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EXECUTION COPY
THE COOPER COMPANIES, INC.
AND
BANKERS TRUST COMPANY
AS SUCCESSOR TRUSTEE
SECOND SUPPLEMENTAL INDENTURE
DATED AS OF JANUARY 6, 1994
AMENDING AND RESTATING THE
INDENTURE
DATED AS OF MARCH 1, 1985, AS AMENDED
Amending and restating the Indenture, dated as of March 1, 1985, between
CooperVision, Inc., the predecessor to The Cooper Companies, Inc., and Security
Pacific National Bank, as trustee, as previously supplemented by the First
Supplemental Indenture, dated as of June 29, 1989, between The Cooper Companies,
Inc. and Bankers Trust Company, as successor trustee, with respect to the
10-5/8% Convertible Subordinated Reset Debentures due 2005.
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CROSS-REFERENCE TABLE*
TRUST INDENTURE INDENTURE
ACT SECTION SECTION
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310 (a)(1)..................................................................................... 7.10
(a)(2)..................................................................................... 7.10
(a)(3)..................................................................................... N.A.
(a)(4)..................................................................................... N.A.
(a)(5)..................................................................................... 7.10
(b)........................................................................................ 7.10
(c)........................................................................................ N.A.
311 (a)........................................................................................ 7.11
(b)........................................................................................ 7.11
(c)........................................................................................ N.A.
312 (a)........................................................................................ 2.05
(b)........................................................................................ 12.03
(c)........................................................................................ 12.03
313 (a)........................................................................................ 7.06
(b)(1)..................................................................................... N.A.
(b)(2)..................................................................................... 7.06
(c)........................................................................................ 4.02,7.06,12.02
(d)........................................................................................ 7.06
314 (a)........................................................................................ 4.02,12.02
(b)........................................................................................ N.A.
(c)(1)..................................................................................... 12.04
(c)(2)..................................................................................... 12.04
(c)(3)..................................................................................... 4.02
(d)........................................................................................ N.A.
(e)........................................................................................ 4.02,12.05
(f)........................................................................................ N.A.
315 (a)........................................................................................ 7.01
(b)........................................................................................ 7.05,12.02
(c)........................................................................................ 7.01
(d)........................................................................................ 7.01
(e)........................................................................................ 6.11
316 (a)(last sentence)......................................................................... N.A.
(a)(1)(A).................................................................................. 6.05
(a)(1)(B).................................................................................. 6.04
(a)(2)..................................................................................... N.A.
(b)........................................................................................ 6.07
(c)........................................................................................ 9.04
317 (a)(1)..................................................................................... 6.08
(a)(2)..................................................................................... 6.09
(b)........................................................................................ 2.04
318 (a)........................................................................................ 12.01
(b)........................................................................................ N.A.
(c)........................................................................................ 12.01
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
i
TABLE OF CONTENTS
PAGE
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ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions.............................................................................. 2
Section 1.02. Other Definitions........................................................................ 7
Section 1.03. Incorporation by Reference of Trust Indenture Act........................................ 8
Section 1.04. Rules of Construction.................................................................... 8
ARTICLE 2
THE SECURITIES
Section 2.01. Form and Dating.......................................................................... 9
Section 2.02. Execution and Authentication............................................................. 9
Section 2.03. Registrar, Paying Agent and Conversion Agent............................................. 10
Section 2.04. Paying Agent to Hold Money in Trust...................................................... 10
Section 2.05. Securityholder Lists..................................................................... 10
Section 2.06. Transfer and Exchange.................................................................... 10
Section 2.07. Replacement Securities................................................................... 11
Section 2.08. Outstanding Securities................................................................... 11
Section 2.09. Treasury Securities...................................................................... 11
Section 2.10. Temporary Securities..................................................................... 11
Section 2.11. Cancellation............................................................................. 12
Section 2.12. Defaulted Interest....................................................................... 12
ARTICLE 3
REDEMPTION
Section 3.01. Notices to Trustee....................................................................... 12
Section 3.02. Selection of Securities to Be Redeemed................................................... 12
Section 3.03. Notice of Redemption..................................................................... 13
Section 3.04. Effect of Notice of Redemption........................................................... 13
Section 3.05. Deposit of Redemption Price.............................................................. 14
Section 3.06. Securities Redeemed in Part.............................................................. 14
ARTICLE 4
COVENANTS
Section 4.01. Payment of Securities.................................................................... 14
Section 4.02. SEC Reports, Financial Reports........................................................... 14
Section 4.03. Compliance Certificate................................................................... 15
Section 4.04. Money for Security Payments to Be Held in Trust.......................................... 15
Section 4.05. Continued Existence...................................................................... 16
Section 4.06 Maintenance of Properties................................................................ 16
Section 4.07. Taxes.................................................................................... 16
Section 4.08. Limitation on Transactions with Affiliates............................................... 17
Section 4.09. Stay, Extension and Usury Laws........................................................... 17
Section 4.10. Limitation on Restricted Payments........................................................ 17
Section 4.11. Limitation On Indebtedness............................................................... 19
Section 4.12. Board of Directors....................................................................... 20
Section 4.13. Change of Control Offer.................................................................. 20
ARTICLE 5
SUCCESSORS
Section 5.01. When Company May Merge, etc.............................................................. 22
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default........................................................................ 23
Section 6.02. Acceleration............................................................................. 24
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Section 6.03. Other Remedies........................................................................... 24
Section 6.04. Waiver of Past Defaults.................................................................. 24
Section 6.05. Control by Majority...................................................................... 25
Section 6.06. Limitation on Suits...................................................................... 25
Section 6.07. Rights of Holders to Receive Payment..................................................... 25
Section 6.08. Collection Suit by Trustee............................................................... 25
Section 6.09. Trustee May File Proofs of Claim......................................................... 26
Section 6.10. Priorities............................................................................... 26
Section 6.11. Undertaking for Costs.................................................................... 26
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee........................................................................ 26
Section 7.02. Rights of Trustee........................................................................ 27
Section 7.03. Individual Rights of Trustee............................................................. 28
Section 7.04. Trustee's Disclaimer..................................................................... 28
Section 7.05. Notice of Defaults....................................................................... 28
Section 7.06. Reports by Trustee to Holders............................................................ 28
Section 7.07. Compensation and Indemnity............................................................... 28
Section 7.08. Replacement of Trustee................................................................... 29
Section 7.09. Successor Trustee by Merger, etc......................................................... 30
Section 7.10. Eligibility; Disqualification............................................................ 30
Section 7.11. Preferred Collection of Claims Against Company........................................... 30
ARTICLE 8
DISCHARGE OF INDENTURE
Section 8.01. Termination of Company's Obligations..................................................... 30
Section 8.02. Application of Trust Money............................................................... 31
Section 8.03. Repayment to Company..................................................................... 31
Section 8.04. Reinstatement............................................................................ 31
ARTICLE 9
AMENDMENTS
Section 9.01. Without Consent of Holders............................................................... 32
Section 9.02. With Consent of Holders.................................................................. 32
Section 9.03. Compliance with Trust Indenture Act...................................................... 33
Section 9.04. Revocation and Effect of Consents........................................................ 33
Section 9.05. Notation on or Exchange of Securities.................................................... 33
Section 9.06. Trustee Protected........................................................................ 33
ARTICLE 10
CONVERSION
Section 10.01. Conversion Privilege..................................................................... 34
Section 10.02. Conversion Procedure..................................................................... 34
Section 10.03. Fractional Shares........................................................................ 34
Section 10.04. Taxes on Conversion...................................................................... 35
Section 10.05. Company to Provide Stock................................................................. 35
Section 10.06. Adjustment for Change in Capital Stock................................................... 35
Section 10.07 Adjustment for Rights Issue.............................................................. 36
Section 10.08. Adjustment for Other Distributions....................................................... 36
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Section 10.09. Adjustment for Common Stock Issue........................................................ 37
Section 10.10. Adjustment for Convertible Securities Issue.............................................. 38
Section 10.11. Current Market Price..................................................................... 39
Section 10.12. Consideration Received................................................................... 39
Section 10.13. When Adjustment May Be Deferred.......................................................... 40
Section 10.14. When No Adjustment Required.............................................................. 40
Section 10.15. Notice of Adjustment..................................................................... 40
Section 10.16. Voluntary Reduction...................................................................... 40
Section 10.17. Notice of Certain Transactions........................................................... 41
Section 10.18. Reorganization of Company................................................................ 41
Section 10.19. Company Determination Final.............................................................. 41
Section 10.20. Trustee's Disclaimer..................................................................... 41
ARTICLE 11
SUBORDINATION
Section 11.01. Agreement to Subordinate................................................................. 42
Section 11.02. Certain Definitions...................................................................... 42
Section 11.03. Liquidation; Dissolution; Bankruptcy..................................................... 42
Section 11.04. Default on Senior Debt................................................................... 43
Section 11.05. Acceleration of Securities............................................................... 43
Section 11.06. When Distribution Must Be Paid Over...................................................... 43
Section 11.07. Notice by Company........................................................................ 44
Section 11.08. Subrogation.............................................................................. 44
Section 11.09. Relative Rights.......................................................................... 44
Section 11.10. Subordination May Not Be Impaired by Company............................................. 45
Section 11.11. Distribution or Notice to Representative................................................. 45
Section 11.12. Rights of Trustee and Paying Agent....................................................... 45
ARTICLE 12
MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls............................................................. 45
Section 12.02. Notices.................................................................................. 45
Section 12.03. Communication by Holders with Other Holders.............................................. 46
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Section 12.04. Certificate and Opinion as to Conditions Precedent....................................... 46
Section 12.05. Statements Required in Certificate or Opinion............................................ 46
Section 12.06. Rules by Trustee and Agents.............................................................. 46
Section 12.07. Legal Holidays........................................................................... 46
Section 12.08. No Recourse Against Others............................................................... 47
Section 12.09. Duplicate Originals...................................................................... 47
Section 12.10. Variable Provisions...................................................................... 47
Section 12.11. Governing Law............................................................................ 48
Section 12.12. No Adverse Interpretation of Other Agreements............................................ 48
Section 12.13. Successors............................................................................... 48
Section 12.14. Severability............................................................................. 48
v
SECOND SUPPLEMENTAL INDENTURE (the 'Second Supplemental Indenture'), dated
as of January 6, 1994, between The Cooper Companies, Inc., a Delaware
corporation (the 'Company'), and Bankers Trust Company, as successor trustee
(the 'Trustee'), with respect to the 10-5/8% Convertible Subordinated Reset
Debentures due 2005 of the Company (the 'Securities').
RECITALS
A. Pursuant to the Indenture, dated as of March 1, 1985 (the 'Original
Indenture'), between CooperVision, Inc., predecessor to the Company, and
Security Pacific National Bank, as trustee, the Company issued $200,000,000
aggregate principal amount of the Securities.
B. By the First Supplemental Indenture, dated as of June 29, 1989, between
the Company and the Trustee, the Original Indenture was supplemented and
amended. The Original Indenture, as so amended and supplemented, is referred to
herein as the 'Supplemented Indenture.'
C. Section 9.02 of the Supplemented Indenture provides, among other things,
that the Company and the Trustee, with the written consent of the Holders (as
defined in the Supplemented Indenture) of at least a majority in principal
amount of the then outstanding Securities, may amend the Supplemented Indenture
in certain respects.
D. Section 6.04 of the Supplemented Indenture provides that the Holders of
a majority in principal amount of the then outstanding Securities by notice to
the Trustee may waive an existing Default or Event of Default (as such terms are
defined in the Supplemented Indenture) and its consequences, subject to certain
exceptions set forth in such Section 6.04.
E. The Company has (i) offered (the 'Exchange Offer') to exchange up to
$30,000,000 aggregate principal amount of Securities for $725 principal amount
of its 10% Senior Subordinated Secured Notes due 2003 (the 'Notes') and $145 in
cash per $1,000 principal amount of Securities and (ii) solicited (the
'Solicitation' and, together with the Exchange Offer, the 'Exchange Offer and
Solicitation') the consents (the 'Consents') of the holders of the Securities to
(x) certain amendments (the 'Amendments') to the Securities and the Supplemented
Indenture and (y) the waiver of any and all Defaults and Events of Default (as
such terms are defined in the Supplemented Indenture) and their consequences
under the Securities and the Supplemented Indenture, whether such Defaults or
Events of Default are known or unknown, arising out of any actions, omissions or
events occurring on or prior to the Expiration Date (as defined in the Company's
Amended and Restated Offer to Exchange and Consent Solicitation dated December
15, 1993, as amended or supplemented from time to time (the 'Amended and
Restated Offer to Exchange and Consent Solicitation')) and if, on or prior to
the Expiration Date, there is an acceleration of the Securities based upon any
Event of Default, the rescission of such acceleration and its consequences (such
waiver and rescission, the 'Waiver').
F. On the date hereof, the Company has received and certified pursuant to
an Officers' Certificate and delivered to the Trustee Letters of Transmittal and
Consent and Notices of Guaranteed Delivery, among other things, constituting the
notice of waiver pursuant to Section 6.04 of the Supplemented Indenture and
evidencing Consents of Holders of a majority in principal amount of the
outstanding Securities not owned by the Company or its Affiliates, with the
effect that any and all Defaults and Events of Default and their consequences
under the Securities and the Supplemented Indenture, whether such Defaults and
Events of Default are known or unknown, arising out of any actions, omissions or
events occurring on or prior to the Expiration Date that could be construed as
Defaults or Events of Default under the Securities or the Indenture, including,
but not limited to, any and all Defaults and Events of Default and their
consequences relating to certain actions, omissions or events described in the
Amended and Restated Offer to Exchange and Consent Solicitation or any other
matter whether or not described in the Amended and Restated Offer to Exchange
and Consent Solicitation that could be construed to be a Default or an Event of
Default under the Securities or the Indenture, have been waived; provided, that
the Waiver will not become operative until Securities validly tendered pursuant
to the Exchange Offer and Solicitation are accepted for payment and exchange in
accordance with the terms thereof.
G. On the date hereof, the Company, having received and certified pursuant
to an Officers' Certificate and delivered to the Trustee Letters of Transmittal
and Consent and Notices of Guaranteed Delivery evidencing Consents of Holders of
a majority in principal amount of the outstanding Securities
not owned by the Company or its Affiliates, and the Trustee executed this Second
Supplemental Indenture to amend and restate the Supplemented Indenture, thereby
giving effect to the Amendments; provided, that the Amendments will not become
operative until Securities validly tendered pursuant to the Exchange Offer and
Solicitation are accepted for payment and exchange in accordance with the terms
thereof.
Now, therefore, it is agreed that the Supplemented Indenture is hereby
amended and restated in its entirety to read as follows, provided that
notwithstanding the execution and delivery of this Second Supplemental
Indenture, the Amendments shall not become operative until the Company accepts
Securities for payment and exchange in accordance with the terms of the Exchange
Offer and Solicitation:
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions.
'Acquired Debt' means, with respect to any specified person, Indebtedness
of any other person existing at the time such other person merged with or into
or became a subsidiary of such specified person, Indebtedness of any other
person assumed in connection with the acquisition of assets from such other
person and Indebtedness incurred in connection with, or in contemplation of,
such other person merging with or into or becoming a subsidiary of such
specified person or the acquisition of assets from such other person, as the
case may be.
