SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(Mark One)
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarterly Period Ended May 3, 2002
or
Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Transition Period from ________ to _______.
Commission file number 000-25225
CBRL GROUP, INC.
(Exact Name of Registrant as
Specified in Its Charter)
Tennessee 62-1749513
- ------------------------------- ----------
(State or Other Jurisdiction (IRS Employer
of Incorporation or Organization) Identification No.)
Hartmann Drive, P. O. Box 787
Lebanon, Tennessee 37088-0787
-----------------------------
(Address of Principal Executive Offices)
615-444-5533
------------
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
------- ----------
52,486,912 Shares of Common Stock
Outstanding as of May 31, 2002
PART I
Item 1. Financial Statements
CBRL GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands, except share data)
(Unaudited)
May 3, August 3,
2002 2001*
---- ----
ASSETS
Current assets:
Cash and cash equivalents $ 31,981 $ 11,807
Receivables 8,180 10,201
Inventories 115,136 116,590
Prepaid expenses 12,282 10,019
Deferred income taxes 6,573 6,573
---------- ----------
Total current assets 174,152 155,190
Property and equipment - net 976,607 955,028
Goodwill - net 92,882 92,882
Other assets 15,622 9,772
---------- ----------
Total assets $1,259,263 $1,212,872
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 64,199 $ 64,939
Accrued expenses 142,541 132,110
Current maturities of long-term debt and other long-term
obligations 96 200
---------- ----------
Total current liabilities 206,836 197,249
---------- ----------
Long-term debt 195,174 125,000
---------- ----------
Other long-term obligations 46,074 44,515
---------- ----------
Shareholders' equity:
Preferred stock - 100,000,000 shares of $.01 par
value authorized, no shares issued -- --
Common stock - 400,000,000 shares of $.01 par
value authorized, at May 3, 2002, 52,504,414
shares issued and outstanding and at August 3, 2001,
55,026,846 shares issued and outstanding 525 550
Additional paid-in capital 53,996 149,073
Retained earnings 756,658 696,485
---------- ----------
Total shareholders' equity 811,179 846,108
---------- ----------
Total liabilities and shareholders' equity $1,259,263 $1,212,872
========== ==========
See notes to condensed consolidated financial statements.
(*) This condensed consolidated balance sheet has been derived from the
audited consolidated balance sheet as of August 3, 2001.
CBRL GROUP, INC.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(In thousands, except per share data)
(Unaudited)
Quarter Ended Nine Months Ended
--------------------- -----------------------
May 3, April 27, May 3, April 27,
2002 2001 2002 2001
---- ---- ---- ----
Net sales $504,730 $467,911 $1,521,963 $1,419,068
Franchise fees and royalties 320 190 802 555
-------- -------- ---------- ----------
Total revenue 505,050 468,101 1,522,765 1,419,623
Cost of goods sold 161,262 155,668 506,194 486,279
-------- -------- ---------- ----------
Gross profit 343,788 312,433 1,016,571 933,344
Labor & other related expenses 195,696 178,542 573,899 525,560
Other store operating expenses 86,486 81,970 255,718 245,524
-------- -------- ---------- ----------
Store operating income 61,606 51,921 186,954 162,260
General and administrative 28,347 24,657 87,095 75,256
Amortization of goodwill -- 999 -- 2,996
-------- -------- ---------- ----------
Operating income 33,259 26,265 99,859 84,008
Interest expense 1,535 3,014 4,616 9,790
Interest income -- 30 -- 84
-------- -------- ---------- ----------
Income before income taxes 31,724 23,281 95,243 74,302
Provision for income taxes 11,167 8,684 33,907 27,715
-------- -------- ---------- ----------
Net income $ 20,557 $ 14,597 $ 61,336 $ 46,587
======== ======== ========== ==========
Net earnings per share:
Basic $ .38 $ .26 $ 1.12 $ .83
======== ======== ========== ==========
Diluted $ .36 $ .26 $ 1.08 $ .82
======== ======== ========== ==========
Weighted average shares:
Basic 54,548 56,016 54,994 56,450
======== ======== ========== ==========
Diluted 56,693 56,911 56,823 57,113
======== ======== ========== ==========
See notes to condensed consolidated financial statements.
CBRL GROUP, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended
----------------------
May 3, April 27,
2002 2001
---- ----
Cash flows from operating activities:
Net income $ 61,336 $ 46,587
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 46,012 48,031
(Gain) loss on disposition of property and equipment (413) 80
Changes in assets and liabilities:
Inventories 1,454 (4,184)
Accounts payable (740) (2,556)
Other current assets and other current liabilities 10,189 (716)
Other assets and other long-term liabilities (4,277) 5,319
--------- ---------
Net cash provided by operating activities 113,561 92,561
--------- ---------
Cash flows from investing activities:
Purchase of property and equipment (69,997) (74,624)
Proceeds from sale of property and equipment 3,228 141,502
--------- ---------
Net cash (used in) provided by investing activities (66,769) 66,878
--------- ---------
Cash flows from financing activities:
Proceeds from issuance of long-term debt 492,556 253,700
Principal payments under long-term debt and other
long-term obligations (422,909) (395,876)
Proceeds from exercise of stock options 45,215 4,007
Purchases and retirement of common stock (140,317) (23,823)
Dividends on common stock (1,163) (1,185)
--------- ---------
Net cash used in financing activities (26,618) (163,177)
--------- ---------
Net increase (decrease) in cash and cash equivalents 20,174 (3,738)
Cash and cash equivalents, beginning of period 11,807 13,865
--------- ---------
Cash and cash equivalents, end of period $ 31,981 $ 10,127
========= =========
Supplemental disclosures of cash flow information:
Cash paid during the nine months for:
Interest $ 4,603 $ 9,780
Income taxes 32,817 30,162
See notes to condensed consolidated financial statements.
CBRL GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
- ----------------------------------------------------
(In thousands except per share amounts)
1. Condensed Consolidated Financial Statements
-------------------------------------------
The condensed consolidated balance sheet as of May 3, 2002 and the related
condensed consolidated statements of income and cash flows for the quarters and
nine-month periods ended May 3, 2002 and April 27, 2001, have been prepared by
CBRL Group, Inc. and subsidiaries (the "Company") without audit; in the opinion
of management, all adjustments for a fair presentation of such condensed
consolidated financial statements have been made.
These condensed consolidated financial statements should be read in
conjunction with the audited consolidated financial statements and notes thereto
contained in the Company's Annual Report on Form 10-K for the year ended August
3, 2001.
Deloitte & Touche LLP, the Company's independent accountants, have
performed a limited review of the financial information included herein. Their
report on such review accompanies this filing.
2. Income Taxes
------------
The provision for income taxes for the nine-month period ended May 3, 2002
has been computed based on management's estimate of the tax rate for the entire
fiscal year of 35.6%. This estimate is lower than management's previous
estimates, resulting in a 35.2% rate for the third quarter of fiscal 2002. The
variation between the statutory tax rate and the effective tax rate is due
primarily to employer tax credits for FICA taxes paid on employee tip income.
The Company's effective tax rates for the nine-month period ended April 27, 2001
and for the entire fiscal year of 2001 were 37.3% and 41.8%, respectively.
3. Seasonality
-----------
The sales and profits of the Company are affected significantly by seasonal
travel and vacation patterns because of its interstate highway locations.
Historically, the Company's greatest sales and profits have occurred during the
period of June through August. Early December through the end of February,
excluding the Christmas holidays, has historically been the period of lowest
sales and profits although retail revenues historically have been seasonally
higher between Thanksgiving and Christmas. Therefore, the results of operations
for the quarter and nine-month period ended May 3, 2002 cannot be considered
indicative of the operating results for the full fiscal year.
4. Inventories
-----------
Inventories were comprised of the following at:
May 3, August 3,
2002 2001
---- ----
Retail $ 81,846 $ 87,445
Restaurant 17,784 15,853
Supplies 15,506 13,292
-------- --------
Total $115,136 $116,590
======== ========
5. Earnings Per Share and Weighted Average Shares
----------------------------------------------
Basic earnings per share are computed by dividing income available to
common shareholders by the weighted average number of common shares outstanding
for the reporting period. Diluted earnings per share reflect the potential
dilution that could occur if securities, options or other contracts to issue
common stock were exercised or converted into common stock. The Company's
zero-coupon convertible senior notes (see Note 10) represent potential dilutive
shares at the balance sheet date. The effect of the assumed conversion of the
zero-coupon convertible senior notes has been excluded from the calculation of
diluted earnings per share for the quarter and nine-month period ended May 3,
2002, because none of the conditions that permit conversion had been satisfied
during the respective reporting periods. Outstanding stock options issued by the
Company represent the only dilutive effect reflected in diluted weighted average
shares.
6. Comprehensive Income
--------------------
Comprehensive income is defined as the change in equity of a business
enterprise during a period from transactions and other events and circumstances
from non-owner sources. There is no difference between comprehensive income and
net income as reported by the Company for all periods shown.
7. Segment Reporting
-----------------
The Company manages its business on the basis of one reportable operating
segment. All of the Company's operations are located within the United States.
The following data are presented in accordance with Statement of Financial
Accounting Standards ("SFAS") No. 131 for all periods presented:
Quarter Ended Nine Months Ended
------------------- -----------------------
May 3, April 27, May 3, April 27,
2002 2001 2002 2001
---- ---- ---- ----
Net sales:
Restaurant $413,866 $379,365 $1,200,779 $1,103,810
Retail 90,864 88,546 321,184 315,258
-------- -------- ---------- ----------
Total net sales $504,730 $467,911 $1,521,963 $1,419,068
======== ======== ========== ==========
8. Recent Accounting Pronouncements Adopted
----------------------------------------
SFAS No. 141, "Business Combinations" requires that the purchase method of
accounting be used for all business combinations initiated after June 30, 2001
and that the use of the pooling-of-interest method is no longer allowed.
Adoption of SFAS No. 141 had no effect on the financial statements presented
herein.
Effective August 4, 2001, the Company elected early adoption of SFAS No.
142, "Goodwill and Other Intangible Assets." SFAS No. 142 eliminates the
amortization for goodwill and other intangible assets with indefinite lives.
Intangible assets with lives restricted by contractual, legal, or other means
will continue to be amortized over their useful lives. Goodwill and other
intangible assets not subject to amortization are tested for impairment annually
or more frequently if events or changes in circumstances indicate that the asset
might be impaired. SFAS No. 142 requires a two-step process for testing
impairment. First, the fair value of each reporting unit is compared to its
carrying value to determine whether an indication of impairment exists. If an
impairment is indicated, then the implied fair value of the reporting unit's
goodwill is determined by allocating the unit's fair value to its assets and
liabilities (including any unrecognized intangible assets) as if the reporting
unit had been acquired in a business combination. The amount of impairment for
goodwill and other intangible assets is measured as the excess of its carrying
value over its implied fair value. The Company conducted the initial test of the
carrying value of its goodwill, as required by SFAS No. 142, during the second
quarter of fiscal 2002, which ended February 1, 2002, and concluded that there
was no current indication of impairment to goodwill. In subsequent fiscal years,
the Company will also conduct its annual assessment of the carrying value of its
goodwill, as required by SFAS No. 142, during its second quarter.
In accordance with SFAS No. 142, the Company discontinued amortization of
goodwill effective August 4, 2001. The pro forma effects of the adoption of SFAS
No. 142 on net income and basic and diluted earnings per share is as follows:
Third Quarter Ended Third Quarter Ended Nine Months Ended Nine Months Ended
May 3, 2002 April 27, 2001 May 3, 2002 April 27, 2001
----------- -------------- ----------- --------------
Net income, as reported $20,557 $14,597 $61,336 $46,587
Intangible amortization,
net of $0 tax -- 999 -- 2,996
------- ------- ------- -------
Net income, pro forma $20,557 $15,596 $61,336 $49,583
======= ======= ======= =======
Basic earnings per share:
Net income, as reported $.38 $.26 $1.12 $.83
Intangible amortization,
net of $0 tax -- .02 -- .05
---- ---- ----- ----
Net income, pro forma $.38 $.28 $1.12 $.88
==== ==== ===== ====
Diluted earnings per share:
Net income, as reported $.36 $.26 $1.08 $.82
Intangible amortization,
net of $0 tax -- .01 -- .05
---- ---- ----- ----
Net income, pro forma $.36 $.27 $1.08 $.87
==== ==== ===== ====
9. Impairment of Long-lived Assets
-------------------------------
The Company evaluates long-lived assets and certain identifiable
intangibles to be held and used in the business for impairment whenever events
or changes in circumstances indicate that the carrying amount of an asset may
not be recoverable. An impairment is determined by comparing estimated
undiscounted future operating cash flows to the carrying amounts of assets on a
store by store basis. If an impairment exists, the amount of impairment is
measured as the sum of the estimated discounted future operating cash flows of
such asset and the expected proceeds upon sale of the asset less its carrying
amount. Assets held for sale are reported at the lower of carrying amount or
fair value less costs to sell. The Company had no impairment loss recorded for
the quarters or nine-month periods ended May 3, 2002 and April 27, 2001.
10. Debt
----
In April 2002, the Company issued $422,050 face value at maturity of
zero-coupon convertible senior notes ("Notes"), maturing on April 3, 2032, and
received proceeds totaling $172,756 prior to debt issuance costs of $4,639. The
Company used $60,000 of the proceeds to repurchase 2,132,954 shares of its
common stock at $28.13 per share and used the remaining proceeds of $112,756 to
repay existing borrowings under its revolving bank credit facility, to fund its
debt issuance costs and for general corporate purposes. The debt costs are being
amortized over three years to the first put date. The Notes are callable at the
Company's option on or after April 3, 2007. Holders of the Notes may require the
Company to purchase all or a portion of their Notes on April 3, 2005, April 3,
2007 and every 5 years thereafter until April 3, 2027, at a purchase price equal
to the accreted value of the Notes, which includes accrued and unpaid cash
interest. Each $1,000 Note (face value at maturity) will be convertible into
10.8584 shares of the Company's common stock at an initial conversion price of
$37.69 per share, if the closing price of the Company's common stock exceeds a
specified price (initially, 120% of the accreted conversion price, and declining
...08474% per quarter thereafter to approximately 110% of the accreted conversion
price on the last day of the quarter ending January 30, 2032) for a specified
period of time (20 of the last 30 trading days) in any quarter beginning after
August 2, 2002, or otherwise upon the occurrence of certain events. The Notes
have an initial yield to maturity of 3.0%, which is being accreted over the life
of the Notes using the effective interest method. The Company may pay cash
contingent interest for the six-month period commencing April 4, 2007, and for
any six-month period thereafter if the average market price of the Notes for a
five-trading day measurement period preceding the applicable six-month period
equals 120% or more of the sum of the issue price and accrued original issue
discount for the Notes. All subsidiaries of the Company have fully and
unconditionally guaranteed on a joint and several basis the obligations under
the Notes. Each guarantor directly or indirectly is a wholly-owned subsidiary of
the parent company, CBRL Group, Inc., which has no independent assets or
operations. The Notes and the underlying common stock will be registered in the
Company's fourth fiscal quarter of this fiscal year with the Securities and
Exchange Commission to enable holders of the Notes to resell their Notes and the
shares of common stock issuable upon conversion of their Notes.
11. Litigation
----------
In Note 10 to the Consolidated Financial Statements for the fiscal year
ended August 3, 2001 contained in the Company's Annual Report on Form 10-K filed
on October 12, 2001 (which is incorporated herein by this reference for a more
complete description of such litigation), the Company reported that its Cracker
Barrel Old Country Store, Inc. subsidiary is a defendant in two pending
lawsuits, one of which has been provisionally certified as a class action. The
Company believes it has substantial defenses in each of these actions and is
defending each of them vigorously. The Company recorded a provision of $3,500 in
the consolidated financial statements in the fourth quarter of fiscal 2001 with
respect to one of these lawsuits. There has been no material development in
these two lawsuits during the quarter ended May 3, 2002.
In addition, on December 11, 2001 the Company was informed that the
attorneys representing the plaintiffs in the two cases described in the
preceding paragraph intended to file two new lawsuits against the Company's
Cracker Barrel Old Country Store, Inc. subsidiary. One of the threatened
lawsuits alleged additional wage and hour claims; the second alleged racial
discrimination in public accommodations. These two lawsuits were not served on
the Company's subsidiary until April 12, 2002. The Company believes that the
claims made in these two lawsuits are unfounded and that is has substantial
defenses to the claims made. Accordingly, it intends to defend these new claims
vigorously. Answers in both lawsuits, and in the public accommodations case a
motion to deny class certification, were filed on May 1, 2002. At this time,
however, neither the likelihood of an unfavorable outcome nor the amount of
ultimate liability, if any, with respect to these claims can be determined.
Accordingly, no provision for any potential liability has been made in the
consolidated financial statements of the Company. In the event of an unfavorable
outcome in any of these cases (including the two discussed in the preceding
paragraph), the Company's results of operations, financial position and
liquidity could be materially and adversely affected.
In addition to the litigation described in the preceding paragraphs, the
Company is a party to other legal proceedings incidental to its business. In the
opinion of management, based upon information currently available, the ultimate
liability with respect to these other actions will not materially affect the
Company's consolidated financial statements.
12. Derivative Financial Instruments and Hedging Activities
-------------------------------------------------------
The Company is exposed to market risk, such as changes in interest rates
and commodity prices. To manage the volatility relating to these exposures, the
Company nets the exposures on a consolidated basis to take advantage of natural
offsets. For the residual portion, the Company may enter into various derivative
financial instruments pursuant to the Company's policies in areas such as
counterparty exposure and hedging practices. The Company would review these
derivative financial instruments on a specific exposure basis to support hedge
accounting. The changes in fair value of these hedging instruments would be
offset in part or in whole by the corresponding changes in the fair value or
cash flows of the underlying exposures being hedged. The Company does not hold
or use derivative financial instruments for trading purposes. The Company's
historical practice has been not to enter into derivative financial instruments.
The Company's policy has been to manage interest cost using a mix of fixed
and variable rate debt. The Company has accomplished this objective through the
use of interest rate swaps, sale-leaseback transactions and/or zero-coupon
convertible debt. In an interest rate swap, the Company agrees to exchange, at
specified intervals, the difference between fixed and variable interest amounts
calculated by reference to an agreed-upon notional amount. In a sale-leaseback
transaction, the Company finances its operating facilities by selling them to a
third party and then leasing them back under a long-term operating lease at
fixed terms. The Company's zero-coupon convertible debt is fixed-rate, long-term
debt. See Note 10 for a further description of this zero-coupon convertible
debt. See Note 12 to the Consolidated Financial Statements for the fiscal year
ended August 3, 2001 contained in the Company's Annual Report on Form 10-K filed
on October 12, 2001.
Many of the food products purchased by the Company are affected by
commodity pricing and are, therefore, subject to price volatility caused by
weather, production problems, delivery difficulties and other factors which are
outside the control of the Company and which are generally unpredictable.
Changes in commodity prices would affect the Company and its competitors
generally and often simultaneously. In many cases, the Company believes it will
be able to pass through any increased commodity costs by adjusting its menu
pricing. From time to time, competitive circumstances may limit menu price
flexibility, and in those circumstances increases in commodity prices can result
in lower margins for the Company. Some of the Company's purchase contracts are
used to hedge commodity prices and may contain features that could be classified
as derivative financial instruments under SFAS Nos. 133, 137 and 138. However,
these features that could be classified as derivative financial instruments are
exempt from hedge accounting based on the normal purchases exemption. The
Company presently believes that any changes in commodity pricing which cannot be
adjusted for by changes in menu pricing or other product delivery strategies
would not be material.
Upon adoption of SFAS Nos. 133, 137 and 138 on July 29, 2000 and through
May 3, 2002, the Company had no derivative financial instruments that required
hedge accounting.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
All dollar amounts reported or discussed in Part I, Item 2 of this
Quarterly Report on Form 10-Q are shown in thousands, except dollar amounts per
share. The following discussion and analysis provides information which
management believes is relevant to an assessment and understanding of the
Company's consolidated results of operations and financial condition. The
discussion should be read in conjunction with the condensed consolidated
financial statements and notes thereto. Except for specific historical
information, many of the matters discussed in this Form 10-Q may express or
imply projections of revenues or expenditures, statements of plans and
objectives or future operations or statements of future economic performance.
These, and similar statements are forward-looking statements concerning matters
that involve risks, uncertainties and other factors which may cause the actual
performance of the Company to differ materially from those expressed or implied
by these statements. All forward-looking information is provided by the Company
pursuant to the safe harbor established under the Private Securities Litigation
Reform Act of 1995 and should be evaluated in the context of these factors.
Forward-looking statements generally can be identified by the use of
forward-looking terminology such as "assumptions", "target", "guidance",
"plans", "may", "will", "would", "expect", "intend", "estimate", "anticipate",
"believe", "potential" or "continue" (or the negative of each of these terms) or
similar terminology. Factors which will affect actual results include, but are
not limited to: adverse general economic conditions including uncertain consumer
confidence effects on sales; the actual results of pending or threatened
litigation; the effects of negative publicity; commodity, workers' compensation,
group health and utility price increases; weather conditions and customer travel
activity; the effects of plans intended to improve operational execution and
performance; the effects of increased competition at Company locations on sales
and on labor recruiting, cost, and retention; the ability of and cost to the
Company to recruit, train, and retain qualified restaurant hourly and management
employees; the ability of the Company to identify successful new lines of retail
merchandise; the availability and costs of acceptable sites for development; the
acceptance of the Company's concepts as the Company continues to expand into new
markets and geographic regions; changes in interest rates affecting the
Company's financing costs; changes in or implementation of additional
governmental or regulatory rules and regulations affecting accounting, wage and
hour matters, health and safety, pensions and insurance; practical or
psychological effects of terrorist acts, or military or government responses;
other undeterminable areas of government or regulatory actions or regulations;
and other factors described from time to time in the Company's filings with the
Securities and Exchange Commission and press releases, and other communications.
Results of Operations
The following table highlights operating results by percentage
relationships to total revenue for the quarter and nine-month period ended May
3, 2002 as compared to the same periods a year ago:
Quarter Ended Nine Months Ended
----------------- -----------------
May 3, April 27, May 3, April 27,
2002 2001 2002 2001
---- ---- ---- ----
Net sales 99.9% 100.0% 100.0% 100.0%
Franchise fees and royalties 0.1 -- -- --
----- ----- ----- -----
Total revenue 100.0 100.0 100.0 100.0
Cost of goods sold 31.9 33.3 33.3 34.3
----- ----- ----- -----
Gross profit 68.1 66.7 66.7 65.7
Labor & other related expenses 38.8 38.1 37.7 37.0
Other store operating expenses 17.1 17.5 16.8 17.3
----- ----- ----- -----
Store operating income 12.2 11.1 12.2 11.4
General and administrative 5.6 5.3 5.7 5.3
Amortization of goodwill -- 0.2 -- 0.2
----- ----- ----- -----
Operating income 6.6 5.6 6.5 5.9
Interest expense 0.3 0.6 0.3 0.7
Interest income -- -- -- --
----- ----- ----- -----
Income before income taxes 6.3 5.0 6.2 5.2
Provision for income taxes 2.2 1.9 2.2 1.9
----- ----- ----- -----
Net income 4.1% 3.1% 4.0% 3.3%
===== ===== ===== =====
Average Comparable Store Sales Analysis
Quarter Ended Nine Months Ended
----------------- ------------------
May 3, April 27, May 3, April 27,
2002 2001 2002 2001
---- ---- ---- ----
Cracker Barrel (422 and 414 stores
for the quarter and nine
months, respectively)
Net sales:
Restaurant $778.6 $743.8 $2,303.5 $2,178.4
Retail 202.5 200.3 724.2 706.9
------ ------ -------- --------
Total net sales $981.1 $944.1 $3,027.7 $2,885.3
====== ====== ======== ========
Logan's (62 and 59 restaurants for $758.0 $733.3 $2,232.3 $2,171.2
the quarter and nine months,
respectively)
Total Revenue
- -------------
Total revenue for the third quarter of fiscal 2002 increased 7.9% compared
to last year's third quarter. At the Cracker Barrel Old Country Store ("Cracker
Barrel") concept, comparable store restaurant sales increased 4.7% and
comparable retail sales increased 1.1%, for a combined comparable store sales
(total net sales) increase of 3.9%. The comparable store restaurant sales
increase consisted of a 3.0% average check increase for the quarter and a 1.7%
guest traffic increase. Comparable store retail sales increased primarily due to
the increase in restaurant guest traffic. At the Logan's Roadhouse ("Logan's")
concept, comparable store sales increased 3.4%, which consisted of a 0.4%
average check increase and a 3.0% guest traffic increase. Sales from new Cracker
Barrel and Logan's stores primarily accounted for the balance of the total
revenue increase in the third quarter, partly offset by loss of revenues
associated with the closing of four Cracker Barrel units and three Logan's units
and exiting the Carmine Giardini's restaurant and gourmet market business at the
end of fiscal 2001.
Total revenue for the nine-month period ended May 3, 2002, increased 7.3%
compared to the nine-month period ended April 27, 2001. At the Cracker Barrel
concept, comparable store restaurant sales increased 5.7% and comparable retail
sales increased 2.4%, for a combined comparable store sales (total net sales)
increase of 4.9%. The comparable store restaurant sales increase consisted of a
3.0% average check increase for the nine months and a 2.7% guest traffic
increase. Comparable store retail sales increased primarily due to the increase
in restaurant guest traffic. At the Logan's concept, comparable store sales
increased 2.8%, which consisted of a 0.2% average check increase and a 2.6%
guest traffic increase. Sales from new Cracker Barrel and Logan's stores
primarily accounted for the balance of the total revenue increase in the
nine-month period ended May 3, 2002, partly offset by loss of revenues
associated with the closing of four Cracker Barrel units and three Logan's units
and exiting the Carmine Giardini's restaurant and gourmet market business at the
end of fiscal 2001.
Cost of Goods Sold
- ------------------
Cost of goods sold as a percentage of total revenue for the third quarter
of fiscal 2002 decreased to 31.9% from 33.3% in the third quarter of last year.
This decrease was primarily due to a lower mix of retail sales as a percent of
total revenues (retail has a higher cost of goods sold than restaurant), higher
average check, improvements in Cracker Barrel store-level execution, lower
markdowns of retail merchandise and lower beef, shrimp, chicken, butter and egg
prices. These decreases were partially offset by higher potato prices and lower
initial mark-ons versus the prior year.
Cost of goods sold as a percentage of total revenue for the nine-month
period ended May 3, 2002, decreased to 33.3% from 34.3% in the nine-month period
ended April 27, 2001. This decrease was primarily due to a lower mix of retail
sales as a percent of total revenues (retail has a higher cost of goods sold
than restaurant), higher average check, improvements in Cracker Barrel
store-level execution and higher initial mark-ons. These decreases were
partially offset by higher potato prices.
Labor and Other Related Expenses
- --------------------------------
Labor and other related expenses include all direct and indirect labor and
related costs incurred in store operations. Labor and other related expenses as
a percentage of total revenue increased to 38.8% in the third quarter this year
from 38.1% last year. This increase was primarily due to increases under the
store-level bonus programs, increases in wages and increases in workers'
compensation costs. These increased workers' compensation costs reflect
continued higher than expected claims cost development from claims incurred in
prior fiscal years. In the Company's fourth fiscal quarter the Company has an
independent actuary perform an annual actuarial evaluation of its expected
claims cost development to determine the appropriate workers' compensation
reserve as of its third fiscal quarter. The Company then uses this actuary
report and management's judgment based on actual claims development since the
last actuarial evaluation to update the workers' compensation reserve. In the
third quarter, the Company retained the independent actuary to prepare an
update, although not a full actuarial analysis, of its earlier evaluation
because certain historical claims experience appeared to be developing to a
greater degree than had been expected from the earlier actuarially determined
levels. Part of this higher development became apparent as a study by an outside
consultant revealed that a number of claims were reserved insufficiently by the
Company's outside claims administrator based on developments in those claims
during the current fiscal year. The Company does not expect this increased
workers' compensation claims development trend to continue to the same degree.
These increases were partially offset by higher average check, improved volume
and lower group health costs.
Labor and other related expenses as a percentage of total revenue increased
to 37.7% in the nine-month period ended May 3, 2002 from 37.0% in the nine-month
period ended April 27, 2001. This increase was primarily due to increases in
wages, increases under the store-level bonus programs and increases in workers'
compensation costs. These increased workers' compensation costs reflect
continued higher than expected claims cost development (as determined annually
by an independent actuarial evaluation) from claims incurred in prior fiscal
years. The Company does not expect this increased workers' compensation claims
development to continue to the same degree. These increases were partially
offset by higher average check and improved volume.
Other Store Operating Expenses
- ------------------------------
Other store operating expenses include all unit-level operating costs, the
major components of which are operating supplies, repairs and maintenance,
advertising expenses, utilities, rent and depreciation. Other store operating
expenses as a percentage of total revenue decreased to 17.1% in the third
quarter of fiscal 2002 from 17.5% in the third quarter of last year. This
decrease was primarily due to lower utility costs and operating supplies versus
the prior year, lower advertising spending at Cracker Barrel compared to a year
ago, higher average check and improved volume partially offset by higher general
liability insurance costs versus the prior year.
Other store operating expenses as a percentage of total revenue decreased
to 16.8% in the nine-month period ended May 3, 2002 from 17.3% in the nine-month
period ended April 27, 2001. This decrease was primarily due to lower utility
costs versus the prior year, lower advertising spending at Cracker Barrel
compared to a year ago, higher average check and improved volume partially
offset by higher general liability insurance costs versus the prior year.
General and Administrative Expenses
- -----------------------------------
General and administrative expenses as a percentage of total revenue
increased to 5.6% in the third quarter of fiscal 2002 from 5.3% in the third
quarter of last year. This increase was primarily due to bonus accruals
reflective of performance improvements, higher professional fees, and various
staffing and infrastructure changes not in place a year ago partially offset by
higher average check and improved volume.
General and administrative expenses as a percentage of total revenue
increased to 5.7% in the nine-month period ended May 3, 2002 from 5.3% in the
nine-month period ended April 27, 2001. This increase was primarily due to bonus
accruals reflective of performance improvements, higher professional fees, and
various staffing and infrastructure changes not in place a year ago partially
offset by higher average check and improved volume.
Interest Expense
- ----------------
Interest expense decreased to $1,535 in the third quarter of fiscal 2002
from $3,014 in the third quarter of last year. The decrease primarily resulted
from lower average interest rates and lower average outstanding debt during the
third quarter as compared to last year. During the third quarter the Company
issued $422,050 face value at maturity, 3.0% yield-to-maturity, zero-coupon,
convertible senior notes for proceeds of $172,756 prior to debt issuance costs
of $4,639, which are being amortized over three years (see footnote 10, "Debt",
to the consolidated interim financial statements for the period ending May 3,
2002, contained herein).
Interest expense decreased to $4,616 in the nine-month period ended May 3,
2002 from $9,790 in the nine-month period ended April 27, 2001. The decrease
primarily resulted from lower average interest rates and lower average
outstanding debt during the nine-month period ended May 3, 2002 as compared to
the same period last year.
Interest Income
- ---------------
Interest income decreased to $0 in the third quarter of fiscal 2002 from
$30 in the third quarter of last year. The decrease was primarily due to no
funds available for investment during the third quarter as compared to last
year.
Interest income decreased to $0 in the nine-month period ended May 3, 2002
from $84 in the nine-month period ended April 27, 2001. The decrease was
primarily due to no funds available for investment during the nine-month period
ended May 3, 2002 as compared to the same period last year.
Provision for Income Taxes
- --------------------------
The provision for income taxes as a percent of pre-tax income decreased to
35.6% in the first nine months of fiscal 2002 from 37.3% during the same period
a year ago reflective of management's estimate of the tax rate for the entire
fiscal year. This rate for fiscal 2002 is lower than management's previous
estimate, resulting in a 35.2% rate for the third quarter of fiscal 2002. The
decrease in tax rate was primarily due to the Company no longer amortizing
goodwill upon its adoption of SFAS No. 142 on August 4, 2001, in the first
quarter of fiscal 2002. See Note 8 to the Condensed Consolidated Financial
Statements.
Critical Accounting Policies
- ----------------------------
See Note 2 to the Consolidated Financial Statements for the fiscal year
ended August 3, 2001 contained in the Company's Annual Report on Form 10-K filed
on October 12, 2001. The only change since the fiscal year ended August 3, 2001,
has been the adoption of SFAS No. 142.
Impact of Recent Accounting Pronouncements Not Yet Adopted
- ----------------------------------------------------------
In July 2001, The Financial Accounting Standards Board ("FASB") issued SFAS
No. 143, "Accounting for Asset Retirement Obligations". SFAS No. 143 requires
entities to record obligations associated with the retirement of a tangible
long-lived asset as a liability upon incurring those obligations, with the
amount of the liability initially measured at fair value. Upon initially
recognizing a liability for an asset retirement obligation ("ARO"), an entity
must capitalize the cost by recognizing an increase in the carrying amount of
the related long-lived asset. Over time, the entity amortizes the liability to
its present value each period, and the entity depreciates the capitalized cost
over the useful life of the related asset. Upon settlement of the liability, an
entity either settles the obligation for its recorded amount or incurs a gain or
loss upon settlement. Upon adoption, an entity will use a cumulative-effect
approach to recognize transition amounts for existing ARO liabilities, asset
retirement costs, and accumulated depreciation. All transition amounts are to be
measured using current information known as of the adoption date, including
current assumptions and current interest rates. SFAS No. 143 will be effective
for financial statements for fiscal years beginning after June 15, 2002 and
earlier application is encouraged. The Company is evaluating the impact of the
adoption of this standard and has not yet determined the effect.
In August 2001, the FASB issued SFAS No. 144 "Accounting for the Impairment
or Disposal of Long-Lived Assets". This statement supersedes SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of" and the accounting and reporting provisions of Accounting
Principles Board Opinion No. 30 "Reporting the Results of Operations-Reporting
the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual
and Infrequently Occurring Events and Transactions". SFAS No. 144 retains the
fundamental provisions of SFAS No. 121 but eliminates the requirement to
allocate goodwill to long-lived assets to be tested for impairment. This
statement also requires discontinued operations to be carried at the lower of
cost or fair value less costs to sell and broadens the presentation of
discontinued operations to include a component of an entity rather than a
segment of a business. SFAS No. 144 is effective for fiscal years beginning
after December 15, 2001, and interim periods within those fiscal years, with
early application encouraged. The Company does not expect the adoption of this
statement to have a material impact on its results of operations or financial
position.
In May 2002, FASB issued SFAS No. 145, "Recission of FASB Statements No. 4,
44, 64, Amendment of FASB Statement No. 13, and Technical Corrections". This
Statement rescinds FASB Statement No. 4, "Reporting Gains and Losses from
Extinguishment of Debt", and an amendment of that Statement, FASB Statement No.
64, "Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements". This
Statement also rescinds FASB Statement No. 44, "Accounting for Intangible Assets
of Motor Carriers". This Statement amends FASB Statement No. 13,"Accounting for
Leases", to eliminate an inconsistency between the required accounting for
sale-leaseback transactions and the required accounting for certain lease
modifications that have economic effects that are similar to sale-leaseback
transactions. This Statement also amends other existing authoritative
pronouncements to make various technical corrections, clarify meanings, or
describe their applicability under changed conditions. The provisions of this
Statement related to the rescission of Statement 4 shall be applied in fiscal
years beginning after May 15, 2002. The provisions of this Statement related to
Statement 13 shall be effective for transactions occurring after May 15, 2002.
All other provisions of this Statement shall be effective for financial
statements issued on or after May 15, 2002. The Company is evaluating the impact
of the adoption of this standard and has not yet determined the effect.
Liquidity and Capital Resources
- -------------------------------
The Company's operating activities provided net cash of $113,561 for the
nine-month period ended May 3, 2002. Most of this cash was provided by net
income adjusted for depreciation and amortization. Increases in other assets and
decreases in accounts payable were partially offset by decreases in inventories
and other current assets and increases in other current liabilities and other
long-term obligations.
Capital expenditures were $69,997 for the nine-month period ended May 3,
2002. Construction of new stores and land purchases accounted for substantially
all of these expenditures. Capitalized interest was $79 and $276 for the quarter
and nine-month period ended May 3, 2002 as compared to $148 and $731 for the
quarter and nine-month period ended April 27, 2001, respectively. This
difference was primarily due to lower borrowing costs as compared to a year ago.
In the first quarter of fiscal 2001, the Company completed a sale-leaseback
transaction involving 65 of its owned Cracker Barrel units. Under the
transaction, the land, buildings and building improvements at the locations were
sold for net consideration of $138,325 and have been leased back for an initial
term of 21 years. Equipment was not included. The leases include specific
renewal options for up to 20 additional years and have certain financial
covenants related to fixed charge coverage for the leased units. Net rent
expense during the initial lease term will be $14,963 annually, and the assets
sold and leased back previously had depreciation expense of $2,707 annually. The
gain on the sale is being amortized over the initial lease term of 21 years. The
net proceeds from the sale were used to reduce the Company's long-term debt by
$138,300 by reducing the Company's outstanding borrowing under the revolving
bank credit facility.
The Company's internally generated cash, along with cash at August 3, 2001,
the Company's new operating leases, proceeds from stock option exercises, and
the Company's available revolver, were sufficient to finance all of its growth,
share repurchases and other cash payment obligations in the first nine months of
fiscal 2002.
The Company estimates that its capital expenditures for fiscal 2002 will be
approximately $100,000, substantially all of which will be related to the
construction of 20 new Cracker Barrel stores and nine new Logan's restaurants.
On September 12, 2001, the Company reduced its entire bank credit facility to
$250,000 from $350,000 and converted its $50,000 term loan into a revolving
loan.
Long-term debt outstanding at May 3, 2002, consisted of $173,174 of
zero-coupon convertible senior notes ("Notes"), ($422,050 face value at maturity
less $248,876 representing an unamortized debt discount) and $22,000 under the
Company's revolving bank credit facility.
In April 2002, the Company issued $422,050 face value at maturity of Notes
and received proceeds totaling $172,756 prior to debt issuance costs of $4,639.
The Company used $60,000 of the proceeds to repurchase 2,132,954 shares of its
common stock at $28.13 per share and used the remaining proceeds of $112,756 to
repay existing borrowings under its revolving bank credit facility, to fund its
debt issuance costs and for general corporate purposes. See Note 10 to the
Company's Condensed Consolidated Financial Statements for a further description
of the Notes.
On September 17, 2001, the Company announced that the Board of Directors
had authorized the repurchase of up to 3 million shares of the Company's common
stock. The purchases are to be made from time to time in the open market at
prevailing market prices. As of May 3, 2002, the Company had repurchased
2,902,242 shares of its common stock for total consideration of $80,318 or
$27.67 per share under this authorization. The Company presently expects to
complete this share repurchase authorization during the fourth quarter of fiscal
2002.
On May 23, 2002, the Company announced that the Board of Directors had
authorized the repurchase of up to an additional 1.5 million shares of the
Company's common stock. The purchases are to be made from time to time in the
open market at prevailing market prices. The Company presently expects to
complete this new share repurchase authorization during the fourth quarter of
fiscal 2002, although there can be no assurance that such repurchase actually
will be completed in that period of time.
For the nine-month period ended May 3, 2002, the Company received proceeds
of $45,215 from the exercise of stock options on 2,512,764 shares of its common
stock.
Management believes that cash at May 3, 2002, along with cash generated
from the Company's operating activities, stock option exercises and its
available revolving credit facility, will be sufficient to finance its continued
operations, its remaining share repurchase authorization and its continued
expansion plans through fiscal 2003. At May 3, 2002, the Company had $228,000
available under its revolving credit facility. The Company estimates that its
operations, stock option exercises and other sources will generate excess cash
of approximately $120,000 after capital expenditures in fiscal 2002 which it
intends to apply toward completing its current share repurchase authorization
with the remaining excess cash to be used for future share repurchase
authorizations or debt reduction.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 7A of the Company's Annual Report on Form 10-K for the fiscal year
ended August 3, 2001, and filed with the Commission on October 12, 2001, is
incorporated in this item of this report by this reference.
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors and Shareholders of
CBRL Group, Inc.
Lebanon, Tennessee
We have reviewed the accompanying condensed consolidated balance sheet of CBRL
Group, Inc. and subsidiaries (collectively, the "Company") as of May 3, 2002,
and the related condensed consolidated statements of income and cash flows for
the quarters and nine-month periods ended May 3, 2002 and April 27, 2001. These
financial statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and of making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with auditing standards generally accepted in the United States of America, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to such condensed consolidated financial statements for them to be in
conformity with accounting principles generally accepted in the United States of
America.
We have previously audited, in accordance with auditing standards generally
accepted in the United States of America, the consolidated balance sheet of CBRL
Group, Inc. and subsidiaries as of August 3, 2001, and the related consolidated
statements of income, shareholders' equity, and cash flows for the year then
ended (not presented herein); and in our report dated September 13, 2001, we
expressed an unqualified opinion on those financial statements. In our opinion,
the information set forth in the accompanying condensed consolidated balance
sheet as of August 3, 2001 is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.
DELOITTE & TOUCHE LLP
Nashville, Tennessee
June 6, 2002
PART II
Item 1. Legal Proceedings
-----------------
Part I, Item 3 of the Company's Annual Report on Form
10-K filed October 12, 2001, is incorporated in this
Form 10-Q by this reference. See also Note 11 to the
Company's Condensed Consolidated Financial Statements
filed in Part I, Item I of this Quarterly Report on
Form 10-Q, which also is incorporated in this item of
this report by this reference.
Item 2. Changes in Securities and Use of Proceeds
-----------------------------------------
On April 3, 2002 and April 9, 2002, the Company sold
an aggregate of $422,050 of zero-coupon convertible
senior notes ("Notes") maturing on April 3, 2032, for
which the Company received gross cash proceeds of
$172,756 prior to debt issuance costs of $4,639 in
private offerings to Merrill Lynch & Co., as the
initial purchaser. These Notes were resold by the
initial purchaser in transactions exempt from
registration requirements of the Securities Act of
1933, as amended ("Securities Act"), to persons
reasonably believed by the initial purchaser to be
"qualified institutional buyers" (as defined in Rule
144A under the Securities Act). The aggregate gross
underwriting discounts for these transactions was
approximately $3,887. The Company used $60,000 of the
proceeds to repurchase 2,132,954 shares of its common
stock at $28.13 per share and used the remaining
proceeds of $112,756 to repay existing borrowings
under its revolving bank credit facility, to fund its
debt issuance costs and for general corporate
purposes. See Note 10 to the Company's Condensed
Consolidated Financial Statements for a further
description of the Notes, including a discussion of
the conversion feature.
The above-described sales were made without general
solicitation or advertising. We intend to file a
registration statement on Form S-3 covering the
resale of the Notes and the common stock into which
the Notes are convertible in the fourth quarter of
fiscal 2002. All net proceeds from the sale of such
securities will go to the selling shareholders who
offer and sell their securities and we will receive
none of such proceeds.
Item 3. Defaults Upon Senior Securities
-------------------------------
None.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
None.
Item 5. Other Information
-----------------
None.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) See Exhibit Index on page 20 hereof for a listing of
the exhibits that are filed pursuant to Item 601 of
Regulation S-K.
(b) On February 25, 2002, the Company furnished a Current
Report on Form 8-K, Item 9 to report the Company's
quarter-end financial and other information. The
Company also disclosed information on current sales
trends and reaffirmed its earnings guidance for the
third fiscal quarter and full fiscal year, all as had
been announced by a press release on February 21,
2002.
On March 25, 2002, the Company furnished a Current
Report on Form 8-K, Item 9 to report the Company's
quarter-to-date information on current sales trends
and reaffirm its earnings guidance for the third
fiscal quarter and full fiscal year, all as had been
announced by a press release on March 21, 2002.
On March 29, 2002, the Company furnished a Current
Report on Form 8-K, Item 9 to report the Company's
proposed sale of its 30-year zero-coupon senior notes
that are convertible into shares of the Company's
common stock, all as had been announced by press
releases on March 27, 2002 and March 28, 2002.
On April 12, 2002, the Company furnished a Current
Report on Form 8-K, Item 9 to report the Company's
April 9, 2002 closing of the over-allotment option
granted in connection with its previously announced
30-year 3.0% zero-coupon convertible senior notes,
all as had been announced by a press release on April
10, 2002.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CBRL GROUP, INC.
Date: 6/6/02 By /s/Lawrence E. White
-------- ------------------------------------------------
Lawrence E. White, Senior Vice President/Finance
and Chief Financial Officer
Date: 6/6/02 By /s/Patrick A. Scruggs
-------- -------------------------------------------------
Patrick A. Scruggs, Assistant Treasurer
EXHIBIT INDEX
Exhibit No. Description
4.1 Registration Rights Agreement, dated as of April 3, 2002, by
and among the Company, the Guarantors (as defined therein), and
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated
4.2 Indenture, dated as of April 3, 2002, among the Company, the
Guarantors (as defined therein) and Wachovia Bank, National
Association, as trustee, relating to the Company's zero-coupon
convertible senior notes.
4.3 Form of Certificate for the Company's zero-coupon convertible
senior notes (included in the Indenture filed as Exhibit 4.2
hereof).
4.4 Form of Guarantee of the Company's zero-coupon convertible
senior notes (included in the Indenture filed as Exhibit 4.2
hereof).
10.1 Executive Employment Agreement signed January 15, 2002 between
Dan W. Evins and the Company
10.2 Executive Employment Agreement signed February 21, 2002 among
Peter W. Kehayes, the Company and Logan's Roadhouse, Inc.
10.3 CBRL Group, Inc. Long-Term Incentive Plan Cover Letter
10.4 CBRL Group, Inc. Long-Term Incentive Plan
10.5 CBRL Group, Inc. Long-Term Incentive Summary Plan Description
15 Letter regarding unaudited financial information.
EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT is made and entered into as
of April 3, 2002 by and among CBRL Group, Inc., a Tennessee corporation ("the
Company"), all domestic Subsidiaries of the Company (the "Guarantors") and
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated (the
"Initial Purchaser"), pursuant to the Purchase Agreement, dated April 3, 2002
(the "Purchase Agreement"), between the Company and the Initial Purchaser. In
order to induce the Initial Purchaser to enter into the Purchase Agreement, the
Company and the Guarantors have agreed to provide the registration rights set
forth in this Agreement. The execution of this Agreement is a condition to the
closing under the Purchase Agreement.
The Company and the Guarantors agree with the Initial
Purchaser, (i) for its benefit as Initial Purchaser and (ii) for the benefit of
the beneficial owners (including the Initial Purchaser) from time to time of the
LYONs (as defined herein), and the beneficial owners from time to time of the
Underlying Common Stock (as defined herein) issued upon conversion of LYONs
(each of the foregoing a "Holder" and together the "Holders"), as follows:
SECTION 1. Definitions. Capitalized terms used herein without
-----------
definition shall have their respective meanings set forth in the Purchase
Agreement. In addition to the terms that are defined elsewhere in this
Agreement, the following terms shall have the following meanings:
"Affiliate" with respect to any specified person, has the
-----------
meaning specified in Rule 144.
"Applicable Conversion Price" means, as of any date of
-----------------------------
determination, the Applicable Principal Amount per $1,000 principal amount at
maturity of LYONs as of such date of determination divided by the Conversion
Rate in effect as of such date of determination or, if no LYONs are then
outstanding, the Conversion Rate that would be in effect were LYONs then
outstanding.
"Applicable Principal Amount" means, as of any date of
-----------------------------
determination, (1) with respect to each $1,000 principal amount at maturity of
LYONs means the sum of the initial issue price of such LYONs ($409.30) plus
accrued original issue discount with respect to such LYON through such date of
determination, (2) if the LYONs have been converted to semiannual coupon notes
upon a Tax Event, the Restated Principal Amount with respect to the LYONs, or
(3) if no LYONs are then outstanding, such sum calculated as if such LYONs were
then outstanding.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday
--------------
and Friday that is not a day on which banking institutions in The City of New
York are authorized or obligated by law or executive order to close.
"Common Stock" means any shares of the common stock, $0.01 par
--------------
value, of the Company and any other shares of common stock as may constitute
"Common Stock" for purposes of the Indenture, including the Underlying Common
Stock.
"Conversion Rate" has the meaning assigned to such term in the
-----------------
Indenture.
"Damages Accrual Period" has the meaning specified in Section
------------------------
2(e) hereof.
"Damages Payment Date" means each April 3 and October 3.
----------------------
"Deferral Notice" has the meaning specified in Section 3(i)
-----------------
hereof.
"Deferral Period" has the meaning specified in Section 3(i)
-----------------
hereof.
"domestic Subsidiary" means any subsidiary of the Company that
---------------------
was formed under the laws of the United States or any state or political
subdivision thereof or the District of Columbia.
"Effectiveness Deadline Date" has the meaning specified in
-----------------------------
Section 2(a) hereof.
"Effectiveness Period" means the period of two years from the
----------------------
Issue Date or such shorter period ending on the date that all Registrable
Securities have ceased to be Registrable Securities.
"Event" has the meaning specified in Section 2(e) hereof.
-------
"Event Termination Date" has the meaning specified in Section
------------------------
2(e) hereof.
"Event Date" has the meaning specified in Section 2(e) hereof.
------------
"Exchange Act" means the Securities Exchange Act of 1934, as
--------------
amended, and the rules and regulations of the SEC promulgated thereunder.
"Filing Deadline Date" has the meaning specified in Section
----------------------
2(a) hereof.
"guarantee" means, as applied to any obligation, (i) a
-----------
guarantee (other than by endorsement of negotiable instruments for collection in
the ordinary course of business), direct or indirect, in any manner, of any part
or all of such obligation and (ii) an agreement, direct or indirect, contingent
or otherwise, the practical effect of which is to assure in any way the payment
or performance (or payment of damages in the event of non-performance) of all or
any part of such obligation, including, without limiting the foregoing, the
payment of amounts drawn down by letters of credit.
