Certificate of Incorporation - Toy Biz Inc.
RESTATED CERTIFICATE OF INCORPORATION
OF
TOY BIZ, INC.
Toy Biz, Inc., a corporation (the "Corporation") organized and existing
under the General Corporation Law of the State of Delaware (the "GCL"), does
hereby certify as follows:
1. The present name of the Corporation is Toy Biz, Inc. The Corporation
was originally incorporated under the name "Toy Biz Acquisition, Inc.," and its
original certificate of incorporation was filed with the office of the Secretary
of State of the State of Delaware on March 18, 1993.
2. This Restated Certificate of Incorporation was duly adopted in
accordance with Sections 242 and 245 of the GCL, after an annual meeting of
stockholders called and held upon notice in accordance with Section 222 of the
GCL and after a vote of stockholders thereat.
3. This Restated Certificate of Incorporation restates and integrates
and further amends the certificate of incorporation of the Corporation, as
heretofore amended, supplemented, and/or restated (the "Certificate of
Incorporation").
4. The text of the Certificate of Incorporation is hereby restated and
integrated and further amended to read in its entirety as follows:
ARTICLE I
NAME
The name of the Corporation is Marvel Enterprises, Inc. (the
"Corporation").
ARTICLE II
REGISTERED OFFICE
The address of the registered office of the Corporation in the State of
Delaware is 1013 Centre Road, in the City of Wilmington, County of New Castle,
and the name of the
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registered agent of the Corporation at such address is The Prentice-Hall
Corporation System, Inc.
ARTICLE III
PURPOSES
The nature of the business or purposes of the Corporation is to engage
in any lawful act or activity for which corporations may be organized under the
GCL.
ARTICLE IV
CAPITAL STRUCTURE
4.1 Authorized Capital Stock. The total number of shares of capital
stock which the Corporation shall have authority to issue is 350,000,000 shares,
consisting of two classes of capital stock:
(a) 250,000,000 shares of common stock, par value $.01 per share (the
"Common Stock"); and
(b) 100,000,000 shares of preferred stock, par value $.01 per share
(the "Preferred Stock") of which 75,000,000 shares shall be designated as shares
of 8% Cumulative Convertible Exchangeable Preferred Stock.
4.2 Reclassification. Upon the filing (the "Effective Time") of this
Restated Certificate of Incorporation pursuant to the GCL, each share of the
Corporation's Class A common stock, $0.01 par value per share, issued and
outstanding immediately prior to the Effective Time (the "Class A Stock") shall
be reclassified as and changed into one validly issued, fully paid, and
non-assessable share of Common Stock authorized by subparagraph 4.1(a) of
Article IV hereof, without any action by the holder thereof (the
"Reclassification"). Each certificate that theretofore represented a share or
shares of Class A Stock shall thereafter represent that number of shares of
Common Stock into which the share or shares of Class A Stock represented by such
certificate shall have been reclassified; provided, however, that each record
holder of a stock certificate or certificates that theretofore represented a
share or shares of Class A Stock shall receive, upon surrender of such
certificate or certificates, a new certificate or certificates evidencing and
representing the number of shares of Common Stock to which such record holder is
entitled pursuant to the foregoing Reclassification.
4.3 Designations, Preferences, etc. The designations, preferences,
powers, and relative, participating, optional, and other rights and the
qualifications, limitations, and
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restrictions thereof, of the capital stock of the Corporation shall be as set
forth in this Certificate of Incorporation.
ARTICLE V
COMMON STOCK
5.1 Dividends. Subject to any preferential or other rights of the
holders of outstanding shares of Preferred Stock, when, as, and if dividends are
declared by the Corporation's Board of Directors in accordance with the
provisions of this Certificate of Incorporation on outstanding shares of Common
Stock, whether payable in cash, in property, or in securities of the
Corporation, the holders of shares of the Common Stock shall be entitled to
share equally in and to receive all such dividends, in accordance with the
number of shares of Common Stock held by each such holder.
5.2 Liquidation Rights. Upon any duly authorized voluntary or any
involuntary liquidation, dissolution, or winding-up of the affairs of the
Corporation, after payment in full or reasonable provision for payment in full
of all claims and obligations of the Corporation, in accordance with Section 281
of the GCL, as the same now exists or may hereafter be amended, or with the
provisions of any successor statute, shall have been made, and subject to any
preferential or other rights of holders of outstanding shares of Preferred
Stock, the holders of shares of Common Stock shall be entitled to share ratably,
in accordance with the number of shares of Common Stock held by each such
holder, in all remaining assets of the Corporation available for distribution
among the holders of Common Stock, whether such assets are capital, surplus, or
earnings. For the purposes of this Paragraph 5.2, neither the consolidation or
merger of the Corporation with or into any other entity or entities, nor the
sale, lease, exchange or transfer by the Corporation of all or any part of its
assets, nor the reduction of the number of authorized shares of the capital
stock or any class or series thereof of the Corporation, shall be deemed to be a
voluntary or involuntary liquidation, dissolution, or winding-up of the
Corporation as those terms are used in this Paragraph 5.2.
5.3 Voting Rights. At each annual or special meeting of stockholders
and for all other purposes, each holder of record of shares of Common Stock on
the relevant record date shall be entitled to one (1) vote for each share of
Common Stock standing in such holder's name on the stock transfer records of the
Corporation. The holders of shares of Common Stock shall not have cumulative
voting rights.
5.4 No Preemptive or Subscription Rights. No holder of shares of Common
Stock shall be entitled to preemptive or subscription rights.
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ARTICLE VI
PREFERRED STOCK
Shares of Preferred Stock may be issued from time to time in one or
more series only as may be determined and authorized in accordance with the
provisions of this Certificate of Incorporation. Subject to the provisions of
this Certificate of Incorporation, the Board of Directors is expressly
authorized, to the fullest extent permitted by law, to fix and alter the powers,
designations, preferences, and relative, optional, participating, and other
rights, and the qualifications, limitations, and restrictions thereof, granted
to or imposed upon any wholly unissued series of Preferred Stock and, unless
otherwise provided in any resolution or resolutions of the Board of Directors
originally fixing the number of shares constituting any such series, to increase
(but not above the total number of authorized shares of Preferred Stock) or
decrease (but not below the number of shares of such series then outstanding)
the number of shares of any such series subsequent to the issue of shares of
that series.
Authorized and unissued shares of any series of Preferred Stock may be
issued with such designations, powers, voting rights, preferences, and relative,
participating, optional and other rights, if any, and such qualifications,
limitations and restrictions thereof, if any, only as may be authorized in
accordance with the provisions of this Certificate of Incorporation prior to the
issuance of any shares of such series of Preferred Stock, including, but not
limited to: (i) the distinctive designation of each series and the number of
shares that will constitute such series; (ii) the voting rights, if any, of
shares of such series and whether the shares of any such series having voting
rights shall have multiple votes per share; (iii) the dividends payable on the
shares of such series, any restriction, limitation, or condition upon the
payment of such dividends, whether dividends shall be cumulative, and the dates
on which dividends are payable; (iv) the prices at which, and the terms and
conditions on which, the shares of such series may be redeemed, if such shares
are redeemable; (v) the purchase or sinking fund provisions, if any, for the
purchase or redemption of shares of such series; (vi) any preferential amount
payable upon shares of such series in the event of the liquidation, dissolution,
or winding-up of the Corporation, or any distribution of its assets; and (vii)
the prices or rates of conversion or exchange at which, and the terms and
conditions on which, the shares of such series are convertible or exchangeable,
if such shares are convertible or exchangeable.
Any and all shares of Preferred Stock issued and for which full
consideration has been paid or delivered shall be deemed fully paid and
non-assessable shares, and the holder thereof shall not be liable for any
further payment thereon.
6.1 8% Cumulative Convertible Exchangeable Preferred Stock. The initial
series of Preferred Stock shall be comprised of 75,000,000 shares and shall be
designated 8% Cumulative Convertible Exchangeable Preferred Stock (the "8%
Preferred Stock").
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The rights, preferences, privileges and restrictions granted to or
imposed upon the 8% Preferred Stock are as follows.
6.2 Dividends and Distributions. (a) The holders of 8% Preferred Stock
shall be entitled to receive, when and as declared by the Board of Directors out
of funds legally available for the purpose, dividends at a rate per annum equal
to 8% of the Liquidation Preference (as defined in Section 6.7) per share of the
8% Preferred Stock payable quarterly on the first business day of January,
April, July and October in each year (each such date being referred to herein as
a "Quarterly Dividend Payment Date"), commencing January 4, 1999. Dividends
shall be payable at the option of the Board of Directors (x) in cash, (y) in
additional shares of 8% Preferred Stock having an aggregate Liquidation
Preference no less than the dividend payment, or (z) in any combination of cash
and additional shares of 8% Preferred Stock valued on such basis. If any
dividend, or portion thereof, is not timely paid in cash, the Board of Directors
will be deemed to have elected to pay the dividend, or such portion, in shares
of 8% Preferred Stock which will be deemed issued for this purpose as of the
Dividend Payment Date applicable to that dividend. So long as any shares of 8%
Preferred Stock are outstanding, the Corporation shall not pay or declare, or
issue by way of any capital reorganization or reclassification, any dividend or
distribution on shares of Common Stock or on any series of capital stock ranking
junior to the 8% Preferred Stock (either as to dividends or upon liquidation,
dissolution or winding up), except (i) Approved Spinoff Distributions (as
defined in this paragraph), (ii) dividends or distributions that are payable
solely in shares of Common Stock or any series of capital stock ranking junior
to the 8% Preferred Stock both as to dividends and upon liquidation, dissolution
or winding up, or (iii) any rights or warrants to subscribe for or purchase
shares described in clause (ii). "Approved Spinoff Distribution" shall mean a
dividend or distribution of shares of stock having a majority of the voting
power of a subsidiary of the Corporation but only if the Corporation receives a
fairness opinion from a nationally recognized investment banking firm to the
effect that the adjustment of the conversion ratio of the 8% Preferred Stock as
a result of such dividend or distribution is fair to the holders of the 8%
Preferred Stock from a financial point of view.
(b) In the case of the original issuance of shares of 8% Preferred
Stock, dividends shall begin to accrue and be cumulative from the date of issue.
In the case of shares of 8% Preferred Stock issued at any other time, dividends
shall begin to accrue and be cumulative from the Quarterly Dividend Payment Date
next preceding the date of issue of such shares to which such dividends have
been paid, unless the date of issue is a Quarterly Dividend Payment Date or is a
date after the Dividend Record Date (as defined below) for the determination of
holders of shares of 8% Preferred Stock entitled to receive a quarterly dividend
and before the Quarterly Dividend Payment Date to which such Dividend Record
Date relates, in either of which events such dividends shall be cumulative from
such Quarterly Dividend Payment Date; provided, however, that if dividends shall
not be paid on such Quarterly Dividend Payment Date, then dividends shall accrue
and be cumulative from the Quarterly Dividend Payment Date to which such
dividends have been paid. Dividends paid on
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the shares of 8% Preferred Stock in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be allocated
pro-rata on a share-by-share basis among all such shares at the time
outstanding. The record date (the "Dividend Record Date") for the determination
of holders of 8% Preferred Stock entitled to receive payment of a dividend on
any Quarterly Dividend Payment Date shall be the close of business on the last
day of the month preceding the month in which a Quarterly Dividend Payment Date
occurs.
6.3 Voting Rights. The holders of 8% Preferred Stock shall have the
following voting rights:
(a) Except as otherwise provided herein, each holder of shares of 8%
Preferred Stock shall be entitled to such number of votes for the 8% Preferred
Stock held by him on all matters submitted to a vote of holders of Common Stock
as shall be equal to the largest number of whole shares of Common Stock into
which all of his shares of 8% Preferred Stock are then convertible;
(b) Except as otherwise provided herein or by law, the holders of 8%
Preferred Stock and the holders of Common Stock shall vote together as one class
on all matters submitted to a vote of the Corporation's stockholders;
(c) The Corporation shall not (A) consolidate with or merge into any
other person in any transaction in which the Corporation is not the continuing
or surviving corporation, (B) permit any other person to consolidate with or
merge into the Corporation in any transaction in which the Corporation is the
continuing or surviving person, but the Common Stock is changed into or
exchanged for stock or other securities of any other person or cash or any other
property, (C) transfer all or substantially all of its properties or its assets
to any other person, or (D) exchange the outstanding 8% Preferred Stock for
Subordinated Notes (as defined in Section 7.1 hereof), pursuant to Article VII
hereof, unless such transaction is approved by a majority of the shares of
outstanding 8% Preferred Stock, voting together as a separate class, except that
in the case of a transaction described in subsections (A), (B) or (C) which is
to be consummated prior to October 1, 2001 such approval shall not be required
if each of the following conditions is satisfied with respect to such merger,
consolidation, sale or transfer: (i) the holders of Common Stock will receive
consideration equal to at least $9.625 per share of Common Stock, and (ii) the
holders of 8% Preferred Stock will receive (x) the same consideration such
holders would have received had such holders converted their 8% Preferred Stock
to Common Stock immediately prior to consummation of the merger or
consolidation, plus (y) an amount equal to the present value of the amount of
dividends such holders would have been entitled to receive on their shares of 8%
Preferred Stock if such shares remained outstanding until October 1, 2001,
discounted at a discount rate of 10% per annum, compounded quarterly.
6.4 Certain Restrictions. So long as any shares of 8% Preferred Stock
are outstanding, the Corporation shall not:
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(a) redeem or purchase or otherwise acquire for consideration any stock
ranking junior to or on a parity with (either as to dividends or upon
liquidation, dissolution or winding up) the 8% Preferred Stock;
(b) permit any subsidiary of the Corporation to purchase or otherwise
acquire for consideration any shares of stock of the Corporation unless the
Corporation could purchase such shares at such time and in such manner; or
(c) without the affirmative vote or consent of holders of at least
two-thirds of the outstanding shares of 8% Preferred Stock voting or consenting
separately as one class, authorize or issue any class or series of stock ranking
(either as to dividends or upon liquidation, dissolution or winding up) senior
to or on parity with the 8% Preferred Stock, or issue any shares of 8% Preferred
Stock other than (i) as contemplated by the Fourth Amended Joint Plan of
Reorganization Proposed by Secured Lenders and the Corporation in the chapter 11
cases of Marvel Entertainment Group, Inc. and certain of its affiliates (the
"Fourth Amended Plan"), including pursuant to the Stockholder Series B Warrants
referred to in the Fourth Amended Plan, or (ii) as dividends on shares of 8%
Preferred Stock.
6.5 Redemption. (a) The Corporation shall redeem all outstanding shares
of 8% Preferred Stock on October 1, 2011 at a price per share equal to the
Liquidation Preference plus an amount equal to all accrued but unpaid dividends
thereon, whether or not declared, to the redemption date.
(b) The Corporation may redeem all, but not less than all, of the
outstanding shares of the 8% Preferred Stock at any time after the October 1,
2001 at a price per share equal to the Liquidation Preference, plus all accrued
but unpaid dividends, whether or not declared, plus, if the redemption date is
not a Quarterly Dividend Payment Date, an amount equal to the annual dividend
per share multiplied by a fraction, the numerator of which is the number of days
from the Quarterly Dividend Payment Date next preceding the date of redemption
to the redemption date and the denominator of which is 365, provided that if the
redemption date occurs after a Dividend Record Date and before the Quarterly
Dividend Payment Date to which that Dividend Record Date relates, the dividend
otherwise payable on that Quarterly Dividend Payment Date shall not be paid by
the Corporation. If the Corporation elects to redeem the outstanding shares of
8% Preferred Stock as provided in this paragraph, the Corporation shall send a
notice of redemption to each holder of the 8% Preferred Stock specifying (i) the
redemption date, which date shall be not less than thirty (30) nor more than
sixty (60) days following the date of mailing of the notice of redemption, and
(ii) the redemption price, including a calculation thereof in reasonable detail.
(c) The following provisions shall apply to any redemption pursuant to
this Section 6.5:
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(i) On the redemption date, the Corporation shall deposit for the pro-
rata benefit of the holders of the shares of the outstanding 8% Preferred Stock
the funds necessary for such redemption with a bank or trust company in the
Borough of Manhattan, The City of New York, having a capital and surplus of at
least $100,000,000. Holders of shares of 8% Preferred Stock shall thereafter
have the right to receive payment of the redemption price for such shares by
surrendering to the Corporation, at its principal office or at such other office
or agency maintained by the Corporation for that purpose, a certificate or
certificates representing the shares of 8% Preferred Stock to the Corporation,
at its principal office or at such other office or agency maintained by the
Corporation for that purpose, a certificate or certificates representing such
shares. Any monies so deposited by the Corporation with a bank or trust company
pursuant to this subparagraph (c)(i) and unclaimed at the end of two years from
the redemption date shall revert to the general funds of the Corporation. After
such reversion, any such bank or trust company shall, upon demand, pay over to
the Corporation such unclaimed amounts and thereupon such bank or trust company
shall be relieved of all responsibility in respect thereof to such holder and
such holder shall look only to the Corporation for the payment of the redemption
price. Any interest accrued on funds so deposited pursuant to this subparagraph
(c)(i) shall be paid from time to time to the Corporation for its own account;
and
(ii) Upon the deposit of funds pursuant to subparagraph (i) in respect
of outstanding shares of the 8% Preferred Stock, notwithstanding that any
certificates for such shares shall not have been surrendered for cancellation,
the shares represented thereby shall no longer be deemed outstanding, the rights
to receive dividends thereon shall cease to accrue from and after the date of
redemption and all rights of the holders of the shares of the 8% Preferred Stock
shall cease and terminate, excepting only the right to receive the redemption
price therefor.