'Adjusted Net Worth' of any person means, as of any date for which the
determination thereof is to be made, the Consolidated Net Worth of such person,
plus, without duplication, any preferred stock, at its value in accordance with
GAAP, of such person which is not Disqualified Stock and which is not
exchangeable or convertible into a debt security of such person or any of its
subsidiaries at the option of the holders of such equity security prior to the
date on which the Securities mature, and less any amount included in such
Consolidated Net Worth attributable to preferred stock, or any other equity
security of such person, which is Disqualified Stock or which is exchangeable or
convertible into a debt security of such person or any of its subsidiaries at
the option of the holders of such equity security prior to the date on which the
Securities mature.
'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 voting securities of a person
shall be deemed to be control.
'Agent' means any Registrar, Paying Agent, Conversion Agent or
co-registrar.
'Board of Directors' means the Board of Directors of the Company or any
authorized committee of the Board.
'capital stock' means any and all shares, interests, participations,
warrants, options or other equivalents (however designated) of corporate stock
or other equity interest.
'Cash Equivalents' means (i) Government Securities, (ii) time deposits and
certificates of deposit of any commercial bank organized in the United States
having capital and surplus in excess of $100,000,000 with a maturity date not
more than one year from the date of acquisition, (iii) repurchase obligations
with a term of not more than thirty days for underlying securities of the types
described in clause (i) above entered into with any bank meeting the
qualifications specified in clause (ii) above, (iv) direct obligations issued by
any state of the United States of America or any political subdivision of any
such state or any public instrumentality thereof maturing within ninety days
after the date of acquisition thereof, (v) commercial paper issued by the parent
corporation of any commercial bank organized in the United States having capital
and surplus in excess of $100,000,000 and commercial paper issued by
2
others having a rating of A-2 or higher from Standard & Poor's Corporation or
P-2 or higher from Moody's Investors Service, Inc. or, in the case of a foreign
subsidiary of the Company, the equivalent rating from a foreign rating agency in
the applicable foreign country (or, if at any time neither Standard & Poor's
Corporation nor Moody's Investors Service, Inc. nor, in the case of a foreign
subsidiary of the Company, a foreign rating agency, shall be rating such
obligations, then from such other rating services recognized in the United
States or, in the case of a foreign subsidiary of the Company, in the applicable
foreign country, acceptable to the Trustee) at the time of acquisition, (vi)
bonds, debentures, notes or other corporate debt securities having a rating of
BB or higher from Standard and Poor's Corporation or Ba2 or higher from Moody's
Investors Service, Inc. or, in the case of a foreign subsidiary of the Company,
the equivalent rating from a foreign rating agency in the applicable foreign
country (or, if at any time neither Standard & Poor's Corporation nor Moody's
Investors Service, Inc. nor, in the case of a foreign subsidiary of the Company,
a foreign rating agency, shall be rating such obligations, then from such other
rating services recognized in the United States or, in the case of a foreign
subsidiary of the Company, in the applicable foreign country, acceptable to the
Trustee) at the time of acquisition, (vii) overnight bank deposits and bankers'
acceptances at any commercial bank organized in the United States having capital
and surplus in excess of $100,000,000, (viii) deposits available for withdrawal
on demand with commercial banks organized in the United States having capital
and surplus in excess of $50,000,000 and (ix) investments in mutual funds
substantially all of whose assets comprise securities of the types described in
clauses (i) through (viii).
'Cash Flow Coverage Ratio' means with respect to any person for any period,
the ratio of the Consolidated Cash Flow of such person for such period to the
Fixed Charges of such person for such period.
'Company' means the party named as such above until a successor replaces it
and thereafter means the successor.
'Consolidated Cash Flow' means, with respect to any person for any period,
income from continuing operations before extraordinary items for such person and
its subsidiaries for such period, on a consolidated basis, determined in
accordance with GAAP, plus, to the extent deducted in computing such income from
continuing operations before extraordinary items, (a) interest expense, whether
or not paid during the period, (b) provisions for taxes based on income, (c)
depreciation of property, plant and equipment, and (d) amortization of
intangible assets.
'Consolidated Net Income' means, with respect to any person for any period,
the aggregate of the net income of such person and its subsidiaries for such
period, on a consolidated basis, determined in accordance with GAAP; provided,
that there shall be excluded therefrom (a) items classified as extraordinary,
nonrecurring or unusual gains and losses, and the related tax effects, each
determined in accordance with GAAP, (b) the net income of any other person
acquired in a pooling of interests transaction accrued prior to the date it
becomes a subsidiary of such person or is merged or consolidated with such
person or any subsidiary thereof, and (c) the net income of any other person
other than a subsidiary of such person, except to the extent of the cash
dividends or distributions actually paid (without any repayment obligation) to
such person or a subsidiary of such person.
'Consolidated Net Worth' means, with respect to any Person, the
consolidated stockholders' equity of such person and its subsidiaries,
determined in accordance with GAAP.
'Default' means any event which is, or after notice or passage of time
would be, an Event of Default.
'Disqualified Stock' means any capital stock which, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part, on or prior to the date
on which the Securities mature.
'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).
'Exchange Act' means the Securities Exchange Act of 1934, as amended.
3
'Existing Indebtedness' means the Securities, Notes and any other
Indebtedness of the Company and its subsidiaries in existence on the date of
this Second Supplemental Indenture, until such amounts are repaid.
'Fixed Charges' means, with respect to any person for any period, the
consolidated interest expense of such person and its subsidiaries for such
period, whether paid or accrued, to the extent such expense was reflected in
computing income from continuing operations before extraordinary items for such
person and its subsidiaries, on a consolidated basis, in accordance with GAAP,
but excluding amortization of deferred financing fees.
'GAAP' means generally accepted accounting 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 entities which have authoritative support and are in effect from time to
time.
'Government Securities' means direct obligations of, or obligations
guaranteed by, the United States of America, for the payment of which
obligations or guarantee the full faith and credit of the United States is
pledged.
'Holder' or 'Securityholder' means a person in whose name a Security 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, debentures or similar instruments or letters of credit (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), except any such balance that constitutes an accrued expense or
trade payable, if and to the extent any of the foregoing indebtedness 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 of items which would be included within this definition.
'Indenture' means the Supplemented Indenture as amended and restated by
this Second Supplemental Indenture and as further amended from time to time.
'Investment' means, with respect to any person, any investment by such
person in any other person in the form of a loan, advance (excluding any
commission, travel or similar advance to an officer or employee made in the
ordinary course of business) or capital contribution or purchase or other
acquisition for consideration of any Indebtedness, Equity Interest or other
security.
'Lien' means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
'Officers' Certificate' means a certificate signed by two Officers, one of
whom must be the President, the Treasurer or a Vice-President of the Company;
provided, however, that one of the Officers signing an Officers' Certificate
given pursuant to Section 4.03 shall be the principal executive officer,
principal financial officer or principal accounting officer of the Company. See
Sections 12.04 and 12.05.
'Opinion of Counsel' means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to the
Company or the Trustee. See Sections 12.04 and 12.05.
'Permitted Investments' means (a) Investments in cash or Cash Equivalents;
(b) Investments of the Company or any subsidiary of the Company existing on the
date of this Second Supplemental Indenture; (c) Investments in the Company by a
subsidiary of the Company, in any subsidiary of the Company by the Company or
any other subsidiary of the Company or in any person which, as a result of such
Investment, becomes a subsidiary of the Company; (d) prepaid expenses in the
ordinary course of business; (e) loans and advances to employees of the Company
or any subsidiary in the ordinary course of business, provided that, if
applicable, any such loan or advance meets the requirements set forth in Section
4.08; (f) Investments in accounts and notes receivable arising, created or
received in the ordinary course of business; (g) interest rate or currency
protection agreements, including, but not limited to, any interest rate or
currency swap agreements, interest rate cap agreements and interest rate
4
collar agreements; (h) endorsements of negotiable instruments and other similar
instruments; (i) Investments received as consideration upon the sale or transfer
of any Property; (j) so long as such Investments are not made at a time when a
Default or an Event of Default has occurred and is continuing, Investments
approved by a majority of the members of the Board of Directors of who are not
employees of the Company, provided that the primary purpose of each such
Investment, as determined by such members of the Board of Directors, is to
benefit, complement, or further (i) any business operated by the Company or any
subsidiary of the Company prior to and on the date of such Investment or (ii)
any healthcare-related business that the Company or any subsidiary of the
Company proposes to operate on the date of such Investment; (k) so long as
such Investments are not made at a time when a Default or an Event of Default
has occurred and is continuing, other Investments made after the date of this
Second Supplemental Indenture, provided that, immediately after giving effect to
each such Investment made pursuant to this clause (k), the aggregate
consideration paid for all Investments made pursuant to this clause (k) and held
at such time by the Company and its subsidiaries, does not exceed an amount
equal to 20% of the total consolidated assets of the Company and its
subsidiaries, determined in accordance with GAAP, at the end of the Company's
most recently ended full fiscal quarter for which internal financial statements
are available immediately preceding the date on which such Investment is made;
and (l) Investments received as proceeds of any Investment made pursuant to
clauses (a) through (k) above or this clause (l), including, but not limited to,
Investments received in connection with a restructuring, bankruptcy or workout
of the issuer of any such Investment. Each of the foregoing clauses (a)-(k) sets
forth an independent, separate and distinct Permitted Investment, and
Investments that may be made pursuant to each of such clauses are in addition to
any Investments that may be made pursuant to any other clause. Limitations set
forth in any one of such clauses (a)-(k) or in the definitions used therein
shall not be applicable to any other such clauses or any other such definition.
'person' means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
'principal' of a debt security means the principal of the security plus the
premium, if any, on the security.
'Property' means assets or property of any kind or nature whatsoever, real,
personal or mixed, whether tangible or intangible, and including any business or
securities.
'Purchase Money Indebtedness' means (a) Indebtedness secured by Liens (i)
on Property purchased, acquired, or constructed after the date of this Second
Supplemental Indenture, (ii) securing the payment of all or any part of the
purchase price or construction cost of such Property or taken by a person who by
making advances or incurring an obligation gives value and enables another
person to purchase, acquire or construct such Property and (iii) limited to the
Property so purchased, acquired or constructed and improvements thereon
(including Liens on the securities of any subsidiary formed or acquired in
connection with the purchase, acquisition or construction of such Property and
Liens on Property purchased, acquired or constructed indirectly through the
purchase or acquisition of securities of a person in a transaction in which such
person becomes a subsidiary of the Company) and (b) any exchange, extension,
refinancing, renewal, replacement or refunding of such Indebtedness if any Liens
securing such Indebtedness are as set forth in clauses (i) and (iii) of clause
(a) of this definition.
'SEC' means the Securities and Exchange Commission.
'Securities' means the Securities described above issued under this
Indenture.
'subsidiary' means any person of which at least a majority of capital stock
having ordinary voting power for the election of directors or other governing
body of such person is owned by the Company directly or through one or more
subsidiaries.
'TIA' means the Trust Indenture Act of 1939 (15 U.S.C. 77aaa-77bbbb) as in
effect on the date of execution of this Indenture; provided, however, that in
the event that 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.
5
'Trustee' means the party named as such above until a successor replaces it
and thereafter means the successor.
'Trust Officer' means any officer within the Corporate Trust and Agency
Group of the Trustee, including any vice president, any assistant vice
president, any assistant secretary, any assistant treasurer, or any other
officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means, with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred because of his knowledge of and familiarity with the particular
subject.
'wholly owned subsidiary' means any subsidiary of the Company all of the
outstanding voting stock (other than directors' qualifying shares) of which is
owned by the Company or by any other subsidiary of the Company in an unbroken
chain of subsidiaries in which all of the outstanding voting stock (other than
directors' qualifying shares) of each subsidiary in such unbroken chain is owned
by the Company or another subsidiary in the chain.
Section 1.02. Other Definitions.
Defined in
Term Section
- ---------------------------------------------------------------------------------------------------- -----------
'Affiliate Transaction'............................................................................. 4.08
'Amended and Restated Offer to Exchange and Consent Solicitation'................................... Recital E
'Amendments'........................................................................................ Recital E
'Bankruptcy Law'.................................................................................... 6.01
'Change of Control'................................................................................. 4.13
'Change of Control Date'............................................................................ 4.13
'Change of Control Offer'........................................................................... 4.13
'Change of Control Offer Period'.................................................................... 4.13
'Change of Control Payment Date'.................................................................... 4.13
'Common Stock'...................................................................................... 10.01
'Consents'.......................................................................................... Recital E
'Conversion Agent'.................................................................................. 2.03
'Custodian'......................................................................................... 6.01
'Debt'.............................................................................................. 10.02
'Event of Default'.................................................................................. 6.01
'Exchange Offer'.................................................................................... Recital E
'Exchange Offer and Solicitation'................................................................... Recital E
'Expiration Date'................................................................................... Recital E
'incur'............................................................................................. 4.11
'Legal Holiday'..................................................................................... 12.07
'Notes'............................................................................................. Recital E
'Officer'........................................................................................... 12.10
'Old Certificates'.................................................................................. 2.01
'Original Indenture'................................................................................ Recital A
'Paying Agent'...................................................................................... 2.03
'Quoted Price'...................................................................................... 12.10
'Registrar'......................................................................................... 2.03
'Representative'.................................................................................... 11.02
'Restricted Payments'............................................................................... 4.10
'Senior Debt'....................................................................................... 11.02
'Solicitation'...................................................................................... Recital E
'Supplemented Indenture'............................................................................ Recital B
'Waiver'............................................................................................ Recital E
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.
6
The following TIA terms used in this Indenture have the following meanings:
'indenture securities' means the Securities;
'indenture security holder' means a Securityholder;
'indenture to be qualified' means this Indenture;
'indenture trustee' or 'institutional trustee' means the Trustee;
'obligor' on the Securities means the Company.
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 assigned to them.
Section 1.04.Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with generally accepted accounting principles in effect
on the date of execution of the Original Indenture;
(3) 'or' is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular;
(5) provisions apply to successive events and transactions; and
(6) references to 'generally accepted accounting principles' shall
mean generally accepted accounting principles in effect as of the time when
and for the period as to which such accounting principles are to be
applied.
ARTICLE 2
THE SECURITIES
Section 2.01. Form and Dating.
The Securities shall be substantially in the form of Exhibit A, which is
part of this Indenture. The Securities may have notations, legends or
endorsements required by law, stock exchange rule or usage. Each Security shall
be dated the date of its authentication. Certificates that represented
Securities prior to the execution of this Second Supplemental Indenture ('Old
Certificates') shall continue to represent the Securities as amended by the
Amendments and shall be entitled to all of the rights, benefits and privileges
of the Securities until such time as they are exchanged for certificates in the
form of Exhibit A. Holders may submit their Old Certificates to the Registrar in
exchange for certificates in the form of Exhibit A. In addition, whenever Old
Certificates are submitted by a Holder for transfer or conversion, certificates,
if any, in the form of Exhibit A will be returned to such Holder.
