Upon Dissolution Etc. Upon any
distribution of assets of the Company in the event of (a) any
insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or other similar case or proceeding in
connection therewith, relative to the Company or to its creditors, as
such, or to its assets, or (b) any liquidation, dissolution or other
winding up of the Company, whether voluntary or involuntary and
whether or not involving insolvency or bankruptcy, or (c) any
assignment for the benefit of creditors or any other marshalling of
assets and liabilities of the Company, then and in such event the
holders of Senior Indebtedness shall be entitled to receive payment
in full of all amounts due or to become due on or in respect of all
Senior Indebtedness, or provision shall be made for such payment, in
money or money's worth, before the Holder is entitled to receive any
payment on account of principal of (or premium, if any) or interest
on the Debentures, and to that end the holders of Senior Indebtedness
shall be entitled to receive, for application to the payment thereof,
any payment or distribution of any kind or character, whether in
cash, property or securities, including any such payment or
distribution which may be payable or deliverable by reason of the
payment of any other indebtedness of the Company being subordinated
to the payment of the Debentures, which may be payable or deliverable
in respect of the Debentures in any such case, proceeding,
dissolution, liquidation or other winding up or event.
In the event that, notwithstanding the foregoing provisions of
this Subsection, the Holder shall have received any payment or
distribution of assets of the Company of any kind or character,
whether in cash, property or securities, including any such payment
or distribution which may be payable or deliverable by reason of the
payment of any other indebtedness of the Company being subordinated
to the payment of the Debentures, before all Senior Indebtedness is
paid in full or payment thereof provided for, and if such fact shall
then have been made known to the Holder, then and in such event such
payment or distribution shall be paid over or delivered forthwith to
the trustee in bankruptcy, receiver, liquidating trustee, custodian,
assignee, agent or other Person making payment or distribution of
assets of the Company for application to the payment of all Senior
Indebtedness remaining unpaid, to the extent necessary to pay all
Senior Indebtedness in full, after giving effect to any concurrent
payment or distribution to or for the holders of Senior Indebtedness.
For purposes of this Section only, 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 Subsection with respect to the Debentures to
the payment of all Senior Indebtedness which may at the time be
outstanding: provided, however, that (i) Senior Indebtedness is
assumed by the new corporation, if any, resulting from any such
reorganization or readjustment, and (ii) the rights of the holders of
the Senior Indebtedness 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 properties and assets
substantially as an entirety to another Person upon the terms and
conditions set forth in Section G shall not be deemed a dissolution,
winding up, liquidation, reorganization, assignment for the benefit
of creditors or marshalling of assets and liabilities of the Company
for the purposes of this Section if the corporation formed by such
consolidation or into which the Company is merged or the Person which
acquires by conveyance or transfer such properties and assets
substantially as a entirety, as the case may be, shall, as a part of
such consolidation, merger, conveyance or transfer, comply with the
conditions set forth in Section G.
3. Prior Payment to Senior Indebtedness Upon Acceleration of
Debentures. In the event that any of the Debentures are declared due
and payable before their Stated Maturity, then and in such event the
holders of Senior Indebtedness outstanding at the time such
Debentures so become due and payable shall be entitled to receive
payment in full of all amounts due or to become due on or in respect
of all such Senior Indebtedness, or provision shall be made for such
payment in money or money's worth, before the Holder is entitled to
receive any payment (including any payment which may be payable by
reason of the payment of any other indebtedness of the Company being
subordinated to the payment of the Debentures) by the Company on
account of the principal of (or premium, if any) or interest on the
Debentures or on account of the purchase or other acquisition of
Debentures.
In the event that, notwithstanding the foregoing, the Company
shall make any payment to the Holder prohibited by the foregoing
provisions of this Subsection, and if such facts shall then have been
made known to the Holder, then and in such event such payment shall
be paid over and delivered forthwith to the Company for the benefit
of the holders of Senior Indebtedness.
The provisions of this Section shall not apply to any payment
with respect to which Subsection 2 would be applicable.
4. No Payment When Newco Indebtedness in Default. (a) In the
event and during the continuation of any default in the payment of
principal (or premium, if any) or interest on any Newco Indebtedness
beyond any applicable grace period with respect thereto, or in the
event that any event of default with respect to any Newco
Indebtedness shall have occurred and be continuing permitting the
holders of such Newco Indebtedness (or a trustee on behalf of the
holders thereof) to declare such Newco Indebtedness due and payable
prior to the date on which it would otherwise have become due and
payable, unless and until such event of default shall have been cured
or waived or shall have ceased to exist and such acceleration shall
have been rescinded or annulled, or (b) in the event any judicial
proceeding shall be pending with respect to any such default in
payment or event of default, then no payment (including any payment
which may be payable by reason of the payment of any other
indebtedness of the Company being subordinated to the payment of the
Debentures) shall be made by the Company on account of principal of
(or premium, if any) or interest on the Debentures or on account of
the purchase or other acquisition of Debentures.
In the event that, notwithstanding the foregoing, the Company
shall make any payment to the Holder prohibited by the foregoing
provisions of this Subsection, and if such fact shall then have been
made known to the Holder, then and in such event such payment shall
be paid over and delivered forthwith to the Company for the benefit
of the holders of Newco Indebtedness.
The provisions of this Section shall not apply to any payment
with respect to which Subsection D(2) would be applicable.
5. Payment Permitted if No Default. Nothing contained in this
Section or elsewhere or in any of the Debentures shall prevent (x)
the Company, at any time except during the pendency of any case,
proceeding, dissolution, liquidation or other winding up, assignment
for the benefit of creditors or other marshalling of assets and
liabilities of the Company referred to in Subsection D(2) or under
the conditions described in Subsections D(3) or D(4), from making
payments at any time of principal of (and premium, if any) or
interest on the Debentures, or (y) the retention by the Holder of any
money deposited with it hereunder to the payment of or on account of
the principal of (and premium, if any) or interest on the Debentures
if, at the time of such retention the Holder did not have knowledge
that such payment would have been prohibited by the provisions of
this Section.
6. Subrogation to Rights of Holders of Senior Indebtedness.
Subject to the payment in full of all Senior Indebtedness, the Holder
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 Section to the rights of the holders of such
Senior Indebtedness to receive payments or distributions of cash,
property or securities applicable to the Senior Indebtedness until
the principal of (and premium, if any) and interest on the Debentures
shall be paid in full. For purposes of such subrogation, no payments
or distributions to the holders of the Senior Indebtedness of any
cash, property or securities to which the Holder would be entitled
except for the provisions of this Section, and no payments over
pursuant to the provisions of this Section to the Company or to the
holders of Senior Indebtedness by the Holder, shall, as between the
Company, its creditors other than holders of Senior Indebtedness and
the Holder, be deemed to be a payment or distribution by the Company
to or on account of the Debentures.
7. Provisions Solely to Define Relative Rights. The
provisions of this Section are and are intended solely for the
purpose of defining the relative rights of the Holder, on the one
hand, and the holders of Senior Indebtedness, on the other hand.
Nothing contained in this Section or elsewhere in this Debenture is
intended to or shall impair, as between the Company, its creditors
other than the holders of Senior Indebtedness and the Holder, the
obligation of the Company, which is absolute and unconditional, to
pay to the Holder the principal of (and premium, if any) and interest
on the Debenture as and when the same shall become due and payable in
accordance with their terms and which, subject to the rights under
this Section of the holders of Senior Indebtedness, is intended to
rank equally with all other general obligations of the Company, or is
intended to or shall affect the relative rights against the Company
of the Holder and creditors of the Company other than the holders of
Senior Indebtedness, nor shall anything herein or therein prevent the
Holder from exercising all remedies otherwise permitted by applicable
law upon default under this Debenture, subject to the rights, if any,
under this Section of the holders of Senior Indebtedness to receive
cash, property or securities otherwise payable or deliverable to the
Holder, and nothing herein shall prevent the conversion of this
Debenture (or any part thereof) in accordance with the terms hereof.
8. No Waiver of Subordination Provisions. No right of any
present or future holder of any Senior Indebtedness to enforce
subordination 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 Debenture, regardless of any
knowledge thereof any such holder may have or be otherwise charged
with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness may, at any time and
from time to time, without the consent of or notice to the Holder,
without incurring responsibility to the Holder and without impairing
or releasing the subordination provided in this Section or the
obligations hereunder of the Holder to the holders of Senior
Indebtedness, do any one or more of the following: (i) change the
manner, place or terms of payment or extend the time of payment of,
or renew or alter, Senior Indebtedness, or otherwise amend or
supplement in any manner Senior Indebtedness or any instrument
evidencing the same or any agreement under which Senior Indebtedness
is outstanding; (ii) sell, exchange, release otherwise or otherwise
deal with any property pledged, mortgaged or securing Senior
Indebtedness; (iii) release any Person liable in any manner for the
collection of Senior Indebtedness; and (iv) exercise or refrain from
exercising any rights against the Company and any other Person.
9. Notice to Holder. The Company shall give prompt written
notice to the Holder of any fact known to the Company which would
prohibit the making of any payment to the Holder in respect of the
Debentures. Failure to give such notice shall not affect the
subordination of the Debenture to Senior Indebtedness.
Notwithstanding the provisions of this Section or any other provision
of this Debenture, the Holder shall not be charged with knowledge of
the existence of any facts which would prohibit the making of any
payment to the Holder in respect of the Debenture, unless and until
the Holder shall have received written notice thereof from the
Company or a holder of Senior Indebtedness or from any trustee
therefor.
Section E. Optional Mandatory Repurchase.
1. Obligation to Repurchase.
a. Upon the occurrence of any Contingent Event, the
Holder shall have the right, at such Holder's option, to require
the Company to redeem this Debenture in whole or in part at a
repurchase price equal to the principal amount of this Debenture
so repurchased plus accrued and unpaid interest on the principal
amount of this Debenture so repurchased.
Such option under this Section E shall be exercised by written
notice to the Company under Section E.b. hereof given at any
time from and after the thirtieth (30th) day before such
Contingent Event through the thirtieth (30th) day after such
Contingent Event (or, if later, through the thirtieth (30th) day
after the Holder receives written notice from the Company of
such Contingent Event). Promptly (and in any event within ten
(10) days) after the occurrence of any Contingent Event, and not
more than thirty (30) days before such Contingent Event, the
Company shall given written notice to the Holder notifying such
Holder of the occurrence of such Contingent Event and informing
such Holder of its right to exercise an option to require a
repurchase under this Section E.
b. In order to exercise its rights to require a
repurchase under this Section E, the Holder shall send to the
Company a written notice demanding prepayment under this Section
E and specifying the date of such prepayment (which shall not be
less than fifteen (15) days after receipt of such notice by the
Company, but in no event earlier than such Contingent Event,
except that such date may be the same date as a Contingent Event
if requested by the Holder).
c. This obligation to repurchase is subject to the
restriction that the Company may not buy any Debenture at any
time when the subordination provisions of this Debenture would
not permit the Company to make a payment of principal, premium
or interest on the Debentures.
2. Certain Definitions. As used in this Section:
a. "Contingent Event" means any one or more of the
following events which shall occur subsequent to the date of
this Debenture:
(1) the Company shall convey, transfer or lease all
or substantially all of its assets (whether held directly
or indirectly through Subsidiaries) to any Persons (other
than to a Subsidiary of the Company);
(2) any Person (other than the Company), including a
"group" (within the meaning of Section 13(d) and 14(d)(2)
of the Securities Exchange Act of 1934, as amended) that
includes such Person, shall acquire, directly or
indirectly, beneficial ownership, in the aggregate, of (x)
50 percent or more of the Common Stock, or (y) securities
representing 50 percent or more of the combined voting
power of the Company's voting securities, in either case,
outstanding on the date immediately prior to the date of
the last such acquisition by such Person; or
(3) on any day (a "Calculation Date") (x) (A) the
Company shall distribute cash, securities or other
properties, including cash dividends (other than Common
Stock, or rights or warrants to acquire Common Stock or
preferred stock substantially equivalent to Common Stock)
to holders of Common Stock, whether by means of dividend,
reclassification, recapitalization or otherwise, or (B) the
Company shall acquire, directly or indirectly, beneficial
ownership of Common Stock; and (y) the sum of the
Applicable Percentages (as defined below) of all such
distributions and acquisitions which have occurred on the
Calculation Date and during the 365-day period immediately
preceding the Calculation Date shall exceed 30 percent.
b. "Applicable Percentage" means (x) In the case of each
distribution referred to in clause (3) above, the percentage
determined as of the Calculation Date of each such distribution
by dividing the aggregate fair market value (as determined in
good faith by the Board of Directors), of such distribution, by
the fair market value (based on the then current market price)
of all of the shares of Common Stock outstanding on the day
immediately prior to such Calculation Date; and (y) in the case
of each acquisition referred to in clause (3) above, the
percentage determined as of the Calculation Date of each such
acquisition by dividing all amounts expended by the Company
(such amounts, if other than in cash, as determined in good
faith by the Board of Directors), in connection with the
acquisition of any shares of Common Stock, by the fair market
value (based on the then current market price) of all of the
shares of Common Stock outstanding on the day immediately prior
to such Calculation Date.
Section F. Covenants.
1. Payment of Principal, Premium and Interest. The Company
will duly and punctually pay the principal of (and premium, if any)
and interest on this Debenture in accordance with the terms hereof.
2. Statement as to Compliance. The Company will deliver to
the Holder, within 120 days after the end of each fiscal year, an
Officers' Certificate stating, as to each signer thereof, that
a. a review of the activities of the Company and its
Subsidiaries during such year and of performance under this
Debenture has been made under his supervision, and
b. to the best of his knowledge, based on such review,
the Company has fulfilled all its obligations under this
Debenture throughout such year, or, if there has been a default
in the fulfillment of any such obligation, specifying each such
default known to him and the nature and status thereof.
3. Further Instruments and Acts. From time to time the
Company will, at its own expense and upon request of the Holder,
execute and deliver or cause to be executed and delivered such
further instruments and do such further acts as may reasonably be
necessary or desirable to carry out the purposes of this Debenture.
Section G. Consolidation, Merger, Conveyance, Transfer or Lease.
1. Company May Consolidate, etc. Only on Certain Terms. The
Company shall not consolidate with or merge into any other Person or
convey, transfer or lease its properties and assets substantially as
an entirety (whether such properties and assets are held by the
Company directly or through its Subsidiaries) to any Person, unless:
a. the Person formed by such consolidation or into which
the Company is merged or the Person which acquires by conveyance
or transfer, or which leases, the properties and assets of the
Company substantially as a entirety shall be a corporation
organized and existing under the laws of the United States of
America, any State thereof or the District of Columbia and shall
expressly assume, by an instrument, executed and delivered to
the Holder, in form satisfactory to the Holder, the due and
punctual payment of the principal of (and premium, if any) and
interest on this Debenture and the performance of every
obligation herein on the part of the Company to be performed or
observed and shall have provided for conversion rights in
accordance with Subsection (B)(6).
b. immediately after giving effect to such transaction,
no Event of Default, and no event which, after notice or lapse
of time or both, would become an Event of Default, shall have
happened and be continuing; and
c. the Company has delivered to the Holder an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and, if an
instrument is required hereunder in connection with such
transaction, such instrument comply with this Section and that
all conditions precedent herein provided for relating to such
transaction have been complied with.
2. Successor Corporation Substituted. Upon any consolidation
or merger by the Company with or into any other Person or any
conveyance, transfer or lease of the properties and assets of the
Company substantially as a entirety (whether such properties and
assets are held by the Company directly or through its Subsidiaries)
to any Person in accordance with Subsection (G)(1), the successor
corporation formed by such consolidation or into which the Company is
merged or to which such conveyance, transfer or lease is made shall
succeed to, and be substituted for, and may exercise every right and
power of the Company hereunder with the same effect as if such
successor corporation had been named as the Company herein, and
thereunder, except in the case of a lease to another Person, the
predecessor corporation shall be relieved of all obligations and
covenants under this Debenture.
Section H. Reports by Company. The Company shall mail to
the Holder, within 15 days after the Company is required to file the
same with the Commission, copies of the annual reports and of the
information, documents and other reports (or copies of such portions
of any of the foregoing as the Commission may from time to time by
rules and regulations prescribe) which the Company may be required to
file with the Commission pursuant to Section 13(a) or Section 15(d)
of the Securities Exchange Act of 1934, as amended; and, if the
Company is not required to file information, documents or reports
pursuant to either of said Sections, then it shall nonetheless mail
the same to the Holder as if it were required to do so by the
Commission.
Section I. Remedies.
1. Events of Default. "Event of Default," wherever used
herein, means any one of the following events (whatever the reason
for such Event of Default and whether it shall be occasioned by the
provisions of Section (B) or be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or
order of any court or any order, rule or regulation or any
administrative or governmental body):
a. default in the payment of any interest upon this
Debenture and any other Debenture issued to the Holder when it
becomes due and payable and continuance of such default for a
period of 10 days; or
b. default in the payment of the principal of (or
premium, if any, on) this Debenture and any other Debenture
issued to the Holder at its Maturity whether or not such payment
is prohibited by the subordination provisions of this Debenture
and continuance of such default for a period of 30 days; or
c. default in the performance, or breach, of any covenant
or warranty of the Company in this Debenture (other than a
covenant or warranty a default in whose performance or whose
breach is elsewhere in this Section specifically dealt with),
and continuance of such default or breach for a period of 30
days after there has been given, by registered or certified
mail, to the Company by the Holder a written notice specifying
such default or breach and requiring it to be remedied and
stating that such notice is a "Notice of Default" hereunder; or
d. the entry by a court having jurisdiction in the
premises of (A) a decree or order for relief in respect of the
Company in an involuntary case or proceeding under any
applicable Federal or state bankruptcy, insolvency,
reorganization or other similar law or (B) a decree or order
adjudging the Company a bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement,
adjustment or composition of or in respect of the Company under
any applicable Federal or state law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or of any substantial part of
its property, or ordering the winding up or liquidation of its
affairs, and the continuance of any such decree or order for
relief or any such other decree or order unstayed and in effect
for a period of 60 consecutive days; or
e. the commencement by the Company of a voluntary case or
proceeding under any applicable Federal or state bankruptcy,
insolvency, reorganization or other similar law or of any other
case or proceeding to be adjudicated a bankrupt or insolvent, or
the consent by it to the entry of a decree or order for relief
in respect of the Company in an involuntary case or proceeding
under any applicable Federal or state bankruptcy, insolvency,
reorganization or other similar law or to the commencement of
any bankruptcy or insolvency case or proceeding against it, or
the filing by it of a petition or answer or consent seeking
reorganization or relief under any applicable Federal or state
law, or the consent by it to the filing of such petition or to
the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator or similar
official of the Company or of any substantial part of its
property, or the making by it of an assignment for the benefit
of creditors, or the admission by it in writing of its inability
to pay its debts generally as they become due, or the taking of
corporate action by the Company in furtherance of any such
action.
2. Acceleration of Maturity; Rescission and Annulment. If any
Event of Default occurs and is continuing (other than an Event of
Default described in Subsections I(1)(d) and (e)), then and in every
such case the Holder may declare the principal and all accrued and
unpaid interest of all the Debentures issued to the Holder to be due
and payable immediately, by a notice in writing to the Company, and
upon any such declaration such principal shall become immediately due
and payable. If an Event of Default described in Subsections I(1)(d)
and (e) shall occur, then in every such case the unpaid principal
balance hereof and all accrued and unpaid interest shall
automatically become due and payable.
3. Collection of Indebtedness and Suits for Enforcement. The
Company covenants that if
a. default is made in the payment of any installment of
interest on any Debenture issued to the Holder when such
interest become due and payable and such default continues for a
period of 30 days, or
b. default is made in the payment of the principal of (or
premium, if any, on) any Debenture issued to the Holder at the
Maturity thereof,
the Company will, upon demand by the Holder, pay to it, the whole
amount then due and payable on such Debentures for principal (and
premium, if any) and interest, with interest upon the overdue
principal (and premium, if any) and, to the extent that payment of
such interest shall be legally enforceable, upon overdue installments
of interest, at the rate borne by the Debentures and, in addition
thereto, such further amount as shall be sufficient to cover the
costs and expenses of collection, including the reasonable
compensation, expenses and disbursements of the Holder, its agents
and counsel.
If the Company fails to pay such amounts forthwith upon such
demand, the Holder may institute a judicial proceeding for the
collection of the sums so due and unpaid, may prosecute such
proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon the Debentures and
collect the moneys adjudged or decreed to be payable in the manner
provided by law out of the property of the Company or any other
obligor upon the Debentures, wherever situated.
If an Event of Default occurs and is continuing, the Holder may
in its discretion proceed to protect and enforce its rights by such
appropriate judicial proceedings as it shall deem most effectual to
protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Debenture or in aid
of the exercise of any power granted herein, or to enforce any other
proper remedy.
4. Application of Money Collected. Subject to Section D, any
money collected by the Holder pursuant to this Section shall be
applied first to the payment of all fees, costs and expenses
(including attorneys fees and expenses) incurred by the Holder
(whether before or after judgment) in the collection of such sums and
second, to the payment of the amounts then due and unpaid for
principal of (and premium, if any) and interest on the Debentures in
respect of which or for the benefit of which such money or
Debentures, as the case may be, has been collected.
5. Unconditional Right of Holder to Receive Principal, Premium
and Interest and to Convert. Notwithstanding any other provision
herein, the Holder shall have the right, which is absolute and
unconditional, to receive payment of the principal of (and premium,
if any) and interest on this Debenture on the date when due (or, in
the case of redemption, on the Redemption Date) and to convert this
Debenture in accordance with Section B and to institute suit for the
enforcement of any such payment and right to convert.
6. Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Holder is intended to be exclusive
of any other right or remedy, and every right and remedy shall, to
the extent permitted by law, be cumulative and in addition to every
other right and remedy given hereunder or now or hereafter existing
at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or
remedy.
7. Delay or Omission Not Waiver. No delay or omission of the
Holder to exercise any right or remedy accruing upon any Event of
Default shall impair any such right or remedy or constitute a waiver
of any such Event of Default or an acquiescence therein. Every right
and remedy given by this Section or by law to the Holder may be
exercised from time to time, and as often as may be deemed expedient,
by the Holder.
8. Amendments; Governing Law etc.. This Debenture may be
amended only by a writing signed by the Company and the Holder. The
Article and Section headings herein are for convenience only and
shall not affect the construction hereof. All covenants and
agreements in this Debenture by the Company shall bind its successors
and assigns, whether so expressed or not. In case any provision in
this Debenture shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby. This Debenture
shall be governed by and construed in accordance with the laws of the
State of Wisconsin. If any action or proceeding shall be brought by
the Holder in order to enforce any right or remedy under this
Debenture, the Company hereby consents and submits to the
jurisdiction of the courts of the State of Wisconsin and of any
Federal court sitting in The City of Milwaukee, State of Wisconsin.
Any action or proceeding brought by the Company to enforce any right,
assert any claim or obtain any relief whatsoever in connection with
this Debenture shall be brought by the Company exclusively in the
courts of the State of Wisconsin or in any Federal court sitting in
The City of Milwaukee, State of Wisconsin.
No provision of this Debenture shall alter or impair the
obligation of the Company, which is absolute and unconditional, to
pay the principal of (and premium, if any) and interest on this
Debenture at the times, place and rate, and in the coin or currency
or with another debenture, herein prescribed or to convert this
Debenture as provided herein.
Debentures are exchangeable for a like aggregate principal
amount of Debentures of a different authorized denomination, as
requested by the Holder.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in
connection therewith.
9. Definitions. The following terms shall have the meanings
specified below:
"Affiliate" of any specified person means any other Person
directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of
this definition, "control" when used with respect to any specified Person
means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly
adopted by the Board of Directors and to be in full force and effect on
the date of such certification, and delivered to the Trustee.
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Securities Exchange Act
of 1934, or, if at any time after the execution of this instrument such
Commission is not existing and performing the duties now assigned to it
under the Trust Indenture Act, then the body performIng such duties at
such time.
"Common Stock" means all shares now or hereafter authorized of
the class of Common Stock of the Company currently authorized and stock of
any other class into which such shares may hereafter have been changed.
"Debentures" means this Debenture and all other Debentures of
the Company issued to the Holder.
"Event of Default" has the meaning specified in Section I.
"Interest Payment Date" means the Stated Maturity of a
installment of interest on the Debentures.
"Maturity" when used with respect to any Debenture means the
date on which the principal of such Debenture becomes due and payable as
therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
"Newco" means Newco, Inc., a Wisconsin corporation and any
successor thereto.
"Newco Indebtedness" means the principal, premium, if any, and
unpaid interest on indebtedness for money borrowed by Newco and guaranteed
by the Company (at any time and from time to time), whether outstanding on
the date hereof or hereafter, and all renewals, extensions and refundings
of any such Debt; provided, however, that the following shall not
constitute Newco Indebtedness: any Debt which by its terms refers
explicitly to the Debentures issued hereunder and states that such Debt
shall not be senior in right of payment thereto.
"Officers" Certificate" means a certificate signed by the
Chairman of the Board, the President or a Vice President, and by the
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary
of the Company, and delivered to the Holder.
"Opinion of Counsel" means a written opinion of counsel, who may
be counsel for the Company or other counsel acceptable to the Holder.
"Person" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated
organization or government or any agent or political subdivision thereof.
"Redemption Date," when used with respect to any Debenture to be
redeemed, means the date fixed for such redemption by or pursuant to this
Debenture.
"Redemption Price," when used with respect to any Debenture to
be redeemed, means the price at which it is to be redeemed pursuant to
this Debenture.
"Regular Record Date" for the interest payable on any Interest
Payment Date means the April 1st or the September 1st (whether or not a
Business Day), as the case may be, next preceding such Interest Payment
Date.
"Senior Indebtedness" means all Debts, obligations and
liabilities of the Company arising under the guarantee by the Company of
the Newco Indebtedness, whether such guarantee is outstanding on the date
hereof or hereafter, and all renewals, replacements and extensions
thereof.
"Stated Maturity," when used with respect to any Debenture or
any installment of interest thereon, means the date specified in such
Debenture as the fixed date on which the principal of such Debenture or
such installment of interest is due and payable.
"Subsidiary" means a corporation more than 50% of the
outstanding voting stock of which is owned, directly or indirectly, by the
Company or by one or more other Subsidiaries, or by the Company and one or
more other Subsidiaries. For the purposes of this definition, "voting
stock" means stock which ordinarily has voting power for the election of
directors, whether at all times or only so long as no senior class of
stock has such voting power by reason of any contingency.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed under its corporate seal.
SWING-N-SLIDE CORP.
By:/s/ Richard G. Mueller
Richard G. Mueller
President
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS
OF ANY STATE BY REASON OF SPECIFIC EXEMPTIONS UNDER THE PROVISIONS OF THE
AFOREMENTIONED ACT AND LAWS AND/OR RULES AND REGULATIONS PROMULGATED
THEREUNDER. ACCORDINGLY, THIS INSTRUMENT MAY NOT BE OFFERED FOR SALE,
SOLD, OR OTHERWISE TRANSFERRED EXCEPT UPON AN EFFECTIVE REGISTRATION OF
THE SECURITIES REPRESENTED BY THIS INSTRUMENT UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS, OR UPON
ACCEPTANCE BY THE ISSUER OF AN OPINION OF COUNSEL IN SUCH FORM AND BY SUCH
COUNSEL, OR OTHER DOCUMENTATION, AS SHALL BE SATISFACTORY TO COUNSEL FOR
THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
SWING-N-SLIDE CORP.
10% Convertible Subordinated Debenture due 2004
$4,714.82 October 15, 1996
Swing-N-Slide Corp., a corporation duly organized and existing
under the laws of Delaware, and its permitted successors and assigns
(herein called the "Company"), for value received, hereby promises to pay
to the order of Brian K. Zeilinger, and his successors and assigns (the
"Holder"), the principal sum of FOUR THOUSAND SEVEN HUNDRED FOURTEEN and
82/100 DOLLARS ($4,714.82) on February 15, 2004, and to pay interest
thereon commencing April 15, 1997 and on April 15 and October 15, in each
year thereafter, at the rate of 10% per annum, until the principal hereof
is paid in full. Payment of the principal of (and premium, if any) and
interest on this Debenture will be made by check payable in money of the
United States of America that at the time of payment is legal tender for
payment of public and private debts, mailed to the Holder at 1407
Greenview Drive, Janesville, Wisconsin, or such other address as may be
designated by the Holder; provided, however, that until February 15, 1999,
at the option of the Company, interest on this Debenture may be paid by
the issuance of an additional debenture, in the form of this Debenture, in
the principal amount of the interest so payable, dated the interest
payment date for such interest payment, with interest payable as provided
herein with a stated maturity of principal and interest as provided in
this Debenture and otherwise identical to this Debenture. Interest shall
be calculated based on a year composed of 365 days.
Section A. Securities Offering. If debentures are issued to
shareholders of the Company as contemplated by Section 4.8(c) of the
Transaction Agreement, dated January 4, 1996, between GreenGrass Holdings
and the Company, then contemporaneously with the closing of such offer
this Debenture may be exchanged, at the option of the Holder, for
debentures issued under the indenture entered into by the Company in
connection with such offer, at par plus any accrued and unpaid interest,
except that any such debentures issued to the Holder will continue to be
convertible at the Conversion Rate (as defined below) specified below.
Section B. Conversion Rights.
1. General. The Holder shall have the right at any time prior
to maturity, at its option, to convert the principal of this
Debenture (or any portion of the principal thereof which is $1.00 or
an integral multiple of $1.00) into fully paid and nonassessable
(except as otherwise provided by law) shares of Common Stock of the
Company at the rate of one share of Common Stock for each $4.80
principal amount of Debentures or, in case an adjustment to the
number of shares of Common Stock issuable for each $4.80 principal
amount of Debentures (the "Conversion Rate" or "rate") has taken
place pursuant to the provisions hereof, then at the rate as so
adjusted. Such right shall be exercised by the surrender of the
Debenture, the principal of which is so to be converted, to the
Company, accompanied by written notice that the Holder elects to
convert the Debenture or any portion thereof and specifying the name
or names (with address) in which a certificate or certificates for
Common Stock are to be issued. For convenience, the conversion of
all or a portion, as the case may be, of the principal of this
Debenture (and any other Debentures (including without limitation any
Debentures issued in lieu of interest in accordance with the first
paragraph of this Debenture)) into the Common Stock of the Company is
hereinafter sometimes referred to as the conversion of this
Debenture. If this Debenture is converted in part only, upon such
conversion the Company shall execute and deliver to the Holder a new
Debenture or Debentures of authorized denominations in an aggregate
principal amount equal to the unconverted portion of such Debenture.
This Debenture shall continue to be convertible, in whole or in
part, (i) even though the Company or the Holder may have given notice
of prepayment or redemption with respect to this Debenture or any
part thereof pursuant to Sections C or E hereof, so long as this
Debenture and the Holder's election to convert shall have been
delivered to the Company pursuant to this Section B prior to the date
fixed for such prepayment or redemption and (ii) whether or not a
mandatory, optional or mandatory optional prepayment or redemption
prior to the date fixed for such prepayment or redemption, is due on
this Debenture on any date following such time.
