SECURITIES PURCHASE AGREEMENT
Between
TRIBUNE COMPANY, as Purchaser
and
SOFTKEY INTERNATIONAL, INC., as Issuer
Dated as of November 30, 1995
5 1/2% Senior Convertible/Exchangeable Notes due 2000
$150,000,000 Principal Amount
Page
TABLE OF CONTENTS
Page
ARTICLE I. AUTHORIZATION AND SALE OF NOTES................................. 1
Section 1.1. Authorization....................................... 1
Section 1.2. Issuance and Sale of Notes.......................... 1
ARTICLE II. CLOSING........................................................ 1
Section 2.1. Closing Date........................................ 1
Section 2.2. Further Assurances.................................. 2
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY................. 2
Section 3.1. SEC Reports......................................... 3
Section 3.2. Accountants......................................... 3
Section 3.3. Financial Statements................................ 3
Section 3.4. Absence of Certain Changes.......................... 4
Section 3.5. Authority........................................... 4
Section 3.6. Non-Contravention................................... 4
Section 3.7. Capitalization...................................... 5
Section 3.8. Subsidiaries........................................ 5
Section 3.9. Actions............................................. 6
Section 3.10. Investment Company Act.............................. 7
Section 3.11. Rule 144A........................................... 7
Section 3.12. Reporting........................................... 7
Section 3.13. Registration and Qualification...................... 7
Section 3.14. No Liabilities...................................... 7
Section 3.15. No Defaults......................................... 7
Section 3.16. Violations of Law................................... 8
Section 3.17. Enforceability of Agreement......................... 8
Section 3.18. The Notes........................................... 8
Section 3.19. The Indenture....................................... 9
Section 3.20. The Registration Rights Agreement................... 9
Section 3.21. The Capital Stock................................... 9
Section 3.22. Ranking of Notes................................... 10
Section 3.23. Properties and Assets.............................. 10
Section 3.24. Intellectual Property.............................. 10
Section 3.25. Taxes.............................................. 11
Section 3.26. Insurance.......................................... 11
Section 3.27. Certain Payments................................... 11
Section 3.28. No Prohibition..................................... 11
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER............... 12
Section 4.1. Investment......................................... 12
Section 4.2. Rule 144........................................... 12
Section 4.3. Organization of the Purchaser...................... 13
Section 4.4. Authority of the Purchaser......................... 13
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Page
ARTICLE V. CONDITIONS TO THE OBLIGATIONS OF THE PARTIES................... 14
Section 5.1. Condition to Obligations
of the Purchaser...................... 14
Section 5.2. Condition to Obligations
of Both Parties....................... 14
ARTICLE VI. [Intentionally Omitted]....................................... 14
ARTICLE VII. ADDITIONAL COVENANTS......................................... 14
Section 7.1. PORTAL; DTC........................................ 14
Section 7.2. Reporting.......................................... 14
Section 7.3. Payment of Expenses................................ 15
Section 7.4. Inspection......................................... 15
Section 7.5. Indenture.......................................... 15
Section 7.6. Availability of Preferred
Shares and Common Stock............... 15
ARTICLE VIII. RESTRICTIONS ON TRANSFERABILITY OF SECURITIES............... 16
Section 8.1. Restrictions on Transferability.................... 16
Section 8.2. Restrictive Legend................................. 16
Section 8.3. Notice of Proposed Transfers....................... 16
Section 8.4. Registration Rights Agreement...................... 17
ARTICLE IX. TERMINATION................................................... 17
ARTICLE X. MISCELLANEOUS.................................................. 18
Section 10.1. Governing Law..................................... 18
Section 10.2. Survival.......................................... 18
Section 10.3. Successors and Assigns............................ 18
Section 10.4. Entire Agreement; Amendment....................... 18
Section 10.5. Notices, Etc...................................... 19
Section 10.6. Delays or Omissions............................... 19
Section 10.7. Counterparts...................................... 19
Section 10.8. Severability...................................... 19
Section 10.9. Titles and Subtitles.............................. 20
Section 10.10. No Public Announcement............................ 20
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SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (this "Agreement") is made
as of November 30, 1995 between SoftKey International, Inc., a Delaware
corporation (the "Company"), and Tribune Company, a Delaware corporation (the
"Purchaser").
In consideration of the mutual covenants, agreements,
representations and warranties herein set forth, it is hereby agreed between the
Company and the Purchaser as follows:
ARTICLE I
AUTHORIZATION AND SALE OF NOTES
Section 1.1. Authorization. The Company has hereto fore
authorized the issuance and sale to the Purchaser pursuant to this Agreement of
the Company's 5 1/2% Senior Convertible/ Exchangeable Notes due 2000 (the
"Notes") in the aggregate principal amount of $150,000,000, such Notes to be in
the form and to have terms and provisions substantially as set forth in the
indenture (the "Indenture") dated as of November 30, 1995 between the Company
and State Street Bank and Trust Company, as trustee (the "Trustee"), which
Indenture is attached hereto as Exhibit A. The Notes shall represent senior,
unsecured obligations of the Company and shall rank pari passu with the
Company's 5 1/2% Senior Convertible Notes due 2000 (the "Old Notes"). The shares
of the Company's 5 1/2% Series C Convertible Preferred Stock into which the
Notes are exchangeable are hereinafter called the "Preferred Shares."
Section 1.2. Issuance and Sale of Notes. Upon the terms and
subject to the conditions set forth herein, on the Closing Date (as defined
below), the Company will issue and sell to the Purchaser and, in reliance on the
representations and warranties of the Company contained herein, the Purchaser
will purchase from the Company, the Notes, at a purchase price equal to
$150,000,000, which amount equals 100% of the principal amount thereof.
ARTICLE II
CLOSING
Section 2.1. Closing Date. The closing (the "Clos
ing") of the purchase and sale of the Notes contemplated hereby
shall take place on such date and at such time as agreed to by
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the Company and the Purchaser and upon which all of the condi tions set forth in
Article V are satisfied or waived (the date of the Closing is hereinafter
referred to as the "Closing Date"). The Closing shall be held at the offices of
Sidley & Austin, One First National Plaza, Chicago, Illinois 60603, or at such
other place as agreed to by the Company and the Purchaser.
Delivery of the Notes to be purchased by the Purchaser
pursuant to this Agreement shall be made at the Closing by the Company
delivering to the Purchaser, against payment of the purchase price therefor, one
Note for the total principal amount of Notes to be purchased by the Purchaser
(registered in the name of the Purchaser or such other person which shall be an
affiliate of the Purchaser or a nominee of the Purchaser or such affiliate as
the Purchaser may have designated in writing to the Company at least one
business day prior to the Closing Date), unless at least two business days prior
to the Closing Date the Purchaser shall have requested that the Company deliver
more than one Note, in which event the Company will deliver to the Purchaser the
number of Notes so requested, registered in such name or names specified in such
request (subject to the foregoing limitation) and in such principal amounts as
shall have been specified in the request. Payment of the purchase price for the
Notes to be purchased hereunder shall be made by the Purchaser by Federal funds
check or bank check made payable to the Company in, or by wire transfer of,
immediately available funds.
Section 2.2. Further Assurances. From time to time following
the Closing, upon the request of the Purchaser, the Company shall execute and
deliver, or cause to be executed and delivered, to the Purchaser such other
instruments as may be reasonably necessary to more effectively vest in the
Purchaser and put the Purchaser in possession of the Notes, the Preferred Shares
and the shares of common stock, par value $.01 per share, of the Company (the
"Common Stock") issuable upon conversion of the Notes or the Preferred Shares.
The Company shall cooperate with the Purchaser in obtaining as soon as
practicable all necessary governmental consents and approvals, including
approvals under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act").
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As an inducement to the Purchaser to enter into this Agreement
and to consummate the transactions contemplated hereby, except as set forth in a
letter dated the date hereof from the Company to the Purchaser, the Company
represents and warrants to the Purchaser as follows:
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Section 3.1. SEC Reports. The Company has filed all documents
required to be filed since January 1, 1995 with the Securities and Exchange
Commission (the "Commission") (the "SEC Reports"). As of their respective dates,
the SEC Reports complied in all material respects with the requirements of the
Securities Act of 1933, as amended (including the rules and regulations
promulgated thereunder, the "Securities Act"), and the Securities Exchange Act
of 1934, as amended (including the rules and regulations promulgated thereunder,
the "Exchange Act"), as the case may be, and none of the SEC Reports contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein, in order to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading.
Section 3.2. Accountants. Coopers & Lybrand L.L.P., Arthur
Andersen LLP, KPMG Peat Marwick LLP, Price Waterhouse LLP and Deloitte & Touche
LLP, who have expressed their respective opinions with respect to the financial
statements and schedules included in the Offering Circular, dated October 17,
1995, relating to the Old Notes (the "Offering Circular") are independent
accountants as required by the Securities Act.
Section 3.3. Financial Statements. (a) The annual audited
financial statements of the Company included in the Offering Circular present
fairly the financial position of the Company, as of the respective dates of such
financial statements, and the results of operations and changes in cash flows of
the Company for the respective periods covered thereby. Such statements and
related notes have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis, in each case, as certified
by one or more of the independent accountants named in Section 3.2. The selected
financial data set forth in the Offering Circular under the captions "Summary,"
"Capitalization," "Selected Historical Consolidated Financial Data" and
"Selected Pro Forma Consolidated Financial Data" fairly present the information
set forth therein as of the respective dates thereof on the basis stated in the
Offering Circular.
(b) The unaudited interim financial statements of the Company
included in the Offering Circular and in the Company's Quarterly Report on Form
10-Q for the period ended September 30, 1995 (the "Third Quarter 10-Q") present
fairly the financial position of the Company, as of the respective dates of such
financial statements, and the results of operations and changes in cash flows of
the Company for the respective periods covered thereby. Such statements and
related notes have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis except for normal year-end
adjustments and the omission of certain footnote disclosure.
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(c) The pro forma consolidated condensed balance sheet and
consolidated condensed statements of income and the related notes thereto
included in the Offering Circular have been prepared in accordance with the
applicable requirements of Rule 11-02 of Regulation S-X promulgated under the
Exchange Act, and have been compiled on the pro forma basis described therein,
and the assumptions used in the preparation thereof were reasonable at the time
made and the adjustments used therein are based upon good faith estimates and
assumptions believed by the Company to be reasonable at the time made.
Section 3.4. Absence of Certain Changes. Except as disclosed
in the SEC Reports, subsequent to the dates as of which information is given in
the Offering Circular, except as set forth therein, there has been no material
adverse change or any development involving a prospective material adverse
change in the business, properties, operations, condition (financial or other)
or results of operations of the Company and its Subsidiaries (as defined herein)
taken as a whole, whether or not arising from transactions in the ordinary
course of business, and since the date of the latest balance sheet presented in
the Third Quarter 10-Q, neither the Company nor any of its Subsidiaries has
incurred or undertaken any liabilities or obligations, direct or contingent,
which are material to the Company and its Subsidiaries taken as a whole, except
for (i) the Old Notes, (ii) liabilities or obligations which are reflected in
the Third Quarter 10-Q or the Offering Circular, (iii) liabilities or
obligations in connection with the Agreement and Plan of Merger, dated as of
October 30, 1995, by and among the Company, Schoolco, Inc., a Minnesota
corporation and a wholly owned subsidiary of the Company, and Minnesota
Educational Computing Corporation ("MECC"), a Minnesota corporation and (iv) the
transactions contemplated hereby and any other agreements entered into between
the Purchaser and the Company, either alone or together with other parties
thereto, as of the date of this Agreement.
Section 3.5. Authority. The Company has all necessary
corporate power and corporate authority to enter into this Agreement and the
other agreements, documents and instruments to be executed by the Company in
furtherance of the transactions contemplated hereby, including without
limitation, the Indenture, the Notes and the Securities Resale Registration
Rights Agreement between the Company and the Purchaser, a form of which is
attached hereto as Exhibit B (the "Registration Rights Agreement")
(collectively, the "Transaction Documents"), and to consummate the transactions
contemplated hereby and thereby.
Section 3.6. Non-Contravention. The execution, delivery, and
performance of this Agreement by the Company and the consummation of the
transactions contemplated hereby do not and will not, (i) except as disclosed in
the Offering Circular, (ii) except for the consent of Fleet Bank of
Massachusetts, N.A.
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(the "Bank") in connection with the Credit Agreement dated September 30, 1994 by
and between SoftKey Inc. and the Bank, as amended to date, which consent has
been obtained and (iii) except as to defaults which individually or in the
aggregate would not be material to the Company, (A) conflict with or result in a
breach of any of the terms and provisions of, or constitute a default (or an
event which with notice or lapse of time, or both, would constitute a default)
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of its
Subsidiaries pursuant to any agreement, instrument, franchise, license or permit
to which the Company or any of its Subsidiaries is a party or by which any of
such corporations or their respective properties or assets may be bound or (B)
violate or conflict with any judgment, decree, order, statute, rule or
regulation of any court or any public, governmental or regulatory agency or body
applicable to the Company or any of its Subsidiaries or any of their respective
properties or assets. The execution, delivery and performance of this Agreement
by the Company and the consummation of the transactions contemplated hereby do
not and will not violate or conflict with any provision of the certificate of
incorporation or by-laws of the Company or any of its Subsidiaries, as currently
in effect. No consent, approval, authorization, order, registration, filing,
qualification, license or permit of or with any court or any governmental agency
or body applicable to the Company or any of its Subsidiaries or any of their
respective properties or assets is required for the execution, delivery and
performance of this Agreement or the consummation of the transactions
contemplated hereby, including the issuance, sale and delivery of the Notes to
be issued, sold and delivered by the Company hereunder, except such consents,
approvals, authorizations, orders, registrations, filings, qualifications,
licenses and permits as may be required under state securities or Blue Sky laws
in connection with the purchase of the Notes by the Purchaser.
Section 3.7. Capitalization. The Company had, as of September
30, 1995, an authorized and outstanding capitalization as set forth in the Third
Quarter 10-Q, and the capital stock of the Company conforms in all material
respects to the description thereof contained in the Offering Circular and the
Company's Tender Offer Statement on Schedule 14D-1 filed on October 30, 1995
relating to the Company's offer to purchase outstanding shares of common stock
of The Learning Company, a Delaware corporation ("TLC"), (including all
amendments and supplements thereto, the "Schedule 14D-1").
Section 3.8. Subsidiaries. The Company does not own or
control, directly or indirectly, any corporation, association or other entity
other than (x) the subsidiaries listed in Exhibit 21 to the Annual Report on
Form 10-K for the Company's most recent fiscal year ("Exhibit 21"), (y) tewi
Verlag GmbH, Future
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Vision Holding, Inc., Future Vision Multimedia, Inc., Multimedia Products
Corporation, FVH Asia Pte Ltd. and SuperStudio Ltd. and (z) subsidiaries not
required to be listed on Exhibit 21. The subsidiaries described in clauses (x)
and (y) of the foregoing sentence, with the exception of (i) SoftKey Software
Products of Florida, Inc., (ii) SS Publish International Inc., (iii) Power Up UK
limited and (iv) Spinnaker Software International Limited, are hereinafter
referred to as the "Subsidiaries." The subsidiaries identified in clauses (i)
through (iv) in the preceding sentence would not in the aggregate constitute a
"significant subsidiary" within the meaning of Rule 1-02(w) under Regulation S-X
promulgated by the Commission. Each of the Company and its Subsidiaries has been
duly organized and is validly existing as a corporation in good standing under
the laws of its jurisdiction of incorporation. Each of the Company and its
Subsidiaries is duly qualified to do business and in good standing as a foreign
corporation in each jurisdiction in which the character or location of its
properties (owned, leased or licensed) or the nature or conduct of its business
makes such qualification necessary, except for those failures to be so qualified
or in good standing which will not in the aggregate have a material adverse
effect on the Company and its Subsidiaries taken as a whole or result in any
material adverse change or any development involving a material adverse change
in the business, properties, operations, conditions (financial or other) or
results of operations of the Company and its Subsidiaries taken as a whole. The
Company owns all of the outstanding capital stock of each of its Subsidiaries,
other than the non-voting exchangeable shares of SoftKey Software Products Inc.
and qualifying shares of certain Subsidiaries organized outside the United
States, free and clear of all claims, liens, charges and encumbrances. Each of
the Company and its Subsidiaries has all requisite power and authority, and all
necessary consents, approvals, authorizations, orders, registrations,
qualifications, licenses and permits of and from all public, regulatory or
governmental agencies and bodies, to own, lease and operate its properties and
conduct its business as now being conducted as described in the Offering
Circular, except where the failure to possess such requisite power and authority
would not have a material adverse effect on the business, properties,
operations, condition (financial or other), or results of operations of the
Company and its Subsidiaries taken as a whole, and no such consent, approval,
authorization, order, registration, qualification, license or permit contains a
materially burdensome restriction not adequately disclosed in the Offering
Circular.
Section 3.9. Actions. Except as described in the SEC
Reports, there is no litigation or governmental proceeding to
which the Company or any of its Subsidiaries is a party or to
which any property of the Company or any of its Subsidiaries is
subject or which is pending or, to the knowledge of the Company,
contemplated against the Company or any of its Subsidiaries which
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might reasonably be expected to result in any material adverse change or any
development involving a material adverse change in the business, properties,
operations, condition (financial or other) or results of operations of the
Company and its Subsidiaries taken as a whole.
Section 3.10. Investment Company Act. Neither the Company nor
any of its Subsidiaries is (i) an "investment company" or a company "controlled"
by an investment company within the meaning of the Investment Company Act of
1940, as amended, (ii) a "holding company" or a "subsidiary company" of a
holding company or an "affiliate" thereof within the meaning of the Public
Utility Holding Company Act of 1935, as amended, or (iii) subject to regulation
under the Federal Power Act, the Interstate Commerce Act or any federal or state
statute or regulation limiting its ability to incur indebtedness for borrowed
money.
Section 3.11. Rule 144A. The Notes and Preferred Shares are
eligible for resale pursuant to Rule 144A and, when issued, will not be of the
same class as securities listed on a national securities exchange registered
under Section 6 of the Exchange Act or quoted in a U.S. automated inter-dealer
quotation system.
Section 3.12. Reporting. The Company is subject to
Section 13 of the Exchange Act and is in compliance in all
material respects with the provisions of such section.
Section 3.13. Registration and Qualification. Assuming the
accuracy of the representations and warranties made by the Purchaser and set
forth in Article IV hereof, it is not necessary in connection with the offer,
sale and delivery of the Notes to the Purchaser in the manner contemplated by
this Agreement to register the Notes under the Securities Act or to qualify the
Indenture under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act").
Section 3.14. No Liabilities. Neither the Company nor its
Subsidiaries has any material liabilities or obligations (direct or indirect,
contingent or absolute, known or unknown, matured or unmatured) of any nature
whatsoever, whether arising out of contract, tort, statute or otherwise
("Liabilities"), except (i) as reflected or reserved against in the balance
sheet of the Company included in its annual financial statements for the year
ended December 31, 1994 and not heretofore discharged, (ii) as specifically
disclosed in the SEC Reports or (iii) Liabilities incurred in the ordinary
course of business since September 30, 1995.
Section 3.15. No Defaults. Except as disclosed in the
SEC Reports, and except as to defaults which individually or in
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the aggregate would not be material to the Company, neither the Company nor any
of its Subsidiaries is in violation or default under any provision of its
certificate of incorporation, by-laws or other organizational documents, or is
in breach of or default with respect to any provision of any agreement,
judgment, decree, order, mortgage, deed of trust, lease, franchise, license,
indenture, permit or other instrument to which it is a party or by which it or
any of its properties are bound; and there does not exist any state of facts
which constitutes an event of default on the part of the Company or any such
Subsidiary as defined in such documents or which, with notice or lapse of time
or both, would constitute such an event of default.
Section 3.16. Violations of Law. The Company and its
Subsidiaries are in compliance, and have complied in all material respects, at
all times during the past three years, and all transactions involving the
issuance, offer, placement and sale, pursuant to the terms of the Transaction
Documents, of the Notes comply, in all material respects, with all applicable
federal, state and local statutes, codes, ordinances, rules and regulations of
the United States and all other countries and subdivisions thereof (the "Laws")
to the extent applicable, other than violations which would not have a material
adverse effect on the Company and its Subsidiaries taken as a whole. Neither the
Company nor any of its Subsidiaries has received notice within the past three
years of any violations of any Laws, which violations would be material to the
Company and its Subsidiaries taken as a whole. The Company and each of its
Subsidiaries have all material licenses, franchises, permits, certificates and
other approvals or authorizations from all regulatory officials and bodies that
are necessary to the conduct of their respective businesses and to the ownership
or lease of their respective properties as described or contemplated in the
Offering Circular.
Section 3.17. Enforceability of Agreement. This Agreement has
been duly and validly authorized, executed and delivered by the Company and is a
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms.
Section 3.18. The Notes. The Notes have been duly and validly
authorized by the Company, and the Notes, when authenticated by the Trustee and
issued, sold and delivered in accordance with this Agreement and the Indenture,
will have been duly and validly executed, authenticated, issued and delivered
and will constitute valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms and entitled to the benefits
provided by the Indenture except as such enforcement may be subject to or
limited by (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights and
remedies generally and (ii) general principles of equity (regardless of
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whether such enforcement may be sought in a proceeding in equity
or at law).
Section 3.19. The Indenture. The Indenture has been duly and
validly authorized by the Company, and the Indenture when executed and delivered
by the Company and the Trustee, will constitute a valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms,
except as such enforcement may be subject to or limited by (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights and remedies generally and (ii) general
principles of equity (regardless of whether such enforcement may be sought in a
proceeding in equity or at law).
Section 3.20. The Registration Rights Agreement. The
---------------------------------
Registration Rights Agreement has been duly and validly authorized, executed and
delivered by the Company. The Registration Rights Agreement, when executed and
delivered by the Company and the Purchaser, will constitute a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except as such enforcement may be subject to or limited by (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights and remedies generally and
(ii) general principles of equity (regardless of whether such enforcement may be
sought in a proceeding in equity or at law).
Section 3.21. The Capital Stock. (a) All of the outstanding
shares of Common Stock are duly and validly authorized and issued, fully paid
and nonassessable, have been issued in compliance with all federal and state
securities laws, and were not issued and are not now in violation of or subject
to any preemptive rights. All issued and outstanding shares of capital stock of
each Subsidiary of the Company have been duly authorized and validly issued and
are fully paid and nonassessable. Except as disclosed in or contemplated by the
SEC Reports or the Offering Circular, neither the Company nor any Subsidiary has
outstanding any options to purchase, or any preemptive rights or other rights to
subscribe for or to purchase, any securities or obligations convertible into, or
any contracts or commitments to issue or sell, shares of its capital stock or
any such options, rights, convertible securities or obligations. There are
currently no shares of the Company's preferred stock outstanding.
(b) (i) The Preferred Shares issuable upon exchange of the
Notes have been duly authorized and, when issued in accordance with the terms of
the Notes, will be validly issued, fully paid and nonassessable. The shares of
Common Stock issuable upon conversion of the Notes or the Preferred Shares have
been duly authorized and, when issued in accordance with the
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terms of the Notes and/or Preferred Shares, will be validly issued, fully paid
and nonassessable. No preemptive rights or other rights to subscribe for or
purchase securities exist with respect to the issuance and sale of the Notes by
the Company pursuant to this Agreement, the issuance of the Preferred Shares
upon exchange of the Notes or the issuance of Common Stock on conversion of the
Notes and/or the Preferred Shares.
(ii) No security holder of the Company has any right which has
not been satisfied or waived to require the Company to register the sale of any
securities owned by such security holder under the Securities Act in the Shelf
Registration Statement (as defined in the Registration Rights Agreement), except
as contemplated by the Registration Rights Agreement.
(iii) The Preferred Shares issuable upon exchange of the Notes
have been reserved for issuance and no further approval or authority of the
stockholders or the Board of Directors of the Company under the Delaware General
Corporation Law will be required for such issuance of Preferred Shares upon
exchange for the Notes. The shares of Common Stock issuable on conversion of the
Notes and/or the Preferred Shares at the initial conversion price have been
reserved for issuance, and no further approval or authority of the stockholders
or the Board of Directors of the Company under the Delaware General Corporation
Law will be required for such issuance of Common Stock.
Section 3.22. Ranking of Notes. When issued, the Notes will
rank pari passu in order of preference with (i) all of the Company's other
unsecured and unsubordinated indebtedness for borrowed money and (ii) the Old
Notes.
Section 3.23. Properties and Assets. The Company or the
applicable Subsidiary has good and marketable title to all the properties and
assets reflected as owned in the financial statements hereinabove described (or
elsewhere in the Offering Circular), subject to no lien, mortgage, pledge,
charge or encumbrance of any kind except (i) those, if any, reflected in such
financial statements (or elsewhere in the Offering Circular) or (ii) those which
are not material in amount and do not adversely affect the use made and proposed
to be made of such property by the Company and its Subsidiaries. The Company or
the applicable Subsidiary holds its leased properties under valid and binding
leases, with such exceptions as are not materially significant in relation to
the business of the Company. Except as disclosed in the Offering Circular, the
Company owns or leases all such properties as are necessary to its operations as
now conducted.
Section 3.24. Intellectual Property. Except as
disclosed in or specifically contemplated by the SEC Reports, the
Company and its Subsidiaries have sufficient trademarks, trade
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names, patent rights, copyrights, licenses, approvals and governmental
authorizations to conduct their businesses as now conducted; the expiration of
any trademarks, trade names, patent rights, copyrights, licenses, approvals or
governmental authorizations would not have a material adverse effect on the
condition (financial or otherwise), business or results of operations of the
Company and its Subsidiaries taken as a whole; and the Company has no knowledge
of any material infringement by it or its Subsidiaries of trademark, trade name,
patent, copyright, licenses, trade secret or other similar rights of others, and
there is no claim being made against the Company or its Subsidiaries regarding
trademark, trade name, patent, copyright, license, trade secret or other
infringement which would have a material adverse effect on the condition
(financial or otherwise), business or results of operations of the Company and
its Subsidiaries taken as a whole.
Section 3.25. Taxes. The Company and its Subsidiaries have
filed all necessary federal, state and foreign income and franchise tax returns
and have paid all taxes shown as due thereon; and the Company has no knowledge
of any tax deficiency which has been asserted or threatened against the Company
or its Subsidiaries which could materially and adversely affect the business,
operations or properties of the Company and its Subsidiaries taken as a whole.
Section 3.26. Insurance. The Company or its Subsidiaries
maintain insurance of the types and in the amounts generally deemed adequate for
its business and that of its Subsidiaries against theft, damage, destruction,
acts of vandalism and all other risks customarily insured against, all of which
insurance is in full force and effect.
Section 3.27. Certain Payments. To the knowledge of the
Company, neither the Company nor any of its Subsidiaries has at any time since
February 4, 1994 (i) made any unlawful contribution to any candidate for foreign
office, or failed to disclose fully any contribution in violation of law or (ii)
made any payment to any federal or state governmental officer or official, or
other person charged with similar public or quasi-public duties, other than
payments required or permitted by the laws of the United States or any
jurisdiction thereof.
Section 3.28. No Prohibition. No action has been taken and no
law, statute, rule or regulation or order has been enacted, adopted or issued by
any governmental agency or body which prevents the issuance of the Notes or the
Preferred Shares, and no injunction, restraining order or other order or relief
of any nature by a federal or state court or other tribunal of competent
jurisdiction has been issued with respect to the Company or any of its
Subsidiaries that would prevent the issuance of the Notes or the Preferred
Shares. No action, suit
93610.01
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or proceeding is pending or threatened against or affecting the Company or any
of its Subsidiaries before any court or arbitrator or any governmental body,
agency or official, domestic or foreign, which, if adversely determined, would
materially interfere with or adversely affect the issuance of the Notes or the
Preferred Shares or in any manner draw into question the validity of the
Transaction Documents, the Notes or the Preferred Shares; and every request of
any securities authority or agency of any jurisdiction for additional
information has been complied with.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
As an inducement to the Company to enter into this Agreement
and to consummate the transactions contemplated hereby, the Purchaser hereby
represents and warrants to the Company as follows:
Section 4.1. Investment. The Purchaser is acquiring the Notes,
the Preferred Shares and the shares of Common Stock issuable upon conversion of
the Notes and/or Preferred Shares for investment for its own account, and not
with a view to any distribution thereof. The Purchaser understands that the
Notes, the Preferred Shares and the shares of Common Stock issuable upon
conversion of the Notes and/or Preferred Shares have not been registered under
the Securities Act by reason of specific exemptions therefrom which depend upon,
among other things, the bona fide nature of the investment intent and the
accuracy of the Purchaser's representations as expressed herein.
The Purchaser's financial condition and investments are such
that it is in a position to hold the Notes, the Preferred Shares and the shares
of Common Stock issuable upon conversion of the Notes and/or Preferred Shares
for an indefinite period, bear the economic risks of the investment and to
withstand the complete loss of the investment. The Purchaser has extensive
knowledge and experience in financial and business matters and has the
capability to evaluate the merits and risks of any investment in the Notes, the
Preferred Shares and the shares of Common Stock issuable upon conversion of the
Notes and/or Preferred Shares. The Purchaser qualifies as an "accredited
investor" as such term is defined in Section 4(6) of the Securities Act and
Regulation D promulgated thereunder.
Section 4.2. Rule 144. The Purchaser acknowledges that the
Notes, the Preferred Shares and the shares of Common Stock issuable upon
conversion of the Notes and/or Preferred Shares must be held indefinitely unless
subsequently registered
93610.01
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under the Securities Act or any applicable state securities laws or unless
exemptions from such registrations are available. The Purchaser is aware of the
provisions of Rule 144 promulgated under the Securities Act which permit limited
resale of securi ties purchased in a private placement subject to the
satisfaction of certain conditions.