"Guarantee" means any guarantee of the Securities by any
-----------
domestic Subsidiary in accordance with the provisions of Article 13 of the
Indenture.
"Guarantors" means (i) each domestic Subsidiary listed as a
------------
signatory to the Indenture and (ii) each Person who becomes a Guarantor pursuant
to Article 13 and/or Section 4.08 of the Indenture.
"Holder" has the meaning specified in the second paragraph of
--------
this Agreement.
"Indenture" means the Indenture dated as of the date hereof
-----------
between the Company and First Union National Bank, as trustee, pursuant to which
the LYONs are being issued.
"Initial Purchaser" means Merrill Lynch & Co., Merrill Lynch,
-------------------
Pierce, Fenner & Smith Incorporated.
"Initial Shelf Registration Statement" has the meaning
--------------------------------------
specified in Section 2(a) hereof.
"Issue Date" means April 3, 2002.
------------
"Liquidated Damages Amount" has the meaning specified in
---------------------------
Section 2(e) hereof.
"Losses" has the meaning specified in Section 6 hereof.
--------
"LYONs" means the Liquid Yield OptionTM Notes due 2032 of the
-------
Company to be purchased pursuant to the Purchase Agreement.
"Material Event" has the meaning specified in Section 3(i)
----------------
hereof.
"Notice and Questionnaire" means a written notice delivered to
--------------------------
the Company containing substantially the information called for by the Selling
Security Holder Notice and Questionnaire attached as Annex A to the Offering
Memorandum of the Company dated March 28, 2002 relating to the LYONs.
"Notice Holder" means on any date, any Holder that has
---------------
delivered a Notice and Questionnaire to the Company on or prior to such date.
"Prospectus" means the prospectus included in any Registration
------------
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 415 promulgated under the
Securities Act), as amended or supplemented by any amendment or prospectus
supplement, including post-effective amendments, and all materials incorporated
by reference or explicitly deemed to be incorporated by reference in such
Prospectus.
"Purchase Agreement" has the meaning specified in the first
--------------------
paragraph of this Agreement.
"Record Holder" means with respect to any Damages Payment Date
---------------
relating to any LYON or shares of Underlying Common Stock as to which any
Liquidated Damages Amount has accrued, the registered holder of such LYON or
such shares of Underlying Common Stock, as the case may be, on the 15th day,
immediately prior to the next succeeding Damages Payment Date.
"Registrable Securities" means the LYONs and the Underlying
------------------------
Common Stock until such securities have been converted or exchanged and, at all
times subsequent to any such conversion or exchange, any securities into or for
which such securities have been converted or exchanged, and any security issued
with respect thereto upon any stock dividend, split, merger or similar event
until, in the case of any such security, the earliest of (i) its effective
registration under the Securities Act and resale in accordance with the
Registration Statement covering it, (ii) expiration of the holding period that
would be applicable thereto under Rule 144(k) were it not held by an Affiliate
of the Company, or (iii) its sale to the public pursuant to Rule 144.
"Registration Expenses" has the meaning specified in Section 5
-----------------------
hereof.
"Registration Statement" means any registration statement of
------------------------
the Company that covers any of the Registrable Securities pursuant to the
provisions of this Agreement, including the Prospectus, amendments and
supplements to such registration statement, including post-effective amendments,
all exhibits, and all materials incorporated by reference or explicitly deemed
to be incorporated by reference in such registration statement.
"Restated Principal Amount" has the meaning assigned to such
---------------------------
term in the Indenture.
"Restricted Securities" has the meaning assigned to such term
-----------------------
in Rule 144.
"Rule 144" means Rule 144 under the Securities Act, as such
----------
Rule may be amended from time to time, or any similar or successor rule or
regulation hereafter adopted by the SEC having substantially the same effect as
such Rule.
"Rule 144A" means Rule 144A under the Securities Act, as such
-----------
Rule may be amended from time to time, or any similar or successor rule or
regulation hereafter adopted by the SEC having substantially the same effect as
such Rule.
"SEC" means the United States Securities and Exchange
-----
Commission.
"Securities Act" means the Securities Act of 1933, as amended,
----------------
and the rules and regulations promulgated by the SEC thereunder.
"Shelf Registration Statement" has the meaning specified in
------------------------------
Section 2(a) hereof.
"Subsequent Shelf Registration Statement" has the meaning
-----------------------------------------
specified in Section 2(b) hereof.
"Tax Event" has the meaning assigned to such term in the
-----------
Indenture.
"TIA" means the Trust Indenture Act of 1939, as amended.
-----
"Trustee" means First Union National Bank., (or any successor
---------
entity), the Trustee under the Indenture.
"Underlying Common Stock" means the Common Stock into which
-------------------------
the LYONs are convertible or issued upon any such conversion.
SECTION 2. Shelf Registration.
-------------------
(a) The Company and the Guarantors shall prepare and file or
cause to be prepared and filed with the SEC no later than a date which is
ninety (90) days after the Issue Date (the "Filing Deadline Date") a
Registration Statement for an offering to be made on a delayed or continuous
basis pursuant to Rule 415 of the Securities Act (a "Shelf Registration
Statement") registering the resale from time to time by Holders of all of the
Registrable Securities (the "Initial Shelf Registration Statement"). The Initial
Shelf Registration Statement shall be on Form S-3 or another appropriate form
permitting registration of such Registrable Securities for resale by such
Holders in accordance with the methods of distribution reasonably elected by the
Holders and set forth in the Initial Shelf Registration Statement; provided,
that in no event will such method(s) of distribution take the form of an
underwritten offering of the Registrable Securities without the prior agreement
of the Company. The Company and the Guarantors shall use reasonable efforts to
cause the Initial Shelf Registration Statement to be declared effective under
the Securities Act no later than the date (the "Effectiveness Deadline Date")
that is one-hundred and eighty (180) days after the Issue Date, and to keep the
Initial Shelf Registration Statement (or any Subsequent Shelf Registration
Statement) continuously effective under the Securities Act until the expiration
of the Effectiveness Period. Each Holder that became a Notice Holder on or prior
to the date 10 Business Days prior to the time that the Initial Shelf
Registration Statement became effective shall be named as a selling security
holder in the Initial Shelf Registration Statement and the related Prospectus in
such a manner as to permit such Holder to deliver such Prospectus to purchasers
of Registrable Securities in accordance with applicable law (other than laws not
generally applicable to all such Holders). Notwithstanding the foregoing, no
Holder shall be entitled to have the Registrable Securities held by it covered
by such Shelf Registration Statement unless such Holder has provided a Notice
and Questionnaire in accordance with Section 2(d) and is in compliance with
Section 4. None of the Company's security holders (other than the Holders of
Registrable Securities) shall have the right to include any of the Company's
securities in the Shelf Registration Statement.
(b) If the Initial Shelf Registration Statement or any
Subsequent Shelf Registration Statement ceases to be effective for any
reason at any time during the Effectiveness Period, the Company and the
Guarantors shall use reasonable efforts to obtain the prompt withdrawal of any
order suspending the effectiveness thereof, and in any event shall within thirty
(30) days of such cessation of effectiveness amend the Shelf Registration
Statement in a manner reasonably expected by the Company to obtain the
withdrawal of the order suspending the effectiveness thereof, or file an
additional Shelf Registration Statement covering all of the securities that as
of the date of such filing are Registrable Securities (a "Subsequent Shelf
Registration Statement"). If a Subsequent Shelf Registration Statement is filed,
the Company shall use reasonable efforts to cause the Subsequent Shelf
Registration Statement to become effective as promptly as is reasonably
practicable after such filing or, if filed during a Deferral Period, after the
expiration of such Deferral Period, and to keep such Registration Statement (or
subsequent Shelf Registration Statement) continuously effective until the end of
the Effectiveness Period.
(c) The Company and the Guarantors shall supplement and amend
the Shelf Registration Statement if required by the rules, regulations or
instructions applicable to the registration form used by the Company for such
Shelf Registration Statement, if required by the Securities Act or, to the
extent to which the Company does not reasonably object, as reasonably requested
by the Initial Purchaser or by the Trustee on behalf of the registered Holders.
(d) Each Holder of Registrable Securities agrees that if such
Holder wishes to sell Registrable Securities pursuant to a Shelf
Registration Statement and related Prospectus, it will do so only in accordance
with this Section 2(d) and Section 3(i) and Section 4. Each Holder of
Registrable Securities wishing to sell Registrable Securities pursuant to a
Shelf Registration Statement and related Prospectus agrees to deliver a Notice
and Questionnaire to the Company at least five (5) Business Days prior to any
intended distribution of Registrable Securities under the Shelf Registration
Statement. From and after the date the Initial Shelf Registration Statement is
declared effective, the Company and the Guarantors shall, as promptly as is
reasonably practicable after the date a Notice and Questionnaire is delivered,
(i) if required by applicable law, file with the SEC a post-effective amendment
to the Shelf Registration Statement or prepare and, if required by applicable
law, file a supplement to the related Prospectus or a supplement or amendment to
any document incorporated therein by reference or file any other document
required by the SEC so that the Holder delivering such Notice and Questionnaire
is named as a selling security holder in the Shelf Registration Statement and
the related Prospectus in such a manner as to permit such Holder to deliver such
Prospectus to purchasers of the Registrable Securities in accordance with
applicable law (other than laws not generally applicable to all Holders of
Registrable Securities wishing to sell Registrable Securities pursuant to the
Shelf Registration Statement and related Prospectus) and, if the Company and the
Guarantors shall file a post-effective amendment to the Shelf Registration
Statement, use reasonable efforts to cause such post-effective amendment to be
declared effective under the Securities Act as promptly as is reasonably
practicable; (ii) provide such Holder copies of any documents filed pursuant to
Section 2(d)(i); and (iii) notify such Holder as promptly as is reasonably
practicable after the effectiveness under the Securities Act of any
post-effective amendment filed pursuant to Section 2(d)(i); provided, that if
such Notice and Questionnaire is delivered during a Deferral Period, the Company
shall so inform the Holder delivering such Notice and Questionnaire and shall
take the actions set forth in clauses (i), (ii) and (iii) above upon expiration
of the Deferral Period in accordance with Section 3(i), provided, further, that
if under applicable law the Company has more than one option as to the type or
manner of making any such filing, it will make the required filing or filings in
the manner or of a type that is reasonably expected to result in the earliest
availability of the Prospectus for effecting resales of Registrable Securities.
Notwithstanding anything contained herein to the contrary, the Company shall be
under no obligation to name any Holder that is not a Notice Holder as a selling
security holder in any Registration Statement or related Prospectus; provided,
however, that any Holder that becomes a Notice Holder pursuant to the provisions
of Section 2(d) of this Agreement (whether or not such Holder was a Notice
Holder at the time the Registration Statement was initially declared effective)
shall be named as a selling security holder in the Registration Statement or
related Prospectus subject to and in accordance with the requirements of this
Section 2(d).
(e) The parties hereto agree that the Holders of Registrable
Securities will suffer damages, and that it would not be feasible to
ascertain the extent of such damages with precision, if (i) the Initial Shelf
Registration Statement has not been filed on or prior to the Filing Deadline
Date, (ii) the Initial Shelf Registration Statement has not been declared
effective under the Securities Act on or prior to the Effectiveness Deadline
Date, or (iii) the aggregate duration of Deferral Periods in any period exceeds
the number of days permitted in respect of such period pursuant to Section 3(i)
hereof (each of the events of a type described in any of the foregoing clauses
(i) through (iii) are individually referred to herein as an "Event," and the
Filing Deadline Date in the case of clause (i), the Effectiveness Deadline Date
in the case of clause (ii), and the date on which the aggregate duration of
Deferral Periods in any period exceeds the number of days permitted by Section
3(i) hereof in the case of clause (iii), being referred to herein as an "Event
Date"). Events shall be deemed to continue until the "Event Termination Date,"
which shall be the following dates with respect to the respective types of
Events: the date the Initial Shelf Registration Statement is filed in the case
of an Event of the type described in clause (i), the date the Initial Shelf
Registration Statement is declared effective under the Securities Act in the
case of an Event of the type described in clause (ii), termination of the
Deferral Period that caused the limit on the aggregate duration of Deferral
Periods in a period set forth in Section 3(i) to be exceeded in the case of the
commencement of an Event of the type described in clause (iii).
Accordingly, commencing on (and including) any Event Date and
ending on (but excluding) the next date after an Event Termination Date (a
"Damages Accrual Period"), the Company and the Guarantors agree to pay, as
liquidated damages and not as a penalty, an amount (the "Liquidated Damages
Amount"), payable on the Damages Payment Dates to Record Holders of then
outstanding LYONs that are Registrable Securities or of then outstanding shares
of Underlying Common Stock issued upon conversion of LYONs that are Registrable
Securities, as the case may be, accruing, for each portion of such Damages
Accrual Period beginning on and including a Damages Payment Date (or, in respect
of the first time that the Liquidation Damages Amount is to be paid to Holders
on a Damages Payment Date as a result of the occurrence of any particular Event,
from the Event Date) and ending on but excluding the first to occur of (A) the
date of the end of the Damages Accrual Period or (B) the next Damages Payment
Date, at a rate per annum equal to one-quarter of one percent (0.25%) for the
first 90-day period from the Event Date, and thereafter at a rate per annum
equal to one-half of one percent (0.5%) of the aggregate Applicable Principal
Amount of such LYONs, the aggregate Applicable Conversion Price of the shares of
Underlying Common Stock and the Restated Principal Amount of the Semi-annual
Coupon Notes, as the case may be, in each case determined as of the Business Day
immediately preceding the next Damages Payment Date; provided, that any
Liquidated Damages Amount accrued with respect to any LYON or portion thereof
called for redemption on a redemption date or converted into Underlying Common
Stock on a conversion date or to Semi-annual Coupon Notes prior to the Damages
Payment Date, shall, in any such event, be paid instead to the Holder who
submitted such LYON or portion thereof for redemption or conversion on the
applicable redemption date or conversion date, as the case may be, on such date
(or promptly following the conversion date, in the case of conversion).
Notwithstanding the foregoing, no Liquidated Damages Amounts shall accrue as to
any Registrable Security from and after the earlier of (x) the date such
security is no longer a Registrable Security and (y) expiration of the
Effectiveness Period. The rate of accrual of the Liquidated Damages Amount with
respect to any period shall not exceed the rate provided for in this paragraph
notwithstanding the occurrence of multiple concurrent Events. Following the cure
of all Events requiring the payment by the Company and/or the Guarantors of
Liquidated Damages Amounts to the Holders of Registrable Securities pursuant to
this Section, the accrual of Liquidated Damages Amounts will cease (without in
any way limiting the effect of any subsequent Event requiring the payment of the
Liquidated Damages Amount by the Company and/or the Guarantors).
The Trustee, subject to the applicable provisions of the
Indenture, shall be entitled, on behalf of Holders of LYONs, Underlying Common
Stock or Semiannual Coupon Notes, to seek any available remedy for the
enforcement of this Agreement, including for the payment of any Liquidated
Damages Amount. Notwithstanding the foregoing, the parties agree that the sole
monetary damages payable for a violation of the terms of this Agreement with
respect to which liquidated damages are expressly provided shall be such
liquidated damages. Nothing shall preclude a Notice Holder or Holder of
Registrable Securities from pursuing or obtaining specific performance or other
equitable relief with respect to this Agreement.
All of the Company's and the Guarantors' obligations set forth
in this Section 2(e) that are outstanding with respect to any Registrable
Security at the time such security ceases to be a Registrable Security shall
survive until such time as all such obligations with respect to such security
have been satisfied in full (notwithstanding termination of this Agreement
pursuant to Section 8(k)).
The parties hereto agree that the liquidated damages provided
for in this Section 2(e) constitute a reasonable estimate of the damages that
may be incurred by Holders of Registrable Securities by reason of the failure of
the Shelf Registration Statement to be filed or declared effective or available
for effecting resales of Registrable Securities in accordance with the
provisions hereof.
SECTION 3. Registration Procedures. In connection with the
------------------------
registration obligations of the Company and the Guarantors under Section 2
hereof, the Company and/or the Guarantors shall:
(a) Before filing any Registration Statement or Prospectus or
any amendments or supplements (other than supplements that do nothing more
substantive than name one or more Notice Holders as selling security holders)
thereto with the SEC, furnish to the Initial Purchaser copies of all such
documents proposed to be filed and use reasonable efforts to reflect in each
such document when so filed with the SEC such comments as the Initial Purchaser
reasonably shall propose within three (3) Business Days of the delivery of such
copies to the Initial Purchaser.
(b) Prepare and file with the SEC such amendments and post-
effective amendments to each Registration Statement as may be necessary to
keep such Registration Statement continuously effective for the applicable
period specified in Section 2(a); cause the related Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented to be
filed pursuant to Rule 424 (or any similar provisions then in force) under the
Securities Act; and use reasonable efforts to comply with the provisions of the
Securities Act applicable to it with respect to the disposition of all
securities covered by such Registration Statement during the Effectiveness
Period in accordance with the intended methods of disposition by the sellers
thereof set forth in such Registration Statement as so amended or such
Prospectus as so supplemented.
(c) As promptly as reasonably practicable give notice to the
Notice Holders and the Initial Purchaser (i) when any Prospectus,
Prospectus supplement, Registration Statement or post-effective amendment to a
Registration Statement has been filed with the SEC and, with respect to a
Registration Statement or any post-effective amendment, when the same has been
declared effective (provided, however, that the Company shall not be required by
this clause (i) to notify (A) the Initial Purchaser of the filing of a
Prospectus supplement that does nothing more substantive than name one or more
Notice Holders as selling security holders or (B) any Notice Holder of the
filing of a Prospectus supplement that does nothing more substantive than name
one or more other Notice Holders as selling security holders), (ii) of any
request, following the effectiveness of the Initial Shelf Registration Statement
under the Securities Act, by the SEC or any other federal or state governmental
authority for amendments or supplements to any Registration Statement or related
Prospectus or for additional information, (iii) of the issuance by the SEC or
any other federal or state governmental authority of any stop order or
injunction suspending or enjoining the use of any Prospectus or the
effectiveness of any Registration Statement or the initiation or threatening of
any proceedings for that purpose, (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose, (v) of the occurrence of (but not the nature of or details concerning)
a Material Event (provided, however, that no notice by the Company shall be
required pursuant to this clause (v) in the event that the Company either
promptly files a Prospectus supplement to update the Prospectus or a Current
Report on Form 8-K or other appropriate Exchange Act report that is incorporated
by reference into the Registration Statement, which, in either case, contains
the requisite information with respect to such Material Event that results in
such Registration Statement no longer containing any untrue statement of
material fact or omitting to state a material fact necessary to make the
statements contained therein not misleading) and (vi) of the determination by
the Company that a post-effective amendment to a Registration Statement will be
filed with the SEC, which notice may, at the discretion of the Company (or as
required pursuant to Section 3(i)), state that it constitutes a Deferral Notice,
in which event the provisions of Section 3(i) shall apply.
(d) Use reasonable efforts to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement or the
lifting of any suspension of the qualification (or exemption from qualification)
of any of the Registrable Securities for sale in any jurisdiction in which they
have been qualified for sale, in either case at the earliest possible moment or,
if any such order or suspension is made effective during any Deferral Period, at
the earliest possible moment after the expiration of such Deferral Period.
(e) If reasonably requested by the Initial Purchaser or any
Notice Holder, as promptly as reasonably practicable incorporate in a
Prospectus supplement or post-effective amendment to a Registration Statement
such information as the Initial Purchaser or such Notice Holder shall, on the
basis of a written opinion of nationally-recognized counsel experienced in such
matters, determine to be required to be included therein by applicable law and
make any required filings of such Prospectus supplement or such post-effective
amendment; provided, that the Company shall not be required to take any actions
under this Section 3(e) that are not, in the reasonable opinion of counsel for
the Company, in compliance with applicable law.
(f) As promptly as reasonably practicable after the filing of
such documents with the SEC furnish to each Notice Holder and the Initial
Purchaser, upon their request and without charge, at least one (1) conformed
copy of the Registration Statement and any amendment thereto, including
financial statements, but excluding schedules, all documents incorporated or
deemed to be incorporated therein by reference and all exhibits (unless
requested in writing to the Company by such Notice Holder or the Initial
Purchaser, as the case may be).
(g) During the Effectiveness Period, deliver to each Notice
Holder in connection with any sale of Registrable Securities pursuant to a
Registration Statement, without charge, as many copies of the Prospectus or
Prospectuses relating to such Registrable Securities (including each preliminary
prospectus) and any amendment or supplement thereto as such Notice Holder may
reasonably request; and the Company hereby consents (except during such periods
that a Deferral Notice is outstanding and has not been revoked) to the use of
such Prospectus or each amendment or supplement thereto by each Notice Holder in
connection with any offering and sale of the Registrable Securities covered by
such Prospectus or any amendment or supplement thereto in the manner set forth
therein.
(h) Subject to Section 3(i), prior to any public offering of
the Registrable Securities pursuant to the Shelf Registration Statement,
use reasonable efforts to register or qualify or cooperate with the Notice
Holders in connection with the registration or qualification (or exemption from
such registration or qualification) of such Registrable Securities for offer and
sale under the securities or Blue Sky laws of such jurisdictions within the
United States as any Notice Holder reasonably requests in writing (which request
may be included in the Notice and Questionnaire), it being agreed that no such
registration or qualification will be made unless so requested; prior to any
public offering of the Registrable Securities pursuant to the Shelf Registration
Statement, use reasonable efforts to keep each such registration or
qualification (or exemption therefrom) effective during the Effectiveness Period
in connection with such Notice Holder's offer and sale of Registrable Securities
pursuant to such registration or qualification (or exemption therefrom) and do
any and all other acts or things necessary to enable the disposition in such
jurisdictions of such Registrable Securities in the manner set forth in the
relevant Registration Statement and the related Prospectus; provided, that the
Company will not be required to (i) qualify as a foreign corporation or as a
dealer in securities in any jurisdiction where it is not otherwise qualified or
(ii) take any action that would subject it to general service of process in
suits or to taxation in any such jurisdiction where it is not then so subject.
(i) Upon (A) the issuance by the SEC of a stop order suspending
the effectiveness of the Shelf Registration Statement or the initiation of
proceedings with respect to the Shelf Registration Statement under Section 8(d)
or 8(e) of the Securities Act, (B) the occurrence of any event or the existence
of any fact (a "Material Event") as a result of which any Registration Statement
shall contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, or any Prospectus shall contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading (including, in any such case, as a
result of the non-availability of financial statements), or (C) the occurrence
or existence of any pending corporate development that, in the discretion of the
Company, makes it appropriate to suspend the availability of the Shelf
Registration Statement and the related Prospectus, (i) in the case of clause (B)
above, subject to the next sentence, as promptly as practicable prepare and file
a post-effective amendment to such Registration Statement or a supplement to the
related Prospectus or any document incorporated therein by reference or file any
other required document that would be incorporated by reference into such
Registration Statement and Prospectus so that such Registration Statement does
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, and such Prospectus does not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, as thereafter
delivered to the purchasers of the Registrable Securities being sold thereunder,
and, in the case of a post-effective amendment to a Registration Statement,
subject to the next sentence, use reasonable efforts to cause it to be declared
effective as promptly as is reasonably practicable, and (ii) give notice to the
Notice Holders that the availability of the Shelf Registration Statement is
suspended (a "Deferral Notice") and, upon receipt of any Deferral Notice, each
Notice Holder agrees not to sell any Registrable Securities pursuant to the
Registration Statement until such Notice Holder's receipt of copies of the
supplemented or amended Prospectus provided for in clause (i) above, or until it
is advised in writing by the Company that the Prospectus may be used, and has
received copies of any additional or supplemental filings that are incorporated
or deemed incorporated by reference in such Prospectus. The Company will use
reasonable efforts to ensure that the use of the Prospectus may be resumed (x)
in the case of clause (A) above, as promptly as is practicable, (y) in the case
of clause (B) above, as soon as, in the sole judgment of the Company, public
disclosure of such Material Event would not be prejudicial to or contrary to the
interests of the Company or, if necessary to avoid unreasonable burden or
expense, as soon as reasonably practicable thereafter and (z) in the case of
clause (C) above, as soon as, in the discretion of the Company, such suspension
is no longer appropriate. So long as the period during which the availability of
the Registration Statement and any Prospectus is suspended (the "Deferral
Period") does not exceed forty-five (45) days during any three (3) month period
or one hundred and twenty (120) days during any twelve (12) month period, the
Company shall not incur any obligation to pay liquidated damages pursuant to
Section 2(e).
(j) If reasonably requested in writing in connection with a
disposition of Registrable Securities pursuant to a Registration Statement,
make reasonably available for inspection during normal business hours by a
representative for the Notice Holders of such Registrable Securities and any
broker-dealers, attorneys and accountants retained by such Notice Holders, all
relevant financial and other records, pertinent corporate documents and
properties of the Company and its subsidiaries, and cause the appropriate
executive officers, directors and designated employees of the Company and its
subsidiaries to make reasonably available for inspection during normal business
hours all relevant information reasonably requested by such representative for
the Notice Holders or any such broker-dealers, attorneys or accountants in
connection with such disposition, in each case as is customary for similar "due
diligence" examinations; provided, however, that such persons shall first agree
in writing with the Company that any information that is reasonably designated
by the Company in writing as confidential at the time of delivery of such
information shall be kept confidential by such persons and shall be used solely
for the purposes of exercising rights under this Agreement, unless (i)
disclosure of such information is required by court or administrative order or
is necessary to respond to inquiries of regulatory authorities, (ii) disclosure
of such information is required by law (including any disclosure requirements
pursuant to federal securities laws in connection with the filing of any
Registration Statement or the use of any Prospectus referred to in this
Agreement), (iii) such information becomes generally available to the public
other than as a result of a disclosure or failure to safeguard by any such
person or (iv) such information becomes available to any such person from a
source other than the Company and such source is not bound by a confidentiality
agreement; and provided further, that the foregoing inspection and information
gathering shall, to the greatest extent possible, be coordinated on behalf of
all the Notice Holders and the other parties entitled thereto by the counsel
referred to in Section 5.
(k) Comply with all applicable rules and regulations of the SEC
and make generally available to its securityholders earning statements
(which need not be audited) satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder (or any similar rule promulgated under
the Securities Act) no later than 45 days after the end of any 12-month period
(or 90 days after the end of any 12-month period if such period is a fiscal
year) commencing on the first day of the first fiscal quarter of the Company
commencing after the effective date of a Registration Statement, which
statements shall cover said 12-month periods.
(l) Cooperate with each Notice Holder to facilitate the timely
preparation and delivery of certificates representing Registrable
Securities sold pursuant to a Registration Statement, and cause such Registrable
Securities to be in such denominations as are permitted by the Indenture and
registered in such names as such Notice Holder may request in writing at least
two Business Days prior to any sale of such Registrable Securities.
(m) Provide a CUSIP number for all Registrable Securities
covered by each Registration Statement not later than the effective date of
such Registration Statement and provide the Trustee for the LYONs and the
transfer agent for the Common Stock with certificates for the Registrable
Securities that are in a form eligible for deposit with The Depository Trust
Company.
(n) Make reasonable effort to provide such information as is
required for any filings required to be made with the National Association of
Securities Dealers, Inc.
(o) Upon (i) the filing of the Initial Shelf Registration
Statement and (ii) the effectiveness of the Initial Shelf Registration
Statement, announce the same, in each case by release to Businesswire, Reuters
Economic Services, Bloomberg Business News or any other means of dissemination
reasonably expected to make such information known publicly.
(p) Take all actions necessary, or reasonably requested by the
holders of a majority of the Registrable Securities being sold, in order to
expedite or facilitate disposition of such Registrable Securities; provided that
the Company shall not be required to take any action in connection with an
underwritten offering without its consent; and
(q) Cause the Indenture to be qualified under the TIA not later
than the effective date of any Registration Statement; and in connection
therewith, cooperate with the Trustee to effect such changes to the Indenture as
may be required for the Indenture to be so qualified in accordance with the
terms of the TIA and execute, and use reasonable efforts to cause the Trustee to
execute, all documents as may be required to effect such changes, and all other
forms and documents required to be filed with the SEC to enable the Indenture to
be so qualified in a timely manner.
SECTION 4. Holder's Obligations. Each Holder agrees, by
---------------------
acquisition of the Registrable Securities, that no Holder of Registrable
Securities shall be entitled to sell any of such Registrable Securities pursuant
to a Registration Statement or to receive a Prospectus relating thereto, unless
such Holder has furnished the Company with a Notice and Questionnaire as
required pursuant to Section 2(d) hereof (including the information required to
be included in such Notice and Questionnaire) and the information set forth in
the next sentence. Each Notice Holder agrees promptly to furnish to the Company
all information required to be disclosed in order to make the information
previously furnished to the Company by such Notice Holder not misleading, any
other information regarding such Notice Holder and the distribution of such
Registrable Securities as may be required to be disclosed in the Registration
Statement under applicable law or pursuant to SEC comments and any information
otherwise required by the Company to comply with applicable law or regulations.
Each Holder further agrees, following termination of the Effectiveness Period,
to notify the Company within 10 Business Days of a request, of the amount of
Registrable Securities sold pursuant to the Registration Statement and, in the
absence of a response, the Company may assume that all of the Holder's
Registrable Securities were so sold.
SECTION 5. Registration Expenses. The Company and the
----------------------
Guarantors shall bear all fees and expenses incurred in connection with the
performance by the Company and the Guarantors of its obligations under Sections
2 and 3 of this Agreement whether or not any of the Registration Statements are
declared effective. Such fees and expenses shall include, without limitation,
(i) all registration and filing fees (including, without limitation, fees and
expenses (x) with respect to filings required to be made with the National
Association of Securities Dealers, Inc. and (y) of compliance with federal and
state securities or Blue Sky laws to the extent such filings or compliance are
required pursuant to this Agreement (including, without limitation, reasonable
fees and disbursements of the counsel specified in the next sentence in
connection with Blue Sky qualifications of the Registrable Securities under the
laws of such jurisdictions as the Notice Holders of a majority of the
Registrable Securities being sold pursuant to a Registration Statement may
designate)), (ii) printing expenses (including, without limitation, expenses of
printing certificates for Registrable Securities in a form eligible for deposit
with The Depository Trust Company), (iii) duplication expenses relating to
copies of any Registration Statement or Prospectus delivered to any Holders
hereunder, (iv) fees and disbursements of counsel for the Company in connection
with the Shelf Registration Statement, and (v) reasonable fees and disbursements
of the Trustee and its counsel and of the registrar and transfer agent for the
Common Stock. In addition, the Company and the Guarantors shall bear or
reimburse the Notice Holders for the fees and disbursements of one firm of legal
counsel for the Holders, which shall, upon the written consent of the Initial
Purchaser (which shall not be unreasonably withheld), be another nationally
recognized law firm experienced in securities law matters designated by the
Company. In addition, the Company and the Guarantors shall pay the internal
expenses of the Company and the Guarantors (including, without limitation, all
salaries and expenses of officers and employees performing legal or accounting
duties), the expense of any annual audit, the fees and expenses incurred in
connection with the listing of the Registrable Securities on any securities
exchange on which the same securities of the Company are then listed and the
fees and expenses of any person, including special experts, retained by the
Company.
SECTION 6. Indemnification; Contribution.
------------------------------
(a) The Company and the Guarantors agree to indemnify and hold
harmless the Initial Purchaser and each holder of Registrable Securities
and each person, if any, who controls the Initial Purchaser or any holder of
Registrable Securities within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act, as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), or the omission or
alleged omission therefrom of a material fact required to be stated
therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading or
arising out of any untrue statement or alleged untrue statement of a
material fact included in any preliminary prospectus or the Prospectus
(or any amendment or supplement thereto), or the omission or alleged
omission therefrom of a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, provided
that (subject to Section 6(d) below) any such settlement is effected
with the prior written consent of the Company; and
(iii) subject to Section 6(c) below, against any and all
expense whatsoever, as incurred (including the fees and disbursements
of counsel), reasonably incurred in investigating, preparing or
defending against any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent that any such
expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
- -------- -------
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by or
on behalf of the Initial Purchaser, such holder of Registrable Securities (which
also acknowledges the indemnity provisions herein) or any person, if any, who
controls the Initial Purchaser or any such holder of Registrable Securities
expressly for use in the Registration Statement (or any amendment thereto), or
any preliminary prospectus or the Prospectus (or any amendment or supplement
thereto); provided, further, that this indemnity agreement shall not apply to
any loss, liability, claim, damage or expense (1) arising from an offer or sale
of Registrable Securities occurring during a Deferral Period, if a Deferral
Notice was given to such Notice Holder in accordance with Section 8(b), or (2)
if the Holder fails to deliver at or prior to the written confirmation of sale,
the most recent Prospectus, as amended or supplemented, and such Prospectus, as
amended or supplemented, would have corrected such untrue statement or omission
or alleged untrue statement or omission of a material fact and the delivery
thereof was required by law.
(b) In connection with any Shelf Registration in which a
holder, including, without limitation, the Initial Purchaser, of
Registrable Securities is participating, in furnishing information relating to
such holder of Registrable Securities to the Company in writing expressly for
use in such Registration Statement, any preliminary prospectus, the Prospectus
or any amendments or supplements thereto, the holders of such Registrable
Securities agree, severally and not jointly, to indemnify and hold harmless the
Initial Purchaser and each person, if any, who controls the Initial Purchaser
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act and the Company, and each person, if any, who controls the
Company within the meaning of either such Section, against any and all loss,
liability, claim, damage and expense described in the indemnity contained in
subsection (a) of this Section, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in the
Registration Statement (or any amendment thereto), or any preliminary prospectus
or the Prospectus (or any amendment or supplement thereto) in reliance upon and
in conformity with written information furnished to the Company by or on behalf
of such holder of Registrable Securities (which also acknowledges the indemnity
provisions herein) or any person, if any, who controls any such holder of
Registrable Securities expressly for use in the Registration Statement (or any
amendment thereto) or such preliminary prospectus or the Prospectus (or any
amendment or supplement thereto).
The Initial Purchaser agrees to indemnify and hold harmless
the Company, the holders of Registrable Securities, and each person, if any, who
controls the Company or any holder of Registrable Securities within the meaning
of either Section 15 of the Securities Act or Section 20 of the Exchange Act
against any and all loss, liability, claim, damage and expense described in the
indemnity contained in subsection (a) of this Section, as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Registration Statement (or any amendment thereto), or any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto) in reliance upon and in conformity with written information furnished
to the Company or on behalf of by the Initial Purchaser expressly for use in the
Registration Statement (or any amendment thereto) or such preliminary prospectus
or the Prospectus (or any amendment or supplement thereto).
(c) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action or
proceeding commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of these
indemnity provisions. The indemnifying party, upon request of the indemnified
party, shall retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying party may
designate in such proceeding and shall pay the fees and disbursements of such
counsel related to such proceeding. In any such proceeding, any indemnified
party shall have the right to retain a separate firm as its own counsel, but the
fees and expenses of such counsel shall be at the expense of such indemnified
party unless (i) the indemnifying party and the indemnified party shall have
mutually agreed to the retention of such counsel or (ii) the named parties to
any such proceeding (including any impleaded parties) include both the
indemnifying party and the indemnified party and representation of both parties
by the same counsel would be inappropriate due to actual or potential differing
interests between them. It is understood that the indemnifying party shall not,
in respect of the legal expenses of any indemnified party in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for (a)
the reasonable fees and expenses of more than one firm (in addition to any local
counsel) for the Initial Purchaser, Holders of Registrable Securities, and all
persons, if any, who control the Initial Purchaser or Holders of Registrable
Securities within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act (b) the reasonable fees and expenses of more than
one firm (in addition to any local counsel) for the Company, its directors, and
each person, if any, who controls the Company within the meaning of either such
Section, and that all such reasonable fees and expenses shall be reimbursed as
they are incurred. In the event a separate firm is retained for the Initial
Purchaser, Holders of Registrable Securities, and control persons of the Initial
Purchaser and Holders of Registrable Securities, such firm shall be designated
in writing by the Initial Purchaser. In the event a separate firm is retained
for the Company, and such directors, officers and control persons of the
Company, such firm shall be designated in writing by the Company. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification or contribution could be sought under this
Section 6 (whether or not the indemnified parties are actual or potential
parties thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
(d) If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses
of counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by Section 6(a)(ii) effected without its
written consent if (i) such settlement is entered into more than 60 days after
receipt by such indemnifying party of aforesaid request, (ii) such indemnifying
party shall have received notice of the terms of such settlement at least 45
days prior to such settlement being entered into and (iii) such indemnifying
party shall not have reimbursed such indemnified party in accordance with such
request prior to the date of such settlement; provided, that an indemnifying
party shall not be liable for any such settlement effected without its consent
if such indemnifying party (1) reimburses such indemnified party in accordance
with such request to the extent it considers such request to be reasonable and
(2) provides written notice to the indemnified party describing any unpaid
balance it believes is unreasonable and the reasons therefor, in each case prior
to the date of such settlement.
(e) If the indemnification to which an indemnified party is
entitled under this Section 6 is for any reason unavailable to or
insufficient although applicable in accordance with its terms to hold harmless
an indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, in such proportion as is
appropriate to reflect the relative fault of the indemnifying party or parties
on the one hand and of the indemnified party on the other hand in connection
with the statements or omissions which resulted in such losses, liabilities,
claims, damages or expenses, as well as any other relevant equitable
considerations.
The relative fault of the Company and/or the Guarantors on the
one hand and the holders of the Registrable Securities or the Initial Purchaser
on the other hand shall be determined by reference to, among other things,
whether any such untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by the Company and/or the Guarantors or by the holder of the
Registrable Securities or the Initial Purchaser and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 6(e) were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to above in this Section 6(e). The
aggregate amount of losses, liabilities, claims, damages, and expenses incurred
by an indemnified party and referred to above in this Section 6(e) shall be
deemed to include any out-of-pocket legal or other expenses reasonably incurred
by such indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 6, neither the
holder of any Registrable Securities nor the Initial Purchaser, shall be
required to indemnify or contribute any amount in excess of the amount by which
the total price at which the Registrable Securities sold by such holder of
Registrable Securities or by the Initial Purchaser, as the case may be, and
distributed to the public were offered to the public exceeds the amount of any
damages that such holder of Registrable Securities or the Initial Purchaser has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
For purposes of this Section 6(e), each person, if any, who
controls the Initial Purchaser or any holder of Registrable Securities within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act shall have the same rights to contribution as the Initial Purchaser or such
holder, and each person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act shall have
the same rights to contribution as the Company.
SECTION 7. Information Requirements. The Company covenants
-------------------------
that, if at any time before the end of the Effectiveness Period the Company
is not subject to the reporting requirements of the Exchange Act, it will
cooperate with any Holder of Registrable Securities and take such further
reasonable action as any Holder of Registrable Securities may reasonably request
in writing (including, without limitation, making such reasonable
representations as any such Holder may reasonably request), all to the extent
required from time to time to enable such Holder to sell Registrable Securities
without registration under the Securities Act within the limitations of Rule 144
and Rule 144A under the Securities Act and customarily taken in connection with
sales pursuant to such exemptions. Upon the written request of any Holder of
Registrable Securities, the Company shall deliver to such Holder a written
statement as to whether it has complied with such filing requirements, unless
such a statement has been included in the Company's most recent report required
to be filed and filed pursuant to Section 13 or Section 15(d) of Exchange Act.
Notwithstanding the foregoing, nothing in this Section 7 shall be deemed to
require the Company to register any of its securities under any section of the
Exchange Act.
SECTION 8. Miscellaneous
(a) No Conflicting Agreements. The Company is not, and the
-------------------------
Guarantors are not, as of the date hereof, a party to, nor shall they, on
or after the date of this Agreement, enter into, any agreement with respect to
the Company's securities that conflicts with the rights granted to the Holders
of Registrable Securities in this Agreement. The Company and the Guarantors
represent and warrant that the rights granted to the Holders of Registrable
Securities hereunder do not in any way conflict with the rights granted to the
holders of the Company's or the Guarantors' securities under any other
agreements.
(b) Amendments and Waivers. The provisions of this Agreement,
-----------------------
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the written consent of Holders
of a majority of the then outstanding Underlying Common Stock constituting
Registrable Securities (with Holders of LYONs or Semiannual Coupon Notes deemed
to be the Holders, for purposes of this Section, of the number of outstanding
shares of Underlying Common Stock into which such LYONs or Semiannual Coupon
Notes are or would be convertible or exchangeable as of the date on which such
consent is requested). Notwithstanding the foregoing, a waiver or consent to
depart from the provisions hereof with respect to a matter that relates
exclusively to the rights of Holders of Registrable Securities whose securities
are being sold pursuant to a Registration Statement and that does not directly
or indirectly affect the rights of other Holders of Registrable Securities may
be given by Holders of at least a majority of the Registrable Securities being
sold by such Holders pursuant to such Registration Statement; provided, that the
provisions of this sentence may not be amended, modified, or supplemented except
in accordance with the provisions of the immediately preceding sentence. Each
Holder of Registrable Securities outstanding at the time of any such amendment,
modification, supplement, waiver or consent or thereafter shall be bound by any
such amendment, modification, supplement, waiver or consent effected pursuant to
this Section 8(b), whether or not any notice, writing or marking indicating such
amendment, modification, supplement, waiver or consent appears on the
Registrable Securities or is delivered to such Holder.
(c) Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand delivery, by
telecopier, by courier guaranteeing overnight delivery or by first-class mail,
return receipt requested, and shall be deemed given (i) when made, if made by
hand delivery, (ii) upon confirmation, if made by telecopier, (iii) one (1)
Business Day after being deposited with such courier, if made by overnight
courier or (iv) on the date indicated on the notice of receipt, if made by
first-class mail, to the parties as follows:
if to a Holder of Registrable Securities that is not a Notice
Holder, at the address for such Holder then appearing in the Registrar (as
defined in the Indenture);
if to a Notice Holder, at the most current address given by
such Holder to the Company in a Notice and Questionnaire or any amendment
thereto;
if to the Company, to:
CBRL Group, Inc.
P.O. Box 787
Lebanon, TN 37088
Telephone No. (615) 443-9574
Facsimile No. (615) 443-9818
Attention: Chief Financial Officer
and
Dinsmore & Shohl LLP
414 Union Street
Bank of America Building, Suite 1100
Nashville, TN 37219
Telephone No. (615) 313-3325
Facsimile No. (615) 313-3310
Attention: Gary M. Brown, Esq.
and
if to the Initial Purchaser, to:
Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated
4 World Financial Center
New York, New York 10080
Attention: Syndicate Department
Telecopier: 212-738-1069
or to such other address as such person may have furnished to the other persons
identified in this Section 8(c) in writing in accordance herewith.
(d) Approval of Holders. Whenever the consent or approval of
--------------------
Holders of a specified percentage of Registrable Securities is required
hereunder, Registrable Securities held by the Company or its Affiliates (other
than the Initial Purchaser or subsequent Holders of Registrable Securities if
such subsequent Holders are deemed to be such affiliates solely by reason of
their holdings of such Registrable Securities) shall not be counted in
determining whether such consent or approval was given by the Holders of such
required percentage.
(e) Successors and Assigns. This Agreement shall inure to the
-----------------------
benefit of and be binding upon the successors and assigns of each of the
parties and, without requiring any express assignment, shall inure to the
benefit of and be binding upon each Holder of any Registrable Securities.
(f) Counterparts. This Agreement may be executed in any number
-------------
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for
---------
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
--------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES THEREOF.
(i) Severability. If any term, provision, covenant or
-------------
restriction of this Agreement is held to be invalid, illegal, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated thereby, and the parties hereto
shall use their best efforts to find and employ an alternative means to achieve
the same or substantially the same result as that contemplated by such term,
provision, covenant or restriction, it being intended that all of the rights and
privileges of the parties shall be enforceable to the fullest extent permitted
by law.
(j) Entire Agreement. This Agreement is intended by the parties
-----------------
as a final expression of their agreement and is intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein and the registration rights
granted by the Company with respect to the Registrable Securities. Except as
provided in the Purchase Agreement, there are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein,
with respect to the registration rights granted by the Company with respect to
the Registrable Securities. This Agreement supersedes all prior agreements and
undertakings among the parties with respect to such registration rights.
(k) Termination. This Agreement and the obligations of the
------------
parties hereunder shall terminate upon the end of the Effectiveness Period,
except for any liabilities or obligations under Sections 4, 5 or 6 hereof and
the obligations to make payments of and provide for liquidated damages under
Section 2(e) hereof to the extent such damages accrue prior to the end of the
Effectiveness Period, each of which shall remain in effect in accordance with
its terms.
IN WITNESS WHEREOF, the parties have executed this
Registration Rights Agreement as of the date first written above.
CBRL GROUP, INC.
By: /s/Michael A. Woodhouse
------------------------
Name: Michael A. Woodhouse
Title: President
CRACKER BARREL OLD COUNTRY
STORE, INC., as Guarantor
By: /s/James F. Blackstock
----------------------------
Name: James F. Blackstock
Title: Sr. Vice President
CPM MERGER CORPORATION, as
Guarantor
By:/s/James F. Blackstock
-------------------------
Name: James F. Blackstock
Title: Vice President
CBOCS DISTRIBUTION, INC., as
Guarantor
By: /s/James F. Blackstock
------------------------
Name: James F. Blackstock
Title: Secretary
CBOCS PARTNER I, LLC, as
Guarantor
By: /s/Michael Zylstra
------------------------
Name: Michael Zylstra
Title: Secretary
CBOCS PARTNER II, LLC, as
Guarantor
By: /s/LaShawn Williams
------------------------
Name: LaShawn Williams
Title: President
CBOCS WEST, INC., as Guarantor
By: /s/Michael Zylstra
-------------------------
Name: Michael Zylstra
Title: Secretary
CBOCS MICHIGAN, INC., as
Guarantor
By: /s/Bruce Hallums
------------------------
Name: Bruce Hallums
Title: President
CBOCS SIERRA, INC., as
Guarantor
By: /s/Bruce Scoggins
-------------------------
Name: Bruce Scoggins
Title: President
CB MUSIC LLC, as Guarantor
By: /s/James F. Blackstock
------------------------
Name: James F. Blackstock
Title: Chief Manager and
President
ROCKING CHAIR, INC., as
Guarantor
By: /s/Elizabeth Wilson
-----------------------
Name: Elizabeth Wilson
Title: Assistant Secretary
GC MANAGEMENT COMPANY, as
Guarantor
By: /s/James F. Blackstock
----------------------
Name: James F. Blackstock
Title: Secretary
LOGAN'S ROADHOUSE, INC., as
Guarantor
By: /s/James F. Blackstock
-----------------------
Name: James F. Blackstock
Title: Assistant Secretary
ROADHOUSE PROMOTIONS, INC.,
as Guarantor
By: /s/James F. Blackstock
----------------------
Name: James F. Blackstock
Title: Assistant Secretary
CBOCS TEXAS LIMITED
PARTNERSHIP, as Guarantor
By: /s/Bruce Hallums
-----------------------
Name: Bruce Hallums
Title: President of CBOCS
Partner I, LLC as
General Partner
CBOCS GENERAL PARTNERSHIP,
as Guarantor
By: /s/James F. Blackstock
----------------------
Name: James F. Blackstock
Title: Assistant Secretary
of CBOCS West, Inc.
as General Partner
ROADHOUSE OF WEST VIRGINIA
LIMITED PARTNERSHIP,
as Guarantor
By: /s/James F. Blackstock
---------------------
Name: James F. Blackstock
Title: Assistant Secretary
of Roadhouse
Promotions, Inc. as
General Partner
LOGAN'S ROADHOUSE, INC. OF
W. VA., as Guarantor
By: /s/James F. Blackstock
---------------------
Name: James F. Blackstock
Title: Assistant Secretary
LOGAN'S ROADHOUSE OF
TEXAS, INC., as Guarantor
By: /s/James F. Blackstock
---------------------
Name: James F. Blackstock
Title: Authorized Agent
Accepted as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/Mark E. Hagan
-------------------------------
Name: Mark E. Hagan
Title: Authorized Signatory
EXECUTION COPY
----------------------------------------------------------
CBRL GROUP, INC.
and
THE SUBSIDIARY GUARANTORS PARTIES HERETO
and
WACHOVIA BANK, NATIONAL ASSOCIATION
TRUSTEE
Liquid Yield Option (TM) Notes
due 2032
(Zero Coupon-Senior)
----------------------------------------------------------
INDENTURE
Dated as of April 3, 2002
----------------------------------------------------------
TMTrademark of Merrill Lynch & Co., Inc.
CROSS REFERENCE TABLE*
IA Section.....................................................Indenture Section
310(a)(1)...................................................... 7.10
(a)(2).................................................... 7.10
(a)(3).................................................... N.A.
(a)(4).................................................... N.A.
(b)....................................................... 7.08; 7.10
(c)....................................................... N.A.
311(a)......................................................... 7.11
(b)....................................................... 7.11
(c)....................................................... N.A.
312(a)......................................................... 2.05
(b)....................................................... 14.03
(c)....................................................... 14.03
313(a)......................................................... 7.06
(b)(1).................................................... N.A.
(b)(2).................................................... 7.06
(c)....................................................... 14.02
(d)....................................................... 7.06
314(a).........................................................4.02; 4.03; 14.02
(b)....................................................... N.A.
(c)(1).................................................... 14.04
(c)(2).................................................... 14.04
(c)(3).................................................... N.A.
(d)....................................................... N.A.
(e)....................................................... 14.05
(f)....................................................... N.A.
315(a)......................................................... 7.01
(b)....................................................... 7.05; 14.02
(c)....................................................... 7.01
(d)....................................................... 7.01
(e)....................................................... 6.11
316(a) (last sentence)......................................... 2.08
(a)(1)(A)................................................. 6.05
(a)(1)(B)................................................. 6.04
(a)(2).................................................... N.A.