6.6 Reacquired Shares. Any shares of the 8% Preferred Stock redeemed or
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
to be created by resolution or resolutions of the Board of Directors, subject to
the conditions or restrictions on issuance set forth herein.
6.7 Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the corporation, no distribution shall be made (A)
to the holders of stock ranking junior (upon liquidation, dissolution or winding
up) to the 8% Preferred Stock unless, prior thereto, the holders of 8% Preferred
Stock shall have received $10.00 per share (the "Liquidation Preference"), plus
an amount equal to accrued but unpaid dividends thereon, whether or not
declared, to the date of such payment plus, if the date of such payment is not a
Quarterly Dividend Payment Date, an amount equal to the annual dividend per
share multiplied by a fraction, the numerator of which is the number of days
from the Quarterly Dividend Payment Date next preceding the date of such payment
to the date of such payment
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and the denominator of which is 365, provided that if the date of such payment
is after a Dividend Record Date and before the Quarterly Dividend Payment Date
to which that Dividend Record Date relates, the dividend otherwise payable on
that Quarterly Dividend Payment Date shall not be paid by the Corporation, or
(B) to the holders of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the 8% Preferred Stock, except
distributions made ratably on the 8% Preferred Stock and all other such parity
stock in proportion to the total amounts to which the holders of all such shares
are entitled upon such liquidation, dissolution or winding up.
6.8 Conversion. Each share of the 8% Preferred Stock may be converted
(an "Optional Conversion") at any time, at the option of the holder thereof,
into shares of Common Stock of the Corporation, on the terms and conditions set
forth below in this Section 6.8, and may be converted at the option of the
Corporation as provided in paragraph (g) of this Section 6.8.
(a) Subject to the provisions for adjustment hereinafter set forth,
each share of the 8% Preferred Stock shall be convertible in the manner
hereinafter set forth, into 1.039 fully paid and nonassessable shares of Common
Stock of the Corporation. Upon conversion of any shares of 8% Preferred Stock,
the holder thereof shall be entitled to receive all accrued but unpaid
dividends, whether or not declared, on the shares so converted plus, if the
conversion date is not a Quarterly Dividend Payment Date, an amount equal to the
annual dividend per share multiplied by a fraction, the numerator of which is
the number of days from the Quarterly Dividend Payment Date next preceding the
date of conversion to the conversion date and the denominator of which is 365
(the amount of any such unpaid dividends and the other amount being payable in
such number of shares of Common Stock which would be issuable upon conversion of
shares of 8% Preferred Stock having an aggregate Liquidation Preference equal to
such amount), provided that if the conversion date is after a Dividend Record
Date and before the Quarterly Dividend Payment Date to which that Dividend
Record Date relates, the dividend otherwise payable on that Quarterly Dividend
Payment Date in respect of the shares so converted shall not be paid by the
Corporation.
(b) The number of shares of Common Stock into which each share of the
8% Preferred Stock is convertible shall be adjusted from time to time as
follows:
(i) In case the Corporation shall at any time or from time to time
declare or pay any dividend on its Common Stock payable in its Common Stock or
effect a subdivision of the outstanding shares of its Common Stock into a
greater number of shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in its Common Stock), or combine or consolidate the
outstanding shares of its Common Stock into a lesser number of shares of Common
Stock, by reclassification or otherwise, or the Corporation shall otherwise
effect a capital reorganization or reclassification of the Common Stock
permitted by this Article VI, then, and in each such case, the number of shares
of Common Stock into which each share of the 8% Preferred Stock is convertible
shall be adjusted so that the holder
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of each share thereof shall be entitled to receive, upon the conversion thereof,
the number of shares of Common Stock or number and kind of other securities
which the holder would have owned after giving effect to such event had such
shares been converted immediately prior to the occurrence of such event. An
adjustment made pursuant to this subparagraph (b)(i) shall become effective in
the case of any such dividend, immediately after the close of business on the
record date for the determination of holders of Common Stock entitled to receive
such dividend, and otherwise at the close of business on the day immediately
prior to the day upon which such corporate action becomes effective;
(ii) In case the Corporation at any time or from time to time shall
issue rights or warrants to all holders of shares of its Common Stock entitling
them (for a period expiring within 45 calendar days after the date of issuance)
to subscribe for or purchase shares of its Common Stock at a price per share (or
having a conversion price per share) less than the Current Market Price (as
defined in paragraph (c) below) per share of Common Stock on the record date
fixed for the determination of shareholders entitled to receive such right or
warrant, then, and in each such case (unless the holders of shares of the 8%
Preferred Stock shall be permitted to subscribe for or purchase shares of Common
Stock on the same basis as though such shares of the 8% Preferred Stock had been
converted into shares of Common Stock immediately prior to the close of business
on such record date), the number of shares of Common Stock into which each share
of the 8% Preferred Stock is convertible shall be adjusted so that the holder of
each share thereof shall be entitled to receive, upon the conversion thereof,
the number of shares of Common Stock determined by multiplying (a) the number of
shares of Common Stock into which such share was convertible immediately prior
to such event by (b) a fraction, the numerator of which shall be the sum of (I)
the number of shares of Common Stock outstanding on such record date plus (II)
the number of additional shares of Common Stock offered for subscription or
purchase, and the denominator of which shall be the sum of (I) the number of
shares of Common Stock outstanding on such record date plus (II) the number of
shares of Common Stock which the aggregate consideration receivable by the
Corporation for the total number of shares of Common Stock so offered would
purchase at such Current Market Price on such record date. For purposes of this
subparagraph (b)(ii), the aggregate consideration receivable by the Corporation
in connection with the issuance of rights of warrants to subscribe for or
purchase securities convertible into Common Stock shall be deemed to be equal to
the sum of the aggregate offering price of such securities plus the minimum
aggregate amount, if any, payable upon conversion of such securities into shares
of Common Stock. An adjustment made pursuant to this subparagraph (b)(ii) shall
be made upon the issuance of any such rights or warrants and shall be effective
retroactively immediately after the close of business on the record date fixed
for the determination of shareholders entitled to receive such rights or
warrants. For purposes of this subparagraph (b)(ii) the granting of the right to
purchase Common Stock (whether treasury shares or newly issued shares) pursuant
to any plan providing for the reinvestment of dividends or interest payable on
securities of the Corporation, and the investment of additional optional
amounts, in shares of Common Stock, in any such case at a price per share of not
less than 95% of the current market price (determined as provided in such plans)
per share of Common Stock, shall not be
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deemed to constitute an issue of rights or warrants by the Corporation within
the meaning of this subparagraph; and
(iii) In case the Corporation at any time or from time to time shall
declare, order, pay or make a dividend or other distribution of any kind or
nature whatsoever which is permitted to be made pursuant to this Article VI on
its Common Stock, other than a dividend payable in shares of the Corporation's
Common Stock or rights or warrants to subscribe for shares of the Corporation's
Common Stock covered under (ii) herein, then, and in each such case (unless the
holders of shares of the 8% Preferred Stock shall receive any such dividend or
other distribution on the same basis as though such shares of the 8% Preferred
Stock had been converted into shares of Common Stock immediately prior to the
close of business on the record date for the determination of holders of Common
Stock entitled to receive such dividend or other distribution), the number of
shares of Common Stock into which each share of the 8% Preferred Stock is
convertible shall be adjusted so that the holder of each share thereof shall be
entitled to receive, upon the conversion thereof, the number of shares of Common
Stock determined by multiplying (a) the number of shares of Common Stock into
which such share was convertible immediately prior to the close of business on
the record date fixed for the determination of holders of Common Stock entitled
to receive such dividend or distribution by (b) a fraction, the numerator of
which shall be the Current Market Price (as defined in paragraph (c) below) per
share of Common Stock on the record date fixed for the determination of holders
of Common Stock entitled to receive such dividend or distribution, and the
denominator of which shall be such Current Market Price per share of Common
Stock less the fair value of such dividend or distribution (as determined in
good faith by the Board of Directors of the Corporation, a certified resolution
with respect to which shall be filed with each transfer agent for the 8%
Preferred Stock) payable in respect of one share of Common Stock. An adjustment
made pursuant to this subparagraph (b)(iii) shall be made upon the opening of
business on the next business day following the date on which any such dividend
or distribution is made and shall be effective retroactively immediately after
the close of business on the record date fixed for the determination of holders
of Common Stock entitled to receive such dividend or distribution;
(c) The term "Current Market Price" shall mean, as applied to any class
of stock on any date, the average of the daily "Closing Prices" (as hereinafter
defined) for the 20 consecutive "Trading Days" (as hereinafter defined)
immediately prior to the date in question; provided, however, that in the event
that the Current Market Price per share of Common Stock is determined during a
period which includes the ex-dividend date for a dividend or distribution by the
Corporation on its Common Stock payable in shares of its Common Stock or the
record date for a stock split, reverse stock split, recapitalization or similar
corporate transaction, then, and in each such case, the Current Market Price
shall be appropriately adjusted to reflect the Current Market Price per Common
Stock equivalent. The term "Closing Price" on any day shall mean the last sales
price, regular way, per share of such stock on such day, or, if no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, as reported in the principal consolidation transaction reporting
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system with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if shares of such stock are not listed or admitted to trading
on the New York Stock Exchange, as reported in the principal consolidation
transaction reporting system with respect to securities listed on the principal
national securities exchange on which the shares of such stock are listed or
admitted to trading, including for these purposes the Nasdaq Stock Market
National Market System, or, if the shares of such stock are not listed or
admitted to trading on any national securities exchange, the average of the high
bid and low asked prices in the over-the-counter market, as reported by the
National Association of Securities Dealers Automated Quotation System ("NASDAQ")
or other similar system then in use or, if such bid and ask prices are not
reported on any such system, the fair market value of a share of Common Stock as
determined in good faith by the Board of Directors of the Corporation. The term
"Trading Day" shall mean a day on which the principal national securities
exchange on which shares of such stock are listed or admitted to trading is open
for the transaction of business or, if the shares of such stock are not listed
or admitted to trading on any national securities exchange, a Monday, Tuesday,
Wednesday, Thursday or Friday on which banking institutions in the Borough of
Manhattan, City and State of New York, are not authorized or obligated by law or
executive order to close (a "Business Day") and on which high bid and low asked
prices are quoted by NASDAQ or, if shares of such stock are not traded on
NASDAQ, by such other similar system or if shares of such stock are not traded
on any such system, a Business Day;
(d) If any adjustment in the number of shares of Common Stock into
which each share of the 8% Preferred Stock may be converted required pursuant to
this Section 6.8 would result in an increase or decrease of less than 1% in the
number of shares of Common Stock into which each share of the 8% Preferred Stock
is then convertible, the amount of any such adjustment shall be carried forward
and adjustment with respect thereto shall be made at the time of and together
with any subsequent adjustment which, together with such amount and any other
amount or amounts so carried forward, shall aggregate at least 1% of the number
of shares of Common Stock into which each share of the 8% Preferred Stock is
then convertible. All calculations under this Section 6.8 shall be made to the
nearest one-hundredth of a share;
(e) The Board of Directors may, but shall not be required to, increase
the number of shares of Common Stock into which each share of the 8% Preferred
Stock may be converted, in addition to the adjustments required by Section
6.8(b), as shall be determined by it (as evidenced by a resolution of the Board
of Directors) to be advisable in order to avoid or diminish any income deemed to
be received by any holder of the Common Stock or 8% Preferred Stock resulting
from any dividend or distribution of stock or issuance of rights or warrants to
purchase or subscribe for stock or from any event treated as such for federal
income tax purposes;
(f) The holder of any shares of the 8% Preferred Stock electing to make
an Optional Conversion shall do so by surrendering for such purpose to the
Corporation, at its principal office or at such other office or agency
maintained by the Corporation for that purpose, a certificate or certificates
representing the shares of 8% Preferred Stock to be
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converted accompanied by a written notice stating that such holder elects to
convert all or a specified whole number of such shares in accordance with the
provisions of this Section 6.8(f) and specifying the name or names in which such
holder wishes the certificate or certificates for shares of Common Stock to be
issued. In case such notice shall specify a name or names other than that of
such holder, such notice shall be accompanied by payment of all transfer taxes
payable upon the issuance of shares of Common Stock in such name or names. As
promptly as practicable, and in any event within five business days after the
surrender of such certificates and the receipt of such notice relating thereto
and, if applicable, payment of all transfer taxes, the Corporation shall deliver
or cause to be delivered (i) certificates representing the number of validly
issued, fully paid and nonassessable shares Common Stock of the Corporation to
which the holder of the 8% Preferred Stock so converted shall be entitled and
(ii) if less than the full number of shares of the 8% Preferred Stock evidenced
by the surrendered certificate or certificates are being converted, a new
certificate or certificates, of like tenor, for the number of shares evidenced
by such surrendered certificate or certificates less the number of shares
converted. Such conversions shall be deemed to have been made at the close of
business on the date of giving of such notice and of such surrender of the
certificate or certificates representing the shares of the 8% Preferred Stock to
be converted so that the rights of the holder thereof shall cease except for the
right to receive Common Stock of the Corporation in accordance herewith, and the
converting holder shall be treated for all purposes as having become the record
holder of such Common Stock of the Corporation at such time;
(g) The Corporation shall have the right, from time to time, on or
after October 1, 2001, in its sole discretion, to convert shares of 8% Preferred
Stock in tranches having an aggregate Liquidation Preference of up to $50
million on each occasion, into shares of Common Stock, as follows:
(i) If at any time on or after October 1, 2001 the Common Stock is (x)
listed on a national securities exchange or included for quotation on the
National Market System of the NASDAQ Stock Market and (y) the Closing Price of
the Common Stock on the National Market System of the NASDAQ Stock Market or on
such national securities exchange exceeds $11.55 per share (the "Test Amount")
for each Trading Day (as defined in paragraph (c) above) during a Testing Period
(as defined below), the Corporation shall have the right, in its sole
discretion, to convert issued and outstanding shares of 8% Preferred Stock into
shares of Common Stock, which conversion shall become effective as of a date no
earlier than ten (10) days and no later than forty (40) days following the end
of the relevant Testing Period, provided that the Corporation shall not have the
right to convert 8% Preferred Stock having an aggregate principal amount of more
than $50 million with respect to any single Testing Period. Any such conversion
compelled by the Corporation shall be referred to herein as a "Forced
Conversion." The Test Amount shall be appropriately adjusted in connection with
any stock split, stock dividend, reverse stock split, recapitalization or
similar corporate transaction.
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(ii) The shares of each holder of 8% Preferred Stock shall be converted
on a pro rata basis on any Forced Conversion. The transfer agent shall give
holders of the 8% Preferred Stock written notice of the Forced Conversion at
least ten (10) days prior to the effective date thereof, which notice shall
specify (A) the effective date , (B) the Testing Period utilized, (C) the
Aggregate Liquidation Amount of the 8% Preferred Stock to be converted, (D) the
pro ration factor, if less than all outstanding shares of 8% Preferred Stock are
to be converted and (E) the number of shares of Common Stock into which each
share of 8% Preferred Stock shall be converted pursuant to the Forced
Conversion. Any period of ten (10) consecutive Trading Days that does not
precede or include a previously announced effective date of a Forced Conversion
shall be referred to herein as a "Testing Period."
(iii) Following a Forced Conversion, the holders of shares of 8%
Preferred Stock shall have the right to receive certificates representing the
shares of Common Stock into which such shares of 8% Preferred Stock have been
converted by surrendering to the Corporation, at its principal office or at such
other office or agency maintained by the Corporation for that purpose, a
certificate or certificates representing the applicable shares of 8% Preferred
Stock. As promptly as practicable, and in any event within five business days
after the surrender of such certificates, the Corporation shall deliver or cause
to be delivered certificates representing the number of validly issued, fully
paid and nonassessable shares Common Stock of the Corporation to which the
holder of the 8% Preferred Stock so converted shall be entitled. Upon a Forced
Conversion, the rights of the holders of 8% Preferred Stock shall cease except
for the right to receive Common Stock of the Corporation in accordance herewith,
and the holder shall be treated for all purposes as having become the record
holder of such Common Stock of the Corporation at such time;
(iv) Upon the Forced Conversion of the 8% Preferred Stock, the holders
thereof shall be entitled to receive payment of all accrued but unpaid
dividends, whether or not declared, plus, if the conversion date is not a
Quarterly Dividend Payment Date, an amount equal to the annual dividend per
share multiplied by a fraction, the numerator of which is the number of days
from the Quarterly Dividend Payment Date next preceding the date of conversion
to the conversion date and the denominator of which is 365 (the amount of such
unpaid dividends and the other amount being payable in such number of shares of
Common Stock which would be issuable upon conversion of shares of 8% Preferred
Stock having an aggregate Liquidation Preference equal to such amount) in
respect of the shares so converted, provided that if the conversion date is
after a Dividend Record Date and before the Quarterly Dividend Payment Date to
which that Dividend Record Date relates, the dividend otherwise payable on that
Quarterly Dividend Payment Date in respect of the shares so converted shall not
be paid by the Corporation.
(h) In connection with the conversion of any shares of the 8% Preferred
Stock, no fractions of shares of Common Stock shall be issued, but the
Corporation shall pay a cash adjustment in respect of such fractional interest
in an amount equal to the market value of such fractional interest. In such
event, the market value of a share of Common Stock of the
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Corporation shall be the Closing Price of such shares on the last business day
on which such shares were traded immediately preceding the date upon which such
shares of 8% Preferred Stock are deemed to have been converted.