Section 4.3. Organization of the Purchaser. The Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware.
Section 4.4. Authority of the Purchaser. The Purchaser has the
corporate power and corporate authority to execute and deliver this Agreement,
to consummate the trans actions contemplated hereby and to comply with the
terms, conditions and provisions hereof.
The execution, delivery and performance of this Agree ment by
the Purchaser has been duly authorized and approved by the Purchaser's Board of
Directors and does not require any fur ther authorization or consent of the
Purchaser or its stock holders. This Agreement is the legal, valid and binding
agreement of the Purchaser, enforceable against the Purchaser in accordance with
its terms.
Neither the execution and delivery by the Purchaser of this
Agreement or the consummation by the Purchaser of any of the transactions
contemplated hereby nor compliance by the Purchaser with or fulfillment by the
Purchaser of the terms, conditions and provisions hereof will:
(a) conflict with, result in a breach of the terms, conditions
or provisions of, or constitute a default, an event of default or an event
creating rights of acceleration, termination or cancellation or a loss of rights
under, the Certificate of Incorporation or By-laws of the Purchaser or any
material inden ture, note, instrument or other agreement or any judgment, order,
award or decree to which the Purchaser is a party or any of its properties is
subject or by which the Purchaser is bound, or
(b) require the approval, consent, authorization or act of, or
the making by the Purchaser of any declaration, filing or registration with, any
third party or any governmental author ity, except for filings under the
Securities Act, the Exchange Act and the HSR Act.
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ARTICLE V
CONDITIONS TO THE OBLIGATIONS OF THE PARTIES
Section 5.1. Condition to Obligations of the Purchaser. The
obligations of the Purchaser to purchase and pay for the Notes as provided
herein shall be subject to the condition that the Company shall, concurrently
with the Closing, pay for, or accept for payment, a majority of the outstanding
shares of common stock of TLC.
Section 5.2. Condition to Obligations of Both Parties. The
obligations of each of the Company and the Purchaser to consummate the
transactions contemplated by this Agreement are subject to the condition that no
temporary restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction prohibiting or preventing
consummation of the transactions contemplated by this Agreement shall be in
effect.
ARTICLE VI
[Intentionally Omitted]
ARTICLE VII
ADDITIONAL COVENANTS
Section 7.1. PORTAL; DTC. The Company will use its reasonable
best efforts to cause the Notes and/or the Preferred Shares to be designated
Private Offerings, Resales and Trading through Automated Linkages ("PORTAL")
market securities in accordance with the rules and regulations adopted by the
National Association of Securities Dealers, Inc., relating to trading in the
PORTAL market. The Company will, if requested by the Purchaser, use its
reasonable efforts in cooperation with the Purchaser to permit the Notes and/or
the Preferred Shares to be eligible for clearance and settlement through The
Depository Trust Company ("DTC").
Section 7.2. Reporting. The Company will, so long as the Notes
and/or Preferred Shares are outstanding and are "restricted securities" within
the meaning of Rule 144(a)(3) under the Securities Act, either (i) file reports
and other information with the Commission under Section 13 or 15(d) of the
Exchange Act, or (ii) in the event it is not subject to Section 13 or 15(d) of
the Exchange Act, make available to holders of the Notes and/or Preferred Shares
and prospective purchasers of the
93610.01
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Notes and/or Preferred Shares designated by such holders, upon request of such
prospective purchasers, the information required to be delivered pursuant to
Rule 144A(d)(4) under the Securities Act to permit compliance with Rule 144A in
connection with resales of the Notes and/or Preferred Shares.
Section 7.3. Payment of Expenses. Whether or not the
transactions contemplated in this Agreement are consummated or this Agreement is
terminated, the Company hereby agrees to pay all costs and expenses incident to
the performance of the obligations of the Company hereunder, including those in
connection with (i) the issuance, transfer and delivery of the Notes and/or
Preferred Shares to the Purchaser, including any transfer or similar taxes
payable thereon, (ii) the qualification of the Notes and/or Preferred Shares
under state or foreign securities or Blue Sky laws, (iii) the cost of printing
the Notes and/or Preferred Shares, (iv) the cost and charges of any transfer
agent, registrar, trustee or fiscal paying agent and (v) the cost and charges of
DTC, Euroclear and CEDEL.
Section 7.4. Inspection. Prior to the Closing, the Company
will permit the Purchaser and its representatives to visit and inspect any of
the Company's properties, to examine its books and records and to make copies
and to take extracts therefrom, and to discuss its business affairs and finances
with its officers and key employees, all at such reasonable times as the
Purchaser may request. The Company also agrees to provide answers to reasonable
questions from each subsequent prospective purchaser of the Notes and/or
Preferred Shares concerning the Company and its Subsidiaries (to the extent that
such information is not available to subsequent prospective purchasers without
unreasonable effort or expense and to the extent the provision thereof is not
prohibited by applicable law).
Section 7.5. Indenture. The Company covenants and agrees that
it will use its reasonable efforts to cause the Indenture to be qualified under
the Trust Indenture Act at or prior to the effectiveness of the Shelf
Registration Statement (as defined in the Registration Rights Agreement).
Section 7.6. Availability of Preferred Shares and Common
Stock. The Company shall at all times reserve and keep available out of its
authorized but unissued shares of preferred stock, for the purpose of effecting
the exchange of Notes, the full number of Preferred Shares then issuable upon
exchange of the Notes. The Company shall at all times reserve and keep available
out of its authorized but unissued Common Stock, for the purpose of effecting
the conversion of the Notes and/or Preferred Shares, the full number of shares
of Common Stock then issuable upon the conversion of the Notes and/or Preferred
Shares. The Company will, from time to time, in accordance with the laws of the
State of Delaware, increase the authorized amount
93610.01
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of Common Stock and preferred stock if at any time the number of shares of
Common Stock or preferred stock remaining unissued and available for issuance
shall be insufficient to permit conversion of the Notes and/or Preferred Shares
and the exchange of the Notes.
ARTICLE VIII
RESTRICTIONS ON TRANSFERABILITY OF SECURITIES
Section 8.1. Restrictions on Transferability. The Notes, the
Preferred Shares and any shares of Common Stock issuable upon conversion of the
Notes and/or Preferred Shares shall not be transferable except upon the
conditions specified in Section 8.3 or pursuant to the Registration Rights
Agreement.
Section 8.2. Restrictive Legend. Each certificate representing
(a) the Notes, (b) the Preferred Shares, (c) shares of the Common Stock issued
upon conversion of any Note and/or Preferred Share, and (d) any other securities
issued in respect of the Notes, the Preferred Shares or Common Stock issued upon
conversion of any Note and/or Preferred Share upon any stock split, stock
dividend, recapitalization, merger, consolidation or similar event (each of the
foregoing securities in (a) through (d) being referred to herein as "Restricted
Securities"), shall (unless otherwise permitted by the provisions of Section 8.3
below) be stamped or otherwise imprinted with a legend substan tially in the
following form (in addition to the legend required under any applicable state
securities laws):
THE [SHARES] [NOTE] REPRESENTED BY THIS CERTIFI CATE [HAVE]
[HAS] BEEN ACQUIRED FOR INVESTMENT AND [HAVE] [HAS] NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR ANY APPLICABLE STATE SECURITIES
LAWS. SUCH [SHARES] [NOTE] MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATIONS OR EXEMPTIONS THERE FROM UNDER SAID ACT
OR LAWS. COPIES OF THE AGREEMENT COVERING THE PURCHASE OF [THESE
SHARES] [THIS NOTE] AND RESTRICTING [THEIR] [ITS] TRANSFER MAY BE
OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF
THIS CERTIFICATE TO THE SECRETARY OF THE COMPANY.
Section 8.3. Notice of Proposed Transfers. Prior to any
proposed transfer of any Restricted Securities, unless there is in effect a
registration statement under the Securities Act covering the proposed transfer,
the Purchaser shall give written notice to the Company of its intention to
effect such transfer. Each such notice shall describe the manner and
circumstances of the proposed transfer in sufficient detail, and shall be
accompanied by either (a) a written opinion of legal counsel (who
93610.01
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shall be reasonably satisfactory to the Company) addressed to the Company to the
effect that the proposed transfer of the Restricted Securities may be effected
without registration under the Securities Act or (b) a "no action" letter from
the Commission to the effect that the transfer of such securities without
registration will not result in a recommendation by the staff of the Commission
that action be taken with respect thereto, whereupon, in each case, the
Purchaser shall be entitled to transfer such Restricted Securities in accordance
with the terms of the notice delivered by the Purchaser to the Company. Unless
there is in effect a registration statement under the Securities Act covering
the proposed transfer, each certificate evidencing the Restricted Securities
transferred as herein provided shall bear the appropriate restrictive legend set
forth in Section 8.2 above, except that such certificate shall not bear such
restrictive legend if, (i) in the opinion of counsel for the Purchaser, such
legend is not required in order to establish compliance with any provisions of
the Securities Act, (ii) a period of at least three years has elapsed since the
later of the date the Restricted Securities were acquired from the Company or
from an affiliate of the Company, and the Purchaser represents to the Company
that it is not an affiliate of the Company and has not been an affiliate during
the preceding three months and shall not become an affiliate of the Company
without resubmitting the Restricted Securities for reimposition of the legend,
or (iii) the Restricted Securities have been sold pursuant to Rule 144(k) and
the certificate is accompanied by a representation by the Purchaser that it is
not an affiliate of the Company, has not been an affiliate during the
three-month period prior to the sale and has held the Restricted Securities for
more than three years.
Section 8.4. Registration Rights Agreement. Concurrently with
the execution and delivery of this Agreement, the Company and the Purchaser are
entering into a Registration Rights Agreement which provides, among other
things, for the registration, on the terms and conditions set forth therein, of
the Restricted Securities.
ARTICLE IX
TERMINATION
Notwithstanding anything contained herein to the con trary,
this Agreement may be terminated at any time prior to the Closing Date:
(a) By the mutual written consent of the Purchaser and
the Company;
93610.01
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(b) By the Purchaser or the Company if the Closing has not
occurred on or before December 31, 1996 and this Agreement has not previously
been terminated; provided, however, that the right to terminate the Agreement
under this Section 9(b) shall not be available to any party whose failure to
fulfill any obligation under this Agreement has been the cause of, or resulted
in, the failure of the Closing to occur on or before such date.
In the event that this Agreement shall be terminated pursuant
to this Article IX, all further obligations of the par ties under this Agreement
shall be terminated without further liability of any party to any other party,
provided that nothing herein shall relieve any party from liability for its
willful breach of this Agreement.
ARTICLE X
MISCELLANEOUS
Section 10.1. Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the
State of New York, without regard to the conflict of rules
thereof.
Section 10.2. Survival. The representations and warranties of
the Company set forth in Section 3.5, Section 3.18, Section 3.19, the first
sentence of Section 3.20, the first two sentences of Section 3.21(b)(i), and
Section 3.21(b)(iii) shall survive the Closing for two years, but thereafter
shall be of no further force or effect. All other representations and warranties
contained in this Agreement shall not survive the Closing.
Section 10.3. Successors and Assigns. Except as otherwise
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors and permitted assigns of the parties hereto. No
assignment of this Agreement may be made by either party at any time, whether or
not by operation of law, without the other party's prior written consent, except
that the Purchaser may assign any of its rights hereunder to an affiliate of the
Purchaser without the Company's consent provided that such affiliate expressly
assumes in writing all of the Purchaser's obligations hereunder.
Section 10.4. Entire Agreement; Amendment. This
Agreement and the Transaction Documents constitute the full and
entire understanding and agreement between the parties with
regard to the subjects hereof and thereof. Except as expressly
provided herein, neither this Agreement nor any term hereof may
93610.01
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be amended, waived, discharged or terminated other than by a written instrument
signed by the party against whom enforcement of any such amendment, waiver,
discharge or termination is sought.
Section 10.5. Notices, Etc. All notices and other
communications required or permitted hereunder shall be in writing and shall be
mailed by registered or certified mail, postage prepaid, or otherwise delivered
by hand or by messenger, addressed (a) if to the Purchaser, at 435 North
Michigan Avenue, Chicago, Illinois 60611, Attention: Mr. David D. Hiller, or at
such other address as the Purchaser shall have furnished to the Company in
writing and (b) if to the Company, at One Athenaeum Street, Cambridge,
Massachusetts 02142, Attention: Mr. Neal S. Winneg, or at such other address as
the Company shall have furnished to the Purchaser in writing. Each such notice
or other communication shall for all purposes of this Agreement be treated as
effective or having been given when delivered if delivered personally, or, if
sent by mail, at the earlier of its receipt or 72 hours after the same has been
deposited in a regularly maintained receptacle for the deposit of the United
States mail, addressed and postage prepaid as aforesaid.
Section 10.6. Delays or Omissions. Except as express ly
provided herein, no delay or omission to exercise any right, power or remedy
accruing to the Company or the Purchaser upon any breach or default of any party
under this Agreement, shall impair any such right, power or remedy of the
Company or the Purchaser nor shall it be construed to be a waiver of any such
breach or default, or an acquiescence therein, or of or in any similar breach or
default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of the Company or the Purchaser of any breach or default
under this Agreement, or any waiver on the part of any such party of any
provisions or conditions of this Agreement, must be in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to the
Company or the Purchaser, shall be cumulative and not alternative.
Section 10.7. Counterparts. This Agreement may be executed in
any number of counterparts, each of which may be executed by only one of the
parties hereto, each of which shall be enforceable against the party actually
executing such counter part, and all of which together shall constitute one
instrument.
Section 10.8. Severability. In the event that any
provision of this Agreement becomes or is declared by a court of
competent jurisdiction to be illegal, unenforceable or void, this
Agreement shall continue in full force and effect without said
93610.01
- 19 -
provisions; provided that no such severability shall be effective if it
materially changes the economic benefit of this Agreement to any party.
Section 10.9. Titles and Subtitles. The titles and
subtitles used in this Agreement are used for convenience only
and are not to be considered in construing or interpreting this
Agreement.
Section 10.10. No Public Announcement. Neither the Company nor
the Purchaser shall, to the extent practicable, without consultation of the
other, make any press release or other public announcement concerning the
transactions contemplated by this Agreement except as and to the extent that any
such party shall be obligated to make any such disclosure by law or by the
rules, regulations or policies of any national securities exchange or
association.
93610.01
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IN WITNESS WHEREOF, each of the undersigned has caused the
foregoing Agreement to be executed by one of its duly author ized officers as of
the date first above written.
TRIBUNE COMPANY
By: /s/ David D. Hiller
Name: David D. Hiller
Title: Senior Vice President
SOFTKEY INTERNATIONAL, INC.
By: /s/ Michael J. Perik
Name: Michael J. Perik
Title: Chairman and Chief Executive
Officer
93610.01
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SOFTKEY INTERNATIONAL INC.
AND
STATE STREET BANK AND TRUST COMPANY
Trustee
INDENTURE
Dated as of _____________, 1995
5 1/2% Senior Convertible/Exchangeable Notes Due 2000
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0093773.0 1
TABLE OF CONTENTS
ARTICLE I - DEFINITIONS.......................................................2
Section 1.1 Definitions.............................................2
ARTICLE II - ISSUE, DESCRIPTION, EXECUTION, REGISTRATION
AND EXCHANGE OF NOTES................................................7
Section 2.1 Designation, Amount and Issue of Notes...................7
Section 2.2 Form of Notes............................................8
Section 2.3 Date and Denomination of Notes;
Payments of Interest........................................8
Section 2.4 Execution of Notes.....................................10
Section 2.5 Exchange and Registration of Transfer
of Notes; Restrictions on Transfer; Depositary.............11
Section 2.6 Mutilated, Destroyed, Lost or Stolen
Notes......................................................19
Section 2.7 Temporary Notes........................................20
Section 2.8 Cancellation of Notes Paid, Etc........................20
Section 2.9 Ranking................................................21
ARTICLE III - REDEMPTION OF NOTES............................................21
Section 3.1 Redemption Prices......................................21
Section 3.2 Notice of Redemption, Selection of Notes...............21
Section 3.3 Payment of Notes Called for Redemption.................23
Section 3.4 Conversion/Exchange Arrangement on
Call for Redemption........................................24
Section 3.5 Purchase of Notes Upon a Change of Control.............25
ARTICLE IV - [RESERVED]......................................................26
ARTICLE V - PARTICULAR COVENANTS OF THE COMPANY..............................26
Section 5.1 Payment of Principal, Premium and Interest.............26
Section 5.2 Maintenance of Office or Agency........................26
Section 5.3 Appointments to Fill Vacancies in
Trustee's office...........................................27
Section 5.4 Provisions as to Paying Agent..........................27
Section 5.5 Corporate Existence....................................28
Section 5.6 Rule 144A Information Requirement......................28
Section 5.7 Stay, Extension and Usury Laws.........................29
Section 5.8 Amendments to Series C Preferred Stock.................29
ARTICLE VI - NOTEHOLDERS' LISTS AND REPORTS BY THE COMPANY...................29
Section 6.1 Noteholders' Lists.....................................29
Section 6.2 Reports by Company.....................................29
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0093773.0 1
ARTICLE VII - DEFAULTS AND REMEDIES..........................................30
Section 7.1 Events of Default......................................30
Section 7.2 Payments of Notes on Default; Suit
Therefor...................................................32
Section 7.3 Application of Monies Collected by Trustee.............34
Section 7.4 Proceedings by Noteholder..............................35
Section 7.5 Proceedings by Trustee.................................36
Section 7.6 Remedies Cumulative and Continuing.....................36
Section 7.7 Direction of Proceedings and Waiver
of Defaults by Majority of Noteholders.....................37
Section 7.8 Notice of Defaults.....................................37
Section 7.9 Undertaking to Pay Costs...............................37
ARTICLE VIII - CONCERNING THE TRUSTEE........................................38
Section 8.1 Duties and Responsibilities of Trustee.................38
Section 8.2 Reliance on Documents, Opinions, Etc...................39
Section 8.3 No Responsibility for Recitals, Etc....................40
Section 8.4 Trustee, Paying Agents, Exchange Agents,
Conversion Agents or Registrar May own Notes...............40
Section 8.5 Monies to Be Held in Trust.............................41
Section 8.6 Compensation and Expenses of Trustee...................41
Section 8.7 Officers' Certificate as Evidence......................41
Section 8.8 Conflicting Interests of Trustee.......................42
Section 8.9 Eligibility of Trustee.................................42
Section 8.10 Resignation or Removal of Trustee.....................42
Section 8.11 Acceptance by Successor Trustee.......................43
Section 8.12 Successor, by Merger, Etc.............................44
Section 8.13 Limitation on Rights of Trustee as
Creditor...................................................44
ARTICLE IX - CONCERNING THE NOTEHOLDERS......................................45
Section 9.1 Action by Noteholders..................................45
Section 9.2 Proof of Execution by Noteholders......................45
Section 9.3 Who Are Deemed Absolute Owners.........................45
Section 9.4 Company-Owned Notes Disregarded........................46
Section 9.5 Revocation of Consents, Future
Holders Bound..............................................47
ARTICLE X - NOTEHOLDERS MEETINGS.............................................47
Section 10.1 Purposes for Which Meetings May be Called.............47
Section 10.2 Manner of Calling Meetings; Record Date...............47
Section 10.3 Call of Meeting by Company or Noteholders.............48
Section 10.4 Who may Attend and Vote at Meetings...................48
Section 10.5 Manner of Voting at Meetings and
Record to be Kept..........................................48
Section 10.6 Exercise of Rights of Trustee and
Noteholders not to be Hindered or delayed..................49
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0093773.0 1
ARTICLE XI - SUPPLEMENTAL INDENTURES.........................................49
Section 11.1 Supplemental Indentures Without
Consent of Noteholders.....................................49
Section 11.2 Supplemental Indentures with Consent of
Noteholders................................................51
Section 11.3 Effect of Supplemental Indentures.....................52
Section 11.4 Notation on Notes.....................................52
Section 11.5 Evidence of Compliance of Supplemental
Indenture to be Furnished Trustee..........................52
ARTICLE XII - CONSOLIDATION, MERGER, SALE, CONVEYANCE,
TRANSFER AND LEASE .................................................53
Section 12.1 Company May Consolidate, Etc. on
Certain Terms..............................................53
Section 12.2 Successor Company to Be Substituted...................53
Section 12.3 Opinion of Counsel to Be Given Trustee................54
ARTICLE XIII - SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS....................................................54
Section 13.1 Legal Defeasance and Covenant
Defeasance of the Notes....................................54
Section 13.2 Termination of Obligations upon
Cancellation of the Notes..................................57
Section 13.3 Survival of Certain Obligations.......................57
Section 13.4 Acknowledgment of Discharge by Trustee................58
Section 13.5 Application of Trust Assets...........................58
Section 13.6 Repayment to the Company; Unclaimed Money.............58
Section 13.7 Reinstatement.........................................59
ARTICLE XIV - IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS..............................................59
Section 14.1 Indenture and Notes Solely Corporate
Obligations................................................59
ARTICLE XV - CONVERSION OF NOTES.............................................59
Section 15.1 Right to Convert......................................59
Section 15.2 Exercise of Conversion Privilege;
Issuance of Common Stock on Conversion;
No Adjustment for Interest or Dividends....................60
Section 15.3 Cash Payments in Lieu of Fractional
Shares.....................................................62
Section 15.4 Conversion Price......................................62
Section 15.5 Adjustment of Conversion Price........................62
Section 15.6 Effect of Reclassification,
Consolidation, Merger or Sale..............................72
Section 15.7 Transfer or Similar Taxes on Shares Issued............73
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0093773.0 1
Section 15.8 Reservation of Shares; Shares to Be
Fully Paid; Listing of Common Stock........................73
Section 15.9 Responsibility of Trustee.............................74
Section 15.10 Notice to Holders Prior to Certain
Actions....................................................74
ARTICLE XVI - MISCELLANEOUS PROVISIONS.......................................75
Section 16.1 Provisions Binding on Company's
Successors.................................................75
Section 16.2 Official Acts by Successor Company....................75
Section 16.3 Addresses for Notices, Etc............................75
Section 16.4 Governing Law.........................................76
Section 16.5 Evidence of Compliance with Conditions
Precedent; Certificates to Trustee.........................76
Section 16.6 Legal Holidays........................................77
Section 16.7 No Security Interest Created..........................77
Section 16.8 Trust Indenture Act...................................77
Section 16.9 Benefits of Indenture.................................77
Section 16.10 Table of Contents, Headings Etc......................77
Section 16.11 Authenticating Agent.................................77
Section 16.12 Execution in Counterparts............................78
Section 16.13 Pooling of Interests.................................78
ARTICLE XVII - EXCHANGE OF NOTES.............................................79
Section 17.1 Right to Exchange.....................................79
Section 17.2 Exercise of Exchange Privilege;
Issuance of Preferred Stock on Exchange;
Adjustment for Interest or Dividends.......................79
Section 17.3 Cash Payments in Lieu of Fractional Shares............81
Section 17.4 Exchange Price........................................81
Section 17.5 Adjustment of Exchange Price..........................81
Section 17.6 Effect of Reclassification, Consolidation,
Merger or Sale.............................................83
Section 17.7 Transfer or Similar Taxes on Shares Issued............84
Section 17.8 Reservation of Stock; Shares to Be
Fully Paid; Listing of Preferred Stock.....................84
Section 17.9 Responsibility of Trustee.............................85
Section 17.10 Notice to Holders Prior to Certain
Actions....................................................86
EXHIBIT A - FORM OF DEFINITIVE NOTE.................................88
CERTIFICATE OF AUTHENTICATION.......................................91
ABBREVIATIONS.......................................................96
FORM OF CONVERSION NOTICE] CONVERSION NOTICE........................97
FORM OF EXCHANGE NOTICE] EXCHANGE NOTICE............................99
OPTION TO ELECT REPAYMENT UPON A CHANGE OF CONTROL.................101
FORM OF ASSIGNMENT.................................................102
EXHIBIT B - FORM OF GLOBAL NOTE....................................104
FORM OF CERTIFICATE AUTHENTICATION.................................108
FORM OF REVERSE OF NOTE............................................109
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CONVERSION NOTICE..................................................114
FORM OF EXCHANGE NOTICE............................................116
FORM OF OPTION TO ELECT REPAYMENT] UPON
A CHANGE OF CONTROL.......................................118
EXHIBIT C FORM OF CERTIFICATE OF DESIGNATION.......................119
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INDENTURE dated as of _________________________ between
SOFTKEY INTERNATIONAL 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 Massachusetts banking corporation (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 issuance of its 5 1/2% Senior Convertible/Exchangeable Notes
Due 2000 (hereinafter sometimes called the "Notes"), in an aggregate principal
amount not to exceed $150,000,000 and, to provide the terms and conditions upon
which the Notes are to be authenticated, issued and delivered, the Company has
duly authorized the execution and delivery of this Indenture; and
WHEREAS, the Notes, the certificate of authentication to be
borne by the Notes, a form of assignment, a form of option to require repurchase
by the Company upon a Change of Control (as hereinafter defined), a form of
conversion notice, a form of exchange notice, a form of certificate of
designation of 5 1/2% Series C Convertible Preferred Stock for which the Notes
are exchangeable, and a form of certificate of transfer 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 issuance 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:
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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 Indenture Act
(as hereinafter defined) or which are by reference defined in the Securities Act
(as herein defined), except as herein otherwise expressly provided or unless the
context otherwise requires, shall have the meanings assigned to such terms in
said Trust Indenture Act and in said Securities Act as in force at the date of
the execution of this Indenture. 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.
Accredited Investor: The term "Accredited Investor"
shall have the meaning given it in Rule 501(a) under the
Securities Act.
Acquisition Price: The term "Acquisition Price" means the
volume weighted average of the per share prices paid by a specified person or
group in acquiring Voting Stock.
Affiliate: The term "Affiliate" of any specified person
shall mean an "affiliate" as defined in Rule 144(a) as promulgated
under the Securities Act.
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 a 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" shall mean a day, other
than a Saturday, a Sunday or other day on which the banking institutions in the
State of New York, the State of California or the Commonwealth of Massachusetts
are authorized or obligated by law or executive order to close or a day which is
declared a national or New York, California or Massachusetts state holiday.
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Change of Control: The term "Change of Control" means an event
or series of events pursuant to which (i) any "person" or "group" (as such terms
are used in Sections 13(d) and 14(d) of the Exchange Act) acquires beneficial
ownership (as determined in accordance with Rule 13d-3 under the Exchange Act),
directly or indirectly, of more than 50% of the total voting Stock of the
Company at an Acquisition Price less than the conversion price then in effect
with respect to the Notes and (ii) holders of Common Stock receive consideration
which is not all or substantially all common stock that is (or upon consummation
of or immediately following such event or events will be) listed on a United
States national securities exchange or approved for quotation on the Nasdaq
National Market or any similar United States system of automated dissemination
of quotations of securities prices; provided, however, that any such person or
group shall not be deemed to be the beneficial owner of, or to beneficially own,
any Voting Stock tendered into a tender offer until such tendered voting Stock
is accepted for purchase under the tender offer.
Commission: The term "Commission" shall mean the
Securities and Exchange Commission.
Common Stock: The term "Common Stock" shall mean any stock of
any class of the Company which has no preference in respect of dividends or of
amounts payable in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Company and which is not subject to redemption
by the Company. Subject to the provisions of Section 15.6, however, shares
issuable on conversion of Notes shall include only shares of the class
designated as common stock of the Company at the date of this Indenture or
shares of any class or classes resulting from any reclassification or
reclassifications thereof and which have no preference in respect of dividends
or of amounts payable in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Company and which are not subject to redemption
by the Company; provided that if at any time there shall be more than one such
resulting class, 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 SoftKey International
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.
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Corporate Trust Office of the Trustee: The term "Corporate
Trust office of the Trustee," 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 225 Franklin Street, Boston, Massachusetts 02110
(Attention: Corporate Trust Department).
Custodian: The term "Custodian" means State Street Bank
and Trust Company, as custodian with respect to the Notes in
global form, or any successor entity thereto.
Default: The term "default" shall mean any event that
is, or after notice or passage of time, or both, would be, an
Event of Default.
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 the 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.
Exchange Act: The term "Exchange Act" means the
Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
Exchange Price: The term "Exchange Price" shall have
the meaning specified in Section 17.4.
Event of Default: The term "Event of Default" shall mean any
event specified in Section 7.1(a), (b), (c), (d) or (e).
Indenture: The term "Indenture" shall mean this
instrument as originally executed or, if amended or supplemented
as herein provided, as so amended or supplemented.
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; holder: The terms "Noteholder" or "holder" as
applied to any Note, or other similar terms (but excluding the term "beneficial
holder"), shall mean any person in whose name at the time a particular Note is
registered on the Note registrar's books.
Note register: The term "Note register" shall have the meaning
specified in Section 2.5.
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Officers' Certificate: The term "Officers' Certificate," when
used with respect to the Company, shall mean a certificate signed by the
President, the Chief Executive officer, the Chief Financial officer or any Vice
President or the Secretary or any Assistant Secretary of the Company, which is
delivered to the Trustee. Each such certificate shall include the statements
provided for in Section 16.5 if and to the extent required by the provisions of
such Section.
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 16.5 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 which monies in the
necessary amount shall have been deposited in trust with the Trustee for payment
or redemption; provided that if such Notes are to be redeemed prior to the
maturity thereof, notice of such redemption shall have been given as in Article
III provided, or provision satisfactory to the Trustee shall have been made for
giving such notice;
(c) Notes in lieu of 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
or exchanged for Preferred Stock pursuant to Article XVII and Notes not deemed
outstanding pursuant to Section 3.2.
Person: The term "person" shall mean a corporation, an
association, a partnership, an individual, a joint venture, a joint stock
company, a trust, an unincorporated organization or a government or an agency or
a political subdivision thereof.
