EXHIBIT 4.1
EXECUTION COPY
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MAGNA ENTERTAINMENT CORP.
8.55% CONVERTIBLE SUBORDINATED NOTES DUE JUNE 15, 2010
--------------------
INDENTURE
Dated as of June 2, 2003
--------------------
The Bank of New York
Trustee
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CROSS-REFERENCE TABLE*
---------------------
Trust Indenture Indenture
Act Section Section
- --------------------- ---------
310(a)(1)..................................................................... 9.10
(a)(2)..................................................................... 9.10
(a)(3)..................................................................... n/a
(a)(4)..................................................................... n/a
(a)(5)..................................................................... 9.10
(b)........................................................................ 9.10
(c)........................................................................ n/a
311(a)........................................................................ 9.11
(b)........................................................................ 9.11
(c)........................................................................ n/a
312(a)........................................................................ 2.05
(b)........................................................................ 12.03
(c)........................................................................ 12.03
313(a)........................................................................ 9.06
(b)(1)..................................................................... n/a
(b)(2)..................................................................... 9.06, 9.07
(c)........................................................................ 9.06, 12.02
(d)........................................................................ 9.06
314(a)........................................................................ 6.03
(a)(4)..................................................................... 12.05
(b)........................................................................ n/a
(c)(1)..................................................................... n/a
(c)(2)..................................................................... n/a
(c)(3)..................................................................... n/a
(d)........................................................................ n/a
(e)........................................................................ 12.05
(f)........................................................................ n/a
315(a)........................................................................ n/a
(b)........................................................................ n/a
(c)........................................................................ n/a
(d)........................................................................ n/a
(e)........................................................................ n/a
316(a)(last sentence)......................................................... n/a
(a)(1)(A).................................................................. n/a
(a)(1)(B).................................................................. n/a
(a)(2)..................................................................... n/a
i
(b)........................................................................ 4.7
(c)........................................................................ n/a
317(a)(1)..................................................................... n/a
(a)(2)..................................................................... n/a
(b)........................................................................ n/a
318(a)........................................................................ n/a
(b)........................................................................ n/a
(c)........................................................................ 12.01
- ------------------
"n/a" means not applicable.
*This Cross-Reference Table shall not, for any purpose, be deemed to be a part of the Indenture.
ii
TABLE OF CONTENTS
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Page
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ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE 1
Section 1.01. Definitions.....................................................................................1
Section 1.02. Other Definitions...............................................................................8
Section 1.03. Incorporation by Reference of Trust Indenture Act...............................................8
Section 1.04. Rules of Construction...........................................................................9
ARTICLE 2. THE NOTES 9
Section 2.01. Form and Dating.................................................................................9
Section 2.02. Execution and Authentication...................................................................10
Section 2.03. Registrar, Paying Agent and Conversion Agent...................................................11
Section 2.04. Paying Agent to Hold Money in Trust............................................................11
Section 2.05. Holder Lists...................................................................................11
Section 2.06. Transfer and Exchange..........................................................................12
Section 2.07. Replacement Notes..............................................................................13
Section 2.08. Outstanding Notes..............................................................................13
Section 2.09. Treasury Notes.................................................................................14
Section 2.10. Temporary Notes................................................................................14
Section 2.11. Cancellation...................................................................................14
Section 2.12. Additional Transfer and Exchange Requirements..................................................14
Section 2.13. CUSIP, ISIN and Common Code Numbers............................................................19
Section 2.14. Defaulted Interest.............................................................................19
ARTICLE 3. REDEMPTION AND PREPAYMENT 20
Section 3.01. Notices to Trustee.............................................................................20
Section 3.02. Selection of Notes to Be Redeemed..............................................................20
Section 3.03. Notice of Redemption...........................................................................20
Section 3.04. Effect of Notice of Redemption.................................................................21
Section 3.05. Deposit of Redemption Price....................................................................21
Section 3.06. Notes Redeemed in Part.........................................................................22
Section 3.07. Optional Redemption............................................................................22
Section 3.08. Mandatory Redemption; No Sinking Fund..........................................................22
ARTICLE 4. CONVERSION 22
Section 4.01. Conversion Privilege...........................................................................22
Section 4.02. Conversion Procedure...........................................................................23
Section 4.03. Fractional Shares..............................................................................24
Section 4.04. Taxes on Conversion............................................................................24
Section 4.05. Company to Provide Stock.......................................................................25
Section 4.06. Adjustment of Conversion Price.................................................................25
Section 4.07. No Adjustment..................................................................................29
Section 4.08. Other Adjustments..............................................................................30
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Section 4.09. Adjustments for Tax Purposes...................................................................30
Section 4.10. Notice of Adjustment...........................................................................30
Section 4.11. Notice of Certain Transactions.................................................................30
Section 4.12. Effect of Reclassifications, Consolidations, Mergers or Sales on Conversion Privilege..........31
Section 4.13. Trustee's Disclaimer...........................................................................32
Section 4.14. Voluntary Reduction............................................................................32
ARTICLE 5. SUBORDINATION 32
Section 5.01. Agreement to Subordinate; Pari Passu Obligations...............................................32
Section 5.02. Liquidation; Dissolution; Bankruptcy...........................................................33
Section 5.03. Default on Senior Indebtedness.................................................................34
Section 5.04. Acceleration of Notes..........................................................................34
Section 5.05. When Distribution Must Be Paid Over............................................................34
Section 5.06. Notice by Company..............................................................................34
Section 5.07. Subrogation....................................................................................34
Section 5.08. Relative Rights................................................................................35
Section 5.09. Subordination May Not Be Impaired by Company...................................................35
Section 5.10. Distribution or Notice to Representative.......................................................35
Section 5.11. Rights of Trustee and Paying Agent.............................................................35
Section 5.12. Authorization to Effect Subordination..........................................................36
Section 5.13. Payments of Notes Permitted....................................................................36
Section 5.14. Trustee Not Fiduciary for Holders of Senior Indebtedness.......................................36
ARTICLE 6. COVENANTS 37
Section 6.01. Payment of Notes...............................................................................37
Section 6.02. Maintenance of Office or Agency................................................................37
Section 6.03. Reports........................................................................................38
Section 6.04. Rule 144A Information Requirement..............................................................38
Section 6.05. Compliance Certificate.........................................................................38
Section 6.06. Taxes..........................................................................................39
Section 6.07. Stay, Extension and Usury Laws.................................................................39
Section 6.08. Corporate Existence............................................................................39
Section 6.09. Offer to Repurchase Upon Change in Control.....................................................39
Section 6.10. Payment of Additional Interest.................................................................43
ARTICLE 7. SUCCESSORS 43
Section 7.01. Merger, Consolidation, or Sale of Assets.......................................................43
Section 7.02. Successor Corporation Substituted..............................................................44
ARTICLE 8. DEFAULTS AND REMEDIES 44
Section 8.01. Events of Default..............................................................................44
Section 8.02. Acceleration...................................................................................45
Section 8.03. Other Remedies.................................................................................45
Section 8.04. Waiver of Past Defaults........................................................................45
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Section 8.05. Control by Majority............................................................................46
Section 8.06. Limitation on Suits............................................................................46
Section 8.07. Rights of Holders of Notes to Receive Payment..................................................47
Section 8.08. Collection Suit by Trustee.....................................................................47
Section 8.09. Trustee May File Proofs of Claim...............................................................47
Section 8.10. Priorities.....................................................................................47
Section 8.11. Undertaking for Costs..........................................................................48
ARTICLE 9. TRUSTEE 48
Section 9.01. Duties of Trustee..............................................................................48
Section 9.02. Rights of Trustee..............................................................................49
Section 9.03. Individual Rights of Trustee...................................................................51
Section 9.04. Trustee's Disclaimer...........................................................................51
Section 9.05. Notice of Defaults.............................................................................51
Section 9.06. Reports by Trustee to Holders of the Notes.....................................................51
Section 9.07. Compensation and Indemnity.....................................................................51
Section 9.08. Replacement of Trustee.........................................................................52
Section 9.09. Successor Trustee by Merger, etc...............................................................53
Section 9.10. Eligibility; Disqualification..................................................................54
Section 9.11. Preferential Collection of Claims Against Company..............................................54
ARTICLE 10. SATISFACTION AND DISCHARGE 54
Section 10.01. Satisfaction and Discharge.....................................................................54
Section 10.02. Application of Trust Money; Reinstatement......................................................55
Section 10.03. Repayment to Company...........................................................................55
ARTICLE 11. AMENDMENT, SUPPLEMENT AND WAIVER 56
Section 11.01. Without Consent of Holders of Notes............................................................56
Section 11.02. With Consent of Holders of Notes...............................................................56
Section 11.03. Compliance with Trust Indenture Act............................................................58
Section 11.04. Revocation and Effect of Consents..............................................................58
Section 11.05. Notation on or Exchange of Notes...............................................................58
Section 11.06. Trustee to Sign Amendments, etc................................................................59
ARTICLE 12. MISCELLANEOUS 59
Section 12.01. Trust Indenture Act Controls...................................................................59
Section 12.02. Notices........................................................................................59
Section 12.03. Communication by Holders of Notes with Other Holders of Notes..................................60
Section 12.04. Certificate and Opinion as to Conditions Precedent.............................................61
Section 12.05. Statements Required in Certificate or Opinion..................................................61
Section 12.06. Rules by Trustee and Agents....................................................................61
Section 12.07. No Personal Liability of Directors, Officers, Employees and Stockholders.......................61
Section 12.08. Governing Law; Waiver of Jury Trial............................................................62
Section 12.09. No Adverse Interpretation of Other Agreements..................................................62
Section 12.10. Successors.....................................................................................62
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Section 12.11. Severability...................................................................................62
Section 12.12. Counterpart Originals..........................................................................62
Section 12.13. Table of Contents, Headings, etc...............................................................62
EXHIBITS
Exhibit A FORM OF NOTE
Exhibit B FORM OF CERTIFICATE OF TRANSFER
vi
INDENTURE dated as of June 2, 2003, between Magna Entertainment Corp., a
Delaware corporation (the "Company"), and The Bank of New York, a New York
banking corporation, as trustee (the "Trustee").
The Company and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the Holders of the 8.55%
Convertible Subordinated Notes due June 15, 2010 (the "Notes"):
ARTICLE 1.
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions.
"144A Global Note" means a Global Note substantially in the form of
Exhibit A hereto bearing the Global Note Legend and the Private Placement
Legend and deposited with or on behalf of, and registered in the name of, the
Common Depositary or its nominee for the accounts of Euroclear or Clearstream
that will be issued in a denomination equal to the outstanding principal
amount of the Notes sold on the date hereof or transferred or exchanged, in
each case, in reliance on Rule 144A.
"Additional Interest" means all Additional Interest, if any, at the time
of determination pursuant to Section 3 of the Registration Rights Agreement.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled
by" and "under common control with"), as used with respect to any Person,
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of such Person, whether
through the ownership of voting securities, by agreement or otherwise;
provided, however, that beneficial ownership of 10% or more of the aggregate
voting power of the voting securities of a Person shall be deemed to be
control.
"Agent" means any Registrar, Paying Agent or Conversion Agent.
"Applicable Procedures" means, with respect to any transfer or exchange
of or for beneficial interests in any Global Note, the rules and procedures of
Euroclear and Clearstream that apply to such transfer or exchange.
"Bankruptcy Law" means Title 11, U.S. Code, the Bankruptcy and Insolvency
Act (Canada), the Companies' Creditors Arrangement Act (Canada) or any similar
U.S. or Canadian federal, state or provincial law for the relief of debtors.
"Board of Directors" means the Board of Directors of the Company, or any
authorized committee of the Board of Directors.
"Broker-Dealer" means any broker or dealer registered under the Exchange
Act.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any determination thereof
is to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means any and all shares, interests, participations,
rights or other equivalents (however designated) of corporate stock (but
excluding any debt security that is convertible into, or exchangeable for,
Capital Stock), including, without limitation, with respect to partnerships,
partnership interests (whether general or limited) and any other interest or
participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, such partnership.
"Clearstream" means Clearstream Banking, societe anonyme, and any and all
successors thereto.
"Closing Sale Price" for any date means the last reported sale price or,
in case no such reported sale takes place on such date, the average of the
reported closing bid and asked prices in either case on NASDAQ or, if the
Class A Subordinate Voting Stock is not then listed or admitted to trading on
NASDAQ, on the principal national securities exchange on which the Class A
Subordinate Voting Stock is then listed or admitted to trading or, if not
listed or admitted to trading on NASDAQ or any national securities exchange,
the last reported sale price of the Class A Subordinate Voting Stock as quoted
on NASDAQ or, in case no reported sale takes place, the average of the closing
bid and asked prices as quoted on NASDAQ or any comparable system or, if the
Class A Subordinate Voting Stock is not quoted on NASDAQ or any comparable
system, the closing sale price or, in case no reported sale takes place, the
average of the closing bid and asked prices, as furnished by any two members
of the National Association of Securities Dealers, Inc. selected from time to
time by the Company for that purpose.
"Class A Subordinate Voting Stock" means the Class A Subordinate Voting
Stock, par value $0.01 per share, of the Company.
"Common Depositary" means a depositary common to Euroclear and
Clearstream, being initially The Bank of New York, until a successor, if any,
shall have been appointed as Common Depositary hereunder and having become
such pursuant to this Indenture, and thereafter Common Depositary shall mean
or include each Person who is then a Common Depositary hereunder.
"Company Request" or "Company Order" means a written request or direction
from the Company to the Trustee signed by two Officers of the Company.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 12.02 hereof or such other address as to which
the Trustee may give notice to the Company and the Holders, or the principal
corporate trust office of any successor Trustee.
"Credit Agreement" means the Amended and Restated Credit Agreement dated
as of June 2, 2003, among the Company, the Guarantors named therein, Bank of
Montreal, acting through its Chicago lending office, as lender and agent, and
BMO Nesbitt Burns, a division of Bank of
2
Montreal, as arranger, as such facility may be further amended, extended,
renewed, restated, supplemented or otherwise modified (in whole or in part,
and without limitation as to amount, terms, conditions, covenants and other
provisions) from time to time, and any agreement (and related document)
governing Indebtedness incurred to refinance, in whole or in part, the
borrowings and commitments then outstanding or permitted to be outstanding
under such facility or a successor facility, whether by the same or any other
lender or group of lenders.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Definitive Note" means a certificated Note registered in the name of the
Holder thereof and issued in accordance with Sections 2.06 and 2.12 hereof,
substantially in the form of Exhibit A hereto except that such Note shall not
bear the Global Note Legend and shall not have the "Schedule of Exchanges of
Interests in the Global Note" attached thereto.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Euroclear" means Euroclear, S.A./N.V., as operator of the Euroclear
system, and any and all successors thereto.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Rate Contract" means, with respect to any Person, any currency
swap agreements, forward exchange rate agreements, foreign currency futures or
options, exchange rate collar agreements, exchange rate insurance and other
agreements or arrangements, or any combination thereof, the principal purpose
of which is to provide protection against fluctuations in currency exchange
rates. An Exchange Rate Contract may also include an Interest Rate Agreement.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time, including those principles
set forth in the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board or in such
other statements by such other entity as have been approved by a significant
segment of the accounting profession, which are in effect from time to time.
"Global Notes" means, individually and collectively, each of the
Restricted Global Notes and the Unrestricted Global Notes, substantially in
the form of Exhibit A hereto issued in accordance with this Indenture.
"Global Note Legend" means the legend set forth in Exhibit A hereto,
which is required to be placed on all Global Notes issued under this
Indenture.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America, and the payment for which the
United States pledges its full faith and credit.
3
"Hedging Obligations" means, with respect to any Person, the obligations
of such Person under (i) Interest Rate Agreements and (ii) other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates or the value of foreign currencies purchased or received by the Company
in the ordinary course of business.
"Holder" means a Person in whose name a Note is registered.
"Indebtedness" means, with respect to any Person, any indebtedness of
such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, the Notes or similar instruments or letters of
credit, bank guarantees or bankers' acceptances, or reimbursement agreements
in respect thereof, or representing the balance deferred and unpaid of the
purchase price of any property, including pursuant to capital leases and
sale-and-leaseback transactions, or representing obligations and liabilities,
contingent or otherwise, in respect of leases required, in conformity with
GAAP, to be accounted for as capitalized lease obligations on such Person's
balance sheet, or representing any hedging obligations under an Exchange Rate
Contract or an Interest Rate Agreement, except any such balance that
constitutes an accrued expense or trade payable, if and to the extent any of
the foregoing indebtedness, other than obligations under an Exchange Rate
Contract or an Interest Rate Agreement, would appear as a liability upon a
balance sheet of such Person prepared in accordance with GAAP, and also
includes, to the extent not otherwise included, the guarantee by such Person
of items that would be included within this definition as Indebtedness of
another Person. The amount of any Indebtedness outstanding as of any date
shall be the accreted value thereof, in the case of any Indebtedness issued
with original issue discount. Indebtedness shall not include liabilities for
taxes of any kind.
"Indenture" means this Indenture, as amended or supplemented from time to
time.
"Indirect Participant" means a Person who holds a beneficial interest in
a Global Note through a Participant.
"Insolvency or Bankruptcy Proceeding" means any insolvency or bankruptcy
proceedings, or any receivership, liquidation, reorganization or other similar
proceedings relative to the Company or to the property of the Company or the
assets of the Company, or in the event of any proceedings for voluntary
liquidation, dissolution or other winding-up of the Company whether or not
involving insolvency or bankruptcy, or any marshalling of the assets and
liabilities of the Company.
"Interest Payment Date" has the meaning specified in paragraph 1 of the
Note, attached as Exhibit A hereto.
"Interest Rate Agreement" means, with respect to any Person, any interest
rate swap agreement, interest rate cap agreement, interest rate collar
agreement or other similar agreement the principal purpose of which is to
protect the party indicated therein against fluctuations in interest rates.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or in London, England or at a place of
payment are authorized by law, regulation or executive order to remain closed.
If a payment date is a Legal Holiday at a place of
4
payment, payment may be made at that place on the next succeeding day that is
not a Legal Holiday, and no interest shall accrue on such payment for the
intervening period.
"NASDAQ" means the Nasdaq National Market.
"Non-U.S. Person" means a Person who is not a U.S. Person.
"Notes" has the meaning assigned to it in the preamble to this Indenture.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, fees and expenses, damages and other
liabilities payable under the documentation governing any Indebtedness.
"Offering" means the offering of the Notes by the Company.
"Officer" means, with respect to any Person, the Chairman of the Board,
the Chief Executive Officer, the President, the Chief Operating Officer, the
Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary, Executive Vice-President or any Vice-President of
such Person.
"Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Section 12.05 hereof.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
12.05 hereof. The counsel may be an employee of or counsel to the Company, any
Subsidiary of the Company or the Trustee.
"Participant" means, with respect to Euroclear or Clearstream, a Person
who has an account with Euroclear or Clearstream, respectively.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or agency or political subdivision
thereof (including any subdivision or ongoing business of any such entity).
"Private Placement Legend" means the legend set forth on Exhibit A hereto
to be placed on all Notes issued under this Indenture, except where otherwise
permitted by the provisions of this Indenture.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Registration Rights Agreement" means the Registration Rights Agreement
dated as of June 2, 2003, by and among the Company and the initial purchasers
named on the signature pages thereof, as such agreement may be amended,
modified or supplemented from time to time.
"Regulation S" means Regulation S promulgated under the Securities Act.
5
"Regulation S Global Note" means a Global Note substantially in the form
of Exhibit A hereto bearing the Global Note Legend, the Private Placement
Legend and deposited with or on behalf of, and registered in the name of, the
Common Depositary or its nominee for the accounts of Euroclear or Clearstream
that will be issued in a denomination equal to the outstanding principal
amount of the Notes sold on the date hereof or transferred or exchanged, in
each case, in reliance on Rule 903 of Regulation S.
"Representative" means the indenture trustee or other trustee, agent or
representative for any Senior Indebtedness.
"Responsible Officer," when used with respect to the Trustee, means any
officer within the Corporate Trust Office of the Trustee (or any successor
group of the Trustee) with direct responsibilities for the administration of
this Indenture and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of his
knowledge of and familiarity with the particular subject.
"Restricted Definitive Note" means a Definitive Note bearing the Private
Placement Legend.
"Restricted Global Note" means a Global Note bearing the Private
Placement Legend.
"Restricted Period" means the "one-year distribution compliance" period
within the meaning of Rule 903 of Regulation S.
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 903" means Rule 903 promulgated under the Securities Act.
"Rule 904" means Rule 904 promulgated under the Securities Act.
"SEC" means the Securities and Exchange Commission or any successor
thereto.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Indebtedness" with respect to the Company means Indebtedness
(including any monetary obligation in respect of the Credit Agreement, and
interest, whether or not allowable, accruing on Indebtedness incurred pursuant
to the Credit Agreement after the filing of a petition initiating any
proceeding under any bankruptcy, insolvency or similar law) of the Company
arising under the Credit Agreement or any other Indebtedness of the Company,
whether outstanding on the date of the Indenture or thereafter created,
incurred, assumed or guaranteed by the Company.