The terms and provisions contained in the Securities shall constitute, and
are hereby expressly made, a part of this Indenture and to the extent
applicable, the Company and the Trustee, by their execution and delivery of this
Indenture, expressly agree to such terms and provisions and to be bound thereby.
Section 2.02. Execution and Authentication.
Two Officers shall sign the Securities for the Company by manual or
facsimile signature. The Company's seal shall be reproduced on the Securities.
If an Officer whose signature is on a Security no longer holds that office
at the time the Security is authenticated, the Security shall nevertheless be
valid.
A Security shall not be valid until authenticated by the manual signature
of the Trustee. The signature of the Trustee shall be conclusive evidence that
the Security has been authenticated under this Indenture.
The Trustee shall authenticate Securities for original issue up to the
aggregate principal amount stated in paragraph 4 of the Securities upon a
written order of the Company signed by two Officers. The
7
aggregate principal amount of Securities outstanding at any time may not exceed
that amount except as provided in Section 2.07.
The Trustee may appoint an authenticating agent acceptable to the Company
to authenticate Securities. An authenticating agent may authenticate Securities
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 the Company or
an Affiliate. The Trustee initially appoints The First National Bank of Boston
as Authenticating Agent. Upon the request of the Company, the Trustee shall
replace the authenticating agent with any person that the Company has appointed
as Registrar or Paying Agent.
Section 2.03. Registrar, Paying Agent and Conversion Agent.
The Company shall maintain an office or agency where Securities may be
presented for registration of transfer or for exchange ('Registrar'), an office
or agency where Securities may be presented for payment ('Paying Agent') and an
office or agency where Securities may be presented for conversion ('Conversion
Agent'). The Registrar shall keep a register of the Securities and of their
transfer and exchange. The Company may appoint one or more co-registrars, one or
more additional paying agents and one or more additional conversion agents. The
Company may change any Paying Agent, Registrar, Conversion Agent or co-registrar
without notice to any Securityholder. The term 'Paying Agent' includes any
additional paying agent; the term 'Conversion Agent' includes any additional
conversion agent. The Company shall notify the Trustee 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 shall act as such. The Company or any of its subsidiaries may act as
Conversion Agent, Paying Agent or Registrar. The Company initially appoints The
First National Bank of Boston to act as Registrar and Paying Agent.
Section 2.04. Paying Agent to Hold Money in Trust.
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
Securityholders or the Trustee all money held by the Paying Agent for the
payment of principal or interest on the Securities, and will notify the Trustee
of any failure by the Company in making any such payment. While any such failure
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
shall have no further liability for the money. If the Company acts as Paying
Agent, it shall segregate and hold in a separate trust fund for the benefit of
the Securityholders all money held by it as Paying Agent.
Section 2.05. Securityholder Lists.
The Registrar shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Securityholders. If the Trustee is not the Registrar, the Company shall furnish
to the Trustee on or 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 reasonably require of the names and addresses of
Securityholders.
Section 2.06. Transfer and Exchange.
Where Securities are presented to the Registrar or a co-registrar with a
request to register, transfer or to exchange them for an equal principal amount
of Securities of other denominations, the Registrar shall register the transfer
or make the exchange if its requirements for such transactions are met. To
permit registrations of transfer and exchanges, the Company shall deliver and
the Trustee shall authenticate Securities at the Registrar's request.
No service charge shall be made for any registration of transfer or
exchange (except as otherwise expressly permitted herein), but the Company may
require payment of a sum sufficient to cover any transfer tax or similar
governmental charge payable in connection therewith (other than any such
transfer tax or similar governmental charge payable upon exchanges pursuant to
Sections 2.10, 3.06, 9.05 or 10.02).
Section 2.07. Replacement Securities.
8
If the Holder of a Security claims that the Security has been lost,
destroyed or wrongfully taken, the Company shall issue and the Trustee shall
authenticate a replacement Security if the Trustee's requirements are met. If
required by the Trustee or the Company, an indemnity bond must be sufficient in
the judgment of both to protect the Company, the Trustee, any Agent or any
authenticating agent from any loss which any of them may suffer if a Security is
replaced. The Company may charge for its expenses in replacing a Security.
Every replacement Security is an additional obligation of the Company.
Section 2.08. Outstanding Securities.
The Securities outstanding at any time are all the Securities authenticated
by the Trustee except for those cancelled by it, those delivered to it for
cancellation, and those described in this Section as not outstanding.
If a Security is replaced pursuant to Section 2.07, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
If Securities are considered paid under Section 4.01, they cease to be
outstanding and interest on them ceases to accrue.
A Security does not cease to be outstanding because the Company or an
Affiliate holds the Security.
Section 2.09. Treasury Securities.
In determining whether the Holder of the required principal amount of
Securities have concurred in any direction, waiver or consent, Securities owned
by the Company or an Affiliate shall be considered as though they are not
outstanding, except that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Securities with respect to which a Trust Officer of the Trustee receives an
Officers' Certificate certifying that such Securities are owned by the Company
or an Affiliate shall be so disregarded.
Section 2.10. Temporary Securities.
Until definitive Securities are ready for delivery, the Company may prepare
and the Trustee shall authenticate temporary Securities. Temporary Securities
shall be substantially in the form of definitive Securities but may have
variations that the Company considers appropriate for temporary Securities.
Without unreasonable delay, the Company shall prepare and the Trustee shall
authenticate definitive Securities in exchange for temporary Securities.
Section 2.11. Cancellation.
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar, Paying Agent and Conversion Agent shall forward to
the Trustee any Securities surrendered to them for registration of transfer,
exchange, payment or conversion. The Trustee shall cancel all Securities
surrendered for registration of transfer, exchange, payment, replacement,
conversion or cancellation and shall dispose of cancelled Securities as the
Company directs. The Company may not issue new Securities to replace Securities
that it has paid or that have been delivered to the Trustee for cancellation or
that any Securityholder has converted pursuant to Article 10.
Section 2.12. Defaulted Interest.
If the Company fails to make a payment of interest on the Securities, it
shall pay such interest thereafter in any lawful manner. The Company may (but
shall not be obligated to) set a subsequent special record date with respect to
the payment of such interest and the interest payable on it, in which case the
Company shall fix the record date and payment date. At least 15 days before the
special record date, the Company shall mail to Securityholders a notice that
states the special record date, payment date, and amount of such interest to be
paid.
ARTICLE 3
REDEMPTION
Section 3.01. Notices to Trustee.
9
If the Company wants to redeem Securities pursuant to paragraph 5 of the
Securities, it shall notify the Trustee of the redemption date and the principal
amount of Securities to be redeemed. If the Company wants to credit against any
such redemption Securities it has not previously delivered to the Trustee for
cancellation, it shall deliver the Securities with the notice.
If the Company wants to reduce the principal amount of Securities to be
redeemed pursuant to paragraph 6 of the Securities, it shall notify the Trustee
of the amount of the reduction and the basis for it. If the Company wants to
credit against any such redemption Securities it has not previously delivered to
the Trustee for cancellation, it shall deliver the Securities with the notice.
The Company shall give each notice provided for in this Section at least 50
days before the redemption date (unless a shorter notice period shall be
satisfactory to the Trustee).
The Company may at any time, or from time to time, purchase Securities from
the Securityholders or in market transactions and such purchases shall not be
considered redemptions for the purposes hereof if the action of the sellers is
volitional and not compelled.
Section 3.02. Selection of Securities to Be Redeemed.
If less than all of the Securities are to be redeemed, the Trustee shall
select subject to the remainder of this Section, the Securities to be redeemed
pro rata or by lot. The Trustee shall make the selection not more than 75 days
and not less than 45 days before the redemption date from Securities outstanding
not previously called for redemption. The Trustee may select for redemption
portions of the principal of Securities that have denominations larger than
$1,000. Securities and portions of them it selects shall be in amounts of $1,000
or integral multiples of $1,000. Provisions of this Indenture that apply to
Securities called for redemption also apply to portions of Securities called for
redemption. The Trustee shall notify the Company promptly of the Securities or
portions of Securities to be called for redemption.
Section 3.03. Notice of Redemption.
At least 30 days but not more than 60 days before a redemption date, the
Company shall mail a notice of redemption by first-class mail to each Holder
whose Securities are to be redeemed.
The notice shall identify the Securities to be redeemed and shall state:
(1) the redemption date;
(2) the redemption price;
(3) if any Security is being redeemed in part, the portion of the
principal amount of such Security to be redeemed and that, after the
redemption date, upon surrender of such Security, a new Security or
Securities in principal amount equal to the unredeemed portion will be
issued;
(4) the conversion price;
(5) the name and address of the Paying Agent and Conversion Agent;
(6) that Securities called for redemption may be converted at any time
before the close of business on the fifth business day prior to the
redemption date;
(7) that Holders who want to convert Securities must satisfy the
requirements in paragraph 8 of the Securities;
(8) the Securities called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(9) that interest on Securities called for redemption ceases to accrue
on and after the redemption date; and
(10) the paragraph of the Securities pursuant to which the Securities
are being redeemed.
At the Company's request, the Trustee shall give the notice of redemption
in the Company's name and at its expense.
Section 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed, Securities called for redemption
become due and payable on the redemption date at the price set forth in the
Security.
10
Section 3.05. Deposit of Redemption Price.
On or before the redemption date, the Company shall deposit with the Paying
Agent money sufficient to pay the redemption price of and accrued and unpaid
interest on all Securities to be redeemed on that date. The Paying Agent shall
return to the Company any money not required for that purpose.
Section 3.06. Securities Redeemed in Part.
Upon surrender of a Security that is redeemed in part, the Company shall
issue and the Trustee shall authenticate for the Holder at the expense of the
Company a new Security equal in principal amount to the unredeemed portion of
the Security surrendered.
ARTICLE 4
COVENANTS
Section 4.01. Payment of Securities.
The Company shall pay the principal of and interest on the Securities on
the dates and in the manner provided in the Securities. Principal and interest
shall be considered paid on the date due if the Paying Agent holds on that date
money designated for and sufficient to pay all principal and interest then due.
The Company shall pay interest on overdue principal at the rate borne by
the Securities; it shall pay interest on overdue installments of interest at the
same rate to the extent lawful.
Section 4.02. SEC Reports, Financial Reports.
The Company shall:
(a) file with the Trustee and mail to each of the Holders within 15
days after the required filing date with the SEC copies of the annual
reports and of the information, documents and other reports (or copies of
such portions of any of the foregoing as the SEC may by rules and
regulations prescribe) which the Company is required to file with the SEC
pursuant to Section 13 or Section 15(d) of the Exchange Act; or if the
Company is not required to file information, documents or reports pursuant
to either of such sections, then to file with the Trustee and the SEC, and
mail to each of the Holders within 15 days after it would have been
required to file such with the SEC, in accordance with rules and
regulations prescribed by the SEC, such of the supplementary and periodic
information, documents and reports which may be required pursuant to
Section 13 of the Exchange Act, in respect of a security listed and
registered on a national securities exchange as may be prescribed by such
rules and regulations;
(b) file with the Trustee and the SEC, in accordance with the rules
and regulations prescribed by the SEC, such additional information,
documents and reports with respect to compliance by the Company with the
conditions and covenants provided for in this Indenture as may be required
by such rules and regulations, including, in the case of annual reports, if
required by such rules and regulations, certificates or opinions of
independent public accountants, conforming to the requirements of
subsection (e) of Section 314 of the TIA, as to compliance with conditions
or covenants, compliance with which is subject to verification by
accountants, but no such certificate or opinion shall be required as to any
matter specified in clauses (A), (B), or (C) of paragraph (3) of subsection
(c) of Section 314 of the TIA;
(c) transmit to the Holders of the Securities, in the manner and to
the extent provided in subsection (c) of Section 313 of the TIA, such
summaries of any information, documents and reports required to be filed by
the Company pursuant to the provisions of paragraph (a) or (b) of this
Section 4.02 as may be required by rules and regulations prescribed by the
SEC; and
(d) comply with the other provisions of Section 314(a) of the TIA.
Section 4.03. Compliance Certificate.
The Company shall deliver to the Trustee, within 90 days after the end of
each fiscal year of the Company ending after the date hereof, an Officers'
Certificate , stating whether or not to the best knowledge of the signers
thereof the Company is in default in the performance and observance of any of
the terms, provisions and conditions of this Indenture (without regard to any
period of grace or
11
requirement of notice provided hereunder) and, if the Company shall be in
default, specifying all such defaults and the nature and status thereof of which
they may have knowledge.
The Company will, so long as any of the Securities are outstanding, deliver
to the Trustee, forthwith upon becoming aware of (i) any Default, Event of
Default or default in the performance of any covenant, agreement or condition
contained in this Indenture or (ii) any event of default under any other
mortgage, indenture or instrument as that term is used in Section 6.01(4), an
Officers' Certificate specifying such Default, Event of Default or default.
Section 4.04. Money for Security Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent, it will, on
or before each due date of the principal of or interest on the Securities,
segregate and hold in trust for the benefit of the persons entitled thereto a
sum sufficient to pay the principal or interest so becoming due until such sum
shall be paid to such persons or otherwise disposed of as herein provided, and
will promptly notify the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agent, it will, on or
prior to each date for the payment of the principal of or interest on the
Securities, deposit with a Paying Agent a sum sufficient to pay the principal or
interest so becoming due, such sum to be held in trust for the benefit of the
persons entitled to such payments; and, unless such Paying Agent is the Trustee,
the Company will promptly notify the Trustee of its action or failure so to act.
The Company will cause each Paying Agent other than the Trustee to execute
and deliver to the Trustee an instrument in which such Paying Agent shall agree
with the Trustee, subject to the provisions of this Section, that such Paying
Agent will:
(1) hold all sums held by it for the payment of the principal of or
interest on the Securities in trust for the benefit of the persons entitled
thereto until such sums shall be paid to such persons or otherwise disposed
of as herein provided;
(2) give the Trustee notice of any default by the Company (or any
other obligor upon the Securities) in the making of any payment of
principal or interest; and
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
For the purpose of obtaining the satisfaction and discharge of this
Indenture or for any other purpose, the Company may at any time pay, or direct
any Paying Agent to pay, to the Trustee all sums held in trust by the Company or
such Paying Agent, such sums to be held by the Trustee upon the same trusts as
those upon which such sums were held by the Company or such Paying Agent; and,
upon such payment by the Company or any Paying Agent to the Trustee, the Company
or such Paying Agent, as the case may be, shall be released from all further
liability with respect to such money.
Section 4.05. Continued Existence.
Subject to Article 5, the Company will do or cause to be done all things
necessary to preserve and keep in full force and effect its existence as a
corporation and will refrain from taking any action that would cause its
existence as a corporation to cease, including without limitation any action
that would result in its liquidation, winding up or dissolution.
Section 4.06. Maintenance of Properties.
The Company shall, and shall cause each of its material subsidiaries to,
maintain its properties and assets in good working order and condition and make
all necessary repairs, renewals, replacements, additions, betterments and
improvements thereto, except to the extent that failure to make any such repair,
renewal, replacement, addition, betterment or improvement would not have a
material adverse impact upon the business of the Company and its subsidiaries
taken as a whole.