(i) The Corporation shall at all times reserve and keep available out
of its authorized Common Stock the full number of shares of Common Stock of the
Corporation issuable upon the conversion of all outstanding shares of the 8%
Preferred Stock.
6.9 Adjustments For Consolidation, Merger, etc. In case (A) the
Corporation shall consolidate with or merge into any other person and shall not
be the continuing or surviving corporation of such consolidation or merger, (B)
any other person shall consolidate with or merge into the Corporation and the
Corporation shall be the continuing or surviving person, but, in connection with
such consolidation or merger, the Common Stock shall be changed into or
exchanged for stock or other securities of any other person or cash or any other
property, or (C) the Corporation shall transfer all or substantially all of its
properties or its assets to any other person, then, and in each such case, each
outstanding share of 8% Preferred Stock shall, upon the effective date of such
event, be convertible into the number of shares of stock or other securities or
cash or other property which the holder would have owned after giving effect to
such event had such share been converted pursuant to Section 6.8 immediately
prior to the occurrence of such event, plus any additional shares of stock or
other securities or cash or other property payable by the terms of such event to
the holders of shares 8% Preferred Stock.
6.10 Reports as to Adjustments. Whenever the number of shares of Common
Stock into which the shares of the 8% Preferred Stock are convertible is
adjusted as provided in Section 6.8, the Corporation shall (A) promptly compute
such adjustment and furnish to each transfer agent for the 8% Preferred Stock a
certificate, signed by a principal financial officer of the Corporation, setting
forth the number of shares of Common Stock, or the number and kind of any other
securities, into which each share of the 8% Preferred Stock is convertible as a
result of such adjustment, a brief statement of the facts requiring such
adjustment and the computation thereof and when such adjustment will become
effective and (B) promptly mail to the holders of record of the outstanding
shares of the 8% Preferred Stock a notice stating that the number of shares into
which the shares of 8% Preferred Stock are convertible has been adjusted and
setting forth the new number of shares into which each share of the 8% Preferred
Stock is convertible as a result of such adjustment and when such adjustment
will become effective and the basis for such adjustment in appropriate detail.
6.11 Notices of Corporate Action. In the event of:
(a) any taking by the Corporation of a record of the holders of its
Common Stock for the purpose of determining the holders thereof who are entitled
to receive any distribution or any right or warrant permitted to be distributed
or given to the holder of
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Common Stock in accordance with this Article VI (other than a dividend payable
solely in shares of Common Stock).
(b) any capital reorganization, reclassification or recapitalization of
the Corporation (other than a subdivision or combination of the outstanding
shares of its Common Stock), any consolidation or merger involving the
Corporation and any other person (other than a consolidation or merger with a
wholly-owned subsidiary of the Corporation, provided that the Corporation is the
surviving or the continuing corporation and no change occurs in the Common
Stock), or any transfer of all or substantially all the assets of the
Corporation to any other person; or
(c) any voluntary or involuntary dissolution, liquidation or winding up
of the Corporation;
then, and in each such case, the Corporation shall cause to be mailed to each
transfer agent for the shares of the 8% Preferred Stock and to the holders of
record of the outstanding shares of the 8% Preferred Stock, at least 20 days (or
10 days in case of any event specified in clause (a) above) prior to the
applicable record or effective date hereinafter specified, a notice stating (i)
the date or expected date on which any such record is to be taken for the
purpose of such dividend, distribution or right and the amount and character of
such dividend, distribution or right or (ii) the date or expected date on which
any such reorganization, reclassification, recapitalization, consolidation,
merger, transfer, dissolution, liquidation or winding up is to take place and
the time, if any such time is to be fixed, as of which the holders of record of
Common Stock shall be entitled to exchange their shares of Common Stock for the
securities or other property deliverable upon such reorganization,
reclassification, recapitalization, consolidation, merger, transfer,
dissolution, liquidation or winding up. Such notice shall also state whether
such transaction will result in any adjustment in the number of shares of Common
Stock, or kind and number of any other securities, into which shares of the 8%
Preferred Stock are convertible and, if so, shall state the new number of shares
of Common Stock, or kind and number of any other securities, into which each
share of the 8% Preferred Stock shall be convertible upon such adjustment and
when such adjustment will become effective. The failure to give any notice
required by this Section 6.11, or any defect therein, shall not affect the
legality or validity of any such action requiring such notice.
ARTICLE VII
NOTE EXCHANGE
7.1 Right to Exchange 8% Preferred Stock for Subordinated Notes.
Subject to the terms and conditions set forth herein, including the approval of
the holders of 8% Preferred Stock as provided in Section 6.3(c) hereof, the
Corporation, as note issuer (the "Note Issuer"), may, at its option at any time
after April 1, 2000, exchange all, but not less
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than all, of the outstanding 8% Preferred Stock for subordinated notes (the
"Subordinated Notes") of the Note Issuer (the "Note Exchange"). Pursuant to the
Note Exchange, each share of 8% Preferred Stock shall be exchanged for a
Subordinated Note in an aggregate principal amount equal to the sum of (i) the
liquidation preference of the 8% Preferred Stock to be exchanged, as set forth
in Article VI hereof, and (ii) any accrued and unpaid dividends on such 8%
Preferred Stock. Notwithstanding the foregoing, the Subordinated Notes will be
in registered form without coupons in denominations of $100 (or such greater
amount as may be required by applicable State or Federal law) and integral
multiples of $100 in excess thereof and, in connection with the exchange of any
shares of the 8% Preferred Stock, no fractions of Subordinated Notes shall be
issued. If any fraction of a Subordinated Note would be issuable on the exchange
of the 8% Preferred Stock for Subordinated Notes, the Corporation shall direct
and deposit with the Paying Agent an amount sufficient to pay an amount in cash
for such fractional interests.
7.2 Terms of the Subordinated Notes.
(a) The Subordinated Notes shall be issued under an indenture
substantially in the form attached hereto as Exhibit A (the "Indenture"). The
holders of the Subordinated Notes shall be deemed to be stockholders, and the
Subordinated Notes shall be deemed to be shares of stock, for the purpose of any
provision of the Delaware General Corporation Law or this Restated Certificate
of Incorporation, which requires the vote of stockholders as a prerequisite to
any corporate action. The holders of the Subordinated Notes shall have the
voting rights set forth in Section 2.05 of the Indenture, which terms are
incorporated herein by reference.
(b) The annual rate of interest on the Subordinated Notes shall be 8%,
payable in the manner set forth in the form of Subordinated Note included as
Exhibit 1 to the Indenture from and after the Dividend Payment Date next
preceding the Note Exchange Date (as hereafter defined) or if the Note Exchange
Date is a Dividend Payment Date, from such date. The principal amount of the
Subordinated Notes shall be equal to the sum of (i) the liquidation preference
of the 8% Preferred Stock to be exchanged, as set forth in Article VI hereof,
and (ii) any accrued and unpaid dividends on such 8% Preferred Stock. The Notes
shall mature on October 1, 2011.
7.3 Manner of Exchange.
(a) The Note Issuer may elect to consummate the Note Exchange at any
time. The Note Issuer shall elect to consummate the Note Exchange by mailing to
each holder of record of the 8% Preferred Stock (a "Holder") a notice of
exchange (the "Note Exchange Notice") at such Holder's address as it appears on
the books of the Corporation. The Note Exchange Notice shall specify (x) a date
not less than 30 days nor more than 60 days following the date of the Note
Exchange Notice on which the Note Exchange is to be consummated (the
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"Note Exchange Date"), (y) the procedures for exchanging certificates
representing 8% Preferred Stock for certificates representing Subordinated Notes
and (z) the number of shares of 8% Preferred Stock to be exchanged and, if
applicable, each Holder's pro rata portion of shares to be exchanged.
(b) As of 5:00 p.m., New York City time, on the Note Exchange Date, the
8% Preferred Stock shall no longer be deemed to be outstanding and shall be
retired and all rights with respect to such shares, including, without
limitation, the rights, if any, to receive dividends and to receive notices and
to vote or consent (except for the right of the Holders to receive the
Subordinated Notes to which such Holder is entitled pursuant to the Note
Exchange) shall forthwith cease.
(c) Upon the exchange of shares of 8% Preferred Stock into Subordinated
Notes, as provided herein, the Note Issuer will pay any documentary, stamp or
similar issue or transfer taxes which may be due with respect to the transfer
and exchange of such exchanged shares, if any; provided, however, that if the
Subordinated Notes into which the shares of 8% Preferred Stock are exchangeable
are to be issued in the name of any person other than the Holder of the shares
of 8% Preferred Stock, the amount of any transfer taxes (whether imposed on the
Note Issuer, the holder or such other person) payable on account of the transfer
to such person will be payable by the Holder.
7.4 Selection of Indenture Trustee. Prior to the Note Exchange Date,
the Corporation shall appoint the person or entity to serve as trustee under the
Indenture (the "Indenture Trustee"). The Indenture Trustee shall satisfy the
requirements of Section 310(a)(1) of the Trust Indenture Act of 1939, as
amended, and shall have a combined capital and surplus of at least $100 million
as set forth in its most recent published annual report of condition.
7.5 Conditions to Note Exchange.
(a) It will be a condition to the Note Exchange that: (i) the
Subordinated Notes have been registered under the Securities Act of 1933, unless
an exemption from registration is available, (ii) the Indenture pursuant to
which the Subordinated Notes are to be issued has been executed and delivered by
the Note Issuer and the Indenture Trustee, (iii) the Indenture Trustee, for the
third party benefit of each holder of shares of 8% Preferred Stock on the Note
Exchange Date, shall have received an opinion from outside counsel with a
national reputation in corporate and securities and tax law matters (which may
be Battle Fowler LLP) to the effect that the Subordinated Notes will, when
issued in accordance with the terms of the Indenture, be legal, valid, binding
and enforceable obligations of the Note Issuer and that each holder of shares of
8% Preferred Stock will not recognize income, for federal income tax purposes,
in excess of (a) the principal amount of the Subordinated Notes to be issued to
each such holder minus (b) the sum of the amount paid by the initial holder for
the shares of 8% Preferred Stock exchanged therefor and the amount, if any, of
taxable income
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previously recognized by such holder and successors due to its ownership of the
8% Preferred Stock exchanged therefor other than with respect to cash dividends,
(iv) immediately after the Note Exchange, no default or event of default will
exist under the Indenture, (v) the Indenture has been qualified under the Trust
Indenture Act of 1939, as amended, and (vi) the Subordinated Notes shall have
been listed on a national securities exchange or on the National Market System
of the NASDAQ stock market.
(b) The Note Exchange shall comply with all applicable federal and
state securities and blue sky laws and, subject to Section 9.2, the provisions
of this Article VII may be modified by the Note Issuer without the approval of
the holders of the 8% Preferred Stock in order to effect such compliance.
(c) The Note Issuer may take any action necessary, including without
limitation, amending or modifying the Indenture prior to the Note Exchange, in
order to qualify the Indenture under the Trust Indenture Act of 1939, as
amended, and as in effect from time to time.
ARTICLE VIII
MANAGEMENT OF THE CORPORATION
8.1 Except as otherwise provided herein, the business and affairs of
the Corporation shall be managed by or under the direction of the Board of
Directors. The number of Directors which shall constitute the entire Board of
Directors shall be eleven (11).
8.2 The Board of Directors shall have the power to adopt, amend, and
repeal the By-Laws of the Corporation.
8.3 The stockholders and directors shall have the power, if the By-Laws
so provide, to hold their respective meetings within or without the State of
Delaware and may (except as otherwise required by law) keep the Corporation's
books outside the State of Delaware, at such places as from time to time may be
designated by the By-Laws or the Board of Directors.
8.4 Election of directors need not be by written ballot unless the
By-laws so provide.
8.5 In addition to the powers and authority hereinbefore conferred upon
them, the directors are hereby empowered to exercise all such powers and do all
such acts and things as may be exercised or done by the Corporation, subject,
nevertheless, to the provisions of the GCL, this Certificate of Incorporation,
and the By-Laws; provided, however, that no
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By-Laws hereafter adopted shall invalidate any prior act of the directors which
would have been valid if such By-Laws had not been adopted.
ARTICLE IX
AMENDMENTS
9.1 The Corporation reserves the right to amend or repeal any
provisions contained in this Certificate of Incorporation from time to time and
at any time in the manner now or hereafter prescribed in this Certificate of
Incorporation or the By-Laws or required by the laws of the State of Delaware,
and all rights herein conferred upon stockholders are granted subject to such
reservation.
9.2 So long as any shares of the 8% Preferred Stock are outstanding,
without the affirmative vote or consent of holders of at least two-thirds of the
outstanding shares of the 8% Preferred Stock voting or consenting separately as
one class, no amendment may be made to (i) Article VI of this Certificate of
Incorporation which would increase or decrease the aggregate number of
authorized shares of the 8% Preferred Stock, increase or decrease the par value
of the shares of such class, make any change that adversely affects the
conversion or voting rights of the 8% Preferred Stock or alter or change any
other powers, preferences, or special rights of the shares of such class so as
to affect them adversely, (ii) Article VII hereof which would adversely affect
the rights of holders of 8% Preferred Stock or of Subordinated Notes, (iii) the
Indenture which is attached hereto as Exhibit A which would adversely affect the
rights of holders of Subordinated Notes or, (iv) this Section 9.2; provided,
however, as long as any shares of 8% Preferred Stock are outstanding, without
the unanimous vote or consent of holders of the outstanding 8% Preferred Stock
voting or consenting separately as one class, no amendment may be made to (i)
reduce the rate of or change the time of payment of dividends on the 8%
Preferred Stock, (ii) change the form of payment of any amounts payable in
respect of the 8% Preferred Stock, (iii) reduce the Liquidation Preference of
the 8% Preferred Stock, (iv) change the redemption date, or reduce the
redemption price, specified in Section 6.5(a) for the 8% Preferred Stock, or (v)
adversely effect the right to convert the 8% Preferred Stock into shares of
Common Stock as provided in Section 6.8.
ARTICLE X
LIMITATION OF LIABILITY OF DIRECTORS
No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director; provided, that the foregoing clause shall not eliminate or
limit the liability of a director (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions
639422.31
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not in good faith or that involve intentional misconduct or a knowing violation
of law, (iii) under Section 174 of the GCL, or (iv) for any transaction from
which the director derived an improper personal benefit. For purposes of the
prior sentence, the term "damages" shall, to the extent permitted by law,
include without limitation, any judgment, fine, amount paid in settlement,
penalty, punitive damages, excise or other tax assessed with respect to an
employee benefit plan, or expense of any nature (including, without limitation,
counsel fees and disbursements). Each person who serves as a director of the
Corporation while this Article X is in effect shall be deemed to be doing so in
reliance on the provisions of this Article X. Any repeal or modification of this
Article X shall not adversely affect any right or protection of a director
existing prior to such repeal or modification. The provisions of this Article X
are cumulative and shall be in addition to and independent of any and all other
limitations on or eliminations of the liabilities of directors of the
Corporation, as such, whether such limitations or eliminations arise under or
are created by any law, rule, regulation, by-law, agreement, vote of
stockholders or directors, or otherwise.
ARTICLE XI
ISSUANCE OF
NONVOTING EQUITY SECURITIES
The Corporation will not issue nonvoting equity securities to the
extent prohibited by Section 1123 of the United States Bankruptcy Code;
provided, however, that this Article XI (a) will have no further force and
effect beyond that required under Section 1123 of the United States Bankruptcy
Code, (b) will have such force and effect, if any, only for so long as such
Section 1123 is in effect and applicable to the Corporation, and (c) in all
events may be amended or eliminated in accordance with applicable law as from
time to time in effect.
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IN WITNESS WHEREOF, the Corporation has caused this Restated
Certificate of Incorporation to be duly executed and acknowledged, this 1st day
of October, 1998.
TOY BIZ, INC.
By: /s/ JOSEPH M. AHEARN
__________________________________________
Name: Joseph M. Ahearn
Title: President and Chief Executive
Officer
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Exhibit A
FORM OF INDENTURE1
================================================================================
TOY BIZ, INC.2
8% Convertible Subordinated Voting Debentures
due 2011
---------------
INDENTURE
---------------
Dated as of [ ]
[ ]
Trustee
================================================================================
--------
1 Form of Indenture for Subordinated Notes to be issued in the event of an
exchange of the 8% Cumulative Convertible Exchangeable Preferred Stock (the
"8% Preferred Stock") of Toy Biz, Inc. (which expects to change its name to
"Marvel Enterprises, Inc." on or about
October 1, 1998).
2 Or the successor entity, the "Note Issuer" as defined in the Restated
Certificate of Incorporation of the Corporation.
