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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 20, 1999
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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SPORTSLINE USA, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 7375 65-0470894
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(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
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6340 N.W. 5TH WAY
FORT LAUDERDALE, FLORIDA 33309
(954) 351-2120
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICE)
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MICHAEL LEVY
PRESIDENT AND CHIEF EXECUTIVE OFFICER
SPORTSLINE USA, INC.
6340 N.W. 5TH WAY
FORT LAUDERDALE, FLORIDA 33309
(954) 351-2120
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
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COPIES OF COMMUNICATIONS TO:
KENNETH C. HOFFMAN, ESQ.
GREENBERG TRAURIG, P.A.
1221 BRICKELL AVENUE
MIAMI, FLORIDA 33131
PHONE: (305) 579-0500
FAX: (305) 579-0717
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of this Registration Statement.
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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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED TO BE REGISTERED NOTE(1) PRICE(1) REGISTRATION FEE
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5% Convertible Subordinated Notes due 2006 $150,000,000 100% $150,000,000 $41,700
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Common Stock, $.01 par value per share 2,303,250 shares (2) -- -- --
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(1) Estimated solely for the purpose of computing the registration fee in
accordance with Rule 457 of the Securities Act..
(2) Such number represents the number of shares of common stock that are
currently issuable upon conversion of the notes; pursuant to Rule 416
under the Securities Act, the Registrant is also registering such
indeterminate number of shares of common stock as may be issued from time
to time upon conversion of the notes as a result of the antidilution
protection of the notes. Pursuant to Rule 457(i), no registration fee is
required for these shares.
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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 SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE> 2
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE
SELLING SECURITY HOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN
OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
SUBJECT TO COMPLETION, DATED MAY 20, 1998
$150,000,000
[SportsLine USA LOGO]
5% CONVERTIBLE SUBORDINATED NOTES DUE 2006
(AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THE NOTES)
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We issued $150,000,000 of notes in a private placement in March 1999.
This prospectus will be used by selling security holders to resell their notes
and the common stock issuable upon conversion of their notes.
The notes are convertible at any time prior to maturity into common
stock, at an initial conversion rate of 15.355 shares of common stock per
$1,000 principal amount of notes which is equivalent to a conversion price of
approximately $65.125 per share, subject to adjustment in certain events. Our
common stock is quoted on the Nasdaq National Market under the symbol "SPLN."
On May 19, 1999, the closing price of our common stock was $34.00 per share.
We will pay interest on the notes on April 1 and October 1 of each
year, beginning on October 1, 1999, at a rate of 5% per year. The notes will
mature on April 1, 2006 unless earlier converted or redeemed. The notes are
unsecured and are subordinated to our existing and future senior indebtedness.
As of March 31, 1999, we had no material indebtedness other than the notes.
We may redeem the notes after April 2, 2002, at the declining
redemption prices listed in this prospectus, plus accrued interest. In
addition, if a repurchase event occurs, we must offer to repurchase the notes.
We will not receive any proceeds from the sale by the selling security
holders of the notes or the common stock into which the notes are convertible.
We will pay all expenses of the registration of the notes and the common stock
other than selling commissions and fees and stock transfer taxes.
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SEE "RISK FACTORS" BEGINNING ON PAGE 5 FOR A DESCRIPTION OF CERTAIN
MATTERS THAT YOU SHOULD CONSIDER BEFORE INVESTING IN THE NOTES OR THE COMMON
STOCK INTO WHICH THE NOTES ARE CONVERTIBLE.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
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The date of this Prospectus is , 1999
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ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with
the Securities and Exchange Commission utilizing a "shelf" registration
process. Under this shelf process, the selling security holders may sell up to
$150,000,000 aggregate principal amount of the notes or the applicable number
of shares of common stock which are issuable upon conversion of the notes. This
prospectus provides you with a general description of the notes and the common
stock into which the notes are convertible that the selling security holders
may offer. When the selling security holders sell the notes or the common
stock, we may provide, if necessary, a prospectus supplement that will contain
specific terms of that offering. The prospectus supplement may also add, update
or change information contained in this prospectus. You should read this
prospectus and any prospectus supplement together with the additional
information described under the heading "Where You Can Find More Information."
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains or incorporates by reference statements about
our future that are "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. This act provides a "safe
harbor" for forward-looking statements to encourage companies to provide
prospective information about themselves so long as they identify these
statements as forward-looking and provide meaningful cautionary statements
identifying important factors that could cause actual results to differ from
the projected results. All statements other than statements of historical fact
we make in this prospectus or any other document incorporated by reference are
forward-looking. In some cases, you can identify these forward-looking
statements by terminology such as "believes," "expects," "may," "will,"
"should," "seeks," "approximately," "intends," "plans," "estimates," or
"anticipates" or the negative of those words or other comparable terminology.
In evaluating these statements, you should specifically consider various
factors, including the risks outlined under the caption "Risk Factors" in this
prospectus. You should pay particular attention to the cautionary statements
involving our limited operating history, the unpredictability of our future
revenues, the unpredictable and evolving nature of our business model, the
intensely competitive market for Internet services and products and the risks
associated with capacity constraints, systems development, management of
growth, acquisitions and international and domestic business expansion. These
factors may cause our actual results to differ materially and adversely from
any forward-looking statement.
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TABLE OF CONTENTS
PAGE
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About This Prospectus......................................................2
Special Note Regarding Forward-Looking Statements..........................2
Prospectus Summary.........................................................3
Risk Factors...............................................................5
Use of Proceeds...........................................................15
Ratio of Earnings to Fixed Charges........................................15
Description of Notes......................................................16
Description of Capital Stock..............................................24
United States Federal Income Tax Consequences.............................26
Selling Security Holders..................................................30
Plan of Distribution......................................................33
Legal Matters.............................................................34
Experts...................................................................34
Where You Can Find More Information.......................................35
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"SportsLine USA" is a registered service mark of SportsLine USA, Inc. The
CBS "eye device" is a registered trademark of CBS Inc. This prospectus also
includes trademarks and trade names of companies other than SportsLine USA and
CBS. All other company or product names are trademarks or registered trademarks
of their owners.
Information contained on our Web sites are not part of this prospectus.
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PROSPECTUS SUMMARY
Because this is a summary, it may not contain all information that may be
important to you. You should read this entire prospectus, including the
information incorporated by reference and the financial data and related notes,
before making an investment decision. When used in this prospectus, the terms
"we," "our" and "us" refer to SportsLine USA, Inc. and not the selling security
holders.
SPORTSLINE USA, INC.
We are a leading Internet-based sports media company that provides
branded, interactive information and programming as well as merchandise to
sports enthusiasts worldwide. cbs.sportsline.com, our flagship site on the
World Wide Web, delivers real-time, in-depth and compelling sports content and
programming that capitalizes on the Web's unique graphical and interactive
capabilities. Our other Web sites include those devoted to the following:
o sports superstars such as Joe Namath, Michael Jordan
(jordan.sportsline.com), Tiger Woods (tigerwoods.com), Shaquille
O'Neal (shaq.com) and Cal Ripken, Jr. (2131.com),
o specific sports such as golf (golfweb.com), cricket (cricinfo.org)
and soccer (soccernet.com),
o international sports coverage (sportsline.com/u/worldwide), and
o electronic odds and analysis on major sports events
(vegasinsider.com).
Our objective is to become the leading Internet-based sports media
company and to create a global sports brand. Accordingly, we focus exclusively
on sports and distinguish ourselves from other content providers by offering
innovative, timely and comprehensive sports content.
Our products and services include:
o distribution of a broad range of up-to-date news, scores, player
and team statistics and standings, photos and audio and video clips
obtained from CBS and other leading sports news organizations as
well as our superstar athletes,
o broadcasts of web-based real-time animated re-creations of major
sporting events,
o distribution of instant odds and picks from well-known
handicappers,
o production and distribution of entertaining, interactive and
original programming such as editorials and analyses from our
in-house staff and freelance journalists,
o production and offerings of contests, games, fantasy league
products and fan clubs, and
o sales of sports-related merchandise and memorabilia.
We also own and operate a state-of-the-art radio studio from which we
produce all-sports radio programming which is broadcast over the Internet and
on traditional radio stations in association with the SportsFan Radio Network.
We were incorporated in Delaware in February 1994. Our principal
executive offices are located at 6340 N.W. 5th Way, Fort Lauderdale, Florida
33309, and our telephone number is (954) 351-2120.
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THE OFFERING
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Securities Offered........................ $150,000,000 aggregate principal amount of our 5% Convertible
Subordinated Notes due 2006 and shares of our common stock
issuable upon conversion of the notes.
Interest.................................. We will pay interest on the notes on April 1 and October 1 of
each year, commencing October 1, 1999.
Maturity.................................. April 1, 2006
Conversion................................ You may convert your notes at any time through the close of
business on the final maturity date of the notes, unless the
notes have been previously redeemed or repurchased, at an
initial conversion rate of 15.355 shares of common stock per
$1,000 principal amount of notes which is equivalent to a
conversion price of approximately $65.125 per share.
Optional Redemption....................... We may redeem the notes in whole or in part on or after April
2, 2002, at the redemption prices listed in this prospectus,
together with accrued interest.
Repurchase at Option of Holders
Upon a Repurchase Event................ If a repurchase event occurs, we will be required to offer to
repurchase the notes for cash or, at our option, shares of our
common stock at a repurchase price of 100% of the principal
amount of the notes, plus accrued interest. If we decide to
offer our common stock instead of cash, our common stock will
be valued at 95% of the average of the closing prices for the
five trading days immediately before and including the third
trading day prior to the repurchase date.
Ranking................................... Subordinate to all of our existing and future senior
indebtedness. As of March 31, 1999, we had no material senior
indebtedness. Neither we nor our subsidiaries are limited
under the indenture from incurring additional debt.
Use of Proceeds........................... We will not receive any of the proceeds from the sale of the
notes or the common stock offered in this prospectus.
Trading................................... The notes are currently traded in The Portal Market. However,
any notes sold under this prospectus will no longer trade in
the Portal Market. Our common stock is quoted on the Nasdaq
National Market under the symbol "SPLN".
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RISK FACTORS
You should carefully consider the following factors and other information
included or incorporated by reference in this prospectus before investing in
the notes or common stock.
WE HAVE ONLY BEEN OPERATING OUR BUSINESS SINCE AUGUST 1995
We were incorporated in February 1994 and commercially introduced our
first Web site in August 1995. We first recognized revenue from operations in
the quarter ended September 30, 1995. Accordingly, we have a limited operating
history upon which you may evaluate us. You should consider our prospects in
light of the risks, expenses and difficulties frequently encountered by early
stage companies in new and rapidly evolving markets, including the
Internet-based advertising, information services and commerce markets. As an
early stage online content provider and commerce company, we have an evolving
and unpredictable business model, we face intense competition, we must
effectively manage our growth and we must respond quickly to rapid changes in
customer demands and industry standards. To address these risks, we must
provide compelling and original content to our users, we must maintain our
existing relationships and effectively develop new relationships with
advertisers, advertising agencies and other third parties, we must develop and
upgrade our technology and respond to competitive developments, and we must
attract, retain and motivate qualified personnel. We may not succeed in
addressing these challenges and risks.
WE HAVE AN ACCUMULATED DEFICIT AND WE ANTICIPATE FURTHER LOSSES
We have incurred significant losses since we began doing business. To
date, we have achieved only limited revenue and our ability to generate
significant revenue is subject to substantial uncertainty. We may not ever
generate sufficient revenue to meet our expenses or achieve or maintain
profitability. We incurred net losses of $16.1 million during 1996, $34.2
million during 1997, $35.5 million during 1998, and $10.1 million during the
first quarter of 1999. As of March 31, 1999, we had an accumulated deficit of
$102.4 million. We expect to continue to incur losses for at least the next 24
to 36 months.
Since inception, we have incurred substantial costs to develop and
enhance our technology, to create, introduce and enhance our service offerings,
to acquire and develop content, to build traffic on our Web sites, to acquire
members, to establish marketing relationships and to build an administrative
organization. We intend to continue these efforts and we plan to increase our
spending for marketing and for the development and acquisition of content. We
have entered into various licensing, royalty and consulting agreements with
content providers, vendors, athletes and sports organizations, which agreements
provide for consideration in various forms, including issuance of warrants to
purchase shares of our common stock and payment of royalties, bounties and
certain other guaranteed amounts on a per member and/or a minimum dollar amount
basis over terms ranging from one to ten years. Additionally, some of these
agreements provide for a specified percentage of advertising and merchandising
revenue to be paid to the athlete or organization from whose Web site the
revenue is derived. As of March 31, 1999, the minimum guaranteed payments we
were required to make under such agreements were $6,076,000. Our minimum
guaranteed payments are subject to reduction in the case of certain agreements
based upon the appreciation of warrants issued, the value of stock received on
exercise of such warrants and the amount of profit sharing earned under the
related agreements. Also, we recorded non-cash expense of $12,000,000 for the
year ended December 31, 1998 related to our agreement with CBS and will record
an additional $160,098,000 of non-cash expense over the remaining eight-year
term of our agreement with CBS. Additionally, non-cash expense under our
agreement with AOL will total $21,906,000 over the remaining term of that
agreement.
OUR QUARTERLY RESULTS MAY FLUCTUATE AND OUR FUTURE REVENUES ARE UNPREDICTABLE
AND MAY BE SEASONAL
Due to our limited operating history and the unpredictability of our
industry, we cannot accurately forecast our revenue. Our revenues for the
foreseeable future will continue to come from a mix of advertising, merchandise
sales, membership and premium service fees, content licensing, Web site
development and syndication fees. We are likely to experience fluctuations in
quarterly revenue and operating results due to the level of advertising revenue
within each quarter. We base our current and future expense levels on our
investment plans and estimates of future revenues. Our expenses are to a large
extent fixed. We may not be able to adjust our spending quickly if our revenues
fall short of our expectations.
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Our revenues and operating results may vary significantly from quarter to
quarter due to a number of factors, including:
o the level of usage of the Internet,
o the level of traffic on our Web sites,
o demand for Internet advertising,
o seasonal trends in both Internet usage and advertising placements,
o the addition or loss of advertisers,
o the advertising budgeting cycles of individual advertisers,
o the number of users that purchase memberships, merchandise or
premium services,
o the amount and timing of capital expenditures and other costs
relating to the expansion of our operations,
o the introduction of new sites and services by us or our
competitors,
o price competition or pricing changes in the industry, and
o general economic conditions and economic conditions specific to the
Internet, electronic commerce and online media.
Furthermore, we expect that our revenue will be higher leading up to and
during major U.S. sports seasons and lower at other times of the year,
particularly during the summer months. In addition, the effect of such seasonal
fluctuations in revenue could be enhanced or offset by revenue associated with
major sports events, such as the Olympics and World Cup events, although such
events do not occur every year. We believe that advertising sales in
traditional media, such as television, generally are lower in the first and
third calendar quarters of each year, and that advertising expenditures
fluctuate significantly with economic cycles. Depending on the extent to which
the Internet is accepted as an advertising medium, seasonality and cyclicality
in the level of Internet advertising expenditures could become more pronounced
in which case our revenues may be affected by such seasonal and cyclical
patterns.
Due to all of the foregoing factors, we believe that
quarter-to-quarter comparisons of our operating results are not a good
indication of our future performance. It is possible that our operating results
may fall below the expectations of securities analysts or investors in some
future quarter which would likely cause the trading price of the notes and our
common stock to decline.
WE ARE DEPENDENT UPON OUR RELATIONSHIP WITH CBS TO EXECUTE OUR BUSINESS PLAN
In March 1997, we entered into a five-year agreement with CBS, pursuant
to which our flagship Web site was renamed "cbs.sportsline.com." We amended our
agreement with CBS in February 1999 to extend the term through 2006. Over the
term of the agreement, we have the right to use certain CBS logos and
television-related sports content and will receive extensive network television
advertising and on-air promotions. This network television advertising and
on-air promotions, as well as the association of our brand with CBS, are
important elements of our strategy to increase awareness of the SportsLine
brand and build traffic on our Web sites. Under the agreement, CBS has the
right to receive specified percentages of our net revenues. The agreement
requires us to maintain and operate our flagship Web site, cbs.sportsline.com,
in accordance with certain guidelines and restrictions and to cease using any
content on cbs.sportsline.com which CBS determines conflicts, interferes with
or is detrimental to CBS's reputation or business or which becomes subject to
any third party restriction or claim which would prohibit, limit or restrict
the use of such content on the Internet. CBS has the right to terminate the
agreement upon the acquisition by a CBS competitor of 40% or more of the voting
power of our equity securities or in certain other circumstances, including if
we breach a material term or condition or the agreement or if we become
insolvent or subject to bankruptcy or similar proceedings.
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We cannot assure you that CBS will perform its obligations under the
agreement, or that the agreement will significantly increase consumer awareness
of our brand or build traffic on our Web sites. Any failure of CBS to perform
its material obligations under the agreement, or the termination of the
agreement prior to the end of its term, would have a material adverse effect on
our business, results of operations and financial condition.
WE RELY ON OTHER STRATEGIC RELATIONSHIPS IN ORDER TO EXECUTE OUR BUSINESS PLAN
In addition to our relationship with CBS, we have entered into other
strategic relationships with sports superstars and personalities, sports
organizations, commercial online services (such as AOL), third party Web sites
(such as Excite, Netscape and InfoSpace) and developers of browsers and other
Internet-based products. We rely on these relationships to increase awareness
of our brand among consumers, to create revenue opportunities and to obtain
content for our Web sites. We cannot assure you that a party to any of our
strategic agreements will perform its obligations as agreed or that we will be
able to specifically enforce any such agreement. Many of the these strategic
agreements are short-term in nature and certain of these agreements may be
terminated by either party on short notice. Our failure to maintain or renew
these existing strategic relationships, to establish additional strategic
relationships or to fully capitalize on any such relationship could have a
material adverse effect on our business, results of operations and financial
condition.
WE MAY NOT BE ABLE TO COMPETE SUCCESSFULLY
The market for Internet services and products is relatively new,
intensely competitive and rapidly changing. Since the Internet's
commercialization in the early 1990's, the number of Web sites on the Internet
competing for consumers' attention and spending has proliferated with no
substantial barriers to entry, and we expect that competition will continue to
intensify. Competition could result in less user traffic to our Web sites,
price reductions for our advertising, reduced margins or loss of market share,
any of which would have a material adverse effect on our business, results of
operations and financial condition.
We compete for advertisers, viewers, members, content providers,
merchandise sales and rights to sports events with the following categories of
companies:
o online services or Web sites targeted to sports enthusiasts
generally (such as ESPN.com, CNN and Sports Illustrated's CNN/SI
and Fox Sports) or to enthusiasts of particular sports (such as Web
sites maintained by Major League Baseball, the NFL, the NBA and the
NHL),
o publishers and distributors of traditional off-line media (such as
television, radio and print), including those targeted to sports
enthusiasts, many of which have established or may establish Web
sites,
o general purpose consumer online services such as AOL and Microsoft
Network, each of which provides access to sports-related content
and services,
o vendors of sports information, merchandise, products and services
distributed through other means, including retail stores, mail,
facsimile and private bulletin board services, and
o Web search and retrieval services and portals, such as AltaVista,
Excite, InfoSeek, Lycos, Netscape and Yahoo!, and other
high-traffic Web sites.
Our ability to compete depends on many factors, many of which are outside
of our control. These factors include the quality of content provided by us and
by our competitors, the ease of use of services developed either by us or by
our competitors, the timing and market acceptance of new and enhanced services
developed either by us or by our competitors, and sales and marketing efforts
by us and our competitors.
Based on our review of publicly available documents, we believe some of
our existing competitors, as well as potential new competitors, have longer
operating histories, significantly greater financial, technical and marketing
resources, greater name recognition and substantially larger user or membership
bases than we do. This may allow them to devote greater resources than we can
to the development and promotion of their services. In addition, some of these
competitors may be able to respond more quickly than us to new or emerging
technologies and changes in Internet user requirements and to devote greater
resources than us to the development, promotion and sale of their services.
There can be no assurance that our current or potential competitors will not
develop products and services comparable or superior to those developed by us
or adapt more quickly than us to new technologies, evolving industry trends or
changing Internet user preferences. In addition, as we expand internationally
we are likely to face new competition. There can be no assurance that we will
be able to compete successfully against current and future competitors, or that
competitive pressures would not have a material adverse effect on our business,
results of operations and financial condition.
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WE ARE DEPENDENT ON CERTAIN CONTENT PROVIDERS AND ARE REQUIRED TO MAKE
SIGNIFICANT PAYMENTS TO SUCH CONTENT PROVIDERS
We rely on independent content providers for sports news, scores,
statistics and other sports information. Our future success depends, in
significant part, on our ability to maintain and renew our relationships with
these content providers and to build new relationships with other content
providers. Our agreements with content providers generally are short-term and
may be terminated by the content provider if we fail to fulfill our obligations
under the applicable agreement. Some of our content providers compete with one
another and, to some extent, with us for advertising and members. Termination
of one or more significant content provider agreements would decrease the
availability of sports news and information which we can offer our customers
and could have a material adverse effect on our business, results of operations
and financial condition.
Most of our agreements with content providers are nonexclusive, and many
of our competitors offer, or could offer, content that is similar or the same
as that obtained by us from such content providers. In addition, the growing
reach and use of the Internet have further intensified competition in this
industry. Consumers have gained free access to certain information provided
directly on the Internet by certain content providers. To the extent that
content providers, including but not limited to our current suppliers, provide
information to users at a lower cost than us or at minimal or no cost, our
business, results of operations and financial condition could be materially
adversely affected.
Fees payable to content providers constitute a significant portion of our
cost of revenue. There can be no assurance that these content providers will
enter into or renew agreements with us on the same or similar terms as those
currently in effect. If we are required to increase the fees payable to our
content providers, such increased payments could have a material adverse effect
on our business, results of operations and financial condition.
EFFECTIVELY MANAGING OUR GROWTH MAY BE DIFFICULT
We have rapidly and significantly expanded our operations and anticipate
that significant expansion of our operations will continue to be required in
order to address potential market opportunities. This growth is likely to place
a significant strain on our management, operational and financial resources and
systems. To manage our growth, we must implement systems and train and manage
our employees. In addition, it may become necessary to increase the capacity of
our software, hardware and telecommunications systems on short notice. We
cannot assure you that our management will be able to effectively or
successfully manage our growth.
OUR ACQUISITION STRATEGY HAS CERTAIN RISKS
Our acquisition strategy is subject to the following risks:
o we may not be able to identify additional suitable acquisition
candidates available for sale at reasonable prices,
o acquisitions may cause a disruption in our ongoing business,
distract our management and other resources and make it difficult
to maintain our standards, controls and procedures,
o we may not be able to consummate any acquisition or successfully
integrate services, products and personnel of any acquisition into
our operations,
o we may acquire companies in markets in which we have little
experience, and
o we may be required to incur debt or issue equity securities, which
may be dilutive to existing shareholders, to pay for acquisitions.
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OUR STRATEGY TO EXPAND INTERNATIONALLY HAS CERTAIN RISKS
We plan to continue to expand our business internationally and expect
that our international operations will be subject to most of the risks inherent
in our business generally. We can not assure you that revenue from
international operations will increase in the future or that operating losses
will not be incurred from such operations. In addition, there are certain risks
inherent in doing business in international markets, such as:
o changes in regulatory requirements, tariffs and other trade
barriers,
o fluctuations in currency exchange rates,
o potentially adverse tax consequences,
o difficulties in managing or overseeing foreign operations, and
o differences in consumer preferences and requirements in different
markets.
WE MAY NOT BE ABLE TO PROTECT OUR PROPRIETARY RIGHTS AND WE MAY INFRINGE THE
PROPRIETARY RIGHTS OF OTHERS
Proprietary rights are important to our success and competitive position.
In 1996, we were issued a United States trademark registration for our former
SportsLine USA logo. We have applied to register in the United States our
current SportsLine USA logo and a number of other marks, several of which
include the term "SportsLine USA." We have filed applications to register
"SportsLine" marks in Australia, the United Kingdom and other countries. We can
not assure you that we will be able to secure adequate protection for these
trademarks in the United States or in foreign countries. Although we seek to
protect our proprietary rights, our actions may be inadequate to protect any
trademarks and other proprietary rights or to prevent others from claiming
violations of their trademarks and other proprietary rights. In addition,
effective copyright and trademark protection may be unenforceable or limited in
certain countries, and the global nature of the Internet makes it impossible to
control the ultimate destination of our work. We also license content from
third parties and it is possible that we could become subject to infringement
actions based upon the content licensed from those third parties. We generally
obtain representations as to the origin and ownership of such licensed content;
however, this may not adequately protect us. Any of these claims, with or
without merit, could subject us to costly litigation and divert the attention
of our technical and management personnel.
OUR BUSINESS IS AT RISK OF SYSTEM FAILURES, DELAYS AND INADEQUACY
The performance of our Web sites is critical to our reputation and
ability to attract and retain users, advertisers and members. Services based on
sophisticated software and computer systems often encounter development delays
and the underlying software may contain undetected errors or failures when
introduced. Any system error or failure that causes interruption in
availability or an increase in response time could result in a loss of
potential or existing users, advertisers or members and, if sustained or
repeated, could reduce the attractiveness of our Web sites to users and
advertisers. A sudden and significant increase in the number of users of our
Web sites also could strain the capacity of the software, hardware or
telecommunications systems we deploy, which could lead to slower response time
or system failures. In addition, if the number of Web pages or users of our Web
sites increases substantially, our hardware and software infrastructure may not
be able to adequately handle the increased demand. Our operations also are
dependent upon receipt of timely feeds and computer downloads from content
providers, and any failure or delay in the transmission or receipt of such
feeds and downloads, whether on account of our system failure, our content
providers, the public network or otherwise, could disrupt our operations. Any
failure or delay that causes interruptions in our operations could have a
material adverse effect on our business, results of operations and financial
condition.
OUR SUCCESS IS DEPENDENT ON OUR KEY PERSONNEL
Our future success depends, in part, upon the continued service of our
senior management and other key personnel. Although we are the beneficiary of a
key man life insurance policy covering Michael Levy, SportsLine USA's President
and Chief Executive Officer, and in June 1998 we entered into an employment
agreement with Mr. Levy which continues in effect through December 31, 2003,
the loss of his services or the services of one or more of our other executive
officers or key employees could have a material adverse effect on our business,
results of operations and financial condition. Our future success also depends
on our continuing ability to attract and retain highly qualified technical,
editorial and managerial personnel. Competition for such personnel is intense,
and we have, at times, experienced difficulties in attracting the desired
number of such individuals.
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OUR BUSINESS DEPENDS ON THE GROWTH OF THE INTERNET
Our market is new and rapidly evolving. Our success is highly dependent
upon continued growth in the use of the Internet generally and, in particular,
as a medium for advertising, information services and commerce.
Internet usage may be inhibited for a number of reasons, such as:
o the Internet infrastructure may not be able to support the demands
placed on it, and its performance and reliability may decline as
usage grows,
o security and authentication concerns with respect to the
transmission over the Internet of confidential information, such as
credit card numbers, and attempts by unauthorized computer users,
so-called hackers, to penetrate online security systems,
o privacy concerns, including those related to the ability of web
sites to gather user information without the user's knowledge or
consent, and
o the lack of availability of cost-effective, high-speed services.
If Internet usage grows, the Internet infrastructure may not be able to
support the demands placed on it by this growth or its performance or
reliability may decline. In addition, Web sites may from time to time
experience interruptions in service as a result of outages and other delays
occurring throughout the Internet network infrastructure. If these outages or
delays frequently occur in the future, Internet usage, as well as usage of our
Web sites, could be adversely affected.
ADOPTION OF THE INTERNET AS AN ADVERTISING MEDIUM IS UNCERTAIN
Our business, results of operations and financial condition would be
materially adversely affected if the Internet advertising market develops more
slowly than we expect or if we are unsuccessful in increasing our advertising
revenues. We derive a substantial portion of our revenue from the sale of
advertisements on our Web sites. Since the Internet advertising market is new
and rapidly evolving, we cannot yet gauge its effectiveness as compared to
traditional advertising media.
The adoption of Internet advertising, particularly by those entities that
have historically relied upon traditional media for advertising, requires the
acceptance of a new way of conducting business, exchanging information and
advertising products and services. Advertisers that have traditionally relied
upon other advertising media may be reluctant to advertise on the Internet.
These businesses may find Internet advertising to be less effective than
traditional advertising media for promoting their products and services. Many
potential advertisers have little or no experience using the Internet for
advertising purposes. Consequently, they may allocate only limited portions of
their advertising budgets to Internet advertising.
Advertisers may not advertise on our Web sites or may pay less for
advertising on our Web sites if they do not believe that they can reliably
measure the effectiveness of Internet advertising or the demographics of the
user viewing their advertisements. We use both internal measurements and
measurements provided to us by third parties. If these third parties are unable
to continue to provide these services, we would have to perform them ourselves
or obtain them from another provider. This could cause us to incur additional
costs or cause interruptions in our business while we are replacing these
services. In addition, we are implementing additional systems designed to
record demographic data on our users. If we do not implement these systems
successfully, we may not be able to accurately evaluate the demographic
characteristics of our users. Moreover, "filter" software programs that limit
or prevent advertising from being delivered to an Internet user's computer are
available. Widespread adoption of this software could adversely affect the
commercial viability of Internet advertising.
To the extent that minimum guaranteed impression levels are not met
ratably over the contract period, we defer recognition of the corresponding
pro-rata portion of the revenues related to such unfulfilled obligation until
the guaranteed impression levels are achieved. Advertising based on
impressions, or the number of times an advertisement is delivered to users,
comprises virtually all of our current revenues. To the extent that minimum
impression levels are not achieved for any reason, we may be required to
provide additional impressions after the contract term, which would reduce our
advertising inventory.
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Our revenues could be adversely affected if we are unable to adapt to
other Internet advertising pricing models that are adopted as industry
standard. It is difficult to predict which, if any, pricing models for Internet
advertising will emerge as the industry standard. This makes it difficult to
project our future advertising rates and revenues.
WE MAY NOT BE ABLE TO ADAPT AS INTERNET TECHNOLOGIES AND CUSTOMER DEMANDS
CONTINUE TO EVOLVE
To be successful, we must adapt to rapidly changing Internet technologies
by continually enhancing our Web sites and introducing new services to address
our customers' changing demands. We could incur substantial costs if we need to
modify our services or infrastructure in order to adapt to changes affecting
providers of Internet services. Our business, results of operations and
financial condition could be materially adversely affected if we incurred
significant costs to adapt, or cannot adapt, to these changes.
CONCERNS REGARDING SECURITY OF TRANSACTIONS AND TRANSMITTING CONFIDENTIAL
INFORMATION OVER THE INTERNET
A significant barrier to electronic commerce and communications is the
secure transmission of confidential information over public networks. We rely
on encryption and authentication technology licensed from third parties to
provide the security and authentication necessary to effect secure transmission
of confidential information. We cannot assure you that advances in computer
capabilities, new discoveries in the field of cryptography or other events or
developments will not result in a compromise or breach of the algorithms we use
to protect customer transaction data. If any such compromise of our security
were to occur it could have a material adverse effect on our business, results
of operations and financial condition. If someone is able to circumvent our
security measures, such person could misappropriate proprietary information or
cause interruptions in our operations. We may be required to expend significant
capital and other resources to protect against the threat of such security
breaches or to alleviate problems caused by such breaches. Concerns over the
security of Internet transactions and the privacy of users may also inhibit the
growth of the Internet generally, and the Web in particular, especially as a
means of conducting commercial transactions. To the extent that our activities
or the activities of third party contractors involve the storage and
transmission of proprietary information, such as credit card numbers, security
breaches could expose us to a risk of loss or litigation and possible
liability. We cannot assure you that our security measures will prevent
security breaches or that failure to prevent such security breaches would not
have a material adverse effect on our business, results of operations and
financial condition.
REGULATORY AND LEGAL UNCERTAINTIES COULD HARM OUR BUSINESS
Any new law or regulation pertaining to the Internet, or the application
or interpretation of existing laws, could decrease the demand for our service,
increase our cost of doing business or otherwise have a material adverse effect
on our business, results of operations and financial condition. There is, and
will be, an increasing number of laws and regulations pertaining to the
Internet. These laws or regulations may relate to liability for information
retrieved from or transmitted over the Internet, online content regulation,
user privacy, taxation and the quality of products and services. Moreover, the
applicability to the Internet of existing laws governing intellectual property
ownership and infringement, copyright, trademark, trade secret, obscenity,
libel, employment, personal privacy and other issues is uncertain and
developing.
Our contests and sweepstakes may be subject to state and federal laws
governing lotteries and gambling. We seek to design our contest and sweepstakes
rules to fall within exemptions from such laws and restricts participation to
individuals over 18 years of age who reside in jurisdictions within the United
States and Canada in which the contests and sweepstakes are lawful. We cannot
assure you that our contests and sweepstakes will be exempt from such laws or
that the applicability of such laws to us would not have a material adverse
effect on our business, results of operations and financial condition.
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<PAGE> 13
WE MAY BE LIABLE FOR THE CONTENT WE MAKE AVAILABLE ON THE INTERNET
We may be subject to legal claims relating to the content we make
available on our Web sites, or the downloading and distribution of such
content. For example, persons may bring claims against us if material that is
inappropriate for viewing by young children can be accessed from our Web sites.
Claims could also involve such matters as defamation, invasion of privacy and
copyright infringement. Providers of Internet products and services have been
sued in the past, sometimes successfully, based on the content of material.
Although we carry general liability insurance, our insurance may not cover
potential claims of this type or may not be adequate to cover all costs
incurred in defense of potential claims or to indemnify us for all liability
that may be imposed. Any costs or imposition of liability that is not covered
by insurance or in excess of insurance coverage could have a material adverse
effect on our business, results of operations and financial condition.
Implementing measures to reduce our exposure to this liability may require us
to spend substantial resources and limit the attractiveness of our service to
users.
OUR SYSTEMS MAY NOT BE YEAR 2000 COMPLIANT
We utilize a significant number of computer software programs and
operating systems across our entire organization, including applications used
in operating our various Web sites, member services, e-commerce, and various
administrative and billing functions. To the extent that our software
applications contain source codes that are unable to appropriately interpret
the upcoming calendar year 2000, some level of modification, or even possible
replacement of such applications may be necessary.
We have retained a consulting firm to help assess our Year 2000
compliance. The assessment is currently being conducted in four phases, the
first two of which have been completed. During Phase One, we analyzed
facilities, applications, network, distributed computing, infrastructure, and
data in order to determine the size, scope, and complexity of our exposure to
Year 2000. During Phase Two, specific strategies required to bring exposure
areas into compliance were formulated. Additionally, during Phase Two, we began
interviewing hardware, software, market feed, and firmware vendors for Year
2000 compliance plans. The results of the first and second phases were used to
develop a compliance/renovation approach, budget, and project plan which
includes an analysis of compliance strategies, cost parameters and timelines.
During Phase Three, which is currently in process, we will complete the
renovations of software and applications, implement hardware patches, develop
project contingencies and complete final testing. Phase Four will complete the
process with the development of a contingency plan for any hardware or software
failure. Phase Four is scheduled to begin in June 1999. We expect to be
substantially Year 2000 compliant by the end of June 1999 with respect to our
mission-critical computing infrastructure, associated applications, and
strategic vendors/suppliers.
The costs we incurred during 1998 to address the Year 2000 compliance
were approximately $143,750. We estimate we will incur a maximum of $500,000 in
direct costs during 1999 to support our compliance initiatives. Although we
expect to be Year 2000 compliant on or before December 31, 1999, we cannot
assure you that we will not experience serious unanticipated negative
consequences and/or material costs caused by undetected errors or defects in
the technology used in our internal systems or by failures of our vendors and
partners to address their Year 2000 issues in a timely and effective manner.
Should miscalculations or other operational errors occur as a result of
the Year 2000 issue, we, or the parties on which we depend, may be unable to
produce reliable information or to process routine transactions. Furthermore,
in the worst case, we, or the parties on which we depend, may, for an extended
period of time, be incapable of conducting critical business activities which
include, but are not limited to, the production and delivery of our Internet
sites, invoicing customers and paying vendors, which could have a material
adverse effect on our business, prospects, financial condition and operating
results.
WE MAY NOT BE ABLE TO ACQUIRE OR MAINTAIN EFFECTIVE WEB ADDRESSES
We hold rights to various Web domain names, including
"cbs.sportsline.com," "golfweb.com" and "vegasinsider.com," among others.
Governmental agencies typically regulate domain names. These regulations are
subject to change. We may not be able to acquire or maintain appropriate domain
names in all countries in which we do business. Furthermore, regulations
governing domain names may not protect our trademarks and similar proprietary
rights. We may be unable to prevent third parties from acquiring domain names
that are similar to, infringe upon or diminish the value of our trademarks and
other proprietary rights.
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<PAGE> 14
THE PRICE OF THE NOTES AND OUR COMMON STOCK IS HIGHLY VOLATILE
The trading price of the notes and our Common Stock fluctuates
significantly. For example, during the 52-week period ended March 31, 1999, the
reported closing price of our common stock on the Nasdaq National Market was as
high as $57.81 and as low as $7.69. Trading prices of the notes and the common
stock may fluctuate in response to a number of events and factors, such as:
o quarterly variations in operating results,
o announcements of technological innovations,
o new services, products and strategic developments by us or our
competitors,
o changes in financial estimates or recommendations by securities
analysts, and
o the operating and stock price performance of other companies.
In addition, the stock market has experienced volatility that has
particularly affected the market prices of equity securities of companies
within certain industry groups such as technology companies and
Internet-related companies in particular, and that often has been unrelated to
the operating performance of such companies. These broad market fluctuations
may materially adversely affect the trading price of the notes and the common
stock, regardless of our operating performance.
THE NOTES ARE SUBORDINATED TO OUR SENIOR DEBT
The notes are unsecured and subordinated to our existing and future
senior indebtedness. In the event of our bankruptcy, liquidation or
reorganization or acceleration of the notes due to an event of default, we will
pay our obligations on the notes only after we have paid all of our senior
indebtedness in full. Our assets may not be sufficient to cover amounts due on
any of the notes. The notes also will be effectively subordinated to the
liabilities, including trade payables, of any of our subsidiaries.
As of March 31, 1999, we had no material indebtedness outstanding that
constituted senior indebtedness. Neither we nor our subsidiaries are prohibited
under the indenture from incurring additional debt. Additional debt could
prevent us from meeting our obligations on the notes. From time to time we and
our subsidiaries likely will incur additional debt, including senior
indebtedness. See "Description of Notes - Subordination of Notes."
REDEMPTION OF THE NOTES IS SUBJECT TO CERTAIN LIMITATIONS
We may not have sufficient funds to pay the repurchase price in cash on a
repurchase event. In addition, a repurchase event may result in a default under
one or more agreements governing our senior indebtedness, whether the
repurchase price is paid in common stock or cash. In this event, the
subordination provisions may prevent us from making any cash payment on the
notes, including a payment of the repurchase price, unless we first obtained
the consent of the holders of defaulted senior indebtedness or repay the senior
indebtedness in full.
The repurchase event may have the effect of delaying, deferring or
preventing a change of control or other attempt to acquire control of us. As a
result, the right may render more difficult a merger, consolidation or tender
offer, or an assumption of control by a holder of a large block of our shares
and the removal of incumbent management. The change of control repurchase
feature was a result of negotiations between us and the initial purchasers in
the initial private placement. The repurchase feature is not the result of our
knowledge of any specific effort to accumulate shares of common stock or to
obtain control of us by means of a merger, tender offer, solicitation or
otherwise, or part of a plan by us to adopt a series of anti-takeover
provisions. We have no present intention to engage in a transaction involving a
change of control, although it is possible that we would decide to do so in the
future.
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<PAGE> 15
THERE IS CURRENTLY NO PUBLIC MARKET FOR THE NOTES
The initial purchasers of the notes, though they have advised us that
they intend to make a market in the notes, are not obligated to do so and may
discontinue market making at any time without notice. Their market-making
activity will be subject to the limits imposed by the securities laws. We
cannot guarantee that the market for the notes will be maintained. The trading
price of notes will decline if there ceases to be an active trading market for
them. We do not intend to apply for listing of the notes on any securities
exchange.
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<PAGE> 16
USE OF PROCEEDS
SportsLine USA will not receive any proceeds from the sale of the notes
or the common stock by the selling security holders.
RATIO OF EARNINGS TO FIXED CHARGES
The following table shows the amounts by which our earnings were
insufficient to cover fixed charges on a historical basis for the fiscal years
indicated, except for 1994, our initial year of operations, which began in
February 1994. Earnings consist of income before income taxes plus fixed
charges. Fixed charges consist of interest charges and the portion of rent
expense under operating leases representing interest, which is estimated to be
one-third of rent expense.
<TABLE>
<CAPTION>
Three months ended
March 31,
------------------
1994 1995 1996 1997 1998 1998 1999
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Amount by which earnings were
insufficient to cover fixed charges
(in thousands)........................ $404 $6,108 $16,103 $34,177 $35,509 $9,006 $10,128
</TABLE>
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<PAGE> 17
DESCRIPTION OF NOTES
The notes were issued under an indenture dated as of March 15, 1999,
between us and State Street Bank and Trust Company, as trustee. Many of the
terms and conditions applicable to the notes are contained in the indenture.
The following summarizes some, but not all, of the provisions of the notes and
the indenture. Prospective buyers of notes should refer to the actual terms of
the notes and the indenture for the definitive terms and conditions. The
indenture and a form of the notes have been filed as exhibits to the
registration statement of which this prospectus is a part. As used in this
Description of notes, the words "we," "us," or "our" do not include any of our
subsidiaries.
GENERAL
The aggregate principal amount of the notes is limited to $150,000,000.
The notes will be issued in fully registered form and denominated in integral
multiples of $1,000. The notes will mature on April 1, 2006 unless earlier
converted, redeemed or repurchased.
The notes bear interest at an annual rate of 5%. Interest will be paid on
April 1 and October 1 of each year, commencing October 1, 1999, and upon
maturity, redemption and repurchase. The record dates for payment of interest
on the notes is March 15 and September 15. If any payment date falls on a day
that is not a business day, payment will be made on the next business day and
no additional interest will be paid. Interest will be computed the basis of a
360 day year comprised of twelve 30-day months.
We will maintain an office in the Borough of Manhattan, State of New York
where notes may be presented for registration, transfer, exchange or
conversion. Initially this will be an office or agency of the trustee. Interest
payable on the notes will generally be paid by check and mailed to the holders
of record as of the close of business on the last Business Day before the
related record date. Holders of more than $2,000,000 of notes may request that
their interest be paid by wire transfer.
We are not restricted under the indenture from entering into any
transaction or altering the nature of our business, even if the transaction or
alteration would be detrimental to the holders of the notes. For example, we
may incur substantial amounts of debt or sell our assets to an acquiror without
violating the terms of the indenture. If the transaction involves a "change of
control," a holder will have the right to require us to repurchase their notes,
in the manner described in "--Repurchase at Option of Holders Upon a Repurchase
Event." Dividends, stock splits and other distributions may result in an
adjustment to the conversion price of the notes.
Holders will not be required to pay a service charge for registration or
transfer of their notes. However, we may require you to pay any tax or other
governmental charge in connection with the transfer. We are not required to
exchange or register the transfer of:
o any notes selected for redemption for a period of 15 days prior to
redemption,
o any note or portion selected for redemption,
o any note or portion surrendered for conversion , or
o any note or portion surrendered for repurchase but not withdrawn in
connection with a repurchase event.
The notes will have no sinking fund. A sinking fund is a custodial or
similar account into which regularly scheduled deposits are made for purposes
of redeeming or repurchasing of securities.
CONVERSION
Each holder may convert its notes, in whole or in part, into our common
stock at an initial conversion rate of 15.355 shares of common stock per $1,000
principal amount of notes, which is equivalent to a conversion price of
approximately $65.125 per share. A note may be converted at any time prior to
the close of business on the final maturity date of the notes. If the notes are
called for redemption, the holder's conversion rights on the called notes will
expire at the close of business of the last business day before the redemption
date. Any note that has been presented for repurchase following a repurchase
event may only be converted if the holder delivers a notice of withdrawal prior
to the close of business on the last business day before the repurchase date.
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<PAGE> 18
A holder may exercise the right to convert their notes in denominations
of integral multiples of $1,000 by delivering their notes to the office of our
conversion agent accompanied by a conversion notice in the form required by the
indenture. If the date of conversion occurs on or after a record date, but
before the next interest payment date, and we have not called the notes for
redemption, the notes to be converted and conversion notice must be accompanied
by a payment equal to the amount of the interest payable on the next interest
payment date. Instead of issuing a fractional share upon conversion, we will
pay a cash adjustment based on the closing market price of the common stock on
the last business day before the date of conversion.
A holder that presents a note for conversion will not be required to pay
any taxes or duties resulting from the issuance of our common stock, but a
holder will be required to pay any tax or duty resulting from the issuance of
common stock in the name of any person other than the holder.
The conversion price shall initially be $1,000 divided by the conversion
rate of 15.355 and shall be adjusted upon certain events including:
o our issuing common stock as a dividend or distribution on our
common stock,
o our dividing or combining our outstanding shares of common stock
into a different number of shares,
o subject to certain exceptions, our issuing rights or warrants to
all holders of our common stock to purchase common stock at less
than the current market price of the common stock,
o our making a dividend or distribution to the holders of our common
stock of capital stock or debt or assets, excluding:
o common stock distributions covered by the first bullet point,
o right or warrant distributions covered by the third bullet
point, and
o cash distributions covered by the next bullet point,
o our paying a cash dividend or distribution to all holders of our
common stock or our repurchasing any shares of our common stock
(whether by tender offer or otherwise) in a transaction in which
all holders of our common stock are invited to participate if, when
aggregated with all other dividends, distributions or repurchases
during the prior 12 calendar months for which no adjustment to the
conversion price has been made, the dividend, distribution or
repurchase exceeds 10% of the Company's market capitalization
(calculated by multiplying the current market price of its common
stock by the number of outstanding shares of common stock, on a
fully diluted basis), and
o payment on certain tender offers or exchange offers by a third
party if, as of the closing date of the offer, our board of
directors does not recommend rejection of the offer.
We will only make an adjustment in the last bullet point if the tender
offer increases the person's ownership to more than 25% of our outstanding
common stock. We won't make any adjustment in the last bullet point if the
tender offer is a merger or transaction described below under "--Consolidation,
Merger or Assumption."
If we implement a stockholders' rights plan that grants rights to the
holders of our common stock, the indenture requires that the plan also allow
the holders of notes to receive the same rights upon conversion of the notes
into common stock, on a share-for-share basis.
In the event of any reclassification or other change in our common stock,
or our consolidation, merger, or combination with or into another entity or a
sale or conveyance to another person of our property and assets as an entirety
or substantially as an entirety, that results in the holders of our common
stock becoming entitled to receive stock, other securities, cash or other
property or assets on or in exchange for their shares of common stock, the
holders will generally be entitled to convert their notes into the type of
property or assets that they would have received had the notes been converted
immediately before such event. If the holders of common stock have the right to
chose between or among alternative types of property, the holders of notes will
receive the kind and amount of property received per share by a plurality of
non-electing shares. All references in this Description of notes to "common
stock" in the context of any holder's right to convert should be construed to
mean either our common stock or the other property into which the note is
convertible.
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The holders of notes or common stock issuable upon conversion of the
notes may, in certain circumstances, be deemed to have received a distribution
or dividend subject to United States income tax as a result of an adjustment
(or the nonoccurrence of an adjustment) to the conversion price. See "Certain
Federal Income Tax Considerations."
We are permitted to reduce the conversion price of the notes for certain
periods of time, if our Board of Directors deems it advisable. Any such
reduction shall be effective for not less than 20 days. We may also reduce the
conversion price to avoid or diminish income tax to holders of our common stock
in connection with a dividend or distribution of stock or similar event. We are
required to give at least 15 days prior notice of any such reduction.
No adjustment in the conversion price will be required unless it would
result in a change in the conversion price of at least 1%. Any adjustment not
made will be taken into account in subsequent adjustments.
OPTIONAL REDEMPTION BY US
On or after April 2, 2002, we may elect to redeem all or part of the
notes. We will provide the holders at least 30 but not more than 60 days'
notice of our intent to redeem.
If we elect to redeem the notes the redemption price will be as follows,
expressed as a percentage of the principal amount of the notes to be redeemed:
Redemption
Redemption Date Price
--------------- ---------
From April 2, 2002 through March 31, 2003........................102.857%
From April 1, 2003 through March 31, 2004........................102.143
From April 1, 2004 through March 31, 2005........................101.429
From April 1, 2005 through March 31, 2006........................100.714
and 100% at April 1, 2006.
We will also pay accrued interest to, but excluding, the date of
redemption. If a redemption date occurs on an interest payment date, the
interest will be payable to the holder of record as of the record date.
In the event of a partial redemption, the trustee will select the notes
to be redeemed by lot, or in its discretion, on a pro rata basis or by any
other method that the trustee considers fair and appropriate, as long as the
method chosen is not prohibited by any exchange or automated market. Partial
redemptions of any note must be in integral multiples of $1,000. A new note
will be issued having a principal amount equal to the unredeemed principal
portion of the old note. In the event that a holder partially converts a note
that has been called for a partial redemption, the conversion shall first
reduce the portion of the note called for redemption.
In addition, we may at any time or from time to time repurchase notes in
the open market or in private transactions. We will cancel any notes that we
repurchase.
REPURCHASE AT OPTION OF HOLDERS UPON A REPURCHASE EVENT
If a repurchase event occurs, each holder will have the right to require
us to repurchase all or part of its notes on the 40th calendar day after the
date that we mail a notice of repurchase to the holders. The purchase price
will be 100% of the principal amount of the notes. We will also pay accrued
interest to, but excluding, the repurchase date. However, if a repurchase date
occurs on an interest payment date, the interest becoming due on the interest
payment date will be payable to the holder of record on the Record Date, which
will satisfy our obligation to otherwise pay interest in connection with the
repurchase.
At our option, instead of paying the repurchase price in cash, we may pay
the repurchase price in shares of our common stock, valued at 95% of the
average of the closing prices of our common stock for the five consecutive
trading days prior to such repurchase. We may not make payment in shares of our
common stock unless we satisfy certain conditions with respect to such payment
set forth in the indenture.