2. Issuance of Common Stock; Time of Conversion. As promptly
as practicable after the surrender, as herein provided, of this
Debenture for conversion, the Company shall deliver to the Holder a
certificate or certificates representing the number of fully paid and
nonassessable (except as otherwise provided by law) shares of Common
Stock of the Company into which this Debenture (or portion thereof)
may be converted together with payment in lieu of any fraction of a
share. Subject to the following provisions of this Debenture, such
conversion shall be deemed to have been made immediately prior to the
close of business on the date that this Debenture shall have been
surrendered for conversion (except that if such conversion is in
connection with an underwritten public offering of Common Stock, then
such conversion shall be deemed to have been effected upon such
surrender), so that the rights of the Holder as a Holder shall cease
with respect to this Debenture (or the portion thereof) being
converted at such time, and the Person or Persons entitled to receive
the shares of Common Stock deliverable upon conversion of this
Debenture shall be treated for all purposes as having become the
record holder or holders of such shares of Common Stock at such time,
and such conversion shall be at the conversion rate in effect at such
time; provided, however, that no such surrender on any date when the
stock transfer books of the Company shall be closed shall be
effective to constitute the Person or Persons entitled to receive the
shares of Common Stock deliverable upon such conversion as the record
holder or holders of such shares of Common Stock on such date, but
such surrender shall be effective to constitute the Person or Persons
entitled to receive such shares of Common Stock as the record holder
or holders thereof for all purposes immediately prior to the close of
business on the next succeeding day on which such stock transfer
books are open, and such conversion shall be deemed to have been made
at, and shall be made at the conversion rate in effect at, such time
on such next succeeding day.
If the last day for the exercise of the conversion right shall
not be a business day, then such conversion right may be exercised on
the next succeeding business day.
3. Payment of Accrued Interest. Within ten (10) days after
receipt of any Debenture and an election to convert all or a portion
of the principal amount of such Debenture pursuant to this Section B,
the Company will pay to the Holder any unpaid interest, accrued to
the date of conversion of such Debenture, on the principal amount so
converted.
4. Adjustment of Conversion Price. The conversion rate shall
be subject to adjustment as follows:
a. In case the Company shall (i) pay a dividend on Common
Stock in Common Stock, (ii) subdivide its outstanding shares of
Common Stock, or (iii) combine its outstanding shares of Common
Stock into a smaller number of shares, the conversion rate in
effect immediately prior thereto shall be adjusted retroactively
as provided below so that the Holder shall be entitled to
receive the number of shares of Common Stock of the Company
which it would have owned or have been entitled to receive after
the happening of any of the events described above had this
Debenture been converted immediately prior to the happening of
such event. An adjustment made pursuant to this paragraph (a)
shall become effective immediately after the record date in the
case of a dividend and shall become effective immediately after
the effective date in the case of a subdivision or combination.
b. In case the Company shall issue rights or warrants to
all holders of its Common Stock entitling them to subscribe for
or purchase shares of Common Stock at a price per share less
than the current market price per share (determined as provided
in paragraph (e) of this Section) of the Common Stock on the
date fixed for the determination of stockholders entitled to
receive such rights or warrants, the conversion rate in effect
at the opening of business on the day following the day fixed
for such determination shall be increased by multiplying such
conversion rate by a fraction of which the numerator shall be
the number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination plus the
number of shares of Common Stock so offered for subscription or
purchase and the denominator shall be the number of shares of
Common Stock outstanding at the close of business on the date
fixed for such determination plus the number of shares of Common
Stock which the aggregate of the offering price of the total
number of shares of Common Stocks offered for subscription or
purchase would purchase at such current market price, such
increase to become effective immediately after the opening of
business on the day following the date fixed for such
determination; provided, however, in the event that all the
shares of Common Stock offered for subscription or purchase are
not delivered upon the exercise of such rights or warrants, upon
the expiration of such rights or warrants the conversion rate
shall be readjusted to the conversion rate which would have been
in effect had the numerator and the denominator of the foregoing
fraction and the resulting adjustment been made based upon the
number of shares of Common Stock actually delivered upon the
exercise of such rights or warrants rather than upon the number
of shares of Common Stock offered for subscription or purchase.
For the purposes of this paragraph (b), the number of shares of
Common Stock at any time outstanding shall not include shares
held in the treasury of the Company.
c. In case the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock shares of its
capital stock (other than Common Stock), or assets (excluding
cash dividends paid out of the retained earnings of the Company)
or rights or warrants to subscribe or purchase (excluding those
referred to in paragraph (b) above) (hereinafter collectively
referred to as "Distributions on Common Stock"), then in each
such case, the Company shall deliver to the Holder the
Distribution on Common Stock to which the Holder would be
entitled if it had converted the Debentures for Common Stock
immediately prior to the record date for the purpose of
determining stockholders entitled to receive such Distribution
on Common Stock.
d. The reclassification (including any reclassification
upon a merger in which the Company is the continuing
corporation) of Common Stock into securities including other
than Common Stock (other than any reclassification upon a
consolidation or merger to which Subsection B(6) applies) shall
be deemed to involve (i) a distribution of such securities other
than Common Stock to all holders of Common Stock (and the
effective date of such reclassification shall be deemed to be
"the date fixed for the determination of stockholders entitled
to receive such distribution" and "the date fixed for such
determination" within the meaning of paragraph (e) of this
Section), and (ii) a subdivision or combination, as the case may
be, of the number of shares of Common Stock outstanding
immediately prior to such reclassification into the number of
shares of Common Stock outstanding immediately thereafter.
e. For the purpose of any computation under paragraphs
(b) and (c) of this Section, the current market price per share
of Common Stock on any date shall be deemed to be the average of
the daily closing prices for the thirty consecutive business
days selected by the Company commencing with the forty-fifth
business day before the day in question. The closing price for
each day shall be the last reported sales price regular way or,
in case no such reported sale takes place on such day, the
average of the reported closing bid and asked prices regular
way, in either case on the American Stock Exchange or if the
Common Stock is not listed or admitted to trading on such
Exchange, on the principal national securities exchange on which
the Common Stock is listed or admitted to trading or, if not
listed or admitted to trading on any national securities
exchange, on the National Association of Securities Dealers
Automated Quotations National Market System or, if the Common
Stock is not listed or admitted to trading on any national
securities exchange or quoted on such National Market System,
the average of the closing bid and asked prices in the over-the-
counter market as furnished by any New York Stock Exchange or
American Stock Exchange member firm selected from time to time
by the Company for that purpose. If the current market price
per share of Common Stock cannot be determined in accordance
with the above procedures under this paragraph (e), such current
market price shall be determined in good faith by the Board of
Directors of the Company.
f. No adjustment in the conversion rate shall be required
unless such adjustment would require an increase or decrease of
at least 1% of such rate; provided, however, that the Company
may make any such adjustment at its election and provided,
further, that any adjustments which by reason of this paragraph
(f) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All
calculations under this Section B shall be made to the nearest
cent or to the nearest one-hundredth of a share, as the case may
be. Anything in this Section B notwithstanding, the Company may
make such reductions in the conversion rate, in addition to
those required by this Section, as it considers to be advisable
in order that any event treated for Federal income tax purposes
as a dividend of stock or stock rights shall not be taxable to
the recipients.
g. Whenever the conversion rate is adjusted as herein
provided
(1) the Company shall compute the adjusted
conversion rate in accordance with paragraph (a); and
(2) notice stating that the conversion rate has
been adjusted and setting forth the adjusted
conversion rate shall forthwith be mailed to the
Holder.
h. For the purpose of this Section B(4), the term "Common
Stock" shall include any stock of any class of the Company which
has no preference in respect of dividends or of amounts payable
in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Company and which is not
subject to redemption by the Company. However, shares issuable
on conversion of shares of this Series shall include only shares
of the class designated as Common Stock of the Company as of
January 1, 1996, 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, however, that if
at any time there shall be more than one such resulting class,
the shares of each such class then so issuable shall be
substantially in the proportion which the total number of shares
of such class resulting from all such reclassifications bears to
the total number of shares of all such classes resulting from
all such reclassifications.
5. No Fractional Shares. No fractional shares of Common Stock
shall be issued upon conversion of this Debenture. If more than one
Debenture shall be surrendered for conversion at one time by the
Holder, the number of full shares which shall be issuable upon
conversion thereof shall be computed on the basis of the aggregate
principal amount of the Debentures or specified portions thereof so
surrendered. Instead of any fractional share of Common Stock which
would otherwise be issuable upon conversion of this Debenture or any
Debentures or specified portions thereof, the Company shall pay a
cash adjustment in respect of such fraction in amount equal to the
same fraction of the current market price per share of Common Stock
(as determined in accordance with Section B.4.(e) above) at the close
of business on the day of conversion.
6. Consolidation, Merger or Sale of Assets. In case of any
consolidation of the Company with, or merger of the Company into, any
other Person, (other than a merger which does not result in any
reclassification, conversion, exchange or cancellation of outstanding
shares of Common Stock of the Company) or any sale or transfer of all
or substantially all of the assets of the Company (whether such
assets are held by the Company directly or indirectly through its
Subsidiaries), the Person formed by such consolidation or resulting
from such merger or which acquires such assets, as the case may be,
shall execute and deliver to the Holder an instrument providing that
the Holder shall have the right thereafter, during the period this
Debenture shall be convertible to convert this Debenture only into
the kind and amount of securities, cash and other property receivable
upon such consolidation, merger, sale or transfer by a holder of the
number of shares of Common Stock of the Company into which this
Debenture might have been converted immediately prior to such
consolidation, merger, sale or transfer assuming such holder of
Common Stock of the Company (i) is not a Person with which the
Company consolidated or into which the Company merged or to which
such sale or transfer was made, as the case may be ("constituent
Person"), or an Affiliate of a constituent Person and (ii) failed to
exercise his rights of election, if any, as to the kind or amount of
securities, cash and other property receivable upon such
consolidation, merger, sale or transfer (provided that if the kind or
amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer is not the same for each
share of Common Stock of the Company held immediately prior to such
consolidation, merger, sale or transfer by other than a constituent
Person or an Affiliate thereof and in respect of which such rights of
election shall not have been exercised ("non-electing share") then
for the purpose of this subsection the kind and amount of securities,
cash and other property receivable upon such consolidation, merger,
sale or transfer by 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 instrument shall provide for adjustments
which, for events subsequent to the effective date of such
instrument, shall be as nearly equivalent as may be practicable to
the adjustments provided for in this Section. The above provisions
of this subsection shall similarly apply to successive
consolidations, mergers, sales or transfers.
7. Shares to be Reserved. The Company covenants that it will
at all times reserve and keep available out of its authorized Common
Stock, solely for the purpose of issue upon conversion of Debentures
as herein provided, such number of shares of Common Stock as shall
then be issuable upon the conversion of all outstanding Debentures.
The Company covenants that all shares of Common Stock which shall be
so issuable shall, when issued, be duly and validly issued and fully
paid and nonassessable.
8. Registration and Listing of Shares. The Company covenants
that if any shares of Common Stock, required to be reserved for
purposes of conversion of Debentures hereunder, require registration
with or approval of any governmental authority under any Federal or
State law before such shares may be issued upon conversion, the
Company will in good faith and as expeditiously as possible endeavor
to cause such shares to be duly registered or approved, as the case
may be. The Company further covenants that so long as the Common
Stock of the Company is listed on the American Stock Exchange or any
other national securities exchange, the Company will, if permitted by
the rules of such exchange, list and keep listed on such exchange,
upon official notice of issuance, all shares of Common Stock issuable
upon conversion of Debentures.
9. Taxes and Charges. The issuance of certificates for shares
of Common Stock upon the conversion of Debentures shall be made
without charge to the Holder for such certificates or for any tax in
respect of the issuance of such certificates or the securities
represented thereby, and such certificates shall be issued in the
name of, or in such names as may be directed by, the Holder;
provided, however, that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the
issuance and delivery of any such certificate in a name other than
that of the Holder, and the Company shall not be required to issue or
deliver such certificates unless or until the Person or Persons
requesting the issuance 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 C. Optional Redemption.
The Debentures are subject to redemption upon not less than 30
or more than 60 days' notice by mail, at any time, as a whole or in
part, at the election of the Company, at a redemption price equal to
100% of the principal amount, together with accrued interest to the
redemption date, but interest installments whose stated maturity is
on or prior to such redemption date will be payable to the Holder.
In the event of redemption or conversion of this Debenture is in
part only, a new Debenture or Debentures for the unredeemed or
unconverted portion hereof will be issued in the name of the Holder
upon the cancellation hereof.
Section D. Subordination.
1. Debentures Subordinate to Senior Indebtedness. The Company
covenants and agrees, and the Holder by its acceptance hereof
likewise covenants and agrees, that, to the extent and in the manner
hereinafter set forth in this Section, the indebtedness represented
by this Debenture and the payment of the principal of (and premium,
if any) and interest on this Debenture are hereby expressly made
subordinate and subject in right of payment to the prior payment in
full of all Senior Indebtedness.
2. Payment Over of Proceeds Upon Dissolution Etc. Upon any
distribution of assets of the Company in the event of (a) any
insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or other similar case or proceeding in
connection therewith, relative to the Company or to its creditors, as
such, or to its assets, or (b) any liquidation, dissolution or other
winding up of the Company, whether voluntary or involuntary and
whether or not involving insolvency or bankruptcy, or (c) any
assignment for the benefit of creditors or any other marshalling of
assets and liabilities of the Company, then and in such event the
holders of Senior Indebtedness shall be entitled to receive payment
in full of all amounts due or to become due on or in respect of all
Senior Indebtedness, or provision shall be made for such payment, in
money or money's worth, before the Holder is entitled to receive any
payment on account of principal of (or premium, if any) or interest
on the Debentures, and to that end the holders of Senior Indebtedness
shall be entitled to receive, for application to the payment thereof,
any payment or distribution of any kind or character, whether in
cash, property or securities, including any such payment or
distribution which may be payable or deliverable by reason of the
payment of any other indebtedness of the Company being subordinated
to the payment of the Debentures, which may be payable or deliverable
in respect of the Debentures in any such case, proceeding,
dissolution, liquidation or other winding up or event.
In the event that, notwithstanding the foregoing provisions of
this Subsection, the Holder shall have received any payment or
distribution of assets of the Company of any kind or character,
whether in cash, property or securities, including any such payment
or distribution which may be payable or deliverable by reason of the
payment of any other indebtedness of the Company being subordinated
to the payment of the Debentures, before all Senior Indebtedness is
paid in full or payment thereof provided for, and if such fact shall
then have been made known to the Holder, then and in such event such
payment or distribution shall be paid over or delivered forthwith to
the trustee in bankruptcy, receiver, liquidating trustee, custodian,
assignee, agent or other Person making payment or distribution of
assets of the Company for application to the payment of all Senior
Indebtedness remaining unpaid, to the extent necessary to pay all
Senior Indebtedness in full, after giving effect to any concurrent
payment or distribution to or for the holders of Senior Indebtedness.
For purposes of this Section only, 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 Subsection with respect to the Debentures to
the payment of all Senior Indebtedness which may at the time be
outstanding: provided, however, that (i) Senior Indebtedness is
assumed by the new corporation, if any, resulting from any such
reorganization or readjustment, and (ii) the rights of the holders of
the Senior Indebtedness 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 properties and assets
substantially as an entirety to another Person upon the terms and
conditions set forth in Section G shall not be deemed a dissolution,
winding up, liquidation, reorganization, assignment for the benefit
of creditors or marshalling of assets and liabilities of the Company
for the purposes of this Section if the corporation formed by such
consolidation or into which the Company is merged or the Person which
acquires by conveyance or transfer such properties and assets
substantially as a entirety, as the case may be, shall, as a part of
such consolidation, merger, conveyance or transfer, comply with the
conditions set forth in Section G.
3. Prior Payment to Senior Indebtedness Upon Acceleration of
Debentures. In the event that any of the Debentures are declared due
and payable before their Stated Maturity, then and in such event the
holders of Senior Indebtedness outstanding at the time such
Debentures so become due and payable shall be entitled to receive
payment in full of all amounts due or to become due on or in respect
of all such Senior Indebtedness, or provision shall be made for such
payment in money or money's worth, before the Holder is entitled to
receive any payment (including any payment which may be payable by
reason of the payment of any other indebtedness of the Company being
subordinated to the payment of the Debentures) by the Company on
account of the principal of (or premium, if any) or interest on the
Debentures or on account of the purchase or other acquisition of
Debentures.
In the event that, notwithstanding the foregoing, the Company
shall make any payment to the Holder prohibited by the foregoing
provisions of this Subsection, and if such facts shall then have been
made known to the Holder, then and in such event such payment shall
be paid over and delivered forthwith to the Company for the benefit
of the holders of Senior Indebtedness.
The provisions of this Section shall not apply to any payment
with respect to which Subsection 2 would be applicable.
4. No Payment When Newco Indebtedness in Default. (a) In the
event and during the continuation of any default in the payment of
principal (or premium, if any) or interest on any Newco Indebtedness
beyond any applicable grace period with respect thereto, or in the
event that any event of default with respect to any Newco
Indebtedness shall have occurred and be continuing permitting the
holders of such Newco Indebtedness (or a trustee on behalf of the
holders thereof) to declare such Newco Indebtedness due and payable
prior to the date on which it would otherwise have become due and
payable, unless and until such event of default shall have been cured
or waived or shall have ceased to exist and such acceleration shall
have been rescinded or annulled, or (b) in the event any judicial
proceeding shall be pending with respect to any such default in
payment or event of default, then no payment (including any payment
which may be payable by reason of the payment of any other
indebtedness of the Company being subordinated to the payment of the
Debentures) shall be made by the Company on account of principal of
(or premium, if any) or interest on the Debentures or on account of
the purchase or other acquisition of Debentures.
In the event that, notwithstanding the foregoing, the Company
shall make any payment to the Holder prohibited by the foregoing
provisions of this Subsection, and if such fact shall then have been
made known to the Holder, then and in such event such payment shall
be paid over and delivered forthwith to the Company for the benefit
of the holders of Newco Indebtedness.
The provisions of this Section shall not apply to any payment
with respect to which Subsection D(2) would be applicable.
5. Payment Permitted if No Default. Nothing contained in this
Section or elsewhere or in any of the Debentures shall prevent (x)
the Company, at any time except during the pendency of any case,
proceeding, dissolution, liquidation or other winding up, assignment
for the benefit of creditors or other marshalling of assets and
liabilities of the Company referred to in Subsection D(2) or under
the conditions described in Subsections D(3) or D(4), from making
payments at any time of principal of (and premium, if any) or
interest on the Debentures, or (y) the retention by the Holder of any
money deposited with it hereunder to the payment of or on account of
the principal of (and premium, if any) or interest on the Debentures
if, at the time of such retention the Holder did not have knowledge
that such payment would have been prohibited by the provisions of
this Section.
6. Subrogation to Rights of Holders of Senior Indebtedness.
Subject to the payment in full of all Senior Indebtedness, the Holder
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 Section to the rights of the holders of such
Senior Indebtedness to receive payments or distributions of cash,
property or securities applicable to the Senior Indebtedness until
the principal of (and premium, if any) and interest on the Debentures
shall be paid in full. For purposes of such subrogation, no payments
or distributions to the holders of the Senior Indebtedness of any
cash, property or securities to which the Holder would be entitled
except for the provisions of this Section, and no payments over
pursuant to the provisions of this Section to the Company or to the
holders of Senior Indebtedness by the Holder, shall, as between the
Company, its creditors other than holders of Senior Indebtedness and
the Holder, be deemed to be a payment or distribution by the Company
to or on account of the Debentures.
7. Provisions Solely to Define Relative Rights. The
provisions of this Section are and are intended solely for the
purpose of defining the relative rights of the Holder, on the one
hand, and the holders of Senior Indebtedness, on the other hand.
Nothing contained in this Section or elsewhere in this Debenture is
intended to or shall impair, as between the Company, its creditors
other than the holders of Senior Indebtedness and the Holder, the
obligation of the Company, which is absolute and unconditional, to
pay to the Holder the principal of (and premium, if any) and interest
on the Debenture as and when the same shall become due and payable in
accordance with their terms and which, subject to the rights under
this Section of the holders of Senior Indebtedness, is intended to
rank equally with all other general obligations of the Company, or is
intended to or shall affect the relative rights against the Company
of the Holder and creditors of the Company other than the holders of
Senior Indebtedness, nor shall anything herein or therein prevent the
Holder from exercising all remedies otherwise permitted by applicable
law upon default under this Debenture, subject to the rights, if any,
under this Section of the holders of Senior Indebtedness to receive
cash, property or securities otherwise payable or deliverable to the
Holder, and nothing herein shall prevent the conversion of this
Debenture (or any part thereof) in accordance with the terms hereof.
8. No Waiver of Subordination Provisions. No right of any
present or future holder of any Senior Indebtedness to enforce
subordination 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 Debenture, regardless of any
knowledge thereof any such holder may have or be otherwise charged
with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness may, at any time and
from time to time, without the consent of or notice to the Holder,
without incurring responsibility to the Holder and without impairing
or releasing the subordination provided in this Section or the
obligations hereunder of the Holder to the holders of Senior
Indebtedness, do any one or more of the following: (i) change the
manner, place or terms of payment or extend the time of payment of,
or renew or alter, Senior Indebtedness, or otherwise amend or
supplement in any manner Senior Indebtedness or any instrument
evidencing the same or any agreement under which Senior Indebtedness
is outstanding; (ii) sell, exchange, release otherwise or otherwise
deal with any property pledged, mortgaged or securing Senior
Indebtedness; (iii) release any Person liable in any manner for the
collection of Senior Indebtedness; and (iv) exercise or refrain from
exercising any rights against the Company and any other Person.
9. Notice to Holder. The Company shall give prompt written
notice to the Holder of any fact known to the Company which would
prohibit the making of any payment to the Holder in respect of the
Debentures. Failure to give such notice shall not affect the
subordination of the Debenture to Senior Indebtedness.
Notwithstanding the provisions of this Section or any other provision
of this Debenture, the Holder shall not be charged with knowledge of
the existence of any facts which would prohibit the making of any
payment to the Holder in respect of the Debenture, unless and until
the Holder shall have received written notice thereof from the
Company or a holder of Senior Indebtedness or from any trustee
therefor.
Section E. Optional Mandatory Repurchase.
1. Obligation to Repurchase.
a. Upon the occurrence of any Contingent Event, the
Holder shall have the right, at such Holder's option, to require
the Company to redeem this Debenture in whole or in part at a
repurchase price equal to the principal amount of this Debenture
so repurchased plus accrued and unpaid interest on the principal
amount of this Debenture so repurchased.
Such option under this Section E shall be exercised by written
notice to the Company under Section E.b. hereof given at any
time from and after the thirtieth (30th) day before such
Contingent Event through the thirtieth (30th) day after such
Contingent Event (or, if later, through the thirtieth (30th) day
after the Holder receives written notice from the Company of
such Contingent Event). Promptly (and in any event within ten
(10) days) after the occurrence of any Contingent Event, and not
more than thirty (30) days before such Contingent Event, the
Company shall given written notice to the Holder notifying such
Holder of the occurrence of such Contingent Event and informing
such Holder of its right to exercise an option to require a
repurchase under this Section E.
b. In order to exercise its rights to require a
repurchase under this Section E, the Holder shall send to the
Company a written notice demanding prepayment under this Section
E and specifying the date of such prepayment (which shall not be
less than fifteen (15) days after receipt of such notice by the
Company, but in no event earlier than such Contingent Event,
except that such date may be the same date as a Contingent Event
if requested by the Holder).
c. This obligation to repurchase is subject to the
restriction that the Company may not buy any Debenture at any
time when the subordination provisions of this Debenture would
not permit the Company to make a payment of principal, premium
or interest on the Debentures.
2. Certain Definitions. As used in this Section:
a. "Contingent Event" means any one or more of the
following events which shall occur subsequent to the date of
this Debenture:
(1) the Company shall convey, transfer or lease all
or substantially all of its assets (whether held directly
or indirectly through Subsidiaries) to any Persons (other
than to a Subsidiary of the Company);
(2) any Person (other than the Company), including a
"group" (within the meaning of Section 13(d) and 14(d)(2)
of the Securities Exchange Act of 1934, as amended) that
includes such Person, shall acquire, directly or
indirectly, beneficial ownership, in the aggregate, of (x)
50 percent or more of the Common Stock, or (y) securities
representing 50 percent or more of the combined voting
power of the Company's voting securities, in either case,
outstanding on the date immediately prior to the date of
the last such acquisition by such Person; or
(3) on any day (a "Calculation Date") (x) (A) the
Company shall distribute cash, securities or other
properties, including cash dividends (other than Common
Stock, or rights or warrants to acquire Common Stock or
preferred stock substantially equivalent to Common Stock)
to holders of Common Stock, whether by means of dividend,
reclassification, recapitalization or otherwise, or (B) the
Company shall acquire, directly or indirectly, beneficial
ownership of Common Stock; and (y) the sum of the
Applicable Percentages (as defined below) of all such
distributions and acquisitions which have occurred on the
Calculation Date and during the 365-day period immediately
preceding the Calculation Date shall exceed 30 percent.
b. "Applicable Percentage" means (x) In the case of each
distribution referred to in clause (3) above, the percentage
determined as of the Calculation Date of each such distribution
by dividing the aggregate fair market value (as determined in
good faith by the Board of Directors), of such distribution, by
the fair market value (based on the then current market price)
of all of the shares of Common Stock outstanding on the day
immediately prior to such Calculation Date; and (y) in the case
of each acquisition referred to in clause (3) above, the
percentage determined as of the Calculation Date of each such
acquisition by dividing all amounts expended by the Company
(such amounts, if other than in cash, as determined in good
faith by the Board of Directors), in connection with the
acquisition of any shares of Common Stock, by the fair market
value (based on the then current market price) of all of the
shares of Common Stock outstanding on the day immediately prior
to such Calculation Date.
Section F. Covenants.
1. Payment of Principal, Premium and Interest. The Company
will duly and punctually pay the principal of (and premium, if any)
and interest on this Debenture in accordance with the terms hereof.
2. Statement as to Compliance. The Company will deliver to
the Holder, within 120 days after the end of each fiscal year, an
Officers' Certificate stating, as to each signer thereof, that
a. a review of the activities of the Company and its
Subsidiaries during such year and of performance under this
Debenture has been made under his supervision, and
b. to the best of his knowledge, based on such review,
the Company has fulfilled all its obligations under this
Debenture throughout such year, or, if there has been a default
in the fulfillment of any such obligation, specifying each such
default known to him and the nature and status thereof.
3. Further Instruments and Acts. From time to time the
Company will, at its own expense and upon request of the Holder,
execute and deliver or cause to be executed and delivered such
further instruments and do such further acts as may reasonably be
necessary or desirable to carry out the purposes of this Debenture.
Section G. Consolidation, Merger, Conveyance, Transfer or Lease.
1. Company May Consolidate, etc. Only on Certain Terms. The
Company shall not consolidate with or merge into any other Person or
convey, transfer or lease its properties and assets substantially as
an entirety (whether such properties and assets are held by the
Company directly or through its Subsidiaries) to any Person, unless:
a. the Person formed by such consolidation or into which
the Company is merged or the Person which acquires by conveyance
or transfer, or which leases, the properties and assets of the
Company substantially as a entirety shall be a corporation
organized and existing under the laws of the United States of
America, any State thereof or the District of Columbia and shall
expressly assume, by an instrument, executed and delivered to
the Holder, in form satisfactory to the Holder, the due and
punctual payment of the principal of (and premium, if any) and
interest on this Debenture and the performance of every
obligation herein on the part of the Company to be performed or
observed and shall have provided for conversion rights in
accordance with Subsection (B)(6).
b. immediately after giving effect to such transaction,
no Event of Default, and no event which, after notice or lapse
of time or both, would become an Event of Default, shall have
happened and be continuing; and
c. the Company has delivered to the Holder an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and, if an
instrument is required hereunder in connection with such
transaction, such instrument comply with this Section and that
all conditions precedent herein provided for relating to such
transaction have been complied with.
2. Successor Corporation Substituted. Upon any consolidation
or merger by the Company with or into any other Person or any
conveyance, transfer or lease of the properties and assets of the
Company substantially as a entirety (whether such properties and
assets are held by the Company directly or through its Subsidiaries)
to any Person in accordance with Subsection (G)(1), the successor
corporation formed by such consolidation or into which the Company is
merged or to which such conveyance, transfer or lease is made shall
succeed to, and be substituted for, and may exercise every right and
power of the Company hereunder with the same effect as if such
successor corporation had been named as the Company herein, and
thereunder, except in the case of a lease to another Person, the
predecessor corporation shall be relieved of all obligations and
covenants under this Debenture.
Section H. Reports by Company. The Company shall mail to
the Holder, within 15 days after the Company is required to file the
same with the Commission, copies of the annual reports and of the
information, documents and other reports (or copies of such portions
of any of the foregoing as the Commission may from time to time by
rules and regulations prescribe) which the Company may be required to
file with the Commission pursuant to Section 13(a) or Section 15(d)
of the Securities Exchange Act of 1934, as amended; and, if the
Company is not required to file information, documents or reports
pursuant to either of said Sections, then it shall nonetheless mail
the same to the Holder as if it were required to do so by the
Commission.
Section I. Remedies.
1. Events of Default. "Event of Default," wherever used
herein, means any one of the following events (whatever the reason
for such Event of Default and whether it shall be occasioned by the
provisions of Section (B) or be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or
order of any court or any order, rule or regulation or any
administrative or governmental body):
a. default in the payment of any interest upon this
Debenture and any other Debenture issued to the Holder when it
becomes due and payable and continuance of such default for a
period of 10 days; or
b. default in the payment of the principal of (or
premium, if any, on) this Debenture and any other Debenture
issued to the Holder at its Maturity whether or not such payment
is prohibited by the subordination provisions of this Debenture
and continuance of such default for a period of 30 days; or
c. default in the performance, or breach, of any covenant
or warranty of the Company in this Debenture (other than a
covenant or warranty a default in whose performance or whose
breach is elsewhere in this Section specifically dealt with),
and continuance of such default or breach for a period of 30
days after there has been given, by registered or certified
mail, to the Company by the Holder a written notice specifying
such default or breach and requiring it to be remedied and
stating that such notice is a "Notice of Default" hereunder; or
d. the entry by a court having jurisdiction in the
premises of (A) a decree or order for relief in respect of the
Company in an involuntary case or proceeding under any
applicable Federal or state bankruptcy, insolvency,
reorganization or other similar law or (B) a decree or order
adjudging the Company a bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement,
adjustment or composition of or in respect of the Company under
any applicable Federal or state law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or of any substantial part of
its property, or ordering the winding up or liquidation of its
affairs, and the continuance of any such decree or order for
relief or any such other decree or order unstayed and in effect
for a period of 60 consecutive days; or
e. the commencement by the Company of a voluntary case or
proceeding under any applicable Federal or state bankruptcy,
insolvency, reorganization or other similar law or of any other
case or proceeding to be adjudicated a bankrupt or insolvent, or
the consent by it to the entry of a decree or order for relief
in respect of the Company in an involuntary case or proceeding
under any applicable Federal or state bankruptcy, insolvency,
reorganization or other similar law or to the commencement of
any bankruptcy or insolvency case or proceeding against it, or
the filing by it of a petition or answer or consent seeking
reorganization or relief under any applicable Federal or state
law, or the consent by it to the filing of such petition or to
the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator or similar
official of the Company or of any substantial part of its
property, or the making by it of an assignment for the benefit
of creditors, or the admission by it in writing of its inability
to pay its debts generally as they become due, or the taking of
corporate action by the Company in furtherance of any such
action.