PORTAL Market: The term "PORTAL Market" shall mean the Private
Offerings, Resales and Trading through Automated Linkages market operated by the
National Association of Securities Dealers, Inc. or any successor thereto.
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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.
Preferred Stock: The term "Preferred Stock" shall mean the 5
1/2% Series C Convertible Preferred Stock whose terms are initially set forth in
the form of the Certificate of Designation attached hereto as Exhibit C, for
which the Notes are exchangeable in accordance with Article XVII.
QIB: The term "QIB" shall mean a "qualified
institutional buyer" as defined in Rule 144A (as hereinafter
defined).
Responsible Officer: The term "Responsible Officer," when used
with respect to the Trustee, shall mean an officer of the Trustee assigned and
duly authorized by the Trustee to administer its corporate trust matters.
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.
Subsidiary: The term "subsidiary" of any specified person
shall mean (i) a corporation a majority of whose capital stock with voting power
under ordinary circumstances, to elect directors is at the time directly or
indirectly owned by such person or (ii) any other person (other than a
corporation) in which such person or such person and a subsidiary or
subsidiaries of such person or a subsidiary or subsidiaries of such person
directly or indirectly, at the date of determination thereof, has at least
majority ownership.
Successor Company: The term "Successor Company" shall
have the meaning specified in Section 12.1.
Trust Indenture Act: The term "Trust Indenture Act" shall mean
the Trust Indenture Act of 1939, as amended, as it was in force at the date of
execution of this Indenture, except as provided in Sections 11.3, 15.6 and 17.6;
provided, however, that in the event said Trust Indenture Act of 1939 is amended
after the date hereof, the term "Trust Indenture Act" shall mean, to the
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extent required by such amendment, said Trust Indenture Act of 1939 as so
amended.
Trustee: The term "Trustee" shall mean State Street Bank and
Trust Company, 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.
U.S. Government Obligations: The term "U.S. Government
Obligations" means securities that are (i) direct obligations of the United
States of America for the payment of which its full faith and credit is pledged
or (ii) obligations of a Person controlled or supervised by, and acting as an
agency or instrumentality of, the United States of America the timely payment of
which is unconditionally guaranteed as a full faith and credit obligation by the
United States of America, which, in either case, are not callable or redeemable
at the option of the issuer hereof, and shall also include a Depositary receipt
issued by a bank (as defined in Section 3(a)(2) of the Securities Act of 1933,
as amended) as custodian with respect to any such U.S. Government Obligation or
a specific payment of principal or interest on any such U.S. Government
Obligation held by such custodian for the account of the holder of such
Depositary receipt; provided that (except as required by law) such custodian is
not authorized to make any deduction from the amount payable to the holder of
such Depositary receipt from any amount received by such custodian in respect of
the U.S. Government Obligation or the specific payment of principal of or
interest on the U.S. Government Obligation evidenced by such Depositary receipt.
Voting Stock: The term "Voting Stock" means stock of the class
or classes pursuant to which the holders thereof have the general voting power
under ordinary circumstances to elect at least a majority of the board of
directors, managers or trustees of a corporation (irrespective of whether or not
at the time stock of any other class or classes shall have or might have voting
power by reason of the happening of any contingency).
The definitions of certain other terms are as specified in
Section 3.5 and Articles XV and XVII.
ARTICLE II
ISSUE, DESCRIPTION, EXECUTION, REGISTRATION
AND EXCHANGE OF NOTES
Section 2.1 Designation, Amount and Issue of Notes. The
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Notes shall be designated as "5 1/2% Senior Convertible/Exchange- able Notes Due
2000." Notes not to exceed the aggregate principal amount of $150,000,000 upon
the execution of this Indenture, or 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 its (a) Chief Executive Officer or President,
and (b) Chief Financial Officer or Secretary or any Assistant Secretary, without
any further action by the Company hereunder.
Section 2.2 Form of Notes. The Notes in definitive form 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. The Notes may be issued in global form,
substantially in the form of Exhibit B, 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 stock
exchange on which the Notes may be listed, or to conform to usage. Any Note in
global form shall represent such of the outstanding Notes as shall be specified
therein and shall provide that it shall represent the aggregate amount of
outstanding Notes from time to time endorsed thereon and that the aggregate
amount of outstanding Notes represented thereby may from time to time be
increased or reduced to reflect transfers or exchanges permitted hereby. Any
endorsement of a Note in global form to reflect the amount of any increase or
decrease in the amount of outstanding Notes represented thereby shall be made by
the Trustee or the Custodian, at the direction of the Trustee, in such manner
and upon instructions given by the holder of such Notes in accordance with the
Indenture. Payment of principal of and interest and premium, if any, on any Note
in global form shall be made to the holder of such Note.
The terms and provisions contained in the forms of Notes
attached as Exhibits A and B hereto shall constitute, and are hereby expressly
made, a part of this Indenture and to the extent applicable, the Company and the
Trustee, by their execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby.
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
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authentication, shall bear interest from the applicable date and shall be
payable semiannually on each May 1 and November 1, commencing May 1, 1996, as
specified on the faces of the forms of Notes, attached as Exhibits A and B
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 prior to such interest payment date. Interest may, at the
option of the Company, be paid by check mailed to the address of such person on
the registry kept for such purposes; provided that, with respect to any holder
of Notes with an aggregate principal amount equal to or in excess of $5,000,000,
at the request of such holder in writing to the Trustee on or before the record
date preceding any interest payment date, interest on such holder's Notes shall
be paid by wire transfer in immediately available funds. The term "record date"
with respect to any interest payment date shall mean the April 15 or October 15
preceding said May 1 or November 1.
Interest on the Notes shall be computed on the basis of a year
of twelve 30-day months.
Any interest on any Note which is payable, but is not
punctually paid or duly provided for, on any said May 1 or November 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 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
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Defaulted Interest which shall be not more than 15 days and not less than 10
days prior to the date of the payment and not less than 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 payment of such Defaulted
Interest and the special record date therefor to be mailed, first-class postage
prepaid, to each Noteholder at his address as it appears in the Note register,
not less than 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 on which the Notes may be listed, and upon such notice as may be
required by such exchange, if, after notice given by the Company to the Trustee
of the proposed payment pursuant to this clause, such manner of payment shall be
deemed practicable by the Trustee.
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 Chief
Executive Officer, President or its Chief Financial Officer and attested by the
facsimile signature of its Secretary or any of its Assistant Secretaries (which
may be printed, engraved or otherwise reproduced thereon, by facsimile or
otherwise). Only such Notes as shall bear thereon a certificate of
authentication substantially in the form set forth on the forms of Notes
attached as Exhibits A and B hereto, manually executed by the Trustee (or an
authenticating agent appointed by the Trustee as provided by Section 16.11),
shall be entitled to the benefits of this Indenture or be valid or obligatory
for any purpose. Such certificate by the Trustee (or such an authenticating
agent) upon any 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
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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 of the Trustee a register (the register maintained in such office and in
any other office or agency of the Company designated pursuant to Section 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.
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 Section 2.5(d).
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.
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 of transfer in form satisfactory to the Company, and the Note
shall be duly executed by the Noteholder thereof or his attorney 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.
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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 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 exchange in accordance
with Articles XV or XVII or, if a portion of any Note is surrendered for
conversion or such exchange, such portion thereof surrendered for conversion or
exchange or (d) any Notes surrendered for redemption pursuant to Section 3.5 or,
if a portion of any Note is surrendered for redemption pursuant to Section 3.5,
such portion thereof surrendered for redemption pursuant to Section 3.5.
All Notes issued upon any transfer or exchange of Notes shall
be the valid obligations of the Company, evidencing the same debt, and entitled
to the same benefits under this Indenture as the Notes surrendered upon such
registration of transfer or exchange.
(b) So long as the Notes are eligible for book-entry
settlement with the Depositary, or unless otherwise required by law, all Notes
to be traded on the PORTAL Market shall be represented by a Note in global form
registered in the name of the Depositary or the nominee of the Depositary. The
transfer and exchange of beneficial interests in such Note in global form, 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. Neither the Trustee nor the Custodian (in
such respective capacities) will have any responsibility for the transfer and
exchange of beneficial interests in such Note in global form that does not
involve the issuance of a definitive Note.
At any time at the request of the beneficial holder of an
interest in a Note in global form, 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
Note in global form to be reduced and, following such reduction, the Company
will execute and the Trustee will authenticate and deliver to such beneficial
holder (or its nominee) a Note or Notes in the appropriate aggregate principal
amount in the name of such beneficial holder
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(or its nominee) and bearing such restrictive legends as may be
required by this Indenture.
Any transfer of a beneficial interest in a Note in global form
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. 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 Note in global form to be
reduced 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. In connection with any
such transfer, the Trustee or the Custodian, at the direction of the Trustee,
may request such representations and agreements relating to the restrictions on
transfer of such Note or Notes from such transferee (or such transferee's
nominee) as the Trustee (or the Custodian) may reasonably require.
(c) So long as the Notes are eligible for book-entry
settlement, or 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 Note in global
form to reflect an increase in the aggregate principal amount of the Notes
represented by the Note in global form, 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 Note in
global form to be increased accordingly.
Any Note in global form 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 upon which the Notes may be listed or traded or to conform
with any usage with
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respect thereto, or to indicate any special limitations or restrictions to which
any particular Notes are subject.
(d) Every Note that bears or is required under this Section
2.5(d) to bear the legend set forth in this Section 2.5(d) (together with
Preferred Stock issued upon exchange for all or a portion of such Note or any
Common Stock issued upon conversion of the Notes and required to bear the legend
set forth in Section 2.5(e), collectively, the "Restricted Securities") shall be
subject to the restrictions on transfer set forth in this Section 2.5(d), unless
such restrictions on transfer shall have been waived by the written consent of
the Company or removed in accordance with the provisions of Section 2.5(f), and
the holder of each such Restricted Security, by such holder's acceptance
thereof, agrees to be bound by such restrictions on transfer. As used in this
Section 2.5(d), the term "transfer" encompasses any sale, pledge, transfer or
other disposition of any Restricted Security.
Until three years after the later of the original issuance
date of any Note and the last date on which the Company or an Affiliate of the
Company was the owner of such Note, any certificate evidencing such Note (and
all securities issued in exchange therefor or substitution thereof, other than
Preferred Stock, if any, issued in exchange therefor or Common Stock, if any,
issued upon conversion thereof, which shall bear the legend set forth in Section
2.5(e), if applicable) shall bear a legend in substantially the following form,
unless otherwise agreed by the Company (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 WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING
SENTENCE. BY ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED
IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT)
("INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S.
PERSON AND IS ACQUIRING THE NOTE EVIDENCED HEREBY IN AN
OFFSHORE TRANSACTION; (2) AGREES THAT IT WILL NOT PRIOR TO THE
DATE THAT IS THREE YEARS AFTER THE LATER OF THE ORIGINAL
ISSUANCE OF THE NOTE EVIDENCED HEREBY AND THE LAST DATE ON
WHICH SOFTKEY INTERNATIONAL INC. (THE "COMPANY") OR ANY
"AFFILIATE" (AS DEFINED IN RULE 144 UNDER THE SECURITIES ACT)
OF THE COMPANY WAS THE OWNER OF THE NOTE (THE "RESTRICTION
TERMINATION DATE") RESELL OR OTHERWISE TRANSFER THE NOTE
EVIDENCED HEREBY OR THE PREFERRED STOCK ISSUED UPON EXCHANGE
OF SUCH NOTE OR THE
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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)
OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 UNDER
THE SECURITIES ACT OR (E) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE); AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON
TO WHOM THE NOTE EVIDENCED HEREBY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH
ANY TRANSFER OF THE NOTE EVIDENCED HEREBY BEFORE THE
RESTRICTION TERMINATION DATE, THE HOLDER MUST CHECK THE
APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO
THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO
STATE STREET BANK AND TRUST COMPANY, AS TRUSTEE. IF THE
PROPOSED TRANSFER IS PURSUANT TO CLAUSE (C), (D) OR (E) 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
RESTRICTION TERMINATION DATE. AS USED HEREIN, THE TERMS
"OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE
THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE
SECURITIES ACT.
Any Note (or security issued in exchange or substitution
therefor) as to which such restrictions on transfer shall have expired in
accordance with their terms may, upon satisfaction of the requirements of
Section 2.5(f) and 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)), a Note in global form may
not be transferred as a whole 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.
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The Depositary shall be a clearing agency registered under the
Exchange Act. The Company initially appoints The Depositary Trust Company to act
as Depositary with respect to the Notes in global form. 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 Note in global form
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 Note is not appointed by the
Company within 90 days after the Company receives such notice, the Company will
execute, and the Trustee, upon receipt of 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 Note in global form, in exchange for such Note in global form.
Definitive Notes issued in exchange for all or a part of a
Note in global form 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 a Note in global form have
been redeemed, converted, repurchased or canceled, such Note in global form
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 a global
Note is exchanged for definitive Notes, redeemed, converted, canceled or
transferred to a transferee who receives definitive Notes therefor or any
definitive Note is exchanged or transferred for part of a Note in global form,
the principal amount of such Note in global form shall, in accordance with the
standing procedures and instructions existing between the Depositary and the
Custodian, be reduced or increased, as the case may be, and an endorsement shall
be made on such Note in global form by the Trustee or the Custodian, at the
direction of the Trustee, to reflect such reduction or increase.
(e) Until three years after the later of the original issuance
date of any Note and the last date on which the Company or an Affiliate of the
Company was the owner of such Note, any stock certificate representing Preferred
Stock issued upon exchange of such Note or Common Stock issued upon conversion
of such Note shall bear a legend in substantially the following form,
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including the bracketed material as appropriate, unless otherwise agreed by the
Company (with written notice thereof to the Trustee and any transfer agent for
the Common Stock):
THE [COMMON][PREFERRED] 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 WITHIN THE UNITED STATES OR TO, OR FOR
THE ACCOUNT OR BENEFIT OF U.S. PERSONS EXCEPT AS SET FORTH IN
THE FOLLOWING SENTENCE. THE HOLDER HEREOF AGREES THAT PRIOR TO
THE DATE THAT IS THREE YEARS AFTER THE LATER OF THE ORIGINAL
ISSUANCE OF THE NOTE UPON THE [CONVERSION OF WHICH THE COMMON
STOCK] [EXCHANGE FOR WHICH THE PREFERRED STOCK] EVIDENCED
HEREBY WAS ISSUED AND THE LAST DATE ON WHICH SOFTKEY
INTERNATIONAL INC. (THE "COMPANY") OR ANY "AFFILIATE" (AS
DEFINED IN RULE 144 OF THE SECURITIES ACT) OF THE COMPANY WAS
THE OWNER OF THE NOTE UPON THE [CONVERSION OF] [EXCHANGE FOR]
WHICH THE [COMMON STOCK][PREFERRED STOCK] EVIDENCED HEREBY WAS
ISSUED (THE "RESTRICTION TERMINATION DATE"), (1) IT WILL NOT
RESELL OR OTHERWISE TRANSFER THE [COMMON STOCK] [PREFERRED
STOCK] EVIDENCED HEREBY 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" (AS DEFINED IN RULE
501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) THAT
PRIOR TO SUCH TRANSFER, FURNISHES TO THE FIRST NATIONAL BANK
OF BOSTON, AS TRANSFER AGENT, A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THE [COMMON STOCK] [PREFERRED
STOCK] EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE
OBTAINED FROM SUCH TRANSFER AGENT), (D) OUTSIDE THE UNITED
STATES IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT,
(E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY
RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), OR (F)
PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT; (2) PRIOR TO ANY SUCH
TRANSFER PURSUANT TO CLAUSE (C), (D) OR (E) ABOVE, IT WILL
FURNISH TO THE FIRST NATIONAL BANK OF BOSTON, 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][PREFERRED STOCK]
EVIDENCED HEREBY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND. THIS LEGEND WILL BE REMOVED UPON THE
RESTRICTION TERMINATION DATE. AS USED HEREIN, THE TERMS
"UNITED
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STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO
THEM BY REGULATION S UNDER THE SECURITIES ACT.
Any such Preferred Stock or Common Stock as to which such
restrictions on transfer shall have expired in accordance with their terms may,
upon satisfaction of the requirements of Section 2.5(f) and surrender of the
certificates representing such shares of Preferred Stock or Common Stock for
exchange in accordance with the procedures of the transfer agent for the Common
Stock or the Preferred Stock, as the case may be, be exchanged for a new
certificate or certificates for a like aggregate number of shares of Preferred
Stock or Common Stock, as the case may be, which shall not bear the restrictive
legend required by this Section 2.5(e).
(f) Upon any sale or transfer of any Restricted Security
(including any interest in a Note in global form) (i) that is effected pursuant
to an effective registration statement under the Securities Act, (ii) in the
case of the Common Stock and Preferred Stock only, that is effected pursuant to
Rule 144 as promulgated under the Securities Act or (iii) in connection with
which the Trustee (or transfer agent for the Common Stock, in the case of shares
of Common Stock of the Company or any transfer agent for the Preferred Stock in
the case of shares of Preferred Stock) receives certificates and other
information (including an Opinion of Counsel, if requested) reasonably
acceptable to the Company and the Trustee (or such transfer agent, as the case
may be) to the effect that such security will no longer be subject to the resale
restrictions under federal and state securities laws, then (A) in the case of a
Restricted Security in definitive form, the Note registrar or co-registrar (or
transfer agent, in the case of Common stock of the Company or any transfer agent
for the Preferred Stock in the case of shares of Preferred Stock) shall permit
the holder thereof to exchange such Restricted Security for a security that does
not bear the legends set forth in Section 2.5(d) or 2.5(e), as applicable, and
shall rescind any such restrictions on transfer and (B) in the case of
Restricted Securities represented by a Note in global form, such Note shall no
longer be subject to the restrictions contained in the legend set forth in
Section 2.5(d) (but still subject to the other provisions hereof). In addition,
any Note (or security issued in exchange or substitution therefor) or shares of
Preferred Stock issued upon exchange of any Note or shares of Common Stock
issued upon conversion of any Note, in any case, as to which the restrictions on
transfer described in the legends set forth in Section 2.5(d) and 2.5(e),
respectively, have expired by their terms, may, upon surrender thereof (in
accordance with the terms of this Indenture in the case of Notes) together with
such certifications and other information (including an Opinion of Counsel
having substantial experience in practice under the Securities Act and otherwise
reasonably acceptable to the Company, addressed to the Company and the Trustee
and in a form acceptable
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to the Company, to the effect that the transfer of such Restricted Security has
been made in compliance with Rule 144 or such successor provision) acceptable to
the Company and the Trustee (or any transfer agent, as the case may be) as
either of them may reasonably require, be exchanged for a new Note or Notes of
like tenor and aggregate principal amount (in the case of Notes), or a new
certificate or certificates for a like aggregate number of shares of Preferred
Stock (in the case of Preferred Stock) or Common Stock (in the case of Common
Stock), or a new certificate or other instrument of like tenor and amount (in
the case of securities issued in exchange or substitution for Notes), which
shall not bear the restrictive legends set forth in Sections 2.5(d) and 2.5(e).
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. The Company may charge such applicant for the
expenses of the Company in replacing a Note. 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 from 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 from any loss, liability,
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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 in lieu of any Note which 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 enforceable by anyone, and shall be
entitled to all the benefits (but shall be subject to all the limitations set
forth in) this Indenture equally and proportionately with any and all other
Notes duly issued hereunder. To the extent permitted by law, all Notes shall be
held and owned upon the express condition that the foregoing provisions are
exclusive with respect to the replacement or payment or conversion of mutilated,
destroyed, lost or stolen Notes and shall preclude any and all other rights or
remedies notwithstanding any law or statute existing or hereafter enacted to the
contrary with respect to the replacement or payment or conversion of negotiable
instruments or other securities without their surrender.
Section 2.7 Temporary Notes. Pending the preparation of
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 shall be
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 such Note in global form) may be surrendered in exchange
therefor, at each office or agency maintained by the Company pursuant to Section
5.2 and the Trustee or such authenticating agent shall authenticate and deliver
in exchange for such temporary Notes an equal aggregate principal amount of
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, conversion,
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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, in
accordance with the usual destruction procedures of the Trustee. 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.
Section 2.9 Ranking. The Notes will represent general,
unsecured obligations of the Company senior or pari passu in right of payment to
all other unsecured obligations of the Company and will rank pari passu in order
of preference with the Company's 5 1/2% Senior Convertible Notes due 2000 issued
October 23, 1995.
ARTICLE III
REDEMPTION OF NOTES
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 forms of Note attached as Exhibits A and B
hereto, together with accrued interest to the date fixed for redemption,
provided, however, that no such redemption shall be effected before November 2,
1998.
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, in the case of any redemption pursuant to Section 3.1, it or, at
its request accompanied by the proposed form of notice of redemption (which must
be received by the Trustee at least ten 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 30 and not more than 60 days prior to the date fixed for redemption to the
holders of Notes so to be redeemed as whole or in part at their last addresses
as the same appear on the registry books of the Company, 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
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the holder receives such notice. In any case, failure to give such notice by
mail or any defect in the notice to the holder of any Note designated for
redemption as a whole or in part shall not affect the validity of the
proceedings for the redemption of any other Note.
Each such notice of redemption shall specify the aggregate
principal amount of Notes to be redeemed, the date fixed for redemption, the
redemption price at which Notes are to be redeemed, the place or places of
payment, that payment will be made upon presentation and surrender of such
Notes, that interest accrued to 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 Exchange Price and Conversion Price and the date on which the
right to exchange and to convert such Notes or portions thereof into Preferred
Stock or Common Stock, as the case may be, 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 Business Day 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 so called for redemption (other than those
theretofore surrendered for exchange for Preferred Stock or conversion into
Common Stock) at the appropriate redemption price, together with accrued
interest to the date fixed for redemption. If any Note called for redemption is
exchanged or 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 45 days (or such shorter period of time as
may be acceptable to the Trustee) prior to the redemption date as to the
aggregate principal amount of Notes to be redeemed.
If fewer than all the Notes are to be redeemed, the Trustee
shall select the Notes or portions thereof to be redeemed (in principal amounts
of $1,000 or integral multiples thereof), by lot or, in its sole discretion, on
a pro rata basis. If any Note selected for partial redemption is exchanged or
converted in part
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after such selection, the converted or exchanged portion of such Note shall be
deemed (so far as may be) to be the portion to be selected for redemption. The
Notes (or portions thereof) so selected shall be deemed duly selected for
redemption for all purposes hereof, notwithstanding that any such Note is
exchanged or 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 treat as outstanding any Notes surrendered for exchange or
conversion during the period of 15 days next preceding the mailing of a notice
of redemption and need not treat as outstanding any Note authenticated and
delivered during such period in exchange for the unexchanged or unconverted
portion of any Note exchanged or 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 exchanged
for Preferred Stock or 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 thereon
accrued to 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 thereon accrued to said date), interest on the Notes or
portion of Notes so called for redemption shall cease to accrue, and such Notes
shall cease after the close of business on the Business Day next preceding the
date fixed for redemption to be exchangeable for Preferred Stock or 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 thereon to the date fixed for
redemption. On presentation and surrender of such Notes at a place of payment in
said notice specified, the said Notes or the specified portions thereof shall be
paid and redeemed by the Company at the applicable redemption price, together
with interest accrued thereon to the date fixed for redemption; provided that
any semi-annual payment of interest becoming due on the date fixed for
redemption 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.
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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) or (b), a Responsible Officer of the Trustee has knowledge. If any Note
called for redemption shall not be so paid upon surrender thereof for
redemption, the principal and premium, if any, shall, until paid or duly
provided for, bear interest from the date fixed for redemption at the rate borne
by the Note and such Note shall remain exchangeable for Preferred Stock and
convertible into Common Stock until the principal and premium, if any, shall
have been paid or duly provided for.
Section 3.4 Conversion/Exchange Arrangement on Call for
Redemption. In connection with any redemption of Notes, the Company may arrange
for the purchase and conversion or exchange of any Notes by an agreement with
one or more investment bankers or other purchasers to purchase such Notes by
paying to the Trustee in trust for the Noteholders, on or before the date fixed
for redemption, an amount not less than the applicable redemption price,
together with interest accrued to 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 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 will be filed
with the Trustee prior to the date fixed for redemption, any Notes not duly
surrendered for conversion or exchange 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 Articles XV or XVII) surrendered by such purchasers for conversion
or exchange, all as of immediately prior to the close of business on the date
fixed for redemption (and the right to exchange or 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 the purchase and conversion or exchange 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 or exchange of any Notes between the Company and
such purchasers including the costs and expenses incurred by the
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Trustee in the defense of any claim or liability arising out of or in connection
with the exercise or performance of any of its powers, duties, responsibilities
or obligations under this Indenture.
Section 3.5 Purchase of Notes Upon a Change of Control.
(a) If a Change of Control shall occur at any time, then each
holder of Notes shall have the right to require that the Company purchase such
holder's Notes in whole or in part in integral multiples of $1,000 at a purchase
price (the "Change of Control Purchase Price") in cash in an amount equal to
101% of the principal amount of such Notes, plus accrued and unpaid interest
thereon, if any, to the repurchase date (the "Change of Control Purchase Date")
pursuant to the offer described below (the "Change of Control Offer") and in
accordance with the other procedures set forth in this Indenture.
(b) Within 30 days following any Change of Control, the
Company shall notify the Trustee thereof and give written notice of such Change
of Control to each holder of Notes, by first-class mail, postage prepaid, at his
address appearing in the Note register, stating, among other things: that a
Change of Control has occurred; the Change of Control Purchase Price and the
Change of Control Purchase Date (which shall be a business day no earlier than
30 days nor later than 60 days from the date such notice is mailed, or such
later date as is necessary to comply with requirements under the Exchange Act);
that any Note not tendered will continue to accrue interest and to have all of
the benefits of this Indenture; that, unless the Company defaults in the payment
of the Change of Control Purchase Price, any Notes accepted for payment pursuant
to the Change of Control Offer shall cease to accrue interest after the Change
of Control Purchase Date; and certain other procedures that a holder of Notes
must follow to accept a Change of Control Offer or to withdraw such acceptance.
(c) The Company will comply with the applicable tender offer
rules, including Rule 13e-4 under the Exchange Act, and any other applicable
securities laws or regulations in connection with a Change of Control Offer.
(d) The Company will not, and will not permit any subsidiary
to, create or permit to exist or become effective any restriction that would
materially impair the ability of the Company to make a Change of Control offer
to purchase the Notes or, if such Change of Control offer is made, to pay for
the Notes tendered for purchase.
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ARTICLE IV
[RESERVED]
ARTICLE V
PARTICULAR COVENANTS OF THE COMPANY
Section 5.1 Payment of Principal, Premium and Interest. The
Company covenants and agrees that it will duly and punctually pay or cause to be
paid the principal of and premium, if any, and interest on each of the Notes at
the places, at the respective times and in the manner provided herein and in the
Notes. Each installment of interest on the Notes due on any semi-annual interest
payment date may be paid by mailing checks for the interest payable to or upon
the written order of the holders of Notes entitled thereto as they shall appear
on the Note register; provided that, with respect to any holder of Notes with an
aggregate principal amount equal to or in excess of $5,000,000, at the request
of such holder in writing to the Trustee, interest on such holder's Notes shall
be paid by wire transfer in immediately available funds. An installment of
principal or interest shall be considered paid on the date due if the Trustee or
Paying Agent (other than the Company, a Subsidiary of the Company or any
Affiliate of any of them) holds on that date money designated for and sufficient
to pay the installment of principal or interest and is not prohibited from
paying such money to the holders of the Notes pursuant to the terms of this
Indenture.
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 exchange or conversion or redemption and
where notices and demands to or upon the Company in respect of the Notes and
this Indenture may be served. The Company will give prompt written notice to the
Trustee of the location, and any change in the location, of such office or
agency not designated by the Trustee. If at any time the Company shall fail to
maintain any such office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the Corporate Trust office of the Trustee.
The Company may also from time to time designate one or more
other offices or agencies where the Notes may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations;
provided that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, The City of New York, for such purposes. The Company will give prompt
written notice to the Trustee of any such
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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 and conversion and exchange agent and each of the
Corporate Trust Office of the Trustee and the office of State Street Bank and
Trust Company, N.A. in the Borough of Manhattan, The City of New York, as one
such office or agency of the Company for the purposes set forth in the first
paragraph of this Section 5.2.
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, 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, premium, if any, or
interest on the Notes when the same shall be due and payable;
and
(3) that at any time during the continuance of an
Event of Default, upon request of the Trustee, it will
forthwith pay to the Trustee all sums so held in trust.
The Company shall, 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.
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(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 Corporate Existence. Subject to Article XII, the
Company will do or cause to be done all things necessary to preserve and keep in
full force and effect its corporate existence.
Section 5.6 Rule 144A Information Requirement. During the
three-year period following the original issuance date of any Note and during
the three-year period following the last date on which the Company or an
Affiliate of the Company was the owner of any Note (or shares of Common Stock
issued upon conversion of any Note or Preferred Stock issued upon exchange of
Notes), if the Company is subject neither to Section 13 nor Section 15(d) of the
Exchange Act, the Company shall at the written request of any holder or
beneficial holder of such Note (or shares of Preferred Stock issued upon
exchange of Notes or Common Stock issued upon conversion of Notes) provide to
such holder or beneficial holder of such Note (or shares of Common Stock issued
upon conversion of Notes or Preferred Stock issued upon exchange of Notes) and
any prospective transferee designated by such holder or beneficial holder of
such Note (or shares of Preferred Stock issued upon exchange of Notes or Common
Stock issued upon conversion of Notes) such information, if any, required by
Rule 144A(d)(4) under the Securities Act (so long as such information is
required to permit such transfer under Rule 144A).