(b)....................................................... 6.07
317(a)(1)...................................................... 6.08
(a)(2).................................................... 6.09
(b)....................................................... 2.04
318(a)......................................................... 14.01
N.A. means Not Applicable.
TABLE OF CONTENTS*
Page
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01 Definitions..........................................................................................1
SECTION 1.02 Other Definitions....................................................................................6
SECTION 1.03 Incorporation by Reference of Trust Indenture Act....................................................7
SECTION 1.04 Rules of Construction................................................................................8
SECTION 1.05 Acts of Holders......................................................................................8
ARTICLE 2
THE SECURITIES
SECTION 2.01 Form and Dating......................................................................................9
SECTION 2.02 Execution and Authentication........................................................................11
SECTION 2.03 Registrar, Paying Agent, Conversion Agent and Bid Solicitation Agent................................11
SECTION 2.04 Paying Agent to Hold Money and Securities in Trust..................................................12
SECTION 2.05 Securityholder Lists................................................................................12
SECTION 2.06 Transfer and Exchange...............................................................................12
SECTION 2.07 Replacement Securities..............................................................................14
SECTION 2.08 Outstanding Securities; Determinations of Holders' Action...........................................15
SECTION 2.09 Temporary Securities................................................................................15
SECTION 2.10 Cancellation........................................................................................16
SECTION 2.11 Persons Deemed Owners...............................................................................16
SECTION 2.12 Global Securities...................................................................................16
SECTION 2.13 CUSIP Numbers.......................................................................................21
ARTICLE 3
REDEMPTION AND PURCHASES
SECTION 3.01 Right to Redeem; Notices to Trustee.................................................................21
SECTION 3.02 Selection of Securities to Be Redeemed..............................................................22
SECTION 3.03 Notice of Redemption................................................................................22
SECTION 3.04 Effect of Notice of Redemption......................................................................23
SECTION 3.05 Deposit of Redemption Price.........................................................................23
SECTION 3.06 Securities Redeemed in Part.........................................................................23
SECTION 3.07 Conversion Arrangement on Call for Redemption.......................................................23
SECTION 3.08 Purchase of Securities at Option of the Holder......................................................24
SECTION 3.09 Purchase of Securities at Option of the Holder upon Change in Control...............................30
SECTION 3.10 Effect of Purchase Notice or Change in Control Purchase Notice......................................33
SECTION 3.11 Deposit of Purchase Price or Change in Control Purchase Price.......................................35
SECTION 3.12 Securities Purchased in Part........................................................................35
SECTION 3.13 Covenant to Comply With Securities Laws Upon Purchase of Securities.................................35
SECTION 3.14 Repayment to the Company............................................................................35
ARTICLE 4
COVENANTS
SECTION 4.01 Payment of Securities...............................................................................36
SECTION 4.02 SEC and Other Reports...............................................................................36
SECTION 4.03 Compliance Certificate..............................................................................36
SECTION 4.04 Further Instruments and Acts........................................................................37
SECTION 4.05 Maintenance of Office or Agency.....................................................................37
SECTION 4.06 Delivery of Certain Information.....................................................................37
SECTION 4.07 Calculation of Original Issue Discount..............................................................37
SECTION 4.08 Limitation on Guarantees of Indebtedness by Domestic Subsidiaries...................................38
ARTICLE 5
SUCCESSOR CORPORATION
SECTION 5.01 When Company May Merge or Transfer Assets...........................................................38
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01 Events of Default...................................................................................39
SECTION 6.02 Acceleration........................................................................................41
SECTION 6.03 Other Remedies......................................................................................42
SECTION 6.04 Waiver of Past Defaults.............................................................................42
SECTION 6.05 Control by Majority.................................................................................42
SECTION 6.06 Limitation on Suits.................................................................................42
SECTION 6.07 Rights of Holders to Receive Payment................................................................43
SECTION 6.08 Collection Suit by Trustee..........................................................................43
SECTION 6.09 Trustee May File Proofs of Claim....................................................................43
SECTION 6.10 Priorities..........................................................................................44
SECTION 6.11 Undertaking for Costs...............................................................................44
SECTION 6.12 Waiver of Stay, Extension or Usury Laws.............................................................45
ARTICLE 7
TRUSTEE
SECTION 7.01 Duties of Trustee...................................................................................45
SECTION 7.02 Rights of Trustee...................................................................................46
SECTION 7.03 Individual Rights of Trustee........................................................................48
SECTION 7.04 Trustee's Disclaimer................................................................................48
SECTION 7.05 Notice of Defaults..................................................................................48
SECTION 7.06 Reports by Trustee to Holders.......................................................................48
SECTION 7.07 Compensation and Indemnity..........................................................................48
SECTION 7.08 Replacement of Trustee..............................................................................49
SECTION 7.09 Successor Trustee by Merger.........................................................................50
SECTION 7.10 Eligibility; Disqualification.......................................................................50
SECTION 7.11 Preferential Collection of Claims Against Company...................................................50
ARTICLE 8
DISCHARGE OF INDENTURE
SECTION 8.01 Discharge of Liability on Securities................................................................50
SECTION 8.02 Repayment to the Company............................................................................51
ARTICLE 9
AMENDMENTS
SECTION 9.01 Without Consent of Holders..........................................................................51
SECTION 9.02 With Consent of Holders.............................................................................51
SECTION 9.03 Compliance with Trust Indenture Act.................................................................52
SECTION 9.04 Revocation and Effect of Consents, Waivers and Actions..............................................52
SECTION 9.05 Notation on or Exchange of Securities...............................................................53
SECTION 9.06 Trustee to Sign Supplemental Indentures.............................................................53
SECTION 9.07 Effect of Supplemental Indentures...................................................................53
ARTICLE 10
SPECIAL TAX EVENT CONVERSION
SECTION 10.01 Optional Conversion to Semiannual Coupon Note Upon Tax Event.......................................53
ARTICLE 11
CONVERSION
SECTION 11.01 Conversion Privilege...............................................................................54
SECTION 11.02 Conversion Procedure...............................................................................55
SECTION 11.03 Fractional Shares..................................................................................56
SECTION 11.04 Taxes on Conversion................................................................................56
SECTION 11.05 Company to Provide Stock...........................................................................56
SECTION 11.06 Adjustment for Change In Capital Stock.............................................................57
SECTION 11.07 Adjustment for Rights Issue........................................................................57
SECTION 11.08 Adjustment for Other Distributions.................................................................59
SECTION 11.09 When Adjustment May Be Deferred....................................................................61
SECTION 11.10 When No Adjustment Required........................................................................61
SECTION 11.11 Notice of Adjustment...............................................................................62
SECTION 11.12 Voluntary Increase.................................................................................62
SECTION 11.13 Notice of Certain Transactions.....................................................................62
SECTION 11.14 Reorganization of Company; Special Distributions...................................................63
SECTION 11.15 Company Determination Final........................................................................63
SECTION 11.16 Trustee's Adjustment Disclaimer....................................................................63
SECTION 11.17 Simultaneous Adjustments...........................................................................64
SECTION 11.18 Successive Adjustments.............................................................................64
SECTION 11.19 Rights Issued in Respect of Common Stock Issued Upon Conversion....................................64
ARTICLE 12
PAYMENT OF INTEREST
SECTION 12.01 Interest Payments..................................................................................64
SECTION 12.02 Defaulted Interest.................................................................................65
SECTION 12.03 Interest Rights Preserved..........................................................................65
ARTICLE 13
GUARANTEES
SECTION 13.01 Guarantees.........................................................................................66
SECTION 13.02 Severability.......................................................................................67
SECTION 13.03 Future Subsidiaries................................................................................67
SECTION 13.04 Priority of Guarantees.............................................................................68
SECTION 13.05 Limitation of Guarantors' Liability................................................................68
SECTION 13.06 Subrogation........................................................................................68
SECTION 13.07 Reinstatement......................................................................................68
SECTION 13.08 Release of the Guarantor...........................................................................69
SECTION 13.09 Benefits Acknowledged..............................................................................69
ARTICLE 14
MISCELLANEOUS
SECTION 14.01 Trust Indenture Act Controls.......................................................................69
SECTION 14.02 Notices 69
SECTION 14.03 Communication by Holders with Other Holders........................................................70
SECTION 14.04 Certificate and Opinion as to Conditions Precedent.................................................70
SECTION 14.05 Statements Required in Certificate or Opinion......................................................71
SECTION 14.06 Separability Clause................................................................................71
SECTION 14.07 Rules by Trustee, Paying Agent, Conversion Agent and Registrar.....................................71
SECTION 14.08 Calculations.......................................................................................71
SECTION 14.09 Legal Holidays.....................................................................................71
SECTION 14.10 GOVERNING LAW......................................................................................72
SECTION 14.11 No Recourse Against Others.........................................................................72
SECTION 14.12 Successors.........................................................................................72
SECTION 14.13 Multiple Originals.................................................................................72
INDENTURE dated as of April 3, 2002 among CBRL GROUP, INC., a
Tennessee corporation ("Company"), and the guarantors from time to time parties
hereto and described below (each a "Guarantor" and collectively, the
"Guarantors") and WACHOVIA BANK, NATIONAL ASSOCIATION, (formerly, First Union
National Bank), a national banking association ("Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an issue of
Liquid Yield Option(TM) Notes due 2032 (Zero Coupon-Senior) (the "Securities")
having the terms, tenor, amount and other provisions hereinafter set forth, and,
to provide therefor, the Company has duly authorized the execution and delivery
of this Indenture.
All things necessary to make the Securities, when the
Securities are duly executed by the Company and the Guarantors and authenticated
and delivered hereunder and duly issued by the Company and the Guarantors, the
valid obligations of the Company and the Guarantors, and to make this Indenture
a valid and binding agreement of the Company and the Guarantors, in accordance
with their and its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of
the Securities by the Holders thereof, it is mutually covenanted and agreed, for
the equal and proportionate benefit of all Holders of the Securities, as
follows:
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01 ....Definitions.
"144A Global Security" means a permanent Global Security in
the form of the Security attached hereto as Exhibit A-1, and that is deposited
with and registered in the name of the Depositary, representing Securities sold
in reliance on Rule 144A under the Securities Act.
"Affiliate" of any specified person means any other person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified person. For the purposes of this definition,
"control" when used with respect to any specified person means the power to
direct or cause the direction of the management and policies of such person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Applicable Procedures" means, with respect to any transfer or
transaction involving a Global Security or beneficial interest therein, the
rules and procedures of the Depositary for such Security, in each case to the
extent applicable to such transaction and as in effect from time to time.
"Board of Directors" means either the board of directors of
the Company or any duly authorized committee of such board.
"Business Day" means each day of the year other than a
Saturday or a Sunday or other day on which banking institutions in The City of
New York are required or authorized to close.
"Capital Stock" for any corporation means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) stock or other equity issued
by that corporation.
"Certificated Securities" means any of the Securities that are
in the form of the Securities attached hereto as Exhibit A-2.
"Common Stock" shall mean the shares of Common Stock, $0.01
par value, of the Company as it exists on the date of this Indenture or any
other shares of Capital Stock of the Company into which the Common Stock shall
be reclassified or changed.
"Company" means the party named as the "Company" in the first
paragraph of this Indenture until a successor replaces it pursuant to the
applicable provisions of this Indenture and, thereafter, shall mean such
successor. The foregoing sentence shall likewise apply to any subsequent such
successor or successors.
"Company Request" or "Company Order" means a written request
or order signed in the name of the Company by any two Officers.
"Corporate Trust Office" means the principal office of the
Trustee at which at any time its corporate trust business shall be administered,
which office at the date hereof is located at 2525 West End Avenue, Suite 1200,
Nashville, TN 37203, Attention: Corporate Trust Office, or such other address as
the Trustee may designate from time to time by notice to the Company, or the
principal corporate trust office of any successor Trustee (or such other address
as a successor Trustee may designate from time to time by notice to the
Company).
"Debt" means with respect to the Company at any date, without
duplication, obligations (other than nonrecourse obligations) for borrowed money
or evidenced by bonds, debentures, notes or similar instruments.
"Default" means any event which is, or after notice or passage
of time or both would be, an Event of Default.
"domestic Subsidiary" means any Subsidiary that was formed
under the laws of the United States or any state or dependency thereof or the
district of Columbia.
"Global Securities" means any of the Securities that are in
the form of the Securities attached hereto as Exhibit A-1, and to the extent
that such Securities are required to bear the Legend required by Section 2.06,
such Securities will be in the form of a 144A Global Security.
"guarantee" means, as applied to any obligation, (i) a
guarantee (other than by endorsement of negotiable instruments for collection in
the ordinary course of business), direct or indirect, in any manner, of any part
or all of such obligation and (ii) an agreement, direct or indirect, contingent
or otherwise, the practical effect of which is to assure in any way the payment
or performance (or payment of damages in the event of non-performance) of all or
any part of such obligation, including, without limiting the foregoing, the
payment of amounts drawn down by letters of credit.
"Guarantee" means any guarantee of the Securities by any
domestic Subsidiary in accordance with the provisions of Article 13.
"Guarantors" means (i) each domestic Subsidiary listed as a
signatory to this Indenture and (ii) each Person who becomes a Guarantor
pursuant to Article 13 and/or Section 4.08 of this Indenture.
"Holder" or "Securityholder" means a person in whose name a
Security is registered on the Registrar's books.
"Indenture" means this Indenture, as amended or supplemented
from time to time in accordance with the terms hereof, including the provisions
of the TIA that are deemed to be a part hereof.
"Institutional Accredited Investor Security" means a Security
in the form of the Security attached hereto as Exhibit A-2, representing
Securities sold to Institutional Accredited Investors.
"Issue Date" of any Security means the date on which the
Security was originally issued or deemed issued as set forth on the face of the
Security.
"Issue Price" of any Security means, in connection with the
original issuance of such Security, the initial issue price at which the
Security is sold as set forth on the face of the Security.
"Officer" means the Chairman of the Board, the Vice Chairman,
the Chief Executive Officer, the President, any Executive Vice President, any
Senior Vice President, any Vice President, the Treasurer or the Secretary or any
Assistant Treasurer or Assistant Secretary of the Company.
"Officers' Certificate" means a written certificate containing
the information specified in Sections 14.04 and 14.05, signed in the name of the
Company by any two Officers, and delivered to the Trustee. An Officers'
Certificate given pursuant to Section 4.03 shall be signed by the principal
executive financial or accounting Officer of the Company but need not contain
the information specified in Sections 14.04 and 14.05.
"Opinion of Counsel" means a written opinion containing the
information specified in Sections 14.04 and 14.05, from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of, or counsel to, the
Company or the Trustee.
"Original Issue Discount" of any Security means the difference
between the Issue Price and the Principal Amount at Maturity of the Security as
set forth on the face of the Security.
"person" or "Person" means any individual, corporation,
limited liability company, partnership, joint venture, association, joint-stock
company, trust, unincorporated organization, or government or any agency or
political subdivision thereof.
"Principal Amount at Maturity" of a Security means the
principal amount at maturity as set forth on the face of the Security.
"Redemption Date" or "redemption date" means the date
specified for redemption of the Securities in accordance with the terms of the
Securities and this Indenture.
"Redemption Price" or "redemption price" shall have the
meaning set forth in paragraph 6 of the Securities.
"Responsible Officer" means, when used with respect to the
Trustee, any officer within the corporate trust department of the Trustee,
including any vice president, assistant vice president, assistant secretary,
trust officer or any other officer of the Trustee who customarily performs
functions similar to those performed by the Persons who at the time shall be
such officers, respectively, or to whom any corporate trust matter is referred
because of such person's knowledge of and familiarity with the particular
subject and who, in each case, shall have direct responsibility for the
administration of this Indenture.
"Restricted Security" means a Security required to bear the
restrictive legend set forth in the form of Security set forth in Exhibits A-1
and A-2 of this Indenture.
"Rule 144" means Rule 144 under the Securities Act (or any
successor rule having substantially similar provisions), as it may be amended
from time to time.
"Rule 144A" means Rule 144A under the Securities Act (or any
successor rule having substantially similar provisions), as it may be amended
from time to time.
"Sale Price" of Capital Stock on any date means the closing
per share sale price (or, if no closing sale price is reported, the average of
the bid and ask prices or, if more than one in either case, the average of the
average bid and the average ask prices) on such date as reported in the
composite transactions for the principal United States securities exchange on
which the Capital Stock is traded or, if the Capital Stock is not listed on a
United States national or regional securities exchange, as reported by the
National Association of Securities Dealers Automated Quotation System or by the
National Quotation Bureau Incorporated. In the absence of such quotation, the
Company shall be entitled to determine the Sale Price on the basis of such
quotations as it considers appropriate.
"SEC" means the United States Securities and Exchange
Commission.
"Securities" means any of the Company's Liquid Yield
Option(TM) Notes due 2032 (Zero Coupon-Senior), as amended or supplemented from
time to time, issued under this Indenture.
"Securityholder" or "Holder" means a person in whose name a
Security is registered on the Registrar's books.
"Significant Subsidiary", as such term is defined in Rule 1-02
of Regulation S-X under the Securities Act of 1933, as amended.
"Special Record Date" means, with respect to, the payment of
any Defaulted Interest, the date fixed by the Trustee pursuant to Section 12.02.
"Stated Maturity", when used with respect to any Security or
any installment of semiannual or contingent interest thereon, means the date
specified in such Security as the fixed date on which an amount equal to the
Principal Amount at Maturity of such Security or such installment of semiannual
or contingent interest is due and payable.
"Subsidiary" means (i) a corporation, a majority of whose
Capital Stock with voting power, under ordinary circumstances, to elect
directors is, at the date of determination, directly or indirectly owned by the
Company, by one or more Subsidiaries of the Company or by the Company and one or
more Subsidiaries of the Company, (ii) a partnership in which the Company or a
Subsidiary of the Company holds a majority interest in the equity capital or
profits of such partnership, or (iii) any other person (other than a corporation
or a partnership) in which the Company, a Subsidiary of the Company or the
Company and one or more Subsidiaries of the Company, directly or indirectly, at
the date of determination, has (x) at least a majority ownership interest or (y)
the power to elect or direct the election of a majority of the directors or
other governing body of such person.
"Tax Event" means that the Company shall have received an
opinion from independent tax counsel experienced in such matters to the effect
that, on or after April 3, 2002, as a result of (a) any amendment to, or change
(including any announced prospective change) in, the laws (or any regulations
thereunder) of the United States or any political subdivision or taxing
authority thereof or therein or (b) any amendment to, or change in, an
interpretation or application (including through litigation or a settlement
involving the Company) of such laws or regulations by any legislative body,
court, governmental agency or regulatory authority, in each case which amendment
or change is enacted, promulgated, issued or announced or which interpretation
is issued or announced or which action is taken, on or after April 3, 2002,
there is more than an insubstantial risk that interest (including Tax Original
Issue Discount, as defined in Section 4.07, and contingent interest, if any)
payable on the Securities either (i) would not be deductible on a current
accrual basis or (ii) would not be deductible under any other method, in either
case in whole or in part, by the Company (by reason of deferral, disallowance,
or otherwise) for United States federal income tax purposes.
"TIA" means the Trust Indenture Act of 1939 as in effect on
the date of this Indenture, provided, however, that in the event the TIA is
amended after such date, TIA means, to the extent required by any such
amendment, the TIA as so amended.
"trading day" means a day during which trading in securities
generally occurs on the New York Stock Exchange or, if the Common Stock is not
listed on the New York Stock Exchange, on the principal other national or
regional securities exchange on which the Common Stock is then listed or, if the
Common Stock is not listed on a national or regional securities exchange, on the
National Association of Securities Dealers Automated Quotation System or, if the
Common Stock is not quoted on the National Association of Securities Dealers
Automated Quotation System, on the principal other market on which the Common
Stock is then traded.
"Trustee" means the party named as the "Trustee" in the first
paragraph of this Indenture until a successor replaces it pursuant to the
applicable provisions of this Indenture and, thereafter, shall mean such
successor. The foregoing sentence shall likewise apply to any subsequent such
successor or successors.
SECTION 1.02 Other Definitions.
Defined in
Term Section
- ---- -------
"Act"............................................................................1.05(a)
---
"Agent Members"..................................................................2.12(f)
-------------
"Associate"......................................................................3.09(a)
---------
"Average Sale Price"...............................................................11.01
------------------
"Bankruptcy Law"....................................................................6.01
--------------
"beneficial owner"...............................................................3.09(a)
----------------
"Bid Solicitation Agent"............................................................2.03
-----------------------
"cash"...........................................................................3.08(b)
----
"Change in Control"..............................................................3.09(a)
-----------------
"Change in Control Purchase Date"................................................3.09(a)
-------------------------------
"Change in Control Purchase Notice"..............................................3.09(c)
---------------------------------
"Change in Control Purchase Price"...............................................3.09(a)
--------------------------------
"Company Notice".................................................................3.08(e)
--------------
"Company Notice Date"............................................................3.08(c)
-------------------
"Conversion Agent"..................................................................2.03
----------------
"Conversion Date"..................................................................11.02
---------------
"Conversion Rate"..................................................................11.01
---------------
"Custodian".........................................................................6.01
---------
"Defaulted Interest"...............................................................12.02
------------------
"Depositary".....................................................................2.01(a)
----------
"DTC"............................................................................2.01(a)
---
"Event of Default"..................................................................6.01
----------------
"Exchange Act"...................................................................3.08(d)
------------
"Ex-Dividend Date"..............................................................11.08(b)
----------------
"Ex-Dividend Time".................................................................11.01
----------------
"Extraordinary Cash Dividend"...................................................11.08(a)
---------------------------
"Institutional Accredited Investors".............................................2.01(b)
----------------------------------
"Interest Payment Date"............................................................10.01
---------------------
"Legal Holiday"....................................................................14.09
-------------
"Legend".........................................................................2.06(f)
------
"LYON Market Price"..........................................................Exhibit A-1
-----------------
"Market Price"...................................................................3.08(d)
------------
"Measurement Period"............................................................11.08(a)
------------------
"noncontingent bond method".........................................................4.07
-------------------------
"Notice of Default".................................................................6.01
-----------------
"Option Exercise Date".............................................................10.01
--------------------
"Paying Agent"......................................................................2.03
------------
"Post-Distribution Price".......................................................11.08(b)
-----------------------
"Purchase Date"..................................................................3.08(a)
-------------
"Purchase Notice"................................................................3.08(a)
---------------
"Purchase Price".................................................................3.08(a)
--------------
"QIBs"...........................................................................2.01(a)
----
"Registrar".........................................................................2.03
---------
"Regular Record Date"..............................................................10.01
-------------------
"Relevant Cash Dividends".......................................................11.08(a)
-----------------------
"Restated Principal Amount"........................................................10.01
-------------------------
"Rights"...........................................................................11.19
------
"Rights Agreement".................................................................11.19
----------------
"Rule 144A Information".............................................................4.06
---------------------
"Securities Act".................................................................3.08(d)
--------------
"Special Record Date"..............................................................12.02
-------------------
"Tax Event Date"...................................................................10.01
--------------
"Tax Original Issue Discount".......................................................4.07
---------------------------
"Time of Determination"............................................................11.01
---------------------
"Treasury Regulations" .............................................................4.07
--------------------
SECTION 1.03 ....Incorporation by Reference of Trust Indenture Act. Whenever
this Indenture refers to a provision of the TIA, the provision is incorporated
by reference in and made a part of this Indenture. The following TIA terms used
in this Indenture have the following meanings:
"Commission" means the SEC.
----------
"indenture securities" means the Securities.
--------------------
"indenture security holder" means a Securityholder.
-------------------------
"indenture to be qualified" means this Indenture.
-------------------------
"indenture trustee" or "institutional trustee" means the
----------------- ---------------------
Trustee.
"obligor" on the indenture securities means the Company.
-------
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by SEC rule have
the meanings assigned to them by such definitions.
SECTION 1.04 ....Rules of Construction. Unless the context otherwise requires:
(1) a defined term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with United States generally accepted accounting
principles as in effect from time to time;
(3) "or" is not exclusive;
--
(4) "including" means including, without limitation; and
---------
(5) words in the singular include the plural, and words
in the plural include the singular.
SECTION 1.05 ....Acts of Holders.
(a)......Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or taken by Holders may
be embodied in and evidenced by one or more instruments (which may take the form
of an electronic writing or messaging or otherwise be in accordance with
customary procedures of the Depositary or the Trustee) of substantially similar
tenor signed by such Holders in person or by agent duly appointed in writing
(which may be in electronic form); and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
are delivered to the Trustee and, when it is hereby expressly required, to the
Company. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of Holders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent (either of which may be in
electronic form) shall be sufficient for any purpose of this Indenture and
conclusive in favor of the Trustee and the Company, if made in the manner
provided in this Section.
(b)......The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution (or
electronic delivery) or by a certificate of a notary public or other officer
authorized by law to take acknowledgments of deeds, certifying that the
individual signing or delivering such instrument or writing acknowledged to such
officer the execution (or electronic delivery) thereof. When such execution is
by a signer acting in a capacity other than such signer's individual capacity,
such certificate or affidavit shall also constitute sufficient proof of such
signer's authority. The fact and date of the execution of any such instrument or
writing (electronic or otherwise), or the authority of the Person executing the
same, may also be proved in any other manner which the Trustee deems sufficient.
(c)......The ownership of Securities shall be proved by the register maintained
by the Registrar.
(d)......Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Security shall bind every future Holder of the
same Security and the holder of every Security issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made upon such
Security.
(e)......If the Company shall solicit from the Holders any request, demand,
authorization, direction, notice, consent, waiver or other Act, the Company may,
at its option, by or pursuant to a resolution of the Board of Directors, fix in
advance a record date for the determination of Holders entitled to give such
request, demand, authorization, direction, notice, consent, waiver or other Act,
but the Company shall have no obligation to do so. If such a record date is
fixed, such request, demand, authorization, direction, notice, consent, waiver
or other Act may be given before or after such record date, but only the Holders
of record at the close of business on such record date shall be deemed to be
Holders for the purposes of determining whether Holders of the requisite
proportion of outstanding Securities have authorized or agreed or consented to
such request, demand, authorization, direction, notice, consent, waiver or other
Act, and for that purpose the outstanding Securities shall be computed as of
such record date; provided that no such authorization, agreement or consent by
the Holders on such record date shall be deemed effective unless it shall become
effective pursuant to the provisions of this Indenture within six months after
the record date.
ARTICLE 2
THE SECURITIES
SECTION 2.01 ....Form and Dating. The Securities and the Trustee's certificate
of authentication shall be substantially in the form of Exhibits A-1 and A-2,
which are a part of this Indenture. The Securities may have notations, legends
or endorsements required by law, stock exchange rule or usage (provided that any
such notation, legend or endorsement required by usage is in a form acceptable
to the Company). The Company shall provide any such notations, legends or
endorsements to the Trustee in writing. Each Security shall be dated the date of
its authentication.
(a)......144A Global Securities. Securities offered and sold within the United
States to "qualified institutional buyers" as defined in Rule 144A ("QIBs") in
reliance on Rule 144A shall be issued, initially in the form of a 144A Global
Security, which shall be deposited with the Trustee at its Corporate Trust
Office, as custodian for the Depositary and registered in the name of The
Depository Trust Company ("DTC") or the nominee thereof (such depositary, or any
successor thereto, and any such nominee being hereinafter referred to as the
"Depositary"), duly executed by the Company and authenticated by the Trustee as
hereinafter provided. The aggregate Principal Amount at Maturity of the 144A
Global Securities may from time to time be increased or decreased by adjustments
made on the records of the Trustee and the Depositary as hereinafter provided.
(b)......Institutional Accredited Investor Securities. Except as provided in
this Section 2.01, 2.06 or 2.12, owners of beneficial interests in Global
Securities will not be entitled to receive physical delivery of Certificated
Securities. Securities offered and sold within the United States to
institutional "accredited investors" as defined in Rule 501(a)(1), (2) (3) and
(7) under the Securities Act ("Institutional Accredited Investors") shall be
issued, initially, in the form of an Institutional Accredited Investor Security,
duly executed by the Company and authenticated by the Trustee as hereinafter
provided.
(c)......Global Securities in General. Each Global Security shall represent such
of the outstanding Securities as shall be specified therein and each shall
provide that it shall represent the aggregate Principal Amount at Maturity of
outstanding Securities from time to time endorsed thereon and that the aggregate
Principal Amount at Maturity of outstanding Securities represented thereby may
from time to time be reduced or increased, as appropriate, to reflect exchanges,
redemptions and conversions.
Any adjustment of the aggregate Principal Amount at Maturity
of a Global Security to reflect the amount of any increase or decrease in the
Principal Amount at Maturity of outstanding Securities represented thereby shall
be made by the Trustee in accordance with instructions given by the Holder
thereof as required by Section 2.12 hereof and shall be made on the records of
the Trustee and the Depositary.
(d)......Book-Entry Provisions. This Section 2.01(d) shall apply only to Global
Securities deposited with or on behalf of the Depositary.
The Company shall execute and the Trustee shall, in accordance
with this Section 2.01(d), authenticate and deliver initially one or more Global
Securities that (a) shall be registered in the name of the Depositary, (b) shall
be delivered by the Trustee to the Depositary or pursuant to the Depositary's
instructions or held by the Trustee as custodian for such Depositary and (c)
shall bear legends substantially to the following effect:
"UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS
IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS, IN
WHOLE BUT NOT IN PART, TO NOMINEES OF THE DEPOSITORY TRUST COMPANY OR
TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF
PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN
ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN ARTICLE TWO OF THE
INDENTURE REFERRED TO ON THE REVERSE HEREOF."
(e) Certificated Securities. Securities not issued as interests in the
Global Securities will be issued in certificated form substantially in the form
of Exhibit A-2 attached hereto.
SECTION 2.02 ....Execution and Authentication. The Securities shall be executed
on behalf of the Company by any Officer. The signature of the Officer on the
Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of an
individual who was at the time of the execution of the Securities the proper
Officer of the Company shall bind the Company, notwithstanding that such
individual has ceased to hold such office prior to the authentication and
delivery of such Securities or did not hold such office at the date of
authentication of such Securities.
No Security shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there appears on such
Security a certificate of authentication substantially in the form provided for
herein duly executed by the Trustee by manual signature of an authorized
signatory of the Trustee and such certificate upon any Security shall be
conclusive evidence, and the only evidence, that such Security has been duly
authenticated and delivered hereunder.
The Trustee shall authenticate and deliver Securities for
original issue in an aggregate Principal Amount at Maturity of up to
$422,050,000 upon a Company Order without any further action by the Company. The
aggregate Principal Amount at Maturity of Securities outstanding at any time may
not exceed the amount set forth in the foregoing sentence, except as provided in
Section 2.07.
The Securities shall be issued only in registered form without
coupons and only in denominations of $1,000 of Principal Amount at Maturity and
any integral multiple thereof.
SECTION 2.03 ....Registrar, Paying Agent, Conversion Agent and Bid Solicitation
Agent. The Company shall maintain an office or agency where Securities may be
presented for registration of transfer or for exchange ("Registrar"), an office
or agency where Securities may be presented for purchase or payment ("Paying
Agent") and an office or agency where Securities may be presented for conversion
("Conversion Agent"). The Company shall also appoint a bid solicitation agent
(the "Bid Solicitation Agent") to act pursuant to paragraph 5 of the Securities.
The Registrar shall keep a register of the Securities and of their transfer and
exchange. The Company may have one or more co-registrars, one or more additional
paying agents and one or more additional conversion agents. The term Paying
Agent includes any additional paying agent, including any named pursuant to
Section 4.05. The term Conversion Agent includes any additional conversion
agent, including any named pursuant to Section 4.05.
The Company shall enter into an appropriate agency agreement
with any Registrar or co-registrar, Paying Agent, Conversion Agent or Bid
Solicitation Agent (other than the Trustee). The agreement shall implement the
provisions of this Indenture that relate to such agent. The Company shall notify
the Trustee of the name and address of any such agent. If the Company fails to
maintain a Registrar, Paying Agent, Conversion Agent or Bid Solicitation Agent,
the Trustee shall act as such and shall be entitled to appropriate compensation
therefor pursuant to Section 7.07. The Company or any Subsidiary or an Affiliate
of either of them may act as Paying Agent, Registrar, Conversion Agent or
co-registrar. None of the Company or any Subsidiary or any Affiliate of either
of them may act as Bid Solicitation Agent.
The Company initially appoints the Trustee as Registrar,
Conversion Agent, Paying Agent and Bid Solicitation Agent in connection with the
Securities.
SECTION 2.04 ....Paying Agent to Hold Money and Securities in Trust. Except as
otherwise provided herein, not later than 10:00 a.m., New York City time, on
each due date of payments in respect of any Security, the Company shall deposit
with the Paying Agent a sum of money (in immediately available funds if
deposited on the due date) or Common Stock sufficient to make such payments when
so becoming due. The Company shall require each Paying Agent (other than the
Trustee) to agree in writing that the Paying Agent shall hold in trust for the
benefit of Securityholders or the Trustee all money and Common Stock held by the
Paying Agent for the making of payments in respect of the Securities and shall
notify the Trustee of any default by the Company in making any such payment. At
any time during the continuance of any such default, the Paying Agent shall,
upon the written request of the Trustee, forthwith pay to the Trustee all money
and Common Stock so held in trust. If the Company, a Subsidiary or an Affiliate
of either of them acts as Paying Agent, it shall segregate the money and Common
Stock held by it as Paying Agent and hold it as a separate trust fund. The
Company at any time may require a Paying Agent to pay all money and Common Stock
held by it to the Trustee and to account for any funds and Common Stock
disbursed by it. Upon doing so, the Paying Agent shall have no further liability
for the money or Common Stock.
SECTION 2.05 ....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
Company shall cause to be furnished to the Trustee at least semiannually on May
1 and November 1 a listing of Securityholders dated within 15 days of the date
on which the list is furnished and at such other times as the Trustee may
request in writing a list in such form and as of such date as the Trustee may
reasonably require of the names and addresses of Securityholders.
SECTION 2.06 ....Transfer and Exchange. Subject to Section 2.12 hereof,
(a) Upon surrender for registration of transfer of any Security, together with a
written instrument of transfer satisfactory to the Registrar duly executed by
the Securityholder or such Securityholder's attorney duly authorized in writing,
at the office or agency of the Company designated as Registrar or co-registrar
pursuant to Section 2.03, the Company shall execute, and the Trustee upon
receipt of a Company Order shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Securities of any
authorized denomination or denominations, of a like aggregate Principal Amount
at Maturity. The Company shall not charge a service charge for any registration
of transfer or exchange, but the Company may require payment of a sum sufficient
to pay all taxes, assessments or other governmental charges that may be imposed
in connection with the registration of transfer or exchange of the Securities
from the Securityholder requesting such registration of transfer or exchange.
At the option of the Holder, Certificated Securities may be
exchanged for other Securities of any authorized denomination or denominations,
of a like aggregate Principal Amount at Maturity, upon surrender of the
Securities to be exchanged, together with a written instrument of transfer
satisfactory to the Registrar duly executed by the Securityholder or such
Securityholder's attorney duly authorized in writing, at such office or agency.
Whenever any Securities are so surrendered for exchange, the Company shall
execute, and the Trustee upon receipt of a Company Order shall authenticate and
deliver, the Securities which the Holder making the exchange is entitled to
receive.
The Company shall not be required to make, and the Registrar
need not register, transfers or exchanges of Securities selected for redemption
(except, in the case of Securities to be redeemed in part, the portion thereof
not to be redeemed) or any Securities in respect of which a Purchase Notice or
Change in Control Purchase Notice has been given and not withdrawn by the Holder
thereof in accordance with the terms of this Indenture (except, in the case of
Securities to be purchased in part, the portion thereof not to be purchased) or
any Securities for a period of 15 days before the mailing of a notice of
redemption of Securities to be redeemed.
(b) Notwithstanding any provision to the contrary herein, so long as a Global
Security remains outstanding and is held by or on behalf of the Depositary,
transfers of a Global Security, in whole or in part, shall be made only in
accordance with Section 2.12 and this Section 2.06(b). Transfers of a Global
Security shall be limited to transfers of such Global Security in whole, or in
part, to nominees of the Depositary or to a successor of the Depositary or such
successor's nominee.
(c) Successive registrations and registrations of transfers and exchanges as
aforesaid may be made from time to time as desired, and each such registration
shall be noted on the register for the Securities.
(d) Any Registrar appointed pursuant to Section 2.03 hereof shall provide to the
Trustee such information as the Trustee may reasonably require in connection
with the delivery by such Registrar of Securities upon registration of transfer
or exchange of Securities.
(e) No Registrar shall be required to make registrations of transfer or exchange
of Securities during any periods designated in the text of the Securities or in
this Indenture as periods during which such registration of transfers and
exchanges need not be made.
(f) If Securities are issued upon the registration of transfer, exchange or
replacement of Securities subject to restrictions on transfer and bearing the
legends set forth on the form of Security attached hereto as Exhibits A-1 and
A-2 setting forth such restrictions (collectively, the "Legend"), or if a
request is made to remove the Legend on a Security, the Securities so issued
shall bear the Legend, or the Legend shall not be removed, as the case may be,
unless there is delivered to the Company and the Registrar such satisfactory
evidence, which shall include an Opinion of Counsel, as may be reasonably
required by the Company and the Registrar, that neither the Legend nor the
restrictions on transfer set forth therein are required to ensure that transfers
thereof comply with the provisions of Rule 144A or Rule 144 or that such
Securities are not "restricted" within the meaning of Rule 144. Upon (i)
provision of such satisfactory evidence, or (ii) notification by the Company to
the Trustee and Registrar of the sale of such Security pursuant to a
registration statement that is effective at the time of such sale, the Trustee,
upon receipt of a Company Order, shall authenticate and deliver a Security that
does not bear the Legend. If the Legend is removed from the face of a Security
and the Security is subsequently held by an Affiliate of the Company, the
Company shall use its reasonable best efforts to reinstate the Legend.
The Trustee and the Registrar shall have no obligation or duty
to monitor, determine or inquire as to compliance with any restrictions on
transfer imposed under this Indenture or under applicable law with respect to
any transfer of any interest in any Security (including any transfers between or
among Depositary participants or beneficial owners of interests in any Global
Security) other than to require delivery of such certificates and other
documentation or evidence as are expressly required by, and to do so if and when
expressly required by the terms of, this Indenture, and to examine the same to
determine substantial compliance as to form with the express requirements
hereof.
SECTION 2.07 ....Replacement Securities. If (a) any mutilated Security is
surrendered to the Trustee, or (b) the Company and the Trustee receive evidence
to their satisfaction of the destruction, loss or theft of any Security, and
there is delivered to the Company and the Trustee such security or indemnity as
may be required by them to save each of them harmless, then, in the absence of
notice to the Company or the Trustee that such Security has been acquired by a
protected purchaser within the meaning of Article 8 of the Uniform Commercial
Code (a "Protected Purchaser"), the Company shall execute and upon receipt of a
Company Order, the Trustee shall authenticate and deliver, in exchange for any
such mutilated Security or in lieu of any such destroyed, lost or stolen
Security, a new Security of like tenor and Principal Amount at Maturity, bearing
a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security
has become or is about to become due and payable, or is about to be purchased by
the Company pursuant to Article 3 hereof, the Company in its discretion may,
instead of issuing a new Security, pay or purchase such Security, as the case
may be.
Upon the issuance of any new Securities under this Section,
the Company may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of
any mutilated, destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the destroyed,
lost or stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all benefits of this Indenture equally and proportionately with any
and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 2.08 ....Outstanding Securities; Determinations of Holders' Action.
Securities outstanding at any time are all the Securities authenticated by the
Trustee, except for those cancelled by it, those paid pursuant to Section 2.10
and delivered to it for cancellation and those described in this Section 2.08 as
not outstanding. A Security does not cease to be outstanding because the Company
or an Affiliate thereof holds the Security; provided, however, that in
determining whether the Holders of the requisite Principal Amount at Maturity of
Securities have given or concurred in any request, demand, authorization,
direction, notice, consent or waiver hereunder, Securities owned by the Company
or any other obligor upon the Securities or any Affiliate of the Company or such
other obligor shall be disregarded and deemed not to be outstanding, except
that, in determining whether the Trustee shall be protected in relying upon any
such request, demand, authorization, direction, notice, consent or waiver, only
Securities which a Responsible Officer of the Trustee actually knows to be so
owned shall be so disregarded. Subject to the foregoing, only Securities
outstanding at the time of such determination shall be considered in any such
determination (including, without limitation, determinations pursuant to
Articles 6 and 9).
If a Security is replaced pursuant to Section 2.07, the
replaced Security ceases to be outstanding unless the Trustee and the Company
receive proof satisfactory to each of them that the replaced Security is held by
a Protected Purchaser unaware that such Security has been replaced, in which
case the replacement security shall be deemed not to be outstanding.
If the Paying Agent holds, in accordance with this Indenture,
on a Redemption Date, or on the Business Day following the Purchase Date or a
Change in Control Purchase Date, or on Stated Maturity, money or securities, if
permitted hereunder, sufficient to pay Securities payable on that date, then
immediately after such Redemption Date, Purchase Date, Change in Control
Purchase Date or Stated Maturity, as the case may be, such Securities shall
cease to be outstanding and Original Issue Discount and interest (including
contingent interest), if any, on such Securities shall cease to accrue;
provided, that if such Securities are to be redeemed, notice of such redemption
has been duly given pursuant to this Indenture.
If a Security is converted in accordance with Article 11, then
from and after the time of conversion on the Conversion Date, such Security
shall cease to be outstanding and Original Issue Discount and interest
(including contingent interest), if any, shall cease to accrue on such Security.
SECTION 2.09 ....Temporary Securities. Pending the preparation of definitive
Securities, the Company may execute, and upon Company Order, the Trustee shall
authenticate and deliver, temporary Securities which are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued and with such appropriate insertions, omissions, substitutions and
other variations as the officers executing such Securities may determine, as
conclusively evidenced by their execution of such Securities.
If temporary Securities are issued, the Company will cause
definitive Securities to be prepared without unreasonable delay. After the
preparation of definitive Securities, the temporary Securities shall be
exchangeable for definitive Securities upon surrender of the temporary
Securities at the office or agency of the Company designated for such purpose
pursuant to Section 2.03, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Securities the Company shall execute
and upon Company Order the Trustee shall authenticate and deliver in exchange
therefor a like Principal Amount at Maturity of definitive Securities of
authorized denominations. Until so exchanged the temporary Securities shall in
all respects be entitled to the same benefits under this Indenture as definitive
Securities.
SECTION 2.10 ....Cancellation. All Securities surrendered for payment, purchase
by the Company pursuant to Article 3, conversion, redemption or registration of
transfer or exchange shall, if surrendered to any person other than the Trustee,
be delivered to the Trustee and shall be promptly cancelled by it. The Company
may at any time deliver to the Trustee for cancellation any Securities
previously authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and all Securities so delivered shall be
promptly cancelled by the Trustee. The Company may not issue new Securities to
replace Securities it has paid or delivered to the Trustee for cancellation or
that any Holder has converted pursuant to Article 11. No Securities shall be
authenticated in lieu of or in exchange for any Securities cancelled as provided
in this Section, except as expressly permitted by this Indenture. All cancelled
Securities held by the Trustee shall be disposed of by the Trustee.
SECTION 2.11 ....Persons Deemed Owners. Prior to due presentment of a Security
for registration of transfer, the Company, the Trustee and any agent of the
Company or the Trustee may treat the Person in whose name such Security is
registered as the owner of such Security for the purpose of receiving payment of
principal of the Security or the payment of any Redemption Price, Purchase Price
or Change in Control Purchase Price in respect thereof, and interest (including
contingent interest, if any) thereon, for the purpose of conversion and for all
other purposes whatsoever, whether or not such Security be overdue, and neither
the Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.
SECTION 2.12 ....Global Securities.
(a) Notwithstanding any other provisions of this Indenture or the Securities,
(A) transfers of a Global Security, in whole or in part, shall be made only in
accordance with Section 2.06 and Section 2.12(b)(i), (B) transfer of a
beneficial interest in a Global Security for a Certificated Security shall
comply with Section 2.06 and Section 2.12(b)(i) below, and (C) transfers of a
Certificated Security shall comply with Section 2.06 and Section 2.12(b)(ii) and
transfer of a Certificated Security for a Beneficial Interest in a Global
Security shall comply with Section 2.06 and Section 2.12(b)(iii) below.
(b) Transfer of Global Security. A Global Security may not be transferred, in
whole or in part, to any Person other than the Depositary or a nominee or any
successor thereof, and no such transfer to any such other Person may be
registered; provided that this clause (i) shall not prohibit any transfer of a
Security that is issued in exchange for a Global Security but is not itself a
Global Security. No transfer of a Security to any Person shall be effective
under this Indenture or the Securities unless and until such Security has been
registered in the name of such Person. Nothing in this Section 2.12(b)(i) shall
prohibit or render ineffective any transfer of a beneficial interest in a Global
Security effected in accordance with the other provisions of this Section
2.12(b).
(i) Restrictions on Transfer of a Beneficial Interest in a Global
Security for a Certificated Security. A beneficial interest in
a Global Security may not be exchanged for a Certificated
Security except upon satisfaction of the requirements set
forth below. Upon receipt by the Trustee of a request for
transfer of a beneficial interest in a Global Security in
accordance with Applicable Procedures for a Certificated
Security in the form satisfactory to the Trustee, together
with:
(A) so long as the Securities are Restricted Securities,
certification, in the form set forth in Exhibit B-1,
and, if requested by the Company or the Registrar,
certification in the form set forth in Exhibit B-2,
that such beneficial interest in the Global Security
is being transferred to an Institutional Accredited
Investor that satisfies the definitions set forth in
subparagraphs (a)(1), (2), (3) or (7) of Rule 501
under the Securities Act;
(B) written instructions to the Trustee to make, or
direct the Registrar to make, an adjustment on its
books and records with respect to such Global
Security to reflect a decrease in the aggregate
Principal Amount at Maturity of the Securities
represented by the Global Security, such instructions
to contain information regarding the Depositary
account to be credited with such decrease; and
(C) if the Company or Registrar so requests, an Opinion
of Counsel or other evidence reasonably satisfactory
to them as to the compliance with the restrictions
set forth in the Legend,
then the Trustee shall cause, or direct the Registrar to cause, in
accordance with the standing instructions and procedures existing
between the Depositary and the Registrar, the aggregate Principal
Amount at Maturity of Securities represented by the Global Security to
be decreased by the aggregate Principal Amount at Maturity of the
Certificated Security to be issued, shall authenticate and deliver such
Certificated Security and shall debit or cause to be debited to the
account of the Person specified in such instructions a beneficial
interest in the Global Security equal to the Principal Amount at
Maturity of the Certificated Security so issued.
(ii) Transfer and Exchange of Certificated Securities. When
Certificated Securities are presented to the Registrar with a
request:
(x) to register the transfer of such Certificated
Securities; or
(y) to exchange such Certificated Securities for
an equal Principal Amount at Maturity of Certificated
Securities of other authorized denominations,
the Registrar shall register the transfer or make the
exchange as requested if its reasonable requirements for such
transaction are met; provided, however, that the Certificated
Securities surrendered for registration of transfer or
exchange:
(A) shall be duly endorsed or accompanied by a written
instrument of transfer in form reasonably satisfactory to the
Company and the Registrar, duly executed by the Holder
thereof or his attorney duly authorized in writing; and
(B) so long as such Securities are Restricted Securities,
such Securities are being transferred or exchanged pursuant
to an effective registration statement under the Securities
Act or, if being transferred pursuant to clause (1), (2) or
(3) below, are accompanied by the additional information and
documents specified in each clause, as applicable:
(1) if such Certificated Securities are being delivered
to the Registrar by a Holder for registration in the
name of such Holder, without transfer, a
certification from such Holder to that effect; or
(2) if such Certificated Securities are being transferred
to the Company, a certification to that effect; or
(3) if such Certificated Securities are being transferred
pursuant to an exemption from registration (i) a
certification to that effect (in the form set forth
in Exhibit B-1 and B-2, if applicable) and (ii) if
the Company or Registrar so requests, an opinion of
counsel or other evidence reasonably satisfactory to
them as to the compliance with the restrictions set
forth in the Legend.
(iii) Restrictions on Transfer of a Certificated Security for a
Beneficial Interest in a Global Security. A Certificated
Security may not be exchanged for a beneficial interest in a
Global Security except upon satisfaction of the requirements
set forth below.
Upon receipt by the Trustee of a Certificated Security, duly
endorsed or accompanied by appropriate instruments of
transfer, in form satisfactory to the Trustee, together with:
(A) so long as the Securities are Restricted
Securities, certification, in the form set forth in
Exhibit B-1, that such Certificated Security is being
transferred to a QIB in accordance with Rule 144A;
and
(B) written instructions directing the Trustee to
make, or to direct the Registrar to make, an
adjustment on its books and records with respect to
such Global Security to reflect an increase in the
aggregate Principal Amount at Maturity of the
Securities represented by the Global Security, such
instructions to contain information regarding the
Depositary account to be credited with such increase,
then the Trustee shall cancel such Certificated Security and
cause, or direct the Registrar to cause, in accordance with
the standing instructions and procedures existing between the
Depositary and the Registrar, the aggregate Principal Amount
at Maturity of Securities represented by the Global Security
to be increased by the aggregate Principal Amount at Maturity
of the Certificated Security to be exchanged, and shall credit
or cause to be credited to the account of the Person specified
in such instructions a beneficial interest in the Global
Security equal to the Principal Amount at Maturity of the
Certificated Security so cancelled. If no Global Securities
are then outstanding, the Company shall issue and the Trustee,
upon receipt of a Company Order, shall authenticate a new
Global Security in the appropriate Principal Amount at
Maturity.
(c) Subject to the succeeding paragraph, every Security shall be subject to the
restrictions on transfer provided in the Legend including the requirement of the
delivery of an Opinion of Counsel, if so provided. Whenever any Restricted
Security is presented or surrendered for registration of transfer or for
exchange for a Security registered in a name other than that of the Holder, such
Security must be accompanied by a certificate in substantially the form set
forth in Exhibit B-1, dated the date of such surrender and signed by the Holder
of such Security, as to compliance with such restrictions on transfer. The
Registrar shall not be required to accept for such registration of transfer or
exchange any Security not so accompanied by a properly completed certificate.
