AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 26, 1996
REGISTRATION NO. 333-__________
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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THE SPORTS AUTHORITY, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 5940 36-3511120
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or Classification Code Identification Number)
organization) Number)
3383 NORTH STATE ROAD 7
FORT LAUDERDALE, FLORIDA 33319
(954) 735-1701
(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)
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FRANK W. BUBB III, ESQ.
THE SPORTS AUTHORITY, INC.
3383 NORTH STATE ROAD 7
FORT LAUDERDALE, FLORIDA 33319
(954) 735-1701
(Name and address, including zip code, and telephone number, including area
code, of agent for service)
WITH A COPY TO:
JOHN S. FLETCHER, ESQ.
MORGAN, LEWIS & BOCKIUS LLP
5300 FIRST UNION FINANCIAL CENTER
200 SOUTH BISCAYNE BOULEVARD
MIAMI, FLORIDA 33131
(305) 579-0432
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: FROM TIME TO
TIME AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
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If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box.|_|
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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TITLE OF EACH CLASS OF PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE AMOUNT TO BE AGGREGATE OFFERING AGGREGATE OFFERING REGISTRATION
REGISTERED REGISTERED PRICE PER UNIT PRICE (1) FEE
<S> <C> <C> <C> <C>
5 1/4% Convertible Subordinated Notes due September 15,
2001..................................................... $149,500,000 100.00% $149,500,000 $45,303.03
Common Stock, $.01 par value per share................... 4,580,964(2) --- --- ---
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(1) Estimated solely for the purposes of calculating the registration fee
pursuant to Rule 457(i).
(2) Such number represents the number of shares of Common Stock initially
issuable upon conversion of the Notes registered hereby and, pursuant
to Rule 416 under the Securities Act of 1933, as amended, such
indeterminate number of shares of Common Stock as may be issued from
time to time upon conversion of the Notes by reason of adjustment of
the conversion price under certain circumstances outlined in the
Prospectus.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
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CROSS-REFERENCE SHEET
Pursuant to Item 501(b) of Regulation S-K
ITEM NUMBER AND CAPTION LOCATION IN PROSPECTUS
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<S> <C>
1. Forepart of the Registration Statement and
Outside Front Cover Page of Prospectus........ Facing Page of the Registration Statement; Cross
Reference Sheet; Outside Front Cover Page
2. Inside Front and Outside Back Cover Pages of
Prospectus.................................... Inside Front Cover Page; Outside Back Cover Page
3. Summary Information, Risk Factors and Ratio of
Earnings to Fixed Charges..................... Prospectus Summary; Risk Factors
4. Use of Proceeds............................... *
5. Determination of Offering Price............... *
6. Dilution...................................... *
7. Selling Securityholders....................... Selling Securityholders
8. Plan of Distribution.......................... Plan of Distribution
9. Description of Securities to be Registered.... Price Range of Common Stock; Dividend Policy
10. Interests of Named Experts and Counsel........ *
11. Material Changes.............................. *
12. Incorporation of Certain Information by
Reference..................................... Inside Front Cover Page
13. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities *
</TABLE>
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* Not applicable or answer thereto is negative.
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
SUBJECT TO COMPLETION, DATED NOVEMBER 26, 1996
THE SPORTS AUTHORITY, INC.
$149,500,000 5 1/4% CONVERTIBLE SUBORDINATED NOTES DUE SEPTEMBER 15, 2001
4,580,964 SHARES OF COMMON STOCK
This Prospectus relates to the offering for resale by the selling
securityholders named herein (the "Selling Securityholders") of 5 1/4%
Convertible Subordinated Notes due September 15, 2001 (the "Notes") of The
Sports Authority, Inc. (the "Company") up to the aggregate principal amount of
$149,500,000. In addition, this Prospectus relates to the offering of 4,580,964
shares (subject to adjustment under certain circumstances) of the Company's
common stock, par value $.01 per share (the "Common Stock" and, together with
the Notes, the "Securities"), issued or issuable upon conversion of the Notes.
The Notes were originally issued and sold in September 1996 in the United States
in transactions exempt from the registration requirements of the Securities Act
of 1933, as amended (the "Securities Act").
The Notes are convertible into shares of Common Stock, prior to redemption
or maturity, at a conversion rate of 30.6419 shares per $1,000 principal amount
of Notes (equivalent to a conversion price of $32.635 per share), subject to
adjustment in certain events. See "Description of the Notes-- Conversion." The
Notes are designated for trading on the Private Offerings, Resales and Trading
through Automated Linkages ("PORTAL") Market. The Notes are neither listed on
any stock exchange nor included on any automated quotation system. The Common
Stock is traded on the New York Stock Exchange under the symbol "TSA." On
November 22, 1996, the last reported sale price for the Common Stock on the New
York Stock Exchange was $25.00 per share.
Interest on the Notes is payable semi-annually in arrears on March 15 and
September 15 of each year, commencing on March 15, 1997 and ending on September
15, 2001. Payments will be made without deduction for United States withholding
taxes, to the extent described herein. The Notes will mature on September 15,
2001. The Notes are not redeemable at the option of the Company prior to
September 15, 1999. At any time on or after such date, the Notes will be
redeemable, in whole or in part, upon not less than 30 nor more than 60 days'
prior notice at the option of the Company at redemption prices (expressed as a
percentage of principal amount) for the 12-month period beginning on September
15, 1999 equal to 102.10% and beginning on September 15, 2000 equal to 101.05%,
and thereafter equal to 100% of the principal amount, plus accrued interest to
the redemption date. In the event of a Change in Control (as defined herein),
each holder of Notes may require the Company to repurchase its Notes, in whole
or in part, for cash or, at the Company's option, Common Stock (valued at 95% of
the average closing sale prices for the five trading days immediately preceding
the second trading day prior to the repurchase date) at a repurchase price of
100% of the principal amount of Notes to be repurchased, plus accrued interest
to the repurchase date. See "Description of the Notes--Optional Redemption by
the Company" and "Repurchase at Option of Holders Upon a Change in Control."
The Notes are general unsecured obligations of the Company, subordinated in
right of payment to all existing and future Senior Indebtedness (as defined
herein) of the Company and effectively subordinated in right of payment to all
indebtedness and other liabilities of the Company's subsidiaries. See
"Description of the Notes--Subordination." As of November 22, 1996, the Company
had Senior Indebtedness of approximately $8.7 million and the Company's
subsidiaries had indebtedness of approximately $2.6 million. Neither the
Indenture (as defined herein) nor the Notes limit the amount of Senior
Indebtedness or other indebtedness that the Company or its subsidiaries may
incur.
The Company will not receive any of the proceeds from the sale of the
Securities offered hereby. The Selling Securityholders directly, through agents
designated from time to time, or through dealers or underwriters to be
designated, may sell the Securities from time to time on terms to be determined
at the time of sale. To the extent required, the specific amount of Securities
to be sold, the respective purchase price and public offering price, the names
of any such agent, dealer or underwriter, and any applicable commission or
discount with respect to the particular offer will be set forth in a Prospectus
Supplement. The Company has agreed to bear all expenses of registration of the
Securities under federal and state securities laws and to indemnify the Selling
Securityholders against certain liabilities under the Securities Act. See "Plan
of Distribution."
The Selling Securityholders and any broker-dealer, agents or underwriters
that participate with the Selling Securityholders in the distribution of the
Securities may be deemed to be "underwriters" within the meaning of the
Securities Act, and any commissions received by them and any profits on the
resale of the Securities purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.
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SEE "RISK FACTORS" BEGINNING ON PAGE 10 FOR CERTAIN RISKS
ASSOCIATED WITH AN INVESTMENT IN THE SECURITIES.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE SELLING
SECURITYHOLDERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR
SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH
JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE SUCH DATE.
THE DATE OF THIS PROSPECTUS IS , 1996
<PAGE>
TABLE OF CONTENTS
PAGE
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Incorporation of Certain Information by Reference.......................2
Available Information...................................................3
Prospectus Summary......................................................4
Selected Financial Data.................................................8
Risk Factors...........................................................10
Price Range of Common Stock............................................13
Dividend Policy........................................................13
Description of Notes ..................................................14
Description of Capital Stock...........................................21
Selling Securityholders ...............................................23
Plan of Distribution...................................................25
Legal Matters..........................................................25
Experts................................................................25
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents of the Company filed with the Securities and Exchange
Commission (the "Commission") (File No. 1-13420) are incorporated herein by
reference:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
January 28, 1996;
(b) The Company's Quarterly Reports on Form 10-Q for the quarters ended
April 28, 1996 and July 28, 1996;
(c) The Company's Form 8-K filed September 24, 1996; and
(d) The Company's Proxy Statement dated April 25, 1996.
In addition, all reports and other documents subsequently filed by the
Company pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), prior to the termination
of the offering made hereby, shall be deemed to be incorporated by reference
herein and to be a part hereof from the date of the filing of such reports and
documents. Any statement incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
This Prospectus incorporates documents by reference which are not presented
herein or delivered herewith. The Company will provide a copy of any or all such
documents (exclusive of exhibits unless such exhibits are specifically
incorporated by reference therein), without charge, to each person to whom this
Prospectus is delivered, upon written or oral request to Secretary, The Sports
Authority, Inc., 3383 North State Road 7, Fort Lauderdale, Florida 33319,
telephone number (954) 735-1701. In order to ensure timely delivery of the
documents, any request should allow at least five business days for delivery.
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<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Commission in Washington, D.C. a
Registration Statement on Form S-3 under the Securities Act, with respect to the
securities offered hereby. This Prospectus, which constitutes part of the
Registration Statement, omits certain of the information contained in the
Registration Statement and the exhibits and schedules thereto on file with the
Commission pursuant to the Securities Act and the rules and the regulations of
the Commission thereunder. Statements contained in this Prospectus as to the
contents of any contract or other document referred to are not necessarily
complete and in each instance reference is made to the copy of such contract or
other document filed as an exhibit to the Registration Statement, and each such
statement is qualified in all respects by such reference. The Company is subject
to the informational requirements of the Exchange Act, and, in accordance
therewith, files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at Judiciary Plaza, Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the following Regional Offices of the Commission: Seven World
Trade Center, Suite 1300, New York, New York 10048; and 500 West Madison Avenue,
Suite 1400, Chicago, Illinois 60661. Copies of such material can be obtained
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates, or from the Commission's internet
web site at http://www.sec.gov. In addition, such materials also may be
inspected and copied at the offices of the New York Stock Exchange, SEC Library,
4th Floor, 20 Broad Street, New York, New York 10015.
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<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, AND SHOULD BE
READ IN CONJUNCTION WITH, THE MORE DETAILED INFORMATION AND THE CONSOLIDATED
FINANCIAL STATEMENTS AND RELATED NOTES THERETO APPEARING ELSEWHERE IN THIS
PROSPECTUS OR INCORPORATED BY REFERENCE HEREIN. SEE "RISK FACTORS" FOR A
DISCUSSION OF CERTAIN RISKS ASSOCIATED WITH AN INVESTMENT IN THE SECURITIES.
UNLESS THE CONTEXT OTHERWISE REQUIRES, (I) THE TERM "COMPANY" REFERS TO THE
SPORTS AUTHORITY, INC., A DELAWARE CORPORATION, AND ITS SUBSIDIARIES AND
PREDECESSORS, (II) ALL REFERENCES TO YEARS REFER TO THE COMPANY'S FISCAL YEARS,
EACH OF WHICH ENDS IN JANUARY OF THE FOLLOWING CALENDAR YEAR, AND (III) THE
INFORMATION CONTAINED IN THIS PROSPECTUS REFLECTS A THREE-FOR-TWO STOCK SPLIT
EFFECTED ON JULY 16, 1996. THIS PROSPECTUS IS BEING USED BY THE SELLING
SECURITYHOLDERS TO OFFER $149,500,000 AGGREGATE PRINCIPAL AMOUNT OF NOTES AND
THE UNDERLYING 4,580,964 SHARES OF COMMON STOCK (SUBJECT TO ADJUSTMENT UNDER
CERTAIN CIRCUMSTANCES) ISSUED OR ISSUABLE UPON CONVERSION OF THE NOTES (THE
"OFFERING"). THIS PROSPECTUS, INCLUDING THE DOCUMENTS INCORPORATED HEREIN BY
REFERENCE, MAY CONTAIN STATEMENTS DEEMED TO BE FORWARD LOOKING WHICH ARE
INHERENTLY UNCERTAIN. ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY FROM THOSE
DISCUSSED IN SUCH FORWARD LOOKING STATEMENTS FOR THE REASONS, AMONG OTHERS, SET
FORTH UNDER THE HEADING "RISK FACTORS."
THE COMPANY
The Sports Authority, Inc. (the "Company") is the largest operator of
large format sporting goods stores in the United States in terms of both sales
and number of stores and is also the largest full-line sporting goods retailer
in the United States in terms of sales. At November 22, 1996, the Company
operated 164 sporting goods megastores, virtually all in excess of 40,000 gross
square feet. The Company's business strategy is to offer customers extensive
selections of quality, brand name sporting equipment and athletic and active
footwear and apparel, everyday fair prices and premium customer service. The
Company has a national presence, with 156 stores in 26 states in the United
States, six stores in Canada and two stores in Japan operated by a joint venture
51% owned by the Company. The Company had sales of approximately $1.047 billion
in 1995, a 24.8% increase over 1994. The Company is the first full-line sporting
goods retailer to have achieved annual revenues in excess of $1 billion.
The Company was founded by Mr. Jack A. Smith, its current Chairman and
Chief Executive Officer, who opened the first store in Fort Lauderdale, Florida
in 1987. During the following two years, the Company added nine more stores. In
1990, the Company was acquired by Kmart Corporation ("Kmart"), which provided
additional capital to fund the Company's expansion program as well as its
continual investment in infrastructure and technology. Following public
offerings in November 1994 and October 1995, Kmart no longer owns any interest
in the Company.
Approximately 82% of the Company's stores have achieved profitability
(before allocation of central overhead) within the first full fiscal year of
operation. In addition, the Company has increased its inventory turnover
(calculated by dividing cost of goods sold by the average quarter end inventory
for four quarters) from 2.6 times in 1990 to 3.2 times in 1994 and in 1995.
These favorable results have been achieved during a period of rapid growth, as
the Company realized compound annual growth in sales of 57% during the period
from 1990 to 1995. The Company believes that fundamental elements of its success
have been the consistent execution of its business strategy in each of its
markets as well as its culture that demands high standards of performance
throughout the entire organization.
The Company has engaged in a rapid expansion program pursuant to which
it opened 80 stores over the last three years, including 29 stores in 1995. In
1996, the Company has opened 28 stores through November 22, 1996 and plans to
open four additional stores during the remainder of the year, resulting in a
year-end total of 168 stores, including six stores in Canada, three stores in
Japan and two smaller format stores to be operated in New York City under the
name "The Sports Authority Ltd." The Company currently plans to open at least 30
new stores in 1997. In excess of two-thirds of those stores that were opened or
are planned to be opened in 1996 and 1997 are in the Company's existing markets.
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<PAGE>
The Company's business strategy is to consistently offer the extensive
selection and competitive pricing associated with category dominant retailers
while, at the same time, offering the brand names and professional service
associated with smaller specialty shops and pro shops. The key elements of this
strategy are as follows:
MEGASTORE FORMAT. The Company operates large format stores,
virtually all of which are in excess of 40,000 gross square feet. This
megastore format enables the Company to provide under one roof an
extensive selection of merchandise for sports and leisure activities
that ordinarily are associated with specialty shops and pro shops, such
as golf, tennis, snow skiing, cycling, hunting, fishing, bowling,
archery, boating and water sports, as well as for activities ordinarily
associated with traditional sporting goods retailers, such as team
sports, physical fitness and men's, women's and children's athletic and
active apparel and footwear. Each megastore offers approximately 45,000
active SKUs (without regard to color and size and excluding
discontinued items) across 16 major departments. The Company's
megastores provide ease of shopping through pleasant and well-designed
store layouts, informative and easily identifiable signage, individual
price ticketing of each product, speedy and courteous check-out, easy
store access and convenient customer parking.
QUALITY BRAND NAME SPORTING GOODS. The Company's merchandising
strategy is to offer a large breadth and depth of selection in quality
brand name sporting goods in each of its over 1,200 merchandise
categories. The Company's comprehensive merchandise assortment includes
over 900 brand names, including Adidas, Asics, Champion, Coleman,
Columbia, Ektelon, Fila, Huffy, K2, Nike, Prince, Pro Player, Rawlings,
Reebok, Rollerblade, Rossignol, Russell, Spalding, Starter, Teva,
Timberland and Wilson. The Company utilizes a sophisticated inventory
management system in conjunction with strong store operating controls
to achieve optimal in-stock levels of brand name merchandise.
PREMIUM CUSTOMER SERVICE. The Company seeks to distinguish
itself from other large format sporting goods retailers, traditional
sporting goods retailers and mass merchandisers by emphasizing the
higher levels of customer service generally associated with smaller
specialty stores and pro shops. In addition to hiring many sales
associates who are sports enthusiasts skilled in various disciplines,
the Company provides extensive training for its sales associates and
offers incentives that reward achievement of customer service goals.
EVERYDAY FAIR PRICES. The Company maintains a policy of
consistent everyday fair pricing that is designed to assure customers
that they will receive good value at the Company's stores and is
focused on depth and breadth of merchandise and customer service
relative to price. The Company's everyday fair pricing policy is to
maintain prices that are generally below prices at traditional and
specialty sporting goods retailers and comparable with prices at other
sporting goods superstores and mass merchandisers. Unlike many of its
large format competitors, the Company generally does not take temporary
price reductions to promote product sales. The Company also seeks to be
a price leader on certain highly identifiable items.
FOCUS ON MULTI-STORE MARKETS. The Company seeks to establish a
significant presence in each of its markets and pursues a store
expansion strategy that primarily focuses on opening multiple stores in
its markets. This focus enables the Company to obtain significant
market penetration and to leverage management and advertising expenses,
thereby achieving greater economies of scale. In addition, the Company
believes its multi-store expansion strategy results in greater name
recognition and enhanced customer convenience in each market. The
Company believes that achieving greater market penetration will enable
it to compete more effectively and increase profitability and return on
capital over the long term.
The Company is a Delaware corporation. Its principal executive
offices are located at 3383 North State Road 7, Fort Lauderdale,
Florida 33319 and the Company's telephone number is (954) 735-1701.
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<PAGE>
THE OFFERING
THIS PROSPECTUS RELATES TO THE OFFERING BY THE SELLING SECURITYHOLDERS
OF BOTH THE NOTES AND, TO THE EXTENT THE NOTES HAVE BEEN, OR ARE, CONVERTED, THE
COMMON STOCK. THE FOLLOWING SUMMARY OF CERTAIN TERMS OF THE NOTES IS NOT
COMPLETE AND IS QUALIFIED BY ALL OF THE TERMS AND CONDITIONS CONTAINED IN THE
NOTES AND IN THE INDENTURE (AS DEFINED). FOR A MORE DETAILED DESCRIPTION OF THE
TERMS OF THE NOTES, SEE "DESCRIPTION OF NOTES."
<TABLE>
<CAPTION>
THE COMMON STOCK
<S> <C>
Common Stock outstanding as of November 22, 1996 31,449,631 shares (1)
Common Stock outstanding assuming conversion of the Notes 36,030,595 shares (1)(2)
Common Stock to be outstanding assuming conversion of the Notes, including the
Offered Notes 36,030,595 shares (1)
New York Stock Exchange Symbol TSA
</TABLE>
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(1) EXCLUDES 3,853 SHARES OF COMMON STOCK ISSUABLE PURSUANT TO OPTIONS
EXERCISABLE AS OF NOVEMBER 22, 1996.
(2) ASSUMES NO ADJUSTMENT TO THE CONVERSION PRICE (AS DEFINED) OF THE NOTES.
<TABLE>
<CAPTION>
THE NOTES
<S> <C>
The Notes.......................... $149,500,000 principal amount of 5 1/4% Convertible Subordinated Notes due
September 15, 2001.
Interest Payment Dates............. March 15 and September 15, beginning March 15, 1997.
Maturity........................... September 15, 2001.
Conversion Rate.................... 30.6419 shares per $1,000 principal amount of Notes (equivalent to $32.635 per share),
subject to adjustment.
Conversion Rights.................. The Notes will be convertible into shares of Common Stock at any time on or after the 90th
day following the last original issue date of the Notes and prior to the close of business
on the maturity date, unless previously redeemed or repurchased, at the conversion rate
set forth above. Holders of Notes called for redemption or repurchase will be entitled
to convert the Notes up to and including, but not after, the date fixed for redemption or
repurchase, as the case may be. See "Description of the Notes--Conversion Rights."
Optional Redemption................ The Notes are not redeemable at the option of the Company prior to September 15, 1999.
At any time on or after such date, the Notes will be redeemable, in whole or in part, upon
not less than 30 nor more than 60 days' prior notice at the option of the Company, at
redemption prices (expressed as a percentage of principal amount) for the 12-month period
beginning on September 15, 1999 equal to 102.10% and beginning on September 15, 2000
equal to 101.05%, and thereafter equal to 100% of the principal amount, plus accrued
interest to the redemption date. See "Description of the Notes--Optional Redemption by the
Company."
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<PAGE>
Repurchase at Option of Holders
Upon a Change in Control........ Upon a Change in Control (as defined), each holder of the Notes will have the right, subject
to certain conditions and restrictions, to require the Company to purchase all or part of its
Notes at 100% of the principal amount thereof, plus accrued interest to the repurchase date.
The repurchase price is payable in cash or, at the option of the Company but subject to the
satisfaction of certain conditions on the part of the Company, in shares of Common Stock
(valued at 95% of the average closing sale prices of the Common Stock for the five trading
days preceding the second trading day prior to the repurchase date). See "Risk Factors--
Limitations on Repurchase of Notes Upon a Change in Control" and "Description of the
Notes--Repurchase at Option of Holders Upon a Change in Control."
Subordination...................... The Notes are subordinated to present and future Senior Indebtedness (as defined) of the
Company. The Notes are also effectively subordinated in right of payment to all
indebtedness and other liabilities of the Company's subsidiaries. As of November 22, 1996,
the aggregate amount of outstanding Senior Indebtedness was approximately $8.7 million and
the aggregate amount of outstanding indebtedness of the Company's subsidiaries was
approximately $2.6 million . The Indenture does not restrict the incurrence of Senior
Indebtedness or other indebtedness by the Company or any of its subsidiaries.
Events of Default.................. Events of default include: (a) failure to pay principal of or premium, if any, on any Note
when due, whether or not such payment is prohibited by the subordination provisions of the
Notes and the Indenture; (b) failure to pay any interest on any Note when due, continuing
for 30 days, whether or not such payment is prohibited by the subordination provisions of
the Notes and Indenture; (c) default in the Company's obligation to provide notice of a
Change in Control, whether or not prohibited by the subordination provisions of the Notes
and the Indenture; (d) failure to perform any other covenant of the Company in the
Indenture, continuing for 90 days after written notice as provided in the Indenture; (e) any
indebtedness for money borrowed by the Company in an outstanding principal amount in
excess of $10,000,000 is not paid at final maturity or upon acceleration thereof and such
default in payment or acceleration is not cured or rescinded within 30 days after written
notice as provided in the Indenture; and (f) certain events of bankruptcy, insolvency or
reorganization. See "Description of Notes--Events of Default."
Trading............................ The Notes are designated for trading in the PORTAL Market. The Notes are neither listed
on any stock exchange nor included on any automated quotation system.
Risk Factors....................... An investment in the Securities involves a high degree of risk. See "Risk Factors" for a
discussion of certain factors that should be considered in evaluating an investment in the
Securities.
</TABLE>
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Securities offered hereby.
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<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
The summary consolidated financial data set forth below reflect the
consolidated results of operations, financial condition and operating data of
the Company for the periods indicated and should be read in conjunction with the
consolidated financial statements and notes thereto and Management's Discussion
and Analysis of Financial Condition and Results of Operations, which are
incorporated herein by reference. The consolidated financial data for the fiscal
years ended January 28, 1996, January 22, 1995, January 23, 1994, January 24,
1993 and January 26, 1992 are derived from the consolidated financial statements
of the Company which have been audited by Price Waterhouse LLP, independent
accountants. The consolidated financial data for the 39-week periods ended
October 27, 1996 and October 22, 1995, are derived from unaudited consolidated
financial statements of the Company and reflect all adjustments, consisting only
of normal recurring accruals, that the Company considers necessary for a fair
presentation of the consolidated financial position and consolidated results of
operations for these periods.
<TABLE>
<CAPTION>
39 WEEKS ENDED FISCAL YEAR ENDED(1)
------------------------ ----------------------------------------------------------------
OCTOBER 27, OCTOBER 22, JANUARY 28, JANUARY 22, JANUARY 23, JANUARY 24, JANUARY 26,
1996 1995 1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
(IN THOUSANDS EXCEPT PER SHARE
DATA)
Sales........................ $ 895,074 $ 724,143 $ 1,046,652 $ 838,539 $ 606,871 $ 411,519 $ 240,873
-------- -------- --------- ------- ------- ------- -------
Gross profit................. 249,187 195,718 295,199 231,862 167,694 114,814 66,989
Selling, general and
administrative expenses.... 219,602 173,671 245,886 188,875 137,045 95,590 56,780
Pre-opening expense.......... 5,720 4,180 9,140 10,867 7,658 6,982 4,803
Goodwill amortization........ 1,473 1,473 1,963 1,963 2,070 2,070 2,070
-------- -------- --------- ------- ------- ------- -------
Operating income............. 22,392 16,394 38,210 30,157 20,921 10,172 3,336
Interest expense(2).......... 1,536 365 820 318 13 141 128
-------- -------- --------- ------- ------- ------- -------
Income before income taxes... 20,856 16,029 37,390 29,839 20,908 10,031 3,208
Income tax expense........... 8,700 6,817 15,305 12,980 8,156 4,299 1,882
Minority interest............ (1,056) - (245) - - - -
-------- -------- --------- ------- ------- ------- -------
Net income................... $ 13,212 $ 9,212 $ 22,330 $ 16,859 $ 12,752 $ 5,732 $ 1,326
======== ======== ========= ======= ======= ======= =======
Earnings per common share and
common share equivalents... $ .41 $ .29 .71 $ .54 $ .41
======== ======== ========= ======= =======
Weighted average common shares
common share equivalents
outstanding(3)............ 32,073 31,442 31,458 31,175 31,175
======== ======== ========= ======= =======
Ratio of earnings to fixed
charges(4)................ 2.21 2.28 3.12 3.38 3.53 3.02 2.02
======== ======== ========= ======= ======= ======= =======
PERCENT OF SALES DATA:
Gross margin................. 27.9% 27.0% 28.2% 27.6% 27.6% 27.9% 27.8%
Selling, general and
administrative expenses... 24.5 24.0 23.4 22.5 22.6 23.2 23.6
Pre-opening expense.......... 0.6 0.6 0.9 1.3 1.3 1.7 2.0
Operating income............. 2.5 2.2 3.7 3.6 3.4 2.5 1.4
Income before income taxes... 2.3 2.2 3.6 3.6 3.4 2.4 1.3
SELECTED FINANCIAL AND OPERATING
DATA:
End of period stores......... 150 119 136 107 80 56 36
Comparable store sales
increase(5)............... 4.2% 2.6% 1.1% 5.5% 2.6% 8.3% 15.9%
Weighted average sales per square
foot(6)(7)................ $ 145 $ 151 $ 214 $ 220 $ 224 $ 228 $ 222
Weighted average sales per store
(in thousands)(7)(8)...... 6,344 6,568 9,231 9,446 9,572 9,689 9,290
End of period inventory per store
(in thousands)............ 1,971 2,018 1,829 2,035 1,966 2,030 2,305
End of period inventory net of
accounts payable per store
(in thousands)............. 963 964 823 861 879 1,046 1,302
Average sale per transaction.. 44.56 43.72 43.83 43.23 41.55 39.86 38.48
Capital expenditures--owned
property (in thousands).... 74,303 40,704 55,321 51,449 23,487 25,911 15,645
Depreciation and amortization
(in thousands)............. 20,526 14,746 19,975 13,956 10,181 7,214 4,369
</TABLE>
- 8 -
<PAGE>
AS OF OCTOBER 27, 1996
----------------------
BALANCE SHEET DATA -- END OF PERIOD: (IN THOUSANDS)
Working capital.................................... $ 184,482
Total assets....................................... 703,952
Short-term debt ................................... 0
Long-term debt, including current maturities ...... 152,146
Total liabilities.................................. 410,062
Stockholders' equity............................... 293,274
- --------------------
(1) The fiscal year ended January 28, 1996 consisted of 53 weeks. All
other fiscal years shown each consisted of 52 weeks.
(2) The net interest expense for the fiscal year ended January 28, 1996
includes $1,069 related to the Revolving Credit Facility (as defined
below), $203 paid pursuant to a cash management agreement between the
Company and Kmart (the "Cash Management Agreement"), and $437 in interest
income from short-term investments. The historical financial statements
for the fiscal years prior to the Company's initial public offering in
November 1994 (the "IPO") present all cash used by or provided to the
Company from Kmart as an adjustment of Kmart's investment in the Company.
Net repayments to Kmart were treated as dividends. Accordingly, no
interest expense to or interest income from Kmart is reflected in the
financial statements of the Company for any period prior to the IPO date,
except for interest of $552 on a promissory note to Kmart in the
principal amount of $96,000. For the balance of 1994, after the IPO, the
Company recognized interest income from Kmart of $251 related to the cash
and equivalents held by Kmart pursuant to the Cash Management Agreement.
The Cash Management Agreement was terminated on April 26, 1995.
(3) Earnings per common share and common share equivalents and weighted
average common shares and common share equivalents outstanding for the
39-week period ended October 22, 1995 and for the fiscal years ended
January 28, 1996, January 22, 1995 and January 23, 1994 have been
adjusted to reflect a three-for-two stock split effected on July 16,
1996. Earnings per common share and common share equivalents and weighted
average common shares and common share equivalents outstanding for the
fiscal years ended January 22, 1995 and January 23, 1994 are pro forma
and are based on the actual number of shares outstanding at January 22,
1995 (as adjusted to reflect the three-for-two stock split).
(4) In computing the ratio of earnings to fixed charges: (i) earnings are
based on income before income taxes plus fixed charges and (ii) fixed
charges consist of interest expense, amortization of deferred financing
costs and the estimated interest component of rent expense.
(5) Comparable store sales include the sales of a store beginning in its
fourteenth month of operation.
(6) Sales for the period divided by the weighted average gross square footage
for stores operated during the period.
(7) Includes total sales by licensees of $7,575 and $7,217 in the 39-week
periods ended October 27, 1996 and October 22, 1995, respectively.
Includes total sales by licensees of $29,533, $20,891, $19,248, $10,234
and $5,228 in the fiscal years 1995, 1994, 1993, 1992 and 1991,
respectively.
(8) Sales for the period divided by the weighted average number of stores
operated during the period.
- 9 -
<PAGE>
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION INCLUDED IN THIS PROSPECTUS, THE
FOLLOWING RISK FACTORS SHOULD BE CAREFULLY CONSIDERED IN EVALUATING AN
INVESTMENT IN THE SECURITIES OFFERED HEREBY. THIS PROSPECTUS CONTAINS CERTAIN
FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES
ACT AND SECTION 21E OF THE EXCHANGE ACT, WHICH INVOLVE RISKS AND UNCERTAINTIES.
THE COMPANY'S ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY FROM THE RESULTS DISCUSSED
IN THE FORWARD-LOOKING STATEMENTS. FACTORS THAT MIGHT CAUSE SUCH A DIFFERENCE
INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED IN THIS SECTION.
EXPANSION STRATEGY
The Company has engaged in a rapid expansion program pursuant to which
it opened 80 stores over the last three years, including 29 stores in 1995. In
1996, the Company has opened 28 stores through November 22, 1996 and plans to
open four additional stores during the remainder of the year, resulting in a
year-end total of 168 stores, including six stores in Canada, three stores in
Japan to be operated by a joint venture 51% owned by the Company and two smaller
format stores to be operated in New York City under the name "The Sports
Authority Ltd." The Company currently plans to open at least 30 new stores in
1997. The rate of the Company's expansion will depend, among other things, on
general economic and business conditions affecting consumer confidence and
spending, the availability of qualified management personnel, the availability
of desirable locations, the negotiation of acceptable lease terms, the
availability of adequate capital and its ability to manage the operational
aspects of its growth. The Company's ability to maintain an aggressive growth
rate will be dependent upon its ability to open new stores. There can be no
assurance that the Company will sustain the growth in the number of stores and
the revenue growth achieved historically or that it will maintain consistent
levels of profitability, particularly as it expands into markets now served by
other large format sporting goods retailers and mass merchandisers.
The Company's expansion program includes opening stores
internationally. The Company operates six stores in Canada and three stores in
Japan. In addition, the Company is considering expansion into other countries.
There can be no assurance that the retail formula for the Company's stores that
has worked successfully to date in the United States will work successfully in
foreign markets. Further, in addition to the risks associated with its expansion
program generally, the success of the Company's stores in foreign markets will
depend on the Company's ability to source and ship merchandise and to address
particular challenges in each country it enters, such as the availability of a
suitable work force, the condition of the local real estate market, applicable
regulatory requirements, the stability of such country's currency and the
overall economic and political climate.
The Company's expansion strategy focuses primarily on multi-store
markets where it can achieve significant market penetration and can leverage
management personnel and advertising expenses. For example, more than two-thirds
of those stores that were opened or are planned to be opened in 1996 and 1997
are in the Company's existing markets. This strategy has resulted in some
cannibalization of sales at existing stores. While management believes that
achieving greater market penetration will enable the Company to compete more
effectively and increase profitability and return on capital in the long term,
there can be no assurance that the level of cannibalization that results in the
future will not adversely affect the Company's sales and profitability.
COMPETITION AND MERCHANDISING
The retail sporting goods industry is highly competitive and
fragmented. In order to be successful, the Company must remain competitive in
the areas of selection and price of quality brand name merchandise. The Company
faces competition from a variety of retailers, including traditional sporting
goods retailers, specialty sporting goods retailers, large format sporting goods
retailers and mass merchandisers. The expansion of the Company into markets
served by competitors or the entry of new competitors or the expansion of
operations by existing competitors in the Company's markets could have a
material adverse effect on the Company's financial condition or results of
operations.
The Company's success depends to a large degree on its ability to
provide a merchandise selection that appeals to its customers' changing desires
and that appropriately reflects geographical differences in seasonality, brands
and sports preferences and sizes for footwear and apparel. A failure by the
Company to identify and respond to emerging trends in sports equipment or
athletic apparel, footwear and accessories could have a material adverse effect
on its sales and profitability. Moreover, while the Company believes it has good
relationships with its vendors, the inability to obtain merchandise from
existing or new vendors in the future could have a material adverse effect on
the Company's financial condition or results of operations.
- 10 -
<PAGE>
DISCRETIONARY CONSUMER SPENDING
Sales of sports and leisure equipment have historically been dependent
upon discretionary consumer spending, which may be affected by general economic
conditions. A decline in consumer spending on sports and leisure equipment,
apparel and footwear could have a material adverse effect on the Company's
financial condition or results of operations.
SEASONALITY
The Company's business is highly seasonal, with sales generally highest
in the fourth quarter and lowest in the first quarter. During 1995,
approximately 31% of the Company's sales and approximately 57% of the Company's
operating income were generated in the fourth quarter. The Company's results of
operations depend significantly upon the holiday selling season in the fourth
quarter and any decrease in net sales for such period could have a material
adverse effect on the Company's financial condition or results of operations for
the year. The Company's expansion program generally is weighted with store
openings in the second half of the fiscal year. In the future, changes in the
number and timing of store openings may result in different seasonality trends.
RELIANCE ON KEY PERSONNEL
Management believes that the Company's continued success will depend to
a significant extent upon the efforts and abilities of Mr. Jack A. Smith, who
founded the Company and serves as its Chairman and Chief Executive Officer, Mr.
Richard J. Lynch, Jr., President and Chief Operating Officer, and certain other
key officers. The loss of the services of such key officers could have a
material adverse effect on the Company. The Company does not maintain "key man"
life insurance on any of its officers.
EXTERNAL FINANCING
The Company has entered into a Credit Agreement, dated as of April 26,
1995, with a group of banks for which First Union National Bank of Florida
("First Union") acts as agent, to establish a $110 million revolving line of
credit (the "Revolving Credit Facility") to fund working capital requirements.
The Revolving Credit Facility contains certain restrictive financial covenants
relating to the maintenance of a minimum fixed charge coverage ratio, a maximum
leverage ratio and a minimum tangible net worth, and restrictive covenants
pertaining to limitations on dividends and the incurrence of additional debt and
other areas affecting the management and operations of the Company.
LEASE GUARANTY AGREEMENT
Pursuant to a Lease Guaranty, Indemnification and Reimbursement
Agreement between the Company and Kmart (the "Lease Guaranty Agreement"), the
Company has agreed to indemnify Kmart for any liability incurred by Kmart in
connection with its guarantees of 70 Company leases and the Company is subject
to certain cross default and related provisions contained in the Lease Guaranty
Agreement. The Lease Guaranty Agreement contains certain financial covenants
that are applicable to the Company except in the event, and for so long as, the
Company achieves and maintains the investment grade status specified in the
Lease Guaranty Agreement. These covenants include restrictions on the ability of
the Company to incur indebtedness and to make certain restricted payments
(including dividends or other distributions on, and repurchase of, capital stock
of the Company). In the event of certain payment defaults by the Company under
the Lease Guaranty Agreement in excess of $10 million, and in the event of
certain other defaults, Kmart will have the right to assume any or all of the
guaranteed leases and to take possession of all of the premises underlying such
leases upon 100 days' notice. The Lease Guaranty Agreement will remain in effect
until the expiration of all lease guarantees, which the Company believes will be
during or after November 2022. The terms of the Lease Guaranty Agreement may
adversely affect the Company's ability to obtain certain types of financing or
the terms on which financing might be obtained.
CONTINGENT REFINANCING OBLIGATIONS
Leases with respect to five of the Company's stores serve as collateral
for certain mortgage pass-through certificates. These mortgage pass-through
certificates include a provision (the "Contingent Refinancing Obligations")
which would permit the holders of the mortgage pass-through certificates to
require the Company or, upon the Company's failure, Kmart to repurchase the
underlying mortgage notes in certain events, including the failure by the
Company to make payments of rent under the related lease, the failure by Kmart
to maintain required debt ratings or the termination of the guarantee by Kmart
of the Company's obligations under the related lease. In the event the Company
is required to repurchase all of the underlying mortgage notes, the Company
would be obligated to either refinance or pay approximately $27 million. See
Note 9 to the Notes to Consolidated Financial Statements contained in the
- 11 -
<PAGE>
Company's Annual Report to Stockholders for the year ended January 28, 1996,
which was incorporated by reference to the Company's Annual Report on Form 10-K
for the fiscal year ended January 28, 1996, which is incorporated herein by
reference.
ABSENCE OF TRADING MARKET FOR THE NOTES
The Notes are designated for trading on the PORTAL Market. There can be
no assurance that an active trading market for the Notes will develop or as to
the liquidity of any such market that may develop. If such market were to exist,
the Notes could trade at prices higher or lower than their principal amount,
depending on many factors, including prevailing interest rates, the market for
similar securities and the operating results of the Company.
CERTAIN ANTI-TAKEOVER CONSIDERATIONS
Certain provisions of the Company's Restated Certificate of
Incorporation (the "Certificate") and Amended and Restated By-laws (the
"By-laws"), including those relating to the classification of its Board of
Directors, may have the effect of making more difficult or discouraging a proxy
contest, a merger involving the Company, a tender offer, an open-market purchase
program or other purchases of Common Stock that could give stockholders of the
Company the opportunity to realize a premium over the then-prevailing market
price for their shares of Common Stock.
POSSIBLE VOLATILITY OF STOCK PRICE
The market price of the Common Stock could be highly volatile. Factors
such as announcements of fluctuations in the Company's or its competitors'
operating results and market conditions for growth stocks or retail industry
stocks in general could have a significant impact on the future price of the
Common Stock. Although the Common Stock is listed on the New York Stock Exchange
("NYSE"), there can be no assurance that an active trading market will be
sustained.
- 12 -
<PAGE>
PRICE RANGE OF COMMON STOCK
The Common Stock is traded on the NYSE under the symbol "TSA." On
November 22, 1996, the last sale price of the Common Stock was $ 25.00 per
share. As of November 22, 1996, the Common Stock was held by approximately 776
holders of record. The following table sets forth, for the fiscal quarters
indicated, the high and low market sale prices for the Common Stock as reported
on the NYSE, as adjusted to reflect a three-for-two stock split effected on July
16, 1996:
HIGH LOW
---- ---
Fiscal 1994
4th Quarter (from November 18)...... $16.58 $10.83
Fiscal 1995
1st Quarter......................... 14.25 11.25
2nd Quarter......................... 16.33 11.42
3rd Quarter......................... 20.17 16.00
4th Quarter......................... 16.67 11.25
Fiscal 1996
1st Quarter......................... 20.25 12.50
2nd Quarter......................... 24.17 19.17
3rd Quarter ........................ 29.00 18.50
4th Quarter (through November 22)... 26.38 23.63
DIVIDEND POLICY
The Company has not declared any dividends in 1995 or 1996 and intends
to retain its earnings to finance future growth. Therefore, the Company does not
anticipate paying any cash dividends in the foreseeable future. The declaration
and payment of dividends, if any, is subject to the discretion of the Board of
Directors and to certain limitations under the General Corporation Law of the
State of Delaware. In addition, the Company's Revolving Credit Facility and
Lease Guaranty Agreement contain restrictions on the Company's ability to pay
dividends. The timing, amount and form of dividends, if any, will depend, among
other things, on the Company's results of operations, financial condition, cash
requirements and other factors deemed relevant by the Board of Directors.
- 13 -
<PAGE>
DESCRIPTION OF NOTES
The Notes were issued under an Indenture dated as of September 20, 1996
(the "Indenture"), between the Company and The Bank of New York, as trustee (the
"Trustee"). Wherever particular defined terms of the Indenture (including the
Notes and the various forms thereof) are referred to, such defined terms are
incorporated herein by reference. As used in this section, the "Company" refers
solely to The Sports Authority, Inc. and not its subsidiaries unless the context
otherwise indicates. The following summaries of certain provisions of the
Indenture do not purport to be complete and are subject to, and are qualified in
their entirety by reference to, the detailed provisions of the Notes and the
Indenture, including the definition therein of certain terms. A copy of the
Indenture is filed as an exhibit to the Registration Statement on Form S-3, of
which this Prospectus forms a part.
GENERAL
In September 1996, the Company issued an aggregated principal amount of
$149,500,000 of the Notes pursuant to exemptions from the Securities Act. The
Notes were offered and sold to Qualified Institutional Buyers (as defined in the
Indenture) in reliance on Rule 144A ("Rule 144A Notes") and in offshore
transactions in reliance on Regulation S ("Regulation S Notes"). In addition,
Notes were offered and sold to a limited number of Institutional Accredited
Investors (as defined in the Indenture) in transactions exempt from registration
under the Securities Act not made in reliance on Rule 144A or Regulation S
("Initial IAI Notes").
The Notes are unsecured, subordinated obligations of the Company. The
Notes will mature on September 15, 2001 and be payable at a price of 100% of the
principal amount thereof. The Notes bear interest at the rate of 5 1/4% per
annum, payable semi-annually in arrears on March 15 and September 15 of each
year, commencing on March 15, 1997.
The Notes are convertible into Common Stock initially at the rate of
30.6419 shares per $1,000 of principal amount of Notes (equivalent to a
conversion price of $32.635 per share), subject to adjustment upon the
occurrence of certain events described under "--Conversion Rights," at any time
on or after December 19, 1996 and prior to the close of business on September
15, 2001, unless previously redeemed or repurchased.
The Notes are redeemable at the option of the Company, on or after
September 15, 1999, in whole or in part, at the redemption prices set forth
below under "--Redemption," plus accrued interest to the redemption date.
CONVERSION RIGHTS
The Holder of any Note has the right, at the Holder's option, to
convert any portion of the principal amount of any Note that is an integral
multiple of $1,000 into shares of Common Stock at any time on or after December
19, 1996 and prior to the close of business on September 15, 2001, unless
previously redeemed or repurchased, at a conversion rate of 30.6419 shares of
Common Stock per $1,000 principal amount of Notes (the "Conversion Rate")
(equivalent to a conversion price of $32.635 per share of Common Stock), subject
to adjustment as described below. The right to convert a Note called for
redemption or delivered for repurchase will terminate at the close of business
on the Redemption Date for such Note or the Repurchase Date, as the case may be.
The right of conversion attaching to any Note may be exercised by the
Holder by delivering the Note at the Corporate Trust Office of the Trustee in
the Borough of Manhattan, The City of New York, accompanied by a duly signed and
completed notice of conversion. Such notice of conversion can be obtained at the
office of the Trustee at its Corporate Trust Office in New York City. The
conversion date will be the date on which the Note and the duly signed and
completed notice of conversion are so delivered. As promptly as practicable on
or after the conversion date, the Company will issue and deliver to the Trustee
a certificate or certificates for the number of full shares of Common Stock
issuable upon conversion, together with payment in lieu of any fraction of a
share. Such certificate will be sent by the Trustee to the Conversion Agent for
delivery to the Holder. Such shares of Common Stock issuable upon conversion of
the Notes, in accordance with the provisions of the Indenture, will be fully
paid and nonassessable and will rank pari passu with the other shares of Common
Stock outstanding from time to time. Any Note surrendered for conversion during
the period from the close of business on any Regular Record Date to the opening
of business on the next succeeding Interest Payment Date (except Notes (or
portions thereof) called for redemption on a Redemption Date or repurchaseable
on a Repurchase Date occurring, in either case, within such period) must be
accompanied by payment of an amount equal to the interest payable on such
Interest Payment Date on the principal amount of Notes being surrendered for
conversion, and the interest payable on such Interest Payment Date in respect of
any such Note (or portion thereof, as the case may be) shall be paid to the
Holder of such Note as of such Regular Record Date. The interest payable on such
Interest Payment Date with respect to any Note (or portion thereof, if
applicable) which has been called for redemption on a Redemption Date, or is
repurchaseable on a Repurchase Date, occurring, in either case, during the
period referred to in the parenthetical in the immediately preceding sentence,
which Note (or portion thereof, if applicable) is surrendered for conversion
during
- 14 -
<PAGE>
such period, shall be paid to the Holder of such Note being converted in an
amount equal to the interest that would have been payable on such Note if such
Note had been converted as of the close of business on such Interest Payment
Date. Interest payable in respect of any Note surrendered for conversion on or
after an Interest Payment Date shall be paid to the Holder of such Note as of
the next preceding Regular Record Date, notwithstanding the exercise of the
right of conversion. As a result of the foregoing provisions, Holders that
surrender Notes for conversion on a date that is not an Interest Payment Date
will not receive any interest for the period from the Interest Payment Date next
preceding the date of conversion to the date of conversion or for any later
period, even if the Notes are surrendered after a notice of redemption (except
for the payment of interest on Notes called for redemption on a Redemption Date
or repurchaseable on a Repurchase Date between a Regular Record Date and the
Interest Payment Date to which it relates, as provided above). No other payment
or adjustment for interest, or for any dividends in respect of Common Stock,
will be made upon conversion. Holders of Common Stock issued upon conversion
will not be entitled to receive any dividends payable to holders of Common Stock
as of any record time or date before the close of business on the conversion
date. No fractional shares will be issued upon conversion but, in lieu thereof,
an appropriate amount will be paid in cash by the Company based on the closing
sale price of the Common Stock on the day of conversion.
A Holder delivering a Note for conversion will not be required to pay
any taxes or duties in respect of the issue or delivery of Common Stock on
conversion but will be required to pay any tax or duty which may be payable in
respect of any transfer involved in the issue or delivery of the Common Stock in
a name other than that of the Holder of the Note. Certificates representing
shares of Common Stock will not be issued or delivered unless all taxes and
duties, if any, payable by the Holder have been paid.