Notwithstanding anything to the contrary in the foregoing, Senior
Indebtedness shall not include: (a) Indebtedness of or amounts owed by the
Company for compensation to employees, or for goods or materials purchased or
for services obtained in the ordinary course of business; or
6
(b) the Company's Indebtedness that expressly provides that it shall not be
senior in right of payment to the Notes or expressly provides that it is on
the same basis as or junior to the Notes.
"Shelf Registration Statement" means the Registration Statement as
defined in the Registration Rights Agreement.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date of this Indenture.
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the total
voting power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers
or trustees thereof is at the time owned or controlled, directly or
indirectly, by such Person or one or more of the other Subsidiaries of such
Person or a combination thereof.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA; provided, however, that in the event the Trust Indenture Act of
1939 is amended after such date, "TIA" means, to the extent required by any
such amendment, the Trust Indenture Act of 1939 as so amended.
"Trading Day" means:
(1) if the Class A Subordinate Voting Stock is quoted on NASDAQ and the
Toronto Stock Exchange, a day on which trades may be made on NASDAQ and the
Toronto Stock Exchange; or
(2) if the Class A Subordinate Voting Stock 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 and the province of
Ontario are authorized or obligated by law, executive order or otherwise to
close.
"Trustee" means the party named as such above until a successor replaces
it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"Unrestricted Definitive Note" means one or more Definitive Notes that do
not bear and are not required to bear the Private Placement Legend.
"Unrestricted Global Note" means a permanent Global Note substantially in
the form of Exhibit A attached hereto that bears the Global Note Legend and
that has the "Schedule of Exchanges of Interests in the Global Note" attached
thereto, and that is deposited with or on behalf of and registered in the name
of the Common Depositary, representing Notes that do not bear the Private
Placement Legend.
"U.S. Person" means a U.S. person as defined in Rule 902(o) under the
Securities Act.
7
"Voting Stock" means any class of Capital Stock or other interests then
outstanding and normally entitled (without regard to the occurrence of any
contingency) to vote in the election of the board of directors, managers or
trustees.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such Person
all the outstanding Capital Stock or other ownership interests of which (other
than directors' qualifying shares) shall at the time be owned by such Person
or by one or more Wholly Owned Subsidiaries of such Person or by such Person
and one or more Wholly Owned Subsidiaries of such Person.
Section 1.02. Other Definitions.
Defined in
Term Section
---- ----------
"Change in Control"................................................................. 6.09
"Change in Control Offer"........................................................... 6.09
"Change in Control Payment"......................................................... 6.09
"Change in Control Payment Date".................................................... 6.09
"Change in Control Payment Notice".................................................. 6.09
"Conversion Agent".................................................................. 2.03
"Conversion Date"................................................................... 4.02
"Conversion Price".................................................................. 4.01
"Determination Date"................................................................ 4.06
"DTC"............................................................................... 2.03
"Event of Default".................................................................. 8.01
"Expiration Date"................................................................... 4.06
"Expiration Time"................................................................... 4.06
"Interest Payment".................................................................. 12.14
"Paying Agent"...................................................................... 2.03
"Purchased Shares".................................................................. 4.06
"Registrar"......................................................................... 2.03
"Restricted Definitive Note"........................................................ 2.12(e)(i)
"Restricted Global Note"............................................................ 2.12(e)(i)
"Rights Plan"....................................................................... 4.06
"tender offer"...................................................................... 4.06
"Transfer Certificate".............................................................. 2.12(e)(i)
"Triggering Distribution"........................................................... 4.06
Section 1.03. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes;
"indenture security holder" means a Holder of a Note;
8
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the Notes means the Company and any successor obligor upon
the Notes.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the
TIA have the meanings so assigned to them.
Section 1.04. Rules of Construction.
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning assigned to
it in accordance with GAAP;
(c) "or" is not exclusive;
(d) words in the singular include the plural, and in the plural include
the singular;
(e) provisions apply to successive events and transactions;
(f) references to sections of or rules under the Securities Act shall be
deemed to include substitute, replacement or successor sections or rules
adopted by the SEC from time to time; and
(g) all references to "$" are to U.S. dollars.
ARTICLE 2.
THE NOTES
Section 2.01. Form and Dating.
(a) General. The Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto. The Notes may have
notations, legends or endorsements required by law, stock exchange rule or
usage. Each Note shall be dated the date of its authentication. The Notes
shall be in minimum denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall constitute, and are
hereby expressly made, a part of this Indenture and the Company and the
Trustee, by their execution and delivery of this Indenture, and each Holder by
its acceptance of the Notes, expressly agree to such terms and provisions and
to be bound thereby. However, to the extent any provision of any Note
conflicts with the express provisions of this Indenture, the provisions of
this Indenture shall govern and be controlling.
9
(b) Global Notes. Notes issued in global form shall be substantially in
the form of Exhibit A attached hereto (including the Global Note Legend
thereon and the "Schedule of Exchanges of Interests in the Global Note"
attached thereto). Notes issued in definitive form shall be substantially in
the form of Exhibit A attached hereto (but without the Global Note Legend
thereon and without the "Schedule of Exchanges of Interests in the Global
Note" attached thereto). Each Global Note shall represent such of the
outstanding Notes as shall be specified therein and each shall provide that it
shall represent the aggregate principal amount of outstanding Notes from time
to time endorsed thereon and that the aggregate principal amount of
outstanding Notes represented thereby may from time to time be reduced or
increased, as appropriate, to reflect exchanges and redemptions. Any
endorsement of a Global Note to reflect the amount of any increase or decrease
in the aggregate principal amount of outstanding Notes represented thereby
shall be made by the Trustee in accordance with instructions given by the
Holder thereof as required by Section 2.12 hereof.
(c) Euroclear and Clearstream Procedures Applicable. The provisions of
the "Operating Procedures of the Euroclear System" and "Terms and Conditions
Governing Use of Euroclear" and the "Management Regulations and Instructions
to Participants" of Clearstream shall be applicable to transfers of beneficial
interests in the Regulation S Global Notes that are held by Participants
through Euroclear or Clearstream.
None of the Company, the Trustee or any Paying Agent will be responsible
or liable for (a) any records relating to or payments made on account of
beneficial interests in a Global Note or (b) maintaining, supervising or
reviewing any records relating to such beneficial interests.
Section 2.02. Execution and Authentication.
Two Officers shall sign the Notes for the Company by manual or facsimile
signature.
If an Officer whose signature is on a Note no longer holds that office at
the time a Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature of
the Trustee. The signature shall be conclusive evidence that the Note has been
authenticated under this Indenture.
Subject to the satisfaction of any conditions set forth herein, the
Trustee shall, upon a Company Order, authenticate Notes for original issue in
the aggregate principal amount of $150,000,000. The aggregate principal amount
of Notes outstanding at any time may not exceed $150,000,000 except as
provided in Section 2.07 hereof.
The Trustee shall act as initial authenticating agent. Thereafter, the
Trustee may, with the consent of the Company, appoint an authenticating agent
acceptable to the Company to authenticate Notes at the Company's expense. An
authenticating agent may authenticate Notes whenever the Trustee may do so.
Each reference in this Indenture to authentication by the Trustee includes
authentication by such Agent. An authenticating agent has the same rights as
an Agent to deal with Holders or an Affiliate of the Company.
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Section 2.03. Registrar, Paying Agent and Conversion Agent.
The Company shall maintain or cause to be maintained an office or agency
where Notes may be presented for registration of transfer or for exchange (the
"Registrar"), an office or agency where Notes may be presented for payment
(the "Paying Agent") and an office or agency where Notes may be presented for
conversion (the "Conversion Agent"). The Registrar shall keep a register of
the Notes and of their registration of transfer and exchange. The Company may
appoint one or more co-registrars and one or more additional paying agents and
conversion agents. The term "Registrar" includes any co-registrar, the term
"Paying Agent" includes any additional paying agent and the term "Conversion
Agent" includes any additional conversion agent. The Company may change any
Paying Agent, Conversion Agent or Registrar without notice to any Holder. The
Company shall notify the Trustee in writing of the name and address of any
Agent not a party to this Indenture. If the Company fails to appoint or
maintain another entity as Registrar, Paying Agent or Conversion Agent, the
Trustee hereby agrees to act as such. The Company or any of its Subsidiaries
may act as Paying Agent, Conversion Agent or Registrar.
The Company initially appoints The Bank of New York in the Borough of
Manhattan located at the New York address set forth in Section 12.02 to act as
the Registrar, Paying Agent and Conversion Agent and to act as Common
Depositaty with respect to the Global Notes.
Section 2.04. Paying Agent to Hold Money in Trust.
Prior to 10:30 a.m., New York City time, on each due date of the
principal of, premium, if any, or interest (including Additional Interest) on
any Notes, the Company shall deposit with the Paying Agent a sum sufficient to
pay such principal, premium, if any, or interest (including Additional
Interest) so becoming due. The Company shall require each Paying Agent other
than the Trustee to agree in writing that the Paying Agent will hold in trust
for the benefit of Holders or the Trustee all money held by the Paying Agent
for the payment of principal, premium if any, or interest (including
Additional Interest) on the Notes, and will notify the Trustee of any default
by the Company in making any such payment. While any such default continues,
the Trustee may require a Paying Agent to pay all money held by it to the
Trustee. The Company at any time may require a Paying Agent to pay all money
held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent
(if other than the Company or a Subsidiary) shall have no further liability
for the money. If the Company or a Subsidiary acts as Paying Agent, it shall
before 10:30 a.m., New York City time, on each due date of the principal of,
premium, if any, or interest (including Additional Interest), segregate and
hold in a separate trust fund for the benefit of the Holders all money held by
it as Paying Agent. Upon any Insolvency or Bankruptcy Proceedings relating to
the Company, the Trustee shall serve as Paying Agent for the Notes.
Section 2.05. Holder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA Section 312(a). If the Trustee
is not the Registrar, the Company shall furnish to the Trustee at least seven
Business Days before each Interest Payment Date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may
11
reasonably require of the names and addresses of the Holders of Notes and the
Company shall otherwise comply with TIA Section 312(a).
Section 2.06. Transfer and Exchange.
(a) Subject to compliance with any applicable additional requirements
contained in Section 2.12, when a Note is presented to a Registrar with a
request to register a transfer thereof or to exchange such Note for an equal
principal amount of Notes of other authorized denominations, the Registrar
shall register the transfer or make the exchange as requested; provided,
however, that every Note presented or surrendered for registration of transfer
or exchange shall be duly endorsed or accompanied by an assignment form and,
if applicable, a transfer certificate each in the form included in Exhibit A,
and in form satisfactory to the Registrar duly executed by the Holder thereof
or its attorney duly authorized in writing. To permit registration of
transfers and exchanges, upon surrender of any Note for registration of
transfer or exchange at an office or agency maintained pursuant to Section
2.03, the Company shall execute and the Trustee shall authenticate Notes of a
like aggregate principal amount at the Registrar's request. Any exchange or
registration of transfer shall be without charge, except that the Company or
the Registrar may require payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto; provided
that this sentence shall not apply to any exchange pursuant to Section 2.07,
2.10, 2.12(a), 3.06, 4.02 (last paragraph), 6.09(a)(10), or 11.05.
Neither the Company, any Registrar nor the Trustee shall be required to
exchange or register a transfer of (a) any Notes for a period of 15 days next
preceding any mailing of a notice of Notes to be redeemed, (b) any Notes or
portions thereof selected or called for redemption (except, in the case of
redemption of a Note in part, the portion not to be redeemed) or (c) any Notes
or portions thereof in respect of which a Note has been delivered to the
Trustee and not withdrawn by the Holder thereof (except, in the case of the
purchase of a Note in part, the portion not to be purchased).
All Notes issued upon any registration of transfer or exchange of Notes
shall be 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) Any Registrar appointed pursuant to Section 2.03 hereof shall provide
to the Trustee such information as the Trustee may reasonably require in
connection with the delivery by such Registrar of Notes upon registration of
transfer or exchange of Notes.
(c) Each Holder of a Note agrees to indemnify the Company, the Registrar
and the Trustee against any liability that may result from the registration of
transfer, exchange or assignment of such Holder's Note in violation of any
provision of this Indenture and/or applicable United States federal or state
securities law.
Any Holder of a Global Note shall, by acceptance of such Global Note,
agree that transfers of a beneficial interest in such Global Note may be
effected only through a book-entry system maintained by (i) the Holder of such
Global Note (or its agent), (ii) any Holder of a beneficial interest in such
Global Note or (iii) Euroclear or Clearstream or any Participant
12
therein, and that ownership of a beneficial interest in such Global Note shall
be required to be reflected in a book-entry.
The Trustee shall have no obligation or duty to monitor, determine or
inquire as to compliance with any restrictions on registration of transfer
imposed under this Indenture or under applicable law with respect to any
transfer of any interest in any Note (including any transfers between or among
Participants or other beneficial owners of interests in any Global Note) other
than to require delivery of such certificates and other documentation or
evidence as are expressly required by, and to do so if and when expressly
required by the terms of, this Indenture, and to examine the same to determine
substantial compliance as to form with the express requirements hereof.
Section 2.07. Replacement Notes.
If any mutilated Note is surrendered to the Trustee or the Company and
the Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Note, the Company shall issue and the Trustee, upon receipt of a
Company Order, shall authenticate a replacement Note if the Trustee's
requirements are met, and cancel the mutilated, destroyed, lost or stolen
Note, as the case may be. If required by the Trustee or the Company, an
indemnity bond must be supplied by the Holder that is sufficient in the
judgment of the Trustee and the Company to protect the Company, the Trustee,
any Agent and any authenticating agent from any loss that any of them may
suffer if a Note is replaced. The Company may charge for its expenses in
replacing a Note.
Every replacement Note is an additional obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
Section 2.08. Outstanding Notes.
The Notes outstanding at any time are all the Notes authenticated by the
Trustee except for those canceled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by
the Trustee in accordance with the provisions hereof, and those described in
this Section as not outstanding. Except as set forth in Section 2.09 hereof, a
Note does not cease to be outstanding because the Company or an Affiliate of
the Company holds the Note.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a protected purchaser as defined in Section 8-303 of
the New York Uniform Commercial Code.
If the principal amount of any Note is considered paid under Section 6.01
hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an Affiliate
of any thereof) holds, on a Redemption Date, a Change in Control Payment Date,
or maturity date, money sufficient to pay Notes payable on that date, then on
and after that date such Notes shall be deemed to be no longer outstanding and
shall cease to accrue interest.
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Section 2.09. Treasury Notes.
In determining whether the Holders of the required principal amount of
Notes have concurred in any Notice, direction, waiver or consent, Notes owned
by the Company, or by any Affiliate of the Company, shall be considered as
though not outstanding, except that for the purposes of determining whether
the Trustee shall be protected in relying on any such Notice, direction,
waiver or consent, only Notes that the Trustee knows are so owned shall be so
disregarded.
Section 2.10. Temporary Notes.
Until certificates representing Notes are ready for delivery, the Company
may prepare and execute, and the Trustee, upon receipt of a Company Order,
shall authenticate and deliver temporary Notes. Temporary Notes shall be
substantially in the form of Definitive Notes but may have variations that the
Company considers appropriate for temporary Notes and as shall be reasonably
acceptable to the Trustee. Without unreasonable delay, the Company shall
prepare and the Trustee, upon receipt of a Company Order, shall authenticate
and deliver Definitive Notes in exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits of
this Indenture.
Section 2.11. Cancellation.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar, Paying Agent and Conversion Agent shall forward
to the Trustee any Notes surrendered to them for registration of transfer,
exchange, redemption, payment or conversion. The Trustee and no one else shall
cancel all Notes surrendered for registration of transfer, exchange,
redemption, payment, conversion, replacement or cancellation and shall dispose
of such Notes as it may determine, in accordance with its normal procedures.
Any Notes which are redeemed, purchased or otherwise acquired by the Company
or any of its Subsidiaries prior to the maturity date may, at the option of
the Company, be surrendered to the Trustee for cancellation. Certification of
the destruction of all canceled Notes, if destroyed, shall be delivered to the
Company by the Trustee. The Company may, to the extent permitted by law, and
subject to Section 4(r) of the Purchase Agreement dated May 20, 2003, between
the Company and the initial purchasers named on the signature pages thereof,
resell or issue new Notes to replace such Notes, unless such Notes have been
delivered to the Trustee for cancellation.
Section 2.12. Additional Transfer and Exchange Requirements.
(a) Transfer And Exchange Of Global Notes.
(1) Definitive Notes shall be issued in exchange for interests in
the Global Notes only if (x) the Common Depositary notifies the Company
that it is unwilling or unable to continue as depositary for the Global
Notes or if it at any time ceases to be a "clearing agency" registered
under the Exchange Act, if so required by applicable law or regulation,
and a successor depositary is not appointed by the Company within 120
days, or (y) an Event of Default has occurred and is continuing. In
either case, the Company
14
shall execute, and the Trustee shall, upon receipt of a Company Order
(which the Company agrees to deliver promptly), authenticate and deliver
Definitive Notes in an aggregate principal amount equal to the principal
amount of such Global Notes in exchange therefor. Only Restricted
Definitive Notes shall be issued in exchange for beneficial interests in
Restricted Global Notes, and only Unrestricted Definitive Notes shall be
issued in exchange for beneficial interests in Unrestricted Global Notes.
Definitive Notes issued in exchange for beneficial interests in Global
Notes shall be registered in such names and shall be in such authorized
denominations as the Common Depositary, pursuant to instructions from its
Participants or Indirect Participants or otherwise, shall instruct the
Trustee. The Trustee shall deliver or cause to be delivered such
Definitive Notes to the persons in whose names such Notes are so
registered. Such exchange shall be effected in accordance with the
Applicable Procedures.
(2) Notwithstanding any other provisions of this Indenture other
than the provisions set forth in Section 2.12(a)(1), a Global Note may
not be transferred as a whole except by the Common Depositary to a
nominee of the Common Depositary or by a nominee of the Common Depositary
to the Common Depositary or another nominee of the Common Depositary or
by the Common Depositary or any such nominee to a successor Common
Depositary or a nominee of such successor Common Depositary.
(b) Transfer And Exchange Of Definitive Notes. In the event that
Definitive Notes are issued in exchange for beneficial interests in Global
Notes in accordance with Section 2.12(a)(1) of this Indenture, on or after
such event when a Definitive Note is presented by a Holder to a Registrar with
a request:
(x) to register the transfer of such Definitive Note to a Person who
will take delivery thereof in the form of a Definitive Note only; or
(y) to exchange such Definitive Note for an equal principal amount
of Definitive Notes of other authorized denominations,
such Registrar shall register the transfer or make the exchange as requested;
provided, however, that such Definitive Note presented or surrendered for
register of transfer or exchange:
(1) shall be duly endorsed or accompanied by a written instrument of
transfer in accordance with the proviso to the first sentence of the
first paragraph of Section 2.06(a); and
(2) in the case of a Restricted Definitive Note, such request shall
be accompanied by the following additional information and documents, as
applicable:
(i) if such Restricted Definitive Note is being delivered to the
Registrar by a Holder for registration in the name of such Holder,
without transfer, or such Restricted Definitive Note is being transferred
to the Company or a Subsidiary of the Company, a certification to that
effect from such Holder (in substantially the form set forth in the
Transfer Certificate);
15
(ii) if such Restricted Definitive Note is being transferred to a
Person the Holder reasonably believes is a QIB in accordance with Rule
144A or is being transferred to a Non-U.S. Person in an offshore
transaction in accordance with Rule 903 or Rule 904 or pursuant to an
effective registration statement under the Securities Act, a
certification to that effect from such Holder (in substantially the form
set forth in the Transfer Certificate); or
(iii) if such Restricted Definitive Note is being transferred (A)
pursuant to an exemption from the registration requirements of the
Securities Act in accordance with Rule 144 or (B) pursuant to an
exemption from the registration requirements of the Securities Act (other
than pursuant to Rule 144A, Rule 144, Rule 903 or Rule 904), a
certification to that effect from the Holder (in substantially the form
set forth in the Transfer Certificate) and, if the Company or such
Registrar so requests, a customary opinion of counsel, certificates and
other information reasonably acceptable to the Company and such Registrar
to the effect that such transfer is in compliance with the registration
requirements of the Securities Act.
(c) Transfer of a Beneficial Interest in a Restricted Global Note for a
Beneficial Interest in an Unrestricted Global Note. Any Person having a
beneficial interest in a Restricted Global Note may upon request, subject to
the Applicable Procedures, transfer such beneficial interest to a Person who
is required or permitted to take delivery thereof in the form of a beneficial
interest in an Unrestricted Global Note. Upon receipt by the Trustee of
written instructions, or such other form of instructions as is customary for
the Common Depositary, from the Common Depositary or its nominee on behalf of
any Person having a beneficial interest in a Restricted Global Note and the
following additional information and documents in such form as is customary
for the Common Depositary (all of which may be submitted by facsimile or
electronically):
(1) if such beneficial interest is being transferred pursuant to an
effective registration statement under the Securities Act, a
certification to that effect from the transferor (in substantially the
form set forth in the Transfer Certificate); or
(2) if such beneficial interest is being transferred (i) pursuant to
an exemption from the registration requirements of the Securities Act in
accordance with Rule 144 or (ii) pursuant to an exemption from the
registration requirements of the Securities Act (other than pursuant to
Rule 144A, Rule 144, Rule 903 or Rule 904), a certification to that
effect from the transferor (in substantially the form set forth in the
Transfer Certificate) and, if the Company or the Trustee so requests, a
customary opinion of counsel, certificates and other information
reasonably acceptable to the Company and the Trustee to the effect that
such transfer is in compliance with the registration requirements of the
Securities Act.