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<PAGE> 20
We are required to mail a notice to each holder of record within 15
calendar days after the occurrence of a repurchase event. The notice must
describe the repurchase event, the holder's right to elect repurchase of the
notes and the repurchase date. We must deliver a copy of the notice to the
trustee and cause a copy, or a summary of the notice, to be published in a
newspaper of general circulation in the City of New York. A holder may exercise
its repurchase rights by delivering written notice to us and the trustee
indicating that the holder has elected to exercise its repurchase rights. The
notice is to be accompanied by the notes endorsed for transfer to us. The
exercise notice is to be delivered to us on or before the close of business on
the 35th calendar day after the date the repurchase notice is mailed.
A "change in control" will be deemed to have occurred when:
o any person or group is or becomes the beneficial owner of shares
representing more than 50% of our voting stock,
o our stockholders approve any plan or proposal for our liquidation,
dissolution or winding up,
o we
(A) consolidate with or merge into any other corporation or any
other corporation merges into us and our outstanding common
stock is changed or exchanged for other assets or securities
unless our stockholders immediately before the transaction own
immediately following the transaction at least 51% of the
combined voting power of the corporation resulting from the
transaction in substantially the same proportion as their
ownership of our voting stock immediately before the
transaction, or
(B) convey, transfer or lease all or substantially all of our
assets to any person, or
o any time continuing directors do not constitute a majority of our
Board of Directors.
A change in control will not be deemed to have occurred if:
o the last sale price of our common stock for any five trading days
during the ten trading days immediately before any event listed in
the bullet points above is at least equal to 105% of the conversion
price in effect on that day, or
o in the case of a merger or consolidation, all of the consideration
in such merger or consolidation constituting the change in control
consists of common stock traded on a United States national
securities exchange or quoted on the Nasdaq National Market and as
a result of the transaction the notes become convertible solely
into that common stock.
The term "continuing director" means at any date a member of our Board of
Directors:
o who was a member of our Board of Directors on March 19, 1999, or
o who was nominated or elected by at least a majority of the
directors who were continuing directors at the time of the
nomination or election or whose election to our Board of Directors
was recommended by at least a majority of the directors who were
continuing directors at the time of the nomination or election or
by the nominating committee comprised of our independent directors.
The term "repurchase event" means a change in control or a termination of
trading.
A "termination of trading" is considered to have occurred if our common
stock is neither listed for trading on a United States national securities
exchange nor approved for trading on an established automated over-the-counter
trading market in the United States.
If the phrase "all or substantially all" used in the definition of change
in control were to be interpreted, the interpretation would likely depend on
the facts and circumstances existing at such time. As a result, there may be
uncertainty as to whether or not a sale or transfer of "all or substantially
all" of our assets has occurred.
We may not have sufficient funds to pay the repurchase price in cash on a
repurchase event. In addition, a repurchase event may result in a default under
one or more agreements governing our senior indebtedness, whether the
repurchase price is paid in common stock or cash. In this event, the
subordination provisions may prevent us from making any cash payment on the
notes, including a payment of the repurchase price, unless we first obtained
the consent of the holders of defaulted senior indebtedness or repay the senior
indebtedness in full.
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The repurchase event may have the effect of delaying, deferring or
preventing a change of control or other attempt to acquire control of us. As a
result, the right may render more difficult a merger, consolidation or tender
offer, or an assumption of control by a holder of a large block of our shares
and the removal of incumbent management. The change of control repurchase
feature was a result of negotiations between us and the initial purchasers in
the initial private placement. The repurchase feature is not the result of our
knowledge of any specific effort to accumulate shares of common stock or to
obtain control of us by means of a merger, tender offer, solicitation or
otherwise, or part of a plan by us to adopt a series of anti-takeover
provisions. We have no present intention to engage in a transaction involving a
change of control, although it is possible that we would decide to do so in the
future.
Rule 13e-4 under the Exchange Act requires the distribution of certain
information to security holders in the event of certain issuer tender offers
and may apply in the event of a repurchase. We will comply with this rule to
the extent applicable.
SUBORDINATION
All payments under the notes are subordinate to the prior payment in full
of all existing and future senior indebtedness as provided in the indenture.
Upon any distribution of our assets upon any dissolution, winding up,
liquidation or reorganization of us, payments on the notes will be subordinated
in right of payment to the prior payment in full of all senior indebtedness.
However, if the notes are accelerated following an event of default, the
holders of any senior indebtedness then outstanding will be entitled to payment
in full before the holders of the notes are entitled to receive any payment on
the notes.
In addition, we may not make any payments on the notes if:
o we fail to pay any payment on any designated senior indebtedness
beyond any grace period, or
o any other default occurs and is continuing under any designated
senior indebtedness that permits holders of the designated senior
indebtedness to accelerate the maturity of any designated senior
indebtedness and the holders of designated senior indebtedness send
the trustee and us a payment blockage notice of the default.
We may resume making payments on the notes
o in the case of a payment default, when the default is cured or
waived or ceases to exist, and
o in the case of a nonpayment default, the earlier of when the
default is cured or waived or ceases to exist or 179 days after
receipt of the payment blockage notice.
No new period of payment blockage may be commenced pursuant to a payment
blockage notice unless:
o 365 days have elapsed since our receipt of the prior payment
blockage notice, and
o all scheduled payments on the notes have been paid in full, or, if
not paid in full, neither the trustee nor any of the holders of
notes has begun proceedings to enforce the right of the holders to
receive such payments.
No default that existed on any senior indebtedness on the date of
delivery of any payment blockage notice may be the basis for a subsequent
payment blockage notice.
The term "senior indebtedness" means the principal, premium, if any, and
interest on, including bankruptcy interest, and any other payment on the
following:
o all indebtedness of SportsLine for money borrowed that is evidenced
by notes, debentures, bonds or other securities,
o all indebtedness of SportsLine due and owing with respect to
letters of credit,
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o all indebtedness or other obligations of SportsLine due and owing
with respect to interest rate and currency swap agreements, cap,
floor and collar agreements, currency spot and forward contracts
and other similar agreements and arrangements,
o all indebtedness consisting of commitment or standby fees due and
payable to lending institutions with respect to credit facilities
or letters of credit available to SportsLine,
o all obligations of SportsLine under leases required or permitted to
be capitalized under generally accepted accounting principles,
o all indebtedness or obligations of the type listed in the bullet
points above assumed by or guaranteed by SportsLine or in effect
guaranteed, directly or indirectly, by SportsLine through an
agreement to purchase, and
o any amendments or modifications of indebtedness of type listed in
the bullet points above.
Senior indebtedness shall not include:
o any debt or amendment or modification that is not senior to or is
on the same basis as the notes,
o any indebtedness to any or our subsidiaries,
o indebtedness for trade payables or the deferred purchase price of
assets or services incurred in the ordinary course of business, or
o the notes.
The term "designated senior indebtedness" means our obligations under any
senior indebtedness that expressly provides that it shall be designated senior
indebtedness.
If the trustee or any holder of notes receives any payment or
distribution of our assets of any kind on the notes in contravention of any of
the terms of the indenture, then such payment or distribution will be held by
the recipient in trust for the benefit of the holders of senior indebtedness,
and will be immediately paid or delivered to the holders of senior indebtedness
or their representative or representatives.
We are the sole obligor on the notes. If, in the future, a significant
portion of our consolidated operations is conducted through our subsidiaries,
the cash flow and our ability to service our debt may be dependent upon the
earnings of these subsidiaries and the distribution of those earnings to us.
Each subsidiary will be a separate legal entity, will not be required to
guaranty our obligations with respect to the notes and will have no obligation
to pay any amounts due on the notes or to make any funds available for payment
on the notes. In addition, the payment of dividends and the making of loans and
advances to us by our subsidiaries may be subject to statutory, contractual or
other restrictions. Our right to receive assets of any of our subsidiaries upon
its liquidation or reorganization will be effectively subordinated to the
claims of that subsidiary's creditors, including trade creditors and even if
those claims do not include "senior indebtedness" of that subsidiary, and that
subsidiary's preferred stockholders.
The indenture will not prevent us from incurring additional indebtedness,
including senior indebtedness. As of March 31, 1999, we had no material
indebtedness outstanding which constituted senior indebtedness.
The subordination provisions of the indenture and the notes will not
prevent the occurrence of any default or event of default or limit the rights
of any holder of notes to pursue any other rights or remedies with respect to
the notes.
As a result of the subordination provisions, in the event of the
liquidation, bankruptcy, reorganization, insolvency, receivership or similar
proceedings, holders of the notes may receive less than other creditors on a
ratable basis.
EVENTS OF DEFAULT AND REMEDIES
The following events constitute "events of default" under the indenture:
o our failure to pay the principal of, or premium, if any, on any of
the notes when due,
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o our failure to pay interest or liquidated damages on the notes when
due if such failure continues for 30 days,
o our failure to deliver shares of our common stock required to be
delivered upon conversion of a note if the failure continues for 5
days,
o our failure to perform any covenant in the indenture if such
failure continues for 60 days after notice is given by the trustee
or by the holders of not less than 25% of the notes,
o our failure following a repurchase event to repurchase any notes,
o our failure to provide timely notice of a repurchase event,
o our failure or the failure of any of our significant subsidiaries
to make any payments on any Indebtedness following any applicable
grace periods, in an amount in excess of $15,000,000 and such
amount has not been paid or discharged within 30 days after notice
is given in accordance with the indenture,
o a default by us or any of our significant subsidiaries on any
indebtedness that results in the acceleration of indebtedness in an
amount in excess of $15,000,000 and such indebtedness or such
acceleration has not been discharged for 30 days after notice is
given in accordance with the indenture, or
o certain events involving bankruptcy, insolvency or reorganization
of us or any of our significant subsidiaries.
The trustee is generally required, within 90 days after its becoming
aware of a default, to provide the registered holders of the notes written
notice of the default. Except in the case of a payment default, the trustee
will not be required to deliver a default notice if it determines in good faith
that withholding the notice is in the best interest of the holders of the
notes.
If an event of default has occurred and is continuing, the trustee, or
the holders of not less than 25% of the notes, may declare all amounts
outstanding on the notes to be immediately due and payable. If an event of
default occurs resulting from the bankruptcy, insolvency or reorganization of
us, all unpaid principal of and accrued interest on the outstanding notes would
become due and payable immediately without any declaration or other act on the
part of the trustee or holders of notes.
Holders of a majority of the notes may 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, subject to certain
limitations. Before proceeding to exercise any right or power under the
indenture at the direction of the holders, the trustee will be entitled to
receive from such holders reasonable security or indemnity against any costs,
expenses and liabilities that it might incur as a result. Following an event of
default for nonpayment, each holder to which such default pertains will have
the absolute right to institute suit to enforce payment of any notes held by
it.
Generally, the holders of not less than a majority of the notes may waive
any default or event of default. However, the consent of all holders will be
required to waive any default and events of default relating to:
o a failure by us to make payment on any note,
o a failure by us to convert any note into common stock, or
o a failure by us to comply with any of the provisions of the
indenture that would require the consent of affected holders to
modify.
We are required, within 120 days of the end of each fiscal year, to send
the trustee a statement of certain of our officers:
o stating whether or not to the best of their knowledge we are out of
compliance with any terms of the indenture or the notes, and
o specifying, if any of them has any such knowledge that we are out
of compliance, the nature of the default.
We are also required to deliver to the trustee a statement specifying the
nature of any default of which we are aware and any action we have taken to
cure the default.
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CONSOLIDATION, MERGER OR ASSUMPTION
We may not consolidate or merge into another person or sell, lease,
convey or transfer all or substantially all of our assets to another person
unless:
o either
(A) in the case of a merger or consolidation that does not
involve a transfer of all or substantially all of our assets,
we are the surviving entity, or
(B) the resulting corporation is a U.S. corporation and expressly
assumes all of our obligations under the notes and the
indenture,
o no default or event of default exists or would occur, and
o certain other conditions are satisfied.
MODIFICATIONS OF THE INDENTURE
With the consent of the holders of not less than a majority of the notes,
we and the trustee may modify the indenture, any supplemental indenture or the
notes. However, the following modifications require the consent of each holder:
o an extension of the maturity of any note,
o a reduction in the rate or an extension of the time or payment of
interest on any note,
o a reduction in the principal amount of any note,
o a reduction in any amount payable upon redemption or repurchase of
any note,
o any change in our obligation to repurchase any note upon a
repurchase event if adverse to any holder,
o any change that adversely affects the right of any holder to
institute suit for the payment of any note,
o any change in currency in which any note is payable,
o any adverse modification to the right to convert the notes,
o any adverse modification of the subordination provisions of the
notes, or
o any change to the percentage required to consent to modifications
and amendments.
SATISFACTION AND DISCHARGE
We may discharge our obligations under the indenture while notes remain
outstanding if:
o all notes are within one year of their scheduled maturity or the
date on which they are scheduled for redemption, and
o we have deposited with the trustee an amount sufficient to pay all
outstanding notes on their scheduled maturity or redemption date.
REGISTRATION RIGHTS OF THE HOLDERS OF THE NOTES
Under a registration rights agreement, we are generally required to keep
the shelf registration statement of which this prospectus is a part effective
until the earlier of (1) the sale of all the securities registered under this
prospectus and (2) the expiration of the holding period for the securities held
by people or entities that are not our affiliates under Rule 144(k) under the
Securities Act. We may suspend the use of this prospectus under certain
circumstances relating to pending corporate developments, public filings with
the Securities and Exchange Commission and similar events for a period not to
exceed an aggregate of 90 days in any period of 365 consecutive days. We must
pay predetermined liquidated damages (i) for the notes, at a rate per annum
equal to 0.5% of the principal amount of the notes, and (ii) for any shares of
common stock issued on conversion of the notes, at a rate per annum equal to
0.5% of the conversion price, if the prospectus is unavailable for periods in
excess of those permitted above.
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A holder who sells notes or common stock issued upon conversion of the
notes pursuant to this prospectus generally must be named as a selling holder,
deliver this prospectus to purchasers and be bound by certain provisions of the
registration rights agreement. We will pay all expenses of the shelf
registration statement, provide to each registered holder copies of such
prospectus and take certain other actions as are required to permit
unrestricted resales of the notes and the common stock.
A copy of the registration rights agreement has been filed as an exhibit
to the registration statement of which this prospectus is a part.
GOVERNING LAW
The indenture and the notes will be governed by the laws of the State of
New York without regard to conflicts of laws principles.
CONCERNING THE TRUSTEE
State Street Bank and Trust Company, the trustee under the indenture, has
been appointed by us as the initial paying agent, conversion agent, registrar
and custodian with regard to the notes. An affiliate of the trustee is the
transfer agent for our common stock. We may maintain deposit accounts and
conduct other banking transactions with the trustee or its affiliates in the
ordinary course of business, and the trustee and its affiliates may from time
to time in the future provide banking and other services to us in the ordinary
course of their business.
If the trustee becomes a creditor of us, the indenture and the Trust
Indenture Act of 1939, as amended, may limit the right of the trustee to obtain
payment on or realize on security for its claims. If the trustee develops any
conflicting interest with the holders of notes or us, it must eliminate the
conflict or resign.
DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock consists of 50,000,000 shares of common
stock, $.01 par value per share, and 1,000,000 shares of preferred stock, $0.01
par value per share. The following statements are brief summaries of certain
provisions relating to our capital stock contained in our Certificate of
Incorporation and Bylaws and in the laws of Delaware.
COMMON STOCK
As of March 31, 1999, there were 22,384,266 shares of our common stock
outstanding. Holders of our common stock are entitled to one vote for each
share held on all matters submitted to a vote of stockholders and do not have
cumulative voting rights. Accordingly, holders of a majority of the shares of
common stock entitled to vote in any election of directors may elect all of the
directors standing for election. Holders of common stock are entitled to
receive ratably such dividends, if any, as may be declared by the Board of
Directors out of funds legally available therefor, subject to any preferential
dividend rights of outstanding preferred stock. Upon our liquidation,
dissolution or winding up, holders of our common stock are entitled to receive
ratably our net assets available after the payment of all debts and other
liabilities and subject to the prior rights of any outstanding preferred stock.
Holders of our common stock have no preemptive, subscription, redemption or
conversion rights. The outstanding shares of common stock are fully paid and
nonassessable. The rights, preferences and privileges of holders of Common
Stock are subject to, and may be adversely affected by, the rights of the
holders of shares of any series of preferred stock which we may designate and
issue in the future.
PREFERRED STOCK
As of March 31, 1999, we had no shares of preferred stock outstanding.
Our Board of Directors is authorized, without further shareholder approval, to
issue from time to time up to an aggregate of 1,000,000 shares of preferred
stock in one or more series and to fix or alter the designations, preferences,
rights and any qualifications, limitations or restrictions of the shares of
each such series thereof, including the dividend rights, dividend rates,
conversion rights, voting rights, terms of redemption (including sinking fund
provisions), redemption price or prices, liquidation preferences and the number
of shares constituting any series or designations of such series. We have no
present plans to issue any shares of preferred stock.
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REGISTRATION RIGHTS
Certain of our security holders are entitled to require us to register
under the Securities Act, up to a total of approximately 10.1 million shares of
our common stock (including 1.4 million shares of our common stock which is
issuable upon the exercise of warrants). In the event we propose to register
any of our securities under the Securities Act at any time, these security
holders, subject to certain exceptions, have the right to include their shares
in the registration. In addition, some of these security holders also have the
right, subject to certain conditions and limitations, to require us to prepare
and file a registration statement under the Securities Act with respect to
their shares. We are generally required to bear the expenses of all these
registrations, except underwriting discounts and commissions.
ANTI-TAKEOVER EFFECTS OF CERTAIN PROVISIONS OF DELAWARE LAW AND THE COMPANY'S
CERTIFICATE OF INCORPORATION AND BYLAWS
We are subject to the provisions of Section 203 of the Delaware General
Corporation Law regulating corporate takeovers. Section 203 prevents certain
Delaware corporations, including those whose securities are listed on the
Nasdaq National Market, from engaging, under certain circumstances, in a
"business combination" (which includes a merger or sale of more than 10% of the
corporation's assets) with any "interested stockholder" (a stockholder who
acquired 15% or more the corporation's outstanding voting stock without the
prior approval of the corporation's board of directors) for three years
following the date that such stockholder became an "interested stockholder." A
Delaware corporation may "opt out" of Section 203 with an express provision in
its original certificate of incorporation or an express provision in its
certificate of incorporation or bylaws resulting from a stockholders' amendment
approved by at least a majority of the outstanding voting shares. We have not
"opted out" of the provisions of Section 203.
In addition, certain provisions of our Certificate of Incorporation and
Bylaws may be deemed to have an anti-takeover effect and may delay, defer or
prevent a tender offer or takeover attempt that a shareholder might consider in
its best interest, including those attempts that might result in a premium over
the market price for the shares held by shareholders.
CLASSIFIED BOARD OF DIRECTORS. Our Board of Directors is divided
into three classes of directors serving staggered three-year terms. As a
result, approximately one-third of our directors will be elected each
year. These provisions, when coupled with the provision of our
Certificate of Incorporation authorizing only the Board of Directors to
fill vacant directorships or increase the size of the Board of Directors,
may deter a shareholder from removing incumbent directors and
simultaneously gaining control of the Board of Directors by filling the
vacancies created by such removal with its own nominees.
SHAREHOLDER ACTION; SPECIAL MEETING OF SHAREHOLDERS. Our Certificate
of Incorporation provides that shareholders may not take action by
written consent, but only at duly called annual or special meetings of
shareholders. Our Certificate of Incorporation further provides that
special meetings of our shareholders may be called only by the Chairman
of the Board of Directors or a majority of the Board of Directors.
ADVANCE NOTICE REQUIREMENTS FOR SHAREHOLDER PROPOSALS AND DIRECTOR
NOMINATIONS. Our Bylaws provide that shareholders seeking to bring
business before an annual meeting of shareholders, or to nominate
candidates for election as directors at an annual meeting of
shareholders, must provide timely notice in writing. To be timely, a
shareholder's notice must be delivered to or mailed and received at our
principal executive offices, not less than 120 days nor more than 150
days prior to the first anniversary of the date of our notice of annual
meeting provided with respect to the previous year's annual meeting. For
example, the date of the notice for our 1999 Annual Meeting is May 14,
1999. Accordingly, a shareholder's notice to bring business before our
2000 Annual Meeting must be received by us by January 17, 2000. Our
Bylaws also specify certain requirements for a shareholder's notice to be
in proper written form. These provisions may preclude shareholders from
bringing matters before the shareholders at an annual meeting or from
making nominations for directors at an annual meeting.
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AUTHORIZED BUT UNISSUED SHARES. The authorized but unissued shares
of our common stock and preferred stock are available for future issuance
without shareholder approval. These additional shares may be utilized for
a variety of corporate purposes, including future public offerings to
raise additional capital, corporate acquisitions and employee benefit
plans. The existence of authorized but unissued and unreserved common
stock and preferred stock may enable the Board of Directors to issue
shares to persons friendly to current management which could render more
difficult or discourage an attempt to obtain control by means of a proxy
contest, tender offer, merger or otherwise, and thereby protect the
continuity of our management.
Delaware law provides generally that the affirmative vote of a majority
of the shares entitled to vote on any matter is required to amend a
corporation's certificate of incorporation or bylaws, unless a corporation's
certificate of incorporation or bylaws, as the case may be, requires a greater
percentage. Our Certificate of Incorporation requires the affirmative vote of
the holders of at least 80% of the combined voting power of the outstanding
shares of our capital stock entitled to vote for the election of directors to
amend or repeal any of the provisions of our Certificate of Incorporation
listed above. This 80% shareholder vote is also required to amend or repeal any
of the provisions of our Bylaws listed above, although these Bylaws provisions
may also be amended or repealed by a majority vote of the entire Board of
Directors. This 80% shareholder vote would be in addition to any separate class
vote that might in the future be required pursuant to the terms of any
preferred stock that might be outstanding at the time any such amendments are
submitted to stockholders.
LIMITATION OF LIABILITY AND INDEMNIFICATION
Delaware law authorizes a Delaware corporation to eliminate or limit the
personal liability of a director to the corporation and its stockholders for
monetary damages for breach of certain fiduciary duties as a director. We
believe that such a provision is beneficial in attracting and retaining
qualified directors, and accordingly our Certificate includes a provision
eliminating liability for monetary damages for any breach of fiduciary duty as
a director, except as provided under Delaware law. Pursuant to Delaware law,
our directors are not insulated from liability for breach of their duty of
loyalty (requiring that, in making a business decision, directors act in good
faith and in the honest belief that the action was taken in the best interest
of the corporation), or for certain other claims. The foregoing provisions of
our Certificate may reduce the likelihood of success of derivative litigation
against directors for breaches of their fiduciary duties, even though such an
action, if successful, might otherwise have benefited us and our stockholders.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for our common stock is EquiServe,
Canton, Massachusetts.
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
This section summarizes the material United States federal income tax
consequences of purchasing, owning, and disposing of the notes and the common
stock into which you may convert the notes. This summary is not a complete
analysis of all the potential tax consequences that you may need to consider
before investing based on your particular circumstances.
This summary is based on the Internal Revenue Code of 1986, as amended,
the applicable Treasury regulations promulgated or proposed under the Internal
Revenue Code, judicial authority and administrative rulings and practice. Any
of these may change, possibly on a retroactive basis.
This summary deals only with beneficial owners of notes and common stock
who hold the notes and common stock as "capital assets." It does not address
tax consequences under any special tax rules. Special rules may apply, for
example, to banks, tax-exempt organizations, pension funds, insurance
companies, dealers in securities or foreign currencies, persons participating
in a hedging transaction or a "straddle" or "conversion transaction," or
persons that have a "functional currency" other than the U.S. dollar. In
addition, this discussion does not address the tax consequences to non-U.S.
holders. We have not sought any ruling from the Internal Revenue Service with
respect to the statements and conclusions in this summary. We cannot guarantee
that the IRS will agree with these statements and conclusions.
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Before you invest in the notes, you should consult your own tax adviser
to determine how the United States federal income and estate tax laws apply to
your particular situation and for information about any tax consequences
arising under the laws of any state, local or foreign taxing jurisdiction or
under any applicable tax treaty.
PAYMENT OF INTEREST
You generally must include interest on a note in your income as ordinary
income at the time you receive or accrue the interest based on your method of
accounting for United States federal income tax purposes. We must pay liquidated
damages to holders of the notes in certain circumstances. According to Treasury
regulations, the possibility of liquidated damages being paid on the notes will
not affect the amount of interest income you recognize, in advance of the
payment of any liquidated damages, if there is only a remote chance as of the
date the notes were issued that you will receive liquidated damages. We believe
that the likelihood that we will pay liquidated damages is remote. Therefore, we
do not intend to treat the potential payment of liquidated damages as part of
the yield to maturity of any note. However, if we pay liquidated damages, you
would treat the payments as interest income when you receive them. Similarly, we
intend to take the position that the likelihood of a repurchase of the notes
upon a repurchase event is remote, and likewise do not intend to treat the
possibility of any premium payable on a repurchase as affecting the yield to
maturity of any note.
MARKET DISCOUNT
If you purchase a note for an amount that is less than the principal
amount of the note, the difference will be "market discount" for United States
federal income tax purposes, unless the difference is less than one-fourth
(1/4) of one percent of the principal amount of the note multiplied by the
number of complete years to maturity (after you acquire the note). Under the
rules on market discount, you will be required to treat any partial principal
payment on a note, or any gain on a sale, exchange or redemption of a note, as
ordinary income up to the amount of the market discount that has accrued as of
the time of the payment or disposition, to the extent you have not previously
included such market discount in ordinary income. In addition, you may be
required to defer, until the earlier of the maturity date of the note or the
date you dispose of the note in a taxable transaction, the deduction of part or
all of the interest expense on any debt you may incur to purchase the note or
any debt you keep outstanding to carry the note.
Any market discount on a note will accrue during the period starting on
the date you acquire the note and ending on the maturity date of the note. The
market discount will accrue ratably unless you make an election to accrue the
market discount on the note on a constant interest method. You also may elect to
include market discount in income for United States federal income tax purposes
as it accrues (on either the ratable or constant interest method). If you make
that election, the rule described above requiring the deferral of deductions for
interest expense will not apply. If you make an election to include market
discount in income currently, that election will apply to all market discount
obligations that you acquire on or after the first day of the first taxable year
to which your election applies, and the election may not be revoked without the
consent of the IRS.
AMORTIZABLE BOND PREMIUM
If you purchase a note for an amount that is more than the principal
amount of the note, the excess will be "amortizable bond premium". You may
elect to amortize the premium over the remaining term of the note on a constant
yield method. However, if you purchase the note at a time when we may redeem the
note at our option for an amount greater than the note's principal amount, the
amount of amortizable bond premium will be determined based on the earlier call
date and the call price payable on that earlier call date, if the result of that
calculation would be a smaller amortizable bond premium. If an earlier call date
is used in calculating the amount of amortizable bond premium and the note is
not called on that date, the note will be treated as maturing on that call date
and then reissued on that date for an amount equal to the call price on that
date, with the amortizable bond premium being recalculated under these rules on
that date. Amortizable bond premium, as it accrues, will reduce the amount of
interest payments on the note on which you are taxable and will reduce your
adjusted tax basis in the note.
Once you make an election to amortize bond premium on any debt
obligation, including the notes, that election will apply to all debt
obligations that you own on the first day of the taxable year to which the
election relates and to all debt obligations that you acquire after that day.
You make revoke the election only with the consent of the IRS. If you do not
elect to amortize bond premium, the amount of the premium will decrease the
amount of any gain or increase the amount of any loss you recognize on a
disposition of the note.
27
<PAGE> 29
SALE, EXCHANGE OR REDEMPTION OF THE NOTES
You generally will recognize gain or loss on the sale, exchange (other
than a conversion) or redemption of a note equal to the difference between (1)
the amount of cash proceeds and the fair market value of any property you
receive on the sale, exchange or redemption (except any portion that is accrued
interest income, which is taxable as ordinary income) and (2) your adjusted tax
basis in the note. Your adjusted tax basis generally will equal the cost of the
note to you, reduced by any principal payments you have received and any
amortizable bond premium you have taken into account and increased by any
market discount you have included in income. That gain or loss generally will
be capital gain or loss, except to the extent of any accrued market discount
(see "--Market Discount" above). Capital gain or loss will be long-term if you
have held the note for more than one year and will be short-term if you have
held the note for one year or less. Long-term capital gains for noncorporate
taxpayers, including individuals, are taxed at a maximum rate of 20%, and
short-term capital gains at a maximum rate of 39.6%. Corporate taxpayers pay a
maximum regular tax rate of 35% on all net capital gains and ordinary income.
CONVERSION OF THE NOTES
You generally will not recognize any income, gain or loss on conversion
of a note into common stock, except for any cash you receive instead of a
fractional share of common stock. Your tax basis in the common stock will be
the same as your adjusted tax basis in the note at the time of conversion. For
capital gains purposes, your holding period for the common stock will generally
include the holding period of the note you converted.
You should treat cash you receive instead of a fractional share of common
stock as a payment in exchange for the fractional share of common stock. This
will result in capital gain or loss (measured by the difference between the
cash you receive for the fractional share and your adjusted tax basis in the
fractional share).
DIVIDENDS ON COMMON STOCK
Generally a distribution on common stock (probably including any
liquidated damages) is treated as a dividend and taxed as ordinary income to the
extent of our current and/or accumulated earnings and profits. A distribution in
excess of earnings and profits is treated as a tax-free return of capital to the
extent of your tax basis in the common stock, on a share-by-share basis, and
then as gain from the sale or exchange of such stock.
A dividend to a corporate holder may qualify for a deduction of 70% of the
dividend received, subject to limitations in certain cases, if the holder owns
less than 20% of the voting power and value of our stock (disregarding certain
nonvoting, nonconvertible, nonparticipating preferred stock). A corporate holder
that owns 20% or more of the voting power or value of our stock (similarly
disregarding such preferred stock) generally will qualify for an 80% dividends
received deduction.
ADJUSTMENTS TO CONVERSION PRICE
The conversion price of the notes may change under certain circumstances.
In such a case, you may be treated as having received a constructive
distribution whether or not you ever exercise your conversion privilege. The
constructive distribution will be taxed as ordinary income, subject to a
possible dividends received deduction if you are a corporate holder, to the
extent of our current and/or accumulated earnings and profits, if, and to the
extent that, the adjustment in the conversion price increases your proportionate
interest in our assets or earnings and profits. Moreover, common stockholders
will generally be treated as having received a constructive distribution if
there is not a full adjustment to the conversion price of our notes to reflect a
stock dividend or other event increasing the proportionate interest of the
common stockholders in our assets or earnings and profits. In such an event, the
constructive distribution will be taxable as ordinary income (subject to a
possible dividends received deduction if you are a corporate holder) to the
extent of our current and/or accumulated earnings and profits. At this time, we
have a deficit in accumulated earnings and profits and have no current earnings
and profits.
28
<PAGE> 30
SALE OF COMMON STOCK
On the sale or exchange of common stock, you generally will recognize
capital gain or loss equal to the difference between (1) the amount of cash and
the fair market value of any property you receive on the sale or exchange and
(2) your adjusted tax basis in the common stock. This capital gain or loss will
be long-term if you have held the stock for more than one year and will be
short-term if you have held the stock for one year or less. Long-term capital
gains for noncorporate taxpayers, including individuals, are taxed at a maximum
rate of 20%, and short-term capital gains at a maximum rate of 39.6%. A
holder's basis and holding period in common stock received upon conversion of a
note are determined as discussed above under "Conversion of the Notes."
Corporate taxpayers pay a maximum regular tax rate of 35% on all net capital
gains and ordinary income.
INFORMATION REPORTING AND BACKUP WITHHOLDING TAX
In general, a broker or we must report to the Internal Revenue Service
payments of principal, premium and interest on a note, payments of dividends on
common stock, payments of the proceeds of the sale or exchange of a note and
payments of the proceeds of the sale or exchange of common stock. The payer or
broker must backup withhold at the rate of 31% if
o the payee fails to furnish a taxpayer identification number to the
payer or broker or establish an exemption from backup withholding,
o the IRS notifies the payer or broker that the number furnished by
the payee is incorrect,
o the payee has underreported interest, dividends or original issue
discount, or
o the payee has failed to certify under penalties of perjury that he
or she is not subject to backup withholding under the Code.
Certain holders, including all corporations, are exempt from backup
withholding. You may credit any amounts withheld under the backup withholding
rules against your United States federal income tax or receive a refund, if you
furnish the required information to the IRS.
Treasury regulations that apply to payments made after December 31, 2000
will modify current information reporting and backup withholding procedures and
requirements. These regulations provide certain presumptions regarding the
status of holders when payments to the holders cannot be reliably associated
with appropriate documentation provided to the payer. For payments made after
December 31, 2000, holders must provide certification, if applicable, that
conforms to the requirements of the regulations, subject to certain
transitional rules permitting certification in accordance with current Treasury
regulations until December 31, 2000. Because the application of these
regulations may depend on your particular circumstances, we urge you to consult
your tax adviser regarding the application of these regulations.
29
<PAGE> 31
SELLING SECURITY HOLDERS
The notes were originally issued by us and sold by the initial purchasers
in a transaction exempt from the registration requirements of the Securities
Act to persons reasonably believed by the initial purchasers to be qualified
institutional buyers or other institutional accredited investors. Selling
security holders, which term includes their transferees, pledgees or donees or
their successors, may from time to time offer and sell pursuant to this
prospectus any or all of the notes and common stock into which the notes are
convertible.
The following table sets forth information, as of May 19, 1999, with
respect to the selling security holders and the respective principal amounts of
notes and the underlying common stock beneficially owned by each selling
security holder that may be offered pursuant to this prospectus.
<TABLE>
<CAPTION>
Principal Amount
of Notes
Beneficially Percentage of Number of Shares of Percentage of
Owned and Notes Common Stock Offered Common Stock
Name Offered Hereby Outstanding Hereby(1) Outstanding(2)
- ---- ----------------- ------------- -------------------- --------------
<S> <C> <C> <C> <C>
AAM/Zazove Institutional
Income Fund, L.P............ $3,000,000 2.0% 46,065 *
AIG/National Union Fire
Insurance................... 580,000 * 8,905 *
Alta Partners Holdings, LDC.... 6,000,000 4.0 92,130 *
Arpeggio Fund, LP.............. 300,000 * 4,606 *
Associated Electric & Gas
Insurance Services Ltd...... 400,000 * 6,142 *
Bancroft Convertible Fund, Inc. 375,000 * 5,758 *
Baystate Health Systems, Inc... 35,000 * 537 *
Calamos Convertible Hedge
Limited Partnership......... 200,000 * 3,071 *
Calamos Strategic Income Fund.. 60,000 * 921 *
Christian Science Trustees for
Gifts and Endowments........ 490,000 * 7,523 *
Declaration of Trust for the
Defined Benefit Plans of
ICI American Holdings Inc... 975,000 * 14,971 *
Declaration of Trust for the
Defined Benefit Plans of
ZENECA Holdings Inc......... 645,000 * 9,903 *
Delaware PERS.................. 700,000 * 10,748 *
Delaware State Employees'
Retirement Fund............. 1,245,000 * 19,116 *
Deutsche Bank Securities, Inc.. 16,030,000 10.7 246,140 1.1%
Donaldson, Lufkin &
Jenrette Securities Corp.... 700,000 * 10,748 *
Ellsworth Convertible
Growth and Income Fund, Inc. 375,000 * 5,758 *
First Church of Christ,
Scientist - Endowment....... 535,000 * 8,214 *
Forest Alternative Strategies
Fund II LP A5I.............. 125,000 * 1,919 *
</TABLE>
30
<PAGE> 32
<TABLE>
<CAPTION>
Principal Amount
of Notes
Beneficially Percentage of Number of Shares of Percentage of
Owned and Notes Common Stock Offered Common Stock
Name Offered Hereby Outstanding Hereby(1) Outstanding(2)
- ---- ----------------- ------------- -------------------- --------------
<S> <C> <C> <C> <C>
Forest Alternative Strategies
Fund II LP A5M.............. 60,000 * 921 *
Forest Fulcrum Fund LP......... 3,150,000 2.1 48,368 *
Forest Global Convertible Fund
Series A-5.................. 6,825,000 4.6 104,797 *
Foundation Account No. 1....... 200,000 * 3,071 *
Grace Brothers, LTD............ 750,000 * 11,516 *
Gryphon Domestic III, LLC...... 1,400,000 * 21,497 *
Hamilton Partners Limited...... 1,000,000 * 15,355 *
ICI American Holdings Trust.... 305,000 * 4,683 *
Investcorp SAM Fund Limited.... 2,400,000 1.6 36,852 *
Jackson Investment Fund LTD.... 470,000 * 7,216 *
JMG Convertible
Investments, L.P............ 1,750,000 1.2 26,871 *
Kentfield Trading Ltd.......... 6,000,000 4.0 92,130 *
LLC Account No. 1.............. 90,000 * 1,381 *
LLT Limited.................... 90,000 * 1,381 *
Massachusetts Mutual Life
Insurance Company........... 700,000 * 10,748 *
MassMutual Corporate
Investors................... 240,000 * 3,685 *
MassMutual Corporate
Value Partners Limited...... 425,000 * 6,525 *
MassMutual High Yield Partners
II LLC...................... 700,000 * 10,748 *
MassMutual Participation
Investors................... 125,000 * 1,919 *
Nalco Chemical Company......... 145,000 * 2,226 *
Peoples Benefit Life
Insurance Company........... 5,000,000 3.3 76,775 *
Rhapsody Fund, LP.............. 400,000 * 6,142 *
Saar Holdings CDO Limited...... 275,000 * 4,222 *
Southern Farm Bureau Life
Insurance - FRIC............ 870,000 * 13,358 *
Starvest Combined Portfolio.... 835,000 * 12,821 *
Starvest Managed Portfolio..... 125,000 * 1,919 *
State of Oregon Equity......... 3,470,000 2.3 53,281 *
State of Oregon/SIAF
Corporation................. 3,390,000 2.3 52,053 *
Summer Hill Global Partners
L.P. ....................... 110,000 * 1,689 *
Triton Capital Investments, LTD 10,500,000 7.0 161,227 *
Value Line Convertible Fund.... 250,000 * 3,838 *
Warburg Dillon Read LLC........ 1,050,000 * 16,122 *
Winchester Convertible Plus
Ltd......................... 210,000 * 3,224 *
</TABLE>
31
<PAGE> 33
<TABLE>
<CAPTION>
Principal Amount
of Notes
Beneficially Percentage of Number of Shares of Percentage of
Owned and Notes Common Stock Offered Common Stock
Name Offered Hereby Outstanding Hereby(1) Outstanding(2)
- ---- ----------------- ------------- -------------------- --------------
<S> <C> <C> <C> <C>
Zeneca Holdings Trust.......... 305,000 * 4,683 *
Any other holder of notes or
future transferees from any
such holder(3).............. 63,615,000 42.4 976,808 4.2
</TABLE>
* Less than one percent.
- --------------
(1) Assumes conversion of all of the holder's notes at the initial conversion
rate of 15.355 shares of common stock per $1,000 principal amount of
notes. This initial conversion price may be adjusted under certain
circumstances. As a result, the number of shares issuable upon conversion
of the notes may increase or decrease.
(2) Calculated pursuant to Rule 13d-3(d)(i) of the Exchange Act based on
22,384,266 shares of common stock outstanding as of March 31, 1999. In
calculating the percentage for each holder, we treated as outstanding the
number of shares of common stock issuable upon conversion of all of the
applicable holder's notes. However, we did not assume the conversion of any
other holder's notes.
(3) Information about other selling security holders will be set forth in
prospectus supplements, if required.
We prepared this table based on the information supplied to us by the
selling security holders named in the table.
The selling security holders listed in the above table may have sold or
transferred, in transactions exempt from the registration requirements of the
Securities Act, some or all of their notes since the date on which the
information is presented in the above table. Information about the selling
security holders may change over time. Any changed information will be set
forth in prospectus supplements.
Because the selling security holders may offer all or some of their notes
or the underlying common stock from time to time, we can not estimate the
amount of notes or the underlying common stock that will be held by the selling
security holders upon the termination of any particular offering. Please see
"Plan of Distribution" for additional information.
32
<PAGE> 34
PLAN OF DISTRIBUTION
We will not receive any of the proceeds of the sale of the notes and the
underlying common stock offered by this prospectus. The notes and the
underlying common stock may be sold from time to time to purchasers:
o directly by the selling security holders, or
o through underwriters, broker-dealers or agents who may receive
compensation in the form of discounts, concessions or commissions
from the selling security holders or the purchasers of the notes
and the underlying common stock.
The selling security holders and any such broker-dealers or agents who
participate in the distribution of the notes and the underlying common stock
may be deemed to be "underwriters." As a result, any profits on the sale of the
notes and the underlying common stock by selling security holders and any
discounts, commissions or concessions received by any such broker-dealers or
agents might be deemed to be underwriting discounts and commissions under the
Securities Act. If the selling security holders were deemed to be underwriters,
the selling security holders may be subject to certain statutory liabilities
of, including, but not limited to, Sections 11, 12 and 17 of the Securities Act
and Rule 10b-5 under the Exchange Act.
If the notes and the underlying common stock are sold through
underwriters or broker-dealers, the selling security holders will be
responsible for underwriting discounts or commissions or agent's commissions.
The notes and the underlying common stock may be sold in one or more
transactions at:
o fixed prices,
o prevailing market prices at the time of sale,
o varying prices determined at the time of sale, or
o negotiated prices.
These sales may be effected in transactions:
o on any national securities exchange or quotation service on which
the notes and underlying common stock may be listed or quoted at
the time of the sale, including the Nasdaq National Market in the
case of our common stock,
o in the over-the-counter market,
o in transactions otherwise than on such exchanges or services or in
the over-the-counter market, or
o through the writing of options.
These transactions may include block transactions or crosses. Crosses are
transactions in which the same broker acts as an agent on both sides of the
trade.
In connection with sales of the notes and the underlying common stock or
otherwise, the selling security holders may enter into hedging transactions
with broker-dealers. These broker-dealers may in turn engage in short sales of
the notes and the underlying common stock in the course of hedging their
positions. The selling security holders may also sell the notes and underlying
common stock short and deliver notes and the underlying common stock to close
out short positions, or loan or pledge notes and the underlying common stock to
broker-dealers that in turn may sell the notes and the underlying common stock.
Our common stock trades on the Nasdaq National Market under the symbol
"SPLN". We do not intend to apply for listing of the notes on any securities
exchange or for quotation through Nasdaq. Accordingly, no assurance can be
given as to the development of liquidity or any trading market for the notes.
There can be no assurance that any selling security holder will sell any
or all of the notes or the underlying common stock pursuant to this prospectus.
In addition, any notes or underlying common stock covered by this prospectus
that qualify for sale pursuant to Rule 144 or Rule 144A of the Securities Act
may be sold under Rule 144 or Rule 144A rather than pursuant to this
prospectus.
33
<PAGE> 35
The selling security holders and any other person participating in such
distribution will be subject to the Exchange Act. The Exchange Act rules
include, without limitation, Regulation M, which may limit the timing of
purchases and sales of any of the notes and the underlying common stock by the
selling security holders and any other such person. In addition, Regulation M
of the Exchange Act may restrict the ability of any person engaged in the
distribution of the notes and the underlying common stock to engage in
market-making activities with respect to the particular notes and the
underlying common stock being distributed for a period of up to five business
days prior to the commencement of such distribution. This may affect the
marketability of the notes and the underlying common stock and the ability of
any person or entity to engage in market-making activities with respect to the
notes and the underlying common stock.
Pursuant to the registration rights agreement that has been filed as an
exhibit to the registration statement of which this prospectus is a part, we
and the selling security holders will be indemnified by the other against
certain liabilities, including certain liabilities under the Securities Act, or
will be entitled to contribution in connection with these liabilities.
We have agreed to pay substantially all of the expenses incidental to the
registration, offering and sale of the notes and underlying common stock to the
public other than commissions, fees and discounts of underwriters, brokers,
dealers and agents.
LEGAL MATTERS
Greenberg Traurig, P.A., Miami, Florida will provide us with an opinion
as to legal matters in connection with the notes and the common stock offered
by this prospectus.
EXPERTS
The consolidated balance sheets of SportsLine USA, Inc. as of December
31, 1997 and 1998, and the related consolidated statements of operations,
changes in shareholders' equity and cash flows for each of the three years in
the period ended December 31, 1998 incorporated herein by reference have been
audited by Arthur Andersen LLP, independent certified public accountants, and
are incorporated herein by reference in reliance upon the authority of said
firm as experts in giving said report.
34
<PAGE> 36
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You may read and copy
any documents we file at the Securities and Exchange Commission's Public
Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call
the Securities and Exchange Commission at 1-800-SEC-0330 for information on the
operation of the Public Reference Room. Our SEC filings are also available to
the public from the SEC's Website at "http://www.sec.gov."
The Securities and Exchange Commission allows us to "incorporate by
reference" the information we file with them, which means that we can disclose
important information to you by referring you to those documents. The
information incorporated by reference is considered to be part of this
prospectus, and information we later file with the Securities and Exchange
Commission will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings we
will make with the Securities and Exchange Commission under Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act until this offering is completed:
1. Our Annual Report on Form 10-K for the fiscal year ended December
31, 1998,
2. Our Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 1999,
3. Our Current Report on Form 8-K filed on February 25, 1999,
4. Our Current Reports on Form 8-K filed on March 19, 1999,
5. Our Proxy Statement for our 1999 Annual Meeting filed on May 17,
1999, and
6. The description of our Common Stock contained in the Registration
Statement on Form 8-A filed on November 7, 1997, under Section
12(g) of the Exchange Act.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
SportsLine USA, Inc.
6340 N.W. 5th Way
Fort Lauderdale, Florida 33309
Attention: Investor Relations
(954) 351-2120
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not
authorized anyone else to provide you with different information. The selling
security holders may not make an offer of the notes or our common stock in any
state where the offer is not permitted. You should not assume that the
information in this prospectus or any prospectus supplement is accurate as of
any date other than the date on the front of those documents.
35
<PAGE> 37
SPORTSLINE USA [LOGO]
<PAGE> 38
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The Company estimates that expenses payable by it in connection with the
offering described in this registration statement (other than underwriting
discounts and commissions) will be as follows:
<TABLE>
<CAPTION>
<S> <C>
Securities and Exchange Commission registration fee.................. $ 41,700
Nasdaq National Market listing fee................................... 17,500
Printing expenses.................................................... 20,000
Transfer Agent and Registrar Fees.................................... 15,000
Accounting fees and expenses......................................... 10,000
Legal fees and expenses.............................................. 40,000
Miscellaneous........................................................ 5,800
----------
Total........................................................... $ 150,000
==========
</TABLE>
All amounts except the Securities and Exchange Commission registration
fee and the Nasdaq National Market additional listing fee are estimated.
The Company will pay all expenses of registration of the shares being
sold by the Selling security holders, excluding fees and expenses of counsel,
if any, to the Selling security holders, any commissions, discounts or
concessions, and transfer or other taxes, which shall be borne by the Selling
security holders.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company has authority under Section 145 of the Delaware General
Corporation Law to indemnify its directors and officers to the extent provided
in such statute. The Company's Amended and Restated Certificate of
Incorporation, incorporated by reference as Exhibit 3.2 to this Registration
Statement, provides that the Company shall indemnify its executive officers and
directors to the fullest extent permitted by law either now or hereafter. The
Company has also entered into an agreement with each of its directors and
certain of its officers, in the form incorporated by reference in this
Registration Statement as Exhibit 10.2, wherein it has agreed to indemnify each
of them to the fullest extent permitted by law.
At present, there is no pending litigation or proceeding involving a
director or officer of the Registrant as to which indemnification is being
sought, nor is the Registrant aware of any threatened litigation that may
result in claims for indemnification by any officer or director.
II-1
<PAGE> 39
ITEM 16. EXHIBITS
EXHIBIT DESCRIPTION
------- -----------
3.1 Amended and Restated Certificate of Incorporation (3.1) (1)
3.2 Form of Amended and Restated Bylaws (3.2) (1)
4.1 Indenture, dated as of March 15, 1999, between the Company and
State Street Bank and Trust Company, as trustee, including the form
of the 5% Convertible Subordinated Notes due 2006 attached as
Exhibit A thereto (2)
4.2 Registration Rights Agreement, dated as of March 15, 1999, for the
benefit of the holders of the 5% Convertible Subordinated Notes due
2006 (2)
5.1 Opinion of Greenberg Traurig, P.A., counsel to the Company,
regarding the legality of the 5% Convertible Subordinated Notes due
2006 and the common stock into which the 5% Convertible
Subordinated Notes due 2006 are convertible. (2)
10.1 1995 Stock Option Plan (10.1) (3)*
10.2 Form of Indemnification Agreement between the Company and each of
its directors and executive officers (10.2) (3)
10.3 1997 Incentive Compensation Plan (10.3) (3)*
10.4 Employee Stock Purchase Plan (10.4) (3)*
10.5 Amended and Restated Investors' Rights Agreement dated as of
September 25, 1996, among the Company, the holders of the Company's
Series A, Series B and Series C Preferred Stock, The Estate of Burk
Zanft and Michael Levy (10.5) (3)
10.6 Agreement dated March 5, 1997 between the Company and CBS Inc.
(10.6) (3)
10.7 Consulting Agreement dated September 1, 1994, between the Company
and Horrow Sports Ventures (10.10) (3)*
10.8 Agreement dated June 1996 between the Company and Michael P.
Schulhof (10.11) (3)*
10.9 Agreement dated August 1994 between the Company and Planned
Licensing, Inc. (10.12)
10.10 Employment Agreement dated as of September 1, 1997, between the
Company and Kenneth W. Sanders (10.13) (3)*
10.11 Stock Option between the Company and Gerry Hogan (10.19) (4)*
10.12 Agreement and Plan of Merger dated as of January 15, 1998, among
the Company, GolfWeb.Com, Inc. and GolfWeb (excluding Exhibits
thereto), and Amendment No. 1 to the Merger Agreement dated of
January 29, 1998, among the Company, GolfWeb.Com, Inc. and GolfWeb
(2.1; 2.2)(5)
10.13 Employment Agreement dated as of June 15, 1998, between the Company
and Michael Levy (10.1) (6)*
10.14 Form of Letter Agreement entered into between the Company and each
of Kenneth W. Sanders, Mark J. Mariani, Andrew Sturner and Thomas
Jessiman (10.2) (6)*
10.15+ Premier Sports Information and Commerce Agreement, effective as of
October 1, 1998, by and between the Company and America Online,
Inc. (10.1) (7)
10.16 Amendment to Agreement, effective as of January 1, 1999, between
the Company and CBS Broadcasting, Inc. (99.1) (8)
12.1 Computation of Ratio of Earnings to Fixed Charges (2)
23.1 Consent of Arthur Andersen LLP (2)
23.2 Consent of Greenberg Traurig, P.A. (contained in Exhibit 5.1)
24.1 Power of Attorney (contained on signature page)
25.1 Form T-1 Statement of Eligibility of State Street Bank and Trust
Company to act as trustee under the indenture governing the 5%
Convertible Subordinated Notes due 2006 (2)
- ------------------
(1) Incorporated by reference to an exhibit shown in the preceding
parentheses and filed with the Company's Registration Statement on Form
S-1 (Registration No. 333-62685).