The Company shall, and shall cause each of its material subsidiaries to,
maintain with financially sound and reputable insurers such insurance as may be
required by law and such other insurance, to such extent and against such
hazards and liabilities, as is customarily maintained by companies similarly
situated, except to the extent that failure to maintain such insurance would not
have a material adverse impact upon the business of the Company and its
subsidiaries taken as a whole.
12
The Company shall, and shall cause each of its material subsidiaries to,
keep true books of records and accounts in which full and correct entries will
be made of all its business transactions, in accordance with sound business
practices, and reflect in its financial statements adequate accruals and
appropriations to reserves, all in accordance with GAAP.
The Company shall, and shall cause each of its material subsidiaries to,
comply with all statutes, laws, ordinances, or government rules and regulations
to which it is subject, non-compliance with which would materially adversely
affect the business, prospects, earnings, properties, assets or condition,
financial or otherwise, of the Company and its subsidiaries taken as a whole.
Section 4.07. Taxes.
The Company shall, and shall cause each of its material subsidiaries to,
pay prior to delinquency all taxes, assessments and governmental levies, except
as contested in good faith and by appropriate proceedings.
Section 4.08. Limitation on Transactions with Affiliates.
The Company shall not, and shall not permit any of its subsidiaries to,
sell, lease, transfer or otherwise dispose of any of its Properties to, or
purchase any Property from, or enter into any contract, agreement,
understanding, loan, advance or guarantee with, or for the benefit of, any
Affiliate (each of the foregoing, an 'Affiliate Transaction'), unless (a) such
Affiliate Transaction is on terms that are not materially less favorable to the
Company or the relevant subsidiary than those that would have been obtained at
the time in a comparable transaction by the Company or such subsidiary with an
unrelated person ; (b) with respect to any Affiliate Transaction involving
aggregate payments in excess of $1,000,000, the Company delivers to the Trustee
a resolution of the Board of Directors set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with clause (a) above and
such Affiliate Transaction is approved by a majority of the disinterested
members of the Board of Directors; and (c) with respect to any Affiliate
Transaction (other than an Affiliate Transaction described in the final proviso
below in this Section 4.08) involving aggregate payments in excess of
$2,500,000, the Company delivers to the Trustee an opinion as to the fairness of
such Affiliate Transaction to the Company or such subsidiary from a financial
point of view issued by an independent investment banking firm or an independent
engineer, appraiser or other expert; provided, however, that (i) any employment,
consulting, severance, bonus or benefit agreement or plan entered into by the
Company or any of its subsidiaries in the ordinary course of business and
consistent with the past practice of the Company or such subsidiary and any and
all payments and transactions pursuant thereto, (ii) transactions between or
among the Company and/or its subsidiaries and (iii) transactions permitted by
Section 4.10 or by the covenant entitled 'Limitation on Restricted Payments' in
the indenture governing the Notes, in each case, shall not be deemed Affiliate
Transactions; provided, further, however, that any employment, consulting,
severance or bonus agreement entered into after the date of this Second
Supplemental Indenture by the Company or any of its subsidiaries with a person
who, other than by virtue of entering into such agreement or such person's
position pursuant to such agreement, is an Affiliate of the Company or any of
its subsidiaries, shall be deemed an Affiliate Transaction.
Section 4.09. Stay, Extension and Usury Laws.
The Company covenants (to the extent that it may lawfully do so) that it
will 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, which may affect the covenants
under or the performance of this Indenture; and the Company (to the extent it
may lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not, by resort to any such law, hinder, delay or
impede the execution of any power herein granted to the Trustee, but will suffer
and permit the execution of every such power as though no such law has been
enacted.
Section 4.10. Limitation on Restricted Payments.
The Company shall not, and shall not permit any of its subsidiaries to,
directly or indirectly: (i) declare or pay any dividend or make any distribution
on account of the Company's or any of its subsidiaries' Equity Interests (other
than (A) dividends or distributions payable in Equity Interests (other than
Disqualified Stock) issued by the Company or (B) dividends or distributions
payable to the Company or any subsidiary of the Company); (ii) purchase, redeem
or otherwise acquire or retire for
13
value any Equity Interests issued by the Company (other than any such Equity
Interests owned by a wholly owned subsidiary of the Company); (iii) voluntarily
purchase, redeem or otherwise acquire or retire for value any Indebtedness that
is pari passu with or subordinated to the Securities, except in accordance with
the mandatory redemption or repayment provisions set forth in the original
documentation governing such Indebtedness; or (iv) make any Investment (other
than Permitted Investments) (all such payments and other actions set forth in
clauses (i) through (iv) above being collectively referred to as 'Restricted
Payments'), unless, at the time of such Restricted Payment:
(A) no Default or Event of Default under this Indenture shall have
occurred and be continuing or would occur as a consequence thereof; and
(B) the Cash Flow Coverage Ratio of the Company for the Company's most
recently ended four full fiscal quarters for which internal financial
statements are available immediately preceding the date on which such
Restricted Payment is made, calculated on a pro forma basis as if such
Restricted Payment had been made at the beginning of such four-quarter
period, would have been at least 1.5 to 1; and
(C) such Restricted Payment, together with the aggregate of all other
Restricted Payments made by the Company and its subsidiaries after the date
of this Second Supplemental Indenture, is less than the sum of (A) 50% of
the Consolidated Net Income of the Company for the period (taken as one
accounting period) from the first day of the first full fiscal quarter
beginning after the date of this Second Supplemental Indenture to the end
of the Company's most recently ended fiscal quarter for which internal
financial statements are available at the time of such Restricted Payment
(or, if such Consolidated Net Income for such period is a deficit, minus
100% of such deficit), plus (B) 100% of the aggregate net cash proceeds
received by the Company, or the aggregate net cash proceeds received by a
subsidiary of the Company to the extent such cash proceeds are actually
distributed by such subsidiary to the Company without any repayment
obligation, from the issue or sale of Equity Interests of the Company or
any subsidiary of the Company (other than Equity Interests sold to the
Company or a subsidiary of the Company and other than Disqualified Stock)
since the date of this Second Supplemental Indenture.
Within thirty days of making any Restricted Payment permitted pursuant to
(A), (B) and (C) above, the Company shall deliver to the Trustee an Officers'
Certificate stating that such Restricted Payment is permitted.
Notwithstanding the foregoing or anything to the contrary in this Second
Supplemental Indenture, the provisions of this Second Supplemental Indenture
shall not prohibit (1) the payment of any dividend within 60 days after the date
of declaration thereof, if at said date of declaration such payment would have
complied with the provisions of this Indenture; (2) the redemption, repurchase,
retirement or other acquisition of any Equity Interests issued by the Company in
exchange for, or out of the proceeds of, the substantially concurrent sale
(other than to a subsidiary of the Company) of other Equity Interests of the
Company (other than any Disqualified Stock) or the redemption of Rights to
purchase Series A Junior Participating Preferred Stock of the Company pursuant
to their terms; (3) the repurchase, redemption or other acquisition or
retirement for value of any Equity Interests issued by the Company pursuant to
the Company's 1982 Stock Option Plan, 1985 Stock Option Plan, 1988 Long Term
Incentive Plan, 1990 Non-Employee Directors Restricted Stock Plan, 401(k) Plan
(formerly Stock Purchase Savings Plan) or Turn Around Incentive Plan, provided
that the aggregate redemptions, repurchases, retirements or other acquisitions
made pursuant to this clause (3) do not exceed (a) the product of (x) $100,000
and (y) the number of fiscal years of the Company since the date of this Second
Supplemental Indenture (provided that any portion of a fiscal year of the
Company shall be counted as a full fiscal year for purposes of this clause (3)),
minus (b) the amount paid by the Company and its subsidiaries since the date of
this Second Supplemental Indenture for Restricted Payments pursuant to this
clause (3); (4) any dividend or distribution payable in Equity Interests issued
by a subsidiary of the Company; provided, however, that, as of the date of each
dividend or distribution paid pursuant to this clause (4), the aggregate amount
of Equity Interests of each subsidiary of the Company being paid in such
dividend or distribution, when added to the aggregate amount of all Equity
Interests of such subsidiary previously paid in all dividends and distributions
pursuant to this clause (4) since the date of this Second Supplemental
Indenture, shall not exceed 20% of the outstanding Equity Interests of such
14
subsidiary; (5) any pro rata dividend or distribution made by a subsidiary of
the Company to such subsidiary's shareholders; (6) the payment of cash dividends
on the Company's Series B Preferred Stock; (7) purchases of the Company's Common
Stock from record or beneficial holders thereof who, the Company reasonably
believes, hold of record or beneficially less than 1,000 shares thereof or
purchases of fractional shares of the Company's Common Stock, provided that the
aggregate consideration paid in all purchases pursuant to this clause (7) shall
not exceed (a) the product of (x) $50,000 and (y) the number of fiscal years of
the Company since the date of this Second Supplemental Indenture (provided that
any portion of a fiscal year of the Company shall be counted as a full fiscal
year for purposes of this clause (7)), minus (b) the amount paid by the Company
and its subsidiaries since the date of this Second Supplemental Indenture for
Restricted Payments pursuant to this clause (7). Each of the foregoing clauses
(1)-(7) sets forth an independent, separate and distinct exception to the
covenant set forth in the first paragraph of this Section, and Restricted
Payments that may be made pursuant to each of such clauses are in addition to
any Restricted Payments that may be made pursuant to any other clause.
Limitations set forth in any one of such clauses (1)-(7) or in the definitions
used therein shall not be applicable to any other such clauses or any other such
definition.
Section 4.11. Limitation On Indebtedness
The Company shall not, and shall not permit any of its subsidiaries (other
than HGA or any of its subsidiaries) to, directly or indirectly, create, incur,
issue, assume, guaranty or otherwise become directly or indirectly liable with
respect to (collectively, 'incur') any Indebtedness (including Acquired Debt),
unless the Cash Flow Coverage Ratio for the Company's most recently ended four
full fiscal quarters for which internal financial statements are available
immediately preceding the date on which such additional Indebtedness is incurred
would have been at least 1.0 to 1, determined on a pro forma basis (including a
pro forma application of the net proceeds therefrom and including, without
limitation, the earnings of any business acquired by the Company with the
proceeds therefrom), as if the additional Indebtedness had been incurred at the
beginning of such four-quarter period.
The foregoing limitation shall not prohibit: (a) the existence of the
Existing Indebtedness; (b) if all or any portion of the principal amount of any
Existing Indebtedness is repaid, from time to time on or after the date of this
Second Supplemental Indenture, the incurrence by the Company and its
subsidiaries of Indebtedness in an amount not to exceed at any one time
outstanding the aggregate principal amount so repaid; (c) the incurrence by the
Company of any Indebtedness to any of its subsidiaries or the incurrence by any
subsidiary of the Company of any Indebtedness to the Company or any subsidiary
of the Company; (d) the incurrence of Indebtedness (including Acquired Debt) by
any subsidiary of the Company if such subsidiary, together with its consolidated
subsidiaries, would have had a Cash Flow Coverage Ratio for such subsidiary's
most recently ended four full fiscal quarters for which internal financial
statements are available immediately preceding the date on which such
Indebtedness is incurred by such subsidiary of at least 1.0 to 1, determined on
a pro forma basis (including a pro forma application of the net proceeds
therefrom and including, without limitation, the earnings of any business
acquired by the Company with the proceeds therefrom), as if such additional
Indebtedness had been incurred at the beginning of such four-quarter period; (e)
the incurrence by the Company and its subsidiaries of additional Indebtedness in
an amount not to exceed $50,000,000 at any one time outstanding; (f) the
incurrence by the Company or any of its subsidiaries of Indebtedness issued in
exchange for, or the proceeds of which are used to extend, refinance, renew,
replace or refund, Indebtedness referred to in clauses (a) through (e) above; or
(g) the incurrence by the Company and its subsidiaries of Purchase Money
Indebtedness. Each of the foregoing clauses (a) through (g) sets forth an
independent, separate and distinct exception to the covenant set forth in the
first paragraph of this Section, and Indebtedness that may be incurred pursuant
to each of such clauses is in addition to any Indebtedness that may be incurred
pursuant to any other clause. Limitations set forth in any one of such clauses
(a) through (g) or in the definitions used therein shall not be applicable to
any other such clauses or any other such definitions. The Indebtedness permitted
to be incurred pursuant to the foregoing clauses (a) through (g) may be incurred
from time to time pursuant to one agreement or several agreements with one
lender or several lenders.
Section 4.12. Board of Directors.
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At least 25% of the members of the Board of Directors of the Company at any
time shall be members who are not otherwise employed, on a full-time basis, by
the Company or any of its Affiliates.
Section 4.13. Change of Control Offer.
If at any time after June 29, 1989 the Board of Directors shall have become
aware (whether by public filings or otherwise) of a Change of Control (as
hereinafter defined) (the 'Change of Control Date'), then the Company shall, no
later than 30 days after a Change of Control Date, make an offer to all Holders
to purchase (a 'Change of Control Offer') 100% of the principal amount of
Securities outstanding as of such date at a purchase price equal to 100% of the
principal amount thereof plus accrued and unpaid interest to the Change of
Control Payment Date (as hereinafter defined). The Change of Control Offer shall
remain open for a period of twenty business days following its commencement and
no longer, except to the extent that a longer period is required by applicable
law (the 'Change of Control Offer Period'). No later than five business days
after the termination of the Change of Control Offer Period (the 'Change of
Control Payment Date') the Company shall purchase all Securities tendered in
response to the Change of Control Offer; provided, that no Securities shall be
purchased unless and until the Company purchases all the Notes required to be
purchased pursuant to Section 4.13 of the indenture governing the Notes as
amended from time to time.
If the Change of Control Payment Date is on or after an interest payment
record date and on or before the related interest payment date, any accrued and
unpaid interest to the Change of Control Payment Date will be paid in respect of
Securities that are tendered pursuant to the Change of Control Offer to the
person in whose name a Security is registered at the close of business on such
record date, and no additional interest will be payable to Holders who tender
Securities pursuant to the Change of Control Offer.
The Company shall provide the Trustee with written notice of the Change of
Control Offer at least ten days before the notice of any Change of Control Offer
is mailed to Holders.
Upon the commencement of any Change of Control Offer, the Company or, at
the Company's written request, the Trustee, shall send, by first class mail, a
notice to each of the Holders. The notice shall contain all instructions and
materials necessary to enable such Holders to tender Securities pursuant to the
Change of Control Offer. The notice, which shall govern the terms of the Change
of Control Offer, shall state:
(1) that the Change of Control Offer is being made pursuant to this
Section 4.13 of the Indenture, the expiration of the Change of Control
Offer Period and the Change of Control Payment Date;
(2) that the Change of Control Offer is being made for all Securities
outstanding on the date of such Offer at a price of 100% of the principal
amount thereof plus accrued and unpaid interest to the Change of Control
Payment Date;
(3) that any Security not tendered or accepted for payment will
continue to accrue interest;
(4) that any Security accepted for payment pursuant to the Change of
Control Offer shall cease to accrue interest after the Change of Control
Payment Date;
(5) that Holders electing to have a Security purchased pursuant to any
Change of Control Offer will be required to surrender the Security, with
the form entitled 'Option of Holder to Elect Purchase' on the reverse of
the Security (or, if no such form is provided, a letter of transmittal
supplied by the Company) completed, to the Company, a depositary, if
appointed by the Company, or a Paying Agent at the address specified in the
notice and before the expiration of the Change of Control Offer Period; and
(6) that Holders will be entitled to withdraw their election if the
Company, depositary or Paying Agent, as the case may be, receives, not
later than the expiration of the Change of Control Offer Period, or such
longer period as may be required by law, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Security the Holder delivered for purchase and statement that
such Holder is withdrawing his election to have the Security purchased.