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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 Amendments to Series C Preferred Stock. Without
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, the Company will not take any action with respect to its capital
stock or adopt any change to the Certificate of Designation of the Series C
Preferred Stock which in either such case would require the affirmative vote of
the holders of at least 66-2/3% of the outstanding shares of Series C Preferred
Stock under Section 3.2 of the Certificate of Designation (whether or not any
such Series C Preferred Stock is at the time outstanding).
ARTICLE VI
NOTEHOLDERS' LISTS AND REPORTS BY
THE COMPANY
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 15 days after April 15 and October 15 in each year
beginning with April 15, 1996, and at such other times as the Trustee may
request in writing, within 30 days after receipt by the Company of any such
request (or such lesser time as the Trustee may reasonably request in order to
enable it to timely provide any notice to be provided by it hereunder), a list
in such form as the Trustee may reasonably require of the names and addresses of
the holders of Notes as of a date not more than 15 days (or such other date as
the Trustee may reasonably request in order to so provide any such notices)
prior to the time such information is furnished, except that no such list need
be furnished so long as the Trustee is acting as Note registrar or co-registrar.
Section 6.2 Reports by Company. The Company will
deliver to the Trustee (a) as soon as available and in any event
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within 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
45 days after the end of each of the first three quarters of each fiscal year of
the Company (i) an unaudited consolidated financial report for such quarter and
(ii) a report containing a management's discussion and analysis of the financial
condition and results of operations of the Company; provided that the foregoing
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 next paragraph
of this Section 6.2.
The Company shall file with the Trustee, within 15 days after
it files such annual and quarterly reports with the Commission such annual and
quarterly reports as are required to be filed by the Company with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act.
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 any installment of interest upon
any of the Notes as and when the same shall become due and payable, and
continuance of such default for a period of 30 days; or
(b) 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; or
(c) a failure on the part of the Company duly to
observe or perform any other covenants or agreements on the part
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of the Company in the Notes or in this Indenture (other than a default in the
performance or breach of a covenant or agreement which is specifically dealt
with) elsewhere in this Section 7.1, which continues for a period of 90 days
after the date on which written notice of such failure, requiring the Company to
remedy the same, shall have been given to the Company by the Trustee, or to the
Company and a Responsible Officer of the Trustee, by the holders of at least 25
percent in aggregate principal amount of the Notes at the time outstanding
determined in accordance with Section 9.4; or
(d) the Company shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect, or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, or shall consent to any such relief or to the appointment of or
taking possession by any such official in an involuntary case or other
proceeding commenced against it or shall make a general assignment for the
benefit of creditors or shall fail generally to pay its debts as they become
due; or
(e) an involuntary case or other proceeding shall be commenced
against the Company seeking liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of 90 consecutive days;
then, and in each and every such case (other than an Event of Default specified
in Section 7.1(d) or (e)), 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,
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(d) or (e) occurs and is continuing, 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
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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, 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 subsequent default or Event of Default, or shall impair any
right consequent thereto. The Company shall notify a Responsible Officer of the
Trustee, promptly upon becoming aware thereof, of any Event of Default.
In case the Trustee shall have proceeded to enforce any right
under this Indenture and such proceedings shall have been discontinued or
abandoned because of such waiver or rescission and annulment or for any other
reason or shall have been determined adversely to the Trustee, then and in every
such case the Company, the holders of Notes and the Trustee shall be restored
respectively to their several positions and rights hereunder, and all rights,
remedies and powers of the Company, the holders of Notes and the Trustee shall
continue as though no such proceeding had been taken.
Section 7.2 Payments of Notes on Default; Suit Therefor. The
Company covenants that (a) in case default shall be made in the payment of any
installment of interest upon any of the Notes as and when the same shall become
due and payable, and such default shall have continued for a period of 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, by declaration or otherwise, then, upon demand of the Trustee, the
Company will pay to the Trustee, for the benefit of the holders of the Notes,
the whole amount that then shall have become due and payable on all such Notes
for principal, premium, if any, or interest, or both, as the case may be, with
interest upon the overdue principal, 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
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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 of the Company or any other obligor on the
Notes under Title 11 of the United States Code or any other applicable law, or
in case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Company or such other obligor, the property of the
Company or such other obligor, or in the case of any other judicial proceedings
relative to the Company or such other obligor upon the Notes, or to the
creditors or property of the Company or such other obligor, the Trustee,
irrespective of whether the principal of the Notes shall then be due and payable
as therein expressed or by declaration or otherwise and irrespective of whether
the Trustee shall have made any demand pursuant to the provisions of this
Section 7.2, shall be entitled and empowered, by intervention in such
proceedings or otherwise, to file and prove a claim or claims for the whole
amount of principal, premium, if any, and interest owing and unpaid in respect
of the Notes and, in case of any judicial proceedings, to file such proofs of
claim and other papers or documents as may be necessary or advisable in order to
have the claims of the Trustee and of the Noteholders allowed in such judicial
proceedings relative to the Company or any other obligor on the Notes, its or
their creditors, or its or their property and to collect and receive any monies
or other property payable or deliverable on any such claims and to distribute
the same after the deduction of any amounts due the Trustee under Section 8.6;
and any receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, custodian or similar official is hereby authorized by each of the
Noteholders to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the
Noteholders, to pay to the Trustee any amount due it for
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reasonable compensation, expenses, advances and disbursements, including counsel
fees incurred by it up to the date of such distribution. To the extent that such
payment of reasonable compensation, expenses, advances and disbursements out of
the estate in any such proceedings shall be denied for any reason, payment of
the same shall be secured by a lien on, and shall be paid out of, any and all
distributions, dividends, monies, securities and other property which the
holders of the Notes may be entitled to receive in such proceedings, whether in
liquidation or under any plan of reorganization or arrangement or otherwise.
Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or adopt on behalf of any Noteholder any plan
of reorganization or arrangement affecting the Notes or the rights of any
Noteholder, or to authorize the Trustee to vote in respect of the claim of any
Noteholder in any such proceeding.
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.
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 V, 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
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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; and
Third: Subject to the Provisions of Article V, 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, 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, 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.
Section 7.4 Proceedings by Noteholder. No holder of any Note
shall have any right by virtue of or by availing of any provision of this
Indenture to institute any suit, action or proceeding in equity or at law upon
or under or with respect to this Indenture, or for the appointment of a
receiver, trustee, liquidator, custodian or other similar official, or for any
other remedy hereunder, unless such holder previously shall have given to the
Trustee written notice of an Event of Default and of the continuance thereof, as
hereinbefore provided, and unless also the holders of not less than 25 percent
in aggregate principal amount of the Notes then outstanding shall have made
written request upon the Trustee to institute such action, suit or proceeding in
its own name as Trustee hereunder and shall have offered to the Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee for 60 days after
its receipt of such notice, request and offer of indemnity, shall have neglected
or refused to institute any such action, suit or proceeding, and no direction
inconsistent with such written request shall have been given to the Trustee
pursuant to Section 7.7; it being understood and intended, and being expressly
covenanted by the taker and holder of every Note with every other taker and
holder and the Trustee, that no one or more holders of Notes shall have any
right in any manner whatever by virtue of or by availing of any provision of
this Indenture to affect, disturb or prejudice the rights of any other holder of
Notes, 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
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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, 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 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 such powers and remedies or of any other
powers and remedies available to the Trustee or the holders of the Notes, by
judicial proceedings or otherwise, to enforce the performance or observance of
the covenants and agreements contained in this Indenture, and no delay or
omission of the Trustee or of any holder of any of the Notes to exercise any
right or power accruing upon any default or Event of Default occurring and
continuing as aforesaid shall impair any such right or power or shall be
construed to be a waiver of any such default or any acquiescence therein; and,
subject to the provisions of Section 7.4, every power and remedy given by this
Article VII or by law to the Trustee or to the Noteholders may be exercised from
time to time, and as often as shall be deemed expedient, by the Trustee or by
the Noteholders.
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Section 7.7 Direction of Proceedings and Waiver of Defaults by
Majority of Noteholders. The holders of a majority in aggregate principal amount
of the Notes at the time outstanding (determined in accordance with Section 9.4)
shall have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee; provided, however, that (a) such direction shall
not be in conflict with any rule of law or with this Indenture and (b) the
Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction. The holders of a majority in aggregate
principal amount of the Notes at the time outstanding (determined in accordance
with Section 9.4) may on behalf of the holders of all of the Notes waive any
past default or Event of Default hereunder and its consequences except (i) a
default in the payment of interest or premium, if any, on, or the principal of,
the Notes, (ii) a failure by the Company to exchange any Notes for Preferred
Stock or 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 90
days after the occurrence of a default, mail to all Noteholders, as the names
and addresses of such holders appear upon the registry books of the Company,
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, premium,
if any, or interest on any of the Notes, the Trustee shall be protected in
withholding such notice if and so long as a trust committee of directors and/or
Responsible Officers of the Trustee in good faith determine that the withholding
of such notice is in the interests of the Noteholders.
Section 7.9 Undertaking to Pay Costs. All parties to this
Indenture agree, and each holder of any Note by his acceptance thereof shall be
deemed to have agreed, that any court may, in its discretion, require, in any
suit for the enforcement of any right or remedy under this Indenture, or in any
suit against the Trustee for any action taken or omitted by it as Trustee, the
filing by any party litigant in such suit of an
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undertaking to pay the costs of such suit and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; provided that
the provisions of this Section 7.9 shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Noteholder or group of Noteholders
holding in the aggregate more than ten percent in principal amount of the Notes
at the time outstanding determined in accordance with Section 9.4 or to any suit
instituted by any Noteholder for the enforcement of the payment of the principal
of, premium, if any, or interest on any Note 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 or of the right to exchange any
Note in accordance with the provisions of Article XVII.
ARTICLE VIII
CONCERNING THE TRUSTEE
Section 8.1 Duties and Responsibilities of Trustee. (a) if an
Event of Default has occurred and is continuing, the Trustee shall exercise the
rights and powers vested in it by this Indenture and use the same degree of care
and skill in its exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.
(b) Except during the continuance of an Event of
Default:
(1) the Trustee need perform only those duties
that are specifically set forth in this Indenture and no
others; and
(2) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture;
provided that the Trustee shall examine such certificates and
opinions to determine whether or not they conform to the
requirements of this Indenture.
(c) The Trustee may not be relieved from liability for
its own negligent action, its own negligent failure to act or its
own willful misconduct, except that:
(1) this paragraph (c) does not limit the effect
of paragraph (b) of this section 8.1;
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(2) the Trustee shall not be liable for any error of
judgment made in good faith by an officer of the Trustee
unless it is proved that the Trustee was negligent in
ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to Section
7.7.
(d) Every provision of this Indenture that in any way
relates to the Trustee is subject to paragraphs (a), (b), (c) and
(e) of this Section 8.1.
(e) The Trustee may refuse to perform any duty or exercise any
right or power or extend or risk its own funds or otherwise incur any financial
liability unless it receives indemnity satisfactory to it against any loss,
liability or expense.
Section 8.2 Reliance on Documents, Opinions, Etc.
Except as otherwise provided in Section 8.1:
(a) The Trustee may rely and shall be protected in acting upon
any resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, bond, debenture, coupon or other paper or document
believed by it in good faith to be genuine and to have been signed or presented
by the proper party or parties;
(b) Any request, direction, order or demand of the Company
mentioned herein shall be sufficiently evidenced by an Officers' Certificate
(unless other evidence in respect thereof be herein specifically prescribed);
and any resolution of the Board of Directors may be evidenced to the Trustee by
a copy thereof certified by the Secretary or an Assistant Secretary of the
Company;
(c) The Trustee may consult with counsel and any advice or
Opinion of Counsel shall be full and complete authorization and protection in
respect of any action taken or omitted by it hereunder in good faith and in
accordance with such advice or Opinion of Counsel;
(d) 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; no Depositary, Custodian or paying agent who is not the Trustee shall
be deemed an agent of the Trustee, and the Trustee (in its
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capacity as Trustee) shall not be responsible for any act or
omission by any such Depositary, Custodian or paying agent;
(e) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by the Indenture at the request or
direction of any of the holders pursuant to this Indenture unless such holders
have offered the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which would be incurred by it in compliance with such
request or direction.
(f) Subject to the provisions of Section 8.1(c), the Trustee
shall not be liable for any action it takes or omits to take in good faith which
it believes to be authorized or within its rights or powers;
(g) In connection with any request to transfer or exchange any
Note, the Trustee may request a direction (in the form of an Officers'
Certificate) from the Company and an Opinion of Counsel with respect to
compliance with any restrictions on transfer or exchange imposed by this
Indenture, the Securities Act, other applicable law or the rules and regulations
of any exchange on which the Notes or the capital stock may be traded, and the
Trustee may rely and shall be protected in acting upon such direction and in
accordance with such Officers' Certificate and Opinion of Counsel;
(h) The Trustee may rely and shall be fully protected in
acting upon the determination and notice by the Company of the Conversion Price,
including any adjustment to the Conversion Price pursuant to Section 15.5(j);
and
(i) The Trustee shall not be deemed to have knowledge of any
Event of Default or other fact or event upon the occurrence of which it may be
required to take action hereunder unless one of its Responsible Officers has
actual knowledge thereof.
Section 8.3 No Responsibility for Recitals, Etc. The
-----------------------------------
recitals contained herein and in the Notes (except in the Trustee's certificate
of authentication) shall be taken as the statements of the Company, and the
Trustee assumes no responsibility for the correctness of the same. The Trustee
makes no representations as to the validity or sufficiency of this Indenture or
of the 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, Exchange Agents,
Conversion Agents or Registrar May own Notes. The Trustee, any paying agent, any
exchange agent, any conversion agent or any Note registrar, in its individual or
any other capacity, may become the
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owner or pledgee of Notes with the same rights it would have if it were not
Trustee, paying agent, exchange 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 in writing 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 incurred or made by the Trustee in
accordance with any of the provisions of this Indenture (including the
reasonable compensation and the expenses and disbursements of its counsel and of
all persons not regularly in its employ) except any such expense, disbursement
or advance as may arise from its negligence 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 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 funds held in trust
for the benefit of the holders of particular Notes. The obligation of the
Company under this Section shall survive the satisfaction and discharge of this
Indenture.
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 or bad
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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 or 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. In the event
that the Trust Indenture Act is applicable hereto, the Trustee has or shall
acquire a conflicting interest within the meaning of the Trust Indenture Act and
there exists an Event of Default hereunder (exclusive of any period of grace or
requirement of notice), 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 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 VIII.
Section 8.10 Resignation or Removal of Trustee. (a) The
Trustee may at any time resign by giving written notice of such resignation to
the Company; and the Company shall mail, or cause to be mailed, notice thereof
to the holders of Notes at their addresses as they shall appear on the registry
books of the Company. Upon receiving such notice of resignation, the Company
shall promptly appoint a successor trustee by written instrument, in duplicate,
executed by order of the Board of Directors, one copy of which instrument shall
be delivered to the resigning Trustee and one copy to the successor trustee. If
no successor trustee have been so appointed and have accepted appointment 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.
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(b) In case at any time any of the following shall
occur:
(1) the Trustee shall fail to comply with Section 8.8
after written request therefor by the Company or by any Noteholder who
has been a bona fide holder of a Note or Notes for at least six months;
or
(2) the Trustee shall cease to be eligible in
accordance with the provisions of Section 8.9 and shall fail to resign
after written request therefor by the Company or by any such
Noteholder; or
(3) the Trustee shall become incapable of acting, or
shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee
or of its property shall be appointed, or any public officer shall take
charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation,
then, in any such case, the Company may remove the Trustee and appoint a
successor trustee by written instrument, in duplicate, executed by order of the
Board of Directors, one copy of which instrument shall be delivered to the
Trustee so removed and one copy to the successor trustee or, subject to the
provisions of Section 7.9, any Noteholder who has been a bona fide holder of a
Note or Notes for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor trustee. Such court may
thereupon, after such notice, if any, as it may deem proper and prescribe,
remove the Trustee and appoint a successor trustee.
(c) The holders of a majority in aggregate principal amount of
the Notes at the time outstanding may at any time remove the Trustee and
nominate a successor trustee which shall be deemed appointed as successor
trustee unless within ten days after notice to the Company of such nomination
the Company objects thereto, in which case the Trustee so removed or any
Noteholder, upon the terms and conditions and otherwise as in Section 8.10(a)
provided, may petition any court of competent jurisdiction for an appointment of
a successor trustee.
(d) Any resignation or removal of the Trustee and appointment
of a successor trustee pursuant to any of the provisions of this Section 8.10
shall become effective upon acceptance of appointment by the successor trustee
as provided in Section 8.11.
Section 8.11 Acceptance by Successor Trustee. Any
successor trustee appointed as provided in Section 8.10 shall
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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 eligible under the
provisions of Section 8.9.
Upon acceptance of appointment by a successor trustee as
provided in this Section 8.11, the Company 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 registry books of the Company. If
the Company fails to mail such notice within ten 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 Successor, by Merger, Etc. Any corporation into
which the Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Trustee, shall be the successor to the Trustee hereunder, provided such
corporation shall be qualified under the provisions of Section 8.8 and eligible
under the provisions of Section 8.9 without the execution or filing of any paper
or any further act on the part of any of the parties hereto.
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) and the Trust
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Indenture Act is applicable hereto, 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 (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 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 11.5, proof of the execution of any
instrument by a Noteholder or his agent or proxy shall be sufficient if made in
accordance with such reasonable rules and regulations as may be prescribed by
the Trustee or in such manner as shall be satisfactory to the Trustee. The
holding of Notes shall be proved by the 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 9.1.
Section 9.3 Who Are Deemed Absolute Owners. The Company, the
Trustee, any paying agent, any conversion or exchange agent and any Note
registrar may deem the person in whose name such Note shall be registered upon
the books of the Company 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
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interest on such Note, for conversion or exchange of such Note and for all other
purposes; and neither the Company nor the Trustee nor any paying agent nor any
conversion or exchange 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.
The Depositary shall be deemed to be the owner of any Note in
global form for all purposes, including receipt of notices to Noteholders and
payment of principal of, premium, if any, and interest on the Notes. None of the
Company, the Trustee (in its capacity as Trustee), any paying agent or the Note
registrar (or co-registrar) will have any responsibility for any aspect of the
records relating to or payments made on account of beneficial interests of a
Note in global form or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests; provided, however, that the
foregoing shall not apply to the Trustee or any other person acting in its
capacity as Custodian.
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 pledger'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.
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Section 9.5 Revocation of Consents, Future Holders Bound. At
any time prior to (but not after) the evidencing to the Trustee, as provided in
Section 9.1, of the taking of any action by the holders of the percentage in
aggregate principal amount of the Notes specified in this Indenture in
connection with such action, any holder of a Note which is shown by the evidence
to be included in the Notes the holders of which have consented to such action
may, by filing written notice with the Trustee at its Corporate Trust Office and
upon proof of holding as provided in Section 9.2, revoke such action so far as
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 Purposes for Which Meetings May be Called. 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:
(i) to give any notice to the Company or to the Trustee, or to
give any directions to the Trustee, or to consent to the waiving of any 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;
(ii) to remove the Trustee and appoint a successor
trustee pursuant to the provisions of Article VIII;
(iii) consent to the execution of an indenture or
indentures supplemental hereto pursuant to the provisions of
Section 11.2; or
(iv) 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 provisions of this Indenture or under applicable law.
Section 10.2 Manner of Calling Meetings; Record Date. 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 City
of Boston, Commonwealth of Massachusetts, as the Trustee shall determine. Notice
of every meeting of the Noteholders, setting forth the time and the place
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of such meeting and in general terms the action proposed to be taken at such
meeting, shall be mailed not less than 30 nor more than 60 days prior to the
date fixed for the meeting to such Noteholders at their addresses as such
addresses appear in the Note Register. For the purpose of determining
Noteholders entitled to notice of any meeting of Noteholders, the Trustee shall
fix in advance a date as the record date for such determination, such date to be
a business day not more than ten days prior to the date of the mailing of such
notice as hereinabove provided. Only persons in whose name any Note shall be
registered in the Note Register at the close of business on a record date fixed
by the Trustee as aforesaid, or by the Company or the Noteholders as in Section
10.3 provided, shall be entitled to notice of the meeting of Noteholders with
respect to which such record date was so fixed.
Section 10.3 Call of Meeting by Company or Noteholders. In
case at any time the Company, pursuant to a resolution of its Board of Directors
or the holders of at least ten percent in aggregate principal amount of the
Notes then outstanding, shall have requested the Trustee to call a meeting of
Noteholders to take any action authorized in Section 10.1 by written request
setting forth in reasonable detail the action proposed to be taken at the
meeting, and the Trustee shall not have mailed notice of such meeting within 20
days after receipt of such request, then the Company or the holders of Notes in
the amount above specified, as the case may be, may fix the record date with
respect to, and determine the time and the place in said City of Boston 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. The record date
fixed as provided in the preceding sentence shall be set forth in a written
notice to the Trustee and shall be a business day not less than 15 nor more than
20 days after the date on which such notice is sent to the Trustee.
Section 10.4 Who may Attend and Vote at Meetings. Only
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persons entitled to receive notice of a meeting of Noteholders and their
respective proxies duly appointed by an instrument in writing shall be entitled
to vote at such meeting. 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. When a
determination of Noteholders entitled to vote at any meeting of Noteholders has
been made as provided in this Section, such determination shall apply to any
adjournments thereof.
Section 10.5 Manner of Voting at Meetings and Record to be
Kept. The vote upon any resolution submitted to any meeting of Noteholders shall
be by written ballots on each of which shall be subscribed the signature of the
Noteholder or proxy casting such
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ballot and the identifying number or numbers of the Notes held or represented in
respect of which such ballot is cast. 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 identifying numbers of the Notes voting in favor of or against
any resolution. Each counterpart of such record shall be signed and verified by
the affidavits of the permanent chairman and secretary of the meeting and one of
the counterparts shall be delivered to the Company and the other to the Trustee
to be preserved by the Trustee.
Any counterpart record so signed and verified shall be
conclusive evidence of the matters therein stated and shall be the record
referred to in clause (b) of Section 9.1.
Section 10.6 Exercise of Rights of Trustee and Noteholders not
to be Hindered or delayed. Nothing in this Article X contained shall be deemed
or construed to authorize or permit, by reason of any call of a meeting of
Noteholders or any rights expressly or impliedly conferred hereunder to make
such call, any hindrance or delay in the exercise of any right or rights
conferred upon or reserved to the Trustee or to the Noteholders under any of the
provisions of this Indenture or of the Notes.
ARTICLE XI
SUPPLEMENTAL INDENTURES
Section 11.1 Supplemental Indentures Without Consent of
Noteholders. The Company, when authorized by a Board Resolution, 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;
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(c) to evidence the succession of another person to the
Company, or successive successions, and the assumption by the Successor Company
of the covenants, agreements and obligations of the Company pursuant to Article
XII;
(d) to add to the covenants of the Company such further
covenants, restrictions or conditions as the Board of Directors and the Trustee
shall consider to be for the benefit of the holders of Notes and to make the
occurrence, or the occurrence and continuance, of a default in any such
additional covenants, restrictions or conditions a default or an Event of
Default permitting the enforcement of all or any of the several remedies
provided in this Indenture as herein set forth; provided, however, that in
respect of any such additional covenant, restriction or condition, such
supplemental indenture may provide for a particular period of grace after
default (which period may be shorter or longer than that allowed in the case of
other defaults) or may provide for an immediate enforcement upon such default or
may limit the remedies available to the Trustee upon such default;
(e) to provide for the issuance under this Indenture of Notes
in coupon form (including Notes registrable as to principal only) and to provide
for exchangeability of such Notes with the Notes issued hereunder in fully
registered form and to make all appropriate changes for such purpose;
(f) to cure any ambiguity or to correct or supplement any
provision contained herein or in any supplemental indenture which may be
defective or inconsistent with any other provision contained herein or in any
supplemental indenture, or to make such other provisions in regard to matters or
questions arising under this Indenture which shall not materially adversely
affect the interests of the holders of the Notes;
(g) to evidence and provide for the acceptance of
appointment hereunder by a successor Trustee with respect to the
Notes;
(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 (if applicable), or under any
similar federal statute hereafter enacted (if applicable); or
(i) to modify, eliminate or add to the provisions of this
Indenture to allow for the issuance of one or more Notes in global form, in
addition to the global Note provided for herein, representing beneficial
interests in Notes issued outside the United States in reliance on Regulation S
under the Securities Act, with such transfer restrictions and legends as are
consistent with such Regulation, and to add provisions relating to the exchange
and transfer of beneficial interests in any Note or Notes
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represented by any such global Note or Notes, any definitive Note and any global
Note referred to in Section 2.5(b) hereof.
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, the Company, when authorized by a Board Resolution and
the Trustee may from time to time and at any time enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Indenture or
any supplemental indenture or of modifying in any manner the rights of the
holders of the Notes; provided, however, that no such supplemental indenture
shall (i) extend the fixed maturity of any Note, or reduce the rate or extend
the time of payment of interest thereon, or reduce the principal amount thereof
or premium, if any, thereon or reduce any amount payable on redemption thereof,
alter the obligation of the Company to redeem the Notes at the option of the
holder upon the occurrence of a Change of Control or impair or affect the right
of any Noteholder to institute suit for the payment thereof or make the
principal thereof or interest or premium, if any, thereon payable in any coin or
currency other than that provided in the Notes or impair the right to exchange
the Notes for Preferred Stock or the right to convert the Notes into Common
Stock subject to the terms set forth herein, including Sections 15.6 and 17.6,
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 a
Board Resolution 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 supplemental indenture
unless
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such supplemental indenture affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise, in which case the Trustee may in
its discretion, but shall not be obligated to, enter into such supplemental
indenture.
It shall not be necessary for the consent of the Noteholders
under this Section 11.2 to approve the particular form of any proposed
supplemental indenture, but it shall be sufficient if such consent shall approve
the substance thereof.
Section 11.3 Effect of Supplemental Indentures. Any
---------------------------------
supplemental indenture executed pursuant to the provisions of this Article XI
shall comply with the Trust Indenture Act, as then in effect, if such
supplemental indenture is then required to so comply. 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 16.12) 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 shall be furnished with and, subject to the
provisions of Sections 8.1 and 8.2, may rely upon 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,
TRANSFER AND LEASE
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Section 12.1 Company May Consolidate, Etc. on Certain Terms.
The Company shall not consolidate with or merge with or into, or convey,
transfer or lease all or substantially all of its assets to any Person unless:
(i) either the Company is the resulting, surviving or transferee person (the
"Successor Company") or the Successor Company is a person organized and existing
under the laws of the United States or any State thereof or the District of
Columbia, and the Successor Company (if not the Company) expressly assumes by a
supplemental indenture, executed and delivered to the Trustee, in form
satisfactory to the Trustee, all the obligations of the Company under this
Indenture and the Notes, including the rights pursuant to Article XV hereof;
(ii) immediately after giving effect to such transaction, no Event of Default
has happened and is continuing; and (iii) the Company delivers to the Trustee an
Officer's Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if any)
comply with this Indenture.
Section 12.2 Successor Company to Be Substituted. In
-----------------------------------
case of any such consolidation, merger, sale, conveyance, transfer or lease and
upon the assumption by the Successor Company, 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, 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 Company 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 Company thereupon may cause to be signed, and may issue either in its
own name or in the name of SoftKey International 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 Company
instead of the Company and subject to all the terms, conditions and limitations
in this Indenture prescribed, the Trustee shall authenticate and shall deliver,
or cause to be authenticated and delivered, any Notes which previously shall
have been signed and delivered by the officers of the Company to the Trustee for
authentication, and any Notes which such Successor Company 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, transfer 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
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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,
transfer 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, transfer or lease and any such assumption complies
with the provisions of this Article XII.
ARTICLE XIII
SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS
Section 13.1 Legal Defeasance and Covenant Defeasance
of the Notes.
(a) The Company may, at its option by Board Resolution, at any
time, with respect to the Notes, elect to have either paragraph (b) or paragraph
(c) below be applied to the outstanding Notes upon compliance with the
conditions set forth in paragraph (d).
(b) Upon the Company's exercise under paragraph (a) of the
option applicable to this paragraph (b), the Company shall be deemed to have
been released and discharged from its obligations with respect to the
outstanding Notes on the date the conditions set forth below are satisfied
(hereinafter, "legal defeasance"). For this purpose, such legal defeasance means
that the Company shall be deemed to have paid and discharged the entire
indebtedness represented by the outstanding Notes, which shall thereafter be
deemed to be "outstanding" only for the purposes of the Sections of and matters
under this Indenture referred to in (i) and (ii) below and to have satisfied all
its other obligations under such Notes and this Indenture insofar as such Notes
are concerned, except for the following which shall survive until otherwise
terminated or discharged hereunder: (i) the rights of holders of outstanding
Notes to receive solely from the trust fund described in paragraph (d) below and
as more fully set forth in such paragraph, payments in respect of the principal
of, premium, if any, and interest on such Notes when such payments are due, (ii)
obligations listed in Section 13.3 and (iii) the obligations of the Company
pursuant to Section 5.6.
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(c) Upon the Company's exercise under paragraph (a) of the
option applicable to this paragraph (c), the Company shall be released and
discharged from its obligations under any covenant contained in Article XII and
in Sections 3.5, 5.3, 5.4, 5.5 and 5.7 with respect to the outstanding Notes on
and after the date the conditions set forth in paragraph (d) are satisfied
(hereinafter, "covenant defeasance"), and the Notes shall thereafter be deemed
to be not "outstanding" for the purpose of any direction, waiver, consent or
declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder. For this purpose, such covenant defeasance
means that, with respect to the outstanding Notes, the Company may omit to
comply with and shall have no liability in respect of any term, condition or
limitation set forth in any such covenant, whether directly or indirectly, by
reason of any reference elsewhere herein to any such covenant or by reason of
any reference in any such covenant to any other provision herein or in any other
document, and such omission to comply shall not constitute a Default or an Event
of default under Section 7.1(c), but, except as specified above, the remainder
of this Indenture and such Notes shall be unaffected thereby.