(d) The restrictions imposed by the Legend upon the transferability of any
Security shall cease and terminate when such Security has been sold pursuant to
an effective registration statement under the Securities Act or transferred in
compliance with Rule 144 or, if earlier, upon the expiration of the holding
period applicable to sales thereof under paragraph (k) of Rule 144. Any Security
as to which such restrictions on transfer shall have expired in accordance with
their terms or shall have terminated may, upon a surrender of such Security for
exchange to the Registrar in accordance with the provisions of this Section 2.12
(accompanied, in the event that such restrictions on transfer have terminated by
reason of a transfer in compliance with Rule 144, by an opinion of counsel
having substantial experience in practice under the Securities Act and otherwise
reasonably acceptable to the Company, addressed to the Company, the Trustee and
the Registrar and in form acceptable to the Company, to the effect that the
transfer of such Security has been made in compliance with Rule 144), be
exchanged for a new Security, of like tenor and aggregate Principal Amount at
Maturity, which shall not bear the restrictive Legend. The Company shall inform
the Trustee of the effective date of any registration statement registering the
Securities under the Securities Act. The Trustee and the Registrar shall not be
liable for any action taken or omitted to be taken by it in good faith in
accordance with the aforementioned opinion of counsel or registration statement.
(e) As used in the preceding two paragraphs of this Section 2.12, the term
"transfer" encompasses any sale, pledge, transfer, hypothecation or other
disposition of any Security.
(f) The provisions of clauses (1), (2), (3), (4) and (5) below shall apply
only to Global Securities:
(1) Notwithstanding any other provisions of this
Indenture or the Securities, except as provided in
Section 2.12(b)(i), a Global Security shall not be
exchanged in whole or in part for a Security
registered in the name of any Person other than the
Depositary or one or more nominees thereof, provided
that a Global Security may be exchanged for
Securities registered in the names of any person
designated by the Depositary in the event that (i)
the Depositary has notified the Company that it is
unwilling or unable to continue as Depositary for
such Global Security or such Depositary has ceased to
be a "clearing agency" registered under the Exchange
Act, and a successor Depositary is not appointed by
the Company within 90 days (ii) the Company elects to
discontinue use of the system of book-entry transfer
through DTC (or any successor depositary); or (iii)
an Event of Default has occurred and is continuing
with respect to the Securities. Any Global Security
exchanged pursuant to clause (i) of this sub-section
shall be so exchanged in whole and not in part, and
any Global Security exchanged pursuant to clause (ii)
of this sub-section may be exchanged in whole or from
time to time in part as directed by the Depositary.
Any Security issued in exchange for a Global Security
or any portion thereof shall be a Global Security;
provided that any such Security so issued that is
registered in the name of a person other than the
Depositary or a nominee thereof shall not be a Global
Security.
(2) Securities issued in exchange for a Global
Security or any portion thereof shall be issued in
definitive, fully registered form, without interest
coupons, shall have an aggregate Principal Amount at
Maturity equal to that of such Global Security or
portion thereof to be so exchanged, shall be
registered in such names and be in such authorized
denominations as the Depositary shall designate and
shall bear the applicable legends provided for
herein. Any Global Security to be exchanged in whole
shall be surrendered by the Depositary to the
Trustee, as Registrar. With regard to any Global
Security to be exchanged in part, either such Global
Security shall be so surrendered for exchange or, if
the Trustee is acting as custodian for the Depositary
or its nominee with respect to such Global Security,
the Principal Amount at Maturity thereof shall be
reduced, by an amount equal to the portion thereof to
be so exchanged, by means of an appropriate
adjustment made on the records of the Trustee. Upon
any such surrender or adjustment, the Trustee shall
authenticate and deliver the Security issuable on
such exchange to or upon the order of the Depositary
or an authorized representative thereof.
(3) Subject to the provisions of clause (5) below,
the registered Holder may grant proxies and otherwise
authorize any Person, including Agent Members (as
defined below) and persons that may hold interests
through Agent Members, to take any action which a
holder is entitled to take under this Indenture or
the Securities.
(4) In the event of the occurrence of any of the
events specified in clause (1) above, the Company
will promptly make available to the Trustee a
reasonable supply of Certificated Securities in
definitive, fully registered form, without interest
coupons.
(5) Neither any members of, or participants in, the
Depositary (collectively, the "Agent Members") nor
any other Persons on whose behalf Agent Members may
act shall have any rights under this Indenture with
respect to any Global Security registered in the name
of the Depositary or any nominee thereof, or under
any such Global Security, and the Depositary or such
nominee, as the case may be, may be treated by the
Company, the Trustee and any agent of the Company or
the Trustee as the absolute owner and holder of such
Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall
prevent the Company, the Trustee or any agent of the
Company or the Trustee from giving effect to any
written certification, proxy or other authorization
furnished by the Depositary or such nominee, as the
case may be, or impair, as between the Depositary,
its Agent Members and any other person on whose
behalf an Agent Member may act, the operation of
customary practices of such Persons governing the
exercise of the rights of a holder of any Security.
SECTION 2.13 CUSIP Numbers. The Company in issuing the Securities may use
"CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use
"CUSIP" numbers in notices of redemption as a convenience to Holders; provided
that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Securities or as contained
in any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such redemption shall
not be affected by any defect in or omission of such numbers. The Company will
promptly notify the Trustee of any change in the CUSIP numbers.
ARTICLE 3
REDEMPTION AND PURCHASES
SECTION 3.01 Right to Redeem; Notices to Trustee. The Company, at its option,
may redeem the Securities in accordance with the provisions of paragraphs 6 and
8 of the Securities. If the Company elects to redeem Securities pursuant to
paragraph 6 of the Securities, it shall notify the Trustee in writing of the
Redemption Date, the Principal Amount at Maturity of Securities to be redeemed,
the Redemption Price and the amount of contingent interest, if any, payable on
the Redemption Date.
The Company shall give the notice to the Trustee provided for
in this Section 3.01 by a Company Order, at least 35 days before the Redemption
Date (unless a shorter notice shall be satisfactory to the Trustee).
SECTION 3.02 Selection of Securities to Be Redeemed. If less than all the
Securities are to be redeemed, the Trustee shall select the Securities to be
redeemed pro rata or by lot or by any other method the Trustee considers fair
and appropriate (so long as such method is not prohibited by the rules of any
stock exchange on which the Securities are then listed). The Trustee shall make
the selection at least 30 days but not more than 60 days before the Redemption
Date from outstanding Securities not previously called for redemption. The
Trustee may select for redemption portions of the Principal Amount at Maturity
of Securities that have denominations larger than $1,000.
Securities and portions of them the Trustee selects shall be
in Principal Amounts at Maturity of $1,000 or an integral multiple of $1,000.
Provisions of this Indenture that apply to Securities called for redemption also
apply to portions of Securities called for redemption. The Trustee shall notify
the Company promptly of the Securities or portions of Securities to be redeemed.
If any Security selected for partial redemption is converted
in part before termination of the conversion right with respect to the portion
of the Security so selected, the converted portion of such Security shall be
deemed (so far as may be) to be the portion selected for redemption. Securities
which have been converted during a selection of Securities to be redeemed may be
treated by the Trustee as outstanding for the purpose of such selection.
SECTION 3.03 Notice of Redemption. At least 30 days but not more than 60 days
before a Redemption Date, the Company shall mail a notice of redemption by
first-class mail, postage prepaid, to each Holder of Securities to be redeemed.
The notice shall identify the Securities to be redeemed and
shall state:
(1) the Redemption Date;
(2) the Redemption Price and, to the extent known at the
time of such notice, the amount of contingent interest, if
any, payable on the Redemption Date;
(3) the Conversion Rate;
(4) the name and address of the Paying Agent and
Conversion Agent;
(5) that Securities called for redemption may be
converted at any time before the close of business on the
second Business Day immediately preceding the Redemption
Date;
(6) that Holders who want to convert Securities must
satisfy the requirements set forth in paragraph 9 of the
Securities;
(7) that Securities called for redemption must be
surrendered to the Paying Agent to collect the Redemption
Price and contingent interest, if any;
(8) if fewer than all the outstanding Securities are to
be redeemed, the certificate number and Principal Amounts at
Maturity of the particular Securities to be redeemed;
(9) that, unless the Company defaults in making payment of
such Redemption Price and contingent interest, if any,
Original Issue Discount and interest (including contingent
interest), if any, on Securities called for redemption will
cease to accrue on and after the Redemption Date;
(10) the CUSIP number of the Securities; and
(11) any other information the Company wants to present.
At the Company's request, the Trustee shall give the notice of
redemption to Holders in the Company's name and at the Company's expense,
provided that the Company makes such request at least five Business Days (unless
a shorter period shall be satisfactory to the Trustee) prior to the date such
notice of redemption must be mailed.
SECTION 3.04 Effect of Notice of Redemption. Once notice of redemption is given,
Securities called for redemption become due and payable on the Redemption Date
and at the Redemption Price (together with accrued contingent interest, if any,
to but not including the date of redemption) stated in the notice except for
Securities which are converted in accordance with the terms of this Indenture.
Upon surrender to the Paying Agent, such Securities shall be paid at the
Redemption Price (together with accrued contingent interest, if any, to but not
including the date of redemption) stated in the notice.
SECTION 3.05 Deposit of Redemption Price. Prior to 10:00 a.m. (New York City
time), on any Redemption Date, the Company shall deposit with the Paying Agent
(or if the Company or a Subsidiary or an Affiliate of either of them is the
Paying Agent, shall segregate and hold in trust) money sufficient to pay the
Redemption Price of, and any accrued and unpaid contingent interest to but not
including the date of redemption with respect to, all Securities to be redeemed
on that date other than Securities or portions of Securities called for
redemption which on or prior thereto have been delivered by the Company to the
Trustee for cancellation or have been converted. The Paying Agent shall as
promptly as practicable return to the Company any money not required for that
purpose because of conversion of Securities pursuant to Article 11. If such
money is then held by the Company in trust and is not required for such purpose
it shall be discharged from such trust.
SECTION 3.06 Securities Redeemed in Part. Upon surrender of a Security that is
redeemed in part, the Company shall execute and the Trustee shall authenticate
and deliver to the Holder a new Security in an authorized denomination equal in
Principal Amount at Maturity to the unredeemed portion of the Security
surrendered.
SECTION 3.07 Conversion Arrangement on Call for Redemption. In connection with
any redemption of Securities, the Company may arrange for the purchase and
conversion of any Securities called for redemption by an agreement with one or
more investment banks or other purchasers to purchase such Securities by paying
to the Trustee in trust for the Securityholders, on or prior to 10:00 a.m. New
York City time on the Redemption Date, an amount that, together with any amounts
deposited with the Trustee by the Company for the redemption of such Securities,
is not less than the Redemption Price of, and any accrued and unpaid contingent
interest with respect to, such Securities. Notwithstanding anything to the
contrary contained in this Article 3, the obligation of the Company to pay the
Redemption Prices of such Securities shall be deemed to be satisfied and
discharged to the extent such amount is so paid by such purchasers. If such an
agreement is entered into, any Securities not duly surrendered for conversion by
the Holders thereof may, at the option of the Company, be deemed, to the fullest
extent permitted by law, acquired by such purchasers from such Holders and
(notwithstanding anything to the contrary contained in Article 11) surrendered
by such purchasers for conversion, all as of immediately prior to the close of
business on the Business Day prior to the Redemption Date, subject to payment of
the above amount as aforesaid. The Trustee shall hold and pay to the Holders
whose Securities are selected for redemption any such amount paid to it for
purchase and conversion in the same manner as it would moneys deposited with it
by the Company for the redemption of Securities. Without the Trustee's prior
written consent, no arrangement between the Company and such purchasers for the
purchase and conversion of any Securities shall increase or otherwise affect any
of the powers, duties, responsibilities or obligations of the Trustee as set
forth in this Indenture, and the Company agrees to indemnify the Trustee from,
and hold it harmless against, any loss, liability or expense arising out of or
in connection with any such arrangement for the purchase and conversion of any
Securities between the Company and such purchasers, including the costs and
expenses incurred by the Trustee in the defense of any claim or liability
arising out of or in connection with the exercise or performance of any of its
powers, duties, responsibilities or obligations under this Indenture.
SECTION 3.08 Purchase of Securities at Option of the Holder.
(a) General. Securities shall be purchased by the Company pursuant to paragraph
7 of the Securities as of April 3, 2005, 2007, 2012, 2017, 2022 and 2027 (each,
a "Purchase Date"), at the purchase price of $447.55 per $1,000 of Principal
Amount at Maturity as of April 3, 2005, of $475.01 per $1,000 of Principal
Amount at Maturity as of April 3, 2007, of $551.27 per $1,000 of Principal
Amount at Maturity as of April 3, 2012, of $639.77 per $1,000 of Principal
Amount of Maturity as of April 3, 2017, of $742.47 per $1,000 of Principal
Amount at Maturity as of April 3, 2022, and of $861.67 per $1,000 of Principal
Amount at Maturity as of April 3, 2027, (each, a "Purchase Price", as
applicable), at the option of the Holder thereof, upon:
(1) delivery to the Paying Agent, by the Holder of a written
notice of purchase (a "Purchase Notice") at any time from the
opening of business on the date that is at least 20 Business
Days prior to a Purchase Date until the close of business on
such Purchase Date stating:
(A) the certificate number of the Security which the
Holder will deliver to be purchased,
(B) the portion of the Principal Amount at Maturity
of the Security which the Holder will deliver to be
purchased, which portion must be a Principal Amount
at Maturity of $1,000 or an integral multiple
thereof,
(C) that such Security shall be purchased as of the
Purchase Date pursuant to the terms and conditions
specified in paragraph 7 of the Securities and in
this Indenture, and
(D) in the event the Company elects, pursuant to
Section 3.08(b), to pay the Purchase Price to be paid
as of such Purchase Date, in whole or in part, in
shares of Common Stock but such portion of the
Purchase Price shall ultimately be payable to such
Holder entirely in cash because any of the conditions
to payment of the Purchase Price in Common Stock is
not satisfied prior to the close of business on such
Purchase Date, as set forth in Section 3.08(d),
whether such Holder elects (i) to withdraw such
Purchase Notice as to some or all of the Securities
to which such Purchase Notice relates (stating the
Principal Amount at Maturity and certificate numbers
of the Securities as to which such withdrawal shall
relate), or (ii) to receive cash in respect of the
entire Purchase Price for all Securities (or portions
thereof) to which such Purchase Notice relates; and
(2) delivery of such Security to the Paying Agent prior to, on
or after the Purchase Date (together with all necessary
endorsements) at the offices of the Paying Agent, such
delivery being a condition to receipt by the Holder of the
Purchase Price therefor; provided, however, that such Purchase
Price shall be so paid pursuant to this Section 3.08 only if
the Security so delivered to the Paying Agent shall conform in
all respects to the description thereof in the related
Purchase Notice, as determined by the Company.
If a Holder, in such Holder's Purchase Notice and in any
written notice of withdrawal delivered by such Holder pursuant to the terms of
Section 3.10, fails to indicate such Holder's choice with respect to the
election set forth in clause (D) of Section 3.08(a)(1), such Holder shall be
deemed to have elected to receive cash in respect of the Purchase Price for all
Securities subject to such Purchase Notice in the circumstances set forth in
such clause (D).
The Company shall purchase from the Holder thereof, pursuant
to this Section 3.08, a portion of a Security if the Principal Amount at
Maturity of such portion is $1,000 or an integral multiple of $1,000. Provisions
of this Indenture that apply to the purchase of all of a Security also apply to
the purchase of such portion of such Security.
Any purchase by the Company contemplated pursuant to the
provisions of this Section 3.08 shall be consummated by the delivery of the
consideration to be received by the Holder (together with accrued and unpaid
contingent interest, if any) promptly following the later of the Purchase Date
and the time of delivery of the Security.
Notwithstanding anything herein to the contrary, any Holder
delivering to the Paying Agent the Purchase Notice contemplated by this Section
3.08(a) shall have the right to withdraw such Purchase Notice at any time prior
to the close of business on the Purchase Date by delivery of a written notice of
withdrawal to the Paying Agent in accordance with Section 3.10.
The Paying Agent shall promptly notify the Company of the
receipt by it of any Purchase Notice or written notice of withdrawal thereof.
(b) Company's Right to Elect Manner of Payment of Purchase Price. The Securities
to be purchased pursuant to Section 3.08(a) may be paid for, at the election of
the Company, in U.S. legal tender ("cash") or Common Stock, or in any
combination of cash and Common Stock, subject to the conditions set forth in
Sections 3.08(c) and (d). The Company shall designate, in the Company Notice
delivered pursuant to Section 3.08(e), whether the Company will purchase the
Securities for cash or Common Stock, or, if a combination thereof, the
percentages or amounts of the Purchase Price of Securities in respect of which
it will pay in cash or Common Stock; provided that the Company will pay cash for
fractional interests in Common Stock. For purposes of determining the existence
of potential fractional interests, all Securities subject to purchase by the
Company held by a Holder shall be considered together (no matter how many
separate certificates are to be presented). Each Holder whose Securities are
purchased pursuant to this Section 3.08 shall receive the same percentage of
cash or Common Stock in payment of the Purchase Price for such Securities,
except (i) as provided in Section 3.08(d) with regard to the payment of cash in
lieu of fractional shares of Common Stock and (ii) in the event that the Company
is unable to purchase the Securities of a Holder or Holders for Common Stock
because any necessary qualifications or registrations of the Common Stock under
applicable state securities laws cannot be obtained, the Company may purchase
the Securities of such Holder or Holders for cash. The Company may not change
its election with respect to the consideration (or components or percentages of
components thereof) to be paid once the Company has given its Company Notice to
Securityholders except pursuant to this Section 3.08(b) or pursuant to Section
3.08(d) in the event of a failure to satisfy, prior to the close of business on
the Purchase Date, any condition to the payment of the Purchase Price, in whole
or in part, in Common Stock.
At least three Business Days before the Company Notice Date,
the Company shall deliver an Officers' Certificate to the Trustee specifying:
(i) the manner of payment selected by the Company,
(ii) the information required by Section 3.08(e),
(iii) if the Company elects to pay the Purchase Price, or a
specified percentage thereof, in Common Stock, that the
conditions to such manner of payment set forth in Section
3.08(d) have been or will be complied with, and
(iv) whether the Company desires the Trustee to give the
Company Notice required by Section 3.08(e).
(c) Purchase with Cash. On each Purchase Date, at the option of the Company, the
Purchase Price of Securities in respect of which a Purchase Notice pursuant to
Section 3.08(a) has been given, or a specified percentage thereof, may be paid
by the Company with cash equal to the aggregate Purchase Price of such
Securities. If the Company elects to purchase Securities with cash, the Company
Notice, as provided in Section 3.08(e), shall be sent to Holders (and to
beneficial owners as required by applicable law) not less than 20 Business Days
prior to such Purchase Date (the "Company Notice Date").
(d) Payment by Issuance of Common Stock. On each Purchase Date, at the option of
the Company, the Purchase Price of Securities in respect of which a Purchase
Notice pursuant to Section 3.08(a) has been given, or a specified percentage
thereof, may be paid by the Company by the issuance of a number of shares of
Common Stock equal to the quotient obtained by dividing (i) the amount of cash
to which the Securityholders would have been entitled had the Company elected to
pay all or such specified percentage, as the case may be, of the Purchase Price
of such Securities in cash by (ii) the Market Price of a share of Common Stock,
subject to the next succeeding paragraph.
The Company will not issue a fractional share of Common Stock
in payment of the Purchase Price. Instead the Company will pay cash for the
current market value of the fractional share. The current market value of a
fraction of a share shall be determined by multiplying the Market Price by such
fraction and rounding the product to the nearest whole cent. It is understood
that if a Holder elects to have more than one Security purchased, the number of
shares of Common Stock shall be based on the aggregate amount of Securities to
be purchased.
If the Company elects to purchase the Securities by the
issuance of shares of Common Stock, the Company Notice, as provided in Section
3.08(e), shall be sent to the Holders (and to beneficial owners as required by
applicable law) not later than the Company Notice Date.
The Company's right to exercise its election to purchase the
Securities pursuant to Section 3.08 through the issuance of shares of Common
Stock shall be conditioned upon:
(i) the Company's not having given its Company Notice of an
election to pay entirely in cash and its giving of timely
Company Notice of election to purchase all or a specified
percentage of the Securities with Common Stock as provided
herein;
(ii) the shares of Common Stock having been admitted for
listing or admitted for listing subject to notice of issuance
on the principal United States securities exchange on which
the Common Stock is then listed or, if the Common Stock is not
then listed on a national or regional securities exchange, as
quoted on the National Association of Securities Dealers
Automated Quotation System;
(iii) the registration of the shares of Common Stock to be
issued in respect of the payment of the Purchase Price under
the Securities Act of 1933, as amended (the "Securities Act"),
or the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), in each case, if required;
(iv) any necessary qualification or registration under
applicable state securities laws or the availability of an
exemption from such qualification and registration; and
(v) the receipt by the Trustee of an Officers' Certificate and
an Opinion of Counsel each stating that (A) the terms of the
issuance of the Common Stock are in conformity with this
Indenture and (B) the shares of Common Stock to be issued by
the Company in payment of the Purchase Price in respect of
Securities have been duly authorized and, when issued and
delivered pursuant to the terms of this Indenture in payment
of the Purchase Price in respect of the Securities, will be
validly issued, fully paid and non-assessable and, to the best
of such counsel's knowledge, free from preemptive rights under
law or material contracts, and, in the case of such Officers'
Certificate, stating that conditions (i), (ii), (iii) and (iv)
above and the condition set forth in the second succeeding
sentence have been satisfied and, in the case of such Opinion
of Counsel, stating that conditions (ii) and (iii) above have
been satisfied.
Such Officers' Certificate shall also set forth the number of
shares of Common Stock to be issued for each $1,000 Principal Amount at Maturity
of Securities and the Sale Price of a share of Common Stock on each trading day
during the period for which the Market Price is calculated. The Company may pay
the Purchase Price (or any portion thereof) in Common Stock only if the
information necessary to calculate the Market Price is published in a daily
newspaper of national circulation. If the foregoing conditions are not satisfied
with respect to a Holder or Holders prior to the close of business on the
Purchase Date and the Company has elected to purchase the Securities pursuant to
this Section 3.08 through the issuance of shares of Common Stock, the Company
shall pay the entire Purchase Price of the Securities of such Holder or Holders
in cash.
The "Market Price" of the Common Stock means the average of
the Sale Prices of the Common Stock for the five trading day period ending on
the third Business Day (if the third Business Day prior to the applicable
Purchase Date is a trading day or, if not, then on the last trading day) prior
to the applicable Purchase Date, appropriately adjusted to take into account the
occurrence, during the period commencing on the first of such trading days
during such five trading day period and ending on such Purchase Date, of any
event described in Section 11.06, 11.07 or 11.08; subject, however, to the
conditions set forth in Sections 11.09 and 11.10.
(e) Notice of Election. The Company's notice of election to purchase with cash
or Common Stock or any combination thereof shall be sent to the Holders (and to
beneficial owners as required by applicable law) in the manner provided in
Section 14.02 at the time specified in Section 3.08(c) or (d), as applicable
(the "Company Notice"). Such Company Notice shall state the manner of payment
elected and shall contain the following information:
In the event the Company has elected to pay the Purchase Price
(or a specified percentage thereof) with Common Stock, the Company Notice shall:
(1) state that each Holder will receive Common Stock with a
Market Price determined as of a specified date prior to the
Purchase Date equal to such specified percentage of the
Purchase Price of the Securities held by such Holder (except
any cash amount to be paid in lieu of fractional shares);
(2) set forth the method of calculating the Market Price of
the Common Stock; and
(3) state that because the Market Price of Common Stock will
be determined prior to the Purchase Date, Holders will bear
the market risk with respect to the value of the Common Stock
to be received from the date such Market Price is determined
to the Purchase Date.
In any case, each Company Notice shall include a form of
Purchase Notice to be completed by a Securityholder and shall state:
(i) the Purchase Price, the Conversion Rate and, to the extent
known at the time of such notice, the amount of contingent
interest, if any, that will be accrued and payable with
respect to the Securities as of the Purchase Date;
(ii) the name and address of the Paying Agent and the
Conversion Agent;
(iii) that Securities as to which a Purchase Notice has been
given may be converted pursuant to Article 11 hereof only if
the applicable Purchase Notice has been withdrawn in
accordance with the terms of this Indenture;
(iv) that Securities must be surrendered to the Paying Agent
to collect payment of the Purchase Price and contingent
interest, if any;
(v) that the Purchase Price for any Security as to which a
Purchase Notice has been given and not withdrawn, together
with any accrued contingent interest payable with respect
thereto, will be paid promptly following the later of the
Purchase Date and the time of surrender of such Security as
described in (iv);
(vi) the procedures the Holder must follow to exercise rights
under Section 3.08 and a brief description of those rights;
(vii) briefly, the conversion rights of the Securities;
(viii) the procedures for withdrawing a Purchase Notice
(including, without limitation, for a conditional withdrawal
pursuant to the terms of Section 3.08(a)(1)(D) or Section
3.10);
(ix) that, unless the Company defaults in making payment of
such Purchase Price and contingent interest, if any, Original
Issue Discount and interest (including contingent interest),
if any, on Securities surrendered for purchase will cease to
accrue on and after the Purchase Date; and
(x) the CUSIP number of the Securities.
At the Company's request, the Trustee shall give such Company
Notice in the Company's name and at the Company's expense; provided, however,
that, in all cases, the text of such Company Notice shall be prepared by the
Company.
Upon determination of the actual number of shares of Common
Stock to be issued for each $1,000 Principal Amount at Maturity of Securities,
the Company will issue a press release and publish such determination on the
Company's web site on the World Wide Web.
(f) Covenants of the Company. All shares of Common Stock delivered upon purchase
of the Securities shall be newly issued shares or treasury shares, shall be duly
authorized, validly issued, fully paid and nonassessable and shall be free from
preemptive rights and free of any lien or adverse claim created by the Company.
(g) Procedure upon Purchase. The Company shall deposit cash (in respect of a
cash purchase under Section 3.08(c) or for fractional interests or contingent
interest, as applicable) or shares of Common Stock, or a combination thereof, as
applicable, at the time and in the manner as provided in Section 3.11,
sufficient to pay the aggregate Purchase Price of, and any accrued and unpaid
contingent interest with respect to, all Securities to be purchased pursuant to
this Section 3.08. As soon as practicable after the Purchase Date, the Company
shall deliver to each Holder entitled to receive Common Stock through the Paying
Agent, a certificate for the number of full shares of Common Stock issuable in
payment of the Purchase Price and cash in lieu of any fractional interests. The
person in whose name the certificate for Common Stock is registered shall be
treated as a holder of record of shares of Common Stock on the Business Day
following the Purchase Date. Subject to Section 3.08(d), no payment or
adjustment will be made for dividends on the Common Stock the record date for
which occurred on or prior to the Purchase Date.
(h) Taxes. If a Holder of a Security is paid in Common Stock, the Company shall
pay any documentary, stamp or similar issue or transfer tax due on such issue of
shares of Common Stock. However, the Holder shall pay any such tax which is due
because the Holder requests the shares of Common Stock to be issued in a name
other than the Holder's name. The Paying Agent may refuse to deliver the
certificates representing the Common Stock being issued in a name other than the
Holder's name until the Paying Agent receives a sum sufficient to pay any tax
which will be due because the shares of Common Stock are to be issued in a name
other than the Holder's name. Nothing herein shall preclude any income tax
withholding required by law or regulations.
SECTION 3.09 Purchase of Securities at Option of the Holder upon Change in
Control.
(a) If on or prior to April 3, 2007 there shall have occurred a Change in
Control, Securities shall be purchased by the Company, at the option of the
Holder thereof, at a purchase price specified in paragraph 7 of the Securities
(the "Change in Control Purchase Price"), as of the date that is no later than
35 Business Days after the occurrence of the Change in Control but in no event
prior to the date on which such Change in Control occurs (the "Change in Control
Purchase Date"), subject to satisfaction by or on behalf of the Holder of the
requirements set forth in Section 3.09(c).
A "Change in Control" shall be deemed to have occurred at such
time as either of the following events shall occur:
(i) There shall be consummated any share exchange,
consolidation or merger of the Company pursuant to which the
Common Stock would be converted into cash, securities or other
property, in each case other than a share exchange,
consolidation or merger of the Company in which the holders of
the Common Stock immediately prior to the share exchange,
consolidation or merger have, directly or indirectly, at least
a majority of the total voting power in the aggregate of all
classes of Capital Stock of the continuing or surviving
corporation immediately after the share exchange,
consolidation or merger; or
(ii) There is a report filed on Schedule 13D or TO (or any
successor schedule, form or report) pursuant to the Exchange
Act, disclosing that any person including its Affiliates or
Associates (for the purposes of this Section 3.09 only, as the
term "person" is used in Section 13(d)(3) or Section 14(d)(2)
of the Exchange Act) has become the beneficial owner (as the
term "beneficial owner" is defined under Rule 13d-3 or any
successor rule or regulation promulgated under the Exchange
Act) of 50% or more of the voting power of the Common Stock
then outstanding; provided, however, that a person shall not
be deemed beneficial owner of, or to own beneficially, (A) any
securities tendered pursuant to a tender or exchange offer
made by or on behalf of such person or any of such person's
Affiliates or Associates until such tendered securities are
accepted for purchase or exchange thereunder, or (B) any
securities if such beneficial ownership (1) arises solely as a
result of a revocable proxy delivered in response to a proxy
or consent solicitation made pursuant to the applicable rules
and regulations under the Exchange Act, and (2) is not also
then reportable on Schedule 13D (or any successor schedule)
under the Exchange Act.
Notwithstanding the foregoing provisions of this Section 3.09, a Change in
Control shall not be deemed to have occurred by virtue of the Company, any
Subsidiary, any employee stock ownership plan or any other employee benefit plan
of the Company or any Subsidiary, or any person holding Common Stock for or
pursuant to the terms of any such employee benefit plan, filing or becoming
obligated to file a report under or in response to Schedule 13D or Schedule TO
(or any successor schedule, form or report) under the Exchange Act disclosing
beneficial ownership by it of shares of Common Stock, whether in excess of 50%
or otherwise.
"Associate" shall have the meaning ascribed to such term in
Rule 12b-2 of the General Rules and Regulations under the Exchange Act, as in
effect on the date hereof.
(b) Within 15 Business Days after the occurrence of a Change in Control, the
Company shall mail a written notice of Change in Control by first-class mail to
the Trustee and to each Holder (and to beneficial owners as required by
applicable law). The notice shall include a form of Change in Control Purchase
Notice to be completed by the Securityholder and shall state:
(1) briefly, the events causing a Change in Control and
the date of such Change in Control;
(2) the date by which the Change in Control Purchase
Notice pursuant to this Section 3.09 must be given;
(3) the Change in Control Purchase Date;
(4) the Change in Control Purchase Price and, to the extent
known at the time of such notice, the amount of contingent
interest, if any, that will be accrued and payable with
respect to the Securities as of the Change in Control Purchase
Date;
(5) the name and address of the Paying Agent and the
Conversion Agent;
(6) the Conversion Rate and any adjustments thereto;
(7) that Securities as to which a Change in Control Purchase
Notice has been given may be converted pursuant to Article 11
hereof only if the Change in Control Purchase Notice has been
withdrawn in accordance with the terms of this Indenture;
(8) that Securities must be surrendered to the Paying
Agent to collect payment of the Change in Control Purchase
Price and contingent interest, if any;
(9) that the Change in Control Purchase Price for any Security
as to which a Change in Control Purchase Notice has been duly
given and not withdrawn, together with any accrued contingent
interest payable with respect thereto, will be paid promptly
following the later of the Change in Control Purchase Date and
the time of surrender of such Security as described in (8);
(10) briefly, the procedures the Holder must follow to
exercise rights under this Section 3.09;
(11) briefly, the conversion rights of the Securities;
(12) the procedures for withdrawing a Change in Control
Purchase Notice;
(13) that, unless the Company defaults in making payment of
such Change in Control Purchase Price and contingent interest,
if any, Original Issue Discount and interest (including
contingent interest), if any, on Securities surrendered for
purchase will cease to accrue on and after the Change in
Control Purchase Date; and
(14) the CUSIP number of the Securities.
(c) A Holder may exercise its rights specified in Section 3.09(a) upon delivery
of a written notice of purchase (a "Change in Control Purchase Notice") to the
Paying Agent at any time prior to the close of business on the Change in Control
Purchase Date, stating:
(1) the certificate number of the Security which the Holder
will deliver to be purchased;
(2) the portion of the Principal Amount at Maturity of the
Security which the Holder will deliver to be purchased, which
portion must be $1,000 or an integral multiple thereof; and
(3) that such Security shall be purchased pursuant to the
terms and conditions specified in paragraph 7 of the
Securities.
The delivery of such Security to the Paying Agent prior to, on
or after the Change in Control Purchase Date (together with all necessary
endorsements) at the offices of the Paying Agent shall be a condition to the
receipt by the Holder of the Change in Control Purchase Price therefor;
provided, however, that such Change in Control Purchase Price shall be so paid
pursuant to this Section 3.09 only if the Security so delivered to the Paying
Agent shall conform in all respects to the description thereof set forth in the
related Change in Control Purchase Notice.
The Company shall purchase from the Holder thereof, pursuant
to this Section 3.09, a portion of a Security if the Principal Amount at
Maturity of such portion is $1,000 or an integral multiple of $1,000. Provisions
of this Indenture that apply to the purchase of all of a Security also apply to
the purchase of such portion of such Security.
Any purchase by the Company contemplated pursuant to the
provisions of this Section 3.09 shall be consummated by the delivery of the
consideration to be received by the Holder (together with accrued and unpaid
contingent interest, if any) promptly following the later of the Change in
Control Purchase Date and the time of delivery of the Security to the Paying
Agent in accordance with this Section 3.09.
Notwithstanding anything herein to the contrary, any Holder
delivering to the Paying Agent the Change in Control Purchase Notice
contemplated by this Section 3.09(c) shall have the right to withdraw such
Change in Control Purchase Notice at any time prior to the close of business on
the Change in Control Purchase Date by delivery of a written notice of
withdrawal to the Paying Agent in accordance with Section 3.10.
The Paying Agent shall promptly notify the Company of the
receipt by it of any Change in Control Purchase Notice or written withdrawal
thereof.
The Company shall not be required to comply with this Section
3.09 if a third party mails a written notice of Change in Control in the manner,
at the times and otherwise in compliance with this Section 3.09 and repurchases
all Securities for which a Change in Control Purchase Notice shall be delivered
and not withdrawn.
SECTION 3.10 Effect of Purchase Notice or Change in Control Purchase Notice.
Upon receipt by the Paying Agent of the Purchase Notice or Change in Control
Purchase Notice specified in Section 3.08(a) or Section 3.09(c), as applicable,
the Holder of the Security in respect of which such Purchase Notice or Change in
Control Purchase Notice, as the case may be, was given shall (unless such
Purchase Notice or Change in Control Purchase Notice is withdrawn as specified
in the following two paragraphs) thereafter be entitled to receive solely the
Purchase Price or Change in Control Purchase Price, as the case may be, and any
accrued and unpaid interest, with respect to such Security. Such Purchase Price
or Change in Control Purchase Price and contingent interest, if any, shall be
paid to such Holder, subject to receipt of funds and/or securities by the Paying
Agent, promptly following the later of (x) the Purchase Date or the Change in
Control Purchase Date, as the case may be, with respect to such Security
(provided the conditions in Section 3.08(a) or Section 3.09(c), as applicable,
have been satisfied) and (y) the time of delivery of such Security to the Paying
Agent by the Holder thereof in the manner required by Section 3.08(a) or Section
3.09(c), as applicable. Securities in respect of which a Purchase Notice or
Change in Control Purchase Notice, as the case may be, has been given by the
Holder thereof may not be converted pursuant to Article 11 hereof on or after
the date of the delivery of such Purchase Notice or Change in Control Purchase
Notice, as the case may be, unless such Purchase Notice or Change in Control
Purchase Notice, as the case may be, has first been validly withdrawn as
specified in the following two paragraphs.
A Purchase Notice or Change in Control Purchase Notice, as the
case may be, may be withdrawn by means of a written notice of withdrawal
delivered to the office of the Paying Agent in accordance with the Purchase
Notice or Change in Control Purchase Notice, as the case may be, at any time
prior to the close of business on the Purchase Date or the Change in Control
Purchase Date, as the case may be, specifying:
(1) the certificate number of the Security in respect of
which such notice of withdrawal is being submitted,
(2) the Principal Amount at Maturity of the Security with
respect to which such notice of withdrawal is being submitted,
and
(3) the Principal Amount at Maturity, if any, of such Security
which remains subject to the original Purchase Notice or
Change in Control Purchase Notice, as the case may be, and
which has been or will be delivered for purchase by the
Company.
A written notice of withdrawal of a Purchase Notice may be in
the form set forth in the preceding paragraph or may be in the form of (i) a
conditional withdrawal contained in a Purchase Notice pursuant to the terms of
Section 3.08(a)(1)(D) or (ii) a conditional withdrawal containing the
information set forth in Section 3.08(a)(1)(D) and the preceding paragraph and
contained in a written notice of withdrawal delivered to the Paying Agent as set
forth in the preceding paragraph.
There shall be no purchase of any Securities pursuant to
Section 3.08 (other than through the issuance of Common Stock in payment of the
Purchase Price, including cash in lieu of fractional shares) or 3.09 if there
has occurred (prior to, on or after, as the case may be, the giving, by the
Holders of such Securities, of the required Purchase Notice or Change in Control
Purchase Notice, as the case may be) and is continuing an Event of Default
(other than a default in the payment of the Purchase Price or Change in Control
Purchase Price, as the case may be, and any accrued and unpaid contingent
interest with respect to such Securities). The Paying Agent will promptly return
to the respective Holders thereof any Securities (x) with respect to which a
Purchase Notice or Change in Control Purchase Notice, as the case may be, has
been withdrawn in compliance with this Indenture, or (y) held by it during the
continuance of an Event of Default (other than a default in the payment of the
Purchase Price or Change in Control Purchase Price, as the case may be, and any
accrued and unpaid contingent interest with respect to such Securities) in which
case, upon such return, the Purchase Notice or Change in Control Purchase Notice
with respect thereto shall be deemed to have been withdrawn.
SECTION 3.11 Deposit of Purchase Price or Change in Control Purchase Price.
Prior to 10:00 a.m., New York City time, on the Business Day following the
Purchase Date or the Change in Control Purchase Date, as the case may be, the
Company shall deposit with the Trustee or with the Paying Agent (or, if the
Company or a Subsidiary or an Affiliate of either of them is acting as the
Paying Agent, shall segregate and hold in trust as provided in Section 2.04) an
amount of money (in immediately available funds if deposited on such Business
Day) or Common Stock, if permitted hereunder, sufficient to pay the aggregate
Purchase Price or Change in Control Purchase Price, as the case may be, of, and
any accrued and unpaid contingent interest with respect to, all the Securities
or portions thereof which are to be purchased as of the Purchase Date or Change
in Control Purchase Date, as the case may be.
SECTION 3.12 Securities Purchased in Part. Any Security which is to be purchased
only in part shall be surrendered at the office of the Paying Agent (with, if
the Company or the Trustee so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to the Company and the Trustee duly
executed by, the Holder thereof or such Holder's attorney duly authorized in
writing) and the Company shall execute and the Trustee shall authenticate and
deliver to the Holder of such Security, without service charge, a new Security
or Securities, of any authorized denomination as requested by such Holder in
aggregate Principal Amount at Maturity equal to, and in exchange for, the
portion of the Principal Amount at Maturity of the Security so surrendered which
is not purchased.
SECTION 3.13 Covenant to Comply With Securities Laws Upon Purchase of
Securities. In connection with any offer to purchase or purchase of Securities
under Section 3.08 or 3.09 hereof (provided that such offer or purchase
constitutes an "issuer tender offer" for purposes of Rule 13e-4 (which term, as
used herein, includes any successor provision thereto) under the Exchange Act at
the time of such offer or purchase), the Company shall to the extent applicable
(i) comply with Rule 13e-4 and Rule 14e-1 under the Exchange Act, (ii) file the
related Schedule TO (or any successor schedule, form or report) under the
Exchange Act, and (iii) otherwise comply with all Federal and state securities
laws so as to permit the rights and obligations under Sections 3.08 and 3.09 to
be exercised in the time and in the manner specified in Sections 3.08 and 3.09.
SECTION 3.14 Repayment to the Company. The Trustee and the Paying Agent shall
promptly return to the Company any cash or shares of Common Stock that remain
unclaimed as provided in paragraph 15 of the Securities, together with interest
or dividends, if any, thereon (subject to the provisions of Section 7.01(f)),
held by them for the payment of the Purchase Price or Change in Control Purchase
Price, as the case may be, or contingent interest, if any; provided, however,
that to the extent that the aggregate amount of cash or shares of Common Stock
deposited by the Company pursuant to Section 3.11 exceeds the aggregate Purchase
Price or Change in Control Purchase Price, as the case may be, of, and the
accrued and unpaid contingent interest with respect to, the Securities or
portions thereof which the Company is obligated to purchase as of the Purchase
Date or Change in Control Purchase Date, as the case may be, whether as a result
of withdrawal or otherwise, then promptly after the Business Day following the
Purchase Date or Change in Control Purchase Date, as the case may be, the
Trustee shall return any such excess to the Company together with interest or
dividends, if any, thereon (subject to the provisions of Section 7.01(f)).
ARTICLE 4
COVENANTS
SECTION 4.01 Payment of Securities. The Company shall promptly make all payments
in respect of the Securities on the dates and in the manner provided in the
Securities or pursuant to this Indenture. Any amounts to be given to the Trustee
or Paying Agent, shall be deposited with the Trustee or Paying Agent by 10:00
a.m., New York City time, by the Company. Principal Amount at Maturity, Restated
Principal Amount, Issue Price plus accrued Original Issue Discount, Redemption
Price, Purchase Price, Change in Control Purchase Price, and contingent
interest, if any, shall be considered paid on the applicable date due if on such
date (or, in the case of a Purchase Price or Change in Control Purchase Price,
on the Business Day following the applicable Purchase Date or Change in Control
Purchase Date, as the case may be) the Trustee or the Paying Agent holds, in
accordance with this Indenture, money or securities, if permitted hereunder,
sufficient to pay all such amounts then due.
The Company shall, to the extent permitted by law, pay
interest on overdue amounts at the rate per annum set forth in paragraph 1 of
the Securities, compounded semiannually, which interest shall accrue from the
date such overdue amount was originally due to the date payment of such amount,
including interest thereon, has been made or duly provided for. All such
interest shall be payable on demand. The accrual of such interest on overdue
amounts shall be in lieu of, and not in addition to, the continued accrual of
Original Issue Discount.
SECTION 4.02 SEC and Other Reports. If requested by the Trustee, the Company
shall deliver to the Trustee, within 15 days after it files such annual and
quarterly reports, information, documents and other reports with the SEC, copies
of its annual report and of the information, documents and other reports (or
copies of such portions of any of the foregoing as the SEC may by rules and
regulations prescribe) which the Company is required to file with the SEC
pursuant to Section 13 or 15(d) of the Exchange Act. The Company also shall
comply with the provisions of TIA Section 314(a). Delivery of such reports,
information and documents to the Trustee is for informational purposes only and
the Trustee's receipt of the same shall not constitute constructive notice of
any information contained therein or determinable from information contained
therein, including the Company's compliance with any of its covenants hereunder
(as to which the Trustee is entitled to rely exclusively on Officers'
Certificates).
SECTION 4.03 Compliance Certificate. The Company shall deliver to the Trustee
within 120 days after the end of each fiscal year of the Company (beginning with
the fiscal year ending on August 2, 2002) an Officers' Certificate, stating
whether or not to the best knowledge of the signers thereof the Company is in
default in the performance and observance of any of the terms, provisions and
conditions of this Indenture (without regard to any period of grace or
requirement of notice provided hereunder) and if the Company shall be in
default, specifying all such defaults and the nature and status thereof of which
they may have knowledge.
SECTION 4.04 Further Instruments and Acts. Upon request of the Trustee, the
Company will execute and deliver such further instruments and do such further
acts as may be reasonably necessary or proper to carry out more effectively the
purposes of this Indenture.
SECTION 4.05 Maintenance of Office or Agency. The Company will maintain in the
Borough of Manhattan, The City of New York, an office or agency of the Trustee,
Registrar, Paying Agent and Conversion Agent where Securities may be presented
or surrendered for payment, where Securities may be surrendered for registration
of transfer, exchange, purchase, redemption or conversion and where notices and
demands to or upon the Company in respect of the Securities and this Indenture
may be served. The office of the Trustee, located at 12 East 49th Street, 37th
Floor, New York, New York 10017 (Attention: Corporate Trust Department), shall
initially be such office or agency for all of the aforesaid purposes. The
Company shall give prompt written notice to the Trustee of the location, and of
any change in the location, of any such office or agency (other than a change in
the location of the office of the Trustee). If at any time the Company shall
fail to maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the address of the Trustee set forth in Section
14.02.
The Company may also from time to time designate one or more
other offices or agencies where the Securities may be presented or surrendered
for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall in
any manner relieve the Company of its obligation to maintain an office or agency
in the Borough of Manhattan, The City of New York, for such purposes.
SECTION 4.06 Delivery of Certain Information. At any time when the Company is
not subject to Section 13 or 15(d) of the Exchange Act, upon the request of a
Holder or any beneficial holder of Securities or shares of Common Stock which
are restricted securities issued upon conversion thereof, the Company will
promptly furnish or cause to be furnished Rule 144A Information (as defined
below) to such Holder or any beneficial holder of Securities or holder of shares
of Common Stock issued upon conversion of Securities, or to a prospective
purchaser of any such security designated by any such holder, as the case may
be, to the extent required to permit compliance by such Holder or holder with
Rule 144A under the Securities Act in connection with the resale of any such
security. "Rule 144A Information" shall be such information as is specified
pursuant to Rule 144A(d)(4) under the Securities Act.
SECTION 4.07 Calculation of Original Issue Discount. The Company agrees, and
each Holder and any beneficial owner of a Security by its purchase thereof shall
be deemed to agree, to treat, for United States federal income tax purposes, the
Securities as debt instruments that are subject to Section 1.1275-4(b) of the
Treasury regulations promulgated by the United States Department of the Treasury
pursuant to the Internal Revenue Code of 1986, as amended (the "Treasury
Regulations"). For United States federal income tax purposes, the Company and
each Holder or beneficial holder of a Security agree to treat the fair market
value of the Common Stock received upon the conversion of a Security as a
contingent payment for purposes of Treasury Regulation Section 1.1275-4(b), and
to accrue interest with respect to outstanding Securities as original issue
discount ("Tax Original Issue Discount") according to the "noncontingent bond
method," set forth in section 1.1275-4(b) of the Treasury Regulations, using a
comparable yield of 7.32 percent, compounded semiannually and the projected
payment schedule attached as Annex C to this Indenture. The Company shall file
with the Trustee promptly at the end of each calendar year (i) a written notice
specifying the amount of Tax Original Issue Discount for United States federal
income tax purposes (including daily rates and accrual periods) accrued on
outstanding Securities as of the end of such year and (ii) such other specific
information relating to such Tax Original Issue Discount as may then be relevant
under the Internal Revenue Code of 1986, as amended from time to time, including
the amount of any adjustment made under the noncontingent bond method to account
for the amount of any difference between the amount of an actual payment and the
amount of a projected payment.
The Company acknowledges and agrees, and each Holder and any
beneficial owner of a Security by its purchase thereof shall be deemed to
acknowledge and agree, that (i) the comparable yield and the schedule of
projected payments are determined on the basis of an assumption of linear growth
of the stock price and are not determined for any purpose other than for the
determination of interest accruals and adjustments thereof in respect of the
Securities for United States federal income tax purposes and (ii) the comparable
yield and the schedule of projected payments do not constitute a projection or
representation regarding the amounts payable on the Securities.
SECTION 4.08 Limitation on Guarantees of Indebtedness by Domestic Subsidiaries.
The Company will not permit any domestic Subsidiary to guarantee the payment of
any Debt of the Company unless such domestic Subsidiary simultaneously executes
and delivers a supplemental indenture to the indenture providing for a Guarantee
of the Securities by such domestic Subsidiary to the extent required in Article
13 hereof.
ARTICLE 5
SUCCESSOR CORPORATION
SECTION 5.01 When Company May Merge or Transfer Assets. The Company shall not
consolidate with or merge with or into any other person or convey, transfer or
lease all or substantially all of its properties and assets to any person, nor
will the Company permit any Subsidiary to enter into any such transaction or
series of transactions if such transaction or series of transactions, in the
aggregate, would result in a sale, assignment, transfer, lease or other
disposition of all or substantially all of the properties and assets of the
Company and its Subsidiaries on a consolidated basis to any other person or
persons, unless:
(a) either (1) the Company or such subsidiary shall be the surviving corporation
or (2) the person (if other than the Company) formed by such consolidation or
into which the Company or such Subsidiary is merged or the person which acquires
by conveyance, transfer or lease the properties and assets of the Company or
such Subsidiary substantially as an entirety (i) shall be organized and validly
existing under the laws of the United States or any state thereof or the
District of Columbia and (ii) shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee, in form reasonably
satisfactory to the Trustee, all of the obligations of the Company or such
Subsidiary under the Securities and this Indenture;
(b) immediately after giving effect to such transaction, no Default shall have
occurred and be continuing; and
(c) the Company shall have delivered to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that such consolidation, merger, conveyance,
transfer or lease and, if a supplemental indenture is required in connection
with such transaction, such supplemental indenture, comply with this Article 5
and that all conditions precedent herein provided for relating to such
transaction have been satisfied.