2. Acceleration of Maturity; Rescission and Annulment. If any
Event of Default occurs and is continuing (other than an Event of
Default described in Subsections I(1)(d) and (e)), then and in every
such case the Holder may declare the principal and all accrued and
unpaid interest of all the Debentures issued to the Holder to be due
and payable immediately, by a notice in writing to the Company, and
upon any such declaration such principal shall become immediately due
and payable. If an Event of Default described in Subsections I(1)(d)
and (e) shall occur, then in every such case the unpaid principal
balance hereof and all accrued and unpaid interest shall
automatically become due and payable.
3. Collection of Indebtedness and Suits for Enforcement. The
Company covenants that if
a. default is made in the payment of any installment of
interest on any Debenture issued to the Holder when such
interest become due and payable and such default continues for a
period of 30 days, or
b. default is made in the payment of the principal of (or
premium, if any, on) any Debenture issued to the Holder at the
Maturity thereof,
the Company will, upon demand by the Holder, pay to it, the whole
amount then due and payable on such Debentures for principal (and
premium, if any) and interest, with interest upon the overdue
principal (and premium, if any) and, to the extent that payment of
such interest shall be legally enforceable, upon overdue installments
of interest, at the rate borne by the Debentures and, in addition
thereto, such further amount as shall be sufficient to cover the
costs and expenses of collection, including the reasonable
compensation, expenses and disbursements of the Holder, its agents
and counsel.
If the Company fails to pay such amounts forthwith upon such
demand, the Holder may institute a judicial proceeding for the
collection of the sums so due and unpaid, may prosecute such
proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon the Debentures and
collect the moneys adjudged or decreed to be payable in the manner
provided by law out of the property of the Company or any other
obligor upon the Debentures, wherever situated.
If an Event of Default occurs and is continuing, the Holder may
in its discretion proceed to protect and enforce its rights by such
appropriate judicial proceedings as it shall deem most effectual to
protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Debenture or in aid
of the exercise of any power granted herein, or to enforce any other
proper remedy.
4. Application of Money Collected. Subject to Section D, any
money collected by the Holder pursuant to this Section shall be
applied first to the payment of all fees, costs and expenses
(including attorneys fees and expenses) incurred by the Holder
(whether before or after judgment) in the collection of such sums and
second, to the payment of the amounts then due and unpaid for
principal of (and premium, if any) and interest on the Debentures in
respect of which or for the benefit of which such money or
Debentures, as the case may be, has been collected.
5. Unconditional Right of Holder to Receive Principal, Premium
and Interest and to Convert. Notwithstanding any other provision
herein, the Holder shall have the right, which is absolute and
unconditional, to receive payment of the principal of (and premium,
if any) and interest on this Debenture on the date when due (or, in
the case of redemption, on the Redemption Date) and to convert this
Debenture in accordance with Section B and to institute suit for the
enforcement of any such payment and right to convert.
6. Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Holder is intended to be exclusive
of any other right or remedy, and every right and remedy shall, to
the extent permitted by law, be cumulative and in addition to every
other right and remedy given hereunder or now or hereafter existing
at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or
remedy.
7. Delay or Omission Not Waiver. No delay or omission of the
Holder to exercise any right or remedy accruing upon any Event of
Default shall impair any such right or remedy or constitute a waiver
of any such Event of Default or an acquiescence therein. Every right
and remedy given by this Section or by law to the Holder may be
exercised from time to time, and as often as may be deemed expedient,
by the Holder.
8. Amendments; Governing Law etc.. This Debenture may be
amended only by a writing signed by the Company and the Holder. The
Article and Section headings herein are for convenience only and
shall not affect the construction hereof. All covenants and
agreements in this Debenture by the Company shall bind its successors
and assigns, whether so expressed or not. In case any provision in
this Debenture shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby. This Debenture
shall be governed by and construed in accordance with the laws of the
State of Wisconsin. If any action or proceeding shall be brought by
the Holder in order to enforce any right or remedy under this
Debenture, the Company hereby consents and submits to the
jurisdiction of the courts of the State of Wisconsin and of any
Federal court sitting in The City of Milwaukee, State of Wisconsin.
Any action or proceeding brought by the Company to enforce any right,
assert any claim or obtain any relief whatsoever in connection with
this Debenture shall be brought by the Company exclusively in the
courts of the State of Wisconsin or in any Federal court sitting in
The City of Milwaukee, State of Wisconsin.
No provision of this Debenture shall alter or impair the
obligation of the Company, which is absolute and unconditional, to
pay the principal of (and premium, if any) and interest on this
Debenture at the times, place and rate, and in the coin or currency
or with another debenture, herein prescribed or to convert this
Debenture as provided herein.
Debentures are exchangeable for a like aggregate principal
amount of Debentures of a different authorized denomination, as
requested by the Holder.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in
connection therewith.
9. Definitions. The following terms shall have the meanings
specified below:
"Affiliate" of any specified person means any other Person
directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of
this definition, "control" when used with respect to any specified Person
means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly
adopted by the Board of Directors and to be in full force and effect on
the date of such certification, and delivered to the Trustee.
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Securities Exchange Act
of 1934, or, if at any time after the execution of this instrument such
Commission is not existing and performing the duties now assigned to it
under the Trust Indenture Act, then the body performIng such duties at
such time.
"Common Stock" means all shares now or hereafter authorized of
the class of Common Stock of the Company currently authorized and stock of
any other class into which such shares may hereafter have been changed.
"Debentures" means this Debenture and all other Debentures of
the Company issued to the Holder.
"Event of Default" has the meaning specified in Section I.
"Interest Payment Date" means the Stated Maturity of a
installment of interest on the Debentures.
"Maturity" when used with respect to any Debenture means the
date on which the principal of such Debenture becomes due and payable as
therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
"Newco" means Newco, Inc., a Wisconsin corporation and any
successor thereto.
"Newco Indebtedness" means the principal, premium, if any, and
unpaid interest on indebtedness for money borrowed by Newco and guaranteed
by the Company (at any time and from time to time), whether outstanding on
the date hereof or hereafter, and all renewals, extensions and refundings
of any such Debt; provided, however, that the following shall not
constitute Newco Indebtedness: any Debt which by its terms refers
explicitly to the Debentures issued hereunder and states that such Debt
shall not be senior in right of payment thereto.
"Officers" Certificate" means a certificate signed by the
Chairman of the Board, the President or a Vice President, and by the
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary
of the Company, and delivered to the Holder.
"Opinion of Counsel" means a written opinion of counsel, who may
be counsel for the Company or other counsel acceptable to the Holder.
"Person" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated
organization or government or any agent or political subdivision thereof.
"Redemption Date," when used with respect to any Debenture to be
redeemed, means the date fixed for such redemption by or pursuant to this
Debenture.
"Redemption Price," when used with respect to any Debenture to
be redeemed, means the price at which it is to be redeemed pursuant to
this Debenture.
"Regular Record Date" for the interest payable on any Interest
Payment Date means the April 1st or the September 1st (whether or not a
Business Day), as the case may be, next preceding such Interest Payment
Date.
"Senior Indebtedness" means all Debts, obligations and
liabilities of the Company arising under the guarantee by the Company of
the Newco Indebtedness, whether such guarantee is outstanding on the date
hereof or hereafter, and all renewals, replacements and extensions
thereof.
"Stated Maturity," when used with respect to any Debenture or
any installment of interest thereon, means the date specified in such
Debenture as the fixed date on which the principal of such Debenture or
such installment of interest is due and payable.
"Subsidiary" means a corporation more than 50% of the
outstanding voting stock of which is owned, directly or indirectly, by the
Company or by one or more other Subsidiaries, or by the Company and one or
more other Subsidiaries. For the purposes of this definition, "voting
stock" means stock which ordinarily has voting power for the election of
directors, whether at all times or only so long as no senior class of
stock has such voting power by reason of any contingency.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed under its corporate seal.
SWING-N-SLIDE CORP.
By:/s/ Richard G. Mueller
Richard G. Mueller
President
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS
OF ANY STATE BY REASON OF SPECIFIC EXEMPTIONS UNDER THE PROVISIONS OF THE
AFOREMENTIONED ACT AND LAWS AND/OR RULES AND REGULATIONS PROMULGATED
THEREUNDER. ACCORDINGLY, THIS INSTRUMENT MAY NOT BE OFFERED FOR SALE,
SOLD, OR OTHERWISE TRANSFERRED EXCEPT UPON AN EFFECTIVE REGISTRATION OF
THE SECURITIES REPRESENTED BY THIS INSTRUMENT UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS, OR UPON
ACCEPTANCE BY THE ISSUER OF AN OPINION OF COUNSEL IN SUCH FORM AND BY SUCH
COUNSEL, OR OTHER DOCUMENTATION, AS SHALL BE SATISFACTORY TO COUNSEL FOR
THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
SWING-N-SLIDE CORP.
10% Convertible Subordinated Debenture due 2004
$264,685.49 April 15, 1997
Swing-N-Slide Corp., a corporation duly organized and existing
under the laws of Delaware, and its permitted successors and assigns
(herein called the "Company"), for value received, hereby promises to pay
to the order of GreenGrass Holdings, a Delaware general partnership, and
its successors and assigns (the "Holder"), the principal sum of TWO
HUNDRED SIXTY-FOUR THOUSAND SIX HUNDRED EIGHTY-FIVE and 49/100 DOLLARS
($264,685.49) on February 15, 2004, and to pay interest thereon commencing
October 15, 1997 and on April 15 and October 15, in each year thereafter,
at the rate of 10% per annum, until the principal hereof is paid in full.
Payment of the principal of (and premium, if any) and interest on this
Debenture will be made by check payable in money of the United States of
America that at the time of payment is legal tender for payment of public
and private debts, mailed to the Holder at its principal office in
Chicago, Illinois or such other address as may be designated by the
Holder; provided, however, that until February 15, 1999, at the option of
the Company, interest on this Debenture may be paid by the issuance of an
additional debenture, in the form of this Debenture, in the principal
amount of the interest so payable, dated the interest payment date for
such interest payment, with interest payable as provided herein with a
stated maturity of principal and interest as provided in this Debenture
and otherwise identical to this Debenture. Interest shall be calculated
based on a year composed of 365 days.
Section A. Securities Offering. If debentures are issued to
shareholders of the Company as contemplated by Section 4.8(c) of the
Transaction Agreement, dated January 4, 1996, between GreenGrass Holdings
and the Company, then contemporaneously with the closing of such offer
this Debenture may be exchanged, at the option of the Holder, for
debentures issued under the indenture entered into by the Company in
connection with such offer, at par plus any accrued and unpaid interest,
except that any such debentures issued to the Holder will continue to be
convertible at the Conversion Rate (as defined below) specified below.
Section B. Conversion Rights.
1. General. The Holder shall have the right at any time prior
to maturity, at its option, to convert the principal of this
Debenture (or any portion of the principal thereof which is $1.00 or
an integral multiple of $1.00) into fully paid and nonassessable
(except as otherwise provided by law) shares of Common Stock of the
Company at the rate of one share of Common Stock for each $4.80
principal amount of Debentures or, in case an adjustment to the
number of shares of Common Stock issuable for each $4.80 principal
amount of Debentures (the "Conversion Rate" or "rate") has taken
place pursuant to the provisions hereof, then at the rate as so
adjusted. Such right shall be exercised by the surrender of the
Debenture, the principal of which is so to be converted, to the
Company, accompanied by written notice that the Holder elects to
convert the Debenture or any portion thereof and specifying the name
or names (with address) in which a certificate or certificates for
Common Stock are to be issued. For convenience, the conversion of
all or a portion, as the case may be, of the principal of this
Debenture (and any other Debentures (including without limitation any
Debentures issued in lieu of interest in accordance with the first
paragraph of this Debenture)) into the Common Stock of the Company is
hereinafter sometimes referred to as the conversion of this
Debenture. If this Debenture is converted in part only, upon such
conversion the Company shall execute and deliver to the Holder a new
Debenture or Debentures of authorized denominations in an aggregate
principal amount equal to the unconverted portion of such Debenture.
This Debenture shall continue to be convertible, in whole or in
part, (i) even though the Company or the Holder may have given notice
of prepayment or redemption with respect to this Debenture or any
part thereof pursuant to Sections C or E hereof, so long as this
Debenture and the Holder's election to convert shall have been
delivered to the Company pursuant to this Section B prior to the date
fixed for such prepayment or redemption and (ii) whether or not a
mandatory, optional or mandatory optional prepayment or redemption
prior to the date fixed for such prepayment or redemption, is due on
this Debenture on any date following such time.
2. Issuance of Common Stock; Time of Conversion. As promptly
as practicable after the surrender, as herein provided, of this
Debenture for conversion, the Company shall deliver to the Holder a
certificate or certificates representing the number of fully paid and
nonassessable (except as otherwise provided by law) shares of Common
Stock of the Company into which this Debenture (or portion thereof)
may be converted together with payment in lieu of any fraction of a
share. Subject to the following provisions of this Debenture, such
conversion shall be deemed to have been made immediately prior to the
close of business on the date that this Debenture shall have been
surrendered for conversion (except that if such conversion is in
connection with an underwritten public offering of Common Stock, then
such conversion shall be deemed to have been effected upon such
surrender), so that the rights of the Holder as a Holder shall cease
with respect to this Debenture (or the portion thereof) being
converted at such time, and the Person or Persons entitled to receive
the shares of Common Stock deliverable upon conversion of this
Debenture shall be treated for all purposes as having become the
record holder or holders of such shares of Common Stock at such time,
and such conversion shall be at the conversion rate in effect at such
time; provided, however, that no such surrender on any date when the
stock transfer books of the Company shall be closed shall be
effective to constitute the Person or Persons entitled to receive the
shares of Common Stock deliverable upon such conversion as the record
holder or holders of such shares of Common Stock on such date, but
such surrender shall be effective to constitute the Person or Persons
entitled to receive such shares of Common Stock as the record holder
or holders thereof for all purposes immediately prior to the close of
business on the next succeeding day on which such stock transfer
books are open, and such conversion shall be deemed to have been made
at, and shall be made at the conversion rate in effect at, such time
on such next succeeding day.
If the last day for the exercise of the conversion right shall
not be a business day, then such conversion right may be exercised on
the next succeeding business day.
3. Payment of Accrued Interest. Within ten (10) days after
receipt of any Debenture and an election to convert all or a portion
of the principal amount of such Debenture pursuant to this Section B,
the Company will pay to the Holder any unpaid interest, accrued to
the date of conversion of such Debenture, on the principal amount so
converted.
4. Adjustment of Conversion Price. The conversion rate shall
be subject to adjustment as follows:
a. In case the Company shall (i) pay a dividend on Common
Stock in Common Stock, (ii) subdivide its outstanding shares of
Common Stock, or (iii) combine its outstanding shares of Common
Stock into a smaller number of shares, the conversion rate in
effect immediately prior thereto shall be adjusted retroactively
as provided below so that the Holder shall be entitled to
receive the number of shares of Common Stock of the Company
which it would have owned or have been entitled to receive after
the happening of any of the events described above had this
Debenture been converted immediately prior to the happening of
such event. An adjustment made pursuant to this paragraph (a)
shall become effective immediately after the record date in the
case of a dividend and shall become effective immediately after
the effective date in the case of a subdivision or combination.
b. In case the Company shall issue rights or warrants to
all holders of its Common Stock entitling them to subscribe for
or purchase shares of Common Stock at a price per share less
than the current market price per share (determined as provided
in paragraph (e) of this Section) of the Common Stock on the
date fixed for the determination of stockholders entitled to
receive such rights or warrants, the conversion rate in effect
at the opening of business on the day following the day fixed
for such determination shall be increased by multiplying such
conversion rate by a fraction of which the numerator shall be
the number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination plus the
number of shares of Common Stock so offered for subscription or
purchase and the denominator shall be the number of shares of
Common Stock outstanding at the close of business on the date
fixed for such determination plus the number of shares of Common
Stock which the aggregate of the offering price of the total
number of shares of Common Stocks offered for subscription or
purchase would purchase at such current market price, such
increase to become effective immediately after the opening of
business on the day following the date fixed for such
determination; provided, however, in the event that all the
shares of Common Stock offered for subscription or purchase are
not delivered upon the exercise of such rights or warrants, upon
the expiration of such rights or warrants the conversion rate
shall be readjusted to the conversion rate which would have been
in effect had the numerator and the denominator of the foregoing
fraction and the resulting adjustment been made based upon the
number of shares of Common Stock actually delivered upon the
exercise of such rights or warrants rather than upon the number
of shares of Common Stock offered for subscription or purchase.
For the purposes of this paragraph (b), the number of shares of
Common Stock at any time outstanding shall not include shares
held in the treasury of the Company.
c. In case the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock shares of its
capital stock (other than Common Stock), or assets (excluding
cash dividends paid out of the retained earnings of the Company)
or rights or warrants to subscribe or purchase (excluding those
referred to in paragraph (b) above) (hereinafter collectively
referred to as "Distributions on Common Stock"), then in each
such case, the Company shall deliver to the Holder the
Distribution on Common Stock to which the Holder would be
entitled if it had converted the Debentures for Common Stock
immediately prior to the record date for the purpose of
determining stockholders entitled to receive such Distribution
on Common Stock.
d. The reclassification (including any reclassification
upon a merger in which the Company is the continuing
corporation) of Common Stock into securities including other
than Common Stock (other than any reclassification upon a
consolidation or merger to which Subsection B(6) applies) shall
be deemed to involve (i) a distribution of such securities other
than Common Stock to all holders of Common Stock (and the
effective date of such reclassification shall be deemed to be
"the date fixed for the determination of stockholders entitled
to receive such distribution" and "the date fixed for such
determination" within the meaning of paragraph (e) of this
Section), and (ii) a subdivision or combination, as the case may
be, of the number of shares of Common Stock outstanding
immediately prior to such reclassification into the number of
shares of Common Stock outstanding immediately thereafter.
e. For the purpose of any computation under paragraphs
(b) and (c) of this Section, the current market price per share
of Common Stock on any date shall be deemed to be the average of
the daily closing prices for the thirty consecutive business
days selected by the Company commencing with the forty-fifth
business day before the day in question. The closing price for
each day shall be the last reported sales price regular way or,
in case no such reported sale takes place on such day, the
average of the reported closing bid and asked prices regular
way, in either case on the American Stock Exchange or if the
Common Stock is not listed or admitted to trading on such
Exchange, on the principal national securities exchange on which
the Common Stock is listed or admitted to trading or, if not
listed or admitted to trading on any national securities
exchange, on the National Association of Securities Dealers
Automated Quotations National Market System or, if the Common
Stock is not listed or admitted to trading on any national
securities exchange or quoted on such National Market System,
the average of the closing bid and asked prices in the over-the-
counter market as furnished by any New York Stock Exchange or
American Stock Exchange member firm selected from time to time
by the Company for that purpose. If the current market price
per share of Common Stock cannot be determined in accordance
with the above procedures under this paragraph (e), such current
market price shall be determined in good faith by the Board of
Directors of the Company.
f. No adjustment in the conversion rate shall be required
unless such adjustment would require an increase or decrease of
at least 1% of such rate; provided, however, that the Company
may make any such adjustment at its election and provided,
further, that any adjustments which by reason of this paragraph
(f) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All
calculations under this Section B shall be made to the nearest
cent or to the nearest one-hundredth of a share, as the case may
be. Anything in this Section B notwithstanding, the Company may
make such reductions in the conversion rate, in addition to
those required by this Section, as it considers to be advisable
in order that any event treated for Federal income tax purposes
as a dividend of stock or stock rights shall not be taxable to
the recipients.
g. Whenever the conversion rate is adjusted as herein
provided
(1) the Company shall compute the adjusted
conversion rate in accordance with paragraph (a); and
(2) notice stating that the conversion rate has
been adjusted and setting forth the adjusted
conversion rate shall forthwith be mailed to the
Holder.
h. For the purpose of this Section B(4), the term "Common
Stock" shall include any stock of any class of the Company which
has no preference in respect of dividends or of amounts payable
in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Company and which is not
subject to redemption by the Company. However, shares issuable
on conversion of shares of this Series shall include only shares
of the class designated as Common Stock of the Company as of
January 1, 1996, 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, however, that if
at any time there shall be more than one such resulting class,
the shares of each such class then so issuable shall be
substantially in the proportion which the total number of shares
of such class resulting from all such reclassifications bears to
the total number of shares of all such classes resulting from
all such reclassifications.
5. No Fractional Shares. No fractional shares of Common Stock
shall be issued upon conversion of this Debenture. If more than one
Debenture shall be surrendered for conversion at one time by the
Holder, the number of full shares which shall be issuable upon
conversion thereof shall be computed on the basis of the aggregate
principal amount of the Debentures or specified portions thereof so
surrendered. Instead of any fractional share of Common Stock which
would otherwise be issuable upon conversion of this Debenture or any
Debentures or specified portions thereof, the Company shall pay a
cash adjustment in respect of such fraction in amount equal to the
same fraction of the current market price per share of Common Stock
(as determined in accordance with Section B.4.(e) above) at the close
of business on the day of conversion.
6. Consolidation, Merger or Sale of Assets. In case of any
consolidation of the Company with, or merger of the Company into, any
other Person, (other than a merger which does not result in any
reclassification, conversion, exchange or cancellation of outstanding
shares of Common Stock of the Company) or any sale or transfer of all
or substantially all of the assets of the Company (whether such
assets are held by the Company directly or indirectly through its
Subsidiaries), the Person formed by such consolidation or resulting
from such merger or which acquires such assets, as the case may be,
shall execute and deliver to the Holder an instrument providing that
the Holder shall have the right thereafter, during the period this
Debenture shall be convertible to convert this Debenture only into
the kind and amount of securities, cash and other property receivable
upon such consolidation, merger, sale or transfer by a holder of the
number of shares of Common Stock of the Company into which this
Debenture might have been converted immediately prior to such
consolidation, merger, sale or transfer assuming such holder of
Common Stock of the Company (i) is not a Person with which the
Company consolidated or into which the Company merged or to which
such sale or transfer was made, as the case may be ("constituent
Person"), or an Affiliate of a constituent Person and (ii) failed to
exercise his rights of election, if any, as to the kind or amount of
securities, cash and other property receivable upon such
consolidation, merger, sale or transfer (provided that if the kind or
amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer is not the same for each
share of Common Stock of the Company held immediately prior to such
consolidation, merger, sale or transfer by other than a constituent
Person or an Affiliate thereof and in respect of which such rights of
election shall not have been exercised ("non-electing share") then
for the purpose of this subsection the kind and amount of securities,
cash and other property receivable upon such consolidation, merger,
sale or transfer by 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 instrument shall provide for adjustments
which, for events subsequent to the effective date of such
instrument, shall be as nearly equivalent as may be practicable to
the adjustments provided for in this Section. The above provisions
of this subsection shall similarly apply to successive
consolidations, mergers, sales or transfers.
7. Shares to be Reserved. The Company covenants that it will
at all times reserve and keep available out of its authorized Common
Stock, solely for the purpose of issue upon conversion of Debentures
as herein provided, such number of shares of Common Stock as shall
then be issuable upon the conversion of all outstanding Debentures.
The Company covenants that all shares of Common Stock which shall be
so issuable shall, when issued, be duly and validly issued and fully
paid and nonassessable.
8. Registration and Listing of Shares. The Company covenants
that if any shares of Common Stock, required to be reserved for
purposes of conversion of Debentures hereunder, require registration
with or approval of any governmental authority under any Federal or
State law before such shares may be issued upon conversion, the
Company will in good faith and as expeditiously as possible endeavor
to cause such shares to be duly registered or approved, as the case
may be. The Company further covenants that so long as the Common
Stock of the Company is listed on the American Stock Exchange or any
other national securities exchange, the Company will, if permitted by
the rules of such exchange, list and keep listed on such exchange,
upon official notice of issuance, all shares of Common Stock issuable
upon conversion of Debentures.
9. Taxes and Charges. The issuance of certificates for shares
of Common Stock upon the conversion of Debentures shall be made
without charge to the Holder for such certificates or for any tax in
respect of the issuance of such certificates or the securities
represented thereby, and such certificates shall be issued in the
name of, or in such names as may be directed by, the Holder;
provided, however, that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the
issuance and delivery of any such certificate in a name other than
that of the Holder, and the Company shall not be required to issue or
deliver such certificates unless or until the Person or Persons
requesting the issuance 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 C. Optional Redemption.
The Debentures are subject to redemption upon not less than 30
or more than 60 days' notice by mail, at any time, as a whole or in
part, at the election of the Company, at a redemption price equal to
100% of the principal amount, together with accrued interest to the
redemption date, but interest installments whose stated maturity is
on or prior to such redemption date will be payable to the Holder.
In the event of redemption or conversion of this Debenture is in
part only, a new Debenture or Debentures for the unredeemed or
unconverted portion hereof will be issued in the name of the Holder
upon the cancellation hereof.
Section D. Subordination.
1. Debentures Subordinate to Senior Indebtedness. The Company
covenants and agrees, and the Holder by its acceptance hereof
likewise covenants and agrees, that, to the extent and in the manner
hereinafter set forth in this Section, the indebtedness represented
by this Debenture and the payment of the principal of (and premium,
if any) and interest on this Debenture are hereby expressly made
subordinate and subject in right of payment to the prior payment in
full of all Senior Indebtedness.
2. Payment Over of Proceeds Upon Dissolution Etc. Upon any
distribution of assets of the Company in the event of (a) any
insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or other similar case or proceeding in
connection therewith, relative to the Company or to its creditors, as
such, or to its assets, or (b) any liquidation, dissolution or other
winding up of the Company, whether voluntary or involuntary and
whether or not involving insolvency or bankruptcy, or (c) any
assignment for the benefit of creditors or any other marshalling of
assets and liabilities of the Company, then and in such event the
holders of Senior Indebtedness shall be entitled to receive payment
in full of all amounts due or to become due on or in respect of all
Senior Indebtedness, or provision shall be made for such payment, in
money or money's worth, before the Holder is entitled to receive any
payment on account of principal of (or premium, if any) or interest
on the Debentures, and to that end the holders of Senior Indebtedness
shall be entitled to receive, for application to the payment thereof,
any payment or distribution of any kind or character, whether in
cash, property or securities, including any such payment or
distribution which may be payable or deliverable by reason of the
payment of any other indebtedness of the Company being subordinated
to the payment of the Debentures, which may be payable or deliverable
in respect of the Debentures in any such case, proceeding,
dissolution, liquidation or other winding up or event.
In the event that, notwithstanding the foregoing provisions of
this Subsection, the Holder shall have received any payment or
distribution of assets of the Company of any kind or character,
whether in cash, property or securities, including any such payment
or distribution which may be payable or deliverable by reason of the
payment of any other indebtedness of the Company being subordinated
to the payment of the Debentures, before all Senior Indebtedness is
paid in full or payment thereof provided for, and if such fact shall
then have been made known to the Holder, then and in such event such
payment or distribution shall be paid over or delivered forthwith to
the trustee in bankruptcy, receiver, liquidating trustee, custodian,
assignee, agent or other Person making payment or distribution of
assets of the Company for application to the payment of all Senior
Indebtedness remaining unpaid, to the extent necessary to pay all
Senior Indebtedness in full, after giving effect to any concurrent
payment or distribution to or for the holders of Senior Indebtedness.
For purposes of this Section only, 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 Subsection with respect to the Debentures to
the payment of all Senior Indebtedness which may at the time be
outstanding: provided, however, that (i) Senior Indebtedness is
assumed by the new corporation, if any, resulting from any such
reorganization or readjustment, and (ii) the rights of the holders of
the Senior Indebtedness 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 properties and assets
substantially as an entirety to another Person upon the terms and
conditions set forth in Section G shall not be deemed a dissolution,
winding up, liquidation, reorganization, assignment for the benefit
of creditors or marshalling of assets and liabilities of the Company
for the purposes of this Section if the corporation formed by such
consolidation or into which the Company is merged or the Person which
acquires by conveyance or transfer such properties and assets
substantially as a entirety, as the case may be, shall, as a part of
such consolidation, merger, conveyance or transfer, comply with the
conditions set forth in Section G.
3. Prior Payment to Senior Indebtedness Upon Acceleration of
Debentures. In the event that any of the Debentures are declared due
and payable before their Stated Maturity, then and in such event the
holders of Senior Indebtedness outstanding at the time such
Debentures so become due and payable shall be entitled to receive
payment in full of all amounts due or to become due on or in respect
of all such Senior Indebtedness, or provision shall be made for such
payment in money or money's worth, before the Holder is entitled to
receive any payment (including any payment which may be payable by
reason of the payment of any other indebtedness of the Company being
subordinated to the payment of the Debentures) by the Company on
account of the principal of (or premium, if any) or interest on the
Debentures or on account of the purchase or other acquisition of
Debentures.
In the event that, notwithstanding the foregoing, the Company
shall make any payment to the Holder prohibited by the foregoing
provisions of this Subsection, and if such facts shall then have been
made known to the Holder, then and in such event such payment shall
be paid over and delivered forthwith to the Company for the benefit
of the holders of Senior Indebtedness.
The provisions of this Section shall not apply to any payment
with respect to which Subsection 2 would be applicable.
4. No Payment When Newco Indebtedness in Default. (a) In the
event and during the continuation of any default in the payment of
principal (or premium, if any) or interest on any Newco Indebtedness
beyond any applicable grace period with respect thereto, or in the
event that any event of default with respect to any Newco
Indebtedness shall have occurred and be continuing permitting the
holders of such Newco Indebtedness (or a trustee on behalf of the
holders thereof) to declare such Newco Indebtedness due and payable
prior to the date on which it would otherwise have become due and
payable, unless and until such event of default shall have been cured
or waived or shall have ceased to exist and such acceleration shall
have been rescinded or annulled, or (b) in the event any judicial
proceeding shall be pending with respect to any such default in
payment or event of default, then no payment (including any payment
which may be payable by reason of the payment of any other
indebtedness of the Company being subordinated to the payment of the
Debentures) shall be made by the Company on account of principal of
(or premium, if any) or interest on the Debentures or on account of
the purchase or other acquisition of Debentures.
In the event that, notwithstanding the foregoing, the Company
shall make any payment to the Holder prohibited by the foregoing
provisions of this Subsection, and if such fact shall then have been
made known to the Holder, then and in such event such payment shall
be paid over and delivered forthwith to the Company for the benefit
of the holders of Newco Indebtedness.
The provisions of this Section shall not apply to any payment
with respect to which Subsection D(2) would be applicable.
5. Payment Permitted if No Default. Nothing contained in this
Section or elsewhere or in any of the Debentures shall prevent (x)
the Company, at any time except during the pendency of any case,
proceeding, dissolution, liquidation or other winding up, assignment
for the benefit of creditors or other marshalling of assets and
liabilities of the Company referred to in Subsection D(2) or under
the conditions described in Subsections D(3) or D(4), from making
payments at any time of principal of (and premium, if any) or
interest on the Debentures, or (y) the retention by the Holder of any
money deposited with it hereunder to the payment of or on account of
the principal of (and premium, if any) or interest on the Debentures
if, at the time of such retention the Holder did not have knowledge
that such payment would have been prohibited by the provisions of
this Section.
6. Subrogation to Rights of Holders of Senior Indebtedness.
Subject to the payment in full of all Senior Indebtedness, the Holder
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 Section to the rights of the holders of such
Senior Indebtedness to receive payments or distributions of cash,
property or securities applicable to the Senior Indebtedness until
the principal of (and premium, if any) and interest on the Debentures
shall be paid in full. For purposes of such subrogation, no payments
or distributions to the holders of the Senior Indebtedness of any
cash, property or securities to which the Holder would be entitled
except for the provisions of this Section, and no payments over
pursuant to the provisions of this Section to the Company or to the
holders of Senior Indebtedness by the Holder, shall, as between the
Company, its creditors other than holders of Senior Indebtedness and
the Holder, be deemed to be a payment or distribution by the Company
to or on account of the Debentures.