The Trustee, as a Registrar and Common Depositary, shall reduce or cause to be
reduced the aggregate principal amount of the Restricted Global Note by the
appropriate principal amount and shall increase or cause to be increased the
aggregate principal amount of the Unrestricted Global Note by a like principal
amount. Such transfer shall otherwise be effected in accordance with the
Applicable Procedures. If no Unrestricted Global Note is then outstanding, the
16
Company shall execute and the Trustee shall, upon receipt of a Company Order
(which the Company agrees to deliver promptly), authenticate and deliver an
Unrestricted Global Note.
(d) Transfers of Definitive Notes for Beneficial Interest in Global
Notes. In the event that Definitive Notes are issued in exchange for
beneficial interests in Global Notes and, thereafter, the events or conditions
specified in Section 2.12(a)(1) which required such exchange shall cease to
exist, the Company shall mail notice to the Trustee and to the Holders stating
that Holders may exchange Definitive Notes for interests in Global Notes by
complying with the procedures set forth in this Indenture and briefly
describing such procedures and the events or circumstances requiring that such
notice be given. Thereafter, if Definitive Notes are presented by a Holder to
a Registrar with a request:
(x) to register the transfer of such Definitive Notes to a Person
who will take delivery thereof in the form of a beneficial interest in a
Global Note, which request shall specify whether such Global Note will be
a Restricted Global Note or an Unrestricted Global Note; or
(y) to exchange such Definitive Notes for an equal principal amount
of beneficial interests in a Global Note, which beneficial interests will
be owned by the Holder transferring such Definitive Notes; provided that
in the case of such an exchange, Restricted Definitive Notes may be
exchanged only for interests in Restricted Global Notes and Unrestricted
Definitive Notes may be exchanged only for interests in Unrestricted
Global Notes,
the Registrar shall register the transfer or make the exchange as requested by
canceling such Definitive Note and causing, or directing the Common Depositary
to cause, the aggregate principal amount of the applicable Global Note to be
increased accordingly and, if no such Global Note is then outstanding, the
Company shall issue and the Trustee, upon receipt of a Company Order, shall
authenticate and deliver a new Global Note; provided, however, that the
Definitive Notes presented or surrendered for registration of transfer or
exchange:
(1) shall be duly endorsed or accompanied by a written instrument of
transfer in accordance with the proviso to the first sentence of the
first paragraph of Section 2.06(a);
(2) in the case of a Restricted Definitive Note to be transferred
for a beneficial interest in an Unrestricted Global Note pursuant to
clause (x) above, such request shall be accompanied by the following
additional information and documents, as applicable:
(i) if such Restricted Definitive Note is being transferred pursuant
to an effective registration statement under the Securities Act, a
certification to that effect from such Holder (in substantially the form
set forth in the Transfer Certificate); or
(ii) if such Restricted Definitive Note is being transferred
pursuant to (A) an exemption from the registration requirements of the
Securities Act in accordance with Rule 144 or (B) pursuant to an
exemption from the registration requirements of the Securities Act (other
than pursuant to Rule 144A, Rule 144, Rule 903 or Rule 904), a
certification to that effect from such Holder (in substantially the form
set forth in the
17
Transfer Certificate), and, if the Company or the Registrar so requests,
a customary opinion of counsel, certificates and other information
reasonably acceptable to the Company and the Trustee to the effect that
such transfer is in compliance with the registration requirements of the
Securities Act;
(3) in the case of a Restricted Definitive Note to be transferred or
exchanged for a beneficial interest in a Restricted Global Note, such
request shall be accompanied by a certification from such Holder (in
substantially the form set forth in the Transfer Certificate) to the
effect that such Restricted Definitive Note is being transferred to a
Person the Holder reasonably believes is (x) a QIB (which, in the case of
an exchange, shall be such Holder) in accordance with Rule 144A or (y) is
being transferred to a Non-U.S. Person in an offshore transaction in
accordance with Rule 903 or Rule 904; and
(4) in the case of an Unrestricted Definitive Note to be transferred
or exchanged for a beneficial interest in an Unrestricted Global Note,
such request need not be accompanied by any additional information or
documents.
(e) Legends.
(1) Except as permitted by the following paragraphs (2), (3) (4), or
(5), each Global Note and Definitive Note (and all Notes issued in
exchange therefor or upon registration of transfer or replacement
thereof) shall bear the Private Placement Legend (each a "Restricted
Global Note" or a "Restricted Definitive Note") for so long as it is
required by this Indenture to bear such legend. Each Restricted Global
Note or Restricted Definitive Note shall have attached thereto a
certificate (a "Transfer Certificate") in substantially the form attached
to Exhibit A hereto.
(2) Upon any sale or transfer of a Restricted Global Note or a
Restricted Definitive Note (w) after the expiration of the holding period
applicable to sales of the Notes under Rule 144(k) of the Securities Act,
(x) pursuant to Rule 144, (y) pursuant to an effective registration
statement under the Securities Act or (z) pursuant to any other available
exemption (other than Rule 144, Rule 144A, Rule 903, or Rule 904) from
the registration requirements of the Securities Act:
(i) in the case of any Restricted Definitive Note, any Registrar
shall permit the Holder thereof to exchange such Restricted Definitive
Note for an Unrestricted Definitive Note, or (under the circumstances
described in Section 2.12(d)) to transfer such Restricted Definitive Note
to a transferee who shall take such Note in the form of a beneficial
interest in an Unrestricted Global Note, and in each case shall rescind
any restriction on the transfer of such Note; provided, however, that the
Holder of such Restricted Definitive Note shall, in connection with such
exchange or transfer, comply with the other applicable provisions of this
Section 2.12; and
(ii) in the case of any beneficial interest in a Restricted Global
Note, the Trustee shall permit the beneficial owner thereof to transfer
such beneficial interest to a transferee who shall take such interest in
the form of a beneficial interest in an Unrestricted Global Note and
shall rescind any restriction on transfer of such beneficial
18
interest; provided that such Unrestricted Global Note shall continue to
be subject to the provisions of Section 2.12(a)(2); and provided further
that the owner of such beneficial interest shall, in connection with such
transfer, comply with the other applicable provisions of this Section
2.12.
(3) Subject to Section 2.12(d)(5) hereof, upon the exchange,
registration of transfer or replacement of Notes not bearing the legend
described in paragraph (1) above, the Company shall execute, and the
Trustee shall authenticate and deliver Notes that do not bear such legend
and that do not have a Transfer Certificate attached thereto.
(4) After the expiration of the holding period pursuant to Rule
144(k) of the Securities Act, the Company may with the consent of the
Holder of a Restricted Global Note or Restricted Definitive Note, remove
any applicable restriction of transfer on such Note, and the Company
shall execute, and the Trustee shall authenticate and deliver Notes that
do not bear the Private Placement Legend and that do not have a Transfer
Certificate attached thereto.
(f) Transfers to the Company. Nothing in this Indenture or in the Notes
shall prohibit the sale or other transfer of any Notes (including beneficial
interests in Global Notes) to the Company or any of its Subsidiaries, subject
to Section 2.11 hereof.
Section 2.13. CUSIP, ISIN and Common Code Numbers.
The Company in issuing the Notes may use "CUSIP," "ISIN" and Common Code
numbers (if then generally in use), and, if so, the Trustee shall use "CUSIP,"
"ISIN" and Common Code numbers in notices of redemption or purchase as a
convenience to Holders; provided that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Notes or as contained in any notice of a redemption or purchase and
that reliance may be placed only on the other identification numbers printed
on the Notes, and any such redemption or purchase shall not be affected by any
defect in or omission of such numbers. The Company will promptly notify the
Trustee of any change in the "CUSIP," "ISIN" and Common Code numbers.
Section 2.14. Defaulted Interest.
If the Company defaults in a payment of interest on the Notes, it shall
pay the defaulted interest in any lawful manner plus, to the extent lawful,
interest payable on the defaulted interest, to the Persons who are Holders on
a subsequent special record date, in each case at the rate provided in the
Notes and in Section 4.01 hereof. The Company shall notify the Trustee in
writing of the amount of defaulted interest proposed to be paid on each Note
and the date of the proposed payment. The Company shall fix or cause to be
fixed each such special record date and payment date; provided that no such
special record date shall be less than 10 days prior to the related payment
date for such defaulted interest. At least 15 days before the special record
date, the Company (or, upon the written request of the Company, the Trustee in
the name and at the expense of the Company) shall mail or cause to be mailed
to Holders a notice that states the special record date, the related payment
date and the amount of such interest to be paid.
19
ARTICLE 3.
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee.
If the Company elects to redeem Notes pursuant to the optional redemption
provisions of Section 3.07 hereof, it shall furnish to the Trustee, at least
20 days but not more than 60 days before a redemption date, an Officers'
Certificate setting forth (i) the clause of this Indenture pursuant to which
the redemption shall occur, (ii) if the redemption date is on or prior to June
2, 2008, whether such redemption is in compliance with Section 3.07(a)(x) of
this Indenture, (iii) the redemption date, (iv) the principal amount of Notes
to be redeemed and (v) the redemption price.
Section 3.02. Selection of Notes to Be Redeemed.
If fewer than all the Notes are to be redeemed or purchased in an offer
to purchase at any time, the Trustee shall select the Notes to be redeemed or
purchased by lot, or in the Trustee's discretion, on a pro rata basis. In the
event of partial redemption by lot, the particular Notes to be redeemed shall
be selected, unless otherwise provided herein, not less than 20 nor more than
60 days prior to the redemption date by the Trustee from the outstanding Notes
not previously called for redemption. If a portion of Notes is selected for
partial redemption and a Holder elects to convert a portion of Notes pursuant
to Article 4 hereof, the converted portion of the Notes will be deemed to be
the portion selected for redemption.
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000;
except that if all the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of
$1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
Section 3.03. Notice of Redemption.
At least 20 days but not more than 60 days before a redemption date, the
Company shall mail or cause to be mailed, by first class mail, a notice of
redemption to each Holder whose Notes are to be redeemed at its registered
address.
The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) the then current Conversion Price;
(d) if any Note is being redeemed in part, the portion of the principal
amount of such Note to be redeemed and that, after the redemption date upon
surrender of such Note, a new Note
20
or Notes in principal amount equal to the unredeemed portion shall be issued
upon cancellation of the original Note;
(e) the name and address of the Paying Agent and Conversion Agent;
(f) that Notes called for redemption must be presented and surrendered to
a Paying Agent to collect the redemption price;
(g) that Holders who wish to convert Notes must surrender such Notes for
conversion no later than the close of business on the Business Day immediately
preceding the redemption date and must satisfy the other requirements in
paragraph 8 of the Notes;
(h) that, unless the Company defaults in making such redemption payment,
interest on Notes called for redemption ceases to accrue on and after the
redemption date;
(i) the paragraph of the Notes and/or Section of this Indenture pursuant
to which the Notes called for redemption are being redeemed;
(j) if the redemption date is on or prior to June 2, 2008, whether such
redemption is in compliance with Section 3.07(a)(x) of this Indenture; and
(k) that no representation is made as to the correctness or accuracy of
the CUSIP, "ISIN" and Common Code numbers, if any, listed in such notice or
printed on the Notes.
At the Company's request, the Trustee shall give the notice of redemption
in the Company's name and at its expense; provided, however, that the Company
shall have delivered to the Trustee, at least 30 days prior to the redemption
date, an Officers' Certificate requesting that the Trustee give such notice
and setting forth the information to be stated in such notice as provided in
the preceding paragraph.
Section 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price. A notice of redemption may not be
conditional.
Section 3.05. Deposit of Redemption Price.
One Business Day prior to the redemption date, the Company shall deposit
with the Trustee or with the Paying Agent money sufficient to pay the
redemption price of, and accrued interest on, all Notes to be redeemed on that
date. The Trustee or the Paying Agent shall promptly return to the Company any
money deposited with the Trustee or the Paying Agent by the Company in excess
of the amounts necessary to pay the redemption price of, and accrued interest
on, all Notes to be redeemed.
If the Company complies with the provisions of the preceding paragraph,
on and after the redemption date, interest shall cease to accrue on the Notes
or the portions of Notes called for redemption. If a Note is redeemed on or
after an interest payment record date but on or prior to
21
the related Interest Payment Date, then any accrued and unpaid interest shall
be paid to the Person in whose name such Note was registered at the close of
business on such record date. If any Note called for redemption shall not be
so paid upon surrender for redemption because of the failure of the Company to
comply with the preceding paragraph, interest shall be paid on the unpaid
principal, from the redemption date until such principal is paid, and to the
extent lawful on any interest not paid on such unpaid principal, in each case
at the rate provided in the Notes and in Section 6.01 hereof.
Section 3.06. Notes Redeemed in Part.
Upon surrender of a Note that is redeemed in part, the Company shall
issue, and, upon the Company's written request, the Trustee shall authenticate
for the Holder at the expense of the Company, a new Note equal in principal
amount to the unredeemed portion of the Note surrendered.
Section 3.07. Optional Redemption.
(a) The Company shall not have the option to redeem the Notes pursuant to
this Section 3.07 prior to June 2, 2006. Thereafter the Company shall have the
option to redeem the Notes in whole, or in part, upon not less than 20 nor
more than 60 days' notice by mail to Holders of the Notes, at 100% of the
principal amount of the Notes together with accrued interest up to, but not
including, the redemption date; provided that
(x) in connection with any redemption of the Notes occurring on or
after June 2, 2006 and on or prior to June 2, 2008, the Closing Sale
Price of the Class A Subordinate Voting Stock of the Company shall have
exceeded 125% of the Conversion Price for at least 20 Trading Days in the
30 consecutive Trading Day period ending on the Trading Day prior to the
mailing of the notice of redemption, and
(y) if the redemption date falls after an interest payment record
date and on or before an Interest Payment Date, the applicable interest
payment shall be payable to Holders of record on the relevant interest
payment record date.
(b) Any redemption pursuant to this Section 3.07 shall be made pursuant
to the provisions of Section 3.01 through 3.06 hereof.
Section 3.08. Mandatory Redemption; No Sinking Fund.
The Company shall not be required to (a) make mandatory redemption
payments with respect to the Notes or (b) set aside any funds for the
redemption of the Notes.
ARTICLE 4.
CONVERSION
Section 4.01. Conversion Privilege.
A Holder of a Note may convert it into fully paid and nonassessable
shares of Class A Subordinate Voting Stock at any time prior to the close of
business on the last Business Day
22
prior to maturity at the Conversion Price (as defined below) then in effect,
except that, with respect to any Note called for redemption or submitted or
presented for purchase pursuant to Section 6.09, such conversion right shall
terminate at the close of business on the Business Day immediately preceding
the redemption date or Change in Control Payment Date, as the case may be
(unless the Company shall default in making the redemption payment or Change
in Control Payment, as the case may be, when it becomes due, in which case the
conversion right shall terminate at the close of business on the date such
default is cured and such Note is redeemed or purchased, as the case may be).
The number of shares of Class A Subordinate Voting Stock issuable upon
conversion of a Note will be determined by the Company by dividing the
principal amount of such Note by the conversion price in effect on the
Conversion Date (the "Conversion Price").
The initial Conversion Price is stated in paragraph 8 of the Notes and is
subject to adjustment as provided for in this Article 4.
A Holder may convert a portion of a Note equal to any integral multiple
of $1,000. Provisions of this Indenture that apply to conversion of all of a
Note also apply to conversion of a portion of it.
A Note in respect of which a Holder has delivered a Change in Control
Payment Notice pursuant to Section 6.09 exercising the option of such Holder
to require the Company to purchase such Note may be converted only if such
Change in Control Payment Notice is withdrawn by a written notice of
withdrawal delivered to a Paying Agent prior to the close of business on the
Business Day immediately preceding the Change in Control Payment Date in
accordance with Section 6.09.
A Holder of Notes is not entitled to any rights of a holder of Class A
Subordinate Voting Stock until, and only to the extent that, such Holder has
converted its Notes to Class A Subordinate Voting Stock pursuant to this
Article 4.
Section 4.02. Conversion Procedure
To convert a Note, a Holder must satisfy the requirements in paragraph 8
of the Notes. The date on which the Holder satisfies all those requirements is
the conversion date (the "Conversion Date"). As soon as practicable after the
Conversion Date, the Company shall deliver or cause to be delivered to the
Holder a certificate for the number of whole shares of Class A Subordinate
Voting Stock issuable upon the conversion and a check for any fractional share
determined pursuant to Section 4.03 hereof. The Person in whose name the
certificate is registered shall become the stockholder of record on the
Conversion Date and, as of such date, such Person's rights as a Holder shall
cease; provided, however, that no surrender of a Note on any date when the
stock transfer books of the Company shall be closed shall be effective to
constitute the Person entitled to receive the shares of Class A Subordinate
Voting Stock upon such conversion as the stockholder of record of such shares
of Class A Subordinate Voting Stock on such date, but such surrender shall be
effective to constitute the Person entitled to receive such shares of Class A
Subordinate Voting Stock as the stockholder of record thereof for all purposes
at the close of business on the next succeeding day on which such stock
transfer books are open; provided further, however, that such conversion shall
be at the Conversion Price in
23
effect on the date that such Note shall have been surrendered for conversion,
as if the stock transfer books of the Company had not been closed.
For the avoidance of doubt, the Conversion Agent shall not have a duty to
convert or deliver shares of Class A Subordinate Voting Stock; provided that
the Conversion Agent is not the Company or any of its Subsidiaries.
No payment or other adjustment shall be made for accrued interest or
dividends or distributions on any Class A Subordinate Voting Stock issued upon
conversion of the Notes. If any Notes are converted during any period after
the close of business on any record date for the payment of an installment of
interest but before the opening of business on the next Interest Payment Date,
interest for such Notes will be paid on the next Interest Payment Date,
notwithstanding such conversion, to the Holders of such Notes. Any Notes that
are, however, delivered to the Company for conversion during the period after
any record date but before the opening of business on the next Interest
Payment Date must, except as described in the next sentence, be accompanied by
funds equal to the interest payable on such Interest Payment Date on the
principal amount of Notes being converted. If the Company has issued a
redemption notice or made a Change in Control Offer with respect to the Notes
during that period from the close of business on a record date and ending on
the opening of business on the first Business Day after the next Interest
Payment Date (or if such Interest Payment Date is not a Business Day, the
second Business Day after the Interest Payment Date) and the Holders surrender
the Notes or portions thereof for conversion on a date that is not an Interest
Payment Date, Holders shall receive interest for the period from the Interest
Payment Date next preceding the Conversion Date (it being understood that such
Holders that surrender Notes or portions thereof for conversion following any
redemption notice or Change in Control Offer shall not be required to pay such
funds as described in the third sentence of this paragraph). No fractional
shares will be issued upon conversion, but a cash adjustment will be made for
any fractional shares.
If a Holder converts more than one Note at the same time, the number of
whole shares of Class A Subordinate Voting Stock issuable upon the conversion
shall be based on the total principal amount of Notes converted.
Upon surrender of a Note that is converted in part, the Trustee shall
authenticate for the Holder a new Note equal in principal amount to the
unconverted portion of the Note surrendered.
Section 4.03. Fractional Shares.
The Company will not issue fractional shares of Class A Subordinate
Voting Stock upon conversion of a Note. In lieu thereof, the Company will pay
an amount in cash based upon the Closing Sale Price of the Class A Subordinate
Voting Stock on the last Trading Day prior to the Conversion Date.
Section 4.04. Taxes on Conversion.
The issuance of certificates for shares of Class A Subordinate Voting
Stock upon the conversion of any Note shall be made without charge to the
converting Holder for such certificates or for any tax in respect of the
issuance of such certificates, and such certificates shall be issued in the
respective names of, or in such names as may be directed by, the Holder or
24
Holders of the converted Note; provided, however, that in the event that
certificates for shares of Class A Subordinate Voting Stock are to be issued
in a name other than the name of the Holder of the Note converted, such Note,
when surrendered for conversion, shall be accompanied by an instrument of
transfer, in form satisfactory to the Company, duly executed by the registered
holder thereof or his duly authorized attorney; and provided further, however,
that the Company shall not be required to pay any tax which may be payable in
respect of any transfer involved in the issuance and delivery of any such
certificates in a name other than that of the Holder of the converted Note,
and the Company shall not be required to issue or deliver such certificates
unless and until the Person or Persons requesting the issuance thereof shall
have paid to the Company the amount of such tax or shall have established to
the satisfaction of the Company that such tax has been paid or is not
applicable.
Section 4.05. Company to Provide Stock.
The Company shall at all times reserve and keep available, free from
preemptive rights, out of its authorized but unissued Class A Subordinate
Voting Stock, solely for the purpose of issuance upon conversion of Notes as
herein provided, a sufficient number of shares of Class A Subordinate Voting
Stock to permit the conversion of all outstanding Notes for shares of Class A
Subordinate Voting Stock. All shares of Class A Subordinate Voting Stock which
may be issued upon conversion of the Notes shall be duly authorized, validly
issued, fully paid and nonassessable and free of preemptive rights and free of
any lien or adverse claim when so issued.