For purposes of the foregoing, the transfer (by lease,
assignment, sale or otherwise) of the properties and assets of one or more
Subsidiaries (other than to the Company or another Subsidiary), which, if such
assets were owned by the Company, would constitute all or substantially all of
the properties and assets of the Company, shall be deemed to be the transfer of
all or substantially all of the properties and assets of the Company.
The successor person formed by such consolidation or into
which the Company or the applicable Subsidiary is merged or the successor person
to which such conveyance, transfer or lease is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company or the
applicable Subsidiary under this Indenture with the same effect as if such
successor had been named as the Company or the applicable Subsidiary herein; and
thereafter, except in the case of a lease and any obligations the Company or the
applicable Subsidiary may have under a supplemental indenture pursuant to
Section 11.14, the Company or the applicable Subsidiary shall be discharged from
all obligations and covenants under this Indenture and the Securities. Subject
to Section 9.06, the Company, the applicable Subsidiary, the Trustee and the
successor person shall enter into a supplemental indenture to evidence the
succession and substitution of such successor person and such discharge and
release of the Company and the applicable Subsidiary.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01 Events of Default. An "Event of Default" occurs if:
(1) the Company defaults in payment of any contingent interest
or of interest which becomes payable after the Securities have
been converted to semiannual coupon notes following the
occurrence of a Tax Event, which default, in either case,
continues for 30 days;
(2) the Company defaults in the payment of the Principal
Amount at Maturity (or, if the Securities have been converted
to semiannual coupon notes following a Tax Event pursuant to
Article 10, the Restated Principal Amount), Issue Price plus
accrued Original Issue Discount, Redemption Price, Purchase
Price or Change in Control Purchase Price on any Security when
the same becomes due and payable at its Stated Maturity, upon
redemption, upon declaration, when due for purchase by the
Company or otherwise;
(3) the Company or any Guarantor fails to comply with any of
the other agreements in the Securities, any Guarantee or this
Indenture (other than those referred to in clauses (1) and (2)
above) and such failure continues for 60 days after receipt by
the Company of a Notice of Default;
(4) (a) failure of the Company to make any payment by the end
of any applicable grace period after maturity of Debt in an
amount (taken together with amounts in (b) below) in excess of
$10,000,000 and continuance of such failure, or (b) an
acceleration of Debt has occurred in an amount (taken together
with amounts in (a) above) in excess of $10,000,000 because of
a default with respect to such Debt without such Debt having
been discharged or such acceleration having been cured,
waived, rescinded or annulled, in the case of (a) or (b)
above, for a period of 30 days after receipt by the Company of
a Notice of Default; provided, however, that if any such
failure or acceleration referred to in (a) or (b) above shall
cease or be cured, waived, rescinded or annulled, then the
Event of Default by reason thereof shall be deemed not to have
occurred;
(5) any Guarantee ceases to be in full force and effect or is
declared null and void or any Guarantor denies that it has any
further liability under any Guarantee, or gives notice to such
effect (other than by reason of the termination of this
Indenture or the release of any such Guarantee in accordance
with this Indenture) and such condition shall have continued
for a period of 30 days after written notice of such failure
requiring the Guarantor and the Company to remedy the same
shall have been given (x) to the Company by the Trustee or (y)
to the Company and the Trustee by the holders of 25% in
aggregate principal amount of the Securities then outstanding;
or
(6) the Company or any Significant Subsidiary pursuant to or
under or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case or proceeding;
(B) consents to the entry of an order for relief
against it in an involuntary case or proceeding or
the commencement of any case against it;
(C) consents to the appointment of a Custodian
of it or for any substantial part of its property;
(D) makes a general assignment for the benefit
of its creditors;
(E) files a petition in bankruptcy or answer or
consent seeking reorganization or relief; or
(F) consents to the filing of such petition or
the appointment of or taking possession by a
Custodian; or
(7) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company or any
Significant Subsidiary in an involuntary case or
proceeding, or adjudicates the Company or any
Significant Subsidiary insolvent or bankrupt;
(B) appoints a Custodian of the Company or any
Significant Subsidiary or for any substantial part of
its property; or
(C) orders the winding up or liquidation of the
Company or any Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60 days.
"Bankruptcy Law" means Title 11, United States Code, or any
similar Federal or state law for the relief of debtors.
"Custodian" means any receiver, trustee, assignee, liquidator,
custodian or similar official under any Bankruptcy Law.
A Default under clause (3) or clause (4) above is not an Event
of Default until the Trustee notifies the Company, or the Holders of at least
25% in aggregate Principal Amount at Maturity of the Securities at the time
outstanding notify the Company and the Trustee, of the Default and the Company
does not cure such Default (and such Default is not waived) within the time
specified in clause (3) or clause (4) above after actual receipt of such notice.
Any such notice must specify the Default, demand that it be remedied and state
that such notice is a "Notice of Default".
The Company shall deliver to the Trustee, within 30 days after
it becomes aware of the occurrence thereof, written notice of any event which
with the giving of notice or the lapse of time, or both, would become an Event
of Default under clause (3) or clause (4) above, its status and what action the
Company is taking or proposes to take with respect thereto.
SECTION 6.02 Acceleration. If an Event of Default (other than an Event of
Default specified in Section 6.01(6) or (7) in respect of the Company) occurs
and is continuing, the Trustee by written Notice to the Company, or the Holders
of at least 25% in aggregate Principal Amount at Maturity of the Securities at
the time outstanding by notice to the Company and the Trustee, may declare the
Issue Price plus accrued Original Issue Discount through the date of
declaration, and any accrued and unpaid interest (including contingent interest)
through the date of such declaration, on all the Securities to be immediately
due and payable. Upon such a declaration, such Issue Price plus accrued Original
Issue Discount, and such accrued and unpaid interest (including contingent
interest), if any, shall be due and payable immediately. If an Event of Default
specified in Section 6.01(6) or (7) occurs in respect of the Company and is
continuing, the Issue Price plus accrued Original Issue Discount plus accrued
and unpaid interest (including contingent interest), if any, on all the
Securities shall become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Securityholders. The
Holders of a majority in aggregate Principal Amount at Maturity of the
Securities at the time outstanding, by notice to the Trustee (and without notice
to any other Securityholder) may rescind an acceleration and its consequences if
the rescission would not conflict with any judgment or decree and if all
existing Events of Default have been cured or waived except nonpayment of the
Issue Price plus accrued Original Issue Discount plus accrued and unpaid
interest that have become due solely as a result of acceleration and if all
amounts due to the Trustee under Section 7.07 have been paid. No such rescission
shall affect any subsequent Default or impair any right consequent thereto.
SECTION 6.03 Other Remedies. If an Event of Default occurs and is continuing,
the Trustee may pursue any available remedy to collect the payment of the Issue
Price plus accrued Original Issue Discount 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 the Trustee does
not possess any of the Securities or does not produce any of the Securities in
the proceeding. A delay or omission by the Trustee or any Securityholder in
exercising any right or remedy accruing upon an Event of Default shall not
impair the right or remedy or constitute a waiver of, or acquiescence in, the
Event of Default. Except as set forth in Section 2.07 hereof, no remedy is
exclusive of any other remedy. All available remedies are cumulative.
SECTION 6.04 Waiver of Past Defaults. Subject to Section 6.02, the Holders of a
majority in aggregate Principal Amount at Maturity of the Securities at the time
outstanding, by notice to the Trustee (and without notice to any other
Securityholder), may waive an existing Default and its consequences except (1)
an Event of Default described in Section 6.01(1) or (2), (2) a Default in
respect of a provision that under Section 9.02 cannot be amended without the
consent of each Securityholder affected or (3) a Default which constitutes a
failure to convert any Security in accordance with the terms of Article 11. When
a Default is waived, it is deemed cured, but no such waiver shall extend to any
subsequent or other Default or impair any consequent right. This Section 6.04
shall be in lieu of Section 316(a)1(B) of the TIA and such Section 316(a)1(B) is
hereby expressly excluded from this Indenture, as permitted by the TIA.
SECTION 6.05 Control by Majority. The Holders of a majority in aggregate
Principal Amount at Maturity of the Securities at the time outstanding may
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or of exercising any trust or power conferred on the
Trustee. However, the Trustee may refuse to follow any direction that conflicts
with law or this Indenture or that the Trustee determines in good faith is
unduly prejudicial to the rights of other Securityholders or would involve the
Trustee in personal liability unless the Trustee is offered indemnity
satisfactory to it. This Section 6.05 shall be in lieu of Section 316(a)1(A) of
the TIA and such Section 316(a)1(A) is hereby expressly excluded from this
Indenture, as permitted by the TIA.
SECTION 6.06 Limitation on Suits. A Securityholder may not pursue any remedy
with respect to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice stating
that an Event of Default is continuing;
(2) the Holders of at least 25% in aggregate Principal Amount
at Maturity of the Securities at the time outstanding make a
written request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee security or
indemnity satisfactory to the Trustee against any loss,
liability or expense;
(4) the Trustee does not comply with the request within 60
days after receipt of such notice, request and offer of
security or indemnity; and
(5) the Holders of a majority in aggregate Principal Amount at
Maturity of the Securities at the time outstanding do not give
the Trustee a direction inconsistent with the request during
such 60-day period.
A Securityholder may not use this Indenture to prejudice the
rights of any other Securityholder or to obtain a preference or priority over
any other Securityholder.
SECTION 6.07 Rights of Holders to Receive Payment. Notwithstanding any other
provision of this Indenture, the right of any Holder to receive payment of the
Principal Amount at Maturity (or if the Securities have been converted to
semiannual coupon notes following a Tax Event pursuant to Article 10, the
Restated Principal Amount), Issue Price plus accrued Original Issue Discount,
Redemption Price, Purchase Price, Change in Control Purchase Price, contingent
interest or interest, if any, in respect of the Securities held by such Holder,
on or after the respective due dates expressed in the Securities or any
Redemption Date, and to convert the Securities in accordance with Article 11, or
to bring suit for the enforcement of any such payment on or after such
respective dates or the right to convert, shall not be impaired or affected
adversely without the consent of such Holder.
SECTION 6.08 Collection Suit by Trustee. If an Event of Default described in
Section 6.01(1) or (2) occurs and is continuing, the Trustee may recover
judgment in its own name and as trustee of an express trust against the Company
for the whole amount owing with respect to the Securities and the amounts
provided for in Section 7.07.
SECTION 6.09 Trustee May File Proofs of Claim. In case of the pendency of any
receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement,
adjustment, composition or other judicial proceeding relative to the Company or
any other obligor upon the Securities or the property of the Company or of such
other obligor or their creditors, the Trustee (irrespective of whether the
Principal Amount at Maturity, Restated Principal Amount, Issue Price plus
accrued Original Issue Discount, Redemption Price, Purchase Price, Change in
Control Purchase Price, contingent interest or interest, if any, in respect of
the Securities shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Trustee shall have made
any demand on the Company for the payment of any such amount) shall be entitled
and empowered, by intervention in such proceeding or otherwise,
(a) to file and prove a claim for the whole amount of the
Principal Amount at Maturity, Restated Principal Amount, Issue
Price plus accrued Original Issue Discount, Redemption Price,
Purchase Price, Change in Control Purchase Price, and interest
(including contingent interest), if any, as the case may be,
and to file such other papers or documents as may be necessary
or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its
agents and counsel or any other amounts due the Trustee under
Section 7.07) and of the Holders allowed in such judicial
proceeding, and
(b) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute
the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
similar official in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay the
Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.07.
Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof, or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding.
SECTION 6.10 Priorities. If the Trustee collects any money pursuant to this
Article 6, it shall pay out the money in the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to Securityholders for amounts due and unpaid on the
Securities for the Principal Amount at Maturity, Restated
Principal Amount, Issue Price plus accrued Original Issue
Discount, Redemption Price, Purchase Price, Change in Control
Purchase Price, and interest (including contingent interest),
if any, as the case may be, ratably, without preference or
priority of any kind, according to such amounts due and
payable on the Securities; and
THIRD: the balance, if any, to the Company.
The Trustee may fix a record date and payment date for any
payment to Securityholders pursuant to this Section 6.10. At least 15 days
before such record date, the Trustee shall mail to each Securityholder and the
Company a notice that states the record date, the payment date and the amount to
be paid.
SECTION 6.11 Undertaking for Costs. In any suit for the enforcement of any right
or remedy under this Indenture or in any suit against the Trustee for any action
taken or omitted by it as Trustee, a court in its discretion may require the
filing by any party litigant (other than the Trustee) 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 and expenses,
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 6.11
does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section
6.07 or a suit by Holders of more than 10% in aggregate Principal Amount at
Maturity of the Securities at the time outstanding. This Section 6.11 shall be
in lieu of Section 315(e) of the TIA and such Section 315(e) is hereby expressly
excluded from this Indenture, as permitted by the TIA.
SECTION 6.12 Waiver of Stay, Extension or Usury Laws. The Company covenants (to
the extent that it may lawfully do so) that it will not at any time insist upon,
or plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay or extension law or any usury or other law wherever enacted, now or at
any time hereafter in force, which would prohibit or forgive the Company from
paying all or any portion of the Principal Amount at Maturity, Restated
Principal Amount, Issue Price plus accrued Original Issue Discount, Redemption
Price, Purchase Price, Change in Control Purchase Price or contingent interest,
if any, in respect of Securities or any interest on such amounts, as
contemplated herein, or which may affect the covenants or the performance of
this Indenture; and the Company (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law, and covenants
that it will not hinder, delay or impede the execution of any power herein
granted to the Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.
ARTICLE 7
TRUSTEE
SECTION 7.01 Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee shall
exercise the rights and powers vested in it by this Indenture and use the same
degree of care and skill in its exercise as a prudent person would exercise or
use under the circumstances in the conduct of such person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee need perform only those duties that are
specifically set forth in this Indenture and no others; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture, but in case
of any such certificates or opinions which by any provision
hereof are specifically required to be furnished to the
Trustee, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the
requirements of this Indenture, but need not confirm or
investigate the accuracy of mathematical calculations or other
facts stated therein.
This Section 7.01(b) shall be in lieu of Section 315(a) of the TIA and such
Section 315(a) is hereby expressly excluded from this Indenture, as permitted by
the TIA.
(c) The Trustee may not be relieved from liability for its own negligent action,
its own negligent failure to act or its own willful misconduct, except that:
(1) this paragraph (c) does not limit the effect of paragraph
(b) of this Section 7.01;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer unless it is
proved that the Trustee was negligent in ascertaining the
pertinent facts; and
(3) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.05.
Subparagraphs (c)(1), (2) and (3) shall be in lieu of Sections 315(d)(1),
315(d)(2) and 315(d)(3) of the TIA and such Sections 315(d)(1), 315(d)(2) and
315(d)(3) are hereby expressly excluded from this Indenture, as permitted by the
TIA.
(d) Every provision of this Indenture that in any way relates to the Trustee is
subject to paragraphs (a), (b), (c) and (e) of this Section 7.01.
(e) The Trustee may refuse to perform any duty or exercise any right or power or
extend or risk its own funds or otherwise incur any financial liability unless
it receives indemnity satisfactory to it against any loss, liability or expense.
(f) Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee (acting in any
capacity hereunder) shall be under no liability for interest on any money
received by it hereunder unless otherwise agreed in writing with the Company.
SECTION 7.02 Rights of Trustee. Subject to its duties and responsibilities under
the provisions of Section 7.01, and, except as expressly excluded from this
Indenture pursuant to said Section 7.01, subject also to its duties and
responsibilities under the TIA:
(a) the Trustee may conclusively rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties;
(b) whenever in the administration of this Indenture the Trustee shall deem it
desirable that a matter be proved or established prior to taking, suffering or
omitting any action hereunder, the Trustee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on its part,
conclusively rely upon an Officers' Certificate;
(c) the Trustee may execute any of the trusts or powers hereunder or perform any
duties hereunder either directly or by or through agents or attorneys and the
Trustee shall not be responsible for any misconduct or negligence on the part of
any agent or attorney appointed with due care by it hereunder;
(d) the Trustee shall not be liable for any action taken, suffered, or omitted
to be taken by it in good faith which it believes to be authorized or within its
rights or powers conferred under this Indenture;
(e) the Trustee may consult with counsel selected by it and any advice or
Opinion of Counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it hereunder in good faith
and in accordance with such advice or Opinion of Counsel;
(f) the Trustee shall be under no obligation to exercise any of the rights or
powers vested in it by this Indenture at the request, order or direction of any
of the Holders, pursuant to the provisions of this Indenture, unless such
Holders shall have offered to the Trustee security or indemnity satisfactory to
it against the costs, expenses and liabilities which may be incurred therein or
thereby;
(g) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors may be sufficiently evidenced by a resolution of the
Board of Directors;
(h) the Trustee shall not be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document, but the Trustee, in its
discretion, may make such further inquiry or investigation into such facts or
matters as it may see fit, and, if the Trustee shall determine to make such
further inquiry or investigation, it shall be entitled to examine the books,
records and premises of the Company, personally or by agent or attorney at the
sole cost of the Company and shall incur no liability or additional liability of
any kind by reason of such inquiry or investigation;
(i) the Trustee shall not be deemed to have notice of any Default or Event of
Default unless a Responsible Officer of the Trustee has actual knowledge thereof
or unless written notice of any event which is in fact such a default is
received by the Trustee at the Corporate Trust Office of the Trustee, and such
notice references the Securities and this Indenture;
(j) the rights, privileges, protections, immunities and benefits given to the
Trustee, including, without limitation, its right to be indemnified, are
extended to, and shall be enforceable by, the Trustee in each of its capacities
hereunder, and to each agent, custodian and other Person employed to act
hereunder; and
(k) the Trustee may request that the Company deliver an Officers' Certificate
setting forth the names of individuals and/or titles of officers authorized at
such time to take specified actions pursuant to this Indenture, which Officers'
Certificate may be signed by any person authorized to sign an Officers'
Certificate, including any person specified as so authorized in any such
certificate previously delivered and not superseded.
SECTION 7.03 Individual Rights of Trustee. The Trustee in its individual or any
other capacity may become the owner or pledgee of Securities and may otherwise
deal with the Company or its Affiliates with the same rights it would have if it
were not Trustee. Any Paying Agent, Registrar, Conversion Agent or co-registrar
may do the same with like rights. However, the Trustee must comply with Sections
7.10 and 7.11.
SECTION 7.04 Trustee's Disclaimer. The Trustee makes no representation as to the
validity or adequacy of this Indenture or the Securities, it shall not be
accountable for the Company's use or application of the proceeds from the
Securities, it shall not be responsible for any statement in the registration
statement for the Securities under the Securities Act or in the Indenture or the
Securities (other than its certificate of authentication), or the determination
as to which beneficial owners are entitled to receive any notices hereunder.
SECTION 7.05 Notice of Defaults. If a Default occurs and if it is known to the
Trustee, the Trustee shall give to each Securityholder notice of the Default
within 90 days after it occurs unless such Default shall have been cured or
waived before the giving of such notice. Except in the case of a Default
described in Section 6.01(1) or (2), the Trustee may withhold the notice if and
so long as a committee of its Responsible Officers in good faith determines that
withholding the notice is in the interests of Securityholders. The second
sentence of this Section 7.05 shall be in lieu of the proviso to Section 315(b)
of the TIA and such proviso is hereby expressly excluded from this Indenture, as
permitted by the TIA. The Trustee shall not be deemed to have knowledge of a
Default unless a Responsible Officer of the Trustee has received written notice
of such Default.
SECTION 7.06 Reports by Trustee to Holders. Within 60 days after each March 15
beginning with the March 15 following the date of this Indenture, the Trustee
shall mail to each Securityholder a brief report dated as of such March 15 that
complies with TIA Section 313(a), if required by such Section 313(a). The
Trustee also shall comply with TIA Section 313(b).
A copy of each report at the time of its mailing to
Securityholders shall be filed with the SEC and each securities exchange, if
any, on which the Securities are listed. The Company agrees to promptly notify
the Trustee whenever the Securities become listed on any securities exchange and
of any delisting thereof.
SECTION 7.07 Compensation and Indemnity. The Company agrees:
(a) to pay to the Trustee from time to time such reasonable
compensation as the Company and the Trustee shall from time to
time agree in writing for all services rendered by it
hereunder (which compensation shall not be limited (to the
extent permitted by law) by any provision of law in regard to
the compensation of a trustee of an express trust);
(b) to reimburse the Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or
made by the Trustee in accordance with any provision of this
Indenture (including the reasonable compensation and the
expenses, advances and disbursements of its agents and
counsel), except any such expense, disbursement or advance as
may be attributable to its negligence or bad faith; and
(c) to indemnify the Trustee or any predecessor, Trustee and
their agents for, and to hold them harmless against, any loss,
damage, claim, liability, cost or expense (including
reasonable attorney's fees and expenses and taxes (other than
taxes based upon, measured by or determined by the income of
the Trustee)) incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or
administration of this trust, including the reasonable costs
and expenses of defending itself against any claim (whether
asserted by the Company or any Holder or any other Person) or
liability in connection with the exercise or performance of
any of its powers or duties hereunder.
To secure the Company's payment obligations in this Section
7.07, the Holders shall have been deemed to have granted to the Trustee a lien
prior to the Securities on all money or property held or collected by the
Trustee, except that held in trust to pay the Principal Amount at Maturity,
Issue Price plus accrued Original Issue Discount, Redemption Price, Purchase
Price, Change in Control Purchase Price, contingent interest or interest, if
any, as the case may be, on particular Securities.
The Company's payment obligations pursuant to this Section
7.07 shall survive the discharge of this Indenture and the resignation or
removal of the Trustee. When the Trustee incurs expenses after the occurrence of
a Default specified in Section 6.01(6) or (7), the expenses including the
reasonable charges and expenses of its counsel, are intended to constitute
expenses of administration under any Bankruptcy Law.
SECTION 7.08 Replacement of Trustee. The Trustee may resign by so notifying the
Company; provided, however, no such resignation shall be effective until a
successor Trustee has accepted its appointment pursuant to this Section 7.08.
The Holders of a majority in aggregate Principal Amount at Maturity of the
Securities at the time outstanding may remove the Trustee by so notifying the
Trustee and the Company. The Company shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or public officer takes charge of the
Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall promptly appoint, by
resolution of its Board of Directors, a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company satisfactory in form and
substance to the retiring Trustee and the Company. Thereupon the resignation or
removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. The successor Trustee shall mail a notice of its succession to
Securityholders. The retiring Trustee shall promptly transfer all property held
by it as Trustee to the successor Trustee, subject to the lien provided for in
Section 7.07.
If a successor Trustee does not take office within 30 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company or the Holders of a majority in aggregate Principal Amount at Maturity
of the Securities at the time outstanding may petition any court of competent
jurisdiction at the expense of the Company for the appointment of a successor
Trustee.
If the Trustee fails to comply with Section 7.10, any
Securityholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
SECTION 7.09 Successor Trustee by Merger. If the Trustee consolidates with,
merges or converts into, or transfers all or substantially all its corporate
trust business or assets to, another corporation, the resulting, surviving or
transferee corporation without any further act shall be the successor Trustee.
SECTION 7.10 Eligibility; Disqualification. The Trustee shall at all times
satisfy the requirements of TIA Sections 310(a)(1) and 310(b). The Trustee (or
its parent holding company) shall have a combined capital and surplus of at
least $50,000,000 as set forth in its most recent published annual report of
condition. Nothing herein contained shall prevent the Trustee from filing with
the Commission the application referred to in the penultimate paragraph of TIA
Section 310(b).
SECTION 7.11 Preferential Collection of Claims Against Company. 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 be
subject to TIA Section 311(a) to the extent indicated therein.
ARTICLE 8
DISCHARGE OF INDENTURE
SECTION 8.01 Discharge of Liability on Securities. When (i) the Company delivers
to the Trustee all outstanding Securities (other than Securities replaced
pursuant to Section 2.07) for cancellation or (ii) all outstanding Securities
have become due and payable and the Company or any Guarantor irrevocably
deposits with the Trustee, the Paying Agent (if the Paying Agent is not the
Company or any of its Affiliates) or the Conversion Agent cash or, if expressly
permitted by the terms of the Securities or the Indenture, Common Stock
sufficient to pay all amounts due and owing on all outstanding Securities (other
than Securities replaced pursuant to Section 2.07), and if in either case the
Company pays all other sums payable hereunder by the Company, then this
Indenture shall, subject to Section 7.07, cease to be of further effect. The
Trustee shall join in the execution of a document prepared by the Company
acknowledging satisfaction and discharge of this Indenture on demand of the
Company accompanied by an Officers' Certificate and Opinion of Counsel and at
the cost and expense of the Company.
SECTION 8.02 Repayment to the Company. The Trustee and the Paying Agent shall
return to the Company upon written request any money or securities held by them
for the payment of any amount with respect to the Securities that remains
unclaimed for two years, subject to applicable unclaimed property law. After
return to the Company, Holders entitled to the money or securities must look to
the Company for payment as general creditors unless an applicable abandoned
property law designates another person and the Trustee and the Paying Agent
shall have no further liability to the Securityholders with respect to such
money or securities for that period commencing after the return thereof.
ARTICLE 9
AMENDMENTS
SECTION 9.01 Without Consent of Holders. The Company and the Trustee may amend
this Indenture or the Securities without the consent of any Securityholder:
(1) to cure any ambiguity, omission, defect or
inconsistency;
(2) to comply with Article 5 or Section 11.14;
(3) to secure the Company's obligations under the
Securities and this Indenture;
(4) to add to the Company's covenants for the benefit of
the Securityholders or to surrender any right or power
conferred upon the Company;
(5) to make any change to comply with the TIA, or any
amendment thereto, or to comply with any requirement of the
SEC in connection with the qualification of the Indenture
under the TIA, or as necessary in connection with the
registration of the Securities under the Securities Act; or
(6) to make any change that does not adversely affect the
rights of any Holders (it being understood that any amendment
described in clause (1) above made solely to conform this
Indenture to the final offering memorandum provided to
investors in connection with the initial offering of the
Securities will be deemed not to adversely affect the rights
or interests of Holders).
SECTION 9.02 With Consent of Holders. With the written consent of the Holders of
at least a majority in aggregate Principal Amount at Maturity of the Securities
at the time outstanding, the Company and the Trustee may amend this Indenture or
the Securities. However, without the consent of each Securityholder affected, an
amendment to this Indenture or the Securities may not:
(1) change the provisions of this Indenture that relate to
modifying or amending this Indenture;
(2) make any change in the manner or rate of accrual in
connection with Original Issue Discount, make any change in
the manner of calculation of, or that adversely affects the
right to receive, contingent interest, reduce the rate of
interest referred to in Section 10.01 upon the occurrence of a
Tax Event, or extend the time for payment of Original Issue
Discount or interest, if any, on any Security;
(3) reduce the Principal Amount at Maturity, Restated
Principal Amount or the Issue Price of or change the Stated
Maturity of any Security;
(4) reduce the Redemption Price, Purchase Price or Change in
Control Purchase Price of any Security;
(5) make any Security payable in money or securities other
than that stated in the Security;
(6) make any change in Section 6.04, Section 6.07 or this
Section 9.02, except to increase any percentage set forth
therein;
(7) make any change that adversely affects the right to
convert any Security;
(8) make any change that adversely affects the right to
require the Company to purchase the Securities in accordance
with the terms thereof and this Indenture;
(9) impair the right to institute suit for the enforcement of
any payment with respect to, or conversion of, the Securities;
or
(10) release any Guarantor from any of its obligations under
its Guarantee other than in accordance with the terms of this
Indenture.
It shall not be necessary for the consent of the Holders under
this Section 9.02 to approve the particular form of any proposed amendment, but
it shall be sufficient if such consent approves the substance thereof.
After an amendment under this Section 9.02 becomes effective,
the Company shall mail to each Holder a notice briefly describing the amendment.
SECTION 9.03 Compliance with Trust Indenture Act. Every supplemental indenture
executed pursuant to this Article shall comply with the TIA.
SECTION 9.04 Revocation and Effect of Consents, Waivers and Actions. Until an
amendment, consent, waiver or other action by Holders becomes effective, a
consent thereto by a Holder of a Security hereunder is a continuing consent by
the Holder and every subsequent Holder of that Security or portion of the
Security that evidences the same obligation as the consenting Holder's Security,
even if notation of the amendment, consent, waiver or other action is not made
on the Security. However, any such Holder or subsequent Holder may revoke the
consent as to such Holder's Security or portion of the Security if the Trustee
receives the notice of revocation before the date as of which the amendment,
consent, waiver or action is made effective. After an amendment, consent, waiver
or action becomes effective, it shall bind every Securityholder.
SECTION 9.05 Notation on or Exchange of Securities. Securities authenticated and
delivered after the execution of any supplemental indenture pursuant to this
Article may, and shall if required by the Trustee, bear a notation in form
approved by the Trustee as to any matter provided for in such supplemental
indenture. If the Company shall so determine, new Securities so modified as to
conform, in the opinion of the Board of Directors, to any such supplemental
indenture may be prepared and executed by the Company and authenticated and
delivered by the Trustee in exchange for outstanding Securities.
SECTION 9.06 Trustee to Sign Supplemental Indentures. The Trustee shall sign any
supplemental indenture authorized pursuant to this Article 9 if the amendment
contained therein does not adversely affect the rights, duties, liabilities or
immunities of the Trustee. If it does, the Trustee may, but need not, sign such
supplemental indenture. In signing such supplemental indenture the Trustee shall
receive, and (subject to the provisions of Section 7.01) shall be fully
protected in relying upon, in addition to the documents required by Section
14.04, an Officers' Certificate and an Opinion of Counsel stating that such
amendment is authorized or permitted by this Indenture.
SECTION 9.07 Effect of Supplemental Indentures. Upon the execution of any
supplemental indenture under this Article, this Indenture shall be modified in
accordance therewith, and such supplemental indenture shall form a part of this
Indenture for all purposes; and every Holder of Securities theretofore or
thereafter authenticated and delivered hereunder shall be bound thereby.
ARTICLE 10
SPECIAL TAX EVENT CONVERSION
SECTION 10.01 Optional Conversion to Semiannual Coupon Note Upon Tax Event. From
and after (i) the date of the occurrence of a Tax Event (the "Tax Event Date")
and (ii) the date the Company exercises the option provided for in this Section
10.01, whichever is later (the "Option Exercise Date"), at the option of the
Company, interest in lieu of future Original Issue Discount shall accrue at the
rate specified in paragraph 11(a) of the Securities on a restated principal
amount per $1,000 original Principal Amount at Maturity (the "Restated Principal
Amount") equal to the Issue Price plus Original Issue Discount accrued through
the Option Exercise Date and shall be payable semiannually on April 3 and
October 3 of each year (each an "Interest Payment Date") to holders of record at
the close of business on March 19 or September 18 (each a "Regular Record Date")
immediately preceding such Interest Payment Date. Interest will be computed on
the basis of a 360-day year comprised of twelve 30-day months and will accrue
from the most recent date on which interest has been paid or, if no interest has
been paid, from the Option Exercise Date. Within 15 days of the occurrence of a
Tax Event, the Company shall deliver a written notice of such Tax Event by
facsimile and first-class mail to the Trustee and within 15 days of its exercise
of such option the Company shall deliver a written notice of the Option Exercise
Date by facsimile and first-class mail to the Trustee and by first class mail to
the Holders of the Securities. From and after the Option Exercise Date, (i) the
Company shall be obligated to pay at Stated Maturity, in lieu of the Principal
Amount at Maturity of a Security, the Restated Principal Amount thereof plus
accrued and unpaid interest with respect to any Security, (ii) "Issue Price and
accrued Original Issue Discount," "Issue Price plus Original Issue Discount" or
similar words, as used herein, shall mean Restated Principal Amount plus accrued
and unpaid interest with respect to any Security and (iii) contingent interest
shall cease to accrue on the Securities. Securities authenticated and delivered
after the Option Exercise Date may, and shall if required by the Trustee, bear a
notation in a form approved by the Trustee as to the conversion of the
Securities to semiannual coupon notes. No other changes to the Indenture shall
result as a result of the events described in this Section 10.01.
ARTICLE 11
CONVERSION
SECTION 11.01 Conversion Privilege. A Holder of a Security may convert such
Security into Common Stock at any time during the period stated in paragraph 9
of the Securities. The number of shares of Common Stock issuable upon conversion
of a Security per $1,000 of Principal Amount at Maturity thereof (the
"Conversion Rate") shall be that set forth in paragraph 9 in the Securities,
subject to adjustment as herein set forth.
A Holder may convert a portion of the Principal Amount at
Maturity of a Security if the portion is $1,000 or an integral multiple of
$1,000. Provisions of this Indenture that apply to conversion of all of a
Security also apply to conversion of a portion of a Security.
"Average Sale Price" means the average of the Sale Prices of
the Common Stock for the shorter of
(i) 30 consecutive trading days ending on the last full
trading day prior to the Time of Determination with respect to
the rights, warrants or options or distribution in respect of
which the Average Sale Price is being calculated, or
(ii) the period (x) commencing on the date next succeeding the
first public announcement of (a) the issuance of rights,
warrants or options or (b) the distribution, in each case, in
respect of which the Average Sale Price is being calculated
and (y) proceeding through the last full trading day prior to
the Time of Determination with respect to the rights, warrants
or options or distribution in respect of which the Average
Sale Price is being calculated (excluding days within such
period, if any, which are not trading days), or
(iii) the period, if any, (x) commencing on the date next
succeeding the Ex-Dividend Time with respect to the next
preceding (a) issuance of rights, warrants or options or (b)
distribution, in each case, for which an adjustment is
required by the provisions of Section 11.06(4), 11.07 or 11.08
and (y) proceeding through the last full trading day prior to
the Time of Determination with respect to the rights, warrants
or options or distribution in respect of which the Average
Sale Price is being calculated (excluding days within such
period, if any, which are not trading days).
In the event that the Ex-Dividend Time (or in the case of a
subdivision, combination or reclassification, the effective date with respect
thereto) with respect to a dividend, subdivision, combination or
reclassification to which Section 11.06(1), (2), (3) or (5) applies occurs
during the period applicable for calculating "Average Sale Price" pursuant to
the definition in the preceding sentence, "Average Sale Price" shall be
calculated for such period in a manner determined by the Board of Directors to
reflect the impact of such dividend, subdivision, combination or
reclassification on the Sale Price of the Common Stock during such period.
"Time of Determination" means the time and date of the earlier
of (i) the determination of stockholders entitled to receive rights, warrants or
options or a distribution, in each case, to which Section 11.07 or 11.08 applies
and (ii) the time ("Ex-Dividend Time") immediately prior to the commencement of
"ex-dividend" trading for such rights, warrants or options or distribution on
the New York Stock Exchange or such other principal national or regional
exchange or market on which the Common Stock is then listed or quoted.
SECTION 11.02 Conversion Procedure. To convert a Security a Holder must satisfy
the requirements in paragraph 9 of the Securities. The date on which the Holder
satisfies all those requirements is the conversion date (the "Conversion Date").
As soon as practicable after the Conversion Date, the Company shall deliver to
the Holder, through the Conversion Agent, a certificate for the number of full
shares of Common Stock issuable upon the conversion and cash in lieu of any
fractional share determined pursuant to Section 11.03. The person in whose name
the certificate is registered shall be treated as a stockholder of record on and
after the Conversion Date; provided, however, that no surrender of a Security on
any date when the stock transfer books of the Company shall be closed shall be
effective to constitute the person or persons entitled to receive the shares of
Common Stock upon such conversion as the record holder or holders of such shares
of Common Stock on such date, but such surrender shall be effective to
constitute the person or persons entitled to receive such shares of Common Stock
as the record holder or holders thereof for all purposes at the close of
business on the next succeeding day on which such stock transfer books are open;
such conversion shall be at the Conversion Rate in effect on the date that such
Security shall have been surrendered for conversion, as if the stock transfer
books of the Company had not been closed. Upon conversion of a Security, such
person shall no longer be a Holder of such Security.
No payment or adjustment will be made for dividends on, or
other distributions with respect to, any Common Stock except as provided in this
Article 11. On conversion of a Security, the greater of that portion of accrued
Original Issue Discount (or interest, if the Company has exercised its option
provided for in Section 10.01) or Tax Original Issue Discount attributable to
the period from the Issue Date (or, if the Company has exercised the option
provided for in Section 10.01, the later of (x) the date of such exercise and
(y) the date on which interest was last paid) of the Security through but not
including the Conversion Date and (except as provided below) accrued contingent
interest, if any, with respect to the converted Security shall not be cancelled,
extinguished or forfeited, but rather shall be deemed to be paid in full to the
Holder thereof through delivery of the Common Stock (together with the cash
payment, if any, in lieu of fractional shares) in exchange for the Security
being converted pursuant to the provisions hereof; and the fair market value of
such shares of Common Stock (together with any such cash payment in lieu of
fractional shares) shall be treated as issued, to the extent thereof, first in
exchange for the greater of Original Issue Discount (or interest, if the Company
has exercised its option provided for in Section 10.01) or Tax Original Issue
Discount accrued through the Conversion Date and accrued contingent interest,
and the balance, if any, of such fair market value of such Common Stock (and any
such cash payment) shall be treated as issued in exchange for the Issue Price of
the Security being converted pursuant to the provisions hereof.
If the Holder converts more than one Security at the same
time, the number of shares of Common Stock issuable upon the conversion shall be
based on the total Principal Amount at Maturity of the Securities converted.
If the last day on which a Security may be converted is a
Legal Holiday, the Security may be surrendered on the next succeeding day that
is not a Legal Holiday.
Upon surrender of a Security that is converted in part, the
Company shall execute, and the Trustee shall authenticate and deliver to the
Holder, a new Security in an authorized denomination equal in Principal Amount
at Maturity to the unconverted portion of the Security surrendered.
SECTION 11.03 Fractional Shares. The Company will not issue a fractional share
of Common Stock upon conversion of a Security. Instead, the Company will deliver
cash for the current market value of the fractional share. The current market
value of a fractional share shall be determined, to the nearest 1/1,000th of a
share, by multiplying the Sale Price of the Common Stock, on the last trading
day prior to the Conversion Date, of a full share by the fractional amount and
rounding the product to the nearest whole cent.
SECTION 11.04 Taxes on Conversion. If a Holder converts a Security, the Company
shall pay any documentary, stamp or similar issue or transfer tax due on the
issue of shares of Common Stock upon the conversion. However, the Holder shall
pay any such tax which is due because the Holder requests the shares to be
issued in a name other than the Holder's name. The Conversion Agent may refuse
to deliver the certificates representing the Common Stock being issued in a name
other than the Holder's name until the Conversion Agent receives a sum
sufficient to pay any tax which will be due because the shares are to be issued
in a name other than the Holder's name. Nothing herein shall preclude any tax
withholding required by law or regulations.
SECTION 11.05 Company to Provide Stock. The Company shall, prior to issuance of
any Securities under this Article 11, and from time to time as may be necessary,
reserve out of its authorized but unissued Common Stock a sufficient number of
shares of Common Stock to permit the conversion of the Securities.
All shares of Common Stock delivered upon conversion of the
Securities shall be newly issued shares or treasury shares, shall be duly and
validly issued and fully paid and nonassessable and shall be free from
preemptive rights and free of any lien or adverse claim created by the Company.
The Company will endeavor promptly to comply with all federal
and state securities laws regulating the offer and delivery of shares of Common
Stock upon conversion of Securities, if any, and will list or cause to have
quoted such shares of Common Stock on each national securities exchange or in
the over-the-counter market or such other market on which the Common Stock is
then principally listed or quoted.
SECTION 11.06 Adjustment for Change In Capital Stock. If, after the Issue
Date of the Securities, the Company:
(1) pays a dividend or makes a distribution on its Common
Stock in shares of its Common Stock;
(2) subdivides its outstanding shares of Common Stock
into a greater number of shares;
(3) combines its outstanding shares of Common Stock into
a smaller number of shares;
(4) pays a dividend or makes a distribution on its Common
Stock in shares of its Capital Stock (other than Common Stock
or rights, warrants or options for its Capital Stock); or
(5) issues by reclassification of its Common Stock any
shares of its Capital Stock (other than rights, warrants or
options for its Capital Stock),
then the conversion privilege and the Conversion Rate in
effect immediately prior to such action shall be adjusted so
that the Holder of a Security thereafter converted may receive
the number of shares of Capital Stock of the Company which
such Holder would have owned immediately following such action
if such Holder had converted the Security immediately prior to
such action.
The adjustment shall become effective immediately after the
record date in the case of a dividend or distribution and immediately after the
effective date in the case of a subdivision, combination or reclassification.
If after an adjustment a Holder of a Security upon conversion
of such Security may receive shares of two or more classes of Capital Stock of
the Company, the Conversion Rate shall thereafter be subject to adjustment upon
the occurrence of an action taken with respect to any such class of Capital
Stock as is contemplated by this Article 11 with respect to the Common Stock, on
terms comparable to those applicable to Common Stock in this Article 11.
SECTION 11.07 Adjustment for Rights Issue. If after the Issue Date of the
Securities, the Company distributes any rights, warrants or options to all
holders of its Common Stock entitling them, for a period expiring within 60 days
after the record date for such distribution, to purchase shares of Common Stock
at a price per share less than the Sale Price of the Common Stock as of the Time
of Determination, the Conversion Rate shall be adjusted in accordance with the
formula:
R' = R x (O + N)
-------------------
(O + (N x P)/M)
where:
R' = the adjusted Conversion Rate.
R = the current Conversion Rate.
O = the number of shares of Common Stock outstanding on the record date
for the distribution to which this Section 11.07 is being applied.
N = the number of additional shares of Common Stock offered pursuant to
the distribution.
P = the offering price per share of the additional shares.
M = the Average Sale Price, minus, in the case of (i) a distribution to
which Section 11.06(4) applies or (ii) a distribution to which Section 11.08
applies, for which, in each case, (x) the record date shall occur on or before
the record date for the distribution to which this Section 11.07 applies and (y)
the Ex-Dividend Time shall occur on or after the date of the Time of
Determination for the distribution to which this Section 11.07 applies, the fair
market value (on the record date for the distribution to which this Section
11.07 applies) of the
(1) Capital Stock of the Company distributed in respect of
each share of Common Stock in such Section 11.06(4)
distribution and
(2) assets of the Company or debt securities or any rights,
warrants or options to purchase securities of the Company
distributed in respect of each share of Common Stock in such
Section 11.08 distribution.
The Board of Directors shall determine fair market values for the
purposes of this Section 11.07.
The adjustment shall become effective immediately after the
record date for the determination of shareholders entitled to receive the
rights, warrants or options to which this Section 11.07 applies. If all of the
shares of Common Stock subject to such rights, warrants or options have not been
issued when such rights, warrants or options expire, then the Conversion Rate
shall promptly be readjusted to the Conversion Rate which would then be in
effect had the adjustment upon the issuance of such rights, warrants or options
been made on the basis of the actual number of shares of Common Stock issued
upon the exercise of such rights, warrants or options.
No adjustment shall be made under this Section 11.07 if the
application of the formula stated above in this Section 11.07 would result in a
value of R' that is equal to or less than the value of R.
SECTION 11.08 Adjustment for Other Distributions.
(a) If, after the Issue Date of the Securities, the Company distributes to all
holders of its Common Stock any of its assets excluding distributions of Capital
Stock or equity interests referred to in Section 11.08(b), or debt securities or
any rights, warrants or options to purchase securities of the Company (including
securities or cash, but excluding (x) distributions of Capital Stock referred to
in Section 11.06 and distributions of rights, warrants or options referred to in
Section 11.07 and (y) cash dividends or other cash distributions that are paid
out of consolidated current net earnings or earnings retained in the business as
shown on the books of the Company unless such cash dividends or other cash
distributions are Extraordinary Cash Dividends) the Conversion Rate shall be
adjusted, subject to the provisions of Section 11.08(c), in accordance with the
formula:
R' = R x M
-----
M - F
where:
R' = the adjusted Conversion Rate.
R = the current Conversion Rate.
M = the Average Sale Price, minus, in the case of a distribution to
which Section 11.06(4) applies, for which (i) the record date shall occur on or
before the record date for the distribution to which this Section 11.08(a)
applies and (ii) the Ex-Dividend Time shall occur on or after the date of the
Time of Determination for the distribution to which this Section 11.08(a)
applies, the fair market value (on the record date for the distribution to which
this Section 11.08(a) applies) of any Capital Stock of the Company distributed
in respect of each share of Common Stock in such Section 11.06(4) distribution.
F = the fair market value (on the record date for the distribution to
which this Section 11.08(a) applies) of the assets, securities, rights, warrants
or options to be distributed in respect of each share of Common Stock in the
distribution to which this Section 11.08(a) is being applied (including, in the
case of cash dividends or other cash distributions giving rise to an adjustment,
all such cash distributed concurrently).
The Board of Directors shall determine fair market values for the
purposes of this Section 11.08(a).
The adjustment shall become effective immediately after the
record date for the determination of shareholders entitled to receive the
distribution to which this Section 11.08(a) applies.
For purposes of this Section 11.08(a), the term "Extraordinary
Cash Dividend" shall mean any cash dividend with respect to the Common Stock the
amount of which, together with the aggregate amount of cash dividends on the
Common Stock to be aggregated with such cash dividend in accordance with the
provisions of this paragraph, equals or exceeds the threshold percentage set
forth in item (i) below. For purposes of item (i) below, the "Measurement
Period" with respect to a cash dividend on the Common Stock shall mean the 365
consecutive day period ending on the date prior to the Ex-Dividend Time with
respect to such cash dividend, and the "Relevant Cash Dividends" with respect to
a cash dividend on the Common Stock shall mean the cash dividends on the Common
Stock with Ex-Dividend Times occurring in the Measurement Period.
(i) If, upon the date prior to the Ex-Dividend Time with
respect to a cash dividend on the Common Stock, the aggregate
amount of such cash dividend together with the amounts of all
Relevant Cash Dividends equals or exceeds on a per share basis
the sum of (a) 5% of the Sale Price of the Common Stock on the
last trading day preceding the date of declaration by the
Board of Directors of the cash dividend with respect to which
this provision is being applied, and (b) the quotient of the
amount of any cash interest paid on a Security during the
Ex-Dividend Measurement Period by the conversion rate in
effect on the payment date of such applicable interest
payment, then such cash dividend together with all Relevant
Cash Dividends, shall be deemed to be an Extraordinary Cash
Dividend and for purposes of applying the formula set forth
above in this Section 11.08(a), the value of "F" shall be
equal to (y) the aggregate amount of such cash dividend
together with the amount of all Relevant Cash Dividends, minus
(z) the aggregate amount of all Relevant Cash Dividends for
which a prior adjustment in the Conversion Rate was previously
made under this Section 11.08(a).
In making the determinations required by item (i) above, the
amount of cash dividends paid on a per share basis and the
amount of any Relevant Cash Dividends specified in item (i)
above, shall be appropriately adjusted to reflect the
occurrence during such period of any event described in
Section 11.06.
(b) If, after the Issue Date of the Securities, the Company pays a dividend or
makes a distribution to all holders of its Common Stock consisting of Capital
Stock of any class or series, or similar equity interests, of or relating to a
Subsidiary or other business unit of the Company, the Conversion Rate shall be
adjusted in accordance with the formula:
R' = R x (1 + F/M)
where:
R' = the adjusted Conversion Rate.
R = the current Conversion Rate.
M = the average of the Post-Distribution Prices of the Common Stock for
the 10 trading days commencing on and including the fifth trading day after the
date on which "ex-dividend trading" commences for such dividend or distribution
on the principal United States exchange or market which such securities are then
listed or quoted (the "Ex-Dividend Date").
F = the fair market value of the securities distributed in respect of
each share of Common Stock for which this Section 11.08(b) shall mean the number
of securities distributed in respect of each share of Common Stock multiplied by
the average of the Post-Distribution Prices of those securities distributed for
the 10 trading days commencing on and including the fifth trading day after the
Ex-Dividend Date.
"Post-Distribution Price" of Capital Stock or any similar equity
interest on any date means the closing per unit sale price (or, if no closing
sale price is reported, the average of the bid and ask prices or, if more than
one in either case, the average of the average bid and the average ask prices)
on such date for trading of such units on a "when issued" basis without due
bills (or similar concept) as reported in the composite transactions for the
principal United States securities exchange on which such Capital Stock or
equity interest is traded or, if the Capital Stock or equity interest, as the
case may be, is not listed on a United States national or regional securities
exchange, as reported by the National Association of Securities Dealers
Automated Quotation System or by the National Quotation Bureau Incorporated;
provided that if on any date such units have not traded on a "when issued"
basis, the Post-Distribution Price shall be the closing per unit sale price (or,
if no closing sale price is reported, the average of the bid and ask prices or,
if more than one in either case, the average of the average bid and the average
ask prices) on such date for trading of such units on a "regular way" basis
without due bills (or similar concept) as reported in the composite transactions
for the principal United States securities exchange on which such Capital Stock
or equity interest is traded or, if the Capital Stock or equity interest, as the
case may be, is not listed on a United States national or regional securities
exchange, as reported by the National Association of Securities Dealers
Automated Quotation System or by the National Quotation Bureau Incorporated. In
the absence of such quotation, the Company shall be entitled to determine the
Post-Distribution Price on the basis of such quotations which reflect the
post-distribution value of the Capital Stock or equity interests as it considers
appropriate.
(c) In the event that, with respect to any distribution to which Section
11.08(a) would otherwise apply, the difference "M-F" as defined in the formula
set forth in Section 11.08(a) is less than $1.00 or "F" is equal to or greater
than "M", then the adjustment provided by Section 11.08(a) shall not be made and
in lieu thereof the provisions of Section 11.14 shall apply to such
distribution.
SECTION 11.09 When Adjustment May Be Deferred. No adjustment in the Conversion
Rate need be made unless the adjustment would require an increase or decrease of
at least 1% in the Conversion Rate. Any adjustments that are not made shall be
carried forward and taken into account in any subsequent adjustment.