705179.13
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TABLE OF CONTENTS
<TABLE>
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<S> <C>
Page
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ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE........................................................................1
Section 1.01 Definitions.....................................................................................1
Section 1.02 Other Definitions...............................................................................5
Section 1.03 Incorporation by Reference of Trust Indenture Act...............................................5
Section 1.04 Rules of Construction...........................................................................5
ARTICLE II
THE SECURITIES....................................................................................................6
Section 2.01 Form and Dating.................................................................................6
Section 2.02 Execution and Authentication....................................................................6
Section 2.03 Registrar and Paying Agent......................................................................7
Section 2.04 Payment by the Corporation to the Trustee; Paying Agent to Hold Money in
Trust...........................................................................................7
Section 2.05 Voting Rights of Securityholders................................................................7
Section 2.06 Conversion Into Common Stock....................................................................8
Section 2.07 Adjustments For Consolidation, Merger, etc.....................................................14
Section 2.08 Reports as to Adjustments......................................................................14
Section 2.09 Notices of Corporate Action....................................................................15
Section 2.10 Securityholder Lists...........................................................................16
Section 2.11 Transfer and Exchange..........................................................................16
Section 2.12 Replacement Securities.........................................................................16
Section 2.13 Outstanding Securities.........................................................................17
Section 2.14 Treasury Securities............................................................................17
Section 2.15 Temporary Securities...........................................................................17
Section 2.16 Cancellation...................................................................................17
Section 2.17 Certain Limitations on Securities..............................................................18
ARTICLE III
COVENANTS........................................................................................................18
Section 3.01 Payment of Securities..........................................................................18
Section 3.02 Dividends, Etc.................................................................................18
Section 3.03 Reports by Corporation.........................................................................19
Section 3.04 Money for Security Payments to Be Held in Trust................................................19
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Page
Section 3.05 Compliance Certificate.........................................................................20
Section 3.06 Authorization of Common Stock..................................................................20
Section 3.07 Certain Restrictions...........................................................................20
ARTICLE IV
SUCCESSORS.......................................................................................................21
Section 4.01 When Corporation May Merge, etc................................................................21
Section 4.02 Successor Substituted..........................................................................22
ARTICLE V
DEFAULTS AND REMEDIES............................................................................................22
Section 5.01 Events of Default..............................................................................22
Section 5.02 Acceleration; Limitations on Acceleration......................................................22
Section 5.03 Other Remedies.................................................................................23
Section 5.04 Waiver of Default..............................................................................23
Section 5.05 Control by Majority............................................................................23
Section 5.06 Limitation on Suits............................................................................23
Section 5.07 Rights of Holders to Receive Payment...........................................................24
Section 5.08 Collection Suit by Trustee.....................................................................24
Section 5.09 Trustee May File Proofs of Claim...............................................................24
Section 5.10 Priorities.....................................................................................24
Section 5.11 Undertaking for Costs..........................................................................25
ARTICLE VI
TRUSTEE..........................................................................................................25
Section 6.01 Duties of Trustee..............................................................................25
Section 6.02 Rights of Trustee..............................................................................26
Section 6.03 Individual Rights of Trustee...................................................................27
Section 6.04 Disclaimer.....................................................................................27
Section 6.05 Notice of Defaults.............................................................................27
Section 6.06 Reports by Trustee to Holders..................................................................27
Section 6.07 Compensation and Indemnity.....................................................................27
Section 6.08 Replacement of Trustee.........................................................................28
Section 6.09 Successor Trustee by Merger....................................................................29
Section 6.10 Eligibility; Disqualification..................................................................29
705179.13
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Page
Section 6.11 Preferential Collection of Claims Against Corporation..........................................29
ARTICLE VII
SATISFACTION AND DISCHARGE.......................................................................................29
Section 7.01 Satisfaction and Discharge of Indenture........................................................29
Section 7.02 Application of Trust Money.....................................................................30
Section 7.03 Repayment to Corporation.......................................................................30
ARTICLE VIII
AMENDMENTS.......................................................................................................31
Section 8.01 Without Consent of Holders.....................................................................31
Section 8.02 With Consent of Holders........................................................................31
Section 8.03 Reserved.......................................................................................32
Section 8.04 Revocation and Effect of Consents..............................................................32
Section 8.05 Notation on or Exchange of Securities..........................................................32
Section 8.06 Trustee Protected..............................................................................32
Section 8.07 Rights of Holders to Receive Payment...........................................................32
ARTICLE IX
SUBORDINATION....................................................................................................33
Section 9.01 Agreement to Subordinate.......................................................................33
Section 9.02 Subordination..................................................................................33
Section 9.03 Notice to Trustee of Specified Events; Reliance on Certificate of Custodian....................34
Section 9.04 Trustee Entitled to Assume Payments Not Prohibited in Absence of Notice........................35
Section 9.05 Absolute Obligation to Pay.....................................................................35
Section 9.06 Trustee's Rights as Holder of Senior Debt......................................................35
Section 9.07 No Implied Obligations to Holders of Senior Debt...............................................36
Section 9.08 Enforceability of Subordination................................................................36
Section 9.09 Trustee Authorized to Effectuate Subordination.................................................36
ARTICLE X
REDEMPTION.......................................................................................................36
Section 10.01 Optional Redemption; Notice of Redemption......................................................36
705179.13
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Page
Section 10.02 Notice of Redemption...........................................................................36
Section 10.03 Effect of Notice of Redemption.................................................................37
Section 10.04 Deposit of the Redemption Price................................................................37
ARTICLE XI
MISCELLANEOUS....................................................................................................38
Section 11.01 Trust Indenture Act Controls...................................................................38
Section 11.02 Notices........................................................................................38
Section 11.03 Communication by Holders with Other Holders....................................................39
Section 11.04 Certificate and Opinion as to Conditions Present...............................................39
Section 11.05 Statements Required in Certificate or Opinion..................................................39
Section 11.06 Rules by Trustee and Agents....................................................................40
Section 11.07 Legal Holidays.................................................................................40
Section 11.08 No Recourse Against Others.....................................................................40
Section 11.09 Duplicate Originals............................................................................40
Section 11.10 Governing Law..................................................................................40
Section 11.11 No Adverse Interpretation of Other Agreements..................................................40
Section 11.12 Successors.....................................................................................40
Section 11.13 Severability...................................................................................40
Section 11.14 Table of Contents, Headings, etc...............................................................40
</TABLE>
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INDENTURE dated as of [_________________] between Toy Biz, Inc., a
Delaware corporation, and [______________________], a [_______________]
corporation, as trustee.
Each party agrees as follows for the benefit of the other party and for
the equal and ratable benefit of the Holders of the 8% Convertible Subordinated
Capital Debentures due October 1, 2011.
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01 Definitions.
"Affiliate" means, with respect to any specified Person, any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For the purpose of this
definition, "control" when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Agent" means any Registrar, Paying Agent or co-Registrar.
"Board of Directors" means the Board of Directors of the Corporation or
any authorized committee of such Board.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in the city in which the
Corporate Trust Office is located are authorized or obligated by law or
executive order to close.
"Commission" means the Securities and Exchange Commission, and its
successors.
"Common Stock" means the Corporation's common stock, par value $.01 per
share.
"Consolidated Tangible Capital" of any Person means, at any date, the
total amount of non-redeemable preferred stock and common shareholders' equity
(excluding amounts attributable to securities which are exchangeable for or
convertible into securities other than non-redeemable preferred stock or common
stock and any amounts attributable to shares issued pursuant to an acquisition
by such Person) which would appear on a consolidated statement of financial
condition of such Person as at such date prepared in accordance with generally
accepted accounting principles, less all intangible assets appearing thereon.
705179.13
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"Corporate Trust Office" means the corporate trust office of the
Trustee at which at any particular time its corporate trust business shall be
principally administered, which on the date hereof is [______________________].
"Corporation" means Toy Biz, Inc. (which expects to change its name to
"Marvel Enterprises, Inc." on or about October 1, 1998) or its successor "Note
Issuer", provided that any such successor Person shall have become such pursuant
to the applicable provisions of this Indenture, and thereafter, "Corporation"
shall mean each successor Person, and any other obligor upon the Securities.
"Default" means an event or condition the occurrence of which would,
with the lapse of time or the giving of notice or both, become an Event of
Default.
"8% Preferred Stock" means the 8% Cumulative Convertible Exchangeable
Preferred Stock of the Corporation.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and as in effect from time to time.
"Holder" or "Securityholder" means a Person in whose name a Security is
registered in the register of the Securities kept by the Registrar.
"Indebtedness" means, with respect to any Person, at any date, (i) all
indebtedness, obligations or other liabilities for borrowed money, whether
matured or unmatured, liquidated or unliquidated, direct or contingent, joint or
several, and whether now existing or hereafter created; (ii) all indebtedness
secured by any mortgage, lien, pledge, charge or encumbrance upon Property owned
by such Person; (iii) all indebtedness, obligations or liabilities of others of
the type described in the preceding clauses (i) and (ii) which the Corporation
has guaranteed or is in any other way liable for; and (iv) all amendments,
renewals, extensions or refundings of any such indebtedness, obligation or
liability; (v) all obligations to pay rent or other amounts under any lease of
(or other arrangement conveying the right to use) Property which obligation is
required to be classified and accounted for as a capital lease on a balance
sheet prepared in accordance with generally accepted accounting principles; (vi)
all payment obligations with respect to interest rate or currency protection
agreements; (vii) all obligations as an account party under any letter of credit
or in respect of bankers' acceptance; and (viii) all obligations of any third
party secured by Property (regardless of whether or not the Note Issuer is
liable for repayment of such obligations).
"Indenture" means this instrument as amended from time to time by one
or more indentures supplemental hereto entered into pursuant to the applicable
provisions hereto.
"Interest Payment Due" means the date specified in the Securities as
the fixed date on which interest is due and payable.
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"Officer" means the Chairman of the Board of Directors, the President,
any Vice President, the Treasurer, the Secretary, any Assistant Treasurer or any
Assistant Secretary of the Corporation.
"Officers' Certificate" means a certificate signed by (i) the Chairman
or Vice Chairman of the Board of Directors, President or any Vice President and
(ii) the Treasurer, Secretary or any Assistant Treasurer or any Assistant
Secretary of the Corporation and delivered to the Trustee by the terms of this
Indenture; provided that, in the event an Officer of the Corporation holds a
position set forth in (i) or (ii) above, such Officer may sign an Officer's
Certificate only in his capacity as an Officer under either clause (i) or (ii),
but not both.
"Opinion of Counsel" means a written opinion from legal counsel, which
opinion and legal counsel are acceptable to the Trustee. The counsel may be an
employee of or counsel to the Corporation.
"Order of the Corporation" means a written order signed in the name of
the Corporation by its President or any Vice President and by its Treasurer,
Secretary or any Assistant Treasurer or Assistant Secretary of the Corporation
and delivered to the Trustee.
"Person" means an individual, partnership, corporation or
unincorporated organization, and a government or agency or political subdivision
thereof.
"Principal" means principal amount of a debt security plus the premium,
if any, on the security.
"Primary Indebtedness" means Indebtedness other than Indebtedness
Ranking on Parity with the Securities or Ranking Junior to the Securities.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
"Ranking Junior to the Securities" means, as respects any obligation of
the Corporation, an obligation that by express provisions in the instrument
creating, evidencing or governing such obligation (i) is specifically designated
as ranking junior to the Securities, (ii) ranks junior to and not equally with
or prior to the Securities (or to the Securities and any other obligations of
the Corporation ranking on a parity with the Securities) in right of payment
upon the happening of a Specified Event, as defined in Section 9.02, and (iii)
is also made junior and subordinate in right of payment to other obligations of
the Corporation to at least the same extent as the Securities are made junior
and subordinate thereto by the provisions of Section 9.02.
"Ranking on a Parity with the Securities" means, with respect to any
obligation of the Corporation, an obligation that by express provisions in the
instrument creating, evidencing or
705179.13
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governing such obligation (i) is specifically designated as ranking on a parity
with the Securities, (ii) ranks equally with and not prior to the Securities in
right of payment upon the happening of a Specified Event and (iii) is also made
junior and subordinate in right of payment to other obligations of the
Corporation to the same extent as the Securities are made junior and subordinate
thereto by the provisions of Section 9.02.
"Record Date" means the 15th day (whether or not a Business Day) of the
month preceding the month in which an Interest Payment Date occurs.
"Redemption Date" means, when used with respect to any Security to be
redeemed, the date fixed for such redemption pursuant to this Indenture and the
Security.
"Redemption Price" means, when used with respect to any Security to be
redeemed, the price fixed for such redemption pursuant to this Indenture and the
Security as set forth in Section 10.01.
"Securities" means the "8% Convertible Subordinated Voting Debentures
due October 1, 2011" described above and issued under this Indenture.
"Senior Debt" means principal of and premium, if any, and interest on
all indebtedness and obligations of, and claims against, the Corporation (other
those of the holders of 8% Preferred Stock or any other equity interests of the
Corporation) including, without limitation, commercial paper, repurchase
agreements, trade debt, secured Indebtedness and the Corporation's other
obligations to its general and secured creditors, whether outstanding on the
date hereof or hereafter created, incurred, assumed or guaranteed by the
Corporation (and all renewals, extensions or refundings thereof); provided,
however, that "Senior Debt" shall not include the Securities, any Indebtedness
Ranking on a Parity with the Securities or any Indebtedness Ranking Junior to
the Securities.
"Subsidiary" means any corporation of which the Corporation owns,
directly or indirectly, more than 50% of the Voting Stock.
"TIA" means the Trust Indenture Act of 1939, as amended, and as in
effect from time to time.
"Trustee" means the party named as such in this indenture until a
successor replaces it and thereafter means such successor.
"Trust Officer" means any officer within the Corporate Trust Office (or
any successor group) of the Trustee, including any Vice President, any Assistant
Vice President, any Assistant Secretary 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
705179.13
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respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of his knowledge of or familiarity with the
particular subject.
"Voting Stock" means securities of any class or classes of a
corporation the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for corporate directors (or Persons performing
similar functions).
Section 1.02 Other Definitions.
Term Defined in
---- ----------
"Blockage Period"...............................................Section 9.02(b)
"Default Notice"................................................Section 9.02(b)
"Event of Default"..............................................Section 5.01
"Legal Holiday".................................................Section 11.07
"Paying Agent"..................................................Section 2.03
"Registrar".....................................................Section 2.03
"Specified Event"...............................................Section 9.02(a)
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, whether or not
this Indenture is qualified under the TIA.
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; and
"obligor" on the securities means the Corporation.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by rule of the Commission
under the TIA have the meanings assigned to them thereby.
Section 1.04 Rules of Construction. Unless the context otherwise
requires: (i) a term has the meaning assigned to it; (ii) an accounting term not
otherwise defined has the meaning assigned to it in accordance with generally
accepted accounting principles in effect in the United States at the date of
such computation; (iii) "or" is always used inclusively (for
705179.13
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example, the phrase "A" or "B" means "A or B or both," not "either A or B, but
not both"); (iv) words in the singular include the plural, and in the plural
include the singular; (v) provisions apply to successive events and
transactions; and unless specifically stated, the words "herein," "hereof,"
"hereto" and "hereunder" and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or other
subdivision.
ARTICLE II
THE SECURITIES
Section 2.01 Form and Dating. The Securities and Trustee's certificate
of authentication shall be substantially in the form of Exhibit 1, 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.
Section 2.02 Execution and Authentication. The Securities shall be
executed on behalf of the Corporation by its Chairman of the Board, its
President or one of its Vice Presidents under its corporate seal and attested by
its Secretary or one of its Assistant Secretaries. The signature of any of these
officers on the Securities may be actual or facsimile.
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. Such manual 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 5 of the Securities upon an Order
of the Corporation. The aggregate principal amount of Securities outstanding at
any time may not exceed the amount as stated in paragraph 5 of the Securities
except as provided in Section 2.12.
The Trustee may appoint an authenticating agent acceptable to the
Corporation to authenticate Securities, which authenticating agent shall be
compensated by the Corporation. An authenticating agent may authenticate
Securities whenever the Trustee may do so, other than the authentication of
Securities issued upon original issue or pursuant to Section 2.12. Except as
provided in the previous sentence, 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
Corporation or an Affiliate.
705179.13
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Section 2.03 Registrar and Paying Agent. The Corporation shall maintain
an office or agency where Securities may be presented for registration of
transfer or for exchange ("Registrar") and an office or agency where Securities
may be presented for payment ("Paying Agent"). The Registrar shall keep a
register of the Securities and of their transfer and exchange. The Corporation
may appoint one or more additional Paying Agents. The term "Paying Agent"
includes any additional Paying Agent. The Corporation or any of its Subsidiaries
may act as Paying Agent or Registrar.
The Corporation shall enter into an appropriate agency agreement with
any Agent not a party to this Indenture. The agreement shall implement the
provisions of this Indenture that relate to such Agent. The Corporation shall
give prompt written notice to the Trustee of the name and address of any such
Agent and any change in the address of such Agent. If the Corporation fails to
maintain a Registrar or Paying Agent, the Trustee shall act as such.
The Corporation initially appoints the Trustee as Registrar and Paying
Agent.
Section 2.04 Payment by the Corporation to the Trustee; Paying Agent to
Hold Money in Trust. On each due date for the payment of principal of, or
interest on, any of the Securities, the Corporation shall deposit with the
Trustee or Paying Agent, as the case may be, in immediately available funds a
sum sufficient to pay the principal or interest so becoming due.
The Corporation will require each Paying Agent other than the Trustee
to execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree 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 Corporation
(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.
Section 2.05 Voting Rights of Securityholders. Holders of Securities
shall have the following voting rights:
(a) Except as otherwise provided herein, each Holder shall be
entitled to such number of votes for each Security held by him on all
matters submitted to a vote of
705179.13
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holders of Common Stock as shall be equal to the largest number of
whole shares of Common Stock into which all of such Holder's Securities
are then convertible.
(b) Except as otherwise provided herein or by law, the Holders
and the holders of Common Stock shall vote together as one class on all
matters submitted to a vote of the Corporation's stockholders.