(d) The following shall be the conditions to application of
either paragraph (b) or paragraph (c) above to the outstanding Notes:
(i) The Company shall have irrevocably deposited in
trust with the Trustee, pursuant to an irrevocable trust and security
agreement in form and substance satisfactory to the Trustee, cash or
U.S. Government Obligations maturing as to principal and interest at
such times, or a combination thereof, in such amounts as are
sufficient, without consideration of the reinvestment of such interest
and after payment of all federal, state and local taxes or other
charges or assessments in respect thereof payable by the Trustee, in
the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof (in form and
substance reasonably satisfactory to the Trustee) delivered to the
Trustee, to pay the principal of, premium, if any, and interest on the
outstanding Notes on the dates on which any such payments are due and
payable in accordance with the terms of this Indenture and of the
Notes;
(ii) (A) No Event of Default shall have occurred or be
continuing on the date of such deposit, and (B) no Default or Event of
Default under Section 7.1(d) or 7.1(e) shall occur on or before the
123rd day after the date of such deposit;
(iii) Such deposit will not result in a Default under
this Indenture or a breach or violation of, or constitute a
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default under, any other instrument or agreement to which the
Company is a party or by which it or its property is bound;
(iv) In the case of a legal defeasance under paragraph (b)
above, the Company has delivered to the Trustee an Opinion of Counsel
stating that (A) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or (B) since the
date of this Indenture, there has been a change in the applicable
federal income tax law, in either case to the effect that, and based
thereon such opinion shall confirm that, the holders of the Notes will
not recognize income, gain or loss for federal income tax purposes as a
result of such deposit, defeasance and discharge and will be subject to
federal income tax on the same amounts and in the same manner and at
the same times as would have been the case if such deposit, defeasance
and discharge had not occurred; and, in the case of a covenant
defeasance under paragraph (c) above, the Company shall deliver to the
Trustee an Officers' Certificate and an Opinion of Counsel, in form and
substance reasonably satisfactory to the Trustee, to the effect that
holders of the Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such deposit and defeasance
and will be subject to federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such
deposit and defeasance had not occurred;
(v) The holders shall have a perfected security
interest under applicable law in the cash or U.S. Government
Obligations deposited pursuant to Section 13(d)(i) above;
(vi) The Company shall have delivered to the Trustee an
Opinion of Counsel, in form and substance reasonably satisfactory to
the Trustee, to the effect that, after the passage of 123 days
following the deposit, the trust funds will not be subject to any
applicable bankruptcy, insolvency, reorganization or similar law
affecting creditors' rights generally;
(vii) Such defeasance shall not cause the Trustee to
have a conflicting interest with respect to any securities of
the Company; and
(viii) The Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent specified herein relating to the defeasance contemplated by
this Section 13.1 have been complied with;
provided, however, that no deposit under clause (d)(i) above shall be effective
to terminate the obligations of the Company under the
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Notes or this Indenture prior to 123 days following any such deposit.
Section 13.2 Termination of Obligations upon Cancellation of
the Notes. In addition to the Company's rights under Section 13.1, the Company
may terminate all of its obligations under this Indenture (subject to Section
13.3 and any obligations of the Company under Section 5.6 with respect to any
Common Stock issued upon conversion of the Notes or any Preferred Stock issued
upon exchange of the Notes) when:
(a) (i) all Notes theretofore authenticated and delivered
(other than Notes which have been destroyed, lost or stolen and which
have been replaced or paid as provided in Section 2.6) have been
delivered to the Trustee for cancellation;
(ii) the Company has paid or caused to be paid all other
sums payable hereunder and under the Notes by the Company;
and
(iii) the Company has delivered to the Trustee an Officers'
Certificate, stating that all conditions precedent specified herein
relating to the satisfaction and discharge of this Indenture have been
complied with; or
(b) (i) the Notes not previously delivered to the Trustee for
cancellation will 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 under arrangements satisfactory to the Trustee upon delivery
of notice; (ii) the Company will have irrevocably deposited with the
Trustee, as trust funds, cash, in an amount sufficient to pay principal
of and interest on the outstanding Notes, to maturity or redemption, as
the case may be; (iii) such deposit will not result in a breach or
violation of, or constitute a default under, any agreement or
instrument pursuant to which the Company is a party or by which it or
its property is bound; and (iv) and the Company has delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel, each
stating that all conditions related to such defeasance have been
complied with.
Section 13.3 Survival of Certain Obligations. Notwithstanding
the satisfaction and discharge of this Indenture and of the Notes referred to in
Section 13.1 or 13.2, the respective obligations of the Company and the Trustee
under Sections 2.3, 2.4, 2.5, 2.6, 2.8, 2.9, 5.2, 6.1, 7.4, 7.9, 8.6, 8.10,
13.5, 13.6 and 13.7 shall survive until the Notes are no longer outstanding, and
thereafter, the obligations of the Company and the Trustee under Sections 7.9,
8.6, 13.5, 13.6 and 13.7 shall survive. Nothing contained in this Article XIII
shall abrogate
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any of the rights, obligations or duties of the Trustee under this
Indenture.
Section 13.4 Acknowledgment of Discharge by Trustee. Subject
to Section 13.7, after (i) the conditions of Section 13.1 or 13.2 have been
satisfied, (ii) the Company has paid or caused to be paid all other sums payable
hereunder by the Company and (iii) the Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent referred to in clause (i) above relating to the
satisfaction and discharge of this Indenture have been complied with, the
Trustee upon written request shall acknowledge in writing the discharge of the
Company's obligations under this Indenture except for those surviving
obligations specified in Section 13.3.
Section 13.5 Application of Trust Assets. The Trustee shall
hold any cash or U.S. Government Obligations deposited with it in the
irrevocable trust established pursuant to Section 13.1 or 13.2, as the case may
be. The Trustee shall apply the deposited cash or the U.S. Government
Obligations, together with earnings thereon in accordance with this Indenture
and the terms of the irrevocable trust agreement established pursuant to Section
13.1 or 13.2, as the case may be, to the payment of principal of, premium, if
any, and interest on the Notes. The cash or U.S. Government Obligations so held
in trust and deposited with the Trustee in compliance with Section 13.1 or 13.2,
as the case may be, shall not be part of the trust estate under this Indenture,
but shall constitute a separate trust fund for the benefit of all holders
entitled thereto. Except as specifically provided herein, the Trustee shall not
be requested to invest any amounts held by it for the benefit of the holders or
pay interest on uninvested amounts to any holder.
Section 13.6 Repayment to the Company; Unclaimed Money. Upon
termination of the trust established pursuant to Section 13.1 or 13.2, as the
case may be, the Trustee shall promptly pay to the Company upon request any
excess cash or U.S. Government Obligations held by them. Additionally, if
amounts for the payment of principal, premium, if any, or interest remains
unclaimed for six years, the Trustee will pay such amounts back to the Company
forthwith. Thereafter, all liability of the Trustee with respect to such amounts
shall cease.
Subject to applicable laws governing escheat of such property,
the Trustee shall pay to the Company upon request, and, if applicable, in
accordance with the irrevocable trust established pursuant to Section 13.1 or
13.2, any cash or U.S. Government Obligations held by them for the payment of
principal of, premium, if any, or interest on the Notes that remain unclaimed
for six years after the date on which such payment shall have become due. After
payment to the Company, Holders entitled
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to such payment must look to the Company for such payment as general creditors
unless an applicable abandoned property law designates another person.
Section 13.7 Reinstatement. If the Trustee is unable to apply
any cash or U.S. Government Obligations in accordance with Section 13.1 or 13.2
by reason of any legal proceeding or by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 13.1 or 13.2 until such time as the Trustee is permitted to apply all
such cash or U.S. Government Obligations in accordance with Section 13.1 or
13.2, as the case may be; provided that if the Company makes any payment of
principal of, premium, if any, or interest on any Notes 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 amounts held by
the Trustee.
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, officer or director, as such, past, present or
future, of the Company or of any successor entity, either directly or through
the Company or any successor entity, 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 prior to the close of business on November 1,
2000 (except that, with respect to any Note or portion of a Note which shall be
called for
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redemption or delivered for repurchase, such right shall terminate, except as
provided in the fourth paragraph of Section 15.2, at the close of business on
the last Trading Day prior to 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 nonassessable 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.
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 the 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 a Note in global form, the beneficial holder must complete the
appropriate instruction form for conversion pursuant to the Depositary's
book-entry conversion program and follow the other procedures set forth in such
program.
As promptly as practicable after satisfaction of the
requirements for conversion set forth above, subject to compliance with any
restrictions on transfer if shares issuable on conversion are to be issued in a
name other than that of the Noteholder (as if such transfer were a transfer of
the Note or Notes (or portion
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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
issuable upon the conversion of such Note or portion thereof in accordance with
the provisions of this Article XV 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 1. In case any Note of a denomination
greater than $1,000 shall be surrendered for partial conversion, and subject to
Section 2.3, the Company shall execute and the Trustee shall authenticate and
deliver to the holder of the Note so surrendered, without charge to him, a new
Note or Notes in authorized denominations in an aggregate principal amount equal
to the unconverted portion of the surrendered Note.
Each conversion shall be deemed to have been effected as to
any such Note (or portion thereof) on the date on which the requirements set
forth above in this Section 15.2 have been satisfied as to such Note (or portion
thereof), and the person in whose name any certificate or certificates for
shares of Common Stock shall be issuable upon such conversion shall be deemed to
have become on said date the holder of record of the shares represented thereby;
provided, however, that any such surrender on any date when the stock transfer
books of the Company shall be closed shall constitute the person in whose name
the certificates are to be issued as the record holder thereof for all purposes
on the next succeeding day on which such stock transfer books are open, but such
conversion shall be at the Conversion Price in effect on the date upon which
such Note shall have been surrendered.
Any Note or portion thereof surrendered for conversion during
the period from the close of business on the record date for any interest
payment date through the close of business on the Trading Day next preceding
such interest payment date shall (unless such Note or portion thereof being
converted shall have been called for redemption on a date in such period) be
accompanied by payment, in 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. An amount equal to such payment shall be paid by the Company on
such interest payment date to the holder of such Note at the close of business
on such record date; provided, however, that if the Company shall default in the
payment of interest on such interest payment date, such amount shall be paid to
the person who made such required payment. 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
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issued upon the conversion of such Note as provided in this
Article.
Upon the conversion of an interest in a Note in global form,
the Trustee, or the Custodian at the direction of the Trustee, shall make a
notation on such Note in global form as to the reduction in the principal amount
represented thereby.
Section 15.3 Cash Payments in Lieu of Fractional Shares. No
fractional shares of Common Stock or scrip representing fractional shares shall
be issued upon conversion of Notes. If more than one Note shall be surrendered
for conversion at one time by the same holder, the number of full shares which
shall be issuable upon conversion shall be computed on the basis of the
aggregate principal amount of the Notes (or specified portions thereof to the
extent permitted hereby) so surrendered. If any fractional share of stock would
be issuable upon the conversion of any Note or Notes, the Company shall make an
adjustment therefor in cash at the current market value thereof. 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(g).
Section 15.4 Conversion Price. The conversion price shall be
as specified in the forms of Notes (herein called the "Conversion Price")
attached as Exhibits A and B 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 the numerator of which 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(g)) fixed for such determination and the denominator
of which 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. The Company will not pay any dividend or make any distribution
on shares of Common Stock held in the treasury of the Company.
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(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 45 days after the date fixed for determination of stockholders
entitled to receive such rights or warrants) to subscribe for or purchase shares
of Common Stock at a price per share less than the Current Market Price (as
defined in Section 15.5(g)) on the Record Date fixed for determination of
stockholders entitled to receive such rights or warrants, the Conversion Price
shall be adjusted so that the same shall equal the price determined by
multiplying the Conversion Price in effect at the opening of business on the
date after the Record Date by a fraction the numerator of which 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 would purchase at such Current Market Price,
and the denominator of which 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 after 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 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 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
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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 or assets (including
securities, but excluding any rights or warrants referred to in Section 15.5(b),
and excluding any dividend or distribution (x) in connection with the
liquidation, dissolution or winding-up of the Company, whether voluntary or
involuntary, (y) exclusively in cash or (z) referred to in Section 15.5(a) (any
of the foregoing hereinafter in this Section 15.5(d) called 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(g)) 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(g)) on such date less the fair market value (as determined by the 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 redaction 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 the amount of
Securities such holder would have received had such holder converted each Note
on such 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 used in computing the Current Market Price pursuant to Section
15.5(g) to the extent possible.
Notwithstanding the foregoing provisions of this Section
15.5(d), no adjustment shall be made hereunder for any distribution of
Securities if the Company makes proper provision so that each Noteholder who
converts such Note (or any portion thereof) after the date fixed for
determination of stockholders entitled to receive such distribution shall be
entitled to receive
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upon such conversion, in addition to the shares of Common Stock issuable upon
such conversion, the amount and kind of Securities that such holder would have
been entitled to receive if such holder had, immediately prior to such
determination date, converted such Note into Common Stock; provided that, with
respect to any Securities that are convertible, exchangeable or exercisable, the
foregoing provision shall only apply to the extent (and so long as) the
Securities receivable upon conversion of such Note would be convertible,
exchangeable or exercisable, as applicable, without any loss of rights or
privileges for a period of at least 60 days following conversion of such Note.
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 not be deemed distributed for
purposes of this Section 15.5(d) (and no adjustment to the Conversion Price
under Section 15.5(d) will be required) until the occurrence of the earliest
Trigger Event. In addition, in the event of any distribution of rights or
warrants, or any Trigger Event with respect thereto, that shall have 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 by any holder thereof, the Conversion Price shall be readjusted
as if such issuance had not occurred.
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 (or both), shall be deemed instead to be
(1) a dividend or distribution of the evidences of indebtedness, assets or
shares of capital stock other than such shares of Common Stock or rights or
warrants (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
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required by Sections 15.5(a) and (b) with respect to such dividend or
distribution shall then be made, except (A) the Record Date of such dividend or
distribution shall be substituted as "the date fixed for the determination of
stockholders entitled to receive such dividend or other distribution" and "the
date fixed for such determination" within the meaning of Sections 15.5(a) and
(b) and (B) any shares of Common Stock 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 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 20.0% of the product of the Current
Market Price (determined as provided in Section 15.5(g)) on the Record Date with
respect to such distribution times the number of shares of Common Stock
outstanding on such date, then, and in each such case, immediately after the
close of business on such date, unless the Company elects to reserve such 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 to which such holder is entitled, the
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, 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 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 20.0% 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
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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 the amount of cash such holder would have
received had such holder converted each Note on the Record Date. In the event
that such dividend or distribution is not so paid or made, the Conversion Price
shall again be adjusted to be the Conversion Price which would then be in effect
if such dividend or distribution had not been declared.
(f) In case a tender offer made by the Company or any of its
subsidiaries 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, of consideration payable in respect of any other tender
offer, 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
paragraph (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 paragraph (e) of this Section has been made,
exceeds 20.0% of the product of the Current Market Price (determined as provided
in paragraph (g) of this Section) 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
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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 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.
(g) For purposes of this section 15.5, the following terms
shall have the meaning indicated:
(1) "Closing Price" with respect to any securities on any day
shall mean the closing sale price regular way on such day or, in case
no such sale takes place on such day, the average of the reported
closing bid and asked prices, regular way, in each case on the New York
Stock Exchange, or, if such security is not listed or admitted to
trading on such Exchange, on the principal national security exchange
or quotation system on which such security is quoted or listed or
admitted to trading, or, if not quoted or listed or admitted to trading
on any national securities exchange or quotation system, the average of
the closing bid and asked prices of such security on the
over-the-counter market on the day in question as reported by the
National Quotation Bureau Incorporated, or a similar generally accepted
reporting service, or if not so available, in such manner as furnished
by any New York Stock Exchange member firm selected from time to time
by the Board of Directors for that purpose, or a price determined in
good faith by the Board of Directors 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 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 or Change of Control
requiring such computation) that requires an adjustment to the
Conversion Price pursuant to Section 15.5(a), (b), (c), (d), (e) or (f)
occurs during such ten consecutive Trading Days, the Closing Price for
each Trading Day prior to the "ex" date for such other event shall be
adjusted by multiplying such Closing Price by the same fraction by
which the Conversion Price is so required to be adjusted as a result of
such other event, (2) if the "ex" date for any event (other than the
issuance,
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distribution or Change of Control requiring such computation) that
requires an adjustment to the Conversion Price pursuant to Section
15.5(a), (b), (c), (d), (e) or (f) 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,
distribution or Change of Control 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) or (f),
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 Section 15.5(f), 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 or exchange offer requiring
such computation) that requires an adjustment to the conversion Price
pursuant to Section 15.5(a), (b), (c), (d), (e) or (f) occurs on or
after the Expiration Time for the tender or exchange offer requiring
such computation and prior to the day in question, the Closing Price
for each Trading Day on and after the "ex" date for such other event
shall be adjusted by multiplying such Closing Price by the reciprocal
of the fraction by which the Conversion Price is so required to be
adjusted as a result of such other event. For purposes of this
paragraph, the term "ex" date, (1) when used with respect to any
issuance or distribution, means the first date on which the Common
Stock 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 of such offer. Notwithstanding the foregoing, whenever
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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 that other 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.
(h) The Company may make such reductions in the Conversion
Price, in addition to those required by Sections 15.5(a), (b), (c), (d), (e) and
(f), 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
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 all holders of
record of the Notes a notice of the reduction at least 15 days prior to the date
the reduced Conversion Price takes effect, and such notice shall
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state the reduced Conversion Price and the period it will be in
effect.
(i) 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(i) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Article
XV shall be made by the Company and shall be made to the nearest cent or to the
nearest one-hundredth of a share, as the case may be.
No adjustment need be made for rights to purchase Common Stock
pursuant to a Company plan for reinvestment of dividends or interest.
No adjustment need be made for a change in the par value, or
to or from no par value, of the Common Stock.
To the extent the Notes become convertible into cash, assets,
property or securities (other than Common Stock of the Company), no adjustment
need be made thereafter as to the cash, assets, property or such securities
(except as such securities may otherwise by their terms provide), and interest
shall not accrue on such cash.
(j) 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 of this
Indenture, within 20 days after execution thereof. Failure to deliver such
notice shall not effect the legality or validity of any such supplemental
indenture.
(k) In any case in which this Section 15.5 provides that an
adjustment shall become effective immediately after a Record Date for an event,
the Company may defer until the occurrence of such event (i) issuing to the
holder of any Note converted after such Record Date and before the occurrence of
such event the additional shares of Common Stock issuable upon such conversion
by reason of the adjustment required by such event over and above the Common
Stock issuable upon such conversion before
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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.
Section 15.6 Effect of Reclassification, Consolidation, Merger
or Sale. If any of the following events occur, namely (i) any reclassification
or change of outstanding shares of Common Stock (other than a change in par
value, or to or from no par value, 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 reclassification, change,
consolidation, merger, combination, sale or conveyance (provided that, if the
kind or amount of securities, cash or other property receivable upon such
reclassification, change, consolidation, merger, combination, sale or conveyance
is not the same for each share of Common Stock in respect of which such rights
of election shall not have been exercised ("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 reclassification, change, consolidation, merger,
combination, sale or conveyance for each non-electing share shall be deemed to
be the kind and amount so receivable per share by a plurality of the
non-electing shares). Such supplemental indenture shall provide for adjustments
which shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Article XV.
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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 20 days after execution thereof. Failure to deliver such notice shall not
affect the legality or validity of such supplemental indenture.
The above provisions of this Section shall similarly apply to
successive reclassifications, changes, consolidations, mergers, combinations,
sales and conveyances.
If this Section 15.6 applies to any event or occurrence,
Section 15.5 shall not apply.
Section 15.7 Transfer or Similar Taxes on Shares Issued. The
issue of stock certificates on conversions of Notes shall be made without charge
to the converting Noteholder for any transfer or similar tax in respect of the
issue thereof. The Company shall not, however, be required to pay any such 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 which
may be issued upon conversion of Notes will, upon issue, be fully paid and
nonassessable by the Company and free from all transfer or similar taxes as
described in Section 15.7, 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 New York Stock Exchange or any other national
securities exchange, the Company will, if permitted by the rules of such
exchange, list and keep listed, so long as
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the Common Stock shall be so listed on such exchange, all Common Stock issuable
upon conversion of the Notes.
Section 15.9 Responsibility of Trustee. The Trustee and any
other conversion agent shall not at any time be under any duty or responsibility
to any holder of Notes to determine whether any facts exist which may require
any adjustment of the Conversion Price, or with respect to the nature or extent
or calculation of any such adjustment when made, or with respect to the method
employed, or herein or in any supplemental indenture provided to be employed, in
making the same. The Trustee and any other conversion agent shall not be
accountable with respect to the validity or value (or the kind or amount) of any
shares of Common Stock, or of any securities or property, which may at any time
be issued or delivered upon the conversion of any Note; and the Trustee and any
other conversion agent make no representations with respect thereto. Subject to
the provisions of Section 8.1, neither the Trustee nor any conversion agent
shall be responsible for any failure of the Company to issue, transfer or
deliver any shares of Common Stock or stock certificates or other securities or
property or cash upon the surrender of any debenture for the purpose of
conversion or to comply with any of the duties, responsibilities or covenants of
the Company contained in this Article XV. 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 makes any distribution or dividend that
would require an adjustment in the Conversion Price pursuant
to Section 15.5; or
(b) the Company takes any action that would require a
supplemental indenture pursuant to Section 15.6; or
(c) 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
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provided for in Section 2.5 of this Indenture, as promptly as possible
but in any event at least 15 days prior to the applicable date
hereinafter specified, a notice stating (x) the date on which a record
date is to be taken for the purpose of such dividend, distribution,
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, rights or warrants are to be determined or (y)
the date on which such reclassification, change, consolidation, merger,
sale, conveyance, 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 record of Common Stock shall be entitled to
exchange their Common Stock for securities or other property
deliverable upon such reclassification, change consolidation, merger,
sale, conveyance, 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, change, consolidation, merger, sale, conveyance,
transfer, dissolution, liquidation or winding-up. Neither the failure
to give such notice nor any defect therein shall affect the legality or
validity of the proceedings referenced in clauses (a) through (c) of
this Section 15.10.
ARTICLE XVI
MISCELLANEOUS PROVISIONS
Section 16.1 Provisions Binding on Company's Successors. All
the covenants, stipulations, promises and agreements in this Indenture made by
the Company shall bind its successors and assigns whether so expressed or not.
Section 16.2 Official Acts by Successor Company. Any act or
proceeding by any provision of this Indenture authorized or required to be done
or performed by any board (including the Board of Directors), committee or
officer of the Company shall and may be done and performed with like force and
effect by the like board, committee or officer of any corporation that shall at
the time be the lawful sole successor of the Company.
Section 16.3 Addresses for Notices, Etc. Any notice or
demand which by any provision of this Indenture is required or
permitted to be given or served by the Trustee or by the holders
of 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 SoftKey International Inc.,
One Athenaeum Street, Cambridge, MA 02142, Attention: Chief
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Financial Officer. Any notice, direction, request or demand hereunder to or upon
the Trustee shall be deemed to have been sufficiently given or made, for all
purposes, if given or served by being deposited postage prepaid by registered or
certified mail in a post office letter box addressed to the Corporate Trust
Office of the Trustee, which office is, at the date as of which this Indenture
is dated, located at 225 Franklin Street, Boston, MA 02110.
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 16.4 Governing Law. This Indenture and each Note shall
be deemed to be a contract made under the substantive laws of New York and for
all purposes shall be construed in accordance with the substantive laws of New
York.
Section 16.5 Evidence of Compliance with Conditions Precedent;
Certificates to Trustee. Upon any application or demand by the Company to the
Trustee to take any action under any of the provisions of this Indenture, the
Company shall furnish to the Trustee an Officers' Certificate stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, and an Opinion of Counsel stating that,
in the Opinion of such counsel, all such conditions precedent have been complied
with.
Each certificate or opinion provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or covenant
provided for in this Indenture shall include: (1) a statement that the person
making such certificate or opinion has read such covenant or condition; (2) a
brief statement as to the nature and scope of the examination or investigation
upon which the statement or opinion contained in such certificate or opinion is
based; (3) a statement that, in the opinion of such person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and (4) a statement as to whether or not, in the
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opinion of such person, such condition or covenant has been
complied with.
Section 16.6 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 16.7 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
where property of the Company or its subsidiaries is located.
Section 16.8 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, notwithstanding the foregoing, this
Indenture and the Notes issued hereunder shall not be subject to the provisions
of subsections (a)(1), (a)(2) and (a)(3) of Section 314 of the Trust Indenture
Act as now in effect or as hereafter amended or modified.
Section 16.9 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 and the holders of Notes, any benefit or any
legal or equitable right, remedy or claim under this Indenture.
Section 16.10 Table of Contents, Headings Etc. The table of
contents and the titles and headings of the articles and sections of this
Indenture have been inserted for convenience of reference only, are not to be
considered a part hereof, and shall in no way modify or restrict any of the
terms or provisions hereof.
Section 16.11 Authenticating Agent. The Trustee may appoint an
authenticating agent which shall be authorized to act on its behalf and subject
to its direction in the authentication and delivery of 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
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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 Company 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 Company.
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, and the Trustee shall be
entitled to be reimbursed for such payments, subject to Section 8.6.
The provisions of Sections 8.2, 8.3, 8.4, 9.3 and this Section
16.11 shall be applicable to any authenticating agent.
Section 16.12 Execution in Counterparts. This Indenture may be
executed in any number of counterparts, each of which shall be an original, but
such counterparts shall together constitute but one and the same instrument.
Section 16.13 Pooling of Interests. The Company desires to
preserve its ability to account for acquisition and other business combination
transactions using the pooling of interests method where appropriate, and the
provisions of this Indenture shall be interpreted accordingly.
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ARTICLE XVII
EXCHANGE OF NOTES
Section 17.1 Right to Exchange. 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 prior to the close of business on November 1,
2000 (except that, with respect to any Note or portion of a Note which shall be
called for redemption or delivered for repurchase, such right shall terminate,
except as provided in the fourth paragraph of Section 17.2, at the close of
business on the last Trading Day prior to 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 exchange 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 nonassessable shares of Preferred
Stock (as such shares shall then be constituted) obtained by dividing the
principal amount of the Note or portion thereof surrendered for exchange by the
Exchange 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 17.2. A holder
of Notes is not entitled to any rights of a holder of Preferred Stock until such
holder has converted his Notes to Preferred Stock, and only to the extent such
Notes are deemed to have been exchanged for Preferred Stock under this Article
XVII.
Section 17.2 Exercise of Exchange Privilege; Issuance of
Preferred Stock on Exchange; Adjustment for Interest or Dividends. In order to
exercise the exchange 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 17.2, and shall give written notice of exchange 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 exchange such Note or
the 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 Preferred Stock which shall be issuable on such conversion shall be issued
and shall be accompanied by transfer taxes, if required pursuant to Section
17.7. Each such Note surrendered for exchange shall, unless the shares issuable
on exchange 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 exchange privilege with respect to
any interest in a Note in global form, the beneficial holder
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must complete the appropriate instruction form for exchange pursuant to the
Depositary's book-entry exchange program and follow the other procedures set
forth in such program.
As promptly as practicable after satisfaction of the
requirements for exchange set forth above, subject to compliance with any
restrictions on transfer if shares issuable on exchange 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 exchanged), 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 issuable upon the exchange of such Note or portion
thereof in accordance with the provisions of this Article XVII. In case any Note
of a denomination greater than $1,000 shall be surrendered for partial exchange,
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 exchanged portion of the surrendered Note.
Each exchange 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 17.2 have been satisfied as to such Note (or portion
thereof), and the person in whose name any certificate or certificates for
shares of Preferred Stock shall be issuable upon such exchange 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 exchange shall be at the Exchange Price in effect on the date
upon which such Note shall have been surrendered.
Any Note or portion thereof surrendered for exchange during
the period from the close of business on the record date for any interest
payment date through the close of business on the Trading Day next preceding
such interest payment date shall (unless such Note or portion thereof being
converted shall have been called for redemption on a date in such period) be
accompanied by payment, in 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 exchange a default in the payment of interest
on the Notes. An amount equal to such payment shall be paid by the Company on
such interest payment date to the holder of such Note at the close of business
on such record date; provided, however, that if the Company shall default in the
payment of interest on
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such interest payment date, such amount shall be paid to the person who made
such required payment. In the case of any exchange, dividends on the Preferred
Stock issuable upon such exchange will commence to accrue as of the most recent
date as of which interest has been paid, or duly provided for, on the Notes
unless no interest has been paid or duly provided for on the Notes, in which
case from ____________, 1995. Except as provided above in this Section 17.2, no
adjustment shall be made for interest accrued on any Note converted or for
dividends on any shares issued upon the exchange of such Note as provided in
this Article.
Upon the exchange of an interest in a Note in global form, the
Trustee, or the Custodian at the direction of the Trustee, shall make a notation
on such Note in global form as to the reduction in the principal amount
represented thereby.
Section 17.3 Cash Payments in Lieu of Fractional Shares. No
fractional shares of Preferred Stock or scrip representing fractional shares
shall be issued upon exchange of Notes. If more than one Note shall be
surrendered for exchange at one time by the same holder, the number of full
shares which shall be issuable upon exchange shall be computed on the basis of
the aggregate principal amount of the Notes (or specified portions thereof to
the extent permitted hereby) so surrendered. If any fractional share of stock
would be issuable upon the exchange of any Note or Notes, the Company shall make
an adjustment therefor in cash at the current market value thereof. The Current
Market Value of a share of Preferred Stock shall be the greater of (i) the
Liquidation Preference thereof or (ii) the current market value of that number
of shares of Common Stock (including any fraction of a share) into which one
share of Preferred Stock may then be converted. 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(g).