(2) Filed herewith.
(3) Incorporated by reference to an exhibit shown in the preceding
parentheses and filed with the Company's Registration Statement on Form
S-1 (Registration No. 333-25259).
II-2
<PAGE> 40
(4) Incorporated by reference to an exhibit shown in the preceding
parentheses and filed with the Company's Registration Statement on Form
S-8 (Registration No. 333-46029).
(5) Incorporated by reference to the exhibit shown in the preceding
parentheses and filed with the Company's Report on Form 8-K (Event of
January 29, 1998).
(6) Incorporated by reference to the exhibit shown in the preceding
parentheses and filed with the Company's Report on Form 10-Q for the
quarterly period ending June 30, 1998.
(7) Incorporated by reference to the exhibit shown in the preceding
parentheses and filed with the Company's Report on Form 10-Q for the
quarterly period ending September 30, 1998.
(8) Incorporated by reference to the exhibit shown in the preceding
parentheses and filed with the Company's Report on Form 8-K (Event of
February 10, 1999).
+ Confidential treatment granted to certain portions of this Exhibit.
* Management Contract or Compensatory Plan
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected
in the form of prospectus filed with the Commission pursuant
to Rule 424(b) 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 material change to such
information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Company's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the securities offered thereby, and the offering of such securities
at the time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities 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
II-3
<PAGE> 41
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 Securities Act and will be governed
by the final adjudication of such issue.
II-4
<PAGE> 42
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Fort Lauderdale, State of Florida, on May 20,
1999.
SPORTSLINE USA, INC.
By: /s/ Michael Levy
------------------------------
Michael Levy, President and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Michael Levy and Kenneth W. Sanders his
true and lawful attorneys-in-fact, each acting alone, with full powers of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any or all amendments, including any
post-effective amendments, to this registration statement, or any registration
statement relating to this offering to be effective upon filing pursuant to
Rule 462(b) under the Securities Act of 1933, and to file the same, with
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
said attorneys-in-fact or their substitutes, each acting alone, 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 date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Michael Levy President, Chief Executive Officer and May 20, 1999
- ----------------------------------------- Director (principal executive officer)
Michael Levy
/s/ Kenneth W. Sanders Chief Financial Officer May 20, 1999
- ----------------------------------------- (principal financial and accounting officer)
Kenneth W. Sanders
/s/ Thomas Cullen Director May 20, 1999
- -----------------------------------------
Thomas Cullen
/s/ Gerry Hogan Director May 20, 1999
- -----------------------------------------
Gerry Hogan
</TABLE>
II-5
<PAGE> 43
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ RICHARD B. HORROW Director May 20, 1999
- -----------------------------------------
Richard B. Horrow
/s/ Joseph Lacob Director May 20, 1999
- -----------------------------------------
Joseph Lacob
/s/ Sean McManus Director May 20, 1999
- -----------------------------------------
Sean McManus
/s/ Andrew Nibley Director May 20, 1999
- -----------------------------------------
Andrew Nibley
Director May , 1999
- -----------------------------------------
Fredric G. Reynolds
/s/ Michael P. Schulhof Director May 20, 1999
- -----------------------------------------
Michael P. Schulhof
/s/ James C. Walsh Director May 20, 1999
- -----------------------------------------
James C. Walsh
</TABLE>
II-6
<PAGE> 44
EXHIBIT INDEX
4.1 Indenture, dated as of March 15, 1999, between the Company and State
Street Bank and Trust Company, as trustee, including the form of the 5%
Convertible Subordinated Notes due 2006 attached as Exhibit A thereto.
4.2 Registration Rights Agreement, dated as of March 15, 1999, for the
benefit of the holders of the 5% Convertible Subordinated Notes due
2006.
5.1 Opinion of Greenberg Traurig, P.A., counsel to the Company, regarding
the legality of the 5% Convertible Subordinated Notes due 2006 and the
common stock into which the 5% Convertible Subordinated Notes due 2006
are convertible.
12.1 Computation of Ratio of Earnings to Fixed Charges
23.1 Consent of Arthur Andersen LLP
25.1 Form T-1 Statement of Eligibility of State Street Bank and Trust
Company to act as trustee under the indenture governing the 5%
Convertible Subordinated Notes due 2006
<PAGE> 1
EXHIBIT 4.1
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SportsLine USA, Inc., Issuer
State Street Bank and Trust Company
as Trustee
INDENTURE
Dated as of March 15, 1999
5% Convertible Subordinated Notes due 2006
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I DEFINITIONS............................................................................................. 1
Section 1.1 Definitions........................................................................................ 1
ARTICLE II ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF NOTES...................................... 9
Section 2.1 Designation, Amount and Issue of Notes............................................................. 9
Section 2.2 Form of Notes...................................................................................... 9
Section 2.3 Date and Denomination of Notes; Payments of Interest............................................... 10
Section 2.4 Execution of Notes................................................................................. 11
Section 2.5 Exchange and Registration of Transfer of Notes; Restrictions on Transfer; Depositary............... 12
Section 2.6 Mutilated, Destroyed, Lost or Stolen Notes......................................................... 21
Section 2.7 Temporary Notes.................................................................................... 22
Section 2.8 Cancellation of Notes Paid, Etc.................................................................... 22
ARTICLE III REDEMPTION OF NOTES................................................................................... 22
Section 3.1 Redemption Prices.................................................................................. 23
Section 3.2 Notice of Redemption; Selection of Notes........................................................... 23
Section 3.3 Payment of Notes Called for Redemption............................................................. 24
Section 3.4 Conversion Arrangement on Call for Redemption...................................................... 25
ARTICLE IV SUBORDINATION OF NOTES................................................................................. 26
Section 4.1 Agreement of Subordination......................................................................... 26
Section 4.2 Payments to Noteholders............................................................................ 26
Section 4.3 Bankruptcy and Dissolution, Etc.................................................................... 28
Section 4.4 Subrogation of Notes............................................................................... 29
Section 4.5 Authorization by Noteholders....................................................................... 30
Section 4.6 Notice to Trustee.................................................................................. 30
Section 4.7 Trustee's Relation to Senior Indebtedness.......................................................... 32
Section 4.8 No Impairment of Subordination..................................................................... 32
Section 4.9 Certain Conversions and Repurchases Deemed Payment................................................. 32
ARTICLE V PARTICULAR COVENANTS OF THE COMPANY..................................................................... 33
Section 5.1 Payment of Principal, Premium and Interest......................................................... 33
Section 5.2 Maintenance of Office or Agency.................................................................... 33
Section 5.3 Appointments to Fill Vacancies in Trustee's Office................................................. 34
Section 5.4 Provisions as to Paying Agent...................................................................... 34
Section 5.5 Existence.......................................................................................... 35
Section 5.6 Rule 144A Information Requirement.................................................................. 35
Section 5.7 Stay, Extension and Usury Laws..................................................................... 36
Section 5.8 Compliance Certificate............................................................................. 36
Section 5.9 Further Instruments and Acts....................................................................... 36
ARTICLE VI NOTEHOLDERS' LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE.......................................... 36
Section 6.1 Noteholders' Lists................................................................................. 36
Section 6.2 Preservation and Disclosure of Lists............................................................... 37
Section 6.3 Reports by Trustee................................................................................. 37
Section 6.4 Reports by Company................................................................................. 37
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C>
ARTICLE VII DEFAULTS AND REMEDIES................................................................................. 38
Section 7.1 Events of Default.................................................................................. 38
Section 7.2 Payments of Notes on Default; Suit Therefor........................................................ 41
Section 7.3 Application of Monies Collected by Trustee......................................................... 43
Section 7.4 Proceedings by Noteholder.......................................................................... 43
Section 7.5 Proceedings by Trustee............................................................................. 44
Section 7.6 Remedies Cumulative and Continuing................................................................. 44
Section 7.7 Direction of Proceedings and Waiver of Defaults by Majority of Noteholders......................... 45
Section 7.8 Notice of Defaults................................................................................. 45
Section 7.9 Undertaking to Pay Costs........................................................................... 45
Section 7.10 Delay or Omission Not Waiver...................................................................... 46
ARTICLE VIII CONCERNING THE TRUSTEE............................................................................... 46
Section 8.1 Duties and Responsibilities of Trustee............................................................. 46
Section 8.2 Reliance on Documents, Opinions, Etc............................................................... 47
Section 8.3 No Responsibility for Recitals, Etc................................................................ 48
Section 8.4 Trustee, Paying Agents, Conversion Agents or Registrar May Own Notes............................... 49
Section 8.5 Monies to Be Held in Trust......................................................................... 49
Section 8.6 Compensation and Expenses of Trustee............................................................... 50
Section 8.7 Officers' Certificate as Evidence.................................................................. 50
Section 8.8 Conflicting Interests of Trustee................................................................... 50
Section 8.9 Eligibility of Trustee............................................................................. 50
Section 8.10 Resignation or Removal of Trustee................................................................. 50
Section 8.11 Acceptance by Successor Trustee................................................................... 52
Section 8.12 Succession by Merger, Etc......................................................................... 52
Section 8.13 Limitation on Rights of Trustee as Creditor....................................................... 53
ARTICLE IX CONCERNING THE NOTEHOLDERS............................................................................. 53
Section 9.1 Action by Noteholders.............................................................................. 53
Section 9.2 Proof of Execution by Noteholders.................................................................. 53
Section 9.3 Who Are Deemed Absolute Owners..................................................................... 54
Section 9.4 Company-Owned Notes Disregarded.................................................................... 54
Section 9.5 Revocation of Consents; Future Holders Bound....................................................... 54
ARTICLE X NOTEHOLDERS' MEETINGS................................................................................... 55
Section 10.1 Purpose of Meetings............................................................................... 55
Section 10.2 Call of Meetings by Trustee....................................................................... 55
Section 10.3 Call of Meetings by Company or Noteholders........................................................ 56
Section 10.4 Qualifications for Voting......................................................................... 56
Section 10.5 Regulations....................................................................................... 56
Section 10.6 Voting............................................................................................ 57
Section 10.7 No Delay of Rights by Meeting..................................................................... 57
ARTICLE XI SUPPLEMENTAL INDENTURES................................................................................ 58
Section 11.1 Supplemental Indentures Without Consent of Noteholders............................................ 58
Section 11.2 Supplemental Indentures With Consent of Noteholders............................................... 59
Section 11.3 Effect of Supplemental Indentures................................................................. 60
Section 11.4 Notation on Notes................................................................................. 60
Section 11.5 Evidence of Compliance of Supplemental Indenture to Be Furnished Trustee.......................... 60
</TABLE>
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<PAGE> 4
<TABLE>
<S> <C>
ARTICLE XII CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE..................................................... 60
Section 12.1 Company May Consolidate, Etc. on Certain Terms.................................................... 60
Section 12.2 Successor Corporation to Be Substituted........................................................... 61
Section 12.3 Opinion of Counsel to Be Given Trustee............................................................ 62
ARTICLE XIII SATISFACTION AND DISCHARGE OF INDENTURE.............................................................. 62
Section 13.1 Discharge of Indenture............................................................................ 62
Section 13.2 Deposited Monies to Be Held in Trust by Trustee................................................... 63
Section 13.3 Paying Agent to Repay Monies Held................................................................. 63
Section 13.4 Return of Unclaimed Monies........................................................................ 63
Section 13.5 Reinstatement..................................................................................... 63
ARTICLE XIV IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS....................................... 65
Section 14.1 Indenture and Notes Solely Corporate Obligations.................................................. 65
ARTICLE XV CONVERSION OF NOTES.................................................................................... 65
Section 15.1 Right to Convert.................................................................................. 65
Section 15.2 Exercise of Conversion Privilege; Issuance of Common Stock on Conversion; No Adjustment for
Interest or Dividends.......................................................................................... 66
Section 15.3 Cash Payments in Lieu of Fractional Shares........................................................ 67
Section 15.4 Conversion Price.................................................................................. 68
Section 15.5 Adjustment of Conversion Price.................................................................... 68
Section 15.6 Effect of Reclassification, Consolidation, Merger or Sale......................................... 78
Section 15.7 Taxes on Shares Issued............................................................................ 80
Section 15.8 Reservation of Shares; Shares to Be Fully Paid; Listing of Common Stock........................... 80
Section 15.9 Responsibility of Trustee......................................................................... 80
Section 15.10 Notice to Holders Prior to Certain Actions....................................................... 81
ARTICLE XVI REPURCHASE UPON A REPURCHASE EVENT.................................................................... 83
Section 16.1 Repurchase Right.................................................................................. 83
Section 16.2 Notices; Method of Exercising Repurchase Right, Etc............................................... 83
Section 16.3 Conditions to the Company's Election to Pay the Repurchase Price in Common Stock.................. 86
Section 16.4 Certain Definitions............................................................................... 87
ARTICLE XVII MISCELLANEOUS PROVISIONS............................................................................. 88
Section 17.1 Provisions Binding on Company's Successors........................................................ 88
Section 17.2 Official Acts by Successor Corporation............................................................ 88
Section 17.3 Addresses for Notices, Etc........................................................................ 89
Section 17.4 Governing Law..................................................................................... 89
Section 17.5 Evidence of Compliance with Conditions Precedent; Certificates to Trustee......................... 89
Section 17.6 Legal Holidays.................................................................................... 90
Section 17.7 No Security Interest Created...................................................................... 90
Section 17.8 Trust Indenture Act............................................................................... 90
Section 17.9 Benefits of Indenture............................................................................. 90
Section 17.10 Table of Contents, Headings, Etc................................................................. 90
Section 17.11 Authenticating Agent............................................................................. 91
Section 17.12 Execution in Counterparts........................................................................ 91
</TABLE>
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<PAGE> 5
INDENTURE dated as of March 15, 1999 between SportsLine USA, Inc., a
Delaware corporation (hereinafter sometimes called the "Company", as more fully
set forth in Section 1.1), and State Street Bank and Trust Company, a trust
company organized under the laws of the Commonwealth of Massachusetts, as
trustee (hereinafter sometimes called the "Trustee", as more fully set forth in
Section 1.1).
W I T N E S S E T H:
WHEREAS, for its lawful corporate purposes, the Company has duly
authorized the issue of its 5% Convertible Subordinated Notes due 2006
(hereinafter the "Notes"), in an aggregate principal amount not to exceed
$150,000,000 ($200,000,000 if the option to the Initial Purchasers is exercised
in full) and to provide the terms and conditions upon which the Notes are to be
authenticated, issued and delivered, the Company has duly authorized the
execution and delivery of this Indenture; and
WHEREAS, the Notes, the certificate of authentication to be borne by
the Notes, a form of assignment and transfer, a form of option to elect
repayment upon a Repurchase Event and a form of conversion notice to be borne
by the Notes are to be substantially in the forms hereinafter provided for; and
WHEREAS, all acts and things necessary to make the Notes, when
executed by the Company and authenticated and delivered by the Trustee or a
duly authorized authenticating agent, as in this Indenture provided, the valid,
binding and legal obligations of the Company, and to constitute these presents
a valid agreement according to its terms, have been done and performed, and the
execution of this Indenture and the issue hereunder of the Notes have in all
respects been duly authorized.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
That in order to declare the terms and conditions upon which the Notes
are, and are to be, authenticated, issued and delivered, and in consideration
of the premises and of the purchase and acceptance of the Notes by the holders
thereof, the Company covenants and agrees with the Trustee for the equal and
proportionate benefit of the respective holders from time to time of the Notes
(except as otherwise provided below), as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. The terms defined in this Section 1.1
(except as herein otherwise expressly provided or unless the context otherwise
requires) for all purposes of this Indenture and of any indenture supplemental
hereto shall have the respective meanings specified in this Section 1.1. All
other terms used in this Indenture, which are defined in the Trust
<PAGE> 6
Indenture Act or which are by reference therein defined in the Securities Act
(except as herein otherwise expressly provided or unless the context otherwise
requires) shall have the meanings assigned to such terms in the Trust Indenture
Act and in the Securities Act as in force at the date of the execution of this
Indenture. The words "herein," "hereof," "hereunder," and words of similar
import refer to this Indenture as a whole and not to any particular Article,
Section or other Subdivision. The terms defined in this Article include the
plural as well as the singular.
Affiliate: The term "Affiliate" of any specified person shall mean any
other person directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified person. For the purposes
of this definition, "control," when used with respect to any specified person
means the power to direct or cause the direction of the management and policies
of such person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Board of Directors: The term "Board of Directors" shall mean the Board
of Directors of the Company or a committee of such Board duly authorized to act
for it hereunder.
Board Resolution: The term "Board Resolution" means a copy of a
resolution certified by the Secretary or an Assistant Secretary of the Company
to have been duly adopted by the Board of Directors, or duly authorized
committee thereof (to the extent permitted by applicable law), and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.
Business Day: The term "Business Day" means each Monday, Tuesday,
Wednesday, Thursday and Friday which is not a day on which the banking
institutions in The City of New York or the city in which the Corporate Trust
Office is located are authorized or obligated by law or executive order to
close or be closed.
Change in Control: The term "Change in Control" shall have the meaning
specified in Section 16.4.
close of business: The term "close of business" means 5 p.m. (New York
City time).
Commission: The term "Commission" shall mean the Securities and
Exchange Commission.
Common Stock: The term "Common Stock" shall mean any stock of any
class of the Company which has no preference in respect of dividends or of
amounts payable in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Company and which is not subject to redemption
by the Company. Subject to the provisions of Section 15.6, however, shares
issuable on conversion of Notes shall include only shares of the class
designated as
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<PAGE> 7
common stock of the Company at the date of this Indenture or shares of any
class or classes resulting from any reclassification or reclassifications
thereof and which have no preference in respect of dividends or of amounts
payable in the event of any voluntary or involuntary liquidation, dissolution
or winding up of the Company and which are not subject to redemption by the
Company; provided that if at any time there shall be more than one such
resulting class, the shares of each such class then so issuable shall be
substantially in the proportion which the total number of shares of such class
resulting from all such reclassifications bears to the total number of shares
of all such classes resulting from all such reclassifications.
Company: The term "Company" shall mean SportsLine USA, Inc., a
Delaware corporation, and subject to the provisions of Article XII, shall
include its successors and assigns.
Conversion Price: The term "Conversion Price" shall have the meaning
specified in Section 15.4.
Corporate Trust Office: The term "Corporate Trust Office," or other
similar term, shall mean the office of the Trustee at which at any particular
time its corporate trust business shall be principally administered, which
office is, at the date as of which this Indenture is dated, located at Two
International Place, 4th Floor, Boston, Massachusetts 02110, Attention:
Corporate Trust Department (SportsLine USA, Inc. -- 5% Convertible Subordinated
Notes due 2006).
Custodian: The term "Custodian" means State Street Bank and Trust
Company with respect to the Notes in global form, or any successor entity
thereto.
default: The term "default" shall mean any event that is, or after
notice or passage of time, or both, would be, an Event of Default.
Depositary: The term "Depositary" means, with respect to the Notes
issuable or issued in whole or in part in global form, the person specified in
Section 2.5(d) as the Depositary with respect to such Notes, until a successor
shall have been appointed and become such pursuant to the applicable provisions
of this Indenture, and thereafter, "Depositary" shall mean or include such
successor.
Designated Senior Indebtedness: The term "Designated Senior
Indebtedness" means the Company's obligations under any particular Senior
Indebtedness in which the instrument creating or evidencing the same or the
assumption or guarantee thereof (or related agreements or documents to which
the Company is a party) expressly provides that such Senior Indebtedness shall
be "Designated Senior Indebtedness" for purposes of this Indenture (provided
that such instrument, agreement or other document may place limitations and
conditions on the right of such Senior Indebtedness to exercise the rights of
Designated Senior Indebtedness).
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<PAGE> 8
Event of Default: The term "Event of Default" shall mean any event
specified in Section 7.1, continued for the period of time, if any, and after
the giving of notice, if any, therein designated.
Exchange Act: The term "Exchange Act" means the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated thereunder.
Expiration Time: The term "Expiration Time" shall have the meaning
specified in Section 15.5(f).
Global Note: The term "Global Note" shall have the meaning specified
in Section 2.5(b).
Indebtedness: The term "Indebtedness" shall mean any obligations of,
or guaranteed or assumed by, the Company or any Significant Subsidiary for
borrowed money.
Indenture: The term "Indenture" shall mean this instrument as
originally executed or, if amended or supplemented as herein provided, as so
amended or supplemented.
Initial Purchasers: The term "Initial Purchasers" means BancBoston
Robertson Stephens Inc., BT Alex. Brown Incorporated, Hambrecht & Quist LLC and
PaineWebber Incorporated.
Liquidated Damages: The term "Liquidated Damages" means all liquidated
damages then owing pursuant to Section 3 of the Registration Rights Agreement.
Note or Notes: The terms "Note" or "Notes" shall mean any Note or
Notes, as the case may be, authenticated and delivered under this Indenture.
Noteholder or holder: The terms "Noteholder" or "holder" as applied to
any Note, or other similar terms (but excluding the term "beneficial holder"),
shall mean any person in whose name at the time a particular Note is registered
on the Note register.
Note register: The term "Note register" shall have the meaning
specified in Section 2.5.
Officers' Certificate: The term "Officers' Certificate", when used
with respect to the Company, shall mean a certificate signed by (a) one of the
President, the Chief Executive Officer, Executive or Senior Vice President or
any Vice President (whether or not designated by a number or numbers or word
added before or after the title "Vice President") and (b) by one of the
Treasurer or any Assistant Treasurer, Secretary or any Assistant Secretary or
Controller of the Company, which is delivered to the Trustee. Each such
certificate shall include the statements provided for in Section 17.5 if and to
the extent required by the provisions of such Section.
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<PAGE> 9
Opinion of Counsel: The term "Opinion of Counsel" shall mean an
opinion in writing signed by legal counsel, who may be an employee of or
counsel to the Company, or other counsel acceptable to the Trustee, which is
delivered to the Trustee. Each such opinion shall include the statements
provided for in Section 17.5 if and to the extent required by the provisions of
such Section.
outstanding: The term "outstanding," when used with reference to
Notes, shall, subject to the provisions of Section 9.4, mean, as of any
particular time, all Notes authenticated and delivered by the Trustee under
this Indenture, except
(a) Notes theretofore canceled by the Trustee or delivered
to the Trustee for cancellation;
(b) Notes, or portions thereof, for the payment, or
redemption of which monies in the necessary amount shall have been
deposited in trust with the Trustee or with any paying agent (other
than the Company) or shall have been set aside and segregated in trust
by the Company (if the Company shall act as its own paying agent);
provided that if such Notes are to be redeemed, as the case may be,
prior to the maturity thereof, notice of such redemption shall have
been given as provided in Section 3.2, or provision satisfactory to
the Trustee shall have been made for giving such notice;
(c) Notes in lieu of which, or in substitution for which,
other Notes shall have been authenticated and delivered pursuant to
the terms of Section 2.6 unless proof satisfactory to the Trustee is
presented that any such Notes are held by bona fide holders in due
course; and
(d) Notes converted into Common Stock pursuant to Article
XV and Notes deemed not outstanding pursuant to Section 3.2.
person: The term "person" shall mean an individual, a corporation, a
limited liability company, an association, a partnership, an individual, a
joint venture, a joint stock company, a trust, an unincorporated organization
or a government or an agency or a political subdivision thereof.
Portal Market: The term "Portal Market" shall mean The Portal Market
operated by the National Association of Securities Dealers, Inc. or any
successor thereto.
Predecessor Note: The term "Predecessor Note" of any particular Note
shall mean every previous Note evidencing all or a portion of the same debt as
that evidenced by such particular Note; and, for the purposes of this
definition, any Note authenticated and delivered under Section 2.6 in lieu of a
lost, destroyed or stolen Note shall be deemed to evidence the same debt as the
lost, destroyed or stolen Note that it replaces.
-5-
<PAGE> 10
QIB: The term "QIB" shall mean a "qualified institutional buyer" as
defined in Rule 144A.
Registration Rights Agreement: The term "Registration Rights
Agreement" means that certain Registration Rights Agreement, dated as of March
15, 1999, between the Company and the Initial Purchasers.
Repurchase Event: The term "Repurchase Event" shall have the meaning
specified in Section 16.4.
Repurchase Price: The term "Repurchase Price" has the meaning
specified in Section 16.1.
Responsible Officer: The term "Responsible Officer", when used with
respect to the Trustee, shall mean an officer of the Trustee in the Corporate
Trust Office assigned and duly authorized by the Trustee to administer its
obligations under this Indenture.
Restricted Securities: The term "Restricted Securities" has the
meaning specified in Section 2.5(d).
Rule 144A: The term "Rule 144A" shall mean Rule 144A as promulgated
under the Securities Act.
Securities Act: The term "Securities Act" means the Securities Act of
1933, as amended, and the rules and regulations promulgated thereunder.
Senior Indebtedness: The term "Senior Indebtedness" means the
principal of, premium, if any, interest on (including any interest accruing
after the filing of a petition by or against the Company under any bankruptcy
law, whether or not allowed as a claim after such filing in any proceeding
under such bankruptcy law) and any other payment due pursuant to, any of the
following, whether outstanding on the date of this Indenture or thereafter
incurred or created:
(a) All indebtedness of the Company for money borrowed
that is evidenced by notes, debentures, bonds or other securities
(including, but not limited to, those which are convertible or
exchangeable for securities of the Company);
(b) All indebtedness of the Company due and owing with
respect to letters of credit (including, but not limited to,
reimbursement obligations with respect thereto);
(c) All indebtedness or other obligations of the Company
due and owing with respect to interest rate and currency swap
agreements, cap, floor and collar agreements,
-6-
<PAGE> 11
currency spot and forward contracts and other similar agreements and
arrangements;
(d) All indebtedness consisting of commitment or standby
fees due and payable to lending institutions with respect to credit
facilities or letters of credit available to the Company;
(e) All obligations of the Company under leases required or
permitted to be capitalized under generally accepted accounting
principles;
(f) All indebtedness or obligations of others of the kinds
described in any of the preceding clauses (a), (b), (c), (d) or (e)
assumed by or guaranteed in any manner by the Company or in effect
guaranteed (directly or indirectly) by the Company through an
agreement to purchase, contingent or otherwise, and all obligations of
the Company under any such guarantee or other arrangements; and
(g) All renewals, extensions, refundings, deferrals,
amendments or modifications of indebtedness or obligations of the
kinds described in any of the preceding clauses (a), (b), (c), (d),
(e) or (f);
unless in the case of any particular indebtedness, obligation, renewal,
extension, refunding, amendment, modification or supplement, the instrument or
other document creating or evidencing the same or the assumption or guarantee
of the same expressly provides that such indebtedness, obligation, renewal,
extension, refunding, amendment, modification or supplement is subordinate to,
or is not superior to, or is pari passu with, the Notes; provided that Senior
Indebtedness shall not include (i) any indebtedness of any kind of the Company
to any subsidiary of the Company, a majority of the voting stock of which is
owned, directly or indirectly, by the Company, (ii) indebtedness for trade
payables or constituting the deferred purchase price of assets or services
incurred in the ordinary course of business, or (iii) the Notes.
Significant Subsidiary: The term "Significant Subsidiary" means, with
respect to any person, a Subsidiary of such person that would constitute a
"significant subsidiary" as such term is defined under Rule 1-02 of Regulation
S-X of the Securities and Exchange Commission.
Subsidiary: The term "Subsidiary" means a corporation more than 50% of
the outstanding voting stock of which is owned, directly or indirectly, by the
Company or by one or more other Subsidiaries, or by the Company and one or more
other Subsidiaries. For the purposes of this definition, "voting stock" means
stock which ordinarily has voting power for the election of directors, whether
at all times or only so long as no senior class of stock has such voting power
by reason of any contingency.
Trading Day: The term "Trading Day" has the meaning specified in
Section 15.5(h)(5).
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Trust Indenture Act: The term "Trust Indenture Act" shall mean the
Trust Indenture Act of 1939, as amended, as it was in force at the date of
execution of this Indenture, except as provided in Sections 11.3 and 15.6;
provided, however, that in the event the Trust Indenture Act of 1939 is amended
after the date hereof, the term "Trust Indenture Act" shall mean, to the extent
required by such amendment, the Trust Indenture Act of 1939 as so amended.
Trustee: The term "Trustee" shall mean State Street Bank and Trust
Company, and its successors and any corporation resulting from or surviving any
consolidation or merger to which it or its successors may be a party and any
successor trustee at the time serving as successor trustee hereunder.
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The definitions of certain other terms are as specified in Article XV
and Article XVI.
ARTICLE II
ISSUE, DESCRIPTION, EXECUTION, REGISTRATION
AND EXCHANGE OF NOTES
Section 2.1 Designation, Amount and Issue of Notes. The Notes
shall be designated as "5% Convertible Subordinated Notes due 2006." Notes not
to exceed the aggregate principal amount of $150,000,000 (or $200,000,000 if
the option set forth in Section 2(b) of the Purchase Agreement dated March 18,
1999 (as amended from time to time by the parties thereto) by and between the
Company and the Initial Purchasers is exercised in full) upon the execution of
this Indenture, or (except pursuant to Sections 2.5, 2.6, 3.3, 15.2 and 16.2)
from time to time thereafter, may be executed by the Company and delivered to
the Trustee for authentication, and the Trustee shall thereupon authenticate
and deliver said Notes upon the written order of the Company, signed by the
Company's (a) President, Executive or Senior Vice President or any Vice
President (whether or not designated by a number or numbers or word or words
added before or after the title "Vice President") and (b) any Vice President,
any Treasurer or any Assistant Treasurer or any Secretary or any Assistant
Secretary, without any further action by the Company hereunder.
Section 2.2 Form of Notes. The Notes and the Trustee's certificate
of authentication to be borne by such Notes shall be substantially in the form
set forth in Exhibit A, which is incorporated in and made a part of this
Indenture.
Any of the Notes may have such letters, numbers or other marks of
identification and such notations, legends and endorsements as the officers
executing the same may approve (execution thereof to be conclusive evidence of
such approval) and as are not inconsistent with the provisions of this
Indenture, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any
securities exchange or automated quotation system on which the Notes may be
listed or designated for issuance, or to conform to usage.
The Global Note shall represent such of the outstanding Notes as shall
be specified therein and shall provide that it shall represent the aggregate
amount of outstanding Notes from time to time endorsed thereon and that the
aggregate amount of outstanding Notes represented thereby may from time to time
be increased or reduced to reflect transfers or exchanges permitted hereby. Any
endorsement of the Global Note to reflect the amount of any increase or
decrease in the amount of outstanding Notes represented thereby shall be made
by the Trustee or the Custodian, at the direction of the Trustee, in such
manner and upon instructions given by the
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holder of such Notes in accordance with this Indenture. Payment of principal of
and interest and premium, if any (including any redemption price), on the
Global Note shall be made to the holder of such Note.
The terms and provisions contained in the form of Note attached as
Exhibit A hereto shall constitute, and is hereby expressly made, a part of this
Indenture and to the extent applicable, the Company and the Trustee, by their
execution and delivery of this Indenture, expressly agree to such terms and
provisions and to be bound thereby.
Section 2.3 Date and Denomination of Notes; Payments of Interest.
The Notes shall be issuable in registered form without coupons in denominations
of $1,000 principal amount and integral multiples thereof. Every Note shall be
dated the date of its authentication, and shall bear interest from the
applicable date and accrued interest shall be payable semiannually on April 1
and October 1, commencing October 1, 1999 as specified on the face of the form
of Note, attached as Exhibit A hereto.
The person in whose name any Note (or its Predecessor Note) is
registered at the close of business on any record date with respect to any
interest payment date (including any Note that is converted after the record
date and on or before the interest payment date) shall be entitled to receive
the interest payable on such interest payment date notwithstanding the
cancellation of such Note upon any transfer, exchange or conversion subsequent
to the record date and on or prior to such interest payment date; provided
that, in the case of any Note, or portion thereof, called for redemption
pursuant to Article III on a redemption date, or repurchased by the Company
pursuant to Article XVI on a repurchase date, during the period from the close
of business on the record date to the close of business on the Business Day
next preceding the following interest payment date, interest shall not be paid
to the person in whose name the Note, or portion thereof, is registered on the
close of business on such record date, and the Company shall have no obligation
to pay interest on such Note or portion thereof except to the extent required
to be paid upon such redemption or repurchase in accordance with Article III or
Article XVI. Interest may, at the option of the Company, be paid by check
mailed to the address of such person on the Note registry; provided that, with
respect to any holder of Notes with an aggregate principal amount equal to or
in excess of $2,000,000, at the request of such holder in writing to the
Company, interest on such holder's Notes shall be paid by wire transfer in
immediately available funds to any bank located in the United States in
accordance with the wire transfer instruction supplied by such holder from time
to time to the Trustee and paying agent (if different from Trustee) at least
two days prior to the applicable record date. The term "record date" with
respect to any interest payment date shall mean the March 15 or September 15
preceding said April 1 or October 1, respectively.
Interest on the Notes shall be computed on the basis of a 360-day year
comprised of twelve 30-day months.
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Any interest on any Note which is payable, but is not punctually paid
or duly provided for, on any said April 1 or October 1 (herein called
"Defaulted Interest") shall forthwith cease to be payable to the Noteholder on
the relevant record date by virtue of his having been such Noteholder; and such
Defaulted Interest shall be paid by the Company, at its election in each case,
as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the persons in whose names the Notes (or their respective
Predecessor Notes) are registered at the close of business on a
special record date for the payment of such Defaulted Interest, which
shall be fixed in the following manner. The Company shall notify the
Trustee in writing of the amount of Defaulted Interest to be paid on
each Note and the date of the payment (which shall be not less than
twenty-five (25) days after the receipt by the Trustee of such notice,
unless the Trustee shall consent to an earlier date), and at the same
time the Company shall deposit with the Trustee an amount of money
equal to the aggregate amount to be paid in respect of such Defaulted
Interest or shall make arrangements satisfactory to the Trustee for
such deposit prior to the date of the proposed payment, such money
when deposited to be held in trust for the benefit of the persons
entitled to such Defaulted Interest as in this clause provided.
Thereupon the Trustee shall fix a special record date for the payment
of such Defaulted Interest which shall be not more than fifteen (15)
days and not less than ten (10) days prior to the date of the proposed
payment and not less than ten (10) days after the receipt by the
Trustee of the notice of the proposed payment. The Trustee shall
promptly notify the Company of such special record date and, in the
name and at the expense of the Company, shall cause notice of the
proposed payment of such Defaulted Interest and the special record
date therefor to be mailed, first-class postage prepaid, to each
Noteholder as of such special record date at his address as it appears
in the Note register, not less than ten (10) days prior to such
special record date. Notice of the proposed payment of such Defaulted
Interest and the special record date therefor having been so mailed,
such Defaulted Interest shall be paid to the persons in whose names
the Notes (or their respective Predecessor Notes) were registered at
the close of business on such special record date and shall no longer
be payable pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted Interest
in any other lawful manner not inconsistent with the requirements of
any securities exchange or automated quotation system on which the
Notes may be listed or designated for issuance, and upon such notice
as may be required by such exchange or automated quotation system, if,
after notice given by the Company to the Trustee of the proposed
payment pursuant to this clause, such manner of payment shall be
deemed practicable by the Trustee.
Section 2.4 Execution of Notes. The Notes shall be signed in the
name and on behalf of the Company by the facsimile signature of its President,
its Chief Executive Officer, any of its
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Executive or Senior Vice Presidents, or any of its Vice Presidents (whether or
not designated by a number or numbers or word or words added before or after
the title "Vice President") and attested by the facsimile signature of any Vice
President, Secretary or any of its Assistant Secretaries (which may be printed,
engraved or otherwise reproduced thereon, by facsimile or otherwise). Only such
Notes as shall bear thereon a certificate of authentication substantially in
the form set forth on the form of Note attached as Exhibit A hereto, manually
executed by the Trustee (or an authenticating agent appointed by the Trustee as
provided by Section 17.11), shall be entitled to the benefits of this Indenture
or be valid or obligatory for any purpose. Such certificate by the Trustee (or
such an authenticating agent) upon any Note executed by the Company shall be
conclusive evidence that the Note so authenticated has been duly authenticated
and delivered hereunder and that the holder is entitled to the benefits of this
Indenture.
In case any officer of the Company who shall have signed any of the
Notes shall cease to be such officer before the Notes so signed shall have been
authenticated and delivered by the Trustee, or disposed of by the Company, such
Notes nevertheless may be authenticated and delivered or disposed of as though
the person who signed such Notes had not ceased to be such officer of the
Company; and any Note may be signed on behalf of the Company by such persons
as, at the actual date of the execution of such Note, shall be the proper
officers of the Company, although at the date of the execution of this
Indenture any such person was not such an officer.
Section 2.5 Exchange and Registration of Transfer of Notes;
Restrictions on Transfer; Depositary.
(a) The Company shall cause to be kept at the Corporate
Trust Office a register (the register maintained in such office and in
any other office or agency of the Company designated pursuant to
Section 5.2 being herein sometimes collectively referred to as the
"Note register") in which, subject to such reasonable regulations as
it may prescribe, the Company shall provide for the registration of
Notes and of transfers of Notes. Such register shall be in written
form or in any form capable of being converted into written form
within a reasonable period of time. The Trustee is hereby appointed
"Note registrar" for the purpose of registering Notes and transfers of
Notes as herein provided. The Company may appoint one or more
co-registrars in accordance with Section 5.2.
Upon surrender for registration of transfer of any Note to
the Note registrar or any co-registrar, and satisfaction of the
requirements for such transfer set forth in this Section 2.5, the
Company shall execute, and the Trustee shall authenticate and deliver,
in the name of the designated transferee or transferees, one or more
new Notes of any authorized denominations and of a like aggregate
principal amount and bearing such restrictive legends as may be
required by this Indenture.
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Notes may be exchanged for other Notes of any authorized
denominations and of a like aggregate principal amount, upon surrender
of the Notes to be exchanged at any such office or agency. Whenever
any Notes are so surrendered for exchange, the Company shall execute,
and the Trustee shall authenticate and deliver, the Notes which the
Noteholder making the exchange is entitled to receive, bearing
registration numbers not contemporaneously outstanding.
All Notes presented or surrendered for registration of
transfer or for exchange shall (if so required by the Company, the
Trustee, the Note registrar or any co-registrar) be duly endorsed, or
be accompanied by a written instrument or instruments of transfer in
form satisfactory to the Company and duly executed, by the Noteholder
thereof or his attorney-in-fact duly authorized in writing.
No service charge shall be charged to the Noteholder for any
exchange or registration of transfer of Notes, but the Company may
require payment of a sum sufficient to cover any tax, assessments or
other governmental charges that may be imposed in connection
therewith.
None of the Company, the Trustee, the Note registrar or any
co-registrar shall be required to exchange or register a transfer of
(a) any Notes for a period of fifteen (15) days next preceding any
selection of Notes to be redeemed or (b) any Notes called for
redemption or, if a portion of any Note is selected or called for
redemption, such portion thereof selected or called for redemption or
(c) any Notes surrendered for conversion or, if a portion of any Note
is surrendered for conversion, such portion thereof surrendered for
conversion or (d) any Notes, or a portion of any Note, surrendered for
repurchase (and not withdrawn) in connection with a Repurchase Event.
All Notes issued upon any transfer or exchange of Notes in
accordance with this Indenture shall be the valid obligations of the
Company, evidencing the same debt, and entitled to the same benefits
under this Indenture as the Notes surrendered upon such registration
of transfer or exchange.
(b) So long as the Notes are eligible for book-entry
settlement with the Depositary, unless otherwise required by law, all
Notes issued to QIBs pursuant to Rule 144A of the Securities Act to be
traded on The Portal Market shall be represented by a Note in global
form (the "Global Note") registered in the name of the Depositary or
the nominee of the Depositary. The transfer and exchange of beneficial
interests in the Global Note, which does not involve the issuance of a
definitive Note, shall be effected through the Depositary (but not the
Trustee or the Custodian) in accordance with this Indenture (including
the restrictions on transfer set forth herein) and the procedures of
the Depositary therefor.
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Notes resold to persons who are not QIBs will be issued in
definitive registered form and may not be represented by the Global
Note. In addition, at any time at the request of a QIB that is a
beneficial holder of an interest in the Global Note, such beneficial
holder shall be entitled to obtain a definitive Note upon written
request to the Trustee and the Custodian in accordance with the
standing instructions and procedures existing between the Depositary
and the Custodian for the issuance thereof. Upon receipt of any such
request, the Trustee or the Custodian, at the direction of the
Trustee, will cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Custodian, the
aggregate principal amount of the Global Note to be reduced by the
principal amount of the definitive Note issued upon such request to
such beneficial holder and, following such reduction, the Company will
execute and the Trustee will authenticate and deliver to such
beneficial holder (or its nominee) a definitive Note or Notes in the
appropriate aggregate principal amount in the name of such beneficial
holder (or its nominee) and bearing such restrictive legends as may be
required by this Indenture.
Any transfer of a beneficial interest in the Global Note
which cannot be effected through book-entry settlement must be
effected by the delivery to the transferee (or its nominee) of a
definitive Note or Notes registered in the name of the transferee (or
its nominee) on the books maintained by the Trustee in accordance with
the transfer restrictions set forth herein. With respect to any such
transfer, the Trustee or the Custodian, at the direction of the
Trustee, will cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Custodian, the
aggregate principal amount of the Global Note to be reduced by the
principal amount of the beneficial interest in the Global Note being
transferred and, following such reduction, the Company will execute
and the Trustee will authenticate and deliver to the transferee (or
such transferee's nominee, as the case may be), a Note or Notes in the
appropriate aggregate principal amount in the name of such transferee
(or its nominee) and bearing such restrictive legends as may be
required by this Indenture.
(c) So long as the Notes are eligible for book-entry
settlement, unless otherwise required by law, upon any transfer of a
definitive Note to a QIB in accordance with Rule 144A, unless
otherwise requested by the transferor, and upon receipt of the
definitive Note or Notes being so transferred, together with a
certification from the transferor that the transferee is a QIB (or
other evidence satisfactory to the Trustee), the Trustee shall make or
direct the Custodian to make, an endorsement on the Global Note to
reflect an increase in the aggregate principal amount of the Notes
represented by the Global Note by the principal amount of the Note
being transferred to the QIB, the Trustee shall cancel such definitive
Note or Notes and cause, or direct the Custodian to cause, in
accordance with the standing instructions and procedures existing
between the Depositary and the Custodian, the aggregate principal
amount of Notes represented by the Global Note to be increased
accordingly; provided that no definitive Note, or portion thereof, in
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respect of which the Company or an Affiliate of the Company held any
beneficial interest shall be included in the Global Note until such
definitive Note is freely tradable in accordance with Rule 144(k);
provided further that the Trustee shall authenticate and deliver Notes
in definitive form upon any transfer of a beneficial interest in the
Global Note to the Company or any Affiliate of the Company.
Upon any sale or transfer of a Note or the Common Stock
issued upon conversion thereof that bears the restrictive legend set
forth in Section 2.5(d) or Section 2.5(e), respectively, to an
Institutional Accredited Investor (other than pursuant to a
registration statement that has been declared effective under the
Securities Act), such Institutional Accredited Investor shall, prior
to such sale or transfer, furnish to the Company and/or the Trustee a
signed letter containing representations and agreements relating to
restrictions on transfer substantially in the form set forth in
Exhibit B to this Indenture.
Any Global Note may be endorsed with or have incorporated in
the text thereof such legends or recitals or changes not inconsistent
with the provisions of this Indenture as may be required by the
Custodian, the Depositary or by the National Association of Securities
Dealers, Inc. in order for the Notes to be tradeable on The Portal
Market or as may be required for the Notes to be tradeable on any
other market developed for trading of securities pursuant to Rule 144A
or required to comply with any applicable law or any regulation
thereunder or with the rules and regulations of any securities
exchange or automated quotation system upon which the Notes may be
listed or traded or designated for issuance or to conform with any
usage with respect thereto, or to indicate any special limitations or
restrictions to which any particular Notes are subject.
(d) Every Note that bears or is required under this
Section 2.5(d) to bear either of the legends set forth in this Section
2.5(d) (together with any Common Stock issued upon conversion of the
Notes and required to bear either of the legends set forth in Section
2.5(e), collectively, the "Restricted Securities") shall be subject to
the restrictions on transfer set forth in this Section 2.5(d)
(including one of the legends set forth below), unless such
restrictions on transfer shall be waived by written consent of the
Company, and the holder of each such Restricted Security, by such
holder's acceptance thereof, agrees to be bound by all such
restrictions on transfer. As used in Sections 2.5(d) and 2.5(e), the
term "transfer" encompasses any sale, pledge, transfer or other
disposition whatsoever of any Restricted Security.
Until two (2) years after the original issuance date of any
Note, any certificate evidencing such Note (and all securities issued
in exchange therefor or substitution thereof, other than Common Stock,
if any, issued upon conversion thereof which shall bear the legend set
forth in Section 2.5(e), if applicable) shall bear a legend in
substantially the following form (unless such Notes have been
transferred pursuant to a registration statement that has been
declared effective under the Securities Act (and
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which continues to be effective at the time of such transfer),
pursuant to the exemption from registration provided by Rule 144 under
the Securities Act, or unless otherwise agreed by the Company in
writing, with notice thereof to the Trustee):
THE NOTE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT") OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR
SOLD EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS
ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS
A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3)
OR (7) UNDER THE SECURITIES ACT) ("INSTITUTIONAL ACCREDITED
INVESTOR"); (2) AGREES THAT IT WILL NOT WITHIN TWO YEARS
AFTER THE ORIGINAL ISSUANCE OF THE NOTE EVIDENCED HEREBY
RESELL OR OTHERWISE TRANSFER THE NOTE EVIDENCED HEREBY OR THE
COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH NOTE EXCEPT (A)
TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (C) TO AN INSTITUTIONAL ACCREDITED INVESTOR
THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO STATE STREET BANK
AND TRUST COMPANY, AS TRUSTEE, A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THE NOTE EVIDENCED HEREBY (THE
FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH TRUSTEE), (D)
PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE
144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (E) PURSUANT
TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE
UNDER THE SECURITIES ACT (AND WHICH CONTINUES TO BE EFFECTIVE
AT THE TIME OF SUCH TRANSFER); AND (3) AGREES THAT IT WILL
DELIVER TO EACH PERSON TO WHOM THE NOTE EVIDENCED HEREBY IS
TRANSFERRED (OTHER THAN A TRANSFER PURSUANT TO CLAUSE 2(E)
ABOVE) A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
IN CONNECTION WITH ANY TRANSFER OF THE NOTE EVIDENCED HEREBY
WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF SUCH NOTE
(OTHER THAN A TRANSFER PURSUANT TO CLAUSE 2(E)
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ABOVE), THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH
ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER
AND SUBMIT THIS CERTIFICATE TO STATE STREET BANK AND TRUST
COMPANY, AS TRUSTEE. IF THE PROPOSED TRANSFER IS PURSUANT TO
CLAUSE 2(C) OR 2(D) ABOVE, THE HOLDER MUST, PRIOR TO SUCH
TRANSFER, FURNISH TO STATE STREET BANK AND TRUST COMPANY, AS
TRUSTEE, SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER
INFORMATION AS THE COMPANY MAY REASONABLY REQUIRE TO CONFIRM
THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE
REMOVED UPON THE EARLIER OF THE TRANSFER OF THE NOTE
EVIDENCED HEREBY PURSUANT TO CLAUSE 2(D) OR 2(E) ABOVE OR THE
EXPIRATION OF TWO YEARS FROM THE ORIGINAL ISSUANCE OF THE
NOTE EVIDENCED HEREBY.
Any Note (or security issued in exchange or substitution
therefor) as to which such restrictions on transfer shall have expired
in accordance with their terms may, upon surrender of such Note for
exchange to the Note registrar in accordance with the provisions of
this Section 2.5, be exchanged for a new Note or Notes, of like tenor
and aggregate principal amount, which shall not bear the restrictive
legend required by this Section 2.5(d).
Notwithstanding any other provisions of this Indenture (other
than the provisions set forth in this Section 2.5(d)), the Global Note
may not be transferred as a whole or in part except by the Depositary
to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary or by the
Depositary or any such nominee to a successor Depositary or a nominee
of such successor Depositary.
The Depositary shall be a clearing agency registered under
the Exchange Act. The Company initially appoints The Depository Trust
Company to act as Depositary with respect to the Global Note.
Initially, the Global Note shall be issued to the Depositary,
registered in the name of Cede & Co., as the nominee of the
Depositary, and deposited with the Trustee as custodian for Cede & Co.
If at any time the Depositary for the Global Note notifies
the Company that it is unwilling or unable to continue as Depositary
for such Note, the Company may appoint a successor Depositary with
respect to such Note. If a successor Depositary for the Global Note is
not appointed by the Company within ninety (90) days after the Company
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receives such notice, the Company will execute, and the Trustee, upon
receipt of an Officers' Certificate for the authentication and
delivery of Notes, will authenticate and deliver, Notes in definitive
form, in an aggregate principal amount equal to the principal amount
of the Global Note, in exchange for the Global Note, and upon delivery
of the Global Note to the Trustee the Global Note shall be canceled.
If a Note in certificated form is issued in exchange for any
portion of a Global Note after the close of business on any record
date at the office or agency where such exchange occurs and before the
opening of business at such office or agency on the next succeeding
interest payment date, interest will not be payable on such interest
payment date in respect of such certificated Note, but will be payable
on such interest payment date only with respect to the exchanged
portion of the Global Note in accordance with the provisions of this
Indenture.
Definitive Notes issued in exchange for all or a part of the
Global Note pursuant to this Section 2.5(d) shall be registered in
such names and in such authorized denominations as the Depositary,
pursuant to instructions from its direct or indirect participants or
otherwise, shall instruct the Trustee. Upon execution and
authentication, the Trustee shall deliver such definitive Notes to the
persons in whose names such definitive Notes are so registered.