7. Provisions Solely to Define Relative Rights. The
provisions of this Section are and are intended solely for the
purpose of defining the relative rights of the Holder, on the one
hand, and the holders of Senior Indebtedness, on the other hand.
Nothing contained in this Section or elsewhere in this Debenture is
intended to or shall impair, as between the Company, its creditors
other than the holders of Senior Indebtedness and the Holder, the
obligation of the Company, which is absolute and unconditional, to
pay to the Holder the principal of (and premium, if any) and interest
on the Debenture as and when the same shall become due and payable in
accordance with their terms and which, subject to the rights under
this Section of the holders of Senior Indebtedness, is intended to
rank equally with all other general obligations of the Company, or is
intended to or shall affect the relative rights against the Company
of the Holder and creditors of the Company other than the holders of
Senior Indebtedness, nor shall anything herein or therein prevent the
Holder from exercising all remedies otherwise permitted by applicable
law upon default under this Debenture, subject to the rights, if any,
under this Section of the holders of Senior Indebtedness to receive
cash, property or securities otherwise payable or deliverable to the
Holder, and nothing herein shall prevent the conversion of this
Debenture (or any part thereof) in accordance with the terms hereof.
8. No Waiver of Subordination Provisions. No right of any
present or future holder of any Senior Indebtedness to enforce
subordination 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 Debenture, regardless of any
knowledge thereof any such holder may have or be otherwise charged
with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness may, at any time and
from time to time, without the consent of or notice to the Holder,
without incurring responsibility to the Holder and without impairing
or releasing the subordination provided in this Section or the
obligations hereunder of the Holder to the holders of Senior
Indebtedness, do any one or more of the following: (i) change the
manner, place or terms of payment or extend the time of payment of,
or renew or alter, Senior Indebtedness, or otherwise amend or
supplement in any manner Senior Indebtedness or any instrument
evidencing the same or any agreement under which Senior Indebtedness
is outstanding; (ii) sell, exchange, release otherwise or otherwise
deal with any property pledged, mortgaged or securing Senior
Indebtedness; (iii) release any Person liable in any manner for the
collection of Senior Indebtedness; and (iv) exercise or refrain from
exercising any rights against the Company and any other Person.
9. Notice to Holder. The Company shall give prompt written
notice to the Holder of any fact known to the Company which would
prohibit the making of any payment to the Holder in respect of the
Debentures. Failure to give such notice shall not affect the
subordination of the Debenture to Senior Indebtedness.
Notwithstanding the provisions of this Section or any other provision
of this Debenture, the Holder shall not be charged with knowledge of
the existence of any facts which would prohibit the making of any
payment to the Holder in respect of the Debenture, unless and until
the Holder shall have received written notice thereof from the
Company or a holder of Senior Indebtedness or from any trustee
therefor.
Section E. Optional Mandatory Repurchase.
1. Obligation to Repurchase.
a. Upon the occurrence of any Contingent Event, the
Holder shall have the right, at such Holder's option, to require
the Company to redeem this Debenture in whole or in part at a
repurchase price equal to the principal amount of this Debenture
so repurchased plus accrued and unpaid interest on the principal
amount of this Debenture so repurchased.
Such option under this Section E shall be exercised by written
notice to the Company under Section E.b. hereof given at any
time from and after the thirtieth (30th) day before such
Contingent Event through the thirtieth (30th) day after such
Contingent Event (or, if later, through the thirtieth (30th) day
after the Holder receives written notice from the Company of
such Contingent Event). Promptly (and in any event within ten
(10) days) after the occurrence of any Contingent Event, and not
more than thirty (30) days before such Contingent Event, the
Company shall given written notice to the Holder notifying such
Holder of the occurrence of such Contingent Event and informing
such Holder of its right to exercise an option to require a
repurchase under this Section E.
b. In order to exercise its rights to require a
repurchase under this Section E, the Holder shall send to the
Company a written notice demanding prepayment under this Section
E and specifying the date of such prepayment (which shall not be
less than fifteen (15) days after receipt of such notice by the
Company, but in no event earlier than such Contingent Event,
except that such date may be the same date as a Contingent Event
if requested by the Holder).
c. This obligation to repurchase is subject to the
restriction that the Company may not buy any Debenture at any
time when the subordination provisions of this Debenture would
not permit the Company to make a payment of principal, premium
or interest on the Debentures.
2. Certain Definitions. As used in this Section:
a. "Contingent Event" means any one or more of the
following events which shall occur subsequent to the date of
this Debenture:
(1) the Company shall convey, transfer or lease all
or substantially all of its assets (whether held directly
or indirectly through Subsidiaries) to any Persons (other
than to a Subsidiary of the Company);
(2) any Person (other than the Company), including a
"group" (within the meaning of Section 13(d) and 14(d)(2)
of the Securities Exchange Act of 1934, as amended) that
includes such Person, shall acquire, directly or
indirectly, beneficial ownership, in the aggregate, of (x)
50 percent or more of the Common Stock, or (y) securities
representing 50 percent or more of the combined voting
power of the Company's voting securities, in either case,
outstanding on the date immediately prior to the date of
the last such acquisition by such Person; or
(3) on any day (a "Calculation Date") (x) (A) the
Company shall distribute cash, securities or other
properties, including cash dividends (other than Common
Stock, or rights or warrants to acquire Common Stock or
preferred stock substantially equivalent to Common Stock)
to holders of Common Stock, whether by means of dividend,
reclassification, recapitalization or otherwise, or (B) the
Company shall acquire, directly or indirectly, beneficial
ownership of Common Stock; and (y) the sum of the
Applicable Percentages (as defined below) of all such
distributions and acquisitions which have occurred on the
Calculation Date and during the 365-day period immediately
preceding the Calculation Date shall exceed 30 percent.
b. "Applicable Percentage" means (x) In the case of each
distribution referred to in clause (3) above, the percentage
determined as of the Calculation Date of each such distribution
by dividing the aggregate fair market value (as determined in
good faith by the Board of Directors), of such distribution, by
the fair market value (based on the then current market price)
of all of the shares of Common Stock outstanding on the day
immediately prior to such Calculation Date; and (y) in the case
of each acquisition referred to in clause (3) above, the
percentage determined as of the Calculation Date of each such
acquisition by dividing all amounts expended by the Company
(such amounts, if other than in cash, as determined in good
faith by the Board of Directors), in connection with the
acquisition of any shares of Common Stock, by the fair market
value (based on the then current market price) of all of the
shares of Common Stock outstanding on the day immediately prior
to such Calculation Date.
Section F. Covenants.
1. Payment of Principal, Premium and Interest. The Company
will duly and punctually pay the principal of (and premium, if any)
and interest on this Debenture in accordance with the terms hereof.
2. Statement as to Compliance. The Company will deliver to
the Holder, within 120 days after the end of each fiscal year, an
Officers' Certificate stating, as to each signer thereof, that
a. a review of the activities of the Company and its
Subsidiaries during such year and of performance under this
Debenture has been made under his supervision, and
b. to the best of his knowledge, based on such review,
the Company has fulfilled all its obligations under this
Debenture throughout such year, or, if there has been a default
in the fulfillment of any such obligation, specifying each such
default known to him and the nature and status thereof.
3. Further Instruments and Acts. From time to time the
Company will, at its own expense and upon request of the Holder,
execute and deliver or cause to be executed and delivered such
further instruments and do such further acts as may reasonably be
necessary or desirable to carry out the purposes of this Debenture.
Section G. Consolidation, Merger, Conveyance, Transfer or Lease.
1. Company May Consolidate, etc. Only on Certain Terms. The
Company shall not consolidate with or merge into any other Person or
convey, transfer or lease its properties and assets substantially as
an entirety (whether such properties and assets are held by the
Company directly or through its Subsidiaries) to any Person, unless:
a. the Person formed by such consolidation or into which
the Company is merged or the Person which acquires by conveyance
or transfer, or which leases, the properties and assets of the
Company substantially as a entirety shall be a corporation
organized and existing under the laws of the United States of
America, any State thereof or the District of Columbia and shall
expressly assume, by an instrument, executed and delivered to
the Holder, in form satisfactory to the Holder, the due and
punctual payment of the principal of (and premium, if any) and
interest on this Debenture and the performance of every
obligation herein on the part of the Company to be performed or
observed and shall have provided for conversion rights in
accordance with Subsection (B)(6).
b. immediately after giving effect to such transaction,
no Event of Default, and no event which, after notice or lapse
of time or both, would become an Event of Default, shall have
happened and be continuing; and
c. the Company has delivered to the Holder an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and, if an
instrument is required hereunder in connection with such
transaction, such instrument comply with this Section and that
all conditions precedent herein provided for relating to such
transaction have been complied with.
2. Successor Corporation Substituted. Upon any consolidation
or merger by the Company with or into any other Person or any
conveyance, transfer or lease of the properties and assets of the
Company substantially as a entirety (whether such properties and
assets are held by the Company directly or through its Subsidiaries)
to any Person in accordance with Subsection (G)(1), the successor
corporation formed by such consolidation or into which the Company is
merged or to which such conveyance, transfer or lease is made shall
succeed to, and be substituted for, and may exercise every right and
power of the Company hereunder with the same effect as if such
successor corporation had been named as the Company herein, and
thereunder, except in the case of a lease to another Person, the
predecessor corporation shall be relieved of all obligations and
covenants under this Debenture.
Section H. Reports by Company. The Company shall mail to
the Holder, within 15 days after the Company is required to file the
same with the Commission, copies of the annual reports and of the
information, documents and other reports (or copies of such portions
of any of the foregoing as the Commission may from time to time by
rules and regulations prescribe) which the Company may be required to
file with the Commission pursuant to Section 13(a) or Section 15(d)
of the Securities Exchange Act of 1934, as amended; and, if the
Company is not required to file information, documents or reports
pursuant to either of said Sections, then it shall nonetheless mail
the same to the Holder as if it were required to do so by the
Commission.
Section I. Remedies.
1. Events of Default. "Event of Default," wherever used
herein, means any one of the following events (whatever the reason
for such Event of Default and whether it shall be occasioned by the
provisions of Section (B) or be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or
order of any court or any order, rule or regulation or any
administrative or governmental body):
a. default in the payment of any interest upon this
Debenture and any other Debenture issued to the Holder when it
becomes due and payable and continuance of such default for a
period of 10 days; or
b. default in the payment of the principal of (or
premium, if any, on) this Debenture and any other Debenture
issued to the Holder at its Maturity whether or not such payment
is prohibited by the subordination provisions of this Debenture
and continuance of such default for a period of 30 days; or
c. default in the performance, or breach, of any covenant
or warranty of the Company in this Debenture (other than a
covenant or warranty a default in whose performance or whose
breach is elsewhere in this Section specifically dealt with),
and continuance of such default or breach for a period of 30
days after there has been given, by registered or certified
mail, to the Company by the Holder a written notice specifying
such default or breach and requiring it to be remedied and
stating that such notice is a "Notice of Default" hereunder; or
d. the entry by a court having jurisdiction in the
premises of (A) a decree or order for relief in respect of the
Company in an involuntary case or proceeding under any
applicable Federal or state bankruptcy, insolvency,
reorganization or other similar law or (B) a decree or order
adjudging the Company a bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement,
adjustment or composition of or in respect of the Company under
any applicable Federal or state law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or of any substantial part of
its property, or ordering the winding up or liquidation of its
affairs, and the continuance of any such decree or order for
relief or any such other decree or order unstayed and in effect
for a period of 60 consecutive days; or
e. the commencement by the Company of a voluntary case or
proceeding under any applicable Federal or state bankruptcy,
insolvency, reorganization or other similar law or of any other
case or proceeding to be adjudicated a bankrupt or insolvent, or
the consent by it to the entry of a decree or order for relief
in respect of the Company in an involuntary case or proceeding
under any applicable Federal or state bankruptcy, insolvency,
reorganization or other similar law or to the commencement of
any bankruptcy or insolvency case or proceeding against it, or
the filing by it of a petition or answer or consent seeking
reorganization or relief under any applicable Federal or state
law, or the consent by it to the filing of such petition or to
the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator or similar
official of the Company or of any substantial part of its
property, or the making by it of an assignment for the benefit
of creditors, or the admission by it in writing of its inability
to pay its debts generally as they become due, or the taking of
corporate action by the Company in furtherance of any such
action.
2. Acceleration of Maturity; Rescission and Annulment. If any
Event of Default occurs and is continuing (other than an Event of
Default described in Subsections I(1)(d) and (e)), then and in every
such case the Holder may declare the principal and all accrued and
unpaid interest of all the Debentures issued to the Holder to be due
and payable immediately, by a notice in writing to the Company, and
upon any such declaration such principal shall become immediately due
and payable. If an Event of Default described in Subsections I(1)(d)
and (e) shall occur, then in every such case the unpaid principal
balance hereof and all accrued and unpaid interest shall
automatically become due and payable.
3. Collection of Indebtedness and Suits for Enforcement. The
Company covenants that if
a. default is made in the payment of any installment of
interest on any Debenture issued to the Holder when such
interest become due and payable and such default continues for a
period of 30 days, or
b. default is made in the payment of the principal of (or
premium, if any, on) any Debenture issued to the Holder at the
Maturity thereof,
the Company will, upon demand by the Holder, pay to it, the whole
amount then due and payable on such Debentures for principal (and
premium, if any) and interest, with interest upon the overdue
principal (and premium, if any) and, to the extent that payment of
such interest shall be legally enforceable, upon overdue installments
of interest, at the rate borne by the Debentures and, in addition
thereto, such further amount as shall be sufficient to cover the
costs and expenses of collection, including the reasonable
compensation, expenses and disbursements of the Holder, its agents
and counsel.
If the Company fails to pay such amounts forthwith upon such
demand, the Holder may institute a judicial proceeding for the
collection of the sums so due and unpaid, may prosecute such
proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon the Debentures and
collect the moneys adjudged or decreed to be payable in the manner
provided by law out of the property of the Company or any other
obligor upon the Debentures, wherever situated.
If an Event of Default occurs and is continuing, the Holder may
in its discretion proceed to protect and enforce its rights by such
appropriate judicial proceedings as it shall deem most effectual to
protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Debenture or in aid
of the exercise of any power granted herein, or to enforce any other
proper remedy.
4. Application of Money Collected. Subject to Section D, any
money collected by the Holder pursuant to this Section shall be
applied first to the payment of all fees, costs and expenses
(including attorneys fees and expenses) incurred by the Holder
(whether before or after judgment) in the collection of such sums and
second, to the payment of the amounts then due and unpaid for
principal of (and premium, if any) and interest on the Debentures in
respect of which or for the benefit of which such money or
Debentures, as the case may be, has been collected.
5. Unconditional Right of Holder to Receive Principal, Premium
and Interest and to Convert. Notwithstanding any other provision
herein, the Holder shall have the right, which is absolute and
unconditional, to receive payment of the principal of (and premium,
if any) and interest on this Debenture on the date when due (or, in
the case of redemption, on the Redemption Date) and to convert this
Debenture in accordance with Section B and to institute suit for the
enforcement of any such payment and right to convert.
6. Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Holder is intended to be exclusive
of any other right or remedy, and every right and remedy shall, to
the extent permitted by law, be cumulative and in addition to every
other right and remedy given hereunder or now or hereafter existing
at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or
remedy.
7. Delay or Omission Not Waiver. No delay or omission of the
Holder to exercise any right or remedy accruing upon any Event of
Default shall impair any such right or remedy or constitute a waiver
of any such Event of Default or an acquiescence therein. Every right
and remedy given by this Section or by law to the Holder may be
exercised from time to time, and as often as may be deemed expedient,
by the Holder.
8. Amendments; Governing Law etc.. This Debenture may be
amended only by a writing signed by the Company and the Holder. The
Article and Section headings herein are for convenience only and
shall not affect the construction hereof. All covenants and
agreements in this Debenture by the Company shall bind its successors
and assigns, whether so expressed or not. In case any provision in
this Debenture shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby. This Debenture
shall be governed by and construed in accordance with the laws of the
State of Wisconsin. If any action or proceeding shall be brought by
the Holder in order to enforce any right or remedy under this
Debenture, the Company hereby consents and submits to the
jurisdiction of the courts of the State of Wisconsin and of any
Federal court sitting in The City of Milwaukee, State of Wisconsin.
Any action or proceeding brought by the Company to enforce any right,
assert any claim or obtain any relief whatsoever in connection with
this Debenture shall be brought by the Company exclusively in the
courts of the State of Wisconsin or in any Federal court sitting in
The City of Milwaukee, State of Wisconsin.
No provision of this Debenture shall alter or impair the
obligation of the Company, which is absolute and unconditional, to
pay the principal of (and premium, if any) and interest on this
Debenture at the times, place and rate, and in the coin or currency
or with another debenture, herein prescribed or to convert this
Debenture as provided herein.
Debentures are exchangeable for a like aggregate principal
amount of Debentures of a different authorized denomination, as
requested by the Holder.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in
connection therewith.
9. Definitions. The following terms shall have the meanings
specified below:
"Affiliate" of any specified person means any other Person
directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of
this definition, "control" when used with respect to any specified Person
means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly
adopted by the Board of Directors and to be in full force and effect on
the date of such certification, and delivered to the Trustee.
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Securities Exchange Act
of 1934, or, if at any time after the execution of this instrument such
Commission is not existing and performing the duties now assigned to it
under the Trust Indenture Act, then the body performIng such duties at
such time.
"Common Stock" means all shares now or hereafter authorized of
the class of Common Stock of the Company currently authorized and stock of
any other class into which such shares may hereafter have been changed.
"Debentures" means this Debenture and all other Debentures of
the Company issued to the Holder.
"Event of Default" has the meaning specified in Section I.
"Interest Payment Date" means the Stated Maturity of a
installment of interest on the Debentures.
"Maturity" when used with respect to any Debenture means the
date on which the principal of such Debenture becomes due and payable as
therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
"Newco" means Newco, Inc., a Wisconsin corporation and any
successor thereto.
"Newco Indebtedness" means the principal, premium, if any, and
unpaid interest on indebtedness for money borrowed by Newco and guaranteed
by the Company (at any time and from time to time), whether outstanding on
the date hereof or hereafter, and all renewals, extensions and refundings
of any such Debt; provided, however, that the following shall not
constitute Newco Indebtedness: any Debt which by its terms refers
explicitly to the Debentures issued hereunder and states that such Debt
shall not be senior in right of payment thereto.
"Officers" Certificate" means a certificate signed by the
Chairman of the Board, the President or a Vice President, and by the
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary
of the Company, and delivered to the Holder.
"Opinion of Counsel" means a written opinion of counsel, who may
be counsel for the Company or other counsel acceptable to the Holder.
"Person" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated
organization or government or any agent or political subdivision thereof.
"Redemption Date," when used with respect to any Debenture to be
redeemed, means the date fixed for such redemption by or pursuant to this
Debenture.
"Redemption Price," when used with respect to any Debenture to
be redeemed, means the price at which it is to be redeemed pursuant to
this Debenture.
"Regular Record Date" for the interest payable on any Interest
Payment Date means the April 1st or the September 1st (whether or not a
Business Day), as the case may be, next preceding such Interest Payment
Date.
"Senior Indebtedness" means all Debts, obligations and
liabilities of the Company arising under the guarantee by the Company of
the Newco Indebtedness, whether such guarantee is outstanding on the date
hereof or hereafter, and all renewals, replacements and extensions
thereof.
"Stated Maturity," when used with respect to any Debenture or
any installment of interest thereon, means the date specified in such
Debenture as the fixed date on which the principal of such Debenture or
such installment of interest is due and payable.
"Subsidiary" means a corporation more than 50% of the
outstanding voting stock of which is owned, directly or indirectly, by the
Company or by one or more other Subsidiaries, or by the Company and one or
more other Subsidiaries. For the purposes of this definition, "voting
stock" means stock which ordinarily has voting power for the election of
directors, whether at all times or only so long as no senior class of
stock has such voting power by reason of any contingency.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed under its corporate seal.
SWING-N-SLIDE CORP.
By:/s/ Richard G. Mueller
Richard G. Mueller
President
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS
OF ANY STATE BY REASON OF SPECIFIC EXEMPTIONS UNDER THE PROVISIONS OF THE
AFOREMENTIONED ACT AND LAWS AND/OR RULES AND REGULATIONS PROMULGATED
THEREUNDER. ACCORDINGLY, THIS INSTRUMENT MAY NOT BE OFFERED FOR SALE,
SOLD, OR OTHERWISE TRANSFERRED EXCEPT UPON AN EFFECTIVE REGISTRATION OF
THE SECURITIES REPRESENTED BY THIS INSTRUMENT UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS, OR UPON
ACCEPTANCE BY THE ISSUER OF AN OPINION OF COUNSEL IN SUCH FORM AND BY SUCH
COUNSEL, OR OTHER DOCUMENTATION, AS SHALL BE SATISFACTORY TO COUNSEL FOR
THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
SWING-N-SLIDE CORP.
10% Convertible Subordinated Debenture due 2004
$280,068.71 October 15, 1997
Swing-N-Slide Corp., a corporation duly organized and existing
under the laws of Delaware, and its permitted successors and assigns
(herein called the "Company"), for value received, hereby promises to pay
to the order of GreenGrass Holdings, a Delaware general partnership, and
its successors and assigns (the "Holder"), the principal sum of TWO
HUNDRED EIGHTY THOUSAND SIXTY-EIGHT and 71/100 DOLLARS ($280,068.71) on
February 15, 2004, and to pay interest thereon commencing April 15, 1998
and on April 15 and October 15, in each year thereafter, at the rate of
10% per annum, until the principal hereof is paid in full. Payment of the
principal of (and premium, if any) and interest on this Debenture will be
made by check payable in money of the United States of America that at the
time of payment is legal tender for payment of public and private debts,
mailed to the Holder at its principal office in Chicago, Illinois or such
other address as may be designated by the Holder; provided, however, that
until February 15, 1999, at the option of the Company, interest on this
Debenture may be paid by the issuance of an additional debenture, in the
form of this Debenture, in the principal amount of the interest so
payable, dated the interest payment date for such interest payment, with
interest payable as provided herein with a stated maturity of principal
and interest as provided in this Debenture and otherwise identical to this
Debenture. Interest shall be calculated based on a year composed of 365
days.
Section A. Securities Offering. If debentures are issued to
shareholders of the Company as contemplated by Section 4.8(c) of the
Transaction Agreement, dated January 4, 1996, between GreenGrass Holdings
and the Company, then contemporaneously with the closing of such offer
this Debenture may be exchanged, at the option of the Holder, for
debentures issued under the indenture entered into by the Company in
connection with such offer, at par plus any accrued and unpaid interest,
except that any such debentures issued to the Holder will continue to be
convertible at the Conversion Rate (as defined below) specified below.
Section B. Conversion Rights.
1. General. The Holder shall have the right at any time prior
to maturity, at its option, to convert the principal of this
Debenture (or any portion of the principal thereof which is $1.00 or
an integral multiple of $1.00) into fully paid and nonassessable
(except as otherwise provided by law) shares of Common Stock of the
Company at the rate of one share of Common Stock for each $4.80
principal amount of Debentures or, in case an adjustment to the
number of shares of Common Stock issuable for each $4.80 principal
amount of Debentures (the "Conversion Rate" or "rate") has taken
place pursuant to the provisions hereof, then at the rate as so
adjusted. Such right shall be exercised by the surrender of the
Debenture, the principal of which is so to be converted, to the
Company, accompanied by written notice that the Holder elects to
convert the Debenture or any portion thereof and specifying the name
or names (with address) in which a certificate or certificates for
Common Stock are to be issued. For convenience, the conversion of
all or a portion, as the case may be, of the principal of this
Debenture (and any other Debentures (including without limitation any
Debentures issued in lieu of interest in accordance with the first
paragraph of this Debenture)) into the Common Stock of the Company is
hereinafter sometimes referred to as the conversion of this
Debenture. If this Debenture is converted in part only, upon such
conversion the Company shall execute and deliver to the Holder a new
Debenture or Debentures of authorized denominations in an aggregate
principal amount equal to the unconverted portion of such Debenture.
This Debenture shall continue to be convertible, in whole or in
part, (i) even though the Company or the Holder may have given notice
of prepayment or redemption with respect to this Debenture or any
part thereof pursuant to Sections C or E hereof, so long as this
Debenture and the Holder's election to convert shall have been
delivered to the Company pursuant to this Section B prior to the date
fixed for such prepayment or redemption and (ii) whether or not a
mandatory, optional or mandatory optional prepayment or redemption
prior to the date fixed for such prepayment or redemption, is due on
this Debenture on any date following such time.
2. Issuance of Common Stock; Time of Conversion. As promptly
as practicable after the surrender, as herein provided, of this
Debenture for conversion, the Company shall deliver to the Holder a
certificate or certificates representing the number of fully paid and
nonassessable (except as otherwise provided by law) shares of Common
Stock of the Company into which this Debenture (or portion thereof)
may be converted together with payment in lieu of any fraction of a
share. Subject to the following provisions of this Debenture, such
conversion shall be deemed to have been made immediately prior to the
close of business on the date that this Debenture shall have been
surrendered for conversion (except that if such conversion is in
connection with an underwritten public offering of Common Stock, then
such conversion shall be deemed to have been effected upon such
surrender), so that the rights of the Holder as a Holder shall cease
with respect to this Debenture (or the portion thereof) being
converted at such time, and the Person or Persons entitled to receive
the shares of Common Stock deliverable upon conversion of this
Debenture shall be treated for all purposes as having become the
record holder or holders of such shares of Common Stock at such time,
and such conversion shall be at the conversion rate in effect at such
time; provided, however, that no such surrender on any date when the
stock transfer books of the Company shall be closed shall be
effective to constitute the Person or Persons entitled to receive the
shares of Common Stock deliverable upon such conversion as the record
holder or holders of such shares of Common Stock on such date, but
such surrender shall be effective to constitute the Person or Persons
entitled to receive such shares of Common Stock as the record holder
or holders thereof for all purposes immediately prior to the close of
business on the next succeeding day on which such stock transfer
books are open, and such conversion shall be deemed to have been made
at, and shall be made at the conversion rate in effect at, such time
on such next succeeding day.
If the last day for the exercise of the conversion right shall
not be a business day, then such conversion right may be exercised on
the next succeeding business day.
3. Payment of Accrued Interest. Within ten (10) days after
receipt of any Debenture and an election to convert all or a portion
of the principal amount of such Debenture pursuant to this Section B,
the Company will pay to the Holder any unpaid interest, accrued to
the date of conversion of such Debenture, on the principal amount so
converted.
4. Adjustment of Conversion Price. The conversion rate shall
be subject to adjustment as follows:
a. In case the Company shall (i) pay a dividend on Common
Stock in Common Stock, (ii) subdivide its outstanding shares of
Common Stock, or (iii) combine its outstanding shares of Common
Stock into a smaller number of shares, the conversion rate in
effect immediately prior thereto shall be adjusted retroactively
as provided below so that the Holder shall be entitled to
receive the number of shares of Common Stock of the Company
which it would have owned or have been entitled to receive after
the happening of any of the events described above had this
Debenture been converted immediately prior to the happening of
such event. An adjustment made pursuant to this paragraph (a)
shall become effective immediately after the record date in the
case of a dividend and shall become effective immediately after
the effective date in the case of a subdivision or combination.
b. In case the Company shall issue rights or warrants to
all holders of its Common Stock entitling them to subscribe for
or purchase shares of Common Stock at a price per share less
than the current market price per share (determined as provided
in paragraph (e) of this Section) of the Common Stock on the
date fixed for the determination of stockholders entitled to
receive such rights or warrants, the conversion rate in effect
at the opening of business on the day following the day fixed
for such determination shall be increased by multiplying such
conversion rate by a fraction of which the numerator shall be
the number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination plus the
number of shares of Common Stock so offered for subscription or
purchase and the denominator shall be the number of shares of
Common Stock outstanding at the close of business on the date
fixed for such determination plus the number of shares of Common
Stock which the aggregate of the offering price of the total
number of shares of Common Stocks offered for subscription or
purchase would purchase at such current market price, such
increase to become effective immediately after the opening of
business on the day following the date fixed for such
determination; provided, however, in the event that all the
shares of Common Stock offered for subscription or purchase are
not delivered upon the exercise of such rights or warrants, upon
the expiration of such rights or warrants the conversion rate
shall be readjusted to the conversion rate which would have been
in effect had the numerator and the denominator of the foregoing
fraction and the resulting adjustment been made based upon the
number of shares of Common Stock actually delivered upon the
exercise of such rights or warrants rather than upon the number
of shares of Common Stock offered for subscription or purchase.
For the purposes of this paragraph (b), the number of shares of
Common Stock at any time outstanding shall not include shares
held in the treasury of the Company.
c. In case the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock shares of its
capital stock (other than Common Stock), or assets (excluding
cash dividends paid out of the retained earnings of the Company)
or rights or warrants to subscribe or purchase (excluding those
referred to in paragraph (b) above) (hereinafter collectively
referred to as "Distributions on Common Stock"), then in each
such case, the Company shall deliver to the Holder the
Distribution on Common Stock to which the Holder would be
entitled if it had converted the Debentures for Common Stock
immediately prior to the record date for the purpose of
determining stockholders entitled to receive such Distribution
on Common Stock.
d. The reclassification (including any reclassification
upon a merger in which the Company is the continuing
corporation) of Common Stock into securities including other
than Common Stock (other than any reclassification upon a
consolidation or merger to which Subsection B(6) applies) shall
be deemed to involve (i) a distribution of such securities other
than Common Stock to all holders of Common Stock (and the
effective date of such reclassification shall be deemed to be
"the date fixed for the determination of stockholders entitled
to receive such distribution" and "the date fixed for such
determination" within the meaning of paragraph (e) of this
Section), and (ii) a subdivision or combination, as the case may
be, of the number of shares of Common Stock outstanding
immediately prior to such reclassification into the number of
shares of Common Stock outstanding immediately thereafter.
e. For the purpose of any computation under paragraphs
(b) and (c) of this Section, the current market price per share
of Common Stock on any date shall be deemed to be the average of
the daily closing prices for the thirty consecutive business
days selected by the Company commencing with the forty-fifth
business day before the day in question. The closing price for
each day shall be the last reported sales price regular way or,
in case no such reported sale takes place on such day, the
average of the reported closing bid and asked prices regular
way, in either case on the American Stock Exchange or if the
Common Stock is not listed or admitted to trading on such
Exchange, on the principal national securities exchange on which
the Common Stock is listed or admitted to trading or, if not
listed or admitted to trading on any national securities
exchange, on the National Association of Securities Dealers
Automated Quotations National Market System or, if the Common
Stock is not listed or admitted to trading on any national
securities exchange or quoted on such National Market System,
the average of the closing bid and asked prices in the over-the-
counter market as furnished by any New York Stock Exchange or
American Stock Exchange member firm selected from time to time
by the Company for that purpose. If the current market price
per share of Common Stock cannot be determined in accordance
with the above procedures under this paragraph (e), such current
market price shall be determined in good faith by the Board of
Directors of the Company.
f. No adjustment in the conversion rate shall be required
unless such adjustment would require an increase or decrease of
at least 1% of such rate; provided, however, that the Company
may make any such adjustment at its election and provided,
further, that any adjustments which by reason of this paragraph
(f) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All
calculations under this Section B shall be made to the nearest
cent or to the nearest one-hundredth of a share, as the case may
be. Anything in this Section B notwithstanding, the Company may
make such reductions in the conversion rate, in addition to
those required by this Section, as it considers to be advisable
in order that any event treated for Federal income tax purposes
as a dividend of stock or stock rights shall not be taxable to
the recipients.
g. Whenever the conversion rate is adjusted as herein
provided
(1) the Company shall compute the adjusted
conversion rate in accordance with paragraph (a); and
(2) notice stating that the conversion rate has
been adjusted and setting forth the adjusted
conversion rate shall forthwith be mailed to the
Holder.
h. For the purpose of this Section B(4), the term "Common
Stock" shall include any stock of any class of the Company which
has no preference in respect of dividends or of amounts payable
in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Company and which is not
subject to redemption by the Company. However, shares issuable
on conversion of shares of this Series shall include only shares
of the class designated as Common Stock of the Company as of
January 1, 1996, 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, however, that if
at any time there shall be more than one such resulting class,
the shares of each such class then so issuable shall be
substantially in the proportion which the total number of shares
of such class resulting from all such reclassifications bears to
the total number of shares of all such classes resulting from
all such reclassifications.