16
On or before a Change of Control Payment Date, the Company shall, to the
extent lawful, (i) accept for payment Securities or portions thereof tendered
pursuant to the Change of Control Offer, (ii) if the Company appoints a
depositary or Paying Agent, deposit with such depositary or Paying Agent money
sufficient to pay the purchase price of all Securities or portions thereof so
accepted, (iii) deliver or cause the depositary or Paying Agent to deliver to
the Trustee Securities so accepted and (iv) deliver an Officers' Certificate
stating such Securities were accepted for payment by the Company in accordance
with the terms of this Section 4.13. The depositary, the Paying Agent or the
Company, as the case may be, shall promptly (but in any case not later than five
business days after the Change of Control Payment Date) mail or deliver to each
tendering Holder an amount equal to the purchase price of the Securities
tendered by such Holder and accepted by the Company for purchase.
The Company shall comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with an offer to
purchase Securities upon a Change of Control.
A 'Change of Control' shall be deemed to have occurred if (i) any 'person'
(as such term is used in Sections 13(d) and 14(d)(2) of the Exchange Act) other
than the Company or a subsidiary or any employee benefit plan sponsored by the
Company or any subsidiary shall become the beneficial owner (within the meaning
of Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of
the Company representing in excess of 50% of the combined voting power of the
Company's then outstanding securities, or (ii) during any period of two
consecutive years, individuals who at the beginning of such period constitute
the Board of Directors of the Company cease for any reason to constitute a
majority thereof unless each new director was elected by, or on the
recommendation of, a majority of the directors then still in office who were
directors at the beginning of the period. Notwithstanding the foregoing, a
Change of Control shall not be deemed to have occurred if the transaction or
event constituting a Change of Control shall have been approved by a majority of
the members of the Board in office immediately prior to such transaction or
event.
ARTICLE 5
SUCCESSORS
Section 5.01. When Company May Merge, etc.
The Company shall not consolidate or merge with or into any person unless:
(1) the person formed by or surviving any such consolidation or merger
is a corporation organized and existing under the laws of the United
States, any state thereof or the District of Columbia;
(2) the corporation formed by or surviving any such consolidation or
merger assumes by supplemental indenture all the obligations of the Company
under the Securities and this Indenture, except that it need not assume the
obligations of the Company as to conversion of Securities if pursuant to
Section 10.18 the Company or another person enters into a supplemental
indenture obligating it to deliver securities, cash or other assets upon
conversion of Securities.
(3) immediately after the transaction no Default or Event of Default
exists; and
(4) the corporation formed by or surviving any such consolidation or
merger shall have Adjusted Net Worth (immediately after the transaction)
equal to or greater than the Adjusted Net Worth of the Company (immediately
preceding the transaction), and the aggregate combined Consolidated Net
Income of such person and the Company for the four full fiscal quarters
immediately preceding such transaction shall be equal to or greater than
the Consolidated Net Income of the Company (for its four full fiscal
quarters immediately preceding such transaction), respectively.
The Company shall deliver to the Trustee prior to the proposed
transaction an Officers' Certificate to the foregoing effect and an Opinion
of Counsel stating that the proposed transaction and such supplemental
indenture comply with this Indenture.
The surviving corporation shall be the successor Company.
Notwithstanding the foregoing, the Company shall be permitted to sell,
lease, transfer or otherwise dispose of any or all of its assets.
17
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.
Each of the following constitutes an Event of Default under this Indenture:
(1) default for 30 days in the payment when due of interest on any Security
(whether or not prohibited by the subordination provisions of this Indenture);
(2) default in payment of principal of any Security (whether or not
prohibited by the subordination provisions of this Indenture) when due and
payable at maturity, upon repurchase under Section 4.13, upon redemption or
otherwise;
(3) failure by the Company to comply with the other agreements in this
Indenture or any Security which failure continues for the period and after the
notice specified below;
(4) default under any mortgage, indenture or other instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company (or the payment of which is
guaranteed by the Company) whether such Indebtedness or guarantee existed on the
date of the Original Indenture, or is or was created after the date of the
Original Indenture, which default results in the acceleration of such
Indebtedness prior to its express maturity and the principal amount of any such
Indebtedness aggregates $5,000,000 or more;
(5) a final judgment or final judgments for the payment of money are
entered by a court or courts of competent jurisdiction against the Company or
any subsidiary of the Company which judgment remains undischarged for a period
(during which execution shall not be effectively stayed) of 30 days, provided
that the aggregate of all such judgments exceeds $5,000,000;
(6) the Company pursuant to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief against it in an
involuntary case;
(C) consents to the appointment of a Custodian of it or for all or
substantially all of its property;
(D) makes a general assignment for the benefit of creditors; or
(E) generally is not able to pay its debts as the same become due;
and
(7) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that
(A) is for relief against the Company in an involuntary case;
(B) appoints a Custodian of the Company or for all or substantially
all of its property; or
(C) orders the liquidation of the Company, and the order or decree
remains unstayed and in effect for 60 days.
The term 'Bankruptcy Law' means title 11, U.S. Code or any similar Federal
or State law for the relief of debtors. The term 'Custodian' means any receiver,
trustee, assignee, liquidator or similar official under any Bankruptcy Law.
A Default under clause (3) is not an Event of Default until the Trustee or
the Holders of at least 25% in aggregate principal amount of the then
outstanding Securities notify the Company in writing of the Default and the
Company does not cure the Default within 60 days after receipt of the notice.
The notice must specify the Default, demand that it be remedied and state that
the notice is a 'Notice of Default.' In the case of any Event of Default
pursuant to the provisions of this Section 6.01 occurring by reason of any
willful action (or inaction) taken (or not taken) by or on behalf of the Company
with the intention of avoiding payment of the premium which the Company would
have to pay if the Company then had elected to redeem the Securities pursuant to
paragraph 5 of the Securities, an equivalent premium shall also become
immediately due and payable to the extent permitted by law, anything in this
Indenture or in the Securities contained to the contrary notwithstanding.
Section 6.02. Acceleration.
18
If an Event of Default occurs and is continuing, the Trustee by written
notice to the Company, or the Holders of at least 25% in aggregate principal
amount of the then outstanding Securities by written notice to the Company and
the Trustee, may declare the principal of and accrued interest on all the
Securities to be due and payable. Upon such declaration the principal and
interest shall be due and payable immediately. If an Event of Default specified
in clause (6) or (7) of Section 6.01 occurs, such an amount shall ipso facto
become and be immediately due and payable without any declaration or other act
on the part of the Trustee or any Holder. The Holders of a majority in aggregate
principal amount of the then outstanding Securities by notice to the Trustee may
rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events of Default have
been cured or waived except nonpayment of principal or interest that has become
due solely because of the acceleration.
Section 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may pursue any
available remedy to collect the payment of principal or interest on the
Securities or to enforce the performance of any provision of the Securities or
this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder 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 6.04. Waiver of Past Defaults.
The Holders of a majority in principal amount of the then outstanding
Securities by notice to the Trustee may waive an existing Default or Event of
Default and its consequences except a continuing Default or Event of Default in
the payment of the principal of or interest on any Security or a Default or
Event of Default under Article 10.
Section 6.05. Control by Majority.
The Holders of a majority in aggregate principal amount of the then
outstanding Securities may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on it. However, the Trustee may refuse to follow any direction
that conflicts with law or this Indenture or would involve the Trustee in
personal liability.
Section 6.06. Limitation on Suits.
A Securityholder may pursue a remedy with respect to this Indenture or the
Securities only if:
(1) the Holder gives to the Trustee notice of a continuing Event of
Default;
(2) the Holders of at least 25% in aggregate principal amount of the
then outstanding Securities make a request to the Trustee to pursue the
remedy;
(3) such Holder or Holders offer to the Trustee indemnity satisfactory
to the Trustee against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer of indemnity; and
(5) during such 60-day period the Holders of a majority in aggregate
principal amount of the then outstanding Securities do not give the Trustee
a direction inconsistent with the request.
A Securityholder may not use this Indenture to prejudice the rights of another
Securityholder or to obtain a preference or priority over another
Securityholder.
Section 6.07. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Security to receive payment of principal and interest on the
Security, on or after the respective due dates expressed in the Security, 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 the Holder.
19
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Security to bring a suit for the enforcement of the right to convert
the Security shall not be impaired or affected without the consent of the
Holder.
Section 6.08. Collection Suit by Trustee.
If an Event of Default specified in Section 6.01(1) or (2) occurs and is
continuing, the Trustee may recover judgment in its own name and as trustee of
an express trust against the Company for the whole amount of principal and
interest remaining unpaid on the Securities and interest on overdue principal
and interest and such further amount as shall be sufficient to cover the costs
and, to the extent lawful, expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel.
Section 6.09. Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or documents as
may be necessary or advisable in order to have the claims of the Trustee and the
Securityholders allowed in any judicial proceedings relative to the Company, its
creditors or its property. Nothing contained herein shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Securities or the rights of any Holder thereof, or to authorize
the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
Section 6.10. Priorities.
If the Trustee collects any money pursuant to this Article, it shall pay
out the money in the following order:
First: to the Trustee for amounts due under Section 7.07;
Second: to holders of Senior Debt to the extent required by Article 11;
Third: to Securityholders for amounts due and unpaid on the Securities for principal and
Fourth: interest, ratably, without preference or priority of any kind, according to the
amounts due and payable on the Securities for principal and interest,
respectively; and
to the Company.
The Trustee may fix a record date and payment date for any payment to
Securityholders.
Section 6.11. 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 this 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 pursuant to
Section 6.07, or a suit by Holders of more than 10% in aggregate principal
amount of the then outstanding Securities.
ARTICLE 7
TRUSTEE
Section 7.01. 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 their exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(1) The Trustee need perform only those duties that are specifically
set forth in this Indenture and no others.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
the
20
Trustee shall examine the certificates and opinions to determine whether or
not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act, or its own wilful misconduct, except
that:
(1) This paragraph does not limit the effect of paragraph (b) of this
Section.
(2) The Trustee shall not be liable for any error of judgment made in
good faith by a Trust Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05.
(d) 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) The Trustee may refuse to perform any duty or exercise any right or
power unless it receives 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 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 7.02. Rights of Trustee.
(a) The Trustee may rely on any document believed by it to be genuine and
to have signed or presented by the proper person. The Trustee need not
investigate any fact or manner stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel. The Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on the
Certificate or Opinion.
(c) The Trustee may act through agents and shall not be responsible for the
misconduct or negligence or any agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers.
Section 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the owner or
pledgee of Securities and may otherwise deal with the Company or an Affiliate
with the same rights it would have if it were not Trustee. Any Agent may do the
same with like rights. However, the Trustee is subject to Sections 7.10 and
7.11.
Section 7.04. Trustee's Disclaimer.
The Trustee makes no representation as to the validity or adequacy of this
Indenture, or the Securities, it shall not be accountable for the Company's use
of the proceeds from the Securities, and it shall not be responsible for any
statement in the Indenture or any statement in the Securities other than its
authentication.
Section 7.05. 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 Securityholders 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 on any Security, the Trustee may
withhold the notice if and so long as a committee of its Trust Officers in good
faith determines that withholding the notice is in the interests of
Securityholders.
Section 7.06. Reports by Trustee to Holders.
Within 60 days after the reporting date stated in Section 12.10, the
Trustee shall mail to Securityholders a brief report dated as of such reporting
date that complies with TIA 313(a) if so required. The Trustee also shall comply
with TIA 313(b)(2) if so required. The Trustee shall also transmit by mail all
reports as required by TIA 313(c) if so required.
21
A copy of each report at the time of its mailing to Securityholders shall
be filed with the SEC and each stock exchange on which the Securities are
listed. The Company shall notify the Trustee when the Securities are listed on
any stock exchange.
Section 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time reasonable
compensation for its services. 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 upon request for all reasonable out-of-pocket expenses
incurred by it. Such expenses shall include the reasonable compensation and
out-of-pocket expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee against any loss or liability
incurred by it except as set forth in the next paragraph. The Trustee shall
notify the Company promptly of any claim for which it may seek indemnity. The
Company shall defend the claim and the Trustee shall cooperate in the defense.
The Trustee may have separate counsel and the Company shall pay the reasonable
fees and expenses of such counsel. The Company need not pay for any settlement
made without its consent, which consent shall not be unreasonably withheld.
The Company need not reimburse any expense or indemnify against any loss or
liability incurred by the Trustee through negligence or bad faith.
To secure the Company's payment obligations in this Section, the Trustee
shall have a lien prior to the Securities on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Securities.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(6) or (7) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
This Section 7.07 shall survive any satisfaction, discharge or termination
of this Indenture, including, to the extent enforceable, any termination under
any Bankruptcy Law.
Section 7.08. 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.
The Trustee may resign by so notifying the Company. The Holders of a
majority in aggregate principal amount of the then outstanding Securities may
remove the Trustee by so notifying the Trustee and the Company. The Company may
remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) 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;
(3) a Custodian or public officer takes charge of the Trustee or its
property;
(4) the Trustee becomes incapable of acting; or
(5) in the judgment of the Company, comparable services are available
from another entity qualifying under Section 7.10 at a materially lower
cost to the Company.
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 takes office, the Holders of a
majority in aggregate principal amount of the then outstanding Securities 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
Securities may petition any court of competent jurisdiction for the appointment
of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder who
satisfies the requirements of TIA SECTION 310(b) may petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee.
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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 Securityholders. The
retiring Trustee shall promptly transfer all property held by it as Trustee to
the successor Trustee, subject to the lien provided for in Section 7.07.
Section 7.09. 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.
Section 7.10. Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the requirements
of TIA SECTION 310(a)(1), (2) and (5). The Trustee shall always have a combined
capital and surplus as stated in Section 12.10. The Trustee is subject to TIA
SECTION 310(b), including the optional provision permitted by the second
sentence of TIA SECTION 310(b)(9). Section 12.10 lists any excluded indenture or
trust agreement.
Section 7.11. Preferred 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 8
DISCHARGE OF INDENTURE
Section 8.01. Termination of Company's Obligations.
This Indenture shall cease to be of further effect (except that the
obligations under Section 7.07 and 8.03 shall survive) when all outstanding
Securities theretofore authenticated and issued have been delivered to the
Trustee for cancellation and the Company has paid all sums payable hereunder.
In addition, the Company may terminate all of its obligations under this
Indenture if:
(1) the Securities mature within one year or all of them are to be
called for redemption within one year under arrangements satisfactory to
the Trustee for giving the notice of redemption; and
(2) the Company irrevocably deposits in trust with the Trustee money
or Government Securities sufficient to pay principal and interest on the
Securities to maturity or redemption, as the case may be. The Company may
make the deposit only during the one-year period and only if Article 11
permits it.