At such time as all interests in the Global Note have been
redeemed, converted, canceled, repurchased or transferred, the Global
Note shall be, upon receipt thereof, canceled by the Trustee in
accordance with standing procedures and instructions existing between
the Depositary and the Custodian. At any time prior to such
cancellation, if any interest in the Global Note is exchanged for
definitive Notes, redeemed, converted, canceled, repurchased or
transferred to a transferee who receives definitive Notes therefor or
any definitive Note is exchanged or transferred for part of the Global
Note, the principal amount of the Global Note shall, in accordance
with the standing procedures and instructions existing between the
Depositary and the Custodian, be appropriately reduced or increased,
as the case may be, and an endorsement shall be made on the Global
Note, by the Trustee or the Custodian, at the direction of the
Trustee, to reflect such reduction or increase.
(e) Until two (2) years after the original issuance date
of any Note, any stock certificate representing Common Stock issued
upon conversion of such Note shall bear a legend in substantially the
following form (unless such Common Stock has been sold pursuant to the
exemption from registration provided by Rule 144 under the Securities
Act or pursuant to a registration statement that has been declared
effective under the Securities Act, and which continues to be
effective at the time of such transfer, or such Common Stock has been
issued upon conversion of Notes that have been transferred pursuant to
a registration statement that has been declared effective under the
Securities
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<PAGE> 23
Act, or unless otherwise agreed by the Company with written notice
thereof to the Trustee and any transfer agent for the Common Stock):
THE COMMON STOCK EVIDENCED HEREBY HAS NOT BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") OR ANY STATE SECURITIES LAWS, AND MAY NOT
BE OFFERED OR SOLD EXCEPT AS SET FORTH IN THE FOLLOWING
SENTENCE. THE HOLDER HEREOF AGREES THAT UNTIL THE EXPIRATION
OF TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THE NOTE UPON THE
CONVERSION OF WHICH THE COMMON STOCK EVIDENCED HEREBY WAS
ISSUED, (1) IT WILL NOT RESELL OR OTHERWISE TRANSFER THE
COMMON STOCK EVIDENCED HEREBY EXCEPT (A) TO THE COMPANY OR
ANY SUBSIDIARY THEREOF, (B) TO A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN
COMPLIANCE WITH RULE 144A, (C) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3)
OR (7) UNDER THE SECURITIES ACT) THAT PRIOR TO SUCH TRANSFER,
FURNISHES TO EQUISERVE, L.P., AS TRANSFER AGENT, A SIGNED
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THE COMMON STOCK
EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED
FROM SUCH TRANSFER AGENT), (D) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT
(IF AVAILABLE), OR (E) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT
(AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH
TRANSFER); (2) PRIOR TO ANY SUCH TRANSFER (OTHER THAN A
TRANSFER PURSUANT TO CLAUSE 1(E) ABOVE), IT WILL FURNISH TO
EQUISERVE, L.P., AS TRANSFER AGENT, SUCH CERTIFICATIONS,
LEGAL OPINIONS OR OTHER INFORMATION AS THE COMPANY MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING
MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT; AND (3) IT WILL DELIVER TO EACH PERSON TO WHOM THE
COMMON STOCK EVIDENCED HEREBY IS TRANSFERRED (OTHER THAN A
TRANSFER PURSUANT TO CLAUSE 1(E) ABOVE) A NOTICE
SUBSTANTIALLY TO THE
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<PAGE> 24
EFFECT OF THIS LEGEND. THIS LEGEND WILL BE REMOVED UPON THE
EARLIER OF THE TRANSFER OF THE COMMON STOCK EVIDENCED HEREBY
PURSUANT TO CLAUSE 1(D) OR 1(E) ABOVE OR THE EXPIRATION OF
TWO YEARS FROM THE ORIGINAL ISSUANCE OF THE NOTE UPON THE
CONVERSION OF WHICH THE COMMON STOCK EVIDENCED HEREBY WAS
ISSUED.
Any such Common Stock as to which such restrictions on
transfer shall have expired in accordance with their terms may, upon
surrender of the certificates representing such shares of Common Stock
for exchange in accordance with the procedures of the transfer agent
for the Common Stock, be exchanged for a new certificate or
certificates for a like aggregate number of shares of Common Stock,
which shall not bear the restrictive legend required by this Section
2.5(e).
(f) Any Note or Common Stock issued upon the conversion or
exchange of a Note that, prior to the expiration of the holding period
applicable to sales thereof under Rule 144(k) under the Securities Act
(or any successor provision), is purchased or owned by the Company or
any Affiliate thereof may not be resold by the Company or such
Affiliate unless registered under the Securities Act or resold
pursuant to an exemption from the registration requirements of the
Securities Act in a transaction that results in such Notes or Common
Stock, as the case may be, no longer being "restricted securities" (as
defined under Rule 144).
(g) Notwithstanding any provision of Section 2.5 to the
contrary, in the event Rule 144(k) as promulgated under the Securities
Act (or any successor rule) is amended to change the two-year period
under Rule 144(k) (or the corresponding period under any successor
rule), from and after receipt by the Trustee of the Officers'
Certificate and Opinion of Counsel provided for in this Section
2.5(g), (i) each reference in Section 2.5(d) to "two (2) years" and in
the restrictive legend set forth in such paragraph to "TWO YEARS"
shall be deemed for all purposes hereof to be references to such
changed period, (ii) each reference in Section 2.5(e) to "two (2)
years" and in the restrictive legend set forth in such paragraph to
"TWO YEARS" shall be deemed for all purposes hereof to be references
to such changed period and (iii) all corresponding references in the
Notes and the restrictive legends thereon shall be deemed for all
purposes hereof to be references to such changed period, provided that
such changes shall not become effective if they are otherwise
prohibited by, or would otherwise cause a violation of, the
then-applicable federal securities laws. As soon as practicable after
the Company has knowledge of the effectiveness of any such amendment
to change the two-year period under Rule 144(k) (or the corresponding
period under any successor rule), unless such changes would otherwise
be prohibited by, or would otherwise cause a violation of, the
then-applicable securities law, the Company shall provide to the
Trustee
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an Officers' Certificate and Opinion of Counsel informing the Trustee
of the effectiveness of such amendment and the effectiveness of the
foregoing changes to Sections 2.5(d) and 2.5(e) and the Notes. The
provisions of this Section 2.5(g) will not be effective until such
time as the Opinion of Counsel and Officers' Certificate have been
received by the Trustee hereunder. This Section 2.5(g) shall apply to
successive amendments to Rule 144(k) (or any successor rule) changing
the holding period thereunder.
Section 2.6 Mutilated, Destroyed, Lost or Stolen Notes. In case
any Note shall become mutilated or be destroyed, lost or stolen, the Company in
its discretion may execute, and upon its request the Trustee or an
authenticating agent appointed by the Trustee shall authenticate and deliver, a
new Note, bearing a number not contemporaneously outstanding, in exchange and
substitution for the mutilated Note, or in lieu of and in substitution for the
Note so destroyed, lost or stolen. In every case the applicant for a
substituted Note shall furnish to the Company, to the Trustee and, if
applicable, to such authenticating agent such security or indemnity as may be
required by them to save each of them harmless for any loss, liability, cost or
expense caused by or connected with such substitution, and, in every case of
destruction, loss or theft, the applicant shall also furnish to the Company, to
the Trustee and, if applicable, to such authenticating agent evidence to their
satisfaction of the destruction, loss or theft of such Note and of the
ownership thereof.
The Trustee or such authenticating agent may authenticate any such
substituted Note and deliver the same upon the receipt of such security or
indemnity as the Trustee, the Company and, if applicable, such authenticating
agent may require. Upon the issuance of any substituted Note, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses connected
therewith. In case any Note which has matured or is about to mature or has been
called for redemption or is about to be converted into Common Stock shall
become mutilated or be destroyed, lost or stolen, the Company may, instead of
issuing a substitute Note, pay or authorize the payment of or convert or
authorize the conversion of the same (without surrender thereof except in the
case of a mutilated Note), as the case may be, if the applicant for such
payment or conversion shall furnish to the Company, to the Trustee and, if
applicable, to such authenticating agent such security or indemnity as may be
required by them to save each of them harmless for any loss, liability, cost or
expense caused by or connected with such substitution, and, in case of
destruction, loss or theft, evidence satisfactory to the Company, the Trustee
and, if applicable, any paying agent or conversion agent of the destruction,
loss or theft of such Note and of the ownership thereof.
Every substitute Note issued pursuant to the provisions of this
Section 2.6 by virtue of the fact that any Note is destroyed, lost or stolen
shall constitute an additional contractual obligation of the Company, whether
or not the destroyed, lost or stolen Note shall be found at any time, and shall
be entitled to all the benefits of (but shall be subject to all the limitations
set forth in) this Indenture equally and proportionately with any and all other
Notes duly issued hereunder. To the
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extent permitted by law, all Notes shall be held and owned upon the express
condition that the foregoing provisions are exclusive with respect to the
replacement or payment or conversion of mutilated, destroyed, lost or stolen
Notes and shall preclude any and all other rights or remedies notwithstanding
any law or statute existing or hereafter enacted to the contrary with respect
to the replacement or payment or conversion of negotiable instruments or other
securities without their surrender.
Section 2.7 Temporary Notes. Pending the preparation of definitive
Notes, the Company may execute and the Trustee or an authenticating agent
appointed by the Trustee shall, upon written request of the Company,
authenticate and deliver temporary Notes (printed or lithographed). Temporary
Notes shall be issuable in any authorized denomination, and substantially in
the form of the definitive Notes but with such omissions, insertions and
variations as may be appropriate for temporary Notes, all as may be determined
by the Company. Every such temporary Note shall be executed by the Company and
authenticated by the Trustee or such authenticating agent upon the same
conditions and in substantially the same manner, and with the same effect, as
the definitive Notes. Without unreasonable delay the Company will execute and
deliver to the Trustee or such authenticating agent definitive Notes (other
than in the case of Notes in global form) and thereupon any or all temporary
Notes (other than any the Global Note) may be surrendered in exchange therefor,
at each office or agency maintained by the Company pursuant to Section 5.2 and
the Trustee or such authenticating agent shall authenticate and deliver in
exchange for such temporary Notes an equal aggregate principal amount of
definitive Notes. Such exchange shall be made by the Company at its own expense
and without any charge therefor. Until so exchanged, the temporary Notes shall
in all respects be entitled to the same benefits and subject to the same
limitations under this Indenture as definitive Notes authenticated and
delivered hereunder.
Section 2.8 Cancellation of Notes Paid, Etc. All Notes surrendered
for the purpose of payment, redemption, repurchase, conversion, exchange or
registration of transfer, shall, if surrendered to the Company or any paying
agent or any Note registrar or any conversion agent, be surrendered to the
Trustee and promptly canceled by it, or, if surrendered to the Trustee, shall
be promptly canceled by it, and no Notes shall be issued in lieu thereof except
as expressly permitted by any of the provisions of this Indenture. Upon written
instructions of the Company, the Trustee shall destroy canceled Notes and,
after such destruction, shall deliver a certificate of such destruction to the
Company. If the Company shall acquire any of the Notes, such acquisition shall
not operate as a redemption or satisfaction of the indebtedness represented by
such Notes unless and until the same are delivered to the Trustee for
cancellation.
ARTICLE III
REDEMPTION OF NOTES
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Section 3.1 Redemption Prices. The Company may, at its option,
redeem all or from time to time any part of the Notes on any date prior to
maturity, upon notice as set forth in Section 3.2, and at the optional
redemption prices set forth in the form of Note attached as Exhibit A hereto,
together with accrued interest, if any, to, but excluding, the date fixed for
redemption, provided, however, that no such redemption shall be effected before
April 2, 2002.
Section 3.2 Notice of Redemption; Selection of Notes. In case the
Company shall desire to exercise the right to redeem all or, as the case may
be, any part of the Notes pursuant to Section 3.1, it shall fix a date for
redemption, and it, or at its request (which must be received by the Trustee at
least ten (10) Business Days prior to the date the Trustee is requested to give
notice as described below unless a shorter period is agreed to by the Trustee),
the Trustee in the name of and at the expense of the Company, shall mail or
cause to be mailed a notice of such redemption at least thirty (30) and not
more than sixty (60) days prior to the date fixed for redemption to the holders
of Notes so to be redeemed as a whole or in part at their last addresses as the
same appear on the Note register (provided that if the Company shall give such
notice, it shall also give such notice, and notice of the Notes to be redeemed,
to the Trustee). Such mailing shall be by first class mail. The notice if
mailed in the manner herein provided shall be conclusively presumed to have
been duly given, whether or not the holder receives such notice. In any case,
failure to give such notice by mail or any defect in the notice to the holder
of any Note designated for redemption as a whole or in part shall not affect
the validity of the proceedings for the redemption.
Each such notice of redemption shall specify the aggregate principal
amount of Notes to be redeemed, the CUSIP number or numbers of such Notes, the
date fixed for redemption, the redemption price at which Notes are to be
redeemed, the place or places of payment, that payment will be made upon
presentation and surrender of such Notes, that interest accrued to, but
excluding, the date fixed for redemption will be paid as specified in said
notice, and that on and after said date interest thereon or on the portion
thereof to be redeemed will cease to accrue. Such notice shall also state the
current Conversion Price and the date on which the right to convert such Notes
or portions thereof into Common Stock will expire. If fewer than all the Notes
are to be redeemed, the notice of redemption shall identify the Notes to be
redeemed. In case any Note is to be redeemed in part only, the notice of
redemption shall state the portion of the principal amount thereof to be
redeemed and shall state that on and after the date fixed for redemption, upon
surrender of such Note, a new Note or Notes in principal amount equal to the
unredeemed portion thereof will be issued.
On or prior to the redemption date specified in the notice of
redemption given as provided in this Section, the Company will deposit with the
Trustee or with one or more paying agents (or, if the Company is acting as its
own paying agent, set aside, segregate and hold in trust as provided in Section
5.4) an amount of money sufficient to redeem on the redemption date all the
Notes (or portions thereof) so called for redemption (other than those
theretofore surrendered for conversion into Common Stock) at the appropriate
redemption price, together with accrued
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interest to, but excluding, the date fixed for redemption; provided that if
such payment is made on the redemption date it must be received by the Trustee
or paying agent, as the case may be, by 10:00 a.m. New York City time, on such
date. If any Note called for redemption is converted pursuant hereto, any money
deposited with the Trustee or any paying agent or so segregated and held in
trust for the redemption of such Note shall be paid to the Company upon its
request, or, if then held by the Company shall be discharged from such trust.
If fewer than all the Notes are to be redeemed, the Company will give
the Trustee written notice in the form of an Officers' Certificate not fewer
than forty (40) days (or such shorter period of time as may be acceptable to
the Trustee) prior to the redemption date as to the aggregate principal amount
of Notes to be redeemed. If fewer than all the Notes are to be redeemed, the
Trustee shall select the Notes or portions thereof to be redeemed (in principal
amounts of $1,000 or integral multiples thereof), by lot or, in its discretion,
on a pro rata basis, or by a method the Trustee considers fair and appropriate
(as long as such method is not prohibited by the rules of any United States
national securities exchange or of an established automated over-the-counter
trading market in the United States on which the Notes are then listed). If any
Note selected for partial redemption is converted in part after such selection,
the converted portion of such Note shall be deemed (so far as is possible) to
be the portion to be selected for redemption. The Notes (or portions thereof)
so selected shall be deemed duly selected for redemption for all purposes
hereof, notwithstanding that any such Note is converted as a whole or in part
before the mailing of the notice of redemption.
Upon any redemption of less than all Notes, the Company and the
Trustee may (but need not) treat as outstanding any Notes surrendered for
conversion during the period of fifteen (15) days next preceding the mailing of
a notice of redemption and may (but need not) treat as not outstanding any Note
authenticated and delivered during such period in exchange for the unconverted
portion of any Note converted in part during such period.
Section 3.3 Payment of Notes Called for Redemption. If notice of
redemption has been given as above provided, the Notes or portion of Notes with
respect to which such notice has been given shall, unless converted into Common
Stock pursuant to the terms hereof, become due and payable on the date and at
the place or places stated in such notice at the applicable redemption price,
together with interest accrued to, but excluding, the date fixed for
redemption, and on and after said date (unless the Company shall default in the
payment of such Notes at the redemption price, together with interest accrued
to, but excluding, said date) interest on the Notes or portion of Notes so
called for redemption shall cease to accrue and such Notes shall cease, after
the close of business on the Business Day next preceding the date fixed for
redemption, to be convertible into Common Stock and, except as provided in
Sections 8.5 and 13.4, to be entitled to any benefit or security under this
Indenture, and the holders thereof shall have no right in respect of such Notes
except the right to receive the redemption price thereof and unpaid interest
to, but excluding, the date fixed for redemption. On presentation and surrender
of such Notes at a place of payment in said notice specified, the said Notes or
the specified portions
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thereof to be redeemed shall be paid and redeemed by the Company at the
applicable redemption price, together with interest accrued thereon to, but
excluding, the date fixed for redemption; provided that, if the applicable
redemption date is an interest payment date, the semi-annual payment of
interest becoming due on such date shall be payable to the holders of such
Notes registered as such on the relevant record date subject to the terms and
provisions of Section 2.3 hereof.
Upon presentation of any Note redeemed in part only, the Company shall
execute and the Trustee shall authenticate and deliver to the holder thereof,
at the expense of the Company, a new Note or Notes, of authorized
denominations, in principal amount equal to the unredeemed portion of the Notes
so presented.
Notwithstanding the foregoing, the Trustee shall not redeem any Notes
or mail any notice of optional redemption during the continuance of a default
in payment of interest or premium on the Notes or of any Event of Default of
which, in the case of any Event of Default other than under Section 7.1(a), (b)
or (e), a Responsible Officer of the Trustee has knowledge. If any Note called
for redemption shall not be so paid upon surrender thereof for redemption, the
principal and premium, if any, shall, until paid or duly provided for, bear
interest from the date fixed for redemption at the rate borne by the Note and
such Note shall remain convertible into Common Stock until the principal and
premium, if any, shall have been paid or duly provided for.
Section 3.4 Conversion Arrangement on Call for Redemption. In
connection with any redemption of Notes, the Company may arrange for the
purchase and conversion of any Notes not converted prior to the expiration of
such conversion right by an agreement with one or more investment bankers or
other purchasers to purchase such Notes by paying to the Trustee in trust for
the Noteholders, on or before the date fixed for redemption, an amount not less
than the applicable redemption price, together with interest accrued to the
date fixed for redemption, of such Notes. Notwithstanding anything to the
contrary contained in this Article III, the obligation of the Company to pay
the redemption price of such Notes, together with interest accrued to, but
excluding, the date fixed for redemption, shall be deemed to be satisfied and
discharged to the extent such amount is so paid by such purchasers. If such an
agreement is entered into, a copy of which, certified as true and correct by
the Secretary or Assistant Secretary of the Company will be filed with the
Trustee prior to the date fixed for redemption, any Notes not duly surrendered
for conversion by the holders thereof may, at the option of the Company, be
deemed, to the fullest extent permitted by law, acquired by such purchasers
from such holders and (notwithstanding anything to the contrary contained in
Article XV) surrendered by such purchasers for conversion, all as of
immediately prior to the close of business on the date fixed for redemption
(and the right to convert any such Notes shall be deemed to have been extended
through such time), subject to payment of the above amount as aforesaid. At the
direction of the Company, the Trustee shall hold and dispose of any such amount
paid to it in the same manner as it would monies deposited with it by the
Company for the redemption of Notes. Without the Trustee's prior written
consent, no arrangement between the Company and such purchasers for
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the purchase and conversion of any Notes shall increase or otherwise affect any
of the powers, duties, responsibilities or obligations of the Trustee as set
forth in this Indenture, and the Company agrees to indemnify the Trustee from,
and hold it harmless against, any loss, liability or expense arising out of or
in connection with any such arrangement for the purchase and conversion of any
Notes between the Company and such purchasers, including the costs and expenses
incurred by the Trustee in the defense of any claim or liability arising out of
or in connection with the exercise or performance of any of its powers, duties,
responsibilities or obligations under this Indenture.
ARTICLE IV
SUBORDINATION OF NOTES
Section 4.1 Agreement of Subordination. The Company covenants and
agrees, and each holder of Notes issued hereunder by his acceptance thereof
likewise covenants and agrees, that all Notes shall be issued subject to the
provisions of this Article IV; and each person holding any Note, whether upon
original issue or upon transfer, assignment or exchange thereof, accepts and
agrees to be bound by such provisions.
The payment of the principal of, premium, if any, and interest on all
Notes (including, but not limited to, the redemption price or repurchase price
with respect to the Notes to be redeemed or repurchased, as provided in this
Indenture) issued hereunder shall, to the extent and in the manner hereinafter
set forth, be subordinated to the prior payment in full, in cash or in such
other form of payment as may be acceptable to the holders of Senior
Indebtedness, of all Senior Indebtedness, whether outstanding at the date of
this Indenture or thereafter incurred or created.
No provision of this Article IV shall prevent the occurrence of any
default or Event of Default hereunder.
Section 4.2 Payments to Noteholders. No payment (including
pursuant to any redemption or repurchase of Notes) shall be made with respect
to the principal of, or premium, if any, or interest (including Liquidated
Damages, if any) on the Notes, except payments and distributions made by the
Trustee as permitted by Section 4.6, if:
(1) a default in the payment of principal, premium, if
any, or interest or other payment due on Designated Senior
Indebtedness occurs and is continuing beyond any applicable period of
grace; or
(2) any other default occurs and is continuing with
respect to Designated Senior Indebtedness that then permits holders of
the Designated Senior Indebtedness as to which such default related to
accelerate its maturity and the Trustee and the Company
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receive a notice of such default (a "Payment Blockage Notice") from a
representative of Designated Senior Indebtedness or a holder of
Designated Senior Indebtedness or the Company.
The Company may and shall resume payments on the Notes (1) in the case
of a payment default, on the date upon which such default is cured or waived or
ceases to exist, and (2) in the case of a nonpayment default with respect to
Designated Senior Indebtedness, on the earlier of the date on which the
nonpayment default is cured or waived or ceases to exist or 179 days pass after
the date on which the applicable Payment Blockage Notice is received.
No new period of payment blockage may be commenced pursuant to a
Payment Blockage Notice unless (A) at least 365 days shall have elapsed since
the first day of effectiveness of the immediately prior Payment Blockage Notice
and (B) all scheduled payments of principal, premium, if any, and interest on
the Notes that have come due have been paid in full in cash, or in such other
form of payment as may be acceptable to the holders of the Notes. No default
(whether or not such event of default is on the same issue of Designated Senior
Indebtedness) that existed or was continuing on the date of delivery of any
Payment Blockage Notice to the Trustee shall be, or be made, the basis for a
subsequent Payment Blockage Notice.
In addition, in the event of any acceleration of the Notes because of
an Event of Default, no payment or distribution (including with respect to any
redemption or repurchase of the Notes) shall be made to the Trustee or any
holder of Notes with respect to the principal of, premium, if any, or interest
(including Liquidated Damages, if any) on the Notes, except payments and
distributions made by the Trustee as permitted by Section 4.6, until all Senior
Indebtedness has been paid in full in cash or other payment satisfactory to the
holders of Senior Indebtedness or such acceleration is rescinded in accordance
with the terms of this Indenture. If payment of the Notes is accelerated
because of an Event of Default, the Company shall promptly notify holders of
Senior Indebtedness of the acceleration.
Notwithstanding the foregoing, in the event that the Trustee or any
holder of Notes receives any payment or distribution of assets of the Company
of any kind in contravention of any term of this Indenture, whether in cash,
property or securities, including, without limitation, by way of setoff or
otherwise, before all Senior Indebtedness is paid in full, in cash or such
other form of payment as may be acceptable to the holders of Senior
Indebtedness, then such payment or distribution shall be held by the recipient
or recipients in trust for the benefit of, and shall immediately be paid over
or delivered to, the holders of Senior Indebtedness or their respective
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any Senior Indebtedness
may have been issued, as their respective interests may appear, as calculated
by the Company, for application to the payment of all Senior Indebtedness
remaining unpaid to the extent necessary to make payment in full, in cash or
such other form of payment as may be acceptable to the holders of Senior
Indebtedness, of all Senior Indebtedness remaining unpaid, after giving effect
to any concurrent payment or distribution, or provision therefor, to or for the
holders of such Senior Indebtedness.
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Nothing in this Section 4.2 shall apply to claims of, or payments to,
the Trustee pursuant to Section 8.6. This Section 4.2 shall be subject to the
further provisions of Section 4.6.
Section 4.3 Bankruptcy and Dissolution, Etc. Upon any payment by
the Company, or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, to creditors upon any dissolution,
winding-up, liquidation or reorganization of the Company, whether voluntary or
involuntary or in bankruptcy, insolvency, receivership or other proceedings,
all amounts due or to become due upon all Senior Indebtedness shall first be
paid in full, in cash or in such other form of payment as may be acceptable to
the holders of Senior Indebtedness, before any payment is made on account of
the principal or premium, if any, and interest on the Notes (except payments
made pursuant to Article XIII from monies deposited with the Trustee pursuant
thereto prior to the happening of such dissolution, winding-up, liquidation or
reorganization or bankruptcy, insolvency, receivership or other such
proceedings); and upon any such dissolution, winding-up, liquidation or
reorganization or bankruptcy, insolvency, receivership or other such
proceedings, any payment by the Company, or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to
which the holders of the Notes or the Trustee under this Indenture would be
entitled, except for the provision of this Article IV, shall (except as
aforesaid) be paid by the Company or by any receiver, trustee in bankruptcy,
liquidating trustee, agent or other person making such payment or distribution,
or by the holders of the Notes or by the Trustee under this Indenture if
received by them or it, directly to the holders of Senior Indebtedness (pro
rata to such holders on the basis of the respective amounts of Senior
Indebtedness held by such holders, or as otherwise required by law or a court
order) or their respective representative or representatives, or to the trustee
or trustees under any indenture pursuant to which any instruments evidencing
any Senior Indebtedness may have been issued, as their respective interests may
appear, to the extent necessary to pay all Senior Indebtedness in full in cash
or in such other form of payment as may be acceptable to the holders of Senior
Indebtedness after giving effect to any concurrent payment or distribution to
or for the holders of Senior Indebtedness, before any payment or distribution
is made to the holders of the Notes or to the Trustee under this Indenture.
Notwithstanding the foregoing, in the event that the Trustee or any
holder of Notes receives any payment or distribution of assets of the Company
of any kind in contravention of any term of this Indenture, whether in cash,
property or securities, including, without limitation, by way of setoff or
otherwise, before all Senior Indebtedness is paid in full, in cash or such
other form of payment as may be acceptable to the holders of Senior
Indebtedness, then such payment or distribution shall be held by the recipient
or recipients in trust for the benefit of, and shall immediately be paid over
or delivered to, the holders of Senior Indebtedness or their respective
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any Senior Indebtedness
may have been issued, as their respective interests may appear, as calculated
by the Company, for application to the payment of all Senior Indebtedness
remaining unpaid to the extent necessary to make payment in full, in cash
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or such other form of payment as may be acceptable to the holders of Senior
Indebtedness, of all Senior Indebtedness remaining unpaid, after giving effect
to any concurrent payment or distribution, or provision therefor, to or for the
holders of such Senior Indebtedness.
For purposes of Section 4.2 hereof and this Section 4.3, the words
"cash, property or securities" shall not be deemed to include shares of stock
of the Company as reorganized or readjusted, or securities of the Company or
any other corporation provided for by a plan of reorganization or readjustment,
the payment of which is subordinated (at least to the extent provided in this
Article IV with respect to the Notes) to the payment of all Senior Indebtedness
which may at the time be outstanding; provided that (i) the Senior Indebtedness
is assumed by the new corporation, if any, resulting from such reorganization
or adjustment, and (ii) the rights of the holders of Senior Indebtedness (other
than leases which are not assumed by the Company or by the new corporation, as
the case may be) are not, without the consent of such holders, altered by such
reorganization or readjustment. The consolidation of the Company with, or the
merger of the Company into, another corporation or the liquidation or
dissolution of the Company following the conveyance or transfer of its property
as an entirety, or substantially as an entirety, to another corporation upon
the terms and conditions provided for in Article XII shall not be deemed a
dissolution, winding-up, liquidation or reorganization for the purposes of this
Section 4.3 if such other corporation shall, as a part of such consolidation,
merger, conveyance or transfer, comply with the conditions stated in Article
XII.
Nothing in this Section 4.3 shall apply to claims of, or payments to,
the Trustee under or pursuant to Section 8.6. This Section 4.3 shall be subject
to the further provisions of Section 4.6.
Section 4.4 Subrogation of Notes. Subject to the payment in full
in cash or in such other form of payment as may be acceptable to the holders of
Senior Indebtedness of all Senior Indebtedness, the rights of the holders of
the Notes shall be subrogated to the extent of the payments or distributions
made to the holders of such Senior Indebtedness pursuant to the provisions of
this Article IV (equally and ratably with the holders of all indebtedness of
the Company which by its express terms is subordinated to other indebtedness of
the Company to substantially the same extent as the Notes are subordinated and
is entitled to like rights of subrogation) to the rights of the holders of
Senior Indebtedness to receive payments or distributions of cash, property or
securities of the Company applicable to the Senior Indebtedness until the
principal of, and premium, if any, and interest on the Notes shall be paid in
full; and, for the purposes of such subrogation, no payments or distributions
to the holders of the Senior Indebtedness of any cash, property or securities
to which the holders of the Notes or the Trustee would be entitled except for
the provisions of this Article IV, and no payment over pursuant to the
provisions of this Article IV, to or for the benefit of the holders of Senior
Indebtedness by holders of the Notes or the Trustee, shall, as between the
Company, its creditors other than holders of Senior Indebtedness, and the
holders of the Notes, be deemed to be a payment by the Company to or on account
of the Senior Indebtedness; and no payments or distributions of cash, property
or securities to or for the benefit of the holders of the Notes pursuant to the
subrogation
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provisions of this Article IV, which would otherwise have been paid to the
holders of Senior Indebtedness shall be deemed to be a payment by the Company
to or for the account of the Notes. It is understood that the provisions of
this Article IV are and are intended solely for the purposes of defining the
relative rights of the holders of the Notes, on the one hand, and the holders
of the Senior Indebtedness, on the other hand.
Nothing contained in this Article IV or elsewhere in this Indenture or
in the Notes is intended to or shall impair, as among the Company, its
creditors other than the holders of Senior Indebtedness, and the holders of the
Notes, the obligation of the Company, which is absolute and unconditional, to
pay to the holders of the Notes the principal of, and premium, if any, and
interest on the Notes as and when the same shall become due and payable in
accordance with their terms, or is intended to or shall affect the relative
rights of the holders of the Notes and creditors of the Company other than the
holders of the Senior Indebtedness, nor shall anything herein or therein
prevent the Trustee or the holder of any Note from exercising all remedies
otherwise permitted by applicable law upon default under this Indenture,
subject to the rights, if any, under this Article IV of the holders of Senior
Indebtedness in respect of cash, property or securities of the Company received
upon the exercise of any such remedy.
Upon any payment or distribution of assets of the Company referred to
in this Article IV, the Trustee, subject to the provisions of Section 8.1, and
the holders of the Notes shall be entitled to rely upon any order or decree
made by any court of competent jurisdiction in which such bankruptcy,
dissolution, winding-up, liquidation or reorganization proceedings are pending,
or a certificate of the receiver, trustee in bankruptcy, liquidating trustee,
agent or other person making such payment or distribution, delivered to the
Trustee or to the holders of the Notes, for the purpose of ascertaining the
persons entitled to participate in such distribution, the holders of the Senior
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all
other facts pertinent thereto or to this Article IV.
Section 4.5 Authorization by Noteholders. Each holder of a Note 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 IV and appoints the Trustee his attorney-in-fact for
any and all such purposes.
Section 4.6 Notice to Trustee. The Company shall give written
notice to the Trustee of the issuance of any Designated Senior Indebtedness. In
addition, the Company shall give prompt written notice in the form of an
Officers' Certificate to a Responsible Officer of the Trustee and to any paying
agent of any fact known to the Company which would prohibit the making of any
payment of monies to or by the Trustee or any paying agent in respect of the
Notes pursuant to the provisions of this Article IV. Notwithstanding the
provisions of this Article IV or any other provision of this Indenture, the
Trustee shall not be charged with knowledge of the existence of any Senior
Indebtedness or of any default or event of default with
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respect to any Senior Indebtedness or of any other facts which would prohibit
the making of any payment of monies to or by the Trustee in respect of the
Notes pursuant to the provisions of this Article IV, unless and until a
Responsible Officer of the Trustee shall have received written notice thereof
at the Corporate Trust Office from the Company (in the form of an Officers'
Certificate) or a holder or holders of Senior Indebtedness or from any trustee
thereof who shall have been certified by the Company or otherwise established
to the reasonable satisfaction of the Trustee to be such holder or trustee; and
before the receipt of any such written notice, the Trustee, subject to the
provisions of Section 8.1, shall be entitled in all respects to assume that no
such facts exist; provided that if on a date at least two (2) Business Days
prior to the date upon which by the terms hereof any such monies may become
payable for any purpose (including, without limitation, the payment of the
principal of, or premium, if any, or interest on any Note), the Trustee shall
not have received with respect to such monies the notice provided for in this
Section 4.6, then, anything herein contained to the contrary notwithstanding,
the Trustee shall have full power and authority to receive such monies and to
apply the same to the purpose for which they were received, and shall not be
affected by any notice to the contrary which may be received by it on or after
such prior date.
Notwithstanding anything to the contrary hereinbefore set forth,
nothing shall prevent (a) any payment by the Company or the Trustee to the
Noteholders of amounts in connection with a redemption of Notes if (i) notice
of such redemption has been given to the Noteholders pursuant to Article III
prior to the receipt by the Trustee of written notice as aforesaid, and (ii)
such notice of redemption is given not earlier than sixty (60) days before the
redemption date, (b) any payment by the Company or the Trustee to the
Noteholders of amounts in connection with a repurchase of Notes if (i) notice
of such repurchase has been given pursuant to Article XVI prior to the receipt
by the Trustee of written notice as aforesaid, and (ii) such notice of
repurchase is given not earlier than forty (40) days before the repurchase
date, or (c) any payment by the Trustee to the Noteholders of monies deposited
with it pursuant to Section 13.1.
The Trustee, subject to the provisions of Section 8.1, shall be
entitled to rely on the delivery to it of a written notice by a person
representing himself to be a holder of Senior Indebtedness (or a trustee on
behalf of such holder) to establish that such notice has been given by a holder
of Senior Indebtedness or a trustee on behalf of any such holder or holders. In
the event that the Trustee determines in good faith that further evidence is
required with respect to the right of any person as a holder of Senior
Indebtedness to participate in any payment or distribution pursuant to this
Article IV, the Trustee may request such person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness
held by such person, the extent to which such person is entitled to participate
in such payment or distribution and any other facts pertinent to the rights of
such person under this Article IV, and if such evidence is not furnished the
Trustee may defer any payment to such person pending judicial determination as
to the right of such person to receive such payment.
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Section 4.7 Trustee's Relation to Senior Indebtedness. The Trustee
and any agent of the Company or the Trustee in its individual capacity shall be
entitled to all the rights set forth in this Article IV in respect of any
Senior Indebtedness at any time held by it, to the same extent as any other
holder of Senior Indebtedness, and nothing in Section 8.13 or elsewhere in this
Indenture shall deprive the Trustee or any such agent of any of its rights as
such holder. Nothing in this Article IV shall apply to claims of, or payments
to, the Trustee under or pursuant to Section 8.6.
With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article IV, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness and, subject to the
provisions of Section 4.2 and Section 8.1, the Trustee shall not be liable to
any holder of Senior Indebtedness if it shall pay over or deliver to holders of
Notes, the Company or any other person money or assets to which any holder of
Senior Indebtedness shall be entitled by virtue of this Article IV or
otherwise.
Section 4.8 No Impairment of Subordination. No right of any
present or future holder of any Senior Indebtedness to enforce subordination as
herein provided shall at any time in any way be prejudiced or impaired by any
act or failure to act on the part of the Company or by any act or failure to
act, in good faith, by any such holder, or by any noncompliance by the Company
with the terms, provisions and covenants of this Indenture, regardless of any
knowledge thereof which any such holder may have or otherwise be charged with.
Section 4.9 Certain Conversions and Repurchases Deemed Payment.
For the purposes of this Article IV only, (1) the issuance and delivery of
junior securities upon conversion of Notes in accordance with Article XV or
upon repurchase of the Notes by the Company in the event of a Repurchase Event
in accordance with Article XVI shall not be deemed to constitute a payment or
distribution on account of the principal of (or premium, if any) or interest on
Notes or on account of the purchase or other acquisition of Notes, and (2) the
payment, issuance or delivery of cash (including cash paid for fractional
shares upon conversion of a Note or upon repurchase of a Note upon a Repurchase
Event), property or securities (other than junior securities) upon conversion
of a Note or upon repurchase of a Note on a Repurchase Event shall be deemed to
constitute payment on account of the principal of such Note. For the purposes
of this Section, the term "junior securities" means (a) shares of any stock of
any class of the Company 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 Notes are so
subordinated as provided in this Article. Nothing contained in this Article or
elsewhere in this Indenture or in the Notes is intended to or shall impair, as
among the Company, its creditors other than holders of Senior Indebtedness and
the holders of the Notes, the right, which is
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absolute and unconditional, of the holder of any Note to convert such Note in
accordance with Article XV.
Section 4.10 Article Applicable to Paying Agents. If at any time
any paying agent other than the Trustee shall have been appointed by the
Company and be then acting hereunder, the term Trustee as used in this Article
IV shall (unless the context shall otherwise require) be construed as extending
to and including such paying agent within its meaning as fully for all intents
and purposes as if such paying agent were named in this Article in addition to
or in place of the Trustee; provided, however, that the first sentence of
Section 4.5 shall not apply to the Company or any Affiliate of the Company if
it or such Affiliate acts as paying agent.
ARTICLE V
PARTICULAR COVENANTS OF THE COMPANY
Section 5.1 Payment of Principal, Premium and Interest. The
Company covenants and agrees that it will duly and punctually pay or cause to
be paid the principal of and premium, if any, and interest (including
Liquidated Damages, if any) on each of the Notes at the places, at the
respective times and in the manner provided herein and in the Notes. Each
installment of interest on the Notes due on any semi-annual interest payment
date may be paid by mailing checks for the interest payable to or upon the
written order of the holders of Notes entitled thereto as they shall appear on
the registry books of the Company, provided that, with respect to any holder of
Notes with an aggregate principal amount equal to or in excess of $2,000,000,
at the request of such holder in writing to the Company, interest on such
holder's Notes shall be paid by wire transfer in immediately available funds to
any bank located in the United States in accordance with the wire transfer
instructions supplied by such holder from time to time to the Trustee and
paying agent (if different from Trustee) at least two days prior to the
applicable record date.
Section 5.2 Maintenance of Office or Agency. The Company will
maintain in the Borough of Manhattan, The City of New York, an office or agency
where the Notes may be surrendered for registration of transfer or exchange or
for presentation for payment or for conversion, redemption or repurchase and
where notices and demands to or upon the Company in respect of the Notes and
this Indenture may be served. The Company will give prompt written notice to
the Trustee of the location, and any change in the location, of such office or
agency not designated or appointed by the Trustee. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office or the
office or agency of the Trustee in the Borough of Manhattan, The City of New
York.
The Company may also from time to time designate one or more other
offices or agencies
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where the Notes may be presented or surrendered for any or all such purposes
and may from time to time rescind such designations; provided that no such
designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in the Borough of Manhattan, The
City of New York, for such purposes. The Company will give prompt written
notice to the Trustee of any such designation or rescission and of any change
in the location of any such other office or agency.
The Company hereby initially designates the Trustee as paying agent,
Note registrar, Custodian and conversion agent and the Corporate Trust Office
and the office or agency of the Trustee in the Borough of Manhattan, The City
of New York (which initially shall be State Street Bank and Trust Company,
N.A., an Affiliate of the Trustee, located at 61 Broadway, 15th Floor, New
York, New York 10006 (Attention: Corporate Trust Department--SportsLine USA,
Inc.-- 5% Convertible Subordinated Notes due 2006)) as one such office or
agency of the Company for each of the aforesaid purposes.
So long as the Trustee is the Note registrar, the Trustee agrees to
mail, or cause to be mailed, the notices set forth in Section 8.10(a) and the
third paragraph of Section 8.11.
Section 5.3 Appointments to Fill Vacancies in Trustee's Office.
The Company, whenever necessary to avoid or fill a vacancy in the office of
Trustee, will appoint, in the manner provided in Section 8.10, a Trustee, so
that there shall at all times be a Trustee hereunder.
Section 5.4 Provisions as to Paying Agent.
(a) If the Company shall appoint a paying agent other than
the Trustee or if the Trustee shall appoint such a paying agent, it
will cause such paying agent to execute and deliver to the Trustee an
instrument in which such agent shall agree with the Trustee, subject
to the provisions of this Section 5.4:
(1) that it will hold all sums held by it as
such agent for the payment of the principal of and premium,
if any, or interest on the Notes (whether such sums have been
paid to it by the Company or by any other obligor on the
Notes) in trust for the benefit of the holders of the Notes;
(2) that it will give the Trustee notice of any
failure by the Company (or by any other obligor on the Notes)
to make any payment of the principal of and premium, if any,
or interest on the Notes when the same shall be due and
payable; and
(3) that at any time during the continuance of
an Event of Default, upon request of the Trustee, it will
forthwith pay to the Trustee all sums so held in trust.
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The Company shall, on or before each due date of the
principal of, premium, if any, or interest on the Notes, deposit with
the paying agent a sum sufficient to pay such principal, premium, if
any, or interest, and (unless such paying agent is the Trustee) the
Company will promptly notify the Trustee of any failure to take such
action, provided that if such deposit is made on the due date, such
deposit must be received by the paying agent by 10:00 a.m., New York
City time, on such date.
(b) If the Company shall act as its own paying agent, it
will, on or before each due date of the principal of, premium, if any,
or interest on the Notes, set aside, segregate and hold in trust for
the benefit of the holders of the Notes a sum sufficient to pay such
principal, premium, if any, or interest so becoming due and will
notify the Trustee of any failure to take such action and of any
failure by the Company (or any other obligor under the Notes) to make
any payment of the principal of, premium, if any, or interest on the
Notes when the same shall become due and payable.
(c) Anything in this Section 5.4 to the contrary
notwithstanding, the Company may, at any time, for the purpose of
obtaining a satisfaction and discharge of this Indenture, or for any
other reason, pay or cause to be paid to the Trustee all sums held in
trust by the Company or any paying agent hereunder as required by this
Section 5.4, such sums to be held by the Trustee upon the trusts
herein contained and upon such payment by the Company or any paying
agent to the Trustee, the Company or such paying agent shall be
released from all further liability with respect to such sums.
(d) Anything in this Section 5.4 to the contrary
notwithstanding, the agreement to hold sums in trust as provided in
this Section 5.4 is subject to Sections 13.3 and 13.4.
Section 5.5 Existence. Subject to Article XII, the Company
will do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate existence.
Section 5.6 Rule 144A Information Requirement. Within the period
prior to the expiration of the holding period applicable to sales thereof under
Rule 144(k) under the Securities Act (or any successor provision), the Company
covenants and agrees that it shall, during any period in which it is not
subject to Section 13 or 15(d) under the Exchange Act, make available to any
holder or beneficial holder of Notes or any Common Stock issued upon conversion
thereof, in each case which continue to be Restricted Securities, in connection
with any sale thereof and any prospective purchaser of Notes or such Common
Stock from such holder or beneficial holder, the information required pursuant
to Rule 144A(d)(4) under the Securities Act upon the request of any holder or
beneficial holder of the Notes or such Common Stock and it will take such
further action as any holder or beneficial holder of such Notes or such Common
Stock may reasonably request, all to the extent required from time to time to
enable such holder or beneficial holder to sell its Notes or Common Stock
without registration under the
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Securities Act within the limitation of the exemption provided by Rule 144A, as
such rule may be amended from time to time. Upon the request of any holder or
any beneficial holder of the Notes or such Common Stock, the Company will
deliver to such holder a written statement as to whether it has complied with
such requirements.
Section 5.7 Stay, Extension and Usury Laws. The Company covenants
(to the extent that it may lawfully do so) that it shall not at any time insist
upon, plead, or in any manner whatsoever claim or take the benefit or advantage
of, any stay, extension or usury law or other law which would prohibit or
forgive the Company from paying all or any portion of the principal of or
interest on the Notes as contemplated herein, wherever enacted, now or at any
time hereafter in force, or which may affect the covenants or the performance
of this Indenture; and the Company (to the extent it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that
it will not, by resort to any such law, hinder, delay or impede the execution
of any power herein granted to the Trustee, but will suffer and permit the
execution of every such power as though no such law has been enacted.
Section 5.8 Compliance Certificate. The Company shall deliver to
the Trustee within 120 days after the end of each fiscal year of the Company
(beginning with the fiscal year ending on December 31, 1999) an Officers'
Certificate stating whether or not to the best of their knowledge the signers
know of any default or Event of Default that occurred during such period. If
they do, such Officers' Certificate shall describe the default or Event of
Default and its status.
Section 5.9 Further Instruments and Acts. Upon request of the
Trustee, the Company will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purposes of this Indenture.
ARTICLE VI
NOTEHOLDERS' LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE
Section 6.1 Noteholders' Lists. The Company covenants and agrees
that it will furnish or cause to be furnished to the Trustee, semi-annually,
not more than fifteen (15) days after each March 15 and September 15 in each
year beginning with September 15, 1999, and at such other times as the Trustee
may request in writing, within thirty (30) days after receipt by the Company of
any such request (or such lesser time as the Trustee may reasonably request in
order to enable it to timely provide any notice to be provided by it
hereunder), a list in such form as the Trustee may reasonably require of the
names and addresses of the holders of Notes as of a date not more than fifteen
(15) days (or such other date as the Trustee may reasonably request in order to
so provide any such notices) prior to the time such information is furnished,
except that no such list need be furnished so long as the Trustee is acting as
Note registrar.
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Section 6.2 Preservation and Disclosure of Lists.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, all information as to the names and addresses of the
holders of Notes contained in the most recent list furnished to it as provided
in Section 6.1 or maintained by the Trustee in its capacity as Note registrar,
if so acting. The Trustee may destroy any list furnished to it as provided in
Section 6.1 upon receipt of a new list so furnished.
(b) The rights of Noteholders to communicate with other
holders of Notes with respect to their rights under this Indenture or under the
Notes and the corresponding rights and duties of the Trustee, shall be as
provided by the Trust Indenture Act.
(c) Every Noteholder, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the
Trustee nor any agent of either of them shall be held accountable by reason of
any disclosure of information as to names and addresses of holders of Notes
made pursuant to the Trust Indenture Act.
Section 6.3 Reports by Trustee.
(a) After this Indenture has been qualified under the
Trust Indenture Act, the Trustee shall transmit to holders of Notes 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.
(b) A copy of such report shall, at the time of such
transmission to holders of Notes, be filed by the Trustee with each stock
exchange and automated quotation system upon which the Notes are listed and
with the Company. The Company will notify the Trustee when the Notes are listed
on any stock exchange or automated quotation system and when any such listing
is discontinued.
Section 6.4 Reports by Company.
(a) 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 of Notes, such information, documents and
other reports and such summaries thereof, as may be required pursuant to the
Trust Indenture Act at the times and in the manner provided pursuant to such
Act; provided that any such information, documents or reports required to be
filed with the Commission pursuant to Section 13 or 15(d) of the Exchange Act
shall be filed with the Trustee within 15 days after the same is so required to
be filed with the Commission.
(b) The Company will deliver to the Trustee (a) as soon as
available and in
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any event within ninety (90) days after the end of each fiscal year of the
Company (i) a consolidated balance sheet of the Company and its subsidiaries as
of the end of such fiscal year and the related consolidated statements of
operations, stockholders' equity and cash flows for such fiscal year, all
reported on by an independent public accountant of nationally recognized
standing and (ii) a report containing a management's discussion and analysis of
the financial condition and results of operations and a description of the
business and properties of the Company and (b) as soon as available and in any
event within forty-five (45) days after the end of each of the first three
quarters of each fiscal year of the Company (i) an unaudited consolidated
management's discussion and analysis of the financial condition and results of
operations of the Company for such quarter; provided that the foregoing
statements and reports shall not be required for any fiscal year or quarter, as
the case may be, with respect to which the Company files or expects to file
with the Trustee an annual report or quarterly report, as the case may be,
pursuant to the preceding paragraph of this Section 6.4. The Trustee shall have
no liability as regards the substance of the information provided by the
Company or its agents pursuant to this Section 6.4.