Section 4.06. Adjustment of Conversion Price.
The Conversion Price shall be subject to adjustment from time to time as
follows:
(a) Stock split and combinations. In case the Company, at any time or
from time to time after the issuance date of the Notes, (a) subdivides or
splits the outstanding shares of its Class A Subordinate Voting Stock, (b)
combines or reclassifies the outstanding shares of its Class A Subordinate
Voting Stock into a smaller number of shares or (c) issues by reclassification
of the shares of its Class A Subordinate Voting Stock any shares of its
Capital Stock, then the Conversion Price in effect immediately prior to that
event or the record date for that event, whichever is earlier, will be
adjusted so that the Holder of any Notes thereafter surrendered for conversion
will be entitled to receive the number of shares of the Company's Class A
Subordinate Voting Stock or of its other securities which the Holder would
have owned or have been entitled to receive after the occurrence of any of the
events described above had those Notes been surrendered for conversion
immediately before the occurrence of that event or the record date for that
event, whichever is earlier;
(b) Stock Dividends in Class A Subordinate Voting Stock. In case the
Company, at any time or from time to time after the issuance date of the
Notes, pays a dividend or makes a distribution in shares of its Class A
Subordinate Voting Stock on any class of its Capital Stock, other than
dividends or distributions of shares of Class A Subordinate Voting Stock or
other securities with respect to which adjustments are provided in paragraph
(a) above or with respect to payments of interest or dividend obligations with
respect to a particular series of Capital Stock in accordance with the terms
of such Capital Stock, the Conversion Price will be adjusted so that the
Holder of each Note will be entitled to receive, upon conversion of that Note,
the number of
25
shares of the Company's Class A Subordinate Voting Stock determined by
multiplying (a) the Conversion Price by (b) a fraction, the numerator of which
will be the number of shares of Class A Subordinate Voting Stock outstanding
and the denominator of which will be the sum of that number of shares and the
total number of shares issued in that dividend or distribution;
(c) Issuance of Rights or Warrants. In case the Company issues to all or
substantially all holders of its Class A Subordinate Voting Stock rights or
warrants entitling those holders for a period of not more than 60 days to
subscribe for or purchase its Class A Subordinate Voting Stock or securities
convertible into its Class A Subordinate Voting Stock at a price per share or
Conversion Price per share less than the current market price per share of
Class A Subordinate Voting Stock (as determined in accordance with subsection
(g) of this Section 4.06), the Conversion Price in effect immediately before
the close of business on the record date fixed for determination of
stockholders entitled to receive those rights or warrants will be reduced by
multiplying such Conversion Price by a fraction, the numerator of which is the
sum of the number of shares of the Company's Class A Subordinate Voting Stock
outstanding at the close of business on that record date and the number of
shares of Class A Subordinate Voting Stock that the aggregate offering price
of the total number of shares of the Company's Class A Subordinate Voting
Stock so offered for subscription or purchase would purchase at the current
market price per share of Class A Subordinate Voting Stock (as determined in
accordance with subsection (g) of this Section 4.06), and the denominator of
which is the sum of the number of shares of Class A Subordinate Voting Stock
outstanding at the close of business on that record date and the number of
additional shares of the Company's Class A Subordinate Voting Stock so offered
for subscription or purchase. For purposes of this Section 4.06(c), the
issuance of rights or warrants to subscribe for or purchase securities
convertible into shares of the Company's Class A Subordinate Voting Stock will
be deemed to be the issuance of rights or warrants to purchase shares of the
Company's Class A Subordinate Voting Stock into which those securities are
convertible at an aggregate offering price equal to the sum of the aggregate
offering price of those securities and the minimum aggregate amount, if any,
payable upon conversion of those securities into shares of the Company's Class
A Subordinate Voting Stock. This adjustment will be made successively whenever
any such event occurs. For purposes of this Section 4.06(c), in the event the
Company implements a shareholders rights plan (a "Rights Plan"), upon
conversion of the Notes into Class A Subordinate Voting Stock, to the extent
that the Rights Plan has been implemented and is still in effect upon such
conversion, the Holders of Notes will receive, in addition to the Class A
Subordinate Voting Stock, the rights described therein (whether or not the
rights have separated from the Class A Subordinate Voting Stock at the time of
conversion), upon the terms of and subject to the limitations set forth in the
Rights Plan. Any distribution of rights or warrants pursuant to a Rights Plan
complying with the requirements set forth in the immediately preceding
sentence of this paragraph shall not constitute a distribution of rights or
warrants for purposes of this Section 4.06(c);
(d) Distribution of Indebtedness, Securities or Assets. In case the
Company shall distribute to all or substantially all holders of its Class A
Subordinate Voting Stock any shares of Capital Stock of the Company (other
than Class A Subordinate Voting Stock), evidences of indebtedness or other
non-cash assets (including securities of any Person other than the Company but
excluding dividends or distributions referred to in subsection (b) of this
Section 4.06), or shall distribute to all or substantially all holders of its
Class A Subordinate Voting Stock rights or warrants to subscribe for or
purchase any of its securities (excluding those rights and
26
warrants referred to in subsection (c) of this Section 4.06 and also excluding
the distribution of rights to all holders of Class A Subordinate Voting Stock
pursuant to the adoption of a Rights Plan or the detachment of such rights
under the terms of such Rights Plan), then in each such case the Conversion
Price in effect immediately before the close of business on the record date
fixed for the determination of stockholders entitled to such distribution
shall be adjusted so that the same shall equal the price determined by
multiplying the current Conversion Price by a fraction of which the numerator
shall be the current market price per share (determined in accordance with
subsection (g) of this Section 4.06) of the Class A Subordinate Voting Stock
on the record date fixed for the determination of stockholders entitled to
such distribution less the fair market value on such record date (as
determined by the Board of Directors, whose determination shall be conclusive
evidence of such fair market value and which shall be evidenced by an
Officers' Certificate delivered to the Trustee) of the portion of the Capital
Stock, evidences of indebtedness or other non-cash assets so distributed or of
such rights or warrants attributable to one share of Class A Subordinate
Voting Stock (determined on the basis of the number of shares of Class A
Subordinate Voting Stock outstanding on the record date), and of which the
denominator shall be the current market price per share (determined in
accordance subsection (g) of this Section 4.06) of the Class A Subordinate
Voting Stock on such record date. Such adjustment shall be made successively
whenever any such distribution is made and shall become effective immediately
after the record date for the determination of stockholders entitled to
receive such distribution.
(e) All-cash Distributions. In case the Company shall, by dividend or
otherwise, at any time distribute (a "Triggering Distribution") to all or
substantially all holders of its Class A Subordinate Voting Stock all-cash
distributions in an aggregate amount that, together with the aggregate amount
of (A) any cash and the fair market value (as determined by the Board of
Directors, whose determination shall be conclusive evidence thereof and which
shall be evidenced by an Officers' Certificate delivered to the Trustee) of
any other consideration payable in respect of any tender offer by the Company
or a Subsidiary of the Company for Class A Subordinate Voting Stock
consummated within the 12 months preceding the date of payment of the
Triggering Distribution and in respect of which no Conversion Price adjustment
pursuant to this Section 4.06 has been made and (B) all other cash
distributions to all or substantially all holders of its Class A Subordinate
Voting Stock made within the 12 months preceding the date of payment of the
Triggering Distribution and in respect of which no Conversion Price adjustment
pursuant to this Section 4.06 has been made, exceeds an amount equal to 10.0%
of the product of the current market price per share of Class A Subordinate
Voting Stock (as determined in accordance with subsection (g) of this Section
4.06) on the Business Day (the "Determination Date") immediately preceding the
day on which such Triggering Distribution is declared by the Company
multiplied by the sum of the number of shares of Class A Subordinate Voting
Stock and the number of shares of Class B Stock of the Company each
outstanding on the Determination Date (excluding shares held in the treasury
of the Company), the Conversion Price shall be reduced so that the same shall
equal the price determined by multiplying such Conversion Price in effect
immediately prior to the Determination Date by a fraction of which the
numerator shall be the current market price per share of the Class A
Subordinate Voting Stock (as determined in accordance with subsection (g) of
this Section 4.06) on the Determination Date less the sum of the aggregate
amount of cash and the aggregate fair market value (determined as aforesaid in
this Section 4.06(d)) of any such other consideration so distributed, paid or
payable within such 12 months (including, without limitation, the Triggering
27
Distribution) attributable to one share of Class A Subordinate Voting Stock
(determined on the basis of the number of shares of Class A Subordinate Voting
Stock outstanding on the Determination Date) and the denominator shall be such
current market price per share of the Class A Subordinate Voting Stock (as
determined in accordance with subsection (g) of this Section 4.06) on the
Determination Date, such reduction to become effective immediately prior to
the opening of business on the day following the date on which the Triggering
Distribution is paid.
(f) Tender Offer Purchases. In case any tender offer made by the Company
or any of its Subsidiaries for Class A Subordinate Voting Stock shall expire
and such tender offer (as amended upon the expiration thereof) shall involve
the payment of aggregate consideration in an amount (determined as the sum of
the aggregate amount of cash consideration and the aggregate fair market value
(as determined by the Board of Directors, whose determination shall be
conclusive evidence thereof and which shall be evidenced by an Officers'
Certificate delivered to the Trustee thereof) of any other consideration)
that, together with the aggregate amount of (A) any cash and the fair market
value (as determined by the Board of Directors, whose determination shall be
conclusive evidence thereof and which shall be evidenced by an Officers'
Certificate delivered to the Trustee) of any other consideration payable in
respect of any other tender offers by the Company or any Subsidiary of the
Company for Class A Subordinate Voting Stock consummated within the 12 months
preceding the date of the Expiration Date (as defined below) and in respect of
which no Conversion Price adjustment pursuant to this Section 4.06 has been
made and (B) all cash distributions to all or substantially all holders of its
Class A Subordinate Voting Stock made within the 12 months preceding the
Expiration Date and in respect of which no Conversion Price adjustment
pursuant to this Section 4.06 has been made, exceeds an amount equal to 10.0%
of the product of the current market price per share of Class A Subordinate
Voting Stock (as determined in accordance with subsection (g) of this Section
4.06) as of the last date (the "Expiration Date") tenders could have been made
pursuant to such tender offer (as it may be amended) (the last time at which
such tenders could have been made on the Expiration Date is hereinafter
sometimes called the "Expiration Time") multiplied by the sum of the number of
shares of Class A Subordinate Voting Stock and the number of shares of Class B
Stock of the Company each outstanding (including tendered shares but excluding
any shares held in the treasury of the Company) at the Expiration Time, then,
immediately prior to the opening of business on the day after the Expiration
Date, the Conversion Price shall be reduced so that the same shall equal the
price determined by multiplying the Conversion Price in effect immediately
prior to close of business on the Expiration Date by a fraction of which the
numerator shall be the product of the number of shares of Class A Subordinate
Voting Stock outstanding (including tendered shares but excluding any shares
held in the treasury of the Company) at the Expiration Time multiplied by the
current market price per share of the Class A Subordinate Voting Stock (as
determined in accordance with subsection (g) of this Section 4.06) on the
Trading Day next succeeding the Expiration Date and the denominator shall be
the sum of (x) the aggregate consideration (determined as aforesaid) 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 Class A Subordinate Voting Stock outstanding (less any Purchased
Shares and excluding any shares held in the treasury of the Company) at the
Expiration Time and the current market price per share of Class A Subordinate
Voting Stock (as determined in accordance with
28
subsection (g) of this Section 4.06) on the Trading Day next succeeding the
Expiration Date, such reduction to become effective immediately prior to the
opening of business on the day following the Expiration Date. In the event
that the Company would be obligated to purchase shares pursuant to any such
tender offer, but the Company is permanently prevented by applicable law from
effecting any or all such purchases or any or all such purchases are
rescinded, the Conversion Price shall again be adjusted to be the Conversion
Price which would have been in effect based upon the number of shares actually
purchased. If the application of this Section 4.06(f) to any tender offer
would result in an increase in the Conversion Price, no adjustment shall be
made for such tender offer under this Section 4.06(f).
For purposes of this Section 4.06(f), the term "tender offer" shall mean
and include both tender offers and exchange offers, all references to
"purchases" of shares in tender offers (and all similar references) shall mean
and include both the purchase of shares in tender offers and the acquisition
of shares pursuant to exchange offers, and all references to "tendered shares"
(and all similar references) shall mean and include shares tendered in both
tender offers and exchange offers.
(g) For the purpose of any computation under subsections (b), (c), (d)
and (e) of this Section 4.06, the current market price per share of Class A
Subordinate Voting Stock on any date shall be deemed to be the average of the
daily Closing Sale Prices for the 30 consecutive Trading Days commencing 45
Trading Days before (i) the Determination Date or the Expiration Date, as the
case may be, with respect to distributions or tender offers under subsections
(e) and (f) of this Section 4.06 or (ii) the record date with respect to
distributions, issuances or other events requiring such computation under
subsection (c), (d) or (e) of this Section 4.06. If no such prices are
available, the current market price per share shall be the fair value of one
share of Class A Subordinate Voting Stock as determined by the Board of
Directors (which shall be evidenced by an Officers' Certificate delivered to
the Trustee).
(h) If any distribution in respect of which an adjustment to the
Conversion Price is required to be made therefor as of the record date or
Determination Date or Expiration Date is not thereafter made or paid by the
Company for any reason, the Conversion Price shall be readjusted to the
Conversion Price which would then be in effect if such record date had not
been fixed or the effective date or Determination Date or Expiration Date had
not occurred.
Section 4.07. No Adjustment.
No adjustment in the Conversion Price shall be required until cumulative
adjustments amount to at least 1% of the Conversion Price as last adjusted;
provided, however, that any adjustments which by reason of this Section 4.07
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Article 4 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 Class A Subordinate
Voting 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 no par
value of the Class A Subordinate Voting Stock.
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Section 4.08. Other Adjustments.
(a) In the event that, as a result of an adjustment made pursuant to
Section 4.06 hereof, the Holder of any Note thereafter surrendered for
conversion shall become entitled to receive any shares of Capital Stock of the
Company other than shares of its Class A Subordinate Voting Stock, thereafter
the Conversion Price of such other shares so receivable upon conversion of any
Note shall be subject to adjustment from time to time in a manner and on terms
as nearly equivalent as practicable to the provisions with respect to Class A
Subordinate Voting Stock contained in this Article 4.
(b) In the event that shares of Class A Subordinate Voting Stock are not
delivered after the expiration of any of the rights or warrants referred to in
Sections 4.06(c) and (d) hereof, the Conversion Price shall be readjusted to
the Conversion Price which would otherwise be in effect had the adjustment
made upon the issuance of such rights or warrants been made on the basis of
delivery of only the number of shares of Class A Subordinate Voting Stock
actually delivered.
Section 4.09. Adjustments for Tax Purposes.
The Company may make such reductions in the Conversion Price, in addition
to any required by Section 4.06 hereof, as it determines in its discretion to
be advisable in order that any stock dividend, subdivision of shares,
distribution or rights to purchase stock or securities or distribution of
securities convertible into or exchangeable for stock made by the Company to
its stockholders will not be taxable to the recipients thereof.
Section 4.10. Notice of Adjustment.
Whenever the Conversion Price is adjusted, the Company shall promptly
mail to Holders at the addresses appearing on the Registrar's books a notice
of the adjustment and file with the Trustee an Officers' Certificate briefly
stating the facts requiring the adjustment and the manner of computing it. The
Officers' Certificate shall be conclusive evidence of the correctness of such
adjustment. Unless and until a Responsible Officer of the Trustee shall
receive written notice of an adjustment of the Conversion Price, the Trustee
may assume without inquiry that the Conversion Price has not been adjusted and
that the last Conversion Price of which it has knowledge remains in effect.
Section 4.11. Notice of Certain Transactions.
In the event that:
(1) the Company takes any action which would require an adjustment in the
Conversion Price;
(2) the Company takes any action that would require a supplemental
indenture pursuant to Section 4.12; or
(3) there is a dissolution or liquidation of the Company;
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the Company shall mail to Holders at the addresses appearing on the
Registrar's books and the Trustee a notice stating the proposed record or
effective date, as the case may be, to permit a Holder of a Note to convert
such Note into shares of Class A Subordinate Voting Stock prior to the record
date for or the effective date of the transaction in order to receive the
rights, warrants, securities or assets which a holder of shares of Class A
Subordinate Voting Stock on that date may receive. The Company shall mail the
notice at least 15 days before such date; however, failure to mail such notice
or any defect therein shall not affect the validity of any transaction
referred to in clause (1), (2) or (3) of this Section 4.11.
Section 4.12. Effect of Reclassifications, Consolidations, Mergers or Sales
on Conversion Privilege.
If any of the following shall occur, namely: (i) any reclassification or
change of outstanding shares of Class A Subordinate Voting Stock issuable upon
conversion of Notes (other than a change in par value, or from par value to no
par value, or from no par value to par value, or as a result of a subdivision
or combination or as a result of a reincorporation of the Company in another
jurisdiction), (ii) any consolidation or merger to which the Company is a
party other than a merger in which the Company is the continuing corporation
and which does not result in any reclassification of, or change (other than a
change in name, or par value, or from par value to no par value, or from no
par value to par value or as a result of a subdivision or combination) in,
outstanding shares of Class A Subordinate Voting Stock or (iii) any sale or
conveyance of all or substantially all the property or business of the Company
as an entirety, then the Company, or such successor or purchasing corporation,
as the case may be, shall, as a condition precedent to such reclassification,
change, consolidation, merger, sale or conveyance, execute and deliver to the
Trustee a supplemental indenture in form reasonably satisfactory to the
Trustee providing that the Holder of each Note then outstanding shall have the
right to convert such Note into the kind and amount of shares of stock and
other securities and property (including cash) receivable upon such
reclassification, change, consolidation, merger, sale or conveyance by a
Holder of the number of shares of Class A Subordinate Voting Stock deliverable
upon conversion of such Note immediately prior to such reclassification,
change, consolidation, merger, sale or conveyance (assuming that such holder
failed to exercise such holder's rights of election, if any, as to the kind or
amount of shares of stock and other securities and property (including cash)
receivable upon such reclassification, change, consolidation, merger, sale or
conveyance). In the event that the shares of Class A Subordinate Voting Stock
are exchanged or substituted for other securities in connection with any such
reclassification, change, consolidation, merger, sale or conveyance, such
supplemental indenture shall provide for adjustments of the Conversion Price
which shall be as nearly equivalent as may be practicable to the adjustments
of the Conversion Price provided for in this Article 4. If, in the case of any
such consolidation, merger, sale or conveyance, the stock or other securities
and property (including cash) receivable thereupon by a holder of Class A
Subordinate Voting Stock includes shares of stock or other securities and
property of a corporation other than the successor or purchasing corporation,
as the case may be, in such consolidation, merger, sale or conveyance, then
such supplemental indenture shall contain such additional provisions to
protect the interests of the Holders of the Notes as the Board of Directors of
the Company shall reasonably consider necessary by reason of the foregoing.
The provision of this Section 4.12 shall similarly apply to successive
consolidations, mergers, sales or conveyances.
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In the event the Company shall execute a supplemental indenture pursuant
to this Section 4.12, the Company shall promptly file with the Trustee an
Officers' Certificate briefly stating the reasons therefor, the kind or amount
of shares of stock or securities or property (including cash) receivable by
Holders of the Notes upon the conversion of their Notes after any such
reclassification, change, consolidation, merger, sale or conveyance and any
adjustment to be made with respect thereto.
Section 4.13. Trustee's Disclaimer.
The Trustee has no duty to determine when an adjustment under this
Article 4 should be made, how it should be made or what such adjustment should
be, but may accept as conclusive evidence of the correctness of any such
adjustment, and shall be protected in relying upon, the Officers' Certificate
with respect thereto which the Company is obligated to file with the Trustee
pursuant to Section 4.10 hereof. The Trustee makes no representation as to the
validity or value of any securities or assets issued upon conversion of Notes,
and the Trustee shall not be responsible for the Company's failure to comply
with any provisions of this Article 4.
The Trustee shall not be under any responsibility to determine the
correctness of any provisions contained in any supplemental indenture executed
pursuant to Section 4.12, but may accept as conclusive evidence of the
correctness thereof, and shall be protected in relying upon, the Officers'
Certificate with respect thereto which the Company is obligated to file with
the Trustee pursuant to Section 4.12 hereof.
Section 4.14. Voluntary Reduction.
The Company from time to time may, subject to approval from the Toronto
Stock Exchange, reduce the Conversion Price by any amount for any period of
time if the period is at least 20 days and if the Board of Directors
determines that such reduction would be in the best interest of the Company
and the Company provides 15 days' prior notice to the Holders of any reduction
in the Conversion Price; provided, however, that in no event may the Company
reduce the Conversion Price to be less than the par value of a share of Class
A Subordinate Voting Stock.