5. No Fractional Shares. No fractional shares of Common Stock
shall be issued upon conversion of this Debenture. If more than one
Debenture shall be surrendered for conversion at one time by the
Holder, the number of full shares which shall be issuable upon
conversion thereof shall be computed on the basis of the aggregate
principal amount of the Debentures or specified portions thereof so
surrendered. Instead of any fractional share of Common Stock which
would otherwise be issuable upon conversion of this Debenture or any
Debentures or specified portions thereof, the Company shall pay a
cash adjustment in respect of such fraction in amount equal to the
same fraction of the current market price per share of Common Stock
(as determined in accordance with Section B.4.(e) above) at the close
of business on the day of conversion.
6. Consolidation, Merger or Sale of Assets. In case of any
consolidation of the Company with, or merger of the Company into, any
other Person, (other than a merger which does not result in any
reclassification, conversion, exchange or cancellation of outstanding
shares of Common Stock of the Company) or any sale or transfer of all
or substantially all of the assets of the Company (whether such
assets are held by the Company directly or indirectly through its
Subsidiaries), the Person formed by such consolidation or resulting
from such merger or which acquires such assets, as the case may be,
shall execute and deliver to the Holder an instrument providing that
the Holder shall have the right thereafter, during the period this
Debenture shall be convertible to convert this Debenture only into
the kind and amount of securities, cash and other property receivable
upon such consolidation, merger, sale or transfer by a holder of the
number of shares of Common Stock of the Company into which this
Debenture might have been converted immediately prior to such
consolidation, merger, sale or transfer assuming such holder of
Common Stock of the Company (i) is not a Person with which the
Company consolidated or into which the Company merged or to which
such sale or transfer was made, as the case may be ("constituent
Person"), or an Affiliate of a constituent Person and (ii) failed to
exercise his rights of election, if any, as to the kind or amount of
securities, cash and other property receivable upon such
consolidation, merger, sale or transfer (provided that if the kind or
amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer is not the same for each
share of Common Stock of the Company held immediately prior to such
consolidation, merger, sale or transfer by other than a constituent
Person or an Affiliate thereof and in respect of which such rights of
election shall not have been exercised ("non-electing share") then
for the purpose of this subsection the kind and amount of securities,
cash and other property receivable upon such consolidation, merger,
sale or transfer by 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 instrument shall provide for adjustments
which, for events subsequent to the effective date of such
instrument, shall be as nearly equivalent as may be practicable to
the adjustments provided for in this Section. The above provisions
of this subsection shall similarly apply to successive
consolidations, mergers, sales or transfers.
7. Shares to be Reserved. The Company covenants that it will
at all times reserve and keep available out of its authorized Common
Stock, solely for the purpose of issue upon conversion of Debentures
as herein provided, such number of shares of Common Stock as shall
then be issuable upon the conversion of all outstanding Debentures.
The Company covenants that all shares of Common Stock which shall be
so issuable shall, when issued, be duly and validly issued and fully
paid and nonassessable.
8. Registration and Listing of Shares. The Company covenants
that if any shares of Common Stock, required to be reserved for
purposes of conversion of Debentures hereunder, require registration
with or approval of any governmental authority under any Federal or
State law before such shares may be issued upon conversion, the
Company will in good faith and as expeditiously as possible endeavor
to cause such shares to be duly registered or approved, as the case
may be. The Company further covenants that so long as the Common
Stock of the Company is listed on the American Stock Exchange or any
other national securities exchange, the Company will, if permitted by
the rules of such exchange, list and keep listed on such exchange,
upon official notice of issuance, all shares of Common Stock issuable
upon conversion of Debentures.
9. Taxes and Charges. The issuance of certificates for shares
of Common Stock upon the conversion of Debentures shall be made
without charge to the Holder for such certificates or for any tax in
respect of the issuance of such certificates or the securities
represented thereby, and such certificates shall be issued in the
name of, or in such names as may be directed by, the Holder;
provided, however, that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the
issuance and delivery of any such certificate in a name other than
that of the Holder, and the Company shall not be required to issue or
deliver such certificates unless or until the Person or Persons
requesting the issuance 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 C. Optional Redemption.
The Debentures are subject to redemption upon not less than 30
or more than 60 days' notice by mail, at any time, as a whole or in
part, at the election of the Company, at a redemption price equal to
100% of the principal amount, together with accrued interest to the
redemption date, but interest installments whose stated maturity is
on or prior to such redemption date will be payable to the Holder.
In the event of redemption or conversion of this Debenture is in
part only, a new Debenture or Debentures for the unredeemed or
unconverted portion hereof will be issued in the name of the Holder
upon the cancellation hereof.
Section D. Subordination.
1. Debentures Subordinate to Senior Indebtedness. The Company
covenants and agrees, and the Holder by its acceptance hereof
likewise covenants and agrees, that, to the extent and in the manner
hereinafter set forth in this Section, the indebtedness represented
by this Debenture and the payment of the principal of (and premium,
if any) and interest on this Debenture are hereby expressly made
subordinate and subject in right of payment to the prior payment in
full of all Senior Indebtedness.
2. Payment Over of Proceeds Upon Dissolution Etc. Upon any
distribution of assets of the Company in the event of (a) any
insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or other similar case or proceeding in
connection therewith, relative to the Company or to its creditors, as
such, or to its assets, or (b) any liquidation, dissolution or other
winding up of the Company, whether voluntary or involuntary and
whether or not involving insolvency or bankruptcy, or (c) any
assignment for the benefit of creditors or any other marshalling of
assets and liabilities of the Company, then and in such event the
holders of Senior Indebtedness shall be entitled to receive payment
in full of all amounts due or to become due on or in respect of all
Senior Indebtedness, or provision shall be made for such payment, in
money or money's worth, before the Holder is entitled to receive any
payment on account of principal of (or premium, if any) or interest
on the Debentures, and to that end the holders of Senior Indebtedness
shall be entitled to receive, for application to the payment thereof,
any payment or distribution of any kind or character, whether in
cash, property or securities, including any such payment or
distribution which may be payable or deliverable by reason of the
payment of any other indebtedness of the Company being subordinated
to the payment of the Debentures, which may be payable or deliverable
in respect of the Debentures in any such case, proceeding,
dissolution, liquidation or other winding up or event.
In the event that, notwithstanding the foregoing provisions of
this Subsection, the Holder shall have received any payment or
distribution of assets of the Company of any kind or character,
whether in cash, property or securities, including any such payment
or distribution which may be payable or deliverable by reason of the
payment of any other indebtedness of the Company being subordinated
to the payment of the Debentures, before all Senior Indebtedness is
paid in full or payment thereof provided for, and if such fact shall
then have been made known to the Holder, then and in such event such
payment or distribution shall be paid over or delivered forthwith to
the trustee in bankruptcy, receiver, liquidating trustee, custodian,
assignee, agent or other Person making payment or distribution of
assets of the Company for application to the payment of all Senior
Indebtedness remaining unpaid, to the extent necessary to pay all
Senior Indebtedness in full, after giving effect to any concurrent
payment or distribution to or for the holders of Senior Indebtedness.
For purposes of this Section only, 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 Subsection with respect to the Debentures to
the payment of all Senior Indebtedness which may at the time be
outstanding: provided, however, that (i) Senior Indebtedness is
assumed by the new corporation, if any, resulting from any such
reorganization or readjustment, and (ii) the rights of the holders of
the Senior Indebtedness 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 properties and assets
substantially as an entirety to another Person upon the terms and
conditions set forth in Section G shall not be deemed a dissolution,
winding up, liquidation, reorganization, assignment for the benefit
of creditors or marshalling of assets and liabilities of the Company
for the purposes of this Section if the corporation formed by such
consolidation or into which the Company is merged or the Person which
acquires by conveyance or transfer such properties and assets
substantially as a entirety, as the case may be, shall, as a part of
such consolidation, merger, conveyance or transfer, comply with the
conditions set forth in Section G.
3. Prior Payment to Senior Indebtedness Upon Acceleration of
Debentures. In the event that any of the Debentures are declared due
and payable before their Stated Maturity, then and in such event the
holders of Senior Indebtedness outstanding at the time such
Debentures so become due and payable shall be entitled to receive
payment in full of all amounts due or to become due on or in respect
of all such Senior Indebtedness, or provision shall be made for such
payment in money or money's worth, before the Holder is entitled to
receive any payment (including any payment which may be payable by
reason of the payment of any other indebtedness of the Company being
subordinated to the payment of the Debentures) by the Company on
account of the principal of (or premium, if any) or interest on the
Debentures or on account of the purchase or other acquisition of
Debentures.
In the event that, notwithstanding the foregoing, the Company
shall make any payment to the Holder prohibited by the foregoing
provisions of this Subsection, and if such facts shall then have been
made known to the Holder, then and in such event such payment shall
be paid over and delivered forthwith to the Company for the benefit
of the holders of Senior Indebtedness.
The provisions of this Section shall not apply to any payment
with respect to which Subsection 2 would be applicable.
4. No Payment When Newco Indebtedness in Default. (a) In the
event and during the continuation of any default in the payment of
principal (or premium, if any) or interest on any Newco Indebtedness
beyond any applicable grace period with respect thereto, or in the
event that any event of default with respect to any Newco
Indebtedness shall have occurred and be continuing permitting the
holders of such Newco Indebtedness (or a trustee on behalf of the
holders thereof) to declare such Newco Indebtedness due and payable
prior to the date on which it would otherwise have become due and
payable, unless and until such event of default shall have been cured
or waived or shall have ceased to exist and such acceleration shall
have been rescinded or annulled, or (b) in the event any judicial
proceeding shall be pending with respect to any such default in
payment or event of default, then no payment (including any payment
which may be payable by reason of the payment of any other
indebtedness of the Company being subordinated to the payment of the
Debentures) shall be made by the Company on account of principal of
(or premium, if any) or interest on the Debentures or on account of
the purchase or other acquisition of Debentures.
In the event that, notwithstanding the foregoing, the Company
shall make any payment to the Holder prohibited by the foregoing
provisions of this Subsection, and if such fact shall then have been
made known to the Holder, then and in such event such payment shall
be paid over and delivered forthwith to the Company for the benefit
of the holders of Newco Indebtedness.
The provisions of this Section shall not apply to any payment
with respect to which Subsection D(2) would be applicable.
5. Payment Permitted if No Default. Nothing contained in this
Section or elsewhere or in any of the Debentures shall prevent (x)
the Company, at any time except during the pendency of any case,
proceeding, dissolution, liquidation or other winding up, assignment
for the benefit of creditors or other marshalling of assets and
liabilities of the Company referred to in Subsection D(2) or under
the conditions described in Subsections D(3) or D(4), from making
payments at any time of principal of (and premium, if any) or
interest on the Debentures, or (y) the retention by the Holder of any
money deposited with it hereunder to the payment of or on account of
the principal of (and premium, if any) or interest on the Debentures
if, at the time of such retention the Holder did not have knowledge
that such payment would have been prohibited by the provisions of
this Section.
6. Subrogation to Rights of Holders of Senior Indebtedness.
Subject to the payment in full of all Senior Indebtedness, the Holder
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 Section to the rights of the holders of such
Senior Indebtedness to receive payments or distributions of cash,
property or securities applicable to the Senior Indebtedness until
the principal of (and premium, if any) and interest on the Debentures
shall be paid in full. For purposes of such subrogation, no payments
or distributions to the holders of the Senior Indebtedness of any
cash, property or securities to which the Holder would be entitled
except for the provisions of this Section, and no payments over
pursuant to the provisions of this Section to the Company or to the
holders of Senior Indebtedness by the Holder, shall, as between the
Company, its creditors other than holders of Senior Indebtedness and
the Holder, be deemed to be a payment or distribution by the Company
to or on account of the Debentures.
7. Provisions Solely to Define Relative Rights. The
provisions of this Section are and are intended solely for the
purpose of defining the relative rights of the Holder, on the one
hand, and the holders of Senior Indebtedness, on the other hand.
Nothing contained in this Section or elsewhere in this Debenture is
intended to or shall impair, as between the Company, its creditors
other than the holders of Senior Indebtedness and the Holder, the
obligation of the Company, which is absolute and unconditional, to
pay to the Holder the principal of (and premium, if any) and interest
on the Debenture as and when the same shall become due and payable in
accordance with their terms and which, subject to the rights under
this Section of the holders of Senior Indebtedness, is intended to
rank equally with all other general obligations of the Company, or is
intended to or shall affect the relative rights against the Company
of the Holder and creditors of the Company other than the holders of
Senior Indebtedness, nor shall anything herein or therein prevent the
Holder from exercising all remedies otherwise permitted by applicable
law upon default under this Debenture, subject to the rights, if any,
under this Section of the holders of Senior Indebtedness to receive
cash, property or securities otherwise payable or deliverable to the
Holder, and nothing herein shall prevent the conversion of this
Debenture (or any part thereof) in accordance with the terms hereof.
8. No Waiver of Subordination Provisions. No right of any
present or future holder of any Senior Indebtedness to enforce
subordination 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 Debenture, regardless of any
knowledge thereof any such holder may have or be otherwise charged
with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness may, at any time and
from time to time, without the consent of or notice to the Holder,
without incurring responsibility to the Holder and without impairing
or releasing the subordination provided in this Section or the
obligations hereunder of the Holder to the holders of Senior
Indebtedness, do any one or more of the following: (i) change the
manner, place or terms of payment or extend the time of payment of,
or renew or alter, Senior Indebtedness, or otherwise amend or
supplement in any manner Senior Indebtedness or any instrument
evidencing the same or any agreement under which Senior Indebtedness
is outstanding; (ii) sell, exchange, release otherwise or otherwise
deal with any property pledged, mortgaged or securing Senior
Indebtedness; (iii) release any Person liable in any manner for the
collection of Senior Indebtedness; and (iv) exercise or refrain from
exercising any rights against the Company and any other Person.
9. Notice to Holder. The Company shall give prompt written
notice to the Holder of any fact known to the Company which would
prohibit the making of any payment to the Holder in respect of the
Debentures. Failure to give such notice shall not affect the
subordination of the Debenture to Senior Indebtedness.
Notwithstanding the provisions of this Section or any other provision
of this Debenture, the Holder shall not be charged with knowledge of
the existence of any facts which would prohibit the making of any
payment to the Holder in respect of the Debenture, unless and until
the Holder shall have received written notice thereof from the
Company or a holder of Senior Indebtedness or from any trustee
therefor.
Section E. Optional Mandatory Repurchase.
1. Obligation to Repurchase.
a. Upon the occurrence of any Contingent Event, the
Holder shall have the right, at such Holder's option, to require
the Company to redeem this Debenture in whole or in part at a
repurchase price equal to the principal amount of this Debenture
so repurchased plus accrued and unpaid interest on the principal
amount of this Debenture so repurchased.
Such option under this Section E shall be exercised by written
notice to the Company under Section E.b. hereof given at any
time from and after the thirtieth (30th) day before such
Contingent Event through the thirtieth (30th) day after such
Contingent Event (or, if later, through the thirtieth (30th) day
after the Holder receives written notice from the Company of
such Contingent Event). Promptly (and in any event within ten
(10) days) after the occurrence of any Contingent Event, and not
more than thirty (30) days before such Contingent Event, the
Company shall given written notice to the Holder notifying such
Holder of the occurrence of such Contingent Event and informing
such Holder of its right to exercise an option to require a
repurchase under this Section E.
b. In order to exercise its rights to require a
repurchase under this Section E, the Holder shall send to the
Company a written notice demanding prepayment under this Section
E and specifying the date of such prepayment (which shall not be
less than fifteen (15) days after receipt of such notice by the
Company, but in no event earlier than such Contingent Event,
except that such date may be the same date as a Contingent Event
if requested by the Holder).
c. This obligation to repurchase is subject to the
restriction that the Company may not buy any Debenture at any
time when the subordination provisions of this Debenture would
not permit the Company to make a payment of principal, premium
or interest on the Debentures.
2. Certain Definitions. As used in this Section:
a. "Contingent Event" means any one or more of the
following events which shall occur subsequent to the date of
this Debenture:
(1) the Company shall convey, transfer or lease all
or substantially all of its assets (whether held directly
or indirectly through Subsidiaries) to any Persons (other
than to a Subsidiary of the Company);
(2) any Person (other than the Company), including a
"group" (within the meaning of Section 13(d) and 14(d)(2)
of the Securities Exchange Act of 1934, as amended) that
includes such Person, shall acquire, directly or
indirectly, beneficial ownership, in the aggregate, of (x)
50 percent or more of the Common Stock, or (y) securities
representing 50 percent or more of the combined voting
power of the Company's voting securities, in either case,
outstanding on the date immediately prior to the date of
the last such acquisition by such Person; or
(3) on any day (a "Calculation Date") (x) (A) the
Company shall distribute cash, securities or other
properties, including cash dividends (other than Common
Stock, or rights or warrants to acquire Common Stock or
preferred stock substantially equivalent to Common Stock)
to holders of Common Stock, whether by means of dividend,
reclassification, recapitalization or otherwise, or (B) the
Company shall acquire, directly or indirectly, beneficial
ownership of Common Stock; and (y) the sum of the
Applicable Percentages (as defined below) of all such
distributions and acquisitions which have occurred on the
Calculation Date and during the 365-day period immediately
preceding the Calculation Date shall exceed 30 percent.
b. "Applicable Percentage" means (x) In the case of each
distribution referred to in clause (3) above, the percentage
determined as of the Calculation Date of each such distribution
by dividing the aggregate fair market value (as determined in
good faith by the Board of Directors), of such distribution, by
the fair market value (based on the then current market price)
of all of the shares of Common Stock outstanding on the day
immediately prior to such Calculation Date; and (y) in the case
of each acquisition referred to in clause (3) above, the
percentage determined as of the Calculation Date of each such
acquisition by dividing all amounts expended by the Company
(such amounts, if other than in cash, as determined in good
faith by the Board of Directors), in connection with the
acquisition of any shares of Common Stock, by the fair market
value (based on the then current market price) of all of the
shares of Common Stock outstanding on the day immediately prior
to such Calculation Date.
Section F. Covenants.
1. Payment of Principal, Premium and Interest. The Company
will duly and punctually pay the principal of (and premium, if any)
and interest on this Debenture in accordance with the terms hereof.
2. Statement as to Compliance. The Company will deliver to
the Holder, within 120 days after the end of each fiscal year, an
Officers' Certificate stating, as to each signer thereof, that
a. a review of the activities of the Company and its
Subsidiaries during such year and of performance under this
Debenture has been made under his supervision, and
b. to the best of his knowledge, based on such review,
the Company has fulfilled all its obligations under this
Debenture throughout such year, or, if there has been a default
in the fulfillment of any such obligation, specifying each such
default known to him and the nature and status thereof.
3. Further Instruments and Acts. From time to time the
Company will, at its own expense and upon request of the Holder,
execute and deliver or cause to be executed and delivered such
further instruments and do such further acts as may reasonably be
necessary or desirable to carry out the purposes of this Debenture.
Section G. Consolidation, Merger, Conveyance, Transfer or Lease.
1. Company May Consolidate, etc. Only on Certain Terms. The
Company shall not consolidate with or merge into any other Person or
convey, transfer or lease its properties and assets substantially as
an entirety (whether such properties and assets are held by the
Company directly or through its Subsidiaries) to any Person, unless:
a. the Person formed by such consolidation or into which
the Company is merged or the Person which acquires by conveyance
or transfer, or which leases, the properties and assets of the
Company substantially as a entirety shall be a corporation
organized and existing under the laws of the United States of
America, any State thereof or the District of Columbia and shall
expressly assume, by an instrument, executed and delivered to
the Holder, in form satisfactory to the Holder, the due and
punctual payment of the principal of (and premium, if any) and
interest on this Debenture and the performance of every
obligation herein on the part of the Company to be performed or
observed and shall have provided for conversion rights in
accordance with Subsection (B)(6).
b. immediately after giving effect to such transaction,
no Event of Default, and no event which, after notice or lapse
of time or both, would become an Event of Default, shall have
happened and be continuing; and
c. the Company has delivered to the Holder an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and, if an
instrument is required hereunder in connection with such
transaction, such instrument comply with this Section and that
all conditions precedent herein provided for relating to such
transaction have been complied with.
2. Successor Corporation Substituted. Upon any consolidation
or merger by the Company with or into any other Person or any
conveyance, transfer or lease of the properties and assets of the
Company substantially as a entirety (whether such properties and
assets are held by the Company directly or through its Subsidiaries)
to any Person in accordance with Subsection (G)(1), the successor
corporation formed by such consolidation or into which the Company is
merged or to which such conveyance, transfer or lease is made shall
succeed to, and be substituted for, and may exercise every right and
power of the Company hereunder with the same effect as if such
successor corporation had been named as the Company herein, and
thereunder, except in the case of a lease to another Person, the
predecessor corporation shall be relieved of all obligations and
covenants under this Debenture.
Section H. Reports by Company. The Company shall mail to the
Holder, within 15 days after the Company is required to file the same
with the Commission, copies of the annual reports and of the
information, documents and other reports (or copies of such portions
of any of the foregoing as the Commission may from time to time by
rules and regulations prescribe) which the Company may be required to
file with the Commission pursuant to Section 13(a) or Section 15(d)
of the Securities Exchange Act of 1934, as amended; and, if the
Company is not required to file information, documents or reports
pursuant to either of said Sections, then it shall nonetheless mail
the same to the Holder as if it were required to do so by the
Commission.
Section I. Remedies.
1. Events of Default. "Event of Default," wherever used
herein, means any one of the following events (whatever the reason
for such Event of Default and whether it shall be occasioned by the
provisions of Section (B) or be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or
order of any court or any order, rule or regulation or any
administrative or governmental body):
a. default in the payment of any interest upon this
Debenture and any other Debenture issued to the Holder when it
becomes due and payable and continuance of such default for a
period of 10 days; or
b. default in the payment of the principal of (or
premium, if any, on) this Debenture and any other Debenture
issued to the Holder at its Maturity whether or not such payment
is prohibited by the subordination provisions of this Debenture
and continuance of such default for a period of 30 days; or
c. default in the performance, or breach, of any covenant
or warranty of the Company in this Debenture (other than a
covenant or warranty a default in whose performance or whose
breach is elsewhere in this Section specifically dealt with),
and continuance of such default or breach for a period of 30
days after there has been given, by registered or certified
mail, to the Company by the Holder a written notice specifying
such default or breach and requiring it to be remedied and
stating that such notice is a "Notice of Default" hereunder; or
d. the entry by a court having jurisdiction in the
premises of (A) a decree or order for relief in respect of the
Company in an involuntary case or proceeding under any
applicable Federal or state bankruptcy, insolvency,
reorganization or other similar law or (B) a decree or order
adjudging the Company a bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement,
adjustment or composition of or in respect of the Company under
any applicable Federal or state law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or of any substantial part of
its property, or ordering the winding up or liquidation of its
affairs, and the continuance of any such decree or order for
relief or any such other decree or order unstayed and in effect
for a period of 60 consecutive days; or
e. the commencement by the Company of a voluntary case or
proceeding under any applicable Federal or state bankruptcy,
insolvency, reorganization or other similar law or of any other
case or proceeding to be adjudicated a bankrupt or insolvent, or
the consent by it to the entry of a decree or order for relief
in respect of the Company in an involuntary case or proceeding
under any applicable Federal or state bankruptcy, insolvency,
reorganization or other similar law or to the commencement of
any bankruptcy or insolvency case or proceeding against it, or
the filing by it of a petition or answer or consent seeking
reorganization or relief under any applicable Federal or state
law, or the consent by it to the filing of such petition or to
the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator or similar
official of the Company or of any substantial part of its
property, or the making by it of an assignment for the benefit
of creditors, or the admission by it in writing of its inability
to pay its debts generally as they become due, or the taking of
corporate action by the Company in furtherance of any such
action.
2. Acceleration of Maturity; Rescission and Annulment. If any
Event of Default occurs and is continuing (other than an Event of
Default described in Subsections I(1)(d) and (e)), then and in every
such case the Holder may declare the principal and all accrued and
unpaid interest of all the Debentures issued to the Holder to be due
and payable immediately, by a notice in writing to the Company, and
upon any such declaration such principal shall become immediately due
and payable. If an Event of Default described in Subsections I(1)(d)
and (e) shall occur, then in every such case the unpaid principal
balance hereof and all accrued and unpaid interest shall
automatically become due and payable.
3. Collection of Indebtedness and Suits for Enforcement. The
Company covenants that if
a. default is made in the payment of any installment of
interest on any Debenture issued to the Holder when such
interest become due and payable and such default continues for a
period of 30 days, or
b. default is made in the payment of the principal of (or
premium, if any, on) any Debenture issued to the Holder at the
Maturity thereof,
the Company will, upon demand by the Holder, pay to it, the whole
amount then due and payable on such Debentures for principal (and
premium, if any) and interest, with interest upon the overdue
principal (and premium, if any) and, to the extent that payment of
such interest shall be legally enforceable, upon overdue installments
of interest, at the rate borne by the Debentures and, in addition
thereto, such further amount as shall be sufficient to cover the
costs and expenses of collection, including the reasonable
compensation, expenses and disbursements of the Holder, its agents
and counsel.
If the Company fails to pay such amounts forthwith upon such
demand, the Holder may institute a judicial proceeding for the
collection of the sums so due and unpaid, may prosecute such
proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon the Debentures and
collect the moneys adjudged or decreed to be payable in the manner
provided by law out of the property of the Company or any other
obligor upon the Debentures, wherever situated.
If an Event of Default occurs and is continuing, the Holder may
in its discretion proceed to protect and enforce its rights by such
appropriate judicial proceedings as it shall deem most effectual to
protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Debenture or in aid
of the exercise of any power granted herein, or to enforce any other
proper remedy.
4. Application of Money Collected. Subject to Section D, any
money collected by the Holder pursuant to this Section shall be
applied first to the payment of all fees, costs and expenses
(including attorneys fees and expenses) incurred by the Holder
(whether before or after judgment) in the collection of such sums and
second, to the payment of the amounts then due and unpaid for
principal of (and premium, if any) and interest on the Debentures in
respect of which or for the benefit of which such money or
Debentures, as the case may be, has been collected.
5. Unconditional Right of Holder to Receive Principal, Premium
and Interest and to Convert. Notwithstanding any other provision
herein, the Holder shall have the right, which is absolute and
unconditional, to receive payment of the principal of (and premium,
if any) and interest on this Debenture on the date when due (or, in
the case of redemption, on the Redemption Date) and to convert this
Debenture in accordance with Section B and to institute suit for the
enforcement of any such payment and right to convert.
6. Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Holder is intended to be exclusive
of any other right or remedy, and every right and remedy shall, to
the extent permitted by law, be cumulative and in addition to every
other right and remedy given hereunder or now or hereafter existing
at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or
remedy.
7. Delay or Omission Not Waiver. No delay or omission of the
Holder to exercise any right or remedy accruing upon any Event of
Default shall impair any such right or remedy or constitute a waiver
of any such Event of Default or an acquiescence therein. Every right
and remedy given by this Section or by law to the Holder may be
exercised from time to time, and as often as may be deemed expedient,
by the Holder.
8. Amendments; Governing Law etc.. This Debenture may be
amended only by a writing signed by the Company and the Holder. The
Article and Section headings herein are for convenience only and
shall not affect the construction hereof. All covenants and
agreements in this Debenture by the Company shall bind its successors
and assigns, whether so expressed or not. In case any provision in
this Debenture shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby. This Debenture
shall be governed by and construed in accordance with the laws of the
State of Wisconsin. If any action or proceeding shall be brought by
the Holder in order to enforce any right or remedy under this
Debenture, the Company hereby consents and submits to the
jurisdiction of the courts of the State of Wisconsin and of any
Federal court sitting in The City of Milwaukee, State of Wisconsin.
Any action or proceeding brought by the Company to enforce any right,
assert any claim or obtain any relief whatsoever in connection with
this Debenture shall be brought by the Company exclusively in the
courts of the State of Wisconsin or in any Federal court sitting in
The City of Milwaukee, State of Wisconsin.
No provision of this Debenture shall alter or impair the
obligation of the Company, which is absolute and unconditional, to
pay the principal of (and premium, if any) and interest on this
Debenture at the times, place and rate, and in the coin or currency
or with another debenture, herein prescribed or to convert this
Debenture as provided herein.
Debentures are exchangeable for a like aggregate principal
amount of Debentures of a different authorized denomination, as
requested by the Holder.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in
connection therewith.
9. Definitions. The following terms shall have the meanings
specified below:
"Affiliate" of any specified person means any other Person
directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of
this definition, "control" when used with respect to any specified Person
means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly
adopted by the Board of Directors and to be in full force and effect on
the date of such certification, and delivered to the Trustee.
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Securities Exchange Act
of 1934, or, if at any time after the execution of this instrument such
Commission is not existing and performing the duties now assigned to it
under the Trust Indenture Act, then the body performIng such duties at
such time.
"Common Stock" means all shares now or hereafter authorized of
the class of Common Stock of the Company currently authorized and stock of
any other class into which such shares may hereafter have been changed.
"Debentures" means this Debenture and all other Debentures of
the Company issued to the Holder.
"Event of Default" has the meaning specified in Section I.
"Interest Payment Date" means the Stated Maturity of a
installment of interest on the Debentures.
"Maturity" when used with respect to any Debenture means the
date on which the principal of such Debenture becomes due and payable as
therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
"Newco" means Newco, Inc., a Wisconsin corporation and any
successor thereto.
"Newco Indebtedness" means the principal, premium, if any, and
unpaid interest on indebtedness for money borrowed by Newco and guaranteed
by the Company (at any time and from time to time), whether outstanding on
the date hereof or hereafter, and all renewals, extensions and refundings
of any such Debt; provided, however, that the following shall not
constitute Newco Indebtedness: any Debt which by its terms refers
explicitly to the Debentures issued hereunder and states that such Debt
shall not be senior in right of payment thereto.
"Officers" Certificate" means a certificate signed by the
Chairman of the Board, the President or a Vice President, and by the
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary
of the Company, and delivered to the Holder.
"Opinion of Counsel" means a written opinion of counsel, who may
be counsel for the Company or other counsel acceptable to the Holder.