(c) The Corporation shall not (A) consolidate with or merge
into any other person in any transaction in which the Corporation is
not the continuing or surviving corporation, (B) permit any other
person to consolidate with or merge into the Corporation in any
transaction in which the Corporation is the continuing or surviving
person, but the Common Stock is changed into or exchanged for stock or
other securities of any other person or cash or any other property, or
(C) transfer all or substantially all of its properties or assets to
any other person, unless such transaction is approved by Holders of a
majority in principal amount of the outstanding Securities, voting
together as a separate class, except that, in the case of a merger,
consolidation or transfer to be consummated prior to October 1, 2001,
such approval shall not be required if each of the following conditions
are satisfied with respect to such merger, consolidation, sale or
transfer: (i) the holders of Common Stock will receive consideration
equal to at least $9.625 per share of Common Stock, and (ii) the
Holders will receive (x) the same consideration such holders would have
received had such Holders converted their Securities to Common Stock
immediately prior to consummation of the merger, consolidation, sale or
transfer, plus (y) an amount equal to the present value of the amount
of interest such Holders would have been entitled to receive on their
Securities if such Securities remained outstanding until October 1,
2001, discounted at a discount rate of 10% per annum, compounded
quarterly.
Section 2.06 Conversion Into Common Stock. A Security may be converted
(an "Optional Conversion") at any time, at the option of a Holder, into shares
of Common Stock, on the terms and conditions set forth below in this Section
2.06, and may be converted at the option of the Corporation as provided in
paragraph (g) of this Section 2.06.
(a) Subject to the provisions for adjustment hereinafter set
forth, each one thousand dollars ($1,000) in principal amount of
Securities shall be convertible in the manner hereinafter set forth,
into the number of fully paid and non-assessable shares of Common Stock
obtained by multiplying [THE NUMBER OF SHARES OF COMMON STOCK INTO
WHICH EACH SHARE OF 8% PREFERRED STOCK IS CONVERTIBLE ON THE DATE OF
THE EXCHANGE OF 8% PREFERRED STOCK INTO SECURITIES] by a fraction, the
numerator of which is one thousand (1,000) and the denominator of which
is [THE LIQUIDATION PREFERENCE OF EACH SHARE OF 8% PREFERRED STOCK ON
THE DATE OF THE EXCHANGE]. Upon conversion of a Security, a Holder
shall be entitled to receive all accrued and unpaid interest up to the
date of conversion of such Securities (the amount
705179.13
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of any such unpaid interest being payable in such number of shares of
Common Stock which would be issuable upon conversion of Securities
having an aggregate principal amount equal to such amount), provided
that if the conversion date is after the Record Date and before the
Interest Payment Date to which that Record Date relates, the interest
payment otherwise payable on that Interest Payment Date in respect of
such Securities shall not be paid by the Corporation.
(b) The number of shares of Common Stock into which a Security
is convertible shall be adjusted from time to time as follows:
(i) In case the Corporation shall at any time or from
time to time declare or pay any dividend on Common Stock payable in
Common Stock or effect a subdivision of the outstanding shares of its
Common Stock into a greater number of shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in Common
Stock), or combine or consolidate the outstanding shares of Common
Stock into a lesser number of shares of Common Stock, by
reclassification or otherwise, or the Corporation shall otherwise
effect a capital reorganization or reclassification of the Common Stock
permitted by the Corporation's Restated Certificate of Incorporation,
as amended, then, and in each such case, the number of shares of Common
Stock into which a Security is convertible shall be adjusted so that
the Holder shall be entitled to receive, upon the conversion thereof,
the number of shares of Common Stock or number and kind of other
securities which a Holder would have owned after giving effect to such
event had such Security been converted immediately prior to the
occurrence of such event. An adjustment made pursuant to this
subparagraph (b) shall become effective in the case of any such
dividend, immediately after the close of business on the record date
for the determination of holders of Common Stock entitled to receive
such dividend, and otherwise at the close of business on the day
immediately prior to the day upon which such corporate action becomes
effective;
(ii) In case the Corporation at any time or from time to
time shall issue rights or warrants to all holders of shares of Common
Stock entitling them (for a period expiring within 45 calendar days
after the date of issuance) to subscribe for or purchase shares of
Common Stock at a price per share (or having a conversion price per
share) less than the Current Market Price (as defined in paragraph (c)
below) per share of Common Stock on the record date fixed for the
determination of shareholders entitled to receive such right or
warrant, then, and in each such case (unless Holders shall be permitted
to subscribe for or purchase shares of Common Stock on the same basis
as though the Securities had been converted into shares of Common Stock
immediately prior to the close of business on such record date), the
number of shares of Common Stock into which each Security is
convertible shall be adjusted so that a Holder thereof shall be
entitled to receive, upon the conversion thereof, the number of shares
of Common Stock determined by multiplying (a) the number of shares of
Common Stock
705179.13
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<PAGE>
into which such Security was convertible immediately prior to such
event by (b) a fraction, the numerator of which shall be the sum of (I)
the number of shares of Common Stock outstanding on such record date
plus (II) the number of additional shares of Common Stock offered for
subscription or purchase, and the denominator of which shall be the sum
of (x) the number of shares of Common Stock outstanding on such record
date plus (y) the number of shares of Common Stock which the aggregate
consideration receivable by the Corporation for the total number of
shares of Common Stock so offered would purchase at such Current Market
Price on such record date. For purposes of this subparagraph (b)(ii),
the aggregate consideration receivable by the Corporation in connection
with the issuance of rights of warrants to subscribe for or purchase
securities convertible into Common Stock shall be deemed to be equal to
the sum of the aggregate offering price of such securities plus the
minimum aggregate amount, if any, payable upon conversion of such
securities into shares of Common Stock. An adjustment made pursuant to
this subparagraph (b)(ii), shall be made upon the issuance of any such
rights or warrants and shall be effective retroactively immediately
after the close of business on the record date fixed for the
determination of shareholders entitled to receive such rights or
warrants. For purposes of this subparagraph (b)(ii) the granting of the
right to purchase Common Stock (whether treasury shares or newly issued
shares) pursuant to any plan providing for the reinvestment of
dividends or interest payable on securities of the Corporation, and the
investment of additional optional amounts, in shares of Common Stock,
in any such case at a price per share of not less than 95% of the
current market price (determined as provided in such plans) per share
of Common Stock, shall not be deemed to constitute an issue of rights
or warrants by the Corporation within the meaning of this subparagraph
(b)(ii); and
(iii) In case the Corporation at any time or from time to
time shall declare, order, pay or make a distribution of any kind or
nature whatsoever which is permitted to be made pursuant to this
Indenture on its Common Stock, other than a dividend payable in shares
of Common Stock or rights or warrants to subscribe for shares of Common
Stock covered under 2.06(b) (ii) herein, then, and in each such case
(unless the Holders shall receive any such dividend or other
distribution on the same basis as though the Securities had been
converted into shares of Common Stock immediately prior to the close of
business on the record date for the determination of holders of Common
Stock entitled to receive such dividend or other distribution), the
number of shares of Common Stock into which each Security is
convertible shall be adjusted so that the Holder of each Security shall
be entitled to receive, upon the conversion thereof, the number of
shares of Common Stock determined by multiplying (a) the number of
shares of Common Stock into which such Security was convertible
immediately prior to the close of business on the record date fixed for
the determination of holders of Common Stock entitled to receive such
dividend or distribution by (b) a fraction, the numerator of which
shall be the Current Market Price (as defined in paragraph (c) below)
per share of Common Stock on the record date fixed for the
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determination of holders of Common Stock entitled to receive such
dividend or distribution, and the denominator of which shall be such
Current Market Price per share of Common Stock less the fair value of
such dividend or distribution (as determined in good faith by the Board
of Directors of the Corporation, a certified resolution with respect to
which shall be filed with the Trustee) payable in respect of one share
of Common Stock. An adjustment made pursuant to this subparagraph
(b)(iii) shall be made upon the opening of business on the next
business day following the date on which any such dividend or
distribution is made and shall be effective retroactively immediately
after the close of business on the record date fixed for the
determination of holders of Common Stock entitled to receive such
dividend or distribution;
(c) The term "Current Market Price" shall mean, as applied to
any class of stock on any date, the average of the daily "Closing
Prices" (as hereinafter defined) for the 20 consecutive "Trading Days"
(as hereinafter defined) immediately prior to the date in question;
provided, however, that in the event that the Current Market Price per
share of Common Stock is determined during a period which includes the
ex-dividend date for a dividend or distribution by the Corporation on
its Common Stock payable in shares of its Common Stock, or the record
date for a stock split, reverse stock split, recapitalization or
similar corporate transaction, then, and in each such case, the Current
Market Price shall be appropriately adjusted to reflect the Current
Market Price per Common Stock equivalent. The term "Closing Price" on
any day shall mean the last sales price, regular way, per share of such
stock on such day, or, if no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, as reported
in the principal consolidation transaction reporting system with
respect to securities listed or admitted to trading on the New York
Stock Exchange or, if shares of such stock are not listed or admitted
to trading on the New York Stock Exchange, as reported in the principal
consolidation transaction reporting system with respect to securities
listed on the principal national securities exchange on which the
shares of such stock are listed or admitted to trading, including for
these purposes the Nasdaq Stock Market National Market System or, if
the shares of such stock are not listed or admitted to trading on any
national securities exchange, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the National
Association of Securities Dealers Automated Quotation System ("NASDAQ")
or other similar system then in use or, if such bid and ask prices are
not reported on any such system, the fair market value of a share of
Common Stock as determined in good faith by the Board of Directors of
the Corporation. The term "Trading Day" shall mean a day on which the
principal national securities exchange on which shares of such stock
are listed or admitted to trading is open for the transaction of
business or, if the shares of such stock are not listed or admitted to
trading on any national securities exchange, a Monday, Tuesday,
Wednesday, Thursday or Friday on which banking institutions in the
Borough of Manhattan, City and State of New York, are not authorized or
obligated by law or executive order to close (a "Business Day") and on
which high bid and low asked prices are quoted on NASDAQ or, if shares
of such stock are not traded
705179.13
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on NASDAQ, by such other similar system or if shares of such stock are
not traded on any such system, a Business Day;
(d) If any adjustment in the number of shares of Common Stock
into which each Security may be converted required pursuant to this
Section 2.06 would result in an increase or decrease of less than 1% in
the number of shares of Common Stock into which each Security is then
convertible, the amount of any such adjustment shall be carried forward
and adjustment with respect thereto shall be made at the time of and
together with any subsequent adjustment which, together with such
amount and any other amount or amounts so carried forward, shall
aggregate at least 1% of the number of shares of Common Stock into
which each Security is then convertible. All calculations under this
Section 2.06 shall be made to the nearest one-hundredth of a share;
(e) The Board of Directors may, but shall not be required to,
increase the number of shares of Common Stock into which each Security
may be converted, in addition to the adjustments required by Section
2.06(b), as shall be determined by it (as evidenced by a resolution of
the Board of Directors) to be advisable in order to avoid or diminish
any income deemed to be received by any holder of the Common Stock or
the Securities resulting from any dividend or distribution of stock or
issuance of rights or warrants to purchase or subscribe for stock or
from any event treated as such for federal income tax purposes;
(f) A Holder of any of the Securities electing to make an
Optional Conversion shall do so by surrendering for such purpose to the
Corporation, at its principal office or at such other office or agency
maintained by the Corporation for that purpose, the Securities to be
converted accompanied by a written notice stating that such Holder
elects to convert all or a specified whole number of such Securities in
accordance with the provisions of this Section 2.06(f) and specifying
the name or names in which such Holder wishes the certificate or
certificates for shares of Common Stock to be issued. In case such
notice shall specify a name or names other than that of such Holder,
such notice shall be accompanied by payment of all transfer taxes
payable upon the issuance of shares of Common Stock in such name or
names. As promptly as practicable, and in any event within five
business days after the surrender of such Securities and the receipt of
such notice relating thereto and, if applicable, payment of all
transfer taxes, the Corporation shall deliver or cause to be delivered
certificates representing the number of validly issued, fully paid and
nonassessable shares of Common Stock to which a Holder of the
Securities so converted shall be entitled. Such conversions shall be
deemed to have been made at the close of business on the date of giving
of such notice and of such surrender of the Securities to be converted
so that the rights of a Holder shall cease except for the right to
receive Common Stock in accordance herewith, and the converting Holder
shall be treated for all purposes as having become the record holder of
such Common Stock at such time;
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(g) The Corporation shall have the right, from time to time,
on or after October 1, 2001, in its sole discretion, to convert the
Securities in tranches having an aggregate Principal amount of $50
million on each occasion, into the shares of Common Stock, as follows:
(i) If at any time on or after October 1, 2001 the
Common Stock is (i) listed on a national securities exchange or
included for quotation on the National Market System of the NASDAQ
Stock Market and (ii) the Closing Price of the Common Stock on the
National Market System of the NASDAQ Stock Market or on such national
securities exchange exceeds $11.55 per share (the "Test Amount") for
each Trading Day (as defined in paragraph (c) above) during a Testing
Period (as defined below), the Corporation shall have the right, in its
sole discretion, to convert Securities into shares of Common Stock,
which conversion shall become effective as of a date no earlier than
ten (10) days and no later than forty (40) days following the end of
the relevant Testing Period, provided that the Corporation shall not
have the right to convert Securities having an aggregate principal
amount of more than $50 million with respect to any single Testing
Period. Any such conversion compelled by the Corporation shall be
referred to herein as a "Forced Conversion." The Test Amount shall be
appropriately adjusted in connection with any stock split, stock
dividend, reverse stock split, recapitalization or similar corporate
transaction.
(ii) The Securities held by each Holder shall be converted
on a pro rata basis on any Forced Conversion. The transfer agent shall
give holders of the Securities written notice of the Forced Conversion
at least ten (10) days prior to the effective date thereof, which
notice shall specify (A) the effective date, (B) the Testing Period
utilized, (C) the aggregate value of the Securities to be converted,
(D) the pro-ration factor, if less than all Securities are to be
converted and (E) the number of shares of Common Stock into which each
Security shall be converted pursuant to the Forced Conversion. Any
period of ten (10) consecutive Trading Days that does not precede or
include a previously announced effective date of a Forced Conversion
shall be referred to herein as a "Testing Period."
(iii) Following a Forced Conversion, the Holders shall have
the right to receive certificates representing the shares of Common
Stock into which the Securities have been converted by surrendering to
the Corporation, at its principal office or at such other office or
agency maintained by the Corporation for that purpose, the applicable
Securities. As promptly as practicable, and in any event within five
business days after the surrender of the Securities, the Corporation
shall deliver or cause to be delivered certificates representing the
number of validly issued, fully paid and nonassessable shares Common
Stock to which the Holder of the Securities so converted shall be
entitled. Upon a Forced Conversion, the rights of the Holders of the
Securities shall cease except for the right to receive Common Stock in
accordance herewith, and
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the Holder shall be treated for all purposes as having become the
record holder of such Common Stock at such time;
(iv) Upon the Forced Conversion of the Securities, the
Holders thereof shall be entitled to receive payment of all accrued and
unpaid interest to the effective date of the conversion (the amount of
such unpaid interest being payable in such number of shares of Common
Stock which would be issuable upon conversion of the Securities having
an aggregate principal amount equal to such amount) in respect of the
shares so converted, provided that if the conversion date is after the
Record Date and before the Interest Payment Date to which that Interest
Record Date relates, the interest otherwise payable on that Interest
Payment Date in respect of the Securities so converted shall not be
paid by the Corporation.
(h) In connection with the conversion of the Securities, no
fractions of shares of Common Stock shall be issued, but the
Corporation shall pay a cash adjustment in respect of such fractional
interest in an amount equal to the market value of such fractional
interest. In such event, the market value of a share of Common Stock
shall be the Closing Price of such shares on the last business day on
which such shares were traded immediately preceding the date upon which
the Securities are deemed to have been converted.
Section 2.07 Adjustments For Consolidation, Merger, etc. In case (i)
the Corporation shall consolidate with or merge into any other person and shall
not be the continuing or surviving corporation of such consolidation or merger,
(ii) any other person shall consolidate with or merge into the Corporation and
the Corporation shall be the continuing or surviving person, but, in connection
with such consolidation or merger, the Common Stock shall be changed into or
exchanged for stock or other securities of any other person or cash or any other
property, or (iii) the Corporation shall transfer all or substantially all of
its properties or its assets to any other person, then, and in each such case,
each Security shall, upon the effective date of such event, thereafter represent
the right to receive the number of shares of stock or other securities or cash
or other property which the Holder would have owned after giving effect to such
event had such Security been converted into Common Stock pursuant to Section
2.06 immediately prior to the occurrence of such event, plus any additional
shares of stock or other securities or cash or other property payable by the
terms of such event to the Holders.
Section 2.08 Reports as to Adjustments. Whenever the number of shares
of Common Stock into which the Securities are convertible is adjusted as
provided in Section 2.06, the Corporation shall (i) promptly compute such
adjustment and furnish to the Trustee and the Registrar a certificate, signed by
a principal financial officer of the Corporation, setting forth the number of
shares of Common Stock, or the number and kind of any other securities, into
which each Security is convertible as a result of such adjustment, a brief
statement of the facts requiring such adjustment and the computation thereof and
when such adjustment will become
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effective and (ii) promptly mail to the Holders a notice stating that the number
of shares into which the Securities are convertible has been adjusted and
setting forth the new number of shares into which the Securities are convertible
as a result of such adjustment and when such adjustment will become effective
and the basis for such adjustment in appropriate detail.