Except as set forth in this Article 4, the Company shall not adjust the
Conversion Price for (a) the issuance of its Class A Subordinate Voting Stock
or any securities convertible into or exchangeable therefor or (b) the right
to purchase its Class A Subordinate Voting Stock or any securities convertible
or exchangeable therefor.
ARTICLE 5.
SUBORDINATION
Section 5.01. Agreement to Subordinate; Pari Passu Obligations.
The Company agrees, and each Holder by accepting a Note agrees, that the
Indebtedness evidenced by the Notes (including the principal of, premium, if
any, and interest (including Additional Interest, if any) on all the Notes and
the redemption price with respect to any Notes being called for redemption and
the Change in Control Payment with respect to all Notes subject to purchase
pursuant to Section 6.09 hereof) is subordinated in right of payment, to the
extent
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and in the manner provided in this Article 5, to the prior payment in full of
all Senior Indebtedness (whether outstanding on the date hereof or hereafter
created, incurred, assumed or guaranteed), and that such subordination is
intended for the benefit of, and may be enforced by, each holder of Senior
Indebtedness.
Each Holder by accepting a Note agrees that the Indebtedness evidenced by
the Notes (including the principal of, premium, if any, and interest
(including Additional Interest, if any) on all the Notes and the redemption
price with respect to any Notes being called for redemption and the Change in
Control Payment with respect to all Notes subject to purchase pursuant to
Section 6.09 hereof) shall rank pari passu in right of payment with the
Company's $75,000,000 aggregate principal amount of 7-1/4% Convertible
Subordinated Notes due December 15, 2009.
Section 5.02. Liquidation; Dissolution; Bankruptcy.
(a) Upon payment or distribution of assets of the Company, of any kind or
character, including without limitation cash, property or securities, to
creditors pursuant to or as a result of any Insolvency or Bankruptcy
Proceeding, all principal, interest (including interest after the commencement
of any Insolvency or Bankruptcy Proceeding at the default rate set forth in
the agreement or instrument relating to such Senior Indebtedness whether or
not such interest is an allowable claim under such proceeding), or other
amounts payable on the Senior Indebtedness or claims relating thereto, shall
first be paid in full, or payment thereof be provided for in cash or in a
manner satisfactory to the holders of such Senior Indebtedness, before either
the Holders of the indebtedness evidenced by the Notes or the Trustee under
this Indenture shall be entitled to retain any assets so paid or distributed
in respect of this Indenture; and upon any such Insolvency or Bankruptcy
Proceeding any payment or distribution of assets of the Company, of any kind
or character, including without limitation, cash, property or securities, to
which the Holders of the Notes or the Trustee under this Indenture would be
entitled except for the provisions of this Article 5, shall be paid by the
Company or by any receiver, administrator, trustee in bankruptcy, liquidating
trustee, agent or other person making such payment or distribution, or by the
Holders of the Notes or by the Trustee under this Indenture if received by
them or it, directly to the holders of the Senior Indebtedness or to their
representatives under the agreement or instrument pursuant to which such
Senior Indebtedness may have been issued as their respective interests may
appear, to the extent necessary to pay all Senior Indebtedness in full, in
cash or in a manner satisfactory to the holders of such Senior Indebtedness,
before any payment or distribution is made to the Holders of the Notes or by
the Trustee under this Indenture.
(b) Upon any distribution of assets of the Company referred to in this
Article 5, the Trustee, subject to Article 9, and the Holders of Notes will be
entitled to rely upon a certificate of the liquidation trustee or agent or
other person making any distribution to the Trustee or to the Holders of Notes
for the purpose of ascertaining the persons entitled to participate in such
distribution, the holders of the Senior Indebtedness and other Indebtedness of
the Company, the amount thereof or payable thereon, the amount paid or
distributed thereon and all other facts pertinent thereto or to this Article
5.
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Section 5.03. Default on Senior Indebtedness.
No payment or prepayment on account of principal, or interest on
(including Additional Interest), and no repurchase, redemption or other
retirement (including without limitation any defeasance) of the Notes shall be
made if at the time of such payment or prepayment or immediately after giving
effect thereto, there shall exist under any Senior Indebtedness or any
agreement or instrument pursuant to which any Senior Indebtedness is
outstanding, any default or any conditions, event or act which with notice,
lapse of time, or both, would constitute an event of default, unless such
Senior Indebtedness has been repaid in full or unless and until such default
or event of default has been cured or waived or has ceased to exist.
Section 5.04. Acceleration of Notes.
If payment of the Notes is accelerated because of an Event of Default,
the Company shall promptly notify holders of Senior Indebtedness of the
acceleration.
Section 5.05. When Distribution Must Be Paid Over.
If any payment or distribution of any kind, including without limitation,
cash, property or securities, is made by way of set-off or otherwise to the
Holders of the Notes or to the Trustee under this Indenture that because of
these subordination provisions should not have been made to it, such Trustee
or Holder who receives the distribution shall segregate such distribution from
its other funds and property and shall hold it in trust for the benefit of,
and upon demand shall pay it over to, the holders of Senior Indebtedness or to
their Representatives under the agreement or instrument pursuant to which such
Senior Indebtedness may have been issued or incurred as their respective
interests may appear, for application to, or for the payment or prepayment in
full of, all Senior Indebtedness and all claims relating thereto.
Section 5.06. Notice by Company.
The Company shall promptly notify the Trustee and the Paying Agent of any
facts known to the Company that would cause a payment of any Obligations with
respect to the Notes to violate this Article 5, but failure to give such
notice shall not affect the subordination of the Notes to the Senior
Indebtedness as provided in this Article 5.
Section 5.07. Subrogation.
Subject to the payment in full of all Senior Indebtedness, the rights of
the Holders of Notes will be subrogated to the rights of the holders of Senior
Indebtedness to receive payments or distributions of assets of the Company
applicable to the Senior Indebtedness, to the extent of the application
thereto of monies or other assets which would have been received by the
Holders of Notes but for the provisions of this Article 5, until the Notes
have been paid in full and no such subrogation, as between the Company, its
creditors other than the holders of Senior Indebtedness, and the Holders of
Notes, will be deemed to be a payment by the Company to or on account of the
holders of Senior Indebtedness.
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Section 5.08. Relative Rights.
This Article 5 defines the relative rights of Holders of Notes and
holders of Senior Indebtedness. Nothing in this Indenture shall:
(i) impair, as between the Company and Holders of Notes, the
obligation of the Company, which is absolute and unconditional, to pay
principal of and interest on the Notes in accordance with their terms;
(ii) affect the relative rights of Holders of Notes and creditors of
the Company other than their rights in relation to holders of Senior
Indebtedness; or
(iii) prevent the Trustee or any Holder of Notes from exercising its
available remedies upon a Default or Event of Default, subject to the
rights of holders and owners of Senior Indebtedness to receive
distributions and payments otherwise payable to Holders of Notes.
If the Company fails because of this Article 5 to pay principal of or
interest (including Additional Interest) on a Note on the due date, the
failure is still a Default or Event of Default.
Section 5.09. Subordination May Not Be Impaired by Company.
No right of any holder of Senior Indebtedness to enforce the
subordination of the Indebtedness evidenced by the Notes shall be impaired by
any act or failure to act by the Company or any Holder or by the failure of
the Company or any Holder to comply with this Indenture.
Section 5.10. Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders of
Senior Indebtedness, the distribution may be made and the notice given to
their Representative.
Upon any payment or distribution of assets of the Company referred to in
this Article 5, the Trustee and the Holders of Notes shall be entitled to rely
upon any order or decree made by any court of competent jurisdiction or upon
any certificate of such Representative or of the liquidating trustee or agent
or other Person making any distribution to the Trustee or to the Holders of
Notes for the purpose of ascertaining the Persons entitled to participate in
such distribution, the holders of the Senior Indebtedness and other
Indebtedness of the Company, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto
or to this Article 5.
Section 5.11. Rights of Trustee and Paying Agent.
Notwithstanding the provisions of this Article 5 or any other provision
of this Indenture, the Trustee shall not be charged with knowledge of the
existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless the Trustee shall have received at its
Corporate Trust Office at least five Business Days prior to the date of such
payment written
35
notice of facts that would cause the payment of any Obligations with respect
to the Notes to violate this Article 5. Only the Company or a Representative
may give the notice. Nothing in this Article 5 shall impair the claims of, or
payments to, the Trustee under or pursuant to Section 9.07 hereof.
The Trustee in its individual or any other capacity may hold Senior
Indebtedness with the same rights it would have if it were not Trustee. Any
Agent may do the same with like rights.
Section 5.12. Authorization to Effect Subordination.
Each Holder of Notes by its acceptance thereof authorizes and directs the
Trustee on its behalf to take such action as may be necessary or appropriate
to acknowledge and effectuate the subordination of the Notes as provided for
in this Article 5 and appoints the Trustee as attorney-in-fact for any and all
such purposes. Forthwith upon the request of any holder of Senior Indebtedness
or its representative or the trustee under any indenture under which any
instruments evidencing Senior Indebtedness may have been issued, the Trustee
shall execute and deliver to the person making such request such agreements or
instruments reasonably acceptable to the Trustee in favor of the holders of
Senior Indebtedness reflecting the terms of the subordination of the Notes
provided for in this Article 5 and in a form reasonably acceptable to such
holder, representative or trustee, as applicable.
Section 5.13. Payments of Notes Permitted.
Nothing contained in this Indenture, or any of the Notes, will upon the
happening of any default, condition, event or act described in Section 5.03,
prevent any payment being made by the Company or the Trustee in connection
with the redemption or repurchase of Notes if: (i) notice of redemption or
repurchase, as applicable, has been given pursuant to Article 3 or Section
6.09, respectively, prior to the happening of any such default, condition,
event or act described in Section 5.03; (ii) notice of such redemption or
repurchase, as applicable, is mailed not earlier than sixty (60) days before
the date fixed for such redemption or repurchase; and (iii) prior to the time
of such mailing the Company shall have furnished to the Trustee an Officers'
Certificate as to the absence of any such default, condition, event or act
described in Section 5.03 and to the effect that, to the best of the knowledge
and belief of the officers signing such certificate, there is no reason to
expect that any such default, condition, event or act will exist at the date
fixed for such redemption or repurchase, as applicable, or as a result of such
redemption or repurchase.
Section 5.14. Trustee Not Fiduciary for Holders of Senior Indebtedness.
With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform only such obligations on the part of the Trustee as are
specifically set forth in this Article 5, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to
owe any fiduciary duty to the holders of Senior Indebtedness and shall not be
liable to any such holders if the Trustee shall in good faith mistakenly pay
over or distribute to (i) Holders or holders of shares of Class A Subordinate
Voting Stock issued upon conversion of such Notes; (ii) the Company; or (iii)
any other person cash, property or securities to which any holders of Senior
36
Indebtedness would be entitled by virtue of this Article 5 or otherwise. With
respect to the holders of Senior Indebtedness, the Trustee undertakes to
perform or to observe only such of its covenants or obligations as are
specifically set forth in this Article 5 and no implied covenants or
obligations with respect to holders of Senior Indebtedness shall be read into
this Indenture against the Trustee.
ARTICLE 6.
COVENANTS
Section 6.01. Payment of Notes.
The Company shall pay or cause to be paid the principal of and interest
on the Notes on the dates and in the manner provided in the Notes. Principal
and interest shall be considered paid on the date due if the Paying Agent, if
other than the Company or a Subsidiary thereof, holds as of 10:30 a.m., New
York City Time, on the due date money deposited by the Company in immediately
available funds and designated for and sufficient to pay all principal and
interest then due. The Company shall pay all Additional Interest, if any, in
the same manner on the dates and in the amounts set forth in the Registration
Rights Agreement.
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the rate borne by
the Notes to the extent lawful; it shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue installments
of interest and Additional Interest (without regard to any applicable grace
period) at the same rate to the extent lawful.
Section 6.02. Maintenance of Office or Agency.
The Company shall maintain in the Borough of Manhattan in New York City,
U.S.A. and in London, England, a Paying Agent, Conversion Agent, Registrar and
an office or agency (which may be an office of the Trustee or an affiliate of
the Trustee or Registrar) where Notes may be surrendered for registration of
transfer or for exchange and where notices and demands to or upon the Company
in respect of the Notes and this Indenture may be served. The Company shall
give prompt written notice to the Trustee of the location, and any change in
the location, of such office or agency. If at any time the Company fails to
maintain any such required office or agency or fails 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, however, 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 in New York City, U.S.A. and in London, England for such
purposes. The Company shall give prompt written notice to the Trustee of any
such designation or rescission and of any change in the location of any such
other office or agency.
The Company hereby designates the Corporate Trust Office of the Trustee
as one such office or agency of the Company in accordance with Section 2.03.
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Section 6.03. Reports.
Whether or not required by the rules and regulations of the SEC, so long
as any Notes are outstanding, the Company shall furnish to the Holders of
Notes (i) all quarterly and annual financial information that would be
required to be contained in a filing with the SEC on Forms 10-Q and 10-K if
the Company were required to file such forms, including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and,
with respect to the annual information only, a report thereon by the Company's
certified independent accountants and (ii) all current reports that would be
required to be filed with the SEC on Form 8-K if the Company were required to
file such reports, in each case, within the time periods specified in the
SEC's rules and regulations. The Company shall at all times comply with TIA
Section 314(a).
Section 6.04. Rule 144A Information Requirement.
Within the period prior to the expiration of the holding period
applicable to sales thereof under Rule 144(k) under the Securities Act (or any
successor provision), the Company covenants and agrees that it shall, during
any period in which it is not subject to Section 13 or 15(d) under the
Exchange Act, make available to any Holder or beneficial holder of Notes or
any Class A Subordinate Voting Stock issued upon conversion thereof which
continue to be either a Restricted Global Note or a Restricted Definitive Note
in connection with any sale thereof and any prospective purchaser of Notes or
such Class A Subordinate Voting Stock designated by such Holder or beneficial
holder, the information required pursuant to Rule 144A(d)(4) under the
Securities Act upon the request of any Holder or beneficial holder of the
Notes or such Class A Subordinate Voting Stock and it will take such further
action as any Holder or beneficial holder of such Notes or such Class A
Subordinate Voting Stock may reasonably request, all to the extent required
from time to time to enable such Holder or beneficial holder to sell its Notes
or Class A Subordinate Voting Stock without registration under the Securities
Act within the limitation of the exemption provided by Rule 144A, as such Rule
may be amended from time to time. Upon the request of any Holder or any
beneficial holder of the Notes or such Class A Subordinate Voting Stock, the
Company will deliver to such Holder a written statement as to whether it has
complied with such requirements.
Section 6.05. Compliance Certificate.
(a) The Company shall deliver to the Trustee, within 90 days after the
end of each fiscal year, an Officers' Certificate stating that a review of the
activities of the Company and its Subsidiaries during the preceding fiscal
year has been made under the supervision of the signing Officers with a view
to determining whether the Company has kept, observed, performed and fulfilled
its obligations under this Indenture, and further stating, as to each such
Officer signing such certificate, that to the best of his or her knowledge the
Company has kept, observed, performed and fulfilled each and every covenant
contained in this Indenture and is not in default in the performance or
observance of any of the terms, provisions and conditions of this Indenture
(or, if a Default or Event of Default shall have occurred, describing all such
Defaults or Events of Default of which he or she may have knowledge and what
action the Company is taking or proposes to take with respect thereto) and
that to the best of his or her knowledge no event has occurred and remains in
existence by reason of which payments on account of the principal of or
38
interest, if any, on the Notes is prohibited or if such event has occurred, a
description of the event and what action the Company is taking or proposes to
take with respect thereto.
(b) The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon any Officer becoming aware of any
Default or Event of Default, an Officers' Certificate specifying such Default
or Event of Default and what action the Company is taking or proposes to take
with respect thereto.
Section 6.06. Taxes.
The Company shall pay, and shall cause each of its Subsidiaries to pay,
prior to delinquency, all material taxes, assessments, and governmental levies
except such as are contested in good faith and by appropriate proceedings or
where the failure to effect such payment is not adverse in any material
respect to the Holders of the Notes.
Section 6.07. 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 wherever
enacted, now or at any time hereafter in force, that may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it
may lawfully do so) hereby expressly waives all benefit or advantage of any
such law, and covenants that it shall not, by resort to any such law, hinder,
delay or impede the execution of any power herein granted to the Trustee, but
shall suffer and permit the execution of every such power as though no such
law has been enacted.
Section 6.08. Corporate Existence.
Subject to Article 7 hereof, the Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect (i) its
corporate existence, and the corporate, partnership or other existence of each
of its Significant Subsidiaries, in accordance with the respective
organizational documents (as the same may be amended from time to time) of the
Company or any such Significant Subsidiary and (ii) the rights (charter and
statutory), licenses and franchises of the Company and its Subsidiaries;
provided, however, that the Company shall not be required to preserve any such
right, license or franchise, or the corporate, partnership or other existence
of any of its Subsidiaries, if the Board of Directors shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and its Subsidiaries, taken as a whole, and that the loss thereof
is not adverse in any material respect to the Holders of the Notes.
Section 6.09. Offer to Repurchase Upon Change in Control.
(a) Upon the occurrence of a Change in Control, the Company shall make an
offer (a "Change in Control Offer") to each Holder to repurchase all or any
part (equal to $1,000 or an integral multiple thereof) of each Holder's Notes
at a purchase price equal to 100% of the aggregate principal amount thereof
plus accrued and unpaid interest and Additional Interest thereon, if any, to,
but excluding, the date of purchase (the "Change in Control Payment"). Within
10 Business Days following any Change in Control, the Company shall mail a
notice to
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each Holder stating: (1) that the Change in Control Offer is being made
pursuant to this Section 6.09 and that all Notes tendered will be accepted for
payment; (2) the purchase price and the purchase date, which shall be 30
Business Days after the occurrence of a Change in Control (the "Change in
Control Payment Date"); (3) that any Note not tendered will continue to accrue
interest; (4) the name and address of each Paying Agent and Conversion Agent;
(5) the Conversion Price and any adjustments thereto and information
concerning the Holder's right to convert the Notes; (6) that Notes as to which
a Change in Control Payment Notice has been given may be converted into Class
A Subordinate Voting Stock pursuant to this Section 6.09 only to the extent
that the Change in Control Payment Notice has been withdrawn in accordance
with the terms of this Indenture; (7) that, unless the Company defaults in the
payment of the Change in Control Payment, all Notes accepted for payment
pursuant to the Change in Control Offer shall cease to accrue interest after
the Change in Control Payment Date; (8) that Holders electing to have any
Notes purchased pursuant to a Change in Control Offer will be required to
surrender the Notes, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Notes completed, to the Paying Agent at the
address specified in the notice prior to the close of business on the Business
Day preceding the Change in Control Payment Date; (9) that Holders will be
entitled to withdraw their election if the Paying Agent receives, not later
than the close of business on the Business Day preceding the Change in Control
Payment Date, facsimile transmission, letter or any other written form setting
forth the name of the Holder, the principal amount of Notes delivered for
purchase, and a statement that such Holder is withdrawing its election to have
the Notes purchased; and (10) that Holders whose Notes are being purchased
only in part will be issued new Notes equal in principal amount to the
unpurchased portion of the Notes surrendered, which unpurchased portion must
be equal to $1,000 in principal amount or an integral multiple thereof. The
Company shall comply with the requirements of Rule 13e-4 and Rule 14e-1 under
the Exchange Act, file a Schedule TO or any successor or similar schedule, if
required, under the Exchange Act and comply with any other federal and state
securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of Notes in
connection with a Change in Control.
A "Change in Control" shall be deemed to have occurred if any of the
following occurs after the date hereof:
(i) any "person" or "group" (as such terms are defined below) is or
becomes the "beneficial owner" (as defined below), directly or indirectly
of shares of Voting Stock of the Company representing 50% or more of the
total voting power of all outstanding classes of Voting Stock of the
Company or has the power, directly or indirectly, to elect a majority of
the members of the Board of Directors of the Company; or
(ii) the Company consolidates with, or merges with or into, another
Person or the Company sells, assigns, conveys, transfers, leases or
otherwise disposes of all or substantially all of the assets of the
Company, or any Person consolidates with, or merges with or into, the
Company, in any such event other than pursuant to a transaction in which
the Persons that "beneficially owned" (as defined below), directly or
indirectly, shares of Voting Stock of the Company immediately prior to
such transaction "beneficially own" (as defined below), directly or
indirectly, shares of Voting Stock of the Company representing at least a
majority of the total voting power of all outstanding classes of Voting
Stock of the surviving or transferee Person; or
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(iii) holders of the Capital Stock of the Company approve any plan
or proposal for the liquidation or dissolution of the Company (whether or
not otherwise in compliance with this Indenture).