However, the Company's obligations in Sections 2.03, 2.04, 2.05, 2.06,
2.07, 4.01, 4.04, 7.07, 7.08 , 8.03 and 8.04, and in Article 10, shall survive
until the Securities are no longer outstanding. Thereafter, only the obligations
in Sections 7.07, 8.03 and 8.04 shall survive.
After a deposit made pursuant to this Section 8.01, the Trustee upon
request shall acknowledge in writing the discharge of the Company's obligations
under this Indenture except for those surviving obligations specified above.
In order to have money available on a payment date to pay principal or
interest on the Securities, the Government Securities shall be payable as to
principal or interest on or before such payment date in such amounts as will
provide the necessary money. Government Securities shall not be callable at the
issuer's option.
Section 8.02. Application of Trust Money.
The Trustee shall hold in trust money or Government Securities deposited
with it pursuant to Section 8.01. It shall apply the deposited money and the
money from Government Securities through the Paying Agent and in accordance with
this Indenture to the payment of principal and interest on the Securities. Money
and securities so held in trust are not subject to Article 11.
Section 8.03. Repayment to Company.
23
The Trustee and the Paying Agent shall promptly pay to the Company upon
request any excess money or securities held by them at any time.
The Trustee and the 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 the date upon which such payment shall have become
due; provided, however, that the Company shall have first caused notice of such
payment to the Company to be mailed to each Holder entitled thereto no less than
30 days prior to such payment. After payment to the Company, Securityholders
entitled to the money must look to the Company for payment as general creditors
unless an applicable abandoned property law designates another person.
Section 8.04. Reinstatement.
If (i) the Trustee or Paying Agent is unable to apply any money in
accordance with Section 8.02 by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application and (ii) the Holders of at least a majority in principal amount of
the then outstanding Securities so request by written notice to the Trustee, the
Company's obligations under this Indenture and the Securities shall be revived
and reinstated as though no deposit had occurred pursuant to Section 8.01 until
such time as the Trustee or Paying Agent is permitted to apply all such money in
accordance with Section 8.02; provided, however, that if the Company makes any
payment of interest on or principal of any Security following the reinstatement
of its obligations, the Company shall be subrogated to the rights of the Holders
of such Securities to receive such payment from the money held by the Trustee or
Paying Agent.
ARTICLE 9
AMENDMENTS
Section 9.01. Without Consent of Holders.
The Company and the Trustee may amend this Indenture or the Securities
without the consent of any Securityholder:
(1) to cure any ambiguity, defect or inconsistency;
(2) to comply with Section 10.18;
(3) to provide for uncertificated Securities in addition to
certificated Securities; or
(4) to make any change that does not adversely affect the legal rights
hereunder of any Securityholder.
Section 9.02. With Consent of Holders.
Subject to Section 6.07, the Company and the Trustee may amend this
Indenture or the Securities with the written consent of the Holders of at
least a majority in aggregate principal amount of the then outstanding
Securities. Subject to Sections 6.04 and 6.07, the Holders of a majority in
aggregate principal amount of the Securities then outstanding may also
waive compliance in a particular instance by the Company with any provision
of this Indenture or the Securities. However, without the consent of each
Holder affected, an amendment under this Section may not:
(1) reduce the amount of Securities whose Holders must consent to an
amendment;
(2) reduce the rate of or change the time for payment of interest,
including default interest, on any Security;
(3) reduce the principal of or change the fixed maturity of any
Security or alter the provisions with respect to the redemption of the
Securities in a manner that adversely affects the rights of any Holders of
Securities;
(4) make any Security payable in money other than that stated in the
Security;
(5) make any change in Section 6.04, 6.07 or 9.02 (third sentence);
(6) make any change that adversely affects the right to convert any
Security; or
(7) make any change in Article 11 that adversely affects the rights of
any Securityholder.
24
An amendment under this Section may not make any change that adversely
affects the rights under Article 11 of any holder of an issue of Senior Debt
unless the holders of the issue pursuant to its terms consent to the change or
the change is otherwise permissible.
After an amendment under this Section becomes effective, the Company shall
mail to Securityholders a notice briefly describing the amendment.
Section 9.03. Compliance with Trust Indenture Act.
Every amendment to this Indenture or the Securities shall be set forth in a
supplemental indenture that complies with the TIA as then in effect.
Section 9.04. Revocation and Effect of Consents.
Until an amendment or waiver becomes effective, a consent to it by a Holder
of a Security is a continuing consent by the Holder and every subsequent Holder
of a Security or portion of a Security that evidences the same debt as the
consenting Holder's Security, even if notation of the consent is not made on any
Security. However, any such Holder or subsequent Holder may revoke the consent
as to his Security or portion of a Security if the Trustee receives the notice
of revocation before the date on which the Trustee receives an Officers'
Certificate certifying that the Holders of the requisite principal amount of
Securities have consented to the amendment or waiver. An amendment or waiver
becomes effective in accordance with its terms and thereafter binds every
Securityholder.
The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders entitled to consent to any amendment or
waiver. If a record date is fixed, then notwithstanding the provisions of the
immediately preceding paragraph, those persons who were Holders at such record
date (or their duly designated proxies), and only those persons, shall be
entitled to consent to such amendment or waiver or to revoke any consent
previously given, whether or not such persons continue to be Holders after such
record date. No consent shall be valid or effective for more than 90 days after
such record date unless consents from Holders of the principal amount of
Securities required hereunder for such amendment or waiver to be effective shall
have also been given and not revoked within such 90-day period.
After an amendment or waiver becomes effective it shall bind every
Securityholder, unless it is of the type described in any of clauses (1) through
(7) of Section 9.02. In such case, the amendment or waiver shall bind each
Holder of a Security who has consented to it and every subsequent Holder of a
Security that evidences the same debt as the consenting Holder's Security.
Section 9.05. Notation on or Exchange of Securities.
The Trustee may place an appropriate notation about an amendment or waiver
on any Security thereafter authenticated. The Company in exchange for all
Securities may issue and the Trustee shall authenticate new Securities that
reflect the amendment or waiver.
Section 9.06. Trustee Protected.
The Trustee shall sign all supplemental indentures, except that the Trustee
need not sign any supplemental indenture that adversely affects its rights. If
it does, the Trustee may but need not sign it. In signing or refusing to sign
such amendment, supplement or waiver the Trustee shall be entitled to receive
and shall be fully protected in relying upon, an Officers' Certificate and an
Opinion of Counsel stating that such amendment, supplement or waiver is
authorized or permitted by this Indenture and constitutes the legal, valid and
binding obligation of the Company enforceable in accordance with its terms, with
customary exceptions.
ARTICLE 10
CONVERSION
Section 10.01. Conversion Privilege.
A Holder of a Security may convert it into Common Stock at any time during
the period stated in paragraph 9 of the Securities. The number of shares
issuable upon conversion of a Security is determined as follows: Divide the
principal amount to be converted by the conversion price in effect on the
conversion date. Round the result to the nearest 1/100th of a share.
25
The initial conversion price is stated in paragraph 9 of the Securities.
The conversion price is subject to adjustment.
A Holder may convert a portion of a Security if the portion is $1,000 or an
integral multiple of $1,000. Provisions of this Indenture that apply to
conversion of all of a Security also apply to conversion of a portion of it.
'Common Stock' means Common Stock of the Company as it existed on the date
of the Original Indenture or as it may be constituted from time to time.
Section 10.02. Conversion Procedure.
To convert a Security, a Holder must satisfy the requirements in paragraph
9 of the Securities. The date on which the Holder satisfies all those
requirements is the conversion date. As soon as practical, the Company shall
deliver through the Conversion Agent a certificate for the number of full shares
of Common Stock issuable upon the conversion and a check for any fractional
share. The person in whose name the certificate is registered shall be treated
as a stockholder of record on and after the conversion date.
No payment or adjustment will be made for accrued interest on a converted
Security or dividends on any Common Stock issued.
If a Holder converts more than one Security at the same time, the number of
full shares issuable upon the conversion shall be based on the total principal
amount of the Securities converted.
Upon surrender of a Security that is converted in part, the Company shall
issue and the Trustee shall authenticate for the Holder a new Security equal in
principal amount to the unconverted portion of the Security surrendered.
If the last day on which a Security may be converted is a Legal Holiday in
a place where a Conversion Agent is located, the Security may be surrendered to
that Conversion Agent on the next succeeding day that is not a Legal Holiday.
Section 10.03. Fractional Shares.
The Company will not issue a fractional share of Common Stock upon
conversion of a Security. Instead the Company will deliver its check for the
current market value of the fractional share. The current market value of a
fraction of a share is determined as follows: Multiply the current market price
of a full share by the fraction. Round the result to the nearest cent.
The current market price of a share of Common Stock is the Quoted Price of
the Common Stock on the last trading day prior to the conversion date. In the
absence of such a quotation, the Company shall determine the current market
price on the basis of such quotations as it considers appropriate.
Section 10.04. Taxes on Conversion.
If a Holder of a Security converts it, the Company shall pay any
documentary, stamp or similar issue or transfer tax due on the issue of shares
of Common Stock upon the conversion. However, the Holder shall pay any such tax
which is due because the shares are issued in a name other than the Holder's
name.
Section 10.05. Company to Provide Stock.
The Company shall reserve out of its authorized but unissued Common Stock
or its Common Stock held in treasury enough shares of Common Stock to permit the
conversion of the Securities.
All shares of Common Stock which may be issued upon conversion of the
Securities shall be fully paid and non-assessable.
The Company will endeavor to comply with all securities laws regulating the
offer and delivery of shares of Common Stock upon conversion of Securities and
will endeavor to list such shares on each national securities exchange on which
the Common Stock is listed.
Section 10.06. Adjustment for Change in Capital Stock.
If the Company:
26
(1) pays a dividend or makes a distribution on its Common Stock in
shares of its Common Stock;
(2) subdivides its outstanding shares of Common Stock into a greater
number of shares;
(3) combines its outstanding shares of Common Stock into a smaller
number of shares;
(4) makes a distribution on its Common Stock in shares of its capital
stock other than Common Stock; or
(5) issues by reclassification of its Common Stock any shares of its
capital stock;
then the conversion privilege and the conversion price in effect immediately
prior to such action shall be adjusted so that the Holder of a Security
thereafter converted may receive the number of shares of capital stock of the
Company which he would have owned immediately following such action if he had
converted the Security immediately prior to such action.
The adjustment shall become effective immediately after the record date in
the case of a dividend or distribution and immediately after the effective date
in the case of a subdivision, combination or reclassification.
If after an adjustment a Holder of a Security upon conversion of it may
receive shares of two or more classes of capital stock of the Company, the
Company shall determine the allocation of the adjusted conversion price between
the classes of capital stock. After such allocation, the conversion privilege
and the conversion price of each class of capital stock shall thereafter be
subject to adjustment on terms comparable to those applicable to Common Stock in
this Article.
Section 10.07 Adjustment for Rights Issue.
If the Company distributes any rights or warrants to all holders of its
Common Stock entitling them for a period expiring within 60 days after the
record date mentioned below to purchase shares of Common Stock at a price per
share less than the current market price per share on that record date, the
conversion price shall be adjusted in accordance with the formula:
N X P
O + -------
M
C1 = C X -------------
O + N
where
C1 = the adjusted conversion price.
C = the current conversion price.
O = the number of shares of Common Stock outstanding on the record date.
N = the number of additional shares of Common Stock offered.
P = the offering price per share of the additional shares.
M = the current market price per share of Common Stock on the record date.
The adjustment shall be made successively whenever any such rights or
warrants are issued and shall become effective immediately after the record date
for the determination of stockholders entitled to receive the rights or
warrants. If at the end of the period during which such warrants or rights are
exercisable, not all warrants or rights shall have been exercised, the
conversion price shall be immediately readjusted to what it would have been if
'N' in the above formula had been the number of shares actually issued.
Section 10.08. Adjustment for Other Distributions.
If the Company distributes to all holders of its Common Stock any of its
assets or debt securities or any rights or warrants to purchase debt securities,
assets or other securities of the Company, the conversion price shall be
adjusted in accordance with the formula:
27
M - F
C1 = C X ------
M
where
C1 = the adjusted conversion price.
C = the current conversion price.
M = the current market price per share of Common Stock on the record date
mentioned below.
F = the fair market value on the record date of the assets, securities,
rights or warrants applicable to one share of Common Stock. The Board of
Directors shall determine the fair market value.
The 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 the distribution.
This Section does not apply to cash dividends or cash distributions paid
out of consolidated current or retained earnings as shown on the books of the
Company. Also, this Section does not apply to rights or warrants referred to in
Section 10.07.
Section 10.09. Adjustment for Common Stock Issue.
If the Company issues shares of Common Stock for a consideration per share
less than the current market price per share on the date the Company fixes the
offering price of such additional shares, the conversion price shall be adjusted
in accordance with the formula:
P
O + --
M
C1 = C X --------
N
where
C1 = the adjusted conversion price.
C = the then current conversion price.
O = the number of shares outstanding immediately prior to the issuance of such
additional shares.
P = the aggregate consideration received for the issuance of such additional
shares.
M = the current market price per share on the date of issuance of such
additional shares.
A = the number of shares outstanding immediately after the issuance of such
additional shares.
The adjustment shall be made successively whenever any such issuance is
made, and shall become effective immediately after such issuance.
This Section does not apply to (i) any of the transactions described in
Sections 10.07 and 10.08, (ii) the conversion of Securities, or the conversion
or exchange of other securities convertible or exchangeable for Common Stock,
(iii) Common Stock issued to the Company's employees under bona fide employee
benefit plans adopted by the Board of Directors and approved by the holders of
Common Stock when required by law, if such Common Stock would otherwise be
covered by this Section (but only to the extent that the aggregate number of
shares excluded hereby and issued after the date of the Original Indenture shall
not exceed 10% of the Common Stock outstanding at the time of the adoption of
each such plan, exclusive of antidilution adjustments thereunder), (iv) Common
Stock upon the exercise of rights or warrants issued to the holders of Common
Stock, (v) Common Stock issued to shareholders of any person which merges into
the Company or with a subsidiary of the Company in proportion to their stock
holdings of such person immediately prior to such merger, upon such merger, (vi)
Common Stock issued in a bona fide public offering pursuant to a firm commitment
or best efforts underwriting or (vii) Common Stock issued in a bona fide private
placement through a placement agent which is a member firm of the National
Association of Securities Dealers, Inc. (except
28
to the extent that any discount from the current market price attributable to
restrictions on transferability of the Common Stock, as determined in good faith
by the Board of Directors and described in a Board resolution which shall be
filed with the Trustee, shall exceed 20%).
Section 10.10. Adjustment for Convertible Securities Issue.
If the Company issues any securities convertible into or exchangeable for
Common Stock (other than securities issued in transactions described in Section
10.07 and 10.08 or the Securities) for a consideration per share of Common Stock
initially deliverable upon conversion or exchange of such securities less than
the current market price per share on the date of issuance of such securities,
the conversion price shall be adjusted in accordance with the formula:
P
O + --
M
C1 = C X --------
O + D
where
C' = the adjusted conversion price.