Section 2.09 Notices of Corporate Action. In the event of:
(a) any taking by the Corporation of a record of the holders
of its Common Stock for the purpose of determining the holders thereof
who are entitled to receive any distribution or any right or warrant
permitted to be distributed or given to the holder of Common Stock in
accordance with Article VI of the Corporation's Restated Certificate of
Incorporation (other than a dividend payable solely in shares of Common
Stock).
(b) any capital reorganization, reclassification or
recapitalization of the Corporation (other than a subdivision or
combination of the outstanding shares of its Common Stock), any
consolidation or merger involving the Corporation and any other person
(other than a consolidation or merger with a wholly-owned subsidiary of
the Corporation, provided that the Corporation is the surviving or the
continuing corporation and no change occurs in the Common Stock), or
any transfer of all or substantially all the assets of the Corporation
to any other person; or
(c) any voluntary or involuntary dissolution, liquidation or
winding up of the Corporation;
then, and in each such case, the Corporation shall cause to be mailed to the
Trustee and to the Holders, at least 20 days (or 10 days in case of any event
specified in clause (a) above) prior to the applicable record or effective date
hereinafter specified, a notice stating (i) the date or expected date on which
any such record is to be taken for the purpose of such distribution or right and
the amount and character of such distribution or right or (ii) the date or
expected date on which any such reorganization, reclassification,
recapitalization, consolidation, merger, transfer, dissolution, liquidation or
winding up is to take place and the time, if any such time is to be fixed, as of
which the Holders shall be entitled to exchange their shares of Common Stock
into which their Securities are convertible or other property deliverable upon
such reorganization, reclassification, recapitalization, consolidation, merger,
transfer, dissolution, liquidation or winding up. Such notice shall also state
whether such transaction will result in any adjustment in the number of shares
of Common Stock, or kind and number of any other securities, into which shares
of the 8% Preferred Stock are convertible and, if so, shall state the new number
of shares of Common Stock, or kind and number of any other securities, into
which Securities shall be convertible upon such adjustment and when such
adjustment will become effective. The failure to give any notice required by
this Section 2.09, or any defect therein, shall not affect the legality or
validity of any such action requiring such notice.
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Section 2.10 Securityholder Lists. The Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available to it
of the names and addresses of Securityholders. If the Trustee is not the
Registrar, the Corporation shall furnish to the Trustee at least 10 days before
each Interest Payment Date and at such other times as the Trustee may request in
writing all information in the possession or control of the Corporation or any
Paying Agent as to the names and addresses of the Securityholders in such form
and as of such date as the Trustee may reasonably require.
Section 2.11 Transfer and Exchange. When Securities are presented to
the Registrar or a co-Registrar with a request to register the transfer of such
Securities or to exchange them for an equal principal amount of Securities of
authorized denominations of $100 (or such greater amount as may be required by
applicable State or Federal law) and integral multiples of $100 in excess
thereof, the Registrar shall register the transfer or make the exchange if its
requirements for such transactions are met. To permit registrations of transfers
and exchanges, the Corporation shall execute and the Trustee shall authenticate
Securities at the Registrar's request. The Trustee, the Registrar and the Paying
Agent shall be entitled to rely on such representation in authenticating,
registering the transfer or exchange of, or making of payments on, the
Securities.
The Registrar shall not be required (i) to issue, register the transfer
of or exchange Securities during a period beginning at the opening of 15
Business Days before the day of any selection of Securities for conversion under
Section 2.06(g) or for redemption under Section 10.01 and ending at that close
of business on the day of such selection, or (ii) to register the transfer of or
exchange any Security so selected for conversion or redemption in whole or in
part, except for the unconverted or unredeemed portion of any Security being
converted or redeemed in part.
Section 2.12 Replacement Securities. If the Holder of a mutilated
Security surrenders such Security to the Trustee, the Corporation shall execute
and the Trustee shall authenticate and deliver in exchange therefor a new
Security of like tenor and principal amount and bearing a number not
contemporaneously outstanding.
If the Holder of a Security claims that the Security has been lost,
destroyed or wrongfully taken, the Corporation shall issue and the Trustee shall
authenticate a replacement Security if the Trustee's requirements are met. If
required by the Trustee or the Corporation, such Holder shall provide an
indemnity bond sufficient in the judgment of both the Corporation and the
Trustee to protect the Corporation, the Trustee, any Agent or any authenticating
agent from any loss which any of them may suffer if a Security is replaced. The
Corporation may charge for its expenses in replacing a Security.
Every replacement Security issued under this Section shall constitute
an obligation of the Corporation, entitled to all the benefits of this Indenture
equally and proportionately with any and all other Securities.
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Section 2.13 Outstanding Securities. The Securities outstanding at any
time are all the Securities authenticated by the Trustee except for those
canceled 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 2.12, 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 3.01, they cease to be
outstanding and interest on them ceases to accrue.
A Security does not cease to be outstanding because the Corporation or
an Affiliate of the Corporation holds the Security.
Section 2.14 Treasury Securities. In determining whether the Holders of
the required principal amount of Securities have concurred in any direction,
vote, waiver or consent, Securities owned by the Corporation or an Affiliate of
the Corporation shall be considered as though they are not outstanding, except
that for the purposes of determining whether the Trustee or the Corporation
shall be protected in relying on any such direction, vote, waiver or consent,
only Securities which the Trustee actually knows are so owned shall be so
disregarded.
Section 2.15 Temporary Securities. Until definitive Securities are
ready for delivery, the Corporation may prepare and the Trustee shall, upon
Order of the Corporation, authenticate temporary Securities. Temporary
Securities shall be substantially in the form of definitive Securities but may
have variations that the Corporation considers appropriate for temporary
Securities including, without limitation, a legend stating that such temporary
Security is a temporary Security. Without unreasonable delay, the Corporation
shall prepare and the Trustee shall authenticate definitive Securities in
exchange for temporary Securities. Until such exchange, such temporary
Securities shall be entitled to the same rights, benefits and privileges as the
definitive Securities.
Section 2.16 Cancellation. The Corporation at any time may deliver
Securities to the Trustee for cancellation. The Registrar and Paying Agent shall
forward to the Trustee any Securities surrendered to them for registration of
transfer, exchange or payment. The Trustee shall cancel all Securities
surrendered for registration of transfer, exchange, payment, replacement or
cancellation and shall destroy canceled Securities and deliver a certificate of
such destruction to the Corporation, unless the Corporation directs the Trustee
to deliver canceled Securities to the Corporation. The Corporation may not issue
new Securities to replace securities that it has paid or that have been
delivered to the Trustee for cancellation.
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Section 2.17 Certain Limitations on Securities. Notwithstanding
anything to the contrary in this Indenture (or in any related document):
(a) In the event that the obligations represented by the
Securities are assumed in full by another corporation, which shall
succeed by merger or otherwise to substantially all of the assets and
the business of the Corporation, and payment or provision for payment
shall have been made in respect of all matured installments of interest
upon the Securities together with all matured installments of principal
on such Securities which shall have become due otherwise than by
acceleration, then any default caused by the appointment of a receiver
for the Corporation shall be deemed to have been cured, and any
declaration consequent upon such default declaring the principal and
interest on the Securities to be immediately due and payable shall be
deemed to have been rescinded.
(b) The Securities are unsecured by the assets of the
Corporation, or any of its affiliates.
(c) The Securities are subordinated and junior in right of
payment to all Indebtedness of the Corporation, whether secured or
unsecured, other than Indebtedness Ranking Junior to the Securities and
Indebtedness Ranking on a Parity with the Securities.
(d) The Securities are ineligible as collateral for a loan by
the Corporation.
ARTICLE III
COVENANTS
Section 3.01 Payment of Securities. The Corporation shall punctually
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 Trustee or all Paying Agents hold on that date money
designated for and sufficient to pay all principal and interest then due.
Section 3.02 Dividends, Etc. So long as any Securities are outstanding,
the Corporation shall not pay or declare, or issue by way of any capital
reorganization or reclassification, any dividend or distribution on shares of
Common Stock or on any series of capital stock, except (i) Approved Spinoff
Distributions (as defined in this paragraph), (ii) dividends or distributions
that are payable solely in shares of Common Stock or any series of capital
stock, or (iii) any rights or warrants to subscribe for or purchase shares
described in clause (ii). "Approved Spinoff Distribution" shall mean a dividend
or distribution of shares of stock having a majority of the voting power of a
subsidiary of the Corporation but only if (x)
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the dividend or distribution of those subsidiary shares is approved by a vote of
at least 75% of the members of the Corporation's board of directors and (y) the
Corporation receives a fairness opinion from a nationally recognized investment
banking firm to the effect that the adjustment of the conversion ratio of the
Securities as a result of such dividend is fair to the Holders of the Securities
from a financial point of view.
Section 3.03 Reports by Corporation.
(a) The Corporation shall file with the Trustee within 5 days
after it files them with the Commission copies of the annual and
quarterly reports and of the information, documents and other reports
which the Corporation files, or which are filed in respect of the
Corporation, with the Commission pursuant to Section 13 of the Exchange
Act and the regulations of the Commission thereunder, or any other
rules and regulations of the Commission under the Exchange Act as may
from time to time be in effect. If the Corporation is not subject to
the requirements of Section 13 of the Exchange Act, the Corporation
shall file with the Trustee, within 15 days after it would have
otherwise been required to file pursuant to the Exchange Act, financial
statements including any notes thereto, and a "Management's Discussion
and Analysis of Financial Condition and Results of Operations," both
comparable to that which the Corporation would have been required to
include in the annual and quarterly reports, information documents or
other reports (under rules currently in effect on the date hereof)
which the Corporation would have been required to file pursuant to
Section 13 of the Exchange Act.
(b) While any of the Securities are outstanding, the
Corporation shall mail to each Holder copies of the annual and
quarterly reports of the Corporation that it is required to file with
the Trustee pursuant to Section 3.03(a) (or summaries thereof) within
30 days after such filing is required to be made.
Section 3.04 Money for Security Payments to Be Held in Trust. If the
Corporation 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 in a trust or special deposit account 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 Person or otherwise disposed
of as herein provided, and will promptly notify the Trustee of its action or
failure so to act.
Whenever the Corporation shall have one or more Paying Agents, it will,
on or prior to each date for the payment of the principal of or interest on the
Securities, deposit with the Paying Agents sums sufficient to pay the principal
or interest so becoming due, such sums to be held in trust for the benefit of
the Persons entitled to such payments pursuant to the agreement referred to in
Section 2.04; and, unless such Paying Agent is the Trustee, the Corporation will
promptly notify the Trustee of its action or failure so to act.
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For the purpose of obtaining the satisfaction and discharge of this
Indenture or for any other purpose, the Corporation may at any time pay, or
direct any Paying Agent to pay, to the Trustee all sums held in trust by the
Corporation or such Paying Agent, such sums to be held by the Trustee, the
Corporation or such Paying Agent, as the case may be, shall be released from all
further liability with respect to such money.
Section 3.05 Compliance Certificate. The Corporation shall deliver to
the Trustee, within 120 days after the end of each fiscal year of the
Corporation, an Officers' Certificate stating that a review of the activities of
the Corporation and its Subsidiaries during the preceding fiscal year has been
made under the supervision of the signing Officers with a view to determining
whether the Corporation has kept, observed, performed and fulfilled its
obligations under this Indenture, and further stating, as to each such officer
signing such Certificate, that to the best of his knowledge the Corporation has
kept, observed, performed and fulfilled each and every covenant contained in
this Indenture and is not in default in the performance or observance of any of
the terms, provisions and conditions hereof (or, if a Default or Event of
Default shall have occurred, describing all such Defaults or Events of Default
of which he may have knowledge and specifying what action the Corporation is
taking or proposes to take with respect thereto) and that to the best of his
knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest on the Securities are
prohibited.
The Corporation will, so long as any of the Securities are outstanding,
deliver to the Trustee at its Corporate Trust Office, forthwith upon becoming
aware of any Default, Event of Default or default in the performance of any
covenant, agreement or condition contained in this Indenture, an Officers'
Certificate describing such Default, Event of Default or default and specifying
what action the Corporation is taking or proposes to take with respect thereto.
Any such Certificate delivered under this Section 3.05 shall comply with Section
314 of the TIA.
Section 3.06 Authorization of Common Stock. The Corporation shall at
all times reserve and keep available out of its authorized Common Stock the full
number of shares of Common Stock of the Corporation issuable upon the conversion
of all outstanding Securities.
Section 3.07 Certain Restrictions. So long as any Securities are
outstanding, the Corporation shall not:
(a) redeem or purchase or otherwise acquire for consideration
any shares of its capital stock or Securities Ranking Junior to or on a
Parity with the Securities; and
(b) permit any subsidiary of the Corporation to purchase or
otherwise acquire for consideration any shares of capital stock or
Securities Ranking Junior to or on a Parity with the Securities of the
Corporation unless the Corporation could purchase such shares or
Securities at such time and in such manner.
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(c) without the affirmative vote or consent of Holders of at
least two-thirds in principal amount of the Securities, issue any
securities representing Indebtedness ranking on parity with the
Securities or issue any Securities other than in payment of interest on
Securities.
ARTICLE IV
SUCCESSORS
Section 4.01 When Corporation May Merge, etc. Subject to Section 2.17,
the Corporation shall not consolidate or merge with or into, or transfer, sell,
lease or convey all or substantially all of its Property to, any Person unless:
(i) the corporation formed by or surviving any such
consolidation or merger, or the Person to which such transfer, sale,
lease or conveyance shall have been made, unconditionally assumes by
supplemental indenture all the obligations of the Corporation under the
Securities and this Indenture including but not limited to the due and
punctual payment of the principal of and interest on all the
Securities; and
(ii) immediately after the transaction no Default or Event
of Default exists.
The Corporation 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 and that all conditions precedent to the consummation
of the transaction under this Indenture have been met.
The surviving corporation shall be the successor Corporation, but the
predecessor Corporation in the case of a transfer, sale, lease or conveyance
shall not be released from the obligation to pay the principal of and interest
on the Securities.
The parties hereto recognize that the remedies otherwise provided in
this Indenture may not provide an adequate remedy in the case of noncompliance
by the Corporation under this Section. The parties hereto therefore agree that,
in any such case of noncompliance, the Trustee shall be entitled to seek an
injunction or specific performance of the Corporation's obligations under this
Section, or any other equitable remedies, in addition to other remedies provided
in this Indenture.
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Section 4.02 Successor Substituted. Upon any consolidation or merger,
or any transfer, sale, lease or conveyance of all or substantially all of the
assets of the Corporation in accordance with Section 4.01, the successor Person
formed by such consolidation or into which the Corporation is merged or to which
such transfer, sale, lease or conveyance is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Corporation
under this Indenture with the same effect as if such successor had been named as
the Corporation herein.
ARTICLE V
DEFAULTS AND REMEDIES
Section 5.01 Events of Default. An "Event of Default" occurs if:
(1) the Corporation defaults in the payment of the principal
on any Security when the same becomes due and payable at maturity or
upon redemption, acceleration or otherwise;
(2) the Corporation defaults in the payment of interest on any
Security when the same becomes due and payable and the Default
continues for a period of 30 days.
(3) the Corporation fails to comply with any of its other
agreements or covenants in or provisions of the Securities or this
Indenture, and such default continues for a period of 30 days after the
Trustee notifies the Corporation, or the Holders of at least 25% in
principal amount of the then-outstanding Securities notify the
Corporation and the Trustee, of such Default;
Section 5.02 Acceleration; Limitations on Acceleration. Subject to
Section 2.16, if an Event of Default occurs and is continuing, the Trustee by
notice to the Corporation, or the Holders of at least 25% in principal amount of
the then-outstanding Securities by notice to the Corporation and the Trustee,
may declare the principal and any accrued interest on all the Securities to be
due and payable. Upon such declaration the principal and interest shall be due
and payable immediately without any presentment, demand, protest or notice to
the Corporation, all of which the Corporation expressly waives.
The Holders of a majority in principal amount of the then-outstanding
Securities by notice to the Trustee may rescind an acceleration and its
consequences if:
(1) the rescission would not conflict with any judgment or
decree;
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(2) 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; and
(3) all payments then due the Trustee and any predecessor
Trustee under Section 6.07 have been made.
Section 5.03 Other Remedies. Subject to Section 2.16, if an Event of
Default occurs and is continuing, the Trustee may pursue any available remedy by
an action at law, suit in equity or other appropriate proceeding to collect the
payment of principal of 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 a Default or Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in such Default or Event of Default.
All remedies are cumulative to the extent permitted by law.
Section 5.04 Waiver of Default. The Holders of at least 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. No such waiver shall extend to any subsequent or other
Default or Event of Default.
Section 5.05 Control by Majority. The Holders of a majority in
principal amount of the then-outstanding Securities may direct the time, method
and place of conducting any pro ceeding 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, regulation or this
Indenture, is unduly prejudicial to the rights of other Securityholders or would
subject the Trustee to personal liability.
Section 5.06 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 principal amount of the
then-outstanding Securities make a request to the Trustee to pursue the
remedy;
(3) such Holder or Holders offer(s) to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or expense;
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(4) the Trustee does not comply with the request within 60
days after the receipt of the notice, the request and the offer of
indemnity; and
(5) during such 60-day period the Holders of a majority in
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 5.07 Rights of Holders to Receive Payment. Subject only to
Article IX, Section 2.16 and the provisions of Section 5.02 regarding rescission
of acceleration, notwith standing any other provision of this Indenture, the
right of any holder of a Security to receive payment of principal of and
interest on the Security on or after the due date expressed in the Security, or
to bring suit for the enforcement of any such payment on or after such date,
shall not be impaired or affected without the consent of the Holder.