For the purpose of the definition of "Change in Control", (i) "person"
and "group" have the meanings given such terms under Section 13(d) and 14(d)
of the Exchange Act or any successor provision to either of the foregoing, and
the term "group" includes any group acting for the purpose of acquiring,
holding or disposing of securities within the meaning of Rule 13d-5(b)(1)
under the Exchange Act (or any successor provision thereto), (ii) a
"beneficial owner" shall be determined in accordance with Rule 13d-3 under the
Exchange Act, as in effect on the date of this Indenture, except that the
number of shares of Voting Stock of the Company shall be deemed to include, in
addition to all outstanding shares of Voting Stock of the Company and Unissued
Shares (as defined below) deemed to be held by the "person" or "group" (as
such terms are defined above) or other Person with respect to which the Change
in Control determination is being made, all Unissued Shares deemed to be held
by all other Persons, and (iii) the terms "beneficially owned" and
"beneficially own" shall have meanings correlative to that of "beneficial
owner". The term "Unissued Shares" means shares of Voting Stock not
outstanding that are subject to options, warrants, rights to purchase or
conversion privileges exercisable within 60 days of the date of determination
of a Change in Control, including the shares of Class A Subordinate Voting
Stock issuable upon conversion of the Notes.
Notwithstanding anything to the contrary set forth in this Section 6.09,
a Change in Control will be deemed not to have occurred if:
(i) any of the Stronach Trust, Frank Stronach or any member of his
immediate family, or any of their heirs or personal representatives,
continues to be the "beneficial owner", directly or indirectly, of shares
of the Company's Voting Stock representing 50% or more of the total
voting power of all outstanding classes of the Voting Stock of the
Company or continues to have the power, directly or indirectly, to elect
a majority of the members of the Board of Directors of the Company; or
(ii) the Closing Sale Price of the Class A Subordinate Voting Stock
for any five Trading Days during the period of the ten Trading Days
immediately preceding the Change in Control is at least equal to 105% of
the Conversion Price in effect on such day; or
(iii) in the case of a merger or consolidation, all the
consideration (excluding cash payments for fractional shares and cash
payments pursuant to dissenters' appraisal rights) in the merger or
consolidation constituting the Change in Control consists of Class A
Subordinate Voting Stock traded on a United States national securities
exchange or quoted on NASDAQ (or which will be so traded or quoted when
issued or exchanged in connection with such Change in Control) and as a
result of such transaction or transactions the Notes become convertible
solely into such Class A Subordinate Voting Stock.
(b) A Holder may exercise its rights pursuant to this Section 6.09 upon
delivery of a written notice (which shall be in substantially the form
entitled "Option of Holder to Elect
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Purchase" on the reverse of the Notes and which may be delivered by letter,
overnight courier, hand delivery, facsimile transmission or in any other
written form and, in the case of Global Notes, may be delivered electronically
or by other means in accordance with the Common Depositary's customary
procedures) of the exercise of such rights (a "Change in Control Payment
Notice") to any Paying Agent at any time prior to the close of business on the
Business Day next preceding the Change in Control Payment Date.
Notwithstanding anything herein to the contrary, any Holder delivering to
a Paying Agent the Change in Control Payment Notice contemplated by this
Section 6.09(b) shall have the right to withdraw such Change in Control
Payment Notice in whole or in a portion thereof that is a principal amount of
$1,000 or in an integral multiple thereof at any time prior to the close of
business on the Business Day next preceding the Change in Control Payment Date
by delivery of a written notice of withdrawal to the Paying Agent in
accordance with Section 6.09(a) hereof.
Upon receipt by any Paying Agent of the Change in Control Payment Notice
specified in this Section 6.09(b), the Holder of the Note in respect of which
such Change in Control Payment Notice was given shall (unless such Change in
Control Payment Notice is withdrawn as specified below) thereafter be entitled
to receive the Change in Control Payment with respect to such Note. Such
Change in Control Payment shall be paid to such Holder promptly following the
later of (i) the Change in Control Payment Date with respect to such Note
(provided the conditions in this Section 6.09(b) have been satisfied) and (ii)
the time of delivery of such Note to a Paying Agent by the Holder thereof in
the manner required by this Section 6.09(b). Notes in respect of which a
Change in Control Payment Notice has been given by the Holder thereof may not
be converted into shares of Class A Subordinate Voting Stock on or after the
date of the delivery of such Change in Control Payment Notice unless such
Change in Control Payment Notice has first been validly withdrawn.
(c) No later than 10:30 a.m. New York City time, on the Change in Control
Payment Date, the Company shall, to the extent lawful, (1) accept for payment
all Notes or portions thereof properly tendered pursuant to the Change in
Control Offer, (2) deposit with the Paying Agent an amount equal to the Change
in Control Payment in respect of all Notes or portions thereof so tendered and
(3) deliver or cause to be delivered to the Trustee the Notes so accepted
together with an Officers' Certificate stating the aggregate principal amount
of Notes or portions thereof being purchased by the Company. The Paying Agent
shall promptly mail to each Holder of Notes so tendered payment in an amount
equal to the purchase price for the Notes, and the Trustee shall promptly
authenticate and mail (or cause to be transferred by book entry) to each
Holder a new Note equal in principal amount to any unpurchased portion of the
Notes surrendered by such Holder, if any; provided that each such new Note
shall be in a principal amount of $1,000 or an integral multiple thereof. The
Company shall publicly announce the results of the Change in Control Offer on
or as soon as practicable after the Change in Control Payment Date.
If a Paying Agent holds, in accordance with the terms hereof, money
sufficient to pay the Change in Control Payment of any Note for which a Change
in Control Payment Notice has been tendered and not withdrawn in accordance
with this Indenture then, on the Change in Control Payment Date, such Note
will cease to be outstanding and the rights of the Holder in respect
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thereof shall terminate (other than the right to receive the Change in Control
Payment as aforesaid).
(d) Notwithstanding anything to the contrary in this Section 6.09, the
Company shall not be required to make a Change in Control Offer upon a Change
in Control if a third party makes the Change in Control Offer in the manner,
at the times and otherwise in compliance with the requirements set forth in
this Section 6.09 hereof and all other provisions of this Indenture applicable
to a Change in Control Offer made by the Company and purchases all Notes
validly tendered and not withdrawn under such Change in Control Offer.
Section 6.10. Payment of Additional Interest.
If Additional Interest is payable by the Company pursuant to the
Registration Rights Agreement, the Company shall deliver to the Trustee an
Officers' Certificate to that effect stating (i) the amount of such Additional
Interest that is payable and (ii) the date on which such Additional Interest
is payable. Unless and until a Trust Officer of the Trustee receives such an
Officers' Certificate, the Trustee may assume without inquiry that no such
Additional Interest is payable. If the Company has paid Additional Interest
directly to the Persons entitled to it, the Company shall deliver to the
Trustee an Officers' Certificate setting forth the particulars of such
payment.
ARTICLE 7.
SUCCESSORS
Section 7.01. Merger, Consolidation, or Sale of Assets.
The Company shall not, directly or indirectly, consolidate or merge with
or into (whether or not the Company is the surviving corporation), or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially
all its properties or assets in one or more related transactions to, another
Person unless (i) the Company is the surviving corporation or the Person
formed by or surviving any such consolidation or merger (if other than the
Company) or to which such sale, assignment, transfer, lease, conveyance or
other disposition has been made is a corporation organized or existing under
the laws of the United States, Canada, any state within the United States, any
province of Canada or the District of Columbia, (ii) the Person formed by or
surviving any such consolidation or merger (if other than the Company) or the
Person to which such sale, assignment, transfer, lease, conveyance or other
disposition has been made assumes all the obligations of the Company under the
Registration Rights Agreement, the Notes and this Indenture pursuant to a
supplemental indenture in a form reasonably satisfactory to the Trustee, (iii)
immediately after giving effect to such transaction, no Default or Event of
Default has occurred and is continuing and (iv) the Company or the surviving
corporation, as the case may be, has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such merger,
consolidation, sale, assignment, transfer, lease, conveyance, transfer or
other dispositions comply with this Article 7 and that all conditions
precedent herein provided for relating to such transaction have been
satisfied.
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Section 7.02. Successor Corporation Substituted.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all the assets
of the Company in accordance with Section 7.01 hereof, the successor
corporation formed by such consolidation or into or with which the Company is
merged or to which such sale, assignment, transfer, lease, conveyance or other
disposition is made shall succeed to, and be substituted for (so that from and
after the date of such consolidation, merger, sale, assignment, transfer,
lease, conveyance or other disposition, the provisions of this Indenture
referring to the "Company" shall refer instead to the successor corporation
and not to the Company), and may exercise every right and power of the Company
under this Indenture with the same effect as if such successor Person had been
named as the Company herein; provided, however, that the predecessor Company
shall not be relieved from the obligation to pay the principal of and interest
on the Notes except in the case of a sale, assignment, transfer, lease,
conveyance or other disposition of all or substantially all the Company's
assets that meets the requirements of Section 7.01 hereof.
ARTICLE 8.
DEFAULTS AND REMEDIES
Section 8.01. Events of Default.
An "Event of Default" occurs if:
(a) the Company fails to pay principal on any Note when due, whether or
not prohibited by the subordination provisions in Section 5 hereof;
(b) the Company fails to pay any interest, including any Additional
Interest, on any Note when due if such failure continues for 30 days, whether
or not prohibited by the subordination provisions of Section 5 hereof;
(c) the Company fails to perform any other agreement required of the
Company in this Indenture if such failure continues for 60 days after notice
is given in accordance with this Indenture;
(d) the Company fails to pay the purchase price of any Note when due,
whether or not prohibited by the subordination provisions of Section 5 hereof;
(e) the Company fails to provide timely notice of a Change in Control if
such failure continues for 30 days after notice is given;
(f) any Indebtedness for money borrowed by the Company or one of the
Company's Significant Subsidiaries (all or substantially all of the
outstanding Voting Stock of which are owned, directly or indirectly, by the
Company) in an aggregate outstanding principal amount in excess of $10.0
million is not paid at final maturity or upon acceleration and such
Indebtedness is not discharged, or such acceleration is not cured or
rescinded, within 30 days after written notice as provided in this Indenture;
and
44
(g) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(i) is for relief against the Company in an involuntary case;
(ii) appoints a custodian of the Company or for all or substantially
all of the property of the Company; or
(iii) orders the liquidation of the Company;
and the order or decree remains unstayed and in effect for 60 consecutive
days.
Section 8.02. Acceleration.
If any Event of Default (other than an Event of Default specified in
clause (g) of Section 8.01 hereof) with respect to the Company occurs and is
continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount of the then outstanding Notes may declare all the Notes to be due and
payable immediately. Upon any such declaration, the Notes shall become due and
payable immediately. Notwithstanding the foregoing, if an Event of Default
specified in clause (g) of Section 8.01 hereof occurs with respect to the
Company, all outstanding Notes shall be due and payable immediately without
further action or notice. Any payment by the Company on the Notes following
any such acceleration will be subject to the subordination provisions of
Section 5 hereof. Before a judgment or decree is entered based on such
acceleration, the Holders of a majority in aggregate principal amount of the
then outstanding Notes by written notice to the Trustee may on behalf of all
of the Holders rescind and annul an acceleration and its consequences if all
existing Events of Default (except nonpayment of principal that has become due
solely because of the acceleration) have been cured or waived.
Section 8.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy to collect the payment of principal, premium, if any, and
interest on the Notes or to enforce the performance of any provision of the
Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. All
remedies are cumulative to the extent permitted by law.
Section 8.04. Waiver of Past Defaults.
Subject to Section 8.02, Holders of not less than a majority in aggregate
principal amount of the then outstanding Notes by notice to the Trustee may on
behalf of the Holders of all of the Notes waive an existing Default or Event
of Default and its consequences hereunder, except a continuing Default or
Event of Default in the payment of the principal of, premium, if any, and
Additional Interest, if any, or interest on, the Notes (including in
connection with an offer to purchase) or a failure by the Company to convert
any Notes into Class A Subordinate Voting
45
Stock in accordance with the provisions of the Notes and Article 4 of this
Indenture, or a failure to comply with any of the provisions of this Indenture
that would require the consent of the Holder of each outstanding Note affected
to waive such failure (provided, however, that the Holders of a majority in
aggregate principal amount of the then outstanding Notes may rescind an
acceleration and its consequences, including any related payment default that
resulted from such acceleration). Upon any such waiver, such Default shall
cease to exist, and any Event of Default arising therefrom shall be deemed to
have been cured for every purpose of this Indenture; but no such waiver shall
extend to any subsequent or other Default or impair any right consequent
thereon.
Section 8.05. Control by Majority.
Subject to the Trustee's duties in the case of an Event of Default, the
Trustee will not be obligated to exercise any of its rights or powers at the
request of the Holders, unless the Holders have offered to the Trustee
reasonable indemnity. Subject to this Indenture, applicable law and the
Trustee's indemnification, the Holders of a majority in principal amount of
the then outstanding Notes may direct the time, method and place of conducting
any proceeding for exercising any remedy available to the Trustee or
exercising any trust or power conferred on it with respect to the Notes.
However, the Trustee may refuse to follow any direction that conflicts with
law or this Indenture, that the Trustee determines may be unduly prejudicial
to the rights of other Holders of Notes or that may involve the Trustee in
personal liability.
Section 8.06. Limitation on Suits.
A Holder of a Note may pursue a remedy with respect to this Indenture or
the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if requested,
provide to the Trustee indemnity reasonably satisfactory to the Trustee
against any loss, liability or expense resulting from instituting such
proceeding as Trustee;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in aggregate
principal amount of the then outstanding Notes did not give the Trustee a
direction inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the rights of
another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.
46
Section 8.07. Rights of Holders of Notes to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal, premium, if any, and
Additional Interest, if any, and interest on the Note, on or after the
respective due dates expressed in the Note (including in connection with an
offer to purchase), to convert such Note in accordance with Article 4 or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.
Section 8.08. Collection Suit by Trustee.
If an Event of Default specified in Section 8.01(a) or (b) occurs and is
continuing, the Trustee is authorized to recover judgment in its own name and
as trustee of an express trust against the Company for the whole amount of
principal of, premium, if any, and Additional Interest, if any, and interest
remaining unpaid on the Notes and interest on overdue principal and, to the
extent lawful, interest and such further amount as shall be sufficient to
cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel.
Section 8.09. Trustee May File Proofs of Claim.
The Trustee is authorized 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 (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the
Company (or any other obligor upon the Notes), its creditors or its property
and shall be entitled and empowered to collect, receive and distribute any
money or other property payable or deliverable on any such claims and any
custodian in any such judicial proceeding is hereby authorized by each Holder
to make such payments to the Trustee, and in the event that the Trustee shall
consent to the making of such payments directly to the Holders, to pay to the
Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any
other amounts due the Trustee under Section 9.07 hereof. To the extent that
the payment of any such compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, and any other amounts due the Trustee
under Section 9.07 hereof out of the estate in any such proceeding, 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, money, securities
and other properties that the Holders may be entitled to receive in such
proceeding 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 accept or adopt on behalf
of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize
the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
Section 8.10. Priorities.
If the Trustee collects any money pursuant to this Article, subject to
Article 5 of this Indenture, it shall pay out the money in the following
order:
47
First: to the Trustee, its agents and attorneys for amounts due
under Section 9.07 hereof, including payment of all compensation, expense
and liabilities incurred, and all advances made, by the Trustee and the
costs and expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the Notes
for principal, premium, if any, and Additional Interest, if any, and
interest, ratably, without preference or priority of any kind, according
to the amounts due and payable on the Notes for principal, premium, if
any, and Additional Interest, if any and interest, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 8.10.
Section 8.11. Undertaking for Costs.
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 a Trustee, a court in its discretion may require the filing by any
party litigant in the suit of an undertaking to pay the costs of the suit, and
the court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party
litigant. This Section does not apply to a suit by the Trustee, a suit by a
Holder of a Note pursuant to Section 8.07 hereof, or a suit by Holders of more
than 10% in aggregate principal amount of the then outstanding Notes.
ARTICLE 9.
TRUSTEE
Section 9.01. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture,
and use the same degree of care and skill in 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:
(i) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need perform only
those duties that are specifically set forth in this Indenture and no
others, and no implied covenants or obligations shall be read into this
Indenture against the Trustee; and
(ii) 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. However, the Trustee shall examine the certificates and
opinions to
48
determine whether or not they conform to the requirements of this
Indenture (but need not confirm or investigate the accuracy of
mathematical calculations or other facts stated therein).
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of
this Section;
(ii) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(iii) 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 pursuant to Section 8.05 hereof.
(d) Whether or not therein expressly so provided, every provision of this
Indenture that in any way relates to the Trustee is subject to paragraphs (a),
(b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at
the request of any Holders, unless such Holder shall have offered to the
Trustee security and indemnity satisfactory to it against any loss, liability
or expense.
(f) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
Section 9.02. Rights of Trustee.
(a) The Trustee may conclusively rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed or presented by the
proper party or parties. The Trustee shall not be bound to make any inquiry or
investigation into the matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit, and shall incur no
liability or additional liability of any kind by reason of such inquiry or
investigation.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance
on such Officers' Certificate or Opinion of Counsel. The Trustee may consult
with counsel of its choice and the written advice of such counsel or any
Opinion of Counsel shall be full and complete authorization and protection
from
49
liability in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon.
(c) The Trustee may act and rely and shall be protected in acting and
relying in good faith on the opinion or advice of, or information obtained
from, any counsel, accountant, appraiser or other expert or adviser, whether
retained or employed by the Company or by the Trustee, in relation to any
matter arising in the administration of the trusts hereof.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it reasonably believes to be authorized or within the
rights or powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any demand,
request, direction or notice from the Company shall be sufficient if evidenced
by a Company Request or Company Order.
(f) The Trustee shall not be charged with knowledge of any Default or
Event of Default with respect to the Notes unless either (1) a Responsible
Officer shall have actual knowledge of such Default or Event of Default or (2)
written notice of such Default or Event of Default shall have been received by
the Trustee from the Company or from any Holder of the Notes, and such notice
references the Notes and this Indenture.
(g) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder.
(h) The rights, privileges, protections, immunities and benefits given to
the Trustee, including, without limitation, its right to be indemnified, are
extended to, and shall be enforceable by, the Trustee in each of its
capacities hereunder, and each agent, custodian and other Person employed to
act hereunder.
(i) The Trustee may request that the Company deliver an Officers'
Certificate setting forth the names of individuals and/or titles of officers
authorized at such time to take specified actions pursuant to this Indenture,
which Officers' Certificate may be signed by any person authorized to sign an
Officers' Certificate, including any person specified as so authorized in any
such certificate previously delivered and not superseded.
(j) Notwithstanding anything in this Indenture, in no event shall the
Trustee, the Paying Agent, the Conversion Agent or the Registrar be liable
under or in connection with this Indenture for indirect, special, incidental,
punitive or consequential losses or damages of any kind whatsoever, including
but not limited to lost profits, whether or not foreseeable, even if the
Trustee, the Paying Agent, the Conversion Agent or the Registrar has been
advised of the possibility thereof and regardless of the form of action in
which such damages are sought; provided that the Paying Agent, the Conversion
Agent or the Registrar is not the Company or any of its Subsidiaries.
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Section 9.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the owner
or pledgee of Notes and may otherwise deal with the Company or any Affiliate
of the Company with the same rights it would have if it were not Trustee.
However, in the event that the Trustee acquires any conflicting interest it
must eliminate such conflict within 90 days, apply to the SEC for permission
to continue as trustee or resign. Any Agent may do the same with like rights
and duties. The Trustee is also subject to Sections 9.10 and 9.11 hereof.
Section 9.04. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation as
to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision of
this Indenture, it shall not be responsible for the use or application of any
money received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes
or any other document in connection with the sale of the Notes or pursuant to
this Indenture other than its certificate of authentication.
Section 9.05. Notice of Defaults.
If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Holders of Notes a notice of
the Default or Event of Default within 90 days after it occurs. Except in the
case of a Default or Event of Default in payment of principal of, premium, if
any, or interest on any Note, the Trustee may withhold the notice if and so
long as a committee of its Responsible Officers in good faith determines that
withholding the notice is in the interests of the Holders of the Notes.
Section 9.06. Reports by Trustee to Holders of the Notes.
Within 60 days after each June 15 beginning with the June 15 following
the date of this Indenture, and for so long as Notes remain outstanding, the
Trustee shall mail to the Holders of the Notes a brief report dated as of such
reporting date that complies with TIA Section 313(a) (but if no event
described in TIA Section 313(a) has occurred within the 12 months preceding
the reporting date, no report need be transmitted). The Trustee also shall
comply with TIA Section 313(b)(2). The Trustee shall also transmit by mail all
reports as required by TIA Section 313(c).
A copy of each report at the time of its mailing to the Holders of Notes
shall be mailed to the Company and filed with the SEC and each stock exchange
on which the Notes are listed in accordance with TIA Section 313(d). The
Company shall promptly notify the Trustee when the Notes are listed on any
stock exchange.
Section 9.07. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder as
shall be agreed in writing between the Company and the Trustee. The Trustee's
compensation shall not be limited by any law on compensation of a trustee of
an express trust. The Company shall reimburse the Trustee
51
promptly upon request for all reasonable disbursements, advances and expenses
incurred or made by it in addition to the compensation for its services. Such
expenses shall include the reasonable compensation, disbursements and expenses
of the Trustee's agents and counsel.