All calculations under this Article 11 shall be made to the
nearest cent or to the nearest 1/1,000th of a share, as the case may be.
SECTION 11.10 When No Adjustment Required. No adjustment need be made for a
transaction referred to in Section 11.06, 11.07, 11.08 or 11.14 if
Securityholders are to participate in the transaction on a basis and with notice
that the Board of Directors determines to be fair and appropriate in light of
the basis and notice on which holders of Common Stock participate in the
transaction. Such participation by Securityholders may include participation
upon conversion provided that an adjustment shall be made at such time as the
Securityholders are no longer entitled to participate.
No adjustment need be made for rights to purchase Common Stock
pursuant to a Company plan for reinvestment of dividends or interest.
No adjustment need be made for a change in the par value or no
par value of the Common Stock.
To the extent the Securities become convertible pursuant to
this Article 11 into cash, no adjustment need be made thereafter as to the cash.
Interest will not accrue on the cash.
SECTION 11.11 Notice of Adjustment. Whenever the Conversion Rate is adjusted,
the Company shall promptly mail to Securityholders a notice of the adjustment.
The Company shall file with the Trustee and the Conversion Agent such notice and
a certificate from the Company's independent public accountants briefly stating
the facts requiring the adjustment and the manner of computing it. The
certificate shall be conclusive evidence that the adjustment is correct. Neither
the Trustee nor any Conversion Agent shall be under any duty or responsibility
with respect to any such certificate except to exhibit the same to any Holder
desiring inspection thereof.
SECTION 11.12 Voluntary Increase. The Company from time to time may increase the
Conversion Rate by any amount for any period of time. Whenever the Conversion
Rate is increased, the Company shall mail to Securityholders and file with the
Trustee and the Conversion Agent a notice of the increase. The Company shall
mail the notice at least 15 days before the date the increased Conversion Rate
takes effect. The notice shall state the increased Conversion Rate and the
period it will be in effect.
A voluntary increase of the Conversion Rate does not change or
adjust the Conversion Rate otherwise in effect for purposes of Section 11.06,
11.07 or 11.08.
SECTION 11.13 Notice of Certain Transactions. If:
(1) the Company takes any action that would require an
adjustment in the Conversion Rate pursuant to Section 11.06,
11.07 or 11.08 (unless no adjustment is to occur pursuant to
Section 11.10); or
(2) the Company takes any action that would require a
supplemental indenture pursuant to Section 11.14; or
(3) there is a liquidation or dissolution of the Company;
then the Company shall mail to Securityholders and file with the Trustee and the
Conversion Agent a notice stating the proposed record date for a dividend or
distribution or the proposed effective date of a subdivision, combination,
reclassification, consolidation, merger, binding share exchange, transfer,
liquidation or dissolution. The Company shall file and mail the notice at least
15 days before such date. Failure to file or mail the notice or any defect in it
shall not affect the validity of the transaction.
SECTION 11.14 Reorganization of Company; Special Distributions. If the Company
is a party to a transaction subject to Section 5.01 (other than a sale of all or
substantially all of the assets of the Company in a transaction in which the
holders of Common Stock immediately prior to such transaction do not receive
securities, cash or other assets of the Company or any other person) or a merger
or binding share exchange which reclassifies or changes the outstanding Common
Stock of the Company, the person obligated to deliver securities, cash or other
assets upon conversion of Securities shall enter into a supplemental indenture.
If the issuer of securities deliverable upon conversion of Securities is an
Affiliate of the successor Company, that issuer shall join in the supplemental
indenture.
The supplemental indenture shall provide that the Holder of a
Security may convert it into the kind and amount of securities, cash or other
assets which such Holder would have received immediately after the
consolidation, merger, binding share exchange or transfer if such Holder had
converted the Security immediately before the effective date of the transaction,
assuming (to the extent applicable) that such Holder (i) was not a constituent
person or an Affiliate of a constituent person to such transaction; (ii) made no
election with respect thereto; and (iii) was treated alike with the plurality of
non-electing Holders. The supplemental indenture shall provide for adjustments
which shall be as nearly equivalent as may be practical to the adjustments
provided for in this Article 11. The successor Company shall mail to
Securityholders a notice briefly describing the supplemental indenture.
If this Section applies, neither Section 11.06 nor 11.07
applies.
If the Company makes a distribution to all holders of its
Common Stock of any of its assets, or debt securities or any rights, warrants or
options to purchase securities of the Company that, but for the provisions of
Section 11.08(c), would otherwise result in an adjustment in the Conversion Rate
pursuant to the provisions of Section 11.08, then, from and after the record
date for determining the holders of Common Stock entitled to receive the
distribution, a Holder of a Security that converts such Security in accordance
with the provisions of this Indenture shall upon such conversion be entitled to
receive, in addition to the shares of Common Stock into which the Security is
convertible, the kind and amount of securities, cash or other assets comprising
the distribution that such Holder would have received if such Holder had
converted the Security immediately prior to the record date for determining the
holders of Common Stock entitled to receive the distribution.
SECTION 11.15 Company Determination Final. Any determination that the Company or
the Board of Directors must make pursuant to Section 11.03, 11.06, 11.07, 11.08,
11.09, 11.10, 11.14 or 11.17 is conclusive.
SECTION 11.16 Trustee's Adjustment Disclaimer. The Trustee has no duty to
determine when an adjustment under this Article 11 should be made, how it should
be made or what it should be. The Trustee has no duty to determine whether a
supplemental indenture under Section 11.14 need be entered into or whether any
provisions of any supplemental indenture are correct. The Trustee shall not be
accountable for and makes no representation as to the validity or value of any
securities or assets issued upon conversion of Securities. The Trustee shall not
be responsible for the Company's failure to comply with this Article 11. Each
Conversion Agent shall have the same protection under this Section 11.16 as the
Trustee.
SECTION 11.17 Simultaneous Adjustments. In the event that this Article 11
requires adjustments to the Conversion Rate under more than one of Sections
11.06(4), 11.07 or 11.08, and the record dates for the distributions giving rise
to such adjustments shall occur on the same date, then such adjustments shall be
made by applying, first, the provisions of Section 11.06, second, the provisions
of Section 11.08 and, third, the provisions of Section 11.07.
SECTION 11.18 Successive Adjustments. After an adjustment to the Conversion Rate
under this Article 11, any subsequent event requiring an adjustment under this
Article 11 shall cause an adjustment to the Conversion Rate as so adjusted.
SECTION 11.19 Rights Issued in Respect of Common Stock Issued Upon Conversion.
Each share of Common Stock issued upon conversion of Securities pursuant to this
Article 11 shall be entitled to receive the appropriate number of common stock
or preferred stock purchase rights, as the case may be (the "Rights"), if any,
that all shares of Common Stock are entitled to receive and the certificates
representing the Common Stock issued upon such conversion shall bear such
legends, if any, in each case as may be provided by the terms of any shareholder
rights agreement adopted by the Company, as the same may be amended from time to
time (in each case, a "Rights Agreement"). Provided that such Rights Agreement
requires that each share of Common Stock issued by the Company (including those
that might be issued upon conversion of Securities) at any time prior to the
distribution of separate certificates representing the Rights be entitled to
receive such Rights, then, notwithstanding anything else to the contrary in this
Article 11, there shall not be any adjustment to the conversion privilege or
Conversion Rate or any other term or provision of the Securities as a result of
the issuance of Rights, the distribution of separate certificates representing
the Rights, the exercise or redemption of such Rights in accordance with any
such Rights Agreement, or the termination or invalidation of such Rights.
ARTICLE 12
PAYMENT OF INTEREST
SECTION 12.01 Interest Payments. Interest, if any, on any Security that is
payable in cash, and is punctually paid or duly provided for, on any applicable
payment date shall be paid to the person in whose name that Security is
registered at the close of business on the Regular Record Date or accrual date,
as the case may be, for such interest at the office or agency of the Company
maintained for such purpose. Each installment of semiannual or contingent
interest on any Security shall be paid in same-day funds by transfer to an
account maintained by the payee located inside the United States, if the Trustee
shall have received proper wire transfer instructions from such payee not later
than the related Regular Record Date or accrual date, as the case may be, or, if
no such instructions have been received, by check drawn on a bank in New York
City mailed to the payee at its address set forth on the Registrar's books. In
the case of a permanent Global Security, semiannual or contingent interest
payable on any applicable payment date will be paid to the Depositary, with
respect to that portion of such permanent Global Security held for its account
by Cede & Co. for the purpose of permitting such party to credit the interest
received by it in respect of such permanent Global Security to the accounts of
the beneficial owners thereof.
SECTION 12.02 Defaulted Interest. Except as otherwise specified with respect to
the Securities, any interest on any Security that is payable, but is not
punctually paid or duly provided for, within 30 days following any applicable
payment date (herein called "Defaulted Interest", which term shall include any
accrued and unpaid interest that has accrued on such defaulted amount in
accordance with paragraph 1 of the Securities), shall forthwith cease to be
payable to the registered Holder thereof on the relevant Regular Record Date or
accrual date, as the case may be, by virtue of having been such Holder, and such
Defaulted Interest may be paid by the Company, at its election in each case, as
provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the persons in whose names the Securities are
registered at the close of business on a special record date
for the payment of such Defaulted Interest, which shall be
fixed in the following manner. The Company shall notify the
Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each Security and the date of the
proposed payment (which shall not be less than 20 days after
such notice is received by the Trustee), and at the same time
the Company shall deposit with the Trustee an amount of money
equal to the aggregate amount proposed to be paid in respect
of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit on or prior to
the date of the proposed payment, such money when deposited to
be held in trust for the benefit of the persons entitled to
such Defaulted Interest as in this clause provided. Thereupon
the Trustee shall fix a special record date (the "Special
Record Date") for the payment of such Defaulted Interest which
shall be not more than 15 days and not less than 10 days prior
to the date of the proposed payment and not less than 10 days
after the receipt by the Trustee of the notice of the proposed
payment. The Trustee shall promptly notify the Company of such
Special Record Date and, in the name and at the expense of the
Company, shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to be
mailed, first-class postage prepaid, to each Holder of
Securities at his address as it appears on the list of
Securityholders maintained pursuant to Section 2.05 not less
than 10 days prior to such Special Record Date. Notice of the
proposed payment of such Defaulted Interest and the Special
Record Date therefor having been mailed as aforesaid, such
Defaulted Interest shall be paid to the persons in whose names
the Securities are registered at the close of business on such
Special Record Date and shall no longer be payable pursuant to
the following clause (2).
(2) The Company may make payment of any Defaulted Interest on
the Securities in any other lawful manner not inconsistent
with the requirements of any securities exchange on which such
Securities may be listed, and upon such notice as may be
required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to
this clause, such manner of payment shall be deemed
practicable by the Trustee.
SECTION 12.03 Interest Rights Preserved. Subject to the foregoing provisions of
this Article 12 and Section 2.06, each Security delivered under this Indenture
upon registration of transfer of or in exchange for or in lieu of any other
Security shall carry the rights to semiannual and contingent interest accrued
and unpaid, and to accrue, which were carried by such other Security.
ARTICLE 13
GUARANTEES
SECTION 13.01 Guarantees.
The Guarantors jointly and severally, hereby absolutely,
unconditionally and irrevocably guarantee the Securities and obligations of the
Company hereunder and thereunder, and guarantee to each Holder of a Security
authenticated and delivered by the Trustee in accordance with the terms hereof,
and to the Trustee on behalf of such Holder, that: (a) the principal of and
interest (including contingent interest, if any on the Securities will be paid
in full when due, whether at Stated Maturity, by acceleration, redemption or
otherwise (including, without limitation, the amount that would become due but
for the operation of the automatic stay under Section 362(a) of the Bankruptcy
Law), together with interest (including contingent interest, if any on the
overdue principal, if any, and interest on any overdue interest, to the extent
lawful, and all other obligations of the Company to the Holders or the Trustee
hereunder or thereunder will be paid in full or performed, all in accordance
with the terms hereof and thereof; and (b) in case of any extension of time of
payment or renewal of any Securities or of any such other obligations, the same
shall be paid in full when due or performed in accordance with the terms of the
extension or renewal, whether at Stated Maturity, by acceleration redemption or
otherwise.
The Guarantors hereby agree that their obligations hereunder
shall be unconditional, irrespective of the validity, regularity or
enforceability of the Securities or this Indenture, the absence of any action to
enforce the same, any waiver or consent by any Holder with respect to any
provisions hereof or thereof, the recovery of any judgment against the Company,
any action to enforce the same or any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of a Guarantor.
The Guarantors hereby waive (to the extent permitted by law)
the benefits of diligence, presentment, demand for payment, filing of claims
with a court in the event of insolvency or bankruptcy of the Company, any right
to require a proceeding first against the Company or any other Person, protest,
notice and all demands whatsoever and covenants that the Guarantee of such
Guarantor shall not be discharged as to any Security except by complete
performance of the obligations contained in such Security, this Indenture and
such Guarantee. The Guarantors acknowledge that the Guarantees are a guarantee
of payment and not of collection.
The Guarantors hereby agree that, in the event of a default in
payment of principal or interest including contingent interest, if any on such
Security, whether at its Stated Maturity, by acceleration, redemption, purchase
or otherwise, legal proceedings may be instituted by the Trustee on behalf of,
or by, the Holder of such Security, subject to the terms and conditions set
forth in this Indenture, directly against each of the Guarantors to enforce such
Guarantor's Guarantee without first proceeding against the Company or any other
Guarantor. The Guarantor agrees that if, after the occurrence and during the
continuance of an Event of Default, the Trustee or any of the Holders are
prevented by applicable law from exercising their respective rights to
accelerate the maturity of the Securities, to collect interest on the
Securities, or to enforce or exercise any other right or remedy with respect to
the Securities, such Guarantor shall pay to the Trustee for the account of the
Holder, upon demand therefor, the amount that would otherwise have been due and
payable had such rights and remedies been permitted to be exercised by the
Trustee or any of the Holders.
If any Holder or the Trustee is required by any court or
otherwise to return to the Company or any Guarantor, or any custodian, trustee,
liquidator or other similar official acting in relation to either the Company or
any Guarantor, any amount paid by any of them to the Trustee or such Holder, the
Guarantee of each of the Guarantors, to the extent theretofore discharged, shall
be reinstated in full force and effect. The Guarantor further agrees that as
between each Guarantor, on the one hand, and the Holders and the Trustee, on the
other hand, (x) subject to this Article Thirteen, the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article Six
hereof for the purposes of the Guarantee of such Guarantor notwithstanding any
stay, injunction or other prohibition preventing such acceleration in respect of
the obligations guaranteed hereby, and (y) in the event of any acceleration of
such obligation as provided in Article Six hereof, such obligations (whether or
not due and payable) shall forthwith become due and payable by each Guarantor
for the purpose of the Guarantee of such Guarantor.
Each Guarantee shall remain in full force and effect and
continue to be effective should any petition be filed by or against the Company
for liquidation, reorganization, should the Company become insolvent or make an
assignment for the benefit of creditors or should a receiver or trustee be
appointed for all or any significant part of the Company's assets, and shall, to
the fullest extent permitted by law, continue to be effective or be reinstated,
as the case may be, if at any time payment and performance of the Securities
are, pursuant to applicable law, rescinded or reduced in amount, or must
otherwise be restored or returned by any obligee on the Securities, whether as a
"voidable preference", "fraudulent transfer" or otherwise, all as though such
payment or performance had not been made. In the event that any payment or any
part thereof, is rescinded, reduced, restored or returned, for the purposes of
the amounts due under the Guarantees, the Securities shall, to the fullest
extent permitted by law, be reinstated and deemed reduced only by such amount
paid and not so rescinded, reduced, restored or returned. The form of Guarantee
is attached hereto as Exhibit A-2.
SECTION 13.02 Severability.
In case any provision of any Guarantee 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 13.03 Future Subsidiaries.
If the Company or any of its Subsidiaries acquires or forms a
Subsidiary organized under the laws of the United States or any state or
political subdivision thereof or the District of Columbia, the Company will
cause any such domestic Subsidiary to (i) execute and deliver to the Trustee any
amendment or supplement to this Indenture in accordance with the provisions of
Article Nine of this Indenture pursuant to which such Subsidiary shall guarantee
all of the obligations on the Securities, whether for principal, interest
(including contingent interest), and interest accruing after the filing of, or
which would have accrued but for the filing of, a petition by or against the
Company under Bankruptcy Law, whether or not such interest is allowed as a claim
after such filing in any proceeding under such law), if any and other amounts
due in connection therewith (including any fees, expenses and indemnities), on a
senior unsecured basis and (ii) deliver to such Trustee an Opinion of Counsel
reasonably satisfactory to such Trustee to the effect that such amendment or
supplement has been duly executed and delivered by such domestic Subsidiary and
is in compliance with the terms of this Indenture. Upon the execution of any
such amendment or supplement, the obligations of the Guarantors and any such
domestic Subsidiary under their respective Guarantees shall become joint and
several and each reference to the "Guarantor" in this Indenture shall, be deemed
to refer to all Guarantors, including such domestic Subsidiary.
SECTION 13.04 Priority of Guarantees.
The Guarantee issued by any Guarantor shall be unsecured
senior obligations of such Guarantor, ranking pari passu with all other existing
and future senior unsecured indebtedness of such Guarantor, if any.
SECTION 13.05 Limitation of Guarantors' Liability.
Each Guarantor and by its acceptance hereof each Holder
confirms that it is the intention of all such parties that the guarantee by the
Guarantor pursuant to its Guarantee not constitute a fraudulent transfer or
conveyance for purposes of the Bankruptcy Law, the Uniform Fraudulent Conveyance
Act, the Uniform Fraudulent Transfer Act or any similar federal or state law or
the provisions of its local law relating to fraudulent transfer or conveyance.
To effectuate the foregoing intention, the Holders and the Guarantors hereby
irrevocably agree that the obligations of such Guarantor under its Guarantee
shall be limited to the maximum amount that will not, after giving effect to all
other contingent and fixed liabilities of such Guarantor result in the
obligations of such Guarantor under its Guarantee constituting such fraudulent
transfer or conveyance.
SECTION 13.06 Subrogation. Each Guarantor shall be subrogated to all rights of
Holders against the Company in respect of any amounts paid by any Guarantor
pursuant to the provisions of Section 13.01; provided, however, that, if an
Event of Default has occurred and is continuing, no Guarantor shall be entitled
to enforce or receive any payments arising out of, or based upon, such right of
subrogation until all amounts then due and payable by the Company under this
Indenture or the Securities shall have been paid in full.
SECTION 13.07 Reinstatement.
The Guarantor hereby agrees (and each Person who becomes a
Guarantor shall agree) that the Guarantee provided for in Section 13.01 shall
continue to be effective or be reinstated, as the case may be, (a) if at any
time, payment, or any part thereof, of any obligations or interest thereon is
rescinded or must otherwise be restored by a Holder to the Company upon the
bankruptcy or insolvency of the Company or any Guarantor and (b) at any time any
Guarantor (and each Person who becomes a Guarantor) guarantees any indebtedness
or obligations of the Company.
SECTION 13.08 Release of the Guarantor.
Concurrently with the discharge of the Securities under
Section 8.01, each Guarantor shall be released from all its obligations under
its Guarantee under this Article Thirteen.
So long as no Default exists or with notice or lapse of time
or both, would exist, the Guarantee issued by any Guarantor shall be
automatically and unconditionally released and discharged upon (a) any sale,
exchange, transfer to any Person that is not an Affiliate of the Company of all
of the Capital Stock of such Guarantor owned by the Company, which transaction
is otherwise in compliance with the Indenture or (b) any release or discharge of
all guarantees by each of the Guarantors of any indebtedness or obligations of
the Company other than the Guarantees of the Securities.
SECTION 13.09 Benefits Acknowledged.
Each Guarantor acknowledges that it will receive direct and
indirect benefits from the financing arrangements contemplated by this Indenture
and that its guarantee and waivers pursuant to its Guarantee are knowingly made
in contemplation of such benefits.
ARTICLE 14
MISCELLANEOUS
SECTION 14.01 Trust Indenture Act Controls. If any provision of this Indenture
limits, qualifies, or conflicts with another provision which is required to be
included in this Indenture by the TIA, the required provision shall control.
SECTION 14.02 Notices. Any request, demand, authorization, notice, waiver,
consent or communication shall be in writing and delivered in person or delivery
by courier guaranteeing overnight delivery or mailed by first-class mail,
postage prepaid, addressed as follows or transmitted by facsimile transmission
(confirmed by guaranteed overnight courier) to the following facsimile numbers:
if to the Company:
CBRL Group, Inc.
P.O. Box 787
Lebanon, TN 37088
Telephone No. (615) 443-9574
Facsimile No. (615) 443-9818
Attention: Chief Financial Officer
with a copy of any notice given pursuant to Article 6 to:
Dinsmore & Shohl, LLP
414 Union Street
Bank of America Building, Suite 1100
Nashville, TN 37219
Telephone No. (615) 313-3325
Facsimile No. (615) 313-3310
Attention: Gary M. Brown, Esq.
if to the Trustee:
Wachovia Bank, National Association
Corporate Trust Group
2525 West End Avenue, Suite 1200
Nashville, TN 37203
Telephone No. (615) 341-3921
Facsimile No. (615) 341-3927
Attention: Corporate Trust Department
The Company or the Trustee by notice given to the other in the
manner provided above may designate additional or different addresses for
subsequent notices or communications.
Any notice or communication given to a Securityholder shall be
mailed to the Securityholder, by first-class mail, postage prepaid, at the
Securityholder's address as it appears on the registration books of the
Registrar and shall be sufficiently given if so mailed within the time
prescribed.
Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not received by the addressee.
If the Company mails a notice or communication to the
Securityholders, it shall mail a copy to the Trustee and each Registrar, Paying
Agent, Conversion Agent or co-registrar.
SECTION 14.03 Communication by Holders with Other Holders. Securityholders may
communicate pursuant to TIA Section 312(b) with other Securityholders with
respect to their rights under this Indenture or the Securities. The Company, the
Trustee, the Registrar, the Paying Agent, the Conversion Agent and anyone else
shall have the protection of TIA Section 312(c).
SECTION 14.04 Certificate and Opinion as to Conditions Precedent. Upon any
request or application by the Company to the Trustee to take any action under
this Indenture, the Company shall furnish to the Trustee if reasonably
requested:
(1) 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
(2) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied
with.
SECTION 14.05 Statements Required in Certificate or Opinion. Each Officers'
Certificate or Opinion of Counsel with respect to compliance with a covenant or
condition provided for in this Indenture shall include to the extent required by
the Trustee:
(1) a statement that each person making such Officers'
Certificate or Opinion of Counsel 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 Officers' Certificate or Opinion of
Counsel are based;
(3) a statement that, in the opinion of each such person, he
has made such examination or investigation as is necessary to
enable such person to express an informed opinion as to
whether or not such covenant or condition has been complied
with; and
(4) a statement that, in the opinion of such person, such
covenant or condition has been complied with.
SECTION 14.06 Separability Clause. 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 14.07 Rules by Trustee, Paying Agent, Conversion Agent and Registrar.
The Trustee may make reasonable rules for action by or a meeting of
Securityholders. The Registrar, Conversion Agent and the Paying Agent may make
reasonable rules for their functions.
SECTION 14.08 Calculations. The calculation of the Purchase Price, Change in
Control Purchase Price, Conversion Rate, Market Price, Sale Price of the Common
Stock and each other calculation to be made hereunder (other than the LYON
Market Price) shall be the obligation of the Company. All calculations made by
the Company as contemplated pursuant to this Section 14.08 shall be final and
binding on the Company and the Holders absent manifest error. The Trustee,
Paying Agent, Conversion Agent and Bid Solicitation Agent shall not be obligated
to recalculate, recompute or confirm any such calculations.
SECTION 14.09 Legal Holidays. A "Legal Holiday" is any day other than a Business
Day. If any specified date (including a date for giving notice) is a Legal
Holiday, the action shall be taken on the next succeeding day that is not a
Legal Holiday, and, if the action to be taken on such date is a payment in
respect of the Securities, no Original Issue Discount or interest, if any, shall
accrue for the intervening period.
SECTION 14.10 GOVERNING LAW. THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN
THIS INDENTURE AND THE SECURITIES.
SECTION 14.11 No Recourse Against Others. A director, officer, employee, agent,
representative, stockholder or equity holder, as such, of the Company shall not
have any liability for any obligations of the Company under the Securities or
this Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Securityholder
shall waive and release all such liability. The waiver and release shall be part
of the consideration for the issue of the Securities.
SECTION 14.12 Successors. All agreements of the Company in this Indenture and
the Securities shall bind its successor. All agreements of the Trustee in this
Indenture shall bind its successor.
SECTION 14.13 Multiple Originals. The parties may sign any number of copies of
this Indenture. Each signed copy shall be an original, but all of them together
represent the same agreement. One originally signed copy is enough to prove this
Indenture.
NYDOCS01/842735.8 A-1-22
IN WITNESS WHEREOF, the undersigned, being duly authorized,
have executed this Indenture on behalf of the respective parties hereto as of
the date first above written.
CBRL GROUP, INC.
By: /s/James F. Blackstock
----------------------------
Name: James F. Blackstock
Title: Senior Vice President,
General Counsel and
Secretary
CRACKER BARREL OLD COUNTRY
STORE, INC., as Guarantor
By: /s/James F. Blackstock
--------------------------
Name: James F. Blackstock
Title: Senior Vice President,
General Counsel and
Secretary
CPM MERGER CORPORATION, as Guarantor
By: /s/James F. Blackstock
--------------------------
Name: James F. Blackstock
Title: Vice President and
Secretary
CBOCS DISTRIBUTION, INC., as Guarantor
By: /s/James F. Blackstock
--------------------------
Name: James F. Blackstock
Title: Secretary
CBOCS PARTNER I, LLC, as Guarantor
By: /s/Michael Zylstra
-----------------------------
Name: Michael Zylstra
Title: Secretary
CBOCS PARTNER II, LLC, as Guarantor
By: /s/LaShawn Williams
-----------------------------
Name: LaShawn Williams
Title: President
CBOCS WEST, INC., as Guarantor
By: /s/Michael Zylstra
----------------------------
Name: Michael Zylstra
Title: Secretary
CBOCS MICHIGAN, INC., as Guarantor
By: /s/Bruce Hallums
--------------------------
Name: Bruce Hallums
Title: President
CBOCS SIERRA, INC., as Guarantor
By: /s/Bruce Scoggins
-------------------------
Name: Bruce Scoggins
Title: President
CB MUSIC LLC, as Guarantor
By: /s/James F. Blackstock
--------------------------
Name: James F. Blackstock
Title: Chief Manager and
President
ROCKING CHAIR, INC., as Guarantor
By: /s/Elizabeth Wilson
---------------------------
Name: Elizabeth Wilson
Title: Assistant Secretary
GC MANAGEMENT COMPANY, as Guarantor
By: /s/James F. Blackstock
-------------------------
Name: James F. Blackstock
Title: Secretary
LOGAN'S ROADHOUSE, INC., as Guarantor
By: /s/James F. Blackstock
--------------------------
Name: James F. Blackstock
Title: Assistant Secretary
ROADHOUSE PROMOTIONS, INC., as
Guarantor
By: /s/James F. Blackstock
--------------------------
Name: James F. Blackstock
Title: Assistant Secretary
CBOCS TEXAS LIMITED PARTNERSHIP, as
Guarantor
By: /s/Bruce Hallums
--------------------------
Name: Bruce Hallums
Title: President of CBOCS
Partner I, LLC as General
Partner
CBOCS GENERAL PARTNERSHIP, as Guarantor
By: /s/James F. Blackstock
--------------------------
Name: James F. Blackstock
Title: Assistant Secretary of
CBOCS West, Inc as
General Partner
ROADHOUSE OF WEST VIRGINIA LIMITED
PARTNERSHIP, as Guarantor
By: /s/James F. Blackstock
--------------------------
Name: James F. Blackstock
Title: Assistant Secretary of
Roadhouse Promotions, Inc.
as General Partner
LOGAN'S ROADHOUSE, INC. OF W. VA., as
Guarantor
By: /s/James F. Blackstock
--------------------------
Name: James F. Blackstock
Title: Assistant Secretary
LOGAN'S ROADHOUSE OF TEXAS, INC., as
Guarantor
By: /s/James F. Blackstock
--------------------------
Name: James F. Blackstock
Title: Authorized Agent
WACHOVIA BANK, NATIONAL ASSOCIATION,
as Trustee
By: /s/Susan K. Baker
--------------------------
Name: Susan K. Baker
Title: Vice President
EXHIBIT A-1
[FORM OF FACE OF GLOBAL SECURITY]
FOR PURPOSES OF SECTIONS 1273 AND 1275 OF THE INTERNAL REVENUE
CODE, THIS SECURITY IS ISSUED WITH AN INDETERMINATE AMOUNT OF ORIGINAL ISSUE
DISCOUNT FOR UNITED STATES FEDERAL INCOME TAX PURPOSES. THE ISSUE DATE IS APRIL
3, 2002, AND THE YIELD TO MATURITY FOR PURPOSES OF ACCRUING ORIGINAL ISSUE
DISCOUNT IS 7.32% PER ANNUM, COMPOUNDED SEMIANNUALLY. THE HOLDER OF THIS
SECURITY MAY OBTAIN THE PROJECTED PAYMENT SCHEDULE BY SUBMITTING A WRITTEN
REQUEST FOR SUCH INFORMATION TO: INVESTOR RELATIONS, CBRL GROUP, INC., P.O. BOX
787 LEBANON, TN 37088.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF THE DEPOSITORY TRUST COMPANY, OR TO A
SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS
GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN ARTICLE TWO OF THE INDENTURE REFERRED TO ON THE
REVERSE HEREOF.
THIS SECURITY AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION
OF THIS SECURITY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY, THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY
NOR ANY INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES TO OFFER,
SELL, OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE"), WHICH IS TWO YEARS AFTER THE LATER OF THE LAST
DAY SECURITIES OF THIS ISSUE WERE ISSUED AND THE LAST DATE ON WHICH CBRL GROUP,
INC. (THE "COMPANY" OR THE "ISSUER") OR ANY AFFILIATE OF THE COMPANY WAS THE
OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY) ONLY (A) TO THE
COMPANY OR ANY SUBSIDIARY THEREOF, (B) FOR SO LONG AS THE SECURITIES ARE
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS
A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHICH NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (C) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE
MEANING OF SUBPARAGRAPH (A)(1), (2),(3) OR (7) OF RULE 501 UNDER THE SECURITIES
ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF
SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT
WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT, (D) PURSUANT TO A REGISTRATION STATEMENT WHICH
HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT OR (E) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE
OR TRANSFER PURSUANT TO CLAUSE (C) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION
OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM,
AND IN EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM
APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE
TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF ANY
HOLDER THAT IS NOT AN AFFILIATE OF THE COMPANY AFTER THE RESALE RESTRICTION
TERMINATION DATE.
THE FOREGOING LEGEND MAY BE REMOVED FROM THIS SECURITY ON SATISFACTION
OF THE CONDITIONS SPECIFIED IN THE INDENTURE.
CBRL GROUP, INC.
Liquid Yield Option(TM) Note due 2032
(Zero Coupon-Senior)
No. R-1 ......... CUSIP: 12489VAA4
Issue Date: April 3, 2002. Original Issue Discount: $590.70
Issue Price: $409.30...... (for each $1,000 Principal
(for each $1,000 Principal. Amount at Maturity)
Amount at Maturity)
CBRL GROUP, INC., a Tennessee corporation, promises to pay to Cede & Co. or
registered assigns, the Principal Amount at Maturity of THREE HUNDRED AND SIXTY
SEVEN MILLION DOLLARS ($367,000,000) on April 3, 2032.
This Security shall not bear interest except as specified on the other
side of this Security. Original Issue Discount will accrue as specified on the
other side of this Security. This Security is convertible as specified on the
other side of this Security.
Additional provisions of this Security are set forth on the other side
of this Security.
Dated: April 3, 2002..... CBRL GROUP, INC.
By:
-----------------------------
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
WACHOVIA BANK, NATIONAL ASSOCIATION, as Trustee, certifies that this is one of
the Securities referred to in the within-mentioned Indenture.
By:________________________
Authorized Officer
Dated: ________________________
[FORM OF REVERSE SIDE OF LYON]
Liquid Yield Option(TM) Note due 2032
(Zero Coupon-Senior)
1. Interest.
This Security shall not bear interest, except as specified in this
paragraph or in paragraphs 5 and 11 hereof. If the Principal Amount at Maturity
hereof or any portion of such Principal Amount at Maturity is not paid when due
(whether upon acceleration pursuant to Section 6.02 of the Indenture, upon the
date set for payment of the Redemption Price pursuant to paragraph 6 hereof,
upon the date set for payment of the Purchase Price or Change in Control
Purchase Price pursuant to paragraph 7 hereof or upon the Stated Maturity of
this Security) or if interest (including contingent interest, if any) due hereon
or any portion of such interest is not paid when due in accordance with
paragraph 5 or 11 hereof, then in each such case the overdue amount shall, to
the extent permitted by law, bear interest at the rate of 3.00% per annum,
compounded semiannually, which interest shall accrue from the date such overdue
amount was originally due to the date payment of such amount, including interest
thereon, has been made or duly provided for. All such interest shall be payable
on demand. The accrual of such interest on overdue amounts shall be in lieu of,
and not in addition to, the continued accrual of Original Issue Discount.
Original Issue Discount (the difference between the Issue Price and the
Principal Amount at Maturity of the Security), in the period during which a
Security remains outstanding, shall accrue at 3.00% per annum, on a semiannual
bond equivalent basis using a 360-day year composed of twelve 30-day months,
from the Issue Date of this Security.
2. Method of Payment.
Subject to the terms and conditions of the Indenture, the Company will
make payments in respect of Redemption Prices, Purchase Prices, Change in
Control Purchase Prices and at Stated Maturity to Holders who surrender
Securities to a Paying Agent to collect such payments in respect of the
Securities. The Company will pay any cash amounts in money of the United States
that at the time of payment is legal tender for payment of public and private
debts. However, the Company may make such cash payments by check payable in such
money.
3. Paying Agent, Conversion Agent, Registrar and Bid Solicitation Agent.
Initially, Wachovia Bank, National Association, a national banking
association (the "Trustee"), will act as Paying Agent, Conversion Agent,
Registrar and Bid Solicitation Agent. The Company may appoint and change any
Paying Agent, Conversion Agent, Registrar or co-registrar or Bid Solicitation
Agent without notice, other than notice to the Trustee except that the Company
will maintain at least one Paying Agent in the State of New York, City of New
York, Borough of Manhattan, which shall initially be an office or agency of the
Trustee. The Company or any of its Subsidiaries or any of their Affiliates may
act as Paying Agent, Conversion Agent, Registrar or co-registrar. None of the
Company, any of its Subsidiaries or any of their Affiliates shall act as Bid
Solicitation Agent.
4. Indenture.
The Company issued and the Guarantors have guaranteed the Securities
pursuant to an Indenture dated as of April 3, 2002 (the "Indenture"), among the
Company, the Guarantors and the Trustee. The terms of the Securities include
those stated in the Indenture and those made part of the Indenture by reference
to the Trust Indenture Act of 1939, as in effect from time to time (the "TIA").
Capitalized terms used herein and not defined herein have the meanings ascribed
thereto in the Indenture. The Securities are subject to all such terms, and
Securityholders are referred to the Indenture and the TIA for a statement of
those terms.
The Securities and the Guarantees are general unsecured and
unsubordinated obligations, of the Company and the Guarantors, respectively,
limited to $422,050,000 aggregate Principal Amount at Maturity (subject to
Section 2.07 of the Indenture). The Indenture does not limit other indebtedness
of the Company, secured or unsecured.
5. Contingent Interest.
Subject to the accrual provisions specified in this paragraph 5, the
Company shall pay contingent interest to the Holders during any six-month period
(a "Contingent Interest Period") from April 4 to October 3 and from October 4 to
April 3, commencing after April 3, 2007, if the average LYON Market Price for
the Five-Day Period with respect to such Contingent Interest Period equals 120%
or more of the sum of the Issue Price of a Security and Original Issue Discount
accrued thereon to the trading day immediately preceding the first day of the
relevant Contingent Interest Period.
The amount of contingent interest payable per $1,000 Principal Amount
at Maturity hereof shall equal 0.125% of the average LYON Market Price for the
Five-Day Period with respect to such Contingent Interest Period.
Contingent interest, if any, will be payable to Holders as of the 15th
day (whether or not a Business Day) preceding the last day of the relevant
Contingent Interest Period. Such payments shall be paid on the last day of the
relevant Contingent Interest Period. Original Issue Discount will continue to
accrue at 3.00% per annum whether or not contingent interest is paid.
"Five-Day Period" means, with respect to any Contingent Interest
Period, the five trading days ending on the second trading day immediately
preceding the first day of such Contingent Interest Period.
"LYON Market Price" means, as of any date of determination, the average
of the secondary market bid quotations per $1,000 Principal Amount at Maturity
obtained by the Bid Solicitation Agent for $10 million Principal Amount at
Maturity of Securities at approximately 4:00 p.m., New York City time, on such
determination date from three recognized securities dealers in The City of New
York (none of which shall be an Affiliate of the Company) selected by the
Company; provided, however, if (a) at least three such bids are not obtained by
the Bid Solicitation Agent or (b) in the Company's reasonable judgment, the bid
quotations are not indicative of the secondary market value of the Securities as
of such determination date, then the LYON Market Price for such determination
date shall equal (i) the Conversion Rate in effect as of such determination date
multiplied by (ii) the average Sale Price of the Common Stock for the five
trading days ending on such determination date, appropriately adjusted to take
into account the occurrence, during the period commencing on the first of such
trading days during such five trading day period and ending on such
determination date, of any event described in Section 11.06, 11.07 or 11.08
(subject to the conditions set forth in Sections 11.09 and 11.10) of the
Indenture.
Upon determination that Holders will be entitled to receive contingent
interest which may become payable during a Contingent Interest Period, on or
prior to the first day of such Contingent Interest Period, the Company shall
promptly notify the Trustee of such determination and shall issue a press
release and publish such information on its web site on the World Wide Web.
6. Redemption at the Option of the Company.
No sinking fund is provided for the Securities. The Securities are
redeemable as a whole, or from time to time in part, at any time at the option
of the Company in accordance with the Indenture at the Redemption Prices set
forth below, provided that the Securities are not redeemable prior to April 3,
2007.
The table below shows Redemption Prices of a Security per $1,000
Principal Amount at Maturity on the dates shown below and at Stated Maturity,
which prices reflect accrued Original Issue Discount calculated to each such
date. The Redemption Price of a Security redeemed between such dates shall
include an additional amount reflecting the additional Original Issue Discount
accrued since the preceding date in the table but not including the Redemption
Date.
(1)
(2) (3)
LYON Accrued Original Redemption Price
Redemption Date Issue Price Issue Discount (1) + (2)
- --------------- ----------- -------------- ---------
April 3
2007..................................... 409.30 65.71 475.01
2008..................................... 409.30 80.07 489.37
2009..................................... 409.30 94.86 504.16
2010..................................... 409.30 110.09 519.39
2011..................................... 409.30 125.79 535.09
2012..................................... 409.30 141.97 551.27
2013..................................... 409.30 158.63 567.93
2014..................................... 409.30 175.79 585.09
2015..................................... 409.30 193.48 602.78
2016..................................... 409.30 211.70 621.00
2017..................................... 409.30 230.47 639.77
2018..................................... 409.30 249.80 659.10
2019..................................... 409.30 269.72 679.02
2020..................................... 409.30 290.25 699.55
2021..................................... 409.30 311.39 720.69
2022..................................... 409.30 333.17 742.47
2023..................................... 409.30 355.61 764.91
2024..................................... 409.30 378.73 788.03
2025..................................... 409.30 402.55 811.85
2026..................................... 409.30 427.09 836.39
2027..................................... 409.30 452.37 861.67
2028..................................... 409.30 478.41 887.71
2029..................................... 409.30 505.24 914.54
2030..................................... 409.30 532.88 942.18
2031..................................... 409.30 561.36 970.66
At Stated Maturity....................... 409.30 590.70 1,000.00
If this Security has been converted to a semiannual coupon note
following the occurrence of a Tax Event, the Redemption Price will be equal to
the Restated Principal Amount plus accrued and unpaid interest from the date of
such conversion to but not including the Redemption Date; but in no event will
this Security be redeemable before April 3, 2007.
7. Purchase by the Company at the Option of the Holder.
Subject to the terms and conditions of the Indenture, the Company shall
become obligated to purchase, at the option of the Holder, the Securities held
by such Holder on the following Purchase Dates and at the following Purchase
Prices per $1,000 Principal Amount at Maturity, upon delivery of a Purchase
Notice containing the information set forth in the Indenture, at any time from
the opening of business on the date that is 20 Business Days prior to such
Purchase Date until the close of business on the day immediately preceding such
Purchase Date and upon delivery of the Securities to the Paying Agent by the
Holder as set forth in the Indenture.
Purchase Date Purchase Price
April 3, 2005 $447.55
April 3, 2007 $475.01
April 3 2012 $551.27
April 3, 2017 $639.77
April 3, 2022 $742.47
April 3, 2027 $861.67
The Purchase Price (equal to the Issue Price plus accrued Original
Issue Discount to the Purchase Date) may be paid, at the option of the Company,
in cash or by the issuance and delivery of shares of Common Stock of the
Company, or in any combination thereof in accordance with the Indenture.
If prior to a Purchase Date this Security has been converted to a
semiannual coupon note following the occurrence of a Tax Event, the Purchase
Price will be equal to the Restated Principal Amount plus accrued and unpaid
interest from the date of conversion to the Purchase Date as provided in the
Indenture.
At the option of the Holder and subject to the terms and conditions of
the Indenture, the Company shall become obligated to purchase the Securities
held by such Holder no later than 35 Business Days after the occurrence of a
Change in Control of the Company but in no event prior to the date on which such
Change in Control occurs on or prior to April 3, 2007 for a Change in Control
Purchase Price equal to the Issue Price plus accrued Original Issue Discount to
but not including the Change in Control Purchase Date, which Change in Control
Purchase Price shall be paid in cash. If prior to a Change in Control Purchase
Date this Security has been converted to a semiannual coupon note following the
occurrence of a Tax Event, the Change in Control Purchase Price shall be equal
to the Restated Principal Amount plus accrued and unpaid interest from the date
of conversion to the Change in Control Purchase Date.
A third party may make the offer and purchase of the Securities in lieu
of the Company in accordance with the Indenture.
Holders have the right to withdraw any Purchase Notice or Change in
Control Purchase Notice, as the case may be, by delivering to the Paying Agent a
written notice of withdrawal in accordance with the provisions of the Indenture.
If cash (and/or securities if permitted under the Indenture) sufficient
to pay the Purchase Price or Change in Control Purchase Price, as the case may
be, of all Securities or portions thereof to be purchased as of the Purchase
Date or the Change in Control Purchase Date, as the case may be, is deposited
with the Paying Agent on the Business Day following the Purchase Date or the
Change in Control Purchase Date, as the case may be, Original Issue Discount and
contingent interest, if any, shall cease to accrue on such Securities (or
portions thereof) on such Purchase Date or Change in Control Purchase Date, as
the case may be, and the Holder thereof shall have no other rights as such
(other than the right to receive the Purchase Price or Change in Control
Purchase Price, as the case may be, if any, upon surrender of such Security).
8. Notice of Redemption.
Notice of redemption will be mailed at least 30 days but not more than
60 days before the Redemption Date to each Holder of Securities to be redeemed
at the Holder's registered address. If money sufficient to pay the Redemption
Price of, and accrued and unpaid contingent interest, if any, with respect to,
all Securities (or portions thereof) to be redeemed on the Redemption Date is
deposited with the Paying Agent prior to or on the Redemption Date, on such
Redemption Date, Original Issue Discount and interest (including contingent
interest), if any, shall cease to accrue on such Securities or portions thereof.
Securities in denominations larger than $1,000 of Principal Amount at Maturity
may be redeemed in part but only in integral multiples of $1,000 of Principal
Amount at Maturity.
9. Conversion.
Subject to the provisions of this paragraph 9 and notwithstanding the
fact that any other condition to conversion has not been satisfied, Holders may
convert the Securities into Common Stock on a Conversion Date in any fiscal
quarter commencing after August 2, 2002, if, as of the last day of the preceding
fiscal quarter, the Sale Price of the Common Stock for at least 20 trading days
in a period of 30 consecutive trading days ending on the last trading day of
such preceding fiscal quarter is greater than the conversion trigger price per
share. The "conversion trigger price" for any fiscal quarter shall be a
reference percentage, beginning at 120%, and declining 0.08474% per quarter
thereafter to approximately 110% on the last day of the quarter ending January
30, 2032, of the accreted conversion price per share of Common Stock on the last
trading day of such preceding calendar quarter.
The "accreted conversion price per share" of Common Stock as of any day
equals the quotient of:
o the Issue Price and accrued Original Issue Discount to that day,
divided by
o the number of shares of Common Stock issuable upon conversion of $1,000
Principal Amount at Maturity of Securities on that day.
For illustrative purposes only, the table below shows the conversion
trigger price per share of Common Stock in respect of each of the first 20
fiscal quarters. These prices reflect the accreted conversion price per share of
Common Stock (assuming that no events occurred requiring an adjustment to the
initial Conversion Rate of 10.8584 shares of Common Stock per $1,000 Principal
Amount of Maturity) multiplied by the applicable reference percentage for the
respective fiscal quarter. Thereafter, the accreted conversion price per share
of Common Stock increases each fiscal quarter by the accrued Original Issue
Discount per share for the quarter and the applicable percentage declines by
0.8474% per quarter.
(1) (2) (3)
Accreted Applicable Conversion Trigger
Conversion Price Reference Price (1)x(2)
Quarter Per Share Percentage ------------
------- --------- ----------
2003
First Quarter................................... $38.07 120.0000% $45.68
Second Quarter.................................. $38.35 119.9153% $45.99
Third Quarter................................... $38.64 119.8305% $46.30
Fourth Quarter.................................. $38.93 119.7458% $46.62
2004
First Quarter................................... $39.22 119.6610% $46.93
Second Quarter.................................. $39.51 119.5763% $47.24
Third Quarter................................... $39.80 119.4916% $47.56
Fourth Quarter.................................. $40.10 119.4068% $47.88
2005
First Quarter................................... $40.40 119.3221% $48.21
Second Quarter.................................. $40.70 119.2373% $48.53
Third Quarter................................... $41.00 119.1526% $48.85
Fourth Quarter.................................. $41.31 119.0679% $49.19
2006
First Quarter................................... $41.62 118.9831% $49.52
Second Quarter.................................. $41.93 118.8984% $49.85
Third Quarter................................... $42.24 118.8136% $50.18
Fourth Quarter.................................. $42.55 118.7289% $50.52
2007
First Quarter................................... $42.87 118.6442% $50.87
Second Quarter.................................. $43.19 118.5594% $51.20
Third Quarter................................... $43.51 118.4747% $51.55
Fourth Quarter.................................. $43.84 118.3899% $51.90
Subject to the provisions of this paragraph 9 and notwithstanding the
fact any other condition to conversion has not been satisfied, Holders may
convert the Securities into Common Stock on a Conversion Date during any period
in which the credit rating assigned to the Securities by a Rating Agency is at
or below the Applicable Rating. "Rating Agency" means (1) Moody's Investors
Service, Inc. and its successors ("Moody's"), (2) Standard & Poor's Ratings
Services, a division of The McGraw-Hill Companies Inc., and its successors
("Standard & Poor's") or (3) if Moody's or Standard & Poor's or both of them are
not making ratings of the Securities publicly available, a nationally recognized
U.S. rating agency or agencies, as the case may be, selected by the Company,
which will be substituted for Moody's or Standard & Poor's or both, as the case
may be. "Applicable Rating" means (1) Ba3, (or its equivalent under any
successor ratings categories of Moody's), or its successor Rating Agency or in
the case of Moody's (2) BB- (or its equivalent, under any successor ratings
categories of Standard & Poor's or its successor Rating Agency) in the case of
Standard & Poor's.
Subject to the provisions of this paragraph 9 and notwithstanding the
fact that any other condition to conversion has not been satisfied, a Holder may
convert into Common Stock a Security or portion of a Security which has been
called for redemption pursuant to paragraph 6 hereof, but such Securities may be
surrendered for conversion until the close of business on the second Business
Day immediately preceding the Redemption Date.
Subject to the provisions of this paragraph 9 and notwithstanding the
fact that any other condition to conversion has not been satisfied, in the event
that the Company declares a dividend or distribution described in Section 11.07
of the Indenture, or a dividend or a distribution described in Section 11.08 of
the Indenture where, the fair market value, per share, of such dividend or
distribution per share of Common Stock, as determined in the Indenture, exceeds
15% of the Sale Price of the Common Stock on the Business Day immediately
preceding the date of declaration for such dividend or distribution, the
Securities may be surrendered for conversion beginning on the date the Company
gives notice to the Holders of such right, which shall not be less than 20 days
prior to the Ex-Dividend Time for such dividend or distribution, and Securities
may be surrendered for conversion at any time thereafter until the close of
business on the Business Day prior to the Ex-Dividend Time or until the Company
announces that such dividend or distribution will not take place.
Subject to the provisions of this paragraph 9 and notwithstanding the
fact that any other condition to conversion has not been satisfied, in the event
the Company is a party to a consolidation, merger or binding share exchange
pursuant to which the Common Stock would be converted into cash, securities or
other property as set forth in Section 11.14 of the Indenture, the Securities
may be surrendered for conversion at any time from and after the date which is
15 days prior to the date the Company announces the anticipated effective time
until 15 days after the actual effective date of such transaction, and at the
effective time of such transaction the right to convert a Security into Common
Stock will be deemed to have changed into a right to convert it into the kind
and amount of cash, securities or other property which the holder would have
received if the holder had converted its Security immediately prior to the
transaction.