Section 5.08 Collection Suit by Trustee. If an Event of Default
specified in clause (1) of Section 5.01 occurs and is continuing, the Trustee
may recover judgment in its own name and as trustee of an express trust against
the Corporation for the whole amount of principal and interest remaining unpaid
on the Securities and any compensation due the Trustee under Section 6.07.
Section 5.09 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 Corporation, its creditors
or its Property.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Securityholder 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 Securityholder in any such proceeding.
Section 5.10 Priorities. If the Trustee collects any money pursuant to
this Article V, it shall pay out the money in the following order:
First: to the Trustee for amounts due under Section 6.07;
Second: to holders of Senior Debt to the extent required by
Article IX;
Third: to Securityholders for amounts due and unpaid on the
Securities for principal and interest, ratably, without preference or
priority of any kind, according to
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the amounts due and payable on the Securities for principal and
interest, respectively; and
Fourth: to the Corporation, its successors or assigns, or to
whomever may be legally entitled to receive the remainder, or as a
court of competent jurisdiction may determine.
The Trustee may fix a record date and a payment date for any payment to
the Securityholders pursuant to this Article.
Section 5.11 Undertaking for Costs. In any suit for the enforcement of
any right or remedy under this Indenture or in any suit against the Trustee for
any action taken or omitted by it as a Trustee, a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees, against any party litigant in the
suit having due regard to the merits and good faith of the claims or defenses
made by the party litigant. This Section does not apply to a suit by the
Trustee, a suit by a Holder for the enforcement of rights set forth in Section
5.07, or a suit by Holders of at least 25% in principal amount of the
then-outstanding Securities.
ARTICLE VI
TRUSTEE
Section 6.01 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; and
(2) in the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture but shall not
be required to verify the accuracy of the contents of such
certificates or opinions. However,
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the 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 or failure to act, or its own willful 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
judgement made in good faith by a Trust Officer, unless it is
proved that the Trustee was negligent in ascertaining the
pertinent facts; and
(3) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance
with a direction received by it pursuant to Section 5.05.
(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 an 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 Corporation.
Money held in trust by the Trustee need not be segregated from other
funds except to the extent required by law.
Section 6.02 Rights of Trustee.
(a) The Trustee may rely on any document believed by it to be
genuine and to have been signed or presented by the proper person. The
Trustee need not investigate any fact or matter 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 such Certificate or Opinion.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of 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.
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Section 6.03 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 Corporation 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 6.10 and 6.11.
Section 6.04 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 Corporation's use of the proceeds from the Securities, and
it shall not be responsible for any statement in the Securities other than its
authentication.
Section 6.05 Notice of Defaults. If a Default or Event of Default has
occurred and is continuing of which a Trust Officer of the Trustee has actual
knowledge, the Trustee shall mail to Securityholders a notice of the Default or
Event of Default within 90 days after it becomes known to the Trustee. Except in
the case of a Default or Event of Default in payment of principal of or interest
on any Security, the Trustee may withhold notice if and so long as a committee
of its Trust Officers in good faith determines that withholding the notice is in
the interest of Securityholders.
Section 6.06 Reports by Trustee to Holders.
(a) Within 60 days after each April 15, the Trustee shall mail
to each Securityholder and the Corporation a brief report dated as of
such April 15 that complies with TIA Section 313(a). The Trustee shall
also comply with TIA Section 313(b)(2).
(b) In lieu of the foregoing reports, so long as this
Indenture is not qualified under the TIA, the Trustee may transmit by
mail to the Corporation a statement as to its qualifications and
eligibility hereunder, and shall transmit by mail a copy of such
statement to such Holders who have previously furnished a written
request therefor to the Trustee.
Section 6.07 Compensation and Indemnity. The Corporation 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 Corporation 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 Corporation shall indemnify the Trustee against any loss or
liability incurred by it in connection with its services hereunder except as set
forth in the next paragraph. The Trustee shall notify the Corporation promptly
of any claim for which it may seek indemnity.
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The Corporation shall settle or defend the claim and the Trustee shall cooperate
in the defense. The Trustee may have separate counsel, at the expense of the
Corporation.
The Corporation need not reimburse any expense or indemnity against any
loss or liability incurred by the Trustee through negligence or bad faith.
To secure the Corporation'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 of and
interest on particular securities.
Section 6.08 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 Corporation. The Holders of
a majority in principal amount of the then-outstanding Securities may remove the
Trustee by so notifying the Trustee and the Corporation. The Corporation may
remove the Trustee if:
(1) the Trustee fails to comply with Section 6.10;
(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 or similar law for the benefit of creditors;
(3) a custodian or public officer takes charge of the Trustee
or its Property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Corporation shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office, the
Holders of a majority in principal amount of the then-outstanding Securities may
appoint a successor Trustee to replace the successor Trustee appointed by the
Corporation.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Corporation or
the Holders of at least 10% in 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 6.10, any Securityholder
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 Corporation. 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 6.07.
Section 6.09 Successor Trustee by Merger. 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 6.10 Eligibility; Disqualification. This Indenture shall always
have a Trustee who satisfies the requirements of TIA Section 310(a)(1). The
Trustee shall always have a combined capital and surplus of at least $10 million
as set forth in its most recent published annual report of condition. 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 6.11 Preferential Collection of Claims Against Corporation. The
Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall comply with TIA Section 311(a) to the extent indicated therein.
ARTICLE VII
SATISFACTION AND DISCHARGE
Section 7.01 Satisfaction and Discharge of Indenture. This Indenture
shall cease to be of further effect (except as to (i) any rights of
substitution, registration of transfer and exchange of Securities herein
expressly provided for, (ii) rights hereunder of Holders to receive payments of
principal of, or interest on, the Securities and (iii) the rights, obligations
and immunities of the Trustee hereunder, including without limitation, its
rights under Section 6.07), and the Trustee, on the demand and at the expense of
the Corporation, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture when:
(1) either
(A) all Securities theretofore authenticated and
delivered (other than (i) Securities which have been
destroyed, lost or stolen and which have been replaced or paid
as provided in Article II, and (ii) Securities for the payment
of which money has theretofore been deposited in trust with
the Trustee or any Paying Agent or segregated and held in
trust by the Corporation and thereafter
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repaid to the Corporation or discharged from such trust, as
provided in Section 7.03) have been delivered to the Trustee
for cancellation; or
(B) the principal of all such Securities not theretofore
delivered to the Trustee for cancellation has become due and
payable and the Corporation has deposited or caused to be
deposited in trust with the Trustee, solely for the benefit of
the Holders, funds in an amount sufficient to pay and
discharge the entire Indebtedness on such Securities not
theretofore delivered to the Trustee for cancellation;
(2) the Corporation has irrevocably paid or caused to be
irrevocably paid all other sums payable hereunder by the Corporation;
and
(3) the Corporation has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for herein to be complied with by the Corporation
relating to the satisfaction and discharge of this Indenture have been
complied with.
Section 7.02 Application of Trust Money. The Trustee shall hold in
trust money deposited with it pursuant to Section 7.01. It shall apply the
deposited money through the Paying Agents and in accordance with the Indenture
to the payment of principal and Interest, on the Securities. Money so held in
trust shall not be subject to Article IX.
Section 7.03 Repayment to Corporation. Any money deposited with the
Trustee or any Paying Agent, or then held by the Corporation in trust for the
payment of principal or interest that remains unclaimed for two years after such
principal or interest has become due and payable shall be paid to the
Corporation upon request, or, if then held by the Corporation, shall be released
from such trust; provided, however, that the Trustee or such Paying Agent, may,
at the expense of the Corporation, cause to be published once in a newspaper of
general circulation in the City of New York or mail to each such Holder, notice
that such money remains unclaimed and that, after a date specified therein,
which shall not be less than 30 days from the date of such publication or
mailing, any unclaimed balance of such money then re maining will be repaid to
the Corporation. After such money has been paid to the Corporation or released
from trust, Securityholders entitled to the money must look to the Corporation
for payment as general creditors unless an applicable abandoned property law
designates another person.
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ARTICLE VIII
AMENDMENTS
Section 8.01 Without Consent of Holders. The Corporation 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 4.01;
(3) to provide for definitive Securities in exchange for
global Securities;
(4) to make any change that does not adversely affect the
legal rights hereunder of any Securityholder; or
(5) to take any action necessary to qualify this Indenture
under the TIA.
Section 8.02 With Consent of Holders. The Corporation and the Trustee
may amend this Indenture or the Securities with the written consent of the
holders of at least a majority in principal amount of the then-outstanding
Securities. However, without the consent of each Securityholder 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 or in any way
affect the terms of payment of interest on any Security;
(3) reduce the principal of or change the fixed maturity of
any Security, or change the date on which any Security may be subject
to conversion or redemption, or reduce the Redemption Price therefor;
(4) make any Security payable in money other than that stated
in the Security;
(5) make any change in Section 5.04 or 5.07 or the second
sentence of this Section 8.02;
(6) make any change in Article IX that adversely affects the
rights of any Securityholder; or
(7) make any change in Section 2.06 hereof that adversely
effects the right to convert the Securities into shares of Common
Stock.
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After an amendment under this Section becomes effective, the
Corporation shall mail to Securityholders a notice briefly describing the
amendment.
Section 8.03 Reserved.
Section 8.04 Revocation and Effect of Consents. Until an amendment or
waiver becomes effective, a consent to it by a Holder is a continuing consent by
the Holder and every subsequent Holder of a Security or portion of a Security
that evidences the same date 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 the
amendment or waiver becomes effective. An amendment or waiver becomes effective
in accordance with its terms and thereafter binds every Securityholder.
Section 8.05 Notation on or Exchange of Securities. If an amendment,
supplement or waiver changes the terms of the Securities, the Trustee may
require the Holders of such Securities to deliver them to the Trustee. The
Trustee may place an appropriate notation on such Securities about the changed
terms and return them to such Holders. Alternatively, the Corporation in
exchange for all securities may issue and the Trustee shall authenticate new
Securities that reflect the changed terms.
Section 8.06 Trustee Protected. The Trustee shall sign any amendment,
supplement or waiver if requested by the Corporation, so long as the same
complies with the requirements of this Indenture and in doing so shall be
entitled to receive, and shall be fully protected in relying upon an opinion of
counsel stating that the execution of any amendment, supplement or waiver
authorized pursuant to this Article is authorized or permitted by this
Indenture, is not inconsistent herewith and is valid and binding on the
Corporation in accordance with its terms. However, the Trustee need not sign any
amendment, supplement or waiver that adversely affects its rights, duties,
liabilities or immunities. The Corporation may not sign an amendment or
supplement until its Board of Directors approves it (a certified copy of the
resolutions in which such approval is given shall be delivered to the Trustee
prior to its signing any amendment, supplement or waiver).
Section 8.07 Rights of Holders to Receive Payment. Subject only to
Article IX, Section 2.16 and the provisions of Section 8.02 regarding rescission
of acceleration, notwith standing any other provision of this Indenture, the
right of any holder of a Security to receive payment of principal of and
interest on the Security on or after the due date expressed in the Security, or
to bring suit for the enforcement of any such payment on or after such date
shall not be impaired or affected without the consent of the Holder.
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ARTICLE IX
SUBORDINATION
Section 9.01 Agreement to Subordinate. The Corporation, and each
Securityholder by accepting a Security, agrees that the Indebtedness evidenced
by the Security is subordinated and junior in right of payment to the prior
payment in full of all Senior Debt to the extent and in the manner provided in
this Article.
Each Holder, by his acceptance of a Security, acknowledges that the
provisions of this Article are for the benefit of all holders of Senior Debt
who, in reliance upon such provisions, become holders of, or continue to hold,
Senior Debt.
Section 9.02 Subordination.
(a) The Indebtedness evidenced by the Securities shall be
subordinate and junior in right of payment to all Senior Debt to the
extent and in the manner set forth in this Section. In the event of any
insolvency, receivership, conservatorship, reorganization, dissolution,
readjustment of debt, marshaling of assets and liabilities or similar
proceedings or any liquidation relating to or winding up of the
Corporation as a whole, whether voluntary or involuntary (each, a
"Specified Event" and collectively, the "Specified Events"), the
holders of Senior Debt shall be entitled to payment in full of all
principal of, premium, if any, and interest on Senior Debt before the
Holders are entitled to any payment on account of the principal of,
premium, if any, or interest on the Securities. Subject to Section
2.17, in the event of any Specified Event, after payment in full of all
sums owing on the Senior Debt, the Holders, together with the holders
of any Indebtedness of the Corporation Ranking on a Parity with the
Securities, shall be entitled to be paid from the remaining assets of
the Corporation. In addition, during the continuance of any Specified
Event, all principal of, premium, if any, and interest on the
Securities which shall have become due and payable shall be due and
payable in full to the Securityholders entitled thereto before any
payment or other distribution shall be made on account of any
Indebtedness or other obligation of the Corporation Ranking Junior to
the Securities.
(b) If any event of default occurs and is continuing (or if
such an event of default would occur upon any payment with respect to
the Securities), as such event of default is defined in any Primary
Indebtedness or in the instrument under which such Primary Indebtedness
is outstanding, permitting the holders thereof to accelerate the
maturity thereof and if the holder or holders or a representative
thereof gives written notice of such event of default (which notice
makes specific reference to this subparagraph) to the Corporation and
the Trustee (a "Default Notice"), then, unless and until such event of
default has been cured or waived or has ceased to exist, then, during
the 180 days after the delivery of such Default Notice (the "Blockage
Period") (i) no
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payment of or with respect to the principal of, premium, if any, or
interest on the Securities (including any payment or distribution that
may be payable or deliverable to holders of Securities by reason of the
payment of any other debt of the Corporation subordinated to the
payment of the Securities), but not including any payment of interest
on the Securities paid in the form of additional Securities, shall be
made directly or indirectly by or on behalf of the Corporation and (ii)
no direct or indirect payment shall be made by or on behalf of the
Corporation with respect to any repurchase, redemption or other
retirement of any of the Securities for cash or property or otherwise.
For all purposes of this Section 9.02(b), an event of default which
existed or was continuing with respect to the Primary Indebtedness, the
holders of which initiated the Blockage Period, on the date such
Blockage Period commenced may not be or be made the basis for the
commencement of any subsequent Blockage Period by the holder or holders
of such Primary Indebtedness (or a representative of such holder or
holders) unless such event of default is cured or waived or has ceased
to exist for a period of not less than 90 consecutive days.
(c) In the event that, notwithstanding the foregoing, any
payment shall be received directly or indirectly by the Trustee or any
Holder when such payment is prohibited by Section 9.02(a) or 9.02(b),
such payment shall be held in trust for the benefit of, and shall
forthwith be paid over or delivered to, the holders of Primary
Indebtedness, of their respective representatives, or to the trustee or
trustees under any indenture pursuant to which any of such Primary
Indebtedness may have been issued, as their respective interests may
appear, but only to the extent that, upon notice from the Trustee to
the holders of Primary Indebtedness, as the case may be, that such
prohibited payment has been made, the holders of the Primary
Indebtedness notify the Trustee of the amounts then due and owing on
the Primary Indebtedness, if any, and only the amounts specified in
such notice to the Trustee shall be paid to the holders of Primary
Indebtedness.
The foregoing subordination provisions shall in no way be affected,
modified, waived or revoked by the occurrence of any Event of Default hereunder
or any acceleration of the maturity of the Securities in consequence thereof.
Section 9.03 Notice to Trustee of Specified Events; Reliance on
Certificate of Custodian. The Corporation shall give prompt written notice to
the Trustee and the Paying Agent of any Specified Event affecting the
Corporation. The Trustee and the Paying Agent shall be entitled to assume that
no Specified Event has occurred unless the Corporation has given such notice.
Upon any distribution of assets of the Corporation or payment by or on
behalf of the Corporation referred to in Section 9.02, the Trustee and the
Securityholders shall be entitled to rely upon any order or decree of a court or
governmental body of competent jurisdiction in which any proceedings relating to
a Specified Event are pending, and the Trustee and the
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Securityholders shall be entitled to rely upon a certificate of the custodian or
agent or other Person making any distribution to the Trustee or to the
Securityholders for the purpose of ascertaining the persons entitled to
participate in such distribution, the holders of Senior Debt and other
Indebtedness of the Corporation, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article.
Section 9.04 Trustee Entitled to Assume Payments Not Prohibited in
Absence of Notice.
(a) Subject to Section 2.17, nothing contained in this Article
or elsewhere in this Indenture, or in any of the Securities, shall
prevent the Corporation from making payment of or on account of the
principal of, premium, if any, or interest on the Securities, or from
depositing with the Trustee moneys for such payments, or prevent the
Trustee from making payments from moneys deposited with it hereunder
for the payment of or on account of the principal of, premium, if any,
or interest on the Securities if such payment or deposit is not
contrary to the conditions described in Section 9.02 on the date of
such payment or deposit.
(b) The Trustee shall not at any time be charged with
knowledge of the existence of any facts which would prohibit the making
of any payment to or by the Trustee, unless and until the Trustee shall
have received written notice thereof at its Corporate Trust Office from
the Corporation at least three business days prior to any payment date.
Thereafter, the Trustee shall use its best efforts to prevent any
prohibited payment under Section 9.02. Prior to the receipt of any such
written notice the Trustee shall be entitled to assume conclusively
that no such facts exist, and shall be fully protected in making any
such payment in any such event.