The Company shall indemnify the Trustee and any predecessor Trustee
against any and all losses, liabilities or expenses incurred by it arising out
of or in connection with the acceptance or administration of its duties,
including taxes (other than taxes based upon, measured by or determined by the
income of the Trustee) under this Indenture, including the costs and expenses
of enforcing this Indenture against the Company (including this Section 9.07)
and defending itself against any claim (whether asserted by the Company or any
Holder or any other person) or liability in connection with the exercise or
performance of any of its powers or duties hereunder, except to the extent any
such loss, liability or expense may be attributable to its negligence or bad
faith. The Trustee shall notify the Company promptly of any claim for which it
may seek indemnity. Failure by the Trustee to so notify the Company shall not
relieve the Company of its obligations hereunder. The Company shall defend the
claim and the Trustee shall cooperate in the defense. The Trustee shall have
the right to employ separate counsel in any and all actions or proceedings
arising out of or in connection with the acceptance or administration of its
duties under this Indenture and participate in the investigation and defense
thereof, and the Company shall pay the reasonable fees and expenses of such
separate counsel; provided, however, that the Trustee may only employ separate
counsel at the expense of the Company if in the reasonable judgment of the
Trustee (i) a conflict of interest exists by reason of common representation
or (ii) there are legal defenses available to the Trustee that are different
from or are in addition to those available to the Company or if all parties
commonly represented do not agree as to the action (or inaction) of counsel.
The Company need not pay for any settlement made without its consent, which
consent shall not be unreasonably withheld.
The obligations of the Company under this Section 9.07 shall survive the
resignation or removal of the Trustee and the satisfaction and discharge of
this Indenture.
To secure the Company's payment obligations in this Section, the Trustee
shall have a lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such lien shall survive the satisfaction and
discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 8.01(g) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents
and counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA Section 313(b)(2) to
the extent applicable.
Section 9.08. Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
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The Trustee may resign in writing at any time and be discharged from the
trust hereby created by so notifying the Company. The Holders of a majority in
principal amount of the then outstanding Notes may remove the Trustee by so
notifying the Trustee and the Company in writing. The Company may remove the
Trustee if:
(a) the Trustee fails to comply with Section 9.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of at least 10% in aggregate principal amount of the then
outstanding Notes may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee, after written request by any Holder who has been a Holder
for at least six months, fails to comply with Section 9.10, such Holder may
petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Thereupon, the resignation or
removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. The successor Trustee shall mail a notice of its succession to
Holders. The retiring Trustee shall promptly transfer all property held by it
as Trustee to the successor Trustee; provided all sums owing to the Trustee
hereunder have been paid and subject to the lien provided for in Section 9.07
hereof. Notwithstanding replacement of the Trustee pursuant to this Section
9.08, the Company's obligations under Section 9.07 hereof shall continue for
the benefit of the retiring Trustee.
Section 9.09. Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation, the
successor corporation without any further act shall be the successor Trustee.
53
Section 9.10. Eligibility; Disqualification.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or
state authorities and that has a combined capital and surplus of at least $100
million as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the requirements
of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to TIA Section
310(b).
Section 9.11. Preferential Collection of Claims Against Company.
The Trustee is subject to TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated
therein.
ARTICLE 10.
SATISFACTION AND DISCHARGE
Section 10.01. Satisfaction and Discharge.
This Indenture will be discharged and will cease to be of further effect
as to all Notes issued hereunder, when:
(1) either:
(a) all outstanding Notes have or will become due and payable at their
scheduled maturity, within one year; or
(b) all outstanding Notes that are scheduled for cancellation have become
due and payable by reason of the making of a notice of redemption or
otherwise or will become due and payable within one year;
and the Company has irrevocably deposited or caused to be deposited with
the Trustee as trust funds in trust solely for the benefit of the
Holders, cash in U.S. dollars, non-callable Government Securities, or a
combination thereof, in such amounts as will be sufficient without
consideration of any reinvestment of interest, to pay and discharge the
entire indebtedness on the Notes not delivered to the Trustee for
cancellation for principal, premium, if any, and Additional Interest, if
any, and accrued interest to the date of maturity or redemption;
provided, however, that the foregoing shall not discharge the Company's
obligation to effect conversion, registration of transfer or exchange of
securities in accordance with the terms of this Indenture;
(2) no Default or Event of Default shall have occurred and be continuing on
the date of such deposit or shall occur as a result of such deposit and
such deposit will not result in a breach or violation of, or constitute a
default under, any other instrument to which the Company is a party or by
which the Company is bound;
54
(3) the Company has paid or caused to be paid all sums payable by it under
this Indenture; and
(4) the Company has delivered irrevocable instructions to the Trustee under
this Indenture to apply the deposited money toward the payment of the
Notes at maturity or the redemption date, as the case may be.
In addition, the Company must deliver an Officers' Certificate and an Opinion
of Counsel to the Trustee stating that all conditions precedent to
satisfaction and discharge have been satisfied.
Notwithstanding the satisfaction and discharge of this Indenture, if
money shall have been deposited with the Trustee pursuant to subclause (b) of
clause (1) of this Section, the provisions of Section 10.02 and of Article 4
shall survive.
Section 10.02. Application of Trust Money; Reinstatement.
All money deposited with the Trustee pursuant to Section 10.01 shall be
held in trust and applied by it, in accordance with the provisions of the
Notes and this Indenture, to the payment, either directly or through any
Paying Agent (including the Company acting as its own Paying Agent) as the
Trustee may determine, to the Persons entitled thereto, of the principal (and
premium, if any) and interest for whose payment such money has been deposited
with the Trustee; but such money need not be segregated from other funds
except to the extent required by law.
If the Trustee or Paying Agent is unable to apply any money or Government
Securities in accordance with Section 10.01 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 10.01 until
such time as the Trustee or such Paying Agent is permitted to apply all such
money in accordance with Section 10.01; provided that if the Company has made
any payment of principal of, premium, if any, or interest on any Notes because
of the reinstatement of its obligations, the Company shall be subrogated to
the rights of the Holders of such Notes to receive such payment from the money
or Government Securities held by the Trustee or Paying Agent.
Section 10.03. Repayment to Company.
The Trustee and each Paying Agent shall promptly pay to the Company upon
request any excess money (i) deposited with them pursuant to Section 10.01 and
(ii) held by them at any time.
The Trustee and each Paying Agent shall pay to the Company upon request
any money held by them for the payment of principal or interest that remains
unclaimed for two years after a right to such money has matured; provided,
however, that the Trustee or such Paying Agent, before being required to make
any such payment, may at the expense of the Company cause to be mailed to each
Holder entitled to such money notice that such money remains unclaimed and
that after a date specified therein, which shall be at least 30 days from the
date of such mailing, any unclaimed balance of such money then remaining will
be repaid to the Company. After
55
payment to the Company, Holders entitled to money must look to the Company for
payment as general creditors.
ARTICLE 11.
AMENDMENT, SUPPLEMENT AND WAIVER
Section 11.01. Without Consent of Holders of Notes.
The Company and the Trustee may amend or supplement this Indenture or the
Notes without the consent of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency or make any other
change that does not, in the good faith opinion of the Board of Directors and
the Trustee, adversely affect the rights of any Holders of Notes in any
material respect;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes or to alter the provisions of Article 2 hereof (including
the related definitions) in a manner that does not materially adversely affect
any Holder;
(c) to provide for the assumption of the Company's obligations to the
Holders of the Notes by a successor to the Company pursuant to Article 7
hereof;
(d) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not, in the good faith
opinion of the Board of Directors of the Company and the Trustee adversely
affect the legal rights hereunder of any Holder of the Note in any material
respect;
(e) to comply with requirements of the SEC in order to effect or maintain
the qualification of this Indenture under the TIA; or
(f) to conform this Indenture to the description of the Notes contained
in the Company's confidential offering memorandum dated May 20, 2003, relating
to the offering of the Notes.
Upon the request of the Company accompanied by a resolution of its Board
of Directors authorizing the execution of any such amended or supplemental
indenture, and upon receipt by the Trustee of the documents described in
Section 9.02 hereof, the Trustee shall join with the Company in the execution
of any amended or supplemental indenture authorized or permitted by the terms
of this Indenture and to make any further appropriate agreements and
stipulations that may be therein contained, but the Trustee shall not be
obligated to enter into such amended or supplemental indenture that affects
its own rights, duties or immunities under this Indenture or otherwise.
Section 11.02. With Consent of Holders of Notes.
Except as provided below in this Section 11.02, the Company and the
Trustee may amend or supplement this Indenture and the Notes with the consent
of the Holders of at least a majority in aggregate principal amount of the
Notes then outstanding voting as a single class (including
56
consents obtained in connection with a tender offer or exchange offer for, or
purchase of, the Notes), and, subject to Sections 8.04 and 8.07 hereof, any
existing Default or Event of Default (other than a Default or Event of Default
in the payment of the principal of, premium, if any, or interest on the Notes,
except a payment default resulting from an acceleration that has been
rescinded) or compliance with any provision of this Indenture or the Notes may
be waived with the consent of the Holders of a majority in aggregate principal
amount of the then outstanding Notes voting as a single class (including
consents obtained in connection with a tender offer or exchange offer for, or
purchase of, the Notes). Sections 2.08 and 2.09 hereof shall determine which
Notes are considered to be "outstanding" for purposes of this Section 11.02.
Upon the request of the Company accompanied by a resolution of its Board
of Directors authorizing the execution of any such amended or supplemental
indenture, and upon the filing with the Trustee of evidence satisfactory to
the Trustee of the consent of the Holders of Notes as aforesaid, and upon
receipt by the Trustee of the documents described in Section 9.02 hereof, the
Trustee shall join with the Company in the execution of such amended or
supplemental indenture unless such amended or supplemental indenture directly
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 amended or supplemental indenture.
It shall not be necessary for the consent of the Holders of Notes under
this Section 11.02 to approve the particular form of any proposed amendment or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
indenture or waiver. Subject to Sections 8.04 and 8.07 hereof, the Holders of
a majority in aggregate principal amount of the Notes then outstanding voting
as a single class may waive compliance in a particular instance by the Company
with any provision of this Indenture or the Notes. However, without the
consent of each Holder affected, an amendment or waiver under this Section
11.02 may not (with respect to any Notes held by a non-consenting Holder):
(a) change the stated maturity of the principal of, or interest
(including Additional Interest) on, any Note;
(b) reduce the principal amount of or any interest on any Note;
(c) reduce the amount of principal payable upon acceleration of the
maturity of any Note;
(d) change the place or currency of payment of principal of, or any
interest (including Additional Interest) on, any Note;
(e) impair the right to institute suit for the enforcement of any payment
on, or with respect to, any Note;
57
(f) modify the provisions with respect to the purchase right of the
Holders upon a Change in Control in a manner adverse to Holders;
(g) modify the subordination provisions in Article 5 hereof in a manner
materially adverse to the Holders of Notes;
(h) adversely affect the right of Holders to convert Notes pursuant to
Article 4 hereof other than as provided in this Indenture;
(i) reduce the percentage in principal amount of outstanding notes
required for modification or amendment of the Indenture provided for in this
Article 11;
(j) reduce the percentage in principal amount of outstanding Notes
necessary for waiver of compliance set forth in Section 8.04 and Section 8.07;
or
(k) modify provisions with respect to Section 11.02 hereof, except to
increase the percentage required for modification or waiver or to provide for
consent of each affected Note Holder.
Section 11.03. Compliance with Trust Indenture Act.
Every amendment or supplement to this Indenture or the Notes shall be set
forth in a amended or supplemental Indenture that complies with the TIA as
then in effect.
Section 11.04. Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a consent to
it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment
becomes effective. An amendment, supplement or waiver becomes effective in
accordance with its terms and thereafter binds every Holder.
Section 11.05. Notation on or Exchange of Notes.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall, upon receipt of a
Company Order, authenticate new Notes that reflect the amendment, supplement
or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
58
Section 11.06. Trustee to Sign Amendments, etc.
The Trustee shall sign any amended or supplemental indenture authorized
pursuant to this Article 11 if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. The
Company may not sign an amendment or supplemental indenture until the Board of
Directors of the Company approves it. In executing any amended or supplemental
indenture, the Trustee shall be entitled to receive and (subject to Section
9.01 hereof) shall be fully protected in relying upon, in addition to the
documents required by Section 12.04 hereof, an Officers' Certificate and an
Opinion of Counsel stating that the execution of such amended or supplemental
indenture is authorized or permitted by this Indenture.
ARTICLE 12.
MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA Section 318(c), the imposed duties shall control.
Section 12.02. Notices.
Any notice or communication by the Company or the Trustee to the others
is duly given if in writing and delivered in Person or mailed by first class
mail (registered or certified, return receipt requested), facsimile or
overnight air courier guaranteeing next day delivery, to the others' address:
If to the Company:
Magna Entertainment Corp.
337 Magna Drive
Aurora, Ontario, L46 7K1
Canada
Attn: Corporate Secretary
Facsimile: (905) 726-7172
With a copy to:
Sidley Austin Brown & Wood LLP
787 Seventh Avenue
New York, New York, 10019
USA
Attn: Scott M. Freeman
Facsimile: (212) 839-5599
59
If to the Trustee:
The Bank of New York
101 Barclay Street, 21st Floor
New York, New York 10286
Attention: Global Finance Unit
Facsimile: (212) 815-5802
With a copy to:
The Bank of New York
One Canada Square
London E14 5AL
Attention: Global Finance Unit
Facsimile: + (44-207) 964-6399
The Company or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders) shall
be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telecopied; and the next
Business Day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register
kept by the Registrar. Any notice or communication shall also be so mailed to
any Person described in TIA Section 313(c), to the extent required by the TIA.
Failure to mail a notice or communication to a Holder or any defect in it
shall not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall mail
a copy to the Trustee and each Agent at the same time.
Section 12.03. Communication by Holders of Notes with Other Holders of Notes.
Holders may communicate pursuant to TIA Section 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Company,
the Trustee, the Registrar and anyone else shall have the protection of TIA
Section 312(c).
60
Section 12.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take any
action under this Indenture, except in connection with the initial issuance of
the Notes, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 12.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably satisfactory
to the Trustee (which shall include the statements set forth in Section 12.05
hereof) stating that, in the opinion of such counsel, all such conditions
precedent and covenants have been satisfied.
Section 12.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA Section 314(a)(4)) shall comply with the provisions of TIA
Section 314(e) and shall include:
(a) a statement that the Person making such certificate or opinion has
read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has made
such examination or investigation as is necessary to enable such Person to
express an informed opinion as to whether or not such covenant or condition
has been satisfied; and
(d) a statement as to whether or not, in the opinion of such Person, such
condition or covenant has been satisfied.
Section 12.06. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar, Paying Agent or Conversion Agent may make reasonable
rules and set reasonable requirements for its functions.
Section 12.07. No Personal Liability of Directors, Officers, Employees and
Stockholders.
No past, present or future director, officer, employee, incorporator or
stockholder of the Company, as such, shall have any liability for any
obligations of the Company under the Notes, this Indenture or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the Notes.
61
Section 12.08. Governing Law; Waiver of Jury Trial.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE AND THE NOTES WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS
OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. EACH OF THE COMPANY AND THE
TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS INDENTURE, THE NOTES OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
Section 12.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret any other indenture, loan or
debt agreement of the Company or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
Section 12.10. Successors.
All agreements of the Company in this Indenture and the Notes shall bind
its successors. All agreements of the Trustee in this Indenture shall bind its
successors.
Section 12.11. Severability.
In case any provision in this Indenture or in the Notes shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
Section 12.12. Counterpart Originals.
The parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together represent the same
agreement.
Section 12.13. Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table 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 of this Indenture and shall in no way
modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
62
SIGNATURES
Dated as of June 2, 2003
Magna Entertainment Corp.
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Name:
Title:
The Bank of New York,
as Trustee
By:
--------------------------------
Name:
Title:
EXHIBIT A
[FORM OF FACE OF NOTE]
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE BANK OF NEW YORK DEPOSITARY (NOMINEES) LIMITED AS NOMINEE FOR THE BANK OF
NEW YORK (THE "COMMON DEPOSITARY") TO THE COMPANY OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF THE BANK OF NEW YORK AS COMMON DEPOSITARY OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE COMMON
DEPOSITORY (AND ANY PAYMENT HEREON IS MADE TO THE BANK OF NEW YORK AS COMMON
DEPOSITARY OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE COMMON DEPOSITORY), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, THE BANK OF NEW YORK AS COMMON DEPOSITARY, HAS AN
INTEREST HEREIN. THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A COMMON
DEPOSITARY OR A NOMINEE THEREOF. THIS NOTE IS EXCHANGEABLE FOR SECURITIES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE COMMON DEPOSITARY OR ITS
NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND,
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
COMMON DEPOSITARY TO A NOMINEE OF THE COMMON DEPOSITARY OR BY A NOMINEE OF THE
COMMON DEPOSITARY TO THE COMMON DEPOSITARY OR ANOTHER NOMINEE OF THE COMMON
DEPOSITARY OR BY THE COMMON DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR
COMMON DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR COMMON DEPOSITARY.]/1/
[THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE
"SECURITIES ACT"), AND THIS NOTE AND THE CLASS A SUBORDINATE VOTING STOCK
ISSUABLE UPON CONVERSION HEREOF MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF
THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF
THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.]/2/
- --------------------
1 This paragraph should be included only if the Note is a Global Note.
2 These paragraphs to be included only if the Note is a Restricted Global
Note or a Restricted Definitive Note.
A-1
[THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE COMPANY THAT (A)
THIS NOTE AND THE CLASS A SUBORDINATE VOTING STOCK ISSUABLE UPON CONVERSION
HEREOF MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I) IN
THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) OUTSIDE THE
UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE
904 OF REGULATION S UNDER THE SECURITIES ACT, (III) PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE), (IV) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) THAT
PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE WITH A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS NOTE
(THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS
IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF SECURITIES LESS THAN $250,000,
AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN
COMPLIANCE WITH THE SECURITIES ACT, OR (V) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH
(V) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED
TO, NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS
REFERRED TO IN (A) ABOVE. IN ANY CASE, THE HOLDER HEREOF WILL NOT, DIRECTLY OR
INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTIONS WITH REGARD TO THE SECURITIES
EXCEPT AS PERMITTED UNDER THE SECURITIES ACT.]/3/
[THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO NOTIFY ANY
PURCHASER OF THIS NOTE FROM IT OF THE FOREGOING RESALE RESTRICTIONS.]/4/
[THE HOLDER OF THIS NOTE IS ENTITLED TO THE BENEFITS OF A REGISTRATION
RIGHTS AGREEMENT (AS SUCH TERM IS DEFINED IN THE INDENTURE REFERRED TO ON THE
REVERSE HEREOF) AND, BY ITS ACCEPTANCE HEREOF, AGREES TO BE BOUND BY AND TO
COMPLY WITH THE PROVISIONS OF SUCH REGISTRATION RIGHTS AGREEMENT.]/5/
- --------------------------
3 These paragraphs to be included only if the Note is a Restricted Global
Note or a Restricted Definitive Note.
4 These paragraphs to be included only if the Note is a Restricted Global
Note or a Restricted Definitive Note.
5 These paragraphs to be included only if the Note is a Restricted Global
Note or a Restricted Definitive Note.
A-2
MAGNA ENTERTAINMENT CORP.
CUSIP/ISIN/CINS: No.__
8.55% CONVERTIBLE SUBORDINATED NOTES DUE JUNE 15, 2010
Magna Entertainment Corp., a Delaware corporation (the "Company", which
term shall include any successor corporation under the Indenture referred to
on the reverse hereof), promises to pay to __________________________, or
registered assigns, the principal sum of _____________________________ Dollars
($__________) on June 15, 2010[, or such greater or lesser amount as is
indicated on the Schedule of Exchanges of Notes on the other side of this
Note]./6/
Interest Payment Dates: June 15 and December 15
Record Dates: June 1 and December 1
This Note is convertible as specified on the other side of this Note.
Additional provisions of this Note are set forth on the other side of this
Note.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
MAGNA ENTERTAINMENT CORP.
By:
------------------------------------
Name:
Title:
By:
------------------------------------
Name:
Title:
Dated:
- --------------------------
6 This phrase should be included only if the Note is a Global Note.
A-3
Trustee's Certificate of Authentication: This is one of the Notes referred to
in the within-mentioned Indenture.
THE BANK OF NEW YORK,
as Trustee
- ------------------------------
Authorized Signatory
By:
---------------------------
A-4
[FORM OF REVERSE SIDE OF NOTE]
MAGNA ENTERTAINMENT CORP.
8.55% CONVERTIBLE SUBORDINATED NOTES DUE JUNE 15, 2010
1. INTEREST
Magna Entertainment Corp., a Delaware corporation (the "Company", which
term shall include any successor corporation under the Indenture hereinafter
referred to), promises to pay interest on the principal amount of this Note at
the rate of 8.55% per annum. The Company shall pay interest semiannually on
June 15 and December 15 of each year (each, an "Interest Payment Date"),
commencing December 15, 2003, unless such date is not a Business Day, in which
case, the Company shall pay interest on the next succeeding Business Day and
such payment shall be deemed to have been paid on such interest payment date
and no interest shall accrue during the additional period of time. Interest on
the Notes shall accrue from the most recent date to which interest has been
paid or, if no interest has been paid, from June 2, 2003; provided, however,
that if there is not an existing default in the payment of interest and if
this Note is authenticated between a record date referred to on the face
hereof and the next succeeding Interest Payment Date, interest shall accrue
from such Interest Payment Date. Interest will be computed on the basis of a
360-day year of twelve 30-day months. Any reference herein to interest accrued
or payable as of any date shall include any Additional Interest accrued or
payable on such date as provided in the Registration Rights Agreement.