The Conversion Rate is subject to adjustment in certain events,
including, without duplication: (a) dividends (and other distributions) payable
in Common Stock, (b) the issuance to all holders of Common Stock of rights,
options or warrants entitling them to subscribe for or purchase Common Stock at
less than the then Current Market Price of such Common Stock (determined as
provided in the Indenture) as of the record date for stockholders entitled to
receive such rights, options or warrants, (c) subdivisions, combinations and
reclassifications of Common Stock, (d) distributions to all holders of Common
Stock of evidences of indebtedness of the Company, shares of capital stock, cash
or assets (including securities, but excluding those dividends, rights, options,
warrants and distributions referred to above, dividends and distributions paid
exclusively in cash and in mergers and consolidations to which the next
succeeding paragraph applies), (e) distributions consisting exclusively of cash
(excluding any cash portion of distributions referred to in (d) above, or cash
distributed upon a merger or consolidation to which the next succeeding
paragraph applies) to all holders of Common Stock in an aggregate amount that,
combined together with (i) other such all-cash distributions made within the
preceding 12 months in respect of which no adjustment has been made and (ii) any
cash and the fair market value of other consideration payable in respect of any
tender offer (including the type described in (f) below) by the Company or any
of its subsidiaries for Common Stock concluded within the preceding 12 months in
respect of which no adjustment has been made, exceeds 10% of the Company's
market capitalization (being the product of the Current Market Price per share
of the Common Stock on the record date for such distribution times the number of
shares of Common Stock outstanding) on such date, and (f) the successful
completion of a tender offer made by the Company or any of its subsidiaries for
Common Stock which involves an aggregate consideration that, together with (i)
any cash and other consideration payable in a tender offer by the Company or any
of its subsidiaries for Common Stock expiring within the 12 months preceding the
expiration of such tender offer in respect of which no adjustment has been made
and (ii) the aggregate amount of any such all-cash distributions referred to in
(e) above to all holders of Common Stock within the 12 months preceding the
expiration of such tender offer in respect of which no adjustments have been
made, exceeds 10% of the Company's market capitalization on the expiration of
such tender offer. The Company reserves the right to make such reductions in the
Conversion Rate in addition to those required in the foregoing provisions as it
considers to be advisable in order that any event treated for United States
federal income tax purposes as a dividend of stock or stock rights will not be
taxable to the recipients. No adjustment of the Conversion Rate will be required
to be made until the cumulative adjustments amount to 1.0% or more of the
Conversion Rate. The Company will compute any adjustments of the Conversion Rate
pursuant to this paragraph and will give notice by mail to Holders of the Notes
of any adjustments.
In case of any consolidation or merger of the Company with or into
another Person or any merger of another Person into the Company (other than a
merger which does not result in any reclassification, conversion, exchange or
cancellation of the Common Stock), or in case of any sale or transfer of all or
substantially all of the assets of the Company, each Note then outstanding will,
without the consent of the Holder of any Note, become convertible 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 into which such Note was convertible immediately prior thereto
(assuming such holder of Common Stock failed to exercise any rights of election
and that such Note was then convertible).
If at any time the Company makes a distribution of property to its
stockholders which would be taxable to such stockholders as a dividend for
United States federal income tax purposes (e.g., distributions of evidences of
indebtedness or assets of the Company, but generally not stock dividends on
common stock or rights to subscribe for common stock) and, pursuant to the
anti-dilution provisions
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of the Indenture, the number of shares into which Notes are convertible is
increased, such increase may be deemed for federal income tax purposes to be the
payment of a taxable dividend to Holders of Notes. See "United States
Taxation--United States Holders--Dividends."
SUBORDINATION
The payment of the principal of, premium, if any, and interest on the
Notes (including any Liquidated Damages (as defined in the Indenture) and any
amounts payable upon the redemption or the repurchase of the Notes permitted by
the Indenture) will be subordinated in right of payment to the extent set forth
in the Indenture to the prior payment in full of the principal of, premium, if
any, interest and other amounts in respect of all Senior Indebtedness of the
Company. The aggregate amount of outstanding Senior Indebtedness was
approximately $8.7 million at November 22, 1996.
"Senior Indebtedness" is defined in the Indenture to mean: the
principal of (and premium, if any) and interest (including all interest accruing
subsequent to the commencement of any bankruptcy or similar proceeding, whether
or not a claim for post-petition interest is allowable as a claim in any such
proceeding) on, and all fees and other amounts payable in connection with, the
following, whether absolute or contingent, secured or unsecured, due or to
become due, outstanding on the date of the Indenture or thereafter created,
incurred or assumed: (a) indebtedness of the Company evidenced by credit or loan
agreements, notes, bonds, debentures, or other written obligations; (b) all
obligations of the Company for money borrowed; (c) all obligations of the
Company evidenced by a note or similar instrument given in connection with the
acquisition or any businesses, properties or assets of any kind; (d) obligations
of the Company as lessee under leases capitalized on the balance sheet of the
lessee under generally accepted accounting principles; (e) obligations of the
Company under interest rate and currency swaps, caps, floors, collars, hedge
agreements, forward contracts, or similar agreements or arrangements intended to
protect the Company against fluctuations in interest or currency exchange rates
or commodity prices; (f) all reimbursement obligations of the Company with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of the Company; (g) all obligations of the Company issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business); (h) all obligations of the type referred to in clauses (a) through
(g) above of another Person and all dividends of another Person, the payment of
which, in either case, the Company has assumed or guaranteed, or for which the
Company is responsible or liable, directly or indirectly, jointly or severally,
as obligor, guarantor or otherwise, or which is secured by a lien on property of
the Company; and (i) renewals, extensions, modifications, replacements,
restatements and refundings of, or any indebtedness or obligation issued in
exchange for, any such indebtedness or obligation described in clauses (a)
through (g) of this paragraph; provided, however, that Senior Indebtedness shall
not include the Notes or any such indebtedness or obligation if the terms of
such indebtedness or obligation (or the terms of the instrument under which or
pursuant to which it is issued) provides that such indebtedness or obligation is
not superior in right of payment to the Notes.
No payment on account of principal of, premium, if any, or interest on
the Notes (including any Liquidated Damages and any amounts payable upon the
redemption or the repurchase of the Notes permitted by the Indenture) may be
made by the Company if there is a default in the payment of principal, premium,
if any, or interest (including a default under any repurchase or redemption
obligation) or other amounts with respect to any Senior Indebtedness or if any
other event of default with respect to any Senior Indebtedness, permitting the
holders to accelerate the maturity thereof, shall have occurred and shall not
have been cured or waived or shall not have ceased to exist after written notice
to the Company and the Trustee by any holder of Senior Indebtedness. Upon any
acceleration of the principal due on the Notes or payment or distribution of
assets of the Company to creditors upon any dissolution, winding up, liquidation
or reorganization, whether voluntary or involuntary, marshaling of assets,
assignment for the benefit of creditors, or in bankruptcy, insolvency,
receivership or other similar proceedings of the Company, all principal,
premium, if any, and interest or other amounts due on all Senior Indebtedness
must be paid in full before the Holders of the Notes are entitled to receive any
payment. By reason of such subordination, in the event of insolvency, creditors
of the Company who are holders of Senior Indebtedness may recover more, ratably,
than the Holders of the Notes, and such subordination may result in a reduction
or elimination of payments to the Holders of the Notes.
In addition, the Notes are structurally subordinated to all
indebtedness and other liabilities (including trade payables and lease
obligations) of the Company's subsidiaries, as any right of the Company to
receive any assets of its subsidiaries upon their liquidation or reorganization
(and the consequent right of the Holders of the Notes to participate in those
assets) will be effectively subordinated to the claims of that subsidiary's
creditors (including trade creditors), except to the extent that the Company
itself is recognized as a creditor of such subsidiary, in which case the claims
of the Company would still be subordinate to any security interest in the assets
of such subsidiary and any indebtedness of such subsidiary senior to that held
by the Company. As of November 22, 1996, the aggregate amount of outstanding
indebtedness of subsidiaries of the Company (excluding intercompany
indebtedness) was approximately $2.6 million.
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The Indenture does not limit the Company's or its subsidiaries' ability
to incur Senior Indebtedness or any other indebtedness.
REDEMPTION
The Notes may not be redeemed at the option of the Company prior to
September 15, 1999. On and after September 15, 1999, the Notes may be redeemed,
in whole or in part, at the option of the Company, at the redemption prices
specified below, upon not less than 30 nor more than 60 days' prior notice as
provided under "--Notices" below.
The redemption price (expressed as a percentage of principal amount) is
as follows for the 12-month periods beginning on September 15 of the following
years:
REDEMPTION
YEAR PRICE
---- ------
1999................ 102.100
2000................ 101.050
and thereafter is equal to 100% of the principal amount, in each case together
with accrued interest to the date of redemption. No sinking fund is provided for
the Notes.
PAYMENT AND CONVERSION
The principal of Notes will be payable in U.S. dollars, against
surrender thereof at the Corporate Trust Office of the Trustee in the Borough of
Manhattan, The City of New York, by dollar check drawn on, or by wire transfer
to a dollar account (such wire transfer to be made only to Holders of an
aggregate principal amount of Notes in excess of $2,000,000) maintained by the
Holder with, a bank in New York City. Payment of any installment of interest on
Notes will be made to the Person in whose name such Notes (or any predecessor
Notes) are registered at the close of business on the March 1 or the September 1
(whether or not a Business Day) immediately preceding the relevant Interest
Payment Date (a "Regular Record Date"). Payments of such interest will be made
by a dollar check drawn on a bank in New York City mailed to the Holder at such
Holder's registered address or, upon application by the Holder thereof to the
Trustee not later than the applicable Regular Record Date, by wire transfer to a
dollar account (such wire transfer to be made only to Holders of an aggregate
principal amount of Notes in excess of $2,000,000) maintained by the Holder with
a bank in New York City. No wire transfer to a dollar account will be made
unless the Trustee has received written wire instructions not less than 15 days
prior to the relevant payment date.
Any payment on the Notes due on any day which is not a Business Day
need not be made on such day, but may be made on the next succeeding Business
Day with the same force and effect as if made on such due date, and no interest
shall accrue on such payment for the period from and after such date. "Business
Day," when used with respect to any place of payment, place of conversion or any
other place, as the case may be, means each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions in such place of
payment, place of conversion or other place, as the case may be, are authorized
or obligated by law or executive order to close; provided, however, that a day
on which banking institutions in New York, New York are authorized or obligated
by law or executive order to close shall not be a Business Day for certain
purposes.
Notes may be surrendered for conversion at the Corporate Trust Office
of the Trustee in the Borough of Manhattan, The City of New York. Notes
surrendered for conversion must be accompanied by appropriate notices and any
payments in respect of interest or taxes, as applicable, as described above
under "--Conversion Rights."
The Company has initially appointed the Trustee as Paying Agent and
Conversion Agent. The Company may at any time terminate the appointment of any
Paying Agent or Conversion Agent and appoint additional or other Paying Agents
and Conversion Agents, provided that until the Notes have been delivered to the
Trustee for cancellation, or moneys sufficient to pay the principal of, premium,
if any, and interest on the Notes have been made available for payment and
either paid or returned to the Company as provided in the Indenture, it will
maintain an office or agency in the Borough of Manhattan, The City of New York
for surrender of Notes for conversion. Notice of any such termination or
appointment and of any change in the office through which any Paying Agent or
Conversion Agent will act will be given in accordance with "--Notices" below.
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All moneys deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of principal of, premium, if any, or
interest on any Notes which remain unclaimed at the end of two years after such
payment has become due and payable will be repaid to the Company, and the Holder
of such Note will thereafter look only to the Company for payment thereof.
REPURCHASE AT OPTION OF HOLDERS UPON A CHANGE IN CONTROL
If a Change in Control (as defined below) occurs, each Holder of Notes
shall have the right, at the Holder's option, to require the Company to
repurchase all of such Holder's Notes not theretofore called for redemption, or
any portion of the principal amount thereof that is $1,000 or an integral
multiple thereof, on the date (the "Repurchase Date") that is 45 days after the
date of the Company Notice (as defined below), at a price equal to 100% of the
principal amount of the Notes to be repurchased, together with interest accrued
to the Repurchase Date (the "Repurchase Price").
The Company may, at its option, in lieu of paying the Repurchase Price
in cash, pay the Repurchase Price in Common Stock valued at 95% of the average
of the closing sale prices of the Common Stock for the five trading days
immediately preceding the second trading day prior to the Repurchase Date;
provided that payment may not be made in Common Stock unless the Company
satisfies certain conditions with respect to such payment prior to the
Repurchase Date as provided in the Indenture.
Within 30 days after the occurrence of a Change in Control, the Company
is obligated to give to all Holders of the Notes notice, as provided in the
Indenture (the "Company Notice"), of the occurrence of such Change in Control
and of the repurchase right arising as a result thereof. The Company must also
deliver a copy of the Company Notice to the Trustee. To exercise the repurchase
right, a Holder of Notes must deliver on or before the 30th day after the date
of the Company Notice irrevocable written notice to the Trustee of the Holder's
exercise of such right, together with the Notes with respect to which the right
is being exercised.
A "Change in Control" shall be deemed to have occurred at such time
after the original issuance of the Notes as there shall occur:
(i) the acquisition by any Person of beneficial ownership,
directly or indirectly, through a purchase, merger or other acquisition
transaction or series of transactions, of shares of capital stock of the Company
entitling such Person to exercise 50% or more of the total voting power of all
shares of capital stock of the Company entitled to vote generally in elections
of directors, other than any such acquisition by the Company, any subsidiary of
the Company or any employee benefit plan of the Company; or
(ii) any consolidation or merger of the Company with or into,
any other Person, any merger of another Person into the Company, or any
conveyance, sale, transfer or lease of all or substantially all of the assets of
the Company to another Person (other than (a) any such transaction (x) which
does not result in any reclassification, conversion, exchange or cancellation of
outstanding shares of capital stock of the Company and (y) pursuant to which the
holders of the Common Stock immediately prior to such transaction have the
entitlement to exercise, directly or indirectly, 50% or more of the total voting
power of all shares of capital stock entitled to vote generally in the election
of directors of the continuing or surviving corporation immediately after such
transaction and (b) any merger which is effected solely to change the
jurisdiction of incorporation of the Company and results in a reclassification,
conversion or exchange of outstanding shares of Common Stock solely into shares
of common stock);
provided, however, that a Change in Control shall not be deemed to have occurred
if the closing sale price per share of the Common Stock for any five trading
days within the period of 10 consecutive trading days ending immediately after
the later of the Change in Control or the public announcement of the Change in
Control (in the case of a Change in Control under clause (i) above) or the
period of 10 consecutive trading days ending immediately before the Change in
Control (in the case of a Change in Control under clause (ii) above) shall equal
or exceed 105% of the Conversion Price of the Notes in effect on each such
trading day. The "Conversion Price" is equal to $1,000 divided by the Conversion
Rate. "Beneficial Owner" shall be determined in accordance with Rule 13d-3
promulgated by the Commission under the Exchange Act, as in effect on the date
of execution of the Indenture. "Person" includes any syndicate or group which
would be deemed to be a "person" under Section 13(d)(3) of the Exchange Act.
Rule 13e-4 under the Exchange Act requires the dissemination of certain
information to Securityholders in the event of an issuer tender offer and may
apply in the event that the repurchase option becomes available to Holders of
the Notes. The Company will comply with this rule to the extent applicable at
that time.
The Company may, to the extent permitted by applicable law, at any time
purchase Notes in the open market or by tender at any price or by private
agreement. Any Note so purchased by the Company may, to the extent permitted by
applicable law and subject
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<PAGE>
to restrictions contained in the Purchase Agreement, be re-issued or resold or
may, at the Company's option, be surrendered to the Trustee for cancellation.
Any Notes surrendered as aforesaid may not be re-issued or resold and will be
canceled promptly.
The foregoing provisions would not necessarily afford Holders of the
Notes protection in the event of highly leveraged or other transactions
involving the Company that may adversely affect Holders.
MERGERS AND SALES OF ASSETS BY THE COMPANY
The Company may not consolidate with or merge into any other Person or
convey, transfer, sell or lease its properties and assets substantially as an
entirety to any Person, and the Company shall not permit any Person to
consolidate with or merge into the Company or convey, transfer, sell or lease
such Person's properties and assets substantially as an entirety to the Company
unless (a) the Person formed by such consolidation or into or with which the
Company is merged or the Person to which the properties and assets of the
Company are so conveyed, transferred, sold or leased shall be a corporation,
limited liability company, partnership or trust organized and existing under the
laws of the United States, any State thereof or the District of Columbia and, if
other than the Company, shall expressly assume the payment of the principal of,
premium, if any, and interest on the Notes and the performance of the other
covenants of the Company under the Indenture, and (b) immediately after giving
effect to such transaction, no Event of Default, and no event that, after notice
or lapse of time or both, would become an Event of Default, shall have occurred
and be continuing.
EVENTS OF DEFAULT
The following are Events of Default under the Indenture: (a) failure to
pay principal of or premium, if any, on any Note when due, whether or not such
payment is prohibited by the subordination provisions of the Notes and the
Indenture; (b) failure to pay any interest (including any Liquidated Damages) on
any Note when due, continuing for 30 days, whether or not such payment is
prohibited by the subordination provisions of the Notes and the Indenture; (c)
failure to provide a Company Notice in the event of a Change in Control, whether
or not such notice is prohibited by the subordination provisions of the Notes
and the Indenture; (d) failure to perform any other covenant of the Company in
the Indenture, continuing for 90 days after written notice as provided in the
Indenture; (e) default in respect of any indebtedness for money borrowed by the
Company that results in acceleration of the maturity of an amount in excess of
$10,000,000 of indebtedness if such indebtedness is not discharged, or such
acceleration is not annulled, within 30 days after written notice as provided in
the Indenture; and (f) certain events of bankruptcy, insolvency or
reorganization. Subject to the provisions of the Indenture relating to the
duties of the Trustee in case an Event of Default shall occur and be continuing,
the Trustee will be under no obligation to exercise any of its rights or powers
under the Indenture at the request or direction of any of the Holders, unless
such Holders shall have offered to the Trustee reasonable indemnity. Subject to
such provisions for the indemnification of the Trustee, the Holders of a
majority in aggregate principal amount of the Outstanding Notes 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.
If an Event of Default shall occur and be continuing, either the
Trustee or the Holders of at least 25% in principal amount of the Outstanding
Notes may accelerate the maturity of all Notes; provided, however, that after
such acceleration, but before a judgment or decree based on acceleration, the
Holders of a majority in aggregate principal amount of Outstanding Notes may,
under certain circumstances, rescind and annul such acceleration if all Events
of Default, other than the non-payment of principal of the Notes which have
become due solely by such declaration of acceleration, have been cured or waived
as provided in the Indenture. For information as to waiver of defaults, see
"--Meetings, Modification and Waiver."
No Holder of any Note will have any right to institute any proceeding
with respect to the Indenture or for any remedy thereunder, unless such Holder
shall have previously given to the Trustee written notice of a continuing Event
of Default and the Holders of at least 25% in aggregate principal amount of the
Outstanding Notes shall have made written request, and offered reasonable
indemnity, to the Trustee to institute such proceeding as trustee, and the
Trustee shall not have received from the Holders of a majority in aggregate
principal amount of the Outstanding Notes a direction inconsistent with such
request and shall have failed to institute such proceeding within 60 days.
However, such limitations do not apply to a suit instituted by a Holder of a
Note for the enforcement of payment of the principal of, premium, if any, or
interest on such Note on or after the respective due dates expressed in such
Note or of the right to convert such Note in accordance with the Indenture.
The Company is required to furnish to the Trustee annually a statement
as to the performance by the Company of certain of its obligations under the
Indenture and as to any default in such performance.
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MEETINGS, MODIFICATION AND WAIVER
The Indenture contains provision for convening meetings of the Holders
of Notes to consider matters affecting their interests.
Certain limited modifications of the Indenture may be made without the
necessity of obtaining the consent of the Holders of the Notes. Other
modifications and amendments of the Indenture may be made, and certain past
defaults by the Company may be waived, either (i) with the written consent of
the Holders of not less than a majority in aggregate principal amount of the
Notes at the time Outstanding or (ii) by the adoption of a resolution, at a
meeting of Holders of the Notes at which a quorum is present, by the Holders of
at least 66 2/3% in aggregate principal amount of the Notes represented at such
meeting. However, no such modification or amendment may, without the consent of
the Holder of each Outstanding Note affected thereby, (a) change the Stated
Maturity of the principal of, or any installment of interest on, any Note, (b)
reduce the principal amount of, or the premium, if any, or interest on, any
Note, (c) reduce the amount payable upon a redemption or mandatory repurchase,
(d) modify the provisions with respect to the repurchase right of the Holders in
a manner adverse to the Holders, (e) change the place or currency of payment of
principal of, premium, if any, or interest on, any Note (including any payment
of Liquidated Damages or of the Repurchase Price in respect of such Note), (f)
impair the right to institute suit for the enforcement of any payment on or with
respect to any Note, (g) modify the obligation of the Company to maintain an
office or agency in New York City, (h) except as otherwise permitted or
contemplated by provisions concerning consolidation, merger, conveyance,
transfer, sale or lease of all or substantially all of the property and assets
of the Company, adversely affect the right of Holders to convert any of the
Notes or to require the Company to repurchase any Note other than as provided in
the Indenture, (i) modify the subordination provisions in a manner adverse to
the Holders of the Notes, (j) reduce the above-stated percentage of Outstanding
Notes necessary to modify or amend the Indenture, (k) reduce the percentage of
aggregate principal amount of Outstanding Notes necessary for waiver of
compliance with certain provisions of the Indenture or for waiver of certain
defaults, (l) reduce the percentage in aggregate principal amount of Outstanding
Notes required for the adoption of a resolution or the quorum required at any
meeting of Holders of Notes at which a resolution is adopted, or (m) modify the
obligation of the Company to deliver information required under Rule 144A to
permit resales of Notes and Common Stock issuable upon conversion thereof in the
event the Company ceases to be subject to certain reporting requirements under
the United States securities laws. The quorum at any meeting called to adopt a
resolution will be persons holding or representing a majority in aggregate
principal amount of the Notes at the time Outstanding and, at any reconvened
meeting adjourned for lack of a quorum, 25% of such aggregate principal amount.
The Holders of a majority in aggregate principal amount of the
Outstanding Notes may waive compliance by the Company with certain restrictive
provisions of the Indenture by written consent or by the adoption of a
resolution at a meeting. The Holders of a majority in aggregate principal amount
of the Outstanding Notes also may waive any past default under the Indenture,
except a default in the payment of principal, premium, if any, or interest, by
written consent.
TRANSFER, EXCHANGE AND WITHDRAWAL
At the option of the Holder upon request confirmed in writing, and
subject to the terms of the Indenture, any Note will be exchangeable at any time
into an equal aggregate principal amount of Notes of different authorized
denominations provided that any applicable transfer restrictions are satisfied.
Notes may be presented for registration of transfer (with the form of
transfer endorsed thereon duly executed) or exchange, at the office of any
transfer agent or at the office of the security registrar, without service
charge but, in the case of a transfer, upon payment of any taxes and other
governmental charges as described in the Indenture. Any registration of transfer
or exchange will be effected upon the transfer agent or the security registrar,
as the case may be, being satisfied with the documents of title and identity of
the person making the request, and subject to such reasonable regulations as the
Company may from time to time agree upon with the transfer agents and the
security registrar, all as described in the Indenture. Subject to the applicable
transfer restrictions, Notes may be transferred in whole or in part in
authorized denominations.
The Company has initially appointed the Trustee as security registrar
and transfer agent, acting through its Corporate Trust Office in New York City.
The Company reserves the right to vary or terminate the appointment of the
security registrar or of any transfer agent or to appoint additional or other
transfer agents or to approve any change in the office through which any
security registrar or any transfer agent acts.
In the event of a redemption of the Notes for any of the reasons set
forth below under "--Redemption," the Company will not be required (a) to
register the transfer or exchange of Notes for a period of 15 days immediately
preceding the date notice is given
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<PAGE>
identifying the serial numbers of the Notes called for such redemption or (b) to
register the transfer of or exchange any Note, or portion thereof, called for
redemption.
TITLE
The Company, the Trustee, any Paying Agent and any Conversion Agent may
treat the registered owner (as reflected in the Security Register) of any Note
as the absolute owner thereof (whether or not such Note shall be overdue) for
the purpose of making payment and for all other purposes.
NOTICES
Notice to Holders of the Notes will be given by mail to the addresses
of such Holders as they appear in the Security Register. Such notices will be
deemed to have been given on the date of such mailing.
Notice of a redemption of Notes will be given at least once not less
than 30 nor more than 60 days prior to a redemption date (which notice shall be
irrevocable) and will specify the redemption date.
REPLACEMENT OF NOTES
Notes that become mutilated, destroyed, stolen or lost will be replaced
by the Company at the expense of the Holder upon delivery to the Trustee of the
mutilated Notes or evidence of the loss, theft or destruction thereof
satisfactory to the Company and the Trustee. In the case of a lost, stolen or
destroyed Note, indemnity satisfactory to the Trustee and the Company may be
required at the expense of the Holder of such Note before a replacement Note
will be issued.
PAYMENT OF STAMP AND OTHER TAXES
The Company will pay all stamp and other duties, if any, which may be
imposed by the United States or any political subdivision thereof or taxing
authority thereof or therein with respect to the issuance of the Notes. The
Company will not be required to make any payment with respect to any other tax,
assessment or governmental charge imposed by any government or any political
subdivision thereof or taxing authority thereof or therein.
THE TRUSTEE
In case an Event of Default shall occur (and shall not be cured), the
Trustee will be required to use the degree of care of a prudent person in the
conduct of his own affairs in the exercise of its powers. Subject to such
provisions, the Trustee will be under no obligation to exercise any of its
rights or powers under the Indenture at the request of any of the Holders of
Notes, unless they shall have offered to the Trustee reasonable security or
indemnity.
DESCRIPTION OF CAPITAL STOCK
GENERAL
The Certificate authorizes 105 million shares of capital stock, 100
million of such shares being Common Stock, par value $.01 per share, and five
million of such shares being preferred stock, par value $.01 per share. As of
November 22, 1996, a total of 31,449,631 shares of Common Stock were issued and
outstanding.
COMMON STOCK
Subject to the rights of holders of any preferred stock then
outstanding, holders of Common Stock are entitled to receive such dividends out
of assets legally available therefor as may from time to time be declared by the
Board of Directors (the "Board"). Holders of Common Stock are entitled to one
vote per share on all matters on which the holders of Common Stock are entitled
to vote. Because holders of Common Stock do not have cumulative voting rights,
holders of a majority of the shares of Common Stock represented at a meeting can
elect all of the directors that could be elected at such meeting. In the event
of liquidation, dissolution or winding up of the Company, holders of Common
Stock would be entitled to share ratably in assets of the Company available for
distribution to holders of Common Stock. All outstanding shares of Common Stock
are, and shares of Common Stock issuable upon conversion of the Notes will be,
when so issued upon conversion, fully paid and nonassessable.
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<PAGE>
Holders of Common Stock are not liable to further calls or assessments
by the Company and holders of Common Stock are not liable for any liabilities of
the Company. Holders of Common Stock have no preemptive rights under the
Certificate.
PREFERRED STOCK
The Certificate authorizes the Board to provide for the issuance, from
time to time, of classes or series of preferred stock, to establish the number
of shares to be included in any such series and to fix the designations, voting
powers, preferences and rights of the shares of each such series and any
qualifications, limitations or restrictions thereof. Because the Board has the
power to establish the preferences and rights of the shares of any such series
of preferred stock, it may afford holders of any preferred stock preferences,
powers and rights (including voting rights) senior to the rights of holders of
Common Stock, which could adversely affect the rights of holders of Common
Stock. There are no shares of preferred stock currently outstanding and the
Company has no current intention to issue any shares of preferred stock.
CERTAIN CERTIFICATE AND BY-LAW PROVISIONS
Certain provisions of the Certificate and By-laws could be deemed to
have an anti-takeover effect. These provisions are intended to enhance the
likelihood of continuity and stability in the composition of the Board and in
the policies formulated by the Board and to discourage an unsolicited takeover
of the Company if the Board determines that such takeover is not in the best
interests of the Company and its stockholders. However, these provisions could
have the effect of discouraging certain attempts to acquire the Company or to
remove incumbent management even if some or a majority of stockholders deem such
an attempt to be in their best interests.
The Certificate provides for a classified Board consisting of three
classes as nearly equal in size as the then authorized number of directors
constituting the Board permits. At each annual meeting of stockholders, the
class of directors to be elected at such meeting will be elected for a
three-year term and the directors in the other two classes will continue in
office. Each class shall hold office until the date of the third annual meeting
for the election of directors following the annual meeting at which such
director was elected, except that the initial terms of Class III directors
expire on the date of the annual meeting in 1997. As a result, approximately
one-third of the Board will be elected each year. Under the Delaware General
Corporation Law, in the case of a corporation having a classified board,
stockholders may remove a director only for cause. This provision, when coupled
with provisions of the Certificate and By-laws authorizing the Board to fill
vacant directorships, precludes a stockholder from removing incumbent directors
without cause and simultaneously gaining control of the Board of Directors by
filling the vacancies created by such removal with its own nominees.
The By-laws establish an advance notice procedure for the nomination,
other than by or at the direction of the Board, of candidates for election as
directors as well as for other stockholder proposals to be considered at annual
meetings of stockholders. In general, notice must be received by the Company not
less than 60 days nor more than 90 days prior to the meeting and must contain
certain specified information concerning the persons to be nominated or the
matters to be brought before the meeting and concerning the stockholder
submitting the proposal.
The Certificate provides that no action may be taken by stockholders
except at an annual or special meeting of stockholders and prohibits action by
written consent in lieu of a meeting. The By-laws provide that special meetings
of stockholders of the Company may be called only by the Chairman of the Board,
the President or the Secretary or by a majority of the members of the Board.
This provision will make it more difficult for stockholders to take action
opposed by the Board.
First Union National Bank of North Carolina acts as transfer agent and
registrar for the Common Stock.
- 22 -
<PAGE>
SELLING SECURITYHOLDERS
The following table sets forth the name of each Selling Securityholder
and such Selling Securityholder's relationship, if any, with the Company and (i)
the amount of Notes owned by each Selling Securityholder as of November 22, 1996
(assuming no Notes have been sold in transactions exempt from registration
according to the terms of the Indenture), (ii) the maximum amount of Notes which
may be offered for the account of such Selling Securityholder under the
Prospectus, (iii) the amount of Common Stock owned by each Selling
Securityholder as of November 22, 1996 and (iv) the maximum amount of Common
Stock which may be offered for the account of such Selling Securityholder under
the Prospectus.
<TABLE>
<CAPTION>
COMMON
PRINCIPAL AMOUNT STOCK OWNED
NAME OF SELLING PRINCIPAL AMOUNT OF OF NOTES OFFERED PRIOR TO COMMON STOCK
SECURITYHOLDER NOTES OWNED HEREBY OFFERING (1) OFFERED HEREBY(2)
-------------- ----------- ------ ------------ -----------------
<S> <C> <C> <C> <C>
CFW-C, L.P. $10,500,000 $10,500,000 321,739 321,739
Lipco Partners, L.P. 5,150,000 5,150,000 157,805 157,805
The TCW Group, Inc.(3) 4,855,000 4,855,000 148,766 148,766
Deutsche Morgan Grenfell, Inc. 4,050,000 4,050,000 124,099 124,099
SMM Co. BV 3,850,000 3,850,000 117,971 117,971
OCM ConvertibleTrust 3,545,000 3,545,000 108,625 108,625
Oppenheimer Total Return Fund, Inc. 3,000,000 3,000,000 91,925 91,925
State of Connecticut Combined 2,690,000 2,690,000 82,426 82,426
Investment Funds
Tour Societe Generale 2,500,000 2,500,000 76,604 76,604
Delta Air Lines Master Trust 2,470,000 2,470,000 75,685 75,685
Lincoln National Life Insurance 1,500,000 1,500,000 45,962 45,962
Company
Teachers Retirement System of Texas 1,250,000 1,250,000 38,302 38,302
Lipco Offshore Partners, L.P. 1,000,000 1,000,000 30,641 30,641
State Employees' Retirement Fund of 920,000 920,000 28,190 28,190
the State of Delaware
Pacific Mutual Life Insurance 750,000 750,000 22,981 22,981
Company
Hughes Aircraft Company Master 625,000 625,000 19,151 19,151
Retirement Trust
Salomon Brothers International 450,000 450,000 13,788 13,788
Limited(4)
OCM Convertible Limited 250,000 250,000 7,660 7,660
Partnership
Goldman Sachs & Co. Bank, 200,000 200,000 6,128 6,128
Zurich(5)
Colonial Penn Insurance Company 180,000 180,000 5,515 5,515
Colonial Penn Life Insurance 180,000 180,000 5,515 5,515
Company
Ramius Fund, L.P. 160,000 160,000 4,902 4,902
Palladin Partners, L.P. 80,000 80,000 2,451 2,451
Gershon Partners, L.P. 65,000 65,000 1,991 1,991
Hick Investment, L.P. 65,000 65,000 1,991 1,991
Paloma Securities L.L.C. 50,000 50,000 1,532 1,532
------------- ------------- --------- ---------
Subtotal $ 50,335,000 $ 50,335,000 1,542,345 1,542,345
- 23 -
<PAGE>
Unnamed Securityholders or any
future transferees, pledges, donees or
successors of or from any such $ 99,165,000 $ 99,165,000 3,038,604 3,038,604
unnamed Securityholder (6)(7)
Total $ 149,500,000 $ 149,500,000 4,580,949 4,580,949
============= ============= ========= =========
</TABLE>
- ----------------------
(1) Comprises the shares of Common Stock into which the Notes held by such
Selling Securityholder are convertible at the initial Conversion Rate
(as defined herein). The Conversion Rate and the number of shares of
Common Stock issuable upon conversion of the Notes are subject to
adjustment under certain circumstances. See "Description of
Notes--Conversion Rights." Accordingly, the number of shares of Common
Stock issuable upon conversion of the Notes may increase or decrease
from time to time.
(2) Assumes conversion into Common Stock of the full amount of Notes held
by the Selling Securityholder at the initial Conversion Rate and the
offering of such shares by such Selling Securityholder pursuant to the
Registration Statement of which this Prospectus forms a part. The
Conversion Rate and the number of shares of Common Stock issuable upon
Conversion of the Notes are subject to adjustment under certain
circumstances. See "Description of Notes--Conversion Rights."
Accordingly, the number of shares of Common Stock issuable upon
conversion of the Notes may increase or decrease from time to time.
(3) The TCW Group, Inc. holds such Notes under management for various
entities.
(4) Salomon Brothers International Limited served as a co-manager for
public offerings of the Common Stock made in October 1995 and November
1994. Salomon Brothers International Limited is an affiliate of Salomon
Brothers Inc. which served as a co- manager for public offerings of the
Common Stock made in October 1995 and November 1994.
(5) Goldman Sachs & Co. Bank, Zurich is an affiliate of Goldman, Sachs &
Co. Goldman, Sachs & Co. was the initial purchaser of the Notes and has
served as managing underwriter for public offerings of the Common Stock
made in October 1995 and November 1994.
(6) No such holder may offer Notes pursuant to the Registration Statement
of which this Prospectus forms a part until such holder is included as
a Selling Securityholder in a supplement to this Prospectus in
accordance with the Registration Rights Agreement.
(7) Assumes that the unnamed Securityholders or any future transferees,
pledgees, donees or successors of or from any such unnamed
Securityholder do not beneficially own any Common Stock other than the
Common Stock issuable upon conversion of the Notes at the initial
Conversion Rate.
Because the Selling Securityholders may, pursuant to this Prospectus,
offer all or some portion of the Notes they presently hold, no estimate can be
given as to the amount of the Notes that will be held by the Selling
Securityholders upon termination of any such sales. In addition, the Selling
Securityholders identified above may have sold, transferred or otherwise
disposed of all or a portion of their Notes since the date on which they
provided the information regarding their Notes, in transactions exempt from the
registration requirements of the Securities Act. See "Plan of Distribution."
Only Selling Securityholders identified above who beneficially own the
Notes set forth opposite each such Selling Securityholder's name in the
foregoing table on the effective date of the Registration Statement of which
this Prospectus forms a part may sell such Notes pursuant to the Registration
Statement. The Company may from time to time, in accordance with the
Registration Rights Agreement, include additional Selling Securityholders in
supplements to this Prospectus.
- 24 -
<PAGE>
PLAN OF DISTRIBUTION
The Notes were issued in connection with a private placement. The Notes
may be sold from time to time by the Selling Securityholders. The Selling
Securityholders may from time to time sell all or a portion of the Notes in
transactions in the over-the-counter market, in negotiated transactions, or a
combination of such methods of sale, at market prices prevailing at the time of
sale, at prices related to such prevailing market prices or at negotiated
prices. The Notes may be sold directly or through broker-dealers. If the
Securities are sold through broker-dealers, the Selling Securityholders may pay
brokerage commissions and charges. The methods by which the Notes may be sold
include (a) a block trade (which may involve crosses) in which the broker or
dealer so engaged will attempt to sell the securities as agent but may position
and resell a portion of the block as principal to facilitate the transaction;
(b) by a broker or dealer as principal and resale by such broker or dealer for
its own account pursuant to this Prospectus; (c) exchange distributions and/or
secondary distributions; (d) ordinary brokerage transactions and transactions in
which the broker solicits purchasers; and (e) privately negotiated transactions.
Pursuant to the provisions of the Registration Rights Agreement entered
into by and between the Company and Goldman, Sachs & Co., the Company will pay
the costs and expenses incident to its registration and qualification of the
Notes and Common Stock offered hereby, including registration and filing fees.
In addition, the Company has agreed to indemnify the Selling Securityholders
against certain liabilities, including liabilities arising under the Securities
Act.
The holders of the Notes and the Common Stock issuable upon conversion
of the Notes are qualified institutional buyers within the meaning of Rule 144A
of the Securities Act, institutional accredited investors within the meaning of
Rule 501 of the Securities Act or non-U.S. persons within the meaning of
Regulation S under the Securities Act. Prior to any use of this Prospectus for
the resale of the Notes and the Common Stock issuable upon conversion of the
Notes registered herein, this Prospectus will be amended or supplemented to set
forth the name of the Selling Securityholder, the amount of the Notes and/or the
number of shares of Common Stock beneficially owned by such Selling
Securityholder, and the amount of the Notes and/or the number of shares of
Common Stock to be offered for resale by such Selling Securityholder. The
supplemented or amended Prospectus will also disclose whether any Selling
Securityholder selling in connection with such supplemented or amended
Prospectus has held any position or office with, been employed by or otherwise
had a material relationship with, the Company or any of its affiliates during
the three years prior to the date of the supplemented or amended Prospectus.
The Selling Securityholders and any broker-dealer participating in the
distribution of the Notes and the Common Stock may be deemed to be
"underwriters" within the meaning of the Securities Act, and any profit and any
commissions paid or any discounts or concessions allowed to any such
broker-dealer may be deemed to be underwriting discounts and commissions under
the Securities Act. The Selling Securityholders may indemnify any broker-dealer
that participates in transactions involving the sale of Notes and the Common
Stock against certain liabilities, including liabilities under the Securities
Act.
There can be no assurances that the Selling Securityholders will sell
any or all of the Notes and/or the Common Stock offered by them hereunder.
The resale of the Notes and/or the Common Stock issuable upon
conversion of the Notes will be freely transferable in the hands of persons
other than affiliates of the Company. The Common Stock is listed and principally
traded on the NYSE under the symbol "TSA."
The Company will receive none of the proceeds from the resale of the
Notes and the Common Stock issuable upon conversion of the Notes.
LEGAL MATTERS
The validity of the issuance of the Securities offered by this
Prospectus has been passed upon for the Company by Morgan, Lewis & Bockius LLP,
5300 First Union Financial Center, 200 South Biscayne Boulevard, Miami, Florida
33131-2339.
EXPERTS
The consolidated financial statements of the Company as of January 28,
1996 and January 22, 1995, and for each year in the three year period ended
January 28, 1996, have been audited by Price Waterhouse LLP, independent
accountants, whose report is incorporated herein by reference. Such financial
statements have been included in reliance on the reports of such independent
accountants given on the authority of such firms as experts in auditing and
accounting.
- 25 -
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses (other than underwriting
compensation expected to be incurred) in connection with the offering described
in this Registration Statement. All of such amounts (except the SEC Registration
Fee) are estimated.
COMPANY
-------
SEC Registration Fee............................... $45,303.03
New York Stock Exchange Listing Fee................ 16,030.00
Printing and Engraving Costs....................... 40,000.00
Legal Fees and Expenses............................ 60,000.00
Ratings Agency Fees................................ 112,000.00
Accounting Fees and Expenses....................... 50,000.00
Transfer Agent and Registrar Fees and Expenses..... 30,000.00
Miscellaneous...................................... 2,000.00
------------
Total........................................ $ 355,333.03
============
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Restated Certificate of Incorporation (the "Certificate")
provides that the Company shall, to the fullest extent permitted by the Delaware
General Corporation Law, as amended from time to time, indemnify all directors
and officers.
Article Fifth of the Certificate provides that the directors of the
Company shall not be personally liable to the Company or its stockholders for
monetary damages for breach of fiduciary duty, except for liability in
connection with a breach of duty of loyalty, for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law, for
dividend payments or stock repurchases illegal under Delaware law or any
transaction in which a director has derived an improper personal benefit.
Section 145 of the Delaware General Corporation Law Delaware permits a
corporation, under specified circumstances, to indemnify its directors,
officers, employees or agents 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 by reason of the fact that they were or are directors, officers,
employees or agents of the corporation, if such directors, officers, employees
or agents 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 reason 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 (including attorneys'
fees) actually and reasonably incurred by directors, officers, employees or
agents 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 persons shall have been adjudged liable to the corporation, unless and only
to the extent that the court in which the action or suit was brought shall
determine upon application that the defendant directors, officers, employees or
agents are fairly and reasonably entitled to indemnity for such expenses despite
such adjudication of liability.
II-1
<PAGE>
ITEM 16. EXHIBITS
(a) Exhibits:
1.1 Purchase Agreement, dated September 17, 1996, by and
between the Company and Goldman, Sachs & Co.
4.1 Indenture, dated as of September 20, 1996, the Company and
The Bank of New York, as Trustee, relating to the
Company's $149,500,000 5 1/4% Convertible Subordinated
Notes due September 15, 2001 (including form of Note)
4.2 Registration Rights Agreement, dated as of September 20,
1996, by and between the Company and Goldman, Sachs & Co.
5.1 Opinion of Morgan, Lewis & Bockius LLP
12.1 Statement Re Computation of Ratio of Earnings to Fixed
Charges
23.1 Consent of Price Waterhouse LLP
23.2 Consent of Morgan, Lewis & Bockius LLP
(contained in Exhibit 5.1)
24.1 Power of Attorney (included on signature page)
25.1 Form T-1, Statement of Eligibility of The Bank of New York.
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the provisions described in Item 14, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which any offers or sales are
being made, a post-effective amendment to the registration
statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b)
if, in the aggregate, the changes in volume and price
represent no more than a 20% 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 other material change to such information in
the registration statement;
II-2
<PAGE>
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
registration statement is on Form S-3 or Form S-8, and the information required
to be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the registrant pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference 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 being 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 which are being registered which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report pursuant
to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 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.
(5) To deliver or cause to be delivered with the prospectus, to each
person to whom the prospectus is sent or given, the latest annual report to
Securityholders that is incorporated by reference in the prospectus and
furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule 14c-3
under the Securities Exchange Act of 1934; and, where interim financial
information required to be presented by Article 3 of Regulation S-X are not set
forth in the prospectus, to deliver, or cause to be delivered to each person to
whom the prospectus is sent or given, the latest quarterly report that is
specifically incorporated by reference in the prospectus to provide such interim
financial information.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement on Form S-3 to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Fort Lauderdale, State of Florida, on November
25, 1996.
THE SPORTS AUTHORITY, INC.
By: /S/ JACK A. SMITH
-----------------------------
Name: Jack A. Smith
Title: Chairman of the Board and
Chief Executive Officer
Each person whose signature appears below hereby appoints Jack A.
Smith, Richard J. Lynch, Jr., and Frank W. Bubb, III, and any of them, either of
whom may act without the joinder of the other, as his true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement and any registration statements for the same
offering filed pursuant to Rule 462 under the Securities Act of 1933, and to
file the same, with all exhibits thereto and all other documents in connection
therewith, with the Commission, granting unto said attorneys-in-fact and agents
full power and authority to perform each and every act and thing appropriate or
necessary to be done, as full and for all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or their substitute or substitutes may lawfully do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY IN WHICH SIGNED DATE
--------- ------------------------ ----
<S> <C> <C>
/S/ JACK A. SMITH Chairman of the Board and Chief Executive Officer November 25, 1996
- -------------------------------------------- (Principal Executive Officer)
Jack A. Smith
/S/ RICHARD J. LYNCH, JR. President, Chief Operating Officer and Director November 25, 1996
- --------------------------------------------
Richard J. Lynch, Jr.
/S/ ANTHONY F. CRUDELE Senior Vice President and Chief Financial Officer November 25, 1996
- -------------------------------------------- (Principal Financial Officer and Principal Accounting)
Anthony F. Crudele
/S/ NICHOLAS A. BUONICONTI Director November 25, 1996
- --------------------------------------------
Nicholas A. Buoniconti
/S/ STEVE DOUGHERTY Director November 25, 1996
- --------------------------------------------
Steve Dougherty
II-4
<PAGE>
/S/ CAROL FARMER Director November 25, 1996
- --------------------------------------------
Carol Farmer
/S/ W. MITT ROMNEY Director November 25, 1996
- --------------------------------------------
W. Mitt Romney
/S/ HAROLD TOPPEL Director November 20, 1996
- --------------------------------------------
Harold Toppel
</TABLE>
II-5
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------ -----------
1.1 Purchase Agreement, dated September 17, 1996, by and
between the Company and Goldman, Sachs & Co.
4.1 Indenture, dated as of September 20, 1996, the Company and
The Bank of New York, as Trustee, relating to the Company's
$149,500,000 5 1/4% Convertible Subordinated Notes due
September 15, 2001 (including form of Note)
4.2 Registration Rights Agreement, dated as of September 20,
1996, by and between the Company and Goldman, Sachs & Co.
5.1 Opinion of Morgan, Lewis & Bockius LLP
12.1 Statement Re Computation of Ratio of Earnings to Fixed
Charges
23.1 Consent of Price Waterhouse LLP
23.2 Consent of Morgan, Lewis & Bockius LLP (contained in
Exhibit 5.1)
24.1 Power of Attorney (included on signature page)
25.1 Form T-1, Statement of Eligibility of The Bank of New York.
THE SPORTS AUTHORITY, INC.
5 1/4% CONVERTIBLE SUBORDINATED NOTES DUE SEPTEMBER 15, 2001
--------------
PURCHASE AGREEMENT
September 17, 1996
Goldman, Sachs & Co.,
85 Broad Street,
New York, New York 10004.
Ladies and Gentlemen:
The Sports Authority, Inc., a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to you (the "Purchaser") an aggregate of $130,000,000 principal amount of the
Convertible Subordinated Notes, convertible into shares of Common Stock, par
value $.01 per share ("Stock"), of the Company, specified above (the "Firm
Securities") and, at the election of the Purchaser, up to an aggregate of
$19,500,000 additional aggregate principal amount of such Convertible
Subordinated Notes (the "Optional Securities") (the Firm Securities and the
Optional Securities which the Purchaser elects to purchase pursuant to Section 2
hereof are herein collectively called the "Securities"). As used herein, the
term "Securities" shall be deemed, unless the context otherwise requires, to
include the Securities in the form of a temporary global Security representing
the Securities issued and sold in reliance on Regulation S.
The Purchaser and other holders (including subsequent transferees) of
Securities in registered form without coupons will be entitled to the benefits
of the registration rights agreement, to be dated as of the Time of Delivery (as
defined below) (the "Registration Rights Agreement") among the Company and the
Purchaser, in substantially the form previously delivered to you. Pursuant to
the Registration Rights Agreement, the Company will agree to file with the
Securities and Exchange Commission (the "Commission") under the circumstances
set forth therein a shelf registration statement pursuant to Rule 415 under the
Securities Act of 1933, as amended (the "Securities Act"), relating to the
resale of (i) such Securities and (ii) the shares of Stock initially issuable
upon conversion of the Securities by holders thereof, and to use its reasonable
efforts to cause such shelf registration statement to be declared effective.
<PAGE>
1. The Company represents and warrants to, and agrees with, you that:
(a) An offering circular, dated September 17, 1996 (the "Offering
Circular"), including the international supplement thereto and the
Company's Annual Reports on Form 10-K for the fiscal year ended January 28,
1996 (the "Form 10-K") and Quarterly Reports on Form 10-Q for the quarters
ended July 28, 1996 and April 28, 1996, which are attached to and made a
part of the Offering Circular, have been prepared in connection with the
offering of the Firm Securities and Optional Securities and shares of the
Stock issuable upon conversion thereof. Any reference to the Offering
Circular shall be deemed to refer to and include the Company's most recent
Annual Report on Form 10-K and all subsequent documents filed with the
United States Securities and Exchange Commission (the "Commission")
pursuant to Section 13(a), 13(c) or 15(d) of the United States Securities
Exchange Act of 1934, as amended (the "Exchange Act") on or prior to the
date of the Offering Circular, and any reference to the Offering Circular,
as amended or supplemented, as of any specified date, shall be deemed to
include (i) any documents filed with the Commission pursuant to Section
13(a), 13(c) or 15(d) of the Exchange Act after the date of the Offering
Circular, and prior to such specified date and (ii) any Additional Issuer
Information (as defined in Section 5(f)) furnished by the Company prior to
the completion of the distribution of the Securities; and all documents
filed under the Exchange Act and so deemed to be included in the Offering
Circular, or any amendment or supplement thereto are hereinafter called the
"Exchange Act Reports". The Exchange Act Reports, when they were or are
filed with the Commission, conformed or will conform in all material
respects to the applicable requirements of the Exchange Act and the
applicable rules and regulations of the Commission thereunder. The Offering
Circular and any amendments or supplements thereto and the Exchange Act
Reports did not and will not, as of their respective dates, contain an
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; PROVIDED,
HOWEVER, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by you expressly for use
therein;
(b) The only subsidiaries of the Company are OSR, Inc., Authority
International Inc., The Sports Authority Canada, Inc., Intelligent Sports
Inc., The Sports Authority Florida, Inc., The Sports Authority Puerto Rico,
Inc. The Sports Authority Michigan, Inc. and Mega Sports Co., Ltd. (all
subsidiaries of the Company being referred to herein as the
"subsidiaries").