ARTICLE VII
DEFAULTS AND REMEDIES
Section 7.1 Events of Default. In case one or more of the
following Events of Default (whatever the reason for such Event of Default and
whether it shall be voluntary or involuntary or be effected by operation of law
or pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body) shall have occurred and
be continuing:
(a) default in the payment of the principal of and
premium, if any, on any of the Notes as and when the same shall become
due and payable either at maturity or in connection with any
redemption, by declaration or otherwise, whether or not such payment
is prohibited by the provisions of Article IV; or
(b) default for thirty (30) days in the payment of any
installment of interest or Liquidated Damages, if any, upon any of the
Notes as and when the same shall become due and payable, whether or
not such payment is prohibited by the provisions of Article IV; or
(c) failure by the Company to deliver shares of Common
Stock (including cash in lieu of fractional shares) required to be
delivered following conversion of a Note in accordance with Article XV
of this Indenture and continuance of such default for five (5) days;
or
(d) failure on the part of the Company duly to observe or
perform any other of
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the covenants on the part of the Company in the Notes or in this
Indenture (other than a covenant a default in whose performance or
whose breach is elsewhere in this Section specifically dealt with) and
the continuance of such failure for a period of sixty (60) days after
the date on which written notice of such failure, requiring the
Company to remedy the same, shall have been given to the Company by
the Trustee, or to the Company and a Responsible Officer of the
Trustee by the holders of at least 25% in aggregate principal amount
of the outstanding Notes at the time outstanding determined in
accordance with Section 9.4; or
(e) a default in the payment of the Repurchase Price in
respect of any Note on the repurchase date therefor in accordance with
the provisions of Article XVI, whether or not such payment in cash of
the Repurchase Price is prohibited by the provisions of Article IV; or
(f) failure on the part of the Company to provide a
written notice of a Repurchase Event in accordance with Section 16.2;
or
(g) failure on the part of the Company or any Significant
Subsidiary to make any payment at maturity, including any applicable
grace period, in respect of Indebtedness of, or guaranteed or assumed
by, the Company or any Significant Subsidiary, in a principal amount
then outstanding in excess of U.S. $15,000,000, and the continuance of
such failure for a period of thirty (30) days after there shall have
been given, by registered or certified mail, to the Company by the
Trustee or to the Company and the Trustee by the holders of not less
than 25% in aggregate principal amount of the Notes then outstanding,
a written notice specifying such default and requiring the Company to
cause such default to be cured or waived and stating that such notice
is a "Notice of Default" hereunder; or
(h) default on the part of the Company or any Significant
Subsidiary with respect to any Indebtedness of, or guaranteed or
assumed by, the Company or any Significant Subsidiary, which default
results in the acceleration of Indebtedness in a principal amount then
outstanding in excess of U.S. $15,000,000, and such Indebtedness shall
not have been discharged or such acceleration shall not have been
rescinded or annulled for a period of thirty (30) days after there
shall have been given, by registered or certified mail, to the Company
by the Trustee or to the Company and the Trustee by the holders of not
less than 25% in aggregate principal amount of the Notes then
outstanding, 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
(i) the Company or any Significant Subsidiary shall
commence a voluntary
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case or other proceeding seeking liquidation, reorganization or other
relief with respect to itself or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking
the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, or
shall consent to any such relief or to the appointment of or taking
possession by any such official in an involuntary case or other
proceeding commenced against it, or shall make a general assignment
for the benefit of creditors, or shall fail generally to pay its debts
as they become due; or
(j) an involuntary case or other proceeding shall be
commenced against the Company or any Significant Subsidiary seeking
liquidation, reorganization or other relief with respect to it or its
debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of
ninety (90) consecutive days;
then, and in each and every such case (other than an Event of Default specified
in Section 7.1(i) or (j) with respect to the Company), unless the principal of
all of the Notes shall have already become due and payable, either the Trustee
or the holders of not less than 25% in aggregate principal amount of the Notes
then outstanding hereunder determined in accordance with Section 9.4, by notice
in writing to the Company (and to the Trustee if given by Noteholders), may
declare the principal of and premium, if any, on all the Notes and the interest
accrued thereon to be due and payable immediately, and upon any such
declaration the same shall become and shall be immediately due and payable,
anything in this Indenture or in the Notes contained to the contrary
notwithstanding. If an Event of Default specified in Section 7.1(i) or (j)
occurs and is continuing with respect to the Company, the principal of all the
Notes and the interest accrued thereon shall be immediately due and payable.
This provision, however, is subject to the conditions that if, at any time
after the principal of the Notes shall have been so declared due and payable,
and before any judgment or decree for the payment of the monies due shall have
been obtained or entered as hereinafter provided, the Company shall pay or
shall deposit with the Trustee a sum sufficient to pay all matured installments
of interest upon all Notes and the principal of and premium, if any, on any and
all Notes which shall have become due otherwise than by acceleration (with
interest on overdue installments of interest (to the extent that payment of
such interest is enforceable under applicable law) and on such principal and
premium, if any, at the rate borne by the Notes, to the date of such payment or
deposit) and amounts due to the Trustee pursuant to Section 8.6, and if any and
all defaults under this Indenture, other than the nonpayment of principal of
and premium, if any, and accrued interest on Notes which shall have become due
by acceleration, shall have been cured or waived pursuant to Section 7.7, then
and in every such case the holders of a majority in aggregate principal amount
of the Notes then outstanding, by written notice to the Company and to the
Trustee, may waive all defaults or Events of Default and rescind and annul such
declaration and its consequences; but no such waiver or rescission and
annulment shall extend to or shall affect any
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subsequent default or Event of Default, or shall impair any right consequent
thereon. The Company shall notify the Responsible Officer of the Trustee,
promptly upon becoming aware thereof, of any default or Event of Default and
shall deliver to the Trustee a statement specifying such default or Event of
Default and the action the Company has taken, is taking or proposes to take
with respect thereto.
In case the Trustee shall have proceeded to enforce any right under
this Indenture and such proceedings shall have been discontinued or abandoned
because of such waiver or rescission and annulment or for any other reason or
shall have been determined adversely to the Trustee, then and in every such
case the Company, the holders of Notes, and the Trustee shall be restored
respectively to their several positions and rights hereunder, and all rights,
remedies and powers of the Company, the holders of Notes, and the Trustee shall
continue as though no such proceeding had been instituted.
Section 7.2 Payments of Notes on Default; Suit Therefor. The
Company covenants that (a) in case default shall be made in the payment by the
Company of any installment of interest upon any of the Notes as and when the
same shall become due and payable, and such default shall have continued for a
period of thirty (30) days, or (b) in case default shall be made in the payment
of the principal of or premium, if any, on any of the Notes as and when the
same shall have become due and payable, whether at maturity of the Notes or in
connection with any redemption or repurchase, by declaration under this
Indenture or otherwise, then, upon demand of the Trustee, the Company will pay
to the Trustee, for the benefit of the holders of the Notes, the whole amount
that then shall have become due and payable on all such Notes for principal and
premium, if any, or interest, or both, as the case may be, with interest upon
the overdue principal and premium, if any, and (to the extent that payment of
such interest is enforceable under applicable law) upon the overdue
installments of interest at the rate borne by the Notes; and, in addition
thereto, such further amount as shall be sufficient to cover the costs and
expenses of collection, including reasonable compensation to the Trustee, its
agents, attorneys and counsel, and any expenses or liabilities incurred by the
Trustee hereunder other than through its negligence or bad faith. Until such
demand by the Trustee, the Company may pay the principal of and premium, if
any, and interest on the Notes to the registered holders, whether or not the
Notes are overdue.
In case the Company shall fail forthwith to pay such amounts upon such
demand, the Trustee, in its own name and as trustee of an express trust, shall
be entitled and empowered to institute any actions or proceedings at law or in
equity for the collection of the sums so due and unpaid, and may prosecute any
such action or proceeding to judgment or final decree, and may enforce any such
judgment or final decree against the Company or any other obligor on the Notes
and collect in the manner provided by law out of the property of the Company or
any other obligor on the Notes wherever situated the monies adjudged or decreed
to be payable.
In the case there shall be pending proceedings for the bankruptcy or
for the reorganization
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of the Company or any other obligor on the Notes under Title 11 of the United
States Code, or any other applicable law, or in case a receiver, assignee or
trustee in bankruptcy or reorganization, liquidator, sequestrator or similar
official shall have been appointed for or taken possession of the Company or
such other obligor, the property of the Company or such other obligor, or in
the case of any other judicial proceedings relative to the Company or such
other obligor upon the Notes, or to the creditors or property of the Company or
such other obligor, the Trustee, irrespective of whether the principal of the
Notes shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand
pursuant to the provisions of this Section 7.2, shall be entitled and
empowered, by intervention in such proceedings or otherwise, to file and prove
a claim or claims for the whole amount of principal, premium, if any, and
interest owing and unpaid in respect of the Notes, and, in case of any judicial
proceedings, to file such proofs of claim and other papers or documents and to
take such other actions as it may deem necessary or advisable in order to have
the claims of the Trustee and of the Noteholders allowed in such judicial
proceedings relative to the Company or any other obligor on the Notes, its or
their creditors, or its or their property, and to collect and receive any
monies or other property payable or deliverable on any such claims, and to
distribute the same after the deduction of any amounts due the Trustee under
Section 8.6; and any receiver, assignee or trustee in bankruptcy or
reorganization, liquidator, custodian or similar official is hereby authorized
by each of the Noteholders to make such payments to the Trustee, and, in the
event that the Trustee shall consent to the making of such payments directly to
the Noteholders, to pay to the Trustee any amount due it for reasonable
compensation, expenses, advances and disbursements, including agents and
counsel fees incurred by it up to the date of such distribution. To the extent
that such payment of reasonable compensation, expenses, advances and
disbursements out of the estate in any such proceedings shall be denied for any
reason, payment of the same shall be secured by a lien on, and shall be paid
out of, any and all distributions, dividends, monies, securities and other
property which the holders of the Notes may be entitled to receive in such
proceedings, whether in liquidation or under any plan of reorganization or
arrangement or otherwise.
All rights of action and of asserting claims under this Indenture, or
under any of the Notes, may be enforced by the Trustee without the possession
of any of the Notes, or the production thereof on any trial or other proceeding
relative thereto, and any such suit or proceeding instituted by the Trustee
shall be brought in its own name as trustee of an express trust, and any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, be for the ratable benefit of the holders of the Notes.
In any proceedings brought by the Trustee (and in any proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party) the Trustee shall be held to represent all the
holders of the Notes, and it shall not be necessary to make any holders of the
Notes parties to any such proceedings.
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Section 7.3 Application of Monies Collected by Trustee. Any monies
collected by the Trustee pursuant to this Article VII shall be applied in the
order following, at the date or dates fixed by the Trustee for the distribution
of such monies, upon presentation of the several Notes, and stamping thereon
the payment, if only partially paid, and upon surrender thereof, if fully paid:
First: To the payment of all amounts due the Trustee under
Section 8.6;
Second: Subject to the provisions of Article IV, in case the
principal of the outstanding Notes shall not have become due and be
unpaid, to the payment of interest on the Notes in default in the
order of the maturity of the installments of such interest, with
interest (to the extent that such interest has been collected by the
Trustee) upon the overdue installments of interest at the rate borne
by the Notes, such payments to be made ratably to the persons entitled
thereto;
Third: Subject to the provisions of Article IV, in case the
principal of the outstanding Notes shall have become due, by
declaration or otherwise, and be unpaid, to the payment of the whole
amount then owing and unpaid upon the Notes for principal and premium,
if any, and interest, with interest on the overdue principal and
premium, if any, and (to the extent that such interest has been
collected by the Trustee) upon overdue installments of interest at the
rate borne by the Notes; and in case such monies shall be insufficient
to pay in full the whole amounts so due and unpaid upon the Notes,
then to the payment of such principal and premium, if any, and
interest without preference or priority of principal and premium, if
any, over interest, or of interest over principal and premium, if any,
or of any installment of interest over any other installment of
interest, or of any Note over any other Note, ratably to the aggregate
of such principal and premium, if any, and accrued and unpaid
interest; and
Fourth: Subject to the provisions of Article IV, to the
payment of the remainder, if any, to the Company or any other person
lawfully entitled thereto.
Section 7.4 Proceedings by Noteholder. No holder of any Note shall
have any right by virtue of or by availing of any provision of this Indenture
to institute any suit, action or proceeding in equity or at law upon or under
or with respect to this Indenture, or for the appointment of a receiver,
trustee, liquidator, custodian or other similar official, or for any other
remedy hereunder, unless such holder previously shall have given to the Trustee
written notice of an Event of Default and of the continuance thereof, as
hereinbefore provided, and unless also the holders of not less than 25% in
aggregate principal amount of the Notes then outstanding shall have made
written request upon the Trustee to institute such action, suit or proceeding
in its own name as Trustee hereunder and shall have offered to the Trustee such
indemnity as may be reasonably satisfactory to the Trustee against the costs,
expenses and liabilities to be incurred therein or thereby, and the Trustee for
sixty (60) days after its receipt of such notice, request and
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offer of indemnity, shall have neglected or refused to institute any such
action, suit or proceeding and no direction inconsistent with such written
request shall have been given to the Trustee pursuant to Section 7.7; it being
understood and intended, and being expressly covenanted by the taker and holder
of every Note with every other taker and holder and the Trustee, that no one or
more holders of Notes shall have any right in any manner whatever by virtue of
or by availing of any provision of this Indenture to affect, disturb or
prejudice the rights of any other holder of Notes, or to obtain or seek to
obtain priority over or preference to any other such holder, or to enforce any
right under this Indenture, except in the manner herein provided and for the
equal, ratable and common benefit of all holders of Notes (except as otherwise
provided herein). For the protection and enforcement of this Section 7.4, each
and every Noteholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity.
Notwithstanding any other provision of this Indenture and any
provision of any Note, the right of any holder of any Note to receive payment
of the principal of and premium, if any, and interest on such Note, on or after
the respective due dates expressed in such Note, or to institute suit for the
enforcement of any such payment on or after such respective dates against the
Company shall not be impaired or affected without the consent of such holder.
Anything in this Indenture or the Notes to the contrary
notwithstanding, the holder of any Note, without the consent of either the
Trustee or the holder of any other Note, in his own behalf and for his own
benefit, may enforce, and may institute and maintain any proceeding suitable to
enforce, his rights of conversion as provided herein.
Section 7.5 Proceedings by Trustee. In case of an Event of Default
the Trustee may in its discretion proceed to protect and enforce the rights
vested in it by this Indenture by such appropriate judicial proceedings as the
Trustee shall deem most effectual to protect and enforce any of such rights,
either by suit in equity or by action at law or by proceeding in bankruptcy or
otherwise, whether for the specific enforcement of any covenant or agreement
contained in this Indenture or in aid of the exercise of any power granted in
this Indenture, or to enforce any other legal or equitable right vested in the
Trustee by this Indenture or by law.
Section 7.6 Remedies Cumulative and Continuing. Except as provided
in the last paragraph of Section 2.6, all powers and remedies given by this
Article VII to the Trustee or to the Noteholders shall, to the extent permitted
by law, be deemed cumulative and not exclusive of any thereof or of any other
powers and remedies available to the Trustee or the holders of the Notes, by
judicial proceedings or otherwise, to enforce the performance or observance of
the covenants and agreements contained in this Indenture, and no delay or
omission of the Trustee or of any holder of any of the Notes to exercise any
right or power accruing upon any default or Event of Default occurring and
continuing as aforesaid shall impair any such right or power, or shall be
construed to be a waiver of any such default or any acquiescence therein; and,
subject to the provisions of Section 7.4, every power and remedy given by this
Article VII or by law to the Trustee or to the Noteholders may be exercised
from time to time, and as often as shall be
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deemed expedient, by the Trustee or by the Noteholders.
Section 7.7 Direction of Proceedings and Waiver of Defaults by
Majority of Noteholders. The holders of a majority in aggregate principal
amount of the Notes at the time outstanding determined in accordance with
Section 9.4 shall have the right to direct the time, method, and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee; provided, however, that (a) such
direction shall not be in conflict with any rule of law or with this Indenture,
and (b) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction. The holders of not less than a
majority in aggregate principal amount of the Notes at the time outstanding
determined in accordance with Section 9.4 may on behalf of the holders of all
of the Notes waive any past default or Event of Default hereunder and its
consequences except (i) a default in the payment of interest or premium, if
any, on, or the principal of, the Notes when due, (ii) a failure by the Company
to convert any Notes into Common Stock or (iii) a default in respect of a
covenant or provisions hereof which under Article XI cannot be modified or
amended without the consent of the holders of all Notes then outstanding. Upon
any such waiver the Company, the Trustee and the holders of the Notes shall be
restored to their former positions and rights hereunder; but no such waiver
shall extend to any subsequent or other default or Event of Default or impair
any right consequent thereon. Whenever any default or Event of Default
hereunder shall have been waived as permitted by this Section 7.7, said default
or Event of Default shall for all purposes of the Notes and this Indenture be
deemed to have been cured and to be not continuing; but no such waiver shall
extend to any subsequent or other default or Event of Default or impair any
right consequent thereon.
Section 7.8 Notice of Defaults. The Trustee shall, within ninety
(90) days after the occurrence of a default, mail to all Noteholders, as the
names and addresses of such holders appear upon the Note register, notice of
all defaults known to a Responsible Officer, unless such defaults shall have
been cured or waived before the giving of such notice; and provided that,
except in the case of default in the payment of the principal of, or premium,
if any, or interest on any of the Notes, including without limiting the
generality of the foregoing any default in the payment of any Repurchase Price
or in the payment of any amount due in connection with any redemption of Notes,
then in any such event the Trustee shall be protected in withholding such
notice if and so long as a trust committee of directors and/or Responsible
Officers of the Trustee in good faith determines that the withholding of such
notice is in the interests of the Noteholders.
Section 7.9 Undertaking to Pay Costs. All parties to this
Indenture agree, and each holder of any Note by his acceptance thereof shall be
deemed to have agreed, that any court may, in its discretion, require, in any
suit for the enforcement of any right or remedy under this Indenture, or in any
suit against the Trustee for any action taken or omitted by it as Trustee, the
filing by any party litigant in such suit of an undertaking to pay the costs of
such suit and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the
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claims or defenses made by such party litigant; provided that the provisions of
this Section 7.9 shall not apply to any suit instituted by the Trustee, to any
suit instituted by any Noteholder, or group of Noteholders, holding in the
aggregate more than 10% in principal amount of the Notes at the time
outstanding determined in accordance with Section 9.4, or to any suit
instituted by any Noteholder for the enforcement of the payment of the
principal of or premium, if any, or interest on any Note (including, but not
limited to, the redemption price or repurchase price with respect to the Notes
being redeemed or repurchased as provided in this Indenture) on or after the
due date expressed in such Note or to any suit for the enforcement of the right
to convert any Note in accordance with the provisions of Article XV.
Section 7.10 Delay or Omission Not Waiver. No delay or omission of
the Trustee or of any holder of any Note 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 or by law to the Trustee or to the
holders of Notes may be exercised from time to time, and as often as may be
deemed expedient, by the Trustee or by the holders of Notes, as the case may
be.
ARTICLE VIII
CONCERNING THE TRUSTEE
Section 8.1 Duties and Responsibilities of Trustee. The Trustee,
prior to the occurrence of an Event of Default and after the curing or waiver
of all Events of Default which may have occurred, undertakes to perform such
duties and only such duties as are specifically set forth in this Indenture. In
case an Event of Default has occurred (which has not been cured or waived) the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that
(a) prior to the occurrence of an Event of Default and
after the curing or waiving of all Events of Default which may have
occurred:
(1) the duties and obligations of the Trustee
shall be determined solely by the express provisions of this
Indenture and, after it has been qualified thereunder, the
Trust Indenture Act, and the Trustee shall not be liable
except for the performance of such duties and obligations as
are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture
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and the Trust Indenture Act against the Trustee; and
(2) in the absence of bad faith and willful
misconduct on the part of the Trustee, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture; but, in the
case of any such certificates or opinions which by any
provisions hereof are specifically required to be furnished
to the Trustee, the Trustee shall be under a duty to examine
the same to determine whether or not they conform to the
requirements of this Indenture;
(b) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer or Officers of
the Trustee, unless it shall be provided that the Trustee was
negligent in ascertaining the pertinent facts;
(c) the Trustee shall not be liable to any Noteholder with
respect to any action taken or omitted to be taken by it in good faith
in accordance with the direction of the holders of not less than a
majority in principal amount of the Notes at the time outstanding
determined as provided in Section 9.4 relating to the time, method and
place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee,
under this Indenture; and
(d) whether or not therein provided, every provision of
this Indenture relating to the conduct or affecting the liability of,
or affording protection to, the Trustee shall be subject to the
provisions of this Section.
None of the provisions contained in this Indenture shall
require the Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers, if there is reasonable ground for believing
that the repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
Section 8.2 Reliance on Documents, Opinions, Etc. Except as
otherwise provided in Section 8.1:
(a) the Trustee may rely and shall be protected in acting
upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, bond, note, coupon or other
paper or document believed by it in good faith to be genuine and to
have been signed or presented by the proper party or parties;
(b) any request, direction, order or demand of the Company
mentioned herein shall be sufficiently evidenced by an Officers'
Certificate (unless other evidence in
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respect thereof be herein specifically prescribed); and any resolution
of the Board of Directors may be evidenced to the Trustee by a copy
thereof certified by the Secretary or an Assistant Secretary of the
Company;
(c) the Trustee may consult with counsel and any advice of
such counsel or Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken or omitted
by it hereunder in good faith and in accordance with such advice or
Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Indenture at the
request, order or direction of any of the Noteholders pursuant to the
provisions of this Indenture, unless such Noteholders shall have
offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which may be incurred therein or
thereby;
(e) the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture or other paper or document,
but the Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit, and, if
the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and
premises of the Company, personally or by agent or attorney; provided,
however, that if the payment within a reasonable time to the Trustee
of the costs, expenses or liabilities likely to be incurred by it in
the making of such investigation is, in the opinion of the Trustee,
not reasonably assured to the Trustee by the security afforded to it
by the terms of this Indenture, the Trustee may require indemnity
reasonably satisfactory to the Trustee from the Noteholders against
such expenses or liability as a condition to so proceeding; the
reasonable expenses of every such examination shall be paid by the
Company or, if paid by the Trustee or any predecessor Trustee, shall
be repaid by the Company upon demand; and
(f) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney
appointed by it with due care hereunder.
In no event shall the Trustee be liable for any consequential loss or damage of
any kind whatsoever (including but not limited to lost profits), even if the
Trustee has been advised of the likelihood of such loss or damage and
regardless of the form of action other than through the Trustee's willful
misconduct or gross negligence.
Section 8.3 No Responsibility for Recitals, Etc. The recitals
contained herein and in
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the Notes (except in the Trustee's certificate of authentication) shall be
taken as the statements of the Company, and the Trustee assumes no
responsibility for the correctness of the same. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Notes. The Trustee shall not be accountable for the use or application by the
Company of any Notes or the proceeds of any Notes authenticated and delivered
by the Trustee in conformity with the provisions of this Indenture.
Section 8.4 Trustee, Paying Agents, Conversion Agents or Registrar
May Own Notes. The Trustee, any paying agent, any conversion agent or Note
registrar, in its individual or any other capacity, may become the owner or
pledgee of Notes with the same rights it would have if it were not Trustee,
paying agent, conversion agent or Note registrar.
Section 8.5 Monies to Be Held in Trust. Subject to the provisions
of Section 13.4, all monies received by the Trustee shall, until used or
applied as herein provided, be held in trust for the purposes for which they
were received. Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by law. The Trustee
shall be under no liability for interest on any money received by it hereunder
except as may be agreed from time to time by the Company and the Trustee.
Section 8.6 Compensation and Expenses of Trustee. The Company
covenants and agrees to pay to the Trustee from time to time, and the Trustee
shall be entitled to, reasonable compensation for all services rendered by it
hereunder in any capacity (which shall not be limited by any provision of law
in regard to the compensation of a trustee of an express trust), and the
Company will pay or reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances reasonably incurred or made by the Trustee
in accordance with any of the provisions of this Indenture (including the
reasonable compensation and the expenses and disbursements of its agents and
counsel and of all persons not regularly in its employ) except any such
expense, disbursement or advance as may arise from its negligence, willful
misconduct or bad faith. The Company also covenants to indemnify the Trustee in
any capacity under this Indenture and its agents and any authenticating agent
for, and to hold them harmless against, any loss, liability or expense incurred
without negligence, willful misconduct or bad faith on the part of the Trustee
or such agent or authenticating agent, as the case may be, and arising out of
or in connection with the acceptance or administration of this trust or in any
other capacity hereunder, including the costs and expenses of defending
themselves against any claim of liability in the premises. The obligations of
the Company under this Section 8.6 to compensate or indemnify the Trustee and
to pay or reimburse the Trustee for expenses, disbursements and advances shall
be secured by a lien prior to that of the Notes upon all property and funds
held or collected by the Trustee as such, except, subject to the effect of
Sections 4.3 and 7.6, funds held in trust herewith for the benefit of the
holders of particular Notes prior to the date of the accrual of such unpaid
compensation or indemnifiable claim. The obligation of the Company under this
Section shall survive the satisfaction and discharge of this Indenture. The
indemnification provided in this Section 8.6 shall extend to the officers,
directors, agents and employees of the Trustee.
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When the Trustee and its agents and any authenticating agent incur
expenses or render services after an Event of Default specified in Section
7.1(i) or (j) occurs, the expenses and the compensation for the services are
intended to constitute expenses of administration under any bankruptcy,
insolvency or similar laws.
Section 8.7 Officers' Certificate as Evidence. Except as otherwise
provided in Section 8.1, whenever in the administration of the provisions of
this Indenture the Trustee shall deem it necessary or desirable that a matter
be proved or established prior to taking or omitting any action hereunder, such
matter (unless other evidence in respect thereof be herein specifically
prescribed) may, in the absence of negligence, willful misconduct, recklessness
and bad faith on the part of the Trustee, be deemed to be conclusively proved
and established by an Officers' Certificate delivered to the Trustee, and such
Officers' Certificate, in the absence of negligence, willful misconduct,
recklessness and bad faith on the part of the Trustee, shall be full warrant to
the Trustee for any action taken or omitted by it under the provisions of this
Indenture upon the faith thereof.
Section 8.8 Conflicting Interests of Trustee. After qualification
under the Trust Indenture Act, if the Trustee has or shall acquire a
conflicting interest within the meaning of the Trust Indenture Act, the Trustee
shall either eliminate such interest or resign, to the extent and in the manner
provided by, and subject to the provisions of, the Trust Indenture Act and this
Indenture.
Section 8.9 Eligibility of Trustee. There shall at all times be a
Trustee hereunder which shall be a person that is eligible pursuant to the
Trust Indenture Act to act as such and has a combined capital and surplus
(together with its corporate parent) of at least $50,000,000. If such person
publishes reports of condition at least annually, pursuant to law or to the
requirements of any supervising or examining authority, then for the purposes
of this Section, the combined capital and surplus of such person shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. If at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article.
Section 8.10 Resignation or Removal of Trustee.
(a) The Trustee may at any time resign by giving written
notice of such resignation to the Company and by mailing notice
thereof to the holders of Notes at their addresses as they shall
appear on the Note register. Upon receiving such notice of
resignation, the Company shall promptly appoint a successor trustee by
written instrument, in duplicate, executed by order of the Board of
Directors, one copy of which
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instrument shall be delivered to the resigning Trustee and one copy to
the successor trustee. If no successor trustee shall have been so
appointed and have accepted appointment sixty (60) days after the
mailing of such notice of resignation to the Noteholders, the
resigning Trustee may petition any court of competent jurisdiction for
the appointment of a successor trustee, or any Noteholder who has been
a bona fide holder of a Note or Notes for at least six months may,
subject to the provisions of Section 7.9, on behalf of himself and all
others similarly situated, petition any such court for the appointment
of a successor trustee. Such court may thereupon, after such notice,
if any, as it may deem proper and prescribe, appoint a successor
trustee.
(b) In case at any time any of the following shall occur:
(1) the Trustee shall fail to comply with
Section 8.8 within a reasonable time after written request
therefor by the Company or by any Noteholder who has been a
bona fide holder of a Note or Notes for at least six months,
or
(2) the Trustee shall cease to be eligible in
accordance with the provisions of Section 8.9 and shall fail
to resign after written request therefor by the Company or by
any such Noteholder, or
(3) the Trustee shall become incapable of
acting, or shall be adjudged a bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be
appointed, or any public officer shall take charge or control
of the Trustee or of its property or affairs for the purpose
of rehabilitation, conservation or liquidation,
then, in any such case, the Company may by a Board resolution remove
the Trustee and appoint a successor trustee by written instrument, in
duplicate, executed by order of the Board of Directors, one copy of
which instrument shall be delivered to the Trustee so removed and one
copy to the successor trustee, or, subject to the provisions of
Section 7.9, any Noteholder who has been a bona fide holder of a Note
or Notes for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a
successor trustee. Such court may thereupon, after such notice, if
any, as it may deem proper and prescribe, remove the Trustee and
appoint a successor trustee.
(c) The holders of a majority in aggregate principal
amount of the Notes at the time outstanding may at any time remove the
Trustee and nominate a successor trustee which shall be deemed
appointed as successor trustee unless within ten (10) days after
notice to the Company of such nomination the Company objects thereto,
in which case the Trustee so removed or any Noteholder, upon the terms
and conditions and otherwise as in Section 8.10(a) provided, may
petition any court of competent jurisdiction for an
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appointment of a successor trustee.
(d) Any resignation or removal of the Trustee and
appointment of a successor trustee pursuant to any of the provisions
of this Section 8.10 shall become effective upon acceptance of
appointment by the successor trustee as provided in Section 8.11.
Section 8.11 Acceptance by Successor Trustee. Any successor trustee
appointed as provided in Section 8.10 shall execute, acknowledge and deliver to
the Company and to its predecessor trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become vested with all the rights,
powers, duties and obligations of its predecessor hereunder, with like effect
as if originally named as trustee herein; but, nevertheless, on the written
request of the Company or of the successor trustee, the trustee ceasing to act
shall, upon payment of any amounts then due it pursuant to the provisions of
Section 8.6, execute and deliver an instrument transferring to such successor
trustee all the rights and powers of the trustee so ceasing to act. Upon
request of any such successor trustee, the Company shall execute any and all
instruments in writing for more fully and certainly vesting in and confirming
to such successor trustee all such rights and powers. Any trustee ceasing to
act shall, nevertheless, retain a lien upon all property and funds held or
collected by such trustee as such, except for funds held in trust for the
benefit of holders of particular Notes, to secure any amounts then due it
pursuant to the provisions of Section 8.6.
No successor trustee shall accept appointment as provided in this
Section 8.11 unless at the time of such acceptance such successor trustee shall
be qualified under the provisions of Section 8.8 and be eligible under the
provisions of Section 8.9.
Upon acceptance of appointment by a successor trustee as provided in
this Section 8.11, each of the Company and the former trustee shall mail or
cause to be mailed notice of the succession of such trustee hereunder to the
holders of Notes at their addresses as they shall appear on the Note register.
If the Company fails to mail such notice within ten (10) days after acceptance
of appointment by the successor trustee, the successor trustee shall cause such
notice to be mailed at the expense of the Company.
Section 8.12 Succession by Merger, Etc. Any corporation or other
entity 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 or
other entity succeeding to all or substantially all of the corporate trust
business of the Trustee (including the trust created by this Indenture), shall
be the successor to the Trustee hereunder without the execution or filing of
any paper or any further act on the part of any of the parties hereto, provided
that in the case of any corporation succeeding to all or substantially all of
the corporate trust business of the Trustee such corporation shall be qualified
under the provisions of Section 8.8 and eligible under the provisions of
Section 8.9.
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In case at the time such successor to the Trustee shall succeed to the
trusts created by this Indenture, any of the Notes shall have been
authenticated but not delivered, any such successor to the Trustee may adopt
the certificate of authentication of any predecessor trustee or authenticating
agent appointed by such predecessor trustee, and deliver such Notes so
authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Trustee or an authenticating agent
appointed by such successor trustee may authenticate such Notes either in the
name of any predecessor trustee hereunder or in the name of the successor
trustee; and in all such cases such certificates shall have the full force
which it is anywhere in the Notes or in this Indenture provided that the
certificate of the Trustee shall have; provided, however, that the right to
adopt the certificate of authentication of any predecessor Trustee or to
authenticate Notes in the name of any predecessor Trustee shall apply only to
its successor or successors by merger, conversion or consolidation.
Section 8.13 Limitation on Rights of Trustee as Creditor. If and
when the Trustee shall be or become a creditor of the Company (or any other
obligor upon the Notes), after qualification under the Trust Indenture Act, the
Trustee shall be subject to the provisions of the Trust Indenture Act regarding
the collection of the claims against the Company (or any such other obligor).
ARTICLE IX
CONCERNING THE NOTEHOLDERS
Section 9.1 Action by Noteholders. Whenever in this Indenture it
is provided that the holders of a specified percentage in aggregate principal
amount of the Notes may take any action (including the making of any demand or
request, the giving of any notice, consent or waiver or the taking of any other
action), the fact that at the time of taking any such action, the holders of
such specified percentage have joined therein may be evidenced (a) by any
instrument or any number of instruments of similar tenor executed by
Noteholders in person or by agent or proxy appointed in writing, or (b) by the
record of the holders of Notes voting in favor thereof at any meeting of
Noteholders duly called and held in accordance with the provisions of Article
X, or (c) by a combination of such instrument or instruments and any such
record of such a meeting of Noteholders. Whenever the Company or the Trustee
solicits the taking of any action by the holders of the Notes, the Company or
the Trustee may fix in advance of such solicitation, a date as the record date
for determining holders entitled to take such action. The record date shall be
not more than fifteen (15) days prior to the date of commencement of
solicitation of such action.
Section 9.2 Proof of Execution by Noteholders. Subject to the
provisions of Sections 8.1, 8.2 and 10.5, proof of the execution of any
instrument by a Noteholder or his agent or proxy shall be sufficient if made in
accordance with such reasonable rules and regulations as may be
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prescribed by the Trustee or in such manner as shall be satisfactory to the
Trustee. The holding of Notes shall be proved by the Note register or by a
certificate of the Note registrar. The record of any Noteholders' meeting shall
be proved in the manner provided in Section 10.6.
Section 9.3 Who Are Deemed Absolute Owners. The Company, the
Trustee, any authenticating agent, any paying agent, any conversion agent and
any Note registrar may deem the person in whose name such Note shall be
registered upon the Note register to be, and may treat him as, the absolute
owner of such Note (whether or not such Note shall be overdue and
notwithstanding any notation of ownership or other writing thereon) for the
purpose of receiving payment of or on account of the principal of, premium, if
any, and interest on such Note, for conversion of such Note and for all other
purposes; and neither the Company nor the Trustee nor any paying agent nor any
conversion agent nor any Note registrar shall be affected by any notice to the
contrary. All such payments so made to any holder for the time being, or upon
his order, shall be valid, and, to the extent of the sum or sums so paid,
effectual to satisfy and discharge the liability for monies payable upon any
such Note.
Section 9.4 Company-Owned Notes Disregarded. In determining
whether the holders of the requisite aggregate principal amount of Notes have
concurred in any direction, consent, waiver or other action under this
Indenture, Notes which are owned by the Company or any other obligor on the
Notes or by any person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company or any other obligor
on the Notes shall be disregarded and deemed not to be outstanding for the
purpose of any such determination; provided that for the purposes of
determining whether the Trustee shall be protected in relying on any such
direction, consent, waiver or other action only Notes which a Responsible
Officer knows are so owned shall be so disregarded. Notes so owned which have
been pledged in good faith may be regarded as outstanding for the purposes of
this Section 9.4 if the pledgee shall establish to the satisfaction of the
Trustee the pledgee's right to vote such Notes and that the pledgee is not the
Company, any other obligor on the Notes or a person directly or indirectly
controlling or controlled by or under direct or indirect common control with
the Company or any such other obligor. In the case of a dispute as to such
right, any decision by the Trustee taken upon the advice of counsel shall be
full protection to the Trustee. Upon request of the Trustee, the Company shall
furnish to the Trustee promptly an Officers' Certificate listing and
identifying all Notes, if any, known by the Company to be owned or held by or
for the account of any of the above described persons; and, subject to Section
8.1, the Trustee shall be entitled to accept such Officers' Certificate as
conclusive evidence of the facts therein set forth and of the fact that all
Notes not listed therein are outstanding for the purpose of any such
determination.
Section 9.5 Revocation of Consents; Future Holders Bound. At any
time prior to (but not after) the evidencing to the Trustee, as provided in
Section 9.1, of the taking of any action by the holders of the percentage in
aggregate principal amount of the Notes specified in this Indenture in
connection with such action, any holder of a Note which is shown by the
evidence to be included in the Notes the holders of which have consented to
such action may, by filing
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written notice with the Trustee at its Corporate Trust Office and upon proof of
holding as provided in Section 9.2, revoke such action so far as concerns such
Note. Except as aforesaid, any such action taken by the holder of any Note
shall be conclusive and binding upon such holder and upon all future holders
and owners of such Note and of any Notes issued in exchange or substitution
therefor, irrespective of whether any notation in regard thereto is made upon
such Note or any Note issued in exchange or substitution therefor.
ARTICLE X
NOTEHOLDERS' MEETINGS
Section 10.1 Purpose of Meetings. A meeting of Noteholders may be
called at any time and from time to time pursuant to the provisions of this
Article X for any of the following purposes:
(1) to give any notice to the Company or to the Trustee or
to give any directions to the Trustee permitted under this Indenture,
or to consent to the waiving of any default or Event of Default
hereunder and its consequences, or to take any other action authorized
to be taken by Noteholders pursuant to any of the provisions of
Article VII;
(2) to remove the Trustee and nominate a successor trustee
pursuant to the provisions of Article VIII;
(3) to consent to the execution of an indenture or
indentures supplemental hereto pursuant to the provisions of Section
11.2;
(4) to take any other action authorized to be taken by or
on behalf of the holders of any specified aggregate principal amount
of the Notes under any other provision of this Indenture or under
applicable law; or
(5) to take any other action authorized by this Indenture
or under applicable law.
Section 10.2 Call of Meetings by Trustee. The Trustee may at any
time call a meeting of Noteholders to take any action specified in Section
10.1, to be held at such time and at such place in the Borough of Manhattan,
The City of New York, as the Trustee shall determine. Notice of every meeting
of the Noteholders, setting forth the time and the place of such meeting and in
general terms the action proposed to be taken at such meeting and the
establishment of any record date pursuant to Section 9.1, shall be mailed to
holders of Notes at their addresses as they shall appear on the Note register.
Such notice shall also be mailed to the Company. Such
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notices shall be mailed not less than twenty (20) nor more than ninety (90)
days prior to the date fixed for the meeting.
Any meeting of Noteholders shall be valid without notice if the
holders of all Notes then outstanding are present in person or by proxy or if
notice is waived before or after the meeting by the holders of all Notes
outstanding, and if the Company and the Trustee are either present by duly
authorized representatives or have, before or after the meeting, waived notice.
Section 10.3 Call of Meetings by Company or Noteholders. In case at
any time the Company, pursuant to a resolution of its Board of Directors, or
the holders of at least 10% in aggregate principal amount of the Notes then
outstanding, shall have requested the Trustee to call a meeting of Noteholders,
by written request setting forth in reasonable detail the action proposed to be
taken at the meeting, and the Trustee shall not have mailed the notice of such
meeting within twenty (20) days after receipt of such request, then the Company
or such Noteholders may determine the time and the place for such meeting and
may call such meeting to take any action authorized in Section 10.1, by mailing
notice thereof as provided in Section 10.2.
Section 10.4 Qualifications for Voting. To be entitled to vote at
any meeting of Noteholders a person shall (a) be a holder of one or more Notes
on the record date pertaining to such meeting or (b) be a person appointed by
an instrument in writing as proxy by a holder of one or more Notes. The only
persons who shall be entitled to be present or to speak at any meeting of
Noteholders shall be the persons entitled to vote at such meeting and their
counsel and any representatives of the Trustee and its counsel and any
representatives of the Company and its counsel.
Section 10.5 Regulations. Notwithstanding any other provisions of
this Indenture, the Trustee may make such reasonable regulations as it may deem
advisable for any meeting of Noteholders, in regard to proof of the holding of
Notes and of the appointment of proxies, and in regard to the appointment and
duties of inspectors of votes, the submission and examination of proxies,
certificates and other evidence of the right to vote, and such other matters
concerning the conduct of the meeting as it shall think fit.
The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Noteholders as provided in Section 10.3, in which case the
Company or the Noteholders calling the meeting, as the case may be, shall in
like manner appoint a temporary chairman. A permanent chairman and a permanent
secretary of the meeting shall be elected by vote of the holders of a majority
in principal amount of the Notes represented at the meeting and entitled to
vote at the meeting.
Subject to the provisions of Section 9.4, at any meeting each
Noteholder or proxyholder shall be entitled to one vote for each $1,000
principal amount of Notes held or represented by him; provided, however, that
no vote shall be cast or counted at any meeting in respect of any
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Note challenged as not outstanding and ruled by the chairman of the meeting to
be not outstanding. The chairman of the meeting shall have no right to vote
other than by virtue of Notes held by him or instruments in writing as
aforesaid duly designating him as the proxy to vote on behalf of other
Noteholders. Any meeting of Noteholders duly called pursuant to the provisions
of Section 10.2 or 10.3 may be adjourned from time to time by the holders of a
majority of the aggregate principal amount of Notes represented at the meeting,
whether or not constituting a quorum, and the meeting may be held as so
adjourned without further notice.
Section 10.6 Voting. The vote upon any resolution submitted to any
meeting of Noteholders shall be by written ballot on which shall be subscribed
the signatures of the holders of Notes or of their representatives by proxy and
the principal amount of the Notes held or represented by them. The permanent
chairman of the meeting shall appoint two inspectors of votes who shall count
all votes cast at the meeting for or against any resolution and who shall make
and file with the secretary of the meeting their verified written reports in
duplicate of all votes cast at the meeting. A record in duplicate of the
proceedings of each meeting of Noteholders shall be prepared by the secretary
of the meeting and there shall be attached to said record the original reports
of the inspectors of votes on any vote by ballot taken thereat and affidavits
by one or more persons having knowledge of the facts setting forth a copy of
the notice of the meeting and showing that said notice was mailed as provided
in Section 10.2. The record shall show the principal amount of the Notes voting
in favor of or against any resolution. The record shall be signed and verified
by the affidavits of the permanent chairman and secretary of the meeting and
one of the duplicates shall be delivered to the Company and the other to the
Trustee to be preserved by the Trustee, the latter to have attached thereto the
ballots voted at the meeting.
Any record so signed and verified shall be conclusive evidence of the
matters therein stated.
Section 10.7 No Delay of Rights by Meeting. Nothing in this Article
X contained shall be deemed or construed to authorize or permit, by reason of
any call of a meeting of Noteholders or any rights expressly or impliedly
conferred hereunder to make such call, any hindrance or delay in the exercise
of any right or rights conferred upon or reserved to the Trustee or to the
Noteholders under any of the provisions of this Indenture or of the Notes.
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ARTICLE XI
SUPPLEMENTAL INDENTURES
Section 11.1 Supplemental Indentures Without Consent of
Noteholders. The Company, when authorized by the resolutions of the Board of
Directors, and the Trustee may from time to time and at any time enter into an
indenture or indentures supplemental hereto for one or more of the following
purposes:
(a) to make provision with respect to the conversion
rights of the holders of Notes pursuant to the requirements of Section
15.6;
(b) subject to Article IV, to convey, transfer, assign,
mortgage or pledge to the Trustee as security for the Notes, any
property or assets;
(c) to evidence the succession of another corporation to
the Company, or successive successions, and the assumption by the
successor corporation of the covenants, agreements and obligations of
the Company pursuant to Article XII;
(d) to add to the covenants of the Company such further
covenants, restrictions or conditions for the benefit of the holders
of Notes, and to make the occurrence, or the occurrence and
continuance, of a default in any such additional covenants,
restrictions or conditions a default or an Event of Default permitting
the enforcement of all or any of the several remedies provided in this
Indenture as herein set forth; provided, however, that in respect of
any such additional covenant, restriction or condition such
supplemental indenture may provide for a particular period of grace
after default (which period may be shorter or longer than that allowed
in the case of other defaults) or may provide for an immediate
enforcement upon such default or may limit the remedies available to
the Trustee upon such default;
(e) to provide for the issuance under this Indenture of
Notes in coupon form (including Notes registrable as to principal
only) and to provide for exchangeability of such Notes with the Notes
issued hereunder in fully registered form and to make all appropriate
changes for such purpose;
(f) to cure any ambiguity or to correct or supplement any
provision contained herein or in any supplemental indenture which may
be defective or inconsistent with any other provision contained herein
or in any supplemental indenture, or to make such other provisions in
regard to matters or questions arising under this Indenture which
shall not materially adversely affect the interests of the holders of
the Notes;
(g) to evidence and provide for the acceptance of
appointment hereunder by a
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successor Trustee with respect to the Notes; or
(h) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the
qualifications of this Indenture under the Trust Indenture Act, or
under any similar federal statute hereafter enacted.
The Trustee is hereby authorized to join with the Company in the
execution of any such supplemental indenture, to make any further appropriate
agreements and stipulations which may be therein contained and to accept the
conveyance, transfer and assignment of any property thereunder, but the Trustee
shall not be obligated to, but may in its discretion, enter into any
supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this
Section 11.1 may be executed by the Company and the Trustee without the consent
of the holders of any of the Notes at the time outstanding, notwithstanding any
of the provisions of Section 11.2.
Section 11.2 Supplemental Indentures With Consent of Noteholders.
With the consent (evidenced as provided in Article IX) of the holders of not
less than a majority in aggregate principal amount of the Notes at the time
outstanding (determined in accordance with Section 9.4), the Company, when
authorized by the resolutions of the Board of Directors, and the Trustee may
from time to time and at any time enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or any
supplemental indenture or of modifying in any manner the rights of the holders
of the Notes; provided, however, that no such supplemental indenture shall (i)
extend the fixed maturity of any Note, or reduce the rate or extend the time of
payment of interest thereon, or reduce the principal amount thereof or premium,
if any, thereon, or reduce any amount payable on redemption or repurchase
thereof, impair, or change in any respect adverse to the holder of Notes, the
obligation of the Company to repurchase any Note at the option of the holder
upon the happening of a Repurchase Event, or impair or adversely affect the
right of any Noteholder to institute suit for the payment thereof, or change
the currency in which the Notes are payable, or impair or change in any respect
adverse to the Noteholders the right to convert the Notes into Common Stock
subject to the terms set forth herein, including Section 15.6, or modify the
provisions of this Indenture with respect to the subordination of the Notes in
a manner adverse to the Noteholders, without the consent of the holder of each
Note so affected, or (ii) reduce the aforesaid percentage of Notes, the holders
of which are required to consent to any such supplemental indenture, without
the consent of the holders of all Notes then outstanding.
Upon the request of the Company, accompanied by a copy of the
resolutions of the Board of Directors certified by its Secretary or Assistant
Secretary authorizing the execution of any such supplemental indenture, and
upon the filing with the Trustee of evidence of the consent of Noteholders as
aforesaid, the Trustee shall join with the Company in the execution of such
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supplemental indenture unless such supplemental indenture affects the Trustee's
own rights, duties or immunities under this Indenture or otherwise, in which
case the Trustee may in is discretion, but shall not be obligated to, enter
into such supplemental indenture.
It shall not be necessary for the consent of the Noteholders under
this Section 11.2 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.
Section 11.3 Effect of Supplemental Indentures. Any supplemental
indenture executed pursuant to the provisions of this Article XI shall comply
with the Trust Indenture Act, as then in effect. Upon the execution of any
supplemental indenture pursuant to the provisions of this Article XI, this
Indenture shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitation of rights, obligations, duties
and immunities under this Indenture of the Trustee, the Company and the holders
of Notes shall thereafter be determined, exercised and enforced hereunder
subject in all respects to such modifications and amendments and all the terms
and conditions of any such supplemental indenture shall be and be deemed to be
part of the terms and conditions of this Indenture for any and all purposes.
Section 11.4 Notation on Notes. Notes authenticated and delivered
after the execution of any supplemental indenture pursuant to the provisions of
this Article XI may bear a notation in form approved by the Trustee as to any
matter provided for in such supplemental indenture. If the Company or the
Trustee shall so determine, new Notes so modified as to conform, in the opinion
of the Trustee and the Board of Directors, to any modification of this
Indenture contained in any such supplemental indenture may, at the Company's
expense, be prepared and executed by the Company, authenticated by the Trustee
(or an authenticating agent duly appointed by the Trustee pursuant to Section
17.11) and delivered in exchange for the Notes then outstanding, upon surrender
of such Notes then outstanding.
Section 11.5 Evidence of Compliance of Supplemental Indenture to Be
Furnished Trustee. The Trustee, subject to the provisions of Sections 8.1 and
8.2, may receive an Officers' Certificate and an Opinion of Counsel as
conclusive evidence that any supplemental indenture executed pursuant hereto
complies with the requirements of this Article XI.
ARTICLE XII
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
Section 12.1 Company May Consolidate, Etc. on Certain Terms. The
Company shall not, directly or indirectly, consolidate with or merge with or
into any other Person or sell, lease, convey or transfer all its properties and
assets substantially as an entirety, whether in a single transaction or a
series of related transactions, to any Person or group of affiliated Persons
unless:
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(a) either (i) in the case of a merger or consolidation
that does not involve a transfer of all or substantially all of the Company's
properties and assets, the Company is the surviving entity or (ii) in case the
Company shall consolidate with or merge into another Person or sell, lease,
convey or transfer all its properties and assets substantially as an entirety,
whether in a single transaction or a series of related transactions, to any
Person, the Person formed by such consolidation or into which the Company is
merged, or the Person which acquires by sale, 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) on all of the Notes 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 the applicable conversion rights set forth
in Section 15.6 and the repurchase rights set forth in Article XVI;
(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 happened and be continuing; and
(c) 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 Article IX.
Section 12.2 Successor Corporation to Be Substituted. In case of
any such consolidation, merger, sale, conveyance or lease in accordance with
Section 12.1, and, where required in accordance with Section 12.1(a) upon the
assumption by the successor corporation, by supplemental indenture, executed
and delivered to the Trustee and satisfactory in form to the Trustee, of the
due and punctual payment of the principal of and premium, if any, and interest
on all of the Notes and the due and punctual performance of all of the
covenants and conditions of this Indenture to be performed by the Company, such
successor corporation shall succeed to and be substituted for the Company, with
the same effect as if it had been named herein as the party of the first part.
Such successor corporation thereupon may cause to be signed, and may issue
either in its own name or in the name of SportsLine USA, Inc. any or all of the
Notes issuable hereunder which theretofore shall not have been signed by the
Company and delivered to the Trustee; and, upon the order of such successor
corporation instead of the Company and subject to all the terms, conditions and
limitations in this Indenture prescribed, the Trustee shall
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authenticate and shall deliver, or cause to be authenticated and delivered, any
Notes which previously shall have been signed and delivered by the officers of
the Company to the Trustee for authentication, and any Notes which such
successor corporation thereafter shall cause to be signed and delivered to the
Trustee for that purpose. All the Notes so issued shall in all respects have
the same legal rank and benefit under this Indenture as the Notes theretofore
or thereafter issued in accordance with the terms of this Indenture as though
all of such Notes had been issued at the date of the execution hereof. In the
event of any such consolidation, merger, sale, conveyance or lease, the person
named as the "Company" in the first paragraph of this Indenture or any
successor which shall thereafter have become such in the manner prescribed in
this Article XII may be dissolved, wound up and liquidated at any time
thereafter and such person shall be released from its liabilities as obligor
and maker of the Notes and from its obligations under this Indenture.
In case of any such consolidation, merger, sale, conveyance or lease,
such changes in phraseology and form (but not in substance) may be made in the
Notes thereafter to be issued as may be appropriate.
Section 12.3 Opinion of Counsel to Be Given Trustee. The Trustee,
subject to Sections 8.1 and 8.2, shall receive an Officers' Certificate and an
Opinion of Counsel as conclusive evidence that any such consolidation, merger,
sale, conveyance or lease and any such assumption complies with the provisions
of this Article XII.