A Security in respect of which a Holder has delivered a Purchase Notice
or Change in Control Purchase Notice exercising the option of such Holder to
require the Company to purchase such Security may be converted only if such
notice of exercise is withdrawn in accordance with the terms of the Indenture.
The initial Conversion Rate is 10.8584 shares of Common Stock per
$1,000 Principal Amount at Maturity, subject to adjustment in certain events
described in the Indenture. The Company will deliver cash or a check in lieu of
any fractional share of Common Stock.
In the event the Company exercises its option pursuant to Section 10.01
of the Indenture to have interest in lieu of Original Issue Discount accrue on
the Security following a Tax Event, the Holder will be entitled on conversion to
receive the same number of shares of Common Stock such Holder would have
received if the Company had not exercised such option.
Accrued and unpaid interest in lieu of Original Issue Discount and
contingent interest will not be paid on Securities that are converted; provided,
however that Securities surrendered for conversion during the period, in the
case of interest in lieu of Original Issue Discount, from the close of business
on any Regular Record Date next preceding any Interest Payment Date to the
opening of business on such Interest Payment Date, shall be entitled to receive
such interest, in lieu of Original Issue Discount, payable on such Securities on
the corresponding Interest Payment Date and (except Securities with respect to
which the Company has mailed a notice of redemption) Securities surrendered for
conversion during such periods must be accompanied by payment of an amount equal
to the interest in lieu of Original Issue Discount with respect thereto that the
registered Holder is to receive.
To convert a Security, a Holder must (1) complete and manually sign the
conversion notice below (or complete and manually sign a facsimile of such
notice) and deliver such notice to the Conversion Agent, (2) surrender the
Security to the Conversion Agent, (3) furnish appropriate endorsements and
transfer documents if required by the Conversion Agent, the Company or the
Trustee and (4) pay any transfer or similar tax, if required.
A Holder may convert a portion of a Security if the Principal Amount at
Maturity of such portion is $1,000 or an integral multiple of $1,000. No payment
or adjustment will be made for dividends on the Common Stock except as provided
in the Indenture. On conversion of a Security, the greater of that portion of
accrued Original Issue Discount (or interest if the Company has exercised its
option provided for in paragraph 11 hereof) or Tax Original Issue Discount
attributable to the period from the Issue Date (or, if the Company has exercised
the option referred to in paragraph 11 hereof, the later of (x) the date of such
exercise and (y) the date on which interest was last paid) through the
Conversion Date and (except as provided above) accrued contingent interest, if
any, with respect to the converted Security shall not be cancelled, extinguished
or forfeited, but rather shall be deemed to be paid in full to the Holder
thereof through the delivery of the Common Stock (together with the cash
payment, if any, in lieu of fractional shares) in exchange for the Security
being converted pursuant to the terms hereof; and the fair market value of such
shares of Common Stock (together with any such cash payment in lieu of
fractional shares) shall be treated as issued, to the extent thereof, first in
exchange for the greater of Original Issue Discount (or interest, if the Company
has exercised its option provided for in paragraph 11 hereof) or Tax Original
Issue Discount accrued through the Conversion Date and any accrued contingent
interest, and the balance, if any, of such fair market value of such Common
Stock (and any such cash payment) shall be treated as issued in exchange for the
Issue Price of the Security being converted pursuant to the provisions hereof.
The Conversion Rate will be adjusted for dividends or distributions on
Common Stock payable in Common Stock or other Capital Stock; subdivisions,
combinations or certain reclassifications of Common Stock; distributions to all
holders of Common Stock of certain rights to purchase Common Stock for a period
expiring within 60 days of the record date for such distribution at less than
the Sale Price of the Common Stock at the Time of Determination; and
distributions to such holders of assets or debt securities of the Company or
certain rights to purchase securities of the Company (excluding certain cash
dividends or distributions) and certain rights pursuant to shareholder rights
plans. However, no adjustment need be made if Securityholders may participate in
the transaction or in certain other cases. The Company from time to time may
voluntarily increase the Conversion Rate.
If the Company is a party to a consolidation, merger or binding share
exchange or a transfer of all or substantially all of its assets, or upon
certain distributions described in the Indenture, the right to convert a
Security into Common Stock may be changed into a right to convert it into
securities, cash or other assets of the Company or another person.
10. Conversion Arrangement on Call for Redemption.
Any Securities called for redemption, unless surrendered for conversion
before the close of business on the Redemption Date, may be deemed to be
purchased from the Holders of such Securities at an amount not less than the
Redemption Price, by one or more investment bankers or other purchasers who may
agree with the Company to purchase such Securities from the Holders, to convert
them into Common Stock of the Company and to make payment for such Securities to
the Trustee in trust for such Holders.
11. Tax Event.
(a)......From and after (i) the date of the occurrence of a Tax Event
(the "Tax Event Date") and (ii) the date the Company exercises the option
provided for in this paragraph 11, whichever is later (the "Option Exercise
Date"), at the option of the Company, interest in lieu of future Original Issue
Discount shall accrue at the rate of 3.00% per annum on a principal amount per
Security (the "Restated Principal Amount") equal to the Issue Price plus
Original Issue Discount accrued through the Option Exercise Date and shall be
payable semiannually on April 3 and October 3 of each year (each an "Interest
Payment Date") to holders of record at the close of business on March 19 or
September 18 (each a "Regular Record Date") immediately preceding such Interest
Payment Date. Interest will be computed on the basis of a 360-day year comprised
of twelve 30-day months and will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the Option
Exercise Date.
(b)......Interest on any Security that is payable, and is punctually
paid or duly provided for, on any Interest Payment Date shall be paid to the
person in whose name that Security is registered at the close of business on the
Regular Record Date for such interest at the office or agency of the Company
maintained for such purpose. Each installment of interest on any Security shall
be paid in same-day funds by transfer to an account maintained by the payee
located inside the United States.
(c)......From and after the Option Exercise Date, contingent interest
provided for in paragraph 5 hereof shall cease to accrue on this Security.
12. Defaulted Interest.
Except as otherwise specified with respect to the Securities, any
Defaulted Interest on any Security shall forthwith cease to be payable to the
registered Holder thereof on the relevant Regular Record Date or accrual date,
as the case may be, by virtue of having been such Holder, and such Defaulted
Interest may be paid by the Company as provided for in Section 12.02 of the
Indenture.
13. Denominations; Transfer; Exchange.
The Securities are in fully registered form, without coupons, in
denominations of $1,000 of Principal Amount at Maturity and integral multiples
of $1,000. A Holder may transfer or exchange Securities in accordance with the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay any taxes and fees
required by law or permitted by the Indenture. The Registrar need not transfer
or exchange any Securities selected for redemption (except, in the case of a
Security to be redeemed in part, the portion of the Security not to be redeemed)
or any Securities in respect of which a Purchase Notice or Change in Control
Purchase Notice has been given and not withdrawn (except, in the case of a
Security to be purchased in part, the portion of the Security not to be
purchased) or any Securities for a period of 15 days before the mailing of a
notice of redemption of Securities to be redeemed.
14. Persons Deemed Owners.
The registered Holder of this Security may be treated as the owner of
this Security for all purposes.
15. Unclaimed Money or Securities.
The Trustee and the Paying Agent shall return to the Company upon
written request any money or securities held by them for the payment of any
amount with respect to the Securities that remains unclaimed for two years,
subject to applicable unclaimed property laws. After return to the Company,
Holders entitled to the money or securities must look to the Company for payment
as general creditors unless an applicable abandoned property law designates
another person.
16. Amendment; Waiver.
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in aggregate Principal Amount at Maturity of the
Securities at the time outstanding and (ii) certain Defaults may be waived with
the written consent of the Holders of a majority in aggregate Principal Amount
at Maturity of the Securities at the time outstanding. Subject to certain
exceptions set forth in the Indenture, without the consent of any
Securityholder, the Company and the Trustee may amend the Indenture or the
Securities to cure any ambiguity, omission, defect or inconsistency, or to
comply with Article 5 or Section 11.14 of the Indenture, to secure the Company's
obligations under this Security or to add to the Company's covenants for the
benefit of the Securityholders or to surrender any right or power conferred, to
comply with any requirement of the SEC in connection with the qualification of
the Indenture under the TIA, or as necessary in connection with the registration
of the Securities under the Securities Act or to make any change that does not
adversely affect the rights of any Holders.
17. Defaults and Remedies.
Under the Indenture, Events of Default include (i) default in the
payment of contingent interest when the same becomes due and payable or of
interest which becomes due and payable upon exercise by the Company of its
option provided for in paragraph 11 hereof which default in either case
continues for 30 days; (ii) default in payment of the Principal Amount at
Maturity (or, if the Securities have been converted to semiannual coupon notes
following a Tax Event, the Restated Principal Amount), Issue Price plus accrued
Original Issue Discount, Redemption Price, Purchase Price or Change in Control
Purchase Price, as the case may be, in respect of the Securities when the same
becomes due and payable; (iii) failure by the Company or any Guarantor to comply
with other agreements in the Indenture or the Securities, subject to notice and
lapse of time; (iv) (a) failure of the Company to make any payment by the end of
any applicable grace period after maturity of Debt in an amount (taken together
with amounts in (b) below) in excess of $10,000,000, or (b) an acceleration of
Debt has occurred in an amount (taken together with amounts in (a) above) in
excess of $10,000,000 because of a default with respect to such Debt without
such Debt having been discharged or such acceleration having been cured, waived,
rescinded or annulled, subject to notice and lapse of time; provided, however,
that if any such failure or acceleration referred to in (a) or (b) above shall
cease or be cured, waived, rescinded or annulled, then the Event of Default by
reason thereof shall be deemed not to have occurred; (v) if any Guarantee ceases
to be in full force and effect or is declared null and void or any Guarantor
denies that it has any further liability under any Guarantee, or gives notice to
such effect (other than by reason of the termination of this Indenture or the
release of any such Guarantee in accordance with this Indenture) and such
condition shall have continued for a period of 30 days after written notice of
such failure requiring the Guarantor and the Company to remedy the same shall
have been given (x) to the Company by the Trustee or (y) to the Company and the
Trustee by the holders of 25% in aggregate principal amount of the Securities
then outstanding; and (vi) certain events of bankruptcy or insolvency. If an
Event of Default occurs and is continuing, the Trustee, or the Holders of at
least 25% in aggregate Principal Amount at Maturity of the Securities at the
time outstanding, may declare all the Securities to be due and payable
immediately. Certain events of bankruptcy or insolvency are Events of Default
which will result in the Securities becoming due and payable immediately upon
the occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the Securities except
as provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Securities unless it receives indemnity or security reasonably satisfactory
to it. Subject to certain limitations, Holders of a majority in aggregate
Principal Amount at Maturity of the Securities at the time outstanding may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Securityholders notice of any continuing Default (except a Default
in payment of amounts specified in clause (i) or (ii) above) if it determines
that withholding notice is in their interests.
18. Trustee Dealings with the Company.
Subject to certain limitations imposed by the TIA, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates and may otherwise deal with the Company
or its Affiliates with the same rights it would have if it were not Trustee.
19. No Recourse Against Others.
A director, officer, employee, agent, representative, stockholder or
equity holder, as such, of the Company shall not have any liability for any
obligations of the Company under the Securities or the Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creation. By accepting a Security, each Securityholder waives and releases all
such liability. The waiver and release are part of the consideration for the
issue of the Securities.
20. Authentication.
This Security shall not be valid until an authorized signatory of the
Trustee manually signs the Trustee's Certificate of Authentication on the other
side of this Security.
21. Abbreviations.
Customary abbreviations may be used in the name of a Securityholder or
an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with right of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
22. GOVERNING LAW.
THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE INDENTURE, THE
GUARANTEES AND THIS SECURITY.
----------------------
The Company will furnish to any Securityholder upon written
request and without charge a copy of the Indenture which has in it the text of
this Security in larger type. Requests may be made to:
CBRL Group, Inc.
P.O. Box 787
Lebanon, TN 37088
Attention: Chief Financial Officer
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
- ------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax ID no.)
- ------------------------------------
- ------------------------------------
- ------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
_____________________ agent to transfer this Security on the books of the
Company. The agent may substitute another to act for him.
CONVERSION NOTICE
To convert this Security into Common Stock of the Company, check the box:
9
To convert only part of this Security, state the Principal Amount at Maturity to
be converted (which must be $1,000 or an integral multiple of $1,000):
$-----------------------------------
If you want the stock certificate made out in another person's name, fill in the
form below:
- ------------------------------------------------------------------------
(Insert other person's soc. sec. or tax ID 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)
Exhibit A-2
[FORM OF GUARANTEE]
The Guarantors (as defined in the Indenture and which term includes any
successor person under the Indenture), upon the terms and subject to the
conditions set forth in the Indenture, hereby unconditionally guaranteed on a
senior unsecured basis (such guarantee by each Guarantor being referred to
herein as the "Guarantee") (i) the due and punctual payment of the principal of
and interest (including contingent interest) on the Securities, whether at
maturity, by acceleration or otherwise, the due and punctual payment of interest
on the overdue principal and interest, if any, on the Securities, to the extent
lawful, and the due and punctual performance of all other obligations of the
Company to the Holders or the Trustee all in accordance with the terms set forth
in Article 13 of the Indenture and (ii) in case of any extension of time of
payment or renewal of any Securities or any of such other obligations, that the
same will be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, whether at Stated Maturity, by acceleration
or otherwise.
The obligations of the undersigned to the Holders of the
Securities and to the Trustee pursuant to this Guarantee and in the Indenture
are expressly set forth in the Indenture and reference is hereby made to the
Indenture for the precise terms of the Guarantees and all of the other
provisions of the Indenture to which this Guarantee relates.
No stockholder, officer, director, employee or incorporator,
as such, past, present or future, of any Guarantor shall have any liability
under the Guarantee by reason of his or its status as such stockholder, officer,
director, employee or incorporator.
The Guarantee shall not be valid or obligatory for any purpose
until the certificate of authentication on the Securities upon which the
Guarantee is noted shall have been executed by the Trustee under the Indenture
by the manual signature of one of its authorized signatories.
The Guarantee shall be governed by and construed in accordance
with the law of the State of New York applicable to agreements made or
instruments entered into and, in each case, performed in said state.
IN WITNESS WHEREOF, the Guarantors have caused this instrument
to be duly executed.
CRACKER BARREL OLD COUNTRY
STORE, INC.
CPM MERGER CORPORATION
CBOCS DISTRIBUTION, INC.
CBOCS PARTNER I, LLC
CBOCS PARTNER II, LLC
CBOCS WEST, INC.
CBOCS MICHIGAN, INC.
CBOCS SIERRA, INC.
CB MUSIC LLC
ROCKING CHAIR, INC.
GC MANAGEMENT COMPANY
LOGAN'S ROADHOUSE, INC.
ROADHOUSE PROMOTIONS, INC.
CBOCS TEXAS LIMITED PARTNERSHIP
CBOCS GENERAL PARTNERSHIP
ROADHOUSE OF WEST VIRGINIA
LIMITED PARTNERSHIP
LOGAN'S ROADHOUSE, INC. OF W. VA.
LOGAN'S ROADHOUSE OF TEXAS, INC.
By: _______________________________
EXHIBIT A-3
[Form of Certificated Security]
FOR PURPOSES OF SECTIONS 1273 AND 1275 OF THE INTERNAL REVENUE CODE,
THIS SECURITY IS ISSUED WITH AN INDETERMINATE AMOUNT OF ORIGINAL ISSUE DISCOUNT
FOR UNITED STATES FEDERAL INCOME TAX PURPOSES. THE ISSUE DATE IS APRIL 3, 2002,
AND THE YIELD TO MATURITY FOR PURPOSES OF ACCRUING ORIGINAL ISSUE DISCOUNT IS
7.32% PER ANNUM, COMPOUNDED SEMIANNUALLY. THE HOLDER OF THIS SECURITY MAY OBTAIN
THE PROJECTED PAYMENT SCHEDULE BY SUBMITTING A WRITTEN REQUEST FOR SUCH
INFORMATION TO: INVESTOR RELATIONS, CBRL GROUP, INC., P.O. BOX 787 LEBANON, TN
37088.
[INCLUDE IF SECURITY IS A CERTIFICATED SECURITY TO BE HELD BY AN
INSTITUTIONAL ACCREDITED INVESTOR--IN CONNECTION WITH ANY TRANSFER, THE HOLDER
WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER
INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE
TRANSFER COMPLIES WITH THE FOLLOWING RESTRICTIONS.]
THIS SECURITY AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION
OF THIS SECURITY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY, THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY
NOR ANY INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES TO OFFER,
SELL, OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE"), WHICH IS TWO YEARS AFTER THE LATER OF THE LAST
DAY SECURITIES OF THIS ISSUE WERE ISSUED AND THE LAST DATE ON WHICH CBRL GROUP,
INC. (THE "COMPANY" OR THE "ISSUER") OR ANY AFFILIATE OF THE COMPANY WAS THE
OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY) ONLY (A) TO THE
COMPANY OR ANY SUBSIDIARY THEREOF, (B) FOR SO LONG AS THE SECURITIES ARE
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS
A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHICH NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (C) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE
MEANING OF SUBPARAGRAPH (A)(1), (2),(3) OR (7) OF RULE 501 UNDER THE SECURITIES
ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF
SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT
WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT, (D) PURSUANT TO A REGISTRATION STATEMENT WHICH
HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT OR (E) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE
OR TRANSFER PURSUANT TO CLAUSE (C) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION
OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM,
AND IN EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM
APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE
TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF ANY
HOLDER THAT IS NOT AN AFFILIATE OF THE COMPANY AFTER THE RESALE RESTRICTION
TERMINATION DATE.
THE FOREGOING LEGEND MAY BE REMOVED FROM THIS SECURITY ON SATISFACTION
OF THE CONDITIONS SPECIFIED IN THE INDENTURE.
CBRL GROUP, INC.
Liquid Yield Option(TM) Note due 2032
(Zero Coupon-Senior)
No. R- ......... CUSIP: 12489VAA4
Issue Date: April 3, 2002 Original Issue Discount: $590.70
Issue Price: $409.30 (for each $1,000 Principal
(for each $1,000 Principal Amount at Maturity)
Amount at Maturity)
CBRL GROUP, INC., a Tennessee corporation, promises to pay to Cede & Co. or
registered assigns, the Principal Amount at Maturity of Three Hundred and Sixty
Seven Million DOLLARS ($367,000,000) on April 3, 2032.
This Security shall not bear interest except as specified on the other
side of this Security. Original Issue Discount will accrue as specified on the
other side of this Security. This Security is convertible as specified on the
other side of this Security.
Additional provisions of this Security are set forth on the other side
of this Security.
Dated: April 3, 2002 CBRL GROUP, INC.
By:
----------------------------
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
WACHOVIA BANK, NATIONAL ASSOCIATION, as Trustee, certifies that this is one of
the Securities referred to in the within-mentioned Indenture.
By: ________________________
Authorized Officer
Dated: ________________________
NYDOCS01/842735.8 B-1-1
EXHIBIT B-1
Transfer Certificate
In connection with any transfer of any of the Securities within the
period prior to the expiration of the holding period applicable to the sales
thereof under Rule 144(k) (or any successor provision) under the Securities Act
of 1933, as amended (the "Securities Act"), the undersigned registered owner of
this Security hereby certifies with respect to $____________ Principal Amount at
Maturity of the above-captioned securities presented or surrendered on the date
hereof (the "Surrendered Securities") for registration of transfer, or for
exchange or conversion where the securities issuable upon such exchange or
conversion are to be registered in a name other than that of the undersigned
registered owner (each such transaction being a "transfer"), that such transfer
complies with the restrictive legend set forth on the face of the Surrendered
Securities for the reason checked below:
The transfer of the Surrendered Securities is made to the Company or
any subsidiaries; or
The transfer of the Surrendered Securities complies with Rule 144A
under the Securities Act; or
The transfer of the Surrendered Securities is to an institutional
accredited investor, as described in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act; or
The transfer of the Surrendered Securities is pursuant to an effective
registration statement under the Securities Act, or
The transfer of the Surrendered Securities is pursuant to an offshore
transaction in accordance with Rule 904 under the Securities Act; or
The transfer of the Surrendered Securities is pursuant to another
available exemption from the registration requirement of the Securities
Act.
and unless the box below is checked, the undersigned confirms that, to
the undersigned's knowledge, such Securities are not being transferred to an
"affiliate" of the Company as defined in Rule 144 under the Securities Act (an
"Affiliate").
The transferee is an Affiliate of the Company.
DATE:
-------------------- ----------------------------------------
Signature(s)
(If the registered owner is a corporation, partnership or
fiduciary, the title of the Person signing on behalf of
such registered owner must be stated.)
EXHIBIT B-2
Form of Letter to be Delivered by Accredited Investors
CBRL Group, Inc.
P.O. Box 787
Lebanon, TN 37088
Attention: Chief Financial Officer
Wachovia Bank, National Association
2525 West End Avenue, Suite 1200
Nashville, TN 37203
Attention: Corporate Trust Department
Dear Sirs:
We are delivering this letter in connection with the proposed transfer
of $_____________ Principal Amount at Maturity of the Liquid Yield Option(TM)
Notes due 2032 (Zero Coupon-Senior) ("LYONs") issued by CBRL Group, Inc. (the
"Company"), which are convertible into shares of the Company's Common Stock,
$0.01 par value per share (the "Common Stock").
We hereby confirm that:
(i) we are an "accredited investor" within the meaning of Rule 501(a)(1),
(2) or (3) under the Securities Act of 1933, as amended (the
"Securities Act"), or an entity in which all of the equity owners are
accredited investors within the meaning of Rule 501(a)(1), (2) or (3)
under the Securities Act (an "Institutional Accredited Investor");
(ii) the purchase of LYONs by us is for our own account or for the account
of one or more other Institutional Accredited Investors or as fiduciary
for the account of one or more trusts, each of which is an "accredited
investor" within the meaning of Rule 501(a)(7) under the Securities Act
and for each of which we exercise sole investment discretion or (B) we
are a "bank," within the meaning of Section 3(a)(2) of the Securities
Act, or a "savings and loan association" or other institution described
in Section 3(a)(5)(A) of the Securities Act that is acquiring LYONs as
fiduciary for the account of one or more institutions for which we
exercise sole investment discretion;
(iii) we will acquire LYONs having a minimum principal amount at maturity of
not less than $250,000 for our own account or for any separate account
for which we are acting;
(iv) we have such knowledge and experience in financial and business matters
that we are capable of evaluating the merits and risks of purchasing
LYONs; and
(v) we are not acquiring LYONs with a view to distribution thereof or with
any present intention of offering or selling LYONs or the Common Stock
issuable upon conversion thereof, except as permitted below; provided
that the disposition of our property and property of any accounts for
which we are acting as fiduciary shall remain at all times within our
control.
We understand that the LYONs were originally offered and sold in a
transaction not involving any public offering within the United States within
the meaning of the Securities Act and that the LYONs and the Common Stock
issuable upon conversion thereof (the LYONs and such Common Stock hereinafter
referred to as the "Securities") have not been registered under the Securities
Act, and we agree, on our own behalf and on behalf of each account for which we
acquire any LYONs, that if in the future we decide to resell or otherwise
transfer such Securities prior to the date (the "Resale Restriction Termination
Date") which is two years after the later of the last day the LYONs of this
issue were issued and the last date on which the Company or an affiliate of the
Company was the owner of the Security, such Securities may be resold or
otherwise transferred only (i) to CBRL Group, Inc. or any subsidiary thereof, or
(ii) for as long as the LYONs are eligible for resale pursuant to Rule 144A, to
a person it reasonably believes is a "qualified institutional buyer" (as defined
in Rule 144A under the Securities Act) that purchases for its own account or for
the account of a qualified institutional buyer to which notice is given that the
transfer is being made in reliance on Rule 144A, or (iii) to an Institutional
Accredited Investor that is acquiring the Security for its own account, or for
the account of such Institutional Accredited Investor for investment purposes
and not with a view to, or for offer or sale in connection with, any
distribution in violation of the Securities Act, or (iv) pursuant to another
available exemption from registration under the Securities Act (if applicable),
or (v) pursuant to a registration statement which has been declared effective
under the Securities Act and, in each case, in accordance with any applicable
securities laws of any state of the United States or any other applicable
jurisdiction and in accordance with the legends set forth on the Securities. We
further agree to provide any person purchasing any of the Securities from us
other than pursuant to clause (v) above a notice advising such purchaser that
resales of such securities are restricted as stated herein. We understand that
the trustee or the transfer agent, as the case may be, for the Securities will
not be required to accept for registration of transfer any Securities pursuant
to (iii) or (iv) above except upon presentation of evidence satisfactory to the
Company that the foregoing restrictions on transfer have been complied with. We
further understand that any Securities will be in the form of definitive
physical certificates and that such certificates will bear a legend reflecting
the substance of this paragraph other than certificates representing Securities
transferred pursuant to clause (v) above.
We acknowledge that the Company, others and you will rely upon our
confirmations, acknowledgments and agreements set forth herein, and we agree to
notify you promptly in writing if any of our representations or warranties
herein ceases to be accurate and complete.
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK.
(Name of Purchaser)
By:
-----------------------------------
Name:
Title:
Address:
ANNEX C
Projected Payment Schedule*
Semi-annual Period Ending Projected Payment per Security
------------------------- ------------------------------
April 4, 2002 --
October 4, 2002 --
April 4, 2003 --
October 4, 2003 --
April 4, 2004 --
October 4, 2004 --
April 4, 2005 --
October 4, 2005 --
April 4, 2006 --
October 4, 2006 --
April 4, 2007 --
October 4, 2007 --
April 4, 2008 --
October 4, 2008 --
April 4, 2009 --
October 4, 2009 --
April 4, 2010 --
October 4, 2010 --
April 4, 2011 --
October 4, 2011 --
April 4, 2012 0.8179
October 4, 2012 0.8514
April 4, 2013 0.8862
October 4, 2013 0.9225
April 4, 2014 0.9602
October 4, 2014 0.9995
April 4, 2015 1.0404
October 4, 2015 1.0830
April 4, 2016 1.1273
October 4, 2016 1.1734
April 4, 2017 1.2214
October 4, 2017 1.2714
April 4, 2018 1.3234
October 4, 2018 1.3776
April 4, 2019 1.4339
October 4, 2019 1.4926
April 4, 2020 1.5536
October 4, 2020 1.6172
April 4, 2021 1.6834
October 4, 2021 1.7522
April 4, 2022 1.8239
October 4, 2022 1.8986
April 4, 2023 1.9762
October 4, 2023 2.0571
April 4, 2024 2.1412
October 4, 2024 2.2289
April 4, 2025 2.3200
October 4, 2025 2.4150
April 4, 2026 2.5138
October 4, 2026 2.6166
April 4, 2027 2.7237
October 4, 2027 2.8351
April 4, 2028 2.9511
October 4, 2028 3.0718
April 4, 2029 3.1975
October 4, 2029 3.3283
April 4, 2030 3.4645
October 4, 2030 3.6062
April 4, 2031 3.7538
October 4, 2031 3.9074
April 4, 2032 4.0672
- --------
* Note: This Cross Reference Table shall not, for any purpose, be
deemed to be part of the Indenture.
* The comparable yield and the schedule of projected payments are determined on
the basis of an assumption of linear growth of the stock price and a constant
dividend yield and are not determined for any purpose other than for the
determination of interest accruals and adjustments thereof in respect of the
Securities for United States federal income tax purposes. The comparable yield
and the schedule of projected payments do not constitute a projection or
representation regarding the amounts payable on the Securities.
Executive employment agreement
PARTIES: Dan W. Evins
("Executive")
CBRL Group, Inc.
a Tennessee corporation
("Company")
SUBJECT: Employment for a Specified Term
POSITION: Chairman of the Board of Directors
of the Company
LOCATION: Lebanon, Tennessee
DATE: August 4, 2001
- -------------------------------------------------------------------------------
This Agreement, dated for reference purposes August 4, 2001, is made by
CBRL Group, Inc., a Tennessee corporation (the "Company"), and by Dan W. Evins,
an individual, (the "Executive").
BACKGROUND FACTS
A. The Executive has previously been employed by the Company as its
Chairman and Chief Executive Officer and as an officer of certain subsidiaries.
B. The Board of Directors of the Company (the "Board") recognizes that the
Executive's contribution to the growth and success of the Company during the
past 32 years has been substantial. The Board now desires, and deems it to be in
the best interests of the Company and its shareholders, to provide for the
continued employment of the Executive and to make certain changes in the
Executive's employment arrangements with the Company which the Board has
determined will reinforce and encourage the Executive's continued attention and
dedication to the Company.
C. The Executive is willing to commit himself to continue to serve the
Company on the specified terms and conditions.
D. In order to effect those purposes, the Company and the Executive wish to
enter into an employment agreement on the terms and conditions set forth below.
Therefore, in consideration of the mutual promises in this Agreement, the
Company and the Executive agree as follows:
AGREEMENT
1. EMPLOYMENT.
The Company employs the Executive and the Executive accepts employment
from the Company upon the terms and conditions of this Agreement.
2. DURATION OF AGREEMENT.
This employment shall begin as of the effective date of this Agreement,
August 4, 2001, and shall continue until it terminates pursuant to this
Agreement. Unless earlier terminated pursuant to Article 6, this Agreement, and
the Executive's employment, will automatically terminate at November 22, 2005.
3. DUTIES.
3.01 In General. Subject to the ultimate direction and control of the
Company's Board of Directors, the Executive shall devote all of his efforts on a
full-time basis to the business and affairs of the Company with such duties and
responsibilities as the Board shall designate, and he shall not engage in any
activities, or render services to or become associated with any other business
that in the reasonable judgment of the Board violates Article 8 of this
Agreement or interferes with the full and proper performance of the Executive's
duties. The parties acknowledge and agree that community service, charitable
activities, and reasonable participation in unrelated business activities, which
do not adversely affect the Executive's employment duties, are not prohibited or
restricted by this Section.
3.02 Specific Duties. The Executive will serve as Chairman of the Board
of Directors of the Company, and as Chairman of its Executive Committee. The
Executive will provide vision and leadership to oversee the development of the
Company's strategic plan, with particular attention to the Company's core
Cracker Barrel Old Country Store(R) concept.
4. COMPENSATION AND BENEFITS.
4.01 Compensation Package. In full consideration for all services
rendered by the Executive under this Agreement, including service on the
Company's Board of Directors, and in accordance with its payroll practices for
executives, the Company shall pay the Executive an annual salary, and in
appropriate specified circumstances, a bonus, and the Company will provide
employment benefits all as set forth in Exhibit A attached to and, made a part
of this Agreement. Exhibit A will remain in effect until altered by mutual
agreement or until this Agreement is terminated.
4.02 Benefits Distinct from Salary. Nothing paid to the Executive under
any benefit plan or arrangement presently in effect or made available in the
future shall be deemed to be in lieu of the salary payable to the Executive
pursuant to this Article 4 and Exhibit A.
4.03 Prorations. Any payments or benefits payable to the Executive in
respect of any 12-month period during which the Executive is employed by the
Company for less than the entire 12-month period shall, unless otherwise
provided in the applicable plan or arrangement, be prorated in accordance with
the actual number of days within the 12-month period during which he is
employed.
5. CHANGE IN CONTROL.
The Executive and the Company are parties to a separate agreement
concerning changes in control of the Company. That agreement is specified in a
letter dated October 8, 1999 from the Company to the Executive with a subject
styled: "Employee Retention Agreement" (the "Letter Agreement"). A copy of the
Letter Agreement comprises Exhibit B, which is attached to and is made part of
this Agreement. The Letter Agreement supersedes this Agreement and controls all
issues between these parties that may be affected by a change in control of the
Company, as defined in the Letter Agreement (a "Change in Control").
6. TERMINATION OF EMPLOYMENT OR SEVERANCE.
6.01 Termination by Company Without Cause. The Board of Directors may
terminate the Executive's employment, with or without cause, at any time by
giving written notice of termination to the Executive, that termination of
employment to be effective on a date specified in the notice. In the event of a
termination without cause, the Executive shall be entitled to receive:
a. the unpaid amount due the Executive for annual base salary during the
employment term prior to the date of termination;
b. initially, 3 times the annual base +salary in effect at the date of
termination, but this amount shall be automatically and appropriately reduced so
that if it is paid, the amount paid shall not exceed the total annual base
salary which could have been earned by the Executive during the remaining period
prior to the established date of his mandatory retirement; and
c. subject to other specific provisions of this Agreement and the
specific terms and conditions of each award or grant, appropriate stock options
and restricted stock.
Payments with respect to base salary shall be made in cash in a single payment
within 5 business days of the date of termination. The Executive's participation
in all benefit programs other than life, medical and disability insurance shall
cease as of the date of termination. The Executive's participation in the life,
medical and disability insurance programs shall continue until the earlier of
the time the Executive is employed by another employer and is covered or
permitted to be covered by that employer's benefit plans without regard to the
extent of such coverage, the Company no longer provides such benefit plans to
the Executive's management employees, or the expiration of the term of this
Agreement (as in effect at the time of termination). This provision supersedes
any other severance program or policy that may be offered by the Company (except
for the Letter Agreement) and is in lieu of, rather than in addition to other
severance plans that may be in place, except with regard to any rights the
Executive may have pursuant to COBRA or the Letter Agreement.
6.02 Termination by Company for Cause. If the Executive is terminated
for cause, the Company shall have no further obligation to the Executive under
this Agreement, and the Executive's participation in all benefit programs
controlled by this Agreement shall cease as of the date of termination. For
purposes of this Agreement, "cause" shall mean only any one or more of the
following: (a) the Executive's personal dishonesty in connection with his duties
to the Company; (b) the Executive's willful misconduct in the performance of his
duties with the Company; (c) breach of fiduciary duty to the Company involving
personal profit by the Executive; (d) conviction of the Executive for any felony
or crime involving moral turpitude; (e) material intentional breach by the
Executive of any provision of this Agreement; or (f) unsatisfactory performance
by the Executive of the duties designated for the Executive by the Company's
Board of Directors as a result of alcohol or drug use by the Executive.
6.03 Termination by Executive After Change in Control. If a Change
in Control occurs, the Executive will have the rights, subject to the specified
terms and conditions, set forth in the Letter Agreement.
6.04 Termination by Executive Other Than After Change in Control. The
Executive may terminate his employment with the Company at any time without
further obligation by either party under this Agreement (except for the
obligations and covenants of the Executive pursuant to Article 8, which shall
survive termination as specified in this Agreement) by giving not less than 60
nor more than 180 days prior written notice of termination to the Company.
6.05 Effect of Termination on Stock Options.
a. General Effect. Subject to the terms, conditions and
provisions of the Company's separate Long-Term Incentive Plan and the cash and
stock awards made under that plan, upon any termination of the Executive's
employment and this Agreement, all stock options and restricted stock held by
the Executive that are vested prior to the effective date of the termination
shall be exercisable in accordance with their terms, and all stock options and
restricted stock held by the Executive that are not vested prior to the
effective date of the termination shall lapse and be void.
b. Option Treatment Upon Termination Without Cause. Upon a
termination of the Executive's employment without cause pursuant to Section
6.01, in addition to any other rights of the Executive under this Agreement, the
Executive shall receive, within 30 days after the termination, a lump sum cash
distribution equal to: (a) the number of shares of the Company's common stock
that is subject to options held by the Executive which are not vested on the
date of termination of employment but which would otherwise vest during the
original term; multiplied by (b) the difference between: (i) the closing price
of a share of the Company's common stock as of the day prior to the effective
date of termination of employment (or, if the United States securities trading
markets are closed on that date, on the last preceding date on which the United
States securities trading markets were open for trading), and (ii) the
applicable exercise prices of the non-vested shares.
c. Effect Upon Change in Control. In the event of termination
following a Change in Control, the terms and conditions expressed in the Letter
Agreement will control with respect to stock options.
6.06 Death of Executive. If the Executive dies during the employment
term, this Agreement and the Executive's employment shall terminate upon the
Executive's death. With respect to cash compensation, the Executive's estate
shall be entitled to any annual base salary earned but not paid plus any bonus
accrued by the Company for the Executive through the date of death plus an
additional amount equal to the annual base salary in effect for the Executive at
the date of the death of the Executive. This payment shall be paid in a lump sum
to the Executive's estate within 90 days after the Company is given notice of
the Executive's death. With respect to stock options and restricted stock, the
specific terms, conditions and provisions of those awards will determine their
disposition and vesting upon death of the Executive.
6.07 Disability of Executive. The Company has disability insurance
insuring individuals holding management positions, and the Executive is included
under that disability insurance. During any period that the Executive fails to
perform his duties as a result of a disability, the Executive shall continue to
receive his full salary at the rate then in effect pursuant to Exhibit A until
his employment is terminated by death or the expiration of this Agreement.
Payments made to the Executive during the disability period shall be reduced by
the amounts, if any, payable to the Executive under disability benefit plans of
the Company. The Executive's year-end bonus shall be paid in a pro rata amount
to compensate the Executive proportionately for days worked prior to the
beginning of his disability period. For purposes of this Agreement, unless and
except as otherwise specifically defined by the Company in its insurance plans,
a "disability" of the Executive shall occur if the Executive suffers any mental
or physical condition that impairs the Executive's ability to perform the
essential functions of his duties for a period of 180 consecutive days or more,
and if within 30 days after the Executive receives written notice from the
Company requesting that the Executive resume his duties under this Agreement,
the Executive is unable or refuses to do so.
7. INDEMNIFICATION.
7.01 Executive's Indemnification. The Company shall indemnify and hold
the Executive harmless to the maximum extent permitted by law against judgments,
fines, amounts paid in settlement and reasonable expenses, including attorneys'
fees incurred by the Executive, in connection with the defense of, or as a
result of any action or proceeding (or any appeal from any action or proceeding)
in which the Executive is made or is threatened to be made a party by reason of
the fact that he is or was an officer of the Company.
7.02 Insurance. The Company agrees that the Executive is and shall
continue to be covered and insured up to the maximum limits provided by all
insurance which the Company maintains to indemnify its directors and officers
(and to indemnify the Company for any obligations which it incurs as a result of
its undertaking to indemnify its officers and directors) and that the Company
will exert its best efforts to maintain such insurance, in not less than its
present limits, in effect throughout the term of the Executive's employment.
8. LIMITS ON COMPETITION.
8.01 No Competing Activities. While this Agreement is in effect, and
during the time period specified in Section 8.03, the Executive shall not
directly or indirectly, either as an employee, employer, officer, director,
agent, consultant, partner or other investor (except for investments no greater
than 5% of any entity) or in any other individual or representative capacity,
engage or participate in any business or profession that is in substantial
direct competition with the business of the Company. For the purposes of this
paragraph, a business enterprise with which the Executive becomes associated as
an employee, employer, officer, director, agent, consultant, partner or other
investor shall be considered in "substantial direct competition" with the
Company if it is engaged in the restaurant or gift shop business. This Section
does not prohibit the Executive from engaging in any transaction which is
approved in writing by the Board of Directors of the Company.
8.02 Confidentiality. In consideration of his employment and the
compensation to be paid to him the Executive specifically covenants and agrees
that he will regard and preserve as confidential all trade secrets and all
non-public information pertaining to the Company's or its subsidiaries'
businesses that have been or may be obtained by him. The Executive will not
reveal, allow release of, nor disclose any Company confidential information.
This prohibition on disclosure and release applies whether or not the
information which is confidential may be classified as a trade secret. The
confidential information of the Company which the Executive will not reveal,
disclose or release to any person includes, but is not limited to, all
technology, recipes and business systems of the Company at the date of this
Agreement as well as all recipes, customer lists, business systems and styles
developed during the course of this employment, and all other Company
proprietary business information not generally known to the public. The
Executive shall not use any confidential information except in the course of
employment. The Executive will not use any of the confidential information after
his employment by the Company is terminated, and the Executive will not take
away or retain after termination of employment any of the Company's recipes,
business systems, business styles or specifications, Company proprietary
information, customer lists, or other documents or things relating to those
matters. This provision does not apply to information voluntarily disclosed by
the Company to the public, independently developed and disclosed by others, or
otherwise lawfully in the public domain.
8.03 Survival of Obligations. If the Executive's employment is
terminated for cause pursuant to Section 6.02, or if the Executive voluntarily
terminates his employment prior to the end of the specified term of this
Agreement, the non-competition requirements of this Article 8 will remain in
force for 1 year following the date of the termination. In all cases, the
confidentiality requirements of this Article 8 shall survive any expiration or
termination of this Agreement or the Executive's employment pursuant to it.
9. MISCELLANEOUS TERMS.
9.01 Annual Performance Review. The Executive will report regularly
to the Board of Directors and the Board will conduct an annual review of the
Executive's performance prior to each Annual Shareholders Meeting.
9.02 Location of Employment. The Executive shall be employed at the
Company's headquarters office in the city of Lebanon, TN, but the Executive
shall travel to and carry out his duties wherever reasonably necessary for
Company business, to an extent substantially consistent with business travel
obligations at the date of this Agreement.
9.03 Compliance with Law. The Executive shall always, and when
appropriate, at Company expense, endeavor to comply with all applicable federal,
State and local laws, ordinances, rules, and regulations in the performance of
all work and other activities carried out in the name of or on behalf of the
Company.
9.04 Notices. All notices, requests, demands and other communications,
under this Agreement shall be in writing and shall be duly given on the date of
delivery if served personally on the party, or delivered by overnight courier,
or 3 days after mailing if mailed to the party by first class mail, registered
or certified, postage fully prepaid, and properly addressed as specified on the
signature page of this Agreement. Any party may change its address by giving the
other parties written notice of the new address in the manner set forth in this
Section.
9.05 Entire Agreement. This Agreement, including the Letter Agreement
and its other Exhibits, supersedes all other agreements, either oral or in
writing, between the parties with respect to employment of the Executive by the
Company. It contains all the promises between parties with respect to that
employment. No representations, inducements, promises or other agreements, oral
or otherwise, have been made by any party or any one acting on behalf of any
party, and no agreement, statement or promise not contained in this Agreement is
valid. Any modification of this Agreement must be in writing.
9.06 Partial Invalidity. If any provision in this agreement is
held by a court of competent jurisdiction to be void or unenforceable, the
remaining provisions shall continue in full force without being
invalidated in any way.
9.07 Binding Effect. The provisions of this Agreement benefit
and bind the Executive's heirs, representatives, and successors, and the
Company's successors, transferees and assigns.
9.08 No Assignment. The Executive and the Company each acknowledges and
agrees that the services to be rendered by the Executive are unique and
personal. This Agreement is, therefore, personal to the parties and it, and the
rights and obligations created by it, may not be assigned by the Executive, or
except to corporations which are part of a consolidated group for tax purposes,
by the Company.
9.09 Attorneys' Fees. If either party brings suit to compel performance
of, to interpret, or to recover damages for the breach of this Agreement, the
finally prevailing party shall be entitled to reasonable attorneys' fees in
addition to costs and necessary disbursements otherwise recoverable.
9.10 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Tennessee.
IN WITNESS WHEREOF, the parties have executed this Agreement on January
15, 2002.
ADDRESSES: COMPANY:
106 Castle Heights Avenue North CBRL Group, Inc.
Lebanon, Tennessee 37087 a Tennessee corporation
By: /s/Michael A. Woodhouse
-------------------------------
Michael A. Woodhouse, President
By: /s/James F. Blackstock
-------------------------------
James F. Blackstock, Secretary
EXECUTIVE:
6636 Cairo Bend Road Dan W. Evins
Lebanon, Tennessee 37087
By: /s/Dan W. Evins
-------------------------------
Dan W. Evins
January 15, 2002
- ----------
Approved.
/s/Robert V. Dale
- -----------------------------------------------------
Robert V. Dale,
Chairman Compensation & Stock Option Committee
Dan W. Evins Agreed Salary and Benefits
Effective Date Executive Annual Base Salary Bonus Base
- -------------- ----------------- ------------------ ----------------------
August 4, 2001 Dan W. Evins $500,000 100% of base salary
1. Salary. The annual base salary for the Executive will be paid in arrears
semi-monthly, in equal installments on or about the 15th and last day of
each calendar month. This salary may be increased from time to time in
accordance with normal business practices of the Company, and if so
increased, shall not thereafter during the term of this Agreement be
decreased. Compensation of the Executive by salary payments shall not be
deemed exclusive and shall not prevent the Executive from participating in
any other compensation or benefit plan of the Company.
2. Benefits. The Company shall maintain in full force, and the Executive
shall be entitled to continue to participate in, all of its employee
benefit plans and arrangements in force on the effective date of this
Exhibit A in which the Executive now participates (or it will implement
plans or arrangements providing the Executive with at least equivalent
benefits). The Company shall not make any changes in those plans and
arrangements which would adversely affect the Executive's rights or
benefits, unless the change occurs pursuant to a program applicable to all
officers of the Company and does not result in a proportionately greater
reduction in the rights of or benefits to the Executive as compared with
any other officers of the Company. The Executive shall be entitled to
participate in or receive benefits under any employee benefit plan or
arrangement made available by the Company in the future to its officers and
key management employees, subject to and on a basis consistent with the
terms, conditions and overall administration of those plans and
arrangements.
3. Options. The Executive is currently a participant in the Company's existing
long term incentive arrangement and the Executive will have an opportunity
each year to receive an annual grant of options for shares of Company
common stock in the same manner stock options are granted to senior
management employees of the Company. All option grants are subject to
annual review and approval by the Company's Board of Directors.
4. Bonus. As part of this employment Agreement, the Executive will participate
in a company bonus plan substantially similar in terms and conditions to
the Company Management Incentive "MIP" Program, with a base bonus amount
established at 100% of annual base salary. This bonus, or a portion of it,
is earned if, and as, annually specified Company and personal target goals
are achieved in each fiscal year. Any bonus earned will be paid after the
close of each fiscal year.
EXHIBIT A
5. Expenses. The Executive shall be entitled to receive prompt reimbursement
for all reasonable expenses incurred by him in performing his services,
including all expenses of travel and living expenses while away from home
on business or at the request of and in the service of the Company,
provided that those expenses are incurred and accounted for in accordance
with the policies and procedures established by the Company from time to
time.
6. Health Insurance. The Executive will be provided with health, life, and
disability insurance benefits of the same kinds and at the same levels as
are available to senior management employees of the Company throughout the
term of his employment.
7. Retirement Savings. The Executive will be eligible to participate in
Company-sponsored retirement savings plans of the same kind and at the same
level as are available to senior management employees of the Company
throughout the term of his employment.
A-2
Executive employment agreement
PARTIES: Peter W. Kehayes
("Executive")
CBRL Group, Inc.
a Tennessee corporation
("Company")
Logan's Roadhouse, Inc.
a Tennessee corporation
("Logan's")
SUBJECT: Employment for a Specified Term
POSITION: President and Chief Operating
Officer of Logan's
LOCATION: Lebanon, Tennessee
DATE: January 15, 2002
- --------------------------------------------------------------------------------
This Agreement, dated for reference purposes January 15, 2002, is made by
CBRL Group, Inc., a Tennessee corporation (the "Company"), by Logan's Roadhouse,
Inc., a Tennessee corporation, and by Peter W. Kehayes, an individual (the
"Executive").
BACKGROUND FACTS
A. The Executive has previously been employed by the Company and
Logan's as the President and Chief Operating Officer of the Company's Logan's
Roadhouse, Inc. subsidiary.
B. The Board of Directors of the Company (the "Board") recognizes
that the Executive's contribution to the growth and success of Logan's during
prior years has been substantial. The Board now desires, and deems it to be in
the best interests of the Company and its shareholders, to provide for the
continued employment of the Executive and to make certain changes in the
Executive's employment arrangements with the Company and Logan's which the Board
has determined will reinforce and encourage the Executive's continued attention
and dedication to Logan's.
C. The Executive is willing to commit himself to continue to serve
the Company and Logan's on the specified terms and conditions.
D. In order to effect those purposes, the Company, Logan's and the
Executive wish to enter into an employment agreement on the terms and conditions
set forth below.
Therefore, in consideration of the mutual promises in this Agreement,
the Company, Logan's and the Executive agree as follows:
AGREEMENT
1. EMPLOYMENT.
The Company authorizes and approves the Executive's employment and
Logan's employs the Executive and the Executive accepts employment from Logan's
upon the terms and conditions of this Agreement.
2. DURATION OF AGREEMENT.
2.01 Initial Term. This employment shall begin as of the effective date
of this Agreement, January 15, 2002, and shall continue until it terminates
pursuant to this Agreement. Unless extended in writing by the parties or earlier
terminated pursuant to Article 6, this Agreement will automatically terminate at
July 30, 2004.
3. DUTIES.
3.01 In General. Subject to the ultimate direction and control of the
Company and Logan's Board of Directors, the Executive shall devote all of his
efforts on a full-time basis to the business and affairs of Logan's with such
duties and responsibilities as the Board shall designate, and he shall not
engage in any activities, or render services to or become associated with any
other business that in the reasonable judgment of the Board violates Article 8
of this Agreement or interferes with the full and proper performance of the
Executive's duties. The parties acknowledge and agree that community service,
charitable activities, and reasonable participation in unrelated business
activities, which do not adversely affect the Executive's employment duties, are
not prohibited or restricted by this Section.
3.02 Specific Duties. The Executive will serve as President and Chief
Operating Officer of Logan's. The Executive will provide leadership and
oversight and direction to the business operations of Logan's and its
subsidiaries.
4. COMPENSATION AND BENEFITS.
4.01 Compensation Package. In full consideration for all services
rendered by the Executive under this Agreement, including service on the Logan's
Board of Directors, and in accordance with its payroll practices and other
applicable Company policies for executives, the Company authorizes, and Logan's
shall pay the Executive an annual salary, and in appropriate specified
circumstances, a bonus, and they will provide employment benefits all as set
forth in Exhibit A attached to and a part of this Agreement. Exhibit A will
remain in effect until altered by mutual agreement or until this Agreement
expires or is terminated.