(c) Intelligent Sports Inc. and The Sports Authority Florida, Inc. are
the only subsidiaries that meet the definition of "significant subsidiary"
contained in Rule 1-02(w) of Regulation S-X (Intelligent Sports Inc. and
The Sports Authority Florida, Inc. being individually referred to as a
"Significant Subsidiary" and collectively as the "Significant
Subsidiaries");
(d) Neither the Company nor any of its subsidiaries has sustained since
the date of the latest audited financial statements included in the
Offering Circular any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or
from any labor dispute or court or governmental action, order or decree,
otherwise than as set forth or contemplated in the Offering Circular, that
would have,
-2-
<PAGE>
individually or in the aggregate, a material adverse effect on the
business, operations, financial condition, stockholders equity or results
of operations of the Company and its subsidiaries taken as a whole (a
"Material Adverse Effect"); and, since the respective dates as of which
information is given in the Offering Circular, there has not been any
change in the capital stock or long-term debt of the Company or any of its
subsidiaries or any material adverse change in or affecting the business,
operations, financial position, stockholders' equity or results of
operations of the Company and its subsidiaries, otherwise than as set forth
or contemplated in the Offering Circular;
(e) The Company and its subsidiaries have good and marketable title in
fee simple to all real property and good and marketable title to all
material personal property owned by them, in each case free and clear of
all liens, encumbrances and defects except, in each case, such as are
described in the Offering Circular or such as do not and would not,
individually or in the aggregate, have a Material Adverse Effect; and any
real property and buildings held under lease by the Company and its
subsidiaries are held by them under valid, subsisting and enforceable
leases with such exceptions as are not material and do not interfere with
the use made and proposed to be made of such property and buildings by the
Company and its subsidiaries;
(f) Each of the Company and the Significant Subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation, with power and
authority (corporate and other) to own its properties and conduct its
business as described in the Offering Circular, and has been duly qualified
as a foreign corporation for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it owns or
leases properties or conducts any business so as to require such
qualification, or is subject to no material liability or disability by
reason of the failure to be so qualified in any such jurisdiction;
(g) The Company has an authorized capitalization as set forth in the
Offering Circular, and all of the issued and outstanding shares of capital
stock of the Company have been duly and validly authorized and issued and
are fully paid and non-assessable; the shares of Stock initially issuable
upon conversion of the Securities have been duly and validly authorized and
reserved for issuance out of the Company's authorized and unissued shares
of Stock and, when issued and delivered in accordance with the provisions
of the Securities and the Indenture referred to below, will be duly and
validly issued, fully paid and non-assessable and will conform to the
description of the Stock contained in the Offering Circular; and all of the
issued and outstanding shares of capital stock of the Significant
Subsidiaries of the Company have been duly and validly authorized and
issued, are fully paid and non-assessable and are owned directly or
indirectly by the Company, free and clear of all liens, encumbrances,
equities or claims, other than the lien in favor of the lenders under the
Credit Agreement, dated as of April 26, 1995, between the Company, as the
Borrower, and the Financial Institutions named therein, as the Lenders;
(h) The Securities have been duly authorized and, when issued and
delivered pursuant to this Agreement, will have been duly executed,
authenticated, issued and delivered and will
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constitute valid and legally binding obligations of the Company entitled to
the benefits provided by the indenture to be dated as of September 20, 1996
(the "Indenture") between the Company and The Bank of New York, as Trustee
(the "Trustee"), under which they are to be issued, each of the Indenture
and the Registration Rights Agreement have been duly authorized and, when
executed and delivered by the parties thereto, will constitute valid and
legally binding obligations of the Company, enforceable in accordance with
their terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles; and the
Securities, the Indenture and the Registration Rights Agreement will
conform to the descriptions thereof in the Offering Circular and will be in
substantially the form previously delivered to you;
(i) The issue and sale of the Securities and the compliance by the
Company with all of the provisions of the Securities, the Indenture, this
Agreement and the Registration Rights Agreement and the consummation of the
transactions herein and therein contemplated (i) will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company or any of
its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject, (ii) will not result in any
violation of the provisions of the Certificate of Incorporation or By-laws
of the Company and (iii) will not result in any violation of any statute or
any order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Company or any of its subsidiaries or any of
their properties, except, with respect to clauses (i) and (iii) above, for
such breaches, violations or defaults that would not, individually or in
the aggregate, have a Material Adverse Effect or that would not,
individually or in the aggregate, impair the Company's ability to
consummate the transactions herein contemplated; and no consent, approval,
authorization, order, registration or qualification of or with any such
court or governmental agency or body is required for the issue and sale of
the Securities or the consummation by the Company of the transactions
contemplated by this Agreement, the Registration Rights Agreement or the
Indenture, except (i) as required pursuant to the Registration Rights
Agreement, (ii) for the listing of the Stock issuable upon conversion of
the Securities on the New York Stock Exchange, (iii) such consents,
approvals, authorizations, registrations or qualifications as may be
required under state or foreign securities or Blue Sky laws in connection
with the purchase and distribution of the Securities by the Purchaser and
conversion of the Securities into shares of Stock and, (iv) the filing,
pursuant to Section 5(h) hereof, by the Company of a notice on Form D,
pursuant to Regulation D under the Securities Act, with the Commission;
(j) None of the Company or either of its Significant Subsidiaries is in
violation of its Certificate of Incorporation or By-laws or in default in
the performance or observance of any material obligation, covenant or
condition contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a party or
by which it or any of its properties may be bound, which default would have
a Material Adverse Effect;
(k) The statements set forth in the Offering Circular under the caption
"Description of Notes" and "Description of Capital Stock", insofar as they
purport to constitute a summary of the terms of the Securities and the
Stock, under the caption "United States Taxation", and under the caption
"Offer and Resale", insofar as they purport to describe the provisions of
this Agreement, fairly and accurately present the information disclosed
therein in all material respects;
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(l) Other than as set forth or contemplated in the Offering Circular,
there are no legal or governmental proceedings pending to which the Company
or any of its Significant Subsidiaries is a party or of which any property
of the Company or any of its Significant Subsidiaries is the subject which,
if determined adversely to the Company or any of its Significant
Subsidiaries, would individually or in the aggregate have a Material
Adverse Effect and, to the best of the Company's knowledge, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others;
(m) When the Securities are issued and delivered pursuant to this
Agreement, the Securities will not be of the same class (within the meaning
of Rule 144A under the Securities Act) as securities which are listed on a
national securities exchange registered under Section 6 of the Exchange Act
or quoted in a U.S. automated inter-dealer quotation system;
(n) The Company is subject to Section 13 or 15(d) of the Exchange Act;
(o) The Company is not, and after giving effect to the offering and sale
of the Securities will not be an "investment company", or an entity
"controlled" by an "investment company", as such terms are defined in the
United States Investment Company Act of 1940, as amended (the "Investment
Company Act");
(p) Neither the Company nor any person acting on its behalf has offered
or sold the Securities by means of any general solicitation or general
advertising within the meaning of Rule 502(c) under the Act or, with
respect to Securities sold outside the United States to non- U.S. persons
(as defined in Rule 902 under the Act), by means of any directed selling
efforts within the meaning of Rule 902 under the Securities Act and the
Company, any affiliate of the Company and any person acting on its or their
behalf, has complied with and will implement the "offering restrictions"
within the meaning of such Rule 902;
(q) Within the preceding six months, neither the Company nor any other
person acting on behalf of the Company has offered or sold to any person
any Securities or any securities of the same or a similar class as the
Securities, other than Securities offered or sold to the Purchaser
hereunder. The Company will take reasonable precautions designed to insure
that any offer or sale, direct or indirect, in the United States or to any
U.S. person (as defined in Rule 902 under the Securities Act) of any
Securities or any substantially similar security issued by the Company,
within six months subsequent to the date on which the distribution of the
Securities has been completed (as notified to the Company by you), is made
under restrictions and other circumstances reasonably designed not to
affect the status of the offer and sale of the Securities in the United
States and to U.S. persons contemplated by this Agreement as transactions
exempt from the registration provisions of the Securities Act;
(r) None of the holders of outstanding shares of capital stock of the
Company and no other person has or will have any preemptive or other rights
(other than the conversion rights of the Securities) to purchase, subscribe
for or otherwise acquire (i) the shares of Stock to be issued upon
conversion of the Securities or any rights to such shares or (ii) as a
result of or in
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connection with the transactions contemplated by the Indenture or this
Agreement, any other capital stock of the Company or rights thereto;
(s) Neither the Company nor any of its affiliates does business with the
government of Cuba or with any person or affiliate located in Cuba within
the meaning of Section 517.075, Florida Statutes;
(t) Price Waterhouse LLP, who have certified certain financial
statements of the Company, are independent public accountants as required
by the Act and the rules and regulations of the Commission thereunder;
(u) The Company, either directly or through its wholly-owned subsidiary,
Intelligent Sports, Inc., owns, or possesses adequate rights to use, all
trademarks, service marks, trade names, copyrights and licenses necessary
to conduct the business now operated by it, and neither the Company nor
Intelligent Sports Inc. has received any notice of infringement of or
conflict with (and knows of no such infringement or conflict with) asserted
rights of others with respect to any trademarks, service marks, trade
names, copyrights or licenses that, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would have a
Material Adverse Effect;
(v) The Company and each of the Significant Subsidiaries has all
necessary consents, authorizations, approvals, orders, certificates and
permits of and from, and has made all declarations and filings with, all
federal, state, local and other governmental authorities, all
self-regulatory organizations and all courts and other tribunals, necessary
to own, lease, license and use its properties and assets and to conduct its
business in the manner described in the Offering Circular, except to the
extent that the failure to obtain or file would not, alone or in the
aggregate, have a Material Adverse Effect; and
(w) The Company and each of the Significant Subsidiaries (i) is in
compliance with any and all applicable federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) has received all permits,
licenses or other approvals required of it under applicable Environmental
Laws to conduct its business and (iii) is in compliance with all terms and
conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and
conditions of such permits, licenses or approvals would not, individually
or in the aggregate, have a Material Adverse Effect.
2. Subject to the terms and conditions herein set forth, (a) the Company
agrees to issue and sell to the Purchaser, and the Purchaser agrees to purchase
from the Company, at a purchase price of 97.5% of the principal amount thereof,
plus accrued interest, if any, from September 20, 1996, the Firm Securities,
and (b) in the event and to the extent that the Purchaser shall exercise the
election to purchase Optional Securities as provided below, the Company agrees
to issue and sell to the Purchaser, and the Purchaser agrees to purchase from
the Company, at the same purchase price set forth in clause (a) of this Section
2, the aggregate principal amount of the Optional Securities as to which such
election shall have been exercised.
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<PAGE>
The Company hereby grants to the Purchaser the right to purchase at its
election up to $19,500,000 aggregate principal amount of Optional Securities, at
the same purchase price set forth in clause (a) of the first paragraph of this
Section 2, for the sole purpose of covering overallotments in the sale of Firm
Securities. Any such election to purchase Optional Securities may be exercised
by written notice from you to the Company, given within a period of 30 calendar
days after the date of this Agreement, setting forth the aggregate principal
amount of Optional Securities to be purchased and the date on which such
Optional Securities are to be delivered, as determined by you but in no event
earlier than the First Time of Delivery (as defined in Section 4 hereof) or,
unless you and the Company otherwise agree in writing, earlier than two or later
than ten business days after the date of such notice.
3. Upon the authorization by you of the release of the Firm Securities, the
Purchaser proposes to offer the Firm Securities for sale upon the terms and
conditions set forth in this Agreement and the Offering Circular and the
Purchaser hereby represents and warrants to, and agrees with the Company that:
(a) It will offer and sell the Securities only to: (i) persons who it
reasonably believes are "qualified institutional buyers" ("QIBs") within the
meaning of Rule 144A under the Act in transactions meeting the requirements of
Rule 144A, (ii) institutions which it reasonably believes are "accredited
investors" ("Institutional Accredited Investors") within the meaning of Rule 501
under the Act or, (iii) upon the terms and conditions set forth in Annex I to
this Agreement;
(b) It is an Institutional Accredited Investor; and
(c) It will not offer or sell the Securities by any form of general
solicitation or general advertising, including but not limited to the methods
described in Rule 502(c) under the Act.
4. (a) The Securities to be purchased will be represented (i) in the case of
Securities purchased in reliance on Rule 144A (except in the case of Securities
to be acquired by Institutional Accredited Investors, which will be represented
in definitive certificated registered form), by one or more definitive global
Securities in book-entry form which will be deposited by or on behalf of the
Company with The Depository Trust Company ("DTC") or its designated custodian
and (ii) in the case of Securities purchased in reliance on Regulation S, by one
or more definitive global Securities in book-entry form which will be deposited
by or on behalf of the Company with DTC or its designated custodian for the
benefit of Morgan Guaranty Trust Company of New York (Brussels office), as
operator of the Euroclear System, or Cedel Bank, Societe Anonyme, or both, for
credit to the account of Goldman, Sachs & Co., unless otherwise directed by you.
The Company will deliver the Securities to Goldman, Sachs & Co., for its
account, against payment therefor by or on behalf of the Purchaser of the
purchase price therefor by certified or official bank check or checks, or by
wire transfer, payable to the order of the Company in Federal (same day) funds,
by causing DTC to credit the Securities to the account of Goldman, Sachs & Co.
at DTC. The Company will cause the certificates representing the Securities to
be made available to Goldman, Sachs & Co. for checking at least twenty-four
hours prior to the Time of Delivery (as defined below) at the office of DTC or
its designated custodian (the "Designated Office"). The time and date of such
delivery and payment shall be, with respect to the Firm Securities, 10:00 a.m.,
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New York City time, on September 20, 1996, or such other time and date as the
Purchaser and the Company may agree upon in writing and, with respect to the
Optional Securities, 10:00 a.m., New York City time, on the date specified by
the Purchaser in the written notice given by the Purchaser of the Purchaser's
election to purchase such Optional Securities, or such other time and date as
the Purchaser and the Company may agree upon in writing. Such time and date for
delivery of the Firm Securities is herein called the "First Time of Delivery",
such time and date for delivery of the Optional Securities, if not the First
Time of Delivery, is herein called the "Second Time of Delivery", and each such
time and date for delivery is herein called a "Time of Delivery".
Such Securities, if any, as Goldman, Sachs & Co. may request upon at least
forty-eight hours' prior to notice to the Company (such request to include the
authorized denominations and the names in which they are to be registered),
shall be delivered in definitive certificated form, by or on behalf of the
Company to Goldman, Sachs & Co., against payment by or on behalf of such
Purchaser of the purchase price therefor by certified or official bank check or
checks, payable to the order of the Company in Federal (same day) funds. The
Company will cause the certificates representing the Securities to be made
available for checking and packaging at least twenty-four hours prior to such
Time of Delivery at the office of Goldman, Sachs & Co., 85 Broad Street, New
York, New York 10004.
(b) The documents to be delivered at such Time of Delivery by or on behalf of
the parties hereto pursuant to Section 7 hereof, including the cross-receipt for
the Securities and any additional documents requested by the Purchaser pursuant
to Section 7(i) hereof, will be delivered at such time and date at the offices
of Sullivan & Cromwell, 125 Broad Street, New York, New York 10004 (the "Closing
Location"), and the Securities will be delivered at the Designated Office, all
at such Time of Delivery. A meeting will be held at the Closing Location at 3:00
p.m., New York City time, on the New York Business Day next preceding such Time
of Delivery, at which meeting the final drafts of the documents to be delivered
pursuant to the preceding sentence will be available for review by the parties
hereto. For the purposes of this Section 4, "New York Business Day" shall mean
each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in New York are generally authorized or obligated by law or
executive order to close.
5. The Company agrees with the Purchaser:
(a) To prepare the Offering Circular in a form approved by you; to make no
amendment or any supplement to the Offering Circular prior to such Time of
Delivery which shall be disapproved by you promptly after reasonable notice
thereof; and to furnish you with copies thereof;
(b) Promptly from time to time to take such action as you may reasonably
request to qualify the Securities and the shares of Stock issuable upon
conversion thereof for offering and sale under the securities laws of such
jurisdictions as you may request and to comply with such laws so as to permit
the continuance of sales and dealings therein in such jurisdictions for as long
as may be necessary to complete the distribution of the Securities, provided
that in connection therewith the Company shall not be required to qualify as a
foreign corporation or to file a general consent to service of process in any
jurisdiction or to take any other action which would subject it to the service
of process in suits or to taxation, other than as to matters and transactions
relating to the offer and sale of the Securities in each jurisdiction in which
the Securities have been qualified as provided above;
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<PAGE>
(c) Subject to delays caused by the Purchaser or its counsel, prior to 1:00
p.m., New York City time, on the New York business day next succeeding the date
of this Agreement to furnish the Purchaser with ten copies of the Offering
Circular and each amendment or supplement thereto signed by an authorized
officer of the Company with the independent accountants' report(s) in the
Offering Circular, and any amendment or supplement containing amendments to the
financial statements covered by such report(s), signed by the accountants,
copies of the Offering Circular in such quantities as are necessary to fulfill
confirmation requirements and additional copies thereof in such quantities as
you may from time to time reasonably request, and if, at any time prior to the
expiration of nine months after the date of the Offering Circular, any event
shall have occurred as a result of which the Offering Circular as then amended
or supplemented would include an untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made when such Offering
Circular is delivered, not misleading, or, if for any other reason it shall be
necessary or desirable during such same period to amend or supplement the
Offering Circular, to notify you and upon your request to prepare and furnish
without charge to the Purchaser and to any dealer in securities as many copies
as you may from time to time reasonably request of an amended Offering Circular
or a supplement to the Offering Circular which will correct such statement or
omission or effect such compliance;
(d) During the period beginning from the date hereof and continuing to and
including the date 90 days after the Date of the Offering Circular, not to
offer, sell, contract to sell or otherwise dispose of, except as provided
hereunder, any securities of the Company that are substantially similar to the
Securities or the Stock, including but not limited to any securities that are
convertible into or exchangeable for, or that represent the right to receive,
Stock or any such substantially similar securities (other than pursuant to
employee benefit plans existing on, or upon the conversion or exchange of
convertible or exchangeable securities outstanding as of, the date of this
Agreement), without your prior written consent;
(e) Not to be or become, at any time prior to the expiration of three years
after the last Time of Delivery, an open-end investment company, unit investment
trust, closed-end investment company or face-amount certificate company that is
or is required to be registered under Section 8 of the Investment Company Act;
(f) At any time when the Company is not subject to Section 13 or 15(d) of the
Exchange Act, for the benefit of holders from time to time of Securities, to
furnish at its expense, upon request, to holders of Securities and prospective
purchasers of securities information (the "Additional Issuer Information")
satisfying the requirements of subsection (d)(4)(i) of Rule 144A under the
Securities Act;
(g) If requested by you, to use its best efforts to cause Securities sold in
reliance on Rule 144A to be eligible for the PORTAL trading system of the
National Association of Securities Dealers, Inc.;
(h) To file with the Commission, not later than 15 days after each Time of
Delivery, five copies of a notice on Form D under the Act (one of which will be
manually signed by a person duly authorized by the Company); to otherwise comply
with the requirements of Rule 503 under the Securities Act; and to furnish
promptly to you evidence of each such required timely filing (including a copy
thereof);
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(i) During a period of five years from the date of the Offering Circular to
furnish to the holders of the Securities as soon as practicable after the end of
each fiscal year an annual report (including a balance sheet and statements of
income, stockholders' equity and cash flows of the Company and its consolidated
subsidiaries certified by independent public accountants) and, as soon as
practicable after the end of each of the first three quarters of each fiscal
year (beginning with the fiscal quarter ending after the date of the Offering
Circular), consolidated summary financial information of the Company and its
subsidiaries for such quarter in reasonable detail;
(j) During a period of five years from the date of the Offering Circular, to
furnish to you copies of all reports or other communications (financial or
other) furnished to stockholders of the Company, and to deliver to you (i) as
soon as they are available, copies of any reports and financial statements
furnished to or filed with the Commission or any securities exchange on which
the Securities or any class of securities of the Company is listed; and (ii)
such additional information concerning the business and financial condition of
the Company as you may from time to time reasonably request;
(k) During the period of three years after the last Time of Delivery, the
Company will not, and will not permit any of its "affiliates" (as defined in
Rule 144 under the Securities Act) to, resell any of the Securities which
constitute "restricted securities" under Rule 144 that have been reacquired by
any of them;
(l) To use the net proceeds received by it from the sale of the Securities
pursuant to this Agreement in the manner specified in the Offering Circular
under the caption "Use of Proceeds";
(m) Until such time as any Security or any Stock issuable upon conversion
thereof is registered under the Securities Act pursuant to the Registration
Rights Agreement and transferred pursuant to such registration, to include a
legend on the Securities and Stock issuable upon the conversion thereof to the
effect set forth under "Notice to Investors" in the Offering Circular;
(n) To reserve and keep available at all times, free of preemptive rights,
authorized and unissued shares of Stock for the purpose of enabling the Company
to satisfy any obligations to issue shares of its Stock upon conversion of the
Securities; and
(o) (i) As promptly as practicable, and in any event not later than 90 days
after the First Time of Delivery, to have the Shares of Stock issuable upon
conversion of the Securities approved for listing on the New York Stock
Exchange.
6. The Company covenants and agrees with the Purchaser that the Company will
pay or cause to be paid the following: (i) the fees, disbursements and expenses
of the Company's counsel and accountants in connection with the issue of the
Securities and the shares of Stock issuable upon conversion of the Securities
and all other expenses in connection with the preparation and printing of the
Offering Circular and any amendments and supplements thereto and the mailing and
delivering of copies thereof to the Purchaser and dealers; (ii) the cost of
printing or producing any Agreement among Purchasers, this Agreement, the
Indenture, the Blue Sky Memo and any other documents in connection with the
offering, purchase, sale and delivery of the Securities; (iii) all expenses in
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connection with the qualification of the Securities and the shares of Stock
issuable upon conversion of the Securities for offering and sale under state
securities laws as provided in Section 5(b) hereof, including the fees and
disbursements of counsel for the Purchaser in connection with such qualification
and in connection with the Blue Sky surveys; (iv) any fees charged by securities
rating services for rating the Securities; (v) the cost of preparing the
Securities; (vi) the fees and expenses of the Trustee and any agent of the
Trustee and the fees and disbursements of counsel for the Trustee in connection
with the Indenture and the Securities; (vii) any cost incurred in connection
with the designation of the Securities for trading in PORTAL and the listing of
the shares of Stock issuable upon conversion of the Securities; and (viii) all
other costs and expenses incident to the performance of its obligations
hereunder which are not otherwise specifically provided for in this Section. It
is understood, however, that, except as provided in this Section, and Sections 8
and 11 hereof, the Purchaser will pay all of its own costs and expenses,
including the fees of its counsel, transfer taxes on resale of any of the
Securities by it, and any advertising expenses connected with any offers it may
make, and the Purchaser will reimburse the Company for up to $325,000, and up to
an additional $48,750 in the event of the exercise by the Purchaser of its right
to purchase Optional Securities, for out-of-pocket expenses incurred in
connection with the transactions contemplated hereunder.
7. The obligations of the Purchaser hereunder at each Time of Delivery shall
be subject, in its discretion, to the condition that all representations and
warranties and other statements of the Company herein are, at and as of such
Time of Delivery, true and correct, the condition that the Company shall have
performed all of its obligations hereunder theretofore to be performed, and the
following additional conditions:
(a) Sullivan & Cromwell, counsel for the Purchaser, shall have furnished to
you such opinion or opinions, dated such Time of Delivery, with respect to the
incorporation of the Company, the validity of the Securities being delivered at
such Time of Delivery, the Offering Circular and other related matters as you
may reasonably request, and such counsel shall have received such papers and
information as they may reasonably request to enable them to pass upon such
matters;
(b) Morgan, Lewis & Bockius LLP, counsel for the Company, shall have
furnished to you their written opinion, dated such Time of Delivery, in form and
substance satisfactory to you, to the effect that:
(i) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware, with
corporate power and authority to own its properties and conduct its business
as described in the Offering Circular;
(ii) The shares of Stock initially issuable upon conversion of the
Securities have been duly and validly authorized and reserved for issuance
and, when issued and delivered in accordance with the provisions of the
Securities and the Indenture, will be duly and validly issued and fully paid
and non-assessable, and will conform to the description of the Stock
contained in the Offering Circular;
(iii) This Agreement has been duly authorized, executed and delivered
by the Company;
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(iv) The Securities have been duly authorized, executed, authenticated,
issued and delivered, are entitled to the benefits provided by the Indenture,
and constitute valid and legally binding obligations of the Company
enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws
of general applicability relating to or affecting creditors' rights and to
general equity principles; and the Securities, the Indenture, this Agreement
and the Registration Rights Agreement conform to the descriptions thereof in
the Offering Circular;
(v) The Indenture and the Registration Rights Agreement have been duly
authorized, executed and delivered by the Company and constitute valid and
legally binding instruments of the Company, enforceable in accordance with
their terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles;
(vi) The issue and sale of the Securities and the compliance by the
Company with all of the provisions of the Securities, the Indenture, the
Registration Rights Agreement and this Agreement and the consummation of the
transactions herein and therein contemplated will not conflict with or result
in a breach or violation of any of the terms or provisions of, or constitute
a default under, any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries is bound or to
which any of the property or assets of the Company or any of its subsidiaries
is subject and which was filed as an exhibit to the Form 10-K, nor will such
actions result in any violation of the provisions of the Certificate of
Incorporation or By-laws of the Company or any statute or any Applicable Laws
or any Applicable Orders; provided, that in rendering such opinions such
counsel need not express any opinion with respect to (1) foreign or state
securities or Blue Sky laws or (2) the information contained in, or the
accuracy, completeness or correctness of, the Offering Circular, which
matters are dealt with separately herein;
For purposes of clauses (vi) and (vii) of this Section 7(b): (i)
"Applicable Laws" means those laws, rules and regulations of the State of
Delaware, the State of New York and the United States of America that, in
such counsel's experience, are normally applicable to transactions of the
type contemplated by the Purchase Agreement; (ii) "Applicable Orders" means
those judgments, orders or decrees of Delaware, New York or federal
Government Authorities (as such term is hereinafter defined) known to such
counsel and identified on a certificate from an appropriate officer of the
Company as applicable to the Company or its subsidiaries or their properties;
(iii) "Governmental Authorities" means any Delaware, New York or federal
executive, legislative, judicial, administrative or regulatory body; and (iv)
"Governmental Approval" means any consent, approval, license, authorization
or qualification or validation of, or notice to, or filing, recording or
registration with, any Governmental Authority pursuant to Applicable Laws or
Applicable Orders;
(vii) Based on such counsel's review of Applicable Laws and Applicable
Orders, no Governmental Approval is required for the issue and sale of the
Securities or the conversion of the Securities into shares of Stock or the
consummation by the Company of the transactions contemplated by this
Agreement, the Indenture and the Registration Rights Agreement except (i) as
required pursuant to the Registration Rights Agreement, (ii) such approvals
as may be required
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under foreign or state securities or Blue Sky laws in connection with the
purchase and distribution of the Securities by the Purchaser, and (iii) the
filing, pursuant to Section 5(h) hereof, by the Company of a notice on Form
D, pursuant to Regulation D under the Securities Act, with the Commission;
(viii) The statements set forth in the Offering Circular under the
caption "Description of Notes" and "Description of Capital Stock", insofar as
they purport to constitute a summary of the terms of the Securities and the
Stock, under the caption "United States Taxation", and under the caption
"Offer and Resale", to the extent they constitute matters of law or legal
conclusions fairly and accurately present the information required to be
disclosed therein in all material respects; and
(ix) No registration of the Securities under the Securities Act, and no
qualification of an indenture under the United States Trust Indenture Act of
1939 with respect thereto, is required for the offer, sale and initial resale
of the Securities by the Purchaser in the manner contemplated by this
Agreement.
In addition, such counsel shall state that, in connection with the
preparation of the Offering Circular, such counsel has participated in
conferences with officers and other representatives of the Company,
representatives of the independent accountants of the Company, the Purchaser
and counsel for the Purchaser at which the contents of the Offering Circular
and related matters were discussed, and although such counsel is not passing
upon, and does not assume any responsibility for, the accuracy, completeness
or fairness of the statements contained in the Offering Circular and has made
no independent check or verification thereof, on the basis of the foregoing,
no facts have come to the attention of such counsel that have led them to
believe that the Offering Circular (except for the financial statements,
schedules and other financial data included therein or omitted therefrom, as
to which such counsel need express no opinion), as of its date and as of each
Time of Delivery, contained or contains an untrue statement of a material
fact or omitted or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
Such counsel may also state that, insofar as any opinions involve
factual matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Company and certificates of public officials
and others.
(c) Frank W. Bubb III, Vice President and General Counsel of the Company,
shall have furnished to you his written opinion, dated such Time of Delivery,
in form and substance satisfactory to you, to the effect that:
(i) The Company has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each
jurisdiction in which the Company owns or leases properties, or conducts
any business, so as to require such qualification, or is subject to no
material liability or disability by reason of the failure to be so
qualified in any such jurisdiction;
-13-
<PAGE>
(ii) To the best of such counsel's knowledge, after due inquiry and
other than as set forth in the Offering Circular, there are no legal or
governmental proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property of the Company or any of
its subsidiaries is the subject which, if determined adversely to the
Company or such subsidiary, would individually or in the aggregate have a
material adverse effect on the business, operations, financial condition,
stockholder's equity or results of operations of the Company, or the
Company and its subsidiaries taken as a whole; and, to the best of such
counsel's knowledge, no such proceedings are threatened;
(iii) The issue and sale of the Securities being issued at such Time of
Delivery by the Company, the compliance by the Company with all of the
provisions of this Agreement, the Securities, the Indenture and the
Registration Rights Agreement and the consummation by the Company of the
transactions herein and therein contemplated will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any real estate lease to which the Company or
any of its subsidiaries is a party, except for such conflicts, breaches,
defaults or violations which would not, individually or in the aggregate,
have a material adverse effect on the business, operations, financial
condition, stockholders' equity or results of operations of the Company and
its subsidiaries taken as a whole; and
(iv) The Sports Authority Florida, Inc. has been duly incorporated and
is validly existing as a corporation in good standing under the laws of its
state of incorporation; and all of the issued and outstanding shares of
capital stock of The Sports Authority Florida, Inc. have been duly and
validly authorized and issued, are fully paid and non-assessable and are
owned directly or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims, other than the lien in favor of the
lenders under the Credit Agreement, dated as of April 26, 1995, between the
Company, as the Borrower, and the Financial Institutions named therein, as
the Lenders; and
(v) Intelligent Sports Inc. has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its state of
incorporation; and all of the issued and outstanding shares of capital
stock of Intelligent Sports Inc. have been duly and validly authorized and
issued, are fully paid and non-assessable and are owned directly or
indirectly by the Company, free and clear of all liens, encumbrances,
equities or claims other than the lien in favor of the lenders under the
Credit Agreement, dated as of April 26, 1995, between the Company, as the
Borrower, and the Financial Institutions named therein, as the Lenders; and
(vi) To the best of such counsel's knowledge, after due inquiry and
other than as set forth in the Offering Circular, there are no legal or
governmental proceedings pending to which Intelligent Sports Inc. is a
party or of which any property of Intelligent Sports Inc. is the subject
which, if determined adversely to Intelligent Sports Inc., would
individually or in the aggregate have a material adverse effect on the
business, operations, financial condition, stockholder's equity or results
of operations of Intelligent Sports Inc.; and, to the best of such
counsel's knowledge, no such proceedings are threatened.
-14-
<PAGE>
Such counsel may also state that, insofar as any opinions involve
factual matters, he has relied, to the extent he deems proper, upon
certificates of officers of the Company and certificates of public officials.
(d) On the date of the Offering Circular prior to the execution of this
Agreement and also at such Time of Delivery, Price Waterhouse LLP shall have
furnished to you a letter or letters, dated the respective dates of delivery
thereof, in form and substance satisfactory to you, to the effect set forth in
Annex II hereto;
(e) (i) Neither the Company nor any of the Significant Subsidiaries shall
have sustained since the date of the latest audited financial statements
included in the Offering Circular any loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order or
decree, otherwise than as set forth or contemplated in the Offering Circular,
and (ii) since the respective dates as of which information is given in the
Offering Circular there shall not have been any change in the capital stock or
long-term debt of the Company or any of the Significant Subsidiaries or any
change, or any development involving a prospective change, in or affecting the
general affairs, management, financial position, stockholders' equity or results
of operations of the Company or any of the Significant Subsidiaries, otherwise
than as set forth or contemplated in the Offering Circular, the effect of which,
in any such case described in Clause (i) or (ii), is in your judgment so
material and adverse as to make it impracticable or inadvisable to proceed with
the offering or the delivery of the Securities being delivered at such Time of
Delivery on the terms and in the manner contemplated in this Agreement and in
the Offering Circular;
(f) On or after the date hereof (i) no downgrading shall have occurred in
the rating accorded the Company's debt securities by any "nationally recognized
statistical rating organization", as that term is defined by the Commission for
purposes of Rule 436(g)(2) under the Securities Act, and (ii) no such
organization shall have publicly announced that it has under surveillance or
review, with possible negative implications, its rating of any of the Company's
debt securities;
(g) On or after the date hereof there shall not have occurred any of the
following: (i) a suspension or material limitation in trading in securities
generally on the New York Stock Exchange; (ii) a suspension or material
limitation in trading in the Company's securities on the New York Stock
Exchange; (iii) a general moratorium on commercial banking activities in New
York declared by either Federal or New York State authorities; or (iv) the
outbreak or escalation of hostilities involving the United States or the
declaration by the United States of a national emergency or war, if the effect
of any such event specified in this Clause (iv) in your judgment makes it
impracticable or inadvisable to proceed with the public offering or the delivery
of the Securities being delivered at such Time of Delivery on the terms and in
the manner contemplated in the Offering Circular;
(h) The Company shall have furnished or caused to be furnished to you at
each Time of Delivery certificates of officers of the Company satisfactory to
you as to the accuracy of the representations and warranties of the Company
herein at and as of such Time of Delivery, as
-15-
<PAGE>
to the performance by the Company of all of its obligations hereunder to be
performed at or prior to such Time of Delivery, as to the matters set forth in
subsections (a) and (e) of this Section and as to such other matters as you may
reasonably request.
8. (a) The Company will indemnify and hold harmless the Purchaser against any
losses, claims, damages or liabilities, joint or several, to which the Purchaser
may become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in the Offering Circular, or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact necessary to make the statements therein not misleading, and
will reimburse the Purchaser for any legal or other expenses reasonably incurred
by the Purchaser in connection with investigating or defending any such action
or claim as such expenses are incurred; PROVIDED, HOWEVER, that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in the Offering
Circular or any such amendment or supplement in reliance upon and in conformity
with written information furnished to the Company by the Purchaser expressly for
use therein.
(b) The Purchaser will indemnify and hold harmless the Company against any
losses, claims, damages or liabilities to which the Company may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in the
Offering Circular, or any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
or necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in the Offering Circular or
any such amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by the Purchaser expressly for use therein;
and will reimburse the Company for any legal or other expenses reasonably
incurred by the Company in connection with investigating or defending any such
action or claim as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection (a) or
(b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party (who shall not, except
with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party under such subsection for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation. No indemnifying party shall, without the
written consent of the indemnified party, effect the settlement or compromise
of, or consent to the entry of any judgment with respect to, any pending
-16-
<PAGE>
or threatened action or claim in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified party is an
actual or potential party to such action or claim) unless such settlement,
compromise or judgment (i) includes an unconditional release of the indemnified
party from all liability arising out of such action or claim and (ii) does not
include a statement as to, or an admission of, fault, culpability or a failure
to act, by or on behalf of any indemnified party.
(d) If the indemnification provided for in this Section 8 is unavailable to
or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above in respect of any losses, claims, damages or liabilities (or actions
in respect thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Purchaser on the other from the offering
of the Securities. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law or if the indemnified
party failed to give the notice required under subsection (c) above, then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company on the one hand and
the Purchaser on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and the Purchaser on the other
shall be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by the Purchaser, in each case
as set forth in the Offering Circular. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or the Purchaser
on the other and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Company
and the Purchaser agree that it would not be just and equitable if contribution
pursuant to this subsection (d) were determined by pro rata allocation or by any
other method of allocation which does not take account of the equitable
considerations referred to above in this subsection (d). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in this subsection
(d) shall be deemed to include any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this subsection (d), the
Purchaser shall not be required to contribute any amount in excess of the amount
by which the total price at which the Securities underwritten by it and
distributed to investors were offered to investors exceeds the amount of any
damages which the Purchaser has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission.
(e) The obligations of the Company under this Section 8 shall be in addition
to any liability which the Company may otherwise have and shall extend, upon the
same terms and conditions, to each person, if any, who controls the Purchaser
within the meaning of the Act; and the obligations of the Purchaser under this
Section 8 shall be in addition to any liability which the Purchaser may
otherwise
-17-
<PAGE>
have and shall extend, upon the same terms and conditions, to each officer and
director of the Company and to each person, if any, who controls the Company
within the meaning of the Act.
9. The respective indemnities, agreements, representations, warranties and
other statements of the Company and the Purchaser, as set forth in this
Agreement or made by them, respectively, pursuant to this Agreement, shall
remain in full force and effect, regardless of any investigation (or any
statement as to the results thereof) made by the Purchaser or any controlling
person of the Purchaser, or the Company, or any officer or director or
controlling person of the Company, and shall survive delivery of and payment for
the Securities.
10. If the Purchaser shall default in its obligation to purchase the
Securities which it has agreed to purchase hereunder, the Company shall not be
under any liability to the Purchaser except as provided in Section 6 and 8
hereof, but if for any other reason the Securities are not delivered by or on
behalf of the Company as provided herein, the Company will reimburse the
Purchaser for all out-of-pocket expenses, including fees and disbursements of
counsel, reasonably incurred by the Purchaser in making preparations for the
purchase, sale and delivery of the Securities, but the Company shall then be
under no further liability to the Purchaser except as provided in Sections 6 and
8 hereof, and the reimbursement provision at the end of paragraph 6 will have no
effect.
11. All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Purchaser shall be delivered or sent by mail, telex or
facsimile transmission to you at 85 Broad Street, New York, New York 10004,
Attention: Registration Department; and if to the Company shall be delivered or
sent by mail, telex or facsimile transmission to the address of the Company set
forth in the Offering Circular, Attention: Secretary. Any such statements,
requests, notices or agreements shall take effect upon receipt thereof.
12. This Agreement shall be binding upon, and inure solely to the benefit of,
the Purchaser, the Company and, to the extent provided in Sections 8 and 10
hereof, the officers and directors of the Company and each person who controls
the Company or the Purchaser, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. No purchaser of any of the
Securities from the Purchaser shall be deemed a successor or assign by reason
merely of such purchase.
13. Time shall be of the essence of this Agreement.
14. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH TH
LAWS OF THE STATE OF NEW YORK.
15. This Agreement may be executed by any one or more of the parties hereto
in any number of counterparts, each of which shall be deemed to be an original,
but all such respective counterparts shall together constitute one and the same
instrument.
-18-
<PAGE>
If the foregoing is in accordance with your understanding, please sign and
return to us four counterparts hereof, and upon the acceptance hereof by you,
this letter and such acceptance hereof shall constitute a binding agreement
between the Purchaser and the Company.
Very truly yours,
The Sports Authority, Inc.
By: /S/ ANTHONY F. CRUDELE
-------------------------------
Name:
Title:
Accepted as of the date hereof:
/S/ GOLDMAN, SACHS & CO
- ---------------------------------
(Goldman, Sachs & Co.)
-19-
<PAGE>
ANNEX I
(1) THE SECURITIES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE ACT
AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE
ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT IN ACCORDANCE WITH REGULATION S UNDER
THE ACT OR PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
ACT. THE PURCHASER REPRESENTS THAT IT HAS OFFERED AND SOLD THE SECURITIES, AND
WILL OFFER AND SELL THE SECURITIES (I) AS PART OF THEIR DISTRIBUTION AT ANY TIME
AND (II) OTHERWISE UNTIL 40 DAYS AFTER THE LATER OF THE COMMENCEMENT OF THE
OFFERING AND THE LAST TIME OF DELIVERY, ONLY IN ACCORDANCE WITH RULE 903 OF
REGULATION S, RULE 144A OR PURSUANT TO PARAGRAPH 2 OF THIS ANNEX I UNDER THE
SECURITIES ACT. ACCORDINGLY, THE PURCHASER AGREES THAT NEITHER IT, ITS
AFFILIATES NOR ANY PERSONS ACTING ON THEIR BEHALF HAS ENGAGED OR WILL ENGAGE IN
ANY DIRECTED SELLING EFFORTS WITH RESPECT TO THE SECURITIES, AND THEY HAVE
COMPLIED AND WILL COMPLY WITH THE OFFERING RESTRICTIONS REQUIREMENT OF
REGULATION S. THE PURCHASER AGREES THAT, AT OR PRIOR TO CONFIRMATION OF SALE OF
SECURITIES (OTHER THAN A SALE PURSUANT TO RULE 144A) OR PURSUANT TO PARAGRAPH 2
OF THIS ANNEX I, IT WILL HAVE SENT TO EACH DISTRIBUTOR, DEALER OR PERSON
RECEIVING A SELLING CONCESSION, FEE OR OTHER REMUNERATION THAT PURCHASES
SECURITIES FROM IT DURING THE RESTRICTED PERIOD A CONFIRMATION OR NOTICE TO
SUBSTANTIALLY THE FOLLOWING EFFECT:
"THE SECURITIES COVERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND MAY NOT BE OFFERED
AND SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF,
U.S. PERSONS (I) AS PART OF THEIR DISTRIBUTION AT ANY TIME OR (II)
OTHERWISE UNTIL 40 DAYS AFTER THE LATER OF THE COMMENCEMENT OF THE
OFFERING AND THE CLOSING DATE, EXCEPT IN EITHER CASE IN ACCORDANCE WITH
REGULATION S (OR RULE 144A IF AVAILABLE) UNDER THE SECURITIES ACT. TERMS
USED ABOVE HAVE THE MEANING GIVEN TO THEM BY REGULATION S."
TERMS USED IN THIS PARAGRAPH HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S.
THE PURCHASER FURTHER AGREES THAT IT HAS NOT ENTERED AND WILL NOT ENTER
INTO ANY CONTRACTUAL ARRANGEMENT WITH RESPECT TO THE DISTRIBUTION OR DELIVERY OF
THE SECURITIES, EXCEPT WITH ITS AFFILIATES OR WITH THE PRIOR WRITTEN CONSENT OF
THE COMPANY.
(2) Notwithstanding the foregoing, Securities in registered form may be
offered, sold and delivered by the Purchaser in the United States and to U.S.
persons pursuant to Section 3 of this Agreement without delivery of the written
statement required by paragraph (1) above.
(3) The Purchaser further represents and agrees that (i) it has not offered
or sold, and will not offer or sell, in the United Kingdom by means of any
document, any Securities other than to persons whose ordinary business it is to
buy or sell debentures, whether as principal or as agent, or in circumstances
which do not constitute an offer to the public within the meaning of the Public
Offers of Securities Regulations 1995, (ii) it has complied, and will comply,
with all applicable provisions of the Financial Services Act 1986 of Great
Britain with respect to anything done by it in relation to the Securities in,
from or otherwise involving the United Kingdom, and (iii) it has only issued or
passed on, and will only issue or pass on, in the United Kingdom, any document
received by it in connection with the issuance of the Securities to a person who
is of a kind described in Article 11(3) of the Financial
A-1
<PAGE>
Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996 of Great
Britain or is a person to whom the document may otherwise lawfully be issued or
passed on.
(4) The Purchaser agrees that it will not offer, sell or deliver any of the
Securities in any jurisdiction outside the United States except under
circumstances that will result in compliance with the applicable laws thereof,
and that it will take at its own expense whatever action is required to permit
their purchase and resale of the Securities in such jurisdictions. The Purchaser
understands that no action has been taken to permit a public offering in any
jurisdiction outside the United States where action would be required for such
purpose. The Purchaser agrees not to cause any advertisement of the Securities
to be published in any newspaper or periodical or posted in any public place and
not to issue any circular relating to the Securities.
A-2
<PAGE>
ANNEX II
Pursuant to Section 7(d) of the Purchase Agreement, the accountants shall
furnish letters to the Purchaser to the effect that:
(i) They are independent certified public accountants with respect to
the Company and its subsidiaries within the meaning of the Securities
Exchange Act of 1934 (the "Exchange Act") and the applicable published
rules and regulations thereunder;
(ii) In their opinion, the consolidated financial statements and
financial statement schedules audited by them and included in the Offering
Circular comply as to form in all material respects with the applicable
requirements of the Exchange Act and the related published rules and
regulations;
(iii) The unaudited selected financial information with respect to the
consolidated results of operations and financial position of the Company
for the five most recent fiscal years included in the Offering Circular
agrees with the corresponding amounts (after restatements where
applicable) in the audited consolidated financial statements for such five
fiscal years;
(iv) On the basis of limited procedures not constituting an audit in
accordance with generally accepted auditing standards, consisting of a
reading of the unaudited financial statements and other information
referred to below, a reading of the latest available interim financial
statements of the Company and its subsidiaries, inspection of the minute
books of the Company and its subsidiaries since the date of the latest
audited financial statements included in the Offering Circular, inquiries
of officials of the Company and its subsidiaries responsible for financial
and accounting matters and such other inquiries and procedures as may be
specified in such letter, nothing came to their attention that caused them
to believe that:
(A) the unaudited consolidated statements of income, consolidated
balance sheets and consolidated statements of cash flows included in
the Offering Circular are not in conformity with generally accepted
accounting principles applied on the basis substantially consistent
with the basis for the unaudited condensed consolidated statements
of income, consolidated balance sheets and consolidated statements
of cash flows included in the Offering Circular;
(B) any other unaudited income statement data and balance sheet
items included in the Offering Circular do not agree with the
corresponding items in the unaudited consolidated financial
statements from which such data and items were derived, and any such
unaudited data and items were not determined on a basis
substantially consistent with the basis for the corresponding
amounts in the audited consolidated financial statements included in
the Offering Circular;
(C) the unaudited financial statements which were not included
in the Offering Circular but from which were derived any unaudited
condensed financial statements referred to in Clause (A) and any
unaudited income statement data and balance sheet
II-A-1
<PAGE>
items included in the Offering Circular and referred to in Clause
(B) were not determined on a basis substantially consistent with
the basis for the audited consolidated financial statements included
in the Offering Circular;
(D) any unaudited pro forma consolidated condensed financial
statements included in the Offering Circular do not comply as to
form in all material respects with the applicable accounting
requirements or the pro forma adjustments have not been properly
applied to the historical amounts in the compilation of those
statements;
(E) as of a specified date not more than five days prior to the
date of such letter, there have been any changes in the consolidated
capital stock (other than issuances of capital stock upon exercise
of options and stock appreciation rights, upon earn- outs of
performance shares and upon conversions of convertible securities,
in each case which were outstanding on the date of the latest
financial statements included in the Offering Circular) or any
increase in the consolidated long-term debt of the Company and its
subsidiaries, or any decreases in consolidated net current assets or
stockholders' equity or other items specified by the Purchaser, or
any increases in any items specified by the Purchaser, in each case
as compared with amounts shown in the latest balance sheet included
in the Offering Circular except in each case for changes, increases
or decreases which the Offering Circular discloses have occurred or
may occur or which are described in such letter; and
(F) for the period from the date of the latest financial
statements included in the Offering Circular to the specified date
referred to in Clause (E) there were any decreases in consolidated
net revenues or operating profit or the total or per share amounts
of consolidated net income or other items specified by the
Purchaser, or any increases in any items specified by the Purchaser,
in each case as compared with the comparable period of the preceding
year and with any other period of corresponding length specified by
the Purchaser, except in each case for decreases or increases which
the Offering Circular discloses have occurred or may occur or which
are described in such letter; and
(v) In addition to the examination referred to in their report(s)
included in the Offering Circular and the limited procedures, inspection
of minute books, inquiries and other procedures referred to in paragraphs
(iii) and (iv) above, they have carried out certain specified procedures,
not constituting an audit in accordance with generally accepted auditing
standards, with respect to certain amounts, percentages and financial
information specified by the Purchaser, which are derived from the general
accounting records of the Company and its subsidiaries, which appear in
the Offering Circular, and have compared certain of such amounts,
percentages and financial information with the accounting records of the
Company and its subsidiaries and have found them to be in agreement.