2. METHOD OF PAYMENT
The Company shall pay interest on this Note (except defaulted interest)
to the person who is the Holder of this Note at the close of business on June
1 or December 1, as the case may be, next preceding the related Interest
Payment Date. The Holder must surrender this Note to a Paying Agent to collect
payment of principal. The Company will pay principal and interest in money of
the United States that at the time of payment is legal tender for payment of
public and private debts. The Company may pay principal and interest in
respect of any Definitive Note by check or wire payable in such money;
provided, however, that a Holder with an aggregate principal amount in excess
of $1,000,000 will be paid by wire transfer in immediately available funds at
the election of such Holder. The Company may mail an interest check to the
Holder's registered address. Notwithstanding the foregoing, so long as this
Note is registered in the name of a Common Depositary or its nominee, all
payments hereon shall be made by wire transfer of immediately available funds
to the account of the Common Depositary or The Bank of New York.
3. PAYING AGENT, REGISTRAR AND CONVERSION AGENT
Initially, The Bank of New York, (the "Trustee," which term shall include
any successor trustee under the Indenture hereinafter referred to) will act as
Paying Agent, Registrar and Conversion Agent. The Company may change any
Paying Agent, Registrar or Conversion Agent without notice to the Holder. The
Company or any of its Subsidiaries may, subject to certain limitations set
forth in the Indenture, act as Paying Agent or Registrar.
A-5
4. INDENTURE, LIMITATIONS
This Note is one of a duly authorized issue of Notes of the Company
designated as its 8.55% Convertible Subordinated Notes due June 15, 2010 (the
"Notes"), issued under an Indenture dated as of June 2, 2003 (together with
any supplemental indentures thereto, the "Indenture"), between the Company and
the Trustee. The terms of this Note include those stated in the Indenture and
those required by or made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended, as in effect on the date of the Indenture.
This Note is subject to all such terms, and the Holder of this Note is
referred to the Indenture and said Act for a statement of them. All
capitalized terms used but not defined herein shall have the meaning ascribed
to such term in the Indenture.
The Notes are subordinated unsecured obligations of the Company limited
to $100,000,000 aggregate principal amount, subject to Section 2.07 of the
Indenture. The Indenture does not limit other debt of the Company, secured or
unsecured, including Senior Indebtedness.
5. OPTIONAL REDEMPTION
The Company shall not have the option to redeem the Notes prior to June
2, 2006. Thereafter the Company shall have the option to redeem the Notes in
whole, or in part, upon not less than 20 nor more than 60 days' notice by mail
to Holders of the Notes, at 100% of the principal amount of the Notes together
with accrued interest up to, but not including, the redemption date; provided
that (a) in connection with any redemption of the Notes occurring on or after
June 2, 2006 and on or prior to June 2, 2008, the Closing Sale Price of the
Class A Subordinate Voting Stock of the Company shall have exceeded 125% of
the Conversion Price for at least 20 Trading Days in the 30 consecutive
Trading Day period ending on the Trading Day prior to the mailing of the
notice of redemption, and (b) if the redemption date falls after an interest
payment record date and on or before an Interest Payment Date, the applicable
interest payment shall be payable to Holders of record on the relevant
interest payment record date.
6. NOTICE OF REDEMPTION
Notice of redemption will be mailed by first-class mail at least 20 days
but not more than 60 days before the redemption date to each Holder of Notes
to be redeemed at its registered address. Notes in denominations larger than
$1,000 may be redeemed in part, but only in whole multiples of $1,000. On and
after the redemption date, subject to the deposit with the Paying Agent of
funds sufficient to pay the redemption price plus accrued interest, if any,
accrued to, but not including, the redemption date, interest shall cease to
accrue on Notes or portions of them called for redemption.
7. PURCHASE OF NOTES AT OPTION OF HOLDER UPON A CHANGE IN CONTROL
At the option of the Holder and subject to the terms and conditions of
the Indenture, the Company shall become obligated to purchase all or any part
specified by the Holder (so long as the principal amount of such part is
$1,000 or an integral multiple of $1,000 in excess thereof) of the Notes held
by such Holder on the date that is 30 Business Days after the occurrence of a
A-6
Change in Control, at a purchase price equal to 100% of the principal amount
thereof together with accrued interest up to, but excluding, the Change in
Control Payment Date. The Holder shall have the right to withdraw any Change
in Control Payment Notice (in whole or in a portion thereof that is $1,000 or
an integral multiple of $1,000 in excess thereof) at any time prior to the
close of business on the Business Day next preceding the Change in Control
Payment Date by delivering a written notice of withdrawal to the Paying Agent
in accordance with the terms of the Indenture.
8. CONVERSION
A Holder of a Note may convert the principal amount of such Note (or any
portion thereof equal to $1,000 or any integral multiple of $1,000 in excess
thereof) into shares of Class A Subordinate Voting Stock at any time prior to
the last Business Day prior to the close of business on June 15, 2010;
provided, however, that if the Note is called for redemption or subject to
purchase upon a Change in Control, the conversion right will terminate at the
close of business on the Business Day immediately preceding the redemption
date or the Change in Control Payment Date, as the case may be, for such Note
or such earlier date as the Holder presents such Note for redemption or
purchase (unless the Company shall default in making the redemption payment or
Change in Control Payment, as the case may be, when due, in which case the
conversion right shall terminate at the close of business on the date such
default is cured and such Note is redeemed or purchased).
The initial Conversion Price is $7.05 per share, subject to adjustment
under certain circumstances. The number of shares of Class A Subordinate
Voting Stock issuable upon conversion of a Note is determined by dividing the
principal amount of the Note or portion thereof converted by the Conversion
Price in effect on the Conversion Date. No fractional shares will be issued
upon conversion; in lieu thereof, an amount will be paid in cash based upon
the Closing Sale Price of the Class A Subordinate Voting Stock on the Trading
Day immediately prior to the Conversion Date.
To convert a Note, a Holder must (a) complete and manually sign the
conversion notice set forth below and deliver such notice to a Conversion
Agent, (b) surrender the Note to a Conversion Agent, (c) furnish appropriate
endorsements and transfer documents if required by a Registrar or a Conversion
Agent, and (d) pay any transfer or similar tax, if required. Notes so
surrendered for conversion (in whole or in part) during the period from the
close of business on any regular record date to the opening of business on the
next succeeding Interest Payment Date (excluding Notes or portions thereof
called for redemption or subject to purchase upon a Change in Control on a
redemption date or Change in Control Payment Date, as the case may be, during
the period beginning at the close of business on a regular record date and
ending at the opening of business on the first Business Day after the next
succeeding Interest Payment Date, or if such Interest Payment Date is not a
Business Day, the second such Business Day) shall also be accompanied by
payment in funds acceptable to the Company of an amount equal to the interest
payable on such Interest Payment Date on the principal amount of such Note
then being converted, and such interest shall be payable to such registered
Holder notwithstanding the conversion of such Note, subject to the provisions
of the Indenture relating to the payment of defaulted interest by the Company.
If the Company defaults in the payment of interest payable
A-7
on such Interest Payment Date, the Company shall promptly repay such funds to
such Holder. A Holder may convert a portion of a Note equal to $1,000 or any
integral multiple thereof.
A Note in respect of which a Holder had delivered a Change in Control
Payment Notice exercising the option of such Holder to require the Company to
purchase such Note may be converted only if the Change in Control Payment
Notice is withdrawn in accordance with the terms of the Indenture.
9. SUBORDINATION; PARI PASSU
The indebtedness evidenced by the Notes is, to the extent and in the
manner provided in the Indenture, subordinate and junior in right of payment
to the prior payment in full in cash of all Senior Indebtedness. Any Holder by
accepting this Note agrees to and shall be bound by such subordination
provisions, authorizes the Trustee to give them effect and appoints the
Trustee as attorney-in-fact for such purpose. In addition to all other rights
of Senior Indebtedness described in the Indenture, the Senior Indebtedness
shall continue to be Senior Indebtedness and entitled to the benefits of the
subordination provisions irrespective of any amendment, modification or waiver
of any terms of any instrument relating to the Senior Indebtedness or any
extension or renewal of the Senior Indebtedness. Such subordination is
intended for the benefit of, and may be enforced by, each holder of Senior
Indebtedness.
The indebtedness evidenced by the Notes (including the principal of,
premium, if any, and interest (including Additional Interest, if any) on all
the Notes and the redemption price with respect to any Note being called for
redemption and the Change in Control Payment with respect to all Notes subject
to purchase pursuant to Section 6.09 of the Indenture) ranks pari passu in
right of payment with the Company's $75,000,000 aggregate principal amount of
71/4% Convertible Subordinated Notes due December 15, 2009.
10. DENOMINATIONS, TRANSFER, EXCHANGE
The Notes are in registered form without coupons in denominations of
$1,000 and integral multiples of $1,000. A Holder may register the transfer of
or exchange Notes in accordance with the Indenture. The Registrar may require
a Holder, among other things, to furnish appropriate endorsements and transfer
documents and to pay any taxes or other governmental charges that may be
imposed in relation thereto by law or permitted by the Indenture.
11. PERSONS DEEMED OWNERS
The Holder of a Note may be treated as the owner of it for all purposes.
12. UNCLAIMED MONEY
If money for the payment of principal or interest remains unclaimed for
two years, the Trustee or Paying Agent will pay the money back to the Company
at its written request. After that, Holders entitled to money must look to the
Company for payment.
A-8
13. AMENDMENT, SUPPLEMENT AND WAIVER
Subject to certain exceptions, the Indenture or the Notes may be amended
or supplemented with the consent of the Holders of at least a majority in
aggregate principal amount of the Notes then outstanding, and an existing
default or Event of Default and its consequences, or compliance with any
provision of the Indenture or the Notes, may be waived in any particular
instance with the consent of the Holders of a majority in aggregate principal
amount of the Notes then outstanding. Without the consent of or notice to any
Holder, the Company and the Trustee may amend or supplement the Indenture or
the Notes to, among other things, cure any ambiguity, defect or inconsistency
or make any other change that does not, in the good faith opinion of the Board
of Directors of the Company and the Trustee, adversely affect the rights of
any Holder in any material respect.
14. SUCCESSOR CORPORATION
When a successor corporation assumes all the obligations of its
predecessor under the Notes and the Indenture in accordance with the terms and
conditions of the Indenture, the predecessor corporation will (except in
certain circumstances specified in the Indenture) be released from those
obligations.
15. DEFAULTS AND REMEDIES
Under the Indenture, an Event of Default includes: (i) the Company fails
to pay principal on any Note when due, whether or not prohibited by the
subordination provisions in the Indenture; (ii) the Company fails to pay any
interest, including any Additional Interest, on any Note when due if such
failure continues for 30 days, whether or not prohibited by the subordination
provisions of the Indenture; (iii) the Company fails to perform any other
agreement required of the Company in the Indenture if such failure continues
for 60 days after notice is given in accordance with the terms of the
Indenture; (iv) the Company fails to pay the purchase price of any Note when
due, whether or not prohibited by the subordination provisions of the
Indenture; (v) the Company fails to provide timely notice of a Change in
Control if such failure continues for 30 days after notice is given; (vi) any
Indebtedness for money borrowed by the Company or one of the Company's
Significant Subsidiaries (all or substantially all of the outstanding Voting
Stock of which are owned, directly or indirectly, by the Company) in an
aggregate outstanding principal amount in excess of $10.0 million is not paid
at final maturity or upon acceleration and such Indebtedness is not
discharged, or such acceleration is not cured or rescinded, within 30 days
after written notice as provided in the Indenture; and (vii) certain events of
bankruptcy, insolvency or reorganization of the Company. If an Event of
Default (other than as a result of certain events of bankruptcy, insolvency or
reorganization of the Company) occurs and is continuing, the Trustee or the
Holders of at least 25% in aggregate principal amount of the then outstanding
Notes may declare all the Notes then outstanding due and payable immediately,
all as and to the extent provided in the Indenture. If an Event of Default
occurs as a result of certain events of bankruptcy, insolvency or
reorganization of the Company, the outstanding Notes shall become due and
payable immediately without further notice, all as and to the extent provided
in the Indenture. Holders may not enforce the Indenture or the Notes except as
provided in the Indenture. The Trustee may require indemnity satisfactory to
it before it enforces the Indenture or the Notes. Subject to certain
limitations, Holders of a majority in
A-9
principal amount of the Notes then outstanding may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Holders notice
of any continuing default (except a default in payment of principal or
interest) if it determines that withholding notice is in their interests. The
Company is required to file periodic reports with the Trustee as to the
absence of default.
16. TRUSTEE DEALINGS WITH THE COMPANY
The Bank of New York, the Trustee under the Indenture, in its individual
or any other capacity, may make loans to, accept deposits from and perform
services for the Company or an Affiliate of the Company, and may otherwise
deal with the Company or an Affiliate of the Company, as if it were not the
Trustee.
17. NO RECOURSE AGAINST OTHERS
A director, officer, employee or shareholder, as such, of the Company
shall not have any liability for any obligations of the Company under the
Notes or the Indenture nor for any claim based on, in respect of or by reason
of such obligations or their creation. The Holder of this Note by accepting
this Note waives and releases all such liability. The waiver and release are
part of the consideration for the issuance of this Note.
18. AUTHENTICATION
This Note shall not be valid until the Trustee or an authenticating agent
manually signs the certificate of authentication on the other side of this
Note.
19. ABBREVIATIONS AND DEFINITIONS
Customary abbreviations may be used in the name of the Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common) and UGMA (= Uniform Gifts to Minors Act).
All terms defined in the Indenture and used in this Note but not
specifically defined herein are defined in the Indenture and are used herein
as so defined.
20. INDENTURE TO CONTROL; GOVERNING LAW
In the case of any conflict between the provisions of this Note and the
Indenture, the provisions of the Indenture shall control. This Note shall be
governed by, and construed in accordance with, the internal laws of the State
of New York, without giving effect to applicable principles of conflicts of
law to the extent that the application of the laws of another jurisdiction
would be required thereby.
The Company will furnish to any Holder, upon written request and without
charge, a copy of the Indenture. Requests may be made to: Magna Entertainment
Corp., 337 Magna Drive, Aurora, Ontario L4G 7K1, Canada, Attention: Corporate
Secretary.
A-10
ASSIGNMENT FORM
To assign this Note, fill in the form below:
I or we assign and transfer this Note to
- ------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
- ------------------------------------------------------------------------------
agent to transfer this Note on the books of the Company. The agent may
substitute another to act for him or her.
Your Signature:
Date:
---------------------------- -----------------------------------------
(Sign exactly as your name appears on the
other side of this Note)
*Signature guaranteed by:
By:
--------------------------------
* The signature must be guaranteed by an institution which is a member of
one of the following recognized signature guaranty programs: (i) the
Securities Transfer Agent Medallion Program (STAMP); (ii) the New York
Stock Exchange Medallion Program (MSP); (iii) the Stock Exchange
Medallion Program (SEMP); or (iv) such other guaranty program acceptable
to the Trustee.
A-11
CONVERSION NOTICE
To convert this Note into Class A Subordinate Voting Stock of the Company,
check the box: |_|
To convert only part of this Note, state the principal amount to be converted
(must be $1,000 or a multiple of $1,000): $____________.
If you want the stock certificate made out in another person's name, fill in
the form below:
- ------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
Your Signature:
Date:
---------------------------- -----------------------------------------
(Sign exactly as your name appears on the
other side of this Note)
*Signature guaranteed by:
By:
--------------------------------
* The signature must be guaranteed by an institution which is a member of
one of the following recognized signature guaranty programs: (i) the
Securities Transfer Agent Medallion Program (STAMP); (ii) the New York
Stock Exchange Medallion Program (MSP); (iii) the Stock Exchange
Medallion Program (SEMP); or (iv) such other guaranty program acceptable
to the Trustee.
A-12
OPTION TO ELECT REPURCHASE UPON A CHANGE IN CONTROL
To: Magna Entertainment Corp.
The undersigned registered owner of this Note hereby irrevocably
acknowledges receipt of a notice from Magna Entertainment Corp. (the
"Company") as to the occurrence of a Change in Control with respect to the
Company and requests and instructs the Company to redeem the entire principal
amount of this Note, or the portion thereof (which is $1,000 or an integral
multiple thereof) below designated, in accordance with the terms of the
Indenture referred to in this Note at the Change in Control Payment, together
with accrued interest to, but excluding, such date.
Dated:
------------------------------ ------------------------------
------------------------------
Signature(s)
Signature(s) must be
guaranteed by a qualified
guarantor institution with
membership in an approved
signature guarantee program
pursuant to Rule 17Ad-15 under
the Securities Exchange Act of
1934.
------------------------------
Signature Guaranty
Principal amount to be redeemed
(in an integral multiple of $1,000, if less than all):
- ---------------------------------------
NOTICE: The signature to the foregoing Election must correspond to the Name as
written upon the face of this Note in every particular, without alteration or
any change whatsoever.
A-13
SCHEDULE OF EXCHANGES OF NOTES/7/
The following exchanges, redemptions, repurchases or conversions of a
part of this global Note have been made:
Principal Amount of this
Global Note Following
Such Decrease (or Amount of Decrease in Amount of Increase in
Increase) Date of Authorized Signatory of Principal Amount of Principal Amount of this
Exchange Common Depository this Global Note Global Note
- -------------------------- ------------------------- --------------------------- --------------------------
- --------------------------
7 This schedule should be included only if the Note is a Global Note.
A-14
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION
OF TRANSFER OF TRANSFER RESTRICTED SECURITIES/8/
Re: 8.55% Convertible Subordinated Notes due June 15, 2010 (the "Notes") of
Magna Entertainment Corp.
This certificate relates to $_______ principal amount of Notes owned in
(check applicable box)
|_| book-entry or |_| definitive form by __________________________ (the
"Transferor").
The Transferor has requested a Registrar or the Trustee to exchange or
register the transfer of such Notes.
In connection with such request and in respect of each such Note, the
Transferor does hereby certify that the Transferor is familiar with transfer
restrictions relating to the Notes as provided in Section 2.12 of the
Indenture dated as of June 2, 2003 between Magna Entertainment Corp. and The
Bank of New York (the "Indenture") and the transfer of such Note is being made
pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "Securities Act") (check applicable box) or the transfer
or exchange, as the case may be, of such Note does not require registration
under the Securities Act because (check applicable box):
|_| Such Note is being transferred pursuant to an effective registration
statement under the Securities Act.
|_| Such Note is being acquired for the Transferor's own account, without
transfer.
|_| Such Note is being transferred to the Company or a Subsidiary (as defined
in the Indenture) of the Company.
|_| Such Note is being transferred to a Person the Transferor reasonably
believes is a "qualified institutional buyer" (as defined in Rule 144A or
any successor provision thereto ("Rule 144A") under the Securities Act)
that is purchasing for its own account or for the account of a "qualified
institutional buyer", in each case to whom notice has been given that the
transfer is being made in reliance on such Rule 144A, and in each case in
reliance on Rule 144A.
|_| Such Note is being transferred pursuant to and in accordance with Rule
903 or Rule 904 under the Securities Act and, accordingly, the Transferor
hereby further certifies that (i) the transfer is not being made to a
Person in the United States and (x) at the time the buy order was
originated, the transferee was outside the United States or such
Transferor and
- --------------------------
8 This certificate should be included only if this Note is a Restricted
Global Note or a Restricted Definitive Note.
B-1
any Person acting on its behalf reasonably believed and believes that the
transferee was outside the United States or (y) the transaction was
executed in, on or through the facilities of a designated offshore
securities market and neither such Transferor nor any Person acting on
its behalf knows that the transaction was prearranged with a buyer in the
United States, (ii) no directed selling efforts have been made in
contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S under the Securities Act, (iii) the transaction is not part
of a plan or scheme to evade the registration requirements of the
Securities Act and (iv) if the proposed transfer is being made prior to
the expiration of the Restricted Period, the transfer is not being made
to a U.S. Person or for the account or benefit of a U.S. Person (other
than a "qualified institutional buyer" (as defined under Rule 144A)).
|_| Such Note is being transferred pursuant to and in compliance with an
exemption from the registration requirements under the Securities Act in
accordance with Rule 144 (or any successor thereto) ("Rule 144") under
the Securities Act.
|_| Such Note is being transferred pursuant to and in compliance with an
exemption from the registration requirements under the Securities Act
(other than an exemption referred to above).
The Transferor acknowledges and agrees that, if the transferee will hold
any such Note in the form of beneficial interests in a global Note which is a
"restricted security" within the meaning of Rule 144 under the Securities Act,
then such transfer can only be made pursuant to (i) Rule 144A under the
Securities Act and such transferee must be a "qualified institutional buyer"
(as defined in Rule 144A) or (ii) pursuant to Rule 903 or Rule 904 of
Regulation S under the Securities Act in an offshore transaction in and such
transferee must be a Non-U.S. Person.
Date:
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(Insert Name of Transferor)
B-2