"Person" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated
organization or government or any agent or political subdivision thereof.
"Redemption Date," when used with respect to any Debenture to be
redeemed, means the date fixed for such redemption by or pursuant to this
Debenture.
"Redemption Price," when used with respect to any Debenture to
be redeemed, means the price at which it is to be redeemed pursuant to
this Debenture.
"Regular Record Date" for the interest payable on any Interest
Payment Date means the April 1st or the September 1st (whether or not a
Business Day), as the case may be, next preceding such Interest Payment
Date.
"Senior Indebtedness" means all Debts, obligations and
liabilities of the Company arising under the guarantee by the Company of
the Newco Indebtedness, whether such guarantee is outstanding on the date
hereof or hereafter, and all renewals, replacements and extensions
thereof.
"Stated Maturity," when used with respect to any Debenture or
any installment of interest thereon, means the date specified in such
Debenture as the fixed date on which the principal of such Debenture or
such installment of interest is due and payable.
"Subsidiary" means a corporation more than 50% of the
outstanding voting stock of which is owned, directly or indirectly, by the
Company or by one or more other Subsidiaries, or by the Company and one or
more other Subsidiaries. For the purposes of this definition, "voting
stock" means stock which ordinarily has voting power for the election of
directors, whether at all times or only so long as no senior class of
stock has such voting power by reason of any contingency.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed under its corporate seal.
SWING-N-SLIDE CORP.
By:/s/ Richard E. Ruegger
Richard E. Ruegger
Vice President - Finance
[Letterhead of Swing-N-Slide]
September 2, 1997
Terry Malone
2620 Southeast Torch Lake Drive
Bel Air, Michigan 49615
Re: Consulting Agreement
Dear Terry:
This letter agreement (the "Agreement") is made as of the 2nd
day of September, 1997, by and between Swing-N-Slide Corp. ("Company") and
yourself ("Consultant") to detail the terms and conditions of your tenure
as interim Chief Executive Officer of the Company.
WHEREAS, Consultant is a member of the Board of Directors of
Company; and
WHEREAS, Consultant desires to be retained by Company and
Company desires to secure the services of Consultant on an interim
consulting basis.
NOW, THEREFORE, in consideration of the covenants and agreements
of the parties herein contained, the parties hereto agree as follows:
1. Engagement. Company hereby agrees to retain and Consultant
agrees to serve as Chief Executive Officer of Company on an interim basis
and on the terms and conditions set forth herein. The Consultant shall
have such powers and shall perform such duties as are customarily incident
to such position, together with such limitations on authority and such
additional duties as shall be determined from time to time by the Board of
Directors of Company. The Consultant shall devote sufficient time and
efforts so as to fully and diligently perform such duties.
2. Consulting Fee. As compensation for Consultant's services as a
consultant hereunder, Company shall pay Consultant a gross monthly base
consulting fee of $20,000, payable monthly in arrears. In the event
Consultant's services are terminated before the end of a given month,
Consultant shall be paid a pro rata portion of the monthly consulting fee
based on the number of days worked during such month.
3. Stock Options. Consultant is hereby granted an option to
purchase up to 7,500 shares of common stock of Company pursuant to the
Company's 1996 Stock Option Plan, for each 30-day period in which
Consultant is a consultant of Company under the terms hereof. Each such
option to purchase shall vest, if at all, on the day after the 30-day
period expires during which Consultant has continually been a consultant
of Company under the terms hereof. In the event Consultant's term is
terminated pursuant to Paragraph 4(i) during the pendency of a 30-day
period, a pro rata number of options shall vest for the number of days
incurred prior to the termination. For example, if Consultant's services
are terminated pursuant to Paragraph 4(i) after 15 days of the 30-day
period, 3,750 shares shall vest on the termination date. The exercise
price of any option granted pursuant hereto shall be $4.75. Any option
granted pursuant to the terms hereof shall be exercisable, if at all, no
later than five (5) years following the termination of Consultant's
services hereunder.
4. Term. The term of Consultant's services hereunder shall
commence on the date hereof and shall continue until the earlier of (i)
the date on which the term of employment of a permanent chief executive
officer of Company begins, (ii) December 31, 1997, or (iii) such date as
the parties mutually agree.
5. Expenses. Consultant is authorized to incur reasonable expenses
on behalf of Company including, but not limited to, expenses for
entertainment and related travel. Consultant shall be reimbursed for
such reasonable expenses upon submitting substantiation of such expenses
to Company, subject to established reimbursement policies of Company in
effect from time to time.
6. Independent Consultant. Consultant shall not be deemed an
employee of Company, and shall perform such consulting services as an
independent consultant.
7. Miscellaneous.
(a) No provisions of this Agreement may not be amended unless
such amendment, modification or discharge is agreed to in writing signed
by the parties hereto.
(b) This Agreement constitutes the entire agreement of the
parties on the subject matter hereof and no agreements or representations,
oral or otherwise, expressed or implied, with respect to the subject
matter hereof have been made by either party which are not set forth
expressly in this Agreement.
(c) This Agreement shall be binding upon and inure to the
benefit of Company, its successors and assigns, and Consultant and his
heirs, personal and legal representatives.
(d) The validity, interpretation, construction and performance
of this Agreement shall be governed by the laws of the State of Wisconsin
applicable to contracts made and to be performed therein between residents
thereof.
If the foregoing agreement is acceptable, please acknowledge
your acceptance by signing below and returning one original to me.
SWING-N-SLIDE CORP.
By: /s/ Richard E. Ruegger
Richard Ruegger
Chief Financial Officer
By: /s/ Caroline Williams
Caroline Williams
Chairperson, Compensation
Committee of the Board of
Directors
Agreed and Accepted this
2nd day of September, 1997.
By: /s/ Terry Malone
Terry Malone
November 10, 1997
Personal & Confidential
Mr. Richard G. Mueller
Dear Rich:
This letter agreement confirms our mutual understanding
regarding your resignation, effective October 1, 1997 from employment with
Swing-N-Slide Corp. (the "Company").
1. Resignation. (a) Your duties as Chairman, Chief Executive
Officer, and President of the Company shall cease on September 2, 1997.
You shall also resign, as of October 1, 1997, from any other positions to
which you have been appointed by the Company, including positions as an
officer or director of the Company or any affiliated company and as a
member of any committee or administrative body relating to the Company and
its businesses. You will also resign and withdraw as a Manager and/or
member of GreenGrass Management LLC and GreenGrass Holdings LLC. You will
provide the Company with a resignation in the form of the attachment to
this letter, signed and dated October 1, 1997, and such other written
resignations as the Company may request in accordance with this paragraph
(a).
(b) Effective as of October 1, 1997 you shall cease to be an
employee of the Company. No changes will be made between September 2,
1997, and such date in your current base salary, benefit plans, or fringe
benefits as a result of your resignation as an executive officer of the
Company.
(c) The Company and you mutually agree that the principal
reason leading to your resignation from the Company was your desire to
expand the business through acquisitions more rapidly than the Board of
Directors wished and that shall be the sole basis for any response by the
Company to inquiries regarding reasons for your resignation.
2. Stock Compensation Programs. Your stock options for
187,207 shares of Company stock under the Company's 1992 Stock Option Plan
are fully vested and exercisable at $3.70 per share through February 26,
2006. Your stock options for 220,000 shares of Company stock under the
1996 Incentive Stock Plan are fully vested and may be exercised at any
time during the 90 day period following execution of this agreement. To
the extent applicable in connection with your transactions in the
company's securities, you agree to make all necessary filings and execute
all appropriate documents in order to comply with the provisions of
Section 16 of the Securities Exchange Act of 1934, as amended.
The Company acknowledges that to the extent that the terms of
the documents governing the options provide for discretion in relation to
anti-dilution provisions, the discretion is not intended to be applied to
deny an adjustment otherwise appropriate, as opposed to the appropriate
manner of adjustment.
3. Consideration. a. The Company will pay you $52,500 (less
$6,362.22 in expenses due the Company) not later than November 14, 1997.
This amount is payable in the same manner as compensation is provided to
other salaried employees of the Company but shall not count as
compensation for any benefit plan purposes. Not later than January 5,
1998, the Company will pay you an additional $247,916. This also will not
count as compensation for any benefit plan purposes.
(b) The Company will pay you, not later than January 5, 1998,
$24,000 representing your performance bonus earned for the year ending
December 31, 1996. This amount shall not count as compensation for any
benefit plan purposes.
(c) Employee group health benefits covering you and your
dependents, including group life, group long-term disability, individual
long-term disability currently maintained by the Company, and similar
group insurance coverages, if any, shall be maintained by the Company, at
no cost to you, for the 18 month period commencing October 1, 1997. If,
however, such continued participation is precluded by the provisions of
such plans or by law, the Company shall provide you with comparable
benefits of equal value. Execution of this agreement by you shall not be
considered to be a waiver of any rights or entitlements you may have under
applicable law to continuation of coverage under the group health plan
maintained by the Company ("COBRA continuation rights").
(d) Not later than November 14, 1997, the Company will purchase
the 34,385 shares of Company stock held by GreenGrass Management LLC or
GreenGrass Holdings LLC for your benefit at a purchase price of $4.75 per
share. Payment of the purchase price will be made directly to the lender
(Capital Bank, Madison, Wisconsin) to the extent of your outstanding
indebtedness guaranteed by the Company, with the excess, if any, paid to
you. The debentures currently owned on your behalf by those entities will
be distributed to you.
(e) Not later than 10 days after execution of this agreement,
the Company will redeem options with respect to 37,207 shares of Company
stock at a price of $1.05 per optioned share. Not later than January 5,
1998, the Company will redeem options with respect to 50,000 shares of
Company stock at a price of $1.05 per optioned share. The remaining
options that are vested may be redeemed by you in any portion thereafter
at a price determined by multiplying the excess, if any, of the then
applicable fair market value of each optioned share over the option
purchase price per share times the number of shares for which options are
being redeemed. Fair market value is defined for this purpose as the
highest closing price of the three preceding business days without
deduction for brokerage commissions or other expenses.
(f) The Company shall provide you with individual executive
outplacement services, without charge to you, through P.D.I. Outplacement
Services in Minneapolis, Minnesota for one year. These services have been
invoiced for the sum of $25,000. You will also be entitled, during that
one year period, to use of the Company's long distance telephone card, at
no cost, but limited to calls within the U.S. and those primarily related
to job placement. The Company will also pay you up to $2,500 in
relocation expense and up to $4,500 to reimburse for legal fees incurred
in connection with this Agreement. This provision is designated as the
consideration for the releases you are providing in Section 7.
(g) The Company agrees to direct all reference inquiries about
Mr. Mueller from prospective future employers to Terry Malone and/or David
Evans for superior or board references, and to Mr. Caldwell, Mr. Hammelman
or Mr. Ruegger for inquiries directed to subordinate personnel. Mr.
Malone and Mr. Evans would agree to provide a positive reference for Mr.
Mueller.
4. Death. Any amount payable or distributable to you under
this agreement which remains payable following your death shall be paid to
your spouse, if she survives you, otherwise to your estate.
5. Covenant Not to Compete. This covenant is the same
covenant included in your previous Severance, Change of Control and
Noncompetition Agreement, which was duly entered into by you as of May 21,
1997. In that agreement you were provided adequate consideration for this
covenant as part of the terms of your overall employment relationship with
the Company. This covenant is included herein for convenience in having
all relevant terms and conditions of your separation agreement in one
document:
(a) You agree that you will not, during the period of your
employment with the Company and for a period of one year thereafter, as
proprietor, partner, member, shareholder (directly or indirectly owning or
controlling 5% or more of any class of stock), employee, consultant, agent
or otherwise, on your own behalf or on behalf of another person, do any of
the following in competition with the Company, without the prior written
consent of the Company: solicit or assist in the solicitation of
customers of the Company, render or assist in rendering services to
customers of the Company, or divert or attempt to divert any customer's
business from the Company or otherwise interfere with the business
relationship between the Company and any of their respective customers,
employers, or suppliers.
(b) Notwithstanding the foregoing, this agreement shall not in
any event be construed to prevent you from earning a living utilizing your
skills in any businesses which may, as an incident to a business or
activity significantly different from the business of the Company, make or
sell some products or provide some services which may in some degree
compete with the business of the Company. However, nothing in this
section shall be deemed to permit you to accept employment with companies
or divisions thereof which then or thereafter will directly compete in a
major way with the business of the Company with which you were involved or
had access to information about while employed by the Company.
6. Confidential Information. This covenant is the same
covenant included in your previous Severance, Change of Control and
Noncompetition Agreement, which was duly entered into by you as of May 21,
1997. In that agreement you were provided adequate consideration for this
covenant as part of the terms of your overall employment relationship with
the Company. This covenant is included herein for convenience in having
all relevant terms and conditions of your separation agreement in one
document:
(a) You agree that you will not, while you are employed by the
Company or thereafter, disclose to any person to whom you are not
otherwise authorized to do so by the Company (an "Unauthorized Person"),
or use for your own account, any information (the "Confidential
Information"), whether or not reduced to written or other tangible form,
in which the Company has a legally protectible interest by virtue of the
fact that such information is not generally known in the industry; you
have had access to (or, either alone or in cooperation with others,
originated or developed) such information during your employment with the
Company; such information has been treated by the Company as confidential;
such information relates to the business the Company; or such information
is of competitive advantage to the Company or any of its subsidiaries.
(b) Confidential Information for which you have first secured
the written consent of the Company for its disclosure or use, and
Confidential Information which becomes generally known in the industry, or
which otherwise ceases to be legally protectible (other than by your
breach of this covenant), shall cease to be subject to the restrictions
set forth in this covenant. Notwithstanding anything contained herein to
the contrary, this covenant prohibits only the use and disclosure of
Confidential Information and shall not be construed as limiting your right
to undertake any other employment or business activity. You are
prohibited from competing with the Company only as provided in Section 5,
above.
7. Release and Covenants. (a) In consideration of the
payments provided and to be provided by the Company, particularly the
amounts provided to you pursuant to Section 3(f), you, on behalf of
yourself, your spouse, heirs, executors, administrators, agents,
successors, assigns and representatives of any kind (hereinafter
collectively referred to as the "Releasors") confirm that Releasors have
released the Company, and each of its subsidiaries, affiliates, their
employees, successors, assigns, executors, trustees, directors, advisors,
agents and representatives, and all their respective predecessors and
successors (hereinafter collectively referred to as the "Releasees"), from
any and all actions, causes of action, charges, debts, liabilities,
accounts, demands, damages and claims of any kind whatsoever related to
your termination of your status as an employee, officer or director of the
Company or any of its affiliates or termination thereof including, but not
limited to, those arising under any labor, employment discrimination,
(including without limitation, the Age Discrimination in Employment Act of
1967, as amended, Title VII of the Civil rights Act of 1964, as amended,
the Americans with Disabilities Act, the Wisconsin Fair Employment Act, as
amended), contract or tort laws, equity or public policy, or negligence
standard, whether known or unknown, certain or speculative, which against
any of the Releasees, any of the Releasors ever had, now has, or hereafter
shall have or can have. You further covenant that you will not initiate
any action, claim or proceeding against any of the Releasees for any of
the foregoing, nor will you participate, assist, or cooperate in any such
action, claim, or proceeding unless required to do so by law and you
further warrant and covenant that you have no knowledge of facts that
would lead you to believe you have any other claim against Releasees.
(b) Notwithstanding the foregoing, this letter agreement does
not waive rights, if any, you or your successors and assigns may have
under or pursuant to, or release any member of Releasees from obligations,
if any, it may have to you or to your successors and assigns on claims
arising out of, related to or asserted under or pursuant to, this letter
agreement or any indemnity agreements or obligation contained in or
adopted or acquired pursuant to any provision of the charter or bylaws of
the Company or its subsidiaries or affiliates or in any applicable
insurance policy carried by the Company or its affiliates for any matter
which arises or may arise in the future in connection with your employment
with the Company.
(c) You hereby acknowledge that you have at least 21 days to
review this letter agreement from the date you first receive it and you
have been advised to review it with an attorney of your choice. You
further understand that the 21 day review period ends when you sign this
agreement. You also have 7 days after your signing of this agreement to
revoke by so notifying the Company in writing. Any revocation by you
under this subparagraph (c), however, is not effective with regard to
Section 1 hereof and your termination of employment with the company shall
remain in effect as set forth therein. You further acknowledge that you
have carefully read this letter agreement, know and understand the
contents of it and its binding legal effect. You sign the same of your
own free will and act, and it is your intention that you be legally bound
thereby.
(d) You agree to keep this letter agreement confidential and
not to reveal its contents to anyone other than your attorney, financial
consultant, and immediate family members. The provisions of this
subparagraph (d) shall not apply to any truthful statement required to be
made by you in any legal proceeding or government or regulatory
investigation, provided, however, that prior to making such statement you
will give the Company reasonable notice and, to the extent you are legally
entitled to do so, afford the Company the ability to seek a
confidentiality order.
8. Noncompliance. The additional services or compensation
provided to you pursuant to Section 3(f) are conditioned upon your
compliance with all of the terms and conditions of this letter agreement,
particularly Section 7, above. In the event of any violation of such
provision by you or anyone acting at your direction or in the event you or
anyone acting at your direction at any time shall substantially denigrate
any of the Releasees, including without limitation by way of news media or
the expression to news media of personal views, opinions or judgments, the
Company shall be entitled to withhold and terminate such services provided
or to be provided pursuant to Section 3(f), above, and you agree to repay
to the Company the amounts it has expended pursuant to this subparagraph
on your behalf or the Company shall be entitled to recover from you such
amounts, without waiving the right to pursue any other available legal or
equitable remedies.
9. Tax Payments and Reporting. You recognize that the
payments and benefits provided under this letter agreement, including
without limitation those provided pursuant to Section 3, may result in
taxable income to you which the Company and its affiliates will report to
their appropriate taxing authorities. The Company and its affiliates
shall have the right to deduct from any payment made under this letter
agreement to you any national, state, local or other income, employment or
other taxes it determines are required by law to be withheld with respect
to such payments provided hereunder. You also agree to report the
compensation hereunder to the appropriate tax authorities and pay all
required tax amounts.
10. Severability. In the event any one or more of the
provisions of this letter agreement (or any part thereof) shall for any
reason be held to be invalid, illegal or unenforceable, the remaining
provisions of this letter agreement (or part thereof) shall be unimpaired,
and the invalid, illegal or unenforceable provision (or part thereof)
shall be replaced by a provision (or part thereof), which, being valid,
legal and enforceable, comes closest to the intention of the parties
underlying the invalid, illegal or unenforceable provisions. However, in
the event that any such provision of this letter agreement (or part
thereof) is adjudged by a court of competent jurisdiction to be invalid,
illegal or unenforceable, but that the other provisions (or part thereof)
are adjudged to be valid, legal and enforceable if such invalid, illegal
or unenforceable provision (or part thereof) were deleted or modified,
then this letter agreement shall apply with only such deletions or
modifications, or both, as the case may be, as are necessary to permit the
remaining separate provisions (or part thereof) to be valid, legal and
enforceable.
11. Rights in the Event of Dispute. If a claim or dispute
arises concerning the rights of the Employee or his beneficiary (either or
both of whom are hereinafter referred to as the :claimant") under this
Agreement, regardless of the party by whom such claim or dispute is
initiated, the Company shall, upon presentation of appropriate vouchers,
pay all legal expenses, including reasonable attorneys' fees, court costs
and ordinary and necessary out-of-pocket costs of attorneys' billed to and
payable by the claimant in connection with the bringing, prosecuting,
defending, litigating, negotiating, or settling such claim or dispute;
provided, however, that the Company shall not be obligated to pay such
expenses unless and until final resolution of such claim or dispute with
the claimant being entitled to a substantial part of the rights claimed by
him.
12. General Provisions. (a) All notices or other
communications required or permitted hereunder shall be in writing and
shall be deemed given (i) when delivered in person or (ii) when telecopied
(at the date and time indicated on the receipt of transmission if such day
is a business day, and if not, at 9 a.m. on the following business day)
with a hard copy delivered by hand or deposited in the United States mail
postage prepaid, registered or certified mail, on or before two (2)
business days after its delivery by telecopy, or (iii) three (3) business
days after being deposited in the United States mail, postage prepaid,
registered or certified mail, or (iv) two (2) business days after delivery
to a nationally recognized express courier, expenses prepaid, addressed to
the appropriate party as follows: to the Employee at his address on file
with the Company; or to the Company, c/o Swing-N-Slide Corp., 1212
Barberry Drive, Janesville, Wisconsin 53545, telecopier number (608) 755-
4763, Attention: Chairman; and with a copy to Foley & Lardner, 777 East
Wisconsin Avenue, Milwaukee, Wisconsin 53202, Attention: Benjamin F.
Garmer III.
(b) Nothing herein shall be construed as an agreement to
continue the employment by the Company of the Employee.
(c) This Agreement constitutes the entire agreement between the
parties with respect to the subject matter contained herein and supersedes
any and all prior understandings, representatives, negotiations, and
agreements with respect thereto (including, without limitation, that
certain Severance Change of Control and Noncompetition Agreement dated May
21, 1997, by and between the Employee and the Company.)
(d) No modification or amendment of any provision of this
Agreement shall be effective unless in a written instrument executed by
both parties. Either party's failure to insist upon strict compliance
with any provision hereof shall not be deemed to be a waiver of such
provision or any other provision hereof.
(e) This Agreement shall be binding upon and shall inure to the
benefit of the affiliates, predecessors, successors and assigns of the
Company. Without limiting the foregoing, the Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation
or otherwise) to all or substantially all of the business and/or assets of
the Company, to expressly assume and agree to perform the Company's
obligations under this Agreement in the same manner and to the same extent
that Company is required to perform them if no such succession had taken
place. As used in this Agreement, This Agreement shall inure to the
benefit of, and shall be enforceable by, the Employee's heirs, legal
representative or other successors in interest, but shall not otherwise be
assignable or transferable.
(f) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
(g) The validity, interpretation, construction and
enforceability of this Agreement shall be governed by the laws of the
State of Wisconsin, without regard to conflicts of laws principles.
If you find that the foregoing satisfactorily states our mutual
understanding, please sign and date the enclosed copy of this letter
agreement in the spaces indicated below and return it to me.
Very truly yours,
SWING-N-SLIDE CORP.
/s/ Richard Ruegger
Richard Ruegger
Agreed and Accepted this 13th day of November, 1997.
/s/ Richard G. Mueller
Richard G. Mueller
<PAGE>
ATTACHMENT 1
Richard G. Mueller left the employment of Swing-N-Slide Corp.
October 1, 1997 due to Mr. Mueller's desire to expand its business through
acquisitions more rapidly than desired by its Board.
As agreed to by the Company and Richard G. Mueller.
For the Company:
/s/ Richard G. Mueller
Name and Title Richard G. Muelle
Exhibit 12
<TABLE>
Swing-N-Slide Corp.
Statement Re: Computation of Ratio of Earnings to Fixed Charges
(Amounts in Thousands, Except Ratio Data)
<CAPTION>
Year Ended December 31
1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C>
Income (loss) before
income taxes and
extraordinary item $12,569 $7,378 $6,727 $3,050 $3,307
Fixed charges 1,209 545 4,593 4,543 8,347
------- ------ ------- ------ -------
Earnings $13,778 $7,923 $11,320 $7,593 $11,654
======= ====== ======= ====== =======
Interest expense $1,149 $529 $4,312 $3,931 $7,485
Amortization of
deferred financing
costs 60 16 281 452 589
Interest portion of
rent expense --- --- --- 160 273
------ ----- ------ ------ ------
Fixed Charges $1,209 $545 $4,593 $4,543 $8,347
====== ===== ====== ====== ======
Ratio of earnings to
fixed charges 11.40 14.54 2.46 1.67 1.40
===== ===== ====== ====== ======
</TABLE>
Exhibit 23.(i)(1)
Consent of Ernst & Young LLP, Independent Auditors
We consent to the reference to our firm under the caption "Experts" in
Amendment No. 1 to the Registration Statement (Form S-2 No. 333-3907) and
related Prospectus of Swing-N-Slide Corp. for the registration of
$3,333,333 principal amount of 10% Convertible Subordinated Debentures due
February 15, 2004, together with $212,395 principal amount of 10%
Convertible Subordinated Debentures due February 15, 2004 that may be
issued in lieu of cash interest thereon and shares of its common stock
issuable upon conversion of the 10% Convertible Subordinated Debentures,
and to the incorporation by reference therein of our report dated January
30, 1998, with respect to the consolidated financial statements and
schedules of Swing-N-Slide Corp. included in its Annual Report (Form 10-K)
for the year ended December 31, 1997, filed with the Securities and
Exchange Commission.
/s/ Ernst & Young LLP
Milwaukee, Wisconsin ERNST & YOUNG LLP
March 26, 1998
Exhibit 24
SWING-N-SLIDE CORP.
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each
individual whose signature appears below hereby
constitutes and appoints TERENCE S. MALONE and RICHARD
E. RUEGGER, and each of them, his or her true and
lawful attorneys-in-fact and agents, each with the
full power of substitution for him or her and in his
or her name, place and stead, in any and all
capacities, to sign any and all amendments (including
post-effective amendments) to the following
registration statements under the Securities
Act of 1933, as amended, filed or to be filed by
Swing-N-Slide Corp., a Delaware Corporation (the
"Company"): (i) Registration Statement on Form
S-2 with respect to the offering by the Company of up
to 625,000 shares of its common stock, (ii)
Registration Statement on Form S-8 with respect to
the offering by the Company of $3,333,333.00 of ten
percent convertible subordinate debentures, and (iii)
Registration Statement on Form S-8 with respect to the
registration of shares issuable pursuant to the
Company's 1996 Incentive Stock Program; and to file
the same, with all exhibits thereto, and all documents
in connection therewith with the Securities and
Exchange Commission, hereby ratifying and confirming
all that each of said attorneys-in-fact or any of
them, or their or his substitutes, may do or
cause to be done by virtue thereof.
The validity of this Power of Attorney shall not
be affected in any manner by reason of the execution,
at any time, of other powers of attorney by the
undersigned in favor of persons other than the
attorneys-in-fact named herein.
Dated this 5th day of September, 1997.
/s/ Terence S. Malone
Terence S. Malone
Director and Chief Executive Officer
/s/ Richard E. Ruegger
Richard E. Ruegger
Vice President - Finance, Chief Financial
Officer, Secretary and Treasurer (Principal
Financial and Accounting Officer)
/s/ David S. Evans
David S. Evans
Director
/s/ George N. Herrera
George N. Herrera
Director
/s/ Timothy R. Kelleher
Timothy R. Kelleher
Director
/s/ Gary A. Massel
Gary A. Massel
Director
/s/ Caroline L. Williams
Caroline L. Williams
Director
Securities and Exchange Commission
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER
THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an Application to Determine Eligibility of a Trustee
Pursuant to Section 305(b)(2) _________
FIRSTAR BANK MILWAUKEE, N.A.
(Exact name of trustee as specified in its charter)
Wisconsin 39-0281225
(Jurisdiction of incorporation or (I.R.S. Employer
organization if not a U. S. National Bank) Identification Number)
777 East Wisconsin Avenue, Milwaukee, Wisconsin 53202
(Address of principal executive offices) (Zip Code)
William J. Schulz, Senior Vice President and Secretary
Firstar Bank Milwaukee, N.A.
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Telephone (414) 765-5725
(Name, address, and telephone number of agent for service)
Swing-N-Slide Corp.
(Exact name of obligor as specified in its charter)
Delaware 36-3808989
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
1212 Barberry Drive
Janesville, Wisconsin 53545
(Address of principal executive offices) (Zip Code)
10% Convertible Subordinated Debentures Due February 15, 2004
(Title of indenture securities)
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
Comptroller of the Currency, Washington, D.C.
Office of Commissioner of Banking, Madison, Wisconsin
Federal Deposit Insurance Corporation, Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
The corporate trustee is authorized to exercise corporate trust
powers.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
The obligor is not an affiliate of the trustee.
Item 3. Voting Securities of the Trustee.
Furnish the following information as to each class of voting
securities of the trustee:
As of March 3, 1998
Col. A Col. B
Title of class Amount outstanding
Per General Instruction B to Form T-1, no response is required to
this item as the obligor is not presently in default.
Item 4. Trusteeships under Other Indentures.
If the trustee is a trustee under another indenture under which any
other securities, or certificates of interest or participation in any
other securities, of the obligor are outstanding, furnish the following
information:
(a) Title of the securities outstanding under each such other
indenture.
Per General Instruction B to Form T-1, no response is required
to this item as the obligor is not presently in default.
(b) A brief statement of the facts relied upon as a basis for the
claim that no conflicting interest within the meaning of Section 310(b)(1)
of the Act arises as a result of the trusteeship under any such other
indenture, including a statement as to how the indenture securities will
rank as compared with the securities issued under such other indenture.
Per General Instruction B to Form T-1, no response is required
to this item as the obligor is not presently in default.
Item 5. Interlocking Directorates and Similar Relationships with the
Obligor or Underwriters.
If the trustee or any of the directors or executive officers of the
trustee is a director, officer, partner, employee, appointee, or
representative of the obligor or of any underwriter for the obligor,
identify each such person having any such connection and state the nature
of each such connection.
Per General Instruction B to Form T-1, no response is required to
this item as the obligor is not presently in default.
Item 6. Voting Securities of the Trustee Owned by the Obligor or its
Officials.
Furnish the following information as to the voting securities of the
trustee owned beneficially by the obligor and each director, partner, and
executive officer of the obligor:
As of March 3, 1998
Col. A Col. B Col. C Col. D
Name of owner Title of class Amount owned Percentage of
beneficially voting
securities
represented by
amount given
in Col. C
Per General Instruction B to Form T-1, no response is required to
this item as the obligor is not presently in default.
Item 7. Voting Securities of the Trustee Owned by Underwriters or their
Officials.
Furnish the following information as to the voting securities of the
trustee owned beneficially by each underwriter for the obligor and each
director, partner, and executive officer of each such underwriter:
As of March 3, 1998
Col. A Col. B Col. C Col. D
Name of owner Title of class Amount owned Percentage of
beneficially voting securities
represented by
amount given
in Col. C
Per General Instruction B to form T-1, no response is required to
this item as the obligor is not presently in default.
Item 8. Securities of the Obligor Owned or Held by the Trustee.
Furnish the following information as to securities of the obligor
owned beneficially or held as collateral security for obligations in
default by the trustee:
As of March 3, 1998
Col. A Col. B Col. C Col. D
Title of class Whether Amount owned Percent of
the securities beneficially or held class
are voting as collateral security represented
or nonvoting for obligations by amount
securities in default given in
Col. C
Per General Instruction B to Form T-1, no response is required to
this item as the obligor is not presently in default.
Item 9. Securities of Underwriters Owned or Held by the Trustee.
If the trustee owns beneficially or holds as collateral security for
obligations in default any securities of an underwriter for the obligor,
furnish the following information as to each class of securities of such
underwriter any of which are so owned or held by the trustee:
As of March 3, 1998
Col. A Col. B Col. C Col. D
Name of Amount Amount owned Percent of
issuer and outstanding beneficially or held class represented
title of class as collateral security by amount given
for obligations in in Col. C
default by trustee
Per General Instruction B to Form T-1, no response is required to
this item as the obligor is not presently in default.
Item 10. Ownership or Holdings by the Trustee of Voting Securities of
Certain Affiliates or Security Holders of the Obligor.