II-A-2
------------------------------------------------
THE SPORTS AUTHORITY, INC.
ISSUER
TO
THE BANK OF NEW YORK,
TRUSTEE
----------------
INDENTURE
Dated as of September 20, 1996
----------------
U.S.$149,500,000
5 1/4% CONVERTIBLE SUBORDINATED NOTES DUE SEPTEMBER 15, 2001
------------------------------------------------
<PAGE>
TABLE OF CONTENTS
-----------
PAGE
RECITALS OF THE COMPANY........................................ 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION...................... 2
SECTION 1.1. Definitions.................................... 2
Act ................................................... 2
Affiliate................................................ 2
Agent Member............................................. 2
Applicable Procedures.................................... 2
Authenticating Agent..................................... 3
Authorized Newspaper..................................... 3
Board of Directors....................................... 3
Board Resolution......................................... 3
Business Day............................................. 3
CEDEL ................................................... 3
Change in Control........................................ 3
Closing Price Per Share.................................. 3
Code ................................................... 4
Commission............................................... 4
Common Stock............................................. 4
common stock............................................. 4
Company.................................................. 4
Company Notice........................................... 4
Company Request" or "Company Order....................... 4
Constituent Person....................................... 4
Conversion Agent......................................... 4
Conversion Price......................................... 5
Conversion Rate.......................................... 5
Corporate Trust Office................................... 5
corporation.............................................. 5
Note: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
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PAGE
Defaulted Interest....................................... 5
Depositary............................................... 5
Dollar" or "U.S.$........................................ 5
DTC ................................................... 5
Euroclear................................................ 5
Event of Default......................................... 5
Exchange Act............................................. 5
Exchange Date............................................ 5
Global Security.......................................... 5
Holder................................................... 5
Indenture................................................ 6
Initial Purchaser........................................ 6
Interest Payment Date.................................... 6
Liquidated Damages....................................... 6
Maturity................................................. 6
Non-electing Share....................................... 6
Notice of Default........................................ 6
Officers' Certificate.................................... 6
Opinion of Counsel....................................... 6
Outstanding.............................................. 6
Paying Agent............................................. 7
Person................................................... 7
Place of Conversion...................................... 7
Place of Payment......................................... 7
Predecessor Security..................................... 8
Purchase Agreement....................................... 8
Record Date.............................................. 8
Record Date Period....................................... 8
Redemption Date.......................................... 8
Redemption Price......................................... 8
Registered Security...................................... 8
Registrable Securities................................... 8
Registration Default..................................... 8
Registration Rights Agreement............................ 8
Regular Record Date...................................... 8
Regulation D Securities.................................. 8
Regulation S............................................. 9
Note: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
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<PAGE>
PAGE
Regulation S Certificate................................. 9
Regulation S Global Security............................. 9
Regulation S Legend...................................... 9
Regulation S Securities.................................. 9
Repurchase Date.......................................... 9
Repurchase Price......................................... 9
Responsible Officer...................................... 9
Restricted Global Security............................... 9
Restricted Period........................................ 9
Restricted Securities.................................... 9
Restricted Securities Certificate........................ 9
Restricted Securities Legend............................. 10
Rule 144A................................................ 10
Rule 144A Information.................................... 10
Rule 144A Securities..................................... 10
Securities............................................... 10
Securities Act........................................... 10
Securities Act Legend.................................... 10
Security Register and Security Registrar................. 10
Senior Indebtedness...................................... 10
Shelf Registration Statement............................. 11
Special Record Date...................................... 11
Stated Maturity.......................................... 11
Subsidiary............................................... 11
Successor Security....................................... 11
Surrender Certificate.................................... 11
Trading Days............................................. 11
Trust Indenture Act...................................... 12
Trustee.................................................. 12
United States............................................ 12
Unrestricted Securities Certificate...................... 12
Vice President........................................... 12
SECTION 1.2. Compliance Certificates and Opinions........... 12
SECTION 1.3. Form of Documents Delivered to the Trustee..... 13
SECTION 1.4. Acts of Holders of Securities.................. 14
SECTION 1.5. Notices, Etc., to Trustee and Company.......... 16
SECTION 1.6. Notice to Holders of Securities; Waiver........ 17
Note: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
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<PAGE>
PAGE
SECTION 1.7. Effect of Headings and Table of Contents....... 17
SECTION 1.8. Successors and Assigns......................... 17
SECTION 1.9. Separability Clause............................ 18
SECTION 1.10. Benefits of Indenture.......................... 18
SECTION 1.11. Governing Law.................................. 18
SECTION 1.12. Legal Holidays................................. 18
SECTION 1.13. Conflict with Trust Indenture Act.............. 19
ARTICLE TWO
SECURITY FORMS.................................... 20
SECTION 2.1. Form Generally................................. 20
SECTION 2.2. Form of Security............................... 21
SECTION 2.4. Form of Certificate of Authentication.......... 37
SECTION 2.5. Form of Conversion Notice...................... 37
ARTICLE THREE
THE SECURITIES.................................... 39
SECTION 3.1. Title and Terms................................ 39
SECTION 3.2. Denominations.................................. 40
SECTION 3.3. Execution, Authentication, Delivery and Dating. 40
SECTION 3.4. Global Securities; Non-Global Securities....... 40
SECTION 3.5. Registration, Registration of Transfer and
Exchange;
Restrictions on Transfer....................... 43
SECTION 3.6. Mutilated, Destroyed, Lost or Stolen Securities 47
SECTION 3.7. Payment of Interest; Interest Rights Preserved. 49
SECTION 3.8. Persons Deemed Owners.......................... 50
SECTION 3.9. Cancellation................................... 50
SECTION 3.10. Computation of Interest........................ 50
SECTION 3.11. CUSIP Numbers.................................. 50
Note: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
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<PAGE>
PAGE
ARTICLE FOUR
SATISFACTION AND DISCHARGE.................... 52
SECTION 4.1. Satisfaction and Discharge of Indenture........ 52
SECTION 4.2. Application of Trust Money..................... 53
ARTICLE FIVE
REMEDIES................................. 54
SECTION 5.1. Events of Default.............................. 54
SECTION 5.2. Acceleration of Maturity; Rescission and
Annulment...................................... 55
SECTION 5.3. Collection of Indebtedness and Suits for
Enforcement
by Trustee................................... 57
SECTION 5.4. Trustee May File Proofs of Claim............... 57
SECTION 5.5. Trustee May Enforce Claims Without Possession of
Securities..................................... 58
SECTION 5.6. Application of Money Collected................. 59
SECTION 5.7. Limitation on Suits............................ 59
SECTION 5.8. Unconditional Right of Holders to Receive
Principal, Premium and Interest and to
Convert........................................ 60
SECTION 5.9. Restoration of Rights and Remedies............. 60
SECTION 5.10. Rights and Remedies Cumulative................. 60
SECTION 5.11. Delay or Omission Not Waiver................... 61
SECTION 5.12. Control by Holders of Securities............... 61
SECTION 5.13. Waiver of Past Defaults........................ 61
SECTION 5.14. Undertaking for Costs.......................... 62
SECTION 5.15. Waiver of Stay, Usury or Extension Laws........ 62
ARTICLE SIX
THE TRUSTEE.............................. 63
Note: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
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<PAGE>
PAGE
SECTION 6.1. Certain Duties and Responsibilities............ 63
SECTION 6.2. Notice of Defaults............................. 64
SECTION 6.3. Certain Rights of Trustee...................... 64
SECTION 6.4. Not Responsible for Recitals or Issuance of
Securities..................................... 65
SECTION 6.5. May Hold Securities, Act as Trustee Under Other
Indentures..................................... 66
SECTION 6.6. Money Held in Trust............................ 66
SECTION 6.7. Compensation and Reimbursement................. 66
SECTION 6.8. Corporate Trustee Required; Eligibility........ 67
SECTION 6.9. Resignation and Removal; Appointment of
Successor...................................... 67
SECTION 6.10. Acceptance of Appointment by Successor......... 69
SECTION 6.11. Merger, Conversion, Consolidation or Succession
to Business.................................... 69
SECTION 6.12. Authenticating Agents.......................... 70
SECTION 6.13. Disqualification; Conflicting Interests........ 71
SECTION 6.14. Preferential Collection of Claims Against
Company........................................ 71
ARTICLE SEVEN
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE............... 72
SECTION 7.1. Company May Consolidate, Etc., Only on Certain
Terms.......................................... 72
SECTION 7.2. Successor Substituted.......................... 73
ARTICLE EIGHT
SUPPLEMENTAL INDENTURES...................... 74
SECTION 8.1. Supplemental Indentures Without Consent of
Holders of Securities.......................... 74
SECTION 8.2. Supplemental Indentures with Consent of Holders of
Securities..................................... 75
SECTION 8.3. Execution of Supplemental Indentures........... 76
Note: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
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<PAGE>
PAGE
SECTION 8.4. Effect of Supplemental Indentures.............. 77
SECTION 8.5. Reference in Securities to Supplemental
Indentures..................................... 77
SECTION 8.6. Notice of Supplemental Indentures.............. 77
ARTICLE NINE
MEETINGS OF HOLDERS OF SECURITIES................ 78
SECTION 9.1. Purposes for Which Meetings May Be Called...... 78
SECTION 9.2. Call, Notice and Place of Meetings............. 78
SECTION 9.3. Persons Entitled to Vote at Meetings........... 78
SECTION 9.4. Quorum; Action................................. 79
SECTION 9.5. Determination of Voting Rights; Conduct and
Adjournment of Meetings........................ 79
SECTION 9.6. Counting Votes and Recording Action of Meetings 80
ARTICLE TEN
COVENANTS..................................... 82
SECTION 10.1. Payment of Principal, Premium and Interest..... 82
SECTION 10.2. Maintenance of Offices or Agencies............. 82
SECTION 10.3. Money for Security Payments To Be Held in Trust 83
SECTION 10.4. Existence...................................... 84
SECTION 10.5. Maintenance of Properties...................... 84
SECTION 10.6. Payment of Taxes and Other Claims.............. 85
SECTION 10.7. Registration and Listing....................... 85
SECTION 10.8. Statement by Officers as to Default............ 85
SECTION 10.09. Delivery of Certain Information................ 86
SECTION 10.10. Resale of Certain Securities; Reporting Issuer. 86
SECTION 10.11. Registration Rights............................ 87
SECTION 10.12. Waiver of Certain Covenants.................... 89
ARTICLE ELEVEN
Note: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
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<PAGE>
PAGE
REDEMPTION OF SECURITIES..................... 90
SECTION 11.1. Right of Redemption............................ 90
SECTION 11.2. Applicability of Article....................... 90
SECTION 11.3. Election to Redeem; Notice to Trustee.......... 90
SECTION 11.4. Selection by Trustee of Securities To Be
Redeemed....................................... 90
SECTION 11.5. Notice of Redemption........................... 91
SECTION 11.6. Deposit of Redemption Price.................... 92
SECTION 11.7. Securities Payable on Redemption Date.......... 92
SECTION 11.8. Securities Redeemed in Part.................... 92
ARTICLE TWELVE
CONVERSION OF SECURITIES..................... 94
SECTION 12.1. Conversion Privilege and Conversion Rate....... 94
SECTION 12.2. Exercise of Conversion Privilege............... 94
SECTION 12.3. Fractions of Shares............................ 96
SECTION 12.4. Adjustment of Conversion Rate.................. 97
SECTION 12.5. Notice of Adjustments of Conversion Rate.......101
SECTION 12.6. Notice of Certain Corporate Action.............102
SECTION 12.7. Company to Reserve Common Stock................103
SECTION 12.8. Taxes on Conversions...........................103
SECTION 12.9. Covenant as to Common Stock....................103
SECTION 12.10. Cancellation of Converted Securities...........104
SECTION 12.11. Provision in Case of Consolidation, Merger or
Sale of
Assets.........................................104
SECTION 12.12. Responsibility of Trustee for Conversion
Provisions.....................................105
ARTICLE THIRTEEN
SUBORDINATION OF SECURITIES...................106
SECTION 13.1. Securities Subordinate to Senior Indebtedness..106
Note: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
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PAGE
SECTION 13.2. Payment Over of Proceeds Upon Dissolution,
Etc............................................106
SECTION 13.3. No Payment When Senior Indebtedness in Default.107
SECTION 13.4. Payment Permitted If No Default................108
SECTION 13.5. Subrogation to Rights of Holders of Senior
Indebtedness...................................108
SECTION 13.6. Provisions Solely to Define Relative Rights....109
SECTION 13.7. Trustee to Effectuate Subordination............109
SECTION 13.8. No Waiver of Subordination Provisions..........109
SECTION 13.9. Notice to Trustee..............................110
SECTION 13.10. Reliance on Judicial Order or Certificate of
Liquidating
Agent..........................................111
SECTION 13.11. Trustee Not Fiduciary for Holders of Senior
Indebtedness...................................111
SECTION 13.12. Reliance by Holders of Senior Indebtedness on
Subordination Provisions.......................111
SECTION 13.13. Rights of Trustee as Holder of Senior
Indebtedness;
Preservation of Trustee's Rights...............112
SECTION 13.14. Article Applicable to Paying Agents............112
SECTION 13.15. Certain Conversions and Repurchases Deemed
Payment........................................112
ARTICLE FOURTEEN
REPURCHASE OF SECURITIES AT THE OPTION OF THE
HOLDER UPON A CHANGE IN CONTROL.................113
SECTION 14.1. Right to Require Repurchase....................113
SECTION 14.2. Conditions to the Company's Election to
Pay the Repurchase Price in Common Stock.......114
SECTION 14.3. Notices; Method of Exercising Repurchase Right,
Etc............................................115
SECTION 14.4. Certain Definitions............................118
ARTICLE FIFTEEN
Note: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
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Page
HOLDERS LISTS AND REPORTS
BY TRUSTEE AND COMPANY; NON-RECOURSE...............120
SECTION 15.1. Company to Furnish Trustee Names and Addresses
of
Holders........................................120
SECTION 15.2. Preservation of Information....................120
SECTION 15.3. No Recourse Against Others.....................121
SECTION 15.4. Reports by Trustee.............................121
SECTION 15.5. Reports by Company.............................121
SIGNATURES
ACKNOWLEDGMENTS
ANNEX A............................................................ A-1
ANNEX B............................................................ B-1
ANNEX C............................................................ C-1
ANNEX D............................................................ D-1
Note: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
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<PAGE>
INDENTURE, dated as of September 20, 1996, between The Sports
Authority, Inc., a corporation duly organized and existing under the laws of the
State of Delaware, having its principal office at 3383 N. State Road 7, Fort
Lauderdale, Florida 33319 (herein called the "Company"), and The Bank of New
York, a New York banking corporation, as Trustee hereunder (herein called the
"Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an issue of its 5
1/4% Convertible Subordinated Notes due September 15, 2001 (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 the Securities are
executed by the Company and authenticated and delivered hereunder, 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. Further, all
things necessary to duly authorize the issuance of the Common Stock of the
Company issuable upon the conversion of the Securities, and to duly reserve for
issuance the number of shares of Common Stock issuable upon such conversion,
have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Securities, as follows:
<PAGE>
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.1. 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 accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles in the United States, and, except as otherwise herein expressly
provided, the term "generally accepted accounting principles" with respect
to any computation required or permitted hereunder shall mean such
accounting principles as are generally accepted at the date of such
computation; and
(3) 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.
"Act", when used with respect to any Holder of a Security, has the
meaning specified in Section 1.4.
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control", when used with respect to any specified Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agent Member" means any member of, or participant in, the
Depositary.
"Applicable Procedures" means, with respect to any transfer or
transaction involving a Global Security or beneficial interest therein, the
rules and procedures of Euroclear and CEDEL, and of the Depositary for such
Security, in each case to the extent applicable to such transaction and as in
effect from time to time.
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"Authenticating Agent" means any Person authorized pursuant to
Section 6.12 to act on behalf of the Trustee to authenticate Securities.
"Authorized Newspaper" means a newspaper in the English language,
customarily published on each Monday, Tuesday, Wednesday, Thursday and Friday,
whether or not published on Saturdays, Sundays or holidays, and of general
circulation in a Place of Payment.
"Board of Directors" means either the board of directors of the
Company or any duly authorized committee of that board.
"Board Resolution" means a resolution duly adopted by the Board of
Directors, a copy of which, 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, shall have been
delivered to the Trustee.
"Business Day", when used with respect to any Place of Payment,
Place of Conversion or any other place, as the case may be, means each Monday,
Tuesday, Wednesday, Thursday and Friday which is not a day on which banking
institutions in such Place of Payment, Place of Conversion or other place, as
the case may be, are authorized or obligated by law or executive order to close;
provided, however, that a day on which banking institutions in New York, New
York are authorized or obligated by law or executive order to close shall not be
a Business Day for purposes of Section 11.6 or Section 13.9.
"CEDEL" means Cedel Bank, S.A. (or any successor securities clearing
agency).
"Change in Control" has the meaning specified in Section 14.4(b).
"Closing Price Per Share" means, with respect to the Common Stock of
the Company, for any day, (i) the closing price regular way on the New York
Stock Exchange or, (ii) if the Common Stock is not listed on the New York Stock
Exchange, the closing bid price regular way on the Nasdaq National Market, or
the reported last sales price regular way per share 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 principal national securities
exchange on which the Common Stock is listed or admitted to trading, or (iii) if
the Common Stock is not quoted on the Nasdaq National Market or listed or
admitted to trading on any national securities exchange, the average of the
closing bid prices in the over-the-counter market as furnished by any New York
Stock Exchange member firm selected from time to time by the Company for that
purpose.
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<PAGE>
"Code" has the meaning specified in Section 2.1.
"Commission" means the United States Securities and Exchange
Commission, as from time to time constituted, created under the Exchange Act,
or, if at any time after the execution of this instrument such Commission is not
existing and performing the duties now assigned to it under the Trust Indenture
Act, then the body performing such duties at such time.
"Common Stock" means the common stock, par value $0.01 per share, of
the Company authorized at the date of this instrument as originally executed.
Subject to the provisions of Section 12.11, shares issuable on conversion or
repurchase of Securities shall include only shares of Common Stock or shares of
any class or classes of common stock resulting from any reclassification or
reclassifications thereof; PROVIDED, HOWEVER, that if at any time there shall be
more than one such resulting class, the shares so issuable on conversion of
Securities shall include shares of all such classes, and 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.
"common stock" includes any stock of any class of capital stock
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 issuer thereof and which is not subject to redemption by the issuer thereof.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"Company Notice" has the meaning specified in Section 14.3.
"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 Vice
Chairman of the Board, its Chief Executive Officer, its President or a Vice
President, and by its principal financial officer, Treasurer, an Assistant
Treasurer, its Secretary or an Assistant Secretary, and delivered to the
Trustee.
"Constituent Person" has the meaning specified in Section 12.11.
"Conversion Agent" means any Person authorized by the Company to
convert Securities in accordance with Article Twelve. The Company has initially
-4-
<PAGE>
appointed the Trustee as its Conversion Agent in the Borough of Manhattan, The
City of New York.
"Conversion Price" has the meaning specified in Section 14.4(c).
"Conversion Rate" has the meaning specified in Section 12.1.
"Corporate Trust Office" means the office of the Trustee at which at
any particular time its corporate trust business shall be principally
administered (which at the date of this Indenture is located at 101 Barclay
Street, Floor 21 W, New York, New York 10286, Attention: Corporate Trust Trustee
Administration.
"corporation" means a corporation, company, association, joint-stock
company or business trust.
"Defaulted Interest" has the meaning specified in Section 3.7.
"Depositary" means, with respect to any Registered Securities, a
clearing agency that is registered as such under the Exchange Act and is
designated by the Company to act as Depositary for such Registered Securities
(or any successor securities clearing agency so registered).
"Dollar" or "U.S.$" means a dollar or other equivalent unit in such
coin or currency of the United States as at the time shall be legal tender for
the payment of public and private debts.
"DTC" means The Depository Trust Company, a New York corporation.
"Euroclear" means the Euroclear Clearance System (or any successor
securities clearing agency).
"Event of Default" has the meaning specified in Section 5.1.
"Exchange Act" means the United States Securities Exchange Act of
1934 (or any successor statute), as amended from time to time.
"Exchange Date" means the date and day on which the Restricted
Period expires.
"Global Security" means a Registered Security that is registered in
the Security Register in the name of a Depositary or a nominee thereof.
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<PAGE>
"Holder" means the Person in whose name the 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,
including, for all purposes of this instrument and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this instrument and any such supplemental indenture,
respectively.
"Initial Purchaser" means Goldman, Sachs & Co. and Goldman Sachs
International, collectively.
"Interest Payment Date" means the Stated Maturity of an installment
of interest on the Securities.
"Liquidated Damages" has the meaning specified in Section 10.11.
"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, exercise of the repurchase right set forth in
Article Fourteen or otherwise.
"Non-electing Share" has the meaning specified in Section 12.11.
"Notice of Default" has the meaning specified in Section 5.1.
"Officers' Certificate" means a certificate signed by the Chairman
of the Board, a Vice Chairman of the Board, the Chief Executive Officer, the
President or a Vice President and by the principal financial officer, 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 and who shall be 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 this Indenture, EXCEPT:
(i) Securities theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
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<PAGE>
(ii) Securities for the payment or redemption of which 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 Holders of such Securities, 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 3.6 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 Holders of the requisite
principal amount of Outstanding Securities are present at a meeting of Holders
of Securities for quorum purposes or have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company or any other obligor upon the Securities or any Affiliate of the
Company or such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such determination as to the presence of a quorum or upon
any such request, demand, authorization, direction, notice, consent or waiver,
only Securities which a Responsible Officer of the Trustee actually 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 act with respect to such
Securities and that the pledgee is not the Company or any other obligor upon the
Securities or any Affiliate of the Company or such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of or interest on any Securities on behalf of the Company and, except
as otherwise specifically set forth herein, such term shall include the Company
if it shall act as its own Paying Agent. The Company has initially appointed the
Trustee as its Paying Agent in the Borough of Manhattan, The City of New York.
"Person" means any individual, corporation, limited liability
company, partnership, joint venture, trust, estate, unincorporated organization
or government or any agency or political subdivision thereof.
"Place of Conversion" has the meaning specified in Section 3.1.
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"Place of Payment" has the meaning specified in Section 3.1.
"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 3.6 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.
"Purchase Agreement" means the Purchase Agreement, dated as of
September 17, 1996, between the Company and the Initial Purchaser, as such
agreement may be amended from time to time.
"Record Date" means any Regular Record Date or Special Record Date.
"Record Date Period" means the period from the close of business of
any Regular Record Date next preceding any Interest Payment Date to the opening
of business on such Interest Payment Date.
"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.
"Registered Security" means any Security issued in substantially the
form set forth in Section 2.2 and registered in the Security Register. A Global
Security is a Registered Security.
"Registrable Securities" has the meaning specified in Section 10.11.
"Registration Default" has the meaning specified in Section 10.11.
"Registration Rights Agreement" has the meaning specified in Section
2.2.
"Regular Record Date" for interest payable in respect of any
Registered Security on any Interest Payment Date means the March 1 or September
1 (whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date.
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<PAGE>
"Regulation D Securities" means the Securities sold by the Initial
Purchaser in the initial offering contemplated by the Purchase Agreement in
reliance on an exemption from the registration requirements of the Securities
Act other than Rule 144A and Regulation S.
"Regulation S" means Regulation S under the Securities Act (or any
successor provision), as it may be amended from time to time.
"Regulation S Certificate" means a certificate substantially in the
form set forth in Annex A.
"Regulation S Global Security" has the meaning specified in Section
2.1.
"Regulation S Legend" means a legend substantially in the form of
the legend required in the form of Security set forth in Section 2.2 to be
placed upon a Regulation S Global Security.
"Regulation S Securities" means all Securities required pursuant to
Section 3.5(c) to bear a Regulation S Legend. Such term includes the Regulation
S Global Security.
"Repurchase Date" has the meaning specified in Section 14.1.
"Repurchase Price" has the meaning specified in Section 14.1.
"Responsible Officer", when used with respect to the Trustee, means
any officer within the Corporate Trust Office of the Trustee including without
limitation any vice president, assistant vice president, assistant treasurer,
corporate trust officer or other employee of the Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his knowledge and familiarity
with the particular subject.
"Restricted Global Security" has the meaning specified in Section
2.1.
"Restricted Period" means the period of 41 consecutive days
beginning on and including the later of (i) the day on which Securities are
first offered to persons other than distributors (as defined in Regulation S) in
reliance on Regulation S and (ii) the last original issuance date of the
Securities.
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"Restricted Securities" means all Securities required pursuant to
Section 3.5(c) to bear any Restricted Securities Legend. Such term includes the
Restricted Global Security.
"Restricted Securities Certificate" means a certificate
substantially in the form set forth in Annex B.
"Restricted Securities Legend" means, collectively, the legends
substantially in the forms of the legends required in the form of Security set
forth in Section 2.2 to be placed upon each Restricted Security.
"Rule 144A" means Rule 144A under the Securities Act (or any
successor provision), as it may be amended from time to time.
"Rule 144A Information" has the meaning specified in Section 10.09.
"Rule 144A Securities" means the Securities purchased by the Initial
Purchaser from the Company pursuant to the Purchase Agreement and resold by the
Initial Purchaser, other than the Regulation D Securities and the Regulation S
Securities.
"Securities" has the meaning ascribed to it in the first paragraph
under the caption "Recitals of the Company".
"Securities Act" means the United States Securities Act of 1933 (or
any successor statute), as amended from time to time.
"Securities Act Legend" means a Restricted Securities Legend or a
Regulation S Legend.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 3.5.
"Senior Indebtedness" means the principal of (and premium, if any)
and interest (including all interest accruing subsequent to the commencement of
any bankruptcy or similar proceeding, whether or not a claim for post-petition
interest is allowable as a claim in any such proceeding) on, and all fees and
other amounts payable in connection with, the following, whether absolute or
contingent, secured or unsecured, due or to become due, outstanding on the date
of the Indenture or thereafter created, incurred or assumed: (a) indebtedness of
the Company evidenced by credit or loan agreements, notes, bonds, debentures, or
other written obligations, (b) all obligations of the Company for money
borrowed, (c) all obligations of the Company evidenced by a note or similar
instrument given in connection with the
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acquisition of any businesses, properties or assets of any kind, (d) obligations
of the Company as lessee under leases capitalized on the balance sheet of the
lessee under generally accepted accounting principles, (e) obligations of the
Company under interest rate and currency swaps, caps, floors, collars, hedge
agreements, forward contracts, or similar agreements or arrangements intended to
protect the Company against fluctuations in interest or currency exchange rates
or commodity prices, (f) all reimbursement obligations of the Company with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of the Company, (g) all obligations of the Company issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business), (h) all obligations of the type referred to in clauses (a) through
(g) above of another Person and all dividends of another Person, the payment of
which, in either case, the Company has assumed or guaranteed, or for which the
Company is responsible or liable, directly or indirectly, jointly or severally,
as obligor, guarantor or otherwise, or which is secured by a lien on property of
the Company, and (i) renewals, extensions, modifications, replacements,
restatements and refundings of, or any indebtedness or obligation issued in
exchange for, any such indebtedness or obligation described in clauses (a)
through (h) of this paragraph; provided, however, that Senior Indebtedness shall
not include the Securities or any such indebtedness or obligation if the terms
of such indebtedness or obligation (or the terms of the instrument under which,
or pursuant to which it is issued) provides that such indebtedness or obligation
is not superior in right of payment to the Securities.
"Shelf Registration Statement" has the meaning specified in Section
10.11.
"Special Record Date" for the payment of any Defaulted Interest
means a date fixed by the Company pursuant to Section 3.7.
"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 or
other similar interests in the corporation which ordinarily has or have voting
power for the election of directors, or persons performing similar functions,
whether at all times or only so long as no senior class of stock or other
interests has or have such voting power by reason of any contingency.
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"Successor Security" of any particular Security means every Security
issued after, and 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 3.6 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.
"Surrender Certificate" means a certificate substantially in the
form set forth in Annex D.
"Trading Days" means (i) if the Common Stock is listed or admitted
for trading on any national securities exchange, days on which such national
securities exchange is open for business; (ii) if the Common Stock is quoted on
the Nasdaq National Market or any other system of automated dissemination of
quotations of securities prices, days on which trades may be effected through
such system; or (iii) if the Common Stock is not listed or admitted for trading
on any national securities exchange or quoted on the Nasdaq National Market or
any other system of automated dissemination of quotation of securities prices,
days on which the Common Stock is traded regular way in the over-the-counter
market and for which a closing bid and a closing asked price for the Common
Stock are available.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
force at the date as of which this instrument was executed; PROVIDED, HOWEVER,
that in the event the Trust Indenture Act of 1939 is amended after such date,
"Trust Indenture Act" means, to the extent required by any such amendment, the
Trust Indenture Act of 1939 as so amended.
"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.
"United States" means the United States of America (including the
States and the District of Columbia), its territories, its possessions and other
areas subject to its jurisdiction (its "possessions" including Puerto Rico, the
U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana
Islands).
"Unrestricted Securities Certificate" means a certificate
substantially in the form set forth in Annex C.
"Vice President", when used with respect to the Company, means any
vice president, whether or not designated by a number or a word or words added
before or after the title "vice president".
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SECTION 1.2 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, if required by the Trust Indenture Act, 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 specifically 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 (including certificates
provided for in Section 10.8) 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 statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of 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 1.3. FORM OF DOCUMENTS DELIVERED TO THE 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.
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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 such 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 or any other Person
stating that the information with respect to such factual matters is in the
possession of the Company or such other Person, 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 1.4. ACTS OF HOLDERS OF SECURITIES.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided or permitted by this Indenture to be given or
taken by Holders of Securities may be embodied in and evidenced by (1) one or
more instruments of substantially similar tenor signed by such Holders in person
or by an agent or proxy duly appointed in writing by such Holders or (2) the
record of Holders of Securities voting in favor thereof, either in person or by
proxies duly appointed in writing, at any meeting of Holders of Securities duly
called and held in accordance with the provisions of Article Nine. Such action
shall become effective when such instrument or instruments or record is
delivered to the Trustee and, where it is hereby expressly required, to the
Company. The Trustee shall promptly deliver to the Company copies of all such
instruments and records delivered to the Trustee. Such instrument or instruments
and record (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Holders of Securities signing such
instrument or instruments and so voting at such meeting. Proof of execution of
any such instrument or of a writing appointing any such agent or proxy, or of
the holding by any Person of a Security, shall be sufficient for any purpose of
this Indenture and (subject to Section 6.1) conclusive in favor of the Trustee
and the Company if made in the manner provided in this Section. The record of
any meeting of Holders of Securities shall be proved in the manner provided in
Section 9.6.
(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
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acknowledgements 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.
(c) The principal amount and serial number of any Registered
Security held by any Person, and the date of his holding the same, shall be
proved by the Security Register.
(d) The fact and date of execution of any such instrument or writing
and the authority of the Person executing the same may also be proved in any
other manner which the Trustee deems sufficient; and the Trustee may in any
instance require further proof with respect to any of the matters referred to in
this Section 1.4.
(e) The Company may set any day as the record date for the purpose
of determining the Holders entitled to give or take any request, demand,
authorization, direction, notice, consent, waiver or other action, or to vote on
any action, authorized or permitted by this Indenture to be given or taken by
Holders. Promptly and in any case not later than ten days after setting a record
date, the Company shall notify the Trustee and the Holders of such record date.
If not set by the Company prior to the first solicitation of a Holder made by
any Person in respect of any such action, or, in the case of any such vote,
prior to such vote, the record date for any such action or vote shall be the
30th day (or, if later, the date of the most recent list of Holders required to
be provided pursuant to Section 15.1) prior to such first solicitation or vote,
as the case may be. With regard to any record date, the Holders on such date (or
their duly appointed agents or proxies), and only such Persons, shall be
entitled to give or take, or vote on, the relevant action, whether or not such
Holders remain Holders after such record date. Notwithstanding the foregoing,
the Company shall not set a record date for, and the provisions of this
paragraph shall not apply with respect to, any notice, declaration or direction
referred to in the next paragraph.
Upon receipt by the Trustee from any Holder of (i) any notice of
default or breach referred to in Section 5.1(4), if such default or breach has
occurred and is continuing and the Trustee shall not have given such a notice to
the Company, (ii) any declaration of acceleration referred to in Section 5.2, if
an Event of Default has occurred and is continuing and the Trustee shall not
have given such a declaration to the Company, or (iii) any direction referred to
in Section 5.12, if the Trustee shall not have taken the action specified in
such direction, then, with respect to clauses (ii) and (iii), a record date
shall automatically and without any action by the Company or the Trustee be set
for determining the Holders entitled to join in such declaration or direction,
which record date shall be the close of business on the
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tenth day (or, if such day is not a Business Day, the first Business Day
thereafter) following the day on which the Trustee receives such declaration or
direction, and, with respect to clause (i), the Trustee may set any day as a
record date for the purpose of determining the Holders entitled to join in such
notice of default. Promptly after such receipt by the Trustee of any such
declaration or direction referred to in clause (ii) or (iii), and promptly after
setting any record date with respect to clause (i), and as soon as practicable
thereafter, the Trustee shall notify the Company and the Holders of any such
record date so fixed. The Holders on such record date (or their duly appointed
agents or proxies), and only such Persons, shall be entitled to join in such
notice, declaration or direction, whether or not such Holders remain Holders
after such record date; PROVIDED that, unless such notice, declaration or
direction shall have become effective by virtue of Holders of the requisite
principal amount of Securities on such record date (or their duly appointed
agents or proxies) having joined therein on or prior to the 90th day after such
record date, such notice, declaration or direction shall automatically and
without any action by any Person be cancelled and of no further effect. Nothing
in this paragraph shall be construed to prevent a Holder (or a duly appointed
agent or proxy thereof) from giving, before or after the expiration of such
90-day period, a notice, declaration or direction contrary to or different from,
or, after the expiration of such period, identical to, the notice, declaration
or direction to which such record date relates, in which event a new record date
in respect thereof shall be set pursuant to this paragraph. In addition, nothing
in this paragraph shall be construed to render ineffective any notice,
declaration or direction of the type referred to in this paragraph given at any
time to the Trustee and the Company by Holders (or their duly appointed agents
or proxies) of the requisite principal amount of Securities on the date such
notice, declaration or direction is so given.
(f) Except as provided in Sections 5.12 and 5.13, any request,
demand, authorization, direction, notice, consent, election, waiver or other Act
of the Holder of any Security shall bind every future Holder of the same
Security and the Holder 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.
(g) The provisions of this Section 1.4 are subject to the provisions
of Section 9.5.
SECTION 1.5. NOTICES, ETC., TO TRUSTEE AND COMPANY.
Any request, demand, authorization, direction, notice, consent,
election, waiver or other Act of Holders of Securities or other document
provided or permitted by this Indenture to be made upon, given or furnished to,
or filed with,
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(1) the Trustee by any Holder of Securities or by the Company shall
be sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with the Trustee and received at its Corporate
Trust Office, Attention: Corporate Trust Department, and shall be deemed
given when received.
(2) the Company by the Trustee or by any Holder of Securities shall
be sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing, mailed, first-class postage prepaid, or
telecopied and confirmed by mail, first-class postage prepaid, or
delivered by hand or overnight courier, addressed to the Company at 3383
N. State Road 7, Fort Lauderdale, Florida 33319, Attention: Chief
Financial Officer (telecopy no.: (954) 677- 6094, and General Counsel
(telecopy no.: (954) 730-4288), or at any other address previously
furnished in writing to the Trustee by the Company, and shall be deemed
given when received.
Any request, demand, authorization, direction, notice, consent,
election or waiver required or permitted under this Indenture shall be in the
English language, except that any published notice may be in an official
language of the country of publication.
SECTION 1.6. NOTICE TO HOLDERS OF SECURITIES; WAIVER.
Except as otherwise expressly provided herein, where this Indenture
provides for notice to Holders of Securities of any event, such notice shall be
sufficiently given to Holders if in writing and mailed, first-class postage
prepaid, to each Holder of a Security affected by such event, at the address of
such Holder as it appears in the Security Register, not earlier than the
earliest date and not later than the latest date prescribed for the giving of
such notice.
Neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular Holder of a Registered Security shall affect
the sufficiency of such notice with respect to other Holders of Registered
Securities. 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 to Holders of Registered Securities as shall be made with
the approval of the Trustee, which approval shall not be unreasonably withheld,
shall constitute a sufficient notification to such Holders for every purpose
hereunder.
Such notice shall be deemed to have been given when such notice is
mailed.
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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 Holders of Securities 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.
SECTION 1.7. 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 1.8. 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 1.9. SEPARABILITY CLAUSE.
In case any provision in this Indenture or 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 1.10. BENEFITS OF INDENTURE.
Except as provided in the next sentence, nothing in this Indenture
or in the Securities, express or implied, shall give to any Person, other than
the parties hereto and their successors and assigns hereunder and the Holders of
Securities, any benefit or legal or equitable right, remedy or claim under this
Indenture. The provisions of Article Thirteen are intended to be for the benefit
of, and shall be enforceable directly by, the holders of Senior Indebtedness.
SECTION 1.11. GOVERNING LAW.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, THE UNITED STATES OF
AMERICA, WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF.
SECTION 1.12. LEGAL HOLIDAYS.
In any case where any Interest Payment Date, Redemption Date,
Repurchase Date or Stated Maturity of any Security or the last day on which a
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Holder of a Security has a right to convert his Security shall not be a Business
Day at a Place of Payment or Place of Conversion, as the case may be, then
(notwithstanding any other provision of this Indenture or of the Securities)
payment of principal of, premium, if any, or interest on, or the payment of the
Repurchase Price (whether the same is payable in cash or in shares of Common
Stock) with respect to, or delivery for conversion of, such Security need not be
made at such Place of Payment or Place of Conversion, as the case may be, on or
by such day, but may be made on or by the next succeeding Business Day at such
Place of Payment or Place of Conversion, as the case may be, with the same force
and effect as if made on the Interest Payment Date, Redemption Date or
Repurchase Date, or at the Stated Maturity or by such last day for conversion;
PROVIDED, HOWEVER, that in the case that payment is made on such succeeding
Business Day, no interest shall accrue on the amount so payable for the period
from and after such Interest Payment Date, Redemption Date, Repurchase Date,
Stated Maturity or last day for conversion, as the case may be.
SECTION 1.13. CONFLICT WITH TRUST INDENTURE ACT.
If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act that is required under such Act to be a
part of and govern this Indenture, the latter provision shall control. If any
provision of this Indenture modifies or excludes any provision of the Trust
Indenture Act that may be so modified or excluded, the latter provision shall be
deemed to apply to this Indenture as so modified or to be excluded, as the case
may be. Until such time as this Indenture shall be qualified under the Trust
Indenture Act, this Indenture, the Company and the Trustee shall be deemed for
all purposes hereof to be subject to and governed by the Trust Indenture Act to
the same extent as would be the case if this Indenture were so qualified on the
date hereof.
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ARTICLE TWO
SECURITY FORMS
SECTION 2.1. FORM GENERALLY.
The Securities shall be in substantially the form 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
securities exchange or the Internal Revenue Code of 1986, as amended, and
regulations thereunder (the "Code"), or as may, consistently herewith, be
determined by the officers executing such Securities, as evidenced by their
execution thereof. All Securities shall be Registered Securities.
The Trustee's certificates of authentication shall be in
substantially the form set forth in Section 2.4.
Conversion notices shall be in substantially the form set forth in
Section 2.5.
Repurchase notices shall be substantially in the form set forth in
Section 2.2.
The Securities shall be printed, lithographed, typewritten or
engraved or produced by any combination of these methods on steel engraved
borders if so required by any securities exchange upon which the Securities may
be listed, or may be produced in any other manner permitted by the rules of any
such securities exchange, or, if the Securities are not listed on a securities
exchange, in any other manner approved by the Company, all as determined by the
officers executing such Securities, as evidenced by their execution thereof.
Upon their original issuance, Rule 144A Securities shall be issued
in the form of one or more Global Securities without interest coupons and shall
be registered in the name of DTC, as Depositary, or its nominee and deposited
with the Trustee, as custodian for DTC, for credit by DTC to the respective
accounts of beneficial owners of the Securities represented thereby (or such
other accounts as they may direct). Such Global Security, together with its
Successor Securities which are Global Securities other than the Regulation S
Global Security, are collectively herein called the "Restricted Global
Security".
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Upon their original issuance, Regulation S Securities shall be
issued in the form of one or more Global Securities without interest coupons and
shall be registered in the name of DTC, as Depositary, or its nominee and
deposited with the Trustee, as custodian for DTC for credit to the respective
accounts at DTC of the depositaries for Morgan Guaranty Trust Company of New
York, Brussels office, as operator of Euroclear, or CEDEL. Such Global Security,
together with its Successor Securities which are Global Securities other than
the Restricted Global Security, are collectively herein called the "Regulation S
Global Security".
Upon their original issuance, Regulation D Securities shall be
issued as Registered Securities but not in the form of a Global Security or in
any other form intended to facilitate book-entry trading in beneficial interests
in such Securities.
SECTION 2.2. FORM OF SECURITY
[FORM OF FACE]
[THE FOLLOWING LEGEND SHALL APPEAR ON THE FACE OF EACH RESTRICTED SECURITY OTHER
THAN ANY GLOBAL RESTRICTED SECURITY:
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES
ACT OF 1933 (THE "SECURITIES ACT"), AND THIS NOTE AND ANY SHARES OF COMMON STOCK
ISSUABLE UPON ITS CONVERSION MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT (A) BY THE INITIAL INVESTOR (I) TO A PERSON WHO THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A, (II) IN AN OFFSHORE TRANSACTION COMPLYING WITH THE PROVISIONS OF RULE 903
OR 904 OF REGULATION S UNDER THE SECURITIES ACT, (III) PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE), OR (IV) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, AND (B) BY SUBSEQUENT INVESTORS AS SET FORTH IN (A) ABOVE OR TO
AN INSTITUTION THAT IS AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE
501(a)(1), (2), (3) or (7) UNDER THE SECURITIES ACT IN A TRANSACTION EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, AND IN EACH OF CASES (A) OR
(B) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF THE STATES OF THE
UNITED STATES AND OTHER JURISDICTIONS.
[THE FOLLOWING LEGEND SHALL APPEAR ON THE FACE OF EACH RESTRICTED GLOBAL
SECURITY:
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THE NOTES EVIDENCED BY THIS GLOBAL NOTE HAVE NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND SUCH
NOTES AND ANY SHARES OF COMMON STOCK ISSUABLE UPON THEIR CONVERSION MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) BY THE INITIAL
INVESTOR (I) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) IN AN OFFSHORE
TRANSACTION COMPLYING WITH THE PROVISIONS OF RULE 903 OR 904 OF REGULATION S
UNDER THE SECURITIES ACT, (III) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), OR (IV)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND
(B) BY SUBSEQUENT INVESTORS AS SET FOR IN (A) ABOVE OR TO AN INSTITUTION THAT IS
AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) or (7)
UNDER THE SECURITIES ACT IN A TRANSACTION EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, AND IN EACH OF CASES (A) OR (B) IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED
STATES AND OTHER JURISDICTIONS.
[THE FOLLOWING LEGEND SHALL APPEAR ON THE FACE OF EACH GLOBAL SECURITY:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITARY OR A NOMINEE OF THE DEPOSITARY, WHICH MAY BE TREATED BY THE COMPANY,
THE TRUSTEE AND ANY AGENT THEREOF AS OWNER AND HOLDER OF THIS SECURITY FOR ALL
PURPOSES.]
[THE FOLLOWING LEGEND SHALL APPEAR ON THE FACE OF EACH GLOBAL SECURITY FOR WHICH
THE DEPOSITORY TRUST COMPANY IS TO BE THE DEPOSITARY:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY
OR ITS AGENT FOR REGISTRATION OR TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR REGISTERED
SECURITIES IN DEFINITIVE REGISTERED FORM IN THE LIMITED
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<PAGE>
CIRCUMSTANCES REFERRED TO IN THE INDENTURE, THIS GLOBAL SECURITY MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY
OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR
A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.]
[THE FOLLOWING LEGEND SHALL APPEAR ON THE FACE OF EACH REGULATION S GLOBAL
SECURITY:
THE SECURITIES EVIDENCED BY THIS GLOBAL SECURITY (OR ITS
PREDECESSOR) HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED
OR OTHERWISE TRANSFERRED IN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, ANY U.S. PERSON EXCEPT PURSUANT TO AN AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ALL APPLICABLE STATE
SECURITIES LAWS. TERMS USED ABOVE HAVE THE MEANINGS GIVEN THEM IN REGULATION S
UNDER THE SECURITIES ACT.]
THE SPORTS AUTHORITY, INC.
5 1/4% CONVERTIBLE SUBORDINATED NOTE
DUE SEPTEMBER 15, 2001
No. _____________ U.S.$_____
[IF RESTRICTED GLOBAL SECURITY - CUSIP NO. 849176AA0]
[IF REGULATION S GLOBAL SECURITY - CUSIP NO. U84607AA5]
[IF REGULATION D SECURITY - CUSIP NO. - 849176AB8]
THE SPORTS AUTHORITY, INC., a corporation duly organized and
existing under the laws of the State of Delaware (herein called the "Company",
which term includes any successor Person under the Indenture referred to on the
reverse hereof), for value received, hereby promises to pay to _______________,
or registered assigns, the principal sum of _____________ United States Dollars
(U.S.$ _____) [IF THIS SECURITY IS A GLOBAL SECURITY, THEN INSERT -- (which
principal amount may from time to time be increased or decreased to such other
principal amounts (which, taken together with the principal amounts of all other
Outstanding Securities, shall not exceed $149,500,000 in the aggregate at any
time) by adjustments made on the records of the Trustee hereinafter referred to
in accordance with the Indenture)] on September 15, 2001 and to pay interest
thereon, from September 20, 1996, or from the most recent Interest Payment Date
(as defined below) to which interest has
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been paid or duly provided for, semi-annually in arrears on March 15 and
September 15 in each year (each, an "Interest Payment Date"), commencing March
15, 1997, at the rate of 5 1/4% per annum, until the principal hereof is due,
and at the rate of 5 1/4% per annum on any overdue principal and premium, if
any, and, to the extent permitted by law, on any overdue interest. The interest
so payable, and punctually paid or duly provided for, on any Interest Payment
Date will, as provided in the Indenture, be paid to the Person in whose name
this Security (or one or more Predecessor Securities) is registered at the close
of business on the Regular Record Date for such interest, which shall be the
March 1 or September 1 (whether or not a Business Day), as the case may be, next
preceding such Interest Payment Date. Except as otherwise provided in the
Indenture, 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 Security (or one or more
Predecessor Securities) is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Company, notice whereof shall be given to Holders of Registered Securities 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 requirements of any securities
exchange on which the Securities may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in the Indenture. Payments
of principal shall be made upon the surrender of this Security at the option of
the Holder at the Corporate Trust Office of the Trustee, or at such other office
or agency of the Company as may be designated by it for such purpose in the
Borough of Manhattan, The City of New York, in such coin or currency of the
United States of America as at the time of payment shall be legal tender for the
payment of public and private debts, or at such other offices or agencies as the
Company may designate, by United States Dollar check drawn on, or wire transfer
to, a United States Dollar account (such a wire transfer to be made only to a
Holder of an aggregate principal amount of Registered Securities in excess of
U.S.$2,000,000, and only if such Holder shall have furnished wire instructions
in writing to the Trustee no later than 15 days prior to the relevant payment
date) maintained by the payee with a bank in the Borough of Manhattan, The City
of New York. Payment of interest on this Security may be made by United States
Dollar check drawn on a bank in the Borough of Manhattan, The City of New York
mailed to the address of the Person entitled thereto as such address shall
appear in the Security Register, or, upon written application by the Holder to
the Security Registrar setting forth wire instructions not later than the
relevant Record Date, by wire transfer to a United States Dollar account (such a
wire transfer to be made only to a Holder of an aggregate principal amount of
Registered Securities in excess of U.S.$2,000,000 and only if such Holder shall
have furnished wire instructions in writing to the Trustee no later than 15 days
prior to the relevant payment date) maintained by the payee with a bank in the
Borough of Manhattan, The City of New York.
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<PAGE>
Except as specifically provided herein and in the Indenture, the
Company shall not be required to make any payment with respect to any tax,
assessment or other governmental charge imposed by any government or any
political subdivision or taxing authority thereof or therein.
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof or an Authenticating Agent by the
manual signature of one of their respective authorized signatories, this
Security shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this Security to be duly
executed under its corporate seal.
THE SPORTS AUTHORITY, INC.