Section 17.4 Exchange Price. The exchange price shall
be $1000.00 (herein called the "Exchange Price").
Section 17.5 Adjustment of Exchange Price. The Exchange Price
shall be adjusted from time to time by the Company as follows:
(a) In the event that the provisions of the Series C Preferred
Stock as set forth in the Certificate of Designation attached as Exhibit C
hereto shall at any time be amended in accordance with the provisions of the
Certificate of Designation and this Indenture, to reduce the Liquidation
Preference of, or the amount of dividends or other distributions payable with
respect to, the Series C Preferred Stock, or to change the
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Conversion Price at which such Series C Preferred Stock is convertible into
Common Stock pursuant to the provisions of the Certificate of Designation (or
the manner in which such Conversion Price is adjusted as set forth in Section 8
thereof), the Exchange Price shall be adjusted in such manner as the Board of
Directors of the Company shall determine is fair and equitable, which
determination shall be conclusive and shall be set forth in a Board Resolution.
(b) The Company may make such reductions in the Conversion
Price, in addition to those required by Section 17.5(a), as the Board of
Directors considers to be advisable to avoid or diminish any income tax to
holders of Preferred Stock or rights to purchase Preferred 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 Exchange Price by
any amount for any period of time if the period is at least 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 Exchange Price is reduced pursuant to the preceding
sentence, the Company shall mail to all holders of record of the Notes a notice
of the reduction at least 15 days prior to the date the reduced Exchange Price
takes effect, and such notice shall state the reduced conversion Price and the
period it will be in effect.
(c) No adjustment in the Exchange 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 17.5(c) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Article
XVII shall be made by the Company and shall be made to the nearest cent or to
the nearest one-hundredth of a share, as the case may be.
No adjustment need be made for a change in the par value, or
to or from no par value, of the Preferred Stock.
To the extent the Notes become convertible into cash, assets,
property or securities (other than Preferred Stock or Common Stock of the
Company), no adjustment need be made thereafter as to the cash, assets, property
or such securities (except as such securities may otherwise by their terms
provide), and interest shall not accrue on such cash.
(d) whenever the Exchange Price is adjusted as herein
provided, the Company shall promptly file with the Trustee and any exchange
agent other than the Trustee an Officers' Certificate
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setting forth the Exchange 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
Exchange Price setting forth the adjusted Exchange Price and the date on which
each adjustment becomes effective and shall mail such notice of such adjustment
of the Exchange Price to the holder of each Note at his last address appearing
on the Note register provided for in Section 2.5 of this Indenture, within 20
days after execution thereof. Failure to deliver such notice shall not effect
the legality or validity of any such supplemental indenture.
(e) In any case in which this Section 17.5 provides that an
adjustment shall become effective immediately after a Record Date for an event,
the Company may defer until the occurrence of such event (i) issuing to the
holder of any Note converted after such Record Date and before the occurrence of
such event the additional shares of Preferred Stock issuable upon such
conversion by reason of the adjustment required by such event over and above the
Preferred 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 17.3.
Section 17.6 Effect of Reclassification, Consolidation, Merger
or Sale. If any of the following events occur, namely (i) any reclassification
or change of outstanding shares of Preferred Stock (other than a change in par
value, or to or from no par value, 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 Preferred Stock shall be entitled to
receive stock, securities or other property or assets (including cash) with
respect to or in exchange for such Preferred 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 Preferred
Stock shall be entitled to receive stock, securities or other property or assets
(including cash) with respect to or in exchange for such Preferred 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 exchangeable 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 Preferred
Stock issuable upon exchange of such Notes (assuming, for such purposes, a
sufficient number of authorized shares of Preferred Stock available to exchange
all such Notes) immediately prior to such reclassification, change,
consolidation, merger, combination,
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sale or conveyance, assuming such holder of Preferred 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 reclassification, change, consolidation,
merger, combination, sale or conveyance (provided that, if the kind or amount of
securities, cash or other property receivable upon such reclassification,
change, consolidation, merger, combination, sale or conveyance is not the same
for each share of Preferred Stock in respect of which such rights of election
shall not have been exercised ("non-electing share"), then for the purposes of
this Section 17.6 the kind and amount of securities, cash or other property
receivable upon such reclassification, change, consolidation, merger,
combination, sale or conveyance for each non-electing share shall be deemed to
be the kind and amount so receivable per share by a plurality of the
non-electing shares). Such supplemental indenture shall provide for adjustments
which shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Article XVII.
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 20 days after execution thereof. Failure to deliver such notice shall not
affect the legality or validity of such supplemental indenture.
The above provisions of this Section shall similarly apply to
successive reclassifications, changes, consolidations, mergers, combinations,
sales and conveyances.
Section 17.7 Transfer or Similar Taxes on Shares Issued. The
issue of stock certificates on exchanges of Notes shall be made without charge
to the exchanging Noteholder for any transfer or similar tax in respect of the
issue thereof. The Company shall not, however, be required to pay any such 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 17.8 Reservation of Stock; Shares to Be Fully Paid;
Listing of Preferred 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 exchange of the Notes from time to time as
such Notes are presented for exchange.
Before taking any action which would cause an adjustment
reducing the Exchange Price below the then par value, if any, of
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the shares of Preferred Stock issuable upon exchange 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
Preferred Stock at such adjusted Exchange Price.
The Company covenants that all shares of Preferred Stock which
may be issued upon exchange of Notes will, upon issue, be fully paid and
nonassessable by the Company and free from all transfer or similar taxes as
described in Section 17.7, liens and charges with respect to the issue thereof.
The Company further covenants that, if at any time the
Preferred Stock shall be listed on the New York Stock Exchange or any other
national securities exchange, the Company will, if permitted by the rules of
such exchange, list and keep listed, so long as the Preferred Stock shall be so
listed on such exchange, all Preferred Stock issuable upon exchange of the
Notes.
Section 17.9 Responsibility of Trustee. The Trustee and any
other exchange 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 Exchange Price, or with respect to the nature or extent or
calculation of any such adjustment when made, or with respect to the method
employed, or herein or in any supplemental indenture provided to be employed, in
making the same. The Trustee and any other conversion agent shall not be
accountable with respect to the validity or value (or the kind or amount) of any
shares of Preferred Stock, or of any securities or property, which may at any
time be issued or delivered upon the exchange of any Note; and the Trustee and
any other exchange agent make no representations with respect thereto. Subject
to the provisions of Section 8.1, neither the Trustee nor any exchange agent
shall be responsible for any failure of the Company to issue, transfer or
deliver any shares of Preferred Stock or stock certificates or other securities
or property or cash upon the surrender of any debenture for the purpose of
exchange or to comply with any of the duties, responsibilities or covenants of
the Company contained in this Article XVII, without limiting the generality of
the foregoing, neither the Trustee nor any exchange agent shall be under any
responsibility to determine the correctness of any provisions contained in any
supplemental indenture entered into pursuant to Section 17.6 relating either to
the kind or amount of shares of stock or securities or property (including cash)
receivable by Noteholders upon the exchange of their Notes after any event
referred to in such Section 17.6 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
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file with the Trustee prior to the execution of any such supplemental indenture)
with respect thereto.
Section 17.10 Notice to Holders Prior to Certain
Actions. In case:
(a) the Company takes any action that would require a
supplemental indenture pursuant to Section 17.6; or
(b) 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 15 days prior to the applicable date
hereinafter specified, a notice stating (x) the date on which a record date is
to be taken for the purpose of such dividend, distribution, rights or warrants,
or, if a record is not to be taken, the date as of which the holders of
Preferred Stock of record to be entitled to such dividend, distribution, rights
or warrants are to be determined or (y) the date on which such reclassification,
change, consolidation, merger, sale, conveyance, 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 record of Preferred Stock shall be
entitled to exchange their Preferred Stock for securities or other property
deliverable upon such reclassification, change consolidation, merger, sale,
conveyance, 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, change, consolidation, merger,
sale, conveyance, transfer, dissolution, liquidation or winding-up. Neither the
failure to give such notice nor any defect therein shall affect the legality or
validity of the proceedings referenced in clauses (a) through (b) of this
Section 17.10.
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State Street Bank and Trust Company hereby accepts the trusts
in this Indenture declared and provided, upon the terms and conditions
hereinabove set forth.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly signed, and their respective corporate seals to be hereunto affixed and
attested, all as of the date first written above.
SOFTKEY INTERNATIONAL INC.
By:
Name:
Title:
Attest:
- ------------------------
STATE STREET BANK AND TRUST
COMPANY, as Trustee
By: ___________________
Name: _________________
Title:
Attest:
- -----------------------
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EXHIBIT A - FORM OF DEFINITIVE NOTE
[FORM OF FACE OF NOTE]
No. B-1 $_______________
CUSIP
SOFTKEY INTERNATIONAL INC.
5 1/2% Senior Convertible/Exchangeable Note Due 2000
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 WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS
SET FORTH IN THE FOLLOWING SENTENCE. BY ACQUISITION HEREOF, THE HOLDER
(1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A) (1),
(2), (3) OR (7) UNDER THE SECURITIES ACT) ("INSTITUTIONAL ACCREDITED
INVESTOR",) OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THE NOTE
EVIDENCED HEREBY IN AN OFFSHORE TRANSACTION; (2) AGREES THAT IT WILL
NOT PRIOR TO THE DATE THAT IS THREE YEARS AFTER THE LATER OF THE
ORIGINAL ISSUANCE OF THE NOTE EVIDENCED HEREBY AND THE LAST DATE ON
WHICH SOFTKEY INTERNATIONAL INC. (THE "COMPANY") OR ANY "AFFILIATE" (AS
DEFINED IN RULE 144 UNDER THE SECURITIES ACT) OF THE COMPANY WAS THE
OWNER OF THE NOTE (THE "RESTRICTION TERMINATION DATE") RESELL OR
OTHERWISE TRANSFER THE NOTE EVIDENCED HEREBY OR THE PREFERRED STOCK
ISSUABLE UPON EXCHANGE OF SUCH NOTE 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) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH
RULE 904 UNDER THE SECURITIES ACT OR (E) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE); AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM
THE NOTE EVIDENCED HEREBY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THE NOTE
EVIDENCED HEREBY
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BEFORE THE RESTRICTION TERMINATION DATE, THE HOLDER MUST CHECK THE
APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER
OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO STATE STREET BANK AND
TRUST COMPANY, AS TRUSTEE. IF THE PROPOSED TRANSFER IS PURSUANT TO
CLAUSE (C), (D) OR (E) 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 RESTRICTION TERMINATION DATE. AS USED HEREIN, THE
TERMS "OFFSHORE TRANSACTION, "UNITED STATES", "U.S. PERSON" HAVE THE
MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
SOFTKEY INTERNATIONAL 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 Company 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 on November 1, 2000, at the office or agency of the Company maintained
for that purpose in the Borough of Manhattan, The City of New York, or, at the
option of the holder of this Note, at the Corporate Trust Office of the Trustee,
in such coin or currency of the United States of America as at the time of
payment shall be legal tender for the payment of public and private debts, and
to pay interest, semi-annually on May 1 and November 1 of each year, commencing
May 1, 1996, on said principal sum at said office or agency, in like coin or
currency, at the rate per annum specified in the title of this Note, from the
May 1 or November 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 hereof is a
date to which interest has been paid or duly provided for, in which case from
the date of this Note, or unless no interest has been paid or duly provided for
on the Notes, in which case from _____________, 1995, until payment of said
principal sum has been made or duly provided for. Notwithstanding the foregoing,
if the date hereof is after any April 15 or October 15, as the case may be, and
before the following May 1 or November 1 other than October 15, 1995, this Note
shall bear interest from such May 1 or November 1, respectively; provided,
however, that if the Company shall default in the payment of interest due on
such May 1 or November 1, then this Note shall bear interest from the next
preceding May 1 or November 1 to which interest has been paid or duly provided
for or, if no interest has been paid or duly provided for on such Note, from
____________, 1995. The interest so payable on any May 1 or November 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
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shall be the April 15 or October 15 (whether or not a Business Day) next
preceding such May 1 or November 1, respectively; provided that any such
interest not punctually paid or duly provided for shall be payable as provided
in the Indenture. Interest may, at the option of the Company, be paid by check
mailed to the registered address of such person.
Reference is made to the further provisions of this Note set
forth an the reverse hereof, including, without limitation, provisions giving
the holder of this Note the right to convert this Note into Common Stock and to
exchange this Note for Preferred 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 set forth at this place.
This Note shall be deemed to be a contract made under the laws
of the State of New York, and for all purposes shall be construed in accordance
with and governed by the laws of said State.
This Note shall not be valid or become obligatory for any
purpose until the certificate of authentication hereon shall have been manually
signed by the Trustee or a duly authorized authenticating agent under the
Indenture.
IN WITNESS WHEREOF, the Company has caused this Note to be
duly executed under its corporate seal.
SOFTKEY INTERNATIONAL INC.
By:
Name:
Title:
Dated:
Attest:
- ---------------------
Secretary
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[FORM OF CERTIFICATE OF AUTHENTICATION]
CERTIFICATE OF AUTHENTICATION
This is one of the Notes described in the within-named
Indenture.
STATE STREET BANK AND TRUST
COMPANY, as Trustee
By:
Authorized officer
As Authenticating Agent
(if different from
Trustee)
By:
Authorized Officer
[FORM OF REVERSE OF NOTE]
SOFTKEY INTERNATIONAL INC.
5 1/2% Senior Convertible/Exchangeable Note Due 2000
This Note is one of a duly authorized issue of Notes in
the Company, designated as its 5 1/2% Senior Convertible/Ex- changeable Notes
due 2000 (herein called the "Notes"), limited to the aggregate principal amount
of $150,000,000 all issued or to be issued under and pursuant to an indenture
dated as of _____________ (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 and accrued interest on
all Notes may be declared, and upon said declaration shall become, due and
payable, in the manner, with the effect and subject to the conditions provided
in the Indenture.
The Indenture contains provisions permitting the Company and
the Trustee, with the consent of the holders of not less than a majority in
aggregate principal amount of the Notes at the time
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outstanding, evidenced as in the Indenture provided to execute supplemental
indentures adding any provisions to or changing in any manner or eliminating any
of the provisions of the Indenture or of any supplemental indenture or modifying
in any manner the rights of the holders of the Notes; provided, however, that no
such supplemental indenture shall (i) extend the fixed maturity of any Note, or
reduce the rate or extend the time of payment of interest thereon, or reduce the
principal amount thereof or premium, if any, thereon, or reduce any amount
payable on redemption thereof, alter the obligation of the Company to redeem the
Notes at the option of the holders upon the occurrence of a Change of Control or
impair or affect the right of any Noteholder to institute suit for the payment
thereof, or make the principal thereof or interest or premium, if any, thereon
payable in any coin or currency other than that provided in the Notes or impair
the right to exchange the Notes for Preferred Stock or to convert the Notes into
Common Stock subject to the terms set forth in the Indenture, including Sections
15.6 and 17.6 thereof, without the consent of the holder of each Note so
affected or (ii) reduce the aforesaid percentage of Notes, the holders of which
are required to consent to any such supplemental indenture, without the consent
of the holders of all Notes then outstanding. It is also provided in the
Indenture that, 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 a
default in the payment of interest or any premium on or the principal of any of
the Notes, a failure by the Company to convert any Notes into Common Stock of
the Company or to exchange any Notes for Preferred Stock of the Company or a
default in respect of a covenant or provision of the Indenture which under
Article XI thereof 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.
No reference herein to the Indenture and no provision of this
Note or of the Indenture shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of and any premium and
interest on this Note at the place, at the respective times, at the rate and in
the coin or currency herein prescribed.
Interest on the Notes shall be computed on the basis of a year
of twelve 30-day months.
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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 November 2, 1998. On or after such date and prior to maturity the Notes
may be redeemed at the option of the Company as 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
optional redemption prices (expressed as percentages of the principal amount),
together in each case with accrued interest to the date fixed for redemption.
If redeemed during the 12-month period beginning:
Date Percentage
---- ----------
November 2, 1998 102.2%
November 1, 1999 101.1%
and 100% at November 1, 2000; provided that if the date fixed for redemption is
a May 1 or November 1, then the interest payable on such date shall be paid to
the holder of record on the next preceding April 15 or October 15, respectively.
If a Change of Control (as defined in the Indenture) shall
occur at any time, then each holder of Notes shall have the right to require
that the Company purchase such holder's Notes in whole or in part in integral
multiples of $1,000, at a purchase price in cash in an amount equal to 101% of
the principal amount of such Notes, plus accrued and unpaid interest, if any, on
the repurchase date pursuant to an offer to be made by the Company and in
accordance with the procedures set forth in the Indenture.
Subject to the provisions of the Indenture, the holder hereof
has the right, at its option, at any time after 60 days following the latest
date of original issuance of the Notes and prior to the close of business on
November 1, 2000, or, as to all or any portion hereof 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
thereof), to exchange the principal amount 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 the Company's Preferred Stock obtained
by dividing the principal amount of this Note, or portion thereof to be
exchanged by the exchange price of $1000.00, or such exchange price as adjusted
from time to time as provided in the Indenture, or 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 $53.00 or such conversion price as adjusted
from time to time as provided in the Indenture, in either case, upon surrender
of this Note, together with any conversion or exchange notice, as the case may
be, as provided in the Indenture, to the Company at the office or agency of the
Company maintained for that purpose in the Borough of Manhattan, The City of New
York, or at the option of such holder, the Corporate Trust Office of the
Trustee, and, unless the shares issuable on conversion or exchange 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. In the case of any exchange,
dividends on the Preferred Stock issuable upon such exchange will commence to
accrue as of the most recent date as of which interest has been paid, or duly
provided for, on the Notes unless no interest has been paid or duly provided for
on the Notes, in which case from ____________, 1995 and no further adjustment
will be made with regard to interest due on the Note, or portions thereof, so
exchanged. 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 or exchange 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 it or the portion being converted or exchanged shall have been called
for redemption on a date in such period) must be accompanied by an amount, in
funds acceptable to the Company, equal to the interest payable on such interest
payment date on the principal amount being converted or exchanged. No fractional
shares will be issued upon any conversion or exchange, but an adjustment in cash
will be made, as provided in the Indenture, in respect of any fraction of a
share which would otherwise be issuable upon the surrender of any Note or Notes
for conversion or exchange.
Any Notes called for redemption, unless surrendered for
exchange or 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 in 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 or
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exchange them for Preferred 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 of the Trustee, a new Note or Notes of authorized denominations for an
equal aggregate principal amount will be issued to the transferee in exchange
thereof, subject to the limitations provided in the Indenture, without charge
except for any tax or other governmental charge imposed in connection therewith.
The Company, the Trustee, any authenticating agent, any paying
agent, exchange or 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 exchange or 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 exchange or 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, officer or director, as such,
past, present or future, of the Company or of any Successor Company, either
directly or through the Company or any Successor Company, 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.
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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
TEN ENT - as tenants by the _________________ Custodian
entireties (Cust)
JT TEN - as joint tenants with ____________________ under
right of survivorship (minor)
and not as tenants in
common
Uniform Gifts to
minors Act ___________________
(State)
Additional abbreviations may also be used though not in
the above list.
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[FORM OF CONVERSION NOTICE]
CONVERSION NOTICE
TO: SoftKey International 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, par value $.01 per share, of the
Company in accordance with the terms of the Indenture referred to in this Note,
and directs that the shares issuable and deliverable upon such conversion, and
any Notes representing any unconverted principal amount hereof, be issued and
delivered to the registered holder hereof unless a different name has been
indicated below. If shares or any portion of this Note not converted are to be
issued in the name of a person other than the undersigned, the undersigned will
check the appropriate box below and pay all transfer taxes payable with respect
thereto. Any amount required to be paid to the undersigned on account of
interest accompanies this Note.
Dated: _______________________
----------------------------------
----------------------------------
Signature(s)
Signature(s) must be guaranteed by an eligible Guarantor Institution (banks,
stock brokers, savings and loan associations and credit unions) with membership
in an approved signature guarantee medallion program pursuant to Securities and
Exchange Commission Rule 17Ad-15 if shares of Common Stock are to be issued, or
Notes to be delivered, other than to and in the name of the registered holder.
- -------------------------------------
Signature Guarantee
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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
--------------------------
Social Security or other
Taxpayer Identification
Number
Principal amount to be
converted (if less than
all) $___________________
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[FORM OF EXCHANGE NOTICE]
EXCHANGE NOTICE
TO: SoftKey International Inc.
The undersigned registered owner of this Note hereby irrevocably
exercises the option to exchange this Note, or the portion hereof (which is
$1,000 principal amount or an integral multiple thereof) below designated, into
shares of Preferred Stock, par value $.01 per share, of the Company in
accordance with the terms of the Indenture referred to in this Note, and directs
that the shares issuable and deliverable upon such exchange, and any Notes
representing any unexchanged 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 exchanged are to be issued in the name
of a person other than the undersigned, the undersigned will check the
appropriate box below and pay all transfer taxes payable with respect thereto.
Any amount required to be paid to the undersigned on account of interest
accompanies this Note.
Dated: ___________
--------------------
--------------------
Signature(s)
Signature(s) must be guaranteed by an eligible Guarantor institution (banks,
stock brokers, savings and loan associations and credit unions) with membership
in an approved signature guarantee medallion program pursuant to Securities and
Exchange Commission Rule 17Ad-15 if shares of Preferred Stock are to be issued,
or Notes to be delivered, other than to and in the name of the registered
holder.
- -------------------------------------
Signature Guarantee
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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
--------------------------
Social Security or other
Taxpayer Identification
Number
Principal amount to be
exchanged (if less than
all) $______________
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[FORM OF OPTION TO ELECT REPAYMENT
UPON A CHANGE OF CONTROL]
To: SoftKey International Inc.
The undersigned registered owner of this Note hereby
irrevocably acknowledges receipt of a notice from SoftKey International Inc.
(the "Company") as to the occurrence of a Change of Control with respect to the
Company and requests and instructs the Company to repay the entire principal
amount of this Note, or the portion thereof (which is $1,000 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 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):
$-------------------
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(FORM OF ASSIGNMENT)
For value received _________________________ hereby sell(s),
assign(s) and transfer(s) unto ___________________ (Please insert social
security or other identifying 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 (or any
issuance of shares of Common Stock, par value $.Ol per share, or shares of
Preferred Stock, par value $.01 per share, of SoftKey International Inc. upon
conversion or exchange of the within Note) occurring prior to the third
anniversary of the date of original issuance of such Note, the undersigned
confirms that such Note (or shares of Common Stock or Preferred Stock, as the
case may be) are being transferred:
|_| To SoftKey International 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 Regulation S under the
Securities Act of 1933, as amended; or
|_| Pursuant to and in compliance with Rule 144 under the
Securities Act of 1933, as amended.
Unless one of the boxes above is checked, the Trustee will
refuse to register any of the within Notes (or such shares of Common Stock or
Preferred Stock, as the case may be) in the name of any person other than the
registered holder thereof (or hereof); provided, however, that the Trustee may,
in its sole discretion, register the transfer of such Notes (or such shares of
Common Stock or Preferred Stock, as the case may be) if it has received such
certifications, legal opinions and/or other information as the Company has
reasonably requested 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 of 1933, as amended.
In addition, if the transferee is an institutional
accredited investor or a purchaser who is not a U.S. person, the
holder must furnish to the Trustee (i) in the case of an
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institutional accredited investor, a signed letter containing certain
representations and agreements relating to the restrictions on transfer of the
security evidenced hereby and (ii) such other certifications, legal opinions or
other information as it may reasonably require to confirm that such transfer is
being made pursuant to an exemption from, or in a transaction not subject to,
the registration requirements of the Securities Act of 1933, as amended.
Dated: ________________
- -----------------------
- -----------------------
Signature(s)
Signature(s) must be guaranteed by an eligible Guarantor institution (banks,
stock brokers, savings and loan associations and credit unions) with membership
in an approved signature guarantee medallion program pursuant to Securities and
Exchange Commission Rule 17Ad-15.
- -----------------------
Signature Guarantee
NOTICE: The signature on the conversion notice or the exchange notice, the
option to elect payment upon a Change of Control 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.
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EXHIBIT B - FORM OF GLOBAL NOTE
[FORM OF FACE OF NOTE]
No. A-1 $____________________
CUSIP_______________
SOFTKEY INTERNATIONAL INC.
5 1/2% Senior Convertible/Exchangeable Note Due 2000
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY
THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE
DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY
THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A
NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS
PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY TRUST
COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO. OR 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 NOTE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES
LAWS, AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR
FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE
FOLLOWING SENTENCE. BY ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7)
UNDER THE SECURITIES ACT) ("INSTITUTIONAL ACCREDITED INVESTOR") OR (C)
IT IS NOT A U.S. PERSON AND IS ACQUIRING THE NOTE EVIDENCED HEREBY IN
AN OFFSHORE TRANSACTION; (2) AGREES THAT IT WILL NOT PRIOR TO THE DATE
THAT IS THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF THE
NOTE EVIDENCED HEREBY AND THE LAST DATE ON WHICH SOFTKEY INTERNATIONAL
INC. (THE "COMPANY") OR ANY "AFFILIATE" (AS DEFINED IN RULE 144 UNDER
THE SECURITIES ACT) OF THE COMPANY WAS THE OWNER OF THE NOTE (THE
"RESTRICTION TERMINATION DATE") RESELL OR OTHERWISE TRANSFER THE NOTE
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EVIDENCED HEREBY OR THE COMMON STOCK ISSUABLE UPON CONVERSION OR
EXCHANGE 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) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH
RULE 904 UNDER THE SECURITIES ACT OR (E) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE); AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM
THE NOTE EVIDENCED HEREBY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THE NOTE
EVIDENCED HEREBY BEFORE THE RESTRICTION TERMINATION DATE, THE HOLDER
MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING
TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO STATE
STREET BANK AND TRUST COMPANY, AS TRUSTEE. IF THE PROPOSED TRANSFER IS
PURSUANT TO CLAUSE (C), (D) OR (E) 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 RESTRICTION TERMINATION DATE. AS USED HEREIN, THE
TERMS "OFFSHORE TRANSACTION "UNITED STATES" AND "U.S. PERSON" HAVE THE
MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
SOFTKEY INTERNATIONAL 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 Company 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 (subject to adjustment as set forth in the next paragraph hereof) on
November 1, 2000, at the office or agency of the Company maintained for that
purpose in the Borough of Manhattan, The City of New York, or, at the option of
the holder of this Note, at the Corporate Trust office of the Trustee, in such
coin or currency of the United States of America as at the time of payment shall
be legal tender for the payment of public and private debts, and to pay
interest, semi-annually on May 1 and November 1 of each year, commencing May 1,
1996, on said principal
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sum at said office or agency, in like coin or currency, at the rate per annum
specified in the title of this Note, from the May 1 or November 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 hereof is a date to which interest has been
paid or duly provided for, in which case from the date of this Note, or unless
no interest has been paid or duly provided for on the Notes, in which case from
___________, 1995, until payment of said principal sum has been made or duly
provided for. Notwithstanding the foregoing, if the date hereof is after any
April 15 or October 15, as the case may be, and before the following May 1 or
November 1 other than October 15, 1995, this Note shall bear interest from such
May 1 or November 1, respectively; provided, however, that if the Company shall
default in the payment of interest due on such May 1 or November 1, then this
Note shall bear interest from the next preceding May 1 or November 1 to which
interest has been paid or duly provided for or, if no interest has been paid or
duly provided for on such Note, from __________, 1995. The interest so payable
on any May 1 or November 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 April 15 or October 15 (whether or not a
Business Day) next preceding such May 1 or November 1, respectively; provided
that any such interest not punctually paid or duly provided for shall be payable
as provided in the Indenture. Interest may, at the option of the Company, be
paid by check mailed to the registered address of such person.
The aggregate principal amount of the Note in global form represented
hereby may from time to time be reduced or increased to reflect exchanges of a
part of this Note in global form for definitive Notes or exchanges of definitive
Notes for a part of this Note in global form or exchanges or conversions or
redemptions of a part of this Note in global form or cancellations of a part of
this Note in global form or transfers of definitive Notes in return for a part
of this Note in global form or transfers of a part of this Note in global form
effected by delivery of definitive Notes, in each case, and in any such case, by
means of notations on the Schedule of Exchanges, Conversions, Redemptions,
Cancellations and Transfers on the last page hereof. Notwithstanding any
provision of this Note to the contrary, (i) exchanges of a part of this Note in
global form for definitive Notes, (ii) exchanges of definitive Notes for a part
of this Note in global form, (iii) conversions, exchanges or redemptions of a
part of this Note in global form, (iv) cancellations of a part of this Note in
global form, (v) transfers of definitive Notes in return for a part of this Note
in global form and (vi) transfers of a part of this Note in global form effected
by delivery of definitive Notes may be effected without the surrendering of this
Note in global form, provided that appropriate notations on the Schedule of
Exchanges, Conversions, Redemptions, Cancellations and Transfers are made by the
Trustee, or the Custodian at the
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direction of the Trustee, to reflect the appropriate reduction or increase, as
the case may be, in the aggregate principal amount of this Note in global form
resulting therefrom or as a consequence thereof.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, including, without limitation, provisions giving the holder
of this Note the right to convert this Note into Common Stock and exchange this
Note for Preferred 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.
This Note shall not be valid or become obligatory for any purpose until
the certificate of authentication hereon shall have been manually signed by the
Trustee or a duly authorized authenticating agent under the Indenture.
IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed under its corporate seal.
SOFTKEY INTERNATIONAL INC.