4.02 Benefits Distinct from Salary. Nothing paid to the Executive under
any benefit plan or arrangement presently in effect or made available in the
future shall be deemed to be in lieu of the salary payable to the Executive
pursuant to this Article 4 and Exhibit A.
4.03 Prorations. Any payments or benefits payable to the Executive in
respect of any 12-month period during which the Executive is employed by the
Company for less than the entire 12-month period shall, unless otherwise
provided in the applicable plan or arrangement, be prorated in accordance with
the actual number of days within the 12-month period during which he is
employed.
5. CHANGE IN CONTROL.
The Executive and the Company are parties to a separate agreement
concerning changes in control of the Company. That agreement is specified in a
letter dated October 8, 1999 from the Company to the Executive with a subject
styled: "Employee Retention Agreement" (the "Letter Agreement"). A copy of the
Letter Agreement comprises Exhibit B, which is attached to and is made part of
this Agreement. The Letter Agreement supersedes this Agreement and controls with
respect to all issues between the Company and the Executive that may be affected
by a change in control of the Company, as defined in the Letter Agreement (a
"Change in Control").
6. TERMINATION OF EMPLOYMENT OR SEVERANCE.
6.01 Termination Without Cause. The Company's Board of Directors may
direct Logan's to terminate the Executive's employment, with or without cause,
at any time by giving written notice of termination to the Executive, that
termination of employment to be effective on a date specified in the notice. In
the event of a termination without cause, the Executive shall be entitled to
receive:
a. the unpaid amount due the Executive for annual base salary
during the employment term prior to the date of termination;
b. an amount equal to 2 times the annual base salary in effect
at the date of termination; and
c. subject to other specific provisions of this Agreement and
the specific terms and conditions of each award or grant, appropriate stock
options and restricted stock.
Payments with respect to base salary shall be made in cash in a single payment
within 5 business days of the date of termination. The Executive's participation
in all benefit programs other than life, medical and disability insurance shall
cease as of the date of termination. The Executive's participation in the life,
medical and disability insurance programs shall continue until the earlier of
the time the Executive is employed by another employer and is covered or
permitted to be covered by that employer's benefit plans without regard to the
extent of such coverage, the Company no longer provides such benefit plans to
the Executive's management employees, or the expiration of the term of this
Agreement (as in effect at the time of termination). This provision supersedes
any other severance program or policy that may be offered by the Company (except
for those relating to termination following a Change in Control, which are set
forth in the Letter Agreement) and is in lieu of, rather than in addition to
other severance plans that may be in place, except with regard to any rights the
Executive may have pursuant to COBRA or the Letter Agreement.
6.02 Termination for Cause. If the Executive is terminated for cause,
the Company and Logan's shall have no further obligation to the Executive under
this Agreement, and the Executive's participation in all benefit programs
controlled by this Agreement shall cease as of the date of termination (except
employee health insurance benefits which shall continue to be provided in
accordance with applicable COBRA law). For purposes of this Agreement, "cause"
shall mean only any one or more of the following: (a) the Executive's personal
dishonesty in connection with his duties to the Company or Logan's; (b) the
Executive's willful misconduct in the performance of his duties with the Company
or Logan's; (c) breach of fiduciary duty to the Company or Logan's involving
personal profit by the Executive; (d) conviction of the Executive for any felony
or crime involving moral turpitude; (e) material intentional breach by the
Executive of any provision of this Agreement; or (f) unsatisfactory performance
by the Executive of the duties designated for the Executive by Logan's or the
Company's Board of Directors as a result of alcohol or drug use by the
Executive.
6.03 Termination by Executive After Change in Control. If a Change in
Control occurs, the Executive will have the rights, subject to the specified
terms and conditions, set forth in the Letter Agreement.
6.04 Termination by Executive Other Than After Change in Control. The
Executive may terminate his employment with Logan's at any time without further
obligation by either party under this Agreement (except for the obligations and
covenants of the Executive pursuant to Article 8, which shall survive
termination as specified in this Agreement) by giving not less than 60 nor more
than 180 days prior written notice of termination to the Company and Logan's.
6.05 Effect of Termination on Stock and Options.
a. General Effect. Subject to the terms, conditions and
provisions of the Company's separate Long-Term Incentive Plan and the cash and
stock awards made under that plan, upon any termination of the Executive's
employment and this Agreement, all stock options and restricted stock held by
the Executive that are vested prior to the effective date of the termination
shall be exercisable in accordance with their terms, and all stock options and
restricted stock held by the Executive that are not vested prior to the
effective date of the termination shall lapse and be void.
b. Effect Upon Change in Control. In the event of termination
following a Change in Control, the terms and conditions expressed in the Letter
Agreement will control with respect to stock options.
6.06 Death of Executive. If the Executive dies during the employment
term, this Agreement and the Executive's employment shall terminate upon the
Executive's death. With respect to cash compensation, the Executive's estate
shall be entitled to any annual base salary earned but not paid plus any bonus
accrued by Logan's for the Executive through the date of death plus an
additional amount equal to the annual base salary in effect for the Executive at
the date of the death of the Executive. This payment shall be paid in a lump sum
to the Executive's estate within 90 days after Logan's is given notice of the
Executive's death. The rights of the Executive's estate with respect to stock
options and restricted stock, and all other benefit plans, shall be determined
in accordance with the specific terms, conditions and provisions of the
applicable awards, agreements and plans.
6.07 Disability of Executive. Through the Company, Logan's has
disability insurance insuring individuals holding officer positions, and the
Executive is included under that disability insurance. During any period that
the Executive fails to perform his duties as a result of a disability, the
Executive shall continue to receive his full salary at the rate then in effect
pursuant to Exhibit A until his employment is terminated by death or the
expiration of this Agreement. Payments made to the Executive during the
disability period shall be reduced by the amounts, if any, payable to the
Executive under disability benefit plans of the Company and Logan's. The
Executive's year-end bonus shall be paid in a pro rata amount to compensate the
Executive proportionately for days worked prior to the beginning of his
disability period. For purposes of this Agreement, unless and except as
otherwise specifically defined by the Company and Logan's in its insurance
plans, a "disability" of the Executive shall occur if the Executive suffers any
mental or physical condition that impairs the Executive's ability to perform the
essential functions of his duties for a period of 180 consecutive days or more,
and if within 30 days after the Executive receives written notice from Logan's
requesting that the Executive resume his duties under this Agreement, the
Executive is unable or refuses to do so.
7. INDEMNIFICATION.
7.01 Executive's Indemnification. The Company and Logan's shall
indemnify and hold the Executive harmless to the maximum extent permitted by law
against judgments, fines, amounts paid in settlement and reasonable expenses,
including reasonable attorneys' fees incurred by the Executive, in connection
with the defense of, or as a result of any action or proceeding (or any appeal
from any action or proceeding) in which the Executive is made or is threatened
to be made a party by reason of the fact that he is or was an officer of the
Company or Logan's.
7.02 Insurance. The Company and Logan's agree that the Executive is and
shall continue to be covered and insured up to the maximum limits provided by
all insurance which the Company and Logan's maintain to indemnify directors and
officers (and to indemnify the Company or Logan's for any obligations which it
incurs as a result of its undertaking to indemnify its officers and directors)
and that the Company and Logan's will each exert its best efforts to maintain
such insurance, in not less than its present limits, in effect throughout the
term of the Executive's employment.
8. LIMITS ON COMPETITION.
8.01 No Competing Activities. While this Agreement is in effect, and
for 1-year following termination of the Executive's employment for cause or by
the Executive's voluntary resignation, the Executive shall not directly or
indirectly, either as an employee, employer, officer, director, agent,
consultant, partner or other investor (except for investments no greater than 5%
of any entity) or in any other individual or representative capacity, engage or
participate in any business or profession that is in substantial direct
competition with the business of the Company. For the purposes of this
paragraph, a business enterprise with which the Executive becomes associated as
an employee, employer, officer, director, agent, consultant, partner or other
investor shall be considered in "substantial direct competition" with the
Company if it is engaged in the restaurant or gift shop business. Without
limiting the list of companies engaged in substantial direct competition, the
following companies are considered to certainly fall within that definition:
Advantica Restaurants, Applebee's International, Avado Brands, Inc., Bob Evans
Farms, Brinker International, Cheesecake Factory, Inc., Darden Restaurants,
Inc., Il Fornaio Corporation, O' Charley's, Outback Steakhouse, RARE Hospitality
and Roadhouse Grill. This Section does not prohibit the Executive from engaging
in any transaction which is approved in writing by the Board of Directors of the
Company and this Section does not apply following normal expiration of this
Agreement.
8.02 Confidentiality. In consideration of his employment and the
compensation to be paid to him the Executive specifically covenants and agrees
that he will regard and preserve as confidential all trade secrets and all
non-public information pertaining to the Company's or its subsidiaries'
businesses that have been or may be obtained by him. The Executive will not
reveal, allow release of, nor disclose any Company or Logan's confidential
information. This prohibition on disclosure and release applies whether or not
the information which is confidential may be classified as a trade secret. The
confidential information of the Company or Logan's which the Executive will not
reveal, disclose or release to any person includes, but is not limited to, all
technology, recipes and business systems of the Company or Logan's at the date
of this Agreement as well as all recipes, customer lists, business systems and
styles developed during the course of this employment, and all other Company or
Logan's proprietary business information not generally known to the public. The
Executive shall not use any confidential information except in the course of
employment. The Executive will not use any of the confidential information after
his employment by Logan's is terminated, and the Executive will not take away or
retain after termination of employment any of the Company's or Logan's recipes,
business systems, business styles or specifications, Company or Logan's
proprietary information, customer lists, or other documents or things relating
to those matters. This provision does not apply to information voluntarily
disclosed by the Company or Logan's to the public, independently developed and
disclosed by others, or otherwise lawfully in the public domain.
8.03 No Contact with Employees. As a specific part of the consideration
to induce the Company and Logan's to enter into this Agreement with him, the
Executive unconditionally agrees that, for a period of 1-year from the effective
date of termination of the Executive's employment for any reason, the Executive
will not initiate any contact with any employees of CBRL Group, Inc., or its
subsidiaries or affiliates (jointly or severally, the "Group"), in order to
induce them to terminate their employment with the Group or to seek employment
with the Executive or any corporation or other business entity in which the
Executive has an ownership interest (except an ownership interest of 1% or less
in a public company) or by which he might be employed.
9. MISCELLANEOUS TERMS.
9.01 Annual Performance Review. The Executive will report regularly
to the Company's Board of Directors and the Board will conduct an annual review
of the Executive's performance in or near July of each year.
9.02 Location of Employment. The Executive shall be employed at Logan's
headquarters office in the city of Nashville, TN, but the Executive shall travel
to and carry out his duties wherever reasonably necessary for Logan's business,
to an extent substantially consistent with business travel obligations at the
date of this Agreement.
9.03 Compliance with Law. The Executive shall always, and when
appropriate, at Logan's expense, endeavor to comply with all applicable federal,
State and local laws, ordinances, rules, and regulations in the performance of
all work and other activities carried out in the name of or on behalf of
Logan's.
9.04 Notices. All notices, requests, demands and other communications,
under this Agreement shall be in writing and shall be duly given on the date of
delivery if served personally on the party, or delivered by overnight courier,
or 3 days after mailing if mailed to the party by first class mail, registered
or certified, postage fully prepaid, and properly addressed as specified on the
signature page of this Agreement. Any party may change its address by giving the
other parties written notice of the new address in the manner set forth in this
Section.
9.05 Entire Agreement. This Agreement, including the Letter Agreement
and its other Exhibits, supersedes all other agreements, either oral or in
writing, between the parties with respect to employment of the Executive by
Logan's. It contains all the promises between parties with respect to that
employment. No representations, inducements, promises or other agreements, oral
or otherwise, have been made by any party or any one acting on behalf of any
party, and no agreement, statement or promise not contained in this Agreement is
valid. Any modification of this Agreement must be in writing.
9.06 Partial Invalidity. If any provision in this agreement is held
by a court of competent jurisdiction to be void or unenforceable, the remaining
provisions shall continue in full force without being invalidated in any way.
9.07 Binding Effect. The provisions of this Agreement benefit and
bind the Executive's heirs, representatives, and successors, and the Company's
and Logan's successors, transferees and assigns.
9.08 No Assignment. The Executive, the Company and Logan's each
acknowledges and agrees that the services to be rendered by the Executive are
unique and personal. This Agreement is, therefore, personal to the parties and
it, and the rights and obligations created by it, may not be assigned by the
Executive, or except to a corporation which is part of a consolidated group for
tax purposes, by the Company or Logan's.
9.09 Attorneys' Fees. If any party brings suit to compel performance
of, to interpret, or to recover damages for the breach of this Agreement, the
finally prevailing party shall be entitled to reasonable attorneys' fees in
addition to costs and necessary disbursements otherwise recoverable.
[continued on following page]
9.10 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Tennessee.
IN WITNESS WHEREOF, the parties have executed this Agreement on
February 27, 2002, to be effective as of the date specified on page 1 of this
Agreement.
ADDRESSES: COMPANY:
106 Castle Heights Avenue North CBRL Group, Inc.
Lebanon, Tennessee 37087 a Tennessee corporation
By: /s/Michael A. Woodhouse
-------------------------------
Michael A. Woodhouse, President
By: /s/James F. Blackstock
-------------------------------
James F. Blackstock, Secretary
LOGAN'S:
Logan's Roadhouse, Inc.
a Tennessee corporation
By: /s/Dan W. Evins
-----------------------------
Dan W. Evins, Chairman
By: /s/James F. Blackstock
-----------------------------
James F. Blackstock, Assistant
Secretary
EXECUTIVE:
Peter W. Kehayes
/s/Peter W. Kehayes
----------------------------------
Peter W. Kehayes
February 27, 2002
Approved.
/s/Robert V. Dale
- ---------------------------
Robert V. Dale,
Chairman Compensation & Stock Option Committee
Peter W. Kehayes Executive Employment Agreement
Agreed Salary and Benefits
Effective Date Executive Annual Base Salary Bonus Base
- -------------- ----------------- ------------------ -------------------
January 15, 2002 Peter W. Kehayes $323,000 80% of base salary
1. Salary. The annual base salary for the Executive will be paid in arrears in
equal installments at Logan's normal paydays during each calendar month. This
salary may be increased from time to time in accordance with normal business
practices of the Company by direction to Logan's, and if so increased, shall not
thereafter during the term of this Agreement be decreased. Compensation of the
Executive by salary payments shall not be deemed exclusive and shall not prevent
the Executive from participating in any other compensation or benefit plan of
the Company and Logan's.
2. Benefits. The Company and Logan's shall maintain in full force, and the
Executive shall be entitled to continue to participate in, all of its employee
benefit plans and arrangements in force on the effective date of this Exhibit A
in which the Executive now participates (or it will implement plans or
arrangements providing the Executive with at least equivalent benefits). The
Company and Logan's shall not make any changes in those plans and arrangements
which would adversely affect the Executive's rights or benefits, unless the
change occurs pursuant to a program applicable to all executive officers of the
Company and does not result in a proportionately greater reduction in the rights
of or benefits to the Executive as compared with any other executive officers of
the Company. The Executive shall be entitled to participate in or receive
benefits under any employee benefit plan or arrangement made available by the
Company and Logan's in the future to its executive officers and key management
employees, subject to and on a basis consistent with the terms, conditions and
overall administration of those plans and arrangements.
3. Options. The Executive is currently a participant in the Company's existing
long term incentive arrangement and the Executive will have an opportunity each
year to receive an annual grant of options for shares of Company common stock in
the same manner stock options are granted to senior management employees of the
Company. All option grants are subject to annual review and approval by the
Company's Board of Directors.
4. Bonus. As part of this employment Agreement, the Executive will participate
in a company bonus plan substantially similar in terms and conditions to the
Company and Cracker Barrel Old Country Store, Inc. Management Incentive Program
("MIP"), with a base bonus amount established at 80% of annual base salary. This
bonus, or a portion of it, is earned if, and as, annually specified Logan's and
personal target goals are achieved in each fiscal year. Any bonus earned will be
paid after the close of each fiscal year.
EXHIBIT A
5. Expenses. The Executive shall be entitled to receive prompt reimbursement for
all reasonable expenses incurred by him in performing his services, including
all expenses of travel and living expenses while away from home on business or
at the request of and in the service of Logan's, provided that those expenses
are incurred and accounted for in accordance with the policies and procedures
established by the Company and Logan's from time to time.
6. Health Insurance. The Executive will be provided with health, life, and
disability insurance benefits of the same kinds and at the same levels as are
available to senior management employees of Logan's throughout the term of his
employment.
7. Retirement Savings. The Executive will be eligible to participate in
Company-sponsored retirement savings plans of the same kind and at the same
level as are available to senior management employees of the Company and its
subsidiaries throughout the term of his employment.
A-2
SAMPLE AWARD LETTER
_______________, 200__
[Officer]
Cracker Barrel Old Country Store, Inc.
Dear ______:
I am pleased to advise you about a compensation opportunity for which
you are eligible as an officer of the company. It's called the FY 2000 Long-Term
Incentive ("LTI") Plan and is offered in addition to your base salary and the
annual Management Incentive Plan ("MIP") which provides for cash bonuses when
earned. The purpose of the LTI program is to give you an additional compensation
opportunity based on company financial performance, and so it replaces the stock
option program that was extended to officers prior to FY 2000.
Here's an overview of how the program works, and I'll include many more
details in Enclosure 1 to this letter.
a. You receive an award percentage that is determined by your officer
level within the company ("Percentage Award").
b. Your LTI target award will be your base salary multiplied by that
percentage.
c. Part of the LTI award (70%) will be granted as annual stock options and
part (30%) will be a lump sum Targeted Performance Cash Award
opportunity.
d. In order to provide the potential to increase your award based on
successful company performance, you will also receive a separate,
one-time Special Non-Qualified Stock Option Grant.
In your case, your total percentage award opportunity is ___%, so your
LTI target award will be your base salary multiplied by ____%. That total is
$_______. Here's how you can expect to receive the LTI target award:
70% of your LTI target award will be in the form of an annual
stock option grant. The other 30%, the Targeted Performance
Cash Award ($_______), will be a lump sum cash payout award
tied to company performance and stock price. And, the size of
that Cash Award will determine the amount you are eligible for
in the separate Special Non-Qualified Stock Option Grant.
This program is more complicated than a single annual stock option
program, so don't hesitate to contact us if you have any questions. Your
questions regarding the LTI program should be referred to ______ in the
Compensation and Benefits Department at extension _____.
We recognize the value you, as a member of senior management, bring to
the company. This program, and others, are intended to reward you for that
contribution. Let's continue to make the coming months and years even better for
our company than ever before.
Sincerely,
Michael A. Woodhouse
President & Chief Executive Officer
CBRL Group, Inc.
Enclosure
CBRL GROUP, INC.
LONG-TERM INCENTIVE PLAN
- --------------------------------------------------------------------------------
1. GENERAL.
1.01 Establishment of the Plan. The Board of Directors of CBRL
Group, Inc. hereby adopts this long-term incentive plan which shall be known as
the CBRL Group, Inc. Long-Term Incentive Plan (the "Plan").
1.02 Plan Purpose. The purpose of this Plan is to attract and
retain the best possible executive talent and to motivate officers to focus
attention on long-term objectives and strategic initiatives, and to further
align their interests with those of the shareholders of the Company.
1.03 Plan Administration.
a. The Plan shall ultimately be administered by the
Compensation and Stock Option Committee (the "Committee") of the Board of
Directors. Subject to the Committee's approval, the Chief Executive Officer of
the Company ("CEO") may assist in, and make recommendations regarding, the
administration of the Plan. The Committee may delegate responsibility for the
day-to-day administration of the Plan to the Compensation and Benefits
Department personnel, provided that those Company personnel follow any
administrative guidelines approved from time to time by the Committee.
b. Subject to the provisions of the Plan, the Committee shall
have exclusive and final authority to (1) select from the officers of the
Company those who shall participate in the Plan and be granted Performance
Awards ("Participants"), (2) make Performance Awards in any forms and amounts it
determines, (3) impose limitations, restrictions, and conditions upon the
Performance Awards as it deems appropriate, (4) interpret the Plan and adopt,
amend and rescind administrative guidelines and other rules and regulations
relating to the Plan, (5) correct any defect or omission or reconcile any
inconsistency in this Plan or in any Performance Award granted under the Plan,
and (6) make all other necessary determinations and take all other actions
necessary or appropriate for the implementation and administration of the Plan.
The Committee's determinations on matters within its authority shall be
conclusive and binding upon the Company and all other Persons.
c. All expenses associated with the Plan shall be borne by the
Company subject to all allocations to its subsidiaries, affiliates and operating
units as it deems appropriate.
2. DEFINITIONS.
2.01 Definitions. Whenever used in this document, the following
terms shall have the meanings set forth below:
a. "Annual Stock Options" means those stock options
constituting a part of a Participant's long-term incentive award, but which are
granted from time to time on a yearly basis pursuant to a stock option plan of
the Company which has been approved by the Company's shareholders.
b. "Board" means the Board of Directors of the Company.
c. "Cash Opportunity Award" means any cash award which may be
earned by a Participant when specified Performance Goals and any applicable
award conditions are met and which is determined by a formula or standards
established by the Committee pursuant to Section 4.03.
d. "Change in Control" is defined in Section 8.02.
e. "Committee" means the Compensation and Stock Option
Committee of the Board, the members of which are not Plan Participants, have
been appointed by the Board, and have been given responsibility for
administration of the Plan.
f. "Company" means CBRL Group, Inc., and includes its
subsidiaries and affiliates.
g. "For cause" means termination of a Participant's employment
by the Company due to (1) the Participant's serious, willful misconduct in
respect of, or failure to perform, his or her duties; (2) commission of a felony
or perpetration of a material fraud or material crime involving moral turpitude;
(3) willful failure to comply with any material applicable laws with respect to
the execution of the Company's business; (4) theft, fraud, embezzlement,
dishonesty or other conduct which has resulted, or is likely to result in
material economic damage to the Company, or which has resulted or was intended
to result in direct or indirect gain to, or personal enrichment of the
Participant.
h. "Participant" means an officer of the Company meeting the
defined eligibility criteria for participation in the Plan and approved for
participation by the Committee.
i. "Performance Awards" means the awards established by the
Committee pursuant to Section 4.03.
j. "Performance Goals" means the goals established by the
Committee pursuant to Section 4.02.
k. "Performance Period" means the period designated by the
Committee pursuant to Section 4.01.
l. "Person" means any individual, corporation, partnership,
limited liability company, association, joint-stock company, trust,
unincorporated organization, or government or its political subdivision.
m. "Program" means an award program established by the
Committee which designates the Performance Period, Performance Goals and
formulas or standards for determining the amounts of Performance Awards payable
under the Plan.
3. Eligibility and Participation.
3.01 Eligibility. Eligibility for participation in the Plan is limited
to CEO and those officers of the Company that meet criteria established from
time to time by the Committee.
3.02 Participation. Participation in the Plan shall be determined by
the Committee and may be based on recommendations by the CEO or his designee.
The Committee shall consider such factors as it deems pertinent in selecting
Participants and in determining the type and amount of their respective
Performance Awards.
3.03 Partial Year Participation. Participants who become eligible after
the beginning of a Performance Period, but prior to the first calendar day of
the last year of the Performance Period, may, in the Committee's sole
discretion, participate for the Performance Period on a pro-rata basis
determined by the number of calendar months of actual participation. Such
situations may include, but are not limited to new hires, to promotions
affecting Plan participants, and to promotions or transfers to an eligible
position from an ineligible position.
3.04 Committee Discretion. The Committee retains the right, in its sole
discretion, to prohibit or allow participation in a Performance Period and to
determine eligibility for participation. Designation of a Participant in any
year shall not require the Committee to designate that person to receive a
Performance Award in any other year or to receive the same type or amount of
Performance Award as granted to the Participant in any other year or as granted
to any other Participant in any year.
4. Performance Awards.
4.01 Performance Period. For each Program, the Committee shall
establish a Performance Period (which shall not exceed 10 years) over which
performance will be measured to determine whether and in what amounts to pay
Performance Awards to Participants.
4.02 Performance Goals and Award Conditions. The Committee shall
establish Performance Goals and other award conditions or criteria that shall be
based upon, or geared to encourage, attainment of specific business objectives
and other measures of individual, business unit or Company performance, and any
other appropriate goals or a combination of goals as determined by the
Committee. No Performance Award shall be paid if the applicable Performance
Goals and award conditions are not satisfied. However, Performance Goals and
award conditions may include standards for partial achievement and may provide
for a partial award for partial achievement. The Committee shall also have sole
discretion to adjust the Performance Goals and award conditions for each
Participant during a Performance Period, if it determines that external changes
or other unanticipated business conditions have materially affected the fairness
of the goals or conditions and unduly influenced the Participant's ability to
meet them.
4.03 Performance Awards. Performance Awards, such as the LTI target
award and similarly designated awards, may consist of Annual Stock Options or
Cash Opportunity Awards, of other cash, restricted stock or stock options, or of
any combination, to be issued with or without any payment in exchange, in the
event the Performance Goals established by the Committee are achieved during the
Performance Period. For each Performance Period, the Committee shall designate
an objective formula or standard for determining each Participant's Performance
Award. The Committee shall have the discretion to increase or reduce the amount
of any Participant's Performance Award above or below the standard or formula
amount to reflect individual performance and unanticipated factors.
4.04 Payment of Performance Awards. After the close of each Performance
Period, or upon the earlier vesting of Performance Awards upon the attainment of
previously established and specified Company Performance Goals and award
conditions, when appropriate financial information is available, the Committee
shall formally certify the achievement of any applicable Performance Goals and
the amounts of any Performance Awards payable or to be granted to the
Participants under the applicable formulas or standards. Cash Opportunity Awards
earned may be paid in stock or in cash, in a single sum or in periodic
installments, or by a combination, all as the Committee in its sole discretion
determines. The timing of payment of all Performance Awards to Participants is
within the discretion of the Committee.
4.05 Acceleration of Vesting. The Committee, in its sole discretion,
may accelerate partial or total vesting of any Performance Award upon
achievement of specified Company Performance Goals or upon a Participant's
termination other than termination for cause.
5. Termination of Employment.
5.01 Termination of Employment Other Than For Cause. If a Participant's
employment is terminated other than for cause or by voluntary resignation, the
Performance Award under an award Program will be paid to the extent it is vested
under the specifics of that Program, and it shall be reduced to reflect
participation prior to termination only. If paid, in the specified
circumstances, the reduced award shall be based upon the number of calendar
months of participation during the Performance Period prior to termination. In
the case of a Participant's disability, the employment termination shall be
deemed to have occurred on the date the Committee determines, pursuant to the
Company's then current group long-term disability insurance benefit for
officers, that the definition of disability was satisfied. The pro-rated
Performance Award thus determined shall be payable as soon as practicable
following the end of the year in which employment termination occurred, or
sooner, as determined by the Committee in its sole discretion.
5.02 Termination of Employment For Cause. If a Participant's employment
is terminated for cause (of which the Committee shall be the sole judge), or the
Participant voluntarily resigns, all of the Participant's rights to a
Performance Award for the Performance Period then in progress shall be
forfeited, unless otherwise specifically stated in the applicable award Program.
However, in any case, the Committee, in its sole discretion, may pay a partial
award for the portion of that Performance Period that the Participant was
employed by the Company, computed and payable as determined by the Committee.
6. Rights of Participants.
6.01 Employment. Nothing in the Plan shall interfere with or limit in
any way the right of the Company to terminate any Participant's employment at
any time, nor confer upon any Participant any right to continue in the employ of
the Company.
6.02 Non-Transferability. No right or interest of any Participant in
the Plan shall be assigned or transferred, or be made subject to any lien,
directly, by operation of law or otherwise, including, but not limited to,
execution, levy, garnishment, attachment, pledge and bankruptcy.
7. Beneficiary Designation.
7.01 Designation. If set forth in the specific award Program, each
Participant under the Plan may, from time to time, name any beneficiary or
beneficiaries (who may be named contingently or successively) to whom any
benefit under the Plan is to be paid in case of his or her death.
7.02 Revocation. Each designation shall revoke all prior designations
by the same Participant and shall be effective only when filed by the
Participant in writing with the Compensation and Benefits Department during his
or her lifetime.
7.03 Default. Upon the death of a Participant, in the absence of any
beneficiary designation, or if the designated beneficiary is no longer living,
payment of benefits shall be made to the executor or administrator of the estate
of the deceased Participant or the person or persons to whom the deceased
Participant's rights in the benefit shall pass by will or the laws of descent
and distribution.
8. Change in Control.
8.01 Effect of Change in Control. Unless expressly stated otherwise in
the award Program, upon a Change in Control of the Company (as defined in
Section 8.02), any Performance Award that has not expired or been forfeited
shall be considered earned and shall become fully payable on the assumption that
all Performance Goals have been fully achieved throughout the entire Performance
Period. If a Participant is not fully vested in his or her Performance Award
upon a Change in Control, the Performance Award shall be fully vested effective
as of the day prior to the date of the Change in Control. The Performance Award
shall be payable to the Participant as soon as administratively possible, but no
later than 30 days following a Change in Control.
8.02 Definition of Change in Control. For purposes of this Plan, a
Change in Control shall be deemed to have occurred if: (a) any Person (other
than the Company) is or becomes the "beneficial owner" (as defined in Rule 13d-3
of the Securities Exchange Act of 1934, as amended (the "Act")), directly or
indirectly, of Company securities that represent 50% or more of the combined
voting power of the Company's then outstanding securities; (b) during any period
of 2 consecutive years, individuals who at the beginning of that period
constitute the Board cease for any reason to constitute at least a majority of
the Board, unless the election or the nomination for election by the Company's
shareholders of each new director is approved by a vote of at least 2/3 of the
directors then still in office who were directors at the beginning of the
period, but excluding any individual whose initial assumption of office occurs
as a result of either an actual or threatened election contest (as such term is
used in Rule 14a-11 of Regulation 14A promulgated under the Act) or other actual
or threatened solicitation of proxies or consents by or on behalf of a person
other than the Board; (c) there is a consolidation or merger of the Company in
which the Company is not the continuing or surviving corporation or pursuant to
which shares of the Company's common stock are converted into cash, securities
or other property, other than a merger of the Company in which the holders of
the Company's common stock immediately prior to the merger have the same
proportionate ownership of common stock of the surviving corporation immediately
after the merger; (d) there is a consolidation or merger of the Company in which
the Company is the continuing or surviving corporation in which the holders of
the Company's common stock immediately prior to the merger do not own 70% or
more of the stock of the surviving corporation immediately after the merger; (e)
there is a sale, lease, exchange or other transfer (in one transaction or a
series of transactions) of all, or substantially all, of the assets of the
Company; or (f) the shareholders of the Company approve any plan or proposal for
the liquidation or dissolution of the Company.
9. Amendment, Modification and Termination.
The Committee, in its sole discretion, without notice, at any time and
from time to time, may modify or amend, in whole or in part, any or all of the
provisions of the Plan, or suspend or terminate it entirely; provided, however,
that no modification, amendment, suspension or termination may, without the
consent of a Participant (or his or her beneficiary after the death of a
Participant), reduce any rights or payments or distributions to which a
Participant (or his or her beneficiary, as the case may be) is otherwise
entitled.
10. Miscellaneous Terms.
10.01 Governing Law. This document and the parties to it shall be
governed by, and the validity, construction and effect of the Plan and any rules
and regulations relating to the Plan shall be determined in accordance with, the
laws of the State of Tennessee and applicable Federal law.
10.02 Withholding. The Company has the right to deduct from all
payments under the Plan any Federal, state or local taxes required by law to be
withheld with respect to the payments. The Participant or the Participant's
beneficiary or beneficiaries are responsible for payment of all taxes related to
a payment or delivery of property under the Plan, and shall immediately
reimburse the Company for all taxes whenever the Company advanced payment of
taxes on behalf of any recipient.
10.03 No Limit on Other Compensation Arrangements. Nothing contained in
this Plan prevents the Company from adopting or continuing in effect other or
additional compensation arrangements, and those arrangements may be either
generally applicable or applicable only in specific cases.
10.04 Severability. If any provision of the Plan, or in any Performance
Award issued under the Plan, is, becomes or is deemed to be invalid, illegal or
unenforceable in any jurisdiction, or as to any Participant or Performance
Award, or would disqualify the Plan or any Performance Award under any law
deemed applicable by the Committee, that provision shall be construed or deemed
amended to conform to applicable laws, or if it cannot be so construed or deemed
amended without, in the determination of the Committee, materially altering the
intent of the Plan or the Performance Award, that provision shall be stricken as
to the affected jurisdiction, Participant or Performance Award, and the
remainder of the Plan and any affected Performance Award shall remain in full
force.
10.05 No Trust or Fund Created. Neither the Plan nor any Performance
Award shall create or be construed to create a trust or separate fund of any
kind or a fiduciary relationship between the Company and a Participant or the
Participant's beneficiary or beneficiaries. To the extent that any Participant
or the Participant's beneficiary acquires a right to receive payments or
property from the Company pursuant to a Performance Award, that right shall be
no greater than the right of any unsecured general creditor of the Company.
10.06 Plan Attachments. As the Committee issues awards pursuant to this
Plan, the Committee may evidence those awards by letters or other appropriate
documentation. For record keeping purposes, those letters or other documents may
be attached to this Plan and those attachments will show the Plan grants and
awards which are in effect from time to time.
Long-Term Incentive Plan
Attachment to Plan Document Dated as of September 1, 1999
This sets forth the CBRL Group, Inc. Long Term Incentive Plan as of September 1,
1999.
The Long-Term Incentive Plan has 3 components:
o Annual Stock Option Grant
o Targeted Performance Cash Award
o Special Non-Qualified Stock Option Grant
The annual stock option grant provides 70% of the Long Term Incentive (LTI)
compensation, while the Targeted Performance Cash Award and the Special
Non-Qualified Stock Option Grant comprise 30% of the program compensation. The
Cash Award can decrease, but it has no upside potential. The Special
Non-Qualified Stock Option Grant provides the upside performance reward
potential.
Plan
Duration: The duration of the program is 5 years beginning with FY
2000 (July 31, 1999) and concluding at the end of FY 2004
(July 31, 2004).
Eligible
Employees: Eligible employees are all corporate officers at CBRL Group,
Inc., and all officers at the level of Vice President and
above at Cracker Barrel Old Country Store, Inc. and at
Logan's Roadhouse, Inc.
Percentage
Award: An eligible officer will receive an award percentage that
is determined by his or her officer level within the company
(the "Percentage Award" or "LTI%"). The LTI target award
will be the officer's base salary multiplied by that
percentage. Part of the LTI target award compensation (70%)
will be granted as Annual Stock Options and part (30%) will
be a lump sum Targeted Performance Cash Award opportunity.
Each eligible officer will also be eligible for an
additional Special Non-Qualified Stock Option Grant. The
size of the Cash Award will determine the amount of the
additional Special Non-Qualified Option Grant.
A. ANNUAL STOCK OPTION GRANT
Annual Stock
Option Grant: The company historically has granted stock options to
eligible employees annually. We anticipate continuing this
practice going forward. An annual stock option grant will be
awarded based on the provisions of the CBRL Group, Inc.
Amended and Restated Stock Option Plan. The annual stock
option grant makes up 70% of the LTI target award
compensation.
Calculation
Of Grant: The individual stock option grant will be determined based
on each participant's base salary and officer level. The
company will follow an appropriate widely-used compensation
methodology and calculation (such as Black-Scholes, for
example) to arrive at the Stock Option Price Adjustment
Factor. For purpose of our examples, assume that this
factor is 40%. The Exercise Price of the annual stock
options will be the regular session closing priceof the
stock on the most recent trading day preceding the date of
grant.
Vesting
Period: These options typically vest over 3 years and, generally,
remain in effect until exercised or 10 years from the grant
date, whichever date is earlier, all subject to the specific
terms and conditions of each grant.
Annual Grant
Formula: Number of Options granted =(Annual Salary) x (LTI %) x (70%)
---------------------------------
(stock Exercise Price) x (40%)
B. TARGETED PERFORMANCE CASH AWARD
Cash
Award: Eligible employees receive a one time Targeted Performance
Cash Award amount based on their LTI target award. The LTI
target award amount is a percentage of salary based on the
employee's job and officer level in the organization (the
"LTI %") at the date the award is granted. The Targeted
Performance Cash Award is 30% of the LTI target award. The
Targeted Performance Cash Award is "front-loaded" for the
next 5 years, thus, the total amount represents compensation
for 5 years of service. Officers who join the plan after the
original award date will have their award pro-rated to
reflect the time remaining in the award period. The purpose
of these adjustments is to ensure that all participants are
on a level economic playing field. These Targeted
Performance Cash Award grants will "cliff vest" at the end
of FY 2004 (July 31, 2004) but could vest sooner if certain
specified performance goals are achieved. The Targeted
Performance Cash Award amount granted cannot increase. It
can decrease if the company stock price is below certain
pre-established levels at the close of business on the
vesting date.
Adjustments: After the beginning of the LTI program, for those hired in
or promoted to a position qualifying for LTI, the company
will adjust the award period to reflect the expected time in
position during the remaining LTI period. The adjustment
factor (the years remaining in the LTI plan) is multiplied
by the Targeted Annual Dollar Value of Cash Award. The net
result of this calculation is the Adjusted Targeted
Performance Cash Award. The specified Cash Award is the
maximum amount you can realize at the time the award vests,
and if the stock price drops below what it was at the time
of the award, the specified Cash Award will be adjusted
lower to reflect that drop.
Basic Grant
Formula: (Annual Salary) x (LTI %) x (30%) = Targeted Annual Dollar
Value of Cash Award
5-Year
Cash Award: (Annual Salary) x (LTI%) x (30%) x (5 yrs) = Targeted
Performance Cash Award
The pro-ration factor was 1 for the initial grant. Those who
entered the program after the initial grant date will have a
pro-ration factor based on the time remaining in the
program. For example, if 40 months are left in the program
the pro-ration factor will be 40/60.
Adjusted
Cash Award: (Annual Salary) x (LTI%) x (30%) x (5 yrs) x
(remaining mos / 60 mos) = Adjusted Targeted Performance
Cash Award
Vesting
Period: The 5-year or adjusted Cash Award will "cliff vest" at the
end of FY 2004 (July 31, 2004). The vesting period could be
accelerated to the end of FY 2002 or FY 2003 if certain
specified cumulative performance goals are achieved. The
amount of the award will be reduced pro-rata if the stock
price on the vesting date is below the award price (for
initial awards, $13.0625 - the closing price on October 27,
1999 - the day prior to the date of implementation of the
LTI plan).
Actual
Payment: If the cumulative goals are achieved such that the Targeted
Performance Cash Award vests early (in either 3 or 4 years)
the full value (the originally stated amount) of the Cash
Award grant will be paid. If vesting is in 5 years, the
full amount will only be paid if the stock price is
$13.0625 (or the specified price for plan awards made
subsequent to the initial award under the plan) or higher.
If the stock price is then lower than $13.0625 (or the
specified price for plan awards made subsequent to the
initial award under the plan), the cash payment will be
prorated based on the differential. For example, for an
initial award, if the stock price on the last day of FY 2004
is $30.00, the full Cash Award amount will be paid. However,
if the stock price is $12.00 on that date, the Cash Award
will be paid at 92% (12.00/13.0625) of the grant amount.
Performance
Criteria for
Accelerated
Vesting: CBRL participants have a goal based on Total Shareholder
Return in relation to the Stock Performance Graph of Peer
Composite performance over the period, as provided by the
Nasdaq Stock Market. On a cumulative basis, measured from
the last day of fiscal year 1999 (July 30, 1999), CBRL must
exceed the annual Total Return Index performance of the
Nasdaq - listed eating and drinking places composite peer
group (SIC Code 58xx) (the "Goal Index") as reported by the
Nasdaq Stock Market as of the end of each measurement fiscal
year as follows: at the end of the 3rd LTI plan year, CBRL
must exceed the Goal Index by 20% or more, at the end of the
4th LTI plan year, CBRL must exceed the Goal Index by 10%
or more.
Cracker Barrel Old Country Store and Logan's Roadhouse
participants have goals based on their cumulative Operating
Income growth. On a cumulative basis, Cracker Barrel Old
Country Store must meet or exceed its annual financial plan
Operating Income goal. On a cumulative basis, Logan's
Roadhouse must meet or exceed its annual financial plan
Operating Income goal. The cumulative basis in both these
cases will reflect the cumulative effects of annual
full-year variances, favorable and unfavorable, from the
applicable financial plan, beginning with fiscal year 2000.
Operating performance will be evaluated at the end of the
third year (fiscal 2002) for each covered company. If the
cumulative third-year goal (exceeding the stated target by
20%) has not been achieved in the third year, operating
performance will be reviewed again at the end of the fourth
year (fiscal 2003). If the cumulative fourth-year goal
(exceeding target by 10%) is not achieved in the fourth
year, the cash award will not vest early. In that case, the
award will vest at the end of the fifth year (fiscal 2004)
of the program.
The specific performance goal program was established at the
July 1999 meeting of the Board of Directors.
In all cases, there are no performance criteria as
conditions for the vesting of the award at the end of FY
2004. If not vested earlier, all LTI awards to participants
who are otherwise qualified at that time, will then
automatically vest.
C. SPECIAL NON-QUALIFIED STOCK OPTION GRANT
Non-Qualified
Stock Option
Grant: Since the cash award amount does not increase over time, the
Special Non-Qualified Stock Options provide a vehicle to
reward long-term performance that actually increases Total
Shareholder Value. The number of options granted is
determined by dividing each employee's specified Targeted
Performance Cash Award by the stock Exercise Price. The
Exercise Price of these special stock options will be the
regular session closing price of CBRL stock on the most
recent trading day preceding the date of grant. The vesting
schedule is identical to the Cash Award vesting schedule.
These options must be exercised within 6 months of the date
they vest.
5-Year Grant
Formula: (Annual Salary) x (LTI %) x (30%) x (5 years) = Number of
---------------------------------------------
stock Exercise Price Options
Adjusted Grant
Formula: (Annual Salary) x (LTI %) x (30%) x (5 years)
x (remaining mos/60) = Number
---------------------------------------------
stock Exercise Price of Options
Vesting
Period: Like the cash award, this option award will "cliff vest" at
the end of FY 2004 (July 31, 2004). The vesting period could
be accelerated to the end of FY 2002 or FY 2003 if certain
specified performance goals are achieved.
Performance
Criteria for
Accelerated
Vesting: CBRL participants have a goal based on Total Shareholder
Return in relation to the Stock Performance Graph of Peer
Composite performance over the period, as provided by the
Nasdaq Stock Market. On a cumulative basis, measured from
the last day of fiscal year 1999 (July 30, 1999), CBRL must
exceed the annual Total Return Index performance of the
Nasdaq - listed eating and drinking places composite peer
group (SIC Code 58xx) (the "Goal Index") as reported by the
Nasdaq Stock Market as of the end of each measurement fiscal
year as follows: at the end of the 3rd LTI plan year, CBRL
must exceed the Goal Index by 20% or more, at the end of the
4th LTI plan year, CBRL must exceed the Goal Index by 10%
or more.
Cracker Barrel Old Country Store and Logan's Roadhouse
participants have goals based on their cumulative Operating
Income growth. On a cumulative basis, Cracker Barrel Old
Country Store must meet or exceed its annual financial plan
Operating Income goal. On a cumulative basis, Logan's
Roadhouse must meet or exceed its annual financial plan
Operating Income goal. The cumulative basis in both these
cases will reflect the cumulative effects of annual
full-year variances, favorable and unfavorable, from the
applicable financial plan, beginning with fiscal year 2000.
Operating performance will be evaluated at the end of the
third year (fiscal 2002) for each covered company. If the
cumulative third-year goal (exceeding the stated target by
20%) has not been achieved in the third year, operating
performance will be reviewed again at the end of the fourth
year (fiscal 2003). If the cumulative fourth-year goal
(exceeding target by 10%) is not achieved in the fourth
year, the cash award will not vest early. In that case, the
award will vest at the end of the fifth year (fiscal 2004)
of the program.
The specific performance goal program was established at the
July 1999 meeting of the Board of Directors.
In all cases, there are no performance criteria as
conditions for the vesting of the award at the end of FY
2004. If not vested earlier, all LTI awards to participants
who are otherwise qualified at that time, will then
automatically vest.
D. EXHIBITS
Examples of Long-
Term Incentive
Calculations: Exhibit A
Chart of Officers'
Long-Term Incentive
Percentages: Exhibit B
Examples of Long-Term Incentive Calculations
Annual Stock Option Grant Example:
Annual Grant
Formula: (Annual Salary) x (LTI %) x (70%) = Number of
-----------------------------------
(stock price) x (40%*) Options granted
Example #1: VP #1 was eligible for the initial grant and received a
cash award based on 60% of an annual salary of $150,000. The
closing price of the stock the day before the grant was
$20.50.
Option grant=($150,000) x (.60) x (.70)= 7,683 stock options
--------------------------------------
($20.50) x (.40*)
* Black-Scholes factor, for this example 40%.
Cash Award Example:
Grant
Formula: (Annual Salary)x(LTI%)x(30%)x(5 years)x(Pro-ration factor,
if any)= Adjusted Targeted Performance Cash Award
Example #1: VP #1 was eligible for the initial grant and received a cash
award based on 60% of an annual salary of $150,000.
Cash Award = ($150,000)x(.60)x(.30)x(5)x(1) = $135,000
Example #2 VP #2 became eligible for the long-term incentive plan in
the 20th month (40 months left in the program period). The
base salary and award percentage is the same as VP #1.
Cash Award = ($150,000)x(.60)x(.30)x(5)x(40/60) = $90,000
EXHIBIT A
Special Non-Qualified Stock Option Example:
Grant
Formula: (Annual Salary) x (LTI %) x (30%) x (5 years)
x (Pro-ration factor, if any) = Number
---------------------------------------------
stock Exercise Price of Options
Example #1: VP #1 was eligible for the initial grant and received a
cash award based on 60% of an annual salary of $150,000. The
closing stock price (and therefore the stock Exercise Price)
on the day prior to the grant date was $13.0625
Option grant = ($150,000)x(.60)x(.30)x(5)x(1) = 10,335
------------------------------ stock options
$13.0625
Example #2 VP #2 became eligible for the long-term incentive plan in
the 20th month (40 months left in the program period). The
base salary and award percentage is the same as VP #1. The
closing stock price (and therefore the stock Exercise Price)
on the day prior to the grant date was $20.25
Option grant = ($150,000)x(.60)x(.30)x(5)x(40/60) = 4,444
---------------------------------- stock
$20.25 options
A-2
Chart of Officers' Long-Term Incentive Percentages
The chart below shows the officer tiers that are eligible for long-term
incentives and the appropriate long-term incentive award target as a percentage
of salary.
Long Term Incentive as Percent of Salary
Targeted
Performance
Cash Award
Annual and Related
Officer Tiers Stock Options Options Total
- ------------- ------------- ----------- -----
Chairman 175% 75% 250%
President & COO 105% 45% 150%
SVP & General Counsel 84% 36% 120%
Operational VP's 42% 18% 60%
Other VP's 31.5% 13.5% 45%
Notes to Chart
1. The size of the long term incentive opportunity is based on competitive
data.
2. Participants would receive 70% of their opportunity from annual stock
options and 30% from the Targeted Performance Cash Award. In connection
with the Targeted Performance Cash Award, a participant is also granted a
one-time Special Non-Qualified Stock Option Grant to provide an opportunity
for a greater award due to improved company financial performance.
3. The value of the annual options in this plan is determined using an
appropriate, widely-used compensation methodology (such as Black-Scholes,
for example).
4. This chart is effective on and after September 1, 1999.
EXHIBIT B
Chart of Officers' Long-Term Incentive Percentages
The chart below shows the officer tiers that are eligible for long-term
incentives and the appropriate long-term incentive award target as a percentage
of salary.
Long Term Incentive as Percent of Salary
Targeted
Performance
Cash Award
Annual and Related
Officer Tiers Stock Options Options Total
- ------------- ------------- ----------- -----
Chairman; CEO 175% 75% 250%
President & COO 105% 45% 150%
CAO; SVP &
General Counsel 84% 36% 120%
Divisional (and similar)
Vice Presidents 52.5% 22.5% 75%
Operational VP's 42% 18% 60%
Other VP's 31.5% 13.5% 45%
Notes to Chart
5. The size of the long term incentive opportunity is based on competitive
data.
6. Participants would receive 70% of their opportunity from annual stock
options and 30% from the Targeted Performance Cash Award. In connection
with the Targeted Performance Cash Award, a participant is also granted a
one-time Special Non-Qualified Stock Option Grant to provide an opportunity
for a greater award due to improved company financial performance.
7. The value of the annual options in this plan is determined using an
appropriate, widely-used compensation methodology (such as Black-Scholes,
for example).
8. This chart is effective on and after August 4, 2001.
EXHIBIT B
June 6, 2002 CBRL Group, Inc. Lebanon, Tennessee 37088-0787 We have made a review, in accordance with standards established by the American Institute of Certified Public Accountants, of the unaudited interim financial information of CBRL Group, Inc. and subsidiaries for the quarters and nine-month periods ended May 3, 2002 and April 27, 2001, as indicated in our report dated June 6, 2002; because we did not perform an audit, we expressed no opinion on that information. We are aware that our report referred to above, which is included in your Quarterly Report on Form 10-Q for the quarter ended May 3, 2002, is incorporated by reference in Registration Statement Nos. 2-86602, 33-15775, 33-37567, 33-45482, 333-01465, 333-71384 and 333-81063 on Forms S-8 and Registration Statement No. 33-59582 on Form S-3. We also are aware that the aforementioned report, pursuant to Rule 436(c) under the Securities Act of 1933, is not considered a part of the Registration Statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of that Act. DELOITTE & TOUCHE LLP Nashville, Tennessee