ARTICLE XIII
SATISFACTION AND DISCHARGE OF INDENTURE
Section 13.1 Discharge of Indenture. When (a) the Company shall
deliver to the Trustee for cancellation all Notes theretofore authenticated
(other than any Notes which have been destroyed, lost or stolen and in lieu of
or in substitution for which other Notes shall have been authenticated and
delivered) and not theretofore canceled, or (b) all the Notes not theretofore
canceled or delivered to the Trustee for cancellation shall have become due and
payable, or are by their terms to become due and payable within one year or are
to be called for redemption within one year under arrangements satisfactory to
the Trustee for the giving of notice of redemption, and the Company shall
deposit with the Trustee, in trust, funds sufficient to pay at maturity or upon
redemption of all of the Notes (other than any Notes which shall have been
mutilated, destroyed, lost or stolen and in lieu of or in substitution for
which other Notes shall have been authenticated and delivered) not theretofore
canceled or delivered to the Trustee for cancellation, including principal and
premium, if any, and interest due or to become due to such date of maturity or
redemption date, as the case may be, and if in either case the Company shall
also pay or cause to be paid all other sums payable hereunder by the Company,
then this Indenture shall cease to be of further effect (except as to (i)
remaining rights of registration of
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transfer, substitution and exchange and conversion of Notes, (ii) rights
hereunder of Noteholders to receive payments of principal of and premium, if
any, and interest on, the Notes and the other rights, duties and obligations of
Noteholders, as beneficiaries hereof with respect to the amounts, if any, so
deposited with the Trustee and (iii) the rights, obligations and immunities of
the Trustee hereunder), and the Trustee, on demand of the Company accompanied
by an Officers' Certificate and an Opinion of Counsel as required by Section
17.5 and at the cost and expense of the Company, shall execute proper
instruments acknowledging satisfaction of and discharging this Indenture; the
Company, however, hereby agreeing to reimburse the Trustee for any costs or
expenses thereafter reasonably and properly incurred by the Trustee and to
compensate the Trustee for any services thereafter reasonably and properly
rendered by the Trustee in connection with this Indenture or the Notes.
Section 13.2 Deposited Monies to Be Held in Trust by Trustee.
Subject to Section 13.4, all monies deposited with the Trustee pursuant to
Section 13.1 shall be held in trust and applied by it to the payment,
notwithstanding the provisions of Article IV, either directly or through any
paying agent (including the Company if acting as its own paying agent), to the
holders of the particular Notes for the payment or redemption of which such
monies have been deposited with the Trustee, of all sums due and to become due
thereon for principal and interest and premium, if any.
Section 13.3 Paying Agent to Repay Monies Held. Upon the
satisfaction and discharge of this Indenture, all monies then held by any
paying agent of the Notes (other than the Trustee) shall, upon demand of the
Company, be repaid to it or paid to the Trustee, and thereupon such paying
agent shall be released from all further liability with respect to such monies.
Section 13.4 Return of Unclaimed Monies. Subject to the
requirements of applicable law, any monies deposited with or paid to the
Trustee for payment of the principal of, premium, if any, or interest on Notes
and not applied but remaining unclaimed by the holders of Notes for two years
after the date upon which the principal of, premium, if any, or interest on
such Notes, as the case may be, shall have become due and payable, shall be
repaid to the Company by the Trustee on demand and all liability of the Trustee
shall thereupon cease with respect to such monies; and the holder of any of the
Notes shall thereafter look only to the Company for any payment which such
holder may be entitled to collect unless an applicable abandoned property law
designates another person.
Section 13.5 Reinstatement. If (i) the Trustee or the paying agent
is unable to apply any money in accordance with Section 13.2 by reason of any
order or judgment of any court or governmental authority enjoining, restraining
or otherwise prohibiting such application and (ii) the holders of at least a
majority in principal amount of the then outstanding Notes so request by
written notice to the Trustee, the Company's obligations under this Indenture
and the Notes shall be revived and reinstated as though no deposit had occurred
pursuant to Section 13.1 until such time as the Trustee or the paying agent is
permitted to apply all such money in accordance
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with Section 13.2; provided, however, that if the Company makes any payment of
interest on or principal of any Note following the reinstatement of its
obligations, the Company shall be subrogated to the rights of the holders of
such Notes to receive such payment from the money held by the Trustee or paying
agent.
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ARTICLE XIV
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
Section 14.1 Indenture and Notes Solely Corporate Obligations. No
recourse for the payment of the principal of or premium, if any, or interest on
any Note, or for any claim based thereon or otherwise in respect thereof, and
no recourse under or upon any obligation, covenant or agreement of the Company
in this Indenture or in any supplemental indenture or in any Note, or because
of the creation of any indebtedness represented thereby, shall be had against
any incorporator, stockholder, employee, agent, officer or director or
subsidiary, as such, past, present or future, of the Company or of any
successor corporation, either directly or through the Company or any successor
corporation, whether by virtue of any constitution, statute or rule of law, or
by the enforcement of any assessment or penalty or otherwise; it being
expressly understood that all such liability is hereby expressly waived and
released as a condition of, and as a consideration for, the execution of this
Indenture and the issue of the Notes.
ARTICLE XV
CONVERSION OF NOTES
Section 15.1 Right to Convert. Subject to and upon compliance with
the provisions of this Indenture, the holder of any Note shall have the right,
at his option, at any time following the date of original issuance of the Notes
and prior to the close of business on April 1, 2006 (except that, with respect
to any Note or portion of a Note which shall be called for redemption, such
right shall terminate, except as provided in the fifth paragraph of Section
15.2 and Section 3.4, at the close of business on the Business Day next
preceding the date fixed for redemption of such Note or portion of a Note
unless the Company shall default in payment due upon redemption thereof) to
convert the principal amount of any such Note, or any portion of such principal
amount which is $1,000 or an integral multiple thereof, into that number of
fully paid and non-assessable shares of Common Stock (as such shares shall then
be constituted) obtained by dividing the principal amount of the Note or
portion thereof surrendered for conversion by the Conversion Price in effect at
such time, by surrender of the Note so to be converted in whole or in part in
the manner provided in Section 15.2. A holder of Notes is not entitled to any
rights of a holder of Common Stock until such holder has converted his Notes to
Common Stock, and only to the extent such Notes are deemed to have been
converted to Common Stock under this Article XV. A Note with respect to which a
holder has delivered a notice in accordance with Section 16.2 regarding such
holder's election to require the Company to repurchase such holder's Notes
following the occurrence of a Repurchase Event may be converted in accordance
with this Article XV only if such holder withdraws such notice by delivering a
written notice of withdrawal to the Company prior to the close of business on
last Business Day prior to the day fixed for repurchase.
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Section 15.2 Exercise of Conversion Privilege; Issuance of Common
Stock on Conversion; No Adjustment for Interest or Dividends. In order to
exercise the conversion privilege with respect to any Note in definitive form,
the holder of any such Note to be converted in whole or in part shall surrender
such Note, duly endorsed, at an office or agency maintained by the Company
pursuant to Section 5.2, accompanied by the funds, if any, required by the
penultimate paragraph of this Section 15.2, and shall give written notice of
conversion in the form provided on the Notes (or such other notice which is
acceptable to the Company) to the office or agency that the holder elects to
convert such Note or such portion thereof specified in said notice. Such notice
shall also state the name or names (with address) in which the certificate or
certificates for shares of Common Stock which shall be issuable on such
conversion shall be issued, and shall be accompanied by transfer taxes, if
required pursuant to Section 15.7. Each such Note surrendered for conversion
shall, unless the shares issuable on conversion are to be issued in the same
name as the registration of such Note, be duly endorsed by, or be accompanied
by instruments of transfer in form satisfactory to the Company duly executed
by, the holder or his duly authorized attorney.
In order to exercise the conversion privilege with respect to any
interest in the Global Note, the beneficial holder must complete the
appropriate instruction form for conversion pursuant to the Depositary's
book-entry conversion program, deliver by book-entry delivery an interest in
the Global Note, furnish appropriate endorsements and transfer documents if
required by the Company or the Trustee or conversion agent, and pay the funds,
if any, required by the penultimate paragraph of this Section 15.2 and any
transfer taxes, if required pursuant to Section 15.7.
As promptly as practicable after satisfaction of the requirements for
conversion set forth above (but in no event later than three (3) Business Days
after satisfaction of such requirements for conversion), subject to compliance
with any restrictions on transfer if shares issuable on conversion are to be
issued in a name other than that of the Noteholder (as if such transfer were a
transfer of the Note or Notes (or portion thereof) so converted), the Company
shall issue and shall deliver to such holder at the office or agency maintained
by the Company for such purpose pursuant to Section 5.2, a certificate or
certificates for the number of full shares of Common Stock issuable upon the
conversion of such Note or portion thereof in accordance with the provisions of
this Article and a check or cash in respect of any fractional interest in
respect of a share of Common Stock arising upon such conversion, as provided in
Section 15.3 (which payment, if any, shall be paid no later than three (3)
Business Days after satisfaction of the requirements for conversion set forth
above). In case any Note of a denomination greater than $1,000 shall be
surrendered for partial conversion, and subject to Section 2.3, the Company
shall execute and the Trustee shall authenticate and deliver to the holder of
the Note so surrendered, without charge to him, a new Note or Notes in
authorized denominations in an aggregate principal amount equal to the
unconverted portion of the surrendered Note.
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Each conversion shall be deemed to have been effected as to any such
Note (or portion thereof) on the date on which the requirements set forth above
in this Section 15.2 have been satisfied as to such Note (or portion thereof),
and the person in whose name any certificate or certificates for shares of
Common Stock shall be issuable upon such conversion shall be deemed to have
become on said date the holder of record of the shares represented thereby;
provided, however, that any such surrender on any date when the stock transfer
books of the Company shall be closed shall constitute the person in whose name
the certificates are to be issued as the record holder thereof for all purposes
on the next succeeding day on which such stock transfer books are open, but
such conversion shall be at the Conversion Price in effect on the date upon
which such Note shall be surrendered.
Any Note or portion thereof surrendered for conversion during the
period beginning after the close of business on the record date for any
interest payment date through the close of business on the Business Day next
preceding such interest payment date shall (unless such Note or portion thereof
being converted shall have been called for redemption pursuant to a redemption
notice mailed to the Noteholders in accordance with Section 3.2) be accompanied
by payment, in New York Clearing House funds or other funds acceptable to the
Company, of an amount equal to the interest otherwise payable on such interest
payment date on the principal amount being converted; provided, however, that
no such payment need be made if there shall exist at the time of conversion a
default in the payment of interest on the Notes. Except as provided above in
this Section 15.2, no adjustment shall be made for interest accrued on any Note
converted or for dividends on any shares issued upon the conversion of such
Note as provided in this Article.
Upon the conversion of an interest in the Global Note, the Trustee, or
the Custodian at the direction of the Trustee, shall make a notation on the
Global Note as to the reduction in the principal amount represented thereby.
Section 15.3 Cash Payments in Lieu of Fractional Shares. No
fractional shares of Common Stock or scrip representing fractional shares shall
be issued upon conversion of Notes. If more than one Note shall be surrendered
for conversion at one time by the same holder, the number of full shares which
shall be issuable upon conversion thereof shall be computed on the basis of the
aggregate principal amount of the Notes (or specified portions thereof to the
extent permitted hereby) so surrendered for conversion. If any fractional share
of stock otherwise would be issuable upon the conversion of any Note or Notes,
the Company shall calculate and pay a cash adjustment in lieu of such
fractional share at the current market value thereof to the holder of Notes.
The current market value of a share of Common Stock shall be the Closing Price
on the first Trading Day immediately preceding the day on which the Notes (or
specified portions thereof) are deemed to have been converted and such Closing
Price shall be determined as provided in Section 15.5(h).
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Section 15.4 Conversion Price. The conversion price shall be as
specified in the form of Note (herein called the "Conversion Price") attached
as Exhibit A hereto, subject to adjustment as provided in this Article XV.
Section 15.5 Adjustment of Conversion Price. The Conversion Price
shall be adjusted from time to time by the Company as follows:
(a) In case the Company shall hereafter pay a dividend or
make a distribution to all holders of the outstanding Common Stock in
shares of Common Stock, the Conversion Price in effect at the opening
of business on the date following the date fixed for the determination
of stockholders entitled to receive such dividend or other
distribution shall be reduced by multiplying such Conversion Price by
a fraction of which the numerator shall be the number of shares of
Common Stock outstanding at the close of business on the Record Date
(as defined in Section 15.5(h)) fixed for such determination and the
denominator shall be the sum of such number of shares and the total
number of shares constituting such dividend or other distribution,
such reduction to become effective immediately after the opening of
business on the day following the Record Date. If any dividend or
distribution of the type described in this Section 15.5(a) is declared
but not so paid or made, the Conversion Price shall again be adjusted
to the Conversion Price which would then be in effect if such dividend
or distribution had not been declared.
(b) In case the Company shall issue rights or warrants to
all holders of its outstanding shares of Common Stock entitling them
(for a period expiring within forty-five (45) days after the date
fixed for the determination of stockholders entitled to receive such
rights or warrants) to subscribe for or purchase shares of Common
Stock at a price per share less than the Current Market Price (as
defined in Section 15.5(h)) on the Record Date fixed for the
determination of stockholders entitled to receive such rights or
warrants, the Conversion Price shall be adjusted so that the same
shall equal the price determined by multiplying the Conversion Price
in effect at the opening of business on the date after such Record
Date by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding at the close of business on the
Record Date plus the number of shares which the aggregate offering
price of the total number of shares so offered for subscription or
purchase would purchase at such Current Market Price, and of which the
denominator shall be the number of shares of Common Stock outstanding
on the close of business on the Record Date plus the total number of
additional shares of Common Stock so offered for subscription or
purchase. Such adjustment shall become effective immediately after the
opening of business on the day following the Record Date fixed for
determination of stockholders entitled to receive such rights or
warrants. To the extent that shares of Common Stock are not delivered
pursuant to such rights or warrants, upon the expiration or
termination of such rights or warrants the Conversion Price shall be
readjusted to the Conversion Price which would then be in effect had
the adjustments
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made upon the issuance of such rights or warrants been made on the
basis of delivery of only the number of shares of Common Stock
actually delivered. In the event that such rights or warrants are not
so issued, the Conversion Price shall again be adjusted to be the
Conversion Price which would then be in effect if such date fixed for
the determination of stockholders entitled to receive such rights or
warrants had not been fixed. In determining whether any rights or
warrants entitle the holders to subscribe for or purchase shares of
Common Stock at less than such Current Market Price, and in
determining the aggregate offering price of such shares of Common
Stock, there shall be taken into account any consideration received
for such rights or warrants, the value of such consideration, if other
than cash, to be determined by the Board of Directors.
(c) In case the outstanding shares of Common Stock shall
be subdivided into a greater number of shares of Common Stock, the
Conversion Price in effect at the opening of business on the day
following the day upon which such subdivision becomes effective shall
be proportionately reduced, and conversely, in case outstanding shares
of Common Stock shall be combined into a smaller number of shares of
Common Stock, the Conversion Price in effect at the opening of
business on the day following the day upon which such combination
becomes effective shall be proportionately increased, such reduction
or increase, as the case may be, to become effective immediately after
the opening of business on the day following the day upon which such
subdivision or combination becomes effective.
(d) In case the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock shares of any class of
capital stock of the Company (other than any dividends or
distributions to which Section 15.5(a) applies) or evidences of its
indebtedness, cash or other assets (including securities, but
excluding (1) any rights or warrants referred to in Section 15.5(b)
and, (2) dividends and distributions (A) in connection with the
liquidation, dissolution or winding up of the Company or paid (B)
exclusively in cash and (3) any capital stock, evidences of
indebtedness, cash or assets distributed upon a merger or
consolidation to which Section 15.6 applies) (the foregoing
hereinafter in this Section 15.5(d) called the "Securities")), unless
the Company elects to reserve such Securities for distribution to the
Noteholders upon conversion of the Notes so that any such holder
converting Notes will receive upon such conversion, in addition to the
shares of Common Stock to which such holder is entitled, the amount
and kind of such Securities which such holder would have received if
such holder had converted its Notes into Common Stock immediately
prior to the Record Date (as defined in Section 15.5(h) for such
distribution of the Securities) then, in each such case, the
Conversion Price shall be reduced so that the same shall be equal to
the price determined by multiplying the Conversion Price in effect
immediately prior to the close of business on the Record Date (as
defined in Section 15.5(h)) with respect to such distribution by a
fraction of which the numerator shall be the Current Market Price
(determined as provided in Section 15.5(h)) on such date less the fair
market value (as determined by the
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Board of Directors, whose determination shall be conclusive and
described in a Board Resolution) on such date of the portion of the
Securities so distributed applicable to one share of Common Stock and
the denominator shall be such Current Market Price, such reduction to
become effective immediately prior to the opening of business on the
day following the Record Date; provided, however, that in the event
the then fair market value (as so determined) of the portion of the
Securities so distributed applicable to one share of Common Stock is
equal to or greater than the Current Market Price on the Record Date,
in lieu of the foregoing adjustment, adequate provision shall be made
so that each Noteholder shall have the right to receive upon
conversion of a Note (or any portion thereof) the amount of Securities
such holder would have received had such holder converted such Note
(or portion thereof) immediately prior to such Record Date. In the
event that such dividend or distribution is not so paid or made, the
Conversion Price shall again be adjusted to be the Conversion Price
which would then be in effect if such dividend or distribution had not
been declared. If the Board of Directors determines the fair market
value of any distribution for purposes of this Section 15.5(d) by
reference to the actual or when issued trading market for any
securities comprising all or part of such distribution, it must in
doing so consider the prices in such market over the same period (the
"Reference Period") used in computing the Current Market Price
pursuant to Section 15.5(h) to the extent possible, unless the Board
of Directors in a board resolution determines in good faith that
determining the fair market value during the Reference Period would
not be in the best interest of the Noteholder.
In the event that the Company implements a stockholder rights
plan, such rights plan shall provide that upon conversion of the Notes
the holders will receive, in addition to the Common Stock issuable
upon such conversion, the rights issued under such rights plan
(notwithstanding the occurrence of an event causing such rights to
separate from the Common Stock at or prior to the time of conversion).
Any distribution of rights or warrants pursuant to a stockholder
rights plan complying with the requirements set forth in the
immediately preceding sentence of this paragraph shall not constitute
a distribution of rights or warrants for the purposes of this Section
15.5(d).
Rights or warrants distributed by the Company to all holders
of Common Stock entitling the holders thereof to subscribe for or
purchase shares of the Company's capital stock (either initially or
under certain circumstances), which rights or warrants, until the
occurrence of a specified event or events ("Trigger Event"): (i) are
deemed to be transferred with such shares of Common Stock; (ii) are
not exercisable; and (iii) are also issued in respect of future
issuances of Common Stock, shall be deemed not to have been
distributed for purposes of this Section 15.5(d) (and no adjustment to
the Conversion Price under this Section 15.5(d) will be required)
until the occurrence of the earliest Trigger Event. If such right or
warrant is subject to subsequent events, upon the occurrence of which
such right or warrant shall become exercisable to purchase different
securities, evidences of indebtedness or other assets or entitle the
holder to purchase a
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different number or amount of the foregoing or to purchase any of the
foregoing at a different purchase price, then the occurrence of each
such event shall be deemed to be the date of issuance and record date
with respect to a new right or warrant (and a termination or
expiration of the existing right or warrant without exercise by the
holder thereof). In addition, in the event of any distribution (or
deemed distribution) of rights or warrants, or any Trigger Event or
other event (of the type described in the preceding sentence) with
respect thereto, that resulted in an adjustment to the Conversion
Price under this Section 15.5(d), (1) in the case of any such rights
or warrants which shall all have been redeemed or repurchased without
exercise by any holders thereof, the Conversion Price shall be
readjusted upon such final redemption or repurchase to give effect to
such distribution or Trigger Event, as the case may be, as though it
were a cash distribution, equal to the per share redemption or
repurchase price received by a holder of Common Stock with respect to
such rights or warrants (assuming such holder had retained such rights
or warrants), made to all holders of Common Stock as of the date of
such redemption or repurchase, and (2) in the case of such rights or
warrants all of which shall have expired or been terminated without
exercise, the Conversion Price shall be readjusted as if such rights
and warrants had never been issued.
For purposes of this Section 15.5(d) and Sections 15.5(a) and
(b), any dividend or distribution to which this Section 15.5(d) is
applicable that also includes shares of Common Stock, or rights or
warrants to subscribe for or purchase shares of Common Stock to which
Section 15.5(b) applies (or both), shall be deemed instead to be (1) a
dividend or distribution of the evidences of indebtedness, assets,
shares of capital stock, rights or warrants other than such shares of
Common Stock or rights or warrants to which Section 15.5(b) applies
(and any Conversion Price reduction required by this Section 15.5(d)
with respect to such dividend or distribution shall then be made)
immediately followed by (2) a dividend or distribution of such shares
of Common Stock or such rights or warrants (and any further Conversion
Price reduction required by Sections 15.5(a) and (b) with respect to
such dividend or distribution shall then be made, except (A) the
Record Date of such dividend or distribution shall be substituted as
"the date fixed for the determination of stockholders entitled to
receive such dividend or other distribution", "Record Date fixed for
such determination" and "Record Date" within the meaning of Section
15.5(a) and as "the date fixed for the determination of stockholders
entitled to receive such rights or warrants", "the Record Date fixed
for the determination of the stockholders entitled to receive such
rights or warrants" and "such Record Date" within the meaning of
Section 15.5(b) and (B) any shares of Common Stock included in such
dividend or distribution shall not be deemed "outstanding at the close
of business on the date fixed for such determination" within the
meaning of Section 15.5(a).
(e) In case the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock cash (excluding any cash
that is distributed upon a merger or consolidation to which Section
15.6 applies or as part of a distribution referred to in
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Section 15.5(d)), in an aggregate amount that, combined together with
(1) the aggregate amount of any other such distributions to all
holders of its Common Stock made exclusively in cash within the twelve
(12) months preceding the date of payment of such distribution, and in
respect of which no adjustment pursuant to this Section 15.5(e) has
been made, and (2) the aggregate of any cash plus the fair market
value (as determined by the Board of Directors, whose determination
shall be conclusive and described in a 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 twelve (12) months preceding the date of payment
of such distribution, and in respect of which no adjustment pursuant
to Section 15.5(f) has been made, exceeds 10% of the product of the
Current Market Price (determined as provided in Section 15.5(h)) on
the Record Date with respect to such distribution times the number of
shares of Common Stock outstanding on such date, then, and in each
such case, immediately after the close of business on such date, the
Conversion Price shall be reduced so that the same shall equal the
price determined by multiplying the Conversion Price in effect
immediately prior to the close of business on such Record Date by a
fraction (i) the numerator of which shall be equal to the Current
Market Price on the Record Date less an amount equal to the quotient
of (x) the excess of such combined amount over such 10% and (y) the
number of shares of Common Stock outstanding on the Record Date and
(ii) the denominator of which shall be equal to the Current Market
Price on such date; provided, however, that in the event the portion
of the cash so distributed applicable to one share of Common Stock is
equal to or greater than the Current Market Price of the Common Stock
on the Record Date, in lieu of the foregoing adjustment, adequate
provision shall be made so that each Noteholder shall have the right
to receive upon conversion of a Note (or any portion thereof) the
amount of cash such holder would have received had such holder
converted such Note (or portion thereof) immediately prior to such
Record Date. In the event that such dividend or distribution is not so
paid or made, the Conversion Price shall again be adjusted to be the
Conversion Price which would then be in effect if such dividend or
distribution had not been declared. Any cash distribution to all
holders of Common Stock as to which the Company makes the election
permitted by Section 15.5(n) and as to which the Company has complied
with the requirements of such Section shall be treated as not having
been made for all purposes of this Section 15.5(e)).
(f) 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 (1) the aggregate of the cash plus the
fair market value (as determined by the Board of Directors, whose
determination shall be conclusive and described in a Board
Resolution), as of the expiration of such tender offer,
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of consideration payable in respect of any other tender offers, by the
Company or any of its subsidiaries for all or any portion of the
Common Stock expiring within the twelve (12) months preceding the
expiration of such tender offer and in respect of which no adjustment
pursuant to this Section 15.5(f) has been made and (2) the aggregate
amount of any distributions to all holders of the Company's Common
Stock made exclusively in cash within twelve (12) months preceding the
expiration of such tender offer and in respect of which no adjustment
pursuant to Section 15.5(e) has been made, exceeds 10% of the product
of the Current Market Price (determined as provided in Section
15.5(h)) as of the last time (the "Expiration Time") tenders could
have been made pursuant to such tender offer (as it may be amended)
times the number of shares of Common Stock outstanding (including any
tendered shares) on the Expiration Time, then, and in each such case,
immediately prior to the opening of business on the day after the date
of the Expiration Time, the Conversion Price shall be adjusted so that
the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to close of business on
the date of the Expiration Time by a fraction of which the numerator
shall be the number of shares of Common Stock outstanding (including
any tendered shares) on the Expiration Time multiplied by the Current
Market Price of the Common Stock on the Trading Day next succeeding
the Expiration Time and the denominator shall be the sum of (x) the
fair market value (determined as aforesaid) of the aggregate
consideration payable to stockholders based on the acceptance (up to
any maximum specified in the terms of the tender offer) of all shares
validly tendered and not withdrawn as of the Expiration Time (the
shares deemed so accepted, up to any such maximum, being referred to
as the "Purchased Shares") and (y) the product of the number of shares
of Common Stock outstanding (less any Purchased Shares) on the
Expiration Time and the Current Market Price of the Common Stock on
the Trading Day next succeeding the Expiration Time, such reduction
(if any) to become effective immediately prior to the opening of
business on the day following the Expiration Time. In the event that
the Company is obligated to purchase shares pursuant to any such
tender offer, but the Company is permanently prevented by applicable
law from effecting any such purchases or all such purchases are
rescinded, the Conversion Price shall again be adjusted to be the
Conversion Price which would then be in effect if such tender offer
had not been made. If the application of this Section 15.5(f) to any
tender offer would result in an increase in the Conversion Price, no
adjustment shall be made for such tender offer under this Section
15.5(f). Any cash distribution to all holders of Common Stock as to
which the Company has made the election permitted by Section 15.5(n)
and as to which the Company has complied with the requirements of such
Section shall be treated as not having been made for all purposes of
this Section 15.5(f).
(g) In case of a tender or exchange offer made by a person
other than the Company or any Subsidiary for an amount which increases
the offeror's ownership of Common Stock to more than 25% of the Common
Stock outstanding and shall involve the payment by such person of
consideration per share of Common Stock having a fair
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market value (as determined by the Board of Directors), whose
determination shall be conclusive, and described in a resolution of
the Board of Directors at the last time (the "Expiration Time")
tenders or exchanges may be made pursuant to such tender or exchange
offer (as it shall have been amended) that exceeds the Current Market
Price of the Common Stock on the Trading Day next succeeding the
Expiration Time, and in which, as of the Expiration Time the Board of
Directors is not recommending rejection of the offer, the Conversion
Price shall be reduced so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately
prior to the Expiration Time by a fraction of which the numerator
shall be the number of shares of Common Stock outstanding (including
any tendered or exchanged shares) on the Expiration Time multiplied by
the current Market Price of the Common Stock on the Trading Day next
succeeding the Expiration Time and the denominator shall be the sum of
(x) the fair market value (determined as aforesaid) of the aggregate
consideration payable to stockholders based on the acceptance (up to
any maximum specified in the terms of the tender or exchange offer) of
all shares validly tendered or exchanged and not withdrawn as of the
Expiration Time (the shares deemed so accepted, up to any such
maximum, being referred to as the "Purchased Shares") and (y) the
product of the number of shares of Common Stock outstanding (less any
Purchased Shares) on the Expiration Time and the Current Market Price
of the Common Stock on the Trading Day next succeeding the Expiration
Time, such reduction to become effective immediately prior to the
opening of business on the day following the Expiration Time. In the
event that such person is obligated to purchase shares pursuant to any
such tender or exchange offer, but such person is permanently
prevented by applicable law from effecting any such purchases or all
such purchases are rescinded, the Conversion Price shall again be
adjusted to be the Conversion Price which would then be in effect if
such tender or exchange offer had not been made. Notwithstanding the
foregoing, the adjustment described in this Section 15.5(g) shall not
be made if, as of the Expiration Time, the offering documents with
respect to such offer disclose a plan or intention to cause the
Company to engage in any transaction described in Article XII.
(h) For purposes of this Section 15.5, the following terms
shall have the meaning indicated:
(1) "Closing Price" with respect to any
securities on any day shall mean the closing sale price
regular way on such day or, in case no such sale takes place
on such day, the average of the reported closing bid and
asked prices, regular way, in each case on the Nasdaq
National Market or New York Stock Exchange, as applicable,
or, if such security is not listed or admitted to trading on
such National Market or Exchange, on the principal national
security exchange or quotation system on which such security
is quoted or listed or admitted to trading, or, if not quoted
or listed or admitted to trading on any national securities
exchange or quotation system, the average of the closing bid
and asked prices of
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such security on the over-the-counter market on the day in
question as reported by the National Quotation Bureau
Incorporated, or a similar generally accepted reporting
service, or if not so available, in such manner as furnished
by any New York Stock Exchange member firm selected from time
to time by the Board of Directors for that purpose, or a
price determined in good faith by the Board of Directors,
whose determination shall be conclusive and described in a
Board Resolution.
(2) "Current Market Price" shall mean the
average of the daily Closing Prices per share of Common Stock
for the ten (10) consecutive Trading Days immediately prior
to the date in question; provided, however, that (1) if the
"ex" date (as hereinafter defined) for any event (other than
the issuance or distribution requiring such computation) that
requires an adjustment to the Conversion Price pursuant to
Section 15.5(a), (b), (c), (d), (e), (f) or (g) occurs during
such ten (10) consecutive Trading Days, the Closing Price for
each Trading Day prior to the "ex" date for such other event
shall be adjusted by multiplying such Closing Price by the
same fraction by which the Conversion Price is so required to
be adjusted as a result of such other event, (2) if the "ex"
date for any event (other than the issuance or distribution
requiring such computation) that requires an adjustment to
the Conversion Price pursuant to Section 15.5(a), (b), (c),
(d), (e), (f) or (g) occurs on or after the "ex" date for the
issuance or distribution requiring such computation and prior
to the day in question, the Closing Price for each Trading
Day on and after the "ex" date for such other event shall be
adjusted by multiplying such Closing Price by the reciprocal
of the fraction by which the Conversion Price is so required
to be adjusted as a result of such other event, and (3) if
the "ex" date for the issuance or distribution requiring such
computation is prior to the day in question, after taking
into account any adjustment required pursuant to clause (1)
or (2) of this proviso, the Closing Price for each Trading
Day on or after such "ex" date shall be adjusted by adding
thereto the amount of any cash and the fair market value (as
determined by the Board of Directors in a manner consistent
with any determination of such value for purposes of Section
15.5(d), (f) or (g), whose determination shall be conclusive
and described in a Board Resolution) of the evidences of
indebtedness, shares of capital stock or assets being
distributed applicable to one share of Common Stock as of the
close of business on the day before such "ex" date. For
purposes of any computation under Sections 15.5(f) or (g),
the Current Market Price of the Common Stock on any date
shall be deemed to be the average of the daily Closing Prices
per share of Common Stock for such day and the next two
succeeding Trading Days; provided, however, that if the "ex"
date for any event (other than the tender offer requiring
such computation) that requires an adjustment to the
Conversion Price pursuant to Section 15.5(a), (b), (c), (d),
(e), (f) and (g) occurs on or after the Expiration Time for
the tender or exchange offer requiring such computation and
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prior to the day in question, the Closing Price for each
Trading Day on and after the "ex" date for such other event
shall be adjusted by multiplying such Closing Price by the
reciprocal of the fraction by which the Conversion Price is
so required to be adjusted as a result of such other event.
For purposes of this paragraph, the term "ex" date, (1) when
used with respect to any issuance or distribution, means the
first date on which the Common Stock trades regular way on
the relevant exchange or in the relevant market from which
the Closing Price was obtained without the right to receive
such issuance or distribution, (2) when used with respect to
any subdivision or combination of shares of Common Stock,
means the first date on which the Common Stock trades regular
way on such exchange or in such market after the time at
which such subdivision or combination becomes effective, and
(3) when used with respect to any tender or exchange offer
means the first date on which the Common Stock trades regular
way on such exchange or in such market after the Expiration
Time of such offer. Notwithstanding the foregoing, whenever
successive adjustments to the Conversion Price are called for
pursuant to this Section 15.5, such adjustments shall be made
to the Current Market Price as may be necessary or
appropriate to effectuate the intent of this Section 15.5 and
to avoid unjust or inequitable results as determined in good
faith by the Board of Directors.
(3) "fair market value" shall mean the amount
which a willing buyer would pay a willing seller in an arm's
length transaction.
(4) "Record Date" shall mean, with respect to
any dividend, distribution or other transaction or event in
which the holders of Common Stock have the right to receive
any cash, securities or other property or in which the Common
Stock (or other applicable security) is exchanged for or
converted into any combination of cash, securities or other
property, the date fixed for determination of stockholders
entitled to receive such cash, securities or other property
(whether such date is fixed by the Board of Directors or by
statute, contract or otherwise).
(5) "Trading Day" shall mean (x) if the
applicable security is listed or admitted for trading on the
New York Stock Exchange or another national security
exchange, a day on which the New York Stock Exchange or
another national security exchange is open for business or
(y) if the applicable security is quoted on the Nasdaq
National Market, a day on which trades may be made thereon or
(z) if the applicable security is not so listed, admitted for
trading or quoted, any day other than a Saturday or Sunday or
a day on which banking institutions in the State of New York
are authorized or obligated by law or executive order to
close.
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(i) The Company may make such reductions in the Conversion
Price, in addition to those required by Sections 15.5(a), (b), (c),
(d), (e), (f) and (g), as the Board of Directors considers to be
advisable to avoid or diminish any income tax to holders of Common
Stock or rights to purchase Common Stock resulting from any dividend
or distribution of stock (or rights to acquire stock) or from any
event treated as such for income tax purposes.
To the extent permitted by applicable law, the Company from
time to time may reduce the Conversion Price by any amount for any
period of time if the period is at least twenty (20) days, the
reduction is irrevocable during the period and the Board of Directors
shall have made a determination that such reduction would be in the
best interests of the Company, which determination shall be conclusive
and described in a Board Resolution. Whenever the Conversion Price is
reduced pursuant to the preceding sentence, the Company shall mail to
the holder of each Note at his last address appearing on the Note
register provided for in Section 2.5 a notice of the reduction at
least fifteen (15) days prior to the date the reduced Conversion Price
takes effect, and such notice shall state the reduced Conversion Price
and the period during which it will be in effect.
(j) No adjustment in the Conversion Price shall be
required unless such adjustment would require an increase or decrease
of at least 1% in such price; provided, however, that any adjustments
which by reason of this Section 15.5(j) are not required to be made
shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Article XV shall be made by
the Company and shall be made to the nearest 1/1,000th of a cent or to
the nearest 1/10,000th of a share, as the case may be. No adjustment
need be made for a change in the par value or no par value of the
Common Stock.
(k) Whenever the Conversion Price is adjusted as herein
provided, the Company shall promptly file with the Trustee and any
conversion agent other than the Trustee an Officers' Certificate
setting forth the Conversion Price after such adjustment and setting
forth a brief statement of the facts requiring such adjustment.
Promptly after delivery of such certificate, the Company shall prepare
a notice of such adjustment of the Conversion Price setting forth the
adjusted Conversion Price and the date on which each adjustment
becomes effective and shall mail such notice of such adjustment of the
Conversion Price to the holder of each Note at his last address
appearing on the Note register provided for in Section 2.5, within
twenty (20) days of the effective date of such adjustment. Failure to
deliver such notice shall not effect the legality or validity of any
such adjustment.
(l) In any case in which this Section 15.5 provides that
an adjustment shall become effective immediately after a Record Date
for an event, the Company may defer until the occurrence of such event
(i) issuing to the holder of any Note converted after
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such Record Date and before the occurrence of such event the
additional shares of Common Stock issuable upon such conversion by
reason of the adjustment required by such event over and above the
Common Stock issuable upon such conversion before giving effect to
such adjustment and (ii) paying to such holder any amount in cash in
lieu of any fraction pursuant to Section 15.3.
(m) For purposes of this Section 15.5, the number of
shares of Common Stock at any time outstanding shall not include
shares held in the treasury of the Company but shall include shares
issuable in respect of scrip certificates issued in lieu of fractions
of shares of Common Stock. The Company will not pay any dividend or
make any distribution on shares of Common Stock held in the treasury
of the Company.
(n) In lieu of making any adjustment to the Conversion
Price pursuant to Section 15.5(e), the Company may elect to reserve an
amount of cash for distribution to the holders of the Notes upon the
conversion of the Notes so that any such holder converting Notes will
receive upon such conversion, in addition to the shares of Common
Stock and other items to which such holder is entitled, the full
amount of cash which such holder would have received if such holder
had, immediately prior to the Record Date for such distribution of
cash, converted its Notes into Common Stock, together with any
interest accrued with respect to such amount, in accordance with this
Section 15.5(n). The Company may make such election by providing an
Officers' Certificate to the Trustee to such effect on or prior to the
payment date for any such distribution and depositing with the Trustee
on or prior to such date an amount of cash equal to the aggregate
amount the holders of the Notes would have received if such holders
had, immediately prior to the Record Date for such distribution,
converted all of the Notes into Common Stock. Any such funds so
deposited by the Company with the Trustee shall be invested by the
Trustee in marketable obligations issued or fully guaranteed by the
United States government with a maturity not more than three (3)
months from the date of issuance. Upon conversion of Notes by a
holder, the holder will be entitled to receive, in addition to the
Common Stock issuable upon conversion, an amount of cash equal to the
amount such holder would have received if such holder had, immediately
prior to the Record Date for such distribution, converted its Note
into Common Stock, along with such holder's pro rata share of any
accrued interest earned as a consequence of the investment of such
funds. Promptly after making an election pursuant to this Section
15.5(n), the Company shall give or shall cause to be given notice to
all Noteholders of such election, which notice shall state the amount
of cash per $1,000 principal amount of Notes such holders shall be
entitled to receive (excluding interest) upon conversion of the Notes
as a consequence of the Company having made such election.
Section 15.6 Effect of Reclassification, Consolidation, Merger or
Sale. If any of the following events occur, namely (i) any reclassification or
change of the outstanding shares of
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Common Stock (other than a change in par value, or from par value to no par
value, or from no par value to par value, or as a result of a subdivision or
combination), (ii) any consolidation, merger or combination of the Company with
another corporation as a result of which holders of Common Stock shall be
entitled to receive stock, securities or other property or assets (including
cash) with respect to or in exchange for such Common Stock, or (iii) any sale
or conveyance of the properties and assets of the Company as, or substantially
as, an entirety to any other corporation as a result of which holders of Common
Stock shall be entitled to receive stock, securities or other property or
assets (including cash) with respect to or in exchange for such Common Stock,
then the Company or the successor or purchasing corporation, as the case may
be, shall execute with the Trustee a supplemental indenture (which shall comply
with the Trust Indenture Act as in force at the date of execution of such
supplemental indenture if such supplemental indenture is then required to so
comply) providing that such Note shall be convertible into the kind and amount
of shares of stock and other securities or property or assets (including cash)
receivable upon such reclassification, change, consolidation, merger,
combination, sale or conveyance by a holder of a number of shares of Common
Stock issuable upon conversion of such Notes (assuming, for such purposes, a
sufficient number of authorized shares of Common Stock available to convert all
such Notes) immediately prior to such reclassification, change, consolidation,
merger, combination, sale or conveyance assuming such holder of Common Stock
did not exercise his rights of election, if any, as to the kind or amount of
securities, cash or other property receivable upon such consolidation, merger,
statutory exchange, sale or conveyance (provided that, if the kind or amount of
securities, cash or other property receivable upon such consolidation, merger,
statutory exchange, sale or conveyance is not the same for each share of Common
Stock in respect of which such rights of election shall not have been exercised
("non-electing share"), then for the purposes of this Section 15.6 the kind and
amount of securities, cash or other property receivable upon such
consolidation, merger, statutory exchange, sale or conveyance for each
non-electing share shall be deemed to be the kind and amount so receivable per
share by a plurality of the non-electing shares). Such supplemental indenture
shall provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Article. If, in the case of
any such reclassification, change, consolidation, merger, combination, sale or
conveyance, the stock or other securities and assets receivable thereupon by a
holder of shares of Common Stock include shares of stock or other securities
and assets of a corporation other than the successor or purchasing corporation,
as the case may be, in such reclassification, change, consolidation, merger,
combination, sale or conveyance, then such supplemental indenture shall also be
executed by such other corporation and shall contain such additional provisions
to protect the interests of the holders of the Notes as the Board of Directors
shall reasonably consider necessary by reason of the foregoing, including to
the extent practicable the provisions providing for the repurchase rights set
forth in Article XVI herein.
The Company shall cause notice of the execution of such supplemental
indenture to be mailed to each holder of Notes, at his address appearing on the
Note register provided for in Section 2.5 of this Indenture, within twenty (20)
days after execution thereof. Failure to deliver
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such notice shall not affect the legality or validity of such supplemental
indenture.
The above provisions of this Section shall similarly apply to
successive reclassifications, changes, consolidations, mergers, combinations,
sales and conveyances.
If this Section 15.6 applies to any event or occurrence, Section 15.5
shall not apply.
Section 15.7 Taxes on Shares Issued. The issue of stock
certificates on conversions of Notes shall be made without charge to the
converting Noteholder for any tax in respect of the issue thereof. The Company
shall not, however, be required to pay any tax which may be payable in respect
of any transfer involved in the issue and delivery of stock in any name other
than that of the holder of any Note converted, and the Company shall not be
required to issue or deliver any such stock certificate unless and until the
person or persons requesting the issue thereof shall have paid to the Company
the amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid.
Section 15.8 Reservation of Shares; Shares to Be Fully Paid;
Listing of Common Stock. The Company shall provide, free from preemptive
rights, out of its authorized but unissued shares or shares held in treasury,
sufficient shares to provide for the conversion of the Notes from time to time
as such Notes are presented for conversion.
Before taking any action which would cause an adjustment reducing the
Conversion Price below the then par value, if any, of the shares of Common
Stock issuable upon conversion of the Notes, the Company will take all
corporate action which may, in the opinion of its counsel, be necessary in
order that the Company may validly and legally issue shares of such Common
Stock at such adjusted Conversion Price.
The Company covenants that all shares of Common Stock issued upon
conversion of Notes will be fully paid and non-assessable by the Company and
free from all taxes, liens and charges with respect to the issue thereof.
The Company further covenants that if at any time the Common Stock
shall be listed on the American Stock Exchange or any other national securities
exchange or automated quotation system the Company will, if permitted by the
rules of such exchange or automated quotation system, list and keep listed, so
long as the Common Stock shall be so listed on such exchange or automated
quotation system, all Common Stock issuable upon conversion of the Notes.
Section 15.9 Responsibility of Trustee. The Trustee and any other
conversion agent shall not at any time be under any duty or responsibility to
any holder of Notes to determine whether any facts exist which may require any
adjustment of the Conversion Price, or with respect to the nature or extent or
calculation of any such adjustment when made, or with respect to the method
employed, or herein or in any supplemental indenture provided to be employed,
in
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making the same. The Trustee and any other conversion agent shall not be
accountable with respect to the validity or value (or the kind or amount) of
any shares of Common Stock, or of any securities or property, which may at any
time be issued or delivered upon the conversion of any Note; and the Trustee
and any other conversion agent make no representations with respect thereto.
Subject to the provisions of Section 8.1, neither the Trustee nor any
conversion agent shall be responsible for any failure of the Company to issue,
transfer or deliver any shares of Common Stock or stock certificates or other
securities or property or cash upon the surrender of any note for the purpose
of conversion or to comply with any of the duties, responsibilities or
covenants of the Company contained in this Article. Without limiting the
generality of the foregoing, neither the Trustee nor any conversion agent shall
be under any responsibility to determine the correctness of any provisions
contained in any supplemental indenture entered into pursuant to Section 15.6
relating either to the kind or amount of shares of stock or securities or
property (including cash) receivable by Noteholders upon the conversion of
their Notes after any event referred to in such Section 15.6 or to any
adjustment to be made with respect thereto, but, subject to the provisions of
Section 8.1, may accept as conclusive evidence of the correctness of any such
provisions, and shall be protected in relying upon, the Officers' Certificate
(which the Company shall be obligated to file with the Trustee prior to the
execution of any such supplemental indenture) with respect thereto.
Section 15.10 Notice to Holders Prior to Certain Actions. In case:
(a) the Company shall declare a dividend (or any other
distribution) on its Common Stock (that would require an adjustment in
the Conversion Price pursuant to Section 15.5); or
(b) the Company shall authorize the granting to the
holders of its Common Stock of rights or warrants to subscribe for or
purchase any share of any class or any other rights or warrants; or
(c) of any reclassification of the Common Stock of the
Company (other than a subdivision or combination of its outstanding
Common Stock, or a change in par value, or from par value to no par
value, or from no par value to par value), or of any consolidation or
merger to which the Company is a party and for which approval of any
shareholders of the Company is required, or of the sale or transfer of
all or substantially all of the assets of the Company; or
(d) of the voluntary or involuntary dissolution,
liquidation or winding-up of the Company;
the Company shall cause to be filed with the Trustee and to be mailed to each
holder of Notes at his address appearing on the Note register, provided for in
Section 2.5 of this Indenture, as promptly as possible but in any event at
least fifteen days prior to the applicable date hereinafter
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specified, a notice stating (x) the date on which a record is to be taken for
the purpose of such dividend, distribution or rights or warrants, or, if a
record is not to be taken, the date as of which the holders of Common Stock of
record to be entitled to such dividend, distribution or rights are to be
determined, or (y) the date on which such reclassification, consolidation,
merger, sale, transfer, dissolution, liquidation or winding-up is expected to
become effective or occur, and the date as of which it is expected that holders
of Common Stock of record shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding-up.
Failure to give such notice, or any defect therein, shall not affect the
legality or validity of such dividend, distribution, reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding-up.
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ARTICLE XVI
REPURCHASE UPON A REPURCHASE EVENT
Section 16.1 Repurchase Right.
(a) If, at any time prior to April 1, 2006 there shall
occur a Repurchase Event, then each Noteholder shall have the right,
at such holder's option, to require the Company to repurchase all of
such holder's Notes, or any portion thereof (in principal amounts of
$1,000 or integral multiples thereof), on the date (the "repurchase
date") that is forty (40) calendar days after the date of the Company
Notice (as defined in Section 16.2 below) of such Repurchase Event
(or, if such 40th day is not a Business Day, the next succeeding
Business Day). Such repurchase shall be made in cash at a price equal
to 100% of the principal amount of Notes such holder elects to require
the Company to repurchase, together with accrued interest, if any, to
the repurchase date (the "Repurchase Price") (or, at the option of the
Company, by delivery of Common Stock in accordance with the provisions
of Section 16.3); provided, however, that if such repurchase date is
April 1 or October 1 then the interest payable on such date shall be
paid to the holder of record of the Note on the next preceding March
15 or September 15, respectively. No Notes may be redeemed at the
option of holders upon a Repurchase Event if there has occurred and is
continuing an Event of Default, other than a default in the payment of
the Repurchase Price with respect to such Notes on the repurchase
date.
Section 16.2 Notices; Method of Exercising Repurchase Right, Etc.
(a) Unless the Company shall have theretofore called for
redemption all of the outstanding Notes, on or before the fifteenth
(15th) calendar day after the occurrence of a Repurchase Event, the
Company or, at the written request of the Company, the Trustee, shall
mail to all holders of record of the Notes a notice (the "Company
Notice") in the form as prepared by the Company of the occurrence of
the Repurchase Event 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 and cause a copy of
such notice of a repurchase right, or a summary of the information
contained therein, to be published once in a newspaper of general
circulation in The City of New York. The Company Notice shall contain
the following information:
(1) the repurchase date,
(2) the date by which the repurchase right must
be exercised,
(3) the last date by which the election to
require repurchase, if submitted, must be
revoked;
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(4) the Repurchase Price and whether the
Repurchase Price shall be payable in cash or Common Stock
and, if payable in Common Stock, the method of calculating
the amount of the Common Stock to be delivered upon the
repurchase as provided in Section 16.3(a);
(5) a description of the procedure which a
holder must follow to exercise a repurchase right, and
(6) the Conversion Price then in effect, the
date on which the right to convert the principal amount of
the Notes to be repurchased will terminate and the place or
places where Notes may be surrendered for conversion.
No failure of the Company to give the foregoing notices or
defect therein shall limit any holder's right to exercise a repurchase
right or affect the validity of the proceedings for the repurchase of
Notes.
If any of the foregoing provisions 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 thirty-fifth (35th) day after the
Company Notice was delivered (i) written notice to the Company (or
agent designated by the Company for such purpose) of the holder's
exercise of such right, which notice shall set forth the name of the
holder, the principal amount of the Notes to be repurchased, 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 Notes with respect to which the repurchase
right is being exercised, duly endorsed for transfer to the Company.
Election of repurchase by a holder shall be revocable at any time
prior to, but excluding, the repurchase date, by delivering written
notice to that effect to the Trustee prior to the close of business on
the Business Day prior to the repurchase date.
(c) If the Company fails to repurchase on the repurchase
date any Notes (or portions thereof) as to which the repurchase right
has been properly exercised, then the principal of such Notes shall,
until paid, bear interest to the extent permitted by applicable law
from the repurchase date at the rate borne by the Note and each such
Note shall be convertible into Common Stock in accordance with this
Indenture (without giving effect to Section 16.2(b)) until the
principal of such Note shall have been paid or duly provided for.
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(d) Any Note which is to be repurchased only in part shall
be surrendered to the Trustee duly endorsed for transfer to the
Company and accompanied by appropriate evidence of genuineness and
authority satisfactory to the Company and the Trustee duly executed
by, the holder thereof (or his attorney duly authorized in writing),
and the Company shall execute, and the Trustee shall authenticate and
deliver to the holder of such Note without service charge, a new Note
or Notes, containing identical terms and conditions, of any authorized
denomination as requested by such holder in aggregate principal amount
equal to and in exchange for the unrepurchased portion of the
principal of the Note so surrendered.
(e) On or prior to the repurchase date, the Company shall
deposit with the Trustee or with a paying agent (or, if the Company is
acting as its own paying agent, segregate and hold in trust as
provided in Section 5.4) the Repurchase Price in cash for payment to
the holder on the repurchase date; provided that if payment is to be
made in cash, such cash payment is made on the repurchase date it must
be received by the Trustee or paying agent, as the case may be, by
10:00 a.m., New York City time, on such date; provided further that if
the Repurchase Price is to be paid in shares of Common Stock, such
shares of Common Stock are to be paid as promptly after the repurchase
date as practicable.