By:________________________________
Name:
Title:
Dated: _______________________
Attest:
- ------------------------------
Secretary
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[FORM OF CERTIFICATE AUTHENTICATION]
CERTIFICATE OF AUTHENTICATION
This is one of the Notes Described in the within-named Indenture.
STATE STREET BANK AND TRUST
COMPANY, as Trustee
By: _____________________________
Authorized Officer
As Authenticating Agent
if different from Trustee)
By: _____________________________
Authorized Officer
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[FORM OF REVERSE OF NOTE]
SoftKey International Inc.
5 1/2% Senior Convertible/Exchangeable Note Due 2000
This Note is one of a duly authorized issue of Notes of the Company,
designated as its 5 1/2% Senior Convertible/Exchangeable Notes due 2000 (herein
called the "Notes"), limited to the aggregate principal amount of $150,000,000
all issued or to be issued under and pursuant to an Indenture dated as of
__________, 1995 (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 to rights, obligations, duties and
immunities thereunder of the Trustee, the Company and the holders of the Notes.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of and accrued interest on all Notes
may be declared, and upon said declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the holders of not less than a majority in
aggregate principal amount of the Notes at the time outstanding, evidenced as in
the Indenture provided, to execute supplemental indentures adding any provisions
to or changing in any manner or eliminating any of the provisions of the
Indenture or of any supplemental indenture or modifying in any manner the rights
of the holders of the Notes; provided, however, that no such supplemental
indenture shall (i) extend the fixed maturity of any Note, or reduce the rate or
extend the time of payment of interest thereon, or reduce the principal amount
thereof or premium, if any, thereon, or reduce any amount payable on redemption
thereof, alter the obligation of the Company to redeem the Notes at the option
of the holders upon the occurrence of a Change of Control or impair or affect
the right of any Noteholder to institute suit for the payment thereof, or make
the principal thereof or interest or premium, if any, thereon payable in any
coin or currency other than that provided in the Notes or impair the right to
exchange the Notes for Preferred Stock or to convert the Notes into Common Stock
subject to the terms set forth in the Indenture, including Sections 15.6 and
17.6 thereof, without the consent of the holder of each Note so affected or (ii)
reduce the aforesaid percentage of Notes, the holders of which are required to
consent to any such supplemental indenture, without the consent of the holders
of all Notes then outstanding. It is also provided in the Indenture that, prior
to any declaration accelerating the
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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 a default in the payment of interest or any premium on or
the principal of any of the Notes, a failure by the Company to exchange the
Notes for Preferred Stock or to convert any Notes into Common Stock of the
Company or a default in respect of a covenant or provision of the Indenture
which under Article XI thereof 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.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and any premium and interest
on this Note at the place, at the respective times, at the rate and in the coin
or currency herein prescribed.
Interest on the Notes shall be computed on the basis of a year 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
November 2, 1998. On or after such date and prior to maturity the Notes may be
redeemed at the option of the Company as 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
optional redemption prices (expressed as percentages of the principal amount),
together in each case with accrued interest to the date fixed for redemption.
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If redeemed during the 12-month period beginning:
Date Percentage
November 2, 1998 102.2%
November 1, 1999 101.1%
and 100% at November 1, 2000; provided that if the date fixed for redemption is
a May 1 or November 1, then the interest payable on such date shall be paid to
the holder of record on the next preceding April 15 or October 15, respectively.
If a Change of Control (as defined in the Indenture) shall
occur at any time, then each holder of Notes shall have the right to require
that the Company purchase such holder's Notes in whole or in part in integral
multiples of $1,000, at a purchase price in cash in an amount equal to 101% of
the principal amount of such Notes, plus accrued and unpaid interest, if any, to
the repurchase date pursuant to an offer to be made by the Company and in
accordance with the procedures set forth in the Indenture.
Subject to the provisions of the Indenture, the holder hereof
has the right, at its option, at any time after 60 days following the latest
date of original issuance of the Notes and prior to the close of business on
November 1, 2000, or, as to all or any portion hereof 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
thereof), exchange the principal amount 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 the Company's Preferred Stock obtained by dividing
the principal amount of this Note, or portion thereof to be exchanged, by the
exchange price of $1000.00 or such exchange price as adjusted from time to time
as provided in the Indenture, or 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 $53.00 or such conversion price as adjusted from time to
time as provided in the Indenture, in either case, upon surrender of this Note,
together with an exchange notice or a conversion notice, as the case may be, as
provided in the Indenture, to the Company at the office or agency of the Company
maintained for that purpose in the Borough of Manhattan, The City of New York,
or at the option of such holder, the Corporate Trust Office of the Trustee, and,
unless the shares issuable on conversion or exchange 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. In the
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case of any exchange, dividends on the Preferred Stock issuable upon such
exchange will commence to accrue as of the most recent date as of which interest
has been paid, or duly provided for, on the Notes unless no interest has been
paid or duly provided for on the Notes, in which case from ____________, 1995
and no further adjustment will be made with regard to interest due on the Note,
or portions thereof, so exchanged. 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 or exchange 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 it or the portion being converted or exchanged shall have been
called for redemption on a date in such period) must be accompanied by an
amount, in funds acceptable to the Company, equal to the interest payable on
such interest payment date on the principal amount being converted or exchanged.
No fractional shares will be issued upon any conversion or exchange, but an
adjustment in cash will be made, as provided in the Indenture, in respect of any
fraction of a share which would otherwise be issuable upon the surrender of any
Note or Notes for conversion or exchange.
Any Notes called for redemption, unless surrendered for conversion or
exchange 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 or exchange them for Preferred 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
of the Trustee, a new Note or Notes of authorized denominations for an equal
aggregate principal amount will be issued to the transferee in exchange thereof,
subject to the limitations provided in the Indenture, without charge except for
any tax or other governmental charge imposed in connection therewith.
The Company, the Trustee, any authenticating agent, any paying agent,
any exchange or 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
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account hereof, for the exchange or 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 exchange or 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, officer or director, as such,
past, present or future, of the Company or of any Successor Company, either
directly or through the Company or any Successor Company, 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.
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[FORM OF CONVERSION NOTICE]
CONVERSION NOTICE
TO: SoftKey International 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, par value $.01 per share, of the
Company in accordance with the terms of the Indenture referred to in this Note,
and directs that the shares issuable and deliverable upon such conversion, and
any Notes representing any unconverted principal amount hereof, be issued and
delivered to the registered holder hereof unless a different name has been
indicated below. If shares or any portion of this Note not converted are to be
issued in the name of a person other than the undersigned, the undersigned will
check the appropriate box below and pay all transfer taxes payable with respect
thereto. Any amount required to be paid to the undersigned on account of
interest accompanies this Note.
Dated: _______________________
--------------------------------
--------------------------------
Signature(s)
Signature(s) must be guaranteed by an eligible Guarantor Institution (banks,
stock brokers, savings and loan associations and credit unions) with membership
in an approved signature guarantee medallion program pursuant to Securities and
Exchange Commission Rule 17Ad-15 if shares of Common Stock are to be issued, or
Notes to be delivered, other than to and in the name of the registered holder.
- -------------------------------------
Signature Guarantee
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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
--------------------------
Social Security or other
Taxpayer Identification
Number
Principal amount to be
converted (if less than
all) $___________________
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[FORM OF EXCHANGE NOTICE)
EXCHANGE NOTICE
To: SoftKey International Inc.
The undersigned registered owner of this Note hereby
irrevocably exercises the option to exchange this Note, or the portion hereof
(which is $1,000 principal amount or an integral multiple thereof) below
designated, into shares of Preferred Stock, par value $.01 per share, of the
Company in accordance with the terms of the Indenture referred to in this Note,
and directs that the shares issuable and deliverable upon such exchange, 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 exchanged are to be
issued in the name of a person other than the undersigned, the undersigned will
check the appropriate box below and pay all transfer taxes payable with respect
thereto. Any amount required to be paid to the undersigned on account of
interest accompanies this Note.
Dated:
- ---------------------------------
Signature(s)
Signature(s) must be guaranteed by an eligible Guarantor institution (banks,
stock brokers, savings and loan associations and credit unions) with membership
in an approved signature guarantee medallion program pursuant to Securities and
Exchange Commission Rule 17Ad-15 if shares of Common Stock are to be issued, or
Notes to be delivered, other than to and in the name of the registered holder.
- --------------------------------
Signature Guarantee
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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
--------------------------
Social Security or other
Taxpayer Identification
Number
Principal amount to be
exchanged (if less than
all) $___________________
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[FORM OF OPTION TO ELECT REPAYMENT]
UPON A CHANGE OF CONTROL)
To: SoftKey International Inc.
The undersigned registered owner of this Note hereby irrevocably
acknowledges receipt of a notice from SoftKey International Inc. (the "Company")
as to the occurrence of a Change of Control with respect to the Company and
requests and instructs the Company to repay the entire principal amount of this
Note, or the portion thereof (which is $1,000 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 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): $__________________
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EXHIBIT C
[FORM OF
CERTIFICATE OF DESIGNATION]
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EXHIBIT C
SoftKey International Inc.
CERTIFICATE OF DESIGNATION
OF 5-1/2% SERIES C CONVERTIBLE
PREFERRED STOCK SETTING FORTH THE POWERS,
PREFERENCES, RIGHTS, QUALIFICATIONS,
LIMITATIONS AND RESTRICTIONS OF
SUCH SERIES OF PREFERRED STOCK
Pursuant to Section 151 of the General Corporation Law of the
State of Delaware, SoftKey International Inc. (the "Company"), a corporation
organized and existing under the General Corporation Law of the State of
Delaware, in accordance with the provisions of Section 103 thereof, DOES HEREBY
CERTIFY:
That pursuant to the authority conferred upon the Board of
Directors of the Company (the "Board of Directors") by Article 4.2.2 of the
Restated Certificate of Incorporation of the Company, as amended, and in
accordance with the provisions of Section 151 of the General Corporation Law of
the State of Delaware, the Board of Directors on ___________, 1995, adopted the
following resolution authorizing and creating a series of Preferred Stock
designated as 5-1/2% Series C Convertible Preferred Stock:
RESOLVED that, pursuant to the authority vested in the Board
of Directors in accordance with the provisions of the Restated Certificate of
Incorporation, as amended, a series of the class of authorized Preferred Stock,
par value $.01 per share, of the Company is hereby authorized and created and
that the designation and number of shares thereof and the voting powers,
preferences and relative, participating, optional and other special rights of
the shares of such series, and the qualifications, limitations and restrictions
thereof are as follows:
Section 1. Designation and Number.
Section 1.1 Designation. The shares of such series shall be
designated as "5-1/2% Series C Convertible Preferred Stock" (the "Series C
Preferred Stock"). The maximum number of shares of Series C Preferred Stock
hereby authorized shall be 150,000 shares.
Section 1.2 Priority. The Series C Preferred Stock
shall, with respect to the payment of dividends and the
93845.01
- 1 -
distribution of assets on liquidation, dissolution or winding up, (i) rank prior
to the Common Stock, par value $0.01 per share, of the Company (the "Common
Stock") and (ii) rank on a parity with any other series of Preferred Stock
hereinafter issued by the Company.
Section 2. Dividends and Distributions.
Section 2.1 Dividends. The holders of shares of Series C
Preferred Stock, in preference to the holders of shares of Common Stock and of
any shares of other capital stock of the Company ranking junior to the Series C
Preferred Stock as to payment of dividends, shall be entitled to receive, when,
as and if declared by the Board of Directors, out of the assets of the Company
legally available therefor, dividends in the amount per share equal to 5-1/2%
per annum of the Liquidation Preference (as defined herein) of such share
payable or accrued semi-annually on May 1 and November 1 in each year commencing
May 1, 1996 (each such date a "Dividend Payment Date") to the persons in whose
names the Series C Preferred Stock is registered at the close of business on the
April 15 and October 15 immediately preceding such Dividend Payment Date, as the
case may be. Such dividends shall begin to accrue on outstanding shares of
Series C Preferred Stock from the date of issuance of such shares of Series C
Preferred Stock; provided, in the case of any Series C Preferred Stock issued
upon exchange for the Company's $150 million principal amount of 5-1/2% Senior
Convertible/Exchangeable Notes due 2000 (the "Notes"), such dividend shall begin
to accrue and accumulate from the date on which interest was last paid or duly
provided for on such Notes, or if no interest has been paid or duly provided for
prior to the date of such exchange, from __________, 1995. Dividends payable for
any partial dividend period shall be computed on the basis of a 360-day year of
twelve 30-day months. Dividends on the Series C Preferred Stock shall accrue on
a daily basis whether or not funds shall be legally available for the payment
thereof. Accrued but unpaid dividends on the Series C Preferred Stock shall
cumulate as of the Dividend Payment Date on which they first become payable, and
any and all such accrued dividends shall be paid as provided in this Section 2,
Section 5 and Section 7.
Section 2.2 No Additional Dividends. The holders of shares of
Series C Preferred Stock shall not be entitled to receive any dividends or other
distributions except as provided herein.
Section 3. Voting Rights. In addition to any voting
rights provided by law, the holders of shares of Series C
Preferred Stock shall have the following voting rights:
Section 3.1 With Common Stock. So long as the Series
C Preferred Stock is outstanding, each share of Series C
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Preferred Stock shall entitle the holder thereof to vote on all matters voted on
by holders of Common Stock voting together as a single class with other shares
entitled to vote at all meetings of the stockholders of the Company. With
respect to any such vote, each share of Series C Preferred Stock shall entitle
the holder thereof to cast the number of votes equal to the number of votes
which could be cast in such vote by a holder of the shares of capital stock of
the Company into which such share of Series C Preferred Stock is convertible on
the record date for such vote.
Section 3.2 As a Class. The affirmative vote of the holders of
at least 66-2/3% of the outstanding shares of Series C Preferred Stock, in
person or by proxy, at a special or annual meeting of stockholders called for
the purpose, shall be necessary to (i) authorize, increase the authorized number
of shares of, or issue (including on conversion or exchange of any convertible
or exchangeable securities or by reclassification), any shares of any class or
classes of the Company's capital stock ranking prior to (either as to dividends
or upon voluntary or involuntary liquidation, dissolution or winding up) the
Series C Preferred Stock; (ii) increase the authorized number of shares of, or
issue (including on conversion or exchange of any convertible or exchangeable
securities or by reclassification) any shares of, Series C Preferred Stock,
except in connection with the exchange of the Notes; (iii) authorize, adopt or
approve an amendment to the Restated Certificate of Incorporation of the Company
which would decrease the aggregate number of authorized shares of Series C
Preferred Stock, increase or decrease the par value of the shares of Series C
Preferred Stock, or alter or change the powers, preferences or special rights of
the shares of Series C Preferred Stock so as to affect such shares of Series C
Preferred Stock adversely; (iv) authorize or issue shares of any class or series
of stock not authorized herein having any preference or priority as to dividends
or assets superior to any such preference or priority of the Series C Preferred
Stock; or (v) reclassify any shares of Common Stock or any other shares of
capital stock of the Company other than the Series C Preferred Stock (such
shares other than (A) shares of capital stock of the Company ranking senior
(either as to dividends or upon liquidation, dissolution or winding up of the
Company) to the Series C Preferred Stock and (B) Parity Stock (as hereinafter
defined) are hereinafter referred to as "Junior Stock") into shares having any
preference or priority as to dividends or liquidation superior to or on a parity
with any such preference or priority of the Series C Preferred Stock; provided
that Parity Stock may be reclassified into a different series of Parity Stock
without the approval of the holders of Series C Preferred Stock.
Section 3.3 Right to Elect Directors as a Class. If on any
date dividends payable on the Series C Preferred Stock shall have been in
arrears and not paid in full for three semi-annual periods, whether or not
consecutive, the number of
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directors constituting the Board of Directors shall, without further action, be
increased by two and the holders of shares of Series C Preferred Stock shall
have, in addition to the other voting rights set forth herein, the exclusive
right, voting separately as a single class or as a class with the holders of
shares of Parity Stock (as hereinafter defined), if such holders are then
entitled to elect additional directors pursuant to any provision of the
Certificate of Designation for such stock that is similar to this Section 3.3
("Defaulted Parity Stock"), to elect the directors of the Company to fill such
newly created directorships, the remaining directors to be elected by the other
classes of stock entitled to vote therefor (including the Series C Preferred
Stock in accordance with Section 3.1), at each meeting of stockholders held for
the purpose of electing directors. Such additional directors shall continue as
directors and such additional voting right shall continue until such time as all
dividends accumulated on the Series C Preferred Stock have been paid in full or
all necessary funds have been set aside for payment, as the case may be, at
which time such additional directors shall cease to be directors and such
additional voting right of the holders of Series C Preferred Stock shall
terminate subject to revesting in the event of each and every subsequent event
of the character indicated above. In no event shall the holders of Series C
Preferred Stock and/or the holders of Parity Stock voting separately or together
as a class be entitled to elect a total of more than two directors to the Board
of Directors of the Company pursuant to this Section 3.3 and/or any similar
provision of the Certificate of Designation for any Parity Stock.
Section 3.4.1 Exercise. The foregoing rights of holders of
shares of Series C Preferred Stock to take any actions as provided in this
Section 3 may be exercised at any annual meeting of stockholders or at a special
meeting of stockholders held for such purpose as hereinafter provided or at any
adjournment thereof, or by the written consent, delivered to the Secretary of
the Company, of the holders of the minimum number of shares required to take
such action.
So long as such right to vote continues (and unless such right
has been exercised by written consent of the minimum number of shares required
to take such action), the Chairman of the Board of the Company may call, and,
upon the written request of holders of record of 20% of the outstanding shares
of Series C Preferred Stock, if the holders of Series C Preferred Stock are to
vote separately as a single class, or the holders of record of 20% of the
outstanding shares of Series C Preferred Stock and Defaulted Parity Stock, if
the holders of shares of Series C Preferred Stock are to vote as a class with
the holders of shares of any Defaulted Parity Stock, addressed to the Secretary
of the Company at the principal office of the Company, shall call a special
meeting of the holders of shares entitled to vote as
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provided herein. Such meeting shall be held within 30 days after delivery of
such request to the Secretary, at the place and upon the notice provided by law
and in the By-laws of the Company for the holding of meetings of stockholders.
Section 3.4.2 Quorum. At each meeting of stockholders at which
the holders of shares of Series C Preferred Stock shall have the right, voting
separately as a single class or as a class with the holders of shares of any
Defaulted Parity Stock, to elect directors of the Company as provided in this
Section 3 or to take any action, the presence in person or by proxy of the
holders of record of one-third of the total number of shares of Series C
Preferred Stock, if the holders of shares of Series C Preferred Stock are to
vote separately as a single class, or the holders of record of one-third of the
total number of shares of Series C Preferred Stock and Defaulted Parity Stock,
if the holders of shares of Series C Preferred Stock are to vote as a class with
the holders of shares of any Parity Stock, then outstanding and entitled to vote
on the matter shall be necessary and sufficient to constitute a quorum. At any
such meeting or at any adjournment thereof:
(i) the absence of a quorum of the holders of shares of Series
C Preferred Stock, if the holders of Series C Preferred Stock are to
vote separately as a single class, or the holders of shares of Series C
Preferred Stock and Defaulted Parity Stock, if the holders of shares of
Series C Preferred Stock are to vote as a class with the holders of
shares of any Parity Stock, shall not prevent the election of directors
other than those to be elected by the holders of shares of Series C
Preferred Stock or the holders of shares of Series C Preferred Stock
and Defaulted Parity Stock, as the case may be, and the absence of a
quorum of the holders of shares of any other class or series of capital
stock shall not prevent the election of directors to be elected by the
holders of shares of Series C Preferred Stock or the holders of shares
of Series C Preferred Stock and Defaulted Parity Stock, as the case may
be, or the taking of any action as provided in this Section 3; and
(ii) in the absence of a quorum of the holders of shares of
Series C Preferred Stock, if the holders of Series C Preferred Stock
are to vote separately as a single class, or the holders of shares of
Series C Preferred Stock and Defaulted Parity Stock, if the holders of
Series C Preferred Stock are to vote as a class with the holders of
shares of any Defaulted Parity Stock, a majority of the holders of such
shares present in person or by proxy shall have the power to adjourn
the meeting as to the actions to be taken by
93845.01
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the holders of shares of Series C Preferred Stock or the holders of
shares of Series C Preferred Stock and Defaulted Parity Stock, as the
case may be, from time to time and place to place without notice other
than announcement at the meeting until a quorum shall be present.
Section 3.4.3 Votes. For the taking of any action as provided
in Sections 3.2 and 3.3 by the holders of shares of Series C Preferred Stock or
the holders of shares of Series C Preferred Stock and Defaulted Parity Stock, as
the case may be, each such holder shall have one vote for each share of such
stock standing in his name on the transfer books of the Company as of any record
date fixed for such purpose or, if no such date be fixed, at the close of
business on the Business Day (as defined in Section 11) next preceding the day
on which notice is given, or if notice is waived, at the close of business on
the Business Day next preceding the day on which the meeting is held.
Section 3.4.4 Directors. Each director elected by the holders
of shares of Series C Preferred Stock or the holders of shares of Series C
Preferred Stock and Defaulted Parity Stock, as the case may be, as provided in
Section 3.3 shall, unless his term shall expire earlier, hold office until the
annual meeting of stockholders next succeeding his election or until his
successor, if any, is elected and qualified.
In case any vacancy shall occur among the directors elected by
the holders of shares of Series C Preferred Stock or the holders of shares of
Series C Preferred Stock and Defaulted Parity Stock, as the case may be, as
provided in Section 3.3, such vacancy may be filled for the unexpired portion of
the term by vote of the remaining director theretofore elected by such holders
(if there is a remaining director), or such director's successor in office. If
any such vacancy is not so filled within 20 days after the creation thereof or
if both directors so elected by the holders of Series C Preferred Stock or the
holders of Series C Preferred Stock and Defaulted Parity Stock, as the case may
be, shall cease to serve as directors before their terms shall expire, the
holders of the Series C Preferred Stock or the holders of Series C Preferred
Stock and Defaulted Parity Stock, as the case may be, then outstanding and
entitled to vote for such directors may, by written consent as herein provided,
or at a special meeting of such holders called as provided herein, elect
successors to hold office for the unexpired terms of the directors whose places
shall be vacant.
Any director elected by the holders of shares of Series C
Preferred Stock voting separately as a single class or the holders of shares of
Series C Preferred Stock voting as a class with the holders of shares of
Defaulted Parity Stock may be removed from office with or without cause by the
vote or written
93845.01
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consent of the holders of at least a majority of the outstanding shares of
Series C Preferred Stock or a majority of the outstanding shares of Series C
Preferred Stock and Defaulted Parity Stock, as the case may be. A special
meeting of the holders of shares of Series C Preferred Stock or the holders of
shares of Series C Preferred Stock and Defaulted Parity Stock, as the case may
be, may be called in accordance with the procedures set forth in Section 3.4.1.
Section 3.4.5 Parity Stock. "Parity Stock" shall mean any
capital stock of the Company ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up of the Company) with the Series C
Preferred Stock.
Section 4. Certain Restrictions.
Section 4.1 Restrictions on Dividends. Whenever dividends
payable on shares of Series C Preferred Stock as provided in Section 2 are not
paid in full, thereafter and until all unpaid dividends payable, whether or not
declared, on the outstanding shares of Series C Preferred Stock shall have been
paid in full or declared and set apart for payment, until all necessary funds
have been set apart for payment, the Company shall not: (A) declare or pay
dividends, or make any other distributions, on any shares of Junior Stock (as
defined in Section 3.2), other than dividends or distributions payable in Junior
Stock; or (B) declare or pay dividends, or make any other distributions, on any
shares of Parity Stock, except (1) dividends or distributions payable in Junior
Stock and (2) dividends or distributions paid ratably on the Series C Preferred
Stock and all Parity Stock on which dividends are payable or in arrears, in
proportion to the total amounts to which the holders of all shares of the Series
C Preferred Stock and such Parity Stock are then entitled; provided, however,
that in the case of clause (2) the holders of at least 66-2/3% of the
outstanding shares of Series C Preferred Stock, voting separately as a single
class, or the holders of at least 66-2/3% of the outstanding shares of Series C
Preferred Stock and of any Parity Stock the approval of holders of which is
required for such a pro rata dividend or distribution pursuant to any similar
provision of the Certificate of Designation for such stock, voting together as a
class, shall have approved the payment of such dividend or distribution; and
provided, further, that the restrictions of this Section 4.1 shall not apply
upon the affirmative vote of the holders of 66-2/3% of the outstanding shares of
Series C Preferred Stock.
Section 4.2 Restrictions on Redemption or Purchase. Whenever
dividends payable on shares of Series C Preferred Stock as provided in Section 2
are not paid in full, thereafter and until all unpaid dividends payable, whether
or not declared, on the outstanding shares of Series C Preferred Stock shall
have
93845.01
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been paid in full or declared and set apart for payment, until all necessary
funds have been set apart for payment, the Company shall not: (A) redeem,
purchase or otherwise acquire for consideration any shares of Junior Stock or
Parity Stock; provided that (1) the Company may at any time redeem, purchase or
otherwise acquire shares of Junior Stock or Parity Stock in exchange for any
shares of Junior Stock, (2) the Company may accept shares of any Parity Stock
for conversion and (3) the Company may at any time redeem, purchase or otherwise
acquire shares of any Parity Stock pursuant to any mandatory redemption, put,
sinking fund or other similar obligation, pro rata with the Series C Preferred
Stock in proportion to the total amount then required to be applied by it to
repurchase or otherwise acquire shares of Series C Preferred Stock and shares of
such Parity Stock; provided, however, that in the case of clause (3) the holders
of at least 66-2/3% of the outstanding shares of Series C Preferred Stock,
voting separately as a single class, or the holders of at least 66-2/3% of the
outstanding shares of Series C Preferred Stock and of any Parity Stock the
approval of holders of which is required for such a pro rata repurchase or other
acquisition pursuant to any similar provision of the Certificate of Designation
for such stock, voting together as a class, shall have approved such repurchase
or other acquisition; or (B) redeem or purchase or otherwise acquire for
consideration any shares of Series C Preferred Stock; provided that the Company
(1) may accept shares of Series C Preferred Stock surrendered for conversion
into shares of capital stock of the Company pursuant to Section 8, or (2) may
redeem shares of Series C Preferred Stock pro rata pursuant to Section 5.2; and
provided, further, that the restrictions of this Section 4.2 shall not apply
upon the affirmative vote of the holders of 66-2/3% of the outstanding shares of
Series C Preferred Stock.
Section 4.3 Purchase by Subsidiary. The Company shall not
permit any subsidiary of the Company to purchase or otherwise acquire for
consideration any shares of capital stock of the Company unless the Company
could, pursuant to Section 4.2, purchase such shares at such time and in such
manner.
Section 5. Redemption.
Section 5.1 Redemption Prices. The Company may, at its option,
redeem all or from time to time any part of the Series C Preferred Stock on any
date, upon notice as set forth in Section 5.2, and at the redemption prices set
forth below, provided, however, that no such redemption shall be effected before
November 2, 1998; provided, further, that, notwithstanding the foregoing, on
November 1, 2000 the Company shall redeem all of the Series C Preferred Stock
then outstanding. The redemption prices (expressed as percentages of the
liquidation value of $1,000.00), together in each case with accrued and unpaid
93845.01
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dividends thereon, whether or not declared, to the date of redemption, payable
in cash, shall be as follows:
If redeemed during the 12-month period beginning:
Date Percentage
November 1, 1998 102.2%
November 1, 1999 101.1%
and 100% on and after November 1, 2000.
Section 5.2 Notice of Redemption, Selection of Series C
Preferred Stock. In case the Company shall desire to exercise the right to
redeem all or, as the case may be, any part of the Series C Preferred Stock
pursuant to Section 5.1, it shall fix a date for redemption and, in the case of
any redemption pursuant to Section 5.1, it shall mail or cause to be mailed a
notice of such redemption at least 30 and not more than 60 days prior to the
date fixed for redemption to the holders of Series C Preferred Stock so to be
redeemed as a whole or in part at their last addresses as the same appear on the
books of the Company. 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 Series C Preferred Stock designated for redemption as a whole or in part
shall not affect the validity of the proceedings for the redemption of any other
shares of Series C Preferred Stock.
Each such notice of redemption shall specify the aggregate
number of shares of Series C Preferred Stock to be redeemed, the date fixed for
redemption, the redemption price at which Series C Preferred Stock is to be
redeemed, the place or places of payment, that payment will be made upon
presentation and surrender of certificates representing such Series C Preferred
Stock, that dividends accrued to the date fixed for redemption will be paid as
specified in said notice and that on and after said date, dividends thereon or
on the portion thereof to be redeemed will cease to accrue. Such notice shall
also state the current Conversion Price (as defined below) and the date on which
the right to convert such Series C Preferred Stock into Common Stock will
expire. If fewer than all the Series C Preferred Stock is to be redeemed, the
notice of redemption shall identify the Series C Preferred Stock to be redeemed.
On or prior to the Business Day prior to the redemption date
specified in the notice of redemption given as provided in this Section, the
Company will deposit with one or more paying agents (or, if the Company is
acting as its own paying agent, set aside, segregate and hold in trust) an
amount of money sufficient
93845.01
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to redeem on the redemption date all the Series C Preferred Stock so called for
redemption (other than those shares theretofore surrendered for conversion into
Common Stock) at the appropriate redemption price, together with accrued
dividends to the date fixed for redemption. If any shares of Series C Preferred
Stock called for redemption are converted pursuant hereto, any money deposited
with any paying agent or so segregated and held in trust for the redemption of
such shares of Series C Preferred Stock 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 shares of Series C Preferred Stock are
to be redeemed, the Company shall select the shares of Series C Preferred Stock
to be redeemed by lot or, in its sole discretion, on a pro rata basis.