C = the then current conversion price.
O = the number of shares outstanding immediately prior to the issuance of
such securities.
P = the aggregate consideration received for the issuance of such
securities.
M = the current market price per share on the date of issuance of such
securities.
D = the maximum number of shares deliverable upon conversion or in exchange
for such securities at the initial conversion or exchange rate.
The adjustment shall be made successively whenever any such issuance is
made, and shall become effective immediately after such issuance. If all of the
Common Stock deliverable upon conversion or exchange of such securities have not
been issued when such securities are no longer outstanding, then the conversion
price shall promptly be readjusted to the conversion price which would then be
in effect had the adjustment upon the issuance of such securities been made on
the basis of the actual number of shares of Common Stock issued upon conversion
or exchange of such securities.
This Section does not apply to (i) convertible securities issued to
shareholders of any person which merges into the Company, or with a subsidiary
of the Company, in proportion to their stock holdings of such person immediately
prior to such merger, upon such merger, (ii) convertible securities issued in a
bona fide public offering pursuant to a firm commitment or best efforts
underwriting or (iii) convertible securities issued in a bona fide private
placement through a placement agent which is a member firm of the National
Association of Securities Dealers, Inc. (except to the extent that any discount
from the current market price attributable to restrictions on transferability of
Common Stock issuable upon conversion, as determined in good faith by the Board
of Directors and described in a Board resolution which shall be filed with the
Trustee, shall exceed 20% of the then current market price).
Section 10.11. Current Market Price.
In Sections 10.07, 10.08, 10.09 and 10.10 the current market price per
share of Common Stock on any date is the average of the Quoted Prices of the
Common Stock for 30 consecutive trading days commencing 45 trading days before
the date in question. In the absence of one or more such quotations, the Company
shall determine the current market price on the basis of such quotations as it
considers appropriate.
Section 10.12. Consideration Received.
For purposes of any computation respecting consideration received pursuant
to Sections 10.09 and 10.10, the following shall apply:
(1) in the case of the issuance of shares of Common Stock for cash,
the consideration shall be the amount of such cash, provided that in no
case shall any deduction be made for any
29
commissions, discounts or other expenses incurred by the Company for any
underwriting of the issue or otherwise in connection therewith;
(2) in the case of the issuance of shares of Common Stock for a
consideration in whole or in part other than cash, the consideration other
than cash shall be deemed to be the fair market value thereof as determined
in good faith by the Board of Directors (irrespective of the accounting
treatment thereof), whose determinations shall be conclusive, and described
in a Board resolution which shall be filed with the Trustee; and
(3) in the case of the issuance of securities convertible into or
exchangeable for shares, the aggregate consideration received therefor
shall be deemed to be the consideration received by the Company for the
issuance of such securities plus the additional minimum consideration, if
any, to be received by the Company upon the conversion or exchange thereof
(the consideration in each case to be determined in the same manner as
provided in clauses (1) and (2) of this Section).
Section 10.13. When Adjustment May Be Deferred.
No adjustment in the conversion price need be made unless the
adjustment would require an increase or decrease of at least 1% in the
conversion price. Any adjustments that are not made shall be carried
forward and taken into account in any subsequent adjustment.
All calculations under this Article shall be made to the nearest cent
or to the nearest 1/100th of a share, as the case may be.
Section 10.14. When No Adjustment Required.
No adjustment need be made for a transaction referred to in Section
10.06, 10.07, 10.08, 10.09 or 10.10 if Securityholders are to participate
in the transaction on a basis and with notice that the Board of Directors
determines to be fair and appropriate in light of the basis and notice on
which holders of Common Stock participate in the transaction.
No adjustment need be made for rights to purchase Common Stock
pursuant to a Company plan for reinvestment of dividends or interest.
No adjustment need be made for a change in the par value or no par
value of the Common Stock.
To the extent the Securities become convertible into cash, no
adjustment need be made thereafter as to the cash. Interest will not accrue
on the cash.
Section 10.15. Notice of Adjustment.
Whenever the conversion price is adjusted, the Company shall promptly
mail to Securityholders a notice of the adjustment. The Company shall file
with the Trustee a certificate from the Company's independent public
accountants briefly stating the facts requiring the adjustment and the
manner of computing it. The certificate shall be conclusive evidence that
the adjustment is correct.
Section 10.16. Voluntary Reduction.
The Company from time to time may reduce the conversion price by any
amount for any period of time if the period is at least 20 days and if the
reduction is irrevocable during the period, provided that in no event may
the conversion price be less than the par value of a share of Common Stock.
Whenever the conversion price is reduced, the Company shall mail to
Securityholders a notice of the reduction. The Company shall mail the
notice at least 15 days before the date the reduced conversion price takes
effect. The notice shall state the reduced conversion price and the period
it will be in effect.
A reduction of the conversion price does not change or adjust the
conversion price otherwise in effect for purposes of Sections 10.06, 10.07,
10.08, 10.09 and 10.10.
Section 10.17. Notice of Certain Transactions.
If:
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(1) the Company takes any action that would require an adjustment in
the conversion price pursuant to Section 10.06, 10.07, 10.08, 10.09 or
10.10 and if the Company does not let Securityholders participate pursuant
to Section 10.14;
(2) the Company takes any action that would require a supplemental
indenture pursuant to Section 10.18; or
(3) there is a liquidation or dissolution of the Company,
the Company shall mail to Securityholders a notice stating the proposed record
date for a dividend or distribution or the proposed effective date of a
subdivision, combination, reclassification, consolidation, merger, transfer,
lease, liquidation or dissolution. The Company shall mail the notice at least 15
days before such date. Failure to mail the notice or any defect in it shall not
affect the validity of the transaction.
Section 10.18. Reorganization of Company.
If the Company is a party to a transaction subject to Section 5.01, upon
consummation of such transaction the Securities shall automatically become
convertible into the kind and amount of securities, cash or other assets which
the Holder of a Security would have owned immediately after such transaction if
the Holder had converted the Security immediately before the effective date of
the transaction. Concurrently with the consummation of such transaction, the
corporation formed by or surviving any such consolidation or merger, or to which
such sale, conveyance or lease shall have been made, shall enter into a
supplemental indenture, so providing and further providing for adjustments which
shall be as nearly equivalent as may be practical to the adjustments provided
for in this Article. The successor Company shall mail to Securityholders a
notice briefly describing the supplemental indenture.
If the issuer of securities deliverable upon conversion of Securities under
the supplemental indenture is an affiliate of the formed, surviving, transferee
or lessee corporation, that issuer shall join in the supplemental indenture.
If this Section applies, Sections 10.06, 10.07, 10.08 and 10.09 do not
apply.
Section 10.19. Company Determination Final.
Any determination that the Company or the Board of Directors must make
pursuant to Section 10.03, 10.06, 10.08, 10.09, 10.10, 10.11, 10.12 or 10.14 is
conclusive.
Section 10.20. Trustee's Disclaimer.
The Trustee has no duty to determine when an adjustment under this Article
should be made, how it should be made or what it should be. The Trustee has no
duty to determine whether any provisions of a supplemental indenture under
Section 10.18 are correct. The Trustee makes no representation as to the
validity or value of any securities or assets issued upon conversion of
Securities. The Trustee shall not be responsible for the Company's failure to
comply with this Article. Each Conversion Agent other than the Company shall
have the same protection under this Section as the Trustee.
ARTICLE 11
SUBORDINATION
Section 11.01. Agreement to Subordinate.
The Company agrees, and each Securityholder by accepting a Security agrees,
that the indebtedness evidenced by the Securities is subordinated in right of
payment, to the extent and in the manner provided in this Article, to the prior
payments in full of all Senior Debt, and that the subordination is for the
benefit of the holders of Senior Debt.
Section 11.02. Certain Definitions.
'Debt' means any indebtedness, contingent or otherwise, in respect of
borrowed money (whether or not the recourse of the lender is to the whole of the
assets of the Company or only to a portion thereof), or evidenced by bonds,
notes, debentures or similar instruments or letters of credit, or representing
the balance deferred and unpaid of the purchase price of any Property or
interest therein, except any such balance that constitutes a trade payable, if
and to the extent such indebtedness would
31
appear as a liability upon a balance sheet of the Company prepared on a
consolidated basis in accordance with generally accepted accounting principles.
'Representative' means the indenture trustee or other trustee, agent or
representative for an issue of Senior Debt.
'Senior Debt' means all Debt (present or future) created, incurred, assumed
or guaranteed by the Company (and all renewals, extensions or refundings
thereof), unless the instrument under which such Debt is created, incurred,
assumed or guaranteed expressly provides that such Debt is not senior or
superior in right of payment to the Securities. Notwithstanding anything to the
contrary in the foregoing, Senior Debt shall not include any Debt of the Company
to any of its subsidiaries.
A distribution may consist of cash, securities or other property.
Section 11.03. Liquidation; Dissolution; Bankruptcy.
Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property:
(1) holders of Senior Debt shall be entitled to receive payment in
full in cash of the principal of and interest (including interest accruing
after the commencement of any such proceeding) to the date of payment, on
the Senior Debt before Securityholders shall be entitled to receive any
payment of principal of or interest on Securities; and
(2) until the Senior Debt is paid in full in cash, any distribution to
which Securityholders would be entitled but for this Article shall be made
to holders of Senior Debt as their interests may appear, except that
Securityholders may receive securities that are subordinated to Senior Debt
to at least the same extent as the Securities.
A distribution may consist of cash, securities or other property.
Section 11.04. Default on Senior Debt.
Upon the maturity of any Senior Debt by lapse of time, acceleration or
otherwise, all such Senior Debt shall first be paid in full, or such payment
duly provided for in cash or in a manner satisfactory to the holders of such
Senior Debt, before any payment is made by the Company or any person acting on
behalf of the Company on account of the principal or interest on the Securities.
The Company may not pay principal of or interest on the Securities and may
not acquire any Securities for cash or property other than capital stock of the
Company if:
(1) a default on Senior Debt occurs and is continuing that permits
holders of such Senior Debt to accelerate its maturity, and
(2) the default is the subject of judicial proceedings or the Company
receives a notice of the default from a person who may give it pursuant to
Section 11.12. If the Company receives any such notice, a similar notice
received within nine months thereafter relating to the same default on the
same issue of Senior Debt shall not be effective for purposes of this
Section.
The Company may resume payments on the Securities and may acquire them
when:
(a) the default is cured or waived, or
(b) 120 days pass after the notice is given if the default is not the
subject of judicial proceedings,
if this Article otherwise permits the payment or acquisition at that time.
Section 11.05. Acceleration of Securities.
If payment of the Securities is accelerated because of an Event of Default,
the Company shall promptly notify holders of Senior Debt of the acceleration.
The Company may pay the Securities when 120 days pass after the acceleration
occurs if this Article permits the payment at that time.
Section 11.06. When Distribution Must Be Paid Over.
In the event that notwithstanding the provisions of Section 11.04, the
Company shall make any payment to the Trustee on account of the principal or
interest on the Securities, after the happening of a
32
default in payment of the principal or interest on Senior Debt, or after receipt
by the Company and the Trustee of written notice as provided in Sections 11.04
and 11.12 of an event of default or an event which, with the passage of time or
the giving of notice or both, would constitute an event of default with respect
to any Senior Debt, then, unless and until such default or event of default
shall have been cured or waived or shall have ceased to exist, such payment
shall be held by the Trustee, in trust for the benefit of, and shall be paid
forthwith over and delivered to, the holders of Senior Debt (pro rata as to each
of such holders on the basis of the respective amounts of Senior Debt held by
them) or their representative or the trustee under the indenture or other
agreement (if any) pursuant to which Senior Debt may have been issued, as their
respective interests may appear, for application to the payment of all Senior
Debt remaining unpaid to the extent necessary to pay all Senior Debt in full in
accordance with its terms, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Debt.
If a distribution is made to Securityholders that because of this Article
should not have been made to them, the Securityholders who receive the
distribution shall hold it in trust for holders of Senior Debt and pay it over
to them as their interests may appear.
Section 11.07. 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 principal of or
interest on the Securities to violate this Article, but failure to give such
notice shall not affect the subordination of the Securities to the Senior Debt
provided in this Article. Nothing in this Article 11 shall apply to claims of,
or payments to, the Trustee under or pursuant to Section 7.07.
Section 11.08. Subrogation.
After all Senior Debt is paid in full and until the Securities are paid in
full, Securityholders shall be subrogated to the rights of holders of Senior
Debt to receive distributions applicable to Senior Debt to the extent that
distributions otherwise payable to the Securityholders have been applied to the
payment of Senior Debt. A distribution made under this Article to holders of
Senior Debt which otherwise would have been made to Securityholders is not, as
between the Company and the Securityholders, a payment by the Company on the
Senior Debt.
Section 11.09. Relative Rights.
This Article defines the relative rights of Securityholders and holders of
Senior Debt. Nothing in this Indenture shall:
(1) impair, as between the Company and Securityholders, the obligation
of the Company, which is absolute and unconditional, to pay principal of
and interest on the Securities in accordance with their terms;
(2) affect the relative rights of Securityholders and creditors of the
Company other than holders of Senior Debt; or
(3) prevent the Trustee or any Securityholder from exercising its
available remedies upon a Default or Event of Default, subject to the
rights of holders of Senior Debt to receive distributions otherwise payable
to Securityholders which rights are set forth in this Article 11.
If the Company fails because of this Article to pay principal of or
interest on a Security on the due date, the failure is still a Default or Event
of Default.
Section 11.10. Subordination May Not Be Impaired by Company.
No right of any holder of Senior Debt to enforce the subordination of the
indebtedness evidenced by the Securities shall be impaired by any act or failure
to act by the Company or by its failure to comply with this Indenture.
Section 11.11. Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders of
Senior Debt, the distribution may be made and the notice given to their
Representative.
Section 11.12. Rights of Trustee and Paying Agent.
33
The Trustee or Paying Agent may continue to make payments on the Securities
until it receives notice of facts that would cause a payment of principal of or
interest on the Securities to violate this Article. Only the Company, a
Representative or a holder of an issue of Senior Debt that has no Representative
may give the notice.
The Trustee in its individual or any other capacity may hold Senior Debt
with the same rights it would have if it were not Trustee. Any Agent may do the
same with like rights.
ARTICLE 12
MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies, or conflicts with
another provision which is required to be included in this Indenture by the TIA,
the required provision shall control.
Section 12.02. Notices.
Any notice or communication by the Company or the Trustee to the other is
duly given if in writing and delivered in person or mailed by first-class mail
to the other's address stated in Section 12.10. The Company or the Trustee by
notice to the other may designate additional or different addresses for
subsequent notices or communications.
Any notice or communication to a Securityholder shall be mailed by
first-class mail to his address shown on the register kept by the Registrar.
Failure to mail a notice or communication to a Securityholder or any defect in
it shall not affect its sufficiency with respect to other Securityholders.
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 Securityholders, it shall
mail a copy to the Trustee and each Agent at the same time.
All other notices or communications shall be in writing.
Section 12.03. Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA SECTION 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA SECTION 312(c).