[Corporate Seal]
By:
----------------------
Name:
Title:
Attest:
- ------------------------
Name:
Title:
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<PAGE>
[FORM OF REVERSE]
This Security is one of a duly authorized issue of securities of the
Company designated as its "5 1/4% Convertible Subordinated Notes due September
15, 2001" (herein called the "Securities"), limited in aggregate principal
amount to U.S.$149,500,000, issued and to be issued under an Indenture, dated as
of September 20, 1996 (herein called the "Indenture"), between the Company and
The Bank of New York, 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 Securities and of the terms upon which the Securities are, and are to be,
authenticated and delivered. As provided in the Indenture and subject to certain
limitations therein set forth, Registered Securities are exchangeable for a like
aggregate principal amount of Registered Securities of any authorized
denominations as requested by the Holder surrendering the same upon surrender of
the Registered Security or Registered Securities to be exchanged, at the
Corporate Trust Office of the Trustee. The Trustee upon such surrender by the
Holder will issue the new Registered Securities in the requested denominations.
No sinking fund is provided for the Securities. The Securities are
subject to redemption at the option of the Company at any time on or after
September 15, 1999, in whole or in part, upon not less than 30 nor more than 60
days' notice to the Holders prior to the Redemption Date at the following
Redemption Prices (expressed as percentages of the principal amount) for the
twelve-month period beginning on September 15 of the following years:
YEAR REDEMPTION PRICE
---- ----------------
1999 102.100
2000 101.050
and thereafter at a Redemption Price equal to 100% of the principal amount,
together, in each case, with accrued interest to the Redemption Date; PROVIDED,
HOWEVER, that interest installments on Registered Securities whose Stated
Maturity is on or prior to such Redemption Date will be payable to the Holders
of such Securities, or one or more Predecessor Securities, of record at the
close of business
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<PAGE>
on the relevant Record Dates referred to on the face hereof, all as provided in
the Indenture.
In the event of a redemption of the Securities, the Company will not
be required (a) to register the transfer or exchange of Registered Securities
for a period of 15 days immediately preceding the date notice is given
identifying the serial numbers of the Securities called for such redemption or
(b) to register the transfer or exchange of any Registered Security, or portion
thereof, called for redemption.
Notice to the Holders will be given not less than 30 nor more than
60 days prior to the Redemption Date as provided in the Indenture.
In any case where the due date for the payment of the principal of,
premium, if any, interest, or Liquidated Damages on any Security or the last day
on which a Holder of a Security has a right to convert his Security shall be, at
any Place of Payment or Place of Conversion, as the case may be, a day on which
banking institutions at such Place of Payment or Place of Conversion are
authorized or obligated by law or executive order to close, then payment of
principal, premium, if any, interest, or Liquidated Damages, or delivery for
conversion of such Security need not be made on or by such date at such place
but may be made on or by the next succeeding day at such place which is not a
day on which banking institutions are authorized or obligated by law or
executive order to close, with the same force and effect as if made on the date
for such payment or the date fixed for redemption or repurchase, or by such last
day for conversion, and no interest shall accrue on the amount so payable for
the period after such date.
Subject to and upon compliance with the provisions of the Indenture,
the Holder of this Security is entitled, at his option, at any time on or after
the 90th day following the last original issue date of the Securities and on or
before the close of business on September 15, 2001, or in case this Security or
a portion hereof is called for redemption or the Holder hereof has exercised his
right to require the Company to repurchase this Security or such portion hereof,
then in respect of this Security until and including, but (unless the Company
defaults in making the payment due upon redemption or repurchase, as the case
may be) not after, the close of business on the Redemption Date or the
Repurchase Date, as the case may be, to convert this Security (or any portion of
the principal amount hereof that is an integral multiple of U.S.$1,000, PROVIDED
that the unconverted portion of such principal amount is U.S.$1,000 or any
integral multiple of U.S.$1,000 in excess thereof) into fully paid and
nonassessable shares of Common Stock of the Company at an initial Conversion
Rate of 30.6419 (or at the current adjusted Conversion Rate if an adjustment has
been made as provided in the Indenture) by surrender of this Security, duly
endorsed or assigned to the Company or in blank and, in case such surrender
shall be made during the period from the close of business on any Regular
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<PAGE>
Record Date next preceding any Interest Payment Date to the opening of business
on such Interest Payment Date (except if this Security has been called for
redemption on a Redemption Date or is repurchasable on a Repurchase Date
occurring, in either case, during such period and is surrendered for such
conversion during such period), also accompanied by payment in New York Clearing
House or other funds acceptable to the Company of an amount equal to the
interest payable on such Interest Payment Date on the principal amount of this
Security then being converted, and also the conversion notice hereon duly
executed, to the Company at the Corporate Trust Office of the Trustee, or at
such other office or agency of the Company, subject to any laws or regulations
applicable thereto and subject to the right of the Company to terminate the
appointment of any Conversion Agent (as defined below) as may be designated by
it for such purpose in the Borough of Manhattan, The City of New York, or at
such other offices or agencies as the Company may designate (each a "Conversion
Agent"), PROVIDED, FURTHER, that if this Security or portion hereof has been
called for redemption on a Redemption Date or is repurchasable on a Repurchase
Date occurring, in either case, during the period from the close of business on
any Regular Record Date next preceding any Interest Payment Date to the opening
of business on such succeeding Interest Payment Date and is surrendered for
conversion during such period, then the Holder of this Security will be entitled
to receive the interest accruing hereon from the Interest Payment Date next
preceding the date of such conversion to such succeeding Interest Payment Date
and shall not be required to pay such interest upon surrender of this Security
for conversion. Subject to the provisions of the preceding sentence and, in the
case of a conversion after the close of business on the Regular Record Date next
preceding any Interest Payment Date and on or before the close of business on
such Interest Payment Date, to the right of the Holder of this Security (or any
Predecessor Security of record as of such Regular Record Date) to receive the
related installment of interest to the extent and under the circumstances
provided in the Indenture, no cash payment or adjustment is to be made on
conversion for interest accrued hereon from the Interest Payment Date next
preceding the day of conversion, or for dividends on the Common Stock issued on
conversion hereof. The Company shall thereafter deliver to the Holder the fixed
number of shares of Common Stock (together with any cash adjustment, as provided
in the Indenture) into which this Security is convertible and such delivery will
be deemed to satisfy the Company's obligation to pay the principal amount of
this Security. No fractions of shares or scrip representing fractions of shares
will be issued on conversion, but instead of any fractional interest (calculated
to the nearest 1/100th of a share) the Company shall pay a cash adjustment as
provided in the Indenture. The Conversion Rate is subject to adjustment as
provided in the Indenture. In addition, the Indenture provides that in case of
certain consolidations or mergers to which the Company is a party or the
conveyance, transfer, sale or lease of all or substantially all of the property
and assets of the Company, the Indenture shall be amended, without the consent
of any Holders of Securities, so that this Security, if then
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<PAGE>
Outstanding, will be convertible thereafter, during the period this Security
shall be convertible as specified above, only into the kind and amount of
securities, cash and other property receivable upon such consolidation, merger,
conveyance, transfer, sale or lease by a holder of the number of shares of
Common Stock of the Company into which this Security could have been converted
immediately prior to such consolidation, merger, conveyance, transfer, sale or
lease (assuming such holder of Common Stock is not a Constituent Person, 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 and further assuming,
if such consolidation, merger, conveyance, transfer, sale or lease occurs prior
to 90 days following the last original issue date of the Securities, that the
Security was convertible at the time of such occurrence at the Conversion Rate
specified above as adjusted from the issue date of such Security to such time as
provided in the Indenture). No adjustment in the Conversion Rate will be made
until such adjustment would require an increase or decrease of at least one
percent of such rate, PROVIDED that any adjustment that would otherwise be made
will be carried forward and taken into account in the computation of any
subsequent adjustment.
Subject to certain limitations in the Indenture, at any time when
the Company is not subject to Section 13 or 15(d) of the United States
Securities Exchange Act of 1934, as amended, upon the request of a Holder of a
Restricted Security or the holder of shares of Common Stock issued upon
conversion thereof, the Company will promptly furnish or cause to be furnished
Rule 144A Information (as defined below) to such Holder of Restricted Securities
or such holder of shares of Common Stock issued upon conversion of Restricted
Securities, or to a prospective purchaser of any such security designated by any
such Holder or holder, as the case may be, to the extent required to permit
compliance by such Holder or holder with Rule 144A under the Securities Act of
1933, as amended (the "Securities Act"), in connection with the resale of any
such security. "Rule 144A Information" shall be such information as is specified
pursuant to Rule 144A(d)(4) under the Securities Act (or any successor provision
thereto).
If this Security is a Registrable Security, then the Holder of this
Security [IF THIS SECURITY IS A GLOBAL SECURITY, THEN INSERT-- (including any
Person that has a beneficial interest in this Security)] and the Common Stock
issuable upon conversion hereof is entitled to the benefits of a Registration
Rights Agreement, dated as of September 20, 1996 (the "Registration Rights
Agreement"), executed by the Company. Pursuant to the Registration Rights
Agreement, the Company has agreed for the benefit of the Holders from time to
time of Registered Securities and the Common Stock issuable upon conversion
thereof, in each case, that are Registrable Securities, at the Company's
expense, (a) to file within 90 days after the first date of original issuance of
the Securities, a shelf registration statement (the "Shelf Registration
Statement") with the Commission with respect to resales of the
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<PAGE>
Registrable Securities, (b) thereafter to use its best efforts to cause such
Shelf Registration Statement to be declared effective by the Commission within
180 days after the first date of original issuance of the Securities, and (c) to
use its best efforts to maintain such Shelf Registration Statement continuously
effective under the Securities Act until a period of the three years from the
last date of original issuance of the Securities or, if earlier, until there are
no outstanding Registrable Securities.
Section 2(d) of the Registration Rights Agreement provides that,
upon written notice to each Holder of a Registrable Security, the Company may
postpone having the Shelf Registration Statement declared effective as required
by Section 2(a) of the Registration Rights Agreement for a reasonable time
specified in the notice but not exceeding 90 days if the Company is in
possession of material non-public information the disclosure of which would have
a material adverse effect on the business, operations, prospects, condition
(financial or otherwise) of the Company and its subsidiaries, taken as a whole.
Notwithstanding any postponement pursuant to Section 2(d) of the Registration
Rights Agreement, if (i) on or prior to 90 days following the date of original
issuance of the Registered Securities, a Shelf Registration Statement has not
been filed with the Commission, or (ii) on or prior to the 180th day following
the date of original issuance of the Registered Securities, such Shelf
Registration Statement is not declared effective (each, a "Registration
Default"), additional interest ("Liquidated Damages") will accrue on this
Security from and including the day following such Registration Default to but
excluding the day on which such Registration Default has been cured. Liquidated
Damages will be paid semi-annually in arrears, with the first semi-annual
payment due on the first interest payment date in respect of the Registered
Securities following the date on which such Liquidated Damages begin to accrue,
and will accrue at a rate per annum equal to an additional one-quarter of one
percent (.25%) of the principal amount of the Registered Securities to and
including the 90th day following such Registration Default and at a rate per
annum equal to one-half of one percent (.50%) thereof from and after the 91st
day following such Registration Default. In the event that the Shelf
Registration Statement ceases to be effective prior to the third annual
anniversary of the initial effective date of the Shelf Registration Statement or
such earlier date as is provided in the Registration Rights Agreement for a
period in excess of 60 days, whether or not consecutive, during any 12-month
period, then the interest rate borne by the Registered Securities shall increase
by an additional one-half of one percent (.50%) per annum from the 61st day of
the applicable 12-month period such Shelf Registration Statement ceases to be
effective to but excluding the day on which the Shelf Registration Statement
again becomes effective.
Whenever in this Security there is a reference, in any context, to
the payment of the principal of, premium, if any, or interest on, or in respect
of, any Security such mention shall be deemed to include mention of the payment
of Liquidated Damages payable as described in the preceding paragraph to the
extent
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<PAGE>
that, in such context, Liquidated Damages are, were or would be payable in
respect of this Security pursuant to such paragraph, and an express mention of
the payment of Liquidated Damages (if applicable) in any provisions of this
Security shall not be construed as excluding Liquidated Damages in those
provisions of this Security where such express mention is not made.
[If this Security is a Registrable Security and the Holder of this
Security [IF THIS SECURITY IS A GLOBAL SECURITY, THEN INSERT-- (including any
Person that has a beneficial interest in this Security)] elects to sell this
Security pursuant to the Shelf Registration Statement then, by its acceptance
hereof, such Holder of this Security agrees to be bound by the terms of the
Registration Rights Agreement relating to the Registrable Securities which are
the subject of such election.]
If a Change in Control occurs, the Holder of this Security, at the
Holder's option, shall have the right, in accordance with the provisions of the
Indenture, to require the Company to repurchase this Security (or any portion of
the principal amount hereof that is an integral multiple of $1,000) for cash at
a Repurchase Price equal to 100% of the principal amount thereof plus interest
accrued to the Repurchase Date. At the option of the Company, the Repurchase
Price may be paid in cash or, subject to the conditions provided in the
Indenture, by delivery of shares of Common Stock having a fair market value
equal to the Repurchase Price. For purposes of this paragraph, the fair market
value of shares of Common Stock shall be determined by the Company and shall be
equal to 95% of the average of the Closing Prices Per Share for the five
consecutive Trading Days immediately preceding the second Trading Day prior to
the Repurchase Date. Whenever in this Security there is a reference, in any
context, to the principal of any Security as of any time, such reference shall
be deemed to include reference to the Repurchase Price payable in respect of
such Security to the extent that such Repurchase Price is, was or would be so
payable at such time, and express mention of the Repurchase Price in any
provision of this Security shall not be construed as excluding the Repurchase
Price so payable in those provisions of this Security when such express mention
is not made; provided, however, that, for the purposes of the second succeeding
paragraph, such reference shall be deemed to include reference to the Repurchase
Price only to the extent the Repurchase Price is payable in cash.
[THE FOLLOWING PARAGRAPH SHALL APPEAR IN EACH REGISTERED SECURITY
THAT IS NOT A GLOBAL SECURITY:
In the event of redemption, repurchase or conversion of this
Security in part only, a new Registered Security or Registered Securities for
the unredeemed, unrepurchased or unconverted portion hereof will be issued in
the name of the Holder hereof.]
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<PAGE>
[THE FOLLOWING PARAGRAPH SHALL APPEAR IN EACH GLOBAL SECURITY:
In the event of a deposit or withdrawal of an interest in this
Security, including an exchange, transfer, redemption, repurchase or conversion
of this Security in part only, the Trustee, as custodian of the Depositary,
shall make an adjustment on its records to reflect such deposit or withdrawal in
accordance with the Applicable Procedures.]
The indebtedness evidenced by this Security is, to the extent and in
the manner provided in the Indenture, subordinate and subject in right of
payment to the prior payment in full of all Senior Indebtedness of the Company,
and this Security is issued subject to such provisions of the Indenture with
respect thereto. Each Holder of this Security, by accepting the same, (a) agrees
to and shall be bound by such provisions, (b) authorizes and directs the Trustee
on his behalf to take such action as may be necessary or appropriate to
effectuate the subordination so provided and (c) appoints the Trustee his
attorney-in-fact for any and all such purposes.
If an Event of Default shall occur and be continuing, the principal
of all the Securities, together with accrued interest to the date of
declaration, may be declared due and payable in the manner and with the effect
provided in the Indenture. Upon payment (i) of the amount of principal so
declared due and payable, together with accrued interest to the date of
declaration, and (ii) of interest on any overdue principal and, to the extent
permitted by applicable law, overdue interest, all of the Company's obligations
in respect of the payment of the principal of and interest on the Securities
shall terminate.
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 rights of the Holders of the Securities under the Indenture at
any time by the Company and the Trustee with either (a) the written consent of
the Holders of a majority in principal amount of the Securities at the time
Outstanding, or (b) by the adoption of a resolution, at a meeting of Holders of
the Outstanding Securities at which a quorum is present, by the Holders of
66-2/3% in principal amount of the Outstanding Securities represented and
entitled to vote at such meeting. The Indenture also contains provisions
permitting the Holders of specified percentages in principal amount of the
Securities at the time Outstanding, on behalf of the Holders of all the
Securities, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Security shall be conclusive
and binding upon such Holder and upon all future Holders of this Security and of
any Security issued in exchange herefor or in lieu hereof, whether or
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<PAGE>
not notation of such consent or waiver is made upon this Security or such other
Security.
As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default, 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 as Trustee and offered the Trustee reasonable indemnity and the
Trustee shall not have received from the Holders of a majority in principal
amount of the Securities Outstanding a direction inconsistent with such request,
and shall have failed to institute any such proceeding, for 60 days after
receipt of such notice, request and offer of indemnity. The foregoing shall not
apply to any suit instituted by the Holder of this Security for the enforcement
of any payment of principal hereof, premium, if any, or interest hereon
(including Liquidated Damages) on or after the respective due dates expressed
herein or for the enforcement of the right to convert this Security as provided
in the Indenture.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of, premium,
if any, and interest on (including Liquidated Damages) this Security at the
times, places and rate, and in the coin or currency, herein prescribed or to
convert this Security as provided in the Indenture.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of Registered Securities is registrable on the
Security Register upon surrender of a Registered Security for registration of
transfer at the Corporate Trust Office of the Trustee or at such other office or
agency of the Company as may be designated by it for such purpose in the Borough
of Manhattan, The City of New York, or at such other offices or agencies as the
Company may designate, 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 thereof or his attorney duly authorized in writing, and
thereupon one or more new Registered Securities, of authorized denominations and
for the same aggregate principal amount, will be issued to the designated
transferee or transferees by the Registrar. 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 recover any tax or other governmental charge
payable in connection therewith.
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<PAGE>
Prior to due presentation of a Registered 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 Registered Security is
registered as the owner thereof for all purposes, whether or not such Security
be overdue, and neither the Company, the Trustee nor any such agent shall be
affected by notice to the contrary.
Interest on the Securities (including any Liquidated Damages) shall
be computed on the basis of a 360-day year of twelve 30-day months.
THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, UNITED STATES OF AMERICA,
WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
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ELECTION OF HOLDER TO REQUIRE REPURCHASE
1. Pursuant to Section 14.1 of the Indenture, the undersigned hereby
elects to have this Security repurchased by the Company.
2. The undersigned hereby directs the Trustee or the Company to pay
it or __________________ an amount in cash or, at the Company's election, Common
Stock valued as set forth in the Indenture, equal to 100% of the principal
amount to be repurchased (as set forth below), plus interest accrued to the
Repurchase Date, as provided in the Indenture.
Dated:
-----------------------
-----------------------
Signature
-----------------------
Signature Guaranteed
Principal amount to be repurchased
(an integral multiple of U.S.$1,000):
----------------------
Remaining principal amount following such repurchase:
----------------------
NOTICE: The signature to the foregoing Election must correspond to the Name as
written upon the face of this Security in every particular, without alteration
or any change whatsoever.
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SECTION 2.4. FORM OF CERTIFICATE OF AUTHENTICATION.
The Trustee's certificates of authentication shall be in
substantially the following form:
Dated: [Date of Authentication]
This is one of the Securities referred to in the within-mentioned
Indenture.
------------------------------
as Trustee
By:
--------------------------
Authorized Signatory
SECTION 2.5. FORM OF CONVERSION NOTICE.
CONVERSION NOTICE
The undersigned Holder of this Security hereby irrevocably exercises
the option to convert this Security, or any portion of the principal amount
hereof (which is an integral multiple of U.S.$1,000) below designated, into
shares of Common Stock in accordance with the terms of the Indenture referred to
in this Security, and directs that such shares, together with a check in payment
for any fractional share and any Securities representing any unconverted
principal amount hereof, be delivered to and be registered in the name of the
undersigned unless a different name has been indicated below. If shares of
Common Stock or Securities are to be registered in the name of a Person other
than the undersigned, the undersigned will pay all transfer taxes payable with
respect thereto. Any amount required to be paid by the undersigned on account of
interest accompanies this Security.
Dated:
---------------------------
--------------------
Signature
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If shares or Registered Securities are If only a portion of the Securities
to be registered in the name of a be converted, please indicate:
Person other than the Holder, please
print such Person's name and address:
1. Principal amount to be
converted:
- ----------------------------- U.S.$
Name -------------------
2. Principal amount and
denomination of Registered
Securities representing
unconverted principal amount
- ----------------------------- to be issued:
Address
Amount: U.S.$
-----------
- -----------------------------
Social Security or other Taxpayer Denominations:
Identification Number, if any U.S.$
---------
(any integral multiple of U.S.$1,000)
- ----------------------------- [Signature Guaranteed]
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ARTICLE THREE
THE SECURITIES
SECTION 3.1. TITLE AND TERMS.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is limited to U.S.$149,500,000,
except for Securities authenticated and delivered in exchange for, or in lieu
of, other Securities pursuant to Section 3.4, 3.5, 3.6, 8.5, 11.8, 12.2 or
14.3(f).
The Securities shall be known and designated as the "5 1/4%
Convertible Subordinated Notes due September 15, 2001" of the Company. Their
Stated Maturity shall be September 15, 2001 and they shall bear interest on
their principal amount from September 20, 1996, payable semi-annually in arrears
on March 15 and September 15 in each year, commencing March 15, 1997, at the
rate of 5 1/4% per annum until the principal thereof is due and at the rate of 5
1/4% per annum on any overdue principal and, to the extent permitted by law, on
any overdue interest; PROVIDED, HOWEVER, that payments shall only be made on
Business Days as provided in Section 1.12.
The principal of, premium, if any, and interest on the Securities
shall be payable as provided in the form of Securities set forth in Section 2.2,
and the Repurchase Price, whether payable in cash or in shares of Common Stock,
shall be payable at such places as are identified in the Company Notice given
pursuant to Section 14.3 (any city in which any Paying Agent is located being
herein called a "Place of Payment").
The Registrable Securities are entitled to the benefits of a
Registration Rights Agreement as provided by Sections 2.2 and 10.11. The
Securities are entitled to the payment of Liquidated Damages and additional
interest as provided by Section 10.11.
The Securities shall be redeemable at the option of the Company at
any time on or after September 15, 1999, in whole or in part, as provided in
Article Eleven and in the form of Securities set forth in Section 2.2.
The Securities shall be convertible as provided in Article Twelve
(any city in which any Conversion Agent is located being herein called a "Place
of Conversion").
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The Securities shall be subordinated in right of payment to Senior
Indebtedness of the Company as provided in Article Thirteen.
The Securities shall be subject to repurchase by the Company at the
option of the Holders as provided in Article Fourteen.
SECTION 3.2. DENOMINATIONS.
The Securities shall be issuable only in registered form, without
coupons, in denominations of U.S.$1,000 and integral multiples thereof.
SECTION 3.3. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
The Securities shall be executed on behalf of the Company by its
Chairman of the Board, its Vice Chairman of the Board, its Chief Executive
Officer, its President or one of its Vice Presidents, under a facsimile of its
corporate seal reproduced thereon attested by its Secretary or one of its
Assistant Secretaries. Any such signature may be manual or facsimile.
Securities bearing the manual or facsimile signature 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.
At 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 or to its order 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 make available for
delivery 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 of an authorized signatory, and such
certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered
hereunder.
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SECTION 3.4. GLOBAL SECURITIES; NON-GLOBAL SECURITIES.
(A) GLOBAL SECURITIES
(a) Each Global Security authenticated under this Indenture shall be
registered in the name of the Depositary designated by the Company for such
Global Security or a nominee thereof and delivered to such Depositary or a
nominee thereof or custodian therefor, and each such Global Security shall
constitute a single Security for all purposes of this Indenture.
(b) Notwithstanding any other provision in this Indenture, no Global
Security may be exchanged in whole or in part for Securities registered, and no
transfer of a Global Security in whole or in part may be registered, in the name
of any Person other than the Depositary for such Global Security or a nominee
thereof unless (i) such Depositary (A) has notified the Company that it is
unwilling or unable to continue as Depositary for such Global Security or (B)
has ceased to be a clearing agency registered as such under the Exchange Act or
announces an intention permanently to cease business or does in fact do so or
(ii) there shall have occurred and be continuing an Event of Default with
respect to such Global Security.
(c) If any Global Security is to be exchanged for other Securities
or canceled in whole, it shall be surrendered by or on behalf of the Depositary
or its nominee to the Trustee, as Security Registrar, for exchange or
cancellation, as provided in this Article Three. If any Global Security is to be
exchanged for other Securities or cancelled in part, or if another Security is
to be exchanged in whole or in part for a beneficial interest in any Global
Security, in each case, as provided in Section 3.5, then either (i) such Global
Security shall be so surrendered for exchange or cancellation, as provided in
this Article Three, or (ii) the principal amount thereof shall be reduced or
increased by an amount equal to the portion thereof to be so exchanged or
cancelled, or equal to the principal amount of such other Security to be so
exchanged for a beneficial interest therein, as the case may be, by means of an
appropriate adjustment made on the records of the Trustee, as Security
Registrar, whereupon the Trustee, in accordance with the Applicable Procedures,
shall instruct the Depositary or its authorized representative to make a
corresponding adjustment to its records. Upon any such surrender or adjustment
of a Global Security, the Trustee shall, subject to Section 3.5(c) and as
otherwise provided in this Article Three, authenticate and make available for
delivery any Securities issuable in exchange for such Global Security (or any
portion thereof) to or upon the order of, and registered in such names as may be
directed by, the Depositary or its authorized representative. Upon the request
of the Trustee in connection with the occurrence of any of the events specified
in the preceding paragraph, the Company shall promptly make available to the
Trustee a reasonable supply of Securities that are not in the form of Global
Securities. The Trustee shall be entitled to rely upon any
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order, direction or request of the Depositary or its authorized representative
which is given or made pursuant to this Article Three if such order, direction
or request is given or made in accordance with the Applicable Procedures.
(d) Every Security authenticated and delivered upon registration of
transfer of, or in exchange for or in lieu of, a Global Security or any portion
thereof, whether pursuant to this Article Three or otherwise, shall be
authenticated and delivered in the form of, and shall be, a registered Global
Security, unless such Security is registered in the name of a Person other than
the Depositary for such Global Security or a nominee thereof, in which case such
Registered Security shall be authenticated and delivered in definitive, fully
registered form, without interest coupons.
(e) The Depositary or its nominee, as registered owner of a Global
Security, shall be the Holder of such Global Security for all purposes under the
Indenture and the Registered Securities, and owners of beneficial interests in a
Global Security shall hold such interests pursuant to the Applicable Procedures.
Accordingly, any such owner's beneficial interest in a Global Security will be
shown only on, and the transfer of such interest shall be effected only through,
records maintained by the Depositary or its nominee or its Agent Members and
such owners of beneficial interests in a Global Security will not be considered
the owners or holders thereof.
(B) NON-GLOBAL SECURITIES
Regulation D Securities shall be initially issued as Registered
Securities in definitive, fully registered form, without interest coupons, shall
initially be registered in such names and be in such authorized denominations as
Goldman, Sachs & Co. shall designate and shall bear the legends required
hereunder. The Company will make available to the Trustee a reasonable supply of
Registered Securities in definitive form.
Pending the preparation of definitive Securities, the Company may
execute, and upon Company Order the Trustee shall authenticate and make
available for delivery, temporary Securities which are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Registered Securities in lieu of
which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Registered
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
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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 10.2, without charge to
the Holder. Upon surrender for cancellation of any one or more temporary
Securities the Company shall execute and the Trustee shall authenticate and make
available for delivery 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 3.5. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE;
RESTRICTIONS ON TRANSFER.
(a) 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 of the Company designated pursuant to Section 10.2 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 Registered Securities and of transfers of
Registered Securities. The Trustee is hereby appointed "Security Registrar" for
the purpose of registering Registered Securities and transfers and exchanges of
Registered 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 10.2 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 and of a like aggregate principal
amount and bearing such restrictive legends as may be required by this
Indenture.
At the option of the Holder, and subject to the other provisions of
this Section 3.5, Securities may be exchanged for other Securities of any
authorized denomination and of a like aggregate principal amount, upon surrender
of the Securities to be exchanged at any such office or agency. Whenever any
Securities are so surrendered for exchange, and subject to the other provisions
of this Section 3.5, the Company shall execute, and the Trustee shall
authenticate and make available for delivery, the Securities which the Holder
making the exchange is entitled to receive. Every Security presented or
surrendered for registration of transfer or for exchange shall (if so required
by the Company or the Security Registrar) 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 Holder thereof or his attorney duly
authorized in writing.
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<PAGE>
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 subject to the other provisions of this Section 3.5, entitled to the
same benefits under this Indenture, as the Securities surrendered upon such
registration of transfer or exchange.
No service charge shall be made for any registration of transfer or
exchange of Securities except as provided in Section 3.6, 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 3.4, 8.5, 11.8,
12.2 or 14.3 (other than where the shares of Common Stock are to be issued or
delivered in a name other than that of the Holder of the Security) not involving
any transfer and other than any stamp and other duties, if any, which may be
imposed in connection with any such transfer or exchange by the United States or
any political subdivision thereof or therein, which shall be paid by the
Company.
In the event of a redemption of the Securities, the Company will not
be required (a) to register the transfer of or exchange Securities for a period
of 15 days immediately preceding the date notice is given identifying the serial
numbers of the Securities called for such redemption or (b) to register the
transfer of or exchange any Security, or portion thereof, called for redemption.
(b) CERTAIN TRANSFERS AND EXCHANGES. Notwithstanding any other
provision of this Indenture or the Securities, transfers and exchanges of
Securities and beneficial interests in a Global Security of the kinds specified
in this Section 3.5(b) shall be made only in accordance with this Section
3.5(b).
(i) RESTRICTED GLOBAL SECURITY TO REGULATION S GLOBAL SECURITY. If
the owner of a beneficial interest in the Restricted Global Security
wishes at any time to transfer such interest to a Person who wishes to
acquire the same in the form of a beneficial interest in the Regulation S
Global Security, such transfer may be effected only in accordance with the
provisions of this Clause (b)(i) and Clause (b)(v) below and subject to
the Applicable Procedures. Upon receipt by the Trustee, as Security
Registrar, of (A) an order given by the Depositary or its authorized
representative directing that a beneficial interest in the Regulation S
Global Security in a specified principal amount be credited to a specified
Agent Member's account and that a beneficial interest in the Restricted
Global Security in an equal principal amount be debited from another
specified Agent Member's account and (B) a Regulation S Certificate,
satisfactory to the Trustee and duly executed by the owner of such
beneficial interest in the Restricted Global Security or his attorney duly
authorized in writing, then the Trustee, as Security Registrar but
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subject to Clause (b)(v) below, shall reduce the principal amount of the
Restricted Global Security and increase the principal amount of the
Regulation S Global Security by such specified principal amount as
provided in Section 3.4(A)(c).
(ii) REGULATION S GLOBAL SECURITY TO RESTRICTED GLOBAL SECURITY. If
the owner of a beneficial interest in the Regulation S Global Security
wishes at any time to transfer such interest to a Person who wishes to
acquire the same in the form of a beneficial interest in the Restricted
Global Security, such transfer may be effected only in accordance with
this Clause (b)(ii) and subject to the Applicable Procedures. Upon receipt
by the Trustee, as Security Registrar, of (A) an order given by the
Depositary or its authorized representative directing that a beneficial
interest in the Restricted Global Security in a specified principal amount
be credited to a specified Agent Member's account and that a beneficial
interest in the Regulation S Global Security in an equal principal amount
be debited from another specified Agent Member's account and (B) if such
transfer is to occur during the Restricted Period, a Restricted Securities
Certificate, satisfactory to the Trustee and duly executed by the owner of
such beneficial interest in the Regulation S Global Security or his
attorney duly authorized in writing, then the Trustee, as Security
Registrar, shall reduce the principal amount of the Regulation S Global
Security and increase the principal amount of the Restricted Global
Security by such specified principal amount as provided in Section
3.4(A)(c).
(iii) RESTRICTED NON-GLOBAL SECURITY TO RESTRICTED GLOBAL
SECURITY OR REGULATION S GLOBAL SECURITY. If the Holder of a Restricted
Security (other than a Global Security) wishes at any time to transfer all
or any portion of such Restricted Security to a Person who wishes to take
delivery thereof in the form of a beneficial interest in the Restricted
Global Security or the Regulation S Global Security, such transfer may be
effected only in accordance with the provisions of this Clause (b)(iii)
and Clause (b)(v) below and subject to the Applicable Procedures. Upon
receipt by the Trustee, as Security Registrar, of (A) such Restricted
Security as provided in Section 3.5(a) and instructions satisfactory to
the Trustee directing that a beneficial interest in the Restricted Global
Security or Regulation S Global Security in a specified principal amount
not greater than the principal amount of such Security be credited to a
specified Agent Member's account and (B) a Restricted Securities
Certificate, if the specified account is to be credited with a beneficial
interest in the Restricted Global Security, or a Regulation S Certificate,
if the specified account is to be credited with a beneficial interest in
the Regulation S Global Security, in either case satisfactory to the
Trustee and duly executed by such Holder or his attorney duly authorized
in writing,
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then the Trustee, as Security Registrar but subject to Clause (b)(v)
below, shall cancel such Restricted Security (and issue a new Restricted
Security in respect of any untransferred portion thereof) as provided in
Section 3.5(a) and increase the principal amount of the Restricted Global
Security or the Regulation S Global Security, as the case may be, by the
specified principal amount as provided in Section 3.4(A)(c).
(iv) EXCHANGES BETWEEN GLOBAL SECURITY AND NON-GLOBAL SECURITY. A
beneficial interest in a Global Security may be exchanged for a Security
that is not a Global Security as provided in Section 3.4, PROVIDED that,
if such interest is a beneficial interest in the Restricted Global
Security, or if such interest is a beneficial interest in the Regulation S
Global Security and such exchange is to occur during the Restricted
Period, then such interest shall be exchanged for a Restricted Security
(subject in each case to Section 3.5(c)). A Security that is not a Global
Security may be exchanged for a beneficial interest in a Global Security
only if (A) such exchange occurs in connection with a transfer effected in
accordance with Clause (b)(iii) above.
(v) REGULATION S GLOBAL SECURITY TO BE HELD THROUGH EUROCLEAR OR
CEDEL DURING RESTRICTED PERIOD. The Company shall use its best efforts to
cause the Depositary to ensure that, until the expiration of the
Restricted Period, beneficial interests in the Regulation S Global
Security may be held only in or through accounts maintained at the
Depositary by Euroclear or CEDEL (or by Agent Members acting for the
account thereof), and no person shall be entitled to effect any transfer
or exchange that would result in any such interest being held otherwise
than in or through such an account; PROVIDED that this Clause (b)(v) shall
not prohibit any transfer or exchange of such an interest in accordance
with Clause (b)(ii) or (iv) above.
(c) SECURITIES ACT LEGENDS. Rule 144A Securities, Regulation D
Securities and their respective Successor Securities shall bear the applicable
Restricted Securities Legend, and the Regulation S Securities and their
Successor Securities shall bear a Regulation S Legend, subject to the following:
(i) subject to the following Clauses of this Section 3.5(c), a
Security or any portion thereof which is exchanged, upon transfer or
otherwise, for a Global Security or any portion thereof shall bear the
Securities Act Legend borne by such Global Security while represented
thereby;
(ii) subject to the following Clauses of this Section 3.5(c), a new
Security which is not a Global Security and is issued in exchange for
another Security (including a Global Security) or any portion thereof,
upon transfer or otherwise, shall bear the Securities Act Legend borne by
such other
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Security, PROVIDED that, if such new Security is required pursuant to
Section 3.5(b)(iv) to be issued in the form of a Restricted Security, it
shall bear a Restricted Securities Legend and, if such new Security is so
required to be issued in the form of a Regulation S Security, it shall
bear a Regulation S Legend;
(iii) any Securities which are sold or otherwise disposed of
pursuant to an effective registration statement under the Securities Act
(including the Shelf Registration Statement), together with their
Successor Securities shall not bear a Securities Act Legend; the Company
shall inform the Trustee in writing of the effective date of any such
registration statement registering the Securities under the Securities Act
and shall notify the Trustee at any time when prospectuses may not be
delivered with respect to Securities to be sold pursuant to such
registration statement. The Trustee shall not be liable for any action
taken or omitted to be taken by it in good faith in accordance with the
aforementioned registration statement;
(iv) at any time after the Securities may be freely transferred
without registration under the Securities Act or without being subject to
transfer restrictions pursuant to the Securities Act, a new Security which
does not bear a Securities Act Legend may be issued in exchange for or in
lieu of a Security (other than a Global Security) or any portion thereof
which bears such a legend if the Trustee has received an Unrestricted
Securities Certificate, satisfactory to the Trustee and duly executed by
the Holder of such legended Security or his attorney duly authorized in
writing, and after such date and receipt of such certificate, the Trustee
shall authenticate and make available for delivery such a new Security in
exchange for or in lieu of such other Security as provided in this Article
Three;
(v) a new Security which does not bear a Securities Act Legend may
be issued in exchange for or in lieu of a Security (other than a Global
Security) or any portion thereof which bears such a legend if, in the
Company's judgment, placing such a legend upon such new Security is not
necessary to ensure compliance with the registration requirements of the
Securities Act, and the Trustee, at the direction of the Company, shall
authenticate and make available for delivery such a new Security as
provided in this Article Three; and
(vi) notwithstanding the foregoing provisions of this Section
3.5(c), a Successor Security of a Security that does not bear a particular
form of Securities Act Legend shall not bear such form of legend unless
the Company has reasonable cause to believe that such Successor Security
is a "restricted security" within the meaning of Rule 144, in which case
the Trustee, at the
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direction of the Company, shall authenticate and make available for
delivery a new Security bearing a Restricted Securities Legend in exchange
for such Successor Security as provided in this Article Three.
(d) Neither the Trustee, the Paying Agent nor any of their agents
shall (1) have any duty to monitor compliance with or with respect to any
federal or state or other securities or tax laws or (2) have any duty to obtain
documentation on any transfers or exchanges other than as specifically required
hereunder.
SECTION 3.6. MUTILATED, DESTROYED, LOST OR STOLEN SECURITIES.
If any mutilated Security is surrendered to the Trustee, the Company
shall execute and the Trustee shall authenticate and make available for delivery
in exchange therefor a new Security of like tenor and principal amount and
bearing a number not contemporaneously outstanding.
If there be delivered to the Company and to the Trustee:
(1) evidence to their satisfaction of the destruction, loss or theft
of any Security, and
(2) such security or indemnity as may be satisfactory to the
Company and the Trustee to save each of them and any agent of either of
them harmless,
then, in the absence of actual notice to the Company or the Trustee that such
Security has been acquired by a bona fide purchaser, the Company shall execute
and the Trustee shall authenticate and make available for delivery, 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, but
subject to any conversion rights, may, instead of issuing a new Security, pay
such Security, upon satisfaction of the conditions set forth in the preceding
paragraph.
Upon the issuance of any new Security under this Section 3.6, 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 (other than any
stamp and other duties, if any, which may be imposed in connection therewith by
the United States or any political subdivision thereof or therein, which shall
be paid by the Company) and any other expenses (including the fees and expenses
of the Trustee) connected therewith.
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Every new Security issued pursuant to this Section 3.6 in lieu of
any mutilated, destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the mutilated,
destroyed, lost or stolen Security shall be at any time enforceable by anyone,
and such new Security 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 3.6 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies of any Holder with respect
to the replacement or payment of mutilated, destroyed, lost or stolen
Securities.
SECTION 3.7. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
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.
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 Holder on the
relevant Regular Record Date by virtue of having been such Holder, 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, the date of the proposed payment and the Special Record
Date, and at the same time the Company shall deposit with the Trustee an
amount of money 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 when deposited to be held in trust for the benefit of the
Persons entitled to such Defaulted Interest as in this Clause provided.
The Special Record Date for the payment of such Defaulted Interest 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 10 days after the receipt by the
Trustee of the notice of the proposed payment. The Trustee, in the name
and at the expense of the Company, shall cause notice of the proposed
payment of such Defaulted Interest and the
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Special Record Date therefor to be mailed, first-class postage prepaid, to
each Holder at such Holder's 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 and Section 3.5,
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 on any Security which is converted in accordance with
Section 12.2 during a Record Date Period shall be payable in accordance with the
provisions of Section 12.2.
SECTION 3.8. 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, premium, if any,
and (subject to Section 3.7) 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 3.9. CANCELLATION.
All Securities surrendered for payment, redemption, repurchase,
registration of transfer or exchange or conversion shall, if surrendered to any
Person other than the Trustee, be delivered to the Trustee. All Securities so
delivered to the Trustee shall be canceled promptly by the Trustee. No
Securities shall be authenticated in lieu of or in exchange for any Securities
canceled as provided in this
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Section 3.9. The Trustee shall dispose of all canceled Securities in accordance
with applicable law and its customary practices in effect from time to time.
SECTION 3.10. COMPUTATION OF INTEREST.
Interest on the Securities (including any Liquidated Damages) shall
be computed on the basis of a 360-day year of twelve 30-day months.
SECTION 3.11. CUSIP NUMBERS.
The Company in issuing Securities may use "CUSIP" numbers (if then
generally in use) in addition to serial numbers, if so, the Trustee shall use
such CUSIP numbers in addition to serial numbers in notices of redemption and
repurchase as a convenience to Holders; PROVIDED that any such notice may state
that no representation is made as to the correctness of such CUSIP numbers
either as printed on the Securities or as contained in any notice of a
redemption or repurchase and that reliance may be placed only on the serial or
other identification numbers printed on the Securities, and any such redemption
or repurchase shall not be affected by any defect in or omission of such CUSIP
numbers. The Company shall promptly notify the Trustee in writing of any change
in any such CUSIP number.
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ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 4.1. SATISFACTION AND DISCHARGE OF INDENTURE.
This Indenture shall upon Company Request cease to be of further
effect (except as to any surviving rights of conversion, or registration of
transfer or exchange, or replacement of Securities herein expressly provided for
and any right to receive Liquidated Damages as provided in the form of
Securities set forth in Section 2.2 and the Company's obligations to the Trustee
pursuant to Section 6.7), and the Trustee, at the expense of the Company, shall
execute proper instruments in form and substance satisfactory to the Trustee
acknowledging satisfaction and discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered
(other than (i) Securities which have been destroyed, lost or stolen
and which have been replaced or paid as provided in Section 3.6 and
(ii) 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 10.3) have been delivered to the Trustee for
cancellation; or
(B) all such Securities not theretofore delivered to the Trustee
or its agent for cancellation (other than Securities referred to in
clauses (i) and (ii) of clause (1)(A) above)
(i) have become due and payable, or
(ii) will have become due and payable at their Stated
Maturity within one year, or
(iii) 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 clause (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee as trust funds
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(immediately available to the Holders in the case of clause (i)) 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, premium, if any, and
interest (including any Liquidated Damages) 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 6.7, the obligations
of the Company to any Authenticating Agent under Section 6.12, the obligation of
the Company to pay Liquidated Damages, if money shall have been deposited with
the Trustee pursuant to clause (1)(B) of this Section 4.1, the obligations of
the Trustee under Section 4.2 and the last paragraph of Section 10.3 and the
obligations of the Company and the Trustee under Section 3.5 and Article Twelve
shall survive. Funds held in trust pursuant to this Section are not subject to
the provisions of Article Thirteen.
SECTION 4.2. APPLICATION OF TRUST MONEY.
Subject to the provisions of the last paragraph of Section 10.3, all
money deposited with the Trustee pursuant to Section 4.1 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), to the Persons entitled
thereto, of the principal, 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 4.1 (and
held by it or any Paying Agent) for the payment of Securities subsequently
converted shall be returned to the Company upon Company Request.
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ARTICLE FIVE
REMEDIES
SECTION 5.1. 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 Article Thirteen 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 of any
administrative or governmental body):
(1) default in the payment of the principal of or premium, if any,
on any Security at its Maturity; or
(2) default in the payment of any interest (including any Liquidated
Damages) upon any Security when it becomes due and payable, and
continuance of such default for a period of 30 days; or
(3) failure by the Company to give the Company notice in accordance
with Section 14.3; or
(4) 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 the performance or breach of which is specifically
dealt with elsewhere in this Section), and continuance of such default or
breach for a period of 90 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;
(5) a default under any bond, debenture, note or other evidence of
indebtedness for money borrowed by the Company or under any mortgage,
indenture or instrument under which there may be issued or by which there
may be secured or evidenced any indebtedness for money borrowed by the
Company with a principal amount then outstanding in excess of
U.S.$10,000,000, whether such indebtedness now exists or shall hereafter
be created, which default shall have resulted in such indebtedness
becoming or being declared due and payable prior to the date on which it
would otherwise have become due and payable, without such indebtedness
having been
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discharged, or such acceleration having been rescinded or annulled,
within a period of 30 days after there shall have beengiven, 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 and
requiring the Company to cause such indebtedness to be discharged or cause
such default to be cured or waived or such acceleration to be rescinded or
annulled and stating that such notice is a "Notice of Default" hereunder;
or
(6) 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
(7) 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 similar 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 other 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.
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SECTION 5.2. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
If an Event of Default (other than an Event of Default specified in
Section 5.1(6) or 5.1(7)) 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 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 the Holders), and upon any such declaration such principal
and all accrued interest thereon shall become immediately due and payable. If an
Event of Default specified in Section 5.1(6) or 5.1(7) occurs, the principal of,
and accrued interest on, all the Securities shall IPSO FACTO become immediately
due and payable without any declaration or other Act of the Holder or any act on
the part of the Trustee.
At any time after such 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 Five 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
sufficient to pay
(A) all overdue interest (including any Liquidated Damages)
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 any interest (including any Liquidated Damages)
thereon at the rate borne by the Securities,
(C) to the extent permitted by applicable law, interest upon
overdue interest at a rate of 5 1/4% per annum, 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, and any premium and interest on, Securities which have
become due solely by such declaration of acceleration, have been cured or
waived as provided in Section 5.13.
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No rescission or annulment referred to above shall affect any
subsequent default or impair any right consequent thereon.
SECTION 5.3. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE.
The Company covenants that if
(1) default is made in the payment of any interest (including any
Liquidated Damages) on any Security when it becomes 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 interest (including any Liquidated Damages) and
interest on any overdue principal and premium, if any, and, to the extent
permitted by applicable law, on any overdue interest (including any Liquidated
Damages), at a rate of 5 1/4% per annum, and in addition thereto, such further
amount as shall be sufficient to cover the reasonable costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its 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 of Securities 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.
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SECTION 5.4. 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 the
creditors of either, the Trustee (irrespective of whether the principal of, and
any interest on, 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 in such proceeding
or otherwise,
(1) to file and prove a claim for the whole amount of principal,
premium, if any, and interest (including any Liquidated Damages) owing and
unpaid in respect of the Securities and take such other actions, including
participating as a member, voting or otherwise, of any official committee
of creditors appointed in such matter, and to file such other papers or
documents, in each of the foregoing cases, as may be necessary or
advisable in order to have the claims of the Trustee (including any claim
for the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel) and of the Holders of Securities
allowed in such judicial proceeding, and
(2) to collect and receive any moneys or other property payable or
deliverable on any such claim 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 of Securities to make such payments to the Trustee and, in the event
that the Trustee shall consent to the making of such payments directly to the
Holders of Securities to pay to the Trustee any amount due to it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel and any other amounts due the Trustee under Section 6.7.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder of a Security
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 of a Security in any such proceeding;
provided, however, that the Trustee may, on behalf of such Holders, vote for the
election of a trustee in bankruptcy or similar official.
SECTION 5.5. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES.
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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, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which judgment
has been recovered.
SECTION 5.6. APPLICATION OF MONEY COLLECTED.
Subject to Article Thirteen, any money collected by the Trustee
pursuant to this Article Five 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 on account of principal, 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 under Section
6.7;
SECOND: To the payment of the amounts then due and unpaid for
principal of, premium, if any, or interest (including any Liquidated
Damages) on, the Securities in respect of which or for the benefit of
which such money has been collected, ratably, without preference or
priority of any kind, according to the amounts due and payable on such
Securities for principal, premium, if any, and interest (including any
Liquidated Damages), respectively; and
THIRD: Any remaining amounts shall be repaid to the Company.
SECTION 5.7. 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
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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 of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all such
Holders.
SECTION 5.8. 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, premium, if any, and (subject to Section
3.7) interest (including any Liquidated Damages) on such Security on the
respective Stated Maturities expressed in such Security (or, in the case of
redemption or repurchase, on the Redemption Date or Repurchase Date, as the case
may be), and to convert such Security in accordance with Article Twelve, and to
institute suit for the enforcement of any such payment and right to convert, and
such rights shall not be impaired without the consent of such Holder.
SECTION 5.9. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder of a Security 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 of Securities shall be restored severally and respectively to
their former positions hereunder and thereafter
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all rights and remedies of the Trustee and such 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 3.6, no right or remedy herein conferred upon or reserved to the
Trustee or to the Holders of Securities 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
any acquiescence therein. Every right and remedy given by this Article Five or
by law to the Trustee or to the Holders of Securities may be exercised from time
to time, and as often as may be deemed expedient, by the Trustee or (subject to
the limitations contained in this Indenture) by the Holders of Securities as the
case may be.
SECTION 5.12. CONTROL BY HOLDERS OF SECURITIES.
The Holders of a majority in principal amount of the Outstanding
Securities 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) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
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SECTION 5.13. WAIVER OF PAST DEFAULTS.