Section 5.3 Payment of Series C Preferred Stock Called for
Redemption. If notice of redemption has been given as above provided, the Series
C Preferred Stock 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 dividends thereon accrued to the date fixed for
redemption, and on and after said date (unless the Company shall default in the
payment of such redemption price, together with dividends thereon accrued to
said date), dividends on the Series C Preferred Stock so called for redemption
shall cease to accrue, and such Series C Preferred Stock 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 the holders thereof shall
have no right in respect of such shares of Series C Preferred Stock except the
right to receive the redemption price thereof and dividends thereon to the date
fixed for redemption. On presentation and surrender of Series C Preferred Stock
at a place of payment in said notice specified, the said Series C Preferred
Stock shall be paid and redeemed by the Company at the applicable redemption
price, together with dividends accrued thereon to the date fixed for redemption.
Section 5.4 Conversion Arrangement on Call for Redemption. In
connection with any redemption of Series C Preferred Stock, the Company may
arrange for the purchase and conversion of any Series C Preferred Stock by an
agreement with one or more investment bankers or other purchasers to purchase
such Series C Preferred Stock by paying to the Company or a paying agent
designated by the Company in trust for the holders of Series C Preferred Stock,
on or before the date fixed for redemption, an amount not less than the
applicable redemption price, together with dividends accrued to the date fixed
for redemption, of such Series C Preferred Stock. Notwithstanding anything to
the contrary contained in this Section 5, the
93845.01
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obligation of the Company to pay the redemption price of such Series C Preferred
Stock, together with dividends accrued to 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, any Series C Preferred
Stock 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 Section 8) 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 Series C Preferred Stock
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, any payment
agent appointed by the Company 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 Series C Preferred Stock.
Section 5.5. Purchase of Series C Preferred Stock Upon
a Change of Control.
Section 5.5.1 If a Change of Control (as defined in Section
11) shall occur at any time, then each holder of Series C Preferred Stock shall
have the right to require that the Company purchase, to the extent that the
Company shall have funds legally available therefor, such holder's shares of
Series C Preferred Stock in whole or in part at a purchase price (the "Change of
Control Purchase Price") in cash in an amount equal to 101% of the Liquidation
Preference of such Series C Preferred Stock, plus accrued and unpaid dividends
thereon, if any, to the repurchase date (the "Change of Control Purchase Date")
pursuant to the offer described below (the "Change of Control Offer") and in
accordance with the other procedures set forth herein.
Section 5.5.2 Within 30 days following any Change of Control,
the Company shall give written notice of such Change of Control to each holder
of Series C Preferred Stock, by first-class mail, postage prepaid, at his
address appearing on the books of the Company, stating, among other things: that
a Change of Control has occurred; the Change of Control Purchase Price and the
Change of Control Purchase Date (which shall be a Business Day no earlier than
30 days nor later than 60 days from the date such notice is mailed, or such
later date as is necessary to comply with requirements under the Exchange Act);
that any shares of Series C Preferred Stock not tendered will continue to accrue
dividends; that, unless the Company defaults in the payment of the Change of
Control Purchase Price, any shares of Series C Preferred Stock accepted for
payment pursuant to the Change of Control Offer shall cease to accrue dividends
after the Change of Control Purchase Date; and certain other procedures that a
holder
93845.01
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of Series C Preferred Stock must follow to accept a Change of Control Offer or
to withdraw such acceptance.
Section 5.5.3 The Company will comply with the applicable
tender offer rules, including Rule 13e-4 under the Exchange Act, and any other
applicable securities laws or regulations in connection with a Change of Control
Offer.
Section 5.5.4 The Company will not, and will not permit any
subsidiary to, create or permit to exist or become effective any restriction
that would materially impair the ability of the Company to make a Change of
Control Offer to purchase the Series C Preferred Stock or, if such Change of
Control Offer is made, to pay for the Series C Preferred Stock tendered for
purchase.
Section 6. Reacquired Shares. Any shares of Series C Preferred
Stock converted, redeemed, purchased or otherwise acquired by the Company in any
manner whatsoever shall be retired and canceled promptly after the acquisition
thereof. All such shares of Series C Preferred Stock shall upon their
cancellation, and upon the filing of an appropriate certificate with the
Secretary of State of the State of Delaware, become authorized but unissued
shares of Preferred Stock, par value $.01 per share, of the Company,
undesignated as to series, and may be reissued as part of another series of
Preferred Stock, par value $.01 per share, of the Company subject to the
conditions or restrictions on issuance set forth herein.
Section 7. Liquidation, Dissolution or Winding Up.
Section 7.1 Bankruptcy or Insolvency. If the Company shall
commence a voluntary case under the Federal bankruptcy laws or any other
applicable Federal or State bankruptcy, insolvency or similar law, or consent to
the entry of an order for relief in an involuntary case under any such law or to
the appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or other similar official) of the Company or of any substantial
part of its property, or make an assignment for the benefit of its creditors, or
admit in writing its inability to pay its debts generally as they become due, or
if a decree or order for relief in respect of the Company shall be entered by a
court having jurisdiction in the premises in an involuntary case under the
Federal bankruptcy laws or any other applicable Federal or State bankruptcy,
insolvency or similar law, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or other similar official) of the Company or
any substantial part of its property, or ordering the winding up or liquidation
of its affairs, and any such decree or order shall be unstayed and in effect for
a period of 90 consecutive days and on account of any such event the Company
shall liquidate, dissolve or wind up, or if the Company shall otherwise
liquidate, dissolve or wind up, no
93845.01
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distribution shall be made (i) to the holders of shares of Junior Stock unless,
prior thereto, the holders of shares of Series C Preferred Stock, subject to
Section 8, shall have received the Liquidation Preference with respect to each
share, or (ii) to the holders of shares of Parity Stock, except distributions
made ratably on the Series C Preferred Stock and all Parity Stock in proportion
to the total amounts to which the holders of all shares of the Series C
Preferred Stock and Parity Stock are entitled upon such liquidation, dissolution
or winding up. "Liquidation Preference" shall mean $1,000.00 per share of Series
C Preferred Stock, plus an amount equal to all accrued and unpaid dividends
thereon. After payment of the full amount to which the holders of Series C
Preferred Stock are entitled as provided in this Section 7.1, such holders shall
have no further right or claim to any of the remaining assets of the Company.
Section 7.2 Consolidation or Merger. Neither the
consolidation, merger or other business combination of the Company with or into
any other person or persons nor the sale, lease, exchange or other transfer of
all or substantially all the assets of the Company shall be deemed to be a
liquidation, dissolution or winding up of the Company for purposes of this
Section 7.
Section 7.3 Proportionate Amount. The Liquidation Preference
with respect to each fractional share of Series C Preferred Stock outstanding
shall be equal to a ratably proportionate amount of the Liquidation Preference
with respect to each outstanding share of Series C Preferred Stock.
SECTION 8.
CONVERSION OF SERIES C PREFERRED STOCK
Section 8.1 Right to Convert. Subject to and upon compliance
with the provisions of this Certificate of Designation, the holder of any share
of Series C Preferred Stock shall have the right, at his option, at any time
(except that, with respect to any shares of Series C Preferred Stock which shall
be called for redemption or delivered for repurchase, such right shall
terminate, except as provided in the third paragraph of Section 8.2, at the
close of business on the last Trading Day prior to the date fixed for redemption
of such shares of Series C Preferred Stock unless the Company shall default in
payment due upon redemption thereof) to convert any such share into that number
of fully paid and nonassessable shares of Common Stock (as such shares shall
then be constituted) obtained by dividing $1,000.00 for each such share so
converted by the Conversion Price in effect at such time, by surrender of the
shares so to be converted in the manner provided in Section 8.2. A holder of
Series C Preferred Stock is not entitled to any rights of a holder of Common
Stock until such holder has converted his Series
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C Preferred Stock to Common Stock, and only to the extent such Series C
Preferred Stock is deemed to have been converted to Common Stock under this
Section 8.
Section 8.2 Exercise of Conversion Privilege; Issuance of Common
Stock on Conversion; No Adjustment for Dividends. In order to exercise the
conversion privilege with respect to any Series C Preferred Stock, the holder of
any such share of Series C Preferred Stock to be converted in whole or in part
shall surrender such share of Series C Preferred Stock, duly endorsed, at the
principal office of the Company or with the Transfer Agent for the Common Stock,
and shall give written notice of conversion in the form provided on the share of
Series C Preferred Stock (or such other notice which is acceptable to the
Company) to the office or agency that the holder elects to convert such shares
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 8.7. Each such
share surrendered for conversion shall, unless the shares issuable on conversion
are to be issued in the same name as the registration of such share of Series C
Preferred Stock, 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.
As promptly as practicable after satisfaction of the
requirements for conversion set forth above, subject to compliance with any
restrictions on transfer if shares issuable on conversion are to be issued in a
name other than that of the shareholder (as if such transfer were a transfer of
the shares so converted), the Company shall issue and shall deliver to such
holder at the address designated in the notice of conversion, a certificate or
certificates for the number of full shares issuable upon the conversion of such
shares in accordance with the provisions of this Section 8 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 8. In case any certificate
shall be surrendered for partial conversion, the Company shall issue and deliver
to the holder of the certificate so surrendered, without charge to him, a new
certificate or certificates in an aggregate share amount equal to the
unconverted portion of the surrendered certificate.
Each conversion shall be deemed to have been effected as to any
such certificate on the date on which the requirements set forth above in this
Section 8.2 have been satisfied as to such certificate, 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,
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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 Series C Preferred Stock shall have been surrendered.
Section 8.3 Cash Payments in Lieu of Fractional Shares. No
fractional shares of Common Stock or scrip representing fractional shares shall
be issued upon conversion of Series C Preferred Stock. If more than one
certificate for shares of Preferred Stock shall be surrendered for conversion at
one time by the same holder, the number of full shares which shall be issuable
upon conversion shall be computed on the basis of the aggregate shares of Series
C Preferred Stock (or specified portions thereof to the extent permitted hereby)
so surrendered. If any fractional share of stock would be issuable upon the
conversion of any Series C Preferred Stock, the Company shall make an adjustment
therefor in cash at the current market value thereof. 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 Series C Preferred Stock is deemed to
have been converted and such Closing Price shall be determined as provided in
Section 8.5.7.
Section 8.4 Conversion Price. The conversion price shall be
$53.00 (herein called the "Conversion Price") subject to adjustment as provided
in this Section 8.
Section 8.5 Adjustment of Conversion Price. The Conversion Price
shall be adjusted from time to time by the Company as follows:
Section 8.5.1 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 the numerator of which shall be the number
of shares of Common Stock outstanding at the close of business on the Record
Date (as defined in Section 8.5.7) fixed for such determination and the
denominator of which 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. The Company will not pay any dividend or make any
distribution on shares of Common Stock held in the treasury of the Company.
93845.01
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Section 8.5.2 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 45 days after the date fixed for determination of
stockholders entitled to receive such rights or warrants) to subscribe for or
purchase shares of Common Stock at a price per share less than the Current
Market Price (as defined in Section 8.5.7) on the Record Date fixed for
determination of stockholders entitled to receive such rights or warrants, the
Conversion Price shall be adjusted so that the same shall equal the price
determined by multiplying the Conversion Price in effect at the opening of
business on the date after the Record Date by a fraction the numerator of which
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 would purchase at such
Current Market Price, and the denominator of which 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 after 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 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.
Section 8.5.3 In case 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,
93845.01
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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.
Section 8.5.4 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 8.5.1 applies) or evidences of its indebtedness or assets (including
securities, but excluding any rights or warrants referred to in Section 8.5.2,
and excluding any dividend or distribution (x) in connection with the
liquidation, dissolution or winding-up of the Company, whether voluntary or
involuntary, (y) exclusively in cash or (z) referred to in Section 8.5.1 (any of
the foregoing hereinafter in this Section 8.5.4 called 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 8.5.7) with respect to such distribution by a fraction of which the
numerator shall be the Current Market Price (determined as provided in Section
8.5.7) on such date less the fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a resolution
of such board) 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 holder
of Series C Preferred Stock shall have the right to receive upon conversion the
amount of Securities such holder would have received had such holder converted
each Series C Preferred Stock on such 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 8.5.4 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 used in computing the
Current Market Price pursuant to Section 8.5.7 to the extent possible.
Notwithstanding the foregoing provisions of this Section 8.5.4,
no adjustment shall be made hereunder for any distribution of Securities if the
Company makes proper provision so that each holder of Series C Preferred Stock
who converts such Series C
93845.01
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Preferred Stock after the date fixed for determination of stockholders entitled
to receive such distribution shall be entitled to receive upon such conversion,
in addition to the shares of Common Stock issuable upon such conversion, the
amount and kind of Securities that such holder would have been entitled to
receive if such holder had, immediately prior to such determination date,
converted such Series C Preferred Stock into Common Stock; provided that, with
respect to any Securities that are convertible, exchangeable or exercisable, the
foregoing provision shall only apply to the extent (and so long as) the
Securities receivable upon conversion of such Series C Preferred Stock would be
convertible, exchangeable or exercisable, as applicable, without any loss of
rights or privileges for a period of at least 60 days following conversion of
such Series C Preferred Stock.
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 not be deemed distributed for
purposes of this Section 8.5.4 (and no adjustment to the Conversion Price under
Section 8.5.4 will be required) until the occurrence of the earliest Trigger
Event. In addition, in the event of any distribution of rights or warrants, or
any Trigger Event with respect thereto, that shall have resulted in an
adjustment to the Conversion Price under this Section 8.5.4, (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 by any holder thereof, the Conversion Price shall be readjusted
as if such issuance had not occurred.
For purposes of this Section 8.5.4 and Sections 8.5.1 and 8.5.2,
any dividend or distribution to which this Section 8.5.4 is applicable that also
includes shares of Common Stock, or rights or warrants to subscribe for or
purchase shares of Common Stock (or both), shall be deemed instead to be (1) a
dividend or distribution of the evidences of indebtedness, assets or shares of
capital stock other than such shares of Common Stock or rights
93845.01
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or warrants (and any Conversion Price reduction required by this Section 8.5.4
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 8.5.1 and 8.5.2 with respect to such dividend or distribution shall
then be made, except (A) the Record Date of such dividend or distribution shall
be substituted as "the date fixed for the determination of stockholders entitled
to receive such dividend or other distribution" and "the date fixed for such
determination" within the meaning of Sections 8.5.1 and 8.5.2 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 8.5.1).
Section 8.5.5 In case the Company shall, by dividend or
otherwise, distribute to all holders of its Common Stock cash (excluding any
cash that is distributed upon a merger or consolidation to which Section 8.6
applies or as part of a distribution referred to in Section 8.5.4) 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
8.5.5 has been made, and (2) the aggregate of any cash plus the fair market
value (as determined by the Board of Directors, whose determination shall be
conclusive and described in a resolution of such board) 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 8.5.6 has been made, exceeds 20.0% of the product
of the Current Market Price (determined as provided in Section 8.5.7) 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, unless the Company elects to reserve
such cash for distribution to the holders of the Series C Preferred Stock upon
the conversion of the Series C Preferred Stock so that any such holder
converting Series C Preferred Stock will receive upon such conversion, in
addition to the shares of Common Stock to which such holder is entitled, the
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 Series C Preferred Stock into Common Stock, 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
date by a fraction (i) the numerator of which shall be equal to the Current
Market Price on the Record Date
93845.01
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less an amount equal to the quotient of (x) the excess of such combined amount
over such 20.0% 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
Series C Preferred Stock shareholder shall have the right to receive upon
conversion the amount of cash such holder would have received had such holder
converted each share of Series C Preferred Stock on the Record Date. In the
event that such dividend or distribution is not so paid or made, the Conversion
Price shall again be adjusted to be the Conversion Price which would then be in
effect if such dividend or distribution had not been declared.
Section 8.5.6 In case a tender offer made by the Company or any
of its subsidiaries 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
resolution of such board) that combined together with (1) the aggregate of the
cash plus the fair market value (as determined by the Board of Directors, whose
determination shall be conclusive and described in a resolution of such board),
as of the expiration of such tender offer, of consideration payable in respect
of any other tender offer, 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 8.5.6 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 8.5.5 has been made,
exceeds 20.0% of the product of the Current Market Price (determined as provided
in Section 8.5.7) 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
93845.01
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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 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.
Section 8.5.7 For purposes of this section 8.5, the following
terms shall have the meaning indicated:
(1) "Closing Price" with respect to any securities on any day
shall mean the closing sale price regular way on such day or, in case no such
sale takes place on such day, the average of the reported closing bid and asked
prices, regular way, in each case on the New York Stock Exchange, or, if such
security is not listed or admitted to trading on such Exchange, on the principal
national security exchange or quotation system on which such security is quoted
or listed or admitted to trading, or, if not quoted or listed or admitted to
trading on any national securities exchange or quotation system, the average of
the closing bid and asked prices of such security on the over-the-counter market
on the day in question as reported by the National Quotation Bureau
Incorporated, or a similar generally accepted reporting service, or if not so
available, in such manner as furnished by any New York Stock Exchange member
firm selected from time to time by the Board of Directors for that purpose, or a
price determined in good faith by the Board of Directors, whose determination
shall be conclusive and described in a resolution of such board.
(2) "Current Market Price" shall mean the average of the daily
Closing Prices per share of Common Stock for the ten consecutive Trading Days
immediately prior to the date in question; provided, however, that (1) if the
"ex" date (as hereinafter defined) for any event (other than the issuance or
distribution or Change of Control requiring such computation) that requires an
adjustment to the Conversion Price pursuant to
93845.01
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Section 8.5.1, 8.5.2, 8.5.3, 8.5.4, 8.5.5 or 8.5.6 occurs during such ten
consecutive Trading Days, the Closing Price for each Trading Day prior to the
"ex" date for such other event shall be adjusted by multiplying such Closing
Price by the same fraction by which the Conversion Price is so required to be
adjusted as a result of such other event, (2) if the "ex" date for any event
(other than the issuance, distribution or Change of Control requiring such
computation) that requires an adjustment to the Conversion Price pursuant to
Section 8.5.1, 8.5.2, 8.5.3, 8.5.4, 8.5.5 or 8.5.6 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, distribution or Change of Control 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 8.5.4 or 8.5.6, whose determination shall be conclusive and
described in a resolution of such board) 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 Section 8.5.6, 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 or exchange offer requiring such computation) that requires an
adjustment to the Conversion Price pursuant to Section 8.5.1, 8.5.2, 8.5.3,
8.5.4, 8.5.5 or 8.5.6 occurs on or after the Expiration Time for the tender or
exchange offer requiring such computation and prior to the day in question, the
Closing Price for each Trading Day on and after the "ex" date for such other
event shall be adjusted by multiplying such Closing Price by the reciprocal of
the fraction by which the Conversion Price is so required to be adjusted as a
result of such other event. For purposes of this paragraph, the term "ex" date,
(1) when used with respect to any issuance or distribution, means the first date
on which the Common Stock trades regular way in 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
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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 of such offer. Notwithstanding the foregoing, whenever successive
adjustments to the Conversion Price are called for pursuant to this Section 8.5,
such adjustments shall be made to the Current Market Price as may be necessary
or appropriate to effectuate the intent of this Section 8.5 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 that
other 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.
Section 8.5.8 The Company may make such reductions in the
Conversion Price, in addition to those required by Sections 8.5.1, 8.5.2, 8.5.3,
8.5.4, 8.5.5 and 8.5.6 as the Board of Directors considers to be advisable to
avoid or diminish any income tax to holders of Common Stock or rights to
purchase Common Stock resulting from any dividend or distribution of stock (or
rights to acquire stock) or from any event treated as such for income tax
purposes. To the extent permitted by applicable law, the Company from time to
time may reduce the Conversion Price by any amount for any period of time if the
period is at least 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 resolution of such board. Whenever the Conversion Price is
reduced pursuant to the preceding sentence, the Company shall mail to all
holders
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of record of the Series C Preferred Stock a notice of the reduction at least 15
days prior to the date the reduced Conversion Price takes effect, and such
notice shall state the reduced Conversion Price and the period it will be in
effect.
Section 8.5.9 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 8.5.9 are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 8 shall be made by the Company and shall be made to the nearest cent or
to the nearest one one-hundredth of a share, as the case may be.
No adjustment need be made for rights to purchase Common Stock
pursuant to a Company plan for reinvestment of dividends or interest.
No adjustment need be made for a change in the par value, or to
or from no par value, of the Common Stock.
To the extent the Series C Preferred Stock becomes convertible
into cash, assets, property or securities (other than Common Stock of the
Company), no adjustment need be made thereafter as to the cash, assets, property
or such securities (except as such securities may otherwise by their terms
provide), and interest shall not accrue on such cash.
Section 8.5.10 In any case in which this Section 8.5 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 Series C Preferred Stock converted after such Record Date and
before the occurrence of such event the additional shares of Common Stock
issuable upon such conversion by reason of the adjustment required by such event
over and above 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 8.3.
Section 8.6 Effect of Reclassification, Consolidation, Merger or
Sale. If any of the following events occur, namely (i) any reclassification or
change of outstanding shares of Common Stock (other than a change in par value,
or to or from no par value, 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
93845.01
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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, (each of the foregoing being
referred to as a "Transaction"), each share of Series C Preferred Stock then
outstanding shall thereafter 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 share of Series C Preferred Stock (assuming, for such
purposes, a sufficient number of authorized shares of Common Stock available to
convert all such Series C Preferred Stock) immediately prior to such
reclassification, change, consolidation, merger, combination, sale or
conveyance, assuming each 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 reclassification, change, consolidation, merger,
combination, sale or conveyance (provided that, if the kind or amount of
securities, cash or other property receivable upon such reclassification,
change, consolidation, merger, combination, sale or conveyance is not the same
for each share of Common Stock in respect of which such rights of election shall
not have been exercised ("non-electing share"), then for the purposes of this
Section 8.6 the kind and amount of securities, cash or other property receivable
upon such reclassification, change, consolidation, merger, combination, sale or
conveyance for each non-electing share shall be deemed to be the kind and amount
so receivable per share by a plurality of the non-electing shares).
Notwithstanding anything contained herein to the contrary, the
Company will not effect any Transaction unless, prior to the consummation
thereof, (i) the Surviving Person thereof shall assume, by written instrument
mailed to each holder of shares of Series C Preferred Stock if such shares are
held by 50 or fewer holders or groups of affiliated holders or to each Transfer
Agent for the shares of Series C Preferred Stock if such shares are held by a
greater number of holders, the obligation to deliver to such holder such stock,
securities or other property or assets (including cash) with respect to or in
exchange for Common Stock to which, in accordance with the foregoing provisions,
such holder is entitled and (ii) proper provision is made to ensure that the
holders of shares of Series C Preferred Stock will be entitled to receive the
benefits afforded by Section 8.6. Such written instrument should provide for
adjustments which shall be as nearly as equivalent as may be practicable to the
adjustments provided for in this Section 8.6.
The above provisions of this Section shall similarly apply to
successive reclassifications, changes, consolidations, mergers, combinations,
sales and conveyances.
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If this Section 8.6 applies to any event or occurrence, Section
8.5 shall not apply.
Section 8.7 Transfer or Similar Taxes on Shares Issued. The issue
of stock certificates on conversions of Series C Preferred Stock shall be made
without charge to the converting holder of Series C Preferred Stock for any
transfer or similar tax in respect of the issue thereof. The Company shall not,
however, be required to pay any such 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 Series C Preferred Stock 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 8.8 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 Series C Preferred Stock from time
to time as such Series C Preferred Stock is 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 Series C Preferred Stock, 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 which may
be issued upon conversion of Series C Preferred Stock will, upon issue, be fully
paid and nonassessable by the Company and free from all transfer or similar
taxes as described in Section 8.7, 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 New York Stock Exchange or any other national
securities exchange, the Company will, if permitted by the rules of such
exchange, list and keep listed, so long as the Common Stock shall be so listed
on such exchange, all Common Stock issuable upon conversion of the Series C
Preferred Stock.
Section 8.9 Notice to Stockholders Prior to Certain
Actions. In case:
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(a) the Company makes any distribution or dividend that
would require an adjustment in the Conversion Price pursuant to
Section 8.5; or
(b) the Company takes any action that would result in a
Transaction as defined in Section 8.6; or
(c) of the voluntary or involuntary dissolution,
liquidation or winding-up of the Company,
the Company shall cause to be mailed to each holder of Series C Preferred Stock
at his address appearing on the books of the Company, as promptly as possible
but in any event at least 15 days prior to the applicable date hereinafter
specified, a notice stating (x) the date on which a record date is to be taken
for the purpose of such dividend, distribution, 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, rights or warrants are to
be determined or (y) the date on which such reclassification, change,
consolidation, merger, sale, conveyance, 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 record of Common Stock shall be entitled to exchange
their Common Stock for securities or other property deliverable upon such
reclassification, change consolidation, merger, sale, conveyance, 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, change, consolidation, merger, sale, conveyance,
transfer, dissolution, liquidation or winding-up. Neither the failure to give
such notice nor any defect therein shall affect the legality or validity of the
proceedings referenced in clauses (a) through (c) of this Section 8.9.
Section 9. Reports as to Adjustments. Upon any adjustment of
the Conversion Price then in effect and any increase or decrease in the number
of shares of Common Stock issuable upon the operation of the conversion set
forth in Section 8, then, and in each such case, the Company shall promptly
deliver to the Transfer Agent for the Series C Preferred Stock and the Transfer
Agent for the Common Stock, a certificate signed by the President or a Vice
President and by the Treasurer or an Assistant Treasurer or the Secretary or an
Assistant Secretary of the Company setting forth in reasonable detail the event
requiring the adjustment and the method by which such adjustment was calculated
and specifying the Conversion Price then in effect following such adjustment and
the increased or decreased number of shares issuable upon the conversion set
forth in Section 8. The Company shall also promptly after the making of such
adjustment give written notice to the registered holders of the Series C
Preferred Stock at the address of each holder as
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shown on the books of the Company maintained by the Transfer Agent thereof,
which notice shall state the Conversion Price then in effect, as adjusted, and
the increased or decreased number of shares issuable upon the exercise of the
right of conversion granted by Section 8, and shall set forth in reasonable
detail the method of calculation of each with a brief statement of the facts
requiring such adjustment. Where appropriate, such notice to holders of the
Series C Preferred Stock may be given in advance and included as part of the
notice required under the provisions of Section 8.9.
Section 10. Certain Covenants. Any registered holder of Series
C Preferred Stock may proceed to protect and enforce its rights and the rights
of such holders by any available remedy by proceeding at law or in equity to
protect and enforce any such rights, whether for the specific enforcement of any
provision in this Certificate of Designation or in aid of the exercise of any
power granted herein, or to enforce any other proper remedy.
Section 11. Definitions. For the purposes of this
Certificate of Designation of Series C Preferred Stock, the
following terms shall have the meanings indicated:
"Acquisition Prices" shall mean the volume weighted average of
the per share prices paid by a specified person or group in acquiring Voting
Stock.
"Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act.
"Business Day" shall mean a day, other than a Saturday, a
Sunday or other day on which the banking institutions in the State of New York,
the State of California or the Commonwealth of Massachusetts are authorized or
obligated by law or executive order to close or a day which is declared a
national or New York, California or Massachusetts state holiday.
"Change in Control" shall mean an event or series of events
pursuant to which (i) any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act) acquires beneficial ownership (as
determined in accordance with Rule 13d-3 under the Exchange Act), directly or
indirectly, of more than 50% of the total Voting Stock of the Company at an
Acquisition Price less than the Conversion Price then in effect with respect to
the Series C Preferred Stock and (ii) holders of Common Stock receive
consideration which is not all or substantially all common stock that is (or
upon consummation of or immediately following such event or events will be)
listed on a United States national securities exchange or approved for quotation
on the Nasdaq National Market or any similar United States system of automated
dissemination of quotations of
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securities prices; provided, however, that any such person or group shall not be
deemed to be the beneficial owner of, or to beneficially own, any Voting Stock
tendered into a tender offer until such tendered Voting Stock is accepted for
purchase under the tender offer.
Commission: The term "Commission" shall mean the
Securities and Exchange Commission.
Company: The term "Company" shall mean SoftKey
International Inc., a Delaware corporation.
Conversion Price: The term "Conversion Price" shall
have the meaning specified in Section 8.4.
Exchange Act: The term "Exchange Act" means the
Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
Junior Stock: The term "Junior Stock" shall have the
meaning set forth in Section 3.2.
Parity Stock: The term "Parity Stock" shall have the
meaning set forth in Section 3.4.5.
person: The terms "person" shall mean a corporation, an
association, a partnership, an individual, a joint venture, a joint stock
company, a trust, an unincorporated organization or a government or an agency or
a political subdivision thereof.
subsidiary: The term "subsidiary" of any specified person
shall mean (i) a corporation a majority of whose capital stock with voting power
under ordinary circumstances, to elect directors is at the time directly or
indirectly owned by such person or (ii) any other person (other than a
corporation) in which such person or a subsidiary or subsidiaries of such person
directly or indirectly, at the date of determination thereof, has at least
majority ownership.
Surviving Person shall mean the continuing or surviving person
of a merger, consolidation or other corporate combination, the person receiving
a transfer of all or substantially all of the properties and assets of the
Company, or the person consolidating with or merging into the Company in a
merger, consolidation or other combination in which the Company is the
continuing or surviving person, but in connection with which Series C Preferred
Stock or Common Stock of the Company is exchanged, converted or reinstated into
the securities of any other person or cash or any other property.
Voting Stock: The term "Voting Stock" means stock of
the class or classes pursuant to which the holders thereof have
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the general voting power under ordinary circumstances to elect at least a
majority of the board of directors, managers or trustees of a corporation
(irrespective of whether or not at the time stock of any other class or classes
shall have or might have voting power by reason of the happening of any
contingency).
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