(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 Notes. If more than one Note 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 Notes so repurchased. Instead of any fractional share of
Common Stock which would otherwise be issuable on the repurchase of
any Note or Notes, 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.
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For purposes of this Section, the current market price of a share of
Common Stock is the Closing Price 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 Notes shall be made without charge to
the holder of Notes 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; 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
Notes 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) All Notes delivered for repurchase shall be delivered
to the Trustee to be canceled in accordance with the provisions of
Section 2.8.
Section 16.3 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 16.1 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 16.1 and this
Section 16.3, 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 of the Common Stock for the five consecutive Trading Days
immediately preceding and including the third 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 Notes 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;
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(c) Payment of the Repurchase Price may not be made in Common Stock
unless such stock is, or shall have been, or approved for quotation on the
Nasdaq National Market or listed on a national securities exchange, in either
case, prior to the repurchase date; and
(d) All shares of Common Stock which may be issued upon repurchase
of the Notes 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 16.3 are not
satisfied in accordance with the terms thereof, the Repurchase Price shall be
paid by the Company only in cash.
Section 16.4 Certain Definitions. For purposes of this Article XVI:
(a) the term "beneficial owner" shall be determined in
accordance with Rule 13d-3 and 13d-5, as in effect on the date of the
original execution of this Indenture, promulgated by the Securities
and Exchange Commission pursuant to the Exchange Act;
(b) the term "person" or "group" shall include any
syndicate or group which would be deemed to be a "person" under
Section 13(d) and 14(d) of the Exchange Act as in effect on the date
of the original execution of this Indenture; and
(c) the term "Continuing Director" means at any date a
member of the Company's Board of Directors (i) who was a member of
such board on March 19, 1999 or (ii) who was nominated or elected by
at least a majority of the directors who were Continuing Directors at
the time of such nomination or election or whose election to the
Company's Board of Directors was recommended or endorsed by at least a
majority of the directors who were Continuing Directors at the time of
such nomination or election or such lesser number comprising a
majority of a nominating committee if authority for such nominations
or elections has been delegated to a nominating committee whose
authority and composition have been approved by at least a majority of
the directors who were Continuing Directors at the time such committee
was formed. (Under this definition, if the Board of Directors of the
Company as of the date of this Indenture were to approve a new
director or directors and then resign, no Change in Control would
occur even though the current Board of Directors would thereafter
cease to be in office).
(d) the term "Repurchase Event" means a Change in Control
or a Termination of Trading.
(e) a "Change in Control" shall be deemed to have occurred
when (i) any "person" or "group" (as such terms are used in Sections
13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial
owner" (as defined in Rules 13-d3 and 13-d5 under the
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Exchange Act) of shares representing more than 50% of the combined
voting power of the then outstanding securities entitled to vote
generally in elections of directors of the Company (the "Voting
Stock"); (ii) approval by stockholders of the Company of any plan or
proposal for the liquidation, dissolution or winding up of the
Company; (iii) the Company (A) consolidates with or merges into any
other corporation or any other corporation merges into the Company,
and in the case of any such transaction, the outstanding Common Stock
of the Company is changed or exchanged into other assets or securities
as a result, unless the stockholders of the Company immediately before
such transaction own, directly or indirectly immediately following
such transaction, at least 51% of the combined voting power of the
outstanding voting securities of the corporation resulting from such
transaction in substantially the same proportion as their ownership of
the Voting Stock immediately before such transaction, or (B) conveys,
transfers or leases all or substantially all of its assets to any
person; or (iv) any time Continuing Directors do not constitute a
majority of the Board of Directors of the Company (or, if applicable,
a successor corporation to the Company); provided that a Change in
Control shall not be deemed to have occurred if either (x) the Closing
Price (as defined in Section 15.5(h)(1) hereof) of the Common Stock
for any five (5) Trading Days during the ten (10) Trading Days
immediately preceding the Change in Control is at least equal to 105%
of the Conversion Price in effect on the date on which the Change in
Control occurs or (y) in the case of a merger or consolidation
otherwise constituting a Change in Control, all of the consideration
(excluding cash payments for fractional shares) in such merger or
consolidation constituting the Change in Control consists of common
stock traded on a United States national securities exchange or quoted
on the Nasdaq National Market (or which will be so traded or quoted
when issued or exchanged in connection with such Change in Control)
and as a result of such transaction or transactions such Notes become
convertible solely into such common stock.
(f) a "Termination of Trading" shall have occurred if the
Common Stock (or other common stock into which the Notes are then
convertible) is neither listed for trading on a United States national
securities exchange nor approved for trading on an established
automated over-the-counter trading market in the United States.
ARTICLE XVII
MISCELLANEOUS PROVISIONS
Section 17.1 Provisions Binding on Company's Successors. All the
covenants, stipulations, promises and agreements of the Company in this
Indenture contained shall bind its successors and assigns whether so expressed
or not.
Section 17.2 Official Acts by Successor Corporation. Any act or
proceeding by any
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provision of this Indenture authorized or required to be done or performed by
any board, committee or officer of the Company shall and may be done and
performed with like force and effect by the like board, committee or officer of
any corporation that shall at the time be the lawful sole successor of the
Company.
Section 17.3 Addresses for Notices, Etc. Any notice or demand which
by any provision of this Indenture is required or permitted to be given or
served by the Trustee or by the holders of Notes on the Company shall be deemed
to have been sufficiently given or made, for all purposes if given or served by
being deposited postage prepaid by registered or certified mail in a post
office letter box addressed (until another address is filed by the Company with
the Trustee) to 6340 N.W. 5th Way, Fort Lauderdale, Florida 33309, Attention:
Michael Levy, Chief Executive Officer. Any notice, direction, request or demand
hereunder to or upon the Trustee shall be deemed to have been sufficiently
given or made, for all purposes, if given or served by being deposited postage
prepaid by registered or certified mail in a post office letter box addressed
to the Corporate Trust Office.
The Trustee, by notice to the Company, may designate additional or
different addresses for subsequent notices or communications.
Any notice or communication mailed to a Noteholder shall be mailed to
him by first class mail, postage prepaid, at his address as it appears on the
Note register and shall be sufficiently given to him if so mailed within the
time prescribed.
Failure to mail a notice or communication to a Noteholder or any
defect in it shall not affect its sufficiency with respect to other
Noteholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
Section 17.4 Governing Law. This Indenture and each Note shall be
deemed to be a contract made under the laws of New York, and for all purposes
shall be construed in accordance with the laws of New York (without regard to
the conflict of laws provisions thereof).
Section 17.5 Evidence of Compliance with Conditions Precedent;
Certificates to Trustee. Upon any application or demand by the Company to the
Trustee to take any action under any of the provisions of this Indenture, the
Company shall furnish to the Trustee an Officers' Certificate stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, and an Opinion of Counsel stating
that, in the opinion of such counsel, all such conditions precedent have been
complied with.
Each certificate or opinion provided for by or on behalf of the
Company in this Indenture and delivered to the Trustee with respect to
compliance with a condition or covenant provided for in this Indenture shall
include (1) a statement that the person making such certificate or opinion has
read such covenant or condition; (2) a brief statement as to the nature and
scope of
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the examination or investigation upon which the statement or opinion contained
in such certificate or opinion is based; (3) a statement that, in the opinion
of such person, he has made such examination or investigation as is necessary
to enable him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and (4) a statement as to whether or not,
in the opinion of such person, such condition or covenant has been complied
with.
Section 17.6 Legal Holidays. In any case where the date of maturity
of interest on or principal of the Notes or the date fixed for redemption of
any Note will not be a Business Day, then payment of such interest on or
principal of the Notes need not be made on such date, but may be made on the
next succeeding Business Day with the same force and effect as if made on the
date of maturity or the date fixed for redemption, and no interest shall accrue
for the period from and after such date.
Section 17.7 No Security Interest Created. Nothing in this
Indenture or in the Notes, expressed or implied, shall be construed to
constitute a security interest under the Uniform Commercial Code or similar
legislation, as now or hereafter enacted and in effect, in any jurisdiction.
Section 17.8 Trust Indenture Act. This Indenture is hereby made
subject to, and shall be governed by, the provisions of the Trust Indenture Act
required to be part of and to govern indentures qualified under the Trust
Indenture Act; provided, however, that, unless otherwise required by law,
notwithstanding the foregoing, this Indenture and the Notes issued hereunder
shall not be subject to the provisions of subsections (a)(1), (a)(2), and
(a)(3) of Section 314 of the Trust Indenture Act as now in effect as hereafter
amended or modified; provided further that this Section 17.8 shall not require
that this Indenture or the Trustee be qualified under the Trust Indenture Act
prior to the time such qualification is in fact required under the terms of the
Trust Indenture Act, nor shall it constitute any admission or acknowledgment by
any party hereto that any such qualification is required prior to the time such
qualification is in fact required under the terms of the Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with another provision
hereof which is required to be included in an indenture qualified under the
Trust Indenture Act, such required provision shall control.
Section 17.9 Benefits of Indenture. Nothing in this Indenture or in
the Notes, expressed or implied, shall give to any person, other than the
parties hereto, any paying agent, any authenticating agent, any Note registrar
and their successors hereunder, the holders of Notes and the holders of Senior
Indebtedness, any benefit or any legal or equitable right, remedy or claim
under this Indenture.
Section 17.10 Table of Contents, Headings, Etc. The table of
contents and the titles and headings of the articles and sections of this
Indenture have been inserted for convenience of reference only, are not to be
considered a part hereof, and shall in no way modify or restrict any of the
terms or provisions hereof.
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Section 17.11 Authenticating Agent. The Trustee may appoint an
authenticating agent which shall be authorized to act on its behalf and subject
to its direction in the authentication and delivery of Notes in connection with
the original issuance thereof and transfers and exchanges of Notes hereunder,
including under Sections 2.4, 2.5, 2.6, 2.7 and 3.3, as fully to all intents
and purposes as though the authenticating agent had been expressly authorized
by this Indenture and those Sections to authenticate and deliver Notes. For all
purposes of this Indenture, the authentication and delivery of Notes by the
authenticating agent shall be deemed to be authentication and delivery of such
Notes "by the Trustee" and a certificate of authentication executed on behalf
of the Trustee by an authenticating agent shall be deemed to satisfy any
requirement hereunder or in the Notes for the Trustee's certificate of
authentication. Such authenticating agent shall at all times be a person
eligible to serve as trustee hereunder pursuant to Section 8.9.
Any corporation into which any authenticating agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any authenticating agent
shall be a party, or any corporation succeeding to the corporate trust business
of any authenticating agent, shall be the successor of the authenticating agent
hereunder, if such successor corporation is otherwise eligible under this
Section, without the execution or filing of any paper or any further act on the
part of the parties hereto or the authenticating agent or such successor
corporation.
Any authenticating agent may at any time resign by giving written
notice of resignation to the Trustee and to the Company. The Trustee may at any
time terminate the agency of any authenticating agent by giving written notice
of termination to such authenticating agent and to the Company. Upon receiving
such a notice of resignation or upon such a termination, or in case at any time
any authenticating agent shall cease to be eligible under this Section, the
Trustee shall promptly appoint a successor authenticating agent (which may be
the Trustee), shall give written notice of such appointment to the Company and
shall mail notice of such appointment to all holders of Notes as the names and
addresses of such holders appear on the Note register.
The Trustee agrees to pay to the authenticating agent from time to
time reasonable compensation for its services (to the extent pre-approved by
the Company in writing), and the Trustee shall be entitled to be reimbursed for
such pre-approved payments, subject to Section 8.6.
The provisions of Sections 8.2, 8.3, 8.4, 9.3 and this Section 17.11
shall be applicable to any authenticating agent.
Section 17.12 Execution in Counterparts. This Indenture may be
executed in any number of counterparts, each of which shall be an original, but
such counterparts shall together constitute but one and the same instrument.
State Street Bank and Trust Company hereby accepts the trusts in this
Indenture declared and provided, upon the terms and conditions hereinabove set
forth.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly signed all as of the date first written above.
SPORTSLINE USA, INC.,
a Delaware corporation
By: /s/ Kenneth Sanders
---------------------------------------------------------
Name: Kenneth Sanders
Title: Senior Vice President and Chief Financial Officer
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By: /s/ Earl W. Dennison, Jr.
---------------------------------------------------------
Name: Earl W. Dennison, Jr.
Title: Vice President
<PAGE> 97
EXHIBIT A
[FORM OF FACE OF NOTE]
[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 OF 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.
[THE FOLLOWING LEGEND SHALL APPEAR ON THE FACE OF EACH RESTRICTED NOTE.]
THE NOTE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS, AND MAY
NOT BE OFFERED OR SOLD EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS
ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B)
IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2),
(3) OR (7) UNDER THE SECURITIES ACT) ("INSTITUTIONAL ACCREDITED INVESTOR"); (2)
AGREES THAT IT WILL NOT WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THE NOTE
EVIDENCED HEREBY RESELL OR OTHERWISE TRANSFER THE NOTE EVIDENCED HEREBY OR THE
COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH NOTE EXCEPT (A) TO THE COMPANY OR
ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE
WITH RULE 144A UNDER THE SECURITIES ACT, (C) TO AN INSTITUTIONAL ACCREDITED
INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO STATE STREET BANK AND TRUST
COMPANY, AS TRUSTEE, A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE RESTRICTIONS ON
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TRANSFER OF THE NOTE EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED
FROM SUCH TRUSTEE), (D) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY
RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (E) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT (AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH TRANSFER); AND (3)
AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE NOTE EVIDENCED HEREBY IS
TRANSFERRED (OTHER THAN A TRANSFER PURSUANT TO CLAUSE 2(E) ABOVE) A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF
THE NOTE EVIDENCED HEREBY WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF SUCH
NOTE (OTHER THAN A TRANSFER PURSUANT TO CLAUSE 2(E) ABOVE), THE HOLDER MUST
CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER
OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO STATE STREET BANK AND TRUST
COMPANY, AS TRUSTEE. IF THE PROPOSED TRANSFER IS PURSUANT TO CLAUSE 2(C) OR 2(D)
ABOVE, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO STATE STREET BANK AND
TRUST COMPANY, AS TRUSTEE, SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER
INFORMATION AS THE COMPANY MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER
IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED
UPON THE EARLIER OF THE TRANSFER OF THE NOTE EVIDENCED HEREBY PURSUANT TO CLAUSE
2(D) OR 2(E) ABOVE OR THE EXPIRATION OF TWO YEARS FROM THE ORIGINAL ISSUANCE OF
THE NOTE EVIDENCED HEREBY.
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<PAGE> 99
SPORTSLINE USA, INC.
5% Convertible Subordinated Notes due 2006
No. ___ $_______________
CUSIP No._____________
SportsLine USA, Inc., a corporation duly organized and validly existing
under the laws of the State of Delaware (herein called the "Company", which term
includes any successor corporation under the Indenture referred to on the
reverse hereof), for value received hereby promises to pay to
____________________, or registered assigns, the principal sum of_______________
___________________________ Dollars [(which 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 Notes, shall not exceed
$150,000,000 in aggregate at any time (or $200,000,000 if the option set forth
in Section 2(b) of the Purchase Agreement is exercised in full by the Initial
Purchasers)) by adjustments made on the records of the Trustee, as Custodian of
the Depositary, in accordance with the rules and procedures of the Depositary)]1
on April 1, 2006, and to pay interest on said principal sum semi-annually on
April 1 and October 1 of each year, commencing October 1, 1999, at the rate per
annum specified in the title of this Note, accrued from the April 1 or October
1, as the case may be, next preceding the date of this Note to which interest
has been paid or duly provided for, unless the date of this Note is a date to
which interest has been paid or duly provided for, in which case interest shall
accrue from the date of this Note, or unless no interest has been paid or duly
provided for on this Note, in which case interest shall accrue from March 24,
1999 until payment of said principal sum has been made or duly provided for.
Notwithstanding the foregoing, if the date hereof is after any March 15 or
September 15, as the case may be, and before the following April 1 or October 1,
this Note shall bear interest from such April 1 or October 1, respectively;
provided, however, that if the Company shall default in the payment of interest
due on such April 1 or October 1, then this Note shall bear interest from the
next preceding April 1 or October 1 to which interest has been paid or duly
provided for or, if no interest has been paid or duly provided for on this Note,
from March 24, 1999. The interest so payable on any April 1 or October 1 will be
paid to the person in whose name this Note (or one or more Predecessor Notes) is
registered at the close of business on the record date, which shall be the March
15 or September 15 (whether or not a Business Day) next preceding such April 1
or October 1, respectively; provided that any such interest not punctually paid
or duly provided for shall be payable as provided in the Indenture. Payment of
the principal of and interest accrued on this Note shall be made at the office
or agency of the Company maintained for that purpose in the Borough of
Manhattan, The City of New York, or,
- --------
1 This language shall appear on each Global Note.
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at the option of the holder of this Note, at the Corporate Trust Office, in such
lawful money of the United States of America as at the time of payment shall be
legal tender for the payment of public and private debts; provided further,
however, that, with respect to any holder of Notes with an aggregate principal
amount equal to or in excess of $2,000,000, at the request of such holder in
writing to the Company, interest on such holder's Notes shall be paid by wire
transfer in immediately available funds in accordance with the wire transfer
instruction supplied by such holder from time to time to the Trustee and paying
agent (if different from the Trustee) at least two days prior to the applicable
record date.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, including, without limitation, provisions subordinating the
payment of principal of and premium, if any, and interest on this Note to the
prior payment in full of all Senior Indebtedness as defined in the Indenture and
provisions giving the holder of this Note the right to convert this Note into
Common Stock of the Company on the terms and subject to the limitations referred
to on the reverse hereof and as more fully specified in the Indenture. Such
further provisions shall for all purposes have the same effect as though fully
set forth at this place.
This Note shall be deemed to be a contract made under the laws of the
State of New York, and for all purposes shall be construed in accordance with
and governed by the laws of said State (without regard to the conflicts of laws
provisions thereof).
This Note shall not be valid or become obligatory for any purpose until
the certificate of authentication hereon shall have been manually signed by the
Trustee or a duly authorized authenticating agent under the Indenture.
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IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed.
SPORTSLINE USA, INC.
By:
--------------------------------------
Name:
Title:
Attest:
By:
-------------------------
Name:
Title:
[FORM OF CERTIFICATE OF AUTHENTICATION]
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
STATE STREET BANK AND TRUST COMPANY,
as Trustee, certifies that this is one of the Notes described
in the within-named Indenture.
Dated:
By:
-----------------------------
Authorized Signatory
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<PAGE> 102
[FORM OF REVERSE OF NOTE]
SPORTSLINE USA, INC.
5% Convertible Subordinated Note Due 2006
This Note is one of a duly authorized issue of Notes of the Company,
designated as its 5% Convertible Subordinated Notes due 2006 (herein called the
"Notes"), limited to the aggregate principal amount of $150,000,000 (or
$200,000,000 if the option set forth in Section 2(b) of the Purchase Agreement
is exercised in full by the Initial Purchasers) all issued or to be issued under
and pursuant to an Indenture dated as of March 15, 1999 (herein called the
"Indenture"), between the Company and State Street Bank and Trust Company
(herein called the "Trustee"), to which Indenture and all indentures
supplemental thereto reference is hereby made for a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Trustee, the Company and the holders of the Notes.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of, premium, if any, and accrued
interest (including Liquidated Damages, if any) on all Notes may be declared,
and upon said declaration shall become, due and payable, in the manner, with the
effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions permitting the Company and the Trustee in
certain limited circumstances, without the consent of the holders of the Notes,
and in other circumstances, with the consent of the holders of not less than a
majority in aggregate principal amount of the Notes at the time outstanding,
evidenced as in the Indenture provided, to execute supplemental indentures
adding any provisions to or changing in any manner or eliminating any of the
provisions of the Indenture or of any supplemental indenture or modifying in any
manner the rights of the holders of the Notes; provided, however, that no such
supplemental indenture shall (i) extend the fixed maturity of any Note, or
reduce the rate or extend the time of payment of interest thereon, or reduce the
principal amount thereof or premium, if any, thereon, or reduce any amount
payable on redemption or repurchase thereof, impair, or change in any respect
adverse to the holder of Notes, the obligation of the Company to repurchase any
Note at the option of the holder upon the happening of a Repurchase Event, or
impair or adversely affect the right of any Noteholder to institute suit for the
payment thereof, or change the currency in which the Notes are payable, or
impair or change in any respect adverse to the Noteholders the right to convert
the Notes into Common Stock subject to the terms set forth herein, including
Section 15.6, or modify the provisions of this Indenture with respect to the
subordination of the Notes in a manner adverse to the Noteholders, without the
consent of the holder of each Note so affected, or (ii) reduce the aforesaid
percentage of Notes, the holders of which are required to consent to any such
supplemental indenture, without the consent of the holders of all Notes then
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outstanding. It is also provided in the Indenture that, prior to any declaration
accelerating the maturity of the Notes, the holders of a majority in aggregate
principal amount of the Notes at the time outstanding may on behalf of the
holders of all of the Notes waive any past default or Event of Default under the
Indenture and its consequences except (i) a default in the payment of interest
or premium, if any, on, or the principal of, the Notes when due, (ii) a failure
by the Company to convert any Notes into Common Stock or (iii) a default in
respect of a covenant or provisions of the Indenture which under Article XI
cannot be modified or amended without the consent of the holders of all Notes
then outstanding. Any such consent or waiver by the holder of this Note (unless
revoked as provided in the Indenture) shall be conclusive and binding upon such
holder and upon all future holders and owners of this Note and any Notes which
may be issued in exchange or substitution hereof, irrespective of whether or not
any notation thereof is made upon this Note or such other Notes.
The indebtedness evidenced by the Notes is, to the extent and in the manner
provided in the Indenture, expressly subordinate and subject in right of payment
to the prior payment in full in cash or other payment satisfactory to the
holders of Senior Indebtedness of all Senior Indebtedness of the Company, as
defined in the Indenture, whether outstanding at the date of the Indenture or
thereafter incurred, and this Note is issued subject to the provisions of the
Indenture with respect to such subordination. Each holder of this Note, by
accepting the same, agrees to and shall be bound by such provisions and
authorizes the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination so provided and appoints the Trustee
his attorney in fact for such purpose.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of, premium, if any, and
interest on this Note at the place, at the respective times, at the rate and in
the lawful money herein prescribed.
Interest on the Notes shall be computed on the basis of a 360-day year
comprised of twelve 30-day months.
The Notes are issuable in registered form without coupons in denominations
of $1,000 principal amount and integral multiples thereof. At the office or
agency of the Company referred to on the face hereof, and in the manner and
subject to the limitations provided in the Indenture, without payment of any
service charge but with payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration or
exchange of Notes, Notes may be exchanged for a like aggregate principal amount
of Notes of other authorized denominations.
The Notes will not be redeemable at the option of the Company prior to
April 2, 2002. On or after such date and prior to maturity the Notes may be
redeemed at the option of the Company as
A-7
<PAGE> 104
a whole, or from time to time in part, upon mailing a notice of such redemption
not less than 30 nor more than 60 days before the date fixed for redemption to
the holders of Notes at their last registered addresses, all as provided in the
Indenture, at the following redemption prices (expressed as percentages of the
principal amount), together in each case with accrued interest, if any, to, but
excluding, the date fixed for redemption.
If redeemed during the 12-month period beginning April 1 (April 2, 2002
through March 31, 2003 in the case of the first such period):
<TABLE>
<CAPTION>
Redemption
Year Price
---- ----------
<S> <C>
2002 102.857%
2003 102.143%
2004 101.429%
2005 100.714%
</TABLE>
and 100% at April 1, 2006; provided that if the date fixed for redemption is a
April 1 or October 1, then the interest payable on such date shall be paid to
the holder of record on the next preceding March 15 or September 15,
respectively.
The Notes are not subject to redemption through the operation of any
sinking fund.
Upon the occurrence of a "Repurchase Event," the Noteholder has the
right, at such holder's option, to require the Company to repurchase all or any
portion of such holder's Notes on the 40th calendar day (or, if such 40th day is
not a Business Day, the next succeeding Business Day) after notice of such
Repurchase Event at a price equal to 100% of the principal amount of the Notes
such holder elects to require the Company to repurchase, together in each case
with accrued interest to the date fixed for repurchase; provided that if such
repurchase date is April 1 or October 1, then the interest payable on such date
shall be paid to the holder of record of the Note on the next preceding March 15
or September 15, respectively. The Company or, at the written request of the
Company, the Trustee shall mail to all holders of record of the Notes a notice
of the occurrence of a Repurchase Event and of the repurchase right arising as a
result thereof on or before the fifteenth (15th) calendar day after the
occurrence of such Repurchase Event. Payment of the repurchase price may be made
in shares of the Company's Common Stock under certain circumstances as provided
in Section 16.3 of the Indenture.
Subject to the provisions of the Indenture, the holder hereof has the
right, at its option, at any time following the date of original issuance of the
Notes and prior to the close of business on
A-8
<PAGE> 105
April 1, 2006, (except that with respect to any Note or portion of a Note which
shall be called for redemption, prior to the close of business on the Business
Day next preceding the date fixed for redemption) (unless the Company shall
default in payment due upon redemption), to convert the principal hereof or any
portion of such principal which is $1,000 or an integral multiple thereof, into
that number of fully paid and non-assessable shares of Company's Common Stock,
as said shares shall be constituted at the date of conversion, obtained by
dividing the principal amount of this Note or portion thereof to be converted by
the conversion price of an amount equal to $1,000 divided by 15.355 or such
conversion price as adjusted from time to time as provided in the Indenture,
upon surrender of this Note, together with a conversion notice as provided in
the Indenture and this Note, to the Company at the office or agency of the
Company maintained for that purpose in the Borough of Manhattan, The City of New
York, or at the option of such holder, the Corporate Trust Office, and, unless
the shares issuable on conversion are to be issued in the same name as this
Note, duly endorsed by, or accompanied by instruments of transfer in form
satisfactory to the Company duly executed by, the holder or by his duly
authorized attorney. No adjustment in respect of interest or dividends will be
made upon any conversion; provided, however, that if this Note shall be
surrendered for conversion during the period from the close of business on any
record date for the payment of interest through the close of business on the
Business Day next preceding the following interest payment date, this Note
(unless the Note or the portion thereof being converted shall have been called
for redemption pursuant to a redemption notice mailed to the Noteholders in
accordance with Section 3.2 of the Indenture) must be accompanied by an amount,
in funds acceptable to the Company, equal to the interest otherwise payable on
such interest payment date on the principal amount being converted. No
fractional shares of Common Stock will be issued upon any conversion, but an
adjustment in cash will be paid to the holder, as provided in the Indenture, in
respect of any fraction of a share which would otherwise be issuable upon the
surrender of any Note or Notes for conversion.
Any Notes called for redemption, unless surrendered for conversion on
or before the close of business on the date fixed for redemption, may be deemed
to be purchased from the holder of such Notes at an amount equal to the
applicable redemption price, together with accrued interest to the date fixed
for redemption, by one or more investment bankers or other purchasers who may
agree with the Company to purchase such Notes from the holders thereof and
convert them into Common Stock of the Company and to make payment for such Notes
as aforesaid to the Trustee in trust for such holders.
Upon due presentment for registration of transfer of this Note at the
office or agency of the Company in the Borough of Manhattan, The City of New
York, or at the option of the holder of this Note, at the Corporate Trust
Office, a new Note or Notes of authorized denominations for an equal aggregate
principal amount will be issued to the transferee in exchange thereof, subject
to the limitations provided in the Indenture, without charge except for any tax
or other governmental charge imposed in connection therewith.
A-9
<PAGE> 106
The Company, the Trustee, any authenticating agent, any paying agent,
any conversion agent and any Note registrar may deem and treat the registered
holder hereof as the absolute owner of this Note (whether or not this Note shall
be overdue and notwithstanding any notation of ownership or other writing hereon
made by anyone other than the Company or any Note registrar), for the purpose of
receiving payment hereof, or on account hereof, for the conversion hereof and
for all other purposes, and neither the Company nor the Trustee nor any other
authenticating agent nor any paying agent nor any other conversion agent nor any
Note registrar shall be affected by any notice to the contrary. All payments
made to or upon the order of such registered holder shall, to the extent of the
sum or sums paid, satisfy and discharge liability for monies payable on this
Note.
No recourse for the payment of the principal of or any premium or
interest on this Note, or for any claim based hereon or otherwise in respect
hereof, and no recourse under or upon any obligation, covenant or agreement of
the Company in the Indenture or any indenture supplemental thereto or in any
Note, or because of the creation of any indebtedness represented thereby, shall
be had against any incorporator, stockholder, employee, agent, officer, director
or subsidiary, as such, past, present or future, of the Company or of any
successor corporation, either directly or through the Company or any successor
corporation, whether by virtue of any constitution, statute or rule of law or by
the enforcement of any assessment or penalty or otherwise, all such liability
being, by the acceptance hereof and as part of the consideration for the issue
hereof, expressly waived and released.
Terms used in this Note and defined in the Indenture are used herein as
therein defined.
A-10
<PAGE> 107
ABBREVIATIONS
The following abbreviations, when used in the inscription of the face
of this Note, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT -
Custodian
-----------------------
(Cust)
TEN ENT - as tenants by the
entireties -----------------------
(Minor)
JT TEN - as joint tenants with
right of survivorship Uniform Gifts to
and not as tenants in Minors Act
common ---------------
(State)
Additional abbreviations may also be used
though not in the above list.
A-11
<PAGE> 108
[FORM OF CONVERSION NOTICE]
To: SportsLine USA, Inc.
The undersigned registered owner of this Note hereby irrevocably
exercises the option to convert this Note, or the portion hereof (which is
$1,000 principal amount or an integral multiple thereof) below designated, into
shares of Common Stock in accordance with the terms of the Indenture referred to
in this Note, and directs that the shares issuable and deliverable upon such
conversion, together with any check in payment for fractional shares and any
Notes representing any unconverted principal amount hereof, be issued and
delivered to the registered holder hereof unless a different name has been
indicated below. If shares or any portion of this Note not converted are to be
issued in the name of a person other than the undersigned, the undersigned will
pay all transfer taxes payable with respect thereto. Any amount required to be
paid to the undersigned on account of interest accompanies this Note.
Dated:
-------------------------------
--------------------------------
--------------------------------
Signature(s)
- ---------------------------------------------
Signature Guarantee
Signature(s) must be guaranteed by an
eligible Guarantor Institution (banks, stock
brokers, savings and loan associations and
credit unions) with membership in an
approved signature guarantee medallion
program pursuant to Securities and Exchange
Commission Rule 17Ad-15 if shares of Common
Stock are to be issued, or Notes to be
delivered, other than to and in the name of
the registered holder.
A-12
<PAGE> 109
Fill in for registration of shares if to be
issued, and Notes if to be delivered, other
than to and in the name of the registered
holder:
- -------------------------------
(Name)
- -------------------------------
(Street Address)
- -------------------------------
(City, State and Zip Code)
Please print name and address
Principal amount to be converted (if less than all):
$______,000
---------------------------------------------
Social Security or Other Taxpayer Identification
Number
A-13
<PAGE> 110
[FORM OF OPTION TO ELECT REPAYMENT
UPON A REPURCHASE EVENT]
To: SportsLine USA, Inc.
The undersigned registered owner of this Note hereby acknowledges
receipt of a notice from SportsLine USA, Inc. (the "Company") as to the
occurrence of a Repurchase Event with respect to the Company and requests and
instructs the Company to repay the entire principal amount of this Note, or the
portion thereof (which is $1,000 principal amount or an integral multiple
thereof) below designated, in accordance with the terms of the Indenture
referred to in this Note, together with accrued interest to, but excluding, such
date, to the registered holder hereof.
Dated:
--------------------------
--------------------------------------
--------------------------------------
Signature(s)
--------------------------------------
Social Security or Other Taxpayer
Identification Number
Principal amount to be repaid (if less than
all): $______,000
NOTICE: The above signatures of the holder(s)
hereof must correspond with the name as
written upon the face of the Note in every
particular without alteration or enlargement
or any change whatever.
A-14
<PAGE> 111
[FORM OF ASSIGNMENT AND TRANSFER]
For value received ____________________________ hereby sell(s),
assign(s) and transfer(s) unto _________________ (Please insert social security
or Taxpayer Identification Number of assignee) the within Note, and hereby
irrevocably constitutes and appoints ________ _____________ attorney to transfer
the said Note on the books of the Company, with full power of substitution in
the premises.
In connection with any transfer of the within Note occurring within two
years (or such shorter holding period required under Rule 144(k) of the
Securities Act) of the original issuance of such Note (unless such Note is being
transferred pursuant to a registration statement that has been declared
effective under the Securities Act), the undersigned confirms that such Note is
being transferred:
[ ] To SportsLine USA, Inc. or a subsidiary thereof; or
[ ] Pursuant to and in compliance with Rule 144A under
the Securities Act of 1933, as amended; or
[ ] To an Institutional Accredited Investor pursuant to
and in compliance with the Securities Act of 1933,
as amended; or
[ ] Pursuant to and in compliance with Rule 144 under
the Securities Act of 1933, as amended;
and unless the box below is checked, the undersigned confirms that such Note is
not being transferred to an "affiliate" of the Company as defined in Rule 144
under the Securities Act of 1933, as amended (an "Affiliate"):
[ ] The transferee is an Affiliate of the Company.
A-15
<PAGE> 112
Dated:
-------------------------
- -------------------------------
- -------------------------------
Signature(s)
- -------------------------------
Signature Guarantee
Signature(s) must be guaranteed by an
eligible Guarantor Institution (banks, stock
brokers, savings and loan associations and
credit unions) with membership in an
approved signature guarantee medallion
program pursuant to Securities and Exchange
Commission Rule 17Ad-15 if shares of Common
Stock are to be issued, or Notes to be
delivered, other than to and in the name of
the required holder.
NOTICE: The signature on the conversion notice, the option to elect repurchase
upon a Repurchase Event or the assignment must correspond with the name as
written upon the face of the Note in every particular without alteration or
enlargement or any change whatever.
A-16
<PAGE> 113
EXHIBIT B
SportsLine USA, Inc.
6340 NW 5th Way
Ft. Lauderdale, FL 33309
State Street Bank and Trust
Two International Place, 4th Floor
Boston, Massachusetts 02110
Ladies and Gentlemen:
We are delivering this letter in connection with the resale or transfer
of 5% Convertible Subordinated Notes due 2006 (the "Notes") which are
convertible into shares of Common Stock, $.01 par value (the "Common Stock"), of
SportsLine USA (the "Company").
We hereby confirm that:
1. we are an "accredited investor" within the meaning of
Rule 501(a)(1), (2) or (3) under the Securities Act of 1933 (the
"Securities Act") or an entity in which all of the equity owners are
accredited investors within the meaning of Rule 501(a)(1), (2) or (3)
under the Securities Act;
2. (A) any purchase of Notes by us will be for our own
account or for the account of one or more other Institutional
Accredited Investors (defined below) or as fiduciary for the account of
one or more trusts, each of which is an "accredited investor" within
the meaning of Rule 501(a)(7) under the Securities Act (such trusts,
together with accredited investors within the meaning of Rule
501(a)(1), (2) or (3) under the Securities Act, an "Institutional
Accredited Investor") and for each of which we exercise sole investment
discretion or (B) we are a "bank," within the meaning of Section
3(a)(2) of the Securities Act, or a "savings and loan association" or
other institution described in Section 3(l)(5)(a) of the Securities Act
that is acquiring Notes as fiduciary for the account of one or more
institutions for which we exercise sole investment discretion;
3. in the event that we purchase any Notes, we will
acquire Notes having a minimum principal amount of not less than
$100,000 for our own account or for any separate account for which we
are acting;
4. we have such knowledge and experience in financial and
business matters that we are capable of evaluating the merits and risks
of purchasing the Notes; and
B-1
<PAGE> 114
5. we are not acquiring Notes with a view to distribution
thereof or with any present intention of offering or selling Notes or
the Common Stock issuable upon conversion thereof, except as permitted
below; provided that the disposition of our property and property of
any accounts for which we are acting as fiduciary shall remain at all
times within our control.
We understand that the Notes are being offered in a transaction not
involving any public offering within the United States within the meaning of the
Securities Act and that the Notes and the shares of Common Stock issuable upon
conversion thereof (the "Securities") have not been registered under the
Securities Act, and we agree, on our own behalf and on behalf of each account
for which we acquire any Securities, that if in the future we decide to resell
or otherwise transfer such Securities, such Securities may be resold or
otherwise transferred only (i) to the Company or any subsidiary thereof, or (ii)
to a person who is a "qualified institutional buyer" (as defined in Rule 144A
under the Securities Act) in a transaction meeting the requirements of Rule
144A, or (iii) to an Institutional Accredited Investor that, prior to such
transfer, furnishes to the Trustee or transfer agent for such Securities a
signed letter containing certain representations and agreements relating to the
restrictions on transfer of such Securities (the form of which letter can be
obtained from such Trustee or transfer agent), or (iv) pursuant to the exemption
from registration provided by Rule 144 under the Securities Art (if applicable),
or (v) pursuant to a registration statement which has been declared effective
under the Securities Act, and in each case, in accordance with any applicable
securities laws of any State of the United States or any other applicable
jurisdiction and in accordance with the legends set forth on the Securities. We
further agree to provide any person purchasing any of the Securities other than
pursuant to clause (v) above from us a notice advising such purchaser that
resales of such securities are restricted as stated herein. We understand that
the Trustee for the Notes and/or the transfer agent for the Common Stock will
not be required to accept for registration of transfer any Notes or any shares
of Common Stock issued upon conversion of the Notes except upon presentation of
evidence satisfactory to the Company that the foregoing restrictions on transfer
have been complied with. We further understand that any Notes and any
certificates representing Common Stock will be in the form of definitive
physical certificates and that such certificates will bear a legend reflecting
the substance of this paragraph other than certificates representing Common
Stock transferred pursuant to clause (v) above.
We acknowledge that the Company, others and you will rely upon our
confirmations, acknowledgments and agreements set forth herein, and we agree to
notify you promptly in writing if any of our representations or warranties
herein ceases to be accurate and complete.
B-2
<PAGE> 115
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICTS OF LAWS
AND PRINCIPLES THEREOF.
-----------------------------------
(Name of Purchaser)
By:
--------------------------------
Name:
Title:
Address:
B-3
<PAGE> 1
EXHIBIT 4.2
5% CONVERTIBLE SUBORDINATED NOTES DUE 2006
REGISTRATION RIGHTS AGREEMENT
Dated as of March 15, 1999
between
SPORTSLINE USA, INC.
as the Company,
and
BANCBOSTON ROBERTSON STEPHENS INC.
BT ALEX BROWN INCORPORATED
HAMBRECHT & QUIST LLC
PAINEWEBBER INCORPORATED
as Purchasers
<PAGE> 2
This Registration Rights Agreement is made and entered into as of March
15, 1999, between SportsLine USA, Inc., a Delaware corporation (the "Company"),
and BancBoston Robertson Stephens Inc., BT Alex Brown Incorporated, Hambrecht &
Quist LLC, PaineWebber Incorporated (the "Purchasers") who have purchased or
have the right to purchase up to $150,000,000 in aggregate principal amount of
5% Convertible Subordinated Notes due 2006 (or up to $200,000,000 if the option
set forth in Section 2(b) of the Purchase Agreement (as defined) is exercised in
full by the Initial Purchasers) of the Company pursuant to the Purchase
Agreement (as such term is defined in Section 1 hereof).
This Agreement is made pursuant to the Purchase Agreement, dated March
18, 1999, among the Company and the Purchasers (the "Purchase Agreement"). In
order to induce the Purchasers to enter into the Purchase Agreement, the Company
has agreed to provide the registration rights provided for in this Agreement to
the Purchasers and their respective direct and indirect transferees (i) for the
benefit of the Purchasers, (ii) for the benefit of the holders from time to time
of the Notes (as such term is defined in Section 1 hereof) (including the
Purchasers) and the holders from time to time of the Common Stock issuable or
issued upon conversion of the Notes and (iii) for the benefit of the securities
constituting the Transfer Restricted Securities (as such term is defined in
Section 1 hereof). The execution of this Agreement is a condition to the closing
of the transactions contemplated by the Purchase Agreement.
The parties hereby agree as follows:
1. Definitions. As used in this Agreement, the following terms
shall have the following meanings:
Act: As defined in this Section 1.
Advice: As defined in the last paragraph of Section 2(d)
hereof.
Affiliate: An affiliate of any specified person shall mean any
other person directly or indirectly controlling or controlled by or under direct
or indirect common control with such specified person. For the purposes of this
definition, "control," when used with respect to any 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 "affiliated," "controlling" and "controlled" have meanings correlative
to the foregoing.
Agreement: This Registration Rights Agreement, as the same may
be amended, supplemented or modified from time to time in accordance with the
terms hereof.
Business Day: Each Monday, Tuesday, Wednesday, Thursday and
Friday that is not a day on which banking institutions in New York, New York are
authorized or obligated by law or executive order to close.
Closing Date: March 24, 1999.
Common Stock: Common Stock, $0.01 par value per share, of the
Company and any other shares of common stock as may constitute "Common Stock"
for purposes of the Indenture, in each case, as issuable or issued upon
conversion of the Notes.
<PAGE> 3
Company: SportsLine USA, Inc., a Delaware corporation, and any
successor corporation thereto.
controlling person: As defined in Section 6(a) hereof.
Damages Payment Date: Each of the semi-annual interest
payment dates provided in the Indenture.
Effectiveness Period: As defined in Section 2(a) hereof.
Effectiveness Target Date: The 150th day following the
Closing Date.
Exchange Act: The Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated by the SEC thereunder.
Filing Date: The 60th day after the Closing Date.
Holder: Each owner of any Transfer Restricted Securities.
Indemnified Person: As defined in Section 6(a) hereof.
Indenture: The Indenture, dated as of the date hereof, between
the Company and the Trustee, pursuant to which the Notes are being issued, as
the same may be amended, modified or supplemented from time to time in
accordance with the terms thereof.
Liquidated Damages: As defined in Section 3(a) hereof.
Notes: The $150,000,000 aggregate principal amount of 5%
Convertible Subordinated Notes due 2006 of the Company being issued pursuant to
the Indenture (or $200,000,000 if the option set forth in Section 2(b) of the
Purchase Agreement is exercised in full by the Initial Purchasers).
Notice and Questionnaire: A written notice delivered to the
Company containing substantially the information called for by the Selling
Securityholder Notice and Questionnaire attached as Annex B to the Offering
Circular of the Company dated March 19, 1999 relating to the Notes.
Proceeding: An action, claim, suit or proceeding (including,
without limitation, an investigation or partial proceeding, such as a
deposition), whether commenced or threatened.
Prospectus: The prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement, with respect
to the resale of any of the Transfer Restricted Securities covered by such
Registration Statement, and all other amendments and supplements to any such
prospectus, including post-effective amendments, and all materials incorporated
by reference or deemed to be incorporated by reference, if any, in such
prospectus.
Purchase Agreement: As defined in the second paragraph hereof.
-3-
<PAGE> 4
Purchasers: As defined in the first paragraph hereof.
Record Holder: (i) with respect to any Damages Payment Date
relating to any Note as to which any such Liquidated Damages have accrued, the
registered Holder of such Note on the record date with respect to the interest
payment date under the Indenture on which such Damages Payment Date shall occur
and (ii) with respect to any Damages Payment Date relating to any shares of
Common Stock as to which any such Liquidated Damages have accrued, the
registered Holder of such shares 15 days prior to the next succeeding Damages
Payment Date.
Registration Default: As defined in Section 3(a) hereof.
Registration Statement: Any registration statement of the
Company filed with the SEC pursuant to the Securities Act that covers the resale
of any of the Transfer Restricted Securities pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
registration statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto, and all material incorporated by reference or
deemed to be incorporated by reference, if any, in such registration statement.
Requisite Information: As defined in Section 2(c) hereof.
Restricted Notes: Notes required pursuant to the Indenture to
bear the legend set forth in Section 2.5(d) of the Indenture.
Rule 144: Rule 144 promulgated by the SEC pursuant to the
Securities Act, as such Rule may be amended from time to time, or any successor
rule or regulation.
Rule 144A: Rule 144A promulgated by the SEC pursuant to the
Securities Act, as such Rule may be amended from time to time, or any successor
rule or regulation.
Rule 415: Rule 415 promulgated by the SEC pursuant to the
Securities Act, as such Rule may be amended from time to time, or any successor
rule or regulation.
Rule 424: Rule 424 promulgated by the SEC pursuant to the
Securities Act, as such Rule may be amended from time to time, or any successor
rule or regulation.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended, and
the rules and regulations promulgated by the SEC thereunder.
Shelf Registration Statement: As defined in Section 2 hereof.
Special Counsel: The special counsel to the Holders.
TIA: The Trust Indenture Act of 1939, as amended, and the
rules and regulations promulgated by the SEC thereunder.
-4-
<PAGE> 5
Transfer Restricted Securities: The Restricted Notes and the
shares of Common Stock into which such Restricted Notes are converted or
convertible (including any shares of Common Stock issued or issuable thereon
upon any stock split, stock combination, stock dividend or the like) upon
original issuance thereof, and at all times subsequent thereto, and associated
related rights, if any, until, in the case of any such Restricted Note or shares
of Common Stock (and associated rights) (i) the date on which the resale thereof
has been effectively registered under the Securities Act and disposed of in
accordance with the Registration Statement relating thereto, (ii) the date on
which such security has been distributed to the public pursuant to Rule 144 or
is saleable pursuant to paragraph (k) of Rule 144 or (iii) the date on which
such security ceases to be outstanding, whichever date is earliest.
Trustee: The trustee under the Indenture.
underwritten registration or underwritten offering: A
registration in connection with which securities of the Company are sold to one
or more underwriters for reoffering to the public pursuant to an effective
Registration Statement.
References herein to the term "Holders of a majority in
aggregate principal amount of Transfer Restricted Securities" or words to a
similar effect shall mean, with respect to any request, notice, demand,
objection or other action by the Holders hereunder or pursuant hereto (each, an
"Act"), registered Holders of a number of shares of then-outstanding Common
Stock constituting Transfer Restricted Securities and an aggregate principal
amount of then outstanding Notes constituting Transfer Restricted Securities,
such that the sum of such shares of Common Stock and the shares of Common Stock
issuable upon conversion of such Notes constitutes in excess of 50% of the sum
of all of the then-outstanding shares of Common Stock constituting Transfer
Restricted Securities and the number of shares of Common Stock issuable upon
conversion of then-outstanding Notes constituting Transfer Restricted
Securities. For purposes of the preceding sentence, Transfer Restricted
Securities owned, directly or indirectly, by the Company or its Affiliates shall
be deemed not to be outstanding.
2. Shelf Registration Statement
(a) The Company agrees to file with the SEC on or prior to the
Filing Date a Registration Statement for an offering to be made on a continuous
basis pursuant to Rule 415 covering all of the Transfer Restricted Securities or
separate Registration Statements for an offering to be made on a continuous
basis pursuant to Rule 415 covering all of the Notes constituting Transfer
Restricted Securities and all of the Common Stock constituting Transfer
Restricted Securities, respectively (such Registration Statement or Statements,
collectively, the "Shelf Registration Statement"). Each Shelf Registration
Statement shall be on Form S-3 under the Securities Act or another appropriate
form selected by the Company permitting registration of such Transfer Restricted
Securities for resale by the Holders in the manner or manners reasonably
designated by Holders of a majority in aggregate principal amount of Transfer
Restricted Securities being sold (including, without limitation, up to three
underwritten offerings). The Company shall not permit any securities other than
the Transfer Restricted Securities to be included in any Shelf Registration
Statement. The Company shall use its best efforts to cause each Shelf
Registration Statement to be declared effective pursuant to the Securities Act
as promptly as is practicable following the filing thereof and to keep each
Shelf Registration Statement continuously effective under the Securities Act for
two years after the latest date of original issuance of
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<PAGE> 6
any of the Notes (subject to extension pursuant to Sections 2(d) hereof) (the
"Effectiveness Period"), or such shorter period ending when there cease to be
any Transfer Restricted Securities outstanding.
(b) Supplements and Amendments. The Company shall use its best
efforts to keep each Shelf Registration Statement continuously effective by
supplementing and amending the Shelf Registration Statement if required by the
rules, regulations or instructions applicable to the registration form used for
such Shelf Registration Statement, if required by the Securities Act or if
reasonably requested by the Holders of a majority in aggregate principal amount
of the Transfer Restricted Securities or by any underwriter of such Transfer
Restricted Securities; provided, however, that the Effectiveness Period shall be
extended as provided in Section 2(d) hereof.
(c) Selling Securityholder Information. Each Holder of
Transfer Restricted Securities agrees that if such Holder wishes to sell
Transfer Restricted Securities pursuant to a Shelf Registration Statement and
related Prospectus, it will do so only in accordance with this Section 2. Each
Holder of Transfer Restricted Securities wishing to sell Transfer Restricted
Securities pursuant to a Shelf Registration Statement and related Prospectus
agrees to deliver a Notice and Questionnaire that includes such information
regarding the distribution of its Transfer Restricted Securities as is required
by law to be disclosed by the Holder in the applicable Registration Statement
(the "Requisite Information") to the Company prior to any intended distribution
of Transfer Restricted Securities under the Shelf Registration Statement. From
and after the date the Shelf Registration Statement becomes effective, the
Company shall, as promptly as is practicable after the date a Notice and
Questionnaire is delivered, and in any event within five (5) Business Days after
such date, (i) if required by applicable law, file with the SEC a post-effective
amendment to the Shelf Registration Statement or prepare and, if required by
applicable law, file a supplement to the related Prospectus or a supplement or
amendment to any document incorporated therein by reference or file any other
required document so that the Holder delivering such Notice and Questionnaire is
named as a selling securityholder in the Shelf Registration Statement and the
related Prospectus in such a manner as to permit such Holder to deliver such
Prospectus to purchasers of the Transfer Restricted Securities in accordance
with applicable law and, if the Company shall file a post-effective amendment to
the Shelf Registration Statement, use its reasonable best efforts to cause such
post-effective amendment to be declared effective under the Securities Act as
promptly as is practicable, but in any event by the date that is forty-five (45)
days after the date such post-effective amendment is required by this clause to
be filed; (ii) provide such Holder copies of any documents filed pursuant to
Section 2(c)(i); and (iii) notify such Holder as promptly as practicable after
the effectiveness under the Securities Act of any post-effective amendment filed
pursuant to Section 2(c)(i); provided, that if such Notice and Questionnaire is
delivered during the time a Holder receives a notice from the Company pursuant
to Section 2(d) that the use of the Prospectus shall be discontinued, the
Company shall so inform the Holder delivering such Notice and Questionnaire and
shall take the actions set forth in clauses (i), (ii) and (iii) above upon such
time the use of the Prospectus may be resumed, provided, further, that if under
applicable law the Company has more than one option as to the type or manner of
making any such filing, it will make the required filing or filings in the
manner or of a type reasonably expected to result in the earliest availability
of the Prospectus for effecting resales of Transfer Restricted Securities.