The Holders, either (a) through the written consent of not less than
a majority in principal amount of the Outstanding Securities, or (b) by the
adoption of a resolution, at a meeting of Holders of the Outstanding Securities
at which a quorum is present, by the Holders of at least 66-2/3% in principal
amount of the Outstanding Securities represented at such meeting, may on behalf
of the Holders of all the Securities waive any past default hereunder and its
consequences, except a default (1) in the payment of the principal of, premium,
if any, or interest (including any Liquidated Damages) on any Security, or (2)
in respect of a covenant or provision hereof which under Article Eight 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.
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 and
expenses, 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 5.14 shall not apply to any suit instituted by
the Company, 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 any Security for the enforcement of the payment of the principal of,
premium, if any, or interest (including any Liquidated Damages) on any Security
on or after the respective Stated Maturity or Maturities expressed in such
Security (or, in the case of redemption or repurchase, on or after the
Redemption Date or Repurchase Date, as the case may be) or for the enforcement
of the right to convert any Security in accordance with Article Twelve.
SECTION 5.15. WAIVER OF STAY, USURY 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, usury or extension law
wherever enacted, now or at any time hereafter in force, which may affect the
covenants or the
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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 by reason of
such law 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.
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ARTICLE SIX
THE TRUSTEE
SECTION 6.1. 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, but not to verify
the contents thereof.
(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 willful misconduct, EXCEPT that
(1) this paragraph (c) shall not be construed to limit the effect of
paragraph (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts;
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(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 a majority in principal amount of the
Outstanding Securities 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 6.2. NOTICE OF DEFAULTS.
Within 90 days after the occurrence of any default hereunder as to
which the Trustee has actually received written notice, the Trustee shall give
to all Holders of Securities, in the manner provided in Section 1.6, notice of
such 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, 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 5.1(4), no such notice to Holders
of Securities shall be given until at least 60 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 6.3. CERTAIN RIGHTS OF TRUSTEE.
Subject to the provisions of Section 6.1:
(1) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officers' Certificate, other
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, coupon, other evidence
of indebtedness or other
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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 shall 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, in the absence of
bad faith on its part, rely upon an Officers' Certificate;
(4) the Trustee may consult with counsel of its selection and the
advice of such counsel or any Opinion of Counsel 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 of Securities 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, coupon, other evidence of indebtedness or other
paper or document, but the Trustee 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; and
(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.
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SECTION 6.4. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE 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, of the Securities or ofthe Common Stock issuable upon the conversion
of the Securities. The Trustee shall not be accountable for the use or
application by the Company of Securities or the proceeds thereof.
SECTION 6.5. MAY HOLD SECURITIES, ACT AS TRUSTEE UNDER OTHER INDENTURES.
The Trustee, any Authenticating Agent, any Paying Agent, any
Conversion Agent or any other agent of the Company or the Trustee, in its
individual or any other capacity, may become the owner or pledgee of Securities
and may otherwise deal with the Company with the same rights it would have if it
were not Trustee, Authenticating Agent, Paying Agent, Conversion Agent or such
other agent.
The Trustee may become and act as trustee under other indentures
under which other securities, or certificates of interest or participation in
other securities, of the Company are outstanding in the same manner as if it
were not Trustee hereunder.
SECTION 6.6. 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 in writing with the Company.
SECTION 6.7. COMPENSATION AND REIMBURSEMENT.
The Company agrees
(1) to pay to the Trustee from time to time such compensation as the
Company and the Trustee shall from time to time agree in writing for all
services rendered by it hereunder (which compensation shall not be limited
by any provision of law in regard to the compensation of a trustee of an
express trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements
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and advances incurred or made by the Trustee in accordance with any
provision 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 the Trustee (and its directors, officers, employees
and agents) for, and to hold it harmless against, any and all loss,
damage, claim, liability or expense, including taxes (other than taxes
based on the income of the Trustee), incurred without negligence or bad
faith on its part, arising out of or in connection with the acceptance or
administration of this trust, including the reasonable costs, expenses and
reasonable attorneys' fees of defending itself against any claim or
liability in connection with the exercise or performance of any of its
powers or duties hereunder.
When the Trustee incurs expenses or renders services in connection
with an Event of Default specified in Section 5.1(6) or Section 5.1(7), the
expenses (including the reasonable charges of its counsel) and the compensation
for the services are intended to constitute expenses of the administration under
any applicable Federal or State bankruptcy, insolvency or other similar law.
The Trustee shall have a lien prior to the Securities as to all
property and funds held by it hereunder for any amount owing it or any
predecessor Trustee pursuant to this Section 6.7, except with respect to funds
held in trust for the benefit of the Holders of particular Securities.
The provisions of this Section shall survive the termination of this
Indenture or the earlier resignation or removal of the Trustee.
SECTION 6.8. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a Trustee hereunder which shall be a
Person that is eligible pursuant to the Trust Indenture Act to act as such,
having a combined capital and surplus of at least U.S.$10,000,000, subject to
supervision or examination by Federal or State authority, in good standing and
having an established place of business in the Borough of Manhattan, The City of
New York. If such corporation 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 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
provisions of this Section, it shall resign immediately in the manner and with
the
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effect hereinafter specified in this Article and a successor shall be
appointed pursuant to Section 6.9.
SECTION 6.9. 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 in accordance with the
applicable requirements of Section 6.10.
(b) The Trustee may resign at any time by giving written notice
thereof to the Company. If the instrument of acceptance by a successor Trustee
required by Section 6.10 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 the Company. If the instrument of acceptance by a successor Trustee
required by Section 6.10 shall not have been delivered to the Trustee within 30
days after the giving of such notice of removal, the removed Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
(d) If at any time:
(1) the Trustee shall cease to be eligible under Section 6.8 and
shall fail to resign after written request therefor by the Company or by
any Holder of a Security who has been a bona fide Holder of a Security for
at least six months, or
(2) 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 (i) the Company by a Board Resolution may remove the
Trustee, or (ii) subject to Section 5.14, any Holder of a Security 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.
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(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 and
shall comply with the applicable requirements of this Section and Section 6.10.
If, within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor 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 successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment in accordance
with the applicable requirements of Section 6.10, become the successor 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 of Securities
and accepted appointment in the manner required by this Section and Section
6.10, any Holder of a Security 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 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 to all
Holders of Securities in the manner provided in Section 1.6. Each notice shall
include the name of the successor Trustee and the address of its Corporate Trust
Office.
SECTION 6.10. 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 the 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 such 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,
powers and trusts.
No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be eligible under this Article.
SECTION 6.11. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.
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Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise 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 6.12. AUTHENTICATING AGENTS.
The Trustee may, with the consent of the Company, appoint an
Authenticating Agent or Agents acceptable to the Company with respect to the
Securities which shall be authorized to act on behalf of the Trustee to
authenticate Securities issued upon exchange or substitution pursuant to this
Indenture.
Securities authenticated by an Authenticating Agent 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, and every reference
in this Indenture to the authentication and delivery of Securities by the
Trustee or the Trustee's certificate of authentication 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
subject to acceptance by 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 act as
Authenticating Agent and subject to supervision or examination by government or
other fiscal authority. If at any time an Authenticating Agent shall cease to be
eligible in accordance with the provisions of this Section 6.12, such
Authenticating Agent shall resign immediately in the manner and with the effect
specified in this Section 6.12.
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 6.12, without the execution or filing of any paper or any
further act on the part of the Trustee or the Authenticating Agent.
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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 6.12, the Trustee may appoint a successor
Authenticating Agent which shall be subject to acceptance by the Company. 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 6.12.
The Company agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section 6.12.
If an Authenticating Agent is appointed with respect to the
Securities pursuant to this Section 6.12, the Securities may have endorsed
thereon, in addition to or in lieu of the Trustee's certification of
authentication, an alternative certificate of authentication in the following
form:
This is one of the Securities referred to in the within-mentioned
Indenture.
THE BANK OF NEW YORK,
as Trustee
By [Authenticating Agent],
as Authenticating Agent
By ___________________________
Authorized Signature
SECTION 6.13. DISQUALIFICATION; CONFLICTING INTERESTS.
If the Trustee has or shall acquire a conflicting interest within
the meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture.
SECTION 6.14. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
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If and when the Trustee shall be or become a creditor of the Company
(or any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).
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ARTICLE SEVEN
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 7.1. 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 all its properties and assets substantially
as an entirety to any Person, and the Company shall not permit any Person to
consolidate with or merge into the Company or convey, transfer or lease all or
substantially all of its properties and assets to the Company, unless:
(1) in case the Company shall consolidate with or merge into another
Person or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, 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 an entirety, shall be a
corporation, limited liability company, partnership or trust, shall be
organized and validly existing under the laws of the United States of
America, any State thereof or the District of Columbia and shall expressly
assume, by an indenture supplemental hereto, executed and delivered to the
Trustee, in form satisfactory to the Trustee, the due and punctual payment
of the principal of, premium, if any, and interest (including Liquidated
Damages, if any, payable pursuant to Section 10.11) on all of the
Securities as applicable, and the performance or observance of every
covenant of this Indenture on the part of the Company to be performed or
observed and shall have provided for conversion rights in accordance with
Article Twelve;
(2) immediately after giving effect to such transaction, no Event of
Default, and no event that after notice or lapse of time or both, would
become an Event of Default, shall have happened and be continuing; and
(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, together with any documents required under Section
8.3.
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SECTION 7.2. SUCCESSOR SUBSTITUTED.
Upon any consolidation of the Company with, or merger of the Company
into any other Person or any conveyance, transfer or lease of all or
substantially all the properties and assets of the Company in accordance with
Section 7.1, the successor Person formed by such consolidation or into or with
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 Person had been named as the Company herein, and thereafter, except in
the case of a lease, the predecessor Person shall be relieved of all obligations
and covenants under this Indenture and the Securities.
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ARTICLE EIGHT
SUPPLEMENTAL INDENTURES
SECTION 8.1. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF
HOLDERS OF SECURITIES.
Without the consent of any Holders of Securities 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 for any of the
following purposes:
(1) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants and obligations of
the Company herein and in the Securities as permitted by this Indenture;
or
(2) to add to the covenants of the Company for the benefit of the
Holders of Securities or to surrender any right or power herein conferred
upon the Company; or
(3) to secure the Securities; or
(4) to make provision with respect to the conversion rights of
Holders of Securities pursuant to Section 12.11; or
(5) to make any changes or modifications to this Indenture necessary
in connection with the registration of any Registrable Securities under
the Securities Act as contemplated by Section 10.11, PROVIDED, such action
pursuant to this clause (5) shall not adversely affect the interests of
the Holders of Securities; or
(6) to comply with the requirements of the Trust Indenture Act or
the rules and regulations of the Commission thereunder in order to effect
or maintain the qualification of this Indenture under the Trust Indenture
Act, as contemplated by this Indenture or otherwise; or
(7) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee; or
(8) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein or which
is otherwise defective, or to make any other provisions with respect to
matters
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or questions arising under this Indenture as the Company and the Trustee
may deem necessary or desirable, PROVIDED such action pursuant to this
clause (8) shall not adversely affect the interests of the Holders of
Securities in any material respect.
Upon Company Request, accompanied by a Board Resolution authorizing
the execution of any such supplemental indenture, and subject to and upon
receipt by the Trustee of the documents described in Section 8.3 hereof, the
Trustee shall join with the Company in the execution of any supplemental
indenture authorized or permitted by the terms of this Indenture and to make any
further appropriate agreements and stipulations which may be therein contained.
SECTION 8.2. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS OF SECURITIES.
With either (a) the written consent of the Holders of not less than
a majority in principal amount of the Outstanding Securities, by the Act of said
Holders delivered to the Company and the Trustee, or (b) by the adoption of a
resolution, at a meeting of Holders of the Outstanding Securities at which a
quorum is present, by the Holders of 66-2/3% in principal amount of the
Outstanding Securities represented at such meeting, 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 of Securities under this
Indenture; PROVIDED, HOWEVER, that no such supplemental indenture shall, without
the consent or affirmative vote 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
or the rate of interest payable thereon or any premium payable upon
redemption or mandatory repurchase thereof, or change the obligation of
the Company to pay Liquidated Damages pursuant to Section 10.11 in a
manner adverse to the Holders, or change the coin or currency in which any
Security or the interest or any premium thereon or any other amount in
respect thereof is payable, or impair the right to institute suit for the
enforcement of any payment in respect of any Security on or after the
Stated Maturity thereof (or, in the case of redemption or any repurchase,
on or after the Redemption Date or Repurchase Date, as the case may be)
or, except as permitted by Section 12.11, adversely affect the right to
convert any Security as provided in Article Twelve, or modify the
provisions of this Indenture with respect to the subordination of the
Securities in a manner adverse to the Holders of Securities; or
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(2) reduce the requirements of Section 9.4 for quorum or voting, or
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 the obligation of the Company to maintain an office or
agency in the Borough of Manhattan, The City of New York, pursuant to
Section 10.2; or
(4) modify any of the provisions of this Section or Section 5.13 or
10.12, except to increase any percentage contained herein or therein 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; or
(5) modify the provisions of Article Fourteen in a manner adverse
to the Holders; or
(6) modify any of the provisions of Section 10.09 or 10.10.
It shall not be necessary for any Act of Holders of Securities 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 8.3. 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 Sections 6.1 and 6.3) 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, and that such supplemental
indenture has been duly authorized, executed and delivered by the Company and
constitutes a valid and legally binding obligation of the Company enforceable
against the Company in accordance with its terms. The Trustee may, but shall not
be obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
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SECTION 8.4. 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
appertaining thereto shall be bound thereby.
SECTION 8.5. 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 Company and the
Trustee, 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.
SECTION 8.6. NOTICE OF SUPPLEMENTAL INDENTURES.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of Section 8.2, the Company
shall give notice to all Holders of Securities of such fact, setting forth in
general terms the substance of such supplemental indenture, in the manner
provided in Section 1.6. Any failure of the Company to give such notice, or any
defect therein, shall not in any way impair or affect the validity of any such
supplemental indenture.
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ARTICLE NINE
MEETINGS OF HOLDERS OF SECURITIES
SECTION 9.1. PURPOSES FOR WHICH MEETINGS MAY BE CALLED.
A meeting of Holders of Securities may be called at any time and
from time to time pursuant to this Article to make, give or take any request,
demand, authorization, direction, notice, consent, waiver or other action
provided by this Indenture to be made, given or taken by Holders of Securities.
SECTION 9.2. CALL, NOTICE AND PLACE OF MEETINGS.
(a) The Trustee may at any time call a meeting of Holders of
Securities for any purpose specified in Section 9.1, to be held at such time and
at such place in the Borough of Manhattan, The City of New York, as the Trustee
shall determine. Notice of every meeting of Holders of Securities, setting forth
the time and the place of such meeting and in general terms the action proposed
to be taken at such meeting, shall be given, in the manner provided in Section
1.6, not less than 21 nor more than 180 days prior to the date fixed for the
meeting.
(b) In case at any time the Company, pursuant to a Board Resolution,
or the Holders of at least 10% in principal amount of the Outstanding Securities
shall have requested the Trustee to call a meeting of the Holders of Securities
for any purpose specified in Section 9.1, by written request setting forth in
reasonable detail the action proposed to be taken at the meeting, and the
Trustee shall not have made the first publication of the notice of such meeting
within 21 days after receipt of such request or shall not thereafter proceed to
cause the meeting to be held as provided herein, then the Company or the Holders
of Securities in the amount specified, as the case may be, may determine the
time and the place in the Borough of Manhattan, The City of New York, for such
meeting and may call such meeting for such purposes by giving notice thereof as
provided in paragraph (a) of this Section.
SECTION 9.3. PERSONS ENTITLED TO VOTE AT MEETINGS.
To be entitled to vote at any meeting of Holders of Securities, a
Person shall be (a) a Holder of one or more Outstanding Securities, or (b) a
Person appointed by an instrument in writing as proxy for a Holder or Holders of
one or more Outstanding Securities by such Holder or Holders. The only Persons
who shall be entitled to be present or to speak at any meeting of Holders shall
be the Persons
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entitled to vote at such meeting and their counsel, any
representatives of the Trustee and its counsel and any representatives of the
Company and its counsel.
SECTION 9.4. QUORUM; ACTION.
The Persons entitled to vote a majority in principal amount of the
Outstanding Securities shall constitute a quorum. In the absence of a quorum
within 30 minutes of the time appointed for any such meeting, the meeting shall,
if convened at the request of Holders of Securities, be dissolved. In any other
case, the meeting may be adjourned for a period of not less than 10 days as
determined by the chairman of the meeting prior to the adjournment of such
meeting. In the absence of a quorum at any such adjourned meeting, such
adjourned meeting may be further adjourned for a period not less than 10 days as
determined by the chairman of the meeting prior to the adjournment of such
adjourned meeting (subject to repeated applications of this sentence). Notice of
the reconvening of any adjourned meeting shall be given as provided in Section
9.2(a), except that such notice need be given only once not less than five days
prior to the date on which the meeting is scheduled to be reconvened. Notice of
the reconvening of an adjourned meeting shall state expressly the percentage of
the principal amount of the Outstanding Securities which shall constitute a
quorum.
Subject to the foregoing, at the reconvening of any meeting
adjourned for a lack of a quorum, the Persons entitled to vote 25% in principal
amount of the Outstanding Securities at the time shall constitute a quorum for
the taking of any action set forth in the notice of the original meeting.
At a meeting or an adjourned meeting duly reconvened and at which a
quorum is present as aforesaid, any resolution and all matters (except as
limited by the proviso to Section 8.2 and except to the extent Section 10.12
requires a different vote) shall be effectively passed and decided if passed or
decided by the Persons entitled to vote not less than 66-2/3% in principal
amount of Outstanding Securities represented and entitled to vote at such
meeting.
Any resolution passed or decisions taken at any meeting of Holders
of Securities duly held in accordance with this Section shall be binding on all
the Holders of Securities whether or not present or represented at the meeting.
The Trustee shall, in the name and at the expense of the Company, notify all the
Holders of Securities of any such resolutions or decisions pursuant to Section
1.6.
SECTION 9.5. DETERMINATION OF VOTING RIGHTS; CONDUCT AND
ADJOURNMENT OF MEETINGS.
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(a) Notwithstanding any other provisions of this Indenture, the
Trustee may make such reasonable regulations as it may deem advisable for any
meeting of Holders of Securities in regard to proof of the holding of Securities
and of the appointment of proxies and in regard to the appointment and duties of
inspectors of votes, the submission and examination of proxies, certificates and
other evidence of the right to vote, and such other matters concerning the
conduct of the meeting as it shall deem appropriate. Except as otherwise
permitted or required by any such regulations, the holding of Securities shall
be proved in the manner specified in Section 1.4 and the appointment of any
proxy shall be proved in the manner specified in Section 1.4 or by having the
signature of the Person executing the proxy guaranteed by any bank, broker or
other eligible institution participating in a recognized medallion signature
guarantee program.
(b) The Trustee shall, by an instrument in writing, appoint a
temporary chairman (which may be the Trustee) of the meeting, unless the meeting
shall have been called by the Company or by Holders of Securities as provided in
Section 9.2(b), in which case the Company or the Holders of Securities calling
the meeting, as the case may be, shall in like manner appoint a temporary
chairman. A permanent chairman and a permanent secretary of the meeting shall be
elected by vote of the Persons entitled to vote a majority in principal amount
of the Outstanding Securities represented at the meeting.
(c) At any meeting, each Holder of a Security or proxy shall be
entitled to one vote for each U.S.$1,000 principal amount of Securities held or
represented by him; PROVIDED, HOWEVER, that no vote shall be cast or counted at
any meeting in respect of any Security challenged as not Outstanding and ruled
by the chairman of the meeting to be not Outstanding. The chairman of the
meeting shall have no right to vote, except as a Holder of a Security or proxy.
(d) Any meeting of Holders of Securities duly called pursuant to
Section 9.2 at which a quorum is present may be adjourned from time to time by
Persons entitled to vote a majority in principal amount of the Outstanding
Securities represented at the meeting, and the meeting may be held as so
adjourned without further notice.
SECTION 9.6. COUNTING VOTES AND RECORDING ACTION OF MEETINGS.
The vote upon any resolution submitted to any meeting of Holders of
Securities shall be by written ballots on which shall be subscribed the
signatures of the Holders of Securities or of their representatives by proxy and
the principal amounts at Stated Maturity and serial numbers of the Outstanding
Securities held or represented by them. The permanent chairman of the meeting
shall appoint two inspectors of votes who shall count all votes cast at the
meeting for or against
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any resolution and who shall make and file with the secretary of the meeting
their verified written reports in duplicate of all votes cast at the meeting. A
record, at least in duplicate, of the proceedings of each meeting of Holders of
Securities shall be prepared by the secretary of the meeting and there shall be
attached to said record the original reports of the inspectors of votes on any
vote by ballot taken thereat and affidavits by one or more Persons having
knowledge of the facts setting forth a copy of the notice of the meeting and
showing that said notice was given as provided in Section 9.2 and, if
applicable, Section 9.4. Each copy shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one such
copy shall be delivered to the Company and another to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the ballots voted
at the meeting. Any record so signed and verified shall be conclusive evidence
of the matters therein stated.
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ARTICLE TEN
COVENANTS
SECTION 10.1. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST.
The Company covenants and agrees that it 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. The Company will
deposit or cause to be deposited with the Trustee, no later than the opening of
business on the date of the Stated Maturity of any Security or no later than the
opening of business on the due date for any installment of interest, all
payments so due, which payments shall be in immediately available funds on the
date of such Stated Maturity or due date, as the case may be.
SECTION 10.2. MAINTENANCE OF OFFICES OR AGENCIES.
The Company hereby appoints (a) the Corporate Trust Office of the
Trustee as its agent in the Borough of Manhattan, The City of New York, 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, and where notices and demands to or upon the Company
in respect of the Securities and this Indenture may be served.
The Company may at any time and from time to time vary or terminate
the appointment of any such agent or appoint any additional agents for any or
all of such purposes; PROVIDED, HOWEVER, that until all of the Securities have
been delivered to the Trustee for cancellation, or moneys sufficient to pay the
principal of, premium, if any, and interest on the Securities have been made
available for payment and either paid or returned to the Company pursuant to the
provisions of Section 10.3, the Company will maintain in the Borough of
Manhattan, The City of New York, an office or agency where Securities may be
presented or surrendered for payment and conversion, where Securities may be
surrendered for registration of transfer or exchange 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, and
notice to the Holders in accordance with Section 1.6, of the appointment or
termination of any such agents and of the location and any change in the
location of any 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,
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presentations and surrenders may be made and notices and demands may be served
on the Corporate Trust Office of the Trustee.
SECTION 10.3. MONEY FOR SECURITY PAYMENTS TO BE HELD IN TRUST.
If the Company shall act as its own Paying Agent, it will, on or
before each due date of the principal of, premium, if any, or interest on any of
the Securities, segregate and hold in trust for the benefit of the Persons
entitled thereto a sum sufficient to pay the principal, premium, if any, or
interest so becoming due until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and the Company 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,
no later than the opening of business on each due date of the principal of,
premium, if any, or interest on any Securities, deposit with the Trustee a sum
sufficient to pay the principal, premium, if any, or interest so becoming due,
such sum to be held for the benefit of the Persons entitled to such principal,
premium, if any, or interest, and (unless such Paying Agent is the Trustee) the
Company will promptly notify the Trustee of any failure 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,
premium, if any, or interest on Securities 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, 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 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 in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such
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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, premium, if
any, or interest on any Security and remaining unclaimed for two years after
such principal, 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 an Authorized Newspaper in each Place of Payment, 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 10.4. EXISTENCE.
Subject to Article Seven, the Company will do or cause to be done
all things necessary to preserve and keep in full force and effect its
existence, rights (charter and statutory) and franchises; PROVIDED, HOWEVER,
that the Company shall not be required to preserve any such right or franchise
if the Board of Directors shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company and that the loss
thereof is not disadvantageous in any material respect to the Holders.
SECTION 10.5. MAINTENANCE OF PROPERTIES.
The Company will cause all properties used or useful in the conduct
of its business or the business of any Subsidiary to be maintained and kept in
good condition, repair and working order and supplied with all necessary
equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Company may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; PROVIDED,
HOWEVER, that nothing in this Section shall prevent the Company from
discontinuing the operation or maintenance of any of such properties if such
discontinuance is, in the judgment of the Company, desirable in the conduct of
its business or the business of any Subsidiary and not disadvantageous in any
material respect to the Holders.
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SECTION 10.6. PAYMENT OF TAXES AND OTHER CLAIMS.
The Company will pay or discharge, or cause to be paid or
discharged, before the same may become delinquent, (1) all taxes, assessments
and governmental charges levied or imposed upon the Company or any Subsidiary or
upon the income, profits or property of the Company or any Subsidiary, (2) all
claims for labor, materials and supplies which, if unpaid, might by law become a
lien or charge upon the property of the Company or any Subsidiary, and (3) all
stamps and other duties, if any, which may be imposed by the United States or
any political subdivision thereof or therein in connection with the issuance,
transfer, exchange or conversion of any Securities or with respect to this
Indenture; PROVIDED, HOWEVER, that, in the case of clauses (1) and (2), the
Company shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim (a) if the failure to do so
will not, in the aggregate, have a material adverse impact on the Company, or
(b) if the amount, applicability or validity is being contested in good faith by
appropriate proceedings.
SECTION 10.7. REGISTRATION AND LISTING.
Prior to the Exchange Date, the Company (i) will effect all
registrations with, and obtain all approvals by, all governmental authorities
that may be necessary under any United States Federal or state law (including
the Securities Act, the Exchange Act and state securities and Blue Sky laws)
before the shares of Common Stock issuable upon conversion of Securities may be
lawfully issued and delivered, and qualified or listed as contemplated by clause
(ii) (it being understood that the Company shall not be required to register the
Securities under the Securities Act, except pursuant to the Registration Rights
Agreement referred to in Section 10.11); and (ii) will cause the shares of
Common Stock required to be issued and delivered upon conversion of Securities,
prior to such issuance or delivery, to be listed on the New York Stock Exchange
or, if the Common Stock is not then listed on the New York Stock Exchange, list
the Common Stock or qualify the Common Stock for quotation on each national
securities exchange or quotation system on which outstanding Common Stock is
listed or quoted at the time of such delivery. Nothing in this Section 10.7 will
limit the application of Section 10.11.
SECTION 10.8. STATEMENT BY OFFICERS AS TO DEFAULT.
The Company shall deliver to the Trustee, within 120 days after the
end of each fiscal year of the Company ending after the date hereof, an
Officers' Certificate (one of the signers of which shall be the Company's
principal executive, principal financial or principal accounting officer),
stating whether or not to the best knowledge of the signers thereof the Company
is in default in the performance and observance of any of the terms, provisions
and conditions of this Indenture (without
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regard to any period of grace or requirement of notice provided hereunder) and,
if the Company shall be in default, specifying all such defaults and the nature
and status thereof of which they may have knowledge.
The Company will deliver to the Trustee, forthwith upon becoming
aware of any default in the performance or observance of any covenant, agreement
or condition contained in this Indenture, or any Event of Default, an Officers'
Certificate specifying with particularity such default or Event of Default and
further stating what action the Company has taken, is taking or proposes to take
with respect thereto.
Any notice required to be given under this Section 10.8 shall be
delivered to the Trustee at its Corporate Trust Office.
SECTION 10.09. DELIVERY OF CERTAIN INFORMATION.
At any time when the Company is not subject to Section 13 or 15(d)
of the Exchange Act, upon the request of a Holder of a Restricted Security or
the holder of shares of Common Stock issued upon conversion thereof, the Company
will promptly furnish or cause to be furnished Rule 144A Information (as defined
below) to such Holder of Restricted Securities or such holder of shares of
Common Stock issued upon conversion of Restricted Securities, or to a
prospective purchaser of any such security designated by any such Holder or
holder, as the case may be, to the extent required to permit compliance by such
Holder or holder with Rule 144A under the Securities Act (or any successor
provision thereto) in connection with the resale of any such security; PROVIDED,
HOWEVER, that the Company shall not be required to furnish such information in
connection with any request made on or after the date which is three years from
the later of (i) the date such a security (or any such predecessor security) was
last acquired from the Company or (ii) the date such a security (or any such
predecessor security) was last acquired from an "affiliate" of the Company
within the meaning of Rule 144 under the Securities Act (or any successor
provision thereto). "Rule 144A Information" shall be such information as is
specified pursuant to Rule 144A(d)(4) under the Securities Act (or any successor
provision thereto).
SECTION 10.10. RESALE OF CERTAIN SECURITIES; REPORTING ISSUER.
During the period beginning on the last date of original issuance of
the Securities and ending on the date that is three years from such date, the
Company will not, and will not permit any of its subsidiaries or other
"affiliates" (as defined under Rule 144 under the Securities Act or any
successor provision thereto) controlled by it to, resell (x) any Securities
which constitute "restricted securities" under Rule 144 or (y) any securities
into which the Securities have been converted
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under this Indenture which constitute "restricted securities" under Rule 144,
that in either case have been reacquired by any of them. The Trustee shall have
no responsibility in respect of the Company's performance of its agreement in
the preceding sentence.
SECTION 10.11. REGISTRATION RIGHTS.
The Company agrees that the Holders from time to time of Registrable
Securities (as defined below) are entitled to the benefits of a Registration
Rights Agreement, dated as of September 20, 1996 (the "Registration Rights
Agreement"), executed by the Company. Pursuant to the Registration Rights
Agreement, the Company has agreed for the benefit of the Holders from time to
time of Registrable Securities, at the Company's expense, (i) to file within 90
days after the first date of original issuance of the Securities, a shelf
registration statement (the "Shelf Registration Statement") with the Commission
with respect to resales of the Registrable Securities, (ii) thereafter use
reasonable efforts to cause such Shelf Registration Statement to be declared
effective by the Commission within 180 days after the first date of original
issuance of the Securities, and (iii) to use reasonable efforts to maintain such
Shelf Registration Statement continuously effective under the Securities Act of
1933, as amended, until a period of three years from the last date of original
issuance of the Securities or, if earlier, until there are no outstanding
Registrable Securities.
Section 2(c) of the Registration Rights Agreement provides that,
upon written notice to each Holder of a Registrable Security, the Company may
postpone having the Shelf Registration Statement declared effective as required
by Section 2(a) of the Registration Rights Agreement for a reasonable time
specified in the notice but not exceeding 90 days if the Company is in
possession of material non-public information the disclosure of which would have
a material adverse effect on the business, operations, prospects, condition
(financial or otherwise) of the Company and its subsidiaries, taken as a whole.
Notwithstanding any postponement pursuant to Section 2(c) of the Registration
Rights Agreement, if (i) on or prior to 90 days following the date of original
issuance of the Registered Securities, a Shelf Registration Statement has not
been filed with the Commission, or (ii) on or prior to the 180th day following
the date of original issuance of the Registered Securities, such Shelf
Registration Statement is not declared effective (each, a "Registration
Default"), additional interest ("Liquidated Damages") will accrue on the
Registered Securities from and including the day following such Registration
Default to but excluding the day on which such Registration Default has been
cured. Liquidated Damages will be paid semi-annually in arrears, with the first
semi-annual payment due on the first Interest Payment Date in respect of the
Registered Securities following the date on which such Liquidated Damages begin
to accrue, and will accrue at a rate per annum equal to an additional
one-quarter of one percent (.25%)
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of the principal amount of the Registered Securities to and including the 90th
day following such Registration Default and at a rate per annum equal to
one-half of one percent (.50%) thereof from and after the 91st day following
such Registration Default. In the event that the Shelf Registration Statement
ceases to be effective prior to the third annual anniversary of the initial
effective date of the Shelf Registration Statement or such earlier date as is
provided in the Registration Rights Agreement for a period in excess of 60 days,
whether or not consecutive, during any 12-month period, then the interest rate
borne by the Registered Securities shall increase by an additional one-half of
one percent (.50%) per annum on the 61st day of the applicable 12-month period
such Shelf Registration Statement ceases to be effective to but excluding the
day on which the Shelf Registration Statement again becomes effective.
Whenever in this Indenture there is mentioned, in any context, the
payment of the principal of, premium, if any, or interest on, or in respect of,
any Registered Security, such mention shall be deemed to include mention of the
payment of Liquidated Damages provided for in this Section to the extent that,
in such context, Liquidated Damages are, were or would be payable in respect
thereof pursuant to the provisions of this Section, and express mention of the
payment of Liquidated Damages (if applicable) in any provisions hereof shall not
be construed as excluding Liquidated Damages in those provisions hereof where
such express mention is not made.
For the purposes of the Registration Rights Agreement, "Registrable
Securities" means all or any portion of the Registered Securities issued from
time to time under this Indenture and the shares of Common Stock issuable upon
conversion of such Securities PROVIDED, HOWEVER, that a Security or the shares
of Common Stock issuable upon conversion of a Security ceases to be a
Registrable Security when it (i) has been effectively registered under the
Securities Act and sold in a manner contemplated by the Shelf Registration
Statement, (ii) has been transferred in compliance with Rule 144 under the
Securities Act (or any successor provisions thereto) or (iii) otherwise has been
transferred and a new Security or share of Common Stock not subject to transfer
restrictions under the Securities Act has been delivered by or on behalf of the
Company in accordance with Section 3.5(b).
If a Security, or the shares of Common Stock issuable upon
conversion of a Security, is a Registrable Security, and the Holder thereof
elects to sell such Registrable Security pursuant to the Shelf Registration
Statement then, by its acceptance thereof, the Holder of such Registrable
Security will have agreed to be bound by the terms of the Registration Rights
Agreement relating to the Registrable Securities which are the subject of such
election.
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For the purposes of the Registration Rights Agreement, the term
"Holder" includes any Person that has a beneficial interest in any Global
Security or any beneficial interest in a global security representing shares of
Common Stock issuable upon conversion of a Security. The Company will give the
Trustee prompt written notice of any Registration Default, and of any cure
thereof.
SECTION 10.12. WAIVER OF CERTAIN COVENANTS.
The Company may omit in any particular instance to comply with any
covenant or conditions set forth in Sections 10.4 to 10.6, inclusive (other than
a covenant or condition which under Article Eight cannot be modified or amended
without the consent of the Holder of each Outstanding Security affected), if
before the time for such compliance the Holders shall, through the written
consent of, or the adoption of a resolution at a meeting of Holders of the
Outstanding Securities at which a quorum is present by, not less than a majority
in principal amount of the Outstanding Securities, either waive such compliance
in such instance or generally waive compliance with such covenant or condition,
but no such waiver shall extend to or affect such covenant or condition except
to the extent so expressly waived, and, until such waiver shall become
effective, the obligations of the Company and the duties of the Trustee or any
Paying or Conversion Agent in respect of any such covenant or condition shall
remain in full force and effect.
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ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 11.1. RIGHT OF REDEMPTION.
The Securities may be redeemed in accordance with the provisions of
the form of Securities set forth in Section 2.2.
SECTION 11.2. APPLICABILITY OF ARTICLE.
Redemption of Securities at the election of the Company or
otherwise, as permitted or required by any provision of the Securities or this
Indenture, shall be made in accordance with such provision and this Article
Eleven.
SECTION 11.3. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem any Securities shall be
evidenced by a Board Resolution. In case of any redemption at the election of
the Company of any of the Securities, the Company shall, at least 60 days prior
to the Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee in writing of such Redemption
Date. If the Securities are to be redeemed pursuant to an election of the
Company which is subject to a condition specified in the form of Securities set
forth in Section 2.2, the Company shall furnish the Trustee with an Officers'
Certificate stating that the Company is entitled to effect such redemption and
setting forth a statement of facts showing that the conditions precedent to the
right of the Company so to redeem have occurred.
SECTION 11.4. 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 by the Trustee within three Business
Days after it receives the notice described in 11.3, from the Outstanding
Securities not previously called for redemption, by such method as the Trustee
may deem fair and appropriate.
If any Registered 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
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converted during a selection of Securities to be redeemed may 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 and
certificate numbers 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 Securities which has been or is to be
redeemed.
SECTION 11.5. NOTICE OF REDEMPTION.
Notice of redemption shall be given in the manner provided in
Section 1.6 to the Holders of Securities to be redeemed not less than 30 nor
more than 60 days prior to the Redemption Date, and such notice shall be
irrevocable.
All notices of redemption shall identify the Securities to be
redeemed (including CUSIP numbers) and shall state:
(1) the Redemption Date,
(2) the Redemption Price, and accrued interest, if any,
(3) if less than all Outstanding Securities are to be redeemed, the
aggregate principal amount of Securities to be redeemed,
(4) that on the Redemption Date the Redemption Price, and accrued
interest, if any, will become due and payable upon each such Security to
be redeemed, and that interest thereon shall cease to accrue on and after
said date,
(5) the Conversion Rate, the date on which the right to convert the
Securities to be redeemed will terminate and the 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 and accrued interest, if any.
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 written request,
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by the Trustee in the name of and at the expense of the Company. Notice of
redemption of Securities to be redeemed at the election of the Company received
by the Trustee shall be given by the Trustee to each Paying Agent in the name of
and at the expense of the Company.
SECTION 11.6. DEPOSIT OF REDEMPTION PRICE.
Not less than one Business Day prior to any Redemption Date, the
Company shall deposit with the Trustee (or, if the Company is acting as its own
Paying Agent, segregate and hold in trust as provided in Section 10.3) an amount
of money (which shall be in immediately available funds on such Redemption Date)
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 so segregated and held in trust for the redemption
of such Security shall (subject to any right of the Holder of such Security or
any Predecessor Security to receive interest as provided in the last paragraph
of Section 3.7) be paid to the Company on Company Request or, if then held by
the Company, shall be discharged from such trust.
SECTION 11.7. 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, including accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
Security for redemption in accordance with said notice such Security shall be
paid by the Company at the Redemption Price together with accrued and unpaid
interest to the Redemption Date; PROVIDED, HOWEVER, that installments of
interest on Securities whose Stated Maturity is on or prior to the Redemption
Date shall be payable to the Holders of such Securities, or one or more
Predecessor Securities, registered as such on the relevant Record Date according
to their terms and the provisions of Section 3.7.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal amount of, premium, if any, and,
to the extent permitted by applicable law, accrued interest on such Security
shall, until paid, bear interest from the Redemption Date at a rate of 5 1/4%
per annum and such Security shall remain convertible until the principal of such
Security (or portion thereof, as the case may be) shall have been paid or duly
provided for.
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SECTION 11.8. 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 10.2 (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 make available for delivery to the Holder of such
Security without service charge, a new Registered Security or Securities, of any
authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Security so surrendered.
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ARTICLE TWELVE
CONVERSION OF SECURITIES
SECTION 12.1. CONVERSION PRIVILEGE AND CONVERSION RATE.
Subject to and upon compliance with the provisions of this Article,
at the option of the Holder thereof, any Security may be converted into fully
paid and non-assessable shares (calculated as to each conversion to the nearest
1/100th of a share) of Common Stock of the Company at the Conversion Rate,
determined as hereinafter provided, in effect at the time of conversion. Such
conversion right shall commence on the 90th day after the last original issuance
date of the Securities and expire at the close of business on September 15,
2001, subject, in the case of conversion of any Global Security, to any
Applicable Procedures. In case a Security or portion thereof is called for
redemption at the election of the Company or the Holder thereof exercises his
right to require the Company to repurchase the Security, such conversion right
in respect of the Security, or portion thereof so called, shall expire at the
close of business on the Redemption Date or the Repurchase Date, as the case may
be, unless the Company defaults in making the payment due upon redemption or
repurchase, as the case may be (in each case subject as aforesaid to any
Applicable Procedures with respect to any Global Security).
The rate at which shares of Common Stock shall be delivered upon
conversion (herein called the "Conversion Rate") shall be initially 30.6419
shares of Common Stock for each U.S.$1,000 principal amount of Securities. The
Conversion Rate shall be adjusted in certain instances as provided in this
Article Twelve.
SECTION 12.2. EXERCISE OF CONVERSION PRIVILEGE.
In order to exercise the conversion privilege, the Holder of any
Security to be converted shall surrender such Security, duly endorsed or
assigned to the Company or in blank, at any office or agency of the Company
maintained for that purpose pursuant to Section 10.2, accompanied by a duly
signed conversion notice substantially in the form set forth in Section 2.5
stating that the Holder elects to convert such Security or, if less than the
entire principal amount thereof is to be converted, the portion thereof to be
converted. Each Security surrendered for conversion (in whole or in part) during
the period from the close of business on any Regular Record Date next preceding
any Interest Payment Date to the opening of business on such Interest Payment
Date shall (except in the case of any Security or portion thereof which has been
called for redemption on a Redemption Date, or is repurchasable on a Repurchase
Date, occurring, in either case, within such period) be accompanied by payment
in New York Clearing House funds or other funds
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acceptable to the Company of an amount equal to the interest payable on such
Interest Payment Date on the principal amount of such Security (or part thereof,
as the case may be) being surrendered for conversion. The interest so payable on
such Interest Payment Date with respect to any Security (or portion thereof, if
applicable) which has been called for redemption on a Redemption Date, or is
repurchasable on a Repurchase Date, occurring, in either case, during the period
from the close of business on any Record Date next preceding any Interest
Payment Date to the opening of business on such Interest Payment Date, which
Security (or portion thereof, if applicable) is surrendered for conversion
during such period, shall be paid to the Holder of such Security being converted
in an amount equal to the interest that would have been payable on such
Security if such Security had been converted as of the close of business
on such Interest Payment Date. The interest so payable on such Interest Payment
Date in respect of any Security (or portion thereof, as the case may be) which
has not been called for redemption on a Redemption Date, or is not eligible for
repurchase on a Repurchase Date, occurring, in either case, during the period
from the close of business on any Record Date next preceding any Interest
Payment Date to the opening of business on such Interest Payment Date, which
Security (or portion thereof, as the case may be) is surrendered for conversion
during such period, shall be paid to the Holder of such Security as of such
Regular Record Date. Interest payable in respect of any Security surrendered for
conversion on or after an Interest Payment Date shall be paid to the Holder of
such Security as of the next preceding Regular Record Date, notwithstanding the
exercise of the right of conversion. Except as provided in this paragraph and
subject to the last paragraph of Section 3.7, no cash payment or adjustment
shall be made upon any conversion on account of any interest accrued from the
Interest Payment Date next preceding the conversion date, in respect of any
Security (or part thereof, as the case may be) surrendered for conversion, or on
account of any dividends on the Common Stock issued upon conversion. The
Company's delivery to the Holder of the number of shares of Common Stock (and
cash in lieu of fractions thereof, as provided in this Indenture) into which a
Security is convertible will be deemed to satisfy the Company's obligation to
pay the principal amount of the Security.
Securities shall be deemed to have been converted immediately prior
to the close of business on the day of surrender of such Securities for
conversion in accordance with the foregoing provisions, and at such time the
rights of the Holders of such Securities as Holders shall cease, and the Person
or Persons entitled to receive the Common Stock issuable upon conversion shall
be treated for all purposes as the record holder or holders of such Common Stock
at such time. As promptly as practicable on or after the conversion date, the
Company shall issue and deliver to the Trustee, for delivery to the Holder, a
certificate or certificates for the number of full shares of Common Stock
issuable upon conversion, together with payment in lieu of any fraction of a
share, as provided in Section 12.3.
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All shares of Common Stock delivered upon such conversion of
Restricted Securities shall bear restrictive legends substantially in the form
of the legends required to be set forth on the Restricted Securities pursuant to
Section 3.5 and shall be subject to the restrictions on transfer provided in
such legends. Neither the Trustee nor any agent maintained for the purpose of
such conversion shall have any responsibility for the inclusion or content of
any such restrictive legends on such Common Stock; PROVIDED, HOWEVER, that the
Trustee or any agent maintained for the purpose of such conversion shall have
provided, to the Company or to the Company's transfer agent for such Common
Stock, prior to or concurrently with a request to the Company to deliver such
Common Stock, written notice that the Securities delivered for conversion are
Restricted Securities.
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
make available for delivery to the Holder thereof, at the expense of the
Company, a new Registered Security or Securities of authorized denominations in
an aggregate principal amount equal to the unconverted portion of the principal
amount of such Security. A Security may be converted in part, but only if the
principal amount of such Security to be converted is any integral multiple of
U.S.$1,000 and the principal amount of such security to remain Outstanding after
such conversion is equal to U.S.$1,000 or any integral multiple of $1,000 in
excess thereof.
If shares of Common Stock to be issued upon conversion of a
Restricted Security, or Registered Securities to be issued upon conversion of a
Restricted Security in part only, are to be registered in a name other than that
of the beneficial owner of such Restricted Security, then such Holder must
deliver to the Conversion Agent a Surrender Certificate, dated the date of
surrender of such Restricted Security and signed by such beneficial owner, as to
compliance with the restrictions on transfer applicable to such Restricted
Security. Neither the Trustee nor any Conversion Agent, Registrar or Transfer
Agent shall be required to register in a name other than that of the beneficial
owner, shares of Common Stock or Securities issued upon conversion of any such
Restricted Security not so accompanied by a properly completed Surrender
Certificate.
SECTION 12.3. FRACTIONS OF SHARES.
No fractional shares of Common Stock shall be issued upon conversion
of any Security or 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 (or 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
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Company shall calculate and pay a cash adjustment in respect of such fraction
(calculated to the nearest 1/100th of a share) in an amount equal to the same
fraction of the Closing Price Per Share at the close of business on the day of
conversion.
SECTION 12.4. ADJUSTMENT OF CONVERSION RATE.
The Conversion Rate shall be subject to adjustments from time to
time as follows:
(1) In case the Company shall pay or make a dividend or other
distribution on any class of capital stock of the Company payable in shares of
Common Stock, the Conversion Rate in effect at the opening of business on the
day following the date fixed for the determination of shareholders entitled to
receive such dividend or other distribution shall be increased by dividing 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 and the denominator shall be the sum of such number of
shares and the total number of shares constituting such dividend or other
distribution, such increase to become effective immediately after the opening of
business on the day following the date fixed for such determination. If, after
any such date fixed for determination, any dividend or distribution is not in
fact paid, the Conversion Rate shall be immediately readjusted, effective as of
the date the Board of Directors determines not to pay such dividend or
distribution, to the Conversion Rate that would have been in effect if such
determination date had not been fixed. For the purposes of this paragraph (1),
the number of shares of Common Stock at any time outstanding shall not include
shares held in the treasury of the Company but shall include shares issuable in
respect of scrip certificates issued in lieu of fractions of shares of Common
Stock. The Company will not pay any dividend or make any distribution on shares
of Common Stock held in the treasury of the Company.
(2) In case the Company shall issue rights, options 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 (8) of this Section 12.4) of the
Common Stock on the date fixed for the determination of stockholders entitled to
receive such rights, options or warrants (other than any rights, options or
warrants that by their terms will also be issued to any Holder upon conversion
of a Security into shares of Common Stock without any action required by the
Company or any other Person), the Conversion Rate in effect at the opening of
business on the day following the date fixed for such determination shall be
increased by dividing 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 which the aggregate of the offering
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price of the total number of shares of Common Stock so offered for subscription
or purchase would purchase at such current market price and the denominator
shall be the number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination plus the number of shares of
Common Stock so offered for subscription or purchase, such increase to become
effective immediately after the opening of business on the day following the
date fixed for such determination. If, after any such date fixed for
determination, any such rights, options or warrants are not in fact issued, the
Conversion Rate shall be immediately readjusted, effective as of the date the
Board of Directors determines not to issue such rights, options or warrants, to
the Conversion Rate that would have been in effect if such determination date
had not been fixed. For the purposes of this paragraph (2), the number of shares
of Common Stock at any time outstanding shall not include shares held in the
treasury of the Company but shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of shares of Common Stock. The Company
will not issue any rights, options or warrants in respect of shares of Common
Stock held in the treasury of the Company.
(3) In case outstanding shares of Common Stock shall be subdivided
into a greater number of shares of Common Stock, the Conversion Rate in effect
at the opening of business on the day following the day upon which such
subdivision becomes effective shall be proportionately increased, and,
conversely, in case outstanding shares of Common Stock shall each be combined
into a smaller number of shares of Common Stock, the Conversion Rate in effect
at the opening of business on the day following the day upon which such
combination becomes effective shall be proportionately reduced, such increase or
reduction, as the case may be, to become effective immediately after the opening
of business on the day following the day upon which such subdivision or
combination becomes effective.
(4) In case the Company shall, by dividend or otherwise, distribute
to all holders of its Common Stock evidences of its indebtedness, shares of any
class of capital stock, or other property (including securities, but excluding
(i) any rights, options or warrants referred to in paragraph (2) of this
Section, (ii) any dividend or distribution paid exclusively in cash, (iii) any
dividend or distribution referred to in paragraph (1) of this Section and (iv)
any merger or consolidation to which Section 12.11 applies), the Conversion Rate
shall be adjusted so that the same shall equal the rate determined by dividing
the Conversion Rate in effect immediately prior to the close of business on the
date fixed for the determination of stockholders entitled to receive such
distribution by a fraction of which the numerator shall be the current market
price per share (determined as provided in paragraph (8) of this Section 12.4)
of the Common Stock on the date fixed for such determination less the then fair
market value (as determined by the Board of Directors, whose determination shall
be conclusive and described in a Board Resolution filed with the Trustee) of the
portion of the assets, shares or evidences of indebtedness so
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distributed applicable to one share of Common Stock and the denominator shall be
such current market price per share of the Common Stock, such adjustment to
become effective immediately prior to the opening of business on the day
following the date fixed for the determination of stockholders entitled to
receive such distribution. If, after any such date fixed for determination, any
such distribution is not in fact made, the Conversion Rate shall be immediately
readjusted, effective as of the date the Board of Directors determines not to
make such distribution, to the Conversion Rate that would have been in effect if
such determination date had not been fixed.