Section 9.05 Absolute Obligation to Pay. Subject to Section 2.17,
nothing contained in this Indenture or in the Securities shall:
(1) impair, as between the Corporation and the
Securityholders, the obligation of the Corporation, which is absolute
and unconditional, to pay the principal of and interest on the
Securities in accordance with their terms;
(2) affect the relative rights of the Securityholders and
creditors of the Corporation other than holders of Senior Debt;
(3) prevent the Trustee or any Securityholder from exercising
all or any of its available remedies upon a Default or an Event of
Default.
Section 9.06 Trustee's Rights as Holder of Senior Debt. The Trustee in
its individual or any other capacity may hold Senior Debt with the same rights
it would have if it were not the Trustee. Any Agent may do the same with like
rights.
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Section 9.07 No Implied Obligations to Holders of Senior Debt. No
implied covenants or obligations with respect to the holders of Senior Debt
shall be read into this Indenture against the Trustee. The Trustee shall not be
deemed to owe any fiduciary duty to the holders of Senior Debt and shall not be
liable to any such holder if it shall pay over or distribute to or on behalf of
Securityholders or the Corporation moneys or assets to which any holder of
Senior Debt shall be entitled.
Section 9.08 Enforceability of Subordination. The rights of any holder
of Senior Debt to enforce the subordination of the Indebtedness evidenced by the
Securities shall not be prejudiced or impaired by any act or failure to act by
the Corporation or by its failure to comply with the Indenture.
Section 9.09 Trustee Authorized to Effectuate Subordination. Each
Securityholder, by accepting a Security, authorizes and directs the Trustee on
his behalf to take such action as may be necessary or appropriate to effectuate
the subordination provided in this Article and appoints the Trustee his
attorney-in-fact for any and all such purposes.
ARTICLE X
REDEMPTION
Section 10.01 Optional Redemption; Notice of Redemption. The
Corporation may redeem all, but not less than all, of the outstanding Securities
at any time after October 1, 2001 upon payment of the Principal amount plus all
accrued and unpaid interest thereon to the date of the redemption, provided that
if the redemption date occurs after the Record Date and before the Interest
Payment Date to which that Record Date relates, the interest otherwise payable
on that Interest Payment Date shall not be paid by the Corporation.
If the Corporation elects to redeem Securities pursuant to this
subparagraph, it shall furnish to the Trustee an Officer's Certificate notifying
the Trustee of the Redemption Date at least 50 days but not more than 90 days
before such Redemption Date.
Section 10.02 Notice of Redemption. At least 30 days but not more than
60 days before a Redemption Date, the Trustee shall mail a notice of redemption
by first-class mail to each Holder stating that the Securities are to be
redeemed in the Corporation's name and at its expense.
The notice shall state:
(1) the Redemption Date;
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(2) the Redemption Price and the amount of accrued and unpaid
interest to be paid;
(3) the name and address of the Paying Agent or Agents; and
(4) that the Securities must be surrendered to a Paying Agent
to collect the Redemption Price.
Section 10.03 Effect of Notice of Redemption. Once notice of redemption
is mailed, the Securities called for redemption become due and payable on the
specified Redemption Date at the Redemption Price plus accrued and unpaid
interest to the Redemption Date.
Section 10.04 Deposit of the Redemption Price.
(a) On the Redemption Date, the Corporation shall deposit for
the pro-rata benefit of the Holders of the Securities the funds
necessary for the payment of the Redemption Price with a bank or trust
company in the Borough of Manhattan, The City of New York, having a
capital and surplus of at least $100,000,000. Holders shall thereafter
have the right to receive payment of the Redemption Price for such
Securities by surrendering to the Corporation, at its principal office
or at such other office or agency maintained by the Corporation for
that purpose, the Securities to the Corporation, at its principal
office or at such other office or agency maintained by the Corporation
for that purpose. Any monies so deposited by the Corporation with a
bank or trust company pursuant to this subparagraph (a) and unclaimed
at the end of five years from the Redemption Date shall revert to the
general funds of the Corporation. After such reversion, any such bank
or trust company shall, upon demand, pay over to the Corporation such
unclaimed amounts and thereupon such bank or trust company shall be
relieved of all responsibility in respect thereof to such Holder and
such Holder shall look only to the Corporation for the payment of the
Redemption Price. Any interest accrued on funds so deposited pursuant
to this paragraph (a) shall be paid from time to time to the
Corporation for its own account; and
(b) Upon the deposit for funds pursuant to subparagraph (a) of
this Section in respect of outstanding Securities, the Securities
represented thereby shall no longer be deemed outstanding, the rights
to receive interest thereon shall cease to accrue from and after the
Redemption Date and all rights of the Holders shall cease and
terminate, excepting only the right to receive the Redemption Price
therefor.
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ARTICLE XI
MISCELLANEOUS
Section 11.01 Trust Indenture Act Controls. Any provision of this
Indenture which would be required to be contained herein if the Indenture were
qualified under the TIA shall be construed and interpreted in accordance with
interpretations of the TIA by courts and the Commission.
Section 11.02 Notices. Any notice or communication to the Corporation
or the Trustee is duly given if in writing and delivered in person or mailed by
first-class mail to the following address:
The Corporation's address is:
Toy Biz, Inc.
685 Third Avenue
New York, New York 10017
Attention: Chief Executive Officer
The Trustee's address is:
[ ]
[ ]
[ ]
Attention: [ ]
Telephone: [ ]
Telecopy: [ ]
With respect to notices between the Trustee and the Corporation only,
notices may also be given by facsimile transmission with receipt confirmed by
telephone and followed by an original sent by guaranteed overnight courier.
The Corporation 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 in writing and
mailed by first-class mail to his address shown on the register kept by the
Registrar. Failure to mail a notice or a communication to a Securityholder or
any defect in it shall not affect its sufficiency with respect to other
Securityholders.
705179.13
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<PAGE>
If a notice or communication is delivered or mailed, as the case may
be, in the manner provided above within the time prescribed, it is duly given,
whether or not the addressee receives it.
If the Corporation mails a notice or communication to Securityholders,
it shall mail a copy to the Trustee and each Agent at the same time.
Section 11.03 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 Trustee shall comply with the provisions of TIA Section 312(b).
The Corporation, the Trustee, the Registrar and anyone else shall have the
protection of TIA Section 312(c).
Section 11.04 Certificate and Opinion as to Conditions Present. Upon
any request or application by the Corporation to the Trustee to take any action
under this Indenture, the Corporation 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 11.05 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.
705179.13
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<PAGE>
Section 11.06 Rules by Trustee and Agents. The Trustee may make
reasonable rules for action by or a meeting of Securityholders. The Registrar or
Paying Agents may make reasonable rules and set reasonable requirements for
their functions.
Section 11.07 Legal Holidays. A "Legal Holiday" with respect to any
place is a Saturday, a Sunday or a day on which banking institutions are not
required to be open in such place. If a payment date is a Legal Holiday at a
place of payment, payment may be made at the place on the next succeeding day
that is not a Legal Holiday, and no interest shall accrue for the intervening
period.
Section 11.08 No Recourse Against Others. The Securities and the
obligations of the Corporation under this Indenture are solely obligations of
the Corporation and no officer, director, employee or stockholder shall as such
be liable for any failure by the Corporation to pay amounts on the Securities
when due or perform any such obligation.
Section 11.09 Duplicate Originals. The parties may sign any number of
copies of this Indenture. One signed copy is enough to prove this Indenture.
Section 11.10 Governing Law. The internal laws of the State of Delaware
shall govern this Indenture and the Securities.
Section 11.11 No Adverse Interpretation of Other Agreements. This
Indenture may not be used to interpret another indenture, loan or debt agreement
of the Corporation or a Sub sidiary. Any such indenture, loan or debt agreement
may not be used to interpret this Indenture.
Section 11.12 Successors. All agreements of the Corporation in this
Indenture and the Securities shall bind its successor. All agreements of the
Trustee in this Indenture shall bind its successor.
Section 11.13 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.
Section 11.14 Table of Contents, Headings, etc. The Table of Contents
and headings of the Articles and Sections of this Indenture have been inserted
for the convenience of reference only, are not to be considered a part thereof,
and shall in no way modify or restrict any of the terms or provisions hereof.
705179.13
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their names to be
signed hereto by their respective officers thereunto duly authorized as of the
day and year first above written.
TOY BIZ, INC.
By:_____________________________________
Name:
Title:
Attest:
______________________________
[ ]
as Trustee
By:_____________________________________
Name:
Title:
Attest:
______________________________
705179.13
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<PAGE>
Exhibit 1
[Form of Face of Security1]
THE DEBENTURES EVIDENCED BY THIS CERTIFICATE MAY BE ISSUED AND TRANSFERRED ONLY
IN DENOMINATIONS OF $100 AND INTEGRAL MULTIPLES THEREOF (OR SUCH GREATER AMOUNT
AS MAY BE REQUIRED BY APPLICABLE STATE OR FEDERAL LAW).
No. __________ $__________
TOY BIZ, INC.
8% Convertible Subordinated Voting Debentures due 2011
Toy Biz, Inc., a Delaware corporation, promises to pay ___________ or
registered assigns, the principal sum of ____________ Dollars on October 1,
2011, unless earlier redeemed or accelerated after an Event of Default on the
terms and in the manner described in the Indenture, as hereinafter defined, and
to pay interest thereon at the rate of 8% per annum. Payment of principal and
interest shall be made in the method and subject to the terms set forth in
provisions appearing on the reverse hereof, which provisions, in their entirety,
shall for all purposes have the same effect as if set forth at this place.
IN WITNESS WHEREOF, Toy Biz, Inc. has caused this instrument to be executed
in its corporate name by the manual or facsimile signature of its President or a
Vice President and attested by its Secretary or an Assistant Secretary.
Dated: [ ]
TOY BIZ, INC.
(SEAL)
By: ________________________________
Attest:
By: ________________________________
------------------
1 Both the face and reverse of this form of Security are subject to change to
reflect any changes made in the Form of Indenture to which this Form of
Security is attached. No such change in the Form of Security shall be made
which materially adversely affects the rights and interests of holders of
8% Preferred Stock without the consent of the holders so affected, as
provided in the Indenture.
634635.5
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<PAGE>
FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the 8% Convertible Subordinated Voting Debentures due 2011
referred to in the within-mentioned Indenture.
Dated: [________________]
as Trustee
By: _________________________________
Authorized Signatory
634635.5
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<PAGE>
[Form of Reverse of Security]
TOY BIZ, INC.
1. The Securities. This Security is one of a duly authorized Issue of
subordinated voting debentures issued by Toy Biz, Inc., a Delaware corporation
(the "Corporation"), designated as its 8% Convertible Subordinated Voting
Debentures due October 1, 2011 and referred to hereinafter as the "Securities".
2. Interest. The Corporation promises to pay interest on the principal
amount of this Security at the rate per annum shown above. The Corporation will
pay interest on the first business day of January, April, July and October in
each year (each an "Interest Payment Date"), commencing on the first Interest
Payment Date following the date of issuance hereof. Interest on the Securities
will accrue from the most recent Interest Payment Date to which interest has
been paid or, if no interest has been paid, from the date hereof. Interest shall
be payable at the option of the Board of Directors of the Corporation (x) in
cash, (y) in additional Securities having an aggregate Principal amount equal to
the interest payment due, or (z) in any combination of cash and additional
Securities valued on such basis. Interest will be computed on the basis of a
three hundred sixty five (365) day year (or three hundred sixty six (366) days
in a leap year).
3. Method of Payment; Form. The Corporation will pay interest on the
Securities to the persons who are registered Holders of Securities at the close
of business on the last day (whether or not such day is a Business Day) of the
month preceding the month in which an Interest Payment Date (a "Record Date")
occurs even though Securities are canceled 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 Corporation will pay principal and cash
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 Corporation or the
Paying Agent may, at its election, pay principal and cash interest by check
payable in such money. It may mail an interest check to a Holder's registered
address.
4. Paying Agents and Registrar. The Trustee (as defined herein) will act as
a Paying Agent and Registrar. The Corporation may change any Paying Agent or
Registrar without notice to any Securityholder. The Corporation may act in any
such capacity.
5. Indenture. The Corporation issued the Securities under an Indenture
dated as of [ ] (the "Indenture"), between the Corporation and [ ], as trustee
(the "Trustee"). The Securities were issued pursuant to the exchange of the 8%
Cumulative Convertible Exchangeable Preferred Stock of the Corporation (the "8%
Preferred Stock") pursuant to the terms thereof. 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 as amended, and as in effect from
time to time (the "Trust Indenture Act"). The Securities are subject to all such
634635.5
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<PAGE>
terms and Securityholders are referred to the Indenture and such Act for a
statement of such terms. The Securities are unsecured general obligations of the
Corporation. The indebtedness evidenced by this Security is unsecured by the
assets of the Corporation or any of its affiliates. This Security is not
eligible as collateral for any loan by the Corporation.
6. Subordination. The Securities are subordinated to Senior Debt on
liquidation of the Corporation, any event of default in respect of Senior Debt
(as defined in the Indenture) and certain other events specified in the
Indenture.
7. Denominations, Transfer, Exchange. The Securities are in registered form
without coupons in denominations of $100 (or such greater amount as may be
required by applicable State or Federal law) and integral multiples of $100 in
excess thereof. 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 or other governmental charges 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.
8. Redemption. The Corporation may redeem all, but not less than all, of
the outstanding Securities at any time after October 1, 2001 upon payment of the
Principal amount, plus all accrued and unpaid interest thereon, provided that if
the redemption date occurs after an Record Date and before the Interest Payment
Date to which that Record Date relates, the interest otherwise payable on that
Interest Payment Date shall not be paid by the Corporation.
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.
The securities are not subject to any sinking fund.
9. Persons Deemed Owners. The registered Holder of a Security may be
treated as its owner for all purposes.
10. Amendments and Waivers. The Indenture or the Securities may be amended
with the consent of the Holders of at least a majority in principal amount of
the then-outstanding Securities, and may be amended without the consent of any
Securityholder, to cure any ambiguity, defect or inconsistency, to provide for
assumption of the Corporation's obligations to Securityholder, to make any
change that does not adversely affect the rights of any Securityholder or to
take any action necessary to qualify the Indenture under the Trust Indenture
Act.
11. Defaults and Remedies. An Event of Default is: default for 30 days in
payment of interest on the Securities; default in payment of principal or
premium on the Securities (including any sinking fund payments) when it becomes
due and payable at maturity or upon
634635.5
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<PAGE>
redemption, acceleration or otherwise; failure by the Corporation for 30
days after notice to it to comply with any of its other agreements or covenants
in the Indenture or the Securities or the Holders of at least 25% in principal
amount of the then outstanding Securities notify the Corporation and the Trustee
of such Default. Subject to paragraph 17 of this Security, if an Event of
Default occurs and is continuing, the Trustee or the Holders of at least 25% in
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 described in the Indenture, Holders
of a majority in principal amount of the then-outstanding Securities may direct
the Trustee in its exercise of any trust or power.
12. Trustee Dealings with Corporation. The Trustee in its individual or any
other capacity, may make loans to, and perform services for the Corporation or
its Affiliates, and may otherwise deal with the Corporation or its Affiliates,
as if it were not Trustee.
13. No Recourse Against Others. The Securities and the obligations of the
Corporation under the Indenture are solely obligations of the Corporation and no
officer, director, employee or stockholder of the Corporation shall as such be
liable for any failure of the Corporation to pay amounts on the Securities when
due or perform any such obligation.
14. Unclaimed Money. If money for the payment of principal of or interest
on any Security remains unclaimed for two years, the Trustee or its Agents will
pay the money back to the Corporation at the Corporation's request. After that,
Holders entitled to this money must look to the Corporation for payment, unless
a law governing abandoned property designates another person.
15. Discharge Upon Redemption or Maturity. Subject to the terms of the
Indenture, the Indenture will be discharged and canceled upon the payment of all
the Securities.
16. Authentication. This Security shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
17. Conversion. A holder of a Security may convert it into Common Stock of
the corporation at any time before the close of business on October 1, 2011.
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 the
Corporation, (3) furnish appropriate endorsements and transfer documents if
required by the Registrar or the Corporation, and (4) pay any transfer or
similar tax if required.
634635.5
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18. Certain Limitations on Securities. This Security is not secured by the
assets of the Corporation, or any of its Affiliates or Subsidiaries, and is not
eligible as collateral for any loan by the Corporation.
19. Definitions. Terms defined in the Indenture and not otherwise defined
in this Security are used in this Security with the meanings so defined.
20. 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 UNIF GIFT
MIN ACT (= Uniform Gifts to Minors Act).
The Corporation 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: Toy Biz, Inc., 685 Third
Avenue, New York, New York 10017, Attention: Chief Executive Officer.
634635.5
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<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below: For valuable
consideration, the undersigned registered Holder or Holders of this Security
assign and transfer this Security to
--------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
--------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably constitute and appoint _________________ agent transfer this
Security on the books of the Corporation. The agent may substitute another act
for him.
--------------------------------------------------------------------------------
Date: Your signature________________________________
(Sign exactly as your name appears
on the other side of this Security)
Signature Guaranteed
By____________________________________________
634635.5
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<PAGE>
CONVERSION NOTICE
To convert this Security into Common Stock of the
Company, check the box:
---------
---------
If you want the stock certificate made out in another
person's name fill in the form below:
---------
---------
(insert other person's social security tax I.D. no.)
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
(Print or type other person's name, address and zip
code)
Date: Your signature________________________________
(Sign exactly as your name appears
on the other side of this Security)
Signature Guaranteed
By____________________________________________
634635.5
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