If the trustee owns beneficially or holds as collateral security for
obligations in default voting securities of a person who, to the knowledge
of the trustee (1) owns 10 percent or more of the voting securities of the
obligor or (2) is an affiliate, other than a subsidiary, of the obligor,
furnish the following information as to the voting securities of such
person:
As of March 3, 1998
Col. A Col. B Col. C Col. D
Name of Amount Amount owned Percent of
issuer and outstanding beneficially or held class
title of class as collateral security represented by
for obligations in amount given
default by trustee in Col. C
Per General Instruction B to Form T-1, no response is required to
this item as the obligor is not presently in default.
Item 11. Ownership or Holdings by the Trustee of any Securities of a
Person Owning 50 Percent or More of the Voting Securities of the Obligor.
If the trustee owns beneficially or holds as collateral security for
obligations in default any securities of a person who, to the knowledge of
the trustee, owns 50 percent or more of the voting securities of the
obligor, furnish the following information as to each class of securities
of such person any of which are so owned or held by the trustee:
As of March 3, 1998
Col. A Col. B Col. C Col. D
Name of Amount Amount owned Percent of
issuer and outstanding beneficially or held class
title of class as collateral security represented by
for obligations in amount given
default by trustee in Col. C
Per General Instruction B to Form T-1, no response is required to
this item as the obligor is not presently in default.
Item 12. Indebtedness of the Obligor to the Trustee.
Except as noted in the instructions, if the obligor is indebted to
the trustee, furnish the following information:
As of March 3, 1998
Col. A Col. B Col. C
Nature of indebtedness Amount outstanding Date due
Per General Instruction B to Form T-1, no response is required to
this item as the obligor is not presently in default.
Item 13. Defaults by the Obligor.
(a) State whether there is or has been a default with respect to the
securities under this indenture. Explain the nature of any such default.
Per General Instruction B to Form T-1, no response is required
to this item as the obligor is not presently in default.
(b) If the trustee is a trustee under another indenture under which
any other securities, or certificates of interest or participation in any
other securities, of the obligor are outstanding, or is trustee for more
than one outstanding series of securities under the indenture, state
whether there has been a default under any such indenture or series,
identify the indenture or series affected, and explain the nature of any
such default.
Per General Instruction B to Form T-1, no response is required
to this item as the obligor is not presently in default.
Item 14. Affiliations with the Underwriters.
If any underwriter is an affiliate of the trustee, describe each such
affiliation.
Per General Instruction B to Form T-1, no response is required to
this item as the obligor is not presently in default.
Item 15. Foreign Trustee.
Identify the order or rule pursuant to which the foreign trustee is
authorized to act as sole trustee under indentures qualified or to be
qualified under the Act.
Not applicable
Item 16. List of Exhibits.
List below all exhibits filed as part of this statement of
eligibility.
1. A copy of the Articles of Association of Firstar Bank Milwaukee,
N.A. (f/k/a First Wisconsin National Bank) as now in effect (filed
herewith).
2. Certificate of authority of the Trustee to commence business
(contained in Exhibit 1).
3. Authorization of the Trustee to exercise trust powers (filed
herewith).
4. A copy of the existing By-Laws of Firstar Bank Milwaukee, N.A.
(f/k/a First Wisconsin National Bank) (filed herewith).
6. The consent of the Trustee required by Section 321(b) of the
Trust Indenture Act of 1939 (filed herewith).
7. A copy of the latest report of condition of the trustee
published pursuant to law or the requirement of its supervising or
examining authority (filed herewith).
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, Firstar Bank Milwaukee, N.A., a corporation organized and
existing under the laws of the United States, has duly caused this
statement of eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of Milwaukee, and State of
Wisconsin, on the 3rd day of March, 1998.
FIRSTAR BANK MILWAUKEE, N.A.
(Trustee)
By: /s/ Gene E. Ploeger
Gene E. Ploeger, Trust
Officer
(Name and title)
By: /s/ Yvonne Siira
Yvonne Siira, Trust Officer
(Name and title)
<PAGE>
Exhibit 1
FIRSTAR BANK MILWAUKEE, N.A., NATIONAL ASSOCIATION
ARTICLES OF ASSOCIATION
As Amended To
March 27, 1995
AND
BY-LAWS
As Amended To
August 19, 1993
<PAGE>
ARTICLES OF ASSOCIATION
OF
FIRSTAR BANK MILWAUKEE, N.A., NATIONAL ASSOCIATION
As Amended to March 27, 1995
Amended 9/14/92 FIRST. The title of this Association shall be
"Firstar Bank Milwaukee,N.A., National Association."
SECOND. The place where the main banking house or
office of this Association shall be located, its
operations of discount and deposit carried on, and its
general business conducted, shall be Milwaukee, County
of Milwaukee, State of Wisconsin.
Amended 2/27/87 THIRD. The Board of Directors of this Association
shall consist of such number of its shareholders not
less than five nor more than twenty-five, as from time
to time shall be determined by a majority of the votes
to which all of its shareholders are at the time
entitled. Each director, during the full term of his
or her directorship, shall own a minimum of $1,000
aggregate par value of stock of this Association or a
minimum par value, fair market value or equity
interest of $1,000 of stock in the bank holding
company controlling this Association. A majority of
the Board of Directors shall be necessary to
constitute a quorum for the transaction of business.
The Board of Directors, by the vote of a majority of
the full Board, may, between Annual Meetings of the
Shareholders, increase the membership of the Board by
not more than two members and by like vote appoint
qualified persons to fill the vacancies created
thereby.
FOURTH. The regular annual meeting of the
Shareholders of this Association shall be held at its
main banking house or other convenient place duly
authorized by the Board of Directors on such day of
each year as is specified therefor in the By-laws.
Amended 1/17/67 FIFTH. The amount of authorized capital stock of this
5/13/71 Association shall be Sixty-Three Million Dollars
2/22/74 ($63,000,000) divided into 2,100,000 shares of common
1/21/75 stock of the par value of Thirty Dollars ($30.00)
10/27/75 each; but said capital stock may be increased or
1/17/80 decreased from time to time in accordance with the
2/19/81 provisions of the laws of the United States.
3/27/95
No holder of shares of the capital stock of any class
of the Association shall have any pre-emptive or
preferential right of subscription to any shares of
any class of stock of the Association, whether now or
hereafter authorized, or to any obligations
convertible into stock of the Association, issued or
sold, nor any right of subscription to any thereof
other than such, if any, as the Board of Directors, in
its discretion may from time to time determine and
at such price as the Board of Directors may from time
to time fix.
The Association may at any time or times authorize and
issue debt obligations, whether or not subordinated,
without the approval of the Shareholders.
Amended 2/16/78 SIXTH. The Board of Directors shall appoint one of
its members President of this Association, who shall
be Chairman of the Board, but the Board of Directors
may appoint a Director, in lieu of the President, to
be Chairman of the Board, who shall perform such other
duties as may be designated by the Board of Directors.
In the absence of the Chairman of the Board and or the
President of this Association, the Board of Directors
may appoint any one of the other officers or Directors
of this Association to act as temporary Chairman at a
meeting of the Board of Directors and to preside
temporarily thereat; provided that such temporary
Chairman may not, unless he shall be a member of the
Board of Directors, have any right to vote at such
meeting. The Board of Directors shall have the power
to appoint one or more Vice Presidents, a Cashier and
such other officers as may be required to transact the
business of this Association, to fix the salaries to
be paid to all officers of this Association, and to
dismiss such officers, or any of them.
The Board of Directors shall have the power to define
the duties of officers and employees of this
Association, to require bonds from them, and to fix
the penalty thereof; to regulate the manner in which
Directors shall be elected or appointed, and to
appoint judges of the election; to make all by-laws
that it may be lawful for them to make for the general
regulation of the business of this Association and the
management of its affairs, and generally to do and
perform all acts that it may be lawful for a Board of
Directors to do and perform.
SEVENTH. This Association shall have succession from the date
of its organization certificate until such time as it
be dissolved by the act of its shareholders in
accordance with the provisions of the banking laws of
the United States, or until its franchise becomes
forfeited by reason of violation of law, or until
terminated by either a general or a special act of
Congress, or until its affairs be placed in the hands
of a receiver and finally wound up by him.
EIGHTH. The Board of Directors of this Association, or any
three or more shareholders owning, in the aggregate,
not less than ten percentum of the stock of this
Association, may call a special meeting of
shareholders at any time provided, however, that,
unless otherwise provided by law, not less than ten
days prior to the date fixed for any such meeting, a
notice of the time, place and purpose of the meeting
shall be given by first-class mail, postage prepaid,
to all shareholders of record of this Association at
their respective addresses as shown upon the books of
the Association. These Articles of Association may be
amended at any regular or special meeting of the
shareholders by the affirmative vote of the
shareholders owning at least a majority of the stock
of this Association, subject to the provisions of the
banking laws of the United States. The notice of any
shareholders' meeting, at which an amendment to the
Articles of Association of this Association is to be
considered, shall be given as hereinabove set forth.
<PAGE>
Exhibit 3
United States of America
The State of Wisconsin
State Banking Department
WHEREAS, the FIRST WISCONSIN NATIONAL BANK, Milwaukee, Wisconsin, has
been granted FIDUCIARY POWERS, as witnessed by certified copy of such
permit granted by the Federal Reserve Board, under Subsection (k) of
Section Eleven (11) of the Federal Reserve Act, and
WHEREAS, said bank has complied with Section 221.04, subsection (6),
220.09 and 223.02 of the Revised Statutes of Wisconsin, by depositing
sufficient securities approved by this Department with the State
Treasurer,
NOW, THEREFORE, I, Wm. E. Nuesse, Commissioner of Banks for the State
of Wisconsin, do concur in the permit as granted by the Federal Reserve
Board, authorizing said bank to act as Trustee, Executor, Administrator,
Committee of Estates of Lunatics, and in any other fiduciary capacity
granted thereby.
THIS CONCURRENCE OF PERMIT shall be subject to revocation in whole or
in part, should the law relating to the fiduciary powers of national banks
be further restricted, or should the bank exercising these fiduciary
powers fail to comply with any or all provisions of the Statutes of
Wisconsin.
IN TESTIMONY WHEREOF, I have hereunto set my
hand and caused my Official Seal to be
affixed. Done at the Hill Farms State
Office Building, in the City of Madison,
this 10th Day of March, 1967.
/s/Wm. E. Nuesse
Wm. E. Nuesse
Commissioner of Banks
<PAGE>
Exhibit 4
F I R S T A R B A N K M I L W A U K E E , N . A .
B Y - L A W S
<PAGE>
ARTICLE I
SHAREHOLDERS
Amended: 12/18/75
Section 1. Annual Meeting. The annual meeting of the shareholders, for the
purpose of electing directors and for the transaction of such other
business as may come before the meeting, shall be held on the third
Thursday of February of each year, at 8:30 o'clock in the morning, unless
some other hour shall have been designated by the Board of Directors. If
the election of directors shall not be held on the date designated herein
for any annual meeting of the shareholders, or at any adjournment thereof,
the Board of Directors shall cause the election to be held at a special
meeting of the shareholders as soon thereafter as conveniently may be.
Amended: 6/19/80
Section 2. Special Meetings. Special meetings of the shareholders for any
purpose or purposes, unless otherwise prescribed by the laws of the United
States or the Articles of Association, may be called by the Chairman of
the Executive Committee, the Chairman of the Board, the President or the
Board of Directors, and shall be called by the Secretary upon a written
request to him signed by at least three shareholders owning in the
aggregate not less than ten percent of all outstanding shares of the
Association entitled to vote at the meeting.
Section 3. Place of Meeting. The Board of Directors may designate any
convenient place in the City of Milwaukee, Wisconsin, as the place of
meeting for any annual meeting or for any special meeting. If no such
designation is made, the place of meeting shall be the main banking office
of the Association in the City of Milwaukee, Wisconsin. Any meeting may be
adjourned to reconvene at any place in the City of Milwaukee, Wisconsin,
designated by vote of a majority of the shares represented thereat.
Amended: 6/19/80
Section 4. Notice of Meeting. Unless otherwise provided by the laws of the
United States or the Articles of Association, written notice stating the
place, date and hour of the meeting and, in case of a special meeting, the
purpose or purposes for which the meeting is called, shall be delivered
not less than ten or more than fifty days before the date of the meeting,
by or at the direction of the Chairman of the Executive Committee, the
Chairman of the Board, the President, or the Secretary, to each
shareholder of record entitled to vote at such meeting. Such notice shall
be deemed to be delivered when deposited in the United States mail,
addressed to the shareholder at his address as it appears on the stock
record book of the Association, with postage thereon prepaid.
Section 5. Closing of Transfer Books or Fixing of Record Date. For the
purpose of determining shareholders entitled to notice of or to vote at
any meeting of shareholders or any adjournment thereof, or shareholders
entitled to receive payment of any dividend, or in order to make a
determination of shareholders for any other proper purpose, the Board of
Directors of the Association may provide that the stock transfer books
shall be closed for stated period but not to exceed, in any case, fifty
days. If the stock transfer books shall be closed for the purpose of
determining shareholders entitled to notice of or to vote at a meeting of
shareholders, such books shall be closed for at least ten days immediately
preceding such meeting. In lieu of closing the stock transfer books, the
Board of Directors may fix in advance a date as the record date for any
such determination of shareholders, such date in any case to be not more
than fifty days and, in case of a meeting of shareholders, not less than
ten days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If the stock transfer books
are not closed and no record date is fixed for the determination of
shareholders entitled to notice of or to vote at a meeting of
shareholders, or shareholders entitled to receive payment of a dividend,
the close of business on the date on which notice of the meeting is mailed
or on the date on which the resolution of the Board of Directors declaring
such dividend is adopted, as the case may be, shall be the record date for
such determination of shareholders. When a determination of shareholders
entitled to vote at any meeting of shareholders has been made as provided
in this Section, such determination shall be applied to any adjournment
thereof except where the determination has been made through the closing
of the stock transfer books and the stated period of closing has expired.
Amended: 6/19/80
Section 6. Voting Lists. The Secretary shall make, at least ten days
before each meeting of shareholders, a complete list of the shareholders
entitled to vote at such meeting, or any adjournment thereof, arranged in
alphabetical order, with the address of and the number of shares held by
each, which list, for a period of ten days prior to such meeting, shall be
kept on file at the office of the Association and shall be subject to
inspection by any shareholder at any time during usual business hours.
Such list shall also be produced and kept open at the time and place of
the meeting and shall be subject to the inspection of any shareholder
during the whole time of the meeting. The original stock transfer books
shall be prima facie evidence as to who are the shareholders entitled to
examine such list or transfer books or to vote at any meeting of
shareholders. Failure to comply with the requirements of this Section
shall not affect the validity of any action taken at such meeting.
Section 7. Quorum. Except as otherwise provided by law, a majority of the
outstanding shares of the Association entitled to vote, represented in
person or by proxy, shall constitute a quorum at a meeting of
shareholders, and a majority of votes cast at any meeting at which a
quorum is present shall be decisive of any motion or election. Though less
than a quorum of the outstanding shares are represented at a meeting, a
majority of the shares so represented may adjourn the meeting from time to
time without further notice. At such adjourned meeting at which a quorum
shall be present or represented, any business may be transacted which
might have been transacted at the meeting as originally notified.
Amended: 6/19/80
Section 8. Proxies. At all meetings of shareholders, a shareholder
entitled to vote may vote in person or by proxy appointed in writing by
the shareholder or by his duly authorized attorney in fact. Such proxy
shall be filed with the Secretary of the Association before or at the time
of the meeting. Unless otherwise provided in the proxy, a proxy may be
revoked at any time before it is voted, either by written notice filed
with the secretary of the meeting or by oral notice given by the
shareholder to the presiding officer during the meeting. No proxy shall be
valid after eleven months from the date of its execution, unless otherwise
provided in the proxy.
Section 9. Voting of Shares. Each outstanding share entitled to vote shall
be entitled to one vote upon each matter submitted to a vote at a meeting
of shareholders, except for the election of Directors. In all elections of
Directors each shareholder shall have the right to vote the number of
shares owned by him for as many persons as there are Directors to be
elected, or to cumulate such shares and give one candidate as many votes
as the number of Directors multiplied by the number of his shares shall
equal or to distribute them on the same principle among as many candidates
as he shall elect.
Section 10. Voting of Shares by Certain Holders.
Amended: 6/19/80
(a) Other Corporation. Shares standing in the name of another corporation
may be voted either in person or by proxy, by the president of such
corporation, or any other officer appointed by such president. A proxy
executed by any principal officer of such other corporation or assistant
thereto shall be conclusive evidence of the signer's authority to act, in
the absence of express notice to this Association, given in writing to the
Secretary of the designation of some other person by the Board of
Directors or the by-laws of such other corporation.
Amended: 6/19/80
(b) Legal Representatives and Fiduciaries. Shares held by an
administrator, executor, guardian, conservator, trustee in bankruptcy,
receiver, or assignee for creditors may be voted by him, either in person
or by proxy, without a transfer of such shares into his name, provided
that there is filed with the Secretary before or at the time of the
meeting proper evidence of his incumbency and the number of shares held.
Shares standing in the name of a fiduciary may be voted by him, either in
person or by proxy. A proxy executed by a fiduciary shall be conclusive
evidence of the signer's authority to act, in the absence of express
notice to this Association, that such manner of voting is expressly
prohibited or otherwise directed by the document creating the fiduciary
relationship.
(c) Pledges. A shareholder whose shares are pledges shall be entitled to
vote such shares until the shares have been transferred into the name of
the pledgee, and thereafter the pledgee shall be entitled to vote the
shares so transferred.
(d) Treasury Stock and Subsidiaries. Neither treasury shares, nor shares
held by another corporation if majority of the shares entitled to vote for
the election of directors of such other corporation is held by this
Association, shall be voted at any meeting or counted in determining the
total number of outstanding shares entitled to vote, but shares of its own
issue held by such other corporation in a fiduciary capacity, may be voted
and shall be counted in determining the total number of outstanding shares
entitled to vote.
Amended: 6/19/80
(e) Minors. Shares held by a minor may be voted by such minor in person
or proxy and no such vote shall be subject to disaffirmance or avoidance,
unless prior to such vote the Secretary of the Association has received
written notice or has actual knowledge that such shareholder is a minor.
Amended: 6/19/80
(f) Incompetents and Spendthrifts. Shares held by an incompetent or
spendthrift may be voted by such incompetent or spendthrift in person or
by proxy and no such vote shall be subject to disaffirmance or avoidance,
unless prior to such vote the Secretary of the Association has actual
knowledge that such shareholder has been adjudicated an incompetent or
spendthrift or actual knowledge of filing of judicial proceedings for
appointment of a guardian.
Amended: 6/19/80
(g) Joint Tenants. Shares registered in the names of two or more
individuals who are named in the registration as joint tenants may be
voted in person or by proxy signed by any one or more of such individuals
if either (i) no other such individual or his legal representative is
present and claims the right to participate in the voting of such shares
or prior to the vote files with the Secretary of the Association a
contrary written voting authorization or direction or written denial of
authority of the individual present or signing the proxy proposed to be
voted or (ii) all such other individuals are deceased and the Secretary of
the Association has no actual knowledge that the survivor has been
adjudicated not to be the successor to the interests of those deceased.
Section 11. Waiver of Notice of Shareholders. Whenever any notice whatever
is required to be given to any shareholder of the Association under the
Article of Association or By-laws or any provision of law, a waiver
thereof in writing, signed at any time, whether before or after the time
of meeting, by the shareholder entitled to such notice, shall be deemed
equivalent to the giving of such notice; provided that such waiver in
respect to any matter of which notice is required under any provision of
law shall contain the same information as would have been required to be
included in such notice, except such waiver need not set forth the time
and place of meeting.
Section 12. Chairman and Secretary of Meeting. At each meeting of the
shareholders, the shareholders shall elect a Chairman and a Secretary of
the meeting, each of whom shall be either an officer or a shareholder of
the Association.
Amended: 6/19/80
Section 13. Judges of Elections. Not less than thirty days prior to the
date of any election of Directors the Board of Directors shall appoint two
shareholders to be the judges of said election has been held the judges
shall certify the results thereof to the Secretary.
Amended: 6/19/80
Section 14. Reports of Meetings. The Secretary of the meeting shall cause
the record of each meeting of shareholders to be kept showing the names of
the shareholders present in person and by proxy, the number of shares held
by each and the number of shares voted on each action. After each such
meeting the Secretary shall forward a report thereof to the Comptroller of
the Currency in the form prescribed by him.
ARTICLE II
BOARD OF DIRECTORS
Section 1. General Powers. The business and affairs of the Association
shall be managed by its Board of Directors.
Amended: 10/19/67; 6/19/80; 1/21/82
Section 2. Number, Tenure and Qualifications. The Board of Directors shall
consist of not less than five nor more than twenty-five persons. The
number of Directors to be elected shall be determined by a majority of the
votes cast by the shareholders at the annual meeting or at a special
meeting called for such purpose; provided that the Board of Directors may,
by a vote of the majority of its members, increase the number of members
of the Board as established by the shareholders by not more than two
members. Each Director shall hold office until the next annual meeting of
shareholders and until his successor shall have been elected, or until his
death or until he shall resign by filing his written resignation with the
Secretary. No person shall be eligible to be elected or re-elected as a
member of the Board of Directors if he shall have attained 70 years of age
at the date of his election.
Section 3. Oath. Each person when initially elected or appointed a member
of the Board of Directors shall take the oath of such office in the form
prescribed by the Comptroller of the Currency. No person elected or
appointed a Director shall exercise the functions of such office until he
shall have taken such oath.
Section 4. Regular Meetings. A regular meeting of the Board of Directors
shall be held, without other notice than this By-law, immediately after
and at the same place as the annual meeting of shareholders for the
purpose of the Directors taking their oaths, organizing the Board,
electing the Executive Committee, appointing officers of the Association
and transacting such other business as may properly come before the
meeting. Additional regular meetings of the Board of Directors shall be
held monthly on such day and at such hour as the Board of Directors may
provide by resolution, without other notice than such resolutions. When
any regular meeting of the Board of Directors falls upon a holiday, the
meeting shall be held on the next business day unless the Board of
Directors shall have previously designated another day.
Amended: 6/19/80
Section 5. Special Meetings. Special meetings of the Board of Directors
may be called by or at the request of the Chairman of the Executive
Committee, Chairman of the Board, the President, the Executive Vice
President, and shall be called by the Secretary at the request of three or
more Directors.
Section 6. Place of Meeting. The Board of Directors (or in the case of a
special meeting called at the request of the Chairman of the Executive
Committee, the Chairman of the Board, the President, the Executive Vice
President, or three or more Directors calling such meeting, the officer of
Directors requesting such call) may designate any convenient place in the
City of Milwaukee, Wisconsin, as the place of meeting for any meeting of
the Board of Directors. If no such designation is made, the place of
meeting shall be the main banking office of the Association in the City of
Milwaukee, Wisconsin.
Amended: 6/19/80
Section 7. Notice. Notice of any special meeting shall be given by the
Secretary to each Director at least 48 hours previous thereto by orally
presenting such notice to a Director personally, directly or by telephone,
or by written notice delivered personally or mailed to a Director at his
business address, or by telegram. If mailed, such notice shall be deemed
to be delivered when deposited in the United States mail so addressed with
postage thereon prepaid (air mail postage as to any Director whose address
is more than 200 airline miles from Milwaukee, Wisconsin). If notice is
given by telegram, such notice shall be deemed to be delivered when the
telegram is delivered to the telegraph company. Whenever any notice
whatever is required to be given to any Director under the provisions of
these By-laws or under the provisions of the Articles of Association or
under the provisions of any statute, a waiver thereof in writing, signed
at any time, whether before or after the time of meeting, by the director
entitled to such notice, shall be deemed equivalent to the giving of such
notice. The attendance of a Director at a meeting shall constitute a
waiver of notice of such meeting, except where a Director attends a
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
Board of Directors need be specified in the notice or waiver of notice of
such meeting.
Section 8. Quorum. A majority of the members of the Board of Directors
shall constitute a quorum for the transaction of business at any meeting
of the Board of Directors, but a majority of the Directors present (though
less than such quorum) may adjourn the meeting from time to time without
further notice.
Section 9. Manner of Acting. The act of the majority of the Directors
present at a meeting at which a quorum is present shall be the act of the
Board of Directors, unless the act of greater number is required by law or
by the Articles of Association or these By-laws.
Section 10. Vacancies. Any vacancy occurring in the Board of Directors by
resignation or death or by reason of the increase in the number of
authorized members of the Board as provided at Section 2 of this Article
II may be filled until the next succeeding annual election by appointment
pursuant to the affirmative vote of a majority of the Directors then in
office.
Amended: 6/19/80
Section 11. Presumption of Assent. A Director of the Association who is
present at a meeting of the Board of Directors or a committee thereof at
which action on any corporate matter is taken shall be presumed to have
assented to the action taken unless his dissent shall be entered in the
minutes of the meeting or unless he shall file his written dissent to such
action with the person acting as Secretary of the meeting before the
adjournment thereof or shall file his written dissent by registered mail
to the Secretary immediately after the adjournment of the meeting. Such
right to dissent shall not apply to a Director who voted in favor of such
action.
ARTICLE III
COMMITTEES
Amended: 2/19/87
Section 1. Executive Committee. The Board of Directors shall, at its
regular meeting held immediately following the annual meeting of
shareholders, elect an Executive Committee consisting of such number of
members of the Board, not less than six nor more than fifteen, as the
Board may fix by resolution. The Chairman of the Board and President shall
be members of the Executive Committee. The Board of Directors shall also
elect six or more of its members to serve as alternate members of the
Executive Committee, which alternate members may be called upon by the
Chairman of the Executive Committee to serve in the absence of any of the
regular members. Any vacancy occurring in the Executive Committee may be
filled until the next succeeding annual election by appointment of the
Board of Directors.
The Executive Committee shall be vested with all the authority of the
Board of Directors and, subject to the control of the Board, shall direct
the management of the affairs of the Association in the interim between
meetings of the Board. The Executive Committee may require that it shall
approve all loans and discounts to any individual or entity which equal or
exceed such aggregate amount as the Executive Committee shall keep minutes
of all of its meetings, showing the matters considered and disposed of by
it, which minutes shall be presented to the Board of Directors at its next
succeeding regular meeting.
The Executive Committee shall elect one of its members as Chairman of the
Executive Committee who may, but need not be, the Chairman of the Board of
Directors and/or the President. Such election shall be made annually at
the first meeting of the Executive Committee held after each annual
meeting of the shareholders. The Chairman of the Executive Committee shall
hold office until his successor shall have been duly elected and shall
have qualified or until his death, resignation or removal in the manner
hereinafter provided. The Chairman of the Executive Committee shall
appoint a Secretary who need not be a member of the Executive Committee.
Amended: 2/15/79; 7/19/79; 2/19/80; 9/18/80; 11/18/82; 2/19/87; 8/19/93
Section 2. Risk Examination Committee. The Board of Directors shall, at
its regular meeting held immediately following the annual meeting of
shareholders, elect a Risk Examination Committee consisting of not less
than three members of the Board, none of whom may be officers of the
Association, except where the full Board of Directors comprises the Risk
Examination Committee. The Board of Directors may also elect one or more
of its members to serve as an alternate member or members of the Risk
Examination Committee, which alternate member or members may be called
upon by the Chairman of the Risk Examination Committee to serve in the
absence of any of the regular members.
The Board of Directors shall appoint the Chairman of the Risk Examination
Committee, who shall be a member of such Committee, and a Secretary, who
need not be a member of such Committee.
The Risk Examination Committee shall cause suitable examinations of the
affairs of the Association to be made by auditors responsible only to the
Board of Directors, in order to ascertain whether the Association is in
sound financial condition, and whether adequate internal audit controls
and procedures are maintained. The Risk Examination Committee shall also
review activities that represent significant potential loss of income or
assets of the Association. The Risk Examination Committee shall, in
addition, cause suitable examinations of the Trust Department to be made
by such independent auditors at least once during each calendar year and
within fifteen months of the last such audit for the purpose of
determining whether the Trust Department has been administered according
to law, the regulations of any governmental regulatory agency and sound
fiduciary principles. The results of each such examination, together with
the results of any examination made by the examining staff of any
governmental regulatory agency, shall be reviewed by the Risk Examination
Committee and reported to the Board of Directors, together with any
recommended changes in the manner of conducting the affairs of the
Association as shall be deemed advisable, and made a part of the records
of the Association.
Amended: 9/18/80; 2/19/87
Section 3. Trust Investment Committee. The Board of Directors shall, at
its regular meeting held immediately following the annual meeting of
shareholders, elect a Trust Investment Committee, consisting of such
number of members of the Board, not less than three nor more than fifteen,
as the Board may fix by resolution. The Board of Directors shall also
elect six or more of its members to serve as alternate members of the
Trust Investment Committee, which alternate members may be called upon by
the Chairman of the Board to serve in the absence of any of the regular
members.
The Trust Investment Committee shall appoint a Chairman who shall be a
member of such Committee, and a Secretary, who need not be a member of
such Committee.
All investments of trust funds shall be made, retained or disposed of only
with the authorization or approval of the Trust Investment Committee. The
Trust Investment Committee shall, at least annually, review each trust
account to determine the safety and value of its assets and advisability
of retaining or disposing of them. The Trust Investment Committee shall
keep minutes of all of its meetings, showing the disposition of all
matters considered and passed on by it, which minutes shall be presented
to the Executive Committee at its next succeeding regular meeting.
Amended: 11/15/73
Section 4. Officers' Loan Committees. The Executive Committee or the Board
of Directors may appoint such Officers' Loan Committees as it deems
appropriate from time to time, each such Committee shall consist of such
number of officers of the Association as the Executive Committee or the
Board of Directors shall determine by resolution. The Executive Committee
or the Board of Directors may also appoint one or more officers of the
Association to serve as alternate members of such Committees, which
alternate members may be called upon by the Chairman of the Board,
President or the Chairman of the respective Committee to serve in the
absence of any of the regular members. The Executive Committee or the
Board of Directors shall designate the person who shall serve as Chairman
of each such Committee and each Committee shall appoint a Secretary who
need not be a member of the Committee.
Each such Officers' Loan Committee shall have such powers to discount and
purchase bills, notes and other evidences of debt, to buy and sell bills
of exchange, to examine and approve loans and discounts held by the
Association as the Executive Committee or the Board of Directors may from
time to time specify by resolution, subject at all times to the control of
the Executive Committee and the Board of Directors. Such Committees shall
report their actions to each regular meeting of the Executive Committee or
Board of Directors, which shall approve or disapprove the report and
record such action in the minutes of their meetings, but no such
disapproval shall adversely affect the interests of any customer or third
party in any transaction or commitment made under the authority of this
Section.
Added: 11/15/73; 1/20/83
Section 5. Other Committees. The Board of Directors or Executive Committee
by resolution may designate one or more additional committees, each
committee to consist of such number of officers and/or directors of the
Association as may be specified in such resolution, provided, however,
that a Plan Committee for any pension plan established by the Association
may consist of such officers, directors, and/or employees of the
Association as may be designated by the Board. Each such committee shall
have such powers in the management of the business and affairs of the
Association to the extent provided in said resolution as initially
adopted, and as thereafter supplemented or amended by further resolution
adopted by the Executive Committee or Board of Directors, except action in
respect to matters requiring action by the shareholders, Board of
Directors, Executive Committee or other committee established by or
pursuant to these By-laws. The Executive Committee or Board of Directors
may specify one or more alternate member of any such committee who may
take the place of any absent members or members at any meeting of such
committee, upon request by the Chairman of the Board, President or upon
request by the chairman of such committee. Each such committee shall fix
its own rules governing the conduct of its activities and shall report
their actions to each regular meeting of the Executive Committee or Board
of Directors, which shall approve or disapprove the report and record such
action in the minutes of their meetings.