(5) In case the Company shall, by dividend or otherwise, distribute
to all holders of its Common Stock cash (excluding any cash that is distributed
upon a merger or consolidation to which Section 12.11 applies or as part of a
distribution referred to in paragraph (4) of this Section) in an aggregate
amount that, combined together with (I) the aggregate amount of any other cash
distributions to all holders of its Common Stock made exclusively in cash within
the 12 months preceding the date of payment of such distribution and in respect
of which no adjustment pursuant to this paragraph (5) has been made and (II) the
aggregate of any cash plus the fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a Board
Resolution) of consideration payable in respect of any tender offer by the
Company or any of its subsidiaries for all or any portion of the Common Stock
concluded within the 12 months preceding the date of payment of such
distribution and in respect of which no adjustment pursuant to paragraph (6) of
this Section 12.4 has been made (the "combined cash and tender amount") exceeds
10% of the product of the current market price per share (determined as provided
in paragraph (8) of this Section 12.4) of the Common Stock on the date for the
determination of holders of shares of Common Stock entitled to receive such
distribution times the number of shares of Common Stock outstanding on such date
(the "aggregate current market price"), then, and in each such case, immediately
after the close of business on such date for determination, the Conversion Rate
shall be adjusted so that the same shall equal the rate determined by dividing
the Conversion Rate in effect immediately prior to the close of business on the
date fixed for determination of the stockholders entitled to receive such
distribution by a fraction (i) the numerator of which shall be equal to the
current market price per share (determined as provided in paragraph (8) of this
Section) of the Common Stock on the date fixed for such determination less an
amount equal to the quotient of (x) the excess of such combined cash and tender
amount over such aggregate current market price divided by (y) the number of
shares of Common Stock outstanding on such date for determination and (ii) the
denominator of which shall be equal to the current market price per share
(determined as provided in paragraph (8) of this Section 12.4) of the Common
Stock on such date for determination.
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(6) In case a tender offer made by the Company or any Subsidiary for
all or any portion of the Common Stock shall expire and such tender offer (as
amended upon the expiration thereof) shall require the payment to stockholders
(based on the acceptance (up to any maximum specified in the terms of the tender
offer) of Purchased Shares (as defined below)) of an aggregate consideration
having a fair market value (as determined by the Board of Directors, whose
determination shall be conclusive and described in a Board Resolution) that
combined together with (I) the aggregate of the cash plus the fair market value
(as determined by the Board of Directors, whose determination shall be
conclusive and described in a Board Resolution), as of the expiration of such
tender offer, of consideration payable in respect of any other tender offer by
the Company or any Subsidiary for all or any portion of the Common Stock
expiring within the 12 months preceding the expiration of such tender offer and
in respect of which no adjustment pursuant to this paragraph (6) has been made
and (II) the aggregate amount of any cash distributions to all holders of the
Company's Common Stock within 12 months preceding the expiration of such tender
offer and in respect of which no adjustment pursuant to paragraph (5) of this
Section has been made (the "combined tender and cash amount") exceeds 10% of the
product of the current market price per share of the Common Stock (determined as
provided in paragraph (8) of this Section 12.4) as of the last time (the
"Expiration Time") tenders could have been made pursuant to such tender offer
(as it may be amended) times the number of shares of Common Stock outstanding
(including any tendered shares) as of the Expiration Time, then, and in each
such case, immediately prior to the opening of business on the day after the
date of the Expiration Time, the Conversion Rate shall be adjusted so that the
same shall equal the rate determined by dividing the Conversion Rate immediately
prior to close of business on the date of the Expiration Time by a fraction (i)
the numerator of which shall be equal to (A) the product of (I) the current
market price per share of the Common Stock (determined as provided in paragraph
(8) of this Section 12.4) on the date of the Expiration Time multiplied by (II)
the number of shares of Common Stock outstanding (including any tendered shares)
on the Expiration Time less (B) the combined tender and cash amount, and (ii)
the denominator of which shall be equal to the product of (A) the current market
price per share of the Common Stock (determined as provided in paragraph (8) of
this Section 12.4) as of the Expiration Time multiplied by (B) the number of
shares of Common Stock outstanding (including any tendered shares) as of the
Expiration Time less the number of all shares validly tendered and not withdrawn
as of the Expiration Time (the shares deemed so accepted up to any such maximum,
being referred to as the "Purchased Shares").
(7) The reclassification of Common Stock into securities including
other than Common Stock (other than any reclassification upon a consolidation or
merger to which Section 12.11 applies) shall be deemed to involve (a) a
distribution of such securities other than Common Stock to all holders of Common
Stock (and
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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 (4) of this Section), and (b) 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 (and the effective date of such
reclassification shall be deemed to be "the day upon which such subdivision
becomes effective" or "the day upon which such combination becomes effective",
as the case may be, and "the day upon which such subdivision or combination
becomes effective" within the meaning of paragraph (3) of this Section 12.4).
(8) For the purpose of any computation under paragraphs (2), (4),
(5) or (6) of this Section 12.4, the current market price per share of Common
Stock on any date shall be calculated by the Company and be deemed to be the
average of the daily Closing Prices Per Share for the five consecutive Trading
Days selected by the Company commencing not more than 10 Trading Days before,
and ending not later than, the earlier of the day in question and the day before
the "ex" date with respect to the issuance or distribution requiring such
computation. For purposes of this paragraph, the term "'ex' date", when used
with respect to any issuance or distribution, means the first date on which the
Common Stock trades regular way in the applicable securities market or on the
applicable securities exchange without the right to receive such issuance or
distribution.
(9) No adjustment in the Conversion Rate shall be required unless
such adjustment (plus any adjustments not previously made by reason of this
paragraph (9)) would require an increase or decrease of at least one percent in
such rate; PROVIDED, HOWEVER, that any adjustments which by reason of this
paragraph (9) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Article
shall be made to the nearest cent or to the nearest one-hundredth of a share, as
the case may be.
(10) The Company may make such increases in the Conversion Rate, for
the remaining term of the Securities or any shorter term, in addition to those
required by paragraphs (1), (2), (3), (4), (5) and (6) of this Section 12.4, as
it considers to be advisable in order to avoid or diminish any income tax
liability to any holders of shares of Common Stock resulting from any dividend
or distribution of stock or issuance of rights or warrants to purchase or
subscribe for stock or from any event treated as such for income tax purposes.
(11) Notwithstanding the foregoing provisions of this Section, no
adjustment of the Conversion Rate shall be required to be made (a) upon the
issuance of shares of Common Stock pursuant to any present or future plan for
the
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reinvestment of dividends or (b) because of a tender or exchange offer of
the character described in Rule 13e-4(h)(5) under the Exchange Act or any
successor rule thereto.
SECTION 12.5. NOTICE OF ADJUSTMENTS OF CONVERSION RATE.
Whenever the Conversion Rate is adjusted as herein provided:
(1) the Company shall compute the adjusted Conversion Rate in
accordance with Section 12.4 and shall prepare a certificate signed by the
Chief Financial Officer of the Company setting forth the adjusted
Conversion Rate and showing in reasonable detail the facts upon which such
adjustment is based, and such certificate shall promptly be filed with the
Trustee and with each Conversion Agent; and
(2) upon each such adjustment, a notice stating that the Conversion
Rate has been adjusted and setting forth the adjusted Conversion Rate
shall be required, and as soon as practicable after it is required, such
notice shall be provided by the Company to all Holders in accordance with
Section 1.6.
Neither the Trustee nor any Conversion Agent shall be under any duty or
responsibility with respect to any such certificate or the information and
calculations contained therein, except to exhibit the same to any Holder of
Securities desiring inspection thereof at its office during normal business
hours.
SECTION 12.6. NOTICE OF CERTAIN CORPORATE ACTION.
In case:
(a) the Company shall declare a dividend (or any other distribution)
on its Common Stock payable (i) otherwise than exclusively in cash or (ii)
exclusively in cash in an amount that would require any adjustment
pursuant to Section 12.4; or
(b) the Company shall authorize the granting to the holders of its
Common Stock of rights, options or warrants to subscribe for or purchase
any shares of capital stock of any class or of any other rights; or
(c) of any reclassification of the Common Stock of the Company, or
of any consolidation, merger or share exchange to which the Company is a
party and for which approval of any stockholders of
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the Company is required, or of the conveyance, sale, transfer or lease of
all or substantially all of the assets of the Company; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company;
then the Company shall cause to be filed at each office or agency maintained for
the purpose of conversion of Securities pursuant to Section 10.2, and shall
cause to be provided to all Holders in accordance with Section 1.6, at least 20
days (or 10 days in any case specified in clause (a) or (b) above) prior to the
applicable record or effective date hereinafter specified, a notice stating (x)
the date on which a record is to be taken for the purpose of such dividend,
distribution, rights, options 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, rights, options or warrants are to be determined
or (y) the date on which such reclassification, consolidation, merger,
conveyance, transfer, sale, lease, 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, cash or other property deliverable upon such
reclassification, consolidation, merger, conveyance, transfer, sale, lease,
dissolution, liquidation or winding up. Neither the failure to give such notice
or the notice referred to in the following paragraph nor any defect therein
shall affect the legality or validity of the proceedings described in clauses
(a) through (d) of this Section 12.6. If at the time the Trustee shall not be
the conversion agent, a copy of such notice shall also forthwith be filed by the
Company with the Trustee.
The Company shall cause to be filed at each office or agency
maintained for the purpose of conversion of Securities pursuant to Section 10.2,
and shall cause to be provided to all Holders in accordance with Section 1.6,
notice of any tender offer by the Company or any Subsidiary for all or any
portion of the Common Stock at or about the time that such notice of tender
offer is provided to the public generally.
SECTION 12.7. COMPANY TO RESERVE COMMON STOCK.
The Company shall at all times reserve and keep available, free from
preemptive rights, out of its authorized but unissued Common Stock, for the
purpose of effecting the conversion of Securities, the full number of shares of
Common Stock then issuable upon the conversion of all Outstanding Securities.
SECTION 12.8. TAXES ON CONVERSIONS.
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Except as provided in the next sentence, the Company will pay any
and all taxes and duties that may be payable in respect of the issue or delivery
of shares of Common Stock on conversion of Securities pursuant hereto. The
Company shall not, however, be required to pay any tax or duty which may be
payable in respect of any transfer involved in the issue and delivery of shares
of Common Stock in a name other than that of the Holder of the Security or
Securities to be converted, and no such issue or delivery shall be made unless
and until the Person requesting such issue has paid to the Company the amount of
any such tax or duty, or has established to the satisfaction of the Company that
such tax or duty has been paid.
SECTION 12.9. COVENANT AS TO COMMON STOCK.
The Company agrees that all shares of Common Stock which may be
delivered upon conversion of Securities, upon such delivery, will have been duly
authorized and validly issued and will be fully paid and nonassessable and,
except as provided in Section 12.8, the Company will pay all taxes, liens and
charges with respect to the issue thereof.
SECTION 12.10. CANCELLATION OF CONVERTED SECURITIES.
All Securities delivered for conversion shall be delivered to the
Trustee or its agent to be canceled by or at the direction of the Trustee, which
shall dispose of the same as provided in Section 3.9.
SECTION 12.11. PROVISION IN CASE OF CONSOLIDATION, MERGER OR SALE OF ASSETS.
In case of any consolidation or merger of the Company with or into
any other Person, any merger of another Person with or into the Company (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 conveyance, sale, transfer or lease of all or substantially all of the
assets of the Company, 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 as specified in Section 12.1, to
convert such Security only into the kind and amount of securities, cash and
other property receivable upon such consolidation, merger, conveyance, sale,
transfer or lease 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, conveyance, sale, transfer or lease, assuming such
holder of Common Stock of the Company (i) is not a Person with which the Company
consolidated or merged with or into or which merged into or with the Company or
to which such conveyance, sale, transfer or
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lease 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, conveyance, sale, transfer or lease (PROVIDED that
if the kind or amount of securities, cash and other property receivable upon
such consolidation, merger, conveyance, sale, transfer, or lease is not the same
for each share of Common Stock of the Company held immediately prior to such
consolidation, merger, conveyance, sale, transfer or lease by others 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 12.11 the kind and amount of securities, cash and other
property receivable upon such consolidation, merger, conveyance, sale, transfer
or lease by the holders of 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), and further assuming, if such consolidation, merger, conveyance,
transfer, sale or lease occurs prior to the 90th day following the last original
issue date of the Securities, that the Security was convertible at the time of
such occurrence at the Conversion Rate specified in Section 12.1 as adjusted
from the issue date of such Security to such time as provided in this Article
Twelve. 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 12.11 shall similarly apply
to successive consolidations, mergers, conveyances, sales, transfers or leases.
Notice of the execution of such a supplemental indenture shall be given by the
Company to the Holder of each Security as provided in Section 1.6 promptly upon
such execution.
Neither the Trustee nor any Conversion Agent shall 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 other securities or property or cash receivable by Holders of
Securities upon the conversion of their Securities after any such consolidation,
merger, conveyance, transfer, sale or lease or to any such adjustment, but 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 12.12. RESPONSIBILITY OF TRUSTEE FOR CONVERSION PROVISIONS.
The Trustee, subject to the provisions of Section 6.1, and any
Conversion Agent shall not at any time be under any duty or responsibility to
any Holder of Securities 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
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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, or whether a supplemental indenture need be entered into. Neither the
Trustee, subject to the provisions of Section 6.1, nor any Conversion Agent
shall be accountable with respect to the validity or value (or the kind or
amount) of any Common Stock, or of any other securities or property or cash,
which may at any time be issued or delivered upon the conversion of any
Security; and it or they do not make any representation with respect thereto.
Neither the Trustee, subject to the provisions of Section 6.1, nor any
Conversion Agent shall be responsible for any failure of the Company to make or
calculate any cash payment or to issue, transfer or deliver any shares of Common
Stock or share certificates or other securities or property or cash upon the
surrender of any Security for the purpose of conversion; and the Trustee,
subject to the provisions of Section 6.1, and any Conversion Agent shall not be
responsible for any failure of the Company to comply with any of the covenants
of the Company contained in this Article.
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ARTICLE THIRTEEN
SUBORDINATION OF SECURITIES
SECTION 13.1. 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 (subject to the provisions
of Article Four), the indebtedness represented by the Securities and the payment
of the principal of (and premium, if any) and interest on, and any payment of
the Repurchase Price with respect to, 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 13.2. PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC.
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 any
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 in cash before the Holders of the Securities are entitled to
receive any payment on account of principal of (or premium, if any) or interest
(including any Liquidated Damages) on the Securities or on account of the
purchase, redemption or other acquisition of 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, 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, securities or other property, before all Senior Indebtedness is
paid in full, and if such fact shall, at or prior to the time of such payment or
distribution, 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
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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, securities or
other property" 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, which shares of stock
or securities are subordinated in right of payment to all then outstanding
Senior Indebtedness to substantially the same extent as, or to a greater extent
than, the Securities are so subordinated as provided in this Article. The
consolidation of the Company with, or the merger of the Company into, another
Person or the liquidation or dissolution of the Company following the conveyance
or transfer of its properties and assets substantially as an entirety to another
Person upon the terms and conditions set forth in Article Seven 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 Person formed by such consolidation or
into which the Company is merged or which acquires by conveyance or transfer
such properties and assets substantially as an 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 Seven.
SECTION 13.3. NO PAYMENT WHEN SENIOR INDEBTEDNESS IN DEFAULT.
(a) In the event and during the continuation of any default in the
payment of principal of (or premium, if any) or interest on (including a default
under any redemption or repurchase obligation with respect to) any Senior
Indebtedness beyond any applicable grace period with respect thereto or in the
event that any other event of default with respect to any Senior Indebtedness
shall have occurred and be continuing which would then permit the holders of
such Senior Indebtedness to declare such Senior 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 after written notice to the Company and the Trustee by any
holder of such Senior Indebtedness, or any trustee, agent or representative
therefor 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
shall be made by the Company on account of principal of (or premium, if any) or
interest (including Liquidated Damages) on the Securities or on account of the
purchase, redemption or other acquisition of Securities.
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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, at or prior to the
time of such payment, 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, in the case of the Trustee, or the Trustee,
in the case of such Holder.
The provisions of this Section shall not apply to any payment with
respect to which Section 13.2 would be applicable.
SECTION 13.4. PAYMENT PERMITTED IF NO DEFAULT.
Nothing contained in this Article or elsewhere in this Indenture or
in any of the Securities shall prevent (a) 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 13.2 or under the
conditions described in Section 13.3, from making payments at any time of
principal of (and premium, if any) or interest on the Securities, or (b) the
application by the Trustee 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 or the retention of such payment by the Holders, if, at the
time of such application by the Trustee, it did not have knowledge that such
payment would have been prohibited by the provisions of this Article.
SECTION 13.5. 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 and distributions of cash, property and
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 holders of Senior Indebtedness by Holders of the Securities or the Trustee,
shall, as among 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 Senior Indebtedness.
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SECTION 13.6. 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 (a) impair, as among the Company, its creditors other than
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; or (b) 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; or (c) 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 and securities
otherwise payable or deliverable to the Trustee or such Holder.
SECTION 13.7. 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 13.8. NO WAIVER OF SUBORDINATION PROVISIONS.
No right of any present or future holder of any Senior Indebtedness
to enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder of any Senior
Indebtedness, or by any non-compliance 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
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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 or otherwise deal with any property
pledged, mortgaged or otherwise 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 13.9. 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. 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, agent or
representative therefor; and, prior to the receipt of any such written notice,
the Trustee, subject to the provisions of Section 6.1, shall be entitled in all
respects to assume that no such facts exist; PROVIDED, HOWEVER, that if the
Trustee shall not have received the notice provided for in this Section 13.9
prior to the date upon which by the terms hereof any 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), 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 two Business Days prior to such date.
Subject to the provisions of Section 6.1, 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, agent
or representative therefor) to establish that such notice has been given by a
holder of Senior Indebtedness (or a trustee, agent or representative therefor).
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.
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SECTION 13.10. 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 6.1, 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, receiver, liquidating trustee, custodian, 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 the Senior Indebtedness and other indebtedness of
the Company, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this Article.
SECTION 13.11. TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR INDEBTEDNESS.
The Trustee shall not be deemed to owe 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 to which
any holders of Senior Indebtedness shall be entitled by virtue of this Article
or otherwise. With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants or obligations as
are specifically set for in this Article Thirteen and no implied covenants or
obligations with respect to holders of Senior Indebtedness shall be read into
this Indenture against the Trustee.
SECTION 13.12. RELIANCE BY HOLDERS OF SENIOR INDEBTEDNESS ON SUBORDINATION
PROVISIONS.
Each Holder by accepting a Security acknowledges and agrees that the
foregoing subordination provisions are, and are intended to be, an inducement
and a consideration to each holder of any Senior Indebtedness, whether such
Senior Indebtedness was created or acquired before or after the issuance of the
Securities, to acquire and continue to hold, or to continue to hold, such Senior
Indebtedness and such holder of Senior Indebtedness shall be deemed conclusively
to have relied on such subordination provisions in acquiring and continuing to
hold, or in continuing to hold, such Senior Indebtedness.
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SECTION 13.13. 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 extent 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 of, or payments to,
the Trustee under or pursuant to Section 6.7.
SECTION 13.14. ARTICLE APPLICABLE TO PAYING AGENTS.
In case at any time any Paying Agent other than the Trustee shall
have been appointed by the Company and be then acting hereunder, the term
"Trustee" as used in this Article shall in such case (unless the context
otherwise requires) be construed as extending to and including such Paying Agent
within its meaning as fully for all intents and purposes as if such Paying Agent
were named in this Article in addition to or in place of the Trustee; PROVIDED,
HOWEVER, that Section 13.13 shall not apply to the Company or any Affiliate of
the Company if it or such Affiliate acts as Paying Agent.
SECTION 13.15. CERTAIN CONVERSIONS AND REPURCHASES DEEMED PAYMENT.
For the purposes of this Article only, (1) the issuance and delivery
of junior securities upon conversion of Securities in accordance with Article
Twelve or upon the repurchase of Securities in accordance with Article Fourteen
shall not be deemed to constitute a payment or distribution on account of the
principal of or premium or interest on Securities or on account of the purchase
or other acquisition of Securities, and (2) the payment, issuance or delivery of
cash, property or securities (other than junior securities) upon conversion of a
Security shall be deemed to constitute payment on account of the principal of
such Security. For the purposes of this Section, the term "junior securities"
means (a) shares of any stock of any class of the Company and any cash, property
or securities into which the Securities are convertible pursuant to Article
Twelve and (b) securities of the Company which are subordinated in right of
payment to all Senior Indebtedness which may be outstanding at the time of
issuance or delivery of such securities to substantially the same extent as, or
to a greater extent than, the Securities are so subordinated as provided in this
Article. Nothing contained in this Article or elsewhere in this Indenture or in
the Securities is intended to or shall impair, as among the Company, its
creditors other than holders of Senior Indebtedness and the Holders of the
Securities, the right, which is absolute and unconditional, of the Holder of any
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Security to convert such Security in accordance with Article Twelve or to
exchange such Security for Common Stock in accordance with Article Fourteen if
the Company elects to satisfy the obligations under Article Fourteen by the
delivery of Common Stock.
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ARTICLE FOURTEEN
REPURCHASE OF SECURITIES AT THE OPTION OF THE
HOLDER UPON A CHANGE IN CONTROL
SECTION 14.1. RIGHT TO REQUIRE REPURCHASE.
In the event that a Change in Control (as hereinafter defined) shall
occur, then each Holder shall have the right, at the Holder's option, but
subject to the provisions of Section 14.2, to require the Company to repurchase,
and upon the exercise of such right the Company shall repurchase, all of such
Holder's Securities not theretofore called for redemption, or any portion of the
principal amount thereof that is equal to U.S.$1,000 or any integral multiple
thereof, on the date (the "Repurchase Date") that is 45 days after the date of
the Company Notice (as defined in Section 14.3) at a purchase price equal to
100% of the principal amount of the Securities to be repurchased plus interest
accrued to the Repurchase Date (the "Repurchase Price"); PROVIDED, HOWEVER, that
installments of interest on Securities whose Stated Maturity is on or prior to
the Repurchase Date shall be payable to the Holders of such Securities, or one
or more Predecessor Securities, registered as such on the relevant Record Date
according to their terms and the provisions of Section 3.7. Such right to
require the repurchase of the Securities shall not continue after a discharge of
the Company from its obligations with respect to the Securities in accordance
with Article Four, unless a Change in Control shall have occurred prior to such
discharge. At the option of the Company, the Repurchase Price may be paid in
cash or, subject to the fulfillment by the Company of the conditions set forth
Section 14.2, by delivery of shares of Common Stock having a fair market value
equal to the Repurchase Price. Whenever in this Indenture (including Sections
2.2, 3.1, 5.1(1) and 5.8) there is a reference, in any context, to the principal
of any Security as of any time, such reference shall be deemed to include
reference to the Repurchase Price payable in respect of such Security to the
extent that such Repurchase Price is, was or would be so payable at such time,
and express mention of the Repurchase Price in any provision of this Indenture
shall not be construed as excluding the Repurchase Price in those provisions of
this Indenture when such express mention is not made; PROVIDED, HOWEVER, that
for the purposes of Article Thirteen such reference shall be deemed to include
reference to the Repurchase Price only to the extent the Repurchase Price is
payable in cash.
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SECTION 14.2. CONDITIONS TO THE COMPANY'S ELECTION TO PAY THE
REPURCHASE PRICE IN COMMON STOCK.
The Company may elect to pay the Repurchase Price by delivery of shares of
Common Stock pursuant to Section 14.1 if and only if the following conditions
shall have been satisfied:
(a) The shares of Common Stock deliverable in payment of the
Repurchase Price shall have a fair market value as of the Repurchase Date of not
less than the Repurchase Price. For purposes of Section 14.1 and this Section
14.2, the fair market value of shares of Common Stock shall be determined by the
Company and shall be equal to 95% of the average of the Closing Prices Per Share
for the five consecutive Trading Days immediately preceding the second Trading
Day prior to the Repurchase Date;
(b) The Repurchase Price shall be paid only in cash in the event any
shares of Common Stock to be issued upon repurchase of Securities hereunder (i)
require registration under any federal securities law before such shares may be
freely transferrable without being subject to any transfer restrictions under
the Securities Act upon repurchase and if such registration is not completed or
does not become effective prior to the Repurchase Date, and/or (ii) require
registration with or approval of any governmental authority under any state law
or any other federal law before such shares may be validly issued or delivered
upon repurchase and if such registration is not completed or does not become
effective or such approval is not obtained prior to the Repurchase Date;
(c) Payment of the Repurchase Price may not be made in Common Stock
unless such stock is, or shall have been, approved for listing on the New York
Stock Exchange or listed or quoted on a national securities exchange or
quotation system, in either case, prior to the Repurchase Date; and
(d) All shares of Common Stock which may be issued upon repurchase
of Securities will be issued out of the Company's authorized but unissued Common
Stock and, will upon issue, be duly and validly issued and fully paid and
non-assessable and free of any preemptive rights.
If all of the conditions set forth in this Section 14.2 are not
satisfied in accordance with the terms thereof, the Repurchase Price shall be
paid by the Company only in cash.
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SECTION 14.3. NOTICES; METHOD OF EXERCISING REPURCHASE RIGHT, ETC.
(a) Unless the Company shall have theretofore called for redemption
all of the Outstanding Securities, on or before the 30th day after the
occurrence of a Change in Control, the Company or, at the request and expense of
the Company on or before the 15th day after such occurrence, the Trustee, shall
give to all Holders of Securities, in the manner provided in Section 1.6, notice
(the "Company Notice") of the occurrence of the Change of Control and of the
repurchase right set forth herein arising as a result thereof. The Company shall
also deliver a copy of such notice of a repurchase right to the Trustee.
Each notice of a repurchase right shall state:
(1) the Repurchase Date,
(2) the date by which the repurchase right must be exercised,
(3) the Repurchase Price, and whether the Repurchase Price shall be
paid by the Company in cash or by delivery of shares of Common Stock,
(4) a description of the procedure which a Holder must follow to
exercise a repurchase right, and the place or places where such
Securities, are to be surrendered for payment of the Repurchase Price and
accrued interest, if any,
(5) that on the Repurchase Date the Repurchase Price, and accrued
interest, if any, will become due and payable upon each such Security
designated by the Holder to be repurchased, and that interest thereon
shall cease to accrue on and after said date,
(6) the Conversion Rate then in effect, the date on which the right
to convert the principal amount of the Securities to be repurchased will
terminate and the place or places where such Securities may be surrendered
for conversion,
(7) the place or places that the certificate required by Section 2.2
shall be delivered, and the form of such certificate and the place or
places that the Surrender Certificate required by Section 14.3(i) shall be
delivered, and
(8) the Cusip number or numbers of such Securities.
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No failure of the Company to give the foregoing notices or defect
therein shall limit any Holder's right to exercise a repurchase right or affect
the validity of the proceedings for the repurchase of Securities.
If any of the foregoing provisions or other provisions of this
Article Fourteen are inconsistent with applicable law, such law shall govern.
(b) To exercise a repurchase right, a Holder shall deliver to the
Trustee on or before the 30th day after the date of the Company Notice (i)
written notice of the Holder's exercise of such right, which notice shall set
forth the name of the Holder, the principal amount of the Securities to be
repurchased (and, if any Security is to repurchased in part, the serial number
thereof, the portion of the principal amount thereof to be repurchased and the
name of the Person in which the portion thereof to remain Outstanding after such
repurchase is to be registered) and a statement that an election to exercise the
repurchase right is being made thereby, and, in the event that the Repurchase
Price shall be paid in shares of Common Stock, the name or names (with
addresses) in which the certificate or certificates for shares of Common Stock
shall be issued, and (ii) the Securities with respect to which the repurchase
right is being exercised. Such written notice shall be irrevocable, except that
the right of the Holder to convert the Securities with respect to which the
repurchase right is being exercised shall continue until the close of business
on the Repurchase Date.
(c) In the event a repurchase right shall be exercised in accordance
with the terms hereof, the Company shall pay or cause to be paid to the Trustee
the Repurchase Price in cash or shares of Common Stock, as provided above, for
payment to the Holder on the Repurchase Date or, if shares of Common Stock are
to be paid, as promptly after the Repurchase Date as practicable, together with
accrued and unpaid interest to the Repurchase Date payable with respect to the
Securities as to which the purchase right has been exercised; PROVIDED, HOWEVER,
that installments of interest that mature on or prior to the Repurchase Date
shall be payable in cash to the Holders of such Securities, or one or more
Predecessor Securities, registered as such at the close of business on the
relevant Regular Record Date.
(d) If any Security (or portion thereof) surrendered for repurchase
shall not be so paid on the Repurchase Date, the principal amount of such
Security (or portion thereof, as the case may be) shall, until paid, bear
interest to the extent permitted by applicable law from the Repurchase Date at
the rate of 5 1/4% per annum, and each Security shall remain convertible into
Common Stock until the principal of such Security (or portion thereof, as the
case may be) shall have been paid or duly provided for.
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(e) Any Security which is to be repurchased only in part shall be
surrendered to the Trustee (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and make available for delivery to the Holder of such
Security without service charge, a new Security or Securities, containing
identical terms and conditions, each in an authorized denomination in aggregate
principal amount equal to and in exchange for the unrepurchased portion of the
principal of the Security so surrendered.
(f) Any issuance of shares of Common Stock in respect of the
Repurchase Price shall be deemed to have been effected immediately prior to the
close of business on the Repurchase Date and the Person or Persons in whose name
or names any certificate or certificates for shares of Common Stock shall be
issuable upon such repurchase shall be deemed to have become on the Repurchase
Date the holder or holders of record of the shares represented thereby;
PROVIDED, HOWEVER, that any surrender for repurchase on a date when the stock
transfer books of the Company shall be closed shall constitute the Person or
Persons in whose name or names the certificate or certificates for such shares
are to be issued as the record holder or holders thereof for all purposes at the
opening of business on the next succeeding day on which such stock transfer
books are open. No payment or adjustment shall be made for dividends or
distributions on any Common Stock issued upon repurchase of any Security
declared prior to the Repurchase Date.
(g) No fractions of shares shall be issued upon repurchase of
Securities. If more than one Security shall be repurchased from the same Holder
and the Repurchase Price shall be payable in shares of Common Stock, the number
of full shares which shall be issuable upon such repurchase shall be computed on
the basis of the aggregate principal amount of the Securities so repurchased.
Instead of any fractional share of Common Stock which would otherwise be
issuable on the repurchase of any Security or Securities, the Company will
deliver to the applicable Holder its check for the current market value of such
fractional share. The current market value of a fraction of a share is
determined by multiplying the current market price of a full share by the
fraction, and rounding the result to the nearest cent. For purposes of this
Section, the current market price of a share of Common Stock is the Closing
Price Per Share of the Common Stock on the Trading Day immediately preceding the
Repurchase Date.
(h) Any issuance and delivery of certificates for shares of Common
Stock on repurchase of Securities shall be made without charge to the Holder of
Securities being repurchased for such certificates or for any tax or duty in
respect of the issuance or delivery of such certificates or the securities
represented thereby;
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PROVIDED, HOWEVER, that the Company shall not be required to pay any tax or duty
which may be payable in respect of (i) income of the Holder or (ii) any transfer
involved in the issuance or delivery of certificates for shares of Common Stock
in a name other than that of the Holder of the Securities being repurchased, and
no such issuance or delivery shall be made unless and until the Person
requesting such issuance or delivery has paid to the Company the amount of any
such tax or duty or has established, to the satisfaction of the Company, that
such tax or duty has been paid.
(i) If shares of Common Stock to be delivered upon repurchase of a
Security are to be registered in a name other than that of the beneficial owner
of such Security, then such Holder must deliver to the Trustee a Surrender
Certificate, dated the date of surrender of such Restricted Security and signed
by such beneficial owner, as to compliance with the restrictions on transfer
applicable to such Restricted Security. Neither the Trustee nor any Registrar or
Transfer Agent or other agents shall be required to register in a name other
than that of the beneficial owner shares of Common Stock issued upon repurchase
of any such Restricted Security not so accompanied by a properly completed
Surrender Certificate.
(j) All Securities delivered for repurchase shall be delivered to
the Trustee to be canceled at the direction of the Trustee, which shall dispose
of the same as provided in Section 3.9.
SECTION 14.4. CERTAIN DEFINITIONS.
For purposes of this Article Fourteen,
(a) the term "beneficial owner" shall be determined in accordance
with Rule 13d-3, as in effect on the date of the original execution of this
Indenture, promulgated by the Commission pursuant to the Exchange Act;
(b) a "Change in Control" shall be deemed to have occurred at the
time, after the original issuance of the Securities, of:
(i) the acquisition by any person of beneficial ownership,
directly or indirectly, through a purchase, merger or other
acquisition transaction or series of transactions, of shares
of capital stock of the Company entitling such person to
exercise 50% or more of the total voting power of all shares
of capital stock of the Company entitled to vote generally in
the elections of directors (any shares of voting stock of
which such person or group is the beneficial owner that are
not then outstanding being deemed outstanding for purposes of
calculating such percentage), other
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<PAGE>
than any such acquisition by the Company, any Subsidiary of
the Company or any employee benefit plan of the Company
existing on the date of this Indenture; or
(ii) any consolidation or merger of the Company with or into, any
other person, any merger of another person with or into the
Company, or any conveyance, sale, transfer or lease of all
or substantially all of the assets of the Company to another
person (other than (a) any such transaction (x) which does not
result in any reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock and (y)
pursuant to which holders of Common Stock immediately prior
to such transaction have the entitlement to exercise, directly
or indirectly, 50% or more of the total voting power of all
shares of capital stock entitled to vote generally in the
election of directors of the continuing or surviving person
immediately after such transaction and (b) any merger which is
effected solely to change the jurisdiction of incorporation of
the Company and results in a reclassification, conversion or
exchange of outstanding shares of Common Stock into solely
shares of common stock);
PROVIDED, HOWEVER, that a Change in Control shall not be deemed to have occurred
if the Closing Price Per Share on any five Trading Days within the period of 10
consecutive Trading Days ending immediately after the later of the date of the
Change in Control or the date of the public announcement of the Change in
Control (in the case of a Change in Control under Clause (i) above) or the
period of 10 consecutive Trading Days ending immediately prior to the date of
the Change in Control (in the case of a Change in Control under Clause (ii)
above) shall equal or exceed 105% of the Conversion Price of the Securities in
effect on each such Trading Day;
(c) the term "Conversion Price" shall equal U.S.$1,000 divided by
the Conversion Rate; and
(d) for purposes of Section 14.4(b)(i), the term "person" shall
include any syndicate or group which would be deemed to be a "person" under
Section 13(d)(3) of the Exchange Act, as in effect on the date of the original
execution of this Indenture.
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<PAGE>
ARTICLE FIFTEEN
HOLDERS LISTS AND REPORTS
BY TRUSTEE AND COMPANY; NON-RECOURSE
SECTION 15.1. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS.
The Company will furnish or cause to be furnished to the Trustee:
(a) semi-annually, not more than 15 days after the Regular Record
Date, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders of Securities as of such Regular Record
Date, and
(b) at such other times as the Trustee may reasonably 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 15.2. PRESERVATION OF INFORMATION.
(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 15.1 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 15.1 upon receipt of a new list so furnished.
(b) After this Indenture has been qualified under the Trust
Indenture Act, the rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Securities, and the
corresponding rights and duties of the Trustee, shall be as provided by the
Trust Indenture Act.
(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 any
disclosure of information as to names and addresses of Holders made pursuant to
the Trust Indenture Act.
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<PAGE>
SECTION 15.3. NO RECOURSE AGAINST OTHERS.
An incorporator or any past, present or future director, officer,
employee or stockholder, as such, of the Company shall not have any liability
for any obligations of the Company under the Securities or this Indenture or for
any claim based on, in respect of or by reason of such obligations or their
creation. By accepting a Security, each Holder shall waive and release all such
liability. Such waiver and release shall be part of the consideration for the
issue of the Securities.
SECTION 15.4. REPORTS BY TRUSTEE.
(a) After this Indenture has been qualified under the Trust
Indenture Act, the Trustee shall transmit to Holders such reports concerning the
Trustee and its actions under this Indenture as may be required pursuant to the
Trust Indenture Act at the times and in the manner provided pursuant thereto. If
required by Section 313(a) of the Trust Indenture Act, the Trustee shall, within
sixty days after each May 15 following the date of this Indenture, deliver to
Holders a brief report, dated as of such May 15, which complies with the
provisions of such Section 313(a).
(b) After this Indenture has been qualified under the Trust
Indenture Act, 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 promptly notify the Trustee when the Securities are listed on any
stock exchange.
SECTION 15.5. REPORTS BY COMPANY.
After this Indenture has been qualified under the Trust Indenture
Act, the Company shall file with the Trustee and the Commission, and transmit to
Holders, such information, documents and other reports, and such summaries
thereof, as may be required pursuant to the Trust Indenture Act at the times and
in the manner provided pursuant to such Act; PROVIDED that any such information,
documents or reports required to be filed with the Commission pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 shall be filed with
the Trustee within 15 days after the same is so required to be filed with the
Commission.
Delivery of such reports, information and documents to the Trustee
is for informational purposes only and the Trustee's receipt thereof shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
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<PAGE>
---------------------
This instrument may be executed in any number of counterparts, each
of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, all as of the day and year first above written.
THE SPORTS AUTHORITY, INC.
By /s/ ANTHONY F. CRUDELE
---------------------------
Name:
Title:
THE BANK OF NEW YORK, Trustee
By /s/ PAUL J. SCHMALZEL
---------------------------
Name:
Title:
<PAGE>
ANNEX A -- Form of
Regulation S Certificate
REGULATION S CERTIFICATE
(For transfers pursuant to ss. 3.5(b)(i), (iii) and (v)
of the Indenture)
THE BANK OF NEW YORK,
as Trustee
101 Barclay Street, Floor 21W
New York, New York 10286
Attention: Corporate Trust
Trustee Administration
Re: 5 1/4% CONVERTIBLE SUBORDINATED NOTES DUE
SEPTEMBER 15, 2001 OF THE SPORTS AUTHORITY, INC.
(THE "SECURITIES")
Reference is made to the Indenture, dated as of September 20, 1996
(the "Indenture"), from The Sports Authority, Inc. (the "Company") to The Bank
of New York, as Trustee. Terms used herein and defined in the Indenture or in
Regulation S or Rule 144 under the U.S. Securities Act of 1933 (the "Securities
Act") are used herein as so defined.
This certificate relates to U.S. $____________ principal amount of
Securities, which are evidenced by the following certificate(s) (the "Specified
Securities"):
CUSIP No(s). ___________________________
CERTIFICATE No(s). _____________________
The person in whose name this certificate is executed below (the "Undersigned")
hereby certifies that either (i) it is the sole beneficial owner of the
Specified Securities or (ii) it is acting on behalf of all the beneficial owners
of the Specified Securities and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner".
If the Specified Securities are represented by a Global Security, they are held
through the Depositary or an Agent Member in the name of the Undersigned, as or
on behalf of the Owner. If the Specified Securities are not represented by a
Global Security, they are registered in the name of the Undersigned, as or on
behalf of the Owner.
A-1
<PAGE>
The Owner has requested that the Specified Securities be transferred
to a person (the "Transferee") who will take delivery in the form of a
Regulation S Security. In connection with such transfer, the Owner hereby
certifies that, unless such transfer is being effected pursuant to an effective
registration statement under the Securities Act, it is being effected in
accordance with Rule 904 or Rule 144 under the Securities Act and with all
applicable securities laws of the states of the United States and other
jurisdictions. Accordingly, the Owner hereby further certifies as follows:
(1) RULE 904 TRANSFERS. If the transfer is being effected in
accordance with Rule 904:
(A) the Owner is not a distributor of the Securities, an
affiliate of the Company or any such distributor or a person acting
on behalf of any of the foregoing;
(B) the offer of the Specified Securities was not made to a
person in the United States;
(C) either:
(i) at the time the buy order was originated, the Transferee
was outside the United States or the Owner and any person acting
on its behalf reasonably believed that the Transferee was
outside the United States, or
(ii) the transaction is being executed in, on or through
the facilities of the Eurobond market, as regulated by the
Association of International Bond Dealers, or another designated
offshore securities market and neither the Owner nor any person
acting on its behalf knows that the transaction has been
prearranged with a buyer in the United States;
(D) no directed selling efforts have been made in the United
States by or on behalf of the Owner or any affiliate thereof;
(E) if the Owner is a dealer in securities or has received a
selling concession, fee or other remuneration in respect of the
Specified Securities, and the transfer is to occur during the
Restricted Period, then the requirements of Rule 904(c)(1) have been
satisfied; and
A-2
<PAGE>
(F) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act.
(2) RULE 144 TRANSFERS. If the transfer is being effected
pursuant to Rule 144:
(A) the transfer is occurring after a holding period of at least
two years (computed in accordance with paragraph (d) of Rule 144)
has elapsed since the date the Specified Securities were acquired
from the Company or from an affiliate (as such term is defined in
Rule 144) of the Company, whichever is later, and is being effected
in accordance with the applicable amount, manner of sale and notice
requirements of paragraphs (e), (f) and (h) of Rule 144; or
(B) the transfer is occurring after a period of at least three
years has elapsed since the date the Specified Securities were
acquired from the Company or from an affiliate (as such term is
defined in Rule 144) of the Company, whichever is later, and the
Owner is not, and during the preceding three months has not been, an
affiliate of the Company.
This certificate and the statements contained herein are made for
your benefit and the benefit of the Company and the Initial Purchaser.
Dated: ______________________________
(Print the name of the Undersigned, as such term is
defined in the second paragraph of this certificate.)
By:____________________________________
Name:
Title:
(If the Undersigned is a corporation, partnership or
fiduciary, the title of the person signing on behalf of
the Undersigned must be stated.)
A-3
<PAGE>
ANNEX B -- Form of Restricted
Securities Certificate
RESTRICTED SECURITIES CERTIFICATE
(For transfers pursuant to ss. 3.5(b)(ii), (iii), (iv) and (v)
of the Indenture)
The Bank of New York,
as Trustee
101 Barclay Street, Floor 21W
New York, New York 10286
Attention: Corporate Trust
Trustee Administration
Re: 5 1/4% CONVERTIBLE SUBORDINATED NOTES DUE
SEPTEMBER 15, 2001 OF THE SPORTS AUTHORITY, INC.
(THE "SECURITIES")
Reference is made to the Indenture, dated as of September 20, 1996
(the "Indenture"), from The Sports Authority, Inc. (the "Company") to The Bank
of New York, as Trustee. Terms used herein and defined in the Indenture or in
Regulation S or Rule 144 under the U.S. Securities Act of 1933 (the "Securities
Act") are used herein as so defined.
This certificate relates to U.S. $_____________ principal amount of
Securities, which are evidenced by the following certificate(s) (the "Specified
Securities"):
CUSIP No(s). ___________________________
CERTIFICATE No(s). _____________________
The person in whose name this certificate is executed below (the "Undersigned")
hereby certifies that either (i) it is the sole beneficial owner of the
Specified Securities or (ii) it is acting on behalf of all the beneficial owners
of the Specified Securities and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner".
If the Specified Securities are represented by a Global Security, they are held
through the Depositary or an Agent Member in the name of the Undersigned, as or
on behalf of the Owner. If the Specified Securities are not represented by a
Global Security, they are registered in the name of the Undersigned, as or on
behalf of the Owner.
B-1
<PAGE>
The Owner has requested that the Specified Securities be transferred
to a person (the "Transferee") who will take delivery in the form of a
Restricted Security. In connection with such transfer, the Owner hereby
certifies that, unless such transfer is being effected pursuant to an effective
registration statement under the Securities Act, it is being effected in
accordance with Rule 144A or Rule 144 under the Securities Act and all
applicable securities laws of the states of the United States and other
jurisdictions.
Accordingly, the Owner hereby further certifies as:
(1) RULE 144A TRANSFERS. If the transfer is being effected in
accordance with Rule 144A:
(A) the Specified Securities are being transferred to a person
that the Owner and any person acting on its behalf reasonably
believe is a "qualified institutional buyer" within the meaning of
Rule 144A, acquiring for its own account or for the account of a
qualified institutional buyer; and
(B) the Owner and any person acting on its behalf have taken
reasonable steps to ensure that the Transferee is aware that the
Owner may be relying on Rule 144A in connection with the transfer;
and
(2) RULE 144 TRANSFERS. If the transfer is being effected pursuant
to Rule 144:
(A) the transfer is occurring after a holding period of at least
two years (computed in accordance with paragraph (d) of Rule 144)
has elapsed since the date the Specified Securities were acquired
from the Company or from an affiliate (as such term is defined in
Rule 144) of the Company, whichever is later, and is being effected
in accordance with the applicable amount, manner of sale and notice
requirements of paragraphs (e), (f) and (h) of Rule 144; or
(B) the transfer is occurring after a period of at least three
years has elapsed since the date the Specified Securities were
acquired from the Company or from an affiliate (as such term is
defined in Rule 144) of the Company, whichever is later, and the
Owner is not, and during the preceding three months has not been, an
affiliate of the Company.
B-2
<PAGE>
This certificate and the statements contained herein are made for
your benefit and the benefit of the Company and the Initial Purchaser.
Dated: ____________________________________
(Print the name of the Undersigned, as such term is
defined in the second paragraph of this certificate.)
By:_________________________________
Name:
Title:
(If the Undersigned is a corporation, partnership or
fiduciary, the title of the person signing on behalf of
the Undersigned must be stated.)
B-3
<PAGE>
ANNEX C -- Form of Unrestricted
Securities Certificate
UNRESTRICTED SECURITIES CERTIFICATE
(For removal of Securities Act Legends pursuant to ss. 3.5(c))
The Bank of New York,
as Trustee
101 Barclay Street, Floor 21W
New York, New York 10286
Attention: Corporate Trust
Trustee Administration
Re: 5 1/4% CONVERTIBLE SUBORDINATED NOTES DUE
SEPTEMBER 15, 2001 OF THE SPORTS AUTHORITY, INC.
(THE "SECURITIES")
Reference is made to the Indenture, dated as of September 20, 1996
(the "Indenture"), from The Sports Authority, Inc. (the "Company") to The Bank
of New York, as Trustee. Terms used herein and defined in the Indenture or in
Regulation S or Rule 144 under the U.S. Securities Act of 1933 (the "Securities
Act") are used herein as so defined.
This certificate relates to U.S. $_____________ principal amount of
Securities, which are evidenced by the following certificate(s) (the "Specified
Securities"):
CUSIP No(s). ___________________________
CERTIFICATE No(s). _____________________
The person in whose name this certificate is executed below (the "Undersigned")
hereby certifies that either (i) it is the sole beneficial owner of the
Specified Securities or (ii) it is acting on behalf of all the beneficial owners
of the Specified Securities and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner".
If the Specified Securities are represented by a Global Security, they are held
through the Depositary or an Agent Member in the name of the Undersigned, as or
on behalf of the Owner. If the Specified Securities are not represented by a
Global Security, they are registered in the name of the Undersigned, as or on
behalf of the Owner.
C-1
<PAGE>
The Owner has requested that the Specified Securities be exchanged
for Securities bearing no Securities Act Legend pursuant to Section 3.5(c) of
the Indenture. In connection with such exchange, the Owner hereby certifies that
the exchange is occurring after a period of at least three years has elapsed
since the date the Specified Securities were acquired from the Company or from
an affiliate (as such term is defined in Rule 144) of the Company, whichever is
later, and the Owner is not, and during the preceding three months has not been,
an affiliate of the Company. The Owner also acknowledges that any future
transfers of the Specified Securities must comply with all applicable securities
laws of the states of the United States and other jurisdictions.
This certificate and the statements contained herein are made for
your benefit and the benefit of the Company and the Initial Purchaser.
Dated: __________________________________
(Print the name of the Undersigned, as such term is
defined in the second paragraph of this certificate.)
By:_______________________________
Name:
Title:
(If the Undersigned is a corporation, partnership or
fiduciary, the title of the person signing on behalf of
the Undersigned must be stated.)
C-2
<PAGE>
ANNEX D -- Form of
Surrender Certificate
In connection with the certification contemplated by
Section 12.2 or
14.3(i) relating to compliance with certain restrictions relating to transfers
of Restricted Securities, such certification shall be provided substantially in
the form of the following certificate, with only such changes thereto as shall
be approved by the Company and Goldman, Sachs & Co.:
CERTIFICATE
THE SPORTS AUTHORITY, INC.