If any such Registration Statement refers to any Holder by
name or otherwise as the holder of any securities of the Company, then such
Holder shall have the right to require, in the event that such reference to such
Holder by name or otherwise is not required by the Securities Act or any
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<PAGE> 7
similar Federal statute then in force, the deletion of the reference to such
Holder in such Registration Statement at any time subsequent to the time that
such reference ceases to be required.
(d) Certain Notices; Suspension of Sales. Each Holder agrees
by acquisition of such Transfer Restricted Securities that, upon receipt of any
notice from the Company of the happening of any event of the kind described in
Section 4(c)(ii), 4(c)(iii), 4(c)(v) or 4(c)(vi) hereof, such Holder will
forthwith discontinue disposition of such Transfer Restricted Securities covered
by such Registration Statement and Prospectus (other than in transactions exempt
from the registration requirements under the Securities Act) until such Holder's
receipt of the copies of the supplemented or amended Prospectus contemplated by
Sections 4(c)(i) and 4(k) hereof, or until it is advised in writing (the
"Advice") by the Company that the use of the applicable Prospectus may be
resumed, and, in either case, has received copies of any additional or
supplemental filings that are incorporated or deemed to be incorporated by
reference in such Prospectus. If the Company shall give any such notice, the
Effectiveness Period shall be extended by the number of days during such period
from and including the date of the giving of such notice to and including the
date when each Holder shall have received (x) the copies of the supplemented or
amended Prospectus contemplated by Sections 4(c)(i) and 4(k) hereof or (y) the
Advice, and, in either case, has received copies of any additional or
supplemental filings that are incorporated or deemed to be incorporated by
reference in such Prospectus.
3. Liquidated Damages
(a) The Company and the Purchasers agree that the Holders will
suffer damages if the Company fails to fulfill its obligations pursuant to
Section 2 hereof and that it would not be possible to ascertain the extent of
such damages. Accordingly, the Company hereby agrees to pay liquidated damages
("Liquidated Damages") under the circumstances and to the extent set forth
below:
(i) to each Holder if the Shelf Registration Statement
has not been filed with the SEC on or prior to the Filing
Date; or
(ii) to each Holder if each Shelf Registration Statement
is not declared effective by the SEC on or prior to the
applicable Effectiveness Target Date;
(iii) to each Holder any Shelf Registration Statement
ceases to be effective or usable at any time during the
Effectiveness Period (without being succeeded on the same day
immediately by a post-effective amendment or supplement to
such Registration Statement that cures such failure and that
is itself, in the case of post-effective amendment,
immediately declared effective) for a period of time which
shall exceed 90 days in the aggregate in any period of 365
consecutive days; or
(iv) to the particular Holder affected by the Company's
failure to perform its obligations set forth in Section 2(c)
within the time period required therein;
(any of the foregoing, a "Registration Default"); provided that the fact that a
Shelf Registration Statement is not usable by a particular Holder at any given
time solely as a result of the failure of such Holder to provide Requisite
Information with respect to it shall not be relevant for purposes of clause
(iii) above unless such Holder shall have provided such information to the
Company and the Company shall have
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<PAGE> 8
failed to file an appropriate Prospectus supplement or post-effective amendment
to the Registration Statement. In the event of any such Registration Default,
the Company shall accrue Liquidated Damages to each applicable Holder during the
first 90-day period immediately in an amount equal to $.05 per week per $1,000
principal amount of Notes held by such Holder and, if applicable, on an
equivalent basis per share (subject to adjustment in the event of any stock
split, stock combination, stock dividends and the like) of Common Stock
constituting Transfer Restricted Securities held by such Holder for each week or
portion thereof that the Registration Default continues. The weekly rate at
which such Liquidated Damages accrue shall increase by an additional $.05 per
$1,000 principal amount of Notes and, if applicable, an equivalent amount per
week per share (subject to adjustment as set forth above) of Common Stock
constituting Transfer Restricted Securities for each subsequent continuing
90-day period following the occurrence of such Registration Default until all
Registration Defaults have been cured; provided, however, that Liquidated
Damages shall not at any time exceed $.25 per week per $1,000 principal amount
of Notes or, as applicable, an equivalent amount per week per share (subject to
adjustment as set forth above) of Common Stock constituting Transfer Restricted
Securities. Following the cure of all Registration Defaults, the accrual of
Liquidated Damages shall cease (without in any way limiting the effect of any
subsequent Registration Default). A Registration Default under clause (i) above
shall be cured on the date that the applicable Shelf Registration Statement is
filed with the SEC; a Registration Default under clause (ii) above shall be
cured on the date that the applicable Shelf Registration Statement is declared
effective by the SEC; a Registration Default under clause (iii) above shall be
cured on the date the applicable Shelf Registration Statement is declared
effective or otherwise usable; and a Registration Default under clause (iv)
above shall be cured on the date the applicable prospectus supplement to the
Shelf Registration Statement is filed or the post-effective amendment with
respect to such Shelf Registration Statement is declared effective.
(b) The Company shall notify the Trustee within one Business
Day after each and every date on which a Registration Default occurs. Liquidated
Damages shall be paid by the Company to the Record Holders on each Damages
Payment Date in the same manner as interest is paid under the Indenture, in the
case of the Notes, and by mailing checks to their registered addresses in the
register of the Company for the Common Stock, in the case of shares of Common
Stock; provided, however, that any Liquidated Damages accrued with respect to
any Note or portion thereof called for redemption on a redemption date,
repurchased in connection with a Repurchase Event (as defined in the Indenture)
on a repurchase date, or converted into shares of Common Stock on a conversion
date prior to the Damages Payment Date, shall, in any such event, be paid
instead to the Holder who submitted such Note or portion thereof for redemption,
repurchase or conversion on the applicable redemption date, repurchase date or
conversion date, as the case may be, on such date (promptly following the
conversion date, in the case of conversion of a Note). In no event shall the
Company be required to pay Liquidated Damages in excess of the applicable
maximum weekly amount set forth above, regardless of whether one or multiple
Registration Defaults shall exist.
(c) All of the Company's obligations set forth in this Section
3 which are unsatisfied to any extent with respect to any Transfer Restricted
Securities at the time such security ceases to be a Transfer Restricted Security
shall survive until such time as all such obligations with respect to such
security have been satisfied in full (notwithstanding the earlier termination of
this Agreement).
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<PAGE> 9
(d) Any payments due and payable pursuant to this Section 3
with respect to any Notes shall be subject to the provisions of Article IV of
the Indenture as if such payments were additional interest on the Notes.
(e) The parties hereto agree that the Liquidated Damages
provided for in this Section 3 constitute a reasonable estimate of the damages
that may be incurred by holders of record of Transfer Restricted Securities by
reason of the failure of the Shelf Registration Statement to be filed or
declared effective or unavailable (absolutely or as a practical matter) for
effecting resales of Transfer Restricted Securities in accordance with the
provisions hereof. Notwithstanding the foregoing, the parties agree that the
sole contractual damages payable for a violation of the terms of this Agreement
with respect to which Liquidated Damages are expressly provided shall be such
Liquidated Damages. Nothing in this Section 3(e), however, shall preclude a
holder of Transfer Restricted Securities from pursuing or obtaining specific
performance or other equitable relief with respect to the Company's failure to
pay Liquidated Damages pursuant to this Agreement.
4. Registration Procedures. In connection with the Company's
registration obligations hereunder, the Company shall effect such registrations
on the appropriate form selected by the Company to permit the resale of Transfer
Restricted Securities in accordance with the intended method or methods of
disposition thereof, and pursuant thereto the Company shall as expeditiously as
reasonably possible:
(a) No fewer than five Business Days prior to the initial
filing of a Registration Statement or Prospectus and no fewer than two Business
Days prior to the filing of any amendment or supplement thereto (excluding,
unless requested, any document that would be incorporated or deemed to be
incorporated therein by reference), furnish to the registered (as of the most
recent reasonably practicable date which shall not be more than two Business
Days prior to the date such document is personally delivered, delivered to a
next-day courier, deposited in the mail or telecopied, as the case may be)
Holders, Special Counsel and the managing underwriters, if any, copies of all
such documents proposed to be filed (excluding, unless requested, those
incorporated or deemed to be incorporated by reference) and cause the officers
and directors of the Company, counsel to the Company and independent certified
public accountants to the Company to respond to such inquiries as shall be
necessary in connection with such Registration Statement, in the opinion of
Special Counsel and counsel to such underwriters, to conduct a reasonable
investigation within the meaning of the Securities Act. The Company shall not
file any such Registration Statement or related Prospectus or any amendments or
supplements thereto to which the Holders of a majority in aggregate principal
amount of the Transfer Restricted Securities, Special Counsel, or the managing
underwriters, if any, shall reasonably object on a timely basis;
(b) Prepare and file with the SEC such amendments, including
post-effective amendments, to each Registration Statement as may be necessary to
keep such Registration Statement continuously effective for the applicable time
period set forth in Section 2(a) hereof; cause the related Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented to be
filed pursuant to Rule 424 under the Securities Act and the Exchange Act with
respect to the disposition of all securities covered by such Registration
Statement during such period in accordance with the intended method or methods
of disposition by the Holder set forth in such Registration Statement as so
amended or in such Prospectus as so supplemented (including, without limitation,
the filing of any Prospectus supplement pursuant to Rule 424 in order to add or
change any selling security holder
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<PAGE> 10
information (including any such supplements or amendments pursuant to Section
2(c) hereof, provided such Holder to which such change applies complies with the
Requisite Information requirements of Section 2(c) hereof));
(c) Notify the registered (as of the most recent reasonably
practicable date which shall not be more than two Business Days prior to the
date such notice is personally delivered, delivered to a next-day courier,
deposited in the mail or telecopied, as the case may be) Holders, Special
Counsel and the managing underwriters, if any, promptly (and in the case of an
event specified by clause (i)(A) of this paragraph in no event fewer than two
Business Days prior to such filing), and (if requested by any such person),
confirm such notice in writing, (i)(A) when a Prospectus or any Prospectus
supplement or post-effective amendment is proposed to be filed, and, (B) with
respect to a Registration Statement or any post-effective amendment, when the
same has become effective, (ii) of any request of the SEC or any other Federal
or state governmental authority for amendments or supplements to such
Registration Statement or related Prospectus or for additional information
related thereto, (iii) of the issuance by the SEC, any state securities
commission, any other governmental agency or any court of any stop order, order
or injunction suspending or enjoining the use or the effectiveness of the
Registration Statement or the initiation of any proceedings for that purpose,
(iv) if at any time any of the representations and warranties of the Company
contained in any agreement (including any underwriting agreement) contemplated
by Section 4(m) hereof are not true and correct in all material respects, (v) of
the receipt by the Company of any notification with respect to the suspension of
the qualification or exemption from qualification of any of the Transfer
Restricted Securities for sale in any jurisdiction, or the initiation or
threatening of any proceeding for such purpose, and (vi) of the existence of any
fact and the happening of any event that makes any statement made in such
Registration Statement or related Prospectus untrue in any material respect, or
that requires the making of any changes in such Registration Statement or
Prospectus so that in the case of the Registration Statement, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading and that, in the case of the Prospectus, such Prospectus will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
(d) Use its best efforts to avoid the issuance of, or, if
issued, obtain the withdrawal of any stop order or order enjoining or suspending
the use or effectiveness of a Registration Statement or the lifting of any
suspension of the qualification (or exemption from qualification) of any of the
Transfer Restricted Securities for sale in any jurisdiction, at the earliest
practicable moment;
(e) If requested by the Special Counsel, the managing
underwriters, if any, or the Holders of a majority in aggregate principal amount
of the Transfer Restricted Securities being sold in connection with such
offering, (i) promptly include in a Prospectus supplement or post-effective
amendment such information as the Special Counsel, the managing underwriters, if
any, and such Holders agree should be included therein, and (ii) make all
required filings of such Prospectus supplement or such post-effective amendment
as soon as reasonably practicable after the Company has received notification of
the matters to be included in such Prospectus supplement or post-effective
amendment; provided, however, that the Company shall not be required to take any
action pursuant to this Section 4(e) that would, in the opinion of counsel for
the Company, violate applicable law or which is not reasonably required to
comply with applicable securities laws;
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<PAGE> 11
(f) Furnish to each Holder who so requests, Special Counsel
and each managing underwriter, if any, without charge, at least one conformed
copy of each Registration Statement and each amendment thereto, including
financial statements (but excluding schedules, all documents incorporated or
deemed to be incorporated therein by reference and all exhibits, unless
requested in writing by such Holder, Special Counsel or managing underwriter);
(g) Deliver to each Holder, the Special Counsel, and the
underwriters, if any, without charge, as many copies of the Prospectus or
Prospectuses (including each form of Prospectus) and each amendment or
supplement thereto to as such persons may reasonably request; and, unless the
Company shall have given notice to such Holder pursuant to Section 4(c)(vi), the
Company hereby consents to the use of such Prospectus and each amendment or
supplement thereto by each of the selling Holders of Transfer Restricted
Securities and the underwriters, if any, in connection with the offering and
sale of the Transfer Restricted Securities covered by such Prospectus and any
amendment or supplement thereto, provided, however, that no Holder shall be
entitled to use the Prospectus unless and until such Holder shall have furnished
to the Company any and all Requisite Information pursuant to Section 2(c)
hereof;
(h) Use its best efforts to register or qualify, or cooperate
with the Holders of Transfer Restricted Securities to be sold or tendered for,
the underwriters, if any, and their respective counsel in connection with the
registration or qualification (or exemption from such registration or
qualification) of, such Transfer Restricted Securities for offer and sale under
the securities or Blue Sky laws of such jurisdictions within the United States
as any Holder or underwriter reasonably requests in writing, keep each such
registration or qualification (or exemption therefrom) effective during the
period such Registration Statement is required to be kept effective and do any
and all other acts or things necessary legally to enable the disposition in such
jurisdictions of the Transfer Restricted Securities covered by the applicable
Registration Statement; provided, however, that the Company shall not be
required to qualify generally to do business in any jurisdiction where it is not
then so qualified, take any action that would subject it to general service of
process in any such jurisdiction where it is not then so subject or subject the
Company to any tax in any such jurisdiction where it is not then so subject;
(i) In connection with any sale or transfer of Transfer
Restricted Securities that will result in such securities no longer being
Transfer Restricted Securities, cooperate with the Holders and the managing
underwriters, if any, to (A) facilitate the timely preparation and delivery of
certificates representing Transfer Restricted Securities to be sold, which
certificates shall not bear any restrictive legends, shall bear a CUSIP number
different from the CUSIP number for the Transfer Restricted Securities and shall
be in a form eligible for deposit with The Depository Trust Company and (B)
enable such Transfer Restricted Securities to be in such denominations and
registered in such names as the managing underwriters, if any, or Holders may
reasonably request at least two Business Days prior to any sale of Transfer
Restricted Securities;
(j) Use its best efforts to cause the offering of the Transfer
Restricted Securities covered by the Registration Statement to be registered
with or approved by such other governmental agencies or authorities within the
United States, except as may be reasonably required as a consequence of the
nature of a Holder's business, in which case the Company will cooperate in all
reasonable respects with the filing of such Registration Statement and the
granting of such approvals as may be reasonably
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<PAGE> 12
necessary to enable the seller or sellers thereof or the underwriters, if any,
to consummate the disposition of such Transfer Restricted Securities; provided,
however, that the Company shall not be required to register the Transfer
Restricted Securities in any jurisdiction that would require the Company to
qualify to do business in any jurisdiction where it is not then so qualified,
subject it to general service of process in any such jurisdiction where it is
not then so subject or subject the Company to any tax in any such jurisdiction
where it is not then so subject or to;
(k) Upon the occurrence of any event contemplated by Section
4(c)(vi) hereof, as promptly as reasonably practicable, prepare a supplement or
amendment, including, if appropriate, a post-effective amendment, to each
Registration Statement or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, and file any
other required document so that, as thereafter delivered, such Prospectus 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 under which they were made, not misleading;
(l) Prior to the effective date of the first Registration
Statement relating to the Transfer Restricted Securities, to provide a CUSIP
number for the Transfer Restricted Securities to be sold pursuant to the
Registration Statement;
(m) Enter into such agreements (including an underwriting
agreements in form, scope and substance as are customary in underwritten
offerings) reasonably satisfactory to the Company and take all such other
reasonable actions in connection therewith (including those reasonably requested
by the managing underwriters, if any, or the Holders of a majority in aggregate
principal amount of the Transfer Restricted Securities being sold) in order to
expedite or facilitate the sale of such Transfer Restricted Securities;
provided, however, that the Company is required to facilitate no more than two
underwritten offerings. In such connection, whether or not an underwriting
agreement is entered into and whether or not the registration is an underwritten
registration, (i) make such representations and warranties to the Holders of
such Transfer Restricted Securities and the underwriters, if any, with respect
to the business of the Company and its subsidiaries (including with respect to
businesses or assets acquired or to be acquired by any of them), and the
Registration Statement, Prospectus and documents, if any, incorporated or deemed
to be incorporated by reference therein, in each case, in form, substance and
scope as are customarily made by issuers to underwriters in underwritten
offerings and reasonably acceptable to the Company, and confirm the same if and
when requested; (ii) seek to obtain opinions of counsel to the Company and
updates thereof (which counsel and opinions (in form, scope and substance) shall
be reasonably satisfactory to the managing underwriters, if any, and Special
Counsel to the Holders of the Transfer Restricted Securities being sold,
addressed to each selling Holder of Transfer Restricted Securities and each of
the underwriters, if any, covering the matters customarily covered in opinions
requested in underwritten offerings (including any such matters as may be
reasonably requested by such Special Counsel and underwriters); (iii) use all
reasonable efforts to obtain customary "cold comfort" letters and updates
thereof from the independent certified public accountants of the Company (and,
if necessary, any other independent certified public accountants of any
subsidiary of the Company or of any business acquired by the Company for which
financial statements and financial data is, or is required to be, included in
the Registration Statement), addressed (where reasonably possible) to each
selling Holder of Transfer Restricted Securities and each of the underwriters,
if any, such letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with underwritten
offerings; (iv) if an underwriting agreement is entered into, the same shall
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<PAGE> 13
contain indemnification provisions and procedures no less favorable to the
selling Holders of Transfer Restricted Securities and the underwriters, if any,
than those set forth in Section 6 hereof (or such other provisions and
procedures acceptable to Holders of a majority in aggregate principal amount of
the Transfer Restricted Securities covered by such Registration Statement and
the managing underwriters); and (v) deliver such documents and certificates as
may be reasonably requested by the Holders of majority in aggregate principal
amount of the Transfer Restricted Securities being sold, their Special Counsel
or the managing underwriters, if any, to evidence the continued validity of the
representations and warranties made pursuant to clause (i) of this Section 4(m)
and to evidence compliance with any customary conditions contained in the
underwriting agreement or other agreement entered into by the Company;
(n) Make available for inspection by a representative of the
Holders of Transfer Restricted Securities being sold, any underwriter
participating in any such disposition of Transfer Restricted Securities, if any,
and any attorney, consultant or accountant retained by such selling Holders or
underwriter, at the offices where normally kept, during reasonable business
hours, all financial and other records, pertinent corporate documents and
properties of the Company and its subsidiaries as they may reasonably request,
and cause the officers, directors, agents and employees of the Company and its
subsidiaries to supply all information in each case reasonably requested by any
such representative, underwriter, attorney, consultant or accountant in
connection with such Registration Statement, provided, however, that such
persons shall first agree in writing with the Company that any information that
is reasonably and in good faith designated by the Company in writing as
confidential at the time of delivery or inspection (as the case may be) of such
information shall be kept confidential by such persons, unless (i) disclosure of
such information is required by court or administrative order or is necessary to
respond to inquiries of regulatory authorities, (ii) disclosure of such
information is required by law (including any disclosure requirements pursuant
to Federal securities laws in connection with the filing of any Registration
Statement or the use of any Prospectus), (iii) such information becomes
generally available to the public other than as a result of a disclosure or
failure to safeguard by any such person or (iv) such information becomes
available to any such person from a source other than the Company and such
source is not bound by a confidentiality agreement.
(o) Cause the Indenture to be qualified under the TIA not
later than the effective date of the first Registration Statement relating to
the Transfer Restricted Securities; and in connection therewith, cooperate with
the Trustee and the Holders of Notes constituting Transfer Restricted Securities
to effect such changes to the Indenture, if any, as may be required for such
Indenture to be so qualified in accordance with the terms of the TIA; and
execute, and use its best efforts to cause the Trustee to execute, all customary
documents as may be required to effect such changes, and all other forms and
documents (including Form T-1) required to be filed with the SEC to enable the
Indenture to be so qualified under the TIA in a timely manner.
(p) Comply with applicable rules and regulations of the SEC
and make generally available to its security holders earning statements
satisfying the provisions of Section 11(a) of the Securities Act or Rule 158 of
the Securities Act (or any similar rule promulgated under the Securities Act),
no later than 45 days after the end of any 12-month period (or 90 days after the
end of any 12-month period if such period is a fiscal year) (i) commencing at
the end of any fiscal quarter in which Transfer Restricted Securities are sold
to underwriters in a firm commitment or best efforts underwritten offering and
(ii) if not sold to underwriters in such an offering, commencing on the first
day of the first
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<PAGE> 14
fiscal quarter after the effective date of a Registration Statement, which
statement shall cover said period, consistent with the requirements of Rule 158
of the Securities Act; and
(q) (i) list all shares of Common Stock covered by such
Registration Statement on any securities exchange on which the Common Stock is
then listed or (ii) authorize for quotation on the National Association of
Securities Dealers Automated Quotation System ("Nasdaq") or the National Market
of Nasdaq all Common Stock covered by such Registration Statement if the Common
Stock is then so authorized for quotation.
5. Registration Expenses
(a) All fees and expenses incident to the performance of or
compliance with this Agreement by the Company shall be borne by it whether or
not any Registration Statement is filed or becomes effective and whether or not
any securities are offered or sold pursuant to any Registration Statement. The
fees and expenses referred to in the foregoing sentence shall include, without
limitation, (i) all registration and filings fees (including, without
limitation, fees and expenses (A) with respect to filings required to be made
with the National Association of Securities Dealers, Inc. and (B) in compliance
with securities or Blue Sky laws (including, without limitation and in addition
to that provided for in (b) below, reasonable fees and disbursements of counsel
for the underwriters or the Special Counsel in connection with Blue Sky
qualifications of the Transfer Restricted Securities and determination of the
eligibility of the Transfer Restricted Securities for investment under the laws
of such jurisdictions as the managing underwriters, if any, or Holders of a
majority in aggregate principal amount of Transfer Restricted Securities, may
designate)), (ii) printing expenses (including, without limitation, expenses of
printing certificates for Transfer Restricted Securities in a form eligible for
deposit with The Depository Trust Company and of printing Prospectuses if the
printing of Prospectuses is required by the managing underwriters, if any, or by
the Holders of a majority in aggregate principal amount of the Transfer
Restricted Securities included), (iii) messenger, telephone and delivery
expenses, (iv) fees and disbursements of counsel for the Company and the Special
Counsel (plus any local counsel deemed appropriate by the Holders of a majority
in aggregate principal amount of the Transfer Restricted Securities) in
accordance with the provisions of Section 5(b) hereof, (v) fees and
disbursements of all independent certified public accountants referred to in
Section 4(m)(iii) (including, without limitation, the expenses of any special
audit and "comfort" letters required by or incident to such performance), (vi)
Securities Act liability insurance, if the Company so desires such insurance,
and (vii) fees and expenses of all other persons retained by the Company. In
addition, the Company shall pay its internal expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), the expense of an annual audit and the fees and
expenses incurred in connection with the listing of the securities to be
registered on any securities exchange or the Nasdaq or the Nasdaq National
Market. Notwithstanding anything in this Agreement to the contrary, each Holder
shall pay all underwriting discounts and brokerage commissions with respect to
any Transfer Restricted Securities sold by it.
(b) In connection with any registration hereunder, the Company
shall reimburse the Holders of the Transfer Restricted Securities being
registered or tendered for in such registration for the reasonable fees and
disbursements of not more than one firm of attorneys representing the selling
Holders, which firm shall initially be Wilson Sonsini Goodrich & Rosati,
Professional Corporation, but which may, with the written consent of the Initial
Purchasers (which shall not be unreasonably withheld),
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<PAGE> 15
be another nationally recognized law firm experienced in securities law matters
designated by the Company unless and until another Special Counsel shall have
been selected by a majority in aggregate principal amount of the Transfer
Restricted Securities and notice hereof shall have been given to the Company.
6. Indemnification
(a) The Company agrees to indemnify and hold harmless (i) the
Purchasers, (ii) each Holder, (iii) each person, if any, who controls (within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act) any of the foregoing (any of the persons referred to in this clause (iii)
being hereinafter referred to as a "controlling person"), and (iv) the
respective officers, directors, partners, employees, representatives and agents
of the Purchasers, the Holders (including predecessor Holders), or any
controlling person (any person referred to in clause (i), (ii), (iii) or (iv)
may hereinafter be referred to as an "Indemnified Person"), from and against any
and all losses, claims, damages, liabilities, expenses and judgments caused by
any untrue statement or alleged untrue statement of a material fact contained in
any Registration Statement or Prospectus or in any amendment or supplement
thereto or in any preliminary Prospectus, or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of any Prospectus or
supplement thereto, in light of the circumstances under which they were made)
not misleading, except insofar as such losses, claims, damages, liabilities,
expenses or judgments are caused by any such untrue statement or omission or
alleged untrue statement or omission based upon information relating to any
Indemnified Person furnished to the Company by or on behalf of such Indemnified
Person expressly for use therein; provided, however, that the foregoing
indemnity with respect to any preliminary Prospectus shall not inure to the
benefit of any Indemnified Person from whom the person asserting such losses,
claims, damages, liabilities, expenses and judgments purchased securities if
such untrue statement or omission or alleged untrue statement or omission made
in such preliminary Prospectus is eliminated or remedied in the Prospectus and a
copy of the Prospectus shall not have been furnished to such person in a timely
manner due to the wrongful action or wrongful inaction of such Indemnified
Person, whether as a result of negligence or otherwise.
(b) In case any action shall be brought against any
Indemnified Person, based upon any Registration Statement or any such Prospectus
or any amendment or supplement thereto and with respect to which indemnity may
be sought against the Company, such Indemnified Person shall promptly notify the
Company in writing and the Company shall assume the defense thereof, including
the employment of counsel reasonably satisfactory to such Indemnified Person and
payment of all fees and expenses. Any Indemnified Person shall have the right to
employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Person, unless (i) the employment of such counsel shall have
been specifically authorized in writing by the Company, (ii) the Company shall
have failed to assume the defense and employ counsel or (iii) such Indemnified
Person or Persons shall have been advised by counsel that there may be a
conflict between the positions of the indemnifying party or parties and of the
indemnified party or parties in conducting the defense of such action or
proceeding or that there may be legal defenses available to such Indemnified
Person or Persons different from or in addition to those available to the
indemnifying party or parties (in which case the Company shall not have the
right to assume the defense of such action on behalf of such Indemnified Person,
it being understood, however, that the Company shall not, in connection with any
one such action or separate but substantially similar or related actions in
-15-
<PAGE> 16
the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one separate
firm of attorneys (in addition to any local counsel) for all such Indemnified
Persons, which firm shall be designated in writing by such Indemnified Persons,
and that all such fees and expenses shall be reimbursed as they are incurred).
The Company shall not be liable for any settlement of any such action effected
without its written consent but if settled with the written consent of the
Company, the Company agrees to indemnify and hold harmless any Indemnified
Person from and against any loss or liability by reason of such settlement. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in respect
of which any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party from all liability
on claims that are the subject matter of such proceeding.
(c) In connection with any Registration Statement pursuant to
which any Holder (or predecessor Holder) sold or offered for resale Transfer
Restricted Securities, such Holder (or predecessor Holder) agrees, severally and
not jointly, to indemnify and hold harmless the Company, its directors, its
officers and any person controlling the Company within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act, to the same extent as
the foregoing indemnity from the Company to each Indemnified Person but only
with reference to information relating to such Indemnified Person furnished by
or on behalf of such Indemnified Person expressly for use in such Registration
Statement. In case any action shall be brought against the Company, any of its
directors, any such officer or any person controlling the Company based on such
Registration Statement and in respect of which indemnity may be sought against
any Indemnified Person, the Indemnified Person shall have the rights and duties
given to the Company (except that if the Company shall have assumed the defense
thereof, such Indemnified Person shall not be required to do so, but may employ
separate counsel therein and participate in defense thereof but the fees and
expenses of such counsel shall be at the expense of such Indemnified Person),
and the Company, its directors, any such officers and any person controlling the
Company shall have the rights and duties given to the Indemnified Person by
Section 6(b) hereof.
(d) If the indemnification provided for in this Section 6 is
unavailable to an indemnified party in respect of any losses, claims, damages,
liabilities, expenses or judgments referred to therein, then each indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities, expenses and judgments (i) in such proportion as
is appropriate to reflect the relative benefits received by the Company on the
one hand and each Indemnified Person on the other hand pursuant tot he Purchase
Agreement or from the offering for resale of the Transfer Restricted Securities
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company and each such Indemnified Person in connection with the statements
or omissions which resulted in such losses, claims, damages, liabilities,
expenses or judgments, as well as any other relevant equitable considerations.
The relative fault of the Company and each such Indemnified Person shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the Company or such Indemnified Person and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission.
-16-
<PAGE> 17
The Company, the Holders and the Purchasers 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 Indemnified Person 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 the
immediately preceding paragraph. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, liabilities, expenses or
judgments referred to in the immediately preceding paragraph shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 6, no Indemnified Person shall be required to contribute any amount in
excess of the amount by which the total net profit received by it in connection
with the sale of the Transfer Restricted Securities pursuant to this Agreement
exceeds the amount of any damages which such Indemnified Person has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Indemnified Persons' obligations to contribute pursuant
to this Section 6(d) are several in proportion to the respective amount of
Transfer Restricted Securities included in and sold pursuant to any such
Registration Statement by each Indemnified Person and not joint.
7. Rules 144 and 144A
The Company shall to file the reports required to be filed by
it under the Securities Act and the Exchange Act in a timely manner and, if at
any time it is not required to file such reports but in the past had been
required to or did file such reports, it will, upon the request of any Holder,
make available other information as required by, and so long as necessary to
permit sales of, its Transfer Restricted Securities pursuant to Rule 144 and
Rule 144A. Notwithstanding the foregoing, nothing in this Section 7 shall be
deemed to require the Company to register any of its securities pursuant to the
Exchange Act.
8. Underwritten Registrations
If any of the Transfer Restricted Securities covered by any
Shelf Registration Statement are to be sold in an underwritten offering, the
investment banker or investment bankers and manager or managers that will
administer the offering will be investment bankers of recognized national
standing selected by the Holders of a majority in aggregate principal amount of
such Transfer Restricted Securities included in such offering, subject to the
consent of the Company (which will not be unreasonably withheld or delayed).
No person may participate in any underwritten registration
hereunder unless such person (i) agrees to sell such person's Transfer
Restricted Securities on the basis reasonably 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, lock-up agreements and other
documents reasonably required under the terms of such underwriting arrangements.
-17-
<PAGE> 18
9. Miscellaneous
(a) Remedies. In the event of a breach by the Company or by a
Holder of any of their respective obligations under this Agreement, each Holder
or the Company, in addition to being entitled to exercise all rights granted by
law, including, without limitation, recovery of damages, will be entitled to
specific performance of its rights under this Agreement. The Company and each
Holder agree that monetary damages would not be adequate compensation for any
loss incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agree that, in the event of any action for specific
performance in respect of such breach, they shall waive the defense that a
remedy at law would be adequate. This Section 9(a) shall not apply to Section 3.
(b) No Inconsistent Agreements. The Company shall not enter
into any agreement with respect to its securities that is inconsistent with the
rights granted to the Holders in this Agreement or otherwise conflicts with the
provisions hereof. The Company is not currently a party to any agreement
granting any registration rights with respect to any of its securities to any
person which conflicts with the Company's obligations hereunder or gives any
other party the right to include any securities in any Registration Statement
filed pursuant hereto, except for such rights and conflicts as have been
irrevocably waived. Without limiting the generality of the foregoing, without
the written consent of the Holders of a majority in aggregate principal amount
of the Transfer Restricted Securities, the Company shall not grant to any person
the right to request it to register any of its securities under the Securities
Act unless the rights so granted are subject in all respect to the prior rights
of the Holders set forth herein, and are not otherwise in conflict or
inconsistent with the provisions of this Agreement.
(c) No Adverse Action Affecting the Transfer Restricted
Securities. The Company will not take any action with respect to the Transfer
Restricted Securities which would adversely affect the ability of any of the
Holders to include such Transfer Restricted Securities in a registration
undertaken pursuant to this Agreement.
(d) No Piggyback on Registrations. After the date hereof, the
Company shall not grant to any of its security holders (other than the Holders
in such capacity) the right to include any of its securities in any Shelf
Registration Statement.
(e) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof,
may not be given, without the written consent of the Holders of a majority in
aggregate principal amount of the Transfer Restricted Securities; provided,
however, that, for the purposes of this Agreement, Transfer Restricted
Securities that are owned, directly or indirectly, by either the Company or an
Affiliate of the Company are not deemed outstanding. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect
to a matter that relates exclusively to the rights of Holders whose Transfer
Restricted Securities are being sold pursuant to an underwritten offering and
that does not directly or indirectly affect the rights of other Holders may be
given by Holders of a majority in aggregate principal amount of the Transfer
Restricted Securities being sold by such Holders pursuant to such an
underwritten offering; provided, however, that the provisions of this sentence
may not be amended, modified, or supplemented except in accordance with the
provisions of the immediately preceding sentence.
-18-
<PAGE> 19
(f) Notices. All notices and other communications provided for
herein shall be made in writing by hand-delivery, next day air courier,
certified first-class mail, return receipt requested or telecopy:
(i) if to a Holder, to the address of such Holder
as it appears in the Note or Common Stock
register of the Company, as applicable;
(ii) if to the Company, to:
SportsLine USA, Inc.
6340 N.W. 5th Way
Fort Lauderdale, Florida 33309
Attn: Michael Levy, Chief Financial Officer
Telecopy No.: (954) 351-9175
with a copy to:
Greenberg Traurig
1221 Brickell Avenue
Miami, Florida 33131
Attn: Kenneth Hoffman, Esq.
Telecopy No.: (305) 579-0717
(iii) if to the Special Counsel, to:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304-1050
Attn: John A. Fore, Esq.
Telecopy No.: (650) 493-6811
or such other Special Counsel at such other address and telecopy number as a
majority in aggregate principal amount of the Transfer Restricted Securities
shall have given notice to the Company as contemplated by Section 5(b) hereof.
Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given, when delivered by hand,
if personally delivered; one Business Day after being timely delivered to a
next-day air courier, five Business Days after being deposited in the mail,
postage prepaid, if mailed; and when receipt is acknowledged by the recipient's
telecopier machine, if telecopied.
(g) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of each of
the parties and shall inure to the benefit of each existing and future Holder.
The Company may not assign its rights or obligations hereunder without the prior
written consent of the Holders of a majority in aggregate principal amount of
the Transfer Restricted Securities, other than by operation of law pursuant to a
merger or consolidation to
-19-
<PAGE> 20
which the Company is a party. In the event the Notes constituting Transfer
Restricted Securities become convertible into common stock of another person
pursuant to Section 15.6 of the Indenture, the Company shall cause such person
to assume the Company's obligations hereunder.
(h) Counterparts. This Agreement may be executed in any number
of counterparts by the parties hereto, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same instrument.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.
(j) Severability. The remedies provided herein are cumulative
and not exclusive of any remedies provided by law. If any term, provision,
covenant or restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions set forth herein shall remain in
full force and effect and shall in no way be affected, impaired or invalidated,
and the parties hereto shall use their best efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
(k) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof. All references made in this Agreement to "Section" and
"paragraph" refer to such Section or paragraph of this Agreement, unless
expressly stated otherwise.
(l) Attorneys' Fees. In any action or proceeding brought to
enforce any provision of this Agreement, or where any provision hereof is
validly asserted as a defense, the prevailing party, as determined by the court,
shall be entitled to recover its reasonable attorneys' fees in addition to any
other available remedy.
-20-
<PAGE> 21
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of the date first written above.
SPORTSLINE USA, INC.
By: /s/ Kenneth Sanders
------------------------------------------------------
Name: Kenneth Sanders
Title: Senior Vice President and Chief Financial Officer
The foregoing Registration Rights Agreement
is hereby confirmed and agreed to as of the date
first written above:
BANCBOSTON ROBERTSON STEPHENS INC.
BT ALEX BROWN INCORPORATED
HAMBRECHT & QUIST LLC
PAINEWEBBER INCORPORATED
By: BANCBOSTON ROBERTSON STEPHENS INC.
By: /s/ Brendan Dyson
--------------------------------
Authorized Signatory
-21-
<PAGE> 1
EXHIBIT 5.1
May 20, 1999
SportsLine USA, Inc.
6340 N.W. 5th Way
Fort Lauderdale, Florida 33309
Ladies and Gentlemen:
We have acted as counsel to SportsLine USA, Inc., a Delaware
corporation (the "Company"), in connection with the registration under the
Securities Act of 1933, as amended, of $150,000,000 aggregate principal amount
of 5% Convertible Subordinated Notes due 2006 (the "Notes") issued by the
Company and such indeterminate number of shares of the Company's Common Stock,
$0.01 par value per share, issuable upon conversion thereof (the "Shares," and
together with the Notes, the "Offered Securities"), each as described in the
Company's Registration Statement on Form S-3 (the "Registration Statement")
filed with the Securities and Exchange Commission on or about the date hereof
with respect to the resale of the Offered Securities by the holders thereof.
In rendering this opinion, we have examined and relied upon such
documents and records of the Company and other documents as we have deemed
necessary for the expression of opinions herein contained. In making the
foregoing examinations, we have assumed the genuineness of all signatures and
the authenticity of all documents submitted to us as originals, and the
conformity to original documents of all documents submitted to us as certified
or photostatic copies. As to various questions of fact material to this opinion,
we have relied, to the extent we deem reasonably appropriate, upon
representations or certificates of officers or directors of the Company and upon
documents, records and instruments furnished to us by the Company, without
independently checking or verifying the accuracy of such documents, records and
instruments.
Based upon the foregoing examination, we are of the opinion that (i)
the Notes have been duly and validly authorized and issued and, assuming due
authorization by the trustee for the Notes, constitute the legal and binding
obligations of the Company entitled to the benefits provided by the Indenture
(the "Indenture"), dated as of March 15, 1999, between the Company and State
Street Bank and Trust Company, as trustee, subject to applicable bankruptcy and
insolvency laws and the application of general principles of equity, and (ii)
the Shares have been duly and validly authorized, and when issued upon the due
conversion of the Notes in accordance with their terms and the Indenture, will
be validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name under the caption "Legal
Matters" in the Prospectus forming a part of the Registration Statement. In
giving such consent, we do not admit that we come within the category of persons
whose consent is required by Section 7 of the Act or the rules and regulations
of the Commission thereunder.
Sincerely,
/s/ Greenberg Traurig, P.A.
GREENBERG TRAURIG, P.A.
<PAGE> 1
EXHIBIT 12.1
SPORTSLINE USA, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
Three months ended
March 31,
-------------------
1994 1995 1996 1997 1998 1998 1999
----- ------- -------- -------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Loss...................... $(404) $(6,108) $(16,103) $(34,177) $(35,509) $(9,006) $(10,128)
Plus Fixed charges:
Interest expense including
amortization of debt
issuance costs............. 50 51 161 146 118 27 186
Assumed interest element
included in rent expense(1) 16 55 60 180 245 64 100
----- ------- -------- -------- -------- ------- --------
66 106 221 326 363 91 286
----- ------- -------- -------- -------- ------- --------
Adjusted earnings (loss)...... (338) (6,002) (15,882) (33,851) (35,146) (8,915) (9,842)
Fixed Charges................. (66) (106) (221) (326) (363) (91) (286)
----- ------- -------- -------- -------- ------- --------
Deficiency of earnings
available to cover fixed
charges..................... $(404) $(6,108) $(16,103) $(34,177) $(35,509) $(9,006) $(10,128)
===== ======= ======== ======== ======== ======= ========
</TABLE>
- ----------------
(1) Total rent expense for the period divided by three. This is the portion of
rental expense which the Company believes to be representative of interest.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the
incorporation by reference in this registration statement of our report dated
January 25, 1999 (except with respect to the matter discussed in the eight
paragraph of Note 5, as to which the date is February 10, 1999) included in
SportsLine USA, Inc.'s Annual Report on Form 10-K for the fiscal year ended
December 31, 1998, and to all references to our Firm included in this
registration statement.
ARTHUR ANDERSEN LLP
Fort Lauderdale, Florida,
May 17, 1999.
<PAGE> 1
EXHIBIT 25.1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
----------
STATEMENT OF ELIGIBILITY UNDER THE
TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an Application to Determine Eligibility
of a Trustee Pursuant to Section 305(b)(2)
STATE STREET BANK AND TRUST COMPANY
(Exact name of trustee as specified in its charter)
<TABLE>
<S> <C>
Massachusetts 04-1867445
(Jurisdiction of incorporation or (I.R.S. Employer
organization if not a U.S. national bank) Identification No.)
</TABLE>
225 Franklin Street, Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)
Maureen Scannell Bateman, Esq. Executive Vice President and General Counsel
225 Franklin Street, Boston, Massachusetts 02110
(617) 654-3253
(Name, address and telephone number of agent for service)
SPORTSLINE USA, INC.
(Exact name of obligor as specified in its charter)
<TABLE>
<S> <C>
DELAWARE (65-0470894)
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
6340 N.W. 5TH WAY
FT. LAUDERDALE, FL 33309
(954) 351-2120
(Address of principal executive offices) (Zip Code)
$150,000,000 5% CONVERTIBLE SUBORDINATED NOTES DUE 2006
(Title of indenture securities)
<PAGE> 2
GENERAL
ITEM 1. GENERAL INFORMATION.
FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISORY AUTHORITY TO
WHICH IT IS SUBJECT.
Department of Banking and Insurance of The Commonwealth of
Massachusetts, 100 Cambridge Street, Boston, Massachusetts.
Board of Governors of the Federal Reserve System, Washington,
D.C., Federal Deposit Insurance Corporation, Washington, D.C.
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
The obligor is not an affiliate of the trustee or of its
parent, State Street Corporation.
(See note on page 2.)
ITEM 3. THROUGH ITEM 15. NOT APPLICABLE.
ITEM 16. LIST OF EXHIBITS.
LIST BELOW ALL EXHIBITS FILED AS PART OF THIS STATEMENT OF ELIGIBILITY.
1. A COPY OF THE ARTICLES OF ASSOCIATION OF THE TRUSTEE AS NOW IN
EFFECT.
A copy of the Articles of Association of the trustee, as now
in effect, is on file with the Securities and Exchange
Commission as Exhibit 1 to Amendment No. 1 to the Statement of
Eligibility and Qualification of Trustee (Form T-1) filed with
the Registration Statement of Morse Shoe, Inc. (File No.
22-17940) and is incorporated herein by reference thereto.
2. A COPY OF THE CERTIFICATE OF AUTHORITY OF THE TRUSTEE TO COMMENCE
BUSINESS, IF NOT CONTAINED IN THE ARTICLES OF ASSOCIATION.
A copy of a Statement from the Commissioner of Banks of
Massachusetts that no certificate of authority for the trustee
to commence business was necessary or issued is on file with
the Securities and Exchange Commission as Exhibit 2 to
Amendment No. 1 to the Statement of Eligibility and
Qualification of Trustee (Form T-1) filed with the
Registration Statement of Morse Shoe, Inc. (File No. 22-17940)
and is incorporated herein by reference thereto.
3. A COPY OF THE AUTHORIZATION OF THE TRUSTEE TO EXERCISE CORPORATE
TRUST POWERS, IF SUCH AUTHORIZATION IS NOT CONTAINED IN THE DOCUMENTS
SPECIFIED IN PARAGRAPH (1) OR (2), ABOVE.
A copy of the authorization of the trustee to exercise
corporate trust powers is on file with the Securities and
Exchange Commission as Exhibit 3 to Amendment No. 1 to the
Statement of Eligibility and Qualification of Trustee (Form
T-1) filed with the Registration Statement of Morse Shoe, Inc.
(File No. 22-17940) and is incorporated herein by reference
thereto.
4. A COPY OF THE EXISTING BY-LAWS OF THE TRUSTEE, OR INSTRUMENTS
CORRESPONDING THERETO.
A copy of the by-laws of the trustee, as now in effect, is on
file with the Securities and Exchange Commission as Exhibit 4
to the Statement of Eligibility and Qualification of Trustee
(Form T-1) filed with the Registration Statement of Eastern
Edison Company (File No. 33-37823) and is incorporated herein
by reference thereto.
1
<PAGE> 3
5. A COPY OF EACH INDENTURE REFERRED TO IN ITEM 4. IF THE OBLIGOR IS IN
DEFAULT.
Not applicable.
6. THE CONSENTS OF UNITED STATES INSTITUTIONAL TRUSTEES REQUIRED BY
SECTION 321(B) OF THE ACT.
The consent of the trustee required by Section 321(b) of the
Act is annexed hereto as Exhibit 6 and made a part hereof.
7. A COPY OF THE LATEST REPORT OF CONDITION OF THE TRUSTEE PUBLISHED
PURSUANT TO LAW OR THE REQUIREMENTS OF ITS SUPERVISING OR EXAMINING AUTHORITY.
A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its
supervising or examining authority is annexed hereto as
Exhibit 7 and made a part hereof.
NOTES
In answering any item of this Statement of Eligibility which relates to
matters peculiarly within the knowledge of the obligor or any underwriter for
the obligor, the trustee has relied upon information furnished to it by the
obligor and the underwriters, and the trustee disclaims responsibility for the
accuracy or completeness of such information.
The answer furnished to Item 2. of this statement will be amended, if
necessary, to reflect any facts which differ from those stated and which would
have been required to be stated if known at the date hereof.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, State Street Bank and Trust Company, a corporation
organized and existing under the laws of The Commonwealth of Massachusetts, has
duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of Boston and The
Commonwealth of Massachusetts, on the 7TH DAY OF MAY, 1999.
STATE STREET BANK AND TRUST COMPANY
By: /s/ EARL W. DENNISON JR.
-----------------------------------
NAME EARL W. DENNISON JR.
TITLE VICE PRESIDENT
2
<PAGE> 4
EXHIBIT 6
CONSENT OF THE TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture
Act of 1939, as amended, in connection with the proposed issuance by SPORTSLINE
USA, INC.. of its 5% CONVERTIBLE SUBORDINATED NOTES DUE 2006, we hereby consent
that reports of examination by Federal, State, Territorial or District
authorities may be furnished by such authorities to the Securities and Exchange
Commission upon request therefor.
STATE STREET BANK AND TRUST COMPANY
By: /s/ EARL W. DENNISON JR.
-------------------------------------
NAME EARL W. DENNISON JR.
TITLE VICE PRESIDENT
DATED: MAY 7, 1999
3
<PAGE> 5
EXHIBIT 7
Consolidated Report of Condition of State Street Bank and Trust Company,
Massachusetts and foreign and domestic subsidiaries, a state banking institution
organized and operating under the banking laws of this commonwealth and a member
of the Federal Reserve System, at the close of business December 31, 1998,
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act and in accordance
with a call made by the Commissioner of Banks under General Laws, Chapter 172,
Section 22(a).
<TABLE>
<CAPTION>
Thousands of
ASSETS Dollars
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin .............................................. 1,209,293
Interest-bearing balances ....................................................................... 12,007,895
Securities ............................................................................................... 9,705,731
Federal funds sold and securities purchased
under agreements to resell in domestic offices
of the bank and its Edge subsidiary ............................................................. 9,734,476
Loans and lease financing receivables:
Loans and leases, net of unearned income ........................................................ 6,973,125
Allowance for loan and lease losses ............................................................. 84,308
Allocated transfer risk reserve ................................................................. 0
Loans and leases, net of unearned income and allowances ......................................... 6,888,817
Assets held in trading accounts .......................................................................... 1, 574,999
Premises and fixed assets ................................................................................ 523,514
Other real estate owned .................................................................................. 0
Investments in unconsolidated subsidiaries ............................................................... 612
Customers' liability to this bank on acceptances outstanding ............................................. 47,334
Intangible assets ........................................................................................ 212,743
Other assets ............................................................................................. 1,279,224
-----------
Total assets ............................................................................................. 43,184,638
===========
LIABILITIES
Deposits:
In domestic offices ............................................................................. 10,852,862
Noninterest-bearing .................................................................... 8,331,830
Interest-bearing ....................................................................... 2,521,032
In foreign offices and Edge subsidiary .......................................................... 16,761,573
Noninterest-bearing .................................................................... 83,010
Interest-bearing ....................................................................... 16,678,563
Federal funds purchased and securities sold under
agreements to repurchase in domestic offices of
the bank and of its Edge subsidiary ............................................................. 10,041,324
Demand notes issued to the U.S. Treasury ................................................................. 108,420
Trading liabilities ..................................................................... 1,240,938
Other borrowed money ..................................................................................... 322,331
Subordinated notes and debentures ........................................................................ 0
Bank's liability on acceptances executed and outstanding ................................................. 47,334
Other liabilities ........................................................................................ 1,126,058
Total liabilities ........................................................................................ 40,500,840
-----------
EQUITY CAPITAL
Perpetual preferred stock and related surplus ............................................................ 0
Common stock ............................................................................................. 29,931
Surplus .................................................................................................. 468,511
Undivided profits and capital reserves/Net unrealized holding gains (losses) ............................. 2,164,055
Net unrealized holding gains (losses) on available-for-sale securities .................. 21,638
Cumulative foreign currency translation adjustments ...................................................... (337)
Total equity capital ..................................................................................... 2,683,798
-----------
Total liabilities and equity capital ..................................................................... 43,184,638
-----------
</TABLE>
4
<PAGE> 6
I, Rex S. Schuette, 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.
Rex S. Schuette
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.
David A. Spina
Marshall N. Carter
Truman S. Casner
5