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, the Company shall furnish to the Trustee:
(a) an Officers' Certificate stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(b) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
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 shall include:
(1) a statement that the person making such certificate or opinion has
read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether or not, in the opinion of such person,
such condition or covenant has been complied with.
34
Section 12.06. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or a meeting of
Securityholders. The Registrar, Paying Agent or Conversion Agent may make
reasonable rules and set reasonable requirements for its functions.
Section 12.07. Legal Holidays.
A 'Legal Holiday' is a Saturday, a Sunday or a day on which banking
institutions are not required to be open. If a payment date is a Legal Holiday
at a place of payment, payment may be made at that place on the next succeeding
day that is not a Legal Holiday, and no interest shall accrue for the
intervening period.
Section 12.08. No Recourse Against Others.
All liability described in the Securities of any director, officer,
employee or stockholder, as such, of the Company is waived and released.
Section 12.09. Duplicate Originals.
The parties may sign any number of copies of this Indenture. One signed
copy is enough to prove this Indenture.
Section 12.10. Variable Provisions.
'Officer' means the President, any Vice President, the Treasurer, the
Secretary, any Assistant Treasurer or any Assistant Secretary of the Company.
The Company initially appoints First National Bank of Boston as Conversion
Agent, Paying Agent, Registrar and authenticating agent.
The first certificate pursuant to Section 4.03 shall be for the fiscal year
ending on October 31, 1985.
The reporting date for Section 7.06 is June 15 of each year. The first
reporting date is June 15, 1986.
The Trustee shall always have a combined capital and surplus of at least
$100,000,000 as set forth in its most recent published annual report of
condition.
In Sections 10.03 and 10.11, the 'Quoted Price' of the Common Stock is the
last reported sales price of the Common Stock on the New York Stock Exchange.
The Company's address is:
The Cooper Companies, Inc.
One Bridge Plaza, 6th Floor
Fort Lee, New Jersey 07024
Telephone: (201) 585-5100
Telecopy: (201) 585-5100
Attention: Robert S. Holcombe, Esq.
With a copy to:
Latham & Watkins
885 Third Avenue
New York, New York 10022
Telephone: (212) 906-1200
Telecopy: (212) 751-4864
Attention: Samuel A. Fishman, Esq.
The Trustee's address is:
Bankers Trust Company
Corporate Trust and Agency Group
Four Albany Street
New York, New York 10006
Telephone: (212) 250-2500
Telecopy: (212) 250-6961
Section 12.11. Governing Law.
35
The internal laws of the State of New York shall govern this Indenture and
the Securities.
Section 12.12. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or debt
agreement of the Company or a subsidiary. Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.
Section 12.13. Successors.
All agreements of the Company in this Indenture and the Securities shall
bind its successor. All agreements of the Trustee in this Indenture shall bind
its successor.
Section 12.14. Severability.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
36
IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental
Indenture to be signed and acknowledged by their respective officers thereunto
duly authorized and their respective corporate seals to be hereunto duly affixed
and attested, all as of the day and year first above written.
[Seal] THE COOPER COMPANIES
Attest:
/s/ MARISA F. JACOBS /s/ ROBERT S. WEISS
....................................................... By: ..................................................
Name: MARISA F. JACOBS Name: ROBERT S. WEISS
Title: Secretary and Associate General Counsel Title: Sr. Vice President, Treasurer and Chief
Financial Officer
[Seal] BANKERS TRUST COMPANY
Attest: as Successor Trustee
/s/ WANDA CAMACHO /s/ LINDA A. RAKOLTA
....................................................... By: ..................................................
Name: WANDA CAMACHO Name: LINDA A. RAKOLTA
Title: Assistant Secretary Title: Vice President
37
EXHIBIT A
No. $
THE COOPER COMPANIES, INC.
promises to pay to
or registered assigns,
the principal sum of Dollars on March 1, 2005
10 5/8% CONVERTIBLE SUBORDINATED RESET DEBENTURE DUE 2005
Interest Payment Dates: March 1 and September 1
Record Dates: February 15 and August 15
Authenticated: Dated:
Bankers Trust Company
as Successor Trustee
THE COOPER COMPANIES, INC.
By By
Authorized Signature
President Secretary
(SEAL)
OR
First National Bank of Boston
as Authenticating Agent
By
Authorized Signature
38
(Back of Security)
THE COOPER COMPANIES, INC.
10 5/8% Convertible Subordinated Reset Debenture due 2005
1. Interest. The Cooper Companies, Inc. ('Company'), a Delaware
corporation, promises to pay interest on the principal amount of this Security
at the rate of 10 5/8% per annum. The Company will pay interest semiannually on
March 1 and September 1 of each year. Interest on the Securities will accrue at
a rate of 8 5/8% until June 29, 1989 and thereafter at a rate of 10 5/8%.
The Company will reset the interest rate on the Securities on June 15, 1991
(the 'Reset Date') to a rate per annum, as determined by two nationally
recognized investment banking firms selected by the Company (or, if such firms
cannot agree upon such rate, the average of the rates determined by each of
them), that the Debentures should bear in order to have a market value equal to
75% of their principal amount on the Reset Date. In no event shall the rate be
reset to an annual interest rate which is less than 10 5/8% nor greater than
13 1/8%.
The Company will notify the Trustee and the Dow Jones News/Retrieval
Service as soon as practicable, but in no event later than five business days
after the Reset Date of the reset interest rate. No later than five business
days after the Trustee has received such notice from the Company, the Trustee
will mail to each holder of Debentures then outstanding a notice setting forth
the reset interest rate.
2. Method of Payment. The Company will pay interest on the Securities
(except defaulted interest) to the persons who are registered holders of
Securities at the close of business on the record date for the next interest
payment date even though Securities are cancelled after the record date and on
or before the interest payment date. Holders must surrender Securities to a
Paying Agent to collect principal payments. 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. However, the Company may pay
principal and interest by check payable in such money. It may mail an interest
check to a holder's registered address.
3. Paying Agent, Registrar, Conversion Agent. First National Bank of Boston
will act as Conversion Agent, Paying Agent and Registrar. The Company may change
any Paying Agent, Registrar, Conversion Agent or co-registrar without notice to
any Security holder. The Company may act in any such capacity.
4. Indenture. The Company issued the Securities under an Indenture dated as
of March 1, 1985 (the 'Original Indenture') as amended and supplemented by a
Supplemental Indenture dated June 29, 1989 and as amended and restated by a
Second Supplemental Indenture dated as of January 6, 1994 (collectively, the
'Indenture') between the Company and the Trustee. The terms of the Securities
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939 (15 U.S. Code SECTIONS
77aaa-77bbbb) as in effect on the date of the Original Indenture. The Securities
are subject to all such terms, and Securityholders are referred to the Indenture
and the Act for a statement of such terms. The terms of the Indenture shall
govern any inconsistencies between the Indenture and the Securities. The
Securities are unsecured general obligations of the Company limited to
$200,000,000 in aggregate principal amount.
5. Optional Redemption. The Company may redeem all the Securities at any
time or some of them from time to time at the redemption prices (expressed in
percentages of principal amount) set forth below plus accrued interest to the
redemption date, if redeemed during the 12-month period beginning March 1 of the
years indicated below. The Debentures may not be so redeemed before March 1,
1987, unless the last sale price for shares of Common Stock, as reported by the
New York Stock Exchange for 20 trading days within a period of 30 consecutive
trading days ending on the fifth day preceding the initial redemption notice, is
then at 140% of the conversion price then in effect.
39
Year Percentage
- ------------------------ ----------
1985................... 108.6250%
1986................... 107.7625
1987................... 106.9000
1988................... 106.0375
1989................... 105.1750
1990................... 104.3125
1991................... 103.4500
1992................... 102.5875
1993................... 101.7250
1994................... 100.8625
1995 and thereafter.... 100.0000
6. Mandatory Redemption. The Company will redeem $15,000,000 principal
amount of Securities on March 1, 1995, and on each March 1 thereafter through
March 1, 2004 at a redemption price of 100% of principal amount, plus accrued
interest to the redemption date. The Company may reduce the principal amount of
Securities to be redeemed pursuant to this paragraph 6 by subtracting 100% of
the principal amount (excluding premium) of any Securities that Securityholders
have converted (other than Securities converted after being called for mandatory
redemption), that the Company has delivered to the Trustee for cancellation or
that the Company has redeemed other than pursuant to this paragraph 6. The
Company may so subtract the same Security only once.
7. Notice of Redemption. Notice of redemption will be mailed at least 30
days but not more than 60 days before the redemption date to each holder of
Securities to be redeemed at his registered address. Securities 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 interest ceases to accrue on Securities
or portions of them called for redemption.
8. Change of Control Offer. If at any time after the Board of Directors
shall have become aware (whether by public filings or otherwise) of a Change of
Control (as defined in the Indenture), then the Company shall, within 30 days,
make a Change of Control Offer to all Holders to purchase 100% of the principal
amount of Securities outstanding as of such date at a purchase price equal to
100% of the principal amount thereof plus accrued and unpaid interest to the
date of purchase. The Change of Control Offer shall remain open for a period of
twenty business days following its commencement and no longer, except to the
extent that a longer period is required by applicable law. No later than five
business days after the termination of the Change of Control Offer the Company
shall purchase all Securities tendered in response to the Change of Control
Offer; provided, that no Securities shall be purchased unless and until the
Company purchases all the Notes required to be purchased pursuant to Section
4.13 of the indenture governing the Notes as amended from time to time.
9. Conversion. A holder of a Security may convert it into Common Stock at
any time before the close of business on March 1, 2005. If the Security is
called for redemption, the holder may convert it at any time before the close of
business on the fifth business day prior to the redemption date. The conversion
price is $5.00 per share, subject to adjustment in certain events. To determine
the number of shares issuable upon conversion of a Security, divide the
principal amount to be converted by the conversion price in effect on the
conversion date. On conversion no payment or adjustment for interest will be
made. The Company will deliver a check for any fractional share.
To convert a Security a holder must (1) complete and sign the conversion
notice on the back of the Security, (2) surrender the Security to a Conversion
Agent, (3) furnish appropriate endorsements and transfer documents if required
by the Registrar or Conversion Agent, and (4) pay any transfer or similar tax if
required. A holder may convert a portion of a Security if the portion is $1,000
or an integral multiple of $1,000.
The Company from time to time may voluntarily reduce the conversion price
for a period of time, provided that the conversion price is not less than the
par value of a share of Common Stock.
40
If the Company is a party to a consolidation or merger or a transfer or
lease of all or substantially all of its assets, the right to convert a Security
into Common Stock may be changed into a right to convert it into securities,
cash or other assets of the Company or another.
10. Subordination. The Securities are subordinated to Senior Debt, which is
any Debt of the Company outstanding on the date of the Original Indenture or
Debt thereafter created, incurred, assumed or guaranteed by the Company and all
renewals, extensions or refundings thereof, unless by its terms it is expressly
not senior or superior in right of payment to the Securities. Debt is any
indebtedness, contingent or otherwise, in respect of borrowed money (whether or
not the recourse of the lender is to the whole of the assets of the Company or
only to a portion thereof), or evidenced by bonds, notes, debentures or similar
instruments or letters of credit, or representing the balance deferred and
unpaid of the purchase price of any property or interest therein, except any
such balance that constitutes a trade payable, if and to the extent such
indebtedness would appear as a liability upon a balance sheet of the Company
prepared on a consolidated basis in accordance with generally accepted
accounting principles. To the extent provided in the Indenture, Senior Debt must
be paid before the Securities may be paid. The Company agrees, and each
Securityholder by accepting a Security agrees, to the subordination and
authorizes the Trustee to give it effect.
11. Denominations, Transfer, Exchange. The Securities are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Securities may be registered and Securities may be
exchanged as provided in the Indenture. The Registrar may require a holder,
among other things, to furnish appropriate endorsements and transfer documents
and to pay any taxes and fees required by law or permitted by the Indenture. The
Registrar need not exchange or register the transfer of any Security or portion
of a Security selected for redemption. Also, it need not exchange or register
the transfer of any Securities for a period of 15 days before a selection of
Securities to be redeemed.
12. Persons Deemed Owners. The registered holder of a Security may be
treated as its owner for all purposes.
13. Amendments and Waivers. Subject to certain exceptions, the Indenture or
the Securities may be amended with the consent of the holders of at least a
majority in aggregate principal amount of the then outstanding Securities, and
any existing default may be waived with the consent of the holders of a majority
in aggregate principal amount of the then outstanding Securities. Without the
consent of any Securityholder, the Indenture or the Securities may be amended to
cure any ambiguity, defect or inconsistency, to provide for assumption of
Company obligations to Securityholders or to make any change that does not
adversely affect the rights of any Securityholder.
14. Default and Remedies. An Event of Default is: default for 30 days in
the payment of interest on any Security (whether or not prohibited by the
subordination provisions of the Indenture); default in payment of principal of
any Security (whether or not prohibited by the subordination provisions of the
Indenture) when due and payable at maturity, upon repurchase under Section 4.13
of the Indenture, upon redemption or otherwise; failure by the Company to comply
with the other agreements in the Indenture or any Security which failure
continues for the period and after the notice specified in the Indenture;
default under any mortgage, indenture or other instrument under which there may
be issued or by which there may be secured or evidenced any Indebtedness for
money borrowed by the Company (or the payment of which is guaranteed by the
Company) whether such Indebtedness or guarantee now exists, or is or was created
after the date of the Original Indenture, which default results in the
acceleration of such Indebtedness prior to its express maturity and the
principal amount of any such Indebtedness aggregates $5,000,000 or more; a final
judgment or final judgments for the payment of money are entered by a court or
courts of competent jurisdiction against the Company or any subsidiary of the
Company which judgment remains undischarged for a period (during which execution
shall not be effectively stayed) of 30 days; provided, that the aggregate of all
such judgments exceeds $5,000,000; and certain events of bankruptcy or
insolvency. If an Event of Default occurs and is continuing, the Trustee or the
holders of at least 25% in aggregate principal amount of the then outstanding
Securities may declare all the Securities to be due and payable immediately.
Securityholders may not enforce the Indenture or the Securities except as
provided in the Indenture. The Trustee may require indemnity satisfactory to it
before it enforces the Indenture or the Securities. Subject to certain
limitations, holders
41
of a majority in aggregate principal amount of the then outstanding Securities
may direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Securityholders 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 must furnish an annual compliance certificate to
the Trustee.
15. Trustee Dealings with Company. Bankers Trust Company, 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 its Affiliates, and
may otherwise deal with the Company or its Affiliates, as if it were not a
Trustee.
16. No Recourse Against Others. A director, officer, employee or
stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Securities or the Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creation. Each Securityholder by accepting a Security waives and releases all
such liability. The waiver and release are part of the consideration for the
issue of the Securities.
17. Authentication. This Security shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
18. Abbreviations. Customary abbreviations may be used in the name of a
Securityholder 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), CUST (= Custodian), and U/G/M/A (=
Uniform Gifts to Minors Act).
The Company will furnish to any Securityholder upon written request and
without charge a copy of the Indenture, which has in it the text of this
Security in larger type. Requests may be made to: Secretary, The Cooper
Companies, Inc., One Bridge Plaza, 6th Floor, Fort Lee, New Jersey 07024.
42