5 1/4% CONVERTIBLE NOTES DUE SEPTEMBER 15, 2001
This is to certify that as of the date hereof with respect to
U.S.$________ principal amount (as defined in the Indenture) of the
above-captioned securities surrendered on the date hereof (the "Surrendered
Securities") for registration of transfer, or for conversion or repurchase where
the securities issuable upon such conversion or repurchase are to be registered
in a name other than that of the undersigned Holder (each such transaction being
a "transfer"), the undersigned Holder (as defined in the Indenture) certifies
that the transfer of Surrendered Securities associated with such transfer
complies with the restrictive legend set forth on the face of the Surrendered
Securities for the reason checked below:
_______ The transfer of the Surrendered Securities complies with
Rule 144 under the United States Securities Act of 1933,
as amended (the "Securities Act"); or
_______ The transfer of the Surrendered Securities complies with
Rule 144A under the Securities Act; or
_______ The transfer of the Surrendered Securities complies with
Rule 904 under the Securities Act.
_______ The transfer of the Surrendered Securities has been made
to an institution that is an "accredited investor"
within the meaning of Rule 501(a)(1), (2), (3) or (7)
under the Securities Act in a transaction exempt from
the registration requirements of the Securities Act.
[Name of Holder]
--------------------
Dated: ____________, ____*"
* To be dated the date
of surrender
D-1
------------------------------------------------------------------------
REGISTRATION RIGHTS
AGREEMENT
Dated as of September 20, 1996
By and Between
THE SPORTS AUTHORITY, INC.
and
GOLDMAN, SACHS & CO.
------------------------------------------------------------------------
<PAGE>
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of September 20, 1996, by
and between The Sports Authority, Inc., a Delaware corporation (the "Company"),
and Goldman, Sachs & Co. (the "Purchaser").
RECITALS
WHEREAS, the Company and the Purchaser have entered into a Purchase
Agreement, dated September 17, 1996 (the "Purchase Agreement"), providing for,
among other things, the sale by the Company and the purchase by the Purchaser of
an aggregate of U.S.$130,000,000 principal amount, and, at the election of the
Purchaser, up to an aggregate of U.S.$19,500,000 additional principal amount, of
the Company's 5 1/4% Convertible Subordinated Notes due September 15, 2001,
convertible into shares of Common Stock (as defined herein) of the Company as
provided in the Indenture (as defined herein); and
WHEREAS, this Agreement is being entered into pursuant to the
Purchase Agreement as a condition to the closing of the sale of the Securities
(as defined herein) pursuant thereto;
NOW, THEREFORE, in consideration of the premises, and of the mutual
covenants, representations, warranties and agreements herein contained, the
parties hereto agree as follows:
1. CERTAIN DEFINITIONS.
As used in this Agreement, the following terms shall have the
following respective meanings:
(a) "CLOSING DATE" shall mean the First Time of Delivery as defined
in the Purchase Agreement.
(b) "COMMISSION" shall mean the Securities and Exchange Commission,
or any other federal agency at the time administering the Exchange Act or the
Securities Act, whichever is the relevant statute for the particular purpose.
(c) "COMMON STOCK" means the Common Stock, par value $.01 per share,
of the Company, and any securities of the Company or any successor which may be
issuable upon
<PAGE>
conversion of the Securities pursuant to Article Twelve of the Indenture.
(d) "EFFECTIVE TIME" shall mean the date on which the Commission
declares the Registration Statement effective or on which the Registration
Statement otherwise becomes effective.
(e) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
or any successor thereto, as the same shall be amended from time to time.
(f) The term "HOLDER" shall mean any person that is the record owner
of Registrable Securities or any person that has a beneficial interest in a
global security representing Registerable Securities.
(g) "INDENTURE" shall mean the Indenture, dated as of September 20,
1996, between the Company and The Bank of New York, as Trustee, as amended and
supplemented from time to time in accordance with its terms.
(h) The term "MANAGING UNDERWRITER OR UNDERWRITERS" shall mean the
person or persons selected pursuant to Section 7(a) of this Agreement to manage
an underwritten offering of Registrable Securities.
(i) The term "PERSON" shall have the meaning specified in the
Indenture.
(j) "PROSPECTUS" shall mean the prospectus (including any
preliminary prospectus and any final prospectus) included in any Registration
Statement, as amended or supplemented by any prospectus supplement with respect
to the terms of the offering of any portion of the Registrable Securities
covered by the Registration Statement and by all other amendments and
supplements to such prospectus, including all material incorporated by reference
in such prospectus and all documents filed after the date of such prospectus by
the Company under the Exchange Act and incorporated by reference therein.
(k) "REGISTRABLE SECURITIES" shall mean all or any portion of the
Securities issued under the Indenture and the shares of Common Stock issuable
upon conversion of such Securities; PROVIDED, HOWEVER, that a Security or the
shares of Common Stock issuable upon conversion of a Security ceases to be a
Registrable Security when it (i) has been effectively registered under the
Securities Act and sold in a manner contemplated by the Registration Statement,
(ii) has been transferred in compliance with Rule 144 under
-2-
<PAGE>
the Securities Act (or any successor provisions thereto) or (iii) otherwise has
been transferred and a new Security or share of Common Stock not subject to
transfer restrictions under the Securities Act has been delivered by or on
behalf of the Company in accordance with Section 3.5(b) of the Indenture.
(l) "REGISTRATION EXPENSES" shall have the meaning assigned thereto
in Section 4 of this Agreement.
(m) "REGISTRATION STATEMENT" shall mean a "shelf" registration
statement filed under the Securities Act providing for the registration of, and
the sale on a continuous or delayed basis by the holders of, all of the
Registrable Securities pursuant to Rule 415 under the Securities Act and/or any
similar rule that may be adopted by the Commission, filed by the Company
pursuant to the provisions of Section 2 of this Agreement, including the
Prospectus contained therein, any amendments and supplements to such
registration statement, including post-effective amendments, and all exhibits
and all material incorporated by reference in such registration statement.
(n) "RESTRICTED SECURITY" shall have the meaning specified in the
Indenture.
(o) "RULES AND REGULATIONS" shall mean the published rules and
regulations of the Commission promulgated under the Securities Act or the
Exchange Act, as in effect at any relevant time.
(p) "SECURITIES" shall mean the Company's 5 1/4% Convertible
Subordinated Notes due September 15, 2001, to be issued pursuant to the
Indenture and sold pursuant to the Purchase Agreement and any securities issued
in exchange therefor or in lieu thereof pursuant to the Indenture.
(q) "SECURITIES ACT" shall mean the Securities Act of 1933, or any
successor thereto, as the same shall be amended from time to time.
(r) "TRUST INDENTURE ACT" shall mean the Trust Indenture Act of
1939, or any successor thereto, and the rules, regulations and forms promulgated
thereunder, all as the same shall be amended from time to time.
(s) The term "UNDERWRITER" shall hereinafter mean any underwriter of
an underwritten offering of Registrable Securities.
-3-
<PAGE>
(t) Wherever there is a reference in this Agreement to a percentage
of the "principal amount" of the Registrable Securities or to a percentage of
Registrable Securities, Common Stock shall be treated as representing the
principal amount of Securities which was surrendered for conversion in order to
receive such number of shares of Common Stock.
2. REGISTRATION UNDER THE SECURITIES ACT.
(a) The Company shall, at its expense, within 90 calendar days
following the Closing Date, file with the Commission a Registration Statement
with respect to the Registrable Securities and thereafter shall use its
reasonable efforts to cause such Registration Statement to be declared effective
by the Commission under the Securities Act within 180 calendar days after the
Closing Date.
(b) The Company shall use its best efforts, and will file such
supplements or amendments to the Registration Statement as may be necessary or
appropriate, to keep the Registration Statement continuously effective under the
Securities Act and usable by holders for resales of Registrable Securities for a
period of three years from the Effective Time or, if earlier, until there are no
outstanding Registrable Securities.
(c) Upon written notice to each holder of a Registrable Security,
the Company may postpone having the Registration Statement declared effective as
required by Section 2(a) above for a reasonable time specified in the notice but
not exceeding 90 days, if the Company is in possession of material non-public
information the disclosure of which would have a material adverse effect on the
business, operations, prospects, condition (financial or otherwise) of the
Company and its subsidiaries, taken as a whole.
3. REGISTRATION PROCEDURES.
(a) Prior to or at the Effective Time the Company shall qualify the
Indenture under the Trust Indenture Act. In the event that any modification or
amendment to the Indenture is required by the Trust Indenture Act or by the
staff of the Commission in order so to qualify the Indenture, the Company shall
without delay call a meeting of Holders (as defined in the Indenture) in the
manner and with the effect provided by the Indenture, at which meeting such
Holders shall be asked to consider and to vote upon such modifications or
amendments, but only such modifications or
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amendments, as shall be so required. In connection with any such meeting, the
Company shall solicit proxies from holders to be voted in favor of such
modifications or amendments and shall recommend that Holders vote in favor of
such modifications or amendments. Notwithstanding the foregoing, in the event
that, in the written opinion of counsel to the Company, such modifications or
amendments may be effected without a meeting of Holders pursuant to the
applicable provisions of the Indenture, the Company shall effect such
modifications or amendments without such a meeting.
(b) In the event that any such amendment or modification referred to
in Section 3(a) hereof involves the appointment of a new trustee under the
Indenture, the Company shall appoint a new trustee thereunder pursuant to the
applicable provisions of the Indenture.
(c) In connection with the Company's obligations with respect to the
Registration Statement, the Company shall use its best efforts to cause the
Registration Statement to permit the sale of the Registrable Securities by the
holders thereof in accordance with the intended method or methods of
distribution thereof described in the Registration Statement. In connection
therewith, the Company shall, as promptly as possible:
(i) before filing a Registration Statement or Prospectus or any
amendments or supplements thereto (other than periodic reports filed with
the Commission under the Exchange Act), the Prospectus or any prospectus
supplement, furnish to the holders of the Registrable Securities covered
by such Registration Statement and the managing underwriter or
underwriters of Registrable Securities being sold in any underwritten
offering copies of all such documents proposed to be filed, together with
copies of documents previously filed with the Commission and proposed to
be incorporated by reference in the Registration Statement, and the
Company will not file any Registration Statement or amendment thereto or
any Prospectus or any supplement thereto (other than periodic reports
filed with the Commission under the Exchange Act after the initial filing
of the Registration Statement and incorporated by reference in the
Registration Statement, provided that the Company shall furnish copies of
such documents as promptly as practicable after the filing thereof with
the Commission to such holders of Registrable Securities covered by such
Registration Statement and such managing underwriter or underwriters, if
any) to which the Purchaser or, if the Purchaser is not a selling
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holder, the holders of at least 50% in aggregate principal amount of the
Registrable Securities covered by such Registration Statement or the
managing underwriter or underwriters, if any, shall reasonably object;
PROVIDED, that the Company may assume, for the purposes of this
subparagraph (i), that objections to the inclusion of information
specifically requested to be included in the Registration Statement or
other documents by the staff of the Commission, or in the opinion of
counsel to the Company required to be in the Registration Statement or
other documents, or specifically required by the Securities Act or the
Rules and Regulations, shall not be deemed to be reasonable;
(ii) for a reasonable period prior to the filing of the
Registration Statement and throughout the period specified in Section 2(b)
hereof, make available for inspection by a representative or
representatives of the Purchaser or, if the Purchaser is not then a
holder, the holders of not less than 20% of the principal amount of the
Registrable Securities, any underwriter participating in any disposition
pursuant to a Registration Statement, and any attorney or accountant
retained by the Purchaser or such selling holders or underwriter, all
financial and other records, pertinent corporate documents and properties
of the Company, and cause the Company's officers, directors, employees and
agents, including independent public accounts and counsel, to supply all
information reasonably requested by any such representative, underwriter,
attorney or accountant in connection with such Registration Statement;
PROVIDED that any records, information or documents that are designated by
the Company in writing as confidential shall be kept confidential by such
persons unless disclosure of such records, information or documents is
required by court or administrative order; and PROVIDED FURTHER that the
Company shall not be required to furnish to any such holder any trade
secrets, customer lists or other proprietary information that it
reasonably concludes could, if disclosed generally, adversely affect the
Company or its competitive position;
(iii) prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement, and such
supplements to the Prospectus, as may be required by the Rules and
Regulations or the instructions applicable to the registration form
utilized by the Company or by the Securities Act or otherwise necessary to
keep the
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Registration Statement effective for the period specified in Section 2(b)
and cause the Prospectus as so supplemented to be filed pursuant to Rule
424 under the Securities Act; and comply with the provisions of the
Securities Act with respect to the disposition of all Registrable
Securities covered by such Registration Statement during the period
specified in Section 2(b) in accordance with the intended methods of
disposition by the sellers thereof set forth in such Registration
Statement or supplement to the Prospectus;
(iv) notify the selling holders of Registrable Securities and the
managing underwriter or underwriters, if any, promptly, and confirm such
advice in writing,
(A) when the Registration Statement, any pre-effective
amendment thereto, the Prospectus or any prospectus supplement
or post-effective amendment to the Registration Statement has
been filed, and, with respect to the Registration Statement or
any post-effective amendment, when the same has become
effective,
(B) of any comments by the Commission with respect to
the Registration Statement, the Prospectus or any prospectus
supplement or any request by the Commission for amendments or
supplements to the Registration Statement, the Prospectus or any
prospectus supplement or for additional information,
(C) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or
the initiation or threatening of any proceedings for that
purpose,
(D) if at any time the representations and warranties of
the Company contemplated by subparagraph (xiv) below or Section
5 hereof cease to be true and correct,
(E) of the receipt by the Company of any notification
with respect to the suspension of the qualification of the
Registrable Securities for sale under the securities or "Blue
Sky" laws of any jurisdiction or the initiation or threatening
of any proceeding for such purpose, and
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(F) of the existence of any fact known to the Company
which results in the Registration Statement, any amendment or
post-effective amendment thereto, the Prospectus, any prospectus
supplement, or any document incorporated therein by reference
containing an untrue statement of material fact or omitting to
state a material fact required to be stated therein or necessary
to make the statements therein not misleading;
(v) use its best efforts to obtain the withdrawal of any order
suspending the effectiveness of the Registration Statement at the earliest
possible moment;
(vi) if requested by any managing underwriter or underwriters or
any holder of Registrable Securities being sold pursuant to an
underwritten offering, as soon as practicable incorporate in a prospectus
supplement or post-effective amendment to the Registration Statement such
information as is required by the applicable Rules and Regulations and as
the managing underwriter or underwriters or such holder reasonably
specifies should be included therein relating to the terms of the sale of
the Registrable Securities, including without limitation, information with
respect to the principal amount or number of shares of Registrable
Securities being sold by such holder to any underwriter or underwriters,
the name and description of such holder or underwriter, the offering price
of such Registrable Securities and any discount, commission or other
compensation payable in respect thereof, the purchase price being paid
therefor by such underwriter or underwriters and with respect to any other
terms of the underwritten offering (including whether such underwriting
commitment is on a firm commitment or best efforts basis) of the
Registrable Securities to be sold in such offering; and make all required
fillings of such prospectus supplement or post-effective amendment
promptly after being notified of the matters to be incorporated in such
prospectus supplement or post-effective amendment;
(vii) furnish to each selling holder of Registrable Securities and
each managing underwriter, if any, without charge, an executed copy of the
Registration Statement, each amendment and supplement thereto (in each
case including all exhibits thereto and documents incorporated by
reference therein) and such number of copies of the Registration Statement
(including exhibits thereto and documents incorporated by
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reference therein) as such persons may reasonably request in order to
facilitate the offering and disposition of the Registrable Securities;
(viii) deliver to each selling holder of Registrable Securities
and each managing underwriter, if any, without charge, as many copies of
the Prospectus (including each preliminary prospectus) and any amendment
or supplement thereto, and such other documents, as such persons may
reasonably request in order to facilitate the offering and disposition of
the Registrable Securities and to permit any of such persons to satisfy
the prospectus delivery requirements of the Securities Act; the Company
hereby consents to the use of the Prospectus or any amendment or
supplement thereto by each of the selling holders of Registrable
Securities and by each underwriter thereof, if any, in connection with the
offering and sale of the Registrable Securities covered by the Prospectus
or any amendment or supplement thereto; and as promptly as practicable
after the filing with the Commission of any document which is incorporated
by reference in the Prospectus the Company will deliver a copy of such
document to each such selling holder and managing underwriter, if any;
(ix) prior to any public offering of Registrable Securities, use
its best efforts to (A) register or qualify the Registrable Securities
covered by the Registration Statement for offer and sale under the
securities or "Blue Sky" laws of such states of the United States as any
selling holder or underwriter reasonably shall request, (B) keep such
registrations or qualifications in effect and comply with such laws so as
to permit the continuance of offers, sales and dealings therein in such
jurisdictions for so long as may be necessary (but not to exceed three
years from the Effective Time) to enable any such holder or underwriter to
complete its distribution of Registrable Securities pursuant to the
Registration Statement and (C) take any and all other actions as may be
reasonably necessary or advisable to enable the disposition in such
jurisdictions of such Registrable Securities; PROVIDED, HOWEVER, that the
Company shall not be required for any such purpose to qualify as a foreign
corporation in any jurisdiction wherein it would not otherwise be required
to qualify but for the requirements of this Section 3(c)(ix) or consent to
general service of process in any such jurisdiction;
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(x) cooperate with the selling holders of Registrable Securities
and the managing underwriter or underwriters, if any, to facilitate the
timely preparation and delivery of certificates representing Registrable
Securities to be sold, which certificates shall not bear any restrictive
legends and which, if so required by any securities exchange upon which
any Registrable Securities are listed, shall be printed, lithographed or
engraved, or produced by any combination of such methods, on steel
engraved borders; and enable such Registrable Securities to be in such
denominations and registered in such names as the selling holder or the
managing underwriter or underwriters, if any, may request at least two
business days prior to any delivery of Registrable Securities;
(xi) use its best efforts to cause the Registrable Securities
covered by the Registration Statement to be registered with or approved by
such other governmental agencies or authorities located within the United
States (federal, state and local) as may be necessary to enable the seller
or sellers thereof or the underwriter or underwriters, if any, to
consummate the disposition of such Registrable Securities;
(xii) if any fact contemplated by subparagraph (iv)(F) above shall
exist, prepare a post-effective amendment or supplement to the
Registration Statement or the related Prospectus or any document
incorporated therein by reference or file any other required document so
that the Prospectus, as thereafter delivered to the purchasers of the
Registrable Securities, will not contain an untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading;
(xiii) use its best efforts to cause the shares of Common Stock
constituting Registrable Securities covered by the Registration Statement
to be listed on the New York Stock Exchange or, if the Common Stock is not
then listed on the New York Stock Exchange, to list such shares or qualify
such shares for quotation on each securities exchange or quotation system
on which outstanding Common Stock of the Company is then listed or quoted,
if any;
(xiv) enter into such customary agreements (including, if
requested by holders of at least 50% in aggregate principal amount of the
Registrable Securities being registered, a customary underwriting
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agreement with the underwriter or underwriters, if any) and take all such
other actions in connection therewith in order to expedite or facilitate
the disposition of any Registrable Securities as may be reasonably
requested and, in such connection, if an underwriting agreement is entered
into:
(A) make such representations and warranties to the
holders of such Registrable Securities and the underwriter or
underwriters in form, substance and scope as are customarily
made in connection with primary underwritten offerings of equity
or convertible debt securities;
(B) cause to be delivered to the sellers of Registrable
Securities and the underwriter or underwriters opinions of
counsel to the Company, dated the effective date of the
Registration Statement and the date of delivery of any
Registrable Securities sold pursuant thereto (which counsel and
opinions (in form, scope and substance) shall be reasonably
satisfactory to the managing underwriter or underwriters and the
counsel to the holders of at least 50% in aggregate principal
amount of the Registrable Securities being registered or, in the
case of an underwritten offering, sold), addressed to each
selling holder and each underwriter covering the matters
customarily covered in opinions requested in primary
underwritten offerings of equity and convertible debt securities
and such other matters as may be reasonably requested by the
counsel to holders of at least 50% in aggregate principal amount
of the Registrable Securities being sold or the managing
underwriter or underwriters;
(C) cause to be delivered on the date of the Prospectus
and, if later, the effective date of the most recent
post-effective amendment to the Registration Statement, and at
the time of the signing of the underwriting or purchase
agreement and at the time of delivery of any Registrable
Securities sold pursuant thereto, letters from the Company's
independent certified public accountants addressed to each
selling holder and each underwriter stating that such
accountants are independent public accountants within the
meaning of the
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Securities Act and the applicable published Rules and
Regulations thereunder, and otherwise in customary form and
covering such financial and accounting matters as are
customarily covered by letters of independent certified public
accountants delivered in connection with primary underwritten
public offerings of equity or convertible debt securities;
(D) cause the same to set forth in full the
indemnification provisions and procedures of Section 6 hereof
(or such other provisions and procedures satisfactory to the
managing underwriter or underwriters) with respect to all
parties to be indemnified pursuant to said Section; and
(E) deliver such documents and certificates as may be
reasonably requested by any holder of Registrable Securities
being sold or the managing underwriter or underwriters to
evidence the accuracy of the representations contemplated by
clause (A) above and compliance with any customary conditions
contained in the underwriting agreement or other agreement
entered into by the Company in connection with such offering;
(xv) otherwise use its best efforts to comply with all applicable
Rules and Regulations, and make generally available to its security
holders earnings statements satisfying the provisions of Section 11(a) of
the Securities Act (including, at the Company's option, by complying with
Rule 158 thereunder) no later than 45 days after the end of any 12-month
period (or 90 days, if such period is a fiscal year) (A) commencing at the
end of any fiscal quarter in which the Registrable Securities are sold in
an underwritten offering, or, if not sold in such an offering, (B)
commencing with the first month of the Company's first fiscal quarter
commencing after the effective date of the Registration Statement, which
statements shall cover said 12-month periods; and
(xvi) notify in writing each holder of Registrable Securities of
any proposal by the Company to amend or waive any provision of this
Agreement pursuant to Section 9(h) hereof and of any amendment or waiver
effected pursuant thereto, each of which notices shall contain the text of
the amendment or waiver proposed or effected, as the case may be.
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(d) The Company shall give notice to the holders of Registrable
Securities, in the same manner as a notice to Holders pursuant to Section 1.6 of
the Indenture, not less than 30 days prior to the filing of the Registration
Statement, of the Company's intention to make such filing and requiring each
such holder to inform the Company, not less than 10 days prior to such intended
filing, whether it will be a selling holder. The Company may require each
selling holder of Registrable Securities as to which any registration is being
effected to furnish to the Company such information regarding such holder, the
Registrable Securities held by such holder and the distribution of such
Registrable Securities as the Company may from time to time reasonably request.
If a holder refuses to supply the Company with any of such information on the
grounds that it is not necessary to include such information in the Registration
Statement or for any other reason, the Company may exclude such holder's
Registrable Securities from the Registration Statement if the Company provides
such holder with a written opinion of Morgan, Lewis & Bockius LLP or other
counsel chosen by the Company and reasonably satisfactory to such holder to the
effect that such information must be included in the Registration Statement and
such holder thereafter continues to withhold such information. The deletion of
such holder's Registrable Securities from a registration shall not affect the
registration of the other Registrable Securities to be included in the
Registration Statement. Each such holder agrees, by the acquisition of
Registrable Securities, to notify the Company as promptly as practicable of any
inaccuracy or change in information previously furnished by such holder to the
Company or of the occurrence of any event in either case as a result of which
any Prospectus relating to such registration contains or would contain an untrue
statement of a material fact regarding such holder or such holder's intended
method of distribution of such Registrable Securities or omits to state any
material fact regarding such holder or such holder's intended method of
distribution of such Registrable Securities necessary to make the statements
therein, in light of the circumstances then existing, not misleading and
promptly to furnish to the Company any additional information required to
correct and update any previously furnished information or required so that such
Prospectus shall not contain, with respect to such holder or the distribution of
such Registrable Securities, an untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances then existing, not misleading.
(e) Each holder of Registrable Securities agrees by acquisition of
such Registrable Securities that, upon
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receipt of any notice from the Company of the happening of any event of the kind
described in Section 3(c)(iv)(F) hereof, such holder will forthwith discontinue
disposition of Registrable Securities pursuant to the Registration Statement
until such holder's receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 3(c)(xii) hereof, or until it is advised in
writing by the Company that the use of the Prospectus may be resumed, and has
received copies of any additional or supplemental filings which are incorporated
by reference in the Prospectus, and, if so directed by the Company, such holder
will deliver to the Company (at the Company's expense) all copies, other than
permanent file copies, then in such holder's possession of the Prospectus
covering such Registrable Securities at the time of receipt of such notice.
4. REGISTRATION EXPENSES.
The Company agrees to bear and to pay or cause to be paid promptly
upon request being made therefor all expenses incident to the Company's
performance of or compliance with this Agreement, including, without limitation,
(a) all Commission registration and filing fees and expenses, (b) all fees and
expenses in connection with the registration or qualification of the Registrable
Securities for offering and sale under the State securities and blue sky laws
referred to in Section 3(c)(ix) hereof as the managing underwriter or
underwriters, if any, or the holders of such Registrable Securities may
designate, including reasonable fees and disbursements, if any, of counsel for
the selling holders or underwriters in connection with such registrations or
qualifications, (c) all expenses relating to the preparation, printing,
distribution and reproduction of the Registration Statement required to be filed
hereunder, each prospectus included therein or prepared for distribution
pursuant hereto, each amendment or supplement to the foregoing, the expenses of
preparing the Registrable Securities for delivery and the expenses of printing
or producing any underwriting agreement(s), agreement(s) among underwriters and
"Blue Sky" memoranda, any selling agreements and all other documents in
connection with the offering, sale or delivery of Registrable Securities to be
disposed of, (d) messenger, telephone and delivery expenses of the Company, (e)
fees and expenses of any Trustee under the Indenture, any Transfer Agent and
Registrar with respect to the Registrable Securities and any escrow agent or
custodian, (f) internal expenses of the Company (including, without limitation,
all salaries and expenses of the Company's officers and employees performing
legal or
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accounting duties), (g) fees, disbursements and expenses of counsel and
independent certified public accountants of the Company (including the expenses
of any opinions or "cold comfort" letters required by or incident to such
performance and compliance), (h) fees, disbursements and expenses of one counsel
for the holders of Registrable Securities retained in connection with such
registration, as selected by the holders of at least 50% in aggregate principal
amount of the outstanding Registrable Securities being registered (which counsel
shall be reasonably satisfactory to the Company), (i) fees, expenses and
disbursements of any other persons, including special experts, retained by the
Company in connection with such registration and (j) all fees and expenses
incurred in connection with the listing of the shares of Common Stock
constituting Registrable Securities on the New York Stock Exchange, or the
listing of such shares on any securities exchange or qualification of such
shares for quotation on any quotation system, pursuant to Section 3(c)(xiii)
(collectively, the "Registration Expenses"). To the extent that any Registration
Expenses are incurred, assumed or paid by any holder of Registrable Securities
or any underwriter thereof, the Company shall reimburse such person for the full
amount of the Registration Expenses so incurred, assumed or paid promptly after
receipt of a request therefor. Notwithstanding the foregoing, the holders of the
Registrable Securities being registered shall pay all agency fees and
commissions and underwriting discounts and commissions attributable to the sale
of such Registrable Securities and the fees and disbursements of any counsel or
other advisors or experts retained by such holders (severally or jointly), other
than the counsel and experts specifically referred to above.
5. REPRESENTATIONS AND WARRANTIES.
The Company represents and warrants to, and agrees with, the
Purchaser and each of the holders from time to time of Registrable Securities
that:
(a) Each Registration Statement and each Prospectus contained
therein or furnished pursuant to Sections 3(c)(vii) and 3(c)(viii) hereof and
any further amendments or supplements to any such Registration Statement or
Prospectus, when it becomes effective or is filed with the Commission, as the
case may be, and, in the case of an underwritten offering of Registrable
Securities, at the time of the closing under the underwriting agreement relating
thereto, will conform in all material respects to the requirements of the
Securities Act and will not contain an untrue statement of a material fact or
omit to state a
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material fact required to be stated therein or necessary to make the statements
therein not misleading; and at all times subsequent to the Effective Time when a
prospectus would be required to be delivered under the Securities Act, other
than from (i) such time as a notice has been given to holders of Registrable
Securities pursuant to Section 3(c)(iv)(F) hereof until (ii) such time as the
Company furnishes an amended or supplemented prospectus pursuant to Section
3(c)(xii) hereof, the Registration Statement, and the Prospectus contained
therein or furnished pursuant to Section 3(c)(vii) or 3(c)(viii) hereof, as then
amended or supplemented, will conform in all material respects to the
requirements of the Securities Act and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances then
existing, not misleading; PROVIDED, HOWEVER, that this representation and
warranty shall not apply to any statements or omissions made in reliance upon
and in conformity with information furnished in writing to the Company by a
holder of Registrable Securities or an underwriter expressly for use therein.
(b) Any documents incorporated by reference in any Prospectus
referred to in Section 5(a) hereof, when they become or became effective or are
or were filed with the Commission, as the case may be, will conform or conformed
in all material respects to the requirements of the Securities Act or the
Exchange Act, as applicable, and none of such documents will contain or
contained an untrue statement of a material fact or will omit or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading.
(c) The compliance by the Company with all of the provisions of
this Agreement and the consummation of the transactions herein contemplated will
not conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, any material indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which the Company or any
subsidiary thereof is a party or by which the Company or any subsidiary thereof
is bound or to which any of the property or assets of the Company or any
subsidiary thereof is subject, nor will such action result in any violation of
the provisions of the Certificate of Incorporation, as amended and restated, or
the By-Laws, as amended, of the Company or any statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction over
the Company or any subsidiary thereof or any of their properties; and no
consent, approval, authorization, order, registration or
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qualification of or with any such court or governmental agency or body is
required to be obtained or made by the Company for the consummation by the
Company of the transactions contemplated by this Agreement, except the
registration under the Securities Act of the Registrable Securities and such
consents, approvals, authorizations, registrations or qualifications as may be
required under State securities or "Blue Sky" laws or foreign laws in connection
with the offering and distribution of the Registrable Securities.
(d) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and legally binding obligation
of the Company enforceable in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors' rights and to
general equity principles and, in the case of Section 6 hereof, public policy.
6. INDEMNIFICATION.
(a) INDEMNIFICATION BY THE COMPANY. Upon the registration of the
Registrable Securities pursuant to Section 2 hereof, and in consideration of the
agreements of the Purchaser contained herein and in the Purchase Agreement, and
as an inducement to the Purchaser to enter into such Agreements, the Company
shall, and it hereby agrees to, indemnify and hold harmless each of the holders
of Registrable Securities to be included in such registration, each underwriter,
selling agent or placement agent with respect to the Registrable Securities and
each of their respective officers, directors, employees and agents and each
person who controls such holder or underwriter, selling agent or placement agent
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act (each such person being sometimes referred to as an "Indemnified
Person") against any losses, claims, damages or liabilities, joint or several,
to which such Indemnified Person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any Registration Statement
under which such Registrable Securities were registered under the Securities
Act, or any Prospectus contained therein or furnished by the Company to any
Indemnified Person, or any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged
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omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and the Company shall,
and it hereby agrees to, reimburse such Indemnified Person for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such action or claim; PROVIDED, HOWEVER, that the Company shall
not be liable to any such Indemnified Person in any such case to the extent that
any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in such Registration Statement or Prospectus, or amendment or supplement,
in reliance upon and in conformity with written information furnished to the
Company by or on behalf of a holder of Registrable Securities or an underwriter
expressly for use therein.
(b) INDEMNIFICATION BY THE HOLDERS AND ANY AGENTS AND
UNDERWRITERS. The Company may require, as a condition to including any
Registrable Securities in any Registration Statement filed pursuant to this
Agreement and to entering into any underwriting agreement with respect thereto,
that the Company shall have received an undertaking reasonably satisfactory to
it from the holder of such Registrable Securities and from each underwriter
named in any such underwriting agreement, severally and not jointly, to (i)
indemnify and hold harmless the Company, its directors and officers who sign any
Registration Statement and each person, if any, who controls the Company within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act, against any losses, claims, damages or liabilities to which the
Company or such other persons may become subject, under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in such Registration Statement, or
any Prospectus contained therein or furnished by the Company to any such holder
or underwriter, or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information furnished in writing
to the Company by or on behalf of such holder or underwriter expressly for use
therein, and (ii) reimburse the Company for any legal or other expenses
reasonably incurred by the Company in
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connection with investigating or defending any such action or claim.
(c) NOTICES OF CLAIMS, ETC. Promptly after receipt by an
indemnified party under subsection (a) or (b) above of written notice of the
commencement of any action, such indemnified party shall, if a claim in respect
thereof is to be made against an indemnifying party pursuant to the
indemnification provisions of or contemplated by this Section 6, notify such
indemnifying party in writing of the commencement of such action; but the
omission so to notify the indemnifying party shall not relieve it from any
liability which it may have to any indemnified party other than under the
indemnification provisions of or contemplated by Section 6(a) or 6(b) hereof. In
case any such action shall be brought against any indemnified party and it shall
notify an indemnifying party of the commencement thereof, such indemnifying
party shall be entitled to participate therein and, to the extent that it shall
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel reasonably satisfactory to such indemnified
party (who shall not, except with the consent of the indemnified party, be
counsel to the indemnifying party), and, after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, such indemnifying party shall not be liable to such indemnified party
for any legal expenses of other counsel or any other expenses, in each case
subsequently incurred by such indemnified party, in connection with the defense
thereof other than reasonable costs of investigation. No indemnifying party
shall, without the written consent of the indemnified party, effect the
settlement or compromise of, or consent to the entry of any judgment with
respect to, any pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified party is an actual or potential party to such action or claim)
unless such settlement, compromise or judgment (i) includes an unconditional
release of the indemnified party from all liability arising out of such action
or claim and (ii) does not include a statement as to, or an admission of, fault,
culpability or a failure to act, by or on behalf of any indemnified party.
(d) CONTRIBUTION. Each party hereto agrees that, if for any reason
the indemnification provisions contemplated by Section 6(a) or Section 6(b) are
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, claims, damages or liabilities (or actions in respect thereof)
referred to therein, then each indemnifying party shall contribute to the amount
paid or
-19-
<PAGE>
payable by such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is appropriate
to reflect the relative fault of the indemnifying party and the indemnified
party in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions in respect thereof), as well
as any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified party shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact relates to
information supplied by such indemnifying party or by such indemnified party,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The parties hereto
agree that it would not be just and equitable if contribution pursuant to this
Section 6(d) were determined by pro rata allocation (even if the holders or any
agents or underwriters or all of them were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in this Section 6(d). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above shall be deemed to
include any legal or other fees or expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The holders'
and any underwriters' obligations in this Section 6(d) to contribute shall be
several in proportion to the percentage of principal amount of Registrable
Securities registered or underwritten, as the case may be, by them and not
joint.
(e) Notwithstanding any other provision of this Section 6, in no
event will any (i) holder be required to undertake liability to any person or
persons under this Section 6 for an aggregate amount in excess of the dollar
amount of the proceeds received by such holder from the sale of such holder's
Registrable Securities (after deducting any fees, discounts and commissions
applicable thereto) pursuant to such registration or (ii) underwriter be
required to contribute any amount in excess of the amount by which the total
price at which the Registrable Securities underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages which
such underwriter has otherwise been required to pay by reason of
-20-
<PAGE>
untrue or alleged untrue statements or omissions or alleged omissions in respect
of such Registrable Securities.
(f) The obligations of an indemnifying party under this Section 6
shall be in addition to any liability which such indemnifying party may
otherwise have to any Indemnified Person, including any liability of the Company
to the Purchaser pursuant to Section 8 of the Purchase Agreement.
In the event that any provision of an indemnification clause in an
underwriting agreement executed by or on behalf of a holder of Registrable
Securities differs from a provision in this Section 6, such provision in the
underwriting agreement shall determine such holder's rights in respect thereof.
7. UNDERWRITTEN OFFERINGS.
(a) SELECTION OF UNDERWRITERS. If any of the Registrable
Securities covered by the Registration Statement are to be sold pursuant to an
underwritten offering, the managing underwriter or underwriters thereof shall be
designated by the holders of at least 50% in aggregate principal amount of the
outstanding Registrable Securities to be included in such offering, provided
that such designated managing underwriter or underwriters is or are acceptable
to the Company; PROVIDED that the Purchaser shall be deemed to be acceptable to
the Company as managing underwriter or underwriters for this purpose.
(b) PARTICIPATION BY HOLDERS. Each holder of Registrable
Securities hereby agrees with each other such holder that no such holder may
participate in any underwritten offering hereunder unless such holder (i) agrees
to sell such holder's Registrable Securities on the basis provided in any
underwriting arrangements approved by the persons entitled hereunder to approve
such arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
8. RULE 144.
The Company covenants to the holders of Registrable Securities
that to the extent it shall be required to do so under the Exchange Act, the
Company shall timely file the reports required to be filed by it under the
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<PAGE>
Exchange Act or the Securities Act (including, but not limited to, the reports
under Sections 13 and 15(d) of the Exchange Act referred to in subparagraph
(c)(1) of Rule 144 under the Securities Act) and the Rules and Regulations, and
shall take such further action as any holder of Registrable Securities may
reasonably request, all to the extent required from time to time to enable such
holder to sell Registrable Securities without registration under the Securities
Act within the limitations of the exemption provided by Rule 144 under the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission. Upon the request of any
holder of Registrable Securities, the Company shall deliver to such holder a
written statement as to whether it has complied with such requirements.
9. MISCELLANEOUS.
(a) NO INCONSISTENT AGREEMENTS. The Company will not grant
registration rights with respect to Registrable Securities or any other
securities, or enter into any agreement with respect to its securities, which is
inconsistent with the rights granted to the holders of Registrable Securities in
this Agreement or otherwise conflicts with the provisions hereof. The Company is
not currently a party to any agreement with respect to any of its equity or debt
securities granting any registration rights to any person.
(b) SPECIFIC PERFORMANCE. The parties hereto acknowledge that
there may be no adequate remedy at law if any party fails to perform any of its
obligations hereunder and that each party may be irreparably harmed by any such
failure, and accordingly agree that each party, in addition to any other remedy
to which it may be entitled at law or in equity, shall be entitled to compel
specific performance of the obligations of any other party under this Agreement
in accordance with the terms and conditions of this Agreement, in any court of
the United States or any State thereof having jurisdiction.
(c) NOTICES. All notices, requests, claims, demands, waivers and
other communications hereunder shall be given in the manner provided for in the
Indenture.
(d) PARTIES IN INTEREST. All the terms and provisions of this
Agreement shall be binding upon, shall inure to the benefit of and shall be
enforceable by the respective successors and assigns of the parties hereto. In
the event that any transferee of any holder of Registrable
-22-
<PAGE>
Securities shall acquire Registrable Securities, in any manner, whether by gift,
bequest, purchase, operation of law or otherwise, such transferee shall, without
any further writing or action of any kind, be deemed a party hereto for all
purposes and such Registrable Securities shall be held subject to all of the
terms of this Agreement, and by taking and holding such Registrable Securities
such transferee shall be entitled to receive the benefits of and be conclusively
deemed to have agreed to be bound by and to perform all of the terms and
provisions of this Agreement. If the Company shall so request, any such
successor, assign or transferee shall agree in writing to acquire and hold the
Registrable Securities subject to all of the terms hereof.
(e) SURVIVAL. The respective indemnities, agreements,
representations, warranties and each other provision set forth in this Agreement
or made pursuant hereto shall remain in full force and effect regardless of any
investigation (or statement as to the results thereof) made by or on behalf of
any holder of Registrable Securities, any director, officer or partner of such
holder, any agent or underwriter or any director, officer or partner thereof, or
any controlling person of any of the foregoing, and shall survive delivery of
and payment for the Registrable Securities pursuant to the Purchase Agreement
and the transfer and registration of Registrable Securities by such holder.
(f) LAW GOVERNING. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(g) HEADINGS. The descriptive headings of the several Sections and
paragraphs of this Agreement are inserted for convenience only, do not
constitute a part of this Agreement and shall not affect in any way the meaning
or interpretation of this Agreement.
(h) AMENDMENTS AND WAIVERS. This Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively) only by a written
instrument duly executed by the Company and the holders of at least a majority
of the principal amount of the Registrable Securities at the time outstanding.
Each holder of any Registrable Securities at the time or thereafter outstanding
shall be bound by any amendment or waiver effected pursuant to this Section
9(h), whether or not any notice, writing or marking indicating such amendment or
waiver appears on such Registrable Securities or is delivered to such holder.
-23-
<PAGE>
(i) INSPECTION. For so long as this Agreement shall be in effect,
this Agreement and a complete list of the names and addresses of all the holders
of Registrable Securities shall be made available for inspection and copying on
any business day by any holder of Registrable Securities at the offices of the
Company at the address set forth in the Indenture.
(j) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument
to be duly executed as of the date first written above.
THE SPORTS AUTHORITY, INC.
By: /S/ ANTHONY F. CRUDELE
------------------------------
Name:
Title:
/S/ GOLDMAN, SACHS & CO.
-------------------------------
(Goldman, Sachs & Co.)
November 25, 1996
The Sports Authority, Inc.
3383 North State Road 7
Fort Lauderdale, Florida 33319
Re: OFFERING OF SHARES PURSUANT TO
REGISTRATION STATEMENT ON FORM S-3
Ladies and Gentlemen:
We have acted as counsel to The Sports Authority, Inc., a Delaware corporation
(the "Company"), in connection with the preparation and filing with the
Securities and Exchange Commission under the Securities Act of 1933, as amended,
of a Registration Statement on Form S-3 (the "Registration Statement") relating
to the offering by certain securityholders of the Company of an aggregate of
$149,500,000 5-1/4% Convertible Subordinated Notes due September 15, 2001 (the
"Notes") and of an aggregate of 4,580,964 shares of the Company's common stock,
$.01 par value per share (the "Shares"), issued or issuable upon conversion of
the Notes.
In so acting, we have examined originals, or copies certified or otherwise
identified to our satisfaction, of (a) the Articles of Incorporation of the
Company, (b) the Bylaws of the Company and (c) such other documents, records,
certificates and other instruments of the Company as in our judgment are
necessary or appropriate for purposes of this opinion.
Based on the foregoing, we are of the following opinion:
1. The Company is a corporation duly incorporated and validly
existing in good standing under the laws of the State of
Delaware.
2. The Notes have been duly authorized and issued by, and are
binding obligations of, the Company.
<PAGE>
3. The Shares have been duly authorized by the Company and, when
issued upon conversion of the Notes as contemplated by the
Registration Statement, will be duly and validly issued and
will be fully paid and non-assessable.
We render the foregoing opinions as members of the Bar of the State of Florida
and express no opinion as to laws other than the General Corporation Law of the
State of Delaware.
We consent to the use of this opinion as an exhibit to the Registration
Statement and to the use of our name under the caption "Legal Matters" in the
Registration Statement.
Very truly yours,
/s/ MORGAN, LEWIS & BOCKIUS LLP
<TABLE>
<CAPTION>
THE SPORTS AUTHORITY, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
39 WEEKS ENDED 39 WEEKS ENDED
COMPANY 1991 1992 1993 1994 1995 OCTOBER 1995 OCTOBER 1996
- --------------------------------------------- -------- -------- ------- ------- ------- -------------- --------------
<C> <C> <C> <C> <C> <C> <C> <C>
1) Income before Income Taxes 3,208 10,031 20,908 29,839 37,390 16,029 20,856
Add:
2) Interest Expenses 128 141 13 318 820 365 1,536
3) Amortization of Deferred Financing Costs 0 0 0 0 365 219 422
4) Interest Component of Rent Expense 3,025 4,835 8,240 12,234 16,476 11,925 15,228
-------- -------- ------- ------- ------- -------- --------
5) Total 6,361 15,007 29,161 42,391 55,051 28,538 38,042
Divided by:
6) Fixed charges (2+3+4) 3,153 4,976 8,253 12,552 17,661 12,509 17,186
-------- -------- ------- ------- ------- -------- --------
7) Ratio of Earnings to Fixed Charges 2.02 3.02 3.53 3.38 3.12 2.28 2.21
======== ======== ======= ======= ======= ======== ========
</TABLE>
Consent of Independent Certified Public Accountants
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report dated
March 5, 1996, except as to Note 9, which is as of March 22, 1996, which appears
on page 22 of the 1995 Annual Report to Stockholders of The Sports Authority,
Inc., which is incorporated by reference in The Sports Authority, Inc.'s Annual
Report on Form 10-K for the fiscal year ended January 28, 1996. We also consent
to the reference to us under the heading "Experts" in such Prospectus.
/s/ PRICE WATERHOUSE LLP
Fort Lauderdale, Florida
November 26, 1996
CONFORMED COPY
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(B)(2) [ ]
---------------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
NEW YORK 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. mational bank) identification no.)
48 WALL STREET, NEW YORK, N.Y. 10286
(Address of principal executive offices) (Zip code)
---------------------------
THE SPORTS AUTHORITY, INC.
(EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER)
DELAWARE 36-3511120
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
3383 NORTH STATE ROAD 7
FORT LAUDERDALE, FLORIDA 33319
(Address of principal executive offices) (Zip code)
----------------------
5 1/4% CONVERTIBLE SUBORDINATED NOTES DUE SEPTEMBER 15, 2001
(TITLE OF THE INDENTURE SECURITIES)
================================================================================
<PAGE>
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.
- --------------------------------------------------------------------------------
NAME ADDRESS
- --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany,
N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None. (See Note on page 3.)
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION,
ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO
RULE 7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND RULE 24
OF THE COMMISSION'S RULES OF PRACTICE.
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains
the authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 To Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 And Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-Laws of the Trustee. (Exhibit 4 to Form
T-1 filed with Registration Statement No. 33-31019.)
-2-
<PAGE>
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or
examining authority.
NOTE
Inasmuch as this Form T-1 is filed prior to the ascertainment by the
Trustee of all facts on which to base a responsive answer to Item 2, the answer
to said Item is based on incomplete information.
Item 2 may, however, be considered as correct unless amended by an
amendment to this Form T-1.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 16th day of October, 1996.
THE BANK OF NEW YORK
By: /S/ STEPHEN J. GIURLANDO
-------------------------------
Name: Stephen J. Giurlando
Title:Assistant Vice President
-4-
<PAGE>
Exhibit 7
CONSOLIDATED REPORT OF CONDITION OF
THE BANK OF NEW YORK
OF 48 WALL STREET, NEW YORK, N.Y. 10286
AND FOREIGN AND DOMESTIC SUBSIDIARIES,
a member of the Federal Reserve System, at the close of business March 31, 1996,
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
DOLLAR AMOUNTS
ASSETS IN THOUSANDS
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin .................. $ 2,461,550
Interest-bearing balances .......... 835,563
Securities:
Held-to-maturity securities ........ 802,064
Available-for-sale securities ...... 2,051,263
Federal funds sold in domestic offices of the bank:
Federal funds sold ................... 3,885,475
Loans and lease financing
receivables:
Loans and leases, net of unearned
income .................27,820,159
LESS: Allowance for loan and
lease losses ..............509,817
LESS: Allocated transfer risk
reserve......................1,000
Loans and leases, net of unearned
income, allowance, and reserve 27,309,342
Assets held in trading accounts ...... 837,118
Premises and fixed assets (including
capitalized leases) ................ 614,567
Other real estate owned .............. 51,631
Investments in unconsolidated
subsidiaries and associated
companies .......................... 225,158
Customers' liability to this bank on
acceptances outstanding ............ 800,375
Intangible assets .................... 436,668
Other assets ......................... 1,247,908
-----------
Total assets ......................... $41,558,682
===========
LIABILITIES
Deposits:
In domestic offices ................ $18,851,327
Noninterest-bearing .......7,102,645
Interest-bearing .........11,748,682
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ... 10,965,604
Noninterest-bearing ..........37,855
-5-
<PAGE>
Interest-bearing .........10,927,749
Federal funds purchased and secu-
rities sold under agreements to re-
purchase in domestic offices of
the bank and of its Edge and
Agreement subsidiaries, and in
IBFs:
Federal funds purchased ............ 1,224,886
Securities sold under agreements
to repurchase .................... 29,728
Demand notes issued to the U.S.
Treasury ........................... 118,870
Trading liabilities .................. 673,944
Other borrowed money:
With original maturity of one year
or less .......................... 2,713,248
With original maturity of more than
one year ......................... 20,780
Bank's liability on acceptances exe-
cuted and outstanding .............. 803,292
Subordinated notes and debentures .... 1,022,860
Other liabilities .................... 1,590,564
-----------
Total liabilities .................... 38,015,103
-----------
EQUITY CAPITAL
Common stock ........................ 942,284
Surplus ............................. 525,666
Undivided profits and capital
reserves .......................... 2,078,197
Net unrealized holding gains
(losses) on available-for-sale
securities ........................ 3,197
Cumulative foreign currency transla-
tion adjustments .................. ( 5,765)
-----------
Total equity capital ................ 3,543,579
-----------
Total liabilities and equity
capital ........................... $41,558,682
===========
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
J. Carter Bacot )
Thomas A. Renyi ) Directors
Alan R. Griffith )
-6-