ARTICLE IV
OFFICERS
Amended: 2/16/78; 6/19/80; 9/15/88; 3/18/93
Section 1. Number and Qualifications. The principal officers of the
Association shall be a Chairman of the Board of Directors, a President,
one or more Executive, Senior and First Vice Presidents, a Cashier, a
Trust Officer, a Comptroller, and a Secretary, each of whom shall be
appointed by the Board of Directors. Such other officers, including Vice
Presidents, and assistant officers as may be deemed necessary may be
appointed by the Board of Directors. Any two or more offices may be held
by the same person, except the offices of President and Cashier, the
offices of President and Secretary, and the offices of President and Vice
President. The Chairman of the Board of Directors and President shall be
members of the Board of Directors. Except to the extent such power is
limited by the Board of Directors, any officer authorized by these By-laws
or the Board of Directors to appoint officers may appoint one or more
other officers or assistant officers, and any officer making such an
appointment shall report the appointment to the Board of Directors at its
next regular meeting.
Section 2. Terms of Office. The officers of the Association shall be
appointed annually by the Board of Directors at the first meeting of the
Board of Directors held after each annual meeting of the shareholders. If
officers shall not be appointed at such meeting, they shall be appointed
as soon thereafter as conveniently may be. Each officer shall hold office
until his successor shall have been duly appointed and shall have
qualified or until his death or until he shall resign or shall have been
removed in the manner hereinafter provided.
Section 3. Removal. Any officer or agent appointed by the Board of
Directors or Executive Committee may be removed by the Board of Directors
or Executive Committee, as the case may be, whenever in its judgment the
best interests of the Association will be served thereby, but such removal
shall be without prejudice to the contract rights, if any, of the person
so removed. Appointment shall not of itself create contract rights.
Section 4. Vacancies. A vacancy in any principal office because of death,
resignation, removal, disqualification or otherwise shall be filled by the
Board of Directors for the unexpired portion of the term.
Amended: 3/18/93
Section 5. Principal Executive Officer. The principal executive officer of
the Association shall be either the Chairman of the Board or the President
of the Association, as is designated from time to time by the Board of
Directors by resolution duly adopted by a majority of its members at any
regular or Special Meeting. Subject to the control of the Board of
Directors such principal executive officer shall generally supervise and
control all of the business and affairs of the Association. The principal
executive officer shall have authority, subject to such rules as may be
prescribed by the Board of Directors, to appoint such agents, employees
and, in accordance with Section 1 of this Article, other officers of the
Association as he or she shall deem necessary, to prescribe their powers,
duties and compensation, and to delegate authority to them. Such agents,
employees and officers shall hold office at the discretion of the
principal executive officer.
Amended: 1/16/69; 2/18/82
Section 6. Chairman of the Board. The Chairman of the Board shall, when
present, preside at all meetings of the shareholders and the Board of
Directors. The Chairman of the Board shall perform all such duties as may
be prescribed by the Board of Directors from time to time.
Amended: 1/16/69; 6/19/80; 2/18/82
Section 7. President. The President shall perform all duties incident to
the office of President and such other duties as may be prescribed by the
Board of Directors from time to time. Unless the Board of Directors
otherwise provides, in the absence of the Chairman of the Board or in the
event of his inability or refusal to act, the President shall perform the
duties of the Chairman of the Board, and when so acting shall have all the
powers of and be subject to all the restrictions upon the Chairman of the
Board. He may sign with the Cashier, Secretary, Assistant Cashier or
Assistant Secretary, or any other proper officer of the Association
thereunto authorized by the Board of Directors certificates for shares of
the Association.
Amended: 2/16/78
Section 8. Executive Vice President(s). The Executive Vice President(s)
shall consult with the Chairman of the Board and the President regarding
the business and affairs of the Association and shall perform such duties
as may be prescribed by the Chairman of the Board, the President and the
Board of Directors from time to time. In the absence of the President, or
in the event of his inability or refusal to act, the Board of Directors
may designate one Executive Vice President to perform the duties of
President and when so acting said Executive Vice President shall have all
of powers of and be subject to all of the restrictions upon the President.
Section 9. The Vice Presidents. In the absence of the Chairman of the
Board, the President and the Executive Vice President, or in the event of
their inability or refusal to act, the Vice President (or in the event
there be more than one Vice President, the Vice Presidents in the order
designated by resolution of the Board of Directors, or in the absence of
any designation, then in the order of their appointment) shall perform the
duties of the Chairman of the Board and the President (except for
presiding at meetings of the shareholders, of the Board of Directors and
of the Executive Committee), and when so acting shall have all the powers
of and be subject to all the restrictions upon the Chairman of the Board
and/or President. Any Vice President may sign, with the Cashier,
certificates for shares of the Association; and shall perform such other
duties as from time to time may be assigned to him by the Chairman of the
Executive Committee, the Chairman of the Board, the President, or by the
Board of Directors.
Amended: 6/19/80
Section 10. The Cashier. The Cashier and the Secretary, or either of them,
shall (a) be custodians of the corporate records and of the seal of the
Association and see that the seal of the Association is affixed to all
documents the execution of which on behalf of the Association under its
seal is duly authorized; and (b) sign with the President, or a Vice
President, certificates for shares of the Association, the issuance of
which shall have been authorized by resolution of the Board of Directors.
The Cashier shall have and may exercise any and all other powers and
duties pertaining by law, regulation or practice, to the officer of
Cashier or imposed by these By-laws and shall perform such other duties as
from time to time may be assigned to him by the Chairman of the Board, the
President or by the Board of Directors.
Section 11. Comptroller. The Comptroller shall be responsible for the
accuracy and proper maintenance of all accounting records of the
Association in accordance with generally recognized principles of
accounting acceptable to the Board of Directors. He shall prepare and
furnish to the Board periodic reports showing the financial condition and
results of operations of the Association, together with such other
information as he may be called upon from time to time to furnish. The
Comptroller shall also perform such other duties as may be assigned to him
directly or indirectly, by the Chairman of the Board, the President or the
Board of Directors. The Comptroller shall be responsible to the Board of
Directors of the Association and shall report to the Board directly or
through the Chairman of the Board.
Added: 6/19/80
Section 12. The Secretary. The Secretary of the Association shall: (a)
keep the minutes of the shareholders' and of the Board of Directors'
meetings in one or more books provided for that purpose; (b) see that all
notices are duly given in accordance with the provisions of these By-laws
or as required by law; (c) advise all members of the Board of Directors
immediately upon their election as such; (d) along with the Cashier, or
either of them, be custodians of the corporate records and of the seal of
the Association and see that the seal of the Association is affixed to all
documents the execution of which on behalf of the Association under its
seal is duly authorized; (e) keep a register of the post office address of
each shareholder; (f) sign with the President, or a Vice President,
certificates for shares of the Association, the issuance of which shall
have been authorized by resolution of the Board of Directors, as duties of
the Cashier. The Secretary shall perform such other duties as from time to
time may be assigned to him by the Chairman of the Board, the President or
by the Board of Directors.
Renumbered: 6/19/80
Section 13. Assistants and Acting Officers. The Board of Directors shall
have the power to appoint any person to act as assistant to any officer,
or to perform the duties of such officer whenever for any reason it is
impracticable for such officer to act personally, and such assistant or
acting officer so appointed by the Board of Directors shall have the power
to perform all the duties of the office to which he is so appointed to be
assistant, or as to which he is so appointed to act, except as to such
power may be otherwise defined or restricted by the Board of Directors.
ARTICLE V
CERTIFICATES FOR SHARES AND THEIR TRANSFER
Amended: 6/19/80
Section 1. Certificates for Shares. Certificates representing shares of
the Association shall be in such form as shall be determined by the Board
of Directors. Such certificates shall be signed by the President or Vice
President and by the Cashier, Assistant Cashier, Secretary or Assistant
Secretary. All certificates for shares shall be consecutively numbered or
otherwise identified. The name and address of the person to whom the
shares represented thereby are issued, with the number of shares and the
date of issue, shall be entered on the stock transfer books of the
Association. All certificates surrendered to the Association for transfer
shall be cancelled and no new certificate shall be issued until the former
certificate for a like number of shares shall have been surrendered and
cancelled, except that in case of a lost, destroyed or mutilated
certificate a new one may be issued therefor upon such terms and indemnity
to the Association as the Board of Directors may prescribe.
Amended: 6/19/80
Section 2. Facsimile Signatures and Seal. The Seal of the Association on
any certificates for shares may be a facsimile. The signatures of the
President or Vice President, the Cashier or Assistant Cashier and the
Secretary or Assistant Secretary upon a certificate may be facsimiles if
the certificate is countersigned by a transfer agent, or registered by a
registrar, other than the Association itself or an employee of the
Association.
Amended: 6/19/80
Section 3. Signature by Former Officers. In case any officer, who has
signed or whose facsimile signature has been placed upon any certificate
for shares, shall have ceased to be such officer before such certificate
is issued, it may be issued by the Association with the same effect as if
he were such officer at the date of its issue.
Section 4. Transfer of Shares. Prior to due presentment of a certificate
for shares for registration or transfer the Association may treat the
registered owner of such shares as the person exclusively entitled to
vote, to receive notifications and otherwise to exercise all the rights
and powers of an owner. Where a certificate for shares is presented to the
Association with a request to register for transfer, the Association had
no duty to inquire into adverse claims or has discharged any such duty.
The Association may require reasonable assurance that said endorsements
are genuine, effective and in compliance with such other regulations as
may be prescribed under the authority of the Board of Directors.
Section 5. Stock Regulations. The Board of Directors shall have the power
and authority to make all such further rules and regulations not
inconsistent with law as it may deem expedient concerning the issue,
transfer and registration of certificates representing shares of the
Association.
ARTICLE VI
CONTRACTS
Amended: 3/18/76
The Board of Directors may authorize any officer or officers, agent or
agents, to enter into any contract, execute and deliver any instrument in
the name of and on behalf of the Association, execute checks, drafts,
bills of exchange, orders, letters of credit and other obligations of the
Association, transmit and receive funds of the Association, direct the
transfer of such funds by others and enter into agreements which authorize
others, on terms and conditions set forth therein, to transmit, receive
and direct transfer of such funds by telegraphic, telephonic, electronic
or other means, and such authorization may be general or confined to
specific instances.
ARTICLE VII
AMENDMENTS
These By-laws may be altered, amended or repealed and new By-laws may be
adopted by the shareholders or Board of Directors by majority vote at any
regular meeting or special meeting noticed for such purpose. Any By-law
adopted by the Board of Directors shall be subject to amendment or repeal
by the shareholders as well as by the Directors.
ARTICLE VIII
CORPORATE SEAL
The Board of Directors shall provide a corporate seal which shall be
circular in form and shall have inscribed thereon the name of the
Association and the words "Corporate Seal."
ARTICLE IX
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 1. Definitions of Terms for this Article.
(a) "Director or Officer" shall include any person who may have served at
the request of the Association as a director or officer of another
corporation in which the Association owned stock or was a creditor at any
time during the period of said service, and all past, present and future
directors and officers of the Association whether or not so serving at the
time of incurring the expenses or liabilities referred to herein, and
their personal representatives.
(b) "Expenses" shall include, without limiting the generality thereof,
amounts paid or payable as fees of legal counsel and experts.
(c) "Action" means any civil, criminal or administrative action, suit,
proceeding or claim, or threat thereof, in which a director or officer may
be involved as a party or otherwise, by reason of his having served as
such director or officer or by reason of anything done or omitted by him
as such director or officer, or alleged to have been so done or omitted.
(d) "Determination by the Board of Directors" means a determination made
by resolution, upon favorable advice by counsel for the Association,
adopted by the affirmative vote of a majority of a committee consisting of
all directors of the Association then in office, other than those involved
in the action, provided that there are not less than three, such
determination shall be deemed to have been made if recommended by
affirmative vote of a majority of the directors of the Association then in
office (whether or not involved in the action) but only to the extent
concurred in by either (i) the affirmative vote of a majority of the
outstanding shares entitled to vote at a meeting of the shareholders
called for that purpose, or (ii) the opinion of independent legal counsel
selected by the Board of Directors.
Section 2. Mandatory Indemnification. The Association shall indemnify each
director or officer against all expenses actually and reasonably incurred
by him in connection with any action and against all liability to which he
is subjected upon disposition of any action, if either (a) final
disposition of such action is made in favor of such director or officer or
(b) he is adjudged to be not guilty of gross negligence or misconduct in
the performance of duty to the Association in the matter.
Section 3. Assumption of Defense and Liability. If any director or
officer, who is involved in any action for which mandatory indemnification
might be required under Section 1 in the event of favorable adjudication
thereof, shall make full disclosure to the Board of Directors of or to
counsel for the Association of the pertinent facts not otherwise known to
the Association, and if there shall be made a determination by the Board
of Directors that in its opinion such director or officer was not guilty
of negligence or misconduct in the performance of duty to the Association
in the matter, the Association shall assume or provide at the
Association's expense and risk the defense or settlement thereof on his
behalf; and in such event such director or officer shall have no liability
to the Association for any expense, liability or settlement payment
incurred by the Association in the matter.
Section 4. Insurance. The Association may upon affirmative vote of a
majority of its Board of Directors, purchase commercial insurance for the
benefit of a director or officer against all or any part of the expenses
of actions against such director or officer; and such insurance need not
exclude actions in which such director or officer may thereafter be
adjudged guilty of negligence or misconduct in the performance of duty to
the Association. Such insurance may, but need not, be for the benefit of
all directors or officers.
Section 5. Further Assumption or Sharing of Expense and Liability. If
complete indemnification of expense, liability or settlement payments is
not provided pursuant to Sections 2, 3 and 4 to any director or officer,
the Association may grant such further indemnification in whole or in part
as may be fixed by determination by the Board of Directors upon
consideration of the circumstances of the individual action.
Section 6. Liability for Determination. The Association and its directors,
officers, employees and agents shall not be liable to anyone for making
any determination as to the existence or absence of liability under any of
Section 2 through 5 above, or for making or refusing to make any payment
thereunder on the basis of such determination, or for taking or omitting
to take any other action thereunder in reliance upon advice of counsel.
Section 7. Other Rights. The foregoing indemnification provisions shall be
in addition, and may be claimed without prejudice, to any other rights
which any director, officer, employee or agent may have.
ARTICLE X
EMERGENCY PROVISIONS
Section 1. Applicability. The provisions of this Article shall be of no
effect until the occurrence of a state of emergency resulting in this
Association being unable to continue its normal functions under the
direction of established management and at the location of its main office
(in this Article referred to as "Emergency"), which Emergency may include
but shall not be limited to war or war-like disaster. Upon such occurrence
and during the continuation of such Emergency:
(a) the provisions of this Article shall become effective forthwith and
shall remain so effective without further authorization or declaration,
unless otherwise determined by the Board of Directors or other body
performing the powers of the Board of Directors as provided in these
By-laws or under any governmental directives, and
(b) so far as the provisions of this Article are in conflict with the
provisions of any other By-law or resolution theretofore adopted, the
provisions of this Article shall prevail.
Section 2. Temporary Offices. Upon the occurrence and during the
continuation of such an Emergency of sufficient severity so as to prevent
this Association from carrying on its normal banking functions at the
location of its main office, any or all of the business ordinarily
conducted at such location shall be temporarily relocated elsewhere in
suitable quarters, which may be or include but need not be limited to an
established branch office of this Association, as may be designated by the
Board of Directors or other body performing the powers of the Board of
Directors as provided in these By-laws or under any governmental
directives. Such relocated place of business shall be within the City of
Milwaukee if a suitable location within such City is available. Any
temporary relocated place of business shall be returned to its original or
other legally authorized location as soon as practicable and such
temporary place of business shall then be discontinued.
Section 3. Emergency Executive Committee. Upon the occurrence and during
the continuance of such an Emergency of sufficient severity so as to
prevent the conduct and management of the affairs and business of this
Association by its Board of Directors and the regularly established
committees thereof:
(a) There is hereby created an Emergency Executive Committee, which may
exercise the full powers and authority of the Board of Directors and of
any other regularly established Committee of the Board of Directors until
the Board of Directors or other such established committee may be
available to resume exercise of its functions.
(b) Such Emergency Executive Committee shall consist of the then
available members of the Board of Directors, any three of whom shall
constitute a quorum. Whenever less than three regularly elected directors
of this Association shall be available to serve on such Emergency
Executive Committee, the place of any absent director may be taken by any
person, designated by prior resolution of the Board of Directors of First
Wisconsin Bankshares Corporation (as holder of more than 98% of the
outstanding shares of this Association), to serve as an acting director
and member of the Emergency Executive Committee until not less than three
regularly elected directors of this Association are available to serve.
(c) The Emergency Executive Committee may meet upon such notice and at
such times and places, as the person performing the powers and duties of
President may determine to be practicable under Emergency conditions.
Approval by any member of any matter or action, given by written,
telegraphic or telephone consent, shall have the same effect as a vote
taken at a meeting.
Amended: 6/19/80
Section 4. Emergency Officer Succession. If during any Emergency, neither
the Chairman of the Board, nor the President, nor the Executive Vice
President of this Association can be located by the then acting main
office or is unable to assume or to continue normal executive duties, then
the authority and duties of such officer shall without further action of
the Board of Directors, be automatically assumed temporarily by the Senior
Vice Presidents of the Bank and such monthly amounts of Pension Plan
Benefits shall be calculated according to the applicable method of payment
as provided under the Pension Plan, including any such method or payment
option validly elected by the Eligible Employee or his Beneficiary
thereunder.
<PAGE>
EXHIBIT 6
CONSENT OF THE TRUSTEE REQUIRED BY SECTION 321(b)
OF THE TRUST INDENTURE ACT OF 1939
Firstar Bank Milwaukee, N.A., as Trustee herein named, hereby consents
that reports of examination of said Trustee by Federal and State
authorities may be furnished by such authorities to the Securities and
Exchange Commission upon request therefor.
FIRSTAR BANK MILWAUKEE, N.A.
(Trustee)
By: /s/ Gene E. Ploeger
Gene E. Ploeger, Trust Officer
(Name and title)
By: /s/ Yvonne Siira
Yvonne Siira, Trust Officer
(Name and title)
Dated: March 3, 1998
<PAGE>
EXHIBIT 7
Legal Title of Bank: Firstar Bank Milwaukee, N.A. Call Date: 12/31/97
Address: 777 East Wisconsin Avenue ST-BK: 55-9180
City, State Zip: Milwaukee, Wisconsin 53202 FFIEC 031
Page RC-1
FDIC Certificate No.: | 0 | 5 | 3 | 0 | 8 |
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR DECEMBER 31, 1997
All schedules are to be reported in thousands of dollars. Unless
otherwise indicated, report the amount outstanding as of the last business
day of the quarter.
Schedule RC--Balance Sheet
| C400 |
Dollar Amounts in Thousands RCFD Bil Mil Thou
ASSETS
1. Cash and balances due from depository
institutions (from Schedule RC-A): . . . . . . | / / / / / / / / |
a. Noninterest-bearing balances and
currency and coin (1) . . . . . . . . . . . 0081 690,396 1.a.
b. Interest-bearing balances (2) . . . . . . . . 0071 5,324 1.b.
2. Securities . . . . . . . . . . . . . . . . . . . | / / / / / / / |
a. Held-to-maturity securities
(from Schedule RC-B, Column A): . . . . . . 1754 533,471 2.a.
b. Available-for-sale securities
(from Schedule RC-B, Column D) . . . . . . . 1773 483,764 2.b.
3. Federal funds sold and securities purchased
under agreements to resell . . . . . . . . . . 1350 851,589 3.
4. Loans and lease financing receivables: . . . . . |/ / / / / / /|
a. Loans and leases, net of unearned
income . . . . . . . . . . . . . . . . . . . | / / / / / / |
(from Schedule RC-C) | RCFD 2122 | 4,605,912 | / / / / / / | 4.a.
b. LESS: Allowance for loan and
lease losses | RCFD 3123 | 71,941 | / / / / / / | 4.b.
c. LESS: Allocated transfer risk
reserve | RCFD 3128 | 0 | / / / / / / | 4.c.
d. Loans and leases, net of unearned
income, allowance, and reserve | / / / / / / |
(Item 4.a. minus 4.b. and 4.c.) . . . . . . . 2125 4,533,97 4.d.
5. Trading assets (from Schedule RC-D) . . . . . . 3545 9,318 5.
6. Premises and fixed assets (including
capitalized leases) . . . . . . . . . . . . . . 2145 131,024 6.
7. Other real estate owned (from
Schedule RC-M) . . . . . . . . . . . . . . . . 2150 1,205 7.
8. Investments in unconsolidated subsidiaries
and associated companies . . . . . . . . . . . | / / / / / / / / |
(from Schedule RC-M) . . . . . . . . . . . . . . 2130 0 8.
9. Customers' liability to this bank
on acceptances outstanding . . . . . . . . . . 2155 7,084 9.
10. Intangible assets (from Schedule RC-M) . . . . . 2143 26,939 10.
11. Other assets (from Schedule RC-F) . . . . . . 2160 108,520 11.
12. Total assets (sum of items 1 through 11) . . . . 2170 7,382,605 12.
___________
(1) Includes cash items in process of collection and unposted debits
(2) Includes time certificates of deposit not held for trading
LIABILITIES
13. Deposits: . . . . . . . . . . . . . . . | / / / / / / / / |
a. In domestic offices (sum of totals of
columns A and C from . . . . . . . . | / / / / / / / / |
Schedule RC-E, part 1) . . . . . . RCON 2200 4,503,0911 3.a.
(1) Noninterest-bearing
(1) . . . . | RCON 6631 | 1,535,600| / / / / / / /|13.a.(1)
(2) Interest-bearing
. . | RCON 6636 | 2,967,491| / / / / / / /|13.a.(2)
b. In foreign offices, Edge
and Agreement . . . . . . . . . . . | / / / / / / / / |
subsidiaries, and IBFs (from
Schedule RC-E, part II) . . . . . . RCFN 2200 232,7711 3.b.
(1) Noninterest-
bearing . . | RCFN 6631 | 960| / / / / / / |13.b.(1)
(2) Interest-
bearing . . | RCFN 6636 | 231,811| / / / / / / |13.b.(2)
14. Federal funds purchased and securities sold
under agreements to repurchase . . . RCON 2800 1,259,149 14.
15. a. Demand notes issued to
the U.S. Treasury . . . . . . . . RCON 2840 410,759 15.a.
b. Trading liabilities (From
Schedule RC-D) . . . . . . . . . . RCFD 3548 8,381 15.b.
16. Other borrowed money (including
mortgage indebtedness and
obligations under . . . . . . . . . . | / / / / / / / / / |
capitalized leases) . . . . . . . . | / / / / / / / / / |
a. With a remaining maturity of
one year or less . . . . . . . . . RCFD 2332 3,253 16.a.
b. With a remaining maturity of
more than one year through
three years . . . . . . . . . . . RCFD A547 0 16.b.
c. With a remaining maturity of
more than three years . . . . . . RCFD A547 20,000 16.c.
17. Not applicable . . . . . . . . . . . | / / / / / / / / / |
18. Bank's liability on acceptances
executed and outstanding . . . . . . RCFD 2920 7,084 18.
19. Subordinated notes and
debentures (2) . . . . . . . . . . . RCFD 3200 293,678 19.
20. Other liabilities (from
Schedule RC-G) . . . . . . . . . . . RCFD 2930 96,576 20.
21. Total liabilities (sum of items
13 through 20) . . . . . . . . . . . RCFD 2948 6,834,742 21.
22. Not applicable
EQUITY CAPITAL
23. Perpetual preferred stock and related
surplus . . . . . . . . . . . . . . . RCFD 3838 0 23.
24. Common stock . . . . . . . . . . . . . RCFD 3230 75,600 24.
25. Surplus (exclude all surplus
related to preferred stock) . . . . . RCFD 3839 126,843 25.
26. a. Undivided profits and
capital reserves . . . . . . . . . RCFD 3632 339,860 26.a.
b. Net unrealized holding gains
(losses) on available-for-
sale securities . . . . . . . . . RCFD 8434 5,560 26.b.
27. Cumulative foreign currency
translation adjustments . . . . . . RCFD 3284 0 27.
28. Total equity capital (sum of items
23 through 27) . . . . . . . . . . . RCFD 3210 547,863 28.
29. Total liabilitiesand equity capital
(sum of items 21 and 28) . . . . . . RCFD 3300 7,382,605 29.
MEMORANDUM
To be reported only with the March Report
of Condition.
1. Indicate in the box at the right the
number of the statement below that best
describes the most comprehensive level
of auditing work performed for the bank by
independent external auditors as of any date Number
during 1994 . . . . . . . . . . . . . . . . RCFD 6724 N/A M.1.
1 = Independent audit of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm which
submits a report on the bank.
2 = Independent audit of the bank's parent holding company conducted in
accordance with generally accepted auditing standards by a certified
public accounting firm which submits a report on the consolidated holding
company (but not on the bank separately).
3 = Directors' examination of the bank conducted in accordance with
generally accepted auditing standards by a certified public accounting
firm (may be required by state chartering authority).
4 = Directors' examination of the bank performed by other external
auditors (may be required by state chartering authority).
5 = Review of the bank's financial statements by external auditors.
6 = Compilation of the bank's financial statements by external auditors.
7 = Other audit procedures (excluding tax preparation work).
8 = No external audit work.
___________
(1) Includes total demand deposits and noninterest-bearing time and
savings deposits.
(2) Includes limited-life preferred stock and related surplus.
Exhibit 99
SUBSCRIPTION AGREEMENT
Firstar Trust Company
Corporate Trust Services
Attention: Pamela Warner
1555 North RiverCenter Drive, Suite 301
Milwaukee, Wisconsin 53212
The undersigned ("Subscriber") hereby acknowledges receipt of
the Prospectus relating to the offer by Swing-N-Slide Corp. (the
"Company") of an aggregate $3,333,333 principal amount (the "Maximum
Offering Amount") of the Company's 10% Convertible Subordinated Debentures
due February 15, 2004 (the "Debentures"). Under the terms and conditions
set forth in the Prospectus, each stockholder of the Company other than
GreenGrass Holdings (an "Other Stockholder") is entitled to purchase
Debentures in the principal amount of up to his, her or its pro rata
portion of the Maximum Offering Amount, determined by multiplying the
Maximum Offering Amount by a fraction, the numerator of which is the
number of shares of Common Stock owned by the Other Stockholder as of June
27, 1996 (the "Record Date") and the denominator of which is 2,416,536
(the total number of shares of Common Stock owned by all Other
Stockholders as of the Record Date), rounded down to the nearest dollar.
Under the terms and conditions set forth in the Prospectus, the
principal amount of Debentures which the Subscriber is entitled to
purchase is as follows:
Maximum Offering Amount: $3,333,333
multiplied by X
Number of Shares Owned by Subscriber
as of the Record Date: __________
divided by
Total Number of Shares Owned by All Other
Stockholders As of the Record Date: 2,416,536
equals =
Principal Amount Offered to Subscriber,
Rounded Down to Nearest Dollar: $__________
Under the terms and conditions set forth in the Prospectus, the
Subscriber hereby irrevocably commits to purchase and subscribes for the
principal amount of Debentures set forth below, at a purchase price equal
to 100% of the principal amount of such Debentures, or the aggregate
purchase price set forth below:
Principal Amount of Debentures Which Subscriber
Commits to Purchase (not to exceed $______): $__________
multiplied by X
Purchase Price at 100% of the principal amount: 100%
equals =
Aggregate Purchase Price of Debentures Purchased: $__________
THIS SUBSCRIPTION AGREEMENT MUST BE RETURNED TO FIRSTAR TRUST
COMPANY (THE "SUBSCRIPTION AGENT"), CORPORATE TRUST SERVICES, ATTENTION:
PAMELA WARNER, 1555 NORTH RIVERCENTER DRIVE, SUITE 301, MILWAUKEE,
WISCONSIN 53212, BY 5:00 P.M., CENTRAL DAYLIGHT TIME, ON JUNE 9, 1998 (THE
"EXPIRATION DATE"). PAYMENT IN FULL OF THE PURCHASE PRICE (THE "PURCHASE
PRICE") FOR THE PRINCIPAL AMOUNT OF DEBENTURES SUBSCRIBED FOR MUST BE MADE
TOGETHER WITH THE RETURN OF THIS SUBSCRIPTION AGREEMENT.
Payment may be made only by (a) check or bank draft drawn upon a
U.S. bank, or postal, telegraphic or express money order, payable to
Swing-N-Slide Corp., or (b) wire transfer of funds to the account
maintained by the Subscription Agent for the purpose of accepting
subscriptions, or (c) a combination of the foregoing. The Purchase Price
will be deemed to have been received by the Subscription Agent only upon
(i) clearance of any uncertified check, (ii) receipt by the Subscription
Agent of any certified check or bank draft drawn upon a U.S. bank or any
postal, telegraphic or express money order, or (iii) receipt of collected
funds in the Subscription Agent's account designated above.
THE METHOD OF DELIVERY OF THE SUBSCRIPTION AGREEMENT AND PAYMENT
OF THE PURCHASE PRICE TO THE SUBSCRIPTION AGENT ARE AT THE ELECTION AND
RISK OF THE SUBSCRIBER. IF SENT BY MAIL, THE SUBSCRIBER IS URGED TO SEND
THE SUBSCRIPTION AGREEMENT AND PAYMENTS BY REGISTERED MAIL, PROPERLY
INSURED, WITH RETURN RECEIPT REQUESTED, AND IS URGED TO ALLOW A SUFFICIENT
NUMBER OF DAYS TO ENSURE DELIVERY TO THE SUBSCRIPTION AGENT AND CLEARANCE
OF PAYMENT PRIOR TO THE EXPIRATION TIME.
IF PAYING BY UNCERTIFIED PERSONAL CHECK, PLEASE NOTE THAT THE
FUNDS PAID THEREBY MAY TAKE AT LEAST FIVE (5) BUSINESS DAYS TO CLEAR.
ACCORDINGLY, IF THE SUBSCRIBER WISHES TO PAY THE PURCHASE PRICE BY MEANS
OF UNCERTIFIED PERSONAL CHECK, THE SUBSCRIBER IS URGED TO MAKE PAYMENT
SUFFICIENTLY IN ADVANCE OF THE EXPIRATION DATE TO ENSURE THAT SUCH PAYMENT
IS RECEIVED AND CLEARS BY SUCH TIME, AND IS URGED TO CONSIDER IN THE
ALTERNATIVE PAYMENT BY MEANS OF CERTIFIED OR CASHIER'S CHECK, MONEY ORDER
OR WIRE TRANSFER OF FUNDS.
For further information about the offering of Debentures, please
refer to the Prospectus or contact Richard E. Ruegger, Vice President-
Finance, Swing-N-Slide Corp., 1212 Barberry Drive, Janesville, Wisconsin
53545, phone number (608) 755-4777.
IN WITNESS WHEREOF, the undersigned has executed this
Subscription Agreement as of the date set forth below.
Dated: _________________, 1998
_____________________________
Signature
(Must be signed exactly as name appears on stock certificate or on
security position listing.)
Print Name: ____________________________________
Address: ____________________________________
____________________________________
____________________________________
Telephone Number: ____________________________________
